Shashi Ruia: candid to the core

He built a multibillion-dollar business conglomerate, Essar starting from scratch in the early 1960s in Madras (now Chennai) in partnership with his brother Ravi Ruia. Though he was clearly the leader, he never stopped emphasising that Essar stands for Shashi-Ravi – a partnership that withstood over six decades of stress, unlike many other family businesses, where partnerships have fallen apart to the detriment of fortunes of businesses and individuals.

India abounds in conglomerates, especially family-owned ones. They defy the modern international trend of narrowly focussed businesses. Even then, for a first-generation entrepreneur like Shashi Ruia to have built multiple large businesses in steel, oil refining, telecom, IT services, infrastructure, ports, shipping, power, oil & gas exploration, coal bed methane, iron ore pelletisation and other areas is perhaps unprecedented.

Ruia built some businesses, organically ground-up like steel, refining, shipping, IT services, oil & gas, pelletisation, infrastructure, etc. And, some other businesses he did through audacious acquisitions and deal-making – like mobile telephony in Delhi (from Sivasankaran of Sterling), Shell refinery in Stanstead, UK, ALGOMA Steel in Canada, iron ore mines in Minnesota, US and so on.

He also knew when to quit a business while it is going on successfully and move on, as he did in mobile telephony of Essar Telecom and sold it to Vodafone for $5.46 billion. He also sold the Essar oil refinery in Vadinaar, Gujarat, to Rosneft, Russia and its partners for a huge $13 billion in 2017.

Of course, parting with Essar Steel in Hazira when forced by lenders and NCLT in 2018-19 was painful to him, since he had built it ground up brick by brick. The hot briquetted iron project using gas in Hazira was the first major project of Essar, set up in the late 1980s. Its phenomenal success and healthy export earnings fuelled the group’s expansion in the 1990s, given a leg up by India’s liberalisation into an electric arc-based steel mill, as opposed to the conventional blast furnace-based integrated steel mills of yore.

There was backward and forward integration along the chain with port infrastructure, a gas-based power plant, a flat product producing cold rolling mill, a pelletisation plant on the east coast, benefitted by the abundant iron ore supply from eastern India, and so on. Hazira was where Shashi Ruia spent most of his time. The insolvency process of the newly created IBC was a setback. However, it led Essar to rethink and restructure its businesses and become debt-free, in order to start a second innings. Thus followed a series of asset monetisations. 

Essar sold the power station and port in Hazira to the new owners of steel plant, ArcelorMittal and Nippon Steel, for $2.4 billion. Similarly, the innovative 253 km long slurry pipeline that carried iron ore fines, considered a mining waste, from Bailadilla to Vizag, where the fines were converted into iron ore pellets to be used as valuable feedstock for steel plants, were also sold to ArcelorMittal/Nippon Steel for $2 billion. Also, Essar Shipping, which had become a major player in Indian shipping was sold to Liberty group, based in the UAE, for $1 billion in 2020.

With the successful conclusion of restructuring, the focus now became building up and modernising the oil refinery in Stanstead in the UK, plans for green transition to renewable energy and hydrogen, renewed interest in the iron ore mines acquired earlier in Minnesota and a greenfield steel mill there, increasing coal bed methane production in Ranigunj, West Bengal, and so on. Shashi Ruia also implemented a well-thought-out succession plan within the group. 

Business India has been following the group, its ups and downs, from the 1980s to this day. We will miss a remarkable entrepreneur in Shashi Ruia’s passing away. He was candid and full of anecdotes and chutzpah. In an apocryphal story, once at IIM Ahmedabad, he asserted in his usual jovial style that he is not an MBA like his audience, but MBB. He went on to explain to his perplexed, blue chip, B-School audience that MBB stood for Marwadi by birth!

He was a man who paid attention to detail and loved to be on the project sites. Every employee in Essar soon found out that the best place to meet the chairman was not the swanky group HQ at Mahalaxmi, but the dusty sites – be they highway and pipeline projects or steel mills and factory townships. He visited them regularly and enjoyed engaging his staff in his own ‘walk-about style of management’. He would exchange pleasantries with one and all – drivers, personal assistants, executives or top-notch secretaries to the government of India, often breaking into fluent dockyard Tamil (if any of them were from Tamil Nadu) and disarmed everyone.

Farewell, Shashi Ruia, India’s business world will miss you.