Vedanta open offer for Cairn India yet to get SEBI nod

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has not yet approved the open offer made by the Vedanta Group to Cairn India shareholders, even as the target company formed a two-member panel to look into the offer made to minority shareholders, reports PTI.

Billionaire Anil Agarwal-led Vedanta Group is buying Cairn Energy Plc's 40%-51% stake in Cairn India and has made an open offer for an additional 20% stake - which will take the deal size to up to $9.6 billion.

"SEBI will look at the financials of the transaction and will decide on the open offer price," Cairn Energy Plc CEO and Cairn India chairman Bill Gammell told reporters after the AGM of Cairn India.

Mr Gammell said: "We will seek all necessary approvals from the government" and said that Cairn India's skill-sets are its people and the company will retain the management structure even after the change of ownership.

"This is a corporate transaction involving change of shares at the corporate level. Cairn India is about its people and the knowledge resides in these people and not in Cairn Energy Plc," he said when asked if Vedanta's lack of experience in oil business may become a stumbling block to obtain regulator approvals.

Vedanta is paying Rs405 per share to Cairn Energy, including a non-compete fee of Rs50 per share, while it has made an open offer to Cairn India shareholders at Rs355 (offer price minus non-compete fee). The open offer will start on 11th October.

Cairn India CEO Rahul Dhir said the transfer of shares does not affect the operations of Cairn India and the company would continue to do business as usual.

Mr Gammell refused to comment on Vedanta's offer price, saying it is for Vedanta to decide.

"The matter is with SEBI. They have not yet decided," he said.

Meanwhile, Cairn India has formed a committee of two independent directors - Omkar Goswami and Ed Story - to look into issues of minority shareholders.

Mr Goswami said: "We are looking at various matters of transactions. One of the matter is difference between offer made to minority shareholders and that extended to the Cairn Energy Plc.

"We did ask the chairman of Cairn India whether the difference can be eliminated...under section 20(8) of SEBI Takeover Code up to 25% premium can be given as non-compete fee. This Rs50 is only 14% of the offer size so that is no clear legal deviation.
 

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COMMENTS

K PRASHANT

6 years ago

I filed a complaint with SEBI on the 16th August 2010 against the non compete fee, I received a response from the lead manager(JM Financial Pvt Ltd) of the ensuing open offer and I believe I have a decent case to counter the arguments put forward by JMFinancials. I am taking the liberty of attaching the Letter I received from JM Financial and also my response to the same for your kind attention.

My purpose of this email is to ask for your help in bringing the letter and my response to the attention of your members, you being a recognised investor association you would have access to members who may be unhappy like me with the price being offered. I would greatly appreciate it if you could request every member in your organisation who may be interested to contest the matter, to please copy my response with minor modifications and email the same to SEBI to exert pressure, in the process ensuring that SEBI and SAT takes a rationale desicion in accordance with the principles enshrined in SEBI'S preamble.

Thanking you in anticipation of your help.

Kind Regards

K. Prashant

Small cars, big battles: Pricey Honda Jazz falls behind Ford Figo, VW Polo and Nissan Micra

The cost of a car, especially a small car, matters a lot in India. This is a truth that other carmakers, except Honda and Skoda, seem to have learned

We have been hearing a lot of noise about every automaker's wish - or plans - to enter the small car market in India. Although some foreign carmakers have ventured into the market, they are finding the ground realities, like the price sensitivity of an Indian buyer, the biggest hurdle to overcome.

Take for example, Honda Siel Cars India Ltd (HSCI), which is finding it difficult to sell its pricey Honda Jazz in the crowded compact car (A2) segment, while other low-priced cars are selling like hot cakes.

During August 2010, the total sales of A2 cars in the domestic market rose 27% to 116,558 units from 91,539 units a year ago, according to data provided by the Society of Indian Automobile Manufacturers (SIAM). The biggest gainer in terms of volume, during the month was, surprisingly, Ford India Pvt Ltd, which sells its Fusion and Figo variants in the compact car category. During August, Ford sold 6,382 units in the A2 segment from 47 units the same month a year ago, on the back of its newly-launched small car Figo. Ford has received about 34,000 bookings for Figo since its launch in March.

Similarly, new entrants like Volkswagen and Nissan also witnessed good sales in the A2 category during the month. While Volkswagen sold 3,211 units of its Polo, Nissan sold 1,182 units of its newly launched Micra in August.

Three carmakers were losers in terms of sales in the A2 category - Fiat India Automobiles Pvt Ltd, Tata Motors and HSCI. During August, sales of Fiat, which is handled by Tata in the country, fell by 44.7% to 1,012 units from 1,830 units. Even Tata Motors, the country's biggest vehicle maker, could not arrest sales of its famous Indica from falling. During the month, sales of Indica fell 21.5% to 7,531 units from 9,598 units a year ago.

While variants from Fiat and Tata are relatively older and hence could have lost their sheen, for Honda it was the higher price that put the spanner in the works. While all variants from other carmakers in the compact car segment are available between Rs3.72 lakh to Rs7 lakh, the price of Honda Jazz starts from Rs7.56 lakh.

The Indian customer, more sensitive to price-related issues, seems to have simply ditched the Jazz for more lucrative and low-priced offerings from other carmakers like Ford, Volkswagen and Nissan. New launches by Maruti Suzuki India Ltd, the country's largest carmaker that is famous for its 'value for money' cars, also played their role in curtailing the growth of the pricey Jazz.

While Volkswagen's Polo was gaining ground in terms of sales, its other subsidiary, however, had to face a fate similar to Jazz. Reason? Again higher price. Fabia, the offering from Skoda India is priced between Rs4.86 lakh to Rs7.62 lakh. Compare it with the prices of other top selling compact cars, which ratify the low price and higher sales theory.

Ford's top selling car Figo is available for Rs3.72 lakh to Rs5.59 lakh, ex-showroom Mumbai, while VW Polo and Nissan Micra are priced between Rs4.34 lakh to Rs6.70 lakh and Rs4.13 lakh to Rs5.59 lakh, respectively.

In order to regain market share and attract new customers, Honda has to seriously rethink on its price strategy. Despite able and good support from the Tata team, Fiat is still finding it difficult to maintain its sales momentum. Maybe Fiat also needs to revisit its pricing policy, especially for its variants in the compact car segment. As far as Tata Motors is concerned, can we have some new models in the A2 segment before someone starts comparing Tata Indica to the everlasting (and unchanging) Ambassador from Hindustan Motors? 
 

User

COMMENTS

prabu

6 years ago

cost of honda jazz in thiruchirapalli

Wednesday Closing Report: Expect a sideways movement

The market continued its upmove for the seventh straight day with the benchmarks scaling fresh 32-months highs in trade. Support from the Asian markets and institutional buying kept the rally intact.

The market opened on a cautious note today on mixed cues from its Asian peers but it soon took off on its northward journey and touched a fresh high. The benchmarks then witnessed profit booking, bringing the indices lower in noon trades. The market was range-bound in the post-noon session, with the Sensex hovering around the 19,500 levels following a lacklustre opening by the European markets. However, the market regained some strength in the last hour of trade but could not breach the earlier intraday high.

The Sensex closed at 19,502, up 155.15 points (0.80%), after touching an intraday high of 19,554 and a low of 19,341. The Nifty was 65.40 points (1.13%) higher at 5,860. The benchmark touched a high of 5,869 and a low of 5,792 during the session.

The market breadth was almost equated on the Sensex. Of the 30 stocks, 17 ended in the green while 13 settled lower. The Nifty had 35 stocks in the advancing list while 15 stocks declined.  Among the broader indices, the BSE Mid-cap index added 0.08% while the BSE Small-cap index shed 0.09%.

The top Sensex gainers were Infosys Technologies (up 2.49%), Reliance Industries (RIL) (up 2.30%), Wipro (up 2.25%), TCS (up 2.18%) and HDFC Bank (up 1.76%). The main losers were Tata Motors (down 2.86%), State Bank of India (SBI) down 1.70%), ACC down 1.14%), Jaiprakash Associates (down 1.03%) and Cipla (down 0.93%).

The sectoral gainers were BSE IT index (up 2.49%), BSE Oil & Gas (up 1.85%) and BSE TECk (up 1.78%). The lone loser in the sectoral space was BSE Auto (down 0.25%).

Indian exports grew by 22.5% to $16.64 billion in August compared to the same period last fiscal. Imports, too, jumped by 32.2% year-on-year to $29.7 billion in August, commerce secretary Rahul Khullar told reporters in New Delhi.

During April-August this fiscal, exports posted a growth rate of 28.6% to $85.27 billion on a year-on-year basis. Imports during the April-August period grew by 33.1% to $141.89 billion.

Markets in Asia ended mostly in the green on Wednesday. While the Japanese market rallied on the government’s intervention to calm down the yen, Chinese stocks tumbled on speculations that the government would look at new avenues to curb property prices.

The Hang Seng was up 0.14%, Jakarta Composite jumped 3.90%, Nikkei 225 surged 2.34%, Straits Times advanced 0.73%, Seoul Composite was up 0.48% and Taiwan Weighted rose 0.38%. On the other hand, Shanghai Composite tanked 1.34% and KLSE Composite was down 0.10%.

The US markets closed with marginal losses on Tuesday. While the retail sales numbers were in line with market expectations, selling in financial stocks erased earlier gains. Purchases increased 0.4% following a 0.3% gain in July, Commerce Department figures showed. This apart, inventories at US businesses rose in July at the fastest pace in two years as companies stocked up ahead of the back-to-school sales season that proved to be better than projected. The Dow slid 17.64 points (0.17% to 10,526. The S&P 500 fell 0.80 points (0.07%) to 1,121. The Nasdaq added 4.06 points (0.18%) to 2,289.

UK jobless claims unexpectedly increased in August for the first time in seven months, a sign that the country’s economic recovery may be slow down.

Claims for unemployment benefits rose by 2,300 to 1.47 million, the Office for National Statistics said today in London. Overall unemployment in the quarter through July fell by 8,000 to 2.47 million.

Foreign institutional investors were net buyers of stocks worth Rs1,651 crore on Tuesday. Domestic institutional investors were net sellers of equities worth Rs1,124 crore on the same day.

Cairn India Ltd (up 1.39%), the energy firm that London-listed Vedanta Resources is seeking to buy, today said the giant Mangala oilfield in Rajasthan can produce 150,000 barrels per day (bpd), 20% more than the previously approved peak production.

Mangala is the first of the 25 oil and gas discoveries Cairn has made in the prolific Rajasthan block and produces 125,000 barrels of oil per day.

Wind turbine-maker Suzlon Energy (down 0.10%) today said its subsidiary, REpower, will supply three turbines to Sweden's Klagerup Kraft AB, to be installed by 2011.

REpower Systems, in which Suzlon Energy is the majority shareholder with a 90% stake, has signed an agreement with Klagerup Kraft AB for delivery of three wind turbines to Sweden, an official statement said. However, the financial details of the deal were not immediately available.

RPG group firm Integrated Coal Mining Limited's (ICML) agreement with Australian firm Resource Generation Limited (RGL) would boost CESC's (down 0.69%) aggressive plans in power, a top official of the utility said.

The agreement would feed the new generation capacities of CESC and supplies would start from 2013. Integrated Coal Mining, in which CESC owns just above 25%, entered into a pact with RGL for a 20-year overseas coal procurement. Besides the coal contract, ICML also intends to pick up 10% stake in RGL at an approximate value of Rs45 crore.

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