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Business News/ Companies / News/  Cairn India profit falls on low crude price, maintenance shutdown
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Cairn India profit falls on low crude price, maintenance shutdown

The company on Tuesday also named oil and gas industry veteran Mayank Ashar as its new CEO and D

Cairn India’s CEO post has been vacant since 2 May. Premium
Cairn India’s CEO post has been vacant since 2 May.

Mumbai: Cairn India Ltd, the cash-rich oil and gas arm of Anil Agarwal-controlled Vedanta Resources Plc, on Tuesday reported a 33% drop in net profit in the quarter ended 30 September because of lower crude oil prices and a maintenance shutdown at its Rajasthan block.

A higher royalty paid to the government also cut into the net profit at the company, which on Tuesday named oil and gas industry veteran Mayank Ashar as its new chief executive officer (CEO) and managing director (MD).

Cairn India posted a net profit of 2,278 crore in the fiscal second quarter, down 33% from 3,385 crore in the year-ago period. Revenue slid 14% to 3,982 crore from 4,650 crore.

The company missed analyst estimates. It had been expected to post a net profit of 2,377.8 crore on revenue of 4,078.3 crore, according to a Bloomberg poll of 30 analysts.

The company said production from its prolific Barmer basin block in Rajasthan fell 7% to 163,262 barrels of oil equivalent per day (boepd) in the September quarter from 175,478 boepd in the same period a year ago.

In an explanatory note released with its earnings statement, Cairn India said net revenue was down on account of lower production because of the planned maintenance shutdown in Rajasthan and softer global crude prices.

“During the quarter, total profit petroleum was 1,322 crore including 1,133 crore for the Rajasthan block. For the quarter, royalty for the RJ block was 908 crore," said the company statement.

The company posted earnings before interest, tax, depreciation and amortization—an indicator of operating profitability—of 2,701 crore for the quarter compared with 3,619 crore in the same period a year ago.

“In this time of lower crude prices, our strong balance sheet and low cost profile distinctly positions us amongst global peers," said Sudhir Mathur, chief financial officer and interim CEO. “Considering that each of our development projects is on track, we are confident of achieving our targeted volume growth of 7% to 10% over the next three years. The continued success of our exploration and appraisal campaign will help achieve targeted 150% reserve replacement ratio in the same period."

Next CEO Ashar, who has worked in the oil and gas industry with for over 36 years, will take charge on 17 November, a note issued earlier in the day by Cairn India said.

The post has been vacant since 2 May, when in a surprise move P. Elango quit, citing personal reasons.

A company statement said Ashar has served in various senior management and top leadership roles in global organizations such as British oil and gas company BP Plc, Canadian oil company Suncor Energy Inc. and its downstream subsidiary Petro-Canada. He also served as the CEO and president at Irving Oil Ltd. His appointment will be finalized subject to shareholders’ approval and other regulatory approvals.

“Mayank has a strong track record of executing corporate strategy, driving operational efficiency and delivering value to all stakeholders. His appointment comes at a critical phase when Cairn India is focused on delivering the next level of growth from its world-class Rajasthan asset and other assets," chairman Navin Agarwal said.

Cairn India’s shares gained 0.63% to close at 278.25 on Tuesday on BSE, while the benchmark Sensex rose 0.55% to close at 26575.65 points and the BSE Oil and Gas Index lost 0.77% to close at 10,664.10.

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Published: 21 Oct 2014, 05:29 PM IST
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