Billions to Bust

As the sale of Essar Steel under the Insolvency and Bankruptcy Code, or IBC, moves a step closer, its past owner, the Ruia family, is coming to terms with the fact that re building its business empire to the scale it enjoyed just five years ago might take decades. At its peak, the group, promoted by brothers Shashi Ruia and Ravi Ruia, and at present run by Shashi's son Prashant Ruia, had interests in half a dozen sectors oil refining, power, steel, ports, telecom and BPO, in India and abroad. In 2014/15, it was among the top five business houses in India with revenues of Rs1.6 lakh crore. It had also run up a debt of Rs1.3 lakh crore.

After the IBC process is over, the Ruias would have lost not only their crown jewel, Essar Steel (Rs20,000 crore revenue in the last financial year), but also a number of power and port assets that lenders are referring to the National Companies Law Tribunal or NCLT. They will still own some companies but the group will be less than one third the size it was five years ago.

The Ruias did everything possible to hold on to Essar Steel. In 2016, they sold their Vadinar oil refinery, a captive power plant and a port for $12.9 billion to pay off some group level debt. They even tried to bid for Essar Steel when it was offered for sale under the IBC. But the government changed the IBC rules and barred promoters from bidding unless they paid banks the entire money owed by them.

The only consolation is that even after losing Essar Steel, the Ruias would control several companies with combined revenues of over $7 billion, thanks to the Stanlow refinery in the UK. Several others who had built their business empires using cheap debt during the go go years of the economy in the last decade would consider them lucky. They, after all, are losing almost everythingthey ran.

The warring Singal brothers Sanjay and his younger sibling Neeraj in race to build bigger and more modern steel factories have lost their companies. Neeraj's Bhushan Steel has been snapped up by Tata Steel, while JSW Steel and Tata Steel are fighting for Sanjay's Bhushan Power and Steel. The Singals will have no significant business left after this.

The Gaur family of the Jaypee group will also lose most of their assets. They started off as government contractors for big dams such as Sardar Sarovar and Tehri. But after the IBC process is over, they would have lost almost all their businesses cement, power, real estate and infrastructure. The most profitable cement plants have already been sold to clear some debt. The real estate business is facing bankruptcy, and after its sale/liquidation, the Gaurs will probably have a handful of relatively smaller assets, if anything.

They have company in Sandip Jajodia (the brother in law of JSW Group's Sajjan Jindal), who built the Monnet Ispat group; Arvind