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Shashi Ruia’s Essar Oil and Russian government-owned Rosneft still have miles to go before the latter acquires a 49 per cent stake in the Indian private sector oil refiner-cum-retailer. The entities are looking at middle of next fiscal to firm up the deal.
Currently, Rosneft is doing due diligence, an executive in the know of the development said, adding that only after this process is over will the two start discussing the financial aspects of the deal.
“As of now, no agreement has been reached with Rosneft on the key terms of transaction including the transaction price,” an Essar spokesperson told BusinessLine .
In July 2015, the two companies announced that Rosneft will purchase a 49 per cent stake in Essar Oil, which owns the 20-million-tonne per annum Vadinar refinery and about 1,700 retail outlets. However, this is only a term-sheet.
“The board composition and the deal price will be decided only after the agreement is finalised,” a person closely associated with the development said, adding that “since the majority control will remain with Essar Oil, the branding is unlikely to undergo any change.”
Essar working on de-listing Essar Oil is simultaneously working on completing the de-listing process which has been delayed by over a year. After its board approved a floor price of ₹108.18 on June 26, 2014, which got shareholders nod in August 2014, further delays in getting regulatory approvals pushed back the whole process.
On November 6, 2015, the Securities and Exchange Board of India asked the company to complete the de-listing process within two months, that is, by January 6, 2016. SEBI also took note of the term-sheet with Rosneft and directed Essar Oil’s promoters to compensate the shareholders if the ultimate value of the transaction with the Russian company is higher than the price discovered in the de-listing process.
“Ultimately, it will be the shareholders who decide at what price the de-listing will happen…If the transaction with Rosneft is higher than the ultimate de-listed value then the shareholders would have to be compensated. It would have anyway happened, but the SEBI has formalised it,” the official said.
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