Essar to tap market for Rs3,000 cr; convert FCCBs

Essar Oil, which runs the country's second-largest refinery, plans to tap the market to raise Rs3,000 crore in equity over the next 15 months, its managing director and chief executive L K Gupta told the media on Friday.

''We will infuse fresh equity in the company to the tune of Rs3,000 crore. We will require funds to run the refinery once the capacity expansion is over,'' Gupta said in a conference call.

It will also ask its parent, Essar Energy Plc, to immediately convert foreign currency convertible bonds (FCCBs) of Rs1,396 crore into equity, as its seeks to boost its liquidity.

Gupta said the company will use part of the funds to retire some debt on its books - currently at a huge Rs15,400 crore.

The company reported a net loss of Rs3,986 crore in third quarter of 2011-12 ended 31 December on account of an exceptional debit of Rs4,015 crore towards reversal of sales tax deferral income following a Supreme Court decision, Essar said in a statement.

In fact analysts see a good part of the fresh funds being used to meet the liability arising to the Gujarat government out of the sales tax deferment.