On Monday Vedanta Resources formally announced it plans to spend up to $9.6 billion to buy up to 60% of Cairn. The company will buy between forty and fifty-one percent from parent company Cairn Energy. Additional stake will come from other shareholders. Right now, Cairn Energy owns just over 60% of Cairn India.
Vedanta’s efforts to take over Cairn India may not go smoothly. It could have a rival in the state-run ONGC. Mint has learnt that the petroleum ministry wants it to make a counter-bid for Cairn India. ONGC is currently a licensee and partner in one of Cairn India’s big oil blocks out in Rajasthan.
In a separate development, Vedanta suffered a setback in its Indian mining operations this week. On Monday a panel set up by the environment ministry said the company should not get permission to mine for bauxite in Orissa. Its report concluded that a mine would threaten the survival of the Dongria Kondh tribe.
Markets regulator Sebi is proposing a new rule to encourage retail investments in public issues. On Wednesday it released a discussion paper that suggests doubling the investment cap for individual retail investors to two hundred thousand rupees instead of one hundred thousand. The proposed rule change applies to both IPOs and follow-on offers, and it will be open to public comments on it until the third of September. Sebi’s move comes at a time when government-run Coal India is looking to issue an IPO that could raise up to Rs17,700 crore.
And in another action this week, Sebi is also trying to keep some popular savings schemes tax-free. It’s told the Central Board of Direct Taxes equity-linked savings schemes should continue to have tax exemptions. Sebi’s latest proposal came after the finance ministry’s draft direct tax code suggested removing exemptions for all such schemes.
Also this week, the US indicated it could soften its stand on increases in visa fees. On Tuesday the State Department said it would work with India to address concerns about the hikes. The statement came soon after India said it would go to the WTO over the issue. A new American law has increased applications fees for the H-1B and the L work visas by $2000 apiece. Indian IT companies are some of the biggest users of both visas and they say the law is targeted at them. The increase in visa fees is supposed to fund security measures along America’s tumultuous border with Mexico.