Prashant Ruia To Head 3 Essar Units

Prashant Ruia, son of Shashi Ruia, has assumed direct charge of three leading Essar group companies, in a move that consolidates his position as the heir-apparent to the Ruia brothers.

Acting on the advice of the outside consultant, S R Ganesh, the group has allocated clear-cut areas of responsibilities among the Ruias. Under this, Prashant Ruia has been put in charge of Essar Steel, Essar Oil and Essar Power. The decision was implemented three months ago. The group has also clarified the status of the different Ruias with regards to the different companies.

Anshuman Ruia, Prashant's younger brother, will be in charge of Essar Shipping, while Shashi Ruia, will handle the emerging telecom businesses. Corporate service departments like communications and personnel will also be reporting to Prashant.

 

Sources said the move is part of the group's attempts to evolve a clear line of authority among the promoters. If implemented properly, it is expected to quicken responses and lead to faster decision-making within the group.

Appointed last year, S R Ganesh suggested this structure after discussions with the Ruia brothers and the three CEOs. Prashant is already a director on the board of the three companies, and his authority over these companies will supersede those of his father and uncle. In Essar Steel, Shashi Ruia is the chairman, while Ravi Ruia is the vice-chairman.

R K Sukhdevsinhji is already theCMDof Essar Oil. Major decisions, apart from day-to-day matters handled by the different CEOs, will be referred to him and he will have the sole decision-making powers. In his absence, Ravi Ruia will take responsibility. Ravi Ruia, currently vice-chairman of Essar Steel, will not be directly in charge of any business, but will have responsibility of the groups overseas business.

These include the Indonesian steel joint venture, PT Essar Dhananjaya, the joint venture with the Riva group of Italy and two other overseas companies, Essar Global based in Mauritius and Prime Hazira, the special purpose vehicle (SPV), which holds 49 per cent stake in Essar Power. Ravi Ruia will also be in charge of the financing for oil and telecom business.

Previously, all members of Ruia family were dabbling in different businesses and there was no clear line of authority. There have been instances of company executives playing one promoter against other if they don't receive a favourable response.

The vesting of major decision-making powers with Prashant is expected to end this practice. As far as the three companies go, the buck stops with him, explained group sources. The group spawns different industries like steel, oil, power, shipping and telecom.

For the last one year, the group has been attempting to professionalise itself. Experts have been given greater freedom and the Ruia brothers have been divesting responsibility, keeping only major decisions with them.

The appointment of Prashant will not alter that, but will give the CEOs a focal point of reference. We are moving towards a more systems-led organisation where professionals are fully in charge, explained a group spokeperson. In several day-to-day operations, the promoters are already withdrawing into the background. In the group's constant dealings with institutions, it is only the managing directors who represent the different companies, sources said.