Cairn India chief executive Mayank Ashar quits

Mayank AsharIn an unexpected development, Mayank Ashar, managing director and chief executive of Cairn India, which operates the country's biggest onshore oilfield, has quit the firm citing ''personal reasons''.

Company sources told The Financial Express that he did not want to continue after his two-year tenure that ends this month and will leave on 5 June. Chief financial officer Sudhir Mathur will be acting chief executive, the company said.

Ashar had joined Cairn in May 2014 taking over from P Elango, then the interim CEO.

The 60-year-old executive's exit from the Vedanta Group company comes at a time the oil explorer has been performing poorly following the collapse in crude oil prices. Ashar has been trying to get the lease for the Barmer oil and gas block extended by another 10 years beyond 2020.

Cairn has dragged the petroleum ministry to court citing delays in decisions on the extension of the lease for the Barmer asset. A merger between between Vedanta and Cairn India was announced in June last year.

In the last two years, the Cairn India stock has lost more than 60 per cent of its value; in January, it fell to an all-time low of Rs110. This dismal performance has resulted in the scrip being excluded from some key indices including the BSE 100, the BSE 200, the BSE 500 and the oil and gas sector index effective 20 June 2016.

Cairn India also drew flak from investors after it lent a group company $1.25 billion in May 2014; the tenor of the loan was recently extended for two years. The company claims the extension is ''on arm's length'' at a revised rate of interest of Libor plus 450 basis points in the first year and at Libor plus 475 bps in the second year, higher than the existing rate of Libor plus 300 bps.

Interestingly, Cairn India's top management has seen a complete overhaul after the firm was acquired for $8.67-billion by the Anil Agarwal-promoted Vedanta Resources in December 2011 (See: Panel of ministers clears Cairn India stake sale to Vedanta). Ashar, who had brought with him 37 years of experience in the international oil and gas industry, came on board with a hefty one-time joining bonus and earns a package of $1.15 million plus perquisites and allowances.

Cairn India has reduced its capital expenditure plan to just $100 million for FY17; in FY16 too the capex had been pruned first to $500 million and then to $300 million from the initial allocation of $1.2 billion. Media reports last year had noted that Cairn India had let go of more than 100 executives.

The explorer had moved the Delhi High Court in January seeking directions to be permitted to export crude oil drilled from Rajasthan's Barmer.