The $8.7 billion (Rs 39,150 crore) deal under which NRI billionaire Anil Agarwal’s Vedanta Resources will acquire a majority control in UK energy major Cairn Energy’s Indian unit— Cairn India Ltd — is practically through and on Tuesday moved a step closer to being sealed.
The board of Cairn India that met at Edinburgh (UK) on Tuesday decided to “hold a postal ballot of all the shareholders to consider the conditions imposed by the government of India” as the board was divided on the matter.
All shareholders of Cairn India — including Cairn Energy with a 52.1% holding followed by Vedanta with a 28.5% holding — will participate in the postal ballot. Any opposition from the minority shareholders will mean a little as both Vedanta and Cairn Energy have already agreed in principle to the government pre-conditions.
“The notice for seeking shareholders’ consent through the postal ballot will be issued in a day or two, after which they will be given 15 days to decide,” said a Cairn India official.
“The shareholders’ stand will be discussed at the August 18 board meeting to be followed by Cairn India’s extraordinary general meeting the same day.”
Under the government’s pre-conditional approval, the royalty and cess burden arising out of the crude oil production from Rajasthan oilfields has to be shared by Cairn India — something that the board of Cairn India has been opposing so far.
However, the board of Cairn India on Tuesday announced the impact of the proposed royalty and cess sharing mechanism proposed. A statement from Cairn India said if royalty were to be cost recoverable, it would lead to a revenue decline.