Notwithstanding the setback caused due to the loss of its flagship steel business to ArcelorMittal, the Essar group has embarked on the next phase of investment-led growth.
In a mailer sent to Union ministers, Chief Ministers and top bureaucrats on the occasion of the group’s 50th anniversary celebrations, the promoters Ruia family said it is looking to embark on a new phase of growth on the strength of a substantially lighter balance sheet arising from repayment of ₹1.4-lakh crore loans over the last three years.
Essar did not specify what the new growth areas could be, but said it took “a conscious call of reducing its debt in response to evolving domestic and evolving economic scenario.”
Despite losing Essar Steel in insolvency proceedings, cash flows remain strong, with ₹1-lakh crore of revenues from existing businesses.
The letter was jointly signed by Ravi Ruia and Prashant Ruia.
“In the largest debt reduction exercise in the history of corporate India, we have paid about ₹140,000 crore ($20 billion) of debt to the banking system over the last 3 years,” the promoter Ruia family wrote in the letter.
Essar, the promoters said, had made capital investments of over ₹2-lakh crore in the vital sectors of ports, steel plants, oil refining and fuel retail, oil and gas exploration and production, power generation and transmission, mining, shipping and telecom, with substantial equity contribution.
“We have built some of the finest assets in these sectors, creating thousands of jobs, and contributing several thousand crores of rupees to the Indian exchequer by way of taxes and royalties,” they wrote.
Reminiscing the last 50 years of the Essar journey, the Ruias said the group had to face several business and regulatory challenges along the way in its flagship steel and power businesses, “which particularly impacted us.”
“Committed gas supply contracts for the Essar Steel Complex were withdrawn in 2012 and allotted coal mines for power plants were cancelled in 2014, leading to a partial closure of some of our prime operating assets,” they said.