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Notes to Accounts of Oil India Ltd.

Mar 31, 2016

1.1 Disclosure pursuant to Accounting Standard (AS) 15 (Revised 2005) - Employee Benefits:-

1.1.1 Defined Contribution Plans

The Company''s contribution to Provident Funds for employees and executives is Rs. 86.59 crore (Previous year Rs. 84.20 crore).

1.1.2 Defined Benefit Plans

The various Benefit Plans which are in operation are Gratuity Fund, Oil India Employee''s Pension Fund (OIEPF), Oil India Pension Fund (OIPF), Leave Encashment Fund, Post Retirement Medical Benefit and Long Service Award. The present value of the obligation is determined based on actuarial valuation made at the end of the financial year using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation

The amount recognised in the Balance Sheet as the present value of the defined benefit obligation is net of the fair value of plan assets at the Balance Sheet date.

1.1.3 Certified Actuarial Data:-

The following tables set out the status of the Defined Benefit plans as required under AS-15:

1.2 Information as per Accounting Standard (AS) 16 "Borrowing Costs"

Borrowing cost capitalized during the year is Rs. Nil (Previous year Rs. 7.24 crore).

1.3 Information as per Accounting Standard (AS) 18 "Related Party Disclosures"

a) Related party relationships

Name of related parties and nature of relationship (excluding the State controlled entities):

i) (a) Joint Ventures (Unincorporated):

(b) Jointly Controlled Entity:

(i) Suntera Nigeria 205 Ltd.

ii) Key Management Personnel:

Whole time Functional Directors:

a) Mr. U.P. Singh Chairman and Managing Director (w.e.f. 01.07.2015)

b) Mr. S.K.Srivastava Chairman and Managing Director (up to 30.06.2015)

c) Mrs. R.S. Borah Director (Finance)

d) Mr. S. Mahapatra Director (Exploration & Development)

e) Mr. B. Roy Director (HR & BD) (w.e.f. 08.05.2015)

f) Mr. P. K. Sharma Director (Operations) (w.e.f. 01.06.2015)

g) Mr. S. Rath Director (Operations) (up to 31.05.2015)

Other Officers:

a) Mr. S.R. Krishnan Company Secretary

1.4 Information as per Accounting Standard (AS) 27 "Financial reporting of interest in Joint Ventures"

1.4.1 Company executed various JVCs/PSCs in India for oil and gas exploration, as Jointly Control Assets as on 31.03.2016, the details of which are given below:

1.4.2 Company has sent for confirmation of balances to the JVC Partners which are yet to be received.

1.5 Micro, Small and Medium Enterprises Development Act, 2006:

The Company has identified Micro, Small and Medium Enterprises (MSMEs) to whom the Company owes dues, which are outstanding as at 31.03.2016.

1.6 Income Tax

(a) For Assessment Years (AY) 2003-04 to 2007-08, 2009-10 and 2010-11, the appeals are pending for disposal before the Hon''ble Income Tax Appellate Tribunal (ITAT) with respect to the Company''s claim of benefit u/s 80-IB / 80-IC of the Income Tax Act, 1961, herein after called as the Act.

(b) For Assessment Years (AY) 2008-09, 2011-12, 2012-13 and 2013-14 the appeals are pending for disposal before the CIT (A) against disallowances / additions made in the assessment u/s 143(3).

(c) The benefit u/s 80IB and 80-IC of the Act has not been considered to make the provisions of tax in the books.

(d) The resulting interest, whether receivable or payable, shall be accounted for on finalization of the matter by an appellate authority.

(e) Income tax assessments up to the Assessment Year 2013-14 have been completed and a demand of Rs. 188.23 crore has been raised by the Department over the period on account of certain disallowances / additions. Such disallowances /additions have not been provided for in the books as the same is likely to be deleted or may be reduced substantially on the grounds taken by the company before the first appellate authority. However, wherever demand is raised, the amount has been paid.

(f) The Current tax figure of the year includes Rs.102.03 Crore on account of adjustments pertaining to previous year.

(g) Subject to the approval of the prescribed authority, Department of Scientific and Industrial Research, Company has claimed weighted deduction u/s 35(2AB) of the Income Tax Act, 1961, for the eligible amount incurred in the following respective year for capital and revenue expenditure on scientific research on in-house approved research and development facilities:

1.7 Implementation of component accounting as per Schedule II to The Companies Act, 2013

In terms of Schedule II to The Companies Act, 2013, the Company has with effect from 01.04.2015 implemented component accounting in respect of assets. As a result, depreciation for the year ended 31.03.2016, calculated based on revised useful life of the components under written down value method is higher by Rs. 4.80 crore.

1.8 Provision for diminution in value of certain Investments through impairment test arising out of exceptional circumstances:

(i) Investment in Beas Rovuma Energy Mozambique Limited (BREML)

The Company has acquired 40% stake in BREML in Financial Year 2013-14. Considering the prevailing low global oil/gas prices consequent to slowdown in global economy as an impairment indicator, a provision for diminution amounting to Rs.174 crore in the value of investments in BREML has been made during the year based on the impairment test conducted arising out of exceptional circumstances.

(ii) Investment in Suntera Nigeria 205 Limited (SUNTERA) including loans and advances

a. The Long Term Loans & Advances to SUNTERA amounting to Rs.161.55 crore as of 31.03.2016 represents the loan extended for Company''s share of expenditure in Oil Mining Lease (OML) 142, Nigeria including accrued interest of Rs.54.52 crore.

b. On expiry of the loan agreement on 31st December 2014, the outstanding loan amounting to Rs.99.66 crore had been provided as doubtful of recovery in financial year 2014-15 accounts. Interest of Rs. 7.89 crore upto 31.12.2009 had earlier been provided in Financial Year 2009-10 accounts. Further, provision was created as Diminution in value of investment of Rs. 0.01 crore and Rs. 0.67 crore recoverable on other accounts was provided as doubtful in 2014-15 Accounts.

c. The loan agreement has now been extended up to 31.01.2022 on 23.10.2015 with retrospective effect from 1-1-2015 in supersession of earlier agreements to cover further development in the block.

d. Accordingly, aforesaid provisions taken in the previous year for above loan dues with interest and other provisions as referred in (b) above have been written back in the current year.

e. As the loan as well as total interest accrual thereof will be payable by 31.01.2022 as per fresh agreement reached duly approved by Board of Directors of the Company on 29.09.2015, accrued interest from 01.01.2010 to 31.03.2016 amounting to Rs.46.64 crore (including Rs.7.44 crore for 2015-16) have been accounted in the current year under accrual system of accounting being followed by the Company.

However considering the prevailing low global oil/gas prices consequent to slowdown in global economy as an impairment indicator, the Investment in SUNTERA by way of loans & advances including accrued interest thereon have been put to impairment test and Rs.41.13 crore provision in diminution in value has been made in current year''s accounts based on such test conducted arising out of exceptional circumstances.

1.9 VAT and Royalty on crude oil:

(a) The Company has received notice of demand for Rs. 1349.71 crore from Assam Value Added Tax Authority claiming VAT on sharing of under recoveries to downstream oil companies and on transportation charges of own crude oil. Out of this an amount of Rs.21.97 crore pertains to VAT on transportation of crude oil for the period from FY 2009-10 to 2012-13. The company has provided Rs.41.11 crore including interest for the period from 2009-10 to 2015-16 in the accounts for the quarter and year ended 31.03.2016. The demand for the balance Rs.1327.74 crore, being VAT on sharing of under-recoveries has been contested by the Company before the Commissioner of Taxes, Assam. In a similar matter, the Gujrat High Court has passed order against applicability of VAT on the amount of under recoveries shared, which has been upheld by Supreme Court of India through dismissal of Special Leave Petition filed by Gujrat Government against the High Court decision.

(b) The Company has received claim of Rs. 7224.20 crore from Director of Geology and Mining, Assam claiming royalty on sharing of under recoveries to downstream oil companies on crude oil for the year 2008-09 to 2013-14 including interest upto 31.08.2014. Company is paying royalty on post-discounted price based on the instructions issued by MOP&NG and in line with Oil Field (Regulation & Development) Act 1948 and subsequent notifications thereof and hence does not consider the claim as liability. The Government of Assam has filed a writ petition before the Hon''ble Gauhati High Court which is pending adjudication. The amount of claim as above together with amount of differential royalty up to 31.03.2016 including interest thereon estimated to be Rs.9749.55 crore has accordingly been included and shown as contingent liability.

1.10 Details of charge:

(a) The Company has created charge against Current Assets to the tune of Rs. 377.45 crore (previous year Rs. 377.45 crore) for availing Bank Guarantee.

(b) Further the Company has created charge against the Current Assets to the tune of Rs. 700.00 crore (previous year Rs. 700.00 crore) for availing Cash Credit/Letter of Credit/Bank Guarantee Facility.

1.11 Other disclosure under Schedule III to the Companies Act, 2013

I. Contingent Liabilities and commitments

(i) Contingent Liabilities:

(a) Claims against the Company not acknowledged as debts:

(b) In respect of Guarantees :

(c) Other matters for which the Company is contingently liable:

(ii) Commitments:

(a) Capital Commitments:

(i) The estimated amount of contracts remaining to be executed on Capital Account and not provided for in the accounts: Rs. 632.92 crore (previous year Rs. 246.20 crore).

(ii) Company''s share in the amount of contracts remaining to be executed on Capital Accounts and not provided for in the account in respect of the un-incorporated Joint Ventures is Rs.146.76 crore (previous year Rs. 18.13 crore).

(b) Other Commitment:

(iii) The estimated amount of contracts remaining to be executed on Revenue Account and not provided for in the accounts: Rs. 283.07 crore (previous year Rs. 172.45 crore).

(iv) Balance of Minimum Work Program Commitment (MWP) by OIL under Production Sharing Contracts (PSCs) entered for NELP Blocks with Govt. of India is Rs. 2200.62 crore (previous year Rs.2371.00 crore) out of which Rs. 460.81 crore (previous year Rs. 883.00 crore) is covered by Bank Guarantee submitted to DGH.

(v) Balance of Minimum Work Program Commitment (MWP) by OIL under Production Sharing Contracts (PSCs) entered for overseas Blocks is Rs. 388.03 crore (previous year Rs. 445.50 crore) out of which Rs. 345.34 crore (previous year Rs. 326.19 crore) is covered by Bank Guarantee.

1.12 RECLASSIFICATION/REGROUPING:

Previous year figures have been reclassified / regrouped wherever necessary to conform to current year figures.


Mar 31, 2015

1. The Board of Directors has recommended a final dividend of Rs.10 per share which is subject to the approval of the shareholders in the ensuing Annual General Meeting over and above the interim dividend of Rs. 10 per share paid .

2. Foreign Currency Translation Reserve Account represents the exchange difference arising out of translation of monetary items related to advances paid to subsidiaries/joint venture being considered as Non-Integral Foreign Operation.

3. The treatment of Foreign Currency Monetary Item Translation Difference Account is accounted for in line with the Para 46 A of AS-11- reference note no. 32.5 (i) (b).

4. Pursuant to directive from Government of India, company has raised overseas borrowings for acquiring 10% participating interest in Rovuma 1 offshore block in Mozambique. In the opinion of the management, there is no explicit restriction by the competent authority with regard to repayment and servicing of such overseas borrowings from domestic resources of the company. Interest servicing on this overseas borrowings have been met from domestic resources and accounting treatment of exchange fluctuation on such long term overseas borrowings is made accordingly.

5. Bonds represent

(i) 5.375% Notes USD 500 million Reg S Bonds issued on 17.04.2014, payable after 10 years from the date of issue.

(ii) 3.875% Notes USD 500 million Reg S Bonds issued on 17.04.2014, payable after 5 years from the date of issue.

6. External commercial Borrowings represent

(i) Syndication loan of USD 250 million (Previous year USD 250 million) drawn from banks on 26.12.2013 repayable on the date falling five years from the date of drawl.

(ii) Syndication loan of USD 125 million availed from banks repayable on the date falling five years from the average date of drawl facility commencing from 06th January, 2015. Amount drawn upto 31.03.2015 is USD 70 million.

7. Provision for employee benefits includes superanuation benefits as per Note no 31.1.2. The figure represents includes Leave encashment Rs. 183.58 crore (Previous year Rs. 172.11 crore), Post retirement medical benefit Rs. 115.90 crore (Previous year Rs. 104.77 crore) and Long service award Rs. 30.77 crore (Previous year Rs. 17.81 crore).

8. In terms of Department of Public Enterprise (DPE) order for revision of pay package of executives and non- unionised supervisors of CPSEs w.e.f 01.01.2007 a superannuation defined contribution plan called Oil India Superannuation Benefit Scheme has been implemented. The scheme has started disbursement of pension to eligible retirees. Employees liability includes Rs. 562.98 crore as on 31.03.2015 towards Oil India Superannuation Benefit Scheme after payment of Rs.70.41 crore to the trust fund. Corresponding figure included in the previous year was Rs. 460.90 crore under Provision for employee benefits in Note-10 towards defined contribution benefit scheme as it was not implemented in previous financial year.

9. Provision for employee benefits includes superannuation benefits in Note no. 31.1.2. The figure represents Leave encashment Rs. 33.71 crore (Previous year Rs. 32.54 crore), Post retirement medical benefit Rs. 22.08 crore (Previous year Rs.18.89 crore), Long service award Rs. 14.78 crore (Previous year Rs.9.41 crore) & provision against ex- gratia bonus Rs. 4.59 crore (Previous year Rs. 2.07 crore) and also refer Note No. 9.1.

10. Provision has been made towards cost of non-fulfilment of Minimum Work Programme (MWP) payable to Government of India as per terms of the Production Sharing Contract (PSC) of Blocks.

11. Depreciation for the year includes Rs. 70.50 crore (Previous year Rs. 54.44 crore) capitalised under Development Cost (Note 13) and Rs. 0.92 crore [Previous year Rs. (0.65) crore] shown under Note-29 in prior period items.

12. Lands for projects and drillings operations are acquired primarily through bipartite negotiation with the occupiers/ pattadars. In case, however, bipartite negotiation fails, lands are acquired with the intervention of government officials under the relevant land laws. Upon successful negotiation or government order, as the case may be, consent letters are obtained from the occupiers/pattadars and surface compensation for the standing crops on the lands are settled and the same are capitalized either as Land under Possession or as Pre Producing / Producing Properties. At the same time occupiers/pattadars are advised to submit documentary evidences in support of their legal possession of the lands. Pending submission of these documents and upon settlement of surface compensation, liability for land value is determined and capitalised under respective heads. Land cost forming part of Pre-Producing/Producing Properties is either amortized or charged off depending on discovery in the well. Land cost forming part of the Land under Possession is not amortized. Out of the total lands measuring 26164.65 Bighas under the possession of the company, title deed have been executed for lands measuring 12439.22 Bighas, mutation completed for lands measuring 6466.84 Bighas, 3720.39 Bighas have been applied for mutation and for the balance, the company is in the process of execution of title deed/mutation. The Company is in the process of strengthening the acquisition process and the mutation of those lands including maintenance of systematic records thereof.

13. The aggregate amount of unquoted investments is Rs. 8630.71 crore (Previous year Rs. 8585.86 crore).

14. The aggregate market value of quoted investments is Rs. 4475.32 crore (Previous year Rs. 3386.99 crore).

15. Advance against acquisition of equity shares includes advances amounting to Rs. 0.17 crore (Previous year Rs. 0.06 crore), Rs. 69.63 crore (Previous year Rs. 69.63 crore), Nil (Previous year Rs. 13.61 crore) and Rs. 210.05 crore (Previous year NIL) paid to Oil India Cyprus Limited, Oil India (USA) Inc., M/s BCPL & Oil India International B.V. respectively pending allotment.

16. Loans represents loans given to

(i) M/s Oil India International B.V. : Maturing on 12th July, 2019, carries interest at 3 months LIBOR plus 5.65%.

(ii) M/s DNP Limited: Repayment @ Rs. 2 crore per month maturing on 1st January, 2019, carries interest at SBI Base Rate plus 1.75% to be reset every 2 years, last such reset having done on 20th April, 2015. The Current portion of the loan outstanding is shown under 'Short-term loans and advances'.

(iii) M/s Brahmaputra Cracker & Polymer Limited: Repayment in eight equal quarterly instalments maturing on 31st December, 2017, carries interest at SBI Base Rate plus 0.50% to be reset every year, last such reset was done on 21st Feb, 2015. The Current portion of the loan outstanding is shown under 'Short-term loans and advances'.

17. The aggregate amount of unquoted investments is Rs. 210.00 crore (Previous year Rs. 200.00 crore).

18. Mode of valuation of investments is given in Note no 32.9.

19. Stores and spares includes Goods in transit Rs. 97.55 crore (Previous year Rs. 121.80 crore).

20. Mode of valuation of inventories is given in Note no 32.10.

21. Current Accounts includes an amount of Rs. 7.46 crore (Previous year Rs. 8.83 crore) in respect of earmarked balances with bank for unpaid dividend.

22. Term deposits includes Nil (Previous year Rs. 1971.78 crore), pledged as Security against Short Term Loans from Banks.

23. As per directive of MOP&NG, Crude Oil price calculation is based on the monthly average price of benchmarked International Basket of Crude Oil which is further adjusted for quality differential. As per directive of MOP&NG, Discount is allowed on the sale of crude oil and LPG.

24. LPG price is governed as per the MOU between the Company and Indian Oil Corporation Ltd.

25. Natural Gas price is as notified by MOP&NG and applicable to operating areas of the company. Subsidy extended to the eligible customers in North East India is reimbursed by Government of India and shown as Other Operating Revenue.

26.In terms of decision of Government of India (GOI), the company has shared under-recoveries of Oil Marketing Companies (OMCs) on price sensitive products viz Crude Oil & LPG for the first three quarters by extending discount in the prices Crude Oil & LPG based on the rates of discount communicated by Petroleum Planning and Analysis Cell (PPAC), Ministry of Petroleum and Natural Gas (MoP&NG). Sales value of Crude Oil & LPG are shown net of such discount of Rs. 5439.81 crore (Previous year Rs. 8566.23 crore) and Rs. 82.77 crore (Previous year Rs. 170.62 crore) respectively.

27. Contribution to provident and other funds include an amount of Rs. 172.44 crore (Previous year Rs. 106.55 crore) on account of superannuation defined contribution benefit plan. {Refer Note 10.1}

ADDITIONAL NOTES

28. DISCLOSURE PURSUANT TO ACCOUNTING STANDARD (AS) 15 (REVISED 2005) - EMPLOYEE BENEFITS:-

28.1. Defined Contribution Plans

The Company's contribution to Provident Funds for employees and executives is Rs. 84.20 crore (Previous year Rs. 79.79 crore).

28.2. Defined Benefit Plans

The various Benefit Plans which are in operation are Gratuity Fund, Oil India Employee's Pension Fund (OIEPF), Oil India Pension Fund (OIPF), Leave Encashment Fund, Post Retirement Medical Benefit and Long Service Award. The present value of the obligation is determined based on actuarial valuation made at the end of the financial year using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation.

The amount recognised in the Balance Sheet as the present value of the defined benefit obligation is net of the fair value of plan assets at the Balance Sheet date.

28.3. Certified Actuarial Data:-

The following tables set out the status of the Defined Benefit plans as required under AS-15:

Borrowing cost capitalized during the year is Rs. 7.24 crore (Previous year Rs. 1.38 crore).

29. Information as per Accounting Standard (AS) 18 "Related Party Disclosures"

a) Related party relationships

Name of related parties and nature of relationship (excluding the State controlled entities):

(b) Jointly Controlled Entity:

(i) Suntera Nigeria 205 Ltd.

(ii) Key Management Personnel:

whole time Functional Directors:

a) Mr. S.K.Srivastava Chairman and Managing Director

b) Mr. N.K. Bharali Director (HR & BD)

c) Mr. S. Rath Director (Operations)

d) Mrs. R.S. Borah Director (Finance)

e) Mr. S. Mahapatra Director (E & D)

Part-time Directors:

a) Mr. Anup Mukerji Independent Director

b) Mr. Suresh Chand Gupta Independent Director

c) Mr. Bhaskar Ramamurthi Independent Director

d) Mr. Shekhar Chaudhuri Independent Director

e) Mr. Gautam Barua Independent Director

Other Officers:

a) Mr.S.R.Krishnan Company Secretary

The Company has signed a "Participating Agreement" (PA) for the product pipeline in Sudan with ONGC Videsh Limited (OVL) for a 10% Participating Interest (balance 90% being with OVL) awarded by Ministry of Energy & Mining , Govt. of Sudan (GOS). The construction of the pipeline project was completed on 01.09.2005 and handed over to GOS under Build, Own, Lease and Transfer (BOLT) basis.

The "PA" entered into between OVL and the Company is neither intended nor shall be construed as creating a partnership or joint venture among the parties. Hence, accounting has not been done following "Joint Venture Accounting Policy" but the agreement for providing finance for the project in rupees to OVL and to share lease rentals receivable from Govt. of Sudan has been treated as "Finance Lease Activity" as envisaged under Accounting Standard (AS) 19 issued by The Institute of Chartered Accountants of India and accordingly accounted for.

Since the company is not having any discontinuing operations and as such disclosure under AS-24 is not applicable.

30. Information as per Accounting Standard (AS) 27 "Financial reporting of interest in Joint Ventures"

31.1 Company has sent for confirmation of balances to the JVC Partners which are yet to be received.

32. INCOME TAX

(a) For Assessment Year (AY) 2003-04 to 2007-08, 2009-10 and 2010-11, the appeal is pending for disposal before the Hon'ble Income Tax Appellate Tribunal (ITAT) with respect to the Company's claim of benefit u/s 80-IB / 80-IC of the Income Tax Act, 1961, herein after called as the Act.

(b) For Assessment Year (AY) 2008-09, 2011-12 and 2012-13, the appeal is pending for disposal before the CIT (A) against disallowances / additions made in the assessment u/s 143(3).

(c) The benefit u/s 80IB and 80-IC of the Act has not been considered to make the provisions of tax in the books.

(d) The resulting interest, whether receivable or payable, shall be accounted for on finalization of the matter by an appellate authority.

(e) Income tax assessments up to the Assessment Year 2013-14 have been completed and a demand of Rs.200.50 crore has been raised by the Department over the period on account of certain disallowances / additions. Such disallowances/additions have not been provided for in the books as the same is likely to be deleted or may be reduced substantially on the grounds taken by the company before the first appellate authority. However, wherever demand is raised, the amount has been paid.

(f) The current tax figure of the year includes Rs. 93.76 crore (negative) on account of adjustments pertaining to previous years.

(g) Subject to the approval of the prescribed authority, Department of Scientific and Industrial Research, company has claimed weighted deduction u/s 35 (2AB) of the Income Tax Act, 1961, for the eligible amount incurred in the following respective years for capital and revenue expenditure on scientific research on in-house approved research and development facilities:

33. Implementation of Schedule II of the Companies Act, 2013

In respect of Fixed assets other than those included under Producing Properties, the company has w.e.f. 01.04.2014 revised the depreciation rates based on the useful life of its various fixed assets as prescribed in Part-C of Schedule II to the Companies Act, 2013. As a result, depreciation for financial year, calculated on written down value method is lower by Rs. 28.84 crore. Similarly, in case of fixed assets whose useful life has already been completed as on March 31,2014, the carrying value (net of residual value) of those fixed assets amounting to Rs.14.37 crore (net of deferred tax Rs. 4.88 crore) have been debited to the opening balance of General Reserves.

34. Implementation of Guidance Note on Depletion of Producing Properties - Other Production Facilities:

Company following the Guidance note on Accounting for Oil and Gas Producing Activities (Revised), 2013 as well as ICAI Expert Advisory Committee, company has w.e.f. 01.04.2014 made changes in accounting estimates by changing the useful life of "Other production facilities" by linking it with the respective oil and gas reserves as against the existing practice of determination of the same on the basis of the Companies Act. Such reserves are assessed at the year end and impacts of changes to reserves are accounted for prospectively. As per (AS) 5, such change in accounting estimates do not require restatement of earlier financial statements or any retrospective adjustment. Accordingly, the effect of such changes including reversal of changes made consequent to implementation of Schedule II to the Companies Act, 2013 in respect of those "Other production facilities" resulted in depletion/depreciation for the year higher by Rs. 17.72 crore.

(iii) Proved and Proved Developed Reserves of oil (including condensates) and gas are technically assesses and reviewed in-house at the end of each year in line with international practices. Reserves are audited by external experts at periodical intervals. For the purpose of estimation of Proved and Proved Developed Reserves Deterministic Method is used by the company. Production pattern analysis, no of additional wells to be completed, application of enhanced recovery techniques, validity of mining lease agreements, agreements/MOU for sales are taken into consideration for determining reserves quantity.

35. VAT and Royalty on crude oil:

(a) Company has received notice of demand for Rs.1349.71 crore from Assam Value Added Tax Authority claiming tax on sharing of under recoveries to downstream oil companies and on transportation charges on crude oil. Company is contesting the demand and pursuant to directive of Gauhati High Court the matter is pending before the VAT Appellate Authority.

(b) Company has received claim of Rs.7224.20 crore from Director of Geology and Mining, Assam claiming royalty on sharing of under recoveries to downstream oil companies on crude oil for the year 2008-09 to 2013-14. Company is paying royalty on post-discounted price based on the instructions issued by MOP&NG and in line with Oil Field (Regulation & Development) Act 1948 and hence does not consider the claim as liability.

(C) Oil India International BV: On 4th July 2014, company through its wholly owned subsidiary Oil India International B.V. completed acquisition of 50% shareholding in World Ace Investments Limited, a Cyprus based company which through its wholly owned subsidiary owns License 61 in Tomsk Oblast region in Western Siberia, Russia. The company's share of consideration for acquiring the shares has been accounted as investment in Joint Venture as per AS -13

(d) In respect of claims made against the company to the extent they are not acknowledged as debt and where no provisions have been made, are disclosed under Contingent Liabilities 31.16(I)(i).

36. Details of charge:

(a) The company has created charge against Current Assets to the tune of Rs.377.45 crore (Previous year Rs.377.45 crore) for availing Bank Guarantee.

(b) The company is having Cash Credit /Letter of credit / Bank Guarantee facility against the security of its current assets to the tune of Rs.700 crore.(Previous year Rs.700 crore)

37. Other disclosure under Schedule III to the Companies Act, 2013

I. Contingent Liabilities and commitments

(i) Contingent Liabilities:

(a) Claims against the Company not acknowledged as debts:

(i) In respect of claims under Sales Tax Act : Rs.1358.12 crore (Previous year Rs.8.41 crore)

(ii) In respect of claims under Central excise Acts : Rs. 158.17 crore (Previous year & Service Tax Rs.114.73 crore)

(iii) In respect of claims under Income Tax Act : Rs.3.96 crore(Previous year - nil)

(iv) In respect of claims under Other Acts : Rs.46.39 crore (Previous year ' 42.26 crore)

(v) Claims by contractors pending in Arbitration / Courts. : '24.52 crore (Previous year '109.63 crore).

(vi) In respect of share of claim on JVC/PSC account : Rs.6.57 crore (Previous year ' 27.36 crore)

(vii) In respect of claim of Royalty by Govt. of Assam : Rs.7224.20 crore (Previous year - nil) on gross price of crude oil

(b) In respect of Guarantees :

(i) Bank Guarantee issued for Rs.702.02 crore to Superintendent of Taxes, Naharkatia, Assam, in relation to demand raised by the Department under Assam Taxation (on specified lands) Act 1990. (Previous year Rs.702.02crore).

(ii) Guarantee to OIDB against Loan by M/S BCPL from OIDB: Rs.36.34 crore (Previous year Rs.36.34 crore).

(iii) Counter Guarantee to GAIL against Loan by M/S BCPL from OIDB: Rs.27.78 crore (Previous year Rs.27.78 crore).

(iv) Corporate Guarantee to Royal Bank of Scotland (Finance) Ireland against Loan taken by OIL INDIA (USA) INC. for USD Nil Rs.NIL (Previous year USD 90 million Rs. 545.49 crore).

(v) Corporate Guarantee to Sumitomo Mitsui Banking Corporation against Loan taken by OIL INDIA (USA)INC. for USD 90 million Rs.568.71 crore (Previous year USD Nil Rs.Nil).

(c) Other money for which the company is contingently liable:

(II) Commitments:

(a) Capital Commitments:

(i) The estimated amount of contracts remaining to be executed on Capital Account and not provided for in the accounts: Rs.246.20 crore (Previous year Rs. 538.66 crore).

(ii) Company's share in the amount of contracts remaining to be executed on Capital Accounts and not provided for in the account in respect of the Joint Ventures is Rs.18.13 crore (Previous year Rs. 8.47 crore).

(b) Other Commitment:

(i) Balance of Minimum Work Program Commitment (MWP) by OIL under Production Sharing Contracts (PSCs) entered for NELP Blocks with Govt. of India is Rs.2371 crore.(Previous year Rs.2663 crore) out of which Rs. 883 crore (Previous year Rs.314 crore) is covered by Bank Guarantee submitted to DGH.

38. RECLASSIFICATION/REGROUPING:

Previous year figures have been reclassified / regrouped whenrever necessary to conform to current year figures.


Mar 31, 2014

1.1 The Board of Directors has recommended a final dividend of Rs. 0.50 per share which is subject to the approval of the shareholders in the ensuing Annual General Meeting over and above the interim dividend of Rs. 21 (Rs. 11 and Rs. 10) per share paid in two phases.

2.1 The balance in Foreign Currency Translation Reserve Account reflects the exchange difference arising out of translation of monetary items related to Non Integral Foreign Operation.

3.1 Syndication loan of USD 250 million drawn from banks on 26.12.2013 repayable on the date falling five years from the date of drawal.

4.1 Provision for employee benefits includes superannuation benefits as Note No 31.1.2.

4.2 In terms of Department of Public Enterprise order for revision of pay package of executives and non-unionised supervisors of CPSEs w.e.f 01.01.2007, a superanuation defined contribution plan has been formulated and approved by the competent authority. In recognition of such defined contribution plan liability w.e.f 01.01.2007, company has provided Rs. 106.55 crore during the year (Previous year Rs. 29.24 crore) and the cumulative liability as on 31.03.2014 stands at Rs. 460.95 crore (Previous year Rs. 354.40 crore).

4.3 Provision has been made towards cost of non-fulfilment of Minimum Work Programme (MWP) payable to Government of India as per terms of the Production Sharing Contract (PSC) of Blocks.

5.1 Lands for projects and drillings operations are acquired primarily through bipartite negotiation with the occupiers/pattadars. In case, however, bipartite negotiation fails, lands are acquired with the intervention of government officials under the relevant land laws. Upon successful negotiation or government order, as the case may be, consent letters are obtained from the occupiers/pattadars and surface compensation for the standing crops on the lands are settled and the same are capitalized either as Freehold Land or as Capital work in progress/Acquisition cost under Producing Properties. At the same time occupiers/pattadars are advised to submit documentary evi- dences in support of their legal possession of the lands. Pending submission of these documents and upon settlement of surface compensation, liability for land value is determined and capitalised under respective heads. Land cost forming part of Producing Proper- ties/Capital work in progress is either amortized or charged off depending on discovery in the well. Land cost forming part of the Land under Possession is not amortized. Out of the total lands measuring 26064.41 Bigha under the possession of the company, lands measuring 6311.24 Bighas have been mutated and 3480.20 Bighas have been applied for mutation & for the balance, the verification of title deed of the land is in the process as on 31.03.2014. The Company is in the process of strengthening the acquisition process and the mutation of those lands including maintenance of systematic records thereof.

6.1 Right of use for laying pipelines does not bestow upon the company, the ownership of land and hence, treated as Intangible Assets.

7.1 The aggregate amount of unquoted investments is Rs. 8585.86 crore (Previous year Rs. 1857.07 crore).

7.2 The aggregate market value of quoted investments is Rs. 3386.99 crore (Previous year Nil).

8.1 Inter Corporate Loans represent loans given to

(i) M/s DNP Limited of Rs. 98.20 crore for a period of 10 years, which carries an interest of 10% per annum (8% per annum upto 19.04.2011). First instalment of Repayment of loan commenced from 01.04.2013. The Current portion of the loan outstanding is shown under ''Short- term loans and advances''.

(ii) M/s Brahmaputra Cracker & Polymer Limited of Rs. 250.00 crore for a period of 5 years. The rate of interest is SBI Base Rate plus 0.50% prevailing on the date of signing of the Loan agreement and shall remain valid for one year. The interest on loan will be reset every year thereafter at prevailing SBI Base Rate at that point of time plus 0.50%. Repayment of loan will be commenced after the moratorium period of 2 years.

9.1 Long term trade receivables represents non-current portion of receivables against lease rent under finance lease arrangement. Refer to note no. 31.5.

9.2 In terms of Hon''ble High Court order, Company has paid decreed amount of Rs. 99.05 crore in the FY 2012-13 arising out of dispute with a contractor. Company''s appeal against such decreed amount is admitted and pending before the Hon''ble High Court and the Company considers it to be recoverable and as such not treated as expense.

10.1 Stores and spares includes Goods in transit Rs. 121.80 crore (Previous year Rs. 126.70 crore).

10.2 Mode of valuation of inventories is given in Note no 32.10.

11.1 Current Accounts includes an amount of Rs. 8.83 crore (Previous year Rs. 231.10 crore) in respect of earmarked balances with bank for unpaid dividend.

11.2 Term deposits includes Rs. 1971.78 crore (Previous Year Rs.1021.86 crore), pledged as Security against Short Term Loans from Banks.

12.1 For Leave Encashment fund refer to note no. 31.1.3.

12.2 Advance against acquisition of equity shares includes advances amounting to Rs. 0.06 crore (Previous year Rs. 0.06 crore), Rs. 69.63 crore (Previous year Rs. 52.78 crore) & Rs. 13.61 crore (Previous year Rs. 21.10 crore) paid to Oil India Cyprus Limited, Oil India (USA) Inc. & M/s BCPL respectively pending allotment.

13.1 As per directive of MOP&NG, Crude Oil price calculation is based on the monthly average price of benchmarked International Basket of Crude Oil which is further adjusted for quality differential. As per directive of MOP&NG, Discount is allowed on the sale of crude oil and LPG.

13.2 LPG price is governed as per the MOU between the Company and Indian Oil Corporation Ltd.

13.3 Natural Gas price is as notified by MOP&NG and applicable to operating areas of the company. Subsidy extended to the eligible customers in North East India is reimbursed by Government of India and shown as Other Operating Revenue.

13.4 In terms of decision of Government of India (GOI), the company has shared under-recoveries of Oil Marketing Companies (OMCs) on price sensitive products viz Crude Oil & LPG for the year 2013-14 by extending the discount in the Crude Oil & LPG based on the rates of discount communicated by Petroleum Planning and Analysis Cell (PPAC), Ministry of Petroleum and Natural Gas (MoP&NG). Sales value of Crude Oil & LPG are shown net of such discount of Rs. 8566.23 crore (Previous year Rs. 7766.08 crore) and Rs. 170.62 crore (Previous year Rs. 126.09 crore) respectively.

14.1 Contribution to provident and other funds includes an amount of Rs.106.55 Crore (Previous year Rs. 29.24 crore) on account of superannuation defined contribution benefit plan. {Refer Note 10.2}

15.1 In line with the approval of the Govt. of India, Company has financed the acquisition of 40% shares in Videocon Mozambique Rovuma 1 Limited (renamed as Beas Rovuma Energy Mozambique Limited) out of foreign currency borrowings. However, interest servicing on these foreign currency borrowings amounting to Rs. 21.01 crore is being done out of Company''s internal resource generation in India.

16.1 Statutory levies represent Royalty Rs.1276.08 crore (Previous year Rs. 1332.55 crore) and Cess Rs.1602.77 crore (Previous year Rs. 1711.30 crore).

16.2 The Company has reviewed the recent judgement of the Supreme Court with regard to payment of Royalty on Pre-discount price of crude oil and is of the opinion that no liability on this account is anticipated at this stage.

17.1 Weighted average number of Equity Shares for Previous period figures have been restated for the purpose of computation of Earnings per share in accordance with AS-20.

18.1 Disclosure pursuant to Accounting Standard (AS) 15 (Revised 2005) – Employee Benefits:- 31.1.1 Defined Contribution Plans

The Company''s contribution to Provident Funds for employees and executives is Rs. 79.79 crore (Previous year Rs. 72.36 crore).

18.1.2 Defined Benefit Plans

The various Benefit Plans which are in operation are Gratuity Fund, Oil India Employee''s Pension Fund (OIEPF), Oil India Pension Fund (OIPF), Leave Encashment Fund, Post Retirement Medical Benefit and Long Service Award. The present value of the obligation is determined based on actuarial valuation made at the end of the financial year using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation. Long Service Award liability as on 31.03.2014 determined by the actuary, has been charged to Statement of Profit and Loss. The amount recognised in the Balance Sheet as the present value of the defined benefit obligation is net of the fair value of plan assets at the Balance Sheet date.

18.2 Information as per Accounting Standard (AS) 16 "Borrowing Costs"

Borrowing cost capitalized during the year is Rs.1.38 crore (Previous year Rs. Nil).

18.3 Information as per Accounting Standard (AS) 19 "Lease"

The Company has signed a "Participating Agreement" (PA) for the product pipeline in Sudan with ONGC Videsh Limited (OVL) for a 10% Participating Interest (balance 90% being with OVL) awarded by Ministry of Energy & Mining , Govt. of Sudan (GOS). The construction of the pipeline project was completed on 01.09.2005 and handed over to GOS under Build, Own, Lease and Transfer (BOLT) basis.

The "PA" entered into between OVL and the Company is neither intended nor shall be construed as creating a partnership or joint venture among the parties. Hence, accounting has not been done following "Joint Venture Accounting Policy" but the agreement for providing finance for the project in rupees to OVL and to share lease rentals receivable from Govt. of Sudan has been treated as "Finance Lease Activity" as envisaged under Account- ing Standard (AS) 19 issued by The Institute of Chartered Accountants of India and accordingly accounted for.

18.4 Since the company is not having any discontinuing operations and as such disclosure under AS-24 is not applicable.

18.5 Information as per Accounting Standard (AS) 27 "Financial reporting of interest in Joint Ventures"

C. Blocks relinquished/being relinquished

The required disclosures under AS 27 related to relinquished/being relinquished blocks against which full provision has been made are not disclosed since it does not affect the related disclosures materially. However, relinquished/ being relinquished blocks against which balances are appearing in the books of accounts or transactions have taken place during the financial year are disclosed as under:

Jointly Controlled Entity:

The Company along with ONGC Videsh Limited (OVL) acquired 100% shares of Videocon Mozambique Rovuma 1 Limited (renamed as Beas Rovuma Energy Mozambique Limited (BREML)). The Company acquired 40% shares in BREML, which holds 10% PI in the Rovuma Area 1 offshore Block, Mozambique. The transaction was completed on 7th January, 2014 for USD 1,007.69 million (Rs. 6337.39 crore) against the net asset value of USD 130.46 million (Rs. 820.44 crore). The company''s share of consideration for acquiring the shares has been accounted as investment in Joint Venture as per AS -13.

As per the condition of sale and purchase agreement with Videocon for acquiring the shares of BREML, the consideration is subject to adjustment for the seller''s final statements of accounts which has been received from Videocon on 2nd May, 2014 seeking adjustment to the purchase price of USD 20.972 million (Rs. 127.11 crore) additionally payable to seller. The same is under review and adjustment to the consideration, if any, shall be accounted on finalization of seller''s final statement of accounts.

18.7.1 Pursuant to directive from Government of India vide MoP&NG letter no. 33011/16/2013-ONG-III dated 17.10.2013, the company has raised overseas funding for acquiring 10% participating interest in Rovuma I offshore block in Mozambique along with ONGC Videsh Ltd. The foreign currency borrowing at the close of year has been translated in accordance with AS-11 and consequently Rs 238.96 crore has been recognized as exchange gain on foreign currency translation.

In the opinion of the Management there is no explicit restriction by the authority with regard to repayment or servicing of debt from domestic resources of the company.

18.7.2 Recoverability of dues of Rs. 94.47 crore as on 31.03.2014 from Suntera Nigeria 205 Ltd. in which the company is having 25% interest in equity along with Suntera Resources Limited (50%) and Indian Oil Corporation Limited (25%) is dependent upon its ability to continue as a going concern with the support of its shareholding companies. This loan is however due for repayment on 31.12.2014 only. Accordingly, no provision has been created in accounts as on 31.03.2014.

18.7.3 Company has sent for confirmation of balances to the JVC Partners which are yet to be received.

19.1 Income Tax

a) For Assessment Year (AY) 2003-04 to 2007-08, 2009-10 and 2010-11, the appeal is pending for disposal before the Hon''ble Income Tax Appellate Tribunal (ITAT) with respect to the Company''s claim of benefit u/s 80-IB / 80-IC of the Income Tax Act, 1961, herein after called as the Act.

b) For Assessment Year (AY) 2008-09, 2011-12 and 2012-13, the appeal is pending for disposal before the CIT(A) against disallowances / additions made in the assessment u/s 143(3).

c) The benefit u/s 80-IB & 80-IC of the Act has not been considered to make the provisions of tax in the books.

d) The resulting interest, whether receivable or payable, shall be accounted for on finalization of the matter by an appellant authority.

e) Income tax assessments up to the Assessment Year 2012-13 have been completed and a demand of 149.18 crore has been raised by the Department over the period on account of certain disallowances / additions.

Such disallowances/additions have not been provided for in the books as the same is likely to be deleted or may be reduced substantially on the grounds taken by the company before the first appellate authority. However, as per demand notice, the amount has been paid.

f) Subject to the approval of the prescribed authority, Department of Scientific and Industrial Research, company has claimed weighted deduction u/s 35 (2AB) of the Income Tax Act, 1961, for the eligible amount incurred in the following respective years for capital and revenue expenditure on scientific research on in-house approved research and development facilities:

19.2 Disclosure under Section 441A of the Companies Act:

Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

19.3 Implementation of Guidance Note on Oil & Gas Producing Activities (Revised 2013):

Company has implemented "Guidance Note on Accounting for Oil & Gas Producing Activities (Revised 2013)" issued by the Institute of Chartered Accountants of India (ICAI). However, the company has continued to provide depreciation on other Production Facilities, being part of producing properties as per the rates prescribed under Schedule XIV to the Companies Act 1956, in preference to the Depletion method based on Unit of Production as recommended by ICAI. Company''s decision is based on the opinion from Expert Advisory Committee of ICAI issued on 11.05.2010 and also since the rates under Schedule XIV to the Companies Act 1956 prescribes the minimum rates at which depreciation is to be provided. Impact of implementation of the Guidance Note is increase in Acquisition Cost-Land with corresponding increase in Profit before tax by Rs. 0.32 crore, increase in abandonment liability by Rs. 86.15 crore with corresponding increase in Producing well Rs. 80.21 crore, Capital Work in Progress (Development Cost- Wells Rs. 0.94 crore) & Well write off Rs. 5 crore.

Reserves are calculated in terms of Million kilo litres. Figures relating to crude oil (including condensates) are converted in Million metric tonne using average conversion factor as applicable for the year.

iii) Proved and Proved Developed Reserves of oil (including condensates) and gas are technically assesses and reviewed in-house at the end of each year in line with international practices. Reserves are audited by external experts at periodical intervals. For the purpose of estimation of Proved and Proved Developed Reserves Deterministic Method is used by the company. Production pattern analysis, no of additional wells to be completed, application of enhanced recovery techniques, validity of mining lease agreements, agreements/MOU for sales are taken into consideration for determining reserves quantity.

19.4 Details of charge:

a) The company has created charge against Current Assets to the tune of Rs. 377.45 crore (Previous year Rs. 377.45 crore) for availing Bank Guarantee.

b) The company has created charge against Current Assets to the tune of Rs. Nil (Previous year Rs.150 crore) for availing Letter of Credit.

c) The company is having Cash Credit /Letter of credit / Bank Guarantee facility against the security of its current assets to the tune of Rs. 700 crore.(Previous year Rs.1000 crore)

19.5 Other disclosure under Schedule VI to the Companies Act, 1956

I. Contingent Liabilities and commitments

i) Contingent Liabilities:

a) Claims against the Company not acknowledged as debts:

i) In respect of claims under Sales Tax Act : Rs. 8.41 crore (Previous year Rs. 5.58 crore)

ii) In respect of claims under Central excise Acts : Service Tax Rs. 114.73 crore (Previous year Rs. 43.66 crore)

iii) In respect of claims under Other Acts : Rs. 42.26 crore(Previous year Rs. 41.51 crore)

iv) Claims by contractors pending in Arbitration / Courts : Rs. 109.63 crore (Previous year Rs.110.97 crore)

v) In respect of share of claim on JVC/PSC account : Rs. 27.36 crore (Previous year Rs. 30.11 crore)

b) In respect of Guarantees :

i) Bank Guarantee issued for Rs. 702.02 crore to Superintendent of Taxes, Naharkatia, Assam, in relation to demand raised by the Department under Assam Taxation (on specified lands) Act 1990.(Previous year Rs. 702.02crore).

ii) Guarantee to OIDB against Loan by M/S BCPL from OIDB : Rs. 36.34 crore(Previous year Rs. 36.34 crore)

iii) Guarantee to OIDB against Loan by M/S DNPL from OIDB : Rs. Nil (Previous year Rs. 38.02 crore)

iv) Counter Guarantee to GAIL against Loan by M/S BCPL from OIDB : Rs. 27.78 crore(Previous year Rs. 27.78 crore)

v) Irrevocable Standby Letter of Credit to CARRIZO OIL AND GAS INC. of USD Nil, Rs. Nil, under Purchase and Participating agreement. (Previous year USD 23 Million, Rs. 126.29 crore)

vi) Guarantee to Citibank NA., New York against Loan taken by OIL INDIA (USA)INC. for USD Nil, Rs. Nil (Previous year USD 50 Million, Rs. 274.55 crore)

vii) Guarantee to Royal Bank of Scotland (Finance) Ireland against Loan taken by OIL INDIA (USA)INC. for USD 90 million Rs. 545.49 crore (Previous year USD Nil, Rs. Nil)

ii) Commitments:

Capital Commitments:

i) The estimated amount of contracts remaining to be executed on Capital Account and not provided for in the accounts: Rs. 538.66 crore (Previous year Rs. 364.13 crore).

ii) Company''s share in the amount of contracts remaining to be executed on Capital Accounts and not provided for in the account as on 31.03.2014 in respect of the Joint Ventures is Rs. 8.47 crore (Previous year Rs. 0.09 crore).

Other Commitment:

iii) Balance of Minimum Work Program Commitment (MWP) by OIL under Production Sharing Contracts (PSCs) entered for NELP Blocks with Govt. of India is Rs. 2663 crore. (Previous year Rs. 3094.53 crore) out of which Rs. 314 crore. (Previous year Rs. 389 crore) is covered by Bank Guarantee submitted to DGH.

19.6 RECLASSIFICATION/REGROUPING:

Previous year figures have been reclassified / regrouped wherever necessary to conform to current year figures.


Mar 31, 2013

1.1.1 Defined Contribution Plans

The Company''s contribution to Provident Funds for employees and executives is Rs.72.36crore (Previous year Rs. 67.38 crore).

1.1.2 Defined Benefit Plans

The various Benefit Plans which are in operation are Gratuity Fund, Oil India Employee''s Pension Fund (OIEPF), Oil India Pension Fund (OIPF), Leave Encashment Fund, Post Retirement Medical Benefit and Long Service Award. The present value of the obligation is determined based on actuarial valuation made at the end of the financial year using the Projected Unit Credit Method, which recognizes each period of service as given rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation. Long Service Award liability as on 31.03.2013 determined by the actuary, has been charged to Statement of Profit and Loss.

The amount recognised in the Balance Sheet as the present value of the defined benefit obligation is net of the fair value of plan assets at the Balance Sheet date.

1.2 Information as per Accounting Standard (AS) 16 "Borrowing Costs" Borrowing cost capitalized during the period is Rs. Nil (Previous year Rs. Nil).

1.3 Information as per Accounting Standard (AS) 18 "Related Party Disclosures"

a) Related party relationships

Name of related parties and nature of relationship (excluding the State controlled entities):

i) Joint Ventures (Unincorporated):

ii) Key Management Personnel Whole time Functional Directors:

a) Mr. S.K.Srivastava Chairman and Managing Director(w.e.f. 01.05.2012)

b) Mr. N.M. Borah Chairman and Managing Director( upto 30.04.2012)

c) Mr. T.K. Ananth Kumar Director (Finance)

d) Mr. B.N. Talukdar Director (Exploration & Development)

e) Mr. N.K. Bharali Director (HR & BD)

f) Mr. S. Rath Director (Operations)

Part-time Directors:

a) Mr. Anup Mukerji Independent Director (w.e.f 16.09.2012)

b) Mr. Suresh Chand Gupta Independent Director (w.e.f 16.09.2012)

c) Mr. Bhaskar Ramamurthi Independent Director (w.e.f 16.09.2012)

d) Mr. Shekhar Chaudhuri Independent Director (w.e.f 16.09.2012)

e) Mr. Gautam Barua Independent Director (w.e.f 16.09.2012)

f) Mr. Ghanshyambhai Hiralal Amin Independent Director (upto 15.09.2012)

g) Mr. Pawan Kumar Sharma Independent Director (upto 15.09.2012)

h) Mr. Alexander Koipuram Luke Independent Director (upto 15.09.2012)

i) Mr. Vinod Kumar Misra Independent Director (upto 15.09.2012)

j) Mr. Sushil Khanna Independent Director (upto 15.09.2012)

Other Officers

a) Mr. S.R. Krishnan Company Secretary

1.4 Information as per Accounting Standard (AS) 19 "Lease"

The Company has signed a "Participating Agreement" (PA) for the product pipeline in Sudan with ONGC Videsh Limited (OVL) for a 10% Participating Interest (balance 90% being with OVL) in the pipeline project awarded by Ministry of Energy & Mining (MEM), Govt. of Sudan (GOS) through a separate agreement entered into by OVL in this regard. The construction of the pipeline project was completed on 01.09.2005 and handed over to MEM under Build, Own, Lease and Transfer (BOLT) basis.

The "PA" entered into between OVL and the Company is neither intended nor shall be construed as creating a partnership or joint venture among the parties. Hence, accounting has not been done following "Joint Venture Accounting Policy" but the agreement for providing finance for the project in rupees to OVL and to share lease rentals receivable from MEM has been treated as "Finance Lease Activity" as envisaged under Accounting Standard (AS) 19 issued by The Institute of Chartered Accountants of India and accordingly accounted for.

1.5 Since the company is not having any discontinuing operations and as such disclosure under AS-24 is not applicable.

1.6 Information as per Accounting Standard (AS) 27 "Financial reporting of interest in Joint Ventures"

1.7.1 Company has sent for confirmation of balances to the JVC Partners which are yet to be received.

1.8 Income Tax

a) For Assessment Year (AY) 2003-04 to 2007-08, the appeal is pending for disposal before the Hon''ble Income Tax Appellate Tribunal (ITAT) with respect to the Company claim of benefit u/s 80-IB / 80-IC of the Income Tax Act, 1961, herein after called as the Act.

b) For AY 2009-10 the Commissioner of Income Tax (Appeal), "CIT(A)", has disposed off the appeal and confirmed the disallowances of Company claim u/s 80-IC of the Act. The Company will prefer a 2nd appeal before Hon''ble ITAT.

c) For AY 2008-09, 2010-11 and 2011-12 the appeal is pending for disposal before the CIT(A) with respect to the Company claim of benefit u/s 80-IC of the Act.

d) The resulting interest, whether receivable or payable, shall be accounted for on finalization of the matter by an appellant authority.

The benefit u/s 80-IC of the Act has not been considered to make the provisions of tax in the books.

1.9 Disclosure under Section 441A of the Companies Act:

Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

1.10 Details of charge:

The company has created charge against Current Assets to the tune of Rs. 377.45 crore for availing Bank Guarantee.

The company has created further charge against Current Assets to the tune of Rs. 150 crore for availing Letter of Credit.

The company is having Cash Credit facility against the security of its current assets to the tune of Rs.1000 crore.

1.11 Other disclosure under Schedule VI to the Companies Act, 1956

I. Contingent Liabilities and commitments

i) Contingent Liabilities:

a) Claims against the Company not acknowledged as debts:

i) In respect of claims under Sales Tax Act : Rs. 5.58 crore (Previous year Rs.5.58 crore)

ii) In respect of claims under Central excise Acts : Rs. 43.66 crore (Previous year Rs.26.19 crore)

iii) In respect of claims under Other Acts : Rs. 41.51crore(Previous year Rs. 36.91 crore)

iv) Claims by contractors pending decision in Arbitration / Courts. : Rs. 110.97crore (Previous year Rs.128.53 crore).

v) In respect of share of claim on JVC/PSC account : Rs. 30.11crore (Previous year Rs. 31.80 crore)

b) In respect of Guarantees :

i) Bank Guarantee issued for Rs. 702.02 crore to Superintending of Taxes, Naharkatia, Assam, in relation to demand raised by the Department under Assam Taxation (on specified lands) Act 1990.(Previous year Rs.702.02crore)

ii) Guarantee to OIDB against Loan by M/S BCPL from OIDB: Rs.36.34crore(Previous year Rs.36.34crore)

iii) Guarantee to OIDB against Loan by M/S DNPL from OIDB: Rs.38.02crore(Previous year Rs.38.02crore)

iv) Counter Guarantee to GAIL against Loan by M/S BCPL from OIDB:Rs.27.78crore(Previous year Nil)

v) Irrevocable Standby Letter of Credit to CARRIZO OIL AND GAS INC.of 23 Million USD, Rs.126.29crore under Purchase and Participating agreement. (Previous year Nil)

vi) Guarantee to Citibank NA., New York against Loan by OIL INDIA (USA)INC. for USD 50 million Rs.274.55 crore(Previous year Nil)

(ii) Commitments:

(i) The estimated amount of contracts remaining to be executed on Capital Account and not provided for in the accounts: - Rs.364.13 crore (Previous year Rs. 256.97 crore).

(ii) Company''s share in the amount of contracts remaining to be executed on Capital Accounts and not provided for in the account as on 31.03.2013 in respect of the Joint Ventures is Rs.0.09 crore (Previous year Rs. 0.02 crore).

(iii) Balance of Minimum Work Program Commitment (MWP) by OIL under Production Sharing Contracts (PSCs) entered for NELP Blocks with Govt. of India is Rs.3094.53 crore.(Previous year Rs. 3248.68 crore).

1.12 Reclassification/Regrouping:

Previous year figures have been reclassified / regrouped wherever necessary to conform to current year figures.


Mar 31, 2012

A. During the year, the company has increased authorised share capital from Rs. 500 crore to Rs. 2000 crore.

b. In terms of the approval of shareholders vide its resolution dated 21.03.2012 the Bonus issue committee of the Board of Directors of the Company have issued on 02.04.2012. 36,06,81,573 new fully paid up equity shares of Rs.10 each as bonus shares by capitalising a sum of Rs. 3,606,815,730/- out of the "Securities Premium Account" in the proportion of 3 equity bonus shares of the Company for every 2 equity fully paid up shares of Rs. 10 each to the holders of the equity shares on the record date as on 31.03.2012.

(a) Lands for projects and drillings operations are acquired primarily through bipartite negotiation with the occupiers/pattadars. In case, however, bipartite negotiation fails, lands are acquired with the intervention of government officials under the relevant land laws. Upon successful negotiation or government order, as the case maybe, consent letters are obtained from the occupiers/pattadars and surface compensation for the standing crops on the lands are settled and the same are capitalized either as Land under Possession or as Pre Producing / Producing Properties. At the same time occupiers/pattadars are advised to submit documentary evidences in support of their legal possession of the lands. Pending submission of these documents and upon settlement of surface compensation, liability for land value is determined and capitalised under respective heads. Land cost forming part of Pre-Producing/Producing Properties is either amortized or charged off depending on discovery in the well. Land cost forming part of the Land under Possession is not amortized. Out of the total lands measuring 21569B 3K 10L under the possession of the company, lands measuring 6271B 1K 3L have been mutated up to 31.03.2012. The Company is in the process of strengthening the acquisition process and the mutation of those lands including maintenance of systematic records thereof.

(b) To facilitate gas supply to Brahmaputra Cracker and Polymers Limited (BCPL), the company is requried to construct/modify additional/ existing gas distribution network. Towards this, Government of India has agreed to release capital subsidy of Rs. 215.00 crore to the Company. Total Grant received till 31.03.2012 is Rs. 69.65 crore. Out of this, an amount of Rs.41.25 crore has been adjusted against Tangible Assets on capitalisation. Balance amount of Rs.28.40 crore is kept under 'Current Liabilities' pending capitalisation of the respective assets.

(#) There are certain wells which have been temporarily abandoned / shut in & the possibility of commercial hydrocarbon discovery from these wells is remote. Hence, a provision for an amount of Rs. 265.53 crore (Previous year k Nil) has been made in the books during the year.

In respect of 2 PEL (Petroleum Exploration License) Areas, whose license have expired and renewal of the same is pending with the Government of India. Provision of Rs. 80.06 crore (Previous year Rs. Nil) has been made in the accounts during the year being the carrying amount of expenditure lying in Pre Producing Properties as on 31.03.2012.

Provision for Rs.71.58 crore (Previous Year Rs.71.12 crore) and Rs. 14.60 crore (Previous Year Rs.Nil) being the company's share of expenditure in Pre Producing Properties in Farsi Block and Libya Block respectively has been created due to geopolitical instability in respective countries.

b. Inter Corporate Loan (PSU) represents Rs. 131 crore loan given to M/s DNP Limited for a period of 10 years, which carries an interest of 10% per annum (8% per annum upto 19.04.2011). Repayment of loan will commence 2 years after commercial operation date which is 01.04.2011.

a. As per directive of MOP&NG, Crude Oil price calculation is based on the monthly average price of benchmarked International Basket of Crude Oil which is further adjusted for quality differential. As per directive of MOP&NG, Discount is allowed on the sale of crude oil and LPG.

b. LPG price is governed as per the MOU between the Company and Indian Oil Corporation Ltd.

c. Natural Gas price is as notified by MOP&NG and applicable to operating areas of the company. Subsidy extended to the eligible customers in North East India is reimbursed by Government of India and shown as Other Operating Revenue.

NOTE-1: Additional Notes

1.1 Disclosure pursuant to Accounting Standard (AS) 15 (Revised 2005) - Employee Benefits:-

1.1.1 Defined Contribution Plans

The Company's contribution to Provident Funds for employees and executives is Rs. 67.38 crore (Previous year Rs. 95.08 crore).

1.1.2 Defined Benefit Plans

The various Benefit Plans which are in operation are Gratuity Fund, Oil India Employee's Pension Fund (OIEPF), Oil India Pension Fund (OIPF), Leave Encashment Fund, Post Retirement Medical Benefit and Long Service Award. The present value of the obligation is determined based on actuarial valuation made at the end of the financial year using the Projected Unit Credit Method, which recognizes each period of service as given rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation. Long Service Award liability as on 31.03.2012 determined by the actuary, has been charged to Statement of Profit and Loss.

The amount recognised in the Balance Sheet as the present value of the defined benefit obligation is net of the fair value of plan assets at the Balance Sheet date.

1.2 Information as per Accounting Standard (AS) 16 "Borrowing Costs"

Borrowing cost capitalized during the period is Rs. Nil (Previous year Rs.Nil).

1.3 Information as per Accounting Standard (AS) 18 "Related Party Disclosures"

a) Related party relationships

Name of related parties and nature of relationship (excluding the State controlled entities):

i) Joint Ventures (Unincorporated):

ii) Key Management Personnel

Whole time Functional Directors:

a) Mr. S.K.Srivastava Chairman and Managing Director (w.e.f. 01.05.2012)

b) Mr. N.M. Borah Chairman and Managing Director (upto 30.04.2012)

c) Mr. T.K. Ananth Kumar Director (Finance)

d) Mr. B.N. Talukdar Director (Exploration & Development)

e) Mr. N.K. Bharali Director (HR & BD)

f) Mr. S. Rath Director (Operations)

Part-time Directors:

a) Mr. Ghanshyambhai Hiralal Amin Independent Director

b) Mr. Pawan Kumar Sharma Independent Director

c) Mr. Alexander Koipuram Luke Independent Director

d) Mr. Arun Kumar Gupta Independent Director (upto 29.07.2011)

e) Mr. Vinod Kumar Misra Independent Director

f) Mr. Sushil Khanna Independent Director

Other Officers

a) Mr. S.R. Krishnan Company Secretary

1.4 Information as per Accounting Standard (AS) 19 "Lease"

The Company has signed a "Participating Agreement" (PA) for the product pipeline in Sudan with ONGC Videsh Limited (OVL) for a 10% Participating Interest (balance 90% being with OVL) in the pipeline project awarded by Ministry of Energy & Mining (MEM), Govt, of Sudan (GOS) through a separate agreement entered into by OVL in this regard. The construction of the pipeline project was completed on 01.09.2005 and handed over to MEM under Build, Own, Lease and Transfer (BOLT) basis.

The "PA" entered into between OVL and the Company is neither intended nor shall be construed as creating a partnership or joint venture among the parties. Hence, accounting has not been done following "Joint Venture Accounting Policy" but the agreement for providing finance for the project in rupees to OVL and to share lease rentals receivable from MEM has been treated as "Finance Lease Activity" as envisaged under Accounting Standard (AS) 19 issued by The Institute of Chartered Accountants of India and accordingly accounted for.

Note:

i. Amount recoverable from M/s. Suntera Resources Ltd. against the expenditure incurred in some NELP Blocks stands at Rs. 53.22 crore (Previous year Rs. 49.81 crore). M/s Suntera Resources Ltd. has not paid the amount despite reminders and provision has been made in books of accounts for the entire amount .The Company applied to Directorate General of Hydro- carbon (DGH) under Ministry of Petroleum and Natural Gas (MOP&NG), New Delhi for acquiring the Participating Interest (PI) of M/s Suntera Resources Ltd in these NELP Blocks. Approval from DGH has since been received to acquire the participating interest of M/s Suntera Resources Ltd in these NELP Blocks .No further expenditure pertaining to these NELP Blocks has been debited to M/s Suntera Resources Ltd and no cash calls have been raised on M/s Suntera Resources Ltd. The revised PSC in this regard is yet to be executed.

ii. The required disclosures under AS 27 related to relinquished / under relinquishment JVCs against which full provision has been made are not disclosed since it does not affect the related disclosures made above materially.

1.5 Income Tax

(a) For Assessment Year (AY) 2003-04 to 2007-08, the appeal is pending for disposal before the Income Tax Appellate Tribunal (ITAT) with respect to the Company claim of benefit u/s 80-IB / 80-IC of the Income Tax Act, 1961, herein after called as the Act.

(b) For AY 2008-09 and 2009-10, the appeal is pending for disposal before the Commissioner of Income Tax (CIT(A)) with respect to the Company claim of benefit u/s 80-IC of the Act.

(c) The resulting interest, whether receivable or payable, shall be accounted for on finalization of the matter by an appellant authority.

The benefit u/s 80-IC of the Act has not been considered to make the provisions of tax in the books.

1.6 Disclosure under Section 441A of the Companies Act:

Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

1.7 Other disclosure under Schedule VI to the Companies Act, 1956

I. Contingent Liabilities and commitments

i. Contingent libilities

(a) In respect of claims under Income Tax, Sales Tax, Service Tax and Other Acts

(i) In respect of claims under Sales Tax Act : Rs. 5.58 crore (Previous year Rs. 5.58 crore)

ii) In respect of claims under Central excise Acts : Rs.26.19 crore (Previous year Rs.14.27 crore)

iii) In respect of claims under Other Acts : Rs. 661.73crore(Previous year Rs. 561.67 crore)

(b) In respect of claims other than under Income Tax, Sales Tax, Service Tax and Other Act :

(i) Claims by contractors pending decision in Arbitration / Courts. : Rs.128.53crore (Previous year Rs.503.33 crore)

(c) In respect of share of claim on JVC/PSC account : Rs. 31.80crore (Previous year Rs. 26.39 crore)

(ii) Commitments:

(i) The estimated amount of contracts remaining to be executed on Capital Account and not Provided for in the accounts: -

Rs. 256.97 crore (Previous year Rs. 172.74 crore).

(ii) Company's share in the amount of contracts remaining to be executed on Capital Accounts and not provided for in the account as on 31.03.2012 in respect of the Joint Ventures is Rs. 0.02 crore (Previous year Rs. Nil).

1.8 RECLASSIFICATION/REGROUPING:

The financial statements have been prepared as per the amended Schedule VI to the Companies Act, 1956 which had an impact on the presentation. Accordingly, previous year figures have been reclassified / regrouped wherever necessary to conform to current year figures.


Mar 31, 2011

1. (i) (a) With effect from 01.04.2002, the price of Crude Oil and LPG are market determined in terms of the policy of the Government of India. Accordingly, the Crude Oil price was being determined based on the terms and conditions of the Memorandum of Understanding (MOU) signed with various buyers of Crude Oil for the period 01.04.2002 to 31.03.2004. Though the MOU / Crude Offtake and Sale Agreement (COSA) for the period effective from 01.04.2004 has not yet been finalized, the Company is continuing to bill and the buyers are continuing to pay on the terms and conditions of the aforesaid MOU for the period 01.04.2004 to 31.03.2011.

In terms of the notification from MOP&NG dated 01.05.2009, the Company w.e.f. 01.04.2008 has accounted for on a monthly average price of Crude Oil benchmarked to Basket Price of Crude Oil (ascertained from Reuter) after adjustment for Gross Product Worth (quality differential) and discount on account of Base Sediment & Water (BS&W).

(b) As regard LPG price, the same continues to be notified by Indian Oil Corporation Ltd. (IOC) every month.

(c) The price of APM Natural Gas has been revised by MOP & NG, Government of India vide its letter no. L-12015/8/10- GP dated 31.05.2010 at USD 4.20/ mmbtu inclusive of royalty at 10% on Net Calorific Value (NCV) basis w.e.f. 01.06.2010. For Customers in the North East, the net consumer price charged to the customers at 60% of USD 4.20/mmbtu i.e. USD 2.52/mmbtu on NCV basis. The difference between Producer Price and Consumer Price has been taken as Budget Claim from MOP& NG. For Non- APM customers, the same price of USD 4.20/ mmbtu inclusive of royalty at 10% has also been fixed w.e.f. 01.06.2010 vide letter no. L-12015/5/10-GP dated 28 .06.2010 from

MOP&NG. Similarly the gas price for gas sale in Rajasthan has also been revised at USD 4.20 / mmbtu inclusive of royalty at 10% on Net Calorific Value (NCV) basis w.e.f. 01.06.2010. Royalty @10% is being paid separately to the respective State Governments.

(ii) The MOP& NG, Government of India, vide Letter No.P-20012/11/2006-PP (Vol. II) dated 21.03.2011 allowed the Company to realize the sales tax and full amount of transportation charges in respect of its own Crude Oil sold to the refineries for the year ended 31.03.2011 also. Accordingly an amount of Rs. 27.15 crore (Previous year Rs. 27.33 crore) for transportation charges and Rs. 269.70 crore (Previous year Rs. 269.81 crore) for reimbursement of sales tax, respectively have been recognised during financial year 2010-11.

(iv) a. Pending finalization of the Transportation Tariff by the Government of India for Crude Oil, the Company has on a provisional basis accounted for the transportation income of Crude Oil from all the refineries as fixed by the Petroleum Planning & Analysis Cell (PPAC) for the year 2001-02 for the Forward Pumping Sector of the pipeline from Naharkatiya to Digboi and Bongaigaon (Sector-wise).

b. In regards to the transportation income in respect of Crude Oil of M/s Oil & Natural Gas Corporation Ltd. (ONGCL) & Canoro Resources Limited, are accounted on the basis of MOU/Crude Oil Transportation Agreement (COTA) signed with the respective companies.

c. In respect of the Reverse Pumping Sector between Barauni to Bongaigaon, Transportation Tariff has been revised by PPAC w.e.f. financial year 2008-09 and in the current year the income for the same has been recognised on that basis.

(v) The total Gas Reserve as on 31.03.2011 in Assam & Arunachal Pradesh has been ascertained field wise following Society of Petroleum Engineers (SPE) norms.

(vi) Exchange (gain)/loss of Rs. 1.40 crore {Previous year (Rs. 4.78) crore} includes, exchange (gain)/loss of Rs. Nil (Previous year Rs. Nil) related to Assets charged off in line with the changed Accounting Policy No.5 due to applicability of AS 11 (Revised).

(viii) The Company is holding in its safe custody, Fixed Deposit Receipts issued in its favour by Contractors / Suppliers as Security Deposit / Earnest Money amounting to Rs. 1.62 crore (Previous year Rs. 1.60 crore), which are not included in the accounts.

(ix) Borrowing cost capitalized during the period is Rs. Nil. 2. Disclosure pursuant to Accounting Standard (AS) 15 (Revised 2005) – Employee Benefits:- The Company has adopted AS 15 (Revised 2005) for Employee Benefits issued by ICAI as against erstwhile AS 15. Consequent to the adoption, the following disclosure related to accounting etc. are made as far as practicable under AS 15 (Revised 2005) requirement:

Defined Contribution Plans

The Company's contribution to Provident Funds for employees and executives is Rs. 95.11 crore (Previous year Rs. 48.60 crore).

Defined Benefit Plans

The various Benefits Plans which are in operation are Gratuity Fund, Oil India Employee Pension Fund (New), Oil India Pension Fund (Old), Leave Encashment, Post Retirement Medical Benefit and Long Service Award. The present value of the obligation is determined based on actuarial valuation made at the end of the financial year using the Projected Unit Credit Method, which recognizes each period of service as given rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation.

G. Notes on above

(i) In view of the amendment of the Payment of Gratuity Act 1972, the ceiling of Gratuity has been enhanced from the existing limit of Rs. 3.50 lakh to Rs. 10.00 lakh. Accordingly, the Company has adopted the revised limit for provisioning of Gratuity Liability based on the actuarial valuation.

(ii) Long Service Award liability as on 31.03.2011, determined by the actuary, has been charged to Profit and Loss Account.

(iii) The Company's Provident fund is exempted under section 17 of Employees' Provident Fund and Misc. Provisions Act, 1952. The Company has also taken exemption under Para 39 of Employees Pension Schemes 1995 and extending the Pension benefits through Oil India Employees Pension Fund. Conditions for grant of exemptions, stipulate that the employer shall make good the deficiency, if any, in the interest rate declared by the trust vis-à-vis statutory rate in case of Employee Provident Fund as well as the deficiency, if any in extending the pensioner benefits will be made good by the Company in the Employee Pension Fund.

(iv) The amount recognised in the Balance Sheet as the present value of the defined benefit obligation is net of the fair value of plan assets at the Balance Sheet date.

H. Employees cost includes:

(a) The company has finalised the pay revision of the unionised employees w.e.f 01.01.2007 and an amount of Rs. 256.57 crore (net of provision upto 31.03.2010 has been accounted for in the year 2010-11 under other adjustment of Rs. 220.02 crore and under employee cost Rs. 43.81 crore).

(b) The company has finalised the pay revision of the executive employees w.e.f 01.01.2007 and an amount of Rs. (34.06) crore (net of provision upto 31.03.2010 has been accounted for in the year 2010-11 under other adjustment of Rs. 139.54 crore and under employee cost Rs. 44.13 crore).

3. The Company has completed the process of IPO on 26.09.2009 and thus allotted 2, 64, 49, 982 Equity Shares of Rs. 10/- each to the public including employees of the Company. Accordingly the Issued, Subscribed and Paid-up Share Capital of the Company has increased to Rs. 240.45 crore. As the face value of shares of Rs. 10/- each were issued at a premium of Rs. 1040/- per share the sum of Rs. 2750.80 crore have been credited to "Security Premium Account".

Against the estimated expenditure of planned activities up to 31.03.2011 amounting to Rs. 4559.84 crore as per the 'Object Clause' of the Issue as declared in the Prospectus an amount of Rs. 3022.96 crore have been spent up to 31.03.2011.

The cost of the issue amounting to Rs. 32.17 crore has been amortized in seven equal quarterly installments over the period during which the proceeds of IPO is planned to be utilized by the Company i.e. up to 31.03.2011. Accordingly the total amount Rs. 32.17 crore has been charged as expenses upto 31.03.2011.

4. (i) Fixed Assets :

a. Land in possession of the Company, includes some areas for which title/conveyance deeds are yet to be executed and/or mutation in settlement records are pending, documentation formalities are in progress.

b. The Company has identified various Plant & Machinery, which are not in use for considerable time. Pending writing off of these assets from the gross block, the Company has taken a provision of Rs. 3.00 crore (Previous year Rs. (0.74) crore) during the financial year towards the difference between the WDV as on 31.03.2011 and 5% of original cost as the residual value of the respective assets.

c. For infrastructure development and to facilitate the supply of natural gas to Brahmaputra Cracker and Polymer Limited (BCPL), the Company will have to augment/ modify the existing gas pipeline network, construction of lean gas distribution network and setting up of gas sale off-take point with metering facility. The Government of India has agreed to release one time subsidy upto a maximum of Rs. 215.00 crore to the Company through BCPL, subject to incurring higher actual expenditure. The expenditure will be vetted by Engineers India Ltd. (EIL). Towards this arrangement, the Company has started incurring expenditure for various assets and claiming the amount in stages from BCPL after the same is vetted by EIL. BCPL has paid Rs. 35.26 crore to the Company up to 31.03.2011 in this regard. The Company is maintaining a separate record to identify the capital expenditure incurred and receipt of the claim till the completion of all the facilities. Necessary accounting related to subsidy/adjustment thereof with assets will be carried out on completion of the project.

(ii) Pre-Producing Property

A sum of Rs. 88.01 crore (Previous year Rs. 83.90 crore) is being allocated to Pre-producing Property Account from general overhead during the year ended 31.03.2011.

(iii) Liability for Well Abandonment Cost

During the year, the Company has changed the Accounting Policy 2. 2. on abandonment cost and started providing the full eventual estimated liability towards cost related to dismasting, abandoning and restoring of well sites. Such cost of well sites has been capitalized to Producing Properties when completed {with reference to Accounting Policy 2.1. (d)} and in case of dry wells it is charged to Profit and Loss Account. This has resulted in increase in Producing Properties by Rs. 153.54 crore and cost off dry wells by Rs. 8.95 crore with corresponding increase in well abandonment liability by Rs. 162.49 crore. This has also resulted in decrease in Profit before tax by Rs. 21.47 crore, due to increase in Depletion Cost by Rs. 12.52 crore and write off of abandonment cost relating to dry wells by Rs. 8.95 crore.

(iv) Impairment of Assets

In terms of the Significant Accounting Policy No. 6, the Company assessed the Cash Generating Assets for the Impairment as required under AS-28 issued by ICAI and found that no cash generating Asset needs impairment as on 31.03.2011.

(v) Sundry Debtors:

Sundry Debtors including the overdue amount are reconciled from time to time on an ongoing basis and are considered good and realizable, unless stated otherwise and provision made wherever considered necessary.

(vi) (i) Loans and Advances include :

(b) Advances recoverable in cash or in kind or for value to be received includes materials given on loan to Public Sector Undertakings amounting to Rs. 3.85 crore (Previous year Rs. 3.18 crore)

(c) Arising out of one time settlement with M/s. Indian Drugs and Pharmaceuticals Limited (IDPL), (a Government of India Undertaking) the loan amount of Rs. 15.00 crore was to be settled along with interest @ 5% p.a. as per the revival package of the unit. Since no significant improvement on the revival package is forth coming, the Company is continuing with the provision of Rs. 28.33 crore created in the books of accounts during the financial year 2008- 09 as against the principal and interest due from IDPL. No interest has been accounted for w.e.f 01.04.2009.

(d) In terms of the Joint Operating Agreement and the Memorandum and Articles of Association of Brahmaputra Cracker and Polymer Limited (BCPL), the Company has paid an amount of Rs. 32.47 crore to M/s. Brahmaputra Cracker and Polymer Limited (BCPL) towards acquisition of 32465729 Equity Shares of Rs. 10/- each which is shown as "Investments". Further, an amount of Rs. 22.88 crore paid during the year for acquisition of Equity Share is shown under "Loans & Advances" pending allotment.

(e) The Company has acquired 23% Equity Shares of DNP Limited and paid Rs. 24.38 crore as contribution to Equity Capital in the form of 24380000 Equity Shares of Rs. 10 each which is shown as "Investment". Further a sum of Rs. 6.65 crore was paid on 01.10.2010 towards Company's share of additional contribution to Equity Capital and is shown under "Loans and Advances" pending allotment.

(viii) Current Liabilities :

(a) Sundry creditors include materials received on loan from other Public Sector Undertakings amounting to Rs. 4.05 crore (Previous year Rs. 5.03 crore)

(b) Balance shown sundry creditors, claims recoverable and advances are reconciled from time to time on an on-going basis. Provisions, wherever considered necessary, have been made.

(ix) Micro, Small and Medium Enterprises Act, 2006 :

The Company has identified Micro, Small and Medium Enterprises (MSMEs) to whom the Company owes dues, which are outstanding as at 31.03.2011.

6. (a) The Assessing Officer (AO) rejected the claim of the Company u/s 80-IB / 80-IC of the Income Tax Act'1961 (IT Act) for assessment years 2003-04 to 2006-07. The Company preferred an appeal before the first Appellate Authority [CIT(A)] against the AO order. The appeal was decided in the Company's favour resulting into refund of Rs. 672.59 crore (including interest of Rs. 71.81 crore). The Income Tax Department (Department) preferred second appeal which is pending for disposal before the Income Tax Appellant Tribunal (ITAT). The accounting adjustment for the refund of section 80-IB and 80-IC of IT Act will be taken on finalization of such appeal by ITAT.

(b) For the assessment year 2007-08, the AO continued the disallowance of claim of the Company u/s 80-IC of IT Act. The Company preferred appeal before CIT(A) disputing the disallowance. The CIT(A), however, vide his order dated 23.04.2010 has confirmed the disallowance made by AO. The Company preferred an appeal in ITAT against the order of CIT(A) for the claim u/s 80-IC of IT Act.

(c) Further for the assessment year 2008-09, the AO once again disallowed the claim of the Company u/s 80-IC of IT Act. The Company's appeal before CIT(A) disputing such disallowance is pending for disposal.

No Contingent Liabilities exist in respect of above mentioned disallowance of claim u/s 80-IB / 80-IC of IT Act as the Company continued to make provisions for tax without considering the benefit u/s 80-IB / 80-IC of IT Act.

The Company has signed a "Participating Agreement" (PA) for the product pipeline at Sudan with ONGC Videsh Limited (OVL) for a 10% Participating Interest (balance 90% being with OVL) in the pipeline project awarded by Ministry of Energy & Mining (MEM), Govt. of Sudan (GOS) through a separate agreement entered into by OVL in this regard. The construction of the pipeline project was completed on 01.09.2005 and handed over to MEM under Build, Own, Lease and Transfer (BOLT) basis.

The "PA" entered into between OVL and OIL is neither intended nor shall be construed as creating a partnership or joint venture among the parties. Hence, accounting has not been done following "Joint Venture Accounting Policy" but the agreement for providing finance for the project in rupees to OVL and to share lease rentals receivable from MEM has been treated as "Finance Lease Activity" as envisaged under Accounting Standard (AS) 19 issued by The Institute of Chartered Accountants of India and accordingly accounted for.

The Company has been informed by OVL that the EPC contractor for constructing the pipeline has raised further invoices for an amount of approximately Rs. 115.46 crore (US$ 25.53 million) and OVL has in turn raised a claim on MEM of GOS as per the agreement between GOS and OVL. OIL's share related to both the claims i.e. by the pipeline contractor on OVL (though accepted by OVL) and OVL's claim on GOS shall be accounted for upon acceptance by GOS and on suitable amendment of repayment schedule by MEM. OVL has received an additional claim of Rs. 52.55 crore (US$ 11.62 million) which has not been acknowledged as debt in the books of the operator (OVL). Pending this, the Company's share of the amount claimed by the pipeline contractor has not been accounted for but disclosed under "Contingent Liabilities".

In terms of such "PA", the Company on 10.02.2011 has received the balance due of 9th Installment along with 10th & 11th Installments due on 30.06.2010 & 31.12.2010 respectively. Moreover the Company has also received, in terms of the agreement, the interest on the delayed rental payments by the MEM and the same is shown under miscellaneous income. The regular installments are accounted for as income from Finance Lease.

The Company has acquired 25% equity in Suntera Nigeria 205 Ltd., a company incorporated under the Laws of Nigeria, from Suntera Resources Ltd., Cyprus through "Share Purchase Agreement" (SPA) signed with them on 31st August, 2006 (effective dated 27th September, 2006) for Rs. 0.01 crore (Nigerian Naira 62502 USD 488.87 approximately) at par and also signed a Shareholders Agreement (SHA) with Suntera Resources Ltd. and IOCL, the other shareholders of the company Suntera Nigeria 205 Ltd. had entered into an Acquisition Agreement (AA) and Economic Interest Assignment Agreement (EIAA) with Summit Oil International Limited (original 100% Participating Interest holder in OPL-205 and the operators of the Block) on 10.05.2006 for acquiring 40% Participating Interest and 30% Economic Interest in onland Block OPL-205 in Nigeria. Suntera Nigeria 205 Ltd. also entered into a Joint Operating Agreement (JOA) and Technical Service Agreement (TSA) with Summit Oil International Limited on 10.05.2006 for providing the technical support for the operations in OPL-205. Accordingly, the Company indirectly, through 25% equity holding in Suntera Nigeria 205 Ltd. owns a combined Participating and Economic interest of 17.5% in OPL- 205. The Company is required to contribute its 25% share of all the expenses in the Block by way of loan to Suntera Nigeria 205 Ltd. as agreed by all the shareholders in the SHA, and accordingly a loan agreement has been signed on 30.08.2007. In terms of the loan agreement, the Company has disbursed loan amounting to Rs. 35.63 crore (US$ 78,01,050.31) as of 31.03.2011 carrying a simple interest of 8.75% per annum is payable. Accordingly, Rs. 7.89 crore (Previous year ended 31.03.2010 Rs. 7.89 crore) has been charged to Suntera Nigeria 205 Ltd. as interest up to 31.03.2011. As per the loan agreement with Suntera OPL-205 Limited, the principal amount along with simple interest @ 8.75% p.a. is repayable by 31.03.2011. However due to uncertainty of the project, the Company is doubtful about the recoverability of the principal amount and interest receivable upto 31.12.2009. Accordingly no amount is being recognized as interest w.e.f quarter ended 31.03.2010 onwards. Further provisions have also been made towards entire principal and interest outstanding amounting to Rs. 43.51 crore as on 31.03.2011. Accordingly exchange fluctuation on account of principal and interest as at 31.03.2011 has not been accounted for.

3. The consortium of Gujarat State Petroleum Corporation Limited (GSPCL), Oil India Limited (OIL) and Hindustan Petroleum Corporation Limited (HPCL) has been awarded Block 3 and Block 4 (offshore Egypt) offered under International Bid Round 2008 announced by M/s. Ganoub El Wadi Holding Petroleum Company (GANOPE), Egypt. GSPCL is the operator for the blocks with 50% participating interest (PI). OIL and HPCL both have 25% PI each in these blocks as non-operators. The Company has remitted its share of the signature bonus of USD 0.75 million for each block and shown as acquisition costs. The Company has also executed bank guarantee of USD 8.75 million and USD 7.25 million for its share of 5% of the total financial commitment for the blocks as per requirement of signing of Concession Agreements. GANOPE has informed the consortium that some concern has been raised by neighboring country related with the maritime boundaries of both the awarded blocks. The consortium members are in negotiation with GANOPE for resolving the issue and execution of the concession agreement.

4. The consortium of Oil India Limited (OIL), ONGC Videsh Limited (OVL), Indian Oil Corporation Limited (IOCL), Repsol YPF (Spain) and Petroliam National Berhad (PETRONAS) (Malaysia), has been awarded on 10.02.2010 Project I consisting of Carabobo I North and Carabobo I Central blocks in Venezuela's Orinoco belt under competitive bidding, for development of the Field. The project will be operated by a Mixed Company (MC), the contract for which has been signed on 12th May 2010 in

Venezuela between the state company and the successful bidders. Corporation Venezolana del Petroleo, S.A. (CVP) i.e. a wholly owned subsidiary of Petroleos De Venezuela S.A. (PdVSA), the national oil company of Venezuela holds 60% share of MC and remaining 40% is held jointly by INDOIL Netherlands BV (a consortium of OIL and IOCL), ONGC Videsh Limited, REPSOL (Spain) and Petronas (Malaysia) with Participating Interests of 7% (3.5% each for OIL & IOCL), 11%, 11% and 11% respectively.

OIL will be investing in the project in Venezuela through INDOIL, Netherlands B.V., a company acquired in The Netherlands (OIL's WOS in Sweden and IOC's WOS in Sweden holds 50% each in this company) which will be funded through WOS in Sweden and Cyprus. OIL will be infusing its financial commitments for 3.50% in Carabobo Project I in Venezuela through the Swedish Company OIL INDIA SWEDEN AB. OIL, as a Guarantor, has also given a Parent Company Guarantee towards its share of Minimum Work Commitment in the Carabobo Project to CORPORATION VENEZOLANA DEL PETROLEO, S.A., Caracas, Venezuela jointly and severally with Indian Oil Corporation Ltd. through INDOIL, Netherlands B.V., The Netherlands. During the year the Company paid ? 84.84 crore to OIL INDIA Sweden AB towards acquisition of 1374650 number of equity share for which allotment was made.

5. i) As per the terms of the Kharsang PSC, the applicable price for crude oil produced and saved from the field is to be ascertained online from Reuters' daily publication for the previous month. Accordingly the invoices are being raised by the operator of the field at the rates, as applicable.

ii) As per the terms of the respective PSCs, provision for Abandonment Costs is to be made and accordingly a sum of ? 0.11 crore (Previous year? 0.32 crore) has been provided through creation of a Sinking Fund as per Joint Operating Agreement. Such sinking Fund on cumulative basis has been disclosed separately in the Balance Sheet.

6. (A) The assets, liabilities, income and expenditure of the Joint ventures as shown above are ? 376.41 crore, ? 856.27 crore, ? 102.33 crore and ? 578.16 crore respectively (Previous year ? 356.44 crore, ? 56.33 crore, ? 98.05 crore and ? 398.17 crore respectively), being the proportionate value relating to Company's Participating Interest which have been incorporated in the books of accounts on the basis of Audited 5 nos. (Previous year 18 nos.) and Unaudited 37 nos. (Previous year 21 nos.) Statement of Accounts received from the respective operators. No material changes are expected by the Company in the Unaudited Statement of Accounts.

(B) The Company's Share of Contingent liability and Capital Commitment, if any, under the PSC are shown in Note No.9 (A) & (C) below.

7. In terms of the Memorandum of Understanding dated 27.12.2005 the Company has entered into a consortium agreement dated 13.10.2006 with M/s. IOT Infrastructure & Energy Services Limited (formerly IOTL), for jointly bidding and securing a contract for laying a part of the Numaligarh - Siliguri Product Pipeline for the Company on 50:50 sharing basis and the consortium was awarded with a contract for laying 115 km pipeline at a total contract value of? 50.01 crore by the Company. On finalisation of accounts of the consortium after completion of the project, share of profit of the company was ?1.31 crore, which has been adjusted from the cost of such pipeline as per Accounting Standard.

8. Information as per Accounting Standard (AS) 18 "Related Party Disclosures" issued by ICAI.

a) Related party relationships

Name of related parties and description of relationship (excluding the State controlled entities):

-> Joint Ventures (Unincorporated):

1 AA-ONN-2002/3

2 MZ-ONN-2004/1

3 AA-ONN-2004/1

4 AA-ONN-2004/2

5 RJ-ONN-2004/2

6 RJ-ONN-2004/3

8 KG-ONN-2004/1

9 RJ-ONN-2005/2

10 Kharsang PSC

11 AAP-ON-94/1

12 SR-OS-94/1

13 GK-OSJ-3

14 CY-DWN-2001/1

15 KG-DWN-2009/1

16 RJ-ONN-2000/1

17 CR-ON-90/1

18 KG-OSN-2009/4

19 Shakthi, Gabon

20 Area 95/96, Libya

21 Timor Leste-Block 'K', East Timor

22 Block 82, Yemen

23 Block 82, Yemen

-> Associates :

a) IOTL - OIL Consortium

-> Key Management Personnel

Whole time Functional Directors:

a) Mr. N.M. Borah Chairman and Managing Director

b) Mr. T.K. Ananth Kumar Director (Finance)

c) Mr. B.N. Talukdar Director (Exploration & Development)

d) Mr. N.K. Bharali Director (HR & BD) from 14.09.2010

e) Mr. S. Rath Director (Operation) from 31.03.2011

Part-time Directors:

a) Mr. Ghanshyambhai Hiralal Amin Independent Director

b) Mr. Pawan Kumar Sharma Independent Director

c) Mr. Alexander Koipuram Luke Independent Director

d) Mr. Arun Kumar Gupta Independent Director

e) Mr. Vinod Kumar Misra Independent Director

f) Mr. Sushil Khanna Independent Director

Other Officers

a) Mr. S.R. Krishnan Company Secretary

9. (A) Contingent Liabilities :

Claims against the Company not acknowledged as debts amounting to Rs. 1112.03 crore (Previous year Rs. 640.95 crore) include:

(a) In respect of claims under Income Tax, Sales Tax, Service Tax and Other Acts :

(i) Rs. 17.94 crore (Previous year Rs. 16.11 crore):- Demand raised by the District Revenue Authorities on account of premium / revenue on Government ceiling surplus land occupied by the Company.

(ii) Rs. 13.12 crore (Previous year Rs. 13.12 crore) – Demand raised by District Revenue Authorities on Account of revised rate of Land revenue against which has been disputed by the Company and obtained Stay from the Gauhati High Court.

(iii) Rs. 3.66 crore (Previous year Rs. 3.38 crore) being the demand raised by Govt. of Rajasthan for alleged short payment of PEL fee and penalty thereon, which has been disputed by the Company.

(iv) Rs. 526.78 crore (Previous year Rs. 436.13 crore) being the tax imposed under "Assam Taxation (on specified land) Act 2004", the validity of the imposition of which has been challenged by the Company before the Gauhati High Court.

(v) Rs. 0.17 crore (Previous year Rs. 0.17 crore) – Demand raised by Govt. of Orissa under Orissa Entry Tax Act for material purchased for drilling operation for Block MN-ONN-2000/1.

(vi) Rs. 5.58 crore (Previous year Rs. 5.58 crore) – Demand raised by the Sale Tax authority on Account Assam VAT and CST Act pending the adjustment of the refundable to the Company by the Sales Tax Authority under Assam General Sales Tax Act to the tune of Rs 3.66 crore for which Assessment order has been recieved..

(vii) Rs. 0.79 crore (Previous year Rs. Nil) – Being the demand raised by Commissioner of Central Excise, Jodhpur for Service Tax on PDVSA Contract appeal against the same is being pending for disposal before CESTAT, New Dehli.

(viii) Rs. 14.27 crore (previous year- Rs. Nil) - Demand raised by Commissioner Central Excise, Dibrugarh as an Excise Duty on Condensate, under Section 11A along with interest to be accrued thereon for delayed payment of duties of excise under Section 11AB of the Central Excise Act, 1944 and penalty of Rs. 10000/- under Rule 27 of the Central Excise Rules 2002 for contravention of the various provisions of the Rule 4,6 and 11 of the Central Excise Rules 2002. An appeal in CESTAT, Kolkata is being filed against the order.

(b) In respect of claims other than under Income Tax, Sales Tax, Service Tax and Other Act :

(i) Rs. 503.33 crore (Previous year Rs. 139.93 crore):- Claims by contractors pending decision in Arbitration / Courts.

(c) In respect of share of claim on JVC/PSC account :

(i) Rs. 0.75 crore (Previous year Rs. 0.75 crore) being the value of 19.28 GLK2D Seismic Survey carried out in one of the block in Karbi Anglong, Assam.

(ii) Rs. 14.09 crore (Previous year Rs. 14.12 crore) being proportionate (45%) value of claim on OIL for 3.389 billion FCFA raised by Mr. Paul Tomo, Power of Attorney Holder of M/s. Import Commerce General (IGC) in Block "Shakthi", Gabon (JV).

(iii) Rs. 11.55 crore (Previous year Rs. 11.66 crore) being the Company's share of claim made by the Sudan Pipeline contractor on OVL, pending acceptance by the MEM Govt. of Sudan.

(B) Letter of Credit and Bank guarantees.

(i) Letters of Credit outstanding as on 31.03.2011 amounting to Rs. 78.84 crore (Previous year Rs. 24.38 crore) for which there is a floating charge on Current Assets of the Company.

(ii) Rs. 353.58 crore (Previous year Rs. 216.78 crore):- Bank Guarantee in US Dollars of 75.92 million (Previous year USD 44.66 million) issued by SBI CAG Branch, Kolkata in favour of Ministry of Petroleum & Natural Gas, Govt. of India towards Company's obligation under various rounds of Production Sharing Contracts of NELP.

(iii) Rs. 79.14 crore (Previous year Rs. 79.14 crore):- Guarantee / Standby Letter of Credits in US dollars of 16.00 million (Previous year USD 16.00 million) issued in favour of Ganoub Ei Wadi Holding Petroleum Company, Cairo, Egypt for Block No. 3 & 4, Egypt, towards company's share of the total financial commitment for the blocks as per requirement of signing the concession agreement.

(iv) Rs. Nil (Previous year Rs. 24.77 crore) :- Bank Guarantee issued by HDFC Bank Ltd., New Delhi in favour of National Stock Exchange of India Limited for security deposit for listing of shares.

(v) Rs. 15.59 crore (Previous year Rs. 15.59 crore) :- Bank Guarantee for USD 3.2 million (Previous year USD 3.2 million) issued in favour of Autoridade National Dp. Petrolo – Anp Ala Leste Do Palacio Do Governo, towards OIL's share of 12.5% Participating Interest of the Minimum Work Programme in Deep Water Block "K" in Democratic Republic of Timor Leste.

(vi) Rs. 8.89 crore (Previous year Rs. 22.45 crore):- Bank Guarantee issued for USD 2.00 million (Previous year USD 5 million) by HDFC Bank Limited, New Delhi for five PEL areas allotted to the company.

(vii) Rs. 0.01 crore (Previous year - Rs. 0.01 crore) – Bank Guarantee issued on behalf of Pipeline Telecommunication system.

(C) (i) The estimated amount on account of contracts remaining to be executed on Capital Account and not provided for in the accounts :- Rs. 172.74 crore (Previous year Rs. 170.37 crore).

(ii) Company's share of amount of contracts remaining to be executed on Capital Accounts and not provided for in the account as on 31.03.2011 in respect of the Joint Ventures is Rs. Nil (Previous period Rs. Nil).

(10) Previous period's figures have been reclassified / regrouped wherever necessary to conform to current period's classifications.


Mar 31, 2010

1. (i) (a) With effect from 01.04.2002, the price of Crude Oil and LPG are market determined in terms of the policy of the Government of India. Accordingly, the Crude Oil price was being determined based on the terms and conditions of the Memorandum of Understanding (MOU) signed with various buyers of Crude Oil for the period 01.04.2002 to 31.03.2004. Though the MOU / Crude Offtake and Sale Agreement (COSA) for the period effective from 01.04.2004 has not yet been fi nalized, the Company is continuing to bill and the buyers are continuing to pay on the terms and conditions of the aforesaid MOU for the period 01.04.2004 to 31.03.2010.

In terms of the notifi cation from MOP&NG dated 01.05.2009, the Company w.e.f. 01.04.2008 has accounted for on a monthly average price of Crude Oil benchmarked to Basket Price of Crude Oil (ascertained from Reuter) after adjustment for Gross Product Worth (quality differential) and discount on account of Base Sediment & Water (BS&W).

(b) As regard LPG price, the same continues to be notifi ed by Indian Oil Corporation Ltd. (IOC) every month.

(c) The price of Natural Gas was revised by the Ministry of Petroleum and Natural Gas, (MOP&NG) Government of India vide letter No. L-12015/5/04-GP (i) dated 20th June, 2005. The revised price applicable w.e.f. 01.07.2005 in respect of APM gas quantity, being the quantity of gas produced as on 30.06.2005 and sold to consumers other than those with whom the Company had signed Gas Sale and Purchase Agreement (GSPA) with mutually agreed price. The gas price for gas sale in Rajasthan is governed by the MOU dated 11th October, 2004 between the Company and GAIL India Limited, which is a mutually agreed price.

(ii) The MOP&NG, Government of India, vide its letter dated 22.04.2010 allowed the Company to realize the sales tax and full amount of transportation charges in respect of its own Crude Oil sold to the refi neries for the financial year 2009-10, similar to the decision in the previous financial years.

(iii) In terms of the decision of Government of India, MOP&NG, vide letter no. P-20012/28/97-PP dated 23.07.2004 and further communications in this regard, the Company during the year ended 31.03.2010 has allowed a discount Rs. 148990.89 lakh (Previous year Rs 294853.19 lakh) on the sale of Crude Oil and Rs. 5890.98 lakh (Previous year Rs 7475.48 lakh) on the sale of LPG. Accordingly, the sales revenue in respect of Crude Oil and LPG are net of the aforesaid discounts which have the effect of reduction of profi t for the respective years by such amounts.

(iv) Pending fi nalization of the Transportation Tariff by the Government of India for Crude Oil, the Company has on a provisional basis accounted for the Transportation Income of Crude Oil from all the refi neries as fi xed by the Petroleum Planning & Analysis Cell (PPAC) for the year 2001-02. In regards to the Transportation Income in respect of Crude Oil of M/s Oil & Natural Gas Corporation Ltd. (ONGCL), Conoro Resources Limited and M/s Bongaigaon Refi nery and Petrochemicals Limited the same are accounted for based on the MOU/Crude Oil Transportation Agreement (COTA) signed with the respective companies.

(v) The total Gas Reserve as on 31.03.2010 in Assam & Arunachal Pradesh has been ascertained fi eld wise following SPE norms.

(vi) Exchange gain of Rs. 501.83 lakh (Previous year loss of Rs. 615.08 lakh) includes, exchange gain of Rs nil (Previous Year Rs. Nil) related to Assets charged off in line with the changed Accounting Policy no. 5 due to applicability of AS 11 (Revised).

2. Disclosure pursuant to AS 15 (Revised 2005) – Employee Benefi ts:-

The Company has adopted AS 15 (Revised 2005) for Employee Benefi ts issued by ICAI as against erstwhile AS 15. Consequent to the adoption, the following disclosures related to accounting, etc are made as far as practicable under AS 15 (Revised 2005) requirement:

Defined Contribution Plans

The Companys contribution to Provident Funds for employees and executives is Rs. 4859.60 lakh (Previous year Rs. 4085.99 lakh).

Defined Benefit Plans

The various Benefi ts Plans which are in operation are Gratuity Fund, Pension Funds, Leave Encashment, Leave Fare Assistance/ Leave Travel Concession, Post Retirement Medical Benefi t and Long Service Award. The present value of the obligation is determined based on Actuarial valuation using the Projected Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefi ts entitlement and measures each unit separately to build up the fi nal obligation.

F. Notes on above

(i) In view of the amendment of the Payment of Gratuity Act 1972, the ceiling of Gratuity has been enhanced from the existing limit of Rs 3.50 lakh to Rs. 10.00 lakh. Accordingly the Company has adopted the revised limit for provisioning of Gratuity liability based on the actuarial valuation.

(ii) Long Service Award liability as on 31.03.2010, as per actuarial determination has been charged to Profi t and Loss Account.

(iii) The Companys Provident fund is exempted under section 17 of Employees Provident Fund and Misc. Provisions Act, 1952. The Company has also taken exemption under Para 39 of Employees Pension Schemes 1995 and extending the Pension benefi ts through Oil India Employees Pension Fund. Conditions for grant of exemptions stipulate that the employer shall make good the defi ciency, if any, in the interest rate declared by the trust vis-à-vis statutory rate in case of Employee Provident Fund as well as the defi ciency, if any in extending the pensioner benefi ts will be made good by the Company in the Employee Pension Fund.

(iv) The amount recognised in the Balance Sheet as the present value of the defi ned benefi t obligation is net of the fair value of plan assets at the Balance Sheet date.

G. Employees cost includes:

(a) Rs 5787.05 lakh for the year, resulting into total provision to Rs. 35120.09 lakh unto 31.03.2010 (Previous year Rs. 29333.04 lakh ) being the amount estimated pending fi nalisation and full implementation of the pay revision of unionized as well as executive employees (including Board level) of the Company which is due for revision with effect from 01.01.2007.

(b) Rs. 43193.29 lakh (Previous year Rs. 40399.81 lakh) being the amount estimated according to Actuarial Valuation of employees benefi ts for future services as required under AS-15.

3. During the year the Company has completed the process of IPO on 26.09.2009 and thus allotted 2,64,49,982 Equity Shares of Rs. 10/- each to the public including employees of the Company. Accordingly the Issued, Subscribed and Paid-up Share Capital of the Company has increased to Rs. 24045.44 lakh. As the face value of shares of Rs. 10/- each were issued at a premium of Rs 1040/- per share the sum of Rs. 275079.81 lakh has been accounted for in Security Premium Account in Balance Sheet.

Against the estimated expenditure of planned activities up to 31.03.2011 amounting to Rs. 455984.70 lakh as per the Object of the Issue declared in the Prospectus an amount of Rs. 148443.40 lakh, as certifi ed by the Monitoring Agency have been spent up to 31.03.2010. The unutilised issue proceeds along with internal resources have been invested in short term deposits and ICDs.

The cost of the issue amounting to Rs 3216.52 lakh will be amortized over the period during which the proceeds of IPO is planned to be utilized by the Company. Accordingly Rs 1378.51 lakh has been charged as expenses during the year ended 31.03.2010 and Rs 1838.01 lakh has been carried over under the head "Miscellaneous Expenditure" in the Balance Sheet as on 31.03.2010.

4. (i) Fixed Assets:

A. Land in possession of the Company, includes some areas for which title / conveyance deeds are yet to be executed and / or mutation in settlement records is pending. Documentation formalities are in progress.

B. The Company has identifi ed various Plant & Machinery, which are not in use for considerable time. Pending writing off of these assets from the gross block, the Company has taken a provision of Rs. (73.59) lakh (Previous year Rs (78.50) lakh) during the year towards the difference between the WDV as on 31.03.2010 and 5% of original cost as the residual value of the respective assets.

C. For infrastructure development and to facilitate the supply of natural gas to Brahmaputra Cracker and Polymers Limited (BCPL), the Company will have to augment / modify the existing gas pipeline network, construction of lean gas distribution network and setting up of gas sale off-take point with metering facility. The Government of India has agreed to release one time subsidy upto a maximum of Rs. 21500.00 lakh to the Company through BCPL, subject to incurring the actual expenditure more than that. The expenditure will be vetted by Engineers India Ltd. (EIL). Towards this arrangement, the Company has started incurring expenditure for various assets and has been claiming the amount in stages from BCPL after the same is vetted by EIL. BCPL has deposited Rs. 3093.47 lakh to the Company up to 31.03.2010 in this regard. Pending completion of all the facilities, the Company is maintaining the separate identity to record capital expenditure and the receipt of the claim till incurring the total expenditure on capital assets and receipt of fi nal amount of subsidy. Necessary accounting related to subsidy/adjustment thereof with assets will be carried out on completion of the project.

D. The cost of infrastructure which are in the nature of Corporate Social Responsibility (viz. Delhi Public School (DPS), Duliajan and some other assets) amounting to Rs 583.83 lakh has been charged off as expense in the Accounts of the Company for year ended 31.03.2010.

(ii) Pre-Producing Property

A sum of Rs. 8389.89 lakh (Previous year Rs. 8321.93 lakh) is been allocated to Pre-producing Property Account from general overhead.

(iii) Impairment of Assets

In terms of the Signifi cant Accounting Policy No. 6, the Company assessed the Cash Generating Assets for the Impairment as required under AS-28 issued by ICAI and found that no cash generating Asset needs impairment as on 31.03.2010.

(iv) Sundry Debtors:

Sundry Debtors including the overdue amount are reconciled from time to time on an ongoing basis and are considered good and realizable, unless stated otherwise and provision made wherever considered necessary.

(v) (i) Loans and Advances include:

(b) Advances recoverable in cash or in kind or for value to be received includes materials given on loan to Public Sector Undertakings amounting to Rs. 317.57 lakh (Previous year Rs. 294.00 lakh).

(c) Arising out of one time settlement with M/s Indian Drugs and Pharmaceuticals Limited (IDPL), (a Government of India undertaking) the loan amount of Rs. 1500.00 lakh was to be settled along with interest @ 5% as per the revival package of the unit. Since no signifi cant improvement on the revival package is forth coming, the Company is continuing with the provision of Rs. 2833.16 lakh created in the books of Accounts during the financial year 2008-09 as against the principal and interest dues from IDPL. For the year ended 31.03.2010 no interest has been accounted for.

(d) In terms of the Joint Operating Agreement and the Memorandum and Articles of Association of Brahmaputra Cracker and Polymer Limited (BCPL), the Company has paid an amount of Rs 50,100 to M/s Brahmaputra Cracker and Polymer Limited (BCPL) towards acquisition of 5,010 shares of Rs 10 each. The amount paid was accounted under Investments. During the year 2009-10 BCPL has further allotted 26332149 equity shares of Rs. 10 each accordingly an amount of Rs. 2633.21 lakh is shown as "Investment" which was accounted as Loan & Advances in the previous year. The balance amount of Rs. 613.99 lakh is shown under "Loans & Advances" pending allotment.

(e) The Company has acquired 23% Equity Shares of DNP Limited and paid Rs. 2438.00 lakh toward its contribution to Equity Capital. The allotment of 24380000 equity shares of Rs. 10/- each was done during the financial year 2009-10 is shown as "Investment".

(f) OIL has entered into a MOU with HPCL, GAIL India limited, Mittal Energy Investment Pte. Ltd. and TOTAL France S.A. on 18.10.2007 for setting up of an integrated Refi nery cum Petrochemical Complex at Vishakapatnam in Andhra Pradesh. However as on 31.03.2010, no provision has been kept in the books the project ceased to exist.

(g) Investment in associate is valued following the "Equity Method" as per AS-23 "Accounting of Investment in Associate in Consolidation".

(ii) Disclosure pursuant to clause 32 of the Listing Agreement

(a) Loans, Advances and Investments in its own shares by the Company and its subsidiary/associates Nil (Previous year Nil)

(b) Advances to associated "INDOIL Netherlands BV" Rs 7.85 lakh (Previous year Nil)

(c) Investment in wholly own subsidiary "Oil India Sweden AB" Rs. 6.45 lakh (Previous year Nil)

(vi) Current Liabilities:

Sundry creditors include materials received on loan from other Public Sector Undertakings amounting to Rs. 502.94 lakh (Previous Year Rs. 365.85 lakh)

(vii) Balance shown sundry creditors, claims recoverable and advances are reconciled from time to time on an on-going basis. Provisions, wherever considered necessary, have been made.

(viii) Micro, Small and Medium Enterprises Act, 2006:

The Company has identifi ed Micro, Small and Medium Enterprises (MSME) to whom the Company owes dues, which are outstanding as at 31.03.2010. There is no such Micro, Small and Medium Enterprises where outstanding balance is due for more than 45 days.

6. The Income Tax Assessing Offi cers had rejected claim of the Company for certain relief and concessions and further did not allow the discount on Crude Oil and LPG being allowed to Oil Marketing Companies (OMCs), as per the Government order/ notifi cation, as expenses for Assessment Years 2003-04 to 2006-07, due to which demand of Rs. 84023.00 lakh had been raised on the Company during the financial year 2007-08. The Company had preferred an appeal before the fi rst Appellate Authority against such order/demand and succeeded in the Appeal proceeding resulting into refund of Rs. 67259.59 lakh (including interest of Rs. 7180.56 lakh) during the financial year 2008-09 though the Income Tax Department has preferred second appeal before ITAT. Necessary Accounting action has been taken for the refund, except the provision relating to the claim under section 80-IB and 80-IC. On fi nalization of such appeal by ITAT necessary adjustments will be carried out.

For the Assessment Year 2007-08, the Assessing Offi cer continued the disallowance of both the above two claims of the Company in the Assessment Order and demanded Rs 71660.86 lakh, against which the Company has deposited Rs. 26950.00 lakh under protest. The Company has preferred appeal before CIT (A) disputing the assessment. CIT (A) vide his order dated 23.04.2010 allowed the issue of discount to the OMCs in favour of the Company but the claim of benefi t u/s 80-IC was disallowed. The order of the Assessing Offi cer for rectifying the original order in the terms of the appellate order is pending. The company is preferring second appeal before ITAT against such disallowances by CIT (A).

For the assessment year 2008-09, the Assessing Offi cer continued the disallowance of claim of benefi t u/s 80-IC but allowed the discount to OMCs as an allowable expenditure, based on the Committee of Disputes (COD) minutes dated 27.08.2009, in the assessment order and demanded Rs. 42541.78 lakh. The Company has preferred an appeal before CIT (A) disputing the disallowance.

No Contingent Liabilities arises in respect of above mentioned Orders as:- (a) Committee on Dispute (COD) constituted by Government of India has decided, that the discount to OMCs as an allowable expenses and not allowed Income Tax Department to agitate on the issue any further.

(b) While making the provision for Income Tax in its books of account the Company has not considered the benefi t available u/s 80-IB and 80-IC on conservative basis pending disposal of appeal by ITAT.

(vi) The Company has acquired 15% Participating Interest (PI) in the Onshore blocks 82 and 83, Republic of Yemen (Sl. No. C (7) & C (8) above). Both the areas are being operated by MEDCOENERGI through its 100% subsidiaries. The Production Sharing Agreements (PSA) for both the exploration blocks were signed on 13th April, 2008 and Government of Yemen accorded its approval on 17th March, 2009. The Operator has initiated actions to start the Seismic commitment of the MWP

Abbreviations used in (A), (B), (C) and (D) above:

ONGCLOil & Natural Gas Corporation Limited

IOCLIndian Oil Corporation Limited

GAILGAIL(India) Limited

BPCLBharat Petroleum Corporation Ltd

HPCLHindustan Petroleum Corporation Ltd.

GANOPE Ganoub El Wadi Holding Petroleum Company, Egypt.

GSPCLGujarat State Petroleum Corporation Ltd.

HOEC Hindustan Oil Exploration Ltd

GGRGeo Global Resources (Barbados) Inc.

SUNTERASuntera Resources Ltd.

SHIVVANIShivvani Oil & Gas Exploration Services Ltd.

OIL Oil India Limited

GeoenproGeo Enpro Petroleum Limited

POCPremier Oil Cachar BV

JEPLJubilant Enpro Pvt Ltd.

Geo-PetrolGeo-Petrol International Inc.

EOL Essar Oil Limited

RIL Reliance Industries Ltd.

Marvis Marvis Pte Ltd.

OVL ONGC Videsh Ltd

SummitSummit Oil International Ltd

PIBBV Petrobras International Braspetro

SIPEX Sonatrach International Petroleum Exploration and Production Corporation BVI

RE&P DMCCReliance Exploration & Production DMCC

HMEL HPCL Mittal Energy Ltd. ACL Assam Co. Ltd.

MEDCOENERGI Pt. Medco Energi Internasional Tbk

MEDCO AMEDMedco Yemen Amed Limited (100% Subsidiary of MEDCO ENERGI)

MEDCO ARAT Medco Yemen Arat Limited (100% Subsidiary of MEDCO ENERGI)

ANPAutoridade Nacionale Do Petroleo ANP Ala Leste Do Palacio Do Governo, Dili, Timor Leste

YGCOGYemen General Corporation for Oil & Gas

CVP Corporation Venezolana del Petroleo, S.A.

(E) The Company has signed a "Participating Agreement" (PA) for the product pipeline at Sl. No. C above with ONGC Videsh Limited (OVL) for a 10% Participating Interest (balance 90% being with OVL) in the pipeline project awarded by Ministry of Energy & Mining (MEM), Govt. of Sudan (GOS) through a separate agreement entered into by OVL in this regard. The construction of the pipeline project was completed on 01.09.2005 and handed over to MEM under Build, Own, Lease and Transfer (BOLT) basis.

The "PA" entered into between OVL and OIL is neither intended nor shall be construed as creating a partnership or joint venture among the parties. Hence, accounting has not been done following "Joint Venture Accounting Policy" but the agreement for providing fi nance for the project in rupees to OVL and to share lease rentals receivable from MEM has been treated as "Finance Lease Activity" as envisaged under Accounting Standard (AS) 19 issued by The Institute of Chartered Accountants of India and accordingly accounted for.

The Company has been informed by OVL that the EPC contractor for constructing the pipeline has raised further invoices for an amount of approximately Rs. 11658.67 lakh (US$ 25.53 million) and OVL has in turn raised a claim on MEM of GOS as per the agreement between GOS and OVL. OILs share related to both the claims i.e. by the pipeline contractor on OVL (though accepted by OVL) and OVLs claim on GOS shall be accounted for upon acceptance by GOS and on suitable amendment of repayment schedule by MEM. OVL has received an additional claim of Rs. 5306.55 lakh (US$ 11.62 million) which has not been acknowledged as debt in the books of the operator (OVL). Pending this, the Companys share of the amount claimed by the pipeline contractor has not been accounted for but disclosed under "Contingent Liabilities".

In terms of such "PA", the Company has partly received on 21.01.2010 its share of (9th) ninth installment of lease rentals due as on 31.12.2009. Moreover the Company has also received, in terms of the agreement, the interest on the delayed rental payments by the MEM and the same is shown under miscellaneous income. The regular installments are accounted for as income from Finance Lease.

(F) The Company has acquired 25% equity shares of Suntera Nigeria 205 Ltd. (a company incorporated under the Laws of Nigeria) from Suntera Resources Ltd., a company incorporated under the Laws of Cyprus. The other shareholders of Suntera Nigeria 205 Ltd. are Suntera Resources Ltd. and IOCL with 50% and 25% equity holding respectively. Suntera Nigeria 205 Ltd. holds participating interest of 40% and a further Economic Interest of 30% in onland Block OPL-205 in Nigeria in which the exploration work started. Further the said block (OPL-205) had a hydrocarbon (gas) discovery in structure "Otien". To appraise the discovery of the said prospect it was earlier decided to drill two more appraisal wells. Drilling of the fi rst well started on 24.11.2007 and was suspended in January, 2008 for future re-entry after acquisition of seismic data. Meanwhile OPL-205 was valid only till 19.01.2009. To retain the acreage and execute the drilling of the third well, the operator (SOIL) has obtained the Oil Mining Lease (OML) of the said block on 25.06.2009. The Title deed for OML is still awaited. Pending the receipt of the title deed for OML, the block activity has been kept under abeyance. The plan for future activities in the block has also been under continuous discussion between the shareholders of Suntera Nigeria 205 Ltd.

The Company has acquired 25% equity in Suntera Nigeria 205 Ltd., a company incorporated under the Laws of Nigeria, from Suntera Resources Ltd., Cyprus, through a Share Purchase Agreement (SPA) signed with them on 31st August, 2006 (effective dated 27th September, 2006), for Rs. 0.22 lakh (Nigerian Naira 62502 USD 488.87 approximately) at par and also signed a Shareholders Agreement (SHA) with Suntera Resources Ltd. and IOCL, the other shareholders of the company. Suntera Nigeria 205 Ltd. had entered into an Acquisition Agreement (AA) and Economic Interest Assignment Agreement (EIAA) with Summit Oil International Limited (original 100% Participating Interest holder in OPL-205 and the operators of the Block) on 10.05.2006 for acquiring 40% Participating Interest and 30% Economic Interest in onland Block OPL-205 in Nigeria. Suntera Nigeria 205 Ltd. also entered into a Joint Operating Agreement (JOA) and Technical Service Agreement (TSA) with Summit Oil International Limited on 10.05.2006 for providing the technical support for the operations in OPL-205. Accordingly, the Company indirectly, through 25% equity holding in Sunetra Nigeria 205 Ltd., owns a combined Participating and Economic interest of 17.5% in OPL- 205. The Company is required to contribute its 25% share of all the expenses in the Block by way of loan to Suntera Nigeria 205 Ltd. as agreed by all the shareholders in the SHA, and accordingly a loan agreement has been signed on 30.08.2007. In terms of the loan agreement, the Company has disbursed loan amounting to Rs. 3562.74 lakh (US$ 78,01,050.31) as of 31.03.2010 carrying a simple interest of 8.75% per annum is payable. Accordingly, Rs. 788.51 lakh (Previous year ended on 31.03.2009 Rs. 624.92 lakh) has been charged to Suntera Nigeria 205 Ltd. as interest up to 31.12.2010. As per the loan agreement with Suntera OPL-205 Limited, the principal amount along with simple interest @ 8.75% p.a. is repayable by 31.12.2010. However due to uncertainty of the project, the Company is doubtful about the recoverability of the principal amount and interest receivable upto 31.12.2009. Accordingly no amount has been recognised as interest for the quarter ended 31.03.2010. Further provisions have also been made towards entire principal and interest outstanding amounting to Rs. 4351.25 lakh as on 31.03.2010.

(G) The consortium of Gujarat State Petroleum Corporation Limited (GSPCL), Oil India Limited (OIL) and Hindustan Petroleum Corporation Limited (HPCL) has been awarded Block 3 and Block 4 (offshore Egypt) offered under International Bid Round 2008 announced by M/s. Ganoub El Wadi Holding Petroleum Company (GANOPE), Egypt. GSPCL is the operator for the blocks with 50% participating interest (PI). OIL and HPCL both have 25% PI each in these blocks as non-operators. The Company has remitted its share of the signature bonus of USD 0.75 million for each block and shown as Acquisition costs. The Company had also executed bank guarantee of USD 8.75 million and USD 7.25 million for its share of 5% of the total financial commitment for the blocks as per requirement of signing of Concession Agreements. GANOPE has informed the consortium that some concern has been raised by neighboring country related with the maritime boundaries of both the awarded blocks. The consortium members are in negotiation with GANOPE for resolving the issue and execution of the concession agreement.

(H) The consortium of Oil India Limited (OIL), ONGC Videsh Limited (OVL), Indian Oil Corporation Limited (IOCL), Repsol YPF (Spain) and Petroliam Nasional Berhad (PETRONAS) (Malaysia) has been awarded on 10.02.2010 Project 1 consisting of Carabobo 1 North and Carabobo 1 Central blocks in Venezuelas Orinoco belt under competitive bidding, for development of the Field. The project will be operated by a Mixed Company (MC), the contract for which has been signed on 12th May 2010 in Venezuela between the state company and the successful bidders. Corporatcion Venezolana del Petroleo, S.A. (CVP) i.e. a wholly owned subsidiary of Petroleos De Venezuela S.A. (PdVSA), the national oil company of Venezuela holds 60% share of MC and remaining 40% is held jointly by INDOIL Netherlands BV (a consortium of OIL and IOCL), ONGC Videsh Limited, REPSOL (Spain) and Petronas (Malaysia) with Participating Interests of 7% (3.5% each for OIL & IOCL), 11%, 11% and 11% respectively. OIL will be investing in the project in Venezuela through INDOIL Netherlands B.V., a company acquired in The Netherlands (OILs WOS in Sweden and IOCs WOS in Sweden holds 50% each in this company) which will be funded through WOS in Sweden and Cyprus. OIL will be infusing its financial commitments for 3.5 % in Carabobo project 1 in Venezuela through the Swedish Company OIL INDIA SWEDEN AB.

(I) The assets, liabilities, income and expenditure of the Joint ventures as shown in (A), (B), (C), (D), (E) and (F) above are Rs 35644.45 lakh, Rs 5632.72 lakh, Rs 9804.83 lakh and Rs. 39817.03 lakh respectively (Previous year Rs 4012.36 lakh, Rs. 2296.04 lakh, Rs 7407.71 lakh and Rs 45289.88 lakh respectively), being the proportionate value relating to Companys Participating Interest which have been incorporated in the books of accounts on the basis of Audited 18 nos. (Previous year 13 nos.) and Unaudited 21 nos. (Previous year 20 nos.) Statement of Accounts received from the respective operators. No material changes are expected by the Company in the Unaudited Statement of Accounts.

(J) i) As per the terms of the Kharsang PSC, the applicable price for crude oil produced and saved from the fi eld is to be ascertained online from Reuters daily publication for the previous month. Accordingly the invoices are being raised by the operator of the fi eld at the rates, as applicable. ii) As per the terms of the respective PSCs, provision for Abandonment Costs is to be made and accordingly a sum of Rs. 31.60 lakh (Previous Year Rs 6.83 lakh) has been provided through creation of a Sinking Fund as per Joint Operating Agreement. Such Sinking Fund on cumulative basis has been disclosed separately in the Balance Sheet.

(K) The Companys Share of Contingent liability and Capital Commitment, if any, under the PSC are shown in Note No. 9 (A) & (C) below.

(L) In terms of the Memorandum of Understanding dated 27.12.2005 with M/s. IOT Infrastructure & Energy Services Limited (formerly IOTL), the Company has entered into a consortium agreement dated 13.10.2006 with IOTL for jointly bidding and securing a contract for laying a part of the Numaligarh – Siliguri Product Pipeline for the Company on 50: 50 sharing basis and the consortium was awarded with a contract for laying 115 km of the pipeline at a total contract value of Rs 5001.21 lakh by the Company. Pending receipt of Audited Statement of Accounts relating to the contract (complying with the requirement of Accounting Standard (AS) 7 issued by ICAI for recognition of Profi t/Loss on execution of contract) from IOTL (Project Leader), the Company has accounted for Rs.5325.00 lakh being the project cost incurred by the consortium. The initial contribution of Rs 250.00 lakh paid by the Company to the consortium towards its share of working capital requirement as per the Consortium Agreement has been shown under "Loans and Advances". The project as such has been completed in 2008-09. On receipt of the Audited Statement of Accounts of the Consortium necessary adjustment for fi nal accounting of profi t/loss of this Consortium will be accounted for in the books of the Company.

ii) Associates:

IOTL – OIL Consortium

iii) Key Management Personnel

Whole-time Functional Directors:

a) Mr. N. M. Borah Chairman and Managing Director

b) Mr. T. K. Ananth Kumar Director (Finance)

c) Mr. B. N. Talukdar Director (Exploration & Development)

d) Mr. A. Anand Director (HR & BD)

e) Mr. S. K. Srivastava Director (Operations) (From 01.10.2009 to 28.02.2010)

Part-time Directors:

a) Mr. Ghanshyambhai Hiralal Amin Independent Director

b) Mr. Pawan Kumar Sharma Independent Director

c) Mr. Alexander Koipuram Luke Independent Director

d) Mr. Arun Kumar Gupta Independent Director

e) Mr. Vinod Kumar Misra Independent Director

f) Mr. Sushil Khanna Independent Director

Other Offi cers

a) Mr. S. R. Krishnan Company Secretary

9 (A) Contingent Liabilities:

Claims against the Company not acknowledged as debts amounting to Rs. 57094.62 lakh (Previous year Rs. 54218.56 lakh) include:- (a) In respect of claims under Income Tax, Sales Tax , Service Tax and Other Acts:

(i) Rs. 157.74 lakh (Previous year Rs. 1452.53 lakh):- Demand raised by the District Revenue Authorities on account of premium / revenue on Government ceiling surplus land occupied by the Company. (ii) Rs. 1200.43 lakh (Previous year Rs. 1198.54 lakh) – Demand raised by District Revenue Authorities on Account of revised rate of Land revenue against which has been disputed by the Company and obtained Stay from the Gauhati High Court.

(iii) Rs. 337.81 lakh (Previous year Rs.314.74 lakh ) being the demand raised by Govt. of Rajasthan for alleged short payment of PEL fee and penalty thereon, which has been disputed by the Company.

(iv) Rs. 43612.57 lakh (Previous year Rs. 34555.46 lakh) being the tax imposed under "Assam Taxation (on specifi ed land) Act 2004", the validity of the imposition of which has been challenged by the Company before the Gauhati High Court.

(v) Rs. 16.63 lakh (Previous year Nil) – Demand raised by Govt. of Orissa under Orissa Entry Tax Act for material purchased for drilling operation for Block MN-ONN-2000/1.

(vi) Rs. 558.13 lakh (Previous year Nil) – Demand raised by the Sale Tax authority on Account Assam VAT and CST Act pending the adjustment of the refundable to the Company by the Sales Tax Authority under Assam General Sales Tax Act.

(b) In respect of claims other than under Income Tax, Sales Tax, Service Tax and Other Acts:

(i) Rs. 8558.70 lakh (Previous year Rs. 13908.20 lakh):- Claims by contractors pending decision in Arbitration / Courts.

(c) In respect of share of claim on JVC/PSC account:

(i) Rs. 75.19 lakh (Previous Year Rs. 75.19 lakh) being the value of 19.28 GLK 2D Seismic Survey carried out in one of the block in Karbi Anglong, Assam.

(ii) Rs. 1411.55 lakh (Previous Year Rs. 1397.93 lakh) being proportionate (45%) value of claim on OIL for 3.389 billion FCFA raised by Mr. Paul Tomo, Power of Attorney Holder of M/s Import Commerce General (IGC) in Block "Shakthi", Gabon (JV) .

(iii) Rs. 1165.87 lakh (Previous Year Rs. 1315.97 lakh) being the Companys share of claim made by the Sudan pipeline contractor on OVL, pending acceptance by the MEM Govt. of Sudan.

(B) Letter of Credit and Bank Guarantees

(i) Letters of Credit outstanding as on 31.03.2010 amounting to Rs. 2437.50 lakh (Previous year Rs. 4478.10 lakh) for which there is a fl oating charge on Current Assets of the Company.

(ii) Letters of Credit outstanding as on 31.03.2010 Nil (Previous year US dollars of 1.032 million equivalent to Rs.518.32 lakh) towards OIL s share (50%) for Area 86 and Block 102/4, Libya issued by M/s ICICI Bank Limited, New Delhi.

(iii) Rs 21677.86 lakh (Previous year Rs. 16674.43 lakh) :- Bank Guarantee in US Dollars of 44.66 million (Previous year USD 36.42 million) issued by SBI CAG Branch, Kolkata in favour of Ministry of Petroleum & Natural Gas, Govt. of India towards Companys obligation under various rounds of Production Sharing Contracts.

(iv) Rs. 7913.60 lakh (Previous year Rs. 401.44 lakh):- Guarantee / Standby Letter of Credits in US dollars of 16 million (previous year ended 31.03.2009 USD 0.80 million) issued in favour of Ganoub Ei Wadi Holding Petroleum Company, Cairo, Egypt for Block no.3 & 4, Egypt, towards companys share of the total financial commitment for the blocks as per requirement of signing the concession agreement.

(v) Rs.2477.25 lakh (Previous year ended 31.03.2009 – Nil) :- Bank Guarantee issued by HDFC Bank Ltd., New Delhi in favour of National Stock Exchange of India Limited for security deposit for listing of shares.

(vi) Rs.1559.04 lakh (Previous year ended 31.03.2009 – Nil) : - Bank Guarantee for USD 3.2 million (previous year ended 31.03.2009 – Nil) issued in favour of Autoridade Nacional Dp Petrolo – Anp Ala Leste Do Palacio Do Governo, towards OILs share of 12.5% Participating Interest of the Minimum Work Programme in Deep Water Block "K" in Democratic Republic of Timor Leste.

(vii) Rs.2245 lakh (Previous year ended 31.03.2009 – Nil): - Bank Guarantee issued for USD 5 million by HDFC Bank Limited, New Delhi (previous year ended 31.03.2009- Nil) for fi ve PEL areas allotted to the company.

(viii) Rs.2397.68 lakh (Previous year ended 31.03.2009 – Nil) – Bank Guarantee issued for USD 5.250 million by Deutsche Bank (Asia) issued in favour of BOLIVARIAN REPUBLIC OF VENEZUELA, MINISTRY OF THE PEOPLES POWER FOR ENERGY AND PETROLEUM, Caracus, Venezuela as a part of tender process.

(C) (i) The estimated amount on account of contracts remaining to be executed on Capital Account and not provided for in the accounts :- Rs. 17036.69 lakh (Previous year Rs. 18256.83 lakh).

(ii) Companys share of amount of contracts remaining to be executed on Capital Account and not provided for in the account as on 31.03.2010 in respect of the Joint Ventures is Rs. Nil. (Previous Year Rs Nil).

10) Previous years figures have been reclassifi ed/ regrouped wherever necessary to conform to current years classifi cations.


Mar 31, 2008

1. The Company has acquired 25% equity shares of Suntera Nigeria 205 Ltd. (a company incorporated under the Laws of Nigeria) from Suntera Resources Ltd., a company incorporated under the Laws of Cyprus. The other shareholders of Suntera Nigeria 205 Ltd. are Suntera Resources Ltd. and IOCL with 50% and 25% equity holding respectively. Suntera Nigeria 205 Ltd. holds participating interest of 40% and a further Economic Interest of 30% in onland Block OPL-205 in Nigeria in which the exploration work is yet to commence.

Notes : (i) The Exploration Service Contract for the Block at Sl. No. B(1) above was signed with National Iranian Oil Company (NIOC), the State owned company, of the Government of Iran, in consortium with ONGC Videsh Limited and Indian Oil Corporation Limited. The exploration work in the block is in progress.

(ii) The Company signed two "Exploration and Production Sharing Agreement (EPSA)" for the blocks at Sl. No. B (2) and B (3) above with National Oil Corporation of Libya in consortium with Indian Oil Corporation Ltd. The Company is the operator of these blocks. The exploration work in both the Blocks is in progress.

(iii) The Company acquired a participating interest of 45% in onshore Block Shakthi in Gabon, West Africa (Sl. No. B (4) above) through a farm-out agreement signed on 17.04.2006 with Marvis Pte Ltd., a company incorporated in Singapore, which was holding 100% Participating Interest in the Block. The acquisition has been approved by the Govt. of Gabon. The Company is the Operator of the Block. The exploration work in the block is in progress.

(iv) The Company has signed a "Participating Agreement" (PA) for the product pipeline at Sl. No. C above with ONGC Videsh Limited (OVL) for a 10% participating interest (balance 90% being with OVL) in the pipeline project awarded by Ministry of Energy & Mining (MEM), Govt. of Sudan (GoS) through a separate agreement entered into by OVL in this regard. The construction of the pipeline project was completed on 01.09.2005 and handed over to MEM under Build, Own, Lease and Transfer (BOLT) basis.

The "PA" entered into between OVL and OIL is neither intended nor shall be construed as creating a partnership or joint venture among the parties. Hence, accounting has not been done following "Joint Venture Accounting Policy" but the agreement for providing finance for the project in rupees to OVL and to share lease rentals receivable from MEM has been treated as "Finance Lease activity" as envisaged under Accounting Standard (AS) 19 issued by The Institute of Chartered Accountants of India and accordingly accounted for.

The Company has been informed by OVL that the contractor for constructing the pipeline has raised further invoices for an amount of approximately Rs.10259.73 lakh (US$ 25.53 Million) and OVL has in turn raised a claim on MEM of GoS as per the agreement between GoS and OVL. OIL’s share related to both the claims i.e. by the pipeline contractor on OVL (though accepted by OVL) and OVL’s claim on GoS shall be accounted for upon acceptance by GoS and on suitable amendment of repayment schedule by MEM. OVL has received an additional claim of Rs. 4669.80 lakh (US$ 11.62 million) which has not been acknowledged as debt in the books of the operator (OVL). Pending this, the Company’s share of the amount claimed by the pipeline contractor has not been accounted for but disclosed under "Contingent Liabilities".

In terms of such "PA", the Company has received its share of (5th) fifth instalment of lease rentals due as on 31.12.2007. Moreover the Company has also received, in terms of the agreement, the interest on the delayed rental payments by the MEM and the same is shown under miscellaneous income. The regular installments are accounted for as income from Finance Lease.

(v) The Company, as stated in Sl. No. D above, has acquired 25% equity in Suntera Nigeria 205 Ltd., a company incorporated under the Laws of Nigeria, from Suntera Resources Ltd., Cyprus, through a Share Purchase Agreement (SPA) signed with them on 31st August, 2006 (effective dated 27th September, 2006), for Rs. 0.22 lakh (Nigerian Naira 62502 USD 488.87 approximately) at par and also signed a Shareholders Agreement (SHA) with Suntera Resources Ltd. and IOCL, the other shareholders of the company. Suntera Nigeria 205 Ltd. had entered into an Acquisition Agreement (AA) and Economic Interest Assignment Agreement (EIAA) with Summit Oil International Limited (original 100% Participating Interest holder in OPL-205 and the operators of the Block) on 10.05.2006 for acquiring 40% Participating Interest and 30% Economic Interest in onland Block OPL-205 in Nigeria. Suntera Nigeria 205 Ltd. also entered into a Joint Operating Agreement (JOA) and Technical Service Agreement (TSA) with Summit Oil International Limited on 10.05.2006 for providing the technical support for the operations in OPL-205. Accordingly, the Company indirectly, through 25% equity holding in Suntera Nigeria 205 Ltd., owns a combined Participating and Economic interest of 17.5% in OPL-205. The Company is required to contribute its 25% share of all the expenses in the Block by way of loan to Suntera Nigeria 205 Ltd. as agreed by all the shareholders in the SHA and accordingly a loan agreement has been signed on 30.08.2007. In terms of the loan agreement, the Company has disbursed loan amounting to Rs. 2989.73 lakh (US$ 7565108.31) as of 31.03.2008 {Previous year Rs. 1650.43 lakh (US$ 3704233.12)} carrying a simple interest of 8.75% per annum. Accordingly, Rs.211.69 lakh (Previous year Rs.31.26 lakh) has been charged to Suntera Nigeria 205 Ltd. as interest up to 31.03.2008.

(E) The assets, liabilities, income and expenditure of the Joint ventures as shown in (A), (B), (C) and (D) above are Rs 791.36 lakh, Rs 1994.04 lakh, Rs 5993.96 lakh and Rs.19403.50 lakh respectively (Previous year Rs 8756.43 lakh, Rs.2055.12 lakh, Rs 6025.13 lakh and Rs 30457.82 lakh respectivety), being the proportionate value relating to Company’s Participating Interest which have been incorporated in the books of accounts on the basis of Audited 20 no. (Previous years Nil) and Unaudited 11 no. (Previous year 31 nos.) Statement of Accounts received from the respective operators. No material changes are expected by the Company in the unaudited Statement of Accounts.

(F) (i) As per the terms of the Kharsang PSC, the applicable price for crude oil produced and saved from the field is to be ascertained online from Reuters’ daily publication for the previous month. Accordingly the invoices are being raised by the operator of the field at the rates, as applicable.

(ii) As per the terms of the respective PSCs, provision for Abandonment Costs is to be made; in accordance whereof a sum of Rs. 6.83 lakh (Previous Year Rs 7.22 lakh) has been provided through creation of a Sinking Fund as per Joint Operating Agreement. Such Sinking Fund on cumulative basis has been disclosed separately in the Balance Sheet.

(G) The Company’s Share of Contingent liability and Capital Commitment, if any, under the PSC are shown in Note No. 9 (A) & (C) below.

(H) In terms of the Memorandum of Understanding dated 27.12.2005 with M/s. Indian Oil Tanking Limited (IOTL), the Company has entered into a consortium agreement dated 13.10.2006 with IOTL for jointly bidding and securing a contract for laying a part of the Numaligarh – Siliguri product pipeline for the Company on 50: 50 sharing basis and the consortium has been awarded with a contract for laying 115 km of the pipeline at a total contract value of Rs 5001.21 lakh by the Company. Pending receipt of Audited Statement of Accounts relating to the contract (complying with the requirement of Accounting Standard 7 issued by ICAI for recognition of Profit/Loss on execution of contract) from IOTL (Project Leader), the Company has provisionally accounted for loss of Rs 281.95 lakh in the current year’s account being its share based on the unaudited accounts and charged the same to the project cost in addition to the amount paid to consortium amounting to Rs 3385.57 lakh and Rs 111.44 lakh spent by the Company towards laying of the pipeline under Capital Work in Progress pending completion of the project. The initial contribution of Rs 250.00 lakh paid by the Company to the consortium towards its share of working capital requirement as per the Consortium Agreement has been shown under Loans and Advances. On receipt of Audited Statement of Accounts of the Consortium upon completion of the Project, which is expected during the year 2008-09, necessary accounting of profit/loss of this project of the Consortium will be carried out.

(I) The Company had entered into a joint venture partnership agreement dated 26.09.2006 with M/s ICSA (India) Ltd. (ICSA) towards development of the iCap technology (used in pipeline surveillance) by ICSA. During the year the said agreement was terminated and accordingly Rs.225.18 lakh provided in 2006-07 on adhoc basis as payable has been written back under "Other Adjustments (Income)" in Schedule 22A.

2. Information as per Accounting Standard (AS) 18 "Related Party Disclosures" issued by ICAI.

a) Related party relationships

Name of related parties and description of relationship (excluding the State controlled entities):-

3. Deferred Tax

a) In accordance with the Accounting Standard – 22, the Company has net deferred tax liability as at 31st March, 2008 of Rs. 86,551.70 lakh (Previous year Rs. 80333.18 lakh).

4. Fixed Assets:

A. Land in possession of the Company, includes some areas for which title / conveyance deeds are yet to be executed and / or mutation in settlement records is pending. Documentation formalities are in progress.

B. The Company has identified various Plant & Machinery, which are not in use for considerable time. Pending writing off of these assets from the gross block, the Company has taken a provision of Rs. 402.66 lakh (Previous year Rs 120.43 Lakh) during the year towards the difference between the WDV as on 31.03.2008 and 5% of original cost as the residual value of the respective assets.

5. Impairment of Assets

In terms of the Significant Accounting Policy No. 6, the Company assessed the Cash Generating Assets for the Impairment as required under AS-28 issued by ICAI and found that no cash generating Asset needs impairment as on 31.03.2008.

6. (A) Sundry Debtors:

i) The settlement of outstanding dues from Assam State Electricity Board (ASEB) for sale of Natural Gas amounting to Rs. 16196.87 lakh was under process. The Government of Assam has decided to discharge the liability from its’ budgetary support. Accordingly the Government of Assam has released Rs. 3000.00 lakh on 31.03.2008 being the 1st instalment. Hence, entire amount due from ASEB has been classified as "Unsecured, Considered Good" under Sundry Debtors. Interest receivable, if any, on the dues will be accounted in the year of final settlement.

ii) All other Sundry Debtors including the overdue amount are considered good and realizable, unless stated otherwise.

(B) Loans and Advances include :

(i) Amount due by Directors and Other Officers of the Company:

(ii) Advances recoverable in cash or in kind or for value to be received includes materials given on loan to Public Sector Undertakings amounting to Rs. 279.41 lakh (Previous year Rs. 279.31 lakh).

(iii) A revival package for M/s Indian Drugs and Pharmaceuticals Limited (IDPL) has been recommended by BRPSE on 9th March, 2007 to the Government of India. The revival package also envisages payment of principal amount of Rs. 1500.00 lakh along with 5 % simple interest to OIL. The matter was also considered by the Cabinet in its meeting on 17th May, 2007 and then referred to Group of Ministers for consideration. As soon as the package is approved by the Government and the funds are provided for the same, the outstanding dues will be cleared by IDPL.

(iv) M/s Luit India Inc., (formerly known as Sakhalin India Inc.) incorporated in United States of America became fully owned subsidiary company of Oil India Limited with effect from 10.05.2003. The subsidiary company was already wound up on 31.12. 2004. The company does not exist as of 31.03.2008, no consolidated Statement of Assets and Liabilities and Profit and Loss Account has been prepared. An amount of Rs.6731.44 (Previous Year Rs. 7475.79) lying in the bank account of Luit India Inc. as on 31st March, 2008 is shown as amount receivable.

(C) Balance shown creditors, debtors, claims, recoverable and advances include balances subject to confirmation/ reconciliation and consequential adjustment, if any. Reconciliation are carried out on on-going basis. Provisions, wherever considered necessary, have been made.

(D) Micro , Small and Medium Enterprises Act, 2006 :

The Company has initiated the process of obtaining confirmation from vendors who have registered under The Micro, Small and Medium Enterprises Development Act, 2006.The Company has not received any confirmation from registered vendors as of date, in respect of whom disclosures are required to be made under the said Act.

7. Current Liabilities:

Sundry creditors include materials received on loan from other Public Sector Undertakings amounting to Rs. 351.56 lakh (Previous Year Rs. 359.92 lakh).

8. Disclosure pursuant to AS 15 (Revised 2005) – Employee Benefits:- Effective 1st April, 2007, the Company has adopted AS 15 (Revised 2005) for Employee Benefits issued by ICAI as against erstwhile AS 15. Consequent to the adoption, the following disclosures related to accounting etc are made as far as practicable under AS 15 (Revised 2005) requirement:

Defined Contribution Plans

The Company’s contribution to Provident Funds for employees and executives is Rs.3212.78 lakh.

Defined Benefit Plans

The various Benefits Plans which are in operation are Gratuity Fund, Pension Funds, Leave Encashment, Leave Fare Assistance/ Leave Travel Concession, Pre & Post Retirement Medical Benefit and Long Service Award. The present value of the obligation is determined based on Actuarial valuation using the projected Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation.

E. Notes on above

(i) In case of gratuity, the fair value of plan asset at the end of the year is Rs.15300.16 lakh as against present value of obligation of Rs.10870.35 lakh i.e. Rs.4429.81 lakh higher. Neither any adjustment has been made in the Accounts for such credit in the Funded benefits scheme nor Rs.150.56 lakh expense has been recognized.

(ii) Long Service Award liability as on 31.03.2008, Actuarial determination has been charged to Profit and Loss Account as no figure up to 31.03.2007, has been ascertained for taking to opening General Reserve.

(iii) LFA/LTC liability determined by Actuary as on 31.03.2007 of Rs.2500.01 lakh has been adjusted against opening General Reserve net of Deferred Ta x Asset of Rs.849.75 lakh.

(iv) The Company’s Provident fund is exempted under section 17 of Employees’ Provident Fund Act, 1952. The Company has also taken exemption under Para 39 of Employees Pension Schemes 1995 and extending the Pension benefits through Oil India Employees Pension Fund. Conditions for grant of exemptions stipulate that the employer shall make good the deficiency, if any, in the interest rate declared by the trust vis-à-vis statutory rate in case of Employee Provident Fund and deficiency, if any in extending the pensionary benefits will be made good by the Company in the Employee Pension Fund.

(v) AS 15 (Revised 2005) Employees benefit being mandatorily applicable from 01.04.2007 no corresponding previous figures appear. Accordingly, the impact on current year’s Accounts due to such adoption of revised AS, as compared to earlier policy not disclosed.

9 (A) Contingent Liabilities:

Claims against the Company not acknowledged as debts amounting to Rs.62196.30 lakh (Previous year Rs.36785.10 lakh) include:- (a) In respect of claims under Income Tax, Sales Tax , Service Tax and Other Acts:

(i) Rs. 1424.54 lakh (Previous year Rs. 67.66 lakh) :- Demand raised by the District Revenue Authorities on account of premium / revenue on Government ceiling surplus land occupied by the Company.

(ii) Rs. 1088.47 lakh (Previous year Nil) – Demand raised by District Revenue Authorities on Account of revised rate of Land revenue against which has been disputed by the Company and obtained Stay from the Gauhati High Court.

(iii) Rs. 293.94 lakh (Previous year Rs. 242.75 lakh ) being the demand raised by Govt. of Rajasthan for alleged short payment of PEL fee and penalty thereon, which has been disputed by the Company.

(iv) Rs. 25908.74 lakh (Previous year Rs. 17825.99 lakh ) being the tax imposed under "Assam Taxation (on specified land) Act 2004", the validity of the imposition of which has been challenged by the Company before the Supreme Court of India.

(b) In respect of claims other than under Income Tax, Sales Tax , Service Tax and Other Acts:

(i) Rs. 31712.47 lakh (Previous year Rs. 14882.64 lakh) :- Claims by contractors pending decision in Arbitration/Courts.

(ii) Rs. 1692.95 lakh (Previous Year Rs. 508.58 lakh) being the Company’s share of claim made by the Sudan pipeline contractor on OVL, pending acceptance.

(c) In respect of share of claim on JVC/PSC account:

Rs. 75.19 lakh (Previous Year Rs. 75.19 lakh) being the value of 19.28 GLK 2D Seismic Survey carried out in one of the blocks. Barring above, there are no other contingent liabilities in any of the Joint Ventures in India or abroad requiring disclosure.

(B) Letter of Credit and Bank Guarantees.

(i) Letters of Credit outstanding as on 31st March, 2008 amounting to Rs.7806.71 lakh (Previous year Rs. 5685.77 lakh) for which there is a floating charge on Current Assets of the Company.

(ii) Rs 8238.02 lakh (Previous year Rs. 3018.62 lakh) :- Performance Guarantee in US Dollars of 20.23 million issued by SBI CAG Branch, Kolkata in favour of Ministry of Petroleum & Natural Gas, Govt. of India towards Company’s obligation under various Production Sharing Contracts.

(iii) Rs 4.85 lakh (Previous year Nil):- Performance Bank Guarantee of Rs. 4.85 lakh issued by State Bank of India, CAG Branch, Kolkata in favour of "Indian Oil Corporation Noida (Pipeline Division)", valid upto 19.07.2008.

(C) (i) The estimated amount on account of contracts remaining to be executed on Capital Account and not provided for in the accounts :- Rs. 22044.23 lakh (Previous year Rs. 7177.74 lakh).

(ii) Company’s share of amount of contracts remaining to be executed on Capital Account and not provided for in the account as on 31.03.2008 in respect of the Joint Ventures is Rs. Nil. (Previous Year Rs Nil).

10. General

(A) (i) With effect from 01.04.2002, the price of Crude Oil and LPG is market determined in terms of the Policy of the Government of India. Accordingly, the crude oil price is determined based on the terms and condition of the Memorandum of Understanding (MOU) signed with various buyers of crude oil for the period from 01.04.2002 to 31.03.2004. Though the MOU for the period effective from 01.04.2004 has not yet been finalized, the Company is continuing to bill and the buyers are continuing to pay on the terms and conditions of the MOU for the period from 01.04.2002 to 31.03.2004. In terms of the MOU, the Company receives a monthly average price of crude oil bench marked to Nigerian Bonny Light crude oil (ascertained from Reuter) after adjustment for gross product worth (quality differential) and discount on account of Base Sediment & Water (BS&W). As regards LPG price, the same continues to be notified by Indian Oil Corporation Ltd. (IOC) every month.

(ii) The Ministry of Petroleum & Natural Gas (MOP&NG), Govt. of India, vide its letter dated 03.03.2008 allowed the Company to realize the sales tax for the financial year 2007-08, similar to decision of 2006-07, in respect of crude oil supplies to refineries which were borne by the Company up to financial year 2005- 06. The same amounting to Rs17223.38 lakh (net) (Previous year Rs 15458.28 lakh (net)) has accordingly been accounted for in the current year.

(iii) In terms of decision of the Govt. of India, conveyed by Petroleum Planning and Analysis Cell , the Company has allowed discount of Rs. 223562.73 lakh (Previous year Rs. 192848.18 lakh) on sale price of Crude oil and Rs. 6946.08 (Previous year Rs. 6526.63 lakh) on sale price of LPG during the year. Accordingly, the sales revenue in respect of crude oil and LPG is net of the aforesaid discounts, which have the effect of reduction of the profit for the year by that amount.

(iv) The price of Natural Gas was revised by the Ministry of Petroleum and Natural Gas, Government of India vide letter No. L-12015/5/04-GP(i) dated 20th June, 2005. The revised price applicable w.e.f. 01.07.2005 in respect of APM gas quantity, being the quantity of gas produced as on 30.06.2005 and sold to consumers other than those with whom the Company had signed Gas Sale and Purchase Agreement (GSPA) with mutually agreed price. The gas price for gas sale in Rajasthan is governed by the MOU dated 11th October, 2004 between the Company and GAIL, which is a mutually agreed price.

(v) The Company has been recovering, on a provisional basis, from all refineries other than Numaligarh Refinery Limited (NRL), 50% of the transportation tariff on crude oil as fixed by the Petroleum Planning & Analysis Cell (PPAC) for the year 2001-02. However, for the year MOP & NG, vide its letter dated 03.03.2008 has allowed the Company to realize the full transportation tariff from all the refineries including NRL similar to the decision in 2006-07. The same amounting to Rs. 1865.67 lakh (net) {Previous year Rs. 1917.45 lakh (net)} has accordingly been accounted for. As regards transportation income in respect of crude oil of M/s. Oil & Natural Gas Corp. Ltd. (ONGC) and M/s. Bongaigaon Refinery & Petro-chemicals Ltd. (BRPL) for its imported crude, the same are accounted for based on the MOU/Crude Oil Transportation Agreement (COTA) signed with the respective companies.

(vi) The Company is holding in its safe custody, Fixed Deposit Receipts issued in its favour by Contractors / Suppliers as Security Deposit / Earnest Money amounting to Rs. 159.10 lakh (Previous year Rs. 159.10 lakh), which are not included in the accounts.

(vii) The total Gas Reserve as on 31st March, 2008 in Assam & Arunachal Pradesh have been allocated to the Oil Fields based on the ratio of Reserve figures as on 31.03.2006. The opening balance of Reserve as on 01.04.2007 as reduced by production during the year in respect of such fields and depletion provided accordingly.

(viii) Exchange loss of Rs. 392.13 lakh (Previous year Rs. 112.37 lakh) includes , exchange gain of Rs 21.75 lakh related to Assets accounted in line with the changed Accounting Policy no. 5 due to applicability of AS 11 (Revised).

(ix) OIL has entered into a MOU with HPCL, GAIL, Mittal Energy Investment Pte. Ltd. and TOTAL France S.A. on 18.10.2007 for setting up of an integrated Refinery cum Petrochemical Complex at Vishakapatnam in Andhra Pradesh. A provision of Rs.81.00 lakh have been made in the Accounts for the year towards OIL’s share of cost for feasibility study for the said project.

(B) During the year, the Company has provided a Drilling Rig on hire for the operation in one of the NELP blocks in Rajasthan, in which the Company is the operator. The profit arising out of the drilling rig hiring services has been identified and set off from the Pre-Producing Properties Account relating to the wells in which the rig was put to use.

(C) The salary of the unionized employees as well as executive employees below board level is due for revision with effect from 01.01.2007. Pending finalization of the same Rs. 2289.53 lakh for the period 01.01.2007 to 31.03.2007 and Rs. 14010.76 lakh for the current year have been provided in the accounts on adhoc basis.

(D) Borrowing cost capitalized during the year is nil.

(E) Previous year’s figures have been reclassified/ regrouped wherever necessary to conform to current year’s classifications.

1. (a) In accordance with the existing management reporting system, the Company has adopted :-

(i) the following business segments as the primary reporting segments :

Crude Oil

Natural Gas

LPG

Transportation

and

(ii) the following geographical segments as the secondary reporting segments :

Assam / Arunachal Pradesh (AP)

Rajasthan

(b) All inter-segment transfers have been measured using actual price used for transfer pricing.

2. Segment sales revenues are directly identifiable with the respective segments and therefore, have been directly allocated to the segments. Other income which can be directly attributed to a particular segment has been shown as segment revenue. Other income which cannot be attributed to any of the segments have been disclosed as unallocated.

3. Expenditure incurred directly by the segments are directly allocated to them. Expenditure incurred by Service departments have been allocated to the segments in proportion to the actual services rendered to the respective segments. Overhead expenditure have been allocated to the segments on the basis of direct emoluments. Exploration expenditure pertaining to the areas having joint production of Crude Oil & Natural Gas, charged to the Profit and Loss Account have been allocated to the Crude Oil and Natural Gas segments on the basis of thermal equivalence. Research & Development expenditure have been considered as unallocated.

4. Other adjustments in the income and expenditure not relating to the year of reporting have been disclosed as unallocated corporate income/expenses.

5. Share capital, Reserves and Surplus and Loans have been treated as unallocated corporate liabilities.

6. Liabilities and Current Assets relating to purchase of materials and hiring of services, used jointly by two or more segments have been allocated to the segments on the basis of average consumption/utilization of the previous two years.

7. Liabilities and Advances arising out of payment to employees , used jointly by two or more segments, have been allocated to the respective segments on the same basis as followed for allocation of employees cost

8. Fixed assets and depreciation thereon have been identified cost center wise and after allocation of the amounts under services and overhead cost centers on the basis mentioned in para 3 above, the segment assets have been determined.

9. Producing properties, pre producing properties and depletion pertaining to the areas having joint production of Crude Oil & Natural Gas have been allocated to crude oil and gas segments on the basis of Proved-Developed- Producing reserves.

10. Investments outside the business and Cash and Bank balances are treated as unallocated corporate assets.

11. Any other revenue, expenditure, assets or liabilities, which cannot be directly attributed to one or more segments, have been treated as unallocated corporate revenue, expenditure, assets or liabilities as the case may be.

12. Exploration expenditure, assets & liabilities pertaining to the project areas where commercial production of Hydrocarbons has not yet commenced, have been shown in the unallocated corporate head.

13. Individual items of assets or liabilities used jointly by two or more segments, the amount of which is insignificant and are not considered material, have been allocated to Crude Oil and Natural Gas segment on the basis of thermal equivalence.

14. Inter segment sales not considered in total revenue are shown under elimination.


Mar 31, 2005

1. Current Liabilities:

Sundry Creditors include materials received on loan from other Public Sector Undertakings amounting to Rs. 909.36 lakh (Previous Year Rs.210.61 lakh).

4. Fixed Assets:

(i) Land in possession of the Company, includes some areas for which title deeds/conveyance deeds are yet to be executed and/or mutation in settlement records is pending. Documentation formalities are in progress.

(ii) Lease for 90 years or more is treated as Perpetual Lease.

(iii) Fixed Assets as on 31.03.2005 includes Rs. 3.01 lakh being the adjusted value of the Assets awaiting disposal as per the Significant Accounting Policy No.3 (c) as against nil value in earlier years, which has the effect of increase in profit for the year by like amount.

(iv) A firm of consultants was appointed to physically verify the Fixed Assets of the Company as on 31.03.98. The firm has completed the verification and reconciliation of the assets at various locations of the Company. Based on such physical verification, assets of original cost of Rs.3402.60 lakh representing 2.60% of the total cost of the assets of the Company were to be matched and reconciled, for which a sum of Rs.1154.17 lakh representing the Written Down Value (WDV) as on 31.03.2001 had been provided for, pending the reconciliation of the said items, on that date. Upon reconciliation, which is still continuing as on date, assets representing original cost of Rs. 2972.73 lakh (WDV Rs.1089.79 lakh) have been identified and balance assets with original amount of Rs.429.87 lakh of original cost (WDV Rs. 64.38 lakh) representing 0.30% of the total cost of assets on the date of the verification (31.03.98) are pending reconciliation/identification as on date. Accordingly, the provision of Rs. 74.59 lakh made in the previous year for the unidentified assets has been reduced to Rs. 64.38 lakh as on 31.03.2005.

5. Depreciation:

In accordance with the Significant Accounting Policy No. 4 (b), depreciation on fixed assets for the year amounting to Rs. 2313.63 lakh (Previous year Rs. 2390.49 lakh) has been allocated to drilling and/or completion and testing of exploratory and development wells undertaken during the year.

6. Impairment of Assets

In terms of the Significant Accounting Policy No. 6 the Company assessed the Cash Generating Assets for the Impairment Test with the U.S. Dollar Conversion Rate as per RBIs B.C. Selling Rate notified as on 31.03.2005 and using a discounting rate of 10%, finds no asset need impairment as on 31.03.2005.

7. (A) Loans and Advances include:

(i) Amount due by Directors and Other Officers of the Company (Rs. in lakhs):

Balance as at Maximum amount due at any time during the year 31st March, 2005 31st March, 2004 2004-05 2003-04

(a) Directors 3.17 5.67 5.67 9.66

(b) Other Officers 7.42 8.16 8.16 8.90

(ii) Advances recoverable in cash or in kind or for value to be received includes materials given on loan to Public Sector Undertakings amounting to Rs. 922.73 lakh (Previous year Rs.472.35 lakh)

(iii) During the previous year ending 31st March 2004, since North Hellhole Bayou Prospect was declared unsuccessful, a part of the loan (Rs. 3155.03 lakh) extended to Luit India Inc. after netting the amount available in its bank account as on 31st March, 2004, had been written off. Further, it was also decided to wind up M/s. Luit India Inc. in due course. Accordingly, M/s. Luit India Inc/Sakhalin India Inc. was dissolved on 31st December, 2004 and the certificate of dissolution has been obtained after completing all the formalities required under the laws of United States of America. Since the Company has been dissolved on 31.12.2004, an amount of Rs.315717.32 (i.e. US$ 7157.50@ Rs.44.11 per dollar) incurred during the year towards administrative and winding up expenses of the Company has been charged off. The remaining amount of Rs.7513.26 (US$ 170.33 @44.11) in the bank account of Luit India Inc. as on 31st December, 2004 (as on the date of dissolution) is shown as amount receivable from M/s. Luit India Inc.

(iv) During the year, one instalment of the loan taken from ONGC Videsh Limited amounting to Rs. 618.24 lakh was due for repayment as per Sale & Purchase Agreement dt. 7th March, 2003. However, the Company has disputed the repayment and has appealed to Ministry of Petroleum and Natural Gas. Pending disposal of the appeal by the Ministry of Petroleum and Natural Gas, no further action is being taken towards repayment of the loans. Entire amount is due and payable as per terms of Sale & Purchase Agreement.

(B) Sundry Debtors;

i) The settlement of outstanding dues from Assam State Electricity Board (ASEB) for sale of Natural Gas is under the process of securitization as per the scheme "Securitization of dues of State Electricity Boards" of Government of India. Hence, entire amount due from ASEB has been classified as "Unsecured Considered Good" under Sundry Debtors (Schedule 10).

ii) Sundry Debtors balance includes interest receivable for delay in payment.

iii) All other Sundry Debtors including the overdue amount are considered good and realisable.

(C) Balance confirmation in respect of Creditors and Loans & Advances have not been obtained.

(D) Inventory : During the year the Company has reviewed the valuation of insurance spares including items related to deferred projects/drilling wells and accessories of plant & equipment. Accordingly, the insurance spares have been capitalised and depreciated in line with Accounting Standard-2 read with Accounting Standard-10. The other spares have been considered as part of other Stores and Spares for valuation as per the Significant Accounting Policy no. 10 (c).

Due to above change in policy a sum of Rs. 215.37 lakh has been charged to depreciation and Rs. 1949.14 lakh has been charged to Profit & Loss Account during the year, which have effect of reduction of profit for the year by like amount.

8 Contingent Liabilities not provided for:

(A) Claims against the Company not acknowledged as debts Rs. 16831.40 lakh (Previous year Rs. 18406.38 lakh) which includes:-

(i) Rs.989.57 lakh (Previous year Rs.824.64 lakh):- Sales Tax and interest demand on account of a foreign contractor which is pending before the Orissa High Court.

(ii) Rs. 13653.32 lakh (Previous year Rs. 17457.00 lakh) :- Claims by contractors pending decision in Arbitration/Courts.

(iii) Rs.67.66 lakh (Previous year Rs.67.66 lakh) :- Demand raised by the District Revenue Authorities on account of premium/revenue on Government ceiling surplus land occupied by the Company.

(iv) Rs. 69.47 lakh (Previous year Rs.57.08 lakh) :- Being the Companys Share (40%) of the disputed demand of Cess by Excise Authorities on Crude Oil sold by Kharsang PSC by Excise Authority.

(v) Rs.1930.40 lakh (Previous year-nil) being the tax imposed under "Assam Taxation (on specified land) Act 2004", the validity of the imposition of which is challenged by the Company before the Honble High Court at Guwahati.

(vi) Rs.120.98 lakh (Previous year-nil) being the claim by ASEB against sale of Electricity which is disputed by the Company.

(B) Letters of Credit and Bank Guarantees

(i) Letters of Credit outstanding as on 31st March, 2005 amounting to Rs.7257.00 lakh (Previous year Rs.2117.44 lakh) for which there is a floating charge on Current Assets of the Company.

(ii) Rs.478.74 lakh (Previous year Rs.477.58 lakh) :- Performance Guarantee for US Dollars 1.08 Million given (towards work commitment) issued by SBI CAG Branch, Kolkata in favour of National Iranian Oil Company towards 20% participating interest of the Company in the Exploration Service Contract for the Offshore Farsi Block in Persian Gulf, Islamic Republic of Iran. Though as per Exploration Service Contract, the amount of the Perfomance Guarantee is to be reduced at the end of each year to the extent of the work commitment already fulfilled, the amount of the liability has been retained at its original level due to non-receipt of clearance from the National Iranian Oil Company, the state owned oil company of the Government of Iran, in this regard.

(iii) Rs. 753.56 lakh (Previous year-nil):- Bid bond guarantee of US Dollars 1.7 million issued by State Bank of India, CAG Branch, Kolkata in favour of National Oil Corporation ("NOC"), Bashir Sadawi Street, Tripoli, Great Socialist People Libyan Arab Jamahiriya for participating by Oil India Limited in the bidding process for an Exploration and Production Sharing Agreement (EPSA) for Block No.86 in Libya. Although the bank guarantee is valid as on 31.03.2005, the EPSA has been signed on 20th March, 2005, hence there will not be any future liability towards the same.

(iv) Rs.500.00 lakh ((Previous year-nil) :- Performance Bank Guarantees of Rs.500.00 lakh issued by State Bank of India, CAG Branch, Kolkata with validity of two years in favour of "Department of Telecom, Government of India" upon approval of Department of Telecommunication granting licence to Oil India Limited on non-exclusive basis for Infrastructure Provider Category-II(IP-II) permitting the company leasing of end to end dark fibre to out side operator.

(C) The estimated amount on account of contracts remaining to be executed on Capital Account and not provided for in the accounts :- Rs.9749.35 lakh (Previous year Rs.6675.07 lakh)

10. General

(a) (i) With effect from 1.4.2002, the price of crude oil and LPG is market determined in terms of the Policy of the Government of India. Accordingly, the crude oil prices during the year have been taken based on Memorandum of Understanding (MOU) signed with various buyers of crude oil for the period from 01/4/2002 to 31/03/2004. Though the MOU for the period effective from 01/04/2004 has not yet been finalized, the Company is continuing to bill and the buyers are continuing to pay, on a provisional basis, on the terms and conditions of the MOU for the period from 01/04/2002 to 31/03/2004. In terms of the MOU, the Company receives a monthly average price of crude oil bench marked to Nigerian Bonny Light crude oil (ascertained from Platts Oilgram) after adjustment for gross product worth (quality differential) and discount on account of Base Sediment & Water (BS&W), Further, the Company would also be entitled to receive sales tax on crude oil sales provided Free on Board (FOB) crude oil price is up to US$21/bbl. In case FOB crude oil price exceeds US$21/bbl, sales tax shall be borne by the Company subject to the Company getting minimum US$21/bbl plus sales tax. As regards LPG price, the same continues to be notified by Indian Oil Corporation Ltd. (IOC) every month.

In terms of decision of the Govt. of India, conveyed vide letter No. P-20012/28/97-PP dated 23rd July, 2004 and further communicated by Petroleum Planning and Analysis Cell vide letter dated 27th August, 2004, 15th October, 2004, 24th January, 2005 and 3rd May, 2005 the Company has allowed discount of Rs. 64815.71 lakh on sale price of crude oil and Rs. 5642.84 lakh on sale price of LPG. Accordingly, the sales revenue in respect of crude oil and LPG is net of the aforesaid discounts, which have the effect of reduction of the profit for the year by those amount.

(ii) The price of natural gas is governed by the notification issued by GAIL(lndia) Ltd. in respect of all gas sales in the North East Region except where gas supply is based on a mutually agreed price. However, in respect of gas sale in Rajasthan, the Company followed the price as per notification from GAIL(lndia) Ltd. till 10th October, 2004. Since 11th October, 2004, the gas price for gas sale in Rajasthan is Governed by the MOU dated 11th October, 2004 between the Company and GAIL, which is mutually agreed price and has been approved by the Government of India.

(iii) The Company recovers on a provisional basis, from all refineries other than Numaligarh Refinery, 50% of the transportation tariff as fixed by the Petroleum Planning & Analysis Cell (PPAC) for the year 2001-02. Accordingly, the transportation income, pertaining to the Companys Crude oil transported through pipeline to the Refineries during the year, has been accounted for as Transportation Income to the extent received/receivable from refineries which were hitherto accounted for at full value on notional basis as Income from Transportation. As regards transportation Income in respect of crude oil of M/s Oil & Natural Gas Corpn. Ltd. (ONGC) and imported crude of M/s. Bongaigaon Refinery & Petro-chemicals Ltd. (BRPL), the same are accounted for based on the Crude Oil Transportation Agreement (COTA) signed with the respective Companies.

(iv) The Company has lodged a claim on M/s. Bongaigaon Refinery & Petro-chemicals Ld. (BRPL), towards minimum guaranteed quantity of throughput, amounting to Rs.5434.22 lakh for the period from 27/12/2000 to 31.03.2003, during which the Reverse pumping facility of the Company was not fully utilized by BRPL as agreed in the MOU for this purpose. However, as the claim is yet to be accepted by M/s. Bongaigaon Refinery & Petro-chemicals Ltd., the said revenue has not been recognized in the Books of Account.

(v) (a) In terms of notification No. 4(7)-W&M/2002 dated 30th March, 2002, the Government of India had issued 6.96% Oil Companies Government of India Special Bond 2009 on 30th March, 2002, amounting to Rs. 10700.00 lakh towards settlement of a part of the estimated outstanding claims of the Company with Oil Coordination Committee under the Administered Price Mechanism. Out of the same, Bonds amounting to Rs, 10692.00 lakh (Rs. 6427.00 lakh till the end of the previous year) have been sold by the Company at par till the end of the current year. Accordingly, the balance amount of bonds amounting to Rs.8.00 lakh (Previous year Rs.4273.00. lakh) has been reflected in the books of account under the head "Investments".

(b) In terms of Notification No. 4(3)-W&M/2004 dated 23rd March, 2004, the Government of India has issued 5% Oil Companies Govt. of India Special Bond 2009 amounting to Rs.9103.40 lakh in settlement of claim arising from arrear Royally for the period 01.04.1998 to 31.03.2002 paid by the Company to State Governments. The same is reflected under the head "Investments".

(vi) The Company, for the first time has provided for liability towards Post-Retirement Medical Benefits based on an Actuarial Valuation carried out at the end of the year and, accordingly, a sum of Rs. 3200.12 lakh has been provided in the books towards such liability, which has the effect of reduction of profit for the year by like amount.

The Company is holding in its safe custody, Fixed Deposit Receipts issued in its favour by Contractors/Suppliers as Security Deposit/Earnest Money amounting to Rs. 178.88 lakh (Previous year Rs. 230.85 lakh), which are not included in the accounts.

(b) Borrowing cost capitalized during the year is nil.

(c) Rupee figures have been rounded off to nearest rupees in lakh.

(d) Previous years figures have been reclassified/regrouped, wherever necessary to conform to current years classification.


Mar 31, 2003

Note : (i) The Company took participating interest in the Production Sharing Contract for the Block at SI.No. (1) through a Farmout Agreement signed on 28-08-1998 with M/s. Total Exploration Oman. The Block stands relinquished on 31st December 2001 (ii) The Exploration Service Contract for the Block at SI. No. (2) above was signed with National Iranian Company (NIOC) the state owned company of the Government of Iran, in consortium with ONGC Videsh Limited and Indian Oil Corporation Limited.

c) Previous years figures are reflected in parentheses hereof and current years figures are unaudited.

d) The assets, liabilities, income and expenditure as shown in (a) & (b) above, being the proportionate value towards Companys Participating Interest, have been incorporated in the books of Accounts on the basis of unaudited figures. There was no income from any of the blocks during the year. No material changes are expected by the Company in the audited figures.

e) i) As per the terms of the Karsang PSC, the applicable price for JVC crude is to be ascertained from Piatts Oilgram daily publication for the previous month. Accordingly the invoicing is being done at the rates, as applicable

ii) As per terms of the Kasang PSC, provision for Abandonment Costs has to be made over eight years commencing from the third year of the date of execution of the PSC, in accordance whereof a sum of 11.49 lakhs (Previous Year Rs. 13.87 lakhs) has been provided which is included in the expenditure of Rs. 969.67 lakhs (Previous year Rs. 731.32 lakhs) reflected in Note (a) above.

iii) The valuation of inventory of Crude Oil in PSC (Kharsang) was not carried out in Companys accounts in earlier years. However the system has been changed from this year and the Companys share of Closing Stock of Crude oil as on 31st March 2003 has been valued at Rs. 35.01 lakhs and accounted for in the Companys account. Impact of this change has resulted in decrease of the profit by Rs. 0.39 lakhs.

f) The Companys Share of Contingent liability and Capital Commitment, if any, under the PCSs are shown in note No. 7 below

2. Related Party Disclosure

a) Related party relationships

Name of the related party Relationship

1. Geo Enpro Petroleum Ltd. Operator in the Kharsang PSC

2. Key Management Personnel

i) Mr. R.K. Dutta Chairman Cum Managing Director

ii) Col. P. Barua Director (Personnel)

iii) Mr. S.K. Patra Director (Exploration)

iv) Mr. M.R. Pasrija Director (Finance)

v) Mr. P.C. Goswami Director (Operation) (since deceased)

3. Current Liabilities :

Sundry Creditors include materials received on loan from other Public Sector Undertakings amounting to Rs. 207.14 lakhs (Previous year Rs. 204.09 lakhs)

4. Fixed Assets :

(i) Land in possession of the Company, includes some areas for which title deeds/conveyance deeds are yet to be executed and/or mutation in settlement records is pending. Documentation formalities are in progress.

(ii) A firm of consultants was appointed to physically verify the Fixed Assets of the Company as on 31.03.98. The firm has completed the verification and reconciliation of the assets at various locations of the Company. Based on such physical verification, assets of original cost of Rs. 3402.60 lakhs representing 2.60% of the total cost of the assets

of the Company were to be matched and reconciled, for which a sum of Rs. 1154.17 lakhs representing the Written Down Value (WDV) as on 31.03.2001 has been provided for, pending the reconciliation of the said items, on that date. Upon reconciliation, which is still continuing as on date, assets representing original cost of Rs. 2912.69 lakhs (WDV Rs. 1025.13 lakhs) have been identified and balance assets representing 0.37% of the total cost of assets on the date of the verification (31.03.98) are pending reconciliation/identification as on date. Accordingly, the provision made in the previous year as aforesaid has been correspondingly reduced.

5. Depreciation:

In accordance with the Significant Accounting Policy Para 3 (Schedule 28) depreciation on fixed assets for the year amounting to Rs. 2375.83 lakhs (Previous year Rs. 2318.59 lakhs) has been allocated to drilling and/or completion and testing of exploratory and development wells undertaken during the year.

6. Loans and Advances include:

(ii) Advances recoverable in cash or in kind or for value to be received includes materials given on loan to Public Sector Undertakings amounting to Rs. 545.58 lakhs (Previous year Rs. 681.70 lakhs).

(iii) A deposit of Rs. 1500 lakhs with a Public Sector Undertaking, including interest thereon aggregating to Rs. 4126.90 lakhs (previous year Rs. 4126.90 lakhs) has not been settled despite maturity. Since the said PSU was referred to BIFR (being a sick unit), a moratorium of three years for repayment of loan and interest thereon was granted with effect from 12.08.1992. Subsequently, BIFR on the advice of Group of Ministers appointed IDBI as the operating agency for a revival package, who recommended repayment of principal amount of loan only. Though the Company has not agreed to the proposal for waiver of interest, the Company had made a provision for doubtful advances for the full amount of interest of Rs. 2626.90 lakhs in the books of accounts till 31-03-2002 in the previous years, which has been written off during this year without waiving the right to further recourse, if any. The Company has also not accounted for the interest amounting to Rs. 210.00 Lakhs for the year (Previous year Rs. 210.00 Lakhs)

7. Contingent liabilities not provided for:

(A)(a) Claims against the Company not acknowledged as debts Rs. 24862.46 lakhs (Previous year Rs. 46094.86 lakhs) which includes :-

(i) Rs. NIL (Previous year Rs. 8446.36 lakhs) :- Excise Duty demanded on Condensate and Residue gas in respect of which appeals are pending before CEGAT.

(ii) Rs. NIL (Previous year Rs. 18757.07 lakhs) :- Excise Duty demanded on Condensate in respect of which appeals are pending before Commissioner of Excise (Appeals).

(iii) Rs. 687.20 lakhs (Previous year Rs. 645.03 lakhs):- Sales Tax and Interest demand on account of a foreign contractor is pending before the Orissa High Court.

(iv) Rs. 88.64 lakhs (Previous year Rs. 88.64 lakhs) :- Customs Duty refund received but department has preferred appeal, which is pending before CEGAT.

(v) Rs. 18219.10 lakhs (Previous year Rs. 18090.10 lakhs ) :- Claims by contractors pending decision in Arbitration.

(vi) Rs. 67.66 lakhs (Previous year Rs. 67.66 lakhs) :- Demand raised by the District Revenue authorities on account of premium/revenue on Government ceiling surplus land occupied by the Company.

(vii) Rs. 515.48 lakhs (previous year Rs. NIL) : - Performance Guarantee provided in favour of National Iranian Oil Company towards 20% participating interest of the Company in the Offshore Farsi Block in Persian Gulf. Islamic Republic of Iran.

(viii) Rs. 5237.90 Lakhs (previous Rs. Nil) - Income Tax liability on the Appeals filed by the IT. department, which have been disposed of by the Appellate Authorities in limini in absence of the clearance by the Committee On Disputes (COD). Govt. of India.

(ix) Rs. 46.48 lakhs (previous year Rs. 33.14 lakhs) - Being the 40% (OILS Share) of the disputed demand of cess on crude oil sold by JVC by Excise Authority.

(b) Letters of Credit outstanding as on 31 st March, 2003 Rs.1372.29 lakhs (Previous year Rs. 6583.30 lakhs) for which there is a floating charge on Current Assets of the company.

(B) The estimated amount on account of contracts remaining to be executed on Capital Account and not provided for in the accounts Rs.7370.38 lakhs (Previous year Rs. 7894.17 lakhs).

8. Deferred Tax

a) Adoption of Accounting standard- 22 "Accounting for taxes on income" Issued by the Institute of Chartered Accountants of India has been made mandatory for all the Companies for the accounting period commencing on or after 1st April 2002. Accordingly the Company has recorded the cumulative net deferred tax/liability in respect of all timing difference as at 31st March 2002 amounting to Rs. 59862/.06 lakhs as a deduction from the General Reserve as on. 1st April 2002 and disclosed the same separately under Source of funds. The incremental deferred tax liability (net) for the year works out to Rs. 5184.18 lakhs, which has been provided for in current year and has been added to the Deferred Tax Liability account in the Balance Sheet.

9. General

(a) (i) With effect from 1.4.2002, the price of crude oil and LPG is market determined in terms of Government of Indias policy in this regard. Accordingly, the crude oil prices during the year have been taken based on Memorandum of

Understanding (MOU) signed with various buyers. In term of the MOU, the company receives a monthly average price of crude oil bench marked to Nigerian Bonny Light crude oil after adjustment for gross product worth (quality differential) and discount on account of Base Sediment & Water (BS&W). Further, the company would be entitled to receive sales tax on crude oil sales provided Free on Board (FOB) crude oil price is up to US$21/bbl. In case FOB crude oil price exceeds US$21/bbl sales tax shall be borne by the company subject to the company getting minimum US $21/bbl plus sales tax . As regards LPG, the same continues to be notified by Indian Oil Corporation every month. However, since 1.10.2002, IOC has not notified the revised price and the company has been receiving the price as notified for October, 2002. Revenue from LPG sales has been taken accordingly

(ii) With effect from 1st October, 1997 the price of Natural Gas as notified by GAIL for every quarter is taken for invoicing.

(iii) Transportation tariff of crude oil receivable from Refineries has not been finalized for the period from 1.4.2002. Hence, the transportation income pertaining to the Companys crude oil produced and delivered to the Refineries during the year has been appropriated out of sales value of the crude oil on a provisional basis at the transportation tariff rates proposed by Petroleum Planning & Analysis Cell (PPAC). As regards transportation of crude oil pertaining to Oil & Natural Gas Corpn. Ltd. (ONGC), income has been accrued in the books of account on a provisional basis based on tariff rates proposed by PPAC for the year 2001-02.

(iv) The Government of India has issued 6.96% Oil Companies Government of India Special Bonds 2009 in terms of notification No. F.4.(7) W&M/2002 on 30th March 2002 towards settlement of a part of the estimated outstanding claims of the Company on Oil Coordination Committee under Administered Pricing Mechanism. Out of the said bonds, the bonds amounting to Rs. 3610 lakhs have been sold by the Company at par during the year. Accordingly, the balance amount of bonds amounting to Rs. 7090 lakhs has been reflected in the books of accounts under the head "Investments".

(v) The Company has been receiving interest @ 10.5% p.a. simple interest on amounts due from Oil Pool Account towards various claims up to 31.3.2002. However with the winding up of Oil Co-ordination Committee, the additional claims have been raised during the year on Petroleum Planning And analysis Cell (PPAC), a new body created by Ministry of Petroleum & Natural Gas, Government of India. Since, there are no guidelines for payment of interest on outstanding amounts due from Oil Pool Account w.e.f. 1.4.2002 no interest income has been accounted for during the year on the outstanding amounts.

(b) The Company is holding in its safe custody, Call Deposit Receipts, Cash Certificate, Pass book, issued in its favour by Contractors/ Suppliers as security deposit/earnest money amounting to Rs. 271.94 lakhs (Previous year Rs. 309.96 lakhs) which are not included in the accounts.

(c) The Company had undertaken a research project on Pilot Plant for co-processing of Assam Coal & Oil Into clean liquid fuels in consortium with HRI Incorporation USA, subsequently known as IFP North America Inc. and presently known as Axens NA, under PACER grant. The original total cost envisaged for the project was Rs. 925.70 lakhs inclusive of Foreign Exchange component of Rs. 549 lakhs against which a conditional PACER grant was available for US$ 1174500 and Rs. 94.70 lakhs or 65% of the actual project cost, whichever is lower. The Pilot plant has been commissioned in March, 1999 to undertake pilot test and to determine commercial potential.

The PACER GRANT is subject to the conditions that the grant was to be repaid within one year of each disbursement subject to the following :

(i) In the event the project not being successful and/or not resulting in successful commercialisation and no product with commercial potential is developed then the entire conditional grant will be due to the Company. Upon completion of the pilot test, the commercial viability of the project was not established and as such as per the terms of the contract the amount of Rs. 477.62 lakhs equivalent to US$ 1174500 ( at exchange rate prevailing at the date of original transaction) has been refunded by ICICI (Nodal Agency).

(ii) However the company is desirous of continuing the project for coal fuel only with further modifications to pilot plant, as may be necessary.

(d) During the year, the Company acquired the entire paid up capital of 1000 Equity Shares of US$1/- each amounting to US$/- 1000/-in respect of M/s Sakhalin India Inc., a company registered under the laws of Texas, USA M/s Sakhalin India Inc., has accordingly become a wholly owned subsidiary (100%) of the Company w.e.f. 10-03-2003,

the date on which the transaction of sales and purchase of the equity shares was settled between the Company and M/s ONGC Videsh Ltd. (OVL) through a Sale and Purchase Agreement dated 07.03.2003. Further in terms of the Sale and Purchase Agreement, the total amount of money spent by M/s OVL, through M/s Sakhalin India Inc. towards participating interest share of expenses in the North HellHole Bayou Prospect in the Vermillion Parish, Offshore, Louisiana, USA, was taken over by the Company from M/s OVL as loan on the effective date of the Agreement. In turn, the total amount of loan from M/s OVL along with other amounts transferred to M/s Sakhalin India Inc.s bank account for its operations by the Company has been treated in the books of accounts as Un- secured Loans to M/s Sakhalin India Inc. The Company has not consolidated the financial statement of M/s Sakhalin India Inc. in terms of option available under the Accounting Standard 21 dealing with "Consolidation of Financial statement" read with Section 212 of the Companies Act 1956. However, the Balance Sheet of M/s Sakhalin India Inc. as at 31.3.2003 is annexed to the Companys financial statement.

(e) Contributions to Pension, Gratuity Funds and liability for leave encashment are as per pare 9 of Significant Accounting Policies (Schedule 28) on the basis of Actuarial valuation done as at the year end.

(f) Borrowing cost capitalised during the year is nil.

(g) The inventory of stock and spare parts includes a sum of Rs. 275.07 lakhs which was alleged as damaged in transit in 1999-2000 against which an insurance claim was lodged. The insurance survey report against the claim was received during the year 2000-01 where the surveyor opined that actual loss could only be estimated once minor repair and N.D. Test are carried out by the company with the help of external agency. The N.D. Tests have been carried out and the final assessment of the same/claim is awaited which is not likely to prejudice the current assets of the Company.

(h) Rupee figures have been rounded off to nearest lakhs of rupees.

(i) Schedules 1 to 28 from an integral part of the accounts.

(j) Previous years figures have been rearranged/regrouped/recasted wherever necessary.

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