Mumbai: The resignations by Cairn India’s chief executive officer (CEO) Sudhir Mathur and chief financial officer Pankaj Kalra last week, come as a setback for the Vedanta Ltd subsidiary, which is in the midst of finalizing the exploration and production (E&P) plans for the 41 hydrocarbon blocks it had won last year.
In January 2018, Cairn Oil and Gas was prepared to bid for a dozen of 55 hydrocarbon blocks that the government had put on offer under its maiden Open Acreage Licensing Policy (OALP). But when the idea was proposed to mining baron and Cairn India’s promoter Anil Agarwal, he directed them to bid for all the blocks. And, Cairn India came home with 41 of the 55 blocks.
“It is not easy to work for Cairn. Continuous interference from the promoters makes it difficult to work. Mathur and Kalra quit due to ideological differences," said an official aware of the developments, requesting anonymity.
Cairn India has, in fact, witnessed the exit of four CEOs in the last seven years, since Vedanta took charge.
The other three CEOs who left the company include Rahul Dhir, who stepped down in August 2012, interim CEO P. Elango left in May 2014, and Mayank Ashar put in his papers in June 2016.
“It’s not a routine exit. Both officials left in a week’s time. Kalra has worked for Mathur in his previous assignments and they are close friends, too. Mathur brought Kalra to Cairn India," added a second official with direct knowledge of the matter, also requesting anonymity.
When contacted, in an emailed response, Vedanta said: “Such movements in management are part of natural evolution in any organization, and are in line with career aspirations and personal priorities of individuals. Having a strong and healthy leadership pipeline is the key in a high-growth organization like ours. We want to emphasize here that these movements are unconnected and have been spread over a period of time."
Vedanta’s shares, however, bore the brunt of the exits, trading 3.72% lower at ₹181.30 apiece on Thursday. Though Cairn India was delisted from the BSE in April 2017, after its merger with Vedanta, the latter failed to inform the stock exchanges about the exit of the CEO and the CFO of its subsidiary.
In its producing blocks, Cairn India has already planned investments worth $4 billion, $2.5 billion of which have already been awarded in large contracts with global partners, significantly for new oil wells in Barmer.
And, with the latest acreage win, Cairn India’s portfolio expands from five onshore blocks to 48 offshore and onshore blocks pushing its proven and probable reserves and resources from about 1.3 bboe (billion barrels of oil equivalent) to 4.2 bboe.
So far, Cairn’s key producing assets are in Rajasthan (Mangala, Bhagyam, and Aishwariya fields), Andhra Pradesh (Ravva) and Gujarat (Cambay).
In the new blocks, the initial work plan alone is worth $500 million, and will go up manifold should there be a discovery, Sudhir Mathur had said in an interview last month.
But in the wake of the resignations and given the lack of exploration and production service providers in the country, industry experts said it would be tough for Cairn to meet deadlines, despite long-term strategic partnerships with global firms such as Baker Hughes LLC, Halliburton Co., and Schlumberger Ltd.
“Cairn has appointed an interim chief executive officer. It will have to outsource everything to third-party service provider and may need someone to manage the outsourcing," added the second official quoted above.
In its most recent partnership meeting in November 2018, more than 200 oil and gas specialists from 50-plus companies had participated. One-on-one discussions with bidders are ongoing until bid-submission time," Mathur had said in March.