21st Jul 2015 15:34
LONDON (Alliance News) - Vedanta Resources PLC Tuesday said its subsidiary, Cairn India Ltd, reported a large fall in revenue and profit in the first quarter of the 2016 financial year.
Vedanta currently holds a majority 59.8% stake of Cairn India whilst Cairn Energy PLC holds a 9.8% stake. However, Vedanta has recently announced it plans to merge Cairn India with its other Indian subsidiary Vedanta Ltd.
Vedanta said Cairn India reported profit after tax of USD131 million in the first quarter of the 2016 financial year, down from USD183 million a year earlier, as revenue plummeted to USD414 million from USD750 million.
Earnings before interest, tax, depreciation and amortisation in the quarter came in at USD205 million, less than half the USD522 million a year earlier.
That was partially a result of significantly lower oil prices. Cairn India averaged USD56.0 per barrel in the quarter. That compares to USD48.4 per barrel in the previous quarter but is significantly down from the USD97.0 per barrel being achieved a year earlier.
But Cairn India also said revenue was lower because of the increase in the share of profit petroleum payable to the government of India, jumping to 40% from 30% in the quarter, it said.
Production also was lower at 217,935 barrels of oil equivalent per day, which is down 3% quarter-on-quarter and down 4% year-on-year.
On July 15, Vedanta said it planned on merging two important Indian subsidiaries as it looks to simplify its structure.
The move results in the combination of Vedanta Ltd and Cairn India. Vedanta Resources' stake in Vedanta Ltd is to fall to 50.1% from its current 62.9% holdings, with Cairn India minority shareholders to own 20.2% and Vedanta Ltd minorities to own a 29.7% of the combined entity.
Minority shareholders in Cairn India will receive one equity share in Vedanta Ltd, as well as one redeemable preference share in Vedanta Ltd with a face value of INR10, implying a premium of 7.3% to the previous closing price.
Vedanta Chairman Anil Agarwal, who founded the group in 1976, said the deal means the FTSE 100 natural resources company is "uniquely positioned" to support India's economic growth.
The merger requires approval from shareholders in the two subsidiaries, as well as from those in London-listed Vedanta Resources, while other authorities also must consent to the deal.
Vedanta shares were down 0.2% at 461.00 pence per share at the close Tuesday, whilst Cairn Energy shares were up 0.1% to 173.70p.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Vedanta ResourcesCapricorn Energy PLC