With the surge in the price of oil from 1st April, has resulted Essar Oil to lost more market share, vis-a-vis the public sector Oil Marketing Companies (OMCs).

Currently, the Essar Oil has 1,339 operation fuel outlets in India.

Last week, the price of crude oil has touched an 18-month high of more than $87 per barrel.

The price increase of Rs. 1.50-2 per litre was to partially pass on the impact of the rising price. However, the price at which public sector OMCs sell petrol and diesel to retail consumers is capped by the government order, their underrecoveries are compensated by government in the form of government bonds and discounts from producers.

However, Private firms like - Essar and Reliance, enjoy no such privilege.

Mr. S Thangapandian, CEO (marketing) of Essar Oil said prices have been adjusted effective from 1st April, mainly due to the hike in crude prices. The new price differs from state to state. In Gujarat, the prices are at par with public sector OMC levels. In other states, the prices vary from Re. 1 - Rs. 3.50 per litre more than OMC prices for petrol, and from Rs. 0.50 - Rs. 3 per litre more for diesel.

The price difference between Essar Oil and those of the OMCs has caused the company to lose more than 40 % of its volume to the latter - Indian Oil, Bharat Petroleum and Hindustan Petroleum.

An Indian Oil official said even after the hike in prices, Essar Oil faces an underrecovery of around Re. 1 on every litre of petrol and diesel it sells. If the same trend continues, the pricing will have to be fully linked to crude prices.

However, Industry sources said Reliance Industries Ltd. (RIL) which had re-opened 600 odd of its earlier total of 1,430 outlets are primarily selling diesel at OMC prices, though some also sell petrol at a premium of Rs. 2.50 per litre.

Both Essar Oil and RIL were forced to shut their retail operations in early 2008, when crude oil prices reached a high of $147 per barrel. Besides, Essar Oil had reopened all its outlets, after the prices of crude prices had softened in early 2009.

While, RIL had moved cautiously and restored operations at only a little over 600 outlets, mostly in western and southern states. For setting up these outlets, RIL had invested Rs. 5,000 crore in these outlets.

The three government-owned OMCs currently lose Rs. 6.50 on every litre of petrol and Rs. 5.50 on every litre of diesel.

Essar Oil has no plans to shut its outlets, despite the mounting loss that has emerged. In contrast, it plans to expand the number from 1,339 to 1,700 by the end of the current financial year (2010-11).

As suggested by the Kirit Parikh committee, the private retailers are expecting that the government would soon free the prices of petrol and diesel, to bring in a level field between them and state-owned retailers.

Essar Oil is currently trading at Rs.150.4, down by 0.46% at 10.03 AM.

The stock hit an intraday high of Rs.152 till now, as against the 52-week high of Rs.194.The stock hit a low of Rs.149.3 during the day. The stock had hit a 52-week low of Rs.117 on July 13, 2009.

The stock opens at Rs.151 at BSE. The total traded volume of the scrip on BSE till now stood at 384586.

Meanwhile today, the BSE Sensex is trading down by -79.62 points, or -0.44% , at 17853.52 on 10:03 AM.

The NSE Nifty is trading down by -26.30 points, or -0.49% , at 5335.45.

Essar Oil has an equity capital of Rs 1,202.00 crore as of 2009 Dec. The face value per share is Rs 10. At the current price of Rs 150.4, the P/E multiple stood at 0 with book Value of 28.91 and P/BV at 5.20.

The total shareholding pattern of the company as on Dec 2009 stood at Promoters- 18.14%, Institutional Investors- 4.37%, General Public- 5.31% and other investors- 72.18%.

Considering the current price of Rs. 150.4 at 10:03:00 AM , the stock had outperformed the market over the past one month till 12/04/2010 surged 8.99% as compared to the Sensex's return of 4.01% and NSE Nifty's 4.01 % returns.

Considering the current price of Rs. 150.4 at 10:03:00 AM , the stock had underperformed the market over the past one quarter till 12/04/2010 surged -1.83% as compared to the Sensex's return of 1.96% and NSE Nifty's 1.96 % returns.

Eanwhile, Essar Oil plans to lay a 160-km pipeline from Durgapur to Kolkata in order to transport gas from its CBM blocks to consumers in West Bengal.

Essar Oil has applied to the sectoral regulator, Petroleum and Natural Gas Regulatory Board (PNGRB) in order to allow to lay a 24-inch pipeline from Durgapur, as per the company's January 13 application to the regulator.

The company is likely to commence the production of gas found below coal seams, called Coal Bed Methane (CBM), from its Raniganj block in West Bengal this quarter.

The initial output is likely in the range of 9,000-10,000 cubic meters per day with peak production of 3.5 million standard cubic meters envisaged in mid-2013.