Vedanta Resources plc

16 Berkeley Street

London W1J 8DZ

Tel: +44 (0) 20 7499 5900

Fax: +44 (0) 20 7491 8440

                       www.vedantaresources.com

For Immediate Release                                                                                                                      21^st July, 2016

                                              Cairn India Limited

Quarterly Financial Results for the period ended 30^th June, 2016

Normalized net profit up by 88% QoQ to ₹ 360 crore

·     Revenue at ₹ 1,885 crore (US$ 282 mn); up 10% QoQ on improved price realization

·     EBITDA at ₹ 794 crore (US$ 119 mn); up 48% QoQ on account of higher revenues and reduction in operating cost

·     Normalized net profit at ₹ 360 crore (US$ 54 mn); up 88% QoQ

·     Strong total free cash flow of ₹ 1,521 crore (US$ 226 mn) generation despite low oil price; robust Cash and Cash Equivalents position of ₹ 23,394 crore (US$ 3.5 bn)

·     Discount to Brent for Rajasthan (RJ) crude at US$ 8.2/bbl, reduced from 19.8% to 17.8%

·     World's largest Polymer EOR project contributing ~42 kboepd; up 31% QoQ

·     Average gross oil and gas production maintained at 206 kboepd

·    Continuous improvement in RJ water-flood operating cost, reduced by 7% QoQ and 14% from FY16 to US$ 4.4/boe; polymer injection cost in Mangala also 25% below guidance

o ~25% reduction in well maintenance expenses from FY16, ~40% work-over optimization

o ~24% reduction in crude processing charges from FY16, savings on chemical cost and gas compressor rentals

·     Ultimate gas recovery potential up by ~25% in RDG post completion of hydro-fraccing in 15 wells. Gross recovery (gas and condensate) till 2030 up from 74 mmboe to 86 mmboe

·     Polymer flood in MBA has potential to add ~10-12% recovery, further to 30-35% estimated from water-flooding. Development plan for Aishwariya (15 mmbbls EUR) and Bhagyam (45 mmbbls EUR) EOR till 2030 expected to be submitted in current quarter and 1H CY17, respectively.

·     Development of Aishwariya Barmer Hill (20-30 mmbbls EUR) envisaged in stages. Production from stage-1 expected in current fiscal year. Exploration potential of 1.4 bnboe of HIIP in Barmer Hill offers a growth opportunity with an estimated ultimate recovery of 8-10%

·     Seismic data interpretation ongoing to identify new prospects near Raageshwari Deep Gas field and other areas within the block

·     At the Annual General Meeting held earlier in the day, members have voted on all items of the AGM Notice. The results shall be declared within the prescribed time limits and will also be placed at the website of the Company and CDSL.

·     Mike Wylie joins Cairn India as Head of Tight Oil business. His rich experience on unconventional resources from his earlier tenure at Exxon Mobil and Newfield Exploration, will help strength the focus on the tight oil resources.

·     Cairn India remains committed to the Cairn - Vedanta Limited merger and continue to work towards its completion. The merger would generate value for shareholders delivering stable cash flows through the cycle by providing exposure to a large, resilient and diversified commodity portfolio with significant near term growth potential.

·     The PSC extension and crude export writs are sub judice in the Hon'ble High Court of Delhi. Pursuant to the Delhi High Court's directions, ONGC in the capacity of the Contractor (as per the PSC) communicated its consent to the extension of PSC on the same terms and conditions for a period of 10 years. The Rajasthan JV partners keenly await Government's expeditious decision on PSC extension, to initiate large investment.

·     In May 2016, the MoPNG launched Discovered Small Fields Bid Round - 2016. This is a significant step towards a more simplified and transparent, administrative and regulatory set-up for the Oil & Gas sector. Cairn India believes this will increase production and investments in the Indian Oil & Gas sector.

Mr. Sudhir Mathur, CFO and Acting CEO of Cairn India commented:

"The Cairn team has delivered a resilient performance, registering 88% increase in profit for the quarter on sequential basis. 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.

We remain committed to our four projects - RDG Gas, Enhance Recovery at Bhagyam & Aishwariya as well as the tight oil projects. Sharp reductions in drilling and fraccing costs coupled with learnings from Mangala EOR give us the confidence that we will be ready to execute in a US$ 50/barrel world within 12 months."

During Q1 FY17, Cairn had a gross production of 17.9 mmboe across all the assets, of which working interest production was 11.4 mmboe. Gross Sales was 17.7 mmboe averaging at 195,003 boepd.

* Includes internal gas consumption

Operations

Rajasthan (Block RJ-ON-90/1)

The Rajasthan block crossed the cumulative production of 350 mmboe in Q1 FY17, with a total production of ~354 mmboe by the end of the quarter. Gross production was largely stable at 15.2 mmboe at an average of 166,943 boepd, aided by encouraging Mangala EOR volumes and inline performance from Aishwariya. Contribution from Mangala EOR increased by ~31% to an average of 42,000 boepd for the quarter from 32,000 boepd in Q4 FY16, driven by enhanced well productivity and new wells coming online. Production optimization and maximization of liquid handling capacity helped maintain strong performance from Aishwariya. Satellite Field's production increased ~4% QoQ to an average of ~3.5 Kbopd in Q1 FY17. Total oil sales for the quarter was 14.9 mn barrels, at an average rate of 164,169 bopd.

Gas production from RDG remained firm at an average of 28 mmscfd, amounting to 2.6 bcf. Hydro-frac campaign of 15 wells that started in December 2015 to sustain the growth level, was successfully completed Total gas sales was 1.3 bcf, maintaining an average rate of 14.4 mmscfd.

The water-flood operating cost in Rajasthan has been consistently brought down over the past six quarters to US$ 4.4/boe in Q1 FY17 from US$5.2/boe in FY16 through cost reduction in crude processing and work-over optimization activities. Blended operating cost was also reduced to US$ 6.4/boe from US$6.5/boe while maintaining the injection of polymer at the targeted level of 400 kblpd.

Maintaining continued focus of safe operations and asset integrity, the average facility uptime was over 99% in Q1 FY17. Lost Time Incident (LTI) free man-hours for Rajasthan Projects crossed 30 million since last LTI.

A routine operational and statutory maintenance shutdown at the Mangala Processing Terminal is planned in later half of September. While this would have an impact on production, the opportunity will be used to create tie-ins for ongoing new facility enhancements, development projects and future growth projects.

Ravva (Block PKGM-1)

The Ravva block continues to be an excellent example of good reservoir management, having produced more than 278 mmbbls of crude and over 345 bcf of gas with an overall recovery of ~50% since inception in 1994, far greater than the initial resource estimates at the time of the PSC award. In Q1 FY17, Ravva production increased 3% QoQ to 1.8 mmboe at an average rate of 19,637 boepd on account of improvement in well productivity after the well stimulation program was carried out in Q4 FY16. Prudent reservoir management through continuous surveillance, sustained water injection and optimizing the lift gas, has helped offset the natural decline. For Q1 FY17, 1.5 mmbbls of crude and 1.4 bcf of gas were sold, averaging 16,934 bopd of crude oil and 16 mmscfd of gas, respectively.

With a strong focus on asset integrity, Ravva recorded an uptime of 99.9% in Q1 FY17. Maintaining its high safety standards, Ravva asset completed two years of Lost Time Incident (LTI) free operations this quarter and recorded 4.9 million LTI free man-hours since last LTI.

Cambay (Block CB/OS-2)

The Cambay block has been consistently delivering strong performance with a total production of more than 25 mmbbls of crude and over 226 bcf of gas since inception in 2002. For Q1 FY17, the production remained steady at 0.9 mmboe at an average rate of 10,281 boepd. Effective reservoir management practices and production optimization measures helped offsetting the natural decline in the block. During the quarter, 0.7 mmbbls of crude and 0.8 bcf of gas were sold, averaging 7,343 bopd of crude oil and 9.2 mmscfd of gas, respectively.

Facilities maintained excellent uptime of 99.9% in Q1 FY17 and recorded 3.4 million LTI free man-hours.

Development

With an aim to monetize the large base of resources of over one billion boe in Rajasthan, significant development efforts have been undertaken to improve their economics. Following activities were undertaken in this direction in the key projects:

Mangala EOR

The world-class polymer project in Mangala has been successfully implemented and stabilized within the acceptable efficiency range within a span of one year. It continues to perform on expected lines as polymer injection is maintained at the target level of 400 kblpd. EOR contribution increased to an average of about 42,000 boepd in Q1 FY17 from 32,000 boepd in Q4 FY16. Encouraging results from Mangala polymer flood gives the confidence to pursue it in Bhagyam and Aishwariya also.

The specialized technology for produced water treatment has already been partially commissioned and the initial results of the water quality from the skim tanks are as per expectations. Common facilities for all well-pads are in place and injection is ongoing at all the well-pads as per plan.

Gas Development at RDG Field

Based on superior initial well productivity post conclusion of the hydro-frac campaign and better reservoir characterization, the Expected Ultimate gas recovery from RDG has increased by ~25%.  The recovery estimates till 2030, including of condensate, increased from 74 mmboe to 86 mmboe. Focus on cutting-edge technology and design improvements has led to over 100% increase in initial well productivity to 8-10 mmscfd compared to wells fracced during the2009-10 campaign. 'Limited Entry Technique' for fracturing and better design in terms of larger numbers of fracs, higher proppant concentration etc increased the pay coverage by ~30%. Introduction of 'Addressable Switch Firing System' perforation technique has halved the number of days per frac to 2.2 days resulting in ~50% reduction in per frac cost to US$ 230k; 35% of this optimization is structural in nature driven by design engineering and operational efficiency savings.

Good progress has been made on phased ramp-up of gas production through return based capital discipline approach while ensuring sustained production growth. As part of Phase 1, fraccing has been completed in all the 15 wells and the wells are being put on production after testing and clean-up. Debottlenecking of existing facilities through low cost augmentation is underway. Completion of Phase 1 is expected to increase the gas production to 40-45 mmscfd by end of 1H CY17. For Phase 2, tendering for new gas processing terminal Long Lead Items, drilling rig and services is progressing as per plan. Tendering activity for the EPC contract for gas evacuation pipeline from Raageshwari to Pali and Pali to Mehsana planned to be constructed by GSPL India Gasnet Limited is also progressing as per schedule. Completion of Phase 2 will increase the gas production to 100 mmscfd.

Polymer flood in Bhagyam and Aishwariya

Continued efforts to reduce the cost through scope optimization have resulted in improving the economics of polymer flood in Bhagyam and Aishwariya. Recovery from MBA is estimated at 10-12% through polymer flood, in addition to 30-35% from water-flood operations. At present incremental production of 45 mmbbls in Bhagyam and 15 mmbbls in Aishwariya are expected through polymer flood till 2030. In-line with the return focused capital investment approach, the initial implementation will take place in a favourable region to reduce drilling and surface facility costs. This has helped reduced the development and operating cost per barrel by 25-30% compared to the cost based on initial plan for full field development. Efforts are underway to further bring down the cost by 10-20% to improve the economics at a low oil price. Multiple options are being evaluated to reduce the cost through design innovations, drilling and completion optimization, and alternate technology and material. Learnings from Mangala EOR in terms of enhanced development through fewer wells, use of standardized skids and optimizing polymer consumption, will also help lower the cost further.

Multi-well polymer injectivity test in Bhagyam to improve injection rate modelling is currently underway. Revised development plan is expected to be submitted to the JV partner in 1H CY17 after incorporating results of the test. Polymer injection is planned begin in Q1 CY19 subject to approval of the plan. For Aishwariya EOR, concept report has been finalized and development plan is expected to be submitted in the current quarter. First polymer injection is expected in 1H CY18.

Barmer Hill

With a large exploration potential of 1.4 bnboe of HIIP, Barmer Hill offers an excellent growth opportunity, with an estimated ultimate recovery of 8-10% till 2030. The focus is to monetize the Barmer Hill formations of Mangala and Aishwariya by leveraging the existing infrastructure. The recently concluded field appraisal program saw an improvement in operating efficiency and technology implementation. Introduction of advanced technologies like 'Microseismic' and 'Chemical Tracer Technology' also helped in improving the recovery. Aishwariya Barmer Hill is also expected to benefit from its reservoir outperformance. With the initial results indicating 30% higher productivity compared to the expectation, ultimate recovery per well is estimated to be double of initial prognosis. Increase in number of fracs per day from one to three has helped reduce the well completion cost for lateral wells by ~20% from the initial estimates. Efforts are ongoing to further reduce it by 20-30% to US$ 4.5-5 million per well, through design improvement in well construction.

Development of Aishwariya Barmer Hill, with total EUR of 20-30 mmbbls, is envisaged in stages to de-risk the capital investment. Stage-1 includes development of the appraisal wells to increase the production at low investment. Technical and commercial discussion with the JV partner is in advanced stage and first oil is expected in the current fiscal year. Future stages shall be developed with improvement in economics driven by enhanced recovery and cost reduction. For Mangala Barmer Hill, internal studies and field pilots are being carried out to optimize and finalize the development plan.

Satellite Field

Production enhancement and cost reduction are key focus areas in Satellite Field. The operating cost optimization initiatives like reducing fuel expense by substituting diesel with produced gas/grid power where possible, optimizing well intervention expense through effective use of low cost alternatives and minimizing trucking costs for produced liquids have yielded good results. Considerable progress on preparing development plans for additional satellite resources at minimal development costs has been achieved. Stage-1 development plan of Guda field is in advanced stages of discussion with the JV partner. These additional resources provide optionality and are expected to be monetized with improvement in their economics.

Exploration

Exploration activities will continue focussing on seismic interpretation while integrating the well information from the previous extensive exploration campaign to build a large portfolio for future growth.

Rajasthan

In-line with the re-phased exploration program, the focus is continued on appraisal of new discoveries and processing of the new 3D seismic data over high priority areas during Q1 FY17. The data obtained during appraisal work for NL and V&V fields is being evaluated, with the objective of progressing these discoveries to development.

The recently acquired 3D seismic data over Raageshwari field and adjoining areas has been processed in pre-stack depth migration mode, which has improved the subsurface imaging. Data interpretation is underway to identify new prospects near Raageshwari deep gas field. Processing of 3D seismic data in other areas of Rajasthan block (DP and Air Field South) is ongoing with a focus upon identifying additional prospects that will act to replenish the exploration prospect inventory.

Other India and International Assets

KG Offshore (Block KG-OSN-2009/3): Cairn continues to engage with the MoPNG for an extension contingent upon full lifecycle clearance from Ministry of Defence. Phase-I was up to 8^th March 2016. Interpretation of the new seismic volumes has resulted in identification of four prospects and a number of smaller leads over different play types.

KG Onshore (Block KG-ONN-2003/1): ONGC, the development operator, has submitted the Field Development Plan (FDP) to the Management Committee (MC). The FDP is being reviewed by the MC.

Palar-Pennar (Block PR-OSN-2004/1): Preparation for drilling the commitment wells in 2017-18 is in progress. Process for receiving Coastal Regulatory Zone clearance is also initiated. The JV is engaging with the MoPNG for proportionate revision of work program commitment from three wells to two wells in view of lack of access to the full block area.

Mumbai Offshore (Block MB-DWN-2009/1): Due to lack of prospectivity and high risk, Cairn has submitted an application for relinquishment of the block. The first exploration phase expired on 16^th April 2016.

South Africa (Block 1): The prospect inventory for the block has been finalised. Assessment of exploration potential of inboard plays is ongoing to provide other drilling options. A decision on the proposed legislative changes to the Mineral and Petroleum Resources Development Act 2002 and the consequent applicable fiscal regime for progressing into the second exploration license phase is awaited.

In-line with the requirement of Ministry of Corporate Affairs, the financial statements are prepared under Indian Accounting Standards (IndAS). Numbers for FY16 have also been restated as per IndAS. A detailed Annexure, explaining the key changes under IndAS and their impact on the profit and reserves, has also been attached.

In Q1 FY17, net revenue increased 10% QoQ to ₹ 1,885 crore on account of a significant rise in Brent prices. Brent prices were up 33% during the quarter, resulting into a 35% QoQ increase in the overall realization to US$ 38.0/boe. Realization for RJ crude also increased by 36% to US$ 37.4/bbl as discount to Brent was at US$ 8.2/bbl, which reduced from 20% to 18% over the quarter. A lower increase in revenue was due to a higher amount of profit petroleum. During the quarter, net profit petroleum more than doubled to ₹ 648 crore (US$ 97 million) including ₹ 549 crore (US$ 82 million) for Rajasthan block. Net royalty was ₹ 366 crore (US$ 55 million) with Rajasthan share of ₹ 363 crore (US$ 54 million).

With constant efforts to reduce the cost, the water-flood operating cost in RJ was further reduced to US$ 4.4/boe in Q1 FY17 from US$ 4.8/boe in Q4 FY16 and US$ 5.2/boe in FY16. Reduction in the well maintenance expenses through continuous optimization of work-over activities and lower crude processing charges due to savings on chemical cost and gas compressor rentals resulted into decline in the operating cost. Blended operating cost for RJ was also reduced to US$ 6.4/boe in Q1 FY17 from US$ 6.5/boe in FY16 with polymer injection being maintained at the targeted level of 400 kblpd. Continuous interventions to reduce the polymer cost resulted into a polymer injection cost being ~25% lower than the guidance. Purchase of power from open exchange has also decreased the energy expenses and work on enhancing the captive power generation to reduce the cost further is underway.

EBITDA for the quarter increased 48% QoQ to ₹ 794 crore with an EBITDA margin of 42%. Higher revenue, reduction in operating cost and lower Cess charges on ad-valorem basis led to increase in EBITDA. DD&A charges increased 9% QoQ to ₹ 810 crore as per IndAS computation, wherein 2P reserves on entitlement interest basis and addition of future capex to current asset base for development of these reserves are considered for DD&A calculation. Other income was stable at ₹ 528 crore. Movement in Rupee of 1.4% depreciation versus US Dollar resulted into a forex loss of ₹ 125 crore, in accordance with IndAS.

Normalized profit after tax was 88% up QoQ at ₹ 360 crore driven by higher EBITDA but was partly offset by higher DD&A charges and forex losses. A higher profit resulted into Earnings per share of ₹ 1.9 for Q1 FY17. Cash EPS was also up 19% QoQ to ₹ 6.7 due to higher EBITDA.

Cash flow from operations for Q1 FY17 was ₹ 735 crore. Net capital investment for the quarter was ₹ 70 crore (US$ 11 million), which was distributed between development and exploration activities in the ratio of 82% and 18%, respectively. Total free cash flow was recorded at ₹ 1,521 crore. Closing cash and cash equivalent position is strong at ₹ 23,394 crore (US$ 3.5 billion), of which 68% is invested in rupee funds and 32% in dollar funds.

Cairn India's continued focus on health, safety, environment and sustainability has helped sustain excellent HSES performance over the years. Cambay asset won CII - Western Region HSE Excellence Award 2015-16 in Manufacturing Category. At the 29^th Mines Safety Week 2015 Awards organised by the Directorate General of Mines Safety - Ajmer Region, Mangala Processing Terminal secured first prize in overall performance while the other four installations also won prizes in different categories.

In line with the Chairman's vision, construction of two clusters of the modern Anganwadi project "Nandghar" was completed at Barmer. During the quarter, other developments included commencement of operations for the first set of plants under the safe drinking water project, partnerships with Government agencies at the Cairn Centre of Excellence (CCOE) and placement of trainees. The programmes received wide visibility amongst the stakeholders. Cairn established a safe drinking water plant in Sewniwala, one of the largest community drinking water plant in India run by solar power. Over 70 operators were appointed from the local community creating employment and encouraging entrepreneurship; they also included women operators. CCOE has been recognized as the first vocational training centre in Rajasthan to get a 'Gold' Green Building certification. Following the earlier prestigious CII-ITC Sustainability Award under Corporate Social Responsibility Domain Excellence, Cairn India also received the BT-CSR Excellence award in this quarter.

Pursuing its goal to create a long term value, Cairn India will remain focused on monetizing its Rajasthan resource base in FY17. An estimated net capex spend of US$ 100 million is proposed, 20% of which is for exploration while balance will be invested primarily to develop RDG Gas and for completion activities of Mangala EOR completion. The aim will be to maintain production from Rajasthan asset at FY16 level.Efforts are underway to further improve the economics of key projects that includes Bhagyam & Aishwariya EOR, Barmer Hill and Satellite fields, at low oil price and invest in their pre-development activities to ensure project readiness for development with grant of extension of PSC. The company maintains its flexibility to raise capital investment as oil prices improve and aims to generate a healthy cash flow post capex so as to retain the ability to pay dividends.

Media Relations

Arun Arora, Chief Communication Officer

+91 124 4593039; +91 8826999270; cilmedia@cairnindia.com            

Investor Relations

Dheeraj Agarwal 

+91 124 4593409; +91 9769732150; cilir@cairnindia. 

Annexure-1

Cairn India Group

Adoption of Ind AS (effective 1 April 2016)