Face the axe in Tata business revamp
MUMBAI: Tata Sons Ltd may shut down Tata Petrodyne Ltd (TPL), its oil exploration and production arm, as new chairman N Chandrasekaran weeds out businesses that are unprofitable or lack scale, according to two people aware of the development.
“Tata Petrodyne has not made much progress since inception. As part of the pruning exercise, Tata Sons has also slashed salaries of officials at TPL,” said one of the people on condition of anonymity as he is not allowed to talk to the media.
Registrar of Companies data shows Tata Petrodyne’s turnover at ₹66 crore for 2016-17. Filings confirm the firm has cut the salaries of its officials. The company, which has a participating interest in four oil and gas blocks in India and one each in Indonesia and Tanzania, has a net worth of ₹385 crore — small in Chandrasekaran’s scheme of things.
On July 22, Chandrasekaran told Fortune Magazine that he was looking to prune the group’s portfolio and exit businesses that are not giving returns.
A Tata Sons spokesperson declined to comment.
“Tata Petrodyne has slashed investments in existing blocks and also did not participate in the latest bidding round of exploration and production blocks,”said an official from Oil and Natural Gas Corporation (ONGC), which partners Tata Petrodyne in four blocks in the country.
TPL’s website, however, says that some of these blocks are in different stages of exploration and production. For instance, it says that it is trying to “revive” an offshore field asset in the Cauvery Basin while another block in the Palar Basin is in “the exploration phase and the drilling campaign has commence in Feb 2017.” In both these blocks, the firm holds a 21-30% stake with the rest owned by ONGC and other firms such as Hindustan Oil Exploration Co Ltd and Cairn India Ltd.
“If Tata Petrodyne decides to wrap up operations, it will have to sell its stake in the field to existing partners or find a new buyer. Given the present market, this may turn out to be a tough deal,” said an energy consultant on the condition of anonymity as his firm does business with some of the firms mentioned earlier.