Cairn India shares fall on reports it may be merged with Vedanta

Cairn India shares fell about 5 per cent in noon trade on Tuesday on reports that parent Vedanta Group is close to merging the oil and gas company with its metals and mining firm Vedanta Resources to get access to Cairn India's cash and help reduce debt of the latter.

Both the companies are in final stages of discussions and process would be completed by March 2016.

Vedanta Resources had standalone net debt of Rs 36,796 crore ($5.75 billion) as of March 31, 2015.

"Cairn India's market cap is now near to cash plus the loan given to Vedanta earlier. It seems like a negative (move) for Cairn India and positive for cash-starved Vedanta,'' said G Chokkalingam, founder, Equinomics, a Mumbai-based research and fund advisory firm.

Cairn India shares closed at Rs 172.60, down 4.46 per cent against its previous close. However, Vedanta shares gained 3.11 per cent to Rs 182.55 a piece.