Cairn says Vedanta deal a litmus test for India: report
British oil explorer Cairn Energy has warned India that any attempt to hold up the firm's sale of part of its India unit to Vedanta Resources would send a signal to other foreign investors, a report said Tuesday.
In remarks published by the Financial Times on Tuesday, Cairn chairman Bill Gammell said New Delhi's handling of the 9.6 billion-dollar sale of the majority stake in Cairn India would be a litmus test for investors, especially those considering disinvesting in Indian operations.
"It's important this transaction be seen to be a smooth transaction from an investment point of view," Gammell told the British daily. "People will be watching very carefully as to how it takes place."
London-listed resources giant Vedanta announced in August that it would buy 51 to 60 percent of Cairn India, adding to its assets, which already include aluminium, copper, iron ore and zinc mines.
The transaction requires the government's blessing because it has oil production-sharing contracts with Cairn India.
Cairn India holds stakes in 10 oil and gas blocks in the country and has tie-ups with ONGC, energy-hungry India's largest oil producer.
Indian-born billionaire Anil Agarwal, who controls Vedanta, has said he wants to create an "Indian natural resources champion".
But the Indian government has reservations about the deal as the takeover would mark Vedanta's first foray into the energy field and it is worried about the company's lack of experience, according to the Indian media.
The government is expected to announce its decision on the sale by the end of the year.
© 2010 AFP