Shares of Essar Oil gained as much as 4 percent intraday Friday as the company will buy balance 74 percent stake in Vadinar Power.
Essar Group firm on Wednesday said it will convert over USD 1 billion worth of rupee loan into dollar debt by March to reduce its cost of borrowings and will acquire group firm, Vadinar Power Company, for Rs 2,100 crore.
"We are continuing on our mission to dollarise debt. Being a fully dollar-driven company, it makes immense sense for us to de-risk our business from currency fluctuations by converting our long term liabilities into dollars. Till date, we have dollarised about USD 1 billion of rupee debt, which besides lowering our interest cost, also extends our debt tenure. We aim to dollarise another USD 1-plus billion by March 2015," Essar Oil Chairman Prashant S Ruia said at the firm's annual general meeting.
Essar Oil, a part of the Essar Group that is controlled by billionaire brothers Shashi and Ravi Ruia, will buy additional 73.99 percent stake in group company Vadinar Power Company to make it a fully owned subsidiary. The acquisition was approved by board and shareholders in May.
The coal fired power plant, owned by VPCL, is already providing a refining margin uplift of USD 1-1.5 per barrel to the company.
Ruia said Essar Oil is undertaking a series of low capex and short gestation projects under the banner of Optima Plus, which upon completion would provide a margin uplift of about USD 1.0-1.5 per barrel over a period of the next two years.
At 10:55 hours IST, the stock was quoting at Rs 109.75, up Rs 3.00, or 2.81 percent on the Bombay Stock Exchange.
(With inputs from PTI)
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