Jeu 18 Aoû 2011 22:10
Driven to accept govt's word on Vedanta deal: Cairn India
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Driven to accept govt's word on Vedanta deal: Cairn India
Published on Thu, Aug 18, 2011 at 22:00 | Source : CNBC-TV18
Updated at Thu, Aug 18, 2011 at 23:10
In a new twist to the tale, Cairn India board today said it was pushed to the wall and had no option but to accept the pre-conditions laid out by the government for the Vedanta deal.
That is what Cairn India management told shareholders at the annual general meeting, report CNBC-TV18’s Sajeet Manghat and Ashwin Mohan.
Minority shareholders of the company questioned the Cairn India’s decision to give up on its earlier stand and accept the pre-conditions set by the government to okay the Cairn-Vedanta deal. Expressing dissent, they even went to the extent of proposing an additional resolution and a poll against accepting these pre-conditions. However, these proposals were turned down by acting chairperson Jann Brown, who was sitting in for Bill Gammell.
Independent directors such as Omkar Goswami and Edward Story, who have been representing minority shareholders till date too tried to allay shareholder apprehensions, saying the option was between stagnation and growth.
“The intention was, do we continue the line of maximum resistance which others would call as confrontation but for us it would have been simple resistance and running a risk of stagnation. From there, do we take the view unofficially because the board still is not in favour of it, or do we take the view that should we look at reaching out and then, hopefully, get rid of the hurdles so that we can achieve our 175 then achieve our 240 because the more we achieve, the more we will give value to the shareholders,” Goswami opined at the AGM.
The board indicated that with its license coming up for renewal in 2020, any confrontation would have put the ability to reap the benefits of the Rajasthan blocks beyond 2020 at risk. Goswami conceded that the postal ballot was just eyewash, as only a simple majority is needed to pass the resolution. And with nearly 80% held by Cairn PLC and Vedanta Resources, this is no problem. However, he justified the preference for a postal ballot over an AGM.
“I can say this with absolute certainty that not even once did anyone think of Vedanta, we were just concerned about Cairn India. So we were faced with a very straight forward situation- should we have only a shareholders meeting requested by Cairn Energy PLC under Sec 169, or should it be a democratic process on the basis of ballot where every shareholder votes. We thought about it, the share holders meeting would have only been present and holding and hosted by the shareholders,” he said.
Meanwhile, Cairn PLC has already sought approval from ONGC, and, CEO, Rahul Dhir feels they are just a few weeks away from an outcome.
“I should give you assurance that there will be an end to this period of uncertainty. We are more confident, I am more confident on the future of the company of our ability to deliver value consistently for the government and you,” he said.
Cairn PLC MD, Jann Brown made it clear at the AGM that the company will continue to hold 22% in Cairn India as long as shareholders of Cairn PLC wish it. She added that this transaction will, in no way, interrupt Cairn India's growth momentum. The results of the postal ballot will be announced by the 14th of September and other approval processes will commence thereafter.
