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Directors Report of Oil And Natural Gas Corporation Ltd.

Mar 31, 2016

Notice is hereby given that the 23''" Annual General Meeting of the Members of OIL AND NATURAL GAS CORPORATION LIMITED will be held on Thursday, the 8''n September, 2016 at 10:00 hrs. at, Indira Gandhi Indoor Stadium I. P Estate, Near Rajghat, Grand Trunk Road, New Delhi-110002 to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Audited Financial Statements including Consolidated Financial Statements of the Company for the financial year ended on 31st March, 2016, together with the Board''s Report and the Auditors'' Report thereon and Comments of the Comptroller & Auditor General of India, in terms of Section 143(6) of the Companies Act. 2013 and the reply of the Management there to.

2. To confirm the payment of two interim dividends and declare final dividend on equity shares for the FY 2015-16.

3. To appoint a Director in place of Shri T K Sengupta, who retires by rotation and being eligible, offers himself for re-appointment.

4. To authorize Board of Directors of the Company to fix the remuneration of the Joint Statutory Auditors of the Company for the Financial Year 2016-17, in terms of the provisions of section 139(5) read with section 142 of the Companies Act, 2013 and to pass the following resolution, with or without modification(s). as an Ordinary Resolution:

"RESOLVED THAT the Board of Directors of the Company be and are hereby authonsed to decide and fix the remuneration of the Joint Statutory Auditors of the Company for the Financial Year 2016-17, as may be deemed fit by the Board".

SPECIAL BUSINESS:

ITEM No. 5

To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:

"RESOLVED THAT Shri A K Srinivasan (DIN-07168305) who was appointed as an Additional Director and designated as Director (Finance) under Section 161 of the Companies Act, 2013, effective 23"’ September, 2015 and holds office up to the 23''fl Annual General meeting and the Company having received a notice in writing, under Section 160 of the Companies Act, 2013, from Shri A K Srinivasan proposing his candidature for the office of director, be and is hereby appointed as a Director of the Company, liable to retire by rotation ITEM No. 6

To consider and if thought fit, to pass with or without modification(s). the following resolution as an Ordinary Resolution:

"RESOLVED THAT Shri Ajai Malhotra (DIN-07361375) who was appointed as an Additional Director (part-time non-official Director) under Section 161 of the Companies Act, 2013, effective 20* November, 2015 and holds office up to the 23"’ Annual General meeting and in respect of whom, the Company has received a notice in writing, under Section 160 of the Companies Act, 2013, from a member proposing his candidature for the office of director, be and is hereby appointed as a Director of the Company."

ITEM No. 7

To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:

- RESOLVED THAT Prof. S B Kedare (DIN- 01565171) who was appointed as an Additional Director (part-time non-official Director) under Section 161 of the Companies Act, 2013, effective 20" November, 2015 and holds office up to the 23" Annual General meeting and In respect of whom, the Company has received a notice in writing, under Section 160 of the Companies Act, 2013, from a member proposing his candidature for the office of director, be and is hereby appointed as a Director of the Company." ITEM No. 8

To consider and if thought fit, to pass with or without modification(s). the following resolution as an Ordinary Resolution: "RESOLVED THAT Shri K M Padmanabhan (DIN-00254109) who was appointed as an Additional Director (part-time non-official Director) under Section 161 of the Companies Act, 2013, effective 20'' November, 2015 and holds office up to the 23''° Annual General meeting and in respect of whom, the Company has received a notice in writing, under Section 160 of the Companies Act, 2013, from a member proposing his candidature for the office of director, be and is hereby appointed as a Director of the Company."

ITEM No. 9

To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:

“RESOLVED THAT Shri A P Sawhney (DIN-03359323) who was appointed as an Additional Director (Govt Director) under Section 161 of the Companies Act, 2013. effective 2“’ January 2016 and holds office up to the 23''" Annual General meeting and the Company having received a notice in writing, under Section 160 of the Companies Act, 2013, from a member proposing his candidature for the office of director, be and is hereby appointed as a Director of the Company, liable to retire by rotation."

ITEM No. 10

To consider and if thought fit, to pass with or without modification(s). the following resolution as an Ordinary Resolution: “RESOLVED THAT Shri Amar Nath (DIN-05130108) who was appointed as an Additional Director (Govt Director) under Section 161 of the Companies Act, 2013, effective 28''" June, 2016 and holds office up to the 23''* Annual General meeting and the Company having received a notice in writing, under Section 160 of the Companies Act, 2013, from a member proposing his candidature for the office of director, be and is hereby appointed as a Director of the Company, liable to retire by rotation."

ITEM No. 11

To consider and if thought fit, to pass, with or without modifications, the following resolution as an Ordinary Resolution:

"RESOLVED THAT pursuant to the provisions of Section 148 and other applicable provisions of the Companies Act, 2013 and Rule 14(a)(ii) of the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or reenactment thereof, for the time being in force), the aggregate remuneration of Rs,3.25 lakhs per Cost Auditor plus applicable taxes and out of pocket expenses payable to the six Joint Cost Auditors appointed by the Board of Directors of the Company, to conduct the audit of the cost records of the various units of the Company for the financial year ending March 31, 2017, be and is hereby ratified.”

NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. THE PROXY FORM DULY COMPLETED MUST BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN FORTY-EIGHT HOURS (48 HRS.) BEFORE THE COMMENCEMENT OF THE MEETING. BLANK PROXY FORM IS ATTACHED. A PERSON CAN ACT AS A PROXY ON BEHALF OF MEMBERS NOT EXCEEDING 50(FIFTY) MEMBERS AND HOLDING IN AGGREGATE NOT MORE THAN TEN PERCENT OF THE TOTAL SHARE CAPITAL OF THE COMPANY. PROXIES SUBMITTED ON BEHALF OF LIMITED COMPANIES, SOCIETIES ETC MUST BE SUPPORTED BY APPROPRIATE RESOLUTION/ AUTHORITY, AS APPLICABLE.

2. Relevant Explanatory Statement pursuant to Section 102(2) of the Companies Act, 2013, in respect of Special Business, as set out above is annexed hereto.

3. Brief profile of the Directors seeking appointment/reappointment as mandated under regulation 36(3) of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 with the Stock Exchanges forms part of the Notice. The directors have furnished consent/declaration for their appointment/ re-appointment as required under the Companies Act, 2013 and the Rules there under.

4. The Register of Members and Share Transfer Books of the Company will remain closed from Friday, the 2"° September, 2016 to Thursday, the 8"'' September, 2016 (both days inclusive).

5. The Board had recommended a final Dividend of Rs, 3.25 per equity share of Rs,5/- each fully paid up. at its meeting held on 26"* May, 2016. The dividend, if approved by the Members at the said Annual General Meeting, will be paid within a period of 30 days from the date of declaration, to the members whose names appear on the Register of Members of the Company after giving effect to all valid share transfers in physical form lodged with the Company on or before Thursday, the 1" September, 2016 and to the respective Beneficial Owners as at the close of business hours on Thursday, the 1"'' September, 2016, as per details thereof to be furnished by the depositories.

6. The Register of Directors and Key Managerial Personnel and their shareholding maintained under Section 170 of the Companies Act. 2013 will be available for inspection by the members at the AGM venue.

7. The Register of Contracts or arrangements in which the Directors are interested, maintained under Section 189 of the Companies Act, 2013 will be available for inspection by the members at the AGM venue.

8. It may be noted that M/s. Alankit Assignments Ltd., Alankit Heights, IE/13 Jhandewalan Extension, New Delhi - 110055 has been appointed as Registrar and Share Transfer Agent of the Company during February, 2016, in place of Karvy Computershare Pvt Ltd. Therefore, share transfer documents and all correspondence relating thereto, must be addressed to M/s. Alankit Assignments Ltd (Alankit), Alankit Heights, 1 E/13 Jhandewalan Extension, New Delhi-110055 Tel: 91-11-4254 1234/1960, Fax: 91- 11-42541201/23552001, www.alankit.com, rsmaurya@alankit.com. Alankit is also the depository inter face of the Company with both NSDL and CDSL. However, keeping in view the convenience of the Shareholders, documents relating to shares will continue to be accepted at the Registered Office of the Company at 8th Floor, Jeevan Bharati Building, Tower-ll, 124, Indira Chowk, New Delhi - 110001, Phone No.011-23301277/23301299; e-mail: secretariat@ongc.co.in.

9. The Company has designated an exclusive e-mail ID called secretariat@ongc.co.in for redressal of shareholders''/investors’ complaints/grievances. In case you have any queries/complaints or grievances, then please write to us at the above e-mail address.

10. Members holding shares in electronic form may please note that the bank account details and 9-digit MICR Code of their Bankers, as noted in the records of their depository, shall be used for the purpose of remittance of dividend through Electronic Clearing Service (ECS), or for printing on dividend warrants, wherever applicable. Members are, therefore, requested to update their bank account particulars, change of address and other details with their respective Depository Participants for shares held in demat mode and to the Registrar and Share Transfer Agent for shares held in physical form.

11. Reserve Bank of India (RBI) is providing ECS facility for payment of dividend in select cities. Members holding shares in physical form are advised to submit particulars of their bank account, viz., names and address of the branch of the bank, 9 digit MICR code of the branch, type of account and account number latest by 1" September, 2016 to M/s Alankit Assignments Ltd.

12. Pursuant to Section 124(5) and 125(2)(c) of the Companies Act, 2013, the Company has transferred the unpaid/unclaimed amount of final dividend declared on 19th September, 2008 for the financial year 2007-08 and interim dividend declared on 19th December, 2008 for the financial year 2008-09, to the Investor Education and Protection Fund of the Central Government. The unpaid/unclaimed amount of Final Dividend declared on 23''° September 2009 and Interim Dividend declared on 18* December 2009 will be transferred to the Investor Education and Protection Fund (IEPF) of the Central Government by 22"9 October, 2016 and 17" January, 2017 respectively. Members who have not encased their dividend warrants pertaining to the said years may approach the Company or its Registrar & Share Transfer Agent for obtaining payment thereof.

13. In order to avoid the incidence of fraudulent encashment of dividend warrants, the Members holding shares in physical form are requested to provide their Bank Account Number, Name and Address of the Bank/Branch to the Company or RTA to enable them to incorporate the same in the dividend warrant,

14. Members who have not encased their dividend warrants within its validity period may write to the Company at its Registered Office or M/s Alankit, Registrar & Share Transfer Agent of the Company, for revalidating the warrants or payment in lieu of such warrants in the form of demand draf t.

15. The Annual Report 2015-16 is being sent by electronic mode to those members whose email addresses are registered with the Company/ Depositories/RTA, unless any member has requested for a physical copy of the same. For members, who have not registered their email addresses, physical copies are being sent by the permitted mode.

16. In compliance with the provisions of section 108 of the Act, the Rules made there under and Regulation 44 of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, the Members are provided with the facility to cast their vote electronically, through e-voting services provided by Alankit through M/s National Securities Depositories Ltd(NSDL), on all resolutions set forth in this Notice. The instruction for e-voting are annexed to the notice. The notice of 23Annual General Meeting along with the Proxy Form and attendance slip is being sent by electronic mode to those members whose email addresses are registered with the Company/ Depositories/RTA, unless any member has requested for a physical copy of the same. For members, who have not registered their email addresses, physical copies are being sent by the permitted mode. The facility for voting through ballot paper, will also be made available at the AGM and the members attending the AGM who have not cast their vote by remote e-voting shall be able to exercise their right at the AGM through ballot papers. Members who have cast their vote by remote e-voting prior to the AGM, may attend the AGM but shall not be entitled to cast their vote again.

17. In terms of Section 72 of the Companies Act, 2013, nomination facility is available to individual shareholders. Members holding shares in physical form may nominate a person in respect of all the shares held by them whether singly or jointly. Members who hold shares in individual name are advised to avail of the nomination facility by filing Form No. SH-13 in their own interest. Blank form can be obtained from M/s Alankit Assignments Ltd. on request. Members holding shares in dematerialized form may contact their respective DPs for registration of nomination.

18. Members holding physical shares in multiple folios in identical names are requested to send their share certificates to Company''s Registrar and Share Transfer Agent, M/s Alankit Assignments Ltd. for consolidation.

19. Pursuant to Section 139(5) read with Section 142 of the Companies Act. 2013, the Auditors of a Government Company are appointed or re-appointed by the Comptroller and Auditor General (C8AG) of India and their remuneration is to be fixed by the Company in the Annual General Meeting. The members may authorize the Board to fix up an appropriate remuneration of Auditors for the year 2016-17 after taking into consideration the increase in volume of work and prevailing inflation etc.

20. Members are requested:

i) to bring their copies of Annual Report and Attendance Slip duly completed and signed at the meeting.

ii) to quote their Folio/DP & Client identification No. in all correspondence.

iii) Not to bring brief case, bags, eatables, cell phone etc. as they are prohibited inside the meeting hall for security reasons.

iv) lo notify immediately any change of their address and bank particulars to the Company or its Share Transfer Agent, in case shares are held in physical form.

AND

In case their shares are held in dematerialized form, information should be passed on directly to their respective Depository Participants and not to the Company/Share Transfer Agent, without any delay.

v) to note that no gift will be distributed at the meeting.

21. Shareholders of the Company are requested to register their e-mail ID(if not registered with their Depository Participant) with M/s. Alankit Assignments Ltd, R&T Agent of the Company by sending a written request duly signed by the shareholder or email to rsmaurya@alankit.com for sending electronic communication to their registered e-mail. Please ensure that you have indicated your Folio No. / DP & client ID No as well as your consent to receive future communications from ONGC including Annual Reports etc through email at your registered email address.

EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 Item No.5

APPOINTMENT OF SHRI A K SRINIVASAN

Shri A K Srinivasan was appointed as an Additional Director designated as Director (Finance) on 23.09.2015. In terms of Section 161 of the Companies Act, 2013, he holds office up to the 23''c Annual General meeting of the Company. The Company has received a notice in writing from him pursuant to the provisions of Section 160 of the Companies Act. 2013 along with the requisite fees, signifying his intention to propose himself as candidate for the office of Director. Shri A K Srinivasan, if appointed, will be liable to retire by rotation under Sections 152 of the Companies Act, 2013 and in terms of provisions under the Articles of Association of the Company.

Born on 08.10.1957, Shri Srinivasan, an IIM Bangalore alumnus, is an accomplished finance professional with experience of over 31 years in upstream oil and gas finance. He started his professional journey with ONGC as a graduate trainee in the year 1983 and has demonstrated his professional capability in diverse facets of financial planning and management with the energy major. With experience in the capital markets, project financing & contracts, corporate budgeting & planning, corporate accounting, corporate taxation and dispute resolution. Shri Srinivasan has a broad array of expertise up his sleeves and has played major role in the acquisition of various oil and gas development projects, Power, Petro-Chemical and capital assets for ONGC. He has also steered critical productivity enhancement projects like the transition from excel based reporting to SAP based reporting and implementation of Enterprise Resource Planning (ERP) projects across ONGC.

Shri A K Srinivasan holds directorship on the Board of ONGC Petro addition Ltd. and ONGC Tripura Power Company Ltd. He holds 5,752 equity shares in ONGC.

Except Shri A K Srinivasan, none of the Directors, Key Managerial Personnel and their relatives is interested or concerned in the resolution.

The Board of Directors considers that in view of the background and experience of Shri A K Srinivasan, it would be in the interest of the Company to appoint him as a Director of the Company. The Board recommends the resolution for your approval.

Item No.6

APPOINTMENT OF SHRI AJAI MALHOTRA

Shri Ajai Malhotra was appointed as an Additional Director (part-time non-official Director) under Section 161 of the Companies Act, 2013, effective 20'' November, 2015. Shri Ajai Malhotra shall hold office up to the 23rd Annual General meeting and shall be eligible for appointment to the office of Director thereon. The Company has received a notice from a member proposing his candidature for the office of Director along with requisite fees. Shri Ajai Malhotra, if appointed, will not be liable to retire by rotation under Sections 152 of the Companies Act. 2013..

Born on 21.11.1953, Shri Malhotra holds an M.A. in Economics from The Delhi School of Economics, University of Delhi. He joined the Indian Foreign Service (IFS) in 1977 and besides assignments at the Ministry of External Affairs, New Delhi, worked ai Indian diplomatic missions in Bucharest, Geneva, Kuwait, Moscow, Nairobi, New York and Washington DC.

He was Minister (Commerce) at the Embassy of India, Washington DC (1999-2003), serving simultaneously from 2002-2003 as Chairman of the International Cotton Advisory Committee. He was Ambassador of India to Romania, concurrently accredited to Albania and Moldova (2003-2005), Ambassador and Deputy Permanent Representative of India to the United Nations, New York (2005-2009), Ambassador of India to Kuwait (2009-2011), and Ambassador of India to the Russian Federation (2011 -2013), before retiring from the IFS on November 30, 2013, after nearly 37 years of distinguished service.

His wide ranging experience includes being on the Indian team negotiating issues such as biological diversity, climate change, desertification, education, energy, forestry, health, human rights, human settlements, intellectual property rights, international law. labour, ozone depletion, sustainable development and international trade. In 2004, he was awarded an Honorary Doctorate by Western University of Arad, Romania, in recognition of his work in support of environment and development.

He is presently a Distinguished Fellow at The Energy and Resources Institute (TERI), New Delhi, besides being Chairman and Managing Trustee of two organizations serving the underprivileged - CHIKITSA and SHIKSHA - as well as Chairman, Nehru Trust for the Indian Collections at the Victoria & Albert Museum, and Chairman, NAB Centre for Blind Women & Disability Studies. He frequently contributes to seminars on economic, environmental, defense, political, trade and security issues.

Shri Ajai Malhotra holds directorship in Aicorps Enterprises Pvt. Ltd.

He holds 1,100 equity shares of ONGC.

Except Shri Ajai Malhotra, none of the Directors, Key Managerial Personnel and their relatives is interested or concerned in the resolution.

The Board of Directors considers that in view of the background and experience of Shri Ajai Malhotra, it would be in the interest of the Company to appoint him as a Director of the Company. The Board recommends the resolution for your approval.

Item No.7

APPOINTMENT OF PROF S B KEDARE

Prof. S B Kedare was appointed as an Additional Director (part-time non-official Director) under Section 161 of the Companies Act. 2013, effective 20th November, 2015. Prof S B Kedare shall hold office up to the 23''° Annual General meeting and shall be eligible for appointment to the office of Director thereon. The Company has received a notice from a member proposing his candidature for the office of Director along with requisite fees. Prof S B Kedare, if appointed, will not be liable to retire by rotation under Sections 152 of the Companies Act, 2013.

Born on 22.10.1963, Prof. Kedare has obtained his B.Tech. in Mechanical Engineering from IIT Bombay in 1985. He also obtained his Ph.D. in 1992 from IIT Bombay in Reciprocating Wind Machine". He spent three years (1992-95) as a volunteer in social sector working on dif ferent issues related to ‘Development''. He started his engineering consultancy in energy and environment in 1995. He worked as a Technical Consultant (1998-2001) to the Chairman, Khadi and Village Industries Commission when he worked on the issues related to Development of Rural Industries

Clusters. He is presently associated with IIT Bombay as a Professor.

He joined Department of Energy Science and Engineering, IIT Bombay as an adjunct faculty and simultaneously Clique Developments Ltd., an engineering Company in Mumbai as its Director (R&D). Based on his studies on different renewable energy systems, he identified a need for developing concentrating solar thermal collectors for industrial process heat applications way back in 1997. He acted as a Principal Investigator (2004 to 2007) under IIT Bombay-Clique R&D project of ARUN 160 (160 sq.m Fresnel Paraboloid Solar Concentrator for industrial process heat) sponsored by MNRE (Ministry of New and Renewable Energy), New Delhi, He has also worked on integration of solar concentrator technology for a variety of industrial processes as well as commercial applications using steam, pressurized water or thermal fluid as media and for steam augmentation in thermal power plants.

Along with optimization of Solar Industrial Process Heat Systems with and without storage, his focus is on development of solar thermal power plant with storage working for 24 h/d suitable for Indian conditions. He is also associated with Centre for Technology Alternatives for Rural Areas (CTARA), IIT Bombay and is working on rural energy and other technologies. He is presently focusing on problem assessment and development and dissemination of small and affordable implements for performance improvement for traditional wood fired cook-stoves (Chulha) used in different regions of the country.

Prof S B Kedare does not hold any directorship.

He does not hold any equity shares of ONGC.

Except Prof S B Kedare, none of the Directors, Key Managerial Personnel and their relatives is interested or concerned in the resolution.

The Board of Directors considers that in view of the background and experience of Prof S B Kedare, it would be in the interest of the Company to appoint him as a Director of the Company. The Board recommends the resolution for your approval.

Item No.8

APPOINTMENT OF SHRI K M PADMANABHAN

Shri K M Padmanabhan was appointed as an Additional Director (part-time non-official Director) under Section 161 of the Companies Act, 2013, effective 20''" November. 2015. Shri K M Padmanabhan shall hold office up to the 23rd Annual General meeting and shall be eligible for appointment to the office of Director thereon. The Company has received a notice from a member proposing his candidature for the office of Director along with requisite fees. Shri K M Padmanabhan, if appointed, will not be liable to retire by rotation under Sections 152 of the Companies Act, 2013.

Born on 04.04.1957. Shri Padmanabhan. is a Chartered Accountant in practice for more than 27 years and is the Senior Partner of Sinivas & Padmanabhan. Chartered Accountants, Chennai.

As a practicing Chartered Accountant, he has created Internal Control Systems, processes and procedure besides rendering business consultancy for a very big South based educational institution spread into engineering, medical and also into hospitals.

He is a regular Visiting Faculty in the area of Finance and Accounting at Indian Institute of Management (Indore), Indian Institute of Management (Raipur), Institute for Financial Management and Research (IFMR), RBI Staff Training College, Tamilnadu Judicial Academy, The Institute of Chartered Accountants of India (ICAI).

He has been trained in Case Method Teaching at Harvard Business School. Boston, USA and at Harvard Business School Center. Shanghai, China. He is the founder member of Prerana Helpline Foundation (NGO) that caters for the need of visually challenged people. He was able to eliminate wastes and non- value added expenditure through Business Process Reengineering and Kaizen cost Reduction Methods for various business units in the SME sector in the last 10 years of business consulting. He had trained thousands of non-finance executives in Finance, costing, and kaizen cost Reduction with strategic orientation,

He is also a Managing committee member of Madras Management Association one of most acclaimed management associations in India and served as subcommittee member of Economic affairs and taxation committee of Cll-Southern region.

Shri K M Padmanabhan holds directorship in Rashtriya Ispat Nigam Ltd. & Prerana Educational Media Pvt. Ltd.

He does not hold any equity shares of ONGC.

Except Shri K M Padmanabhan, none of the Directors. Key Managerial Personnel and their relatives is interested or concerned in the resolution.

The Board of Directors considers that in view of the background and experience of Shri K M Padmanabhan, it would be in the interest of the Company to appoint him as a Director of the Company. The Board recommends the resolution for your approval. ltemNo.9

APPOINTMENT OF SHRI A P SAWHNEY

Shri A P Sawhney, was appointed as an Additional Director (Govt. Director) on the Board of ONGC effective January. 2016. In terms of Section 161 of the Companies Act. 2013. he holds office up to the 23'' Annual General meeting of the Company. The Company has received a notice in writing from a member pursuant to the provisions of Section 160 of the Companies Act, 2013, signifying intention to propose Shri A P Sawhney, as candidate for the of fice of Director. Shri A P Sawhney, if appointed, will be liable to retire by rotation under Sections 152 of the Companies Act, 2013 and in terms of provisions under the Articles of Association of the Company.

Born on 04.02.1962, Shri Sawhney an IAS Officer of Andhra Pradesh cadre (1984 batch) is a Mechanical Engineer. Shri Sawhney has handled various assignments in the State of Andhra Pradesh, covering land administration, law and order and quasi-judicial functions, rural development, health

& family welfare, communication & information technology, e-governance and elections etc.

He played a lead role in the Total Literacy Campaign taken up in Nizamabad district in the early nineties. He has also catalyzed the establishment of the International Institute of Information Technology in Hyderabad and its emergence as one of the premier institutions in computer science education and research in the country. He has spent more than ten years in assignments relating to information technology and e-governance and has led the formulation of innovative policies and implementation of several major e-governance, communications and broadband projects. He has also worked as the Principal Secretary to Chief Minister of AP after the reorganization of the State of Andhra Pradesh.

He has also held important positions in the Govt, of India as Joint Secretary Training in the Department of Personnel and Training and as the President and CEO of the National e-Governance Division, which assists the Ministry of Electronics and Information Technology in the implementation of the National e-Governance Plan. Since March 2015, he is working as Additional Secretary in the Ministry of Petroleum and Natural Gas.

Shri A P Sawhney holds directorship in Indian Oil Corporation Ltd. & Indian Strategic Petroleum Reserves Ltd. He is a member of Nomination and Remuneration Committee of Indian Oil Corporation Ltd.

He does not hold any equity shares of ONGC.

Except Shri A P Sawhney, none of the Directors, Key Managerial Personnel and their relatives is interested or concerned in the resolution.

The Board of Directors considers that in view of the background and experience of Shri A P Sawhney, it would be in the interest of the Company to appoint him as a Director of the Company. The Board recommends the resolution for your approval.

Item No.10

APPOINTMENT OF SHRI AMAR NATH

Shri Amar Nath was appointed as an Additional Director (Govt. Director) on the Board of ONGC effective 28th June. 2016. In terms of Section 161 of the Companies Act, 2013, he holds office up to the 23rd Annual General meeting of the Company. The Company has received a notice in writing from a member pursuant to the provisions of Section 160 of the Companies Act, 2013, signifying intention to propose Shri Amar Nath as candidate for the office of Director. Shri Amar Nath, if appointed, will be liable to retire by rotation under Sections 152 of the Companies Act, 2013 and in terms of provisions under the Articles of Association of the Company.

Shri Amar Nath. Joint Secretary (Exploration) Ministry of Petroleum & Natural Gas is the Govt, nominee Director on the Board of your Company. Born on 30.03.1966, Shri Amar Nath an IAS Officer (1994 AGMUT Cadre) is a Bachelor of Science (Mechanical Engineering) from National Institute of Technology, Kurukshetra, Kurukshetra University and MA (International Development Policy) from Duke University. USA. Shri Amar Nath was Secretary to the Department of Health, Government of National Capital Territory of Delhi prior to the present assignment. He has held the positions of

Administrator of Union Territory of Lakshadweep, Chief Executive Officer of Delhi Urban Shelter Improvement Board, and Chief Executive Officer of Chandigarh Housing Board in Chandigarh.

He has extensive experience of working in various Departments of Government at senior management positions such as Finance, Economic Planning, Tourism and Industrial Development in the states of Arunachal Pradesh. Pondicherry, Chandigarh and Delhi. Before joining IAS in 1994 he worked with State Bank of India and Steel Authority of India.

Shri Amar Nath does not hold any directorship. He also does not hold any equity shares of ONGC.

Except Shri Amar Nath, none of the Directors, Key Managerial Personnel and their relatives is interested or concerned in the resolution.

The Board of Directors considers that in view of the background and experience of Shri Amar Nath, it would be in the interest of the Company to appoint him as a Director of the Company. The Board recommends the resolution for your approval.

Item No.11

RATIFICATION OF REMUNERATION OF COST AUDITORS FOR THE FINANCIAL YEAR 2016-17

The Board of Directors of the Company on the recommendations of the Audit S Ethics Committee have approved appointment of the following Cost Auditors of ONGC for the year 2016-17 at a remuneration of Rs, 3.25.Lakh (Rupees Three Lakh twenty five thousand only) per Cost Auditor plus applicable service tax and out-of-pocket expense, as per entitlement:

1. M/s Rao Murthy & Associates, Bangalore

2. M/s R.Nanabhoy& Co., Mumbai

3. M/s RJGoel& Co., Delhi

4. M/sShome& Banerjee, Kolkata

5. M/s Rohit& Associates, Mumbai

6. M/s Dhananjay V. Joshi & Associates, Pune

None of the Directors, Key Managerial Personnel and their relatives is interested or concerned in the resolution.

The Board of Directors recommends the resolution for your approval.

The instructions for e-voting are as under:

a) Details of the process and manner of e-voting along with the User ID and Password are being sent to the members along with the notice:

By email to those members whose email ID is registered with the Company / Depository Participants.

By post to those members whose email ID is not registered with the Company / Depository Participant.

b) The instructions and other information relating to e-voting are as under:

i. Launch internet browser by typing the URL: https://evoting.nsdl.com.

ii. Enter the login credentials (i.e. User ID and Password mentioned in the notice). However, if you are already registered with NSDL for e-voting, you can use your existing User ID and password for logging in.

iii. After entering these details appropriately, Click on "LOGIN".

iv. You will now reach password change Menu wherein you are required to mandatorily change your password. The new password shall comprise of minimum 8 characters with at least one upper case (A-Z), one lower case (a-z), one numeric value (0-9) and a special character (@,#,$, etc.). The system will prompt you to change your password and update your contact details like mobile number, email ID, etc. on first login. You may also enter a secret question and answer of your choice to retrieve your password in case you forget it. It is strongly recommended that you do not share your password with any other person and that you take utmost care to keep your password confidential.

v. You need to login again with the new password.

vi. On successful login, the system will prompt you to select the "EVENT" i.e. Oil and Natural Gas Corporation Limited.

vii. On the voting page, enter the number of shares (which represents the number of votes as on the Cut Off date) under “FOR / AGAINST / ABSTAIN" or alternatively, you may partially enter any number of votes in "FOR” and partially in AGAINST" such that the total number of votes cast “FOR / AGAINST’ taken together should not exceed your total shareholding as on cutoff date. In case you do not wish to cast your vote you may choose the option "ABSTAIN" and the shares held will not be counted under either head.

viii. Voting has to be done for each item of the Notice separately. In case you do not cast your vote on any specific item it will be treated as abstained.

ix. Members holding multiple demat accounts / folios shall choose the voting process separately for each demat account / folio.

x. You may then cast your vote by selecting an appropriate option and click on ‘''Submit".

xi. A confirmation box will be displayed. Click “OK" to confirm else “CANCEL’ to modify. Once you confirm, you will not be allowed to modify your vote. During the voting period, members can login any number of times till they have voted on the Resolution(s).

xii. Corporate / Institutional members are required to send scanned certified true copy (PDF Format) of the Board Resolution/Authority Letter, etc. together with attested specimen signature(s) of the duly authorized representative(s), to the Scrutinizer at email ID: fcs.ppa@gmail.com with a copy marked to evoting@nsdl.com.

Relevant Information for e-voting:

The e-voting period commences on 05.09.2016 (9.00 a.m. 1ST) and ends on 07.09.2016 (5.00 p.m. 1ST). During this period. Members of the Company, holding shares either in physical form or in dematerialized form, as on 01.09.2016, may cast their vote electronically. The e-voting module shall be disabled by M/s Alankit (RTA) for voting thereafter. Once the vote on a resolution is cast by the Member, he shall not be allowed to change it subsequently.

The voting rights of Members shall be in proportion to their shares of the paid up equity share capital of the Company as on 01.09.2016.

- Any person who acquires shares of the Company and becomes a shareholder of the company after dispatch of the Notice of AGM and holds shares as on the cut-off date i.e 01.09.2016 may obtain the login ID and password by sending a request at evoting@nsdl.com. If you are already registered with NSDL for e-voting then you can use your existing user ID and password.

A Member may participate in the AGM even after exercising his right to vote through remote e-voting but shall not be allowed to vote again at the AGM.

The facility for voting through ballot paper, will also be made available at the AGM and the members attending the AGM who have not cast their vote by remote e-voting shall be able to exercise their right at the AGM through ballot papers.

- Shri P P Agarwal of M/s P P Agarwal & Co., Practicing Company Secretary (Membership No. FCS 4955). has been appointed as the Scrutinizer to scrutinize the voting and remote e-voting process in a fair and transparent manner.

The Scrutinizer shall immediately after the conclusion of voting at the AGM count the votes cast at the AGM and thereafter, unblock the votes cast through remote e-voting in the presence of at least two witnesses not in the employment of the Company. The Scrutinizer shall submit a consolidated Scrutinizer Report of the Total votes cast in favor of or against, if any. not later than 48 (Forty eight) hours from the conclusion of the AGM to the Chairman of the Company. The Chairman or any other person authorized by the Chairman shall declare the result of the voting forthwith.

- The results declared along with the Scrutinizer’s Report shall be placed on the Company’s website www.ongcindia.com and on the website of Alankit i.e www.alankit.com immediately after the result is declared by the Chairman or any other person authorized by the Chairman and the same shall be communicated to the BSE Limited and National Stock Exchange of India Limited, where the shares of the Company are listed.

By Order of the Board of Directors

(V N Murthy)

Regd. Office: Company Secretary

Jeevan Bharati Building Tower II,

124 Indira Chowk,

New Delhi -110 001

3''“ August, 2016


Mar 31, 2015

Dear Members,

It gives me great pleasure to present, on behalf of the Board of Directors of your Company, the 22nd Annual Report on the business and operations of Oil And Natural Gas Corporation Ltd. (ONGC) and its Audited Statements of Accounts for the year ended March 31, 2015, together with the Auditors' Report and Comments on the Accounts by the Comptroller and Auditor General (CAG) of India.

Your Company along with its group companies has registered yet another year of sustained performance. Exploration and production of crude oil and gas, our core business, set various milestones during the year. Besides that performance in the areas where ONGC has engaged substantially also witnessed success with positive contributions.

ONGC has steadfastly focussed on organic growth through its exploratory endeavours and build a healthy reserve profile for the future. During FY'15, the Company registered Reserve Replacement Ratio (RRR) of 1.38 (with 2P reserves) with 22 oil and gas discoveries in various basins of

the country. This has been possible because of extensive exploration in known basins as well as frontier plays. Domestic crude oil and natural gas production of ONGC along with its share in the domestic joint ventures (PSC-JVs) during FY'15 has been 49.46 million metric tonnes of oil and oil equivalent gas (MMtoe) which is about 2.7% lower than FY'14 production (50.84 MMtoe). On standalone basis crude oil production from ONGC operated fields has been 22.26 million metric tonnes (MMT) against production of 22.25 MMT during FY'14. This goes to the credit of your Company that production decline could be arrested due to prudent reservoir management practices adopted in the matured fields and bringing new fields on stream.

Major Highlights: FY'2014-15

Salient highlights with respect to performance of your Company during FY'2014-15 are as below:

* 22 oil & gas discoveries in domestic acreages with accretion of 61.05 MMToe of 2P reserves.

* RRR (2P) for FY'2014-15 was 1.38; in excess of One consecutively for 9 years.

* Despite natural decline in matured fields, crude oil production from domestic fields maintained at 25.94 MMT Major upside in production was registered from the Western offshore fields with incremental oil gain of 4.3%.

* New and marginal fields contributed about 12.3% of crude oil (2.74 MMT out of 22.26 MMT from domestic operated fields) and 15.2% of natural gas production (3.35 BCM out of 22.02 BCM from domestic operated fields). 34.5% of crude oil production was contributed by the IOR/EOR and redevelopment schemes.

* The gross revenue from operations during FY'2014-15 has been Rs. 830,935 million; 1.3% lower than FY'14.

* Rs. 362,996 million contribution towards sharing the under- recoveries of OMCs during FY'2014-15 impacting ONGC's Profit Before Tax (PBT) by Rs. 309,596 million and Profit After Tax (PAT) by Rs. 204,370 million. Despite this Net Profit has been Rs. 177,330 million; 19.7% lower than the profit during previous year FY'2013-14.

* Hon'ble Prime Minister Mr. Narendra Modi dedicated the 2nd unit of OTPC Power Plant at Palatana, Tripura, to the Nation on December 1,2014. The 726.6 MW gas-based power plant of ONGC Tripura Power Company is the biggest project in North East part of India in terms of investment in E&P, gas and power transmission. It is also credited as the largest Clean Development Mechanism (CDM) projects of the world.

* Your Company decided to invest Rs. 249,000 million in five major projects in estern Offshore for sustaining crude oil and gas production.

* HRD process platform of ONGC was installed successfully on January 15, 2015 using the state-of-the- art Float-Over technology. This is the first such endeavour in the history of ONGC, where installation of an add-on platform with the existing operational platform has been completed successfully.

* The operationalization of FPSO at Cluster-7 project on February 26, 2015 resulted in doubling the crude oil production from around 7,500 barrels per day (bpd) to around 15,000 bpd.

* ONGC Videsh Ltd. (100% subsidiary of your Company) registered 8.87 Mmtoe of O OEG production during FY'2014-15 against 8.36 Mmtoe during FY'2013-14. Production upside primarily came from BC-10 field in Brazil, blocks in Myanmar and the Sakhalin project in Russia.

* Despite higher production, ONGC Videsh's Revenue during FY'2014-15 has been down by 14% due to lower oil prices globally. PAT has been down by 57% due to lower oil prices, exchange losses, higher financing cost and higher depletion charges.

* During the year ONGC Videsh made a maiden venture in New Zealand with exploratory acreages.

Discoveries

Offshore: 10; Onshore: 12

New Prospects: 10; New Pool: 12

NELP Blocks: 7; Nomination blocks: 15

* MRPL commissioned all the units under Phase-III refinery expansion project during the year and registered the highest-ever thru-put of 14.65 MMT

* Turnover of MRPL for the year was down by 17% due to lower products' prices and it registered a net loss of Rs. 11,700 million against Net profit of Rs. 6,010 million in FY'2013-14 due to exchange and inventory losses.

Besides excellence in core operational activities your Company positioned itself as a valuable corporate citizen through its mapped defined actions towards inclusive growth of the Society/Community and green initiatives as per the commitment and our performance was globally recognized. ONGC was ranked at 183rd position among 2000 top global companies in Forbes Global 2000 list published in May'2015. In the global oil and gas operation industry, ONGC has moved up three places to occupy the 18th position. ONGC has been ranked as the Top energy company in India, in the coveted Platt's Top 250 Global Energy Company Rankings 2014. ONGC improved upon its global ranking by a notch to be positioned 21st among the global energy majors. ONGC has also maintained its position as the 3rd largest Exploration and Production (E&P) company in the world. In the latest Newsweek Green Rankings, the world's most recognized assessment of corporate environmental performance, ONGC has made a quantum leap to be ranked 217 globally (it was positioned 386th in 2012 Green rankings). The company now stands third amongst only seven Indian companies named in the prestigious list.

Performance 2014-15 Exploration

During the year 2014-15, ONGC has made 22 Oil and gas discoveries in domestic acreages (operated by ONGC). Out of 22, 10 discoveries are in Offshore and 12 in Onshore; 10 discoveries were made in the new prospects whereas 12 were new pool discoveries. 7 discoveries were made in NELP blocks and 15 in nomination blocks.

Two discoveries (Rudrasagar-184 & Gandhar-699) during 2014-15 in nomination blocks have already been put on production and efforts are on for bringing the other discoveries on production as early as possible. 7 discoveries in NELP blocks (5 Onland, 2 Offshore) are governed by the PSC guidelines and appraisal/ development activities will be taken up keeping in view the timelines of the respective blocks. In addition to these discoveries, exploratory wells conclusively tested and proved to be hydrocarbon bearing will help in field growth of existing fields. Details of the discoveries are as under:

Sr. Well No. Basin/ Type of Sub-basin Hydro-carbon

1 Tukbai-3A (TK-3A) AAFB-Cachar Gas

2 Rupal-2* Oil

3 Vadatal-10 (VDAH)* Cambay Oil

4 Vadatal-11* Oil

5 Thirunagari / Thirunagari-1* Cauvery(On) Gas

6 South Pasarlapudi-1 KG(On) Oil & Gas

7 YS-9-1 (Shift) KG(S) Gas

8 GD-11 / GD-11-1 KG(DW) Gas

9 GKS092NAA-1* Kutch Gas

10 GKS091NDA-1* Offshore Gas

11 C-1-7 Mumbai Oil & Gas

12 C-1-8 Offshore Oil & Gas

13 Rudrasagar / Rudrasagar-184 Oil

14 Khoraghat-35 A&AA (Assam) Gas & Cond.

15 Khoraghat-37 Gas

16 Gandhar-699 Cambay Oil

17 Madanam / Madanam-6* Cauvery Onshore Oil & Gas

18 Damoh / Damoh-4 Vindhyan Gas

19 GS-29-10 (AJ) KG (SW) Oil & Gas

20 G-1-NE-1 KG (S) Oil & Gas

21 G-1-NE-2 KG (S) Gas & Cond.

22 WO-5 / WO-5-11 Mumbai Offshore Oil & Gas

Sr. Well No. Type of discovery

1 Tukbai-3A (TK-3A) New Prospect

2 Rupal-2* New Prospect

3 Vadatal-10 (VDAH)* New Prospect

4 Vadatal-11* New Prospect

5 Thirunagari / Thirunagari-1* New Prospect

6 South Pasarlapudi-1 New Prospect

7 YS-9-1 (Shift) New Prospect

8 GD-11 / GD-11-1 New Prospect

9 GKS092NAA-1* New Prospect

10 GKS091NDA-1* New Prospect

11 C-1-7 New Pool

12 C-1-8 New Pool

13 Rudrasagar / Rudrasagar-184 New Pool

14 Khoraghat-35 New Pool

15 Khoraghat-37 New Pool

16 Gandhar-699 New Pool

17 Madanam / Madanam-6* New Pool

18 Damoh / Damoh-4 New Pool

19 GS-29-10 (AJ) New Pool

20 G-1-NE-1 New Pool

21 G-1-NE-2 New Pool

22 WO-5 / WO-5-11 New Pool

* In NELP blocks

Details of the discoveries in NELP blocks (since inception till 01.04.2015)

Out of the 114 NELP blocks awarded to/ acquired by ONGC as operator, currently ONGC is operating in 49 blocks, balance 65 blocks have been relinquished. Exploration/ appraisal programme is underway in all the active blocks. A total of 47 discoveries as on date (16 in deep-water, 13 in shallow water and 18 in onland) have been made by ONGC in 22 of these NELP blocks (6 deep-water, 6 shallow water & 10 onland). Commencement of production from these discoveries is governed by stipulations laid down in the respective PSCs and is to be taken up after successful completion of appraisal programme followed by submission of DOC and approval of Field Development Plan. ONGC has put three NELP Blocks on Commercial Production:

a. NELP Block CB-ONN-2004/1 (Karannagar)

Onshore NELP Block CB-ONN-2004/1 (Karannagar) located in Ahmedabad was put on commercial production on 24.03.2015 within 24 hours of getting the Mining Lease. This NELP block was awarded to consortium of ONGC and GSPC in VI round of NELP bidding in 2007. ONGC is the operator of block with 60% participatory interest.

b. NELP block CB-ONN-2004/2 (Vadatal)

Vadatal-1 in the NELP block CB-ONN-2004/2 (Vadatal) was put on production on March 26, 2015. The NELP block CB-ONN-2004/2 was awarded to a consortium of ONGC and GSPC in VI round of NELP bidding in 2007. ONGC is the operator of the block (PI: 55%) with partner GSPC (PI: 45 %.).

c. NELP block CB-ONN-2002/1 (West Patan)

West Patan #3 well in the NELP block CB-ONN-2002/1 (West Patan) was put on commercial production on 31.03.15 on the same day of getting the Mining Lease from the Govt. of Gujarat. The block CB-ONN-2002/1, covering 135 sq. km and falls in the northern part of the Cambay Basin and is located west of Patan town in North Gujarat.

Reserve accretion & Reserve Replacement Ratio (RRR)

Continuing exploration in challenging and frontier areas, your company has accreted 215.65 million metric tonnes of oil equivalent (MMtoe) of In-place volume of hydrocarbon in the domestic basins (operated by ONGC). As on 01.04.2015, in-place hydrocarbon volume of ONGC as a group stands at 9,283.84 MMtoe; up 4.2% from FY'2013-14 figure of 8,912.81 MMtoe. The ultimate reserves (3P) accretion in domestic area (ONGC operated) during FY'2014-15 has been 70.98 MMtoe and 2P reserve accretion has been 61.06 MMtoe. Total reserve accretion during 2014-15 in domestic basins including ONGC's share in PSC JVs stands at 60.03 MMtoe. Voluntary disclosures in respect of Oil & Gas Reserves, conforming to SPE classification 1994 and US Financial Accounting Standards Board (FASB-69) have been made by your Company.

The following table gives the details of reserve accretion (2P) for the last 5 years in domestic basins as well as from the overseas assets:

Ultimate Reserve (2P) accretion O OEG (in MMToe)

Year Domestic ONGC's share in Total Assets Domestic JVs Domestic Reserve (1) (2) (3) = (1) (2)

2010- 11 63.09 0.29 63.38

2011- 12 58.67 1.43 60.1

2012- 13 67.59 4.23 71.82

2013- 14 56.26 4.29 60.55

2014- 15 61.06 -1.03 60.03

Ultimate Reserve (2P) accretion O OEG (in MMToe)

Year ONGC VIDESH's Total Share in Foreign Asset (5)=(3) (4) (4)

2010- 11 54.2 117.58

2011- 12 -0.06 60.04

2012- 13 10.09 81.91

2013- 14 213.24 273.79

2014- 15 20.03 80.06

Note: Reserve accretion reported in terms of 2P reserves

Statement of Reserve Recognition Accounting (RRA)

Reserve Recognition Accounting is a voluntary disclosure towards recognizing income at the point of discovery of reserves and seeks to demonstrate the intrinsic strength of an organization engaged in exploration and production of hydrocarbons with reference to its future earning capacity in terms of current prices for income as well as expenditure. This information is based on the estimated net proved reserves (developed and undeveloped) as determined by the Reserves Estimates Committee of the Company.

As per FASB-69 on disclosure about Oil and Gas producing activities, publicly traded enterprises that have significant Oil and Gas producing activities, are to disclose with complete set of annual financial statements, the following supplemental information:

a) Proved Oil and Gas reserve quantities

b) Capitalized costs relating to Oil and Gas producing activities

c) Cost incurred for property acquisition, exploration and development activities

d) Results of operations for Oil and Gas producing activities

e) A standardized measure of discounted future net cash flows relating to proved Oil and Gas reserve quantities

Your Company has disclosed information in respect of (a) to (d) above in the Annual Financial Statements.

Your Company has also made voluntary disclosure on standardized measure of discounted future net cash flows relating to proved oil and gas reserve at Annexure-A' to this report as statement of Reserve Recognition Accounting (RRA).

Oil & Gas production

During FY '15, your Company retained its position as the largest producer of oil and gas in the country and contributed 69 per cent of oil and 70 per cent of natural gas production of the country from its domestic operations. On standalone basis, in FY'15 ONGC's domestic crude oil production registered 22.26 MMt against 22.25 MMt in FY'14, reversing the production decline in domestic fields. The major contribution came from Western Offshore, which produced 4.3 per cent more than the production during last year. Details of crude oil and natural gas production from domestic basins along with that of Value Added Products (VAP) are as below:

Unit Production Qty ales Qty

FY'15 FY'14 FY'15 FY'14

Direct

Crude Oil (MMT) 25.94 25.99 24.11 23.61

Natural Gas (BCM) 23.52 24.85 17.98 19.63

Ethane/Propane 000 MT 339 430 337 428

LPG 000 MT 1,095 1,067 1,090 1,073

Naphtha 000 MT 1,155 1,358 1,124 1,379

SKO 000 MT 72 84 74 85

Others

Sub Total

Trading

Motor Spirit 000 KL 0.53 0.54

HSD 000 KL 0.39 0.05

Sub Total

Total

Value (Rs. in million)

FY15 FY'14

Direct

Crude Oil 536,638 25,734

Natural Gas 187,381 83,291

Ethane/Propane 10,064 14,837

LPG 34,380 30,145

Naphtha 50,835 75,743

SKO 2,771 2,779

Others 1,359 2,124

Sub Total 823,428 34,653

Trading

Motor Spirit 38 41

HSD 22 3

Sub Total 60 44

Total 823,488 834,697

Oil & Gas production of ONGC Group, including PSC-JVs and from overseas Assets for FY'15 has been 58.33 MMtoe (against 59.21 MMtoe during FY'14).

Out of the total production of 31.47 MMT of crude oil, 70.8 per cent production came from ONGC operated domestic fields, 17.5 per cent from the overseas assets and balance 11.7 per cent from domestic joint ventures. As far as natural gas production is concerned, majority of production (82 per cent) came from ONGC operated domestic fields, 12.4 per cent from overseas assets and 5.6 per cent from domestic joint ventures.

Production from overseas assets

ONGC Videsh, has thirteen (13) producing assets in ten countries - Venezuela (1), Brazil (1), Colombia (1), Sudan (1), South Sudan (2), Syria (1), Vietnam (1), Mayanmar (2), Russia (2) and Azerbaijan (1).

Total production from these overseas assets during FY'15 has been 8.87 MMtoe of O OEG (Crude oil: 5.53 MMT & Gas: 3.34 BCM).

Ajerbaijan has contributed 12% as compared to around 0.1% last year. Resumption of operations in South Sudan & Sudan has also contributed to this year's increased volume contributing 13.2% this year as compared to 8.2% last year. Russia & Vietnam continued to be the biggest contributor to overseas production volume with 29.4% and 23% respectively.

Unconventional sources of energy

ONGC plans to continue its endeavor for exploration and development of Unconventional & other resources like Shale Gas, CBM, etc. ONGC has prioritized suitable actions for exploration and exploitation of Non-Conventional and Alternate Sources of energy which has the potential to change the energy business landscape in the country as it is happening in the other parts of the world. The initiatives by ONGC in these areas are summarized below;

a. Shale Gas

ONGC has the distinction of establishing the first flow of shale gas in the country on 25th January, 2011 from RNSG#1 well (R&D Pilot Project, Durgapur).

ONGC has chalked out plan of drilling of pilot shale gas and oil wells in most of the identified blocks in Cambay,Krishna-Godavari,Cauvery and Assam &Assam-Arakan Basins. During October, 2013 Government of India brought out shale gas policy which allows National Oil Companies viz. ONGC and OIL to initiate shale gas and oil assessment activities in their allocated nomination blocks in phased manner. As per the new Policy, 50 nomination PML blocks have been identified in four Basins - 28 PMLs in Cambay, 3 PMLs in A&AA, 10 PMLs in Krishna-Godavari and 9 PMLs in Cauvery basins for Shale Gas assessment within three year period of Phase-I. A total of 57 pilot/assessment wells are to be drilled by April, 2017

During 2014-15, ONGC has drilled five exploratory wells for shale gas exploration (4 dual and 1 exclusive) in Cambay, Cauvery, Krishna-Godavari and Assam- Arakan Basins and samples have been collected for assessment of Shale Gas potential. Most of the studies in wells drilled last year have been completed and the integration/ assessment exercise is in progress. Based on the review of data collected in wells JMSGA and GNSGA, prospective intervals have been identified in Cambay Shale which are planned to be hydro- fractured shortly. Presently, 2 Shale gas wells (GNSGB & GNSGC, Cambay Basin) and 1conventional well with dual objective (WPGAA,KG Basin) are under drilling.

b. Coal Bed Methane (CBM)

Of the total thirty-three CBM Blocks awarded by GOI to various operators through four rounds of bidding and nomination, ONGC was awarded nine CBM blocks. Due to poor CBM potential, concluded on the basis of the data generated in the exploratory activities, five Blocks viz. Satpura (Madhya Pradesh), Wardha (Maharashtra), Barmer-Sanchor (Rajasthan), North Karanpura (West) and South Karanpura (Jharkhand) have been relinquished.

Currently, ONGC is operating four CBM Blocks i.e., Jharia, Bokaro, North Karanpura (Jharkhand) and Raniganj (West Bengal),FDP of which has been approved. Nearly 400 wells and 2000 hydro-fracturing jobs have to be carried out in the coming 4-5 years as per timelines of the CBM Contract. In view of the mammoth and time bound task, ONGC is in the process of farming out its participative interest (PI) to experienced CBM players through formation of JV. Farm out Agreement (FoA) for North Karanpura Block has been signed on October 7, 2014 with M/s Prabha Energy Pvt. Ltd (PEPL) with assignment of 25% PI from ONGC's share. Documents have been submitted to DGH for Government's approval of PI assignment. Joint Venture for farming out in Bokaro Block is being negotiated. Further, offers for formation of Joint Venture for Jharia and Raniganj blocks are being invited.

Sale of incidentally CBM gas from existing wells at Parbatpur of Jharia block is continuing and as on April 1, 2015 cumulative gas supply has been 13,875,102 SCM.

c. Underground Coal Gasification (UCG)

ONGC with GIPCL selected Vastan Mine block site in Gujarat as an R&D project to establish UCG technology. All the ground work and inputs for construction and implementation of UCG Pilot Project at Vastan, has been completed and further development is awaiting award of Mining Lease by Ministry of Coal (MoC), GoI.

Further, a number of sites have been jointly identified by ONGC & Neyveli Lignite Corporation Limited (NLC) for studying their suitability to UCG. These are Tadkeshwar in Gujarat and Hodu-Sindhari & East Kurla in Rajasthan. One more site was jointly identified by ONGC & GMDC viz. Surkha in Bhavnagar district, Gujarat. The data of all the fields have already been analyzed for evaluating the suitability of these sites for UCG. All the sites have been found suitable for UCG exploration.

Oil & Gas Projects

In recent years your Company took up 15 projects for development of 39 new/marginal oil and gas fields with an investment of Rs. 386,024 million. Out of these 15 projects, 11 projects have already been completed. Production from development of G-1 & GS-15 fields has already commenced. Rest three projects, Development of WO-16 Cluster, C-26 Cluster and B-127 Cluster, are under implementation and are expected to be completed in FY'17. Further, Improved Oil Recovery (IOR), Enhanced Oil Recovery (EOR) and redevelopment projects were also taken up by your Company for prudent reservoir management and arresting decline from matured fields. 21 of 26 such projects have so far been completed. Two projects i.e., "Heera & South Heera Redevelopment Project" and "Development of Western Periphery of Mumbai High South" project is likely to be completed by Mid FY'16 and the remaining three projects i.e., "Redevelopment of Mumbai High North Phase-III", "Redevelopment of Mumbai High South Phase-III" and "Additional development of Vasai East" will be completed by the year 2017-18.

Details about the projects completed during the year 2014-15, new projects taken up are given as below:

Oil and Gas projects completed during FY'2014-15

The following eight major field development and other projects were completed during the year 2014-15:

Sl. Name of Projects Completion/ Total No Commencement Investment of production Rs. million

1 Development of SB-14 April, 2014 4,104

2 MHN Redevelopment Phase-II June, 2014 71,334

3 MHS Redevelopment Phase-II June, 2014 88,134

4 Development of B-46 June, 2014 14,570 Cluster Fields

5 Fire Water Network at Uran July, 2014 1,717

6 Development of C July, 2014 36,904 Series fields (C-24 Cluster)

7 Development of B-22 July, 2014 29,208 Cluster fields

8 Additional Development July, 2014 23,316 of NBP (D-1) field

Sl. Name of Projects No Envisaged oil & gas gain

1 Development of SB-14 0.197 MMm3 of condensate & 1.641 BCM of gas in its project life of 12 years

2 MHN Redevelopment Phase-II 17.354 MMT of oil and 2.987 of gas BCM respectively by 2029-30

3 MHS Redevelopment Phase-II 18.31 MMT of oil and 2.70 BCM of gas by 2029-2030

4 Development of B-46 5.273 BCM of gas & 1.68 MMm3 of Cluster Fields condensate in its project life of 12 years

5 Fire Water Network at Uran For safe operations

6 Development of C 10.771 BCM of gas and 2.166 MMT Series fields (C-24 Cluster) of condensate by 2024-25

7 Development of B-22 2.46 MMT of oil, 1.13 MMT of Cluster fields condensate and 6.56 BCM of gas by 2019-2020

8 Additional Development 8.296 MMT of oil by 2024-25 of NBP (D-1) field

Projects brought to production in FY'2014-15

Production commenced from following six projects during the year

Sl. Fields Project Date of No Commencement of production

1. SB-14 Development of 7th April, 2014 SB-14 field

2. BHE Development of BHE & 4th April, 2014 BH-35 fields

3. WO-24 Development of 10th June, 2014 Cluster-7 fields

4. B-193 Development of B -193 26th May, 2015 Cluster fields

5. B-178 Development of B -193 25th May, 2015 Cluster fields

6. B-179 Development of B -193 24th May, 2015 Cluster fields

Sl. Name of Projects Approved Cost Incremental Oil No (Rs. million) & Gas gain

1 MHN Redevelopment 58,133 6.997 MMT of Oil Phase-III and 5.253 BCM of gas by the year 2029-30

2 MHS Redevelopment 60,688 7.547 MMT of oil Phase-III and 3.864 BCM of gas by the year 2029-30

3 Additional Development 24,768 1.827 MMT of Oil of Vasai and 1.971 BCM of gas by the year 2029-30

4 Integrated Development 60,861 5.01 MMm3 of of Daman condensate and 27.67 BCM of gas by the year 2024-25

5 Enhanced Recovery from 46,199 19.36 BCM of gas Bassein field through 1.97 Mm3 of Integrated Development condensational, of Mukta, Bassein & Panna 0.183 mmt of oil till 2027-28

6 Pipeline replacement 28,999 Project-IV

Total 279,648

1. Financial Results

Despite volatile markets and sharing under-recoveries of Rs. 362,996 million during the year 2014-15, your Company has earned a Profit After Tax (PAT) of Rs.177,330 million, down 19.74% over FY 2013-14 (Rs. 220,948 million). During 2014-15, your Company registered Gross revenue of Rs. 830,935 million, down 1.32 % over 2013-14 (Rs. 842,028 million).

Highlights

* Gross Revenue : Rs. 830,935 million

* Profit After Tax : Rs. 177,330 million

* Contribution to Exchequer : Rs. 421,074 million

* Return on Capital Employed : 33.2 %

* Debt-Equity Ratio : 0.0096 :1

* Earnings Per Share (Rs.) : 20.73

* Book Value Per Share (Rs.) : 168

Particulars 2014-15 2013-14

Revenue from operations 830,935 842,028

Other Income 53,666 67,132

Total Revenues 884,601 909,160

Profit Before Interest, Depreciation & Tax (PBIDT) 380,163 433,582

Profit Before Tax (PBT) 265,552 324,319

Profit After Tax (PAT) 177,330 220,948

APPROPRIATION

Interim Dividend 77,000 79,138

Proposed Final Dividend 4,278 2,139

Tax on Dividend 16,256 13,807

Transfer to General Reserve 79,796 125,864

TOTAL 177,330 220,948

The decrease in Profit during FY 14 -15 as compared to FY 13-14 is mainly due to higher exploratory wells written off and reduction in quantity sold as well as lower price realization of value added products.

Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statement of its subsidiaries, associate company and joint venture in Form AOC-1 forms part of the Financial Statements.

2. Dividend

Your Company paid interim dividend of Rs. 9.00 per share (180 per cent) in two phases('5.00 and Rs. 4.00). The Board of Directors has recommended a final dividend of Rs. 0.50 per share(10 per cent) making the aggregate dividend at Rs. 9.50 per share (190 per cent) for FY 14-15 i.e. same as compared to dividend for the year 2013-14. The total dividend will be Rs. 81,278 million, besides Rs. 16,256 million as tax on dividend amounting to 55% of PAT

3. Management Discussion and Analysis Report

As per the terms of Clause 49VIIID of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report (MDAR) has been included and forms part of the Annual Report of the Company.

4. Financial Accounting

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable Accounting Standards and Successful Efforts Method of accounting as per the Revised Guidance Note on Accounting for Oil & Gas Producing Activities issued by The Institute of Chartered Accountants of India (ICAI) effective from 01.04.2013 and provisions of the Companies Act, 2013. Further, as per Ministry of Corporate Affairs (MCA) notification, the financial statements have been prepared under the Schedule III format of the Companies Act, 2013.

Loans, Guarantees or Investments

ONGC is engaged in Exploration & Production business which is covered under the exemption provided under Section 186(11) of the Companies Act, 2013. Accordingly, the details of loans given, investment made or guarantee or security given by the company to subsidiaries and associates is not required to be reported.

Related Party Transaction

Particulars of contracts or arrangements with related parties referred to in Section 188 of the Companies Act, 2013 in the form AOC-2 form part of Board's Report and placed at Annexure-B.

5. Subsidiaries

I ONGC Videsh Limited (ONGC Videsh)

Videsh, the wholly-owned subsidiary of your Company for E&P activities outside India, has participation in 36 projects in 17 countries viz., Azerbaijan, Bangladesh, Brazil, Colombia, Iran, Iraq, Kazakhstan, Libya, Mozambique, Myanmar, New Zealand, Russia, South Sudan, Sudan, Syria, Venezuela and Vietnam. Out of 36 projects, 13 are producing, 4 are discovered/ under development, 17 are exploratory and remaining 2 are pipeline projects.

ONGC Videsh is currently producing about 167 thousand barrels of oil and oil equivalent gas per day and has total oil and gas (2P) reserves of about 612 MMtoe as on 31st March 2015. During FY'15, there is an increase in oil and gas production by 6.19% (Oil 0.86% and Gas 16.37%) as compared to previous fiscal year. The incremental production is primarily due to better management of fields and addition in the portfolio.

ONGC Videsh's share in production of oil and oil equivalent gas (O OEG), together with its wholly-owned subsidiaries, ONGC Nile Ganga B.V, ONGC Amazon Alaknanda Limited, Imperial Energy Limited and Carabobo One AB, was 8.874 MMtoe during FY15 as compared to 8.357 MMtoe during FY 14. The oil production increased from 5.486 MMT during FY'14 to 5.533 MMT during FY'15 (0.86% higher) primarily due to increased share of additional 12% PI in Block BC-10, Brazil.

During FY'15, the company has earned profit after tax of Rs. 19,042 million, a decrease of 57% as compared to FY'14. Despite higher production during FY'15, the decrease in profit is mainly due tolower oil prices, higher financing cost including exchange loss, higher depletion charge, and impairment provision in one of the assets.

(A) Significant Acquisitions, Alliances and Operations highlights of ONGC Videshduring FY'15 are as follows:

a) Block PEP 57090, New Zealand: ONGC Videsh was awarded an exploration permit PEP 57090 in the Taranaki offshore basin by Government of New Zealand on 9th December, 2014. ONGC Videsh has now started operations in Pacific Region.

b) During FY'15, ONGC Videsh has signed the following MoUs:

(i) MoU with ROSNEFT was executed on 24th May, 2014 for cooperation in subsurface surveys, exploration and appraisal activities and hydrocarbon production in Russia's offshore Arctic.

(ii) MoU with TPAO (the Turkish Petroleum Company) was executed on 18th June 2014 for working together for E&P activities in Turkey, joint participation in bidding for opportunities including exploration bid rounds in third countries and pursuit of hydrocarbon opportunities related research and development activities.

(iii) MoU with YPF S.A. Argentina was executed on 1st September, 2014 for working to explore possibility of cooperation in the areas of Unconventional and Conventional Hydrocarbon Assets in Argentina, E&P activities in India and in third countries, research & development activities and human resources development.

(iv) Lol with Petro Vietnam was executed on 15th September, 2014, for expansion of exploration activities by ONGC Videsh in Vietnam by considering participation in 2-3 additional blocks subject to technical and commercial viability and requisite approvals.

(v) MoU with Pemex-Exploracion Y Production (PEP) was executed on 25th September, 2014, for cooperation in the hydrocarbon sector in the fields of technology, human resources, research & development.

(vi) MoU with Mubadala Petroleum, UAE was executed on 29th September, 2014, for collaboration in potential upstream oil & gas exploration, development and producing projects and LNG opportunities.

(vii) HoA with PVEP was executed on 28th October, 2014, for mutual cooperation and participation in Blocks 102/10 & 106/10 of PVEP and Block 128 of ONGC Videsh in offshore Vietnam subject to due diligence and negotiations on the terms of participation.

(c) Operations

i. In Sakhalin-1 Project, the topside of "Berkut"-world's biggest offshore platform in Arkutun-Dagi field, was successfully floated over from South Korea to Russia and installed on 20th June, 2014 with production commencing from 5th January, 2015.

ii. Gas Export Pipeline Remediation project in Block BC-10, Brazil was successfully commissioned on 1st November, 2014 leading to gas export about 0.27 MMSCMD.

iii. In A-1/A3 Project, Myanmar, plateau gas production rate of 14.2 MMSCMD was achieved on 2nd December, 2014.

iv. Oil production from Petro Carabobo, Venezuela, crossed 16,000 BOPD on 16th March, 2015 with average oil production of 9,775 BOPD during FY'15 as compared to 3,293 BOPD during FY'14.

v. First crude oil cargo of 1.2 million barrel of Petro Carabobowas lifted by RIL on 25th May, 2014 from Venezuela.

vi. The ongoing geo-political situation in Syria including EU sanctions and the resulting restrictions on contractors continue adversely affecting Syrian operations since December, 2011.

vii. The operations in South Sudan projects are temporarily under shutdown after internal conflicts and adverse security situation in the country since 22nd December, 2013. The operations in South Sudan shall resume once security situation improves.

Direct Subsidiaries of ONGC Videsh

i. ONGC Nile Ganga B.V. (ONGBV)

ONGBV, a subsidiary of ONGC Videsh, is engaged in E&P activities in Sudan, South Sudan, Syria, Venezuela, Brazil and Myanmar. ONGBV holds 25 per cent Participating Interest (PI) in Greater Nile Oil Project (GNOP), Sudan with its share of oil production of about 0.705 MMT during 2014-15. ONGBV also holds 25 per cent PI in Greater Pioneer Operating Company (GPOC), South Sudan. Due to adverse geo-political conditions, ONGC Videsh could not produce in GPOC, South Sudan during FY'15.

ONGBV holds 16.66 per cent to 18.75 per cent PI in four Production Sharing Contracts in Al Furat Project (AFPC), Syria. Due to force majeure condition in Syria, there was no production in AFPC project during FY'15. ONGBV holds 40 per cent PI in San Cristobal Project in Venezuela through its wholly owned subsidiary ONGC Nile Ganga (San Cristobal) BV with its share of oil production of about 0.645 MMT during FY' 15. ONGBV holds 27 per cent PI in BC-10 Project in Brazil through its wholly owned subsidiary ONGC Campos Ltd. with its share of oil and gas production of about 0.854 MMtoe during FY' 15. It also holds 25 percent PI in Block BM- SEAL-4 located in deep-water offshore, Brazil through its wholly owned subsidiary ONGC Campos Ltd. ONGBV also holds 8.347 per cent PI in South East Asia Gas Pipeline Co. Ltd., (SeAGP) for Pipeline project, Myanmar through its wholly owned subsidiary ONGC Caspian E&P B.V.

ii. ONGC Narmada Limited (ONL)

ONL has been retained for acquisition of future E&P projects in Nigeria.

iii ONGC Amazon Alaknanda Limited (OAAL)

OAAL, a wholly-owned subsidiary of ONGC Videsh, holds stake in E&P projects in Colombia, through Mansarovar Energy Colombia Limited (MECL), a 50:50 joint venture company with Sinopec of China. During FY' 15, ONGC Videsh's share of oil production in MECL was about 0.626 MMT

iv. Imperial Energy Limited

Imperial Energy Limited, a wholly-owned subsidiary of ONGC Videsh incorporated in Cyprus, has its main activities in the Tomsk region of Western Siberia, Russia. During FY' 15, Imperial Energy's oil and gas production was about 0.289 MMToe.

v. Carabobo One AB

Carabobo One AB, a subsidiary of ONGC Videsh incorporated in Sweden, indirectly holds 11 per cent PI in Carabobo-1 Project, Venezuela. During FY' 15, Carabobo's oil production was about 0.066 MMT

vi. ONGC (BTC) Limited :

ONGC (BTC) Limited holding 2.36 per cent interest in the Baku-Tbilisi-Ceyhan Pipeline ("BTC") owns and operates 1,768 km oil pipeline running through Azerbaijan, Georgia and Turkey. The pipeline mainly carries crude from the ACG fields from Azerbaijan to the Mediterranean Sea.

vii. Beas Rovuma Energy Mozambique Limited:

Beas Rovuma Energy Mozambique Limited was incorporated in British Vergin Islands (BVI) and holding 6% PI in Rovuma Area 1, Mozambique.

viii. ONGC Videsh Atlantic Inc.:

ONGC Videsh Atlantic Inc. is incorporated in Texas, United States of America, to work in co-ordination with Anadarko (Operator of Rovuma Area 1, Mozambique) and to establish G&G centre etc.

ix. ONGC Videsh Rovuma Limited:

ONGC Videsh Rovuma Limited was incorporated in Mauritius for structuring of 10% PI in ONGC Videsh's Rovuma Area 1, Mozambique.

II Mangalore Refinery and Petrochemicals Limited (MRPL)

Your Company continues to hold 71.62 per cent equity stake in MRPL, a Schedule A' Mini Ratna, which is a single location 15 MMTPA Refinery on the West coast.

Performance Highlights FY 2014-15

MRPL achieved the highest-ever thru'put of 14.65 MMT in FY 14-15 against 14.55 MMT in FY 13-14 .

MRPL exported 4.98 MMT of products against 6.72 MMT in the previous year. The exports were low compared to the previous year due to the commissioning of Delayed Coker Unit and increased domestic sale of Kerosene and HSD .

Crude sourcing (Receipts): 14.35 MMT; Iran (34.83 per cent), Saudi Arabia (19.67 per cent), ADNOC (12.12 per cent), Kuwait (15.12 per cent), Basrah Light (0.8 percent) Mumbai High (5.03 per cent), Ravva and KG basin (3.50 per cent) Sonangol (3.81 percent) Spot (5.12 per cent).

Marketing and Retail Operations

MRPL continues to expand its market spread in the direct sales segment of petroleum products in the state of Karnataka and its adjoining states. MRPL has significant market share and direct customer relations for products such as Bitumen, Fuel Oil, Sulphur, Diesel, Petcoke and Mixed Xylene in its refinery zone. The total sales volume of direct marketing products during the FY 2014-15 was 820 TMT with a sales value of Rs. 22,970 million compared to volume of 507 TMT and sales value of Rs. 25,890 million in the previous FY 2013-14.

Phase III - Brownfield expansion Project

All the units of MRPLs Phase III up-gradation and expansion project have been commissioned . The Polypropylene unit was inaugurated by Hon'ble Minister (I/C) P&NG on 05-04-2015.

Acquisition of controlling stake in OMPL

MRPL has increased its stake in OMPL to 51 % by subscribing to the right issue made by OMPL Subsequently OMPL has become subsidiary of MRPL and a Government company under Companies Act, 2013.

6. Annual Report of Subsidiaries and Consolidated Financial Statement

In accordance with Section 134 of the Companies Act, 2013 and the Accounting Standard (As)-21 on "Consolidated Financial Statements" read with AS-23 on "Accounting for Investments in Associates" and AS- 27 on "Financial Reporting of Interests in Joint Ventures", audited Consolidated Financial Statements for the year ended 31st March, 2015 of the Company and its subsidiaries form part of the Annual Report.

Full Annual Report of subsidiaries of ONGC will be made available to any shareholder, if he/she desires, which is also available on Company's website. Further, Annual Reports of MRPL and ONGC Videsh are also available on website www.mrpl.co.in and www.ongcvidesh.com respectively.

7. Joint Ventures/ Associates

i. ONGC Petro-additions Limited (OPaL)

ONGC Petro-additions Limited (OPaL), has been promoted by your company asa Joint Venture (JV) Company, with envisaged equity stake of 26% along with GAIL (15.5%). gSpC also has a token presence in OPaL.

The balance equity of 58.5% is to be tied up with Strategic Partners/ FIs / IPO.

OPaL is a mega petrochemical project at Dahej SEZ for utilizing in-house production of C2-C3 and Naphtha from various units of ONGC.

Present status

* Overall Cumulative progress is 95 %.

* Total cumulative expenditure as on 31st March 2015 is Rs. 213,110 million. Approved project cost is Rs. 270,110 million.

* Debt closure has been attained for approved project cost of Rs. 270,110 million with the execution of Rupee Term Loan agreement.

* Phase-wise commissioning of the complex has commenced with stabilized operations envisaged in Q3 2015-16.

ii. ONGC Tripura Power Company Ltd (OTPC)

Your Company has promoted OTPC with an envisaged stake of 50% along with Govt. of Tripura (0.5%) and IL&FS Energy Development Co. Ltd. (IEDCL-an IL&FS subsidiary) (26%); the balance 23.5% has been tied up with India Infrastructure Fund-II acting through IDFC alternatives Limited.

OTPC has set up a 726.6 MW (2 X 363.3 MW) gas based Combined Cycle Power Plant (CCCP) at Palatana, Tripura. The basic objective of the project is to monetize idle gas assets of ONGC in land-locked Tripura state and to boost exploratory efforts in the region.

Present Status

* OTPC's first unit (Unit-1) was dedicated to the Nation by the Hon'ble President of India on 21stJune, 2013 and its commercial operation was achieved on 4thJanuary 2014 in presence of representatives of beneficiary states. The second unit was dedicated to nation by Hon'ble Prime Minister of India on 1st December, 2014 and its commercial operation was achieved on 24th March, 2015.

The Plant has been granted provisional tariff by Central Electricity Regulatory Commission (CERC). The Ministry of Power has allocated more than 86% of power from the project (two units) to the NER beneficiary states while 98 MW is allocated to OTPC for merchant sales. The OTPC has signed a gas sale and purchase agreement (GSPA) with ONGC for supplying Daily contracted Quantity of 2.65 MMSCMD of gas.

* The 663 KM long 400 KV double circuit transmission network Palatana-Bongaigaon transmission has been commissioned up to Bongaigaon by North-East Transmission Company Limited (NETCL), a joint venture of Power Grid Corporation, OTPC and Governments of the North-Eastern states. This development is helping in evacuating power from both Unit-1and Unit-2.

* The total expenditure incurred on the project till 31st March, 2015 is Rs. 37511 million against the total estimated cost of Rs. 40,470million.

iii. ONGC Mangalore Petrochemicals Limited (OMPL)

Your company has promoted OMPL which has set up Aromatic Complex with an annual capacity 914 KTPA of Para-xylene and 283 KPTA of Benzene in Mangalore Special Economic Zone as value chain integration project of ONGC. The total project cost is about Rs. 68,750 million and commenced commercial operation from 1st October, 2014. 2,59,618 MT of Para-xylene and 61,788 MT of Benzene, have since been exported in the financial year, as the production is being ramped up. After successful commissioning of OMPL in October, 2014, MRPL has increased its equity from 3% to 51.002% in February, 2015 with balance 48.998% held by ONGC and thus OmPL has become a subsidiary of MRPL.

iv. Dahej SEZ Ltd (DSL)

Your company as Lead Promoter has developed a multi-product SEZ at Dahej in coastal Gujarat .Your Company is setting up C2-C3 Extraction Plant on its own and value-chain integration project - OPaL through JV route in this SEZ Area. Your company has 23% equity in the project with GIDC having 26% and balance 51% is proposed to be tied up through IPO / Strategic / Financial Investor.

Present status:

* SEZ is already operational and units in SEZ have clocked export of Rs. 19,740 million in FY 2013-14 and Rs. 21,050 million in FY 2014-15.

v. Mangalore Special Economic Zone Limited (MSEZ)

With an envisaged equity stake of 26% along with KIADB (23%), IL&FS (50%), OMPL (0.96%) and KCCI (0.04%), ONGC has set up MSEZ to serve as site for development of necessary infrastructure to facilitate and locate ONGC/MRPLs Aromatic complex being promoted by ONGC.

Present Status:

Commercial Operation Date (COD) has been declared on 1st April, 2015.

vi. Petronet MHB Limited (PMHBL)

* PMHBL is a JV company wherein your company has an

equity stake of 28.7% along with HPCL (28.7%) and PIL (7.9%) with balance 34.57per cent of equity being held by leading banks.

* PMHBL owns and operates a multi-product pipeline to transport MRPLs products to the hinterland of Karnataka.

* In FY'15 PMHBL pipeline has achieved a throughput of 3.141MMT against total throughput of 3.073 MMT last year. As per audited results for the year 2014-15, the turnover and PAT of PMHBL are Rs. 1,071 million and Rs. 341million respectively.

vii. ONGC TERI Biotech Limited (OTBL)

ONGC TERI Biotech Limited ( O T B L ) w h i c h w a s incorporated on 26th March, 2007 is a Joint-venture Company of ONGC in association with The Energy Research Institute (TERI), with shareholding of 49.98% & 48.02%, respectively. Through the efforts of joint research of oNgC & TERI over the years, OTBL is offering below mentioned technologies and providing various Biotechnical Solutions to Oil and Gas Industry, both in India and abroad:

OilzapperTechnology(Bioremediation)- used to eliminate & tackle Oil Spills, Oily Sludge, and hazardous hydro carbon waste;

Paraffin Degrading Bacteria (PDB)- used to prevent Paraffin Deposition in Oil well Tubing;

Wax Deposition Prevention (WDP)- used to prevent Paraffin Deposition in surface and sub-surface flow lines; Microbial Enhanced Oil Recovery (MeOR)- used for Enhanced Oil Recovery by mobilizing crude oil trapped in pores of Oil Reservoirs.

During 2014-15 the turnover of OTBL was Rs. 180.0 Million with Profit after Tax of Rs. 45.1 Million as against turnover of Rs. 141.0 Million and Profit after Tax of Rs. 44.8 Million in the previous year.

viii. Petronet LNG Limited (PLL)

ONGC has 12.5 per cent equity stake in PLL, identical to stakes held by other Oil PSU co-promoters viz., IOCL, GAIL and BPCL. Dahej LNG terminal of PLL having a capacity of 10 MMTPA is currently meeting nearly 20 per cent of the total gas demand of the country. Dahej LNG Terminal is being further expanded from 10 MMTPA to 15 MMTPA. The construction activities continue as planned and the project is expected to be completed by end 2016.

A new LNG terminal of capacity 5 MMTPA has been set up at Kochi and has already been dedicated to the Nation.

The Company is also planning to set up an LNG terminal of capacity 5 MMTPA at Gangavaram, Andhra Pradesh. The turnover of PLL during 2014-15 is Rs. 395,010 million and net profit is Rs. 8,825 million.

ix. Pawan Hans Limited (PHL)

ONGC has 49 per cent equity stake in PHL (previously known as Pawan Hans Helicopters (A Government of India Enterprise) Limited). Balance 51 per cent equity is held by the Government of India. PHL is one of Asia's largest helicopter operators having a well-balanced operational fleet of 46 helicopters. It provides helicopter support for ONGC's offshore operations. PHL was successful in providing all the 12 Dauphin N and N3 helicopters fully compliant with AS-4 as per the new contract with ONGC.

8. Other New Projects/ Business initiatives C2-C3-C4 Extraction Plant

* Your company has set up a C2, C3 and C4 Extraction Plant at Dahej having a capacity to process 5.0 MMTPA Rich Liquefied Natural Gas (LNG) from M/s Petronet LNG Limited (PLL) as feed stock, for extraction of C2, C3 & C4 products.

* The plant will be commissioned shortly.

* These extracted C2, C3 and C4 products would be feed stock for ONGCs promoted Joint Venture OPaL in the same SEZ at Dahej. They would form 40 % feed stock for upcoming OPaL Project.

* However till the starting operations and stabilization of OPaL, ONGC shall be producing LPG by blending C3 & C4 in the requisite ratio and would be sold to Oil Marketing Companies.

9. Alliances & Partnerships for Business Growth

a. MoU between ONGC, BPCL, Mitsui and NMPT

ONGC along its consortium partners BPCL and Japanese conglomerate Mitsui signed a MoU with the New Mangalore Port trust (NMPT) on 18t h March, 2013. The MoU documents Port's No- Objection to carry out feasibility studies and intention to extend all cooperation to the consortium in this regard. The consortium has carried out the pre-feasibility study of the project and found that terminal is technically feasible and the same had been presented to NMPT Based on the report, NMPT has conveyed its no objection to the consortium, for carrying out detailed feasibility studies for the identified locations, subject to adherence to navigational safety requirements. Commercial prefeasibility study is being carried out.

b. MoU for setting up a Special Purpose Vehicle (SPV) for implementing Renewable Energy projects

Your company is likely to be a lead partner in a Joint Venture Company being set up through Special Purpose Vehicle (SPV) for implementing large scale grid-connected solar, wind and other renewable energy (including hybrid) power projects.

An MOU for creating such a JVC was signed on 25th February, 2014 between the Ministry of New & Renewable Energy and Ministry of Petroleum & Natural Gas, Govt of India.

This JVC shall be for grid connected renewable energy and would be led by ONGC as the lead partner with likely 26% equity and other Oil upstream companies like OIL and GAIL along with EIL, IREDA and SECI as partners, equity percentage of each one of them to be decided later. Feasibility study for formation of SPV has been done by EIL and report has been submitted to MoPNG.

10. Information Technology

Considering the need to ensure implementation of cutting edge technology in all areas of operations and to ensure data integrity and security, ONGC has deployed state-of-the-art IT tools and technologies. In a knowledge-driven and technology-intensive industry such as oil & gas E&P, information technology establishes the vital synergy across the company's many locations and varied workforce, essentially serving as its operations' lifeline. Many of the IT achievements of the Company are regarded as benchmarks in the industry in terms of implementation of widespread systems integration and process automation.

Highlights for the year 2014-15

* Consequent to allotment of transponder on GSAT 10 satellite in lieu of INSAT 3E by Department of Space, Govt. of India, Satcom stations were successfully migrated to GSAT 10 satellite using in-house capabilities. On the directive from MoP&NG, a meeting was held with representatives of Indian Space Research Organisation (ISRO) on 05.09.2014 to work-out the use of space applications in E&P sector. ISRO has constituted a five member team which will interact with ONGC team to work-out the use of space applications in E&P sector.

* ISO/IEC 20000: 2011 accreditation for IT Services has been extended to all locations covering entire ONGC, after successful external audit during 8th-12th September, 2014.

* Crisis Management Plan (CMP) for Countering Cyber Attacks and Cyber Terrorism prepared based on CERT-In template and got validated from security expert of CMC and submitted to EC for approval. CMP Incident Management team was constituted at corporate level, which will meet weekly or in case of requirement, to oversee resolution of incidents and discuss mitigation plans for upcoming / known threats & which are communicated by NCIIPC, CERT-in etc.

* Infocom has developed "O Drive" facility for ONGCians. With "O Drive" facility, documents can be stored in a centralized server which can be accessed from anywhere. This effort is alternative option to the usage of USB drives and thus contributes for Information security

* Developed a complete pipeline information system In-house and rolled out at Mehsana& Rajahmundry Assets. The system feature includes facility to view other geographical information such as nearby locations of hospitals, schools fire stations etc., facility to measure distance between any two points, liquid flow direction animation etc. Distinctive colours adopted for different type of lines. The facility can be accessed from anywhere on ONGC Intranet with user login authentication.

* Participated in the CERT-in simulated cyber- attacks based Cyber Security Drill on 23.12.2014, along with 47 other organizations, to assess ONGC preparedness to withstand the possible cyber-attacks. The Cyber Security Drill was completed successfully and Cyber Security Crisis Management Team was able to detect and analyze the incidents and inform CERT-in within given time.

* A portal for Public Grievances was developed in- house to facilitate public to launch their complaints online. This web-based Grievance redressal initiative of ONGC reinforces focus on Digital India project which aims to leverage technology to maintain the Citizen-Government Interface with the highest integrity. Through this portal, citizen/vendor/employee/former-employee can register their grievances relating to any operational wing of ONGC, through an online/single window system. Facility available for monitoring the complaint status by the complainer.

* A portal for JRM (Joint Review Meeting) of Technology and Field services was developed in- house to cater to the complete JRM requirements for conducting the meeting smoothly. JRM members can upload the presentations, tour program details, ATR for previous meetings etc. Notifications/ messages can be generated through this portal and be sent as SMS as well as mail to the members.

11. Health, Safety and Environment(HSE)

Safety, Occupational health and protection of environment in and around its workingareas are prime concerns of ONGC. ONGC has implemented globally recognized QHSE Management System conforming to requirements of QHSE Certifications ISO 9001 ISO 14001 and ISO 18001(OHSAS) at ONGC facilities and certified by reputed certification agencies at all its operational units. During the year 2014-15, 412 Nos. of installations of ONGC were audited for certification/surveillance audit. Corporate guidelines on incident reporting, investigation and monitoring of recommendations was developed and implemented for maintaining uniformity throughout the organization in line with international practice.

A few highlights of HSE during 2014-15 are:

* Regular QHSE internal audits

* Fire safety measures including regular fire and earthquake mock drills

* Training on HSE related topics

* Environmental analysis

* PME of employees and Health Awareness programs

* Water and electricity conservation Noise and pollution reduction measures

* Material Safety Data Sheets(MSDS)

* Personal protective Equipment's(PPE)

* Solid waste management and Developing E- waste disposal procedure

* Identification and implementation of Environment Management Programmes (EMP).

* Occupation Health & Safety(OHS) programs as per need of the unit

* Energy conservation awareness through display and communication

* Accident near miss and Governance Risk Compliance (GRC) reporting.

* Mines Vocational Training for Petty Contractual Workers

ONGC is now an Accredited Environment Impact Assessment (EIA) Consultant organization by Ministry of Environment & Forest (MoEF) in Oil and Gas Exploration Development and Production in Offshore/Onshore areas and Petroleum refining industry.

Approval by DSIR

ONGC Institutes have received the renewal of recognition of In-house R&D unit by Department of Scientific and Industrial Research (DSIR) for a period of five years (valid till 31st March, 2018) on 26.03.2013. This will enable ONGC Institutes to continue claiming weighted deduction in Income Tax (200%) against the expenditure towards R&D activities.

Patenting R&D Work

1. One Patent proposal of IRS, Ahmedabad on "Process and composition for cleaning scale deposits of effluent dispatch lines" has been submitted to Centralized Patent Cell, KDMIPE in March, 2015.

2. Patent application has been made by CEWELL for patenting the innovative technique for TOC estimation. The TOC estimated by this technique in first shale gas well matches very well with TOC data obtained through laboratory study on cutting samples. This validates the new technique developed by CEWELL and its applicability in Indian basins.

12. Carbon Management & Sustainability Development

ONGC being one of the premier energy majors of the world and the highest profit earning PSU of India realises its responsibilities in ensuring sustained development through protection of the ecological system. It therefore strives to position itself as a leading organisation in sustainable management and is aiming to achieve sustainable development through a holistic approach to carbon management. ONGC believes that focused Carbon Management efforts are an ideal route to cover the elements of our business specific sustainable development issues across the environmental dimensions. A critical area of environmental sustainability is mitigation of global greenhouse gas from operations. It isan organizational objective for us to progressively reduce our carbon footprint by working towards reduction in both direct and indirect energy consumption.

Sustainable development requires contribution of all the societal players and with increasingly dominant role of modern day corporates; they can contribute significantly towards sustainable development. ONGC has created a small group called "Carbon Management & Sustainability Group" with a mandate for developing CDM projects, Sustainability reporting, Carbon & Water Management and focussed R&D in the area of low carbon. The following efforts undertaken by ONGC illustrate its commitment to Sustainable Development:

Project status:

1. Clean Development Mechanism (CDM):

ONGC commenced its CDM journey in 2006. Till date, ONGC has registered 12 CdM projects with UNFCCC. 2 new CDM projects validated and 2 already registered projects successfully verified for issuance of CERs.

Validation of New CDM projects

1. Gas Flare Recovery at GGS Chariali, Assam

2. Energy Savings by replacement of MOL pump at Neelam&Heera Asset

Verification & Issuance of Registered CDM projects

1. Gas Flaring Reduction at Uran Plant

2. 51 MW wind power project of ONGC at Surajbari

2. Carbon and Water Foot printing:

Carbon Foot printing:

GHG Accounting & GHG mitigation projects

Comprehensive company-wide GHG accounting had been completed for the base year 2010-11 and it is found that ONGC has 8,234,853 and 281,178 tons of CO2 emissions under Scope 1 - Direct Emissions and Scope 2 - Energy Indirect Emissions respectively. Based on the study, 11 focus areas and projects have been identified. It is proposed to undertake the feasibility study of eleven identified GHG mitigation projects.

Global Methane Initiative (GMI):

The Global Methane Initiative (GMI) is an action-oriented initiative from United State Environmental Protection Agency (USEPA) to reduce global fugitive methane emissions to enhance economic growth, promote energy security, improve the environment, and reduce greenhouse gases emission. The Global Methane Initiative facilitates cooperative mitigation activities that result in bringing more gas to markets through Identification, Quantification, and Reduction (IQR) path.

ONGC entered into a MoU with the USEPA in August 2007, to undertake Methane to Market (now GMI) projects in ONGC and over the years since its joining into the program, ONGC has formed a dedicated team and has procured methane emission detection and measurement equipment in order to undertake Fugitive Emission detection and quantification at its operating facilities and has reduced approx. 14 MMSCM over the years. This is equivalent to reductions of over 2 lakhs tCO2e emitting into atmosphere.

Fugitive emission Identification & Quantification (IQ) jobs have been completed as per Performance Contract (PC) targets. Assam Asset, Ankleshwar Asset &Hazira plant were mapped for fugitive emissions. The reports have been submitted to respective work centres to take corrective actions.

Water Foot printing:

Sustainable water management:

Every business depends and impacts on water resources. The future of business depends on the sustainability of water resources, which are increasingly under pressure. With freshwater supplies tightening due to overuse and more extreme weather patterns, business is coming under more pressure to measure and cut water use. ONGC is concerned towards the risks and benefits of water management and exploring new techniques to cut consumption. ONGC's Sustainable Water Management policy is based on philosophy of 4 "R" i.e. Reduce, Reuse, Recycle & Replenish. CM&SG is entrusted with the responsibility of steering SM projects across ONGC. CM&SG is working on following projects in this area:

Water footprint study in Ahmedabad Asset and IPSHEM, Goa:

For the first time an in-house footprint study has been done without engaging any external agency. The project was completed ahead of schedule.

Setting up sea water desalination plant at Uran:

LOA for techno-commercial and environmental feasibility study for proposed 20 MLD sea water desalination plant has been placed on M/s MECON India.

Setting up desalination plants at ONGC work centres located near coastal areas and at MRPL:

It is proposed to set up desalination plants at ONGC work centres located near coastal areas (Hazira Plant, Ankleshwar Asset, Cauvery Asset-Karaikal, Rajahmundry Asset & Eastern Offshore Asset-Kakinada) and at MRPL as a SWM measure, in order to mitigate future sustainability risk due to declining fresh water availability. It is proposed to initially conduct techno-commercial and environmental feasibility study and based on the affirmative outcome of the feasibility report, implementation of setting up desalination plant at the respective work centre may be undertaken.

Rain water Harvesting:

Rain Water Harvesting (RWH) projects are implemented/ being implemented at different work centres of ONGC under the umbrella of Sustainable Water Management. The harvested water is being used for beneficial use like gardening, toilet flushing, etc and also for recharging of ground water aquifers. The RWH projects have been taken up at Ahmedabad Asset, Tripura Asset, WOB Vadodara and IPSHEM Goa.

Sewage Treatment Plant (STP) at Mehsana Asset:

Administrative approval accorded for setting up three STP's (each of capacity 100 KLD) at ONGC Nagar, Mehsana. Finalization of scope of work and tendering process is being taken up by Mehsana Asset.

Produced Water Management at Mehsana Asset:

CM&SG and Mehsana Asset have jointly undertaken produced water management in a holistic manner through a Multi-disciplinary Team (MDT) under sustainable water management umbrella in line with EC decision.

Integrated Watershed/Check dam Management at Mehsana:

ONGC as a responsible corporate wants to expand its activities in sustainable water management beyond its operational boundaries. As a first step Mehsana Asset has been chosen as it is one of the worst affected regions as far as water scarcity is concerned. The project will be a CSR project in association with CM&SG, Mehsana Asset and local concerned authorities. The project is at present exists as a concept and implementation roadmap is being worked out.

SD through focussed R&D and collaborations

ONGC is committed towards reduction of greenhouse gases (GHG) emissions and is actively pursuing various R&D projects towards CO2 capture and sequestration in following ways:

* Sequestration by Algal biomass

* Conversion into useful products

ONGC has signed NDA (Non-Disclosure Agreement) with following Finnish agencies

* Ripasso Energy, Sweden in the field of Solar CSP-ST technology,

* Chempolis, Finland in the area of 3G bio refinery.

* Cleen, Finland in the area of CCSP, EFEU and BEST program

* VTT, Finland in the area of water management

At present, however, CM&SG has been pursuing the CCSP programme with CLEEN for the CO2 capture and reformation programme at Hazira plant.

Setting up of 3G Bio-refinery

ONGC is planning to setup a 3G bio-refinery (first of its kind in India) to meet the government mandate of E95 (blending of 5% ethanol to gasoline). To this effect, ONGC had signed NDA &MoU with Chempolis, Finland. This endeavor would create a new business dimension for ONGC. Chempolis had conducted feasibility study for the state of Punjab and the same is under consideration.

Carbon Capture & Sequestration

ONGC has also collaborated with CLEEN, Finland in the area of carbon capture and joined its program named Carbon Capture & Storage Program (CCSP). This program works on sharing knowledge among consortium members and working on the specific goals. Consortium agreement has been signed for ONGC specific work package at Hazira.

Solar power CSP-ST technology

Ripasso Energy has specific and unique expertise in the Concentrated Solar Power (CSP) technology. CSP technology is based on "Stirling Engine technology", a unit has a typical power output of 30 KW. An inherited modular design ideally suited for volume electricity production with an outstanding conversion efficiency of 32%, provides a number of benefits compared to other solar thermal technologies. CM&SG is in talk with Rippaso Energy for establishing a 3MW pilot solar power project at Gamnewala, Jaisalmer. The project proposal is under consideration.

Pilot project on CO2 sequestration through microalgae at Hazira plant

Algae have recently received a lot of attention as a new biomass source for the production of renewable energy. Some of the main characteristics which set algae apart from other biomass sources are that algae have a high biomass yield per unit of light and area, can have a high oil or starch content, do not require agricultural land, fresh water is not essential and nutrients can be supplied by wastewater and CO2 by combustion gas.

The pilot project was set up at Hazira plant with an aim to sequester CO2 from vent gas (released during sweeting process of sour gas) with the microalgae and convert into value added products. The results are encouraging which shows that 50% of the CO2 from the SRU vent could be absorbed by the absorption medium in the absorption column at a pressure of 0.5 Bar. The carbonated medium, when transferred to the raceway pond, inoculated with microalgal strain, showed appreciable algal growth (18 g/m2/day), which was harvested. The harvested biomass was tested at BITS Pilani, Goa Campus for the potential of bio-methane generation. It was found that the biomass have good potential of bio-methane generation. (336 Litre/ when fed with 0.5 KgVS /m3/day).

Waste to Fuel project (under Swach Bharat Abhiyan)

MoP&NG has desired to take a project on waste to fuel at Puri, Odisha under Swachh Bharat Abhiyan (SBA) as a part of Corporate Social Responsibility. The project being of specialized nature and involving technical expertise is being steered by CM&SG. Following steps were taken:

* MDT has been formulated to take project forward

* Meeting with Puri administration had been concluded.

* Draft Eol has been put up for approval before floating for identifying technology and prospective bidders.

Disclosing sustainability performance- Sustainability Reporting

Sustainability reporting, the practice of measuring, disclosing, and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development is being increasingly adopted by organizations. Sustainability Reporting is also believed to lead to improved sustainable development outcomes as it allows organizations to measure, track, and improve their performance on specific issues along the three bottom lines.

Published third party assured A sustainability report for ONGC group of companies including ONGC Videsh and MRPL (GRI-G3.0 complaint with Oil and gas sector supplement and BRR).

Capacity building & knowledge Dissemination

CM&SG has three tier knowledge dissemination approaches on carbon, water management and sustainable development.

* Annual Training Program at ONGC Academy

* Programs at Petrotech

* Awareness programs at different work-centers

Total seven awareness programs were conducted by CM&SG at CFB Silchar, RFB Jodhpur, Western Offshore Basin Mumbai, MBA Basin Kolkata, Cauvery Asset Karaikal, OB Vadodara and Cauvery & KG-PG Basin. Total 240 executives participated in the program.

A two day 3rd CM&SG meet was conducted at Goa in January, 2015 for an in depth interaction of CM&SG and SD officers from all ONGC work centers to strategize the pursuit of SD activities in ONGC.

A two day seminar on "Innovation for Sustainability Dividend" was conducted by CM&SG in association with Petrotech Society at Delhi during November, 2014. The seminar was attended by representatives across Indian oil & gas industries, institutes working in the sustainability and representatives from ONGC.

SD brochure was published during 3rd CM&SG meet. The brochure would be a communication tool to communicate ONGC's triple bottom line performance (economic, social and environmental) and sustainability practices. This brochure highlights the considerable work done in the sustainability space, SD initiatives and performance.

Film on Sustainability was unveiled during 3rd CM&SG meet by Governor of Goa in the presence of Director-I/c- CM&SG.This small film highlights the journey of ONGC in the pursuit of sustainable development.

Stake holder engagement meet

Two stakeholders engagement meets were organized to map and prioritise the key sustainability issues of ONGC. The first meet was meant for internal stakeholders who had prioritized the set of issues which would impact the business sustainability of ONGC. The second meet was for the external stakeholders who had prioritized the issues whose impacts on ONGC would impact their business sustainability. The outcome of the two reports, upon juxtaposition, has generated the key materiality issues of ONGC to work upon. This is the first time such an exercise was undertaken.

Other Initatives:

Corporate Waste Management Policy: Your company approved Corporate Waste Management Policy and the same will be reviewed after every three years.

* Trading policy on monetizing of CER shas been approved and will be operational shortly.

* Carbon Neutrality: ONGC has taken a conscious decision to reduce its carbon footprint as a part of its sustainable development programme. As a first step towards this mission, CM&SG has undertaken a maiden initiative to render the carbon footprints of three major areas neutralised for 2013-14. The areas are :

* Air travel of all ONGC employees including to and fro local surface transportation to airport.

* Consumption of electricity, paper, LPG and fuel for local transportation from IPE Campus, IDT, IEOT, IRS and IPSHEM

* Flaring and electricity consumption of Uran Plant. Carbon neutrality is essentially a concept of having a net zero GHG footprint of an activity. The entire process involved a detailed GHG accounting of the activity and offsetting the footprint. The total footprint of the activities is 1,37, 345 tons of CO2 equivalent and has been offset by retiring an equivalent quantity of carbon credits issued against the registered CDM projects of ONGC.

13. Business Responsibility Report - 2014-15

Securities & Exchange Board of India has introduced Clause 55 to the Listing Agreement with the Stock Exchanges, which states that Listed entities shall submit, as part of their Annual Report, Business Responsibility Report, describing the initiatives taken by them from an environmental, social and governance perspective. Accordingly, the third Business Responsibility Report - 2014-15 has been drawn up and forms part of the Annual Report for 2014-15.

14. Internal Control System

Your Company has a well-established and efficient internal control system and procedure. The Company has a well-defined delegation of financial powers to its various executives through the Book of Delegated Powers (BDP). The Integrated BDP is updated from time- to-time in line with the needs of the organisation as well as to bring further delegation. BDP has been revised during FY 14-15 and the same has been made effective from 01.01.2015. The Company has in-house Internal Audit Department commensurate with its size of operations. Audit observations are periodically reviewed by the Audit &Ethics Committee of the Board and necessary directions are issued whenever required.

15. R&D EFFORTS THROUGH ONGC ENERGY CENTRE TRUST(OECT)

Your company has taken steps to evaluate various forms of energy to fulfil the country's growing energy needs. Towards this end, your company has established an ONGC Energy Centre Trust (OECT), which is mandated to undertake or assist in programs / projects of fundamental and applied research for improving and developing commercially viable energy mediums and sources beyond hydrocarbons, especially in clean and/or renewable energy options. ONGC Energy Centre (OEC) has been set-up under the aegis of the OEC Trust to work on various clean energy options.

Your company through ONGC Energy Centre has been implementing several Research Projects on new and alternative sources of energy. These Projects are in advanced stages of implementation, in collaboration with various national and international academic, research and industrial organizations. The projects where your company is currently engaged in are:

a) Hydrogen Generation through Thermo-chemical Processes

b) Exploration for Uranium

c) Bioconversion of lignite to Methane

d) Bioconversion of Oil to Methane

e) Kinetic Hydro Power

f) Geothermal Energy

g) Solar Thermal Project

These apart, during 2014-15, ONGC Energy Centrehas also evaluated many new options to expand the research and technology development activities and also to focus on optimum utilization of resources available with ONGC. These efforts have been described in detail in the Annexure Con Energy Conservation.

Further, a Board Level Committee on Research & Development has been constituted. The first meeting of the Committee was held on 27.05.2015 and the terms of reference of the Committee have been approved.

16. Human Resources

Your Company values its Human Resources the most. To keep their morale high, your company extends several welfare benefits to the employees and their families by way of comprehensive medical care, education, housing and social security.

17. Employee Welfare

Your Company continues to extend welfare benefits to the employees and their dependants by way of comprehensive medical care, education, housing, and social security. Your Company continues to align company policies with changing economy and business environment.

Employee Welfare Trusts -

Your Company has established the following major Trusts for welfare of employees:- Employees Contributory Provident Fund(ECPF) Trust, manages Provident Fund accounts of employees of your Company.

The Post Retirement Benefit Scheme (PRBS) Trust of your Company manages the pension fund of employees of your company which has been converted into a Defined Contribution Scheme as per DPE guidelines.In the converted Defined Contribution Scheme, the corpus in the individual employee account shall include employer/ employee contributions and interest thereon. The benefits under the Scheme are dependent on corpus in the individual employee account and accordingly, would be market determined which depends on interest rate, annuity price etc.

The Composite Social Security Scheme(CSSS)

formulated by your company provides an assured ex- gratia payment in the event of unfortunate death or permanent disability of an employee in service. In case of Separation other than Death/Permanent total disability, employees own contribution alongwith interest is refunded.

Gratuity Fund Trust exists for payment of gratuity as per the provisions of the Gratuity Act.

Your Company has a Sahayog Trust for its Sahayog Yojana to provide ex-gratia financial grant for sustenance, medical assistance, treatment, rehabilitation, education, marriage of female dependent and alleviation of any hardship or distress to secure the Welfare of the workforce and their kin, who do not have adequate means of support. The beneficiaries under this scheme includes casual, contingent, daily rated, part time, adhoc, contract appointees, tenure based employees, apprentices and trainees employed by your Company besides regular and past employees. Under the scheme an amount of Rs. 5770 million were disbursed by the Trust during the year.

Extension of Benefits under the Asha Kiran Scheme to retired employees:-

The Asha Kiran Scheme was introduced to meet the emergency needs of the ex-employees retired prior to 01.01.2007, who are passing through distressful situation. The scheme was launched as per DPE guidelines by creating a corpus of 1.5% of PBT. During the year, under this scheme financial assistance of Rs. 1780 million was provided to 14698 ex-employee.

Persons with Disabilities

ONGC believes in affording equal opportunities to physically challenged people. As on 31.03.2015, there were 156 permanent employees with disabilities (0.5%) on the rolls of ONGC.

Implementation of Govt. Directives for Priority Section

Your Company complies with the Government directives for Priority Section of the society. The percentage of Scheduled Castes(SC) and Scheduled Tribes (ST) employees were 15 percent and 9 percent respectively as on 31st March, 2015.

Your Company is fully committed for the welfare of SC and ST communities. The following welfare activities are carried out by your Company for their upliftment in and around its operational areas:-

Annual Component Plan:

Under Annual Component Plan for SC/ST, every year an allocation of Rs. 200 million is made. Out of this, Rs. 60 million is distributed amongst all the Work centres of ONGC for taking up activities for welfare of SC/ST Communities in and around the areas of our operations. In addition, Rs. 140 million is managed centrally, and is earmarked for Special projects/ proposals/schemes for the welfare of areas/persons belonging to SC/ST communities. The amount under component plan is utilised for taking up various welfare measures for the welfare and upliftment of the needy people of SC/ST Communities. This fund is especially meant for providing help and support in Education and Training, Community Development and Medical and Health Care.

Scholarship to SC/ST meritorious students

Your Company provides scholarships for meritorious SC & ST students from 100 to 500 for pursuing higher professional courses at different Institutes and Universities across the country in Graduate Engineering, MBBS, PG courses of MBA and Geo- Sciences. The major feature of the scheme is that the scholarships have been equally divided for both Boys and Girl students and the amount of scholarship has been made out to Rs. 4,000/- per month per student subject to the conditions of the scheme. The annual budget for the scheme on its total implementation is Rs. 76 million per annum.

18. Industrial Relations

During the year your Company maintained harmonious Industrial Relations throughout the Corporation. Mandays loss due to internal industrial action was reported as 'NIL' for the year 2014-15.

19. Grievance Management System (GMS) :

Your Company provides an easily accessible machinery to the employees for redressal of their grievances, either through informal channel (open hearing day) or through formal channel. On 26th January, 2015 a web-portal, "Public Grievance Portal", was launched, which will provide redressal of grievances of all stakeholders. This portal is a step further to empower each stakeholder viz. citizen/vendor/employee/former-employee to register their grievances related to any operational wing of ONGC, through a single window on corporate web portal. A structured apparatus has been operationalized to process the grievances within a limited time frame Public Grievance Management System

All Key Executives of your company have designated a publicized time slot thrice in a week to meet Public Representatives in order to speedily redress their grievances.

20. Implementation under the Right to Information Act

An elaborate mechanism has been set up throughout the organization to deal with requests received under RTI Act, 2005.There are two Central Public Information officers (CPIOs) based at the Registered Office at Delhi and 22 Central Assistant Public Information officers (CAPIOs) have been designated at different work centers across the country to redress the issues under RTI Act 2005.

69 applications were carried forward from the year 2013-14 to 2014-15. 1790 applications were received during the year 2014-15; making a total of 1859. In addition, 66 First appeals were carried forward from the previous year to financial year 2014-15 and 261 were received during the period. All the aforesaid 327 first appeals were disposed off by the appellate authority of ONGC and orders passed by the authority were complied with in stipulated time frame.

21. Implementation of Official Language Policy

Your Company makes concerted effort to spread and promote Official Language. In this effort some of the steps taken during the year were:-

(i) Company has introduced Unicode Hindi software in all our offices. (ii) Hindi workshops are conducted at regular intervals(iii) Hindi seminars and 'Kavi Gosthies' organized in Dehradun and Delhi. (iv) ONGC actively contributed in publishing bilingual Petroleum Terminology, initiated by MoP&NG. (v) Hindi Teaching Scheme of Govt. of India is effectively implemented at all regional work centres.

22. Human Resource Development

33,185 ONGCians (as on 31st March, 2015), which includes 26,656 executives and 9,529 non-executives, dedicated themselves for the excellent performance of your company during the year. The workforce intake strategy pursued by your Company caters to meeting the demands of maintaining a steady flow of talent, in a business which is characterized by high risks and uncertainties, enormous costs, fast changing level of technology, physically challenging work environment, fluctuating product prices and growing competition. Your Company has drawn up a scientific manpower induction plan aligned to the business plans as well factoring the manpower profile of the Company.

Your company believes that continuous development of its human resources fosters engagement and drives competitive advantage. Towards that end, during the year, your Company conducted Business Games to hone the business acumen of its executives. Business Game has proved to be very popular initiative and tests the ability of the executives through business quizzes, business simulations and case-study presentations. During the year 2014-15, a total of 144 teams and 576 executives participated in the event. Fun Team Games (FTG) were organized for E0 and staff level employees to inculcate MDT(Multi-disciplinary Team) concept and spirit of camaraderie and belongingness to the organization, which was very well received by the participants. A total of 75 Teams and 300 employees participated in FTG during the year 2014-15. The winners of Business Games and Fun Team Games were felicitated by the CMD on Republic Day Celebrations. Your Company also conducted the Assessment Development Centre (ADC) for 192 DGM level executives (0.81% of executives) and provided them developmental inputs. Your Company has partnered with global HR consulting firms to create a pool of accredited mentors in the organization. These mentors will support organization's effort to hone young minds to successfully respond to the emerging business needs of your Company. As part of this Initiative, in the year 2014-15, 36 mentorship workshops were conducted. Also, 123 mentors have been awarded Basic and Advanced level Accreditations for mentoring.

Training

Your Company attaches utmost importance to the development of its human resource.Your Company has branded the spectrum of its training activities as 'EXPONENT - a comprehensive Programme, which is nurturing the energy leaders of tomorrow. The growth of an ONGCian to an Exponent of energy business is facilitated by ONGC Academy, Regional Training Institutes and other specialised in-house training Institutes and world class training providers in India and abroad.

During the year , a total of 20084 Executives and 4729 non-executives were imparted appropriate training, spanning 176644 executive mandays (Number of executive mandays per executive per year: 7.49) and 16119 non-executive mandays (Number of non- executive mandays per executive per year: 1.69) during 2014-15 at all Work centres.

In order to absorb new and emerging technological advancements pertaining to oil and gas exploration and production, 85 programmes, including 26 foreign faculty programmes pertaining to functional disciplines, were organized with the best of faculties from India and abroad during the year.

To nurture the talent with the objectives to prepare future leaders of the organisation for taking up higher roles and address key organisational challenges, 338 executives of E7, E6 and E5 level were exposed to Leadership Development Program (LDP), Advanced Management Program (AMP) and Senior Management Program (SMP) respectively, the tailor made Management Programmes with overseas learning component through tie-ups with leading B- schools of the country.

23. Women Empowerment

Women employees constituted over 6 percent of your Company's workforce. During the year, programmes on women empowerment and development, including programmes on gender sensitization were organized. Your Company actively supported and nominated its lady employees for programmes organized by reputed agencies.

Your company scrupulously complies with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013. Reported cases of Sexual harassment are inquired into by Complaint Committee constituted separately for all the work- centres, for taking disciplinary action against the delinquent employees.

24. Work-Life Balance:-

Your Company continued in its endeavors to ensure work-life balance of its employees. The townships at many work-centers were provided facilities like gymnasiums, music rooms, etc. Outbound programmes with families were also organized at various work-centers. Plays on the importance of Work-Life Balance' were staged to create awareness amongst the employees. In addition, cultural programmes involving employees and their families were also conducted. MahilaSamitis and Resident Welfare Associations (RWAs) were involved in the organization of these cultural programs. Your Company has a adventure wing named ONGC Himalayan Association which organizes adventure programmes like mountaineering, trekking, white water rafting, snow skiing, desert Safari, Aero sports etc. which adds towards morale, engagement, team spirit, camaraderie, stress management and spirit to explore unknown among the employees.

25. Sports

Your Company continued its large scale support for development of sports in the country in the form of job offers & scholarships to deserving sportspersons. Sponsorships to various sports associations / federations / sports bodies to organise sports events as well as develop infra-structure were also extended. Your Company extended support in 23 game disciplines to 170 players on regular rolls and 167 players on scholarship. The support has enabled many sportspersons to bring home laurels for the nation and the organisation. Some of the key achievements during the year are given below:

Your Company was conferred the prestigious Rashtriya Khel Protsahan Puruskar by Hon'ble President of India Mr. Pranab Mukherjee at a glittering ceremony in Rashtrapati Bhavan on the occasion of National Sports Day on Friday 29th August , 2014. CMD Mr. D.K.Sarraf received the honour from the President.

Two ONGCians were conferred with the prestigious "Arjuna Award" for the year 2014; Ms. Heena Sidhu in Shooting and Mr. V Diju in Badminton. The total number of National Awardees in the organization stands at 24 (KhelRatna - 1, Padma Shri - 2 & Arjuna - 21)

In Commonwealth Games 2014 held at Glasgow (UK) a total of 20 ONGC athletes had participated in this 12 day long mega event and bagged 6 medals (1 Gold, 3 Silver & 2 Bronze) which is a pretty healthy success rate In Asian Games 2014 held at Incheon (Korea) a total of 40 ONGC athletes had participated and bagged 13 medals (4 Gold, 1 Silver & 8 Bronze).

Mr.Sourav Kothari won the Gold Medal at the Asian Billiards Championship.

Your Company was awarded the prestigious FICCI Certificate of Excellence for the "Award for long time contribution to Indian Football" for the year 2014 [this is the first time in the history that an organisation has been awarded successive FICCI Awards].

Mr. Pankaj Advani of ONGCwon 12th world title in cue sports. In the year 2014-15 he won World Billiards title in time & point format, 6 red world snooker championship and World team Billiards Championship.

Ms. Rashmi Kumari of ONGC won the singles title of world Cup (women) in carom.

26. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your company is fully engaged in ensuring equitable and sustainable growth of society in and around the area of its operations besides complying with government directives to discharge its social responsibility as a leading Indian corporate. CSR activities are essentially guided by project based approach in line with the provisions of Companies Act, 2013 promulgated by Ministry of Corporate Affairs and Companies (CSR Policy) Rules and the guidelines on CSR& Sustainability issued by Department of Public Enterprise, Government of India. Seeking to herald an inclusive business paradigm, ONGC has CSR interventions that are based on social, environmental, and economic considerations and are well-integrated into the decision-making structures and processes of the organization.

Pursuant to enactment of Companies Act 2013 and Companies (CSR Policy) Rules 2014 by Ministry of Corporate Affairs and Guidelines on CSR and Sustainability by Department of Public Enterprise, the CSR Policy has been approved by the Board of Directors. The same is uploaded on the Company's website.

Further, in line with the approval of the Board, ONGC has set up and registered ONGC Foundation under the Societies Registration Act, for carrying out CSR activities. Necessary steps are on hand to recruit manpower for making ONGC Foundation an effective tool for implementation of CSR policy of ONGC. Pursuant to Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 the Annual Report on CSR activities is annexed herewith as Annexure 'C'. CSR ACTIVITIES UNDERTAKEN BY ONGC BASED ON ITEMS LISTED IN SCHEDULE VII OF THE COMPANIES ACT, 2013

* Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and including contribution to Swachch Bharat Kosh set up by Central Government for promotion of sanitation, making available safe drinking water:

* Promoting education, including special education and employment enhancing vocation skills. Especially among children, women, elderly, and the differently abled and livelihood enhancement projects.

* Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.

* Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro forestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to clean Ganga fund set up by the central government for rejuvenation of river Ganges.

* Protection of national heritage, alt and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional and handicrafts

* Measures for the benefit of armed forces veterans, war widows and their dependents.

* Training to promote rural sports, nationally recognised sports, Paralympics sports and Olympic sports.

* Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Caste& the Scheduled Tribes, other backward classes, minorities and women.

* Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government.

* Rural development projects.

* Slum area development.

In the last 7 years, your company has contributed Rs. 18,807 Million towards its well-structured and well- focussedCSR activities.

Out of the CSR Budget of Rs. 6,606.12 million, ONGC spent an amount of Rs. 4,952.29 million in FY 2014-15. This translates to overall utilization of 74.97% of the CSR Budget.

Reason for non-utilization of full CSR budget:

* Major Initiatives undertaken were mostly in transition phase so the allocated earmarked budget could not be spent.

* Some of the flagship projects undertaken were of long gestation period with budget spread over 3-5 years thus resulting in lesser utilisation of earmarked budget for the financial year 2014-15.

Some of the landmark CSR initiatives under implementation during the year 2014-15 by your Company include:

(a) Healthcare:

(i) Varisthajana Swasthya Sewa Abhiyan: ONGC and Help-Age India Initiative

To provide basic medical facilities to elderly in terms of medical consultancy, medicine distribution, basic diagnostic test, special health camp and palliative care at their doorstep. A total of 20 Mobile Medicare Units (MMUs) are engaged for taking basic healthcare to the doorsteps of the elderly in nine states, 17 Districts, 35 blocks and 131 Gram Panchayat and 240 villages of India. A total of 11,86,020 beneficiaries were treated for chronic illness such as Hypertension, Diabetes, Osteoarthritis, Dyspepsia& Skin problems etc.

(ii) Community Hospital in Lakhimpur- Kheri, Uttar Pradesh:

The project is unique in terms of using the PPP model in CSR with full Capex of Rs. 45 million contribution by ONGC and Opex borne by the Operating Partner. This 26 bedded Community Hospital would cater to Primary and Secondary Health Service Requirements from BPL, Economically Backward Class families. Healthcare services are being provided at 50% less cost than the existing CGHS rates.

(iii) Aids and Appliances to person with disability:

This is a Pan India CSR project undertaken in association with Artificial Limbs Manufacturing Corporation of India (ALIMCO) and Bhagwan Mahaveer Viklang Sahayata Samiti (BMVSS), Jaipur commonly known as Jaipur Foot benefitting 45,495 Person with Disabilities. Beneficiaries were provided Orthopedic, Hearing and Visually Aids and Appliances. The total financial implication of the project was '262 million covering 39 ONGC operational areas and 61 Backward Districts in Phase-I of the project which concluded in the financial year 2014-15.

(iv) Government General Hospital (GGH), Kakinada:

ONGC has given financial assistance of Rs. 19 million to construct a separate building for blood bank and to equip the hospital with additional equipment for blood bank, general surgery and general medicine departments. This will immensely benefit people of East Godavari District where ONGC has a substantial operational presence

(v) ONGC Mission Ujala:

The project envisages eye screening of 50,000 children in Government Schools in NCR under National Blindness Control Programme of Govt. of India in collaboration with reputed NGO PRAANI. Spectacles to 3,000 children detected with refractive errors along with medicines were provided under this project.

(b) Education & Vocational courses:

i. ONGC-GICEIT Computer Education Program:

Through this project, employment- related free computer education is being imparted to economically underprivileged Youth. The project is implemented in association with Bhartiya Vidhya Bhawan's Gandhi Institute of Computer Education and Information Technology, (GICEIT) at five work centres of ONGC located at Mehsana, Dehradun, Nazira, Karaikal and Rajahmundry. More than 8295 students have received computer training through these centers in the financial year 2014-15.

ii. ONGC-The Akshaya Patra Foundation:

A centralized fully automated mechanized kitchen is being set up to provide mid-day meals to school going children (enrolled in Govt. schools) in the District of Surat. This kitchen was inaugurated by the Hon'ble Chief Minister of Gujarat Smt Anandiben Patel on 15th Feburary, 2015. This kitchen has capacity to feed 2,00,000 children per day. The enrolment as on 31st March, 2015 is 1,90,840.

iii. Community School at Sitapur, Uttar Pradesh:

The project is unique in terms of using the PPP model in CSR with full Capex of Rs. 27 million contribution by ONGC and Opex borne by the Operating Partner- Shanti Devi Memorial Charitable Trust.

iv. ONGC Super 30

"ONGC Super 30" is a residential Coaching Programme for IIT aspirants based at Sivasagar Assam. The total cost of the project is Rs. 6.70 million. The initiative was conceived to cater to underprivileged and below poverty line students who are unable to get proper coaching to qualify engineering exams due to lack of resources and funds.

(c) Projects for Physically and Mentally challenged

i. ONGC Centre for vocational rehabilitation for the differently abled:

A financial support of Rs. 13 million has been provided to Tamana School of Hope, Vasant Vihar, New Delhi for setting up of Autism Centre and provide vocational training for the mentally challenged young adults and children working for their economic rehabilitation by teaching relevant vocational skills to them.

ii. ONGC -Cheshire Home Project for Physically and Mentally Challenged:

A project on health rehabilitation and allied services for economically disadvantage children with disabilities living in slums area of Mumbai undertaken with Cheshire Homes (India) Mumbai with financial assistance from ONGC. Children with Disabilities were identified from areas of Hanuman Nagar, Damu Nagar and Shivaji Nagar covering 3 slum communities and provided with rehabilitation treatment and aids with an objective to help them lead a normal life.

(d) Environment Sustainability:

i. Eastern Swamp Deer Conservation Project (Phase II) :

The phase II of the project includes capture of Eastern Swamp Deer from the source i.e Kaziranga National Park and translocate them to Manas National park. This is a research based project to conserve and increase the viable population of Eastern Swamp Deer in their natural habitat at Manas National Park. The total cost of the project is Rs. 8.9 million.

ii. Harit Moksha: Green Cremation System

This is a unique CSR initiative of ONGC undertaken with MokshdaParyavaranEvam Van SurakshaSamiti (MPEVSS) to reduce wood consumption during traditional cremations through Mokshda Green Cremation Systems (MGCS). The project includes installing 30 units of green cremation system in 8 cities of 7 different states with a budget of Rs. 92 million . The project helped in saving approximately 13,700 tonnes of wood & reduced 26,500 tonnes of GHG emissions till date.

(e) Development of Backward Districts:

The sustainable development project is being implemented in Jaisalmer, a backward district in Rajasthan. Project involves setting up of 49 Wind Turbine Generators (WTG) each of capacity of 2.1 MW with total capacity of 102.9 MW in association with M/S Suzlon Energy Ltd. ONGC contribution towards the project is Rs. 5620 million. 22 nos. of WTG have been installed.

(f) Women Empowerment:

ONGC as a leading organization and among the founder member of Women in Public Sector (IPS) established way back in 1990 under the aegis of SCOPE has always spearheaded women empowerment Initiatives. Women Development Forum (WDF) an internal wing of ONGC women Employees was also formed in line with WIPS to encourage women employee to explore their potential to the fullest.

The basic aims and objectives of WIPS are:

* To promote the growth and development of Women in Public Sector.

* To assist the Public Undertakings in optimising the full potential in omen employees.

* To play a catalytic role in improving the status of Women in and around PSEs

Women in Public Sector (WIPS) presented ONGC with the Best Enterprise Award for Women Empowerment consecutively for 3 years till 2014. In the year 2015 ONGC was awarded the second prize for the same category.

(g) Other CSR Initiatives:

i) Hortoki Water Supply Scheme: The project aims to create a sustainable source of safe drinking water to the people of Hortoki Village, Kolasib District, Mizoram. A massive 1.7 Lakhs litre water tank was constructed as part of the project to supply more than 40 lpcd of water till 2043. ONGC has extended support of Rs. 9 million for the project. More than 450 households of Hartoki village are benefited through this project

ii) Rajeev Gandhi International Sports Complex, Dehradun: ONGC in association with Govt. of Uttarakhand is working towards building a Cricket stadium-cum-sports complex with a capacity of 30,000 people extendable to additional seats in future, car parking, a sports academy, a club house or Gymnasium, restaurant and other auxiliary facilities. ONGC has extended financial support of Rs. 500 million towards the project. The project is expected to be completed in two years.

iii) Dashrath Stadium at Agartala: The project aims to create an Indoor sports complex in association with DDO Directorate of Youth Affairs. ONGC has extended support of Rs. 243 million for the project.

iv) IIIT, Agartala: ONGC has extended support of Rs. 30 million for setting up a new IIIT Campus in Agartala.

In addition to above major CSR initiatives undertaken in 2014-15, ONGC has partnered with many NGO and other non- profit organization in implementing several other CSR initiative across our country. All work centres of ONGC have designated CSR office to take care of the local needs.

As a testimony to our CSR efforts, your company has won many laurels such as:

1. Golden Peacock Award 2014 for CSR during 9th International Conference on Corporate Social Responsibility-2014

2. ABP News Global CSR Excellence & Leadership Award for Best Overall CSR practices

3. 4th Annual Greentech CSR Platinum Award 2014 in petroleum exploration sector

4. Madan Mohan Malviya Golden Award for outstanding contribution in the field of Education

5. P L Roy CSR Award on 'International Day of Olde Persons' for support to the elderly through its CSR initiative 'Varishthajana Swasthya Sewa Abhiyan'

27. ACCOLADES

Consistent with the trend in preceding years, your Company, its various operating units and its senior management have been recipients of various awards and recognitions. Details of such accolades are placed at Annexure - 'D'.

28. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts of the Company on a 'going concern' basis;

(v) The Directors have laid down internal financial controls which are being followed by the company and that such internal financial controls are adequate and are operating effectively; and

(vi) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating.

29. CORPORATE GOVERNANCE

Your Company has taken structured initiatives towards Corporate Governance and its practices are valued by various stakeholders. The practices emanate from the need to position multi-layered checks and balances at various levels to ensure transparency of its operations in the decision making process.

In terms of Clause 49 of the Listing Agreement, a report on Corporate Governance for the year ended March 31st March, 2015, supported by a certificate from the Company's Statutory Auditors confirming compliance of conditions, forms part of this Report.

ONGC has implemented the mandatory Guidelines of Department of Public Enterprises (DPE), Government of India, on Corporate Governance to the maximum extent possible.

In terms of section 204(1) of the Companies Act, 2013, the Company has engaged M/s P P Agrawal & Co., Company Secretaries in whole-time practice as Secretarial Auditors for conducting Secretarial Compliance Audit for the financial year ended 31st March, 2015. Their report forms part of this Annual Report.

With regard to the observations of Secretarial Auditors as contained in their report, it is submitted that ONGC being a Government company, all directors on the Board of the company are appointed by Government of India. The matter relating to appointment of requisite numbers of Independent Directors has already been taken up with the Government.

The Company has formulated and uploaded the following policies/codes on its website in line with the Companies Act, 2013 and Listing Agreement:

(a) Code of Conduct for Board Members and Senior Management Personnel

(b) Related Party Transactions Policy & Procedures, 2014

(c) Material Subsidiary Policy

(d) The Code of Internal Procedures and Conduct for prohibition of insider trading in dealing with the securities of ONGC

In line with global practices, your Company has made available all information, required by investors, on the Company's corporate website www.ongcindia.com Apart from the mandatory measures required to be implemented as a part of Corporate Governance, ONGC has gone the extra mile in this regard for the benefit of its stakeholders:

i. Whistle Blower Policy / Vigil Mechanism: A total of 35 Protected Disclosures till 31.03.2015 have been processed through the histle Blower mechanism of ONGC which was implemented from December 01, 2009. The policy ensures that a genuine Whistle Blower is granted due protection from any victimization. The Policy is applicable to all employees of the Company and has been uploaded on the intranet of the Company.

In addition, the Company has a full-fledged Vigilance Department, which is headed by Chief Vigilance Officer who holds the rank of a Functional Director of the Company. With a view to maintain his independence, the CVO reports to the Chief Vigilance Commissioner of the Government of India.

ii. Enterprise-wide Risk Management (ERM) framework: In line with the requirements of Clause 49 VI of the Listing Agreement, your Company has developed and rolled out a comprehensive Enterprise-wide Risk Management (ERM) Policy throughout the organization. The Audit & Ethics Committee periodically reviews the risk assessment and minimization process in ONGC.

The Risk Management policy of your Company is as follows:

"ONGC shall identify the possible risks associated with its business and commits itself to put in place a Risk Management Framework to address the risk involved on an ongoing basis to ensure achievement of the business objective without any interruptions.

ONGC shall optimize the risks involved by managing their exposure and bringing them in line with the acceptable risk appetite of the Company"

The Board of Directors have constituted a Board Level Risk Management Committee in terms of Clause 49 of the Listing Agreement. The first meeting of the Committee was held on 19.03.2015 wherein the risk appetite and present risk profile, development of risk register to comply with clause 49 of the listing agreement and Companies Act, 2013, Risk Management Policy in ONGC, Risk Reporting structure, Risk Management / mitigation process, Governance Risk Management & Compliance (GRC) module roll-out through SAP, Review of risk register and identification of new & emerging risks, categorization and quantification of risks and role of internal audit in ERM etc were reviewed.

iii. Meeting of Independent Directors: No Meeting of Independent Directors was held during 2014-15.

iv. Certificate of Independence by Independent Directors: The Independent Directors have submitted declaration that they meet the criteria of Independence as per section 149(6) of the Companies Act, 2013.

30. STATUTORY DISCLOSURES

Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement.

Extract of Annual Return

As per requirement of section 92(3) of the Companies Act, 2013, the extract of the annual return in form MGT- 9 is placed at Annexure-E.

Particulars of Employees

ONGC being a Government Company, the provisions of section 197(12) of the Companies Act, 2013 and relevant Rules shall not apply in view of the Gazette notification dated 05.06.15 issued by Government of India, Ministry of Corporate Affairs.

The terms and conditions of the appointment of Functional Directors is decided by the Government of India. The salary and terms and conditions of the appointment of Chief Financial Officer (CFO) and Company Secretary, KMPs of ONGC, is in line with the parameters prescribed by the Government of India. Performance Related Pay of Functional Directors and other employees including CFO & Company Secretary (KMPs) is in line with the guidelines of Department of Public Enterprises, Government of India.

31. ENERGY CONSERVATION

The information required under Section 134(m)of the Companies Act, 2013, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure - 'F'.

32. AUDIT AND ETHICS COMMITTEE

In compliance with section 177(8) of the Companies Act, 2013, the details regarding Audit & Ethics Committee is provided under Corporate Governance report which forms part of this Annual Report. There has been no instance where the recommendations of the Audit & Ethics Committee have not been accepted by the Board of Directors.

33. AUDITORS

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s Mehra Goel & Co, New Delhi, M/s G D Apte & Co, Mumbai, M/s Lodha and Co, Kolkata, M/s Varma & Varma, Chennai and M/s Khandelwal Jain and Co, Mumbai Chartered Accountants were appointed as joint Statutory Auditors for the financial year 2014-15. The Statutory Auditors have been paid a remuneration of Rs. 25.01 million (previous year Rs. 22.92 million) towards audit fee and certification of Corporate Governance Report.The above fees are exclusive of applicable service tax and reimbursement of reasonable travelling and out of pocket expenses actually incurred.

34. Auditors' Report on the Accounts

The Comments of Comptroller & Auditor General of India (C&AG) form part of this Report and are attached as per Annexure-'G'. There is no qualification in the Auditors Report and there are no supplementary comments by C&AG under section 143(6)(b) of the Companies Act, 2013 on the Financial Statements of the Company. Notes to the Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments. You would be pleased to know that your Company has received Nil comments from C&AG and Statutory Auditors for the year 2014-15. This is the ninth year in a row that the organization has received Nil comments.

35. COST AUDIT

Six firms of Cost Accountants were appointed as Cost Auditors for auditing the cost accounts of your Company for the year ended 31st March, 2015 by the Board of Directors. The Cost Audit Report for the year 2013-2014 has been filed under XBRL mode on 25.09.2014 which was well within the due date of filing (i.e.30.09.2014).

36. DIRECTORS

POLICY ON DIRECTORS' APPOINTMENT ETC.

ONGC being a Government Company, the provisions of section 134(3)(e) of the Companies Act, 2013 shall not apply in view of the Gazette notification dated 05.06.15 issued by Government of India, Ministry of Corporate Affairs.

PERFORMANCE EVALUATION ONGC being a Government Company, the provisions of section 134(3)(p) of the Companies Act, 2013 shall not apply in view of the Gazette notification dated 05.06.15 issued by Government of India, Ministry of Corporate Affairs.

APPOINTMENTS / CESSATION ETC

Since the 21st Annual General Meeting held on

19.09.2014, Shri P Uma Shankar, Shri S. Ravi and Shri R.K. Singh (Independent Directors) vacated their office on 19.09.2014 (FN) in terms of Section 161 of the Companies Act, 2013. The tenure of Prof. Samir Kumar Barua and Shri Om Prakash Bhatt (Independent Directors) concluded on 13.12.2014.

On being appointed as Managing Director of ONGC Videsh Ltd, Shri N K Verma relinquished the charge of Director (Exploration), ONGC on 27.08.2014. Shri U.P Singh, Additional Secretary (Exploration), Ministry of Petroleum & Natural Gas, joined the Board as Government nominee Director on 16.10.2014 in place of Shri Aramane Giridhar. Shri A.K. Diwivedi took over as Director (Exploration) on 16.03.2015.Shri A. K. Banerjee, relinquished the charge of the post of Director (Finance) on attaining the age of retirement on 30.04.2015. Ms. Atreyee Das was appointed as Government Nominee Director on 14.05.2015.

On being appointed as Secretary, Department of School Education and Literacy, Dr. S.C. Khuntia, Special Secratary, MoP&NG and Government nominee resigned from the Directorship of ONGC on

26.06.2015. Shri Ashok Varma, Director (Onshore) relinquished the charge of Director (Onshore) on 31.07.2015 on attaining the age of superannuation and Shri V P Mahawar, who has been appointed as Director (Onshore) by Ministry of Petroleum & Natural Gas, Government of India, took over charge on 01.08.2015. The Board places on record its deep appreciation for the excellent contributions made by Shri P. Uma Shankar, Shri S. Ravi, Shri R.K. Singh, Prof. Samir Kumar Barua, Shri Om Prakash Bhatt, Shri N. K. Verma, Shri Aramane Giridhar, Shri A. K. Banerjee, Dr. S.C. Khuntia and Shri Ashok Varma during their tenure.

The strength of the Board of Directors of ONGC as on 1st August, 2015 is 9, comprising 6 Executive Directors (Functional Directors including CMD) and 3 Non- Executive Directors i.e. two Government nominees and one Independent Director. Ministry of Petroleum & Natural Gas has been requested to appoint requisite number of independent Directors to comply with the provisions of Companies Act, 2013 and Listing Agreement. A total of 13 meetings of the Board of Directors of ONGC were held during the financial year 2014-15.

Details of other Key Managerial Personnel as per Rule 8 (5) (iii) of The Companies (Accounts) Rules, 2014:-

Shri A. K. Srinivasan was appointed as Chief Financial Officer w.e.f.06.05.2015 and as Key Managerial Personnel w.e.f. 28.05.2015.

Shri N. K. Sinha, Company Secretary superannuated on 30.06.2015 on attaining the age of retirement. Shri V. N. Murthy took over as Company Secretary on 01.07.2015.

37. Acknowledgement

Your Directors are highly grateful for all the help, guidance and support received from the Ministry of Petroleum and Natural Gas, Ministry of Finance, DPE, MCA, MEA, and other agencies in Central and State Governments. Your Directors acknowledge the constructive suggestions received from Statutory Auditors and Comptroller & Auditor General of India and are grateful for their continued support and cooperation.

Your Directors thank all share-owners, business partners and members of the ONGC Family for their faith, trust and confidence reposed in ONGC.

Your Directors wish to place on record their sincere appreciation for the unstinting efforts and dedicated contributions put in by the ONGCians at all levels, to ensure that the Company continues to grow and excel.

For and on behalf of the Board of Directors

Place : New Delhi (Dinesh Kumar Sarraf) Date : 1st August, 2015 Chairman & Managing Director


Mar 31, 2014

Dear Shareholders,

It gives me great pleasure to present, on behalf of the Board of Directors of your Company, the 21st Annual Report on the business and operations of Oil And Natural Gas Corporation Ltd. (ONGC) and its Audited Statements of Accounts for the year ended March 31, 2014, together with the Auditors'' Report and Comments on the Accounts by the Comptroller and Auditor General (CAG) of India.

Your company along with its group companies has witnessed yet another year of sustained performance, success and growth not only in its core activities of Exploration and Production (E&P) of crude oil and natural gas but also in other areas where we have engaged ourselves significantly.

Your company registered an increase of 5.6% in its PAT despite allowing highest ever discount towards under- recoveries of Oil marketing company (OMCs) at Rs. 563,843 million.

The domestic production by ONGC including its share in JV-PSC during FY''14 was 50.86 MMToe which is about 1% lower than FY''13 production (51.47 MMToe). Your company has been making all efforts to arrest the decline in the production from its matured fields through various measures like IOR and EOR. The company has made commendable performance in the core area of exploration by registering Reserve Replacement Ratio of 1.87. All efforts are being made to bring various marginal fields to production to ensure sustained production performance.

A brief recap of the main achievements during this fiscal are:

- ONGC Deepwater drilling group set a world record of drilling deepest ultra-deepwater well by successfully reaching the target depth of 7725 m. The well KG- DWN-2005/1-D-1 drilled by the Rig DDKG1 has set two records – firstly, the world record of well at the deepest water depth of 3174m and secondly, drilling the deepest offshore well of 7725m.

- The fiscal saw your company completing and successfully putting on production its first deep water sub-sea well G1-11 in Eastern Offshore through an Early Production System (EPS). This has been accomplished by your company ensuring that the production volume from the well got realized within shortest possible time after its completion by connecting it with existing facilities of Odalarevu GCS near Kakinada temporarily through 2x10" subsea pipelines.

- For the first time, your company has adopted easy cost planning for workover operation on Pan-India basis in SAP system throughout ONGC.

- Your Company accreted 84.99 MMToe of ultimate reserves in the domestic fields (ONGC operated); the highest in the last twenty three years.

- For the 9th consecutive year your company maintained the Reserve Replacement Ratio (RRR) of more than 1. RRR during the year has been 1.87.

- The Turnover of the Company stood at Rs. 842,028 million, the highest-ever. The turnover of the ONGC Group at Rs. 1,782,051 million has also been the highest-ever.

- Your Company recorded a Net Profit of Rs. 220,948 million during the year under review, 5.6% higher than 2012-13 (Rs. 209,257 million).

- ONGC Videsh Limited (ONGC Videsh), wholly owned subsidiary of your Company, which had in the recent past shown downward production volume realization owing to extraneous geo-political situations in Sudan & Syria, has recorded a 26% increase in crude oil production this fiscal mainly on account of resumption of production from Sudan and also new production stream from ACG, Azerbaijan and acquisition of additional 12% PI in Block BC-10 in Brazil.

- ONGC Videsh recorded highest-ever Net Profit of Rs.44,453 million.

- Your company''s subsidiary Mangalore Refinery and

Petrochemicals Limited (MRPL), has been upgraded to Schedule-A Category-1 Mini-Ratna Company by the Department of Public Enterprises (DPE), Government of India (GOI), thereby giving MRPL enhanced administrative and financial autonomy.

- MRPL recorded the highest-ever thru''put of 14.6 MMT against an MoU target of 14.5 MMT, thus securing ''Excellent'' rating in achievement of its MOU targets.

- MRPL has posted a net profit of Rs.6010 million, an increase of 179% from last fiscal''s loss of Rs. 7569 millions.

- Pursuant to the decision of the Government of India to divest 10% of the equity share capital of Indian Oil Corporation Ltd, ONGC acquired 5% equity shares of Indian Oil Corporation Limited amounting to 121,397,624 equity shares of Rs. 10 each @ Rs. 220/- per share. The consideration amount of Rs. 26,707 million has been paid to the Government of India. Necessary disclosures in this regard have been submitted to Stock Exchanges.

During 2013-14, your company had to share the highest-ever contribution of Rs. 563,843 million (an increase of Rs. 69,636 million i.e 14% over the previous year) towards the under-recoveries of OMCs. This has impacted your Company''s Profit Before Ta x by Rs. 477,561 million and Profit after Ta x by Rs. 315,238 million. However, your Company has been able to achieve Net Profit of Rs. 220,948 million during 2013-14, which is 5.6% higher than the profit of 2012-13.

Global Recognition

You will be pleased to know that your Company has been ranked at 176th in the 2014 Forbes Global 2000 list of world''s biggest companies. As per the Platts 2013 rankings, your Company is ranked 3rd largest listed E&P Company in the world and ranked 22nd Energy Company of the world based on Asset, Revenue, Profit & ROCE. Your company has been adjudged one of the

Fortune World''s most Admired Companies of 2014 as per CNN Money. There are only two companies from India in the list and your company is the only PSU in that coveted list. CNN Money has further ranked your company 369th in its Fortune Global 500 (2013) list by Revenue among global 500 companies. Adding to our global credentials is the fact that this year also your company has been awarded ''Randstad Award 2013'' for

Most Attractive employer in the Energy Sector in India.

As a fitting acknowledgment of your Company''s green credentials, you will be pleased to learn that ONGC has registered one of the largest Clean Development Mechanism (CDM) projects in the world when it got "the ONGC Tripura Power Company Limited (OTPC)" registered with the United Nations Framework Convention on Climate Change (UNFCCC). This 726.6 MW gas-based power generation plant in Tripura is a fuel-substitution project, which would mitigate over 1.6 million tons of Carbon-dioxide emissions per year for the next 10 years. In addition, your company has registered its 11th CDM project - the Green Building Project at Kolkata, with the UNFCCC. The project, like its two predecessors (Green Building Projects at Mumbai and Dehradun), has been registered for 21 years and once commissioned, will fetch 1861 credits per annum.

Performance: 2013-14

Exploration

During the year, your Company made 14 oil and gas discoveries in domestic fields (operated by ONGC). Out of 14, 7 discoveries are in offshore and 7 in onshore; 6 discoveries were made in the new prospects whereas 8 were new pool discoveries. 5 discoveries were made in NELP blocks and 9 in nomination blocks. Out of the discoveries made this year, 2 are oil bearing, 9 are gas bearing and 3 are both oil & gas bearing.

In addition to these discoveries, 32 more exploratory wells drilled for delineation/appraisal of known pays in existing fields were hydrocarbon bearing and have resulted in field growth.

Out of 7 on-land discoveries made during 2013-14, 4 discoveries (Gandhar-686, Sobhasan-300, Nandasan-111 & Geddanapalli-3) have already been put on production and efforts are on for bringing the other discoveries on production as early as possible.

Five discoveries in NELP blocks (one onland and four offshore) are governed by the PSC guidelines and appraisal/development activities will be taken up keeping in view the time lines of the respective blocks. Details of the discoveries are as under:

Sl. Name of the well Hydro- Basin Block Type & Block Name Pool/ No carbon Prospect Type

New Prospects Discovery

1 KGOSN041NANL #1 Gas KG(Shallow Water) NELP;KG-OSN-2004/1 Prospect

2 KGOSN041NANL#2 Gas KG (Shallow Water) NELP ; KG-OSN- 2004/1 Prospect

3 Seripalem-1(SRM-AA) Gas KG Onshore Nomination; Godavari On-land PML Prospect

4 MBOS51NAA#1 Gas Western Offshore NELP; NB-OSN-2005/1 Prospect

5 Mandapeta South # 1 (MDS-AA) Gas KG Onshore Nomination; Godavari on-land PML Prospect

6 NW-B173A-8 Oil & gas Western Offshore Nomination; South & East Bassein PML Prospect

New Pool Discovery

7 GK-28 # 9 Gas Kutch (Shallow Western Offshore Pool Water); GK-28 PML

8 GK-42 # 3 Gas Kutch (Shallow Western Offshore Nomination; Pool Water); GK-28 PML

9 Gandhar # 686 Oil & Gas Western Onshore Nomination; Gandhar Extension VI PML Pool

10 SB#300 (SBCG) Gas Western Onshore Nomination; Geratpur PML Pool

11 Gedanapalli#3 (GLAC) Oil KG Onshore Nomination; Godavari onland PML Pool

12 KG982NA-M#3 Oil & Gas KG Deep Offshore NELP; NDA of KG-DWN -98/2 Pool

13 Khubal#7 (KHBJ) Gas A&AA NELP; AA-ONN-2001/1 Pool

14 Nandasan-111 (NNBC) Oil Western Onshore Nomination; Nandasan Extn-I PML Pool

The new prospect discover y in NELP Block KGOSN041NANL #1 (Shallow Water) is important because this will help in augmenting hydrocarbon volumes established through four earlier discoveries namely Chandrika South, Alankari, Saveri & NANL-2 in the block. This will add to ONGC''s efforts towards attaining critical hydrocarbon volumes for viability of a possible ''cluster based development'' of these discoveries. Similarly, discovery MBOS51NAA#1 in NELP block NB-OSN-2005/1 is in close vicinity of C-37/ C-39, B-9 areas that will enhance the overall gas potential of the area. Mandapeta South # 1 (MDS-AA) discovery south of main Mandapeta field has indicated for the first time possible production potential of tight reservoirs found in the area through hydro-fracturing. The discovery NW-B173A-8 in South & East Bassein PML area in Mukta formation has huge upsides to the production potential of producing field B-173A.

New pool discoveries GK-28 # 9 and GK-42 # 3 in GK-28 PML block in Kutch Shallow Water has a good potential to add value to GK-28/GK-42 areas which ONGC plans to put on production. Besides, this discovery has potential to add a new basin to the list of producing basins in the country. Similarly, the new oil & gas pool discovery Gandhar # 686 in Gandhar Extension VI PML area has shown first occurrence of oil in sand GS-11 in the South Western part of Gandhar field which will help in opening the sector for further growth of this field.

The discovery SB#300 (SBCG) in Kalol formation South East of main Sobhasan field, in a separate fault block on the plunge of Sobhasan structure is the first gas discovery in KS-IV Sub pay and hence it will lead to adding a new gas play to the area. The discovery of Khubal#7 (KHBJ) in a separate fault block in NELP block AA-ONN-2001/1 in Assam & Arakan basin is likely to add volumes to the already established in-place gas in the block and thereby help our fertiliser business that is planned through gas from Khubal area.

The dominance of oil in Northern Discovery Area (NDA) which has been established through the earlier notified KG98/2NA-A#2 discovery is further confirmed by the new pool discovery KG98/2NA-M#3 this year which has potential to take the in-place oil volumes to more than 100 MMt. Current estimated Oil & Gas (O OEG) volumes in NDA stand at 190 MMToe as on 01-04-2013 and are likely to grow to the order of 290 MMToe with the addition from this M#3 discovery.

Reserve accretion & Reserve Replacement Ratio (RRR)

Continuing exploration in challenging and frontier areas, your company has accreted 255.56 million metric tonnes of oil equivalent (MMToe) of In-place volume of hydrocarbon in the domestic basins (operated by ONGC). As on 31.03.2014, the in-place Reserves of ONGC as a group stands at 2,004.15 MMToe; up 14% from FY''13 figure of 1,759.43 MMToe. The ultimate reserves accretion by ONGC in domestic area during FY''14 has been 84.99 MMToe, the highest in last 23 years. Total reserve accretion in domestic basins including ONGC''s share in PSC JVs stands at 89.76 MMToe. With a Reserve Replacement Ratio (RRR) of 1.87 (with 3P Reserves) for its domestic basins, it was the 9th consecutive year that your Company has maintained an RRR of more than one.

Voluntary disclosures in respect of Oil & Gas Reserves, conforming to SPE classification 1994 and US Financial Accounting Standards Board (FASB-69) have been made by your Company.

Following is the reserve accretion details which your company has been pursuing with great vigour & conviction:

Ultimate Reserve (3P) accretion O OEG (in MMToe)

Year Domestic ONGC''s share in Total ONGC VIDESH''s Total Assets Domestic Jvs Domestic Share in (1) (2) Reserve Foreign Assets (3)=(1) (2) (4) (5)=(3) (4)

2008-09 68.90 2.82 71.72 135.08 206.80

2009-10 82.98 4.39 87.37 0.35 87.72

2010-11 83.56 0.29 83.85 46.23 130.08

2011-12 84.13 1.31 85.44 -0.31 85.13

2012-13 84.84 4.24 89.08 14.16 103.24

2013-14 84.99 4.77 89.76 212.59 302.35

Statement of Reserve Recognition Accounting (RRA)

Reserve Recognition Accounting is a statutory compliance towards recognizing income at the point of discovery of reserves and seeks to demonstrate the intrinsic strength of an organization engaged in exploration and production of hydrocarbons with reference to its future earning capacity in terms of current prices for income as well as expenditure. This information is based on the estimated net proved reserves (developed and undeveloped) as determined by the Reserves Estimates Committee of the Company.

As per FASB-69 on disclosure about Oil and Gas producing activities, publicly traded enterprises that have significant Oil and Gas producing activities, are to disclose with complete set of annual financial statements, the following supplemental information:

a) Proved Oil and Gas reserve quantities

b) Capitalized costs relating to Oil and Gas producing activities

c) Cost incurred for property acquisition, exploration and development activities

d) Results of operations for Oil and Gas producing activities

e) A standardized measure of discounted future net cash flows relating to proved Oil and Gas reserve quantities

Your Company has disclosed information in respect of (a) to (d) above in the Annual Financial Statements.

Your Company has also made voluntary disclosure on standardized measure of discounted future net cash flows relating to proved oil and gas reserve at Annexure-''A'' to this report as statement of Reserve Recognition Accounting (RRA).

Unconventional sources of energy

ONGC plans to continue its endeavour for exploration and development of Unconventional & other resources like Shale Gas, CBM, HP/HT, Fractured Basement plays with the following initiatives:

a. Shale Gas and Oil

ONGC has the distinction of establishing the first flow of shale gas in the country at Durgapur. Shale gas exploration and production is one of the key elements of ONGC''s Perspective Plan 2030 wherein an accretion potential of 850 to 1150 MMToe and production potential of 80 to 140 MMToe have been envisaged by the year 2030. ONGC is planning to explore for shale gas in Cambay, Krishna- Godavari, Cauvery and Assam Shelf and basins.

Government of India notified the New Shale Gas Policy for the NOCs on 14.10.2013 and according to it, ONGC and OIL will initiate shale gas and oil exploration activities in their nomination blocks in a phased manner. ONGC has identified 50 nomination blocks, of which 28 blocks are in Cambay basin, 10 in KG basin, 9 in Cauvery basin and 3 in Assam Shelf.

Following the notification of the policy, ONGC has already drilled its first pilot Shale gas well JMSGA(DD-3305 m) in the Cambay basin. Extensive coring (139 m) was carried out in this well and studies on cores and analysis of wire line logs are in progress which will help in assessing the shale gas and oil potential of Cambay Shale, main source rock in the basin. Identification of prospective shale gas blocks in different basins has been completed and ONGC plans to take up shale gas activities aggressively in these basins. Around 20 similar pilot wells are planned to be drilled in Cambay, KG, Cauvery and A&AA basins in 2014-15. Success in these envisaged Shale Gas pilot programme will help in unlocking unconventional shale gas and oil reserves in dif ferent basins.

b. Coal Bed Methane(CBM)

ONGC has taken concrete steps to discover Coal Bed Methane (CBM) in the country and is currently operating in four CBM Blocks i.e., Jharia, Bokaro, North Karanpura and Raniganj. The Development Plans for all the four blocks has been submitted and approved by the Steering Committees. Nearly 400 wells and 2000 hydro-fracturing jobs would be carried out in the coming 4-5 years as per timelines of the CBM Contract. In view of the mammoth and time bound task, ONGC has decided to farm-in experienced partners to execute field operations, process for acquisition of which is in an advanced stage.

ONGC has started selling incidentally produced CBM gas from existing wells at Parbatpur of Jharia Block at an approved price of $5.1 per MMBTU i.e. Rs. 9.75 per SCM approx. The cumulative gas sale as on 31st March 2014 is 11.41 MSCM. The Commercial CBM production in ONGC blocks is yet to start.

c. Underground Coal Gasification(UCG)

ONGC has selected Vastan Mine block in Surat district, Gujarat for UCG Pilot project. All the ground work and inputs for pilot construction have been finalized for implementation. Gazette notification from GoI for UCG block allocation in the form of Notice Inviting Application (NIA) had been issued on 29th July, 2013. According to the NIA the block shall be allocated to state PSU located in Gujarat. GIPCL, Gujarat being partner in ONGC''s UCG venture, submitted a fresh application on 21st August,2013.

The issue of Mining Lease for the block is awaited. The Pilot construction and erection of surface facilities shall be taken up only after the allocation of the Vastan Mine block.

Further, a number of sites have been jointly identified by ONGC & Neyveli Lignite Corporation Limited (NLC) for studying their suitability to UCG. These are Tadkeshwar in Gujarat and Hodu-Sindhari& East Kurla in Rajasthan. One more site was jointly identified by ONGC & GMDC at Surkha in Bhavnagar district, Gujarat. The data of all the fields have been analysed for evaluating the suitability of these sites for UCG. All sites have been found suitable for UCG exploration.

Oil & Gas production

During FY ''14, like earlier years, your company being the largest producer of oil and gas in the country, was able to maintain its relevance by contributing 69 per cent of oil and 62 per cent of natural gas production of the country from its domestic operations.

Oil & Gas production of ONGC Group, including PSC-JVs and from overseas Assets for FY''14 has been 59.21 MMToe (against 58.71 MMToe during FY''13). The upward volume came from our overseas asset at Ajerbaijan and also from resumption of production in Sudan & South Sudan where production was suspended owing to geopolitical situations. However, when compared to 2011-12, the production is slighlty lower owing to unrest in Syria and still inadequate production from Sudan & South Sudan and the natural decline in overseas matured fields in Sakhalin-1, Russia, San Cristobal Project, Venezuela and BC-10, Brazil, besides the natural production decline in domestic mature fields. The fall in production was offset through IOR & EOR ef forts.

Out of the total production of 31.49 MMT of crude oil, 70.6 per cent production came from ONGC operated domestic fields, 17.4 per cent from the overseas assets and balance 12 per cent from domestic joint ventures. As far as natural gas production is concerned, majority of production (84 per cent) came from ONGC operated domestic fields, 10.4 per cent from overseas assets and 5.6 per cent from domestic joint ventures.

Production from overseas assets

ONGC Videsh, has thirteen (13) producing assets in eight countries - Venezuela (1), Brazil (1), Colombia (1), Sudan (1), South Sudan (2), Syria (1), Vietnam (1), , Mayanmar (2), Russia (2) and Azerbaijan (1).

Total production from these overseas assets during FY''14 has been 8.36 MMToe of O OEG (Crude oil: 5.49 MMT & Gas: 2.87BCM).

Ajerbaijan has contributed 12% as compared to around 0.1% last year. Resumption of operations in South Sudan & Sudan has also contributed to this years increased volume contributing 13.2% this year as compared to 8.2% last year. Russia & Vietnam continued to be the biggest contributor to overseas production volume with 29.4% and 23% respectively followed by Venzuela with 10.8%.

NEW PROJECTS

The following new projects are under implementation:

- Integrated Development of Vasihita and S1 Fields -

The project envisages gas production of 15.96 BCM within 9 years from completion with an investment of ?41243 million.

- Development Plan for lower pays in NBP- 14 Block of NBP field - This project envisages an investment of ?4291 million for drilling and completion of 6 development wells.

- Additional development of Vasai East field The Capex of this project is ?24770 million and envisages installation of 2 well platforms (VSEB & VSEC) and drilling of 20 wells with cumulative incremental oil & gas production of 1.83 MMt and 1.971 BCM by 2029-2030.

- Mudline completion - Development of three shallow water wells GS-15-9, GS-15-E1 & GS-48-1 through Sub- Sea mud-line tree in Eastern Offshore. The project envisages gas production of 1.1 MMSCMD, gradually reducing to 0.36 MMSCMD in 10 years with an investment of ?2848 million.

Overall Production and Sales Performance

Presented below are the highlights of production and sales of Crude Oil, Natural Gas and Value Added Products (VAP):

Unit Production Qty Sales Qty Value (Rs.in millions)

FY''14 FY13 FY14 FY13 FY14 FY13

Direct

Crude Oil (MMT) 25.99 26.13 23.61 23.69 525,734 533,268

Natural Gas (BCM) 24.85 25.34 19.63 20.16 183,291 165,400

Ethane/ Propane 000 MT 430 428 428 425 14,837 13,440

LPG 000 MT 1,067 1,006 1,073 1,005 30,145 31,484

Naphtha 000 MT 1,358 1,534 1,379 1,520 75,743 76,804

SKO 000 MT 84 108 85 106 2,779 3,686

Others 2,124 1,589

Sub Total 834,653 825,671 Trading

Motor Spirit 000 KL 0.54 0.56 41 42

HSD 000 KL 0.05 0.02 3 1

Others

Sub Total 44 43

Total 834,697 825,714

1. Financial Results

During the year, your Company has earned a Profit After Tax (PAT) of ? 220,948 million up 5.6% over FY 2012-13 (?209,257 million)

Highlights

Gross Revenue :? 842,028 million

Profit After Tax (PAT) ? 220,948 million

Contribution to Exchequer : ? 405,750 million

Return on Capital Employed : 39.62%

Debt-Equity Ratio : 0.00

Earnings Per Share (Rs.) : 25.83

Book Value Per Share (Rs.) 159

(Rs. in million)

Particulars 2013-14 2012-13

Revenue from operations 842,028 833,090

Other Income 67,132 54,367

Total Revenues 909,160 887,457

Profit Before Interest Depreciation & Tax (PBIDT) 433,582 389,455

Profit Before Tax (PBT) 324,319 305,443

Profit After Tax (PAT) 220,948 209,257

APPROPRIATION

Interim Dividend 79,138 76,999

Proposed Final Dividend 2,139 4,278

Tax on Dividend 13,807 13,012

Transfer to General Reserve 125,864 114,968

TOTAL 220,948 209,257

Previous year figures have been regrouped wherever necessary.

Previous year figures have been regrouped wherever necessary.

The increase in Profit during FY 13 -14 as compared to FY 12-13 is mainly due to lower write off towards dry wells and appreciation in US$ against INR. This is inspite of contribution of record Rs. 563,843 Million by ONGC towards under-recoveries of Oil Marketing companies.

2. Dividend

Your Company paid interim dividend of Rs.9.25 per share (185 per cent) in two phases (Rs.5.00 and Rs.4.25). The Board of Directors has recommended a final dividend of Rs. 0.25 per share (5 per cent) making the aggregate dividend at Rs. 9.50 per share (190 per cent) for FY 13-14 i.e. same as compared to dividend for the year 2012-13. The total dividend will be Rs.81,277 million, besides Rs.13,807 million as tax on dividend amounting to 43.03 per cent of PAT.

3. Management Discussion and Analysis Report

As per the terms of Clause 49(IV)(F) of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report (MDAR) has been included and forms part of the Annual Report of the Company.

4. Financial Accounting

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable Accounting Standards (AS-1 to AS-29) and Successful Efforts Method of accounting as per the Revised Guidance Note on Accounting for Oil & Gas Producing Activities issued by The Institute of Chartered Accountants of India (ICAI) effective from 01.04.2013 and provisions of the Companies Act, 1956. Further, as per Ministry of Corporate Affairs (MCA) notification, the financial statements have been prepared under the Revised Schedule VI format of the Companies Act, 1956. It may be noted that the provisions of Companies Act, 2013 with regard to preparation of Annual Accounts shall become applicable from the financial years commencing on or after 1st April, 2014.

5. Subsidiaries

I ONGC Videsh Limited (ONGC Videsh)

ONGC Videsh, the wholly-owned subsidiary of your Company for E&P activities outside India, has participation in 33 projects in 16 countries e.g. Azerbaijan, Bangladesh, Brazil, Colombia, Iraq, Kazakhstan, Libya, Mozambique, Myanmar, Russia, South Sudan, Sudan, Syria, Venezuela and Vietnam. Out of 33 projects, 13 are producing, 4 are discovered/under development, 14 are exploratory and remaining 2 are pipeline projects.

ONGC Videsh is currently producing about 169 thousand barrels of oil and oil equivalent gas per day and has total oil and gas reserves of about 637 MMToe as on 31st March 2014. It has achieved the highest- ever profit (PAT) of Rs.44,453 Million during FY'' 14, an increase of 13% as compared to the PAT of Rs. 39,291 Million during FY''13. The increase in profit can be attributed mainly to increase in production / sale quantity and appreciation of US$ against the INR. ONGC Videsh''s share in production of oil and oil equivalent gas (O OEG) of ONGC group, together with its wholly-owned subsidiaries, ONGC Nile Ganga B.V., ONGC Amazon Alaknanda Limited, Imperial Energy Limited and Carabobo One AB, was 8.357 MMToe during FY''14 as compared to 7.260 MMToe during FY'' 13. The oil production increased from 4.343 MMT during FY''13 to 5.486 MMT during FY''14 (26.3% higher) primarily due to new production stream from ACG, Azerbaijan; acquisition of additional 12% PI in Block BC-10, Brazil; higher production from Sudan and South Sudan.

Significant Acquisitions, Alliances and Operations highlights of ONGC Videsh during FY''14 are as follows:

i) ONGC Videsh with Oil India Limited (OIL) has acquired 10% (ONGC Videsh - 6% and OIL - 4%) PI in the Rovuma Area 1 Offshore Block in Mozambique (Area 1) at purchase consideration of USD 2511 Million on 7th January, 2014 by acquiring the share of Videocon Mozambique Rovuma 1 Limited.

Your Company has also acquired 10% PI in the same area from Anadarko Moçambique Area 1 Limitada at purchase consideration of USD 2640 Million on 28th February, 2014.

Area 1 covers approximately 2.6 million acres in the deep-water Rovuma Basin of fshore Mozambique and represents the largest gas discovery in offshore East Africa with estimated recoverable reserves of 50 to 70 trillion cubic feet.

ii) ONGC Videsh, through its subsidiaries, has acquired an additional 12% Participating Interest (PI) in Block BC-10, a deep-water offshore block in Campos Basin, Brazil at purchase consideration of USD 561 million, taking its total PI in the block to 27%. The Company had earlier acquired 15% PI in Block BC-10 in 2006.The transaction for 12% stake in the block was completed in December, 2013.

iii) ONGC Videsh in partnership with OIL on 17th February, 2014, has signed Production Sharing Contract (PSC) for two shallow water exploration blocks SS-09 & SS-04 in the Bay of Bengal of Bangladesh. ONGC Videsh and Oil India Limited (OIL) formed a consortium (50:50) and participated in the Bangladesh Offshore Bidding Round 2012, launched by Bangladesh Government during December 2012 and was officially notified as the winner of the mentioned blocks on August 20th 2013. ONGC Videsh has 45% PI in each of the Blocks with operatorship, 45% PI is held by Oil India Ltd and remaining 10% PI is held by Bangladesh Petroleum and Exploration Company Limited.

iv) On 10th October 2013, the Company was awarded two onshore exploratory blocks namely B2 (Zebyutaung-Nandaw) and EP-3 (Thegon- Shwegu) in the Myanmar Onshore Bidding Round 2013. Block B-2, having an area of 16995 sq. kms is located in Northern Myanmar, bordering state of Manipur in India and Block EP-3 having an area of 1650 sq. kms is located in Central Myanmar. ONGC Videsh was one of the 7 Indian companies which were shortlisted as Pre-qualified bidders by Government of Myanmar for their Onshore 2nd Bid Round -2013 for 18 blocks. v) During FY''14, ONGC Videsh has signed the following MoUs:

a) MoU with Petrovietnam - On November 20, 2013, in furtherance to earlier MoU signed on October 2011 to promote joint cooperation in hydrocarbon sector in Vietnam, India and other countries was signed. Under the MOU, Petrovietnam has offered 5 blocks to ONGC Videsh. ONGC Videsh would assess these blocks and if these are of interest, it would make a proposal to PetroVietnam.

b) MOU with Coordinating Ministry for Strategic Sectors of Ecuador on 9th December 2013 over sharing of information regarding oil and gas projects in Ecuador, which ONGC Videsh would evaluate to identify projects of its interest and could propose participation in such project(s) through specific definitive agreements.

c) MOU with PDVSA - On 9th October 2013 for strategic cooperation and participation in the exploration and production of hydrocarbon resources in the oil-rich Faja area of Venezuela and in other areas as well in joint collaboration thereby enhancing ONGC Videsh''s interest in Venezuela.

vi) ONGC Videsh commenced first commercial production of gas from Block A3 and Block A1 in Offshore Myanmar on 15th July 2013 and 10th January 2014 respectively. The combined production from these blocks is currently 8.7 MMSCMD and is expected to reach a peak level of 14.20 MMSCMD in Q1 of 2015. ONGC Videsh has 17% PI in these blocks.

vii) ONGC Videsh has commissioned the Onshore Pipeline Gas Transportation project in Myanmar in November 2013. The Contractual Transportation Date has been notified as 1st December, 2013. The onshore gas pipeline is currently under operation and is transporting gas to both the Export and Domestic buyers.

viii) In Block BC-10, Brazil, the Phase II of the Project has also come on stream in October 2013 with an expected peak production of about 35,000 barrels of oil equivalent per day (boepd) in 2014. The current oil production from the block has reached 58,000 boepd at JV level. Phase-III of the project has also started with drilling of wells and first - oil is expected by April, 2016 with expected peak production of about 28000 boepd in 2017. The production from all the phases is expected to be about 75,000 boepd in 2017.

ix) After acquisition of 2.72% stake in ACG project in Azerbaijan, additional oil production has commenced from West Chirag field on 28th January, 2014. The current production from the project is 678,000 bopd.

x) The current geo-political situation in Syria including EU sanctions and the resulting restrictions on contractors continues which has adversely affected Syrian operations since December 2011.

xi) The operations in South Sudan projects are temporarily under shutdown after internal conflicts and adverse security situation in the country since 22nd December, 2013. However, a Ceasefire Agreement has been signed on 9th May, 2014 by the warring parties and negotiations are being carried out under the mediation of the African Union and Inter-governmental Authority on Development (IGAD). Operations in South Sudan shall resume once security situation improves.

Direct Subsidiaries and Joint Ventures of ONGC Videsh i. ONGC Nile Ganga B.V. (ONGBV) ONGBV, a subsidiary of ONGC Videsh, is engaged in E&P activities in Sudan, South Sudan, Syria, Venezuela, Brazil and Myanmar. ONGBV holds 25 per cent Par ticipating Interest (PI) in Greater Nile Oil Project (GNOP), Sudan with its share of oil production of about 0.741 MMT during 2013-14. ONGBV also holds 25 per cent PI in Greater Pioneer Operating Company (GPOC), South Sudan. Due to adverse geo-political conditions, ONGC Videsh could produce only 0.218 MMT oil in GPOC, South Sudan during FY''14.

ONGBV holds 16.66 per cent to 18.75 per cent PI in four Production Sharing Contracts in Al Furat Project (AFPC), Syria. Due to geo-political situations in Syria, ONGC Videsh could not produce any oil in AFPC project during FY''14. ONGBV holds 40 per cent PI in San Cristobal Project in Venezuela through its wholly owned subsidiary ONGC Nile Ganga (San Cristobal) BV with its share of oil production of about 0.854 MMT during FY'' 14. ONGBV holds 27 per cent PI in BC- 10 Project in Brazil through its wholly owned subsidiary ONGC Campos Ltda with its share of oil and gas production of about 0.331MMToe during FY'' 14. ONGBV also holds 25% PI in Block BM- SEAL-4 located in deep-water offshore, Brazil through its wholly owned subsidiary ONGC Campos Ltda. ONGBV also holds 8.347per cent PI in South East Asia Gas Pipeline Co. Ltd., (SEAGP) for Pipeline project, Myanmar through its wholly owned subsidiary ONGC Caspian E&P B.V.

ii. ONGC Narmada Limited (ONL)

ONL has been retained for acquisition of future E&P projects in Nigeria.

iii. ONGC Amazon Alaknanda Limited (OAAL)

OAAL, a wholly-owned subsidiary of ONGC Videsh, holds stake in E&P projects in Colombia, through Mansarovar Energy Colombia Limited (MECL), a 50:50 joint venture company with Sinopec of China. During FY'' 14, ONGC Videsh''s share of oil and gas production in MECL was about 0.604MMToe.

iv. Imperial Energy Limited (Erstwhile Jarpeno Limited)

Imperial Energy Limited (Name changed from Jarpeno Limited with effect from April 19th 2013), a wholly-owned subsidiary of ONGC Videsh incorporated in Cyprus, has its main activities in the Tomsk region of Western Siberia, Russia. During FY'' 14, Imperial Energy''s oil and gas production was about 0.423MMToe.

v. Carabobo One AB

Carabobo One AB, a wholly-owned subsidiary of ONGC Videsh incorporated in Sweden, indirectly holds 11 per cent PI in Carabobo-1 Project, Venezuela. The early production has already started from first well (CGO005) on 27th December 2012 @ 300 bopd. During FY'' 14, Carabobo''s oil and gas production was about 0.022MMToe.

vi. ONGC (BTC) Limited :

ONGC (BTC) Limited holding 2.36 per cent interest in the Baku-Tbilisi-Ceyhan Pipeline ("BTC") owns and operates 1,768 km oil pipeline running through Azerbaijan, Georgia and Turkey. The pipeline mainly carries crude from the ACG fields from Azerbaijan to the Mediterranean Sea.

vii. ONGC Mittal Energy Limited (OMEL)

ONGC Videsh along with Mittal Investments Sarl (MIS) promoted OMEL, a joint venture company incorporated in Cyprus. ONGC VIDESH and MIS together hold 98 per cent equity shares of OMEL in the ratio of 49.98 per cent (ONGC Videsh) and 48.02 per cent (MIS) with the balance 2 per cent shares held by SBI Capital Markets Ltd. OMEL held 45.5 per cent PI in exploration block OPL 279, Nigeria and holds 64.33 per cent PI in exploration Block OPL 285, Nigeria. OMEL also holds 1.11 per cent of the issued share capital of ONGBV by way of Class-C shares issued by ONGBV exclusively for AFPC Syrian Assets; such investment being financed by Class-C Preference Shares issued by OMEL in the ratio of 51:49 to ONGC Videsh and MIS respectively.

II Mangalore Refinery and Petrochemicals Limited (MRPL)

Your Company continues to hold 71.62 per cent equity stake in MRPL, a Schedule ''A'' Mini Ratna, which is a single location 15 MMTPA Refinery on the West coast.

Performance Highlights FY 2013-14

- MRPL achieved the highest-ever thru''put of 14.97 and it produced 14.59 MMT of petroleum products in FY''14, the highest-ever.

- FY''14 saw MRPL registering a handsome profit (PAT) of Rs.6010 Million against a net loss of Rs.7,569.10 million that MRPL witnessed during FY''13 owing to reduced gross margins and foreign exchange fluctuation during FY''13.

- Despite profit, however, Board of Directors of MRPL has not recommended any Dividend payout for the financial year 2013-14 considering the working capital requirement, past losses and project expenditure.

- MRPL exported 6.727 MMT of products against 6.838 MMT in the previous year. The Export turnover rose to Rs.353,920 million in FY''14 with 6.15% higher than previous F Y.

- Crude sourcing (Receipts): 14.971 MMT; Iran (28.91 per cent), Saudi Arabia (22.51 per cent), ADNOC (17.09 per cent), Kuwait (9.77 per cent), Mumbai High (9.27 per cent), Nile Blend (1.06 per cent) & Spot (11.39 per cent).

Marketing & Retail Operations

The Company (MRPL) embarked into bulk sales of HSD after the introduction of dual pricing for HSD. The turnover of Direct Marketing stood at Rs.22, 910 Million in FY-14 as compared to Rs.25,830 Million in FY-13. The Company could establish a good market reach for sale of Petcoke after commissioning of Delayed Coker unit in April 2014. The Company''s Joint Venture (Shell MRPL Aviation Fuel services Limited) for marketing ATF has performed well and has increased its turnover by 34% in FY14 as compared to last year.

Phase III - Brownfield expansion Project & SPM

MRPL''s Phase III up-gradation and expansion project has achieved an overall progress of 99.68% as on 15.5.2014. The Company has already commissioned the SPM facility in August 2013. During the month of April/ May 2014 the Delayed Coker Unit and Coker Hydro Treater Unit and one SRU unit have been commissioned. PFCC and two trains of SRU shall be commissioned shortly. The physical progress of Polypropylene unit is 95.6% and is expected to be commissioned shortly. The total capital expenditure incurred for all these projects so far is Rs.130,050 Million.

6. Exemption in respect of Annual Report of

Subsidiaries and Consolidated Financial Statement

In accordance with Ministry of Corporate Affairs (MCA) circular dated 8th February, 2011 and clarification dated 21st February, 2011, your Board has accorded necessary approval for not attaching the Balance Sheet and Profit & Loss Account of its subsidiaries (i) ONGC Videsh and (ii) Mangalore Refinery and Petrochemicals Ltd. (MRPL). Full Annual Report of ONGC including its subsidiaries will be made available to any shareholder, if he/she desires.

Further, Annual Reports of MRPL and ONGC Videsh are also available on website www.mrpl.co.in and www.ongcvidesh.com respectively.

In accordance with the Accounting Standard (AS)–21 on "Consolidated Financial Statements" read with AS- 23 on "Accounting for Investments in Associates" and AS-27 on "Financial Reporting of Interests in Joint Ventures", audited Consolidated Financial Statements for the year ended 31st March, 2014 of the Company and its subsidiaries form part of the Annual Report.

7. Joint Ventures/ Associates

i. ONGC Petro-additions Limited (OPaL)

ONGC Petro-additions Limited (OPaL), has been promoted by your company as a Joint Venture (JV) Company, with envisaged equity stake of 26% along with GAIL (15.5%) and GSPC (5%). The balance equity of 53.5% is to be tied up with Strategic Partners/ FIs / IPO.

OPAL is a mega downstream petrochemical integrated project at Dahej SEZ for utilizing in-house production of C2-C3 and Naphtha from various units of ONGC.

Recently on August 23rd, 2013, your company signed a Product Sale Agreements with OPaL for supply of feed-stocks, thereby enabling OPal''s lenders to release funds for implementation of the project.

Present status

- Overall Cumulative progress is 89.84 %.

- Total cumulative expenditure as on 31st March 2014 is Rs.181,557 million. Approved project cost is Rs.213,960 million.

- Debt closure has been attained for approved project cost of Rs.213,960 million with the execution of Rupee Term Loan agreement, for Rs. 149,770 million, including ECB of USD 300 million.

- Based on the current project progress, expected completion schedule of the Project is Jan, 2015.

ii. ONGC Tripura Power Company Ltd (OTPC)

Your Company has promoted OTPC with an envisaged stake of 50% along with Govt. of Tripura (0.5%) and IL&FS Energy Development Co. Ltd. (IEDCL - an IL&FS subsidiary) (26%); the balance 23.5% is proposed to be tied up through IPO / Strategic / Financial Investor.

OTPC is setting up a 726.6 MW (2 X 363.3 MW) gas based Combined Cycle Power Plant (CCCP) at Palatana, Tripura. The basic objective of the project has been to monetize idle gas assets of ONGC in land- locked Tripura state and to boost exploratory efforts in the region.

Present Status

OTPC''s first unit (Unit-1) was dedicated to the Nation by the Hon''ble President of India on 21st June, 2013. However, commercial operation of its first unit (363.3 MW) effectively got started from 4th January 2014 in presence of representatives of beneficiary states. The second unit is expected to be commissioned in the second quarter of financial year 2014-15.

- The unit has been granted provisional tariff by Central Electricity Regulatory Commission (CERC). The Ministry of Power has allocated more than 86% of power from the project (two units) to the NER beneficiary states while 98 MW is allocated to OTPC for merchant sales. The OTPC has already signed a gas sale and purchase agreement (GSPA) with ONGC for supplying Daily contracted Quantity of 2.65 MMSCMD of gas.

- The 663 KM long 400 KV double circuit transmission network Palatana-Bongaigaon transmission has been commissioned up to Byrnihat by North-East Transmission Company Limited (NETCL), a joint venture of Power Grid Corporation, OTPC and Governments of the North-Eastern states. This development is helping in evacuating power from Unit-1 and enables partial evacuation from unit II. For complete evacuation of Unit-II power, the remaining Byrnihat-Bongaigaon section of the line requires to be completed and its completion is expected to coincide with Unit II commissioning, subject to timely resolution of certain forest clearance issues.

- The total expenditure incurred on the project till 31st March, 2014 is Rs.34,560 million against the total estimated cost of Rs.40,470 million.

- State Bank of India is funding the entire debt for the project at a Debt: Equity ratio of 75:25.

iii. ONGC Mangalore Petrochemicals Limited (OMPL)

Your company has promoted OMPL as a value-chain integration project for manufacturing Para-Xylene and Benzene from the Aromatic streams of MRPL with an envisaged equity participation of 46% along with MRPL (3%), with balance 51% to be tied up through IPO / Strategic / Financial Investor Present status:

- Overall Cumulative progress is 98.5% as on 31st March 2014

- Total cumulative expenditure on the project is Rs.51700 million. Approved project cost is Rs.57500 million.

- The commercial operation date (COD) is August 2014.

iv. Dahej SEZ Ltd (DSL)

Your company as Lead Promoter is developing a multi-product SEZ at Dahej in coastal Gujarat to facilitate your company''s endeavours at C2- C3 Extraction and value-chain integration project – OPaL. Your company has 23% equity in the project with GIDC having 26% and balance 51% is proposed to be tied up through IPO / Strategic / Financial Investor.

Present status:

- SEZ is already operational and units in SEZ have clocked export of Rs.14,200 million in FY 2012-13 and Rs.19,740 million in FY 2013-14.

- 92% of the leasable land has already been allotted and the remaining land is expected to be leased in the next two years.

- Expert Appraisal Committee of Ministry of Environment and Forest (MoEF) has recommended CRZ clearance for 123.42 ha of land in Dahej SEZ. Formal approval is awaited.

v. Mangalore Special Economic Zone Limited (MSEZ)

With an envisaged equity stake of 26% along with KIADB (23%), IL&FS (50%), OMPL (0.96%) and KCCI (0.04%), ONGC is setting up MSEZ to serve as site for development of necessary infrastructure to facilitate and locate ONGC/MRPL''s Aromatic complex being promoted by ONGC.

Present status:

- 65% of the leasable land has already been allotted.

- Pipeline Corridor development - MoEF clearance is awaited for construction works at Reach 2 (~ 1.8 km). Pursuant to presentations to Expert Committee of MoEF and clarifications, recommendations have been submitted to MoEF, Delhi. Final clearance is awaited. However, interim arrangement for laying of OMPL pipelines in this reach has been made, thereby facilitating OMPL to utilize the corridor.

- Land acquisition issues at Reach 3 (~1.5 kms) – Gazette notification has been issued. Price fixation meeting was held on 23rd Oct''13 although resolution would take one more round of discussions. However, due to Lok Sabha elections and the model code of conduct, further discussions could not take place. Interim arrangement for laying of OMPL pipelines in this reach has also been made, thereby facilitating OMPL to utilize the corridor.

- River Water infrastructure: Supply to MRPL and OMPL has commenced. Water Agreement has been initialled with OMPL and is under finalization with MRPL.

vi. ONGC TERI Biotech Limited (OTBL)

ONGC TERI Biotech Limited (OTBL) which was incorporated on 26th March, 2007 is a Joint-venture Company of ONGC in association with The Energy Research Institute (TERI), with shareholding of 49.98% & 48.02%, respectively. Balance 2% is held by FIs. Through the ef forts of joint research of ONGC & TERI over the years, OTBL is offering below mentioned technologies and providing various Biotechnical Solutions to Oil and Gas Industry, both in India and abroad:

I) Oilzapper Technology (Bioremediation)- used to eliminate & tackle Oil Spills, Oily Sludge, and hazardous hydro carbon waste;

ii) Paraffin Degrading Bacteria (PDB)- used to prevent Paraffin Deposition in Oil well Tubing;

iii) Wax Deposition Prevention (WDP)- used to prevent Paraffin Deposition in surface and sub-surface flow lines;

iv) Microbial Enhanced Oil Recovery (MeOR)- used for Enhanced Oil Recovery by mobilizing crude oil trapped in pores of Oil Reservoirs.

During 2013-14 the turnover of OTBL was Rs.154.4 Million with Profit af ter Ta x of Rs.44.8 Million as against turnover of Rs.136.61 Million and Profit after Ta x of Rs.40.05 Million in the previous year.

vii. Petronet MHB Limited (PMHBL)

- PMHBL is a JV company wherein your company has an equity stake of 28.766% along with HPCL (28.7%) and PIL (7.898%) with balance 34.57 per cent of equity being held by leading banks.

- PMHBL owns and operates a multi–product pipeline to transport MRPL''s products to the hinterland of Karnataka.

- In FY''14 PMHBL pipeline has transported a throughput of 3.07 MMT against total throughput of 2.82 MMT last year. As per un-audited results for the year 2013-14, the turnover and PAT of PMHBL are Rs.1295 million and Rs.510 million respectively.

viii. Petronet LNG Limited (PLL)

ONGC has 12.5 per cent equity stake in PLL, identical to stakes held by other Oil PSU co-promoters viz., IOCL, GAIL and BPCL. Dahej LNG terminal of PLL having a capacity of 10 MMTPA is currently meeting nearly 20 per cent of the total gas demand of the country. A new LNG terminal of capacity 5 MMTPA has been set up at Kochi and was dedicated to the Nation by Hon''ble Prime Minister of India on 4th January, 2014. The Company is also planning to set up an LNG terminal of capacity 5 MMTPA at Gangavaram, Andhra Pradesh. The turnover of PLL during 2013-14 is Rs.377,476 million (previous year Rs.314,674 million) and net profit is Rs.7,119 million (previous year Rs.11,493 million).

ix. Pawan Hans Limited (PHL)

ONGC has 49 per cent equity stake in PHL (previously known as Pawan Hans Helicopters Limited). Balance 51 per cent equity is held by the Government of India. PHL is one of Asia''s largest helicopter operators having a well- balanced operational fleet of 40 helicopters. It provides helicopter support for ONGC''s offshore operations. PHL was successful in providing all the 12 Dauphin N and N3 helicopters fully compliant with AS- 4 as per the new contract with ONGC. The accounts of PHL for 2013-14 are under finalisation.

8. Other New Projects/ Business initiatives

a. C2-C3-C4 Extraction Plant

Your company has set up a C2-C3-C4 extraction plant at Dahej with LNG from Petronet LNG Limited (PLL) as the feed stock. Commissioning of the Plant is expected to commence by July 2014. Ministry of Finance, Govt of India, vide its notification dated 17th Feb 2014 has resolved Taxation issues. Ministry of Petroleum & Natural Gas has allocated domestic gas for commissioning of the plant on 11th April 2014.

b. Urea Fertilizer Business

ONGC signed a Memorandum of Understanding (MoU) with M/s Chambal Fertilizers and Chemicals Ltd. (CFCL) and the Government of Tripura for setting up a 1.3 MMTPA capacity urea fertilizer plant in Tripura. MoU was signed on April 9th, 2013. Feedstock for the proposed plant (Natural gas) will be supplied from Khubal field in AA-ONN-2001/1 block where substantial gas reserves have been established. Gas requirement for the plant is estimated to be 2.4 mmscmd. The project cost is executives to share documents from their desktops while participating in the multiparty video conferencing. Executives on the move can also participate in multiparty video conferencing through their smart phone device.

- Lotus Connections: To create an environment that facilitates collaboration and innovation, ONGC Blog site based on Lotus Connections has been launched where users can share information online using technologies like blogs, wikis, and activity streams. Employees have started using the platform to share knowledge & opinion.

- Cyber security Crisis management team – To strengthen information security management with focus on cyber security, proposal for Cyber Security Crisis Management team has been initiated.

- Project IT- Under "IT Skill & Proficiency psruk%

Development Programme through Project IT- " psruk continued for the year 2013-14 also.

- HIS (Healthcare Information System): Standardized version of HIS - which was developed to bring in uniformity in working of ONGC health-centers and Hospitals across the organization, has been rolled- out across 20 work-centers.

- IT Service Management (ITSM): To improve performance of IT service management across the enterprise and for better alignment of IT services & business strategy, all IT helpdesk sites have been taken up for ISO 20000 Certification. Six sites at Delhi & Mumbai, which were already certified for ISO 20000, the certification has been upgraded to the latest version.

- Broadband Wireless Access for remotes: To improve IT applications performance & voice connectivity at remote installations, the contract for Point-to-Multipoint "Broadband Wireless Access (BWA) Radio System" for remote sites at North East & Southern Assets of ONGC was awarded on turnkey basis. The project is under execution.

- Satcom Upgradation: For voice & data communication connectivity, remote installations at offshore are primarily dependent on Satcom (Satellite communications). This also provides primary connectivity to many onshore installations and secondary connectivity to other installations at onshore. Satcom infrastructure equipment has become old and lived its useful life. The project for Upgradation of Satcom Infrastructure has been taken up.

- Microwave backbone: Work for setting up onshore to offshore high capacity microwave backbone communication link between Uran-Neelam-B193- BPA Offshore Complex, is awarded and shall be in service by August 2014. This is the first high capacity microwave communication link from base to offshore installations

11. Health, Safet y and Envir onment(HSE) accreditations

Safety, Occupational health and protection of environment in and around its working areas are prime concerns of ONGC. ONGC has implemented globally recognized QHSE Management System conforming to requirements of QHSE Certifications ISO 9001, ISO 14001 and ISO 18001 (OHSAS) at ONGC facilities and certified by reputed certification agencies at all its operational units. As on date, 412 Nos of working units have third party certified integrated QHSE Management System. ONGC follows the internationally accepted practices with regard to incident reporting, investigation and monitoring of recommendations.

A few highlights of HSE during 2013-14 are:

- Regular QHSE internal audits

- Fire safety measures including regular fire and earthquake mock drills,

- Training on HSE related topics,

- Environmental analysis

- PME of employees and Health Awareness programs

- Water and electricity conservation, Noise and pollution reduction measures,

- Material Safety Data Sheets(MSDS),

- Personal protective Equipment''s(PPE),

- Solid waste management and Developing E- waste disposal procedure,

- Jatropha garden and identification and implementation of Environment Management Programmes (EMP) and Occupation Health & Safety(OHS) programs as per need of the unit,

- Energy conservation awareness through display and communication,

- Accident, near miss and Governance, Risk & Compliance (GRC) reporting.

ONGC is now an Accredited Environment Impact Assessment (EIA) Consultant organization by Ministry of Environment & Forest (MoEF) in Oil and Gas Exploration, Development and Production in Offshore/Onshore areas and Petroleum refining industry.

ONGC has undertaken Ringal plantation (Hill bamboo) in Joshimath and Kedarnath forest areas of Upper Himalayas to strengthen fragile Himalayan eco-system. Plantation of 7.0 Lakh ringal in Upper Himalayas has been completed in an area of 280 Hectares. The Next Phase of ringal plantation is under progress for planting 3.75 Lakh plants in 150 Hectares.

A project on mangrove plantation along the shores of Dhadar River on West Coast has been taken up by ONGC to protect erosion of the shoreline. Phase 1 of the project, more than 17 lakh mangroves have been planted in the soil erosion-prone area along the coast of the Dhadar River at Ankleshwar.

With a view to seek environmental friendly options for the disposal and treatment of accidental oil spillages and the tank bottom sludge generated during the routine operations, ONGC explored the biotechnological option i.e. bioremediation wherein indigenous micro-organisms are isolated and enriched and harnessed on mass scale for application in the field. In the year 2013-14, 25000 MT of oily waste was treated through this technique in ONGC.

12. Sustainability Development

ONGC, one of the premier energy majors of the world and the highest profit earning PSU of India, realises its responsibilities in ensuring sustained development through protection of the ecological system. It therefore strives to position itself as a leading organisation in sustainable management and is aiming to achieve sustainable development through a holistic approach to carbon management. We believe that focused carbon management efforts are an ideal route to cover the elements of our business specific sustainable development issues across the environmental dimension. A critical area of environmental sustainability is mitigation of global greenhouse gas from operations. It is an organizational objective for us to progressively reduce our carbon footprint, by working towards reduction in both direct and indirect energy consumption.

The Company proposes to make a comprehensive, organization-wide GHG inventory that covers both direct and indirect energy over the next two to three years. This would provide the overall carbon footprint of the organization and help identify mitigation opportunities. A pilot exercise to assess GHG footprint of our representative operating units has already been completed. This pilot is now being scaled up into a pan ONGC GHG accounting exercise to assess our organisational carbon footprint and importantly to undertake a rigorous study for identification of all feasible GHG mitigation opportunities.

The following efforts undertaken by ONGC illustrate its commitment to sustainable development:

a. Sustainable Water Management (SWM) Water Mapping:

Water mapping study was completed for Ankleshwar and Rajamundry Assets and Hazira Plants. Based on the mapping, following projects have been identified for consideration under SWM umbrella:

Reuse and Recycle:

The concept was implemented as a pilot project, an STP of 50 KLD capacity was installed in the CISF Colony at Mehsana. The Project was executed in February 2014.

In association with Mehsana Asset under SWM program, the following gains have accrued:

- Mud Recycled upto 2013-14 =30128 M3

- Fresh Water Saved by Mud Recycling=22596 M3 upto 2013-14,

- Fresh Water Saved by Use of Treated Effulent=212059 M3

- Total Fresh Water Saved=234655 M3 (Upto 2013- 14) starting from 2009-10.

Desalination: A 20 MLD Desalination plant has been proposed for Uran Plant.

Rain water Harvesting

Rain water harvesting projects at various assets, Basins and plants are in various stages of implementation. This year harvesting has been conceived at Tripura and Ahmedabad Asset which are being implemented. Besides, harvesting at Rajahmundry Asset has also been conceptualized which will be implemented next year. Rain water harvesting at Vadodara has already started and is recharging ground water. More wells are being conceptualized to expand the programme.

b. Carbon Dioxide mitigation and low carbon initiatives

ONGC has also collaborated with Cleen, Finland in the area of carbon capture and joined its program.

c. Clean Development Mechanism (CDM)

ONGC commenced its CDM journey in 2006. Till date, ONGC has registered 11 CDM projects with UNFCCC. About 3 new CDM projects have been registered and other 3 registered projects have been successfully verified for issuance of 182529 CERs (Carbon credits). These CDM projects are listed below:

Registration of new CDM projects

1. Gas Flaring Reduction at Neelam&Heera Asset

2. Natural gas based combined cycle power plant in Tripura

3. Green Building project at Kolkata

Issuance of Registered CDM projects

1. Waste heat recovery from Process Gas Compressors Mumbai high south (offshore platform)

2. 51 MW wind power project of ONGC at Surajbari

3. Amine Circulation Pumps Energy Efficiency at Hazira Plant, ONGC

d. Carbon Foot Print

Comprehensive companywide GHG accounting has been completed. With this exercise, potential area of carbon management has been identified to reduce carbon footprints of ONGC.

e. 3G Bio-refinery

ONGC is planning to setup a 3G bio-refinery to meet the government mandate of E95 (blending of 5% ethanol to gasoline).

f. Solar power CSP-ST technology

CM&SG is in talk with Rippaso Energy for establishing a 3MW pilot solar power project at Gamnewala, Jaisalmer.

g. Carbon neutral PETROTECH 2014:

PETROTECH 2014, a biennial international event has been declared carbon neutral. Total 3000 VERs were exchanged to make the event carbon neutral. This is second event of its kind that was made carbon neutral by CM&SG.

h. Global Methane Initiative (GMI)

Fugitive emission Identification & Quantification (IQ) jobs have been completed as per PC targets. Ahmedabad Asset and BPA& BPB offshore installations were mapped for fugitive emissions. The reports have been submitted to respective heads to take corrective actions.

ONGC has provided IQ services to GAIL and Gail Vijapur plant was mapped for fugitive emission and thereby earning revenue for the company.

13. Business Responsibility Report – 2013-14

Securities & Exchange Board of India has introduced Clause 55 to the Listing Agreement with the Stock Exchanges, which states that Listed entities shall submit, as part of their Annual Report, Business Responsibility Report, describing the initiatives taken by them from an environmental, social and governance perspective. Accordingly, the second Business Responsibility Report – 2013-14 has been drawn up and forms part of the Annual Report for 2013-14.

14. Internal Control System

Your Company has a well-established and efficient internal control system and procedure. The Company has a well-defined delegation of financial powers to its various executives through the Book of Delegated Powers (BDP). The Integrated BDP is updated from time-to-time in line with the needs of the organisation as well as to bring further delegation. The Company has in-house Internal Audit Depar tment commensurate with its size of operations. Audit observations are periodically reviewed by the Audit, Ethics & Financial Management Committee of the Board and necessary directions are issued whenever required.

15. R&D EFFORTS THROUGH ONGC ENERGY CENTRE TRUST (OECT)

Your company has taken steps to evaluate various forms of energy to fulfil the country''s growing energy needs. Towards this end, your company has established an ONGC Energy Centre Trust (OECT), which is mandated to undertake or assist in programs / projects of fundamental and applied research for improving and developing commercially viable energy mediums and sources beyond hydrocarbons, especially in clean and/or renewable energy options. ONGC Energy Centre (OEC) has been set-up under the aegis of the OEC Trust to work on various clean energy options.

Your company through ONGC Energy Centre has been implementing several Research Projects on new and alternative sources of energy. These Projects are in advanced stages of implementation, in collaboration with various national and international academic, research and industrial organizations. The projects where your company is currently engaged in are:

a) Hydrogen Generation through Thermo-chemical Processes

b) Exploration for Uranium

c) Bioconversion of lignite to Methane

d) Bioconversion of Oil to Methane

e) Kinetic Hydro Power

f) Geothermal Energy

g) Solar Thermal Project

These apart, during 2013-14, ONGC Energy Centre has also evaluated many new options to expand the research and technology development activities and also to focus on optimum utilization of resources available with ONGC. These efforts have been described in detail in the Annexure C on Energy Conservation.

16. Human Resources

ONGC cares and values its human resource which is the bedrock of the ONGC''s success story. To keep the employees'' morale high, your Company extends several welfare benefits to them and their families by way of comprehensive medical care, education, housing and social security. During the year 2013-14, your Company implemented 30 Policy Revisions for further welfare of its employees.

17. Human Resource Development

33,988 ONGCians (as on 31st March, 2014) dedicated themselves and contributed their efforts towards the excellent performance of your company. The workforce intake strategy pursued by your Company caters to meeting the demands of maintaining a steady flow of talent, in a business which is characterized by high risks and uncertainties, enormous costs, fast changing level of technology, physically challenging work environment, fluctuating product prices and growing competition. Your Company has drawn up a scientific manpower induction plan aligned to the business plans as well as factoring the manpower profile of the Company. During the year, HR ensured that adequate numbers with requisite skills-sets were inducted to meet the requirements of the Company as well as replenish the manpower loss on account of superannuation.

Your company believes that continuous development of its human resource fosters engagement and drives competitive advantage. One such initiative towards that end was the innovatively designed and highly popular ''Business Games'', an organization-wide contest that puts to test and further hones the managerial and business acumen of the executives. During the year 2013-14, a total of 167 teams and 668 executives participated in the event.

Fun Team Games (FTGs) were organized for E0 and staff level employees to inculcate MDT (Multi- disciplinary Team) concept and a spirit of camaraderie and belongingness to the organization, which was very well received by the participants. During the year 72 teams and 188 employees participated in FTGs. Your Company also conducted the Assessment Development Centre (ADC) for 294 E-6 (DGM) level executives and provided them developmental inputs. Your Company has partnered with global HR consulting firms to create a pool of accredited mentors in the organization. These mentors will support organization''s effort to hone young minds to successfully respond to the emerging business needs of your Company. As part of this Initiative, in the year 2013-14, 865 mentors were trained and 1376 Mentees were mentored and developed.

Training

Skill up-gradation is a vital component for driving excellence through Human Resource. ONGC has branded the spectrum of its training activities as ''EXPONENT'', a comprehensive programme which is nurturing the energy leaders of tomorrow. The growth of an ONGCian to an Exponent of energy business is facilitated by the ONGC Academy, Regional Training Institutes (RTIs), other in-house Institutes in association with globally recognized trainers. Training Institutes of ONGC organize training in all dimensions - Technical as well as non-technical and Managerial that is relevant to Petroleum Industry.

During the year, ONGC training Institutes have organized various training Programmes for skill development and enhancing the competency level of employees for self-development and enhanced output. A total 15898 executives and 4564 non- executives were imparted appropriate training, spanning 213304 training man-days, during 2013-14, which includes five batches of 746 Graduate Trainees, who were imparted induction training. In order to keep the executives abreast with the latest advancements in cutting-edge concepts and technologies in oil and gas exploration and production, 80 programmes were organized during 2013-14, including foreign faculty programmes. Around 296 senior level executives were exposed to advanced programmes on Management with overseas learning component through tie-ups with leading B-schools of the country.

As a Global player, it is imperative to benchmark our strengths with the world''s best. To achieve this we organize International Certification Programs benchmarked to global standards viz. Offshore Installation Manager (OIMs) Certification through OPITO, Project Management Professionals (PMP) Certification from PMI, USA, CIPM from PMA and IPMA from Switzerland. During the year 2013-14, Academy has organized 14 OIMs Programmes in which 62 OIMs participated, 450 executives attended CIPM Programmes, 120 executives attended PMP of PMI, USA and 50 executives attended IPMA level-D.

18. EMPLOYEE WELFARE

Your Company continues to extend welfare benefits to the employees and their dependants by way of comprehensive medical care, education, housing, and social security. Your Company continues to align company policies with changing economy and business environment. Some of the key facets of ONGC''s employee welfare model are as below:

(i) Employee Welfare Trusts

Your Company has established the following major Trusts for welfare of employees:

- Employees Contributory Provident Fund (ECPF) Trust manages Provident Fund accounts of employees of your Company.

- The Post Retirement Benefit Scheme(PRBS) Trust: The scheme underwent a major transformation from defined benefit to defined contribution during the past year. In the converted Defined Contribution Scheme, the corpus in the individual employee account shall include employer/ employee contributions and interest thereon. The benefits under the Scheme are dependent on corpus in the individual employee account and accordingly, would be market determined which depends on interest rate, annuity price.

- The Composite Social Security Scheme(CSSS): It provides an assured ex-gratia payment in the event of unfortunate death or permanent disability of an employee in service.

- Gratuity Fund Trust: This has been created to take care of payment of gratuity as per the provisions of the Gratuity Act.

- Sahayog Trust: Your Company''s ''Sahayog Yojana'' instituted under this Trust provides ex-gratia financial grant for sustenance, medical assistance, treatment, rehabilitation, education, marriage of female dependent and alleviation of any hardship or distress to secure the welfare of the secondary workforce and their kin, who do not have adequate means of support. Under the scheme, an amount of ? 20.6 million was disbursed by the Trust during the year.

- Extension of Benefits under the Agrani Samman Scheme to retired employees: The Scheme aims to provide succour to the ex-employees who separated from the service of ONGC on account of premature retirement due to disability or medical deficiency suffered while on duty.

- Extension of Benefits under the Asha Kiran Scheme to retired employees:-

During the year, your Company launched Asha Kiran Scheme to meet the emergency needs of the ex- employees retired prior to 01.01.2007, who are passing through distressful situation. The scheme was launched as per DPE guidelines by creating a corpus of 1.5% of PBT. During the year, under this scheme financial assistance of Rs 1352 million was provided to 12964 ex-employees.

(ii) Implementation of Govt. Directives for Priority Section

Your Company complies with the Government directives for Priority Section of the society. The percentage of Scheduled Castes (SC) and Scheduled Tribe (ST) employees were 15.4 % percent and 9.1% percent respectively as on 31st March, 2014.

Your Company is fully committed for the welfare of SC and ST communities. The following welfare activities are carried out by your Company for their upliftment in and around its operational areas:-

- Annual Component Plan

Under Annual Component Plan for SC/ST, each year an allocation of Rs.200 million is made. Out of this, Rs.60 million is distributed amongst all the Work centres of ONGC for taking up activities for welfare of SC/ST Communities in and around the areas of our operations. In addition, Rs.140 million is managed centrally, and is earmarked for Special projects/proposals/schemes for the welfare of areas/persons belonging to SC/ST communities The amount under component plan is utilized for taking up various welfare measures for the welfare and uplif tment of the needy people of SC/ST Communities. This fund is especially meant for providing help and support in Education and Training, Community Development and Medical and Health Care.

- Scholarship to SC/ST meritorious students for pursuing higher professional courses at different Institutes and Universities in the country.

Your Company has recently enhanced scholarships for meritorious SC & ST students from 100 to 500 for pursuing higher professional courses at different Institutes and Universities across the country in Graduate, Engineering, MBBS, PG courses of Geo- Sciences and MBA. The major feature of the scheme is that the scholarships have been divided equally for both male and female students and the allotted amount of scholarship per student is Rs.4,000/- per month subject to the conditions of the scheme. The annual budget for the scheme, considering its total implementation, is Rs.76 million per annum.

19. INDUSTRIAL RELATIONS

During the year your Company maintained harmonious Industrial Relations. Mandays loss due to internal industrial action was reported as ''NIL'' for the year 2013-14.

Your Company has adopted pre-emptive and responsive IR policies that resulted in signing of Long Term settlements covering the Post Retirement Benefit Scheme, under the Defined Contribution methodology and adoption of Group Leave Encashment Scheme of the LIC.

Implementation of the ''Fair Wage Policy'' initiated in Aug 2012, has been steadily reported from all work- centers across the country. More than 2500 contract labourers have been covered under the Fair Wage Policy, while more are due to be covered shortly. The policy enjoins the Contractors to pay 35% higher wages as compared to minimum wage. This will also have a salutary effect on all statutory liabilities towards various social security schemes. The policy also provides that the contractors will obtain Group Gratuity cover and Group Insurance cover from LIC for the labour deployed in ONGC operations.

20. Women Empowerment

Women employees constituted over 6 percent of your Company''s workforce. During the year, programmes on women empowerment and development, including programmes on gender sensitization were organized. Your Company actively supported and nominated its lady employees for participating in programmes organized by reputed agencies.

21. GRIEVANCE MANAGEMENT SYSTEM (GMS) :

Your Company provides an easily accessible mechanism to the employees for redressal of their grievances, either through an informal channel (open hearing day) or through a formal channel.

Public Grievance Management System

All Key Executives of your Company have designated a publicized time slot thrice in a week to meet public representatives in order to speedily redress their grievances.

22. IMPLEMENTATION UNDER THE RIGHT TO INFORMATION ACT

An elaborate mechanism has been set up throughout the organization to deal with the requests received under RTI Act, 2005. Central Public Information Officers (CPIO) have been appointed at every work centre of the Company to redress the issues under RTI Act. 126 applications received in March, 2013 were carried forwarded to the year 2013-14. 1743 applications were received during the year; making a total of 1869 applications. In addition, 50 first appeals were carried forward and 361 were received during the year. All the aforesaid 411 first appeals were disposed off by the appellate authority of ONGC and orders passed by the authority were complied within a stipulated time frame.

23. IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

Your Company makes concerted efforts to spread and promote the Official Language. Some of the important steps taken in this regard during the year were:

- Company has introduced Unicode Hindi software in all our of fices.

- Hindi workshops are conducted at regular intervals

- Hindi seminars and ''Kavi Gosthies'' were organized at Dehradun and Delhi.

- ONGC actively contributed in publishing bilingual Petroleum Terminology Directory, initiated by MO&PNG.

- Hindi Teaching Scheme of Govt. of India is effectively implemented at all regional work centres.

24. IMPROVEMENT IN LIVING AND WORKING CONDITIONS

As a testimony to its commitment for a cleaner tomorrow, your Company has undertaken the ''Green Building'' initiative for its upcoming offices at Chennai, Dehradun, Delhi, Hyderabad, Kolkata and Mumbai.

Work-Life Balance

Your Company continued in its endeavours to ensure work-life balance of its employees. The townships at many work-centres were provided facilities like gymnasiums and music rooms. Outbound programmes with families were also organized at various work-centres. Plays on the importance of ''Work-Life Balance'' were staged to create awareness amongst the employees. In addition, cultural programmes involving employees and their families were also conducted. Mahila Samitis and Resident Welfare Associations (RWAs) were involved in the organization of these cultural programs. Your

Company has an adventure wing named ONGC

Himalayan Association that organizes adventure programmes like mountaineering, trekking, white water rafting, snow skiing, desert Safari and Aero sports, which contributes toward morale, engagement, team spirit, camaraderie, stress management and spirit to explore the unknown among the employees.

25. SPORTS

ONGC continued its support for development of sports in the country in the form of job offers & scholarships to deser ving spor tspersons. Sponsorships to various sports associations / federations / sports bodies to organise sports events as well as develop infra-structure were also extended.

The welfare measures for the sportspersons which includes sponsored trips for training / coaching stints & tournament participation both within India & abroad, kits & liveries and playing equipment as per norms have been provided in 23 game disciplines. There are 177 players on the rolls and 167 players on scholarship benefitting from the welfare measures of ONGC. The support has aided many sportspersons to deliver elite performances and bring laurels for the Nation and the Company. Sports achievements during the year are detailed in Annexure-B. Such elite performances have been rewarded with cash incentives as per Policy.

Head Sports of your company has taken charge as Secretary, Petroleum Sports Promotion Board (PSPB), which is recognition of your company''s immense contribution towards promotion of sport in the country.

26. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your company is fully engaged in ensuring equitable and sustainable growth of society in and around the area of its operations besides complying with government directives to discharge its social responsibility as a leading Indian corporate. CSR activities are essentially guided by project based approach in line with the guidelines issued by the Department of Public Enterprises (DPE) and Ministry of Corporate Affairs (MCA) of the Government of India. Seeking to herald an inclusive business paradigm, ONGC has CSR interventions that are based on social, environmental, and economic considerations and are well-integrated into the decision-making structures and processes of the organization. In the last 7 years, your company has contributed Rs.13,270 Million towards its well-structured and well-focussed CSR activities.

Out of the CSR Budget of Rs.4185 million, ONGC spent an amount of Rs.3413 million in FY 2013-14. This translates to overall utilization of 86 % of the CSR Budget.

Reason for non-utilization of full CSR budget:

One of the major CSR & Sustainability Development projects undertaken during the year was setting up of 102 MW Wind Power Plant in Jaisalmer District (a back ward district of Rajasthan). The scheduled work on this project during the period 2013-14 was delayed because of the issues related to land acquisition at the site. As a result, expenditure towards activities completed in April''14, which were originally planned for 2013-14 amounting to Rs.1247 million was released in May, 2014. Had the activities been completed as per schedule, ONGC would have exceeded the target amount

CSR efforts are primarily focused on protection of environment; providing infrastructure support in our operational areas, water management, women empowerment, initiatives for physically and mentally challenged people, protection and preservation of our heritage, arts and culture, promotion of sports, entrepreneurship building and sponsorship of seminars, conferences and workshops.

During 2013-14, some of the landmark CSR initiatives undertaken by your Company include:

(a) Healthcare:

(i) Assam Medical College, Dibrugarh:

Support of Rs.70 million has been provided to establish Catheterization Laboratory and facilities for open Heart Surgery in Assam Medical College, Dibrugarh for providing quality health services.

(ii) Community Hospital in Lakhimpur-Kheri, Uttar Pradesh:

The project is unique in terms of using the PPP model in CSR with full Capex of Rs.45 million contribution by ONGC and Opex borne by the Operating Partner. This 26 bedded Community Hospital would cater to Primary and Secondary Health Service Requirements from BPL, Economically Backward Class families. Healthcare services are being provided at 50% less cost than the existing CGHS rates.

(iii) King George Hospital, Vizag:

The CSR Initiative involving financial support of Rs.150 million from ONGC aims to construct new 2 9 storied building, medical infrastructure and equipment to enable the Hospital to deliver quality health services to poor patients and also strengthen the present Oncology Department to make cancer treatment a reality.

(iv) District Government Hospital, Chikkaballapur, Karnataka:

A support of Rs. 18 million by ONGC has been provided for upgradation of facilities in the Hospital to improve the general healthcare services at the government Hospital which is the primary source of healthcare for people belonging to the most economically deprived sections of the society.

(v) Government General Hospital (GGH), Kakinada:

ONGC has given financial assistance of Rs. 19 million to construct a separate building for blood bank and to equip the hospital with additional equipment for blood bank, general surgery and general medicine departments. This will immensely benefit people of East Godavari District where ONGC has a substantial operational presence.

(vi) ONGC Mission Ujala:

The project envisages eye screening of 50,000 children in Government Schools in NCR under National Blindness Control Programme of Govt. of India in collaboration with reputed NGO PRAANI. Provisions of spectacles to 3,000 children detected with refractive errors along with medicines were provided under this project in FY 2013-14.

(b) Education & Vocational courses:

i) Shirdi Sai Baba School in Mahoba, UP:

ONGC has joined hands with Shirdi Sai Baba Temple Society for construction and setting up of school for providing absolutely free education with food, clothing, study material and healthcare to under- privileged children in the backward region of Mahoba District under CSR initiative. Out of total estimated cost of Rs. 21 million, a part funding of Rs. 9.5 million has been extended by ONGC.

ii) ONGC- The Akshaya Patra Foundation:

A centralized fully automated mechanized kitchen with a capacity to provide mid-day meals to two lakh school going children (enrolled in Govt. schools) per day in the District of Surat is being set up. Presently 75,000 students are being fed from an interim kitchen.

iii) English medium residential school in Patna, Bihar:

ONGC in association with Soshit Seva Sangh has undertaken a CSR initiative for supporting construction of free English medium residential school in Patna, Bihar for the poor Mushahar community which is one of the most deprived communities with estimated population of approx. 4 million. Out of total estimated cost of Rs. 120 million, part funding of Rs. 5 million has been extended by ONGC. With wider objective of resolving interlinked problems of poverty, unemployment, social injustice, crime and naxalism by means of providing inclusive and affordable education; the project is one of the key initiatives of ONGC in the education sector.

iv) Community School at Sitapur, Uttar Pradesh:

The project is unique in terms of using the PPP model in CSR with full Capex of Rs. 27 million contribution by ONGC and Opex borne by the Operating Partner- Shanti Devi Memorial Charitable Trust.

(c) Projects for Physically and Mentally challenged

i) Aids & Appliances to the physically challenged:

This flagship Project was undertaken with financial implication of Rs.250 million which covered 45,000 beneficiaries from 39 ONGC operational area Districts and 61 Backward Districts in Phase-1 in collaboration with Artificial Limbs Manufacturing Corporation of India (ALIMCO) to cater to the needs of Orthopedic, hearing and visually challenged people by providing suitable Aids and Appliances.

ii) ONGC Centre for vocational rehabilitation for the differently abled:

A financial support of Rs.13 million has been provided to Tamana School of Hope , Vasant Vihar , New Delhi for setting up of Autism Centre and provide vocational training for the mentally challenged young adults and children working for their economic rehabilitation by teaching relevant vocational skills to them.

(d) Self help and livelihood generation schemes:

i) Mokshagundam Visvesvaraya Centre for training

Master Trainers in Skill Development (MVCTMTSD):

Society for Bharat Ratna Sir M Visvesvaraya National Training Facility for Skills for All (BMV NTFSA) in association with ONGC and other partnering agencies such as Government of Karnataka, Government of India, GAIL, JSW, BEML, Volvo, BOSCH, L&T, Nationalised Banks has undertaken to set up Mokshagundam Visvesvaraya Centre for training Master Trainers in Skill Development (MVCTMTSD). The main objective of the programme is to create Master Trainers in India and to scale-up the skill of the technician workforce in the country. Nearly 27,000 Master Trainers are expected to be trained in the next 10 years.

ii) Apparel training programme in Chhindwara ( MP):

This project in association with Apparel Training & Design Centre (ATDC), Gurgaon, aims to train 180 boys and girls of poor families located in tribal areas of Chhindwara district, M.P, to conduct Six Diploma/ Certified training courses, which shall be sponsored by ONGC at a cost of Rs.5 million. The project guarantees at least 70% placements.

iii) Training on agricultural sector and animal husbandry:

Under this project started in October 2013 in association with Shrimad Dayanand Vedarsh Mahavidyalaya Trust, New Delhi, one tractor with accessories along with hybrid/ disease resistant seeds, different manures and fertilizers was procured with the grant provided by ONGC. Presently the students of Gurukul are undergoing training as well as education in modern practices of agriculture and animal husbandry at the Gurukul.

iv) Auto Loans in Chikkaballapur, Karnataka:

The project envisages distribution of auto loans to 200 poor and needy beneficiaries; 100 each from Chikkaballapur and Bangalore (Rural) districts of Karnataka. The loan is distributed through Canara Bank. ONGC has provided financial assistance of Rs. 6 million towards margin money @15% for these loans. The project would be of immense help for the poor and needy beneficiaries to become self employed and earn livelihood for their families.

v) Udaan:

This is a special Initiative taken up by the Ministry of Home Affairs, Govt. of India for the educated youth of Jammu & Kashmir in association with National Skill Development Corporation (NSDC). The project aims to train Graduates/Post Graduates from J&K to improve their technical knowledge and soft skills and enhance their scope for employability. ONGC has extended support of Rs. 91 million towards the project.

(e) Development of Backward Districts:

The sustainable development project is being implemented in Jaisalmer, a backward district in Rajasthan. Project involves setting up of 49 Wind Turbine Generators each of capacity of 2.1 MW with total capacity of 102.9 MW in association with M/S Suzlon Energy Ltd. ONGC contribution towards the project is Rs. 5620 million. 22 nos. of WTG have been installed so far.

(f) Other CSR Initiatives:

i) Hortoki Water Supply Scheme: The project aims to create a sustainable source of safe drinking water to the people of Hortoki Village, Kolasib District, Mizoram. It will supply more than 40 lpcd of water till 2043. ONGC has extended support of Rs. 9 million for the project.

ii) Rajeev Gandhi International Sports Complex, Dehradun: ONGC in association with Govt. of Uttarakhand is working towards building a Cricket stadium-cum-sports complex with a capacity of 30,000 people extendable to additional seats in future, car parking, a sports academy, a club house or Gymnasium, restaurant and other auxiliary facilities. ONGC has extended financial support of Rs. 500 million towards the project. The project is expected to be completed in two years.

iii) Dashrath Stadium at Agartala: The project aims to create an Indoor sports complex in association with DDO Directorate of Youth Affairs. ONGC has extended support of Rs. 243 million for the project.

iv) IIIT, Agartala: ONGC has extended support of Rs. 30 million for setting up a new IIIT in Agartala.

v) Chief Minister''s Relief Fund: Uttarakhand: ONGC has extended support of Rs. 20 million towards rehabilitation of flood af fected regions in Uttarakhand.

In addition to above new CSR initiatives undertaken in 2013-14, ONGC has continued to support the major CSR interventions initiated in previous years. Some of the continued CSR initiatives are (i) Varisthajana Swasthya Sewa Abhiyan – provision of health care support to elderly through Mobile Medicare Units. (ii) ONGC-GICEIT Computer Centre- Employment related computer training to under-privileged youth (iii) ONGC-Eastern Swamp Deer Conservation Project in Kaziranga National Park (iv) Harit Moksha – Green cremation system to reduce wood consumption during traditional cremations.

As a testimony to our CSR efforts, your company has won many laurels such as:

1. Golden Peacock Award 2013 for CSR during 8th International Conference on Corporate Social Responsibility-2014

2. ''Global CSR Excellence and Leadership Awards'' for best CSR Practices in areas of health

3. P L Roy CSR Award on ''International Day of Older Persons'' for support to the elderly through its CSR initiative ''Varishthajana Swasthya Sewa Abhiyan''

4. SCOPE Meritorious Award for CSR & Responsiveness for the year 2011-12 on the occasion of Public Sector Day

27. ACCOLADES

Consistent with the trend in preceding years, your Company, its various operating units and its senior management have been recipients of various awards and recognitions. Details of such accolades are placed at Annexure – ''B''.

28. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit of the Company for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) The Directors have prepared the annual accounts of the Company on a ''going concern'' basis.

29. CORPORATE GOVERNANCE

Your Company has taken structured initiatives towards Corporate Governance and its practices are valued by various stakeholders. The practices emanate from the need to position multi-layered checks and balances at various levels to ensure transparency of its operations in the decision making process.

In terms of Clause 49 of the Listing Agreement, a report on Corporate Governance for the year ended March 31, 2014, supported by a certificate from the Company''s Statutory Auditors confirming compliance of conditions, forms part of this Report.

ONGC has implemented the mandatory Guidelines of Department of Public Enterprises (DPE), Government of India, on Corporate Governance to the maximum extent possible.

Your Company has voluntarily got its Secretarial Compliance Audit conducted for the financial year ended 31st March, 2014 from M/s A.N. Kukreja& Co., Company Secretaries in whole-time practice; their report forms part of this Annual Report.

In line with global practices, your Company has made available all information, required by investors, on the Company''s corporate website www.ongcindia.com

Apart from the mandatory measures required to be implemented as a part of Corporate Governance, ONGC has gone the extra mile in this regard for the benefit of its stakeholders:

i. Whistle Blower Policy: A total of 27 Protected

Disclosures till date have been processed through the Whistle Blower mechanism of ONGC which was implemented from December 01, 2009. The policy ensures that a genuine Whistle Blower is granted due protection from any victimization. The Policy is applicable to all employees of the Company and has been uploaded on the intranet of the Company.

ii. MCA Voluntary Guidelines on Corporate Governance: ONGC has implemented the voluntary guidelines on Corporate Governance issued by Ministry of Corporate Affairs to the extent feasible and within the competency domain of the management.

iii. Enterprise-wide Risk Management (ERM) framework: In line with the requirements of Clause 49 (of the Listing Agreement), your Company has developed and rolled out a comprehensive Enterprise-wide Risk Management (ERM) Policy throughout the organization. The Audit, Ethics & Financial Management Committee periodically reviews the risk assessment and minimization process in ONGC.

iv. Lead Independent Director: Shri. Arun Ramanathan was the Lead Independent Director till conclusion of his term on 19.06.2014. The election of next Lead Independent Director shall be decided by the Independent Directors.

v. Meeting of Independent Directors: The Independent Directors met once during 2013-14.

30. STATUTORY DISCLOSURES

Section 274(1)(g) of the Companies Act, 1956 is not applicable to the Government Companies. Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement.

Particulars of Employees

As per Notification No. GSR 289(E) dated March 31, 2011 issued by the Ministry of Corporate Affairs, amending provisions of the Companies (Particulars of Employees) Rules, 1975 issued in terms of section 217(2A) of the Companies Act, 1956, it is not necessary for Government companies to include the particulars of employees drawing salaries of Rs.6 million or more per annum, employed throughout the financial year or, Rs.0.5 million per month, if employed for part of the financial year. As your company is a Government company, the information has not been included as a part of the Directors'' Report.

31. ENERGY CONSERVATION

The information required under section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure – ''C''.

32. AUDITORS

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s Mehra Goel & Co, M/s S Bhandari & Co, M/s Ray & Ray, M/s Varma & Varma and M/s G D Apte & Co., Chartered Accountants were appointed as joint Statutory Auditors for the financial year 2013-14. The Statutory Auditors have been paid a remuneration of Rs.22.92 million (previous year Rs.20.21 million) towards audit fee and certification of Corporate Governance Report. The above fees are exclusive of applicable ser vice ta x and reimbursement of reasonable travelling and out of pocket expenses actually incurred.

33. Auditors'' Report on the Accounts

The Comments of Comptroller & Auditor General of India (C&AG) form part of this Report as per

Annexure-''D''. There is no qualification in the Auditors Report and there are no supplementary comments by C&AG under section 619(4) of the Companies Act, 1956. Notes to the Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments.

You would be pleased to know that your Company has received Nil comments from C&AG and Statutory Auditors for the year 2013-14. This is the eighth year in a row that the organization has received Nil comments.

34. COST AUDIT

Seven firms of Cost Accountants were appointed as Cost Auditors for auditing the cost accounts of your Company for the year ended 31st March, 2014 by the Board of Directors. The Cost Audit Report for the year 2012-13 has been filed under XBRL mode within the due date of filing.

35. DIRECTORS

Since the 20th Annual General Meeting held on 25.09.2013, Shri Shaktikanta Das, Government Nominee Director resigned on 29.12.2013, Shri P K Borthakur Director (Offshore) superannuated on 31.01.2014, Shri Sudhir Vasudeva, Chairman & Managing Director superannuated on 28.02.2014. The term of Dr. D. Chandrasekharam concluded on 10.03.2014 and that of Prof Deepak Nayyar and Shri Arun Ramanathan concluded on 19.06.2014. Shri K S Jamestin, Director (HR) superannuated on 31.07.2014.

Shri T K Sengupta took over as Director (Offshore) on 01.02.2014. Shri Dinesh Kumar Sarraf assumed charge of the post of Chairman & Managing Director on 01.03.2014. Dr. Subhash Chandra Khuntia, Additional Secretary & FA, Ministry of Petroleum & Natural Gas, joined the Board as Government nominee Director on 01.05.2014. Shri Ashok Varma took over the charge of Director (Onshore) on 19.06.2014 and Shri Desh Deepak Misra assumed the charge of Director (HR) on 01.08.2014.

Shri P Umashankar and Shri S Ravi joined the Board on 29.11.2013 and Shri R K Singh joined the Board on 23.05.2014 as non-official part-time directors

The Board places on record its deep appreciation for the excellent contributions made by Shri Shaktikanta Das, Shri P K Borthakur, Shri Sudhir Vasudeva, Dr. D. Chandrasekharam, Prof. Deepak Nayyar, Shri Arun Ramanathan and Shri K S Jamestin during their tenure.

The strength of the Board of Directors of ONGC as on August 5, 2014 is 15, comprising 7 Executive Directors (Functional Directors including CMD) and 8 Non- Executive Directors, out of which two are Government nominees and six are Independent Directors. Ministry of Petroleum & Natural Gas has been requested to appoint requisite number of Independent Directors to comply with the Listing Agreement.

36. Acknowledgement

Your Directors are highly grateful for all the help, guidance and support received from the Ministry of Petroleum and Natural Gas, Ministry of Finance, DPE, MCA, MEA, and other agencies in Central and State Governments. Your Directors acknowledge the constructive suggestions received from Statutory Auditors and Comptroller & Auditor General of India and are grateful for their continued support and cooperation.

Your Directors thank all share-owners, business partners and members of the ONGC Family for their faith, trust and confidence reposed in ONGC.

Your Directors wish to place on record their sincere appreciation for the unstinting efforts and dedicated contributions put in by the ONGCians at all levels, to ensure that the Company continues to grow and excel.

Place : New Delhi On behalf of the Board of Director

Date : 8th August 2014 (Dinesh Kumar Sarraf)

Chairman & Managing Director


Mar 31, 2013

Dear Shareholders,

The behalf of the Board of Directors of your company it is my privilege to present before you the, 20th Annual Report on the business and operations of Oil And Natural Gas Corporation Ltd. (ONGC) and its Audited Statements of Accounts for the year ended March 31,2013, together with the Auditors'' Report and Comments on theAccounts by the Comptroller and Auditor General (CAG) of India.

The fiscal 2012-13 has been yet another year of sustained performance, success and growth for your Company, which along with the other group companies, excelled in its endeavours; particularly in its core activities of Exploration and Production (E&P) of crude oil and natural gas. Your company scaled new heights and created a world record by drilling the well NA7-1 in KG-DWN-2004/1 block in the East Coast at a water depth of 3,165 meters (10,385 feet); the deepest in the world. The significant milestones achieved by your Company during the year are:

- Your Company accreted 84.84 Mtoe of ultimate reservesin the domesticfields (ONGC operated); the highestin the lasttwenty two years.

- For the 8th consecutive year your company maintained the Reserve Replacement Ratio (RRR) of more than 1. RRR during the year has been 1.84.

- The Turnover of the Company stood at Rs. 833,090 million, the highest-ever. The turnover of the ONGC Group atRs. 1,658,488 million has also been the highest-ever.

- Your Company recorded a net profit of Rs. 209,257 million during the year under review.

- During 2012-13. ONGC had to share the highest-ever under-recovery of Rs. 494,207 million (an increase ofRs. 49,550 million over the previous year) towards the under-recoveries of Oil Marketing Companies (OMCs). Further, there has been increase in Cess by Rs. 42,140 million during the year. This trend of high under-recoveries and burden of Cess, if continued, is likely to draw down the cash reserves of the Company and impact the exploration, production and acquisition plans of ONGC and OVL apart from affecting the bottom line in near future.

- ONGC Videsh Limited (OVL), wholly owned subsidiary of your Company, recorded highest-ever Net Profit ofRs. 39,291 million.

- Mangalore Refinery and Petrochemicals Limited (MRPL), a subsidiary of your Company, recorded highest-ever thru''putof 14.40 MMT.

- Your Company received ''Excellent'' MoU performance ratingfortheyear 2011-12 with a score of 1.222; the highest since adoption of the MoU system in 1988.

These achievements reflect your Company''s proven commitment towards sustained growth and performance excellence. Consistently driven by well-defined growth strategies, your company delivers and improves performance year-on-year basis. Our performance is the benchmark of excellence in various facets of our activities and has been well recognized through peer-and-public evaluations.

Global Recognition

Your Company moved up 16 positions to be ranked 155th in the 2013 Forbes Global 2000 list of world''s biggest companies and is ranked 23rd among global oil and gas companies based on sales, profits, assets and market value. It is my privilege to bring to your kind notice that the ''2012 EU Industrial R&D Scoreboard'' listed ONGC at the 36th position in the list of oil and gas companies based on Research and Development (R&D) expenditure. You will be pleased to know that ONGC is the only company in this list from India. As per the Platts 2012 rankings, your Company is ranked as the 3"1 largest listed E&P Company in the world.

As a fitting acknowledgment of your Company''s motto to ''Grow GREEN'' and a testament of its green credentials, ONGC has been ranked at 386 by the Newsweek Green Ranking 2012 and 15th among the energy companies, above global energy majors like Chevron, Lukoil, ConocoPhillips, Gazprom, Sinopec, Exxon Mobil and Petro China. Top rankers in the list are mostly the companies from retail, IT or Banking sectors which have minimal carbon footprints due to the inherent nature of their businesses.

Performance: 2012-13

Exploration

During the year, your company made 22 oil and gas discoveries in domestic fields (operated by ONGC). Out of these, 12 discoveries were made in the new prospects whereas 10 were new pool discoveries. Nine discoveries were made in NELP blocks and thirteen in the nomination blocks.

The 12 newdiscoveries made during the year are:

- Phulani-1 (Oil) in Assam & Assam Arakan basin,

- Vadatal-5 (Oil & Gas) in Cambay basin,

- Koravaka-1 (Oil & Gas),Bantumilli South-1 (Gas), Mukkamala-1 (Gas)and Vanadurru South-1 (Oil & Gas) in onlandKrishna- Godavari basin,

- KGOSN041 NASA-1 (Saveri#1, Gas) in KG Offshore,

- KGD051NAA-1 (Gas) in KG deep-water offshore,

- Pandanallur-8 (Oil & Gas), Madanam-3 (Oil & Gas) and Pandanallur-7 (Gas) in onland Cauvery basin and

- MBS051NBA-A(Gas) in Western Offshore basin.

The 10 newpool discoveries made during the yearare:

- Agartala Dome-37 (Gas) in Assam &Assam-Arakan Fold belt,

- Mandapeta West-12 (Gas) in onland KG basin,

- KG-DWN-98/2-A-2 (Oil &Gas) in KG deep-water offshore,

- C-39-14 (Oil & Gas), BH-68 (Oil &Gas), D1-D-1 (Oil) in Mumbai Offshore

- Aliabet-4(Gas)inGulfof Cambay, &

- Anklav-9 (Oil), Motera-36 (Oil) and Mansa-36 (Oil) in Western onland.

Discoveries in Bantumilli South-1 (Gas) and Vanadurru South-1 (Oil & Gas) have strengthened the prospectivity of the area and have opened up the entire adjoining tract for hydrocarbon exploration. Basement oil and gas discoveries in Madanam-3 (the first hydrocarbon strike in ONGC operated NELP blocks in Cauvery onshore Basin) and Pandanallur-8 (Oil & Gas) discovery in Cauvery onshore Basin and BH-68 (Oil & Gas) in Mumbai offshore has given huge impetus towards basement being a prolific play. KG-DWN-98/2-A-2 (Oil & Gas) discovery in NELP deep-water block KG-DWN-98/2 has given a definite positive fillip to ONGC''s efforts towards monetizing discoveries in the Northern Discovery Area (NDA) of this block. This is the first time that a substantial amount of oil has been established in the block. Atthe same time, the well DWN-U-3 has given the highest quantity of commercial gas i.e., 7 LCMD.

New pool discovery (D1-D-1) in N.B. Prasad (D-1) field has been a significant discovery and with this, oil and gas in-place volume of the field has increased to 149 MMT of oil and oil equivalent gas (O OEG); making it the third largest field after Mumbai High and Neelam- Heera fields. This discovery has already been put on production. In addition to these discoveries, 23 more exploratory wells drilled for delineation/ appraisal of known pays in existing fields proved to be hydrocarbon bearing and have resulted in field growth.

Out of 14 onshore discoveries made during 2012-13, four discoveries (Anklav-9, Motera-36, Mandapeta West-12 & Phulani-1) have already been put on production and one discovery (Mansa-36) is under trial production. Efforts are on for bringing the other discoveries on production atthe earliest. One discovery in offshore sector (D1-D-1) has also beenputon production.

Reserve accretion & RRR

Your Company accreted 265.65 million metric tonnes of oil equivalent (MMtoe) of In-place volume of hydrocarbon in the domestic basins (operated by ONGC). The ultimate reserves accretion of 84.84 MMtoe is the highest in last 22 years. Total reserve accretion in domestic basins including ONGC''s share in PSC JVs stands at 89.08 MMtoe. With a Reserve Replacement Ratio (RRR) of 1.84 (with 3P Reserves), it was the 8th consecutive that your Company has maintained a RRR of more than one.

Voluntary disclosures in respect of Oil & Gas Reserves, conforming to SPE classification 1994 and US Financial Accounting Standards Board (FASB-69) were also made by your Company. The Ultimate Reserve accretion during the year (84.84 MMtoe) has surpassed the record breaking performance of previous fiscal (84.13 MMtoe).

A snapshot of ONGC''s Reserve Accretion Profile:

Ultimate Reserve (3P) accretion O OEG (in MMtoe)

Year Domestic ONGC''s share Total OVL''s Share Total Assets in Domestic Domestic in JVs Reserve Foreign Assets (1) (2) (3)=(1) (2) (4) (5)=(3) (4)

2008-09 68.90 2.82 71.72 135.08 206.80

2009-10 82.98 4.39 87.37 0.35 87.72

2010-11 83.56 0.29 83.35 46.23 130.08

2011-12 84.13 1.31 85.44 -0.31 85.13

2012-13 84.84 4.24 89.08 14.16 103.24

Statement of Reserve Recognition Accounting

The concept of Reserve Recognition Accounting attempts to recognize income at the point of discovery of reserves and seeks to demonstrate the intrinsic strength of an organization engaged with exploration and production of hydrocarbons with reference to its future earning capacity in terms of current prices for income as well as expenditure. This information is based on the estimated net proved reserves (developed and undeveloped) as determined by the Reserves Estimates Committee.

As per FASB-69 on disclosure about Oil and Gas producing activities, publicly traded enterprises that have significant Oil and Gas producing activities, are to disclose with complete set of annual financial statements, the following supplemental information:

a) Proved Oil and Gas reserve quantities

b) Capitalized costs relating to Oil and Gas producing activities

c) Cost incurred for property acquisition, exploration and development activities

d) Resultsofoperations for Oil and Gas producing activities

e) Astandardized measure of discounted future net cash flows relating to proved Oil and Gasreserve quantities

Your Company has disclosed information in respect of (a) to (d) above in the Annual Financial Statements.

Your Company has also made voluntary disclosure on standardized measure of discounted future net cash flows relating to proved oil and gas reserve atAnnexure-Ato this report as statement of Reserve Recognition Accounting (RRA).

Oil & Gas production

It is my pleasure to inform you that during FY''13, your Company has been the largest producer of oil and gas in the country (from its domestic operations) contributing 69 per cent of oil and 62.28 per cent of natural gas production.

Oil & Gas production of ONGC Group, including PSC-JVs and from overseas Assets has been 58.71 MMtoe (against 61.18 MMtoe during FY''12). The major reason for this relative drop in production during FY''13 is the geopolitical situation and unrest in Sudan, South Sudan and Syria which direclty affected production from our assets in these countries. At the same time, natural decline in domestic fields has also been a contributing factor to this year''s lower production figures.

Out of the total production of 30.46 MMT of crude oil, 74 percent production came from the ONGC operated domestic fields, 14 per cent from the overseas assets and balance 12 percent from domestic joint ventures. As far as natural gas production is concerned majority of production (84 per cent) came from ONGC operated domestic fields and of the remaining, 10 per cent came from overseas assets and 6 per cent from domestic joint ventures.

Production from overseas assets

ONGC Videsh Limited (OVL), the wholly owned subsidiary of your Company, has eleven producing assets in eight countries - Venezuela (1), Brazil (1), Colombia(1), Sudan (1), South Sudan (2), Syria(1), Vietnam (1), Russia(2) andAzerbaijan (1).

Total production from these overseas assets during FY''13 has been 7.26 MMtoe of O-KDEG (Crude oil: 4.34 MMT &Gas: 2.92 BCM). 74 percent of the production was contributed by the assets in Russia (36.5 percent), Vietnam (29.5 percent), Sudan & South Sudan (8.3 per cent), and the remaining 26 per centfrom the assets in Syria, Colombia, Venezuela, Brazil andAzerbaijan.

New projects

The Board of your Company approved redevelopment of Western Periphery of Mumbai High South and Integrated development of Bassein field during the year with an investment of Rs. 41,132 million. Besides this, pipeline replacement Phase-Ill project in the west coast was also approved with an investment of Rs. 25,473 million.

During the year, your Company completed four major projects - Construction of new MHN Platform, Revamping of WIN Platform, Low pressure gas processing and compression at Rajahmundry and Additional gas processing facility at Hazira Plant.

Overall Production and Sales Performance

Presented below are the highlights of production and sales of Crude Oil, Natural Gas and Value Added Products (VAP):

Production Qty Sales Qty Value (Rs. in million) Unit FY'' 13 FY'' 12 FY'' 13 FY'' 12 FY'' 13 FY'' 12

Direct

Crude Oil (MMT) 26.13 26.93 23.69 23.09 533,268 507,873

Natural Gas (BCM) 25.34 25.51 20.16 20.20 165,400 141,396

Ethane/ Propane 000 MT 428 463 425 461 13,440 12,741

LPG 000 MT 1,006 1,037 1,005 1,033 31,484 23,711

Naphtha 000 MT 1,534 1,557 1,520 1,557 76,804 72,167

SKO 000 MT 108 79 106 79 3,686 1,520

Others 1,589 1,850

Sub Total 825,671 761,258

Trading

Motor Spirit 000 KL 0.56 0.43 42 30

HSD 000 KL 0.02 0.07 1 3

Others 0 0

Sub Total 43 33

Total 825,714 761,291

1. Financial Results

Despite volatile markets and sharing of highest-ever under-recoveries of Rs. 494,207 million during the year, your Company has earned a Profit After Tax (PAT) ofRs. 209,257 million (Rs. 251,229 million in 2011-12), down 16.70 per cent. During the year under review, your Company registered Gross revenue ofRs. 833,090 million (Rs. 768,871 million in 2011-12), up 8.35 per cent.

Highlights

- Gross Revenue : Rs.833,090 million

- Profit After Tax (PAT) : Rs.209,257 million

- Contribution to Exchequer : Rs.408,806 million

- Return on Capital Employed : 38.27%

- Debt-Equity Ratio : 0.00

- Earnings Per Share (Rs.) : 24.46

- Book Value Per Share (Rs.) : 144

(Rs. in million)

Particulars 2012-13 2011-12

Revenue from operations 833,090 768,871

Other Income 54,367 44,529

Total Revenues 887,457 813,400

Profit Before Interest Depreciation & Tax (PBIDT) 389,455 410,327

Profit Before Tax (PBT) 305,443 366,425

Profit After Tax (PAT) 209,257 251,229

APPROPRIATION

Interim Dividend 76,999 66,305

Proposed Final Dividend 4,278 17,111

Tax on Dividend 13,012 13,286

Transfer to General Reserve 114,968 154,527

TOTAL 209,257 251,229

Previous year figures have been regrouped wherever necessary.

Reduction in FY 12 -13 profit as compared to FY 11-12 is primarily due to increase in share of under recoveries (Rs. 49,550 Million), additional Cess (Rs. 42,140 Million) and exceptional income accounted for in FY 11-12 on account of Royalty adjustment for JV Block with M/s Cairn in Rajasthan, partly offset by increase in gross revenue.

It would also be pertinent to mention that the stand-alone PAT of ONGC for 2012-13 contribute more than 86% of the Group''s PAT whereas ONGC (stand alone) accounts for just 50.2% of the Group''s revenues. However, if the present trend of under-recoveries and Cess burden on ONGC continues, the profitability and surplus generating capacity of the Company would be affected adversely; thereby may have impacton future growth of the group.

2. Dividend

Your Company paid interim dividend ofRs. 9.00 per share (180 per cent) in two phases (Rs. 5.00 andRs. 4.00). The Board of Directors have recommended a final dividend ofRs. 0.50 per share (10 per cent) making the aggregate dividend atRs. 9.50 per share (190 per cent) as compared toRs. 9.75 per share (195 percent) paid in 2011-12. The total dividend will absorbRs. 81,277 million, besidesRs. 13,012 million as tax on dividend and works out to 45.06 percentof PAT against 38.49 percent in 2011-12

3. Management Discussion and Analysis Report

As per the terms of Clause 49(l V) (F) of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis Report (MDAR) has been included and forms part of theAnnual Report of the Company.

4. Financial Accounting

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable Accounting Standards (AS-1 to AS-29) and Successful Efforts Method as per the Guidance Note on Accounting for Oil & Gas Producing Activities issued by The Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 1956. Further, as per Ministry of Corporate Affairs (MCA) notification, the financial statements have been prepared under the Revised Schedule VI format of the CompaniesAct, 1956.

5. Subsidiaries

I. ONGCVidesh Limited (OVL)

ONGC Videsh Limited (OVL), the wholly-owned subsidiary of your Company for E&P activities outside India, achieved the highest-ever profit (PAT) ofRs.39,291 Million during FY'' 13, an increase of 44.4 per cent as compared to the PAT of Rs.27,211 Million during FY''12. OVL''s share in production of oil and oil equivalent gas (O OEG), together with its wholly-owned subsidiaries ONGC NileGanga B.V., ONGC Amazon Alaknanda Limited, Imperial Energy Limited and CaraboboOneAB, was 7.260 MMtoe during FY''13 as compared to 8.753MMote during FY'' 12. The oil production decreased from 6.214 MMT during FY''12 to 4.341 MMT during FY''13 primarily due to the geopolitical situation in Sudan, South Sudan and Syria and the natural decline in different matured fields in Sakhalin- 1, Russia, San Cristobal Project, Venezuela and BC-10, Brazil.

OVL has resumed its production from Block 5A, South Sudan on April 6,2013 and from Blocks 1,2 & 4, South Sudan on April 13,2013. However, the operations of Al Furat Project (AFPC), Syria would resume only after improvement in geopolitical situations and softening of sanctions. OVL Furat Project presently has participation in 32 assets in 16 countries out of which 11 are producing assets, 5 discovered/under-development assets, 14 exploratory assets and 2 pipelines.

Significant highlights of OVL during FY''13 are:

i. Acquisition of Hess Corporation''s 2.7213 per cent participating interest in the Azeri, Chirag and the Deep Water Portion of Guneshli Fields in the Azerbaijan sector of the Caspian Sea ("ACG") and 2.36 per cent interest in the Baku-Tbilisi-Ceyhan ("BTC") Pipeline was completed on March 28,2013. The acquisition would bring about 9 per cent additional proved reserves to the portfolio of OVL and daily oil production of about 19,000 barrels (aboutO.9 MMT per annum.

ii. OVL has won two exploration blocks in Colombia under Colombian Bid Round 2012 (i) Offshore block Guaoff-2 in Guajira Basin with 100 percent Participative Interest (PI) and (ii) Onshore Llanos-69 (LLA-69) block in prolific llanos basin of Colombia was won by Mansarovar Energy Colombia Limited (MECL); a 50:50 joint venture between OVL and Sinopec of China.

iii. OVL discovered Oil in the first well of the onshore exploration block CPO-5 in Colombia in which it is the Operator with 70 per cent participating interest. The first of the two commitmentwells i.e. Kamal-1 was spudded on October 29,2012 and drilled up to the target depth of 10,500 feet with oil discovery. The second well is currently under testing with encouraging results.

iv. The developmentof Lan-Do field in Block 06.1, Vietnam, where OVLhas 45 per cent PI, has been completed and the field was putto production on October 7,2012. The completion of Lan-Do field enhanced the production capacity of the Block 06.1 by 0.20 BCM.

v. OVL has relinquished/ surrendered its interest from three non-operated exploration blocks namely N-25 to 29 & N-36 in Cuba; BM-S-74and BM-BAR-1, both in Brazil due to unsuccessful exploratory wells.

vi. Project Carabobo-1 in Venezuela is under development and had started early production in January 2013.

vii. OVL made an inaugural US$ bond offering in international capital market with a duel tranche US$ 800 million Notes in April, 2013 to part finance the ACG and BTC acquisition. The offering was well received with the order book closing at about US$ 3 billion. The 5 year tranche of US$ 300 million was priced at a spread of 190 basis point above the 5 year US treasury at yield of 2.574 per cent per annum and the 10 year tranche of US$ 500 million was priced at a spread of 210 basis point above the 10 year US treasury at yield of 3.756 per cent per annum. This inaugural bond offering, guaranteed by the parent company ONGC, represents the largest REG-S only issuance by an Indian issuer in the US$ bond markets at the lowest coupon rates and has set a benchmark in pricing by Indian issuer.

Direct Subsidiaries and Joint Ventures of OVL

i. ONGC Nile Ganga B.V. (ONGBV)

ONGBV, a subsidiary of OVL, is engaged in E&P activities in Sudan, South Sudan, Syria, Venezuela, Brazil and Myanmar. ONGBV holds 25 per cent Participating Interest (PI) in Greater Nile Oil Project (GNOP), Sudan with its share of oil production of about 0.596 MMT during 2012-13. ONGBV holds 25 per cent Participating Interest (PI) in

Greater Pioneer Operating Company (GPOC), South Sudan but due to adverse geo-political conditions, OVL could not produce any oil in GPOC, South Sudan during FY''13.

ONGBV holds 16.66 per cent to 18.75 per cent PI in four Production Sharing Contracts in Al Furat Project (AFPC), Syria with its share of oil and gas production of about 0.126 MMtoe during FY'' 13. ONGBV holds 40 per cent PI in San Cristobal Project in Venezuela through its wholly owned subsidiary ONGC Nile Ganga (San Cristobal) BVwith its share of oil production of about 0.800 MMT during FY'' 13. ONGBV holds 15 per cent PI in BC-10 Project in Brazil through its wholly owned subsidiary ONGC Campos Ltdawith its share of oil and gas production of about 0.303 MMtoe during FY'' 13. ONGBV held 43.5 per cent PI in exploratory block BM-S-74 and 25 per cent PI in exploratory block BM-BAR-1 and holds Block BM-SEAL-4 all located in deep-water offshore, Brazil through its wholly owned subsidiary ONGC Campos Ltda. ONGBV also holds 8.347 percent PI in South EastAsia Gas Pipeline Co. Ltd., (SEAGP) Myanmarfor Pipeline project, through its wholly owned subsidiary ONGC Caspian E&P B.V.

ii. ONGC Narmada Limited (ONL)

ONLhas been retained for acquisition of future E&P projects in Nigeria.

iii. ONGC Amazon Alaknanda Limited (OAAL)

OAAL, a wholly-owned subsidiary of OVL, holds stake in E&P projects in Colombia, through Mansarovar Energy Colombia Limited (MECL), a 50:50 joint venture company with Sinopec of China. During FY'' 13, OVL''s share of oil production in MECL wasabout0.552MMT.

iv. Imperial Energy Limited (Erstwhile Jarpeno Limited)

Imperial Energy Limited (Name changed from Jarpeno Limited with effect from April 19,2013), a wholly-owned subsidiary of OVL incorporated in Cyprus, holds Operatorship with 100 per cent PI in Imperial Energy having its main activities in the Tomsk region of Western Siberia, Russia. During FY'' 13, Imperial Energy''soil production was about0.560 MMT.

v. CaraboboOneAB

Carabobo One AB, a wholly-owned subsidiary of OVL incorporated in Sweden, holds 11 per cent PI in Carabobo-1 Project, Venezuela. The early production has already started from firstwell (CG0005) on 27th December 2012 @ 300 bopd.

vi. ONGC (BTC) Limited

ONGC (BTC) Limited holding 2.36 per cent interest in the Baku-Tbilisi-Ceyhan Pipeline ("BTC") with effect from 28th March, 2013 owns and operates 1,768 km oil pipeline running through Azerbaijan, Georgia and Turkey. The pipeline mainly carries crude from theACG fields from Azerbaijan to Mediterranean Sea.

vii. ONGC Mittal Energy Limited (OMEL)

OVL along with Mittal Investments Sari (MIS) promoted OMEL, a joint venture company incorporated in Cyprus. OVL and MIS together hold 98 per cent equity shares of OMEL in the ratio of 49.98 per cent (OVL) and 48.02 per cent (MIS) with the balance 2 per cent shares held bvSBI Capital Markets Ltd. OMEL held 45.5 per cent PI in exploration Block OPL 279, Nigeria and holds 64.33 per cent PI in exploration Block OPL 285, Nigeria. OMEL also holds 1.11 per cent of the issued share capital of ONGBV by way of Class-C shares issued by ONGBV exclusively for AFPC Syrian Assets; such investment being financed by Class-C Preference Shares issued by OMEL in the ratio of 51:49 to OVL and MIS respectively.

II. Mangalore Refinery and Petrochemicals Limited (MRPL)

Your Company continues to hold 71.62 per cent equity stake in MRPL, a Schedule A Mini Ratna, which is a single location 15 MMTPA Refinery on the west coast.

Performance Highlights FY2012-13

MRPLachieved the highest-everthru''putof 14.40 MMTanditproduced 13.4 MMTof petroleum products, the highest-ever.

MRPLexported 6.82 MMT of products against5.59 MMT in the previousyear.

- Crude sourcing: 14.2 MMT; Iran (28.8 per cent), Saudi Arabia (19.4 per cent), ADNOC (15.9 per cent), Kuwait (8.9 per cent), Mumbai High (12.3 percent), Azeri (4.2 percent) & Spot (10.6 percent).

MRPL achieved all its MOU targets.

MRPL incurred a net loss of Rs. 7,569.10 million during FY''13 mainly on account of reduced gross margins and foreign exchange fluctuation loss ofRs. 5,364.9 million. Accordingly, no dividend has been declared for the FY''13.

Marketing

In view of the continued under recoveries in retail marketing of Auto fuels, the Company operated in a limited way, thereby keeping the under recoveries to the minimum. The Company is in all readiness to take up retail marketing within a short time,if the under recoveries are eliminated.

Retail Operations

Govt, has announced complete decontrol of HSD prices for bulk consumers and MRPL has already made inroads in the bulk HSD market. In line with the Govt, policy towards eventual decontrol of HSD in retail segment, MRPL has taken cautious steps to set up few retail outlets in select markets and the advertisement for the same has been released. MS prices remain decontrolled and market determined and sales from existing retail outlets continue to grow.

Phase III - Brownfield expansion Project & SPM

Under Phase-Ill expansion of MRPL, Hydrogen generation unit and Diesel Hydro-Treater Unit have been commissioned along with Amine Treating Unit and Stripped sour water units. At the same time, SBM/SPM trial run was also undertaken. Commissioning of SRU-3 will be done after the replacement of the gaskets. The Phase-Ill project is expected to be complete by this year end.

6. Exemption in respect of Annual Report of Subsidiaries and Consolidated Financial Statement

Ministry of Corporate Affairs (MCA) vide circular dated February 8, 2011 and clarification dated February 21, 2011 decided to grant a general exemption from the applicability of Section 212 of the Companies Act, 1956 from attaching the Balance Sheet and Profit & Loss Account prepared regarding the financial year ending on or after March 31, 2011, in relation to subsidiaries of those companies which fulfil various conditions including inter-alia approval of the Board of Directors for not attaching the balance sheet and profit & loss account of the subsidiary concerned. Your Board has accorded necessary approval in this regard for not attaching the Balance Sheet and Profit & Loss Account of its subsidiaries (i) ONGC Videsh Limited (OVL) and (ii) Mangalore Refinery and Petrochemicals Ltd. (MRPL). All the conditions mentioned in the circular are being complied with by ONGC. Full Annual Report of ONGC including its subsidiaries will be made available to any shareholder, if he/she desires. Further, Annual Reports of MRPL and OVL are also available on website www.mrpl.co.inandwww.ongcvidesh.com respectively.

In accordance with the Accounting Standard (AS)-21 on "Consolidated Financial Statements" read with AS-23 on "Accounting for Investments in Associates" and AS-27 on "Financial Reporting of Interests in Joint Ventures", audited Consolidated Financial Statements for the year ended March 31,2013 of the Company and its subsidiaries form part of the Annual Report.

7. Joint Ventures/ Associates

i. ONGC Petro-additions Limited (OPaL)

Your Company has promoted OPaL, a Joint Venture (JV) Company, with envisaged equity stake of 26% along with GAIL (15.5%) and GSPC (5%); the balance equity is to be tied up from Strategic Partners / FIs / IPO. It is a mega downstream petrochemical integrated project at Dahej SEZ put in place for utilizing the in-house production of C2-C3 and Naphtha from various units of ONGC. It is scheduled to be completed by 01 2014.

Present status

Overall Cumulative progress is 77.65 per cent as on March 31,2013.

Total cumulative expenditure as on March 31,2013 is Rs. 137,081 million. Approved project cost is Rs. 213,960 million. Debt closure has been attained with the execution of Rupee Term Loan agreement, forRs. 149,770 million on 29.01.2013.

ii. ONGC Mangalore Petrochemicals Limited (OMPL)

OMPLisa value-chain integration project for manufacturing Para-Xylene and Benzene from the Aromatic streams of MRPL promoted by ONGC with an envisaged equity participation of 46% along with MRPL (3%) with balance equity being tied up.

Present status

Overall cumulative progress is 91.83 per cent ason March 31,2013.

Total cumulative expenditure on the project isRs. 40,170 million. Approved project cost isRs. 57,500 million. The scheduled completion of the project is slated for Q3 of FY 2013-14.

iii. Dahej SEZ Ltd (DSL)

It is envisioned as a multi-product SEZ at Dahej in coastal Gujarat for setting up world-class mega infrastructure facilities which would anchor ONGC''s upcoming C2-C3 Extraction Plant and a value-chain integration project (OPaL).

Paid up capital: ONGC: 49.99% &GIDC: 49.99%

Envisaged equity structure: ONGC: 23%; GIDC:26%; balance equity is being tied up.

Present status

SEZ is already operational and units in SEZ have clocked export ofRs. 8,640 million in the FY''12 and Rs. 14,200 million in FY''13. 92 per cent of the leasable land has already been allotted and the remaining land is expected to be leased in the next two years.

iv. ONGC Tripura PowerCompany Ltd (OTPC)

OTPC is setting up a 726.6 MW (2 X 363.3 MW) gas based Combined Cycle Power Plant at Palatana, Tripura. The basic objective of the project has been to monetize idle gas assets of ONGC in land-locked Tripura state and to give further boost to exploratory efforts in the region. Your Company has promoted OTPC with an envisaged stake of 50% along with Govt, of Tripura (0.5%) and IL&FS Energy Development Co. Ltd. (IEDCL- an IL&FS subsidiary) (24.5%); the balance is proposed to be tied up through IPO.

Present status

The total expenditure incurred on the project till March 31, 2013 isRs. 28,353 million against approved project cost of Rs. 34,180 million.

Entire debtfor the project has been tied up with Power Finance Corporation at a Debt: Equity ratio of 3:1.

Physical Progress: In Unit-I, unforeseen technical problems had arisen since first full-load trial operations in early Jan 2013. The same have been attended and the Unit-I has been restarted to commence trial operations to achieve commercial operations by July 2013. Unit-ll commissioning is now scheduled in August 2013.

The Palatana-Bongaigaon transmission line being implemented by NETC is now commissioned up to Byrnihat. This would facilitate full evacuation of power generated from Unit-I. For complete evacuation of Unit-ll power, the Byrnihat-Bongaigaon section of the line needs to be completed by December 2013 subject to resolution of certain issues related to forest clearance in Assam state.

v. Mangalore Special Economic Zone Limited (MSEZ)

With an envisaged equity stake of 26% along with KIADB (23%), IL&FS (50%), OMPL (0.96%) and KCCI (0.04%), ONGC has proposed to set up MSEZ to serve as site for development of necessary infrastructure to facilitate and locate ONGC/ MRPL''s Aromatic complex being promoted by ONGC.

Present status

In respect of Pipeline Corridor development, Ministry of Environment & Forest (MoEF) clearance is awaited for construction works at Reach 2 (about 1.8 km). Pursuant to the presentation made by MSEZ to Expert Committee of MoEF on Feb 18-19, 2013, the committee has favourably recommended the case to MoEF.

As far as land acquisition issues at Reach 3 (about 1.5 km) is concerned, Gazette notification has already been issued by the Government of Karnataka; however, land price fixation is yet to be done by the Government.

Required work for river water infrastructure has been completed. Trial runs to MRPL and OMPL have also been conducted successfully. Facilities are ready for supply of water. Water supply agreement is under finalization.

vi. ONGC TERI Biotech Limited (OTBL)

OTBL is a Joint Venture company of ONGC which was incorporated on March 26, 2007, in association with ''The Energy Research Institute'' (TERI) with shareholding of 49 per cent each. Balance 2 per cent equity is held by the Financial Institutions. The JV has been promoted for addressing the requirement of Bioremediation of oily sludge, Microbial Enhanced Oil Recovery, prevention ofwax deposition in tubulars and solution for other oil field problems. The turnover of OTBL in FY''13 is Rs. 136.61 million and Profit after Tax is Rs. 40.05 million as against turnover of Rs. 129.96 million and Profitafter TaxisRs. 32.78 million in FY''12.

vii. PetronetMHB Limited (PMHBL)

PMHBL is a JV company where in ONGC (28.766%), HPCL (28.7%) and PIL (7.898%)have equity stakes. Balance 34.57 per cent of equity is held by leading banks. It owns and operates a multi-product pipeline to transport MRPL''s products to hinterland of Karnataka. Throughput in FY''13 is 2.816 MMT against 2.771 MMT during the last year. As per audited results for the year 2012-13, the turnover and PAT of PMH BL areRs. 834.53 million andRs. 273.09 million, respectively.

viii. Petronet LNG Limited (PLL)

ONGC has 12.5 per cent equity stake in PLL, identical to stakes held by other Oil PSU co-promoters viz., IOCL, GAIL and BPCL. Dahej LNG terminal of PLL having a capacity of 10 MMTPA is currently meeting around 20 per cent of the total gas demand of the country. A new LNG terminal of 5 MMTPA capacity is under construction at Kochi and is expected to be completed by the 2nd quarter of FY''13. The turnover of PLL during 2012-13 is Rs.314,674 million (previous year Rs. 226,959 million) and net profit is Rs. 11,493million (previousyear Rs. 10,575million).

ix. Pawan Hans Limited (PHL)

ONGC has 49 per cent equity stake in PHL (previously known as Pawan Hans Helicopters Limited). Balance 51 per cent equity is held by the Government of India. PHL is one of Asia''s largest helicopter operators having a well-balanced operational fleet of 40 helicopters. It provides helicopter support for i ONGC''s offshore operations. PHL was successful in providing all the 12 Dauphin N and N3 helicopters fully compliant with AS-4 as per the new contract with ONGC. The accounts of PHLfor 2012-13 are under finalisation.

8. Other Projects/ Business initiatives

a. C2-C3-C4 Extraction Plant

Your company has set up a C2-C3-C4 extraction plant at Dahej with LNG from Petronet LNG Limited (PLL) as the feed stock. This plant will be supplying C2-C3-C4 extracts as feedstock to OPaL. Presently, the plant systems are under preservation and periodic inspection of static and rotary equipment is continuing as per Preservation Plan.

b. Urea Fertilizer Business

ONGC signed a Memorandum of Understanding (MoU) with M/s Chambal Fertilizers and Chemicals Ltd. (CFCL) and the Government of Tripura for setting up a 1.3 MMTPA capacity urea fertilizer plant in Tripura. MoU was signed on April 9, 2013 at Agartalain presence of Shri ManikSarkar, Hon''ble Chief Minister of Tripura. Feedstock for the proposed plant (Natural gas) will be supplied from Khubal field in AA-ONN-2001/1 block where substantial gas reserves have been established. Gas requirement for the plant is estimated to be 2.4 mmscmd. The project cost is estimated to beRs. 50,000 million. Government of Tripura will have 10 per cent equity in the venture.

c. LNG terminal

ONGC along with its consortium partners BPCL and Japanese conglomerate Mitsui signed an MoU with the New Mangalore Port Trust (NMPT) on March 18,2013. The MoU documents the Port''s No-Objection to carry out the feasibility studies and intention to extend all cooperation to the consortium in this regard. The MoU was executed in presence of Hon''ble Minister of Petroleum & Natural Gas Dr. M. Veerappa Moily and the erstwhile Chief Minister of Karnataka Shri Jagadish Shettar. The consortium expects to commission the facility by 2018.

9. Alliances & Partnerships for Business Growth a MoU with Ecopetrol

ONGC signed a MoU with Ecopetrol, Ecuador for collaboration on jointly studying the fan belt traps of the Cachar Region in India and cooperating on studying and developing EOR and IOR technologies during 7th National Oil Companies (NOC) Forum held during May 25-27,2012 at Istanbul.

b Collaboration Agreements with GAIL

ONGC signed the following four agreements with GAILon July 21,2012:

1. Gas Cooperation Agreement,

2. Gas Swap Agreementfor C2-C3 Plant,

3. OPaL Shareholders'' Agreement,

4. Side Letter for polymer marketing rights for GAIL.

While the Gas Cooperation agreement bestows rights on GAIL to market gas produced from ONGC fields on a case-by-case basis, the gas swap agreement is of importance for C2 extraction plant at Dahej as it facilitates swapping of domestic non-APM gas for shrinkage due to extraction of C2 components from PLL''sLNG. The Shareholders''Agreement spells out the ownership pattern in the OPaL project wherein ONGC and GAIL are inter-alia sponsors and the Side Letter bestows marketing rights on GAIL, which is running/expanding petrochemical plant at Pata and is in the process of setting up another one in Assam, for partial quantity of polymers produced by OPaLfacility.

c. Farm-out agreement with M/s INPEXfor block KG-DWN-2004/6

ONGC entered into a strategic partnership with M/slNPEX CORPORATION (INPEX), Japan''s largest national oil company. ONGC signed a Farm-Out Agreement (FOA) on November 5,2012, at New Delhi for handing over 26 per cent participating interest to M/s INPEX in the deep water exploration Block KG-DWN-2004/6 of Krishna-Godavari Basin, which was awarded to ONGC-led consortium under the NELP-VI licensing round. ONGC continues to remain as the operator with 34 per cent participating interest. The existing consortium partners GAIL (India) Limited (10%), Gujarat State Petroleum Corporation Limited (10%), Hindustan Petroleum Corporation Limited (10%) and Oil India Limited (10%) have given their consent to this farm out.

10. Information Technology

ONGC has strived to be at the forefront with regard to adoption, deployment and integration of Information Technology in the organisation, with special reference to its needs. In a knowledge-driven and technology-intensive industry such as oil & gas E&P, information technology establishes the vital links across the company''s many locations and varied workforce, essentially serving as its operation''s lifeline. Many of the IT achievements of the Company are regarded as benchmarks in the industry in terms of implementation of widespread systems integration and process automation. Some of the highlights for the FY''13 are:

Achieved over 99 per cent IT system availability.

Under "IT Skill & Proficiency Development Programme through Project Chetna", 8,100 training man-days were achieved. "Lotus notes e-Mail System" was upgraded.

Optimization of ONGC domain architecture along with up-gradation of "Enterprise Active Directory Services", with new hardware and software was also completed.

"Online Complaints Portal" for Corporate Vigilance was launched.

Deployment of standardized corporate version of Health Information System (HIS) at all the locations (except at Delhi),completed.

Surveillance audit of "ISO 20000 Certification" for ITIL based IT services and acquisition of "ISO 27000 Certification" for Infocom Data centers completed.

A Point-to-Multipoint "Broadband Wireless Access (BWA) Radio System" Project covering Western Onshore and Neelam Offshore completed which resulted in adequate bandwidth availability at remote field locations.

Point-to-Multipoint "Broadband Wireless Access (BWA) Radio System" for remaining sites of North East & Southern Assets of ONGC is under execution.

An LSTK projectforthe revamping of existing Info-com Datacenter in Chennai was completed at a cost of Rs. 20,320 million with seamless shifting of critical operational equipment to the new center in the same area and without any disruption to the existing services.

Project "Augmentation of Communication Infrastructure of Western Offshore on Turnkey basis" completed at Mumbai.

New 8 Mbps Lease line connectivity established between 11 High and Priyadarshini at Mumbai for Logging applications and 2 Mbps Lease line for 24x7 Medical control rooms at Poonam Nagar Colony, Mumbai.

11. Health, Safety and Environment (HSE) accreditations

ONGC attaches the highest priority to safety, occupational health and protection of environment in and around its working areas and affirms strict adherence to globally recognized and industry accredited best practices in its domain. In accordance with this commitment, ONGC has implemented globally recognized QHSE Management System conforming to the requirements of QHSE Certifications ISO 9001, ISO 14001 and ISO 18001 (OHSAS) atONGCfacilities.

Corporate guidelines on incident reporting, investigation and monitoring of recommendations was developed and implemented for maintaining uniformity throughout the organization in line with international practices. Some of the standout features of the Company''s exemplary HSE practices are - Regular QHSE internal audits, Fire safety measures, regular fire and earthquake mock drills, Health Awareness programs, water and electricity conservation, Material Safety Data Sheets (MSDS), Personal Protective Equipment (PPE), and identification and implementation of Environment Management Programmes (EMP) and Occupation Health & Safety (OHS) programs as per need of the units, near miss and Governance, Risk & Compliance (GRC) reporting.

12. Sustainability Development

The world today has only two options, either to stop generating GHGs (Green House Gases) and stop development as a corollary or synergise development with environment. ONGC, similar to the leading energy majors of the world, is striving to position itself as a leading organisation in sustainable management and is aiming to achieve sustainable development through a holistic approach to carbon management. Carbon Management Group synergises ONGC''s all business activities in termsof sustainable development.

All the six Sustainability Development (SD) projects undertaken as per the MoU with MoP&NG have been completed ahead of the schedule. All these SD projects have been assessed by an External agency (Ramky Enviro Engineers Ltd), which has submitted its report on April 15, 2013. As per the assessment, ONGC has achieved excellent grades in all the six SD projects. As a part of its Sustainability Development agenda, the following efforts have been undertaken by ONGC.

a. Water Management

Sustainable water management: Water foot printing is being implemented at two locations (Tripura & Cauvery Assets) and anamountofRs. 0.5 million wasexpended towards water mapping during theyear.

Rainwater Harvesting Programme (RWH): The programme is being actively undertaken in Vadodara and at Tripura Asset. Additionally, a number ofwells have been planned for recharging ground water table in Agartala.

b. Global Methane Initiative (GMI)

Global Methane Initiative (GMI) program activities have been carried as per the ONGC-USEPA ongoing MoU. Leak survey and estimation of fugitive emission was carried out at 13 installations across ONGC. This initiative has helped in recovery of around 3.88 MMSCM of fugitive methane which was added back to the production main stream.

c. Carbon Dioxide mitigation and low carbon initiatives

ONGC is in the process of finding an R&D solution to the vent C02 at Hazira Plant with a view to mitigating emission of C02to the environment.

d. Clean Development Mechanism (CDM)

ONGC has registered 10 CDM projects with UNFCCC (United Nations Framework Convention on Climate Change). This is probably the highest number of projects registered by any single entity in India. During the year, around 1,28,000 Certified Emission Reductions (CERs) (Carbon credits) have been issued, taking the overall CER tally to more than 1,40,000. Issuances being an annual activity after annual verification, more issuances are in the offing as four of the registered projects have already been successfully verified during the year under consideration.

The ten registered CDM projects with UNFCCC are:

Waste heat recovery from Process Gas Compressors (PGCs), of Mumbai High South (offshore platform) and using the recovered heat to heat process oil (Regn Ref No 0814).

Upgradation of Gas Turbine 1 (GT 1) and Gas Turbine 2 (GT 2) at co-generation plant of Hazira Gas Processing Complex (HGPC) (Regn. Ref No 0847)

Flare Gas Recovery project at Uran Plant( Regn. Ref No 1220) and Hazira Plant (HGPC) (Regn. Ref No 1354)

Energy Efficiency of Amine Circulation Pumps at Hazira plant (Regn. No 2648).

51 MWwind power project at Bhuj, Gujarat.

Green Building projects at Mumbai and Dehradun Gas Flaring Reduction at Neelam & HeeraAsset ONGC Tripura Power Company Ltd. (726 MW natural gas based power plant)

e. Carbon footprint

Your Company has initiated an organization wide carbon footprint activity in the year 2011-12 as a part of carbon and energy management. The carbon footprint is ready and eight types of mitigation possibilities have been identified, which may reduce the emission significantly (almost34%).

Business Responsibility Report

Securities &Exchange Board of India has introduced Clause 55 to the Listing Agreement with the Stock Exchanges, which states that Listed entities shall submit, as part of their Annual Report, Business Responsibility Report, describing the initiatives taken by them from an environmental, social and governance perspective. Accordingly, the first Business Responsibility Report-2012-13 has been drawn up and forms part of theAnnual Re port for2012-13.

13. Internal Control System

Your Company has a well-established and efficient internal control system and procedures. The Company has a well-defined delegation of the financial powers to its various executives through Book of Delegated Powers (BDP). The Integrated BDP is updated from time-to-time in line with the needs of the organisation as well as to bring further delegation. The Company has in- house Internal Audit Department commensurate with its size of operations. Audit observations are periodically reviewed by the Audit & Ethics Committee of the Board and necessary directions are issued whenever required.

14. Human Resources

ONGC cares and values for its human resource which is the bedrock of ONGC''s success story. To keep the employees'' morale high, your Company extends several welfare benefits to them and their families by way of comprehensive medical care, education, housing and social security. During the year 2012-13, your Company implemented various new and revised welfare policies for its employees.

15. Human Resource Development

32,923 ONGCians (as on March 31, 2013) dedicated themselves and contributed their efforts towards the excellent performance of your company. In response to the highly knowledge-driven and extremely competitive industry that your Company operates in, it has devised an effective and progressive workforce intake strategy that is suited well to counter the varied complexities and uncertainties of the business environment as well as aligned to overarching business plans of the organization. During the year, adequate number of people with requisite skill-sets were inducted to meet the requirements of the Company as well as replenish the manpower losson accountof high superannuation.

Your company believes that continuous development of its human resource fosters engagement and drives competitive advantage. One such initiative towards that end was the innovatively designed and highly popular ''Business Games'', an organization wide contest that puts to test the managerial and business acumen of the executives. During the year 2012-13, a total of 200 teams and 800 executives participated in the event.

Fun Team Games (FTGs) were organized for E0 and staff level employees to inculcate MDT (Multi-disciplinary Team) concept and a spirit of camaraderie and belongingness to the organization, which was very well received by the participants. During the year, 129 teams and 516 employees participated in FTGs. Your Company also conducted the Assessment Development Centre (ADC) for approximately 300 E-6 (DGM) level executives and provided them developmental inputs.

During the year, Mentoring Initiative was launched in a big way in your Company. Mentoring has been initiated for the motivation of the senior employees as well as to provide guidance and support to the younger employees. Your Company has partnered with global HR consulting firms to create a pool of accredited mentors in the organization. These mentors will support organization''s effort to hone young minds to successfully respond to the emerging business needs of your Company. As part of this Initiative, in the year 2012-13, over 900 senior level executives (E5 &E6) were selected and trained to be mentors for young mentees.

During the year, your Company launched a Suggestion Scheme, ESSENCE (Employees Suggestion Scheme for Engagement, Commitment and Efficiency) aimed at facilitating achievement of Organisational excellence by encouraging employees to put forth suggestions for improvement in various functional areasof the Corporation''s business and operations.

Training

Skill up-gradation is a vital component for driving excellence through Human Resource. Your Company has recently branded the spectrum of its training activities as EXPONENT- a comprehensive programme which nurtures the energy leaders of tomorrow.The program is facilitated by the ONGC Academy, Regional Training Institutes (RTIs), other in-house Institutes and through tie-ups with globally recognized trainers.

During the year, your Company continued its endeavour of equipping the employees with the latest knowledge in the specialized fields of upstream oil and gas sector by organizing training programs with the best of faculty from both India and abroad. A total of 16,255 executives and 3,712 non-executives were imparted appropriate training, spanning 207,447 training man-days, during2012-13.

During 2012-13, five batches of Graduate Trainees, totalling 691 in all, were imparted induction training. In order to keep the executives abreast of the latest advancements in cutting edge concepts and technologies in oil and gas exploration and production, 84 programmes were organized during 2012-13, including foreign faculty programmes. Around 250 senior level officers were exposed to Advanced Management Programmes with overseas learning componentthrough tie-ups with leading B-schools of the country.

16. Employee Welfare

Your Company continues to extend welfare benefits to the employees and their dependants by way of comprehensive medical care, education, housing and social security. Your Company continues to align company policies with the changing economy and business environment. Some of the key facetsof ONGC''s Employee Welfare model are mentioned herein -

(i) Employee Welfare Trusts

Your Company has established thefollowing major Trusts for welfare of employees:

- Employees Contributory Provident Fund (ECPF) Trust: Manages Provident Fund accounts of employees of your Company.

- The Post Retirement Benefit Scheme(PRBS) Trust: Manages the pension fund of employees of your company and settled 1,333 cases of withdrawal benefits during the year

- The Composite Social Security Scheme (CSSS): It provides an assured ex-gratia payment in the event of unfortunate death or permanent disability of an employee in service. During the year, assistance to families of deceased employees under this scheme was revised to between Rs. 3 to 5 million. Under the Composite Social Security Scheme, 1,249 Cases were settled during the year 2012-13. Support to parent has been extended in case of Death/ Disability - 25 per cent of the admissible support amount shall be paid to surviving parents of the deceased employee. The balance 75 per cent amount shall be released as per the nominations recorded by the employee.

- Gratuity Fund Trust: This has been created to take care of payment of gratuity as per the provisions of the Gratuity Act.

- Sahayog Trust: Your Company''s ''Sahayog Yojana'' instituted under this Trust provides ex-gratia financial grant for sustenance, medical assistance, treatment, rehabilitation, education, marriage of female dependent and alleviation of any hardship or distress to secure the welfare of the secondary workforce and their kin, who do not have adequate means of support. Under the scheme, an amount of'' 19 million was disbursed by the Trust during the year.

- Extension of Benefits under the Agrani Samman Scheme to retired employees: During the year, your Company relaxed the provisions of the Agrani Samman Scheme to cover those ex-employees who separated from the service of ONGC on accountof premature retirement due to disability or medical deficiency suffered while on duty.

(ii) Implementation of Govt. Directives for Priority Section

Your Company complies with the Government directives for Priority Section of the society. The percentage of Scheduled Castes (SC) and Scheduled Tribe (ST) employees were 15.68 percent and 8.98 percent respectively as on 31st March, 2013.

Your Company is fully committed for the welfare of SC and ST communities. The following welfare activities are carried out by your Company for their upliftment in and around its operational areas:-

- Annual Component Plan

Under Annual Component Plan for SC/ST, every year an allocation of Rs.200 million is made. The amount under component plan is utilised for taking up various welfare measures for the welfare and upliftment of the needy people of SC/ST communities. This fund is especially meant for providing help and support in Education and Training, Community Developments Medical and Health Care.

Scholarship to SC/ST meritorious students for pursuing higher professional courses at different Institutes and Universities in the country.

Your Company has recently enhanced scholarships for meritorious SC & ST students from 100 to 500 for pursuing higher professional courses at different Institutes and Universities across the country in Graduate, Engineering, MBBS, PG courses of Geo-Sciences and MBA. The major feature of the scheme is that the scholarships have been divided equally for both male and female students and the allotted amount of scholarship per student isRs. 4,000/- per month subject to the conditions of the scheme. The annual budgetforthe scheme, considering its total implementation, isRs. 76 million per annum.

17. Industrial Relations

Your company has maintained harmonious industrial relations throughout the Corporation. During the year, no man days were lost due to internal industrial action. During the illegal strike of the contract labourers in Hazira Plant, from July 18,2012 to October, 2012, operations were continued uninterrupted and production was maintained without any adverse effect on the Company''s performance.

Your Company has evolved cutting edge industrial relations policies in addressing the aspirations of the contract labour deployed by contractors performing jobs and services for ONGC. During the year, your Company extended several benefits to its secondary workforce such as:

Your Company adopted the "Fair Wage Policy". The policy enjoins the Contractors to pay 35% higher wages as compared to minimum wage. This will also have a salutary effect on all statutory liabilities towards various social security schemes. The policy also provides that the contractors will obtain Group Gratuity cover and Group Insurance cover from LICforthe labour deployed in ONGC operations. The policy was rolled out during the year with your Company facilitating the signing of tripartite settlements between contractors and unions representing the contract labour in the presence of Labour Authorities on July 18,2012.

During the year, your Company effected upward revision of the daily wages, house rent subsidy (Rs. 1,000 to Rs. 3,000 per month) and education support for children of contingent workers (Rs. 1,000 per month). Besides, an ex-gratia amount of Rs. 24,000/- each year has also been extended to the contingent workers.

18. Women Empowerment

Women employees constitute approximately 6.37 per cent of your Company''s workforce. During the year, programmes on women empowerment and development, including programmes on gender sensitization were organized. Your Company actively supported and nominated its lady employees for programmes organized by "Women in Public Sector (WIPS) and "Women in Leadership Roles". Also, a new award, ''Woman Executive of The Year'', was introduced by the Company during the year, as part of itsAnnualAward Scheme.

19. Grievance Management System (GMS)

Your Company provides an easily accessible machinery to the employees for redressal of their grievances, either through an informal channel (open hearing day) or through a formal channel. In this regard, a new GMS has been introduced in the Company, during the year.

Public Grievance Management System

All Key Executives of your Company have designated a publicized time slot thrice in a week to meet public representatives in order to speedily redress their grievances.

20. Implementation underthe Right to Information Act

An elaborate mechanism has been set up throughout the organization to deal with the requests received under the RTI Act, 2005. Central Assistant Public Information Officer (CAPIO) have been appointed at every work centre to redress the issues under RTI Act. 40 applications received in March, 2012 were carried forwarded to the year 2012-13.1,552 applications were received during the year; making a total of 1,592 applications. In addition to 6 first appeals received in March, 2012,320 were received during the year.

21. Implementation of Official Language Policy

Your Company makes concerted efforts to spread and promote the Official Language. Some of the important steps taken in this regard during the year were:

- Introduction of new Unicode Hindi software in all the offices,

- Hindi workshops conducted at regular intervals,

- Two International Hindi seminars and ''Kavi Gosthies'' were organized in Dehradun and Delhi,

- ONGC actively contributed in publishing bilingual Petroleum Terminology, initiated by MoP&NG, and

- Hindi Teaching Scheme of the Government of India is effectively implemented at all regional work centres

22. Improvement in Living and Working Conditions

As a testimony to its commitment for a cleaner tomorrow, your Company has undertaken the ''Green Building'' initiative for its upcoming offices at Chennai, Dehradun, Delhi, Hyderabad, Kolkata and Mumbai.. During the year, the ''Green Building'' at Dehradun was inaugurated.

Bachelor Accommodation facilities in Nazira, Sivasagar, Jorhat, Mumbai and renovation of existing offices, colonies and guest houses was successfully completed at many work-centres to make the facilities more in synchronization with present day requirements thus making the infrastructure energy efficient. Energy supply through alternate sources of energy - wind energy and solar panels- has been commenced in some of the townships.

Work-Life Balance

Your Company continued in its endeavours to ensure a desirable work-life balance for its employees. The townships at many work-centres were provided facilities like gymnasiums, music rooms etc.

The newly launched executive rejuvenation programme, called "Nav-Utsah" aims at educating the senior executives on stress management, conflict resolution, good parenting, besides Yoga, and Ayurvedic therapies. Some outbound team- building programmes like - family events at work centres and cultural programmes involving employees and their families - are routinely conducted for work-life balance. MahilaSamitisand ResidentWelfareAssociations(RWAs)playan active role in organizing these social and cultural events.

Your Company has a dedicated adventure wing named ONGC Himalayan Association which organizes adventure programme like mountaineering, trekking, white water rafting, snow skiing, desert safari, aero sports, etc. which adds towards moral engagement, team spirit, stress management, etc., among the employees.

23. Sports

Your Company continues to extend support to the sportspersons under its fold by way of extensive assistance towards training and participation in tournaments within the country and overseas for deserving performers. The scope for benefits to aspiring and promising sportspersons under the scholarship scheme has been further widened with the inclusion of games like squash, archery, ice-skating and equestrian sports. The total number of disciplines supported by ONGC by way ofjobs or scholarship is 23 as on date.

Your Company has also sponsored many prestigious sporting events during the year. ONGC was the "Principal Sponsor" of the Indian Contingent for the Olympic Games 2012. ONGC''s contribution for Team India was not only restricted to the monetary support ofRs. 10 million but also the 15 ONGCians making the qualifying mark and getting selected to represent India at this most prestigious event. Mr. Sudhir Vasudeva, CMD, ONGC & Mr. K S Jamestin, Director-HR took over the charge as President and Vice President respectively of All India Public Sector Sports Promotion Board (AIPSSPB), the largest conglomerate of public sector undertakings, in July 2012. It is a pleasure to inform you that two more ONGCians were conferred with National Awards - Arjuna Award to Ms. Kavita Raut (Athletics) and Ms. Aswini Ponnappa (Badminton). Today your Company boasts for fifteen Arjuna Awardees besides one Khel Ratna and two Padmashrees. Sports achievements during the year are detailed in Annexure-B.

24. Corporate Social Responsibility (CSR)

ONGC''s vision of sustainable growth drives both business decisions as well as Corporate Social Responsibility (CSR) initiatives. The CSR activities are essentially guided by project based approach in line with the guidelines issued by the Department of Public Enterprises (DPE) and Ministry of Corporate Affairs (MCA) of the Government of India. Seeking to herald an inclusive business paradigm, ONGC has CSR interventions that are based on social, environmental, and economic considerations and are well-integrated into the decision-making structures and processes of the organization.

The CSR effortsare primarily focused on protection of environment; providing infrastructure support in our operation al areas, water management, women empowerment, initiatives for physically and mentally challenged people, protection and preservation of our heritage, arts and culture, promotion of sports, entrepreneurship building and sponsorship of seminars, conferences, workshops etc.

During 2012-13, some of the landmark CSR initiatives undertaken by your Company include:

1. ONGC Specialist Palliative and Geriatric Care Out-patient Clinic: Initiated in 2012-13 in association with Dean Foundation, this project intends to help the terminally ill cancer patients in Chennai by providing palliative care. It supports patients by comforting them and relieving them of pain during the final stage of their life. It also provides counselling to the patients and their families. The targeted beneficiaries are selected by the implementing agency in association with various Medical centres providing oncological treatment based on their socio-economic criteria.

2. ONGC Hope Foundation: This CSR project was initiated with the intent to "Bandage the ulcers of 96 leprosy patients every day" for one year in the Village of Hope, (VOH). This is situated in the leprosy complex, Tahirpur, adjacent to Leprosy Mission Hospital at Nandnagri in the outskirts of Delhi.

3. ONGC The Akshaya Patra Foundation: This unique CSR initiative aims at setting up of a centralized fully automated mechanized kitchen with a capacity to provide mid-day meals to two lakh school going children (enrolled in Govt, schools) per day in the District of Surat, Gujarat. The Kitchen has already started feeding about75,000 students from an interim kitchen. Itwill become operational in phases and intends to reach its full capacity of two lakh children per day within two years.

4. Aantyodaya Prakalp: The project implemented through Bhartiya Kushtha Niwarak Sangh (BKNS) andAdivasi Development Initiative (ADI) aims to undertake eradication of malnutrition, especially among children. Itwill conduct sick cell disease detection, counseling and prevention, with appropriate treatment. Medical treatment will be provided through a resource centre/ hospital and surgical centre. The project will also provide education to 20 students from the tribal populations of Western & Eastern Melghat in the Amravati District of Maharashtra, Betul District of Madhya Pradesh and Bastar District of Chhattisgarh atHalbras.

5. Aids & Appliances to the physically challenged: This is a pan India project in collaboration with Artificial Limbs Manufacturing Corporation of India (ALIMCO). The objective is to cater the needs of Orthopaedic, Hearing and visually challenged people by providing aids and appliances. 750 people have already benefitted from this project in Hazira, Gujarat and Karaikal, Puducherry in 2012-13.

6. ONGC Adharshila Entrepreneurship and Skill Development Initiative: The CSR project initiated in 2012-13 aims at providing vocational training for 360 students. These students are from the slums of New Delhi. The training will be in the fields of beauty and healthcare, cutting and tailoring, and computer education.

7. Udaan: This is a special Initiative taken up by the Ministry of Home Affairs, Govt, of India for the educated youth of Jammu & Kashmir in association with National Skill Development Corporation (NSDC). The project aims to train Graduates/ Post Graduates from J&K to improve their technical knowledge and soft skills and enhance their scope for employability.

8. UTKARSH An ONGC AROH effort for Economic Upliftment of People in Sibasagar: The project aims to create sustainable livelihood opportunities through training and skill development. It targets different sections and age-groups in 18 villages in ONGC operational area in Geleki field.

9. Preservation of heritage monuments: Your Company has also dedicated itself towards preservation of Heritage Monuments. Six monuments - Taj Mahal at Agra, Red Fort at Delhi, Ellora & Eliphanta Caves in Maharashtra, Golkonda Fort at Hyderabad and Shore Temple in Mahabalipuram near Chennai - have been taken up under Clean India Campaign of Ministry of Tourism with the help of Archaeological Survey of India (ASI).

10. Other notable CSR Initiatives: Hortoki Water Supply Scheme (aimed at creating a sustainable source of safe drinking water to the people of Hortoki Village, Kolasib District, Mizoram); Assistance to St Joseph of Annecy (India) Society, Tripura (infrastructure support for residential hostel for tribal girls - St Joseph of Annecy (India) Society is running a residential hostel for more than 125 Tribal girls of Kamalpur Dhalia) and Support to Adoration Charitable Trust, Cochin (financial assistance to Cochin to cover educational & health expenses of 100 school children of sex workers/HIV/AIDS affected, drug users etc.) Tailoring machines and candle mould dice were provided to underprivileged women to provide livelihood to them.

In addition to the above new CSR initiatives undertaken in 2012-13, ONGC continued to support the major CSR interventions initiated in previous years. Some of the continued CSR initiatives are Varishtajana Swasthya Sewa Abhiyan (provision of healthcare support to elderly through Mobile Medicare units); ONGC-GICEIT Computer Centre (Employment-related computer training to underprivileged youth); Harit Moksha (green cremation systems to reduce wood consumption during traditional cremations) and ONGC-Eastern Swamp Deer Conservation Project in Kaziranga National Park.

25. Accolades

Consistent with the trend in preceding years your Company, its various operating units and its senior management officials have been recipients of various awards and recognitions. Details of such accolades are placed at Annexure - B.

26. Directors'' Responsibility Statement

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at 3151 March, 2013 and of the profit of the Com pany for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) The Directors have prepared the annual accounts of the Company on a''going concern'' basis.

27. Corporate Governance

Your Company has taken structured initiatives towards Corporate Governance and its practices are valued by the various stakeholders. The practices evolve around multi-layered checks and balances to ensure transparency.

In terms of Clause 49 of the Listing Agreement, a report on Corporate Governance for the year ended March 31,2013, supported by a certificate from the Company''s StatutoryAuditors confirming compliance of conditions, forms part of this Report.

Guidelines of Department of Public Enterprises (DPE), Government of India, on Corporate Governance have been made mandatory from May, 2010. ONGC has implemented the DPE guidelines to the maximum extent possible.

Your Company has voluntarily got its Secretarial ComplianceAuditconductedforthefinancial year ended 31st March, 2013 from M/s A.N. Kukreja&Co., Company Secretaries in whole-time practice; their reportforms part of this Annual Report.

In line with global practices, your Company has made available all information, required by investors, on the Company''s corporate website www.onqcindia.com

Apart from the mandatory measures required to be implemented as a part of Corporate Governance, ONGC has gone the extra mile in this regard for the benefitof the stakeholders:

i. Whistle Blower Policy: A Whistle Blower Policy has been implemented and isfunctional from December 01,2009. The policy ensures that a genuine Whistle Blower is granted due protection from any victimization. The Policy is applicable to all employeesof the Company and has been uploaded on the intranet of the Company.

ii. Annual Report on working of the Audit & Ethics Committee: With a view to apprise the Board of the working of the Audit & Ethics Committee annual report on the working of the Audit & Ethics Committee for FY''12 and FY''13 are under finalisation.

iii. MCA Voluntary Guidelines on Corporate Governance: ONGC has implemented the voluntary guidelines on Corporate Governance issued by Ministry of Corporate Affairs to the extent feasible and within the competency domain of the management.

iv. Enterprise-wide Risk Management (ERM) framework: Inline with the requirements of Clause 49 (of the Listing Agreement) your Company has developed a comprehensive Enterprise-wide Risk Management (ERM) framework. Under the framework Risk Register portfolio has been compiled and an ERM Policy has been firmed up. The Risk Register and the Risk Management policy of ONGC has been reviewed by the Audit and Ethics Committee and approved by the Board of Directors. The ERM framework has been rolled throughout the organization and the risk policy adopted by the company is being displayed at all the Assets/Basins/Plants/lnstitutes across all the locations of ONGC. The risk policy of ONGC is stated below:

"ONGC shall identify the possible risks associated with its business and commits itself to put in place a Risk Management Framework to address the risks involved on an ongoing basis to ensure achievement of the business objectives without any interruptions.

ONGC shall optimize the risks involved by managing their exposure and bringing them in line with the acceptable risk appetite of the company".

The risk reporting structure has already been putin place and all the stake holders are being trained to enumerate risks in their functional area. The Risk Management Cell is receiving reports from the various functional areas. The Risk Management Committee is reviewing the same on a periodical basis.

v. Board Charter: In line with the requirements of mandatory Guidelines of Department of Public Enterprises (DPE), Government of India, on Corporate Governance a detailed charter of the Board has been firmed up. The same has been finalised by the Independent Directors and will be implemented shortly.

vi. Evaluation of Performance of the Board: A draft policy on evaluation of performance of the Board / Committees / Independent Directors is being drawn up.

vii. Lead Independent Director: Mr. Arun Ramanathan has been elected as the Lead Independent Director.

viii. Meeting of Independent Directors: The Independent Directors met three times during the FY 2012-13.

28. Statutory Disclosures

Section 274(1)(g) of the Companies Act, 1956, is not applicable to the Government Companies. Your Directors have made necessary disclosures, as required under various provisionsoftheAct and Clause 49 of the Listing Agreement.

Particulars of Employees

As per Notification No. GSR289(E) dated March 31,2011 issued by the Ministry of Corporate Affairs, amending the provisionsof the Companies (Particulars of Employees) Rules, 1975 issued in terms of Section 217(2A) of the Companies Act, 1956, it is not necessary for Government companies to include the particulars of employees drawing salaries ofRs. 6 million or more per annum, employed throughout the financial year or,Rs. 0.5 million per month, if employed for part of the financial year. As your company being a Governmentcompany, the information has not been included as a part of the Directors'' Report.

29. Energy Conservation

The information required under section 217(1 )(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure - ''C''.

30. Auditors

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s Mehra Goel & Co., M/s S. Bhandari &Co, M/s Ray & Ray, M/sVarma&Varmaand M/sG DApte&Co., Chartered Accountants were appointed as joint Statutory Auditors for the financial year 2012-13. The Statutory Auditors have been paid a remuneration ofRs. 20.21 million (previous yearRs. 16.20 million) towards audit fee and certification of Corporate Governance Report.The above fees are exclusive of applicable service tax and reimbursement of reasonable travelling and out of pocket expenses actually incurred.

31. Auditors''Reporton the Accounts

The Comments of Comptroller & Auditor General of India (C&AG) form part of this Report as per Annexure-D. There is no qualification in the Auditors Report and there are no supplementary comments by C&AG under section 619(4) of the CompaniesAct, 1956. Notes to the Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments.

You would be pleased to know that your Company has received Nil comments from C&AG and Statutory Auditors for the year 2012-13. This is the seventh time in a row that the organization has received Nil comments

32. CostAudit

Pursuant to the directions of the Central Government for audit of Cost Accounts, the proposal for appointment of 7 firms of Cost Accountants as CostAuditors for auditing the cost accounts of your Company for the year ended 31st March, 2013 was approved by the Central Government and they have accordingly been appointed. The CostAudit Report for the year 2011-12 has been filed underXBRLmodeforthefirsttimeon January 15,2013 i.e. within the due date of filing.

33. Directors

During the year under report, Shri A K Hazarika, ex-Director (Onshore) superannuated on September 30,2012. Shri PK Borthakur was appointed as Director (Offshore) on October 30,2012. Shri Shashi Shanker assumed charge as Director (T&FS) on December 01,2012 in place of Shri U N Bose who superannuated on November 30,2012. Smt. Sushama Nath resigned from the Board with effect from January 21,2013. Shri K NarasimhaMurthywas appointed as Non-official part-time Director (Independent Director) on March 21,2013. Shri N K Verma tookover as Director (Exploration) on April 01,2013 in placeof Shri SV Rao who super annuated on March 31,2013.

The Board places on record its deep appreciation for the excellent contributions made by Shri A K Hazarika, Shri U N Bose, Smt. Sushama Nath and Shri S V Rao.

The strength of the Board of Directors of ONGC as on AugustOI, 2013 is 14, comprising 6 Executive Directors (Functional Directors including CMD) and 8 Non-Executive Directors, two Government nominees and six Independent Directors. Ministry of Petroleum & Natural Gas has been requested to appointrequisite number of independent Directors to comply with the Listing Agreement.

Pursuant to the provisions of Section 255 and 256 of the CompaniesAct, 1956 and Clause 104(l) of the Articles of Association of the Company, Dr. D Chandrasekharam and Shri K S Jamestin retire by rotation atthe 20th Annual General Meeting (AGM) and being eligible, offer themselves for reappointment.

Shri P K Borthakur, Shri Shashi Shanker, Shri K Narasimha Murthy and Shri N K Verma who were appointed as Additional Directors after the last AGM, hold office up to the 20th AGM. The Company has received notice in writing from a member pursuant to the provisions of Section 257 of the CompaniesAct, 1956, proposing their candidature for appointment as Directors of the Company liable to retire by rotation.

34. Acknowledgement

Your Directors are highly grateful for all the help, guidance and support received from the Ministry of Petroleum and Natural Gas, Ministry of Finance, DPE, MCA, MEA, and other agencies in Central and State Governments. Your Directors acknowledge the constructive suggestions received from Statutory Auditors and Comptroller & Auditor General of India and are grateful for their continued support and cooperation.

Your Directors thank all share-owners, business partners and members of the ONGC Family for their faith, trust and confidence reposed in ONGC.

Your Directors wish to place on record their sincere appreciation for the unstinting efforts and dedicated contributions put in by the ONGCians at all levels, to ensure that the Company continues to grow and excel.

On behalf of the Board of Directors

(Sudhir Vasudeva)

Chairman and Managing Director

Place: New Delhi

Date: 12.08.2013


Mar 31, 2012

The is indeed my proud privilege to present, on behalf of the Board of Directors, the 19th Annual Report on the business and operations of Oil And Natural Gas Corporation Ltd. and its Audited Statements of Accounts for the year ended 31st March, 2012, together with the Auditors' Report and Comments on the Accounts by the Comptroller & Auditor General (CAG) of India.

FY'12 has been a year of achievements for your Company as it performed exceedingly well in almost all the areas of its activities.

Significant highlights for the year have been: - Your Company accreted 84.13 mmtoe & ultimate reserves in the domestic fields (operated by ONGC), the highest in last two decades.

- Reserve replacement ratio has been 1.79; in 7th consecutive year more than 1. - The Gross Revenue (Rs. 7766,871 million) and PAT (Rs. 251,229 million) has been the highest-ever.

- ONGC paid the highest-ever dividend of Rs. 83,416 million; the Government of India's share has been Rs. 60,372 million. - ONGC's standalone Net worth crossed Rs. 1,000,000 million benchmark (Rs. 1,117,841 million as on 31.03.2012).

- Actual Plan expenditure for domestic operations during XI Plan period has been Rs. 1,205,523 million against the plan outlay of Rs. 759,638 million.

You will appreciate the fact that your company is growth driven which is reflected through its consistent performance over a long period of time despites growing complexities in the industry and global economies. Due to this consistent performance, efforts of your company are well recognised the word over.

Global recognitions

Your Company is the only Indian energy giant in "Fortune's Most Admired List 2012" under 'Mining, Crude Oil Production' category (March 2012). ONGC has been ranked as the Number 2 Exploration & Production Company in the World and 21st in the overall listing of global energy companies as per 'Platts Top 250 Global Energy Company Ranking 2011 (November, 2011). ONGC has been ranked at 171st position in Forbes Global 2000 list 2012 of world's biggest companies for 2011 (April 2012).

Physical Performance: 2011-12

Exploration

Your Company has made 23 discoveries in domestic fields (operated by ONGC); 15 new prospects and eight new pool discoveries. Out of the 15 new prospect discoveries 7 are in NELP blocks. The new prospect discoveries are- East Linch (Oil) and Uber (Gas) in Cambay basin; North Patheria (Gas) and Nohta-2 in Vindhyan Basin; GS-70 (Oil & gas). Alankari (Gas) aid Chandrika South (Gas) from Krishna Godavari offshore basin; B-127E (Oil) & BH-67 (Gas) in Mumbai Offshore basin. GK-42 (Gas) and GS-OSN-2004/1 (Gas) in Kutch offshore basin; MDW-13 (Gas) in the deepwater of Mahanadi offshore and ANDW-1 (Gas) in deepwater Andaman offshore. Hortoki discovery is the first hydrocarbon discovery in Mizoram. Outer 23 discoveries, 15 discoveries are in nomination blocks. Seven onland discoveries have already been put on production and other four discoveries in the offshore nomination blocks have the possibility of cluster development with nearby existing infrastructure. Two onland discoveries are in the process of appraisal/delineation. Total 8 discoveries (two onland and six offshore) are in NELP blocks which are governed by the PSC guidelines and appraisal/development activities will be taken upon keeping in view the time-lines of the respective blocks.

So far, your Company has made 26 discoveries in NELP blocks (up to 31st March, 2012). Out of which, DOC (Declaration of Commerciality) has already been submitted for 13 discoveries; including the Significant discoveries in KG-DWN-98/2 in KG basin and Mahanadi basin. Rest of the discoveries are under assessment/appraisal.

Reserve accretion & RRR

Your Company accreted 242.53 million metric tonnes of oil equivalent (mmtoe) of in-place volume of hydrocarbon in domestic basins (operated by ONGC). The ultimate reserves accretion has been 84.13 mmtoe. Total ultimate reserve accretion in domestic basins including ONGC's share in PSC JVs has been 85.44 mmtoe. This fiscal also your Company maintained Reserve Replacement Ratio (RRR) more than one with RRR of 1.79 (with 3P reserves).

Production of Oil and Gas

The combined production of oil and oil equivalent gas (O OEG) for ONGC, including OVL and ONGC's share in PSC-JVs. in FY'12 has been 61.18 mmtoe, marginally lower by 1.4% compared to the production in FY'11 (62.05 mmtoe). The major reason for lower production during FY'12 has been the unrest in Sudan, South Sudan and Syria fields and natural decline in domestic fields (operated by ONGC).

Out of total production of 33.13 MMT of crude oil, 71 % production came from the ONGC operated domestic fields. 19% from the overseas assets and balance 10% from ONGCs share in domestic joint ventures. As far as natural gas production is concerned, majority of production (83%) came from ONGC operated domestic fields and balance 9% from overseas assets and 8% from domestic joint ventures.

Production from overseas assets

ONGC Videsh Limited (OVL), the wholly owned subsidiary of your company, has ten producing assets in eight countries - Venezuela (1), Brazil (1), Colombia (1), Sudan (1), South Sudan (2), Syria (1), Vietnam (1) and Russia (2). Total production from these assets during FY'12 has been 8.75 mmtoe of O OEG (Crude oil: 6.21 MMT & Gas: 2.54 BCM).

New projects

The Board of your Company approved development of two discovered fields i.e. B-127 cluster and C-26 cluster in FY'12, with an investment of Rs. 46,518 million. Besides this, phase-2 redevelopment of Heera and South Heera was also approved with an investment of Rs. 56,084 million. B-173A field has also been taken up for additional development with and investment of Rs. 3,525 million.

New sources of energy

Shale gas

After establishing the presence of Shale gas in the country in Durgapur, your Company is planning to explore for shale gas in the identified basins such as – Cambay, Krishna Godavari, Cauvery and Bengal basins. A landmark alliance has been linked with ConocoPhillip to explore for stale gas in India and abroad. Your Company has also entered into Shale gas research consortium agreement with Energy & Geoscience Institute (EGI), University of Utah. USA. At the same time a project has been sponsored in Indian School of Mines, Dhanbad for shale gas research.

Coal Bed Methane (CBM)

Your company is currently operating in four CBM blocks i.e., Jharia, Bokaro, North Karanpura and Raniganj. In all Blocks, Phase-l activities have been completed. In two blocks i.e., Bokaro and North Karanpura, Development Plan has been submitted after completion of Phase-II activities Development Plan of Bokaro block has been approved in February, 2012, while approval for the development plan of North Karnapura block is awaited. In remaining two blocks i.e. Jharia and Raniganj, Phase-II activities are nearing completion and development plans will be submitted. Your Company is also looking for farm-in opportunities for expeditious exploration of the CBM resources.

Underground Coal Gasification(UCG)

Your company has selected Vastan Mine block in Sural district, Gujarat for UCG Pilot project. Environmental clearance for the project has been obtained from Ministry of Environment and Forest, Government of India and request has been submitted to Ministry of Coal for award of mining lease which is awaited.

Alternate sources of energy

Your Company, through ONGC Energy Centre (OEC), a trust set up by your Company, is actively pursuing alternate energy opportunities. The Energy Centre is poised to contribute significantly towards your Company endeavours to have a healthy portfolio of alternate energy, Some of the significant initiatives in this regard are:

- Generation of hydrogen through Thermo-chemical processes: First phase of work on Cu-Cl (Copper-Chlorine) cycle has been successfully completed and the second stage i.e. Laboratory Scale Closed Loop studies of Cu-Cl is being pursued with Institute of Chemical Technology (ICT), Mumbai.

- Geothermal Power Project in Cambay Basin: OEC has planned a pilot scale Geothermal Pilot Project in Cambay Basin, which has high geothermal gradient. M/s. Talboom, Belgium will be the technology partner in this project. Through this collaborative project OEC aims to explore the possibilities of harnessing Geothermal Energy in Sedimentary Basins of India.

- Kinetic Hydro Power Project: ONGC Energy Centre has entered into an agreement with M/s. Natural Power Concepts (NPC), Hawaii, USA for the project on "Kinetic Hydro Power Generation in Rivers/Water Channels/Tail Races of Dams'.

- Wind Power Generation Project at Offshore Installations: Your company has already installed wind energy farm of 51 MW and another 102 MW wind farm project is under progress. As your Company has vast experience in offshore and has more than 200 offshore installation for production of oil & gas, the possibility of installation of suitable wind generation facilities at these Installations is being explored for harnessing wind energy in offshore.

- Uranium exploration: Your Company has successfully completed two parametric wells for Uranium exploration in Tamil Nadu.

Disinvestment

One of the major highlights of the year that passed was that the Govt. of India divested 420,416,170 number of equity shares (4.91%) of ONGC on 1st March, 2012 using the "offer for sale through Stock Exchange Mechanism". With this, the Govt. holding of ONGC has come down from 74.14% to 69.23%, In the process Govt. has raised a sum of Rs. 127,668 million resulting in an average price of Rs. 303.67 per share against the floor price of Rs. 290 per share. LIC came out as the latest buyer acquiring 377,107,488 no. of shares (4,408% out of the total divestment of 4.91% of the paid up share capital of ONGC) raising its total holding to 810,617,088 shares (9.475% as on 1st March, 2012).

1. Financial Results

Despite volatile markets your Company has earned a profit After Tax (PAT) of Rs. 251,229 million (Rs. 189,240 million in 2010-11), up 32.76%, which is incidentally the highest-ever. During the year under review, your Company, on standalone basis, registered Gross revenue of Rs. 768.488 million in 2010-11), up 12.00%.

Highlights

Gross Revenue : Rs. 768,871 million

Profit After Tax (PAT) : Rs. 251,229 million

Contribution to Exchequer : Rs. 382,874 million*

Return on Capital Employed : 45.15%

Debt-Equity Ratio : 0.00

Earnings Per Share (Rs.) : 29.36 Book Value Per Share (Rs.) : 131

* OID Cess, Excise duty, Royalty, Corporate and Dividend Distribution Tax, sales tax/VAT and Dividend on Government shareholding.

(Rs. in million)

Particulars 2011-12 2010-11

Revenue from Operations 768,871 686,488

Other Income 44,529 34,069

Total Revenues 813,400 720,557

Profit before Interest Depreciation & Tax (PBIDT) 410,327 353,182

Profit before tax (PBT) 366,425 276,164

Profit After Tax (PAT) 251,229 189,240

Appropriations

Interim Dividend 66,305 68,444

Proposed Final Dividend 17,111 6,417

Tax on Dividend 13,286 12,156

Transfer to General Reserve 154,527 102,223

Total 251,229 189,240

Previous year figures have been regrouped wherever necessary.

2. Dividend:

Your Company paid interim dividends amounting to a total of Rs. 7.75 per share of Rs. 5 each (155%) in two phases (Rs.6.25 and Rs. 1.50) in January and March 2011, respectively. The Board of Directors has recommended a final dividend of Rs. 2 per share (40%). This makes the aggregate dividend at Rs. 975 per share of Rs. 5 each i.e. 195% of the paid up share capital - post split and bonus, as compared to 175% paid In 2010-11 The total dividend will absorb Rs. 83,416 million, besides Rs. 13,286 million as tax on dividend which is the highest ever dividend payout by the Company.

3. Management Discussion and Analysis Report

In terms of Clause 49(IV)(F) of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis Report has been included and forms part of the Annual Report of the Company

4. Production and Sales

Highlights of Productions and sales of Crude Oil, Natural Gas and Value-added products.

Unit Production Qty Sales Qty FY FY FY FY 2011-12 2010-11 2011-12 2010-11

Direct

Crude Oil (MMT) *26.93 27.28 23.08 22.93

Natural Gas (BCM) **25.51 25.32 20.17 20.25

Ethane/Propane 000 MT 463 388 461 387

LPG 000 MT 1,037 1,054 1,033 1,057 Naphtha 000 MT 1,557 1,570 1,557 1,600

SKO 000 MT 79 116 79 118

Others

Sub Total

Trading

Motor Spirit 000 KL 0.43 0.63

HSD 000 KL 0.07 3.27

Others

Sub Total

Total



Unit Value (Rs. in million) FY FY 2011-12 2010-11

Direct

Crude Oil (MMT) 507,873 448,645

Natural Gas (BCM) 141,396 127,544

Ethane/Propane 000 MT 12,741 8,796

LPG 000 MT 23,711 16,369 Naphtha 000 MT 72,167 56,342

SKO 000 MT 1,520 679

Others 1,850 1,002

Sub Total 761,258 661,377

Trading

Motor Spirit 000 KL 30 36

HSD 000 KL 3 134

Others 0 2

Sub Total 33 172

Total 761,291 661,549

* includes 3.21 MMT (Previous year 2.86 MMT) from Joint Ventures.

** includes 2.19 BCM (Previous year 2.23 BCM) from Joint Ventures.

5. Oil & Gas Reserves

Your Company has made voluntary disclosures m respect of Oil & Gas Reserves, conforming to SPE classification 1994 and US Financial Accounting Standards Board (FASB-69). ONGC has added 242.50 MTOE of oil and oil-equivalent gas (O OEG) initial in-place volume with 84.13 MTOE of O OEG as the ultimate reserve component during FY'12 in domestic fields (operated by ONGC).

The ultimate reserve accretion, inducing its share in joint ventures is 85.44 MTOE of O OEG, which is the highest in last two decades.

Ultimate Reserve (3P) accretion O OEG (in MTOE)

Year Domestic ONGC's Total OVL's Total Assets share in Domestic share in (1) Domestic Reserve Foreign JVs (2) (3)=(1) (2) Assets (5)=(3) (4) (4)

2008-09 68.90 2.82 71.72 135.08 206.80

2009-10 82.98 4.39 87.37 0.35 87.72

2010-11 83.56 0.29 83.85 46.23 130.08 2011-12 84.13 1.31 85.44 -0.31 85.13

6. Statement of Reserve Recognition Accounting

The concept of Reserve Recognition Accounting attempts to recognize income at the point of discovery of reserves and seeks to demonstrate the intrinsic strength of an organization with reference to its future earning capacity in terms of current prices for income as well as expenditure. This information is based on the estimated net proved reserves (developed and undeveloped) as determined by the Reserves Estimates Committee.

As per FASB-69 on disclosure about Oil and Gas producing activities, publicly traded enterprises that have significant Oil and Gas producing activities, are so disclose with complete set of annual financial statements, the following supplemental information:

a) Proved Oil and Gas reserve quantities

b) Capitalized costs relating to Oil and Gas producing activities

c) Cost incurred for properly acquisition, exploration and development activities

d) Results of operations for Oil and Gas producing activities

e) A standardized measure of discounted future net cash flows relating to proved Oil and Gas reserve quantities

Your Company has disclosed information in respect of (a) and (d) above in the Annual Financial Statements.

Your Company has made voluntary disclosure on standardized measure of discounted future net cash flows relating to proved oil and gas reserve at Annexure-A to this report as Statement of Reserve Recognition Accounting (RRA).

7. Financial Accounting

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable Accounting Standards (AS-1 to AS-29) and Successful Efforts Method as per the Guidance Note on Accounting for Oil & Gas Producing Activities issued by The Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 1956. Further, as per Ministry of Corporate Affairs (MCA) notification, the financial statements have been prepared under the Revised Schedule VI format of the Companies Act, 1956.

8. Internal Control System

Your Company has well established and efficient internal control system and procedures. The Company has a well defined delegation of the financial powers to its various executives through Book of Delegated Powers (BDP). The Integrated BDP is updated from time-to-time in line with the needs of the organisation as well as to bring further delegation. The Company has in-house Internal Audit Department commensurate with its size of operations. Audit observations are periodically reviewed by the Audit & Ethics Committee of the Board and necessary directions are issued wherever required.

9. Subsidiaries

9.1 ONGC Videsh Ltd. (OVL)

OVL, the wholly-owned subsidiary of your Company for E&P activities outside India, achieved the highest-ever total revenue of Rs. 226,374 Million for the financial year (FY) 2011-12, an increase of 21.2% as compared to the total revenue of Rs. 186,711 Million for the FY 2010-11. OVL's share in production of oil and oil equivalent gas (O OEG) together with its wholly-owned subsidiaries ONGC Nile Ganga B.V., ONGC Amazon Alaknanda Limited and Jarpeno Limited was 8.753 MTOE during the FY 2011-12 as compared to 9.448 MTOE during the FY 2010-11. The Production has decreased in FY 2011-12 mainly due to geopolitical problems in Sudan and Syria. Post secession of South Sudan from Sudan w.e.f. 9th July, 2011, Blocks 1, 2 and 4 straddle between the two countries and Stock 5A is now entirely in South Sudan. Company's operations in South Sudan are temporarily under shutdown with effect from 23rd January, 2012 because of non-resolution of various issues between the Governments of South Sudan and Sudan for use of processing, transportation and port facilities in Sudan for crude oil produced in South Sudan Also, the current geo-political situation in Syria including EU sanction and the resulting restrictions on Contractors has created a difficult situation in AI Furat Petroleum Company (AFPC) project since December 2011. Excluding Syria and Sudan, the production during FY 2011-12 was almost at the level as that of FY 2010-11.

The Profit after tax (PAT) (or the FY 2011 -12 was marginally up by 1.1% from Rs. 26,905 Million during the FY 2010-11 to Rs. 27,212 Million during the FY 2011-12 mainly due to a provision made for Impairment of Rs. 19,534 Million in respect of subsidiary, Jarpeno Ltd. as the 'Value In use' computed for the asset as on 31st March, 2012 was lower than its carrying value. During the year, the company has acquired 25% Participating Interest (PI) In Satpayev Block, Kazakhstan and the exploration activities have started in the block. The remaining 75% PI is held by KMG, the National Oil Company of Kazakhstan.

ONGC Videsh presently has participation in 30 projects in 15 countries. Out of 30 projects, OVL is operator in nine projects and joint operator in six projects. The producing projects in OVL are Greater Nile Oil Project in Sudan, Greater Pioneer Operating Company and Block 5A in South Sudan, Block 06.1 in Veitnam, AI Furat Project in Syria, Sakhalin-I Project and imperial Energy in Russia, Mansarovar Energy Project in Colombia, San Cristobal Project in Venezuela and Block BC-10 in Brazil. Exploration Block XXIV. Syria is on extended production testing. OVL currently has three projects under development namely Carabobo 1, in Venezuela, where first oil is expected in December 2012 and Blocks A1 & A3 in Myanmar, which are likely to commence production in May 2013. Farsi Block, Iran has discoveries and further work is being earned out. One Pipeline Project was executed and completed by OVL and handed over to Government of Sudan in October, 2005 and is currently under lease. The remaining projects are in exploration phase.

Direct Subsidiaries of ONGC Videsh Limited:

a) ONGC Nila Ganga B.V. (ONGBV):

ONGBV, a subsidiary of OVL, is engaged in E&P activities in Sudan, South Sudan, Syria, Venezuela, Brazil and Myanmar. ONGBV holds 25% Participating Interest (PI) in Greater Nile Oil Project (GNOP), Sudan with its share of oil production of about 1.324 MMT during 2011-12. Post secession of South Sudan from Republic of Sudan effective from 9th July 2011, about 60% of fields are in South Sudan. However, major processing facilities, pipeline and port facilities are in Republic of Sudan. A new Joint Operating Company (JOC) Greater Pioneer Operating Company (GPOC) has been registered in Mauritius for petroleum operations of Block 1, 2 & 4 in Republic of South Sudan. The shareholding of ONGBV in GPOC is 25% in accordance with PI and project is jointly operated by all partners.

ONGBV holds 16.66% to 18.75% PI in four Production Sharing Contracts in AI Furat Project (AFPC), Syria with its share of oil and gas production of about 0.503 MTOE during 2011-12 ONGBV holds 40% PI in San Cristobal Project in Venezuela through its wholly owned subsidiary ONGC Nile Ganga (San Cristobal) BV with its share of oil production of about 0.894 MMT during 2011-12 ONGBV holds 15% PI in BC-10 project Brazil through its wholly owned subsidiary ONGC Campos Ltd. with its share of oil and gas production of about 0.465 MTOE during 2011-12.

b) ONGC Narmada Limited (ONL)

ONL, a wholly-owned subsidiary of OVL held 13.5% PI in deep water exploration Block-2, Nigeria-Sao Tome & Principe. Joint Development Zone (JDZ). OVL has communicated its intention of not continuing the block to the Operator and Joint Development Authority (JDA) of Joint Development Zone Nigeria-Sao Tome & Principe as the development of the project is not commercially viable.

C) ONGC Amazon Alaknanda Limited (OAAL): OAAL, a wholly-owned subsidiary of OVL, holds stake in E&P projects in Colombia, through Mansarovar Energy Colombia Limited (MECL), a 50:50 joint venture company with Sinopec of China During 2011-12, OVL's share of oil production in MECL was about 0.561 MMT.

d) Jarpeno Limited:

Jarpeno Limited, a wholly-owned subsidiary of OVL incorporated in Cyprus, acquired Imperial Energy Corporation plc., a UK listed upstream oil exploration and production entity with its main activities in Tomsk region of Western Siberia in Russia, in January 2009. During 2011-12, Imperial Energy’s oil production was about 0.771 MMT.

e) Carabobo One AB:

Carabobo One AB, a wholly-owned subsidiary of OVL Incorporated in Sweden, holds 11% PI in Carabobo-I Project, Venezuela, The upstream production facilities are expected to produce about 400,0Q0 barrels per day of which approximately 200,000 barrels per day would be upgraded into light crude oil in a facility to be located in the Soledad area. Anzoategui state. The license term is for 25 years with the potential for a further extension of 15 years. Four stratigraphic wells and six slant wells were drilled for collection of samples and study of petro physical properties for drilling development wells was carried out for Accelerated Early Production of first oil in 4th quarter of 2012. Presently, Basic Engineering & feed for Upgrader and Downstream facilities and 3D-Seismic study, civil works for well pads have been awarded and awarding of drilling contract for Development of the Field is in progress.

Joint Venture of OVL

f) ONGC Mittal Energy Limited (OMEL)

OVL along with Mittal Investments Sari (MIS) promoted OMEL, a joint venture company incorporated in Cyprus. OVL and MIS holds 98% equity shares of OMEL, in the ratio of 51 (OVL):49(MIS) with balance 2% shares held by SBI Capital Markets Ltd, OMEL held 45.5% PI In exploration block OPL 279, Nigeria and holds 64.33% PI in exploration Block OPL 285, Nigeria. OMEL also holds 1.11% of the issued share capital of ONGBV by way of Classic shares issued by ONGBV exclusively for AFPC Syrian Assets; such investment being financed by Class-C Preference Shares issued by OMEL in the ratio of 51:49 to OVL and MIS respectively.

9.2 Mangalore Refinery & Petrochemicals Limited (MRPL)

Your Company continues to hold 71.62% equity stake in MRPL, a Category I Mini Ratna, which is single location 15 MMTPA Refinery at the west coast.

Performance Highlights of FY 2011 -12;

- GRM of 7.07$/bbl in the fourth quarter despite sleep Rupee depreciation at the end of the quarter.

- Highest ever throughput of 12.82 MMTPA and turnover of Rs. 572,068 million during FY 2011-12. - Commissioned its 3 MMTPA CDU/VDU on 25.3.2012, which enhanced its nameplate capacity from 11.86 MMTPA to 15 MMTPA.

- Revamp of CDU/VDU I and Hydrocracker successfully completed in record time. Revamp of HCU II completed in April-May 2012.

- OPE Adjudged performance as compared to MoU targets as Excellent for the year 2010-11.

FY

Particulars 2011-12 2010-11 Throughput (MMT) 12.82 12.84

Gross Turnover (Rs. in million) 572,068 437,237

GRM ($/bbl) 5.60 5.90

Net Exchange Variation (gain/loss) (Rs. in million) 6,490 (18) PBT (Rs. in million) 13,202 17,371

PAT (Rs. in million) 9,084 11,766



The Board of directors considering the performance and continuing projects expenditure during the FY 2012-13 recommends a dividend of Rs. 1.00 Per equity share of Rs. 10/- each (Previous year Rs. 10/- each). Marketing:

In spite of the continued under-recoveries in retail marketing of Auto fuels, the Company has continued with its significant performance, thereby, limiting the under recoveries, The Direct Marketing sales turnover covering Bitumen/CRMB, ATF, Furnace Oil, Mixed Xylene, Naphtha and Sulphur amounts to Rs. 27,550 million as compared to Rs. 22.910 million during 2010-11, thereby registering an increase of 20% over last year. The Company is in all readiness to take up within a short time the retail marketing if under recoveries are eliminated. Phase-III Refinery Project:

The Financial Year 2011-12 has been a significant year for Phase-III expansion of refinery. In spite of sporadic adverse working conditions in and around the project site, the overall project progress is extremely good. The overall project progress as on 15th May, 2012 is 94.70%.

MRPL has commissioned the Primary Crude Processing Unit, Crude Distillation & Vacuum Distillation Unit along with the required offsite facilities on 25-03-2012. The other units, Diesel Hydrotreater and Hydrogen, are under commissioning. The balance units are scheduled for commissioning progressively from June 2012 and last of the units is expected to be completed by October 2012. The Poly Propylene Unit is expected to be completed by December 2012. The SPM facility is scheduled to be commissioned by July 2012. The first phase of Captive Power Plant being built by M/s. BHEL which was scheduled for commissioning in April 2011 is now expected to be commissioned by September 2012. This has considerably affected the commissioning schedule of units.

10. Exemption in respect of Annual Report of Subsidiaries and Consolidated Financial Statement

MCA vide circular dated 08.02.2011 and clarification dated 21.02.2011 decided to grant a general exemption from the applicability of Section 212 of the Companies Act, 1956 from attaching the Balance Sheet and Profit & Loss Account prepared regarding the financial year ending on or after 31.03.2011, in rotation to subsidiaries of those companies which fulfill various conditions including inter-alia approval of the Board of Directors for not attaching the balance sheet and profit & loss account of the subsidiary concerned. Your Board has accorded necessary approval in this regard for not attaching the Balance Sheet and Profit & Loss Account of its subsidiaries (i) ONGC Videsh Limited (OVL) and (ii) Mangalore Refinery & Petrochemical Ltd. (MRPL). All the conditions mentioned in the circular are being complied with by ONGC. Full Annual Report of ONGC including its subsidiaries will be made available to any shareholder, if he/she desires. Further, Annual Reports of MRPL and OVL are also available on website www.mrpl.co.in and www.ongcvidesh.com respectively.

In accordance with the Accounting Standard (AS)-21 on "Consolidated Financial Statements" read with AS-23 on "Accounting for Investments in Associates' and AS-27 on "Financial Reporting of Interests in Joint Ventures", audited Consolidated Financial Statements for the year ended 31st March, 2012 of the Company and its subsidiaries form part of the Annual Report.

11. Joint Ventures/Associates

i. ONGC Tripura Power Company limited (OTPC)

Your company has promoted OTPC with envisaged equity stake of 50% along with Govt. of Tripura (0.5%) and IL&FS (26%) to set-up 726.6 MW (2 x 363.3 MW) gas based Combined Cycle Power Plant (CCPP) at Palatana in Tripura to monetize its idle gas assets in Tripura. The generation project is in the advanced stage of implementation by Bharat Heavy Electricals Limited, as the turnkey EPC contractor. The financial closure of the project has been achieved and various linkages like gas supply from ONGC and power off-take by NE states have already been tied up. The company has successfully accomplished, riding on the back of a breakthrough transport agreement with the Government of Bangladesh, the highly challenging task of transporting the heavy and over dimensional project equipment to the site through multi-modal transportation route through Bangladesh. In view of the enormous challenges involved in setting up the project at such a remote location, the project timelines have been revised. The commissioning of Unit-I is expected in August 2012, and that of Unit II in December 2012. The total approved cost of the project is Rs. 34,290 million and the financial progress in terms of expenditure incurred till 30th April 2012 is Rs. 23,210 million.

ii. ONGC Petro-additions Limited (OPaL)

Your Company has promoted a JV company OPaL with envisaged equity stake of 26% along with GAIL (15%) and Gujarat State Petroleum Corporation Ltd (GSPCL) (5%) to Implement a mega petrochemical complex comprising 1.1 MMTPA ethylene Cracker and global scale polymer units within Dahej SEZ, as a step towards downstream integration at a total revised cost of Rs. 213,960 million. Project Implementation is in full swing with 95% of contracts awarded and overall progress of the project is 53.2% as on 30th April, 2012.

iii. Mangalore Special Economic Zone Limited (MSEZ)

ONGC with envisaged equity stake of 26% in MSEZ along with KIADB (23%) and IL & FS KCCI (51%) is promoting an SEZ in coastal Mangalore. Ministry of Commerce & Industry has formally notified to set up a Petro-chemical Specific SEZ in 1830 acres of land. Total land in possessions 2323 acres which includes 1543 acres of land for MSEZ and other Domestic Tariff Area(DTA) land for Resettlement & Rehabilitation (R&R) for MRPL etc. MSEZ has already allotted land to OMPL and lease agreement for 441 acres signed. Commercial terms have also been finalized with ISPRL for land. Infrastructure development for river water conveyance, water treatment plants, corridor development, power supply etc. is in progress. Development of R& R colony is undergoing with allotment of 931 pots to Project Displaced Family (PDF) out of total 951 plots planned. Other R&R package is also under implementation. The company has started earning operating revenue from FY 2011-12 with revenue of Rs. 1.90 million.

iv. ONGC Mangalore Petrochemicals Limited (OMPL)

ONGC has promoted OMPL with envisaged equity participation of 46%. along with MRPL (3%) for setting up manufacturing facilities for 0.92 MMTPA Para-Xylene and 0.270 MMTPA Benzene from MRPL's aromatic streams in Mangalore SEZ, as a value added project Around 97% of the project cost has been awarded which includes I major contracts relating to project management, technology licensor and LSTK contract for process packages etc.The project Implementation is in full swing. The total approved cost of the project is Rs. 57,500 million and total expenditure is Rs.25.920 million, till 30th April, 2012.

v. ONGC TERI Biotech Limited (OTBL)

OTBL is a Joint Venture company of ONGC, incorporated on 26th March, 2007, with The Energy Research Institute (TERI) with shareholding of 49% each and balance 2% equity held by the Financial Institution. The J V has been promoted for addressing the requirement of Bioremediation of oily sludge. Microbial Enhanced Oil Recovery, prevention of wax deposition in tubular and solution for other oil field problems. The turnover of OTBL in FY 2011-12 is Rs. 129 .96 million and Profit after Tax is Rs. 32.78 million as against turnover of Rs. 129 .54 million and PAT of Rs. 27.48 million in FY 2010-11.

vi. Petronet MHB Limited (PMHBL)

PMHBL is a JV company of ONGC (28.766%). HPCL (28.766%) and PIL (7.898%). Balance 34.57% of equity is held by the leading banks. It owns and operates a multi-product pipeline to transport MRPL's products to hinterland of Karnataka. Throughput in FY 2011-12 is 2.771 MMT against total throughput of 2.576 MMT last year. As per un-audited results for the year 2011-2012,the turnover and PAT of PMHBL are Rs. 8,602 million and Rs. 3.650 million respectively.

vii. Petronet LNG Limited (PLL)

Your company has 12.5% equity staked PIL, identical to similar stake by other Oil PSU co-promoters viz., IOCL. GAIL and BPCL.Dahej LNG terminal of PLL which was expended to 10 MMTPA capacities in June 2009 is currently meeting around 20% of the total gas demand of the country. A new LNG terminal of capacity 5 MMTPA is under construction at Kochi and is expected to be completed by 2nd quarter of FY 2012. The turnover of PLL during 2011-12 is Rs.226,959 million(previous year Rs.131.973 million) and net profit Rs. 10,575million).

viii. Dahej SEZ Limited (DSL)

Your Company with envisaged equity stake of 23 % along with Gujarat Industrial Development Corporation (26%), is developing a multi-product SEZ at Dahej in coastal Gujarat. Dahej SEZ covers the total land area of 1732 Hectares where in 1717 Hectares is processing area and 15 Hectares is non-processing area. 90% of the leasable land has already been alloted to 65 units and 13 units have already started export from the SEZ. The SEZ is operational audits turnover during FY 11-12 is Rs.484 million and profit after tax is Rs.198 million against the turnover of Rs.651 million in FY 10-11 and profit after tax of Rs.412 million.

ix. Pawan Hans Helicopters Limited (PHHL)

ONGC has 49% equity stake in PHHL, Balance 51% equity is held by the Government of India. PHHL is one of Asia's largest helicopter operators with a well balanced operational fleet of 40 helicopters. it provides helicopter support for ONGC's offshore operations. PHHL was successful in providing all the 12 Dauphin N and N3 helicopters fully compliant with AS-4 as per the new contract with ONGC.

The accounts of PHHL for 2011 -12 are under finalisation.

12. Other Projects/Business initiatives

C2-C3-C4 Extraction Plant;

Your company has set up a C2-C3-C4 Extraction Plant at Dahej with LNG from PLL as feed stock. Commissioning of the Plant would be taken up after allocation of domestic gas for swap and resolution of taxation issue for which your company is actively pursuing with MoP&NG and Central Board of Excise & Customs (CBEC)/Department of Revenue respectively. Presently, the plant systems are under preservation and periodic inspection of static & rotary equipments is continuing as per Preservation Plan.

Partnerships for growth

ONGC signs path breaking MOU with Conoco Phillips

A Memorandum of Understanding was linked between ONGC and US oil major M/s Conoco Phillips on 30th March, 2012. The inking of the MOU is envisaged to go a long way in cooperation between two companies in the areas of shale gas exploration in India, USA and elsewhere in ova world; and Deepwater in India. Sharing of data and transfer of technology would help this competitive technological partnership for mutual benefit of the two organizations in times to come.

ONGC signs MOU with CNPC for cooperation in hydrocarbon sector

ONGC signed a MoU with China National Petroleum Corporation (CNPC) on 18th June, 2012 at New Delhi, (or cooperation in hydrocarbon sector. As per MOU, ONGC and CNPC intend to promote their cooperation and coordination in the existing petroleum projects in the midstream and downstream sectors in India. China and abroad.

ONGC signs MOU with SCCL

ONGC and Singareni Collieries Company Limited (SCCL) inKed an MoU for cooperation in the areas of service, operation, process development and research related to Underground Coal Gasification (UCG). Surface Coal Gasification (SCG) and Coal Bed Methane(CBM)on 18th July,2011 at New Delhi.

SCCL has indicated readiness to provide requisite coal linkage with due approval of the Ministry of Coal (MoC). The MOU aims at promoting clean coal technology to utilize high ash content indigenous coal in an environment friendly manner.

13. Information Technology

Project ICE

1. For pro-active management of enterprise-wide IT Infrastructure, state-of-the-art NOC (Network Operations Centre) has been established in Delhi at a cost of Rs.177.7 million As a part of this initiative, the IT processes have also been standardized as per Industry best practices for IT Service Management in the organization leading to accreditation of ISO 2000 Certification for six IT Maintenance Service locations at Mumbai and Delhi.

2. Enterprise-wide e-mail system has been upgraded with architectural and storage enhancements for improved performance and manageability at a cost of Rs. 109.3 million The license capacity has also been expanded to 30,000 client licenses to provide access to all ONGC employees. This has enabled providing official e-mail facilities to all employees of ONGC with functionalities at par with industry best practices. The upgraded e-mail system also features large mail-boxes and collaborative platform for push mail facility through smart phones mobile devices, instant messaging, file & profile sharing and audio and video conferencing.

3. In order to identify network bottlenecks and upgrade IT infrastructure to make the network future ready, services of consultant is being hired. The gaps identified shall be bridged through appropriate up gradation/enhancement projects. Presently the case is under Tendering process.

4. Under IT-Ready people initiative, an 'End-user PC Training' Project christened as "IT Chethana" has been undertaken at a cost of Rs.5.5 million. The Project aims to enhance the IT skill and proficiency of all employees across the organization through training interventions over a period of three years through the rate contract

5. ONGC has always been a pioneer in adopting state-of-the-art contemporary technologies. In this direction, WiMax based Broadband Communication has been another technology initiative to provide communication facilities to remote installations in Gujarat and Mumbai Offshore which has been inducted at a cost of Rs.247.8 million. This will provide connectivity at the remote installations and fields similar to our offices enabling faster collaborative working.

6. Based on the experience gained from the above initiative, another Wimax Broadband communication project for similar technology presence across ONGC has been planned for North East and South Region at an estimated cost of Rs. 340 million. The project is in final stage of award.

7. To have a captive VC network, 22 Nos. of HD (High Definition) Video Conferencing Systems have been installed at 18 locations at a cost of Rs. 62 million.

8. The augmentation of VATMS System at Mumbai Offshore has been completed at a cost of Rs. 28.6 million.

9. For security surveillance 33 Nos of CCTV camera with recording facilities have been installed at various residential colonies of Mumbai Region at a cost of Rs. 2.23 million.

14. Health, Safety & Environment (HSE)

Safety, occupational heath and protection of environment in and around its working area are prime concerns of ONGC. Your Company has implemented globally recognized QHSE management systems conforming to requirements of ISO 9001, OHSAS 18001 and ISO 14001 at ONGC facilities and certified by reputed certification agencies at ail its operational units. Corporate guidelines on incident reporting, investigation and monitoring of recommendations was developed and Implemented for maintaining uniformity throughout the organization in line with international practice. During 2011-12. the following were the highlights of HSE

- 20% reduction in incidents

- 131 environmental clearance (EC/TOR) obtained

- 4 Lakh Ringal Bamboo Planted in Upper Himalayas

- 25000 MT of oily waste treated using Bioremediation

- 412 installations certified with QHSE

- 240 operational units audited for HSE Performance

- 130 employees trained on HUET

- 14 HSE awareness programs completed

- Contractor Safety workshop at Ahmedabad on 4th August, 2011 with the theme "Zero injury Goal (ZIG) a Zero Accident Goal (ZAG)" in guest to reduce the accidents which predominantly involved contractual employees.)

- Following new training programmes have been introduced;

1. Effective implementation of PTW

2. SSSV-Theory and practices. Failure, Remedies and SCP

3. Control of work practices for offshore going personnel

4. Radioactive safety in logging operation.

- The implementation status of the amended OISD standards 116 & 117 was reviewed by Hon'ble Minister. MoPNG on 13th January 2012 & further on 16th February 2012 by Secretary, MoPNG.

- Corporate Disaster Management Pan (COMP) and guidelines have been developed for uniform disaster management all across ONGC. Your Company has also developed Occupational Health Physical Fitness criteria for employees deployed for offshore operations. Occupational Health (OH) module has now been populated on SAP system.

15. Sustainability Development

Department of Public Enterprises. Government of India has issued "Guidelines on Sustainable Development (SO) for the Central Public Sector Enterprises' (CPSE's)" on 23th September, 2011 for implementation with immediate effect by CPSEs. From the year 2010-11. the Department of Public Enterprises (DPE) has also included Sustainable Development (SD) as a compulsory evaluation parameters for CPSEs under "Non-Financial Parameters” having 5% weight age in the MOU for CPSEs. Further each CPSE is required to form a Board level designated committee on Sustainable Development headed by an Independent Director as its Chairman to approve Sustainable Development (SO) Plan and oversee the Sustainable Development performance. Keeping in view that ONGC already has a Board committee on Health. Safety ^Environment (HSE), the HSE committee has been re- designated as 'Committee on HSE and Sustainable Development". The terms of reference of the re-designated HSE & Sustainable Development Committee remain the same as mat of the existing HSE committee, with the addition of the SD related role as stated in the mandatory DPE guidelines.

As a part of the Sustainability Development the following efforts have been undertaken by ONGC

(i) Water Management

- Water Foot printing of 2 Assets

- Rainwater Harvesting at4 locations

(ii) Global Methane initiative

- Fugitive methane leak survey of production installation at 2 Assets

(iii) Carbon Management

- Carbon foot-printing & identification of GHG mitigation opportunities & development of viable CDM projects. Details of these measures are given under Energy Conservation.

ONGC Corporate Sustainability Report

- The second "Corporate Sustainability Report" of ONGC was adopted on 14th December, 2011. This report covers the sustainability performance i.e. organizational performance across the economic, environmental and social dimensions for the period 2010-11.

- The report; externally assured GRI-G3 based "A" level report, has been assured against Account Ability's AA1000 Assurance Standard 20G8 (AA1000AS 2008) by Emst & Young.

- This reporting is an improvement over 2010 Corporate Sustainability Report which was at "B" level.

16. Energy Conservation

a. Gas Flaring:

Gas flaring in Onshore Assets Has gradually been reduced from 555 MMSCM in 20O1-O2 to 116 MMSCM in 2011-12 by taking various measures like creating necessary Infrastructure 1.e pipelines, compressors etc, direct marketing of isolated low volume and low pressure gas and adopting innovative measures as GTW (Gas to wire). Considering 2001-02 as the base year, these measures have resulted in meaningful utilization of 439 MMSCM of gas in 2011-12 alone.

b. Clean Development Mechanism:

During the year 2011-12. two CDM projects titled "Green Building at Mumbai" and "Green Building at Dehradun" were accorded host country approval by me Designated National Authority. MoEF. Four CDM projects have been validated during this year with annual accruable CERs of 59278. ONGC tally of registered CDM projects as of now stands at six. Annual CERs accruable from these projects are 209460.

Four previously registered CDM projects have been successfully verified during 2011-12. Issuance of 4439 CERs from the first project has been effected n February 2012. The total issued CERs are now around 15000. Issuance of CERs from the other three projects is expected soon With all the expected issuance in place, the total issued CERs would be approx 160.000.

c. Carbon Foot-printing:

An organization wide carbon footprint activity has been initiated in the year 2011-12 as a part of carbon and energy management The aim is to map the GHG emission of all the facilities across ONGC and identify the possible GHG mitigation and opportunities through technical intervention.

d. Carbon Disclosure Project(CDP):

ONGC has taken part in the global initiative on Carbon Disclosure Project (CDP 9) last year. ONGC has been participating in Carbon Disclosure Project since the last five years (since CDP 7). The CDP. launched at London In December 2000 represents an efficient process where by many institutional investors collectively sign a single global request for disclosure of information on GHG emission. The CDP provides the secretariat for the world's largest institutional investor collaboration on the business implications of climate change, covering a large cross section of industry across the world. The CII -ITC Centre of excellence for Sustainable development has spearheaded the movement in India and the CDP in India has been launched In May 2007.By joining the project ONGC has bolstered its reputation as the leader among central PSUs in climate change and sustainable development through transparency and openness. Besides, ONGC will have the access to the technologies adapted by different signatory compares m achieving sustainable development.

17. Human Resources

ONGC values its Human Resources the most. To keep their morale high, your company extends several welfare benefits to the employees and their families by way of comprehensive medical care, education, housing and social security. During the year 2011 - 12. your company implemented various new and revised welfare policies for its employees. 105 employees were released under the Voluntary Retirement Scheme during the year. The Human Resource value of the employees based on "Lev and Schwartz" Model is enclosed at Annexure-B

Wage revision of unionised staff

Consequent upon the tripartite settlement under section 12(3) of the Industrial Disputes Act. 1947 in respect of wage revision of non-executive cadre, the Performance Related Pay was discussed with the recognized unions in a number of meetings before the scheme was finalized and accorded approval of Board of Directors in June, 2011. Accordingly, the payment for the financial year 2010-2011 was released in December, 2011. Thereafter, the 73rd Joint Committee Meeting with recognized unions was held on 19-20th March, 2012 at New Delhi for redressal of various Organizational. Welfare and RAP related issues. The Wage Revision of Contingent/Casual employees which was due for revision w.e.f. 1st January, 2012 has been implemented with additional emoluments i.e. House Rent Subsidy, Educational Grant and ex-Gratia for a period of three years w.e.f. 1st January, 2012

18. Employee Warfare Trusts

a. Your company has established the following major trusts for welfare of the employees:

_ Employees Contributory Provident Fund(ECPF)Trust, managing Provident Fund accounts of employees of your company.

_ The Post Retirement Benefit Scheme(PRBS)Trust of your company manages the pension scheme of the employees.

- The Composite Social Security Scheme (CSSS) formulated by your company provides an assured ex-gratia payment in the event of unfortunate death or permanent disability of an employee in service. Fannies of deceased employees get a financial assistance under the scheme ranging between Rs. 1.5 million to 72.0 million.

- ONGC Sahayog Trust has been created for welfare of secondary workforce or their heirs, who are in financial distress.

- Gratuity Fund Trust has been created for payment of gratuity intime, incompliance with provision of Gratuity rules.

Your Company implemented the Employees Pension Scheme (EPS-1995), w.e.f. 16th November, 1996 Your Company implemented a single integrated seamless computerised accounting system for all welfare trusts pertaining to investments, accounts, settlement and contribution etc. Employee accounts are now maintained on the new system, duly reconciled and updated, and can be viewed by the employees themselves on Company's internal All payments are made to the members through e-payment gateway.

b. Implementation of Government Directives for the priority section

Your Company complies with the Government directives for Priority Section of the society. The percentage of Scheduled Caste (SC) and Scheduled Tribe (ST) employees were 15.7% and 8.8% respectively as on 31st March, 2012. Your Company is fully committed for the welfare of SC & ST communities The following welfare activities are carried out by your Company for their upliftment in and around its operational areas:

i) Annual component plan:

An amount of Rs. 200 million is distributed to various work centers of ONGC for implementation of welfare schemes. This fund is especially meant for providing help and support in areas like Education and training. Community development, Health care, etc.

ii) Scholarship to SC and ST meritorious students:

Your Company spent Rs. 4.02 million for supporting 100 students of the SC and ST community for pursuing higher professional courses at different recognized institutes and universities.

19. Industrial Relations

During the period, harmonious industrial Relations were maintained throughout the Corporation in terms of the agreement dated 16th September, 2010 jointly and mutually reached between ASTO and ONGC. it was decided to conduct me fresh elections and to facilitate the convening of ASTO CEC for revival of representation of officers community.

The elections for new ASTO body was conducted and completed in all 20 work-centres and the entire process was completed on 3rd February, 2012. The CEC of ASTO was convened and facilitated by the management for conducting elections of ASTO President-CWC and formation of CWC. Subsequently, recognition was conferred on the new ASTO body, subject to the revised Policy on Recognition of Officers Association and related Code of Conduct dated 30th September. 2010. This a based on the agreement dated 16th September, 2010, between the management and ASTO, which was endorsed by the High Court of Delhi in W.P.N0.11568 of 2009 vide its order dated 30th September, 2010.

Contract Management

With reference to contracts entered into by the Company, periodic training programmers were conducted to sensitize the Principal Employers about their obligations, roles, responsibilities under the Contract Labour Regulation Act and other welfare legislations. Considering the competitive market situations, a concept of fair wage for secondary work force has been devised for better working and living conditions. Periodic audits of Principal Employers were carried out to ensure near 100% compliances of Labour statutes. Contacts were standardized and aligned to the Model Service Agreements to protect the interest of ONGC as well as the secondary work force. Contracts are being awarded in line with laid down principles of ONGC.

20. Grievance Management System

Your Company provides an easily accessible mechanism to the employees for redressal of their grievances, either through informal or formal channels. All key executives of your Company have designated a publicized time slot, thrice a week, to meet public representatives for speedy redressal of their grievances. Your Company has also approved creation of a 'single window front office' at all work-centres. An officer not below Chief Manager level is responsible for ensuring accessibility and responsiveness to public grievances

21. Right to information Act, 2005 (RTI Act)

An elaborate mechanism has been set up throughout the organization to deal with the requests received under the RTI Act. During the year 2011-12,1413 applications were received, out of which 1362 were deposed off and Balance 51 applications (as on 01.04.2012) are under process for disposal.

22. Implementation of Official Language Policy

During the year, a series of initiatives were undertaken for promotion and propagation of Rajbhasha in official communication. Literary works in official language continued to be financially supported by your Company. In addition, all inductees at the executive level were exposed to the Official Language Policy of the Govt of India. Your Company also contributed actively in publishing the bilingual Petroleum Terminology, an initiative of the Ministry of Petroleum and Natural Gas and in effective implementation of the Hindi Teaching Scheme of Govt of India at all its regional work centres Your company has received appreciation from the Parliamentary Committee on Official Language and the Government of India for excellent progress of implementation of Official language directives.

23. Human Resource Development

All the 32.862 ONGCians (as on 31th March, 2012) dedicated themselves for the excellent performance of your company during the year. During the year, HR group of your company ensured that adequate numbers with requisite skills-sets were inducted to meet the requirements of the Company as well as replenish the manpower loss on account of high superannuation.

Your company believes that continuous development of its human resource fosters engagement and drives competitive advantage. Towards this end, it conducted Business Games all over the organization to none the business acumen of its executives. Fun Team Games(FTGs) were conducted second time since its inception in 2010. for EG and staff level employees to inculcate MDT(Multi-disciplinary Team) concept and spirit of camaraderie and belongingness to the organization, which was very well received by the participants. A climate survey was conducted in which over 17,500 employees responded. The responses were collated and analysed work centre wise. Based upon the outcome of the survey analysis, the work centers have designed action plans for implementation. It also conducted the Assessment Development Centre (ADC) for 306 DGM level executives and provided them developmental inputs.

a. Performance Management System and Performance Related Pay

Your Company. in line with the DPE Guidelines is devising a robust performance management system which is effective in identifying and rewarding high performers. As part of the process, the performance appraisal system has been completely e-enabled. To strengthen transparency in the system, performance ratings of the executives have been disclosed to them. Incentive payments for the year 2010-11 were made during the year to the executives of your Company based on the MoU rating of the Company and the individual's performance.

b. Training

Skill up-gradation is a vital component for the Human Resource Development For the first time in ONGC Academy, an external agency M/s Emst & Young was engaged to review and evaluate the current process of training, infrastructure and present system of course/faculty evaluation. ONGC Academy has taken the initiatives of formulating new training policy for the organization.

In pursuance to the mandate of equipping the executives with latest knowledge in the specialized fields of upstream oil and gas sector, attempts were made to organise training programs with the best of faculties from India and abroad. During the year 2011-12. ONGC conducted various training programmes for its executives and staff spanning 1,72,208 training mandays.

24. Accounts

Consistent with the trend in preceding years, your Company, its various operating unit and its senior management officials have been in receipt of various awards and recognitions. Details of such accolades are placed at Annexure-C.

25. Sports

Your company has 171 International & National sports persons who represent ONGC as well as the country in various national and international events throughout the year. In addition to this, ONGC supports around 128 young and budding sportspersons through scholarships. During the year, ONGC sportspersons left an indelible mark in various sporting events. Cricket icons Gautam Gambhir, Munaf Patel and Virat Kohli of ONGC continued to display their Prowess in the recently concluded IPL-2012 edition. Key achievements of ONGC sports in 2011-12 are as follows:

Athletics

Mayookha Johny became Asian champion in long jump event by securing Gold medal. in Asian Athletics championship held at Kobe.

Badminton

1. Ashwini Ponnappa bagged bronze medal in World Championship held at London from 8th to 14th August 2011. Best ever performance by any Indian shuffler in World Championship.

2. Sourabn Verma. ranked No. 1 in the country, recently reached finals in the Syed Modi Grand Prix Badminton tournament beating players like Tommy Sugiarto (World No. 17), Hun yun (World No. 23) eventually losing to Taufik Hidayat World No. 11. He has been crowned National Champion in Singles in January 2012.

Billiards and Snooker

Alok Kumar won Asian Billiards title held at Iran in April 2011 and became the fast player achieve the rare feat of winning both the Billiards and Snooker Asian title at different points of time, the only Assn to do so.

Hockey

ONGC Hockey team has won four major National level tournaments including Nehru Hockey Cup and Lal Bahadur Shastri Cup.

Shooting

Shagun Chaudhary won the Quota Place for the 2012 London Olympics and became the first ever Indian woman to qualify for Olympics in the shotgun event. Ranked World No. 8th and Asian No. 2.

Table Tennis

Amal Raj became National Champion in Singles on 29th January, 2012.

You will be Proud to know that ONGC has the distinction of the Principal Sponsor of the contingent to the London Olympic 2012.Out of the 81 Indian sports persons who qualified for the Olympics, 15 belong to ONGC.

26. Women Empowerment

Women employees constitute 6% of ONGC's workforce During the year, programmes for empowerment and development, including a programme on gender sensitization was organized. Your Company actively supported and nominated its lady employees for programmes organised by "Women in Public Sector" (WIPS) and "Women in Leadership Roles" (WLL).

27. Corporate Social Responsibility (CSR)

In recognition of its role as a 'responsible leader'. ONGC continued its quest to make positive, tangible difference in the fives of the vulnerable and disenfranchised stakeholders. Seeking to herald a business paradigm based on an interconnected vision - of people's welfare, societal growth and environmental conservation, in 2011-12 ONGC continued to cater to the developmental needs across its 12 focus areas: Education including vocational courses; Health Care; Entrepreneurship (self-help 4 livelihood generation) schemes; infrastructure support-roads, bridges, schools, hospitals in and around our operational areas; Environment protection. Ecological conservation & promotion: Protector of heritage sites, UNESCO heritage monuments etc.; Promotion of artisans, craftsman, musicians, artists etc. for preservation of heritage, art & culture. Women's empowerment. Girl child development gender sensitive projects; Water management including ground water recharge; Initiatives for physically and mentally challenged; Sponsorship of seminars, conferences, workshops etc; Promoting sports/sports persons; supporting agencies promoting sports/sports persons.

In 2011 -12. some of the key projects undertaken by ONGC include:

i. Varisthajana Swasthya Sewa Abhiyan: ONGC along with Help Age India continues its efforts to taken healthcare to the doorsteps of the elderly through Mobile Medicare Units (MMUs). In 2011-12, all the 20 MMUs were launched and treatment worth 1.9 lakh was provided across the eight states and one Union Territory.

ii. ONGC-GICEIT Computer Centre: Under this initiative, implementing partner Bharatiya Vidya Bhavan operates five computer centers providing employment-related computer training to underprivileged youth across different operational areas of ONGC. In 2011 -12, more than 1400 students received training through these centers.

iii. Project Utkarsh-An ONGC-AROH Effort for Economic Upliftment of People in Sibasagar: Initiated in 2011-12, this project seeks to expand livelihood opportunities for 400 households in one year through training of women in skills like tailoring, soft toy making etc. with linkages for income generation as well as training the elderly in vocations like goatery, piggery, mushroom cultivation etc. while establishing adequate forward and backward linkages.

iv. Harit Moksha: This unique CSR initiative where wood consumption during traditional cremations is significantly reduced due to innovatively designed Mokshda Green Cremation Systems (MGCS) was expanded in 2011-12. Now, there are 10 such MGCS units across the cities of Vadodara, Carrtbay. Ahmedabad and Delhi.

v. ONGC-NSTFDC Hathkargha Prashikshan: The CSR project was aimed at economically empowering the women tribal handloom artisans in Assam to facilitate cluster development for economically marginalized tribal populations. In 2011 -12, around 100 tribal handloom artisans were provided on-the-job training in the improvised looms by master craftsmen that included training in intricate designs for catering to wider markets.

vi. ONGC & Ramaknshna Ashram Mobile Medicare Unit: Initiated in 2011-12. this CSR project was envisaged with intent to cater to the health and awareness needs of the underprivileged in the extremely backward region of Kalahandi, Orissa. A Mobile Medical cum Physiotherapy unit to provide free treatment and a Mobile library cum audio visual unit to spread awareness among me community in the field of health, education, agriculture will be set up under this project

vii. ONGC Hospitals ONGC is planning to set up multi-specialty hospitals at Sibsagar, Assam and Ankteshwar, Gujarat and a Community Hospital at La


Mar 31, 2011

Dear Members,

Production Company in the World and 18th in the overall listing of global energy companies as per Platts Top 250 Global Energy Company Ranking 2010 (November, 2010) ONGC has been ranked at 172nd position in Forbes Global 2000 list 2011 of world’s biggest companies for 2010 (April, 2011). It has retained the number one rank among Indian companies and has been ranked at second position in Financial Express FE500 listing of Indian companies both in terms of Net Worth and Overall Composite Ranking.

Physical Performance: 2010-11

Exploration

During FY’11, your Company has made 24 discoveries in domestic fields (operated by

ONGC); 15 new prospects and 9 new pool discoveries. Out of the 15 new prospect discoveries, 5 are in NELP blocks. Some of the significant discoveries are Vadtal 1 & 3, Karnanagar-1 and Matar-12 in Western Onland, GK-28-2 2 in Gulf of Cambay, C-1-6 & C-23-9 in Western Offshore,

Laxminarasinmapuram, Vygreswaram SW and Malleswaram in KG onland, GS-KV-1 & GS-29-6 in KG Offshore, Kuthanallur & North Kovilkallapal in Cauvery onland and Agartala Dome-30 in A&AA basin. Out of these discoveries Matar-12, Aliabet-2 assume significance because these have been made in the blocks where the other operators failed to make breakthrough earlier. Out of 15 onland discoveries, nine discoveries have already been put on production.

Reserve Accretion and RRR

Your Company accreted 236.92 million metric tonnes of oil equivalent (MMTOE) of In-place volume of hydrocarbon in domestic basins (operated by ONGC). The ultimate reserves accretion has been 83.56 MMTOE which surpassed the record breaking performance of 82.98 MMTOE in FY'10 and is the highest in last two decades. Total reserve accretion in domestic basins has been 83.85 MMTOE [including 0.29 MMTOE from ONGCs share in Joint Ventures (JVs)]. This fiscal also your Company maintained Reserve Replacement Ratio (RRR) more than one with RRR of 1.76 (with 3P reserves).

Highest-ever production of oil and gas

The combined production of oil and oil equivalent gas (O OEG) production of ONGC, including OVL and ONGCs share in PSC- JVs, in FY11 has been 62.05 MMTOE; the highest-ever and 1.8% more compared to the production during FY’10 i.e., 60.93 MMTOE.

Highest-ever production from overseas assets

During FY11, ONGC Videsh Limited (OVL), the wholly owned subsidiary of your Company, registered a production of 9.45 MMTOE O OEG (Crude oil: 676 MMT; Gas: 2.69 BCM); surpassing the earlier peak production of 8.87 MMTOE in FY10.Incremental production gains from BC-10 field in Brazil, Imperial Energy, Russia MECL, Colombia and Block 6.1A Vietnam helped OVL to achieve the feat.

New Projects

The Board of your Company approved development of four discovered fields i.e, SB-14, WO series fields, BHE and BH-35 fields in FY11 with an investment of Rs. 29,334 million. Besides that infrastructure renewal project for three western onshore assets i.e., Ankleshwar, Ahmedabad and Mehsana was also approved with an investment ofRs. 79,287 million. Oil and gas fields in these assets have been on stream for more than 30 years and as such the infrastructure required renewal.

New Sources of Energy

Shale gas

Your company created a landmark in the history of India for exploration of unconventional hydrocarbons, when gas flowed

out from the Barren Measure shale at a depth of around 1,700 m in its first Research & Development well RNSG-1 at Icchapur, near Durgapur, West Bengal on 25th Jan 2011. This breakthrough has encouraged your Company to venture into many shale sequences in well explored Cambay, KG, Cauvery and Assam-Arakan Basins for exploitation of Shale Gas

Coal Bed Methane (CBM)

Your company is currently operating in five CBM blocks i.e., Jharia, Bokaro, North Karanpura and South Karanpura Blocks in Jharkhand and Raniganj block in West Bengal. Final Development Plan (FDP) for Parbatpur area measuring 18 Sq.Km in Jharia Block has been submitted to the Government of India (GoI) for approval. Howeve at present incidentally produced gas during production testing is being sold to Calcutta Compression & Liquefaction Ltd. (CC&L) with the approval of GoI.

Underground Coal Gasification (UCG)

Your company has selected Vastan Mine block in Surat district, Gujarat for UCG Pilot project. Environmental clearance for the project has been obtained from Ministry of Environment and Forest, Government of India and request has been submitted to Ministry of Coal for award of mining lease which is awaited.

Alternate sources of energy

The 51 MW Wind farms which has been set up near Bhuj in Gujarat is operating well and electricity generated is wheeled through the Gujarat State Electricity Grid for captive consumption by ONGC at Ankleshwar, Ahmedabad, Mehsana and Vadodara. Your Company is in the process of setting up one more Wind farm of 102 MW capacity in Rajasthan with an investment ofRs.8,000 million.

ONGC Energy Centre set up by your Company for holistic research for new and alternate energy sources has been pursuing a number of new projects like Application of Solar Thermal Engine, Thermo-chemical generation of hydrogen, Bioconversion of coal/oil to methane gas, Uranium exploration, Solid state lighting, Solar PV Energy Farm, etc.

ONGC Energy Centre (OEC), a dedicated centre towards alternate sources of energy is pursuing various alternate energy sources projects to establish lead and mass scale commercialization. OEC successfully installed the three state-of-the-art Solar Thermal Engines at the Solar Energy Centre (SEC), Ministry of New and Renewable Energy (MNRE) campus at Gurgaon. Some of the other significant projects which OEC is pursuing are Thermo-Chemical Reactor for Hydrogen generation, Bio Conversion of Coal to methane, exploration and exploitation of Uranium Reserves globally and LED Project.

1. Financial Results

Inspite of fluctuating crude prices and increased burden of its share of under-recovery on account of the losses suffered by the Oil Marketing Companes, your Company has earned a Profit After Tax of Rs. 189,240 million (Rs. 167,676 million in 2009-10), up 12.86 %, which is incidentally the highest-ever During the year under review, your Company registered Gross revenue ofRs. 695,322 million (Rs.619,832 million in 2009-10), up 12.18%.

Highlights:

Gross Revenue: X 695,322 million

Profit After Tax (PAT): X 189,240 million

Contribution to Exchequer: ^ 317,759 million*

Return on Capital Employed 51.6 %

Debt-Equity Ratio 0.00

Earning Per Share (Rs.) 22.12**

Book Value Per Share (Rs.) 113**

*OID Cess, Excise duty, Royalty, Corporate and Dividend Distribution Tax, Sales Tax / VAT and Dividend on Government shareholding.

**After considering split and bonus issue

Financial Results (Rs. in million)

2010-11 2009-10

Gross Revenue 695,322 619,832

Gross Profit 441,999 396,054

Less:-

Interest 251 686

Exchange Variation 14 (4,033)

Depreciation 20,006 12,312

Amortisation 83,698 89,407

Depletion 54,374 45,302

Impairment 1,352 (433)

Provision/Write Offs 6,114 2,974

Provision for Taxation 86,950 252,759 82,163 228,378

(including deferred tax liability of Rs. 11,160 million)

Profit After Tax 189,240 167,676

Appropriations

Interim Dividend 68,444 38,500

Proposed Final Dividend 6,417 32,083

Tax on Dividend 12,156 11,616

Transfer to General Reserve 102,223 85,477

Total 189,240 167,676

Previous year figures have been regrouped wherever necessary

2. Dividend

Your Company paid an interim dividend oR32 per share (320%), in December 2010. The Board of Directors have recommended a final dividend ofRs. 0.75 per share (15%) which is after considering split and bonus issue during the year. This makes the aggregate dividend at Rs. 35 per share (350% before considering split and bonus as compared to Rs. 33 per share (330%) paid in 2009-10. The total dividend will absorb Rs. 74,861 million, besides 112,156 million as tax on dividend, which is historically the highest dividend payout by the Company.

3. Management Discussion and Analysis Report

In terms of Clause 49(IV)(F) of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis Report h been included and forms part of the Annual Report of the Company.

4. Production and Sales

Highlights of production and sales of Crude Oil, Natural Gas and Value- added products:

Unit Production Sales Value (Rs. in million) 2010-11 2009-10 2010-11 2009- 10 2010-11 2009-10

Direct

Crude Oil (MMT) *27.28 *26.46 22.94 22.33 448,645 445,040

Natural Gas (BCM) **25.32 **25.59 20.29 20.60 127,544 73,797

Ethane/Propane000 MT 388 535 387 533 8,796 10,249

LPG 000 MT 1054 1105 1057 1108 18,369 21,924

Naphtha 000 MT 1570 1592 1600 1598 56,342 47,137

SKO 000 MT 116 165 118 166 679 3,255

ATF 000 NT 19 8 14 2 527 52

Others 475 411

Sub Total 661,377 601,865

Trading

Motor Spirit 000 KL 0.63 0.55 36 27

HSD 000 KL 3.27 4.29 134 156

Others 2

Sub Total 172 183

Total 661,549 602,048

* includes 2.86 MMT (Previous year 1.79 MMT) from Joint Ventures.

** includes 2.23 BCM (Previous year 2.49 BCM) from Joint Ventures.

5. Oil & Gas Reserves

Your Company has made voluntary disclosures in respect of Oil & Gas Reserves, conforming to SPE classification 1994 and US Financial Accounting Standards Board (FASB-69). ONGC has added 236.92 MMTOE of oil and oil-equivalent gas (O OEG) initial in-place volume with 83.56 MMTOE of O OEG as the ultimate reserve component during FY 11 in domestic fields (operated by ONGC). The ultimate reserves accretion, including its share in joint ventures is 83.85 MMTOE of O OEG, which is the highest in last two decades.

Ultimate Reserve (3P) accretion O OEG (in MMTOE)

Year Domestic ONGC's Total OVL's Total Assets share in Domestic Share in Domestic Reserve Foreign JVs Assets (1) (2) (3)=(1) (2) (4) (5)=(3) (4)

2008-09 68.90 2.82 71.72 135.08 206.80

2009-10 82.98 4.39 87.37 0.35 87.72

2010-11 83.56 0.29 83.85 33.49 117.34

6. Statement of Reserve Recognition Accounting

The concept of Reserve Recognition Accounting attempts to recognize income at the point of discovery of reserves and seeks to demonstrate the intrinsic strength of an organization with reference to its future earning capacity in terms of current prices for income as well as expenditure. This information is based on the estimated net proved reserves (developed and undeveloped) as determined by the Reserves Estimates Committee.

As per FASB-69 on disclosure about Oil and Gas producing activities, publicly traded enterprises that have significant Oil and Gas producing activities, are to disclose with complete set of annual financial statements, the following supplemental information:

(a)Proved Oil and Gas reserve quantities

(b) Capitalized costs relating to Oil and Gas producing activities

(c)Cost incurred for property acquisition, exploration and development activities

(d) Results of operations for Oil and Gas producing activities

(e) A standardized measure of discounted future net cash flows relating to proved Oil and Gas reserve quantities

Your Company has disclosed information in respect of (a) and (d) above in the Annual Financial Statements.

Your Company has made voluntary disclosure on standardized measure of discounted future net cash flows relating to proved oil and gas reserve at Annexure-A to this report as Statement of Reserve Recognition Accounting (RRA).

7. Financial Accounting

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable Accounting Standards (AS-1 to AS-29) and Successful Efforts Method as per the Guidance Note on Accounting for Oil & Gas Producing Activities issued by Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 1956.

8. Internal Control System

The operations of your company have been structured to provide adequate support and controls. Standard procedures and guidelines issued to the business units from time to time to support best practices are'followed in all facets of activities, Accounting and Financial Management, Personnel Management, Repairs and Maintenance, Materials Management and Project Implementations.

9. Subsidiaries

(I)ONGC Videsh Limited (OVL)

ONGC Videsh Limited (OVL), the wholly-owned subsidiary of your Company for overseas E&P activities, recorded impressive performance during the year 2010-11. OVL’s share in production of oil and oil equivalent gas (O OEG) together with its wholly-owned subsidiaries ONGC Nile Ganga B.V ONGC Amazon Alaknanda Limited and Jarpeno Limited was the highest ever production with 9.45 MMTOE during 2010-11 up by 7% as compared to 8.87 MMTOE of O OEG during 2009-10. OVLs consolidated gross revenue increased by 21% fromRs.153,830 million during 2009-10 toRs. 186,830 million during 2010-11 and consolidated net profit after tax increased by 29% from Rs. 20,900 million during 2009-10 to Rs.26,910 million during 2010-11.

OVL added one asset in its portfolio of exploratory assets by signing agreements with KazMunaiGas (KMG), the national oil company of Kazakhstan for acquisition of 25% participating interest in Satpayev exploration block on 16th April, 2011 at Astana, Kazakhstan in the presence of Hon’ble Prime Minister of India and the President of Kazakhstan. This transaction marks the maiden entry of OVL in Kazakhstan hydrocarbon sector. Satpayev exploration block, located in the Kazakhstan sector of the Caspian Sea, covers an area of 1482 sq.km and is at a water depth of 6-8 mts. Satpayev is situated in close proximity to major discoveries in the North Caspian Sea. The block contains two prospective structures, namely Satpayev and Satpayev Vostochni East) with estimated hydrocarbon resources of about 256 MMT.

OVL presently has participation in 33 projects in 14 countries. Out of 33 projects, OVL is operator in 11 projects and joint operator in 6

projects. OVL is currently producing oil and gas from 9 projects viz., Greater Nile Oil Project and Block 5A in Sudan, Block 06.1 in

Vietnam, Al Furat Project in Syria, Sakhalin-I Project and Imperial Energy in Russia, Mansarovar Energy Project in Colombia, San Cristobal Project in Venezuela and Block BC-10 in Brazil. In addition to 9 producing projects, Exploration Block XXIV, Syria is on extended production testing. Blocks A-1 and A-3 in Myanmar, Carabobo-1 project Venezuela and Farsi Block, Iran have discoveries and further work is being carried out. One Pipeline Project was executed and completed by OVL and handed over to Government of Sudan in October, 2005 and is currently under lease. The remaining projects are in exploration phase.

Direct Subsidiaries of OVL:

a) ONGC Nile Ganga B.V. (ONGBV):

- ONGBV, a subsidiary of OVL, is engaged in E&P activities in Sudan, Syria, Venezuela, Brazil and Myanmar.

- ONGBV holds 25% Participating Interest (PI) in Greater Nile Oil Project (GNOP), Sudan with its share of oil production of about 1.801 MMT during 2010-11.

- ONGBV holds 16.66% to 18.75% PI in four Production Sharing Contracts in Al Furat Project (AFPC), Syria with its share of oil and gas production of about 0.662 MMTOE during 2010-11.

- ONGBV holds 40% PI in San Cristobal Project in Venezuela with its share of oil production of about 0.757 MMT during 2010-11.

- ONGBV holds 15% PI in BC-10 Project in Brazil with its share of oil and gas production of about 0.586 MMTOE during 2010-11.

- ONGBV holds 43.5% PI and 100% PI as operator of exploratory blocks BM-S-73 and BM-ES-42 respectively and also holds 43.5% PI in exploratory block BM-S-74 and 25% PI each in exploratory blocks Block BM-SEAL-4 and Block BM-BAR-1 all located in Deepwater Offshore, Brazil.

- ONGBV holds 8.347% PI in South East Asia Gas Pipeline Co. Ltd., (SEAGP) for Pipeline project, Myanmar.

b) ONGC Narmada Limited (ONL):

ONL, a wholly-owned subsidiary of OVL held 13.5% PI in deep water exploration Block-2, Nigeria-So Tom & Principe, Joint Development Zone (JDZ). OVL has communicated its intention of not continuing the block to the Operator and Joint Development Authority (JDA) of Joint Development Zone Nigeria-São Tomé & Principe as the development of the project is not commercially viable.

c) ONGC Amazon Alaknanda Limited (OAAL):

OAAL, a wholly-owned subsidiary of OVL, holds stake in E&P projects in Colombia, through Mansarovar Energy Colombia Limited (MECL), a 50:50 joint venture company with Sinopec of China. During 2010-11, OVL's share of production in MECL was about 0.468 MMT of oil.

d) Jarpeno Limited:

Jarpeno Limited, a wholly-owned subsidiary of OVL incorporated in Cyprus, acquired Imperial Energy Corporation plc. a UK listed upstream oil exploration and production entity with its main activities in Tomsk region of Western Siberia in Russia, in January 2009. During 2010-11, Imperial Energy's production was about 0.770 MMT of oil.

e) Carabobo One AB:

Carabobo One AB, a wholly-owned subsidiary of OVL incorporated in Sweden, holds 11% PI in Carabobo-1 Project, Venezuela. The Transfer Decree allowing the Mixed Company Petro Carabobo S.A to carry out primary activities in the designated areas was published in the Official Gazette of the Government of Venezuela on 29th July, 2010. Conceptual Engineering & Tendering for different activities related to development of the field are in progress.

Joint Ventures of OVL: f) ONGC Mittal Energy Limited (OMEL)

OVL along with Mittal Investments Sarl (MIS) promoted OMEL, a joint venture company incorporated in Cyprus. OVL and MIS hold 98% equity shares of OMEL in the ratio of 51(OVL): 49(MIS) with balance 2% shares held by SBI Capital Markets Ltd. OMEL holds 45.5% and 64.33% PI in exploration Blocks OPL 279 and OPL 285,Nigeria respectively. OMEL also holds 1.11% of the issued share capital of ONGBV by way of Class-C shares issued by ONGBV exclusively for AFPC Syrian Assets; such investment being financed by Class-C Preference Shares issued by OMEL in the ratio of 51:49 to OVL and MIS respectively.

(ii) Mangalore Refinery & Petrochemicals Limited (MRPL)

Your Company continues to hold 71.62% equity stake in MRPL, a Category I Mini Ratna, which has put in a commendable all-round performance during 2010-11

Highlights

- Highest ever Refinery Crude Throughput at 12.64 MMT (up from 12.50 MMT)

- Highest ever capacity utilization at 107%, up from 106%,

- Highest ever Turnover at Rs. 438,000 million, up 21% from Rs. 361,410 million.

- Profit after Tax of Rs. 11,770 million, up 6% fromRs. 11,120 million

- Hydrocracker the major secondary processing unit achieved highest ever processing of 2 88 MMT (Capacity 121%)

- Energy index of 58.13 MBN which is the lowest ever achieved

Keeping in view its plans to make investments in various projects, a dividend of 12% has been recommended by its Board. In view of the continued under recoveries in retail marketing of Auto Fuel, the company has continued with its miniscule presence in retail Marketing thereby is not burdened with under recoveries. The direct marketing sales turnover covering Bitumen, CRMB, ATF, Furnace Oil, Mixed Xylene, Naphtha and Sulphur amounts to X 22,910 million registering a marginal increase overRs. 22,780 million of last year. A major growth is achieved in the area of marketing ATF and Mixed Xylene.

The excellent standards maintained by the Refinery on the production, energy conservation, environment management and safety front have enabled MRPL to bag several awards:

- MRPL has bagged the Petrofed 'Refinery of the Year' award on 10th May, 2011 for excellent performance during FY'10. This recognizes leading performance in production and operational efficiency in refining operations, while meeting the norms of health, safety and environmental protection

- Oil Industry Safety directorate ranks MRPL as the 1st in 'Most consistent safety performer in Refineries' for the year 2009-10

- ICRA and CRISIL reaffirmed Issuer rating of 'Ir AAA' and 'Cr AAA' to MRPL for lowest credit risk.

- Best Exporter Award (Gold) - 2010 for exporting products through NMPT, by Federation of Karnataka Chamber of Commerce & Industries.

- The 'Oil & Gas Conservation Award-2010' for Furnace/Boiler Efficiency instituted by CHT.

10.Exemption in respect of Annual Report of Subsidiaries and Consolidated Financial Statement

Ministry of Corporate Affairs (MCA) has vide circular dated 08.02.2011 and clarification dated 21.02.2011 decided to grant a general exemption from the applicability of Section 212 of the Companies Act, 1956 from attaching the Balance Sheet and Profit & Loss Account prepared regarding the financial year ending on or after 31.03.2011, in relation to subsidiaries of those companies which fulfill the various conditions including inter-alia approval of the Board of Directors for not attaching the balance sheet of the subsidiary concerned. Your Board has accorded necessary approval in this regard for not attaching the Balance Sheet and Profit & Loss Account of its subsidiaries (i) ONGC Videsh Limited (OVL) and (ii) Mangalore Refinery & Petrochemicals Ltd. (MRPL). All the conditions mentioned in the circular are being complied with by ONGC. Full Annual Report of ONGC including its subsidiaries will be made available to any shareholder, if he/she desires. Further, Annual Reports of MRPL and OVL are also available on website www.mrpl.co.in and wwwongcvidesh.com respectively.

In accordance with the Accounting Standard (AS)-21 on “Consolidated Financial Statements” read with AS-23 on “Accounting for Investments in Associates” and AS-27 on “Financial Reporting of Interests in Joint Ventures”, audited Consolidated Financial Statements for the year ended 31st March, 2011 of the Company and its subsidiaries form part of the Annual Report.

11.Joint Ventures/ Associates

(i)ONGC Tripura Power Company Limited (OTPC)

ONGC has promoted OTPC with envisaged equity stake of 50% along with Govt of Tripura (0.5%) and IL&FS (26%) to set-up 726.6 MW (2 x 363.3MW) gas based Combined Cycle Power Plant (CCPP) at Pallatana in Tripura to monetize idle gas assets in Tripura. The generation project is in advanced stage of implementation by Bharat Heavy Electricals Limited, which is engaged as the turnkey EPC agency. The financial closure of the project has earlier been achieved and various linkages like gas supply from ONGC and power off-take by NE states has already been tied up. The JV Company is making all-out efforts to commission the project, being set up at a challenging location, as per schedule i.e. by March 2012. The total Capex commitment of the JV Company isRs.25,286 million and total expenditure isRs.16,009 million till 31st May 2011.

(ii) ONGC Petro-additions Limited (OPaL)

Your Company has promoted a JV company “ONGC Petro-additions Limited” (OPaL) with envisaged equity stake of 26% along with GAIL (17%) and Gujarat State Petroleum Corporation Ltd (GSPCL (5%) to implement a mega petrochemical complex comprising of 1.1 MMTPA ethylene Cracker and global scale polymer units within Dahej SEZ as a step towards downstream integration. Project implementation is in progress with major contracts, like Site Infrastructure Development, DFCU, LSTK for HDPE etc., already awarded. The total Capex commitment of the JV Company isRs.141,449 million and total expenditure isRs.56,380 million till 31st May 2011.

(iii) Mangalore Special Economic Zone Limited (MSEZ)

ONGC with envisaged equity stake of 26% in MSEZ along with KIADB (23%) and IEDCL KCCI (51%), is promoting another SEZ in coastal Mangalore. Ministry of Commerce & Industry has formally notified to set up a Petro-chemical Specific SEZ in 1630 acres of land. Total land in possession is 2317 acres out of which 542 acres has been allotted to OMPL, ISPRL etc. Resettlement and Rehabilitation work of Project Displaced Family (PDF) is in progress and Chief Minister of Karnataka has approved Comprehensive Action Plan for employment of PDF nominees of MSEZ Phase-I. The total Capex commitment of the JV Company is Rs. 7,799 million and total expenditure is Rs. 4,431 million till 31st May 2011.

(iv) ONGC Mangalore Petrochemicals Limited (OMPL)

ONGC has promoted OMPL with envisaged equity participation of 46%, along with MRPL (3%) for setting up manufacturing facilities for 0.92 MMTPA Para-Xylene and 0.14 MMTPA Benzene from MRPL's aromatic streams in Mangalore SEZ as value addition project. Around 93.5% of project cost has been awarded which includes major contracts relating to project management, technology licensor and LSTK contract for process packages etc. Project implementation is in full swing. The total Capex commitment of the JV Company is Rs. 43,335 million and total expenditure is Rs. 10,309 million till 31st May 2011.

(v) ONGC TERI Biotech Limited (OTBL)

OTBL is a Joint Venture company of ONGC, incorporated on 26th March, 2007, with The Energy Research Institute (TERI) with shareholding of 49% each and balance 2% equity is held by the Financial Institutions. The JV has been promoted for addressing the requirement of Bioremediation of oily sludge, Microbial Enhanced Oil Recovery, prevention of wax deposition in tubular and solution for other oil field problems. The turnover of OTBL in FY 2010-11 is Rs. 129.54 million and Profit after Tax is Rs. 27.48 million as against turnover of Rs. 73.85 million and PAT of Rs. 16.33 million in FY 2009-10.

(vi)Petronet MHB Limited (PMHBL)

PMHBL is a JV company of ONGC (28.766%), HPCL (28.766%) and PIL (7.898%). Balance 34.57% of equity is held by the leading banks. It owns and operates a multi–product pipeline to transport MRPL's products to hinterland of Karnataka. As per audited results for the year 2010-11, the turnover of PMHBL is Rs. 786.50 million against Rs. 691.80 million in the year 2009-10. However due to change in

depreciation policy as observed by C&AG, adjustments of previous year were also accounted for in the current year balance sheet causing net loss of Rs. 194.40 million.

(vii) Petronet LNG Limited (PLL)

ONGC has 12.5% equity stake in PLL, identical to similar stake by other Oil PSUs co-promoters viz., IOCL, GAIL and BPCL. Dahej LNG terminal of PLL which was expanded to 10 MMTPA capacities in June 2009 is currently meeting around

20% of the total gas demand of the country. A new LNG terminal of 2.5 MMTPA is under construction at Kochi which is expandable upto 5.0 MMTPA depending on the LNG supplies and market conditions. The turnover of PLL during 2010-11 was Rs. 131,972.8 million (previous year Rs. 106,491 million) and net profit is Rs. 6,196 million (previous year Rs. 4,045 million). PLL has declared a dividend of 17.5 % same as the previous year.

(viii) Pawan Hans Helicopters Limited (PHHL)

The Company has increased its equity stake in PHHL from 21.5% to 49% during 2010-11. Balance 51% equity is held by the Government of India. PHHL is one of Asia’s largest

helicopter operators having a well balanced operational fleet of 40 helicopters. It provides helicopter support for ONGC’s offshore operations. PHHL was successful in providing all the 12 Dauphin N and N3 helicopters fully compliant with AS-4 as per the new contract with ONGC. The accounts of PHHL for 2010-11 are under finalisation.

(ix) Dahej SEZ Limited (DSL)

Your Company with envisaged equity stake of 23 % along with Gujarat Industrial Development Corporation (26%) is developing a multi-product SEZ at Dahej in coastal Gujarat over 1717 hectares of land through an SPV “Dahej Special Economic Zone Ltd”. About 1068 hectares of land has already been allotted and 140 hectares has been committed to 61 allottees. SEZ is operational with 5 of its units and has exported more than Rs. 4,000 million worth of products. The total Capex commitment of the JV Company is ^ 9,010 million as on 31st May 2011. Further, DSL has made a net profit oR86 million in FY 2010-11.

12.Other Projects / Business initiatives

(a) C2-C3-C4 Extraction Plant :

Company’s C2-C3 extraction plant at Dahej, using LNG imported by Petronet LNG Limited as feed stock, was mechanically completed on 30.12.08. with an investment of Rs. 6,194.65 million Subsequently, evacuation facilities were completed on 24.02.11 with an investment ofRs. 1,647.04 million. The Commissioning of the plant has been deferred pending resolution of certain commercial and taxation related issues.

Wind Power Project

Based on success of 51 MW Wind Farm at Kutch (Gujarat), your Company, in its mission of providing value linkages in other sectors of energy business, is setting up another 102 MW Wind Farm approval for investment ofRs. 6,500 million. Tendering activities for project implementation is in progress.

(b) Partnerships for growth

(i) Agreement with Petroleos de Venezuela SA (PDVSA)

ONGC Videsh Ltd (OVL) led consortium inked an agreement on 12th May 2010 at Caracas, Venezuela with Petroleos de Venezuela SA (PDVSA) national oil company of Venezuela for the development and production of hydrocarbons from the Carabobo project in the Orinoco region of Venezuela.

(ii) MOU with Uzbekneftegaz (UNG) for E&P cooperation in Uzbekistan

ONGC Videsh limited (OVL) entered into a Memorandum of Understanding (MOU) on 17th May, 2011 with Uzbekneftegaz (UNG), the National Oil Company of Uzbekistan for joint cooperation in the Upstream E&P sector of Uzbekistan as well as third countries. The MOU was signed by Mr. S.P. Garg, Director (Finance), OVL and Mr. Shokir Faizullayev, Chairman, Uzbekneftegaz in the presence of H.E. Mr. Rustam Azimov, First Deputy Prime Minister, Minister of Finance of Uzbekistan.

(iii) Operating agreement for Farm-in in HF-ONN-2001/1

ONGC signed Operating Agreement with MOL Hungarian Oil & Gas Plc on 9th Nov 2010 to conclude farm-in process by the Hungarian company into ONGC's NELP-III exploratory block HF-ONN-2001/1 located in the Himalayan foothills in Himachal Pradesh. MOL is a fully integrated petroleum company with global operations from exploration to marketing and petrochemicals. It was the National Oil Company of Hungary prior to disinvestment in 1995.

(iv) Joint Study agreement with M/s Stealth Ventures, Canada

A Joint Study Agreement (JSA) was signed by ONGC and M/s Stealth Ventures, Canada for assessment of unconventional resources (hydrocarbons) on 9th June, 2010 Subsequently, a Confidentiality Agreement (CA) was signed on 30th June, 2010 for enabling data viewing at ONGC and the scope of work was signed for execution of the project detailed in the JSA in three stages; Preliminary Stage, Screening Stage and Study of Prioritised Areas.

(v) MOU with NGRI and IPT

ONGC has signed MOU with NGRI, India and IPT (Institute of Petroleum Technology) of NTNU (Norwegian University of Science & Technology), Norway to work on 'Reservoir modeling for Enhanced Oil Recovery using Fractals and 4D Seismi for analyzing existing EOR Projects so as to develop and demonstrate more potent technique for increasing oil/gas recovery rate within the oil fields of ONGC and also to develop knowledge base as reservoir surveillance.

(vi) Agreement with STC, Mauritius

MRPL signed an agreement with State Trading Corporation, Mauritius on 1st July, 2010 for supply of liquid petroleum products amounting to 1.1 MMT per annum for a period of 3 years.

(vii) Collaborative projects with Indian Institute of Technology (IIT)

ONGC has taken up different collaborative projects viz. Evaluation of the effect of climate changes on met-ocean parameters for the western offshore region with IIT Mumbai, Finite Element Analysis of tubular Joints of offshore Jacket platform with IIT Chennai and Estimation of Lifetime and Life Cycle Cost of FRP Pipes Manufactured Using Various Technologies Of Offshore & Onshore Applications with IIT Kharagpur.

13.Information Technology

Project ICE

Project ICE, the ERP based business portal of ONGC was upgraded from MySAP 4.6c to ECC 6.0 to leverage the new functionalities of the latest ERP system consisting of Production Revenue Accounting (PRA), Governance, Risk & Compliance (GRC), Master Data Management (MDM), Identity Management (IDM), Occupation Health (OH), Mobile Asset Management. System based processes for Performance Related Pay (PRP), Perquisites and Online Claims and re-imbursements have now been enabled in totality.

14.Health, Safety & Environment (HSE)

Your Company has implemented globally recognized QHSE management systems conforming to requirements of ISO 9001, OHSAS 18001 and ISO 14001 at ONGC facilities and certified by reputed certification agencies at all its operational units. Corporate guidelines on incident reporting, investigation and monitoring of recommendations was developed and implemented for maintaining uniformity throughout the organization in line with international practice. First of its kind workshops on safety of contractual workers were arranged under the themes “Safe Together- Tomorrow” and "Effective Supervision is the Key". For the first time HSE index has been mapped in the performance contract of Key Executives. Policy circulars on use of Halon, Herbicides and Colour Code of Slings have been issued.

- The year 2011 declared as - “Year of Safety, Compliance & New Campaign”.

- Offshore Package Policy renewed for 2011-12 at US$ 27.7 million comparable to US$ 27.05 million, marginally increased considering volatile market due to Macondo blowout and earthquake in Japan.

- 444 QHSE certification/ Recertification/ Surveillance audits for sustaining HSE accreditations carried out during FY’11 against MOU target of 365 audits.

- 283 HSE process safety audits carried out during FY’11 against MOU target of 200.

Corporate Disaster Management Plan (CDMP) and guidelines have been developed for uniform disaster management all across ONGC. Your Company has also developed Occupational Health physical fitness criteria for employees deployed for offshore operations. Occupational Health (OH) module has now been populated on SAP system..

15.Energy Conservation

- Clean Development Mechanism: During the year 2010-11, host company approval for two CDM projects under development viz Green Building at Kolkata and Gas Flaring Reduction (GFR) project at Neelam-Heera Asset have been received from Ministry of Environment & Forest, Govt. of India. Further, two mitigation projects have been identified, conceptualized as CDM projects and the same are under development. ONGC tally of registered CDM projects as of now stands at six. Annual CERs earned from these projects are 209,460.

- GHG Accounting: ONGC has pioneered in the field of GHG accounting. This is the first step towards carbon footprinting and full fledged carbon disclosure system and the first step for attaining carbon neutrality. GHG accounting will also help ONGC in benchmarking its operations leading to energy efficiency and help develop new CDM projects. As per the plan, ONGC has undertaken pilot GHG accounting at nine of its selected installations this year. During the year, third party verification and certification as per GHG protocol and ISO 140064 for the GHG inventory of nine representative sites has been completed.

- Carbon Disclosure Project (CDP): An independent not-for-profit organization headquartered in London has issued its Annual 2010 Global 500 Report ONGC is the only Indian E&P Company participating in the Carbon Disclosure Project (CDP) initiative and disclosing the information voluntarily for the last four years in succession ONGC's disclosure scores have risen from 15 in 2008 to 42 in 2010. Higher score indicating greater commitment to understanding climate related issues and increased ability to measure and manage the company's carbon footprint. The key ONGC initiative of gas flaring reduction projects has also found a specific mention in the CDP 2010-India 200 report which has been compiled by Price Waterhouse on behalf of CDP.

16. Human Resources

You are aware that your Company has vast pool of skilled and talented professionals-the most valuable asset for the company. Your Company continued to extend several welfare benefits to the employees and their families by way of comprehensive medical care, education, housing and social security. During the year 2010-11, your Company implemented various new and revised welfare policies for its employees. 86 employees were released under the Voluntary Retirement Scheme during the year. The Human Resource value of the employees based on “Lev and Schwartz” Model is enclosed at Annexure B.

Wage revision of unionised staff

The Unions had submitted their charter of demands in 2007 and a working group comprising representatives of Unions and the Management was constituted. After lengthy negotiations, an MoU was signed in the meeting of the Wage Revision Committee held on 26th August, 2010.Thereafter, a tripartite Long Term Settlement (LTS) was signed on 18.09.2010 by the Management and Union before Regional Labour Commissioner (RLC) The ONGC Board, in its 209th meeting held on 22nd September, 2010 accorded approval for implementation of this tripartite settlement for Wage Revision of Unionised category of employees of ONGC w.e.f. 112007.

17. Employee Welfare Trusts

Your Company has established the following major Trusts for welfare of the employees:

- Employees Contributory Provident Fund (ECPF) Trust, managing Provident Fund accounts of employees of your Company.

- The Post Retirement Benefit Scheme (PRBS) Trust of your Company manages the pension scheme of the employees.

- The Composite Social Security Scheme (CSSS) formulated by your Company provides an assured ex-gratia payment in the event of unfortunate death or permanent disability of an employee in service. Families of deceased employees get a financial assistance under the scheme ranging betweenRs.15 million toRs.2.0 million.

-ONGC Sahayog Trust has been created for welfare of secondary workforce or their heirs, who are in financial distress.

- Gratuity Fund Trust has been created for payment of gratuity with provision of Gratuity Rules.

- Your Company implemented the Employees Pension Scheme (EPS-1995), retrospectively w.e.f. 16th November, 1995.

Your Company implemented a single integrated seamless computerised accounting system for all welfare trusts pertaining to investments, accounts, settlement and contribution etc. Employee accounts are now maintained on the new system, duly reconciled and updated, and can be viewed by the employees themselves on Company’s intranet. All payments are made to the members through e-payment gateway

Implementation Of Government Directives For Priority Section

Your Company complies with the Government directives for Priority Section of the society. The percentage of Scheduled Caste (SC) and Scheduled Tribe (ST) employees was 15.76% and 8.74% respectively as on 31st March, 2011. Your Company is fully committed for the welfare of SC & ST communities. The following welfare activities are carried out by your Company for their upliftment in and around its operational areas:

i) Annual component plan:

An amount ofRs. 31.00 million is distributed to various work centres of ONGC for implementation of welfare schemes. This fund is especially meant for providing help and support in areas like Education and training, Community development, Health care, etc.

ii) Scholarship to SC and ST meritorious students :

Your Company spent Rs. 4.77 million for supporting 96 students of the SC and ST community for pursuing higher professional courses at different recognized institutes and universities.

18. Industrial Relations

During the year, harmonious Industrial Relations were maintained throughout the Corporation. However, a writ petition filed by a section of the Officers Association is sub-judice in the High Court of Delhi.

19. Contract Management

Periodic training programs were conducted to sensitize the Principal Employers about their obligations, roles, responsibilities under the CLRA and other welfare legislations. Considering the competitive market situations, a concept of Fair wage for secondary work force is being devised for better working and living conditions. Periodic audits of Principal Employers were carried out to ensure near 100% compliances of Labour statutes. Contracts continued on nomination basis for several years have been replaced by new contracts, during the year 2010. Contracts were standardized and aligned to the Model Service Agreements to protect the interest of ONGC as well as the secondary work force.

20.Grievance Management System

Your Company provides an easily accessible mechanism to the employees for redressal of their grievances, either through informal or formal channels. All key executives of your Company have designated a publicized time slot, thrice a week, to meet public representatives for speedy redressal of their grievances. Your Company has also approved creation of a ‘single window front office’ at all work-centres. An officer not below Chief Manager level is responsible for ensuring accessibility and responsiveness to public grievances.

21.Right to Information Act, 2005 (RTI Act)

An elaborate mechanism has been set up throughout the organization to deal with the requests received under the RTI Act. As regards applications seeking information under the Act, opening balance as on 01.04.2010 was 19 applications as these applications were received in the month of March, 2010. During the year, 984 applications were received; hence, total applications are 1003. Out of 1003 applications, information was provided in respect of 803 applications, 6 applications were transferred as the information pertained to other Public Authorities. 200 applications were rejected under the provisions of the RTI Act, 2005. One application is pending for want of information as on date. With respect to Appeals received, opening balance as on 01.04.2010 was 30 appeals as these appeals were received in the month of March, 2010. During the year, 266 appeals were received; hence, total appeals are 296. Against a total of 296 appeals, 144 were rejected, 125 appeals were accepted, 19 appeals were forwarded to RTI Cell in ONGC for supplying information as they were not considered as appeals. 18 appeals were pending as on 31st March, 2011 which have been dealt with later on.

22.Implementation of Official Language Policy

During the year, a series of initiatives were undertaken for promotion and propagation of Rajbhasha in Official communication. Literary works in official language continued to be financially supported by your Company. In addition, all inductees at the executive level were exposed to the Official Language Policy of the Govt. of India. Your Company also contributed actively in publishing the bilingual Petroleum Terminology, an initiative of the Ministry of Petroleum and Natural Gas and in effective implementation of the Hindi Teaching Scheme of Govt. of India at all its regional work centres. Your company received appreciation from the Government of India for excellent progress of implementation of Official language directives.

23. Human Resource Development

33,229 ONGCians (as on 31st March, 2011) dedicated themselves for the excellent performance of your company during the year. The workforce intake strategy pursued by ONGC caters to meeting the demands of maintaining a steady flow of talent, in a business which is characterized by high risks and uncertainties, enormous costs, fast changing level of technology, physically challenging work environment, fluctuating product prices and growing competition. ONGC has drawn up a scientific five-year manpower induction plan aligned to the business plans as well factoring the manpower profile of ONGC. During the year, HR ensured that adequate numbers with requisite skill-sets were inducted to meet the requirements of the Company as well as replenish the manpower loss on account of high superannuation.

Your company believes that continuous development of its human resource fosters engagement and drives competitive advantage. Towards that end, during the year, ONGC conducted Business Games to hone the business acumen of its executives. Business Games in ONGC was introduced for executives in 2007. It has proved to be a very popular initiative and tests the ability of the executives through business quizzes, business simulations and case-study presentations The winners of the Business Games are felicitated by the CMD at Republic Day Celebrations.

For the first time, Fun Team Games (FTGs) were initiated for E0 and staff level employees to inculcate MDT (Multi-disciplinary Team) concept and spirit of camaraderie and belongingness to the organization, which was very well received by the participants. The winners are felicitated by the CMD at Republic Day Celebrations. ONGC also conducted the Assessment Development Centre (ADC) programs for 189 DGM level executives and provided them developmental inputs. An engagement survey was conducted across ONGC providing valuable inputs for the management to take follow-up action.

a. Performance Management System and Performance Related Pay

Your Company, in line with the DPE Guidelines is devising a robust performance management system which is effective in identifying and rewarding high performers. As part of the process, the performance appraisal system has been completely e- enabled. To strengthen transparency in the system performance ratings of the executives have been disclosed to them. Incentive payments for the year 2009-10 were made during the year to the executives of your Company based on the MoU rating of the Company and the individual’s performance.

b. Training

Skill upgradation is a vital component for the Human Resource Development. In pursuance to the mandate of equipping the executives with latest knowledge in the specialized fields of upstream oil and gas sector, attempts were made to organise training programs with the best of faculties from India and abroad. During the year 2010-11, ONGC conducted various training programs for its executives and staff spanning 200,674 training man-days. A scheme titled “Performance Support” was launched as a pilot project on November 24th, 2010 which provides desired knowledge back-up to young executives working at various locations in their respective domains. A panel of 95 domain experts has been prepared for providing the knowledge support. ‘Return on Investment on Training’ based on Donald Kirk Patrick Model was evaluated at Level I / Level II as planned during the year 2010-2011.

To hone the managerial acumen of our officers, second batch of ‘Leadership Development Program’ involving ‘Overseas Learning Component’ was conducted through Indian School of Business, Hyderabad for executives of General Manager level. Five Advanced Management Programs involving ‘Overseas Learning Component were conducted during the year for 125 executives of DGM level. Four Senior Management Programs involving ‘Overseas Learning Component were also conducted during the year for 100 executives of E5 level. In addition 81 planned Management Development Programs have been conducted against the target of 70 programs.

24.Accolades

Consistent with the trend in preceding years, your Company, its various operating units and its senior management officials have been in receipt of various awards and recognitions. Details of such accolades are placed at Annexure C.

25. Sports

Your company has 184 International & National sportspersons who represent ONGC as well as the country in various national and international events throughout the year. In addition to this, ONGC supports around 100 sportspersons through scholarships. During the year, ONGC sportspersons left an indelible mark in mega sporting events like Commonwealth Games, Asian Games and ICC World Cup.

Cricket icons Gautam Gambhir, Munaf Patel and Virat Kohli of ONGC played a stellar role in winning the coveted ICC World Cup Trophy after a gap of 28 years for India.

Thirteen ONGCians won ten medals in CWG 2010 which includes two gold medals. ONGCians followed their CWG performance with exceptional display at 2010 Asian games held at China grabbing 12 medals in all out of which four were gold. Out of India’s total tally of 64 medals ONGCians contributed 12.

Besides splendid performance in Asian Games and CWG, Ronjan Sodhi secured a gold medal in shooting World Cup. Alok Kumar became the only player in India who won all the four National titles in cue sports i.e. Billiards, Snooker, 8 ball Pool and 9 ball

ONGC has been maintaining its supremacy in Petroleum sector & has won Petroleum Minister’s trophy for excellence for seventh year in succession.

26.ISO Certification for HR processes

As part of the increase in the pace of continual improvement in HR-ER functions, ONGC has taken the significant initiative for certifying ISO 9001:2008 of HR-ER functions through reputed agency in sixteen work centres including functions During the year, all these 16 work centres went through this vigorous process under their respective Incharge HR-ER including preparation of documentation (Quality Manual, Procedure Manual, Procedure Format), conducting internal audits, holding ISO sensitization programs and Management Review Meetings. Thereafter, the auditors of Certified Agency visited all the work centres and checked the entire process in the pre-assessment audit. During this process, observations raised by auditors were rectified by HR-ER personnel immediately who were closely associated with this process.

27. Women Empowerment

Women employees constitute 6.2% of ONGC's workforce. During the year, programs for empowerment and development, including program on gender sensitization was organized. Your Company actively supported and nominated its lady employees for programs organised by ‘Women in Public Sector’ (WIPS) and ‘Women in Leadership Roles’.

28. Improvement in Living/Working Conditions

Green Buildings: As part of its commitment to sustainable development, ONGC has taken up development of Green Buildings at Delhi, Mumbai, Kolkata & Dehradun. These buildings are expected to save 50 to 60% energy as compared to baseline buildings. Apart from savings in energy, they higher occupant comfort levels in terms of air quality and personalized controls for temperature and lighti occupants’ health and productivity. These Green Buildings shall also use renewable and clean energy sources like solar photovoltaic and Gas Gensets thereby reducing the Greenhouse Gas (GHG) emissions. These buildings shall also be redeveloped as Carbon Development Mechanism (CDM) projects.

Renovation of existing offices/ colonies/guest houses was successfully completed at many work-centers to make the facilities more in sync with present day requirements as well as make our infrastructure energy efficient. Energy supply through alternate sources of energy viz. wind energy and solar panels has commenced in some of our colonies.

Fleet Management: ONGC deployed 60 cars at Delhi & 245 cars at Mumbai operating on environment friendly greener & cleaner fuel (CNG) against a MoU with Maruti Suzuki India Limited (MSIL) to provide vehicles on lease to ONGC with fleet management services under N2N Scheme of MSIL.

Work-Life Balance: Your Company continued in its endeavors to ensure work-life balance of its employees. The colonies at many work-centers were provided facilities like gymnasiums, music rooms, etc. Outbound programs with families were organized at various work-centers. Hindi dramas on the importance of 'Work-Life Balance' were staged to create awareness amongst the employees. In addition, cultural programs involving employees and their families were also conducted. Involvement of Mahila Samitis in various CSR Projects and Resident Welfare Associations(RWAs) in cultural programs was achieved.

29.Corporate Social Responsibility (CSR)

Your Company is committed to follow the Guidelines on Corporate Social Responsibility (CSR) issued by the Department of Public Enterprises. The CSR initiative of ONGC during 2010-11 was marked by continued commitment to several large-scale key projects as well as initiation of several new projects identified under the 12 focus areas of ONGC i.e. Education including vocational courses, Health Care, Entrepreneurship (self-help and livelihood generation) schemes, Infrastructure support near our operational areas, environment protection, ecological conservation, protection of heritage sites, UNESCO heritage monuments etc., Promotion of artisans, craftsmen, musicians, artists etc. for preservation of heritage, art and culture, Women empowerment, girl child development, gender sensitive projects, promoting sports/sportspersons, supporting agencies promoting sports/sportspersons, Water management including ground water recharge and Initiatives for physically and mentally challenged. Major CSR Projects launched during the year are as follows:

- ONGC- GICIET-Computer Education Project with Bharatiya Vidya Bhavan: The initiative envisages setting up of five computer centres in Uttarakhand, Assam, Andhra Pradesh, Pondicherry and Gujarat for unemployed youth.

- HEAT with Haemophilia Federation of India: A Pan-India operation to transform lives of 1000 children with Haemophilia (CwH) through education.

- 'Varishthjan Swasthya Sewa Abhiyan' with HelpAge India: Community based health services for destitute aged persons in ONGC’s operational areas all over the country through Mobile Medicare Units.

- 'Gram Sarv Utthan' with SEED (Society for Educational welfare and Economic Development): Community mobilization, in- school intervention, adult education with special focus on female literacy, vocational training to community youth, health and sanitation, utilization of effluent water in 3 villages in Bokaro, Jharkhand.

- Construction of Halls and Kitchen with SVS (Shramik Vikas Sansthan): Financial assistance for construction of additional Hall, staff room & kitchen for the hostel for tribal children in Bhekhadia village, Kawant Tehsil, Gujarat.

- Greening of Southern Ridge, Delhi: Greening an approx area of 1.5 sq. km in Vasant Kunj institutional area near Southern Ridge in association with TERI University.

- TERI-ONGC “Soldiers of the Earth” project: The Soldiers of the Earth campaign is an all encompassing, environmental awareness generation program. The campaign undertaken at Dehradun, Ankleshwar and Nazira is aimed at sens and young adults towards a greener future

- Badhte Kadam: A massive pan-India disability awareness raising program throughout the country.

- Mokshda Green Cremation System: Setting up of 30 energy efficient and environmental friendly green cremation system in association with local municipal bodies at work centers of ONGC.

- "Amulya Dharohar" Conservation of Ahom monuments with ASI & NCF: To support the endeavour of Archaeological Survey of India for conservation and development of four Ahom monuments at Sivasagar Assam.

- 'Ashadeep' - Girl child education program: Aimed to ensure continued schooling of the girl students belonging to economically weaker sections of society with observable improved learning levels of the support receiving students.

- Project Saraswati with NGRI: Exploring deep underground water resources in Rajasthan to provide new sources of ground water in the desert / drought prone areas with possible scope for long distance recharge.

30. Directors' Responsiility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors’ Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the profit of the Company for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv)The Directors have prepared the annual accounts of the Company on a ‘going concern’ basis.

31. Corporate Governance

Your Company has taken structured initiatives towards Corporate Governance and its practices are valued by the various stakeholders. The practices evolve around multi-layered checks and balances to ensure transparency.

In terms of Clause 49 of the Listing Agreement, a report on Corporate Governance for the year ended 31.03.2011, supported by a certificate from the Company’s Auditors confirming compliance of conditions, forms part of this Report.

Guidelines of Department of Public Enterprises (DPE), Government of India, on Corporate Governance which were earlier voluntary, have been made mandatory from May 2010. ONGC has implemented the DPE guidelines to the maximum extent possible except with regard to appointment of requisite number of Independent Directors, which is being followed up with the Ministry of Petroleum & Natural Gas.

Your Company has voluntarily got its Secretarial Compliance Audit conducted for the financial year ended 31st March, 2011 from M/s AN. Kukreja & Co., Company Secretaries in whole-time practice; their report forms part of this Annual Report.

In line with global practices, your Company has made all information, required by investors, available on the Company’s corporate website www.ongcindia.com/investercenter.asp.

Apart from the mandatory measures required to be implemented as a part of Corporate Governance, ONGC has gone the extra mile in this regard for the benefit of the stakeholders :

(a) Whistle Blower Policy: A Whistle Blower Policy has been implemented and is functional from 1st December, 2009. The policy ensures that a genuine Whistle Blower is granted due protection from any victimization. The Policy is available to all employees of the Company and has been uploaded on the intranet of the Company.

(b) Annual Report on working of the Audit & Ethics Committee : With a view to apprise the Board of the working of the Audit & Ethics Committee during the year, annual report on the working of the Audit & Ethics Committee for FY ’10 and FY ’11 has been prepared and will be put up to Board for its information. This is in line with the recommendation of the C&AG.

(c) MCA Voluntary Guidelines on Corporate Governance: ONGC has implemented the voluntary guidelines on Corporate Governance issued by Ministry of Corporate Affairs to the extent feasible and within the competency domain of the management.

(d) Enterprise-wide Risk Management (ERM) framework: In line with the requirements of Clause 49 (of the Listing Agreement) your Company has developed a comprehensive Enterprise-wide Risk Management (ERM) framework. Under the framework Risk Register portfolio has been compiled and an ERM Policy has been firmed up. The Risk Register and the draft Risk Management policy of ONGC has been reviewed by the Audit and Ethics Committee and approved by the Board of Directors. The ERM framework has been rolled throughout the organization and the risk policy adopted by the company is being displayed at all the Assets/Basins/Plants/Institutes across all the locations of ONGC. The risk policy of ONGC is stated below:

“ONGC shall identify the possible risks associated with its business and commits itself to put in place a Risk Management Framework to address the risks involved on an ongoing basis to ensure achievement of the business objectives without any interruptions.

ONGC shall optimize the risks involved by managing their exposure and bringing them in line with the acceptable risk appetite of the company”.

The risk reporting structure has already been put in place and all the stakeholders are being trained to enumerate risks in their functional area. The Risk Management Cell is receiving reports from the various functional areas. The Risk Management Committee is reviewing the same on a periodical basis.

32.Statutory Disclosures

Section 274(1)(g) of the Companies Act, 1956 is not applicable to the Government Companies. Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement.

Particulars of Employees

As per Notification No. GSR 289(E) dated 31st March, 2011 issued by the Ministry of Corporate Affairs, amending the provisions of the Companies (Particulars of Employees) Rules, 1975 issued in terms of section 217(2A) of the Companies Act, 1956, it is not necessary for Government companies to include the particulars of employees drawing salaries of Rs. 60 lakhs or more per annum, employed throughout the financial year or, Rs. 5 lakhs per month, if employed for part of the financial year. As your company is a Government company, the information has not been included as a part of the Directors’ Report.

33.Energy Conservation

The information required under section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure D.

34.Auditors

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s Arun K. Agarwal & Associates, M/s Kalyaniwalla & Mistry, M/s S. Bhandari & Co, M/s Ray and Ray and M/s M. Kuppuswamy PSG & Co, Chartered Accountants were appointed as joint Statutory Auditors for the financial year 2010-11. The Statutory Auditors have been paid a remuneration of Rs. 14.25 million for Annual Audit assignment and Certification of Corporate Governance. The above fees are exclusive of applicable service tax and reimbursement of reasonable travelling and out of pocket expenses actually incurred.

35. Auditors' Report on the Accounts

The Comments of Comptroller & Auditor General of India (C&AG) form part of this Report as per Annexure E. There is no qualification in the Auditors Report and there are no supplementary comments by C&AG under section 619(4) of the Companies Act, 1956. Notes to the Accounts referred to in the Auditors Report are self explanatory and therefore do not call for any further comments.

You would be pleased to know that your Company has received ‘Nil’ comments from C&AG and Statutory Auditors for the year 2010- 11. This is the fifth time in a row that the organization has received ‘Nil’ comments and seven times in last eight years.

36.Cost Audit

Pursuant to the directions of the Central Government for audit of Cost Accounts, the proposal for appointment of 7 firms of Cost Accountants as Cost Auditors for auditing the cost accounts of your Company for the year ended 31st March, 2011 was approved by the Central Government and they have accordingly been appointed.

37. Directors

During the year under report, Shri R. S. Sharma, former CMD and Shri D. K. Pande, former Director (Exploration) retired from th


Mar 31, 2010

Physical Performance: 2009-10

Exploration

In recent years, your Company has intensified its exploratory efforts in domestic as well overseas basins to locate new oil and gas assets. These efforts paid good dividends in terms of new discoveries and reserve accretion. During FY10, your Company made twenty one (21) discoveries in domestic fields operated by it - 14 in onshore and 7 in offshore areas. Out of 21 discoveries 11 were new prospect discoveries and 10 were new pool discoveries.

Highest reserve accretion in last two decades ONGC accreted 82.98 Million Tonnes of Oil Equivalent (MTOE) of Ultimate Reserves (3P) in domestic operated fields - the highest in last two decades. Total reserve accretion in domestic basins has been 87.37 MTOE [including 4.39 MTOE from ONGCs share in Joint Ventures (JVs)]. Initial In-place reserve accretion in domestic basins was 273.42 MTOE including 22.82 MTOE from ONGCs share in JVs.

Reserve Replacement Ratio (RRR)

Reserve Replacement Ratio (RRR) i.e. the ratio of reserve accretion to the production of ONGC in its own domestic fields in this fiscal has been quite impressive at 1.74 for 3P reserves; again the highest in the last two decades. This is the 5th consecutive year ONGC maintained RRR of more than 1 against global feature of lower than 1 registered by large number of oil companies.

Oil & Gas production levels maintained

ONGC has maintained oil and gas production levels despite global trend of declining production from matured oil fields. During FY10, the combined Oil and Gas production of ONGC, including OVL and ONGCs share in PSC-JVs, was 60.93 MTOE; marginally lower as compared to 61.23 MTOE in FY09. Production from overseas fields registered 8.87 MTOE; the highest ever.

Largest oil & gas producer in the country

Oil and gas production from domestic fields, including ONGCs share in PSC JVs has been 52.06 MTOE during FY10 against 52.45 MTOE during FY09. ONGC accounted for 79% of Indias crude oil and 54% of natural gas production during FY10.

Highest-ever production from overseas assets

ONGC Videsh Limited (OVL), the flagship wholly owned subsidiary for overseas operations has now footprints across 15 countries with 39 projects. Since its first hydrocarbon revenue from overseas in 2002- 03 from Vietnam, this year OVL registered highest-ever production of 8.87 MTOE of oil and gas.

First oil from RJ-ON-90/1

Your Company holds 30% participating interest in RJ-ON-90/1 pre-NELP block operated by Cairn Energy India Pty. Ltd. (CEIL). Till date, 25 discoveries have been made in the block with six major discoveries i.e., Mangala, Aishwariya, Raageshwari, Saraswati, Bhagyam and Shakti. Out of these discoveries, Mangala commenced production from 24th August, 2009; and it was dedicated to the nation by Honble Prime Minister Dr. Manmohan Singh on 29th August, 2009 at Barmer,

Rajasthan. Your Company is aggressively pursuing with the Government of India for reimbursement of royalty which it is paying on behalf of the operator.

New Projects

During FY 10 the Board has approved development of various offshore marginal fields viz additional development of D-1 field (13.962 MMT oil by 2025) at an investment oR 21,636.5 Million, development of North Tapti gas field (4.116 BCM gas by 2021) at an investment of Rs. 7,557 Million and development of Cluster-7 fields (9.73 MMt of oil & condensate and 4.52 BCM gas by 2029) at an investment of Rs.32,410 Million.

Your Company is currently implementing redevelopment projects in major fields of Western offshore at an estimated cost of Rs. 182 billion which includes Mumbai High North redevelopment phase II at Rs. 71 billion, Mumbai High South redevelopment phase II at Rs. 88 billion and Heera & South Heera redevelopment at Rs. 23 billion. During FY10, the following new facilities were completed to enhance production:

- Installation of 4 Well Platforms C-39A, C-24, C-39-1 and C-22, along with associated modification and pipelines under C-Series development.

- Installation of Process Platform BCPA-2 with 2nd stage booster compressors for Bassein field (10MMSCMD) and Vasai East process facilities having liquid handling capacity of 12,000 bopd, Gas compression of 2.0 MMSCMD and water injection facility of 47,000 bwpd along with associated modifications under Vasai East development project.

- Three new smart well platforms Rs.-15, Rs.-16 and Rs.-17 along with associated cables, pipelines and topside modification under Mumbai High South Redevelopment Phase II.

During the fiscal 2009-10, your Company brought 5 new marginal fields to production. With this total, 50 such fields are now on stream and these fields produced 2.0691 MTOE of oil and gas during 2009-10.

ONGC bags highest number of blocks in NELP-VIII

You would be pleased to note that in NELP-VIII bid round, ONGC in partnership with its consortia members, submitted the bids for 25 exploration blocks and won 17 of these. In the eight NELP rounds which have been rolled out so far, ONGC has won 50% of the blocks i.e.,121 out of total 242 blocks awarded by the Govt, of India. Your Company now holds 80 NELP blocks (70 as operator) and 62 nomination blocks.

CBM production

Your Company is operating in 5 CBM Blocks i.e., Jharia, Bokaro, North Karanpura and South Karanpura Blocks in Jharkhand and Raniganj Block in West Bengal. CBM production from Pilot Project at Parbatpur commenced from January, 2010. Final Development Plan (FDP) for Jharia block has been submitted for approval of the Government.

Value Added Products

The Hazira Plant of your Company started production of a new product Propane. During FY10,1,316 MTof Propane was sold. During FY10, revenue from export of 1,568 MT of Naphtha has been Rs. 45,770 million; the highest-ever both in terms of quantity exported and revenue earned.

Alternate sources of energy

51 MW Wind power farms which your Company had set up near Bhuj in Gujarat with an investment ofRs. 3,080 million in September, 2009 is already operational. The electricity generated is wheeled through the Gujarat State Electricity Grid for captive consumption by ONGC atAnkleshwar,Ahmedabad,MehsanaandVadodara.

ONGC Energy Centre set up by your Company for holistic research for new and alternate energy sources has been pursuing a number of new projects like. Thermo-chemical generation of hydrogen, Bioconversion of coal/oil to methane gas, Uranium exploration, Solid state lighting, Solar PV Energy Farm, etc.

SCOPE Gold Trophy for achievements in CSR and R&D

You will be delighted to know that your Company received the Gold Trophy for SCOPE Meritorious Award for Corporate Social Responsibility and Responsiveness for 2007-2008 and Gold Trophy for R&D, Technology Development and Innovation for the year 2008-09. The awards were presented by H.E. the President of India, Smt. Pratibha Devisingh Patil to CMD, ONGC on Public Sector Day i.e. on 10th April, 2010 at Vigyan Bhawan, New Delhi.

1. Financial Results

Despite volatile markets, your Company has earned a Profit After Tax of Rs.167,676 million (Rs. 161,263 million in 2008-09), up 3.98 %, which is incidentally the highest-ever.

During the year under review, your Company registered Gross revenue ofRs. 619,832 million (Rs. 566,357 million in 2008-09), up 9.44%, by netting off the revenue from trading of products of Mangalore Refinery & Petrochemicals Limited (MRPL), a subsidiary of your Company, amounting to Rs. Nil (Rs. 85,098 million in 2008-09).

Highlights:

Gross Revenue Rs. 619,832 million

Profit after Tax (PAT) Rs. 167,676 million

Contribution to Exchequer Rs.280,988 million*

Return on Capital Employed 50.9%

Debt-Equity Ratio 0.00006:1

Earning Per Shared) 78.39

Book Value Per Share (Rs.) 404

*OID Cess, Excise duty, Royalty, Corporate and Dividend Distribution Tax and Dividend on Government shareholding.

Financial Results (Rs. in million)

2009-10 2008-09

Gross Revenue 619,832 651,455

Gross Profit 396,054 378,292

Less:

Interest 686 1190

Exchange Variation (4,033) 3819

Depreciation 12,312 14,491

Amortisation 89,407 68,281

Depletion 45,302 42,148

Impairment (433) (3110)

Provision/WriteOffs 2,974 11,666

Provision forTaxation (including deferred tax 82,163 228,378 78,544 217,029 liability of Rs. 11,160 million);

Profit After Tax 167,676 161,263

Appropriations Profit & Loss B/F - (1)

Interim Dividend 38,500 38,500

Proposed Final Dividend 32,083 29,944

Tax on Dividend 11,616 11,632

Transfer to General Reserve 85,477 81,188

Total 167,676 161,263

Previous year figures have been regrouped wherever necessary

2. Dividend

Your Company paid an interim dividend of Rs. 18 per share (180%), in December, 2009. The Board of Directors have recommended a final dividend of Rs. 15 per share (150%) making the aggregate dividend at Rs. 33 per share (330%) as compared to Rs. 32 per share (320%) paid in 2008-09. The total dividend will absorb Rs. 70,583 million, besides Rs. 11,616 million as tax on dividend, which is historically the highest dividend payout by the Company.

3. Management Discussion and Analysis Report

In terms of Clause 49(IV)(F) of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis Report has been included and forms part of the Annual Report of the Company.

5. Oil & Gas Reserves

Your Company has made voluntary disclosures in respect of Oil & Gas Reserves, conforming to SPE classification 1994 and US Financial Accounting Standards Board (FASB-69). ONGC has added 250.60 MTOE of oil and oil-equivalent gas (O+OEG) initial inplace volume with 82.98 MTOE of O+OEG as the ultimate reserve component during FY 10. The ultimate reserves accretion, including its share in joint ventures is 87.37 MTOE of O+OEG, which is the highest in last two decades.

Ultimate Reserve (3P accretion O+OEG (in MTOE)

Year Domestic ONGCs Total OVLs Total Assets share in Domestic Share in Domestic Reserve Foreign JVs Assets (1) (2) (3)=(1)+(2) (4) (5)=(3)+(4)

2007-08 63,82 -0.34 63.48 46.73 110.21

2008-09 68.90 2.82 7172 135.08 206.80

2009-10 82.98 4.39 87.37 0.35 87.72

6. Statement of Reserve Recognition Accounting

The concept of Reserve Recognition Accounting attempts to recognize income at the point of discovery of reserves and seeks to demonstrate the intrinsic strength of an organization with reference to its future earning capacity in terms of current prices for income as well as expenditure. This information is based on the estimated net proved reserves (developed and undeveloped) as determined by the Reserves Estimates Committee.

As per FASB-69 on disclosure about Oil and Gas producing activities, publicly traded enterprises that have significant Oil and Gas producing activities, are to disclose with complete set of annual financial statements, the following supplemental information:

a) Proved Oil and Gas reserve quantities

b) Capitalized costs relating to Oil and Gas producing activities

c) Cost incurred for property acquisition, exploration and development activities

d) Results of operations for Oil and Gas producing activities

e) Astandardized measure of discounted future net cash flows relating to proved Oil and Gas reserve quantities

Your Company has disclosed information in respect of (a) and (d) above in the Annual Financial Statements. Your Company has made voluntary disclosure on standardized measure of discounted future net cash flows relating to proved oil and gas reserve at Annexure-A to this report as Statement of Reserve Recognition Accounting (RRA).

7. Financial Accounting

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable Accounting Standards (AS-1 to AS-29) and Successful Efforts Method as per the Guidance Note on Accounting for Oil & Gas Producing Activities issued by The Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 1956.

8. Internal Control System

The Company has well established and efficient internal control system and procedures. Your Company has already implemented SAP R/3 system for integration of various business processes across the organization. The system has now been upgraded from earlier version of MySAP 4.6C to ECC 6.0. The Company also has well defined financial powers of various executives in its Book of Delegated Powers (BDP). Integrated BDP has recently been revised to bring further delegation. The Company has in-house Internal Audit Department commensurate with its size of operations. Audit observations are periodically reviewed by the Audit & Ethics Committee of the Board and necessary directions are issued whereverrequired.

9. Subsidiaries

(i) ONGCVidesh Limited (OVL)

ONGC Videsh Limited, the wholly-owned subsidiary of your Company for overseas E&P activities, registered satisfactory performance during 2009-10. The company presently has participation in 40 projects in 15 countries.

The Big Deal

A consortium led by OVL signed a contract on 12lh May, 2010 for 40% ownership in the company, formed for developing Carabobo-1-Norte and Carabobo-1-Centra heavy oil blocks in Venezuela. The Corporacin Venezolana del Petrleo ("CVP"), a subsidiary of Petrleos de Venezuela S.A. ("PDVSA"), Venezuelas state oil company, will hold the remaining 60% equity interest. The members of the OVLs Consortium are: OVL (11%), Indian Oil Corporation Limited (3.5%), Oil India Limited (3.5%), Repsol YPF (11.0%) and Petroliam Nasional Berhad ("PETRONAS") (11%). The company will build heavy oil production facilities, upgrading facilities and associated infrastructure. The upstream production facilities are expected to produce around 400,000 barrels per day of extra heavy oil of which approximately 200,000 barrels per day will be upgraded into light crude oil in a facility to be located in the Soledad area, Anzotegui State. The license term will be for 25 years with the potential for a 15 year extension.

Out of 39 projects, OVL is operator in 16 projects and joint operator in 6 projects. OVL is currently producing oil and gas from Greater Nile Oil Project and Block 5A in Sudan, Block 06.1 in Vietnam, Al Furat Project in Syria, Sakhalin-I Project and Imperial Energy in Russia, Mansarovar Energy Project in Colombia and San Cristobal Project in Venezuela. Block BC-10 in Brazil commenced production from 13,hJuly, 2009. Block A-1 and A-3 in Myanmar and Carabobo Project in Venezuela are in development phase. North Ramadan Block, NEMED Project in Egypt and Farsi Offshore Block in Iran have discoveries and appraisal work is being carried out. Development for Abu Khashab and Rashid discoveries in Block-24, Syria has been approved by the Syrian Government and further exploration work is ongoing in the block. OVL had completed the Product Pipeline Project for Sudan Government and handed over the pipeline to it in October, 2005 and is currently under lease. The remaining projects are in exploration phase.

During 2009-10, OVLs consolidated share in production of oil and oil equivalent gas (O+OEG), was 8.87 MMT. OVLs consolidated gross revenue during 2009-10 was Rs. 153,828 million (Rs. 184,235 million during 2008-09) down 16.5%. OVLs consolidated Profit After Tax during 2009-10 was Rs. 20,896 million (Rs. 28,067 million during 2008-09) down by 25.55%. The reduction in Gross Revenue and Profit After Tax is mainly on account of fall in crude oil prices in the international markets during 2009-10.

Direct Subsidiaries of OVL:

a) ONGC Nile Ganga B.V. (ONGBV):

ONGBV, a subsidiary of OVL, is engaged in E&P activities in Sudan, Syria, Venezuela and Brazil. ONGBV holds 25% Participating Interest (PI) in Greater Nile Oil Project (GNOP), Sudan with its share of oil production of about 2.126 MMT during 2009-10.

It has 16.66% to 18.75% participative interest in four Production Sharing Contracts (PSCs) in Al Furat Project (AFPC), Syria with its share of oil and gas production of about 0.718 MMTOE during 2009-10.

ONGBV also holds 40% PI in San Cristobal Project in Venezuela with its share of oil production of about 0.704 MMT during 2009-10.

Further ONGBV has 15% PI in BC-10 Project in Offshore Brazil which has commenced production in 2009-10 contributing to OVLs share of 0.192 MMt oil during the year. The current total production of the project is about 80,000 barrels of oil per day.

ONGBV also has 100% PI and is the operator of exploratory blocks BM-S-73 and BM-ES-42 and holds 25% PI in exploratory blocks Block BM-SEAL-4 and Block BM-BAR-1 all located in Deepwater Offshore, Brazil.

b) ONGC Narmada Limited (ONL):

ONL, a wholly-owned subsidiary of OVL is engaged in E&P activities in Nigeria-Sao Tome & Principe, Joint Development Zone (JDZ) with 13.5% PI in deep water exploration Block-2.

c) ONGC Amazon Alaknanda Limited (OAAL):

OAAL, a wholly-owned subsidiary of OVL, holds stake in E&P projects in Colombia, through Mansarovar Energy Colombia Limited (MECL), a 50:50 joint venture company with Sinopec of China.

During 2009-10, OVLs share of production in MECLwasabout0.409MMTofoil.

d) Jarpeno Limited:

Jarpeno Limited, a wholly-owned subsidiary of OVL incorporated in Cyprus, acquired Imperial Energy Corporation pic, a UK listed upstream oil exploration and production entity with its main activities in Tomsk region of Western Siberia in Russia, in January, 2009. During 2009-10, Imperial Energys production was about 0.543 MMTofoil.

e) AB Startkapitalet nr 5636 (name changed to Carabobo One AB): OVL holds 11 % in Carabobo project through a mixed company AB Startkapitalet nr 5636 (name changed to Carabobo One AB).

Joint Venture of OVL:

f) ONGC Mittal Energy Limited (OMEL)

OVL along with Mittal Investments Sari (MIS) promoted OMEL, a joint venture company incorporated in Cyprus. OVL and MIS hold 98% equity shares of OMEL in the ratio of 49(OVL): 49(MIS) with balance 2% shares held bvSBI

Capital Markets Ltd. OMEL holds 45.5% and 64.33% PI in exploration Blocks OPL 279 and OPL 285 respectively in Nigeria. OMEL also holds 1.11 % Class-C shares in ONGBV exclusively for AFPC Syrian Assets; such investment being financed by Class-C Preference Shares issued by OMEL in the ratio of 51:49 to OVL and MIS respectively.

(ii) Mangalore Refinery & Petrochemicals Limited (MRPL)

Your Company continues to hold 71.62% equity stake in MRPL, which has put in a commendable all-round performance, despite downturn during 2009-10.

Highlights

- Refinery crude thruput-12.50 MMT.

- Turnover-Rs. 360,809 million.

- Profit After Tax - Rs. 11,124 million.

Keeping in view its plans to make investments in various projects, a dividend of 12% has been recommended by its Board. MRPL has

successfully completed the turnaround of the 6MMTPA unit as per schedule and also revamp of Gas Oil Desulphurisation unit. The distillate yield was highest ever 72.8% at an operating level of 12.5 MMTPA. The domestic dispatches were highest during the FY 2009- 10. MRPL received the first parcel of "Mangala" crude from the Rajasthan oil field of ONGC and Cairn on 9,h October, 2009. MRPL has achieved "Excellent" performance results under the MOU with ONGC, its holding company. MRPL achieved its lowest ever energy index in terms of MBTU7 BBL/ MRGF (MBN) of 58.27 during the year. The excellent operating, production and safety standards maintained by its Refinery have enabled MRPL to achieve remarkable energy saving and also an accident-free year. ICRA has reaffirmed their Issuer rating oflr AAA to MRPLfor lowest credit risk. CRISIL issued rating of Cr AAA to MRPL indicating highest safety.

It bagged the following awards and accreditations during the year:

- Winner in the Most Safe Refinery in last three years and runner up in Refineries categories of OISD awards for the year 2008-09.

- Jawaharlal Nehru Centenary Award 2008-09 - Joint 1 st Prize in Specific Energy Consumption Performance amongst all Refineries in Public Sector.

- Superstar Achiever Award - 2008 for best export performance from Kanara Chamber of Commerce and also State Level Export Award for the Year 2005-06 and 2006-07 from Govt.ofKamataka.

Direct Marketing

Direct marketing sales of MRPL registered an overall growth of 3% covering products Bitumen, Furnace Oil, Naphtha, Mixed Xylene, LSHS and Sulphur, with sales of 800 TMT in 2009-10. MRPL Shell Aviation Fuel Services Private Limited (a Joint Venture Company of MRPL and Shell Global) has made good progress in marketing of ATF to domestic airlines at Bangalore and Hyderabad airports and is likely to commence operation at Mangalore airport shortly.

Implementation of the Phase III Refinery Project with a project cost of Rs. 121,600 million, was on schedule during the year 2009-10. With a view to add value to the propylene, implementation of Polypropylene unit at a cost of Rs. 18,030 million has been approved. A contract for construction of ISBL facility has been placed on EIL for execution under open book execution method. Your Company has approved to extend a loan facility of Rs. 50,000 million for part financing the projects. OIDB has also sanctioned a loan of Rs. 2,000 million for the projects.

10. Exemption in respect of Annual Report of Subsidiaries and Consolidated Financial Statement

In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956 copies of the Balance Sheets, Profit and Loss Accounts, Reports of the Board of the Directors and Reports of the Auditors of the subsidiary companies have not been attached to the Accounts of the Company. The Company will make these documents/details available upon request by any member of the Company interested in obtaining the same. Annual Reports of MRPL and OVL are available on website www.mrpl.co.in and www.ongcvidesh.com respectively.

In accordance with the Accounting Standard (AS)-21 on "Consolidated Financial Statements" read with AS-23 on "Accounting for Investments in Associates" and AS-27 on "Financial Reporting of Interests in Joint Ventures", audited Consolidated Financial Statements for the year ended 31st March, 2010 of the Company and its subsidiaries form part of the Annual Report.

11, Joint Ventures/ Associates

(i) ONGC Tripura Power Company Limited (OTPC)

ONGC has promoted OTPC with envisaged equity stake of 50% alonq with Govt of Tripura (0.5%) and IL&FS (26%) to set-up 726.6 MW (363.3 x 2) gas based Combined Cycle Power Plant (CCPP) at Pallatana in Tripura to monetize its idle gas assets in Tripura. Various linkages like gas supply by ONGC and power off-take by NE states have been finalized. The JV company has also tied up debt for the project with Power Finance Corporation Limited. Bharat Heavv Electricals Limited has been enaaaed as EPC aaencv for completion of Generation Project on turnkey basis. The first phase of the project is likely to be completed by December, 2011.

(ii) ONGC Petro-additions Limited (OPaL)

Your Company has promoted a JV company "ONGC Petro-additions Limited" (OPaL) with 26% equity stake along with GAIL (19%) and Gujarat State Petroleum Corporation Ltd (GSPCL) (5%) to implement a mega petrochemical complex comprising of 1.1 MMTPA ethylene Cracker and global scale polymer units within Dahej SEZ as a step towards downstream integration. All major statutory approvals like Environmental Clearance from MoEF, SEZ Unit approval etc. have been obtained and major LSTK contracts relating to site infrastructure development, dual feed cracker contract, technology licensor(s) for downstream polymer units have been awarded. M/s EIL has been engaged as the PMC of the project.

(iii> Mangalore Special Economic Zone Limited (MSEZ)

ONGC with 26% equity stake in MSEZ along with KIADB (23%) and IL&FS+KCCI (51 %), is promoting another SEZ in coastal Mangalore. Ministry of Commerce & Industry has formally notified to set up a Petro-chemical Specific SEZ in 1453 acres of land. MSEZ has allotted requisite land to ONGC Mangalore Petrochemical Ltd, a company promoted by ONGC, for setting up an aromatic based petrochemical unit. MSEZ has signed a Co-developer agreement with Indian Strategic Petroleum Reserves Limited (ISPRL) to develop a free trade zone for warehousing of Strategic Crude Reserve. Resettlement and Rehabilitation work of Project Displaced People is in proqress over 136 acres of land. Requisite infrastructure like water supply system, pipe-line corridor etc. is under implementation. (iv) ONGC Mangalore Petrochemicals Limited (OMPL)

ONGC has promoted OMPL with 46% equity participation, along with MRPL (3%) for setting up manufacturing facilities for 0.92 MMTPA Para-Xylene and 0.14 MMTPA Benzene from MRPLs aromatic streams in Mangalore SEZ as value addition project. The project is under implementation. Contracts relating to project management, technology licensor and site grading have been awarded while LSTK contract for process packages are underfinalization. Debt syndication process has been completed and Rupee term loan agreement with bankers signed.

(v) ONGC TERI Biotech Limited (OTBL)

OTBL is a Joint Venture company of ONGC, incorporated on 26 March, 2007, with The Energy and Research Institute (TERI). The JV has been promoted for addressing the requirement of Bioremediation of oily sludges, Microbial Enhanced Oil Recovery, prevention of wax deposition bacteria in tubulars, flow assurance of line pipes for E&P operations. Apart from ONGC, OTBL is bagging contracts for application of above technologies from other companies like Oil India Limited, Railways, Refineries, private companies etc.

(vi) Petronet MHB Limited (PMHBL)

PMHBL is a JV company of ONGC (28.766%), HPCL (28.766%) and PIL (7.898%). Balance 34.57% of equity is held by the leading banks. It owns and operates a multiproduct pipeline to transport MRPLs products to hinterland of Kamataka. Maintaining its turnaround trend, PMHBL, as per unaudited results for the year 2009-10, has made a net profit of Rs. 50 million on a throughput of 2.53 MMT against Net profit of Rs. 20 million with throughput of 2.45 MMTduring the year2008-09.

(vii) Petronet LNG Limited (PLL)

ONGC has 12.5% equity stake in PLL, identical to similar stake by other Oil PSUs co-promoters viz., IOCL, GAIL and BPCL. PLL has started commissioning of Dahej LNG terminal of 10 MMTPA capacity and also commenced construction of LNG Receiving and Re-gasification Terminal of 5.0 MMTPAatKochi. The turnover of PLL during 2009-10 was Rs. 106,491 million (previous yearRs. 84,287 million) and net profit wasRs. 4,045 million (previous yearRs. 5,184 million). PLL has declared a dividend of 17.5%, same as the previous year.

(viii) Pawan Hans Helicopters Limited (PHHL)

The Company has 21.5% equity stake in PHHL with balance 78.5% equity with the Government of India. PHHL is one of Asias largest helicopter operators having a well balanced operational fleet of 36 helicopters. It provides helicopter support for ONGCs offshore operations. PHHL was successful in providing all the 12 Dauphin N and N3 helicopters fully compliant with AS-4 as per the new contract with ONGC. The net profit of PHHL for the year 2008-09 was Rs. 251.20 million and it paid a dividend of 10%. The accounts of PHHLfor 2009-10 are underfinalisation.

(ix)DahejSEZ Limited (DSL)

Your Company with 23% equity stake along with Gujarat Industrial Development Corporation (26%) is developing a multi-product

SEZ at Dahej in coastal Gujarat over 1717 hectares of land through an SPV "Dahej Special Economic Zone Ltd". SEZ has formally been approved by Ministry of Commerce & Industry and Gazette notification issued. This SEZ, now declared as Petroleum, Chemical, Petrochemical Investment Region (PCPIR) by Government of India, is operational since September 2009. Environment clearance from Ministry of Environment & Forest (MoEF) was received on 17th March 2010. About 90% of the saleable land has been allotted to prospective unit holders.

12. Other Projects / Business initiatives

(a) C2-C3-C4 Extraction Plant;

ONGC is setting up a C2-C3-C4 Extraction Plant at Dahej using LNG from PLL as feed stock. The plant is nearing mechanical completion with overall progress of 98.24% as on 31sl March, 2010.

(b) Partnerships for growth

(i) ONGC led Consortium signs agreements for sourcing LNG from Iran

ONGC/OVL, in association with Hinduja Group and Petronet LNG have entered into agreements with Iranian authorities on 1st December, 2009 at New Delhi for participation in development of gas fields and liquefaction facilities in Iran. Indian participation would entitle supply of LNG up to a minimum of 6 MMTPAon long term basis.

(ii) Moll with M/s Sistema, Russia

OVL entered into a non-exclusive Memorandum of Understanding (MoU) on 8lh December, 2009 at Moscow with M/s Sistema, a leading diversified industrial group of Russia to explore the possibilities of jointly studying and participating in attractive oil and gas assets in Russia and third countries.

(iii) MoU with ENARSA, NOC of Argentina

OVL signed an MoU with ENARSA, the national oil company of Argentina for cooperation in E&P ventures in Argentina, India and other countries on 14th October, 2009 in New Delhi in presence of H.E Dr. Cristina Fernandez de Kirchner, President of

Argentina and Honble Prime Minister c India, Dr. Manmohan Singh.

(iv) MoU with Bharat Petroleum Corporation Limited (BPCL)

ONGC executed an MoU with BPCL on 23,d February, 2010 for exploring opportunities in downstream gas business such as participation in CGD networks, laying natural gas pipelines, marketing of natural gas and CNG compression for developing CNG corridors across the state and national highways and for other mutually agreed business.

(v) MoU with GAIL India Limited

The MoU executed with GAIL for mutual co-operation In the areas of Natural Gas Pipelines, Transmission and Marketing business has been extended for two years w.e.f. 24lh July, 2009

(vi) MoU with FMC Technologies (S) Pte Ltd, Singapore

ONGC and FMC Technologies (S) Pte Ltd, Singapore signed an MoU on 14th July, 2009 at New Delhi to pursue collaboration and competence enhancement in area of deepwater development.

13. Information Technology

Project ICE

Project ICE, the ERP based business portal of ONGC was upgraded from MySAP 4.6c to ECC 6.0 to leverage the new functionalities of the latest ERP system consisting of Production Revenue Accounting (PRA), Governance, Risk & Compliance (GRC), Master Data Management (MDM), Identity Management (IDM), Occupation Health (OH), Mobile Asset Management. System based processes for Performance Related Pay (PRP), Perquisites and Online Claims and re-imbursements have now been enabled in totality.

E&P Disaster Recovery Server

E&P Document Management Disaster Recovery Server established at Vadodara was inaugurated on 10lh November, 2009. With this, ONGCs efforts to create an online Central Repository of all accumulated intellectual assets has now been completed.

14. Health, Safety & Environment (HSE)

Your Company has implemented globally recognized QHSE management systems conforming to requirements of ISO 9001, OHSAS 18001 and ISO 14001 at ONGC facilities and certified by reputed certification agencies at all its operational units. Surveillance Audits for sustaining HSE accreditation was carried out in 402 units during the year. Corporate guidelines on incident reporting, investigation and monitoring of recommendations was developed and implemented for maintaining uniformity through out the organization inline with international practice.

Corporate Disaster Management Plan (CDMP) and guidelines have been developed for uniform disaster management all across ONGC. Your Company has also developed Occupational Health physical fitness criteria for employees deployed for offshore operations. Occupational Health (OH) module has now been populated on SAP system.

Ringal Plantation: Sustaining fragile ecosystem of Himalayas is one of the objectives underlined in National Action Plan on Climate Change launched by Honble Prime Minister. Ringal has high carbon sequestration potential, is fodder for musk deer and has potential to provide employment opportunity to local people. In the first phase, 338,000 ringal plants have been planted in Joshimath and Kedarnath forest area in 125 hectare land during 2008-09. In the second phase, plantation of another 400,000 ringal saplings are envisaged in 160 hectares area of upper Himalayas.

Mangrove Plantation: Mangrove plantation has been undertaken by ONGC along the Dhadar river estuary in Gandhar area of Gujarattoprotectfloodingofwateranddegenerationofnearbylandareas. Mangrove plantation on the shore line of Dhadar River in Gandhar area has been intensified. One of the important components of this project is spreading awareness about mangrove plantation in urban and coastal rural areas of Gujarat and Maharastra.

15. Clean Development Mechanism (CDM)

ONGCs 5,u and 6lh Clean Development Mechanism (CDM) projects namely - Energy Efficiency in Amine circulation pumps at Hazira and 51MW wind power project at Gujarat, were registered with United Nations Framework Convention on Climate Change (UNFCCC) on 23rd Sept 2009 and f March 2010 respectively. The projects are estimated to earn annual Certified Emission Reduction (CER) of 85,762 and 4,043 respectively. Expected annual CERs earned by ONGC is about 210,000. In addition, two more CDM projects, viz Gas Flaring Reduction at Jorhat and Green Building project at Delhi have been successfully validated during the year. The total expected CERs from these two projects will be around 28,000 per annum.

ONGCs first CDM project, "Waste heat Recovery Project at Mumbai High" has been successfully verified and the United Nations Framework Convention on Climate Change (UNFCCC) issued the first set of Certified Emission Reduction (CERs) for this project on 18th March 2010. With this issuance, the decks are clear for ONGC to trade and earn revenues from CDM projects.

16. Human Resources

You are aware that your Company has vast pool of skilled and talented professionals-the most valuable asset for the company.

Your Company continued to extend several welfare benefits to its employees and their families by way of comprehensive medical care, education, housing and social security. During the year 2009-10, your Company implemented various new and revised welfare policies for its employees. 75 employees were released under the Voluntary Retirement Scheme during the year. The Human Resource value of the employees based on "Lev and Schwartz" model is enclosed at Annexure B.

Pay Revision of Executives

Ministry of Petroleum and Natural Gas issued Presidential Directives to implement revision of pay and allowances of Board level and below Board level executives in your Company dated, 24th April, 2009. Subsequently, revision of pay scales for executives w.e.f. 1st January, 2007 and revision of perquisites and allowances for executives w.e.f. 26th November, 2008 were implemented in your Company in June, 2009 and February, 2010 respectively.

Wage revision of unionised staff

The Unions had submitted their charter of demands in 2007 and a working group comprising representatives of Unions and the Management was constituted. The working group held three meetings before pay revision guidelines for executives were issued by DPE. Thereafter, the Unions submitted the modified charter of demands in October, 2009. The negotiations on the modified charter of demands have started and two meetings of the working group took place thereafter where issues have been discussed threadbare and certain issues have been clarified.

17. Employee Welfare Trusts

Your Company has established the following major Trusts for welfare of the employees:

- Employees Contributory Provident Fund (ECPF) Trust, managing Provident Fund accounts of employees of your Company.

- The Post Retirement Benefit Scheme (PRBS) Trust of your Company manages the pension scheme of the employees.

- The Composite Social Security Scheme (CSSS) formulated by your Company provides an assured ex-gratia payment in the event of unfortunate death or permanent disability of an employee in service. Families of deceased employees get a financial assistance under the scheme ranging between Rs. 1.5 million to Rs. 2.0 million.

- ONGC Sahayog Trust has been created for welfare of secondary workforce or their heirs, who are in financial distress. Gratuity Fund Trust has been created for payment of gratuity with provision of Gratuity Rules.

- Your Company implemented the Employees Pension Scheme (EPS 1995), retrospectively w.e.f. 16lh November, 1995.

Your Company implemented a single integrated seamless computerised accounting system for all welfare trusts pertaining to investments, accounts, settlement and contribution etc. Employee accounts are now maintained on the new system, duly reconciled and updated, and can be viewed by the employees themselves on Companys intranet. Almost all payments are made to the members through e-payment mechanism.

Implementation Of Government Directives For Priority Section

Your Company complies with the Government directives for Priority Section of the society. The percentage of Scheduled Caste (SC) and Scheduled Tribe (ST) employees were 15.80% and 8.53% respectively as on 1sl April, 2010.

Your Company is fully committed for the welfare of SC and ST communities. The following welfare activities are carried out by your Company for their upliftment in and around its operational areas:

i) Annual component plan:

An amount ofRs. 30 million is distributed to various work centres of ONGC for implementation of welfare schemes. This fund is especially meant for providing help and support in areas like Education and training, Community development, Health care, etc.

ii) Scholarship to SC and ST meritorious students:

Your Company spent Rs. 4.92 million for supporting 100 students of the SC and ST community for pursuing higher professional courses at different recognized institutes and universities.

18. Industrial Relations

Your Company took structured initiatives to maintain harmonious Industrial Relations in the organization. Pursuant to the strike resorted to by the office bearers of ASTO (Association of Scientific and Technical Officers) in January, 2009, the recognition to ASTO was withdrawn. A Code of Conduct was framed and adopted for regulating the relations between the Officers Association and the Management of your Company, which inter-alia, lays down a framework for bilateral resolution of all issues and disputes. Further, a new policy on recognition of Officers Association incorporating the Code of Conduct was issued with the aim to bring in reforms through administrative decisions.

19. Grievance Management System

Your Company provides an easily accessible mechanism to the employees for redressal of their grievances, either through informal or formal channels. All key executives of your Company have designated a publicized time slot, thrice a week, to meet public representatives for speedy redressal of their grievances. Your Company has also approved creation of a single window front office at all work-centres. An officer not below Chief Manager level is responsible for ensuring accessibility and responsiveness to public grievances.

20. Right to Information Act, 2005 (RTI Act)

An elaborate mechanism has been set up throughout the organisation to deal with the requests received under the RTI Act. During the year, 701 requests were received, out of which information was provided in respect of 600 requests and 2 cases were transferred to other public authorities. 91 requests were rejected. 8 applications were pending for supply of information as on 315t March, 2010 and these have been processed later on. Further, against a total of 152 appeals dealt with during the year, 68 were rejected and the balance 54 appeals were accepted and 30 appeals were pending as on 31stMarch, 2010 which have been dealt with later on.

21. Implementation of Official Language Policy

During the year, a series of initiatives were undertaken for promotion and propagation of Rajbhasha in official communication. Literary works in official language continued to be financially supported by your Company. In addition, all inductees at the executive level were exposed to the Official Language Policy of the Govt, of India. Your Company also contributed actively in publishing the bilingual Petroleum Terminology, an initiative of the Ministry of Petroleum and Natural Gas and in effective implementation of the Hindi Teaching Scheme of Govt, of India at all its regional work centres. Your company received appreciation from the Government of India for excellent progress of implementation of Official language directives.

22. Human Resource Development

32,978 ONGCians (as on 31st March, 2010) dedicated themselves for the excellent performance of your company during the year. Your Company believes in and acts on the premise that human capital is the vital source of competitive advantage. Toward this end, your Company initiated several path breaking measures listed below to foster development of its human capital.

a. Performance Management System and Performance Related Pay

Your Company, in line with the DPE Guidelines is devising a robust performance management system which is effective in identifying and rewarding high performers. As part of the process, the performance appraisal system has been completely e-enabled. To strengthen transparency in the system performance ratings of the executives have been disclosed to them. Incentive payments for the year 2007-08 and 2008-09 were made during the year to the executives of your Company based on the MoU rating of the Company and the individuals performance.

b. Training

During the year, ONGC conducted various training programmes for its executives and staff spanning 140,510 training man days. His Excellency Dr. A.P.J. Abdul Kalam, Former President of India launched the Centre for Creative Leadership at ONGC Academy, Dehradun on 30th May, 2009.12 "Orientation Programme on Creative Leadership" involving 309 officers have been conducted at different work centres targeting young corporate level officers through reputed management institutes of the country such as Indian Institute of Management and Admininstrative Staff College of India, Hyderabad. In addition, leadership development is the focus of a continuing programme for senior officers through Indian School of Business, Hyderabad.

c. New Initiatives

- An Employee Engagement Survey was carried out in your Company during the year with the help of a globally renowned consultant in which over 7,000 employees participated.

- To embed the guru-shishya ethos in your Company, a total of 36 senior level executives were trained as Coaches and 45 as Mentors during the year. Fresh joining inductees are being provided the guidance of such mentors for their seamless integration into your Company.

- Your Company is utilizing Assessment and Development Centres as an evaluating tool to assess potential of middle level managers and utilizing the assessment to impart Advanced Management Training to the high potential executives. During the year, 240 DGMs were assessed utilizing this methodology.

- Multi-Disciplinary Team working, which is the essence of functioning of your company, was strengthened during the year with the aim to make it more effective and productive by engaging globally reputed consultants. Several recommendations of the consultants have been implemented with promising results and the effort is on to motivate more and more employees to adapt to these systems.

23. Accolades

Consistent with the trend in preceding years, your Company, its various operating units and its senior management officials have been in receipt of various awards and recognitions. Details of such accolades are placed at Annexure "C

24. Sports

Your Company presently has around 170 sportspersons, including 123 international level performers, on its rolls who represent the Company in different games in addition to around 100 sportspersons on scholarship. Your Company sponsored mega sporting events like 2nd ONGC Nehru Cup International Tournament 2009 and World Snooker Championship. ONGCian Shri Pankaj Advani won his third Asian Billiards title in April, 2009 and created history by winning his maiden World Professional Billiards Championship in 2009. ONGCians Ms. Sinimole Poulose and Shri Gautam Gambhir were conferred with Arjuna Award in recognition of their achievements in athletics and cricket respectively. Shri Gautam Gambhir was also ranked No. 1 batsman in ICC Test world rankings. Shri Chetan Anand won the Dutch Open Grand Prix badminton Tournament in October, 2009 and also the Gold medal in SAF Games held at Dhaka, Bangladesh in February, 2010. Shri Rupesh Kumar finished Runners up in Australia Open Grand Prix badminton Tournament held in July, 2009. Shri K. Sasikiran was the member of the Chess team that won Bronze medal in World Team Championship at Bursa in January, 201 Of Ms. Koneru Humpy won the 1sl place in Fide World Womens Grand Prix Cycle event at Turkey in March, 2010.

Your Company maintained its supremacy in Petroleum Sports Promotion Board tournaments. During the year 2009-10, it has accumulated record breaking 176 points way ahead of other member companies.

25. Women Empowerment

Women employees constituted 6.1% of ONGCs workforce. During the year, programmes for empowerment and development, including programme on gender sensitization was organized. Your Company actively supported and nominated its lady employees for programmes organised by Women in Public Sector(WIPS) and Women in Leadership Roles.

26. Corporate Social Responsibility (CSR)

During the year, your Company operationalised the increase in its commitment from 0.75% to 2% of net profit for its Corporate Social Responsibilities (CSR) and focused on reaching out to the society through sustainable projects with active participation of the stakeholders. Twelve major focus areas of CSR activities were identified. Your Company is committed to follow the Guidelines on CSR issued by the Department of Public Enterprises. Major CSR Projects launched during the year are as follows: - Greening Initiative of the Southern Ridge, New Delhi: The initiative envisages greening an approximate area of 1.5 sq.kms in and around the upcoming ONGC building (Rajiv Gandhi Urja Bhavan) and TERI university campus situated at Institutional Area, Vasant Kunj, New Delhi.

TERI-ONGC "Soldiers of the Earth" project: The

Soldiers of the Earth campaign is an all encompassing, environmental awareness generation programme. The campaign is aimed at sensitizing children and young adults towards a greener future.

Skill based vocational computer training: Setting up and running of five centres named as Gandhi Institute of Computer Education & Information Technology at ONGC work centres at Dehradun, Sibsagar, Mehsana, Karaikal and Rajahmundry, for provision of free job/ entrepreneurship oriented computer education to youth belonging to marginalized sections of the society through institutes run by Bharatiya Vidya Bhavan.

Asmita: Educating youth, rediscovering pride in Indias heritage: Production of a series of 13 films of 45-minutes duration each every year (for the next 5 years) on select topics of Indias cultural heritage jointly with Surabhi Foundation and TERI for connecting the audience to Indias cultural roots to evoke a sense of national pride.

Ashadeep - Girl child education programme: Aimed to ensure continued schooling of the girl students belonging to economically weaker sections of society, with observable improved learning levels of the support receiving students. This is a unique and laudable initiative taken by ONGC Officers Mahila Samiti.

Multi-specialty hospitals: Two multi-specialty hospital on P-P-P model proposed at Sivasagar, Assam and Ankleshwar, Gujarat.

Support to Hemophilia Federation (India): Providing support for education of children with Hemophilia. Hemophilia is a genetically transmitted, life-long, life threatening bleeding disorder.

Mobile Medicare Units: Implementation of Mobile Medicare Unit Project through Help-Age India for community based health care services to destitute older persons and other vulnerable citizens in 20 locations across the country.

Renewable energy for solar water pumping and home lighting: Providing lighting and water to poor households in Gujarat and Tamil Nadu.

Mokshda Green Cremation System: Setting up energy efficient and environmental friendly green cremation system in association with local municipal bodies at work centers of ONGC.

Conservation of ancient monuments: To support Archaeological Survey of India in its endeavour for the conservation and development of the Ahom monuments at SivasagarAssam.

Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2010 and of the profit of the Company for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) The Directors have prepared the annual accounts of the Company on a going concern basis.

28. Corporate Governance

Your Company has taken structured initiatives towards Corporate Governance and its practices are valued by the various stakeholders. The practices evolve round multi-layered checks and balances to ensure transparency. .

In terms of Clause 49 of the Listing Agreement, a report on Corporate Governance for the year ended 31.03.2010, supported by a certificate from the Companys Auditors confirming compliance of conditions, forms part of this Report.

Guidelines of Department of Public Enterprises (DPE), Government of India, on Corporate Governance which were earlier voluntary, have been made mandatory from May, 2010. ONGC has implemented the DPE guidelines to the maximum extent possible except with regard to appointment of requisite number of Independent Directors, which is being followed up with the Ministry of Petroleum & Natural Gas.

Your Company has voluntarily got its Secretarial

Compliance Audit conducted for the financial year ended 31st March, 2010 from M/s A.N. KukrejaS Co., Company Secretaries in whole-time practice; their report forms part of this Annual Report.

In line with global practices, your Company has made all information, required by investors, available on the Companys corporate website www.ongcindia.com/investercenter.asp.

Apart from the mandatory measures required to be implemented as a part of Corporate Governance, ONGC has gone the extra mile in this regard for the benefit of the stakeholders:

(a) Whistle Blower Policy : A Whistle Blower Policy has been implemented as a voluntary initiative and is functional from f December, 2009. The policy ensures that a genuine Whistle Blower is granted due protection from any victimization. The Policy is available to all employees of the Company and has been uploaded on the intranet of the Company.

(b) Annual Report on working of the Audit & Ethics Committee: With a view to apprise the Board of the working of the Audit & Ethics Committee during the year, an elaborate annual report on the working of the Audit & Ethics Committee for FY 10 has been prepared and will be put up to Board for its information. This is in line with the recommendation of the C&AG. The first Annual Report of the Audit & Ethics Committee forthe FY 09 was compiled and approved by the Committee.

(c) MCA Voluntary Guidelines on Corporate Governance : ONGC has implemented the voluntary guidelines on Corporate Governance issued by Ministry of Corporate Affairs to the extent feasible and within the competency domain of the management.

(d) Enterprise-wide Risk Management (ERM) framework: In response to the increasing need for corporate governance in the wake of several corporate disasters and decline in stakeholder confidence, SEBI set out requirements for Companies, under Clause 49 (of the listing agreement), to create an oversight mechanism to address risks. Accordingly your Company has developed a comprehensive Enterprise-wide Risk Management (ERM) framework. Under the framework Risk Register portfolio has been compiled and an ERM Policy has been firmed up. Risk Management process on pilot scale has been initiated in six representative locations i.e., Mumbai High, Rajahmundry and Assam Assets, Western Onshore Basin, Keshav Dev Malviya Institute of Petroleum Exploration (KDMIPE) and Hazira Plant.

You would be pleased to know that your Company has received Nil comments from C & AG and Statutory Auditors for the year 2009-10. This is the fourth time in a row that the organization has received Nil comments and six times in last seven years.

29. Statutory Disclosures

Section 274(1 )(g) of the Companies Act, 1956 is not applicable to the Government Companies. Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of the employees are set out in the annexure to the Directors Report. However, having regard to the provisions of section 219(1 )(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.

30. Energy Conservation

The information required under section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed as Annexure - "D".

31. Auditors

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s PSD & Associates, M/s. Padmanabhan Ramani & Ramanujam, M/s Singhi & Co., M/s Kalyaniwalla & Mistry and M/s Arun K. Agarwal & Associates, Chartered Accountants were appointed as joint Statutory Auditors for the financial year 2009-10. The remuneration of the Statutory Auditors for annual audit assignments has been fixed at Rs. 11.75 million. Further a fee ranging between Rs. 10,000 to Rs. 40,000 for each Block (depending upon the quantum of activity in the Block) aggregating to Rs. 2.08 million is being paid to the Statutory Auditors for certification of the accounts of Joint Venture NELP Blocks. In addition Rs. 0.75 million is being paid for certification of compliance of conditions of Corporate Governance. The above fees are exclusive of applicable service tax and reimbursement of reasonable Jravelling and out of pocket expenses actually incurred.

32. AuditorsReport on the Accounts

The comments of the C&AG form part of this Report as Annexure - E. There is no qualification in the Auditors Report and there are no supplementary comments by C&AG under Section 619(4) of the Companies Act, 1956. Notes to the Accounts referred to in the Auditors Report are self- explanatory and therefore do not call for any further comments.

33. Cost Audit

Pursuant to the directions of the Central Government for audit of Cost Accounts, the proposal for appointment of 7 firms of Cost Accountants as Cost Auditors for auditing the cost accounts of your Company for the year ended 31s1 March, 2010 was approved by the Central Government and they have accordingly been appointed.

34. Directors

During the year under report, Shri S. Sundareshan on taking over the charge as Secretary in the Ministry of Petroleum & Natural Gas (MoP&NG) submitted resignation from the Board of ONGC on 4" February, 2010. Subsequently, Shri Sudhir Bhargava, Additional Secretary, MoP&NG, Government of India was appointed as Government director on the Board of ONGC w.e.f 15th March, 2010. Your Directors place on record their deep appreciation for the valuable contributions made by Shri S. Sundareshan during his tenure.

Dr. A K Balyan, Director (HR) on his appointment as MD & CEO of Petronet LNG Limited, resigned from the Board of ONGC and was relieved on 15th July, 2010. Your Directors place on record their deep appreciation for the valuable contributions made by Dr. AK Balyan during his tenure as Director (HR) and in various capacities in ONGC.

The strength of the Board of Directors of ONGC as on 31s1 July, 2010 was 12 Directors, comprising 6 Executive Directors (Functional Directors including Chairman and Managing Director) and 6 Non-Executive Directors comprising 2 Government nominees and 4 Independent Directors.

Pursuant to the provisions of Section 255 and 256 of the Companies Act, 1956 and Clause 104(l) of the Articles of Association of the Company, Shri A K Hazarika, Shri D K Pande and Shri D K Sarraf retire by rotation at the 17th Annual General Meeting (AGM) and being eligible, offer themselves for reappointment.

Shri Sudhir Bhargava, who was appointed as Additional Director after the last AGM, holds office up to the 17th AGM. The Company has received notice in writing from a member pursuant to the provisions of Section 257 of the Companies Act, 1956, proposing his candidature for appointment as Director of the Company liable to retire by rotation.

Brief resume of the Directors seeking Appointment / Re-appointment, together with the nature of their expertise in specific functional areas and names of the companies in which they hold the directorship, number of shares held and the membership/ chairmanship of committees of the Board, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges are given in the notice convening the 17th AGM of the Company, and form part of the Annual Report.

35. Acknowledgement

Your Directors are highly grateful for all the help, guidance and support received from the Ministry of Petroleum and Natural Gas, Ministry of Finance, DPE, MCA, MEA, and other agencies in Central and State Governments. Your Directors acknowledge the constructive suggestions received from Statutory Auditors and Comptroller & Auditor General of India and are grateful for their continued support and cooperation.

Your Directors thank all share-owners, business partners and members of the ONGC Family for their faith, trust and confidence reposed in ONGC.

Your Directors wish to place on record their sincere appreciation for the unstinting efforts and dedicated contributions put in by the ONGCians at all levels, to ensure that the Company continues to grow and excel.

On behalf of the Board of Directors

Place: New Delhi (R .S.Sharma)

Date: 2nd August, 2010 Chairman and Managing Director