Cairn India net up on currency gains

Cairn India, which discovered the largest oil reserves in India in the last 30 years, reported an over 12-fold increase in consolidated net profit in the third quarter ended September 2008, as the company gained from higher crude oil prices and a depreciating rupee.

Net profit increased to Rs 293.32 crore during the quarter, up from Rs 23.2 crore in the quarter ended September 2007.

Profit (including that of subsidiaries) rose to Rs 293 crore ($59 million) from Rs 23.24 crore a year earlier

Output in the third quarter was the equivalent of 65,566 barrels of oil a day compared with 75,280 barrels a day a year earlier

Cairn India, along with partner ONGC, will increase production at the Mangala, Bhagyam and Aishwariya fields in Rajasthan, to 175,000 barrels a day from 150,000 barrels

Sales rose 21 per cent to Rs 321 crore

Cairn will start oil production at its biggest field in Rajasthan next year at a time when falling global oil prices are curbing earnings from its older fields

Total income rose 75.32 per cent to Rs 526.17 crore (Rs 300.11 crore). It was higher as other income rose nearly six fold to Rs 205.54 crore. Other income includes investments made by the company in mutual funds and fixed deposits in banks, a company official said.

“Higher oil prices coupled with gains from investments helped us record higher profits,” said Rahul Dhir, chief executive officer of Cairn India.

The company gained Rs 87.34 crore during the quarter as the rupee depreciated against the dollar. The company also gained Rs 97 crore from its mutual fund investments and Rs 20 crore as interest on its bank deposits.

Net sales increased 20.62 per cent per cent to Rs 320.63 crore (Rs 265.8 crore) in the quarter as higher selling price of crude oil offset the lower production of oil and gas.

Expenditure fell 28.76 per cent to Rs 165.69 crore (Rs 232.6 crore). Its lower expenditure was because the Cairn India drilled fewer wells in the quarter compared to a year-ago period, said Dhir.

Cairn’s planned capital expenditure of around $2 billion will not be affected due to the current financial crisis hitting the markets worldwide, as the company has adequate cash balance and sanctioned credit lines from financial institutions, said Dhir.

At the end of September 2008, Cairn India has a cash balance of $670 million and an approved loan limit of $850 million.