Its seems there is love triangle between Cairn Vedanta and ONGC. The latest news is that Vedanta Resources may go ahead with the acquisition Cairn India of the government's insistence on tough conditions on royalty.
Vedanta is very keen to enter into Indian energy market as it is developing economy and there is lot of scope for expansion .When Vedanta Resources had first evinced a desire to buy Cairn India, crude oil prices were $75-80, now they are around $112-115. Market experts are also of the view that Vedanta has little choice left but to go ahead and complete the acquisition as it has already acquired Petronas' stake in Cairn India and committed to raise debt to finance the deal.
Vedanta has already acquired 8.1% stake through a mandatory open offer to Cairn India's minority shareholders for another $1.2 billion, so clearly the company has a lot at stake.
Its been over a year that the romance is going on between these 3 companies. The problems are related to royalty and cess.The primary bone of contention being the country's largest onshore oil producing fields in Barmer, Rajasthan, where Cairn holds a 70% stake while ONGC hold the balance 30%. so now we have to see when the deal will strike and on what conditions.
Stevenson
Management trainee- Fundamental Analyst
Denip Consultants Pvt.Ltd
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