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Directors Report of Cairn India Ltd.

Mar 31, 2015

The Members,

The Directors have pleasure in presenting the ninth annual report on the business and operations of the Company and the audited financial accounts for the year ended 31 March, 2015.

COMPANY''S PERFORMANCE

During the year under review, Cairn India delivered revenue of INR 14,646 crore. This was driven by lower crude oil prices, with gross operated average production at 211,671 barrels of oil equivalent for the fiscal. Together with its JV partners, Cairn contributed about 27% to India''s domestic crude oil production as per MoPNG''s February 2015 statistics, thus helping strengthen the energy security of the country. During the year, the Company executed multiple projects in Rajasthan block including one of the world''s largest polymer flood EOR programme at Mangala. Cairn continues to be one of the low cost producers in the world resulting in EBITDA margin of 59% and strong cash flow from operations of INR 8,765 crore for the year.

Since resumption of exploration in March 2013, Cairn India has established 1.5 billion boe in-place resources by delivering a rapid exploration and appraisal drilling program.

CONSOLIDATED FINANCIAL STATEMENTS

Your Company is also presenting the audited consolidated financial statements prepared in accordance with the Accounting Standard 21 issued by the Institute of Chartered Accountants of India. Further, pursuant to the provisions of Section 129(3) read with Rule 5 of Companies (Accounts) Rules, 2014, statement containing salient features of the financial statements of subsidiary companies is disclosed separately and forms part of the annual report.

INTERIM DIVIDEND

Your Company has distributed an interim dividend of INR 5 per equity share of face value of INR 10 each to shareholders, who were on the register of members of the Company as on the closing hours of business on 23 September, 2014, being the record date fixed by the Board of Directors for this purpose. Interim dividend was paid on 26 September, 2014.

FINAL DIVIDEND

In addition to interim dividend, your Directors are pleased to recommend a final dividend of INR 4 per equity share of face value of INR 10 each for the year ended 31 March, 2015, subject to approval of shareholders at the ensuing annual general meeting of the Company.

Final dividend, if approved by the shareholders, taken together with the interim dividend, will amount to total dividend of INR 9 per equity share for the financial year 2014-15.

TRANSFER TO RESERVES

During the year, your Company has transferred INR 33.43 crore to capital redemption reserve account on account of buy-back of equity shares, which is equal to nominal amount of equity shares so bought back and extinguished till 31 March, 2015.

BOARD OF DIRECTORS AND ITS MEETINGS

The Company has a professional Board with right mix of knowledge, skills and expertise with an optimum combination of executive, non- executive and independent Directors including one woman Director. The Board provides strategic guidance and direction to the Company in achieving its business objectives and protecting the interest of the stakeholders.

One meeting of the Board of Directors is held in each quarter. Additional meetings of the Board/ Committees are convened as may be necessary for proper management of the business operations of the Company. The annual calendar of

FINANCIAL HIGHLIGHTS in INR crore

Standalone Consolidated*

For the financial year ended For the financial year ended

31 March, 2015 31 March, 2014 31 March, 2015 31 March, 2014

Total income 8,855 11,829 16,455 20,264

Total Expenditure 5,005 4,054 8,713 7,414

Profit before tax and ex- 3,850 7,775 7,742 12,850 ceptional items

Exceptional item 2,256 - 2,633 -

Profit before tax 1,594 7,775 5,109 12,850

Taxes 274 321 629 418

Profit/ (loss) for the year 1,320 7,454 4,480 12,432

* Cairn India Limited with its subsidiaries meetings of the Board/Committees is usually finalized well before the beginning of the year after seeking concurrence of all the Directors.

In case of inability of any of the Directors to attend the meeting in person, the Directors endeavor to participate in the meeting through video conferencing or other audio visual means. In addition, if required, the Board also approves resolutions by way of circulation between two successive Board meetings.

During the year ended 31 March, 2015, the Board of Directors met six times viz. on 23 April, 2014, 23 July, 2014, 17 September, 2014, 21 October, 2014, 22 January, 2015 and 4 March, 2015. The maximum gap between any two meetings was not more than one hundred and twenty days.

APPOINTMENT AND DECLARATION OF INDEPENDENT DIRECTORS

The Company at its annual general meeting held on 23 July, 2014, had appointed Mr. Naresh Chandra, Dr. Omkar Goswami, Mr. Aman Mehta and Mr. Edward T. Story, as independent Directors of the Company. They hold office for a period upto 31 March, 2017 and shall not be liable to retire by rotation.

Further, all the independent Directors have declared and affirmed their compliance with the independence criteria as mentioned in Section 149(6) of the Companies Act, 2013 and clause 49 of the listing agreement in respect of their position as an "Independent Director" of the Company.

DIRECTORS''/ KEY MANAGERIAL PERSONNEL (KMPs) APPOINTMENT OR RESIGNATION

During the year under review, following changes occurred in the position of Directors/ KMPs of the Company:

- Mr. P. Elango (DIN 06475821) resigned as the interim Chief Executive Officer and Wholetime Director w.e.f. 2 May, 2014.

- Mr. Mayank Ashar (DIN 07001153) was appointed as an additional Director of the Company w.e.f. 17 November, 2014 and was designated as Managing Director and Chief Executive Officer of the Company for a period of 5 (five) years upto 16 November, 2019. The appointment of Mr. Ashar as Managing Director & Chief Executive Officer was approved by the shareholders of the Company (vide resolution passed through postal ballot) on 11 December, 2014 and by Central Government on 16 January, 2015.

Pursuant to the provisions of Section 161 of the Companies Act, 2013,

Mr. Ashar holds office upto the ensuing annual general meeting. The Company has received a notice along with the requisite deposit from a member of the Company proposing the candidature of Mr. Mayank Ashar for the appointment as Director of the Company liable to retire by rotation.

In accordance with Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Tarun Jain (DIN 00006843), shall retire by rotation as Director at the ensuing annual general meeting and being eligible, offers himself for re- appointment.

A brief profile of the above-named Directors seeking appointment/re- appointment at the ensuing annual general meeting of the Company has been provided in the corporate governance report and in the notice of the annual general meeting.

AUDIT COMMITTEE

The Company has an adequately qualified Audit Committee constituted in accordance with the provisions of Companies Act, 2013 and clause 49 of the listing agreement. As on 31 March, 2015, the Committee comprised five non-executive Directors viz. Mr.

Aman Mehta (Chairman), Mr Naresh Chandra, Mr. Tarun Jain, Dr. Omkar Goswami and Mr. Edward T. Story. Apart from Mr. Tarun Jain, all other Committee members are independent. All members of the Committee are financially literate and have accounting or related financial management expertise.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is committed to conduct its business in a socially responsible, ethical and environmental friendly manner and to continuously work towards improving quality of life of the communities in its operational areas.

The Company has a duly constituted CSR Committee, which is responsible for fulfilling the CSR objectives of the Company. As on 31 March, 2015, the Committee comprised three Directors viz. Mr. Naresh Chandra, Mr. Aman Mehta and Mr. Tarun Jain. Mr. Naresh Chandra, Chairman of the Committee is an independent Director.

CSR Policy

During the year under review, the Board of Directors on recommendation of the CSR Committee has formulated the CSR policy of the Company. The CSR activities of the Company are implemented in accordance with the core values viz. protecting stakeholder interests, proactive engagement with the local communities and striving towards inclusive development.

The CSR activities are focused on the following five broad themes with goals to improve overall socio- economic indicators of Company''s area of operation:

- Promoting healthcare, sanitation and making safe drinking water available;

- Employment enhancement through training and vocational skill development;

- Income enhancement through farm based and other livelihood opportunities;

- Promoting education and sports; and

- Ensuring sustainable environment.

The annual report on CSR containing particulars specified in Companies (CSR Policy) Rules, 2014 including initiatives taken by the Company during the year is given in Annexure I and also in the management discussion & analysis section of this report.

The CSR policy of the Company is enclosed as Annexure II to this report and is also placed on the website of the Company viz. www.cairnindia.com

POLICY ON DIRECTORS'' APPOINTMENT & REMUNERATION

The Company strives to maintain an appropriate combination of executive, non-executive and independent Directors subject to a minimum of 3 (three) and maximum of 15 (fifteen) Directors, including at least one woman Director.

The Nomination & Remuneration Committee of the Company leads the process for Board appointments in accordance with the requirements of Companies Act, 2013, listing agreement and other applicable regulations or guidelines. All the Board appointments are based on meritocracy.

The potential candidates for appointment to the Board are inter- alia evaluated on the basis of highest level of personal and professional ethics, standing, integrity, values and character; appreciation of the Company''s vision, mission, values; prominence in business, institutions or professions; professional skill, knowledge and expertise; financial literacy and such other competencies and skills as may be considered necessary.

In addition to the above, the candidature of an independent Director is also evaluated in terms of the criteria for determining independence as stipulated under Companies Act, 2013, listing agreement and other applicable regulations or guidelines. In case of re-appointment of independent Directors, the Board shall take into consideration the results of the performance evaluation of the Directors and their engagement level.

During the year under review, the Board of Directors of the Company has adopted a Remuneration Policy for Directors, KMPs and other employees. The policy represents the overarching approach of the Company to the remuneration of Director, KMPs and other employees. The copy of the policy is attached as Annexure- III to this report.

PERFORMANCE EVALUATION OF BOARD, COMMITTEES & INDIVIDUAL DIRECTORS

A formal evaluation of the performance of the Board, its Committees, the Chairman and the individual Directors was carried out for the year 2014-15. Led by the Nomination & Remuneration Committee, the evaluation was done using individual questionnaires covering amongst others vision, strategy & role clarity of the Board, Board dynamics & processes, contribution towards development of the strategy, risk management, budgetary controls, receipt of regular inputs and information, functioning, performance & structure of Board Committees, ethics & values, skill set, knowledge & expertise of Directors, leadership etc.

As part of the evaluation process, the performance of non-independent Directors, the Chairman and the Board was done by the independent Directors. The performance evaluation of the respective Committees and that of independent and non-independent Directors was done by the Board excluding the Director being evaluated. The Directors expressed satisfaction with the evaluation process.

BUY-BACK OF EQUITY SHARES OF THE COMPANY

During the last financial year, the Company had approved a proposal for buy-back of its equity shares at a price not exceeding INR 335 per equity share for an aggregate amount not exceeding INR 5,725 crore.

The buy-back, which commenced on 23 January, 2014 and concluded on 22 July, 2014 was done from open market other than from promoters and persons in control.

The total number of shares bought back and extinguished as part of the buy back process was 36,703,839 at a consideration of INR 1,225.45 crore. Out of this, during the period from 1 April, 2014 to 22 July, 2014, 33,433,290 equity shares were bought back at a consideration of INR 1,119.93 crore.

Pursuant to the Securities & Exchange Board of India (Buy-back of Securities) Regulations, 1998, the Company has deposited a sum of INR 143.13 crore, being 2.5% of the maximum buy-back size, in an escrow account. Post closure of buy-back, the Company has applied to the Securities & Exchange Board of India for release of the amount deposited in the escrow account.

EMPLOYEE STOCK OPTION SCHEMES

Your Company has established share incentive schemes viz. Cairn India Performance Option Plan (CIPOP) and Cairn India Employee Stock Option Plan (CIESOP) pursuant to which options to acquire shares could be granted to selected employees and executive Directors of the Company and its subsidiaries. The Company also has cash awards option plan (phantom stock options) for expatriate employees of the Company and its subsidiaries.

During the financial year, stock options have been granted to the employees of the Company and its subsidiaries under CIPOP scheme. On exercise of the options so granted, the paid-up equity share capital of the Company will increase in terms of the stock option plans mentioned above. The details of stock options granted by the Company are set out in Annexure IV to this Report in compliance with clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

During the year under review, 656,171 equity shares of INR 10 each were allotted pursuant to the exercise of stock options.

CHANGES IN CAPITAL STRUCTURE

Pursuant to the buy-back process, your Company has bought back and extinguished 33,433,290 equity shares of INR 10 each during the period from 1 April, 2014 to 22 July, 2014.

Further, during the financial year under review, 656,171 equity shares of INR 10 each were allotted on exercise of employee stock options by the employees of the Company and its subsidiaries. The Company has not issued any sweat equity shares or any bonus shares. Consequently, the issued and paid up capital of the Company as on 31 March, 2015 was INR 18,748,527,520 divided into 1,874,852,752 equity shares of INR 10 each. The Company has only one class of equity shares with face value of INR 10 each, ranking pari-passu.

LOANS AND INVESTMENTS BY THE COMPANY

Details of loans and investments by the Company to other body corporates or persons are given in notes to the financial statements.

MANAGEMENT DISCUSSION AND ANALYSIS

The management discussion and analysis report on the operations of the Company as required under the listing agreement with stock exchanges has been given separately and forms part of this report.

RISK MANAGEMENT

The Board of Directors is overall responsible for identifying, evaluating and managing all significant risks faced by the Company. The Board approved Risk Management policy, which acts as an overarching statement of intent and establishes the guiding principles by which key risks are managed across the organization.

The Board monitors and reviews the implementation of various aspects of the Risk Management policy through a duly constituted Risk Management Committee (RMC). The RMC assists the Board in its oversight of the Company''s management of key risks, including strategic and operational risks, as well as the guidelines, policies and processes for monitoring and mitigating such risks under the aegis of the overall business risk management framework. Further, the Company has a dedicated risk assurance team to facilitate risk reporting and updates, risk policy compliances and provide overall guidance and support to business risk owners.

The Company follows well- established and detailed risk assessment and minimization procedures, which are periodically reviewed by the Board. The Company has in place a business risk management framework for identifying risks and opportunities that may have a bearing on the organization''s objectives, assessing them in terms of likelihood and magnitude of impact and determining a response strategy.

In the opinion of the Board, none of the risks faced by the Company threaten its existence. However, the following risks are considered to have a potential bearing on the performance of the Company:

- Unfavorable changes in Production Sharing Contract ("PSC") terms or failure to extend the PSC for the Rajasthan block after the expiry of PSC in May, 2020 could have a material adverse impact on Company''s operations and financial condition.

- The performance of the Company has been and is expected to continue to be substantially dependent on the reserves and production of the Rajasthan block and any interruption in the exploration, development, production operations at the existing oil and gas fields for any reason (including force majeure conditions) could have a material effect on the results of our operations and financial condition.

- Inability/substantial delay in reserves replacement would lead to decline in production from existing fields, which could materially and adversely affect results of operations and financial condition and therefore, sustenance of Company''s operations in the longer term.

- International prices for oil are volatile and have a significant effect on Company''s revenue and profits. In case there are substantial and/ or extended declines in international crude oil prices, it may have an adverse effect on Company''s business, results of operations and financial condition.

- The Company operates under regulatory uncertainties driven by political developments by the central, state, local laws and regulations such as changes in taxes, royalties and other amounts payable to various governments or their agencies. Recently, a tax demand of approximately INR 20,495 crore (comprising tax of approximately INR 10,248 crore and interest of approximately INR 10,247 crore) has been made in relation to retrospective tax legislation for alleged failure to deduct withholding tax on alleged capital gains in the hands of erstwhile parent, Cairn UK Holdings Limited. The Company''s parent, Vedanta Resources Plc. has filed a notice of claims against GoI under the UK-India bilateral investment treaty challenging the tax demand, seeking resolution through international arbitration. The Company has filed a Writ Petition with the Hon''ble Delhi High Court praying for quashing/setting aside the order passed by the Tax Authorities. Further, the Company has also filed an appeal before Commissioner Appeals. Although considered unlikely, if enforced, such tax demand would have a material adverse effect on the business, results of operations and financial condition of the Company.

INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY

Cairn India continuously invests in strengthening its internal control processes. The Company has put in place an adequate system of internal financial control commensurate with its size and nature of business which helps in ensuring the orderly and efficient conduct of its business. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company, prevention & detection of frauds, accuracy & completeness of accounting records and ensuring compliance with corporate policies. As a means to further strengthen the control environment, during the year, the processes were benchmarked with industry practices to identify the gaps, if any and remedial measures were taken.

Financial policies, standards and delegations of authority have been disseminated to senior management to cascade within their departments. Procedures to ensure conformance with the policies, standards and delegations of authority have been put in place covering all activities.

The Company has a Chief Internal Auditor with a dedicated internal audit team which is commensurate with the size, nature & complexity of operations of the Company. Internal audit reports functionally to Audit Committee of Board which reviews and approves risk based annual internal audit plan. Audit Committee periodically reviews the performance of internal audit function.

The Company has a rigorous business planning system to set targets and parameters for operations which are reviewed with actual performance to ensure timely initiation of corrective action, if required. The Audit Committee reviews adherence to internal control systems and internal audit reports. Further, the Board annually reviews the effectiveness of the Company''s internal control system.

VIGIL MECHANISM

The Company has in place a whistleblower policy, to support the Code of Business Ethics. This policy documents the Company''s commitment to maintain an open work environment in which employees, consultants and contractors are able to report instances of unethical or undesirable conduct, actual or suspected fraud or any violation of Company''s Code of Business Ethics at a significantly senior level without fear of intimidation or retaliation.

The Ethics committee comprises of four members including the Company Secretary, Chief Internal Auditor, Chief Financial Officer and a senior functional head. The committee is authorized by the Board of Directors of the Company for the purpose of receiving all complaints under the policy and in ensuring appropriate action. The concern can be reported by sending an e-mail message at the dedicated address viz. ethicscounsellors@cairnindia. com. Individuals can also raise their concerns directly to the CEO or the chairman of the Audit Committee of the Company. Any allegations that fall within the scope of the concerns identified are investigated and dealt with appropriately. Further, during the year, no individual was denied access to the Audit Committee for reporting concerns, if any.

The ethics counsellors periodically submit the report on complaints received, if any and the action taken to the Audit Committee.

The details of establishment of vigil mechanism for Directors & employees to report genuine concerns are available at the website of the Company viz. www.cairnindia.com

SUBSIDIARY COMPANIES

During the financial year under review, in continuation of the efforts to realign the group structure and consolidate the multi layered structure, five subsidiary companies were dissolved, details of which are given in Table 1.

As on 31 March, 2015, the Company had 14 subsidiaries including indirect subsidiaries. All these companies are 100% beneficially owned by Cairn India Limited. The Company regularly monitors the performance of such companies.

The Company shall make available the annual accounts of the subsidiary companies to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the registered office of the Company and respective subsidiary companies. Further, the annual accounts of the subsidiaries are also available on the website of the Company viz. www.cairnindia.com.

The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.

REPORT ON PERFORMANCE & FINANCIAL POSITION OF SUBSIDIARIES

Following are the highlights on performance and financial position of your Company''s subsidiaries:

- Cairn India Holdings Limited:

The company is incorporated in Jersey and its principal business is holding investments. The company did not have any operations during the year, apart from its investments in various subsidiary companies. During the year ended 31 March, 2015, the company made a profit of INR 2,684.86 crore.

- Cairn Energy Hydrocarbons Limited: The company is incorporated in Scotland and its

principal business is exploration and production of oil and gas. The company holds interest in the producing block RJ-ON-90/1 in India. During the year ended 31 March, 2015, the company made a profit of INR 1,912.78 crore. Average gross production from the Rajasthan block for the year ended 31 March, 2015 was 175,143 boepd and working interest production was 61,300 boepd.

- Cairn Energy Holdings Limited: The company is incorporated in Scotland and its principal business is holding investments. The company did not have any operations during the year, apart from its investment in subsidiary company. During the year ended 31 March, 2015, the company made a profit of INR 713 crore.

- Cairn Exploration No. (2) Limited: The company is incorporated in Scotland and its principal business is exploration and production of oil and gas. The company did not have any operations during the year 2014- 15. During the year ended 31 March, 2015, the company made a profit of INR 0.0004 crore.

- Cairn Exploration No. (6) Limited: The company is incorporated in Scotland and its principal business is exploration and production of oil and gas. The company did not have any operations during the year 2014-15. During the year ended 31 March, 2015, the company incurred a loss of INR 0.04 crore.

- Cairn Exploration No. (7) Limited: The company is incorporated in Scotland and its principal business is exploration and production of oil and gas. The company did not have any operations during the year 2014-15. During the year ended 31 March, 2015, the company incurred a loss of INR 0.04 crore.

- Cairn Energy Gujarat Block 1 Limited: The company is incorporated in Scotland and principal business is exploration and production of oil and gas. The company did not have any operations during the year 2014-15. During the year ended 31 March 2015, the company incurred a loss of INR 726 crore.

- Cairn Energy Discovery Limited: The company is incorporated in Scotland and its principal business is exploration and production of oil and gas. The company did not have any operations during the year 2014-15. During the year ended 31 March, 2015, the company incurred a loss of INR 0.07 crore.

- Cairn Energy Australia Pty Limited: The company is incorporated in Australia and its principal business is holding investments. The company did not have any operations during the year, apart from its investment in subsidiary company. During, the year ended 31 March, 2015, the company incurred a loss of INR 0.23 crore.

- Cairn Energy India Pty Limited:

The company is incorporated in Australia and its principal business is exploration and production of oil and gas. The company did not have any operations during the year 2014. During the year ended 31 March, 2015, the company incurred a loss of INR 0.01 crore.

- Cairn South Africa Proprietary Limited: The Company holds a 60% participating interest in the exploration right in Block-1, Orange Basin offshore South Africa. During the year, as part of the work program, processing and interpretation of 2D and 3D seismic data were carried out. The work programme commitments for the current phase that expired in February 2015, have been completed. During the year ended 31 March, 2015, the company incurred a loss of INR 27.02 crore.

- CIG Mauritius Holding Private Limited: The company is incorporated in Mauritius and its principal business is holding investments. During the year ended 31 March, 2015, the company incurred a loss of INR 948.33 crore which was mainly on account of impairment of its investment in its subsidiary company, CIG Mauritius Private Limited, amounting to INR 948.09 crore.

- CIG Mauritius Private Limited:

The company is incorporated in Mauritius and its principal business is holding investments. The company did not have any operations during the year 2014- 15, apart from its investment in subsidiary company. During the year ended 31 March, 2015, the company incurred a loss of INR 958.38 crore which was mainly on account of impairment of its investment and loan in its subsidiary company, Cairn Lanka Private Limited, amounting to INR 829.73 crore and INR 132.48 crore respectively.

- Cairn Lanka Private Limited: The company is incorporated in Sri Lanka and its principal business is exploration and production of oil and gas. The company holds a 100% participating interest in the exploration area of block SL- 2007-01-001 in Sri Lanka. During the year ended 31 March, 2015, the company incurred a loss of INR 553.61 crore. The loss was mainly on account of impairment of carrying value of exploration assets of block in Sri Lanka. Given the current level of gas prices and fiscal terms, the development of hydrocarbons in the said block is not commercially viable. Hence, the management has impaired the carrying value of the related assets amounting to INR 505.19 crore.

CORPORATE GOVERNANCE

Your Company strives to ensure that best corporate governance practices are identified, adopted and consistently followed. Your Company believes that good governance is the basis for sustainable growth of the business and for enhancement of stakeholder value.

The report on corporate governance forms an integral part of this report and is set out as separate section to this annual report. The certificate of S. R. Batliboi & Co. LLP, chartered accountants, the statutory auditors of the Company certifying compliance with the conditions of corporate governance as stipulated in clause 49 of the listing agreement is annexed with the report on corporate governance.

RELATED PARTY TRANSACTIONS

During the year under review, the Board has adopted a policy to regulate the transactions of the Company with its related parties.

As per policy, all related party transactions require prior approval of the Audit Committee and Board of Directors of the Company. Prior approval of the shareholders of the Company is also required for certain related party transactions as prescribed under Companies Act, 2013 and listing agreement. The said policy is available on the Company''s website viz. www.cairnindia.com

All related party transactions that were entered into during the financial year were on an arm''s length basis. There were no materially significant related party transactions made by the Company with promoters, Directors, key managerial personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Details of such transactions are given in the Annexure V to this report.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed M/s Sanjay Grover & Associates, a firm of company secretaries in practice, to undertake the Secretarial Audit of the Company. The report of the Secretarial Audit is annexed to this report as Annexure VI.

Secretarial Auditors'' report is self- explanatory and therefore does not require further comments and explanation.

AUDITORS & AUDITORS'' REPORT

S. R. Batliboi & Co. LLP, chartered accountants, statutory auditors of the Company, hold office till the conclusion of the ensuing annual general meeting. Further, they have confirmed that they are not disqualified for re-appointment as auditors of the Company under the Companies Act, 2013, the Chartered Accountants Act, 1949 and the rules or regulations made thereunder

The Audit Committee at its meeting held on 23 April, 2015 has recommended the re-appointment of S. R. Batliboi & Co. LLP as statutory auditors of the Company. Your Directors also recommend their reappointment from the conclusion of this annual general meeting till the conclusion of the next annual general meeting of the Company.

Auditors'' report is self-explanatory and therefore does not require further comments and explanation.

COST AUDITORS

In terms of the Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost accounting records and get them audited every year.

The Board appointed M/s. Shome & Banerjee, cost accountants, as cost auditors of the Company for the financial year 2015-16 at a fee of INR 885,000 (Rupees eight lacs eighty five thousand only) plus applicable taxes and out of pocket expenses subject to the ratification of the said fees by the shareholders at the ensuing annual general meeting.

The cost audit report would be filed with the Central Government within prescribed timelines.

DEPOSITS

The Company has not invited any deposits from the public under Section 73 of the Companies Act, 2013.

HUMAN RESOURCES

Company''s industrial relations continued to be harmonious during the period under review.

PARTICULARS OF EMPLOYEES

In accordance with the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are set out in the annexure to this report. In terms of the provisions of Section 136(1) of the Companies Act, 2013, the Board''s Report is being sent to the shareholders without this annexure. Shareholders interested in obtaining a copy of the annexure may write to the Company Secretary.

MATERIAL AND SIGNIFICANT ORDERS PASSED BY REGULATORS & COURTS

No significant and material orders have been passed by any regulators or courts or tribunals against the Company impacting the going concern status and Company''s operations in future.

However, members are informed that the Company has received an order from the Income Tax Department for an alleged failure to deduct withholding tax on alleged capital gains arising during the year 2006- 07 in the hands of Cairn UK Holdings Limited (CUHL), Company''s erstwhile parent company, a subsidiary of Cairn Energy Plc. This was in respect of the transaction of CUHL transferring the shares of Cairn India Holdings Limited to Cairn India Limited as part of internal group reorganization in 2006- 07 to facilitate the IPO of Cairn India Limited. A demand of approximately INR 20,495 crore (comprising tax of approximately INR 10,248 crore and interest of approximately INR 10,247 crore) is alleged to be payable. The Company has filed a Writ Petition with the Hon''ble Delhi High Court praying for quashing/setting aside the aforesaid order and is pursuing all possible options to protect its interest.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo is given in Annexure VII to this report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act, 2013, the Directors confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March, 2015 and of the profit of the Company for the year ended 31 March, 2015;

c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a going concern basis;

e. internal financial controls have been laid down to be followed by the Company and such internal financial controls are adequate and were operating effectively;

f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

REMUNERATION

Disclosure pursuant to Section 197(12) of Companies Act, 2013 and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided below:

i) the ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the year 2014-15:

(ii) the percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary in the financial year:

The remuneration of non-executive Directors by way of sitting fee for attending Board/ Committee meetings was increased by 150% viz. INR 20,000 per meeting to INR 50,000 per meeting from financial year 2014-15. There is no increase in profit linked commission paid/payable to non-executive independent Directors of the Company.

Mr. Mayank Ashar was appointed as Managing Director & CEO of the Company on 17 November, 2014 and Mr. P. Elango ceased to be the interim CEO & Wholetime Director of the Company on 2 May, 2014. Accordingly, there is no comparative information in this regard.

The percentage increase in the remuneration of Mr. Sudhir Mathur, CFO and Ms. Neerja Sharma, Director Assurance & Communication and Company Secretary is 24.7% and 12.5% respectively.

(iii) the percentage increase in the median remuneration of employees in the financial year: 18.7%

(iv) the number of permanent employees on the rolls of Company: 1,619 (One thousand six hundred and nineteen), as on 31 March, 2015.

(v) the explanation on the relationship between average increase in remuneration and Company performance:

The average increase in remuneration of the employees was 19.1%. The average increase in remuneration is closely linked to and driven by achievement of annual corporate goals and overall business, financial and operational performance of the Company.

(vi) comparison of the remuneration of the key managerial personnel against the performance of the Company:

During the year, the gross operated average production was at 211,671 barrels of oil equivalent. Together with its JV partners, Cairn contributed about 27% to India''s domestic crude oil production and thus helping strengthen the energy security of the country. Cairn continues to be one of the low cost producers in the world resulting in EBITDA margin of 59% and strong cash flow from operations of INR 8,765 crore for the year. The remuneration of key managerial personnel amongst others is closely linked to and driven by achievement of annual corporate goals and overall business, financial and operational performance of the Company. The average increase in the remuneration of KMP''s was 20.6% over the previous year.

(vii) variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer:

The Company had allotted shares under its IPO in December, 2006 at the price of INR 160 per equity share. The market quotations/price of the shares of the Company as at 31 March, 2015 on NSE compared to the IPO price increased by 33.66%

(viii) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average increase in the remuneration of employees was 19.1%. Mr. Mayank Ashar was appointed as Managing Director & CEO of the Company on 17 November, 2014 and Mr. P. Elango ceased to be the interim CEO & Wholetime Director of the Company on 2 May, 2014. Accordingly, there is no comparative information in this regard.

(ix) comparison of the each remuneration of the Key Managerial Personnel against the performance of the Company:

The increase in the remuneration of Mr. Sudhir Mathur, CFO and Ms. Neerja Sharma, Director - Assurance & Communication and Company Secretary is 24.7% and 12.5% respectively. Mr. Mayank Ashar was appointed as Managing Director & CEO of the Company on 17 November, 2014 and Mr. P. Elango ceased to be the interim CEO & Wholetime Director of the Company on 2 May, 2014. Accordingly, there is no comparative information in this regard. The comparison of the remuneration against the performance of the Company is detailed in clause (vi) above.

(x) the key parameters for any variable component of remuneration availed by the Directors:

The variable component of remuneration of the executive Director comprises of annual performance bonus which is linked to achievement of corporate KPIs & individual goals and the long term incentives in the form of stock/cash options. The non-executive Directors of the Company are entitled to annual commission linked to the performance and profit of the Company.

(xi) the ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year: Not applicable.

(xii) Affirmation that the remuneration is as per the Remuneration Policy of the Company:

The remuneration is as per the Remuneration Policy of the Company.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report for the financial year 2014-15 forms part of the annual report.

KEY AWARDS AND RECOGNITIONS

During the year, your Company received awards and honours from different bodies and trade organisations, the summary of which is as under:

- Seventeen mines safety awards from Directorate General of Mines Safety for site installations and drilling & work over/ completion rigs in Rajasthan;

- Golden Peacock award for Business Excellence 2014 under oil & gas category;

- Golden Peacock HR excellence award 2014;

- Business World award for India''s Fastest Growing Company in middleweight for the financial year 2014-15;

- CII Southern Region "Excellence Award in EHS 2013" awards for best practices in environment, health and safety management at Ravva;

- Awards from Public Relations Council of India (PRCI) in the categories of In House Magazine, Creative Logo of the year, Corporate Publication, Corporate Advertisement; and

- National Safety awards (Mines) conferred by hon''ble President of India for 2011 & 2012 in the category of lowest injury frequency rate and longest accident-free period for Company''s facilities at CB-OS/2 & Ravva respectively.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company has always believed in providing a safe and harassment free workplace for every individual working in Cairn India''s premises through various interventions and practices. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment.

The Company has in place a robust policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees as well as contractors and lays down the guidelines for identification, reporting and prevention of sexual harassment. There is an Internal Complaints Committee (ICC) which is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the policy. ICC has its presence at corporate office as well as at site locations.

During the year ended 31 March, 2015, the ICC received two complaints pertaining to sexual harassment. Detailed investigations were carried out and appropriate action was taken by the ICC.

RELEVANT EXTRACT OF THE ANNUAL RETURN

Relevant extract of annual return for the financial year 2014-15 under the Companies Act, 2013 is given in Annexure VIII to this report.

MATERIAL CHANGES & COMMITMENTS

No material changes and commitments, affecting the financial position of the Company have occurred after the end of the financial year 2014-15 and till the date of this report.

APPRECIATION

Your Directors wish to place on record their sincere appreciation of the efforts and dedicated service of all employees, which contributed to the continuous growth and consequent performance of the Company. Your Directors wish to place on record their gratitude for the valuable assistance and co- operation extended to the Company by the Central Government, State Governments, joint venture partners, banks, institutions, investors and customers.

For and on behalf of the Board of Directors

Navin Agarwal (DIN No.-00006303)

Chairman

Place: Gurgaon Date: 23 April, 2015


Mar 31, 2013

The Members,

The Directors have pleasure in presenting the Seventh Annual Report on the business and operations of the Company and the Audited Financial accounts for the year ended 31 March, 2013.

COMPANY''S PERFORMANCE

During the year under review, Cairn India''s gross operated production was 205,323 barrels of oil equivalent per day. This has helped to reduce India''s crude oil import dependence by ~INR 385 billion and has contributed ~INR 200 billion to the national exchequer.

The exploration in existing development blocks pursuant to policy clarity is a significant step for the nation towards energy self-sufficiency and will not only add to economic growth but also reduce the fiscal deficit through increased contribution to the exchequer.

The company contributes to around 25% of the nation''s crude oil production. In addition, your company is focused on exploration across the asset portfolio both in India and core areas internationally and has also started the seismic survey in its South Africa block, which is in line with your company''s exploration led growth strategy focused on replacement and growth of reserves leading to long term sustainable value creation.

FINANCIAL HIGHLIGHTS

In INR Lacs

Standalone Consolidated

For the financial year ended For the financial year ended 31 March, 2013 31 March, 2012 31 March, 2013 31 March, 2012

Total income 1,010,065 24,893 1,856,039 1,279,866

Total Expenditure 335,555 20,143 640,557 437,519

Profit before tax 674,510 4,750 1,215,482 842,347

Taxes 26,445 354 23,508 48,573

Profit/(loss) after tax 648,065 4,396 1,191,974 793,774

Impact of scheme 826,612 - 13,665 -

Profit/ (loss) for the year 1,474,677 4,396 1,205,639 793,774

The consolidated statements provide the results of Cairn India Limited together with those of its subsidiaries for the financial year ended 31 March, 2013.

DIVIDEND

Your Directors are pleased to recommend a final dividend of INR 6.50 per equity share of face value of Rs.10 each for the year ended 31 March, 2013, subject to approval of shareholders at the ensuing Annual General Meeting of the Company. The dividend will be paid in compliance with applicable regulations.

INTERIM DIVIDEND

In addition to the proposed final dividend of INR 6.50 per equity share, your Company had already distributed an interim dividend of INR 5 per equity share of face value of INR 10 each, to shareholders, who were on the Register of members of the Company as at closing hours of 6 November, 2012, being the record date fixed by the Board of Directors for this purpose. Interim Dividend was paid on 10 November, 2012.

TRANSFER TO RESERVES

Your Company proposes to transfer INR 294,935 lacs to the general reserve. An amount of INR 895,308 lacs is proposed to be retained in the statement of profit and loss.

LIQUIDITY

Your Company has a strong balance sheet with ample cash reserves to meet the various strategic initiatives and to support future expansion programs.

As at 31 March, 2013, the company had liquid assets worth INR 1,276,631 lacs. The company recognizes that though the liquidity is needed to cover the business and financial risks but it should get the adequate return as well. The funds, therefore, have been invested in bank deposits, mutual funds, tax free bonds and certificate of deposits.

CHANGES IN CAPITAL STRUCTURE

During the financial year under review, 2,842,046 equity shares of INR 10 each were allotted on exercise of Employee Stock Options by the employees of the Company and its subsidiaries. Accordingly, the issued and paid up capital of the Company has increased to INR 19,102,381,540 divided into 1,910,238,154 equity shares of INR 10 each.

Subsequent to the close of the financial year, the Company allotted 18,228 equity shares of INR 10 each on exercise of Stock Options by the employees. Accordingly, the issued and paid up capital of the Company has increased to INR 19,102,563,820 divided into 1,910,256,382 equity shares of INR 10 each.

REDEMPTION OF DEBENTURES

During the year under review, the Company has redeemed 6,250 Unsecured Redeemable Non-convertible "Series A" Debentures having face value aggregating to INR 62,500 lacs and 6,250 Unsecured Redeemable Non-convertible "Series B" Debentures having face value aggregating to INR 62,500 lacs. Debentures issued by your Company had a credit rating of CARE AAA. There was no outstanding debt liability of the Company as on 31 March 2013.

CONSOLIDATED FINANCIAL STATEMENTS

Your Company is also presenting the audited consolidated financial statements prepared in accordance with the Accounting Standard 21 issued by the Institute of Chartered Accountants of India. Information in aggregate for each subsidiary in respect of capital reserves, total assets, liabilities, investments, turnover, etc. is disclosed separately and forms part of the annual report.

OPERATIONS & PROJECTS

A detailed review of operations and projects has been included in the Management Discussion and Analysis Report, which forms a part of this Annual Report.

EMPLOYEE STOCK OPTION SCHEMES

Your Company has established share incentive schemes viz., Cairn India Senior Management Plan (CISMP), Cairn India Performance Option Plan (CIPOP) and Cairn India Employee Stock Option Plan (CIESOP) pursuant to which options to acquire shares have been granted to selected employees and Directors of the Company and its subsidiaries. The Company also has cash awards option plan (phantom stock options) for expatriate employees of the Company and its subsidiaries.

During the financial year, stock options have been granted to the employees of the Company and its subsidiaries under CIPOP & CIESOP schemes. On exercise of the options so granted, the paid-up equity share capital of the Company will increase in terms of the Stock Option Plans mentioned above. The details of stock options granted by the Company are set out in Annexure I to this Report in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

During the year under review, 2,842,046 equity shares of INR 10 each were allotted pursuant to the exercise of stock options.

INTERNAL CONTROL SYSTEM

The Company has put in place an adequate system of internal control commensurate with its size and nature of business. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company and ensuring compliance with corporate policies.

The company has a dedicated Internal Audit team which is commensurate with the size, nature & complexity of operations of the Company. Internal Audit reports functionally to Audit Committee of Board which reviews and approves risk based annual Internal Audit plan. Audit Committee periodically reviews the performance of internal audit function.

The Company has a rigorous business planning system to set targets and parameters for operations which are reviewed with actual performance to ensure timely initiation of corrective action, if required.

The Audit Committee reviews adherence to internal control systems and internal audit reports. The Committee also reviews all quarterly and yearly results of the Company and recommends the same to Board for its approval.

SUBSIDIARY COMPANIES

During the financial year under review, a new subsidiary Company, namely, Cairn South Africa Proprietary Limited was incorporated in South Africa.

As on 31 March, 2013, the Company had 31 subsidiaries including indirect subsidiaries. All these companies are 100% beneficially owned by Cairn India Limited. The Company has its representatives on the boards of subsidiary companies and monitors the performance of such companies regularly.

The Ministry of Corporate Affairs, vide its circular no. 2/2011 dated 8 February, 2011, had granted exemption to holding companies from attaching the financial statements of its subsidiaries to the Company''s Annual Report. In accordance with the said circular, the Balance Sheet, Profit & Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company.

The Company will make available the Annual Accounts of the subsidiary companies to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered office of the Company and respective subsidiary companies. Further, the annual accounts of the subsidiaries are also available on the website of the Company: www. cairnindia.com. The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.

SCHEME OF ARRANGEMENT

In order to simplify and consolidate the multi layered structure comprising foreign subsidiaries, your Company had proposed a scheme of arrangement between Cairn India Limited, Cairn Energy India Pty Limited, Cairn Energy India West B.V, Cairn Energy Cambay B.V, Cairn Energy Gujarat B.V and their respective shareholders and creditors (the ''Scheme''). The members of the Company had approved the scheme with overwhelming majority in the Court Convened meeting held on 18 February, 2010.

The Hon''ble High Courts of Madras and Bombay sanctioned the Scheme in April, 2010 and June, 2010 respectively. The Scheme was also subject to receipt of regulatory approvals and the same were received during the year under review. Consequently, the Scheme, having an appointed date of 1 January, 2010 became effective from 18 October, 2012, being the date of last approval received under the Scheme.

The Scheme has helped in consolidation of Indian businesses held by the foreign subsidiaries, directly under Cairn India.

DIRECTORS

During the period under review, following changes were made in the composition of the Board:

- Mr. Rahul Dhir resigned as Managing Director and Chief Executive Officer with effect from 31 August, 2012.

- Mr. P. Elango was appointed as additional and Whole time Director of the Company effective 21 January, 2013.

Pursuant to the provisions of Section 260 of the Companies Act, 1956, Mr. P. Elango, holds office up to the date of this Annual General Meeting. The Company has received notices from members of the Company sponsoring his candidature as Directors of the Company. He is proposed to be appointed as Director liable to retire by rotation.

Further, shareholders'' approval is also required for appointment of Mr. P. Elango as Whole Time Director. Necessary resolution along with relevant details is included in the Notice of the ensuing AGM for seeking approval of members.

In accordance with the Articles of Association of the Company, Mr. Naresh Chandra and Mr. Edward T Story, shall retire by rotation as Directors at the ensuing Annual General Meeting and are eligible for re- appointment.

A brief profile of the above-named Directors seeking appointment/re- appointment forms part of the Corporate Governance report.

CORPORATE GOVERNANCE

Your company strives to ensure that best Corporate Governance practices are identified, adopted and consistently followed. Your Company believes that good governance is the basis for sustainable growth of the business and for enhancement of stakeholder value. The Corporate Governance and Management Discussion and Analysis reports form an integral part of this report and are set out as separate sections to this annual report. The Certificate of S. R. Batliboi & Co. LLP, chartered accountants, the statutory auditors of the Company certifying compliance with the conditions of corporate governance as stipulated in clause 49 of the listing agreement with Stock Exchanges is annexed with the report on corporate governance.

SECRETARIAL AUDIT

In line with the high standards of corporate governance adopted by the Company and also to ensure proper compliance with the provisions of various corporate laws, regulations and guidelines issued by the Securities and Exchange Board of India and the listing agreement, the Company has voluntarily started a practice of secretarial audit from a practicing Company Secretary.

An audit report issued by M/s. Nesar & Associates, Company Secretaries, in respect of the secretarial audit of the Company for the financial year ended 31 March 2013, is provided separately in the Annual Report.

AUDITORS & AUDITORS'' REPORT

S. R. Batliboi & Co. LLP (formerly known as M/s. S. R. Batliboi & Co.), chartered accountants, auditors of the Company, retire at the conclusion of the ensuing annual general meeting and being eligible, offer themselves for re- appointment. The Audit Committee at its meeting held on 22 April, 2013 has also recommended the re-appointment of S. R. Batliboi & Co. LLP as Statutory Auditors of the Company. Your directors also recommend their appointment.

In the accompanying financial statements, the Company has adjusted goodwill against the securities premium account pursuant to the Scheme of Arrangement approved by the Hon''ble High Courts of Bombay and Madras and other relevant regulatory authorities. This accounting, although different from that prescribed under the Accounting Standards, is in conformity with the accounting principles generally accepted in India, and the same has been approved by the Courts. The same has been reported by the Auditors under ''Emphasis of Matter'' in their Report.

Notes to the accounts, as referred to in the Auditors'' Report, are self explanatory and therefore do not require further comments and explanation.

COST AUDITORS

Cost Accounting Records (Petroleum Industry) Rules, 2011, were issued by Ministry of Corporate Affairs on 7 December, 2011, vide G.S.R. 870(E). The said rules are applicable to Cairn India and the Company is now required to maintain cost accounting records and get them audited from the financial year 2012-13.

The Board appointed M/s. Shome & Banerjee, Cost Accountants, as Cost Auditors of the Company for the financial year 2012-13.

The cost audit report will be filed with the Central Government as per the timelines.

FIXED DEPOSITS

The Company has not invited any deposits from the public under Section 58A of the Companies Act, 1956.

HUMAN RESOURCES

Company''s industrial relations continued to be harmonious during the period under review.

PARTICULARS OF EMPLOYEES

Particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956 (''the Act'') form part of this report. However, as per the provisions of Section 219(1)(b) (iv) of the Act, the report and accounts are being sent to the shareholders of the Company excluding the particulars of employees under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary for the same.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is given in Annexure II to this report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) Appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March, 2013 and of the profit of the Company for the year ended 31 March, 2013;

(iii) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The annual accounts have been prepared on a going concern basis;

(v) The Company has devised proper systems to ensure compliances of all laws applicable to the Company;

(vi) Internal financial controls have been laid down and such internal financial controls are adequate and were operating effectively.

CORPORATE SOCIAL RESPONSIBILITY

At Cairn, Corporate Social Responsibility (CSR) encompasses much more than social outreach programs and is an integral part of the way the Company conducts its business. Detailed information on the initiatives of the Company towards CSR activities is provided elsewhere in the Annual Report.

BUSINESS RESPONSIBILTY REPORT

SEBI vide its circular CIR/CFD/ DIL/8/2012 dated 13 August, 2012 and clause 55 of the Listing Agreement, mandated that top 100 listed companies based on market capitalization include Business Responsibility Report as a part of the Annual Report. Accordingly, the Business Responsibility Report for financial year 2012-13 is attached and forms part of the Annual report.

AWARDS AND RECOGNITIONS

As in the past, your company earned a number of awards and honors from different bodies and trade organisations, the summary of which is as under:

- The Company was adjudged the fastest growing energy company in the world at the Platts Top 250 Energy Company Awards 2012

- Golden Peacock Award for excellence in Corporate Governance 2012

- The Company won 16 awards in the 26th Mines Safety week 2012 under the aegis of Directorate General of Mines Safety (DGMS), Ajmer

- Raageshwari Oil Mine won the runners up award at the National Safety Awards (Mines), 2010 held by Government of India for Lowest Injury Frequency Rate per lakh Man Shifts in Oil Mines Category

SHARE TRANSFER SYSTEM AND LISTING OF SHARES

Details pertaining to share transfers and listing of shares are given in the Corporate Governance Report which forms part of the Annual Report. The Company has paid the annual listing fee for the year 2013-14 to Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

APPRECIATION

Your Directors wish to place on record their sincere appreciation of the efforts and dedicated service of all employees, which contributed to the continuous growth and consequent performance of the Company. Your Directors wish to place on record their gratitude for the valuable assistance and co- operation extended to the Company by the Central Government, State Governments, Joint Venture Partners, Banks, Institutions, Investors and Customers.

For and on behalf of the Board of Directors

Mr. Navin Agarwal

Chairman

Place: Gurgaon

Date: 22 April, 2013


Mar 31, 2012

The Directors have pleasure in presenting the Sixth Annual Report on the business and operations of the Company and the Audited Financial accounts for the year ended 31 March, 2012.

FINANCIAL HIGHLIGHTS In INR million

Standalone Consolidated

For the financial year ended For the financial year ended 31 March, 2012 31 March, 2011 31 March, 2012 31 March, 2011

Total Income 2,489 951 127,987 104,067

Total Expenditure 2,014 3,077 43,752 35,167

Profit/(loss) before tax 475 (2,126) 84,235 68,900

Taxes 35 - 4,857 5,556

Profit/(loss) after tax 440 (2,126) 79,378 63,344

The consolidated statements provide the results of Cairn India Limited together with those of its subsidiaries for the financial year ended 31 March, 2012.

DIVIDEND

In view of inadeguacy of profits in Cairn India Limited, your Directors regret their inability to recommend any dividend.

CHANGES IN CAPITAL STRUCTURE

During the financial year under review, 5,479,007 eguity shares of INR 10/- each were allotted on exercise of Employee Stock Options by the employees of the Company and its subsidiaries. Accordingly, the issued and paid up capital of the Company has increased to INR 19,073,961,080 divided into 1,907,396,108 eguity shares of INR 10/- each.

Subseguent to the close of the financial year, the Company allotted 79,588 eguity shares of INR 10/- each on exercise of Stock Options by the employees. Accordingly, the issued and paid up capital of the Company has increased to INR 19,074,756,960 divided into 1,907,475,696 Eguity shares of INR 10/- each.

REDEMPTION OF DEBENTURES

During the year under review, the Company has redeemed 10,000 Unsecured Redeemable Non-convertible "Series C" Debentures (NCDs) having face value aggregating to INR 100 crores. NCDs issued by your Company have a credit rating of CARE AAA.

CONSOLIDATED FINANCIAL STATEMENTS

Your Company is also presenting the audited consolidated financial statements prepared in accordance with the Accounting Standard 21 issued by the Institute of Chartered Accountants of India. Information in aggregate for each subsidiary in respect of capital reserves, total assets, liabilities, investments, turnover, etc. is disclosed separately and forms part of the annual report.

OPERATIONS & PROJECTS

A detailed review of operations and projects has been included in the Management Discussion and Analysis Report, which forms a part of this Annual Report.

EMPLOYEE STOCK OPTION SCHEMES

Your Company has established share incentive schemes viz., Cairn India Senior Management Plan (CISMP), Cairn India Performance Option Plan (CIPOP) and Cairn India Employee Stock Option Plan (CIESOP) pursuant to which options to acguire shares have been granted to select employees and Directors of the Company and its subsidiaries. The Company also has cash awards option plan (phantom stock options) for expatriate employees of the Company and its subsidiaries.

During the financial year, stock options have been granted to the employees of the Company and its subsidiaries under CIPOP & CIESOP schemes. On exercise of the options so granted, the paid-up eguity share capital of the Company will increase in terms of the Stock Option Plans mentioned above. The details of stock options granted by the Company are set out in Annexure I to this Report in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

During the year under review, 5,479,007 eguity shares of INR 10 each were alloted pursuant to the exercise of stock options.

SUBSIDIARY COMPANIES

As on 31 March, 2012, the Company had 30 subsidiaries including indirect subsidiaries. All these companies are 100% beneficially owned by Cairn India Limited. The Company has its representatives on the boards of subsidiary companies and monitors the performance of such companies regularly.

The Ministry of Corporate Affairs, vide its circular no. 2/2011 dated 8 February, 2011, had granted exemption to holding companies from attaching the financial statements of its subsidiaries to the company's Annual Report. In accordance with the said circular, the Balance Sheet, Profit & Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary companies to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered office of the Company and respective subsidiary companies. Further, the annual acounts of the subsidiaries are also available on the website of the Company. The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.

SCHEME OF ARRANGEMENT

In order to simplify and consolidate the multi layered structure comprising foreign susidiaries, your Company had proposed a scheme of arrangement between Cairn India Limited, Cairn Energy India Pty Limited, Cairn Energy India West B.V., Cairn Energy Cambay B.V., Cairn Energy Gujarat B.V. and their respective shareholders and creditors (the 'Scheme'). The members of the Company had approved the scheme with overwhelming majority in the Court Convened meeting held on 18 February, 2010.

The Hon'ble High Courts of Madras and Bombay sanctioned the Scheme in April, 2010 and June, 2010 respectively. The Scheme is now subject to receipt of contractual & regulatory approvals and the same are expected shortly. The Scheme when approved is proposed to be effective from 1 January, 2010.

COMPLETION OF CAIRN VEDANTA DEAL

Cairn Energy PLC and Cairn UK Holdings Limited, promoters of the Company, agreed to sell a substantial part of their equity stake in the Company to Vedanta Resources PLC and persons acting in concert ('Vedanta') by way of a share purchase deed dated 15 August, 2010. In terms of the provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, Vedanta acquired 155,033,172 equity shares under an open offer made to the shareholders of the Company in April, 2011. It subsequently acquired 200,000,000 equity shares of the Company from Petronas International Corporation Ltd.

Pursuant to the conditions imposed by the Government of India, the Company along with its subsidiary Companies viz., Cairn Energy India Pty. Ltd. and Cairn Energy Hydrocarbons Limited, entered into an agreement with Oil and Natural Gas Corporation (ONGC) for acceptance of royalty as cost recoverable and withdrawal of the arbitration pertaining to cess in respect of Block RJ-0N-90/1. Subsequently, the cess arbitration was withdrawn effective 30 November, 2011. Post fulfillment of conditions imposed by the Government of India, shares aggregating 30% of the issued share capital of the Company were transferred by Cairn UK Holdings Ltd. to Vedanta Group on 8 December, 2011. The shareholding of Vedanta Group, i.e. Twin Star Mauritius Holdings Limited, Sesa Goa Ltd. and Sesa Resources Ltd. now aggregates 59% of the issued capital. These Vedanta Group Companies now constitute the Promoter Group of the Company.

DIRECTORS

During the period under review, following changes were made in the composition of the Board:

- Mr. Rahul Dhir has been re-appointed as Managing Director and Chief Executive Officer of the Company for a period of 5 years commencing from 22 August, 2011.

- Mr. Malcolm Shaw Thoms resigned as non-executive Director with effect from 14 June, 2011.

- Mr. Rick Bott resigned as Executive Director and Chief Operating Officer with effect from 15 June, 2011.

- Mr. Indrajit Banerjee resigned as Executive Director and Chief Financial Officer with effect from 23 August, 2011.

- Mr. Mike Watts was appointed as an alternate Director to Ms. Jann Brown with effect from 26 September, 2011 and later ceased to be an alternate Director from 20 October, 2011.

- Sir Bill Gammell and Ms. Jann Brown resigned as non- executive Directors with effect from 8 December, 2011.

- Mr. Navin Agarwal and Mr. Tarun Jain were appointed as additional Directors of the Company with effect from 16 December, 2011. Mr. Navin Agarwal was also appointed as the Chairman of the Company on the said date.

- Ms. Priya Agarwal was appointed as additional Director of the Company effective 2 January, 2012.

Pursuant to the provisions of Section 260 of the Companies Act, 1956, Mr. Navin Agarwal, Mr. Tarun Jain and Ms. Priya Agarwal, hold office up to this Annual General Meeting. The Company has received notices from members of the Company sponsoring their candidature as Directors of the Company. They are proposed to be appointed as non-rotational Directors.

In accordance with the Articles of Association of the Company, Dr. Omkar Goswami and Mr. Aman Mehta, shall retire by rotation as Directors at the ensuing Annual General Meeting and are eligible for re-appointment.

A brief profile of the above-named Directors seeking appointment/re- appointment forms part of the Corporate Governance report.

CORPORATE GOVERNANCE

Your company strives to ensure that best Corporate Governance practices are identified, adopted and consistently followed. Your Company believes that good governance is the basis for sustainable growth of the business and for enhancement of stakeholder value. The Corporate Governance and Management Discussion and Analysis reports form an integral part of this report and are set out as separate sections to this annual report. The Certificate of S. R. Batliboi & Co., chartered accountants, the statutory auditors of the Company certifying compliance with the conditions of corporate governance as stipulated in clause 49 of the listing agreement with stock exchanges is annexed with the report on corporate governance.

AUDITORS & AUDITORS' REPORT

M/s. S. R. Batliboi & Co., chartered accountants, auditors of the Company, retire at the conclusion of the ensuing annual general meeting and being eligible, offer themselves for re-appointment. The audit committee at its meeting held on 20 April, 2012 has also recommended the re- appointment of M/s. S. R. Batliboi & Co., as Statutory Auditors of the Company. Your Directors also recommend their appointment.

Notes to the accounts, as referred to in the Auditors' Report, are self explanatory and therefore do not require further comments and explanation.

FIXED DEPOSITS

The Company has not invited any deposits from the public under Section 58A of the Companies Act, 1956.

HUMAN RESOURCES

Company's industrial relations continued to be harmonious during the period under review.

PARTICULARS OF EMPLOYEES

Particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956 ('the Act') form part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the report and accounts are being sent to the shareholders of the Company excluding the particulars of employees under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary for the same.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information on Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo is given in Annexure II to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) Appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March, 2012 and of the profit of the Company for the year ended 31 March, 2012;

(iii) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The annual accounts have been prepared on a going concern basis.

CORPORATE SOCIAL RESPONSIBILITY

At Cairn, Corporate Social Responsibility (CSR) encompasses much more than social outreach programs and is an integral part of the way the Company conducts its business. Detailed information on the initiatives of the Company towards CSR activities is provided elsewhere in the Annual Report.

SHARE TRANSFER SYSTEM AND LISTING OF SHARES

Details pertaining to share transfers and listing of shares are given in the Corporate Governance Report which forms part of the Annual Report. The Company has paid the annual listing fee for the year 2012-2013 to Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

APPRECIATION

Your Directors wish to place on record their sincere appreciation of the efforts and dedicated service of all employees, which contributed to the continous growth and conseguent performance of the Company. Your Directors wish to place on record their gratitude for the valuable assistance and co-operation extended to the Company by the Central Government, State Governments, Joint Venture Partners, Banks, Institutions, Investors and Customers.

For and on behalf of the Board of

Directors

Navin Agarwal

Chairman

Place; Gurgaon

Date; 20 April, 2012


Mar 31, 2011

The Members,

The Directors have pleasure in presenting the Fifth Annual Report on the business and operations of the Company and the Audited Financial accounts for the year ended 31 March, 2011.

FINANCIAL HIGHLIGHTS

In INR million

Standalone Consolidated

For the financial year ended For the financial year ended

31 March, 2011 31 March, 2010 31 March, 2011 31 March, 2010

Total Income 951 1,634 104,067 20,307

Total Expenditure 3,077 2,367 35,167 10,143

profit/(loss) before tax (2,126) (734) 68,900 10,163

Taxes - (44) 5,556 (348)

profit/(loss) after tax (2,126) (689) 63,344 10,511

The consolidated statements provide the results of Cairn India Limited together with those of its subsidiaries for the financial year ended 31 March, 2011.

DIVIDEND

In view of inadequacy of profits in Cairn India Limited, your Directors regret their inability to recommend any dividend.

CHANGES IN CAPITAL STRUCTURE

During the financial year under review, 4,942,969 equity shares of INR 10/- each were allotted on exercise of Employee Stock Options by the employees of the Company or of its subsidiaries. Accordingly, the issued and paid up capital of the Company has increased to INR 19,019,171,010 divided into 1,901,917,101 equity shares of INR 10/- each.

Subsequent to the close of the financial year, the Company allotted 213,131 equity shares of INR 10/- each on exercise of Stock Options by the employees. Accordingly, the issued and paid up capital of the Company has increased to INR 19,021,302,320 divided into 1,902,130,232 Equity shares of INR 10/- each.

CONSOLIDATED FINANCIAL STATEMENTS

Your Company is also presenting the audited consolidated financial statements prepared in accordance with the Accounting Standard 21 issued by the Institute of Chartered Accountants of India. Information in aggregate for each subsidiary in respect of capital reserves, total assets, liabilities, investments, turnover, etc. is disclosed separately and forms part of the annual report.

OPERATIONS

A detailed review of operations has been included in the Management Discussion and Analysis Report, which forms a part of this Annual Report.

EMPLOYEE STOCK OPTION SCHEMES

Your Company has established share incentive schemes viz., Cairn India Senior Management Plan (CISMP), Cairn India Performance Option Plan (CIPOP) and Cairn India Employee Stock Option Plan (CIESOP) pursuant to which options to acquire shares have been granted to select employees and Directors of the Company and its subsidiaries. The Company also has cash awards option plan (phantom stock options) for expatriate employees of the Company and its subsidiaries.

During the year, stock/cash options have been granted to the executive Directors and employees of the Company or of its subsidiaries. On exercise of the options so granted, the paid-up equity share capital of the Company will increase in terms of the Stock Option Plans mentioned above. The details of stock options granted by the Company are disclosed in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and set out in Annexure I to this Report.

During the period under review, 4,942,969 equity shares of INR 10/- each were allotted pursuant to the exercise of stock options.

SUBSIDIARY COMPANIES

As on 31 March, 2011, the Company had 30 subsidiaries including indirect subsidiaries. All these companies are beneficially owned 100% by Cairn India Limited. During the year under review, Cairn Energy Developments Pte. Ltd., subsidiary Company in Singapore was voluntarily dissolved w.e.f. 8 March, 2011.

The subsidiaries have their own Boards of Directors having the rights and obligations to manage such companies in the best interest of such Companies. The Company has its representatives on the board of subsidiary Companies and monitors the performance of such Companies regularly.

The Ministry of Corporate Affairs, vide its circular nos. 2/2011 & 3/2011 dated 8 February, 2011 & 21 February, 2011 respectively had granted general exemption to holding companies from attaching the fi nancial statements of its subsidiaries to the company's Annual Report. In accordance with the said circulars, the Balance Sheet, profit & Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary companies to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered office of the Company and respective subsidiary Companies. The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.

SCHEME OF ARRANGEMENT

In order to simplify and consolidate the multi layered structure comprising foreign subsidiaries, your Company had proposed a scheme of arrangement between Cairn India Limited, Cairn Energy India Pty Limited, Cairn Energy India West B.V., Cairn Energy Cambay B.V., Cairn Energy Gujarat B.V. and their Respective shareholders and creditors (the 'Scheme'). The members of the Company had approved the scheme with overwhelming majority in the Court Convened meeting held on 18 February, 2010.

The Hon'ble High Courts of Madras and Bombay sanctioned the Scheme in April, 2010 and June, 2010 respectively. The Scheme is now subject to receipt of certain contractual and regulatory approvals. The Scheme when approved is proposed to be effective from 1 January, 2010.

OPEN OFFER TO SHAREHOLDERS BY VEDANTA RESOUCES PLC

During the year under review, Cairn Energy PLC and Cairn UK Holdings Limited, promoters of the Company, agreed to sell a substantial part of their equity stake in the Company to Vedanta Resources PLC and persons acting in concert ('Vedanta') by way of a share purchase deed dated 15 August, 2010. In terms of the provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, Vedanta issued a Public Announcement on 17 August, 2010 to make an open offer to the equity shareholders of the Company. Vedanta also filed the draft Letter of Offer with SEBI, which was received by them on 31 August, 2010. After the receipt of SEBI's nod, the offer opened on 11 April, 2011 and closed on 30 April 2011. Vedanta acquired 155,033,172 number of equity shares under the open offer. Vedanta also acquired 200,000,000 equity shares of the Company from Petronas International Corporation Ltd. Subsequent to these acquisitions, Vedanta now holds 18.66% of the equity capital of the Company.

The deal for sale of shares by Cairn Energy PLC and Cairn UK Holdings Limited, promoters, to Vedanta is pending for regulatory approvals.

DIRECTORS

Mr. Philip Tracy ceased to be an alternate director with effect from 17 August, 2010. He was again appointed as an alternate Director to Ms. Jann Brown on 10 February, 2011 and ceased to be so on 23 May 2011.

In accordance with the Articles of Association of the Company, Mr. Naresh Chandra and Mr. Edward T Story, shall retire by rotation as Directors at the ensuing Annual General Meeting and being eligible, offer themselves for re- appointment.

A brief profile of the above-named directors forms part of the Corporate Governance report.

CORPORATE GOVERNANCE

The Corporate Governance and Management Discussion and Analysis reports form an integral part of this report and are set out as separate sections to this annual report. The Certificate of S. R. Batliboi & Co., chartered accountants, the statutory auditors of the Company certifying compliance with the conditions of corporate governance as stipulated in clause 49 of the listing agreement with stock exchanges is annexed with the report on corporate governance.

AUDITORS

M/s. S. R. Batliboi & Co., chartered accountants, auditors of the Company, retire at the conclusion of the ensuing annual general meeting and being eligible, offer themselves for re-appointment. The audit committee in its meeting held on 25 May, 2011 has also recommended the re-appointment of M/s. S. R. Batliboi & Co., as Statutory Auditors of the Company. Your directors also recommend their appointment.

FIXED DEPOSITS

The Company has not invited any deposits from the public under Section 58A of the Companies Act, 1956.

HUMAN RESOURCES

Company's industrial relations continued to be harmonious during the period under review.

PARTICULARS OF EMPLOYEES

Particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956 ('the Act') form part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the report and accounts are being sent to the shareholders of the Company excluding the particulars of employees under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary for the same.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information on Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo is given in Annexure II to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures

(ii) Appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2011 and of the profit of the Company for the year ended 31 March 2011

(iii) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

(iv) The annual accounts have been prepared on a going concern basis

CORPORATE SOCIAL RESPONSIBILITY

At Cairn, Corporate Social Responsibility (CSR) emcompasses much more than social outreach programs and is an integral part of the way the Company conducts its business. Detailed information on the initiatives of the Company towards CSR activities is provided in the Corporate Social Responsibility section of the Annual Report.

LISTING

The Company has paid the annual listing fee for the year 2011-12 to Bombay Stock Exchange Limited and National Stock Exchange Limited of India.

APPRECIATION

Your Directors wish to place on record their sincere appreciation of the concerned efforts and dedicated service of all employees, which contributed to the continuous growth and consequent performance of the Company. Your Directors wish to place on record their gratitude for the valuable assistance and co-operation extended to the Company by the Central Government, State Governments, Joint Venture Partners, Banks, Institutions, Investors and Customers.

For and on behalf of the Board of Directors

Sir William B.B. Gammell

Chairman

Place Gurgaon

Date 25 May, 2011


Mar 31, 2010

The Directors have pleasure in presenting the Fourth Annual Report on the business and operations of the Company and the Audited Financial accounts for the year ended 31 March, 2010.

FINANCIAL HIGHLIGHTS

In INR million

Standalone Consolidated For the financial year ended For the financial year ended

31 March, 2010 31 March, 2009 31 March, 2010 31 March, 2009 (Twelve months) (Fifteen months) (Twelve months) (Fifteen months)

Total Income 1,634 2,980 20,307 19,837

Total Expenditure 2,367 1,860 10,143 9,958

Profit/(loss) before tax (734) 1,121 10,163 9,879

Taxes (44) 578 (348) 1,844

Profit/(loss) after tax (689) 542 10,511 8,034

The consolidated statements provide the results of Cairn India Limited together with those of its subs- idiaries for the fi nancial year ended 31 March, 2010.

DIVIDEND

In view of the inadequacy of profi ts in Cairn India Limited, your Directors regret their inability to recommend any dividend.

CHANGES IN CAPITAL STRUCTURE

During the fi nancial year under review, 306,316 equity shares of INR 10/- each were allotted on exercise of Employee Stock Options by the employees of the Company or of its subsidiaries. Accordingly, the issued and paid up capital of the Company has increased to INR 18,969,741,320 divided into 1,896,974,132 equity shares of INR 10/- each.

Subsequent to the close of the fi nancial year, the Company allotted 239,288 equity shares of INR. 10/- each on exercise of Stock Options by the employees. Accordingly, the issued and paid up capital of the Company has increased to INR 18,972,134,200 divided into 1,897,213,420 equity shares of INR 10/- each

CONSOLIDATED FINANCIAL STATEMENTS

Your Company is also presenting the audited con- solidated fi nancial statements prepared in accor- dance with the Accounting Standard 21 issued by the Institute of Chartered Accountants of India. Information in aggregate for each subsidiary in respect of capital reserves, total assets, liabilities, investments, turnover, etc. is disclosed separately and forms part of the annual report.

OPERATIONS

A detailed review of operations has been included in the Management Discussion and Analysis Report, which forms a part of this Annual Report.

UTILISATION OF IPO PROCEEDS

The Company has fully utilised INR 88,249 mil- lion raised from its maiden offer to the public.

EMPLOYEE STOCK OPTION SCHEMES

Your Company has established share incentive schemes viz., Cairn India Senior Management Plan (CISMP), Cairn India Performance Option Plan (CIPOP) and Cairn India Employee Stock

Option Plan (CIESOP) pursuant to which options to acquire shares have been granted to select employees and Directors of the Company and its subsidiaries. The Company also has cash awards option plan (phantom stock options) for expatriate employees of the Company and its subsidiaries.

During the year, stock/cash options have been granted to the executive Directors and employees of the Company or of its subsidiaries. On exercise of the options so granted, the paid-up equity share capital of the Company will increase in terms of the Stock Option Plans mentioned above. The details of stock options granted by the Company are disclosed in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and set out in Annexure I to this Report.

During the period under review, 306,316 equity shares of INR 10/- each were allotted pursuant to the exercise of the stock options.

SUBSIDIARY COMPANIES

As on 31 March, 2010, the Company had 31 sub- sidiaries including indirect subsidiaries. All these companies are benefi cially owned 100% by Cairn India Limited.

These subsidiaries have their own Boards of Directors having the rights and obligations to man- age such companies in the best interest of such Companies. The Company has its representatives on the Board of subsidiary companies and moni- tors the performance of such companies regularly.

Pursuant to the provisions of Section 212(8) of the Companies Act, 1956, the Company has ob- tained exemption from the Ministry of Corporate Affairs, Government of India from attaching the accounts of its subsidiaries to the Company’s Annual Accounts for the fi nancial year ended 31 March, 2010. The accounts of the subsidiaries are available for inspection by members on any work- ing day at the Registered Offi ce of the Company between 10 am and 12 noon. Members interested in obtaining copies are entitled to receive them on specifi c request. A statement pursuant to the approval under Section 212(8) of the Companies Act,1956, in respect of subsidiary companies forms part of the annual report.

SCHEME OF ARRANGEMENT

In order to simplify and consolidate the multi layered structure comprising foreign susidiar- ies, your Company had proposed a scheme of arrangement between Cairn India Limited, Cairn Energy India Pty Limited, Cairn Energy India West B.V., Cairn Energy Cambay B.V., Cairn Energy Gujarat B.V. and their respective shareholders and creditors (the Scheme). The members of the Company had approved the Scheme with overwhelming majority in the Court convened meeting held on 18 February, 2010. The Scheme has since been approved by the Honble High Court of Judicature at Madras on 1 April, 2010. The matter is currently pending for fi nal hearing before the Honble High Court of Bombay.

DIRECTORS

Mr Philip Tracy ceased to be an alternate director with effect from 26 May, 2009. He was again appointed as an alternate Director to Sir William B. B. Gammell effective 27 May, 2010. Mr Rahul Dhir and Mr Indrajit Banerjee, directors of the Company, retire by rotation at the ensuing an- nual general meeting and being eligible, offer themselves for re-appointment. A brief profi le of the above-named directors forms part of the Corporate Governance report.

CORPORATE GOVERNANCE

Your Directors reaffi rm their continued commit- ment to good corporate governance practices. A detailed report on the Corporate Governance and Management Discussion and Analysis Report, together with a certifi cate from Statutory Auditors forms an integral part of this report and are set out as separate sections in this annual report.

AUDITORS

M/s S. R. Batliboi & Associates, Chartered Accountants, auditors of the Company, retire at the conclusion of the ensuing annual gen-eral meeting but do not offer themselves for re-ap- pointment. The Company has recieved a requisi- tion to appoint M/s S.R Baltiboi & Co., Chartered Accountants, as the Statutory Auditor of the Company. Consequently a consent letter and certifi cate from M/s S.R Baltiboi & Co., Chartered Accountants stating that their appointment, if made, will be in accordance with the limits specifi ed in Section 224(1B) of the Companies Act, 1956 has also been received. The Audit Committee in its meeting held on 27 May, 2010 has also recommended the appointment of M/s S. R. Batliboi & Co., as Statutory Auditors of the Company. Your directors also recommend their appointment.

FIXED DEPOSITS

The Company has not invited any deposits from the public under Section 58A of the Companies Act, 1956.

HUMAN RESOURCES

Company’s industrial relations continued to be harmonious during the period under review.

PARTICULARS OF EMPLOYEES

Particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956 (‘the Act’) form part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the report and accounts are being sent to the shareholders of the Company excluding the particulars of employees under Section 217(2A) of the Act. Any shareholder interested in obtain- ing a copy of the said statement may write to the Company Secretary at the Registered Offi ce of the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is given in Annexure II to this report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confi rm that: 1 In the preparation of the annual accounts, the applicable accounting standards have been fol- lowed along with proper explanation relating to material departures

2 Appropriate accounting policies have been se- lected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March, 2010 and of the profit of the Company for the year ended 31 March, 2010

3 Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

4 The annual accounts have been prepared on a going concern basis

CORPORATE SOCIAL RESPONSIBILITY

Your Company is a responsible corporate citizen, and strives to give back to the community it oper- ates in. A detailed report on CSR efforts of the Company forms part of this annual report.

LISTING

The Company has paid the annual listing fee for the year 2010-2011 to Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

APPRECIATION

Your Directors wish to place on record their sincere appreciation of the concerted efforts and dedicated service of all employees, which contrib- uted to the continous growth and performance of the Company. Your Directors wish to place on record their gratitude for the valuable assistance and co-operation extended to the Company by the Central Government, State Governments, Joint Venture Partners, Banks, Institutions, Investors and Customers.

For and on behalf of the Board of Directors

Sir William B.B. Gammell

Chairman

Place Gurgaon Date 27 May, 2010

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