We are going to see a very difficult one or two quarters, says Prashant Ruia

Essar Group, which had embarked on a revival plan after settling most of its debt, will have to recalibrate its strategy keeping in mind the impact of the Covid-19 pandemic.

Prashant Ruia, Director, Essar Capital, in an interview with one of Essar Group’s internal media outlets, said that the impact of the epidemic will hit the overall business environment over the next quarter or two. “Covid-19 will have a global impact, the magnitude of which we are still assessing. We are certainly going to see a very difficult one or two quarters. There will be demand destruction, which is already visible across the board. Whatever plans we have will have to be calibrated keeping in mind the pandemic,” Ruia said.

In February, Essar Group promoter family, the Ruias, had said in a mailer sent to Union ministers, Chief Ministers and top bureaucrats, said that the group was looking to embark on a new phase of growth on the strength of a substantially lighter balance sheet arising from repayment of ₹1.4-lakh crore loans over the last three years.

Three-phased growth

The group had charted out a three-phased growth. The first phase was the deleveraging that is now largely completed. The group had to sell some its prized assets including Essar Steel and Essar Oil to repay the massive debt. The second phase was consolidation, which was expected to complete by June this year. The group was embarking on the third phase of growth under the Essar 2.0 programme before the epidemic became a global worry.

“We have set up a monitoring committee with all the senior management of Essar. This committee is now meeting daily through virtual means to address the situation that has arisen out of the Covid-19 outbreak. This is a difficult time that many of us have never seen in our lifetimes. However, we have to carry on,” Ruia said, adding that Essar group is in a strong position compared to other groups.

“We have completed our asset sales and debt reduction prior to the crisis. Of course, we could not have foreseen the crisis, but looking back, we feel fortunate to have completed the monetisation and debt reduction programme before this outbreak. We are therefore in a better position to capitalise on the opportunities when the economy rebounds,” he said.

Ruia said that the group will be careful, conserve cash, and be vigilant of the cost structure until the situation improves.

“There is bound to be a recovery. Whether that recovery will happen in one or two quarters I cannot predict. But I am certain that Essar will come out of this stronger and ready to embrace the new world order,” he added.

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