Cairn-Vedanta merger: Focus is on building existing businesses, say CEOs

Interview with Vedanta's CEO Tom Albanese and Cairn India's acting CEO Sudhir Mathur

Almost two years after announcing the merger with Cairn, Vedanta on Tuesday announced it was complete. Vedanta’s Chief Executive Officer (CEO) Tom Albanese and Cairn India’s acting CEO Sudhir Mathur spoke to Jyoti Mukul over telephone. Edited excerpts:

Earlier, there were investor concerns over the merger. How has the response now been?

Tom Albanese (TA): We have been pleased with the response of both Cairn and Vedanta shareholders. Vedanta comes out stronger. There has been consequent increase in international investor interest. Vedanta stock increased 50 per cent since the merger announcement on June 14, 2015; and 73 per cent since the announcement of the revised terms of the merger on July 22, 2016. Cairn stock increased 62 per cent since the merger announcement, and 58 per cent from the announcement of the revised terms of the merger.

Cairn shareholders come out stronger with Vedanta having stronger ability to provide dividend. The combined entity is a good example of how a diversified business should be. There is stronger capital base.

Will there be management changes after the merger?

TA: In terms of business, Cairn has been running as a completely independent unit in the group. There was regular interface with Vedanta. This will continue. We have committed that Cairn will be continue to be the brand for Vedanta’s oil and gas division.

Sudhir Mathur: In the past 24 months, when oil price plummeted, the growth focus was never lost. There are significantly large projects that have been lined up. The Vedanta board will shortly meet to approve the projects, which will help the double oil production. These projects will be in areas such as tight oil, gas, polymer and tertiary products.

How has been the performance of commodities in the Vedanta basket? Will zinc continue to do well?

Zinc is the strongest commodity in our business with strongest fundamentals. It will continue to be so in the next 12-24 months. In 2016, the weighted average for entire basket of commodities showed a 50 per cent increase in revenue. There was certain tightness in copper which should help price. Iron ore prices have been muted. Oil, which had seen a reduction, has recently strengthened.

From here on, what would be the company strategy?

At this moment, the focus will on building existing businesses and strengthening the foundation so that all businesses continue to do well.