Essar Shipping Limited. · NSE:ESSARSHPNG
Essar Shipping — Essar Oil — Q1 FY2014 Earnings Presentation
31 slides from Essar Shipping's earnings presentation, August 2013
Slide 1: Essar Oil Limited Analyst Presentation
Essar Oil Limited Analyst Presentation August, 2013
Slide 2: Index
Index Performance Highlights Industry Overview Refinery Operations Marketing & Retail Operations Exploration & Production Financials 1
Slide 3: Performance Highlights
4 ESSAR’ OIL & GAS Performance Highlights
Slide 4: Performance Highlights for quarter ended June, 2013
Performance Highlights for quarter ended June, 2013 1 Refinery throughput increased by 15% to 5.14 mmt compared to 4.48 mmt for Q1 FY13. Processed 92% of heavy and ultra heavy crude comprising of 56% of ultra heavy crude compared to 2 48% of ultra heavy crude in Q1FY13. Produced 84% of high marg
Slide 5: Industry Overview
4 ESSAR’ OIL & GAS Industry Overview
Slide 6: Crude Market Dynamics
Crude Market Dynamics Crude Prices (USD/bbl) Benchmark crude prices of Dubai & Brent 120 Brent WTI Dubai 117 114 113 112 114 declined by 9%-10% compared to Q4FY13, while 115 110 111 110 110 WTI demonstrated exceptional strength due to 111 111 109 103 105 103 106 107 106 108 103 103 improved infras
Slide 7: Key Refinery Product Prices and Margins
Key Refinery Product Prices and Margins Gasoline price and spread over Dubai (USD/bbl) Gasoil prices and spread over Dubai (USD/bbl) Gasoline Price Gasoline Spread - RHS 135 Gas Oil Price Gas Oil Spread - RHS 24 135 20 22 19 22 18 130 130 15 21 14 16 17 130 19 20 125 125 130 14 129 12 18 120 11 12 1
Slide 8: Key Product Cracks
Key Product Cracks Gasoil FO Gasoline Jet US$/bbl $23 20.17 19.96 19.27 18.66 18.53 18.57 18.56 16.81 18.04 $18 16.0 19.27 19.61 17.90 18.32 18.33 18.07 18.06 17.48 15.4 15.35 15.33 $13 12.42 11.43 10.6 10.09 $8 9.18 8.74 8.18 7.55 7.06 $3 -$2 3.70 4.82 5.96 5.86 5.26 4.86 4.58 4.51 -$7 9.64 11.26 -
Slide 9: Refinery Operations
4 ESSAR’ OIL & GAS Refinery Operations
Slide 10: Optimization of Capacity & Crude Mix
Optimization of Capacity & Crude Mix Throughput (MMTPA) Crude Slate remain geared towards ultra heavy 5.20 5.14 Light Heavy Ultra Heavy 5.08 100% 11% 12% 8% 5.00 90% 80% 4.80 26% 36% 70% 41% 4.60 60% 4.47 50% 4.40 40% 30% 62% 56% 4.20 48% 20% 10% 4.00 Q1FY13 Q4FY13 Q1FY14 0% Q1FY13 Q4FY13 Q1FY14 Cru
Slide 11: Continuous focus on maintaining high margin product mix
Continuous focus on maintaining high margin product mix Optimized Product Mix Comparative product cracks US$/bbl Product Mix Q1 FY14 Q4 FY13 Light Middle Heavy 39% 100% (5.86) Fuel Oil 2.4% 23% 24% 24% (9.64) 80% (26%) 60% 11.43 Gasoline 15.2% 15.35 59% 60% 60% 40% (14%) 16.81 20% Gasoil 50% 19.61 1
Slide 12: Marketing & Retail Operations
Marketing & Retail Operations 11
Slide 13: Sales Revenue Mix
Sales Revenue Mix 90% Bulk Retail PSUs Exports* 80% 3% 1% 70% 6% 60% 2% 4% 1% 50% 40% 73% 30% 61% 55% 20% 40% 32% 10% 23% 0% Q1FY13 Q4FY13 Q1FY14 * Exports also includes Sales to SEZ Refinery Continue to focus on domestic market due to better price realization of petro products • Tied up with PSUs
Slide 14: Retail Margin~ An Upside
Retail Margin~ An Upside 16.00 US$ /bbl Avg PSU Refinery Margin Avg Retail Margin 14.00 12.00 7.01 10.00 5.17 8.00 2.44 4.05 3.28 3.10 6.00 4.00 7.11 6.54 7.14 5.89 5.92 6.17 2.00 - FY 2008 FY2009 FY 2010 FY 2011 FY2012 FY2013 Source: Industry & research reports Gross margin of Auto Fuels (Gasoil
Slide 15: Emerging Retail Opportunity
Emerging Retail Opportunity 60000 • Retail outlets continue to grow (CARG ~ 6.8%) in line Private Players HPCL BPCL IOC with growth in overall auto fuels. 49109 50000 45103 2897 • Most of retail outlets (94%+) are operated by PSUs in 41947 37853 39251 2966 India due to historical regulated pricing p
Slide 16: Proliferation of Retail Outlets in India
Proliferation of Retail Outlets in India Retail outlets 49109 50000 45103 41947 37853 39251 40000 30000 Number of Retail 20000 Outlets growing at 6.8% CAGR 10000 0 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Retail Sales (TKL) 1,00,000 90,450 83,675 77,212 80,000 71,138 64,066 60,000 Steady growth in 40
Slide 17: Emerging Retail Opportunity for Essar Oil
Emerging Retail Opportunity for Essar Oil DODO Model Non Fuel Revenue (NFR) at Retail Station ~1559 Retail Outlets(1) • First private company in India to enter retailing of petroleum • Focus on tapping the opportunity of 47 products (2003) through Franchisee 63 11 CNG pumps through tie-ups with Aegi
Slide 18: Exploration & Production
4 ESSAR’ OIL & GAS Exploration & Production 17
Slide 19: The Raniganj CBM Success so far…
The Raniganj CBM Success so far… Total 2P/2C & prospective reserves/ resources ~ 855 BCF, certified by Reserve/ NSAI. Resources Peak estimated production ~ 3.0 mmscmd No of Wells Drilled – 165 wells, Hydro fracturing – 150 wells & Completed Wells – 147 wells. Phase I & II successfully comple
Slide 20: New Gas Pricing Regime effective from April, 2014
New Gas Pricing Regime effective from April, 2014 The government has approved the domestic gas price as recommended by the Rangarajan Committee. Background Gas prices are expected to double from current level of US$ 4.2/mmbtu to US$8.4/ mmbtu , effective from, April 2014, which would be reviewed
Slide 21: CBM Raniganj- Project Delivery
CBM Raniganj- Project Delivery Cockpit to consume large amounts of information in a simple, graphical view & monitor key performance indicators company-wide, real-time Key regulatory approvals in place for uninterrupted operations going forward Our biggest constraint, land availability, has been
Slide 22: Status Update ~ other CBM blocks
Status Update ~ other CBM blocks RAJMAHAL CBM Status: Project Offices already set- Location Jharkhand, India up in Rajmahal and Contract Area -Current 1128 sq km Sohagpur. Contract Signing Date 29th July,2010 Environmental clearances Effective Date The date of Grant of PEL (PEL applied for) bein
Slide 23: Financials
4 ESSAR’ OIL & GAS Financials 22
Slide 24: Improvement in Financials post Expansion Projects
Improvement in Financials post Expansion Projects 28,000 Revenue (Rs crore) GRM (USD/bbl) 10 9.06 9 26,000 25,757 8 7.01 24,721 7 6 24,000 4.69 5 4 22,109 3 22,000 2 1 20,000 0 Q1 FY13 Q4 FY13 Q1FY14 Q1 FY13 Q4 FY13 Q1FY14 2,000 EBIDTA ( Rs Crore) PAT (Rs crore) 1,531 300 200 1,600 0 1,200 1,106 -30
Slide 25: Refinery Margin started indicating complexity advantage
Refinery Margin started indicating complexity advantage US$/bbl EOL RIL IEA Singapore Margin 12 10 9.20 8.40 8.70 8.4 8 6.6 7.01 7.96 6 4.53 4 1.6 4.23 2 1.4 1.13 0.37 0 -0.57 -2.03 -2 -4 FY2010 FY 2011 FY2012 FY 2013 Q1 FY14 Source: EOL; Industry Increased complexity resulting widening margin fro
Slide 26: Financial Performance
Financial Performance Rs Crore 25
Slide 27: Impact of Rupee Depreciation
Impact of Rupee Depreciation Impact Analysis Long Term Business Crude Liability Debt Operation RTL Reduction in FCL (1) (2) 100% hedging, net off operating cost in US$ 2527 mn Inventory, Export terms of US$ US$ 641 mn Receivables & GRM $ 481 mn Planning to converted as of convert into March,2013 FCL
Slide 28: Forex Hedging Strategy ~ Recovery of Forex Variations
Forex Hedging Strategy ~ Recovery of Forex Variations Entire forex liabilities over natural hedge are full covered. Forex variations are most of MTM nature hence no cash losses. 27
Slide 29: Depreciation of Rupee ~ Impact on Cash Break Even GRM & Debt position
Depreciation of Rupee ~ Impact on Cash Break Even GRM & Debt position Cash Break Even GRM for quarter ended June, 2013 Every One Rupee change in exchange rate will improve break even GRM by * US$ 0.14 * Excluding one time expenses Impact of Exchange Rates on Debt Every One Rupee change in exchange r
Slide 30: Way Forward…. Key Focus Areas
Way Forward…. Key Focus Areas Optimum utilization of refinery assets. Capitalise on growing Retail Business upon complete deregulation. Commercialization of CBM Raniganj Dollarization of Debt to reduce debt and cost of Debt No new capex plans for next 2-3 years. Free cash flow be utilize
Slide 31: SS Cute — pa og ong ee he
SS Cute — pa og ong ee he