<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[<p>India-focused Essar Energy posted core earnings well short of forecasts, hit by weaker refining margins and depreciation of the rupee, and warned it may scrap some power projects.<br><br>Full-year earnings before interest, tax, depreciation and amortisation (EBITDA) were $624.8 million, compared with $696.5 million in 2010 and the average forecast of $685 million by 10 analysts which was supplied by the company.<br><br>Essar is facing twin setbacks in India, its key market for oil products and electricity, due to delays in government approval to mine cheaper coal from its own resources and a court ruling which ended a tax break for a subsidiary.<br><br>"The full-year results reflect challenges on funding position, project execution and fuel sourcing," Deutsche Bank analysts said.<br><br>Essar's shares, which are worth less than a third of their 2010 listing price, slumped 8.1 percent to 115.8 pence at 1042 GMT, making the company the biggest loser on Britain's bluechip index.<br><br>Essar Energy -- 77 percent-owned by privately-held Indian conglomerate Essar Group -- is the majority shareholder in India-listed Essar Oil which is trying to review an Indian court ruling ending removing its deferred payment of sales tax.<br><br>Essar Oil had deferred $1.24 billion under a tax break from the government of India's western state of Gujarat, where the company's Vadinar refinery is located. Under the previous deal, the sales tax had been repayable from 2021 onwards.<br><br>Naresh Nayyar, Chief Executive of Essar Energy, said he was confident that any repayments due will be met through internal funding and new loan facilities, and that Essar Energy will be able to refinance a $450 million loan which expires in December.<br><br>"We don't see any issue of raising this capital or raising these funds and meeting our obligations in the case that our review petition is not successful," he said on a call with reporters.<br><br>The company also said that it might not participate in a future $609 million capital raising planned by Essar Oil, potentially reducing its 87 percent stake in the unit.<br><br>Essar Energy said it was having to source higher cost coal from outside India to fuel its power stations as it awaited government clearance for it to be able to start mining its own coal.<br><br>As a result, Essar said it may shelve plans for three power projects which would require $3.1 billion of investment.<br><br>"Essar Energy has also decided to progress the construction of three of its later stage power projects at Salaya II, Salaya III and Navabharat I, totalling 2,970MW, which were due to be commissioned in 2014, only against certain milestones," said the company.<br><br>Deutsche Bank analysts said that the decision to possibly scrap the power projects and not participate in the Essar Oil capital raise would give Essar Energy more headroom and make refinancing attempts easier.<br><br>(Reuters)</p>