The Hindu Business Line : Essar Shipping to be reorganised

Strategic move
Will help provide end-to-end logistics solutions and give shareholders a larger and balanced platform for growth.
May help ESL create value in the ports and terminal business in future.

Our Bureau

Mumbai, Jan. 23 The Ruias-promoted Essar Shipping Ltd (ESL) has unveiled a plan to re-organise its business by bringing under it the Essar Group’s oil drilling and exploration business and its port and terminal assets to create a new entity that will provide end-to-end logistics services. After the reorganisation, ESL will be renamed to reflect its new business platform.

As part of the reorganisation, the Ruias plan to bring under ESL four of their group companies — Essar Oilfield Services Ltd, Essar Bulk Terminal Ltd, Vadinar Oil Terminal Ltd and Essar Logistics Ltd.

“The reorganisation will aim to align all Essar Group’s logistics infrastructure related companies under one roof. We believe this will allow us to provide end-to-end logistics solutions and will provide ESL shareholders a larger and balanced platform for growth. It may also help ESL create value in the ports and terminal business in future,” Mr Shashi Ruia, Chairman of Essar Shipping Ltd, said.

With interests in dry bulk ports, oil terminals, crude and dry bulk carriers, port to plant logistics and oil field services, the new entity is expected to provide broader end-to-end solutions.

Reorganisation panel

The ESL board on Wednesday passed a resolution, constituting a seven-member ‘Reorganisation Committee’ to explore a suitable reorganisation strategy. The committee was also authorised to appoint financial advisors, legal advisors and independent valuers for carrying out valuations to recommend swap ratios and acquisition values for any mergers.

Mr Sanjay Mehta, ESL’s Chief Executive Officer, told Business Line that the committee is expected to submit its report within two weeks. He said the new company would also explore ways to raise fresh capital to finance its expansion plans.

An EGM has been scheduled on February 23 to give effect to the proposed reorganisation of ESL.

Mr Mehta said Essar Oilfield Services at present owned one semi-submersible offshore rig and 13 land drilling rigs, which are in operation in Brazil, West Asia and India.

To Double capacity

The Vadinar Oil Terminal Ltd, which is 91 per cent owned by ESL, owns a 32-million-tonnes oil terminal at Vadinar in Jamnagar. “We plan to double the capacity of the terminal by 2010-11,” Mr Mehta said.

Essar Bulk Terminal Ltd is constructing an all-weather deep draft port at Hazira that will be capable of handling 1.05 lakh DWT bulk carriers to import iron ore, pellets, coal and limestone. The facilities will include a dedicated channel, 550-metre jetty, ship un-loaders, storage facilities for steel products and conveyors for transportation of raw materials.

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