Cairn India Cairn India Limited (Cairn India or the company) is a newly incorporated Indian company which has been formed by Cairn Energy PLC (Cairn UK), a crude oil and natural gas exploration and production company trading on the main market of the London Stock Exchange, to acquire those of its subsidiaries which hold all of the ownership and operated interests of its Indian crude oil and natural gas development and production assets and the majority of its Indian crude oil and natural gas exploration assets.  The acquisition will be financed by a series of equity financings including a public offering in India and listing on the Bombay Stock Exchange and National Stock Exchange of India Limited.  Following the listing, Cairn UK is expected to remain a majority shareholder in the company.  With the support of the central and state governments and regulators and in partnerships with key industry participants such as ONGC, Cairn UK has been exploring, as well as operating development and production assets, in India for over 12 years.  Cairn Indias primary asset is a 70% working interest in a development area in Rajasthan, where, in January 2004, Cairn India discovered the Mangala field, the largest onshore crude oil field discovery in India since 1985.  In addition, Cairn Indias key assets include operated interests in producing fields at Ravva in Block PKGM-1 (22.5% working interest) in the Krishna-Godavari Basin offshore eastern India and at Lakshmi and Gauri in Block CB/OS-2 (40% working interest) in the Cambay Basin offshore western India.  Further, Cairn India has an interest in a number of exploration blocks across India.   The companys medium term capital expenditure program will focus primarily on Rajasthan and is expected to comprise additional exploratory, appraisal and development drilling as well as the construction of oil and gas processing and export facilities. It will also include a component covering further exploration and development in currently producing fields as well as exploration in non-producing fields. - Fit with WBG Strategy:  The current World Bank Group Country Assistance Strategy (CAS) for India focuses on improving government effectiveness; investing in people and empowering communities; and promoting private sector-led growth. The strategy for promoting private-sector led growth is further elaborated in the World Bank Groups Private Sector Development Strategy, appended to the CAS, which proposes that the World Bank and IFC work closely together to:   - facilitate greater competitiveness; - improve the quantity and quality of infrastructure through greater private participation; - promote the provision of private health services; and - improve rural productivity and growth through greater private investment.   IFC will focus on providing firms with long-term debt and equity which may not be available from domestic financial markets; and on adding value in the areas of global best practices, creating international partnerships, entering new markets, environmental and social sustainability and corporate governance.   The proposed IFC investment is therefore consistent with the WBGs strategic priorities in India.  - Development Impact:  Since the mid-1990s, India has implemented policy changes to encourage private investment in its upstream oil and gas sector. Although success remains modest, a number of foreign companies, such as Cairn, have successfully entered the sector. IFC''s proposed investment reflects its continuing commitment to enhance the role of the private sector in the upstream hydrocarbons sector in India. The proposed transaction, similar to the senior loan investment made by IFC earlier this year, is expected to have the following key development impacts:  Enhancing Availability of Higher-Quality, Domestic Fuel: The project is expected to reduce the reliance of India''s power sector and small industry on supplies on relatively inferior coal and more expensive naphtha, respectively.   - Import Substitution:   At its currently projected peak plateau production rate of 150,000 bbl/d, the Rajasthan development would account for a significant portion of Indias indigenous oil production and help reduce its oil imports.  - Creation and Preservation of Direct and Indirect Employment:   In 2005 approximately 75% of Cairn Energy PLCs staff and contractors were local nationals. The Rajasthan development is expected to generate 450-500 jobs during peak operations (approximately 2,500 during the construction period), benefiting the local community through increased employment opportunities both directly and indirectly.   - Supporting Local Communities:    Cairn supports a wide range of community development activities in all its operations.  Its work is concentrated in five main areas  health, education, local entrepreneurship development, environment and infrastructure  and benefits from effective co-ordination with local government, NGOs and media. Significant emphasis going forward is to be placed on meeting local community expectations for value-added employment opportunities, as well as further improvements of water infrastructure, medical services, health education, etc.  - Benefits to Government:  It is expected that the government of India will receive substantial fiscal receipts from royalties, production sharing and corporate taxes, generated by the incremental production to be achieved as a result of the proposed investment. Specifically in the case of Rajasthan, a sizeable proportion of fiscal payments will accrue directly to the state government in the form of royalties.  The key development indicators that are proposed to be monitored during the life of the IFC investment are:   - annual production of oil and gas in India,  - direct employment levels,  - production sharing and fiscal payments accruing to the governments of India, and  - implementation of community development programs.