Essar Group co-founder Shashi Ruia dies at 80
Ruia's vision was instrumental in shaping Essar into a global entity with an asset base of approximately $9.6 billion and annual revenues exceeding $15 billion
Industrialist Shashi Ruia, who co-founded the Essar Group with his brother Ravi Ruia, has passed away at age 80.
He and his brother Ravi Ruia founded the Essar Group in 1969, starting with a small order from the Madras Port Trust worth ₹2.5 crore. Under their leadership, Essar diversified into various sectors: shipping, oil refining, power, telecommunications, and steel. It became one of India's largest multinational conglomerates, with operations in over 25 countries and over 75,000 people employed.
Ruia's vision was instrumental in shaping Essar into a global entity with an asset base of approximately $9.6 billion and annual revenues exceeding $15 billion. He was known for his strategic foresight in infrastructure investing, paralleling India's economic growth over the decades. The group's businesses range from mining, oil and gas to retail.
However, in later years, the Essar Group's aggressive expansion strategy led to substantial debt accumulation. By 2017, the group's debt had reached approximately ₹1.3 lakh crore (around $18 billion), primarily due to over-leveraging to finance rapid growth across various sectors, including steel, oil, and telecommunications.
The group's heavy dependence on sectors like steel and oil made it vulnerable to fluctuations in commodity prices. This strategic focus became a liability during periods of economic downturn when these sectors faced significant challenges.
Essar Steel has faced multiple loan defaults over the years, with its first significant loan default occurring in 2000. The group has had to file for bankruptcy protection for its companies in the US and sought debt restructuring several times. This culminated in the sale of key assets and a struggle to maintain its position in the market.
The global price downturn significantly affected Essar Steel's viability, compounded by issues such as dumping from Chinese manufacturers that created an unfavourable competitive environment.
Shashi Ruia often voiced concerns about bureaucratic hurdles and regulatory delays that impacted business operations in India. His advocacy for more liberal policies regarding resource allocation highlighted ongoing tensions between private enterprises and government regulations.
