Essar Global Limited announced today that it had purchased Global Depository Receipts issued by Essar Oil and Essar Shipping. The purchase was made through Vadinar Oil and India Shipping which are 100% offshore subsidiaries of Essar Global Limited. Essar Global will pay USD 823 million for the acquisition.

These GDRs represent 72, 84, 33,000 shares acquired at rupee equivalent price of Rs.47 per share of Essar Oil and 12, 44, 56,000 shares rupee equivalent price of Rs 30 per share of Essar Shipping. With this, the Essar Group's holding in these companies will go up to 87% and 76% respectively after this acquisition.

The purchase was arranged by CLSA Equity Capital Markets, Hong Kong ( part of Calyon Bank group) as negotiated block deals. CLSA were also involved in the initial issue and placement of FCCBs by Essar Oil and Essar Shipping to international investors in 2005 (which were subsequently converted into equity and are now held under a GDR programme) pursuant to the Corporate Debt Restructuring scheme approved by the lenders of the refinery project. Essar was advised JM Morgan Stanley and Khaitan & Co. on this transaction.

Essar Global will finance this purchase through loans from a group of international banks.

International investors who had originally enabled Essar Oil and Essar Shipping to achieve financial closure for their projects have now exited their investments.

Shri Prashant Ruia, Director, Essar Group, commented, "Essar Oil is firmly on the path to realize its full potential as an integrated oil and gas company in the fast growing Indian and regional market. This purchase reflects our full confidence in this business".

Commenting on the transaction Mr. Nimesh Kampani, Chairman J M Morgan Stanley, said "This transaction reflects the Essar Group's commitment to the high growth oil & gas business in India. We see significant potential in the energy sector in India."

Essar Oil is implementing a 10.5 million tonne per annum oil refinery project in Jamnagar, Gujarat which is expected to be commissioned in phases in the second half of 2006 and is setting up petroleum retail outlets throughout the country. It is also engaged in the exploration & production of oil &gas.

Essar Shipping is a leading sea logistics company. It has a diverse fleet of 27 vessels comprising Bulk Carriers, Tankers, and Mini Bulk Carriers including two VLCCs (Very Large Crude Carriers).