Vedanta Acquired a controlling stake in Cairn India Ltd
Vedanta Resources Plc• Vedanta Resources plc ("Vedanta") is a London listed FTSE 100 diversified metals and mining major.• Globally diversified natural resources group• world’s largest integrated Zinc Lead producer and among the top producers of copper, iron ore and silver.• Group Revenue for the fiscal year ending 31 March 2011 was US$ 11.4 billion.
Locations & operationsGeographical Locations: – Australia – India – Liberia – Namibia – South Africa – United Kingdom – ZambiaOperations: – India – Aluminium, Copper, Zinc, Iron Ore, Power – Australia – Copper – Zambia - Copper – Namibia - Zinc – South Africa - Zinc – Liberia – Iron Ore – Ireland – Zinc
Cairn India ltd• Cairn India – largest private crude producer in India (>20% of India’s production) − World class assets at Rajasthan (>6.5 bn boe in place, with substantial upside) − Low cost operations at Rajasthan and potential to produce 240,000 bopd − Recent exploration success in Sri Lanka − Strong, experienced management team
• Cairn India is one of the most significant oil and gas exploration and production companies in South Asia.• 1295 employees in India alone and world class oil reserves in one of the fastest-growing economies in the world.• Cairn India has operations in Andhra Pradesh, Gujarat and Rajasthan.
• Financials Revenue - INR 102,779 million. PAT - INR 63,344 million. (31 March, 2011)• Shares in issue 1,902,582,377 equity shares of Rs.10 each as on 30 September 2011.• Listings Cairn India was listed on 9 January 2007 on the Bombay and National Stock Exchanges. It is ranked amongst the top 25 companies in term of market capitalization.
Vedanta Bought 11% Of Cairn India From Petronas• Malaysias national oil corporation Petronas had a 12.3% stake in Cairn India before transaction• Vedanta Resources Plc has bought 11% stake for $1.5 Bn in Cairn India Ltd from Petronas on April,2011• Vedanta bought the stake at Rs.331 per a share• The acquisition was part of vedanta’s plan to get exposure in Indias oil reserves.• Vedanta group held 28.5 after the transaction%
Vedanta’s Proposal to Cairn• Cairn Energy, which owns 52.11% stake in Cairn India, has voted to accept government conditions.• The company dint not pay any royalty on its 70% interest in the Rajasthan fields.• The royalty was paid by ONGC, which got a 30% stake in the 6.5 billion barrel field for free.• The Cabinet Committee on Economic Affairs (India) on June 27 gave consent to the Cairn-Vedanta deal
Vedanta Acquired Cairn• Acquired 30% of the fully diluted share capital of Cairn India from Cairn Energy PLC on 8th Dec 2011• The Vedanta group now holds 58.5% of the fully diluted share capital of Cairn India and has paid a total gross consideration of US$8.67 billion.• Of the 58.5% stake, 38.5% stake held by vedanta plc and 20% is held by Sesa Goa Limited, a subsidiary of Vedanta.• After transaction,Cairn retains an 22% share holding in Cairn India.
Cairn Acquisition FundingConsideration ($bn)20% stake acquired by Sesa Goa 2.8838.5% stake acquired by Vedanta plc 5.79Total Consideration 8.67
FundingSesa Goa – Own resources 2.88Sr. Secured Bank Term Loan 2.78Bonds 1.65Own Cash 1.36Bridge to Equity never drawnVedanta plc – Total 5.79Total Funding 8.67
Credit MetricsProforma 30 Sep 2011 (including Cairn) in $ mn Debt Cash and Liquid Investments Net DebtVedanta plc 9,127 178 8,949Vedanta Consolidated 16,620 6,438 10,18
Benefits• The acquisition is a landmark event for the global natural resources sector and for India, which is looking at sustainable energy sources to fuel its growing economy.• Cairn India possesses an enviable talent pool and vedanta welcomes it to the their family.• Vedanta believes that Cairn India has the potential to double its current capacity and both will work together to achieve it.
Summary• Immediately earnings accretive• World class asset and management team• Common operating philosophy – focus on delivery and costs• Maintain strong credit metrics – funded through 50% own resources and 50% debt• Unique opportunity to create value enhances and diversifies Vedanta’s strong growth profile
Prepared by P.SARAVANAN B.Tech.,MBAwww.twitter.com/saravananrulez