Mar 31, 2015
Cairn India Limited (''the Company'') was incorporated in India on 21
August 2006. The equity shares of the Company are listed in India on
the Bombay stock exchange and the National stock exchange.
The Company is primarily engaged in the business of surveying,
prospecting, drilling, exploring, acquiring, developing, producing,
maintaining, refining, storing, trading, supplying, transporting,
marketing, distributing, importing, exporting and generally dealing in
minerals, oils, petroleum, gas and related by-products and other
activities incidental to the above. As part of its business activities,
the Company also holds interests in its subsidiary companies which have
been granted rights to explore and develop oil exploration blocks.
The Company is a participant in various Oil and Gas blocks/fields,
which are in the nature of jointly controlled assets, granted by the
Government of India through Production Sharing Contracts (''PSC'')
entered into between the Company and Government of India and other
venture partners.
2 BASIS OF PREPARATION
The financial statements of the Company have been prepared in
accordance with the generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under section 133 of the Companies Act 2013, read together with
paragraph 7 of the Companies (Accounts) Rules 2014. The financial
statements have been prepared on an accrual basis and under the
historical cost convention. The accounting policies, in all material
respects, have been consistently applied by the Company and are
consistent with those used in the previous year, except to the extent
stated in note 2.1 a below.
3. GRATUITY
The Company has a defined benefit gratuity plan for its employees.
Under the gratuity plan, every employee who has completed atleast five
years of service gets a gratuity on departure @ 15 days of last drawn
salary for each completed year of service. The scheme is funded with an
insurance company in the form of qualifying insurance policy.
The following tables summarize the components of net benefit expense
recognized in the statement of profit and loss, the funded status and
amounts recognized in the balance sheet for the respective plans.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
The overall expected rate of return on assets is determined based on
the market prices prevailing on that date, applicable to the period
over which the obligation is to be settled.
The Company is maintaining a fund with the Life Insurance Corporation
of India (LIC) to meet its gratuity liability. The present value of the
plan assets represents the balance available with the LIC as at the end
of the year. The total value of plan assets is as certified by the LIC.
CIPOP plan (including phantom options)
Options will vest (i.e., become exercisable) at the end of a
"performance period" which has been set by the remuneration
committee at the time of grant (although such period will not be less
than three years). However, the percentage of an option which vests on
this date will be determined by the extent to which pre-determined
performance conditions have been satisfied. Phantom options are
exercisable proportionate to the period of service rendered by the
employee subject to completion of one year.
Inputs for Fair valuation of Employees Stock Option Plans
The Share Options have been fair valued using an Option Pricing Model
(Black Scholes Model). The main inputs to the model and the Fair Value
of the options granted during the current year and previous year, based
on an independent valuation, are as under:
4. RELATED PARTY DISCLOSURES
Names of related parties and related party relationship Related parties
where control exists
Holding / Ultimate holding company
Vedanta Resources Pic.
Vedanta Resources Holdings Limited
Volcan Investments Limited
Vedanta Limited (formerly Sesa Sterlite Limited) *
* With effect from 26 August 2013 Vedanta Limited became the
Company''s holding company. Prior to that date, it was a fellow
subsidiary and also had significant influence over the Company.
Subsidiary companies
1. Cairn Energy Australia Pty Limited
2. Cairn Energy India Pty Limited
3. CEH Australia Pty Limited ***
4. Cairn Energy Asia Pty Limited ***
5. Sydney Oil Company Pty Limited ***
6. Cairn Energy Investments Australia Pty Limited ***
7 Wessington Investments Pty Limited ***
8. CEH Australia Limited**
9. Cairn India Holdings Limited
10. CIG Mauritius Holding Private Limited
11. CIG Mauritius Private Limited
12. Cairn Energy Holdings Limited
13. Cairn Energy Discovery Limited
14. Cairn Exploration (No. 2) Limited
15. Cairn Exploration (No. 6) Limited
16. Cairn Energy Hydrocarbons Limited 17 Cairn Petroleum India Limited
***
18. Cairn Energy Gujarat Block 1 Limited
19. Cairn Exploration (No. 4) Limited ***
20. Cairn Exploration (No. 7) Limited
21. Cairn Lanka Private Limited
22. Cairn Energy Group Holdings BV ***
23. Cairn Energy India West BV **
24. Cairn Energy India West Holding BV ***
25. Cairn Energy Gujarat Holding BV ***
26. Cairn Energy India Holdings BV ***
27 Cairn Energy Netherlands Holdings BV **
28. Cairn Energy Gujarat BV **
29. Cairn Energy Cambay BV **
30. Cairn Energy Cambay Holding BV ***
31. Cairn South Africa Proprietary Limited
** Liquidated during the year. *** Liquidated during previous year
Related parties with whom transactions have taken place
Fellow subsidiaries
Twin Star Mauritius Holdings Limited ****
Sterlite Industries (India) Limited [merged into Vedanta Limited on 17
August 2013] Sesa Resources Limited
****also has significant influence over the Company.
Key management personnel
Mayank Ashar, Managing Director and Chief Executive Officer (from 17
November 2014) Sudhir Mathur, Chief Financial Officer (Interim Head,
from 2 May 2014 to 16 November 2014) P. Elango, Wholetime Director and
Interim Chief Executive Officer (upto 2 May 2014)
5. CAPITAL AND OTHER COMMITMENTS
Capital commitments (net of advances)
Company''s share of Joint Ventures'' Exploration activities and
Development activities Rs. 238.70 crore (31 March 2014: Rs. 1,016.07 crore)
and Rs. 915.80 crore (31 March 2014: Rs. 2,261.17 crore) respectively.
Other commitments
Company''s share of Joint Ventures'' minimum exploration commitments
as per the production sharing contracts Rs. 1,540.94 crore (31 March
2014: Rs. 1,095.34 crore).
6. CONTINGENT LIABILITIES
a. Ravva Joint Venture Arbitration proceedings : Base Development Cost
Ravva joint venture had received the notice from Ministry of Petroleum
& Natural Gas Government of India (GOI) for the period from 2000-2005
for USD 129 million for an alleged underpayment of profit petroleum to
the Indian Government, out of which, Company''s share will be USD 29
million (approximately Rs. 181.65 crore) [31 March 2014: USD 29 million
(approximately Rs. 173.76 crore)] plus potential interest at applicable
rate (LIBOR plus 2% as per PSC).
This claim relates to the Indian Government''s allegation that the
Ravva JV had recovered costs in excess of the Base Development Costs
("BDC") cap imposed in the PSC and that the Ravva JV had also
allowed these excess costs in the calculation of the Post Tax Rate of
Return (PTRR). Joint venture partners initiated the arbitration
proceedings and Arbitration Tribunal published the Award on 18 January
2011 at Kuala Lumpur, allowing Claimants (including the Company) to
recover the Development costs spent to the tune of USD 278 million and
disallowed over run of USD 22.3 million spent in respect of BDC along
with 50% legal costs reimbursable to the Joint venture partners. High
Court of Kuala Lumpur dismissed Government of India''s (GOI)
application of setting aside the part of the Award on 30 August 2012
with costs. However, GOI appealed before the Court of Appeal against
the High Court''s order and the same is dismissed the GOI''s appeal
on 27 June 2014. However, GOI still preferred to challenge the same
before the Federal Court, Kuala Lumpur and their Leave to Appeal is
pending. GOI''s has also issued Show Cause Notice on this matter which
the Company has replied to and also filed an application for
enforcement of Award before Delhi High Court as an abundant caution.
Next hearing is due on 29 June 2015.
b. Ravva Joint Venture Arbitration proceedings: ONGC Carry
The Company is involved in a dispute with GOI relating to the
calculation of payments that it was required to make in connection with
the Ravva field. The Ravva PSC obliges the Company to pay proportional
share of ONGC''s exploration, development, production and contract
costs in consideration for ONGC''s payment of costs related to
construction and other activities it conducted in Ravva prior to the
effective date of the Ravva PSC (the ''''ONGC Carry''''). The
question as to how the ONGC Carry is to be calculated, along with other
issues, was submitted to an international arbitration panel in August
2002 which rendered a decision on the ONGC Carry in the Company''s
favour and four other issues in favour of GOI in October 2004
("Partial Award"). The GOI filed a challenge to the ONGC Carry
decision in the Malaysian courts, as Kuala Lumpur was the seat of the
arbitration. The Federal Court of Malaysia which adjudicated the matter
on 11 October 2011, upheld the Partial Award. Company persuaded with
Ministry of Petroleum and Natural Gas (MoPNG) to implement the Partial
Award while reconciling the statement of accounts as outlined in
Partial Award ever since the Federal Court adjudication in place.
However, MoPNG has issued a Show Cause Notice on 10 July 2014 alleging
that profit petroleum has been short-paid. The Company had requested
for Tribunal''s reconstitution to publish the Final Award since it has
retained the jurisdiction if parties are unable to agree on
quantification sums due and payable to each other pursuant to the
Partial Award. Accordingly, Tribunal was reconstituted and the next
hearing is due in 24 September 2015. While the Company does not believe
the GOI will be successful in its challenge, if the arbritral award is
reversed and such reversal is binding, the Company could be liable for
up to approximately USD 63.90 million (approximately Rs. 400.26 crore)
[31 March 2014: USD 63.90 million (approximately Rs. 382.89 crore)] plus
potential interest at applicable rate (LIBOR plus 2% as per PSC). GOI
has issued a Show Cause Notice to make the payment and Company filed
its submissions on 25 March 2015.
c. Service tax
The Company has received nine show cause notices (SCN''s) related to
period 1 April 2006 to 31 March 2014, citing non-payment of service tax
on various services. Detailed reply to all SCN''s has been filed with
the Commissioner of Service. Tax except for the last SCN for the period
1 April 2013 to 31 March 2014, reply to which will be submitted in due
course.
Should future adjudication go against the Company, it will be liable to
pay the service tax of approximately Rs. 119.41 crore (31 March 2014: Rs.
110.21 crore) plus potential interest of approximately Rs. 132.70 crore
(31 March 2014: Rs. 102.35 crore), although this could be recovered in
part, where it relates to services provided to Joint Venture of which
the Company is operator.
d. Tax holiday on gas production
Section 80-IB (9) of the Income Tax Act, 1961 allows the deduction of
100% of profits from the commercial production or refining of mineral
oil. The term ''mineral oil'' is not defined but has always been
understood to refer to both oil and gas, either separately or
collectively.
The 2008 Indian Finance Bill appeared to remove this deduction by
stating [without amending section 80-IB (9)] that "for the purpose of
section 80-IB (9), the term ''mineral oil'' does not include
petroleum and natural gas, unlike in other sections of the Act".
Subsequent announcements by the Finance Minister and the Ministry of
Petroleum and Natural Gas have confirmed that tax holiday would be
available on production of crude oil but have continued to exclude gas.
The Company filed a writ petition to the Gujarat High Court in December
2008 challenging the restriction of section 80-IB to the production of
oil. Gujarat High Court did not admit the writ petition on the ground
that the matter needs to be first decided by lower tax authorities. A
Special Leave Petition has been filed before Supreme Court against the
decision of Gujarat High court. However in an another similar case, the
Gujarat High Court has held that tax holiday benefit would extend to
production of gas.
In the event this challenge is unsuccessful, the potential liability
for tax and related interest on tax holiday claimed on gas is
approximately Rs. 263.35 crore (31 March 2014: Rs. 248.43 crore).
e. Withholding tax on payments made on acquiring a subsidiary
In March 2014 the Company received a notice from the Indian Tax
Authorities ("Tax Authorities") alleging failure by the Company to
withhold tax on the consideration paid to Cairn UK Holdings Limited
("CUHL") in the year 2006-07, the then holding company. The said
transaction relates to the acquisition of the shares of Cairn India
Holdings Limited ("CIHL"), a 100% subsidiary of the Company, from
CUHL during the financial year 2006-2007 as a part of group
reorganization by the then ultimate parent company Cairn Energy Plc.
Based upon the retrospective amendment(s) made in the year 2012 by
inserting explanation 5 of section 9(1)(i) of the Income Tax Act, 1961,
the Tax Authorities vide its order dated 11 March 2015, have raised a
demand of approx. Rs. 20,494.73 crore (comprising tax of appox. Rs.
10,247.36 crore and interest of an equivalent amount) for not
withholding tax on the consideration paid to CUHL, for acquiring shares
of CIHL. Tax Authorities have stated in the said order that a short
term capital gain of Rs. 24,503.50 crore accrued to CUHL on transfer of
the shares of CIHL to the Company in financial year 2006-2007, on which
tax should have been withheld by the Company. The Company understands
that a tax demand has also been raised by the Tax Authorities on CUHL
with respect to taxability of alleged capital gain earned by CUHL.
In this regard, Vedanta Resources Plc. filed a Notice of Claim against
the Government of India under the UK-India bilateral investment treaty
(the "BIT") in order to protect its legal position and shareholder
interests. Management has been advised that Vedanta Resources Plc. has
a good case to defend as per provisions of BIT, the benefit of which
would ultimately accrue to the Company.
Further, the Company has been advised that there could be no liability
on the Company on account of not withholding the taxes in the year
2006-07 based on provisions of law prevailing at the time of
transaction as the aforesaid retrospective amendment has cast an
impossible obligation on the Company to deduct tax by having to predict
and anticipate that the retrospective amendment will be made by
legislature on a future date. The Company has approached the Hon''ble
Delhi High Court against the said order and also filed an appeal before
the Commissioner of Income Tax (Appeals) to defend its said position.
f. Others
i) Pursuant to the provisions of the Rajasthan Entry Tax Act, 1999, an
entry tax demand has been raised for Rs. 5.93 crore (31 March 2014: Rs.
5.81 crore) plus penalty and interest which the Company has contested
before the Deputy Commissioner. The Company believes that this levy is
not constitutionally valid and its Special Leave Petition in this
regard is pending before the Honorable Supreme Court.
ii) The Company has terminated a drilling rig contract with one of its
contractor. The contractor has claimed demobilisation and early
termination fee for an amount Rs. 32.51 crore (US$ 5.19 million) from the
Company. The Company''s stand is that the contract has been terminated
due to contractor''s default and therefore the demobilasation fee and
early termination fee is not payable to the contractor.
Based on an analysis of the legal positions, the management is of the
view that the liabilities in the cases mentioned in (a) to (f) above
are not probable and accordingly no provision has been considered
necessary there against.
7. BUY BACK OF EQUITY SHARES
During the previous year, the Company had approved a proposal for buy
back of its equity shares at a price not exceeding Rs. 335 pe equity
share for an aggregate amount not exceeding Rs. 5,725.00 crore. The
buyback had commenced on 23 January 2014 and closed o 22 July 2014.
During the said period the Company bought back and extinguished
36,703,839 equity shares for a total consideration o Rs. 1,225.45 crore,
which accounted for 21.41% of its Maximum buy-back size. The Company
pursuant to the Securities & Exchange Boar of India (Buyback of
Securities) Regulations, 1998 (''the Regulations'''') has deposited
a sum of Rs. 143.13 crore, being 2.5% of the maximur buy back size, in an
escrow account, which was to be released subject to the Company either
completing a buyback for 50% of th maximum buyback size or complying
with the conditions specified in regulation 15B(8) of the Regulations.
Although the buyback was for less than Rs. 2,862.50 crore, being 50% of
the maximum buy back size, the Company believes that it ha complied
with the conditions specified in regulation 15B(8) of the Regulations
and has accordingly applied to SEBI for a release of th amount
deposited in the escrow account. SEBI has informed the Company, that
its application is under consideration and the Compan believes that it
has a good case on merits to obtain this refund.
The Company''s gross reserve estimates are updated atleast annually
based on the forecast of production profiles, determined on an
asset-by-asset basis, using appropriate petroleum engineering
techniques. The estimates of reserves and resources have been derived
in accordance with the Society for Petroleum Engineers "Petroleum
Resources Management System (2007)". The changes to the reserves are
generally on account of future development projects, application of
technologies such as enhanced oil recovery techniques and true up of
the estimates. The management''s internal estimates of hydrocarbon
reserves and resources at the period end, based on the current terms of
the PSCs, are as follows:
* Includes probable oil reserves of 39.62 mmstb (of which 20.20 mmstb
is developed) and probable gas reserves of 10.42 bscf (of which 9.70
bscf is developed)
** Includes probable oil reserves of 44.95 mmstb (of which 1737 mmstb
is developed) and probable gas reserves of 29.72 bscf (of which 789
bscf is developed)
*** Includes probable oil reserves of 36.95 mmstb (of which 13.84 mmstb
is developed) and probable gas reserves of 34.32 bscf (of which 5.94
bscf is developed)
mmboe = million barrels of oil equivalent
mmstb = million stock tank barrels
bscf = billion standard cubic feet
1 million metric tonnes = 74 mmstb
1 standard cubic meter =35.315 standard cubic feet
MBA = Mangala, Bhagyam & Aishwarya
EOR = Enhanced Oil Recovery
8. SEGMENTAL REPORTING
Business segments
The primary reporting of the Company has been prepared on the basis of
business segments. The Company has only one business segment, which is
the exploration, development and production of oil and gas and operates
in a single business segment based on the nature of the products, the
risks and returns, the organisation structure and the internal
financial reporting systems. Accordingly the figures appearing in these
financial statements relate to the Company''s single business segment.
Geographical segments
The Company''s secondary segments are the geographic distribution of
activities. Revenue and receivables are specified by location of
customers while the other geographic information is specified by
location of the assets. The figures appearing in these financial
statements relate to the Company''s single geographical segment, being
operations in the Indian sub-continent.
9. PREVIOUS YEAR FIGURES
The Company has reclassified and regrouped the previous year figures to
confirm to this year''s classification.
Mar 31, 2013
1. NATURE OF OPERATIONS
Cairn India Limited (''the Company'') was incorporated in India on
August 21, 2006. The equity shares of the Company are listed in India
on the Bombay stock exchange and the National stock exchange.
The Company is primarily engaged in the business of surveying,
prospecting, drilling, exploring, acquiring, developing, producing,
maintaining, refining, storing, trading, supplying, transporting,
marketing, distributing, importing, exporting and generally dealing in
minerals, oils, petroleum, gas and related by-products and other
activities incidental to the above. As part of its business activities,
the Company also holds interests in its subsidiary companies which have
been granted rights to explore and develop oil exploration blocks.
The Company is participant in various Oil and Gas blocks/fields, which
are in the nature of jointly controlled assets, granted by the
Government of India through Production Sharing Contracts (''PSC'')
entered into between the Company and Government of India and other
venture partners.
* acquired on account of transfer of Indian undertakings of the
subsidiaries pursuant to the implementation of the Scheme referred to
in note 26 below.
** increase in participating interest is on account of transfer of
Indian undertakings of the subsidiaries pursuant to the implementation
of the Scheme referred to in note 26 below.
2. BASIS OF PREPARATION
The financial statements have been prepared to comply in all material
respects with the accounting principles generally accepted in India,
including mandatory Accounting Standards notified under the Companies
(Accounting Standard) Rules, 2006 (as amended) under the historical
cost convention and on an accrual basis. The accounting policies, in
all material respects, have been consistently applied by the Company
and are consistent with those used in the previous year.
3. SCHEME OF ARRANGEMENT
The shareholders of the Company had in February 2010 approved a Scheme
of Arrangement (''Scheme'') between the Company and four of its wholly
owned subsidiaries, Cairn Energy India Pty Ltd (''CEIPL''), Cairn
Energy India West BV (''CEIW''), Cairn Energy Cambay BV (''CEC''),
Cairn Energy Gujarat BV (''CEG''), (collectively the ''transferor
companies''), with an Appointed date of 1 January 2010. The Scheme of
Arrangement had been approved by the Hon''ble High Court of Madras and
Hon''ble High Court of Bombay and was subsequently approved by other
relevant regulatory authorities on 18 October 2012. Accordingly, from 1
January 2010, the Indian undertakings of the transferor companies stood
transferred to and vested in the Company on a going concern basis.
In accordance with the provisions of the aforesaid Scheme,
i) The Indian undertakings of the transferor companies relating to
exploration, development and production of crude, natural gas and
related by-products have been transferred to the Company on a going
concern basis. The transfer of assets and liabilities representing the
Indian undertakings has been effected from the "Appointed date" of
1 January 2010, as defined in the Scheme.
The above mentioned deferred tax liabilities (net) have been further
reduced by Rs. 4,563 lacs on account of application of tax rate as
applicable to the Company and fixed assets have been further decreased
by Rs. 530 lacs due to alignment of accounting policy (on depreciation)
as consistently followed by the Company, and adjustments in respect of
these have been recorded in the Statement of profit and loss.
iii) As a consideration for the transfer of the above mentioned assets
and liabilities and consequential expected future cash flows from the
transferor companies to the Company, the Company has reduced the value
of its investment in its direct subsidiary Cairn India Holdings Limited
(''CIHL'') by Rs. 1,495,278 lacs and consequentially a goodwill of Rs.
1,016,703 lacs, after adjusting the net assets taken over of Rs.
478,575 lacs, has been recorded in the books of accounts in accordance
with the provisions of Accounting Standard (AS)-10 of the Companies
(Accounting Standard) Rules, 2006 (as amended). The reduction in value
of investments in CIHL has been considered on the basis of an
independent valuation of the future discounted cash flows from CIHL as
at 31 December 2009.
iv) Further, in accordance with the Special Resolution passed by the
shareholders of the Company under sections 78 and 100 to 103 of the
Companies Act, 1956, which was an integral part of the aforesaid Scheme
approved the Courts, the goodwill of Rs. 1,016,703 lacs as mentioned in
(iii) above has been adjusted against the securities premium account
and as a result both goodwill and securities premium account are stated
lower by Rs. 1,016,703 lacs each. This accounting, although different
from that prescribed under the Accounting Standards, is in conformity
with the accounting principles generally accepted in India, as the same
has been approved by the Courts and has no impact on the profit for the
year.
v) Since the Scheme received all the requisite approvals in the current
year, operations of the Indian undertakings of the transferor companies
from 1 January 2010 to 31 March 2012, as detailed below, have been
accounted for in the current year''s statement of profit and loss as a
seperate line item.
4. GRATUITY
The Company has a defined benefit gratuity plan for its employees.
Under the gratuity plan, every employee who has completed atleast five
years of service gets a gratuity on departure @ 15 days of last drawn
salary for each completed year of service. The scheme is funded with an
insurance company in the form of qualifying insurance policy.
The following tables summarize the components of net benefit expense
recognized in the statement of profit and loss, the funded status and
amounts recognized in the balance sheet for the respective plans.
The vesting conditions of the above plans are as under- CISMP plan
(A) 6,714,233 options to be vested in the following manner- - 1/3rd of
the options vest on the day following the date on which the equity
shares have been admitted to listing on the Stock Exchanges
(''admission date''). Listing date was 9 Jan 2007.
- 1/3rd of the options vest 18 months after the admission date.
- 1/3rd of the options vest on achieving 30 days'' consecutive
production of over 150,000 bopd from the Rajasthan Block.
(B) 1,584,480 options to be vested in the following manner- - 1/2 of
the options vest on the day following the date on which the equity
shares have been admitted to listing on the Stock Exchanges.
- 1/4th of the options vest on the date on which all major equipment
for the start-up of the Mangala field is delivered to site.
- 1/4th of the options vest on achieving 100,000 bopd from the Mangala
Field.
CIPoP plan (including phantom options)
Options will vest (i.e., become exercisable) at the end of a
"performance period" which has been set by the remuneration
committee at the time of grant (although such period will not be less
than three years). However, the percentage of an option which vests on
this date will be determined by the extent to which pre-determined
performance conditions have been satisfied. Phantom options are
exercisable proportionate to the period of service rendered by the
employee subject to completion of one year.
CIESoP plan (including phantom options)
There are no specific vesting conditions under CIESOP plan other than
completion of the minimum service period. Phantom options are
exercisable proportionate to the period of service rendered by the
employee subject to completion of one year.
Capital commitments (net of advances)
Company''s share of Joint Ventures'' Exploration activities and
Development activities - Rs. 14,772 lacs (31 March 2012: Rs. 1,059
lacs) and Rs. 72,383 lacs (31 March 2012: Nil) respectively.
Other commitments
Company''s share of Joint Ventures'' minimum exploration commitments as
per the production sharing contracts - Rs. 4,132 lacs (31 March 2012:
Rs. 1,321 lacs).
5. CONTINGENT LIABILITIES
a. Ravva Joint Venture Arbitration proceedings : Base Development Cost
Ravva joint venture had received a claim from the Director General of
Hydrocarbons (DGH) for the period from 2000-2005 for USD 166.4 million
for an alleged underpayment of profit petroleum to the Indian
Government, out of which, Company''s share will be USD 374 million
(approximately Rs. 16,880 lacs) [31 March 2012: Nil] plus potential
interest at applicable rate (LIBOR plus 2% as per PSC).
This claim relates to the Indian Government''s allegation that the Ravva
JV had recovered costs in excess of the Base Development Costs
("BDC") cap imposed in the PSC and that the Ravva JV had also
allowed these excess costs in the calculation of the Post Tax Rate of
Return (PTRR). Joint venture partners initiated the arbitration
proceedings and Arbitration Tribunal published the Award on 18 January
2011 at Kuala Lumpur, allowing Claimants (including the Company) to
recover the Development costs spent to the tune of USD 278 million and
disallowed over run of USD 22.3 million spent in respect of BDC along
with 50% legal costs reimbursable to the Joint venture partners. High
Court of Kuala Lumpur dismissed Government of India''s (GOI) application
of setting aside the part of the Award on 30 August 2012 with costs.
However, GOI''s counsel served notice of appeal filed before Court of
Appeal against the High Court''s order.
b. Service tax
The Company has received five show cause notices from the tax
authorities in India for non payment of service tax as a recipient of
services from foreign service providers, against which replies have
already been filed before the authorities.
These notices cover periods from 1 April 2006 to 31 March 2011 . A writ
petition has been filed with Chennai High Court challenging the scope
of some services in respect of first show cause notice (1 April 2006 to
31 March 2007).
Should future adjudication go against the Company, it will be liable to
pay the service tax of approximately Rs. 11,248 lacs (31 March 2012:
Nil) plus potential interest of approximately Rs. 9,013 lacs (31 March
2012: Nil), although this could be recovered in part, where it relates
to services provided to Joint Venture of which the Company is operator.
c. Tax holiday on gas production
Section 80-IB (9) of the Income Tax Act, 1961 allows the deduction of
100% of profits from the commercial production or refining of mineral
oil. The term ''mineral oil'' is not defined but has always been
understood to refer to both oil and gas, either separately or
collectively.
The 2008 Indian Finance Bill appeared to remove this deduction by
stating [without amending section 80-IB (9)] that "for the purpose of
section 80-IB (9), the term ''mineral oil'' does not include petroleum
and natural gas, unlike in other sections of the Act". Subsequent
announcements by the Finance Minister and the Ministry of Petroleum and
Natural Gas have confirmed that tax holiday would be available on
production of crude oil but have continued to exclude gas.
The Company filed a writ petition to the Gujarat High Court in December
2008 challenging the restriction of section 80-IB to the production of
oil. Gujarat High Court did not admit the writ petition on the ground
that the matter needs to be first decided by lower tax authorities. A
Special Leave Petition has been filed before Supreme Court against the
decision of Gujarat High court.
In the event this challenge is unsuccessful, the potential liability
for tax and related interest on tax holiday claimed on gas is
approximately Rs. 24,317 lacs (31 March 2012: Nil).
d. others
i) Pursuant to the provisions of the Rajasthan Entry Tax Act, 1999, an
entry tax demand has been raised for Rs. 332 Lacs (31 March 2012: Nil)
plus penalty and interest which the Company has contested before the
Deputy Commissioner. The Company believes that this levy is not
constitutionally valid and its writ petition in this regard is pending
before the Honorable Rajasthan High Court.
ii) Other claims against the Company not acknowledged as debts amounts
to Rs. 1,500 lacs (31 March 2012: Nil).
6. The Board, subject to the approval of shareholders, has appointed
Mr. P. Elango, Interim Chief Executive Officer, as a Whole Time
Director of the Company with effect from 21 January 2013.
Business segments
The primary reporting of the Company has been prepared on the basis of
business segments. The Company has only one business segment, which is
the exploration, development and production of oil and gas and operates
in a single business segment based on the nature of the products, the
risks and returns, the organisation structure and the internal
financial reporting systems. Accordingly, the figures appearing in
these financial statements relate to the Company''s single business
segment.
Geographical segments
The Company''s secondary segments are the geographic distribution of
activities. Revenue and receivables are specified by location of
customers while the other geographic information is specified by
location of the assets. The figures appearing in these financial
statements relate to the Company''s single geographical segment, being
operations in the Indian sub-continent.
7. LOANS AND ADVANCES IN THE NATURE OF LOANS GIVEN TO SUBSIDIARIES AND
ASSOCIATES AND FIRMS/ COMPANIES IN WHICH DIRECTORS ARE INTERESTED
Details of amounts recoverable from subsidiary companies in which
directors are interested are the same as disclosed under note no 31 .
The balance outstanding as at the year end is also the maximum amount
outstanding during the year in all cases except for in previous year in
the case of Cairn Energy Hydrocarbons Limited where the maximum amount
outstanding was Rs. 314 lacs. No loans have been given to the
subsidiaries, associates, firms and companies, in which directors are
interested.
8 PREVIOUS YEAR FIGURES
The current year financial information include the state of affairs and
operations of the Indian undertakings of the transferor companies, as
described in note 26 above. Hence, the current year''s figures are not
comparable with the previous year''s figures. The Company has
reclassified and regrouped the previous year figures to confirm to this
year''s classification.
Mar 31, 2012
1. NATURE OF OPERATIONS
Cairn India Limited ('the Company') was incorporated in India on
August 21, 2006. The equity shares of the Company are listed in India
on the Bombay stock exchange and the National stock exchange.
The Company is primarily engaged in the business of surveying,
prospecting, drilling, exploring, acquiring, developing, producing,
maintaining, refining, storing, trading, supplying, transporting,
marketing, distributing, importing, exporting and generally dealing in
minerals, oils, petroleum, gas and related by-products and other
activities incidental to the above. As part of its business activities,
the Company also holds interests in its subsidiary companies which have
been granted rights to explore and develop oil exploration blocks in
the Indian sub-continent.
The Company is participant in various Oil and Gas blocks/fields, which
are in the nature of jointly controlled assets, granted by the
Government of India through Production Sharing Contracts ('PSC')
entered into between the Company and Government of India and other
venture partners. The Company has interest in the following Oil & Gas
blocks / fields, which are presently under exploration phase-
2. BASIS OF PREPARATION
The financial statements have been prepared to comply in all material
respects with the accounting principles generally accepted in India,
including mandatory Accounting Standards notified under the Companies
(Accounting Standard) Rules, 2006 (as amended) under the historical
cost convention and on an accrual basis. The accounting policies, in
all material respects, have been consistently applied by the Company
and are consistent with those used in the previous year except for
changes in the presentation and disclosures of the financial statements
as described in note no. 41 below.
(a) Terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of INR
10 per share. Each holder of equity shares is entitled to one vote per
share. The dividend, if any, proposed by the Board of Directors will be
subject to the approval of the shareholders in the ensuing Annual
General Meeting.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive assets of the Company remaining
after settlement of all liabilities. The distribution will be in
proportion to the number of equity shares held by the shareholders.
a. Series A debentures are redeemable at par after 21 months from date
of allotment viz. 12 October 2010. Series B debentures are redeemable
at par after 24 months from date of allotment viz. 12 October 2010.
Series C debentures were redeemable at par after 27 months from date of
allotment viz. 12 October 2010 on which a coupon rate of 8.50 % was
applicable for the first 12 months and thereafter a market determined
floating rate subject to a minimum of 8.50 %. The Company during the
current year bought back the debentures issued under Series C, after
their offer of buy back was accepted by the debenture holders.
b. The debenture holders have a negative lien on the assets of the
Company. The Company had the option to prepay the debentures issued
under series A and B at the end of 12 months from the date of issue.
a. The Company has made equity investments in CIG Mauritius Holding
Private Limited fCMHPL') mainly for funding the expenditure pertaining
to block SL 2007-0-001 held by Cairn Lanka Private Limited (a wholly
owned subsidiary of CMHPL). As the block is presently under exploration
phase, no diminution in value of the said investments exists at the
balance sheet date.
b. Cairn India Holdings Limited, U.K. has redeemed its preference
shares during the year at par.
The Company has a defined benefit gratuity plan for its employees.
Under the gratuity plan, every employee who has completed atleast five
years of service gets a gratuity on departure @ 15 days of last drawn
salary for each completed year of service. The gratuity plan of the
Company is an unfunded scheme.
The following tables summarize the components of net benefit expense
recognised in the statement of profit and loss and the amounts
recognised in the balance sheet for the gratuity plans.
CISMP plan
(A) 6,714,233 options are to be vested in the following manner-
- 1/3rd of the options will vest on the day following the date on which
the equity shares have been admitted to listing on the Stock Exchanges
('admission date'). Listing date was 9 Jan 2007.
- 1/3rd of the options will vest 18 months after the admission date.
- 1/3rd of the options will vest on achieving 30 days' consecutive
production of over 150,000 bopd from the Rajasthan Block.
(B) 1,584,480 options are to be vested in the following manner-
- 1/2 of the options will vest on the day following the date on which
the equity shares have been admitted to listing on the Stock Exchanges.
- 1/4th of the options will vest on the date on which all major
equipment for the start-up of the Mangala field is delivered to site.
- 1/4th of the options will vest on achieving 100,000 bopd from the
Mangala Field.
CIPOP plan (including phantom options)
Options will vest (i.e., become exercisable) at the end of a
"performance period" which has been set by the remuneration
committee at the time of grant (although such period will not be less
than three years). However, the percentage of an option which vests on
this date will be determined by the extent to which pre-determined
performance conditions have been satisfied. Phantom options are
exercisable proportionate to the period of service rendered by the
employee subject to completion of one year.
CIESOP plan
There are no specific vesting conditions under Cl ESOP plan other than
completion of the minimum service period.
Subsequent to change in control of the Company as stated in note no 37,
the remuneration committee approved immediate vesting of all the
outstanding options under CISMP plan and prorata vesting upto 8
December 2011 of outstanding options under CIPOP plan as per the
provisions of the scheme. This does not have any material impact on
these financial statements.
Volatility is the measure of the amount by which the price has
fluctuated or is expected to fluctuate during the period. The measure
of volatility used in Black-Scholes option-pricing model is the
annualized standard deviation of the continuously compounded rates of
return on the stock over a period of time. Time to maturity /expected
life of options is the period for which the Cairn India Group expects
the options to be live. Time to maturity has been calculated as an
average of the minimum and maximum life of the options.
Operating Lease:
The Joint Ventures, in which the Company has participating interest,
have entered into operating lease for equipments and buildings. All
such leases are cancellable in nature. There are neither escalation
clauses nor any restrictions in the lease agreements. There are no
subleases.
Capital commitments (net of advances)
Company's share of Joint Ventures' Exploration activities - INR 105,912
thousand (31 March 2011: - I NR 67,462 thousand).
Other commitments
Company's share of Joint Ventures' minimum exploration commitments as
per the production sharing contracts - INR 132,066 thousand (31 March
2011: - INR 5,945,379 thousand).
The shareholders of the Company have approved a Scheme of Arrangement
between the Company and some of its wholly owned subsidiaries, to be
effective from 1 January 2010. The Scheme of Arrangement has been
approved by the Hon'ble High Court of Madras and the Hon'ble High Court
of Bombay. However, it is pending for approval from other regulatory
authorities. Pending receipt of such approvals, no accounting impact of
the scheme has been given in these financial statements. After the
implementation of the scheme, the Company will directly own the Indian
businesses, which are currently owned by some of its wholly owned
subsidiaries and as contemplated in the scheme, any goodwill arising in
the Company pursuant to the scheme, shall be adjusted against the
securities premium account.
Business segments
The primary reporting of the Company has been prepared on the basis of
business segments. The Company has only one business segment, which is
the exploration, development and production of oil and gas and operates
in a single business segment based on the nature of the products, the
risks and returns, the organisation structure and the internal
financial reporting systems. Accordingly, the figures appearing in
these financial statements relate to the Company's single business
segment.
Geographical segments
Secondary segmental reporting is prepared on the basis of the
geographical location of customers. The operating interests of the
Company are confined to India in terms of oil and gas blocks and
customers. Accordingly, the figures appearing in these financial
statements relate to the Company's single geographical segment, being
operations in India.
The sale of shares of the Company by Cairn UK Holdings Limited and its
holding company, Cairn Energy Pic. to Vedanta Resources Pic. and its
subsidiaries (collectively the 'Vedanta group') was completed on 8
December 2011 and resulted in change of control in the management of
the Company from that date.
3. The Board of Directors, subject to the approval of the
shareholders, have reappointed the Managing Director of the Company for
a period of five years w.e.f. 22 August 2011 .
In accordance with the provisions of Accounting Standard 22
'Accounting for taxes on income', the Company would have had deferred
tax assets of INR 1,001,000 thousand (31 March 2011: INR 918,000
thousand) in respect of accumulated tax losses, INR 528,000 thousand
(31 March 2011: Nil) in respect of accumulated long term capital losses
and INR 669,000 thousand (31 March 2011 : INR 586,000 thousand) in
respect of differences in block of fixed assets/exploration assets as
per tax books and financial books. However, as the management is not
virtually certain of subsequent realization of the asset, the same has
not been recognized in these financial statements.
Details of amounts recoverable from subsidiary companies in which
directors are interested are the same as disclosed under note no 27.
The balance outstanding as at the year end is also the maximum amount
outstanding during the year in all cases except for in the case of
Cairn Energy Hydrocarbons Limited where the maximum amount outstanding
during the year was INR 31,432 thousand (31 Mar 2011: INR 31,432
thousand). No loans have been given to the subsidiaries, associates,
firms and companies, in which directors are interested.
During the year ended 31 March 2012, the revised Schedule VI notified
under the Companies Act 1956, became applicable to the Company, for
preparation and presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosures made in the
financial statements. The Company has also reclassified the previous
year figures in accordance with the requirements applicable in the
current year.
Mar 31, 2011
1. NATURE OF OPERATIONS
Cairn India Limited ('the Company') was incorporated in India on August
21, 2006 and is a subsidiary of Cairn UK Holdings Limited, which in
turn is a wholly owned subsidiary of Cairn Energy Plc., UK which is
listed on London Stock Exchange.
The Company is primarily engaged in the business of surveying,
prospecting, drilling, exploring, acquiring, developing, producing,
maintaining, refining, storing, trading, supplying, transporting,
marketing, distributing, importing, exporting and generally dealing in
minerals, oils, petroleum, gas and related by-products and other
activities incidental to the above. As part of its business activities,
the Company also holds interests in its subsidiary companies which have
been granted rights to explore and develop oil exploration blocks in
the Indian sub-continent.
2. SEGMENTAL REPORTING Business segments
The primary reporting of the Company has been prepared on the basis of
business segments. The Company has only one business segment, which is
the exploration, development and production of oil and gas and operates
in a single business segment based on the nature of the products, the
risks and returns, the organisation structure and the internal fi
nancial reporting systems. Accordingly, the fi gures appearing in these
financial statements relate to the Company's single business segment.
Geographical segments
Secondary segmental reporting is prepared on the basis of the
geographical location of customers. The operating interests of the
Company are confined to India in terms of oil and gas blocks and
customers. Accordingly, the fi gures appearing in these financial
statements relate to the Company's single geographical segment, being
operations in India.
3. RELATED PARTY TRANSACTIONS
(A) Names of related parties: Companies having control
- Cairn UK Holdings Limited, UK Holding Company
- Cairn Energy Plc., UK Ultimate holding company
Subsidiary companies
1 Cairn Energy Australia Pty Limited
2 Cairn Energy India Pty Limited
3 CEH Australia Pty Limited
4 Cairn Energy Asia Pty Limited
5 Sydney Oil Company Pty Limited
6 Cairn Energy Investments Australia Pty Limited
7 Wessington Investments Pty Limited
8 CEH Australia Limited
9 Cairn India Holdings Limited
10 CIG Mauritius Holding Private Limited
11 CIG Mauritius Private Limited
12 Cairn Energy Holdings Limited
13 Cairn Energy Discovery Limited
14 Cairn Exploration (No. 2) Limited
15 Cairn Exploration (No. 6) Limited
16 Cairn Energy Hydrocarbons Limited
17 Cairn Petroleum India Limited
18 Cairn Energy Gujarat Block 1 Limited
19 Cairn Exploration (No. 4) Limited
20 Cairn Exploration (No. 7) Limited
21 Cairn Energy Development Pte Limited (Liquidated during the year)
22 Cairn Lanka (Pvt) Limited
23 Cairn Energy Group Holdings BV
24 Cairn Energy India West BV
25 Cairn Energy India West Holding BV
26 Cairn Energy Gujarat Holding BV
27 Cairn Energy India Holdings BV
28 Cairn Energy Netherlands Holdings BV
29 Cairn Energy Gujarat BV
30 Cairn Energy Cambay BV
31 Cairn Energy Cambay Holding BV
Key Management Personnel
- Rahul Dhir, Managing Director and Chief Executive Officer
- Winston Frederick Bott Jr., Executive Director and Chief Operating
Officer
- Indrajit Banerjee, Executive Director and Chief Financial Officer
4. Debenture redemption reserve aggregating to INR 831,913 thousand
(previous year Nil) has not been created due to inadequacy of profits.
CIPOP plan
Options will vest (i.e. become exercisable) at the end of a
"performance period" which have been set by the remuneration committee
at the time of grant (although such period will not be less than three
years). However, the percentage of an option which vests on this date
will be determined by the extent to which pre-determined performance
conditions have been satisfied.
CIESOP plan
There are no specific vesting conditions under CIESOP plan other than
completion of the minimum service period.
Volatility is the measure of the amount by which the price has fl
uctuated or is expected to fl uctuate during the period. The measure of
volatility used in Black-Scholes option-pricing model is the annualized
standard deviation of the continuously compounded rates of return on
the stock over a period of time. Time to maturity /expected life of
options is the period for which the Company expects the options to be
live. The time to maturity has been calculated as an average of the
minimum and maximum life of the options.
Impact of Fair Valuation Method on net profits and EPS
In March 2005, the Institute of Chartered Accountants of India has
issued a guidance note on "Accounting for Employees Share Based
Payments" applicable to employee based share plan the grant date in
respect of which falls on or after April 1, 2005. The said guidance
note requires the Proforma disclosures of the impact of the fair value
method of accounting of employee stock compensation accounting in the
financial statements.
5. The Company has a gratuity plan, wherein every employee who has
completed five years or more of service gets a gratuity on departure
at 15 days salary (last drawn salary) for each completed year of
service. The gratuity plan of the Company is an unfunded scheme.
The following tables summarize the components of net benefit expense
recognised in the profit and loss account and the amounts recognised
in the balance sheet for the gratuity plans.
6. In accordance with the provisions of Accounting Standard 22
'Accounting for taxes on income', the Company would have had deferred
tax assets of INR 811,000 thousand (previous year INR 361,000 thousand)
and INR 393,000 thousand (previous year INR 224,720 thousand) in
respect of accumulated tax losses and differences in block of fi xed
assets/exploration assets as per tax books and financial books
respectively. However, as the management is not virtually certain of
subsequent realization of the asset, the same has not been recognized
in these financial statements.
7. The shareholders of the Company have approved a Scheme of
Arrangement between the Company and some of its wholly owned
subsidiaries, to be effective from 1st January 2010. The Scheme of
Arrangement has been approved by the Hon'ble High Court of Madras and
the Hon'ble High Court of Bombay. However, it is pending for approval
from other regulatory authorities. Pending receipt of such approvals,
no accounting impact of the scheme has been given in these financial
statements. After the implementation of the scheme, the Company will
directly own the Indian businesses, which are currently owned by some
of its wholly owned subsidiaries and as contemplated in the scheme, any
goodwill arising in the Company pursuant to the scheme, shall be
adjusted against the securities premium account.
8. The reversal in fringe benefit tax (FBT) in the previous year is
on account of the abolishment of FBT with effect from 1st April 2009,
as the Company was accounting for FBT liability on stock options on a
pro-rata basis over the vesting period.
9. Details of amounts recoverable from subsidiary companies in which
directors are interested are the same as disclosed in note 4 (c) above.
The balance outstanding as at the year end is also the maximum amount
outstanding during the year. No loans have been given to the
subsidiaries, associates, fi rms and companies, in which directors are
interested.
10. The Company has made equity investments in CIG Mauritius Holding
Private Limited ('CMHPL') mainly for funding the expenditure pertaining
to block SL 2007-0-001 held by Cairn Lanka Private Limited (a wholly
owned subsidiary of CMHPL). As the block is presently under exploration
phase, no diminution in value of the said investments exists at the
balance sheet date.
11. The holding company of Cairn India Limited, Cairn UK Holdings
Limited, along with its holding company, Cairn Energy Plc. (Company's
ultimate holding company) has agreed to sell a substantial portion of
its investment in the Company to Twin Star Holdings Ltd. and Vedanta
Resources Plc. This transaction has been approved by shareholders of
both Cairn Energy Plc. and Vedanta Resources Plc. However, pending
receipt of certain regulatory approvals, Cairn Energy Plc. continues to
be treated as the promoter of the Company.
12. Previous year's figures have been regrouped where necessary to
confirm to current year's classification.
Mar 31, 2010
1. NATURE OF OPERATIONS
Cairn India Limited (the Company) was incorporated in India on August
21, 2006 and is a subsidiary of Cairn UK Holdings Limited, which in
turn is a wholly owned subsidiary of Cairn Energy Plc., UK which is
listed on London Stock Exchange.
The Company is primarily engaged in the business of surveying,
prospecting, drilling, exploring, acquiring, developing, producing,
maintaining, refi ning, storing, trading, supplying, transporting,
marketing, distributing, importing, exporting and generally dealing in
minerals, oils, petroleum, gas and related by-products and other
activities incidental to the above. As part of its business activities,
the Company also holds interests in its subsidiary companies which have
been granted rights to explore and develop oil exploration blocks in
the Indian sub-continent.
The Company is participant in various Oil and Gas blocks/fi elds (which
are in the nature of jointly controlled assets), granted by the
Government of India through Production Sharing Contracts (PSC)
entered into between the Company and Government of India and other
venture partners. The Company has interest in the following Oil & Gas
blocks / fields, which are presently under exploration phase:
2. SEGMENTAL REPORTING Business segments
The primary reporting of the Company has been prepared on the basis of
business segments. The Company has only one business segment, which is
the exploration, development and production of oil and gas and operates
in a single business segment based on the nature of the products, the
risks and returns, the organisation structure and the internal fi
nancial reporting systems. Accordingly, the fi gures appearing in these
fi nancial statements relate to the Companys single business segment.
Geographical segments
Secondary segmental reporting is prepared on the basis of the
geographical location of customers. The operating interests of the
Company are confi ned to India in terms of oil and gas blocks and
customers. Accordingly, the fi gures appearing in these fi nancial
statements relate to the Companys single geographical segment, being
operations in India.
3. RELATED PARTY TRANSACTIONS (A) Names of related parties: Companies
having control
Cairn UK Holdings Limited, UK
Holding Company Cairn Energy Plc., UK
Ultimate holding company
Subsidiary companies
1 Cairn Energy Australia Pty Limited
2 Cairn Energy India Pty Limited
3 CEH Australia Pty Limited
4 Cairn Energy Asia Pty Limited
5 Sydney Oil Company Pty Limited
6 Cairn Energy Investments Australia Pty Limited
7 Wessington Investments Pty Limited
8 CEH Australia Limited
9 Cairn India Holdings Limited
10 CIG Mauritius Holding Private Limited
11 CIG Mauritius Private Limited
12 Cairn Energy Holdings Limited
13 Cairn Energy Discovery Limited
14 Cairn Exploration (No. 2) Limited
15 Cairn Exploration (No. 6) Limited
16 Cairn Energy Hydrocarbons Limited
17 Cairn Petroleum India Limited
18 Cairn Energy Gujarat Block 1 Limited
19 Cairn Exploration (No. 4) Limited
20 Cairn Exploration (No. 7) Limited
21 Cairn Energy Development Pte Limited
22 Cairn Lanka (Pvt) Limited
23 Cairn Energy Group Holdings BV
24 Cairn Energy India West BV
25 Cairn Energy India West Holding BV
26 Cairn Energy Gujarat Holding BV
27 Cairn Energy India Holdings BV
28 Cairn Energy Netherlands Holdings BV
29 Cairn Energy Gujarat BV
30 Cairn Energy Cambay BV
31 Cairn Energy Cambay Holding BV
Key Management Personnel
- Rahul Dhir, Managing Director and Chief Executive Offi cer
- Winston Frederick Bott Jr., Executive Director and Chief Operating
Offi cer (appointed on 29th April, 2008)
- Indrajit Banerjee, Executive Director and Chief Financial Offi cer
- Lawrence Smyth, Executive Director and Chief Operating Offi cer
(resigned on 21st January, 2008)
The Vesting conditions of the above plans are as under:
CISMP plan
(A) 6,714,233 options are to be vested in the following manner:
- 1/3rd of the options will vest on the day following the date on which
the equity shares have been admitted to listing on the Stock Exchanges
(admission date). Listing date was 9th Jan 2007.
- 1/3rd of the options will vest 18 months after the admission date.
- 1/3rd of the options will vest on achieving 30 days consecutive
production of over 150,000 bopd from the Rajasthan Block.
(B) 1,584,480 options are to be vested in the following manner:
- 1/2 of the options will vest on the day following the date on which
the equity shares have been admitted to listing on the Stock Exchanges.
- 1/4th of the options will vest on the date on which all major
equipment for the start-up of the Mangala fi eld is delivered to site.
- 1/4th of the options will vest on achieving 100,000 boepd from the
Mangala Field.
CIPOP plan
Options will vest (i.e. become exercisable) at the end of a
"performance period" which will be set by the remuneration committee at
the time of grant (although such period will not be less than three
years). However, the percentage of an option which vests on this date
will be determined by the extent to which pre-determined performance
conditions have been satisfi ed.
CIESOP plan
There are no specifi c vesting conditions under CIESOP plan.
4. The Company has a gratuity plan, wherein every employee who has
completed fi ve years or more of service gets a gratuity on departure
at 15 days salary (last drawn salary) for each completed year of
service. The gratuity plan of the Company is an unfunded scheme.
The following tables summarize the components of net benefi t expense
recognised in the profi t and loss account and the amounts recognised
in the balance sheet for the gratuity plans.
5. In accordance with the provisions of Accounting Standard 22
Accounting for taxes on income, the Company would have had deferred
tax assets of approximately INR 361,000 thousand (previous period INR
511,000 thousand) primarily comprising of accumulated tax losses and
unamortized issue expenses. However, as the management is not virtually
certain of subsequent realization of the asset, no deferred tax asset
has been computed or recognized in these fi nancial statements.
6. The Company and its wholly owned subsidiary Cairn Energy
Hydrocarbons Limited ("CEHyL") have entered into a loan facility for
INR 40,000 million (available to the Company) and USD 750 million
(available to CEHyL) with a consortium of banks. The purpose of the
loan facility is to fi nance the RJ-ON-90/1 block expenditure and also
the repayment of the earlier loan facility of USD 850 million. The main
security for the INR loan facility is the hypothecation of the 35%
participating interest in RJ-ON-90/1 block held by Cairn Energy India
Pty Limited, a wholly owned subsidiary of the Company whereas for the
USD loan facility, the entire shares of CEHyL has been provided as the
main security.
7. The shareholders of the Company have approved a Scheme of
Arrangement between the Company and some of its wholly owned
subsidiaries, to be effective from 1st January 2010. The Scheme of
Arrangement has been approved by the Honble High Court of Madras.
However, it is pending for approval from the Honble High Court of
Bombay and other regulatory authorities. Pending receipt of such
approvals, no accounting impact of the scheme has been given in these
fi nancial statements. After the implementation of the scheme, the
Company will directly own the Indian businesses, which are currently
owned by some of its wholly owned subsidiaries and as contemplated in
the scheme, any goodwill arising in the Company pursuant to the scheme,
shall be adjusted against the securities premium account.
8. The reversal in fringe benefi t tax (FBT) is on account of the
abolishment of FBT with effect from 1st April 2009, as the Company was
accounting for FBT liability on stock options on a pro-rata basis over
the vesting period.
9. CURRENT INVESTMENTS - UNQUOTED AND NON TRADE (REFER SCHEDULE-7 OF
THE FINANCIAL STATEMENTS):
The following mutual fund units were purchased and sold during the
current year:-
1 335,214,545 units of Birla Sunlife mutual fund under Birla Cash Plus
- Institutional Premium - Daily Dividend Reinvestment
2 19,920,035 units of Canara Robeco mutual fund under Canara Robeco
Liquid Collection - Daily Dividend Reinvestment
3 1,073,385 units of DSP Blackrock mutual fund under DSP Blackrock
Liquidity Fund - Daily Dividend Reinvestment
4 332,343,248 units of HDFC mutual fund under HDFC Liquid Fund -
Premium Plan - Daily Dividend Reinvestment
5 49,198,541 units of ICICI Prudential mutual fund under ICICI
Prudential Flexible Income Plan Premium - Daily Dividend Reinvestment
6 368,973,177 units of ICICI Prudential mutual fund under ICICI
Prudential Institutional Liquid Plan - Super Inst - Daily Dividend
Reinvestment
7 115,181,352 units of IDFC mutual fund under IDFC Cash Fund Super
Institutional - Plan C - Daily Dividend Reinvestment
8 8,927,386 units of Kotak Mahindra mutual fund under Kotak Floater
Long Term Fund - Daily Dividend Reinvestment
9 173,076,949 units of Kotak Mahindra mutual fund under Kotak Liquid
Fund - Institutional Premium - Daily Dividend Reinvestment
10 148,837,398 units of Reliance mutual fund under Reliance Liquid Fund
- Treasury Plan - Institutional Option - Daily Dividend Reinvestment
11 76,780,784 units of SBI mutual fund under SBI Magnum Insta Cash Fund
- Daily Dividend Reinvestment
12 39,908,068 units of Tata mutual fund under Tata Floater Fund - Daily
Dividend Reinvestment
13 2,089,903 units of Tata mutual fund under Tata Liquid Fund - SHIP -
Daily Dividend Reinvestment
14 4,152,801 units of UTI mutual fund under UTI Liquid Cash Plan - Inst
- Daily Dividend Reinvestment
15 504,918 units of UTI mutual fund under UTI Treasury Advantage Fund -
Daily Dividend Reinvestment
The following mutual fund units were purchased and sold during the
previous period :-
1 288,767,315 units of Birla Sunlife mutual fund under Birla Sunlife
Cash Plus - Institutional Premium - Daily Dividend Reinvestment
2 396,375,092 units of Birla Sunlife mutual fund under Birla Sunlife
Cash Plus - Institutional Premium - Growth
3 22,951,572 units of Birla Sunlife mutual fund under Birla Sunlife
Interval Income - Institutional - Quarterly - Series 2 - Growth
4 76,578,715 units of Birla Sunlife mutual fund under Birla Sunlife
Liquid Plus - Institutional - Daily Dividend Reinvestment
5 185,222,322 units of Birla Sunlife mutual fund under Birla Sunlife
Liquid Plus - Institutional - Growth
6 15,000,000 units of Canara Robeco mutual fund under Canara Robeco FMP
- Series 3 - 90 Days - IP - Growth
7 48,919,527 units of Canara Robeco mutual fund under Canara Robeco
Liquid Plus Super Institutional - Daily Dividend Reinvestment
8 31,366,504 units of Fidelity mutual fund under Fidelity Cash - SIP -
Growth
9 62,263,786 units of Fidelity mutual fund under Fidelity Liquid Plus -
SIP - Daily Dividend Reinvestment
10 57,042,071 units of Fidelity mutual fund under Fidelity Liquid Plus
- SIP - Growth
11 128,735,017 units of HDFC mutual fund under HDFC Cash Mgmt - Savings
Plan - Daily Dividend Reinvestment
12 193,231,349 units of HDFC mutual fund under HDFC Cash Mgmt - Savings
Plus Plan - Wholesale - Daily Dividend Reinvestment
13 174,864,026 units of HDFC mutual fund under HDFC Cash Mgmt - Savings
Plus Plan - Wholesale - Growth
14 166,891,418 units of HDFC mutual fund under HDFC Floating Rate
Income - Short Term Plan - Wholesale - Daily Dividend Reinvestment
15 193,913,572 units of HDFC mutual fund under HDFC Floating Rate
Income - Short Term Plan - Wholesale - Growth
16 24,000,000 units of HDFC mutual fund under HDFC FMP 90D (VIII)(3) -
Wholesale - Growth
17 62,847,681 units of HDFC mutual fund under HDFC Liquid - Premium
Plan - Daily Dividend Reinvestment
18 303,956,967 units of HDFC mutual fund under HDFC Liquid - Premium
Plan - Growth
19 41,003,276 units of HDFC mutual fund under HDFC Liquid - Premium
Plus Plan - Weekly Dividend Reinvestment
20 23,586,686 units of HDFC mutual fund under HDFC Quarterly Interval
-Plan B Wholesale Growth - Growth
21 106,509,667 units of HSBC mutual fund under HSBC Cash - Inst Plus -
Daily Dividend Reinvestment
22 155,825,133 units of HSBC mutual fund under HSBC Cash - Inst Plus -
Growth
23 146,239,354 units of HSBC mutual fund under HSBC Liquid Plus - IP -
Daily Dividend Reinvestment
24 229,632,812 units of HSBC mutual fund under HSBC Liquid Plus - IP -
Growth
25 150,719,932 units of ICICI Prudential mutual fund under ICICI
Prudential Flexible Income Plan - Daily Dividend Reinvestment
26 208,534,658 units of ICICI Prudential mutual fund under ICICI
Prudential Flexible Income Plan - Growth
27 32,963,479 units of ICICI Prudential mutual fund under ICICI
Prudential FRF - Plan D - Growth
28 475,076,846 units of ICICI Prudential mutual fund under ICICI
Prudential Inst Liquid Plan - Super Iinst - Daily Dividend Reinvestment
29 446,678,300 units of ICICI Prudential mutual fund under ICICI
Prudential Inst Liquid Plan - Super Iinst - Growth
30 24,485,319 units of ICICI prudential mutual fund under ICICI
Prudential Interval II Quarterly Interval Plan B - Retail Cumulative -
Growth
31 49,165,296 units of IDFC mutual fund under IDFC Cash - Super
Institutional Plan C - Daily Dividend Reinvestment
32 81,765,530 units of IDFC mutual fund under IDFC Floating Rate
-LT-Inst Plan B - Growth
33 24,000,000 units of IDFC mutual fund under IDFC FMP Qtr Series 31 -
Growth
34 64,428,611 units of IDFC mutual fund under IDFC Liquid Plus -
Investment Plan - Inst Plan B - Daily Dividend Reinvestment
35 15,341,934 units of IDFC mutual fund under IDFC Quarterly Interval -
Plan A - Inst - Daily Dividend Reinvestment
36 15,984,797 units of IDFC mutual fund under IDFC Quarterly Interval -
Plan A - Inst - Growth
37 18,000,000 units of ING mutual fund under ING Interval -
Quarterly-C-Institutional - Growth
38 115,482,014 units of ING mutual fund under ING Liquid Super
Institutional - Growth
39 128,337,221 units of ING mutual fund under ING Liquid Plus -
Institutional - Growth
40 23,518,230 units of ING mutual fund under ING Vysya Liquid Plus - IP
- Growth
41 66,088,565 units of JP Morgan mutual fund under JP Morgan India
Liquid Plus - Growth
42 20,913,377 units of Kotak Mahindra mutual fund under Kotak Liquid -
Institutional Premium - Growth
43 3,165,849 units of Principal mutual fund under Principal Cash Mgmt
LO- Institutional Plan - Growth
44 50,350,378 units of Principal mutual fund under Principal Cash Mgmt
LO- Institutional Premium Plan - Daily Dividend Reinvestment
45 150,114,425 units of Principal mutual fund under Principal Floating
Rate - FMP - Institutional - Daily Dividend Reinvestment
46 197,490,161 units of Principal mutual fund under Principal Floating
Rate - FMP - Institutional - Growth
47 20,583,957 units of Reliance mutual fund under Reliance Liquid -
Treasury Plan-Institutional Option - Daily Dividend Reinvestment
48 82,564,435 units of Reliance mutual fund under Reliance Liquid -
Treasury Plan-Institutional Option - Growth
49 2,052,210 units of Reliance mutual fund under Reliance Liquid Plus -
Institutional - Daily Dividend Reinvestment
50 2,380,814 units of Reliance mutual fund under Reliance Liquid Plus -
Institutional - Growth
51 23,091,765 units of Reliance mutual fund under Reliance Liquidity -
Daily Dividend Reinvestment
52 36,180,905 units of Reliance mutual fund under Reliance Liquidity -
Growth
53 158,916,208 units of Reliance mutual fund under Reliance Medium Term
- Daily Dividend Reinvestment
54 21,680,417 units of Reliance mutual fund under Reliance Monthly
Interval - Series I Institutional - Growth
55 23,407,582 units of Reliance mutual fund under Reliance Quarterly
Interval - Series II Institutional - Growth
56 29,168,603 units of SBI mutual fund under SBI Magnum Insta Cash -
Daily Dividend Reinvestment
57 20,444,600 units of SBI mutual fund under SBI SDFS - 90 Days -
Growth
58 98,778,982 units of SBI mutual fund under SBI SHF - Liquid Plus - IP
- Daily Dividend Reinvestment
59 233,026,709 units of SBI mutual fund under SBI SHF - Liquid Plus -
IP - Growth
60 859,255 units of Standard Chartered mutual fund under Standard
Chartered Liquidity Manager Plus - Growth
61 259,059,638 units of Tata mutual fund under Tata Floater - Daily
Dividend Reinvestment
62 206,755,713 units of Tata mutual fund under Tata Floater - Growth
63 38,774,118 units of Tata mutual fund under Tata Floating Rate - STP
- Institutional Plan - Growth
64 2,457,011 units of Tata mutual fund under Tata Liquid - SHIP - Daily
Dividend Reinvestment
65 329,827 units of Tata mutual fund under Tata Liquid - SHIP - Growth
13. Balances written back are on account of reconciliation of certain
working capital balances pertaining to joint ventures, in which the
Company has participating interest.
14. The Company has made equity investments in CIG Mauritius Holding
Private Limited (CMHPL) mainly for funding the expenditure pertaining
to block SL 2007-0-001 held by Cairn Lanka (Private) Limited (a wholly
owned subsidiary of CMHPL). The said investment is carried at cost, as
the block is presently under exploration phase.
15. During the previous period, the Company had decided to
retrospectively account for stock options using the Intrinsic Value
Method as against the Fair Value Method (Black Scholes) followed till
the fi nancial year ended 31st December 2007. Accordingly, the excess
stock option provision up to 31st December 2007 was reversed during the
previous period, resulting in an exceptional gain of INR 155,723
thousand.
16. Details of amounts recoverable from subsidiary companies in which
directors are interested are same as disclosed in note 4 (c) above. The
balance outstanding as at the year / period end is also the maximum
amount outstanding during the year/period. No loans have been given to
the subsidiaries, associates, fi rms and companies, in which directors
are interested.
17. CHANGE IN FINANCIAL YEAR AND PREVIOUS PERIOD COMPARATIVES
The previous fi nancial period consisted of fi fteen months from 1st
January 2008 to 31st March 2009, while the current fi nancial year is
for a twelve months period. Accordingly, previous period fi gures in
the profi t and loss account and cash fl ow statement are not
comparable with current fi nancial year. Previous periods fi gures
have been regrouped where necessary to confi rm to current years
classifi cation.