1. How will the financial statements differ if Essar moves away from Indian GAAP?

2. How will this impact the shareholders?

3. Evaluate the advantages and disadvantages of the three GAAP alternatives. Which of the three GAAPs would you recommend?

In May 2010, Essar Energy plc raised about $1.9 billion in an initial public offering (IPO) on the London Stock Exchange (LSE) at a time when demand for equities was sluggish. It was the largest IPO of an Indian company in London, and the second-largest IPO of an Indian company outside India. The size of the IPO immediately put Essar Energy into the top 100 companies listed in London; therefore, its share price would likely be included in the FT100 index in due course. As Xavier Rolet, CEO of the LSE,

A float of this size is a major win for London and a significant achievement for Essar Energy, which is now positioned on our flagship Main Market alongside its global peers. Despite difficult market conditions, London’s deep pool of international, institutional capital continues to support the financing needs of the world’s largest companies. I am pleased that there is a strong pipeline of prospective Indian issuers, and am hopeful that over the coming months and years other high profile Indian companies will follow Essar Energy’s lead to market. The capital markets and sect oral expertise available in London are a perfect match for ambitious Indian companies looking to expand globally.