Member Info for Bhajanbuffett

It is a Buy, a result which Essar oil wants http://www.moneycontrol.com/news/business/sc-asks-essar-oil-to-pay-tax-dues8-emis-to-guj-gov_757441.html

Court result came out after the drop to 109.3 from 115

Court dismissed interest from 2008, instead in favour for Essar to pay interest from Jan 2012

The Supreme Court (SC) has asked Essar Oil to pay Rs 5,200 crore tax dues in eight tranches to Gujarat government. The company had earlier requested the apex court for a provision to pay in installments. However, the SC has also directed Essar to pay 10% interest on dues from January 2012. Last month, Essar had sought five years time from the Supreme Court to pay sales taxes to Gujarat government. However, the Gujarat government wanted Essar to pay tax dues in six months. The reason Essar Oil has requested an installment-based payment scheme is because the company embarked on a major capital expansion scheme since the sales tax scheme mandated 50 % of the collected amount to be re-invested. Hence, it is not possible to make the payment in a single installment as demanded by the State Government. Essar Oil has Rs 6,300 crore sales tax liability toward Gujarat government The case dates back to 2008 when the Congress party charged the Narendra Modi government for giving a tax benefit of 125% to Essar Oil under a New Capital Incentive Policy Scheme of the state which was operational in the 1995-2000 period That time the ruling government replied saying the company was setting up an integrated greenfield refinery at a cost of Rs 55.44 billion with facilities to process crude of about 9 million MTPA (metric tones per annum) and hence it would benefit the state as well. However, this explanation did not augur well with the Congress party which alleged that the state exchequer was losing around Rs 10,000 crore if this tax exemption continued. Following this controversy, the case reached the Gujarat High Court and Essar won the case in the Gujarat high court in April 2008. But, the state government's industries department appealed against the decision in the Supreme Court.

CB&I’s Lummus Technology business unit successfully commissioned the delayed coking unit (DCU) for Essar Oil’s Vadinar refinery expansion project in Gujarat, India, the companies said on Friday. The Vadinar refinery increased its capacity to 20 million tpy or 405,000 bpd, up from 10.5 million tpy and 200,000 bpd previously. http://www.hydrocarbonprocessing.com/Article/3086350/Latest-News/CB-I-commissions-delayed-coking-unit-on-Essar-Oil-refinery-expansion-in-India.html I can see this share hitting beyond £1.80 within 6 months. Essar Energy's high debt is due to capital expenditure and this is normal for this kind of industry. Recent Sales Tax issue has to be put into context, we had to pay back the Sales Tax in some point in the future as it is a loan from the state government for further investment in the state which Essar did, but not within a specified period therefore instead of paying in 2021 we had to as per the Supreme Court Decision. So the actual losses in real terms is the interest we have to pay by borrowing for 9 years, if we have to pay in one lump sum. Nevertheless, the sales tax were used in the capital expenditure for expansion. By coming out of the CDR, Essar Oil could fund this payment cheaper by going to the international financial institution which I understood is almost in place. Yes, the company is fighting out in court to make payments in installment and reject the interest claimed by the Gujarat government as Essar won the case at Gujarat court in 2008 but was over turned by the Supreme Court earlier this year Q1 losses is again as I see it to be used in court to convince the Judge for payments to be made in installment, I let you make your own mind of what I mean. As for Essar Power is concern, regarding the coal allocation, it is all politics. Coal prices is very low at the moment, so it does not make sense to use your own coal, maybe for the future. What we will possibly lose will be compensated with growth and all the projects up and running. India is a growing country, they will need all the energy resources and a lot more, just as reminder of the recent power outage. We in the west with all doom and gloom in the papers are worried for slightest negative issue, In India. believe me they have got wealth, India is run by the private entities which are called India Inc and they are the Indian success story. Ignore the Indian politics. If you feel, there are certain points which needs to be corrected, please post, as this is my opinion.

I spotted that too.

I invest based on fundamentals, this is a cheap stock for medium and long term. What ever the dispute on the political front, India has a growing middle class which will need more fuel and electricity. Positive thing is revenue is showing growth.

If you can remember my post on 25th Aug regarding SP slide "To add, the recent comment by Pensions & Investment Research Consultants, a London-based group that lobbies for transparency in corporate governance on the removal of the Chairman also contribute to the slide of the SP but I feel this will be a long waited catalyst for the board to get their act together and ensure there is no conflict of interest between the Essar Group." With this out of the way, the concern of revolt is now quashed. SP moving upwards till the next news. Annual General Meeting 2012 Results September 4, 2012: Essar Energy plc [LSE: ESSR], the India-focused integrated energy company, today announced the results of the poll on the Resolutions at the Annual General Meeting held at Deutsche Bank, Winchester House, 1 Great Winchester Street, London EC2N 2DB at 11.00am on 4 September, 2012. All Resolutions were carried. The full text of each resolution is contained in the notice of Annual General Meeting, which is available on the Company's website www.essarenergy.com

I mean in terms of volume.

Can't see price dropping much lower, fewer sellers than buyers and short trader does so at their peril. Remembered the bounce from £1.15 to £1.52 in just matter of hours end of May.

Have a strong feeling the Gujarat Government and Essar Oil will compromise on this issue as directed by the Supreme Court, I was afraid the court would have favoured the Gujarat Government on immediate payment within 6 months. Pheeewwwwww

Politics is in play here regarding the Coal allocation, the same policy of coal allocation was also performed by the opposition. As I understand Jalaram is bitter with his experienced with Essar steel, so I do understand his negativity and do take his comments with a pinch of salt but welcome. The SP have been dropping on concern of the payment and interest on the sales tax and the recent Q1 results disappointment to short term investors but RobertW had just posted an encouraging news indeed

The issue of the telecom 2G license is different from Coal allocation, even PM Manmohan Singh distance himself from Former Telecom Minister MR A Raja but here he himself is refuting the CAG findings.

You missed adding below to the article. In any case, what sense does it make to transfer huge investible resources from industry to the government? The Court deems the first-come-first-served principle used to allot licences since 2001 to be fundamentally flawed. It refrained from cancelling all such licences on the technical ground that no one had raised that demand before it. If someone goes to court tomorrow, will these also be quashed? The verdict hurts both business and the consumer. The Court has been rather lenient on the government, confining culpability to minister Raja, lopsided Trai recommendations and flawed principles. It virtually gives a clean chit to the finance ministry and the Prime Minister, which the CBI court will find hard to ignore. This, however, should not prevent the government from defending its right to formulate policy.

Can you enlighten us your comment on the mobile license, list all the companies which received the license and subsequently as per your comment thus all these companies had their license revoked.

Essar Oil to borrow $1.5 bn via ECBs 29 August 2012 In order to refinance rupee loans worth Rs 8,000 crore, Essar Oil plans to mop up $1.5 billion through external commercial borrowings (ECB) in the next three to four months, media reports suggest. The company’s borrowing cost for Rs 8,000 crore was around 10.5–11 per cent in the domestic market, while the six-month LIBOR rate is 0.72 per cent per annum. Essar Oil estimates that it may have to pay around 4.5-5 percentage points above LIBOR, which would still allow it to save five-six per cent on the pre-hedging cost of ECB loan. The company expects to save around Rs 600 crore annually through this arrangement. The firm has received the Reserve Bank of India (RBI) approval for ECB refinancing, and plans to approach bankers soon. With the company formally exiting the corporate debt restructuring cell, foreign banks who were earlier loathe to lend to the Vadinar-based refiner would be more open to do so. Loans contracted by the company post commissioning of the refinery carry higher interest rates and Essar Oil estimates that with its 20 million tonne per annum refinery expansion complete, it can secure lower interest rates on loans as the project risk premium that bankers charged it hitherto is no longer needed. The company has secured approval for exiting corporate debt restructuring for Rs 9,400 crore of loans disbursed by around 19 lenders and is now working on finalising the terms of the debt facilities.

Aug 29 (Reuters) - India's Essar Oil has sold about 35,000 tonnes of naphtha to Vitol at about $25 a tonne above Middle East quotes on a free-on-board (FOB) basis, reflecting a near 67 percent spike in premiums versus a recent sale, traders said on Wednesday. The cargo, scheduled for Sept. 16-20 loading from Vadinar port, was the second parcel Essar sold for next month lifting. It had previously sold a cargo, also to Vitol, for Sept. 7-9 loading at premiums of $15 a tonne. Tighter supplies from India due to refinery maintenance and domestic demand have helped supported premiums. (Reporting by Seng Li Peng; Editing by Robert Birsel)

You got a bit carried away when writing negatives on Essar Energy, by the way thanks for adding an extra 0 into your figures. To clarify, Essar Group consist of Essar Energy, Shipping, Steel and many other Industries. This post is only for Essar Energy.

To add, the recent comment by Pensions & Investment Research Consultants, a London-based group that lobbies for transparency in corporate governance on the removal of the Chairman also contribute to the slide of the SP but I feel this will be a long waited catalyst for the board to get their act together and ensure there is no conflict of interest between the Essar Group.

The result for the last Quarter were not to the satisfaction to the investors for quick profit. After massive Capital Expenditure which were at the end of the cycle, we will begin to see the increase in margins on the 3rd and 4th Quarter, the current SP is cheap for mid and long term investors. the recent power outage, increasing demand for diesel in India and the flexibility of the world class refinery for export too, will see continuous growth. I am happy to see they have put some project on hold so as not to put strain on cash flow. In short it is a buy.