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Notes to Accounts of Bharat Petroleum Corporation Ltd.

Mar 31, 2022

a) Â Â Â Freehold land includes 'Â 2.20 CroresÂ (Previous year ' 2.20 Crores), which is under dispute and not in theÂ Corporationâs possession, is in the process of being surrendered to the Competent Authority and has been providedÂ for in books of accounts.

b) Â Â Â Buildings include Ownership Flats having gross block of'Â 44.79 CroresÂ (Previous year ' 43.94 Crores) in proposedÂ / existing co-operative societies and others.

c) Â Â Â The Corporation has elected to continue the policy adopted under Previous GAAP for accounting the foreign exchangeÂ differences arising on settlement or translation of long-term foreign currency monetary items outstanding as of 31^stÂMarch 2016 i.e. foreign exchange differences arising on settlement or translation of long-term foreign currencyÂ monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets andÂ depreciated over the balance life of the asset. Accordingly, âOther adjustmentsâ include capitalization of foreignÂ exchange differences (net) of 'Â 229.70 CroresÂ (Previous year ' 187.44 Crores De-capitalization).

d) Â Â Â Additions include capitalization of borrowing costs of 'Â 264.83 CroresÂ (Previous year ' 300.06 Crores).

e) Â Â Â Freehold Land, Plant and Equipment, Tanks and Pipelines, Railway Sidings, Buildings etc. jointly owned in varyingÂ extent with other Oil Companies / Railways / Port Trust: Gross Block 'Â 925.59 CroresÂ (Previous year ' 909.65Â Crores), Cumulative Depreciation 'Â 126.59 CroresÂ (Previous year ' 87.29 Crores), Net Block 'Â 799.00 CroresÂ (Previous year ' 822.36 Crores).

f) Â Â Â Certain assets forming part of Property, Plant and Equipment have been constructed by the Corporation at RailwayÂ consumer depots, having net carrying amount of 'Â 30.39 CroresÂ (Previous year ' 24.78 Crores), out of which fewÂ Railway consumer depots are being used by other oil companies based on award of tender by Railways, net carryingÂ amount of such assets is 'Â 5.85 CroresÂ (Previous year ' 1.82 Crores).

g) Â Â Â Charge was created over the Property, Plant & Equipment of the Corporation, mainly Plant and Machinery at MumbaiÂ Refinery and Kochi Refinery in regard to the borrowings. These charges have been satisfied during the year. (ReferÂ Note No. 25)

h) Â Â Â Compensation received from third parties in respect of items of Property, Plant and Equipment / Capital work inÂ progress that were impaired, lost or given up during the year 'Â 3.49 CroresÂ (Previous year ' 35.35 Crores).

i) Â Â Â Gross Block Reclassifications / Deductions on account of Retirement / Disposal includes:

i) Â Â Â On account of retirement / disposal during the year'Â 364.75 CroresÂ (Previous year ' 217.29 Crores)

ii) Assets classified as held for sale 'Â 36.15 CroresÂ (Previous year ' 58.98 Crores)

iii) Â Â Â Decapitalization of'Â 33.86 CroresÂ (Previous year ' 52.13 Crores)

iv) Â Â Â Deduction on account of reclassifications during the year'Â 1.69 CroresÂ (Previous year ' 33.81 Crores)

j) Â Â Â Depreciation and amortization for the year is 'Â 4,759.68 CroresÂ (Previous year ' 3,998.52 Crores) from which, afterÂ reducing -

i) Â Â Â Depreciation on decapitalization of'Â 4.62 CroresÂ (Previous year ' 19.08 Crores)

ii) Depreciation on reclassification of assets of'Â 0.79 CroresÂ (Previous year ' 1.39 Crores) and Net Depreciation and amortization for the year charged to Profit and Loss statement is 'Â 4,754.27 CroresÂ (Previous yearÂ ' 3,978.05 Crores)

k) Â Â Â Deduction from accumulated depreciation on account of retirement / disposal / reclassifications during the year isÂ 'Â 251.00 CroresÂ (Previous year ' 158.23 Crores)

l) Â Â Â The Corporation has assessed the useful life of Right of Way as indefinite where the same is perpetual in nature.

^Includes Equity component of '126.37 CroresÂ (Previous year ' 126.37 Crores) recognised on Fair Valuation of concessional rate loan given to Subsidiary (BPRL).

** Corporation had acquired 88,86,13,336 shares of Joint Venture Company Bharat Oman Refineries Limited (36.62% of the equity share capital) on 30^thÂ June 2021 from Joint Venture Partner OQ S.A.O.C. (formerly known as Oman Oil CompanyÂ S.A.O.C.) ("OQ") for a consideration of' 2,399.26 Crores. Bharat Oman Refineries Limited has become a wholly ownedÂ subsidiary of the Corporation w.e.f. 30^thÂ June 2021. Further, the Corporation has acquired the remaining share warrants ofÂ Bharat Oman Refineries Limited held by Government of Madhya Pradesh for a consideration of' 72.65 Crores.

* The Corporation has designated these investments at Fair Value through Other Comprehensive Income because these investments represent the investments that the Corporation intends to hold for long-term purposes. No such investmentsÂ were disposed off during the year and accordingly, there have been no transfers of the cumulative gains or losses on theseÂ investments.

The Write Down of Inventories to Net Realisable Value during the year amounted to 'Â 1,247.04 CroresÂ (Previous Year: ' 87.51 Crores). The Reversal of Write Down during the year amounted to '2.69 CroresÂ (Previous Year: '19.23 Crores)Â due to Increase in Net Realisable Value of the Inventories. The Write Down or Reversal of Write Down have been includedÂ under 'Cost of Materials Consumed¹Â or 'Changes in Inventories of Finished Goods, Stock-In-Trade and Work-In-Progress' inÂ the Statement of Profit and Loss.

Inventories Pledged as Collateral - Refer Note No. 30

Non-Current Assets Held-for-Sale consist of items such as Plant and equipment, Dispensing pumps, etc. which have been identified for disposal due to replacement / obsolescence of Assets which happens in the normal course of business. These Assets areÂ expected to be disposed off within the next twelve months. On account of re-classification of these Assets, an Impairment loss ofÂ 'Â 16.22 CroresÂ during the year (PreviousYear:' 32.41 Crores) has been recognised in the Statement of Profit and Loss.

The Corporation has only one class of Shares namely Equity Shares having par value of ' 10 per share. Each Holder of Equity Shares is entitled to one vote per Equity Share. In the event of liquidation of the Corporation, the Holders of EquityÂ 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 final dividend, if any, proposed by the Board of Directors is subjectto the approval ofthe Shareholders in the ensuing Annual General Meeting.

During the Financial year 2017-18, the Corporation has issued Bonus Shares in the ratio of 1:2 by capitalisation of General Reserves. The total number of shares issued is 72,30,84,248 having face value of' 10 each.

* The balance includes accumulated Gain / (Loss) on account of remeasurements of Defined Benefit plans (Net of Tax) as on 31^stÂ March 2022 'Â (531.13) CroresÂ [PreviousYear? (510.19) Crores].

Nature and purpose of reserves

Capital reserve

It represents Capital Reserve appearing in the Financial Statements of erstwhile Kochi Refineries Limited (KRL) transferred on amalgamation and difference between the Investment made in Petronet CCK Limited (PCCKL) and the Share Capital received during the acquisition when the firstÂ time control was obtained.

Debenture Redemption Reserve

Debenture Redemption Reserve represents reserve created out of the profits of the Corporation available for distribution to Shareholders which is utilised for redemption of Debentures/Bonds.

Share Options Outsanding Account

The Share Options Outstanding account is used to record the fair value of Equity-settled Share-based Paymenttransactions with Employees. The amounts recorded in Share Options Outstanding Account are transferred to Securities Premium upon excersice of Share options. In case of ShareÂ options not excersiced by Employees the corresponding amounts are transferred to General Reserve.

General Reserve

General Reserve represents appropriation of Retained Earnings and are available for distribution to Shareholders.

Securities Premium

The amount received in excess of the par value adjusted with additional cost of Equity Shares, if any, has been classified as Securities Premium. The same can be utilised for issuance of Bonus Shares, charging off Equity related expenses etc.

Retained Earnings

Retained Earnings (excluding accumulated balance of remeasurements of Defined Benefit Plans (Net of Tax)) represents surplus / accumulated earnings of the Corporation and are available for distribution to Shareholders.

* 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. [Refer Note no. 13 and 15]

**The Corporation has Triparty Repo Settlement System limits from Clearing Corporation of India Limited, the borrowing against which wasÂ NILÂ as at 31^stÂ March 2022 (Previous Year' 850 Crores). These limits are secured by 7.59% Govt. Stock 2026 & 6.90% Oil Marketing Companies GOIÂ Special Bonds 2026 of face value aggregrating to 'Â 1,245 CroresÂ (Previous Year secured by 7.59% Govt. Stock 2026 & T- Bills of face valueÂ aggregrating to ' 870 Crores )[Refer Note no. 14]

The borrowings from banks and financial institutions have been used forthe purposes for which such loans were taken.

The quarterly returns or statements of current assets fled by the Corporation with banks or financial institutions are in agreement with the books of accounts for FY 2020-21 and FY 2021-22.

Cabinet Committee of Economic Affairs (CCEA) Government of India, in its meeting held on 20^thÂ November 2019, has accorded in-principle approval for strategic disinvestment of Government of India's Shareholding in the CorporationÂ excluding BPCLs shareholding in Numaligarh Refinery Limited. The transaction of strategic disinvestment of Government ofÂ India's Shareholding in the Corporation is in process.

NOTE 45

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 theÂ Corporation in the erstwhile KRL) to a Trust ("BPCL Trust for Investment in Shares") for the benefit of the Corporation in theÂ Financial Year 2006-07. The Corporation made 1:1 Bonus issues in July 2012 and July 2016 and 1:2 bonus issue inÂ July 2017. The Trust held 20,23,72,422 equity shares of the Corporation as at 1^stÂ April 2020.

During FY 2020-21, Corporation had announced BPCL Employee Stock Purchase Scheme (ESPS) 2020 and created "BPCL ESPS Trust" for the purpose of acquiring shares for allotting to eligible employees. Accordingly, "BPCL ESPS Trust" hadÂ purchased 4,33,79,025 Equity shares from "BPCL Trust for Investment in Shares" in October 2020. The proportionate costÂ of "BPCL Trust for Investment in Shares" was recognized as cost of shares held by "BPCL ESPS Trust".

Further during FY 2020-21, Corporation has sold 12,60,33,090 Equity Shares from "BPCL Trust for Investment in Shares" via Bulk Deal on Stock Exchange for Net Consideration of ? 5,511.79 Crores. Accordingly, Security Premium of ? 5,101.31Â Crores was recognized after adjusting the corresponding cost of ? 410.48 Crores (including Face Value of Equity Shares ofÂ ? 126.03 Crores) under Total Equity. The "BPCL Trust for Investment in Shares" holds 3,29,60,307 equity shares of theÂ Corporation as at 31^stÂ March 2022.

During FY 2021-22, Corporation has allotted 3,65,42,077 shares to eligible employees on exercise of options by employees under BPCL Employee Stock Purchase Scheme (ESPS) 2020. Accordingly, Security Premium of ?Â 1,204.88 CroresÂ wasÂ recognized after adjusting the corresponding cost of ?Â 119.01 CroresÂ (including Face Value of Equity Shares of ? 36.54Â Crores) under Total Equity. "BPCL ESPS Trust" holds 68,36,948 equity shares of the Corporation as at 31^stÂ March 2022.

The cost of the original investment together with the additional contribution to the corpus of above trusts has been reduced from the Total Equity of the Corporation. To the extent of the face value of the shares, the same is reduced from the Paid upÂ Share capital of the Corporation and the balance is reduced from Other Equity under separate reserves.

The income received from "BPCL Trust for Investment in Shares" and the impact on consolidation of "BPCL ESPS Trust" has been recognized directly under Other Equity ofthe Corporation.

The details of shares held by "BPCL Trust for Investment in Shares" and "BPCL ESPS Trust" and its corresponding cost adjustment in Total Equity is as under:

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

NOTE 47

During FY 2021-22 the Corporation has provided for Pay Revision dues of non-management staff under Salaries and Wages amounting to ?Â 86.47 CroresÂ (Previous year: ? 151.10 Crores) based on the available information and judgement. Further duringÂ previous FY 2020-21, Corporation had finalized Pay Revision with some of the Employees / Employee Unions. Pay Revision withÂ few of the Employee Unions is pending as at 31^stÂ March 2022.

NOTE 48 SERVICE CONCESSION ARRANGEMENTS

The Corporation has entered into service concession arrangements with entities supplying electricity ("The Regulator") to construct, own, operate and maintain a wind energy based electric power generating station ("Plant").

Under the terms of agreement, the Corporation will operate and maintain the Plant and sell electricity generated to Regulator for a period which covers the substantial useful life of the Plant which may be renewed for such further period as may be mutually agreedÂ upon between the parties. The Corporation will be responsible for any maintenance services during the concession period.

The Corporation in turn has the right to charge the Regulator agreed rate as stated in the service concession arrangement.

The fair value towards the construction of the Plant has been recognized as an Intangible Asset and is amortized over the useful life of the asset or period of contract whichever is less.

[A] Post Employment Benefit Plans:

Defined Contribution Scheme

Corporation has GOI managed PFRDA IMPS for its employees and is contributing up to 10% of the salary from the above defined percentage to the IMPS for the staff who have enrolled under the scheme. The remaining contribution after the PFRDA IMPSÂ contribution is made to a separate Trust managed by the Corporation.Â Â Â Â 'Â _jnÂ Q_rores

Amount recognized in the Statement of Profit and Loss Â Â Â 2021-22Â Â Â Â 2020-21

Defined Contribution Scheme Â Â Â 285.57Â Â Â Â 270.89

Defined Benefit Plans

The Corporation has the following Defined Benefit Plans :-Gratuity:

The Corporation has a Defined Benefit Gratuity plan managed by a Trust. Trustees administer the contributions made to the Trust, investments thereof etc. Based on actuarial valuation, the contribution is paid to the trust which is invested in plan assetsÂ as per the investment pattern prescribed by the Government. Gratuity is paid to a staff member who has put in a minimumÂ qualifying period of 5 years of continuous service, on superannuation, resignation, termination or to his nominee on death.

Other Defined Benefits include:

(a) Â Â Â Post Retirement Medical Scheme (managed by a Trust) for employees, spouse, dependent children and dependentÂ parents;

(b) Â Â Â Pension / Ex-Gratia scheme to the retired employees who are entitled to receive the monthly pension / ex-gratia for life;

(c) Â Â Â Death in service / Permanent Disablement benefit given to the spouse of the employee / employee, provided theÂ deceasedâs family / disabled employee deposits with the Corporation, retirement dues such as Provident Fund, Gratuity,Â Leave Encashment etc., payable to them;

(d) Â Â Â Resettlement allowance paid to employees to permanently settle down at the time of retirement;

(e) Â Â Â Felicitation benefits to retired employees on reaching the age related milestones; and

(f) Â Â Â The Corporation makes contribution towards Provident Fund, which is administered by the trustees. The Corporation hasÂ an obligation to fund any shortfall on the yield of the trust's investments over the interest rates declared by the GovernmentÂ under EPF scheme.

These defined benefitÂ plans expose the Corporation to actuarial risks, such as longevity risk, interest rate risk, and market (investment) risk.

The estimates for future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors.

The expected return on plan assets is based on market expectation at the beginning of the period, for returns over the entire life of the related obligations.

For the funded plans, the trust maintains appropriate fund balance considering the analysis of maturities. Projected Unit Credit method is adopted for Asset-Liability Matching.

Provision in respect of pay revision dues as mentioned in Note 47 is over and above the amounts recognized herein.

In respect of investments made by PRMB Trust, total Provision as at 31^stÂ March 2022 was ?Â 25.50 CroresÂ (as at 31^stÂ March 2021: ? 35 Crores).

During FY 2021-22, Past Service cost is recognized in respect of Gratuity and Post Retirement Medical Benefits for the benefit payable in future after DA reaching the specified limit and an amendment in the member eligibility criteria of the scheme, respectively.

Further for FY 2020-21, Past Service cost is recognized in respect of Gratuity and Post Retirement Medical Benefits as there was an enhancement of Post employement benefits on account of Voluntary Retirement Scheme. Also, Past Service cost was recognizedÂ in respect of Monthly Ex-Gratia Scheme as there was an upward revision in benefits under the scheme.

[B] Provident Fund:

The Corporationâs 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 fundÂ revenues based on the EPFO specified rate of return, will need to be made good by the Corporation and is charged toÂ Statement of Profit and Loss. The actual return earned by the fund has mostly been higher than the EPFO specifiedÂ minimum rate of return in the past two years. During FY 2021-22, Corporation has paid an advance of ' 124 CroresÂ towards provision of default securities. The Fund balance is sufficient to meet the fund obligations as at 31^stÂ March 2022Â and 31^stÂ March 2021.

The details of fund obligations are given below: Â Â Â ' i_nÂ c_rores

Particulars Â Â Â As atÂ Â Â Â As at

31/03/2022 Â Â Â 31/03/2021

Present Value of benefitÂ obligation Â Â Â 5,044.81Â Â Â Â 4,860.26

* During FY 2021-22 the Corporation acquired 88,86,13,336 equity shares from Joint Venture Partner OQ S.A.O.C. (formerly known as Oman Oil Company S.A.O.C.) ("OQ"), of Bharat Oman Refinery Limited(BORL), constituting 36.62% ofÂ the equity share capital, for a consideration of ?Â 2,399.26 Crores.Â BORL has become a Wholly Owned Subsidiary of theÂ Corporation w.e.f. 30^thÂ June 2021 [Refer Note 68 (II)]

~ Companies in the process of winding up.

Further, Ujjwala Plus Foundation is a Joint Venture of IOCL, BPCL and HPCL with fund contribution in the ratio of 50:25:25 respectively which was incorporated as a limited by guarantee company (without share capital) under Section 8 ofÂ Companies Act, 2013.

NOTE 55 SHARE BASED PAYMENT

(a) Employee Option Plan

The Corporation had floated an Employee Stock Purchase Scheme (âSchemeâ) on 28^thÂ September 2020 (Grant Date) after taking Shareholders' approval in the Annual General Meeting held on 28^thÂ September 2020, giving the backgroundÂ of proposed disinvestment by the Government of India (âGOIâ). As a recognition of contribution of employees in growthÂ of the Corporation and increase in shareholdersâ value, the Scheme as a primary objective seeks to reward eligibleÂ employees for their loyalty/longevity with the Corporation. The Scheme was named as "BPCL Employee StockÂ Purchase Scheme-2020" ("ESPS" / "Scheme"). The above scheme also covered the employees who had opted forÂ Voluntary Retirement Scheme (VRS) during the previous FY 2020-21.

As per Vesting Condition of the Scheme, the employee had to render services till the date of share transfer or retirement (including VRS) or Death in Service whichever is earlier. In view of the above, the scheme was accounted as EmployeeÂ Stock Option Scheme, in line with the applicable Ind AS.

Each option converts into one equity share of the Corporation upon exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. These options wereÂ vested and exercised on 20^thÂ April 2021. All options which remain unexercised during the year have lapsed.

The share-based payments (options) to employees being equity-settled instruments are measured at the fair value of the equity instruments of the Corporation at the grant date. The fair value determined at the grant date of theÂ equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on theÂ Corporationâs estimate of equity instruments that will eventually vest, with a corresponding increase in Total Equity.

(d) Expense arising from share based payment transactions

Total expense of 'Â 77.06 CroresÂ (Previous year : ' 940.72 Crores) arising from share based payment transactions is recognized in Statement of Profit and Loss as an exceptional item.

NOTE 56 IMPAIRMENT OF ASSETS

The Corporation assesses at each reporting date, whether there is an indication for impairment of assets. The Corporation takes into consideration external and internal source of information available about the asset to check whether any indication forÂ impairment exists. If any such indication exists, the Corporation estimates the recoverable amount of the asset. The recoverableÂ amount is the higher of an assetâs fair value less cost of disposal and value in use. The value in use is assessed based on theÂ estimated future cash flows which are discounted to their present value using the discount rate that reflects the time value ofÂ money and risk specific to the assets for which the future cash flows estimates have not been adjusted. An impairment loss isÂ recognized in the Statement of Profit and Loss to the extent assetâs carrying amount exceeds its recoverable amount.

Based on the assessment, there are no indications for impairment of assets as at 31^stÂ March 2022 except for investment in one of the associate company GSPL India Transco Limited by 'Â 14.08 Crores.Â (Previous Year: Impairment loss of' 2,032.79Â Crores for investment in one of the Subsidiary Company BPRL). Further, in respect of impairment loss on investment in BPRL,Â the estimated recoverable amount does not necessitate a reversal orfurther impairment in the current FY 2021-22.

* Â Â Â The above expenditure includes contribution to funds, expenses through registered trusts / registered society, companyÂ established under Section 8 of the Companies Act and direct expenses towards implementation of CSR activities by theÂ Corporation.

# Â Â Â Includes payables of'Â 8.15 CroresÂ (Previous year: ' 30.18 Crores)

~The opening balance of ' 17.01 Crores for FY 2021-22 has been transferred to a separate bank account on 30^thÂ April 2021

~The closing balance of ' 45.96 Crores for FY-2021-22 consists of ' 6.56 Crores pertaining to amount transferred on 30^thÂ April 2021 for FY 2020-21 and ' 39.40 Crores transferred to a separate Unspent CSR bank account onÂ 29^thÂ April 2022

Reason for shortfall

The shortfall of ' 45.96 Crores from the stipulated and prescribed spend is on account of delay in certain projects due to certain limitations faced by Implementing Agencies. However, the shortfall has been allocated against the specific projectsÂ and would be spent as per the provisions of Companies Act, 2013.

Nature of CSR Activity undertaken by the company

The Corporation undertakes impactful social projects which are in alignment with the areas specified under Schedule VII of the Companies Act, 2013 of which the Company takes up CSR projects largely in the five core thrust areas of Education,Â Water Conservation, Skill Development, Health & Sanitation and Community Development.

C. Financial risk management C.i. Risk management framework

The Corporationâs Board of Directors has overall responsibility for the establishment and oversight of the Corporationâs risk management framework. The Risk Management Committee of the Board has defined roles and responsibilities, which includesÂ reviewing and recommending the risk management plan and the risk management report for approval of the Board with theÂ recommendation of the Audit Committee. The Corporation has adopted a Risk Management Charter and Policy for self-regulatoryÂ processes and procedures for ensuring the conduct of the business in a risk conscious manner.

The Corporation has exposure to the following risks arising from financial instruments :

â¢ Â Â Â Credit risk;

â¢ Â Â Â Liquidity risk; and

â¢ Â Â Â Market riskÂ C.ii. Credit risk

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Corporationâs trade and other receivables, cash and cash equivalents andÂ other bank balances, derivatives and debt securities. The maximum exposure to credit risk in case of all the financial instrumentsÂ covered below is restricted to their respective carrying amount.

(a) Trade and other receivables from customers

Credit risk in respect of trade and other receivables is managed through credit approvals, establishing credit limits and monitoring the creditworthiness of customers to which the Corporation grants credit terms in the normal course of business.

As at 31^stÂ March 2022 and 31^stÂ March 2021, the Corporationâs retail dealers, industrial and aviation customers accounted for the majority of the trade receivables.

Expected credit loss assessment for Trade and other receivables from customers as at 31^stÂ March 2022 and 31^stÂ March 2021

The Corporation uses an allowance matrix to measure the expected credit losses of trade and other receivables.

The loss rates are computed using a 'Roll Rate' method based on the probability of receivable progressing through successive stages of delinquency to write off. Roll rates are calculated separately for exposures in different segments based on the followingÂ common credit risk characteristics - type of product purchases, type of customers.

(b) PMUY and Other Loans

As per the Government of Indiaâs scheme - Pradhan Mantri Ujjwala Yojana (PMUY), the Corporation has given interest free loans to PMUY customers towards cost of hot plate and 1^stÂ refill, which is to be recovered from the subsidy amountÂ payable to customer when such customers book refill. During the year, the Corporation has recalculated gross carryingÂ amount of the loans at period end at the present value of the estimated future contractual cash flows discounted at theÂ original effective interest rate due to revision in estimates of receipts based on projections of subsidy amount per refill.Â Accordingly, the gross carrying amount of the loans has been reduced by ? 367.29 Crores (Previous year: ? 650.84Â Crores) with a corresponding recognition of expense in the Statement of Profit and Loss.

The Corporation assess the credit risks / significant increases in credit risk on an ongoing basis throughout each reporting period. For determining the expected credit loss on such loans, the Corporation considers the time elapsedÂ since the last refill for determining probability of default on collective basis. Accordingly, the expected credit loss ofÂ ? 88.15 Crores (Previous year: ? 86.38 Crores) has been recognized on carrying amount of ? 642.56 Crores (PreviousÂ year: ? 1,055.79 Crores) (Refer Note No. 9 and 18)

(c) Â Â Â Cash and cash equivalents and Other Bank Balances

The Corporation held cash and cash equivalents and other bank balances of ?Â 834.49 CroresÂ at 31^stÂ March 2022 (Previous year: ? 7,053.49 Crores). The cash and cash equivalents are held with banks with good credit ratings and financial institutionÂ counterparties with good market standing. Also, Corporation invests its short term surplus funds in bank fixed deposits, TriÂ Party Repo and liquid schemes of mutual funds etc., which carry no / low mark to market risks for short duration and thereforeÂ does not expose the Corporation to credit risk.

(d) Â Â Â Derivatives

The derivatives are entered into with banks, financial institutions and other counterparties with good credit ratings. Further exposuresto counter-parties are closely monitored and kept within the approved limits.

(e) Â Â Â Investment in debt securities

Investment in debt securities are mainly as loans to subsidiaries, joint venture companies and investment in government securities which do not carry any significant credit risk.

C.iii. Liquidity risk

Liquidity risk is the risk that the Corporation will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

Liquidity risk is managed by Corporation through effective fund management. The Corporation has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Corporation has access to funds from debt markets throughÂ Commercial Paper programs, Foreign Currency Borrowings and other debt instruments.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments;

NOTE 59 FINANCIAL INSTRUMENTS (CONTD.)

* These Guarantees issued by the Corporation on behalf of subsidiaries are with respect to borrowings raised by the respective entities. The above also includes guarantee amount of ?Â 261.35 CroresÂ (equivalent USD 34.48 Million) [ Previous Year ? 175.79Â Crores (equivalent USD 23.92 Million)] towards BPRL Venture Mozambique BVâs pro rata share of drawdown ofÂ USD 28.73 MillionÂ (as on 31^stÂ March 2022) [USD 19.93 Million (as on 31^stÂ March 2021)] under the project finance arrangement entered into for 2-trainÂ 12.88 MMTPA LNG Project in Mozambique Offshore Area 1, Rovuma basin. This project is being partly funded through USD 16Â Billion project finance. BPCL has provided a Debt Service Undertaking (DSU) to guarantee its pro rata share (i.e. towards BPRLÂ Venture Mozambique BVâs Participating Interest (PI) of 10% in the project) of project finance obligations to any project financeÂ beneficiaries under project financing arrangement, capped at a maximum of USD 1.92 Billion (out of which the draw down was USDÂ 28.73 Million as on 31^stÂ March 2022) [(out of which the draw down was USD 19.93 Million as on 31^stÂ March 2021).

These guarantee amounts will be payable on default by the concerned entity. As of the reporting date, none of the subsidiaries have defaulted and hence, the Corporation does not have any present obligation to third parties in relation to such guarantees. TheÂ bifurcation of contractual cash flows in different years is based on expiry of said guarantees.

C.iv. Market risk

Market Risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises four types of risk: currency risk, interest rate risk, commodity risk and other price risk.

C.iv.a Currency risk

The Corporation is exposed to currency risk on account of its operating and financing activities. The functional currency of the Corporation is Indian Rupee. Our exposure is mainly denominated in US Dollars (USD). The USD exchange rate has changedÂ substantially in recent periods and may continue to fluctuate substantially in the future.

The Corporation has put in place a Financial Risk Management Policy to identify the most effective and efficient ways of managing the currency risks. The Corporation uses derivative instruments, (mainly foreign exchange forward contracts) to mitigate the risk ofÂ changes in foreign currency exchange rates in line with our policy.

The Corporation does not use derivative financial instruments for trading or speculative purposes.

Exposure to currency risk

The currency profile in INR of foreign currency denominated financial assets and financial liabilities as at 31^stÂ March 2022 and 31^stÂ March 2021 are as below:

Sensitivity analysis

A reasonably possible strengthening/ (weakening) of the USD against INR at 31^stÂ March would have affected the measurement of financial instruments denominated in US dollars and affected profit or loss by the amounts shown below.Â This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact ofÂ forecast sales and purchases. In cases where the related foreign exchange fluctuation is capitalised to Property, Plant andÂ Equipment or recognised directly in reserves, the impact indicated below may affect the Corporation's income statementÂ over the remaining life of the related Property, Plant and Equipment or the remaining tenure of the borrowing respectively.

C.iv.b Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates, in cases where theÂ borrowings are measured at fair value through profit or loss. Cash flow interest rate risk is the risk that the future cash flows ofÂ floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

The Corporationâs approach to managing interest rate risk is to have a judicious mix of borrowed funds with fixed and floating interest rate obligation.

In March 2021, the Financial Conduct Authority (FCA), UK had confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be representative:

- Â Â Â immediately after 31 December 2021, in the case of all sterling, euro, Swiss franc and Japanese yen settings, and the 1-weekÂ and 2-month US dollar settings; and

- Â Â Â immediately after 30 June 2023, in the case of the remaining US dollar settings.

The aforementioned exposures shall be migrated from LIBOR to an Alternative Reference Rate in line with the announcement. The impact of such migration is not ascertainable at present.

Fair value sensitivity analysis for fixed-rate instruments

The Corporation accounts for certain investments in fixed-rate financial assets such as investments in Oil bonds and Government Securities at fair value through profit or loss. Accordingly, a decrease in 25 basis point in interest rates is likely to increase the profitÂ or loss (before tax) for the year ending 31^stÂ March 2022 by ?Â 29.43 CroresÂ (Previous year: ? 46.61 Crores) and an increase in 25Â basis point in interest rates is likely to decrease the profit or loss (before tax) for the year ending 31^stÂ March 2022 by ?Â 29.18 CroresÂ (Previous year: ^ 46.10 Crores).

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 25 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates,Â remain constant. In cases where the related interest rate risk is capitalised to Property, Plant and Equipment, the impact indicatedÂ below may affect the Corporation's income statement over the remaining life of the related Property, Plant and Equipment.

C.iv.c Commodity rate risk

Corporationâs profitability gets affected by the price differential (also known as Margin or Crack spread) between prices of products (output) and the price of the crude oil and other feed-stocks used in production (input). Prices of both are set by markets. HenceÂ Corporation uses derivatives instruments (swaps, futures, options, and forwards) to hedge exposures to commodity price risk toÂ cover refinery operating cost using Basic Swaps on various products cracks like Naphtha, Gasoline (Petrol), Jet/Kerosene, GasoilÂ (Diesel) and Fuel Oil against Benchmark Dubai Crude. Further volatility in freight costs is hedged through Freight Forwards andÂ bunker purchases. Settlement of all derivative transactions take place on the basis of monthly average of the daily prices of theÂ settlement month quoted by Platts.

Corporation measures market risk exposure arising from its trading positions using value-at-risk techniques. These techniques make a statistical assessment of the market risk arising from possible future changes in market prices over a one-day holding period.

Corporation uses historical model of VaR techniques based on variance/covariance to make a statistical assessment of the market risk arising from possible future changes in market values over a 24-hour period and within a 95% confidence level. The calculationÂ of the range of potential changes in fair value takes into account positions and the history of price movements for last two years.Â VaR calculation for open position as on 31^stÂ March 2022 is as given below:

A. Â Â Â The Corporation has Triparty Repo Settlement System limits with Clearing Corporation of India Limited, theÂ borrowings against which wasÂ NILÂ as at 31^stÂ March 2022 (Previous year : ' 850 Crores). The limits are secured byÂ 7.59% Government Stock 2026 & 6.90% Oil Marketing Companies GOI Special Bonds 2026 of 'Â 1,245 CroresÂ (Previous year : ' 870 Crores Secured by 7.59% Government Stock 2026 & T-Bills).

B. Â Â Â The Corporation purchases and sells petroleum products from different Oil and Gas Companies. Under the terms ofÂ the agreement, the amounts payable by the Corporation are offset against receivables and only the net amounts areÂ settled. The relevant amounts have therefore been presented net in the balance sheet.

C. Â Â Â The Corporation enters into derivative transactions under the International Swaps and Derivatives Association (ISDA)Â master netting agreements. In general, under such agreements the amounts owed by each counterparty on a singleÂ day in respect of all transactions outstanding in the same currency are aggregated into a single net amount that isÂ payable by one party to the other.

NOTE 60 CAPITAL MANAGEMENT

The Corporationâs objective is to maximize the shareholders' value by maintaining an optimum capital structure.

Management monitors the return on capital as well as the debt equity ratio and makes necessary adjustments in the capital

structure for the development of the business.

The Corporationâs debt to equity ratio as at 31^stÂ March, 2022 wasÂ 0.49Â (Previous year: 0.48).

Note: For the purpose of computing debt to equity ratio, equity includes Equity Share Capital and Other Equity and Debt

includes Current and Non Current borrowings.

NOTE 61 SEGMENT REPORTING

As perthe requirements of Ind AS 108 on âOperating Segmentsâ, segment information has been provided underthe Notes

to Consolidated Financial Statements.

1. Â Â Â Corporationâs subsidiary, Bharat Gas Resources Limited (BGRL) has been authorized by Petroleum and Natural GasÂ Regulatory Board (PNGRB) for development of 11 Geographical Areas (GAs) in Bid Round 9 and 2 GAs in Bid Round 10.Â As a promoter, BPCL has issued Parent Company Guarantees (PCGs) to PNGRB guaranteeing all performance obligationsÂ of BGRL underthese 13 GAs. The outflow that may arise underthese PCGs is not quantifiable.

2. Â Â Â Corporation has issued a Parent Company Guarantee (PCG) in favour of Mozambique LNG1 Company Pte. Limited inÂ respect of obligations of BGRL under LNG Sales Purchase Agreement (SPA) with Mozambique LNG1 Company Pte.Â Limited. Transaction under the SPA is expected to be initiated in FY 2023-24. The outflow that may arise under this PCGsÂ is not quantifiable.

3. Â Â Â Corporationâs subsidiary, Bharat PetroResources Limited (BPRL), is engaged in the business of Exploration and ProductionÂ (E&P) of oil & gas and has participating interest in several blocks held directly or through group companies. Corporation hasÂ issued performance guarantees/ counter-indemnities/ letter of undertakings in favour of Government/ Government Agencies/Â Operators/ other partners towards performance obligations of BPRL (including its group companies) under the ConcessionÂ Agreement/Joint Operating Agreements/ Production Sharing Contracts/ Licenses/ Farmout Agreements relating to variousÂ such E&P oil & gas blocks acquired by them. The outflow that may arise under these performance guarantees/Â counter-indemnities/ letter of undertakings is not quantifiable.

4. Â Â Â The Corporation has issued Performance Guarantee for necessary infrastructure of terminal and pipelines at Kochi andÂ obligations of Associate Company Petronet LNG Ltd under the LNG SPA, the outflow that may arise under the same is notÂ quantifiable.

# Calls received for issue of shares during the year from Subsidiary and Joint Venture Company for which subscription of shares is pending.

¹Â Â Â Â Balance Outstanding of'Â 45,900Â (' 29,700 as at 31^stÂ March 2021)

²Â Â Â Â Balance Outstanding of'Â 16,722Â (' 16,722 at 31^stÂ March 2021)

³Â Balance Outstanding of'Â 9,800Â (' 1,65,781 as at 31^stÂ March 2021)

⁴Â Â Â Â Balance Outstanding of'Â 7,021Â (' 22,705 as at 31^stÂ March 2021)

⁵Â Â Â Â Balance Outstanding of'Â 60,227Â (' 30,359 as at 31^stÂ March 2021)

⁶Â Â Â Â Balance Outstanding of'Â 29,943Â (' 29,943 as at 31^stÂ March 2021)

The above list includes balances for the transactions entered with the above parties before their name has been struck off

by the respective Registrar of Companies or MCA.

(B) Utilisation of Borrowed Funds and share premium

During FY 2021-22, other than the transactions undertaken in the normal course of business and in accordance with

extant regulatory guidelines and internal policies, as applicable,

1. Â Â Â The Corporation has not granted any advance / loans or investments or provided guarantee or security or the likeÂ to any other person(s) or entities with an understanding, whether recorded in writing or otherwise, to furtherÂ lend/invest/provide guarantee or security or the like to any other person on behalf of the Corporation.

2. Â Â Â The Corporation has not received any funds from any person(s) or entity with an understanding, whether recordedÂ in writing or otherwise, that the Corporation shall further lend or invest or provide guarantee or security or the likeÂ in any other person on behalf of and identified by such person(s)/entity.

As per MCA website, a charge of ' 246.80 Crores is appearing unsatisfied vide charge ID 90165239. As per information available with the company, the charge was satisfied vide document number 424 on 20th April 2000 byÂ Registrar of Companies, Mumbai. Hence the same has not been disclosed in Schedule III.

(I) Â Â Â Bharat Gas Resource Limited (BGRL)

During FY 2020-21, the Board had decided to merge the wholly owned subsidiary BGRL with the Corporation and not pursue transfer of Assets and Liabilities of Gas business to BGRL.

The proposed merger of BGRL with the Corporation is in process as on 31^stÂ March 2022 and will be completed after obtaining approval from respective authorities.

(II) Â Â Â Bharat Oman Refineries Limited (BORL)

The Corporation held 63.38% stake in BORL (i.e. 1,53,82,16,114 Equity Shares) and has additionally acquired balance 36.62% of Equity Shares (i.e. 88,86,13,336 equity shares) in BORL vide a Share Purchase Agreement (SPA) with JointÂ Venture Partner OQ S.A.O.C. (formerly known as Oman Oil Company S.A.O.C.) ("OQ") on 30^thÂ June 2021, for aÂ consideration of 'Â 2,399.26 Crores. By way of this transaction, BORL has become a wholly owned subsidiary of theÂ Corporation.

Further, the Corporation has acquired the remaining share warrants of BORL held by Government of Madhya Pradesh for a consideration of 'Â 72.65 CroresÂ (including Stamp Duty).

Further during FY 2021-22, the Board has decided to merge the wholly owned subsidiary BORL with the Corporation. The proposed merger of BORL with the Corporation is in process as on 31^stÂ March 2022 and will be completed afterÂ obtaining necessary approval from respective authorities.

(III) Â Â Â Numaligarh Refinery Limited (NRL)

During previous FY 2020-21 the Corporation had sold its entire shareholding in NRL constituting 61.65% of the total equity capital of NRL (i.e. 45,35,45,998 equity shares of '10/- each) under the terms of Share Purchase AgreementÂ executed on 25^thÂ March 2021 after obtaining approvals from the shareholders in Extra-ordinary General Meeting heldÂ on 25^thÂ March 2021. The Equity Shares of NRL had been sold to a consortium of Oil India Limited and Engineers IndiaÂ Limited; and to Government of Assam for a total consideration of' 9,875.96 Crores.

After the above sale of equity shares, NRL has ceased to be the subsidiary of the Corporation with effect from 26^thÂMarch 2021. The Gain arising from the sale of Equity shares of NRL is ' 9,422.42 Crores has been shown as anÂ Exceptional Item in the Statement of Profit and Loss for FY 2020-21.

NOTE 70

Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the CompaniesÂ (Indian Accounting Standards) Amendment Rules, 2022, applicable from 1^stÂ April , 2022. The Corporation does not expectÂ the amendment to have any significant impact in its financial statements.

NOTE 71 ENERGY SAVING CERTIFICATES (ESCerts)

During FY 2021-22, Mumbai and Kochi Refineries were awarded with 83,996 Nos and 1,06,764 Nos of ESCerts respectively from Bureau of Energy Efficiency (BEE) as part of âPerformance, Achieve & Tradeâ (PAT) scheme, India forÂ achieving reduction in Specific Energy Consumption above targets set by them for the performance during FY 2018-19.Â These can be redeemed to meet refineries own shortfall (if any) or can be used as tradable certificates which can be soldÂ through power exchanges. According to the Indian Energy Exchangeâs market fluctuations, current values of ESCerts areÂ volatile. Considering unascertainability of cost of ESCerts since such cost cannot be derived directly, the same has not beenÂ carried in inventory.

NOTE 72

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

Mar 31, 2021

a) Â Â Â Land:

i) Â Â Â Freehold land includes 'Â 242.68 CroresÂ (Previous year ' 429.20 Crores) capitalized at various locations for whichÂ conveyance deeds are yet to be executed and/or mutation is pending.

ii) Â Â Â Freehold land includes 'Â 2.20 CroresÂ (Previous year ' 2.20 Crores), which is under dispute and not in theÂ Corporationâs possession, is in the process of being surrendered to the Competent Authority.

b) Â Â Â Buildings include Ownership flats having gross block of 'Â 43.94 CroresÂ (Previous year ' 42.68 Crores) in proposed /Â existing co-operative societies and others.

c) Â Â Â The Corporation has elected to continue the policy adopted under Previous GAAP for accounting the foreign exchangeÂ differences arising on settlement or translation of long-term foreign currency monetary items outstanding as of 31stÂ March 2016 i.e. foreign exchange differences arising on settlement or translation of long-term foreign currencyÂ monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets andÂ depreciated over the balance life of the asset. Accordingly, âOther adjustmentsâ include de-capitalization of foreignÂ exchange differences (net) of 'Â 187.44 CroresÂ (Previous year ' 619.09 Crores capitalization).

d) Â Â Â Additions include capitalization of borrowing costs of 'Â 300.06 CroresÂ (Previous year ' 32.34 Crores).

e) Â Â Â Freehold Land, Plant and Equipment, Tanks and Pipelines, Railway Sidings, Buildings etc. jointly owned in varyingÂ extent with other Oil Companies / Railways / Port Trust: Gross Block 'Â 909.65 CroresÂ (Previous year ' 580.31 Crores),Â Cumulative Depreciation 'Â 87.29 CroresÂ (Previous year ' 57.44 Crores), Net Block 'Â 822.36 CroresÂ (Previous yearÂ ' 522.87 Crores).

f) Â Â Â Certain assets forming part of Property, Plant and Equipment have been constructed by the Corporation at RailwayÂ consumer depots, having net carrying amount of 'Â 24.78 CroresÂ (Previous year ' 22.54 Crores), out of which fewÂ Railway consumer depots are being used by other oil companies based on award of tender by Railways, net carryingÂ amount of such assets is 'Â 1.82 CroresÂ (Previous year ' 1.92 Crores).

g) Â Â Â Charge has been created over the Property, Plant & Equipment of the Corporation, mainly Plant and Machinery atÂ Mumbai Refinery and Kochi Refinery in regard to the borrowings (Refer Note No. 25).

h) Â Â Â Compensation received from third parties in respect of items of Property, Plant and Equipment / Capital work-inprogress that were impaired, lost or given up during the year 'Â 35.35 CroresÂ (Previous year ' 8.40 Crores).

i) Â Â Â Gross Block Reclassifications / Deductions on account of Retirement / Disposal includes:

i) Â Â Â On account of retirement / disposal during the year 'Â 217.29 CroresÂ (Previous year ' 255.15 Crores)

ii) Â Â Â Assets classified as held for sale 'Â 58.98 CroresÂ (Previous year ' 134.69 Crores)

iii) Â Â Â Decapitalization of 'Â 52.13 CroresÂ (Previous year ' 56.57 Crores)

iv) Â Â Â Additions on account of reclassifications during the year 'Â 33.81 CroresÂ (Previous year deduction ' 64.24Â Crores)

j) Â Â Â Depreciation and amortization for the year is 'Â 3,998.52 CroresÂ (Previous year ' 3,805.07 Crores) from which, afterÂ reducing -

i) Â Â Â Depreciation on decapitalization of 'Â 19.08 CroresÂ (Previous year ' 14.57 Crores)

ii) Â Â Â Depreciation on reclassification of assets of 'Â 1.39 CroresÂ (Previous year ' 3.61 Crores) and Net DepreciationÂ and amortization for the year charged to Profit and Loss statement is 'Â 3,978.05 CroresÂ (Previous yearÂ ' 3,786.89 Crores)

k) Â Â Â Deduction from accumulated depreciation on account of retirement / disposal / reclassifications during the year isÂ 'Â 158.23 CroresÂ (Previous year ' 274.97 Crores)

l) Â Â Â The Corporation has assessed the useful life of Right of way as indefinite where the same is perpetual in nature.

m) Â Â Â During the year 2020-21, the Board of Directors have decided to merge Bharat Gas Resources Limited (BGRL) with theÂ Corporation and not to pursue its earlier decision of transfer of assets and liabilities of Gas business to BGRL.Â Accordingly, Net Carrying amount of Property, Plant & Equipment of Gas business will no longer be considered asÂ âAssets included in disposal group held-for-saleâ as on 31^stÂ March 2021 (Previous year ' 32.61 Crores). Hence, theÂ corresponding asset block values have been included under âReclassifications / Deductions on account of RetirementÂ / Disposalâ. [Refer Note No. 22(a) and 68(II)].

n) Â Â Â The Residual value of Catalysts with precious metal content have been revised to the aggregate of estimated cost of theÂ precious metal content which is expected to be extracted at end of their useful life and 5% of original cost of catalystÂ excluding cost of precious metals (Previous Year: up to 5% of the original cost of catalyst) based on the experienceÂ and internal technical assessment. The impact of change in residual value has resulted in decrease in depreciation ofÂ 'Â 66.15 CroresÂ for FY 2020-21.

# Â Â Â Pursuant to the Share Holders approval through a Special Resolution passed in the Extraordinary General Meeting datedÂ 25^thÂ March 2021, Equity Shares held by Corporation in Numaligarh Refinery Limited were sold at a consideration ofÂ 'Â 9,875.96 CroresÂ on 26^thÂ March 2021. [Refer Note No. 68(I)]

## Includes Equity component of 'Â 126.37 CroresÂ (Previous year ' 494.40 Crores) recognised on Fair Valuation of concessional rate loan given to Subsidiary.This concessional rate loan, which was originally given on 28^thÂ March 2014 andÂ 31^stÂ March 2015 for a period up to 15 years from the draw down date, was prepaid by BPRL on 28^thÂ Dec 2020.

### During the Year 2020-21, Pursuant to the Capital Reduction carried out by Matrix Bharat PTE Ltd. the No. of shares have reduced from 20,00,000 Equity Shares to 2,50,000 Equity Shares.

* Â Â Â During the year 2020-21, Board has decided to merge BGRL with Corporation and not to pursue its earlier decision ofÂ transfer of assets and liabilities of Corporationâs Gas business to BGRL. Accordingly, the investments in MaharashtraÂ Natural Gas Ltd., Sabarmati Gas Ltd., Central UP Gas Ltd., Haridwar Natural Gas Pvt. Ltd., Goa Natural Gas Pvt. Ltd.,Â Petronet LNG Ltd., Indraprastha Gas Ltd., GSPL India Gasnet Ltd. and GSPL India Transco Ltd. will no longer beÂ considered as "Assets included in disposal group held-for-sale" as on 31^stÂ March 2021 (Previous Year : ' 487.59 Crores).Â [Refer Note No. 22(a) and 68(II)]

* During the year 2020-21, Board has decided to merge BGRL with Corporation and not to pursue its earlier decision of transfer of assets and liabilities of Corporationâs Gas business to BGRL. Accordingly Capital Advances (Previous YearÂ ' 9.66 Crores) and "Advance to Associate (Petronet LNG Limited)" of Gas Business (Previous Year ' 124.90 Crores) will noÂ longer be considered as âAssets included in disposal group held-for-saleâ as on 31⁵¹Â March 2021. [Refer Note No. 22(a) and 68(II)]

The Write-Down of Inventories to Net Realisable Value during the year amounted to 'Â 87.51 CroresÂ (Previous Year : ' 1,080.83 Crores). The Reversal of Write Downs during the year amounted to 'Â 19.23 CroresÂ (Previous Year : ' 0.36 Lacs)Â due to Increase in Net Realisable Value of the Inventories. The Write Downs and Reversal have been Included under âCost ofÂ Materials Consumedâ or âChanges in Inventories of Finished Goods, Stock-in-trade and Work-in-progressâ in theÂ Statement of Profit and Loss.

* During the Year 2020-21, Board has decided to merge BGRL with Corporation and not to pursue its earlier decision of transfer of assets and liabilities of Corporationâs Gas Business to BGRL. Accordingly Stock- In - Trade and Finished GoodsÂ of Gas business will no longer be considered as âAssets included in disposal group held-for-saleâ as on 31^stÂ March 2021.Â (Previous Year ' 78.22 Crores and ' 0.01 Crores respectively). [Refer Note No. 22(a) and 68(II)] .

Inventories Pledged as Collateral - Refer Note No. 30

* Â Â Â Includes Debts secured by Bank guarantee/Letter of Credit/Deposit 'Â 735.90 CroresÂ (Previous year ' 513.36 Crores).

Trade receivables pledged as collateral (Refer Note No. 30).

* Â Â Â Non-Current Assets held-for-sale consists of items such as Plant and equipment, Dispensing pumps, etc. which haveÂ been Identified for disposal due to Replacement/ Obsolescence of Assets which happens in the normal course of business.Â These assets are expected to be disposed off within the next twelve months. On account of re-classification of theseÂ Assets, an Impairment loss of 'Â 32.41 CroresÂ during the year ( Previous Year: ' 53.26 Crores) has been recognised in theÂ Statement of Profit and Loss.

# Â Â Â During the year 2020-21, Board has decided to merge BGRL with Corporation and not to pursue its earlier decision ofÂ transfer of assets and liabilities of Corporationâs Gas business to BGRL. Accordingly assets of Gas Business will no longerÂ be considered as "Assets included in disposal group held-for-sale" as on 31^stÂ March 2021. (Previous Year ' 1,185.49Â Crores). [Refer Note No. 68(II)]Â * During the year 2020-21, Board has decided to merge BGRL with Corporation and not to pursue its earlier decision ofÂ transfer of assets and liabilities of Corporationâs Gas business to BGRL. Accordingly Liabilities of Gas Business will noÂ longer be considered as "Liabilities included in disposal group held-for-sale" as on 31^stÂ March 2021. (Previous YearÂ ' 534.57 Crores). [Refer Note No. 68(11)]

iiiÂ Â Â Â The Corporation has only one class of Shares namely Equity Shares having a par value of ' 10 per share. EachÂ Holder of Equity Shares is entitled to one vote per Equity Share. In the event of liquidation of the Corporation, theÂ Holders of Equity Shares will be entitled to receive the Remaining Assets of the Corporation in proportion to theÂ number of Equity Shares held.

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

ivÂ Â Â Â During the Financial year 2017-18, the Corporation has issued Bonus Shares in the ratio of 1:2 by capitalisation ofÂ General Reserves. The total number of shares issued is 72,30,84,248 having face value of ' 10 each.

During the Financial year 2016-17, the Corporation has issued Bonus Shares in the ratio of 1:1 by capitalisation of General Reserves. The total number of shares issued is 72,30,84,248 having face value of ' 10 each.

Nature and purpose of reserves Capital reserve

It represents Capital Reserve appearing in the Financial Statements of Erstwhile Kochi Refineries Limited (KRL) transferred on amalgamation and difference between the Investment made in Petronet CCK Limited (PCCKL) and the Share CapitalÂ received during the acquisition when the first time control is obtained .

Debenture Redemption Reserve

Debenture Redemption Reserve represents reserve created out of the profits of the Corporation available for distribution to Shareholders which is utilised for Redemption of Debentures/Bonds.

Share Options Outsanding Account

The Share Options Outstanding account is used to record the fair value of Equity-settled Share-based Payment transactions with Employees. The amounts recorded in Share Options Outstanding Account are transferred to SecuritiesÂ Premium upon excersice of Share options.In case of Share options not excersiced by Employees the correspondingÂ amounts are transferred to General Reserve.

General Reserve

General Reserve represents appropriation of Retained Earnings and are available for distribution to Shareholders.Â Securities Premium

The Amount Received in excess of the par value adjusted with additional cost of Equity Shares, if any, has been Classified as Securities Premium. The same can be utilised for issuance of Bonus Shares, Charging off Equity related expenses ,etc.

Retained Earnings

Retained Earnings (Excluding accumulated balance of Remeasurements of Defined Benefit Plans (net of tax)) represents surplus/accumulated earnings of the Corporation and are available for Distribution to Shareholders.

# Classified under Other Financial Liabilities (Refer Note No. 32)

## During the year 2020-21, Board has decided to merge BGRL with Corporation and not to pursue its earlier decision of transfer of assets and liabilities of Corporationâs Gas business to BGRL. Accordingly Lease Obigations of Gas Business willÂ no longer be considered as "Liabilities included in disposal group held-for-sale" as on 31^stÂ March 2021.(Previous YearÂ ' 3.23 Crores ). [Refer Note No. 22(b) and 68(11)]

* Secured in favour of the participating banks ranking pari passu inter-alia by hypothecation of raw materials, finished goods, Work-in-Progress, book debts, stores, components and spares and all movables both present and future. [ReferÂ Note no. 13 and 15]

** The Corporation has Triparty Repo Settlement System limits from Clearing Corporation of India Limited, the borrowings against which was 'Â 850.00 CroresÂ (Previous Year ' 1,000.00 Crores) . These limits are secured by 7.59%Â Govt. Stock 2026 & Treasury Bills of face value 'Â 870.00 CroresÂ (Previous Year: ' 1,220.00 Crores) secured by 7.59%Â Govt. Stock 2026 & 6.90% Oil Marketing Companies GOI Special Bonds 2026.

# Â Â Â During the year 2020-21, Board has decided to merge BGRL with Corporation and not to pursue its earlier decision ofÂ transfer of assets and liabilities of Corporationâs Gas business to BGRL. Accordingly Security/Earnest Money Deposits andÂ Other Liabilities of Gas Business will no longer be considered as "Liabilities included in disposal group held-for-sale" as onÂ 31^stÂ March 2021.(Previous Year ' 0.66 Crores and ' 15.30 Crores respectively). [Refer Note No. 22(b) and 68(II)]

* Â Â Â Includes deposits received under Rajiv Gandhi Gramin LPG Vitrak Yojana and Pradhan Mantri Ujjwala Yojana (CentralÂ Scheme) 'Â 3,281.45 CroresÂ (Previous year ' 3,286.46 Crores). The deposit against these schemes have been funded fromÂ CSR fund and Government of India.

** No amount is due at the end of the period for credit to Investor Education and Protection Fund.

# Â Â Â During the year 2020-21, Board has decided to merge BGRL with Corporation and not to pursue its earlier decision ofÂ transfer of Assets and Liabilities of Corporationâs Gas business to BGRL. Accordingly Advance from customers of GasÂ Business will no longer be considered as "Liabilities included in disposal group held-for-sale" as on 31^stÂ March 2021.Â (Previous Year ' 19.78 Crores). [Refer Note No. 22(b) and 68(II)]

* Â Â Â Deferred Income includes unamortised portion of Government Grants amounting to 'Â 8.31 CroresÂ (Previous yearÂ ' 10.50 Crores) , comprising mainly of works contract tax reimbursement, interest free loan received from Government ofÂ Kerala as part of the fiscal incentives sanctioned for IREP and grants received for technology development.

There isÂ NilÂ gross under recovery (Previous year: ' 255.31 Crores) on sale of sensitive petroleum product due to nonrevision in retail selling prices corresponding to the international prices and applicable foreign exchange rates prevailing during the year.

As advised by the Ministry of Petroleum & Natural Gas, the Corporation has accounted compensation towards sharing of under-recoveries on sale of sensitive petroleum product as subsidy from Government of India amounting toÂ NilÂ (PreviousÂ year: ' 255.31 Crores) and the same is accounted as Revenue from operations.

After adjusting the above compensation, the net under recovery absorbed by the Corporation isÂ NilÂ (Previous year: Nil).

Further, subsidies received from State Governments recognized in Revenue from Operations for 'Â 17.05 CroresÂ (Previous year: ' 34.88 Crores) during the year.

NOTE45

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 theÂ Corporation in the erstwhile KRL) to a Trust ("BPCL Trust for Investment in Shares") for the benefit of the Corporation in theÂ Financial Year 2006-07. After the 1:1 Bonus issue in July 2012 and July 2016 respectively and 1:2 bonus issue in July 2017,Â the Trust holds 20,23,72,422 equity shares of the Corporation as on 1st April 2020. The cost of the original investmentÂ together with the additional contribution to the corpus of the trust made in 2014-15 is reduced from the Total Equity of theÂ Corporation. To the extent of the face value of the shares, the same is reduced from the Paid up Share capital of theÂ Corporation and the balance is reduced from Other Equity under separate reserves.

During the year, Corporation has announced BPCL Employee Stock Purchase Scheme (ESPS) 2020 and created "BPCL ESPS Trust" for the purpose of acquiring shares for allotting to eligible employees. Accordingly, "BPCL ESPS Trust" hasÂ purchased 4,33,79,025 Equity shares from "BPCL Trust for investment in shares". The proportionate cost of "BPCL TrustÂ for Investment in Shares" has been recognized as cost of shares held by "BPCL ESPS Trust".

The income received from "BPCL Trust for investment in shares" and the impact on consolidation of "BPCL ESPS Trust" has been recognized directly under Other Equity of the Corporation.

Further, Corporation has sold 12,60,33,090 Equity Shares from "BPCL Trust for investment in shares" via Bulk Deal on Stock Exchange for Net Consideration of 'Â 5,511.79 Crores.Â Accordingly, Security Premium of 'Â 5,101.31 CroresÂ hasÂ been recognized after adjusting the corresponding cost of 'Â 410.48 CroresÂ (including Face Value of Equity Shares ofÂ ' 126.03 Crores) under Total Equity.

The details of shares held by "BPCL Trust for Investment in Shares" and "BPCL ESPS Trust" and its corresponding cost adjustment in Total Equity is as under:

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

NOTE47

The Corporation has provided for Pay Revision dues of non-management staff under Salaries and Wages amounting to 'Â 151.10 CroresÂ (Previous year: ' 353.02 Crores) during the year based on the available information and judgement.Â Further, Corporation has finalized Pay Revision with some of the Employees / Employee Unions during the year.

NOTE 48 SERVICE CONCESSION ARRANGEMENTS

Under the terms of agreement, the Corporation will operate and maintain the Plant and sell electricity generated to Regulator for a period which covers the substantial useful life of the Plant which may be renewed for such further period asÂ may be mutually agreed upon between the parties. The Corporation will be responsible for any maintenance servicesÂ during the concession period.

The Corporation in turn has the right to charge the Regulator agreed rate as stated in the service concession arrangement.

The fair value towards the construction of the Plant has been recognized as an Intangible Asset and is amortized over the useful life of the asset or period of contract whichever is less.

[A] Post Employment Benefit Plans:

Defined Contribution Scheme

Defined Contribution Scheme (DCS) was introduced effective from 1^stÂ Jan 2007. Corporation contributes at a defined percentage of the employee salary out of the total entitlements on account of superannuation benefits under thisÂ scheme.Corporation has GOI managed PFRDA NPS for its employees and is contributing upto 10% of the salaryÂ from the above defined percentage to the NPS for the staff who have enrolled under the scheme. The remainingÂ contribution after the PFRDA NPS contribution is made to a separate Trust managed by the Corporation.

Gratuity

The Corporation has a defined benefit gratuity plan managed by a trust. Trustees administer the contributions made to the trust, investments thereof etc. Based on actuarial valuation, the contribution is paid to the trust which isÂ invested in plan assets as per the investment pattern prescribed by the Government. Gratuity is paid to a staffÂ member who has put in a minimum qualifying period of 5 years of continuous service, on superannuation,Â resignation, termination or to his nominee on death.

Other Defined Benefits include:

(a) Â Â Â Post Retirement Medical Scheme (managed by a trust) to employees, spouse, dependent children andÂ dependent parents;

(b) Â Â Â Pension / Ex-Gratia scheme to the retired employees who are entitled to receive the monthly pension / ex-gratiaÂ for life;

(c) Â Â Â Death in service / Permanent Disablement benefit given to the spouse of the employee / employee, provided theÂ deceasedâs family / disabled employee deposits with the Corporation, retirement dues such as Provident Fund,Â Gratuity, Leave Encashment etc., payable to them;

(d) Â Â Â Resettlement allowance paid to employees to permanently settle down at the time of retirement;

(e) Â Â Â Felicitation benefits to retired employees on reaching the age related milestones; and

(f) Â Â Â The Corporation makes contribution towards Provident Fund, which is administered by the trustees. TheÂ Corporation has an obligation to fund any shortfall on the yield of the trustâs investments over the interest ratesÂ declared by the Government under EPF scheme.

These defined benefit plans expose the Corporation to actuarial risks, such as longetivity risk, interest rate risk, and market (investment) risk.

The estimates for future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors.

The expected return on plan assets is based on market expectation at the beginning of the period, for returns over the entire life of the related obligations.

For the funded plans, the trust maintains appropriate fund balance considering the analysis of maturities. Projected Unit credit method is adopted for Asset-Liability Matching.

During FY 2019-20, Corporation has contributed an estimated amount of 'Â 122 CroresÂ towards advance funding to PRMB fund against the future service liabilities of the employees to protect the PRMB fund sustainability for the subsequent period in view ofÂ proposed disinvestment.

In respect of investments made by PRMB Trust, total Provision as on 31^stÂ March 2021 was 'Â 35 CroresÂ (Previous year: ' 35 Crores). Past Service cost is recognized in respect of Gratuity and Post Retirement Medical Benefits mainly on account ofÂ implementation of Voluntary Retirement Scheme. These Past Service Cost has been reclassified as Voluntary RetirementÂ Scheme cost under Employee Benefits Expense during the year.

[B] Provident Fund:

The Corporationâs contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employeesâ salary and charged to Statement of Profit and Loss. Shortfall,Â if any, in the fund revenues based on the EPFO specified rate of return, will need to be made good by the CorporationÂ and is charged to Statement of Profit and Loss. The actual return earned by the fund has mostly been higher than theÂ EPFO specified minimum rate of return in the past years. The estimated shortfall in returns for the FY 2020-21 isÂ NilÂ (Previous year: ' 8.00 Crores). During FY 2020-21, there is reversal of provision towards estimated shortfall inÂ returns of 'Â 8 CroresÂ (Previous year: Provision of ' 132.01 Crores for estimated interest shortfall and provision forÂ investment). The Fund balance is sufficient to meet the fund obligations as on 31^stÂ March 2021 and 31^stÂ March 2020.

(a) Employee option plan

The Corporation has floated an Employee Stock Purchase Scheme (âSchemeâ) on 28^thÂ September 2020 (Grant Date) after taking Shareholders approval in the Annual General Meeting held on 28^thÂ September 2020, given theÂ background of proposed disinvestment by the Government of India (âGOIâ). As a recognition of contribution ofÂ employees in growth of the Corporation and increase in shareholdersâ value, the Scheme as a primary objectiveÂ seeks to reward eligible employees for their loyalty/longevity with the Corporation. The Scheme is named as "BPCLÂ Employee Stock Purchase Scheme-2020" ("ESPS" / "Scheme"). The above scheme also covers the employees whoÂ have opted for Voluntary Retirement Scheme (VRS) during the year.

As per Vesting Condition of the Scheme, the employee has to render services till the date of share transfer or retirement (including VRS) and Death in Service whichever is earlier. In view of the above, the scheme has beenÂ accounted as Employee Stock Option Scheme, in line with the applicable Ind AS.

Each option converts into one equity share of the Corporation upon exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. These options vestÂ and need to be exercised on 20^thÂ April 2021. Any options remaining unexercised at the end of the exercise periodÂ shall lapse.

The Corporation assesses, at each reporting date, whether there is an indication of impairment of assets. Further, it is assumed that suitable mechanism would be in place by the Government of India, in line with earlier/ current year(s), toÂ provide compensation towards under recoveries of margin, if any, and recoveries against Direct Benefit Transfer for LPGÂ Scheme on account of sale of sensitive petroleum products in subsequent years.

Based on the assessment, there is no indication of impairment of assets except certain investments in Subsidairies, Joint Ventures and Associates as at 31^stÂ March 2021.

The Corporation has carrying value of investment of ' 6,276.37 Crores in its wholly owned subsidiary, Bharat Petroresources Limited (BPRL). BPRL is an upstream company and is having investments in Oil and Gas Blocks globallyÂ and in India, either directly or through its Subsidiaries (including step down Subsidiaries), Joint ventures and Associates.Â During FY 2020-21, BPRL has relinquished or impaired certain oil and gas blocks on account of changes in circumstancesÂ and prospects of the blocks. Accordingly, impairment testing has been carried out on Equity investment made byÂ Corporation in BPRL and an impairment loss of 'Â 2,032.79 CroresÂ has been recognized based on the value in use of assetsÂ as on 31^stÂ March 2021. Such impairment loss is shown as an exceptional item in Statement of Profit and Loss for the yearÂ ended 31^stÂ March 2021.

C.i. Risk management framework

The Corporationâs Board of Directors has overall responsibility for the establishment and oversight of the Corporationâs risk management framework. The Risk Management Committee of the Board has defined roles and responsibilities, whichÂ includes reviewing and recommending the risk management plan and the risk management report for approval of theÂ Board with the recommendation of the Audit Committee. The Corporation has adopted a Risk Management Charter andÂ Policy for self-regulatory processes and procedures for ensuring the conduct of the business in a risk conscious manner.

The Corporation has exposure to the following risks arising from financial instruments:

â¢ Â Â Â Credit risk ;

â¢ Â Â Â Liquidity risk ; and

â¢ Â Â Â Market riskÂ C.ii. Credit risk

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Corporationâs trade and other receivables, cash and cashÂ equivalents and other bank balances, derivatives and debt securities. The maximum exposure to credit risk in case of all theÂ financial instruments covered below is restricted to their respective carrying amount.

(a) Trade and other receivables from customers

As at 31^stÂ March 2021 and 31^stÂ March 2020, the Corporationâs retail dealers, industrial and aviation customers accounted for the majority of the trade receivables.

Expected credit loss assessment for Trade and other receivables from customers as at 31^stÂ March 2021 and 31^stÂ March 2020

The Corporation uses an allowance matrix to measure the expected credit losses of trade and other receivables. The loss rates are computed using a âRoll Rateâ method based on the probability of receivable progressing through successiveÂ stages of delinquency to write off. Roll rates are calculated separately for exposures in different segments based on theÂ following common credit risk characteristics - type of product purchases, type of customers.

* Guarantees issued by the Corporation on behalf of joint venture/subsidiary are with respect to borrowings raised by the respective entity. These amounts will be payable on default by the concerned entity. As of the reporting date, none of theÂ subsidiary/joint venture have defaulted and hence, the Corporation does not have any present obligation to third parties inÂ relation to such guarantees.

C.iv. Market risk

C.iv.a Currency risk

The Corporation is exposed to currency risk on account of its operating and financing activities. The functional currency of the Corporation is Indian Rupee. Our exposure is mainly denominated in US Dollars (USD). The USD exchange rate hasÂ changed substantially in recent periods and may continue to fluctuate substantially in the future.

The Corporation has put in place a Financial Risk Management Policy to identify the most effective and efficient ways of managing the currency risks. The Corporation uses derivative instruments, (mainly foreign exchange forward contracts)Â to mitigate the risk of changes in foreign currency exchange rates in line with our policy.

The Corporation does not use derivative financial instruments for trading or speculative purposes.

Fair value sensitivity analysis for fixed-rate instruments

The Corporation accounts for certain investments in fixed-rate financial assets such as investments in Oil bonds and Government Securities at fair value through profit or loss. Accordingly, a decrease in 25 basis point in interest rates is likelyÂ to increase the profit or loss (before tax) for the year ending 31^stÂ March 2021 by 'Â 46.61 CroresÂ (Previous year: ' 54.48Â Crores) and an increase in 25 basis point in interest rates is likely to decrease the profit or loss (before tax) for the yearÂ ending 31^stÂ March 2021 by 'Â 46.10 CroresÂ (Previous year: ' 55.19 Crores).

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 25 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currencyÂ exchange rates, remain constant. In cases where the related interest rate risk is capitalised to Property, Plant andÂ Equipment, the impact indicated below may affect the Corporationâs income statement over the remaining life of the relatedÂ Property, Plant and Equipment.

C.iv.c Commodity rate risk

Corporationâs profitability gets affected by the price differential (also known as Margin or Crack spread) between prices of products (output) and the price of the crude oil and other feed-stocks used in production (input). Prices of both are set byÂ markets. Hence Corporation uses derivatives instruments (swaps, futures, options, and forwards) to hedge exposures toÂ commodity price risk to cover refinery operating cost using Basic Swaps on various products cracks like Naphtha,Â Gasoline (Petrol), Jet/Kerosene, Gasoil (Diesel) and Fuel Oil against Benchmark Dubai Crude. Further volatility in freightÂ costs is hedged through Freight Forwards and bunker purchases. Settlement of all derivative transactions take place on theÂ basis of monthly average of the daily prices of the settlement month quoted by Platts.

Corporation uses historical model of VAR techniques based on variance/covariance to make a statistical assessment of the market risk arising from possible future changes in market values over a 24-hour period and within a 95% confidence level.Â The calculation of the range of potential changes in fair value takes into account positions and the history of priceÂ movements for last two years. VAR calculation for open position as on 31^stÂ March 2021 is as given below:

A. Â Â Â The Corporation has Triparty Repo Settlement System limits from Clearing Corporation of India Limited, theÂ borrowings against which was 'Â 850 CroresÂ as at 31^stÂ March 2021 (Previous year : ' 1,000 Crores). The limits areÂ secured by 7.59% Government Stock 2026 & T-Bills of 'Â 870 CroresÂ (Previous year : ' 1,220 Crores Secured byÂ 7.59% Government Stock 2026 & 6.90% Oil Marketing Companies GOI Special Bonds 2026).

C. Â Â Â The Corporation enters into derivative transactions under the International Swaps and Derivatives AssociationÂ (ISDA) master netting agreements. In general, under such agreements the amounts owed by each counterparty on aÂ single day in respect of all transactions outstanding in the same currency are aggregated into a single net amountÂ that is payable by one party to the other.

NOTE 60 CAPITAL MANAGEMENT

The Corporationâs objective is to maximize the shareholdersâ value by maintaining an optimum capital structure.

Management monitors the return on capital as well as the debt equity ratio and makes necessary adjustments in the capital

structure for the development of the business.

The Corporationâs debt to equity ratio as at 31^stÂ March, 2021 wasÂ 0.48Â (Previous year: 1.26).

Note: For the purpose of computing debt to equity ratio, equity includes Equity Share Capital and Other Equity and Debt

includes Long term borrowings, short term borrowings and current maturities of long term borrowings.

NOTE 61 SEGMENT REPORTING

As per the requirements of Ind AS 108 on âOperating Segmentsâ, segment information has been provided under the Notes

to Consolidated Financial Statements.

1. Â Â Â Corporationâs subsidiary, Bharat Gas Resources Limited (BGRL) has been authorized by Petroleum and Natural GasÂ Regulatory Board (PNGRB) for development of 11 Geographical Areas (GAs) in Bid Round 9 and 2 GAs in Bid RoundÂ 10. As a promoter, BPCL has issued Parent Company Guarantees (PCGs) to PNGRB guaranteeing all performanceÂ obligations of BGRL under these 13 GAs. The outflow that may arise under these PCGs is not quantifiable.

2. Â Â Â Corporation has issued a Parent Company Guarantee (PCG) in favour of Mozambique LNG1 Company Limited inÂ respect of obligations of BGRL under LNG Sales Purchase Agreement (SPA) with Mozambique LNG1 CompanyÂ Limited. Transaction under the SPA is expected to be initiated in FY 2023-24. The outflow that may arise under thisÂ PCGs is not quantifiable.

3. Â Â Â Corporationâs subsidiary, Bharat PetroResources Limited (BPRL), is engaged in the business of Exploration andÂ Production (E&P) of oil & gas and has participating interest in several blocks held directly or through groupÂ companies. Corporation has issued performance guarantees/counter-indemnities/letter of undertakings in favour ofÂ Government/Government Agencies/Operators/other partners towards performance of obligations of BPRLÂ (including its group companies) under the Concession Agreement/Joint Operating Agreements/Production SharingÂ Contracts/Licenses/ Farmout Agreements relating to various such E&P oil & gas blocks acquired by them. TheÂ outflow that may arise under these performance guarantees/counter-indemnities/letter of undertakings is notÂ quantifiable.

4. Â Â Â The Corporation has issued Performance Guarantee for necessary infrastructure of terminal and pipelines at KochiÂ and obligations of Associate Company Petronet LNG Ltd under the LNG SPA, the outflow that may arise under theÂ same is not quantifiable.

# Calls received for issue of shares during the year from Joint Venture Company for which subscription of shares was

pending as on 31.03.2021.

In pursuance to Section 115BAA of the Income Tax Act, 1961,The Corporation had an irrevocable option of shifting to a lower corporate income tax rate (22% plus applicable surcharge and cess) as against the earlier rate of 30% plus applicableÂ surcharge and cess, subject to certain conditions. Considering all the applicable provisions of the Income Tax Act, 1961,Â the Corporation has decided to exercise the option of lower corporate income tax rate from FY 2020-21.

Accordingly, the Corporation has recognized Provision for Income Tax for the year ended 31^stÂ March 2021 and re-measured itâs Deferred Tax Assets/Liabilities on the basis of the rate prescribed in the Income Tax Act.

The net impact on Deferred Tax due to this change is 'Â 1,870.26 CroresÂ of which 'Â (55.51) CroresÂ has been accounted in Other Comprehensive Income. The MAT credit balance as on 01^stÂ April 2020 amounting to 'Â 723.10 CroresÂ has not beenÂ carried forward upon movement to new tax regime as per provision of Section 115BAA of the Income Tax Act, 1961.Â However, the above MAT credit would be available for utilization against any tax liabilities pertaining to past periods.

During the year FY 2020-21, Corporation has reversed 'Â 2.40 CroresÂ tax liabilities based on the approved applications made under Vivad Se Vishwas Scheme whereas during FY 2019-20, Corporation has recognized tax liabilities underÂ âShort/(Excess) provision of the earlier yearsâ in respect of all the eligible Income Tax disputes under the SchemeÂ amounting to ' 219.96 Crores. The settlement of the Scheme is likely to be completed in the FY 2021-22.

NOTE 68

(I) Â Â Â Numaligarh Refinery Limited (NRL)

The Corporation has sold its entire shareholding in NRL i.e. 45,35,45,998 equity shares of ' 10/- each (constituting 61.65% of the total equity capital of NRL) under the terms of Share Purchase Agreement executed on 25^thÂ MarchÂ 2021 after obtaining approvals from the shareholders in Extra-ordinary General Meeting held on 25^thÂ March 2021.Â The Equity Shares of NRL have been sold to a consortium of Oil India Limited and Engineers India Limited; and toÂ Government of Assam at total consideration of 'Â 9,875.96 Crores.

After the above sale of equity shares, NRL has ceased to be the subsidiary of the Corporation with effect from 26^thÂ March 2021. The Gain arising from the sale of Equity shares of NRL is 'Â 9,422.42 CroresÂ which has beenÂ shown as an Exceptional Item in the Statement of Profit and Loss.

(II) Â Â Â Bharat Gas Resource Limited (BGRL)

During FY 2020-21, the Board has decided to merge the wholly owned subsidiary BGRL with the Corporation and not pursue transfer of Assets and Liabilities of Gas business to BGRL. Accordingly, the carrying amount of assetsÂ and liabilities pertaining to the Gas business which were classified as Disposal Group and presented seperately asÂ on 31^stÂ March 2020, are no longer required to be classified and presented seperately as on 31Â ^stMarch 2021.

The Proposed Merger of BGRL with the Corporation is in process as on 31^stÂ March 2021 and will be completed after obtaining approval from respective authorities.

(III) Â Â Â Bharat Oman Refineries Limited (BORL)

The Corporation holds 63.38% of Equity Shares in the Joint Venture Company BORL. Corporation has finalized commercial terms and has entered into a Share Purchase Agreement(SPA) with Joint Venture Partner OQ S.A.O.C.Â (formerly known as Oman Oil Company S.A.O.C.) ("OQ") on 31^stÂ March 2021, regarding the purchase of theÂ 88,86,13,336 equity shares of BORL, constituting 36.62% of the equity share capital, for a consideration of aroundÂ 'Â 2,399.26 Crores.Â Pending closure of the transaction as per the SPA which is expected to be completed inÂ FY 2021-22, BORL continues to be treated as a Joint Venture as on 31^stÂ March 2021.

* During FY 2019-20, due to outbreak of COVID-19 globally and resultant lockdown in many countries including India, there had been significant volatility and sharp reduction in the prices of Crude Oil and Petroleum Products, which hasÂ resulted in significant write-down of Inventories to Net Realisable Value (NRV).

NOTE 70

Cabinet Committee of Economic Affairs (CCEA) Government of India, in its meeting held on 20^thÂ November 2019, has accorded in-principle approval for Strategic disinvestment of Government of India shareholding in BPCL excluding BPCLâsÂ shareholding in Numaligarh Refinery Ltd. The transaction of Strategic disinvestment of Government of IndiaâsÂ shareholding in the Corporation is in process.

NOTE 71

COVID-19 pandemic, globally and in India, is causing significant disturbance in economic and business activities. Management has assessed the potential impact of COVID-19 based on the current circumstances and expects noÂ significant impact on the continuity of operations of the business on long term basis/ on useful life of the assets/ onÂ financial position etc.

NOTE 72

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

Mar 31, 2019

NOTE 59 FINANCIAL INSTRUMENTS

									Rs. in Crores
		Carrying amount				Fair value
As at 31/03/2018	Note Reference	Mandatory at FVTPL	FVOCI -designated as such	Amortised Cost	Total	Level 1	Level 2	Level 3	Total
Financial
Investment in equity instruments	8&14	2.30	681.20		683.50	575.94	2.30	105.26	683.50
Investment in debt instruments	8&14	4,992.88		0.01	4,992.89	4,992.88			4,992.88
Derivative instruments - Interest rate swap	19	3.13			3.13		3.13		3.13
Derivative instruments - Forward contracts	19	8.51			8.51		8.51		8.51
Deposits	9			27.81	27.81		34.19		34.19
Loan to subsidiary- fixed rate	9			216.81	216.81		267.57		267.57
Loan to subsidiary- variable rate	9			625.00	625.00
Loan to Joint Venture	9			1,254.10	1,254.10		1,429.67		1,429.67
Loan
- Non-current- Loans to employee	9			389.22	389.22		389.22		389.22
- Non-current - Other Loans	9			463.87	463.87		463.87		463.87
- Non-current- Others	9			41.88	41.88
- Current	18			71.02	71.02
Other Deposits	9			71.22	71.22
Cash and cash equivalents	16			153.34	153.34
Bank Balances other than Cash and cash equivalents	17			29.19	29.19
Trade receivables	15			5,151.73	5,151.73
Others
- Non-current	10			56.34	56.34
- Current	19			4,631.48	4,631.48
Total		5,006.82	681.20	13,183.02	18,871.04

Financial liabilities
Derivative Liability on Currency Swaps	32	85.83			85.83		85.83		85.83
Derivative Liability on commodity derivatives	32	4.33			4.33		4.33		4.33
Bonds	25			7,828.78	7,828.78	7,976.51			7,976.51
OIDB Loans	25 & 32			1,357.94	1,357.94		1,373.45		1,373.45
Debentures	25			1,299.52	1,299.52	1,290.49			1,290.49
Term loans	25			2,000.00	2,000.00
Foreign Currency Loans - Syndicated	25			2,771.42	2,771.42
Other Non-Current financial liabilities	26			58.35	58.35
Short term borrowinqs	30			8,093.01	8,093.01
Trade and Other Payables	31			14,989.52	14,989.52
Other Current liabilities	32			15,398.96	15,398.96
Total		90.16	-	53,797.50	53,887.66

Note: There are no other categories of financial instruments other than those mentioned above.

B. Measurement of fair values

Valuation techniques and significant unobservable inputs

The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, for financial instruments measured at fair value in the Balance Sheet, as well as the significant unobservable inputs used.

Financial instruments measured at fair value

Type	Valuation technique	Significant unobservable inputs	Inter-relationship between significant unobservable inputs and fair value measurement
Unquoted equity shares (Cochin International Airport Limited)	The Valuation is based on market multiples derived from quoted prices of companies comparable to investee and the expected revenue and PAT of the investee.	Adjusted market multiple (P/E)	The estimated fair value would increase/ (decrease) if Adjusted market multiple were higher/(lower)
Unquoted equity shares- (Sai Wardha Power Generation Limited (SWPGL))	The Fair Valuation is based on the agreement with SWPGL.	Not applicable	Not applicable
Derivative instruments -forward exchange contracts	Forward pricing: The fair value is determined using quoted forward exchange rates at the reporting date.	Not applicable	Not applicable
Derivative instruments -interest rate swap and currency swap	Discounted cash flows: The valuation model considers the present value of expected receipt/ payment discounted using appropriate discounting rates. This technique also involves using the interest rate curve for projecting the future cash flows.	Not applicable	Not applicable
Derivative instruments - commodity contracts	Fair valuation of Commodity Derivative instruments are based on forward assessment done by Platts which is an independent agency which assesses benchmark global crude oil and product prices. Globally counterparties also use Platts assessment for settlement of transactions.	Not applicable	Not applicable
Non current financial assets and liabilities measured at amortised cost	Discounted cash flows: The valuation model considers the present value of expected receipt/ payment discounted using appropriate discounting rates.	Not applicable	Not applicable

Level 3 fair values

Reconciliation of Level 3 fair values

The following table shows a reconciliation of the opening and closing balances for Level 3 fair values.

	Rs. in Crores
Paticulars	Equity securities
Opening Balance(1st April 2017)	97.80
Net change in fair value (unrealised)	7.46
Closing Balance (31st March 2018)	105.26

Opening Balance(1st April 2018)	105.26
Net change in fair value (unrealised)	9.04
Closing Balance (31st March 2019)	114.30

Sensitivity analysis

For the fair values of unquoted equity shares, reasonably possible changes at the reporting date to one of the significant unobservable inputs, holding other inputs constant, would have the following effects:

				Rs. in Crores
	As at 31/03/2019		As at 31/03/2018
	Profit or loss		Profit or loss
Significant unobservable inputs	Increase	Decrease	Increase	Decrease
P/E (5% movement)	5.71	(5.71)	5.29	(5.29)

C. Financial risk management

C.i. Risk management framework

The Corporation''s Board of Directors has overall responsibility for the establishment and oversight of the Corporation''s risk management framework. The Risk Management Committee of the Board has defined roles and responsibilities, which includes reviewing and recommending the risk management plan and the risk management report for approval of the Board with the recommendation of the Audit Committee. The Corporation has adopted a Risk Management Charter and Policy for self-regulatory processes and procedures for ensuring the conduct of the business in a risk conscious manner.

The Corporation has exposure to the following risks arising from financial instruments:

â¢ Credit risk;

â¢ Liquidity risk; and

â¢ Market risk C.ii. Credit risk

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Corporation''s trade and other receivables, cash and cash equivalents and other bank balances, derivatives and debt securities. The maximum exposure to credit risk in case of all the financial instuments covered below is restricted to their respective carrying amount.

(a) Trade and other receivables from customers

As at 31st March 2019 and 31st March 2018, the Corporation''s retail dealers, industrial and aviation customers accounted for the majority of the trade receivables.

Expected credit loss assessment for Trade and other receivables from customers as at 31st March 2019 and 31st March 2018

The Corporation uses an allowance matrix to measure the expected credit losses of trade and other receivables.

The loss rates are computed using a ''roll rate'' method based on the probability of receivable progressing through successive stages till full provision for the trade receivable is made. Roll rates are calculated separately for exposures based on common credit risk characteristics for a set of customers.

The following table provides information about the exposure to credit risk and Expected Credit Loss Allowance for trade and other receivables:

			Rs. in Crores
As at 31/03/2019	Gross carrying amount	Weighted average loss rate - range	Loss allowance
Debts not due	4,197.20	0.19%	8.00
Debts over due	2,368.19	11.58%	274.18
Total	6,565.39	4.30%	282.18

			Rs. in Crores
As at 31/03/2018	Gross carrying amount	Weighted average loss rate - range	Loss allowance
Debts not due	3,848.76	0.17%	6.46
Debts over due	1,694.78	15.21%	257.80
Total	5,543.54	4.77%	264.26

The Corporation does not provide for any loss allowance on trade receivables where risk of default is negligible such as receivables from other oil marketing companies, if any, hence the same is excluded from above.

Loss rates are based on actual credit loss experience over the past three years.

The movement in the loss allowance in respect of trade and other receivables during the year was as follows:-

	Rs. in Crores
Balance as at 1st April, 2017	581.67
Movement during the year	(317.41)
Balance as at 31st March, 2018	264.26
Movement during the year	17.92
Balance as at 31st March, 2019	282.18

(b) Cash and cash equivalents and Other Bank Balances

The Corporation held cash and cash equivalents and other bank balances of Rs. 95.41 Crores at 31st March 2019 (31st March 2018: Rs. 182.53 Crores). The cash and cash equivalents are held with banks with good credit ratings and financial institution counterparties with good market standing. Also, Corporation invests its short term surplus funds in bank fixed deposits, Tri Party Repo and liquid schemes of mutual funds, which carry no / low mark to market risks for short duration and therefore does not expose the Corporation to credit risk.

The derivatives are entered into with banks, financial institutions and other counterparties with good credit ratings. Further exposures to counter-parties are closely monitored and kept within the approved limits.

(d) Investment in debt securities

Investment in debt securities are mainly as loans to subsidiaries, joint venture companies and investment in government securites which do not carry any significant credit risk.

C.iii. Liquidity risk

Liquidity risk is managed by Corporation through effective fund management. The Corporation has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Corporation has access to funds from debt markets through commercial paper programs, foreign currency borrowings and other debt instruments.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments

Maturity Analysis of Significant Financial Liabilities

					Rs. in Crores
	Contractual cash flows
As at 31/03/2019	Total	Upto 1 year	1-3 years	3-5 years	More than 5 years
Non-derivative financial liabilities
Bonds	13,793.62	1,874.54	4,357.79	3,895.21	3,666.08
OIDB Loans	1,560.15	583.69	697.80	278.66	-
Term loans	2,825.80	165.45	566.50	1,993.85	100.00
Non Convertible Debentures	3,052.98	178.39	906.51	1,968.08	-
Foreign Currency Loans - Syndicated	10,886.19	253.17	3,220.62	7,412.40	-
Short term borrowings	3,580.75	3,580.75	-	-	-
Trade and other payables	17,235.18	17,235.18	-	-	-
Other current liabilities	17,508.03	17,508.03	-	-	-
Financial guarantee contracts*	6,630.07	-	581.04	1,068.70	4,980.33

Derivative financial liabilities
Currency Swaps	214.97	214.97	-	-	-

					Rs. in Crores
As at 31/03/2018	Contractual cash flows
As at 31/03/2018	Total	Upto 1 year	1-3 years	3-5 years	More than 5 years
Non-derivative financial liabilities
Bonds	9,826.50	326.36	1,995.87	3,871.84	3,632.43
OIDB Loans	1,511.08	586.14	836.71	88.23	-
Term loans	2,863.80	160.00	430.89	536.07	1,736.84
Non Convertible Debentures	1,750.08	98.10	196.20	1,455.78	-
Foreign Currency Loans - Syndicated	3,077.48	80.40	2,997.08	-	-
Short term borrowings	8,093.01	8,093.01	-	-	-
Trade and other payables	14,989.52	14,989.52	-	-	-
Other current liabilities	15,398.96	15,398.96	-	-	-
Financial guarantee contracts*	7,210.14	975.66	546.37	1,004.93	4,683.18

Derivative financial liabilities
Currency Swaps	171.09	25.45	145.64	-	-
Commodity Contracts	4.33	4.33	-	-	-

* Guarantees issued by the Corporation on behalf of joint venture/subsidiary are with respect to borrowings raised by the respective entity. These amounts will be payable on default by the concerned entity. As of the reporting date, none of the subsidiary/joint venture have defaulted and hence, the Corporation does not have any present obligation to third parties in relation to such guarantees.

C.iv. Market risk

C.iv.a Currency risk

The Corporation is exposed to currency risk on account of its operating and financing activities. The functional currency of the Corporation is Indian Rupee. Our exposure is mainly denominated in U.S. dollars (USD). The USD exchange rate has changed substantially in recent periods and may continue to fluctuate substantially in the future

The Corporation has put in place a Financial Risk Management Policy to Identify the most effective and efficient ways of managing the currency risks. The Corporation uses derivative instruments, (mainly foreign exchange forward contracts) to mitigate the risk of changes in foreign currency exchange rates in line with our policy

The Corporation does not use derivative financial instruments for trading or speculative purposes.

Exposure to currency risk

The currency profile in INR of financial assets and financial liabilities as at 31st March 2019 and 31st March 2018 are as below:

Rs. in Crores

As at 31/03/2019	USD	EURO	JPY	CHF	Others
Financial assets
Cash and cash equivalents	11.81	-	-	-	-
Trade receivables and other assets	244.04	0.18	-	-	0.01
Net exposure for assets	255.85	0.18	-	-	0.01

Financial liabilities
Bonds	10,332.38	-	-	1,390.54	-
Foreign Currency Loans - Syndicated	8,108.55	-	-	-	-
Short term borrowings	1,632.44	-	-	-	-
Trade Payables and other liabilities	10,370.28	203.55	12.81	12.44	2.88
Add/(Less): Foreign curency forward exchange contracts	(1,743.12)	-	-	-	-
Add/(Less): Foreign currency swaps	1,579.11	-	-	(1,390.54)	-
Net exposure for liabilities	30,279.64	203.55	12.81	12.44	2.88
Net exposure (Assets - Liabilities)	(30,023.79)	(203.37)	(12.81)	(12.44)	(2.87)

in Crores

As at 31/03/2018	USD	EURO	JPY	CHF	Others
Financial assets
Cash and cash equivalents	14.26	-	-	-	-
Trade receivables and other assets	537.05	0.19	-	-	0.01
Net exposure for assets	551.31	0.19	-	-	0.01

Financial liabilities
Bonds	6,465.77	-	-	1,363.01	-
Foreign Currency Loans - Syndicated	2,771.42	-	-	-	-
Short term borrowings	6,286.26	-	-	-	-
Trade Payables and other liabilities	7,631.08	167.28	0.41	19.15	2.81
Add/(Less): Foreign curency forward exchange contracts	(1,654.97)	-	-	-	-
Add/(Less): Foreign currency swaps	1,484.89	-	-	(1,363.01)	-
Net exposure for liabilities	22,984.45	167.28	0.41	19.15	2.81
Net exposure (Assets - Liabilities)	(22,433.14)	(167.09)	(0.41)	(19.15)	(2.80)

Sensitivity analysis

A reasonably possible strengthening (weakening) of the USD against INR at 31st March would have affected the measurement of financial instruments denominated in US dollars and affected profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. In cases where the related foreign exchange fluctuation is capitalised to Property, Plant and Equipment or recognised directly in reserves, the impact indicated below may affect the Corporation''s income statement over the remaining life of the related Property, Plant and Equipment or the remaining tenure of the borrowing respectively.

	Rs. in Crores
Effect in INR (before tax)	Profit or loss
Effect in INR (before tax)	Strengthening	Weakening
For the year ended 31st March, 2019
3% movement
USD	(900.71)	900.71

Effect in INR (before tax)	Profit or loss
Effect in INR (before tax)	Strengthening	Weakening
For the year ended 31st March, 2018
3% movement
USD	(672.99)	672.99

C.iv.b Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates, in cases where the borrowings are measured at fair value through profit or loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

The Company''s approach to managing interest rate risk is to have a judicious mix of borrowed funds with fixed and floating interest rate obligation.

Exposure to interest rate risk

Corporation''s interest rate risk arises primarily from borrowings. The interest rate profile of the Corporation''s interest-bearing financial instruments is as follows:

			Rs. in Crores
Particulars	Note Reference	As at 31/03/2019	As at 31/03/2018
Fixed-rate instruments
Financial Assets - measured at amortised cost
Investment in debt instruments	8	0.01	0.01
Loan to Subsidiary	9	238.49	216.81
Loan to Joint Venture	9	1,254.10	1,254.10
Financial Assets - measured at Fair Value through Profit & Loss
Investment in debt instruments	14	5,075.89	4,992.88
Total of Fixed Rate Financial Assets		6,568.49	6,463.80
Financial liabilities - measured at amortised cost
Bonds	25 & 32	11,722.91	7,828.78
OIDB Loans	25 & 32	1,358.50	1,357.94
Non- Convertible Debentures	25	2,299.32	1,299.52
Short term borrowings	30	1,737.19	1,500.00
Term Loan	25	29.27	-
Total of Fixed Rate Financial Liabilities		17,147.19	11,986.24

			Rs. in Crores
Particulars	Note Reference	As at 31/03/2019	As at 31/03/2018
Variable-rate instruments
Financial Assets - measured at amortised cost
Loan to Subsidiary	9	450.00	625.00
Total of Variable Rate Financial Assets		450.00	625.00
Financial liabilities - measured at amortised cost
Foreign Currency Loans - Syndicated	25	8,108.55	2,771.42
Short term borrowings	30	1,843.56	6,593.01
Term loans	25	2,000.00	2,000.00
Total of Variable Rate Financial Liabilities		11,952.11	11,364.43

Fair value sensitivity analysis for fixed-rate instruments

The Corporation accounts for certain investments in fixed-rate financial assets such as investments in Oil bonds and Government Securities at fair value through profit or loss. Accordingly, a decrease in 25 basis point in interest rates is likely to increase the profit or loss (before tax) for the year ending 31st March 2019 by Rs. 60.87 Crores (31st March 2018 - Rs. 67.15 Crores) and an increase in 25 basis point in interest rates is likely to decrease the profit or loss (before tax) for the year ending 31st March 2019 by Rs. 61.80 Crores (31st March 2018 -Rs. 68.30 Crores).

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 25 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant. In cases where the related interest rate risk is capitalised to Property, Plant and Equipment, the impact indicated below may affect the Corporation''s income statement over the remaining life of the related Property, Plant and Equipment.

		Rs. in Crores
	Profit or	(loss)
Cash flow sensitivity (net)	0.25 %	0.25%
	increase	decrease
As at 31/03/2019
Variable-rate loan instruments	(29.49)	29.49
Interest on Loan given to Subsidiary	1.12	(1.12)
Cash flow sensitivity (net)	(28.37)	28.37
As at 31/03/2018	0.25 %	0.25%
	increase	decrease
Variable-rate loan instruments	(24.58)	24.58
Interest on Loan given to Subsidiary	4.47	(4.47)
Cash flow sensitivity (net)	(20.11)	20.11
C.iv.c Commodity rate risk

BPCL''s profitability gets affected by the price differential (also known as Margin or Crack spread) between prices of products (output) and the price of the crude oil and other feed-stocks used in production (input). Prices of both are set by markets. Hence BPCL uses derivatives instruments (swaps, futures, options, and forwards) to hedge exposures to commodity price risk to cover refinery operating cost using Basic Swaps on various products cracks like Naphtha, Gasoline (Petrol), Jet /Kerosene, Gasoil (Diesel) and Fuel Oil against Benchmark Dubai Crude. Further volatility in freight costs is hedged through Freight Forwards and bunker purchases. Settlement of all derivative transactions take place on the basis of monthly average of the daily prices of the settlement month quoted by Platts.

BPCL measures market risk exposure arising from its trading positions using value-at-risk techniques. These techniques make a statistical assessment of the market risk arising from possible future changes in market prices over a one-day holding period.

BPCL uses historical model of VAR techniques based on variance/covariance to make a statistical assessment of the market risk arising from possible future changes in market values over a 24-hour period and within a 95% confidence level. The calculation of the range of potential changes in fair value takes into account positions, the history of price movements for last two years and the correlation of these price movements. VAR calculation for open position as on 31st March 2019 is as given below:

Product	Gasoil - Dubai	FO 180 CST 3.5% S FOB Spore Cargo (ZCC)	Brent Dt -Dubai	Gasoil -Gasoline
Unit	USD/Bbl	USD/Bbl	USD/Bbl	USD/Bbl
Mean	14.60	385.18	1.27	5.59
Standard Deviation	1.75	60.37	1.58	4.73
Var95	2.89	99.29	2.60	7.78
Mean Var95	17.49	285.89	(1.33)	13.37
Avg.Trade Price	18.48	413.10	0.92	18.15
Lots as on 31.03.2019	6.00	3.00	6.00	3.00
Standard Lot size	50000 BBL	3000 MT	50000 BBL	50000 BBL
VAR USD million ("-ve" VAR of Gasoil and Gasoil-Gasoline ignored)	(0.30)	3.82	0.67	(0.72)
Total Portfolio VAR in USD million	4.49

C.iv.d Price risk

The Corporation''s exposure to equity investments price risk arises from investments held by the Corporation and classified in the financial statements at fair value through OCI. The corporation intends to hold these investments for long-term for better returns and price risk will not be significant from a long term perspective.

Exposure to price risk

			Rs. in Crores
Effect in INR (before tax)	Profit or loss		Other components of Equity
Effect in INR (before tax)	Strengthening	Weakening	Strengthening	Weakening
As at 31/03/2019
1 % movement
Investment in Oil India - FVOCI	-	-	4.96	(4.96)
Investment in CIAL-FVOCI	-	-	1.14	(1.14)
Total				(6.10)

				Rs. in Crores
Effect in INR (before tax)	Profit or loss		Other components of Equity
Effect in INR (before tax)	Strengthening	Weakening	Strengthening	Weakening
As at 31/03/2018
1 % movement
Investment in Oil India - FVOCI	-	-	5.76	(5.76)
Investment in CIAL-FVOCI	-	-	1.05	(1.05)
Total	-	-	6.81	(6.81)

D. Offsetting

The following table presents the recognised financial instruments that are offset and other similar agreements that are not offset, as at 31st March 2019 and 31st March 2018.

The column ''net amount'' shows the impact on the Corporation''s balance sheet if all set-off rights are exercised.

							Rs. in Crores
Particulars	Note reference	Effect of offsetting on the balance sheet			Related amounts not offset
Particulars	Note reference	Gross amounts	Gross amounts set off in the balance sheet	Net amounts presented in the balance sheet	Financial Instrument	Amounts which can be offset	Net Amount
As at 31/03/2019
Financial assets
Investment in GOI Bonds	A	-	-	-	5,075.89	1,000.00	4,075.8
Trade and other receivables	B&C	3,590.56	3,530.69	59.87	-	-
Derivative Assets	D	-	-	-	0.98	0.98

Financial liabilities
Short term borrowings	A	-	-	-	3,580.75	1,000.00	2,580.75
Trade and other payables	B&C	7,343.98	3,530.69	3,813.29	-	-	-
Derivative Liabilities	D	-	-	-	17.97	0.98	Mar 31, 2018 Additional information in respect of Note no. 2 to 6: a) Land: i) Freehold land includes Rs, 93.08 Crores (Previous year: Rs, 94.66 Crores) capitalized at various locations for which conveyance deeds are yet to be executed and/or mutation is pending. ii) 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. iii) Lease hold land represents land taken on finance lease for more than 99 years. b) Buildings include Ownership flats having gross block of Rs, 41.28 Crores (Previous year: Rs, 41.07 Crores) in proposed / existing co-operative societies and others. c) Other adjustments include capitalization of foreign exchange differences (net) of Rs, 25.76 Crores (Previous year: Rs, 226.25 Crores) and borrowing costs of Rs, 522.31 Crores (Previous year: Rs, 213.12 Crores). d) Freehold Land, Plant and Equipment, Tanks and Pipelines, Railway Sidings, Buildings etc. jointly owned in varying extent with other Oil Companies / Railways: Gross Block Rs, 198.77 Crores (Previous year: Rs, 204.55 Crores), Cumulative Depreciation Rs, 29.95 Crores (Previous year: Rs, 20.52 Crores), Net Block Rs, 168.82 Crores (Previous year: Rs, 184.03 Crores). e) Charge has been created over the fixed assets of the Company, mainly Plant and Machinery at Mumbai Refinery and Kochi Refinery in regard to the borrowings- Refer note no. 25. f) Compensation received from third parties in respect of items of Property, Plant and Equipment / Capital work in progress that were impaired, lost or given up during the year Rs, 8.11 Crores (Previous year: Rs, 1.82 Crores). g) Gross Block reclassifications / deductions on account of retirement / disposal includes: i) Decapitalization of Rs, 57.61 Crores (Previous year: Rs, 27.05 Crores). ii) Deduction on account of retirement / disposal during the year Rs, 298.46 Crores (Previous year: Rs, 67.07 Crores). h) Depreciation and amortization for the year is Rs, 2661.00 Crores (Previous year: Rs, 1905.07 Crores) [Refer Note no. 66] from which, after reducing - i) Depreciation on decapitalization of Rs, 8.28 Crores (Previous year: Rs, 1.75 Crores) and ii) Depreciation on reclassification of assets of Rs, 4.24 Crores (Previous year: Rs, 12.00 Crores). Net Depreciation and amortization for the year charged to Profit and Loss statement is Rs, 2648.48 Crores (Previous year: Rs, 1891.32 Crores). i) Deduction from accumulated depreciation on account of retirement / disposal during the year is Rs, 208.59 Crores (Previous year: Rs, 18.48 Crores). j) The Corporation has assessed the useful life of Right of way as indefinite where the same is perpetual in nature. k) The Corporation has elected to use the exemption available under Ind AS 101 to continue the carrying value for all of its Property, Plant and Equipment, Capital work in progress, Investment properties, Intangible assets and Intangible assets under development as recognized in the financial statements as at the date of transition to Ind ASs, measured as per the previous GAAP and use that as its deemed cost as at the date of transition (1^st April 2015). * Includes equity component of Rs, 494.40 Crores (Previous year: Rs, 494.40 Crores) recognized on fair valuation of concessional rate loan given to subsidiary. # Member Companies of Association of Persons are Bharat Petroleum Corporation Limited, Engineers India Limited, Hindustan Petroleum Corporation Limited, Indian Oil Corporation Limited, Reliance Industries Limited, Chennai Petroleum Corporation Limited, Oil and Natural Gas Corporation Limited and Oil India Limited. The total capital is Rs, 0.55 Crore of which share of Bharat Petroleum Corporation Limited is Rs, 0.10 Crore, Indian Oil Corporation Limited is Rs, 0.15 Crore and other members have equal share of Rs, 0.05 Crore each. * Includes Secured deposits Rs, 18.49 Crores (Previous year: Nil). The above includes Rs, 463.87 Crores as at 31^st March 2018 pertaining to Loans given to Consumers under Pradhan Mantri Ujjwala Yojana scheme, the recovery period has been deferred beyond one year with effect from 1^st April 2018. The write-down of inventories to net realizable value during the year amounted to Rs, 155.00 Crores (Previous year : Rs, 254.52 Crores). The reversal of write downs during the year amounted to Rs, 3.08 Crores (Previous year : Rs, 2.61 Crores) due to increase in net realizable value of the inventories. The write downs and reversal are included in cost of materials consumed or changes in inventories of finished goods, stock-in-trade and work-in-progress. Inventories pledged as collateral - Refer Note No. 30 Non Current Assets held for sale consists of items such as Plant and equipment, Dispensing pumps etc. which have been identified for disposal due to replacement/ obsolescence of assets which happens in the normal course of business. These assets are expected to be disposed off within the next twelve months. On account of re-classification of these assets, an impairment loss of Rs, 26.72 Crores during the year (Previous year: Rs, 5.52 Crores) has been recognized in the statement of profit and loss. iii 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 equity 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 final dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. iv During the Financial year 2017-18, the Corporation has issued Bonus Shares in the ratio of 1:2 by capitalisation of General Reserves. The total number of shares issued is 72,30,84,248 having face value of Rs, 10 each. During the Financial year 2016-17, the Corporation has issued Bonus Shares in the ratio of 1:1 by capitalization of General Reserves. The total number of shares issued is 72,30,84,248 having face value of Rs, 10 each. Debenture Redemption Reserve Debenture redemption reserve represents reserve created out of the profits of the Corporation available for distribution to shareholders which is utilized for redemption of debentures/bonds. General Reserve General Reserve represents appropriation of retained earnings and are available for distribution to shareholders. Foreign Currency Monetary Item Translation Difference Account Foreign Currency Monetary Item Translation Difference Account represents amounts recognized on account of translation of long term foreign currency denominated borrowings not related to acquisition of depreciable assets. Amounts so recognized are amortized in the statement of profit and loss over remaining maturity of related borrowings. Retained Earnings** Retained Earnings (excluding accumulated balance of remeasurements of defined benefit plans (net of tax)) represents surplus/accumulated earnings of the Corporation and are available for distribution to shareholders. Deferred Income includes unamortized portion of capital grants amounting to Rs, 85.97 Crores* as at 31^st March 2018 (Previous year: Rs, 82.99 Crores) comprising mainly of works contract tax reimbursement received from Government of Kerala as part of the fiscal incentives sanctioned for IREP and grants received for technology development. * No amount is due at the end of the Period for credit to Investors Education and Protection Fund. Includes deposit received towards Rajiv Gandhi Gramin LPG Vitrak Yojana and Pradhan Mantri Ujjwala Yojana Scheme (Central Scheme) as on 31^st March 2018 Rs, 1,625.91 Crores (Previous year: Rs, 1,060.53 Crores). The deposit against these schemes have been funded from CSR fund or Government of India. # Nil as at 31^st March 2018 (Previous year: Rs, 4,087) NOTE 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, 719.30 Crores (Previous year: Rs, 1,172.83 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 subsidy from Government of India amounting to Rs, 719.30 Crores (Previous year: Rs, 1,172.83 Crores) and the same is accounted as Revenue from operations. After adjusting the above compensation, the net under recovery absorbed by the Corporation is Nil (Previous year: under recovery Nil). Further, subsidies received from State Governments which are recognized in Revenue From Operations is Rs, 14.93 Crores (Previous year: Rs, 11.56 Crores) during current year. NOTE 2. 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 and July 2016 respectively and 1:2 bonus issue in July 2017, presently the trust holds 20,23,72,422 equity shares of the Corporation. The cost of the original investment together with the additional contribution to the corpus of the trust made in 2014-15 has been reduced from the total equity of the Corporation. To the extent of the face value of the shares, the same has been reduced from the Paid up Share capital of the Corporation and the balance has been reduced from Other Equity under a separate reserve. Accordingly, the income received from the Trust has been recognized directly under Other Equity of the Corporation. NOTE 3. 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. NOTE 47 During the previous Financial Year 2016-17, provision was made under Salaries and Wages in respect of pay revision dues (including retiral dues) to employees w.e.f. 1^st January 2017 at an estimated amount of Rs, 596.86 Crores based on the available information and judgement. Further, pursuant to implementation of the pay revision in the current year and recognition of the employee benefit expenses thereof, an amount of Rs, 455.65 Crores representing past service cost in respect of employee gratuity scheme included in the provisions created in the previous year has been regrouped from âsalaries and wagesâ to âcontribution to provident and other fundsâ of the previous year to that extent. NOTE 4. SERVICE CONCESSION ARRANGEMENTS The Corporation has entered into service concession arrangements with entities supplying electricity ("The Regulator") to construct, own, operate and maintain a wind energy based electric power generating station ("Plant"). Under the terms of agreement, the Corporation will operate and maintain the Plant and sell electricity generated to Regulator for a period which covers the substantial useful life of the Plant which may be renewed for such further period as may be mutually agreed upon between the parties. The Corporation will be responsible for any maintenance services during the concession period. The Corporation in turn has a right to charge the Regulator agreed rate as stated in the service concession arrangement. The fair value towards the construction of the Plant has been recognized as an Intangible Asset and is amortized over the useful life of the asset or period of contract whichever is less. A. Leases as lessee The Corporation enters into cancellable/non-cancellable operating lease arrangements for land, godowns, office premises, staff quarters, third party operating plant and others. The lease rentals paid for the same are charged to the Statement of Profit and Loss. b) The Corporation enters into cancellable operating leases in respect of land, office premises, staff quarters and others which are cancellable by giving appropriate notices as per respective agreements. During the year Rs, 339.93 Crores (Previous year: Rs, 311.83 Crores) has been charged to Statement of Profit and Loss on account of lease rentals. A Post Employment Benefit Plans: Defined Contribution Scheme Defined Contribution Scheme (DCS) was introduced effective from 1^st Jan 2007. Corporation contributes at a defined percentage of the employee salary out of the total entitlements on account of superannuation benefits under this scheme. This Fund is maintained under a trust. The Corporation has the following Defined Benefit Plans Gratuity: The Corporation has a defined benefit gratuity plan managed by a trust. The Trustees administer contributions made to the trust, investments thereof etc. Based on actuarial valuation, the contribution is paid to the trust which is invested in plan assets as per the investment pattern prescribed by the Government. 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. Other Defined Benefits include: (a) Post Retirement Medical Scheme (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 benefit given to the spouse of the employee / employee, provided the deceasedâs family / disabled employee deposits with the Corporation, retirement dues such as Provident Fund, Gratuity, Leave Encashment etc. payable to them; (d) Resettlement allowance paid to employees to permanently settle down at the time of retirement; (e) The Corporation makes contribution towards Provident Fund, which is administered by the trustees. The Corporation has an obligation to fund any shortfall on the yield of the trustâs investments over the interest rates declared by the Government under EPF scheme. [B] Provident Fund: The Corporationâs 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. The actual return earned by the fund has mostly been higher than the Government specified minimum rate of return in the past years. There is no shortfall in the fund as on 31^st March 2018 and 31^st March 2017. NOTE 5. RELATED PARTY TRANSACTIONS a) Names of the Related parties Joint Venture & Associate Companies** 1. Indraprastha Gas Limited 2. Petronet India Limited* 3. Petronet CI Limited* 4. Petronet LNG Limited 5. Bharat Oman Refineries Limited 6. Maharashtra Natural Gas Limited 7. Central UP Gas Limited 8. Sabarmati Gas Limited 9. Bharat Stars Services Private Limited (Including Bharat Stars Services (Delhi) Pvt. Limited) 10. Bharat Renewable Energy Limited* 11. Matrix Bharat Pte. Ltd. 12. Delhi Aviation Fuel Facility Private Limited 13. Kannur International Airport Limited 14. GSPL India Gasnet Limited 15. GSPL India Transco Limited 16. Mumbai Aviation Fuel Farm Facility Private Limited 17. Kochi Salem Pipeline Private Limited 18. Petroleum India International 19. BPCL-KIAL Fuel Farm Private Limited 20. Haridwar Natural Gas Pvt. Ltd. 21. Goa Natural Gas Pvt. Ltd. 22. FINO Paytech Limited 23. Ratnagiri Refinery & Petrochemicals Limited 24. Ujjwala Plus Foundation (Section 8 company) 25. IBV (Brasil) Petroleo Ltda. 26. Taas India Pte Ltd. 27. Vankor India Pte Ltd. 28. Falcon Oil & Gas BV 29. Mozambique LNG 1 Pte Ltd. 30. LLC TYNGD 31. JSC Vankorneft 32. DNP Limited 33. Brahmaputra Cracker and Polymer Limited Companies in the process of winding up Key Management Personnel :* 1. Shri S. Varadarajan, Chairman & Managing Director (Up to 30.09.2016) 2. Shri D. Rajkumar, Chairman & Managing Director Appointed (w.e.f 01.10.2016) 3. Shri S. Ramesh, Director (Marketing) 4. Shri B. K. Datta, Director (Refineries) (Up to 31.07.2016) 5. Shri R. Ramachandran, Director (Refineries) Appointed (w.e.f 01.08.2016) 6. Shri S. P. Gathoo, Director (Human Resource) (Up to 31.10.2017) 7. Shri K. Padmakar, Director (Human Resource) Appointed (w.e.f. 01.02.2018) 8. Shri P. Balasubramanian, Director (Finance) (Up to 30.04.2017) 9. Shri K. Sivakumar, Director (Finance) (w.e.f. 01.05.2017) 10. Shri S.V. Kulkarni, (Company Secretary) (Up to 28.02.2017) 11. Shri M. Venugopal, (Company Secretary) (w.e.f. 01.03.2017) 12. Shri Rajesh Kumar Mangal, Independent Director 13. Shri Deepak Bhojwani, Independent Director 14. Shri Gopal Chandra Nanda, Independent Director 15. Shri Vishal V Sharma, Independent Director Appointed (w.e.f 09.02.2017) 16. Shri P. H. Kurian, Govt. Nominee Director (up to 18.04.2017) 17. Shri Paul Antony, Nominee Director Appointed (w.e.f. 19.04.2017 up to 19.03.2018) 18. Dr. K. Ellangovan, Govt. Nominee Director Appointed (w.e.f. 20.03.2018) 19. Smt. Jane Mary Shanti Sundharam, Independent Director Appointed (w.e.f. 21.09.2017) 20. Shri Vinay Sheel Oberoi, Independent Director Appointed (w.e.f. 21.09.2017) 21. Dr. (Smt.) Tamilisai Soundararajan, Independent Director Appointed (w.e.f. 28.09.2017) 22. Shri Anant Kumar Singh, Govt. Nominee Director (Up to 27.11.2017) 23. Shri Rajiv Bansal, Govt. Nominee Director Appointed (w.e.f. 28.11.2017) The outstanding balances are unsecured and are settled in cash except advance against equities which are settled in equity. c) In the ordinary course of its business, the Corporation enters into transactions with other Government controlled entities (not included in the list above). The Corporation has transactions with other Government-controlled entities,including but not limited to the followings: - Sales and purchases of goods and ancillary materials; - Rendering and receiving of services; - Receipt of dividends; - Loans and advances; - Depositing and borrowing money; - Guarantees; and - Uses of public utilities. These transactions are conducted in the ordinary course of business on terms comparable to those with other entities that are not Government controlled entities. NOTE 6. Dues from Directors is Rs, 0.34 Crores (31^st March 2017: Rs, 0.40 Crores) and Dues from Officers is Rs, 3.54 Crores (31^st March 2017: Rs, 4.13 Crores) # Companies in the process of winding up @The percentage of ownership interest is after considering proposed increase in equity participation * In addition to the ownership interest as mentioned above, the Corporation has made an investment in Compulsorily Convertible Debentures and Share Warrants of BORL. Note: Ujjwala Plus Foundation is a joint venture of IOCL, BPCL and HPCL with fund contribution in the ratio of 50:25:25 which was incorporated as a limited by guarantee company (without share capital) under section 8 of Companies Act, 2013. The Corporation has issued bonus shares in the ratio of 1:2 during Financial Year 2017-18. The EPS for the financial year 201617 has been appropriately adjusted. NOTE 7. The Corporation has elected to continue the policy adopted under Previous GAAP for accounting the foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items outstanding as of 31^st March 2016 i.e. foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in other cases, if any, accumulated in âForeign Currency Monetary Item Translation Difference Accountâ and amortized over the balance period of the liability. The net gain remaining unamortized under Foreign Currency Monetary Item Translation Difference Account as at 31^st March 2018 is Rs, 66.76 Crores* (net gain as at 31^st March 2017 Rs, 206.34 Crores). NOTE 8. 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 31^st March 2018. # The above expenditure includes contribution to funds, expenses through registered trusts / registered society or company established under section 8 of the Act and direct expenses by the company. * including payables of Rs, 2.75 Crores (Previous year: Rs, 6.09 Crores) as on 31.03.2018. C. Financial risk management C. i. Risk management framework The Corporationâs Board of Directors has overall responsibility for the establishment and oversight of the Corporationâs risk management framework. The Risk Management Committee of the Board has defined roles and responsibilities, which includes reviewing and recommending the risk management plan and the risk management report for approval of the Board with the recommendation of the Audit Committee. The Corporation has adopted a Risk Management Charter and Policy for self-regulatory processes and procedures for ensuring the conduct of the business in a risk conscious manner. The Corporation has exposure to the following risks arising from financial instruments: - Credit risk ; - Liquidity risk; and - Market risk C.ii. Credit risk Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Corporationâs trade and other receivables, cash and cash equivalents and other bank balances, derivatives and debt securities. The maximum exposure to credit risk in case of all the financial instruments covered below is restricted to their respective carrying amount. (a) Trade and other receivables from customers Credit risk in respect of trade and other receivables is managed through credit approvals, establishing credit limits and monitoring the creditworthiness of customers to which the Corporation grants credit terms in the normal course of business. As at 31^st March 2018 and 31^st March 2017, the Corporationâs retail dealers and industrial customers accounted for the majority of the trade receivables. Expected credit loss assessment for Trade and other receivables from customers as at 31^st March 2018 and 31^st March 2017 The Corporation uses an allowance matrix to measure the expected credit losses of trade and other receivables. The loss rates are computed using a âroll rateâ method based on the probability of receivable progressing through successive stages till full provision for the trade receivable is made. Roll rates are calculated separately for exposures based on common credit risk characteristics for a set of customers. The following table provides information about the exposure to credit risk and Expected Credit Loss Allowance for trade and other receivables: The Corporation does not provide for any loss allowance on trade receivables where risk of default is negligible such as receivables from other oil marketing companies, if any, hence the same excluded from above. Loss rates are based on actual credit loss experience over the past three years. (b) Cash and cash equivalents and Other Bank Balances The Corporation held cash and cash equivalents and other bank balances of Rs, 88.07 Crores at 31^st March 2018 (31^st March 2017: Rs, 64.69 Crores). The cash and cash equivalents are held with banks with good credit ratings and financial institution counterparties with good market standing. Further, Corporation invests its short term surplus funds in bank fixed deposits, Government of India Treasury-bills and liquid schemes of mutual funds, which carry no / low mark to market risks for short duration. These instruments do not expose the Corporation to credit risk. (c) Derivatives The derivatives are entered into with banks, financial institutions and other counterparties with good credit ratings. Further exposures to counter-parties are closely monitored and kept within the approved limits. (d) Investment in debt securities I nvestment in debt securities are mainly as loans to subsidiary, joint venture companies and investment in Government securites which do not carry any significant credit risk. C.iii. Liquidity risk Liquidity risk is the risk that the Corporation will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk is managed by Corporation through effective fund management. The Corporation has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Corporation has access to funds from debt markets through commercial paper programs, foreign currency borrowings and other debt instruments. The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments. Maturity Analysis of Significant Financial Liabilities * Guarantees issued by the Corporation on behalf of joint venture/subsidiary are with respect to borrowings raised by the respective entity. These amounts will be payable on default by the concerned entity. As of the reporting date, none of the subsidiary/joint venture have defaulted and hence, the Corporation does not have any present obligation to third parties in relation to such guarantees. C.iv. Market risk Market Risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. C.iv.a Currency risk The Corporation is exposed to currency risk on account of its operating and financing activities. The functional currency of the Corporation is Indian Rupee. Our exposure is mainly denominated in U.S. dollars (USD). The USD exchange rate has changed substantially in recent periods and may continue to fluctuate substantially in the future. The Corporation has put in place a Financial Risk Management Policy to Identify the most effective and efficient ways of managing the currency risks. The Corporation uses derivative instruments, (mainly foreign exchange forward contracts) to mitigate the risk of changes in foreign currency exchange rates in line with our policy. The Corporation do not use derivative financial instruments for trading or speculative purposes. Exposure to currency risk The currency profile of financial assets and financial liabilities as at 31^st March 2018 and 31^st March 2017 are as below: Sensitivity analysis A reasonably possible strengthening (weakening) of the USD against INR at 31^st March would have affected the measurement of financial instruments denominated in US dollars and affected profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. In cases where the related foreign exchange fluctuation is capitalized to fixed assets or recognized directly in reserves, the impact indicated below may affect the Corporationâs income statement over the remaining life of the related fixed assets or the remaining tenure of the borrowing respectively. C.iv.b Interest rate risk Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates, in cases where the borrowings are measured at fair value through profit or loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates. The Companyâs approach to managing interest rate risk is to have a judicious mix of borrowed funds with fixed and floating interest rate obligation. Fair value sensitivity analysis for fixed-rate instruments The Corporation accounts for certain investments in fixed-rate financial assets such as investments in Oil bonds and Government Securities at fair value through profit or loss. Accordingly, a decrease in 25 basis point in interest rates is likely to increase the profit or loss (before tax) for the year ending 31^st March 2018 by Rs, 67.15 Crores (31^st March 2017 - Rs, 80.21 Crores) and an increase in 25 basis point in interest rates is likely to decrease the profit or loss (before tax) for the year ending 31^st March 2018 by Rs, 68.30 Crores (31^st March 2017 - Rs, 81.76 Crores). Cash flow sensitivity analysis for variable-rate instruments A reasonably possible change of 25 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant. In cases where the related interest rate risk is capitalized to fixed assets, the impact indicated below may affect the Corporationâs income statement over the remaining life of the related fixed assets. C.iv.c Commodity rate risk BPCLâs profitability gets affected by the price differential (also known as Margin or Crack spread) between prices of products (output) and the price of the crude oil and other feed-stocks used in production (input), prices of both are set by markets. Hence BPCL uses derivative instruments (swaps, futures, options and forwards) to hedge exposures to commodity price risk to cover refinery operating cost using Basic Swaps on various products cracks like Naphtha, Gasoline (Petrol), Jet/Kerosene, Gasoil (Diesel) and Fuel Oil against Benchmark Dubai Crude. Further volatility in freight costs is hedged through Freight Forwards and bunker purchases. Settlement of all derivative transactions take place on the basis of monthly average of the daily prices of the settlement month quoted by Platts. BPCL measures market risk exposure arising from its trading positions using value-at-risk techniques. These techniques make a statistical assessment of the market risk arising from possible future changes in market prices over a one-day holding period. BPCL uses historical model of VAR techniques based on variance/covariance to make a statistical assessment of the market risk arising from possible future changes in market values over a 24-hour period and within a 95% confidence level. The calculation of the range of potential changes in fair value takes into account positions, the history of price movements for last two years and the correlation of these price movements. C.iv.d Price risk The Corporationâs exposure to equity investments price risk arises from investments held by the Corporation and classified in the financial statements at fair value through OCI. The corporation intends to hold these investments for long-term for better returns and price risk will not be significant from a long term perspective. Notes A. The Corporation has Collaterised Borrowing and Lending Obligations limits from Clearing Corporation of India Limited, which are secured by Oil Marketing Companies GOI Special Bonds 2026. As the Counterparty currently does not have a legally enforceable right to off set these amounts, these amounts have not been offset in the balance sheet, but have been presented separately in the table above. B. The Corporation purchases and sells petroleum products from different Oil Marketing Companies. Under the terms of the agreement, the amounts payable by the Corporation are offset against receivables and only the net amounts are settled. The relevant amounts have therefore been presented net in the balance sheet. C. The Corporation enters into derivative transactions under the International Swaps and Derivatives Association (ISDA) master netting agreements. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding in the same currency are aggregated into a single net amount that is payable by one party to the other. D. The Corporation enters into derivative transactions under the International Swaps and Derivatives Association (ISDA) master netting agreements. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding in the same currency are aggregated into a single net amount that is payable by one party to the other. The ISDA master netting agreements do not meet the criteria for offsetting in the balance sheet. This is because the Counterparty does not currently have legally enforceable right to offset recognized amounts, because the right to offset is enforceable only on the occurrence of future events. NOTE 9.CAPITAL MANAGEMENT The Corporationâs objective is to maximize the shareholders'' value by maintaining an optimum capital structure. Management monitors the return on capital as well as the debt equity ratio and makes necessary adjustments in the capital structure for the development of the business. The Corporationâs debt to equity ratio as at 31^st March 2018 was 0.68 (31^st March 2017: 0.78) Note: For the purpose of computing debt to equity ratio, equity includes Equity Share Capital and Other Equity and Debt includes Long term borrowings, short term borrowings and current maturities of long term borrowings. NOTE 61 SEGMENT REPORTING As per the requirements of Ind AS 108 on âOperating Segmentsâ, segment information has been provided under the Notes to Consolidated Financial Statements. NOTE 10. In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) Amendment Rules, 2018 notifying Ind AS 115 âRevenue from Contracts with Customersâ (New Revenue Standard), which replaces Ind AS 11 âConstruction Contractsâ and Ind AS 18 âRevenueâ. The core principle of the New Revenue Standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers for an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Some of the key changes introduced by the New Revenue Standard include additional guidance for multiple-element arrangements, measurement approaches for variable consideration, adjustments for time value of money etc. Significant additional disclosures in relation to revenue are also prescribed. The New Revenue Standard also provides two broad alternative transition options - Retrospective Method and Cumulative Effect Method - with certain practical expedients available under the Retrospective Method. The Company is in the process of evaluating the impact of the New Revenue Standard on the present and future arrangements and shall determine the appropriate transition option once the said evaluation has been completed. The amendments will come into force from 1^st April 2018. NOTE 11. The Corporation has changed the useful life of Computer Equipments from 4 to 3 years during the FY 2017-18. The impact of change in useful life has resulted in increase in depreciation of '' 6.46 Crores in Financial Year 2017-18. NOTE 11 Figures of the previous year have been regrouped wherever necessary, to conform to current period presentation. Signature to Notes â1â to â67â Mar 31, 2017 Corporation Overview Bharat Petroleum Corporation Limited referred to as âBPCLâ or âthe Corporationâ was incorporated on 3^rd 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 at various locations. The Corporationâs marketing infrastructure includes vast network of Installations, Depots, Retail Outlets, Aviation Fuelling Stations and LPG distributors. Additional information in respect of Notes no. 2, 4 and 5: a) Land: i) Freehold land includes Rs.94.66 Crores (as at 31^st March 2016 Rs.126.33 Crores and as at 1^st April 2015 Rs.387.56 Crores) capitalized at various locations for which conveyance deeds are yet to be executed and/ or mutation is pending. ii) Freehold land includes Rs.2.20 Crores (as at 31^st March 2016 Rs.2.20 Crores and as at 1^st April 2015 Rs.2.20 Crores) which is in the process of being surrendered to the Competent Authority. iii) Leasehold land represents land taken on finance lease for more than 99 years. b) Buildings include Ownership flats of Rs.41.07 Crores (as at 31^st March 2016 Rs.40.02 Crores and as at 1^st April 2015 Rs.39.02 Crores) in proposed / existing co-operative societies and others. c) Other adjustments include capitalization of foreign exchange differences (net) of Rs.226.25 Crores (Previous year Rs.313.52 Crores) and borrowing costs of Rs.212.89 Crores (Previous year Rs.35.54 Crores). d) Freehold Land, Plant and Equipment, Tanks and Pipelines, Railway Sidings and Buildings jointly owned in varying extent with other Oil Companies / Railways: Gross Block Rs.248.65 Crores (as at 31^st March 2016 Rs.243.22 Crores and as at 1^st April 2015 Rs.185.18 Crores), Cumulative Depreciation Rs.65.18 Crores (as at 31^st March 2016 Rs.54.45 Crores and as at 1^st April 2015 Nil), Net Block Rs.183.47 Crores (as at 31^st March 2016 Rs.188.77 Crores and as at 1^st April 2015 Rs.185.18 Crores). e) Charge has been created over the fixed assets of the Company, mainly Plant and Machinery at Mumbai Refinery and Kochi Refinery in regard to the borrowings- Refer Note no. 24. f) Compensation received from third parties in respect of items of Property, Plant and Equipment that were impaired, lost or given up during the year Rs.1.82 Crores (Previous year Rs.2.09 Crores). g) Deduction from Gross Block includes : i) Reversal of excess capitalization of Rs.27.05 Crores (Previous year Rs.27.03 Crores) ii) Deletions during the year Rs.66.89 Crores (Previous year Rs.47.76 Crores) h) Depreciation and amortization for the year includes: i) Charged to Statement of Profit and Loss Rs.1901.61 Crores (Previous year Rs.1852.17 Crores) ii) Depreciation of Rs.3.46 Crores (Previous year Rs.6.53 Crores) has been provided for asset not in use and has been classified as non current asset held for sale. i) Deductions from depreciation includes: i) On reversal of excess capitalization Rs.1.75 Crores (Previous year Rs.0.05 Crores). ii) On withdrawal of depreciation on deletion during the year Rs.15.02 Crores (Previous year Rs.9.93 Crores). iii) On reclassification of assets Rs.12.00 Crores (Previous year Rs.14.09 Crores). j) The Right of Way has been acquired under the Petroleum & Mineral Pipelines Act, 1962. As per the provisions of the Act, the Right of Way is perpetual in nature. Accordingly, the Corporation has assessed the useful life as indefinite. iii 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 equity 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 final dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. iv During the Financial year 2016-17, the Corporation has issued Bonus Shares in the ratio of 1:1 by capitalization of General Reserves. The total number of shares issued is 72,30,84,248 having face value of Rs.10 each. During Financial Year 2012-13, the Corporation had issued Bonus Shares in the ratio of 1:1 by capitalization of General Reserves. The total number of Bonus Shares issued is 36,15,42,124 equity shares having face value of Rs.10 each. Nature and purpose of Reserves Capital Reserve It represents capital reserve appearing in the financial statements of erstwhile Kochi Refineries Limited (KRL) transferred on amalgamation. Debenture Redemption Reserve Debenture Redemption Reserve represents reserve created out of the profits of the Corporation available for distribution to shareholders which is utilised for redemption of debentures/bonds. General Reserve General Reserve represents appropriation of retained earnings and are available for distribution to shareholders. Foreign Currency Monetary Item Translation Difference Account Foreign Currency Monetary Item Translation Difference Account represents amounts recognised on account of translation of long term foreign currency denominated borrowings not related to acquisition of depreciable assets. Amounts so recognised are amortized in the Statement of Profit and Loss over the remaining maturity of related borrowings. Retained Earnings Retained Earnings represents surplus/accumulated earnings of the Corporation and are available for distribution to shareholders. * The Corporation had allotted redeemable non-convertible 8.65% Debentures of face value of Rs.700 Crores on 8^th October 2012 redeemable on 8^th October 2017 with a put call option which was exercised on 8^th October 2015. Accordingly Corporation has redeemed the debentures during the Financial Year 2015-16. These were secured by first legal mortgage by way of a Registered Debenture Trust Deed over the fixed assets of the Company, mainly Plant and Machinery at Mumbai Refinery. The relevant charge has been satisfied. The Corporation had allotted non-convertible 7.35% Debentures of face value of Rs.550 Crores on 10^th March 2017 redeemable on 10^th March 2022. These were secured by first legal mortgage by way of a Registered Debenture Trust Deed over the fixed assets of the Company, mainly Plant and Machinery at Mumbai Refinery. * Term Loan is secured by first legal mortgage mainly over Plant and Machinery at Mumbai Refinery and Kochi Refinery. NOTE 1 TRANSITION TO IND AS These are the Corporationâs first financial statements prepared in accordance with Ind AS. The Corporation has adopted all the Ind AS and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards. The transition was carried out from Generally Accepted Accounting Principles in India (Indian GAAP) as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, which was the âPrevious GAAPâ.The Significant Accounting Policies set out in Note No. 1 have been applied in preparing the financial statements for the year ended 31^st March 2017, 31^st March 2016 and the opening Ind aS balance sheet on the date of transition i.e. 1^st April 2015. In preparing its Ind AS Balance Sheet as at 1^st April 2015 and in presenting the comparative information for the year ended 31^st March 2016, the Corporation has adjusted amounts previously reported in the financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Corporation in restating its financial statements prepared in accordance with previous GAAP and how the transition from previous GAAP to Ind AS has affected the Corporationâs financial position, financial performance and cash flows. I. Explanation of transition to Ind AS In preparing the financial statement, the Corporation has applied the below mentioned optional exemptions and mandatory exceptions. Business combination exemption The Corporation has elected to apply the requirements of Ind AS 103, âBusiness Combinationsâ prospectively to business combinations on or after the date of transition (1^st April 2015). Pursuant to this exemption, goodwill arising from business combination has been stated at the carrying amount under previous GAAP Property, Plant and Equipment; Investment Property and Intangible Assets exemption The Corporation has elected to use the exemption available under Ind AS 101 to continue the carrying value for all of its Property, Plant and Equipment, investment properties and intangible assets as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition (1^st April 2015). Investment in equity shares other than Subsidiaries, Joint Ventures and Associates The Corporation has designated its investment in equity shares other than subsidiaries, Joint Ventures and Associates held as at 1^st April 2015 as Fair Value through Other Comprehensive Income based on facts and circumstances at the date of transition to Ind AS. Investment in Subsidiaries, Joint Ventures and Associates The Corporation has elected to use the exemption to measure all investments in Subsidiaries, Joint Ventures and Associates as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition (1^st April 2015). Derecognition of financial assets and financial liabilities The Corporation has elected to use the exemption for derecognition of financial assets and liabilities prospectively i.e. after 1^st April 2015. Long Term Foreign Currency Monetary Items The Corporation has elected to continue the policy adopted under previous GAAP for accounting the foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items outstanding as of 31^st March 2016 i.e. foreign exchange differences arising on settlement or translation of longterm foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in other cases, if any, accumulated in âForeign Currency Monetary Item Translation Difference Accountâ and amortized over the balance period of the liability. Classification and measurement of financial assets Ind AS 101 requires an entity to assess the classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Corporation has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of financial assets accounted at amortized cost has been done retrospectively except where the same is impracticable. Service Concession Arrangement The Corporation has elected to use the exemption available under Ind AS 101 to continue the carrying value as per previous GAAP for all of its intangible assets under the service concession arrangements. Notes to reconciliations:- A. Proposed Dividend Under previous GAAP proposed dividend including dividend distribution tax (DDT), were recognised as a liability in the period in which they relate, as the same was considered as an adjusting event. Under Ind AS, proposed dividend is recognised as a liability in the period in which it is authorised and the distribution of dividend is no longer at the discretion of the Corporation. B. Equity Investments at Fair Value through Other Comprehensive Income Under previous GAAP the Corporation accounted for non-current investments in equity shares of companies other than Subsidiaries, Joint Ventures and Associates at cost less any provision for other than temporary diminution in the value of investments. Under Ind AS, the Corporation has designated these investments at Fair Value through Other Comprehensive Income. C. Loan given to Subsidiary The Corporation has given a concessional rate loan to one of its Subsidiary company. As per the requirements of Ind AS, this loan is to be measured at fair value on initial recognition. Since the differential on account of fair valuation of the loan on initial recognition is in the nature of equity component, the same has been considered as part of investment in Subsidiary. D. Fair valuation of investments in Government Securities Under previous GAAP investment in Government securities are classified as current investments and were carried at lower of cost or fair value. Under Ind AS, these investments are measured at Fair Value through Profit or Loss. E. Trade receivables Under previous GAAP the Corporation had recognised provision on trade receivables based on the expectation of the Corporation. Under Ind AS, the Corporation provides loss allowance on receivables based on the Expected Credit Loss (ECL) model which is measured following the âsimplified approachâ at an amount equal to the lifetime ECL at each reporting date. F. Derivative Contracts Under previous GAAP in respect of all derivative contracts (except forward contracts), only mark-to-market loss was provided. Premium / discount arising at the inception of the forward exchange contracts to hedge foreign currency risks were amortized as expense or income over the life of the contract. Exchange differences on such forward exchange contracts were recognised in the Statement of Profit and Loss. Under Ind AS, all derivative contracts are measured at fair value through profit or loss. G. Borrowings Under previous GAAP transaction costs in relation to borrowings were initially recognised as an asset and subsequently, amortized over the period of the loan as borrowing costs. Under Ind AS, financial liabilities in the form of borrowings have been measured at amortized cost using the effective interest rate method. H. Spare parts Under previous GAAP machinery spares that were specific to a particular Property, Plant and Equipment (PPE) were capitalized to the cost of the PPE. Replacement of such spares were charged to the Statement of Profit and Loss. Spares other than above, were inventorised on procurement and were charged to Statement of Profit and Loss on consumption. Under Ind AS, all significant spare parts which meet the definition of Property, Plant and Equipment are capitalized as Property, Plant and Equipment and in other cases, the spare part is inventorised on procurement and charged to Statement of Profit and Loss on consumption. I. Capital Grant Under previous GAAP Government Grants in respect of Property, Plant and Equipment was presented as part of Reserves and Surplus. Under Ind AS, Government Grants in respect of Property, Plant and Equipment need to be presented as deferred income as part of liabilities. J. Excise Duty Under previous GAAP revenue from sale of goods was presented net of the Excise Duty. Under Ind AS, revenue from sale of goods is presented inclusive of Excise Duty. Accordingly, Excise Duty has been presented in the Statement of Profit and Loss as an expense. K. Inventory valuation Under previous GAAP the Corporation had during financial year 2015-16, changed the method of determination of cost of inventories from âWeighted Averageâ to âFirst in First Outâ (FIFO) in respect of crude oil and finished products (except lubricants which were continued to be determined at weighted average). Under Ind AS, the Corporation is required to use the same accounting policies in its Opening Ind AS Balance Sheet and throughout for all periods presented in its first Ind AS financial statements. Accordingly, the Corporation has restated the opening value of inventories as per FIFO method. L. Remeasurement of defined benefit liabilities Under previous GAAP the Corporation recognised remeasurement of defined benefit plans under Profit or Loss. Under Ind AS, remeasurement of defined benefit plans are recognised in Other Comprehensive Income. M. BPCL Trust for investment in shares As per the scheme of Amalgamation of the erstwhile Kochi Refineries Limited (âKRLâ) 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 and July 2016, presently the trust holds 13,49,14,948 equity shares of the Corporation. Under Ind AS, the cost of the original investment together with the additional contribution to the corpus of the trust made in 2014-15 has been reduced from the total equity of the Corporation. To the extent of the face value of the shares, the same has been reduced from the Paid up Share capital of the Corporation and the balance has been reduced from Other Equity under a separate reserve. Accordingly, the income received from the Trust during the financial year 2015-16 has been recognised directly under Other Equity of the Corporation. N. Fair value measurement of optionally convertible debentures Under previous GAAP the Corporation accounted for optionally convertible debentures which are classified as non-current investments at cost. Under Ind AS, these investments are measured at fair value through profit or loss. O. Others Other adjustments on account of transition to Ind AS include reversal of amortization of Intangible asset at indefinite useful life, reclassification of Property, Plant and Equipment to Intangible asset as part of service concession arrangements, amortization impact of land leases classified as Finance Lease and reclassification of Land lease classified as Operating Leases from Property, Plant and Equipment to Prepaid rentals, classification of Investment Property, fair valuation of deposits and loans given at concessional rate of interest to employees and effect of adjustments relating to revenue recognition. P. Deferred Tax Under previous GAAP deferred tax accounting was done using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Under Ind aS, accounting of deferred taxes is done using the Balance Sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. 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.1,172.83 Crores (Previous year Rs.1,796.50 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) Nil (Previous year Rs.198.01 Crores) discount on crude oil / products purchased from ONGC/GAIL/NRL which has been adjusted against purchase cost; b) Rs.1,172.83 Crores (Previous year Rs.1,598.49 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 Nil (Previous year under recovery Nil). NOTE 2 As per the scheme of Amalgamation of the erstwhile Kochi Refineries Limited (âKRLâ) 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 and July 2016, presently the trust holds 13,49,14,948 equity shares of the Corporation. The cost of the original investment together with the additional contribution to the corpus of the trust made in 2014-15 has been reduced from the total equity of the Corporation. To the extent of the face value of the shares, the same has been reduced from the Paid up Share capital of the Corporation and the balance has been reduced from Other Equity under a separate reserve. Accordingly, the income received from the Trust during the financial years 2016-17 and 2015-16 has been recognised directly under Other Equity of the Corporation. NOTE 3 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. NOTE 4 During the Financial Year 2016-17, provision has been made under Salaries and Wages in respect of pay revision dues (including retiral dues) to employees w.e.f. 1^st January 2017 at an estimated amount of Rs.596.86 Crores based on the available information and judgement. NOTE 5 SERVICE CONCESSION ARRANGEMENTS The Corporation has entered into service concession arrangements with entities supplying electricity (âThe Regulatorâ) to construct, own, operate and maintain a wind energy based electric power generating station (âPlantâ). Under the terms of agreement, the Corporation will operate and maintain the Plant and sell electricity generated to the Regulator for a period which covers the substantial useful life of the Plant which may be renewed for such further period as may be mutually agreed upon between the parties. The Corporation will be responsible for any maintenance services during the concession period. The Corporation in turn has a right to charge the Regulator at the agreed rate as stated in the service concession arrangement. The fair value towards the construction of the Plant has been recognised as an Intangible Asset and is amortized over the useful life of the asset or period of contract whichever is less. During the year ended 31^st March 2017, the Corporation has earned Nil profit (Previous year Rs.2.42 Crores) from construction of the plant. The Corporation has recognised an intangible asset of Rs.57.82 Crores as at 31^st March 2017 (31^st March 2016: Rs.61.36 Crores and 1^stApril 2015: Rs.16.66 Crores) of which Rs.0.58 Crores (Previous year Rs.0.24 Crores) has been amortized during the period. Operating leases A. Leases as lessee The Corporation enters into cancellable/non-cancellable operating lease arrangements for land, godowns, office premises, staff quarters and others. The lease rentals paid for the same are charged to the Statement of Profit and Loss. a) The future minimum lease payments under non-cancellable leases payable as at the year ending are as follows: b) The Corporation enters into cancellable operating leases in respect of land, office premises, staff quarters and others which are cancellable by giving appropriate notices as per respective agreements. During the year Rs.237.20 Crores (Previous year Rs.327.90 Crores) has been charged to Statement of Profit and Loss on account of lease rentals. B. Leases as lessor a) The Corporation enters into cancellable/non-cancellable operating lease arrangements in respect of land, commercial spaces, storage distribution facilities, etc. The details are as follows: b) Total contingent rent recognised as income in the Statement of Profit and Loss during 2016-17 is Rs.25.16 Crores (Previous year Rs.23.20 Crores) c) The future minimum lease payments under non cancellable leases receivable as at the year ending are as follows: Finance Lease Leases as lessee i) The Corporation has finance lease arrangements for various Land leases. The carrying amount of these assets are shown below: NOTE 6 EMPLOYEE BENEFITS [A] Post Employment Benefit Plans: Defined Contribution Scheme Defined Contribution Scheme (DCS) was introduced effective from 1^st January 2007. Corporation contributes at a defined percentage of the employee salary out of the total entitlements on account of superannuation benefits under this scheme. This Fund is maintained under a trust. Defined Benefit Plans The Corporation has the following Defined Benefit Plans Gratuity: The Corporation has a defined benefit gratuity plan managed by a trust. The Trustees administer contributions made to the trust, investments thereof etc. Based on actuarial valuation, the contribution is paid to the trust which is invested in plan assets as per the investment pattern prescribed by the Government. 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. Other Defined Benefits: These are (a) Post Retirement Medical Scheme (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 benefit given to the spouse of the employee / employee, provided the deceasedâs family / disabled employee deposits with the Corporation, retirement dues such as PF, Gratuity, Leave Encashment etc., payable to them; (d) Resettlement allowance paid to employees to permanently settle down at the time of retirement; and (e) The Corporation makes contribution towards Provident Fund, which is administered by the trustees. The Corporation has an obligation to fund any shortfall on the yield of the trustâs investments over the interest rates declared by the Government under EPF scheme. These defined benefit plans expose the Corporation to actuarial risks, such as longetivity risk, interest rate risk, and market (investment) risk. The estimates for future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors. The expected return on plan assets is based on market expectation at the beginning of the period, for returns over the entire life of the related obligation. [B] Provident Fund: The Corporationâs contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employeesâ 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. The actual return earned by the fund has mostly been higher than the Government specified minimum rate of return in the past years. There is no shortfall in the fund as on 31^st March 2017, 31^st March 2016 and 1^st April 2015. NOTE 7 RELATED PARTY TRANSACTIONS a) Names of the Related parties Joint Venture & Associate 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 Stars 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. Brahmaputra Cracker and Polymer Limited DNP Limited Petroleum India International BPCL-KIAL Fuel Farm Private Limited Haridwar Natural Gas Pvt. Ltd. Goa Natural Gas Pvt. Ltd. FINO Paytech Limited Companies in the process of winding up # Petronet CCK Limited has become Subsidiary w.e.f. 29^th May 2015 Key Management Personnel : Shri S. Varadarajan Chairman & Managing Director (Up to 30.09.2016) Shri D. Rajkumar Chairman & Managing Director (Appointed w.e.f. 01.10.2016) Shri K. K. Gupta Director (Marketing) (Up to 29.02.2016) Shri S. Ramesh Director (Marketing) (Appointed w.e.f. 01.03.2016) Shri B. K. Datta Director (Refineries) (Up to 31.07.2016) Shri R. Ramachandran Director (Refineries) (Appointed w.e.f. 01.08.2016) Shri S. P Gathoo Director (Human Resource) Shri P Balasubramanian Director (Finance) Shri Neeraj Mittal Govt. Nominee Director (Up to 11.12.2015) Smt Sushma Taishete Govt. Nominee Director (Appointed w.e.f. 19.05.2015 to 01.01.2016) Shri Anant Kumar Singh Govt. Nominee Director (Appointed w.e.f. 02.01.2016) Shri P H. Kurian Govt. Nominee Director Shri J. R. Varma Independent Director (Up to 09.08.2015) Shri B. Chakrabarti Independent Director (Up to 09.08.2015) Shri Rajesh Kumar Mangal Independent Director (Appointed w.e.f. 01.12.2015) Shri Deepak Bhojwani Independent Director (Appointed w.e.f. 01.12.2015) Shri Gopal Chandra Nanda Independent Director (Appointed w.e.f. 01.12.2015) Shri Vishal V Sharma Independent Director (Appointed w.e.f. 09.02.2017) b) The nature wise transactions with the above related parties are as follows: The outstanding balances are unsecured and are settled in cash except advance against equities which are settled in equity. c) In the course of its ordinary business, the Corporation enters into transactions with other Government controlled entities (not included in the list above). The Corporation has transactions with other Government-controlled entities, including but not limited to the followings: - Sales and purchases of goods and ancillary materials; - Rendering and receiving of services; - Receipt of dividends; - Loans and advances; - Depositing and borrowing money; and - Uses of public utilities. These transactions are conducted in the ordinary course of business on terms comparable to those with other entities that are not Government controlled entities. d) Key management personnel compensation NOTE 8* Dues from Directors is Rs.0.40 Crores (31^st March 2016: Rs.0.35 Crores and 1^st April 2015: Rs.0.32 Crores) and Dues from Officers is Rs.4.13 Crores (31^st March 2016: Rs.3.98 Crores and 1^st April 2015: Rs.3.30 Crores). The Corporation has elected to continue the policy adopted under previous GAAP for accounting the foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items outstanding as of 31^st March 2016 i.e. foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in other cases, if any, accumulated in âForeign Currency Monetary Item Translation Difference Accountâ and amortized over the balance period of the liability. For the current financial year, the impact on account of above (net of depreciation and amortization) is decrease in profit before tax of Rs.165.19 Crores (increase in profit in Previous year Rs.244.01 Crores). The net gain remaining unamortized under Foreign Currency Monetary Item Translation Difference Account as at 31^st March 2017 is Rs.206.34 Crores (net loss as at 31^st March 2016 Rs.79.28 Crores and net gain of Rs.27.20 Crores as at 1^st April 2015). NOTE 9 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 31^st March 2017. NOTE 10 In compliance of Ind AS 37 on âProvisions, Contingent Liabilities and Contingent Assetsâ, the required information is as under: The above provisions are made based on estimates and the expected timing of outflows is not ascertainable at this stage. Above includes provision of Rs.62.57 Crores (Previous year Rs.62.47 Crores) in respect of which deposits have been made. C. Financial risk management C. i. Risk management framework The Corporationâs Board of Directors has overall responsibility for the establishment and oversight of the Corporationâs risk management framework. The Risk Management Committee of the Board has defined roles and responsibilities, which includes reviewing and recommending the risk management plan and the risk management report for approval of the Board with the recommendation of the Audit Committee. The Corporation has adopted a Risk Management Charter and Policy for self-regulatory processes and procedures for ensuring the conduct of the business in a risk conscious manner. The Corporation has exposure to the following risks arising from financial instruments: - Credit risk; - Liquidity risk; and - Market risk C.ii. Credit risk Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Corporationâs trade and other receivables, cash and cash equivalents and other bank balances, derivatives and debt securities. The maximum exposure to credit risk in case of all the financial instuments covered below is restricted to their respective carrying amount. (a) Trade and other receivables from customers Credit risk in respect of trade and other receivables is managed through credit approvals, establishing credit limits and monitoring the creditworthiness of customers to which the Corporation grants credit terms in the normal course of business. As at 31^st March 2017, 31^st March 2016 and 1^st April 2015, the Corporationâs industrial customers accounted for the majority of the trade receivables. Expected credit loss assessment for Trade and other receivables from customers as at 1^st April 2015, 31^st March 2016 and 31^st March 2017 The Corporation uses an allowance matrix to measure the expected credit losses of trade and other receivables. The loss rates are computed using a âroll rateâ method based on the probability of receivable progressing through successive stages till full provision for the trade receivable is made. Roll rates are calculated separately for exposures based on common credit risk characteristics for a set of customers. The following table provides information about the exposure to credit risk and Expected Credit Loss Allowance for trade and other receivables: (b) Cash and cash equivalents and Other Bank Balances The Corporation held cash and cash equivalents and other bank balances of Rs.64.69 Crores at 31^st March 2017 (31^st March 2016: Rs.2,067.35 Crores, 1^st April 2015 : Rs.1,360.20 Crores). The cash and cash equivalents are held with banks with good credit ratings and financial institution counterparties with good market standing. Also, Corporation invests its short term surplus funds in bank fixed deposit, Government of India Treasury-bills and liquid schemes of mutual funds, which carry no / low mark to market risks for short duration, therefore does not expose the Corporation to credit risk. (c) Derivatives The derivatives are entered into with banks, financial institutions and other counterparties with good credit ratings. Further exposures to counter-parties are closely monitored and kept within the approved limits. (d) Investment in debt securities Investment in debt securities are mainly as loans to Subsidiary, Joint Venture companies and investment in Government securites which do not carry any significant credit risk. C.iii Liquidity risk Liquidity risk is the risk that the Corporation will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk is managed by Corporation through effective fund management. The Corporation has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Corporation has access to funds from debt markets through commercial paper programs, foreign currency borrowings and other debt instruments. The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments. * Guarantees issued by the Corporation on behalf of Joint Venture/Subsidiary are with respect to borrowings raised by the respective entity. These amounts will be payable on default by the concerned entity. As of the reporting date, none of the Subsidiary/Joint Venture has defaulted and hence, the Corporation does not have any present obligation to third parties in relation to such guarantees. C.iv. Market risk Market Risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. C.iv.a Currency risk The Corporation is exposed to currency risk on account of its operating and financing activities. The functional currency of the Corporation is Indian Rupee. Our exposure is mainly denominated in U.S. dollars (USD). The USD exchange rate has changed substantially in recent periods and may continue to fluctuate substantially in the future. The Corporation has put in place a Financial Risk Management Policy to Identify the most effective and efficient ways of managing the currency risks. The Corporation uses derivative instruments (mainly foreign exchange forward contracts) to mitigate the risk of changes in foreign currency exchange rates in line with our policy. The Corporation do not use derivative financial instruments for trading or speculative purposes. Exposure to currency risk The currency profile of financial assets and financial liabilities as at 31^st March 2017, 31^st March 2016 and 1^st April 2015 are as below: Sensitivity analysis A reasonably possible strengthening/(weakening) of the USD against INR at 31^st March would have affected the measurement of financial instruments denominated in US dollars and affected profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. In cases where the related foreign exchange fluctuation is capitalized to fixed assets or recognised direclty in reserves, the impact indicated below may affect the Corporationâs income statement over the remaining life of the related fixed assets or the remaining tenure of the borrowing respectively. C.iv.b Interest rate risk Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates, in cases where the borrowings are measured at fair value through profit or loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates. The Companyâs approach to managing interest rate risk is to have a judicious mix of borrowed funds with fixed and floating interest rate obligation. Exposure to interest rate risk Corporationâs interest rate risk arises primarily from borrowings. The interest rate profile of the Corporationâs interest-bearing financial instruments is as follows: Fair value sensitivity analysis for fixed-rate instruments The Corporation accounts for certain investments in fixed-rate financial assets such as investments in Oil bonds at fair value through profit or loss. Accordingly, a decrease in 25 basis point in interest rates is likely to increase the profit or loss (before tax) for the year ending 31^st March 2017 by Rs.80.21 Crores (31^st March 2016 Rs.86.34 Crores) and an increase in 25 basis point in interest rates is likely to decrease the profit or loss (before tax) for the year ending 31^st March 2017 by Rs.81.76 Crores (31^st March 2016 Rs.88.18 Crores). Cash flow sensitivity analysis for variable-rate instruments A reasonably possible change of 25 basis points in interest rates at the reporting date would have increased/ (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant. In cases where the related interest rate risk is capitalized to fixed assets, the impact indicated below may affect the Corporationâs income statement over the remaining life of the related fixed assets. C.iv.c Commodity rate risk BPCLâs profitability gets affected by the price differential (also known as Margin or Crack spread) between prices of products (output) and the price of the crude oil and other feed-stocks used in production (input), prices of both are set by markets. Hence BPCL uses derivatives instruments (swaps, futures, options, and forwards) to hedge exposures to commodity price risk to cover refinery operating cost using Basic Swaps on various products cracks like Naphtha, Gasoline (Petrol), Jet/Kerosene, Gasoil (Diesel) and Fuel Oil against Benchmark Dubai Crude. Further volatility in freight costs is hedged through Freight Forwards and bunker purchases. Settlement of all derivative transactions take place on the basis of monthly average of the daily prices of the settlement month quoted by Platts. BPCL measures market risk exposure arising from its trading positions using value-at-risk techniques. These techniques make a statistical assessment of the market risk arising from possible future changes in market prices over a one-day holding period. BPCL uses historical model of VAR techniques based on variance/covariance to make a statistical assessment of the market risk arising from possible future changes in market values over a 24-hour period and within a 95% confidence level. The calculation of the range of potential changes in fair value takes into account positions, the history of price movements for last two years and the correlation of these price movements. C.iv. d Price risk The Corporationâs exposure to equity investments price risk arises from investments held by the Corporation and classified in the financial statements at fair value through OCI. The corporation intends to hold these investments for long-term for better returns and price risk will not be significant from a long term perspective. Notes A. The Corporation has Collaterised Borrowing and Lending Obligations limits from Clearing Corporation of India Limited, which are secured by 6.90% Oil Marketing Companies GOI Special Bonds 2026. As the Counterparty currently does not have a legally enforceable right to off set these amounts, these amounts have not been offset in the balance sheet, but have been presented separately in the table above. B. The Corporation purchases and sells petroleum products from different Oil Marketing Companies. Under the terms of the agreement, the amounts payable by the Corporation are offset against receivables and only the net amounts are settled. The relevant amounts have therefore been presented net in the balance sheet. C. The Corporation enters into derivative transactions under the International Swaps and Derivatives Association (ISDA) master netting agreements. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding in the same currency are aggregated into a single net amount that is payable by one party to the other. D. The Corporation enters into derivative transactions under the International Swaps and Derivatives Association (ISDA) master netting agreements. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding in the same currency are aggregated into a single net amount that is payable by one party to the other. The ISDA master netting agreements do not meet the criteria for offsetting in the balance sheet. This is because the Counterparty does not currently have legally enforceable right to offset recognised amounts, because the right to offset is enforceable only on the occurrence of future events. NOTE 11 CAPITAL MANAGEMENT The Corporationâs objective is to maximize the shareholdersâ value by maintaining an optimum capital structure. Management monitors the return on capital as well as the debt equity ratio and makes necessary adjustments in the capital structure for the development of the business. The Corporationâs debt to equity ratio as at 31^st March, 2017 was 0.78 (31^st March 2016: 0.58 and 1^st April, 2015: 0.55) Note: For the purpose of computing debt to equity ratio, equity includes Equity Share Capital and Other Equity and Debt includes Long term borrowings, short term borrowings and current maturities of long term borrowings. NOTE 12 SEGMENT REPORTING As per the requirements of Ind AS 108 on âOperating Segmentsâ, segment information has been provided under the Notes to Consolidated Financial Statements. NOTE 13 SPECIFIED BANK NOTES The details of Specified Bank Notes (SBN) held and transacted during the period from 8^th November, 2016 to 30^th December, 2016 are provided in the Table below:- Note: Above excludes Rs.0.22 Crores collected during 9^th December 2016 to 11^th December 2016 in one of the Company Owned Company Operated Retail Outlet since the same was stolen before depositing into the bank. NOTE 14 To the extent, the Corporation has received intimation from the âsuppliersâ regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006, the details are provided as under: Mar 31, 2016 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. 1,796.50 Crores (previous year Rs. 16,140.66 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. 198.01 Crores (previous year Rs. 8,362.88 Crores) discount on crude oil/products purchased from ONGC/GAIL/NRL which has been adjusted against purchase cost; b) Rs. 1,598.49 Crores (previous year Rs. 7,290.40 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 Nil (previous year under-recovery Rs. 487.38 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 FY 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. 441.38 Crores (previous year Rs. 307.06 Crores). The net loss remaining unamortised under Foreign Currency Monetary Item Translation Difference Account as at 31st March 2016 is Rs. 79.20 Crores (net gain in the previous year Rs. 26.99 Crores). 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 FY 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 (previous year Rs. 659.10 Crores) together with the additional contribution to the corpus of the trust of Rs. 0.01 Crores made in 2014-15 amounting to Rs. 659.11 Crores is included in Non-Current Investments (Refer Note no. 16). The income distributed by the trust during the year 2015-16 amounting to Rs. 259.71 Crores (previous year Rs. 114.68 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 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 2016. 5. Segment Reporting: As per Accounting Standard (AS) 17 on "Segment Reporting", segment information has been provided under the Notes to Consolidated Financial Statements. 6. 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. 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 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. The fair value of the assets of the Trust is more than the book value. 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 P F, Gratuity, Leave encashment payable to them with the Corporation; and (d) Resettlement allowance paid to employees to permanently settle down 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 (Including Bharat Stars 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 # Petronet CCK Limited has become subsidiary w.e.f. 29th May 2015 Key Management Personnel (Whole time directors): Shri S. Varadarajan, (Chairman & Managing Director) Shri P. Balasubramanian, Director (Finance) Shri K.K. Gupta, Director (Marketing) till 29th February 2016 Shri S. Ramesh, Director (Marketing) w.e.f. 1st March 2016 Shri B.K. Datta, Director (Refineries) Shri S.P. Gathoo, Director (Human Resources) Guarantees of USD 150 Million (Rs. 994.99 Crores) and USD 84 Million (Rs. 557.20 Crores) were given to lender banks on behalf of Bharat Oman Refineries Ltd. against foreign currency loans which were refinanced during the year and have been extended to new lender banks. 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. 25,898.20 Crores (previous year Rs. 29,610.52 Crores) and Petronet LNG Limited Rs. 4,184.69 Crores (previous year Rs. 5,612.34 Crores). 2. Sale of goods: Matrix Bharat Pte. Ltd. Rs. 997.74 Crores (previous year Rs. 2,286.27 Crores), Bharat Oman Refineries Limited Rs. 808.08 Crores (previous year Rs. 661.21 Crores), Sabarmati Gas Limited Rs. 300.28 Crores (previous year Rs. 339.64 Crores) and Indraprastha Gas Limited Rs. 283.19 Crores (previous year Rs. 434.38 Crores) 3. Rendering of Services: Kochi Salem Pipeline Private Limited Rs. 21.93 Crores (previous year Nil), Mumbai Aviation Fuel Farm Private Limited Rs. 14.69 Crores (previous year Nil), Indraprastha Gas Limited Rs. 15.12 Crores (previous year Rs. 7.38 Crores) and Bharat Oman Refineries Limited Rs. 6.49 Crores (previous year Rs. 16.13 Crores) 4. Receiving of Services: Mumbai Aviation Fuel Farm Facility Private Limited Rs. 40.87 Crores (previous year Nil), Bharat Stars Services Private Limited Rs. 29.08 Crores (previous year Rs. 16.70 Crores) and Bharat Oman Refineries Limited Rs. 12.00 Crores (previous year Rs. 11.70 Crores) 5. Interest income: Bharat Oman Refineries Limited Rs. 129.01 Crores (previous year Rs. 129.12 Crores) 6. Dividend received: Petronet LNG Limited Rs. 18.75 Crores (previous year Rs. 18.75 Crores), Indraprastha Gas Limited Rs. 18.90 Crores (previous year Rs. 17.33 Crores) and Delhi Aviation Fuel Facility Pvt. Ltd. Rs. 7.59 Crores (previous year Rs. 7.59 Crores) 7. Investment and Advances for Investments: Sabarmati Gas Limited Rs. 102.24 Crores (previous year Nil), Kannur International Airport Ltd Rs. 50.00 Crores (previous year Rs. 50.00 crores), Kochi Salem Pipeline Private Limited Rs. 37.50 Crores (previous year Rs. 6.75 Crores) and Mumbai Aviation Fuel Farm Facility Private Limited Rs. 33.77 Crores (previous year Rs. 4.50 Crores) 8. Loans and Advances: Petronet LNG Limited Rs. 56.18 Crores (previous year Rs. 112.36 Crores) 9. Management Contracts (Employees on deputation/consultancy services): Bharat Oman Refineries Limited Rs. 15.96 Crores (previous year Rs. 16.46 Crores) and Bharat Stars Services Private Limited Rs. 2.50 Crores (previous year Rs. 1.81 Crores) 10. Lease Rental & Other Charges received: Bharat Oman Refineries Limited Rs. 26.00 Crores (previous year Rs. 29.21 Crores) 11. Lease Rental & Other Charges paid: Delhi Aviation Fuel Facility Private Limited Rs. 0.07 Crores (previous year Rs. 0.07 crores) 12. Sale of Assets: Bharat Stars Services Private Limited Nil (previous year Rs. 3.09 Crores) and Mumbai Aviation Fuel Farm Private Limited Nil (previous year Rs. 1.92 Crores) 13. Receivables as at period end: Bharat Oman Refineries Limited Rs. 1,388.06 Crores (previous year Rs.1,390.18 Crores), which is mainly on account of Subordinated loan of Rs. 1,354.10 Crores (previous year Rs. 1,354.10 Crores) and Petronet LNG Limited of Rs. 200.00 Crores (previous year Rs. 105.22 Crores) 14. Payables as at period end: Bharat Oman Refineries Limited Rs. 908.04 Crores (previous year Rs. 820.38 Crores) and Petronet LNG Limited Rs. 123.76 Crores (previous year Rs. 151.03 Crores) 9. Dues from Directors is Rs. 0.35 Crores (previous year Rs. 0.32 Crores) and Dues from Officers is Rs. 3.98 Crores (previous year Rs. 3.30 Crores). 10. 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. 11. (a) The Corporation has on the Balance Sheet date, outstanding forward contracts amounting to USD 228.75 Million (Rs. 1,533.66 Crores) (previous year - USD 184 Million, Rs. 1,152.96 Crores) to hedge foreign currency exposure for payment of crude oil. (b) The RBI swap transactions outstanding as on 31/03/2014 had matured during 2014-15 and the gain of Rs. 521.14 Crores had been recognised in the Statement of Profit and Loss during the year 2014-15. (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. 0.58 Crores (previous year Rs. 96.09 Crores) in respect of this CHF-USD Swap transaction have been recognized as expense during 2015-16 based on the concept of prudence and in line with the ICAI announcement of 29th March 2008 on Accounting for Derivatives. 12. The Employee benefits expense for FY 2015-16 include reversal of provisions no longer required Nil (previous year Rs. 657.93 Crores). 13. The Corporation has, in the current year, changed the method of determination of cost of inventories from ''Weighted Average'' to ''First in First Out'' (FIFO) in respect of crude oil and finished products (except lubricants which are continued to be determined at weighted average). This has resulted in increase in value of inventory of crude oil by Rs. 15.30 Crores and finished products including intermediaries by Rs. 167.87 Crores, resulting in corresponding increase in the profit before tax in the current year. 14. During the year, the Corporation has released LPG cylinders for the BPL families as per the scheme of MOPNG. Out of these, in respect of certain connections, the claims on MOPNG towards deposits amounting to Rs. 95.85 Crores are not yet accounted for, pending their approval. 15. Figures of the previous year have been regrouped wherever necessary, to conform to current period presentation. 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. Mar 31, 2011 1. 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 5,746.54 crores (previous year Rs 2,927.27 crores) discount on crude oil purchased from ONGC has been adjusted against raw material cost; b) Rs 1,213.50 crores (previous year Rs 702.57 crores) discounts on SKO and LPG purchased from ONGC/GAIL has been adjusted against "Purchase of products and crude oil for resale". c) Rs 9,418.88 crores (previous year Rs 5,265.03 crores) subsidy from Government of India has been accounted as Income. 2. Debentures a) The Corporation had allotted redeemable non-convertible 7.73% Debentures of face value of Rs 1,000 crores on 12th October 2009. These are secured by first legal mortgage in English form by way of a Registered Debenture Trust Deed over the fixed assets of the Company, viz., a Flat at Mumbai and the Plant and Machinery in respect of Refinery Modernisation Project Crude Distillation Unit / Vacuum Distillation Unit, Catalytic Cracking Unit, Fluid Catalytic Cracking Unit, Diesel Hydro Desulphurisation Unit and Naphtha Hydro Desulphurisation Unit of the Mumbai Refinery. In order to maintain the security cover of 1.25 times, all future immovable properties including Land, Plant & Machinery and Fixtures & Fittings shall be a part of the Premises and Plant & Machinery which are mortgaged. These Debentures are redeemable at par on 9th October 2012. b) The Corporation has allotted redeemable non-convertible 6.23% Debentures of face value of Rs 1,000 crores on 30th April 2010. These are secured by first legal mortgage in English form by way of a Registered Debenture Trust Deed over the fixed assets of the Company, viz., a Flat at Mumbai and Plant and Machinery of the company in respect of its Process Equipments situated at Mahul Refinery. In order to maintain the security cover of 1.25 times, all future immovable properties including Land, Plant & Machinery and Fixtures & Fittings shall be a part of the Premises and Plant & Machinery which are mortgaged. These Debentures are redeemable at par on 28th October 2011. 3. As per the scheme of Amalgamation of the erstwhile Kochi Refineries Limited 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 Kochi Refineries Limited) 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 reflected as 'Others' in Schedule 'J ' - Other Current Assets. The income distributed by the trust during the year 2010-11 amounting to Rs 47.22 crores (previous year Rs 23.61 crores) has been included in 'Other income' in Schedule 'O' Ã Miscellaneous Income. One shareholder of erstwhile KRL has challenged the amalgamation before Delhi High Court, which is pending adjudication. 4. Impairment of Assets Determination as to whether and how much an asset is impaired involve Management estimates of highly uncertain matters such as international prices of crude oil and products, duty structure and Government policies. 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, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. No impairment is therefore considered as at 31st March 2011. 5. The Cubject to confirmation. Adjustments, if any, arising therefrom are not likely to be material on settlement. 6. The Corporation changed its existing "Employees' Contributory Superannuation Scheme", from a Defined Benefit Scheme (DBS) into a Defined Contribution Scheme (DCS) applicable to all employees w.e.f. 1.1.2007. The net shortfall of Rs 373.00 crores based on actuarial valuation in the DBS due to this changeover has been provided as a one-time contribution. Further, the Corporation has also provided Rs 773.00 crores towards its liability to the DCS and fororporation has numerous transactions with other oil companies, which are reconciled on an ongoing basis and s pay-revision of non-management employees on an estimated basis. 7. Provision for taxation is computed, considering the liability provided during the year for the Superannuation Scheme as allowable expenditure. The Corporation is in the process of modifying the Scheme and there is reasonable certainty that approval would be obtained from tax authorities. Provision for taxation also includes Rs 1.50 crores (previous year Rs 1.50 crores) towards wealth tax. 9. Disclosure as per requirements of Accounting Standard 15 - "Employee Benefits" : 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 to employees, spouse, dependant 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 P F, 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 : Indraprastha Gas Limited Petronet India Limited Petronet CCK Limited Petronet CI Limited Petronet LNG Limited Bharat Oman Refineries Limited Petroleum Infrastructure Limited Petroleum India International Maharashtra Natural Gas Limited Central UP Gas Limited Sabarmati Gas Limited Bharat Stars Services Private Limited Bharat Renewable Energy Limited Matrix Bharat Marine Services Pte. Ltd. Delhi Aviation Fuel Facility Private Limited IBV Brasil Petroleo Ltda. Key Management Personnel : M/s. Ashok Sinha (Chairman & Managing Director) (Whole time Directors) up to 18th August, 2010. S. Radhakrishnan (Director Marketing) up to 28th February 2011. Held Additional charge of Chairman & Managing Director from 19th August 2010 to 8th December 2010. R.K. Singh (Chairman & Managing Director) w.e.f. 9th December,2010 and prior to that he was Director (Refineries). K.K. Gupta (Director Marketing) w.e.f. 31st March,2011 S. Mohan (Director Human Resources) Sudhir K. Joshi (Director Finance) Details of remuneration to Directors are given in note 20 of Notes to Accounts. 11. Deferred Tax Liability As per the requirement of the Accounting Standard 22 - "Accounting for Taxes on Income" the net deferred tax liability debited during the year is Rs 148.24 crores (previous year net deferred tax asset credited Rs 303.25 crores). 12. 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. 13. Capital Commitments and Contingent Liabilities : 31/03/2010 Rs Crores Rs Crores 13.1 Capital Commitments : Estimated amount of contracts remaining to be executed on capital account and not provided for 804.98 1,300.53 13.2 Contingent Liabilities : (a) In respect of Income Tax matters 95.26 59.88 (b) Other Matters : i) Surety bonds executed on behalf of other oil companies for excise/ customs duties for which BPCL has signed as surety 183.45 195.30 ii) Claims against the Corporation not acknowledged as debts : (a) Excise and customs matters 1,242.94 1,190.86 (b) Sales tax matters 2,880.03 2,668.30 (c) Others * 322.36 263.12 These include Rs 1014.13 crores (previous year Rs 751.55 crores) against which the Corporation has a recourse for recovery and Rs 43.73 crores (previous year Rs 29.42 crores) on capital account. * In respect of lands acquired, land owners have claimed higher compensation before various Authorities / Courts, which are yet to be settled. The estimated contingent liability of Rs 95.16 crores (previous year Rs 54.63 crores) in such cases is included above. iii) Claims on account of wages, bonus/ex-gratia payments in respect of pending court cases. 6.15 4.55 iv) Guarantees given on behalf of Subsidiaries/JV's 4,408.77 3,700.43 14. 18.1 Foreign Exchange losses amounting to Rs 205.31 crores (previous year Rs 37.42 crores) are regarded as adjustment to Interest cost and debited to Interest expenditure. 18.2 The deferred premium amounting to Rs 130.77 crores (previous year Rs 90.29 crores) in respect of for ward exchange contract will be recognised in the Profit & Loss Account of one or more subsequent accounting periods. 15. Figures of the previous year have been regrouped wherever necessary, to conform to current year presentation. Mar 31, 2010 1) In respect of sharing of under-recoveries on sensitive petroleum products viz. MS, HSD, LPG (Domestic) and SKO (PDS), as advised by the Ministry of Petroleum & Natural Gas, a part of the under-recovery suffered by the Corporation during the year was compensated by ONGC and GAIL by offering discount on price of Crude Oil, SKO and LPG purchased from them. Accordingly, the Corporation has accounted the discount as follows: a) Rs.2,927.27 crores (previous year Rs. 6,709.94 crores) discount on crude oil purchased from ONGC has been adjusted against raw material cost; and b) Rs. 702.57 crores (previous year Rs. 846.50 crores) discounts on SKO and LPG purchased from ONGC/GAIL has been adjusted against "Purchase of products and crude oil for resale". 2) In lieu of the under-recoveries on sale of petroleum products during 2009-10, based on the approval of Government of India, the Corporation has accounted for the subsidy amounting to Rs.5,265.03 crores as income (previous year Rs.16,216.38 crores of Oil Marketing Companies GOI Special Bonds were accounted as Income). Out of the above, an amount of Rs.2,894.26 crores (previous year Oil Marketing Companies GOI Special Bonds amounting to Rs.2,065.28 crores) receivable as on 31st March 2010 from Government of India is shown as Other Current Assets in Schedule J. 3) Debentures: a) The Corporation had allotted redeemable non-convertible 10.35% Debentures of face value of Rs.1,000 crores on 12th December 2008. These are secured by English mortgage, on first pari passu charge basis, by way of a Registered Debenture Trust Deed over the fixed assets of the Company, viz., a Flat at Mumbai and the Plant and Machinery in respect of Hydrocracker Unit and Aromatic Recovery Unit of the Mumbai Refinery. In order to maintain the security cover of 1.25 times, all future immovable properties including Land, Plant & Machinery and Fixtures & Fittings shall be a part of the Premises and Plant & Machinery which are mortgaged. These Debentures are redeemable at par on 11th June 2010. b) The Corporation has allotted redeemable non-convertible 7.73% Debentures of face value of Rs.1,000 crores on 12th October 2009. These are secured by first legal mortgage in English form by way of a Registered Debenture Trust Deed over the fixed assets of the Company, viz., a Flat at Mumbai and the Plant & Machinery in respect of Refinery Modernisation Project Crude Distillation Unit / Vacuum Distillation Unit, Catalytic Cracking Unit, Fluid Catalytic Cracking Unit, Diesel Hydro Desulphurisation Unit and Naptha Hydro Desulphurisation Unit of the Mumbai Refinery. In order to maintain the security cover of 1.25 times, all future immovable properties including Land, Plant & Machinery and Fixtures & Fittings shall be a part of the Premises and Plant & Machinery which are mortgaged. These Debentures are redeemable at par on 9th October 2012. 4) As per the scheme of Amalgamation of the erstwhile Kochi Refineries Limited 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 Kochi Refineries Limited) 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 reflected as ÃOthersÃ in Schedule ÃJÃ - Other Current Assets. The income distributed by the trust during the year 2009-10 amounting to Rs. 23.61 crores (previous year Rs. 13.49 crores) has been included in ÃOther incomeÃ in Schedule ÃOÃ - Miscellaneous Income. One shareholder of erstwhile KRL has challenged the amalgamation before Delhi High Court, which is pending adjudication. 5) Provision for taxation in the Profit & Loss Account includes Rs.1.50 crores (previous year Rs. 1.40 crores) towards wealth tax. 6) The Corporation has numerous transactions with other oil companies, which are reconciled on an ongoing basis and subject to confirmation. Adjustments, if any, arising therefrom are not likely to be material on settlement. 7) The Corporation has made a provision of Rs.463 crores (previous year Rs.114 crores for management staff) towards balance liability on revision in emoluments of management staff and pending pay-revision of non-management staff on an estimated basis. Further, this has been considered for making provision at the year end for employee benefits based on actuarial valuations. 8) The Corporation has reclassified the entire portfolio of long term investments in 6.35% Oil Marketing Companies GOI Special Bonds 2024 - Rs.3,099.96 crores and 6.90% Oil Marketing Companies GOI Special Bonds 2026 - Rs.4,986.71 crores to current investments during the year, considering the future funds requirement. Accordingly an amount of Rs. 1086.50 crores has been provided for the diminution in value of these investments based on mark to market as on 31.3.2010. 9) Impairment of Assets Determination as to whether and how much an asset is impaired involve Management estimates of highly uncertain matters such as international prices of crude oil and products, duty structure and Government policies. 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, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. No impairment is therefore considered as at 31st March 2010. 11) Disclosure as per requirements of Accounting Standard 15 - "Employee Benefits" : Gratuity: The Company has a defined benefit gratuity plan managed by a trust. The contribution based upon actuarial valuation is paid 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 to employees, spouse, dependent children and dependent parents. (b) Medical benefits carry forward entitlements (c) Pension/ex-gratia scheme to the retired employees who are entitled to receive the monthly pension / ex-gratia for life; (d) Death in service / Permanent disablement given to employee, the spouse of the employee, provided the deceasedÃs family/disabled employee deposits retirement dues such as PF, Gratuity, Leave encashment payable to them with the Corporation; and (e) Resettlement allowance paid to employees to permanently settle down at a place other than the location of last posting at the time of retirement. 12) Related Party Disclosures as per Accounting Standard 18 Names of the Related parties Indraprastha Gas Limited Petronet India Limited Petronet CCK Limited Petronet CI Limited Petronet LNG Limited Bharat Oman Refineries Limited Petroleum Infrastructure Limited Petroleum India International Maharashtra Natural Gas Limited Central UP Gas Limited Sabarmati Gas Limited Bharat Stars Services Private Limited Premier Oil Cachar B.V. Bharat Renewable Energy Limited Matrix Bharat Marine Services Pte. Ltd. Delhi Aviation Fuel Facility Private Limited VB (Brazil) Petroleo Private Ltda. Key Management Personnel (Whole time Directors) M/s. Ashok Sinha (Chairman & Managing Director), S. Mohan (Director Human Resources) S. Radhakrishnan (Director Marketing), S. K. Joshi (Director Finance) R. K. Singh (Director Refineries) 13) 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. 14. 14.1 Foreign Exchange losses amounting to Rs.37.42 crores (previous year Rs. 194.58 crores) are regarded as adjustment to Interest cost and debited to Interest expenditure. 20.2 The deferred premium amounting to Rs.90.29 crores (previous year Rs. 123.21 crores) in respect of forward exchange contract will be recognised in the Profit and Loss Account of one or more subsequent accounting periods. 15. 15.1 The Corporation has on the Balance Sheet date, outstanding forward contracts amounting to USD 816.95 million (previous year USD 424.33 million) to hedge the foreign currency exposure towards loans; this includes USD 55 million (previous year USD 107.50 million) in respect of long term loans. The Corporation does not generally hedge the risks on account of foreign currency exposure for the payment of crude oil. Following are the unhedged foreign currency exposures as on 31.03.2010: 16. Figures of the previous year have been regrouped wherever necessary, to conform to current year presentation. Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article IFSC Code Currency From To 1 USD = 83.5622 (USD to INR) 1 EUR = 88.9467 (EUR to INR) 1 GBP = 103.924 (GBP to INR) More More Information on Bharat Petroleum Corporation Ltd. Bharat Petroleum Corporation Ltd. Tools Bulk Deals Block Deals Bharat Petroleum Corporation Ltd. Company Details Company Profile Company History Management Team Capital Structure Product Mix Banker/Auditor/Registrar Company History Bonus BSE Price History NSE Price History Bharat Petroleum Corporation Ltd. Key Financial Ratios Ratios Bharat Petroleum Corporation Ltd. 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