Essar Oil hit by sales tax issues in India

Essar Oil, Essar Energy's 87.09 per cent-owned Indian oil subsidiary, saw a sharp drop in earnings in the year to March 31st due to the reversal of a sales tax benefits and a planned plant shutdown.

Full-year earnings before interest, tax, depreciation and amortisation (EBITDA) fell 24% from 2,799 crore rupees (£324m) to 2,106 crore rupees (£244m) "mainly due to sales tax incentive not available in Q4FY12 and lower throughput due to planned shutdown," the firm said.

Fourth-quarter EBITDA alone dropped 51% from Rs 911 crore to Rs 444 crore (note: one crore=10m rupees).

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"Writ petition seeking direction on the repayment instalments and interest in relation to its sales tax deferral liability admitted by Honourable Gujarat High Court," Essar Oil said.

Meanwhile, gross revenues increased by 19% over the year, up from 53,119 crore to 63,340 crore.

Full-year throughput stood at 13.49m metric tons (MMT), lower than 14,76MMT the year before, as a result of the 35-day planned shutdown undertaken in September and October of 2011.

Essar Oil said that its optimisation project to further increase capacity to 20MMT per annum is on track and completion is expected by September 2012.

Essar Energy's shares were down 2.08% at 129.16p in early trading on Monday.

BC