New Delhi: Cairn India Ltd on Thursday posted a drop of 28% in its consolidated net profit for the April-June quarter.
Net profit came in at Rs.359.55 crore against Rs.501.27 crore for the same period a year ago. In the March quarter, the company had posted a loss of Rs.563.98 crore.
Revenue dropped 28.24% at Rs.1,885.11 crore against Rs.2,627.10 crore in the year-ago period.
“The Cairn team has delivered a resilient performance. We have taken significant measures to drive cost efficiency and rationalize capital investment, resulting in free cash generation in a lower-for-longer oil price environment,” said Sudhir Mathur, chief financial officer and acting chief executives of Cairn India.
In the last fiscal, Cairn India posted a net loss of Rs.9,432 crore on account of low oil prices and the impact of the cess on crude oil production which forced the company to report an impairment of Rs.11,674 crore on some of the assets.
Cess on crude oil production, which was changed in the 2016-17 Union budget to 20% of the realizable value of the fuel from the earlier specific duty of Rs.4,500 a tonne has been depressing some producers’ margins.
At Thursday’s price of Indian basket of crude of $43.68 a barrel, it works out to $8.73, which becomes a cost that producers cannot pass on to consumers.
“There is a strong case for moderating the cess on crude oil production. At oil prices above $45 a barrel, producers face more cess burden in absolute terms compared to what they were paying when a specific duty of Rs.4,500 a tonne was applicable,” said Debasish Mishra, a partner at Deloitte Touche Tohmatsu India LLP.
Companies were paying about $10 a barrel as cess earlier as roughly seven barrels make up one tonne.
Cairn India closed trading on the BSE at Rs.176.6, 0.54% up from the previous close.