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Notes to Accounts of Jindal Drilling & Industries Ltd.

Mar 31, 2015

Note 1

CORPORATE INFORMATION:

Jindal Drilling & Industries Limited (JDIL)was incorporated on 17th October,l983 under the Companies Act,l956 and has its registered office at Raigad (Maharashtra) and head office at Delhi. JDIL's shares are listed on National Stock Exchange of India Ltd. (NSE) and BSE Ltd. (BSE). JDIL is engaged in providing services to entities involved in exploration of Oil & Gas.

1.1) The Company has one class of equity shares having a par value of Rs. 5 each. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holder of equity share will be entitled to receive remaining assets of the company after distribution of all preferential amounts

1.2 Working capital loans are secured by hypothecation of inventories, book debts and all other current assets and first charge on fixed assets excluding specific charge, ranking pari-passu amongst working capital lending Banks.

Note 2.1 : CONTINGENT LIABILTIES

Claims against the company not acknowledged as debt :

Commitments

1. Estimated amount of contracts remaining to be executed on capital account

Estimated amount of contracts for purchase of business assets for the use of the company remaining to be executed, not provided for (net of advances) Rs. 229,452,500 /- (Previous Year Rs. 276,000,000/-).

2. Contingent Liabilities not provided for :

(Amount in Rs.)

Particulars As at As at 31st March 2015 31st March 2014

(i) LC/ Guarantee issued by the Banks 368,391,470 614,728,540

(LC/ Bank Guarantee are provided under Legal/ Contractual Obligations)

(ii) Customs Demand

An Appeal pending at Hon'ble 25,502,866 25,502,866 Mumbai High Court

(A sum of Rupees sixty lacs against demand had been deposited by the company)

(iii) Service Tax Demand

An Appeal by Company pending with 60,394,143 60,394,143 Appellate Tribunal

Note 2.2 :Disclosure as per Accounting Standard - 15

(a) Gratuity:

(i) The employees' gratuity fund scheme managed by LIC of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

(ii) Actuarial Valuation of Gratuity is based on the maximum liability of Rs. 10 lacs as provided under the Gratuity Act, 1972.

(b) Leave Encashment

(i) The obligation for leave encashment is recognised and disclosed as per the Actuarial Valuation Report.

(c) Disclosure as per Actuarial Valuation Report :

(i) Expenses recognised during the year (Under the head "Employees benefit expenses")

NOTE 2.3 :

All undertakings of the Company are engaged in similar activities of providing services to Oil & Gas Companies. Therefore, there is only one reportable Segment - Drilling and Related Services under Accounting Standard - 17 "Segment Reporting". The Company operates in a single geographical segment - India.

NOTE 2.4 :

As per Accounting Standard - 18, the Company's related parties and transactions are disclosed below:

A. List of related parties & relationships:

i. Joint Venture of Reporting Enterprise Discovery Drilling Pte Ltd., Singapore (DDPL)

Virtue Drilling Pte Ltd., Singapore (VDPL)

ii. Key Management Personnel

Name of person Relationship

Sh. D.P.jindal Executive Chairman

Sh. Raghav Jindal Managing Director

Note 2.5: Office Premises taken on lease

The Company has taken office premises on cancellable lease. These are normally renewal after expiry of lease period.

Note 2.6: Financial reporting of Interest in Joint Ventures as per Accounting Standard AS -27:

(i) Discovery Drilling Pte Ltd (DDPL) and Virtue Drilling Pte Ltd (VDPL) continue to be Joint Ventures of the company.

Note 2.7: Trade Receivable, Loans & advances &Trade Payable

(i) An amount of Rs. 44,08,732 is recoverable from ONGC relating rig PN-3.This matter is under arbitration .Management is confident to win the case and considered good for recovery.

(ii) Trade recoverable includes a sum of US$ 14,772,408.55 ( In indian rupees Rs. 658,553,972/- restated on 31-03-2011) as on 31.03.2015, which are outstanding from ONGC Ltd for more than 7 years .Since there has been no realization in this account, the outstanding amount in US$ has not been restated after 31.3.2011 and, a sum of Rs. 1500 lacs has been provided for till year end 31.03.2013 towards its doubtful realization. No further provision is considered necessary by the management as there is every possibility of its full realisation after finality of the case pending before the courts.

(iii) The company had given an advance of Rs. 1098 Lacs to Marine Oil Gas Private limited in FY 2008-09 & 2009 -10 in respect of which no realisation could be made . No interest income has been recognised since financial year 2011-12.The company has initiated legal proceeding for recovery of the same by filing a civil suit in Hon'ble Delhi High Court in September 2013 against this company alongwith related persons and companies of Ex-Managing Director.

(iv) Loans & Advances include an interest free loan of Rs. 1090.00 lacs, paid to Jindal Drilling & Industries Limited Employee Welfare Trust., which had been formed with the sole objective of employees welfare. The management is considering the same as good and fully recoverable.

(v) The Company has given a loan of US $ 16 million to Internovia Natural Resources FZ LLC for business purposes. Loan of Rs. 10007.32 Lacs is outstanding at the year end. Maximum loan outstanding during the year is Rs. 10007.32 Lacs.

(vi) Trade Payable include Rs. 10718.48 Lacs payable to Noble Drilling Corporation on account of Chartered Hire charges relating to Rig 'EDHOLT'. Management has withheld this amount as there are certain claims yet to be settled with the party.

Note 2.8:

a) Dues to micro and small enterprises have been determined as per information collected by the management & has been relied upon by the auditors.

b) In the opinion of the Management and to the best of their knowledge and belief, the value of current assets, loans and advances, if realised in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

c) Figures have been rounded off to the nearest rupee.

d) Previous year's figures have been re-grouped/ re-arranged/ re-classified wherever considered necessary.


Mar 31, 2014

NOTE 1 - CORPORATE INFORMATION:

Jindal Drilling & Industries Limited (JDIL) was incorporated on 17th October, 1983 under the Companies Act, 1956 and has its registered office at Raigad (Maharashtra) and head office at Delhi. JDIL''s shares are listed on National Stock Exchange of India Ltd. (NSE) and BSE Ltd. (BSE). JDIL is engaged in providing services to entities involved in exploration of Oil & Gas.

Note 2.1

1) Aggregate amount of unquoted investements

Note 3.1

*Loan at re-stated value to Discovery Drilling Pte Ltd, Singapore, Joint venture company which is quasi equity in nature and also fully subordinated to the loan given by bank to the JV Company

NOTE 4.1 : CONTINGENT LIABILTIES

Claims against the company not acknowledged as debt :

Commitments

1. Estimated amount of contracts remaining to be executed on capital account

Estimated amount of contracts for purchase of business assets for the use of the company remaining to be executed, not provided for (net of advances) Rs. 27,60,000,00. /- (Previous Year Rs. 39,163,207/-)

2. Contingent Liabilities not provided for:

Particulars 31.03.14 (Rs.) 31.03.13 (Rs.)

(i) Guarantee issued by the Banks

(Bank Guarantee are provided under Legal/

ContractualObligations) 614,728,540 672,781,763

Guarantees issued by banks on behalf of JointVenture Companies:

Virtue Drilling Pte Ltd,Singapore NIL 1,221,750,000 (USD 22.50 Million)

(ii) Customs Demand

An Appeal pending at Hon''ble

Mumbai High Court 25,502,866 25,502,866

(A sum of Rupees sixty lacs against demand had been deposited by the company)

(iii) Service Tax Demand

An Appeal by Company pending with Appellate

Tribunal 60,394,143 60,394,143

(iv) Income Tax Demand

An Appeal pending with CIT (Appeal) related to

a) AssessmentYear2008-09 31,627,829 31,627,829

b) AssessmentYear2009-10 87,054,300 87,054,300

c) AssessmentYear2010-11 406,912,460 -

NOTE 26.2 : DISCLOSURE AS PER ACCOUNTING STANDARD - 15

(a) Gratuity:

(i) The employees'' gratuity fund scheme managed by LIC of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

(ii) Actuarial Valuation of Gratuity is based on the maximum liability of Rs. 10,00,000/- i.e. as provided under the Gratuity Act.

(b) Leave Encashment

(i) The obligation for leave encashment is recognised and disclosed as per the Actuarial Valuation Report.

NOTE 26.4:

All undertakings of the Company are engaged in similar activities of providing services to Oil & Gas Companies. Therefore, there is only one reportable Segment - Drilling and Related Services under Accounting Standard -17 "Segment Reporting". The Company operates in a single geographical segment - India.

NOTE 26.5:

As per Accounting Standard -18, the Company''s related parties and transactions are disclosed below:

A. List of related parties & relationships:

i. Joint Venture of Reporting Enterprise

Discovery Drilling Pte Ltd., Singapore (DDPL)

Virtue Drilling Pte Ltd., Singapore (VDPL)

ii. Key Management Personnel

Name of person Relationship

Sh. D. P. Jindal Executive Chairman

Sh.RaghavJindal ManagingDirector

NOTE 4.2: OFFICE PREMISES TAKEN ON LEASE

The Company has taken office premises on cancellable lease. These are normally renewal after expiry of lease period.

NOTE 4.3 : TRADE RECEIVABLE & LOANS AND ADVANCES

(i) An amount of Rs. 44,08,732 is recoverable from ONGC relating rig PN-3. This matter is under arbitration. Management is confident to win the case and considered good for recovery.

(ii) Trade recoverable includes a sum of US$ 14,772,408.55 (In indian rupees Rs. 658,553,972/- restated on 31-03-2011) as on 31.03.2014, which are outstanding from ONGC Ltd for more than 6 years .Since there has been no realization in this account, the outstanding amount in US$ has not been reinstated after 31.3.2011 and a sum of R 1500 lacs has been provided for till year end 31.03.2013 towards its doubtful realization. No further provision is considered necessary by the management as there is every possibility of its full realisation after finality of the case pending before the courts.

(iii) The company had given an advance of R 1098 Lacs to Marine Oil Gas Private limited in FY 2008-09 & 2009 -10 in respect of which no realisation could be made . No interest income has been recognised since financial year 2011-12.The company has initiated legal proceeding for recovery of the same by filing a civil suit in Hon''ble Delhi High Court in September 2013 against this company alongwith related persons and companies of Ex-Managing Director.

(iv) Loans & Advances include an interest free loan of Rs.14.35 Crores, paid to Jindal Drilling & Industries Limited Employee Welfare Trust, which had been formed with the sole objective of employees welfare. The management is considering the same as good and fully recoverable.

NOTE 4.4:

a) Dues to micro and small enterprises have been determined as per information collected by the management & has been relied upon bythe auditors.

b) In the opinion of the Management and to the best of their knowledge and belief, the value of current assets, loans and advances, if realised in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

c) Figures have been rounded off to the nearest rupee.

d) Previous year''s figures have been re-grouped/ re-arranged/ re-classified wherever considered necessary.


Mar 31, 2013

NOTE 1

CORPORATE INFORMATION:

Jindal Drilling & Industries Limited (JDIL)was incorporated on 17th October,1983 under the Companies Act,1956 and has its registered office at Raigad (Maharashtra) and head office at Delhi. JDIL''s shares are listed on National Stock Exchange of India Ltd. (NSE) and BSE Ltd. (BSE). JDIL is engaged in providing services to entities involved in exploration of Oil & Gas.

NOTE 2.1

* Loans are at re-stated value to Discovery Drilling Pte. Ltd., Singapore & Virtue Drilling Pte. Ltd., Singapore, Joint Venture Companies which are quasi equity in nature and also fully subordinated to loans given by bank to the JV Company.

NOTE 3.1 : CONTINGENT LIABILITIES

Claims against the Company not acknowledged as debt :

1. Estimated amount of contracts remaining to be executed on capital account

Estimated amount of contracts for purchase of business assets for the use of the Company remaining to be executed & not provided for (net of advances) Rs. 39,163,207/- (Previous Year Rs. 5,549,075/-).

2. Contingent Liabilities not provided for:

NOTE 3.2 :DISCLOSURE AS PER ACCOUNTING STANDARD - 15

(a) Gratuity:

(i) The Employees'' Gratuity Fund Scheme managed by LIC of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

(ii) Actuarial Valuation of Gratuity is based on the maximum liability of Rs.10,00,000/- i.e. as provided under the Gratuity Act.

(b) Leave Encashment

(i) The obligation for leave encashment is recognised and disclosed as per the Actuarial Valuation Report.

(c) Disclosure as per Actuarial Valuation Report:

(i) Expenses recognised during the year (Under the head "Personnel Cost")

NOTE 3.4 :

All undertakings of the Company are engaged in similar activities of providing services to Oil & Gas Companies. Therefore, there is only one reportable Segment – Drilling and Related Services under Accounting Standard - 17 "Segment Reporting". The Company operates in a single geographical segment – India.

NOTE 3.5 :

As per Accounting Standard – 18, the Company''s related parties and transactions are disclosed below:

A. List of related parties & relationships:

i. Joint Venture of Reporting Enterprise

Discovery Drilling Pte Ltd., Singapore (DDPL)

Virtue Drilling Pte Ltd., Singapore (VDPL) ii. Key Management Personnel

Name of person Relationship

Sh. D.P.Jindal Executive Chairman

Sh. Raghav Jindal Managing Director

NOTE 3.6: OFFICE PREMISES TAKEN ON LEASE

The Company has taken office premises on cancellable lease. These are normally renewal after expiry of lease period.

NOTE 3.7: TRADE RECEIVABLE & LOANS AND ADVANCES

(i) An amount of Rs. 4,408,732 is recoverable from ONGC relating Rig PN-3. This matter is under arbitration. Management is confident to win the case and considered good for recovery.

(ii) Trade recoverable includes a sum of Rs. 6871.15 lac as on 31.03.2013, are outstanding for more than 5 years. Since there has been no realization in this account so far, management has considered the amount not to be reinstated and as a matter of an abundoned precaution, a sum of Rs. 1500 lac has been provided for till year end towards its doubtful realization, if any.

(iii) As on 1st April, 2012, a short term loan of Rs. 1565.79 lac was recoverable from Jaguar Overseas Limited exceeding three years. The Company had filed a winding up petition for recovery of these dues with Hon''ble Delhi High Court. As per its order, this entire outstanding is recoverable in 20 equal monthly instalment plus interest w.e.f 1st September, 2012. Now the Company is receiving monthly instalment plus interest and as on 31-3-2013, Rs. 812.77 lac remains outstanding.

(iv) The Company had given an advance of Rs.10.98 Crore to Marine Oil Gas Private limited in earlier years in respect of which no realisation could be made .The Company has initiated legal proceeding for recovery of the same. No interest income has been recognised since financial year 2011-12.

(v) Loans & Advances include an interest free loan of Rs. 15.25 Crore, paid to Jindal Drilling & Industries Limited Employees Welfare Trust., which had been formed with the sole objective of employees welfare.

NOTE 3.8:

a) Dues to micro and small enterprises have been determined as per information collected by the management & has been relied upon by the auditors.

b) In the opinion of the Management and to the best of their knowledge and belief, the value of current assets, loans and advances, if realised in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

c) Figures have been rounded off to the nearest rupee.

d) Previous year''s figures have been re-grouped/ re-arranged/ re-classified wherevr considered necessary.


Mar 31, 2012

Note 1 CORPORATE INFORMATION:

Jindal Drilling & Industries Limited (JDIL)was incorporated on 17th October, 1983 under the Companies Act'1956 and has its Registered office at Raigad (Maharashtra) and head office at Delhi. JDIL's shares are listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).JDIL is engaged in providing services to entities involved in exploration of Oil &Gas.

1.1) The company has one class of equity shares having a par value of Rs. 5 each. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holder of equity share will be entitled to receive remaining assets of the company after distribution offal preferential amounts

1.2) Aggregate number of shares allotted other than cash during the period of five years immediately preceding March 31, 2012 11,523,804 Equity Shares of Rs. 5/-each (originally 5,761,902 Equity Shares of Rs. 10/-each) fully paid up issued for consideration other than cash in terms of scheme of Amalgamation in Financial Year 2006-07

3.1 Working capital loans are secured by hypothecation of inventories, book debts and all other current assets and first charge on fixed assets excluding specific charge, ranking pari-passu amongst working capital lending Banks.

#There is no amount due and outstanding to be credited to Investor Education & Protection Fund

* Includes Statutory dues, advances from customers, security deposits etc

(1) Additions includes a sum of Rs. Nil {previous year Rs. 1,219,307) on account of Foreign Exchange Fluctuation Loss on repayment of term Loan.

(2) Assets held under co-ownership- Furniture & Fixture NIL {previous year Rs. 5,714,532/-)

* 2) Pledged with Axis Bank Ltd., Singapore, acting as Security Trustee to the Lenders who have provided financial assistance to Discovery Drilling Pte Ltd, Singapore.

** 3) Pledged with DNBNORASA Bank, Singapore, who has provided financial assistance to Virtue Drilling Pte Ltd. Singapore.

NOTE 4.1

* Loan Rs. 601,016,696 (Previous year Rs. 8,93,033,781) at re-stated value to Discovery Drilling Pte Ltd, Singapore, Joint venture Company which is quasi equity in nature and also fully subordinated to the loan given by bankto theJ V Company

# includes primarily interest receivables on fixed deposits with bank advances to trade creditors

NOTE 5.1 : CONTINGENT LIABILTIES

Claims against the Company not acknowledged as under:

1. Estimated amount of contracts remaining to be executed on capital account

Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs.. 5,549,075/- (Previous Year Rs. 44,293,705/-).

2. Contingent Liabilities not provided for:

As At As At

31st March 2012 31 st March 2011 (Rs.) (Rs.)

(i) Guarantee issued by the Banks

(Bank Guarantee are provided under Legal/ Contractual Obligation) 797,559,723 808,722,960

Guarantees issued by banks on behalf of Joint Venture Companies: -

Discovery Drilling Pte Ltd.,Singapore 1,017,400,000 891,600,000 (USD 20.00 Million) since Gurantee released by Bank Virtue Drilling Pte Ltd.,Singapore 1,119,140,000 1,003,050,000 (USD 22.00 Million)

(ii) Customs Demand

An Appeal pending at Hon'ble Mumbai High Court 25,502,866 25,502,866

(A sum of Rupees sixty lacs against demand had been deposited by the company)

(iii) Service Tax Demand

An Appeal by Company pending with Appellate Tribunal 60,394,143 60,394,143

(iv) Income Tax Demand

An Appeal pending with CIT (Appeal) related to

a) Assessment year 2007-08 NIL 39,150,756

b) Assessment Year 2008-09 31,627,829 Nil



NOTE 5.2 Disclosures as per Accounting Standard -15

(a) Gratuity:

(i) The employees' gratuity fund scheme managed by LIC of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

(ii) Actuarial Valuation of Gratuity is based on the maximum liability of Rs. 10,00,000/- i.e. as provided under the Gratuity Act. (b) Leave Encashment

(i) The obligation for leave encashment is recognized and disclosed as per the Actuarial Valuation Report.

(c) Disclosure as per Actuarial Valuation Report:

NOTE 5.4:

All undertakings of the Company are engaged in similar activities of providing services to Oil & Gas Companies. Therefore, there is only one reportable Segment - Drilling and Related Services under Accounting Standard -17 "Segment Reporting". The Company operates in a single geographical segment - India.

NOTE 5.5 :

As per Accounting Standard -18, the Company's related parties and transactions are disclosed below:

Note: Figures in brackets represents previous year's amounts.

# Loans Includes Interest Receivables (Net of TDS) Rs. 21,669,470./- (Previous Year Rs. 16,070,146/-) converted into Loan.

NOTE 5.6: Office Premises taken on lease

The Company has taken office premises on cancellable lease. These are normally renewal after expiry of lease period.

* Represents Hedging Reserve created out of MTM provisioning on account of Interest Rate Swap (IRS) transactions.

NOTE 5.7: Trade Receivable & Loans and advances

(i) An amount of Rs. 4,408,732/isrecoverablefromONGCrelatingrigPN-3.Thismatterisunder arbitration. Management is confident to win the case and considered good for recovery.

(ii) Trade recoverable includes a sum ofRs. 6,585.53 lacs as on 31.03.2012, which has been withheld by ONGC in earlier years in relation to certain claims made on another body corporate which is being contested by the Company. Since there has been no realization in this account so far, management has considered the amount not to be reinstated during the year and as a matter of a abundant precaution, a sum ofRs. 700 lacs has been provided for towards its doubtful realization, if any.

(iii) The Company had given advance ofRs. 26.44 crores to two Companies i,e, Jaguar Overseas limited (JOL) and Marine Oil Gas Private limited in earlier years in respect of which no realization could be made as stipulated. The Company has initiated legal proceeding during the year and management has considered the same as good for recovery.

(iv) Loan & Advances includes an interest free loan of Rs. 15.00 Crores, paid to Jindal Drilling & Industries Limited Employees Welfare Trust during the year.

Note 5.08

The company has invested Rs. 5187.86 lacs into its Joint Venture Company Discovery Drilling Pte limited under its rights issue. Consideration was paid by means of conversion of loan into Equity Share Capital of its joint venture company. Exchange gain arising thereof has been transferred to foreign currency translation reserve as per Accounting Standard-11, "The effect of change in foreign exchange rate".

NOTE 05.09:

a) Dues to micro and small enterprises have been determined as per information collected by the management & has been relied upon by the auditors.

b) In the opinion of the Management and to the best of their knowledge and belief, the value of current assets, loans and advances, if realized in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

c) Figures have been rounded off to the nearest rupee.

d) Previous year's figures have been re-grouped/ re-arranged/ re-classified wherever, considered necessary.


Mar 31, 2011

1. Estimated amount of contracts remaining to be executed on capital account

Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs. 44,293,705/- (Previous Year Rs. 3,936,105/-).

2. Contingent Liabilities not provided for:

i) A demand raised by Custom Authority in earlier years for Rs. 25,502,866/- on repair and return, scrap and storage of the rig material taken out by ONGCL based at Nhava, Maharashtra which is being contested by the company and the Hon'ble CEGAT has already passed an order allowing Company's contention and directed the Custom Department for review. The liability, if any, would be accounted for at the time of final disposal of the case. The Company had deposited Rs. 6,000,000/-during earlier years as an advance under protest with the Collector of Custom and has been shown as advance recoverable in cash or in kind. There is no progress in the case during the year.

ii) Company has received a demand letter dated 20th May,2010 from the office of the Commissioner of Service Tax-I Mumbai (pursuant to the Show Cause Notice dated 19th September, 2008) for Rs.6,03,94,143/- and interest thereon and penalty for similar account towards availing and utilising the Cenvat credit by the Company which alleged to be not eligible. An Appeal has been filed by the Company before the Appellate Tribunal as the Company has been advised that the demand is untenable and likely to be quashed.

iii) During the year under review, Company's income tax assessment for the assessment year 2007-08 (relevant to the accounting year 2006-07) was completed. The assessing officer made disallowances aggregating to Rs.8,59,70,901/- thereby raising a demand of tax of Rs.3,91,50,756/, An appeal has been filed by the Company before the appellate authorities and is confident it will be decided in favour of the Company.

iv) Company had in earlier year, provided Corporate Guarantees to Axis Bank Limited, Singapore Branch as a Collateral security for providing Loans to Joint Venture Companies as under:

(a) US$ 20 Mn (Equivalent to Rs. 891,600,000/- if converted at the exchange rate prevailing as on 31/03/2011) loan by Axis Bank Ltd., Singapore to Discovery Drilling Pte Ltd, a Joint Venture Company, (This corporate guaranty is backed by Sub - Servient Charge on fixed assets of the Company) and

(b) US$ 22.50 Mn (Equivalent to Rs.1,003,050,000/- if converted at the exchange rate prevailing as on 31/03/2011) loan by Axis Bank Ltd., Singapore to Virtue Drilling Pte Ltd., a Joint Venture Company

3. Joint Ventures

Discovery Drilling Pte Ltd (DDPL) and Virtue Drilling Pte Ltd (VDPL) continue to be Joint Ventures of the company.

4. Sundry Debtors

(i) Last year, Rs. 1,39,38,188/-with regard to following two cases under arbitration were considered good of recovery as the arbitration cases were pending.

(a) With regard to rig Ed-Holt (Rs.95,29,456/-) was settled during the year, partially (for Rs.52,21,962/-) in favour of the Company and partially (for Rs.43,07,494/- against it. The Company has received Rs.138 Lacs (Rs.52,21,962/- along with interest since 1994).The remaining amount of Rs.43,07,494/- has been written off during the year under review.

(b) With regard to rig PN3 (Rs. 4,408,732/-), the matter was kept in abeyance during the whole year. However since the management is confident to win the case, this has been shown as considered good for recovery.

(ii) lnearlieryear,asumofUS$14,772,408.55(in Indian Rupee re-stated on 31-3-2011 atRs. 658,553,972/-) waswithheld by ONGC in relation to certain claim made on another body corporate, which is being contested by the company. Based on the legal opinion obtained, the company is not liable for the aforesaid amount, and therefore the same has been considered good and recoverable. The Company has initiated Arbitration proceedings against ONGC.

5. (i) Confirmation for one of the loans of Rs. 1087 Lacs outstanding as on 31st March, 2011 has not been received so far.

(ii) The identification of Micro, Small & Medium Sized Enterprise Suppliers (MSMES) is based on management's knowledge of their status.

6. In the opinion of the Management and to the best of their knowledge and belief, the value of current assets, loans and advances, if realised in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

7. Disclosures as required by Accounting Standards referred to in sub-section (3C) of the section 211 of the Companies Act, 1956 (to the extent applicable and mandatory):

7.1 The amount of Exchange Difference (Net):

a) The Foreign Exchange Loss (Net) Rs. 68,299,178/- (Previous Year Rs.73,970,541/-) resulting from settlement, restatement of foreign exchange transactions and losses on account of mark to market adjustments on outstanding derivative instruments (if any) has been adjusted in the Profit & Loss Account.

7.2 Disclosure as per Accounting Standard -15

(a) Gratuity:

(i) The employees' gratuity fund scheme managed by LIC of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

(ii) Actuarial Valuation of Gratuity is based on the maximum liability of Rs.10,00,000/- i.e. as provided under the Gratuity Act.

(b) Leave Encashment

The obligation for leave encashment is recognised and disclosed as per the Actuarial Valuation Report.

7.3 All undertakings of the Company are engaged in similar activities of providing services to Oil & Gas Companies. Therefore, there is only one reportable Segment - Drilling and Related Services under Accounting Standard -17 "Segment Reporting." The Company operates in a single geographical segment-India.

7.4 As per Accounting Standard -18, the Company's related parties and transactions are disclosed below:

A. List of related parties & relationships:

i. Joint Venture of Reporting Enterprise (refer Note No.3 above)

Discovery Drilling Pte Ltd., Singapore (DDPL)

Virtue Drilling Pte Ltd., Singapore (VDPL)

ii. Key Management Personnel

Name of person Relationship

Sh. Naresh Kumar Managing Director (up to 24th September, 2010)

Sh.RaghavJindal Managing Director

Sh. I. N. Chatterjee WholeTime Director (up to 11th May, 2010)

iii. Relative of Key Management Personnel

Sh. Manav Kumar Son of Sh. Naresh Kumar, Managing Director

(up to 24th September, 2010)

7.5 Office Premises taken on lease

The Company has taken office premises on cancellable lease. These are normally renewed after expiry of lease period.

8. Additional Information pursuant to the provisions of paragraph 3 & 4 of Part II of Schedule VI to the Companies Act, 1956 (to the extent applicable). Since the Company does not have manufacturing activity, the additional information regarding capacity and quantitative details are not given.

9. Figures have been rounded off to the nearest rupee.

10. Previous year's figures have been re-grouped/ re-arranged/ re-classified wherever considered necessary.

Schedule 1 to 18 are annexed to and form an integral part of the Balance Sheet as at 31 st March, 2011 and Profit & Loss accounts for the year ended on that date.


Mar 31, 2010

1. Estimated amount of contracts remaining to be executed on capital account Estimated amount of contracts remaining to be executed on capital account, not provided for Rs.3,936,105/- (Previous Year Rs. 31,524,954/-).

2. Contingent Liabilities

Contingent Liabilities not provided for:

i) A demand raised by Custom Authority in earlier years for Rs. 25,502,866/- on repair and return, scrap and storage of the rig material taken out by ONGCL based at Nahva, Maharashtra which is being contested by the company and the Honble CEGAT has already passed an order allowing Companys contention and directed the Custom Department for review. The liability, if any, would be accounted for at the time of final disposal of the case. The Company has deposited Rs. 6,000,000/-during earlier years as an advance under protest with the Collector of Custom and has been shown as advance recoverable in cash or in kind. There is no progress in the case during the year.

ii) The company received a notice from Deputy Collector, Stamp Valuation Cell, Mehsana levying an additional stamp duty of Rs.1,699,950/- and a penalty thereon during the financial year 2006-07, pertaining to a property transaction done by the company in the earlier year, against which the company had filed a petition in the Honble Gujarat High Court. The Honble High Court has since quashed the demand notice of Dy. Collector, Stamp Duty, Valuation Cell, Mehsana.

iii) An additional Income Tax liability of Rs. 3,671,185/- was raised by the ITO, for the assessment year 2005-06 for which Company filed an appeal before CIT(A). The Appeal was disallowed. The Company filed Appeal before ITAT. The same has been allowed and the demand has been vacated by the ITAT vide its order dated 31st March, 2010. However a penalty of Rs. 3,151,230/- u/s 271(1)(c) has been imposed by the office of DCIT The company expects to get it vacated. Hence no provision has been made.

iv) The Company had in earlier year, provided Corporate Guarantees to Axis Bank Limited, Singapore Branch as a Collateral security for providing Loans to Joint Venture Companies as under:

(a) US$ 20 Mn ( Equivalent to Rs. 898,000,000/- if converted at the exchange rate prevailing as on 31/03/2010) loan by Axis Bank Ltd., Singapore to Discovery Drilling Pte Ltd, a Joint Venture company, (This corporate guaranty is backed by Sub - Servient Charge on fixed assets of the Company) and

(b) US$ 22.50 Mn (Equivalent to Rs. 1,010,250,000/- if converted at the exchange rate prevailing as on 31/03/2010) loan by Axis Bank Ltd., Singapore to Virtue Drilling Pte Ltd., a Joint Venture company.

3. Joint Ventures

(i) Discovery Drilling Pte Ltd (DDPL) and Virtue Drilling Pte Ltd (VDPL) continue to be Joint Ventures of the company.

4. Sundry Debtors

(i) Sundry Debtors includes an amount of Rs. 13,938,188/- (Previous Year Rs. 13,938,188/-) under arbitration with ONGCL. These debts consist of two cases first for Rig PN3 of Rs. 4,408,732/- and second for Ed-Holt of Rs. 9,529,456/-. In case of Rig PN3 the matter in arbitration was kept in abeyance during the whole year. In the matter of Ed-Holt case both parties, ONGC & the Company, have gone in appeal with the single judge of the Mumbai High Court, since, part of the award was passed by the arbitrator in favour of the company and part of the award in favour of ONGC. However management is confident to win the cases therefore it is considered to be good for recovery.

(ii) In earlier year, a sum of Rs. 663,281,144/-(reinstated value as on 31-3-2010 of US$ 14,772,408.55) was withheld by ONGC in relation to certain claim made on another body corporate, which is being contested by the company. Based on the legal opinion obtained, the company is not liable for the aforesaid amount, and therefore the same has been considered good and recoverable. The Company has initiated Arbitration proceedings in the matter.

5. The identification of Micro, Small & Medium Enterprise Suppliers (MSMES) is based on managements knowledge of their status.

6. In the opinion of the Management and to the best of their knowledge and belief, the value of current assets, loans and advances, if realised in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

Note:

a) Including allowances but excluding contribution towards retirement benefits, since it is determined on the basis of actuarial valuation for all employees in a consolidated manner including managerial employees.

b) Computation of net profit in accordance with the relevant provisions of the Companies Act, 1956 has not been disclosed as no commission is payable to the managing director.

7. Disclosures as required by Accounting Standards referred to in sub-section (3C) of the section 211 of the Companies Act, 1956 (to the extent applicable and mandatory):

7.1 The amount of Exchange Difference (Net):

a) The Foreign Exchange Loss (Net) of Rs. 73,970,541 /- (Previous Year Rs. 61,821,090/-) resulting from settlement, restatement of foreign exchange transactions and losses on account of mark to market adjustments on outstanding derivative instruments has been adjusted in the Profit & Loss Account.

7.2 Disclosure as per Accounting Standard (AS) 15:

(a) The Accounting Standard 15 (Revised 2005) having been made applicable from F.Y. 2007-08, the requisite information and disclosure have been given separately for this year and previous year.

(b) Gratuity:

(i) The employees gratuity fund scheme managed by LIC of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

(ii) Actuarial Valuation of Gratuity is based on the maximum liability of Rs.3,50,000/,

(c) Leave Encashment

The obligation for leave encashment is recognised and shown as per the Actuarial Valuation Report, as required by AS 15 (revised 2005).

7.3 Although the Company is operating four undertakings, all those are engaged in the similar business of providing services to oil & gas companies. Therefore, there is only one reportable segment- Drilling and Related Services. Accordingly, there is no disclosure of segmental reporting in terms of "Accounting Standard-17 of Segment Reporting".

7.4 As per Accounting Standard -18, the Companys related parties and transactions are disclosed below: A. List of related parties & relationships,

i. Joint Venture of Reporting Enterprise (refer Note No.3 above.) Discovery Drilling Pte Ltd., Singapore (DDPL) Virtue Drilling Pte Ltd., Singapore (VDPL)

ii. Key Management Personnel

Name of person Relationship

Sh.Naresh Kumar Managing Director Sh.RaghavJindal Managing Director Sh.lNChatterjee Whole Time Director

iii. Relative of Key Management Personnel

Sh.Manav Kumar SonofSh. Naresh Kumar

7.5 Office Premises taken on lease

The Company has taken office premises on cancellable lease. This lease agreement is for a period of three years.

 
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