Cairn to sell residual stake in Indian arm

New Delhi : British oil major Cairn Energy has called for an annual general meeting of shareholders on May 12 in London to approve, among other things, the proposal to dispose of its 9.82 percent residual stake in Cairn India.

"One of the resolutions seeks approval of the renewal of the existing authority (renewed at last year's annual general meeting held on 14 May 2015) to dispose of all or part of the Group's residual interest in Cairn India," the company said on its website, notifying the AGM agenda.

The proposal comes against the backdrop of the retrospective tax demand of Rs 29,000 crore from the Indian tax department Cairn has received, on alleged capital gains the company made in a 2006 reorganisation of its India business.

Meanwhile, Cairn Energy said on Thursday it faces a Rs 10,200 crore penalty on the retrospective tax demand. "The Indian tax department on February 4, 2016, issued a final assessment order, levying Rs 10,200 crore plus interest back dated to 2007 up to Rs 18,800 crore," the company said in a circular on Wednesday to its investors in London.

The latest order is based on a draft assessment note of January 22, 2014, on the alleged capital gains Cairn made in a 2006 reorganisation of its India business. The Edinburgh-based Cairn Energy still holds 9.8 per cent equity stake in Cairn India through its UK Holdings Ltd. (CUHL), after it sold majority stake in it to the London-based Vedanta mining group for $8.67 billion in 2011 though it raised Rs.8,616 crore ($1.9 billion) through a initial public offering (IPO) in mid-2006.

Asserting that it would contest the assessment proceedings, the company said it was pursuing its right to appeal against the order under the Indian law on the retrospective tax and penalty, besides protecting its assets from any legal action.