Prashant Ruia outlines Essar’s approach through global expansion, disciplined investments, and strength across its core sectors, alongside fast-scaling new businesses.
Interview Transcript
Ankur Mishra, ET Now– Essar Group has gone through major transformations, especially in past decades, and is ready for the next phase of growth. And to discuss the strategy further, I have with me, Group CEO Mr. Prashant Ruia.
Mr. Ruia, welcome to ET Now. My first question to you is how do you describe the current phase of growth which the group is going through?
Prashant Ruia, Essar Group– Well, it’s very interesting times we live in. I mean, our group is basically responding actually to what’s happening around us in the world.
As you know, Essar is primarily focused in four sectors- energy, technology, infrastructure, and metals and mining. And we are actually a global group in the sense we have obviously our primary focus in India, but we also have significant investments globally. And what we are seeing right now is many factors come really together.
One of them is the strength of the Indian economy, the Indian demographic, all the positives which are happening around India and India’s growth in becoming world’s third largest economy. And obviously, that has a massive rub-off effect in the sectors which we are playing. And then the second is that even globally, most of these sectors for many years were not being invested in.
But because of the change in technology, whether it is AI, whether it is energy transition, or in the technological space, because of the change in technology, all of these, the rest of the world has also become very much growth oriented and investing heavily in energy, investing heavily in infrastructure, etc. So, we are actually in a very interesting phase where there is growth all around in the sectors which we are. And we are actually evaluating this and looking at, what should be the best opportunity for us to participate in.
But overall, I would say, certainly a period of growth over the next three to five years.
Ankur Mishra, ET Now– And definitely, if you talk about even Indian economy as per the revised base, India is set to grow, 7% potential growth was highlighted in the economic survey. And we have grown consistently over 7% in past three years.
And that is not true for other peers which are there in Asia and even globally. So, how do you think Essar group is going to benefit from India growth story?
Prashant Ruia, Essar Group– Group principle focus has always been India, we will always be Indian group, we will always be based here. We are investing again in India.
But again, just the point you made is that the economy right now is extremely strong. And I honestly believe that this rate of growth will remain for a while. And if you think about the even internationally, the position which India is gaining as a for providing supply chain, security, or for domestic growth itself, every parameter is pushing for better growth.
And frankly, the fiscal position of the country is extremely strong. Our infrastructure investments, which are being made 12 lakh crores, committed in the budget this year 11 lakh crores last year, I mean, those investments are there to be seen. I mean, if you drive around in city of Mumbai, today, I mean, it’s a transformed city, right.
So, and that’s all happened because of the investments in infrastructure, which have come whether it’s the, coastal road or, or the metro. So, it’s a good period. And we obviously would like to overall as a group, I would say we are about 50% focused in India, 50% of our revenue and businesses in India, and then 50% is international.
So, that’s how we split what we are looking at.
Ankur Mishra, ET Now– Right. And in India, which everybody understands is cricket.
I know that you also watch the matches very carefully. And therefore, I will ask in the cricketing language, in the businesses, which you have described, and there are many like mining, metals, infrastructure, technology, even retail, which are the businesses where you will see 2020 kind of a growth, fast growth, where stable growth can be there for some years like ODI and where sustainable kind of a growth, you see that yes, these are the legacy kind of sectors which you have been carrying on. How do you describe your phase of growth in cricketing language?
Prashant Ruia, Essar Group– I would say the infrastructure businesses are where we are building infrastructure for whether it’s a power sector, any renewable power sector, or whether it’s, like the digital infrastructure, which we are participating in for data centers.
So, those kinds of sectors are more the test match variety, because they are, they are large investments, but they are, 15-year, 20-year, 30-year kind of investments. But then significant growth is happening around energy transition. It’s happening around for us in the technology space, where we are building green mobility, which is basically, electrification of the heavy trucking industry, or in companies like Black Box, which we have, where we are doing network infrastructure, and in and growth and building out data centers for people, especially in the in the US.
So, those would be, I would say more the T20 variety. ODI in the middle, I don’t know. But, but, I would say the steady commodity and infrastructure businesses would be more the longer version, and then the technology and new, these are the new things which are happening and that’s short term.
Ankur Mishra, ET Now– Mr. Ruia, we are at a time where the global scenarios are changing, especially with Mr. Trump being very active, and all the companies have been adjusting. How are you positioning yourself, A- adjusting to the current situation so that in the longer period, the group can avail the kind of opportunity which is there even Prime Minister says, it is a matter of identifying the opportunity as well at this time.
So, how are you preparing yourself? And how much of the opportunity you see there?
Prashant Ruia, Essar Group– Look, we’ve actually done quite a bit of preparation in the last two, three years, I think we have got a good set of investments, which we are currently making. Internationally, significant investment in the UK, where we are building hydrogen plant, and possibly data center capability in the UK, alongside the refinery, which we already have. And that’s becoming an a large, I would say like a tier one asset for us, globally, obviously, in the US, where we are now at an advanced stage of completing the Minnesota steel plant, something which we’ve started a while ago, but now it’s nearing completion.
It’s a sort of two and a half billion-dollar investment in the US in Minnesota, to make iron ore pellets. So, that’s nearing completion. And then in India, we are investing in some projects in renewable power.
And we are building sustainable aviation fuel plant in Jamnagar. So, broad range of investments, which we have currently, obviously, we keep looking at other things, which we would like to do, we are pretty excited with the with the with the current slew of investments.
Ankur Mishra, ET Now– Right. And as far as global supply chains are concerned, it is fast changing world. How do you focus there and keep yourself prepared for that?
Prashant Ruia, Essar Group– I think two big changes have taken place. I think no one country would like to be over dependent on any other one country, say China, for example, for their supplies. And so that’s what is sort of triggered the debate. And India has a very key role to play in being an alternative source of low-cost manufacturing, and becoming a key part of the supply chain globally. I mean, we’ve seen many examples in the last one year.
I mean, what Apple is doing in India is a is a great example with their phones being made. We just saw semiconductor inauguration of the plant last week. So, India is suddenly now creating global capacity to not only meet the domestic demand, but also become a preferred manufacturing country for international supplies.
So, I think India is integrating extremely well. That’s why Prime Minister Modi keeps talking about the tremendous opportunity which we have, because we really can be the global manufacturing hub for the world. And with our low cost of manufacturing, with our efficiency, with our infrastructure, which has really improved by leaps and bounds in the last few years, I think it’s a very strong position to be in.
And I’m sure there will be significant more such investments coming.
Ankur Mishra, ET Now– Mr. Ruia, you mentioned about the focus on India, which is there as a group. But what is your strategy for the other countries as well?
Prashant Ruia, Essar Group– I would say other countries, we principally have large investments in the UK. We have large investments in the US. We are amongst India’s largest investors in those countries from India. And then we have some investments in Asia and Indonesia.
So, those are, I would say are the three real hubs for us globally. But the sectors which we are in, the opportunities are there in other countries, whether it’s Africa or Middle East. But as of yet I would say these are the three main investment countries globally.
Ankur Mishra, ET Now– Right. And in the future, you would want to expand that view?
Prashant Ruia, Essar Group– Yeah, I mean, certainly. As I said, if the opportunities come in other parts, and they are coming, then we would certainly like to approach them.
I mean, we’re following a very disciplined approach with our capital allocation. We are being extremely prudent, and we’ve increased the level of governance of the group at a very high level. And the reason for doing this is to ensure that the investments which we take up are, absolutely right, and they are the top of the stack when it comes to the various opportunities what we are looking at.
So, within that construct, absolutely open to making investments in other parts of the world. But as I said, these would be the primary focus for us right now.
Ankur Mishra, ET Now– So, you’ll play on the merit of the ball?
Prashant Ruia, Essar Group– We’ll play on the merit of the ball, exactly. It’s not the first ball six, which I need.
Ankur Mishra, ET Now– So, that is the strategy of the group. But you are a tech enthusiast, and how can we not discuss AI at the current time, where the focus of even Indian government has been to build in that capacity, and even the companies have been actually, A- ready for the transformation which AI is going to bring, and B- India wants to harp on that opportunity as well. How’s your group looking at that?
Prashant Ruia, Essar Group– Well, for us, I mean, our group is more heavy in terms of manufacturing and infrastructure and things like that, whereas AI, at least today, is having much more impact in the people, services space. But what AI can do massively in a group like ours is, or in our businesses, is actually improve our efficiency, basically bring down our costs. And that whole transformation is something which is going to come across, all the manufacturing or infrastructure space.
And so, we look at it as an opportunity to embrace the AI and see how we can apply it to improve our quality, improve our costs, and frankly, improve our margins. So, that’s where we see it. I don’t think it’s in our sectors, we don’t see this as a threat.
In fact, the biggest opportunity for us in AI is actually, the world is going to be tremendously short of energy, of power. And we being a company which has been in power for the last 40 years, we look at this also as a big opportunity to be able to generate power globally, and provide that for data centers and to run the AI. So, the digital infrastructure is something which we look as an opportunity.
So, actually, we think it’s a good thing which is happening. I mean, some industries are going to get badly affected, clearly. But fortunately, we are not in that camp.
Ankur Mishra, ET Now– You have also been advocating and worked on carbon net neutrality, whereby we have seen so far, it is more done due to the nudge of the government and the requirement of the hour. But how do you think even profitability in the long term can be achieved due to it?
Prashant Ruia, Essar Group– I think you’ve touched on a very good point. I think, look, this is going to happen, energy transition, in my view is going to happen for sure. It’s something which we should, which India has done a tremendous amount of work on with renewable power and, electric vehicles.
And we have introduced electric trucks. So, it’s come in a big way. My only point here is that there was earlier a feeling that all conservative or fossil fuel-based industries are going to sort of go away and then all be replaced by energy, by all the renewable energy. I don’t think that’s going to happen. It’s going to be, different solutions for different countries and different markets, but with both, continuing. So, you will continue to have the traditional sources and you will bring, possibly all the growth coming from the renewable sources.
And having said that, at least the way we see it, we are focused on investing in this sector in a big way, but with projects which are economically viable. And when I say economically viable and profitable, I mean, without depending on government for a subsidy. Because we don’t believe, I mean, long term, large subsidies are not sustainable. Whether it is in India or whether it is in Europe or whether it is in America, it’s the same issue. So, we would rather invest in projects where the subsidies are lower and or non-existent, if at all. And then those technologies we think can stand on their own feet and have significant growth opportunity.
And we are doing two of them. I mean, renewable power, of course, but everybody is doing it. But and then our electric trucks, what we are doing, there’s no subsidy involved. So, in either making them or in operating them. And that’s a very good place to be.
Ankur Mishra, ET Now– Definitely, you have touched upon renewable. I also want to draw your attention toward the retail sector where you are present. What is your strategy there?
Prashant Ruia, Essar Group – The only place we are doing retail in a big way is in the UK. I mean, where we are building out a retail network of petrol pumps or four quarts, as they are called there, as a distribution for the refined product which we are making in the UK.
I mean, it’s a traditional business. It’s not, of course, we are using all the latest technology to make sure that the customer has a great experience. But it’s something which we are growing in the UK. Our goal is to have about 500 retail outlets there and with the Essar brand, and it’s similar to what we did in India when we built 2000 gas stations in India across the country when we had the refinery. So, it’s the same map, I mean, which we are playing on and we think it makes sense. So, we are doing it.
Ankur Mishra, ET Now – Right. If I want to sum up overall your strategy for the group in terms of what we have discussed cricket analogy, and also the thing which you are fond of you being tech enthusiast, how will you sum it up?
Prashant Ruia, Essar Group – I don’t think we are in the first six overs. But I do believe that, we are in a race, because this, as I said, next few years, we see as a very strong period of growth for the group.
Just like many other groups are seeing that opportunity. And I do hope that, in the next few years, we can we can look back and we would have built out each of our businesses, or many of our businesses into tier one assets, which are competitive globally.
Ankur Mishra, ET Now – What does Prashant Ria do when he’s not coming to office or he’s in his business mode? What do you like?
Prashant Ruia, Essar Group – Look, I obviously spending time with the family is the most important thing for me. And because I travel quite a bit, all the opportunity I get to spend with the family and the kids. And we have a large family. So the family and the kids is primary.
But other than that, a little bit of exercise, possibly every day for sure. And, and if I can if I can get away, for a ski holiday or for spending some time with nature, then that’s what I really enjoy.
Ankur Mishra, ET Now – And any Bollywood favorite movie or song you want to dedicate?
Prashant Ruia, Essar Group – Well, I don’t I don’t know about the song, but I must say that I enjoyed Dhurandar extremely. And I think it’s the best movie I’ve seen in a long time.
Ankur Mishra, ET Now – All right, Mr. Ria, thank you so much for your time. And explaining to our viewers, not only in cricketing terms, but also in Bollywood terms. Thank you so much for your time.
Prashant Ruia, Essar Group – Thank you so much. Thank you for having me.
User