MUMBAI, AUG 20: Essar Oil will seek the approval of shareholders to increase the stake of foriegn institutional investors' (FIIs) from 24 per cent to 30 per cent at the company's annual general meeting (AGM) to be held in Jamnagar on September 25.Essar Oil which is setting up a greenfield oil refinery at Vadinar, Gujarat, with a capacity of 10.5 mtpa says in order to take advantage of the rising inflow of foreign exchange and recent changes made by the Indian government, it plans to offer more equity to non-resident Indians and foreign investors.It plans to launch preference shares and/or non-convertible debentures under the portfolio investments scheme for foreign investors, it said. The present equity structure comprises of the promoters Ruia brothers holding a 57 per cent equity, FIIs another 24 per cent while the rest is being shared by the public and Indian FIs. Incidentally, the Ruias have also sought the approval of the shareholders of their other company Essar Steel to increase the stake of FIIs to 30 per cent. The Rs 6,000 crore project is scheduled to be commissioned next year.With the changes anticipated in the new companies act, Essar Oil said that it plans to buy back its shares from the markets as soon as the new norms on buy back of shares are announced by the government. In order to facilitate electronic trading of its shares and debentures, the company has entered into an agreement with the National Securities Depository Ltd (NSDL) to facilitate investors to dematerialise their securities and hold the same in electronic form.The increase in FII stake comes at a time when the public sector major Indian Petrochemicals Corporation Ltd (IPCL) decided to negotiate buy around 35 per cent stake in Essar Oil. The Ruias have not yet taken any decision on the sale of their stake.Top IPCL officials have said it is keen on participating in the project so as to have a ready source for naphtha, the feedstock for its petrochemicals. The corporation has already conducted preliminary studies through Bankers Trust on a possible stake in the project.It may be noted here that Indian Oil Corporation, which has a marketing tie up with Essar Oil, has also indicated that it may take up a 10 per cent stake in Vadinar refinery. Investment banker Morgan Stanley was given the mandate by the IPCL some months back to locate a `strategic partner' for the refinery.
