Cairn's $1.25bn loan to Vedanta: 3 key questions unanswered

Private oil and gas player Cairn India has extended a loan of USD 1.25 billion (nearly Rs 7,500 crore) to its parent Vedanta for a two-year period as a part of the former's treasury operations.

Raising concerns of adequate cash utilization Hetal Dalal, COO of proxy firm Investor Advisory Services India Ltd (IiAS) is concerned by the levels of disclosure made by the company with respect to this transaction. "The transaction has taken place without shareholders knowing it, is a concern," she said in an interview to CNBC-TV18.

Dalal advised shareholders to raise the issue of disclosure quality with the management. She said that shareholders need to demand higher disclosures from management and should find out what is the usage of these funds. Also, they need to quiz the management as to why is the company not investing in its own business operations.

At 12:07 hrs Cairn India was quoting at Rs 326.80, down Rs 18.90, or 5.47 percent .

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Cairn India stock price

On July 24, 2014, at 12:32 hrs Cairn India was quoting at Rs 324.95, down Rs 20.75, or 6 percent. The 52-week high of the share was Rs 385.00 and the 52-week low was Rs 286.85.

The company's trailing 12-month (TTM) EPS was at Rs 39.77 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 8.17. The latest book value of the company is Rs 206.73 per share. At current value, the price-to-book value of the company is 1.57.

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