12 May, 2021

A Dream Crumbles

Essar's problems were caused by external factors, but also because it tried to grow too fast

A Dream Crumbles
Less than 24 hours after Essar Steel Ltd (ESL) became the first Indian company ever to default on an overseas payback commitment, vice-chairman Ravikant Ruia is defensive yet calm. He wants people to hear his side, waving sheaves of paper to support each argument. Sixteen-year-old Revant sits next to his father, learning the subtle art of damage control. Which Ravi Ruia should be a master at by now, given the number of controversies that have dogged the Essar group.

What moths are to fire, the Ruias are to controversy. A sebi inquiry into the Essar Oil public issue, corruption charges in Essar Construction tenders, cheques bouncing on Digvijay Cement and the customs department, accusations of using political connections to profit ESL, suspicions of diverting public funds into personal bank accounts abroad, and now the inability to repay investors against $250 million worth of five-year floating rate notes (frns) that Essar Steel raised and which fell due on July 20. The Ruias had hoped that Indian financial institutions like idbi, uti and lic would bail them out, but at the last...

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