Shareholders roast Cairn at Mumbai meeting

Vol 16, PW 3 (23 Aug 12) People & Policy
     

Cairn India’s new directors didn’t anticipate such a hostile reception during their first meeting with shareholders in Mumbai on August 22.

Speaker after speaker tore into Cairn’s “clever” accounting practices as chairman Navin Agarwal (owner Anil Agarwal’s brother), Priya Agarwal (Anil Agarwal’s daughter), outgoing managing director Rahul Dhir and other directors looked on. Dinesh Lakhani wanted to know why black-clad “bouncers” were inside the auditorium.

“Are we terrorists” he asked. “Are you scared of us Why are these men standing around” Lakhani said Mumbai shareholders are “civilised” even if they criticise company boards! He said (respectable) business groups like the Tatas don’t employ “bouncers” at shareholder meetings and demanded all guards be withdrawn.

Humbled, chairman Navin Agarwal directed the guards to leave. Lakhani then lashed out at Dhir, whom he called the “blue-eyed boy” of (previous chairman) Sir Bill Gammell.

Dhir, he said, is “a billionaire” because of a Rs14cr ($2.8m) annual salary package and a “substantially large” stock option scheme where he paid Rs10 for each Cairn share, now trading at Rs331. “All this is partly at the cost of shareholders,” added Lakhani.

Why, he asked, was Dhir allowed to resign despite his re-appointment last August for five years Another shareholder, Vinayak Bapat, slammed Cairn’s poor treatment of minority shareholders. Bapat said shareholders would have to attend English classes to understand the opaque language of Cairn’s audit report.

He added that Cairn’s 122m barrels P1 reserves estimate for Rajasthan would last just another three years with production at 175,000 b/d. “Is the management aware of more reserves” he asked.

Bapat said shareholders are being denied dividends through “clever” accounting practices within the maze of overseas-based companies that make up the group. “If we are genuine about looking after minority shareholders’ interests,” he said, “there’s a long way to go.