Ravi Ruia To Step Down As Essar Steel Md

Ravi Ruia, the younger of the two Ruia brothers, will soon resign as managing director of group flagship Essar Steel to make way for Jatinder Mehra, the former chairman and managing director of Rashtriya Ispat Nigam Ltd (RINL). Ravi Ruia will function as Essar Steels vice-chairman while his brother Shashi Ruia will be the companys chairman.

Top Essar sources confirmed that Mehra joined as chief executive of Essar Steel from April 29 and will soon take over as the companys managing director. The company, which notched up a turnover of Rs 582.37 crore in 1995-96, is expected to post heavy losses in 1996-97.

 

Mehra assumes office at a time when the group is consolidating highly integrated operations in the steel business, said Essar group vice-chairman S H Venkatramani.

However, Mehras appointment as Essar Steels managing director is subject to clearance from the financial institutions. In case the FIs refuse to ratify his appointment, Ravi Ruia will continue as the companys managing director. The company will also have to convene a shareholders meeting to get the new appointment cleared.

According to FI sources, the proposed change in the company set-up may face opposition from some of the financial institutions.

The financial institutions have a combined equity stake of around 17 per cent in Essar Steel, apart from a debt exposure of over Rs 1,800 crore to the steel company and a debt exposure of around Rs 3,200 crore in the entire group.

Company sources said the move is an attempt to professionalise the top management, which has so far been in the hands of the promoters.

After having built the company from scratch, the promoters want to recede into the background, they claimed.

The groups strategy of inducting professionals in the top management was kicked off some years back when it roped in RK Sukhdevsinhji, who was just stepping down as chairman and managing director of public sector giant Bharat Petroleum Corporation, to head Essar Oil. Essar Steel is the last Essar group company to induct an outside professional as its managing director.

Essar Steel traces its origins to Essar Gujarat, which in turn was hived off from Essar Constructions when the company moved into manufacturing sponge iron.

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