Tax demand on Cairn unfair: Agarwal
NEW DELHI: The tax demand on Cairn Energy Plc is unfair, since the government has said that retrospective tax cases should be avoided, chairman Anil Agarwal told HT over phone from South Africa.
He is, however, hopeful of an early resolution: “The government is committed to resolving tax issues and I’m hopeful that this matter will also be resolved,” Agarwal said.
The merger of subsidiary Cairn India with flagship Vedanta Ltd, originally scheduled to be completed by June 2016, will take another two months, he added.
“The Sebi (Securities and Exchange Board of India) approval has come. Now we need the high court’s approval and a board meeting for shareholders’ approval. This will take two months.”
The merger plans hit a roadblock after the I-T department froze shares held by Cairn Energy Plc in Cairn India. Cairn Energy holds 9.5% stake in Cairn India. The tax department has said the merger can happen only after the freeze is lifted and tax issues are resolved, or if Cairn Plc sets aside the value of its shareholding in Cairn India in an escrow account.
Vedanta Group had acquired Cairn India from British promoters Cairn Energy Plc in 2011. In January 2014, the tax department slapped a ₹10,247-crore notice on Cairn Energy on alleged capital gains made in a 2006 business reorganisation it carried out in its Indian unit before getting it listed.
While Cairn India has approached the Delhi High Court, Cairn Energy is contesting the matter through an international arbitration.
Apart from the merger, expanding his company’s mining portfolio is high on Agarwal’s agenda. During Prime Minister Narendra Modi’s recent visit to South Africa, Vedanta promised to invest $1 billion in the country to increase mining of iron ore, copper and zinc, especially from the Gamberg mines in Northern Cape in South Africa.
“It’s a two-way deal, where we will increase our operations and investment in South Africa, and we will benefit from the advanced technology available with them for mining,” he said.
Other than Africa, Agarwal is betting big on the auction of 100 mineral blocks proposed by the Indian government through the National Mineral Exploration Policy (NMEP). “We are very interested in participating in the auctions” he said.
The Sebi approval has come (for CairnVedanta merger). Now we need the high court’s approval and a board meeting for shareholders’ approval. This will take two months ANIL AGARWAL, chairman, Vedanta