Companies

I-T dept sells part of Cairn Energy's shares in Vedanta to recover tax dues

Our Bureau New Delhi | Updated on July 15, 2019 Published on July 09, 2018

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The Income Tax department has sold a portion of Cairn Energy’s shares in Vedanta Ltd in a bid to recover some of the tax dues. In a statement to the exchanges, Cairn Energy said, “Cairn has now been notified by the IITD (Indian Income Tax Department) that it has sold part of Cairn’s shareholding in VL (Vedanta Ltd), realising and seizing proceeds of $216 million. Following this sale, Cairn’s retained holding in VL is now approximately 3 per cent. It is possible that the IITD may make further sales.”

In January 2014, Cairn UK Holdings Ltd (CUHL), a direct subsidiary of Cairn, was restricted from selling its shareholding of approximately 10 per cent in Cairn India Ltd, which at that time had a market value of approximately $ 1 billion. The Income Tax department raised a Rs 10,247-crore tax demand notice in January 2014 against gains that Cairn had made in 2006, before the Initial Public Offering of Cairn India Ltd.

The merger of Cairn India Ltd (CIL) with Vedanta Ltd was completed in April 2017. Under the terms of the merger, Cairn Energy received ordinary shares and preference shares in Vedanta in exchange for the residual shareholding of approximately 10 per cent in CIL. As a result Cairn had a shareholding of approximately 5 per cent in VL, plus an interest in preference shares. This investment was valued at approximately $1.1 billion on December 31, 2017.

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Published on July 09, 2018
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