About Nayara Energy (Formerly Essar Oil) Limited Unlisted Shares

History of Essar Oil

Essar Oil was part of the Mumbai-based Essar Group before it was acquired by Russian company Rosneft. Essar Oil owns private gas stations and operates the second largest refinery in the Indian state of Gujarat, a 1000MW power plant, and the Vadinar port and oil terminal. In October 2016, Russian state oil company Rosneft, together with Russian investment fund United Capital Partners, acquired a 49% stake in Essar Oil for $12.9 billion. Other investors include Trafigura and UCP Investment Group. In May 2018, the company changed its name to "Nayara", a combination of "Naya" (new) and "era" (era). Following Rosneft's acquisition of 49.13% of the shares, followed by Trafigura and UCP Investment Group acquiring 49.13% each, Essar Oil's new owners want to expand its network of gas stations in India from the current 3,500 to 6,000.

Delisting of Essar Oil

Essar Oil was delisted in 2015-16 and the final delisting price of Essar Oil was determined through a reverse bookbuilding process at *262.80. To complete the process, Essar Oil paid Rs 3,745 crore to shareholders who tendered their shares. The company received a bridge loan of $330 million from Russia's VTB Bank to fund the payment.

About Nayara Energy (formerly Essar Oil)

Nayara Energy (formerly Essar Oil) is an integrated downstream oil company with global scale, spanning the entire hydrocarbon value chain from refining to production and marketing across all segments, including retail. In 2016, Essar Oil was acquired by an investment consortium led by Rosneft, the world's largest publicly traded oil and gas company by liquid hydrocarbon production and reserves, and global commodity trading company Trafigura and UCP Investment Group. Essar Oil has now been renamed Nayara Energy.

Post-acquisition milestones:

1. After the new management was installed, the company was able to raise INR 240 billion (approximately USD 355 million) through a warrant bond issuance in 2018.

2. Local credit rating1 upgraded by three notches to "AA"

3. Refinancing INR debt to optimise capital structure.

Retail Business Developments FY19- 20

1. The retail sector continued to perform well in FY20. Volume growth YoY was 18% compared to the overall industry growth of 1% YoY.

2. 574 new gas stations were added this year. Nayara Energy opened 574 new gas stations in the previous fiscal and had 5,702 gas stations as at the end of FY20, with a pan-India presence.

Supply and Distribution

1. The Company continues to focus on improving its domestic supply infrastructure and has leased coastal terminals in Mangalore and Ennore to ensure supply to Karnataka and Tamil Nadu.

2. Moreover, to improve the availability of local products in Madhya Pradesh and Uttar Pradesh, supplies have been started from food courts in Bina and Kanpur respectively.

3. The company's rail-based warehouse at Wardha, which became operational in 2019, uniquely caters to the product requirements of Nayara Energy's retail outlets as well as other oil companies in and around the Vidarbha region of Maharashtra. The company is completing another rail-based smart automated depot at Pali, which is expected to be completed by 2021.

4. Nayara Energy fully converted its facilities to BSVI class in January 2020, ahead of the mandatory guidelines.

Corporate Business

1. Petcoke sales increased due to proper channel expansion in priority markets. The company has also opened new supply areas for Petcoke in Odisha and Nepal.

2. The company recorded its highest-ever sulfur sales in the year since the refinery opened and has re-entered the bitumen business it withdrew from last year.

Financial performance for the year 2019-20

1. Operating profit for the year ended 31 March 2020 was £1,006,410,000, which increased compared to operating profit of £1,003,130,000 for the year ended 31 March 2019.

2. Total refining margin at current prices (CP GRM) decreased to US$5.88/bbl for the year 2019-20 compared to US$6.97/bbl for the year 2018-19.

3. Total liabilities have reduced to Rs 10,757 crore from Rs 17,566 crore in FY19.

4. D/E is 0.55 times.

5. Accounts receivable also reduced to Rs 12,700 crore from Rs 3,689 crore. This enabled Nayara Energy to achieve an operating cash flow of 12,612 million.

Fundamentals