Agarwal's new team to help Sesa Goa merger with Sterlite
Ishita Ayan Dutt, Surajeet DasGupta & Arijit Barman / Kolkata/ Mumbai Feb 23, 2012, 00:14 IST
As Anil Agarwal is getting ready with a grand group restructuring — beginning with the merger of Sesa Goa and Sterlite — the spotlight is once again on the latter.
From an outright under-achiever to an ambitious, growth-obsessed mining giant, Sesa Goa has come a full circle in the last five years under Agarwal’s Vedanta Resources.
Vedanta acquired the company, the country’s leading producer and exporter of iron ore, for Rs 4,070 cr in 2007 from Japan’s Mitsui.
Sources involved in the ongoing restructuring plans however said, Agarwal’s focus has been on the company for a while now. With a spate of bad news, things have been especially acute in the last one year. The Sesa Goa stock too has been battered at the bourses. From a high of Rs 500 in April 2010, the share has tumbled over 50 per cent. On Wednesday, it closed at Rs 236.40/share.
Matters have kept snowballing: From iron ore mining ban in Karnataka to the collapse of a lease agreement in Orissa to a hike in export tax to 30 per cent from 20 per cent earlier. Even its Goa mining business, which accounts for 90 per cent of its volumes, now also stands a chance of getting impacted after the observations of the Shah Commission, which probed into illegal mining in the state. The first two developments alone meant shaving off almost 4 million tonnes off Sesa Goa’s annual production of 14.8 million tonnes.
The minority investors of the company have also been unhappy that Agarwal was using Sesa Goa’s Rs 15,000 cr cash to invest in Cairn Energy, an oil company. This they thought was an unnecessary diversification.
In this backdrop, a process of internal reorganisation in Sesa Goa had actually started a few months ago with Agarwal bringing in fresh talent and reorienting the incumbent senior management team. For example, four to five months ago, Pramod Unde was parachuted from Vedanta Zambia to improve the management bandwidth of Sesa Goa’s expanding operation.
Unde is a hardcore mining guy and has the mandate of a COO — a post that was created for him. The current MD and CEO, P K Mukherjee is a finance and accounts specialist. Unde, however, is not on the Sesa Goa board but on the board of Sesa Resources and Sesa Mining Corporation.
There have been other changes as well. Arun Kumar Rai (director-operations) retired and was made only a consulting advisor. S L Bajaj was appointed director finance designate, at a board meeting held on January 25, replacing Sushil Gupta. Bajaj, a trusted Agarwal aid, was CFO of Hindustan Zinc and has been with the group for a while now.
“There seems to be a restructuring of the old guard who have been with Sesa Goa for a long time. In the last board meeting, the company’s performance came under sharp scrutiny,” said a source privy to the developments, on condition of anonymity.
Company officials, however said, Mukherjee now 56, will groom Unde till he retires at 60.
But the bad new flow still continues for Sesa Goa. The latest is from the tax man who came calling. The I-T department, said officials in the know, has recently disallowed tax deductions of Rs 246 cr on the basis of regular assessment conducted for financial year 2009 and 2010.
Sources add, certain bank accounts of the company were also temporarily frozen but after the company made a part payment, they have been de-frozen now. The company has appealed against this regular assessment order. But it has still being asked to pay 50 per cent of the disallowance now. Once the appeal is taken into consideration, the final order will be passed.
Sesa Goa spokesperson declin-ed to comment on the issue.
From an outright under-achiever to an ambitious, growth-obsessed mining giant, Sesa Goa has come a full circle in the last five years under Agarwal's Vedanta Resources.....??? Sesa has downright raped their mines, Goa and its resources in a blind mad rush for profits. This is the worst example of corporate greed: Make hay while the sun shines without regard to environment, people, sustainability, pollution, etc. just to milk max. cash in the shortest possible time, without thinking about the future of the land or people. All that wealth will be diverted to acquiring another resource and that too will be milked for all it is worth. Such growth for the sake of growth, for short-term unsustainable gains is what's wrong with our corporate culture and business ethics today.
Unde has been brought long back when Sesa took over Dempo (now Sesa Resources). No doubt he was in Zambia, but hardcore mining man he is not! More like a bloated bureaucrat enjoying the fruits of his position. He's a far cry from Mukherjee, whose boots are too large for him to fill. Seems to be there by some quirk of fate, but unlikely to take over from Mukherjee at the top.
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As Anil Agarwal is getting ready with a grand group restructuring — beginning with the merger of Sesa Goa and Sterlite — the spotlight is once again on the latter.
