Cairn India's minority shareholders raised objections to conditions put forward by the Government for the completion of the Cairn Energy-Vedanta Resources stake sale.
The discussion on conditions laid by the Government came up at the 5th Annual General Meeting (AGM) of Cairn India, held here on Thursday, despite it not being on the agenda of the AGM. Minority shareholders also wanted a separate resolution to reject the Government's conditions, however, they were unsuccessful.
Cairn Energy had inked a deal to sell majority stake in its Indian arm to Vedanta Resources. The Government cleared the deal but added certain riders, such as, sharing of royalty burden for Rajasthan crude oil by all stake holders and withdrawal of all arbitration cases by Cairn.
“Only the minority shareholders should be made to participate in the postal ballot. But that won't happen because I don't think they would support the acceptance of the Government conditions,” said Mr Prabhakar Kuvelkar, a shareholder of Cairn India, miffed with the management.
The management, however, said that all concerns of the shareholders would be included in the postal ballot where all shareholders would have a say. The result of the postal ballot will come out on September 14.
Industry observers see this as mere formality as the majority stakeholders – Cairn Energy (52.2 per cent) and Vedanta (18.5 per cent) – seem to be in acceptance of the conditions.
Dr Omkar Goswami, Non-Executive and Independent Director of Cairn India, told the shareholders that if they don't agree to the conditions, it is unlikely that the Government will let Vedanta go ahead with the purchase.
Ms Jann Brown, Non-Executive Director, Cairn India, said, “Our current understanding of the resource base in the Rajasthan Block supports a vision to produce 240,000 barrels per day subject to further investments, partner and regulatory approvals including exploration rights in the development areas.”
“Without the active support of the GoI (Government of India) and ONGC, it will not be possible for Cairn India to exploit the full potential of the resource base in Rajasthan,” she added.
The low morale of Cairn India was evident after the July 26 board meeting, when Mr Rahul Dhir, at the investor conference said, “the matter has now gone out of the board's hand. Board's view is no longer relevant.”