Essar plans advisory body to integrate business verticals
Feb 25 2013 , Mumbai
Former chairmen of SCI, NMDC to be among key members
The group expects to reach at a conclusive decision in a next two to three months over the role and responsibilities of board.
People close to the development told Financial Chronicle that the core group would comprise mature and experienced people from the public and private sector companies. Some of the appointments made to the board include Shipping Corporation of India former chairman PK Srivastava and former NMDC chairman Rana Som.
Others are expected to be hired in next couple of months. J Mehra and Naresh Nayyar, who are serving on Essar’s boards at present, are also likely to be roped into the new board.
“The objective will be to integrate the vast and diverse organisation in a manner to meet aspirations of the promoters. To bring in individual companies to communicate to the promoters what is beneficial to the group at times require the experience that the individual company may not be able to perceive. That is where the role of the core group of directors would be required,” people spoken to said.
The group that started as a construction company in 1976 is now worth $27 billion with presence in diversified businesses such as oil and gas, refinery, steel, construction and retail and requires deft management and control. There are similarities between what Essar Group is planning to do and what Tata Group does through Tata Sons.
“We may replicate the Tata Sons model in management functions. But the equity in group companies is held by Essar Global, which has a separate board altogether, unlike in the case of Tata Sons,” a senior company official told Financial Chronicle.
The group has had several issues in the past related to corporate governance and with the investor community with respect to the listing and delisting of some of their companies like Essar Steel and Essar Oil.
The core group of directors is expected to bring transparency within the group and exercise extra caution in decision making and over the actions taken.
“It is the right move to infuse confidence in investors mind, who never got a good entry or exit in Essar group companies’ listing or delisting. Regular dividends and assurances would go a long way to bring back the lost investors,” said AK Prabhakar, head of retail research, at Anand Rathi Securities.