Essar Energy, a London-listed subsidiary of Indian family business Essar Group, is confident about its corporate governance principles, despite being criticised by a UK lobby group.
That’s according to a spokesman for the energy company, who told CampdenFB that the business’s governance structure was “robust”. “The eight-strong board of Essar Energy is comprised of a majority of five independent directors, plus non-family CEO in Naresh Nayyar and two Ruia family members,” he said.
His comments follow a move by Pensions & Investment Research Consultants, a London-based group that lobbies for transparency in corporate governance, asking investors not to re-elect family member Prashant Ruia as chairman of the company, claiming he is not independent under the UK’s governance rules.
Prashant took the chair at Essar Energy in December last year, after his uncle Ravi was forced to step down due to his alleged involvement in the telecoms scandal in India.
But the spokesman said the board of Essar Energy is “unanimously in support of Prashant’s appointment”.
“In view of his position in the Essar Group and his extensive involvement with Essar Oil and Essar Power, the board considers that his knowledge of Essar and role in building the business provides significant benefits to Essar Energy, outweighing any potential conflicts,” he added.
Second-gen Prashant is also chief executive of the family’s holding company Essar Group and director of the business’s steel operations.
The energy segment listed in London in 2010, raising more than £1 billion (€1.27 billion), with the family retaining a 75%-plus stake in the group. The spokesman further told CampdenFB that all the money raised “has been invested back in to the business” with nothing used by the parent company.
One of India’s richest families, the Ruias have had a run of bad luck over the last year. Besides Ravi’s ouster as chairman, the group also faced the brunt of the Gujarat government, which ended a tax break for the energy subsidiary. Profits at Essar Energy dropped 76% for the year ending 31 December.