Shashi Ruia: Three setbacks in three weeks

BACKSTAGE

The Chairman of steel-to-oil major Essar group, Shashi Ruia, is an old warhorse in corporate India and has weathered many a storm. Hence, the recent series of setbacks in international acquisitions is not making the 64-year old chairman gloomy or impatient. Instead, the older Ruia is now busy setting high targets for his M&A team.

In the last three weeks, the $8-billion Essar group has lost the race for the American steel firm, Esmark, to Russian metals giant, Severestal. This was followed with the group losing its bid for a 50 per cent stake in Kenyan oil refinery to Libyan oil firm,Tamoil. And this week, Lakshmi Niwas Mittal's ArcelorMittal pipped the Ruias in taking over the Bulgarian firm, Kremikovtzi from Pramod Mittal. A host of calculations, certainly have gone wrong somewhere for the Mumbai-based group.

Unperturbed, Ruia is now looking ahead at other acquisition proposals. Ruia, who has now delegated the day-to-day running of the group to his sons, Prashant and Anshuman, came to Mumbai in 1978 from Chennai with his younger brother Ravi. Since then, the Ruias, ranked 43rd in the Forbes 2008 list, forayed into steel production, oil refining and exploration and wireless telephony and have come a long way since Shashi took over the group's reigns as a 24-year old after his father's untimely death.

After creating a strong group of companies in India with his brother, Shashi started looking out and made aggressive acquisitions abroad in the last five years. This included buying Business Process Outsourcing major, Aegis; Algoma Steel in Canada, and Minnesota Steel in the United States. The group is also investing in a steel mill in Trinidad, oil exploration blocks in Nigeria, Madagascar and Vietnam. In wireless telephony too, the Ruias "" who own 33 per cent in Vodafone Essar "" are looking to increase their presence abroad and havea invested in a GSM telephony network in Kenya.

Ruia, a good-food aficionado, is now busy charting out a $20-billion investment in various projects across the world, including India. The group is setting up new steel mills in Orissa, and increasing capacity in its Hazira plant from nine million tonnes to 25 million tonnes.

The focus is certainly on international operations too. In the last one year, the group increased its overall steel production capacity of nine million tons per annum to 25 million tons per annum. It achieved this by, among others, raising the capacity at Algoma, Canada from 2.4 million tons per annum to four million tons per annum and is investing another $500 million in the plant.

Though the Essar group has received a series of setbacks in international acquisitions, there is some room to cheer. The group took home a cheque of Rs 200 crore as consolation prize from Esmark as break-up fees, and the un-listed Algoma is today valued at $5 billion, up from $1.5 billion it was worth when the Ruias took it over.