Incorporated in 1989, Nayara Energy Limited (formerly Essar Oil Ltd) is an Oil and Gas company engaged in refining and marketing. It owns and operates India’s second-largest single location, state of the art and one of the most modern and complex Refinery (at Vadinar, Gujarat) having a capacity of 20 Million Metric Tons Per Annum (MMTPA; equivalent to 140 million barrels) and high complexity of 11.8 which allows it to process any kind of crude.
It can process wide variety of crude oil ranging from ultra-heavy, high sulphur, sour crude (i.e. low
API) to low sulphur light crude (i.e. high API) and has the flexibility to achieve the product slate based on expected demand. The refinery processes more than 90% of heavy and ultra-heavy crude with API ranging from 15-60 API with an average API of 24. The company also owns a port and a captive power plant in Vadinar, Gujarat.
Refinery – The Refinery has an annual capacity of 20 million metric tonnes (MMT) or 405,000 barrels per day (bpd). It is capable of processing some of the toughest crudes and yet produce high quality Euro IV and Euro VI grade products. It can now produce high quality Bharat Stage (BS VI) compliant fuels that meet international standards.
Nayara Energy refinery is located at Vadinar, Gujarat, which is strategically located to cater the demand of domestic and export markets. The company operates a captive power plant within refinery premises which is equipped with oil, gas, liquid and coal fired boilers and turbines capable of generating a total of 1010 MWe of co-generative thermal power.
Nayara is present in entire hydrocarbon value chain from refining to marketing. And, now it is gearing up to deliver crude to chemicals too. It is the fastest growing pan-India fuel retail network.
The Vadinar refinery (in Gujarat) is India’s second largest single-site, state of the art refinery, which constitutes approximately 8% of India’s refining capacity.
Retail – Nayara also has a presence in retailing of oil with more than 5,750 operational retail outlets in various parts of India as on June 30, 2020. Furthermore, it plans to expand the number of operational retail outlets to 7,300 by December 2022.
The company is also building and hiring depots to store its own products for increasing supply chain efficiency, reducing logistic costs and its dependency on PSUs. Owing to outlets being operated primarily through Dealer Owned and Dealer Operated (DODO) model, the capex requirement of the company is minimal. The company has generated retail margin of around Rs.2,000 crore during FY20. Retail margin for Q1FY21 was healthy at around Rs.1,200 crore. The margins were higher as the retail prices in the country did not decline in proportion to the decline in crude prices. The margins have however bounced back to normal levels at present.
Nayara Energy Unlisted Shares Details
ISIN No – INE011A01019
Face Value – Rs 10 per equity share
Total Available Shares: 100-5000 (Min lot size 100 shares)
Nayara Energy Limited
Khambhalia Post, P O Box 24, District Devbhumi
Dwarka – 361 305,
Nayara Energy (Essar Oil) Unlisted / Delisted Shares Valuation
At current price of around Rs 200 per share, shares of Nayara Energy (Essar Oil) are available at market capitalisation of about Rs 29,800 crore.
Rosneft is the leader of Russia’s petroleum industry and one of the world’s largest public oil and gas companies in terms of reserves and production of the liquid hydrocarbons. Rosneft Oil Company is focused on exploration and appraisal of hydrocarbon fields, production of oil, gas and gas condensate, offshore field development projects, feedstock processing, sales of oil, gas and refined products in the territory of Russia and abroad. The Company is included in the list of Russia’s strategic companies.
Rosneft is the leader in the Russian oil refining sector, owning 13 major refineries in key regions of Russia and ownership stakes in a number of refineries outside Russia, as well as wide range of retail sites in 66 regions of Russia, Abkhazia, Belarus and Kirghizia.
Nayara’s refinery has one of the highest complexities across refineries in India, a Nelson Complexity Index (NCI) of 11.8. Due to high complexity of refinery, Nayara is easily able to process heavier grades of crude oil resulting in higher margins when compared with low complexity refineries. The company during past three years has processed around 64% of ultra-heavy, 30% of heavy and remaining light crude. The refinery has a capacity of 20 MMTPA which constitutes around 8% of India’s refining capacity. It can process crude oil with a blend of 15-60 API (API/American Petroleum Institute gravity is a measure of how heavy or light petroleum liquid is compared with water). Since its commencement, the refinery has consistently achieved a crude throughput more than its rated capacity of 20 MMT, except in the years where company had planned shutdown.
|Profit before tax||2,784||-1,819||978||1,054||978|
|EPS in Rs||8.73||0||3.82||4.5||16.43|
Nayara Energy Ltd consolidated Balance Sheet (Rs cr).
|Share Capital +||1,467||1,507||1,507||1,507||1,507|
|Other Liabilities +||37,760||42,457||36,019||37,255||45,437|
|Fixed Assets +||40,445||39,071||56,437||56,645||59,002|
|Other Assets +||41,517||46,961||15,972||17,391||16,386|
Nayara Energy Ltd consolidated Cash Flow Statement (Rs cr).
|Cash from Operating Activity||7,141||9,057||10,021||2,242||12,612|
|Cash from Investing Activity||-6,468||-1,517||971||326||-674|
|Cash from Financing Activity||-1,013||-5,923||-10,136||-4,494||-9,469|
|Net Cash Flow||-340||1,617||856||-1,926||2,469|
The financials consolidated are of Vadinar Oil Terminal Limited (VOTL), as VOTL is a captive port facility of Nayara and has significant operational linkages.
Liquidity – Nayara has strong liquidity with cash and cash equivalents of around Rs.4,000 crore as on March 31, 2020. In addition to this, the company also has undrawn working capital limits and Bill discounting limits, providing additional liquidity cushion. Nayara has availed moratorium on its debt facilities from banks. Nayara has debt repayment of around Rs.771 crore in FY21 which will be met through internal accruals. The company during FY21 expects to incur capex of around Rs.700 crore which is general capex and will be funded through internal accruals only. The Company as per the guidance received from its Board maintains sufficient liquidity in the form of cash balance and credit lines to withstand unexpected eventualities and navigate through the adverse liquidity environment.
Expansion – At the end of 2021, the company plans to have 7,300 fuel retail outlets, up from the present 5,344. This expansion will increase market share from 5% to 7%.
With this expansion, Nayara will retain its tag of the largest private fuel retailer in the country. Reliance Industries trails Nayara with around 1,372 fuel retail outlets followed by Shell which operates over 120 fuel retail stations in the country and has acquired land for another 150, which are under-construction. Shell plans to open 1,200 retail stations across India over the next ten years. RIL along with partner BP Plc plans to jointly set up 2,000 petrol pumps in India over the next few years.
Nayara is also investing $850 million to expand its Vadinar refinery to foray into the petrochemical business. In the first phase, the company plans to set up a 450,000-tonnes-per annum polypropylene plant. Polypropylene is used in applications, including packaging for consumer products, plastic parts for various industries including the automotive industry and textiles etc. The unit is targeted to be completed by 2022-end.
Besides the petrochemical unit, the company may also invest in adding capacity at the refinery to produce Euro-VI grade petrol and diesel as India is set to implement strict emission norms under Bharat Stage VI from April 1, 2020.
Nayara Energy Limited (formerly known as Essar Oil Limited) derives strengths from strong market position of its shareholders i.e. Rosneft Singapore Pte Limited, a subsidiary of Rosneft Oil Company and Kesani Enterprises Company Limited, a consortium comprising Trafigura and United Capital Partners (UCP) investment group, together having 49.13% shareholding each and their continuous support to Nayara
whether in sourcing of crude, offtake of products or in export prepayments.
The shareholders, both Rosneft and Trafigura have extended their support to Nayara for procurement of crude, exports of refined products. The shareholders have also supported in improving its capital structure by providing long and mid-term export prepayments backed by offtake contracts at optimal market cost. These prepayments have led to improvement in Nayara’s liquidity position and working capital.
Nayara’s flexibility in sourcing of crude, its strong operational profile being India’s second largest single location refinery, relatively higher Gross Refining Margins (GRMs) due to higher complexity of refinery, continuous 100% refinery throughput since commencement (except where company had planned shutdown) and strategic location of its refinery along with captive port terminal and power plant albeit a single asset facility.
Growth in retail operations as well as its inventory hedging policy negates the volatility in crude prices.
Nayara generates its revenue from both domestic sales as well as exports through servicing prepayment contracts and various tenders; this enables the company to offset lower demand in one of the markets. In addition, the company expects to reap benefits of IMO 2020 once the spread of COVID-19 recedes globally and the market stabilizes as the company has already started producing new products like HDD (high density diesel) to meet IMO requirements. The company has also started making BS-VI products for the domestic market and the effects for it are yet to be seen.