New Delhi: Mining major Vedanta on Tuesday said its strategy is to “simplify and consolidate” its corporate structure, amid speculations of Cairn India merging with itself.
Anil Agarwal-led Vedanta recently hiked stake in its subsidiary Cairn India, oil and gas exploration firm, by nearly 5 per cent.
“Company’s stated strategy is to simplify and consolidate its corporate structure. Management reviews options to deliver this strategy on an on-going basis,” Vedanta said in a filing to the BSE on Tuesday.
Vedanta said it would “abide by its obligations to make appropriate disclosures as and when such disclosures are necessitated by decisions taken by the company”.
Merging Cairn India with itself would provide Vedanta access to the latter’s cash and help reduce the debt burden. At the end of March this year, Vedanta had total liabilities worth over Rs 99,000 crore on a consolidated basis.
Last week, the company had acquired a 4.98 per cent stake in Cairn India for $315 million from a wholly-owned subsidiary – Twinstar Mauritius Holdings (TSMHL).
The funds received by TSMHL will be used to service existing debt obligations at TSMHL, Vedanta had said.
Anil Agarwal-led Vedanta India, which changed the name from Sesa Sterlite, is a promoter of Cairn India. TSMHL had a 39.41 per cent stake in Cairn India at the end of March, while Vedanta’s stake was 18.73 per cent.
Following the share transfer, Vedanta will continue to hold 59.9 per cent in Cairn India, of which 25.5 per cent will be held directly and 34.4 per cent held indirectly through TSMHL.
Vedanta chief Anil Agarwal had in January said the company is mulling merging Cairn India and Hindustan Zinc into his flagship Vedanta Group firm to create a global natural resources giant to rival Rio Tinto or BHP Billiton.
He had said consultants have been appointed to explore if it would make sense to merge the two firms into Vedanta and will look at if it made sense to “keep oil and gas and energy companies separate or merge Hindustan Zinc, merge Cairn, so that we can have a company like BHP”.
“That can be one model. It all depends on shareholders…How value can be created, how smooth. We are open for merger if the recommendation comes,” he had said.
Shares in Vedanta Ltd, on Tuesday, ended 3.11 per cent higher at Rs 182.55 apiece on the BSE.