Cairn India, the company in which Vedanta Resources is looking to acquire a majority stake, has criticised the government for delays and uncertainties in clearing the deal.
“What ought to have been a straightforward transaction, subject to shareholder approval, has now been drawn into the government’s decision-making ambit,” Rahul Dhir, managing director and chief executive officer, has said in the company's latest annual report.
Through 2010-11, he has said, the company faced considerable uncertainty arising out of the proposed transaction between Cairn Energy Plc, the UK-based parent, and Vedanta Resources Plc.
“Unfortunately, the transaction has been dogged by serious delays, objections by the Oil and Natural Gas Corporation and major interventions by the ministry of petroleum and natural gas. These have been escalated to the level of the Cabinet Committee on Economic Affairs (CCEA), which then sought the views of a Group of Ministers,” he said.
Dhir said he was not aware of the decisions taken by the CCEA at the time of writing this letter (June 25) to shareholders. “The long hiatus, starting from mid-August 2010, when the deal was announced, has caused delays and uncertainty in managing business.”
In August 2010, London Stock Exchange-listed Vedanta Resources had announced a plan to buy up to 60 per cent stake in Cairn India. Vedanta has so far acquired 28.5 per cent stake in Cairn India through an open offer and purchase from Petronas and Cairn Energy.
The CCEA has granted conditional approval to the deal, wherein both Cairn and Vedanta will have to agree to royalty from Cairn's Barmer block being taken as 'cost-recoverable'. Cairn Energy will sell another 30 per cent of its interest in Cairn India, subject to the necessary consent and approvals from the government.
