Keen to get LIC support for his debt-ridden miner Vedanta Ltd absorbing cash-rich Cairn India, billionaire Anil Agarwal today met Finance Minister Arun Jaitley to explain the merger that hinges on minority shareholder support.
A day after offering minority shareholders of Cairn India one equity share and one 7.5 per cent preference share in Vedanta Ltd, Agarwal met Jaitley as well as Revenue Secretary Shaktikanta Das.
The merger needs approval of at least half of the minority shareholders. State-owned Life Insurance Corp of India (LIC) holds 9.06 per cent stake in Cairn India, second only to 9.82 per cent of UK's Cairn Energy Plc, which had in 2011 sold majority stake in Cairn India to Vedanta for USD 8.67 billion.
Mindful of the fact that the merger will fall if LIC along with Cairn Energy were to vote against, Vedanta today reached out to state insurance company for support.
"This is my regular visit to finance ministry. Whenever I come here, I appraise them of what is happening. We had told them about this is the merger in advance. We told them today also, updated them on the merger of Vedanta Ltd and Cairn India," Agarwal told reporters after the meeting.
Vedanta chief executive Tom Albanese said he will seek support from minority investors based in India this week and will meet investors in the UK next week.
Explaining the rationale of the merger, Agarwal said Vedanta is trying to create a natural resource company in India that will produce oil and gas, aluminium, copper, zinc, iron ore.
All over the world this trend is there that diversified metal companies are very well accepted. India has tremendous potential in this process, he said.
Vedanta plans to use Rs 16,867 crore cash lying with Cairn to pay off part of its Rs 77,752 crore debt.
On the tax demand on Cairn India, Agarwal said: "We have also mentioned about the retrospective tax because when the demand came on us on the basis of withholding tax, the year they have mentioned, those years the law was not there to deduct the TDS. So matter is in the court, it is subjudice. So we have left at that phase."
The I-T Department had in March this year imposed a tax demand of Rs 20,495 crore on Cairn India for failing to deduct withholding tax on alleged capital gains made by its erstwhile promoter, Cairn Energy.
Cairn India, which is 60 per cent owned by Vedanta and is being merged with the metal and mining firm, had stated that it does not agree with the tax demand and had challenged it in the Delhi High Court.
The tax demand is in addition to I-T Department slapping a Rs 10,247-crore tax demand on Cairn Energy for an alleged Rs 24,500-crore worth capital gains it made in 2006 while transferring all of its Indian assets to a new company, Cairn India, and getting it listed on stock exchanges.
