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Notes to Accounts of Hindustan Oil Exploration Company Ltd.

Mar 31, 2016

Notes:

a. Represents amount paid towards the purchase of Bhaili Land in Vadodara district.

b. Represents damages paid of $ 47,630,122 to Directorate General of Hydrocarbons for the block CY-OSN-97/1 under protest in 2012-13 which is under adjudication by an arbitration tribunal.

c. Provision for $ 28,46,339 towards Insurance on PY-3 has been written-off during the year.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

1. Segmental reporting:

The Company is primarily engaged in a single business segment of "Oil and Gas" in one geographic segment in India. Therefore, there are no separate reportable segments for Segmental Reporting.

2. Details of Oil and Gas reserves (as estimated by management and relied upon by auditors)

As at March 31, 2016, the internal estimates of the Management of Proved & Probable Reserves supported by the approved development plan by the Directorate General of Hydrocarbons on working interest basis for the Company is as follows:

Note: The above reserve estimates excludes the reserves of PY-3 and CB-OS-1 as it is not commercial at the current prices.

3. Related party transactions (as identified by management and relied upon by auditors)

Details of related parties:

(i) The related parties of the Company as at March 31, 2016 are as follows:

A. Wholly owned subsidiary company:

1. HOEC Bardahl India Limited

B. Promoter group:

1. ENI UK Holding Plc (Wholly owned subsidiary of ENI S.p.A, Italy)

2. Burren Shakti Limited (Wholly owned indirect subsidiary of ENI UK Holding Plc)

3. Burren Energy India Limited (Wholly owned indirect subsidiary of ENI UK Holding Plc)

C. Other group entities:

1. ENI Finance International S.A., Belgium

2. ENI Lasmo Plc

3. ENI India Limited, United Kingdom,

4. Saipem (Portugal) Comercio Maritimo Su Lda

D. Key management personnel:

1. Mr. P Elango - Managing Director (from 2nd February, 2015)

2. Mr. R. Jeevanandam - Director & CFO (from 2nd February, 2015)

3. Mr. Manish Maheshwari - Managing Director (till 9th October, 2014)

1. A claim made by Hardy Exploration & Production (India) Inc., CY-OS-90/1 (PY-3) (Operator) for $ 114,092,588 (US $ 1.72 Million) has not been accepted as a liability as the claim relates to the period after the cessation of production on July 31, 2011 and no expenditure beyond 31 July 2011 has been approved by the Management Committee. Based on reconciliation of its cash call payments and share of expenses as per the billing statement provided by the Operator till July 31, 2011 during the year, the Company noted an excess payment of $ 9,554,591 (USD 144,040) made to the Operator. This was communicated to the operator on December 21, 2015. The claims not acknowledged as debts also include the claim of $ 143,960,505 relating to the dispute between Aban Offshore Limited and the Operator ("Hardy”) not acknowledged as debt by the Operator.

2. The Company has received a favorable order during the year from the Income Tax Appellate Tribunal against the demand relating to earlier years.

3. In block PY-1, solely operated by the Company, the Ministry of Petroleum & Natural Gas (MoP&NG) has computed the royalty based on the value of gas received by the Company (the Operator) and made a demand for the years from 2009-10 to 2014-15 towards short paid royalty of $ 102,777,080 (US $ 1,549,413) excluding interest.

With regard to the above claim, the company has, during the year, re-computed the royalty on gas produced and sold, based on wellhead price as per the terms of the production sharing contract and compared it with the actual royalty paid by the company for the years from 2009-10 to 2014-15 and noted that they have made an excess payment of $ 115,899,695 (US $ 1,747,243) to MoP&NG. A claim has been lodged by the Company to MoP & NG, which is pending settlement.

4. For block RJ-ONN-2005/2, operated by the Oil India Limited (the Operator), the validity for exploration phase as per the Production Sharing Contract (PSC), expired on June 24, 2015. The Operator has applied for 17 months extension to Ministry of Power & Natural Gas (MoP&NG) which is pending till date. However, the Operator drilled two wells after seeking extension under the extension policy of PSC directly after paying the liquidated damages and executing bank guarantees. Operator has now surrendered the block and the dues, if any, for the Company will be adjusted at the time of final settlement and therefore this cost has not been considered in the financial statements.

5. In this block, RJ-ONN-2005/1, there has been a delay for more than two years in obtaining the Government clearances. According to the terms of policy of Government of India issued in November 2014, which states that, if the delay due to lack of statutory and other clearances is beyond 2 years, then the contractor is permitted to exit from the contract without payment of cost of unfinished work program. The company has decided to exercise this option and exit this block, on July 9, 2015 and therefore there is no liability that will devolve on the Company with respect to this block.

6. With respect to block CB-OS/1 operated by Oil & Natural Gas Commission (ONGC), there was no operations during the year and therefore, no expenditure has been considered in the financial statements.

7. The provisions of Companies Act 2013 relating to corporate social responsibility is applicable for the Company. However, the Company is not required to incur expenditure towards CSR activities in the absence of profits calculated as per Section 198 of the Companies Act 2013.

8. Previous Year Figures

Previous year''s figures have been regrouped and reclassified wherever necessary to confirm to the current year''s presentation.


Mar 31, 2015

1. Background

Hindustan Oil Exploration Company Limited ('the Company') was incorporated in India on September 22, 1983 under the provisions of the Companies Act, 1956 and is listed on the National Stock Exchange of India Limited ('NSE') and BSE Limited ('BSE'). The Company is engaged in the exploration, development and production of crude oil and natural gas in India, both onshore and offshore.

The Company is a participant in various Oil and Gas blocks/fields (which are in the nature of jointly controlled assets with rights and obligations are several and not joint and several) granted by the Government of India through Production Sharing Contracts ('PSC') entered into between the Company and Government of India and other venture partners. The Company has seven onshore assets of which three are located in Cambay basin in the state of Gujarat, one in Assam Arakan basin in the state of Assam, two in Jaisalmer Basin in the state of Rajasthan and one in Pranhita Godavari basin in the state of Telengana. The Company has three offshore assets of which two assets are located in the Cauvery basin on the east coast of India, and one in Gulf of Cambay on the west coast of India. Details of Company's participating interest are fully disclosed in Note 28.

2 Terms/rights attached to equity shares

The Company has only one class of equity shares having par value of INR 10 per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of the Company remaining after settlement of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

3 Long Term Incentive Plan, Scheme 2005

Under the HOEC Limited Employee Stock Option Scheme - 2005 (ESOS Scheme) approved by the Shareholders, and as amended from time to time, the Board had granted options in the prior years to the eligible Employees and eligible Directors at Nil exercise price as part of the Long Term Incentive Plan (LTIP). There are no outstanding share options as on March 31, 2015.

Method Used for Accounting for Share Based Payment Plan:

Under the LTIP Scheme 2005, the options are granted in the succeeding year after adoption of the Annual Audited Accounts for the given year. The Company charges the entire amount provided towards performance bonus and stock options to the Statement of Profit and Loss for the year for which the grant corresponds to. Any upward variation in the market price/acquisition price of the ESOS stocks, as may be applicable, as on the date of Balance Sheet, is charged to the Statement of Profit and Loss for the period as per LTIP.

The fair value of the options granted under LTIP Scheme 2005 approximates the intrinsic value of the options on the date of the grant.

4 Employee Benefits a. Gratuity

The Company's obligation towards the Gratuity Fund is a Defined Benefit Plan. Every employee who has completed a continuous period of five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

5 Segmental Reporting

The Company is primarily engaged in a single business segment of "Hydrocarbons and other incidental services". All the activities of the Company revolve around the main business. Further, the Company does not have any separate geographic segments other than India. Hence, there are no separate reportable segments as per AS-17 "Segmental Reporting".

b) In respect of two of its Unincorporated Joint Ventures (UJV) not operated by the Company, the Company has incorporated its share of the balances as at March 31, 2015 based on the unaudited financial information as follows:

i) CY-OS-90/1 (PY-3): The operations in the field have been stopped since July 2011 and the last relevant audited financial statements for the UJV were received for the year ended March 31, 2012. Subsequent to July 31, 2011 no further expenses that have been approved by the Management Committee and hence the Company has not accounted for the same. The Company does not expect any further expenses with respect to this field. Accordingly, the Company has accounted for its share based on the audited accounts till the year ended March 31, 2012 and subsequent adjustments (if any) till the period ending March 31, 2015 which is based on the unaudited financial information.

ii) CB-OS/1: The Company has accounted for its share of balances based on the audited accounts till the year ended March 31, 2014 and for the balances as at March 31, 2015, the Company has accounted based on the un-audited financial information received from the operator

The financial statements include, Company's share of current assets/(liabilities), non-current assets/(liabilities), expenses and cash flows aggregating to INR 829,974 / INR (79,685,217), INR 310,586,199 / INR (331,065,000), INR Nil and INR (1,924) respectively as at or for the year ended March 31, 2015 in respect of the above two UJVs.

6 Related Party Disclosures

(i) The related parties of the Company as at March 31, 2015 are as follows:

(A) Wholly Owned Subsidiary Company:

1. HOEC Bardahl India Limited

(B) Promoter Group:

1. ENI UK Holding Plc (Wholly Owned Subsidiary of ENI S.p.A, Italy)

2. Burren Shakti Limited (Wholly Owned Indirect Subsidiary of ENI UK Holding Plc.)

3. Burren Energy India Limited (Wholly Owned Indirect Subsidiary of ENI UK Holding Plc.)

(C) Other Group Entities:

1. ENI Finance International S.A., Belgium

2. ENI Lasmo Plc

3. ENI India Limited, United Kingdom

4. Banque ENI, Belgium

5. Saipem (Portugal) Comercio Maritimo Su Lda

(D) Unincorporated Joint Ventures:

As per details given in Note 28 above

(E) Key Management Personnel:

Mr Manish Maheshwari - Managing Director (till 9th October, 2014)

Mr P Elango - Managing Director (from 2nd February, 2015)

Mr R. Jeevanandam - CFO and Additional Director (from 2nd February, 2015)

7 Recovery of Expenses

Recovery of expenses represents expenditure incurred by the Company for the UJVs where the Company is the Operator. Such costs are recovered from the respective UJVs as per the terms of the Production Sharing Contract.

8 The Company has capital requirements to implement its development plan under the Production Sharing Contract (PSC) for the block AAP-ON-94/1 approved by the Directorate General of Hydrocarbons and the Ministry of Petroleum and Natural Gas in the near future. The development cost estimated for the total project is INR 527 Crores (US$ 85 million) and the share of the Company is estimated to be in the order of INR 142 Crores (US$ 22.85 million). These expenditures are to be incurred over a period of two years. The carrying value of the assets in the books of the Company's for the successful exploration and appraisal is INR 117.27 Crores.

The Company has net current assets of INR 127.54 Crores (including tax receivables of INR 82.41 Crores) as on March 31, 2015 before adjusting a liability of INR 26.30 Crores payable to the group companies of the Promoter Management is confident that the above liability of INR 26.30 Crores can be deferred for a period of more than one year and to the completion of the development of the block AAP-ON-94/1.

The Company may be liable for the obligation in respect of unfinished Minimum Work Program in term of the Production Sharing Contract for the block RJ-ONN-2005/1. In case of non-operated block RJ-ONN-2005/2 the Operator has sought the extension of the block validity and if the Minimum Work Program is not completed the Company may be liable for the obligation of the unfinished minimum work program.

The Company has been rated for BBB for a line of credit of INR 100 Crores by Indian Credit Rating Agency on May 15, 2015. Company is confident of meeting the capital requirements to implement its business plan, discretionary capital expenditure, commitments and the obligations under the Production Sharing Contracts (PSC) and liabilities in the foreseeable future with the existing cash and cash equivalents / liquid assets, tax refunds due to the Company and by raising financial resources through debt / equity financing as required without any additional financial support from the promoter The Company has a successful track record of raising capital both debt and equity in the past and shall raise financial resources for the growth of the Company as and when required without any additional capital infusion from the promoter. Accordingly, the Financial Statements have been prepared on the basis that the Company is a going concern with no further adjustments to the carrying value of assets and liabilities.

9 In compliance with SEBI directions relating to treatment of survey cost under the Guidance Note (Accounting for Oil and Gas Producing Activities, issued by Institute of Chartered Accountants of India), the Company has expensed off survey costs amounting to INR 7.05 Crores [Previous Year: INR 44.61 Crores] in the Statement of Profit and Loss.

10 Previous Year Figures

Previous year's figures have been regrouped and reclassified wherever necessary to confirm to the current year's presentation.


Mar 31, 2014

1. Commitments and Contingencies

Particulars As at As at March 31, 2014 March 31, 2013

(i) Contingent Liabilities

(a) Counter Guarantees on account of Bank 256,825,234 208,107,930 Guarantees

(b) Claims against the Company Not 393,584,832 393,584,832 Acknowledged as Debt Income Tax Demands under Appeal

(c) Service Tax Liability (pertaining to 2,139,321 2,139,321 one Unincorporated Joint Venture)

(d) Hire Charges (pertaining to one 217,881,005 51,694,208 Unincorporated Joint Venture)

(e) Liquidated damages under appeal 47,630,122 47,630,122 (Pertaining to one Unincorporated Joint Venture)

(f) Royalty payable under appeal 141,252,121 — (Pertaining to one Unincorporated Joint Venture

(ii) Commitments

(a) Estimated amount of Contracts remaining 13,417,649 397,242,309 to be Executed on Capital Account and Not Provided for

2. Recovery of Expenses

Recovery of expenses represents expenditure incurred by the Company for the UJVs where the Company is the Operator. Such costs are recovered from the respective UJVs as per the terms of the Production Sharing Contract. Recovery of expenses also includes an amount of INR 5,534,431 (Previous Year INR 37,353,814) recovered as parent company overhead pursuant to the respective Production Sharing Contracts.

3. Accounting Standard 11 – The Effects of Changes in Foreign Exchange Rates

The details of the adjustment pursuant to the above are as under:

4. Deferred tax:

Company has restricted the creation of deferred tax assets on carried forward business losses and unabsorbed depreciation to the extent that it believes that there is virtual certainty supported by convincing evidence that sufcient future taxable income will be available against which such deferred tax assets can be realised. Accordingly, the Company has restricted the deferred tax assets to the extent of deferred tax liability existing in books as at March 31, 2014 and March 31, 2013 (See Note 11).

5. The Company has capital requirements to implement its business plans and commitments under the Production Sharing Contracts (PSC) in the foreseeable future, which cannot be met through internal accruals alone. As a strategic exercise initiated pursuant to appointment of a Financial Advisor, discussions are underway between the Promoter and prospective investors. Notwithstanding uncertainties which may be attached to the outcome of any such process, the Board recognizes that the Company has a successful track record of raising capital in the past and that the Company shall raise financial resources as and when needed to meet its commitments under the Production Sharing Contracts and to transform the reserves from the existing discoveries to production in the near to mid-term. Based on the foregoing, the Financial Statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities.

6. While the EBITDA of INR 2,364.15 lacs for FY 2013-14 has been positive, the Company has reported negative EBIT of INR 12,402.13 lacs and PBT of INR 13,767.36 lacs for the same period, primarily due to high depletion, depreciation and amortization (DDA) charge in an ofshore producing property, PY-1, located in the Cauvery Basin. Te Company, as Operator, has commissioned a comprehensive geological and reservoir study by an independent third party for PY-1 Field, the results and recommendations of which are still awaited. Pending the results of the Study, the Company has relied on the last independent reserve report of January 2013 and the capital allocation assumption considered towards drilling additional producer wells at the time of the Impairment Test for the year ended March 2013. Should the fndings of the Study and the capital allocation assumptions undergo revision, there may be uncertainty in the recoverability of the carrying value of PY-1 Asset, which as of March 31, 2014 is approximately INR 116,571 lacs.

The Auditors have qualified their opinion in this regard and the Company''s position is as explained above.

7. In compliance with SEBI directions with respect to previous audit qualification relating to treatment of survey cost under the Guidance Note (Accounting for Oil and Gas Producing Activities, issued by Institute of Chartered Accountants of India), the Company has expensed of survey costs amounting to INR 4,461 lacs (INR 3,410 lacs pertaining to previous years) in the Statement of Profit and Loss which were initially capitalized as ''Exploration Expenditure''.

8. Previous Year Figures

Previous year''s figures have been regrouped and reclassified wherever necessary to confirm to the current year''s presentation.


Mar 31, 2013

A. Background

Hindustan Oil Exploration Company Limited (''the Company'') was incorporated in India on September 22, 1983 under the provisions of the Companies Act, 1956 and is listed on the National Stock Exchange (''NSE'') and Bombay Stock Exchange (''BSE''). Te Company is engaged in the exploration, development and production of crude oil and natural gas in India, both onshore and ofshore.

Te Company is participant in various Oil and Gas blocks / felds (which are in the nature of jointly controlled assets) granted by the Government of India through Production Sharing Contracts (''PSC'') entered into between the Company and Government of India and other venture partners. Te Company has seven onshore assets of which three are located in Cambay basin in the state of Gujarat, one in Assam Arakan basin in the state of Assam, two in Jaisalmer basin in the state of Rajasthan and one in Pranhita Godavari basin in the state of Andhra Pradesh. Te Company has three ofshore assets of which two assets are located in the Cauvery basin on the east coast of India, and one in Gulf of Cambay on the west coast of India. Details of Company''s participating interest are fully disclosed in Note 28.

2. Related Party Disclosures

(i) Te related parties of the Company as at March 31, 2013 are as follows:

(A) Wholly Owned Subsidiary Company: HOEC Bardahl India Limited

(B) Promoter Group:

1. ENI UK Holding plc. (Wholly Owned Subsidiary of ENI S.p.A, Italy)

2. Burren Shakti Limited (Wholly Owned Indirect Subsidiary of ENI UK Holding plc.)

3. Burren Energy India Limited (Wholly Owned Indirect Subsidiary of ENI UK Holding plc.)

(C) Other Group Entities

1. ENI Finance International, S.A., Belgium

2. ENI India Limited, United Kingdom

3. Banque ENI, Belgium

(D) Unincorporated Joint Ventures:

As per details given in Note 28 above

(E) Key Management Personnel:

1. Mr. Manish Maheshwari – Managing Director

2. Mr. Sergio Laura – Managing Director

3. Recovery of Expenses

Recovery of expenses represents expenditure incurred by the Company for the UJVs where the Company is the Operator. Such costs are recovered from the respective UJVs as per the terms of the Production Sharing Contract. Recovery of expenses also includes an amount of INR 37,353,814 (Previous Year: INR 10,303,863) recovered as parent company overhead pursuant to the respective Production Sharing Contracts.

4. Deferred tax:

During the current year, the Company has restricted the creation of deferred tax assets on carried forward business losses and unabsorbed depreciation to the extent that it believes that there is virtual certainty supported by convincing evidence that sufcient future taxable income will be available against which such deferred tax assets can be realised. Accordingly, the Company has restricted the deferred tax assets to the extent of deferred tax liability existing in books as at March 31, 2013 (See Note 11).

5. Previous Year Figures

Previous year''s fgures have been regrouped and reclassifed wherever necessary to confrm to the current year''s presentation.


Mar 31, 2012

1. Long Term Incentive Plan, Scheme 2005

Under the HOEC Limited Employee Stock Option Scheme - 2005 (ESOS Scheme) approved by the Shareholders, and as amended from time to time, the Board had on November 09, 2011 approved grant of 34,524 options (Previous Year: 17,680 options approved on January 31, 2011) to the eligible Independent Directors at Nil exercise price as part of the Long Term Incentive Plan (LTIP). In terms of the ESOS Scheme, the options would vest at the third anniversary from the end of the financial year for which the grant corresponds to. For the year ended March 31, 2012 an aggregate amount of INR Nil (Previous Year: INR 20,000,000) has been provided towards performance bonus and stock options as per the LTIP Scheme 2005. During the year, the Company has written back excess provision towards cash and ESOS (deferred bonus) made during prior years amounting to INR 1,976,665 (Previous Year: INR 6,527,308) based on the approval/ratification of the Board of Directors of the Company.

Method used for Accounting for Share Based Payment Plans

Under the LTIP Scheme 2005, the options are granted in the succeeding year after adoption of the Annual Audited Accounts for the given year. The Company charges the entire amount provided towards performance bonus and stock options to the Profit and Loss Account for the year for which the grant corresponds to. Any upward variation in the market price / acquisition price of the ESOS stocks, as may be applicable, as on the date of Balance Sheet, is charged to the Profit and Loss Account for the period as per LTIP.

2. Employee Benefits

a. Gratuity

The Company's obligation towards the Gratuity Fund is a Defined Benefit Plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy.

3. Segmental Reporting

The Company is primarily engaged in a single business segment of "Hydrocarbons and other incidental services". All the activities of the Company revolve around the main business. Further, the Company does not have any separate geographic segments other than India. Hence, there are no separate reportable segments as per AS-T7 "Segmental Reporting".

4. Related Party Disclosures

(i) The related parties of the Company as at March 31, 2012 are as follows:

(A) Wholly Owned Subsidiary Company: HOEC Bardahl India Limited

(B) Promoter Group:

1. ENI UK Holding pic. (Wholly Owned Subsidiary of ENI S.p.A, Italy)

2. Burren Shakti Limited (Wholly Owned Indirect Subsidiary of ENI UK Holding pic.)

3. Burren Energy India Limited (Wholly Owned Indirect Subsidiary of ENI UK Holding pic.)

(C) Other Group Entities

1. ENI Finance International, S.A., Belgium (formerly known as ENI Coordination Center S.A., Belgium)

2. ENI India Limited, United Kingdom

3. Banque ENI, Belgium

(D) Unincorporated Joint Ventures:

As per details given in Note 28 above

(E) Key Management Personnel:

1. Mr. Manish Maheshwari - Managing Director from September 28, 2011 (Joint Managing Director upto September 27, 2011)

2. Mr. Sergio Laura - Managing Director from September 28, 2011

3. Mr. Luigi Ciarrocchi - Managing Director upto September 27, 2011

5. Recovery of Expenses

Recovery of expenses represents expenditure incurred by the Company for the UJVs where the Company is the Operator. Such costs are recovered from the respective UJVs as per the terms of the Production Sharing Contract. Recovery of expenses also includes an amount of INR 10,303,863 (Previous Year: INR 12,728,726) recovered as parent company overhead pursuant to the respective Production Sharing Contracts.

6. Impairment

As of March 31, 2012, the Company has reviewed the carrying amount of its assets for indications of impairment and based on such review, the Company has concluded that none of the assets of the Company has suffered impairment loss as at March 31, 2012.

7. Previous Year Figures

During the year ended 31 March, 2012, the Revised Schedule VI notified under the Companies Act 1956, became applicable to the Company. The Company has presented the Financial Statements in accordance with the requirements of Revised Schedule VI and has hence reclassified and regrouped the previous year's figures to confirm to this year's classification.


Mar 31, 2011

I. Background

Hindustan Oil Exploration Company Limited ('the Company') was incorporated in India on September 22, 1983 under the provisions of the Companies Act, 1956 and is listed on the National Stock Exchange ('NSE') and Bombay Stock Exchange ('BSE'). Te Company is engaged in the exploration, development and production of crude oil and natural gas in India, both onshore and ofshore.

Te Company is participant in various Oil and Gas blocks/fields (which are in the nature of jointly controlled assets) granted by the Government of India through Production Sharing Contracts ('PSC') entered into between the Company and Government of India and other venture partners. Te Company has seven onshore assets of which three are located in Cambay basin in the state of Gujarat, one in Assam Arakan basin in the state of Assam, two in Jaisalmer Basin in the state of Rajasthan and one in Pranhita Godavari basin in the state of Andhra Pradesh. Te Company has three ofshore assets of which two assets are located in the Cauvery basin on the east coast of India, and one in Gulf of Cambay on the west coast of India. Details of Company's participating interest are fully discussed in Note 12 to Schedule 15.

1. Secured Loans (Foreign Currency and Rupee Term Loans)

(a) Te term loans from State Bank of India, Axis Bank and HDFC Bank amounting to Rs. 311,495,432 as at March 31, 2011 (Rs. 479,900,983 as at March 31, 2010), are secured by way of charge on the Company's Participating Interest in PY-3 and Palej Fields, first charge on the Company's share of Crude Oil Receivables from PY-3 and Palej Fields and charge on the Debt Service Reserve Account. Also see Note 2 of Schedule 15.

(b) Te term loans from Axis Bank amounting to Rs. 275,321,991 as at March 31, 2011 (Rs. 347,276,208 as at March 31, 2010) is secured by way of charge on all movable properties pertaining to PY-1 Gas Project, the Company's Participating Interest in PY-1 Field and on the PY-1 Trust and Retention Accounts. Also see Note 2 of Schedule 15.

2. Bank Balances – Scheduled Banks

(a) Current Accounts with Scheduled Banks include Lien Marked Accounts Rs. 941,993 as at March 31, 2011 (Rs. 1,261,453 as at March 31, 2010). Also see Note 1 of Schedule 15.

(b) Deposits with Scheduled Banks include:

– Lien Marked Deposits Rs. 60,534,613 as at March 31, 2011 (Rs. 39,298,606 as at March 31, 2010). Also see Note 1 of Schedule 15.

– Deposits amounting to Rs. 264,294,120 as at March 31, 2011 (Rs. 227,273,440 as at March 31, 2010) placed as "Site Restoration Fund" under Section 33ABA of the Income Tax Act, 1961.

3. Bank Balances – Non-Scheduled Banks

Te balance with Non-Scheduled Bank represents the Company's share in the balance in a foreign currency account with Barclays Bank, London amounting to Rs. 6,586,423 as at March 31, 2011 (Rs. 24,381,396 as at March 31, 2010) and Banque ENI Belgium (a ENI Group Entity) amounting to Rs. Nil as at March 31, 2011 (Rs. Nil as at March 31, 2010). Te maximum amount outstanding at any time during the year in respect of these accounts were Rs. 35,839,383 (Previous Year Rs. 103,143,622) and Rs. Nil (Previous Year Rs. 6,165,000,000) respectively.

4. Long Term Incentive Plan, Scheme 2005

Under the HOEC Limited Employee Stock Option Scheme – 2005 (ESOS Scheme) approved by the Shareholders, and as amended from time to time, the Board had on January 31, 2011 approved grant of 17,680 options (Previous Year 16,828 options approved on January 27, 2010) to eligible Independent Directors at Nil exercise price as part of the Long Term Incentive Plan (LTIP). In terms of the ESOS Scheme, the options would vest at the third anniversary of the end of the financial year for which the grant corresponds to. For the year ended March 31, 2011 an aggregate amount of Rs. 20,000,000 (Previous Year Rs. 16,200,000) has been provided towards performance bonus and stock options as per the LTIP Scheme 2005. During the year, the Company has written back excess provision towards cash and ESOS (deferred bonus) made during the prior years amounting to Rs. 6,527,308 (Previous Year Rs. 8,813,666) based on the approval/ratification of the Board of Directors of the Company.

Method used for Accounting for Share Based Payment Plan:

Under the LTIP Scheme 2005, the eligible employees are granted options in the succeeding year after adoption of the Annual Audited Accounts for the given year. Te Company charges the entire amount provided towards performance bonus and stock options to the Profit and Loss

Account for the year for which the grant corresponds to. Any upward variation in the market price/acquisition price of the ESOS stocks, as may be applicable, as on the date of Balance Sheet, is charged to the Profit and Loss Account for the period as per LTIP.

5. Employee benefits a. Gratuity

The Company's obligation towards the Gratuity Fund is a Defined benefit Plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. Te scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy.

The following tables summarize the components of net benefit expense recognised in the Profit and Loss Account and the funded status and amounts recognised in the Balance Sheet.

6. Segmental Reporting

Te Company is primarily engaged in a single business segment of "Hydrocarbons and other incidental services". All the activities of the Company revolve around the main business. Further, the Company does not have any separate geographic segments other than India. Hence, there are no separate reportable segments as per AS-17 "Segmental Reporting".

7. Related Party Disclosures

(i) Te related parties of the Company as at March 31, 2011 are as follows:

(A) Wholly Owned Subsidiary Company:

HOEC Bardahl India Limited

(B) Promoter Group:

1. ENI UK Holding plc (Wholly Owned Subsidiary of ENI S.p.A, Italy)

2. Burren Shakti Limited (Wholly Owned Indirect Subsidiary of ENI UK Holding plc)

3. Burren Energy India Limited (Wholly Owned Indirect Subsidiary of ENI UK Holding plc)

(C) Other Group Entities:

1. ENI Coordination Center S.A., Belgium

2. ENI India Limited, United Kingdom

3. Banque ENI, Belgium

(D) Unincorporated Joint Ventures:

As per details given in Note 12 of Schedule 15.

(E) Key Management Personnel:

1. Mr. Luigi Ciarrocchi – Managing Director

2. Mr. Manish Maheshwari – Joint Managing Director

8. Taxation

(i) MAT Credit

Provision for Income Tax for the current year as well as the previous year has been computed based on Minimum Alternate Tax in accordance with Section 115JB of the Income Tax Act, 1961. Taking into consideration the future Profitability and the taxable position in the subsequent years, the Company has recognised "MAT Credit Entitlement" to the extent of Rs. 232,000,000 (Previous Year Rs. 108,000,000) during the current year in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Ta x under Income Ta x Act, 1961" issued by the Institute of Chartered Accountants of India.

9. Quantitative and Other Related Disclosures

Te Company is not a manufacturing company but holds participating interest in Unincorporated Joint Ventures engaged in prospecting, exploring and producing oil and gas. Te information given below as required under items 4-C and 4-D of Part II of Schedule VI to the Companies Act, 1956 represents the Company's share in the Unincorporated Joint Ventures.

10. Recovery of Expenses

Recovery of expenses represents expenditure incurred by the Company for the UJVs where the Company is the Operator. Such costs are recovered from the respective UJVs as per the terms of the Production Sharing Contract. Recovery of expenses also includes an amount of Rs. 12,728,726 (Previous Year Rs. 57,969,229) recovered as parent company overhead pursuant to the respective Production Sharing Contracts.

11. Impairment

As of March 31, 2011, the Company has reviewed the carrying amount of its assets for indications of impairment and based on such review, the Company has concluded that none of the assets of the Company has sufered impairment loss as at March 31, 2011.

12. Previous Year Figures

Previous Year's fgures have been regrouped wherever necessary to conform to the current year presentation.

The fgures of Previous Year were audited by a form of Chartered Accountants other than S. R. Batliboi & Associates.


Mar 31, 2010

1. Commencement of Production from PY-1

During the current year ended March 31, 2010, the Company has commenced production of Natural Gas and condensate from PY-1 Field.The Natural Gas from PY-1 Field is supplied to GAIL (India) Limited ("GAIL") pursuant to the Gas Sales Agreement entered into between the Company and GAIL dated September 18, 2009. Pursuant to the Production Sharing Contract for the PY-1 Field, Chennai Petroleum Corporation Limited (CPCL) is Designated as the Government nominee for purchasing the condensate produced from the field.

2. Secured Loans (Foreign Currency and RupeeTherm Loans)

(a) The term loans from state Bank of India, Axis Bank and HDFC Bank amounting to Rs. 479,900,983 as at March 31, 2010 (Rs. 712,047,320 as at March 31, 2009), are secured by way of charge on the Companys Participating interest in PY-3 and Palej Fields, first charge on the Companys share of Crude Oil Receivables from PY-3 and Palej Fields and charge on the Debt Service Reserve Account. See note 5 below.

(b) The term loans from Axis Bank amounting to Rs. 347,276,208 as at March 31, 2010 ((Rs. 592,793,523 as at March 31, 2009) from Axis Bank, Bank of India, Canara Bank, Export-Import Bank of India, Indian Overseas Bank, SyndicaThe Bank,The Federal Bank Limited and Union Bank of India) are secured by way of charge on all movable properties pertaining to PY-1 Gas Project, the Companys Participating interest in PY-1 Field and on the PY-1 Trust and retention Accounts. See note 5 below.

During the year ended March 31, 2010, the Company has repaid the loans taken from Bank of India, Canara Bank, Export-Import Bank of India, Indian Overseas Bank, SyndicaThe Bank,The Federal Bank Limited and Union Bank of India.

3. Unsecured Loan from ENI Coordination CenTher S.A, Belgium

Pursuant to the Loan Agreement entered into by the Company with ENI Coordination CenTher S.A, Belgium dated February 6, 2009, the Company has availed an Unsecured Loan amounting to USD 125,000,000 (Equivalent Rs. 5,697,500,000 as at March 31, 2010) during the year ended March 31, 2010 for the purpose of inter-alia financing the development capital expenditure in PY-1 and general CORPORATE purposes.

4. Bank Balances – Scheduled Banks

(a) Current Accounts with Scheduled Banks include Lien Marked Accounts Rs. 1,261,453 as at March 31, 2010 (Rs. 3,025,946 as at March 31, 2009). See note 2 above.

(b) Deposits with Scheduled Banks include:

— Lien Marked Deposits Rs. 39,298,606 as at March 31, 2010 (Rs. 52,774,749 as at March 31, 2009). See note 2 above.

— Deposits amounting to Rs. 227,273,440 as at March 31, 2010 (Rs. 214,966,840 as at March 31, 2009) placed as "site Restoration Fund" under Section 33ABA of the Income Ta x Act, 1961.

5. Bank Balances – Non-Scheduled Bank

The balance with Non-Scheduled Bank represents the Companys share in the balance in a foreign currency account with Barclays Bank, London amounting to Rs. 24,381,396 as at March 31, 2010 (Rs. 60,673,355 as at March 31, 2009) and Banque ENI Belgium (a ENI Group Entity) amounting to Rs. Nil as at March 31, 2010 (Rs. Nil as at March 31, 2009).The maximum amount outstanding at any time during the year in respect of these accounts were Rs. 103,143,622 (Previous Year Rs. 159,637,993) and Rs. 6,165,000,000 (Previous Year Rs. Nil), respectively.

6. Micro Enterprises and Small Enterprises

A. 2009-2010

Based on information received by the Company from the suppliers during the year regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the relevant particulars are furnished below. With respect to information relating to dues to Micro, Small and Medium Enterprises in the case of one Unincorporated Joint Venture, the particulars have not been furnished in the absence of the required information in the Audited financial Statements of the Unincorporated Joint Venture, which are prepared in accordance with the requirements of the respective Production Sharing Contracts.

B. 2008-2009

In order to comply with the requirement of the Micro, Small and Medium Enterprises Development Act, 2006, the Company had sought confirmation from the vendors as to whether they were falling in the Category of Micro / Small / Medium Enterprises.The Company had received an intimation from one supplier as being registered under the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was payable / overdue to the said supplier at any time during the year. Accordingly, as at March 31, 2009, the Company did not have any outstanding amounts payable to Micro, Small and Medium Enterprises.The information relating to dues to Micro, Small and Medium Enterprises was not provided in respect of the Unincorporated Joint Ventures as the details with respect to the same were not available as at March 31, 2009. Also see note 38 below

notes:

1. The above Managerial Remuneration does not include an amount of Rs. Nil (Previous Year Rs. 40,000) paid to the erstwhile Managing Director as sitting fee for atThending Board / Committee meetings.The erstwhile Managing Director and the current Managing Director did not / does not draw any other remuneration from the Company.

2. The above Managerial Remuneration does not include the cost of 4,895 Employee Stock Options Granted during the year 2009-2010 for the year 2008-2009 (4,498 Employee Stock Options Granted during the year 2008-2009 for the year 2007-2008), pursuant to LTIP Scheme 2005. See note 12 below.

3. In computing the above Managerial Remuneration, perquisites have been valued in terms of actual expenditure incurred by the Company in providing the benefits or notional amount as per Income Tax Rules has been added, where the actual amount of expenditure cannot be ascertained.

4. As per the practice followed by the Company, gratuity and eligible compensaThed absences is payable at the time of retirement / separation and, hence, gratuity and compensaThed absences are included in the remuneration of the year in which they are payable. Similarly, annual variable pay and long term incentive benefits are included in the remuneration of the year in which they are awarded.

notes:

1. For the current year ended March 31, 2010, with respect to Expenditure in Foreign Currency and CIF Value of Imports in the case of PY-3 Unincorporated Joint Venture, where the Company is not the Operator, the particulars have not been furnished in the absence of the required information in the Audited financial Statements of the Unincorporated Joint Venture, which is prepared in accordance with the requirements of the Production Sharing Contract.

2. The particulars relating to Expenditure in Foreign Currency, Earnings in Foreign Currency and CIF Value of Imports for the previous year ended March 31, 2009 excludes the Companys share in such transactions of the Unincorporated Joint Ventures, in the absence of the required information in the Audited accounts of the respective Unincorporated Joint Ventures for the year ended March 31, 2009. Also See note 38 below.

3. The above disclosures have been made on cash basis as provided for in the Statement on the Amendments to Schedule VI to the Companies Act, 1956 issued by the InstituThe of CharThered Accountants of India dated March 12, 1976.

7. long term Incentive Plan, Scheme 2005

Under the HOEC Limited Employee Stock Option Scheme – 2005 (ESOS Scheme) approved by the Shareholders, and as amended from time to time, the Board had on January 27, 2010 approved grant of 16,828 options (Net) (Previous Year 17,613 options approved on July 28, 2008) to the eligible Employees and eligible Directors at Nil exercise price as part of the long term Incentive Plan (LTIP). in terms of the ESOS Scheme, the options would vest at the third anniversary of the end of the financial year for which the grant corresponds to. For the financial year 2009-2010, an aggregaThe amount of Rs. 16,200,000 (Previous Year Rs. 20,900,000) has been provided towards performance bonus and stock options as per the LTIP Scheme 2005. During the year, the Company has written back excess provision towards cash and ESOS (deferred bonus) made during the prior years amounting to Rs. 8,813,666 based on the approval / ratification of the Board of Directors of the Company, at its meeting held on April 30, 2010.

Method used for Accounting for Share Based Payment Plan:

Under the LTIP Scheme 2005, the eligible employees are Granted options in the succeeding year Afteradoption of the Annual Audited Accounts for the given year.The Company charges the entire amount provided towards performance bonus and stock options to the Profit and Loss Account for the year for which the grant corresponds to. Any upward variation in the market price / acquisition price of the ESOS stocks, as may be applicable, as on the date of Balance Sheet, is charged to the Profit and Loss Account for the period as per LTIP.

8. Segmental Reporting

The Company is primarily engaged in a single business segment of "Hydrocarbons and other incidental services". All the activities of the Company revolve around the main business. Further, the Company does not have any separate geographic segments other than India. Hence, there are no separate reportable segments as per AS-17 "Segmental Reporting".

9. related Party Disclosures

(i) The related parties of the Company as at March 31, 2010 and March 31, 2009 are as follows:

(A) Wholly Owned Subsidiary Company: HOEC Bardahl India Limited

(B) Promoter Group:

1. ENI UK Holdings plc. (Wholly Owned Subsidiary of ENI S.p.A, Italy)

2. Burren Shakti Limited (Wholly Owned Indirect Subsidiary of ENI UK Holdings plc)

3. Burren Energy India Limited (Wholly Owned Indirect Subsidiary of ENI UK Holdings plc)

(C) Other Group Entities

1. ENI Coordination CenTher S.A., Belgium

2. ENI IndiaLimited United Kingdom

3. Banque ENI Belgium

(D) Unincorporated Joint Ventures:

As per details given in note 15 above.

As stated in IThem 6 of Significant Accounting Policies (Schedule 15), the financial Statements of the Unincorporated Joint Ventures are incorporated in the Companys accounts to the extent of the Companys s hare. Hence, particulars of transactions with the Unincorporated Joint Ventures have not been separately disclosed.

(E) Key Management Personnel:

Mr. Luigi Ciarrocchi – Managing Director (w.e.f. September 30, 2008)

Mr. Manish Maheshwari – Joint Managing Director

Mr. Atul Gupta – Erstwhile Managing Director (upto August 21, 2008)

note:

related party relationships are as identified by the Management and relied upon by the Auditors.

10. Taxation

(i) MAT Credit

Provision for Income Tax for the current year as well as the previous year has been compuThed based on Minimum alternate Tax in accordance with Section 115JB of the Income Tax Act, 1961. Taking into consideration the future profitability and the taxable position in the subsequent years, the Company has recognised "MAT Credit Entitlement" to the extent of Rs. 108,000,000 (Previous Year Rs. 31,000,000) during the current year in accordance with the Guidance note on Accounting for Credit Available in respect of Minimum alternate Tax under Income Ta x Act, 1961 issued by the InstituThe of CharThered Accountants of India.

During the current year, the Company has reversed the MAT Credit recognised in the previous year to the extent of Rs. 3,637,552 based on the final return of income filed by the Company for the year 2008-2009.

11. Commitments and Contingencies

in Rupees

Particulars As at As at

March 31, 2010 March 31, 2009

(i) CounTher GuaranThees on account of Bank GuaranThees 71,824,538 12,998,995

(ii) estimated amount of Contracts remaining to be ExecuThed on Capital Account 119,934,054 159,950,859 and Not Provided For: (Including Rs. Nil (As at March 31, 2009 - Rs. 156,922,500) in respect of a farm-in consideration for acquisition of participating right, in one of the Unincorporated Joint Ventures)

(iii) Claims against the Company Not Acknowledged as Debt (See note (1) below)

- DispuThe with Contractors under Arbitration 3,245,248 3,286,632

- Income Tax Demands under Appeal (See note (2) below) 894,400,144 511,787,766

(iv) The Government had encashed the Performance Bank GuaranThee of

Rs. 10,149,000 for PG Block abandoned by the consortium under the force majeure clause of the Production Sharing Contract (PSC). The Government has also raised an additional demand of Rs. 327,033,332 (As at March 31, 2009 - Rs. 304,725,187) (including interest). The Company has been advised that the said actions of the Government are not justified. The Company has initiated arbitration proceeding as per the provisions of the PSC in the matter. Pending the outcome of this, provision has been made in this regard to the extent of Rs. 10,149,000 (As at March 31, 2009 - Rs.10,149,000) only. (See note (1) below) 327,033,332 304,725,187

(v) Service Tax Demand (pertaining to one Unincorporated Joint Venture)

(See note (1) below) 2,139,321 0

(iv) Hire Charges See note 21 below

notes:

(1) The Company is conThesting these claims and demands and the Management believes that the Companys position will quiThe likely be upheld in the appellaThe process/court of law.

(2) The above excludes amount of Rs. 184,853,636 (As at March 31, 2009 - Rs. Nil) for which Appeal was decided in favour of the Company. However, the Order giving effect to the Order of the Commissioner of Income Tax (Appeals) is awaiThed.

(3) For the current year ended March 31, 2010, with respect to Information relating to the Commitments and Contingencies in respect of PY-3 Unincorporated Joint Venture, where the Company is not the Operator, the particulars have not been furnished in the absence of the required information in the Audited financial Statements of the Unincorporated Joint Venture, which are prepared in accordance with the requirements of the Production Sharing Contract.

(4) Other than the contingent liabilities disclosed in note 21 below, information relating to the Commitments and Contingencies of the Unincorporated Joint Ventures for the year ended March 31, 2009 is not available in the Audited accounts of the Unincorporated Joint Ventures. Also see note 38 below.

(5) The above does not include interest claims amounting to Rs. Nil as at March 31, 2010 (Rs. 27,576 as at March 31, 2009) (to the extent quantifiable) pertaining to the Secured Loan for PY-1 Field, which is not as per the provisions of the Dollar Facility Agreement.

12. Hire Charges

(i) In PY-3 Field operated by Hardy Exploration & Production (India) Inc., the Floating Production System ("FPS") was shutdown for a period of 33.47 days from November 26, 2008 to December 29, 2008. Accordingly, the invoice for the hire charges of FPS amounting to US$ 3,290,718 for the above period has been disallowed by the Operator.The above disallowance is dispuThed by the Contractor and, therefore, the Company has treaThed its share amounting to US$ 691,051, equivalent to Rs. 31,187,122, as a contingent liability in the books as at March 31, 2010 (US$ 691,051, equivalent to Rs. 35,554,574, as at March 31, 2009).

(ii) Similarly, the FPS was also shutdown from July 05, 2009 and recommenced production on January 24, 2010. However, the Contractor has claimed day rates for a period of 22.42 days from July 05, 2009 to July 27, 2009 amounting to US$ 2,163,811 (Companys share US$ 454,400, equivalent to Rs. 20,507,086) as at March 31, 2010, which has been considered as claims against the Company not acknowledged as debt.The Operator is in the process of discussing with the Contractor for withdrawal of the above claim.

The Company has relied on the Operators assessment that the above claims are not sustainable and hence, the Company is of the opinion that no provision is required to be made in the books on account of the same.

13. Recovery of Expenses

Recovery of expenses represents expenditure incurred by the Company for the UJVs where the Company is the Operator. Such costs are recovered from the respective UJVs as per theTerms of the Production Sharing Contract.

Recovery of expenses also includes an amount of Rs. 57,969,229 (Previous Year Rs. 59,373,679) recovered as parent company overhead pursuant to the respective Production Sharing Contracts.The parent company overhead is being recovered by the Company from the UJVs to support and manage Petroleum Operations under the Production Sharing Contracts and for staff advice.The parent company overhead is calculaThed as an agreed percentage of total contract cost of each UJV as per theTerms of the respective Production Sharing Contracts.

14. Stores, Spares, Capital Stock and Drilling Tangibles

Stores, Spares, Capital Stock and Drilling Ta n gibles as at March 31, 2010 include the Companys share of Rs. 1,635,375 (As at March 31, 2009 Rs. 3,156,384) towards inventories purchased by the Operator before March 31, 2004 in PY-3 block. Tough the Operator has considered the aforesaid Stock as obsoleThe, the Company is of the opinion that the same will be recovered from the Operator and, hence, no provision is required to be made with respect to the same in the financial Statements at this stage. This has been relied upon by the Auditors.

15. Changes in Accounting Policy (FY 2008-2009) – Accounting Standard 11 – The Effects of Changes in Foreign Exchange rates Upto March 31, 2007, the Company was following a policy of accounting for all foreign exchange differences in the Profit and Loss Account. Effective April 1, 2008, consequent to the exercise of the option available as per the new paragraph 46 of the Accounting Standard 11 –The Effects of Changes in Foreign Exchange rates notified by the Ministry of CORPORATE Affairs vide Notification dated March 31, 2009 on Companies (Accounting Standards) Amendment Rules, 2009 (G.S.R. 225 (E) dated 31.3.2009), the Company had capitalised a net amount of Rs. 133,793,106 to fixed assets (Development Expenditure) and transferred a net amount of Rs. 17,179,351 to Foreign Currency Monetary IThem Translation Difference Account, as of March 31, 2009. Had the Company not changed the Accounting Policy, the profit before tax for the year ended March 31, 2009 would have been lower by Rs. 173,117,256.

16. Exploration Expenditure

(i) CB-ON-7 Exploration Area

The Operator of the Unincorporated Joint Venture CB-ON-7 has sought exThension for conducting additional exploration in certain areas of Block. While the additional work programme has been considered, the final regulatory consents are awaiThed.The exploration expenses amounting to Rs. 53,482,001 as at March 31, 2010 (Rs. 53,235,101 as at March 31, 2009) included under "Exploration Expenditure" (Schedule 5) will be appropriately dealt with based on final regulatory consents inline with the Companys accounting policy.

(ii) CB-OS-1 Exploration Area

The Operator has declared Commercial Discovery in CB-OS-1 Block and is pursuing with the authorities for necessary approvals.The exploration expenses amounting to Rs. 184,543,335 as at March 31, 2010 (Previous Year Rs. 184,543,335 as at March 31, 2009) included under "Exploration Expenditure" (Schedule 5) will be appropriately dealt with based on final regulatory consents inline with the Companys accounting policy.

17. CY-OSN-97/1 Accounts Closure

As per theTerms of the Production Sharing Contract for CY-OSN-97/1 Block, if no Commercial Discovery is made in the Contract Area by end of the Exploration Period, the Contract Area shall be relinquished. In the absence of any discovery being declared by the Unincorporated Joint Venture at the end of the Exploration Period, the Contract Area CY-OSN-97/1 was relinquished on March 15, 2008. During the previous year ended March 31, 2009, the Company had settled its ongoing dispuThe with DIOG Limited which was a subject matter of arbitration initiated by DIOG Limited ( Joint Venture Partner) before London Court of international Arbitration (LCIA). With the relinquishment of the Area and settlement of dispuThe with DIOGLimited the accounts of the Joint Venture have been formally closed and the assets and liabilities of the Joint Venture had been Consolidated 100% in the Companys accounts for the year ended March 31, 2009. Further, a net amount of Rs. 3,247,354 had been written back based on the Audited accounts of the said Joint Venture and included as Miscellaneous Income during that year.

18. GAIL Arbitration

The Company has, as the Operator of PY-1 Field, execuThed a TripartiThe Settlement Agreement with GAIL (India) Limited ("GAIL") and PPN Power Generating Company private Limited ("PPN") inter-alia terminating the Natural Gas Sale and Purchase Agreement with PPN and settling the ongoing dispuThe with GAIL in relation to sale of natural gas. Further the Company has also signed Gas Sale Contract with GAIL for sale of natural gas produced from PY-1 Field.The Company has commenced production of natural gas from PY-1 Field during the year ended March 31, 2010. See note 1 above.

19. Profit Petroleum

Profit Petroleum for the year ended March 31, 2010 includes an amount of Rs. 15,835,109 (Previous Year Rs. Nil) paid for the financial year 2008-2009 as submitted by the Operator of CB-ON-7.

Profit Petroleum for the year ended March 31, 2009 includes an amount of Rs. 4,803,040 paid for the financial year 2005-2006 as submitted by the Operator of PY-3.

20. Miscellaneous Income

Miscellaneous Income includes an amount of Rs. Nil (Previous Year Rs. 1,799,237) being the net gain on sale of Current Non Trade Investments.

21. Sales

i)The Joint Venture Partners of Block CB-ON-7 have inter-aliaagreed with Indian Oil Corporation Limited (IOC), the Buyer of Crude Oil from the said Block, for the final price of Crude Oil sold.The said price revision is applicable with retrospective effect from the commencement of the first sale to IOC since October 2005 from the said Block. Consequently, Sales of Crude Oil, condensate and Natural Gas for the year ended March 31, 2010 includes an amount of Rs. 125,849,572 (Previous Year Rs. Nil) towards the said price revision.The Company has also made payment of Profit Petroleum to the Government of India for the above price revision accounting in accordance with the accounting policy of the Company as per theTerms of the Production Sharing Contract.

ii) Sales is net of an amount of Rs. Nil (Previous Year Rs. 406,863) adjusThed for Reid Vapour Pressure specifications as per the terms of the Crude Oil Sale Agreement for PY-3 field pertaining to prior years as submitted by the Operator of PY-3.

22. Impairment

As of March 31, 2010 and March 31, 2009, the Company has reviewed the carrying amount of its assets for indications of impairment and based on such review, the Company has concluded that none of the assets of the Company has suffered impairment loss as at March 31, 2010 and March 31, 2009.

23. Details of Oil and Gas Reserves

As at March 31, 2010, the Internal estimates of the Management of Proved and Probable Reserves on working interest basis for the Company is 53.2 Million Barrel of Oil Equivalent (Previous Year 53.4 Million Barrel of Oil Equivalent). This has been relied upon by the Auditors, being a technical matter.

24. PY-1 Joint Venture

(i) PY-1 Field has commenced commercial production during the year ended March 31, 2010, and a site Restoration fund amounting to Rs. 14,026,000 (equivalent of US$ 307,705) has been created with state Bank of India subsequently on May 15, 2010.

(ii) Operator of PY-1 Field is in the process of seeking approval from the management Committee in respect of certain development and production related services rendered by an created of the Operator amounting to Rs. 160,438,827 and Rs. 16,258,135 (equivalent to US$ 3,555,431 and US$ 360,291) respectively during the year ended March 31, 2010. Also see note 16 above.

25. Disclosure notes relating to Unincorporated Joint Ventures for the Year Ended March 31, 2009 (based on the information subsequently obtained by the Company during the current year ended March 31, 2010, which were not available in the Audited financial Statements of the Unincorporated Joint Ventures for the previous year ended March 31, 2009).

With respect to information relating to dues to Micro, Small and Medium Enterprises, expenditure in foreign currency, earnings in foreign currency, CIF value of imports, related party disclosures, commitments and contingencies and quantitative and other related disclosures given below, the particulars in the case of PY-3 Unincorporated Joint Venture, where the Company is not the Operator, have not been furnished in the absence of the required information in the Audited financial Statements of the Unincorporated Joint Venture, which are prepared in accordance with the requirements of the respective Production Sharing Contracts.

(v) related Party Disclosures

No transactions have been entered into by the Unincorporated Joint Ventures and the related parties mentioned in note 17(i) above for the year ended March 31, 2009.

26. Previous Year Figures

Previous years figures have been regrouped wherever necessary to conform to the current year presentation.

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