ESSAR Energy lost more than a quarter of its market cap yesterday after the Indian courts overturned a 63bn rupee (£809m) tax ruling in its favour.
In a move that took the markets by surprise, the Indian Supreme Court said Essar Oil, in which the London-listed firm owns an 87.1 per cent stake, will no longer be able to defer payment of a sales tax.
The company said it will decide on its next steps after studying the court’s decision.
“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 who declined to be named.
Under the previous deal, the sales tax had been repayable from 2021 onwards, and the company does not yet know how or when it would pay back the sum.
Essar Energy closed down 26.3 per cent at an all-time low of 127p, having floated at 420p in May 2010.