Essar shares dive 26 per cent after tax blow

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The Independent Online

Shares in Essar Energy plunged 26 per cent in London yesterday after the Indian Supreme Court ruled against it in a tax case.

The ruling means the India-focused oil refiner and power generator will no longer be allowed to benefit from a scheme to defer the sales tax it owes.

Essar Oil, which is 87 per cent-owned by Essar Energy, said it had benefited from sales tax payment deferrals of $1.2bn.

"This benefit they were getting, which is reasonably considerable, they're not going to get going forward. That's going to hit their financials," said an analyst. He added that the shares were also being hurt by the uncertainty as to when the company would have to pay back the sales tax it owes. Under the previous deal, the sales tax had been repayable from 2021 onwards.

Shares in Essar Energy, 77 per cent owned by the Ruia family's conglomerate Essar Group, closed down 45.4p at 127p. Ravi Ruia, pictured, was forced to step aside as chairman of Essar Energy last month amid an inquiry into the sales of telecom licences in India.