The Ruia-owned Essar Group has entered the final leg of its deleveraging exercise as it plans to cut residual debt by 70 per cent to about Rs 12,000 crore post sell off of its oil and steel business.
From Rs 1.83 trillion of debt in FY17, the group has brought down the debt by a staggering Rs 1.40 trillion over the last three years. Now, it plans to cut residual debt from Rs 42,000 crore to about Rs 12,000 crore, Essar Group said in a mailer sent to policymakers and bureaucrats.
After the proposed reduction of debt in the power business by over 60 per cent (Rs 12,000 crore), and similar deleveraging across its portfolio businesses, Essar Group would have almost cleared all its long-term debts, said the mailer.
The balance Rs 30,000 crore debt is the working capital requirement of the group in its fully operational assets. The group is poised to embark on a new phase of growth while driving growth in its existing portfolio, the mailer said.
Group promoters– Ravi Ruia and Prashant Ruia have jointly signed the mailer. Post sell-off, the group holds interests in oil and gas, ports, power, shipping and mining projects in India and overseas that give revenue of Rs 1 trillion.
Essar in the mailer also said that revenues are projected to rise from Rs 94,000 crore in FY19 to Rs 98,000 crore in the current fiscal and then to Rs 1,01,000 crore in 2020-21 and Rs 1,04,000 crore in the year thereafter.
Indicating it has put the past behind, Essar said it is armed with a substantially lighter balance sheet after it took a conscious call of reducing its debt in response to evolving domestic and evolving economic scenario.
“Our strong portfolio of companies consistently generates healthy and sustainable earnings and have combined revenue of Rs 1,00,000 crore ($14 billion),” the mailer quoted.
Essar informed that it has made capital investments of over Rs 2 trillion (about $28 billion) in sectors like ports, steel, oil refining and fuel retailing, oil and gas exploration & production, power generation & transmission, mining, shipping, and telecom, with substantial equity from Essar Group.