Mumbai– Oil and gas major Cairn India on Thursday said it is working to merge with its parent, London-listed Vedanta Resources at a time when key shareholder, the state-run Life Insurance Corporation (LIC), is yet to give its assent to the merger.
“Your company continues to work towards completion of merger with Vedanta,” Cairn India chairman Navin Agarwal told shareholders at the company’s 10th annual general meeting here.
“Your company will get access to Vedanta’s tier-one metal and mining assets, which are well-invested, low cost and have a long life,” he said.
Under the proposed merger, a Cairn India shareholder will get one Vedanta equity share and 7.5 preference shares for every Cairn India share.
LIC, as the single largest domestic minority shareholder, owns 9.06 per cent in Cairn India and 3.9 per cent stake in Vedanta.
The Anil Agarwal-led natural resources firm Vedanta Ltd. received approvals last September from both the Bombay Stock Exchange and the NSE on the company’s proposal to merge with its hydrocarbons subsidiary Cairn India.
Merging Cairn India with itself would provide Vedanta access to the oil explorer’s cash and help reduce its debt burden. Vedanta took majority control of Cairn India for $8.67 billion in 2011 and holds 59.9 percent in the latter through its various units.
“We will continue to invest in our existing assets to increase production and maximize economic recovery. I remain confident that your company will play a pivotal role in India’s quest for energy security,” said Cairn India’s fiscal 2016 annual report quoting Navin Agarwal.
The company’s polymer flood projects at Mangala in Rajasthan continued to yield positive results and contributed an average of 14,000 barrels of oil equivalent per day, during the year the report said.
Amid the low global oil price environment, Cairn India has focused on optimising costs, building talent and capabilities and keeping employees focussed on goals and priorities of the organisation, enabling the company to generate free cash flow over $637 million, it added.
Despite steep drop in crude oil prices, Cairn India adhered to its stated dividend policy with a pay-out amounts to 31.6 per cent of the company’s annual consolidated normalized net profit, the chairman said.