While loans to Essar Oil, to the tune of Rs.28,000 crore, are still seen as standard (or performing assets) in bank books, loans to Essar Steel, amounting to about Rs.35,700 crore, have been classified as non-performing by most banks. Analysts said that this deal gave the Essar Group the opportunity to reduce debt in Essar Steel as well as in Essar Power. “The recent announcement of the sale of Essar Group’s ‘entire’ holding in Essar Oil and Vadinar port to Rosneft, Trifugra and UCP will allay the market’s concerns about Indian banks’ exposure to Essar Group,” according to a report by Kotak Securities. It went on to note that the transaction would release Rs.45,000 crore of cash for the Essar Group, which amount could be used to repay debt of Rs.23,500 crore in Essar Global Holdings and reduce debt in financially stressed entities such as Essar Steel and Essar Power. “The key beneficiaries from the Essar Oil deal are likely to be ICICI Bank, Standard Chartered Bank, SBI, Punjab National Bank, and IDBI Bank,” Motilal Oswal Securities said in a report.

Source: The Hindu October 17, 2016 18:11 UTC