State-owned Oil and Natural Gas Corp (ONGC) says it would have offered around Rs. 310 per share for acquiring Cairn India, much lower than the Rs. 405 a share Vedanta Resources is paying for a majority stake in the firm.
“Obviously, Vedanta is over-paying... perhaps because they have been kept in dark on issues like statutory levies,” a source said. “ONGC did its numbers, but it couldn’t stretch the valuation of Cairn India to Rs. 320 per share,” he said.
London-listed Vedanta is paying Rs. 405 a share to acquire a 40 to 50 per cent stake in Edinburgh-based Cairn Energy Plc’s Indian unit.
Vedanta’s valuation is based on the premise that Cairn India will not have to bear any share of the royalty on its mainstay Rajasthan oilfields.
“Perhaps it (Vedanta) has not been told that Cairn India had in July last year, much before the Vedanta acquisition was announced, agreed to adding the royalty paid on Rajasthan crude to the project cost, which can be recovered from the sale of oil,” the source said.
