Cairn India’s shareholders to get access to Vedanta assets

After the announcement of its merger with its subsidiary Cairn India last month, Vedanta Limited’s Chairman Navin Agarwal has assured shareholders that they will get access to metal and mining assets of the company.

“Cairn India’s shareholders will get access to Vedanta Limited’s Tier I metals and mining assets, which are well invested, have low cost and long life,” he said while addressing the company’s 50th Annual General Meeting (AGM) in Goa.

He added Vedanta’s focus on improving returns from core, existing operations in order to unlock value, would benefit Cairn India and its shareholders. Anil Agarwal- promoted Vedanta on June 15 said it would merge its subsidiary Cairn India with itself for a larger natural resource play.

“We are committed to sustaining and enhancing the Cairn India brand and maximising its potential.

Furthermore, the merger will provide more liquidity to the shareholders of the merged entity with a higher free float,” Navin Agarwal said at the AGM.

According to Agarwal, the merger will deliver significant economies of scale, including improved optionality to allocate capital, and will strengthen the company’s engagement with the government and its sustainability initiatives.

In the all- stock deal, each Cairn India shareholder will be offered an equity share of Vedanta Limited, besides a 7.5 per cent redeemable preference share of `10 face value. According to analysts, however, the merger will pave the way for Vedanta’s London- listed holding company, Vedanta Resources Plc, to lower its debt of close to `76,000 crore.

Agarwal today also lauded steps taken by the government to revitalise the mining industry.

“The reduction in export duty on low- grade iron ore and the enactment of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, which provides continuity to our mining leases and which will bring transparency to future auction processes for mineral concessions, are all steps in the right direction,” he said.

Despite weak commodity prices and tepid industrial activity, the company recorded revenues of `73,364 crore for the financial year, with earnings before interest, tax, depreciation and amortisation ( EBITDA) of `22,226 crore and an adjusted EBITDA margin of 41 per cent.

Vedanta also generated free cash flow of `3,425 crore after capital expenditure of `9,618 crore, and increased its full-year dividend to `4.1 per share. “During the year, we recorded a one- off, non-cash impairment charge to goodwill, largely relating to the oil and gas business, of `19,956 crore. This was on account of the unprecedented drop in oil prices during the year,” said Agarwal.

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