Essar Oil UK to open 400 retail outlets in 3 yrs

The Dollar Business Bureau

Essar Oil UK Ltd, a wholly owned subsidiary of Essar Energy Ltd, said it will focus on fuel retailing in the UK by opening 400 more outlets. The decision comes after the company recorded a net profit of $244 million in financial year 2015-16, its highest-ever and a three-fold jump from $70 million during the previous year.

Currently, Essar Oil UK manages seven retail outlets and said that its retailing expansion plan is a part of its strategy to further enhance its margins.

While speaking to journalists, Naresh Nayyar, Executive Chairman, Essar Oil UK, said, "Retail sales can help us in pushing our refined fuel margins by $2-3 a barrel, as the company can benefit on the commissions of dealer and other fields of downstream integration. We already have seven retail outlets, and planning to increase this number to 400 in the coming three years.”

Nayyar also said the company’s retail expansion plan is capex (capital expenditure) neutral as it will only re-brand a few dealer-owned and operated outlets, already running.

He said that Essar Energy Ltd had acquired Stanlow Refinery in 2011, which was struggling at that time. In the fiscal year 2015-16, the company recorded its highest-ever gross refining margin of $9.3 per barrel, increased from $8.3 per barrel during 2014-15. This led to push our net income to $244 million, a hike of around 249 percent, he added.

Nayyar further added that the positive numbers come in the wake of overall improvement in demand for petrol and the resultant hike in the output to 8.97 million tonnes from 8.54 million tonnes in 2014-15, an increase of 5 percent. The decline in crude prices resulted in a 34 percent fall in gross revenue at $4.99 billion from $7.61 billion during the year 2014-15.

He informed that the Stanlow Refinery meets 16 percent fuel demand of the UK, comprising 4.4 billion litre of diesel, 3 billion litre of petrol and 2 billion litre of ATF annually.

On capex, Nayyar said Essar has committed $137 million of investment for key improvements at major units at Stanlow, which will push further a reduction in crude prices and enhanced output across the product chain.