As Debt Hits ₹1.38 Lakh Crore, the Ruias Are Looking to Recast the Group Once Again.
From his 19th floor office at Essar House in Mumbai’s Mahalaxmi, the world would seem vastly different to Essar group director Prashant Ruia by the end of 2017. It may remind him of a statement in William Shakespeare’s Hamlet: “Neither a borrower nor a lender be; for loan oft loses both itself and friend”.
Caught in a debt trap, Ruia has been forced by lenders to sell and restructure to pay off hefty loans it is struggling to service. By the time Ruia concludes the painful exercise, the Essar group will shrink to a third of its peak revenues of $27 billion in 2014/15. At $8.6 billion (₹55,000 crore), it would be down seven notches to become the 10th largest business house in the country.
Based on the 2015/16 numbers, net losses for the group will be in the range of ₹4,000-4,500 crore. Prashant Ruia expects group revenues to be $15 billion (₹96,550 crore) by March 2018 as the steel business cycle is turning round. That will be where the group was in 2011. “I don’t see it as significant erosion,” he says.
But as American author and radio host Dave Ramsey says, “You can’t be in debt and win. It doesn’t work.” The shrinking of the group is a body blow to the Ruias’ reputation and ambition. “We look forward to being more prudent. We are looking for a much stronger balance sheet, especially after refinery monetisation,” says Prashant Ruia.
When the going was good and the government had just relaxed debt-equity norms, banks were tripping over each other to lend. Ruias borrowed heavily and locked horns with every possible business house – Tatas and Jindals in steel and power, Airtel in telecom and Adani in ports. They also challenged the might of the Ambanis with the Vadinar refinery being in teasing distance from Reliance’s Jamnagar refinery. The inordinate delay in setting it up got tongues wagging about rivalry and corporate influences.
Denne historien er fra July 02, 2017-utgaven av Business Today.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra July 02, 2017-utgaven av Business Today.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
Pension Scheme - Safety Net
The move to introduce the UPS has evoked mixed reactions. Analysts believe its funding will have limited impact on the fiscal math
The Reit Choice?
Real Estate Investment Trusts (Reits) Are Gaining Traction As Interest Rates Stabilise. But Returns Could Be Affected By Adverse Economic Conditions And Market Volatility
CORPORATE - Calling to Account
The sudden exit of Byju's auditor BDO marks the latest in a long series of setbacks for the edtech firm
EMPLOYMENT: Skills Push
The skill development ministry plans to partner with the UGC to improve the employability of undergraduates
Building on a Vision
L&T'S CHAIRMAN EMERITUS A. M. NAIK HAS BUILT A MAMMOTH ENTERPRISE THAT IS BUILDING A NEW INDIA, FROM ITS METRO RAIL SYSTEMS TO THE RAM TEMPLE
"KYS more important than KYC"
Vijay Kedia is a renowned equity investor; the value of his listed portfolio stands at around ₹1,750 crore
ROXX STAR
THE THAR ROXX COMBINES LUXURY WITH PERFORMANCE TO MAKE A STRONG STATEMENT IN THE MID-SIZE SUV SEGMENT
HIT THE GROUND RUNNING
Smartwatches have become indispensable tools for runners, offering real-time insights into pace, distance, heart rate, and more. Here are a few you can consider
TURNING THE TABLES
INDIA'S FURNITURE MARKET IS POISED FOR A GLOBAL TAKE-OFF. ALREADY, A HOST OF GLOBAL BRANDS HAVE MADE THE COUNTRY THEIR HOME, BUT INDIAN COMPANIES ARE NOT TOO FAR BEHIND
THE EVOLUTION OF ATHERA
IDENTIFYING OPPORTUNITIES IN ADVANCE HAS STOOD THIS BENGALURU-BASED VC FUND IN GOOD STEAD. NOW, WITH A HEIGHTENED FOCUS ON TECHNOLOGY, IT WANTS TO SUSTAIN THE SUCCESS