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Notes to Accounts of Chennai Petroleum Corporation Ltd.

Mar 31, 2016

NOTE "1" - DEFERRED TAX LIABILITIES / (ASSETS) (NET)

Due to future taxable income arising on account of reversal of timing differences, Company has restricted the recognition of Deferred Tax Asset in respect of carry forward business loss and unabsorbed depreciation to the extent of Deferred Tax Liability of Rs, 77956.16 lakhs.

(i] There are no amounts due for payment to the Investor Education and Protection Fund as at the year end. Balance as at 31st March 2016 includes Rs, 3210.61 Lakhs (2015 : Rs, 3210.61 Lakhs] of unpaid dividend to Naftiran Inter trade company Limited (NICO] for the financial years ending 2011 and 2012 which could not be remitted due to sanctions imposed by US / European Union against Iran.

(ii] Refer Sl. No 9 of Note 28.

(i) With regard to Disclosure requirement under the provisions of Section 22 of Micro, Small and Medium Enterprises Development Act, 2006, the company has carried out the same based on the confirmation received from its suppliers.

No interest amount remains unpaid to such Micro and Small enterprises as on 31.03.2016 and no payments were made to such enterprises beyond the “appointed day” during the year. Also, the company has not paid any interest in terms of Section 16 of the above mentioned act or otherwise.

(ii) Represents dues to Indian Oil Corporation Ltd., the holding company.

A : Gross block of Land includes Rs, 18.36 Lakhs deposited towards 50.93 acres of Land for which assignment deed is yet to be received from Govt, of TamilNadu.

B : Refer S.No. 2.1.3 and 2.5.4 of Note - 1, Significant Accounting Policies.

C : Pursuant to the requirements prescribed under Schedule II to the Companies Act, 2013 the Company has, effective 1st April 2015, reviewed and identified the components (significant parts) of the main asset having different useful lives as compared to the main asset and depreciation has been charged accordingly. Due to this, the depreciation for the year 2015-16 is higher by Rs, 3984.29 lakhs. In addition, as per the transitional provisions, the Company has charged Rs, 1584.63 lakhs to the opening balance of General reserve as at 1st April, 2015.

D : Represents 5/24 share of total cost of the Railway Siding jointly owned by the Company along with Madras Fertilizers Limited, Madras Petrochem Limited, Steel Authority of India Limited and Rashtriya Ispat Nigam Limited

E : The cost of assets are net of VAT/CENVAT, wherever applicable.

(i) Includes receivables from Indian Oil Corporation Ltd., the holding company - Rs, 61334.93 Lakhs. (2015: Rs, 161885.99 Lakhs) and receivables from Indian Additives Limited., Joint Venture Company - Rs, 485.25 Lakhs. (2015: Rs, 401.10 Lakhs)

(ii) Represents dues for which mortgage and first charge on an asset is in favour of the company to the extent of Rs, 10000 Lakhs. (2015: Rs, 10000 Lakhs)

(i) In line with the scheme formulated by the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas, the company has received an aggregate discount of Rs, 17322.40 Lakhs (2015: Rs, 412063.58 Lakhs) from Oil and Natural Gas Corporation Limited on Crude Oil purchase and has passed on the same as discounts on products sold to Indian Oil Corporation Limited, the holding company. Accordingly, Gross Sale of Products and Consumption of Raw Materials for the year are net of Rs, 17322.40 Lakhs. (2015: Rs, 412063.58 Lakhs).

Refer Note 30 - Finished Products - Quantity and Value Particulars, for product wise sales

(i) Includes interest on Income Tax refunds - Nil (2015: Rs, 805.83 Lakhs)

(ii) Represents income from Non Current Trade Investment - Indian Additives Limited - Joint Venture Company.

(iii)Includes income from Petroleum India International (Non Current Trade Investments) Rs, 78.55 Lakhs (2015: Rs, 60.36 Lakhs)

(iv) During December 2015, due to severe floods in Chennai, there was damage to the Company''s Plant & Machinery and Stores & spares. The Company had filed an insurance claim for an estimated amount of Rs, 1378.95 Lakhs (replacement cost) after considering deductibles. Pending settlement of the claim, the Company has received an "On Account payment" of Rs, 300 Lakhs from the insurance company which has been disclosed under "Other income".

(i) Refer Sl No.12 in Note 28 (Annexure -II)

Miscellaneuos Expenses include:

a) Expenditure on Public Relations and Publicity amounting to Rs, 243.99 lakhs (2015: Rs, 143.66 lakhs). The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.00007:1 (2015: 0.00003:1)

b) Entertainment Expenses Rs, 21.22 lakhs (2015: Rs, 17.68 lakhs).

1. Contingent Liabilities:

a) Claims against the company not acknowledged as debts Rs, 63029.67 lakhs (2015: Rs, 38669.59 lakhs).

These mainly include:

i) Rs, 498.55 lakhs (2015: Rs, 619.54 lakhs) in respect of Central Excise.

ii) Rs, 48632.59 lakhs (2015: Rs, 27028.27 lakhs) in respect of Sales Tax.

iii) Rs, 9414.81 lakhs (2015: Rs, 7075.98 lakhs) in respect of Income Tax.

iv) Rs, 2219.59 lakhs (2015: Rs, 1713.94 lakhs) relating to projects.

b) Interest/Penalty, if any, unascertainable, on the above claims is not considered.

c) Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs, 154579.73 lakhs (2015: Rs, 249455.02 lakhs).

2. Thirty four acres and forty nine cents of land has been taken on lease from a trust on a five-year renewable lease for the construction of Employees Township at Cauvery Basin Refinery

3. Sixteen acres and twenty six cents and twenty acres of land of the company are in the possession of IOT Infrastructure & Energy Services Limited and CPCL Educational T rust respectively under lease agreement for a period of 12 years and 50 years respectively.

4. (a) The cost of land includes provisional payments towards cost, compensation, and other accounts for which

detailed accounts are yet to be received from the authorities concerned

(b) The company has valid title for all immovable properties. However, in respect of 186.86 acres of Land allotted by Government of Tamil Nadu (classified as Poramboke) Assignment deed is yet to be received. Out of this, value is to be determined by Government of Tamilnadu in respect of 135.93 acres.

(c) Pending decision of the Government/Court, additional compensation, if any, payable to the landowners and the Government for certain lands acquired, is not quantifiable, and hence not considered

5. Valuation of Finished Products:

The overall gross margin percentage for all joint products is subtracted from the final net realizable value of each product to arrive at the total cost of each product which is taken as the basis for valuation of closing stock of finished products. (Refer Policy No 7.3 in Note - 1 - "Statement of Significant Accounting Policies").

6. In view of Componentization of fixed assets, expenses on replacement of significant catalyst, hitherto charged to statement of Profit and Loss, have been identified and capitalized as component. This has resulted in decrease in expenditure and increase in profit before tax during the year by Rs, 2165.90 lakhs. Accordingly, net tangible assets is higher by the like amount.

7. The Company has export obligation of Rs, 31854 lakhs (2015: Nil) on account of concessional rate of customs duty availed under EPCG scheme on import of capital goods/Advance License scheme on import of crude oil

8. The company operates in a single segment viz. downstream petroleum sector. As such reporting is done on a single segment basis.

9. Foreign currency exposures (liability) as on 31.03.2016 is Rs, 273528.16 Lakhs (2015: Rs, 392932.66 Lakhs). The company has entered into 135 (2015: 4) forward contract transactions during the year for hedging purposes out of which 4 Forward contracts of Rs, 44328.29 Lakhs (2015: Nil) remained outstanding as on 31st March 2016.

10. Disclosure as required under Accounting Standard - 15 (Revised) on "Employee Benefits" is provided in Annexure - I to this Note.

11. In compliance with Accounting Standard - 18 on "Related Party Disclosures", the required information is given in Annexure - II to this Note.

# Audited

b) Name of the Joint Venture National Aromatics and Petrochemicals Corporation Ltd

Proportion of ownership interest 50%

Country of Incorporation India

Aggregate amount of interest in Joint Venture is not given since the joint venture is not operational

12. During the year, the company has undertaken a review of all fixed assets in line with the requirements of AS- 28 on "Impairment of Assets". Based on such review, no provision for impairment is required to be recognised for the year.

13. In Compliance of Accounting Standard - 29 on " Provisions, Contingent Liabilities & Contingent Assets", the required information on each class of contingent liability is as under :

Defined Contribution Schemes:

(a) Provident Fund

(i) During the year, the company has recognized Rs, 1635.70 Lakhs (2015: Rs, 1574.59 Lakhs) as Employer''s contribution to Provident Fund in the Statement of Profit and Loss (included in ''Contribution to Provident & Other Funds'' in Note 24)

(ii) In addition, during the year, the company has recognized '' 227.88 Lakhs (2015 : Rs, 181.21 Lakhs) as contribution to EPS-95 in the Statement of Profit and Loss (included in ''Contribution to Provident & Other Funds'' in Note 24)

(b) Pension Scheme

During the year, the company has recognized Rs, 2108.82 Lakhs (2015: Rs, 509.18 Lakhs) towards Defined Contributory Employees'' Pension Scheme in the Statement of Profit and Loss (included in ''Contribution to Provident & Other Funds'' in Note 24)

Defined Benefits Plans: General Description

Gratuity:

Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount equal to 15/26 of the monthly emoluments for every completed year of service subject to a maximum of '' 10 Lakhs at the time of separation from the company

Leave Encashment:

Each employee is entitled to get 8 earned leaves for each completed quarter of service. Encashment of earned leaves is allowed during service leaving a minimum balance of 15 days subject to maximum accumulation up to 300 days. In addition, each employee is entitled to get 5 sick leaves at the end of every six months. The entire accumulation of sick leaves is permitted for encashment only at the time of retirement.

PRMS

Post Retirement Medical Scheme (PRMS) provides medical benefit to retired employees and eligible dependant family members.

Long Service Award:

The long service award scheme, under which the employees were rewarded with gold coins based on duration of completed service, has been discontinued based on the advice of MoP&NG. Pending the finalization of alternate scheme, the company has continued actuarial liability as on 31.03.2015. No additional liability has been provided

a) The remuneration/other benefits & entitlements to KMP stated above does not include the impact of provision made on actuarial valuation of retirement/post retirement benefit schemes as the same are not ascertainable separately.

b) Sl No 2, 8 , 9 & 10 represents transactions with Joint Venture Company - Indian Additives Limited

Key Management Personnel (KMP)

Whole-time Directors

1) Mr Gautam Roy

2) Mr S. Venkataramana

3) Mr S. Krishna Prasad

4) Mr. U. Venkata Ramana

Company Secretary

Mr. P. Shankar

Joint Venture Companies

1) Indian Additives Limited

2) National Aromatics and Petrochemicals Corporation Limited

Entity over which KMP exercise significant influence

1) CPCL Educational Trust


Mar 31, 2015

1. Rights, preferences and restrictions attached to shares Equity Shares: The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting, except in case of interim dividend In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company in proportion to their shareholding.

2.Nature of Security and Terms of repayment for Secured Loans

Nature of Security

(i) Secured Redeemable Non Convertible Debentures (Series-II) - First Charge on specific Plant & Machinery alongwith the underlying land together with all the building and structures standing on the said land to the extent of Rs. 100000 Lakhs

Terms of Repayment

Principal repayable at the end of 5 years from 10.01.2014 being date of allotment. Interest payable annually on 10th Jan at the rate of 9.65% p.a.

Nature of Security

(ii) Secured Redeemable Non Convertible Debentures (Series-I) - First Charge on specific Plant & Machinery alongwith the underlying land together with all the building and structures standing on the said land to the extent of RS. 100000 Lakhs.

Terms of Repayment

Principal repayable at the end of 5 years or on the exercise of put/call option either in whole or in part at the end of 3 years from 18.02.2013 being date of allotment. Interest payable annually on 18th Feb at the rate of 8.85% p.a.

2. DEFERRED TAX LIABILITIES / (ASSETS) (NET)

During the current financial year , the company has recognized Deferred Tax Asset in respect of carry forward business loss and unabsorbed depreciation to the extent of Deferred Tax Liability of Rs. 70339.89 lakhs as per the accounts of previous year , which has a consequential impact on the profit for the current year. The said sum of v 70339.89 lakhs constitutes a prior period item and disclosed accordingly. This accounting treatment is based on the opinion received by the company from the Expert Advisory Committee of the Institute of Chartered Accountants of India in July 2014 and due to future taxable income arising on account of reversal of timing differences.

3. Contingent Liabilities:

a) Claims against the company not acknowledged as debts Rs. 38669.59 lakhs (2014: Rs. 30524.95 lakhs).

These mainly include:

i) Rs. 619.54 lakhs (2014: Rs. 344.19 lakhs) in respect of Central Excise.

ii) Rs. 27028.27 lakhs (2014: Rs. 20620.57 lakhs) in respect of Sales Tax.

iii) Rs. 7075.98 lakhs (2014: Rs. 6926.63 lakhs) in respect of Income Tax.

iv) Rs. 1713.94 lakhs (2014: Rs. 1628.03 lakhs) relating to projects.

b) Interest/Penalty, if any, unascertainable, on the above claims is not considered

The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company's financial position and results of operations.

c) Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs. 249455.02 lakhs (2014: Rs. 184959.97 lakhs).

4. Thirty four acres and forty nine cents of land has been taken on lease from a trust on a five-year renewable lease for the construction of Employees Township at Cauvery Basin Refinery.

5. Forty-one acres, twenty three and half acres and eleven acres and sixty two cents of land of the company are in the possession of IOT Infrastructure & Energy Services Limited, CPCL Educational Trust and Indian Oil Corporation Limited respectively under lease agreement.

6. (a) The cost of land includes provisional payments towards cost, compensation, and other accounts for which detailed accounts are yet to be received from the authorities concerned.

(b) The company is in possession of 135.93 acres of land (classified as Poramboke) for which value is to be determined and Assignment deed is yet to be received from Govt of Tamilnadu.

(c) Pending decision of the Government/Court, additional compensation, if any, payable to the landowners and the Government for certain lands acquired, is not considered

7. Valuation of Finished Products:

The overall gross margin percentage for all joint products is subtracted from the final net realisable value of each product to arrive at the total cost of each product which is taken as the basis for valuation of closing stock of finished products. (Refer Policy No 7.3 in Note - 1 - "Statement of Significant Accounting Policies").

8. The Company has no export obligation (2014: Nil) on account of concessional rate of customs duty availed under EPCG scheme on import of capital goods/Advance License scheme on import of crude oil.

9. The company operates in a single segment viz. downstream petroleum sector. As such reporting is done on a single segment basis.

8. No provision for Income Tax (Current Tax) has been made in view of loss for the current year.

10. Foreign currency exposures as on 31.03.2015 is Rs. 392932.66 Lakhs (2014: Rs. 703338.45 Lakhs). The company has entered into four (2014: Nil) derivative transactions during the year. There are no outstanding Forward contracts as on 31st March 2015 (2014: Nil).

11. Disclosure as required under Accounting Standard - 15 (Revised) on "Employee Benefits" is provided in Annexure - I to this Note.

12. In compliance with Accounting Standard - 18 on "Related Party Disclosures", the required information is given in Annexure - II to this Note.

b) Name of the Joint Venture National Aromatics and Petrochemicals Corporation Ltd

Proportion of ownership interest 50%

Country of Incorporation India

Aggregate amount of interest in Joint Venture is not given since the joint venture is not operational

13. During the year, the company has undertaken a review of all fixed assets in line with the requirements of AS- 28 on "Impairment of Assets". Based on such review, no provision for impairment is required to be recognised for the year.

14. Disclosure requirements under AS - 15 (Revised) as per Serial No: 10

Defined Contribution Schemes:

(a) Provident Fund

(i) During the year, the company has recognised Rs. 1574.59 Lakhs (2014: Rs. 1574.98 Lakhs) as Employer's contribution to Provident Fund in the Statement of Profit and Loss (included in 'Contribution to Provident & Other Funds' in Note 24)

(ii) In addition, during the year, the company has recognised Rs. 181.21 Lakhs (2014 : Rs. 104.71 Lakhs) as contribution to EPS-95 in the Statement of Profit and Loss (included in 'Contribution to Provident & Other Funds' in Note 24)

(b) Pension Scheme

During the year, the company has recognised Rs. 509.18 Lakhs (2014: Rs. 1443.42 Lakhs) towards Defined Contributory Employees' Pension Scheme in the Statement of Profit and Loss (included in 'Contribution to Provident & Other Funds' in Note 24)

15.Defined Benefits Plans: General Description Gratuity:

Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount equal to 15/26 of the monthly emoluments for every completed year of service subject to a maximum of Rs. 10 Lakhs at the time of separation from the company.

Leave Encashment:

Each employee is entitled to get 8 earned leaves for each completed quarter of service. Encashment of earned leaves is allowed during service leaving a minimum balance of 15 days subject to maximum accumulation upto 300 days. In addition, each employee is entitled to get 5 sick leaves at the end of every six months. The entire accumulation of sick leaves is permitted for encashment only at the time of retirement.

PRMS

Post Retirement Medical Scheme (PRMS) provides medical benefit to retired employees and eligible dependant family members.

Long Service Award:

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded with Gold Coins of different weight based on the duration of service completed.

Ministry of Petroleum & Natural Gas ( MoP&NG) vide letter dated 25th February 2015 has advised Oil Marketing Companies to discontinue the Long Service Award Scheme. However, IOCL, the holding company has taken-up the issue with MoP&NG and pending final decision in the matter, company has continued with the actuarial valuation for FY 14-15 and provided for liability in the books of accounts.

Key Management Personnel (KMP)

Whole-time Directors

1) Mr Gautam Roy (from 09.10.2014)

2) Mr S. Venkataramana

3) Mr S. Krishna Prasad (from 09.01.2015)

4) Mr. U. Venkata Ramana (from 01.12.2014)

5) Mr A.S Basu (till 31.05.2014)

6) Mr T. S. Ramachandran (till 30.11.2014)

Company Secretary

Mr. P. Shankar

Joint Venture Companies

1) Indian Additives Limited

2) National Aromatics and Petrochemicals Corporation Limited

Entity over which KMP exercise significant influence

1) CPCL Educational Trust


Mar 31, 2014

NOTE 1

1. Contingent Liabilities:

a) Claims against the company not acknowledged as debts Rs.30524.95 lakhs (2013: Rs.29101.34 lakhs).

These mainly include:

i) Rs.344.19 lakhs (2013: Rs.572.31 lakhs) in respect of Central Excise.

ii) Rs.20620.57 lakhs (2013: Rs.21454.65 lakhs) in respect of Sales Tax.

iii) Rs.6926.63 lakhs (2013: Rs.4695.27 lakhs) in respect of Income Tax.

iv) Rs.1628.03 lakhs (2013: Rs.1342.70 lakhs) relating to projects.

b) Interest/Penalty, if any, unascertainable, on the above claims is not considered.

c) Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs.184959.97 lakhs (2013: Rs.38854.22 lakhs).

2. Thirty four acres and forty nine cents of land has been taken on lease from a trust on a five-year renewable lease for the construction of Employees Township at Cauvery Basin Refinery.

3. Forty-one acres, twenty three and half acres and eleven acres and sixty two cents of land of the company are in the possession of IOT Infrastructure & Energy Services Limited, CPCL Educational Trust and Indian Oil Corporation Limited respectively under lease agreement.

4. (a) The cost of land includes provisional payments towards cost, compensation, and other accounts for which detailed accounts are yet to be received from the authorities concerned.

(b) The company is in possession of 135.93 acres of land (classified as Poramboke) for which value is to be determined and Assignment deed is yet to be received from Govt. of Tamilnadu.

(c) Pending decision of the Government/Court, additional compensation, if any, payable to the landowners and the Government for certain lands acquired, is not considered.

5. The company, in the absence of notification by the Central Government specifying the applicable rate of cess under section 441A of the Companies Act, 1956 on turnover payable by the company, has not provided for cess towards formation of Rehabilitation and Revival Fund.

6. Valuation of Finished Products:

The overall gross margin percentage for all joint products is subtracted from the final net realisable value of each product to arrive at the total cost of each product which is taken as the basis for valuation of closing stock of finished products. (Refer Policy No 6.3 in Note – 1 – "Statement of Significant Accounting Policies").

7. The Company has no export obligation (2013: Rs.1153.65 Lakhs) on account of concessional rate of customs duty availed under EPCG scheme on import of capital goods/Advance License scheme on import of crude oil.

8. The company operates in a single segment viz. downstream petroleum sector. As such reporting is done on a single segment basis.

9. No provision for Income Tax (Current Tax) has been made in view of loss for the current year.

10. Foreign currency exposures as on 31.03.2014 is Rs.703338.45 Lakhs (2013: Rs.650903.20 Lakhs). The company has not entered into any derivative transaction. There are no outstanding Forward contracts as on 31st March 2014 (2013: Nil).

11. Disclosure as required under Accounting Standard – 15 (Revised) on "Employee Benefits" is provided in Annexure – I to this Note.

12. In compliance with Accounting Standard – 18 on "Related Party Disclosures", the required information is given in Annexure – II to this Note.

13. During the year, the company has undertaken a review of all fixed assets in line with the requirements of AS- 28 on "Impairment of Assets". Based on such review, no provision for impairment is required to be recognised for the year.

14. Previous year''s comparative figures have been regrouped and recast, wherever necessary, to the extent practicable, for uniformity in presentation.


Mar 31, 2013

1. Contingent Liabilities:

a) Claims against the company not acknowledged as debts Rs. 17103.90 lakhs (2011: Rs. 2971.77 lakhs).

These mainly include:

i) Rs. 447.83 lakhs (2011: Rs.201.72 lakhs) being the demands raised by Central Excise authorities.

ii) Rs. 8857.48 lakhs (2011: Rs. 1270.79 lakhs) in respect of Sales Tax demands.

iii) Rs. 6188.38 lakhs (2011: Rs. 229.45 lakhs) in respect of Income Tax demands.

iv) Rs. 886.88 lakhs (2011: Rs. 811.21 lakhs) relating to projects.

b) Interest/Penalty, if any, unascertainable, on the above claims is not considered

c) Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs. 62554.03 lakhs (2011: Rs. 74183.00 lakhs).

2. Thirty four acres and forty nine cents of land has been taken on lease from a trust on a five-year renewable lease for the construction of Employees Township at Cauvery Basin Refinery

3. Forty-one acres and twenty three and half acres of land of the company are in the possession of IOT Infrastructure & Energy Services Limited and CPCL Educational Trust respectively under lease agreement

4. (a) The cost of land includes provisional payments towards cost, compensation, and other accounts for which detailed accounts are yet to be received from the authorities concerned

(b) Pending completion of formalities, assignment deeds of some portion of the land are yet to be obtained

(c) Pending decision of the Government/Court, additional compensation, if any, payable to the landowners and the Government for certain lands acquired, is not considered

5. The company, in the absence of suitable notification by the Central Government specifying the applicable rate of cess under section 441A of the Companies Act, 1956 on turnover payable by the company, has not provided for cess towards formation of Rehabilitation and Revival Fund

6. Valuation of Finished Products:

The overall gross margin percentage for all joint products is subtracted from the final net realisable value of each product to arrive at the total cost of each product which is taken as the basis for valuation of closing stock of finished products. (Refer Policy No 7 (c) in Note - 1 - "Statement of Significant Accounting Policies").

7. The Company has an export obligation to the extent of Rs. 3904.22 Lakhs (2011: Rs. 19473.58 Lakhs) on account of concessional rate of customs duty availed under EPCG scheme on import of capital goods/Advance License scheme on import of crude oil

8. The company operates in a single segment viz. downstream petroleum sector. As such reporting is done on a single segment basis.

9. (a) No provision for Income Tax (Current Tax) has been made in view of loss for the year.

(b) Rs. 25350.80 lakhs credited in the Statement of Profit and Loss under ''Tax expenses - Pertaining to earlier years'' represents net write back of provisions relating to earlier years considered as no longer required

10. During the year the Company has exercised the option provided by Ministry of Corporate Affairs vide Notification dated 29.12.2011 of the Companies (Accounting Standards) (Second Amendment) Rules, 2011 to adjust the exchange differences on long term foreign currency loans relating to acquisition of fixed assets to the carrying cost of the assets and depreciate the same over the balance life of the assets which were hitherto adjusted in the Profit and Loss Account. Had the company followed the accounting policy adopted earlier, profits for the year would have been lower by Rs. 2140.20 Lakhs with a corresponding decrease in the value of fixed assets.

11. The company has not entered into any derivative transaction, other than for hedging purposes during the year. Fifteen Forward contracts entered into for hedging purposes by the company are outstanding as on 31st March 2012 towards repayment, mainly of Packing Credit Foreign Currency Loan amounting to Rs. 27793.62 Lakhs (USD 54.63 Million) (2011: Rs. 97555.38 Lakhs; USD 212.75 Million).

12. Foreign currency exposures that are not hedged (which mainly includes Packing credit foreign currency loans) as on 31.03.2012 Rs. 134551.71 Lakhs (2011: Rs. 64224.00 Lakhs).

13. Disclosure as required under Accounting Standard - 15 (Revised) on "Employee Benefits" is provided in Annexure - I to this schedule.

14. In compliance with Accounting Standard - 18 on "Related Party Disclosures", the required information is given in Annexure - II to this schedule.

15. Disclosure as required under Accounting Standard - 19 on "Leases" is as under:

Operating Leases:

The company has taken on operating lease, Product Tankages from IOC on a renewal basis. The lease rentals incurred for the current year amounting to Rs. 774.36 lakhs are included in Rent (2011 Rs. 569.46 lakhs).

The lease rent payable for the next financial year is estimated to be Rs. 810.42 Lakhs (2011: Rs. 800.42 Lakhs) and lease rent for the five-year period after the next year is estimated to be Rs. 4052.10 Lakhs (2011: Rs. 4002.10 Lakhs).

16. In compliance with Accounting Standard - 20 on "Earning Per Share", the elements considered for calculation of Earning Per Share (Basic and Diluted) are as under:

17. During the year, the company has undertaken a review of all fixed assets in line with the requirements of AS- 28 on "Impairment of Assets". Based on such review, no provision for impairment is required to be recognised for the year.

18. The Profit and Loss Account includes:

a) Expenditure on Public Relations and Publicity amounting to Rs. 149.06 lakhs (2011: Rs. 132.43 lakhs). The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.00003284:1 (2011: 0.00003473:1).

b) Research and Development expenses Rs. 408.30 lakhs (2011: Rs. 385.99 lakhs).

c) Entertainment Expenses Rs. 43.82 lakhs (2011: Rs. 25.47 lakhs).

19. Previous year''s comparative figures have been regrouped and recast, wherever necessary, to the extent practicable, for uniformity in presentation.


Mar 31, 2012

(i). As per the Formation Agreement entered into between the promoters, an offer is to be made to the Naftiran Intertrade Company Limited (NICO), an affiliate of National Iranian Oil Company (NIOC) in any issue of the Capital in proportion to the shares held by them at the time of such issue to enable them to maintain their shareholding at the existing percentage.

(1) Rights, preferences and restrictions attached to shares

Equity Shares: The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company in proportion to their shareholding.

(i) Disclosure required under the provisions of Section 22 of Micro, Small and Medium Enterprises Development Act, 2006.

The company sought written confirmation from its suppliers to identify Micro, Small and Medium enterprises.

No principal amount or interest amount remains unpaid to such Micro and Small enterprises as on 31.03.2012 and no payments were made to such enterprises beyond the "appointed day" during the year. Also, the company has not paid any interest in terms of section 16 of the above mentioned act or otherwise.

This information has been determined to the extent, such parties could be identified on the basis of information made available to the company.

(ii) Represents due to Indian Oil Corporation Ltd., the holding company.

(i) In line with the scheme formulated by the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas, the company has received an aggregate discount of Rs. 337980.04 Lakhs (2011: Rs. 82439.51 Lakhs) from Oil and Natural Gas Corporation Limited on Crude Oil purchase and has passed on the same as discounts on products sold to Indian Oil Corporation Limited the holding company. Accordingly, Gross Sale of Products and Consumption of Raw Materials for the year are net of Rs. 337980.04 Lakhs. (2011: Rs. 82439.51 Lakhs).

Refer Note 30 - Finished Product - Quantity and Value Particulars, for productwise sales.

(i) Includes interest on Income Tax refunds Rs. 2904.96 Lakhs(2011: Rs. 2178.32 Lakhs)

(ii) Represents income from Non current Trade Investment - Indian Additives Limited - JV Company.

(iii) Includes income from Petroleum India International (Non current Trade Investments) Rs. 112.57 Lakhs (2011: Rs. 25.93 Lakhs)

(i) Disclosure in compliance with Accounting Standard-15 (Revised) on "Employee Benefits" is given in Note 28. (Annexure I)

(ii) Includes Rs. 1700 Lakhs towards estimated provision pending finalisation of wage revision for Non-Supervisory employees (2011: Rs. 983.17 Lakhs).

(iii) Includes Rs. 940 Lakhs (2011: Rs. 768 Lakhs) towards increased retirement benefits in respect of employees.

Note "2"

1. Contingent Liabilities:

a) Claims against the company not acknowledged as debts Rs. 17103.90 lakhs (2011: Rs. 2971.77 lakhs).

These mainly include:

i) Rs. 447.83 lakhs (2011: Rs.201.72 lakhs) being the demands raised by Central Excise authorities.

ii) Rs. 8857.48 lakhs (2011: Rs. 1270.79 lakhs) in respect of Sales Tax demands.

iii) Rs. 6188.38 lakhs (2011: Rs. 229.45 lakhs) in respect of Income Tax demands.

iv) Rs. 886.88 lakhs (2011: Rs. 811.21 lakhs) relating to projects.

b) Interest/Penalty, if any, unascertainable, on the above claims is not considered

c) Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs. 62554.03 lakhs (2011: Rs. 74183.00 lakhs).

2. Thirty four acres and forty nine cents of land has been taken on lease from a trust on a five-year renewable lease for the construction of Employees Township at Cauvery Basin Refinery.

3. Forty-one acres and twenty three and half acres of land of the company are in the possession of IOT Infrastructure & Energy Services Limited and CPCL Educational Trust respectively under lease agreement

4. (a) The cost of land includes provisional payments towards cost, compensation, and other accounts for which detailed accounts are yet to be received from the authorities concerned

(b) Pending completion of formalities, assignment deeds of some portion of the land are yet to be obtained

(c) Pending decision of the Government/Court, additional compensation, if any, payable to the landowners and the Government for certain lands acquired, is not considered

5. The company, in the absence of suitable notification by the Central Government specifying the applicable rate of cess under section 441A of the Companies Act, 1956 on turnover payable by the company, has not provided for cess towards formation of Rehabilitation and Revival Fund

6. Valuation of Finished Products:

The overall gross margin percentage for all joint products is subtracted from the final net realisable value of each product to arrive at the total cost of each product which is taken as the basis for valuation of closing stock of finished products. (Refer Policy No 7 (c) in Note - 1 - "Statement of Significant Accounting Policies").

7. The Company has an export obligation to the extent of Rs. 3904.22 Lakhs (2011: Rs. 19473.58 Lakhs) on account of concessional rate of customs duty availed under EPCG scheme on import of capital goods/Advance License scheme on import of crude oil

8. The company operates in a single segment viz. downstream petroleum sector. As such reporting is done on a single segment basis.

9. (a) No provision for Income Tax (Current Tax) has been made in view of loss for the year.

(b) Rs. 25350.80 lakhs credited in the Statement of Profit and Loss under 'Tax expenses - Pertaining to earlier years' represents net write back of provisions relating to earlier years considered as no longer required

10. During the year the Company has exercised the option provided by Ministry of Corporate Affairs vide Notification dated 29.12.2011 of the Companies (Accounting Standards) (Second Amendment) Rules, 2011 to adjust the exchange differences on long term foreign currency loans relating to acquisition of fixed assets to the carrying cost of the assets and depreciate the same over the balance life of the assets which were hitherto adjusted in the Profit and Loss Account. Had the company followed the accounting policy adopted earlier, profits for the year would have been lower by Rs. 2140.20 Lakhs with a corresponding decrease in the value of fixed assets.

11. The company has not entered into any derivative transaction, other than for hedging purposes during the year. Fifteen Forward contracts entered into for hedging purposes by the company are outstanding as on 31st March 2012 towards repayment, mainly of Packing Credit Foreign Currency Loan amounting to Rs. 27793.62 Lakhs (USD 54.63 Million) (2011: Rs. 97555.38 Lakhs; USD 212.75 Million).

12. Foreign currency exposures that are not hedged (which mainly includes Packing credit foreign currency loans) as on 31.03.2012 Rs. 134551.71 Lakhs (2011: Rs. 64224.00 Lakhs).

13. Disclosure as required under Accounting Standard - 15 (Revised) on "Employee Benefits" is provided in Annexure - I to this schedule.

14. In compliance with Accounting Standard - 18 on "Related Party Disclosures", the required information is given in Annexure - II to this schedule.

15. Disclosure as required under Accounting Standard - 19 on "Leases" is as under:

Operating Leases:

The company has taken on operating lease, Product Tankages from IOC on a renewal basis. The lease rentals incurred for the current year amounting to Rs. 774.36 lakhs are included in Rent (2011 Rs. 569.46 lakhs).

The lease rent payable for the next financial year is estimated to be Rs. 810.42 Lakhs (2011: Rs. 800.42 Lakhs) and lease rent for the five-year period after the next year is estimated to be Rs. 4052.10 Lakhs (2011: Rs. 4002.10 Lakhs).

3. During the year, the company has undertaken a review of all fixed assets in line with the requirements of AS- 28 on "Impairment of Assets". Based on such review, no provision for impairment is required to be recognised for the year.

4. The Profit and Loss Account includes:

a) Expenditure on Public Relations and Publicity amounting to Rs. 149.06 lakhs (2011: Rs. 132.43 lakhs). The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.00003284:1 (2011: 0.00003473:1).

b) Research and Development expenses Rs. 408.30 lakhs (2011: Rs. 385.99 lakhs).

c) Entertainment Expenses Rs. 43.82 lakhs (2011: Rs. 25.47 lakhs).

5. Previous year's comparative figures have been regrouped and recast, wherever necessary, to the extent practicable, for uniformity in presentation.


Mar 31, 2011

1. Contingent Liabilities:

a) Claims against the company not acknowledged as debts Rs. 2971.77 Lakhs (2010: Rs. 2969.46 Lakhs). These mainly include:

i) Rs. 201.72 Lakhs (2010: Rs. 330.36 Lakhs) being the demands raised by Central Excise authorities.

ii) Rs. 1270.79 Lakhs (2010: Rs. 1276.09 Lakhs) in respect of Sales Tax demands.

iii) Rs. 229.45 Lakhs (2010: Rs. 188.21 Lakhs) in respect of Income Tax demands.

iv) Rs. 811.21 Lakhs (2010: Rs. 769.56 Lakhs) relating to projects.

b) Interest/Penalty, if any, unascertainable, on the above claims is not considered.

c) Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs. 74183.00 Lakhs (2010: Rs. 117325.87 Lakhs).

2. Thirty four acres and forty nine cents of land has been taken on lease from a trust on a five-year renewable lease for the construction of Employees Township at Cauvery Basin Refinery.

3. Forty-one acres of land of the company is in the possession of IOT Infrastructure & Energy Services Limited under a lease agreement.

4. Change in Acounting policy of the company with regard to capital expenditure on assets, on which the ownership and control that does not vest with the company are charged to revenue in the year in which it is incurred (Policy No.2.4(c)). This has no impact on the profits for the year as no such expenditure has been incurred during the year.

5. (a) The cost of land includes provisional payments towards cost, compensation, and other accounts for which detailed accounts are yet to be received from the authorities concerned.

(b) Pending completion of formalities, assignment deeds of some portion of the land are yet to be obtained.

(c) Pending decision of the Government/Court, additional compensation, if any, payable to the landowners and the Government for certain lands acquired, is not considered.

6. The company, in the absence of suitable notification by the Central Government specifying the applicable rate of cess under section 441A of the Companies Act, 1956 on turnover payable by the company, has not provided for cess towards formation of Rehabilitation and Revival Fund.

7. Valuation of Finished Products:

The overall gross margin percentage for all joint products is subtracted from the final net realisable value of each product to arrive at the total cost of each product which is taken as the basis for valuation of closing stock of finished products. (Refer policy no 7 (c) in Schedule – Q – "Statement of Significant Accounting Policies").

8. In line with the scheme formulated by the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas, the company has received an aggregate discount of Rs. 82439.51 Lakhs (2010: Rs. 58738.21 Lakhs) from Oil and Natural Gas Corporation Limited on Crude Oil purchase and has passed on the same as discounts on products sold to Indian Oil Corporation Limited. Accordingly, Gross Sales and Consumption of Raw Materials for the year are net of Rs. 82439.51 Lakhs. (2010: Rs. 58738.21 Lakhs).

9. The Company has an export obligation to the extent of Rs.19473.58 Lakhs (2010: Rs.1715.11 Lakhs) on account of concessional rate of customs duty availed under EPCG scheme on import of capital goods/Advance License scheme on import of crude oil.

10. a) Payments to and provisions for employees includes Rs. 983.17 Lakhs for the current year for Non-Supervisory employees (2010: Rs.3066.83 Lakhs for the period 01.01.2009 to 31.03.2010 for Non-Supervisory employees) towards estimated provision pending finalisation of wage revision.

b) Additionally, a sum of Rs.768.00 Lakhs (2010: Rs.1700.05 Lakhs) is accounted during the year towards estimated provision in respect of increased retirement benefits in line with DPE guidelines.

11. The company operates in a single segment viz. downstream petroleum sector. As such reporting is done on a single segment basis.

12. The company has not entered into any derivative transaction, other than for hedging purposes during the year. 88 Forward contracts entered into for hedging purposes by the company and outstanding as on 31st March 2011 towards repayment of foreign currency loan is USD 212.75 Million amounting to Rs. 97555.38 Lakhs (2010: Rs. 84405.96 Lakhs; USD 187.99 Million)

13. Foreign currency exposures that are not hedged as on 31st March 2011: Rs.64224 Lakhs (2010: Rs. 75818.75 Lakhs).

14. Disclosure as required under Accounting Standard – 15 (revised) on "Employee Benefits" is provided in Annexure – I to this schedule.

15. In compliance with Accounting Standard – 18 on "Related Party Disclosures" the required information is given in Annexure – II to this schedule.

16. Disclosure as required under Accounting Standard – 19 on "Leases" is as under:

Operating Leases:

The company has taken on operating lease, Product Tankages from IOC on a renewal basis. The lease rentals incurred for the current year amounting to Rs. 569.46 Lakhs are included in Rent (2010: Rs.766.85 Lakhs).

The lease rent payable for the next financial year is estimated to be Rs. 800.42 Lakhs (2010: Rs.850.11 Lakhs) and lease rent for the five-year period after the next year is estimated to be Rs. 4002.10 Lakhs. (2010: Rs.4250.54 Lakhs)

17. In compliance with Accounting Standard – 22 on "Accounting for Taxes on Income" Deferred Tax Asset (-)/Liability ( ) for the financial period ended 31st March 2011 amounting to Rs. 2851.77 Lakhs (2010: Rs. 16195.25 Lakhs) has been made/provided.

18. Disclosure as required under Accounting Standard – 27 on "Financial Reporting of Interests in Joint Ventures" is as under:

a) Name of the Joint Venture Indian Additives Ltd.

Proportion of ownership interest 50%

Country of Incorporation India

b) Name of the Joint Venture National Aromatics and Petrochemicals

Corporation Ltd.

Proportion of ownership interest 50%

Country of Incorporation India

Aggregate amount of interests in Joint Venture is not given since the joint venture is not operational.

19. During the year, the company has undertaken a review of all fixed assets in line with the requirements of AS - 28 on "Impairment of Assets". Based on such review, no provision for impairment is required to be recognised for the year.

20. Disclosure required under the provisions of Section 22 of Micro, Small and Medium Enterprises Development Act, 2006.

The company sought written confirmation from its suppliers to identify micro, small and medium enterprises.

No principal amount or interest amount remains unpaid to such Micro and Small enterprises as on 31.03.2011 and no payments were made to such enterprises beyond the "appointed day" during the year. Also, the company has not paid any interest in terms of section 16 of the above-mentioned act or otherwise.

This information has been determined to the extent, such parties could be identified on the basis of information made available to the company.

21. The Profit and Loss Account includes:

a) Expenditure on Public Relations and Publicity amounting to Rs. 260.08 Lakhs (2010: Rs. 135.16 Lakhs). The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.00006808: 1 (2010: 0.00004616:1).

b) Research and Development expenses Rs. 385.99 Lakhs (2010: Rs. 388.12 Lakhs).

c) Entertainment Expenses Rs. 25.47 Lakhs (2010: Rs. 22.40 Lakhs).

22. Previous year's comparative figures have been regrouped and recast, wherever necessary, to the extent practicable, for uniformity in presentation.

Key Management Personnel Whole-time Directors

1) Shri K. Balachandran

2) Shri N.C.Sridharan

3) Shri S.Chandrasekaran

4) Shri S. Venkataramana (from 3rd October 2010)

Joint Venture Companies

1) Indian Additives Limited

2) National Aromatics and Petrochemicals Corporation Limited.


Mar 31, 2010

1. Contingent Liabilities:

a) Claims against the company not acknowledged as debts Rs. 2969.46 lakhs (2009: Rs. 34223.05 lakhs). These mainly include:

i) Rs. 330.36 lakhs (2009: Rs. 330.36 lakhs) being the demands raised by Central Excise authorities. ii) Rs. 1276.09 lakhs (2009: Rs. 32127.95 lakhs) in respect of Sales Tax demands. iii) Rs 188.21 lakhs (2009: Rs. 456.06 lakhs) in respect of Income Tax demands. iv) Rs. 769.56 lakhs (2009: Rs. 875.62 lakhs) relating to projects.

b) Interest/Penalty, if any, unascertainable, on the above claims is not considered.

c) Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs. 117325.87 lakhs (2009: Rs. 110445.78 lakhs).

2. Thirty four acres and forty nine cents of land has been taken on lease from a trust on a five-year renewable lease for the construction of Employees Township at Cauvery Basin Refinery.

3. Forty one acres of land of the company is in the possession of IOT Infrastructure & Energy Services Limited under a lease agreement.

4. (a) The cost of land includes provisional payments towards cost, compensation, and other accounts for which detailed accounts are yet to be received from the authorities concerned.

(b) Pending completion of formalities, assignment deeds of some portion of the land are yet to be obtained.

(c) Pending decision of the Government/Court, additional compensation, if any, payable to the land owners and the Government for certain lands acquired, is not considered.

5. The company, in the absence of suitable notification by the Central Government specifying the applicable rate of cess under section 441A of the Companies Act, 1956 on turnover payable by the company, has not provided for cess towards formation of Rehabilitation and Revival Fund.

6. Valuation of Finished Products:

The overall gross margin percentage for all joint products is subtracted from the final net realisable value of each product to arrive at the total cost of each product which is taken as the basis for valuation of closing stock of finished products. (Refer policy no 7 (c) in Schedule - Q - "Statement of Significant Accounting Policies").

7. In line with the scheme formulated by the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas, the company has received an aggregate discount of Rs. 58738.21 lakhs (2009: Rs. 130655.55) from Oil and Natural Gas Corporation Limited on Crude Oil purchase and has passed on the same as discounts on products sold to Indian Oil Corporation Limited. Accordingly, Gross Sales and Consumption of Raw Materials for the year are net of Rs. 58738.21 lakhs. (2009: Rs. 130655.55 lakhs).

8. Based on the assessment order received during the year, provision for Income Tax of Rs. 14555.26 Lakhs made in the earlier year, has been reversed in the current year.

9. a) Payments to and provisions for employees includes Rs. 3066.83 Lakhs towards estimated provision / adhoc relief paid in respect of pay revision for non-supervisory employees for the period 01.01.2009 to 31.03.2010. (2009: Rs. 5467.30 Lakhs in respect of pay revision for supervisory employees for the period 01.01.2007 to 31.03.2009).

b) Additionally, a sum of Rs.1700.05 Lakhs (2009: Rs.Nil) is accounted during the year towards estimated provision in respect of increased retirement benefits in line with DPE guidelines.

10. The company operates in a single segment viz. downstream petroleum sector. As such reporting is done on a single segment basis.

11. The company has not entered into any derivative transaction, other than for hedging purposes during the year. 36 Forward contracts entered into for hedging purposes by the company and outstanding as on 31st March 2010 towards repayment of foreign currency loan is USD 187.99 Million amounting to Rs. 84405.96 Lakhs (2009: NIL)

12. Foreign currency exposures that are not hedged as on 31st March 2010: -75818.75 Lakhs (2009: Rs. 152939.99 Lakhs).

13. The company has migrated to SAP during the year to align with the business processes of the holding company. The company has instituted a system audit to confirm the functionalities and controls.

14. Disclosure as required under Accounting Standard - 15 (revised) on "Employee Benefits" issued by the Institute of Chartered Accountants of India is provided in Annexure -1 to this schedule.

15. In compliance with Accounting Standard - 18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India, the required information is given in Annexure - II to this schedule.

16. Disclosure as required under Accounting Standard - 19 on "Leases" issued by the Institute of Chartered Accountants of India is as under:

17. During the year, the company has undertaken a review of all fixed assets in line with the requirements of AS - 28 on "Impairment of Assets" issued by the Institute of Chartered Accountants of India. Based on such review, no provision for impairment is required to be recognised for the year.

18. Disclosure required under the provisions of Section 22 of Micro, Small and Medium Enterprises Development Act, 2006.

The company sought written confirmation from its suppliers to identify micro, small and medium enterprises.

No principal amount or interest amount remains unpaid to such Micro and Small enterprises as on 31.03.2010 and no payments were made to such enterprises beyond the "appointed day" during the year. Also, the company has not paid any interest in terms of section 16 of the above-mentioned act or otherwise.

This information has been determined to the extent, such parties could be identified on the basis of information made available to the company.

19. The Profit and Loss Account includes:

a) Expenditure on Public Relations and Publicity amounting to Rs. 135.16 lakhs (2009: Rs. 149.31 lakhs). The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.00004616: 1 (2009: 0.00004078:1).

b) Research and Development expenses Rs. 388.12 lakhs (2009: Rs. 330.29 lakhs).

c) Entertainment Expenses Rs. 22.40 lakhs (2009: Rs. 43.74 lakhs).

20. Previous years comparative figures have been regrouped and recast, wherever necessary, to the extent practicable, for uniformity in presentation.

Key Management Personnel Whole-time Directors

1) Shri K. Balachandran

2) Shri N.C.Sridharan

3) Shri S.Chandrasekaran

4) Shri K.K. Acharya (upto November 2009) Joint Venture Companies

1) Indian Additives Limited

2) National Aromatics and Petrochemicals Corporation Limited.

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