Shareholders and creditors of mining major Vedanta Ltd have approved the proposal of its merger with its cash-rich arm Cairn India. The development brings the firm, led by billionaire Anil Agarwal, a step closer to the merger of the oil firm with its debt-laden parent Vedanta Ltd. Earlier this week, shareholders of Vedanta Resources, the parent firm of Vedanta Ltd, had approved the merger. "The equity shareholders, secured creditors and unsecured creditors of Vedanta Ltd at their respective meetings have approved the Scheme of Arrangement of Cairn India with Vedanta Ltd, with requisite majority," London-listed Vedanta Resources said in a regulatory filing today. The shareholders and creditors of Vedanta ltd had met in Goa yesterday to vote on the proposal. However, the real test for Agarwal is next week, on September 12, when Cairn India has called a shareholders' meeting to seek approval for the company's takeover by its parent under a revised all-share deal. To save the deal, the Agarwal-led group in July sweetened the deal by offering three additional preference shares in hope of winning over minority shareholders like LIC. Through the merger, Agarwal is looking to create India's largest diversified natural resources firm, which could compete with BHP Billiton and Vale SA. In the revised offer, Vedanta will give minority shareholders of Cairn India one equity share and four redeemable-preference shares with a face value of Rs 10 each. The preference shares will carry a coupon of 7.5 per cent and tenure of 18 months. Vedanta is said to be wanting to use Rs 23,290 crore cash lying with Cairn to pay off part of its Rs 77,952 crore debt. It had in May rolled over a controversial USD 1.25-billion loan taken from Cairn India in July 2014. For the merger to go through, half of the minority shareholders, who together make up for 40 per cent of the Cairn equity, have to approve the deal. State-owned LIC holds 9.06 per cent in Cairn India while the company's former promoter Cairn Energy Plc of the UK has 9.82 per cent interest. The deal will go through if LIC votes in favour of the deal, a source said. Post-merger, London-listed parent Vedanta Resources Plc's holding in Vedanta will drop to 50.1 per cent from 62.9 per cent. Cairn India's minority shareholders will own 20.2 per cent and Vedanta minority shareholders 29.7 per cent in the merged entity. In June last year, Vedanta had offered shareholders of Cairn India one ordinary share and 7.5 per cent redeemable preference share with a face value of Rs 10 each.