Investors cast doubt on output forecast of Cairn India

Reports indicate that investors have doubts on the exit production (production at the end of the fiscal) forecast of Cairn India for 2013-14.

The Anil Agarwal-promoted firm expects its exit production for March 2014 to be in the range of 210-215 kilo barrel per day (kbpd).

The anticipated delays in getting approvals from the government has put this project at risk, reports indicate.
Other than that, analysts expect the natural decline in Cairn IndiaÂ’s Mangala field output to advance and there are concerns on delay in volumes ramp-up at the Bhagyam field as well.

The company said in its December quarter press statement that the individual well production ramp-up has not met expectations for the Bhagyam field and that a higher number of wells are needed to ramp up production and maintain the fieldÂ’s expected ultimate recovery.

Investors also feel that the visibility on utilization of the companyÂ’s huge cash pile is weak. As on December 31, Cairn India had a strong balance sheet with net cash of about Rs 14,600 crore. In comparison, its current market capitalization is of around Rs 54,880 crore.