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Cairn India's merger with parent Vedanta is on track, even as insurance companies have opposed the arrangement proposed in the deal.
Insurers including Life Insurance Corporation and United India Insurance among others hold about 9.35% stake in the company want better valuation.
Insurers including Life Insurance Corporation and United India Insurance among others hold about 9.35% stake in the company want better valuation.
United India Insurance has said that they are not happy with the scheme of arrangement proposed in the deal. They have conveyed the same to the management.
Similarly, the Life Insurance Corporation of India (LIC) panel which has 9.06% stake said that while they are not opposed to the merger between the companies, as an institutional investor they would want a better deal on the swap ratio.
Similarly, the Life Insurance Corporation of India (LIC) panel which has 9.06% stake said that while they are not opposed to the merger between the companies, as an institutional investor they would want a better deal on the swap ratio.
Sources indicated that if the company does not make a better offer, these institutions would oppose the deal. As per merger norms, at least, 75 percent of shareholders and creditors are supposed to vote in person to accord approval to the merger.
Vedanta Limited, India's largest diversified natural resources had on June 14, announced that the company will merge its subsidiary Cairn India to create a larger natural resources company.
The all-stock deal will offer each Cairn India shareholder one equity share, and a 7.5 percent-redeemable preference share of Vedanta Ltd. with a face value of 10 rupees.
Commenting on the merger, Cairn India Chairman Navin Agarwal, at the 9th annual general meeting of the company said, "This is a significant milestone in the company's journey. Not only will this merger de-risk earnings through increased diversification from exposure to a larger commodity mix, it will also help garner benefits of increased economies of scale,"
"You will get access to Vedanta's tier-one metals and mining assets, which are well-invested, low cost and have a long life," he told shareholders.
Agarwal added that the merger offers long term sustainable value enhancement for all shareholders. "We have an excellent suite of world-class assets and we will continue to operate our assets efficiently, execute the strong pipeline of projects and focus on growing our oil and gas portfolio," he said.
The move to merge the entities was mainly seen as cash-rich Cairn India coming to the rescue of debt-burdened parent company Vedanta. As on March 31, 2015, the standalone debt of Vedanta — excluding liabilities of subsidiaries — was Rs 37,636 crore, while Cairn India has cash reserves close to Rs 17,000 crore apart from the profits it has been generating.
In his address, Agarwal also demanded a stable and predictable investment regime and consistency in policy to boost investor confidence.
“Our nation is blessed with significant untapped oil and gas resources. However, the sector needs encouragement to maximise this potential. We need policies that are tailored to reflect and respond to India’s status of an oil and gas importer,” he said adding, "Investment climate and governance are key drivers for investments. A stable and predictable investment regime and a consistency in policy will help enhance confidence besides attracting domestic as well as foreign investments in the oil and gas sector.”
Agarwal added that Prime Minister Narendra Modi has called for increasing domestic production of oil and gas to reduce import dependence to 67% by 2022. Cairn India shares ended 2.98% down at Rs 162.75 a piece on the Bombay Stock Exchange.
