Essar stocks fall; group signs pacts with Russian firms

NEW DELHI: Shares of Essar group companies plunged over 7 per cent in intraday trade on Friday even as Russian Bank VTB said that it will provide up to $1 billion credit to Essar Group for its corporate and project needs.

In a separate agreement, Rosneft agreed to supply oil and oil products to Essar refineries in India in a deal valued at $10 billion. Rosneft would supply 10 million tons of crude to Essar for 10 years beginning 2015.

Essar Oil Ltd fell as much as 3.04 per cent in intraday trade.

Other Essar group stocks like Essar Ports Ltd also took a beating. Essar Securitues Ltd plunged as much as 7.09 per cent in intraday trade.

The agreement to this effect was signed by Essar co-founder Shashi Ruia and VTB Chairman Andrey Kostin in presence of Prime Minister Narendra Modi and Russian President Vladmir Putin on Thursday.

The MoU "envisages finance arrangement of $1 billion to Essar by VTB for general corporate purpose," an official statement said here.

The deal is intended to finance the continued consolidation of certain assets in Essar Group's investment portfolio and the strengthening of their capital structure.

Essar Group has diversified interests in oil exploration and production, steel production, power and shipping. Essar Energy has increased its refining capacity to 741,000 barrels per day from 260,000 barrels per day, which included expansion and upgradation of it Vadinar refinery. The financing deal with VTB is intended to finance the continued consolidation of assets in Essar Group's investment portfolio and strengthening of their capital structure. This agreement follows the $ 1.2 billion transaction arranged in first half of 2014 by VTB Capital, which acted as financial adviser and financier for the company in delisting Essar Energy from the London Stock Exchange.