Essar Oil CEO quits as Rosneft rejigs board after $13 billion takeover

Rosneft bought 49.13% in Essar Oil and a consortium of European trader Trafigura and Russian fund UCP a similar stake in the $12.9 billion deal.

business Updated: Aug 21, 2017 19:24 IST
Press Trust of India
Press Trust of India
Press Trust of India, Mumbai
Essar Oil,Essar,Rosneft
Tony Fountain, new chairman of Essar Oil, speaks at a press conference in Mumbai on Monday.(PTI)

Essar Oil chief executive Lalit K Gupta has resigned following the $12.9 billion takeover of the company by Russia’s Rosneft and partners but has been retained as a senior adviser by the new management.

Rosneft and its partners restructured the board of the company, packing it with their representatives.

Rosneft bought 49.13% in Essar Oil and a consortium of European trader Trafigura and Russian fund UCP a similar stake in the $12.9 billion deal. The remaining 1.74% stake continues to be held by retail shareholders.

The deal would give Rosneft and its partners control of 20 million tonnes a year Vadinar oil refinery in Gujarat as also over 3,500 petrol pumps.

Gupta, who was CEO of Essar Oil for six years, resigned just as the deal was concluded on August 18, sources said.

A statement issued by Essar Oil under its new management did not mention Gupta’s resignation but said he “will remain with the company as a senior adviser to the Management Board to support future growth plans and bring his considerable experience in the sector.”

B Anand, who was chief financial officer of Trafigura India Pvt Ltd since 2012, would be the new CEO. Tony Fountain, an ex-Reliance Industries executive, would be the chairman of Essar Oil Ltd as a nominee of UCP, the statement said.

On the 12-member board, Rosneft would have four nominee directors and UCP two, including Fountain. Trafigura would have two nominee directors (CEO is not part of the board).

Prashant S Ruia, who represented the promoter Ruia family, too exited the board of Essar Oil after the stake sale. So did Suresh Jain, director (finance).

The outgoing board had nine members, including chairman Prashant S Ruia. It had three other executive directors in Gupta, Jain and Chakrapany Manoharan, director (refinery).

The new management has retained Manoharan. Independent directors Dilip J Thakkar and KN Venkatsubramanian have also been retained and so has nominee of LIC, R Sudarsan.

“The 12-strong board includes senior representatives from the international investors, senior management from EOL, and independent directors,” the statement said.

The new board will be chaired by Fountain who brings 30 years of industry experience having held senior roles with BP, with Reliance Industries in India and currently with the UK’s Nuclear Decommissioning Authority and ATCO, one of Canada’s major energy companies.

“Strengthening Essar Oil Ltd’s balance sheet will be the first priority, a process we have already started by closing this transaction,” Fountain said.

“The Vadinar refinery is key to the energy infrastructure in India as it rapidly makes its way towards becoming one of the world’s largest economies and is now well positioned to play a role in the wider international energy markets,” he said.

First Published: Aug 21, 2017 19:24 IST