Vedanta, Cairn India and Vedanta Resources plc (Vedanta plc) together with its subsidiaries on 14 June 2015, announced a merger between Vedanta and Cairn India. As per the scheme, minority shareholders of Cairn India will receive for each equity shares held, one equity share in Vedanta of face value of Rs 1 each and one 7.5% redeemable preference share (RPS) in Vedanta with a face value of Rs 10. No shares will be issued to Vedanta or any of its subsidiaries for their shareholding in Cairn India. Approximately 75.20 crore of each of equity shares and RPS will be issued to the minority shareholders of Cairn India by Vedanta pursuant to the merger. Post completion of the transaction, Vedanta plc ownership in Vedanta is expected to decrease to 50.1% from its current 62.9% shareholding. Cairn India minority shareholders will own 20.2% and Vedanta minority shareholders will own a 29.7% stake in the enlarged entity. The transaction is expected to be tax-neutral for Vedanta, Cairn India and their shareholders under Indian law. Vedanta would further consider consolidation of some of its wholly owned foreign subsidiaries. Vedanta will continue to be listed on the BSE and NSE, with American Depository Shares (ADS) listed on the New York Stock Exchange (NYSE), and Vedanta plc will continue to be premium listed on the London Stock Exchange (LSE). Cairn India's BSE and NSE listings will be cancelled following completion of the transaction.
This merger accounting would be done under pooling of interest method. As part of this accounting treatment, goodwill appearing in the books of Vedanta and Cairn India would be adjusted against reserves including securities premium account. This will have no impact on cash or the profit and loss account. The transaction is expected to close in the first quarter of calendar year (CY) 2016.
Mr Anil Agarwal, Chairman of Vedanta plc said that the merger of Cairn India and Vedanta consolidates Vedanta plc's position as India's leading diversified natural resources champion, uniquely positioned to support India's economic growth. The independent directors, at both Vedanta and Cairn India, unanimously recommend the proposed combination. This marks a significant step towards achieving vedanta plc's stated long term vision of a simplified group structure with alignment of interests between all shareholders for the creation of long term sustainable value, Agarwal said.
Mr Tom Albanese, CEO of Vedanta said that this transaction consolidates Vedanta's portfolio of Tier-I assets which, combined with strong management, will deliver superior returns for all shareholders. It will result in improved financial flexibility to allocate capital to the highest return projects and sustain strong dividends, Albanese said. The combined entity is uniquely positioned to help unlock India's wealth of world-class energy and mineral resources, Albanese added.
Mr Mayank Ashar, CEO of Cairn India said that the merger with Vedanta will generate additional value for Cairn India's shareholders and de-risks Cairn India by providing access to a portfolio of diversified Tier-I, low cost, long-life assets, to deliver significant near term growth. The company's Rajasthan fields continue to remain its core asset, Mayank said. The financial strength of the enlarged group will ensure greater access to capital to further Indian oil & gas development, Mayank added.
Bank stocks will be in focus after public sector banks and private sector banks unanimously expressed at a meeting between Finance Minister Arun Jaitley with CMDs of public sector banks (PSBs), private banks and Financial Institutions (FIs) on Friday, 12 June 2015, that in a period of 2-3 months, greater transmission of lower rates by commercial banks could be seen. The CMDs of banks, both PSBs and private banks expressed that until the cost of funds/deposits for the banks, as reflected in the re-pricing of their liability book at the new rate comes down and liquidity levels at the new lower costs are tested, full transmission would not be viable, according to a statement issued by the finance ministry after trading hours on Friday, 12 June 2015. Commercial banks were responding to a query by Jaitley as to why the banking system, in response to the Reserve Bank of India's (RBI) rate cut of 75 basis points since January 2015, effected a corresponding rate cut of only 25 basis points. The Finance Minister held the Annual Review Meeting with the CEOs of banks (including private banks), insurance companies and FIs for the year ended 31 March 2015 on Friday, 12 June 2015.
Jaitley also expressed his concern over the modest growth of domestic credit of 7% over the previous year registered by PSBs and took stock of the sectoral profile of the total domestic credit flow of Rs 49.01 lakh crore during 2014-15. The Finance Minister urged the bankers to achieve the target of 20% growth in educational loan asset by the Department of Financial Services (DFS), Ministry of Finance and also attempt to even out the huge regional disparity in such loans. The Finance Minister noted the good growth at 16-18% in the housing sector and also strongly advised the PSBs to achieve a 30% growth in priority sector housing loans, which are intrinsically secure loans and which are required to provide a stimulus to overall growth.
As regards non-performing assets (NPAs), the PSBs continue to be under stress on account of their past lending. Jaitley advised that the RBI, Government Departments and the financial institutions should collectively examine solutions that work, so as to de-bottleneck those critical projects of economic value. Jaitley suggested that Secretary, Department of Financial Services (DFS) obtain a list of all major projects stalled purely due to financial reasons and attempt to sort out the sticky issues along with the concerned banks. He also suggested that DFS and RBI should interact to examine and sort out the regulatory issues in NPAs and the scope for their modification to ease the pressure on banks. The Minister of State for Finance Jayant Sinha mentioned an additional view that banks should sell off their non-core assets. Jaitley himself said he would like to sort out issues which relate to state governments and other central government ministries.
In another separate announcement, the finance ministry after trading hours on Friday, 12 June 2015, said that in order to assess capital requirement of PSBs, all PSBs have been requested to make presentations to the Department of Financial Services, Ministry of Finance. Earlier, during the Quarterly Review of Public Sector Banks' performance held on 11 March, 2015, it was discussed that the banks should work-out/find-out their own resources for raising capital and also work-out their own plan for raising capital from market, the finance ministry said.
Shares of FMCG companies, fertilizer firms and agri input makers will be in focus after a weekly data released by the Ministry of Agriculture after trading hours on Friday, 12 June 2015, showed that the total sown area for Kharif crops as on 12 June 2015 stands at 75.10 lakh hectares, which is lower than 82.87 lakh hectares at this time last year. FMCG companies derive substantial revenue from rural India. The fortunes of the fertilizer firms and agri input makers are closely linked to agriculture production in the country.
Data on the first installment of advance tax payment by corporate taxpayers may provide cues on likely Q1 June 2015 corporate earnings. Companies have to pay 15% of the full year's estimated tax liability as the first installment of the advance tax on or before 15 June every year.
Bajaj Finance will be in focus as shares allotted by the company to institutional investors under Qualified Institutional Placement (QIP) are admitted for trading on the bourses today, 15 June 2015. A total of 32.74 lakh shares will be admitted for trading. Bajaj Finance had priced the issue of shares to institutional investors at Rs 4,275 per share. Shares of Bajaj Finance had risen 0.05% to settle at Rs 4,662.95 on BSE on Friday, 12 June 2015.
Tata Motors' Group global wholesales, including Jaguar Land Rover rose 2.15% to Rs 79,244 units in May 2015 over May 2014. The company announced the global sales data after market hours on Friday, 12 June 2015. Global wholesales of all commercial vehicles - Tata, Tata Daewoo and the Tata Hispano Carrocera range fell 0.33% to 29,063 units in May 2015 over May 2014. Global wholesales of all passenger vehicles rose 3.64% to 50,181 units in May 2015 over May 2014. Global wholesales of Tata passenger vehicles rose 20.02% to 11,302 units in May 2015 over May 2014.
Reliance Industries (RIL) on Saturday, 13 June 2015 said that its CFO has received summons from Mumbai Police in the matter concerning the road accident involving Ms. Jhanvi Ghadkar. This is being disclosed to the stock exchanges as he is a key managerial personnel, RIL said.
NTPC on Saturday, 13 June 2015 said that the unit no. 4 of 200 megawatts (MW) of Koldam Hydro Power Project has been commissioned on Friday, 12 June 2015. With this, the total installed capacity of Koldam Hydro Power Project has become 800 MW and the total installed capacity of NTPC group has become 44,798 MW, the company said.
Infosys will be in focus. With regard to news item titled "TCS, Infosys face US probe for H-1B visa violations", Infosys after market hours on Friday, 12 June 2015 in a clarification said that it has not received any notification or intimation with respect to H-1B visa violations. Infosys also stated that it is committed to complying with US immigration laws. The US Department of Labor (DOL) regularly selects a percentage of visa and labor condition applications for extra scrutiny in this industry, and the company works closely with the DOL to assist DOL in this activity in the ordinary course of its business, Infosys said. Infosys said it has received no indication of any broader investigation of the company's visa practices.
Meanwhile, TCS in its clarification with regard to above news item said that the company maintains rigorous internal controls to ensure it is fully compliant with all regulatory requirements related to US immigration laws including those related to H-1B visas.
The Reserve Bank of India (RBI) on Friday, 12 June 2015 notified that the foreign shareholding by Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) in Kaveri Seed Company has gone below the revised threshold limit. Hence the restrictions placed on the purchase of shares of the above company are withdrawn with immediate effect. The RBI further notified that FIIs/RFPIs can now invest up to 49% of the paid up capital of Kaveri Seed Company under the Portfolio Investment Scheme (PIS).
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