The contours of the Cairn deal are getting clearer. Vedanta Resources plans to spend up to $9.6 billion to buy up to 60% of Cairn India. Some of that will come from parent company Cairn Energy, which has agreed to sell 40-51%. The rest- up to 20%-Vedanta plans to buy from other shareholders. Cairn Energy owns just over 60% of Cairn India. It says it will use cash from the stake sale to pay shareholders and fund explorations in Greenland. Cairn India currently produces of 125,000 barrels of oil everyday. Vedanta thinks it can nearly double that figure.
Meanwhile Vedanta has suffered a setback in its other Indian operations. On Monday a panel set up by the environment ministry said the company should not get permission to mine for bauxite in Orissa. The panel said mining operations would violate the rights of two tribal groups in the Kalahandi area. Vedanta didn’t respond, but in the past has argued that the mining operations will help lift the region out of poverty.
Wholesale inflation has slowed down, growing at just single digits in July. The country’s wholesale price index rose just 9.97% during the month, compared to June’s 10.55%. July’s figure is also lower than most expectations, which hovered at around 10.4%. Despite the easing, deputy chairman of the planning commission Montek Singh Ahluwalia warned that inflation remained a problem. But he added it would fall to about 6% by December. Meanwhile some analysts have said they expect three separate 25 basis points hikes in policy rates this year.