Faced with prospect of its assets across the globe being seized just like Pakistan and Venezuela, the government decided to scrap retrospective taxation but the international embarrassment could have been avoided had 'attached' shares of Britain's Cairn Energy Plc not been sold, according to tax and legal experts. On Thursday, the government introduced a Bill in Parliament to scrap the tax rule that gave the tax department power to go 50 years back and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India. The 2012 legislation was used to levy a cumulative of Rs 1.10 lakh crore of tax on 17 entities, including UK telecom giant Vodafone, but substantial punitive action was taken only in the case of Cairn.
Cairn Energy is back to its original image of an explorer, with its prime producing properties in India now going into the Vedanta group kitty.
Cairn India on Friday said its UK-based parent Cairn Energy Plc is unlikely to exit completely from the company.
A day after agreeing to sell majority stake in its India subsidiary for $8.48 billion, UK's Cairn Energy Plc top management on Tuesday met Oil Minister Murli Deora and other key officials to clear any regulatory roadblocks to the deal with Vedanta Resources.
The company sent the reminder on September 10, ONGC said in a filing to the Bombay Stock Exchange. Vedanta is offering $8.48 billion to buy up to a 51 per cent stake in Cairn India, which has 10 oil assets in the country, including the giant Rajasthan oilfield.
UK's Cairn Energy Plc on Tuesday said it will seek shareholder nod for sale of majority stake in its Indian arm, Cairn India, to London-listed Vedanta Resources Plc for up to $8.48 billion on October 7.
Net profit in 2012 was $72.6 million, compared with $4.56 billion profit in 2011, Cairn said in a statement.
Refusing to be cowed by pressure being brought on him, Oil Minister S Jaipal Reddy on Friday said the decision for mining group Vedanta Resources' $9.6 billion buyout of Cairn India will be taken by the Cabinet without "sacrificing" on national interest.
Contrary to reports, oil PSUs will not make a counter bid to Vedanta Resources' $9.6 billion offer to buy Cairn India, as the oil ministry is disinclined to a rival bid.
International investment in the domestic energy sector could get affected if the government unduly delays the deal between Cairn Energy and Vedanta Resources, says Bill Gammell, Cairn India Chairman and CEO of its British parent.
The Vedanta chief also appeared confident that the deal to acquire a majority stake in Cairn India, promoted by Edinburgh-based Cairn Energy Plc, would soon receive the approval of the government.
The exploration company will buy back shares from January 23 and extinguish them.
Cairn, which is sitting on a cash pile of about $3 billion, in a statement said its board has approved buying 17.09 crore shares or 8.9 per cent of the total shareholding, from open market at no more than Rs 335 apiece.
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According to media reports, CBI is looking into the entire process at the then NDA government and has asked for information from the mines ministry.
The company faces a potential tax demand.
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The Indian government has paid Cairn Energy Plc Rs 7,900 crore to refund taxes it had collected to enforce a retrospective tax demand, ending a seven-year-old dispute that had tarred the country's image as an investment destination. The company, which is now known as Capricorn Energy PLC, in a statement said it has received "net proceeds of $1.06 billion", of which nearly 70 per cent will be returned to the shareholders. The tax department had used a 2012 legislation, which gave it powers to go back 50 years and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India, to seek Rs 10,247 crore in taxes from Cairn.
British oil firm Cairn Energy Plc on Tuesday said it has identified Indian sovereign assets overseas, which it can seize in the event of New Delhi failing to return over USD 1.7 billion that an international arbitration tribunal has ordered after rescinding a retrospective tax demand.
The board of Cairn India has on two occasions rejected oil ministry conditions that royalties paid by Oil and Natural Gas Corporation on its all important Rajasthan oilfields, be cost recoverable from oil sales saying this was against contractual provisions and not in the interest of the company and its shareholders.
Edinburgh-based Cairn said its Alpha-1S1 well in the sea between Greenland and Canada found oil over a 400 meter section and encountered gas reserves, the company said.
On November 23, Cairn India, made conditional applications, which have come in for questioning following a Delhi high court ruling.
Vedanta Resources has huge interests in India. The promoter and majority shareholder of Vedanta Resources, Anil Agarwal, also founded Sterlite Industries.
State-run Oil and Natural Gas Corp (ONGC) may seek management control of the giant Rajasthan oilfields in lieu of allowing UK's Cairn Energy to sell majority stake in its Indian arm that now operates the field, to a non-oil firm, Vedanta Resources for $8.48 billion.
Fixed deposits can fetch 9-9.5% interest versus 3.5% to be received by Cairn, say institutions.
The Vedanta group on Wednesday confirmed putting in a preliminary expression of interest (EoI) for buying the government's stake in Bharat Petroleum Corp Ltd (BPCL).
India-focused mining conglomerate Vedanta Resources reported 49 per cent growth in its core profits to $2.562 billion for the half year ended September 30, 2012, buoyed by earnings from subsidiary Cairn India.
Cairn said it had initiated arbitration.
Cairn Energy of UK is seeking compensation from the Government of India.
The Income Tax department, which is probing Cairn Energy plc's transfer of India assets, has asked the UK-based company not to dispose of its 10.3 per cent holding in Cairn India.
The company no longer sees the London listing as necessary to access capital and the deal will simplify Vedanta's corporate structure.
ONGC's return on investment becomes positive after govt makes Barmer block royalty cost-recoverable.
Cairn files notice against India in $1.6 billion tax dispute.
Oil Ministry is referring the deal to the Cabinet for approval after a standoff between Cairn and Oil and Natural Gas Corporation over the state-owned firm's liability to pay royalty in excess of its 30 per cent share in Cairn's mainstay Rajasthan oilfields.
Though the Prime Minister's Office had earlier this month asked the ministry to decide on giving approvals to the $9.6-billion acquisition on merit, the Oil Ministry has slipped in 11 pre-conditions that are unlikely to be accepted by the London-listed firm.
The company has not been able to sell its 9.8% stake in Cairn India
Cairn faces a potential tax demand on an alleged Rs 24,500 crore of capital gains it made when in 2006-07 it transfered all its India assets to a new company, Cairn India.
Public shareholders of Cairn India will lose out on a whopping Rs 3,570 crore (Rs 35.7 billion) to the promoters who would be only beneficiary of a non-compete fees to be paid by its suitor, London-listed Vedanta group.
The Supreme Court on Friday refused to restrain Vedanta Resources' subsidiary Sesa Goa from launching an open offer to buy 20 per cent stake in Cairn India.
It is the second firm to have received retrospective tax notice this year after Vodafone Group.
A plea of the UK-based Vedanta group company to export its share of crude oil from Barmer oil field in Rajasthan was on Tuesday rejected by the Delhi high court on the ground that domestic crude cannot be exported till India attained "self sufficiency".
The company is looking to invest more than $3 bn over the next three years.
