Nayara Energy is a new-age downstream oil company of international scale based in Mumbai, India encompassing refining, marketing, production and powering India’s growing energy demand by expanding the retail footprint with a current network of over 6000+ retail fuel outlets in the country.

Nayara Energy owns India’s second-largest single-site, state-of-the-art refinery and
one of the most modern and complex refineries in the country-The Vadinar refinery (in Gujarat). It provides proximity to the Middle East and Africa in businesses across the hydrocarbon value chain from refining to retail, thereby facilitating access to high consumption worldwide.

The link between international oil prices and profitability in Nayara Energy –

• The Company imports crude oil as raw material. These costs of raw materials are linked to international prices, exposing the Company to price risk.
  Commodity Risk Hedging-The Company uses derivatives instruments to hedge the price risk of the forecasted transactions and seeks to reduce the impact of market volatility in oil prices on the Company’s profitability.

•  The downstream company has a lower Gross Refinery Margin when oil and natural gas prices are higher since they need to purchase these raw materials at higher rates and sell their finished refined products at a declining margin, enabling it to cash in on lower prices, The Company needs to absorb these higher raw material costs which they are unable to pass through to the customers.
  Rosneft Group and Trafigura Group under their respective contracts with the Company make the first offer for both sale of raw material and purchase of finished products where the transactions are executed without calling for comparative quotations and the Company can get a better offer helping them strategise the crude procurement and sale of finished products.

• The Company imports crude oil as raw material and undertakes these transactions majorly denominated in USD/EURO. This exposes the Company to currency risk that could arise due to depreciation of INR against USD/EURO.
  Currency Risk Management-The Company enters into foreign exchange forwards and option contracts to hedge this risk, limiting the negative impact on profit to a 5% increase in foreign currency rate.

Nayara Energy is proud and confident of making significant strides in its growth strategy.