Cairn India posts lower than expected profits in the second quarter

Cairn India posts lower than expected profits in the second quarterEnergy explorer, Cairn India Ltd has posted a lower than expected profits in the second quarter due to payment of royalties for the first time.

The net income of the energy explorer, which is being acquired by Vedanta Resources, fell 52 percent to 7.63 billion rupees in the second quarter till September. This means the company saw a fall of 4 rupees a share.

A survey including 23 analysts conducted by Bloomberg had estimated a profit of 8.5 billion rupees. The sales of the figures declined 1.5 percent to 26.5 billion rupees. The takeover by Vedanta of Cairn was approved by the government on the condition that the company pays a royalty from the country's largest onshore field.

Carin said that the payments made on its behalf by partner Oil & Natural Gas Corp has resulted in lower profits and revenues for the company. R. Ranganath, head of finance at Cairn India expects the royalty deductions to be about 15 percent from future crude sales from Rajasthan.

Vedanta and its units hold 28.5 percent in Cairn India and UK's Cairn Energy Plc holds 52 percent. Vedanta is set to buy additional 30 percent in the explorer from Cairn Energy in a deal announced last August.