Finnish companies looking for new opportunities in India

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Nina Vaskunlahti, Ambassador of Finland to India Paul Noronha

India is becoming one of the favorite destinations for investments in manufacturing, clean tech, infrastructure and hi-tech for Finnish companies.

Nina Vaskunlahti, Ambassador of Finland to India, in an interview with BusinessLine said, “There is increasing interest in economic cooperation, and Finnish companies are looking for new opportunities in India.”

Investment protection

According to Vaskunlahti, although India’s legislative framework can be a little complicated and the judicial system overworked and under-resourced leading to delays in solving disputes for foreign investors, overall the atmosphere is “welcoming and pretty open”.

However, according to the Ambassador, Finland is worried over India’s move to terminate investment protection agreement with 82 countries. “We are not quite sure what is the purpose of this,” Vaskunlahti said. While the treaty between India and Finland is still in force, according to Vaskunlahti, India and the European Union seem to be stuck over negotiating a new investment protection treaty after a year back India had sent request for renegotiation for the Bilateral Investment Treaty (BIT) to over 80 countries with whom it had earlier signed Bilateral Investment Promotion and Protection Agreements (BIPA).

“As a member of EU, we cannot negotiate on our own, because it’s the EU Commission that has a negotiating mandate,” Vaskunlahti said. “What we have now on the table is called a comprehensive negotiating mandate which covers both free trade agreement and the investment protection agreement. For the moment, nothing much is happening, but efforts and work are being done in background to push it forward.”

The new model of the BIT was cleared by the Union Cabinet in December 2015 and was seen to give more stability to foreign investors and prevent disputes with multinational companies by excluding matters such as government procurement, taxation, subsidies, compulsory licences and national security.

Arbitration mechanism

At the same time, the new model BIT brings in a provision obliging foreign investors to first exhaust the option of local judicial system at least for five years before going to international arbitration mechanism in case of disputes.

Some of the cases when foreign investors challenged India in international arbitrage, invoking clauses of earlier BIPAs include Devas Multimedia, Vodafone, Deutsche Telekom, Sistema and Cairn.

Source: http://www.thehindubusinessline.com/info-tech/finnish-companies-looking-for-new-opportunities-in-india/article9719905.ece

Cairn India to invest in existing projects

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Cairn India, the petroleum exploration arm of London-listed Vedanta Resources, plans to continue investing in its existing projects to enhance domestic hydrocarbon production despite tough operating conditions and uncertain economic environment mainly because of strong demand outlook for the commodities.

Based on the International Energy Agency’s World Energy Outlook, by the year 2040, 91% of India’s demand for oil and 49% demand for gas would be met by imports. This high dependence would entail significant cost to the economy, it said.

“We will continue to invest in our existing assets to increase production and maximize economic recovery. I remain confident that your company will play a pivotal role in India’s quest for energy security,” said Cairn India’s FY16 annual report quoting chairman Navin Agarwal.

The key enablers for Cairn India’s growth would be strength in ‘execution’, technology along with a strong balance sheet, he added.

Cairn India’s Rajasthan block has significant national importance as it has considerably helped reduce country’s crude oil imports.

The company operates over 27% of domestic crude oil production. During the year, Cairn India’s operations helped reduce India’s import bill by over Rs 21,000 crore and its gross contribution to the government exchequer was over Rs 10,000 crore.

Cairn India’s success, over the years, has been reinforced by innovative application of technology. This has enabled early adoption of technology including enhanced oil recovery in the Rajasthan field.

One of the world’s largest polymer flood projects at Mangala, continued to yield positive results and contributed an average of 14,000 barrels of oil equivalent per day, during FY2016, said the report.

During the year, amid low oil price environment, Cairn India has focussed on optimising costs, building talent and capabilities from within, and keeping employees focussed on goals and priorities of the organisation, said the report. This enabled the company to generate free cash flow over $637 million, it said.

Despite steep drop in crude oil prices, Cairn India adhered to its stated dividend policy with a pay-out amounts to 31.6% of the company’s annual consolidated normalized net profit, informed Agarwal.

Regarding merger of the oil company with Vedanta, Agarwal said Cairn India continues to work towards completion of merger which would generate value for the shareholders and de-risk the company. Upon the merger, Cairn India will get access to Vedanta’s tier-one metal and mining assets, which are well-invested, low cost and have a long life.

On Thursday, Cairn India reported a 28 per cent fall in its June quarter net profit at Rs 360 crore against Rs 501 crore in the corresponding period a year earlier. Revenues dipped to Rs 1,885 crore from Rs 2,627 crore due to slump in crude oil prices.

Source: http://www.business-standard.com/article/companies/cairn-india-to-invest-in-existing-projects-116072100828_1.html