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Cairn India slumps as head Rahul Dhir resigns

Shares of Cairn India slumped reacting to the news of the resignation of its managing director and CEO Rahul Dhir “to pursue his entrepreneurial interests,” according to the company, reports said.

P Elango, director of strategy, has taken over as the interim head of the company.

London-listed Vedanta took a majority stake in Cairn India in 2011 in an $8.7 bn deal, buying most of the stake from Cairn Energy.

Dhir had joined Cairn in 2006 from Merrill Lynch, where he headed the energy and power investment banking business.

His resignation comes just days after the company reported its best ever quarterly performance with a 40% jump in its net profit.

Goldman Sachs says in a note that Dhir had been the public face of Cairn India, and along with his executive team, been “instrumental” during negotiations with the government on approval for pipeline costs, volume increases and royalty changes.

Goldman adds Dhir's departure raises uncertainty about how the new CEO would manage relationships with the government, as well as with different key stakeholders, or its interaction with market participants.

Shares of Cairn India ended at Rs. 319.50, down 1.9% over the previous close. It had touched a day’s high of Rs. 321.85 and a day’s low of Rs. 313.60. The total traded quantity of the shares stood at 7.65 lakh shares on the BSE.

Infocus News

IIFL recommends 'Add' on Oil India

IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends “Add ” Oil India.

According to IIFL report, Oil India Limited’s (OIL) PAT of Rs9.3bn was ahead of our estimates, led by lower dry well costs and operating expenses. At the Ebitda level, impact of higher cess (US$5.5/bbl) was negated by 8% INR depreciation.

Subsidy burden for the quarter came in at Rs20bn, implying net realisation of US$54/bbl (US$59.7 for FY12). The lower-than-expected upstream burden at 31.5% came in as a positive surprise. However, OIL’s share in upstream burden remained at 13.4%, similar to FY12.

Crude production fell 2% QoQ and sales declined 3.6% QoQ on lower off-take from the Numaligarh refinery due to a 1.5-month shutdown since mid-April owing to a fire breakout and maintenance shutdown. Gas production declined 2% QoQ and sales declined 2.6% QoQ, report stated.

"We expect muted growth in oil production in FY13 (3% vs. 7% YoY in FY12) until the commencement of the Carabobo project in FY14. Gas production growth (21% YoY in FY12) will be limited at 2.5% in FY13 due to lack of off-takers in theNorth East until commencement of the BCPL cracker in FY14, " brokerage added.
 
The report was published by IIFL’s Institutional Equities Research desk.

IIFL recommends 'Reduce' on Reliance Industries

Result

IOC Q1 loss at Rs224.5bn

Indian Oil Corporation Ltd has posted a net loss of Rs. (224509.50) mn for the quarter ended June 30, 2012 as compared to net loss of Rs. (37187.00) mn for the quarter ended June 30, 2011.

Total Income has increased from Rs. 926445.90 mn for the quarter ended June 30, 2011 to Rs. 975144.40 mn for the quarter ended June 30, 2012.

Domestic News

SC appoints panel to arbitrate between RIL, govt…3 years D6 Budget approved conditionally

The Supreme Court has appointed a panel of judges to arbitrate between Reliance Industries and the government on a dispute related to the company’s KG basin gas block, off the east coast in the Bay of Bengal, reports said.

The panel, consisting of former chief justices S.P. Bharucha and V.N. Khare, will appoint the third member, Judge S.S. Nijjar said in an order today, reports added.

Meanwhile, the Management Committee that oversees operations of Reliance Industries KG-D6 block in a meeting today, considered and conditionally accepted the budget for three years starting 2010-11. It also conditionally approved ‘declaration of commerciality’ for three finds in the block.

According to reports, it is being termed as ‘conditional’ because the contractor was asked to clarify certain issues. Senior officials said, “there has been decisions at the meeting…some budget was approved. Some clarifications have been sought, which the contractor has sought time for.”

Declaration of commerciality was considered for D-29, D-30, and D-31.
The Management Committee had to adopt the audited accounts for pending three years commencing 2008-09.

Asked on the ongoing management committee meeting of D6 block, Petroleum Minister S. Jaipal Reddy said, "all technical and administrative support needed will be extended to the contractor."

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International News

BPCL Q1 net loss at Rs883.6bn

The Organization of Petroleum Exporting Countries,(OPEC) reported that the time forecast for global oil demand growth in 2012 remains unchanged at 0.9 million barrels a day.

OPEC said, "World oil demand has overcome earlier expectations of a declining momentum and moved to a more stabilized trend, supported by the summer driving season, the summer heat, and the continued shutdown of most of Japan's nuclear capacity."

Non-OPEC oil supply is likely to be hiked 0.7 million barrels per day in 2012, while for 2013 that figure is 0.9 million barrels per day, reports added

Sluggish growth to hit global oil demand: IEA

Fitch upgrades China's Sinopec to 'A+'/'AA-'

Fire strikes at Chevron Corp: reports

OPEC unchanged at 0.9 mn barrels