ONGC, which partners Cairn India in its crown jewel oilfields in Rajasthan and seven other properties in India, has waived its pre-emption rights over the deal and has given a no-objection certificate, paving the way for conclusion of the $8.71 billion deal in the next few days
New Delhi: State-owned explorer Oil and Natural Gas Corporation (ONGC) has given a no-objection certificate (NOC) to British oil firm Cairn Energy’s sale of a majority stake in its Indian unit to Vedanta Resources, paving the way for conclusion of the $8.71 billion deal in the next few days, reports PTI.
ONGC, which partners Cairn India in its crown jewel oilfields in Rajasthan and seven other properties in India, has waived its pre-emption rights over the deal and has given a no-objection certificate, sources privy to the development said.
The board of ONGC had in September agreed to waive its pre-emption rights if Cairn India gave a written undertaking to share royalty and pay its share of oil cess on crude oil produced from the Rajasthan fields.
ONGC, being the licencee of the Rajasthan block, pays 20% royalty on not just its share of production, but also on the 70% share of Cairn India. It wanted this payment to be treated like other project costs and taxes and recouped from revenues earned from oil sales, a demand opposed by Cairn India.
Cairn India also felt the Rs2,500 per tonne oil cess was a liability of the licencee and was opposed to deviating from the signed contract to share any of this burden.
However, the firm’s current and future promoters, Cairn Energy and Vedanta, ordered it to accept the twin demands, which the government had made a precondition for giving its nod to the $8.71 billion deal.
Sources said the legal document, wherein Cairn India as well as its current and future promoters commit to accepting the conditions, was held up for two months over minor technicalities, but was signed a few days ago, after which ONGC gave its NOC.
The home ministry had on 25th November given security clearance to a Vedanta takeover of the operations of India's biggest onland oil discovery in more than two decades and other properties of Cairn India.
The two approvals complete the last of a long list of formalities and conclusion of the Cairn-Vedanta deal is likely to be announced within days, they said.
Cairn Energy had in August last year announced the sale of its 40% interest in Cairn India to Vedanta.
After much debate, the Cabinet Committee on Economic Affairs (CCEA) in June this year agreed to give approval to the deal subject to Cairn Energy and its successor agreeing to pay oil cess on Cairn India’s 70% stake and make royalty payments on the Rajasthan fields cost-recoverable.
The CCEA had also made the deal conditional on security clearance of Vedanta, as well as ONGC waiving its so-called pre-emption rights.
Meanwhile, Vedanta said in a statement that it “has now satisfied the conditions under the Sale and Purchase Agreement for the acquisition of a controlling stake in Cairn India”.
It added, “Vedanta and Cairn Energy Plc are working towards the closing of the Transaction and a further announcement will be made in due course.”
Cairn Energy said in a separate statement: “As previously announced, Cairn intends to return a substantial proportion of the proceeds from the sale to shareholders. A further announcement in this respect will be made in due course.”
The company said it will retain about 22% shareholding in Cairn India after the Vedanta transaction.
The delay has been attributed to various reasons including delivery schedule of certain components from Russia and the ongoing protests in Kudankulam against the nuclear power plant
New Delhi: The delay in commissioning of two nuclear power plants at Kudankulam has led to escalation in cost to the tune of Rs2,653 crore, reports PTI.
The approved completion cost of the Kudankulam Nuclear Power project was Rs13,171 crore, officials said.
“The completion cost is now expected to be Rs15,824 crore and the project is expected to be completed in 2012-13,” they added.
The delay has been attributed to various reasons including delivery schedule of certain components from Russia and the ongoing protests in Kudankulam against the nuclear power plant.
The total expenditure on the project till September this year has been Rs14,122 crore.
As per the original plan, the first unit was to be commissioned in December 2007, which was revised to mid-2010.
This was further revised to September 2011 when the anti-nuclear protests broke out in Kudankulam.
The first Inter-Governmental Agreement for setting up two 1000MW light water reactors was signed between India and the erstwhile USSR in 1988.
A supplement to the agreement was signed with the Russian Federation in 1998. The ground breaking for the Kudankulam project took place in September 2001 and the first pour of concrete took place in March 2002.
NPCIL and Russia’s Atomstroy Export formally inked a deal for building two more civil nuclear reactors of 1,000MW each at Kudankulam last year.
A total of 12 Russian nuclear power reactors are expected to come up in India of which six would be built between 2012 and 2017.
Analysts said that mid-caps and small-caps have underperformed their large-cap peers primarily due to concerns such as high borrowing costs, currency fluctuations and low participation from investors
Mumbai: The Bombay Stock Exchange (BSE) small-cap and mid-cap indices have underperformed their large-cap peer this year so far, as the two saw a decline of up to 37% against 21% fall in the broader market benchmark Sensex.
As per the study of indices from 31 December 2010, to 30th November this year, the BSE Small-cap index dropped by 36.94% to settle at 6,097.26 as on 30th November. The Mid-cap index shed 27.87% to close at 5,627.69 in the trade ended 30th November.
Meanwhile, the BSE benchmark index Sensex saw an erosion of 21.38% to close at 16,123.46 on 30th November, from a peak of 20,509.09 on 31 December 2010.
Analysts said that mid-caps and small-caps have underperformed their large-cap peers primarily due to concerns such as high borrowing costs, currency fluctuations and low participation from investors.
In case of a slide in the market, these are the scrips which go down faster than the frontline stocks, experts said.
During the period under review, the BSE Mid-cap index fell to one-year low of 5,459.92 on 24th November, while the Small-cap index skidded to its 52-week low of 5,914.55 on the same day this year.
The Sensex had tanked to its one-year low of 15,478.69 on 23rd November.
“In a bear market investors tend to invest in large cap stocks, while for smaller stocks they prefer to book profits.
During the times of uncertainty one witnesses greater losses in mid and small-cap counters. But when markets rally, these stocks move ahead of the frontline stocks,” Geojit BNP research head Alex Matthews said.
Marketmen also said that retail investors have large exposure in mid-cap and small-cap stocks and since last few months the retail segment activity in the market has dropped significantly. When things become worse, fears makes investors exit these stocks at lowest valuations.
The mid-cap and small-cap indices track the performance of companies with market capitalisations that are a fifth or a tenth of that of blue-chip firms.