The Edinburgh-based firm has till now maintained that forcing its Indian unit to pay royalty and cess on the mainstay Rajasthan oil block was against the signed contract and would hurt minority shareholders' interest
New Delhi: UK's Cairn Energy Plc today said it wants its Indian arm Cairn India to accept all the government's conditions and agree to pay royalty and cess on the Rajasthan oilfields so as to facilitate its stake sale to Vedanta Resources, reports PTI.
Cairn Energy, which owns a 52.11% stake in Cairn India, "has voted to accept (government) conditions", the company said in a press statement.
The Edinburgh-based firm, which is selling a 40% stake in Cairn India to Vedanta, has till now maintained that forcing its Indian unit to pay royalty and cess on the mainstay Rajasthan oil block was against the signed contract and would hurt minority shareholders' interest.
"Two of the government of India conditions-cess and royalty payable-are currently with Cairn India shareholders for approval, Cairn has voted to accept these conditions, with voting results due on 14th September," the statement said.
Together with Vedanta's 28.5% shareholding, Cairn Energy has enough votes to get any proposal passed by its shareholders, ignoring the resolution passed by the Cairn India board in February opposing the value demolishing preconditions.
Minority shareholders at Cairn India's AGM in Mumbai last week had booed Cairn Energy for changing track to get $6.02 billion from the stake sale to Vedanta. Cairn Energy had previously said it would rather call off the deal than force Cairn India to accept these conditions.
Cairn India had on 26th July stated that its April-June quarter net profit would halve to Rs1,435 crore if it was asked to share royalty on the Rajasthan crude oil.
The company currently does not pay any royalty on its 70% interest in the Rajasthan fields. The royalty, as per the contract, is paid by state-owned ONGC, which got a 30% stake in the 6.5 billion barrel field for free.
The Cabinet Committee on Economic Affairs (CCEA) on 27th June gave consent to the Cairn-Vedanta deal, subject to Cairn or its successor agreeing to charge or deduct the royalty paid by ONGC from the revenues earned from the sale of oil before the profits are split between partners.
This cost-recovery of royalty will lower Cairn India's profitability.
Also, the CCEA said Cairn India must pay a Rs2,500 per tonne cess on its 70% share of oil production. Cairn maintains that cess, like royalty, is a liability of ONGC and had initiated arbitration against the government on being forced to pay cess.
Cairn Energy, in the statement, said, "Sale of 40% shareholding in Cairn India to Vedanta (will) be completed in two stages. The first tranche of 10%, which realised about $1.4 billion (was) completed (in) July 2011.
"The second tranche of 30%, approved by the government of India (GoI) in June, subject to certain conditions, will realise about $4 billion," it said.
Cairn Energy said the Mangala field in the Rajasthan block currently produces 125,000 barrels of oil per day.
Development of Bhagyam, the second biggest oilfield in the block after Mangala, was on track and is scheduled to commence production in the fourth quarter of 2011.
Cairn India, it said, had net cash of $1.048 billion, comprising $1.452 billion in cash and $404 million in debt.
"Cairn (Energy) is encouraged that the Vedanta transaction is moving toward completion. Following approval from the government of India, all parties are now working to satisfy the consents and conditions to complete the sale to Vedanta as soon as possible," company CEO Simon Thomson said.
"The sale of Cairn Energy's 40% stake will allow a return of substantial funds to shareholders and will also provide the group with the balance sheet strength and financial flexibility to explore new opportunities in line with its consistent strategy of seeking transformational growth," Mr Thomson added.
"I am showing you the minutes of the meeting in which the prime minister, the then finance minister and the then telecom minister decided that the licences for the 2G spectrum was not to be sold/auctioned," senior advocate Sushil Kumar, appearing for Ms Kanimozhi, told the special CBI judge OP Saini
New Delhi: Prime minister Manmohan Singh and then finance minister P Chidambaram were fully in the loop on the second generation (2G) spectrum license allocation and had decided along with then telecom minister A Raja not to auction them, jailed DMK MP Kanimozhi told a Delhi court today, reports PTI.
"I am showing you (judge) the minutes of the meeting in which the prime minister, the then finance minister and the then telecom minister decided that the licences for the 2G spectrum was not to be sold/auctioned," senior advocate Sushil Kumar, appearing for Ms Kanimozhi, told the special Central Bureau of Investigation (CBI) judge OP Saini.
Seeking discharge from the case, the counsel for the 43-year-old DMK MP, said the CBI case is based on the premise that the accused caused huge loss to the state exchequer by not auctioning the licences for the 2G spectrum.
"The prime minister, the then finance minister and the telecom minister are 'good enough' as witnesses to prove that there was no loss. They are on record in Parliament that the government did not incur any loss," Mr Kumar said.
"The moment, the loss factor goes out, the charge of cheating also goes out," Mr Kumar said, adding that the basic foundation of the CBI case cannot sustain the legal process.
The defence counsel also trashed the computation of loss by the CBI and the Comptroller and Auditor General (CAG) saying they are 'just notional loss' and cannot be a basis for prosecution of the accused.
"The CAG report (of loss of Rs1.76 lakh crore to the state) was laid before the House on 16 November 2010. It had not been adopted by the House. It is still in the limbo as the House is yet to adopt the report," the counsel said.
The counsel for Ms Kanimozhi also disputed the computation of loss of Rs30,984 crore by the CBI saying it too has no basis as the charge sheet said that government could have earned more by auctioning the licences.
"The words-could have-cannot be the basis of prosecution as the relevant paragraph in the charge-sheet is (a) full myth," the defence counsel said.
"The sale of equities by Swan Telecom Pvt Ltd and Unitech Wireless (Tamil Nadu) Pvt Ltd (the two alleged beneficiaries of the scam) to foreign firms, Etisalat and Telenor, respectively were approved by the government. It was not the sale of the licences and hence there was no loss," the defence counsel argued.
"Where is the sale (of the licences)? Where is the cheating?" asked the counsel for the DMK supremo M Karunanidhi's daughter, arrested by the CBI on 30th May for her alleged role in the scam.
Her arguments, opposing charges of corruption and other penal offences like cheating and hatching criminal conspiracy in the 2G scam is still on.
Ms Kanimozhi's arguments seeking her discharge from the case virtually echoed those of former telecom minister A Raja who too had sought to rope in the prime minister and Mr Chidambaram in the case, telling the court that the issue of dilution of equity by spectrum licencees was discussed with them.
Her counsel is the same as that for Mr Raja-senior advocate Sushil Kumar.
Defending 47-year-old Mr Raja against corruption charges in 2G scam, Mr Kumar had told the court that there was nothing wrong in his decision of not auctioning 2G spectrum and that he was merely following the policies pursued by his predecessors and the NDA government.
"I (Mr Raja) have implemented only what I (Mr Raja) have inherited," Mr Raja's counsel had said.
Mr Kumar had said when home minister Chidambaram was the finance minister he had told the prime minister that dilution of shares by the accused licencees to attract FDI did not amount to sale of licence.
Arguing that the sale of equity was not the sale of licence, Mr Raja's counsel had said he cannot be accused of corruption in the controversial 2G spectrum allocation.
"The matter (about sale of equity by spectrum licencees) was discussed between the prime minister and the then finance minister.
"The then Finance Minister( who is now Home Minister) had said in front of the Prime Minister that dilution of shares does not amount to sale of 2G licence as per the corporate law," Mr Raja's counsel had asserted, even adding "Let the prime minister deny this."
He had further said, "When sale of equity does not amount to sale of licence, there is no question of earning profit. How can there be corruption in this regard?"
The CBI, in its second charge-sheet, had alleged that Ms Kanimozhi, who holds 20% stake in the DMK-run Kalaignar TV, accepted Rs200 crore from various firms promoted by Shahid Usman Balwa, another key accused in the scam.
The state-owned lender has been contemplating a Rs20,000 crore rights issue for nearly a year now, but is yet to get a go-ahead from the government, which owns a 59.40% stake in the bank
Mumbai: Even as its long-standing demand for a rights issue is pending, the country's largest lender State Bank of India (SBI) today said it can manage without a capital infusion from the government this fiscal, reports PTI.
"We cannot sustain without capital infusion from the government in the long-term. So it's a crisis situation if we don't get capital, but we have 'Plan B' to sustain this year, we will be able to manage in FY11-12," SBI chief financial officer Diwakar Gupta told reporters on the sidelines of a Ficci-IBA event here.
The state-owned lender has been contemplating a Rs20,000 crore rights issue for nearly a year now, but is yet to get a go-ahead from the government, which owns a 59.40% stake in the bank.
In the event of capital infusion not happening this fiscal, Mr Gupta said SBI's 'Plan B' entails tapping other instruments like retail bonds to augment its capital base.
"Plan B is other instruments for raising quasi capital like Tier-I or Tier-II. We may look at retail bond issue if demand picks up, but we don't have liquidity issues now," he said.
Mr Gupta, however, said that the bank will 'definitely' need capital next fiscal. "We cannot sustain without a capital infusion from the government in the long-term," Mr Gupta said.
The bank's credit growth guidance for the current fiscal is 16%-18% per cent, Mr Gupta said, adding that there is no point in being aggressive on this front and compromising on asset quality.
Mr Gupta said small and medium enterprises are the most affected by the current scenario, as they are pinched by both demand for goods going down and interest rates going up.