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Sesa Goa, a Vedanta Group company, intends to hike its holding in Cairn India to 20 per cent from 18.5 per cent.
Mr P.K. Mukherjee, Managing Director, Sesa Goa, told Business Line that the company would hold 20 per cent stake in Cairn India, according to the initial plan proposed by Vedanta Plc and Cairn Plc, UK, last year.
“By when we will increase the stake depends on the final closure of the deal. Sesa has all the options open for increasing the stake. We can either buy in the open market or from Cairn-UK or Vedanta Plc,” he said.
In May, Sesa Goa had spent Rs 5,504 crore to acquire 8.1 per cent in Cairn India through an open offer. It bought 10.4 per cent stake, valued at Rs 4,100 crore, from Petronas International Corporation.
Sesa has cash and cash equivalents of Rs 2,246 crore as of June 30.
Cairn India will become an associate company of Sesa Goa once the stake is increased to 20 per cent, said an analyst. Sesa Goa will be able to account dividends from the associate company in the income statement, the analyst added.
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The company has scaled down annual production growth to 15-18 per cent from the target of 20-25 per cent fixed in April. Sesa Goa produced 18.80 million tonnes of iron ore last fiscal.
With the restrictions on exports from Karnataka, Sesa Goa has been selling iron ore in the domestic markets amid lacklustre demand from steel companies.
“Karnataka Government has not started issuing permits for iron ore exports despite the Supreme Court order overruling the State Government's export ban. Our mines are located at Chitradurga district away from Bellary where the State Government has initiated a survey on illegal mining,” said Mr Mukherjee.
Sesa Goa is also exploring the possibility of acquiring iron ore mines.
The company is considering three to four proposals for acquisition mines in India and abroad, but no decision has been taken, he said.
The company has reserves of 306 million tonnes as of March 31.
Sesa Goa is awaiting Supreme Court judgment on a writ petition filed by JSW Steel against its deal with IFCI for acquisition of Bellary Steel and Alloys. Mr Mukherjee said IFCI — the prime lender and the auctioneer — has transferred the asset to Sesa and a blueprint is being prepared to take work forward once the Court lifts the status quo order.
Sesa Goa's shares on the BSE were up 2 per cent at Rs 284 on Friday.
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