Anil Agarwal, chairman of the global metal giant Vedanta Resources, continued to push for the merger of the flagship company with Cairn India Ltd, a cash-rich petroleum producing company owned by Vedanta.
The merger has been criticized as harming the interests of the third-party shareholders of Cairn India Ltd, and institutional investors such as the Life Insurance Corporation of India need to give their green signal for the deal to go through.
However, the LIC is learnt to have decided that the deal is against the interest of minority shareholders like itself, and has not supported it yet.
In the annual general meeting of Vedanta, Agarwal once again made a call for the merger.
“We are constantly seeking to simplify the corporate structure of Vedanta. And this will be further strengthened through the merger between Vedanta Limited and Cairn India Limited that we announced this year,” he said.
“This merger will further consolidate our position as India’s natural resources champion, with a diversified portfolio of assets which will deliver strong cash flows and reduce earnings volatility. We are confident that it will create significant value for both sets of shareholders, as well as for Vedanta Resources. And I am delighted that the boards of Vedanta Limited and Cairn India have unanimously recommended the merger,” he said.
Being a related-party merger, the resolution now has to be passed by shareholders of Cairn India in a voting in which the promoter has to abstain according to Indian rules.
Vedanta, which faces high debt, is pushing for the merger after which it will be easier for the company to use the cash lying on the books of Cairn India.