Business

Essar looks to reinvent itself

Group plans to diversify into new age sectors

After being virtually forced to sell cash cow Essar Oil to Rosneft-led consortium to reduce debt and losing Essar Steel to ArcelorMittal, the Ruias-led Essar Group has started working on reinventing the group sans the two companies.

Minus Essar Oil and Essar Steel, group revenue would halve to $13 billion from $26 billion, EBITDA to $5 billion and net profit reduce to $1 billion from $3 billion, a senior group executive told The Hindu.

“The group, with presence in five sectors of energy, infrastructure, metals and mining, services and technology, will be looking to diversify for growth in new sectors, which are less regulated,” according to Prashant Ruia, director, Essar Capital. The company had paid ₹1.4 lakh crore to the lenders in the last three years through asset monetisation and plans to pay the balance 10-15% in the next two quarters.

“We are obviously going to look at growth in new sectors, those will be the more unregulated sectors, which are much more akin to the new economy and which the market perceives differently or more valuable from some of the more traditional sectors,” Mr. Ruia said in an internal chat.

Unforeseen risks

“What we did not, or could not, foresee was the risk of regulation and judicial intervention that would go on to literally cripple these sectors,” he said.

Despite deleveraging, the group still has a fairly substantial portfolio of assets and companies in energy, infrastructure, metals and mining, services and technology sectors, and is confident of growing businesses that straddle these sectors, Mr. Ruia said, adding that even as it monetised assets, as a group, Essar attracted foreign direct investment worth over $32 billion.

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Printable version | Jul 3, 2020 3:42:22 PM | https://www.thehindu.com/business/essar-looks-to-reinvent-itself/article29728262.ece

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