Essar Group


Essar Group is an Indian multinational conglomerate and construction company, founded by Shashi Ruia and Ravi Ruia, in 1969.
Essar Global Fund Limited controls a number of assets across the core sectors of Energy, Infrastructure, Metals & Mining, and Services. EGFL holds near 100% stake in all its investments.

History

In 1969, Shashi Ruia won a major contract worth Rs. 2.3 crore for construction of outer breakwater for Chennai port, thus laying the foundation of Essar Group. In 1976, Essar purchased India's first private tanker for US$ 2 million. In 1986, Offshore & Energy divisions were setup to undertake specialized offshore and drilling activities. In 1988, Essar Steel's first HBI module at Hazira commenced production. In 1991, Essar conceptualized 515 MW combined cycle power plant at Hazira, as India's first Independent Power Producer. In 1995, phase-1 of 2 million tonne steel plant was commissioned. In 1997, Essar Telecom obtained licenses to operate phone services in Delhi, UP, Haryana, Rajasthan & Punjab. In 2005, Essar became an integrated steel player by completing the acquisition of Hy-Grade Pellets Limited & Steel Corporation of Gujarat Limited from Stemcor, UK. In 2006, Essar Steel expands to 4.6 million tonnes; becomes largest flat steel producer in India. In 2007, Essar Global acquired Minnesota Steel LLC, a US-based steel company with estimated reserves of over 1.4 billion tonnes of iron ore. In 2007, Vodafone & Essar agree on a partnership to establish Vodafone-Essar. In 2007, Essar acquired Global Vantedge, a Bermuda-based BPO company. In 2007, Essar set up The MobileStore, India's first countrywide chain of multi-brand & multi-service retail outlets dealing in mobile telephony. In 2008, commercial production started at Vadinar refinery, with an initial capacity of 10.5 million tonnes. In 2009, Aegis debuted in Jammu & Kashmir by setting up 2 BPO centres. In 2010, Essar acquired Aries coal mines in Indonesia, and AGC Networks. In 2010, Essar Oil was awarded 4 coalbed methane blocks. In 2011, Essar sold its stake in Vodafone-Essar to Vodafone. In 2011, Essar Energy purchased Royal Dutch Shell's Stanlow Refinery for US$ 350 million. In 2011, Essar Steel completed the expansion of its capacity to 10 million tonnes. In 2012, Vadinar Refinery completed the expansion of its capacity to 20 million tonnes. In 2014, Essar completed the sale of Aegis USA Inc. to Teleperformance. In 2017, Essar Energy and Oil Bidco successfully concluded the sale of Essar Oil India to Rosneft-Trafigura-UCP consortium for US$ 12.9 billion. In 2018, Essar entered into an agreement with GAIL for off-take of entire production from its Raniganj East CBM block. In 2018, Essar built India's largest iron ore handling complex of 24 MTPA at Vizag port. In 2018, AGC Networks acquired Blackbox Corporation. In 2019, Essar Group's deleveraging efforts reduce the debt by over Rs. 1.3 lakh crores.

Energy

Essar Oil & Gas Exploration & Production Ltd. owns a portfolio of CBM blocks with about 1.7 billion barrels of oil equivalent in reserves and resources. It operates India's highest producing CBM block in Raniganj, West Bengal, and owns four other CBM blocks. EOGEPL's Raniganj East CBM block in West Bengal, which is the highest producing coal bed methane block in the country, also has tremendous shale potential as has been confirmed by an independent study. The block has shale gas resources of 7.7 TCF and recoverable reserves of 1.6 TCF. EOGEPL has invested around Rs 4,000 crore in the Raniganj block, which will produce 1.7 million standard cubic metre per of gas from coal seams in the next two years. The volume will go up to 2.5 million cubic metre per day at standard conditions in three-four years.
On 4 March 2019, Essar Group announced that EOGEPL has received environment clearance for exploring shale gas reserves in its Raniganj block in West Bengal, following the government's decision to allow operators freedom to explore both conventional oil and natural gas as well as non-conventional sources like coal-bed methane and shale reserves within an exploration acreage. With the policy for simultaneous exploration of unconventional resources in place, EOGEPL is looking into the shale prospect in the same blocks which is in the range of 7.7 trillion cubic metre. EOGEPL could spend up to $ 1 billion in development of shale reserves if the exploration programme was successful. EOGEPL has already signed an agreement to sell entire production from Raniganj East CBM block to state gas utility GAIL India. Besides Raniganj CBM block, the company also has the Mehsana CBM block in Gujarat where it plans to drill six wells.
Essar Oil UK owns and operates the 9 million tonne Stanlow Refinery located on the south side of the Mersey Estuary in Ellesmere Port, UK. Stanlow produces approximately 16% of UK road transport fuels, including 3 billion litres of petrol, 4.4 billion litres of diesel and 2 billion litres of jet fuel per year. The company has also started petroleum retailing and has over 45 outlets in the UK, with a target to open 400 outlets in the next five years. Essar's Stanlow Refinery enjoys a number of advantages such as its close location to Liverpool and Manchester, impressive scale and Europe's largest residue cat cracker.
In FY18, Essar Oil UK delivered robust financial performance with revenues at US$5.4 billion, EBITDA of US$300 million for a third consecutive year and Profit after Tax of US$161 million, despite the refinery operating for only nine months in the financial year due to the shutdown period involving upgrade work. With the completion of largest ever upgrade with a capex spend of US$258M, Essar Oil UK expects further reliability and profitability.
On 6 February 2019, Essar Group unveiled the latest phase of its strategic business development after announcing the acquisition of a number of assets from BP to further strengthen the company's logistics infrastructure network which will fuel growth ambitions in the UK. The latest expansion of its UK interests means Essar has now invested nearly US$1 billion in building a profitable and sustainable UK business, since first acquiring the Stanlow Manufacturing Complex in July 2011. Under the agreement, Essar will acquire an equity stake in the UKOP pipeline, a share of the contractual joint venture which runs the Kingsbury Terminal and a 100% interest in the Northampton Terminal.
In 2017, Russia's energy giant Rosneft, Trafigura, and UCP Investment Group acquired Essar Oil for US$12.9 billion, making a grand entry into the world's most sought after energy market with plans of grabbing a larger share of the fuel retail market in India and significantly better financial performance. The new owners have acquired India's largest network of private petrol pumps, the country's second-largest refinery, a 1,000-MW power plant along with the Vadinar port and oil terminal. Essar Oil was later rebranded as Nayara Energy, to compete and succeed in the new era and meet customer needs in the fastest growing energy market in the world.
Essar Power Ltd. is one of India's largest private sector power producers with an operating track record of over 20 years. It owns plants in India and Canada with a planned generation capacity of 5,090 MW, of which 3,830 MW is operational. The operating plants are at Mahan in Madhya Pradesh, Hazira & Salaya in Gujarat, Paradeep in Odisha, and Algoma in Ontario, Canada. Another 1,260 MW of capacity is under construction at Tori, Jharkhand, and Paradeep. Essar Power has also invested in the transmission business, building a 465 km transmission system that spans three Indian states.

Metals & Mining

is a fully integrated flat carbon steel manufacturer–from iron ore to ready-to-market products–with a current capacity of 10 million tonnes per annum. Essar Steel's manufacturing facility comprises ore beneficiation, pellet making, iron making, steel making, and downstream facilities including cold rolling mill, galvanising, pre-coated facility, steel processing facility, extra wide plate mill and a pipe mill. In June 2017, Reserve Bank of India named Essar Steel India Ltd. in a list of 12 defaulters and asked respective lending banks to initiate insolvency proceedings against them under Insolvency and Bankruptcy Code, 2016. In October 2018, ESIL's majority shareholder, Essar Steel Asia Holdings offered a settlement proposal to repay entire debt of Rs 54,389 crore. Meanwhile, Committee of Creditors approved ArcelorMittal's bid of Rs 42,000 crore, with 92 per cent majority vote. In January 2019, NCLT held ESAHL's Rs 54,389-cr settlement offer 'non-maintainable'. On 8 March 2019, NCLT approved ArcelorMittal's Rs 42000 crore bid for Essar Steel. On 15 November 2019, Supreme Court scrapped a bankruptcy appellate tribunal's order that gave secured and unsecured lenders equal right over the proceeds, paving way for ArcelorMittal's takeover of the company.
Essar Global had acquired Minnesota Steel in 2007, giving it access to rich iron ore reserves. But a commodity slowdown and delay in projects led Essar Steel Minnesota to file for bankruptcy in 2016. The firm was later taken out of bankruptcy by Mesabi Metallics in 2017. Essar Global has purchased $260 million face value notes issued by Mesabi Metallics Inc., which paved the way for Essar Global to once again participate in the low-cost iron ore mining and pellet manufacturing project that is under construction in Minnesota, USA.
In 2010, Essar Group acquired Trinity Coal from energy and commodities focused PE firm Denham Capital for $600 million through its arm Essar Minerals. In 2014, Essar Group infused more than $150 million through its affiliates to reorganize its bankrupt unit Trinity Coal Corp. Trinity Coal successfully resolved more than $325 million of claims and is continuing operations after emerging from bankruptcy.

Services

, through its subsidiaries Essar Oilfields Services Ltd and Essar Oilfield Services Ltd., provides onshore and offshore drilling and related services to international clients.
Essar Shipping has a fleet of 12 vessels with a total capacity of 1.12 million DWT, which includes: 1 double hull very large crude carrier, 6 mini-capesize vessels, 1 panamax bulk carrier, 2 supramax bulk carriers, 2 general cargo ships of 13,000 DWT each. Essar Oilfields Services: 15 land rigs and 1 semi-submersible offshore rig.
AGC Networks, an Essar Group company was acquired by the conglomerate in 2010, providing Unified Communications, Cyber Security, Network Infrastructure & Data Center, and Enterprise Applications & Services. AGC has a presence in 9 countries, with a network of offices in India.
On 9 January 2019, Essar Group announced that a wholly owned subsidiary of AGC Networks has completed the acquisition of Black Box Corporation in the US.
In 2003, Essar Group acquired Aegis Communication. Under Essar Group's ownership, Aegis transformed from being a US-based loss making unit with revenues of just US$52 million to become a significant player in the Business process outsourcing industry, growing over 10-fold, with revenues of around US$1 billion. Following the 2014 sale of Aegis’ BPO business in the US, the Philippines and Costa Rica to Teleperformance for $610 million, Essar went about rebuilding the rest of the company in growing markets. Aegis scouted for a chain of fresh acquisitions in Korea and Japan for empowering the Malaysia unit, and enhancing its strength in Latin American and European countries. Aegis forayed into Malaysia by fully acquiring Symphony BPO services in Kuala Lumpur, a business that went on to grow more than threefold, while retaining the business in nine countries— India, Sri Lanka, Malaysia, Australia, Saudi Arabia, UK, South Africa, Peru and Argentina. In November 2017, Essar sold Aegis’ operations in these nine countries to Capital Square Partners for US$300 million marking Essar Group's complete exit from the BPO business.
In 1995, just months after mobile telephony in India was opened up to private participation, Essar Group became the first company to start GSM operations in Delhi under the brand name, Essar Cellphones and roped in Swiss PTT as a joint venture partner. Essar acquired licenses for the telecom circles of Eastern UP, Rajasthan, Haryana and Punjab. In 1999, the government announced a new telecom policy that was more conducive to growth. While Essar was keen on capitalising on the opportunities that the new policy afforded, Swiss PTT was contemplating an exit from its India operations as part of a wider pan-Asia strategy. Essar found a new partner in Hutchison to create a joint venture company that went about consolidating operations and acquiring more telecom circles. In 2005, when the government came out with the unified licensing scheme, the JV started merging all the telecom circles. By 2006, all the circles were under one umbrella—Hutchison Essar Limited. Essar owned 33% stake in the consolidated entity. Independently, Essar had acquired licenses in seven circles, where Hutchison Essar did not have operations, as well as in four circles of BPL. Essar merged these circles into Hutchison Essar to create a sizeable telecom major. In 2006, Hutchison, too, decided to exit India. Essar wanted to buy out Hutchison's stake and tied up a line of credit of over US$11 billion. After a fierce round of bidding that involved several large corporations, Vodafone bought the Hutchison stake, which was valued at US$11.5 billion. For the next five years, Essar Group continued to have a 33% stake in the JV. What started out with an initial investment of US$800 million had reached a valuation of US$18.8 billion in just six years. Hutchison Essar's subscriber base, too, had grown from 1,50,000 to 28 million. In 2011, Essar decided to monetise its put option and exit the JV to fund a huge $20-billion capital expenditure programme across its core sector businesses, like Steel, Oil & Gas, Power and Ports. By this time, Vodafone-Essar’s subscriber base had grown to over 135 million. Essar received US$5.46 billion from the proceeds of the monetisation.

Infrastructure

Essar Ports develops and operates ports and terminals for handling dry bulk, break bulk and general cargo. It has an existing aggregate capacity of 95 MTPA across facilities located at Hazira, and Salaya in the state of Gujarat on the west coast of India, one dry bulk export terminal at Paradip in the state of Odisha and two iron ore berths on the outer harbour of Vizag Port in the state of Andhra Pradesh on the east coast of India.
In FY19, Essar Group announced that Essar Ports handled a total of ~40 MT, which is a 11% increase over the total cargo handled in the previous fiscal. The growth has been driven by a 6% increase in captive cargo and a whopping 36% increase in third-party cargo. The numbers are great, especially when compared with the industry average of 5-6%. As the expansion and investment programme that Essar Ports underwent is complete, the company now has considerably ramped-up capacity, paving way for further growth in the coming financial year. Essar Ports has plans that are already underway to increasing its cargo handling by 50% to 60 MTPA in FY20.
Essar Projects had experience in executing mega projects in sectors such as Hydrocarbons ', Tankages & Terminals, Pipelines ', Offshore ', Infrastructure ', Minerals & Metals ', Power Plants '.
After Essar Steel, Essar Projects became the second Essar Group firm that was sent for debt resolution. The lenders have voted to take an offer from Royale Partners, a Dubai-based fund, for EPC Constructions India Ltd, which was sent to the National Company Law Tribunal for debt resolution. EPC Constructions had defaulted on its loans worth Rs 7,200 crore and has been a non-performing asset since December 2014. The offer by Royale Partners is around Rs 900 crore, including Rs 450 crore upfront cash.
Essar Group, on 24 April 2018, announced the sale of Equinox Business Parks, its commercial property in Mumbai's Bandra-Kurla Complex, to Brookfield Asset Management, a global asset manager, for an enterprise value of Rs 2,400 crore.