Cairn India executive outflows match oil flows, stand-in CEO P Elango latest to quit

Written by fe Bureau | New Delhi | Updated: May 3 2014, 16:07pm hrs
CairnElango joined Cairn India in 1996 and was elevated to the post of interim chief executive in 2012. Reuters
In an unexpected development, P Elango, interim CEO and whole-time director of Cairn India, the operator of the countrys biggest on-land oilfield, quit the firm citing personal reasons. The 53-year-old executives exit from the Vedanta Group company came at a time he was spearheading a $3-billion programme to increase production from the firms flagship Barmer fields in Rajasthan.

Only recently, Elango initiated a discussion with the government to allow Cairn to swap and export crude oil produced from Rajasthan, which could fetch the company a better price, and to extend the contract of the field to 2030.

Under Elangos leadership, Cairn delivered 200,000 barrels of oil equivalent per day from the Rajasthan block and achieved record levels of financial revenue and profitability, the company told stock exchanges.

Elango joined the company in 1996 and was elevated to the post of interim chief executive in 2012 after then managing director and chief executive Rahul Dhir decided to move on from the firm.

Industry watchers were curious why Elango was never appointed full-time CEO.

With Elango's exit, Cairn India's top management has had a complete overhaul after the firm was acquired for $8.67 billion by the Anil Agarwal-promoted Vedanta Resources in December 2011.

It could not be immediately known when Elango will indeed move out, given the assignments at hand. He couldn't be reached for comments. People close to the executive said he may be spending some time in Chennai before setting out on a new assignment.

Cairn India said that current CFO Sudhir Mathur has taken over the additional responsibility of leading the organisation in the interim. Vedanta Resources CEO Tom Albanese and Mike Yeager, chairman,operations review board, Cairn India, will continue to work closely with the leadership team in managing the business under the guidance of the board.

Mathur joined Cairn India from Aircel, while Yeager, former oil CEO of BHP Billiton, has also worked with ExxonMobil and the United States Marine Corps.

Over the past few years the oil producer has seen several key management officials leaving the company. The latest apart from Elango's exit was in February this year, when Sundeep Bhandari, one of the pioneers of Cairn India and chairman of the corporate advisory board, decided to leave.

The resignation saga started when in June 2011 Rick Bott, executive director and chief operating officer left, followed by Indrajit Banerjee, executive director and chief financial officer in August 2011.

Dhir, who was a top-notch investment banker at Merrill Lynch and Morgan Stanley before moving to India, spearheaded the firm's IPO in January 2007. It was during his tenure that the first oil flowed from the Mangala field in Rajasthan on August 29, 2009.

Cairn India is passing through an important phase when it has forecast that its production would remain flat in FY15, while it invests $3 billion by FY17 to increase production. The explorer targets to achieve reserve replacement ratio of 150% in next three years, while its production is expected to witness a compound annual growth rate of 7-10% from known discoveries.

Till now, it has not achieved major success in other operating areas in the Krishna-Godavari Basin onshore or in Sri Lanka.

In FY14, Cairn India's net profit rose 3% to Rs 12,431.79 crore year-on-year on revenues of Rs 18,762 crore. Ebitda stood at Rs 13,877 crore, up 7% over the previous year. Operating expenses for the year increased to Rs 1,174 crore primarily due to an increase in production from Rajasthan block and increased maintenance and operation activities.