Cairn India Q1 profit soars on higher output
Oil explorer Cairn India reported a nearly 10-fold jump in quarterly profit on higher output and said it would seek shareholder approval on the conditions set by the government for its deal with Vedanta Resources.business Updated: Jul 27, 2011 09:17 IST
Oil explorer Cairn India reported a nearly 10-fold jump in quarterly profit on higher output and said it would seek shareholder approval on the conditions set by the government for its deal with Vedanta Resources.
Last month, India gave conditional approval to Vedanta Resources to buy a 40% stake in Cairn India from its British parent Cairn Energy, in a deal valued at around $6 billion.
Cairn India said net profit jumped to 27.27 billion rupees ($617 million) for its fiscal first quarter ended June, from 2.8 billion rupees in the year-ago quarter.
Revenue surged more than four times to 37.13 billion rupees.
The oil ministry has been pushing Cairn India to share royalty payments with state-run Oil and Natural Gas Corp, which has a 30% holding in the Cairn-operated fields in western India but pays 100% of the royalties.
Treating royalty as a cost for developing the field was one of the conditions set by the government to clear the deal with Vedanta.
Cairn India said in a statement late on Tuesday if royalty were to be cost recoverable it would lead to a decline in revenue and profit for the June quarter by 12.92 billion rupees.
Cairn India said it would hold a postal ballot of all the shareholders to consider the conditions imposed by the government.