Cairn India (CAIL.NS) CEO Rahul Dhir has raised 512.68 million rupees by selling half

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his stake in the oil and gas producer ahead of receiving another round of stock options.

Dhir sold 1.5 million shares between January 30 and February 1, Cairn said in a stock exchange filing on Thursday.

Cairn did not disclose a reason for the sale, but sources with knowledge of the matter said proceeds would be used to pay capital gains taxes and to buy new shares under a stock option plan.

Cairn India shares slipped 2.3 percent after the sale of the shares raised concerns about Dhir's future, traders said.

London-listed miner Vedanta Resources (VED.L) acquired a majority stake in Cairn India late last year in an $8.7 billion deal, buying most of the stake from British explorer Cairn Energy Plc (CNE.L).

The new options are part of an incentive agreement reached between Dhir and Cairn India ahead of its 2006 initial public offering in 2006.

Under the deal, he was entitled to stock options for 6.71 million shares in three tranches.

Dhir, who has been CEO since August 2006, is eligible to receive the last tranche of options for 2.24 million shares once the company achieves oil production of 150,000 barrels per day from its Rajasthan block for 30 consecutive days.

Cairn India said last month it expected to reach production of 175,000 barrels per day from its fields in the western Indian state of Rajasthan by the end of the current fiscal year in March. It currently produces 125,000 barrels per day.

The free options will allow Dhir to buy Cairn India shares at a price of 33.70 rupees each. The stock closed at 339 rupees on Thursday.

Dhir last sold Cairn India shares in August 2009.