Ruia brothers under fire for move to delist Essar Energy

The backlash over the move has shone the spotlight on brothers who, despite their billionaire lifestyles, still share an office

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The Independent Online

In November 2012, at a festival in Goa that his company was sponsoring, Shashi Ruia gave a rare insight into his thoughts on the strengths of the Indian entrepreneur.

"I think if we had a better [patents'] registry we would win hands down," he told the audience. "We are the biggest jugaadis [improvisers] in the world. We are innovating all the time. That is what gives us an edge."

Now, 16 months later, Mr Ruia's host at the event, magazine editor Tarun Tejpal, is behind bars awaiting trial on rape charges. The future of the magazine and the festival the businessman sponsored is in doubt.

Mr Ruia, meanwhile, is facing controversy of an altogether different kind after the corporation he heads with his brother, Ravi, announced a plan to delist one its companies from the London Stock Exchange and once again take it private.

Mr Ruia may have considered the plan a classic piece of innovation. But the announcement by Essar Global Fund Limited, the investment vehicle of the billionaire brothers, that they are considering offering 70p a share to buy back the 22 per cent of Essar Energy they don't own has triggered an angry backlash.

The shares were sold for 420p a piece in 2010. And it's only a couple of months since they suggested they would actually sell more shares to meet new, free-float rules and remain eligble for membership of UK FTSE indices. Investors have said the "opportunist" approach – the Ruias now have a month to decide whether to actually table an offer – will damage their reputation.

Some commentators have suggested that investors would be wary should the brothers seek to list another company in London, while the Association of British Insurers, which represents the City's biggest shareholders, is reported to be considering placing the issue on its agenda when its investment committee meets next month.

The move to delist Essar Energy, which among its interests operates Britain's second-biggest oil refinery at Ellesmere Port, has focused fresh attention on Shashi and Ravi Ruia, whom Forbes recently suggested were India's 12th-richest individuals with a fortune of more than £3.3bn

During his interaction in Goa, Shashi said he and his younger brother had inherited their father's business following his death in 1969. They named themselves Essar, to combine the "S" from Shashi and the "R" from Ravi.

Starting with shipping, they quickly diversified into steel, construction and later energy. Today, the Essar conglomerate is said employ more than 73,000 people across 25 countries and enjoy revenues of £23.4bn.

Whereas a number of India's business families are notorious for the toxic relationship between various siblings, at Essar it appears the two brothers work almost as a single unit. It is said that even today they still share a single office. Shashi serves as chairman of the group while Ravi is vice-chairman. Their sons are also involved in the operation.

"One advantage is that we can shout at each other," Mr Ruia joked before the audience in Goa when asked about sharing an office. "But I have always believed that our basic culture promotes the family."

The brothers are said to share a passion for the south of France while Ravi also enjoys the ocean. He owns a 280ft yacht, Sunrays, that is said to have three VIP suites.

Meanwhile, the 2008 wedding of his daughter, Smiti, was one of Mumbai's most lavish events of recent years. Among the guests from the worlds of politics, showbusiness and industry were Sir Richard Branson and members of the Birla family. The entertainment was provided by Richard Marx, the Gypsy Kings and DJ Aqeel.

It is not all glitz. In addition to sponsoring the festival in Goa organised by the left-leaning Tehelka magazine, between 2007-09 Mr Ruia was a donor to The Elders, the NGO whose members include Kofi Annan, Ela Bhatt and Lakhdar Brahimi.

Reports suggest the brothers still share living space. They have homes in Mumbai, Gujarat, London and Tees January Marg in the heart of Lutyens' Delhi. It is said their 21-storey company headquarters, Essar House in Mumbai, was the first corporate base in India to have its own helipad.

In the late 1990s Essar ran into problems, having expanded too quickly just as the economy started to contract. Interest rates were running at more than 20 per cent. In 1999, the company became the first Indian corporation to default on an international debt when it failed to pay overseas bondholders.

But the company has steadily recalibrated, taking on tough competition from the likes of Tata Steel and the Ambani brothers.

"They have earned respect," said one Indian business analyst who asked not to be named. "They have learned the lessons of aggressive expansion during the early years."