Essar shares drop on court ruling over tax liability

published 17 July 2012

Shares in Essar Energy, the India-focused integrated energy company, fell more than two per cent on Tuesday after the Supreme Court of India ordered it to pay 182m dollars to the government of Gujarat by July 30th in relation to its deferred sales tax liability.

Essar's Indian subsidiary, Essar Oil, is currently seeking guidance from the Supreme Court on a repayment schedule as well as the waiver of interest in relation to the deferred sales tax liability of around $1.12bn.

The company also said that the previously announced potential loan facility of around $909m from Indian lenders is expected to be finalised shortly. The facility would be used as a contingency measure for use in the event that the sales tax liability becomes payable immediately or that Essar Oil is not able to negotiate a satisfactory repayment schedule.