Essar Shipping and Port Operations to Split

Stockholders of Essar Shipping Ports and Logistics will get two shares of Essar Ports and one of Essar Shipping for every three shares they hold as part of a plan to divide the first company into two independent operating units.

It also announced a new management structure for the two companies once they are listed.
Essar Shipping Ports, which has a share capital of 6.15 billion rupees, will start trading as Essar Ports with a reduced capital of 4.10 billion rupees and the remaining 2.05 billion rupees will form the share capital of Essar Shipping, which is expected to list subsequently.

Essar Shipping Ports on Monday said the demerger process was completed after it received approvals from the relevant authorities. The committee fixed May 19 as the record date for the share swap.
Post demerger, Essar Shipping Ports will be known as Essar Ports, while the shipping, logistics and oilfield businesses will be spun off into a separate company called Essar Shipping. The company is expected to get listed separately at the end of June.
An aerial view of the Essar port at Hazira in the western Indian state of Gujarat. Essar's shipping and port operations will be split into two separate units.

The two units of Essar Shipping Ports -- Essar Ports and Terminals and Essar International-- that were merged into one in September last year, will come under Essar Ports while the sea transportation and oil field activities of these units will come under Essar Shipping.

Rajiv Agarwal will become the managing director of Essar Ports, K.K. Sinha its chief executive officer and Shailesh Sawa chief financial officer.

A. R. Ramakrishnan will become the managing director of Essar Shipping once it is listed. Anoop Sharma, the chief executive of the sea transportation division, Ankur Gupta chief executive of the oilfields business, and Rahul Himatsingka will head the logistics unit. Vikram Gupta will be the chief financial officer of Essar Shipping.

"Now there is a clear management structure for Essar Shipping and Essar Ports," said Kapil Yadav, a research analyst at Dolat Capital Market Pvt.

"[Essar Shipping Ports and Logistics] was not able to get the real valuation even as it had the port portfolio," he said. The company was only getting valuation intended for shipping, which was low. With the demerger, the management is expecting to increase the valuation."

He did not comment on the share-swap deal.

Essar's ports unit will be the second largest private sector port company in India with 88 million tons per annum of current capacity, with a target to reach 158 tons by 2013, the company said in a release. The company had committed 93 billion rupees toward this business, of which 61.5 billion rupees has been invested already.

The company expects Essar Shipping to become the second-largest shipping and oilfield services company in the private sector.

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