Nayara Energy Ltd Unlisted Shares

Are you looking to invest in a world-class energy company with a massive refining capacity, a pan-India retail network, and the backing of the world’s largest public oil company? Nayara Energy , formerly known as Essar Oil , is an integrated downstream oil company of international scale. After a landmark acquisition by Rosneft (Russia), Trafigura, and UCP Investment Group, the company has been renamed, restructured, and positioned for aggressive growth.

This is a rare opportunity to own a piece of India’s second-largest single-site refinery, a 5,700+ petrol pump network, and a strategic energy infrastructure asset.

Company Overview: The Essar Oil to Nayara Energy Transition

• Original Parent: Essar Group, Mumbai.

• The Deal (October 2016): Russia’s state-owned oil giant Rosneft (49.13%) along with Trafigura and UCP Investment Group (49.13%) acquired Essar Oil in a deal worth $12.9 billion.

• Rebranding: Renamed ‘Nayara Energy’ in May 2018 (“Naya” meaning New, “Era”).

• Delisting History: Essar Oil was delisted in 2015-16. The final delisted price was discovered at ₹262.80 per share through a reverse book-building process. Shareholders who tendered their shares received payments funded partly by a $330 million bridge loan from Russia’s VTB Bank.

What Does Nayara Energy Own?

1. Refinery: Operates the second-largest single-site refinery in India , located in Gujarat. It is a complex, world-class refinery capable of processing a variety of crude oils.

2. Retail Network: As of FY20, operated 5,702 fuel stations across India, with an aggressive plan to expand to 6,000 outlets.

3. Power Plant: A 1,000-MW power plant integrated with the refinery complex.

4. Port & Terminal: Owns and operates the Vadinar port and oil terminal, providing strategic infrastructure advantage for importing crude and exporting products.

Post-Acquisition Milestones:

The new management has swiftly moved to strengthen the company’s financial and operational foundation:

• 2018: Raised ₹2,400 Crore (US$ 355 million) through a placement of non-convertible debentures (NCDs).

• Credit Rating: Local credit rating upgraded by three notches to “AA” , reflecting improved financial health and stability.

• Debt Refinancing: Optimized the capital structure through strategic refinancing of INR debt.

Business Performance: FY19-20 Review

Retail Business (Petrol Pumps): Stellar Growth

• Volume Growth: Nayara’s retail volume grew by 18% YoY , compared to the industry average of just 1% . This demonstrates exceptional market share gains.

• Network Expansion: Added 574 new petrol pumps in FY20 alone, taking the total to 5,702 with a true pan-India presence.

Supply & Distribution: Strengthening the Backbone

• Coastal Terminals: Hired terminals at Mangalore and Ennore to ensure supply to Karnataka and Tamil Nadu.

• Inland Supply: Commenced supplies from Bina (MP) and Kanpur (UP) to improve local product availability.

• New Depots:

  • Commissioned the rail-fed Wardha depot (Maharashtra) in 2019.

  • Finalized another rail-fed smart automated depot in Pali (expected 2021).

• BS-VI Compliance: Completed the full conversion of its own locations to BS-VI grades in January 2020, well ahead of mandatory guidelines.

Institutional Business:

• Petcoke: Increased sales through right channeling in priority markets and expanded into new geographies like Odisha and Nepal .

• Sulphur: Recorded the highest-ever Sulphur sales since the refinery’s inception.

• Bitumen: Re-entered the Bitumen business after a brief hiatus.

Financial Performance: FY19-20

Key Investment Highlights:

1. World-Class Parentage: Backed by Rosneft (global oil major), Trafigura (global commodity trading leader), and UCP, bringing operational expertise, global linkages, and financial strength.

2. Strategic Assets: Owns India’s second-largest single-site refinery, a large retail network, a power plant, and a port – a vertically integrated model.

3. Retail Growth Outperformance: Growing retail volumes at 18% vs industry 1% shows strong brand acceptance and execution capability.

4. Financial Discipline: Significant debt reduction (39% in one year) and improved working capital management (receivables down 66%).

5. Massive Cash Flow: Generated ₹12,612 Cr from operations, highlighting the underlying strength of the business.

6. Expansion Plans: Aiming to scale retail network to 6,000+ outlets, capturing a larger share of India’s growing fuel consumption.

7. Strategic Infrastructure: Refinery located near ports provides logistical cost advantage.

Risks to Consider:

1. Regulatory Risk: The oil & gas sector is heavily regulated, with government control over pricing and policies.

2. Global Commodity Cycles: Refining margins (GRM) are volatile and directly impact profitability.

3. Geopolitical Risk: Majority foreign ownership (Russian) could be subject to international sanctions or geopolitical tensions.

4. Competition: Faces intense competition from PSU giants (IOC, BPCL, HPCL) and other private players (Reliance, Shell).

5. Forex Risk: Crude oil is imported, making the company susceptible to rupee-dollar fluctuations.

The Opportunity:

Nayara Energy (formerly Essar Oil) offers a unique blend of strategic Indian assets with global ownership and expertise. The company has demonstrated operational outperformance in retail, strong financial discipline in reducing debt, and massive cash generation. For investors seeking exposure to India’s energy story with a global flavor, Nayara Energy is a compelling opportunity.

Ready to Own a Piece of India’s Energy Infrastructure?

Buy Unlisted Shares of Nayara Energy (Essar Oil) exclusively through Unlisted Network.

Invest in a refinery giant backed by Rosneft and Trafigura.