Business Case Studies, Financial Management & Corporate Finance Case Study, Financial Re-engineering at Essar Steel

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Case Title:

Financial Re-engineering at Essar Steel

Publication Year : 2006

Authors: Sheetal Vakhariya, Mridu Verma

Industry: Minerals, Metals and Mining


Case Code: FCF0004P

Teaching Note: Available

Structured Assignment: Not Available

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Essar Steel Ltd. (Essar Steel) is the largest integrated producer of steel in Western India with a capacity of 4.6 million tonnes per annum (mtpa). Essar diversified its business by expanding into various sectors. The simultaneous launch of several projects during the 1990s pushed the group towards a liquidity crunch. To tide over the financial crisis, Essar Steel decided to avail the option of CDR to get out of the debt trap and strengthen its balance sheet. The case discusses Essar Steel’s financial crises and its reengineering. It also discusses how financial problems affected the liquidity of Essar Steel and the several financial strategies formulated by Essar Steel to tide over the problems. It also helps to evaluate the reengineering strategy undertaken by Essar Steel to repay the debt and expansion of related projects.

Pedagogical Objectives:

  • To discuss the expansion strategy of Essar Steel
  • To understand the factors lead the Essar Steel towards financial crises
  • To evaluate the re-engineering Strategy adopted by Essar Steel to overcome its problems.

Keywords : Hot rolled coils; Ruias; Hazaria; Corporate Strategies Case Study; Floating rate notes; DR grade pallets

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