Panaji Jun 15, 2015 (Thomson StreetEvents) -- Edited Transcript of Vedanta Ltd M&A conference call or presentation Monday, June 15, 2015 at 12:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Ashwin Bajaj Vedanta Limited - Director of IR * Tom Albanese Vedanta Limited - CEO * Mayank Ashar Cairn India Limited - MD & CEO * Sudhir Mathur Cairn India Limited - CFO * D.D. Jalan Vedanta Limited - CFO ================================================================================ Conference Call Participants ================================================================================ * Liam Fitzpatrick Credit Suisse - Analyst * Tarun Lakhotia Kotak Securities - Analyst * Amos Fletcher Barclays - Analyst * Derek Staples GMO - Analyst * Rakesh Sethia Morgan Stanley - Analyst * Danielle Chigumira UBS - Analyst * Vikash Jain CLSA - Analyst * Amit Sureka Bharti Axa Life - Analyst * Harsh Murarka Pareto Securities - Analyst * Cedar Ekblom Bank of America Merill Lynch - Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, good day and welcome to the Vedanta Limited and Cairn India Limited Merger Conference Call. As a reminder, all participant lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. (Operator Instructions) I now hand the conference over to Mr. Ashwin Bajaj, Director, Investor Relations. Thank you, and over to you, sir. -------------------------------------------------------------------------------- Ashwin Bajaj, Vedanta Limited - Director of IR [2] -------------------------------------------------------------------------------- Thank you, operator. Ladies and gentlemen, thanks very much for joining us today. I am Ashwin Bajaj, Director of Investor Relations for Vedanta. We announced this significant strategic development yesterday, the merger of Cairn India Limited with Vedanta Limited. To discuss this, we have with us today, Mr. Tom Albanese and Mr. D.D. Jalan, CEO and CFO respectively of Vedanta Limited; and Mr. Mayank Ashar and Mr. Sudhir Mathur, CEO and CFO respectively of Cairn India Limited. The team will make some brief opening remarks, referring to the presentation available on our website for download and then we'll open it up for Q&A. I would like to draw your attention to the disclaimer on pages 1 and 2 of the presentation. With that, I'll hand it over to Tom. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [3] -------------------------------------------------------------------------------- Thanks, and good evening ladies and gentleman, and good morning and good afternoon for some of those of you calling from the UK and the US. We are very excited and delighted to present you with the recommended merger of Cairn India with Vedanta Limited, which we believe will create significant value for all shareholders. And I will keep my comments brief, so we can have as much time for Q&A as needed. Let me start by summarizing the key highlights of the transaction. The transaction has been anonymously approved by the non-conflicted, independent Board members of Vedanta Limited, Cairn India and Vedanta plc. Cairn India Limited public shareholders will receive for each equity share held, one share of Vedanta Limited and one 7.5% Redeemable Preference Share of Vedanta Limited with a face value of INR10. Redeemable Preference Share will have the following terms. It will contain a dividend of 7.5% per annum payable annually at the end of every financial year, [for] tenure of 18 months from issuance upon closing of the transaction. It will be listed on the National Stock Exchange and redeemable at face value of INR10 per share for cash at the end of the tenure. Vedanta Limited will also provide a third-party facility, enabling a cash exit for Redeemable Preference Shareholders within 30 days from closing of the transaction. Redeemable Preference shareholders will therefore have the options, either hold this instrument or monetize it, based upon their own preferences. We do believe the transaction terms are very attractive and compelling for the Cairn shareholders. These terms do imply a premium of 7.3% to the previous Friday closing price. We've acted in line with corporate best practices and applied the highest governance standards, both as per Indian and UK regulations in relation to the transaction and we do expect the transaction to close in the first quarter of calendar year 2016. So I'd like to spend a little bit time on the strategic rationale for the merger. With this transaction, we will reinforce our position as a large diversified Indian natural resources major with a suite of Tier 1 assets across a range and number of commodities. The scale and diversity of the asset base will reduce the earnings volatility and increase the stability of cash flows through the cycle. Vedanta Limited will focus on delivering long-term value for all shareholders by continuing to allocate capital to the most compelling growth opportunities across commodities and across geographies. This transaction will provide the Group with significant financial flexibility to distribute strong sustainable dividends to our shareholders. To be very clear, Vedanta Limited is not a highly geared company and we intend to de-lever, and we've already announced that previously, even without this transaction. So access to Cairn's cash is not the rationale behind this merger. Cairn India's minority shareholders are presented with an opportunity to expand exposure to the significant upside of Vedanta Limited, which I'll now summarize in three points. First, is a strong growth pipeline that add an inflection point of delivery -- significant value with lot of latent capacity without much additional capital investment. Second, an increased share of the benefits of our $1.3 billion cost improvement program, which is primarily from a reduction of hard costs such as procurement and increased revenues and marketing savings. And last, they will be also beneficiaries of any future upside with the potential re-rating of the Group going forward. All of this, of course, while retaining upside in oil prices and our oil assets. The enlarged company will have strong financial and credit profile, [leading to] lower funding costs. The availability of capital at this lower cost within the merged group will serve to amplify the potential for value creation for Cairn India and Vedanta Limited shareholders alike. This combination will further simplify the corporate structure in line with the Group's long-stated strategy and align the interests of all shareholders. To summarize, we believe the merger will generate long-term sustainable value for all of our shareholders. I'd like to spend some time talking about the merits from a Cairn perspective, because I do recognize the importance of this transaction for Cairn's shareholders and hence let me ask Mayank Ashar, our Chief Executive of Oil and Gas, Cairn Oil, to go through this transaction from a Cairn perspective. -------------------------------------------------------------------------------- Mayank Ashar, Cairn India Limited - MD & CEO [4] -------------------------------------------------------------------------------- Thank you, Tom, and good morning and good evening everyone. From Cairn's perspective, there are multiple attractions to this merger. The terms of the transaction are extremely attractive for Cairn India shareholders. The implied premium offered reflects the higher quality of our assets and significant future growth potential. We become part of a larger Natural Resources Group with high-quality assets and significant diversification. It leads to a greater resilience to commodity prices and economic cycles and derisks earnings. The more stable and resilient cash flows of Vedanta Limited will enable us to invest through the cycle and not be dependent on the outlook for one commodity while making strategic decisions. It will also enable the enlarged company to pay strong sustainable dividends, which is attractive to our shareholders. We will be able to deliver better value to our shareholders as part of a bigger, more diversified company. Cairn India's shareholders will also get access to Vedanta Limited's first-tier metals and mining assets, which are longer lived when compared to some of the Cairn assets, are well invested and with low cost. Additionally, there is significant latent capacity at Vedanta Limited, which is ramping up and thereby unlocking value, which we will share in. The zinc assets are truly world-class in terms of scale, cost and reserved life. The enlarged platform will also give rise to significant economies of scale, including administration, technical excellence, quality of people, interactions with government and CSR efforts in the community. Additionally, the shares in the new Vedanta Limited will be more liquid than Cairn India, given the larger market cap and the larger free float. A higher index weighting for Vedanta Limited will also benefit its liquidity. We will also gain access to various capital markets, including NYSE and the international debt markets, which further increases our financial flexibility. The merger provides Cairn India minority shareholders with high exposure to the announced cost improvements of $1.3 billion across the Group, the majority of which originate from the metal and mining business, which would not otherwise have received. Cairn's growth story will not change post the merger. We will continue to operate our assets efficiently and execute our strong pipeline of projects with the same vigor and with the support of the Vedanta Group. We have an excellent suite of assets to generate very high returns. The Mangala, Bhagyam and Aishwariya fields at Rajasthan, as well as the offshore assets of Cambay and Ravva are all world-class assets from a cost, reserves and profitability perspective. We will continue to focus on growing our portfolio and have made good progress in the current fiscal year on the ongoing projects of gas, Barmer Hill and Bhagyam EOR. Our focus over the longer term is unchanged and that involves maximizing value from a further suite of projects, including Aishwariya EOR, Satellite fields and subsequent phases of Barmer Hill development. To continue to execute our strategy, we need access to capital, which we believe will not be in any way impacted by the merger. We are firmly of the view that Vedanta will allocate the capital required to fuel our growth aspirations and that our progress will continue unabated. Finally, Vedanta Limited is committed to promoting the brand value that Cairn India has built over the years. Its brand is synonymous to excellence in geology, advanced technology, talented people and financial discipline. Cairn India has been a key contributor to not only [India's oil] and growth story, but also earn tremendous social capital through intense community engagement and sustainable work practices. We will be committed to ensure that the growth story of Cairn India will remain unaffected. With that, I'll hand it back to Tom. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [5] -------------------------------------------------------------------------------- Thanks, Mayank. To summarize, I believe there are significant merits to this transaction to both sets of shareholders. Based upon the recommended exchange ratio, it's a very attractive and compelling offer for the Cairn shareholders. Cairn India shareholders gain access to Vedanta Limited's Tier 1 metal and mining business, which are well invested, long life, first quartile and delivering strong growth. From a Vedanta Limited perspective, this transaction is one step forward in our drive to achieve further simplification of the Group structure. The alignment of debt and cash flow improves the Group's capital structure, credit profile and [results] cost of capital, but also improves the financial flexibility for the Group to make optimal capital allocation decisions and drive shareholder value creation. We really believe this transaction has a long-term value creation potential and that all shareholders will benefit from that. Quite simply, it's a win-win situation for all the shareholders. So as I close, I want to reemphasize the long-term strategy and the vision the Group, which you've heard a number of times from the Group Founder, Mr. Anil Agarwal and also from me over the past year. We're the only diversified Indian natural resource company of global scale. Given our expertise and experience, we're uniquely positioned to develop India's world-class endowment of natural resources. We do generate stable cash flows through the cycle and support long-term shareholder returns. And with this transaction, we believe there is truly a case for a potential re-rating. And to re-emphasize, we are committed to invest in growth and support strong dividends. So thank you very much. And with that we're happy to take any questions. -------------------------------------------------------------------------------- Ashwin Bajaj, Vedanta Limited - Director of IR [6] -------------------------------------------------------------------------------- Over to you operator for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Liam Fitzpatrick, Credit Suisse. -------------------------------------------------------------------------------- Liam Fitzpatrick, Credit Suisse - Analyst [2] -------------------------------------------------------------------------------- Two or three questions. The first two just on the tax situation. Is this still going to be contingent on resolution of the tax problems or disputes at Cairn India? And secondly, on that tax issue, can you outline if you have any indemnities from Cairn Energy? And separately, just on Hindustan Zinc -- -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [3] -------------------------------------------------------------------------------- We didn't hear the full part of that second one. Can you repeat the second part of that tax question? -------------------------------------------------------------------------------- Liam Fitzpatrick, Credit Suisse - Analyst [4] -------------------------------------------------------------------------------- Yes, just with regards to the tax dispute of Cairn India, I just wanted to know whether you have any indemnities from Cairn Energy in respect of that dispute. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [5] -------------------------------------------------------------------------------- Okay. -------------------------------------------------------------------------------- Liam Fitzpatrick, Credit Suisse - Analyst [6] -------------------------------------------------------------------------------- Final question was just on Hindustan Zinc. Should we assume that given you're going ahead with this transaction that the buyouts of the minorities at Hindustan Zinc is likely to be delayed beyond the next 12 months? -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [7] -------------------------------------------------------------------------------- Okay, Liam, maybe what I'd like to do is, first of all, say that this is not contingent on a resolution of the tax problems, but I'd like Sudhir Mathur, CFO of Cairn India to maybe talk about that in some more detail and also answer the second part of your tax question. -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [8] -------------------------------------------------------------------------------- As Tom pointed out, the deal is not contingent on the resolution of the tax issue. We believe that the voting rights and the economic interests are segregated and Cairn plc will have a right to vote in the transaction. And as far as the tax authorities are concerned, the stock that they hold of Cairn India will be replaced by the stock of Vedanta, as on the effect, on when the merger gets affected. So we will keep them -- we believe that the issues are separate. And as we pointed out in previous calls, we are quite confident of our resolving the tax issues with the Government of India over a period of time. -------------------------------------------------------------------------------- Liam Fitzpatrick, Credit Suisse - Analyst [9] -------------------------------------------------------------------------------- (inaudible - microphone inaccessible) -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [10] -------------------------------------------------------------------------------- Yes, as far as Cairn plc is concerned, yes we do have an indemnity agreement; Cairn India has indemnity from Cairn plc on this issue. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [11] -------------------------------------------------------------------------------- On Hindustan Zinc, we just don't have any information that is not publicly available with respect to the Government of India's intention to disinvest their interests in Hindustan Zinc or BALCO for that matter. We have seen for the past two years that they've signaled that this is something that is on their list for disinvestment and we've had engagements with them -- within the normal course of business, we have had engagements, pretty much personally with those in the Mines Ministry that would be involved with this. But again, we have no clarity on timetable. It's probably that they will do it, but the question is when will they do it? I think that whatever transpires with the Cairn merger, we have to be prepared that Hindustan Zinc may come up for auction and again, if they proceed with disinvestment, it probably would be through some type of auction route. So we would certainly be ready, willing and very capable and enthusiastic in participating in that auction when it occurs. I think that you should recognize, because it's an auction, it may not be binary. You get none, or you get all. Maybe that there is a portion of it that is required an auction and that that may lead us to some thinking about what to do next. So, it may be a several-step affair, depending on how the government -- when the government wants to do something and how will they proceed with that disinvestment. And certainly, from my perspective, I'd see that Hindustan Zinc minority buyouts, as part of that longer-term simplification agenda, but we'll be ready for when it's there for us to be ready for it. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- Danielle Chigumira, UBS. -------------------------------------------------------------------------------- Danielle Chigumira, UBS - Analyst [13] -------------------------------------------------------------------------------- I have a couple of questions from me. Firstly, as far as I understand, Cairn Energy is embargoed from selling their 10% stake in Cairn India, given the ongoing tax disputes. So, has there been any communication with the Indian Tax Office that would suggest that Cairn Energy could participate in this deal, if in fact it chooses to do so? And the second question is, are there any ongoing conversations with the government, for example, around the PSC extension that are complicated by this proposed transaction? -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [14] -------------------------------------------------------------------------------- Maybe what I'll do is I'll ask Sudhir, if you can tackle the first one about the -- any discussions with the tax authorities and this whole point about the embargoing of Cairn Energy's shares in Cairn India and what that means. And then maybe I'd like to maybe, Mayank, if you have anything to say on the PSC, then follow it up with Sudhir on the ongoing discussions that are taking place regarding the PSC. I don't see the -- from my perspective, I don't see PSC extension as being anyway related to this. They are independent acts. But with that, over to you Sudhir. -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [15] -------------------------------------------------------------------------------- Thanks, Tom. No, I mean, we've been having discussions with the income tax authorities over the last one year on these issues and they are all ongoing, where we explain our stand on the case and why we believe that the tax claim is unfair on Cairn India. That goes on, but simultaneously, there are two distinct sort of positions that at Cairn India, as well as Vedanta Plc we have taken. One is to go to the court and the High Court of Delhi on the merits of the case, what we believe, we are justified in not being subject to this tax, and also to put a stay on any demand as we go along. The second distinct issue is that Vedanta plc has also filed, because of its investment in Cairn India, you know, triggered discussion with the Government of India under the bilateral investment treaty. But, yes, we don't believe that the two issues of voting rights and economic interests in this transaction is any way impeded by the issues with the tax authorities. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [16] -------------------------------------------------------------------------------- Maybe, Sudhir, that sort of leads then to the conclusion that if this all hypothetically proceeds on that basis and the tax matter is not resolved on that basis and that Cairn plc shares and Cairn Energy are exchanged for Vedanta Limited -- -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [17] -------------------------------------------------------------------------------- Absolutely. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [18] -------------------------------------------------------------------------------- That they would hold those shares and those shares would be embargoed instead of their shares in Cairn India. -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [19] -------------------------------------------------------------------------------- Absolutely. (multiple speakers) yes. -------------------------------------------------------------------------------- Danielle Chigumira, UBS - Analyst [20] -------------------------------------------------------------------------------- I see. -------------------------------------------------------------------------------- Mayank Ashar, Cairn India Limited - MD & CEO [21] -------------------------------------------------------------------------------- This is Mayank. As to your question on PSC extension, we continue to have constructive, positive dialog with the Indian Government, the Ministry of Petroleum and Natural Gas regarding PSC extension and I would put those conversation as constructive, progressive, and recognizing the need to get closure on this. And really the next steps are truly with the government, and we are waiting for news from them and there are no ongoing issues or questions from the government that are unresolved in terms of expectations of Cairn, but it has its schedule and all I can tell you is, they are on track, is what we believe. -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [22] -------------------------------------------------------------------------------- I guess month or two ago, I've said and I'll say it again that I remain confident that we will get the 10-year extension, with no material changes in conditions, it's just a matter of time. -------------------------------------------------------------------------------- Danielle Chigumira, UBS - Analyst [23] -------------------------------------------------------------------------------- So just to clarify on the first question, your understanding is that the embargo would remain in place, just Cairn Energy would be embargoed in selling their shares in Vedanta Limited, rather than in Cairn India? -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [24] -------------------------------------------------------------------------------- That's right. -------------------------------------------------------------------------------- Operator [25] -------------------------------------------------------------------------------- Amos Fletcher, Barclays. -------------------------------------------------------------------------------- Amos Fletcher, Barclays - Analyst [26] -------------------------------------------------------------------------------- Firstly, can I ask whether you're prepared to put a number on what you estimate the interest cost savings could be as a result of the transaction? And then secondly, you show on page 22 of the presentation the pro forma accounts of Vedanta Limited and shows the earnings going up, due to a reduction in goodwill amortization charge. Firstly, can you explain why that is? And then secondly, whether there will be any see-through reduction in the amortization charge in the plc accounts, in addition to the write-down that you recently reported at the FY15 results? Thank you. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [27] -------------------------------------------------------------------------------- Thank you. D.D. over to you. -------------------------------------------------------------------------------- D.D. Jalan, Vedanta Limited - CFO [28] -------------------------------------------------------------------------------- Thanks, Tom. So basically as we have been saying that there is no interest cost saving due to this transaction per se, because Vedanta's refinancing plan is on track and it is not waiting for this transition to happen. We have already, as I said to you at the time of prelims announcement that we are at the advanced stage of completing refinancing and we expect to announce the refinancing terms sometime when we meet up in mid of November for the interims, number one. Number two, we are looking at overall interest cost that how can we see that in spite of US interest costs going up, how can we choose a refinancing instrument in such a way so that it contains the overall cost of funding. And on top of that we want to see that overall maturity profile that increases from 3.1 year to somewhere around 4 year. I think with these objectives, we are planning to finalize our refinancing plan. The investment, which is there in Cairn, that is likely to be there in the same way, at least for this year. And what I have also been talking about that we are going to have a very robust capital allocation policy and which is already there in place and that policy will be revolving around three factors. Number one is the growth. The growth is non-compromisable. We need to see that how do we grow our business. And number two is dividend to shareholders. I think that also is a very important part. And the third is, how do we use the surplus cash and how do we deleverage. So considering these three, four factors, we will see that our capital allocation policy for all the Vedanta companies, that gets reflected in the overall plan. And coming to your second question regarding Vedanta Limited pro forma account, I think this goodwill is there in the IGAAP, it's more -- it is not there in IFRS accounts, what we are drawing for Vedanta plc. So that way the impact of goodwill accounting, which is there in IGAAP, that will not be there in IFRS. And we'll continue to maintain the same treatment in IFRS what we have done in March [2015] account. -------------------------------------------------------------------------------- Operator [29] -------------------------------------------------------------------------------- Tarun Lakhotia, Kotak Securities. -------------------------------------------------------------------------------- Tarun Lakhotia, Kotak Securities - Analyst [30] -------------------------------------------------------------------------------- I have one related to the tax issue. As we understand, Cairn India management has always maintained that tax issue is unfair to the company and it will be resolved in due course of time. In such a scenario, don't you think it would have been prudent to wait for the final resolution of tax litigation before going ahead with this merger, in which you have built in some impact, assuming a probability factor on the tax liability? I mean, applying probability in such a binary event may be detrimental to the interest of Cairn's minorities, especially when the management is pretty confident of resolving the tax issue favorably? -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [31] -------------------------------------------------------------------------------- I mean, I'll make just an observation, but I think Sudhir would be best qualified to talk about that; and that is that it doesn't appear that there's a crisp timeline to the sort of resolving and clarity on that. And so I would like to say that in a few months things will be clear, but these things could go on for years. Remember, this is a retrospective tax from an IPO event from 2006. So I think I wouldn't want to be held hostage to something that we would not have any control of the clarity of a timeline, but Sudhir, do you have any [current] thoughts? -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [32] -------------------------------------------------------------------------------- Tom, I just completely support what you're saying. I mean if we look at when the Vodafone issue started and it's still not resolved, I mean this is a pretty long timeframe, and it's impossible to predict when it will get resolved. And therefore, it is bad to assign probabilities to (inaudible) ramped down, and that's what the valuers have done, and I'm sure you will see how this is being done more precisely when we put this scheme up for your review. -------------------------------------------------------------------------------- Tarun Lakhotia, Kotak Securities - Analyst [33] -------------------------------------------------------------------------------- When can we expect that? -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [34] -------------------------------------------------------------------------------- I think shortly. -------------------------------------------------------------------------------- D.D. Jalan, Vedanta Limited - CFO [35] -------------------------------------------------------------------------------- I think we -- what we have said that we shall be submitting the scheme to SEBI for their approval within this month. So I think concurrently it will be there in their public domain. -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [36] -------------------------------------------------------------------------------- Yes. We'll put it up on our website. -------------------------------------------------------------------------------- Tarun Lakhotia, Kotak Securities - Analyst [37] -------------------------------------------------------------------------------- As a follow-up on this, in case the tax issue -- I mean assuming a hypothetical scenario of tax issue not getting resolved favorably over the, say, next few months before this transaction gets completed, in such a scenario, is Vedanta going to call off this transaction or I mean are the contours going to change? -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [38] -------------------------------------------------------------------------------- The Boards have all approved this transaction without qualification, it's only on the basis of the approval of the shareholders. -------------------------------------------------------------------------------- Mayank Ashar, Cairn India Limited - MD & CEO [39] -------------------------------------------------------------------------------- And the merger is going to be there on a going concern basis. So it is -- whatever liabilities and assets are there of Cairn that is going to get merged in Vedanta Limited with all the obligations remaining intact. -------------------------------------------------------------------------------- Operator [40] -------------------------------------------------------------------------------- Cedar Ekblom, Bank of America Merill Lynch. -------------------------------------------------------------------------------- Cedar Ekblom, Bank of America Merill Lynch - Analyst [41] -------------------------------------------------------------------------------- A few follow-up questions. Firstly, have you had any discussions with minority shareholders at Cairn India yet? Do you have any indications yet on what they may think of the deal? Secondly, in terms of the fairness opinion on the valuation of Cairn India, can you disclose the term for the Rajasthan field that has been used? In other words, have you assumed -- would the fairness opinion assume an extension of the PSC, and to when? And in terms of the fairness opinion again, is there any assumption on synergies? Do you think that there are any synergies that we could be seeing coming forward, which are potentially not yet the base case? Thank you. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [42] -------------------------------------------------------------------------------- Thank you. Maybe I will take the first one. I think that Sudhir on the fairness opinion and the lease term, you could take that one. And then maybe D.D., the synergy of fairness opinions. Normally, as you would expect, we wouldn't be explicitly saying when we're meeting with any individual shareholder, as you would respect that relationship. We were not in a position to meet with any of the minority shareholders until the Board approved and we made a announcement in due course, because of both UK governance, UK laws, but also Indian Companies Act. So, we were mindful of those things. You can expect that we will be engaging with all the shareholders, certainly with Cairn plc and other large shareholders, both in Cairn, but also in Vedanta Limited. I'm here in Mumbai this week and that's my intention to spend the time doing just that. And I think that we should also recognize that if it is a share -- if it's a large asset within an individual business, such as it is in Cairn plc that they would look at that and they would do analysis. They're not going to be in a hurry to make any answer that they have to do that analysis. Certainly, we look forward to that engagement and any questions that they might have. -------------------------------------------------------------------------------- Mayank Ashar, Cairn India Limited - MD & CEO [43] -------------------------------------------------------------------------------- The fairness opinion does take into account that the Rajasthan PSC would be extended. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [44] -------------------------------------------------------------------------------- So it is effectively based upon a field life that's just [30:30]. -------------------------------------------------------------------------------- Mayank Ashar, Cairn India Limited - MD & CEO [45] -------------------------------------------------------------------------------- Yes. [20:30] -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [46] -------------------------------------------------------------------------------- Sorry. It's [20:30]. -------------------------------------------------------------------------------- D.D. Jalan, Vedanta Limited - CFO [47] -------------------------------------------------------------------------------- And basically, I think what we have said that this transaction doesn't entail any direct synergies in a very quantifiable terms, whereas there are going to be synergies, which are going to get evolved and which will get reflected over a period of time. But for the purpose of valuation and for the fairness opinion, no synergies have been factored into. And what Tom had been talking about that there is going to be huge procurement. And what we have done on the Capital Market Day also that we have identified a synergy of $1.3 billion from the procurement initiatives and marketing initiatives. Out of that $1.3 billion, 20% is from Cairn and 80% is from metals and mining business. So whereas the Cairn shareholders are going to get benefited from these synergies, but for the purpose of valuation, we have not factored into the same. -------------------------------------------------------------------------------- Operator [48] -------------------------------------------------------------------------------- Derek Staples, GMO. -------------------------------------------------------------------------------- Derek Staples, GMO - Analyst [49] -------------------------------------------------------------------------------- This seems to be an important transaction from a simplification standpoint, which I know that it's something you guys have been working on. So congratulations on the announcement. So a few questions. The first relates to the Twin Star Mauritius Holdings, TSMHL, that was kind of the SPV that was owning the Cairn shares or a significant portion of the Cairn shares. Curious how all of that stands from a corporate structure standpoint and where those obligations then travel, do they now travel to Vedanta Limited? And most importantly, the inter-company which my understanding was, the [$2.6 billion] inter-company at that entity and my understanding was that was previously an un-guaranteed liability from TSMHL to the parent and curious if that remains unguaranteed and if so, what entity is it from and -- or is it now just an actual obligation of Vedanta Limited? -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [50] -------------------------------------------------------------------------------- Why don't you take that D.D.? -------------------------------------------------------------------------------- D.D. Jalan, Vedanta Limited - CFO [51] -------------------------------------------------------------------------------- Thanks, Tom. So basically I think if we just try to look at -- TSMHL is 100% wholly owned subsidiary of Vedanta Limited and that structure is going to remain same, it is going to remain the subsidiary of Vedanta Limited. And whatever obligations of TSMHL is there, those are going to be discharged by TSMHL, the SPV in consultation with Vedanta Limited. So even though it is unguaranteed, but it is basically obligation between Vedanta plc and Vedanta Limited. So the SPV's obligations and their all liabilities are part of the liability of Vedanta Limited and this has been duly reflected while arriving at the swap ratio between Cairn and Vedanta Limited. -------------------------------------------------------------------------------- Derek Staples, GMO - Analyst [52] -------------------------------------------------------------------------------- And then in terms of the cash, I know you said that the strategic rationale for the transaction wasn't just to access the cash, which I understand -- I think it's something like $2.7 billion or so at Cairn India. I'm curious if you can make a comment about how much cash you see as sensible to hold back at Cairn India, how much can be dividended up to Vedanta Limited or other places like the plc entity through the inter-company or something like that? -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [53] -------------------------------------------------------------------------------- I'll make one generalized comment, then ask DD to follow- up on it. But last year we had the peak spending of the largest capital project in Cairn's history from the EOR project, polymer injection project and we were generating positive cash, even after paying dividends. This year, we have ramped on the capital quite a bit, but as we've said in the -- and as Cairn has said in earlier market releases, they were still generating positive cash flow after capital. We certainly would be expecting, as Mayank's team further develops the -- both the natural gas project, the deep gas project, but also Barmer Hill that it is likely that capital could go up go on a going forward basis, depending again on the quality of the opportunity. We'd be assessing that in any other capital projects as we consider what is the cash needed within Cairn. Obviously, what's the oil price at that time. There'll be a lot of considerations that you can -- you can model right now, but you can't actually predict until you get into those future circumstances. So, I'd say that the key to capital allocation is Boards having that flexibility to make the determination based upon events and opportunities as they may arise. But, DD, anything more specific you could say? -------------------------------------------------------------------------------- D.D. Jalan, Vedanta Limited - CFO [54] -------------------------------------------------------------------------------- Just I will add that we had announced a condition yesterday, and as for the timeline, what we are pursuing, the thing that we shall be completing this transaction sometime in the quarter one of next calendar year. So we have got enough time to see, as Tom said, that how do we put that in a proper capital allocation structure, which is going to be the center evolving around the total surplus what the business is generating, including all the businesses, not only Cairn, but aluminium business, zinc business, so that way, all that cash pooling will be done to meet the objective of capital allocation. -------------------------------------------------------------------------------- Derek Staples, GMO - Analyst [55] -------------------------------------------------------------------------------- And then finally, at the plc level, I guess, this is just a question on kind of where we stand now, pro forma for this transaction if it closes, with regards to capital structure, and also just corporate structure and whether there is further simplification down the road. I mean as I look at it, I mean I know it's and I'm sure you're aware that -- so cash flow at the plc level, when you account for interest -- in [Cairn Inc.] interest expense and dividend has been negative, but you have some asset value there. As I look at it, it seems like -- I mean as of today, at the plc level, I mean, you have the 50.1% stake of Vedanta Limited, which I think is $5.3 billion in market value. And then you've got a $2.6 billion inter-company. So that's $7.9 billion of assets and then $7.7 billion of debt. So, I was curious, just given it's quite a lot of debt relative to asset value there, I was curious if there is further simplification of the structure down the road, or how you plan to address the corporate structure or how you otherwise plan to address the capital structure maturities and kind of what the story is there? I mean, does it have to do with KCM or is there a kind of further simplification down the road? And that's it for me. Thanks. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [56] -------------------------------------------------------------------------------- I'll just make a comment on that, and then also then ask DD to talk about it. But I'd first emphasize, since you've referenced KCM that the entire focus on the management team at KCM is turning around that business. KCM was drawing capital from Vedanta PLC last year for a number of reasons. The first and foremost, you got to make -- put it in position where it is actually generating positive cash flow and manages its own debt structure as it goes forward and then it can be reinvesting on a going forward basis. So that's the first priority. And I wouldn't want to take the eyes off of the management team at KCM, and frankly, the management team of Vedanta (inaudible). I'm sure that's going to keep Steven Din and his team busy for at least the next year or so. So I'd say that the focus is right now on those parts of the business within Vedanta Limited. You make a relevant point about, we're going to have Vedanta plc own a smaller piece of Vedanta Limited, which puts even more need for the dividends and the dividend yield from Vedanta Limited and I think that that is actually something which should encourage the Cain India shareholders. They should see that Vedanta Limited is going to be a big dividend payer as it always has been and as we've said in our presentation yesterday, we're looking at rising dividends out of Vedanta Limited. But, go ahead D.D. -------------------------------------------------------------------------------- D.D. Jalan, Vedanta Limited - CFO [57] -------------------------------------------------------------------------------- Thanks Tom. So basically if we just try to look at, we have very strong businesses in Vedanta Limited. The zinc business will generate huge amount of cash flow. Cairn oil and gas business, which even at a low oil price scenario generates good cash flows. Our copper business in India generating good cash flows and KCM, as Tom mentioned, it is on the -- I'll say it is just very near to the inflection point and basically it will be -- we are very confident that this is an excellent asset and it will start generating good cash flows in coming years. So with that, we see that there is going to be good amount of cash, which is going to be upstream to Vedanta plc level, to service -- not only service the debt obligation on $5 billion of loan, which will be there at plc, net of inter-company debt, but to maintain the progressive dividend policy also. So I think, broadly, we see that we are quite comfortable with the debt profile at Vedanta plc and the cash, which our portfolio of asset is generating and going to generate in the coming years. -------------------------------------------------------------------------------- Derek Staples, GMO - Analyst [58] -------------------------------------------------------------------------------- That helpful. So if you think you can get to a point where you can sustain the dividend with the cash flows at the Vedanta Limited level, then perhaps you could get to a point where you're maybe cash flow breakeven or so, after dividend at the plc level. But you still have -- I mean as I see it and was commenting, something like $7.8 billion, $7.9 billion of assets and $7.7 billion of debt. And so, I guess, it sounds like the story is, it's a KCM story that hopefully there's maybe some equity value beyond the $1 billion or so of debt sitting at KCM. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [59] -------------------------------------------------------------------------------- We're looking for a turnaround in the KCM business. So we'd like to see some dividends coming from KCM to plc, rather than money going the other way around. -------------------------------------------------------------------------------- Operator [60] -------------------------------------------------------------------------------- (Operator Instructions) Rakesh Sethia, Morgan Stanley. -------------------------------------------------------------------------------- Rakesh Sethia, Morgan Stanley - Analyst [61] -------------------------------------------------------------------------------- I have a question. If I look at the deal value of about INR194 per share, which is based on Friday's close and try to reconcile that with the existing cash, which is there with Cairn India, including the loan to Vedanta, both put together about [INR4 billion] or so, which is about INR130 per share. This leaves me with an asset value for reserves and resources at about the INR64 per share, right? Now, if I try to reconcile the stock IPO price, which was at about [INR160] per share and also the fact that the Rajasthan resources since then have only been upgraded. Also Vedanta's own [liquidation] also was at INR350 or so. Just wanted to understand what I'm missing here, considering oil prices are more or less similar to what we saw even during the time of IPO. I know you have said that more details will be put in public domain, but if you could just help us to reconcile what are some of the negatives, which has been considered? -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [62] -------------------------------------------------------------------------------- Maybe, start with Mayank and then Sudhir. I think it is important to recognize the journey of the main fields in Rajasthan. So we've had a lot of production. They've been very low cost units. But we are now putting in quite a bit of intervention with polymer injection, the enhanced oil recovery to basically keep those fields from their natural decline, and sharing certain burden of capital and costs. And as we look ahead, we're looking at the next generation of resources, quite prolific and quite large in size, but probably tighter formations, which themselves are going to have a different set of economics. And obviously, of course, we're not in a world of $85 to $115 oil. We're in a world of -- you have your house call on what that world is, but it's probably quite a bit more subdued than that. -------------------------------------------------------------------------------- Mayank Ashar, Cairn India Limited - MD & CEO [63] -------------------------------------------------------------------------------- Those, Tom, are very good headlines and I'll give some numbers on this. When we first brought -- during the IPO, the fields were young, they were heavily pressurized and even our big fields, they were ramping up in production. And some of your highest rates are -- in the early years, where they mature and then inevitably with all fields declines happen. And what we're doing is to both stem the decline and enhance overall recovery, given the nature of our field, it is economic for us to get into the enhanced oil recovery early. And so, it is fairly front-loaded capital to minimize that decline, and as Tom correctly pointed out. The next, beyond the three fields, the next phase of growth is in tight oil. And in tight oil, the CapEx, OpEx are indeed much higher. It's a different profile than our three core fields that I would say, we are proud of them, but they are a bit of an outliers in terms of their returns. And the next fields, even -- they are tougher, but even though they are tougher, I'm very proud that the Cairn people that are using some of the most advanced technologies in Asia in terms of the horizontal laterals and fracs and so on and we believe that the first phase of this in Aishwariya, Barmer Hill will be economic and good return at current prevailing prices, but recognize that the subsequent phases will be a little further away. We are, just like any miner would, mining in the core sweet spot of Barmer Hill. And what you hope for is, as you get up on the learning curve, as you venture further out, you will incur additional cost, but your learnings and your experience curve will also have kicked in. So it's a different nature of the field compared to IPO, but still potential in Rajasthan. -------------------------------------------------------------------------------- Rakesh Sethia, Morgan Stanley - Analyst [64] -------------------------------------------------------------------------------- One more follow-up to that. I understand the economics are challenging for the tight oil. Could you give any color that, is it going to be more or less similar to what we're seeing in the US shale, which is about, let's say, $40 to $45 per barrel or is it lower? Can you give some indication on what you think about economics of these tight fields? -------------------------------------------------------------------------------- Mayank Ashar, Cairn India Limited - MD & CEO [65] -------------------------------------------------------------------------------- Yes. Compared to US shale, it is different. We expect the produceability to be broadly comparable. These are shallower wells and even though we have seen cost reductions, at the end of the day, the capital cost will be lower than US shale. But overall economics, I would say, would be in -- we'd like to be kind of the high teens, is something that we aspire to and there's still lots of work to do, but we anticipate at the prices around $55 to be high teens. But bear in mind, this is still early days, it's new technology, this is in our core field, which is close to infrastructure. So we are thinking about this Barmer Hill tight oil, not just as one field, but really as a tight oil strategy with multiple phases. So lots of thinking, lots of technology evolution and continuing to work through reducing CapEx, OpEx, increasing produceability, but I'm pleased at least with the first phase of it. But it will be, I would say, more challenging than the MVA production. The first part of it was this year, than this -- but nevertheless it's a journey and it will be a journey we will be on for a long time. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [66] -------------------------------------------------------------------------------- I might just add , if I may, two points. The first is that the Barmer Hill formation for the most part from where we're focusing is more of a silty sandstone then the shale as typified in North America. And then actually, we've actually presented some materials, in recent investor materials, looking at the comparability and permeability porosity of the Barmer Hill formation, versus a typical North American shale. And you can see a considerable difference, which has a positive effect with respect to flow rates, cost of recovery, etc. And then just to add to Mayank's earlier point that when one Mayank was discussing -- the team was discussing Barmer Hill with us, as we were all staring into that abyss of oil prices dropping literally every week earlier this year and we were beginning to think that what would Barmer Hill look like, as Mayank said, in oil in the mid 50s -- spread in the mid 50s. But what we were seeing in terms of Barmer Hill economics at the time, a bit more like low teens, and given that circumstance, we didn't say no. What we suggested to Mayank is he go back to his teams and try to find a way to use the weakness, particularly in the oilfield service business to improve the economics of Barmer Hill. So it is more attractive even if oil in the mid 50s and that's effectively what he has been doing. I'll give you an example. It was only six months ago when we were meeting with the government in terms of the time of the day we can frac, that when you frac you have very expensive rigs, you have lot of people involved, and only a few months ago, we can only frac during daylight hours. So you have actually a pretty pricey proposition to have all equipment on standby, vis-a-vis, it's dark outside. And recently, we've gotten the permission to frac on a 24-hour basis. Now, you've been successful, Mayank, and your team to reduce the cost of these horizontal wells, you've been successful in increasing the number of fracs per horizontal leg, and these are all part of the technical and the commercial processes to improve the economics of Barmer Hill, improve the flow rate, improve the cost of the capital cost, the operating cost of extraction, even in oil price environment in the mid 50s. -------------------------------------------------------------------------------- Operator [67] -------------------------------------------------------------------------------- Vikash Jain, CLSA. -------------------------------------------------------------------------------- Vikash Jain, CLSA - Analyst [68] -------------------------------------------------------------------------------- I have two or three of them. Firstly is, I completely understand the simplification point that you've made after announcing the merger. It's a transaction, which will really simplify where cash flows are coming and how it can be invested from a Vedanta perspective. But as I see it from a Cairn India perspective, I'm not too sure if this is really simplification. Isn't this complification, I mean in terms of being a simple E&P company from an oil and gas perspective, you end up owning something which is more of a basket? Number one. Number two is the fact that you've been very upfront in talking about the fact that there aren't really any tangible synergy benefits. Mayank has also mentioned that the [song] remains the same. So essentially your commitment was always there and will continue in the upstream space and I think you've also clarified that the $1.3 billion synergy that you saw, of course would have been there, the procurement thing, because you would try to do it at a Group level, so that would have also been there. So if that is really the case, am I correct in stating that the biggest benefit that you're offering to Cairn India shareholders is your belief that a basket of commodities is possibly a better option than owning that single commodity cash flow which they currently have? So those are the two questions. I've one more which I'll possibly come back on. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [69] -------------------------------------------------------------------------------- Let me just take a stab at that, if I may first, and feel free anyone else here to follow up. But, I've been involved with diversified producers most of my career and I've watched how it's been very difficult in any given year with any commodity for experts to be truly right at predicting whether prices are going to go up or go down. We all prognosticate about it, we all have our forecasts, some people spend a lot of money paying people to give forecasts. But at the end of the day, the markets will move through a variety of supply-demand factors, in some cases quite complex and derivatives of other products. So It's very difficult to actually predict. So what you've seen is that pure plays, they come in and out of fashion a bit. I think that sometimes that everyone loves pure plays, particularly when you have broad rising markets, but during periods when you have, say, subdued conditions, under-investment in the sector, compressed margins, you tend to see that the TSRs or the diversifieds greatly outshine the pure plays. And on balance, if you look at the last 10 years, where you've had a combination of ups and downs and a lot of volatility in between, remember you had the financial crisis and everything else, you had an average return for the diversified that's been just about double the average total shareholder return for the pure play. So, I that's not -- part of it is my own opinion, part of it is my own experience, but a lot of it is basically just imperial evidence from the past 10 years. Now, getting on to synergies, I think we've been -- as you say, we've been very open about the $1.3 billion. We've talked about this for a couple of months, we've socialized the market with this, and we have very active efforts, including quite a heavy load of internal management and also outside experts involved with achieving these. When we identified these synergies, we had pretty much an idea of what percentage of them came from the Cairn businesses, versus which came from the metals and the mining businesses. And it's fair to say that because the synergies, if I remember right, correct me if I'm wrong D.D. -- of the $1.3 billion, where about 20% coming from Cairn. As a consequence of this merger, the Cairn India shareholder will get a larger piece of that $1.3 billion pie, as a consequence of this merger, than without the merger. So that's a mathematical derivative, it's a real number, but what we are saying is that, these are the kind of things that we were working on and we continue to work on. I put a lot of my focus, as does DD, on getting those achieved. The Cairn shareholder will get a bigger piece of that pie as a consequence of this merger. -------------------------------------------------------------------------------- Vikash Jain, CLSA - Analyst [70] -------------------------------------------------------------------------------- But won't that -- I mean from the release itself, and if you look at the numbers, Cairn shareholders, minority holders would anyways end up owning only about 20%. So I mean that $1.3 billion coincidentally will still be 20% of that. So I mean, that brings me back to the point that the 20% stays 20%. So broadly the biggest attraction that you're offering, which with all due respect as a conjecture that a basket of commodities is better than crude oil, and which you believe, I mean of course you've shown with numerical evidence also. But that is clearly, of course, the biggest attraction. Am I right in stating that? -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [71] -------------------------------------------------------------------------------- (inaudible) math, and I am an engineer, not a finance guy, but the minority shareholder of Cairn would have done 40% of the 20% and that's 8%, if my math is right. Whereas, now the minority shareholder of Cairn will become the 20% shareholder of Vedanta Limited -- 20% of Vedanta Limited. So they're going to get just 20% of it. So if you take 8% of -- correct me if I am wrong -- [about] 8% of $1.3 billion, is lots more than 20% of $1.3 billion. -------------------------------------------------------------------------------- D.D. Jalan, Vedanta Limited - CFO [72] -------------------------------------------------------------------------------- Absolutely right. Yes. -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [73] -------------------------------------------------------------------------------- Does that make sense? -------------------------------------------------------------------------------- Vikash Jain, CLSA - Analyst [74] -------------------------------------------------------------------------------- Yes, sure. It does. And so, I mean -- so it's basically the higher part of synergy and of course a more diversified cash flow. So that's about it. The other question that I had is in terms of when you're calculating the -- I mean the valuations and which basically allowed you to calculate the merger ratio, I think an earlier participant had highlighted that you had taken an assumption that, okay, fine, this is the possibility that the court case could go against us, so probability. As a corollary, there are several other regulatory issues, which are being faced by the Vedanta -- the metals businesses. So what are the assumptions over there? I mean, is the assumption that they will be at some point of time a favorable settlement of that and we'll get hold of those regulatory issues being settled favorably in terms of valuations of Vedanta? Is that how you've valued Vedanta? -------------------------------------------------------------------------------- D.D. Jalan, Vedanta Limited - CFO [75] -------------------------------------------------------------------------------- No, basically, how these experts and wizards in the investment banking sector have done the valuation that you all know that how do they do it. So they do run the DCF model based on various assumptions and then after that they look at whatever are the contingent liabilities in each of the company and then they run those contingent liabilities through the PPR test. And based on the PPR test that whatever weightage is assigned, whether it is probable, whether it is remote or whether it is possible, based on that they give weightage to each of the contingent liabilities and then they arrive at that how much percentage of -- depending on which bracket each of those liabilities are, how much weightage should be assigned to the liability and that is how they adjust that from the valuation, which comes from the DCF model. So the valuers have gone through, in case of all Vedanta's contingent liabilities, as well as in the case of Cairn contingent liability and that is how the adjustments have been done. Sudhir, do you like to add something? -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [76] -------------------------------------------------------------------------------- No, I am quite familiar with the tax one, how [they treated it], based on the way our -- on the legal opinion, they way our auditor treated it on March 31, as well as standard definition within the -- whether it is contingent, whether it is certainty -- associated with various levels of certainty. -------------------------------------------------------------------------------- Vikash Jain, CLSA - Analyst [77] -------------------------------------------------------------------------------- And just one final thing. Since you're talking about this court case, you did mention that there is an indemnity from Cairn Energy. Is there an amount, maximum amount to that indemnity and has that -- has a kind of a credit been taken for that, when you assume the maximum risk from this tax matters? -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [78] -------------------------------------------------------------------------------- You know, it's an indemnity that was given at the time of the Cairn IPO and it doesn't have a limit under the indemnity, per se, but yes we -- as far as management is concerned, we do take a look at Cairn plc's ability to pay it. -------------------------------------------------------------------------------- Vikash Jain, CLSA - Analyst [79] -------------------------------------------------------------------------------- So basically, part of that possible liability credit has been given for that, depending on management's view of how much -- -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [80] -------------------------------------------------------------------------------- (multiple speakers) models, but I would imagine that the valuers and fairness opinion providers will challenge and use their own assumptions. -------------------------------------------------------------------------------- Operator [81] -------------------------------------------------------------------------------- Amit Sureka, Bharti Axa Life. -------------------------------------------------------------------------------- Amit Sureka, Bharti Axa Life - Analyst [82] -------------------------------------------------------------------------------- I just have a query that as you have highlighted that the deal is EPS accretive on an [FY16] basis, so you think that the deal also would be EPS accretive going forward, actually on [FY16, FY17] basis? -------------------------------------------------------------------------------- D.D. Jalan, Vedanta Limited - CFO [83] -------------------------------------------------------------------------------- So technically as far as there are different level to look at the deal accretion. As of now, (inaudible) for Vedanta plc. So for Vedanta plc, for FY16 the deal is neutral and for FY17 onwards the deal is accretive -- EPS accretive. -------------------------------------------------------------------------------- Amit Sureka, Bharti Axa Life - Analyst [84] -------------------------------------------------------------------------------- And for Vedanta India? -------------------------------------------------------------------------------- D.D. Jalan, Vedanta Limited - CFO [85] -------------------------------------------------------------------------------- For Vedanta India, the deal is accretive from FY15 itself on pro forma basis. -------------------------------------------------------------------------------- Operator [86] -------------------------------------------------------------------------------- Harsh Murarka, Pareto Securities. -------------------------------------------------------------------------------- Harsh Murarka, Pareto Securities - Analyst [87] -------------------------------------------------------------------------------- I just have one question regarding the shareholder approval required from the minority shareholders at Cairn India. I understand that Cairn Energy that holds about 10%, it does not have access to its shares at the moment. So, my question was, could you guide whether they would also be part of the shareholder vote or is it going to exclude the share of Cairn Energy? -------------------------------------------------------------------------------- Tom Albanese, Vedanta Limited - CEO [88] -------------------------------------------------------------------------------- I shall start, maybe Sudhir to follow up, but we had been asked that question yesterday. There is a bifurcation of economic and voting rights and they continue to retain their right to vote. So we don't see this affecting their voting rights or their participation in that overall vote of the minority interest. But Sudhir, anything more you want to say? -------------------------------------------------------------------------------- Sudhir Mathur, Cairn India Limited - CFO [89] -------------------------------------------------------------------------------- (inaudible). -------------------------------------------------------------------------------- Operator [90] -------------------------------------------------------------------------------- Thank you. I now hand the floor back to Mr. Ashwin Bajaj for any closing comments. Thank you, and over to you, sir. -------------------------------------------------------------------------------- Ashwin Bajaj, Vedanta Limited - Director of IR [91] -------------------------------------------------------------------------------- Thanks ladies and gentlemen for joining us. Contact us at Investor Relations, if you have any other questions. Thank you. -------------------------------------------------------------------------------- Operator [92] -------------------------------------------------------------------------------- Thank you, sir. Ladies and gentlemen, with that we conclude this conference call. Thank you for joining us. You may now disconnect your lines.
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