New Delhi, Sep 7 (IANS): British energy major Cairn expects to get $1.06 billion (Rs 79,000 crore) as refund by the Government of India, following which the company will withdraw all its international arbitration award claims and cases.
Simon Thomson, Chief Executive, Cairn Energy PLC said: "Progress in resolving our Indian tax issue and active portfolio management leave Cairn well-positioned to deliver growth from a sustainable business, focused on generating further value and returns for shareholders."
In its half yearly report announcement, the company said that the expected near-term resolution of the India tax dispute would result in a refund to Cairn by the Government of India of Rs 79 billion (around $1.06 billion).
"In accepting the terms of the new legislation in India, Cairn would be required to withdraw its international arbitration award claim, interest and costs and to end all legal enforcement actions in order to be eligible for the refund," it said.
Further, payment of the tax refund would enable a proposed return to shareholders of up to $700 million, through a special dividend of $500 million and a share buyback programme of up to $200 million.
The remainder of the proceeds would be allocated to further expansion of the low cost, sustainable production base.
Near-term resolution of the Indian tax dispute, alongside significant recent portfolio changes, will ensure that Cairn remains well-positioned to continue successful delivery of its differentiated business model of returning value to shareholders against a backdrop of sustainable cash-flow generation and growth.
The group is considering entering into statutory undertakings with the Government of India in respect of new legislation, which would enable the refund of retrospective taxes collected from Cairn in India by way of asset seizures since 2014 totaling Rs 79,000 crore.
The final form of these statutory undertakings has yet to be published by the Government of India, but it is anticipated that the principal condition that they prescribe will be the withdrawal of Cairn's rights under the international arbitration award.
"As the Group has not yet entered into any such undertakings, Cairn's receivable under the award of the international arbitration remained classified as a contingent asset at the June 30 balance sheet date," it said.