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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 - 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

aldwickk - 28 Feb 2012 08:19 - 42 of 101

Buy would be my advice ..... but not to many

cynic - 28 Feb 2012 08:23 - 43 of 101

you'll get lacerated hands

aldwickk - 28 Feb 2012 09:44 - 45 of 101

India-based resources firm Essar Energy continued to slide, the biggest blue chip casualty of the day with a fall of 3.5p at 104.1p. Goldman Sachs today downgraded Essar from buy to neutral and slashed its target price from 190p to 134p.

HARRYCAT - 28 Feb 2012 10:07 - 46 of 101

Deutsche summary note:
FY results reflect challenges on funding position, project execution, and fuel sourcing. We reduce our target price to 250p/share and retain a HOLD recommendation. Reflecting its tight position in terms of capital, Essar suggested it may not contribute in an Essar Oil capital raising and may reduce its ambition around power projects. Although there have been some positive signs on government attempts to resolve issues on fuel sourcing, there remains a high degree of uncertainty in the short-term.
Essar reported numbers slightly behind expectations with current price adjusted EBITDA of $624.8m (DB forecast $678m, last year $696.5m). Essar said that it may not participate in any Essar Oil capital raising, and may reduce its ambitions in power to reflect limited capital flexibility, and problems around finalizing approvals for some projects. Although these tough decisions should provide more headroom for the group, and make refinancing attempts for Essar Oil and Energy easier, we have updated our valuation to reflect potential value loss from these decisions.

hlyeo98 - 03 Mar 2012 13:48 - 47 of 101

Capital concerns for Essar Energy

The share price of Essar Energy dipped once more after it was revealed that a faltering rupee and a legal reversal by India's Supreme Court had combined to scupper full-year headline figures for the India-focused refiner and power generator.

Essar's profits were hit by a net charge of $656m (£413m) after the Indian court ruled against it over a matter relating to deferred state sales tax. Essar is seeking a judicial review of the decision, but a provision of $1.14bn was included in the balance sheet to reflect the potential liability to the state of Gujarat. Essar also suffered from the rapid weakening in the rupee last year, prompting a $303m foreign-exchange loss.

Even if you exclude these factors, Essar's cash profits of $625m (£394m) still came up short of consensus estimates, and were 10 per cent down year on year. A positive note was provided by a one-fifth hike in Essar'’s Indian refining and marketing revenues, while the key Vadinar refinery expansion remains on target.

The Gujarat decision, together with a 60 per cent rise in underlying net debt to $5.7bn, has prompted Essar to review its capital commitments. It has already reassessed three power projects – Salaya 2 & 3 and Neptune 1 – while giving notice that it may not participate in a proposed capital raising by its subsidiary Essar Oil.

aldwickk - 04 Mar 2012 08:50 - 48 of 101

Telegrapgh extract :

The average price target of the seven City analysts monitored by Bloomberg is 217p – almost double the current share price.

Should the regulatory issues in India, relating to forest clearing, be resolved and a new share issue at India-listed subsidiary Essar Oil, go well, then there is plenty of upside.

However, the Indian situation could drag on for some time, so it is one to avoid until the situation becomes clearer. However, bold investors may wish to have a small holding in the speculative part of their portfolio.

cynic - 04 Mar 2012 09:57 - 49 of 101

not if you have any sense!
have you ever tried getting something even heard in the indian courts?

midknight - 04 Mar 2012 11:42 - 50 of 101

Telegraph/Questor link for full article:

aldwickk - 04 Mar 2012 15:35 - 51 of 101

Quester v seven City analysts ...... and the winner is ?

Cynic i think Essar would carry more clout in Indian courts then you would , lol

cynic - 04 Mar 2012 16:52 - 52 of 101

all one can say about indian courts - which thankfully i have never had to explore - is that they will be (marginally) less corrupt that the pakistani courts

HARRYCAT - 13 Mar 2012 10:49 - 53 of 101
Essar Oil has successfully commissioned the diesel hydrotreater unit 1 (DHDT-1) as part of the phase I expansion at its Vadinar refinery in India.

Essdar Energy - which own 87.1% of Essar Oil - says this leaves just three units remaining to be commissioned as part of the Vadinar expansion, which is firmly on track to be completed by the end of this month. The phase I expansion involves the addition of nine new units altogether.

These will expand the refinery's capacity to 18 million metric tonnes per annum (or 375,000 barrels per day) and will enhance the refinery's complexity to 11.8 from 6.1 currently. With this commissioning, Essar Oil's capital expenditure programme is beginning to taper downwards.

The refinery expansion will deliver a substantial pick-up in revenues and profitability of the company going forward.

aldwickk - 19 Mar 2012 18:28 - 54 of 101

Woozle1 - 19 Mar'12 - 17:31 - 638 of 640

This is worth potentially a lot more than 150. It's forecast to do earnings next year of 25-30p, as three power stations will be substantially completed during H1 2012 and that 2013 will see the full year benefit of this capex. Management have said that the capex will be scaled back until they get approvals for the coal mining operations (and in the meantime they aren't paying duties on imported fuels) and which means the free cash yield on the shares should increase substantially. Applying a p/e of 15, once investors have bought back into the Indian power story, values the business between 375 and 450.

cynic - 19 Mar 2012 21:00 - 55 of 101

so a realistic p/e of say 5 indicates an sp of 125/150 assuming full valuation

aldwickk - 22 Mar 2012 07:47 - 56 of 101

Essar Energy (ESSR) announced that as part of its 1.8 billion dollar (1.1 billion pound) Phase I expansion plan it has commissioned its new sulphur recovery and vacuum gasoil hydrotreating units at its Vadinar refinery in India. The project will increase capacity at the plant to 375,000 barrels per day, and the only part left to complete is the delayed coker unit, which it expects to come online in a matter of days. Essar shares crept up 0.4p to 149.3p.
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