Heard on the street>>26 Feb, 2008

Heard on the street
26 Feb, 2008, 0000 hrs IST,Vijay Gurav & Apurv Gupta, TNN

‘Confidentiality’ at your convenience

A multi-million or a billion-dollar deal is what can make anyone feel on the top of the world. No wonder, Indian companies have been striking an increasing number of such large transactions of late. But not all are significant enough to make them feel proud about.

So, they conveniently become stingy about disclosing hard facts like acquisition price, deal size or enterprise value of the target company when the deal size is not big enough.

They are prompt enough to parry the question by hiding behind the veil of ‘confidentiality’ clause. At a press meet called by two veteran exchanges on Monday, media persons tried their best to find out the value of the deal signed between them on the day.

Their efforts, however, were in vain as the top brass of the two exchanges did not relent to any ‘tricky’ questions on valuation thrown at them. In the deal, the acquirer was one of the country’s leading stock exchanges with a valuation of about $1 billion while the target exchange was the commodity player whose valuation remains a big question for reporters.

Tax deferment talk buoys Essar Oil

Market talk that Essar Oil is set to get a sales tax deferment from the Gujarat government, led to the scrip witnessing renewed interest. Currently, Reliance Petroleum, another Gujarat-based refinery enjoys this benefit. Reliance Petroleum was granted this benefit as it commenced operations by the government stipulated time.

According to sources, the previous, Congress-backed government had announced this tax benefit. However, the Essar Oil was not eligible due to the delay in the contruction of pipeline. Essar Oil had moved the Gujarat High Court, pleading that the delay was due to issues which were beyond its control.

There is talk that a bench of the Gujarat High Court last week asked the state government to look into the matter. Sources say that the ball is in the state government’s court. If cleared by the government, the company will be entitled for sales tax deferment which will have a positive impact on the company’s cash flow.

When contacted, company officials declined to comment on the speculation, saying the matter is subjudice. The company is estimated to generate additional cash flow of more than Rs 8,000 crore if it is allowed to enjoy the benefit. The stock price of Essar Oil closed at Rs 233 on Monday, up 1% from its previous close.

SOURCE:E.T