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In order to strengthen its governance practices, the Ruias of Essar group are restructuring Essar Steel's board by inducting more professionals.
The company is in talks with Hirco Developments' chairman and managing director Firdose Vandrevala to join its board in executive position. Earlier, Vandrevala was on the board of Tata Steel and had worked in other Tata group companies in key positions.
The Essar group has already inducted Arvind Pande, former chairman and managing director of Steel Authority of India Ltd on its board. Others who joined the Essar Steel board in non-executive positions include Alok Dhir, a financial expert, S Santhanakrishnan, former deputy managing director of State Bank of India, and Rana Som, former chairman and managing director of NMDC. In April, Ashutosh Agarwala from Jindal Power & Steel had joined the company as an additional director and chief financial officer.
The group is also in talks with a veteran from Coal India to join the board, but no final decision has been taken, sources said.
Dilip Oommen, managing director of Essar Steel, will continue to report to the board. The board is chaired by Shashi Ruia, patriarch of the group. No other Ruia family members are currently on the board.
With these changes, the Ruias are expected to strengthen the governance process as these industry veterans with proven track records will help the company in the trying times such as these.
When contacted, an Essar spokesperson declined to comment on the board-level changes.
The company is in the midst of a financial restructuring - converting rupee loans of Rs 22,000 crore into dollar loans. Just a few weeks ago, the group converted its rupee loans worth Rs 6,000 crore into dollars ($1 billion). The group is expecting its current interest cost to come down from 12.25-13 per cent to 6-7 per cent.
However, now with the rupee becoming weaker by 9 per cent in the June quarter, it is likely to slow down its plans.
THE NEW FACES
Firdose Vandrewala: CMD of Hirco Developers, earlier on board of Tata Steel
Arvind Pande: Former Chairman of SAIL
Rana Som: Former Chairman of NMDC
Ashutosh Agarwala: Former CFO of JSPL. Now CFO of Essar Steel, and a board member
