Essar Group To Further Cut Down Debt By 70% In Last Leg Of Deleveraging Exercise
Signage for Essar Steel Ltd. is displayed as workers load items onto a truck at the company’s Pune Facility near Pune, Maharashtra, India (Photographer: Dhiraj Singh/Bloomberg)

Essar Group To Further Cut Down Debt By 70% In Last Leg Of Deleveraging Exercise

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Ruia family-controlled Essar Group has embarked on the final leg of its deleveraging exercise, as it prepares for life after selling off its oil and steel businesses.

From 1.83 lakh crore in 2016-17, Essar Group brought down its debt by Rs 1.40 lakh crore over the next three fiscals. It now plans to cut the residual debt of Rs 42,000 crore by 70 percent to Rs 12,000 crore, according to the conglomerate’s email to policymakers and bureaucrats.

Post the proposed reduction of debt in its power business by over 60 percent (Rs 12,000 crore), and similar deleveraging across its portfolio businesses, Essar Group would have almost cleared all its long-term debts.

The remaining indebtedness is for working capital in fully operational assets.

In the email, Essar Group said it is "poised to embark on a new phase of growth while driving growth in its existing portfolio".

Despite selling its oil refinery in Vadinar, Gujarat, to Russia's Rosneft OAO and partners and losing the steel business to ArcelorMittal SA in insolvency proceedings, the group currently has interests in oil and gas, ports, power, shipping and mining projects in India and overseas that generate revenue of about Rs 1 lakh crore.

That revenue is projected to rise from Rs 94,000 crore in FY19 to Rs 98,000 crore in the current fiscal and then to Rs 1,01,000 crore in 2020-21 and Rs 1,04,000 crore in the financial year thereafter.

Indicating it has put the past behind, Essar Group said it is armed with a substantially lighter balance sheet after it took a conscious call of reducing its debt in response to the evolving domestic economic scenario.

Essar said it has made capital investments of over Rs 2 lakh crore (about $28 billion) in sectors like ports, steel plants, oil refining and fuel retailing, oil and gas exploration and production, power generation and transmission, mining, shipping, and telecom, with substantial equity from the conglomerate.

The Group said it will continue to use its entrepreneurial skills, a vast pool of human resources, and decades of experience and innovation in pursuing fresh opportunities and creating value for all its stakeholders.

The Essar letter was jointly signed by promoters Ravi Ruia and Prashant Ruia.

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