Nayara Energy seeks Centre's approval on independent directors' pay

The company said the remuneration proposed to be paid to the independent directors is comparable with the remuneration being paid for similar assignments in the industry

Russia’s Rosneft-owned Nayara Energy has sought the Centre’s permission to pay additional fees of $270,000 each to its independent directors — former banker Naina Lal Kidwai and former PWC India Chairman Deepak Kapoor.

Apart from the sitting fees, the remuneration will be paid in rupees represented by the value in dollars. It would be at the exchange rate prevailing on the date of payment of the remuneration, according to a notice to the shareholders.

Nayara Energy earned a profit of Rs 1,029.9 crore in the financial year ended March 31, 2022. However, on account of adjustment of past accumulated losses, there was inadequacy of profits. As a consequence, the remuneration proposed to be paid to the independent, non-executive directors in the financial year ended March 31, 2022, exceeded the limits. Hence, the government’s permission is required, the company said.

Nayara is owned by Rosneft, which has a 49.13 per cent stake, and Trafigura and Russian investment firm UCP own 49.13 per cent. Trafigura is looking to exit its investment in the company.

An email sent to the company did not elicit any response till going to press. A company insider said that there wasn’t any major hike in the remuneration of Kidwai and Kapoor. The additional remuneration is being paid to them in addition to the sitting fees of Rs 24 lakh.

The company added that the remuneration proposed to be paid to the independent directors is comparable with the remuneration for similar assignments in the industry.

“Both the independent directors have been associated with the company in professional capacity and do not have any interest in the capital of the company,” the notice said.

A company source indicated that it is not facing any shortage of independent directors and the presence of Kidwai and Kapoor are proof of that.

Sources also said that being a company partly owned by Rosneft is not a roadblock for Nayara in its operations or appointment of independent directors as both the countries are in a friendly relationship.

After Russia invaded Ukraine and Western countries slapped sanctions on Russian entities, several top company executives reportedly left Nayara Energy. Though Nayara is not under fire, sanctions have been imposed on Rosneft. Among those who left the company include its chief financial officer (CFO) Anup Vikal, board member Krzysztof Zielicki and Jonathan Kollek, a nominee of Kesani Enterprises.

Russia became the second largest exporter of crude oil to India since the Ukraine war broke out. Earlier India’s use of Russian crude was minimal at around 1 per cent of its total imports. This has helped Indian refineries post good profits. Nayara posted a net profit of Rs 3,564 crore during the April-June quarter of 2022 compared to a net loss of Rs 139 crore during the same quarter last year.

The company is credited to having India’s second largest single-site refinery at Vadinar with an installed capacity of around 20 million tonnes.

Nayara is also the largest private sector fuel retail company in the country with 6,640 retail outlets. The company was originally set up by the Ruias of Essar group and sold to a Rosneft-led consortium for $13 billion in 2017.