Bank Nifty looks up owing to Essar-Rosneft deal

Essar Group is having a huge debt. The major banks such as ICICI Bank, Axis Bank and State Bank of India (SBI) have financed the group. The Essar Group has confirmed that it has agreed to sell an oil unit to a consortium led by Russia's Rosneft.

Essar Group has total debt exposure of Rs 90000 crore. As per the company’s management, the Rosneft deal was concluded at an enterprise valuation of Rs 72800 crore for a 98 per cent equity.

Post deal, Essar Group is going to proceed funds to reduce its debt by 50 per cent. Meanwhile, remaining 50 per cent would be trimmed through operating level going forward. The group is working closely with the banks to work out a restructuring plan and some of the funds raised via the sale of Essar Oil would go into restructuring the operations of Essar Steel.

The share price of ICICI Bank has risen by 7.32 per cent, Axis Bank has added 2.54 per cent, while SBI has gained 1.75 per cent on bourses and are trading at Rs 258.8, Rs 529.85 and Rs 254.85 on intraday basis, respectively. Bank Nifty has also surged by 1.17 per cent and has touched 19241.75 on an intraday basis, owing to positive changes for banking through reduction in bad assets of one of the major groups.