During the time of Essar Oil's delisting from the Indian bourses, Sebi had directed the company to match the per-share delisting price to the price at which Rosneft buys the 49 percent stake.
A consortium led by Russia's Rosneft today bought 98 percent stake in the company for Rs 72,800 crore.
In an interview with CNBC-TV18, former SEBI ED JN Gupta suggested that the Essar Group's statement that the deal value was close to the de-listing price may not be correct and said the Ruias may have to pay the difference to minority shareholders who exited at the de-listing stage.
He also took issue with the claim that the Rosneft-Essar Oil deal was the biggest foreign direct investment into India.
"No money is coming to India because about 90 percent of Essar is owned offshore by Ruia," he said.
Below is the interview transcript.
Anisha: We want to understand what does it exactly mean for the minority shareholders because last time in December the company had delisted itself with around Rs 260 per share value which was 80 percent premium of the floor price if you look at it. But there was also a regulation given by SEBI later that if there is any upward gap if seen in the valuation the company will have to pay the minority shareholders. Now we have to pay the details, Rs 72,800 is the amount that they are looking to pay for the Vadinar refinery. What will minority shareholders get out of this?
Gupta: I have been hearing that everybody saying that this is one of the biggest foreign direct investment (FDI) into India. I would disagree with this for the simple reason no money is coming to India because about 90 percent of Essar is owned offshore by Ruia. So, the money will remain out of the company, there will be no money flowing into the country.
As far as the minority shareholder thing is concerned SEBI in its order in November had very clearly laid down that if in Rosneft deal, the price that is paid to it is any different from the price that has been out in the delisting offer, then any upward difference will have to be paid to shareholders by the company.
Now the issue there is as I understand some power plant, I don't know whether power plant is included in the deal or not. This we will have to see what are they assets they have been included or excluded.
Anisha: You were telling me that there might be some extra value coming. Can you please help us understand what can be that extra value per share that the minority shareholders can get now?
Gupta: As I was telling you before I heard Mr Ruia now hearing Mr Ruia I am little bit disappointed because he made the statement that the equity value is going to be very much near the delisting price. Now I am baffled how come the equity value negotiation could be based on the delisting price which has no relation to equity value. That means to me it is something like saying that I have decided to sell at the rate at which I delisted.
That is not possible and when we do back of the envelope calculation. The debt at the end of 2015 was close to Rs 25,000 crore. I am not taking into account working capital issue. So, if you take only that without working capital the per share or 98 percent of the equity that has been sold almost amounts to Rs 328 per share. Now, if you take Rs 328 per share versus Rs 268 at which it was delisted it is close to around Rs 60 that would have to be paid to minority shareholders.
But by the statement of Mr Ruia I am very much sure that there would be no intention on the part of their group to pay anything because they have already shared with them the valuation of equity portion in the deal is close to what it was delisted. So, that is the big issue here.