The government has agreed in principle to ensure a minimum 10% return on investment (RoI) to ONGC in Cairn India’s Rajasthan blocks, boosting the firm’s valuation ahead of its follow-on public offering and removing a big obstacle for the $9.6-billion Cairn-Vedanta deal.
The state-run explorer has been losing money from these blocks, as it has to bear the entire royalty burden, and has been using the deal to negotiate better terms for itself. The government may transfer a part of its own share of profit from the blocks to help ONGC, but this would require the approval of the finance ministry because it would be a direct subsidy from the government.
This will come as an upside for investors ahead of the FPO as the Rajasthan blocks will generate more revenues in the years to come. A positive return for ONGC would help the Cairn-Vedanta deal as well as ONGC’s concerns would be addressed without making any changes for Cairn India materially.
| Company Name | CMP |
|---|---|
| ONGC | 284.25 |
| Oil India | 468.95 |
| Jindal Drilling&Inds | 542.50 |
| Deep Industries | 478.05 |
| Asian Energy Service | 313.45 |
| View more.. | |
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: