Essar group which came into prominence after having made their millions with ONGC in the second reich of Indira Gandhi, started mindless diversification and ended up biting more than they can chew. The steel plant at Hazira is excellent, capital cost is high. Recession has further added to the woes, liquidity is a problem and they are burdened with heavy debts.
The management style as anyone who has worked in Lala companies will tell you, is marwarish style, highly concentrated in the family hands, and a few trusted cronies.
Despite all the so-called modernisation and computerisation etc, the style of management remains traditional. Unless they professionalise, it will be in problems.
Essar oil, the venture into petro sector is too late now, better withdraw. Aimless competition with Reliance doesn’t help.