BROTHERS IN ARMS: Shashikant (left) and Ravikant Ruia

Guess who the richest Marwaris in India are? No, it’s not a Birla or a Goenka. It’s the Mumbai-based Ruia brothers — Shashikant (66) and Ravikant (61).

Last month, an international business magazine named the Ruias of the Mumbai-based Essar group as the fourth richest Indians, behind businessmen Mukesh Ambani, Lakshmi Narayan Mittal — who lives in the UK — and Azim Premji.

The Ruias run an empire with interests in steel, oil, shipping, construction, telecommunications and power from a 21-storey glass and steel building in mid-town Mumbai. They’ve had a meteoric rise. Their Essar group has revenues of roughly $15 billion (about Rs 70,000 crore) and Group CEO Prashant Ruia (41), Shashi Ruia’s eldest son, says that revenues will climb to $20 billion (a whopping Rs 88,940 crore or so) this financial year.

Why don’t the Birlas and other prominent Indian businessmen figure in the top 10 of the list? One Birla does, at the 10th spot — Kumar Mangalam Birla. The Calcutta-based S.K. Birla said he did not lend much credence to such “media-generated” lists. A source close to the Birla clan explains the exclusion of other leading lights of the family by saying, “The Birlas have not made the list because they have been primarily in traditional industries which have not seen much growth in recent times. Those who made the list are in sunrise industries such as telecom, petroleum refining, oil exploration, information technology and energy.” These are precisely the industries in which the Ruias have a presence.

The Ruia story is dramatic because just a few years ago the Essar group had hit the headlines for the wrong reasons. It was heavily in debt. Steel prices had crashed worldwide, the group’s petroleum company Essar Oil’s refinery on India’s west coast had made little headway and in 1999 Essar Steel defaulted on an overseas payback commitment of $250 million.

Why did this happen during 1999-2002? “Our assets didn’t have global scale and we were not vertically integrated. Even the Mittal group was caught on the wrong foot as it did not buy up raw material assets 10 years ago,” Prashant Ruia says. The group is now buying companies and plants worldwide to protect itself from the volatility of raw material prices, integrating its businesses upstream and downstream and raising production capacities to benefit from economies of scale.

The group has bought iron ore and coal mines in Indonesia, in Mozambique in Africa and in the US, and steel manufacturing and distribution facilities in Canada, the UK and the US. It has oil blocks in Indonesia, Vietnam and Nigeria, apart from India. Its $1 billion outsourcing company Aegis has acquired at least 16 business process outsourcing (BPO) firms in the last five years. Talks on acquiring three Shell refineries in Europe continue. In May this year, the group listed oil and power company Essar Energy in London, raising $1.95 billion in a share issue.

What is more, it is pushing into Africa in a big way, because it sees a big market there. The Ruias have a 50 per cent stake in a petroleum refinery in Kenya, operate a telecom venture in that country and have invested in the telecommunications industry in Uganda and the Congo.

To oversee the global push, Ravi Ruia, who’s become a non-resident Indian (NRI), flits between London and Mumbai. Nephew Prashant has been an NRI for some time. The other members of the family — Shashi, his second son Anshuman (39), and Ravi’s son Rewant (27) — remain resident Indians.

Despite the overseas forays, the Ruias think that the group’s growth will continue to come from within India. The domestic market accounts for 80 per cent of the group’s business and, says Prashant Ruia, the group is poised to cash in on the country’s need for infrastructure. So Essar Steel is raising global annual production capacities from its current 4.6 million tonne (versus Tata Steel’s current capacity of 7 million tonne, though this will eventually go up to 21 million tonne) to 10 million tonne and then to 14 million tonne. In power, it aims to raise generating capacity by six times, from 1,220MW to 6,100MW by 2012. And the group’s current petroleum refining capacity of 14 million tonnes will climb to 18 million tonnes.

Where’s the money for all this coming from? The $1.95 billion Essar Energy raised by listing its shares has helped. The group also owns a third of joint venture Vodafone Essar’s equity, which gives the group revenues of roughly $1 billion a year, though this does not come into Essar’s books. Using this stake as collateral, the Ruias have raised another $3 billion or so. “Two things worked for the Ruias — a revival in demand for steel from 2003 onwards and their wise bet on telecom that helped raise a debt of several billion dollars to invest in acquisitions and production capacity enhancements,” says a Mumbai-based veteran investment banker who does not want to be identified.

The Ruias’ fortunes turned around too after a government-sponsored corporate debt restructuring exercise in 2004. Some observers also say that the group now has a conservative balance sheet. Certainly, debt levels have almost halved from the late 1990s level. But Prashant Ruia attributes the turn in fortunes to different reasons. “Sure, (the stake in) Vodafone helped us. But we broadly made good bets and invested in the right assets and industries,” he says.

Unquestionably, the Tamil-speaking Ruia brothers have undergone a remarkable journey. They ran their father’s small shipping agency at Chennai after he died in 1969, and moved to Mumbai in 1977 after the Mumbai High oilfield threw up business opportunities. They were involved in building several ports like the ones at Nhava Sheva and Goa, and branched out into the shipping industry.

For all their prominence and affluence, the low-key family ducks media attention and won’t talk about its personal assets, the home in London, the helipad on Essar House or the aircraft that ferries family members around the country. The family resides together in a bungalow in south Mumbai facing the Arabian Sea, and eats idlis and dosas for breakfast, a tradition acquired from their early days in Chennai.

What of the future? The group is dependent on commodities like steel and oil and could be vulnerable to their prices dropping worldwide, as they do periodically. But Prashant demurs, reiterating that the Essar group derives much of its revenues from the Indian market which has been insulated to an extent from economic downturns worldwide. What challenges then will the group confront? Prashant Ruia replies, “It’s all about managing growth.” That’s true — and it’s something that will determine how India’s richest Marwaris will fare in the years ahead.