Acquisition of Navabharat Power transparent, legitimate: Essar

Ruias-owned Essar Power today said its acquisition of Navabharat Power Pvt Ltd (NPPL) -- one of the five companies raided by the CBI in connection with the coal block allocation scam -- was "transparent" and NPPL was never its front company.

Stating that it had paid Rs 230 crore to acquire NPPL in two tranches in 2010 and 2011, three years after the company was allocated two coal mines in Odisha, Essar Power said it had "no dealing with either of the original promoters until this transaction".

Essar Power "categorically denied" allegations that Navabharat was its 'front' company and asserted the deal was "legitimate".

"Following the acquisition, Essar Power has invested more than Rs 500 crore in developing the project and has also achieved financial closure, with ICICI Bank having underwritten debt financing of more than Rs 3,720 crore," the company said in a statement. "The project is currently awaiting certain government approvals," it added.

In a separate statement, Navabharat Group said it had sold its 50 per cent in NPPL to Essar Power "in a transparent and diligent manner and full disclosures were made to the stock exchanges on July 13, 2010 and April 20, 2011".

The sale, it said, followed Malaxmi Group - the other promoter in NPPL, selling its stake to Essar Power "in total disregard to the interest of the other investor" (Nava Bharat Group).

"...Equity divestment (50 per cent in NPPL) was due to exigencies beyond the controls of the Nava Bharat Group and was in the best interest of its shareholders," the Hyderabad-based firm said.

The "active management" of NPPL, including the pursuit of the coal block at the relevant time, was with Malaxmi Group-appointed Managing Director, it added.