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Notes to Accounts of Indian Oil Corporation Ltd.

Mar 31, 2017

A. Corporate information

The stand-alone financial statements of “Indian Oil Corporation Limited” (“the Company” or “IOCL”) are for the year ended 31st March 2017.

The company is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on two recognised stock exchanges in India. The registered office of the company is located at IndianOil Bhavan, G-9, Ali Yavar Jung Marg, Bandra (East), Mumbai.

IOCL is India’s Maharatna national oil company with business interests straddling the entire hydrocarbon value chain - from Refining, Pipeline Transportation and Marketing of Petroleum Products to Research & Development, Exploration & Production, Marketing of Natural Gas and Petrochemicals.

Information on other related party relationships of the Company is provided in Note-37.

The stand-alone financial statements were approved for issue in accordance with a resolution of the Board of directors on 25th May Rs.2017.

B. Standards issued but not yet effective

The MCA has notified Companies (Indian Accounting Standards) (Amendment) Rules, 2017 to amend Ind AS 7 ‘Statement of Cash flows’ and Ind AS 102 “Share-based payment”. They shall come into force w.e.f. 1st April 2017. These have not been adopted early by the company and accordingly, have not been considered in the preparation of the financial statements. The company intends to adopt these standards, if applicable, when they become effective. The information that are expected to be relevant to the financial statements is provided below.

- Amendments to Ind AS 7, Statement of Cash flows

The amendment to Ind AS 7 introduces an additional disclosure that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. Management is of the view that the amendment will have impact only on disclosures in relation to cash flow statement within the financial statements.

- Amendments to Ind AS 102, Share Based payments

The amendment is not relevant for the Company as it does not have any cash-settled share based payments or share based payments with a net-settled feature.

NOTE-1A: SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures and the disclosure of contingent liabilities. These include recognition and measurement of 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 employee benefits, actuarial assumptions, provisions etc.

Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods affected.

JUDGEMENTS

In the process of applying the company’s accounting policies, management has made the following judgements, which have the significant effect on the amounts recognised in the financial statements:

Lease classification in case of leasehold land

The Company has obtained various lands from the governments for purpose of plants, facilities and offices. These lands are having various tenures and at the end of lease term, the lease could be extended for another term or the land could be returned to the government authority. Since land has an indefinite economic life, the mangement has considered 99 years and above cases for finance lease if at the inception of the lease, the present value of minimum lease payments are substantialy equal to fair value of leased assets. Furthers cases between 90-99 are also evaluated for finance lease on the basis of principle that present value of the minimum lease payments are substantially equal to fair value of the leased asset. In addition, other indicators such as the lessee’s ability to renew lease for another term at substantially below market rent, lessee’s option to purchase at price significantly below fair value are also examined for classification of land lease. Leases not meeting the finance lease criteria are classified under operating leases.

Intangible asset under development Acquisition costs and drilling of exploratory well costs are capitalized as intangible asset under development and are reviewed at each reporting date to confirm that exploration drilling is still under way or work has been determined / under way to determine that the discovery is economically viable based on a range of technical & commercial considerations and for establishing development plans and timing , sufficient / reasonable progress is being made. If no future activity is planned on reasonable grounds/timeframes, Intangible asset under development and property acquisition costs is written off. Upon start of production from field and recognition of proved reserves, cost carried as intangible asset under development is transferred to producing properties. Also refer Note-34 for related disclosures.

Contingencies

Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events

ESTIMATES AND ASSUMPTIONS

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.

Defined benefit plans / Other Long term employee benefits

The cost of the defined benefit plans and other long term employee benefit plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. The management considers the interest rates of government securtities based on expected settlement period of various plans.

Further details about various employee benefit obligations are given in Note-35.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (DCF) model based on level-2 and level-3 inputs. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as price estimates, volume estimates, rate estimates etc. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Also refer Note-39 for further disclosures of estimates and assumptions.

Impairment of financial assets

The impairment provisions for trade receivables are based on assumptions about risk of default and expected loss rates. The company uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on the company’s past history and other factors at the end of each reporting period. Also refer Note-40 for impairment analsysis and provision.

NOTE-2: PROPERTY PLANT AND EQUIPMENT

A. i) Freehold land includes Rs.9.51 crore (2016: Rs.7.59 crore) lying vacant due to title disputes/ litigation.

B. i) Buildings include Rs.0.01 crore (2016: Rs.0.01 crore) towards value of 1605 (2016: 1605) Shares in Co-operative Housing Societies towards membership of such societies for purchase of flats. ii) Includes Roads, Bridges etc. (i.e. Assets other than Building) of Gross block amounting to Rs.1,762.66 crore (2016: Rs.1,409.47 crore) and net block amounting to Rs.1,212.98 crore (2016: Rs.1,117.19 crore).

C. The cost of assets are net of VAT CREDIT/CENVAT, wherever applicable.

D. Depreciation and amortisation for the year includes Rs.25.82 crore (2016: Rs.235.05 crore) relating to construction period expenses shown in Note-2.2

E. Railways have claimed transfer of ownership in respect of certain assets provided by the Company at railway premises which has not been accepted by the company and continue to be part of fixed assets of the Company, WDV of such assets is Rs.67.00 crore (2016: Rs.64.25 crore).

F. Land and Buildings include Rs.186.63 crore (2016: Rs.456.76 crore) in respect of which Title / Lease Deeds are pending for execution or renewal.

A. the company has surplus land at various locations such as LPG plant , Depots and RO’s etc. which is under the process of disposal. The management intends to sell the land. No impairment was recognised on reclassification of land as held for sale as the Company expects that the fair value (estimated based on the recent market prices of similar properties in similar locations) less costs to sell is higher than the carrying amount.

B. Includes non current assets retired from active use used in various segments which are planned to be disposed off by the company through tendering process within a year.

C. During the year, the company has recognized impairment loss of Rs.27.10 crore (2016: Rs.43.66 crore) on write-down of the asset to fair value less costs to sell and the same has been shown under the caption ‘Other Expenses’ in the Statement of Profit & Loss.

Secured Loans (Term Loans : H)

1. Security Details for OIDB Loans:

a) First Charge on the facilities at Paradip Refinery, Odisha.

b) First charge on the facilities at Butadiene Extraction Unit, Panipat, Haryana.

c) First charge on the facilities at FCC Unit at Mathura Refinery, Uttar Pradesh.

d) First charge on the facilities at Paradip-Raipur-Ranchi pipeline

e) First charge on the facilities at SMPL System

f) First charge on the facilities at Paradip-Haldia-Durgapur LPG Pipeline

A. Finance Lease Obligations

The Finanace Lease Obligations is against assets aquired under Finance Lease. The net carrying value of the same is Rs.3698.77 crore.

B. Repayment Schedule of Senior Notes (Bank of America)

1 USD 300 Million US Private Placement bonds issued in four tranches of USD 75 Million dt. 6th June, 2nd July, 1st August and 4th September 2007 is payable in three tranches of USD 100 Million each on 1st August 2016, 1st August 2017 and 1st August 2018

A. Includes Rs.287.55 crore (2016: Rs.82.23 crore) towards corpus fund created for Post Retirement Medical Benefits and other emergency needs in respect of employees retired prior to 01.01.2007 as per DPE guidelines and Rs.248.07 crore (2016: Rs.709.40 crore) towards additional provision for Post Retirement Medical Benefit Scheme for past service prior to 31.12.2006. This also includes expenses amounting to Rs.25.62 crore (2016: Rs.11.52 crore) towards compensation to executives for working in shift duty in the plant / operation area on which the company has taken up the matter with MOP&NG/DPE.

B. Above excludes Rs.224.71 crore (2016: Rs.294.47 crore) included in capital work in progress (Note - 2.1) and Rs.9.90 crore (2016: Rs.7.42 crore) included in CSR expenses (Note-29.1).

C. During the year, the company has recognized an estimated expenses of Rs.2,093.45 crore towards revision of employees pay & allowances due w.e.f. 01.01.2017 based on the recommendations by the 3rd Pay Revision Committee. This includes an amount of Rs.1,256.28 crore towards estimated liability for likely increase in Gratuity Ceiling and Rs.364.47 crore for outstanding leave encashment as on 31st March 2017.

D. Disclosure in compliance with Indian Accounting Standard-19 on “Employee Benefits” is given in Note-35.

Basic and 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.

The following reflects the profit and number of shares used in the basic and diluted EPS computations:

Notes

1. Shares held under IOC Share Trust of face value Rs.116.56 crore (Pre-bonus Rs.58.28 crore) has been netted off from weighted average number of equity shares and EPS is worked out accordingly.

2. Pursuant to the approval of the shareholders, the company has issued bonus shares in the ratio of one equity shares of Rs.10/- for one existing equity share of Rs.10/- each in October 2016. Accordingly, earnings per share (EPS) (basic and diluted) of FY 2015-16 have been adjusted on account of bonus shares.

NOTE-3: EMPLOYEE BENEFITS

Disclosures in compliance with Ind-As 19 on “Employee Benefits” is as under:

A. Defined Contribution Plans- General Description Provident Fund (EPS-95)

During the year, the company has recognised Rs.39.87 crore (2016 : Rs.41.95 crore) as contribution to EPS-95 in the Statment of Profit and Loss/CWIP (included in Contribution to Provident and Other Funds in Note - 27/ Construction period expenses in Note-2.2).

Pension Scheme

During the year, the company has recognised Rs.354.13 crore (2016 : Rs.439.67 crore) towards Defined Contributory Employees Pension Scheme in the Statment of Profit and Loss/CWIP (included in Contribution to Provident and Other Funds in Note - 27/ Construction period expenses in Note-2.2).

B. Defined Benefit Plans- General Description Provident Fund:

The Company’s contribution to the Provident Fund is remitted to separate provident fund trusts established for this purpose based on a fixed percentage of the eligible employee’s 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 Company. The Company has three Provident Funds maintained by respective PF Trusts in respect of which actuarial valuation is carried out and all three trusts do not have any deficit as on 31stMarch 2017.

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 year of service subject to maximum of ‘0.10 crore at the time of separation from the company.

Post Retirement Medical Scheme (PRMS):

PRMS provides medical benefit to retired employees and eligible dependant family members.

Resettlement Allowance:

Resettlement allowance is paid to employees to permanently settle down at a place other than the location of last posting at the time of retirement.

Ex gratia:

Ex-gratia is payable to those employees who have retired before 01-11-1987 and not covered under the pension scheme. Further, for employees who have retired on or after 01-11-1987 and their entitlement under the pension scheme is less than applicable amount under Ex- Gratia Scheme, such employees are also eligible to the extent of shortfall or difference under Ex-gratia scheme. The scheme of ex-gratia has been restricted to cover only those eligible employees who have retired upto 31.12.06, and not thereafter.

Staff Pension fund at AOD:

The Fund is maintained for disbursement of pension to Officers who have joined erstwhile Assam Oil Company before 14-10-1981 and opted to continue the benefit of pension as existing prior to takeover. The company is managing the fund after takeover of the erstwhile Assam Oil Company in the name of IOCL(AOD) Staff Pension Fund.

Workmen Compensation:

The Company pays an equivalent amount of 100 months’ salary to the family member of the employee if employee dies while he is on duty. This scheme is not funded by the company. The liability originates out of the Workmen compensation Act and Factory Act.

C. Other Long-Term Employee Benefits - General Description Leave Encashment:

Each employee is entitled to get 8 earned leaves for each completed quarter of service. Encashment of earned leaves is allowed during service leaving a minimum balance of 15 days subject to maximum accumulation of 300 days. In addition, each employee is entitled to get 5 sick leaves (in lieu of 10 HPL) at the end of every six months. The entire accumulation is permitted for encashment only at the time of retirement. As per DPE/ MOP&NG the maximum ceiling of 300 days should be reckoned including HPL. However, keeping in view operational complications and service agreements the company has continued with the present practice and requested concerned authorities to reconsider the matter.

Long Service Award:

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded with amounts based on the duration of service completed.

Leave Fare Allowance (LFA) / Leave Travel Concession (LTC):

LTC is allowed once in a period of two calendar years (viz. two yearly block). An employee has, in any given block period of two years, an option of availing LTC or encashing the entitlements of LFA.

D. During the year, the company has recognized an estimated expenses of Rs.2,093.45 crore towards revision of employees pay & allowances due w.e.f. 01.01.2017 based on the recommendations by the 3rd Pay Revision Committee. This includes an amount of Rs.1,256.28 crore towards estimated liability for likely increase in Gratuity Ceiling and Rs.364.47 crore for outstanding leave encashment as on 31st March 2017. Pending finalization of the same, detailed disclosure as per Ind-As 19 has been made for the liability based on existing ceiling/entitlements.

E. The summarised position of various Defined Benefit Plans recognised in the Statement of Profit & Loss, Balance Sheet and Other Comprehensive Income are as under:

(Figures given in Unbold & Italic Font in the table are for previous year)

NOTE-4: COMMITMENTS AND CONTINGENCIES

A. LEASES

(a) Operating lease-as lessee

(i) Lease Rentals charged to the Statement of profit and loss and maximum obligations on long term non-cancellable operating leases payable as per the rentals stated in the respective lease agreements/arrangements

These relate to storage tankage facilities for petroleum products, BOO contract for Nitrogen and Hydrogen Plant, QC labarotary at Paradip

Refinery and various other leases in substance as mentioned in (iii) below.

(ii) The company has taken certain assets (including lands,office/residential premises) on Operating Lease which are cancellable by giving appropriate notice as per the respective agreements inc. applicable cases as per (iii) below. During the current year, Rs.366.06 crore (2016: Rs.295.83 crore) has been paid towards cancellable Operating Lease. Also refer Note-1B for more details on judgements made for lease classification in case of lands.

(iii) Leases in substance (Operating lease: Company as lessee)

The Company has entered into some contracts which are in substance operating lease contracts. Currently, the Company has booked payment made under these contracts as expenses in the statement of profit and loss. The details in respect of material operating lease arrangements are as under:

(a) IOCL has entered into various agreements with transporters for the movement of petroleum products for different tenures. Under these agreements, specific trucks are identified that are used exclusively for the transport operations of IOCL only.

(b) IOCL has entered into agreements with vessel owners for hiring of vessels for different tenures. Specified vessels are identified in the agreement with reference to the name and description of vessel, which can only be used. Such vessels are dedicated for IOCL’s use only for the entire period of arrangement. Further, during the lease period, the owner can let out the specific vessel to any third party only after obtaining IOCL’s permission. Hence this arrangement is classified as lease as per Appendix C to Ind AS 17.

(c) BOO agreement with Air Liquide Industries is for supply of oxygen and nitrogen at Panipat Refinery for a period of 18 years. The land is owned by IOCL and the plant is being operated by contractor for supply of oxygen and nitrogen to IOCL. There is a commitment to pay monthly minimum amount as per the agreement. IOCL shall always have first right of use of Nitrogen & Oxygen manufactured at the plant. Nitrogen gas manufactured by the contractor is mainly supplied to IOCL. Hence this arrangement is classified as lease as per Appendix C to Ind AS 17.

(b) Operating lease-as lessor

The lease rentals recognized as income in these statements as per the rentals stated in the respective agreements:

These relate to storage tankage facilities for petroleum products and buildings given on lease.

(c ) Finance lease-as lessee

The Company has entered into following material finance lease arrangements:

(i) BOOT agreement with IOT Utkal Energy Services Ltd. in respect of Tankages facility for a period of 15 years. Lessor will transfer ownership to IOCL after 15 Years at Nil value.

(ii) BOOT agreement with IL&FS in respect of Water Intake facility for a period of 25 years. Lessor will transfer ownership to IOCL after 25 Years at Rs.0.01 crore.

(iii) The company has entered into finance lease arrangements with Gujarat Adani Port Limited related to Port facilities at Gujarat for a period of 25 years and 11 months.

(iv) The Company has obtained various lands from the government for purpose of plants, facilities and offices. Lease cases where at the inception of the lease, the present value of minimum lease payments is substantially equal to the fair value of leased assets are considered under finance leases. Also refer Note 1B for more details on judgements made for lease classification.

The Net Carrying amount of the assets acquired under Finance Lease is disclosed in Note-2 and 2.1.

(d) Finance lease-as lessor

The company has entered into following material finance lease arrangements:

(i) Company has entered into Lease Agreement with Indian Railways in respect of BTPN Tank Wagons for a minimum period of 20 years. The lease rentals from the date of formation of rake are @ 16% for the first 10 years and thereafter at the nominal rate of 1% of the cost.

(ii) Company has entered into a lease agreement with Indian Synthetic Rubber Private Limited in which the company has leased out land for one time upfront payment of Rs.16.65 crore.

B. CONTINGENT LIABILITIES

B.1 Claims against the Company not acknowledged as debt

Claims against the Company not acknowledged as debt amounting to Rs.9,251.66 crore (2016: Rs.13,746.3 crore; 01.04.2015: Rs.12,305.87 crore) are as under:

B.1.1 Rs.152.80 crore (2016: Rs.143.04 crore; 01.04.2015: Rs.150.58 crore) being the demands raised by the Central Excise /Customs/ Service Tax Authorities including interest of Rs.29.96 crore (2016: Rs.25.48 crore; 01.04.2015: Rs.23.02 crore).

B.1.2 Rs.73.59 crore (2016: Rs.2,465.27 crore; 01.04.2015: Rs.1,846.75 crore) in respect of demands for Entry Tax from State Governments including interest of Rs.8.98 crore (2016: Rs.40.46 crore; 01.04.2015: Rs.342.44 crore).

B.1.3 Rs.2,844.90 crore (2016: Rs.4,047.38 crore; 01.04.2015: Rs.4,215.58 crore) being the demands raised by the VAT/ Sales Tax Authorities including interest of Rs.1,416.64 crore (2016: Rs.2,078.96 crore; 01.04.2015: Rs.1,482.98 crore).

B.1.4 Rs.2,363.48 crore (2016: Rs.3,953.14 crore; 01.04.2015: Rs.3,078.52 crore) in respect of Income Tax demands including interest of Rs.594.57 crore (2016: Rs.975.03 crore; 01.04.2015: Rs.256.95 crore).

B.1.5 Rs.2,656.00 crore (2016: Rs.2,122.57 crore; 01.04.2015: Rs.2,164.17 crore) including Rs.2,401.88 crore (2016: Rs.1,701.53 crore; 01.04.2015: Rs.1,456.98 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator. This includes interest of Rs.44.24 crore (2016: Rs.57.69 crore; 01.04.2015: Rs.49.75 crore).

B.1.6 Rs.1,160.89 crore (2016: Rs.1,014.90 crore; 01.04.2015: Rs.850.27 crore) in respect of other claims including interest of Rs.258.38 crore (2016: Rs.251.93 crore; 01.04.2015: Rs.266.90 crore).

The Company has not considered those disputed demands/claims as contingent liabilities, for which, the outflow of resources has been considered as remote.

B.2 Guarantees excluding financial guarantees

B.2.1 The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporacion Venezolana del Petroleo S.A. and PeTroCarabobo S.A., on behalf of Indoil Netherlands B.V., Netherlands (an associate company) to fulfill the associate company’s future obligations of payment of signature bonus / equity contribution / loan to the beneficiaries. The total amount sanctioned by the Board of Directors is USD 424 million. The estimated amount of such obligation (net of amount paid) is Rs.2,376.09 crore - USD 366.37 million (2016: Rs.2,427.56 crore - USD 366.37 million; 01.04.2015: Rs.2,295.63 crore - USD 367.27 million).

B.2.2 The company has entered into Master Guarantee Agreement, on behalf of its subsidiaries viz. Indoil Global B.V. and Indoil Montney Ltd. for all of its payments and performance obligations under the various Project Agreements entered by the subsidiaries with PETRONAS Carigali Canada B.V. and Progress Energy Canada Ltd. The total amount sanctioned by the Board of Directors is CAD 3924.76 million. The estimated amount of such obligation (net of amount paid) is Rs.11,570.97 crore - CAD 2,380.74 million (2016: Rs.12,201.06 crore - CAD 2,382.11 million; 01.04.2015: Rs.12,478.71 crore - CAD 2,547.51 million).

B.2.3 The company has issued Corporate Guarantee, on behalf of IndianOil Adani Gas Private Limited (IOAGPL), to the extent of obligations of later company under Performance Bank Guarantee Facility provided to IOAGPL by ‘State Bank of India, Syndicate Bank, Canara Bank, Bank of Baroda and Axis bank’. The Company’s share of such obligation is estimated at Rs.2,471.38 crore (2016: Rs.2,471.38 crore, 01.04.2015: Nil).

B.2.4 The Company has issued Corporate Guarantee, on behalf of IndianOil LNG Private Limited (IOLPL), to the extent of obligations of IOLPL under Performance Bank Guarantee Facility provided to IOLPL by State Bank of India. The estimated amount of such obligation is at Rs.11.40 crore (2016: NIL, 01.04.2015: NIL).

B.3 Other money for which the company is contingently liable

Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

C. COMMITMENTS

C.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs.12,902.79 crore (2016: Rs.7,823.51 crore; 01.04.2015: Rs.10,243.66 crore).

C.2 Other Commitments

The Company has an export obligation to the extent of Rs.7,865.80 crore (2016: Rs.5,124.14 crore; 01.04.2015: Rs.3,787.84 crore) on account of concessional rate of duty availed under EPCG license scheme on procurement of capital goods and the same is expected to be fulfilled by way of exports.

C.3 To meet the direction of Honorable High court of Orissa, the company has a commitment to pay Rs.280.10 crore (2016: Rs.356.54 crore; 01.04.2015: NIL) towards providing high tech ambulances, removal of old anicut and construction of water treatment plant in the state of Orissa . In addition company has to incur cost towards dredging through Orissa Construction Co, a state government agency estimate for which yet to be finalised.

NOTE-5: FINANCIAL INSTRUMENTS AND RISK FACTORS

Financial Risk Factors

The Company’s principal financial liabilities, other than derivatives, comprise Borrowings, trade and other payables, security deposits, employee liabilities and finance lease obligation. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations. The Company’s principal financial assets include loans & advances, trade and other receivables, shortterm deposits and cash/cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company is exposed to a number of different financial risks arising from natural business exposures as well as its use of financial instruments including market risk relating to interest rate, commodity prices, foreign currency exchange rates and equity price, credit risk and liquidity risk.

The Risk Management Commitee comprised of senior management oversees the management of these risks. The Company’s senior management is supported by a Risk Management Compliance Board that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Company’s senior management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies, risk objectives and risk appetite. The company’s requirement of crude oil are managed through integarted function handled through its international trade and optimization department. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. As per Company’s policy, derivatives contracts are taken only to hedge the various risks that the company is exposed to and not for speculation purpose.

The Board of Directors oversee the risk management activities for managing each of these risks, which are summarised below:

A. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The major components of market risk are interest rate risk, foreign currency risk, commodity price risk and other price risk viz. equity shares etc. Financial instruments affected by market risk include Borrowings, Deposits, FVTOCI investments and derivative financial instruments.

The sensitivity analysis in the following sections relate to the position as at 31 March 2017 and 31 March 2016.

The analysis excludes the impact of movements in market variables on the carrying values of gratuity and other post-retirement obligations, provisions, and other non-financial assets and liabilities of foreign operations.

1. Interest rate risk

The Company is also exposed to interest rate risk from the possibilitiy that changes in interest rates will affect future cash flows of a financial instrument, principally financial debt. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates.

The Company manages to maintain a mix between fixed and floating rates for rupee and foreign currency loans, based on liquidity, availability of cost effective instruments and considering the market / regulatory constraints etc. As at 31 March 2017, approximately 42% of the Company’s borrowings are at a fixed rate of interest (2016: 43%, 01.04.2015: 49%).

2. Foreign Curency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a foreign currency) and Borrowings.

The Company manages its foreign currency risk through combination of natural hedge, mandatory hedging and hedging undertaken on occurence of pre-determined triggers. The hedging is mostly undertaken through forward contracts.

The Company has outstanding forward contract of Rs.1,702.23 crore as at 31st March 2017 (2016: Rs.2,953.71 crore, 01.04.2015: ‘ Nil ) which has been undertaken to hedge its exposure to borrowings and other financial liabilities.

The sensitivity to a reasonably possible change in USD/INR exchange rates, with all other variables held constant, the impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives. The Company’s exposure to foreign currency changes for all other currencies other than below is not material.

The effects of most exchange rate fluctuations are absorbed in business operating results which are offset by changing cost competitiveness, lags in market adjustments to movements in rates to its other non-financial assets like inventory etc. For this reason, the total effect of exchange rate fluctuations is not identifiable separately in the company’s reported results.

3. Commodity price risk

The Company is exposed to various commodity price related risk such as Refinery Margins i.e. Differential between the prices of petroleum products & crude oil, Crude Oil Price fluctuation on accounts of inventory valuation fluctuation and crude oil imports. As per approved risk management policy, the company can undertake refinery margin hedging, inventory hedging and crude oil price hedging through swaps, options and futures in the OTC market as well as the exchanges to mitigate the risk within the approved limits.

4. Equity price risk

The Company’s investment in listed and non-listed equity securities, other than its investment in Joint Ventures and Subsidiaries, are susceptible to market price risk arising from uncertainties about future values of the investment securities.

At the reporting date, the exposure to unlisted equity securities at fair value was Rs.271.32 crore. Sensitivity analysis of these investments have been provided in Note-39.

The exposure to listed equity securities at fair value was Rs.20,987.39 crore. An increase / decrease of 5% on the NSE market index could have an impact of approximately Rs.1,049.37 crore on the OCI and equity attributable to the Company. These changes would not have an effect on profit or loss.

B. Credit risk Trade receivables

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by Letters of Credit, Bank Guarantees or other forms of credit insurance, wherever required.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 10. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are approved by the Company’s Board of Directors. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

The Company’s maximum exposure to credit risk for the components of the Balance Sheet at 31 March 2017 and 31 March 2016 is the carrying amounts as provided in Note 4,5,6, 11 & 12.

C. Liquidity risk

The Company monitors its risk of a shortage of funds using a liquidity planning tool. The Company seeks to manage its liquidity requirement by maintaining access to both short term and long term debt markets. In addition, Company has committed credit facilities from banks.

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, commercial papers, bank loans, debentures, and finance leases. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding.

D. Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk, the Company’s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.

E. Collateral

As Company has been rated investment grade by various domestic and international rating agencies, there has been no requirement of submitting any collateral for booking of derivative contracts. Company undertakes derivatives contract only with those counterparties that have credit rating above the internally approved threshold rating. Accordingly, Company does not seek any collaterals from its counterparties.

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and requirements. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using debt equity ratio, which is borrowings divided by Equity. The Company’s endeavour is to keep the debt equity ratio around 1:1.

The dues to Micro and Small Enterprises as required under the Micro, Small and Medium Enterprises Development Act, 2006 to the extent information available with the company is given below:

NOTE-6: RESEARCH AND DEVELOPMENT COSTS

Research and Development Expenses of Rs.109.57 crore (2016: Rs.370 crore) have been capitalized and Rs.217.53 Crore (2016 : Rs.235.86 crore) have been accounted for in the Statment of Profit and Loss during the year. Detailed break up of total expenditure is as under:

NOTE-7: DISCLOSURE ON GOVERNMENT GRANTS

A. Revenue Grants

1 Subsidies on sales of SKO (PDS) and LPG (Domestic)

Subsidies on sales of SKO (PDS) and LPG (Domestic) in India amounting to Rs.62.01 crore (2016: Rs.27.31 crore) and subsidies on sales of SKO & LPG to customers in Bhutan amounting to Rs.18.01 crore (2016: Rs.19.29 crore) have been reckoned as per the schemes notified by Governments.

2 Compensation against under recoveries

2A The company has accounted for Budgetary Support of Rs.5,149.21 crore (2016: Rs.6,885.26 crore) towards under-recovery on sale of SKO (PDS) in the Statement of Profit and Loss as Revenue Grants.

2B During the previous financial year 2015-16, the Company had received discounts of Rs.689.62 crore from ONGC/OIL on crude oil purchased and Rs.173.22 crore from CPCL, through sale of HSD to IOC, out of their purchase of crude oil from ONGC, towards part of the under recovery suffered on sale of SKO (PDS) which were adjusted against purchase of raw material and against purchase of stock in trade respectively. There is no such discount in the financial year 2016-17

3 Grant in respect of revenue expenditure for research projects

During the year, the company has received revenue grant of Rs.0.73 Crore (2016: Rs.2.12 crore) in respect of meeting out revenue expenditure such as Manpower, Consumables, Travel & Contingency etc for research projects undertaken with various agencies.

4 Incentive on sale of power

Company is getting incentive from Department of Renewable Energy, GOI for wind power generation of Electricity at the rate of Rs.0.50 paise for per unit of power generated. The Company has received grant of Rs.3.19 crore during the current year (2016 :Rs.2.77 crore).

5 EPCG Grant

Grant recognized in respect of duty waiver on procurement of capital goods under EPCG scheme of Central Govt. which allows procurement of capital goods including spares for pre production and post production at zero duty subject to an export obligation of 6 times of the duty saved on capital goods procured. The unamortized grant amount as on 31.03.2017 is Rs.435.72 crore (2016: Rs.401.79 crore, 01.04.2015: Rs.379.19 crore) . The company recognised Rs.4.04 crore (2016: NIL) in the statement of profit & loss account as amortisation of revenue grant. The company expects to meet the export obligations and therefore equivalent deferred grant has not been treated as liability.

6 Excise duty benefit in North East

Excise duty exemption of 50% of goods manufactured and cleared from north east refineries has been reckoned at full value in revenue and on net basis in expenses under “Excise Duty” (to the extent of duty paid). Financial impact for the current year is Rs.3,072.91 crore (2016: Rs.2,259.77 crore).

7 Entry Tax exemption

The company has recognised grant on net basis in respect of entry tax exemtion of crude/ Naptha purchased in Panipat Refinery, Panipat Naptha Cracker Complex and Paradip Refinery in cost of materials consumed/ Purchase of Stock-in Trade. Entry tax exemption on crude/Naptha procured in the state of Haryana and Odisha has been received amounting to Rs.505.84 crore ( 2016: Rs.382.45 crore).

B. Capital Grants

1 OIDB Government Grant for strengthening distribution of SKO (PDS)

The company has received government grant from OIDB (Oil Industry Directorate Board) for strengthening distribution of PDS Kerosene as per the directions of MoP&NG to be used in construction of 20KL underground Tank, Mechanical Dispensing Units & Barrel Shed. The unamortized capital grant amount as on 31.03.2017 is Rs.1.84 crore (2016: Rs.2.12 crore, 01.04.2015: Rs.2.38 crore) .During the year, company recognised Rs.0.28 crore (2016: Rs.0.26 crore) in statement of profit & loss as amortisation of capital grants.

2 DBTL Capital Grant

The company has received Government grant for roll out of DBTL scheme launched by MOPNG towards development, acquisition of software/ licenses & data processing equipment for effective implementation of platform for dispensing of subsidy to customers purchasing LPG under DBTL scheme. The unamortized capital grant amount as on 31.03.2017 is Rs.0.47 crore (2016: Rs.1.79 crore, 01.04.2015: Nil) .The company recognised Rs.1.32 crore (2016: Rs.14.97 crore) in the statement of profit & loss account as amortisation of capital grants.

3 Capital Grant in respect of Excise duty & Custom duty waiver

The company has received grant in respect of Custom duty waiver on import of capital goods & Excise duty waiver on purchase of goods from local manufacturer in India under the certificate issued by Department of Scientific & Industrial Research (DSIR). The unamortized capital grant amount as on 31.03.2017 is Rs.44.52 crore (2016: Rs.45.27 crore, 01.04.2015: Rs.42.12 crore). The goods so imported or procured from local manufacturer shall not be transferred or sold for a period of five years from date of installation. The company recognised Rs.4.78 crore (2016: Rs.4.53 crore) in the statement of profit & loss as amortisation of capital grants.

4 Capital Grant in respect of Research projects

The company has received capital grant from various agencies in respect of procurement/setting up of Capital assets for research projects undertaken. The unamortized capital grant amount as on 31.03.2017 is Rs.15.73 crore (2016: Rs.17.91 crore, 01.04.2015: Rs.16.26 crore). The company recognised Rs.3.00 crore (2016: Rs.2.91 crore) in the statement of profit & loss as amortisation of capital grants.

5 Capital Grant in respect of Entry Tax Exemption from Odisha Govt.

Entry Tax exemption received from Odisha Government for Paradip Refinery Project has been recognized as Capital Grant and grossed up with the concerned Assets.The unamortized capital grant amount as on 31.03.2017 is Rs.126.90 crore (2016: Rs.131.40 crore, 01.04.2015: Rs.128.66 crore). The company recognised Rs.5.66 crore (2016: Rs.1.48 crore) in the statement of profit & loss as amortisation of capital grants.

6 Capital Grant in respect of demonstration unit

Grant received from OIDB for setting up of demonstration unit at Guwahati refinery with the company’s R&D developed IndaDeptG technology. The unamortized capital grant amount as on 31.03.2017 is Rs.87.41 crore (2016: Rs.42.20 crore, 01.04.2015: NIL). The company recognised Rs.1.09 crore (2016: NIL) in the statement of profit & loss as amortisation of capital grants.

7 Capital Grant in respect of interest subsidy

The company has received capital grant in respect of interest subsidy on loans taken from OIDB. The unamortized capital grant amount as on 31.03.2017 is Rs.6.67 crore (2016: Rs.6.94 crore, 01.04.2015: NIL). The company recognised Rs.0.26 crore (2016: Rs.0.07 crore, 01.04.2015: NIL)) in the statement of profit & loss as amortisation of capital grants.

These financial statements, for the year ended 31st March 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31st March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31st March 2017, together with the comparative period data as at and for the year ended 31st March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1st April 2015, the Company’s date of transition to Ind AS. This note explains exemptions availed by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April 2015 and the financial statements as at and for the year ended 31st March 2016.

Exemptions applied 1. Mandatory exemptions

a) Estimates

The estimates at 1st April 2015 and at 31st March 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:

- FVTOCI - unquoted equity shares

- FVTOCI - debt securities

- Impairment of financial assets based on expected credit loss model

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April 2015, the date of transition to Ind AS and as of 31st March 2016.

b) De-recognition of financial assets and financial liability

The company has applied the de-recognition requirements under Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

c) Derivative accounting

The Company has applied this exemption and all derivatives measured at fair value at transition date. All deferred gains and losses arising on derivatives under previous GAAP eliminated on the transition date.

d) Classification and measurement of financial instruments

i. Financial assets and liabilities like loan to employees, security deposits received and security deposits paid, has been classified and measured at amortised cost on the basis of the facts and circumstances that exist at the date of transition to Ind ASs. Since, it is impracticable for the company to apply retrospectively the effective interest method in Ind AS 109, the fair value of the above financial asset or the financial liability at the date of transition to Ind As by applying amortised cost method, has been considered as the new gross carrying amount of that financial asset or the financial liability at the date of transition to Ind AS.

ii. The Company has designated quoted and unquoted equity instruments and GOI Special bonds held at 1st April 2015 as fair value through OCI investments.

e) Impairment of financial assets

At the date of transition to Ind ASs, the Company has determined that assessment of significant increase in credit risk since the initial recognition of a financial instrument would require undue cost or effort, the Company has recognised a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised.

f) Embedded Derivatives

The Company has assessed whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date it first became a party to the contract and the date of reassessment.

g) Government Loans

The Company has applied the requirements in Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance, prospectively to government loans existing at the date of transition to Ind ASs and has not recognised the corresponding benefit of the government loan at a below-market rate of interest as a government grant. Accordingly, the Company has used its previous GAAP carrying amount of loan at the date of transition to Ind AS as carrying amount of loan in the opening Ind AS Balance Sheet i.e. Provisions of Ind AS 20 are applied prospectively.

2. Optional exemptions

A. Long Term Foreign Currency Monetary Items

The Company has elected to continue policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in financial statements for period ending immediately before beginning of first Ind AS financial reporting period as per previous GAAP i.e. 1st April 2016.

B. Deemed cost-Previous GAAP

carrying amount

Since there is no change in the functional currency, the Company has elected to continue with the carrying value for all of Property, Plant and Equipment and Intangible Assets, as recognised in its Indian GAAP financial as deemed cost at the transition date.

C. Arrangements containing a lease

i) Arrangement in the nature of leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS

17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.

ii) Composite leases: (Land and Building elements)

The Company has elected this exemption and assessed the classification of each element (land and building) as finance or an operating lease at the date of transition to Ind AS on the basis of the facts and circumstances existing as at that date.

D. Investment in subsidiaries, Joint ventures and associates

The Company has elected this exemption and opted to continue with the carrying value of investment in subsidiaries, associates and joint ventures, as recognised in its Indian GAAP financials, as deemed cost at the date of transition.

E. Designate of previously recognised financial instrument

The Company has elected this exemption and opted to

- Designate financial asset at FVTPL as per Ind AS 109 based on facts and circumstances as on transition date.

- Designate an investment in equity shares as FVOCI, as per Ind AS 109, based on facts and circumstances exist on transition date.

F. Decommissioning liability

The Company has elected this exemption and changes in a decommissioning, restoration or similar liability added to or deducted from the cost of the asset to which it relates; the adjusted depreciable amount of the asset is then depreciated prospectively over its remaining useful life.

The Company need not comply with these requirements for changes in such liabilities that occurred before the date of transition to Ind AS. By applying this exemption, the Company has:

- Measured the liability in accordance with Ind AS 37 on the date of transition to Ind AS

- The obligation capitalized as a separate component of PPE, together with the accumulated depreciation from the date the obligation was incurred to the transition date (if any).

- The amount capitalized as part of the cost of the asset is calculated by discounting the liability back to the date the obligation initially arose using the best estimate of historical discount rates.

- The associated accumulated depreciation is calculated by applying the current estimate of the useful life of the asset, using the entity’s depreciation policy for the asset.

G. Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from transition date or specific date prior to transition date. Accordingly, the Group has elected to apply Ind AS 103 from specific date i.e. 1st April 2013:

Ind AS 103 Business Combinations has not been applied to acquisitions of subsidiaries, which are considered businesses under Ind AS that occurred before 1st April 2013. Use of this exemption means that the Indian GAAP carrying amounts of assets and liabilities, that are required to be recognised under Ind AS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with respective Ind AS. The Company recognises all assets acquired and liabilities assumed in a past business combination, except (i) certain financial assets and liabilities that were derecognised and that fall under the derecognition exception, and (ii) assets and liabilities that were not recognised in the acquirer’s consolidated balance sheet under its previous GAAP and that would not qualify for recognition under Ind AS in the individual balance sheet of the acquiree. Assets and liabilities that do not qualify for recognition under Ind AS are excluded from the opening Ind AS balance sheet. The Company did not recognise or exclude any previously recognised amounts as a result of Ind AS recognition requirements.

The company has applied same exemption for investment in associates and joint ventures.

The Company has not applied Ind AS 21, The Effects of Changes in Foreign Exchange Rates retrospectively to fair value adjustments that occurred before 1st April 2013 to Ind AS. Such fair value adjustments are treated as assets and liabilities of the parent rather than as assets and liabilities of the acquiree. Therefore, those assets and liabilities are already expressed in the functional currency of the parent or are non-monetary foreign currency items and no further translation differences occur.

Footnotes to the reconciliation of equity as at 1st April 2015 and 31st March 2016 and profit or loss for the year ended 31st March 2016

1. Financial assets classified at fair value through Profit and loss

(i) Loan given to related parties

Under IGAAP, loan to related parties ( Suntera Nigeria 205 Ltd.) has been disclosed as long term loans to related parties and accumulated interest is not recognized considering contingency in recovery. Under Ind AS, such loan has been classified at fair value through profit and loss. Consequent to this, at the transition date the Company has fair valued such loan and difference between fair value and carrying value of loan has been adjusted through retained earnings. Similarily, for the year ended 31st March 2016 impact of fair valuation on such loans has been adjusted in profit and loss.

(ii) Non Convertible redeemable preference shares

Under IGAAP, investment in such preference shares has been recorded at its transaction value. Under Ind AS, such preference shares has been classified at fair value through profit and loss. Consequent to this, at the initial date the Company has fair valued such preference shares difference between fair value and carrying value has been adjusted through retained earnings. Accordingly, the Company is required to fair value such preference shares at each reporting date and the impact of fair valuation as on transition date has been adjusted through retained earnings and for the year ended 31st March 2016 impact has been adjusted in profit and loss.

(iii) Compusorily Convertible Debentures

Under IGAAP, investment in such debentures has been recorded at its transaction value. Under Ind AS, such debentures has been classified at fair value through profit and loss. Consequent to this, the Company is required to fair value such debentures at each reporting date and the impact of fair valuation as on transition date has been adjusted through retained earnings and for the year ended 31st March 2016 impact has been adjusted in profit and loss.

2. Financial assets classified at fair value through OCI

(i) Long term investment in Equity shares (other than investment in subsidiaries, associates and Jvs) at fair value through OCI

Under Indian GAAP, the Company has recorded long term investments in unquoted and quoted equity shares as investment and measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as FVTOCI investments. At the date of transition to Ind AS, difference between the instruments fair value and Indian GAAP carrying amount has been recognised through a seperate component of equity in the FVTOCI reserve. Similary, for the year ended 31stMarch 2016, fair value gain or loss recognised in OCI.

(ii) Debt Instruments - Government of India (GOI) special bonds

Under Indian GAAP, the Company has long term and short term investments in GOI special bonds. Long term investments in such bonds has been recorded at cost less provision for other than temporary diminution in the value of investments. Short term investments in such bonds has been recorded at lower of cost and net realisable value.<


Mar 31, 2015

NOTE - 1

CONTINGENT LIABILITIES & COMMITMENTS

A. Contingent Liabilities

A.1 Contingent Liabilities amounting to Rs. 12,702.00 crore (2014: Rs. 11676.65 crore) are as under :

A.1.1 Rs. 155.01 crore (2014: Rs. 210.43 crore) being the demands raised by the Central Excise /Customs/ Service Tax authorities including interest of Rs. 22.67 crore (2014: Rs. 49.15 crore) .

A.1.2 Rs. 2,133.47 crore (2014: Rs. 1,173.20 crore) in respect of demands for Entry Tax from State Governments including interest of Rs. 345.77 crore (2014: Rs. 46.10 crore) .

A.1.3 Rs. 4,275.75 crore (2014: Rs. 4,581.84 crore) in respect of VAT/Sales Ta x demands including interest of Rs. 1,485.44 crore (2014: Rs. 1,495.93 crore).

A.1.4 Rs. 3,078.95 crore (2014: Rs. 2,904.16 crore) in respect of Income Tax demands including interest of Rs. 257.46 crore (2014: Rs. 233.90 crore).

A.1.5 Rs. 2,198.61 crore (2014: Rs. 2,121.26 crore) including Rs. 1,449.52 crore (2014: Rs. 1,601.65 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator. This includes interest of Rs. 71.27 crore (2014: Rs. 65.77 crore).

A.1.6 Rs. 860.21 crore (2014: Rs. 685.76 crore) in respect of other claims including interest of Rs. 272.32 crore (2014: Rs. 119.16 crore).

The Company has not considered those disputed demands/ claims as contingent liabilities, for which, the outflow of resources has been considered as remote.

A.2 Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

A.3 Air India has entered into tripar tite agreement with standard char tered bank to raise bill discounting facilities only for payment of fuel purchases from our company. The bank has recourse of recovery from the company in case of nonpayment by M/s Air India to the bank. The estimated amount of such obligation is Rs. 271.03 Crore (2014 : Nil)

A.4 The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporacion Venezolana del Petroleo S.A. and PeTroCarabobo S.A., on behalf of Indoil Netherlands B.V., Netherlands (an associate company) to fulfill the associate company''s future obligations of payment of signature bonus / equity contribution / loan to the beneficiaries. The total amount sanctioned by the Board of Directors is USD 424 million. The estimated amount of such obligation (net of amount paid) is Rs. 2,295.63 crore - USD 367.27 million (2014: Rs. 2,236.58 crore – USD 373.26 million).

A.5 The company has issued Corporate Guarantee on behalf of ''Indian Synthetic Rubber Limited (ISRL) , Joint venture company to the extent of obligations of later company under loans (principal and interest both) made to ISRL by ''Japan Bank for International Cooperation (JBIC)'' and ''Mizuho Corporate Bank (MHCB)''. The Company''s share of such obligation is estimated at Rs. 347.79 crore - USD 55.64 million (2014: Rs. 333.44 crore – USD 55.65 million).

A.6 The company has entered into Master Guarantee Agreement, on behalf of its subsidiaries viz. Indoil Global B.V. and Indoil Montney Ltd. for all of its payments and performance obligations under the various Project Agreements entered by the subsidiaries with PETRONAS Carigali Canada B.V. and Progress Energy Canada Ltd. The total amount sanctioned by the Board of Directors is CAD 3924.76 million. The estimated amount of such obligation (net of amount paid) is Rs. 12,478.71 crore - CAD 2547.51 million (2014: Rs. 15,181.63 crore - CAD 2791.07 million).

A.7 The company has issued Corporate Guarantee on behalf of step down subsidiary ''IndOil Montney Ltd.(IML), to the extent of obligations of later company under loans (principal and interest both) made to IML by ''Mizuho Bank Ltd, Canada Branch''. The limit of Corporate Guarantee sanctioned to the Bank is CAD 139.35 million. The Company''s share of such obligation as on 31.03.2015 is estimated at Rs. 590.58 crore – CAD 120.57 million (2014: NIL).

A.8 The company has issued Corporate Guarantee on behalf of step down subsidiary ''IndOil Montney Ltd.(IML), to the extent of obligations of later company under loans (principal and interest both) made to IML by ''Bank of Tokyo-Mitsubishi UFJ, Canada, Mizuho Bank Ltd, Canada Branch, Sumitomo Mitsui Banking Corporation, Singapore Branch, Expor t Development Canada, State Bank of India, Canada, Land Bank of Taiwan, Offshore Banking Branch''. The limit of Corporate Gurantee sanctioned to the member banks is CAD 618.30 million. The Company''s share of such obligation as on 31.03.2015 is estimated at Rs. 570.99 crore – CAD 116.57 million (2014: NIL).

B. Commitments

B.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 10,252.52 crore (2014: Rs. 12,574.58 crore).

B.2 Other Commitments

The Company has an export obligation to the extent of Rs. 3,787.84 crore (2014: Rs. 2,729.83 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

B.3 To meet the direction of Honorable High court of Orissa, company has a commitment to pay Rs. 97.75 crore towards providing high tech ambulances, removal of old anicut and construction of water treatment plant in the state of Orissa . In addition company has to incur cost towards dredging through Orissa Construction Co , a state government agency estimate for which yet to be finalised.

NOTE - 2: EMPLOYEE BENEFITS

Disclosures in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is as under:

(A) PROVIDENT FUND

(i) The Company has three Provident Funds maintained by respective PF Trusts. All these three PF Trusts do not have any shortfall as on 31.03.2015.

(ii) During the year, Company has conducted Actuarial Valuation of all three PF Trusts. As per Actuarial Valuation, all three PF Trusts do not have any deficit as on 31st March 2015. Accordingly, other related disclosures in respect of Provident Fund have not been made.

(iii) During the year, the company has recognised Rs. 327.05 crore (2014 : Rs. 322.92 crore) as Employer''s contribution to Provident Fund in the Statment of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(iv) In addition, during the year, the company has recognised Rs. 30.19 crore (2014 : Rs. 20.57 crore) as contribution to EPS-95 in the Statment of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(B) PENSION SCHEME

During the year, the company has recognised Rs. 201.42 crore (2014: Rs. 306.92 crore) towards Defined Contributory Employees Pension Scheme in the Statment of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(C) DEFINED BENEFIT PLANS- GENERAL DESCRIPTION Gratuity:

Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount equal to 15/26 of the monthly emoluments for every completed year of service subject to maximum of Rs. 0.10 crore at the time of separation from the company. Leave Encashment: Each employee is entitled to get 8 earned leaves for each completed quarter of service. Encashment of earned leaves is allowed during service leaving a minimum balance of 15 days subject to maximum accumulation up to 300 days. In addition, each employee is entitled to get 5 sick leaves at the end of every six months. The entire accumulation of sick leaves is permitted for encashment only at the time of retirement. PRMS:

Post Retirement Medical Scheme (PRMS) provides medical benefit to retired employees and eligible dependant family members. Resettlement Allowance:

Resettlement allowance is paid to employees to permanently settle down at a place other than the location of last posting at the time of retirement. Long Service Award:

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded with Gold Coins of different weight based on the duration of service completed. MoP&NG vide letter dated 25th February 2015 has advised Oil Marketing Companies to discontinue the Long Service Award Scheme. However, company has taken-up the issue with MoP&NG and pending final decision in the matter ,company has continued with the actuarial valuation for FY 2014-15 and provision in books of account. Ex gratia:

Ex-gratia is payable to those employees who have retired before 01-11-1987 and not covered under the pension scheme. Further, for employees who have retired on or after 01-11-1987 and their entitlement under the pension scheme is less than applicable amount under Ex- Gratia Scheme, such employees are also eligible to the extent of shor tfall or difference under Ex-gratia scheme. The scheme of ex-gratia has been restricted to cover only those eligible employees who have retired upto 31.12.2006, and not thereafter. Staff Pension fund at AOD:

The Fund is maintained for disbursement of pension to Officers who have joined erstwhile Assam Oil Company before 14-10-1981 and opted to continue the benefit of pension as existing prior to takeover. The company is managing the fund after takeover of the erstwhile Assam Oil Company in the name of IOCL(AOD) Staff Pension Fund.

NOTE - 3: LEASES

Disclosure as required under Accounting Standard – 19 on "Leases":

FINANCE LEASES:

a) As Lessee

The company has entered into following finance leases:

(i) BOOT agreement with IOT Utkal Energy Services Ltd. in respect of Tankages facility for a period of 15 years. Lessor will transfer ownership to IOCL after 15 Years at Nil value.

(ii) BOOT agreement with IL&FS in respect of Water Intake facility for a period of 25 years. Lessor will transfer ownership to IOCL after 25 Years at Rs. 0.01 crore.

NOTE - 4: EXPOSURE TO FINANCIAL AND COMMODITY DERIVATIVES

Financial and Derivative Instruments:

1. All derivative contracts entered into by the Company are for hedging its foreign currency, interest rate & commodity exposures relating to underlying transactions and firm commitments and not for any speculative or trading purposes.

2. The Derivative contracts entered into by the Company and outstanding as on 31st March 2015 are as below:

(a) For Hedging Currency Risks:

Amount of forward contracts entered into by the Company for import & export and outstanding as on 31st March 2015 is NIL (2014: NIL).

(b) For Hedging Commodity Related Risks:

Category–wise quantitative data about commodity derivative transactions that are outstanding as on 31st March 2015 is given below:

NOTE - 5: RESEARCH AND DEVELOPMENT EXPENDITURE

Research and Development Expenses of Rs. 93.66 crore (2014: Rs. 78.32 crore) have been capitalized and Rs. 169.31 Crore (2014 : Rs. 174.40 crore) have been accounted for in the Statment of Profit and Loss during the year. Detailed break up of total expenditure is as under:

NOTE - 6: OTHER DISCLOSURES

1 Purchase of crude oil from Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalization of agreements with respective parties. Adjustments, if any, will be made on finalization of agreements.

2 Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

3 Exceptional income includes income of Rs. 1,668.09 crore arising out of additional state specific surcharge (SSC) towards U.P. entry tax paid in earlier years, in pursuance with MOP&NG order dated 30th March 2013 (2014: Rs. 1,746.80 crore on account of recovery of entry tax paid in earlier years and other matters in relation to U.P. Entry Tax).

4 In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Company has adopted the useful lives as prescribed in Schedule II except in case of following assets where useful life is considered based on technical assessment:

a) Useful life of 15 years for Plant and Equipment relating to Retail Outlets (other than storage tanks and related equipments) and LPG cylinders & pressure regulators

b) Useful life of 25 years for solar power plant/solar panels

Due to revised useful lives, the depreciation expense for the year ended March 31, 2015 is lower by Rs. 1,650.02 crore. As per the transitional provisions of Schedule II of the Companies Act, 2013, the Company has debited Rs. 948.76 crore (net of deferred tax of Rs. 493.36 crore) to the opening balance of General reserve as at April 1, 2014 and Rs. 12.18 crore is capitalized in tangible capital work in progress. Additionally, capital grant of Rs. 2.82 crore is also transferred to General Reserve.

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 of Notes to Schedule II of Companies Act, 2013, relating to componentization, from financial year 2015-16.

5 Previous year''s comparative figures have been regrouped wherever necessary. Figures in brackets indicate deductions.


Mar 31, 2014

Contingent Liabilities & Commitments

A. Contingent Liabilities

A.1 Contingent Liabilities amounting to Rs. 11,676.65 crore (2013: Rs. 11,619.68 crore) are as under :

A.1.1 Rs. 210.43 crore (2013: Rs. 225.70 crore) being the demands raised by the Central Excise /Customs/ Service Tax authorities including interest of Rs. 49.15 crore (2013 : Rs. 43.82 crore).

A.1.2 Rs. 1,173.20 crore (2013: Rs. 1,294.80 crore) in respect of demands for Entry Ta x from State Governments including interest of Rs. 46.10 crore (2013 : Rs. 44.94 crore).

A.1.3 Rs. 4,581.84 crore (2013: Rs. 4,631.93 crore) in respect of VAT/ Sales Tax demands including interest of Rs. 1,495.93 crore (2013: Rs. 1,610.50 crore).

A.1.4 Rs. 2,904.16 crore (2013: Rs. 2,962.25 crore) in respect of Income Tax demands including interest of Rs. 233.90 crore (2013 : Rs. 268.22 crore).

A.1.5 Rs. 2,113.84 crore (2013: Rs. 1,917.26 crore) including Rs. 1,601.65 crore (2013: Rs. 1,600.49 crore) on account of Projects for which suits have been filed in the Cour ts or cases are lying with Arbitrator. This includes interest of Rs. 65.42 crore (2013: Rs. 37.81 crore).

A.1.6 Rs. 693.18 crore (2013: Rs. 587.74 crore) in respect of other claims including interest of Rs. 119.51 crore (2013 : Rs. 98.73 crore).

The Company has not considered those disputed demands/ claims as contingent liabilities, for which, the outflow of resources has been considered as remote.

A.2 Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

A.3 The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The

Corporacion Venezolana del Petroleo S.A. and PeTroCarabobo S.A., on behalf of Indoil Netherlands B.V., Netherlands (an associate company) to fulfill the associate company''s future obligations of payment of signature bonus / equity contribution / loan to the beneficiaries. The total amount sanctioned by the Board of Directors is USD 424 million. The estimated amount of such obligation (net of amount paid) is Rs. 2,236.58 crore - USD 373.26 million (2013: Rs. 2,054.23 crore – USD 378.38 million).

A.4 The company has issued Corporate Guarantee on behalf of ''Indian Synthetic Rubber Limited (ISRL), Joint venture company to the extent of obligations of later company under loans (principal and interest both) made to ISRL by ''Japan Bank for International Cooperation (JBIC)'' and ''Mizuho Corporate Bank (MHCB)''. The Company''s share of such obligation is estimated at Rs. 333.44 crore - USD 55.65 million (2013: Rs. 302.57 crore – USD 55.73 million).

A.5 The company has entered into Master Guarantee Agreement, on behalf of its subsidiaries viz. Indoil Global B.V. and Indoil Montney Ltd. for all of its payments and performance obligations under the various Project Agreements entered by the subsidiaries with PETRONAS Carigali Canada B.V. and Progress Energy Canada Ltd. The total amount sanctioned by the Board of Directors is CAD 3907 million. The estimated amount of such obligation (net of amount paid) is Rs. 15,181.63 crore - CAD 2,791.07 million (2013: NIL).

Commitments

B.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 12,574.58 crore (2013: Rs. 14,648.43 crore).

B.2 Other Commitments

The Company has an export obligation to the extent of Rs. 2,729.83 crore (2013: Rs. 3,090.25 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

Disclosures in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is as under:

(A) PROVIDENT FUND

(i) The Company has three Provident Funds maintained by respective PF Trusts. All these three PF Trusts do not have any shortfall as on 31.03.2014.

(ii) During the year, Company has conducted Actuarial Valuation of all three PF Trusts. As per Actuarial Valuation, all three PF Trusts do not have any deficit as on 31st March 2014. Accordingly, other related disclosures in respect of Provident Fund have not been made.

(iii) During the year, the company has recognised Rs. 322.92 crore (2012-13 : Rs. 288.05 crore) as Employer''s contribution to Provident Fund in the Statement of Profit and Loss/ CWIP (included in Con- tribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(iv) In addition, during the year, the company has recognised Rs. 20.57 crore (2012-13: Rs. 20.83 crore) as contribution to EPS-95 in the Statement of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(B) PENSION SCHEME

During the year, the company has recognised Rs. 306.92 crore (2012-13: Rs. 232.06 crore) towards Defined Contributory Employees Pension Scheme in the Statement of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 24/ Construction period expenses pending allocation in Note-12).

(C) DEFINED BENEFIT PLANS- GENERAL DESCRIPTION

Gratuity:

Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount equal to 15/26 of the monthly emoluments for every completed year of service subject to maximum of Rs. 0.10 crore at the time of separation from the company.

Leave Encashment:

Each employee is entitled to get 8 earned leaves for each completed quarter of service. Encashment of earned leaves is allowed during service leaving a minimum balance of 15 days subject to maximum accumulation up to 300 days. In addition, each employee is entitled to get 5 sick leaves at the end of every six months. The entire accumulation of sick leaves is permitted for encashment only at the time of retirement.

PRMS:

Post Retirement Medical Scheme (PRMS) provides medical benefit to retired employees and eligible dependant family members.

Resettlement Allowance:

Resettlement allowance is paid to employees to permanently settle down at a place other than the location of last posting at the time of retirement.

Long Service Award:

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded with Gold Coins of different weight based on the duration of service completed.

Ex gratia:

Ex-gratia is payable to those employees who have retired before 01-11-1987 and not covered under the pension scheme. Further, for employees who have retired on or after 01-11-1987 and their entitlement under the pension scheme is less than applicable amount under Ex- Gratia Scheme, such employees are also eligible to the extent of shortfall or difference under Ex-gratia scheme. The scheme of ex-gratia has been restricted to cover only those eligible employees who have retired upto 31.12.2006, and not thereafter.

Staff Pension fund at AOD:

The Fund is maintained for disbursement of pension to Officers who have joined erstwhile Assam Oil Company before 14-10-1981 and opted to continue the benefit of pension as existing prior to takeover. The company is managing the fund after takeover of the erstwhile Assam Oil Company in the name of IOCL(AOD) Staff Pension Fund.

1. RELATIONSHIP

A) Details of Joint Venture Entities/Associates

1) IOT Infrastructure Energy Services Ltd.

2) Lubrizol India Pvt. Ltd.

3) Petronet VK Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt.Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

11) Indo Cat Pvt. Ltd. (Upto 26.03.2014)

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facility Private Ltd.

15) Indian Synthetic Rubber Ltd.

16) Indian Oil Ruchi Biofuels LLP

17) NPCIL- IndianOil Nuclear Energy Corporation Ltd.

18) GSPL India Transco Ltd.

19) GSPL India Gasnet Ltd.

20) IndianOil Adani Gas Pvt. Ltd.

21) Petroleum India International - AOP (An Associate)

B) Details of Joint Ventures (Unincorporated)

1) MN-OSN-2000/2

2) AA-ONN-2001/2

3) MB-OSN-2004/1

4) MB-OSN-2004/2

5) KG-DWN-2005/1

6) GK-OSN-2009/1

7) GK-OSN-2009/2

8) CB-ONN-2010/6

9) AAP-ON-94/1

10) BK-CBM-2001/1

11) NK-CBM-2001/1

12) FARSI BLOCK IRAN

13) LIBYA BLOCK 86

14) LIBYA BLOCK 102/4

15) SHAKTHI GABON

16) YEMEN 82

17) YEMEN 83

18) AREA 95-96

C) Whole-time Directors

1) Shri R.S.Butola

2) Dr. R.K.Malhotra

3) Shri Sudhir Bhalla

4) Shri A.M.K.Sinha

5) Shri P.K.Goyal

6) Shri R.K.Ghosh

7) Shri Makarand Nene

8) Shri V.S. Okhde

Disclosure as required under Accounting Standard – 19 on "Leases":

FINANCE LEASES: a) As Lessee

Company has entered into BOOT agreement with IOT Utkal in respect of Tankages facility for a period of 15 years.

b) As Lessors

Company has entered into Lease Agreement with Indian Railways in respect of BTPN Tank Wagons for a minimum period of 20 years. The lease rentals from the date of formation of rake are @ 16% for the first 10 years and thereafter at the nominal rate of 1% of the cost.

NOTE - 2: OTHER DISCLOSURES

1 Purchase of crude oil from Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalization of agreements with respective parties. Adjustments, if any, will be made on finalization of agreements.

2 Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

3 Exceptional items include:- a) Income of Rs. 1,581.27 crore arising out of recovery of additional State Specific Surcharge (SSC) towards UP Entry Tax paid in earlier years, in pursuance of

MOP&NG Order dated 30.03.2013.

b) Income of Rs. 534.36 crore arising out of reduction in the interest expense on the arrears of UP Entry Tax by applying interest rate @12% per annum in lieu of varied rates of interest considered in earlier years pursuant to an application made by the Company to Hon''ble Supreme Court of India and disposal of the same by an order passed by the Hon''ble court dated 06-12-2013. The Supreme court in the said order while accepting the prayer of the company stated that the rate of interest shall be determined by the court at the time of disposal of appeal on the constitutional validity of imposition of entry tax by the Govt of Uttar Pradesh.

c) Expenditure of Rs. 368.83 crore (including interest of Rs. 205.15 crore) towards Entry Tax from 1999-2000 to 2004-05 due to change in calculation modalities, in line with Hon''ble Allahabad High Court Order dated 26.03.2014.

The net amount of Rs. 1,746.80 crore considering the accounting effects referred above has been disclosed as exceptional items.

3 On 29th August 2013, RBI announced a forex swap window for public sector oil companies for meeting its daily US dollar requirements. Income of Rs. 470.25 crore has been accounted as Premium on Forward Contracts and Rs. 804.64 crore as Exchange Gain (Net) on transactions settled upto 31.03.2014. Net Loss, if any, on all outstanding contracts maturing after 31.03.2014 have been considered.

4 Construction work in progress (Note-12) includes "on account running payment" made against Lump sum EPC contracts, which till last year was classified as Capital Advance (Note-15). In order to make previous period figures comparative, such transaction relating to the year ended 31.03.2013 Rs. 7,957.20 crore have been recast accordingly.

5 Deposits made against probable contingencies (hitherto partly netted against each other) are now uniformly accounted separately under probable contingencies (Note-7) and deposits (Note-15). In order to make previous period figures comparative, such transaction relating to the year ended 31.03.2013 Rs. 3,586.86 crore have been recast accordingly.

6 Pending transfer of certain fixed assets to a proposed JV Company, depreciation is being charged. On completion of certain formalities, these assets (Gross Block Rs. 41.36 crore and WDV Rs. 12.72 crore as on 31.03.2014) will be transferred by way of sale to the proposed JV Company at a consideration higher than the Written Down Value.

7 In the absence of relevant notification by the Government of India specifying the period and applicable rate at which cess on turnover is payable under section 441A of the Companies Act, 1956, the same is not determinable and hence, not provided for.

8 Previous year''s comparative figures have been regrouped wherever necessary. Figures in brackets indicate deductions.


Mar 31, 2013

NOTE - 1

1. CONTINGENT LIABILITIES & COMMITMENTS

A. Contingent Liabilities

A.1 Contingent Liabilities amounting to Rs. 11,619.68 crore (2012: Rs. 9518.99 crore) are as under :

A.1.1 Rs. 225.70 crore (2012: Rs. 265.46 crore) being the demands raised by the Central Excise /Customs authorities including interest of Rs. 43.82 crore (2012 : Rs. 52.20 crore) .

A.1.2 Rs. 1,294.80 crore (2012: Rs. 1,244.75 crore) in respect of demands for Entry Tax from State Governments including interest of Rs. 44.94 crore (2012 : Rs. 63.69 crore) .

A.1.3 Rs. 4,631.93 crore (2012: Rs. 4,514.24 crore) in respect of VAT/Sales Tax demands including interest of Rs. 1,610.50 crore (2012 : Rs. 1,644.13 crore).

A.1.4 Rs. 2,962.25 crore (2012: Rs. 2,058.09 crore) in respect of Income Tax demands including interest of Rs. 268.22 crore (2012 : Rs. 302.24 crore).

A.1.5 Rs. 1,917.26 crore (2012: Rs. 890.51 crore) including Rs. 1,600.49 crore (2012: Rs. 597.53 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator. This includes interest of Rs. 37.81 crore (2012: Rs. 29.68 crore).

A.1.6 Rs. 587.74 crore (2012: Rs. 545.94 crore) in respect of other claims including interest of Rs. 98.73 crore (2012 : Rs. 70.91 crore).

The Company has not considered those disputed demands/claims as contingent liabilities, for which, the outflow of resources has been considered as remote.

A.2 Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

A.3 The Company has issued Corporate Guarantee in favor of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporacion Venezolana del Petroleo S. A. and the Mixed Company Venezuela (PeTroCarabobo S.A.), on behalf of Indoil Netherlands B.V. Netherlands (an associate company) to fulfill the associate company''s future obligations for payment of signature bonus/ equity contribution/ loan to the beneficiaries. The estimated amount of such obligation is Rs. 2,054.23 crore - uSD 378.38 million (2012 : Rs. 1,969.71 crore - USD 387.13 million).

A.4 The company has issued Corporate Guarantee on behalf of ''Indian Synthetic Rubber Limited, ISRL (Joint venture company) to the extent of obligations of later company under loans (principal and interest both) made to ISRL by Japan Bank for International Cooperation (JBIC)'' and ''Mizuho Corporate Bank (MHCB)''. The estimated amount of such obligation is Rs. 302.57 crore - uSD 55.73 million (2012: NIL ).

B. Commitments

B.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 14,648.43 crore (2012: Rs. 17,990.86 crore).

B.2 Other Commitments

The Company has an export obligation to the extent of Rs. 3,090.25 crore (2012: Rs. 3,187.06 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

NOTE - 2: EMPLOYEE BENEFITS

Disclosures in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is as under:

(A) PROVIDENT FUND

(i) The Company has three Provident Funds maintained by respective PF Trusts. All these three PF Trusts do not have any shortfall as on 31.03.2013.

(ii) During the year, Company has conducted Actuarial Valuation of all three PF Trusts. As per Actuarial Valuation, all three PF Trusts do not have any deficit as on 31st March 2013. Accordingly, other related disclosures in respect of Provident Fund have not been made.

(iii) During the year, the company has recognised Rs. 287.59 crore (2011-12 : Rs. 261.08 crore) as Employer''s contribution to Provident Fund in the Statment of Profit and Loss (included in Contribution to Provident and Other Funds in Note - 24).

(B) PENSION SCHEME

During the year, the company has recognised Rs. 229.04 crore (2011-12 : Rs. 342.01 crore) towards Defined Contributory Employees Pension Scheme in the Statment of Profit and Loss (included in Contribution to Provident and Other Funds in Note - 24).

NOTE - 3: RELATED PARTY DISCLOSURES

As required by AS -18 "Related party Disclosures", are given below :

1. Relationship

A) Details of Joint Venture Entities/Associates

1) IOT Infrastructure & Energy Services Ltd.

2) Lubrizol India Pvt. Ltd

3) Petronet VK Ltd

4) IndianOil Petronas Pvt. Ltd

5) Avi-Oil India Pvt.Ltd

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facility Private Ltd.

15) Indian Synthetic Rubber Ltd.

16) Indian Oil Ruchi Biofuels LLP

17) NPCIL- IndianOil Nuclear Energy Corporation Ltd.

18) GSPL India Transco Ltd.

19) GSPL India Gasnet Ltd.

20) Petroleum India International - AOP (An Associate)

B) Whole-time Directors

1) Shri R.S.Butola

2) Dr. R.K.Malhotra

3) Shri Sudhir Bhalla

4) Shri A.M.K.Sinha

5) Shri P.K.Goyal

6) Shri R.K.Ghosh

7) Shri Makarand Nene

8) Shri V.S. Okhde

NOTE - 4: LEASES

Disclosure as required under Accounting Standard - 19 on "Leases":

FINANCE LEASES:

Company has entered into Lease Agreement with Indian Railways in respect of BTPN Tank Wagons for a minimum period of 20 years. The lease rentals from the date of formation of rake are @ 16% for the first 10 years and thereafter at the nominal rate of 1% of the cost.

OPERATING LEASES:

a) As Lessees

Lease Rentals charged to the profit and loss account and maximum obligations on long term non-cancellable operating leases payable as per the rentals stated in the respective lease agreements:

b) As Lessors

The lease rentals recognized as income in these statements as per the rentals stated in the respective agreements:

NOTE - 5: INTEREST IN JOINT VENTURES

In compliance of AS-27, " Financial Reporting of Interest in Joint Ventures", the required information is as under:

1) Disclosure of interest in the following categories of Joint Ventures:

(a) Jointly Controlled Operations:-

The Corporation has entered into production sharing agreements for oil and gas exploration blocks with the Govt. of India and other body corporates. These joint ventures are:

(b) Jointly Controlled Assets:-

IOC''s share in jointly controlled/ owned assets have been shown in Note 10 "Tangible Assets"

(c) Jointly Controlled Entities:-

NOTE - 6: EXPOSURE TO FINANCIAL AND COMMODITY TRADING DERIVATIVES

Financial and Derivative Instruments:

1. All derivative contracts entered into by the Company are for hedging its foreign currency, interest rate and commodity exposures relating to underlying transactions and firm commitments and not for any speculative or trading purposes.

2. The Derivative contracts entered into by the Company and outstanding as on 31st March 2013 are as below:

(a) For Hedging Currency Risks

Nominal amounts of derivative contracts entered into by the Company and outstanding as on 31st March 2013 is given below:

NOTE - 7: OTHER DISCLOSURES

1 Purchase of crude oil from Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalization of agreements with respective parties. Adjustments, if any, will be made on finalization of agreements.

2 Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

3 Crude oil imported against canalising commission on behalf of CPCL, a Subsidiary Company, hitherto accounted for as Purchase/ Sales, is now accounted on agency basis. In order to make previous figures comparative, such transactions relating to the year ended 31.03.2012 Rs. 36030.91 crore have been recast accordingly.

4 In view of the Govt. of India clarification dated 9th August 2012 on para 46A of AS-11, exchange differences arising on long-term foreign currency monetary items hitherto accounted for as Finance Cost to the extent that they are regarded as an adjustment to interest costs under para 4(e) of AS-16, has now been considered as foreign exchange differences. This change has resulted in decrease in finance cost by Rs. 71.16 crore and increase in tangible assets and depreciation and profit for the year by Rs. 71.16 crore, Rs. 9.15 crore and Rs. 62.01 crore respectively.

5 In the absence of relevant notification by the Government of India specifying the period and applicable rate at which cess on turnover is payable under section 441A of the Companies Act, 1956, the same is not determinable and hence, not provided for.

6 Previous year''s comparative figures have been regrouped wherever necessary. Figures in brackets indicate deductions.


Mar 31, 2012

A. Above Includes Shares allotted as fully paid without payment being received in Cash:

a) Pursuant to the Petroleum Companies Amalgamation Order, 1964 : 3,76,49,700 Shares of Rs. 10 each.

b) Pursuant to Gujarat Refinery Project Undertaking (Transfer), (Amendment) Order, 1965 : 1,00,00,000 Shares of Rs. 10 each.

c) 2,43,62,106 no. of equity shares of Rs. 10 each issued in June 2007 as fully paid up to be shareholers of erstwhile IBP Co. Ltd as per the Scheme of amalgamation.

d) 2,16,01,935 no. of equity shares of Rs. 10 each issued in May 2009 as fully paid up to be shareholers of erstwhile BRPL as per the Scheme of amalgamation.

e) Aggregate shares allotted as fully paid up Bonus Shares by Capitalisation of General Reserve / Securities Premium: 2,28,02,71,241 Shares of Rs. 10 each, out of these 1,21,39,76,241 no. of equity shares of Rs. 10 each were issued in November 2009.

B. Terms/Rights attached to equity shares

The company has only one class of equity shares having par value of Rs. 10 each and is entitled to one vote per share. The dividend proposed by Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

A. 10,700 Bonds of lace value o1 Rs. 10,00,000:- each, allotted on 10th September 2008, are redeemable at par on 10th September 2018. The bonds carry a coupon rate of 11.00 % p.a. payable annually on 15th September. These are secured by way of registered mortgage over the immovable properties of the Company i.e. Flat no. 3/62 Nanik Niwas of Shyam Co-op. Housing Society Ltd. situated at Bhulabhai Desai Road at Mumbai, together with 5 shares of the said society arid immovable properties of the company at Panipat Refinery situated at Panipat in the state of Haryana ranking pari passu with Bond Series V, VI, & IX holders.

B. 14,150 Bonds of face value of Rs. 10.00.000 - each, allotted on 21st December 2011, are redeemable at par on 21st December 2016 with put/call option after 18 months from the date of allottment The bonds carry a coupon rate of 9.28 % p.a. annually on 21st June each year. These are secured by way of registered mortgage over the immovable properties of the Company at Gujarat Refinery in the state of Gujarat ranking pari passu with Bond Series VII B holders.

C. 16,000 Bonds of face value of Rs. 10.00.000, - each, allotted on nth December 2008. are redeemable at par on 11th December 2016. The bonds carry a coupon rate of 10.70 % p.a. payable annually on 30tn June each year. These are secured by way of registered mortgage over the immovable properties of the Company i.e. Flat no. 3/62 Nanik Niwas of Shyam Co-op. Housing Society Ltd. situated at Bhulabhai Desai Road at Mumbai, together with 5 shares of the said society and immovable properties of the company at Panipat Refinery situated at Panipat in the state of Haryana ranking pari passu with Bonds Series V, VI & VIII B holders.

D. 5,000 Bonds of face value of Rs. 10,00,000/- each, allotted on 15th September 2005, are redeemable at par on 15th September 2015. The Bonds carry a coupon rate of 7.40% p.a. payable annually on 15th September. These are secured by way of registered mortgage over the immovable properties of the Company at Gujarat Refinery situated at Vadodara in the state of Gujarat ranking pari passu with Bond Series XI holders.

E. 20,000 Bonds of face value of Rs. 10,00,000/- each, allotted on 24th July 2009, are redeemable at par on 24th July 2012. The bonds carry a coupon rate of 7.00 % p.a. payable annually on 30th June each year. These are secured by way of registered mortgage over the immovable properties of the Company i.e. Flat no. 34, Makani Manor Co-op. Housing Society Ltd. situated at Peddar Road, at Mumbai, together with 10 shares of the said society and immovable properties of the company at Mathura Refinery situated at Mathura in the state of Uttar Pradesh.

F. 10,000 Bonds of face value of Rs. 10,00,000/- each allotted on 10th June, 2005, are redeemable at par on 10th June 2012. As per the terms of the issue, the bondholders holding 2319 bonds exercised put option available on 10th June 2010. The Principal amount alongwith interest due was paid to the Bondholders on due date. The remaining 7681 bonds are outstanding & will be redeemed on the maturity date i.e. on 10th June 2012. The Bonds carry a coupon rate of 7.15% p.a. payable annually on 30th June. These are secured by way of registered mortgage over Company's premises No. 1343 situated at MIG Adarsh Nagar Co-op. Housing Society Ltd. at Worli, Mumbai together with 5 shares issued by MIG Adarsh Nagar Co-op. Housing Society Ltd. These Bonds are also secured by way of charge on immovable properties of the company at Panipat Refinery in the state of Haryana ranking pari passu with Bond Series V, VI, VIII B & IX holders.

G. 4,300 Bonds of face value of Rs. 10,00,000/- each, allotted on 10th September 2008, were redeemable at par on 10th September 2011. The bonds carry a coupon rate of 11.15 % p.a. payable annually on 15th September. These were secured by way of registered mortgage over the immovable properties of the Company i.e. Flat no. 3/62 Nanik Niwas of Shyam Co-op. Housing Society Ltd. situated at Bhulabhai Desai Road at Mumbai, together with 5 shares of the said society and immovable properties of the company at Panipat Refinery situated at Panipat in the state of Haryana, ranking pari passu with Bond Series V, VI, VIIIB & IX holders. The principal amount alongwith interest due was paid to the bondholders on 10th September 2011.

H. 158 Bonds of face value of Rs. 2,60,00,000/- each allotted on 18th July, 2001 are redeemable in 13 equal installments from the end of the 3rd year upto the end of 15th year from the date of allotment. Accordingly, 8th installment (STRPP H) was paid in July 2011. The Bonds carry a coupon rate of 10.25% p.a. payable annually on 30th September. These are secured by way of registered mortgage over the Company's premises no. 301 situated in Bandra Anita Premises Co-op. Housing Society Ltd. at Bandra, Mumbai together with 5 shares of Bandra Anita Premises Co-op. Housing Society Ltd. These bonds are also secured by way of charge on immovable properties at Panipat Refinery in the state of Haryana ranking pari passu with Bond Series VI, VIII B & IX holders.

I. Security Details for OIDB Loans:

a) First Charge on the facilities of Motor Spirit Quality Improvement Project at Barauni Refinery in Bihar.

b) First charge on facilities for improvement of Diesel quality and Distillate yield (Hydrocracker) and expanded capacity for Haldia Refinery (from 6 MMTPA to 7.5 MMTPA) which includes Once through Hydrocracking Unit (OHCU), Hydrogen Unit, Sulphur Recovery Unit, revamped Crude Distillation Unit and related utilities & off-site facilities pertaining to Haldia Refinery in the state of West Bengal.

c) Second pari-passu charge on facilities for Naphtha Cracker with associated units viz. hydrogenation, butadiene extraction, benzene extraction, etc & downstream polymer units like swing unit (LLDPE / HDPE), dedicated HDPE unit, Polypropylene unit and MEG unit and units like CDU/VDU, OHCU, DCU, DHDT relating to expansion of Panipat Refinery from 12MMTPA to 15 MMTPA in the state of Haryana.

d) Second pari-passu charge on facilities for Residue upgradation & MS-HSD Quality improvement including units like VGO-HDT, ATF-Merox FCC-Merox, LPG-Merox, ISOM, Coker, DHDT, HGU (PDS) and SRU in respect of Gujarat Refinery in the state of Gujarat.

e) First Charge on the facilities of Motor Spirit Quality Improvement Project which includes installation of light Naptha is amortisation along with Benzene Saturation Unit and other Units like Feed Preparation Unit, Reaction Section etc. and Diesel Hydro Teatment project at Bongaigaon Refinery, Dhaligaon, Assam.

A. i) Net Block of Land includes an amount of Rs. 13.32 crore (2011: Rs. 13.04 crore) earmarked for disposal.

ii) Buildings include Rs. 0.01 crore (2011: Rs. 0.01 crore) towards value of 1610 (2011:1995) Shares in Co-operative Housing Societies towards membership of such societies for purchase of flats.

iii) Net Block for Buildings includes an amount of Rs. 5.92 crore (2011: Rs. 7.15 crore) earmarked for disposal, on which no further depreciation is charged.

B. The cost of assets are net of VAT CREDIT/CENVAT, wherever applicable.

C. Depreciation and amortisation for the year includes Rs. (326.05) crore (2011 : Rs. 20.26 crore) pertaining to prior year and Rs. 17.24 crore (2011 : Rs. 23.10 crore) relating to construction period expenses taken to Note 12.1.

D. Railways have claimed transfer of ownership in respect of certain assets provided by the Company at railway premises which has not been accepted by the company and continue to be part of fixed assets of the Company, WDV of such assets is Rs. 57.27 crore (2011: Rs. 58.70 crore).

E. Considering the Government policies and modalities of compensating the oil marketing companies towards under-recoveries, future cash flows are worked out based on desired margins for deciding on impairment of related Cash Generating Units. In view of the assumption being technical, peculiar to the industry and policy matter, the auditors have relied on the same.

A. Right of way for laying pipelines is a perpetual right of use of land but does not bestow upon the company, the ownership of land and hence, treated as intangible asset. However, no amortisation is provided on the same, being perpetual in nature.

B. (a) Amortisation for the year includes Rs. 0.66 crore (2011 : Rs. Nil crore ) pertaining to prior year.

(b) Amortisation for the year includes Rs. 0.06 crore (2011 : Rs. 0.23 crore) relating to construction period expenses taken to Note 12.1.

A. Subsidies on sales of SKO (PDS) and LPG (Domestic) in India amounting to Rs. 1,770.98 crore (2011: Rs. 1,731.56 crore) and subsidies on sales of SKO & LPG to customers in Bhutan amounting to Rs. 49.30 crore (2011: Rs. 35.74 crore) have been reckoned as per the schemes notified by Government of India.

B1. .The company has accounted for Budgetary Support of Rs. 45,485.84 crore towards under-recovery on sale of HSD, SKO (PDS) and LPG (Domestic) for 2011 - 12 [2010-11: Rs. 22,604.84 crore towards under-recovery on sale of MS (upto 25th June 2010), HSD, SKO (PDS) and LPG (Domestic)] in the Profit and Loss Account as Revenue Grants.

B2. In line with the scheme formulated by Petroleum Planning and Analysis Cell (PPAC), the Company has received during the year, discounts of Rs. 26,239.43 crore (2011: Rs. 15,879.34 crore) on Crude Oil/Products purchased from ONGC/GAIUOIL and Rs. 3,379.80 crore (2011: Rs. 824.39 crore) from CPCL, through sale of HSD to IOC, out of their purchase of crude oil from ONGC, towards part of the under recovery suffered on sale of HSD, SKO (PDS) and LPG (Domestic) [2011: under recovery suffered on sale of MS (upto 25th June 2010),HSD, SKO (PDS) and LPG (Domestic)] and the same has been adjusted against the purchase cost. In addition an amount of Rs. 341.50 crore (2011: NIL) received from OIL has been accounted as other Operating Revenue.

Product wise sales has been shown as per Note - 40.

A. Contribution to Provident & Other Funds for 2010-11 includes an amount of Rs. 687 crore as one time net contribution towards defined contributory scheme (employee pension scheme) based on acturial valuation.

B. Disclosure in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is given in Note - 29.

A. In respect of Oil and Gas Exploration activities, Revenue Expenditure amounting to f 180.23 crore (2011 : Rs. 333.44 crore) and Capital Expenditure amounting to Rs. (51.41) crore (2011 : Rs. 19.80 crore) of Oil and Gas Exploration Projects have been incorporated in these accounts on the basis of unaudited statements provided by respective operators of Production Sharing Contracts to the Company.

B. Expenses Includes:

I) Expenditure on Public Relations and Publicity amounting to Rs. 34.81 crore (2011: Rs. 39,40 crore) which is inclusive of Rs. 11.94 crore (2011: Rs. 12.34 crore) on account of Staff and Establishment and 122.87 crore (2011: Rs. 27.06 crore) for payment to others. The ratio of annual expenditure on Public Relations and Publicity to the annual turnover (inclusive of excise duty) is 0.00008:1 (2011: 0.00012:1).

ii) Entertainment Expenses Rs. 2.39 crore (2011: Rs. 2.34 crore).

1. Contingent Liabilities & Commitments

A. Contingent Liabilities

A.1 Contingent Liabilities amounting to Rs. 8568.91 crore (2011: Rs. 7820.86 crore) are as under:

A.1.1 Rs. 219.95 crore (2011: Rs. 238.02 crore) being the demands raised by the Central Excise/Customs authorities.

A.1.2 Rs. 4,656.00 crore (2011: Rs. 5,045.52 crore) in respect of Sales Tax demands.

A.1.3 Rs. 884.28 crore (2011: Rs. 736.79 crore) including Rs. 584.92 crore (2011: Rs. 503.98 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator.

A.1.4 Rs. 2,058.02 crore (2011: Rs. 1,167.75 crore) in respect of Income Tax demands.

A.1.5 Rs. 750.66 crore (2011: Rs. 632.78 crore) in respect of other claims.

A.1.6 The Company has not considered those disputed demands/ claims as contingent liabilities, for which, the outflow of resources has been considered as remote.

A.2 Interest/Penalty, if any, on some of the above claims is unascertainable.

A.3 Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

A.4 The Company has issued Corporate Guarantee in favor of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporacion Venezolana del Petroleo S.A. and the Mixed Company Venezuela (PeTroCarabobo S.A.), on behalf of Indoil Netherlands B.V. Netherlands (an associate company) to fulfill the associate company's future obligations for payment of signature bonus/equity contribution/ loan to the beneficiaries. The estimated amount of such obligation is Rs. 1,969.71 crore - USD 38.71 crore (2011 : Rs. 1,812.95 crore - USD 40.65 crore)

A.5 The Company has issued corporate guarantee in favor of Standard Chartered Bank, on behalf of Lanka IOC PLC, a subsidiary of the company, for raising a loan of Rs. NIL crore (2011 : Rs. 133.80 crore - USD 3.00 crore).

B. Commitments

B.1 Capital Commitments -

Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 17,546.97 crore (2011: Rs. 21,737.72 crore).

B.2 Other Commitments

The Company has an export obligation to the extent of Rs. 3,187.06 crore (2011: Rs. 3,677.09 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

2. Purchase of crude oil from ONGC, Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalization of agreements with respective parties. Adjustments, if any, will be made on finalization of agreements.

3. Title Deeds for Land and residential apartments as also lease and other agreements in respect of certain lands/buildings, the book value of which is Rs. 95.12 crore (2011: Rs. 89.56 crore), are pending for execution or renewal.

4. Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

5. A Pursuant to orders pronounced by the Honorable Supreme Court / various High Courts in the matter of Entry Tax on Crude Oil, HSD & Lubricants and as advised, the Company has not provided for Entry Tax amounting to Rs. 894.89 crore in respect of Panipat Refinery, Mundra-Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending Plant (2011: Rs. 5,106.43 crore in respect of Mathura & Panipat Refineries, Mundra-Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending Plant) including Rs. 207.17 crore for the year in respect of Panipat Refinery, Mundra-Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending Plant (2011: Rs. 1,363.24 crore in respect of Mathura & Panipat Refineries, Mundra-Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending Plant).

B Consequent to the recent order pronounced by Hon'ble High Court of Allahabad in December, 2011, upholding the Constitutional Validity of retrospective application of Entry Tax Law in the State of UR the Company had filed a Special Leave Petition before Hon'ble Supreme Court of India. Although the Apex Court has granted the stay order, the Company has been directed by the Court to deposit 50% of arrears towards the Entry Tax and full tax prospectively vide its order of January, 2012 in respect of crude imported in the State of UR Accordingly, pending final disposal of the matter, an amount of Rs. 8,156.56 crore (including interest of Rs. 2,165.02 crore) has been provided in the books during 2011-12. Out of this, an amount of Rs. 7,707.82 crore comprising of entry Tax and interest thereon upto December, 2011 has been shown as Exceptional Item.

6. In the absence of relevant notification by the Government of India specifying the period and applicable rate at which cess on turnover is payable under section 441A of the Companies Act, 1956, the same is not determinable and hence, not provided for.

Disclosures in compliance with Accounting Standard-15 (Revised 2005) on

"Employee Benefits" is as under:

(A) PROVIDENT FUND

(i) The Company had five Provident Funds maintained by respective PF Trusts as on 31.03.2011. During the year 2011 -12 two PF Trusts have been merged with existing trusts and as on 31.03.2012, the Company has three Provident Funds maintained by respective PF Trusts. All these three PF Trusts do not have any shortfall as on 31.03.2012.

(ii) During the year, Company has conducted Actuarial Valuation of all three PF Trusts. As per Actuarial Valuation, all three PF Trusts do not have any deficit as on 319 March 2012. Accordingly, other related disclosures in respect of Provident Fund have not been made.

(iii) During the year, the company has recognised Rs. 261.08 crore (2010- 11 : Rs. 337.12 crore) as Employer's contribution to Provident Fund in the Profit and Loss Account (included in Contribution to Provident and Other Funds in Note - 24).

(B) PENSION SCHEME

During the year, the company has recognised Rs. 342.01 crore (2010- 11: Rs. 349.86 crore) towards Defined Contributory Employees Pension Scheme in the Profit and Loss Account (included in Contribution to Provident and Other Funds in Note - 24).

NOTE - 1: RELATED PARTY DISCLOSURES

As required by AS -18 "Related Party Disclosures", are given below :

1. RELATIONSHIP

A) Details of Joint Venture Companies/ Entities

1) IOT Infrastructure Energy Services Ltd.

2) Lubrizol India Pvt. Ltd

3) Petronet VK Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt. Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet Cl Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facilty Pvt. Limted

15) Indian Synthetic Rubber Limited

16) IndianOil Ruchi Biofuels LLP

17) NPCIL- IndianOil Nuclear Energy Corporation Limited

B) Whole-time Directors

1) Shri R.S.Butola

2) Shri B.M.Bansal (upto 31.01.2011)

3) Shri S.V.Narasimhan (upto 30.04.2011)

4) Shri V.C.Agrawal (upto 31.07.2010)

5) Shri G.C.Daga (upto 30.09.2011)

6) Shri B.N.Bankapur (upto 31.08.2011)

7) Shri Anand Kumar (upto 30.06.2010)

8) Shri K.K.Jha (upto 31.01.2012)

9) Shri R.K.Malhotra

10) Shri Sudhir Bhalla

11) Shri A.M.K.Sinha

12) Shri RK.Goyal

13) Shri R.K.Ghosh

14) Shri Makarand Nene

15) Shri V.S. Okhade

Notes:

1) This does not include the impact of provision made on actuarial valuation of retirement benefit Schemes and provision made during the period towards Post Retirement Benefits as the same are not separately ascertainable for individual directors.

2) In addition, whole - time Directors are also allowed the use of Corporation's car for private purposes upto 12,000 kms per annum on a payment of Rs. 520/- per menses for car less than 16 hp or Rs. 780/- per mensem for car of above 16 hp as specified in the terms of appointment.

3) No disclosure is required for Subsidiary Companies which can be treated as state controlled enterprises '(i.e. ownership by Central/State Govt, directly or indirectly, of more than 50% of voting rights shall be treated as state controlled enterprise)

4) In case of Joint Venture Companies constituted/acquired during the period, transactions w.e.f. date of constitution/acquisition is disclosed.

5) In case of Joint Venture Companies which have been closed/divested during the period, transactions upto the date of closure/disinvestment only are disclosed.

Financial and Derivative Instruments:

1. All derivative contracts entered into by the Company are for hedging its foreign currency exposures and commodity trading exposures relating to underlying transactions and firm commitments and not for any speculative or trading purposes.

A. The Financial Statements for the year ended 319 March, 2011 were prepared as per the then applicable Schedule VI to the Companies Act, 1956. Consequent to the Notification of Revised Schedule VI under the Companies Act, 1956, the Financial Statements for the year ended 31st March, 2012 have been prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified by the Company to conform to current year's classification.

B. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of Financial Statements.

C. Previous year's comparative figures have been regrouped wherever necessary. Figures in brackets indicate deductions.


Mar 31, 2011

For the Year Ended 31st March, 2011

1. Contingent Liabilities:

a) Contingent Liabilities amounting to Rs. 7,820.86 crore (2010: Rs. 6965.88 crore) are as under :

i) Rs. 238.02 crore (2010: Rs. 288.02 crore) being the demands raised by the Central Excise /Customs authorities.

ii) Rs. 5,045.52 crore (2010: Rs. 4983.51 crore) in respect of Sales Tax demands.

iii) Rs. 736.79 crore (2010: Rs. 630.41 crore) including Rs. 503.98 crore (2010: Rs. 446.57 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator.

iv) Rs. 1,167.75 crore (2010: Rs. 668.94 crore) in respect of Income Tax demands.

v) Rs. 632.78 crore (2010: Rs. 395.00 crore) in respect of other claims.

The Company has not considered those disputed demands/claims as contingent liabilities, the outflow of resources for which would be remote.

b) Interest/Penalty, if any, on some of the above claims is unascertainable.

c) Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

d) The Company has issued Corporate Guarantee in favor of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporacion Venezolana del Petroleo S. A. and the Mixed Company Venezuela (PeTroCarabobo S.A.), on behalf of Indoil Netherlands B.V. Netherlands (an associate company) to fulfill the associate company's future obligations for payment of signature bonus/equity contribution/ loan to the beneficiaries. The estimated amount of such obligation is Rs. 1,812.95 crore-USD 406.49 million (2010 : Rs. 1,903.76 crore- USD 424 million)

e) The Company has issued corporate guarantee in favor of Standard Chartered Bank, on behalf of Lanka IOC PLC, subsidiary of the company, for raising a loan of Rs. 133.80 crore- USD 30 million (2010 : Rs. 224.50 crore - USD 50 million).

2. Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 21,737.72 crore (2010: Rs. 16,620.93 crore).

3. Purchase of crude oil from ONGC, Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalization of agreements with respective parties. Adjustments, if any, will be made on finalization of agreements.

4. Title Deeds for Land and residential apartments as also lease and other agreements in respect of certain lands/buildings, the book value of which is Rs. 139.08 crore (2010: Rs. 217.56 crore), are pending for execution or renewal.

5. Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

6. Pursuant to orders pronounced by the Honorable Supreme Court / various High Courts in the matter of Entry Tax on Crude Oil, HSD & Lubricants and as advised, the Company has not provided for Entry Tax amounting to Rs. 5,106.43 crore (2010: Rs. 3,743.19 crore) including Rs. 1,363.24 crore for the year (2010: Rs. 1,084.42 crore) in respect of Mathura & Panipat Refineries, Mundra- Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending Plant. Pending final disposal of the matter by the Honorable Supreme Court / various High Courts, Entry Tax already paid / deposited / provided for at various units has not been considered for write back.

7. Subsidies on sales of SKO (PDS) and LPG (Domestic) in India amounting to Rs. 1,640.92 crore (2010: Rs. 1,595.82 crore) and subsidies on sales of SKO and LPG to customers in Bhutan amounting to Rs. 35.74 crore (2010: Rs. 27.27 crore) have been reckoned as per the schemes notified by Government of India.

8. The company has accounted for Budgetary Support of Rs. 22,604.84 crore (2010: Rs. 15,171.84 crore) towards under-recovery on sale of MS (upto 25th June 2010), HSD, SKO (PDS) and LPG (Domestic) for 2010-11 in the Profit and Loss Account as Revenue Grants. Out of this Rs. 10,942.44 crore (2010: Rs. 8,071.66 crore) has been accounted for based on the advice from Government of India, pending receipt of compensation.

9. In line with the scheme formulated by Petroleum Planning and Analysis Cell (PPAC), the Company has received during the year, discounts of Rs. 15,879.34 crore (2010: Rs. 6,960.91 crore) on Crude Oil/Products purchased from ONGC/GAIL/OIL and Rs. 824.39 crore (2010: Rs. 587.38 crore) from CPCL, through sale of HSD to IOC, out of their purchase of crude oil from ONGC, towards part of the under recovery suffered on sale of MS (upto 25th June 2010), HSD, SKO (PDS) and LPG (Domestic) and the same has been adjusted against the purchase cost.

10.The Company has an export obligation to the extent of Rs. 3,677.09 crore (2010: Rs. 1,743.84 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

11.In the absence of relevant notification by the Government of India specifying the period and applicable rate at which cess on turnover is payable under section 441A of the Companies Act, 1956, the same is not determinable and hence, not provided for.

12.The accounting policy regarding expenditure during the construction period of projects on assets not owned by the company has been revised as per the opinion of the Expert Advisory Committee of ICAI received during the year which states that such expenditure should be charged to revenue at the time of incurrence instead of charging the same in the year of capitalization of the projects. This change has resulted in decrease in Profit by Rs.57.06 crore for the year (including Rs. 42.24 crore charged to prior period expenses).

13.Company had a superannuation pension scheme primarily funded by employees. In line with DPE guidel ines, the existing scheme has been modified to be defined contributory scheme with effect from 1st January' 2007. Therefore, based on actuarial valuation, the Company has contributed Rs.1067.81 crore, being the deficit assessed in the funds of the existing Scheme as on 31st December 2006, to meet fund's obligations. A sum of Rs.59 crore being interest portion up to the date of contribution has also been contributed in the modified scheme. X 439.81 crore provided for in 2009-10 towards superannuation benefits under existing scheme have been reversed during the year resulting into one time net impact (before tax) of Rs. 687 crore on the Profit & Loss Account for the current year.

14.Disclosure in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is given in Annexure-1.

15.In compliance with Accounting Standard-17 on "Segment Reporting", the required information is given in Annexure-2 to this schedule.

16.In compliance of Accounting Standard - 18 on "Related Party Disclosures", the required information is given in Annexure-3 to this schedule.

17.Disclosure as required under Accounting Standard - 19 on "Leases":

18. In compliance of Accounting Standard – 27 on "Financial Reporting of Interest in Joint Ventures" the required information is given in Annexure-4 to this schedule.

19. Considering the Government polices and modalities of compensating the oil marketing companies towards under-recoveries, future cash flows have been worked out based on desired margins for deciding on impairment of related Cash Generating Units. In view of the assumption being technical, peculiar to the industry and policy matter, the auditors have relied on the same.

20. In compliance of amended clause 32 of the Listing Agreement with the Stock Exchanges, the required information is given in Annexure-5 to this schedule.

21. Exposures to Financial and Commodity Trading Derivative Instruments outstanding as on 31st March, 2011 is given in Annexure-6 to this schedule. In addition, Whole-time Directors are also allowed the use of Company's car for private purposes upto 12,000 KMs per annum on a payment of Rs. 520 per mensem for car of less than 16 hp or Rs. 780 per mensem for car of above 16 hp as specified in the terms of appointment.

22. Duties (Net) shown under the Expenditure in Profit and Loss Account includes an amount of Rs. 349.94 crore (2010 : Rs. 43.03 Crore) on account of difference of Excise Duty between opening and closing stock of finished goods.

23. In respect of Oil and Gas Exploration activities, Revenue Expenditure amounting to Rs. 333.44 crore (2010 : Rs. 139.11 crore) and Capital Expenditure amounting to Rs. 19.80 crore (2010 : Rs. 42.16 crore) of Oil and Gas Exploration Projects have been incorporated in these accounts on the basis of unaudited statements provided by respective operators of Production Sharing Contracts to the Company.

24. Capital Expenditure amounting to Rs. 195.41 crore (2010 : Rs. 328.28 crore) relating to ongoing Oil & Gas Exploration activities is appearing as Capital Work in Progress in accounts, which may have to be charged as expense in case any of the blocks is decided as Dry.

25. Research and Development Expenses of Rs. 77.06 crore (2010 : Rs. 80.92 crore) have been capitalized and Rs. 131.54 crore (2010 : Rs.162.42 crore) have been accounted for in Profit and Loss Account during the year. Detailed break up of total expenditure has been given in Annexure - 7.

26. Pending finalization of third party claims arising out of Fire incident on 29th October 2009 at Jaipur terminal, no provision has been made in the books (being unascertainable at this stage) except for X 0.25 crore (2010 : Rs. 51.89 crore) provisionally paid /provided by the Company and charged to P&L account.

27. Provision for income tax for the current year has been made in terms of section 115 JB (MAT) of the Income Tax Act, 1961. Tax credit has been accounted as per provisions of section 115 JAA.

28. The Profit and Loss Account includes :

a) Expenditure on Public Relations and Publicity amounting to Rs. 39.40 crore (2010: Rs. 31.44 crore) which is inclusive of X12.34 crore (2010: X10.06 crore) on account of Staff and Establishment and Rs. 27.06 crore (2010: Rs. 21.38 crore) for payment to others. The ratio of annual expenditure on Public Relations and Publicity to the annual turnover (inclusive of excise duty) is 0.00012:1 (2010: 0.00012:1).

b) Entertainment Expenses Rs. 2.34 crore (2010:Rs. 2.23 crore).

29. Previous year's comparative figures have been regrouped and recast to the extent practicable, wherever necessary. Figures in brackets indicate deductions.

(A) PROVIDENT FUND

(i) The Company has five Provident Funds maintained by respective PF Trusts. All these five PF Trusts do not have any shortfall as on 31.03.2010. However, due to payment of higher interest @ 9.5% as against 8.5%. for the year 2010-11, two PF trusts have reported net deficit of Rs. 1.03 crore and the same has been contributed and charged to profit & loss account.

(ii) During the year, Company has conducted Actuarial Valuation of all five PF Trusts. As per Actuarial Valuation, one of the Trust has a net deficit of Rs. 3.28 crore as on 31st March 2011 and the same has been provided for in the P&L Account. The other four PF Trusts do not have any deficit as on 31st March 2011. Accordingly, other related disclosures in respect of Provident Fund have not been made.

(iii) During the year, the company has recognised Rs. 337.12 crore (2009-10 : Rs. 221.89 crore) as Employer's contribution to Provident Fund in the Profit and Loss Account (included in Contribution to Provident and Other Funds in Schedule 'O').

(B) PENSION SCHEME

During the year, the company has recognised Rs. 349.86 crore (2009-10 : Rs. 494.95 crore) towards Defined Contributory Employees Pension Scheme in the Profit and Loss Account (included in Contribution to Provident and Other Funds in Schedule 'O').

1. RELATIONSHIP

A) DETAILS OF JOINT VENTURE COMPANIES/ENTITIES

1) IOT Infrastructure & Energy Services Ltd.

2) Lubrizol India Pvt. Ltd.

3) Petronet VK Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt.Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facility Pvt. Ltd.

15) Indian Synthetic Rubber Limited

16) Indian Oil Ruchi Biofuels LLP

B) WHOLE-TIME DIRECTORS

1) Shri R.S. Butola

2) Shri S.Behuria (upto 28.02.2010)

3) Shri B.M.Bansal

4) Shri S.V.Narasimhan

5) Shri V.C.Agrawal

6) Shri G.C.Daga

7) Shri B.N.Bankapur

8) Shri Anand Kumar

9) Shri P. K.Chakraborti (upto 31.08.2009)

10) Shri K.K. Jha

11) Dr. R.K. Malhotra

12) Shri Sudhir Bhalla

13) Shri A.M.K.Sinha


Mar 31, 2010

1) Contingent Liabilities:

a) Contingent Liabilities amounting to Rs. 6965.88 crore (2009: Rs. 8882.13 crore) are as under:

i) Rs. 288.02 crore (2009: Rs. 1198.86 crore) being the demands raised by the Central Excise /Customs authorities.

ii) Rs. 4983.51 crore (2009: Rs. 5555.39 crore) in respect of Sales Tax demands.

iii) Rs. 630.41 crore (2009: Rs. 636.28 crore) including Rs. 446.57 crore (2009: Rs.466.60 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrators.

iv) Rs. 668.94 crore (2009: Rs. 954.03 crore) in respect of Income Tax demands.

v) Rs. 395.00 crore (2009: Rs. 537.57 crore) in respect of other claims.

The Company has not considered those disputed demands/claims as contingent liabilities, the outflow of resources for which would be remote.

b) Interest/Penalty, if any, on some of the above claims is unascertainable.

c) Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

d) The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela, The Corporacion Venezolana del Petroleo S. A. and the Mixed Company Venezuela, on behalf of Indoil Netherlands B.V. Netherlands (an associate company) to fulfill the associate companys future obligations for payment of signature bonus/equity contribution/ loan to the beneficiaries. The estimated amount of such obligation is Rs. 1903.76 crore - USD 424 million (2009: Nil).

e) The Company has issued corporate guarantee in favor of ICICI bank, on behalf of Lanka IOC PLC, subsidiary of the company, for raising a loan of Rs. 224.50 crore - USD 50 million (2009 : Nil).

2. Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. 16620.93 crore (2009: Rs. 17434.92 crore).

3. Purchase of crude oil from ONGC, Oil India Limited and Panna Mukta Tapti JV and some other oilfields has been accounted for provisionally, pending finalisation of agreements with respective parties. Adjustments, if any, will be made on finalisation of agreements.

4. Title Deeds for Land and residential apartments as also lease and other agreements in respect of certain lands/buildings, the book value of which is Rs. 217.56 crore (2009: Rs. 173.49 crore), are pending for execution or renewal.

5. Transactions with other Oil Marketing Companies are jointly reconciled on an ongoing basis.

6. Bond Redemption Reserve:

(a) Bond Redemption Reserve aggregating to of Rs. 269.10 crore has been written back (2009: Rs. 31.60 crore) in respect of bonds redeemed during the year.

(b) No additional Bonds Redemption Reserve has been created during the year in respect of Long Term Redeemable Rupee Bonds and Foreign Currency Bonds, issued during the year as the company already has adequate reserve.

7. Pursuant to orders pronounced by the Honourable Supreme Court / various High Courts in the matter of Entry Tax on Crude Oil, HSD & Lubricants, and as advised, the Company has not provided for Entry Tax amounting to Rs. 3743.19 crore (2009: Rs. 2658.78 crore) including Rs. 1084.42 crore for the year (2009: Rs. 1332.96 crore) in respect of Mathura & Panipat Refineries, Mundra-Panipat & Salaya Mathura Pipelines and Asaouti Lube Blending plant. Pending final disposal of the matter by the Honourable Supreme Court / various High Courts, Entry Tax already paid / deposited / provided for at various units has not been considered for write back.

8. Subsidies on sales of SKO (PDS) and LPG (Domestic) in India amounting to Rs. 1595.82 crore (2009: Rs. 1555.28 crore) and subsidies on sales of SKO & LPG to customers in Bhutan amounting to Rs. 27.27 crore (2009: Rs. 33.41 crore) have been reckoned as per the schemes notified by Government of India.

9. The company has accounted for Budgetary Support of Rs. 15171.84 crore towards under-recovery on sale of SKO (PDS) and LPG (Domestic) for the full year 2009-10 in the Profit and Loss Account as Revenue Grants. Out of this Rs. 8071.66 crore has been accounted for based on the advice from Government of India, pending receipt of compensation. Corresponding compensation towards under-recoveries on sale of MS, HSD, SKO (PDS) and LPG (Domestic) for 2008-09 amounting to Rs. 40383.01 crore was by way of OMC GOI Special Oil Bonds.

10. In line with the scheme formulated by Petroleum Planning and Analysis Cell (PPAC), the Company has received during the year, discounts of Rs. 6960.91 crore (2009: Rs. 16756.55 crore) on Crude Oil/Products purchased from ONGC/GAIL/OIL and Rs. 587.38 crore (2009: Rs. 1306.56 crore) from CPCL, through sale of HSD to IOC, out of their purchase of crude oil from ONGC, towards part of the under recovery suffered on sale of MS/HSD and the same has been adjusted against the purchase cost.

11. The Company has an export obligation to the extent of Rs. 1743.84 crore (2009: Rs. 2882.87 crore) on account of concessional rate of customs duty availed under EPCG license scheme on import of capital goods.

12. a) Pending finalsation of Long Term Settlement with workmen, with effect from 1st January, 2007, the liability towards revision of emoluments continues to be provided on estimated basis.

b) Based on DPE guidelines dated 26"1 November08, 2nd April09 and 8th July09,the company has made a provision of Rs. 834.30 crore towards Post Retirement Benefits of employees during the year.

13. In absence of relevant notification by the Government of India specifying the period and applicable rate at which cess on turnover is payable under section 441A of the Companies Act, 1956, the same is not determinable and hence, not provided for.

14. Disclosure in compliance with Accounting Standard-15 (Revised 2005) on "Employee Benefits" is given in Annexure-1.

15. In compliance with Accounting Standard-17 on "Segment Reporting", the reguired information is given in Annexure-2 to this schedule.

16. In compliance of Accounting Standard - 18 on "Related Party Disclosures", the required information is given in Annexure-3 to this schedule.

17. In compliance of Accounting Standard - 27 on "Financial Reporting of Interest in Joint Ventures" the required information is given in Annexure- 4 to this schedule.

18. Considering the Government polices and modalities of compensating the oil marketing companies towards under-recoveries, future cash flows have been worked out based on desired margins for deciding on impairment of related Cash Generating Units. In view of the assumption being technical, peculiar to the industry and policy matter, the auditors have relied on the same.

19. In compliance of amended clause 32 of the Listing Agreement with the Stock Exchanges, the required information is given in Annexure-5 to this schedule.

20. Exposures to Financial and Commodity Trading Derivative Instruments outstanding as on 31st March, 2010 is given in Annexure-6 to this schedule.

* Includes arrear of Pay Revision for the period 01.01.07 to 31.03.09. This does not include the impact of provision made on actuarial valuation of retirement benefit schemes and provision made during the year towards Post Retirement Benefits as the same is not separately ascertainable for individual directors.

In addition, whole-time Directors are also allowed the use of Companys car for private purposes upto 12,000 KMs per annum on a payment of Rs. 520 per mensem for car of less than 16 hp or Rs. 780 per mensem for car of above 16 hp as specified in the terms of appointment.

21. Duties (Net) shown under the Expenditure in Profit and Loss Account includes an amount of Rs. 43.03 crore (2009 : Rs. 84.91 Crore) on account of difference of Excise Duty between opening and closing stock of finished goods.

22. In respect of Oil and Gas Exploration activities, Revenue Expenditure amounting to Rs. 139.11 crore (2009 : Rs. 172.39 crore) and Capital Expenditure amounting to Rs. 42.16 crore (2009 : Rs. 37.45 crore) of Oil and Gas Exploration Projects has been incorporated in these accounts on the basis of unaudited statements provided by respective operators of Production Sharing Contracts to the Company.

23. Capital Expenditure amounting to Rs. 328.28 crore (2009 : Rs. 286.12 crore) relating to ongoing Oil & Gas Exploration activities is appearing as Capital Work in Progress in accounts, which may have to be charged as expense in case the block/s is decided as Dry.

24. There was a fire incident on 29th October09 at Jaipur Terminal. The impact of all known losses for fixed assets, finished products & stores as well as compensation for third party claims amounting to Rs. 292.05 crore have been accounted for during the year against which an insurance claim of Rs. 179.61 crore towards loss of petroleum products has been treated as income as per the claim provisionally accepted by the insurance company. Out of said insurance claim, an amount of Rs. 50 crore has been received by the company during the year.

Pending finalization of third party claims, no provision has been made in the accounts (being unascertainable at this stage) except for Rs. 51.89 crore provisionally paid /provided by the company and charged to the Profit and Loss Account.

25. Research and Development Expenses of Rs. 80.92 crore (2009: Rs. 71.98 crore) has been capitalized and Rs. 162.42 crore (Rs. 117.50 crore) has been accounted for in Profit and Loss Account during the year. Detailed break up of total expenditure has been given in Annexure - 7.

26. The Profit and Loss Account includes:

a) Expenditure on Public Relations and Publicity amounting to Rs. 31.44 crore (2009: Rs. 27.24 crore) which is inclusive of Rs. 10.06 crore (2009: Rs. 8.43 crore) on account of Staff and Establishment and Rs. 21.38 crore (2009: Rs. 18.81 crore) for payment to others. The ratio of annual expenditure on Public Relations and Publicity to the annual turnover (inclusive of excise duty) is 0.00012:1 (2009: 0.00010:1).

b) Entertainment Expenses Rs.2.23 crore (2009: Rs.1.98 crore).

33. Previous years comparative figures have been regrouped and recast to the extent practicable, wherever necessary. Figures in brackets indicate deductions.

As required by AS-18, "Related Party Disclosures", are given below:

1. Relationships:

A) Details of Joint Venture Companies

1) I0T Infrastructure Energy Services Ltd.

2) Lubrizol India Pvt. Ltd.

3) Petronet V.K. Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt. Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

B) Whole-time Directors

1) Shri S. Behuria

2) Shri B.M. Bansal

3) Shri S.V. Narasimhan

4) Shri V.C. Agrawal

5) Shri G.C. Daga

6) Shri B.N. Bankapur

7) Shri Anand Kumar

8) Shri PK. Chakraborti

9) Shri K.K. Jha

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