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Notes to Accounts of Hindustan Petroleum Corporation Ltd.

Mar 31, 2023

1. Includes assets of gross block H 0.007 Crore (31.03.2022: H 0.007 Crore) of erstwhile Kosan Gas Company that have not been handed over to the Corporation. Though Kosan Gas Company was to give up their claim, in view of the tenancy right sought by third party, the matter is under litigation.

2. Includes Gross Block of H 1,092.01 Crore (31.03.2022: H 1,057.73 Crore) towards Land, Building, Plant & Equipment, Furniture & Fixtures, Transport equipments, Office/lab Equipments, Roads & Culverts, Pipelines, Railway Sidings, etc. representing Corporation''s share of Assets, jointly owned with other Companies.

3. Includes Gross Block of H 10.93 Crore (31.03.2022: H 11.03 Crore) towards Roads & Culverts, Transformers & Transmission lines, Railway Sidings & Rolling Stock for which though ownership does not vest with the Company, operational control over such assets is exercised. These assets are amortized as per useful life specified in Schedule II of Companies Act, 2013.

4. a) Includes following assets used for distribution of PDS Kerosene under Jana Kalyan Pariyojana against which financial

assistance had been provided by Oil Industry Development Board:

5. Assets held for sale consists of items such as plant and equipment, office equipment, transport equipment, buildings, furnitures & fixtures and roads & culverts which have been identified for disposal due to replacement/ obsolescence of assets which happens in the normal course of business. These assets are expected to be disposed off within the next twelve months. On account of classification of these assets as ''Asset held for sale'', a loss of H 54.80 Crore (2021-22: H 92.20 Crore) has been recognised in the statement of profit and loss.

6. Includes Right of Use Assets having Gross Block H 103.75 Crore (31.03.2022: H 92.43 Crore) for land acquired on lease-cum-sale basis from Karnataka Industrial Area Development Board (KIADB), that has not been amortized over the period of lease in view of freehold title that would vest upon fulfilment of certain terms and conditions, as per allotment letter.

7. Includes adjustment to Cost of Assets pursuant to exchange differences arising on long term foreign currency monetary items, which, in accordance with Para 7AA of Ind AS 21 read with Para D13AA of Ind AS 101, are capitalized and depreciated over the balance useful life of the assets.

8. The Corporation has considered pipeline assets laid within the boundary limit of its premises as integral part of Tanks / Other Plant and Machinery and have been depreciating such assets based on the useful life of associated Plant & Equipment, in line with the Schedule II of the Companies Act, 2013.

9. Includes a reduction in depreciation by H 184.17 Crore (2021-22: H Nil Crore) on account of change in accounting estimate regarding the residual value of LPG cylinders and pressure regulators from 15% to 25% of the original cost, implemented during FY 2022-23 based on assessment carried out by the Management. The residual value of LPG cylinders and pressure regulators was earlier revised from 5% to 15% of the original cost during FY 2019-20.

10. Includes depreciation of H 9.05 Crore (2021-22: H Nil Crore) on account of determining the useful life of assets at lower of life as per specific agreements pertaining to Railway Consumer Depots or Schedule II of the Companies Act, 2013.

11. During the year, in respect of LPG consumers who have been inactive for 15 years and the useful life of equipment they are holding is also over, the equipment value (First Cost: H 97.11 Crore, 2021-22: H Nil Crore) along with the LPG consumer deposit (H 127.88 Crore, 2021-22: H Nil Crore) has been de-recognized in the books of account.

12. The process of capitalization in respect of Property, Plant and Equipment including accounting of Capital Work-in-Progress is under continuous review and updation, wherever required, and is being carried out on a regular basis.

13. In the nature of business carried out by the Corporation, there are certain leasehold immovable properties, which are under its continuous possession, control and use over the period, the lease agreement of which have expired. Pending renewal of such leases, these have not been recognised as Right of Use Assets.

14. Title deeds of Immovable Properties not held in name of the Corporation (Other than properties where the Corporation is the lessee and the lease agreements are duly executed in favour of the Corporation).

1. Includes Gross Block of H 75.73 Crore (31.03.2022: H 79.48 Crore) towards Right of Way representing Corporation''s share of Assets, jointly owned with other Companies.

2. The Corporation has entered into service concession arrangements with entities that supply electricity (referred to as "The Regulator") in order to construct, own, operate, and maintain a wind energy-based electric power generating station (referred to as the "Plant"). Pursuant to the agreement, the Corporation will operate and maintain the Plant, and will sell the electricity generated to the Regulator for a period covering the substantial useful life of the Plant, which may be renewed for a further period upon mutual agreement between the parties. During the concession period, the Corporation is responsible for providing any maintenance services required. In turn, the Corporation has the right to charge an agreed rate as set forth in the service concession arrangement. The value of the Plant''s construction has been recognized as an Asset, which is amortized over the useful life of the asset.

6.1. Increase of H 0.90 Crore (2021-22: H 0.90 Crore) in the carrying amount is pursuant to accounting of corporate guarantee commission, which is in accordance with Ind AS 109.

6.2. As per the guidelines issued by Department of Public Enterprises (DPE), Ministry of Finance, in February 2010, the Board of Directors of Maharatna Central Public Sector Enterprises (CPSEs) can invest in joint ventures and wholly owned subsidiaries subject to an overall ceiling of 30% of the net worth of the CPSE. The Corporation has requested Ministry of Petroleum & Natural Gas (MOP&NG) to confirm its understanding that for calculating this ceiling limit, the amount of investments specifically approved by Government of India [viz. investment in HPCL Mittal Energy Limited (HMEL) and HPCL Rajasthan Refinery Limited (HRRL)] are to be excluded. The Corporation has calculated the limit of 30% investment in joint ventures and wholly owned subsidiaries, by excluding these investments. As per financial position as on March 31, 2023, the investments in joint ventures and wholly owned subsidiaries are well within the said 30% limit.

7.1. The Corporation intends to hold these Investments for long term strategic purposes, and accordingly, designated them at fair value through Other Comprehensive Income. No strategic investments were disposed off during the financial year.

7.2. The value of investment in certain start-ups have been fair valued with corresponding recognition of fair value gain of H 18.87 Crore (2021-22: H Nil Crore), considering the information available about deals/funding that have taken place subsequent to our investment in such start-ups. In other cases, considering that the start-ups are in the stage of their development and are mostly in traction and refinement stages, the carrying value of such start-ups is considered as a reasonable approximation of their fair value. Further, during the year, preference shares issued by one of the start-ups, M/s Voltrez Tech Private Limited, have been converted into equity shares.

F. Rights and Restrictions on Equity / preference Shares

The Corporation has only one class of Equity Shares having a face value of H 10/- per share which are issued and subscribed. Each Shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of the winding up, the holders of equity shares will be entitled to receive the remaining assets in proportion to the number of equity shares held by the shareholders and the amount paid up thereon. The Corporation also has 75,000 6% cumulative Redeemable Non-convertible Preference Shares of H 100 /- each as a part of the Authorised Capital, which were issued earlier by the erstwhile ESSO Standard Refining Co. of India Limited (ESRC) . Presently the said Preference Shares stand redeemed.

H. In the period of five years immediately preceding 31st March, 2023

The Board, at its meeting held on November 04, 2020 approved the buyback of fully paid-up equity shares of the face value of H 10/- from the open market through stock exchange mechanism for an aggregate amount not exceeding H 2,500 Crore ("Maximum Buyback Size") and at a price not exceeding H 250 per Equity Share, payable in cash. The shares buy-back program, which commenced on November 17, 2020 had concluded on May 14, 2021. During the buy-back period, a total of 10,52,74,280/- shares, representing 6.91% of paid up Share Capital (prior to commencement of buy-back) having a face value of H 105,27,42,800/- had been bought back and extinguished.

24.1. a. Includes H 37.12 Crore (31.03.2022: H Nil Crore) towards non-current portion of unamortised Capital Grant, out of total Grant of H 37.50 Crore received from GOI, on completion of first milestone against approved financial assistance for viability gap funding (VGF) of H 150 Crore for setting up commercial scale 2G Ethanol refinery at Bhatinda, Punjab under PM-JIVAN Yojna. Of the total unamortised Capital Grant, H 0.38 Crore (31.03.2022: H Nil Crore) towards current portion is included in Note 28.

b. Includes H 124.06 Crore (31.03.2022: H Nil Crore) towards non-current portion of unamortised Capital Grant, out of total Grant of H 127.40 Crore received from GOI (out of approved grant of H 182 Crore) towards FAME India Scheme phase II for installation and commissioning of 1660 EV charging stations across India. Of the total unamortised Capital Grant, H 3.34 Crore (31.03.2022: H Nil Crore) towards current portion is included in Note 28.

c. Includes non-current unamortised portion of H 66.40 Crore (31.03.2022: H Nil Crore) towards the impact of duty deferment under Manufacturing and Other Operations in Warehouse Regulations, 2019 scheme, which is treated as Capital Grant from GOI in accordance with Ind AS-20 "Accounting for Government Grants and Disclosure of Government Assistance". Of the total unamortised Capital Grant, H 0.33 Crore (31.03.2022: H Nil Crore) towards current portion is included in Note 28.

31.1. Net of discount of H 3,260.92 Crore (2021-22: H 2,757.47 Crore).

31.2. Subsidy on PDS Kerosene from State Governments amounting to H 85.01 Crore (2021-22: H 65.58 Crore).

31.3. One-time grant of H 5,617 Crore received from Government of India (GoI) to compensate under-recoveries incurred on sale of domestic LPG during financial year 2021-22 and current period (2021-22: H Nil Crore).

31.4. The MoPNG, vide letter dated 30.04.2020 had conveyed to Oil Marketing Companies (OMCs) that a) In case, the Market Determined Price (MDP) is higher than the Effective Cost to Consumer (ECC), the difference shall be transferred to consumers account via Direct Benefit Transfer of LPG (DBTL) Scheme and b) In case, MDP is less than the ECC, the OMCs will retain the difference in a separate buffer account for future adjustment. However, as on March 31, 2023, the Corporation has a negative buffer of H 989.73 Crore (after adjustment of uncompensated cost of H 2,759.03 Crore and after netting-off one-time grant of H 5,617 Crore) as the retail selling price was less than MDP. In absence of authorisation from GOI, receivable and revenue to the extent of negative buffer has not been recognised. As on March 31,2022, the Corporation had reported a negative buffer of H 2,642.33 Crore.

39.B. Fair value hierarchy

This section explains the judgements and estimates made in determining the fair value of the Financial Assets and Financial Liabilities that are recognised and measured at fair value and amortised cost. To provide an indication about the reliability of the inputs used in determining fair value, Corporation has classified its Financial Assets and Financial Liabilities into the three levels prescribed under the Indian accounting standard. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. An explanation of each level is provided under Significant Accounting Policies.

40. Financial risk management:40.A. Risk management framework

The Corporation has established an Enterprise Risk Management (ERM) framework under the Corporation''s Risk Management Charter and Policy 2007, which is embedded at the forefront of business strategies and focuses on the stronger, deeper and trust-based relationship with the stakeholders. It provides necessary support to the business to steer through the continuously evolving risk terrain through dynamic risk management approach that embraces disruption and enhances resiliency and trust.

The Corporation is regularly reviewing the identified and emerging risks and taking appropriate risk mitigation measures.

The Risk Management Steering Committee (RMSC) receives regular insights on risk exposures faced by the Corporation, thereby enabling it to provide inputs on prompt actions to be taken as well as monitor the actions taken. The Board is also updated regularly on the risk assessment and mitigation procedures.

Technology has been enabled to support the Enterprise Risk Management processes with a focus on optimizing risk exposures and automating risk reporting across the organization.

40.B. Corporation has identified financial risk and categorised them in three parts Viz. (i) Credit Risk, (ii) Liquidity Risk & (iii) Market Risk. Details regarding sources of risk in each such category and how Corporation manages the risk is explained in following notes:40.B.1. Credit risk

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet their contractual obligations. The risk arises principally from the Corporation''s Receivables from Customers and so also from Investment Securities. The risk is managed through credit approval, establishing credit limits and continuous monitoring of the creditworthiness of Customers to whom the Corporation extends credit terms in the normal course of business.

The maximum exposure to credit risk in case of all the financial instruments covered below is restricted to their respective carrying amount.

Note: Refer Note 61 regarding loans given to consumers under Pradhan Mantri Ujjwala Yojna (PMUY).

Trade receivables

The Corporation''s exposure to credit risk is influenced mainly by the individual characteristics of each customer.

The Corporation assesses impairment of Trade Receivable/Other Receivables both individually &/or grouping large numbers of Customers, homogenously and recognizes a loss allowance towards doubtful debts by estimating its expected losses. In this regard, an allowance matrix is used to measure the expected credit losses on trade receivables that are considered good. The following table provides information about the exposure to credit risk and loss allowance (including expected credit loss provision) on such trade receivables:

The amounts written off relates to customers who have defaulted payments and are not expected to pay their outstanding balances, mainly due to economic circumstances.

Cash and Cash Equivalents:

The Corporation held cash and cash equivalents of H 384.93 Crore as on 31.03.2023 (31.03.2022 : H 107.22 Crore). The cash and cash equivalents (other than cash on hand) are held with scheduled banks. The Corporation invests its surplus funds for short duration in fixed deposit with banks, Government of India T-bills, Tri Party Repo System (TREPS), Clearcorp Repo Order Matching System (CROMS) and debt schemes of Mutual Funds, all of which carry no mark to market risks as the Corporation is exposed only to low credit risk.

Derivatives:

The forex and interest rate derivatives are entered into with banks having an investment grade rating. Commodity derivatives are entered with reputed Counterparties in the OTC (Over-the-Counter) Market. The exposure to counterparties are closely monitored and kept within the approved limits.

Investment in Debt Securities:

Investment are made in government securities or bonds which do not carry any credit risk, being sovereign in nature. 40.B.2. Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. Corporation has a strong focus on effective management of its liquidity to ensure that all business and financial commitments are met on time. The Corporation has adequate borrowing limits in place duly approved by its Shareholders and Board. Corporation''s sources of liquidity includes operating cash flows, cash and cash equivalents, fund and non-fund based credit lines from banks and liquid investment portfolio. Corporation ensures that there is minimal concentration risk by diversifying its portfolio across instruments and counterparties. Cash and fund flow management is monitored daily in order to have smooth and continuous business operations.

(i) Financing arrangements

The Corporation has adequate fund and non-fund based lines from various banks. The Corporation has sufficient borrowing limits in place duly approved by its Shareholders and Board. Domestic and international credit rating from reputed credit rating agencies enables access of funds both from domestic as well as international market. Corporation''s diversified source of funds and cash flow enables it to maintain requisite capital structure discipline. Corporation diversifies its capital structure with a mix of instruments and financing products across varying maturities and currencies. The financing products include syndicated loans, foreign currency bonds, bank term loans, TREPS loan, CROMS loan, commercial paper, non-convertible debentures, buyer''s credit loan, clean loan etc. Corporation taps domestic as well as foreign debt markets from time to time to ensure appropriate funding mix and diversification across geographies.

40.B.3. Market Risk - Market Risk is further categorised in (i) Currency risk , (ii) Interest rate risk , (iii) Commodity risk & (iv) Price risk

40.B.3.1. Currency risk

The Corporation is exposed to currency risk, primarily on account of its repayment obligations of loans taken in foreign currency and imports, to be paid in foreign currency. The exposure is mainly denominated in U.S.Dollar. The Corporation has a Forex Risk Management Cell (FRMC) which actively review the forex and interest rate exposures. The Corporation uses generic derivative contracts to mitigate the risk of changes in foreign currency exchange rates in line with Corporation''s forex risk management policy. The Corporation does not use derivative financial instruments for trading or speculative purposes.

40.B.3.2. Interest rate risk

The Corporation has long-term foreign currency syndicated loans with floating rate of interest, which exposes the Corporation to cash flow interest rate risk. The borrowings at floating rate are denominated in USD. The Corporation manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Under this, the Corporation agrees with other Parties to exchange at specified intervals (i.e. quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts. The Corporation monitors the interest rate movement and manages the interest rate risk, based on the Corporation''s Forex Risk Management Policy. The Corporation also has a Forex Risk Management Cell (FRMC) that actively reviews the forex and interest rate exposures. The Corporation does not use derivative financial instruments for trading or speculative purposes.

In March 2021, the Financial Conduct Authority (FCA), UK has confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be a representative in the following manner:

• Immediately after December 31, 2021, in the case of all sterling, Euro, Swiss franc and Japanese yen settings, and the 1-week and 2-month US dollar settings; and

• Immediately after June 30, 2023, in the case of the remaining US dollar settings.

The Corporation has exposure in the form of External Commercial Borrowings aggregating to USD 750 Million linked to 3-Month LIBOR as at 31.03.2023 (31.03.2022: USD 1,250 Million). Of the total loan outstanding as on March 31, 2022, loan aggregating to USD 500 Million have been refinanced and migrated to 3-month Term SOFR i.e., Alternative Reference Rate at a favourable spread during the current financial year.

The balance aforementioned exposure shall be migrated from 3-Month LIBOR to an Alternative Reference Rate (ARR) before the cessation date. The impact of such migration is not expected to be material.

The Corporation''s borrowings which are contracted at fixed rate are carried at amortised cost. These are not affected due to interest rate risk as defined in Ind AS 107 as neither the carrying amount nor the future cash flows will fluctuate in the event of a change in market interest rates.

40.B.3.3. Commodity Risk

The Corporation''s Profitability is exposed to the risk of fluctuation in prices of Crude Oil and Petroleum products in international markets. The Corporation monitors and reduces the impact of the volatility in International Oil prices based on approved Oil Price Risk Management Policy by entering into derivative contracts in the OTC market. The Corporation also has Oil Price Risk Management Committee (OPRMC) which actively reviews and monitors risk management principles, policies and risk management activities.

40.B.3.5. Derivatives & Hedging

The Corporation enters into derivative contracts for hedging purpose, to mitigate the commodity price risk on Highly probable forecast transactions and Currency Risk. The Corporation has applied Hedge Accounting on commodity derivative transactions and foreign exchange forward derivatives entered subsequent to 01st January 2020 as per Ind AS 109 (Financial Instruments). Consequent to this a Mark to Market Debit / (Credit) amounting to H (4.01) Crore (2021-22: H 185.31 Crore) has been accounted in Other Comprehensive Income which will be recycled to Statement of Profit and Loss in subsequent period on settlement of respective contracts.

All these hedges are accounted for as Cash Flow Hedges.

Hedge Effectiveness

The Corporation has established a hedge ratio of 1:1 for the hedging relationship as the underlying risk of the commodity and foreign exchange forward contracts are identical to the hedged risk component. Hedge item and the hedging instruments have economic relationship as the terms of the commodity and foreign exchange forward contracts match with the terms of hedge items. Considering the economic relationship and characteristics of the hedging instrument being aligned to the hedged item, the fair value changes in the hedging instrument reasonably approximates the fair value changes in the hedged Item (in absolute amounts).

Source of Hedge Ineffectiveness

The Corporation has identified the following sources of hedge ineffectiveness w.r.t commodity forward contracts which are not expected to be material as at date:

a. Counterparty Credit Risk impacting the fair value of the hedge instrument and hedge item.

b. Difference in the timing of the cash flows of the hedged items and the hedge instruments.

c. Different indexes used to hedge risk of the hedged item.

d. Changes to forecasted amounts of cash flows of hedged items and hedging instruments.

In case of foreign currency risk, the main source of hedge ineffectiveness is the effect of the counterparty and the Corporation''s own credit risk on the fair value of the hedge contracts, which is not reflected in the fair value of the hedged items. The effect of this is not expected to be material.

During the financial year, the Corporation recognized revenue of H 1,708.91 Crore (2021-22: H 856.32 Crore) arising from opening unearned revenue.

42. Lease

The Corporation enters into lease arrangements for underlying assets such as land, office premises, staff quarters. Upon 151 time adoption of Ind AS 116 in financial year 2019-20, the Corporation had chosen modified retrospective approach with exercising of options to use certain practical expedients. ''Lease Liability'' and ''Right-of-use Assets'', wherever the term of lease is in excess of 12 months have been appropriately disclosed, unless the underlying Asset is of low value.

C. Transactions with other Government-Controlled Entities

The Corporation is a Government related entity, engaged in the business of refining of crude oil and marketing of petroleum products. The Corporation also deals on regular basis with entities directly or indirectly controlled by the Central / State Governments through its Government authorities, agencies, affiliations and other organizations (collectively referred as "Government related entities").

Apart from transactions with Corporation''s group Companies, the Corporation has transactions with other Government related entities, including but not limited to the followings:

• sale and purchase of products; • rendering and receiving services;

• leasing of assets; • depositing and borrowing money; and

• use of public utilities

These transactions are conducted in the ordinary course of the Corporation''s business on terms comparable to those with other entities that are not Government related.

(e) Short or (excess) provision for tax of earlier years,for the year ended includes H Nil Crore [2021-22: H(180.18) Crore] reversed during the year, pursuant to the decision for non-participation under Direct Tax Vivad se Vishwas Act, 2020, in respect of few assessment years.

(f) The Corporation has recognised deferred tax assets on the current year losses which are attributable to significant higher input cost and suppressed marketing margins on certain petroleum products. Based on the business plans and future market outlook, the corporation is reasonably certain to generate taxable income from financial year 2023-24 onwards which will enable setting off such carried forward losses.

*As of 31st March 2014, Bhagyanagar Gas Limited (BGL) had a paid up equity capital of H 5 lakhs, in which HPCL and GAIL were holding 24.99% each and the balance 50.02% of shares were held by Kakinada Seaports Ltd (KSPL) on warehousing basis. In addition, HPCL and GAIL had paid H 22.49 Crore each as Advance against Equity / Share application money (totaling to H 44.98 Crore). On 20th August 2014, BGL allotted 2,24,87,500 shares on preferential basis to each of HPCL and GAIL towards the money paid earlier. Accordingly, the Corporation''s shareholding in BGL had increased to 48.73%. KSPL challenged this in the Company Law Board (CLB), Chennai Bench which dismissed it on 14th September 2014. Against this, KSPL moved the High Court, Telangana, which did not stay the dismissal order of CLB. Pending adjudication of the appeal by KSPL before the High Court, the shareholding was considered at 24.99% till 31st March 2020. However, taking all the facts into consideration, including receipt of dividend on the entire stake of 48.73% during financial year 2020-21 and the Articles of Associations of BGL, the shareholding is being considered as at 48.73%, effective financial year 2020-21.

Ujjwala Plus Foundation, a joint venture of Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) was incorporated on 21st July 2017 as a not for profit Private Company, Limited by Guarantee (Without Share Capital) under Section 8 of the Companies Act, 2013.

(i) The block CB-ONN-2002/3 was awarded under NELP IV bidding round and the production sharing contract was signed on 06.02.2004. The exploration Minimum Work Program has been completed. Production from SE#3/4 wells of the Block is in progress, which had started during FY 2017-18. The share of the assets, liabilities, income and expenditure is considered based on the Management certified financials for the FY 2022-23.

(ii) In respect of Cluster - 7, which is terminated and the matter is under litigation (refer Note 53.1). The remaining blocks are in the process of relinquishment/ under relinquishment and the share of the assets, liabilities, income and expenditure, if any, is considered based on information received towards these blocks.

53.

Contingent Liabilities and Commitments*

(H / Crore)

I.

Contingent Liabilities

31.03.2023

31.03.2022

A

Disputed demands / claims subject to appeals / representations filed by the Corporation

i. Sales Tax/Octroi

1,529.04

1,684.67

ii. Excise/Customs

171.21

192.75

iii. Land Rentals & License Fees

299.82

293.96

iv. Employee Benefits/Demands (to the extent quantifiable)

70.39

57.28

v. Others

186.44

100.39

2,256.90

2,329.05

B

Disputed demands / claims subject to appeals / representations filed against the Corporation

i. Sales Tax/Octroi

0.77

0.77

ii. Excise / Customs

2.83

2.83

iii. Employee Benefits/Demands (to the extent quantifiable)

106.08

93.94

iv. Claims against the Corporation not acknowledged as Debts(refer note 53.1)

548.16

522.61

v. Others

215.44

210.42

873.28

830.57

* Contingent Liabilities considered as ''remote'' as per Ind AS 37 are not included.

(H / Crore)

31.03.2023

31.03.2022

II.

Guarantees given to Others

986.79

1,236.59

53.1.The Corporation with a Participating Interest(PI) of 60% along with Prize Petroleum Company Limited (PPCL), having a PI of 10% and M3nergy Sdn. Bhd (M/s M3nergy) having a PI of 30% were awarded service contract in March, 2006 for development of ONGC''s offshore marginal oilfields of cluster-7. PPCL was the executing contractor. Parties provided necessary Bank Guarantees to ONGC. Since M/s M3nergy could not meet their contractual obligations, the contract was terminated by ONGC and Bank guarantees were forfeited. HPCL and PPCL demanded the refund of monies forfeited towards encashment of Bank Guarantee along with other claims from M/s M3nergy. A counter claim of USD 36.51 Million was made by M3nergy on termination of such service contract. The matter was referred to Arbitration.

The Arbitral Tribunal passed 3 Awards (09.01.2014, 27.09.2017, 15.06.2018 respectively), all were in favour of the Corporation and PPCL. These Orders were to the effect that M3nergy had committed breach of the contract and hence their counter claims were disallowed and that the Corporation and PPCL are entitled for damages with interest and costs of arbitration to be borne by M3nergy. All the 3 Awards were challenged by M/s M3nergy before the Bombay High Court. However, there was no stay granted by Bombay High Court, hence, HPCL/ PPCL filed applications for (a) Mareva Injunction and (b) Enforcement of the Award before the Courts in Malaysia since M/s M3nergy is located in Malaysia.

By Orders dated 10.01.2019 the Hon''ble Bombay High Court set aside all three Arbitration Awards. As the Awards were set aside (on the basis of which the enforcement application was filed by HPCL), on 28.02.2019 the Malaysian High Court at Kuala Lumpur allowed the application of M/s M3nergy to set aside the enforcement order with liberty to file fresh proceedings, if HPCL/ PPCL succeed later. Meanwhile, HPCL and PPCL have filed Appeals against the setting aside order (of Single Judge Bombay High Court) before the Division Bench of the Bombay High Court. After hearing arguments of parties, on 16.10.2019, the Hon''ble Bombay High Court set aside the Single Judge''s Order and remanded all the 3 matters back to the Single Judge of the High Court, to decide the matter afresh on merits. This Order was challenged by M/s M3nergy before the Supreme Court by filing Special Leave Petition (SLP) which, after brief arguments, was dismissed as withdrawn (by M/s M3nergy) on 31.01.2020. As a result, the Single Judge of Bombay High Court will hear the matter afresh on merits. The matter was lastly listed on 17.04.2023, but could not be taken up, and is awaiting hearing.

As a result, the Corporation''s share of the awarded amount which is approximately H 420.74 Crore towards loss of profit /damages /costs and interest thereon has not been recognized on a conservative basis. Further, the claim raised by M/s M3nergy to the extent of Corporation''s share i.e. approximately H 257.15 Crore @ Exchange rate of 1 USD = H 82.1750 (31.03.2022: 237.20 Crore @ Exchange rate of 1 USD = H 75.7975), being considered remote is also not recognized.

53.2. Corporation has entered into a long term product off take agreement with M/s HPCL- Mittal Energy Limited (HMEL), its joint venture company, for purchase of petroleum products produced by the refinery. This agreement has a take or pay clause and the Corporation is committed to purchase the said petroleum products over the tenure of the agreement.

53.3. I n respect of certain Joint Venture/Associate Companies, the Corporation and other joint venture partners have committed among others, that they would jointly hold at least 51% of share capital of such Joint Venture/Associate till the repayment of certain bank loans / bonds for which letters of comfort have been issued in certain cases. Expected future outflow of resources emanating out of approved plans on investment in Subsidiaries/Joint Ventures/Associates are not part of ''Capital Commitments'' unless investment calls are made as at period end.

55. (a) Inter-Oil Company transactions are reconciled on a continuous basis. However, year end balances (including trade

payables / trade receivables) are subject to confirmation/reconciliation which is not likely to have a material impact.

(b) Customer''s accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts.

56. Impairment assessment as per the requirements of Ind AS 36 ''Impairment of Assets'' has been carried out at period end for all Cash-Generating Units (CGUs) by comparing their value-in-use (calculated based on certain assumptions, on which auditors have relied upon) with the carrying value of assets under respective CGUs. Based on such assessment, no impairment loss for CGUs is warranted except in case of windmills assets situated at Akal (Rajasthan) for which an impairment loss of H 44.28 Crore (2021-2022: H Nil Crore) has been recognized.

57. On the reporting date, the Corporation has an equity investment of H 984.61 Crore (31.03.2022: H 756.72 Crore) in its wholly owned subsidiary, HPCL Biofuels Limited (HBL) after conversion of loan amounting H 225 Crore (2021-22: H Nil Crore) into equity during the year. Of this, an amount of H 572.16 Crore has been impaired as on March 31,2023 (March 31,2022: H 572.16 Crore). Considering the Government policy in promoting ethanol blended petrol (subsidiary is engaged in production of ethanol) and business plans for the subsidiary, the current level of impairment is appropriate in the opinion of the Management.

58. The Corporation has an equity investment of H 250.76 Crore in its 100% subsidiary, Prize Petroleum Company Limited. During the current financial year, an impairment assessment is carried out and H 27 Crore (2021-22: H 14 Crore) is provided for. The total amount of impairment towards the carrying value of the investment stands at H 203.98 Crore (31.03.2022: H 176.98 Crore). The said impairment is in line with the requirement of Ind AS 36 and is based on the estimated future cash flow projections from continuing use of its Assets in the entity. In the opinion of the Management, the current level of impairment is appropriate.

59. The Corporation has an equity investment of H 66.77 Crore in its Associate, GSPC India Transco Limited. Upon impairment assessment, an amount of H Nil Crore (2021-22: H 14 Crore) is provided for during the year. The total amount of impairment towards the carrying value of the investment stands at H 14 Crore (31.03.2022: H 14 Crore). The said impairment is in line with the requirement of Ind AS 36 and is based on the financial performance of the entity. In the opinion of the Management, the current level of impairment is appropriate.

60. The Corporation''s 100% step-down subsidiary, Prize Petroleum International Pte Ltd. (a wholly owned subsidiary of Prize Petroleum Company Limited), incorporated in Singapore is engaged in the business of exploration & production of hydrocarbons. On a loan of $86 Million taken during the financial year 2016-17 by the step-down subsidiary towards which a corporate guarantee was provided, the carrying value of the obligation was re-measured under the provisions of Ind AS 109 during the current financial year and a loss allowance of H 300.18 Crore (2021-22: H 31 Crore) is provided for during the year and accounted under ''Sundry Expenses and Charges''. The total amount of loss allowance thus made towards the carrying value of the Corporate Guarantee stands at H 649.18 Crore (31.03.2022: H 349 Crore).

61. The Pradhan Mantri Ujjwala Yojana (PMUY) was launched in 2016 to provide LPG connections to women from below-poverty-line (BPL) households. The beneficiary is given an option to avail loan from the respective OMCs to meet the cost of the stove and first fill. This loan is to be recovered from the subsidy payable to the consumer on purchase of the refill cylinders. The loan has been provided to 1.76 Crore PMUY consumers for an amount aggregating to H 2,960.48 Crore (31.03.2022: H 2,962.33 Crore), and of this, H 1,565.39 Crore (31.03.2022: H 1,705.32 Crore) is outstanding at period end. The Loan is classified as ''subsequently measured at amortized cost'' in the financial statements. The carrying value of loan outstanding as at Balance Sheet date is re-measured based on revised estimates of future cash flows. Such re-measurement has resulted in change in gross carrying amount of outstanding loan, net of interest unwinding, by H -81.57 Crore (2021-22: H 251.85 Crore) during the year. Considering the cumulative re-measurement loss, net of interest unwinding, amounting to H 443.39 Crore (31.03.2022: H 524.96 Crore) and accounting of Deferred Expense amounting to H 528.29 Crore (net balance after amortisation as of 31.03.2023 is H 334.89 Crore), the outstanding loan at period end is carried in the books at H 593.71 Crore (31.3.2022: H 652.07 Crore). Further, considering the consumption pattern of refills, level of subsidies and consequential impact on repayment of the loan, by following the principles of prudence and conservatism, a cumulative provision of H 25.01 Crore (31.03.2022: H 118.70 Crore) net of reversal, if any, is estimated and recognized in books. The reversal of provision during the year amounted to H 93.69 Crore (2021-22: H 499.37 Crore) that arose primarily due to inactive consumer turning active, pursuant to focused initiatives taken in this regard. The expected credit loss estimate is reasonable.

62. The Corporation implements various schemes of Government of India, such as PMUY, Direct Benefit Transfer scheme, wherein the amount is either received in advance or reimbursed subsequently. As of 31.03.2023, reimbursements amounting to H 189.88 Crore (31.03.2022: H 152.11 Crore) are pending for a period beyond 6 months for which provision of H 159.12 Crore (31.03.2022: H Nil Crore) is carried in the books.

63. Till 26-12-2022, the Company was having sufficient number of Independent Directors to comply with the relevant provisions of Companies Act, 2013 and SEBI LODR, 2015. Effective 27-12-2022 till 14-03-2023, the Company was short of one Independent Director to comply with SEBI (LODR) 2015. With the appointment of one Independent Director on 15-03-2023, Company was having sufficient number of Independent Directors till April 30, 2023 to comply with SEBI (LODR), 2015. Effective May 01,2023, the Company was once again short of one Independent Director. The Company has approached Administrative Ministry for appointment of requisite number of Independent Director on its Board from time to time.

65. The Corporation has presented segment information in its Consolidated Financial Statements. Accordingly, in terms of provisions of Indian Accounting Standard on Segment Reporting (Ind AS 108) no disclosure related to the segment are presented in the Standalone Financial Statements.

67. Employee benefit obligationsA. Defined Contribution Plan Superannuation Fund

The Corporation has Superannuation - Defined Contribution Scheme (DCS) maintained by ''Superannuation Benefit Fund Scheme (SBFS) Trust'' wherein Employer makes a monthly contribution of a certain percentage of ''Basic Salary & Dearness Allowance(DA)'', out of 30%, earmarked for various Superannuation benefits. This is in accordance with Department of Public Enterprises (DPE) guidelines. These contributions are credited to individual Employee''s Account maintained either with Life Insurance Corporation of India (LIC) or an optional National Pension Scheme (NPS) Account. For the financial year 2022-23, the Corporation has made an overall contribution of H 207.91 Crore (2021-22 : H 194.39 Crore) towards Superannuation - DCS [including H 84.65 Crore (2021-22 : H 78.73 Crore) to NPS] by charging it to the statement of Profit and Loss.

Employee Pension Scheme(EPS-95)

During the year, Corporation has recognised H 8.19 Crore (2021-22: H 8.95 Crore) as contribution to Employee Pension Scheme (EPS-95) in the Statement of Profit and Loss.

B. Defined Benefit Plan Provident Fund

The long term employee benefit of Provident Fund is administered through a separate Trust, established for this purpose in accordance with The Employee Provident Fund and Miscellaneous Provisions Act, 1952. The Corporation''s contribution to the Provident Fund is remitted to this trust based on a fixed percentage of the eligible employee''s salary and charged to Statement of Profit and Loss. During the year, the Corporation has recognized H 166.71 Crore (2021-22: H 161.93 Crore) as Employer''s contribution to Provident Fund in the Statement of Profit and Loss.

Shortfall, if any, in matching the Government specified minimum rate of return, will be made good by the Corporation and charged to Statement of Profit and Loss. During the year, the actual return earned by the fund has been higher than the Government specified minimum rate of return. There did not arise a shortfall in the fund as on 31st March 2023 and 31st March 2022. The present value of benefit obligation at period end is H 5,041.42 Crore (31.03.2022: H 4,897.34 Crore). The fair value of the assets of Provident Fund Trust as of Balance Sheet date is greater than the present value of benefit obligation.

During the year a provision of H 0.42 Crore has been reversed (created in FY 2019-20) being excess provision no longer required, and a provision of H 82.41 crore has been off-set (created in FY 2019-20) against liability towards losses on defaulted investments.

Pursuant to paragraph 57 of Ind AS 19, accounting by an entity for defined benefit plans, inter-alia, involves determining the amount of the net defined benefit liability (asset) which shall be adjusted for any effect of limiting a net defined benefit asset to the asset ceiling prescribed in paragraph 64. As per Para 64 of Ind AS 19, in case of surplus in a defined benefit plan, an entity shall measure the net defined benefit asset at the lower of actual surplus or the value of the assets ceiling determined using the discount rate. The asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Further, paragraph 65 provides that a net defined benefit asset may arise where a defined benefit plan has been overfunded or where actuarial gains have arisen.

As per the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952, the Company has no right to the benefits either in the form of refund from the plan or lower future contribution to the plan towards the net surplus of H 44.59 Crore (31.03.2022: H 72.26 Crore) determined through actuarial valuation. Accordingly, Company has not recognised the surplus as an asset, and the remeasurement loss /gains in ''Other Comprehensive Income'', as these pertain to the Provident Fund Trust and not to the Company.

H: Notes

I. Gratuity: Each employee rendering continuous service of 5 Years or more is entitled to receive gratuity amount equal to 15/26 of the eligible salary for every completed years of service subject to maximum of H 0.20 Crore at the time of separation from the Corporation. Besides the ceiling, gratuity increases by 25% whenever IDA rises by 50%. The long term employee benefit of Gratuity is administered through a Trust, established under The Payment of Gratuity Act, 1972. The Board of Trustees comprises of representatives from the Employer who are also plan participants in accordance with the plans regulation. The liability towards gratuity is funded with Life Insurance Companies.

II. Pension : The employees covered by the Pension Plan of the Corporation are entitled to receive monthly pension for life. However, none of the current serving employees are covered under Pension Plan of the Corporation.

III. Post Retirement Medical Benefit (PRMBS): Post Retirement Benefit medical scheme provides medical benefit to retired employees and eligible dependent family members. This long term employee benefit is administered through a Trust. The liability towards Post-Retirement Medical Benefit for employees is ascertained, yearly, based on the actuarial valuation and funded to the Trust.

IV. Ex-gratia: The ex-employees of Corporation are covered under the Scheme, entitling to get ex-gratia, determined based on their salary grade at the time of their superannuation. The benefit is paid to eligible employees till their survival, and thereafter till the survival of their spouse. However, none of the current serving employees are covered under this Plan.

V. Resettlement Allowance : Upon superannuation from the services of the Corporation, there are employees who permanently settle down at a place other than the location of the last posting. Such employees are provided with resettlement allowance as per policy of the Corporation.

VI. Others: The expected return on plan assets is based on market expectation over the entire life of the related obligation. The actuarial assumption with regard to future salary escalation takes into consideration, the factors such as inflation, seniority, promotion, demand & supply in the employment market.

VII. Figures in italics represent last year figures.

68. As on 31.03.2023, the Corporation has an inventory of Non-Solar Renewable Energy Certificates (RECs) numbering 3,275 Units (31.03.2022: 16,830 Units), available for sale after earmarking a requisite quantity already for captive consumption. Traded in Indian Energy Exchange Ltd., the revenue from RECs is recognized as and when the same are sold. At period end, these RECs are traded in a price band of H 1,000/- to H 3,000/- per REC. Delhi High Court has suspended online trading in certificates issued before 31-10-2022 and case is sub-judice.

72. Other Disclosures

72.1. The Quarterly returns / statements of the first 3 quarters of the current financial year with respect to current assets (Inventories) filed with banks / financial institutions for the financial year 2022-23 are in agreement with the books of accounts. The return for the 4th quarter, being price sensitive information, will be filed after declaration of annual results.

72.2. Compliance with number of layers of companies as per Clause 87 of Section 2 of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable for Government Companies.

72.3. There have not been any revaluation of Property, Plant & Equipment and Intangible Assets.

72.4. The borrowings from banks and financial institutions were used for the purpose for which it was taken.

72.5. There are no proceedings initiated or pending for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

72.6. No Bank or financial institution or other lender has declared the Corporation as willful defaulter.

72.7. There are no Charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory / stipulated period.

72.8. There are no pending applications with any authority for a scheme of arrangement in terms of sections 230 to 237 of the Companies Act, 2013.

72.9. To the best of knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Corporation (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

To the best of knowledge and belief, no funds have been received from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, to directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiary") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

72.10. There are no unrecorded transactions, which have been surrendered or disclosed as Income during the year in the tax assessments under the Income tax act, 1961.

72.11. There are no trading entered into or investments made in Crypto Currency or Virtual Currency during the year.

73. Previous periods figures are regrouped / reclassified wherever necessary.


Mar 31, 2022

1. Includes assets costing H 0.007 Crore /- (31.03.2021 : H 0.007 Crore) of erstwhile Kosan Gas Company that have not been handed over to the Corporation. Though Kosan Gas Company was to give up their claim, in view of the tenancy right sought by third party, the matter is under litigation.

2. Includes H 1049.3 Crore (31.03.2021: H 1035.63 Crore ) towards Land, Building, Plant & Equipment, Furniture & Fixtures, Transport equipments, Office Equipments, Pipelines, Railway Sidings, etc. representing Corporation''s Share of Assets, jointly owned with other Companies.

3. Includes H 32.25 Crore (31.03.2021 : H 32.35 Crore) towards Roads & Culverts, Transformers & Transmission lines, Railway Sidings & Rolling Stock for which though ownership does not vest with the Company, operational control over such assets is exercised. These assets are amortized as per useful life specified in Schedule II of Companies Act, 2013.

4. a) Includes following assets used for distribution of PDS Kerosene under Jana Kalyan Pariyojana against which financial

assistance had been provided by Oil Industry Deveopment Board:

5. Assets held for sale consists of items such as Plant and equipment, office equipment, transport equipment, buildings, furnitures and fixtures and roads and culverts which have been identified for disposal due to replacement/ obsolescence of assets which happens in the normal course of business. These assets are expected to be disposed off within the next twelve months. On account of classification of these assets as ''Asset held for sale'', a loss of H 92.20 Crore during the year (2020-21: H 13.92 Crore) has been recognised in the statement of profit and loss.

6. Includes Right of Use Assets having Gross value H 92.43 Crore (31.03.2021: H 19.38 Crore) for land acquired on lease-cum-sale basis from Karnataka Industrial Area Development Board (KIADB), that has not been amortized over the period of lease in view of freehold title that would vest upon fulfilment of certain terms and conditions, as per allotment letter.

7. Includes adjustment to Cost of Assets pursuant to exchange differences arising on long term foreign currency monetary items of H Nil Crore during 2021-22 (2020-21: H -70.21 Crore), which, in accordance with Para 7AA of Ind AS 21 read with Para D13AA of Ind AS 101 are capitalized and depreciated over the balance useful life of the assets.

8. The Corporation has considered pipeline assets laid within the boundary limit of its premises as integral part of Tanks / Other Plant and Machinery and have been depreciating such assets based on the useful life of associated Plant & Equipment, in line with the Schedule II of the Companies Act, 2013.

9. Includes assets of H 1.00 Crore (31.03.2021: H 1.03 Crore) forming part of Plant & Equipment, Buildings & Roads & Culverts, wherein though Infrastructure Facilities were provided at Railway Premises, no sales transactions were entered into during current financial year.

10. The process of capitalization in respect of Property, Plant and Equipment including accounting of Capital Work-inProgress is under continuous review and updation, wherever required, is being carried out on a regular basis.

11. In the nature of business carried out by the Corporation, there are certain leasehold immovable properties, which are under its continuous possession, control and use over the period, the lease agreement of which have expired. Pending renewal of such leases, these have not been recognized as Right of Use Assets.

12. Title deeds of Immovable Properties not held in name of the Corporation (Other than properties where the Corporation is the lessee and the lease agreements are duly executed in favour of the Corporation)

6.1. Increase of H 0.90 Crore in the carrying amount is pursuant to accounting of corporate guarantee commission, which is in accordance with Ind AS 109.

6.2. HPCL LNG Limited (HPLNG), [formerly known as HPCL Shapoorji Energy Private Limited (HSEPL)], was incorporated in October 2013 as a joint venture company of HPCL and SP Ports Private Limited to construct and operate a Liquefied Natural Gas (LNG) regasification terminal at greenfield port of Chhara, Gir Somnath District, Gujarat. On March 30, 2021, HPCL had acquired the entire shares owned by SP Ports Private Limited and upon such acquisition, HPLNG became a wholly owned subsidiary of the Corporation.

6.3. As per the guidelines issued by Department of Public Enterprises (DPE) in August 2005, the Board of Directors of Navratna Public Sector Enterprises (PSEs) can invest in joint ventures and wholly owned subsidiaries subject to an overall ceiling of 30% of the net worth of the PSE. The Corporation has requested Ministry of Petroleum & Natural Gas (MOP&NG) to confirm its understanding that for calculating this ceiling limit, the amount of investments specifically approved by Government of India (i.e. investment in HPCL Mittal Energy Limited (HMEL) and HPCL Rajasthan Refinery Limited (HRRL) ) are to be excluded. The Corporation has calculated the limit of 30% investment in joint ventures and wholly owned subsidiaries, by excluding these investments. As per financial position as on March 31, 2022, the investments in joint ventures and wholly owned subsidiaries are well within the said 30% limit.

6.4. Petronet India Limited is in the process of Voluntary winding up w.e.f. August 30, 2018.

10.1. Includes an amount of H 58.26 Crore (31.03.2021: H 58.26 Crore) net of provision of H 22.30 Crore (31.03.2021: H 22.30 Crore) carried as receivable towards Customs Duty refund claims, filed relating to the periods 1992-97 to 2020-21. As per the assessment made by the management, though partially provided to account for aflux of time, the refund is legally tenable, management is continuing to pursue the matter with Authorities for early settlement of these claims.

F. Rights and Restrictions on Equity Preference

The Corporation has only one class of Equity Shares having a face value of H 10/- per share which are issued and subscribed. Each Shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of the winding up, the holders of equity shares will be entitled to receive the remaining assets in proportion to the number of equity shares held by the shareholders and the amount paid up thereon.

The Corporation also has 75,000 6% cumulative Redeemable Non-convertible Preference Shares of H 100 /- each as a part of the Authorised Capital, which were issued earlier by the erstwhile ESSO Standard Refining Co. of India Limited (ESRC) . Presently the said Preference Shares stand redeemed.

H. In the period of five years immediately preceding 31st March, 2022:

(i) The Corporation had issued Bonus Shares numbering 50,79,40,875/- equity shares (having face value of H 10/-each) during Financial Year 2017-18 in the ratio of 1:2 by capitalization of Reserves.

(ii) The Board, at its meeting held on November 04, 2020 approved the buyback of fully paid-up equity shares of the face value of H 10/- from the open market through stock exchange mechanism for an aggregate amount not exceeding H 2,500 Crore ("Maximum Buyback Size") and at a price not exceeding H 250 per Equity Share, payable in cash. The shares buy-back program, which commenced on November 17, 2020 has concluded on May 14, 2021. During the buy-back period, a total of 10,52,74,280/- shares, representing 6.91% of paid up Share Capital (prior to commencement of buy-back) having a face value of H 1,05,27,42,800/- have been bought back and extinguished.

(As on March 31, 2021, equity shares numbering 7,18,01,491/-, having a face value of H 71,80,14,910/- were bought back. Of which, in line with SEBI Regulations, 6,79,77,038/- shares had been extinguished till March 31, 2021 and the rest of it on April 20, 2021).

Of the total loan outstanding as on March 31, 2021, loan aggregating to H 2,150 Crore have been refinanced through unsecured term loan from HDFC Bank during the current financial year. The loan outstanding as on reporting date has been secured with first charge on the facilities of Vishakh Refinery Modernisation Project for a value of H 18,194.30 Crore (31.03.2021: H 13,598.64 Crore), Mumbai Refinery Expansion Project for a value of H Nil Crore (31.03.2021: H 3,839.23 Crore). Of the loan amount H 25.00 Crore (31.03.2021: H 725.00 Crore) is repayable within one year and the same has been included in ''Current Maturities of Long Term Borrowings'' under Note 25.

27.1. Dues as at the end of the year for credit to Investor Education and Protection Fund is H Nil Crore (31.03.2021: H Nil Crore).

27.2. a) I ncludes deposits received towards Rajiv Gandhi Gramin LPG Vitrak Yojana H 241.89 Crore (31.03.2021: H 241.89

Crore) and Prime Minister Ujjavala Yojana of H 3,362.33 Crore (31.03.2021: H 3,015.69 Crore). These deposits have been either made by Government of India or created out of CSR fund. b) The liability is classified as current in accordance with Ind AS 1 as it is payable on demand. Considering past trends, it is expected that the payment towards the liability in the next 12 months would be insignificant.

31.4. The MoPNG, vide letter dated 30.04.2020 had conveyed to Oil Marketing Companies (OMCs) that a) In case, the Market Determined Price (MDP) is higher than the Effective Cost to Consumer (ECC), the difference shall be transferred to consumers account via Direct Benefit Transfer of LPG (DBTL) Scheme and b) In case, where MDP is less the ECC, the OMCs will retain the difference in a separate buffer account for future adjustment. However, as on March 31, 2022, the Corporation had a negative buffer of H 2,642.33 Crore (after adjustment of uncompensated cost of H 2,128.25 Crore) as the retail selling price was less than MDP and accordingly the revenue from the sale of LPG was reduced by this amount.

40. Financial risk management:

40.A. Risk management framework

The Corporation has established an Enterprise Risk Management (ERM) framework under the Corporation''s Risk Management Charter and Policy 2007, which is embedded at the forefront of business strategies and focuses on the stronger, deeper and trust-based relationship with the stakeholders. It provides necessary support to the business to steer through the continuously evolving risk terrain through dynamic risk management approach that embraces disruption and enhances resiliency and trust.

The Corporation had reviewed the Risks arising out of the COVID-19 and as a risk mitigation measure, incorporated certain new risks and amended the existing risks suitably.

The Risk Management Steering Committee (RMSC) receives regular insights on risk exposures faced by the Corporation, thereby enabling it to provide inputs on prompt actions to be taken as well as monitor the actions taken. The Board is also updated regularly on the risk assessment and mitigation procedures.

Technology has been enabled to support the Enterprise Risk Management processes with a focus on optimizing risk exposures and automating risk reporting across the organization.

40.B. Corporation has identified financial risk and categorised them in three parts Viz. (i) Credit Risk, (ii) Liquidity Risk & (iii) Market Risk. Details regarding sources of risk in each such category and how Corporation manages the risk is explained in following notes:

40.B.1. Credit risk

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet their contractual obligations. The risk arises principally from the Corporation''s Receivables from Customers and so also from Investment Securities. The risk is managed through credit approval, establishing credit limits and continuous monitoring of the creditworthiness of Customers to whom the Corporation extends credit terms in the normal course of business.

The maximum exposure to credit risk in case of all the financial instruments covered below is restricted to their respective carrying amount.

Note: Refer Note 61 regarding loans given to consumers under Pradhan Mantri Ujjwala Yojna (PMUY).

Trade receivables

The Corporation''s exposure to credit risk is influenced mainly by the individual characteristics of each customer.

The Corporation assesses impairment of Trade Receivable/Other Receivables both individually &/or grouping large numbers of Customers, homogenously and recognizes a loss allowance towards doubtful debts by estimating its expected losses. In this regard, an allowance matrix is used to measure the expected credit losses on trade receivables that are considered good. The following table provides information about the exposure to credit risk and loss allowance (including expected credit loss provision) on such trade receivables:

The amounts written off relates to customers who have defaulted payments and are not expected to pay their outstanding balances, mainly due to economic circumstances.

Cash and Cash Equivalents

The Corporation held cash and cash equivalents of H 107.22 Crore as on 31.03.2022 (31.03.2021 : H 155.29 Crore). The cash and cash equivalents (other than cash on hand) are held with scheduled banks. The Corporation invests its surplus funds for short duration in fixed deposit with banks, Government of India T-bills and liquid Schemes of Mutual Funds, all of which carry no mark to market risks as the Corporation is exposed only to low credit risk.

The forex and interest rate derivatives are entered into with banks having an investment grade rating. Commodity derivatives are entered with reputed counterparties in the OTC (Over-the-Counter) Market. The exposure to counterparties are closely monitored and kept within the approved limits.

Investment in Debt Securities

Investment are made in government securities or bonds which do not carry any credit risk, being sovereign in nature.

40.B.2. Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. Corporation has a strong focus on effective management of its liquidity to ensure that all business and financial commitments are met on time. The Corporation has adequate borrowing limits in place duly approved by its Shareholders and Board. Corporation''s sources of liquidity includes operating cash flows, cash and cash equivalents, fund and non-fund based lines from banks and liquid investment portfolio. Corporation ensures that there is minimal concentration risk by diversifying its portfolio across instruments and counterparties. Cash and fund flow management is monitored daily in order to have smooth and continuous business operations.

(i) Financing arrangements

The Corporation has an adequate fund and non-fund based lines from various banks. The Corporation has sufficient borrowing limits in place duly, approved by its Shareholders and Board. Domestic and international credit rating from reputed credit rating agencies enables access of funds both from domestic as well as international market. Corporation''s diversified source of funds and strong operating cash flow enables it to maintain requisite capital structure discipline. Corporation diversifies its capital structure with a mix of instruments and financing products across varying maturities and currencies. The financing products include syndicated loans, foreign currency bonds, TREPS loan, commercial paper, non-convertible debentures, buyer''s credit loan, clean loan etc. Corporation taps domestic as well as foreign debt markets from time to time to ensure appropriate funding mix and diversification of geographies.

40.B.3. Market Risk - Market Risk is further categorised in (i) Currency risk , (ii) Interest rate risk , (iii) Commodity risk & (iv) Price risk:

40.B.3.1. Currency risk

The Corporation is exposed to currency risk, primarily on account of its repayment obligations of loans taken in foreign currency and imports, to be paid in foreign currency. The exposure is mainly denominated in U.S.Dollar. The Corporation has a Forex Risk Management Cell (FRMC) which actively review the forex and interest rate exposures. The Corporation uses generic derivative contracts to mitigate the risk of changes in foreign currency exchange rates in line with Corporation''s forex risk management policy. The Corporation does not use derivative financial instruments for trading or speculative purposes.

40.B.3.2 Interest rate risk

The Corporation has long-term foreign currency syndicated loans with floating rate of interest, which exposes the Corporation to cash flow interest rate risk. The borrowings at floating rate are denominated in USD. The Corporation manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Under this, the Corporation agrees with other Parties to exchange at specified intervals (i.e. quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts. The Corporation monitors the interest rate movement and manages the interest rate risk, based on the Corporation''s Forex Risk Management Policy. The Corporation also has a Forex Risk Management Cell (FRMC) that actively reviews the forex and interest rate exposures. The Corporation does not use derivative financial instruments for trading or speculative purposes. The Corporation has exposure in the form of External Commercial Borrowings aggregating to USD 1250 million linked to LIBOR as at 31.03.2022. In March 2021, the Financial Conduct Authority (FCA), UK has confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be a representative in the following manner:

• Immediately after December 31, 2021, in the case of all sterling, Euro, Swiss franc and Japanese yen settings, and the 1-week and 2-month US dollar settings; and

• Immediately after June 30, 2023, in the case of the remaining US dollar settings.

In this context, the afore-mentioned exposure shall be migrated from LIBOR to an Alternative Reference Rate (ARR). The impact of such migration is not ascertainable at present.

The Corporation''s borrowings which are contracted at fixed rate are carried at amortised cost. These are not affected due to interest rate risk as defined in Ind AS 107 as neither the carrying amount nor the future cash flows will fluctuate in the event of a change in market interest rates.

The Corporation enters into derivative contracts for hedging purpose, to mitigate the commodity price risk, on Highly probable forecast transactions as detailed above. The Corporation has applied Hedge Accounting on commodity derivative transactions entered subsequent to 01January 2020 as per Ind AS 109 (Financial Instruments). Consequent to this a Mark to Market Debit amounting to H 185.31 Crore ( 2020-21: H 1.14 Crore) has been accounted in Other Comprehensive Income which will be recycled to Statement of Profit and Loss in subsequent period on settlement of respective contracts.

All these hedges are accounted for as Cash Flow Hedges.

Hedge Effectiveness

The Corporation has established a hedge ratio of 1:1 for the hedging relationship as the underlying risk of the commodity forward contracts are identical to the hedged risk component. Hedge item and the hedging instruments have economic relationship as the terms of the commodity forward contracts match with the terms of hedge items. Considering the economic relationship and characteristics of the hedging instrument being aligned to the hedged item, the fair value changes in the hedging instrument reasonably approximates the fair value changes in the hedged Item (in absolute amounts).

Disclosures of effects of Cash Flow Hedge Accounting

The Corporation has applied Hedge Accounting prospectively for the highly probable forecast transactions as stated above, entered after 01 January 2020. Consequently, disclosure is made only for the transactions designated for Hedge Accounting.

42.Leases

The Corporation enters into lease arrangements for underlying assets such as land, office premises, staff quarters. Upon 1st time adoption of Ind AS 116 in financial year 2019-20, the Corporation had chosen modified retrospective approach with exercising of options to use certain practical expedients. ''Lease Liability'' and ''Right-of-use Assets'', wherever the term of lease is in excess of 12 months have been appropriately disclosed, unless the underlying Asset is of low value.

C. Transactions with other Government-Controlled Entities

The Corporation is a Government related entity, engaged in the business of refining of crude oil and marketing of petroleum products. The Corporation also deals on regular basis with entities directly or indirectly controlled by the Central / State Governments through its Government authorities, agencies, affiliations and other organizations (collectively referred as "Government related entities").

(e) Short or (excess) provision for tax of earlier years, for the year ended March 31,2022: Includes H (180.18) Crore reversed during the year, pursuant to the decision for non-participation under Direct Tax Vivad se Vishwas Act, 2020, in respect of few assessment years.

Short or (excess) provision for tax of earlier years, for the year ended March 31, 2021: Includes H 11.79 Crore of additional provision during 2020-21, (aggregating to a cumulative provision of H 776.66 Crore) pursuant to the decision for participation under Direct Tax Vivad se Vishwas Act, 2020.

47. Capital management

The Corporation''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The Corporation''s debt to equity ratio, used for monitoring capital management is 1.12 (31.03.2021: 1.11) (refer Note 71).

* As of 31st March 2014, Bhagyanagar Gas Limited (BGL) had a paid up equity capital of H 5 lakhs, in which HPCL and GAIL were holding 24.99% each and the balance 50.02% of shares were held by Kakinada Seaports Ltd (KSPL) on warehousing basis. In addition, HPCL and GAIL had paid H 22.49 Crore each as Advance against Equity / Share application money (totaling to H 44.98 Crore). On 20th August 2014, BGL allotted 2,24,87,500 shares on preferential basis to each of HPCL and GAIL towards the money paid earlier. Accordingly, the Corporation''s shareholding in BGL had increased to 48.73%. KSPL challenged this in the Company Law Board (CLB), Chennai Bench which dismissed it on 14th September 2014. Against this, KSPL moved the High Court, Telangana, which did not stay the dismissal order of CLB. Pending adjudication of the appeal by KSPL before the High Court, the shareholding was considered at 24.99% till 31st March 2020. However, taking all the facts into consideration, including receipt of dividend on the entire stake of 48.73% during financial year 2020-21 and the Articles of Associations of BGL, the shareholding is being considered as at 48.73%, effective financial year 2020-21.

Ujjwala Plus Foundation, a joint venture of Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) was incorporated on 21st July 2017 as a not for profit Private Company Limited by Guarantee (Without Share Capital) under Section 8 of the Companies Act 2013.

(i) The block CB-ONN-2002/3 was awarded under NELP IV bidding round and the production sharing contract was signed on 06.02.2004. The exploration Minimum Work Program has been completed. Production from SE#3/4 wells of the Block is in progress, which had started during FY 2017-18. The share of the assets, liabilities, income and expenditure is considered based on the Management certified financials for the FY 2021-22.

(ii) In respect of Cluster - 7, which is terminated and the matter is under litigation (refer Note 53.1). The remaining blocks are in the process of relinquishment/ under relinquishment and the share of the assets, liabilities, income and expenditure, if any, is considered based on information received towards these blocks.

* The shortfall is mainly on account of delay in completing the ongoing projects as per timelines, due to restrictions imposed on account of COVID-19 pandemic. In compliance with statutory provisions, the amount of shortfall has been transferred to UCSRA (Unspent CSR Account) on April 26, 2022 and would be spent in accordance with the applicable CSR Rules. In terms of the statutory obligation, while the shortfall is H 9.42 Crore, by virtue of a higher transfer of amount to UCSRA at H 9.51 Crore and the Corporation not intending to carry-forward the excess to the subsequent financial year, the shortfall is treated as though H 9.51 Crore for the purpose of this disclosure.

53. Contingent Liabilities and Commitments:*

(H / Crore)

I. Contingent Liabilities

31.03.2022

31.03.2021

A. Disputed demands / claims subject to appeals / representations

filed by the Corporation

i. Sales Tax/Octroi

1,684.67

1,670.83

ii. Excise/Customs

192.75

264.14

iii. Land Rentals & License Fees

293.96

238.92

iv. Employee Benefits/Demands (to the extent quantifiable)

57.28

52.44

v. Others

100.39

94.52

2,329.05

2,320.85

B. Disputed demands / claims subject to appeals / representations

filed against the Corporation

i. Sales Tax/Octroi

0.77

0.77

ii. Excise / customs

2.83

-

iii. Employee Benefits/Demands (to the extent quantifiable)

93.94

338.84

iv. Claims against the Corporation not acknowledged as Debts

522.61

396.46

(refer note 53.1)

v. Others

210.42

211.86

830.57

947.93

* Contingent Liabilities considered as ''remote'' as per Ind AS 37 are not included.

(H / Crore)

31.03.2022

31.03.2021

II. Guarantees given to Others

1,236.59

1,896.52

53.1The Corporation with a Participating Interest(PI) of 60% along with Prize Petroleum Company Limited (PPCL), having a PI of 10% and M3nergy Sdn. Bhd (M/s M3nergy) having a PI of 30% were awarded service contract in March, 2006 for development of ONGC''s offshore marginal oilfields of cluster-7. PPCL was the executing contractor. Parties provided necessary Bank Guarantees to ONGC. Since M/s M3nergy could not meet their contractual obligations, the contract was terminated by ONGC and Bank guarantees were forfeited. HPCL and PPCL demanded the refund of monies forfeited towards encashment of Bank Guarantee along with other claims from M/s M3nergy. A counter claim of USD 36.51 Million was made by M3nergy on termination of such service contract. The matter was referred to Arbitration.

The Arbitral Tribunal passed 3 Awards (09.01.2014, 27.09.2017, 15.06.2018 respectively), all were in favour of the Corporation and PPCL. These Orders were to the effect that M3nergy had committed breach of the contract and hence their counter claims were disallowed and that the Corporation and PPCL are entitled for damages with interest and costs of arbitration to be borne by M3nergy. All the 3 Awards were challenged by M/s M3nergy before the Bombay High Court. However, there was no stay granted by Bombay High Court, hence, HPCL/ PPCL filed applications for (a) Mareva Injunction and (b) Enforcement of the Award before the Courts in Malaysia since M/s M3nergy is located in Malaysia.

By Orders dated 10.01.2019 the Hon''ble Bombay High Court set aside all three Arbitration Awards. As the Awards were set aside (on the basis of which the enforcement application was filed by HPCL), on 28.02.2019 the Malaysian High Court at Kuala Lumpur allowed the application of M/s M3nergy to set aside the enforcement order with liberty to file fresh proceedings, if HPCL/ PPCL succeed later. Meanwhile, HPCL and PPCL have filed Appeals against the setting aside order (of Single Judge Bombay High Court) before the Division Bench of the Bombay High Court. After hearing arguments of parties, on 16.10.2019, the Hon''ble Bombay High Court set aside the Single Judge''s Order and remanded all the 3 matters back to the Single Judge of the High Court, to decide the matter afresh on merits. This Order was challenged by M/s M3nergy before the Supreme Court by filing Special Leave Petition (SLP) which, after brief arguments, was dismissed as withdrawn (by M/s M3nergy) on 31.01.2020. As a result, the Single Judge of Bombay High Court will hear the matter afresh on merits. The matter was lastly listed on 18.01.2022, but could not be taken up.

As a result, the Corporation''s share of the awarded amount which is approximately H 420.74 Crore towards loss of profit /damages /costs and interest thereon has not been recognized on a conservative basis. Further, the claim raised by M/s M3Energy to the extent of Corporation''s share i.e. approximately H 237.20 Crore (@ Exchange rate of 1 USD = H 75.7975), being considered remote is also not recognized.

(H / Crore)

III. Commitments

31.03.2022

31.03.2021

Estimated amounts of contracts remaining to be executed on capital account not provided for (net of advances)

13,369.24

17,238.38

53.2. Corporation has entered into a long term product off take agreement with M/s HPCL- Mittal Energy Limited (HMEL), its joint venture company, for purchase of petroleum products produced by the refinery. This agreement has a take or pay clause and the Corporation is committed to purchase the said petroleum products over the tenure of the agreement.

53.3. I n respect of certain Joint Venture/Associate Companies, the Corporation and other joint venture partners have committed among others, that they would jointly hold at least 51% of share capital of such Joint Venture/Associate till the repayment of certain bank loans / bonds for which letters of comfort have been issued in certain cases.

55. (a) I nter-Oil Company transactions are reconciled on a continuous basis. However, year end balances are subject to

confirmation/reconciliation which is not likely to have a material impact.

(b) Customer''s accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts.

56. The future cash flows have been worked out based on the desired margins and impairment assessment has been carried out for all of the Cash Generating Units. Since there do not exist any indication of impairment of assets as at Balance Sheet date, no impairment has been considered necessary. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same.

57. On the reporting date, the Corporation has an equity investment of H 756.72 Crore (31.03.2021: H 748.94 Crore) in its wholly owned subsidiary, HPCL Biofuels Limited (HBL). Of this, as on March 31,2021, an amount of H 572.16 has already been impaired. The net worth of the Company as on March 31,2022 at H 206.92 Crore is more than the carrying value of the equity investment. Considering the Government policy in promoting ethanol blended petrol (subsidiary is engaged in production of ethanol) and the approved investment plan for the subsidiary, in the opinion of the management, the current level of impairment is appropriate.

58. The Corporation has an equity investment of H 249.87 Crore in its 100% subsidiary, Prize Petroleum Company Limited. During the current financial year, an impairment assessment is carried out and H 14 Crore (2020-21: H Nil) is provided. The total amount of impairment towards the carrying value of the investment stands at H 176.98 Crore (31.03.2021: H 162.98 Crore). The said impairment is in line with the requirement of Ind AS 36 and is based on the estimated future cash flow projections from continuing use of its Assets in the entity. In the opinion of the management, the current level of impairment is appropriate.

59. The Corporation has an equity investment of H 66.77 Crore in its Associate, GSPC India Transco Limited. During the current financial year, an impairment assessment is carried out and H 14.00 Crore (2020-21: H Nil) is provided. The total amount of impairment towards the carrying value of the investment stands at H 14.00 Crore (31.03.2021: H Nil). The said impairment is in line with the requirement of Ind AS 36 and is based on the financial performance of the entity. In the opinion of the management, the current level of impairment is appropriate.

60. The Corporation''s 100% step-down subsidiary, Prize Petroleum International Pte Limited (a wholly owned subsidiary of Prize Petroleum Company Limited), incorporated in Singapore is engaged in the business of exploration & production of hydrocarbons. On a loan of $86m taken during the financial year 2016-17 by the step-down subsidiary towards which a corporate guarantee was provided, the carrying value of the obligation was re-measured under the provisions of Ind AS 109 during the current financial year and a loss allowance of H 31 Crore (2020-21: H Nil) is provided during the year and accounted under ''Sundry Expenses and Charges''. The total amount of loss allowance thus made towards the carrying value of the Corporate Guarantee stands at H 349 Crore (31.03.2021: H 318 Crore).

61. The Pradhan Mantri Ujjwala Yojana (PMUY) was launched in 2016 to provide LPG connections to women from below-poverty-line (BPL) households. The beneficiary is given an option to avail loan from the respective OMCs to meet the cost of the stove and first fill. This loan is to be recovered from the subsidy payable to the consumer on purchase of the refill cylinders. The loan has been provided to 1.76 Crore PMUY consumers for an amount aggregating to H 2,962.33 Crore (31.03.2021: H 2,963.01 Crore), and of this, H 1,705.32 Crore (31.03.2021: H 1,882.25 Crore) is outstanding at period end. The Loan is classified as ''subsequently measured at amortized cost'' in the financial statements. Considering the decline in the average subsidy of LPG during the year at H 29/- (2020-21: H 42/-) per cylinder and the consequential increase in loan tenure, the carrying value of loan outstanding as at Balance Sheet date is re-measured based on revised estimates of future cash flows. Such re-measurement loss resulted in further reduction in gross carrying amount of outstanding loan, net of interest unwinding, by H 251.85 Crore (2020-21: H 273.11 Crore) during the year. Considering the cumulative re-measurement loss, net of interest unwinding, amounting to H 524.96 Crore (31.03.2021: H 273.11 Crore) and accounting of Deferred Expense amounting to H 528.29 Crore (net balance after amortisation as of 31.03.2022 is H 387.16 Crore), the outstanding loan at period end is carried in the books at H 652.07 Crore (31.3.2021: H 1,080.85 Crore). Further, considering the consumption pattern of refills, level of subsidies and consequential impact on repayment of the loan, by following the principles of prudence and conservatism, net of reversal, if any, a cumulative provision of H 118.70 Crore (31.03.2021: H 618.07 Crore) is estimated and recognized in books. The reversal of provision during the year amounted to H 499.37 Crore (2020-21: a provision of H 390.67 Crore) that arose primarily due to inactive consumer turning active, pursuant to focused initiatives taken in this regard. The expected credit loss estimate is reasonable.

62. The Corporation implements various schemes of Government of India, such as - PMUY, Direct Benefit Transfer scheme, wherein the amount is either received in advance or reimbursed subsequently. As of 31.03.2022, reimbursements amounting to H 152.11 Crore (31.03.2021: H 215.92 Crore) are pending for a period beyond 6 months. Being dues from Government, no provision has been considered necessary.

63. Pursuant to completion of tenure in Office & consequential cessation of 2 of the Independent Directors, the number of Independent Director in the Board at the commencement of the financial year has got reduced to 1 only, which was less than the minimum number of Independent Directors required in terms of the provisions of the Listing Agreement and the Companies Act, 2013. This was also not in line with the requirement under the relevant SEBI Regulations for the Board to have independent Women Director. During the financial year 2021-22, the Corporation approached the administrative ministry for appointment of requisite number of Directors for compliance of the provisions of the Listing Agreement and the Companies Act, 2013.During the financial Year 2021-22, MOP&NG appointed 5 Independent Directors on the Board, i.e. Four Independent Directors on November 16, 2021 and One Independent Director on December 30, 2021. Thereafter, the Corporation is compliant of all the provisions relating to Composition of Board and the Statutory Board Level Committees prescribed under the Act. This position has been continuing as on the date of approval of Financial Statements for the Financial Year 2021-22.

(H / Crore)

31.03.2022

31.03.2021

64. Interest on borrowings capitalized (weighted average cost of borrowing rate used for capitalization of general borrowing is 4.37% (2020-21 : 1.53%)).

1,205.24

719.46

65. The Corporation has presented segment information in its Consolidated Financial Statements. Accordingly, in terms of provisions of Indian Accounting Standard on Segment Reporting (Ind AS 108) no disclosure related to the segment are presented in the Standalone Financial Statements.

67. Employee benefit obligations

A. Provident Fund

The long term employee benefit of Provident Fund is administered through a separate Trust, established for this purpose in accordance with The Employee Provident Fund and Miscellaneous Provisions Act, 1952. The Corporation''s contribution to the Provident Fund is remitted to this trust based on a fixed percentage of the eligible employee''s salary and charged to Statement of Profit and Loss. During the year, the Corporation has recognized H 161.93 Crore (2020-21: H 167.65 Crore) as Employer''s contribution to Provident Fund in the Statement of Profit and Loss.

Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the Corporation and charged to Statement of Profit and Loss. During the year, the actual return earned by the fund has been higher than the Government specified minimum rate of return. There did not arise a shortfall in the fund as on 31st March 2022 and 31st March 2021. The present value of benefit obligation at period end is H 4,897.34 Crore (31.03.2021: H 4,678.45 Crore). The fair value of the assets of Provident Fund Trust as of Balance Sheet date is greater than the present value of benefit obligation.

During the year a provision of H 15.87 Crore has been reversed (created in FY 2019-20) being excess provision no longer required.

B. Superannuation Fund

The Corporation has Superannuation - Defined Contribution Scheme (DCS) maintained by ''Superannuation Benefit Fund Scheme (SBFS) Trust'' wherein Employer makes a monthly contribution of a certain percentage of ''Basic Salary & Dearness Allowance(DA)'', out of 30%, earmarked for various Superannuation benefits. This is in accordance with Department of Public Enterprises (DPE) guidelines. These contributions are credited to individual Employee''s Account maintained either with Life Insurance Corporation of India (LIC) or an optional National Pension Scheme (NPS) Account. For the financial year 2021-22, the Corporation has made an overall contribution of H 194.39 Crore (2020-21 : H 192.51 Crore) towards Superannuation - DCS [including H 78.73 Crore (2020-21 : H 59.70 Crore) to NPS] by charging it to the statement of Profit and Loss.

While there did not arise any need for funding in the financial year 2021-22, during the year 2020-21, the Corporation had made a provision of H 23.41 Crore by charging to Statement of Profit & Loss towards increase in liabilities in case of Superannuation - Defined Benefit Scheme (DBS) determined based on actuarial valuation.

Pursuant to paragraph 57 of Ind AS 19, accounting by an entity for defined benefit plans, inter-alia, involves determining the amount of the net defined benefit liability (asset) which shall be adjusted for any effect of limiting a net defined benefit asset to the asset ceiling prescribed in paragraph 64. As per Para 64 of Ind AS 19, in case of surplus in a defined benefit plan, an entity shall measure the net defined benefit asset at the lower of actual surplus or the value of the assets ceiling determined using the discount rate. The asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Further, paragraph 65 provides that a net defined benefit asset may arise where a defined benefit plan has been overfunded or where actuarial gains have arisen.

As per the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952, the Company has no right to the benefits either in the form of refund from the plan or lower future contribution to the plan towards the net surplus of H 72.26 Crore (31.03.2021: H 115.53 Crore) determined through actuarial valuation. Accordingly, the Corporation has neither recognised the surplus as an asset, nor the remeasurement loss /gains in ''Other Comprehensive Income'', as these pertain to the Provident Fund Trust and not to the Corporation.

H. Notes:

I. Gratuity : Each employee rendering continuous service of 5 Years or more is entitled to receive gratuity amount equal to 15/26 of the eligible salary for every completed years of service subject to maximum of H 0.20 Crore at the time of separation from the Corporation. Besides the ceiling, gratuity increases by 25% whenever IDA rises by 50%. The long term employee benefit of Gratuity is administered through a Trust, established under The Payment of Gratuity Act, 1972. The Board of Trustees comprises of representatives from the Employer who are also plan participants in accordance with the plans regulation. The liability towards gratuity is funded with Life Insurance Companies.

II. Pension : The employees covered by the Pension Plan of the Corporation are entitled to receive monthly pension for life. However, none of the current serving employees are covered under Pension Plan of the Corporation.

III. Post Retirement Medical Benefit (PRMBS) : Post Retirement Benefit medical scheme provides medical benefit to retired employees and eligible dependent family members. This long term employee benefit is administered through a Trust. The liability towards Post-Retirement Medical Benefit for employees is ascertained, yearly, based on the actuarial valuation and funded to the Trust.

IV. Ex-gratia : The ex-employees of the Corporation are covered under the Scheme, entitling to get ex-gratia, determined based on their salary grade at the time of their superannuation. The benefit is paid to eligible employees till their survival, and thereafter till the survival of their spouse. However, none of the current serving employees are covered under this Plan.

V. Resettlement Allowance : Upon superannuation from the services of the Corporation, there are employees who permanently settle down at a place other than the location of the last posting. Such employees are provided with resettlement allowance as per policy of the Corporation.

VI. Funds retained in LIC : The employees of the Corporation are entitled to certain leave as per policy. The liability of the Corporation is determined annually through actuarial valuation and funded with Life Insurance Corporation of India (LIC).

VII. Others : The expected return on plan assets is based on market expectation over the entire life of the related obligation. The actuarial assumption with regard to future salary escalation takes into consideration, the factors such as inflation, seniority, promotion, demand & supply in the employment market.

VIII. Figures in italics represent last year figures

68. As on 31.03.2022, the Corporation has an inventory of Non-Solar Renewable Energy Certificates (RECs) numbering 16,830 Units (31.03.2021: 35,041), available for Sale after earmarking a requisite quantity already for captive consumption. Traded in Indian Energy Exchange Ltd., the revenue from RECs is recognized as and when the same are sold. At period end, these RECs are traded in a price band of H 1,000/- to H 3,000/- per REC. Pursuant to order of Appellate Tribunal for Electricity (APTEL) , trading of RECs has restarted during the year and the validity of RECs has been extended till December 2023.

69. There are no loans or advances in the nature of loans granted to promoters, directors, KMPs and the related parties either severally or jointly with any other person that are repayable on demand (or without specifying any terms or period of repayment) except for a loan of H 60.00 Crore granted to one of the subsidiaries, which will be converted to equity subsequent to the reporting date. Details of the same is as under:

72. Other Disclosures

72.1. The Quarterly returns / statements of the first 3 quarters of the current financial year with respect to current assets (Inventories) filed with banks / financial institutions for the financial year 2021-22 are in agreement with the books of accounts. The return for the 4th quarter, being price sensitive information, will be filed after declaration of annual results.

72.2. Compliance with number of layers of companies as per Clause 87 of Section 2 of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable for Government Companies.

72.3. There have not been any revaluation of Property, Plant & Equipment and Intangible Assets.

72.4. The borrowings from banks and financial institutions were used for the purpose for which it was taken.

72.5. There are no proceedings initiated or pending for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

72.6. No Bank or financial institution or other lender has declared the Corporation as willful defaulter.

72.7. There are no Charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period.

72.8. There are no pending applications with any authority for a scheme of arrangement in terms of sections 230 to 237 of the Companies Act, 2013.

72.9. To the best of knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Corporation (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

To the best of knowledge and belief, no funds have been received from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, to directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiary") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

72.10. There are no unrecorded transactions, which have been surrendered or disclosed as Income during the year in the tax assessments under the Income tax act, 1961.

72.11. There are no trading entered into or investments made in Crypto Currency or Virtual Currency during the year.

73. Previous periods figures are regrouped / reclassified wherever necessary.


Mar 31, 2021

Includes assets costing '' 0.007 Crore /- (31.03.2020 : '' 0.007 Crore) of erstwhile Kosan Gas Company that have not been handed over to the Corporation. Though Kosan Gas Company was to give up their claim, in view of the tenancy right sought by third party, the matter is under litigation.

Includes '' 810.28 Crore (31.03.2020 : '' 799.55 Crore) towards Land, Building, Plant & Equipment, Furniture & Fixtures, Transport equipments, Office Equipments, Pipelines, Railway Sidings, etc. representing Corporation''s Share of Assets, jointly owned with other Companies.

Includes '' 32.25 Crore (31.03.2020 : '' 32.35 Crore) towards Roads & Culverts, Transformers & Transmission lines, Railway Sidings & Rolling Stock for which though ownership does not vest with the Company, operational control over such assets is exercised. These assets are amortized as per useful life specified in Schedule II of Companies Act, 2013.

Assets held for sale consists of items such as Plant and equipment, office equipment, transport equipment, buildings, furnitures and fixtures and roads and culverts which have been identified for disposal due to replacement/ obsolescence of assets which happens in the normal course of business. These assets are expected to be disposed off within the next twelve months. On account of classification of these assets as Asset held for sale'', a loss of '' 13.92 Crore during the year (2019-20: '' 17.97 Crore) has been recognised in the statement of profit and loss.

Includes Right of Use Assets having Gross value '' 19.38 Crore (31.03.2020: '' 27.57 Crore) for land acquired on lease-cum-sale basis from Karnataka Industrial Area Development Board (KIADB), that has not been amortized over the period of lease in view of freehold title that would vest upon fulfilment of certain terms and conditions, as per allotment letter.

Includes adjustment to Cost of Assets pursuant to exchange differences arising on long term foreign currency monetary items, which, in accordance with Para 7AA of Ind AS 21 read with Para D13AA of Ind AS 101 are capitalized and depreciated over the balance useful life of the assets.

The Corporation has considered pipeline assets laid within the boundary limit of its premises as integral part of Tanks / Other Plant and Machinery and have been depreciating such assets based on the useful life of associated Plant & Equipment, in line with the Schedule II of the Companies Act, 2013.

Includes assets of '' 1.03 Crore (31.03.2020: '' 1.20 Crore) forming part of Plant & Equipment, Buildings & Roads & Culverts, wherein though Infrastructure Facilities were provided at Railway Premises, no sales transactions were entered into during current financial year.

. Assets of '' 0.02 Crore (31.03.2020 : '' 0.03 Crore) comprising 3 number of properties (31.03.2020 : 4) towards which title deeds for freehold/leasehold are not available and further for assets of '' 2.25 Crore (31.03.2020 : '' 2.27 Crore) comprising of 13 number of properties (31.03.2020 : 14) for which property tax receipts are available. Further in case of land taken on lease from Vishakhapatnam Port Trust (VPT) Legal formalities of registration of lease deed is pending in 36 cases having Gross block as at 31.03.2021 '' 593.45 Crore and Net Block as at 31.03.2021 '' 543.09 Crore.

. The process of capitalization in respect of Property, Plant and Equipment including accounting of Capital Work-in-Progress is under continuous review and updation, wherever required, is being carried out on a regular basis.

As per the guidelines issued by Department of Public Enterprises (DPE) in August 2005, the Board of Directors of Navratna Public Sector Enterprises (PSEs) can invest in joint ventures and wholly owned subsidiaries subject to an overall ceiling of 30% of the net worth of the PSE. The Corporation has requested Ministry of Petroleum & Natural Gas (MOP&NG) to confirm its understanding that for calculating this ceiling limit, the amount of investments specifically approved by Government of India (i.e. investment in HPCL Mittal Energy Ltd (HMEL) and HPCL Rajasthan Refinery Limited (HRRL)) are to be excluded. The Corporation has calculated the limit of 30% investment in joint ventures and wholly owned subsidiaries, by excluding these investments. As per financial position as on 31st March 2021, the investments in joint ventures and wholly owned subsidiaries are well within the said 30% limit.

Petronet India Ltd. is in the process of Voluntary winding up w.e.f. August 30, 2018.

HPCL Shapoorji Energy Private Limited (HSEPL), a joint venture company with 50:50 ownership with SP Ports Private Limited (SPPPL) was incorporated in October 2013 to set up and operate an Liquefied Natural Gas (LNG) regasification terminal at greenfield port of Chhara, Gir Somnath District, Gujarat. On 30th March 2021, the Corporation acquired the entire shares held by SPPPL. Upon the acquisition, HSEPL has become a wholly owned subsidiary of the Corporation.

. Includes an amount of '' 80.56 Crore (2019-20: '' 80.56 Crore) on which a net provision of '' 22.30 Crore (2019-20 : Nil) made in the current financial year 2020-21 carried in the books as receivable towards Customs Duty refund claims filed relating to the period 1994-97 to 2020-21. As per the assessment made by the management, though partially provided, considering the effluxion of time, the refund is legally tenable, management is continuing to pursue the matter with Authorities for early settlement of these claims.

1.1. The write-down including reversals, if any, of Inventories to net realisable value during the financial year amounted to '' 122.24 Crore (31.03.2020 : '' 1,002.93 Crore). The write downs and reversal are included in cost of materials consumed, changes in Inventories of finished goods, stock-in-trade and work in progress. (Refer Note 62)

Rights and Restrictions on Equity / Preference Shares:

The Company has only one class of Equity Shares having a face value of '' 10/- per share which are issued and

subscribed. Each Shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors

is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

In the event of the winding up of the Company, the holders of equity shares will be entitled to receive the remaining assets of

the Company in proportion to the number of equity shares held by the shareholders and the amount paid up thereon. The Company also has 75,000 6% cumulative Redeemable Non-convertible Preference Shares of '' 100 /- each as a part of the Authorised Capital, which were issued earlier by the erstwhile ESSO Standard Refining Co. of India Ltd. (ESRC). Presently the said Preference Shares stand redeemed.

In the period of five years immediately preceding 31st March, 2021:

(i) The Company had issued Bonus Shares during Financial Years 2017-18 and 2016-17 in the ratio of 1:2 and 2:1 respectively by capitalization of Reserves. The total number of Bonus Shares issued during Financial Years 2017-18 and 2016-17 are 50,79,40,875 and 67,72,54,500 equity shares respectively, having face value of '' 10 each.

(ii) The Board, at its meeting held on 04.11.2020 approved the buyback of fully paid-up equity shares of the face value of '' 10/- from the open market through stock exchange mechanism for an aggregate amount not exceeding '' 2,500 Crore (“Maximum Buyback Size”) and at a price not exceeding '' 250 per Equity Share, payable in cash. This do not include any transaction costs such as brokerage, fees, turnover charges, taxes such as buyback tax and securities transaction tax, stamp duty, advisor fees, filing fees etc. Pursuant to relevant SEBI regulations, a public announcement was made on 06.11.2020, buy-back opened on 17.11.2020 and it closed on 14.05.2021. As on 31.03.2021, equity shares numbering 7,18,01,491, representing 4.71% of paid up Share Capital (prior to commencement of buy-back), having a face value of '' 71,80,14,910/-have been bought back. Of this, in line with SEBI Regulations, 6,79,77,038 shares have been extinguished as on reporting date and the rest of it on 20.04.2021. The effect of subsequent extinguishment, being adjusting event, under Ind-AS, has been duly recognized as on 31.03.2021 itself.

The loan has been secured with first charge on the facilities of Vishakh Refinery Modernisation Project, Mumbai Refinery Expansion Project, Awa Salawas Pipeline, Manglore Hassan Mysore LPG Pipeline, Uran-Chakan / Shikarpur LPG Pipeline & Rewari Mathura Kanpur Pipeline for a value of '' 17,437.87 Crore (31.03.2020: '' 15,815.87 Crore). Of the loan amount '' 725.00 Crore (31.03.2020: '' 181.19 Crore) is repayable within one year and the same has been included in ‘Current Maturities of Long Term Borrowings'' under Note # 26.

3. Syndicated Loans from foreign Banks (repayable in foreign currency)

The Corporation has availed Syndicated Loans from foreign Banks at fixed rate and/or 3 months floating LIBOR plus spread (spread range: 100 to 155 basis point p.a.). These loans are taken for the period up to 5 years. Of the loan amount '' Nil (31.03.2020: '' 4,150.07 Crore) is repayable within one year and the same has been included in ‘Current Maturities of Long Term Borrowings'' under Note # 26.

. Includes loans repayable within one year: Syndicated Loans from Foreign Banks (repayable in foreign currency) '' Nil Crore (31.03.2020: '' 4,150.07 Crore); Loan from Oil Industry and Development Board '' 725.00 Crore (31.03.2020 : '' 181.19 Crore).

!. Dues as at the end of the year for credit to Investors'' Education and Protection Fund is '' NIL (31.03.2020: NIL).

!. Includes deposits received towards Rajiv Gandhi Gramin LPG Vitrak Yojana '' 241.89 Crore (31.03.2020: '' 241.89 Crore) and Prime Minister Ujjawala Yojana of '' 3,015.69 Crore (31.03.2020: '' 3,020.91 Crore).These deposits have been either made by Government of India or created out of CSR fund.

.1. Net of discount of '' 2,199.63 Crore (2019-20: '' 2,348.47 Crore).

.2. Includes Subsidy on PDS Kerosene from State Governments amounting to '' 31.30 Crore (2019-20: '' 63.95 Crore).

.3. Includes Budgetary Support amounting to '' -9.80 Crore (2019-20: '' 281.41 Crore) under ‘Recovery under Subsidy Schemes'' towards under-recovery on sale of PDS SKO.

The amounts written off relate to customers who have defaulted payments and are not expected to pay their outstanding balances, mainly due to economic circumstances.

Cash and Cash Equivalents:

The Corporation held cash and cash equivalents of '' 155.29 Crore as on 31.03.2021 (31.03.2020 : '' 95.04 Crore). The cash and cash equivalents (other than cash on hand) are held with scheduled banks. The Corporation invests its surplus funds for short duration in fixed deposit with banks, Govt of India T-bills and liquid Schemes of Mutual Funds, all of which carry no mark to market risks as the Corporation is exposed only to low credit risk.

Derivatives:

The forex and interest rate derivatives are entered into with banks having an investment grade rating. Commodity derivatives are entered with reputed Counterparties in the OTC (Over-the-Counter) Market. The exposure to counter-parties are closely monitored and kept within the approved limits.

Investment in Debt Securities:

Investment are made in government securities or bonds which do not carry any credit risk, being sovereign in nature.

2. Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. Corporation has a strong focus on effective management of its liquidity to ensure that all business and financial commitments are met on time. The Corporation has adequate borrowing limits in place duly approved by its Shareholders and Board. Corporation''s sources of liquidity includes operating cash flows, cash and cash equivalents, fund and non-fund based lines from banks and liquid investment portfolio. Corporation ensures that there is minimal concentration risk by diversifying its portfolio across instruments and counterparties. Cash and fund flow management is monitored daily in order to have smooth and continuous business operations.

(i) Financing arrangements

The Corporation has an adequate fund and non-fund based lines from various banks. The Corporation has sufficient borrowing limits in place duly, approved by its Shareholders and Board. Domestic and international credit rating from reputed credit rating agencies enables access of funds both from domestic as well as international market. Corporation''s diversified source of funds and strong operating cash flow enables it to maintain requisite capital structure discipline. Corporation diversifies its capital structure with a mix of instruments and financing products across varying maturities and currencies. The financing products include syndicated loans, foreign currency bonds, TREPS loan, commercial paper, non-convertible debentures, buyer''s credit loan, clean loan etc. Corporation taps domestic as well as foreign debt markets from time to time to ensure appropriate funding mix and diversification of geographies.

Market Risk - Market Risk is further categorised in (i) Currency risk , (ii) Interest rate risk & (iii) Commodity risk:

. Currency risk:

The Corporation is exposed to currency risk, primarily on account of its repayment obligations of loans taken in foreign currency and imports, to be paid in foreign currency. The exposure is mainly denominated in U.S.Dollar. The Corporation has a Forex Risk Management Cell (FRMC) which actively review the forex and interest rate exposures. The Corporation uses generic derivative contracts to mitigate the risk of changes in foreign currency exchange rates in line with Corporation''s forex risk management policy. The Corporation does not use derivative financial instruments for trading or speculative purposes.

The Corporation has long-term foreign currency syndicated loans with floating rate of interest, which exposes the Corporation to cash flow interest rate risk. The borrowings at floating rate are denominated in USD. The Corporation manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Under this, the Corporation agrees with other Parties to exchange at specified intervals (i.e. quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts. The Corporation monitors the interest rate movement and manages the interest rate risk, based on the Corporation''s Forex Risk Management Policy. The Corporation also has a Forex Risk Management Cell (FRMC) that actively reviews the forex and interest rate exposures. The Corporation does not use derivative financial instruments for trading or speculative purposes.

The Corporation''s borrowings, contracted at fixed rate are carried at amortised cost. These are not impacted to interest rate risk as defined in Ind AS 107 as neither the carrying amount nor the future cash flows will fluctuate in the event of a change in market interest rates.

Derivatives & Hedging

The Corporation enters into derivative contracts for hedging purpose, to mitigate the commodity price risk, on Highly probable forecast transactions as detailed above. The Corporation has applied Hedge Accounting on commodity derivative transactions entered subsequent to 01 January 2020 as per Ind AS 109 (Financial Instruments). Consequent to this a Mark to Market Debit amounting to '' 1.14 Crore (2019-20: '' 24.11 Crore) has been accounted in Other Comprehensive Income which will be recycled to Statement of Profit and Loss in subsequent period on settlement of respective contracts.

All these hedges are accounted for as Cash Flow Hedges.

Hedge Effectiveness:

The Corporation has established a hedge ratio of 1:1 for the hedging relationship as the underlying risk of the commodity forward contracts are identical to the hedged risk component. Hedge item and the hedging instruments have economic relationship as the terms of the commodity forward contracts match with the terms of hedge items. Considering the economic relationship and characteristics of the hedging instrument being aligned to the hedged item, the fair value changes in the hedging instrument reasonably approximates the fair value changes in the hedged Item (in absolute amounts).

Source of Hedge Effectiveness:

The Corporation has identified the following sources of hedge ineffectiveness which are not expected to be material as at date:

a. Counterparty Credit Risk impacting the fair value of the hedge instrument and hedge item.

b. Difference in the timing of the cash flows of the hedged items and the hedge instruments

c. Different indexes used to hedge risk of the hedged item.

d. Changes to forecasted amounts of cash flows of hedged items and hedging instruments.

Provision for tax for earlier years '' 16.63 Crore (2019-20: '' (1,548.11) Crore) comprising of additional provision towards current tax of '' 7.18 Crore (2019-20 : '' 172.33 Crore), additional provision towards deferred Tax of '' 17.05 Crore (2019-20: '' (1,652.03) Crore) and recognition of MAT credit Entitlements of '' 7.60 Crore (2019-20: '' 68.41 Crore).

The Provision for Tax for earlier years includes an additional amount of '' 11.79 Crore (2019-20: '' 623.01 Crore) provided during year, pursuant to filing of declaration and acceptance by Income tax department under Vivad Se Vishwas Scheme, 2020 (opted in FY 2019-20), leading to revised tax liability of '' 776.66 Crore vis.a.vis. earlier determination of '' 764.87 Crore, accounted till previous financial years. The proceedings have not been concluded.

1 The Corporation with a Participating Interest(PI) of 60%, Prize Petroleum Company Limited (PPCL), a subsidiary company along with 2 other consortium members together having a PI of 10%, and M3nergy Sdn. Bhd (M/s M3nergy) having a PI of 30% were awarded service contract in March, 2006 for development of ONGC''s offshore marginal oilfields of cluster-7. PPCL was the executing contractor. Parties provided necessary Bank Guarantees to ONGC. Since M/s M3nergy could not meet their contractual obligations, the contract was terminated by ONGC and Bank guarantees were forfeited. HPCL and PPCL demanded the refund of monies forfeited towards encashment of Bank Guarantee along with other claims from M/s M3nergy. A counter claim of USD 36.51 Million was made by M3nergy on termination of such service contract. The matter was referred to Arbitration.

The Arbitral Tribunal passed 3 Awards, 3rd being Final Award. All awards were in favour of the Corporation and PPCL. The Arbitral Tribunal vide 1st partial arbitration award dated 09.01.2014 held that M3nergy had committed breach of the contract and hence their counter claims were disallowed and that the Corporation and PPCL are entitled for damages, which will be quantified later. The 2nd Partial Award dated 27/09/2017 allowed 2 claims of the Corporation/ PPCL in the ratio of 6:1, viz., (1) A claim of USD 91.3 million towards loss of profit (by a majority Award) and (2) A claim of recovery of damages by way of money lost due to encashment of Bank Guarantees of '' 41.60 Crore (by a unanimous Award). Both amounts were allowed with interest. Arbitral Tribunal passed final award as to cost vide Award dated 15.06.2018 thereby directing M3nergy to pay '' 4.82 Crore to the Corporation/PPCL towards cost of arbitration.

All the 3 Awards were challenged by M3nergy before the Bombay High Court. However, there was no stay granted by Bombay High Court, hence, HPCL/ PPCL filed applications for (a) Mareva Injunction and (b) Enforcement of the Award before the Courts in Malaysia since M3nergy is located in Malaysia.

By Orders dated 10th January, 2019 the Bombay High Court set aside all three Arbitration Awards. As the Awards were set aside (on the basis of which the enforcement application was filed by HPCL), on 28.02.2019 the Malaysian High Court at Kuala Lumpur allowed the application of M3nergy to set aside the enforcement order with liberty to file fresh proceedings, if HPCL/ PPCL succeed later. Meanwhile, HPCL and PPCL have filed Appeals against the setting aside order (of Single Judge Bombay High Court) before the Division Bench of the Bombay High Court. After hearing arguments of parties, on 16th of October, 2019 the Bombay High Court set aside the Single Judge''s Order and remanded all the 3 matters back to the Single Judge of the Bombay High Court, to decide the matter afresh on merits. This Order was challenged by M3nergy before the Supreme Court by filing Special Leave Petition (SLP) which, after brief arguments, was dismissed as withdrawn (by M3nergy) on 31st January 2020. As a result, the Single Judge of Bombay High Court will hear the matter afresh on merits.

As a result, the Corporation''s share of the awarded amount which is approximately '' 420.74 Crore (78.26 Million USD @ exchange rate of '' 48.68 for a US Dollar prevailing on January 6, 2009 plus '' 39.79 Crore towards loss of profit /damages /costs) and interest thereon has not been recognized on a conservative basis. Further, the claim raised by M3Energy to the extent of Corporation''s share i.e. approximately '' 228.81 Crore (@ Exchange rate of 1 USD = '' 73.115), being considered remote is also not recognized.

2. Corporation has entered into a long term product off take agreement with HPCL - Mittal Energy Limited (HMEL), its joint venture company, for purchase of petroleum products produced by the refinery. This agreement has a take or pay clause and the Corporation is committed to purchase the said petroleum products over the tenure of the agreement.

3. In respect of certain Joint Venture/Associate Companies, the Corporation and other joint venture partners have committed that they would jointly hold at least 51% of share capital of such Joint Venture/Associate till the repayment of certain bank loans / bonds.

(a) I nter-Oil Company transactions are reconciled on a continuous basis. However, year end balances are subject to confirmation/ reconciliation which is not likely to have a material impact.

(b) Customer''s accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts.

Considering the Government policies and modalities of compensating the oil marketing companies towards under-recoveries, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. Since there is no indication of impairment of assets as at Balance Sheet date as per the assessment carried out, no impairment has been considered. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same.

On the reporting date, the Corporation has an equity investment of '' 748.94 Crore (31.03.2020: '' 395.16 Crore) in its wholly owned subsidiary, HPCL Biofuels Ltd. (HBL). The above investment includes an equity infusion together with conversion of loan into equity during the current financial year aggregating to '' 353.78 Crore. The subsidiary has reported loss for the current financial year. Pursuant to impairment assessment carried out, an amount of '' 50 Crore (2019-20: '' 196.16 Crore against equity and '' 127 Crore towards loss allowance against Outstanding Loan) has been provided during the current financial year, taking the aggregate impairment as of 31.03.2021 to '' 572.16 Crore (31.03.2020: '' 395.16 Crore against equity and '' 127 Crore against Loan) against the aforesaid carrying value. The said impairment has been carried out in line with the requirement of Ind AS 36 and is based on the estimated future cash flow projections from continuing use of its Assets in the entity. In the opinion of the management, the current level of impairment is appropriate considering the intricacies involved in the Sugar Industry.

The Corporation has an equity investment of '' 248.97 Crore in its 100% subsidiary, Prize Petroleum Company Limited. During the current financial year, an impairment assessment is carried out and '' NIL (2019-20: '' 33.57 Crore) is provided. The total amount of impairment towards the carrying value of the investment stands at '' 162.98 Crore (31.03.2020: '' 162.98 Crore). The said impairment is in line with the requirement of Ind AS 36 and is based on the estimated future cash flow projections from continuing use of its Assets in the entity. In the opinion of the management, the current level of impairment is appropriate.

The Corporation''s 100% step-down subsidiary, Prize Petroleum International Pte Ltd. (a wholly owned subsidiary of Prize Petroleum Company Ltd.), incorporated in Singapore is engaged in the business of exploration & production of hydrocarbons. On a Corporate Guarantee provided to the Bank by the corporation towards a loan of $86m taken by the step-down subsidiary during the financial year 2016-17, the carrying value of it was re-measured during the current financial year and a loss allowance of '' NIL (2019-20: '' 165 Crore) is provided during the year (under ‘Sundry Expenses and Charges''). The total amount of loss allowance thus made towards the carrying value of the Corporate Guarantee stands at '' 318 Crore (31.03.2020: '' 318 Crore).

The Pradhan Mantri Ujjwala Yojana (PMUY) was launched in 2016 to provide LPG connections to women from BPL households. Under the scheme, no charges towards the deposit of equipment and cost of Suraksha hose were to be collected from the beneficiary. An amount of '' 1,600 per connection is paid by the Oil Marketing Companies (OMC) to the Distributor and the Government reimburses OMC''s an amount of '' 1,600 per connection towards the same. For the purchase of the stove (cost '' 990/-) as well as for cost of the first fill (prevailing rate at the time of installation), the beneficiary is given an option to avail loan from OMC. This loan is to be recovered from the subsidy payable to the consumer on purchase of the refill cylinder. The total loan disbursed to Consumers under (PMUY), since inception is '' 2,963.01 Crore (31.03.2020: '' 2,963.75 Crore) and of this '' 1,882.25 Crore (31.03.2020: '' 1,966.21 Crore) is outstanding at period end. This is to be repaid out of the subsidy accruing to the consumer from the subsequent refill of cylinders. The overall consumer base is at 2.15 Crore(net of termination) and the consumption pattern of LPG is still evolving. Considering the consumption pattern of refills, level of subsidies and consequential impact on repayment of the loan, by following the principles of prudence and conservatism, an aggregate provision of '' 618.07 Crore (31.03.2020: '' 227.40 Crore) is estimated and recognized as on 31/03/2021, which includes a provision of '' 390.67 Crore (2019-20: '' 131.69 Crore) made during the financial year 2020-21. The expected credit loss estimate is reasonable. The Loan is considered as ‘subsequently measured at amortized cost'' in the financial statements. Considering the steep decline in the average subsidy of LPG during the year at '' 42/- (2019-20: '' 200/-.) per cylinder and the consequential increase in loan tenure, the carrying value of loan outstanding as at Balance Sheet date requires re-measurement based on revised estimates of future cash flows. Such re-measurement resulted in reduction in gross carrying amount of outstanding loan by a '' 450.62 Crore (2019-20: '' NIL). Further, considering the recognition of Interest Income of '' 177.51 Crore during the year on this Loan, both having been recognized in the Statement of Profit and Loss during the year, the net impact is a reduction in fair-valuation of loan by '' 273.11 Crore. The carrying amount of outstanding loan at period end after considering loans disbursed/recovered during the year is '' 1,080.85 Crore (2019-20:? 1,437.95 Crore).

The Corporation implements various Government of India schemes such as PMUY Direct Benefit Transfer scheme wherein the amount is either received in advance or reimbursed subsequently. As of 31.03.2021, reimbursements amounting to '' 215.92 Crore (31.03.2020: '' 2,518.00 Crore) are pending for a period beyond 6 months. Being dues from Government, no provision has been considered necessary.

During the financial year, Pradhan Mantri Garib Kalyan Yojana (PMGKY) was rolled out by Government of India (GOI) as a COVID relief measure. The scheme entailed PMUY Consumers to avail a sequential advance towards purchase of three free refill cylinders. A total of 3.81 Crore refills were delivered under the scheme towards which an advance amount of '' 2,601.86 Crore (2019-20: NIL) was disbursed. The scheme ended on 31.12.2020. The scheme mechanism enabled filing of claim with GOI towards reimbursement. Claims amounting to '' 2,510.28 Crore were settled leaving an amount of '' 91.58 Crore unsettled till date. This unsettled amount represents advance towards which either, the Consumers after availing advance, had not taken the refills, or claims by the Corporation, which were not settled fully pursuant to price variance between date of advance and date of sale of refill cylinders. Considering that the mechanism towards settlement of such amounts is not explicit, notwithstanding the persuasion for its full and final settlement with GOI, considering the principles of prudence and conservatism, a loss allowance has been recognized amounting to '' 91.58 Crore (2019-20: NIL).

!. The COVID-19 pandemic is continuing to inflict high economic and human costs causing slowdown of economic activity, locally and globally. Specific to the Corporation, the pandemic did have an impact in the sales volume, more pronounced in April 2020/Q1FY''21 which had gradually tapered down by end of December 2020. Project construction sites which were required to be closed down after announcement of nationwide lockdown had restarted gradually and by September 2020, resumption to pre-COVID level could be achieved. Despite pandemic, being in the business of essential commodity, all critical supply locations have continued operating even during the lockdown period with health, hygiene and safety measures in place. Both our Refineries and all the supply distribution locations including bulk storage terminals and depots, LPG bottling plants, aviation fuel stations, lube blending plants etc., functioned all through the year with optimized manpower during the lockdown period.

The impact assessment of pandemic is a continuing process given the uncertainties associated with its nature and duration. Being in the business of essential commodity, using the principles of prudence in applying judgements and estimates, the Corporation expects no significant impact on the continuity of operations of the business on long term basis and expects to recover carrying amount of assets, investments, loans, trade receivable etc. On the Capex front, the Corporation expects to go ahead with its capex plans and ensure execution of the same. The Corporation has adequate fund based limits with consortium as well as non-consortium banks for meeting its working capital requirements. There are adequate foreign and domestic resources that could be readily tapped for raising funds required for meeting any of its Capex or working capital needs and therefore there are no liquidity concerns. Unlike previous financial year, the current situation did not call for any significant write down of inventories at period end resorting to reporting of exceptional item in the financial statement (FY 2019-20: '' 1,002.93 Crore, net of Tax: '' 750.51 Crore).

. During the financial year, pursuant to completion of tenure in Office & consequential cessation of 2 of the Independent Directors combined with Government of India not having appointed further Independent Directors to the Board, the number of Independent Director in the Board has got reduced to 1 only, which is less than the minimum number of Independent Directors required in terms of the provisions of the Listing Agreement and the Companies Act, 2013. This is also not in line with the requirement under the relevant SEBI Regulations for the Board to have independent Women Director. The Company has approached the administrative ministry for appointment of requisite number of Directors for compliance of the provisions of the Listing Agreement and the Companies Act, 2013 and the same is awaited. This position has been continuing even as on the date of approval of Financial Statements for the financial year 2020-21. Pending such appointment, the financial statements have been reviewed and recommended to the Board by the reconstituted Audit Committee consisting of one Independent Director and further, these have been approved by the Board consisting of one Independent Director, who is also not an Independent Women Director.

69. Employee benefit obligationsA. Provident Fund:

The long term employee benefit of Provident Fund is administered through a separate Trust, established for this purpose in accordance with The Employee Provident Fund and Miscellaneous Provisions Act, 1952. The Corporation''s contribution to the Provident Fund is remitted to this trust based on a fixed percentage of the eligible employee''s salary and charged to Statement of Profit and Loss. During the year, the Corporation has recognized '' 167.65 Crore (2019-20: '' 146.30 Crore) as Employer''s contribution to Provident Fund in the Statement of Profit and Loss. Under the Statute, the shortfall, if any, in the interest obligation, in comparison to minimum rate of return, declared by Government of India will have to be made good by the Employer. There did not arise any shortfall in interest obligation in the current financial year though the previous year''s shortfall, provisionally accounted in 2019-20 as '' 10.04 Crore got revised to '' 10.43 Crore and therefore an amount of '' 0.39 Crore (2019-20: '' 10.04 Crore) has been provided and charged to Statement of Profit and Loss during the current financial year.

On reporting date, the Trust Investments included few Non-convertible Debentures of certain Companies, amounting to '' 243 Crore (31.03.2020: '' 243 Crore) which have witnessed default in meeting interest obligations in 2019-20, which continued in 2020-21. In anticipation of probable default in principal repayment these investments were marked down by 70% in Books in 2019-20, which continues to be the true and fair valuation as of 31.03.2021 as per management assessment. Thus, no additional provision (2019-20: '' 170.10 Crore) is warranted during this financial year.

The present value of benefit obligation at period end is '' 4,678.45 Crore (31.03.2020: '' 4,372.13 Crore). The fair value of the assets of Provident Fund Trust as of Balance Sheet date is greater than the present value of benefit obligation.

B. Superannuation Fund:

The Corporation has Superannuation - Defined Contribution Scheme (DCS) maintained by ‘Superannuation Benefit Fund Scheme (SBFS) Trust'' wherein Employer makes a monthly contribution of a certain percentage of ‘Basic Salary & Dearness Allowance(DA)'', out of 30%, earmarked for various Superannuation benefits. This is in accordance with Department of Public Enterprises (DPE) guidelines. These contributions are credited to individual Employee''s Account maintained either with Life Insurance Corporation of India (LIC) or an optional National Pension Scheme (NPS) Account. For the financial year 2020-21, the Corporation has made an overall contribution of '' 192.51 Crore (2019 - 20 : '' 162.89 Crore) towards Superannuation - DCS [including '' 59.70 Crore (2019-20 : '' 50.76 Crore) to NPS] by charging it to the statement of Profit and Loss.

Further, for the financial year 2020-21, Corporation has made a provision of '' 23.41 Crore (2019-20: '' 52.15 Crore) by charging to Statement of Profit & Loss towards increase in liabilities in case of Superannuation - Defined Benefit Scheme (DBS) determined based on actuarial valuation.

Notes:

I. Gratuity : Each employee rendering continuous service of 5 Years or more is entitled to receive gratuity amount equal to 15/26 of the eligible salary for every completed years of service subject to maximum of '' 0.20 Crore at the time of separation from the Corporation. Besides the ceiling of gratuity increases by 25% whenever IDA rises by 50%. The long term employee benefit of Gratuity is administered through a Trust, established under The Payment of Gratuity Act, 1972. The Board of Trustees comprises of representatives from the Employer who are also plan participants in accordance with the plans regulation. The liability towards gratuity is funded with Life Insurance Corporation of India (LIC).

II. Pension : The employees covered by the Pension Plan of the Corporation are entitled to receive monthly pension for life. However, none of the current serving employees are covered under Pension Plan of the Corporation.

III. Post Retirement Medical Benefit (PRMBS): Post Retirement Benefit medical scheme provides medical benefit to retired employees and eligible dependent family members. This long term employee benefit is administered through a Trust. The liability towards Post-Retirement Medical Benefit for employees is ascertained, yearly, based on the actuarial valuation and funded to the Trust.

On reporting date, the Trust Investments included few Non-convertible Debentures of certain Companies, amounting to '' 99.50 Crore (31.03.2020: '' 99.50 Crore) which have witnessed default in meeting interest & or principal obligations in 2019-20, which continued in 2020-21. In anticipation of probable default in principal repayment, these investments were marked down by 70% in Books in 2019-20, which continues to be the true and fair valuation as of 31.03.2021 as per management assessment. The diminution in Trust Investments are factored in the actuarial valuation while ascertaining the liability for the Corporation. Thus, no additional provision (2019-20: '' 69.65 Crore) is warranted during this financial year, to be charged to Statement of Profit and Loss in compliance with Ind AS 19.

IV. Ex-gratia : The ex-employees of Corporation are covered under the Scheme, entitling to get ex-gratia, determined based on their salary grade at the time of their superannuation. The benefit is paid to eligible employees till their survival, and thereafter till the survival of their spouse. However, none of the current serving employees are covered under this Plan.

V. Resettlement Allowance : Upon superannuation from the services of the Corporation, there are employees who permanently settle down at a place other than the location of the last posting. Such employees are provided with resettlement allowance as per policy of the Corporation.

VI. Interest rate on funds retained in LIC: The employees of the Corporation are entitled to certain leave as per policy. The liability of the Corporation is determined annually through actuarial valuation and funded with Life Insurance Corporation of India (LIC).

VII. Others: The expected return on plan assets is based on market expectation over the entire life of the related obligation. The actuarial assumption with regard to future salary escalation takes into consideration, the factors such as inflation, seniority, promotion, demand & supply in the employment market.

VIII. Figures in italics represent last year figures

70. As on 31.03.2021, the Corporation has an inventory of Non-Solar Renewable Energy Certificates numbering 35041 Units (31.03.2020: 69256), available for Sale after earmarking a requisite quantity already for captive consumption. The revenue from Certificates is recognized as and when the same are sold. The Central Electricity Regulatory Commission has fixed a floor price of '' NIL and a ceiling price of '' 1000/-per certificate in which range, it could be sold in Indian Energy Exchange Ltd., wherein it is traded. Aggrieved by the decision of NIL floor price, Green Energy Association has filed a petition in the Appellate Tribunal for Electricity (APTEL) and Tribunal has halted trading of these Certificates, until final disposal of the petition.

71. Previous periods figures are regrouped / reclassified wherever necessary.


Mar 31, 2019

1.B Fair value hierarchy

This section explains the judgments’ and estimates made in determining the fair values of the Financial Assets and Financial Liabilities that are recognized and measured at fair value and at amortized cost. To provide an indication about the reliability of the inputs used in determining fair value, Corporation has classified its Financial Assets and Financial Liabilities into the three levels prescribed under the accounting standard. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. An explanation of each level is provided under Significant Accounting Policy.

2: Financial risk management 39.A. Risk management framework

As per Corporation''s Risk Management Charter and Policy 2007, a robust governance structure has been developed and implemented across the organization in its journey towards risk intelligence. The Risk Management Steering Committee (RMSC) constituted under the Risk Management Charter and Policy 2007, guides and monitors the Risk management process across the organization. Periodical reviews are held to ensure that risks are controlled through a properly defined framework. The Board is appraised about the risk assessment and mitigation procedures. The Enterprise Risk Management (ERM) process is aimed at creating a risk culture wherein ''risk consciousness'' is embedded in the decision-making process across the organization. Technology has been used to integrate and manage the entire process of ERM.

Corporation has engaged the services of an independent expert to assist in continued implementation of effective Risk Management framework for providing a holistic view of risks and to facilitate more informed decision-making.

3.B. Corporation has identified financial risk and categorized them in three parts Viz. (i) Credit Risk, (ii) Liquidity Risk & (iii) Market Risk. Details regarding sources of risk in each such category and how Corporation manages the risk is explained in following notes:

4.B.1 - Credit risk

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Corporation''s receivables from customers and investment securities. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Corporation grants credit terms in the normal course of business. The Corporation establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The maximum exposure to credit risk in case of all the financial instruments covered below is restricted to their respective carrying amount.

Trade receivables

The Corporation''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Corporation grants credit terms in the normal course of business.

At 31.03.2019, the Corporation''s most significant customer accounted for Rs,1,085.54 crores of the trade receivables carrying amount (31.03.2018 : Rs,1,109.30 crores).

The Corporation uses an allowance matrix to measure the expected credit losses of trade receivables (which are considered good). The following table provides information about the exposure to credit risk and loss allowance (including expected credit loss provision) for trade receivables:

The amounts written off at each reporting date relates to customers who have defaulted on their payments to the Corporation and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances.

Cash and cash equivalents

The Corporation held cash and cash equivalents of Rs,76.20 crores at 31.03.2019 (31.03.2018 : Rs,10.67 crores). The cash and cash equivalents (other than cash on hand) are held with consortium banks. Corporation invests its surplus funds in bank fixed deposit, Govt of India T-bills and liquid Schemes of Mutual Funds, which carry no mark to market risks for short duration and exposes the Corporation to low credit risk.

Derivatives

The forex and interest rate derivatives were entered into with banks having an investment grade rating and exposure to counter-parties are closely monitored and kept within the approved limits. Commodity derivatives are entered with reputed Counterparties in the OTC (Over-the-Counter) Market.

Investment in debt securities

Investment in debt securities are in government securities or bonds which do not carry any credit risk, being sovereign in nature.

5.B.2. Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. Corporation has a strong focus on effective management of its liquidity to ensure that all business and financial commitments are met on time. The Corporation has adequate borrowing limits in place duly approved by its Shareholders and Board. Corporation''s sources of liquidity includes operating cash flows, cash and cash equivalents, fund and non-fund based lines from banks and liquid investment portfolio. Corporation ensures that there is minimal concentration risk by diversifying its portfolio across instruments and counterparties. Cash and fund flow management is monitored daily in order to have smooth and continuous business operations.

(i) Financing arrangements

The Corporation has an adequate fund and non-fund based lines from various banks. The Corporation has sufficient borrowing limits in place duly, approved by its Shareholders and Board. Domestic and international credit rating from reputed credit rating agencies enables access of funds both from domestic as well as international market. Corporation''s diversified source of funds and strong operating cash flow enables it to maintain requisite capital structure discipline. Corporation diversifies its capital structure with a mix of instruments and financing products across varying maturities and currencies. The financing products include syndicated loans, foreign currency bonds, TREPS loan, commercial paper, non-convertible debentures, buyer''s credit loan, clean loan etc. Corporation taps domestic as well as foreign debt markets from time to time to ensure appropriate funding mix and diversification of geographies.

* Guarantee issued by the Corporation on behalf of the Subsidiary is with respect to borrowings raised by its Subsidiary. This amount will be payable on default by the concerned Subsidiary. As of the reporting date there has been no default by the Subsidiary and hence, the Corporation does not have any present obligation in relation to such guarantee.

6.B.3. Market Risk - Market Risk is further categorized in (i) Currency risk , (ii) Interest rate risk & (iii) Commodity risk: 39.B.3.1. Currency risk:

The corporation is exposed to currency risk mainly on account of its borrowings and import payables in foreign currency. Our exposures are mainly denominated in U.S. dollars. The Corporation has used generic derivative contracts to mitigate the risk of changes in foreign currency exchange rates in line with corporation''s forex risk management policy. The corporation has a Forex Risk Management Cell (FRMC) which actively review the forex and interest rate exposures. The Corporation does not uses derivative financial instruments for trading or speculative purposes.

Following is the derivative financial instrument to hedge the foreign exchange risk as of dates:

7.B.3.2 Interest rate risk

Corporation has long-term foreign currency syndicated loans with floating rate, which expose the Corporation to cash flow interest rate risk. The borrowings at floating rate were denominated in USD. The Corporation manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Under these swaps, the Corporation agrees with other parties to exchange, at specified intervals (i.e quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts. Corporation monitors the interest rate movement and manages the interest rate risk based on the Corporation''s Forex Risk Management Policy. The Corporation also has a Forex Risk Management Cell (FRMC) which actively review the forex and interest rate exposures. The Corporation does not uses derivative financial instruments for trading or speculative purposes.

The Corporation''s fixed rate borrowings are carried at amortized cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Following is the derivative financial instruments to:

8.B.3.3.Commodity Risk

The Corporation''s Profitability is exposed to the risk of fluctuation in prices of Crude Oil and Petroleum products in international markets. Corporation monitors and reduces the impact of the volatility in International Oil prices based on approved Oil Price Risk Management Policy by entering into derivative contracts in the OTC market.

The Corporation also has Oil Price Risk Management Committee (OPRMC) which actively reviews and monitors risk management principles, policies and risk management activities.

The sensitivity to a reasonable possible change of 10% in the price of crude/product swaps on the outstanding Commodity derivative/paper contracts as on Balance Sheet date would increase/decrease the profit or loss by amounts shown below. This 10% movement is directional and does not reflect any forecast of price movement.

9.B.3.4. Price risk

The corporation''s exposure to equity investment price risk arises from investment held by the Corporation. The Corporation has designated these investment at fair value through other comprehensive income because these investments represent the investments that the corporation intends to hold for long-term strategic purposes.

Sensitivity

The table below summarizes the impact of increases/decreases in prices on Other comprehensive Income for the period.

(e) Additional Provision for tax for earlier years have been provided for Rs,20.40 Crores (2017-18: Rs,145.68 Crores reversal) represents reversal provision towards current tax of Rs,33.53 Crores (2017-18 : Rs,54.71 Crores), additional provision towards deferred Tax of Rs,71.02 Crores (2017-18: Rs,62.83 Crores) and recognition of MAT credit Entitlements of Rs,1709 Crores (2017-18: Rs,13756 Crores).

10: Disclosures as per Ind AS 115 ''Revenue from Contracts with Customers'' are as follows:

On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Ind AS 115, Revenue from Contract with Customers in respect of accounting periods commencing on or after 1st April 2018 superseding Ind AS 11 - Construction Contracts and Ind AS 18 - Revenue. The Company has adopted the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending March 31, 2018 are not retrospectively adjusted.

During the year ended March 31, 2019, the company recognized revenue of Rs,538.69 crore arising from opening unearned revenue as of April 1, 2018. This includes the amount pertaining to loyalty points which has been arrived basis the utilization pattern of Loyalty points.

C. Transaction price allocated to the remaining performance obligations

The Corporation recognizes revenue when it satisfies a performance obligation by transferring a promised good or service to a customer. As at 31st March 2019, the amount allocated will be recognized as revenue when

(a) in case of revenue received in advance, when the product is delivered to the customer, (b) in case of loyalty points, when the award points are redeemed / expires and (c) in case of non-refundable bid fee, over the period of dealership agreement.

D. Transition impact

The Corporation collects fixed/bid fees from eligible bidders for allotment of dealership. The fees collected upfront are not refundable and is in the nature of a material right which entitles the dealer to operate the retail outlet in the Corporation''s name for the specified period. Since, the Corporation does not have any significant performance obligation against the receipt of the upfront fees, the revenue is recognized on a systematic basis over the period of the dealership contract.

Accordingly, The Corporation has created a deferred income liability for fixed/bid fee received prior to April 1, 2018 for Rs,126.30 crores, which will be recognized as revenue over the balance period of dealership contract. Considering the fact that the income is already offered for taxation in the earlier years, Deferred Tax Asset has been created to the extent of Rs,44.13 as per Ind AS 12 on the above amount.

During the FY 2018-19, the corporation has recognized Rs,14.95 crores as revenue out of the above deferred income liability.

Had Ind AS 115 not been applied and erstwhile Ind AS 18 ''Revenue'' would have continued, the ''Other Income'' and ''Profit before tax'' would be higher by Rs,11.89 crores.

11: Leases

Operating Lease

Leases as lessee

The Corporation enters into cancellable/non-cancellable operating lease arrangements for land, office premises, staff quarters and others. Payments made under operating leases are generally recognized in statement of Profit and Loss based on corresponding periods contractual terms of the lease, since the Corporation considers it to be more representative of time pattern of benefits flowing to it. The lease rentals paid for the same are charged to the Statement of Profit and Loss.

The Lease payments for operating leases have been charged to Statement of Profit and Loss as per Ind AS 17 "Leases" For the purpose of determining the expected inflationary cost increases, the management has assessed the expected general inflation rate over the lease periods.

Future minimum lease payments

At March 31, the future minimum lease payments for prepaid operating lease under non-cancellable leases are as under:

43: Earnings per share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year after adjusting the effects of all dilutive potential ordinary shares.

* During Financial Year 2017-18, the Corporation had issued Bonus Shares in the ratio of 1:2 by capitalization of Reserve. 44: Capital management

The Corporation''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Corporation monitors capital using debt equity ratio. The Corporation''s debt to equity ratio is as follows:

12: (a) Inter-Oil Company transactions are reconciled on a continuous basis. However, year end balances are subject to confirmation/reconciliation which is not likely to have a material impact.

(b) Customer''s Accounts are reconciled on an ongoing basis and are subject to confirmations and reconciliation, few other accounts relating to current/non-current assets and liabilities are also under the process of confirmation, reconciliation and subsequent accounting adjustments wherever required, such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts.

13: To the extent Micro and Small Enterprises have been identified, the outstanding balance, including interest thereon, if any, as at balance sheet date is disclosed on which Auditors have relied upon:

14:Related Party Disclosure:

A. Names of and Relationship with Related Parties

1. Jointly controlled entities

i. HPCL-Mittal Energy Ltd.

ii. Hindustan Colas Pvt. Ltd.

iii. South Asia LPG Company Pvt. Ltd.

iv. Petronet India Ltd. (in process of voluntary winding up w.e.f. 30th August 2018)

v. HPCL Shapoorji Energy Pvt. Ltd.

2. The Company has not included disclosure in respect of following related parties which are Govt. related entities as per Ind AS 24.

i. Holding Company

1. Oil & Natural Gas Corporation Ltd.

ii. Subsidiaries

1. HPCL Biofuels Ltd.

2. Prize Petroleum Company Ltd. (PPCL)

3. Prize Petroleum International Pte. Ltd. (a wholly owned subsidiary of PPCL)

4. HPCL Middle East FZCO

iii. Jointly controlled entities

1. HPCL Rajasthan Refinery Ltd.

2. Bhagyanagar Gas Ltd.

3. Petronet MHB Ltd.

4. Mumbai Aviation Fuel Farm Facility Pvt. Ltd.

5. Godavari Gas Pvt. Ltd.

6. Aavantika Gas Ltd.

7 Ratnagiri Refinery & Petrochemicals Ltd.

8. Ujjwala plus foundation

9. HPOIL Gas Pvt. Ltd. (incorporated on 30th November 2018)

iv. Associates

1. GSPL India Gasnet Ltd.

2. GSPL India Transco Ltd.

3. Mangalore Refinery and Petrochemicals Ltd.

v. Fellow Subsidiaries

1. ONGC Mangalore Petrochemicals Ltd.

2. ONGC Petro Additives Ltd.

3. Key Management Personnel

i. Shri Mukesh Kumar Surana, Chairman and Managing Director

ii. Shri Pushp Kumar Joshi, Director - Human Resources

iii. Shri J. Ramaswamy, Director - Finance (up to 28th February 2019)

iv. Shri S. Jeyakrishnan, Director - Marketing

v. Shri Vinod S. Shenoy, Director - Refineries

vi. Shri R. Kesavan, Chief Financial Officer (effective 01st March 2019)

vii. Shri Shrikant Madhukar Bhosekar, Company Secretary (up to 30th November 2018)

viii. Shri V. Murali, Company Secretary (effective 01st December2018)

4. Independent Directors

i. Shri Ram Niwas Jain

ii. Smt. Asifa Khan

iii. Shri G.V Krishna

iv. Dr. Trilok Nath Singh

v. Shri Amar Sinha

vi. Shri Siraj Hussain

5. Government Directors

i. Shri Sandeep Poundrik

ii. Smt. Sushma Taishete (up to 07th May 2018)

iii. Shri Subhash Kumar (effective 22nd May 2018)

C. Transactions with other government-controlled entities

The corporation is a Government related entity engaged in the business of refining of crude oil and marketing of petroleum products. The corporation also deals on regular basis with entities directly or indirectly controlled by the central / state governments through its government authorities, agencies, affiliations and other organizations (collectively referred as "Government related entities").

Apart from transactions with corporations'' group companies, the corporation has transactions with other Government related entities, including but not limited to the followings:

- sale and purchase of products;

- rendering and receiving services;

- lease of assets;

- depositing and borrowing money; and

- use of public utilities

These transactions are conducted in the ordinary course of the corporation''s business on terms comparable to those with other entities that are not Government related.

a) Blocks RJ-ONN-2004/1 and MB-OSN-2004/2 are in the process of relinquishment. The audited financial statements for these UJVs have been received up to March 31, 2018. The Blocks MB-OSN-2010/2 and RJ-ONN-2004/3 are in the process of relinquishment and the audited financial statements of these UJVs have been received up to March 31, 2017 The Blocks KK-DWN-2002/2 and MB-OSN-2004/1 are in the process of relinquishment. The audited financial statements for these UJVs have been received up to March 31,2016. Blocks CY-DWN-2004/1,2,3,4, CY-PR-DWN-2004/1&2, KG-DWN-2004/1,2,3,5 and 6 are under relinquishment. The audited financial statements for these UJVs have been received up to March 31, 2015. The Company has incorporated the share of the assets, liabilities, income and expenditure based on the unaudited financial statements / data received from operator.

b) The Blocks AA-ONN-2003/3 and KK-DWN-2002/3 are in the process of relinquishment. The audited financial statements for these UJVs have been received up to March 31, 2011 and March 31, 2012 respectively. The Company has incorporated the share of the assets, liabilities, income and expenditure based on the unaudited financial statements / data received from operator.

c) The block CB-ONN-2002/3 was awarded under NELP IV bidding round and the production sharing contract was signed on 06.02.2004. The exploration Minimum Work Program has been completed. The block is divided into two areas i.e. Miroli and Sanand. Production from SE#3 and SE#4 wells of the Block is currently on which had started during Financial Year 2017-18. Audited financial statements of the block has been received up to March 31, 2018. The unaudited financial statements / data has been received from operator as on 31st March, 2019.

d) In respect of Cluster - 7, the matter is under litigation (refer Note No.55.1 )

* As of 31st March 2014, paid up equity capital of BGL was Rs,5 lacs, in which HPCL and GAIL were holding 24.99% each. Balance 50.02% of shares were held by Kakinada Seaports Ltd (KSPL) on warehousing basis. In addition, each one of HPCL and GAIL had paid Rs,22.49 crores as Advance against Equity / Share application money (totaling to Rs,44.98 crores) in earlier years. On 20th August 2014, BGL allotted 2,24,87,500 shares on preferential basis to each of HPCL and GAIL towards the money paid earlier. Meanwhile there are certain issues pending adjudication with another shareholder. Accordingly, keeping in view financial prudence, HPCL''s share has been considered at 24.99% (considered as 24.99% in FY 2017-18).

** HPOIL Gas Private Limited was incorporated on 30.11.2018 with Hindustan Petroleum Corporation Ltd (HPCL) and Oil India Ltd (OIL) holding 50% equity each. The JV was set up for City Gas Distribution network in Ambala -Kurukshetra in the state of Haryana and Kolhapur in the state of Maharashtra.

Ujjwala Plus Foundation, a joint venture of Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) was incorporated on 21st July 2017 as a not for profit Private Company Limited by Guarantee (Without Share Capital) under Section 8 of the Companies Act 2013.

15 Considering the Government policies and modalities of compensating the oil marketing companies towards under recoveries, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. Since there is no indication of impairment of assets as at Balance Sheet date as per the assessment carried out, no impairment has been considered. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same.

16 Disclosure as required by Regulation 34(3) and 53(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.:

17. Prize Petroleum Company Limited (PPCL), a subsidiary company of Hindustan Petroleum Corporation Ltd.) with a Participating Interest (PI) of 10% along with 2 other consortium members, M/s Hindustan Petroleum Corporation Ltd. (HPCL) (PI-60%) and M/s M3nergy Sdn. Bhd (M/s M3nergy) (PI-30%) were awarded service contract in March, 2006 for development of ONGC''s offshore marginal oilfields of cluster-7 PPCL was the executing contractor. Parties provided necessary Bank Guarantees to ONGC. Since M/s M3nergy could not meet their contractual obligations, the contract was terminated by ONGC and Bank guarantees were forfeited. PPCL and HPCL demanded the refund of the monies forfeited towards encashment of Bank Guarantee along with other claims from M/s M3nergy. A counter claim of 36.51 Million USD equivalent to Rs,252.50 Crores (36.51 Million USD @ Exchange rate of 1 USD = Rs,69.16) was made by M3nergy on termination of such service contract. This amount is not included above. The matter was referred to Arbitration.

The Arbitral Tribunal passed 3 Awards. The 1st Partial Award, the 2nd Partial Award and the Final Award. All three were in favour of HPCL and PPCL. The 1st partial arbitration award held that M3nergy has committed breach of the contract and hence their claims were disallowed and the Arbitral Tribunal held that HPCL and PPCL are entitled for damages, which will be quantified later. The 2nd Partial Award dated 27/09/2017 allowed 2 claims of HPCL/PPCL in the ratio of 6:1, viz., (1) A claim of USD 91.3 million (equivalent Rs,444.44 crores) towards loss of profit (by a majority Award) and (2) a claim of recovery of damages by way of money lost due to encashment of Bank Guarantees of Rs,41.6 crores (by a unanimous Award). Both amounts were allowed with interest as specified.

All three Awards were challenged by M3nergy before the Bombay High Court in the previous year. Hence, HPCL/ PPCL filed applications for (a) Mareva Injunction and (b) Enforcement of the Award before the Courts in Malaysia. By Orders dated 10th January, 2019 the Bombay High Court set aside all partial Arbitration Awards holding that there was no concluded Arbitration Agreement. As the Awards were set aside, on 28.02.2019 the Malaysian High Court at Kuala Lumpur allowed the application of M3nergy to set aside the enforcement order with liberty to file fresh proceedings, if HPCL / PPCL succeed later. Meanwhile, HPCL and PPCL have filed Appeals against the setting aside order before the Division Bench of the Bombay High Court which is to come up for hearing. As a result, the award amount which is approximate Rs,416.61 crores (78.26 Million USD @ exchange rate of Rs,48.68 for a US Dollar prevailing on January 6, 2009 plus Rs,35.66 Crores) and interest thereon has not been recognized on a conservative basis. Similarly, the claim raised by M3Energy is also not included above.

18. : Company has entered into a long term product off take agreement with M/s HPCL- Mittal Energy Limited (HMEL), its joint venture company, for purchase of petroleum products produced by the refinery. This agreement has a take or pay clause and the Company is committed to purchase the said petroleum products over the tenure of the agreement.

19. : The Company and Mittal Energy Investment Pte. Ltd. (its joint venture partner in HPCL-Mittal Energy Limited) have committed that they would jointly hold at least 51 % of share capital of HPCL-Mittal Energy Limited till the repayment of certain bank loans / bonds.

The above are made based on estimates and expected timing of outflows is not ascertainable at this stage.

The above provisions are made based on estimates and expected timing of outflows is not ascertainable at this stage.

20 The investment in HPCL Biofuels Ltd. (100% subsidiary of HPCL) was tested for impairment as at 31st Mar 2019 and accordingly the Corporation has created an incremental provision for impairment of Rs,38 crores (2017-18 : Nil) in the books. The cumulative impairment as at 31st March 2019 is Rs,429 crores (31st March 2018 : Rs,391 crores) in respect of its investments in HBL towards Equity and Preference Share capital which works out to around 69% (31st March 2018 : 63%) of the overall investment in HBL. The said impairment has been carried out in line with the requirement of Ind AS 36 and is based on the estimated future cash flow projections from continuing use of its Property, Plant and Equipment in the entity. The Corporation has also assessed the reasonableness of the assumptions used for such cash flow projections. On a prudent basis these assumptions do not include the intended Capital Expenditure during the immediate future years and the benefits which are likely to arise from such capital expenditure. In the opinion of the management, the current level of impairment is appropriate considering the intricacies involved in the Sugar Industry.

21 Corporation''s 100% step-down subsidiary, Prize Petroleum International Pte Ltd. (a wholly owned subsidiary of Prize Petroleum Corporation Ltd.), and incorporated in Singapore had taken a bank loan of $86m during the FY 2016-17 The said bank loan is backed by a Corporate Guarantee from the ultimate holding company, Hindustan Petroleum Corporation Ltd. The carrying value of the corporate guarantee has been re-measured as on 31st March 2019 in accordance with Ind AS 109 and accordingly a loss allowance of ''15 crores has been made during FY 2018-19 (2017-18-Nil). Total amount of loss allowance thus made towards the carrying value of the corporate guarantee as of 31st March 2019 stands at Rs,153 crores (31st March 2018 : Rs,138 crores).

22 Loa ns given to consumer under Prime Ministers Ujjwala Yojana (PMUY) disbursed to the extent of Rs,2,591 crores and outstanding Rs,1,937 crores are repayable out of the subsidy amount accruing to the consumer from the subsequent refills taken post release of the loan. The overall consumer base being 1.91 Crores, the utilization pattern of the refills is evolving and there are cases of consumers since May 2016 having availed lesser than expected level of refills. While the management has made efforts to encourage the consumers for availing the refills, the cases with zero refills for those connections issued on or before March 31, 2018 have been considered as inactive consumers and the ratio of such loans over the total loans disbursed till March 31,2018 has been estimated to be a likely default ratio for such loans and accordingly an impairment charge of Rs,95.70 crores have been recognized in the financial statements towards such loans. In the opinion of the management, the impairment estimate made on a rationale represent estimate of default in the entire population of the outstanding loans and hence is reasonable as on the date of the Financial statements.

23 The corporation operates various schemes of Government of India e.g. PMUY, Direct benefit Transfer scheme and certain state specific schemes where the mounts spent for the implementation of such schemes are either received in advance or are subject to reimbursements from Central Government and/or respective state Governments. There are cases where such reimbursements are pending to be received from Central Government with period ranging from more than 6 months to more than 3 years. The total such reimbursements remaining to be received for more than 6 months'' amount to Rs,2,781 crores. However, since these dues are considered as sovereign dues, no provision has been considered necessary.

24 On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 116, Leases. The effective date for adoption of Ind AS 116 is annual periods beginning on or after April 1, 2019. Ind AS 116 will replace the existing leases Standard, Ind AS 17 Leases, and related Interpretations. The Standard introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value and sets out the principles for the recognition, measurement, presentation and disclosure of leases. Under operating lease, Lessees are required to initially recognize a lease liability for the obligation to make lease payments and a right -to -use asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments to be made over the lease term. There is no change in the accounting pertaining to finance leases. The new standard permit lessees to use either a full retrospective or a modified retrospective approach on transition for leases existing at the date of transition, with options to use certain practical expedients. The Corporation will adopt the standard w.e.f. April 1, 2019. The Corporation is currently evaluating the requirements of the new Standard and its effect on the Standalone Financial Statements.

25. Employee benefit obligations

A. Provident Fund

The Corporation''s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employees salary and charged to Statement of Profit and Loss.

Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the Corporation and charged to Statement of Profit and Loss. The actual return earned by the fund has mostly been higher than the Government specified minimum rate of return in the past years. There is no shortfall in the fund as on 31st March 2019 and 31st March 2018.

Present value of benefit obligation at period end is Rs,4,082.85 crores (31.03.2018 : Rs,3,764.14 crores).

During the year, the company has recognized Rs,148.44 crore (2017 - 18 : Rs,141.40 crore) as Employer''s contribution to Provident Fund in the Statement of Profit and Loss.

B. Superannuation Fund

The company has Superannuation - Defined Contribution Scheme (DCS) maintained by SBFS trust wherein Corporation contributes a certain percentage every month out of 30% of Basic plus DA towards superannuation benefits (in accordance with DPE guidelines ) to the credit of individual employee accounts maintained with LIC. Effective August 2018, Corporation had introduced optional National Pension Scheme (NPS) for its employees, where in employees are allowed to opt for contribution to their NPS account within their overall superannuation benefits limit for pension. During the year, the Corporation has recognized Rs,181.07 crore ( 2017 - 18 : Rs,162.8 crore) as Employer''s contribution to Superannuation Fund in the statement of Profit and Loss. Out of this amount Rs,20.96 crore (2017-18 : Nil ) was contributed to NPS.

H: Notes:

Gratuity : All employees are entitled to receive gratuity as per the provisions of Payment of Gratuity Act, 1972. The Defined Benefit Plan of Gratuity is administered by Gratuity Trust. The Board of Trustees comprises of representatives from the Corporation who are also plan participants in accordance with the plans regulation.

Pension : The employees covered by the Pension Plan of the Corporation are entitled to receive monthly pension for life.

Post Retirement Medical Benefit : The serving and superannuated employees are covered under medical insurance policy taken by Corporation. It provides reimbursement of medical expenses for self and dependents as per the terms of the policy.

Ex-gratia : The ex-employees of Corporation covered under the Scheme are entitled to get ex-gratia based on the grade at the time of their retirement. The benefit will be paid to eligible employees till their survival, and after that, till the survival of their spouse.

Resettlement Allowance : At the time of retirement, the employees are allowed to permanently settle down at a place other than the location of the last posting.

The fair value of the assets of Provident Fund Trust as of balance sheet date is greater than the obligation, including interest, and also the returns on these plan assets including the amount already provided are sufficient to take care of PF interest obligations, over and above the fixed contribution recognized.

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligation.

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.

Figures in italics represent last year figures

26 During the year the accounting policy related to ''Depreciation/amortization'' on LPG cylinders & regulators is modified to bring more clarity on the accounting treatment. There is no impact on the profit for the year on account of above (refer note 2.2). Since the impact of depreciation in statement of Profit & Loss account is Rs,1.74 crores, the same is not considered material.

27 Previous periods figures are reclassified / regrouped wherever necessary.


Mar 31, 2017

1. Corporate Information

Hindustan Petroleum Corporation Limited referred to as “HPCL” or “the Corporation” was incorporated on 5th July, 1952. HPCL is a Government of India Enterprise listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Corporation is engaged, primarily in the business of refining of crude oil and marketing of petroleum products. The Corporation has, among others, refineries at Mumbai and Vishakhapatnam, LPG bottling plants and Lube blending plants. The Corporation’s marketing infrastructure includes vast network of Installations, Depots, Aviation Service Stations, Retail Outlets and LPG distributors.

Authorization of financial statements

The Financial Statements were authorized for issue in accordance with a resolution of the Board of Directors on 26th May 2017.

1.1. Basis for preparation:

The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (“Act”) read with Companies (Indian Accounting Standards) Rules, 2015; and other relevant provisions of the Act and Rules thereunder.

The Financial Statements are prepared under historical cost convention basis, except for certain assets and liabilities measured at fair value.

The Corporation has adopted Ind AS and the adoption was carried out in accordance with Ind AS 101 (First time adoption of Indian Accounting Standards). The transition was carried out from Accounting Standard as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, (previous GAAP). The Corporation’s Presentation currency and Functional currency is Indian Rupees (‘). All figures appearing in the Financial Statements are rounded to the nearest crores (‘ Crores), except where otherwise indicated.

1.2. Use of Judgement and Estimates

The preparation of the Corporation’s Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Corporation continually evaluates these estimates and assumptions based on the most recently available information.

In particular, information about significant areas of estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as below:

- Financial instruments;

- Estimates of useful lives and residual value of Property, Plant and Equipment and intangible assets;

- Valuation of inventories;

- Measurement of recoverable amounts of cash-generating units;

- Measurement of Defined Benefit Obligation, key actuarial assumptions;

- Provisions and Contingencies; and

- Evaluation of recoverability of deferred tax assets;

Revisions to accounting estimates are recognized prospectively in the Financial Statements in the period in which the estimates are revised and in any future periods affected.

Note 2: Property, Plant and Equipments

The following are the carrying values of Property, Plant & Equipment:

1. Includes assets costing Rs.0.007 crores /- (2015-2016 :Rs.0.007 crores; 2014-15 : Rs.0.007 crores) of erstwhile Kosan Gas Company not handed over to the Corporation. In case of these assets, Kosan Gas Company was to give up their claim. However, in view of the tenancy right sought by third party, the matter is under litigation.

2. Includes Rs.464.72 Crores (2015-2016: Rs.477.90 Crores ; 2014-15 : Rs.153.60 crores) towards Building, Other Machinery, Pipelines, Railway Sidings, Right of Way etc. being the Corporation’s Share of Cost of Land & Other Assets jointly owned with other Companies.

3. IncludesRs.35.28 Crores (2015-2016 : Rs.35.28 Crores ; 2014-15: Rs.35.99 crores) towards Roads & Culverts, Transformers & Transmission lines, Railway Sidings & Rolling Stock, ownership of which does not vest with the Corporation . The Corporation is having operational control over such assets. These assets are amortized at the rate of depreciation specified in Schedule II of Companies Act, 2013.

4. a) Includes following assets which are used for distribution of PDS Kerosene under Jana Kalyan Pariyojana against which financial assistance was provided by OIDB.

b) Includes assets held under PAHAL (DBTL) scheme against which financial assistance is being provided by MOPNG.

5. Deduction/ reclassification includes assets Rs.3.96 crores as on 31.03.17 (31.03.16 : Rs.5.32 crores; 01.04.15 Rs.2.00 crores) for which management has given consent for disposal & hence classified as Assets held for sale.

6. Leasehold Land includes Rs.27.57 Crores (2015-16: Rs.26.87 Crores 2014-15 : Rs.25.25 crores) for land acquired on lease-cum-sale basis from Karnataka Industrial Area Development Board (KIADB) which is capitalized without being amortised over the period of lease. Lease shall be converted into Sale on fulfillment of certain terms and conditions, as per allotment letter.

3.1 : Includes amount of Rs.73.96 Crores (31.03.2016 : Rs.73.96 crores, 01.04.2015 : Rs.73.96 Crores) towards subscribed, but not paid shares of HPCL Rajasthan Refinery Limited being part of MOA / AOA for which liability is created under Section 10 (2) of the Companies Act, 2013.

4.1 : The Company has designated these investment at fair value through other comprehensive income because these investments represent the investments that the Company intends to hold for long-term strategic purposes. No strategic investments were disposed of during the year. There have been no transfers of the cumulative gains or losses on these investments

4.2 : Members in Petroleum India International (AOP) : Hindustan Petroleum Corporation Ltd., Bharat Petroleum Corporation Ltd.,

Engineers India Ltd., Indian Oil Corporation Ltd., Indian Petrochemicals Corporation Ltd., Chennai Petroleum Corporation Ltd. and Oil India Ltd. Each one is holding 10% share except Indian Oil Corporation which is holding 30% and Bharat Petroleum Corporation Ltd. which is holding 20%.

5.1. The write-down of inventories to net realisable value during the year amounted to Rs.212.09 crores (31.03.2016 : Rs.58.32 crores; 01.04.2015 : Rs.192.77 crores). The reversal of write downs during the year amount to Rs.Nil (31.03.2016 : Rs.Nil; 01.04.2015 : Rs.Nil). The write downs and reversal are included in cost of materials consumed or changes in inventories of finished goods and work in progress.

6.1: 6.90% Special Bonds of face value of Rs.2,178.64 Crores and 7.59% G-Sec Bonds of face value of Rs.90 Crores are pledged with Clearing Corporation of India Limited against CBLO Loan.

7.1 Debentures

The Company has issued the following Secured Redeemable Non-convertible Debentures:

i. 8.77% Non-Convertible Debentures were issued on 13th March, 2013 with the maturity date of 13th of March, 2018. These are secured by first legal mortgage by way of a Registered Debenture Trust Deed over immovable property of the company being undivided share of land with the entire First Floor in the building High Street 1, situated at Ahmedabad and the first charge of fixed assets mainly certain Plant and Machinery at Visakh Refinery. The value of such assets is Rs.1,111.87 Crs as on 31/03/2017, Rs.1,072.98 Crs. as on 31/03/2016 and Rs.1,126.39 Crs. as on 01/04/2015. During the year ended March, 2017 an amount of Rs.975.00 crores of 8.77% Non-Convertible Debentures is repayable within one year and shown in note # 27.

ii. 8.75% Non-Convertible Debentures were issued on 9th November, 2012 with the maturity date of 9th of November, 2015. These are secured by mortgage, on first pari passu charge basis, by way of a Registered Debenture Trust Deed over immovable property of the company being undivided share of land with the entire First Floor in the building High Street 1, situated at Ahmedabad and the first charge of fixed assets mainly certain Plant and Machinery at Mumbai Refinery. The value of such assets as on 01/04/2015 is Rs.936.15 Crores. During the year ended March, 2017 an amount of Nil (31.03.2016 : Nil; 31.03.2015 : Rs.545.00 crores) of 8.75% Non-Convertible Debentures is repayable within one year and shown in note # 27. These Debentures Matured on 9th November, 2015.

7.2 Syndicated Loans from Foreign Banks (repayable in foreign currency)

The Corporation has availed Long Term Foreign Currency Syndicated Loans from banks at 3 months floating LIBOR plus spread (spread range : 65 to 155 basis point p.a.). These loans are taken for the period of 5 years. Rs.3,008.46 Crores (31.03.2016 : Rs.6,583.00 crores; 31.03.2015 : Rs.2,490.87 Crores) is repayable within 1 year and the same has been shown as “Current Maturity of Long Term Debts” under Note # 27.

8.1: Amount reflected towards deposits received from customers/ dealers have been presented as non-current financial liabilities. In view of the Corporation, such presentation would reflect an appropriate classification based on commercial practice as these are generally not claimed in short term.

8.2: Includes deposit received towards Rajiv Gandhi Gramin LPG Vitrak Yojana and Prime Minister Ujjavala Yojana of Rs.941.61 crores (31.03.2016 : Rs.219.64 crores; 01.04.2015 : Rs.34.07 crores) The deposits against these schemes have been funded from CSR fund or by Government of India.

9.1: To the extent Micro, Small and Medium Enterprises have been identified, the outstanding balance, including interest thereon, if any, as at Balance Sheet date is disclosed on which Auditors have relied upon.

10.1: This includes loans repayable within one year: Syndicated Loans from Foreign Banks (repayable in foreign currency) Rs.3,008.46 crores (31.03.2016 : Rs.6,583 crores; 01.04.2015: Rs.2,490.87 Crores), 8.77% Non-Convertible Debenture Rs.975 crores as on 31.03.2017, 8.75% Non-Convertible Debentures r 545 crores as on 01.04.2015, and Loan from Oil Industry and Development Board Rs.95.69 crores (31.03.2016 : Rs.189.50 crores; 01.04.2015: Rs.234.50 Crores).

10.2: No amount is due as at the end of the year for credit to Investors’ Education and Protection Fund.

11.1: Net of discount of Rs.1,920.07 crores (2015-16 : Rs.1,805.78 crores) and includes amount towards additional SSC of Rs.57.21 Crores (2015-16 : Rs.430.14 Crores).

Note 12: First-time adoption of Ind AS Transition to Ind AS

These are the Corporation’s first financial statements prepared in accordance with Ind AS.

For the year ended 31.03.2016, the Corporation had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2014, notified under Section 133 of the Companies Act 2013 and other relevant provisions of the Act (‘IGAAP’).

The accounting policies set out in Note 2 have been applied in preparing the Financial Statements for the year ended 31.03.2016 onwards and the opening Ind AS Balance Sheet on the date of transition (i.e. 01.04.2015).

In preparing its Ind AS Balance Sheet as on 01.04.2015 and in presenting the comparative information for the year ended 31.03.2016, the Corporation has adjusted amounts previously reported in the Financial Statements prepared in accordance with IGAAP. This note explains the principal adjustments made by the Corporation in restating its Financial Statements prepared in accordance with IGAAP, and how the transition from IGAAP to Ind AS has impacted the Corporation’s financial position, financial performance and cash flows.

A. Exemptions and exceptions availed

In preparing the Financial Statements, the Corporation has availed the below mentioned optional exemptions and mandatory exceptions.

A.1 Optional exemptions

A.1.1 Property, Plant and Equipment and Intangible Assets

The Corporation has availed the exemption available under Ind AS 101 to continue the carrying value for all of its Property, Plant and Equipment and Intangible Assets as recognised in the Financial Statements as on the date of transition to Ind ASs, measured as per the IGAAP and use that as its deemed cost as on the date of transition (1 April 2015).

A.1.2 Intangible Assets accounted for in accordance with Service Concession Arrangements

The Corporation has reclassified from its Property, plant and equipment certain Wind Mill Assets forming part of Service Concession Arrangements under Ind AS to Intangible assets on the date of transition. The Corporation has availed exemption available under Ind AS 101 to carry such wind mill assets at its IGAAP carrying values on the date of transition since it is impracticable to apply the requirements of Appendix C, Service Concession Arrangements to Ind AS 11 retrospectively.

A.1.3 Designation of previously recognised financial instruments

As per Ind AS 101, the Corporation has designated its investment in equity shares held as on 1 April 2015 as fair value through other comprehensive income (FVTOCI) based on facts and circumstances on the date of transition to Ind AS (i.e. 1 April 2015). The Corporation has availed this exemption for its investment in equity shares other than Subsidiaries, Joint Ventures and Associates.

A.1.4 Investment in Subsidiaries, Joint Ventures and Associates

The Corporation has availed the exemption available under Ind AS 101 to measure its investments in subsidiaries, joint venture and associates as the IGAAP carrying value as deemed cost as on 1 April 2015.

A.1.5 Long term foreign currency monetary items

For borrowings taken upto 31 March 2016, the Corporation has availed the exemption under Ind AS 101 to continue recognising foreign exchange differences on long-term foreign currency monetary items. Accordingly, exchange difference relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in other cases accumulated in “Foreign Currency Monetary Item Translation Difference Account” and amortised over the balance period of the Borrowings.

A.2 Ind AS mandatory exceptions

A.2.1 Estimates

Ind AS estimates as on 1 April 2015 are consistent with the estimates as on the same date made in conformity with IGAAP. Corporation has made estimates for following items in accordance with Ind AS on the date of transition as these were not required under IGAAP:

- Investment in equity instruments carried at FVPL or FVOCI;

- Impairment of financial assets based on expected credit loss model.

- Determination of the discounted value for financial instruments carried at amortised cost.

A.2.2 Classification and measurement of financial assets

As permitted under Ind AS 101, the Corporation has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. In line with Ind AS 101, measurement of financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

B.1. Statement of Cash Flows

The transition from IGAAP to Ind AS has not made a material impact on Statement of Cash Flows.

Notes to the Equity reconciliation:

Note B.2.1.: Proposed Dividend

Under IGAAP, dividends proposed by the Board of Directors after the Balance Sheet date but before the approval of Financial Statements were considered as adjusting event. Accordingly, provision for proposed final dividend was recognised as a liability. Under Ind AS, proposed dividend is recognised as a liability in the period in which it is declared by Corporation i.e. usually when approved by shareholders in an Annual General Meeting.

Accordingly, the liability for proposed final dividend as on 1 April 2015 and 31 March 2016 included under the Provisions, in respective accounting periods, has been reversed with corresponding adjustments to respective period’s Retained Earnings.

Note B.2.2.: Fair valuation of Equity Instruments

Under IGAAP, Corporation accounted for long term investments in quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, Corporation has designated such investments as FVTOCI (Fair Value through Other Comprehensive Income) investments.

At the date of transition to Ind AS, the difference between the cost of the investments and the fair value is recognised under equity in a separate reserve i.e. Equity Instruments through Other Comprehensive Income reserve.

Note B.2.3.: Investment in Preference Shares of HPCL Biofuels Limited (HBL)

Under IGAAP, investment in preference shares of HBL were carried at its Face Value. Under Ind AS, the investment in Preference Shares is fair valued on initial recognition and subsequently measured at amortised cost. Hence, the difference between the carrying amount as per IGAAP and its amortised cost under Ind AS is recognised in Opening Retained Earnings. Interest income is recognised in Statement of Profit and Loss for the year 2015-16 under Ind AS on account of unwinding of discount of such investments.

Note B.2.4.: Investment in Oil Marketing Companies GOI Special Bonds

Under IGAAP, Corporation had classified the investment in GOI Special Bonds as current investment. These investments were carried at lower of cost or its fair value. Hence, loss in respect of fair valuation of such investments was recognised and gain, if any, was ignored.

Under Ind AS, Corporation has elected to carry these investments at fair value with fair value changes being recognised in Statement of Profit and Loss. Hence, gain or loss on account of fair valuation of such bonds is recognised in Statement of Profit and Loss.

Note B.2.5.: Derivative contracts

Under Ind AS, outstanding derivative contracts are considered as financial instruments and hence, needs to be fair valued at every reporting date.

Consequently, under Ind AS, fair value gain or loss on the date of transition is recognized in Opening Retained Earnings and for other periods in respective period’s Statement of Profit and Loss.

Note B.2.6.: Adjustment of transaction cost on borrowings

Under IGAAP, transaction costs incurred for borrowings were recognised as an asset (Unamortised prepaid expenses) and amortised to Statement of Profit and Loss on a straight-line basis over the tenure of the borrowings. Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition and subsequntly measured at amortized cost.

Accordingly, under Ind AS, restatement of outstanding ancillary cost is recognized in Opening Retained Earnings on transition date and subsequently in respective period’s Statement of Profit and Loss.

Note B.2.7.: Capital Grant

Under IGAAP, Capital Grants received from Government are presented as part of Reserves. Under Ind AS, Capital Grants received from Government need to be recognised as a Liability.

Accordingly, under Ind AS, amount of Capital Grant has been reclassified from Reserves to Liabilities.

Note B.2.8.: Timing of Revenue Recognition

Under IGAAP, revenue from sale of goods is recognised when the same is dispatched by the Corporation.

Under Ind AS, in situations where goods have left Corporation’s premises but Corporation continues to exercise effective managerial control on such goods till the time goods reach the customers premises, revenue is deferred and recognised when goods are accepted by the customer.

Accordingly, impact on account of margin elimination on deferred sales is recognised in Retained Earnings on transition date and in Statement of Profit and Loss for Financial Year 2015-16.

Note B.2.9.: Impairment of Trade Receivables

Under IGAAP, the Corporation recognised provision on Trade Receivables based on specific provisions to reflect the Corporation’s expectation. Under Ind AS, impairment of Trade Receivables shall be recognised based on Expected Credit Loss.

Accordingly, Corporation has recognised impairment loss on Trade Receivables at transition date in Opening Retained Earnings and in Statement of Profit and Loss for Financial Year 2015-16.

Note B.2.10.: Reclassification of freehold and leasehold land into operating leases

Under IGAAP, the Corporation has classified leasehold land with a period of 99 years or more as freehold land and accordingly not amortised the same. Also, leasehold land with a lease period of less than 99 years is classified as leasehold land under tangible fixed assets. The same was amortised over the tenure of lease and presented under Statement of Profit and Loss as Depreciation and Amortisation Expense.

Under Ind AS, land leases with long tenure of lease are required to be classified as Finance Lease. Hence, Corporation has decided to consider leasehold lands with lease period of more than 99 years as finance lease. Accordingly, the same will also be subject to amortisation under Ind AS. Also, land with a lease tenure of 99 years or less is treated as operating lease and amortised over the tenure of lease as Rent Expense. The amortisation of prepaid operating lease rentals is presented under Rent Expense.

Accordingly, lease hold land for 99 years has been amortized and impact on account of amortization upto transition date has been recognised in Opening Retained Earnings. Subsequently, the amortization charge is recognized as Rent Expenses in the statement of Profit and Loss. For the purpose of tenure, the Corporation has considered the lease period including the lease period where the Corporation has an un-conditional right to renew the lease at a rate below market price or a fix price.

Note B.2.11.: Reversal of amortisation of Right of Way Assets

Under IGAAP, the Right of Way Assets with indefinite useful lives were amortised over a period of 99 years based on Expert Advisory Committee opinion issued by Institute of Chartered Accountants of India. Under Ind AS, Intangible Assets with indefinite useful life are not required to be amortised but shall be tested for impairment annually or when there is an indication. Accordingly amortisation charge created during Financial Year 2015-16, in Statement of Profit and Loss, on Right of Way Assets with indefinite useful lives has been reversed under Ind AS.

Note B.2.12.: Stores and Spares

Under IGAAP, Stores and Spares which can be identified with a particular item of Property, Plant and Equipment (PPE) and whose use is expected to be irregular is capitalised as part of Tangible Fixed Assets. Other Stores and Spares are treated as inventory and charged to Statement of Profit and Loss on consumption. Under Ind AS, Stores and Spares with a useful life of more than one year shall be treated as PPE. Such Stores and Spares need to be depreciated from the date they are ready for use (based on clarification received from ITFG) over their estimated useful life. Hence, Stores and Spares which were erstwhile treated as inventory under IGAAP have been classified as part of PPE if recognition criteria are met (referred to as capital spares). Also, such capital spares are depreciated from the date of purchase over their estimated useful life. Additionally, since capital spares would be depreciated, spares charged to Statement of Profit and Loss on consumption have been reversed and depreciated over its estimated useful life.

Note B.2.13.: Enabling Asset

Under IGAAP, expenditure incurred on construction/acquisition of enabling assets on which the Corporation does not have a control were expensed out as and when incurred.

Under Ind AS, if the expenditure incurred on such enabling asset is of such nature that it is necessary for making the item of Property, Plant and Equipment capable of operating in the manner intended by the management, then the same has been capitalised with corresponding depreciation expense charged in the statement of Profit and Loss.

Note B.2.14.: Excise duty

Under IGAAP, revenue from sale of goods was presented net of the excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty has been presented in the Statement of Profit and Loss as an expense. This has resulted in an increase in the Revenue from Operations and Expenses for the year ended 31 March 2016.

Note B.2.15.: Actuarial gains/(losses)

Under Ind AS, the Corporation’s Accounting Policy is to recognise all actuarial gains and losses on Post-Employment Benefit Plans in other comprehensive income. Under IGAAP the Corporation recognised actuarial gains and losses in the Statement of Profit and Loss. However, this has no impact on the total comprehensive income and total Equity as on 1 April 2015 as well as 31 March 2016.

Note B.2.16.: Deferred tax assets / (liabilities) (net)

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on Ind AS adjustments which was not required under Indian GAAP.

Note 13: Fair Value Measurements

13.A. Classification of Financial Assets and Financial Liabilities:

The following table shows the carrying amounts of Financial Assets and Financial Liabilities which are classified as on Fair value through Profit and Loss (FVTPL), Fair value through other comprehensive Income (FVTOCI) and Amortized Cost.

13.B Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the Financial Assets and Financial Liabilities that are recognised and measured at fair value and at amortised cost. To provide an indication about the reliability of the inputs used in determining fair value, Corporation has classified its Financial Assets and Financial Liabilities into the three levels prescribed under the accounting standard. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. An explanation of each level is provided under Significant Accounting Policy.

Note 14: Financial risk management

14.A. Risk management framework

The Corporation has adopted a well-defined process for managing its risks on an ongoing basis and for conducting the business in a risk conscious manner. These self-regulatory processes and procedures are contained in our Risk Management Charter and Policy, 2007. The Corporation has a structures and comprehensive Risk Management Framework, under which the risks are identified, assessed, monitored and reported, as a part of a normal business practice. The Corporation has leveraged technology to seamlessly integrate and automate the entire process of risk monitoring and reporting which also facilitate Corporation-wide process of managing the risks. The Corporation’s risk management system is fully aligned with the corporate and operational objectives.

The Corporation has engaged the services of an independent expert to assist in continued implementation of effective Risk Management Framework. In that direction, Risk Management Steering Committee (RMSC) continues to provide its guidance. The Corporation has put in place mechanism to inform Board Members about the risk management and minimisation procedures, and periodical review to ensure that executive management controls risks by means of a properly defined framework.

14.B. Corporation has identified financial risk and categorised them in three parts Viz. (i) Credit Risk, (ii) Liquidity Risk & (iii) Market Risk. Details regarding sources of risk in each such category and how Corporation manages the risk is explained in following notes:

14.B.1-Credit risk:

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Corporation’s receivables from customers and investment securities. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Corporation grants credit terms in the normal course of business. The Corporation establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

The maximum exposure to credit risk in case of all the financial instruments covered below is restricted to their respective carrying amount.

Trade receivables

The Corporation’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Corporation grants credit terms in the normal course of business.

At 31.03.2017, the Corporation’s most significant customer accounted for Rs.1,068.86 crores of the trade receivables carrying amount (31.03.2016 : Rs.855.93 crores and 01.04.2015 : Rs.704.47 crores).

The Corporation uses an allowance matrix to measure the expected credit losses of trade receivables (which are considered good). The following table provides information about the exposure to credit risk and loss allowance (including expected credit loss provision) for trade receivables:

The amounts written off at each reporting date relates to customers who have defaulted on their payments to the Corporation and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances.

Cash and cash equivalents

The Corporation held cash and cash equivalents of Rs.8.85 crores at 31.03.2017 (31.03.2016 : Rs.8.05 crores; 01.04.2015 : Rs.9.15 crores). The cash and cash equivalents are held with consortium banks. Corporation invests its surplus funds in bank fixed deposit, GOI T-bills and liquid schemes of mutual funds, which carry no mark to market risks for short duration and exposes the Corporation to low credit risk.

Derivatives

The forex and interest rate derivatives were entered into with banks having an investment grade rating and exposure to counter-parties are closely monitor and kept within the approved limits. Commodity derivatives are entered with reputed Counterparties in the OTC (Over-the-Counter) Market.

Investment in debt securities

Investment in debt securities are in government securities or bonds which do not carry any credit risk.

Other than trade receivables, the Corporation has no other financial assets that are past due but not impaired.

14.B.2. Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. Corporation has a strong focus on effective management of its liquidity to ensure that all business and financial commitments are met on time. The corporation has adequate borrowing limits in place duly approved by its shareholders and board. Corporation sources of liquidity includes operating cash flows, cash and cash equivalents, fund and non-fund based lines from banks and liquid investment portfolio. Corporation ensures that there is minimal concentration risk by diversifying its portfolio across instruments and counterparties. Cash and fund flow management is monitored daily in order to have smooth and continuous business operations.

(i) Financing arrangements

The Corporation has an adequate fund and non-fund based lines from various banks. The corporation has sufficient borrowing limits in place duly, approved by its shareholders and board. Domestic and international credit rating from reputed credit rating agencies enables access of funds both from domestic as well as international market. HPCL’s diversified source of funds and strong operating cash flow enables it to maintain requisite capital structure discipline. HPCL diversifies its capital structure with a mix of instruments and financing products across varying maturities and currencies. The financing products include syndicated loans, foreign currency bonds, commercial paper, non-convertible debentures, buyer’s credit loan, clean loan etc. HPCL taps domestic as well as foreign debt markets from time to time to ensure appropriate funding mix and diversification of geographies.

(ii) Maturities of financial liabilities

The amounts disclosed in the table are the contractual undiscounted cash flows.

14.C.1. Market Risk-Market Risk is further categorized in (i) Currency risk, (ii) Interest rate risk & (iii) Commodity risk: 41.C.3.1. Currency risk:

The corporation is exposed to currency risk mainly on account of its borrowings and import payables in foreign currency. Our exposures are mainly denominated in U.S. dollars. The Corporation has used generic derivative contracts to mitigate the risk of changes in foreign currency exchange rates in line with corporation forex risk management policy. The corporation has a Forex Risk Management Cell (FRMC) which actively review the forex and interest rate exposures. The Corporation does not uses derivative financial instruments for trading or speculative purposes.

14.C.1.2 Interest rate risk

Corporation’s has a long-term foreign currency syndicated loans with floating rate, which expose the Corporation to cash flow interest rate risk. The borrowings at floating rate were denominated in USD. The Corporation manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Under these swaps, the Corporation agrees with other parties to exchange, at specified intervals (i.e quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts. Corporation monitors the interest rate movement and manages the interest rate risk based on the corporation forex risk management policy. The corporation also has a Forex Risk Management Cell (FRMC) which actively review the forex and interest rate exposures. The Corporation does not uses derivative financial instruments for trading or speculative purposes.

The Corporation’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Following is the derivative financial instruments to hedge the interest rate risk as of dates:

Interest rate risk exposure:

Corporation’s interest rate risk arises from borrowings. The interest rate profile of the Corporation’s interest-bearing financial instruments as reported to the management of the Corporation is as follows.

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 25 basis points in interest rates at the reporting date would have increased / (decreased) profit or loss by the amounts shown below. The indicative 25 basis point (0.25%) movement is directional and does not reflect management forecast on interest rate movement.

This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

14.C.1.3. Commodity Risk

The Corporation’s activities are exposed to Oil price risks and therefore its Oil Price Risk Management program focuses on reducing the impact of the volatility of International Oil prices. With this objective, Risk Management activities aspire to protect the Margins of the Organization. In order to therefore manage its exposure to the risks associated with volatile Oil market / Commodity prices, the Corporation enters into derivative contracts in the OTC Market.

The Oil Price Risk Management Committee regularly reviews and monitors risk management principles, policies, and risk management activities.

14.C.1.4. Offsetting

The following table presents the recognised financial instruments that are eligible for offset and other similar arrangements but are not offset, as on 31.03.2017, 31.03.2016 and 01.04.2015. The column ‘net amount’ shows the impact on the Company’s balance sheet if all set-off rights are exercised.

Note 15 : Leases Operating Lease

A. Leases as lessee

a) The Corporation enters into cancellable/non-cancellable operating lease arrangements for land, office premises, staff quarters and others. Payments made under operating leases are generally recognised in statement of Profit and Loss based on corresponding periods contractual terms of the lease, since the Corporation considers it to be more representative of time pattern of benefits flowing to lease rentals paid for the same are charged to the Statement of Profit and Loss.

Note 16 : Earnings per share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of Equity shares outstanding during the year.

Note 17 : Capital management

The Corporation’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Corporation monitors capital using debt equity ratio. The Corporation’s debt to equity ratio at March 31, 2017 is as follows.

18. The Corporation has accounted the discount of Rs.Nil (2015-16: Rs.190.33 crores) on Crude Oil purchased from ONGC and has adjusted it against purchase cost of Crude Oil.

19. During the current financial year 2016-17, Subsidy on PDS Kerosene and Domestic Subsidized LPG from Central and State Governments amounting to Rs.20.01 crores (2015-16: Rs.11.77 crores) has been accounted.

20. Approval of Government of India for Budgetary Support amounting to Rs.1,272.57 crores (2015-16: 1,761.26 crores) has been received and the same has been accounted under ‘Recovery under Subsidy Schemes’.

21. (a) Inter-Oil company transactions are reconciled on a continuous basis. However, year end balances are subject to confirmation/reconciliation which is not likely to have a material impact.

(b) Customers’ accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts.

22. In accordance with Para 7AA of Ind AS 21 read with Para D13AA of Ind AS 101, the Corporation has adjusted the exchange differences arising on long term foreign currency monetary items to the cost of assets and depreciated over the balance useful life of the assets.

23. In accordance with the option exercised by the Company as referred in note # 20(a), an exchange loss of Rs.0.44 crores (201516: Rs.194.80 crores) related to non-depreciable assets is remaining to be amortized over the balance period of loan in “Foreign Currency Monetary Item Translation Difference Account” as on March 31, 2017.

24. (a) Current Tax includes MAT Credit utilisation of Rs.327.03 Crore (2015-16: Rs.133.61 Crore).

(b) The recognition of MAT Credit Entitlements of Rs.316.87 Crore as on March 31, 2017 (Rs.429.57 Crore as on March 31, 2016) is on the basis of convincing evidence that the Corporation will be able to avail the credit during the period specified in section 115JAA of the Act.

(c) Provision for tax for earlier years written back(net) of Rs.52.48 Crore (2015-16: Rs.120.38 Crore) represents reversal of excess provision towards current tax of Rs.216.40 Crore (2015-16 : Rs.249.75 Crore), additional provision towards deferred Tax of Rs.232.73 Crore (2015-16: Rs.141.08 Crore) and recognition of MAT credit Entitlements of Rs.68.81 Crore (2015-16: Rs.11.71 Crore).

25. To the extent Micro and Small Enterprises have been identified, the outstanding balance, including interest thereon, if any, as on balance sheet date is disclosed on which Auditors have relied upon:

26. Related Party Disclosure:

A. Names of and Relationship with Related Parties

1 . Jointly controlled entities

i. HPCL-Mittal Energy Ltd.

ii. Hindustan Colas Pvt. Ltd.

iii. South Asia LPG Company Pvt. Ltd.

iv. Petronet India Ltd.

v. HPCL Shapoorji Energy Pvt. Ltd.

2. The Company has not included disclosure in respect of following related parties which are Govt. related entities as per Ind AS 24.

i. Subsidiaries

1. HPCL Biofuels Ltd.

2. Prize Petroleum Company Ltd.

ii. Jointly controlled entities

1. CREDA-HPCL Biofuels Ltd.

2. HPCL Rajasthan Refinery Ltd.

3. Bhagyanagar Gas Ltd.

4. Petronet MHB Ltd.

5. Mumbai Aviation Fuel Farm facility Pvt. Ltd.

6. Godavari Gas Pvt Ltd

7. Aavantika Gas Ltd..

iii. Associates

1. GSPL India Gasnet Ltd.

2. GSPL India Transco Ltd.

3. Mangalore Refinery and Petrochemicals Ltd.

3. Key Management Personnel

i. Shri Mukesh Kumar Surana, Chairman and Managing Director (w.e.f. 01.04.2016)

ii. Shri J. Ramaswamy, Director - Finance

iii. Shri Vinod S. Shenoy, Director - Refineries (from 01-11-2016)

iv. Shri B. K. Namdeo, Director- Refineries (till 31.10.2016)

v. Shri S. Jeyakrishnan, Director - Marketing (from 01-11-2016)

vi. Shri Y.K. Gawali, Director - Marketing (till 31.10.2016)

vii. Shri Pushp Kumar Joshi, Director - Human Resources

viii. Shri Shrikant Madhukar Bhosekar, Company Secretary

4. Independent Directors

i. Shri Ram Niwas Jain, Independent Director

ii. Smt. Asifa Khan (from 13.02.2017)

iii. Shri G.V. Krishna (from 13.02.2017)

iv. Dr. Trilok Nath Singh (from 20.03.2017)

B. Details of transactions with related parties

C. Transactions with other government-controlled entities

The corporation is a Government related entity engaged in the business of refining of crude oil and marketing of petroleum products. The corporation also deals on regular basis with entities directly or indirectly controlled by the central/state governments through its government authorities, agencies, affiliations and other organizations (collectively referred as “Government related entities”).

Apart from transactions with corporations’ group companies, the corporation has transactions with other Government related entities, including but not limited to the followings:

- sale and purchase of products;

- rendering and receiving services;

- lease of assets;

- depositing and borrowing money; and

- use of public utilities

These transactions are conducted in the ordinary course of the corporation’s business on terms comparable to those with other entities that are not Government related.

27. The Corporation has entered into production sharing oil & gas exploration contracts in India in consortium with other body corporate. These consortia are:

a) The Blocks CY-DWN-2004/1,2,3,4, CY-PR-DWN-2004/1&2, RJ-ONN-2004/1&3, KK-DWN-2002/2, MB-OSN-20010/2, MB-OSN-2004/1, MB-OSN-2004/2 are in the process of relinquishment. The audited financial statements for these UJVs have been received upto March 31, 2016. Blocks KG-DWN-2004/1,2,3,5 and 6 are under relinquishment and the operating committee had decided not to maintain books of accounts for the projects as they are under relinquishment. The audited financial statements for these UJVs have been received upto March 31, 2015. The Company has incorporated the share of the assets, liabilities, income and expenditure based on the unaudited financial statements / data received from operator as on 31st March, 2017.

b) The Blocks AA-ONN-2003/3 and KK-DWN-2002/3 are in the process of relinquishment. The audited financial statements for these UJVs have been received upto March 31, 2011 and March 31, 2012 respectively. The Company has incorporated the share of the assets, liabilities, income and expenditure based on the unaudited financial statements / data received from operator as on 31st March, 2017.

c) The block CB-ONN-2002/3 was awarded under NELP IV bidding round and the production sharing contract was signed on 06.02.2004. The exploration Minimum Work Program has been completed. The block is divided into two areas i.e. Miroli and Sanand. Approval of Mining Lease to commence production from Sanand field has been received from Govt. of Gujarat. Preparation of addendum to Sanand FDP (Field development plan) for additional discovery in Kalol reservoir is in progress.

d) In respect of Cluster - 7, the matter is under arbitration. Please refer Note # 68.1.

28. As per the guidelines issued by Department of Public Enterprises (DPE) in August, 2005, the Board of Directors of Navratna Public Sector Enterprises (PSEs) can invest in joint ventures and wholly owned subsidiaries subject to an overall ceiling of 30% of the net worth of the PSE. The company has requested Ministry of Petroleum & Natural Gas (MOP&NG) to confirm its understanding that for calculating this ceiling limit, the amount of investments specifically approved by Government of India (i.e. investment in HMEL and HPCL Rajasthan Refinery Limited) are to be excluded. The Company has calculated the limit of 30% investment in joint ventures and wholly owned subsidiaries, by excluding the investments specifically approved by Govt. of India. As per financial position as on 31st march 2017, the investments in joint ventures and wholly owned subsidiaries are well within 30% limit.

29. Considering the Government policies and modalities of compensating the oil marketing companies towards under-recoveries, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. Since there is no indication of impairment of assets as on Balance Sheet date as per the assessment carried out, no impairment has been considered. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same.

30. Disclosure as required by Regulation 34(3) and 53(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

31. The Corporation had complied with the requirement of para 4 (a) of Notes to Schedule II to the Companies Act, 2013 relating to componentization from 2015-16. As per para 7 (b) of Schedule II to the Companies Act, 2013, the Corporation has charged Rs.219.49 crores to Statement of Profit and Loss for 2015-16 as one-time impact.

32. The Corporation has considered the ISBL (Inside boundary Limit) pipeline directly associated as an integral part of Plant and Machinery / Tanks and has depreciated such pipelines based on the useful life of respective plants, which is considered as 25 years in line with the Schedule II of the Companies Act, 2013.

33. During the year 2016 - 17, Corporation has spent Rs.108.11 Crores (2015-16: Rs.71.76 Crores) towards Corporate Social Responsibility (CSR) as against the budget of Rs.107.90 crores (2015-16: Rs.71.67 Crores).

34. There are no reportable segments other than downstream petroleum, as per Ind AS-108 on Segment Reporting.

34.1: A claim of Rs.236.81 crores (36.51 Million USD @ Exchange rate of 1 US = $ 64.855), claim by M3nergy on termination of service contract of Cluster-7 field, which was awarded by ONGC to the consortium of M3nergy (Malaysia) BHD (30%), Prize Petroleum Company Limited (10%) and HPCL (60%). HPCL and Prize Petroleum has also initiated arbitration proceedings against M3nergy. The share of the claim of the company is Rs.871.09 crores with loss of profit and other expenses etc. Arbitration was bifurcated into two aspects one is liability and the other is quantification. Liability aspects have been held in favour of Corporation and by an interim award by Hon’ble Arbitral Tribunal, which has been challenged by M3nergy in Bombay High Court. The said Partial Award has been challenged by M3energy before High Court of Bombay wherein Court refused the request of M3nergy to stay arbitration proceedings. The matter is pending for further arguments.

The final hearing set of hearing before the before the Hon’ble Arbitral Tribunal dealing with nature and extent of relief to be granted to the PPCL and HPCL as well as question of costs were held on November 4-5, 2016, as the oral argument could not be completed, by M3nergy filed their written submission on Apr 6, 2017. The rejoinder to the same is now to be filed by PPCL and HPCL. This amount is not included above.

34.2: Company has entered into a long term product off take agreement with M/s HPCL- Mittal Energy Limited (HMEL), its joint venture company, for purchase of petroleum products produced by the refinery. This agreement has a take or pay clause and the Company is committed to purchase the said petroleum products over the tenure of the agreement.

34.3: The Company and Mittal Energy Investment Pte. Ltd. (its joint venture partner in HPCL-Mittal Energy Limited) have committed that they would jointly hold at least 51 % of share capital of HPCL-Mittal Energy Limited till the repayment of certain bank loans / bonds.

35. Details of Specified Bank Notes (SBN) held and transacted during the period 08/11/2016 to 30/12/2016 are produced herein below:

36. Based on 3rd Pay Revision Committee recommendation, a provision of Rs.449.52 crores have been made towards increase in gratuity ceiling from Rs.10 lakhs to Rs.20 lakhs and revision in salary for management staff w.e.f. 01.01.2017.

Note 37 : Employee benefit obligations A: Provident Fund

The Corporation’s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employees salary and charged to Statement of Profit and Loss.

Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the Corporation and charged to Statement of Profit and Loss. The actual return earned by the fund has mostly been higher than the Government specified minimum rate of return in the past years. There is no shortfall in the fund as on 31st March 2017, 31st March 2016 and 1st April 2015.

Present value of benefit obligation at period end is Rs.3,438.00 crores (31.03.2016 : Rs.3,156.89 crores; 01.04.2015 : Rs.2,852.56 crores).

During the year, the company has recognised Rs.128.90 crore (2015-16 : Rs.120.46 crore) as Employer’s contribution to Provident Fund in the Statement of Profit and Loss.

B: Superannuation Fund

The company has Superannuation Scheme - Defined Contribution Scheme maintained by SBFS trust wherein Company contributes a certain percentage every month out of 30% of Basic plus DA (in accordance with DPE guidelines) to the credit of individual employee accounts maintained with LIC.

During the year, the company has recognised Rs.152.15 crore (2015-16 : Rs.178.34 crore) as Employer’s contribution to Superannuation Fund in the statement of Profit and Loss.

C: Notes:

Gratuity : All employees are entitled to receive gratuity as per the provisions of Payment of Gratuity Act, 1972. The Defined Benefit Plan of Gratuity is administered by Gratuity Trust. The Board of Trustees comprises of representatives from the Corporation who are also plan participants in accordance with the plans regulation. Based on 3rd pay commission recommendation, the gratuity ceiling has been considered as Rs.20 lakhs due to that, past service cost of Rs.368.44 crores is estimated and provided.

Pension : The employees covered by the Pension Plan of the Corporation are entitled to receive monthly pension for life.

Post Retirement Medical Benefit : The serving and superannuated employees are covered under medical insurance policy taken by Corporation. It provides reimbursement of medical expenses for self and dependents as per the terms of the policy.

Ex-gratia : The ex-employees of Corporation covered under the Scheme are entitled to get ex-gratia based on the grade at the time of their retirement. The benefit will be paid to eligible employees till their survival, and after that, till the survival of their spouse.

Resettlement Allowance : At the time of retirement, the employees are allowed to permanently settle down at a place other than the location of the last posting.

The fair value of the assets of Provident Fund Trust as of balance sheet date is greater than the obligation, including interest, and also the returns on these plan assets including the amount already provided are sufficient to take care of PF interest obligations, over and above the fixed contribution recognized.

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligation.

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.

Figures in italics represent last year figures

38 Previous periods figures are reclassified / regrouped wherever necessary.


Mar 31, 2016

(a) Right and Restrictions on Equity Shares

The Company has only one class of Equity Shares having a face value of Rs, 10/- per share which are issued and subscribed. Each Shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of the winding up of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company in proportion to the number of equity shares held by the shareholders and the amount paid up thereon

The Company also has 75,000 6% cumulative Redeemable Non-convertible Preference Shares of Rs, 100 /- each as a part of the Authorised Capital, which were issued earlier by the erstwhile ESRC. Presently the said Preference Shares stand redeemed

1. Debentures

The Company has issued the following Secured Redeemable Non-convertible Debentures:

8.77% Non-Convertible Debentures were issued on 13th March, 2013 with the maturity date of 13th of March, 2018. These are secured by first legal mortgage by way of a Registered Debenture Trust Deed over immovable property of the company being undivided share of land with the entire First Floor in the building High Street 1, situated at Ahmadabad and the first charge of fixed assets mainly certain Plant and Machinery at Visakh Refinery.

i. 8.75% Non-Convertible Debentures were issued on 9th November, 2012 with the maturity date of 9th of November, 2015 These are secured by mortgage, on first pari passu charge basis, by way of a Registered Debenture Trust Deed over immovable property of the company being undivided share of land with the entire First Floor in the building High Street 1, situated at Ahmadabad and the first charge of fixed assets mainly certain Plant and Machinery at Mumbai Refinery.

During the year ended March, 2016 an amount of Nil (31.03.2015 : Rs, 545.00 crores) of 8.75% Non-Convertible Debentures is repayable within one year and shown in note # 10 A. These Debentures Matured on 9th November, 2015

* : Rs, 125 Crores (31.03.15 : Rs, 200.00 Crores) is repayable within 1 year and the same has been shown as "Current Maturity of Long Term Debts" under Note #10 A.

2. Syndicated Loans from Foreign Banks (repayable in foreign currency)

The Company has availed Long Term Foreign Currency Syndicated Loans from banks at 3 months floating LIBOR plus spread (spread range : 65 to 170 basis point p.a.). These loans are taken for the period of 3 - 5 years. Rs, 6,625.25 Crores (31.03.15 Rs, 2,500.20 Crores) is repayble within 1 year and the same has been shown as "Current Maturity of Long Term Debts" under Note #10 A.

* : Security has been created with first charge on the facilities of Awa Salawas Pipeline, Mangalore Hasan Mysore LPG Pipeline, Uran - Chakan / Shikarpur LPG Pipeline & Rewari Project Pipeline. Rs, 64.50 Crores (31.03.2015 : Rs, 34.50 Crores) is repayble within 1 year and the same has been shown as "Current Maturity of Long Term Debts" under Note # 10 A.

10A.1 : This includes loans repayable within one year: Syndicated Loans from Foreign Banks (repayable in foreign currency) Rs, 6,625.25 Crores (31.03.15: Rs, 2,500.20 Crores), 8.75% Non - Convertible Debenture Nil (31.03.15: Rs, 545.00 Crores), and Loan from Oil Industry and Development Board Rs, 189.50 Crores (31.03.15: Rs, 234.50 Crores)

10A.2 : To the extent Micro and Small Enterprises have been identified, the outstanding balance, including interest thereon, if any, as at Balance Sheet date is disclosed on which Auditors have relied upon. (Refer note # 39)

10A.3 : No amount is due as at the end of the year for credit to Investors'' Education and Protection Fund

10A.4 : Includes Statutory Liabilities of Rs, 2,979.39 Crores (31.03.15: Rs, 2,635.81 Crores), Liabilities relating to retention money payable to Suppliers within one year, Supplies / Project related payables, etc. Rs, 4,299.59 Crores (31.03.15: Rs, 3,748.77 Crores)

Notes:

1. Includes assets costing Rs, 0.007 crores (2014-2015 : Rs, 0.007 crores) of erstwhile Kosan Gas Company not handed over to the Corporation. In case of these assets, Kosan Gas Company was to give up their claim. However, in view of the tenancy right sought by third party, the matter is under litigation

2. Includes Rs, 477.90 Crores (2014-2015: Rs, 153.60 Crores) towards Building, Other Machinery, Pipelines, Railway Sidings, Right of Way etc. being the Corporation''s Share of Cost of Land & Other Assets jointly owned with other Companies

3. Includes Rs, 35.28 Crores (2014-2015 : Rs, 35.99 Crores) towards Roads & Culverts, Transformers & Transmission lines, Railway Sidings & Rolling Stock, ownership of which does not vest with the Corporation . The Corporation is having operational control over such assets. These assets are amortised at the rate of depreciation specified in Schedule II of the Companies Act, 2013

4. (a) Includes following assets which are used for distribution of PDS Kerosene under Jana Kalyan Pariyojana against which financial assistance is being provided by OIDB

5. Includes Assets retired from active use and held for disposal - Gross Block: Rs, 177.22 Crores / Net Block: Rs, 37.08 Crores (2014- 2015: Gross Block: Rs, 34.69 Crores/ Net Block: Rs,2.98 Crores). These Assets are valued at their Net Book Value or Net Realisable Value whichever is lower: Rs, 12.01 Crores (2014-2015: Rs, 2.56 Crores)

6. Leasehold Land includes Rs, 26.87 Crores (2014-15: Rs, 25.25 Crores) for land acquired on lease-cum-sale basis from Karnataka Industrial Area Development Board (KIADB) which is capitalized without being amortised over the period of lease. Lease shal be converted into Sale on fulfilment of certain terms and conditions as per allotment letter.

3. During the current financial year 2015-16, ONGC offered discount on prices of crude purchased from them. Accordingly, the Corporation has accounted the discount as under:

(a) Rs, Nil (2014-15: Rs, 1,035.37 crores) discount received on purchase of PDS SKO and Domestic LPG from ONGC and GAIL has been adjusted against Purchases of Stock-in-Trade

(b) Rs, 190.33 crores (2014-15: Rs, 9,826.84 crores) discount received on Crude Oil purchased from ONGC has been adjusted against purchase cost of Crude Oil

4. During the current financial year 2015-16, Subsidy on PDS Kerosene and Domestic Subsidized LPG from Central and State Governments amounting to Rs, 11.77 crores (2014-15:Rs, 684.79 crores) has been accounted

5. Approval of Government of India for Budgetary Support amounting to Rs, 1,761.26 crores (2014-15: Rs, 5,057.94 crores) has been received and the same has been accounted under ''Recovery under Subsidy Schemes''

6. (a) Inter-Oil company transactions are reconciled on a continuous basis. However, year end balances are subject to confirmation/ reconciliation which is not likely to have a material impact.

(b) Customers'' accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts

7. The Corporation has on the Balance sheet date, outstanding forward contract amounting to USD 50.27 Million, of which NIL (2014-15 : USD NIL) is to hedge the foreign currency exposure towards loans and USD 50.27 Million i.e. an equivalent of Rs, 333.05 crores (2014-15 : USD NIL) to hedge its foreign currency exposure towards import payable. As at Balance Sheet date, Corporation has interest rate swap contracts for a value of USD 260 Million i.e. an equivalent ofRs, 1,722.57 crores (2014-15: USD 200 Million i.e. an equivalent of Rs, 1,250.10 crores) to cover its floating interest rate exposure to fixed interest rate

Following are the unheeded foreign currency on account of exposures

8. In accordance with the option as per AS - 11 (notified under the Company''s Accounting Standards Rules, 2006) exercised in the year 2008 - 09, the Corporation has adjusted the exchange differences arising on long term foreign currency monetary items to the cost of assets and depreciated over the balance life of the assets. The Corporation has continued to exercise the option during the year 2015-16 as per Ministry of Corporate Affairs'' Notification

9. In accordance with the option exercised by the Company as referred in note # 34, an exchange loss of Rs, 197.14 crores (2014 - 15: Loss of Rs, 63.16 Crores) related to non-depreciable assets is remaining to be amortized over the balance period of loan in "Foreign Currency Monetary Item Translation Difference Account" as at March 31, 2016

10. During the F. Y. 2015-16, corporation do not have any RBI Swap transaction. During the F.Y. 2014-15, the net gain of Rs, 360.71 crore have been recognized and accounted for in the books on RBI swap transactions, out of which Rs, 192.38 crore was realized on account of RBI swap transactions settled during the financial year 2014-15 and Rs, 168.33 Crore on account of reversal of mark to market losses provision provided as on 31.03.2014 on forward contracts taken to hedge the un-matured RBI swap transactions outstanding as on 31.03.2014.

11. Ancillary costs incurred towards raising of Syndicated Loans from Foreign Banks (repayable in foreign currency) is being amortized over the tenure of the loan. Total amount of such ancillary costs remaining unamortized as on the balance sheet date is Rs, 162.35 Crores (2014-15: Rs, 205.94 crores).

12. (a) Current Tax includes MAT Credit utilisation of Rs, 133.61 Crore (2014-15: Rs, 243.15 Crore).

(b) The recognition of MAT Credit Entitlements of Rs, 429.57 Crore as at March 31, 2016 (^ 344.33 Crore as at March 31, 2015) is on the basis of convincing evidence that the Corporation will be able to avail the credit during the period specified in section 115JAAof the Act.

(c) Provision for tax for earlier years written back(net) of Rs, 120.38 Crore (2014-15: Rs, 27.47 Crore) represents reversal of excess provision towards current tax of Rs, 249.75 Crore (2014-15: Rs, 24.71 Crore), additional provision towards deferred Tax of Rs,141.08 Crore (2014-15: Rs, 26.76 Crore) and recognition of MAT credit Entitlements of Rs, 11.71 Crore (2014-15: Rs, 29.53 Crore)

13. Related Party Disclosure:

A. Names of and Relationship with Related Parties

1. Jointly controlled entities

i. HPCL-Mittal Energy Ltd.

i. Hindustan Colas Pvt. Ltd

iii. South Asia LPG Company Pvt. Ltd

iv. Petronet India Ltd

v. HPCL Shapoorji Energy Pvt. Ltd

2. The Company has not included disclosure in respect of following related parties which are State-Controlled Enterprises as per AS - 18.

i. Subsidiaries

1. CREDA-HPCLBiofuelsLtd.

2. HPCL Biofuels Ltd.

3. Prize Petroleum Company Ltd

4. HPCL Rajasthan Refinery Ltd. ii. Jointly controlled entities

1. Mangalore Refinery and Petrochemicals Ltd

2. Aavantika Gas Ltd

3. Bhagyanagar Gas Ltd

4. Petronet MHB Ltd.

5. GSPL India Gasnet Ltd.

6. GSPL India Transco Ltd

7. Mumbai Aviation Fuel Farm facility Pvt. Ltd

3. Key Management Personnel

Smt. Nishi Vasudeva, Chairman and Managing Director (Till 31.03.2016)

Shri Mukesh Kumar Surana, Chairman and Managing Director (w.e.f. 01.04.2016)

ii. Shri K. V. Rao, Director- Finance (Till 30.09.2015)

iii. Shri J. Ramaswamy, Director - Finance (w.e.f. 01.10.2015)

iv. Shri B. K. Namdeo, Director-Refineries

v. Shri Y.K. Gawali, Director - Marketing

vi. Shri Pushp Kumar Joshi, Director - Human Resources

vii. Shri Shrikant Madhukar Bhosekar, Company Secretary

a) The Blocks KK-DWN-2002/2, CY-DWN-2004/1,2,3,4, CY-PR-DWN-2004/1&2, KG-DWN-2004/1,2,3,5,6, MB-OSN-2004/1, MB-OSN-2004/2 & RJ-ONN-2004/1 & 3 are in the process of relinquishment. The audited financial statements for these UJVs have been received up to March 31, 2015. The Company has incorporated the share of the assets, liabilities, income and expenditure based on the unaudited financial statements / data received from operator as on 31st March, 2016

b) The Blocks AAONN-2003/3 and KK-DWN-2002/3 are in the process of relinquishment. The audited financial statements for these UJVs have been received up to March 31, 2011 and March 31, 2012 respectively. The Company has incorporated the share of the assets, liabilities, income and expenditure based on the unaudited financial statements / data received from operator as on 31st March, 2016

c) The block CB-ONN-2002/3 was awarded under NELP IV bidding round and the production sharing contract was signed on 06.02.2004. The exploration Minimum Work Program has been completed. The block is divided into two areas i.e. Mirol and Sanand. Approval of Mining Lease to commence production from Sanand field has been received from Govt, of Gujarat Preparation of addendum to Sanand FDP (Field development plan) for additional discovery in Kalol reservoir is in progress

d) The exploration block MB-OSN-2010/2 has been awarded under NELP IX Bidding Round, Production Sharing Contract (PSC) of the same has been signed on 30/08/2012. 3D seismic data acquisition, Processing & interpretation have been completed Discussion on well location and further course of action is in progress

e) In respect of Cluster - 7, the matter is under arbitration. Please refer Note #55.1

* As of 31st March 2014, paid up equity capital of BGL wasRs, 5 lacs, in which H PC Land GAIL were holding 25% each. Balance 50% of shares were held by Kakinada Seaports Ltd (KSPL) on warehousing basis. In addition, each one of HPCL and GAIL had paid Rs, 22.49 crores as Advance against Equity/ Share application money (totalling to Rs, 44.98 crores) in earlier years. On 20th August 2014, BGL allotted 2,24,87,500 shares on preferential basis to each of HPCL and GAIL towards the money paid earlier. Meanwhile there are certain issues pending adjudication with another shareholder. Accordingly, keeping in view financial prudence, HPCL''s share has been considered at 24.99% (considered as 24.99% in F.Y. 2014-15).

b) In respect of jointly controlled entities, the Corporation''s share of assets, liabilities, income, expenses, contingent liabilities and capital commitments as furnished below on the basis of audited / unaudited financial statements received from these joint venture companies

14. The net worth of HPCL Biofuel Limited, a 100% subsidiary, is partially eroded. The management has considered Rs, 161 Crores as a diminution other than temporary in the value of Investment as per AS - 13 and accordingly, made a provision during F.Y. 2015-16.

15. During the year Corporation has made 100% provision amounting to Rs, 16.10 crores for diminution in value of investment in CREDA HPCL Biofuels Ltd. as all the business activities of the company have been suspended and Financial Statement of the company has not been prepared on a going concern basis

16. During the year, M/s PPIPL, a subsidiary of M/s Prize Petroleum Company Limited (PPCL), has decided to provide for an impairment charge of Rs, 117.27 Crores taking cognizance of low crude and other product prices estimates in near future Accordingly, a provision for diminution other than temporary in value of PPCL''s investment in PPIPL amounting to Rs, 51.47 Crores has been made in the books of M/s PPCL, a 100% subsidiary of the Corporation. In line with above, a provision for diminution, other than temporary in value of HPCL''s investment in M/s PPCL amounting to Rs, 105 Crores has been made in the books of HPCL taking into account accumulated losses and diminution in PPCL''s Investment in PPIPL as per AS-13.

17. As per the guidelines issued by Department of Public Enterprises (DPE) in August, 2005, the Board of Directors of Navratna Public Sector Enterprises (PSEs) can invest in joint ventures and wholly owned subsidiaries subject to an overall ceiling of 30% of the net worth of the PSE. As per company''s understanding, since the subject matter covered in DPE OM dated 5th August 2005 was on the same lines as covered in DPE OM dated 22nd July 1997 except increase in financial limits, the said clarification would apply mutatis mutandis to both the OMs of DPE. Thus, the ceiling of 30% of Net worth of PSE on Investments in all Joint Ventures/Subsidiaries as prescribed in DPE OM dated 5th August 2005 is calculated exclusive of the Investments made through the Directives of the Government.

18. Operating Leases - Assets taken on lease primarily consist of leased land taken for the purpose of setting up retail outlets, depot operations and properties for use by the Corporation. These lease arrangements are normally renewed on expiry of the term Amount of lease rental expenses recognized in the Statement of Profit & Loss is given under Note 27 - ''Other expenses''

19. Considering the Government policies and modalities of compensating the oil marketing companies towards under-recoveries, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. Since there is no indication of impairment of assets as at Balance Sheet date as per the assessment carried out, no impairment has been considered. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same

20. During the year 2015-16, an amount of Rs, 73.40 Crores (2014-15: Rs, 29.45 Crores) has been charged to revenue towards Enabling Assets on which the Corporation does not have a control

21. Disclosure as required by Regulation 34(3) and 53(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

22. The Corporation has complied with the requirement of para 4 (a) of Notes to Schedule II to the Companies Act, 2013 relating to componentization from 2015-16. Due to the above compliance, the depreciation expense for the period ended March 31, 2016 is increased byRs, 260.88 crores. As provided in para 7 (b) of Schedule II to the Companies Act, 2013, the Corporation has charged Rs, 219.49 crores to Profit & Loss.

23. The Company has considered the ISBL (Inside boundary Limited) pipeline directly associated as an integral part of Plant and Machinery / Tanks and has depreciated such pipelines based on the useful life of respective plants, which is considered as 25 years in line with the Schedule II of the Companies Act, 2013

24. During theyear2015-16, Corporation has spentRs, 71.76 Crores (2014-15 :Rs,34.07 Crores) towards Corporate Social Responsibility (CSR) as against the budget of Rs, 71.67 Crores (2014-15 :Rs,34.03 Crores).

25. : Company has entered into a long term product off take agreement with M/s HPCL- Mittal Energy Limited (HMEL), its joint venture company, for purchase of petroleum products produced by the refinery. This agreement has a take or pay clause and the Company is committed to purchase the said petroleum products over the tenure of the agreement

26. : The Company and Mittal Energy Investment Pte. Ltd. (its joint venture partner in HPCL-Mittal Energy Limited) have committed that they would jointly hold at least 51 % of share capital of HPCL-Mittal Energy Limited till the repayment of certain bank loans / bonds

27. : A claim of Rs, 241.92 crores (36.51 Million USD @ Exchange rate of 1 US$ = Rs, 66.2525), claim by M3nergy on termination of service contract of Cluster - 7 field, which was awarded by ONGC to the consortium of M3nergy (Malaysia) BHD (30%), Prize Petroleum Company Limited (10%) and HPCL (60%). HPCL and Prize Petroleum has also initiated arbitration proceedings against M3nergy. The share of the claim of the company is Rs, 889.71 crores with loss of profit and other expenses etc. Arbitration was bifurcated into two aspects one is liability and the other is quantification. Liability aspects have been held in favour of Corporation and by an interim award by Hon''ble Arbitral Tribunal, which has been challenged by M3nergy in Bombay High Court. Quantification aspect is being looked into by Arbitral Tribunal. This amount is not included above

28. Employee Benefits

(A) Provident Fund

The Company has Provident Fund maintained by PF Trust. During the year, Company has conducted Actuarial Valuation of PF Trust. As per Actuarial Valuation, PF Trust does not have any deficit as on 31st March 2016. Accordingly, other related disclosures in respect of Provident Fund have not been made During the year, the company has recognised Rs, 120.46 crore (2014-15 : Rs, 114.68 crore) as Employer''s contribution to Provident Fund in the Statement of Profit and Loss

(B) Superannuation Fund

The company has Superannuating Scheme - Defined Contribution Scheme maintained by SBFS trust wherein Company contributes a certain percentage every month out of 30% of Basic plus DA ( in accordance with DPE guidelines ) to the credit of individual employee accounts maintained with LIC.

During the year, the company has recognised Rs, 178.34 crore ( 2014-15 : Rs, 144.84 crore) as Employer''s contribution to Superannuation Fund in the statement of Profit and Loss

Foot Notes :

1 Leave Encashment: All employees are entitled to avail earned leave and sick leave during the service period and the same can be encashed on superannuation, resignation, termination or by nominee on death. Further, the accumulated earned leave can also be encased during the service period. The contribution for increase in actuarial liability as of March 31, 2016 over March 31, 2015 towards leave encashment is funded to LIC. As per the practice followed, the payment made to employees during the year to the extent of Rs, 174.39 crores is not claimed from LIC, hence, benefit paid during the year is shown as "NIL" in the above table. Total expenses recognised in Profit & Loss Account of this benefit is Rs, (77.26) crores (i.e. provision of Rs, 15.29 crores towards decrease in liability and interest earned from LIC is Rs, 61.97 crores)

2 Gratuity : All employees are entitled to receive gratuity as per the provisions of Payment of Gratuity Act, 1972

3 Pension : The employees covered by the Pension Plan of the Corporation are entitled to receive monthly pension for life

4 Post Retirement Medical Benefit : The serving and superannuated employees are covered under medical insurance policy taken by Corporation. It provides reimbursement of medical expenses for self and dependents as per the terms of the policy.

5 Long Service Awards : The Board in its 587th meeting held on Feb 12,2016 has approved the modified scheme for Long Service Awards to its employees in the form of memento/emblem/cash on completion of specified length of service and superannuation

6 Ex-qratia : The ex-employees of Corporation covered under the Scheme are entitled to get ex-gratia based on the grade at the time of their retirement. The benefit will be paid to eligible employees till their survival, and after that, till the survival of their spouse

7 Death Benefits : The families of deceased employees are paid at a specified percentage of last drawn salary till the notiona date of retirement age under the provisions of Superannuation Benefit Fund Scheme

8 Resettlement Allowance : At the time of retirement, the employees are allowed to permanently settle down at a place other than the location of the last posting

9 The fair value of the assets of Provident Fund Trust as of balance sheet date is greater than the obligation, including interest, and also the returns on these plan assets including the amount already provided are sufficient to take care of PF interest obligations, over and above the fixed contribution recognized

29. Figures in italics represent last year figures

58 During the year, due to completion of tenure of one of the Independent Directors, the number of Independent Directors in the Board is reduced to one, which is less than the minimum number of Independent Directors required in terms of the provisions of the Listing Agreement and the Companies Act, 2013. The Company has approached the administrative ministry for appointment of requisite number of Directors for compliance of the provisions of the Listing Agreement and the Companies Act, 2013 and the same is awaited. Pending such appointment, the financial results have been reviewed and recommended to the Board by the reconstituted Audit Committee consisting of one Independent Director.

30. Previous year''s figures are reclassified / regrouped wherever necessary.


Mar 31, 2015

1.1 Debentures

The Company has issued the following Secured Redeemable Non-convertible Debentures:

i. 8.77% Non-Convertible Debentures were issued on 13th March, 2013 with the maturity date of 13th of March, 2018. These are secured by mortgage, on first pari passu charge basis, by way of a Registered Debenture Trust Deed over immovable property of the company being undivided share of land with the entire First Floor in the building High Street 1, situated at Ahmedabad and the first charge of fixed assets mainly certain Plant and Machinery at Visakh Refinery.

ii. 8.75% Non-Convertible Debentures were issued on 9th November, 2012 with the maturity date of 9th of November, 2015. These are secured by mortgage, on first pari passu charge basis, by way of a Registered Debenture Trust Deed over immovable property of the company being undivided share of land with the entire First Floor in the building High Street 1, situated at Ahmedabad and the first charge of fixed assets mainly certain Plant and Machinery at Mumbai Refinery.

During the year ended March, 2015 an amount of Rs. 545.00 crores (March, 2014 Rs. Nil) of 8.75% Non-Convertible Debentures is repayable within one year and shown in note # 10 A.

1.2 Term Loan from Oil Industry Development Board

During the year 2014 - 15 security has been created with first charge on the facilities of Awa Salawas Pipeline, Manglore Hasan Mysore LPG Pipeline, Uran - Chakan / Shikarpur LPG Pipeline & Rewari Project Pipeline. Rs. 34.50 Crores (2013 - 14 : Nil) is repayble within 1 year and the same has been shown as "Current Maturity of Long Term Debts" under Note # 10 A.

1.3 Syndicated Loans from Foreign Banks (repayable in foreign currency)

The Company has availed Long Term Foreign Currency Syndicated Loans from banks on floating LIBOR. These loans are taken for the period of 3 - 5 years. Rs. 2,500.20 Crores (2013 - 14 : Rs. Nil) is repayble within 1 year and the same has been shown as "Current Maturity of Long Term Debts" under Note # 10 A.

2A.1 : This includes loans repayable withing one year: Syndicated Loans from Foreign Banks (repayable in foreign currency) Rs. 2,500.20 Crores (2013 - 14: Rs. Nil), 8.75% Non - Convertible Debenture Rs. 545.00 Crores (2013 - 14: Rs. Nil), and Loan from Oil Industry and Development Board Rs. 234.50 Crores (2013 - 14: Rs. 234.50 Crores). In line with Section 71 of Companies Act 2013 read with rules, the Company has earmarked 8.20% Oil Marketing Companies GOI Special Bonds 2024 of Market value of Rs. 81.75 crores being 15% of the total value of Rs. 545 crores maturing in the next financial year.

2A.2 : To the extent Micro and Small Enterprises have been identified, the outstanding balance, including interest thereon, if any, as at Balance Sheet date is disclosed on which Auditors have relied upon. (Refer note # 39).

2A.3 : No amount is due as at the end of the year for credit to Investors'' Education and Protection Fund.

2A.4 : Includes Statutory Liabilities of Rs. 2,635.81 Crores (2013 - 14: Rs. 2,518.81 Crores), Liabilities towards Forward Exchange Contracts of Rs. Nil (2013 - 14: Rs. 386.40 Crores), Liabilities relating to retention money payable to Suppliers within one year, Supplies / Project related payables, etc. Rs. 3,743.03 Crores (2013 - 14: Rs. 2,821.93 Crores).

3.1: Rs. 2,750 Crores bonds pledged with Clearing Corporation of India Limited against CBLO Loan.

3.2: In line with Section 71 of Companies Act 2013 read with rules, the Company has earmarked 8.20% Oil Marketing Companies GOI Special Bonds 2024 of Carrying value of Rs. 81.75 crores being 15% of the total value of Rs. 545 crores maturing in the next financial year.

4. During the current financial year 2014-15, ONGC and GAIL offered discount on prices of crude, PDS SKO and Domestic LPG purchased from them. Accordingly, the Corporation has accounted the discount as under:

(a) Rs. 1,035.37 Crores (2013-14: Rs. 1,815.55 crores) discount received on purchase of PDS SKO and Domestic LPG from ONGC and GAIL has been adjusted against Purchases of Stock-in-Trade.

(b) Rs. 9,826.84 crores (2013-14: Rs. 14,955.22 crores) discount received on Crude Oil purchased from ONGC has been adjusted against purchase cost of Crude Oil.

5. During the current financial year 2014-15, Subsidy on PDS Kerosene and Domestic Subsidized LPG from central and state governments amounting to Rs. 684.79 crores (2013 - 14: Rs. 744.08 crores) has been accounted.

6. Approval of Government of India for Budgetary Support amounting to Rs. 5,057.94 crores (2013-14: Rs. 15,215.45 crores), has been received and the same have been accounted under ''Recovery under Subsidy Schemes''.

7. (a) Inter-Oil company transactions are reconciled on a continuous basis. However, year end balances are subject to confirmation/reconciliation which is not likely to have a material impact.

(b) Customers'' accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts.

8. The Corporation has NIL (2013-14 : USD 1,388.50 Million i.e. an equivalent of Rs. 8,320 crores) foreign exchange hedging contracts, as at the Balance Sheet date, to hedge its foreign currency exposure towards loans/export earnings. The Corporation normally does not hedge the foreign currency exposure in respect of crude/product payments and export earning which is due for payment generally within 30 to 90 days. Exposures not hedged as of Balance Sheet date amounted to USD 460.16 Million i.e. an equivalent of Rs. 2,876.22 crores (2013-14: USD 1,062.68 Million i.e. an equivalent of Rs. 6,367.59 crores) towards purchase of Crude & Products, USD 23.32 Million i.e. an equivalent of Rs. 145.77 crores (2013-14: USD 35.16 Million i.e. an equivalent of Rs. 210.69 crores ) towards export earnings and USD 2,565 Million i.e. an equivalent of Rs. 16,032.53 crores (2013-14: USD 3,051.50 Million i.e. an equivalent of Rs. 18,284.59 crores) in respect of loans taken. As at Balance Sheet date, Corporation has interest rate swap contracts for a value of USD 200 Million i.e. an equivalent of Rs. 1,250 crores (2013-14: USD 200 Million i.e. an equivalent of Rs. 1,198 crores) to cover its floating interest rate exposure to fixed interest rate.

9. In accordance with the option as per AS – 11 (notified under the Company''s Accounting Standards Rules, 2006) exercised in the year 2008 – 09, the Corporation has adjusted the exchange differences arising on long term foreign currency monetary items to the cost of assets and depreciated over the balance life of the assets. The Corporation has continued to exercise the option during the year 2014-15 as per Ministry of Corporate Affairs'' Notification.

10. In accordance with the option exercised by the Company as referred in note # 34, an amount loss of Rs. 63.16 crores (2013 - 14: Gain of Rs. 161.58 Crores) related to non-depreciable assets is remaining to be amortized over the balance period of loan in "Foreign Currency Monetary Item Translation Difference Account" as at March 31, 2015.

11. During the financial year 2013-14, Reserve Bank of India had introduced forex swap window for meeting the daily US dollar requirement of public sector oil marketing companies. Under the special window, total RBI swap window transactions entered during financial year 2013-14 were USD 1,444 Million (i.e. an equivalent of Rs. 9,443.54 crores), out of which USD 491 Million (i.e. an equivalent of Rs. 3,287.41 crores) were settled during financial year 2013-14 and balance USD 953 Million (i.e. an equivalent of Rs. 6,156.13 crores) got settled during financial year 2014-15. Corporation had fully hedged entire swap transactions in the Financial Year 2013-14 itself.

The net gain of Rs. 360.71 crore have been recognized and accounted for in the books on RBI swap transactions during the financial year 2014-15, out of which Rs. 192.38 crore was realized on account of RBI swap transactions settled during the financial year 2014-15 and Rs. 168.33 Crore on account of reversal of mark to market losses provision provided as on 31.03.2014 on forward contracts taken to hedge the un-matured RBI swap transactions outstanding as on 31.03.2014.

12. Ancillary costs incurred towards raising of Syndicated Loans from Foreign Banks (repayable in foreign currency) is being amortized over the tenure of the loan. Total amount of such ancillary costs remaining unamortized as on the balance sheet date is Rs. 205.94 Crores (2013-14: Rs. 224.43 crores).

13. (a) Current Tax includes MAT Credit utilisation of Rs. 243.15 Crore (2013-14: Rs. 10.68 Crore).

(b) The recognition of MAT Credit Entitlements of Rs. 344.33 Crore as at March 31, 2015 ( Rs. 568.44 Crore as at March 31, 2014) is on the basis of convincing evidence that the Corporation will be able to avail the credit during the period specified in section 115JAA of the Act.

(c) Provision for tax for earlier years written back (net) of Rs. 27.47 Crore (2013-14: Provided Rs. 19.82 Crore) represents reversal of excess provision towards current tax of Rs. 24.71 Crore (2013-14: Rs. 2.53 Crore), additional provision towards deferred Tax of Rs. 26.76 Crore (2013-14: Rs. 192.33 Crore) and recognition of MAT credit Entitlements of Rs. 29.53 Crore (2013-14: Rs. 169.99 Crore)

14. RELATED PARTY DISCLOSURE:

A. Names of and Relationship with Related Parties

1. Jointly controlled entities

i. HPCL-Mittal Energy Ltd.

ii. Hindustan Colas Ltd.

iii. South Asia LPG Company Pvt. Ltd.

iv. Petronet India Ltd.

v. HPCL Shapoorji Energy Ltd.

2. Key Management Personnel

i. Smt. Nishi Vasudeva, Chairman and Managing Director.

ii. Shri K. V. Rao, Director - Finance.

iii. Shri B. K. Namdeo, Director – Refineries

iv. Shri Y. K. Gawali, Director - Marketing (w.e.f. 10-10-2014).

v. Shri Pushp Kumar Joshi, Director - Human Resources

vi. Shri Shrikant Madhukar Bhosekar, Company Secretary

3. The Company has not included disclosure in respect of following State-Controlled Enterprises as per AS – 18.

i. Subsidiaries

1. CREDA-HPCL Biofuels Ltd.

2. HPCL Biofuels Ltd.

3. Prize Petroleum Company Ltd.

4. HPCL Rajasthan Refinery Ltd.

ii. Jointly controlled entities

1. Mangalore Refinery and Petrochemicals Ltd.

2. Aavantika Gas Ltd.

3. Bhagyanagar Gas Ltd.

4. Petronet MHB Ltd.

5. GSPL India Gasnet Ltd.

6. GSPL India Transco Ltd.

7. Mumbai Aviation Fuel Farm facility Ltd. (w.e.f. 20-10-2014)

15. Operating Leases - Assets taken on lease primarily consist of leased land taken for the purpose of setting up retail outlets, depot operations and properties for use by the Corporation. These lease arrangements are normally renewed on expiry of the term. Amount of lease rental expenses recognized in the Statement of Profit & Loss is given under Note 27 - ''Other expenses''.

16. Considering the Government policies and modalities of compensating the oil marketing companies towards under- recoveries, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. Since there is no indication of impairment of assets as at Balance Sheet date as per the assessment carried out, no impairment has been considered. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same.

17. During the year 2014-15, an amount of Rs. 29.45 Crores (2013-14: Rs. 12.82 Crores) has been charged to revenue towards Enabling Assets on which the Corporation does not have a control.

18. Disclosure as required by Clause 32 of Listing Agreement

19. The net worth of HPCL Biofuel Limited, a 100% subsidiary, which is in nascent stage of operation, is partially eroded. Government of India has recently announced measures to improve the price sentiments relating to sugar. These include increase in the import duty on sugar and removal of excise duty on Ethanol produced from molasses generated during the next sugar session and supplied for ethanol blending. Based on these announcements and also considering the fact that these mills, have now stabilized, the Corporation expects improvement in the operation of this subsidiary. Having regard to the said facts, being the long term and strategic nature of the investment and continuous support of the Corporation, the diminution in value is considered temporary. Hence no provision has been made.

20. The net worth of M/s Prize Petroleum Company Limited (PPCL), a 100% subsidiary, is partially eroded. Though, PPCL on a standalone basis has reported a net profit of Rs. 2.08 crores during the financial year 2014-15, its wholly owned subsidiary M/s Prize Petroleum International Pte. Limited Singapore (PPIPL), has reported a loss. M/s PPIPL was incorporated in January 2014 and has acquired minority stake in two E&P assets in Australia (Yolla producing field and Trefoil discovered field), the deal for which was completed in November. 2014. The profitability of M/s PPIPL was adversely affected due to fall in crude prices in the international market. Further, as per the planned development program, two additional development wells are being drilled necessitating shut down of the current facility for some time, which has also affected the profitability of M/s PPIPL. Having regard to the above facts, the diminution in value is considered temporary in nature and hence not provided.

21. M/s HPCL Mittal Energy Limited (HMEL), a Joint Venture entity, started its refining operation in the year 2012 and had incurred losses in the initial years of operation resulting in partial erosion of net worth. The investment is long term and strategic in nature and has long gestation period. During June, 2014 there was a fire incident at one of the unit in the refinery and the refinery was shut down for about three months. Post re-commencement of the refinery, the operations have stabilized and the yield of high value products has improved. Having regard to the above facts, the diminution in value is considered temporary in nature and hence not provided.

22. As per the guidelines issued by Department of Public Enterprises (DPE) in August, 2005, the Board of Directors of Navratna Public Sector Enterprises (PSEs) can invest in joint ventures and wholly owned subsidiaries subject to an overall ceiling of 30% of the net worth of the PSE. The company has requested Ministry of Petroleum & Natural Gas (MOP&NG) to confirm its understanding that for calculating this ceiling limit, the amount of investments specifically approved by Government of India (i.e. investment in HMEL and HPCL Rajasthan Refinery Limited) are to be excluded. The reply from MOP&NG is awaited. Pending such clarification, the Company has calculated the limit of 30% by excluding the investments specifically approved by Govt. of India. During the year investments / commitments in Joint Ventures and Subsidiaries as per note 14 have increased by Rs. 131.69 crores, during the current year (2013 – 14: Rs. 969.76 Crores).

23. Due to the revised useful lives, the depreciation expense for the year ended March 31, 2015 is reduced by Rs. 499.16 crores As per the transitional provisions of Schedule II of the Companies Act, 2013, the Company has transferred Rs. 499.52 crores (net of Tax of Rs. 264.36 crores) to retained earnings as at April 1, 2014.

24. In line with the Notification dated August 29, 2014 issued by Ministry of Corporate Affairs (MCA), the Company will comply with the requirements of paragraph 4(a) of Notes to Schedule II of Companies Act, 2013, relating to componentization, from financial year 2015-16.

25. The Company has considered the ISBL (Inside boundary Limited) pipeline directly associated as an integral part of Plant and Machinery / Tanks and has depreciated such pipelines based on the useful life of respective plants, which is considered as 25 years in line with The Schedule II of the Companies Act, 2013.

26. During the year 2014 – 15, Corporation has spent Rs. 34.07 Crores in towards Corporate Social Responsibility (CSR) as against the budget of Rs. 34.03 crores.

Rs. /Crores

2014-15 2013-14

27 Contingent Liabilities and Commitments

I. Contingent Liabilities

A. No provision has been made in the accounts in respect of the following disputed demands/claims since they are subject to appeals/representations filed by the Corporation

i. Income Tax 75.74 75.80

ii. Sales Tax/Octroi 2,483.43 4,419.81

iii. Excise/Customs 324.84 424.57

iv. Land Rentals & Licence Fees 181.83 224.45

v. Others 111.28 134.16

3,177.11 5,278.80

B Contingent Liabilities not provided for in respect of appeals filed against the Corporation

i. Sales Tax/Octroi - 7.33

ii. Excise/Customs - 34.11

iii. Employee Benefits/Demands (to the extent quantifiable) 362.71 367.34

iv. Claims against the Corporation not acknowledged as Debts 400.62 375.49 (refer note 55.1)

v. Others 300.38 286.84

1,063.71 1,071.09

C Guarantees given 158.28 79.27

158.28 79.27

27.1: A claim of Rs. 228.23 crores, claim by M3nergy on termination of service contract of Cluster - 7 field, which was awarded by ONGC to the consortium of M3nergy (Malaysia) BHD (30%), Prize Petroleum Company Limited (10%) and HPCL (60%). HPCL and Prize Petroleum has also initiated arbitration proceedings against M3nergy. The share of the claim of the company is Rs. 441 crores with interest towards loss of profit and other expenses etc. Arbitration was bifurcated into two aspects one is liability and the other is quantification. Liability aspects have been held in favour of Corporation and by an interim award by Hon''ble Arbitral Tribunal, which has been challenged by M3nergy in Bombay High Court. Quantification aspect is being looked into by Arbitral Tribunal. The above amount is not included above.

27.2: Company has entered into a long term product off take agreement with M/s HPCL- Mittal Energy Limited (HMEL), its joint venture company, for purchase of petroleum products produced by the refinery. This agreement has a take or pay clause and the Company is committed to purchase the said petroleum products over the tenure of the agreement.

27.3: The Company and Mittal Energy Investment Pte. Ltd. (its joint venture partner in HPCL-Mittal Energy Limited) have committed that they would jointly hold at least 51 % of share capital of HPCL-Mittal Energy Limited till the repayment of certain bank loans / bonds.

28. EMPLOYEE BENEFITS

(A) Provident Fund

The Company has Provident Fund maintained by PF Trust. During the year, Company has conducted Actuarial Valuation of PF Trust. As per Actuarial Valuation, PF Trust does not have any deficit as on 31st March, 2015. Accordingly, other related disclosures in respect of Provident Fund have not been made.

During the year, the company has recognised Rs. 114.68 crore (2013-14 : Rs. 107.66 crore) as Employer''s contribution to Provident Fund in the Statement of Profit and Loss.

29. Subsequent to the date of the Balance Sheet, due to completion of tenure of some of the Independent Directors, the number of Independent Directors in the Board is reduced to one, which is less than the minimum number of Independent Directors required in terms of the provisions of the Listing Agreement and the Companies Act, 2013. The Company has approached the administrative ministry for appointment of requisite number of Directors for compliance of the provisions of the Listing Agreement and the Companies Act, 2013 and the same is awaited. Pending such appointment, the financial results have been reviewed and recommended to the Board by the reconstituted Audit Committee consisting of one Independent Director.

30. Previous year''s figures are reclassified / regrouped wherever necessary.


Mar 31, 2014

1. During the current financial year 2013-14, ONGC and GAIL offered discount on prices of crude, PDS SKO and Domestic LPG purchased from them. Accordingly, the Corporation has accounted the discount as under:

(a) Rs. 1,815.55 Crores (2012-13: Rs. 1,587.82 Crores) discount received on purchase of PDS SKO and Domestic LPG from ONGC and GAIL has been adjusted against Purchases of Stock-in-Trade.

(b) Rs. 14,955.22 Crores (2012-13: Rs. 9,600.71 Crores) discount received on Crude Oil purchased from ONGC has been adjusted against purchase cost of Crude Oil.

2. In principle approval of Government of India for Budgetary Support amounting to Rs. 15,215.45 Crores (2012-13: Rs. 24,825.28 Crores), has been received and the same have been accounted under ''Recovery under Subsidy Schemes''.

3. (a) Inter-Oil company transactions are reconciled on a continuous basis. However, year end balances are subject to confirmation/reconciliation.

(b) Customers'' accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts.

4. The Corporation has, as at the Balance Sheet date, entered into foreign exchange hedging contracts amounting to USD 138.85 Crores (2012-13 : USD 246.90 Crores) to hedge its foreign currency exposure towards loans/ export earnings. The Corporation normally does not hedge the foreign currency exposure in respect of payment for crude/product which is due for payment generally within 30 to 90 days. Exposures not hedged as of Balance Sheet date amounted to USD 106.27 Crores (2012-13: USD 103.70 Crores) towards purchase of Crude & Products and USD 305.15 Crores (2012-13: USD 242.60 Crores) in respect of loans taken. As at Balance Sheet date, Corporation has interest rate swap contracts for a value of USD 20 Crores (2012-13: USD 16 Crores) to cover its floating interest rate exposure to fixed interest rate. Forward contract of USD 95.30 Crores are outstanding as at the year end to hedge the RBI swap transactions referred in note # 35 later.

5. In accordance with the option as per AS – 11 (notified under the Company''s Accounting Standards Rules, 2006) exercised in the year 2008 – 09, the Corporation has adjusted the exchange differences arising on long term foreign currency monetary items to the cost of assets and depreciated over the balance life of the assets. The Corporation has continued to exercise the option during the year 2013-14 as per Ministry of Corporate Affairs'' Notification.

6. In accordance with the option exercised by the Company as referred in note # 33, an amount (gain) of Rs. 161.58 Crores (2012 - 13: loss of Rs. 4.66 Crores) related to non-depreciable assets is remaining to be amortized over the balance period of loan in "Foreign Currency Monetary Item Translation Difference Account" as at March 31, 2014.

7. During the financial year 2013-14, Reserve Bank of India had introduced forex swap window for meeting the daily US dollar requirement of public sector oil marketing companies. The net realized gain (including premium paid/ received) of Rs. 147.74 Crores on the RBI Swap transactions and the forward contracts taken to hedge the same, which have matured during the financial year 2013-14 have been recognized and accounted for in the books.

The un-matured RBI Swap Transactions (which are in the nature of firm commitments) are mark to market at the year end and resultant unrealized gain of Rs. 192.73 Crores is not recognized on ground of prudence. The forward contracts taken to hedge the un-matured RBI swap transactions and open at year end are also mark to market and the resultant loss of Rs. 168.33 Crores is recognized. This treatment is in line with the March 29, 2008 announcement of Institute of Chartered Accountants of India.

8. During the previous financial year, the premium on forward exchange contracts entered into to hedge the liability towards Syndicated Loans from Foreign Banks (repayable in foreign currency) had been considered as borrowing costs as per AS 16. Accordingly, an amount of Rs. 64.82 crores had been capitalized and an amount of Rs. 55.90 Crores (net of depreciation) had been disclosed as "Prior Period Expenses/(Income)".

During the current financial year, based on the opinion of Expert Advisory Committee of ICAI, the Corporation has decapitalized the said premium of Rs. 64.82 Crores and an amount of Rs. 52.43 Crores (net of depreciation) has been disclosed as "Prior Period Expenses/(Income)".

9. Ancillary costs incurred towards raising of Syndicated Loans from Foreign Banks (repayable in foreign currency) is being amortized over the tenure of the loan. Total amount of such ancillary costs remaining unamortized as on the balance sheet date is Rs. 224.28 Crores (2012-13 : Rs. 118.87 Crores).

10. During the current year, investments in "6.90% Oil Marketing Companies'' GOI Special Bonds 2026" amounting to Rs. 3,500.00 crores have been reclassified from ''Long Term Investments'' to ''Current Investments'' to improve flexibility in liquidity. Consequently, an amount of Rs. 583.18 Crores has been provided in the books of accounts towards diminution in the value for this investment.

11. (a) Current Tax includes MAT Credit availment of Rs. 10.68 Crores (2012-13: Nil).

(b) The recognition of MAT Credit Entitlements of Rs. 568.44 Crore as at March 31, 2014 (Rs. 406.85 Crores as at March 31, 2013) is on the basis of convincing evidence that the Corporation will be able to avail the credit during the period specified in section 115JAA of the Act.

(c) Provision for tax for earlier years (written back) / provided of Rs. 19.82 Crores (2012 – 13: written back Rs. 60.62 Crores) represents additional provision of Rs. 192.33 Crores (2012 – 13: Rs. 72.12 Crores) towards deferred tax, recognition of MAT Credit Entitlements of Rs. (169.99 crores) (2012 – 13: Rs. (24.89 Crores) and reversal of excess provision of Rs. (2.53 Crores) (2012 – 13: Rs. (107.85 Crores).

12. Related Party disclosure:

(A) Names of and Relationship with Related Parties

1. Joint Venture Companies

a. HPCL-Mittal Energy Ltd.

b. Hindustan Colas Ltd.

c. South Asia LPG Company Pvt. Ltd.

d. Petronet India Ltd.

e. Aavantika Gas Ltd.

f. HPCL Shapoorji Energy Limited (w.e.f 27-03-2014)

2. Key Management Personnel

a. Smt. Nishi Vasudeva, Chairman and Managing Director (w.e.f 1-3-2014).

b. Shri S. Roy Choudhury, Chairman and Managing Director (up to 28-2-2014).

c. Shri B. Mukherjee, Director - Finance (up to 31-5-2013).

d. Shri K. V. Rao, Director - Finance (w.e.f. 1-6-2013).

e. Shri K. Murali, Director - Refineries (up to 30-6- 2013).

f. Shri B K Namdeo, Director - Refineries (w.e.f. 1-7- 2013).

g. Smt. Nishi Vasudeva, Director - Marketing (up to 28-2-2014).

h. Shri Pushp Kumar Joshi, Director - Human Resources

The above disclosure does not include following Related Parties for which no disclosure is required as they are State-Controlled Enterprises as per AS - 18.

1. Subsidiaries

a. CREDA-HPCL Biofuels Ltd.

b. HPCL Biofuels Ltd.

c. Prize Petroleum Company Ltd.

d. HPCL Rajasthan Refinery Ltd. (w.e.f 25-03-2014)

2. Joint Venture Companies

a. Mangalore Refinery and Petrochemicals Ltd.

b. Petronet MHB Ltd.

c. Bhagyanagar Gas Ltd.

d. GSPL India Gasnet Ltd. (w.e.f 4-7-2012)

e. GSPL India Transco Ltd. (w.e.f 4-7-2012)

13. Operating Leases - Assets taken on lease primarily consist of leased land taken for the purpose of setting up retail outlets, depot operations and properties for use by the Corporation. These lease arrangements are normally renewed on expiry of the term. Amount of lease rental expenses recognized in the Statement of Profit & Loss is given under Note 23 - ''Other expenses''.

14. Considering the Government policies and modalities of compensating the oil marketing companies towards under- recoveries, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. Since there is no indication of impairment of assets as at Balance Sheet date as per the assessment carried out, no impairment has been considered. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same.

15. During the year 2013-14, an amount of Rs. 12.82 Crores (2012-13: Rs. 8.11 Crores) has been charged to revenue towards Enabling Assets on which the Corporation does not have a control.

16. Disclosure as required by Clause 32 of Listing Agreement

17. During the financial year 2013 - 14, bridge loan (along with accrued interest) totaling to Rs. 419.65 crores given to HPCL Biofuels Ltd., a subsidiary company, has been converted into 41,96,51,511 ''Non-cumulative 14 years Redeemable Preference Shares'' of Rs. 10 each bearing 5% dividend.

The net worth of said subsidiary company, which is in nascent stage of operation, is partially eroded. Based on the current price trends of Ethanol and withdrawal of levy sugar mechanism the Corporation expect improvements in the operation of the subsidiary. Having regard to the said facts, the long terms and strategy nature of investment, conversion of loan into Non-Cumulative Preference Share and continuing support of the Corporation, the diminution in value is considered temporary in nature and hence not provided.

18. The company has investment in Joint Venture entity, viz. Hindustan Mittal Energy Limited, which has set up a Petroleum Refinery at Bathinda and supplies major part of its production to Corporation. The refinery has started operation in the year 2012 and had incurred losses in the initial years of operation resulting in partial erosion of net worth. The investment is long term and strategic in nature and has long gestation period. The operation of refinery is expected to stabilize in near future. Having regard to the above facts, the diminution in value is considered temporary in nature and hence not provided.

19. The Employee cost for the previous year 2012-13 includedRs. 813 Crores towards implementation of Long Term Settlement of Non-management employees and Superannuation Benefits for all the employees finalized during the said year, including for the past periods.

20. During the year, there was an instance of fire in Cooling Water Tower Area in Visakh Refinery. The Company has incurred an expenses of Rs. 31.38 Crores towards reconstruction / compensation. Insurance claims are under process and will be recognized on acceptance.

Rs. / Crores

2013-14 2012-13

21. Contingent Liabilities and Commitments

I. Contingent Liabilities

A. No provision has been made in the accounts in respect of the following disputed demands /claims since they are subject to appeals/ representations filed by the Corporation

i. Income Tax 75.80 87.60

ii. Sales Tax/Octroi 4,419.81 4,260.21

iii. Excise/Customs 424.57 377.24

iv. Land Rentals & Licence Fees 224.45 98.90

v. Others 134.16 125.99

5,278.80 4,949.94

B. Contingent Liabilities not provided for in respect of appeals filed against the Corporation

i. Sales Tax/Octroi 7.33 7.33

ii. Excise/Customs 34.11 25.96

iii. Employee Benefits/Demands (to the extent quantifiable) 367.34 183.44

iv. Claims against the Corporation not acknowledged as Debts 375.49 316.89

v. Others 286.84 267.78

1,071.09 801.39

C. Guarantees given 79.27 54.91

79.27 54.91


Mar 31, 2013

1. BASIS OF PREPARATION

The financial statements are prepared under historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP), Accounting Standards referred to in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government and the relevant provisions of the Companies Act, 1956. All income and expenditure having material bearing are recognised on accrual basis, except where otherwise stated. Necessary estimates and assumptions of income and expenditure are made during the reporting period and difference between the actual and the estimates are recognised in the period in which the results materialise.

2. During the current financial year 2012-13, ONGC and GAIL offered discount on prices of crude, PDS SKO and Domestic LPG purchased from them. Accordingly, the Corporation has accounted the discount as under:

(a) Rs. 1,587.82 Crores (2011-12: Rs. 1,868.12 Crores) discount received on purchase of PDS SKO and Domestic LPG from ONGC and GAIL has been adjusted against Purchases of Stock-in-Trade.

(b) Rs. 9,600.71 Crores (2011-12: Rs. 10,211.63 Crores) discount received on Crude Oil purchased from ONGC has been adjusted against purchase cost of Crude Oil.

3. In principle approval of Government of India for Budgetary Support amounting to Rs. 24,825.28 Crores (2011-12: Rs. 18,342.77 Crores), has been received and the same have been accounted under ''Recovery under Subsidy Schemes''.

4. (a) Inter-Oil company transactions are reconciled on a continuous basis. However, year end balances are subject to confirmation/reconciliation.

(b) Customers'' accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts.

5. The Corporation has, as at the Balance Sheet date, entered into foreign exchange hedging contracts amounting to USD 246.90 Crores (2011-12 : USD 194.58 Crores) to hedge its foreign currency exposure towards loans/ export earnings. The Corporation normally does not hedge the foreign currency exposure in respect of payment for crude/product which is due for payment generally within 30 to 90 days. Exposures not hedged as of Balance Sheet date amounted to USD 103.70 Crores (2011-12: USD 138.38 Crores) towards purchase of Crude & Products and USD 242.60 Crores (2011-12: USD 219.97 Crores) in respect of loans taken. As at Balance Sheet date, Corporation has interest rate swap contracts for a value of USD 16 Crores (2011-12: JPY 1,050 Crores) to cover its floating interest rate exposure to fixed interest rate.

6. In accordance with the option as per AS - 11 (notified under the Company''s Accounting Standards Rules, 2006) exercised in the year 2008 - 09, the Corporation has adjusted the exchange differences arising on long term foreign currency monetary items to the cost of assets and depreciated over the balance life of the assets. The Corporation has continued to exercise the option during the year 2012-13 as per Ministry of Corporate Affairs'' Notification.

7. In accordance with the option exercised by the company as referred in note # 33, an amount of Rs. 4.66 Crores related to non-depreciable assets is remaining to be amortized over the balance period of loan in "Foreign Currency Monetary Item Translation Difference Account" as at March 31st, 2013.

8. Exchange differences arising from Syndicated Loans from Foreign Banks (repayable in foreign currency) taken for acquisition of fixed assets, to the extent that they were regarded as an adjustment to interest cost, were being treated as finance costs in line with the guidance issued by MCA during May 2009. During the year and pursuant to clarification dated 9th August 2012 by MCA, such exchange differences pertaining to all the Syndicated Loans from Foreign Banks (repayable in foreign currency) taken by the Corporation have now been treated as foreign exchange fluctuation and accordingly retrospectively adjusted to the carrying costs of the related assets.

Consequently, exchange difference of Rs. 95.56 Crores pertaining to previous years and charged to the Statement of Profit and Loss Account has been written back and correspondingly credited in Finance Cost during the year. This change has resulted in increase in Profits for the year before tax (net of depreciation) for the year by Rs. 62.52 Crores.

9. Hitherto, premium on forward exchange contracts entered into to hedge the liability from Syndicated Loans from Foreign Banks (repayable in foreign currency) were amortized over the period of the Syndicated Loans from Foreign Banks (repayable in foreign currency). As per AS 16, Borrowing Costs include costs incurred by an enterprise in connection with borrowing of funds. Accordingly, during the current financial year, the premium on forward exchange contracts entered into to hedge the liability towards from Syndicated Loans from Foreign Banks (repayable in foreign currency) have been considered as borrowing costs as per AS 16. Consequently, an amount of Rs. 64.82 Crore has been capitalized in the current financial year and disclosed as a part of Note # 28, "Prior Period Expenses / (Incomes)". As a result, Profit for the year before Tax of the Corporation (net of depreciation) is higher by Rs. 52.43 Crores during the current financial year.

10. Ancillary costs incurred towards raising of Syndicated Loans from Foreign Banks (repayable in foreign currency) is being amortized over the tenure of the loan. Total amount of such ancillary costs remaining unamortized as on the Balance Sheet date is Rs. 118.89 Crores (2011-12 : Rs. 81.71 Crores).

11. (a) Considering the uncertainties attached to certain benefits under the Income Tax Act, the Corporation has been continuing to account for such tax benefits in the year they are allowed in the Appeals/Assessments. Further, where issues are strong on merits/covered by legal precedents, tax has not been provided for.

Accordingly, upon receipt of Appellate Orders covering the assessment periods 1991-92 to 1995-96, 1997-98, 2000-01 to 2002-03 & 2009-10, and Assessment Order for the assessment year 2010-11 during the year, the Corporation has reversed provision for tax/deferred tax/MAT Credit Entitlement amounting to Rs. 20.58 Crores (2011-12: Rs. 58.11 Crores) after duly considering MAT Credit, available for set off U/s 115JAA of the Income Tax Act, 1961.

For other assessment years, a reversal of provision for tax/deferred tax /MAT credit Entitlement amounting to Rs. 40.04 Crores (2011-12: Rs. 37.67 Crore) is made after duly considering MAT Credit, available for set off U/s 115JAA of the Income Tax Act, 1961.

The above reversal of provision of Rs. 60.62 Crore (2011-12: Rs. 95.78 Crore) for earlier years is disclosed as "Provision for Tax for earlier years written back (net)" in the Statement of Profit and Loss.

(b) The recognition of MAT Credit Entitlements of Rs. 406.85 Crore as at March 31, 2013 (Rs. 268.77 Crore as at March 31, 2012) is on the basis of cogent evidence that the Corporation will be able to avail the credit during the period specified in Section 115JAA of the Act.

12. To the extent Micro and Small Enterprises have been identified, the outstanding balance, including interest thereon, if any, as at Balance Sheet date is disclosed on which Auditors have relied upon :

13. RELATED PARTY DISCLOSURE:

(A) Names of and Relationship with Related Parties

1. Joint Venture Companies

a. Prize Petroleum Company Ltd. (upto 18-12-2011)

b. HPCL-Mittal Energy Ltd.

c. Hindustan Colas Ltd.

d. South Asia LPG Company Pvt. Ltd.

e. Petronet India Ltd.

f. Aavantika Gas Ltd.

2. Key Management Personnel

a. Shri S. Roy Choudhury - Chairman and Managing Director.

b. Dr. V Vizia Saradhi - Director - Human Resources (upto 31-7-2012)

c. Shri B. Mukherjee - Director - Finance.

d. Shri K. Murali - Director - Refineries.

e. Smt. Nishi Vasudeva - Director - Marketing.

f. Shri Pushp Kumar Joshi - Director - Human Resources (w.e.f 1-8-2012).

The above disclosure does not include following Related Parties for which no disclosure is required as they are State-Controlled Enterprises.

1. Subsidiaries

a. CREDA-HPCL Biofuels Ltd.

b. HPCL Biofuels Ltd.

c. Prize Petroleum Company Ltd. (w.e.f. 19-12-2011)

2. Joint Venture Companies

a. Mangalore Refinery and Petrochemicals Ltd.

b. Petronet MHB Ltd.

c. Bhagyanagar Gas Ltd.

d. GSPL India Gasnet Ltd. (w.e.f 04-07-2012)

e. GSPL India Transco Ltd. (w.e.f 04-07-2012)

14. Operating Leases - Assets taken on lease primarily consist of leased land taken for the purpose of setting up retail outlets, depot operations and properties for use by the Corporation. These lease arrangements are normally renewed on expiry of the term. Amount of lease rental expenses recognized in the Statement of Profit & Loss is given under Note # 23 - ''Other expenses''.

15. Considering the Government policies and modalities of compensating the oil marketing companies towards under- recoveries, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. Since there is no indication of impairment of assets as at Balance Sheet date as per the assessment carried out, no impairment has been considered. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same.

16. During the year 2012-13, an amount of Rs. 8.11 Crores (2011-12: Rs. 3.83 Crores) has been charged to revenue towards Enabling Assets on which the Corporation does not have a control.

17. Disclosure as required by Clause 32 of Listing Agreement

18. The net worth of one of the subsidiary companies, HPCL Biofuels Ltd., which has started regular operations only during the year, is largely eroded. Based on the current price trends of Ethanol and in view of withdrawal of levy sugar mechanism and keeping in view the long term strategic nature of this investment, this diminution is not considered permanent in nature. Hence, no provision has been considered necessary for the value of the said investment and loans given (refer note # 14 and 46).

19. The Employee cost for the year 2012-13 includes Rs. 813 Crores towards implementation of Long Term Settlement of Non-management employees and Superannuation Benefits for all the employees finalized during the year, including for the past periods.

20. Previous year''s figures are reclassified / regrouped wherever necessary.


Mar 31, 2012

1. BASIS OF PREPARATION

The financial statements are prepared under historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP), Accounting Standards referred to in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government and the relevant provisions of the Companies Act, 1956. All income and expenditure having material bearing are recognised on accrual basis, except where otherwise stated. Necessary estimates and assumptions of income and expenditure are made during the reporting period and difference between the actual and the estimates are recognised in the period in which the results materialise.

2. During the current financial year 2011-12, ONGC and GAIL offered discount on prices of crude, PDS SKO and Domestic LPG purchased from them. Accordingly, the Corporation has accounted the discount as under:

(a) Rs. 1,868.12 crores (2010-11: Rs. 1,378.15 crores) discount received on purchase of PDS SKO and Domestic LPG from ONGC and GAIL has been adjusted against Purchase of Product for Resale.

(b) Rs. 10,211.63 crores (2010-11: Rs. 5,259.40 crores) discount received on Crude Oil purchased from ONGC has been adjusted against Raw Material Cost.

3. In principle approval of Government of India for Budgetary Support amounting to Rs. 18,342.77 crores (2010-11: Rs. 8,976.28 crores), has been received and the same have been accounted under 'Recovery under Subsidy Schemes'.

4. (a) Inter-Oil Company transactions are reconciled on a continuous basis. However, year end balances are subject to confirmation/reconciliation.

(b) Customers' Accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts.

5. The Corporation has, as at the balance sheet date, entered into foreign exchange hedging contracts amounting to USD 194.58 crores (2010-11 : USD 156.34 crores) to hedge its foreign currency exposure towards loans/ export earnings. The Corporation normally does not hedge the foreign currency exposure in respect of payment for crude/product which is due for payment generally within 30 to 90 days. Exposures not hedged as of balance sheet date amounted to USD 138.38 crores (2010-11: USD 117.79 crores) towards purchase of crude & Products and USD 219.97 crores (2010-11: USD 185.46 crores) in respect of loans taken.

6. Total amount outstanding from M/s Kingfisher Airlines Ltd is Rs. 505.53 crores, out of which Rs. 434 crores is covered by Bank Guarantee. Management is confident that the entire dues will be realized.

7. Ancillary costs incurred towards raising of Long Term Syndicated Loans (External Commercial Borrowings) from Foreign Banks (repayable in foreign currency) is being amortized over the tenure of the loan. Total amount of such ancillary costs remaining unamortized as on the balance sheet date is Rs. 81.68 Crores.

8. (a) Considering the uncertainties attached to certain benefits under the Income Tax Act, the Corporation has been continuing to account for such tax benefits in the year they are allowed in the Appeals/Assessments. Further, where issues are strong on merits/covered by legal precedents, tax has not been provided for.

Accordingly, upon receipt of Appellate Order for the assessment year 2008-09 and Assessment Order for the assessment year 2009-10 during the year, the Corporation has reversed provision for tax/deferred tax/MAT Credit Entitlement amounting to Rs. 58.11 Crores (2010-11: Reversal of provision of Rs. 271.39 Crores) after duly considering MAT Credit, available for set off U/s 115JAA of the Income Tax Act, 1961.

For the earlier assessment years, a reversal of provision for tax/deferred tax /MAT credit Entitlement amounting to Rs. 37.67 Crores (2010-11: Provision of Rs. (46.26) Crore) is made after duly considering MAT Credit, available for set off U/s 115JAAofthe Income Tax Act, 1961.

The said reversal includes adjustment done pursuant to treatment of loss on sale of oil bond as a business loss instead of capital loss considering that the issue is strong on merits/covered by legal precedents.

(b) MAT Credit Entitlement consists of Rs. 268.77 Crore (2010-11: Rs. 500.87 Crore) towards earlier years, arising primarily on account of higher depreciation considered in Return of Income, is shown under Long Term Loans & Advances. The recognition of MAT Credit is on the basis of cogent evidence that the Corporation will be able to set off the credit during the period specified in Section 115JAA of the Act.

9. In accordance with the option as per AS - 11 (notified under the Company's Accounting Standards Rules, 2006) exercised in the year 2008-09, the Corporation has adjusted the exchange differences arising on long term foreign currency monetary items to the cost of assets. The corporation has continued to exercise the option during the year 2011-12 as per Ministry of Corporate Affairs' Notification dated 29-12-2011.

10. RELATED PARTY DISCLOSURE

(A) Names of and Relationship with Related Parties

1. Joint Venture Companies

a. Prize Petroleum Company Ltd. (upto 18-12-2011)

b. HPCL-Mittal Energy Ltd.

c. Hindustan Colas Ltd.

d. South Asia LPG Company Pvt. Ltd.

e. Petronet India Ltd.

f. Aavantika Gas Ltd.

2. Key Management Personnel

a. Shri S. Roy Choudhury - Chairman and Managing Director.

b. Dr. V. Vizia Saradhi - Director - Human Resources.

c. Shri B. Mukherjee- Director -Finance.

d. Shri K. Murali- Director -Refineries.

e. Smt. Nishi Vasudeva - Director - Marketing (w.e.f 4-7-2011).

The above disclosure does not include following Related Parties for which no disclosure is required as they are State-Controlled Enterprises.

a. CREDA-HPCL Biofuels Ltd.

b. HPCL Biofuels Ltd.

c. Prize Petroleum Company Ltd. (w.e.f. 19-12-2011)

d. Mangalore Refinery and Petrochemicals Ltd.

e. Petronet MHB Ltd.

f. Bhagyanagar Gas Ltd.

a) Block KK-DWN-2002/3 was relinquished during the year on completion of Minimum Work Program (MWP) under exploration phase. Drilling of 1 well was completed as per committed work program, which was declared as dry.

b) Blocks MB-OSN-2004/1 & MB-OSN-2004/2 were relinquished during the year on completion of Minimum Work Program (MWP) under exploration phase as no presence of hydrocarbons was observed in the drilled wells. Drilling of 3 wells in each block was completed as per committed work program.

c) In block RJ-ONN-2004/3, 2 exploratory wells were drilled against committed work program of 8 wells, which were declared as dry. Hence, due to the poor prospectively of the block it was decided not to drill any further wells and relinquish the block along-with other consortium partners.

d) Two exploration blocks at Egypt were awarded during the 2008-09 with GSPC (Operator) and Oil India. HPCL has 25% participating interest in both of these blocks. Production sharing contract of these blocks is yet to be signed.

* During the year 2011-12, HPCL acquired 50% shareholding in Prize Petroleum Company Limited (PPCL), thereby converting PPCL from a Joint Venture company into a 100% subsidiary of HPCL.

** Corporation's share in Petronet India Ltd. is not reported hereunder as the Management had fully provided for diminution in the value of investment during the financial year 2006-07.

*** Including Tax

11. Operating Leases - Assets taken on lease primarily consist of leased land taken for the purpose of setting up retail outlets, depot operations and properties for use by the Corporation. These lease arrangements are normally renewed on expiry of the term. Amount of lease rental expenses recognized in the Statement of Profit & Loss is given under Note 23 - 'Other expenses'.

12. Considering the Government policies and modalities of compensating the oil marketing companies towards under- recoveries, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. Since there is no indication of impairment of assets as at Balance Sheet date as per the assessment carried out, no impairment has been considered. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same.

13. During the year 2011-12, an amount of Rs. 3.83 Crores (2010-11: Rs. 14.31 Crores) has been charged to revenue towards Enabling Assets on which the Corporation does not have a control.

14. During the year ended 31st March 2012, the Revised Schedule VI notified under the Companies Act 1956 has become applicable to the Corporation. The Corporation has also reclassified / regrouped previous year's figures in accordance with the requirements applicable in the current year.

b) Exploration and Production of Hydrocarbons

Segments have been identified taking into account the nature of activities and the nature of risks and returns.

2. Segment Revenue comprises the following:

a) Turnover (Net of Excise Duties)

b) Subsidy from Government of India

c) Other income (excluding interest income, dividend income and investment income)

3. There are no geographical segments.


Mar 31, 2011

1. During the current financial year 2010-11, ONGC and GAIL offered discount on prices of crude, PDS SKO and Domestic LPG purchased from them. Accordingly, the Corporation has accounted the discount as under :

(a) Rs. 1,378.15 crores (2009-10 : Rs. 796.00 crores) discount received on purchase of PDS SKO and Domestic LPG from ONGC and GAIL has been adjusted against Purchase of Product for Resale.

(b) Rs. 5,259.40 crores (2009-10 : Rs. 2,451.14 crores) discount received on Crude Oil purchased from ONGC has been adjusted against Raw Material Cost.

2. In principle approval of Government of India for Budgetary Support amounting to Rs. 8,976.28 crores (2009-10: Rs. 5,563.13 crores), has been received and the same has been accounted under ‘Recovery under Subsidy Schemes'.

3. (a) Inter-Oil Company transactions are reconciled on a continuous basis. However, year end balances are subject to confrmation/reconciliation.

(b) Customers' Accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classifcation of the accounts.

4. The Corporation has, as at the balance sheet date, entered into foreign exchange hedging contracts amounting to USD 1,563.39 million (2009-10 : USD 1,560.12 million) to hedge its foreign currency exposure towards loans/export earnings. The Corporation normally does not hedge the foreign currency exposure in respect of payment for crude/product which is due for payment generally within 30 days. Exposures not hedged as of balance sheet date amounted to USD 1,177.89 million (2009-10 : USD 925.47 million) towards purchase of crude and USD 1,854.59 million (2009-10 : USD 170.12 million) in respect of loans taken.

5. a) Considering the uncertainties attached to certain benefits under the Income Tax Act, the Corporation has been continuing to account for such tax benefits in the year they are allowed in the Appeals/Assessments. Further, where issues are strong on merits/covered by favourable decisions, tax has not been provided for.

Accordingly, upon receipt of Appellate Orders (for the assessment years 2006-07 & 2007-08) and Assessment Order (for the assessment year 2008-09) during the year, the Corporation has reversed provision for tax/deferred tax amounting to Rs. 271.39 Crores (2009-10: Additional provision of Rs. 57.51 Crores) after duly considering MAT Credit, available for set off u/s 115JAA of the Income Tax Act, 1961.

b) For the assessment years 2009-10 & 2010-11, a further provision of tax/deferred tax amounting to Rs. 46.26 Crores (2009-10: Nil ) is made after duly considering MAT Credit, available for set off u/s 115JAA of the Income Tax Act, 1961. Deferred Tax provision at the beginning of the year is reassessed and Rs. 307.30 Crores has been provided for.

c) MAT Credit Entitlement consists of Rs. 409.36 crores towards earlier years and Rs. 91.51 crores in current year, arising primarily on account of higher depreciation considered in Return of Income, is shown under Loans & Advances.

6. In accordance with the option as per AS – 11 (notifed under the Company's Accounting Standards Rules, 2006) exercised in the year 2008 – 09, the Corporation has adjusted the exchange differences arising on long term foreign currency monetary items to the cost of assets.

7. The employee cost for the year 2010-11 is higher due to the absorption of Rs. 330 Crores based on actuarial valuation towards shortfall in "HPCL Employees' Superannuation Fund Scheme".

The names of related parties are as follows:

Joint Venture Companies:

HPCL-Mittal Energy Ltd., Hindustan Colas Ltd., South Asia LPG Company Pvt. Ltd., Prize Petroleum Co. Ltd., Petronet India Ltd., and Aavantika Gas Ltd.

Key Management Personnel:

Shri Arun Balakrishnan, Chairman & Managing Director (till 31/07/2010), Shri S Roy Choudhury, Chairman and Managing Director (w.e.f. 01/08/2010), Shri S Roy Choudhury, Director – Marketing (till 31/07/2010), Dr. V. Vizia Saradhi , Director – Human Resources, Shri B. Mukherjee, Director – Finance, Shri K. Murali, Director – refineries

Details of remuneration to directors are given in note 20 B. 16 E of Notes to Accounts and dues from Directors are given in Schedule 12 of the Balance Sheet.

The above disclosure does not include HPCL Biofuels Ltd. & Creda-HPCL Biofuel Ltd. (Subsidiary Companies) and Mangalore Refinery and Petrochemicals Ltd., Petronet MHB Ltd. and Bhagyanagar Gas Ltd. (Joint Venture Companies) for which no disclosure is required as they are state-controlled enterprises.

B) For Block AA-ONN-2003/3, proposal of consortium for extension of time till 29.11.2013 in Phase-I of exploration under special dispensation i.e, due to logistic problems was not accepted by MOP&NG. Hence on expiry of Phase-I (i.e., Effective 29.05.2010) block stands relinquished as per PSC provisions.

C) Block 56-Oman was relinquished during the year along with other consortium partners since discoveries in the block were not commercially viable at existing fscal terms.

D) During the year in block WA-388-P, all consortium partners farmed-out 40% of their respective participating interest to M/s Apache Energy, Australia. Hence HPCL's participating interest in the block stands reduced to 8.4% from 14%.

E) Two exploration blocks at Egypt were awarded during the FY 2008-09 with GSPC (Operator) and Oil India. HPCL has 25% participating interest in both of these blocks. Production sharing contract for these blocks is yet to be signed.

F) During the NELP-IX bidding round, HPCL in consortia with NOC's were declared provisional winner in the two blocks i.e, KK-OSN-2010/3 and MB-OSN-2010/2.

8. Operating Leases :

Assets taken on lease primarily consist of properties for use by the Corporation and leased land taken for the purpose of setting up retail outlets. These lease arrangements are normally renewed on expiry of the term. Amount of lease rental expenses recognized in the Profit and Loss Account is given under Schedule 17 – "Other Operating Expenses".

9. Considering the Government policies and modalities of compensating the oil marketing companies towards under-recoveries, future cash fows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. Since there is no indication of impairment of assets as at Balance Sheet date as per the assessment carried out, no impairment has been considered. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same.

Rs. / Crores

2010-11 2009-10

C (I) Contingent Liabilities not provided for in respect of appeals fled against the Corporation

i. Sales Tax/Octroi 14.48 4.68

ii. Excise/Customs 28.71 36.13

iii. Employee Benefits/Demands (to the extent quantifable) 152.73 131.09

iv. Claims against the Corporation not acknowledged as debts 334.62 170.98

v. Others 214.79 191.21

745.32 534.10


Mar 31, 2010

1. During the year, ONGC and GAIL offered discount on prices of crude, SKO and LPG purchased from them. Accordingly, the Corporation has accounted the discount as under :

(a) Rs. 796.00 crores (2008-09 : Rs. 995.13 crores) discount received on purchase of SKO (PDS) and LPG (Domestic) from ONGC and GAIL has been adjusted against Purchase of Product for Resale.

(b) Rs. 2451.14 crores (2008-09 : Rs. 6,181.82 crores) discount received on crude oil purchased from ONGC has been adjusted against Raw Material Cost.

2. In principle approval of Government of India for Budgetary Support amounting to Rs.5563.13 crores (2008-09 : Oil Bonds for Rs. 14,692.77 crores), has been received and the same have been accounted under Recovery under Subsidy Schemes.

3. (a) Inter-Oil Company transactions are reconciled on a continuous basis. However, year end balances are subject to confirmation/reconciliation.

(b) Customers Accounts are reconciled on an ongoing basis and such reconciliation is not likely to have a material impact on the outstanding or classification of the accounts.

4. Additional provision for taxation amounting to Rs. 57.51 crores has been created based on the Assessment / Appellate Orders in respect of earlier years received during the year.

5. The Corporation has, as at the balance sheet date, entered into foreign exchange hedging contracts amounting to USD 1560.12 million (2008-09 : USD 900.12 million) to hedge its foreign currency exposure towards loans/export earnings. The Corporation does not generally hedge the risks on account of foreign currency exposure for the payment of crude. Exposures not hedged as of balance sheet date amounted to USD 925.47 million (2008-09: USD 562.13 million) towards purchase of crude and USD 170.12 million (2008-09 : USD 170.12 million) in respect of loans taken.

6. A new wholly owned subsidiary company, " M/s. HPCL Biofuels Limited" has been incorporated on October 16, 2009 to produce biofuels, such as – ethanol, which is blended with petrol.

7. During the current year, investments in "6.35% Oil Marketing Companies GOI Special Bonds 2024" amounting to Rs. 4603.73 Crores have been reclassified from Long Term Investments to Current Investments. Consequently, an amount of Rs. 756.88 Crores has been provided in the books of accounts towards diminution in the value for this investment.

8. The employee cost for the year 2009-10 is higher due to provision made for Rs. 318.25 Crores towards revision in the salary for non-management staff, and perquisites & retiral benefits for management employees.

9. In accordance with the option as per AS-11 (notified under the Companys Accounting Standard Rules, 2006) exercised in the year 2008-09, the Corporation has adjusted the exchange differences arising on long term foreign currency monetary items to the cost of assets.

10. In line with the Industry practice, the Corporation has changed during the current year its Accounting Policy relating to costs incurred on technical know-how and license fee, and its amortization. This has resulted in decrease in Profit for the current year by Rs. 3.80 crores (including Rs. 3.15 crores for prior periods).

The names of related parties are as follows:

Joint Venture Companies:

HPCL-Mittal Energy Ltd., Hindustan Colas Ltd., South Asia LPG Company Pvt. Ltd., Prize Petroleum Co. Ltd., Petronet India Ltd., and Aavantika Gas Ltd.

Key Management Personnel:

Shri Arun Balakrishnan, Chairman and Managing Director, Shri S. Roy Choudhury, Director Marketing, Shri V. Viziasaradhi , Director – Human Resources, Shri B. Mukherjee, Director – Finance, Shri K. Murali, Director – Refineries.

11. Operating Leases :

Assets taken on lease primarily consist of properties for use by the Corporation and leased land taken for the purpose of setting up retail outlets. These lease arrangements are normally renewed on expiry of the term. Amount of lease rental expenses recognized in the Profit and Loss Account is given under Schedule 17 – "Other Operating Expenses".

12. Considering the Government policies and modalities of compensating the oil marketing companies towards under-recoveries, future cash flows have been worked out based on the desired margins for deciding on impairment of related Cash Generating Units. Since there is no indication of impairment of assets as at Balance Sheet date as per the assessment carried out, no impairment has been considered. In view of assumptions being technical, peculiar to the industry and Government policy, the auditors have relied on the same.

Rs./ Crores 2009-10 2008-09

C. (I) Contingent Liabilities not provided for in respect of appeals filed against the Corporation*

i. Sales Tax/Octroi 4.68 89.40

ii. Excise/Customs 36.13 55.76

iii. Employee Benefits/Demands (to the extent quantifiable) 131.09 112.39

iv. Claims against the Corporation not acknowledged as debts 170.98 197.72

v. Others - 94.27

795.41 699.53

Note: Previous years figures have been regrouped / reclassified wherever necessary.

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