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Despite Higher Cess, Cairn India's FY13 Capex Is $1bn

  • The proposed incremental cess on crude will impact Cairn India's dividend payout, say company sources. Cess on crude will now be Rs 4,500 each metric tonne from the earlier Rs 2,500 which upstream companies like Cairn India, Oil and Natural Corp (ONGC) and Gas Authority of India (GAIL)  pay.Despite higher cess, the Vedanta-controlled company will maintain $1 billion capex for FY13. which will be deployed for global M&A (mergers and acquisition) activities in the exploration and production space.

  • Recently, Cairn India in its written communication to the Prime Minister has also pointed out the extent of impact on its topline. With this incremental cess coming into effect, the Vedanta-controlled company will have to take a hit of around $2.5 billion.Meanwhile, according to CNBC-TV18 sources, the company can't announce dividend untill its internal restructuring for which government's nod is awaited.Special dividend if any, will be announced only post internal restructuring, probably in third week of April. Cairn's dividend policy is expected to be in line with global peers which is around 25% of PAT.

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