Essar Group will receive $350 million (about ₹2,800 crore) from Nayara Energy (formerly Essar Oil) as part of brand licencing agreement signed five years ago when the business was sold to Russian oil major Rosneft.
Essar sold the oil business to Rosneft-led consortium for about $12.8 billion in 2017 to repay the debt.
Earlier, Essar Oil (now Nayara Energy) and its affiliate Abhinand Ventures Pvt Ltd signed an agreement to allow Nayara to use Essar brand by paying an annual license fee of $32 million for 20 years and $1 for 79 years. As per the agreement, Essar Group had right to seek the branding fee upfront after five years using a discounting formula agreed mutually, sources said.
Instead of getting staggered payment, Essar has exercised the option to seek upfront payment, he added.
An Essar Group spokesperson said there is a long-term brand agreement providing for payment of license fees for usage of Essar brand by Nayara. Any payment by Nayara is merely discharge of an existing contractual obligation and is in ordinary course of business, he said.
Essar will conclude its planned asset monetisation programme and complete the debt repayment plan of $25 billion (₹2-lakh crore) with the Indian banking sector being almost fully repaid.
Essar registered an aggregate revenue of $15 billion (₹1.2-lakh core) and assets under management of $8 billion (₹64,000 crore) comprising of various assets spread across India and overseas.
RBI gives approval for opening of nine Vostro accounts of Russian banksAlthough VTB Bank, Sberbank are facing Western sanctions, there won’t be a problem as long as they use their rupee balance to pay for imports from India, say officials
By monetising assets in a planned and strategic manner, that were built with earlier technologies over the last several years, Essar is now poised to reinvest in new assets with the latest, more efficient and ESG-compliant technologies to last the next several decades.
While ongoing businesses will provide operational stability, our renewed focus will be to transition existing assets to green and invest in sector-transforming clean businesses around the investment themes of decarbonisation and digitisation.