Over a year after oil and gas producer Cairn India announced its intention to merge into the metals and mining major Vedanta Resources, both majority-owned by Anil Agarwal, Cairn India reaffirmed its plans at its annual general meeting on Thursday.
“Your company continues to work towards completion of merger with Vedanta,” said Navin Agarwal, Chairman, Cairn India, at the AGM. “The merger would generate value for the shareholders and de-risk your company.”
The debt-heavy mining and metals company Vedanta Ltd currently owns a 60 per cent stake in cash-rich oil and gas explorer Cairn India. The deal was expected to be completed by March 2016, with an effective swap ratio of 1:1.04 for the minority shareholders of Cairn India. In the interim, insurer LIC India, which is a large minority shareholder in both companies, has voiced concerns about the merger plans. Despite the roadblock, Thursday’s statement seems to indicate the plans are still on.
On the operations aspect, Navin Agarwal said that one of the world’s largest polymer flood projects at Mangala has continued to yield positive results. During the year, Cairn India commissioned the Salaya Bhogat Pipeline storage terminal (in Gujarat) and the marine export facilities at Bhogat, a first step towards accessing a larger market as it allows the company to ship out crude oil from the Rajasthan block to refineries across the country.
Cairn India operates over 27 per cent of domestic crude oil production and during the last fiscal, helped reduce India’s import bill by over ₹21,000 crore and its gross contribution to the government exchequer was over ₹10,000 crore, he added.
“We envisage multiplying our gas production by four times, which will support resource maximisation from the Rajasthan block. The expected ultimate recovery from the Raageshwari Deep Gas field has been upgraded by over 25 per cent,” he said.