Sesa Goa Expects To Buy 1.5% Stake In Cairn India For INR11

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Sesa Goa Expects To Buy 1.5% Stake In Cairn India For INR11 Billion - Executive
By Prasenjit Bhattacharya
Published July 22, 2011

NEW DELHI -(Dow Jones)- Iron ore miner Sesa Goa Ltd. (500295.BY) is likely to spend INR11 billion to pick up an additional 1.5% stake in Cairn India Ltd. (532792.BY) to raise its equity holding in the energy company to 20%, a company executive said Friday.Finance director Sushil Gupta told analysts in a call that the company has already picked up an 18.5% stake in Cairn India via an open offer, which closed in the previous quarter.

Last August, London-listed miner Vedanta Resources PLC proposed buying a majority holding in Cairn India, a unit of Cairn Energy PLC, which owns a 70% stake in India's largest onshore oil find in the state of Rajasthan. Sesa Goa--a unit of Vedanta--has picked up part of the stake through an open offer for Cairn India's shares in the Bombay Stock Exchange.
Gupta said Sesa Goa currently has debt of INR37 billion, while it has cash reserves of INR22.5 billion.
He added that given the expected cash flows from its core iron ore business during the financial year, the company expects to pay off the INR37 billion in loans by March 31.
Late Thursday, Sesa Goa announced a drop in its net profit and sales for the quarter ended June 30. The company reported a 35% drop in net profit to INR8.4 billion, while sales dropped to INR20.95 billion from INR23.94 billion.
Managing Director P.K. Mukherjee said the slip in sales and net profit resulted from lower sales volumes of iron ore, which dropped to 4.3 million tons in the previous quarter from 4.9 million in the year-ago period, as the provincial government in the southern state of Karnataka isn't allowing iron ore exports.
He added that given the ban in Karnataka's iron ore exports and some hurdles the company is facing in increasing production volumes in the western state of Goa, Sesa Goa is scaling down its projection for volume growth to 15%-17% for the current financial year against an earlier expectation of 20%-25%.
Copyright © 2011 Dow Jones Newswires


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