The board of the Ruia family-owned Essar Shipping Ports & Logistics (ESPLL) on Thursday decided to demerge its shipping, logistics and oilfields businesses into a separate entity, which will push the ports growth plans independently.
This will mean splitting ESPLL into two companies - the existing company that is being re-christened as Essar Ports (EPL), and Essar Shipping (ESL), a new company created through the demerger. The scheme also includes merger of two wholly-owned investment subsidiaries into ESPLL to simplify the holding structure.
''We believe the port sector has achieved maturity over the years, and time has come to ensure that the port sector follows an independent growth path, which creates better value for stakeholders,'' said Essar Group director and chief executive officer Prashant Ruia.
The port division of Essar is currently the second-largest with a capacity to handle 76 million tonnes (mt). This includes 46 mt at Vadinar and 30 mt at Hazira and the company intends to expand this capacity to 158 mt by 2013.
ESL will issue one fully paid-up share of the face value of Rs10 face value for every three shares of ESPLL (which will become EPL).
Under the proposed share entitlement ratio, promoters will continue to hold an 83.7-per cent stake in the new companies. ''For every three shares that the shareholders hold in the company, they will get one share in the new company. At the end, the shareholders will hold two shares in the existing company and one share in the new company,'' said Vikas Saraf, director (strategy), Essar Shipping.