The move is to separate ownership from management and strengthen professional management in the company, a company official, who did not wished to be identified, said. The company has not yet announced its new chairman.
Ruia began his career in family business in 1965 under the guidance of his father late Nand Kishore Ruia. Along with his brother Ravi, he laid the foundation of the Essar Group, which has interests in steel, oil & gas, power, communications, construction and minerals, in addition to shipping and ports.
Ravi is among the top businessmen to be touched by a Central Bureau of Investigation (CBI) probe into the 2G scandal, which was estimated to have cost the government as much as $34 billion lost revenue. Last week, a special court in New Delhi, which is hearing the case, approved criminal conspiracy charges against Ravi, his nephew Anshuman Ruia, and senior Essar group executive Vikash Saraf, and allowed them bail.
Essar Ports also said it has signed a strategic alliance agreement with Europes Port of Antwerp International (PAI). Under the agreement, PAI will invest about R175 crore in Essar Ports through global depository shares or GDS at a price of R100 per share. These GDS, which can be converted to equity shares after June 2013, would form around 4% of the diluted equity share capital in Essar Ports, when converted.
PAI is the subsidiary of the Antwerp Port Authority, which manages the port of Antwerp, Europes second largest. It was founded in 2010 as an investing and consultancy arm of the Antwerp Port Authority with the mission to capitalise on the expertise of the Antwerp port sector and to establish a global port network through specific investments.
PAIs investment is long-term, focusing on the commercial relationship between the two companies and mutually enhancing the productivity, skill set and performance, said Rajiv Agarwal, MD, Essar Ports. This partnership will promote growth of port traffic between Port of Antwerp and the ports of Essar.
Essar Ports will use the proceeds to complete ongoing work at its Paradip, Salaya and Vadinar projects. PAI will also have the right to nominate a director on the Board of Essar Ports. Jan Adam, CFO, Port of Antwerp, has been appointed as the non-executive director on the companys board.
Essar Ports shares closed at R89.30 on the BSE on Wednesday, marginally down from the previous days close.
Essar Ports had signed an MoU with the PAI in February 2010. We had invested close to R1,000 crore as a capex last year which was funded through internal accruals and this year we will be spending about R700-800 crore, said KK Sinha, CEO, Essar Ports.
Reports loss in Mar quarter
Essar Ports reported a loss of R61.5 crore in the March 2012 quarter against a profit of R11.47 crore in same quarter last year mainly due to interest payments on certain liabilities to the tune of R235.5 crore.
It also recognised a deferred tax asset of R125.5 crore on unabsorbed tax losses. Net one time liability recognised during the quarter is R110 crore, said Shailesh Sawa, Essar Ports CFO, in a presentation.
On a year-on-year basis, its profit declined to R63.92 crore in 2012 fiscal compared to R70.15 in 2011 fiscal.
Its revenues in March quarter stood at R288.31 crore, up 6% on the back of increased volumes and improvement in average realisation rate to R233 per million tonne from R187 per MT.
For the year, revenues stood at R1,108.8 crore. The company handled a total volume of 43.23 MMT in the 2012 fiscal.