‘After Rosneft deal, Essar group can now grow rest of its portfolio’
MUMBAI: The phase of consolidation and monetisation of assets is over in the Essar group, says CEO Prashant Ruia after seeing through the $12.9-billion sale of Essar Oil to a Rosneft PJSC-led consortium. The group is preparing a resolution plan for Essar Steel which is under an interim resolution professional and Ruia hopes to retain control. Edited excerpts from an interview:
Do you have plans to reenter the refining space?
We have not exited the oil and gas business. We still have coal-based methane. We still have Essar Oil UK refinery. We don’t have any plans to re-enter the refining and distribution business.
Are there any tax implications for this deal?
Tax implications are based on the laws of the land. Part of it (the deal) will be in India and part will be in Mauritius. Based on the laws, whatever tax is applicable will have to be met. It’s too early to determine. There’s confusion regarding the noncompete agreement. Is it for three years or forever? We have already issued a clarification that it is for three years.
You have reduced ₹70,000 crore worth of debt at the group level. How much would the outstanding consolidated debt be?
We have said ₹70,000 crore is more than 50%, the balance will be less.
The key part that has been missed is Essar’s strength to create world-class assets, starting from scratch in core sectors. We did that in telecom. We made certain investments over a period of 10 years and then we exited after selling to Vodafone. We made 10X return on our investment. We did that with Aegis. We decided to exit, and we got 5X returns. Now we have done it in oil. When we did the IPO in 1995, our market cap at that time was ₹2,000 crore. Now we have exited. The final number is ₹50,400 crore.
But weren’t these exits under duress?
There is no duress. The company has performed exceptionally for the past 15 years.
When you exited telecom, you had reinvested in some of the other businesses...
That is what we are saying here also. Now, with a de-leveraged balance sheet, we have the ability to grow the rest of the portfolio. This is the flexibility we now have.
What are you going to focus on?
We have got oil and gas, steel, ports, power. The ability to grow in power is limited because of the surplus in the market. We are looking at the whole set.
We had to consolidate, monetise and complete the capital investment programme of ₹1.2 lakh crore, that phase is over. Now we are looking at the next phase.
What is happening at Essar Steel?
We are in the IBC (insolvency and bankruptcy code) process. We will respect the process. We will provide a resolution plan as we had provided earlier, which we gave to Indian lenders. We hope it will be successful. We hope we can restructure the business.
Will you provide the same resolution plan or a different one?
It’s too early to say.
Now that the deal is done, does it give you greater flexibility?
I have the flexibility now to invest and provide a plan.