Essar Group of India has become debt-free, having cleared the remaining of its $25 billion debt after selling two ports and a power plant to ArcelorMittal Nippon Steel Ltd (AM/NS). Essar, founded by brothers Shashi and Ravi Ruia, has sold businesses in industries such as telecommunications, oil refining, and steel in order to pay off its $25 billion debt.
Its steel industry was acquired by a joint venture of ArcelorMittal and Japan’s Nippon Steel & Sumitomo Metal Corp. through Essar Steel. On Monday, Essar Ports and Terminals Ltd and Essar Power Ltd completed the $2.05 billion sale to AM/NS of a 270 megawatt (MW) power plant and a 25 million tonne per annum (mtpa) port at Hazira in the west and a 12 mtpa port at Paradip in the east.
Prashant Ruia, director of Essar Capital, stated in a statement that Essar has finished its asset monetization program and completed the debt repayment of $25 billion, effectively making the group debt-free from Indian banks and financial institutions.
Synergies
The ports and power plant are captive to its India operations. It will produce operational synergies for the company. It stated that the acquisition of a 515 MW gas-fired power plant in Hazira will be completed after regulatory permits are obtained. Hazira is a 16 mtpa deep draught port in Visakhapatnam in southern India. A Gandhar-Hazira transmission line will be also part of this effort.
These assets will aid in the transportation of raw materials and completed goods between the company’s industrial plants in western, eastern, and southern India. Further, Essar stated that it has a large presence and significant operating assets in all of its primary verticals, which include energy, metals and mining, infrastructure and logistics, and technology and retail. Also, the privately held group now has revenues of over $15 billion (Rs 1.2 lakh crore) and assets under management of approximately $8 billion (Rs 64,000 crore) domestically and outside of India.
Shashi Ruia and Ravi Ruia created the Essar Group in 1969. Moreover, the company operates as Essar Global Fund Limited (EGFL), and it has assets in the primary industries of energy (oil refining, oil and gas exploration, and production, power), infrastructure & logistics (ports, projects), metals & mining, technology, and retail (oilfield services, IT, food retail). EGFL owns nearly all of its investments, with a net profit of $1.5 billion and 20,000 employees. Further, Oil UK, Ports, Oil & Gas Exploration & Production, Shipping, Power, and Projects are all important Essar Group companies. Essar is one of the renowned companies in India.
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