Essar Shipping Ltd ( ESL ) is 32 years old copany.It was incorporated on April 5,1975 under the name Karnataka Shipping Corporation Limited (KSCL).In 1983 under a scheme of amalgamation Essar Bulk Carrier Ltd (EBCL)was merged with KSCL and its name changed to Essar Shipping Ltd.Over the years South India Shipping Corp was acquired by ESL and merged with the company. Today ESL is one of the largest Private Sector Shipping company.
Now Essar Shipping and Logistics Ltd (ESLL ) wants to acquire upto 100 million Equity shares of ESL and thus DELIST the company from BSE.
In the Reverse Book Building process which ended yesterday on 9th march 2007, about 30 % shares were offered at prices ranging from Rs. 31.62 to Rs. 900. Bulk of the shares were offered at Rs. 75.If Ruia’s declare an Exit Price of Rs. 75 vs. CMP of Rs. 48 they can receive almost 23 % of the shares. However those who have submitted bids can revise or withdraw the BID submitted before the final settleent date which has been fixed as 14th March 2007.
Now looking at the wide range of BID prices and low CMP what should be the Exit Price that offered by Ruia’s to make a WIN WIN for both the promoters and the investors.
Present Book Value of ESL share is Rs. 55. With Equity Capital of Rs. 426 crores,market capatalisation is Rs. 2100 crores, assets amounting to Rs. 2024 crores and loans of Rs. 1185 crores. But besides this Essar Shipping holds the following assets /investments which are not reflected in the Essar Shipping assets. And they are:
- 125 million shares of US $ 1 each in Essar International
- 849 million shares of rs. 10 each in Vadinar OL Terminal
- 463 million shares of ESSAR SISCO SHIP MGT CO
- 3.8 million shares of Essar Oil
- 1 million shares of Rs. 10 each in Hutchison Essar
- 1.9 million shares of Energy Transportation International
- 10 million shares of Essar Steel
- 2.4 million FCD of Rs. 600 each in Reclame Commercial and Securities Ltd.
Now even at Book value the above EIGHT assets should add Rs.150 per share to ESL. Just 1 million shares of Hutchison Essar are worth more than US $ 1 billion.It appears that the immediate trigger to delist the company came from the valuations of Hutchison Essar which was acquired by VODAFONE for US $ 18.6 billion .
Investors are advised to again visit the balance sheet of ESL and withdraw their BID before 13th March and wait for a better Exit Price to be declared by Ruia’s who have networth of more than US $ 8 billion today, and acqisition of 100 % of ESL will add another US $ 3-4 billion to their networth.
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