Essar mulls makeover strategy; to dilute stake in group cos

Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

The promoters are looking to bring down stake in the oil and ports business to comply with SEBI's public shareholding norm before 2013. As far as Essar Ports is concerned, the aim is to bring down stake from 83% to 75% and the process has already started with the sale of 4% stake to Port of Antwerp today. 

"The company is evaluating how and when to bring down stake and on an ongoing basis examine various options available to them including IPP route, FPO, and offer for sale as allowed by SEBI." With regards to Essar Oil sources say promoters may finalise the IPP route to bring down promoter shareholding to 75% from 85%.

"Essar Oil is looking at raising about USD 600 million of equity. We will examine all options, except for a rights issue, and at an appropriate time we will take this decision and raise the required resources."  On the unlisted business side, the company has already said that it will dilute stake in its BPO business, Aegis.

CNBC-TV18 also learns that the company may seek to tap the capital markets for its infrastructure business, either overseas or in India but the company maintains there are no concrete plans for an IPO yet.

So, what's the motive behind this restructuring exercise other than bringing down promoter shareholding to comply with norms?

Well, at the heart of Essar's strategy is a move to learn from experience and create an entity which boasts of not just a strong capacity and a high net worth, but will also to be able to scale up its operations to meet competition.