Essar Oil to delist, buy back shares at Rs146.05 apiece

Essar Oil Ltd, India's second-biggest private refiner, is offering to buy back share in the company from minority shareholders at a base price of Rs146.05 ($2.19) a share, according to public notice issued by the company.

Essar Oil, which has, earlier this year, signed a deal to sell up to 49 per cent equity in the company to Russian oil giant Rosneft, plans to delist from the local stock exchanges by buying out the 28.54 per cent outstanding in order to give its promoters greater flexibility, the company said.

Both the Bombay Stock Exchange and the National Stock Exchange had earlier approved the planned delisting of shares in Essar Oil and the share buyback would begin on 15 December, the notice said.

The Essar Oil stock price rose by Rs1.25, or 0.59 per cent to 211.40 at noon today. The 52-week high of the share was Rs220.15 and the 52-week low was Rs98.00

Meanwhile, reports said the number of retail investors in Essar Oil has fallen nearly 18 per cent since June last year, touching a multi-year low of 260,000 in September. Their holding has shrunk to 7.9 per cent from the earlier 10.75 per cent, while holdings of foreign institutions inched up to 5.4 per cent from 4.1 per cent.

The number of foreign institutional investors holding the stock went up from 57 to 61. Seven mutual funds which hold the stock pruned their combined holding to about 1.8 per cent from the two per cent they had five quarters ago.

Essar Oil operates India's second largest single - location refinery, with an annual capacity of 20 mmtpa, or 405,000 barrels per day (bpd) at Vadinar, in Gujarat. The Vadinar refinery is also amongst the world's most complex refineries. It can now process a heavier crude diet and yet produce higher value, high-quality products, which will lead to increased refining margins.

Essar Oil, through a franchise model, also operates approximately 1,550 retail fuel outlets across India. Another 1,600 are in various stages of implementation. The company is now looking at expanding its retail network. Additionally, the company is increasing non-fuel retailing activities in this portfolio of retail outlets to provide an additional source of revenue.