Hindu Corporates go Swimming, Oops, Slumming, This Summer: Sid Harth
29 May, 2011, 11.10AM IST,PTI
30 corporate honchos get Rs 1 crore-plus salary
Read more on »Sun TV Network|Salman Khurshid|RIL|Reliance Industries Ltd.|Reliance Industries|Planning commission|Montek Singh Ahluwalia|JSW Energy|ICICI bank|Honda|Hindustan Construction|Corporate affairs minister|Axis Bank|Alps Industries
Sun TV Network Ltd.
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NEW DELHI: Mukesh Ambani has got company of at least 29 fellow corporate executives, including four from his own group Reliance Industries , in terms of annual salaries running into crores of rupees for the latest fiscal.
These include JSW Energy’s Sajjan Jindal, Hindustan Construction’s Ajit Gulabchand, Raymond’s Gautam Hari Singhania, ICICI Bank’s Chanda Kochhar, Axis Bank’s Shikha Sharma, as also Infosys’ S Gopalakrishnan and S D Shibulal.
Companies are currently in the process of disclosing top management salaries for the financial year ended March 31, 2011 through their annual reports for the period.
Just about a month in the process since the annual reports of listed companies began trickling in late April, as many as 30 top corporate executives have been found to have received annual compensation exceeding Rs one crore.
So far, the figures are available for a total of 32 companies, out of which executives at 13 companies received salaries in excess of Rs one crore mark in 2010-11, an analysis of information available with financial data aggregator Capitalline shows.
Besides RIL’s Chairman and MD Mukesh Ambani, there are three more top executives from the company — Nikhil Meswani, Hital Meswani, PMS Prasad and Pawan Kumar Kapil – in this elite league.
The list of executives with salaries exceeding Rs one crore includes a total of four executives from ICICI Bank, including its chief, and five from IT major Infosys, including TV Mohandas Pai and K Dinesh who recently left the company.
Also, there are three top executives from JSW Energy (N K Jain, Lalit Kumar Gupta and S S Rao) besides its chief. The Infosys executives include Srinath Batni, while those from ICICI Bank include K Ramkumar, N S Kannan and Rajiv Sabharwal.
The total list of executives with such salaries would grow further as more companies reveal their figures in the coming days.
For the previous fiscal 2009-10, there were more than 800 corporate honchos with a pay package of over Rs one crore.
For the latest fiscal ended March 31, 2011, the list is so far led by Mukesh Ambani with a pay package of Rs 15 crore — which has remained unchanged for three years now.
As per the figures available so far, Ambani is followed by Nikhil Meswani (Rs 11.05 crore) and Hital Meswani (Rs 11.03 crore).
So far, no one other than these three RIL executives have been found to have got a salary in excess of Rs 10 crore.
However, Mukesh Ambani was not even in the top-10 in terms of salary in 2009-10, when Sun TV Network’s Kalanithi Maran and Kavery Maran were top-earning executives with pay packages of Rs 37.08 crore each.
That year, Marans were followed by Hero Honda’s Pawan Munjal (Rs 30.88 crore) and Brijmohan Lall Munjal (Rs 30.63 crore), Apollo Tyres’ Onkar S Kanwar (Rs 29.69 crore), Cadilla Healthcare’s Pankaj Patel (Rs 28.63 crore), Madras Cements’ P R R Rajha (Rs 27.91 crore), Alps Industries’ Sandeep Agarwal (Rs 23.56 crore), Bharti Airtel’s Sunil Mittal (Rs 23.48 crore) and Torrent Power’s Markand Bhatt (Rs 21.5 crore).
In fiscal ended March 31, 2010, as many as 459 companies gave a salary of over Rs one crore to their one or more executives, but salary figures are so far not available for the year 2010-11 for many of them.
Experts believe that the number could go higher for the year 2010-11, to mark a change from the trend seen till a few years ago when some corporates were shunning fat pay packages.
Among others, Mukesh Ambani had also announced a freeze on his pay package in October 2009, amid a debate over the need for moving away from huge CEO salaries to send a signal of solidarity to fight the global economic slowdown.
Ambani was India’s top-paid executive in 2007-08 with a package of over Rs 44 crore and could have remained to hold the top slot, if he had not decided to freeze his salary from 2008-09 onwards.
For the latest fiscal also, Ambani decided to forego Rs 23.75 crore from his annual compensation and kept his salary capped at Rs 15 crore for the third year in a row.
At the same time, the company’s total remuneration for top management personnel, as also commission paid to non-executive directors, declined during fiscal 2010-11.
Ambani was eligible for an annual remuneration of Rs 38.75 crore in 2010-11 as Chairman and MD of RIL.
RIL has said that the decision to cap the salary was taken to reflect “his desire to continue to set a personal example for moderation in managerial compensation levels.”
At a time when there was a raging debate on right-sizing of CEO salaries, RIL had announced in October 2009 that Mukesh Ambani would take a pay cut as a result of which his pay package dropped to Rs 15 crore for 2008-09 fiscal from over Rs 44 crore in 2007-08.
Days before Ambani’s decision, then Corporate Affairs Minister Salman Khurshid advised the industry to shun “vulgar” salaries. Planning Commission Deputy Chairman Montek Singh Ahluwalia had also spoken against “indecent” compensation.
However, things have changed since then and the experts believe that the days of high CEO salaries could be returning to the corporate world.
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Readers’ opinions (3)
Sid Harth Harth (USA)
I am fine. Thank you ET. Been busy. How are readers treating you? comme si comme sa? Same, same here. Today, of all the days, please forgive me dear God for my past sins, I am gonna be a contrarian, oops, au contraire. I asked you, politely, to drop the Hindu counting method, for a reason. The world is moving fast and India needs to adjust to the world’s speed. Hindu, (one Muslim,) billionaires of India cannot be described, in terms of their annual salaries in “Crores.” It is a case of comparing apples to oranges. I have not yet seen Indian media shirking from their journalistic oaths, namely, “News fit to print.” Just kidding. The very concept of news in capital letter in bold face type, preferably Egyptian-wide in72 point, underlined, in Indian media assigned to the news related to the corporate world is very unprofessional and stinks high heavens. Even the sleight of hand reporting is unwelcome. Buried inside the copy, you reveal the information about corporate salaries in the past. I would have suggested a new caption to your half-baked story. Pardon my French: “Hindu Corporates go Swimming, oops, Slumming this Summer” Win-Win solution. Public would just love that kind of display of the truth in advertising, oops, journalism. By the way have you read Travels into Several Remote Nations of the World, in Four Parts. By Lemuel Gulliver, First a Surgeon, and then a Captain of Several Ships, better known simply as Gulliver’s Travels (1726, amended 1735)?
…and I am Sid Harth
so wats big deal in it…if movie star earns crores for one performance….wats wrong in corporates earning one crore..infact they should be earning more then the movie stars…considering there education and the kind of decisions they take on a dialy basis…pay them more…they deserve it…
This is strange – only 30 earning over a crore , I would have expected the number to be in thousands..
Pak PM Gilani attended funeral of Headley’s father in 2010
PTI | May 29, 2011, 02.54pm IST
Read more:Yousuf Raza Gilani|Tahawwur Rana|Syed Saleem Gilani|Saleem Gilani|David Headley|26/11 attacks case
CHICAGO: Pakistan Prime Minister Yousuf Raza Gilani had attended the funeral of Mumbai attacks accused David Headley’s father in 2010.
This was disclosed by 50-year-old Headley at a Chicago court during the trial of co-accused Tahawwur Rana (50) in the 26/11 attacks case.
He told jury during the course of questioning on Thursday that Prime Minister Gilani attended the funeral of his father Syed Saleem Gilani and also offered condolences to the bereaved family.
Saleem Gilani, who died in December 2010, was a well-known poet, author and musicologist. He was former Director General of Radio Pakistan and worked for the Pakistani Embassy in Washington DC.
Headley’s half-brother Danyal Gilani works as a public relations officer at Prime Minister Gilani’s office.
Pak PM Gilani attended funeral of Headley’s father in 2010
Sid Harth Harth (USA)
1 min ago (05:18 PM)
I, the undersigned, Sid Harth, confess. I sinned, I admit. I attended the funeral in Ratnagiri, Bombay province, British India. It was my last and final tribute to my buddy, Vinayakrao Godse, retired postmaster of Ratnagiri. He was a true blue Konkanastha Brahmin. Formerly of Ahmednagar district postmaster, husband of Godavari, father of several children, however the two most famous and infamous at the same time sons, namely Ramachandra, aka, Nathuram and his younger brother, Gopal. I: “Father, I have sinned.” Father sitting in the next booth replies, “son, very brave of you to admit your sins. However, it has been a very long time since you presented yourself in this confessional booth. Come on child, if you could admit your past sins so eloquently and so emotionally, oops, shedding crocodile’s tears like, you could start with your latest sins. Go ahead, make my day.” I: “Father, I may if I may. However how much time you may afford to listen to my litany of sins?” “Father: “I got plenty of time. Football season, Baseball season, Ice Hockey season, Trout Fishing season, Presidential Primaries season can wait. I ain’t in no hurry. Speak my son, don’t be worrying, our father in heaven is very patient.” I: Holy Hindu Cow!, Father, I confess, that I can start alright but I am afraid that I may finish it, when pigs fly and the hell freezes over. I am a Hindu, Capiche?” The End
…and I am Sid Harth
Mayank Sharma (Noida)
1 min ago (05:18 PM)
Is Gilani the same man who was flyiing olive branches in semi final and eating biryaani with our peace loving PM…?
helpreport (The Realm of Truth)
3 mins ago (05:16 PM)
What a news. Proves absolutely nothing. Just another propaganda piece aiming very low indeed. Headley is CIA, I agree with Vir Sanghvi and mr. Akbar. This CIA charade is just a plan to bring India closer to the war with Pak. For the sake of US and Israeli military industrial complex. Im waiting for TOI to present this view also. But in vain as TOI is certainly working for the domestic and foreign elites, who will profit from the war and it is not in service to Indian people.
10 mins ago (05:09 PM)
ohhh.. now time for us to make dossiers & proof about Gilani hand in Mumbai attack… and keep someone at India gate to catch it back when Pakis throws back those dossiers & proof as unsealed!
Khalid Ahmed (India)
53 mins ago (04:26 PM)
Let’s make UN impose economic sanctions on Pakistan just like Iran and North Korea. Let Pakistanis eat grass and come to senses.
Agree (9)Disagree (3)Recommend (6)
BM (Australia) replies to Khalid Ahmed
8 mins ago (05:11 PM)
Americans will go to any length to protect Pakistan. US needs Pakistan to keep India, Iran, China, Central Asian Republic under control, only Pakistan, as a bankrupt country, will dance to American tune.
1 hr ago (03:59 PM)
Very good, Now PM Gilani is part of 26/11 carnage. Very soon, it will be in black & white that 26/11 attacks are sponsored by Pakistan Government.
Agree (15)Disagree (2)Recommend (9)
helpreport (The Realm of Truth) replies to Shiva
2 mins ago (05:17 PM)
Pak is guilty, no doubt, but you should consider and help to expose the US, CIA led game behind as well.
Raghavan (Pune) replies to Shiva
5 mins ago (05:14 PM)
and yet unfortunately, they will continue to receive US aid in billions per year :-( . The US only cares about US interests and not India’s.
30 May, 2011, 01.16AM IST, Binoy Prabhakar,ET Bureau
Narendra Modi: Big hit with America Inc; persona non grata in US
Read more on »Vibrant Gujarat Global Investors Meet|Narendra Modi|Godhra|America Inc
Gujarat chief minister Narendra Modi has been trying to wriggle out of what he believes is the Godhra straightjacket for nearly a decade. But try as he might, his links with the 2002 riots that killed hundreds of people after a coach of the Sabarmati Express train was burnt in the city of Godhra reappears like a nervous tic intermittently. Last week happened to be the latest such instance.
The US Commission on International Religious Freedom, a government watchdog, has again demanded that the US government urge its Indian counterpart to ensure that efforts to bring a case against Modi for his complicity in the 2002 Gujarat riots “are allowed to proceed in accordance with the law”.
It was six summers ago that the US revoked Modi’s visa on grounds of religious intolerance. In its 2011 report, the watchdog has again urged US authorities to develop a lookout list of foreigners “who are inadmissible to the United States on this basis of violations of religious freedom”.
But while Modi remains persona non grata in the US since 2005, a phalanx of businessmen from America has been descending on his home state. Gujarat has turned into an investment magnet for US businesses, much like their counterparts in India, which view him with rose-tinted glasses. “Of US-India Business Council’s 400 member-companies, as many as 200 of them are present in some shape or form in Gujarat,” says Ron Somers, president of the influential American trade group.
The US also dominated the Vibrant Gujarat Global Investors Meet in January, sending 26 delegations made up of 156 representatives. US companies signed MoUs for investments worth Rs 13, 574 crore during the meet in sectors as diverse as pharmaceuticals and tourism, according to the Industrial Extension Bureau, a government-run body that looks to promote investments in the state. Modi deserves the credit, say US entrepreneurs, because he has almost single-handedly made it easy to do business in Gujarat.
“A CEO-stale of management seems to have energised the bureaucracy. Once the green-light is given on a project, officers are fully empowered to implement the project,” says Somers. It is not clear what Modi thinks of the divisive views about him by Americans or whether he wishes to visit the US. He declined to comment for this story. American CEOs say Gujarat is the place to be for businesses.
Besides removing red tape and improving infrastructure, one big reason is the state’s successful stab at weeding out corruption. Here too, credit is due to the chief minister. Modi’s alleged autocratic functioning has helped the efficient hand overtake the greased palm, say people familiar with his government.
Companies do not have to pay bribes for approvals because the CM is watching, they say, adding that he has taken the IAS lobby to task on petty corruption. Gujarat, says a senior bureaucrat, has an administrative model where targets are met and action is taken against complaints. “Success is breeding success.
My sense is that officers in the state are inspired by this approach,” says Somers. He says Modi has a tireless, indefatigable commitment to build infrastructure in the state that makes him stand out from the rest of India’s politicians. The wave of changes that Modi is credited with hasn’t gone unnoticed by companies. Tata Motors relocated its Nano factory to Sanand in Gujarat from Singur in West Bengal.
Energy powerhouses Royal Dutch Shell and Total have opened a LNG terminal in Hazira. Canada’s Bombardier built a manufacturing plant in Savli while Gujarat-based Torrent Power has a power plant in Surat. DuPont, General Motors, Hitachi and a raft of other foreign and Indian companies have invested in the state.
In recent years, scores of businessmen like Somers have been singing Modi’s hosannas. For his part, the BJP leader has been careful to tend to a businessfriendly image in the US. He hired a Washington public relations firm APCO Worldwide to woo businesses in 2009, a year after there were unconfirmed reports that he applied for a US visa.
“APCO’s role is to assist the government of Gujarat in its investment outreach globally. The United States is a key target and several APCO staff in the US work on the account,” says APCO India managing director Sukanti Ghosh. The agency’s representatives have answered on Modi’s behalf to foreign publications, but Ghosh dodged all questions on the CM. Asked on the perception of Modi in the US, Ghosh says, “We can confirm that the Vibrant Gujarat summit saw considerable interest from US companies and representatives of the US government and US India Business Council.”
Ghosh also had no comment on Modi’s persona non grata status in the US. A more forthcoming response on what the US government thinks of Modi came from the consul general of the US, Paul Folmsbee.
There are no plans to call Modi to his country, said Folmsbee during the Vibrant Gujarat Summit. A report on Human Rights Practices by the US department of state last year took note of the concern of civil society activists “about the Gujarat government’s failure to arrest those responsible for communal violence in 2002″.
But as their growing numbers in Gujarat show, US businesses, borrowing a page from the playbook of their Indian counterparts, are willing to overlook those alleged flaws. “If you are looking at investing in India, Gujarat is a stand-out, welcoming destination,” says Somers.
Is this some kind of Simon says game that I played in my childhood? Somers says stand up. Somers says sit down. Somers says stand up not. Somers says, Namo is a dough boy. Somers says Namo wants American dough. Somers says, Namo is not guilty. Somers says who the hell cares? Somers says, profit is good. Somers says money makes the Gujarat go round. Somers says Godhra? Never heard of it. APCO says, for a price, oops, hefty bribe from the Gujarat exchecker’s well guarded underground vaults we can do some serious doo-doo. Neera Radia et al were treated at the hands of government of India as a bad trend-setting evil example of the corporate fixing the political cart? If above board payments to fix the political machine in America, to fix the bureaucratic mindset in America, to assist in makeover of Namo’s tarnished image into a much airbrushed, much varnished image, as in lobbying in America for the state of Gujarat is considered by Somers as a good business, why, I would recommend my good Marathi brother, Dawood Ibrahim Kaskar et al to give him a call. Mr honorable Somers send me your business card and I shall bring you, not thousands, not millions but billions worth of new business. I suggest that before the said card is dispatched, arrange to have a facility the size of Ronald Reagan Center, the largest government office building in Washington, DC. You may throw an option on Pentagon too, as an insurance. In future, I may use your service, I think.
I hope the Government of India tells the US Commission to stop meddling in other country’s affairs and instead to look at itself more objectively. It is in reality one of those commissions which the US should shut down in its efforts to eliminate wasteful expenditures and reduce its deficit.
29 May, 2011, 03.16PM IST,PTI
Tough choice for Vedanta as GoM adds riders to Cairn India deal
Read more on »Vedanta Resources|Pranab Mukherjee|ONGC|NPV|Natural Gas Corp|Earnings Announcement|Cairn India|Cairn Energy Plc
oil Oil And Natural Gas Corporation Ltd.
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NEW DELHI: London-listed Vedanta Resources faces tough decision after a panel of ministers set stringent conditions for approving Cairn India deal even though after accepting the stipulations the nation’s largest private sector oil producer will still remain a hugely profitable venture.
Vedanta will have to decide if it should continue to pay Rs 405 per share or USD 6.65 billion for buying 40 per cent stake in Cairn India from its Edinburgh-based parent Cairn Energy plc or a lower amount in view of Group of Minister’s condition that royalty on all important Rajasthan oilfield will be cost recoverable.
Cairn India doesn’t pay royalty on its 70 per cent share of 175,000 barrels per day of oil output, but will now have to agree to deducting the royalties paid by state-owned ONGC from revenues earned from oil sale, lowering its profitability.
Sources in the know of the development said cost recovery of the royalty will lower Cairn India’s profit, in net present value (NPV) terms, by Rs 6,272 crore over the approved life of the field till 2020.
This is less than the net profit that Cairn India earned in 2010-11 fiscal (Rs 6,334.40 crore) and half of the Rs 12,600 crore liability it would have to incur if it were to pay state government royalty at the rate of 20 per cent of USD 70 per barrel oil price on its share.
Sources said when Vedanta in August agreed to buy Cairn India, the Indian basket of crude oil was at around 75 per barrel. In May it has averaged, USD 110 per barrel, a huge upside for Vedanta. Cairn India got USD 94.2 per barrel for oil in January-March quarter.
Vedanta, they said, will weigh if the cost recovery liability is more than the upside it has already got in crude oil price. Also, Cairn India’s peak output is now estimated at 240,000 bpd as against 175,000 bpd.
Oil and Natural Gas Corp (ONGC) had made claim for cost recovery of royalty as per provisions of the contract for Rajasthan field in June 2010, much before the Cairn-Vedanta deal was announced.
Cairn India had in fact in July that year acknowledged ONGC’s letter that asked for approval of oil regulator DGH to be produced for beginning cost recovery process.
While oil ministry as well as Solicitor General of India backed ONGC’s interpretation of contract, Cairn India went back on its word and started opposing cost recovery the moment the deal with Vedanta was announced.
ONGC has to pay Rs 18,000 crore in royalty on the entire output over the life of the field. In the absence of cost recovery, this liability together with its obligation to pay for 30 per cent of capital and operating expenditure in the field, made the Rajasthan project a losing proposition for it.
The six-member Group of Ministers, headed by Finance Minister Pranab Mukherjee , on Friday gave recommendations to the Cabinet Committee on Economic Affairs (CCEA).
According to sources, it recommended that to get the government nod, Cairn or its successor will have to agree to make cost recoverable the royalties paid by ONGC on its most important Rajasthan oilfields.
For ONGC, cost recovery would mean that even though NPV of its take from the field will be reduced by Rs 2,688 crore, the project will still be positive for the state-owned firm.
The government will see its profit take plunge by Rs 5,032 crore in NPV terms, which is less than half of Rs 12,600 crore it would have to shell out otherwise to reimburse ONGC, sources said.
Sources said Cairn has also disputed its liability to pay oil cess at the rate of Rs 2,500 per tonne on its 70 per cent share in the Rajasthan fields, saying ONGC is also responsible to pay cess on its behalf like in the case of royalty.
The government has rejected this position as the PSC imposes royalty liability on ONGC, but is silent on cess, which means partners will have to pay in proportion to their share.
Cairn has initiated arbitration against government on this issue.
Sources said the GoM recommended that Cairn should withdraw the cess arbitration and agree to pay its share of cess as the other pre-conditions for approval. Also, the company will have to obtain a no-objection certificate from ONGC for transferring ownership to Vedanta.
For the seven exploration blocks or areas Cairn had won under New Exploration Licensing Policy (NELP), the GoM held that the PSC provision of seeking partner consent must be met. ONGC is a partner in five of these blocks, they said.
In case of CB-OS/2 and Ravva oil and gas fields in the eastern offshore — the other producing properties of Cairn — the GoM suggested government nod should be subject to Vedanta providing performance and financial guarantees.
Also, Vedanta will need a security clearance from the Ministry of Home Affairs, sources said.
Cairn, which has disputed the requirement of government nod for the transaction, has only made a conditional application.
It has also refused to accept the requirement of partner consent even though five oil blocks it won under New Exploration Licensing Policy (NELP) explicitly provides for obtaining no objection from partners in case of change of ownership.
Solicitor General Gopal Subramaniam had in March opined that the government should not give unconditional nod to the deal and on April 6, he reaffirmed the cost recoverability of royalty.
Besides royalty, Cairn had also contested its liability to pay a Rs 2,500 per tonne cess on its 70 per cent share.
But unlike royalty, it is treating cess as a cost-recoverable item and is paying it under protest.
All cost-recoverable items like capital and operating expenditure are first deducted from revenues earned from the sale of oil before profits are shared between stakeholders, including the government.
ET, I am going to charge you for my lunch. Yes, I am. Just about the time I finished my three Martini, oops, ‘nimbupani,’ lunch and retired to my library to scan the news, I was rudely awakened by your item on ‘Cairn-Vedanta’ engagement announcement. Why was I so rattled? Simple. You jumped from Rajasthan desert to my library. You scared me ****. Yes you did. I am not going to quibble over the item, as it is very murky, very uncertain, very un-scholarly and lacking in every respect to be a piece to remember. You have also been jumping from billions to crores. Stick to the billions. They sound so romantic, oops, real. Who cares for crores? I have to get my calculator, find the latest exchange rate as quoted on the Forex and calculate every single number to understand the levity or gravity of the situation. Once I had a fix on my arithmetic, I come to realize that it ain’t so bad for Vedanta. At any reckoning, we are only trying to project the profits and losses with several variables. For instance, the so called life of the project. The so called tax structure. The so called liability. The so called Net Present Value, NPV. Twenty years’ time is a long time. A baby born today would be a babe chasing college going young man by that time. Would this new baby lose his mind over probabilities? Methinks not. Who are you trying to explain your story? Not your ‘aam aadmi,’ are you? He is currently enticed by Annamania only. Not high finance or profit and loss.
Vedanta May Accept Cairn Takeover Conditions as Oil Makes Deal Attractive
By Rakteem Katakey – May 30, 2011 4:12 AM ET
Vedanta May Accept Conditions for Cairn Takeover
A worker is seen at Cairn Energy Plc’s Mangala processing terminal in Rajasthan, India. Source: Cairn Energy via Bloomberg
Vedanta Resources Plc (VED) may accept the Indian government’s conditions for approving its planned $9.4 billion bid for control of Cairn India Ltd. (CAIR) as high crude oil prices make the deal attractive, investors said.
London-based Vedanta may agree to pay its share of royalties from the nation’s biggest onshore oil deposit, currently borne by Cairn India’s state-owned partner, according to K.R. Choksey Shares & Securities Pvt. and Aletti Gestielle SGR SpA. Vedanta bought an 18.5 percent stake in April and needs Cabinet approval to buy a further 40 percent from U.K.-based Cairn Energy Plc. (CNE)
“The rising oil price is the only reason Vedanta would still be interested in Cairn India,” said Deven Choksey, managing director at K.R. Choksey Shares in Mumbai. “The royalty condition will change the deal valuations and prolong Vedanta’s pay-back period. Only the oil price will keep them going.”
Vedanta’s bid, announced in August, is valued at a total of $9.4 billion, Chairman Anil Agarwal said May 5. As part of the deal, Vedanta’s Sesa Goa Ltd. (SESA) unit bought 8.1 percent from minority shareholders last month, paying 355 rupees a share. Vedanta separately acquired a 10.4 percent stake from Malaysia’s Petroliam Nasional Bhd. and will buy another 40 percent from Cairn Energy.
A ministerial group led by Finance Minister Pranab Mukherjee met May 27 and recommended approving the deal with conditions, including reducing state-owned Oil & Natural Gas Corp.’s royalty burden for Cairn India’s main asset, two people with knowledge of the matter said. The panel’s advice will be sent to the Cabinet within two weeks, Oil Minister S. Jaipal Reddy said after the meeting, without giving more information.
ONGC, owner of a 30 percent stake in the oilfield in Rajasthan state, previously said the deal shouldn’t proceed without changes to the royalty agreement, which delayed Vedanta’s bid to acquire 58.5 percent of the explorer.
Oil’s 33 percent gain since the deal was announced on Aug. 16 will help offset a drop in Cairn India’s profit if its share of royalty from the field in Rajasthan state is recovered from customers, said K.K. Mital, a fund manager at Globe Capital Market Ltd. in New Delhi. The change would cut Cairn India’s earnings by 15 rupees a share, or 45 percent of the 33.36 rupees for the year ended March 31, Mital and Choksey estimated.
Agreeing to bear the royalties for the Rajasthan field may result in a burden of about $900 million for Cairn India over the 12-year life of the field, said Jagannadham Thunuguntla, chief strategist at SMC Wealth Management Services Ltd.
“From Vedanta’s point of view, the situation has already improved as higher oil prices have made the economies of its bid much better,” said Walter Rossini, who manages 250 million euros ($358 million) in an India equity fund at Aletti Gestielle SGR SpA in Milan. “Vedanta would want to close this deal as soon as possible.”
Pavan Kaushik, a spokesman for Vedanta, didn’t answer two calls to his mobile phone seeking comment.
Vedanta plans to borrow $6 billion to fund the acquisition, Chief Financial Officer Din Dayal Jalan said May 5. Of that, $3.5 billion will be from bank loans, $1.5 billion from a bond sale and $1 billion from equities, he said then. The mining and metals company priced a $1.65 billion bond offering on May 27.
Vedanta’s five-year credit default swaps rose 21.8 basis points, the sharpest increase in almost seven weeks, to 505 basis points on May 27, according to prices provided by CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
The yield on Cairn India’s 8.35 percent rupee bond due July 2012 increased to 9.88 percent to a record on May 27 from 9.76 percent a day earlier, according to prices compiled by Bloomberg. The company’s shares have advanced 1.6 percent since the deal was announced, compared with a 1.2 percent gain in the benchmark Sensitive Index of the Bombay Stock Exchange.
Oil prices have risen every month from September and reached a high of $113.93 a barrel on April 29. Crude for July delivery was at $100.02 a barrel in electronic trading on the New York Mercantile Exchange at 12:59 p.m. India time.
“Oil prices are expected to stay high and Cairn’s profitability and cash flows are strong,” said Mital of Globe Capital. “Maybe Anil Agarwal will realize that even at $80-$90 oil price, Cairn India will be a profitable cash cow.”
The explorer, based in Gurgaon near New Delhi, reported a record net income of 24.6 billion rupees in the three months ended March 31, a 10-fold surge from a year earlier, according to a May 25 statement.
Vedanta has offered Cairn India’s Edinburgh-based parent 405 rupees a share, including a non-compete fee of 50 rupees. Cairn Energy said in a May 27 statement it hasn’t yet received formal confirmation of any decision made by India’s government.
To contact the reporters on this story: Rakteem Katakey in New Delhi at firstname.lastname@example.org;
To contact the editor responsible for this story: Amit Prakash at email@example.com.Missing in action: Indian Intelligence
Divya A & Shobhan Saxena, TNN | May 30, 2011, 01.20am IST
Read more:Osama bin Laden|NATGRID|ISI|CBI
When US Navy Seals team 6 entered Osama bin Laden’s hideout in Abbotabad, they knew exactly where he was — which floor, which room. This key information didn’t come from billion-dollar satellites but from a small team of agents who lived nearby for months and collected intelligence on the bin Laden compound. Clearly, America’s human intelligence-gathering operations are working.
Compare the perfectly executed strike on bin Laden with India’s dispatch of a list of “50 most wanted hiding in Pakistan”. New Delhi handed over the list to Islamabad last week. It was a disaster. Two suspects on the list — Wazhul Kamar Khan (2003 Mulund blasts) and Feroze Rashid Khan (1993 Mumbai blasts) — were in India, not Pakistan. Even as the government struggled to recover from this embarrassment, a Central Bureau of Investigation team returned red-faced from Copenhagen. It had arrived there with an “expired notice” for the extradition of Kim Davy, the self-proclaimed mercenary who organized the airdrop of a huge cache of arms in Purulia in 1995.
If this weren’t bad enough, it was revealed on May 20 that Rajkumar Meghen, a Manipur rebel who has been in the custody of the National Investigative Agency (NIA) since October 2010, was still on the CBI’s “most wanted list”. This, even though the NIA had shared information on Meghen’s arrest with the Manipur police. Even before Pakistan rejected the most wanted list, both the CBI and Ministry of Home Affairs offered lame excuses for the blunder. Officials of the premier investigative agency complained the Bureau was “overworked”. The Ministry, meanwhile, claimed that the gaffe wouldn’t have occurred if India had the Natgrid — a project that would give the government access to about 21 categories of database such as air travel, income tax, bank accounts, credit card transactions and immigration records.
The truth is more intelligence is needed to effectively conduct intelligence operations. Investigations reveal that both the CBI and Home Ministry’s excuses may be exactly that — excuses. The CBI’s own records, as of January 1, show that 5,147 people work for it. That includes the peon and the CBI chief. The workforce is admittedly less than what the CBI has sanction for — around 6,500. Even so, complaints of “overwork” may not really hold. As of this week, the CBI is handling just 867 regular cases and 142 cases of preliminary enquiry. Experts say the real problem may not be not understaffing but incompetence and bureaucratic sloth. Former CBI chief Joginder Singh is intensely critical of India’s intelligence gathering system overall. “Nowhere in the world does it happen but in CBI that you review your own performance and pat yourself on the back. And in case of any failure, no heads roll ever — be it the Batla House encounter, 26/11 or even the recent goof-ups,” he says.He may have a point. Indian intelligence and investigative agencies — CBI, NIA, IB and R&AW — have had an alarmingly long list of failures in recent times. That includes the Kargil incursions, 26/11 attacks and the David Headley affair.
Singh, who headed the CBI in the mid-90s, says one of the biggest problems is failure to share intelligence. “The level of intelligence-sharing between the IB, R&AW and CBI is zero. The worst thing is that we don’t have one place to collect all intelligence inputs so that they could be processed properly. Ideally, at the least, we should have a databank of incidents, cases on trial, suspects, those arrested and acquitted”.
He adds that the excessive “petty jealousy between different agencies” means whenever anyone gets any information, howsoever incomplete, “they prepare a report and pass it on to their boss — the home minister — to score brownie points.”
Might the Natgrid help because it would force agencies to share whether or not they wanted to? Yes, somewhat , says Singh, but only if it works properly and all “the relevant data is collated in one place”. But the Defence and Finance ministries are sceptical about a “Big Brother project”, which would be run by the Home Ministry. Their objections have already delayed the project by two years. Just last week, the project head, Raghu Raman, who was hired from the private sector for Rs 10 lakh per month, was given a six-month extension. The Home Ministry is pushing hard for Natgrid but some ministers and babus say a central database could be abused and used to harass citizens.
A former junior minister in the home ministry applies the bin Laden test to the Natgrid: “Do we really need such a grid? Osama was tracked down by the CIA despite the fact that he did not a phone or internet connection. He was not using any credit cards. They could still get him because of excellent humint.
Since we are not capable of good humint, we are trying these gimmicks which may be used by some people to make money in the name of national security and to gather information about citizens”.
Missing in action: Indian
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