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Notes to Accounts of Bharat Petroleum Corporation Ltd.

Mar 31, 2015

1 Company Overview

Bharat Petroleum Corporation Limited referred to as "BPCL' or "the Corporation" was incorporated on 3rd November, 1952. BPCL is a Government of India Enterprise listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Corporation is engaged in the business of refining of crude oil and marketing of petroleum products. It has refineries at Mumbai and Kochi, LPG bottling plants and Lube blending plants. The Corporation's marketing infrastructure includes vast network of Installations, Depots, Retail Outlets, Aviation Service Stations and LPG distributors.

2 i The Corporation has only one class of shares namely equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Corporation, the holders of equity shares will be entitled to receive the remaining assets of the Corporation in proportion to the number of equity shares held.

The Corporation declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

ii During the period ended 31st March 2015, proposed dividend per share is Rs. 22.50 (previous year Rs. 17). The total dividend appropriation for the year ended 31st March 2015 amounted to Rs. 1,921.21 crores (previous year Rs. 1,425.82 crores) including Corporate Dividend Tax of Rs. 294.27 crores (previous year Rs. 196.58 crores)

iii During Financial Year 2012-13, the Corporation had issued Bonus Shares in the ratio of 1:1 by capitalisation of General Reserve. The total number of Bonus Shares issued is 36,15,42,124 equity shares having face value of Rs. 10 each.

3. Consequent to non-revision in Retail Selling Prices corresponding to the international prices and applicable foreign exchange rates prevailing during the year, the Corporation has suffered gross under-recovery of Rs. 16,140.66 Crores (previous year Rs. 34,462.56 Crores) on sale of sensitive petroleum products.

As advised by the Ministry of Petroleum & Natural Gas, the Corporation has accounted compensation towards sharing of under-recoveries on sale of sensitive petroleum products as follows:

a) Rs. 8,362.88 Crores (previous year Rs. 15,576.78 Crores) discount on crude oil / products purchased from ONGC/ GAIL/NRL which has been adjusted against purchase cost;

b) Rs. 7,290.40 Crores (previous year Rs. 18,374.28 Crores) subsidy from Government of India has been accounted as Revenue from operations.

After adjusting the above compensation, the net under-recovery absorbed by the Corporation is Rs. 487.38 Crores (previous year Rs. 511.50 Crores).

4. Pursuant to the Ministry of Corporate Affairs Notification G.S.R. 914 (E) dated 29th December 2011, the Corporation had exercised the option under Para 46 A of AS-11 (notified under the Companies (Accounting Standards) Rules, 2006) (as amended) and has changed its accounting policy from financial year 2011-12 onwards for recognition of exchange differences arising on reporting of long term foreign currency monetary items. For the current financial year, the impact on account of this change (net of depreciation and amortization) is increase in profit before tax of Rs. 307.06 Crores (previous year Rs. 209.76 Crores). The net gain remaining unamortised under Foreign Currency Monetary Item Translation Difference Account as at 31st March 2015 is Rs. 26.99 Crores (previous year Rs. 184.25 Crores).

5. As per the scheme of Amalgamation of the erstwhile Kochi Refineries Limited (KRL) with the Corporation approved by the Government of India, 3,37,28,737 equity shares of the Corporation were allotted (in lieu of the shares held by the Corporation in the erstwhile KRL) to a trust for the benefit of the Corporation in the financial year 2006-07. After the 1:1 Bonus issue in July 2012, presently the trust holds 6,74,57,474 equity shares of the Corporation. Accordingly the cost of the original investment of Rs. 659.10 Crores and contribution to the corpus of the trust of Rs. 0.01 Crores (previous year NIL) is included in Non Current Investments (Refer Note No.16). The income distributed by the trust during the year 2014-15 amounting to Rs. 114.68 Crores (previous year Rs. 74.20 crores) have been included in 'Other income' (Refer Note No.26).

6. Impairment of Assets: It is assumed that suitable mechanism would be in place by the Government of India, in line with earlier/ current year(s), to provide compensation towards under-recoveries of margin, if any, and recoveries against Direct Benefit Transfer for LPG Scheme on account of sale of sensitive petroleum products in subsequent years. Hence, there is no indication of impairment of assets of the Corporation as at 31st March 2015.

7. Segment Reporting: The Corporation operates in a single segment - Refinery and Marketing activities, i.e. downstream petroleum sector. Considering the nature of business and operation, there is no reportable segment (business and/or geographical) in accordance with the requirements of Accounting Standard 17.

8. The Corporation has numerous transactions with other oil companies. The outstanding balances (included under Trade Payables / Trade Receivables, etc) from them including certain other outstanding credit and debit balances are subject to confirmation/reconciliation. Adjustments, if any, arising therefrom are not likely to be material on settlement and are accounted as and when ascertained.

9. Disclosure as per requirements of Accounting Standard 15 - "Employee Benefits":

The Corporation's contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employees salary and charged to Statement of Profit and Loss. Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the Corporation and charged to Statement of Profit and Loss.

Gratuity: The Corporation has a defined benefit gratuity plan managed by a trust. The contribution based upon actuarial valuation is paid /payable to a trust which is invested as per investment pattern prescribed by the Government in plan assets. Gratuity is paid to a staff member who has put in a minimum qualifying period of 5 years of continuous service on superannuation, resignation, termination or to his nominee on death.

Leave Encashment: The Employees are entitled to accumulate Earned Leave and Sick Leave, which can be availed during the service period. Employees are also allowed to encash the accumulated earned leave during the service period. Further, the accumulated earned leave and sick leave can be encashed by the employees on superannuation, resignation, and termination or by nominee on death.

Other Defined Benefits: These are (a) Post Retirement Medical Scheme benefit (managed by a trust) to employees, spouse, dependent children and dependent parents; (b) Pension/ex-gratia scheme to the retired employees who are entitled to receive the monthly pension / ex-gratia for life; (c) Death in service / Permanent disablement given to employee, the spouse of the employee, provided the deceased's family/disabled employee deposits retirement dues such as PF, Gratuity, Leave encashment payable to them with the Corporation; and (d) Resettlement allowance paid to employees to permanently settle down at a place other than the location of last posting at the time of retirement.

10 Related Party Disclosures as per Accounting Standard 18 Names of the Related parties (Joint Venture Companies)

Indraprastha Gas Limited Petronet India Limited *

Petronet CCK Limited Petronet CI Limited *

Petronet LNG Limited

Bharat Oman Refineries Limited

Maharashtra Natural Gas Limited

Central UP Gas Limited

Sabarmati Gas Limited

Bharat Stars Services Private Limited

(Including Bharat Star Services (Delhi) Pvt. Limited)

Bharat Renewable Energy Limited *

Matrix Bharat Pte. Ltd.

Delhi Aviation Fuel Facility Private Limited

Kannur International Airport Limited

GSPL India Gasnet Limited

GSPL India Transco Limited

Mumbai Aviation Fuel Farm Facility Private Limited

Kochi Salem Pipeline Private Limited

IBV (Brazil) Petroleo Ltda.

*Companies in the process of winding up

Key Management Personnel (Whole time directors):

Shri S. Varadarajan, (Chairman & Managing Director) w.e.f. 01/10/2013 and (Director Finance) up to 31/03/2014 Shri P Balasubramanian, Director (Finance) w.e.f. 01/04/2014 Shri K.K. Gupta, Director (Marketing)

Shri B.K. Datta, Director (Refineries)

Shri S.P Gathoo, Director (Human Resources)

Shri R.K. Singh, (Chairman & Managing Director) up to 30/09/2013

1. Purchase of goods: Bharat Oman Refineries Limited Rs. 29,610.52 Crores (previous year Rs. 30,971.47 Crores) and Petronet LNG Limited Rs. 5,612.34 Crores (previous year Rs. 6,018.80 Crores).

2. Sale of goods: Matrix Bharat Pte. Ltd. Rs. 2,286.27 Crores (previous year Rs. 4,676.70 Crores), Bharat Oman Refineries Limited Rs. 661.21 Crores (previous year Rs. 1,158.61 Crores) and Indraprastha Gas Limited Rs. 434.38 Crores (previous year Rs. 570.37 Crores)

3. Rendering of Services: Bharat Oman Refineries Limited Rs. 16.13 Crores (previous year Rs. 24.71 Crores) and Indraprastha Gas Limited Rs. 7.38 Crores (previous year Rs. 4.57 Crores)

4. Receiving of Services: Petronet CCK Limited Rs. 108.45 Crores (previous year Rs. 104.39 Crores) and Bharat Star Services Private Limited Rs. 16.70 Crores (previous year Rs. 11.68 Crores)

5. Interest income: Bharat Oman Refineries Limited Rs. 129.12 Crores (previous year Rs. 128.96 Crores)

6. Dividend received: Petronet LNG Limited Rs. 18.75 Crores (previous year Rs. 23.44 Crores), Indraprastha Gas Limited Rs. 17.33 Crores (previous year Rs. 17.33 Crores) and Delhi Aviation Fuel Facility Pvt. Ltd. Rs. 7.59 Crores (previous year Rs. 7.28 Crores)

7. Investment and Advances for Investments: Kannur International Airport Ltd. Rs. 50.00 Crores (previous year Rs. 30.00 crores)

8. Loans and Advances: Petronet LNG Limited Rs. 112.36 Crores (previous year Rs. 56.18 Crores )

9. Management Contracts (Employees on deputation / consultancy services): Bharat Oman Refineries Limited Rs. 16.46 Crores (previous year Rs. 16.75 Crores)

10. Lease Rental & other charges received: Bharat Oman Refineries Limited Rs. 29.21 Crores (previous year Rs. 29.21 Crores)

11. Lease Rental & Other Charges paid: Delhi Aviation Fuel Facility Pvt. Ltd Rs. 0.07 Crores (previous year Rs. 0.21 crores).

12. Sale of Assets: Bharat Star Services Pvt. Limited Rs. 3.09 Crores (previous year Nil) and Mumbai Aviation Fuel Farm Facility Private Limited Rs. 1.92 Crores (previous year Nil).

13. Receivables as at period end: Bharat Oman Refineries Limited Rs. 1,390.18 Crores (previous year Rs. 1,385.83 Crores), which is mainly on account of Subordinated loan of Rs. 1,354.10 Crores (previous year Rs. 1,354.10 Crores).

14. Payables as at period end: Bharat Oman Refineries Limited Rs. 820.38 Crores (previous year Rs. 1,592.05 Crores) and Petronet LNG Limited Rs. 151.03 Crores (previous year Rs. 255.54 Crores)

11. Dues from Directors is Rs. 0.32 Crores (previous year Rs. 0.25 Crores) and Dues from Officers is Rs. 3.30 Crores (previous year Rs. 3.74 Crores).

12. Disclosure for Operating Leases as per Accounting Standard - 19 The Corporation enters into cancellable/ non-cancellable operating lease arrangements for office premises, staff quarters and others. The lease rentals paid/ received for the same are charged to the Statement of Profit and Loss.

13. In compliance with Accounting Standard - 27 'Financial Reporting of Interests in Joint Ventures', the required information is as under:

14. Capital Commitments and Contingent Liabilities :

Rs. in Crores

31/03/2015 31/03/2014

(a) Capital Commitments :

i) Estimated amount of contracts remaining to be executed on 7,877.49 9,662.74 capital account and not provided for

ii) Uncalled liability on shares and other investments partly paid 50.00 100.00

(b) Contingent Liabilities :

In respect of Income Tax matters 80.68 84.13 Other Matters :

i) Claims against the Corporation not acknowledged as debts * : Excise, Service Tax and Customs matters 1,093.13 1,146.12

Sales tax matters 6,526.43 3,191.77

Land Acquisition cases for higher compensation 121.05 139.87

Others 441.42 399.02

* These include Rs. 4,163.89 Crores (previous year Rs. 1,065.60 Crores) against which the Corporation has a recourse for recovery and Rs. 49.93 Crores (previous year Rs. 75.55 Crores) which are on capital account.

ii) Claims on account of wages, bonus/ex-gratia payments in respect 15.95 13.28 of pending court cases.

iii) Guarantees given on behalf of Subsidiaries/JV's 2,698.04 2,661.06

15. (a) The Corporation has on the Balance Sheet date, outstanding forward contracts amounting to USD 184 Million, of which Nil (previous year USD 175 Million i.e. an equivalent of Rs. 1,051.75 Crores) is to hedge the foreign currency exposure towards loans and USD 184 Million i.e. an equivalent of Rs. 1,152.96 Crores (previous year Nil) to hedge foreign currency exposure for payment of crude oil.

(b) The Corporation has on the Balance Sheet date, outstanding forward contracts amounting to Nil (previous year USD 1,229 Million equivalent to Rs. 7,386.27 Crores) to hedge the foreign currency exposure arising out of RBI Swap window transactions. All the RBI swap transactions outstanding as on 31/03/14 have matured during 2014-15 and the gain of Rs. 521.14 Crores (out of which Rs. 324.35 Crores is on account of reversal of mark to market losses accounted in previous years) have been recognised in the Statement of Profit and Loss.

(c) The Corporation had raised Swiss Franc (CHF) 200 Million of 3% CHF Bonds 2019 in March 2014, the proceeds of which were swapped into USD 228.29 Million on the same day. The mark to market losses of Rs. 96.09 Crores (previous year Rs. 15.41 Crores) in respect of this CHF-USD Swap transaction have been recognized as expense during 2014-15 based on the concept of prudence and in line with the ICAI announcement of 29th March 2008 on Accounting for Derivatives.

(d) The Corporation has on the Balance Sheet date the following outstanding derivatives for hedging purposes:

Instrument Description Quantity

OTC Swap Spread between Petroleum 3.20 million Products and Crude Oil barrels

Mark-to-market losses amounting to Rs. 0.01 Crores have been accounted as on 31st March 2015 (previous year Nil) in respect of these derivative contracts.

16. The Employee benefits expense for financial year 2014-15 include reversal of provisions no longer required Rs. 657.93 Crores.

17. Figures of the previous year have been regrouped wherever necessary, to conform to current period presentation.


Mar 31, 2014

Company Overview

Bharat Petroleum Corporation Limited referred to as "BPCL" or "the Corporation" was incorporated on 3rd November, 1952. BPCL is a Government of India Enterprise listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Corporation is engaged in the business of refining of crude oil and marketing of petroleum products. It has refineries at Mumbai and Kochi, LPG bottling plants and Lube blending plants. The Corporation''s marketing infrastructure includes vast network of Installations, Depots, Retail Outlets, Aviation Service Stations and LPG distributors.

1. Consequent to non-revision in Retail Selling Prices corresponding to the international prices and applicable foreign exchange rates prevailing during the year, the Corporation has suffered gross under-recovery of Rs. 34,462.56 crores (previous year Rs. 38,990.43 crores) on sale of sensitive petroleum products.

As advised by the Ministry of Petroleum & Natural Gas, the Corporation has accounted compensation towards sharing of under-recoveries on sale of sensitive petroleum products as follows:

a) Rs. 15,576.78 crores (previous year Rs.16,844.49 crores) discount on crude oil / products purchased from ONGC/ GAIL/NRL which has been adjusted against purchase cost;

b) Rs. 18,374.28 crores (previous year Rs. 21,896.65 crores) subsidy from Government of India has been accounted as Revenue from operations.

After adjusting the above compensation, the net under-recovery absorbed by the Corporation is Rs. 511.50 crores (previous year Rs. 249.29 crores).

2. Pursuant to the Ministry of Corporate Affairs Notification G.S.R. 914 (E) dated 29th December 2011, the Corporation had exercised the option under Para 46 A of AS-11 (notified under the Companies (Accounting Standards) Rules, 2006) (as amended) and has changed its accounting policy from financial year 2011-12 onwards for recognition of exchange differences arising on reporting of long term foreign currency monetary items. For the current financial year, the impact on account of this change (net of depreciation and amortization) is increase in profit before tax of Rs. 209.76 crores (previous year Rs. 100.31 crores). The net gain remaining unamortised under Foreign Currency Monetary Item Translation Difference Account as at 31st March 2014 is Rs. 184.25 crores (previous year Nil).

3. As per the scheme of Amalgamation of the erstwhile Kochi Refineries Limited (KRL) with the Corporation approved by the Government of India, 3,37,28,737 equity shares of the Corporation were allotted (in lieu of the shares held by the Corporation in the erstwhile KRL) to a trust for the benefit of the Corporation in the financial year 2006-07. After the 1:1 Bonus issue in July 2012, presently the trust holds 6,74,57,474 equity shares of the Corporation. Accordingly the cost of the original investment of Rs. 659.10 crores is included in Non Current Investments (Refer Note no.16). The income distributed by the trust during the year 2013-14 amounting to Rs. 74.20 crores (previous year Rs. 37.10 crores) have been included in ''Other income'' (Refer Note No.26).

4. Impairment of Assets: It is assumed that suitable mechanism would be in place, in line with earlier / current year(s), to provide compensation towards under-recoveries of margin, if any, on account of sale of sensitive petroleum products in subsequent years. Hence, there is no indication of impairment of assets of the Corporation as at 31st March 2014.

5. Segment Reporting: The Corporation operates in a single segment - Refinery and Marketing activities, i.e. downstream petroleum sector. Considering the nature of business and operation, there is no reportable segment (business and/ or geographical) in accordance with the requirements of Accounting Standard 17.

6. The Corporation has numerous transactions with other oil companies. The outstanding balances from them including certain other outstanding credit and debit balances are subject to confirmation/reconciliation. Adjustments, if any, arising therefrom are not likely to be material on settlement and are accounted as and when ascertained.

7. Disclosure as per requirements of Accounting Standard 15 - "Employee Benefits" :

The Corporation''s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee''s salary and charged to Statement of Profit and Loss. Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the Corporation and charged to Statement of Profit and Loss.

Gratuity: The Corporation has a defined benefit gratuity plan managed by a trust. The contribution based upon actuarial valuation is paid / payable to a trust which is invested as per investment pattern prescribed by the Government in plan assets. Gratuity is paid to a staff member who has put in a minimum qualifying period of 5 years of continuous service on superannuation, resignation, termination or to his nominee on death. Leave Encashment: The Employees are entitled to accumulate Earned Leave and Sick Leave, which can be availed during the service period. Employees are also allowed to encash the accumulated earned leave during the service period. Further, the accumulated earned leave and sick leave can be encashed by the employees on superannuation, resignation and termination or by nominee on death.

Other Defined Benefits: These are (a) Post Retirement Medical Scheme benefit (managed by a trust) to employees, spouse, dependent children and dependent parents; (b) Pension/ex-gratia scheme to the retired employees who are entitled to receive the monthly pension / ex-gratia for life; (c) Death in service / Permanent disablement given to employee, the spouse of the employee, provided the deceased''s family/disabled employee deposits retirement dues such as Provident Fund, Gratuity, Leave encashment payable to them with the Corporation; and (d) Resettlement allowance paid to employees to permanently settle down at a place other than the location of last posting at the time of retirement.

8. Related Party Disclosures as per Accounting Standard 18 Names of the Related parties (Joint Venture Companies)

Indraprastha Gas Limited

Petronet India Limited *

Petronet CCK Limited

Petronet CI Limited *

Petronet LNG Limited

Bharat Oman Refineries Limited

Maharashtra Natural Gas Limited

Central UP Gas Limited

Sabarmati Gas Limited

Bharat Stars Services Private Limited

Bharat Renewable Energy Limited

Matrix Bharat Pte. Ltd.

Delhi Aviation Fuel Facility Private Limited

Kannur International Airport Limited

GSPC India Gasnet Limited

GSPC India Transco Limited

IBV (Brazil) Petroleo Ltda.

*Companies under liquidation

Disclosure with respect to Related Party Transactions during the year (more than 10% of the total transaction value) :

1. Purchase of Goods: Bharat Oman Refineries Limited Rs. 30,971.47 Crores (previous year Rs. 26,625.92 Crores) and Petronet LNG Limited Rs. 6,018.80 Crores (previous year Rs. 5,095.69 Crores).

2. Sale of Goods: Matrix Bharat Pte. Ltd. Rs. 4,676.70 Crores (previous year Rs. 2,187.47 Crores) and Bharat Oman Refineries Limited Rs. 1,158.61 Crores (previous year Rs. 6,090.64 Crores).

3. Rendering of Services: Bharat Oman Refineries Limited Rs. 24.71 Crores (previous year Rs. 46.67 Crores) and Indraprastha Gas Limited Rs. 4.57 Crores (previous year Rs. 1.17 Crores)

4. Receiving of Services: Petronet CCK Limited Rs. 104.39 Crores (previous year Rs. 101.59 Crores) and Petronet LNG Limited Rs. 13.25 Crores (previous year Nil)

5. Interest Income: Bharat Oman Refineries Limited Rs. 128.96 Crores (previous year Rs. 186.93 Crores)

6. Dividend Received: Petronet LNG Limited Rs. 23.44 Crores (previous year Rs. 23.44 Crores), Indraprastha Gas Limited Rs. 17.33 Crores (previous year Rs. 15.75 Crores) and Delhi Aviation Fuel Facility Private Limited Rs. 7.28 Crores (previous year Rs. 15.17 Crores)

7. Investment and Advances for Investments: Kannur International Airport Limited Rs. 30.00 Crores (previous year Rs. 40.00 crores), GSPL India Gasnet Limited Rs. 8.72 Crores (previous year Rs. 8.48 crores) and GSPL India Transco Limited Rs. 8.41 Crores (previous year Rs. 7.70 crores)

8. Loans and Advances: Petronet LNG Limited Rs. 56.18 Crores (previous year NIL)

9. Management Contracts (Employees on deputation / consultancy services): Bharat Oman Refineries Limited Rs. 16.75 Crores (previous year Rs. 18.39 Crores)

10. Lease Rental & Other Charges received: Bharat Oman Refineries Limited Rs. 29.21 Crores (previous year Rs. 29.26 Crores)

11. Lease Rental & Other Charges paid: Delhi Aviation Fuel Facility Private Limited Rs. 0.21 Crores (previous year Rs. 0.15 crores) and Bharat Star Services Private Limited Rs. 0.08 Crores (previous year Nil)

12. Receivables as at period end: Bharat Oman Refineries Limited Rs. 1,385.83 Crores (previous year Rs. 1,557.58 Crores), which is mainly on account of Subordinated loan of Rs. 1,354.10 Crores (previous year Rs. 1,354.10 Crores) and Matrix Bharat Pte. Ltd. Rs. 309.77 Crores (previous year Rs. 31.94 Crores)

13. Payable as at period end: Bharat Oman Refineries Limited Rs. 1,592.05 Crores (previous year Rs. 1,950.30 Crores) and Petronet LNG Limited Rs. 255.54 Crores (previous year Rs. 214.75 Crores)

Key Management Personnel (Whole time directors):

Shri S. Varadarajan, (Chairman & Managing Director) w.e.f. 01.10.2013 and Director (Finance) up to 31.03.2014

Shri R.K. Singh, (Chairman & Managing Director) up to 30.09.2013

Shri K.K. Gupta, Director (Marketing)

Shri B.K. Datta, Director (Refineries)

Shri S.P. Gathoo, Director (Human Resources)

9. Dues from Directors is Rs. 0.25 Crores (previous year Rs. 0.34 Crores) and Dues from Officers is Rs. 3.74 Crores (previous year Rs. 3.93 Crores).

10. Disclosure for Operating Leases as per Accounting Standard 19

The Corporation has entered into cancellable operating lease arrangements for office premises, staff quarters and others. The lease rentals paid for the same are charged to the Statement of Profit and Loss. The other disclosures as required under para 25 of Accounting Standard 19 are in the process of compilation.

11. Capital Commitments and Contingent Liabilities :

Rs. in Crores

31/03/2014 31/03/2013

(a) Capital Commitments :

i) Estimated amount of contracts remaining to be executed on 9,662.74 2,333.00 capital account and not provided for

ii) Uncalled liability on shares and other investments partly paid 100.00 130.00

(b) Contingent Liabilities :

i) In respect of Income Tax matters 84.13 112.87

ii) Other Matters :

(a) Claims against the Corporation not acknowledged as debts * :

Excise, Service Tax and Customs matters 1,146.12 867.85

Sales Tax matters 3,191.77 2,863.14

Land Acquisition cases for higher compensation 139.87 156.02

Others 399.02 295.26

* These include ~ 1,065.60 crores (previous year" 725.54 crores) against which the Corporation has a recourse for recovery and" 75.55 crores (previous year" 28.35 crores) which are on capital account.

(b) Claims on account of wages, bonus/ex-gratia payments in 13.28 15.36 respect of pending court cases.

(c) Guarantees given on behalf of Subsidiaries/JV''s 2,661.06 4,694.44

12.(a) The Corporation has on the Balance Sheet date, outstanding forward contracts amounting to USD 175 Million i.e. an equivalent of Rs. 1,051.75 crores (previous year USD 1,718.46 Million i.e. an equivalent of Rs. 9,346.58 crores) to hedge the foreign currency exposure towards loans. The Corporation also hedges the currency risks on account of foreign exposure for the payment of crude oil. However, there are no outstanding forward contracts for hedging the currency risks on account of foreign exposure for the payment of crude oil for the year ending 31st March 2014.

(b) The Corporation has on the Balance Sheet date, outstanding forward contracts amounting to USD 1,229 Million i.e. an equivalent of Rs. 7,386.27 Crores (previous year USD Nil) to hedge the foreign currency exposure arising out of RBI Swap window transactions; Total RBI Swap window transactions entered in financial year 2013-14 for USD 2,163 Million out of which USD 934 Million have been settled in financial year 2013-14.

(c) In line with the ICAI announcement of 29th March 2008 on Accounting for Derivatives and based on the concept of prudence, the mark to market losses of Rs. 324.35 Crores on the outstanding forward contracts in respect of RBI Swap window transactions (Refer Note No. 49 (b) above) has been recognised as expense and included under ''Loss on Foreign currency transactions and translations'' (Refer Note No. 32) while the mark to market gains on the RBI Swap window transactions amounting to Rs. 521.14 Crores have not been recognized. Further, the Corporation has raised Swiss Franc (CHF) 200 Million of 3% CHF Bonds 2019 on 20th March 2014, the proceeds of which were swapped into USD 228.29 Million on the same day. The mark to market losses of Rs. 15.41 Crores in respect of this CHF-USD Swap transaction have also been recognized as expense and included under ''Loss on Foreign currency transactions and translations'' (Refer Note No. 32)

(d) The Corporation has on the Balance Sheet date the following outstanding derivatives for hedging purposes:

13. Figures of the previous year have been regrouped wherever necessary, to conform to current period presentation.


Mar 31, 2013

Company Overview

Bharat Petroleum Corporation Limited referred to as "BPCL" or "the Corporation" was incorporated on 3rd November, 1952. BPCL is a Government of India Enterprise listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Corporation is engaged in the business of refining of crude oil and marketing of petroleum products. It has refineries at Mumbai and Kochi, LPG bottling plants and Lube blending plants. The Corporation''s marketing infrastructure includes a vast network of Installations, Depots, Retail Outlets, Aviation Service Stations and LPG distributors.

1. Consequent to non-revision in Retail Selling Prices corresponding to the international prices and applicable foreign exchange rates prevailing during the year, the Corporation has suffered Gross Under-recovery of Rs. 38,990.43 crores (previous year Rs. 32,638.27 crores) on sale of sensitive petroleum products.

As advised by the Ministry of Petroleum & Natural Gas, the Corporation has accounted compensation towards sharing of under-recoveries on sale of sensitive petroleum products as follows:

a) Rs. 16,844.49 crores (previous year Rs. 12,957.20 crores) discount on crude oil/products purchased from ONGC/GAIL/NRL which has been adjusted against Purchase cost;

b) Rs. 21,896.65 crores (previous year Rs. 19,671.39 crores) subsidy from Government of India has been accounted as Revenue from operations.

After adjusting the above Compensation, the net under-recovery absorbed by the Corporation is Rs. 249.29 crores (previous year Rs. 9.68 crores).

2. Pursuant to the Ministry of Corporate Affairs Notification G.S.R. 914 (E) dated 29th December 2011, the Corporation had exercised the option under Para 46 A of AS-11 (notified under the Companies (Accounting Standards) Rules, 2006) and has changed its accounting policy in 2011-12 for recognition of exchange differences arising on reporting of long term foreign currency monetary items. For the current financial year, the impact on account of this change (net of depreciation) is increase in profit before tax of Rs. 100.31 crores (previous year Rs. 110.58 crores).

3. As per the scheme of amalgamation of the erstwhile Kochi Refineries Limited (KRL) with the Corporation which was approved by the Government of India, 3,37,28,737 equity shares of the Corporation were allotted (in lieu of the shares held by the Corporation in the erstwhile KRL) to a trust for the benefit of the Corporation in the financial year 2006-07. After the 1:1 Bonus issue in July 2012 , presently the trust holds 6,74,57,474 equity shares of the Corporation. Accordingly the cost of the original investment of Rs. 659.10 crores is included in Note No.16- Non Current Investments. The income distributed by the trust during the year 2012-13 amounting to Rs. 37.10 crores (previous year Rs. 47.22 crores) have been included in ''Other income'' in Note No. 26.

One shareholder of erstwhile KRL has challenged the amalgamation before Delhi High Court, which is pending adjudication.

4. Short/(Excess) provision for earlier years accounted in current year includes MAT Credit Entitlement of Rs. 36.37 crores pertaining to assessment year 2012-13.

5. Impairment of Assets: It is assumed that a suitable mechanism would be in place, in line with earlier/ current year(s), to provide compensation towards under recoveries of margin, if any, on account of sale of sensitive petroleum products in subsequent years. Hence, there is no indication of impairment of assets of the Corporation. Accordingly, impairment is not considered as at 31st March 2013.

6. Segment Reporting: The Corporation operates in a single segment - Refinery and Marketing activities, i.e. downstream petroleum sector. Considering the nature of business and operation, there is no reportable segment (business and/or geographical) in accordance with the requirements of Accounting Standard 17.

7. The Corporation has numerous transactions with other oil companies. The outstanding balances from them including certain other outstanding credit and debit balances are subject to confirmation/reconciliation. Adjustments, if any, arising therefrom are not likely to be material on settlement and are accounted as and when ascertained.

8. Disclosure as per requirements of Accounting Standard 15 - "Employee Benefits" :

The Corporation''s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee''s salary and charged to Statement of Profit and Loss. Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the Corporation and charged to Statement of Profit and Loss.

Gratuity: The Corporation has a defined benefit gratuity plan managed by a trust. The contribution based upon actuarial valuation is paid /payable to a trust which is invested as per investment pattern prescribed by the Government in plan assets. Gratuity is paid to the Staff member who has put in a minimum qualifying period of five years of continuous service on superannuation, resignation, termination or to his nominee on death.

Leave Encashment: The employees are entitled to accumulate Earned Leave and Sick Leave, which can be availed during the service period. Employees are also allowed to encash the accumulated earned leave during the service period. Further, the accumulated earned leave and sick leave can be encashed by the employees on superannuation, resignation, and termination or by nominee on death.

Other Defined Benefits: These are (a) Post Retirement Medical Scheme benefit (managed by a trust) to employees, spouse, dependent children and dependent parents; (b) Pension/ex-gratia scheme to the retired employees who are entitled to receive the monthly pension / ex-gratia for life; (c) Death in service / Permanent disablement given to employee, the spouse of the employee, provided the deceased''s family/disabled employee deposits retirement dues such as PF, Gratuity, Leave encashment payable to them with the Corporation; and (d) Resettlement allowance paid to employees to permanently settle down at a place other than the location of last posting at the time of retirement.

9. Related Party Disclosures as per Accounting Standard 18 Names of the Related parties (Joint Venture Companies):

Indraprastha Gas Limited

Petronet India Limited

Petronet CCK Limited

Petronet CI Limited

Petronet LNG Limited

Bharat Oman Refineries Limited

Maharashtra Natural Gas Limited

Central UP Gas Limited

Sabarmati Gas Limited

Bharat Stars Services Private Limited

Bharat Renewable Energy Limited

Matrix Bharat Pte. Ltd.

Delhi Aviation Fuel Facility Private Limited

Kannur International Airport Limited

GSPC India Gasnet Limited

GSPC India Transco Limited

IBV (Brazil) Petroleo Pvt Ltda.

Disclosure with Respect of Material Related Party Transactions during the Year:

1. Purchase of goods includes mainly Bharat Oman Refineries Limited Rs. 26,625.92 crores (previous year Rs. 8,331.42 crores) and Petronet LNG Limited Rs. 5,095.69 crores (previous year Rs. 3,105.31 crores).

2. Sale of goods includes mainly Bharat Oman Refineries Limited Rs. 6,090.64 crores (previous year Rs. 9,932.89 crores) and Matrix Bharat Pte. Ltd. Rs. 2,187.47 crores (previous year Rs. 2,160.13 crores).

3. Sale of Fixed Assets includes mainly Delhi Aviation Fuel Facility Private Limited NIL (previous year Rs. 95.05 crores).

4. Rendering of Services includes mainly Bharat Oman Refineries Limited Rs. 46.67 crores (previous year Rs.16.02 crores).

5. Receiving of Services includes Petronet CCK Limited Rs. 101.59 crores (previous year Rs. 69.50 crores) and Bharat Stars Services Private Limited Rs. 10.61 crores (previous year Rs. 11.55 crores)

6. Interest Income includes mainly Bharat Oman Refineries Limited Rs. 186.93 crores (previous year Rs. 155.77 crores).

7. Dividend received includes mainly Petronet LNG Limited Rs. 23.44 crores (previous year Rs. 18.75 crores), Indraprastha Gas Limited Rs. 15.75 crores (previous year Rs. 15.75 crores), Delhi Aviation Fuel Facility Private Limited Rs. 15.17 crores (previous year NIL).

8. Investment and Advances for Investments includes mainly Bharat Oman Refineries Limited Rs. 650.00 crores (previous year NIL), Kannur International Airport Limited Rs. 40.00 crores (previous year NIL), GSPL India Gasnet Limited Rs. 8.48 crores (previous year NIL),GSPL India Transco Limited Rs. 7.70 crores (previous year NIL).

9. Loans and Advances includes mainly Petronet CCK Limited Rs. 30.36 crores (previous year Rs. 29.97 crores)

10. Management Contracts (Employees on Deputation) includes mainly Bharat Oman Refineries Limited Rs. 18.39 crores (previous year Rs.15.79 crores).

11. Lease Rental & Other Charges received includes mainly Bharat Oman Refineries Limited Rs. 29.26 crores (previous year Rs. 45.58 crores) and Bharat Star Services Private Limited Rs. 0.31 crores (previous year Rs. 1.69 crores).

12. Lease Rental & Other Charges paid includes mainly Delhi Aviation Fuel Facility Private Limited Rs. 0.15 crores (previous year NIL).

13. Receivables as at period end includes mainly Bharat Oman Refineries Limited Rs. 1,557.58 crores (previous year Rs. 4,569.73 crores), which is mainly on account of Subordinated loan of Rs. 1354.10 crores (previous year Rs. 1354.10 crores) and Sabarmati Gas Limited Rs. 35.36 crores (previous year Rs. 34.99 crores).

14. Payables as at period end includes mainly Bharat Oman Refineries Limited Rs. 1,950.30 crores (previous year Rs. 734.73 crores) and Petronet LNG Limited Rs. 214.75 crores (previous year Rs. 158.91 crores).

Key Management Personnel (Whole time Directors): Shri R.K. Singh (Chairman & Managing Director)

Shri K.K. Gupta, Director (Marketing)

Shri B.K. Datta, Director (Refineries)

Shri S. Varadarajan, Director (Finance)

Shri S.P Gathoo, Director (Human Resources)

10. Dues from Directors is Rs. 0.34 crores (previous year Rs. 0.43 crores) and Dues from Officers is Rs. 3.93 crores (previous year Rs. 3.49 crores).

11. (a) The Corporation has on the Balance Sheet date, outstanding forward contracts amounting to USD 1,718.46 Million i.e. an equivalent of Rs. 9,346.58 crores (previous year USD 1,857.51 Million i.e. an equivalent of Rs. 9,502.38 crores) to hedge the foreign currency exposure towards loans; this includes Nil (previous year Nil ) in respect of long term loans. The Corporation is now hedging the currency risks on account of foreign exposure for the payment of crude oil. However, there are no outstanding forward contracts for hedging the currency risks on account of foreign exposure for the payment of crude oil for the period ending 31st March 2013.

(b) The Corporation has on the Balance Sheet date the following outstanding derivatives for hedging purposes:

12. Figures of the previous year have been regrouped wherever necessary, to confirm to current period presentation.


Mar 31, 2012

Company Overview

Bharat Petroleum Corporation Limited referred to as "BPCL' or "the Corporation" was incorporated on 3rd November, 1952.

BPCL is a Government of India Enterprise listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Corporation is engaged in the business of refining of crude oil and marketing of petroleum products. It has refineries at Mumbai and Kochi, LPG bottling plants and Lube blending plants. The Corporation's marketing infrastructure includes a vast network of Installations, Depots, Retail Outlets, Aviation Service Stations and LPG distributors.

i The Corporation has only one class of shares namely equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Corporation, the holders of equity shares will be entitled to receive the remaining assets of the Corporation in proportion to the number of equity shares held.

The Corporation declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31st March 2012, the amount of dividend per share is Rs. 11 (previous year Rs. 14). The total dividend appropriation for the year ended 31st March 2012 amounted to Rs. 454.86 crores (previous year Rs. 577.24 crores) including Corporate Dividend Tax of Rs. 57.16 crores (previous year Rs. 71.08 crores)

ii The Corporation has not issued or bought back any shares during the year and accordingly there is no change in the share capital.

* Secured in favour of the participating banks ranking pari passu inter-alia by hypothecation of raw materials, finished goods, stock- in- process, book debts, stores, components and spares and all movables both present and future.

Additional information in respect of note no. 12:

a) Other adjustments include capitalization of foreign exchange differences of Rs. 149.73 Crores (previous yearRs. Nil) and borrowing costs of Rs. 10.51 Crores (previous yearRs. 89.68 Crores).

b) Land:

i) Freehold land includes Rs. 32.08 Crores (previous yearRs. 32.08 Crores) with more than 99 years lease period.

ii) Freehold land includes Rs. 145.06 Crores (previous yearRs. 142.97 Crores) capitalised at various locations for which conveyance deeds are yet to be executed and/or mutation is pending.

iii) Includes the following which though in the possession of Corporation, the lease deeds are yet to be registered :

- Land acquired on lease for a period exceeding 99 years Rs. 0.91 Crores (previous year Rs. 0.91 Crores).

- Other leasehold land - Gross Block Rs. 0.51 Crores (previous year Rs. 0.51 Crores), Net Block Rs. 0.30 Crores (previous yearRs. 0.41 Crores).

iv) Freehold land includes Rs. 2.20 Crores (previous year Rs. 2.20 Crores) which is in the process of being surrendered to the Competent Authority.

c) Buildings include Ownership flats of Rs. 48.16 Crores (previous year Rs. 48.16 Crores) in proposed / existing co-operative societies and others.

d) Land, Plant & Machinery, Tanks & Pipelines, Railway Sidings and Buildings jointly owned in varying extent with other Oil Companies / Railways: Gross Block Rs. 187.83 Crores (previous year Rs. 187.13 Crores), Cumulative Depreciation Rs. 90.66 Crores (previous yearRs. 90.02 Crores), Net Block Rs. 97.17 Crores (previous year Rs. 97.11 Crores).

h) Gross Block includes Rs. 16.66 Crores (previous year Rs. 24.72 Crores) towards assets which are identified as held for disposal during the period in respect of which additional depreciation of Rs. 5.29 Crores (previous yearRs. 9.32 Crores) has been provided to recognise the expected loss on disposal.

Additional information in respect of note nos. 12 and 13:

a. Deduction from Gross Block includes Write back of excess capitalisation of Rs. 39.76 Crores (previous yearRs. 53.17 Crores)and Deletions during the period Rs. 131.07 Crores (previous yearRs. 62.85 Crores).

b. Depreciation for the period includes charged to Profit & Loss account Rs. 1,886.53 Crores (previous yearRs. 1657.05 Crores) and to Prior Period expenses Rs. 1.08 Crores (previous yearRs. 0.57 Crores).

c. Deductions from depreciation includes on excess capitalisation Rs. 1.41 Crores (previous yearRs. 1.29 Crores); on withdrawal of depreciation on deletion during the period Rs. 106.06 Crores (previous yearRs. 49.91 Crores); on reclassification of assets Rs. 0.24 Crores (previous yearRs. 0.36 Crores) and credited to Prior Period Rs. 0.38 Crores (previous yearRs. 14.33 Crores).

2. As advised by the Ministry of Petroleum & Natural Gas, the Corporation has accounted compensation towards sharing of under-recoveries on sale of sensitive petroleum products as follows:

a) Rs. 11,334.82 crores (previous year Rs. 5,746.54 crores) discount on crude oil purchased from ONGC has been adjusted against cost of raw materials consumed;

b) Rs. 1,622.38 crores (previous year Rs. 1,213.50 crores) discounts on SKO and LPG purchased from ONGC/GAIL have been adjusted against "Purchases of Stock in trade".

c) Rs. 19,671.39 crores (previous year Rs. 9,418.88 crores) subsidy from Government of India has been accounted as Revenue from operations.

3. Pursuant to the Ministry of Corporate Affairs Notification G.S.R. 914 (E) dated 29th December 2011, the Corporation has exercised the option under Para 46 A of AS-11 (notified under the Company's Accounting Standard Rules, 2006) and has changed its accounting policy for recognition of exchange differences arising on reporting of long term foreign currency monetary items. For the current financial year, such exchange differences are adjusted to the cost of depreciable assets acquired, which hitherto were charged to the Statement of Profit and Loss. Impact on account of this change for the current year (net of depreciation) is increase in profit before tax of Rs. 110.58 crores.

4. As per the scheme of Amalgamation of the erstwhile Kochi Refineries Limited (KRL) with the Corporation approved by the Government of India, 33,728,738 equity shares of the Corporation were allotted (in lieu of the shares held by the Corporation in the erstwhile KRL) to a trust for the benefit of the Corporation in the financial year 2006-07. Accordingly the cost of the original investment of Rs. 659.10 crores is included in Note No.16-Non Current Investments. The income distributed by the trust during the year 2011-12 amounting to Rs. 47.22 crores (previous year Rs. 47.22 crores) have been included in 'Other income' in Note No.26.

One shareholder of erstwhile KRL has challenged the amalgamation before Delhi High Court, which is pending adjudication.

5. Provision for Income tax has been made in accordance with Section 115JB of the Income Tax Act, 1961. However, management is confident that it would be in a position to pay normal tax within the period specified under the Income Tax Act, 1961 and hence MAT credit has been recognised.

6. Impairment of Assets: It is assumed that a suitable mechanism would be in place, in line with earlier/ current year(s), to provide compensation towards under recoveries of margin, if any, on account of sale of sensitive petroleum products in subsequent years. Hence, there is no indication of impairment of assets of the company. Accordingly, impairment is not considered as at 31st March 2012.

7. Segment Reporting: The Corporation operates in a single segment - Refinery and Marketing activities, i.e. downstream petroleum sector. Considering the nature of business and operation, there is no reportable segment (business and/or geographical) in accordance with the requirements of Accounting Standard 17.

8. The Corporation has numerous transactions with other oil companies. The outstanding balances from them including certain other outstanding credit and debit balances are subject to confirmation/reconciliation. Adjustments, if any, arising therefrom are not likely to be material on settlement.

9. Disclosure as per requirements of Accounting Standard 15 - "Employee Benefits" :

The Corporation's contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee's salary and charged to Statement of Profit and Loss. Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the Corporation and charged to Statement of Profit and Loss.

Gratuity: The Company has a defined benefit gratuity plan managed by a trust. The contribution based upon actuarial valuation is paid /payable to a trust which is invested as per investment pattern prescribed by the Government in plan assets. Gratuity is paid to the Staff member who has put in a minimum qualifying period of 5 years of continuous service on superannuation, resignation, termination or to his nominee on death.

Leave Encashment: The Employees are entitled to accumulate Earned Leave and Sick Leave, which can be availed during the service period. Employees are also allowed to encash the accumulated earned leave during the service period. Further, the accumulated earned leave and sick leave can be encashed by the employees on superannuation, resignation, and termination or by nominee on death.

Other Defined Benefits: These are (a) Post Retirement Medical Scheme benefit (managed by trust) to employees, spouse, dependant children and dependant parents; (b) Pension/ex-gratia scheme to the retired employees who are entitled to receive the monthly pension / ex-gratia for life; (c) Death in service / Permanent disablement given to employee, the spouse of the employee, provided the deceased's family/disabled employee deposits retirement dues such as PF, Gratuity, Leave encashment payable to them with the Corporation; and (d) Resettlement allowance paid to employees to permanently settle down at a place other than the location of last posting at the time of retirement.

10. Related Party Disclosures as per Accounting Standard 18 Names of the Related parties (Joint Venture Companies):

Indraprastha Gas Limited

Petronet India Limited

Petronet CCK Limited

Petronet CI Limited

Petronet LNG Limited

Bharat Oman Refineries Limited

Petroleum Infrastructure Limited

Maharashtra Natural Gas Limited

Central UP Gas Limited

Sabarmati Gas Limited

Bharat Stars Services Private Limited

Bharat Renewable Energy Limited

Matrix Bharat Pte. Ltd.

Delhi Aviation Fuel Facility Private Limited

IBV (Brazil) Petroleo Pvt Ltda.

Petroleum India International (Association of Persons)

11. Dues from Directors is Rs. 0.43 Crores (previous year Rs. 0.14 Crores) and Dues from Officers is Rs. 3.49 Crores (previous year Rs. 3.67 Crores).

12. In compliance with AS - 27 'Financial Reporting of Interests in Joint Ventures', the required information is as under:

b) In respect of jointly controlled entities, the Corporation's share of assets, liabilities, income, expenditure, contingent liabilities and capital commitments compiled on the basis of unaudited / audited financial statements received from these joint ventures are as follows:

13. Capital Commitments and Contingent Liabilities :

Rs. Crores

31/03/2012 31/03/2011

(a) Capital Commitments :

Estimated amount of contracts remaining to be executed on capital account 816.15 804.98 and not provided for

(b) Contingent Liabilities :

In respect of Income Tax matters 122.63 95.26

Other Matters :

i) Surety bonds executed on behalf of other oil companies for excise/ 183.45 183.45 customs duties for which BPCL has signed as surety

ii) Claims against the Corporation not acknowledged as debts :

Excise and customs matters 645.34 1,242.94

Sales tax matters 2,802.22 2,880.03

Land Acquisition cases for higher compensation 91.56 95.16

Others 296.21 227.20

These include Rs. 1234.00 crores (previous year Rs. 1014.13 crores) against which the Corporation has a recourse for recovery and Rs. 28.31 crores (previous year Rs. 43.73 crores) on capital account.

iii) Claims on account of wages, bonus/ex-gratia payments in respect of 13.44 6.15 pending court cases.

iv) Guarantees given on behalf of Subsidiaries/JVs 4,618.30 4,408.77

14. (a) The Corporation has on the Balance Sheet date, outstanding forward contracts amounting to USD 1,857.51 million i.e. an equivalent of Rs. 9,502.38 Crores (previous year USD 1793 Million i.e. an equivalent of Rs. 8,005.75 Crores) to hedge the foreign currency exposure towards loans; this includes Nil (previous year USD 55 million i. e. an equivalent of Rs. 245.58 Crores ) in respect of long term loans. The Corporation does not generally hedge the currency risks on account of foreign exposure for the payment of crude oil. Following are the unhedged foreign currency on account of exposures :

15. During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the Corporation. It has significant impact on presentation and disclosures made in the financial statements. The Corporation has also reclassified / regrouped previous year figures in accordance with the requirements applicable in the current year.

 
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