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Essar demerges shipping, logistics, oilfields businesses

business Updated: Aug 12, 2010 23:35 IST
HT Correspondent
HT Correspondent
Hindustan Times
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In a bid to unlock value for the stakeholders, Essar Shipping Ports & Logistics announced demerger of its shipping, logistics & oilfields businesses into a separate entity that will create two separate entities Essar Ports (existing one) and Essar Shipping (new entity), which will be listed on the stock exchanges.

In a bid to unlock value for the stakeholders, Essar Shipping Ports & Logistics announced demerger of its shipping, logistics and oilfields businesses into a separate entity that will create two separate entities — Essar Ports (existing one) and Essar Shipping (new entity), which will be listed on the stock exchanges.

The two resulting entities will be the second biggest private companies in their respective fields.

On Thursday, the board of directors of Essar Shipping Ports & Logistics (ESPLL) passed a resolution to demerge these businesses into a separate entity. The board also approved the merger of two wholly-owned investment subsidiaries into ESPLL.

"For future growth and given the opportunity, which is available in port infrastructure space in India and internationally, we felt it is better to demerge the companies," said Prashant Ruia, chief executive, Essar Group. " We believe that this will be positive from value creation perspective for all stakeholders."

While the demerger will come into effect from October 1, under the arrangement, Essar Shipping will issue one share for every three shares held to the shareholders of ESPLL.

The share price of Essar Shipping Ports & Logistics witnessed a fall in its share price on Thursday as it closed 7.7 per cent down at Rs 119.5.

The company has a port capacity of 76 million tonnes per annum and has committed Rs 8,200 crore for the expansion of port capacity to more than double over the next three years. The company has already invested Rs 4,600 crore into the project.