Essar sells business park in Mumbai for Rs 2,400 cr

Essar group today announced the sale of its Equinox Business Park, comprising 1.25 million sq ft office space, at prime Bandra-Kurla Complex (BKC) in Mumbai to realty firm RMZ Corp for about Rs 2,400 crore.
This could be the biggest office space deal in the country as Godrej Properties in September had sold 4.35 lakh sq ft commercial space at Bandra-Kurla Complex for Rs 1,480 crore.
"Essar and RMZ Corp announce the signing of definitive agreement in connection with acquisition of Equinox Business Park, a 1.25 million sq ft office space prominently located in Mumbai's prime CBD at Bandra-Kurla Complex for approx Rs 2,400 crore," Essar group said in a statement.

Commenting on the transaction, Essar's Anshuman Ruia said the business park is being sold as part of the strategy to monetise non-core assets.
"This transaction fits in with the Essar's strategy of successfully building businesses and actively managing the portfolio of assets to create and deliver value. This is in line with the present objective and focus of Essar to monetise non core assets and deleverage the balance sheet," Ruia said.
Essar's Executive Director (M&A) Sudip Rungta said the Equinox Business Park, being developed by the Essar group firm Equinox Realty Holding Ltd, has 4 towers comprising 1.25 million sq ft of office space.

Out of four towers, three are completely leased out, while one tower having about five lakh sq ft of leasable area has just been completed and is yet to rented out, Rungta told PTI.

The business park houses tenants including Nissan Motors, Acropolis, Crompton Greaves, Gilbarco Aegis, Lafarge and alike besides the offices of Essar.
"We are confident that with this acquisition we will extend our core businesses into the growing markets with a world-class development opportunity in the heart of one of Mumbai's major regeneration zones," Bengaluru-based RMZ Corp Corporate Vice Chairman Manoj Menda said.
This is the latest in a series of large office space buyouts by RMZ Corp who have created a portfolio of rent-yielding commercial assets in India, the statement said.

Nayyar said a smaller crude distillation unit has been
mothballed to operate Stanlow as an optimised single train site, adding USD 0.4 per barrel to margin and saving USD 0.10 a barrel in operating expenses.
"The crude basket was stretched by reducing the proportion of light crudes and introducing medium density crudes, while sources were diversified by including African and grades," he said. "Condensates were introduced into the diet in 2015, with all of these moves resulting in a lowering of the crude basket cost by about USD 1.4 per barrel."
Essar has invested significantly in Stanlow, with the total equity invested at USD 694 million (including acquisition) and an additional USD 545 million incurred through capital expenditure.

Stanlow is one of the largest refineries in the UK, with the current optimised configuration giving a 196,000 bpd operating capacity and Nelson Complexity of 10.7. It produces 33 per cent petrol, 57 per cent kerosene and diesel and 3 per cent fuel oil
In a pioneering first crude inventory monetisation, Essar in July 2012 entered into a deal with Barclays Bank, which purchased the stocks of crude oil and petroleum products at Stanlow site and supplied the refinery with crude on a daily basis as required.
"This transaction, the first of its kind in Europe, helped the drive for more efficiency by reducing costs, reducing capital employed and reducing risk from crude price volatility," he said.

When Barclays exited the commodity business, new long term arrangements were signed in July 2015 with J Aron & Company for inventory monetisation and Lloyds Bank Plc.
Nayyar said Essar will invest about USD 137 million in project 'Tiger Cub' which will see major improvements to key units at Stanlow to deliver further reduction in crude costs and improved yields across the product slate.
"Project Tiger Cub, and the additional works undertaken during the major block turnaround in 2018 will drive a further USD 2 per barrel in margin improvements," he said.