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Essar Energy - India (ESSR)     

HARRYCAT - 23 Jul 2010 14:56


July 2010 - Market Cap of £6bn ; Founded in 1969.
Floated on the LSE in May 2010
Indian parent Company Essar Group comprising Essar Oil & Gas, Essar Power.
Specialising in power generation & oil & gas operations in India

HARRYCAT - 18 Jan 2012 14:30 - 22 of 101

Morgan Stanley note:
Yesterday’s court ruling in India could see Essar having to pay up to £650m in tax to the Gujarat state government, which ultimately could lead to default of loans at Essar Oil. This could lead to further defaults for the convertible bond and Stanlow working capital facility. Essar is looking to appeal the Supreme Court’s decision.

What has happened? Essar Oil, a subsidiary 87% owned by Essar Energy, received a negative ruling from the Supreme Court of India yesterday. This relates to a tax benefit for Essar Oil at its refinery facility (Vadinar) in the state of Gujarat. In the 1990s, to encourage investment in the state, Gujarat allowed certain tax holidays. Essar initially started building its refinery in the 1990s, but due to a severe cyclone, this disrupted building, and consequently it was not completed until 2008. The company went to the state high court to be allowed to receive the tax benefit, as it argued that the delay was outside of its control. It was granted this benefit. This decision to reverse at the Supreme Court repeals the state’s high court decision.

What is the tax benefit? Essar Oil is allowed to collect sales tax on goods sold, and does not have to pay this back to the state of Gujarat until 2021 (or until it exhausts its limit, which is Rs91bn).

Can Essar appeal? It believes it can put in a review petition to get the judgment reviewed again. This could take up to three months to get a decision.

How quickly will the tax have to be paid? This is unclear, but could be important. Under the current terms of repayment, the tax should be paid back in six equal annual instalments. The judgment from the Supreme Court is unclear on whether this holds, or whether an immediate payment will be required.

Is Essar Oil in default? Technically yes, but Essar had been negotiating with lenders to reorganize the structure and remove the sales tax issue as a covenant. We expect the lenders to wait to see the outcome from the legal process before taking further action.

dreamcatcher - 18 Jan 2012 17:04 - 23 of 101

Essar Energy is bouncing back after yesterday's sell-off, which was sparked by an Indian tax ruling. Essar Oil , the Essar subsidiary hit by the ruling, is examining all legal options and expects to file a review petition in the Supreme Court within the next 30 days.

dreamcatcher - 19 Jan 2012 19:38 - 24 of 101

. The oil refiner’s shares crashed earlier this week after an Indian court ruled the company can no longer benefit from a tax referral scheme. Having since recovered some of those losses, Essar slid 16.2 to a new low of 120p as Goldman Sachs (NYSE: GS - news) cut its price target to 190p from 280p.

“We believe the company’s growth story with a top quality refining asset, attractive exploration and production opportunities in India and large power plants about to be delivered remains attractive,” said analysts. “However, the Supreme Court verdict puts pressure on the company’s liquidity position.”

Analysts at JP Morgan Cazenove one of the banks that brought Essar to market in 2010 were also considering the impact from the ruling. If the sales tax deferral benefit is removed, they estimated that could cut their earnings-per-share estimate for 2011-12 by 44pc to 45pc, but they nonetheless held onto their “overweight” rating.

aldwickk - 20 Jan 2012 09:42 - 25 of 101

Bought a few @116.20 , this morning

aldwickk - 20 Jan 2012 11:18 - 26 of 101

If Indian law is anything like how's , which I think it is, then they could drag this out though the court's and the payment would be put on hold until a final decision is made . And this would give them time to renegotiate the payment or some other way to settle it.

midknight - 20 Jan 2012 11:34 - 27 of 101

Yes, aldwickk, but the drawback for investors is apparent.
Look at what happened to VED, in part due to the
interference or procrastination of those who are supposed
to make us believe that the system has become less bureaucratic!

aldwickk - 23 Jan 2012 14:55 - 28 of 101

I bought at 116 and sold out @ 123 for a daytrade , EK [Simon C ] did the same for a 10p profit

dreamcatcher - 23 Jan 2012 17:05 - 29 of 101

LONDON (ShareCast) - The share price of India-focused integrated energy company Essar Energy (Dusseldorf: 11224817.DU - news) increased by over a tenth on Monday afternoon after the firm increased its best estimate contingent resources at the Raniganj coal bed methane exploration block. Total (Other OTC: TTFNF.PK - news) proven and probable reserves at the block came in at 113bn cubic feet (bcf) gross, or 18.8m barrels of oil equivalent (mmboe). As such, best estimate contingent resources are now 445 bcf gross, or 74.1mmboe, compared with the previous evaluation, carried out in December 2009, which showed 201bcf gross, or 34mmboe

midknight - 15 Feb 2012 13:00 - 30 of 101

Morgan Stanley has upgraded ESSR from underweight
to equal-weight and raised the target price from 160p
to 230p.

HARRYCAT - 15 Feb 2012 14:09 - 31 of 101

Trading statement on the 27th Feb. Can't decide if this is the bottom or not.

aldwickk - 15 Feb 2012 14:18 - 32 of 101

Bought back in @128.6

HARRYCAT - 16 Feb 2012 08:54 - 33 of 101

Essar Oil files Review Petition with Supreme Court of India
16th February, 2012: Essar Energy plc's [LSE: ESSR] subsidiary Essar Oil Limited today announced that it has today filed a review petition in the Supreme Court seeking a review of the apex court's decision relating to repayment of deferred sales tax. On 17th January, 2012, the Supreme Court had set aside a Gujarat High Court judgement permitting Essar Oil to claim a sales tax deferral benefit from the Gujarat Government.

The Gujarat High Court in an earlier order had extended time to Essar Oil for commencing commercial production from the Vadinar Refinery, thus allowing the Company to benefit from the Gujarat state's Capital Investment Incentive to Premier/Prestigious Unit Scheme, 1995-2000.

HARRYCAT - 16 Feb 2012 14:07 - 34 of 101

Morgan Stanley note:
"ESSR shares price in tough outcomes for both Oil and Power. However, near-term newsflow could be negative for both, and coal supply concerns could still be the next big issue. We upgrade to EW but still see some downside to the shares near term.
We expect Essar to submit a review petition to the Supreme Court within the 30 day time limit following the adverse sales tax ruling of 17 January. Whilst we expect the original decision to be upheld, if the review is granted, a final decision could take a further 60 days. This is the first step in the process of resolving the sales tax issue. We look for further clarity on the potential timeline for repayment of benefit to date to the Gujarat government as well as intentions of lenders at Essar Oil. A final negative Supreme Court judgement could lead to an event of default, under the current terms of agreement for the lenders at Essar Oil – this could lead them to convert debt to equity at Essar Oil. Whilst we expect a restructuring of the existing debt rather than a conversion to equity, there remains the risk of severe dilution of Essar Energy’s 87% stake in Essar Oil.
And we still need clarity on coal: The 1200MW Mahan power station is expected on line by end March 2012. Without the use of its captive coal block, there is still uncertainty as to where coal for the station will come from. Full-year results on 27 February may not provide the answer, leading to more disappointment – it could even signal a further delay for the start-up at Mahan.
We set our price target at 160p, as we weight it 50% bear case 50% base case to reflect the near term risks. The shares price in no value from Mahan and Tori, as well we 50% chance of full dilution at Essar Oil. We would turn more positive if the shares headed closer to our bear case."

aldwickk - 16 Feb 2012 15:23 - 35 of 101

Now they tell me , Bought back in @128.6 yesterday

HARRYCAT - 17 Feb 2012 14:47 - 36 of 101
Essar Oil, a subsidiary of Essar Energy (LON:ESSR) has reported revenues of 13,897 crore in the quarter ended 31st December 2011, compared to Rs 13,809 crore in Q3 FY 2010-11.

The quarterly EBITDA was at Rs 490 crore compared to Rs 827 crore in the corresponding period last fiscal.

The Company registered a net loss of Rs 3,986 crore in Q3 FY 2011-12, on account of an exceptional debit of Rs 4,015 crore towards reversal of sales tax deferral income accounted during May 2008 to December 2011 pending decision on its review petition in the Supreme Court, compared to net profit of Rs 273 crore in Q3 of the last fiscal.

The Current Price Gross Refinery Margin (see Appendix for explanation of CP GRM) for the Refinery business in Q3 FY 2011-12 was US$ 6.07 per barrel, compared to US$ 7.21 per barrel in Q3 FY 2010-11.

Nine month ended performance: Revenues for nine months ended 31st December 2011 was Rs 44,180 crore, compared to Rs 38,273 crore for the nine months ended 31st December 2010.

CP GRM For the nine months ended 31st December 2011, it was US$ 6.94/bbl compared to US$ 6.50/bbl for the nine months ended 31st December 2010.

EBITDA for the nine months ended 31st December 2011 stood at Rs 1,662 crore, as against Rs 1,868 crore for the nine months ended 31st December 2010.

LK Gupta, EOL's CEO & Managing Director, said: "Our single-minded focus is on completing the Phase I expansion and optimisation projects at the Vadinar refinery by by March 2012 and September 2012, respectively. This will unlock substantial value for our shareholders by way of improved GRMs, higher EBITDA and better cash flows."

HARRYCAT - 27 Feb 2012 10:02 - 37 of 101
Essar Energy's full year results were hit by a court ruling on a sales tax deferment scheme.

The company's pre-tax profits including sales tax benefit but before its subsequent reversal were $89.2m for the year to the end of December - 76% down on last time.

But the company posts a pre-tax loss of $881.1m for the year compared with a profit of $365.5m a year ago.

Earnings before interest, tax, depreciation and amortisation - including sales tax benefit but before its subsequent reversal and before foreign exchange impact - rose by 14% to $813.1m.

Chief executive Naresh Nayyar: "We were clearly disappointed that the Supreme Court of India set aside an earlier decision of the High Court of Gujarat which enabled us to benefit from a sales tax deferment scheme. We are seeking a review of this decision. We are also in discussions with the government of Gujarat with regard to a suitable repayment schedule. Simultaneously we are taking steps to ensure that the group has sufficient access to sources of funding and liquidity."

"In the Indian power sector, we are very pleased with the intervention of the Indian Prime Minister and encouraged by the recent steps being taken by government to address the key issues facing the sector in a time bound manner. "

"Despite this, given the delays we have experienced in securing consents required for our power project delivery, including clearances to source the domestic coal required to fuel the plants, we are refocusing our portfolio to concentrate on those projects where we can achieve best value for shareholders and deploy capital most efficiently."

"We are therefore making some tough decisions, with construction of three later stage coal-fired power projects to progress only against regulatory and coal mine milestones."

"In our projects, we have made excellent progress with the Vadinar refinery expansions and are close to completing a number of our major power projects totalling 2,910MW. "

"With this our current phase of expansion programme comes to an end; and as a result there would be a significant reduction in our capital expenditure over the next two years."

aldwickk - 27 Feb 2012 18:39 - 38 of 101

The sales tax deferment scheme will be settled to ESSAR's advantage , the Indian government won't let it break-up this company.

cynic - 27 Feb 2012 20:02 - 39 of 101

does that plea mean that you hold these?

aldwickk - 27 Feb 2012 21:36 - 40 of 101

How deceptive of you .... or maybe because am posting on the ESSAR thread, lol

cynic - 27 Feb 2012 21:50 - 41 of 101

cut and run would be my advice
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