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VEDL - Vedanta News Story

₹293.1 -6.5  -2.2%

Last Trade - 24/09/21

Basic Materials
Large Cap
Market Cap £10.73bn
Enterprise Value £12.65bn
Revenue £9.92bn
Position in Universe 47th / 3149

UPDATE 1-Indian oil min says met Cairn India over Vedanta merger

Fri 12th June, 2015 1:32pm
(Adds details, background, June 14 meeting) 
    By Nidhi Verma 
    NEW DELHI, June 12 (Reuters) - India's oil minister met 
executives from oil company Cairn India  CAIL.NS  this week to 
discuss its potential merger with parent Vedanta Ltd  VDAN.NS , 
the operating unit of London-listed mining and energy group 
Vedanta Resources Plc  VED.L . 
    Vedanta earlier this week signalled it was considering 
merging those two listed subsidiaries, as it tries to resolve a 
mismatch between its debt -- held at the top of the group -- and 
its cash, largely generated by subsidiaries including Cairn. 
    Asked on Friday if he had met the companies to discuss the 
deal, Oil Minister Dharmendra Pradhan said the government's main 
concern was that any deal should not affect Cairn's investments. 
    "They met me, but my ministry's concern is that capital 
expenditure should grow. My ministry's expectation is oil and 
gas production should increase," he told Reuters. 
    Debt-burdened Vedanta began simplifying its byzantine 
structure with a 2012 overhaul, but further moves to streamline 
the group and buy out minorities in cash-rich subsidiaries have 
long been awaited by the market.   
    A source familiar with the matter said the deal -- a test 
for new Indian rules protecting minority shareholders -- could 
be announced as early as Sunday. 
    The move is reported to have been triggered by a drop in 
Cairn's shares as oil prices weakened, making for a more 
favourable merger ratio for Vedanta. 
    "There's no question that they do it the moment they feel 
capable of doing it. It's always been the best thing for them to 
do," said one industry banker in London. 
    Analysts calculate that almost three-quarters of Vedanta's 
debt is held at either the group or the operating level. Cairn, 
by contrast, had roughly $2.6 billion in cash on its balance 
sheet as of March 31.     
    This matters particularly at a time when analysts estimate 
the group's debt repayments over the next five years will 
outpace its free cash flow. According to UBS analysts those 
repayments come to $15 billion, against an estimated free cash 
flow of $9.9 billion. 
 (Reporting by Nidhi Verma in NEW DELHI, Freya Berry and Silvia 
Antonioli in LONDON; Writing by Clara Ferreira Marques; Editing 
by Keith Weir) 
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