A bird’s eye view of the Group

IIPM PUBLICATION

But then the roof suddenly fell. The steel business, that looked a solid bet till the mid 1990s, when the Ruias gambled billions on a new project, suddenly went into a tailspin. Far from generating profits like the much anticipated cash cow, the steel business virtually bled the Group dry. The cyclical downturn in the steel industry during the late 1990s and the early years of this century was one of the key reasons for the Essar Group reaching a stage of financial collapse and bankruptcy. By the late 1990s, the Group was already gasping for cash and was forced to sell a substantial stake in the mobile telephone business to Hutchison of Hong Kong. Of course, analysts now praise the Ruias for the guts and farsightedness in clinging on to about 33% of the stake in the mobile phone business even when the Group was in dire financial straits and the temptation to cash was strong.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative