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Notes to Accounts of Indian Oil Corporation Ltd.

Mar 31, 2015

NOTE - 1

CONTINGENT LIABILITIES & COMMITMENTS

A. Contingent Liabilities

A.1 Contingent Liabilities amounting to Rs. 12,702.00 crore (2014: Rs. 11676.65 crore) are as under :

A.1.1 Rs. 155.01 crore (2014: Rs. 210.43 crore) being the demands raised by the Central Excise /Customs/ Service Tax authorities including interest of Rs. 22.67 crore (2014: Rs. 49.15 crore) .

A.1.2 Rs. 2,133.47 crore (2014: Rs. 1,173.20 crore) in respect of demands for Entry Tax from State Governments including interest of Rs. 345.77 crore (2014: Rs. 46.10 crore) .

A.1.3 Rs. 4,275.75 crore (2014: Rs. 4,581.84 crore) in respect of VAT/Sales Ta x demands including interest of Rs. 1,485.44 crore (2014: Rs. 1,495.93 crore).

A.1.4 Rs. 3,078.95 crore (2014: Rs. 2,904.16 crore) in respect of Income Tax demands including interest of Rs. 257.46 crore (2014: Rs. 233.90 crore).

A.1.5 Rs. 2,198.61 crore (2014: Rs. 2,121.26 crore) including Rs. 1,449.52 crore (2014: Rs. 1,601.65 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator. This includes interest of Rs. 71.27 crore (2014: Rs. 65.77 crore).

A.1.6 Rs. 860.21 crore (2014: Rs. 685.76 crore) in respect of other claims including interest of Rs. 272.32 crore (2014: Rs. 119.16 crore).

The Company has not considered those disputed demands/ claims as contingent liabilities, for which, the outflow of resources has been considered as remote.

A.2 Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

A.3 Air India has entered into tripar tite agreement with standard char tered bank to raise bill discounting facilities only for payment of fuel purchases from our company. The bank has recourse of recovery from the company in case of nonpayment by M/s Air India to the bank. The estimated amount of such obligation is Rs. 271.03 Crore (2014 : Nil)

A.4 The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporacion Venezolana del Petroleo S.A. and PeTroCarabobo S.A., on behalf of Indoil Netherlands B.V., Netherlands (an associate company) to fulfill the associate company''s future obligations of payment of signature bonus / equity contribution / loan to the beneficiaries. The total amount sanctioned by the Board of Directors is USD 424 million. The estimated amount of such obligation (net of amount paid) is Rs. 2,295.63 crore - USD 367.27 million (2014: Rs. 2,236.58 crore – USD 373.26 million).

A.5 The company has issued Corporate Guarantee on behalf of ''Indian Synthetic Rubber Limited (ISRL) , Joint venture company to the extent of obligations of later company under loans (principal and interest both) made to ISRL by ''Japan Bank for International Cooperation (JBIC)'' and ''Mizuho Corporate Bank (MHCB)''. The Company''s share of such obligation is estimated at Rs. 347.79 crore - USD 55.64 million (2014: Rs. 333.44 crore – USD 55.65 million).

A.6 The company has entered into Master Guarantee Agreement, on behalf of its subsidiaries viz. Indoil Global B.V. and Indoil Montney Ltd. for all of its payments and performance obligations under the various Project Agreements entered by the subsidiaries with PETRONAS Carigali Canada B.V. and Progress Energy Canada Ltd. The total amount sanctioned by the Board of Directors is CAD 3924.76 million. The estimated amount of such obligation (net of amount paid) is Rs. 12,478.71 crore - CAD 2547.51 million (2014: Rs. 15,181.63 crore - CAD 2791.07 million).

A.7 The company has issued Corporate Guarantee on behalf of step down subsidiary ''IndOil Montney Ltd.(IML), to the extent of obligations of later company under loans (principal and interest both) made to IML by ''Mizuho Bank Ltd, Canada Branch''. The limit of Corporate Guarantee sanctioned to the Bank is CAD 139.35 million. The Company''s share of such obligation as on 31.03.2015 is estimated at Rs. 590.58 crore – CAD 120.57 million (2014: NIL).

A.8 The company has issued Corporate Guarantee on behalf of step down subsidiary ''IndOil Montney Ltd.(IML), to the extent of obligations of later company under loans (principal and interest both) made to IML by ''Bank of Tokyo-Mitsubishi UFJ, Canada, Mizuho Bank Ltd, Canada Branch, Sumitomo Mitsui Banking Corporation, Singapore Branch, Expor t Development Canada, State Bank of India, Canada, Land Bank of Taiwan, Offshore Banking Branch''. The limit of Corporate Gurantee sanctioned to the member banks is CAD 618.30 million. The Company''s share of such obligation as on 31.03.2015 is estimated at Rs. 570.99 crore – CAD 116.57 million (2014: NIL).

B. Commitments

B.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 10,252.52 crore (2014: Rs. 12,574.58 crore).

B.2 Other Commitments

The Company has an export obligation to the extent of Rs. 3,787.84 crore (2014: Rs. 2,729.83 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

B.3 To meet the direction of Honorable High court of Orissa, company has a commitment to pay Rs. 97.75 crore towards providing high tech ambulances, removal of old anicut and construction of water treatment plant in the state of Orissa . In addition company has to incur cost towards dredging through Orissa Construction Co , a state government agency estimate for which yet to be finalised.

NOTE - 2: EMPLOYEE BENEFITS

Disclosures in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is as under:

(A) PROVIDENT FUND

(i) The Company has three Provident Funds maintained by respective PF Trusts. All these three PF Trusts do not have any shortfall as on 31.03.2015.

(ii) During the year, Company has conducted Actuarial Valuation of all three PF Trusts. As per Actuarial Valuation, all three PF Trusts do not have any deficit as on 31st March 2015. Accordingly, other related disclosures in respect of Provident Fund have not been made.

(iii) During the year, the company has recognised Rs. 327.05 crore (2014 : Rs. 322.92 crore) as Employer''s contribution to Provident Fund in the Statment of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(iv) In addition, during the year, the company has recognised Rs. 30.19 crore (2014 : Rs. 20.57 crore) as contribution to EPS-95 in the Statment of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(B) PENSION SCHEME

During the year, the company has recognised Rs. 201.42 crore (2014: Rs. 306.92 crore) towards Defined Contributory Employees Pension Scheme in the Statment of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(C) DEFINED BENEFIT 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 maximum of Rs. 0.10 crore 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. Resettlement Allowance:

Resettlement allowance is paid to employees to permanently settle down at a place other than the location of last posting at the time of retirement. 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. MoP&NG vide letter dated 25th February 2015 has advised Oil Marketing Companies to discontinue the Long Service Award Scheme. However, 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 2014-15 and provision in books of account. Ex gratia:

Ex-gratia is payable to those employees who have retired before 01-11-1987 and not covered under the pension scheme. Further, for employees who have retired on or after 01-11-1987 and their entitlement under the pension scheme is less than applicable amount under Ex- Gratia Scheme, such employees are also eligible to the extent of shor tfall or difference under Ex-gratia scheme. The scheme of ex-gratia has been restricted to cover only those eligible employees who have retired upto 31.12.2006, and not thereafter. Staff Pension fund at AOD:

The Fund is maintained for disbursement of pension to Officers who have joined erstwhile Assam Oil Company before 14-10-1981 and opted to continue the benefit of pension as existing prior to takeover. The company is managing the fund after takeover of the erstwhile Assam Oil Company in the name of IOCL(AOD) Staff Pension Fund.

NOTE - 3: LEASES

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

FINANCE LEASES:

a) As Lessee

The company has entered into following finance leases:

(i) BOOT agreement with IOT Utkal Energy Services Ltd. in respect of Tankages facility for a period of 15 years. Lessor will transfer ownership to IOCL after 15 Years at Nil value.

(ii) BOOT agreement with IL&FS in respect of Water Intake facility for a period of 25 years. Lessor will transfer ownership to IOCL after 25 Years at Rs. 0.01 crore.

NOTE - 4: EXPOSURE TO FINANCIAL AND COMMODITY DERIVATIVES

Financial and Derivative Instruments:

1. All derivative contracts entered into by the Company are for hedging its foreign currency, interest rate & commodity exposures relating to underlying transactions and firm commitments and not for any speculative or trading purposes.

2. The Derivative contracts entered into by the Company and outstanding as on 31st March 2015 are as below:

(a) For Hedging Currency Risks:

Amount of forward contracts entered into by the Company for import & export and outstanding as on 31st March 2015 is NIL (2014: NIL).

(b) For Hedging Commodity Related Risks:

Category–wise quantitative data about commodity derivative transactions that are outstanding as on 31st March 2015 is given below:

NOTE - 5: RESEARCH AND DEVELOPMENT EXPENDITURE

Research and Development Expenses of Rs. 93.66 crore (2014: Rs. 78.32 crore) have been capitalized and Rs. 169.31 Crore (2014 : Rs. 174.40 crore) have been accounted for in the Statment of Profit and Loss during the year. Detailed break up of total expenditure is as under:

NOTE - 6: OTHER DISCLOSURES

1 Purchase of crude oil from Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalization of agreements with respective parties. Adjustments, if any, will be made on finalization of agreements.

2 Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

3 Exceptional income includes income of Rs. 1,668.09 crore arising out of additional state specific surcharge (SSC) towards U.P. entry tax paid in earlier years, in pursuance with MOP&NG order dated 30th March 2013 (2014: Rs. 1,746.80 crore on account of recovery of entry tax paid in earlier years and other matters in relation to U.P. Entry Tax).

4 In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Company has adopted the useful lives as prescribed in Schedule II except in case of following assets where useful life is considered based on technical assessment:

a) Useful life of 15 years for Plant and Equipment relating to Retail Outlets (other than storage tanks and related equipments) and LPG cylinders & pressure regulators

b) Useful life of 25 years for solar power plant/solar panels

Due to revised useful lives, the depreciation expense for the year ended March 31, 2015 is lower by Rs. 1,650.02 crore. As per the transitional provisions of Schedule II of the Companies Act, 2013, the Company has debited Rs. 948.76 crore (net of deferred tax of Rs. 493.36 crore) to the opening balance of General reserve as at April 1, 2014 and Rs. 12.18 crore is capitalized in tangible capital work in progress. Additionally, capital grant of Rs. 2.82 crore is also transferred to General Reserve.

In line with the Notification dated August 29, 2014 issued by Ministry of Corporate Affairs (MCA), the Company will comply with the requirements of paragraph 4 of Notes to Schedule II of Companies Act, 2013, relating to componentization, from financial year 2015-16.

5 Previous year''s comparative figures have been regrouped wherever necessary. Figures in brackets indicate deductions.


Mar 31, 2014

Contingent Liabilities & Commitments

A. Contingent Liabilities

A.1 Contingent Liabilities amounting to Rs. 11,676.65 crore (2013: Rs. 11,619.68 crore) are as under :

A.1.1 Rs. 210.43 crore (2013: Rs. 225.70 crore) being the demands raised by the Central Excise /Customs/ Service Tax authorities including interest of Rs. 49.15 crore (2013 : Rs. 43.82 crore).

A.1.2 Rs. 1,173.20 crore (2013: Rs. 1,294.80 crore) in respect of demands for Entry Ta x from State Governments including interest of Rs. 46.10 crore (2013 : Rs. 44.94 crore).

A.1.3 Rs. 4,581.84 crore (2013: Rs. 4,631.93 crore) in respect of VAT/ Sales Tax demands including interest of Rs. 1,495.93 crore (2013: Rs. 1,610.50 crore).

A.1.4 Rs. 2,904.16 crore (2013: Rs. 2,962.25 crore) in respect of Income Tax demands including interest of Rs. 233.90 crore (2013 : Rs. 268.22 crore).

A.1.5 Rs. 2,113.84 crore (2013: Rs. 1,917.26 crore) including Rs. 1,601.65 crore (2013: Rs. 1,600.49 crore) on account of Projects for which suits have been filed in the Cour ts or cases are lying with Arbitrator. This includes interest of Rs. 65.42 crore (2013: Rs. 37.81 crore).

A.1.6 Rs. 693.18 crore (2013: Rs. 587.74 crore) in respect of other claims including interest of Rs. 119.51 crore (2013 : Rs. 98.73 crore).

The Company has not considered those disputed demands/ claims as contingent liabilities, for which, the outflow of resources has been considered as remote.

A.2 Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

A.3 The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The

Corporacion Venezolana del Petroleo S.A. and PeTroCarabobo S.A., on behalf of Indoil Netherlands B.V., Netherlands (an associate company) to fulfill the associate company''s future obligations of payment of signature bonus / equity contribution / loan to the beneficiaries. The total amount sanctioned by the Board of Directors is USD 424 million. The estimated amount of such obligation (net of amount paid) is Rs. 2,236.58 crore - USD 373.26 million (2013: Rs. 2,054.23 crore – USD 378.38 million).

A.4 The company has issued Corporate Guarantee on behalf of ''Indian Synthetic Rubber Limited (ISRL), Joint venture company to the extent of obligations of later company under loans (principal and interest both) made to ISRL by ''Japan Bank for International Cooperation (JBIC)'' and ''Mizuho Corporate Bank (MHCB)''. The Company''s share of such obligation is estimated at Rs. 333.44 crore - USD 55.65 million (2013: Rs. 302.57 crore – USD 55.73 million).

A.5 The company has entered into Master Guarantee Agreement, on behalf of its subsidiaries viz. Indoil Global B.V. and Indoil Montney Ltd. for all of its payments and performance obligations under the various Project Agreements entered by the subsidiaries with PETRONAS Carigali Canada B.V. and Progress Energy Canada Ltd. The total amount sanctioned by the Board of Directors is CAD 3907 million. The estimated amount of such obligation (net of amount paid) is Rs. 15,181.63 crore - CAD 2,791.07 million (2013: NIL).

Commitments

B.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 12,574.58 crore (2013: Rs. 14,648.43 crore).

B.2 Other Commitments

The Company has an export obligation to the extent of Rs. 2,729.83 crore (2013: Rs. 3,090.25 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

Disclosures in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is as under:

(A) PROVIDENT FUND

(i) The Company has three Provident Funds maintained by respective PF Trusts. All these three PF Trusts do not have any shortfall as on 31.03.2014.

(ii) During the year, Company has conducted Actuarial Valuation of all three PF Trusts. As per Actuarial Valuation, all three PF Trusts do not have any deficit as on 31st March 2014. Accordingly, other related disclosures in respect of Provident Fund have not been made.

(iii) During the year, the company has recognised Rs. 322.92 crore (2012-13 : Rs. 288.05 crore) as Employer''s contribution to Provident Fund in the Statement of Profit and Loss/ CWIP (included in Con- tribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(iv) In addition, during the year, the company has recognised Rs. 20.57 crore (2012-13: Rs. 20.83 crore) as contribution to EPS-95 in the Statement of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(B) PENSION SCHEME

During the year, the company has recognised Rs. 306.92 crore (2012-13: Rs. 232.06 crore) towards Defined Contributory Employees Pension Scheme in the Statement of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(C) DEFINED BENEFIT 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 maximum of Rs. 0.10 crore 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.

Resettlement Allowance:

Resettlement allowance is paid to employees to permanently settle down at a place other than the location of last posting at the time of retirement.

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.

Ex gratia:

Ex-gratia is payable to those employees who have retired before 01-11-1987 and not covered under the pension scheme. Further, for employees who have retired on or after 01-11-1987 and their entitlement under the pension scheme is less than applicable amount under Ex- Gratia Scheme, such employees are also eligible to the extent of shortfall or difference under Ex-gratia scheme. The scheme of ex-gratia has been restricted to cover only those eligible employees who have retired upto 31.12.2006, and not thereafter.

Staff Pension fund at AOD:

The Fund is maintained for disbursement of pension to Officers who have joined erstwhile Assam Oil Company before 14-10-1981 and opted to continue the benefit of pension as existing prior to takeover. The company is managing the fund after takeover of the erstwhile Assam Oil Company in the name of IOCL(AOD) Staff Pension Fund.

1. RELATIONSHIP

A) Details of Joint Venture Entities/Associates

1) IOT Infrastructure Energy Services Ltd.

2) Lubrizol India Pvt. Ltd.

3) Petronet VK Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt.Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

11) Indo Cat Pvt. Ltd. (Upto 26.03.2014)

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facility Private Ltd.

15) Indian Synthetic Rubber Ltd.

16) Indian Oil Ruchi Biofuels LLP

17) NPCIL- IndianOil Nuclear Energy Corporation Ltd.

18) GSPL India Transco Ltd.

19) GSPL India Gasnet Ltd.

20) IndianOil Adani Gas Pvt. Ltd.

21) Petroleum India International - AOP (An Associate)

B) Details of Joint Ventures (Unincorporated)

1) MN-OSN-2000/2

2) AA-ONN-2001/2

3) MB-OSN-2004/1

4) MB-OSN-2004/2

5) KG-DWN-2005/1

6) GK-OSN-2009/1

7) GK-OSN-2009/2

8) CB-ONN-2010/6

9) AAP-ON-94/1

10) BK-CBM-2001/1

11) NK-CBM-2001/1

12) FARSI BLOCK IRAN

13) LIBYA BLOCK 86

14) LIBYA BLOCK 102/4

15) SHAKTHI GABON

16) YEMEN 82

17) YEMEN 83

18) AREA 95-96

C) Whole-time Directors

1) Shri R.S.Butola

2) Dr. R.K.Malhotra

3) Shri Sudhir Bhalla

4) Shri A.M.K.Sinha

5) Shri P.K.Goyal

6) Shri R.K.Ghosh

7) Shri Makarand Nene

8) Shri V.S. Okhde

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

FINANCE LEASES: a) As Lessee

Company has entered into BOOT agreement with IOT Utkal in respect of Tankages facility for a period of 15 years.

b) As Lessors

Company has entered into Lease Agreement with Indian Railways in respect of BTPN Tank Wagons for a minimum period of 20 years. The lease rentals from the date of formation of rake are @ 16% for the first 10 years and thereafter at the nominal rate of 1% of the cost.

NOTE - 2: OTHER DISCLOSURES

1 Purchase of crude oil from Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalization of agreements with respective parties. Adjustments, if any, will be made on finalization of agreements.

2 Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

3 Exceptional items include:- a) Income of Rs. 1,581.27 crore arising out of recovery of additional State Specific Surcharge (SSC) towards UP Entry Tax paid in earlier years, in pursuance of

MOP&NG Order dated 30.03.2013.

b) Income of Rs. 534.36 crore arising out of reduction in the interest expense on the arrears of UP Entry Tax by applying interest rate @12% per annum in lieu of varied rates of interest considered in earlier years pursuant to an application made by the Company to Hon''ble Supreme Court of India and disposal of the same by an order passed by the Hon''ble court dated 06-12-2013. The Supreme court in the said order while accepting the prayer of the company stated that the rate of interest shall be determined by the court at the time of disposal of appeal on the constitutional validity of imposition of entry tax by the Govt of Uttar Pradesh.

c) Expenditure of Rs. 368.83 crore (including interest of Rs. 205.15 crore) towards Entry Tax from 1999-2000 to 2004-05 due to change in calculation modalities, in line with Hon''ble Allahabad High Court Order dated 26.03.2014.

The net amount of Rs. 1,746.80 crore considering the accounting effects referred above has been disclosed as exceptional items.

3 On 29th August 2013, RBI announced a forex swap window for public sector oil companies for meeting its daily US dollar requirements. Income of Rs. 470.25 crore has been accounted as Premium on Forward Contracts and Rs. 804.64 crore as Exchange Gain (Net) on transactions settled upto 31.03.2014. Net Loss, if any, on all outstanding contracts maturing after 31.03.2014 have been considered.

4 Construction work in progress (Note-12) includes "on account running payment" made against Lump sum EPC contracts, which till last year was classified as Capital Advance (Note-15). In order to make previous period figures comparative, such transaction relating to the year ended 31.03.2013 Rs. 7,957.20 crore have been recast accordingly.

5 Deposits made against probable contingencies (hitherto partly netted against each other) are now uniformly accounted separately under probable contingencies (Note-7) and deposits (Note-15). In order to make previous period figures comparative, such transaction relating to the year ended 31.03.2013 Rs. 3,586.86 crore have been recast accordingly.

6 Pending transfer of certain fixed assets to a proposed JV Company, depreciation is being charged. On completion of certain formalities, these assets (Gross Block Rs. 41.36 crore and WDV Rs. 12.72 crore as on 31.03.2014) will be transferred by way of sale to the proposed JV Company at a consideration higher than the Written Down Value.

7 In the absence of relevant notification by the Government of India specifying the period and applicable rate at which cess on turnover is payable under section 441A of the Companies Act, 1956, the same is not determinable and hence, not provided for.

8 Previous year''s comparative figures have been regrouped wherever necessary. Figures in brackets indicate deductions.


Mar 31, 2013

NOTE - 1

1. CONTINGENT LIABILITIES & COMMITMENTS

A. Contingent Liabilities

A.1 Contingent Liabilities amounting to Rs. 11,619.68 crore (2012: Rs. 9518.99 crore) are as under :

A.1.1 Rs. 225.70 crore (2012: Rs. 265.46 crore) being the demands raised by the Central Excise /Customs authorities including interest of Rs. 43.82 crore (2012 : Rs. 52.20 crore) .

A.1.2 Rs. 1,294.80 crore (2012: Rs. 1,244.75 crore) in respect of demands for Entry Tax from State Governments including interest of Rs. 44.94 crore (2012 : Rs. 63.69 crore) .

A.1.3 Rs. 4,631.93 crore (2012: Rs. 4,514.24 crore) in respect of VAT/Sales Tax demands including interest of Rs. 1,610.50 crore (2012 : Rs. 1,644.13 crore).

A.1.4 Rs. 2,962.25 crore (2012: Rs. 2,058.09 crore) in respect of Income Tax demands including interest of Rs. 268.22 crore (2012 : Rs. 302.24 crore).

A.1.5 Rs. 1,917.26 crore (2012: Rs. 890.51 crore) including Rs. 1,600.49 crore (2012: Rs. 597.53 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator. This includes interest of Rs. 37.81 crore (2012: Rs. 29.68 crore).

A.1.6 Rs. 587.74 crore (2012: Rs. 545.94 crore) in respect of other claims including interest of Rs. 98.73 crore (2012 : Rs. 70.91 crore).

The Company has not considered those disputed demands/claims as contingent liabilities, for which, the outflow of resources has been considered as remote.

A.2 Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

A.3 The Company has issued Corporate Guarantee in favor of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporacion Venezolana del Petroleo S. A. and the Mixed Company Venezuela (PeTroCarabobo S.A.), on behalf of Indoil Netherlands B.V. Netherlands (an associate company) to fulfill the associate company''s future obligations for payment of signature bonus/ equity contribution/ loan to the beneficiaries. The estimated amount of such obligation is Rs. 2,054.23 crore - uSD 378.38 million (2012 : Rs. 1,969.71 crore - USD 387.13 million).

A.4 The company has issued Corporate Guarantee on behalf of ''Indian Synthetic Rubber Limited, ISRL (Joint venture company) to the extent of obligations of later company under loans (principal and interest both) made to ISRL by Japan Bank for International Cooperation (JBIC)'' and ''Mizuho Corporate Bank (MHCB)''. The estimated amount of such obligation is Rs. 302.57 crore - uSD 55.73 million (2012: NIL ).

B. Commitments

B.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 14,648.43 crore (2012: Rs. 17,990.86 crore).

B.2 Other Commitments

The Company has an export obligation to the extent of Rs. 3,090.25 crore (2012: Rs. 3,187.06 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

NOTE - 2: EMPLOYEE BENEFITS

Disclosures in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is as under:

(A) PROVIDENT FUND

(i) The Company has three Provident Funds maintained by respective PF Trusts. All these three PF Trusts do not have any shortfall as on 31.03.2013.

(ii) During the year, Company has conducted Actuarial Valuation of all three PF Trusts. As per Actuarial Valuation, all three PF Trusts do not have any deficit as on 31st March 2013. Accordingly, other related disclosures in respect of Provident Fund have not been made.

(iii) During the year, the company has recognised Rs. 287.59 crore (2011-12 : Rs. 261.08 crore) as Employer''s contribution to Provident Fund in the Statment of Profit and Loss (included in Contribution to Provident and Other Funds in Note - 24).

(B) PENSION SCHEME

During the year, the company has recognised Rs. 229.04 crore (2011-12 : Rs. 342.01 crore) towards Defined Contributory Employees Pension Scheme in the Statment of Profit and Loss (included in Contribution to Provident and Other Funds in Note - 24).

NOTE - 3: RELATED PARTY DISCLOSURES

As required by AS -18 "Related party Disclosures", are given below :

1. Relationship

A) Details of Joint Venture Entities/Associates

1) IOT Infrastructure & Energy Services Ltd.

2) Lubrizol India Pvt. Ltd

3) Petronet VK Ltd

4) IndianOil Petronas Pvt. Ltd

5) Avi-Oil India Pvt.Ltd

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facility Private Ltd.

15) Indian Synthetic Rubber Ltd.

16) Indian Oil Ruchi Biofuels LLP

17) NPCIL- IndianOil Nuclear Energy Corporation Ltd.

18) GSPL India Transco Ltd.

19) GSPL India Gasnet Ltd.

20) Petroleum India International - AOP (An Associate)

B) Whole-time Directors

1) Shri R.S.Butola

2) Dr. R.K.Malhotra

3) Shri Sudhir Bhalla

4) Shri A.M.K.Sinha

5) Shri P.K.Goyal

6) Shri R.K.Ghosh

7) Shri Makarand Nene

8) Shri V.S. Okhde

NOTE - 4: LEASES

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

FINANCE LEASES:

Company has entered into Lease Agreement with Indian Railways in respect of BTPN Tank Wagons for a minimum period of 20 years. The lease rentals from the date of formation of rake are @ 16% for the first 10 years and thereafter at the nominal rate of 1% of the cost.

OPERATING LEASES:

a) As Lessees

Lease Rentals charged to the profit and loss account and maximum obligations on long term non-cancellable operating leases payable as per the rentals stated in the respective lease agreements:

b) As Lessors

The lease rentals recognized as income in these statements as per the rentals stated in the respective agreements:

NOTE - 5: INTEREST IN JOINT VENTURES

In compliance of AS-27, " Financial Reporting of Interest in Joint Ventures", the required information is as under:

1) Disclosure of interest in the following categories of Joint Ventures:

(a) Jointly Controlled Operations:-

The Corporation has entered into production sharing agreements for oil and gas exploration blocks with the Govt. of India and other body corporates. These joint ventures are:

(b) Jointly Controlled Assets:-

IOC''s share in jointly controlled/ owned assets have been shown in Note 10 "Tangible Assets"

(c) Jointly Controlled Entities:-

NOTE - 6: EXPOSURE TO FINANCIAL AND COMMODITY TRADING DERIVATIVES

Financial and Derivative Instruments:

1. All derivative contracts entered into by the Company are for hedging its foreign currency, interest rate and commodity exposures relating to underlying transactions and firm commitments and not for any speculative or trading purposes.

2. The Derivative contracts entered into by the Company and outstanding as on 31st March 2013 are as below:

(a) For Hedging Currency Risks

Nominal amounts of derivative contracts entered into by the Company and outstanding as on 31st March 2013 is given below:

NOTE - 7: OTHER DISCLOSURES

1 Purchase of crude oil from Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalization of agreements with respective parties. Adjustments, if any, will be made on finalization of agreements.

2 Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

3 Crude oil imported against canalising commission on behalf of CPCL, a Subsidiary Company, hitherto accounted for as Purchase/ Sales, is now accounted on agency basis. In order to make previous figures comparative, such transactions relating to the year ended 31.03.2012 Rs. 36030.91 crore have been recast accordingly.

4 In view of the Govt. of India clarification dated 9th August 2012 on para 46A of AS-11, exchange differences arising on long-term foreign currency monetary items hitherto accounted for as Finance Cost to the extent that they are regarded as an adjustment to interest costs under para 4(e) of AS-16, has now been considered as foreign exchange differences. This change has resulted in decrease in finance cost by Rs. 71.16 crore and increase in tangible assets and depreciation and profit for the year by Rs. 71.16 crore, Rs. 9.15 crore and Rs. 62.01 crore respectively.

5 In the absence of relevant notification by the Government of India specifying the period and applicable rate at which cess on turnover is payable under section 441A of the Companies Act, 1956, the same is not determinable and hence, not provided for.

6 Previous year''s comparative figures have been regrouped wherever necessary. Figures in brackets indicate deductions.


Mar 31, 2012

A. Above Includes Shares allotted as fully paid without payment being received in Cash:

a) Pursuant to the Petroleum Companies Amalgamation Order, 1964 : 3,76,49,700 Shares of Rs. 10 each.

b) Pursuant to Gujarat Refinery Project Undertaking (Transfer), (Amendment) Order, 1965 : 1,00,00,000 Shares of Rs. 10 each.

c) 2,43,62,106 no. of equity shares of Rs. 10 each issued in June 2007 as fully paid up to be shareholers of erstwhile IBP Co. Ltd as per the Scheme of amalgamation.

d) 2,16,01,935 no. of equity shares of Rs. 10 each issued in May 2009 as fully paid up to be shareholers of erstwhile BRPL as per the Scheme of amalgamation.

e) Aggregate shares allotted as fully paid up Bonus Shares by Capitalisation of General Reserve / Securities Premium: 2,28,02,71,241 Shares of Rs. 10 each, out of these 1,21,39,76,241 no. of equity shares of Rs. 10 each were issued in November 2009.

B. Terms/Rights attached to equity shares

The company has only one class of equity shares having par value of Rs. 10 each and is entitled to one vote per share. The dividend proposed by Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

A. 10,700 Bonds of lace value o1 Rs. 10,00,000:- each, allotted on 10th September 2008, are redeemable at par on 10th September 2018. The bonds carry a coupon rate of 11.00 % p.a. payable annually on 15th September. These are secured by way of registered mortgage over the immovable properties of the Company i.e. Flat no. 3/62 Nanik Niwas of Shyam Co-op. Housing Society Ltd. situated at Bhulabhai Desai Road at Mumbai, together with 5 shares of the said society arid immovable properties of the company at Panipat Refinery situated at Panipat in the state of Haryana ranking pari passu with Bond Series V, VI, & IX holders.

B. 14,150 Bonds of face value of Rs. 10.00.000 - each, allotted on 21st December 2011, are redeemable at par on 21st December 2016 with put/call option after 18 months from the date of allottment The bonds carry a coupon rate of 9.28 % p.a. annually on 21st June each year. These are secured by way of registered mortgage over the immovable properties of the Company at Gujarat Refinery in the state of Gujarat ranking pari passu with Bond Series VII B holders.

C. 16,000 Bonds of face value of Rs. 10.00.000, - each, allotted on nth December 2008. are redeemable at par on 11th December 2016. The bonds carry a coupon rate of 10.70 % p.a. payable annually on 30tn June each year. These are secured by way of registered mortgage over the immovable properties of the Company i.e. Flat no. 3/62 Nanik Niwas of Shyam Co-op. Housing Society Ltd. situated at Bhulabhai Desai Road at Mumbai, together with 5 shares of the said society and immovable properties of the company at Panipat Refinery situated at Panipat in the state of Haryana ranking pari passu with Bonds Series V, VI & VIII B holders.

D. 5,000 Bonds of face value of Rs. 10,00,000/- each, allotted on 15th September 2005, are redeemable at par on 15th September 2015. The Bonds carry a coupon rate of 7.40% p.a. payable annually on 15th September. These are secured by way of registered mortgage over the immovable properties of the Company at Gujarat Refinery situated at Vadodara in the state of Gujarat ranking pari passu with Bond Series XI holders.

E. 20,000 Bonds of face value of Rs. 10,00,000/- each, allotted on 24th July 2009, are redeemable at par on 24th July 2012. The bonds carry a coupon rate of 7.00 % p.a. payable annually on 30th June each year. These are secured by way of registered mortgage over the immovable properties of the Company i.e. Flat no. 34, Makani Manor Co-op. Housing Society Ltd. situated at Peddar Road, at Mumbai, together with 10 shares of the said society and immovable properties of the company at Mathura Refinery situated at Mathura in the state of Uttar Pradesh.

F. 10,000 Bonds of face value of Rs. 10,00,000/- each allotted on 10th June, 2005, are redeemable at par on 10th June 2012. As per the terms of the issue, the bondholders holding 2319 bonds exercised put option available on 10th June 2010. The Principal amount alongwith interest due was paid to the Bondholders on due date. The remaining 7681 bonds are outstanding & will be redeemed on the maturity date i.e. on 10th June 2012. The Bonds carry a coupon rate of 7.15% p.a. payable annually on 30th June. These are secured by way of registered mortgage over Company's premises No. 1343 situated at MIG Adarsh Nagar Co-op. Housing Society Ltd. at Worli, Mumbai together with 5 shares issued by MIG Adarsh Nagar Co-op. Housing Society Ltd. These Bonds are also secured by way of charge on immovable properties of the company at Panipat Refinery in the state of Haryana ranking pari passu with Bond Series V, VI, VIII B & IX holders.

G. 4,300 Bonds of face value of Rs. 10,00,000/- each, allotted on 10th September 2008, were redeemable at par on 10th September 2011. The bonds carry a coupon rate of 11.15 % p.a. payable annually on 15th September. These were secured by way of registered mortgage over the immovable properties of the Company i.e. Flat no. 3/62 Nanik Niwas of Shyam Co-op. Housing Society Ltd. situated at Bhulabhai Desai Road at Mumbai, together with 5 shares of the said society and immovable properties of the company at Panipat Refinery situated at Panipat in the state of Haryana, ranking pari passu with Bond Series V, VI, VIIIB & IX holders. The principal amount alongwith interest due was paid to the bondholders on 10th September 2011.

H. 158 Bonds of face value of Rs. 2,60,00,000/- each allotted on 18th July, 2001 are redeemable in 13 equal installments from the end of the 3rd year upto the end of 15th year from the date of allotment. Accordingly, 8th installment (STRPP H) was paid in July 2011. The Bonds carry a coupon rate of 10.25% p.a. payable annually on 30th September. These are secured by way of registered mortgage over the Company's premises no. 301 situated in Bandra Anita Premises Co-op. Housing Society Ltd. at Bandra, Mumbai together with 5 shares of Bandra Anita Premises Co-op. Housing Society Ltd. These bonds are also secured by way of charge on immovable properties at Panipat Refinery in the state of Haryana ranking pari passu with Bond Series VI, VIII B & IX holders.

I. Security Details for OIDB Loans:

a) First Charge on the facilities of Motor Spirit Quality Improvement Project at Barauni Refinery in Bihar.

b) First charge on facilities for improvement of Diesel quality and Distillate yield (Hydrocracker) and expanded capacity for Haldia Refinery (from 6 MMTPA to 7.5 MMTPA) which includes Once through Hydrocracking Unit (OHCU), Hydrogen Unit, Sulphur Recovery Unit, revamped Crude Distillation Unit and related utilities & off-site facilities pertaining to Haldia Refinery in the state of West Bengal.

c) Second pari-passu charge on facilities for Naphtha Cracker with associated units viz. hydrogenation, butadiene extraction, benzene extraction, etc & downstream polymer units like swing unit (LLDPE / HDPE), dedicated HDPE unit, Polypropylene unit and MEG unit and units like CDU/VDU, OHCU, DCU, DHDT relating to expansion of Panipat Refinery from 12MMTPA to 15 MMTPA in the state of Haryana.

d) Second pari-passu charge on facilities for Residue upgradation & MS-HSD Quality improvement including units like VGO-HDT, ATF-Merox FCC-Merox, LPG-Merox, ISOM, Coker, DHDT, HGU (PDS) and SRU in respect of Gujarat Refinery in the state of Gujarat.

e) First Charge on the facilities of Motor Spirit Quality Improvement Project which includes installation of light Naptha is amortisation along with Benzene Saturation Unit and other Units like Feed Preparation Unit, Reaction Section etc. and Diesel Hydro Teatment project at Bongaigaon Refinery, Dhaligaon, Assam.

A. i) Net Block of Land includes an amount of Rs. 13.32 crore (2011: Rs. 13.04 crore) earmarked for disposal.

ii) Buildings include Rs. 0.01 crore (2011: Rs. 0.01 crore) towards value of 1610 (2011:1995) Shares in Co-operative Housing Societies towards membership of such societies for purchase of flats.

iii) Net Block for Buildings includes an amount of Rs. 5.92 crore (2011: Rs. 7.15 crore) earmarked for disposal, on which no further depreciation is charged.

B. The cost of assets are net of VAT CREDIT/CENVAT, wherever applicable.

C. Depreciation and amortisation for the year includes Rs. (326.05) crore (2011 : Rs. 20.26 crore) pertaining to prior year and Rs. 17.24 crore (2011 : Rs. 23.10 crore) relating to construction period expenses taken to Note 12.1.

D. Railways have claimed transfer of ownership in respect of certain assets provided by the Company at railway premises which has not been accepted by the company and continue to be part of fixed assets of the Company, WDV of such assets is Rs. 57.27 crore (2011: Rs. 58.70 crore).

E. Considering the Government policies and modalities of compensating the oil marketing companies towards under-recoveries, future cash flows are worked out based on desired margins for deciding on impairment of related Cash Generating Units. In view of the assumption being technical, peculiar to the industry and policy matter, the auditors have relied on the same.

A. Right of way for laying pipelines is a perpetual right of use of land but does not bestow upon the company, the ownership of land and hence, treated as intangible asset. However, no amortisation is provided on the same, being perpetual in nature.

B. (a) Amortisation for the year includes Rs. 0.66 crore (2011 : Rs. Nil crore ) pertaining to prior year.

(b) Amortisation for the year includes Rs. 0.06 crore (2011 : Rs. 0.23 crore) relating to construction period expenses taken to Note 12.1.

A. Subsidies on sales of SKO (PDS) and LPG (Domestic) in India amounting to Rs. 1,770.98 crore (2011: Rs. 1,731.56 crore) and subsidies on sales of SKO & LPG to customers in Bhutan amounting to Rs. 49.30 crore (2011: Rs. 35.74 crore) have been reckoned as per the schemes notified by Government of India.

B1. .The company has accounted for Budgetary Support of Rs. 45,485.84 crore towards under-recovery on sale of HSD, SKO (PDS) and LPG (Domestic) for 2011 - 12 [2010-11: Rs. 22,604.84 crore towards under-recovery on sale of MS (upto 25th June 2010), HSD, SKO (PDS) and LPG (Domestic)] in the Profit and Loss Account as Revenue Grants.

B2. In line with the scheme formulated by Petroleum Planning and Analysis Cell (PPAC), the Company has received during the year, discounts of Rs. 26,239.43 crore (2011: Rs. 15,879.34 crore) on Crude Oil/Products purchased from ONGC/GAIUOIL and Rs. 3,379.80 crore (2011: Rs. 824.39 crore) from CPCL, through sale of HSD to IOC, out of their purchase of crude oil from ONGC, towards part of the under recovery suffered on sale of HSD, SKO (PDS) and LPG (Domestic) [2011: under recovery suffered on sale of MS (upto 25th June 2010),HSD, SKO (PDS) and LPG (Domestic)] and the same has been adjusted against the purchase cost. In addition an amount of Rs. 341.50 crore (2011: NIL) received from OIL has been accounted as other Operating Revenue.

Product wise sales has been shown as per Note - 40.

A. Contribution to Provident & Other Funds for 2010-11 includes an amount of Rs. 687 crore as one time net contribution towards defined contributory scheme (employee pension scheme) based on acturial valuation.

B. Disclosure in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is given in Note - 29.

A. In respect of Oil and Gas Exploration activities, Revenue Expenditure amounting to f 180.23 crore (2011 : Rs. 333.44 crore) and Capital Expenditure amounting to Rs. (51.41) crore (2011 : Rs. 19.80 crore) of Oil and Gas Exploration Projects have been incorporated in these accounts on the basis of unaudited statements provided by respective operators of Production Sharing Contracts to the Company.

B. Expenses Includes:

I) Expenditure on Public Relations and Publicity amounting to Rs. 34.81 crore (2011: Rs. 39,40 crore) which is inclusive of Rs. 11.94 crore (2011: Rs. 12.34 crore) on account of Staff and Establishment and 122.87 crore (2011: Rs. 27.06 crore) for payment to others. The ratio of annual expenditure on Public Relations and Publicity to the annual turnover (inclusive of excise duty) is 0.00008:1 (2011: 0.00012:1).

ii) Entertainment Expenses Rs. 2.39 crore (2011: Rs. 2.34 crore).

1. Contingent Liabilities & Commitments

A. Contingent Liabilities

A.1 Contingent Liabilities amounting to Rs. 8568.91 crore (2011: Rs. 7820.86 crore) are as under:

A.1.1 Rs. 219.95 crore (2011: Rs. 238.02 crore) being the demands raised by the Central Excise/Customs authorities.

A.1.2 Rs. 4,656.00 crore (2011: Rs. 5,045.52 crore) in respect of Sales Tax demands.

A.1.3 Rs. 884.28 crore (2011: Rs. 736.79 crore) including Rs. 584.92 crore (2011: Rs. 503.98 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator.

A.1.4 Rs. 2,058.02 crore (2011: Rs. 1,167.75 crore) in respect of Income Tax demands.

A.1.5 Rs. 750.66 crore (2011: Rs. 632.78 crore) in respect of other claims.

A.1.6 The Company has not considered those disputed demands/ claims as contingent liabilities, for which, the outflow of resources has been considered as remote.

A.2 Interest/Penalty, if any, on some of the above claims is unascertainable.

A.3 Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

A.4 The Company has issued Corporate Guarantee in favor of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporacion Venezolana del Petroleo S.A. and the Mixed Company Venezuela (PeTroCarabobo S.A.), on behalf of Indoil Netherlands B.V. Netherlands (an associate company) to fulfill the associate company's future obligations for payment of signature bonus/equity contribution/ loan to the beneficiaries. The estimated amount of such obligation is Rs. 1,969.71 crore - USD 38.71 crore (2011 : Rs. 1,812.95 crore - USD 40.65 crore)

A.5 The Company has issued corporate guarantee in favor of Standard Chartered Bank, on behalf of Lanka IOC PLC, a subsidiary of the company, for raising a loan of Rs. NIL crore (2011 : Rs. 133.80 crore - USD 3.00 crore).

B. Commitments

B.1 Capital Commitments -

Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 17,546.97 crore (2011: Rs. 21,737.72 crore).

B.2 Other Commitments

The Company has an export obligation to the extent of Rs. 3,187.06 crore (2011: Rs. 3,677.09 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

2. Purchase of crude oil from ONGC, Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalization of agreements with respective parties. Adjustments, if any, will be made on finalization of agreements.

3. Title Deeds for Land and residential apartments as also lease and other agreements in respect of certain lands/buildings, the book value of which is Rs. 95.12 crore (2011: Rs. 89.56 crore), are pending for execution or renewal.

4. Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

5. A Pursuant to orders pronounced by the Honorable Supreme Court / various High Courts in the matter of Entry Tax on Crude Oil, HSD & Lubricants and as advised, the Company has not provided for Entry Tax amounting to Rs. 894.89 crore in respect of Panipat Refinery, Mundra-Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending Plant (2011: Rs. 5,106.43 crore in respect of Mathura & Panipat Refineries, Mundra-Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending Plant) including Rs. 207.17 crore for the year in respect of Panipat Refinery, Mundra-Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending Plant (2011: Rs. 1,363.24 crore in respect of Mathura & Panipat Refineries, Mundra-Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending Plant).

B Consequent to the recent order pronounced by Hon'ble High Court of Allahabad in December, 2011, upholding the Constitutional Validity of retrospective application of Entry Tax Law in the State of UR the Company had filed a Special Leave Petition before Hon'ble Supreme Court of India. Although the Apex Court has granted the stay order, the Company has been directed by the Court to deposit 50% of arrears towards the Entry Tax and full tax prospectively vide its order of January, 2012 in respect of crude imported in the State of UR Accordingly, pending final disposal of the matter, an amount of Rs. 8,156.56 crore (including interest of Rs. 2,165.02 crore) has been provided in the books during 2011-12. Out of this, an amount of Rs. 7,707.82 crore comprising of entry Tax and interest thereon upto December, 2011 has been shown as Exceptional Item.

6. In the absence of relevant notification by the Government of India specifying the period and applicable rate at which cess on turnover is payable under section 441A of the Companies Act, 1956, the same is not determinable and hence, not provided for.

Disclosures in compliance with Accounting Standard-15 (Revised 2005) on

"Employee Benefits" is as under:

(A) PROVIDENT FUND

(i) The Company had five Provident Funds maintained by respective PF Trusts as on 31.03.2011. During the year 2011 -12 two PF Trusts have been merged with existing trusts and as on 31.03.2012, the Company has three Provident Funds maintained by respective PF Trusts. All these three PF Trusts do not have any shortfall as on 31.03.2012.

(ii) During the year, Company has conducted Actuarial Valuation of all three PF Trusts. As per Actuarial Valuation, all three PF Trusts do not have any deficit as on 319 March 2012. Accordingly, other related disclosures in respect of Provident Fund have not been made.

(iii) During the year, the company has recognised Rs. 261.08 crore (2010- 11 : Rs. 337.12 crore) as Employer's contribution to Provident Fund in the Profit and Loss Account (included in Contribution to Provident and Other Funds in Note - 24).

(B) PENSION SCHEME

During the year, the company has recognised Rs. 342.01 crore (2010- 11: Rs. 349.86 crore) towards Defined Contributory Employees Pension Scheme in the Profit and Loss Account (included in Contribution to Provident and Other Funds in Note - 24).

NOTE - 1: RELATED PARTY DISCLOSURES

As required by AS -18 "Related Party Disclosures", are given below :

1. RELATIONSHIP

A) Details of Joint Venture Companies/ Entities

1) IOT Infrastructure Energy Services Ltd.

2) Lubrizol India Pvt. Ltd

3) Petronet VK Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt. Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet Cl Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facilty Pvt. Limted

15) Indian Synthetic Rubber Limited

16) IndianOil Ruchi Biofuels LLP

17) NPCIL- IndianOil Nuclear Energy Corporation Limited

B) Whole-time Directors

1) Shri R.S.Butola

2) Shri B.M.Bansal (upto 31.01.2011)

3) Shri S.V.Narasimhan (upto 30.04.2011)

4) Shri V.C.Agrawal (upto 31.07.2010)

5) Shri G.C.Daga (upto 30.09.2011)

6) Shri B.N.Bankapur (upto 31.08.2011)

7) Shri Anand Kumar (upto 30.06.2010)

8) Shri K.K.Jha (upto 31.01.2012)

9) Shri R.K.Malhotra

10) Shri Sudhir Bhalla

11) Shri A.M.K.Sinha

12) Shri RK.Goyal

13) Shri R.K.Ghosh

14) Shri Makarand Nene

15) Shri V.S. Okhade

Notes:

1) This does not include the impact of provision made on actuarial valuation of retirement benefit Schemes and provision made during the period towards Post Retirement Benefits as the same are not separately ascertainable for individual directors.

2) In addition, whole - time Directors are also allowed the use of Corporation's car for private purposes upto 12,000 kms per annum on a payment of Rs. 520/- per menses for car less than 16 hp or Rs. 780/- per mensem for car of above 16 hp as specified in the terms of appointment.

3) No disclosure is required for Subsidiary Companies which can be treated as state controlled enterprises '(i.e. ownership by Central/State Govt, directly or indirectly, of more than 50% of voting rights shall be treated as state controlled enterprise)

4) In case of Joint Venture Companies constituted/acquired during the period, transactions w.e.f. date of constitution/acquisition is disclosed.

5) In case of Joint Venture Companies which have been closed/divested during the period, transactions upto the date of closure/disinvestment only are disclosed.

Financial and Derivative Instruments:

1. All derivative contracts entered into by the Company are for hedging its foreign currency exposures and commodity trading exposures relating to underlying transactions and firm commitments and not for any speculative or trading purposes.

A. The Financial Statements for the year ended 319 March, 2011 were prepared as per the then applicable Schedule VI to the Companies Act, 1956. Consequent to the Notification of Revised Schedule VI under the Companies Act, 1956, the Financial Statements for the year ended 31st March, 2012 have been prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified by the Company to conform to current year's classification.

B. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of Financial Statements.

C. Previous year's comparative figures have been regrouped wherever necessary. Figures in brackets indicate deductions.


Mar 31, 2010

1) Contingent Liabilities:

a) Contingent Liabilities amounting to Rs. 6965.88 crore (2009: Rs. 8882.13 crore) are as under:

i) Rs. 288.02 crore (2009: Rs. 1198.86 crore) being the demands raised by the Central Excise /Customs authorities.

ii) Rs. 4983.51 crore (2009: Rs. 5555.39 crore) in respect of Sales Tax demands.

iii) Rs. 630.41 crore (2009: Rs. 636.28 crore) including Rs. 446.57 crore (2009: Rs.466.60 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrators.

iv) Rs. 668.94 crore (2009: Rs. 954.03 crore) in respect of Income Tax demands.

v) Rs. 395.00 crore (2009: Rs. 537.57 crore) in respect of other claims.

The Company has not considered those disputed demands/claims as contingent liabilities, the outflow of resources for which would be remote.

b) Interest/Penalty, if any, on some of the above claims is unascertainable.

c) Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

d) The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela, The Corporacion Venezolana del Petroleo S. A. and the Mixed Company Venezuela, on behalf of Indoil Netherlands B.V. Netherlands (an associate company) to fulfill the associate companys future obligations for payment of signature bonus/equity contribution/ loan to the beneficiaries. The estimated amount of such obligation is Rs. 1903.76 crore - USD 424 million (2009: Nil).

e) The Company has issued corporate guarantee in favor of ICICI bank, on behalf of Lanka IOC PLC, subsidiary of the company, for raising a loan of Rs. 224.50 crore - USD 50 million (2009 : Nil).

2. Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 16620.93 crore (2009: Rs. 17434.92 crore).

3. Purchase of crude oil from ONGC, Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalisation of agreements with respective parties. Adjustments, if any, will be made on finalisation of agreements.

4. Title Deeds for Land and residential apartments as also lease and other agreements in respect of certain lands/buildings, the book value of which is Rs. 217.56 crore (2009: Rs. 173.49 crore), are pending for execution or renewal.

5. Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

6. Bond Redemption Reserve:

(a) Bond Redemption Reserve aggregating to of Rs. 269.10 crore has been written back (2009: Rs. 31.60 crore) in respect of bonds redeemed during the year.

(b) No additional Bonds Redemption Reserve has been created during the year in respect of Long Term Redeemable Rupee Bonds and Foreign Currency Bonds, issued during the year as the company already has adequate reserve.

7. Pursuant to orders pronounced by the Honourable Supreme Court / various High Courts in the matter of Entry Tax on Crude Oil, HSD & Lubricants, and as advised, the Company has not provided for Entry Tax amounting to Rs. 3743.19 crore (2009: Rs. 2658.78 crore) including Rs. 1084.42 crore for the year (2009: Rs. 1332.96 crore) in respect of Mathura & Panipat Refineries, Mundra-Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending plant. Pending final disposal of the matter by the Honourable Supreme Court / various High Courts, Entry Tax already paid / deposited / provided for at various units has not been considered for write back.

8. Subsidies on sales of SKO (PDS) and LPG (Domestic) in India amounting to Rs. 1595.82 crore (2009: Rs. 1555.28 crore) and subsidies on sales of SKO & LPG to customers in Bhutan amounting to Rs. 27.27 crore (2009: Rs. 33.41 crore) have been reckoned as per the schemes notified by Government of India.

9. The company has accounted for Budgetary Support of Rs. 15171.84 crore towards under-recovery on sale of SKO (PDS) and LPG (Domestic) for the full year 2009-10 in the Profit and Loss Account as Revenue Grants. Out of this Rs. 8071.66 crore has been accounted for based on the advice from Government of India, pending receipt of compensation. Corresponding compensation towards under-recoveries on sale of MS, HSD, SKO (PDS) and LPG (Domestic) for 2008-09 amounting to Rs. 40383.01 crore was by way of OMC GOI Special Oil Bonds.

10. In line with the scheme formulated by Petroleum Planning and Analysis Cell (PPAC), the Company has received during the year, discounts of Rs. 6960.91 crore (2009: Rs. 16756.55 crore) on Crude Oil/Products purchased from ONGC/GAIL/OIL and Rs. 587.38 crore (2009: Rs. 1306.56 crore) from CPCL, through sale of HSD to IOC, out of their purchase of crude oil from ONGC, towards part of the under recovery suffered on sale of MS/HSD and the same has been adjusted against the purchase cost.

11. The Company has an export obligation to the extent of Rs. 1743.84 crore (2009: Rs. 2882.87 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

12. a) Pending finalsation of Long Term Settlement with workmen, with effect from 1st January, 2007, the liability towards revision of emoluments continues to be provided on estimated basis.

b) Based on DPE guidelines dated 26"1 November08, 2nd April09 and 8th July09,the company has made a provision of Rs. 834.30 crore towards Post Retirement Benefits of employees during the year.

13. In absence of relevant notification by the Government of India specifying the period and applicable rate at which cess on turnover is payable under section 441A of the Companies Act, 1956, the same is not determinable and hence, not provided for.

14. Disclosure in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is given in Annexure-1.

15. In compliance with Accounting Standard-17 on "Segment Reporting", the reguired information is given in Annexure-2 to this schedule.

16. In compliance of Accounting Standard - 18 on "Related Party Disclosures", the required information is given in Annexure-3 to this schedule.

17. In compliance of Accounting Standard - 27 on "Financial Reporting of Interest in Joint Ventures" the required information is given in Annexure- 4 to this schedule.

18. Considering the Government polices and modalities of compensating the oil marketing companies towards under-recoveries, future cash flows have been worked out based on desired margins for deciding on impairment of related Cash Generating Units. In view of the assumption being technical, peculiar to the industry and policy matter, the auditors have relied on the same.

19. In compliance of amended clause 32 of the Listing Agreement with the Stock Exchanges, the required information is given in Annexure-5 to this schedule.

20. Exposures to Financial and Commodity Trading Derivative Instruments outstanding as on 31st March, 2010 is given in Annexure-6 to this schedule.

* Includes arrear of Pay Revision for the period 01.01.07 to 31.03.09. This does not include the impact of provision made on actuarial valuation of retirement benefit schemes and provision made during the year towards Post Retirement Benefits as the same is not separately ascertainable for individual directors.

In addition, whole-time Directors are also allowed the use of Companys car for private purposes upto 12,000 KMs per annum on a payment of Rs. 520 per mensem for car of less than 16 hp or Rs. 780 per mensem for car of above 16 hp as specified in the terms of appointment.

21. Duties (Net) shown under the Expenditure in Profit and Loss Account includes an amount of Rs. 43.03 crore (2009 : Rs. 84.91 Crore) on account of difference of Excise Duty between opening and closing stock of finished goods.

22. In respect of Oil and Gas Exploration activities, Revenue Expenditure amounting to Rs. 139.11 crore (2009 : Rs. 172.39 crore) and Capital Expenditure amounting to Rs. 42.16 crore (2009 : Rs. 37.45 crore) of Oil and Gas Exploration Projects has been incorporated in these accounts on the basis of unaudited statements provided by respective operators of Production Sharing Contracts to the Company.

23. Capital Expenditure amounting to Rs. 328.28 crore (2009 : Rs. 286.12 crore) relating to ongoing Oil & Gas Exploration activities is appearing as Capital Work in Progress in accounts, which may have to be charged as expense in case the block/s is decided as Dry.

24. There was a fire incident on 29th October09 at Jaipur Terminal. The impact of all known losses for fixed assets, finished products & stores as well as compensation for third party claims amounting to Rs. 292.05 crore have been accounted for during the year against which an insurance claim of Rs. 179.61 crore towards loss of petroleum products has been treated as income as per the claim provisionally accepted by the insurance company. Out of said insurance claim, an amount of Rs. 50 crore has been received by the company during the year.

Pending finalization of third party claims, no provision has been made in the accounts (being unascertainable at this stage) except for Rs. 51.89 crore provisionally paid /provided by the company and charged to the Profit and Loss Account.

25. Research and Development Expenses of Rs. 80.92 crore (2009: Rs. 71.98 crore) has been capitalized and Rs. 162.42 crore (Rs. 117.50 crore) has been accounted for in Profit and Loss Account during the year. Detailed break up of total expenditure has been given in Annexure - 7.

26. The Profit and Loss Account includes:

a) Expenditure on Public Relations and Publicity amounting to Rs. 31.44 crore (2009: Rs. 27.24 crore) which is inclusive of Rs. 10.06 crore (2009: Rs. 8.43 crore) on account of Staff and Establishment and Rs. 21.38 crore (2009: Rs. 18.81 crore) for payment to others. The ratio of annual expenditure on Public Relations and Publicity to the annual turnover (inclusive of excise duty) is 0.00012:1 (2009: 0.00010:1).

b) Entertainment Expenses Rs.2.23 crore (2009: Rs.1.98 crore).

33. Previous years comparative figures have been regrouped and recast to the extent practicable, wherever necessary. Figures in brackets indicate deductions.

As required by AS-18, "Related Party Disclosures", are given below:

1. Relationships:

A) Details of Joint Venture Companies

1) I0T Infrastructure Energy Services Ltd.

2) Lubrizol India Pvt. Ltd.

3) Petronet V.K. Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt. Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

B) Whole-time Directors

1) Shri S. Behuria

2) Shri B.M. Bansal

3) Shri S.V. Narasimhan

4) Shri V.C. Agrawal

5) Shri G.C. Daga

6) Shri B.N. Bankapur

7) Shri Anand Kumar

8) Shri PK. Chakraborti

9) Shri K.K. Jha

 
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