The Essar group is in the process of consolidating its holdings in various businesses under a single overseas entity, Essar Global, in order to eliminate cross-holdings and have a clearer corporate structure. Like Vedanta, which, in '03, became the first Indian company to list on the London Stock Exchange, the Essar group is likely to look at the option of an international listing for Essar Global.

The Ruias have been restructuring the shareholding structure for the past six months to bring the various businesses of the Essar Group under Essar Global, a firm based in Cayman Islands. Ernst & Young have been advising the group on this restructuring.

Many Indian family-owned companies have faced the problem of cross-holdings, a legacy of the licence raj. Groups such as the Tatas and the AV Birla group have, over the years, pruned cross-holdings and taken steps towards a flatter, clearer corporate structure.

The Essar group has already brought substantial shareholdings of Essar Oil and Essar Shipping under Essar Global and is currently working on transferring the stake in Essar Steel. The move will help the group to get better valuations. According to a senior investment banker, Essar Global is likely to be valued at around $12-15bn.

This includes the group's 33% stake in Hutchison Essar, which is valued at around $4bn, and its stakes in Essar Steel, Essar Oil, Essar Shipping, Essar Power, Essar Construction, BPO company Aegis Communication and its international ventures such as the Indonesia-based steel plant, PT Essar Indonesia.

All its international ventures in the steel sector in Trinidad & Tobago, the Middle East and the South East Asia, and its new greenfield ventures in India are through Essar Global.

Vedanta, the only other India-based conglomerate to be listed abroad, has a market capitalisation of about $1.7bn. A couple of years ago, the Anil Agarwal group had done a similar restructuring, wherein family owned investment companies first transferred their holdings to a Mauritius-based investment company, Twinstar Holdings. This effectively gave control of Sterlite and Malco to Twinstar.

Twinstar was, in turn, fully owned by Vedanta Resources registered in London, while the 100% ownership of Vedanta rested with Bahamas-based investment company Volcan Investments. Volcan offered additional shares in the company through an IPO which diluted Volcan's holding in Vedanta to 54%. Vedanta raised $876m in December '03.

After the restructuring, Essar Global will emerge as a conglomerate with interest in steel, oil & gas, shipping, power, telecom and construction. The consolidation of all the businesses into a single balance sheet would also help the company to raise debt at cheaper rates internationally.

Currently, the Ruias control the group through various investment arms, including Essar Investments, Essar Global and Essar Holdings. Most of the shares, which are owned by other investment arms, will be bought under Essar Global over the next few months.

"The formation of Essar Global and the consolidation of all the group's businesses under this single umbrella will provide flexibility for its future growth in India as well as international markets," a senior Essar executive told ET.

The promoters' shareholding in Essar Steel is now 74.64%. Essar Global has also bought out the global depository receipts of Essar Oil and Essar Shipping, thereby increasing promoter shareholding in the companies to 87% and 76%, respectively.

The group currently has not firmed up any plans to delist the companies from stock exchanges in India. Essar Global spent around $823m to buy out the GDR shareholders of both these companies.

Sources said the group is likely to spend around $300m more to rejig the promoter shareholding in the other group companies. Last year, the promoters had pumped in $450m to help Essar Steel take over Hi Grade Pellets and Gujarat Steel Corporation. The move also helped them increase stake in the company.

Sources said that the company has raised loans worth $500-600m from international bankers led by Standard Chartered Bank to fund these purchases. Essar Global has pledged shares of some of the group companies for this transaction.