Sashikant and Ravikant Ruias were born and brought up in Chennai. They had their education in Chennai and were fluent in Tamil, even more in Chennai-Tamil. Their father started as a civil contractor engaged with the construction of the Chennai Port in its early phases. If you find a couple of hills around Meenambakkam and Pallavaram in Chennai missing, you can fathom the breakwaters of Chennai port to rediscover them.
With experience gained in civil contracts, Ruias shifted to Mumbai and foresaw tremendous opportunities unfolded by the discovery of oil at Bombay High. The enterprising brothers started with supplies of victuals and other materials for the construction of oil platforms 100 km away from the shore. They quickly learned the various aspects of working on marine projects and boldly expanded activities that included the laying of submarine pipelines.
This experience led the duo to specialise in shipping and oil industries. Essar Shipping ensued and soon they also acquired South India Shipping Corporation and emerged strong in shipping. The two looked for opportunities across much broader areas. They bought a mothballed sponge iron plant in Europe and transplanted it to Hazira in Gujarat. Thus was born Essar Steel and soon expanded from sponge iron to a wide range of steel products. With the appetite for steel growing, this massive project in the west coast gained traction as a major supplier of steel products. Essar integrated the process backward by procuring iron ore from Madhya Pradesh and processing this into pellets at Visakhapatnam. Their shipping expertise was a big help in transporting these from the east coast to Hazira in the west. For quite a few years Essar was registering expansion at a frenetic pace.
The group also identified the potential of the oil sector; set up a large refinery at Vadinar near Jamnagar in Gujarat.
Essar expanded further into infrastructure, civil construction, and power. For a while, the group appeared to follow Reliance in terms of its aggressive growth. But where Reliance was focused in select fields, Essar attempted to evolve a large conglomerate in diverse sectors. The gearing was unmanageable with debts far exceeding equity.
This was no issue until recent years when banks were liberal in continually restructuring loans. With banks’ NPAs reaching gigantic proportions and the RBI tightening the NPA norms, the two large businesses of the group, initially Essar Oil and later Essar Steel, came under the National Company Law Tribunal (NCLT) and were forced out of the group.
