| News Room |
| Essar
Oil to unveil new brand for retail products. |
| Business
Line - April 27, 2004 |
Amit
Mitra, N.K. Kurup |
|
The coming months will see the Rs 17,000-crore Essar Group stepping on the gas to expand its network for retail trading of petroleum products. The company's focus in this sector is, at present, on developing a distinct brand for Essar Oil, which will be unveiled soon.
While ruling out any immediate plans to enter into new businesses, Mr Prashant Ruia, Director of the Essar Group, said, "We see a lot of growth opportunities in our existing businesses. After consolidating our businesses, the company is now on a growth phase."
In an exclusive interview with Business Line, he shares the company's plans and prospects. Excerpts: |
| Could you tell us something about the progress made by Essar Oil in entering retail trading of petroleum products? |
| Our oil retail network
programme is progressing as per plan. We expect to set
up 2,000 retail outlets across the country during the next
two years - till date we have commissioned 30 retail outlets
in Maharashtra, Gujarat and Punjab. Our entire retail network
will be set up by the time our refinery becomes operational.
We have adopted a franchisee model for developing the retail
network - we will provide product and marketing support
to the franchisees, apart from assuring them of a minimum
return on their investments. At present, we are working
on developing a brand for Essar Oil, which will be unveiled
soon. |
| Your plans to enter the refining sector had faced some delays in the past. Could you tell us about your new schedules in this regard? |
Actually, when the refinery sector was decontrolled, we were the first private sector company to put everything in place and start construction. Unfortunately, starting with a cyclone, a series of adverse events had delayed the project, including financial issues. However, all obstacles have now been removed, including funding.
We plan to complete the refinery project in the next 18 to 24 months. In fact,
we have utilised the delays to integrate the upgraded technologies to produce
Euro II/III compliant fuel. |
| How are you placed to take advantage of the improvement in the steel industry? |
| In fact, during the downturn
in the steel industry, Essar Steel had taken steps to improve
the performance - all these efforts have started paying
off. The production capacity was raised to 2.4 mmtpa (million
metric tones per annum) and our financial restructuring
was completed. Similarly, our debt has come down to Rs
4,100 crore from Rs 6,000 crore and interest liability
to Rs 450 crore from Rs 650 crore. Our efforts now are
towards bringing down the interest cost further and various
options including re-financing of debt are being considered.
More than 40 per cent of the production is in the value-added
segment. |
| The shipping industry is booming. How did your company cash in on the boom? |
| Today, Essar Shipping
has a young fleet of 30 vessels with a combined DWT of
1.6 million. Over 70 per cent of its revenue is generated
through international operations. Now, the company is shifting
focus to become a sea logistics service provider, rather
than being a mere ship owner-operator. Essar Shipping has
been generating revenue of over $100 million in the last
three years. |
| Being in the race for a majority stake in Shipping Corporation of India (SCI), has the delay in the disinvestment of the State-owned company upset your plans in the shipping sector? |
| No. We have always had
an alternative plan in place. We had kept our option open
for organic growth, or growth through acquisition. As you
are aware, we have recently bought India's first double-hull
bottomed VLCC (Very Large Crude Carrier) of 3.01 lakh DWT
for $80 million. This is the largest vessel to be owned
by an Indian company. |
| What are the new business areas that your company is exploring? |
| We have no immediate plans
to get into new businesses. We are now exploring the possibility
of setting up a 1,200-MW power plant at Jamnagar, based
on residue from the refinery as fuel. Besides, we are also
planning to increase our steel making capacity from the
present 2.4 mmtpa through technological improvements. |
| What are your plans in
the telecom sector? There have been reports that Hutchison
is proposing a public offering. How will this impact your
association with the foreign partner? |
| There will not be any impact on our holdings, except that our holding in percentage terms may come down proportionately depending on the size of the (public) offering. |
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