Cairn India profit tumbles on royalty payment
Britain's Cairn Energy India unit reported a 52 percent plunge in quarterly net profit on Thursday, hit by a one-time provision for crude output royalty payments to the Indian government.
Energy explorer Cairn's net profit for the three months to September fell to 7.63 billion rupees ($167 million) from 15.85 billion in the year-earlier period, but still beat analysts' forecasts.
Analysts had expected Cairn, which produces oil in the western Indian state of Rajasthan, to post a second-quarter profit of around six billion rupees.
"We are now poised to optimise development," Rahul Dhir, chief executive officer of Cairn India, said in a statement.
The earnings figures come after the Indian government in late June gave London-listed mining group Vedanta Resources conditional approval for its planned $6-billion takeover of Cairn Energy's India unit.
The approval of the long-delayed sale to Vedanta came with a key rider that Cairn India and India's state-owned Oil and Natural Gas Corp (ONGC) share royalty payments on crude production from their Rajasthan oil fields.
ONGC owns a 30 percent stake in the oil block but has paid royalties on 100 percent of the output under a "royalty holiday" scheme aimed at promoting private oil exploration in energy-hungry India.
Cairn had objected strenuously to the royalty payment sharing, saying such a step would sharply cut its profits, but finally accepted the condition.
Cairn India's sales slipped one percent during the second quarter to 26.52 billion rupees from a year earlier.
© 2011 AFP