Description
ONGC Videsh Limited Annual Report 2011-12
etc. Your Company also wish to place on record
their deep sense of appreciation for the credible
services by the employees of your Company. Your
Company recognizes that the achievements of
your Company have been possible with support
from the parent company, Oil and Natural Gas
Corporation Limited.
We rea?rm our commitment to excellence in the
coming year with a determination to sustain our
success and momentum.
With Best Compliments,
(Sudhir Vasudeva)
(Chairman)
Address of the Chairman at the 47
th
Annual General Meeting scheduled on
17
th
August 2012
Dear Shareholders,
It gives me great pleasure to welcome you to the
47
th
Annual General Meeting of ONGC Videsh Ltd.
Before I speak about the performance of the year
2011–12 and the business plans, I would like to
outline the global scenario which prevailed during
the year, with reference to countries where ONGC
Videsh operates:
Global Economic Environment:
Worldwide, 2011 has been another excellent year for
conventional exploration, with reserves additions
of almost 12 billion barrels (bbl) of oil and over 82
tcf of gas. In 2011, the demand for total petroleum
products in the Asia–Paci?c region grew by an
estimated 3.1%. Asia is expected to continue to
be the principal driver of global oil demand. The
demand has prompted increased investments in the
exploration and production (E&P) sector, however,
political risk is seen as posing a considerably greater
threat to international E&P business in the recent
past. This is especially true for emerging markets,
where generic political risks i.e. risks of political
violence, FDI protectionism, threats associated with
geopolitical tensions and governmental instability,
are main investment constraints.
Performance:
Your Company has completed another successful
year i.e., 2011–12 despite geo–political challenges.
The major performance highlights of the year are
as under:
• Your Company’s consolidated production of
Oil plus Oil–Equivalent Gas (O+OEG) was 8.753
MMT during FY’12 as compared to 9.448 MMT
during FY’11. The production during the year
was adversely a?ected due to geo–political
situation (force majeure) in Syria, Sudan and
South Sudan. Excluding Syria, Sudan and
South Sudan, production during FY’12 was
Corporate Governance:
Your Company believes that good corporate
governance goes beyond compliance of the
provisions of various laws and
therefore strives to inculcate the
practice of transparency in conduct of
all across its business practices. Your
Company has complied with the DPE
Guidelines on Corporate Governance
and a separate section on Corporate
Governance Report has been included
in its Annual Report.
Perspective Plan:
As a Company, ONGC Videsh and
its employees have always sought
to put their best and this approach
has helped to achieve milestones
year after year. As an attempt to
maintain ONGC’s relevance in India’s
hydrocarbon sector, ONGC as a group
has drawn a Perspective Plan 2030
to double its present production to
around 130 MMTOE/yr by FY 2030,
which would require production
growth @4–5% per annum to ONGC.
ONGC Videsh’s share of production
contribution is targeted to 20 MMTOE
by FY’ 2018 and 60 MMTOE by FY’
2030 i.e. 46% of group production.
The target has thrown a challenging
task to the Management. However, all
e?orts are being made to achieve the
above targets by ONGC Videsh Team.
Government Support:
To achieve energy security, the Govt. of India is
encouraging investment plan of your Company
and facilitates all possible diplomatic supports in
overseas acquisitions.
Acknowledgements:
On behalf of the Board of Directors, I would
like to acknowledge with deep appreciation the
valuable guidance and support extended by the
Government of India, especially the Ministry of
Petroleum & Natural Gas, Ministry of Finance,
Ministry of External A?airs, Indian Embassies / High
Commissions abroad and the Reserve Bank of India
almost at the same level as that of FY’11. If the
operations in these projects had been normal,
your Company’s crude oil production would
have been higher by 0.334 MMT during FY’12.
• Your Company’s share of proved reserves as on
1
st
April 2012 stood at 193.381 MMTOE (O+OEG),
which is the second largest holding of proved
oil and gas reserves by any Indian Company,
next only to parent ONGC.
• Your Company’s consolidated gross revenue
was up by 21%, from `186,711 million during FY’11
to `226,374 million during FY’12.
• Your Company’s consolidated net pro?t was
marginally up by 1.1%, from `26,905 million
for FY’11 to `27,212 million for FY’12 despite
two extraordinary items, ?rst, provisioning
of `19,534 million for impairment in Imperial
Energy, Russia and second, levy of Windfall tax
amounting to `8,087 million for San Cristobal
Project, Venezuela by the host Government.
• Your Company achieved an overall rating of
“Excellent” in actual performance as compared
to MOU parameters for the year 2010–11.
• Your Company’s consolidated net worth
increased to `199,411 million as on 31
st
March,
2012 as compared to `145,530 million as on
31
st
March, 2011.
• Your Company’s actual production during
XI Plan period was 44.649 MMTOE against
projected production of 43.568 MMTOE.
• Your Company has been conferred with the
prestigious “SCOPE Award for Excellence and
Outstanding Contribution to the Public Sector
Management Institutional III (other Pro?t
making PSE Category – Non Ratna) for 2009–10.
Conferment of Mini–Ratna Status:
Your Company was accorded with Mini–Ratna
Category–I status by MoP&NG during the year 2011–
12. With appointment of three new independent
Directors w.e.f. 5
th
June 2012, the powers granted
on the conferment of Mini–Ratna status have been
operationalised.
CHAIRMAN’S MESSAGE
4 5
Boards of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06
Consolidated Performance at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08
Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Management Discussion and Analysis Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Corporate Governance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Comments of C&AG on the Stand – alone Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Secretarial Compliance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Auditors’ Report – ONGC Videsh Stand–alone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Balance Sheet, Pro?t & Loss Account and Schedules including
Accounting Policies & Notes to the Accounts – ONGC Videsh Stand–alone . . . . . . . . . . . 86
Cash Flow Statement– ONGC Videsh Stand–alone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Statement Pursuant to Section 212 of the Companies Act, 1956 . . . . . . . . . . . . . . . . . . . . 132
Auditors’ Report – ONGC Videsh Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Balance Sheet, Pro?t & Loss Account and Schedules including
Accounting Policies & Notes to the Accounts – ONGC Videsh Consolidated . . . . . . . . . 140
Cash Flow Statement– ONGC Videsh Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
Details of the Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
CONTENTS
6 7
BOARD OF DIRECTORS
8 9
CONSOLIDATED PERFORMANCE AT A GLANCE
(` in Million, unless otherwise stated)
2010–11 2009–10 2008–09 2007–08 2006–07 2005–06 2004–05 2003–04 2002–03
PHYSICAL
Crude oil (Including condensate) – MMT 6.756 6.513 6.556 6.84 5.804 4.584 3.714 3.345 0.183
Gas (BCM) 2.692 2.357 2.220 1.962 2.148 1.755 1.349 0.523 0.070
FINANCIAL
Income fromOperations (Turnover) 186,832 153,828 184,235 168,657 117,947 80,780 59,848 34,788 2,319
Statutory Levies 56,947 49,387 68,857 60,374 51,446 39,070 27,781 16,289 761
Operating expenses 35,027 26,186 22,157 20,070 18,107 14,534 9,709 3,821 406
Pro?t before Interest Depreciation &
Tax (PBIDT)
94,858 78,254 93,221 88,213 48,394 27,176 22,358 14,678 1,152
Depreciation, Depletion & Amortisation 42,683 36,513 30,620 36,650 21,335 11,204 7,670 6,134 231
Operating Income (PBIT) 52,175 41,741 62,601 51,563 27,059 15,972 14,688 8,544 921
Exchange loss / (Gain) (815) –2,651 1,904 3,243 –2,527 –1,005 264 913 164
Interest Payment 3,531 4,370 7,289 7,373 318 40 13 64 30
Hedging Cost 42 (19) (154) 217 – – – – –
Pro?t Before Tax 49,418 40,041 53,562 40,730 29,268 16,937 14,411 7,567 727
Corporate Tax 22,048 18,889 25,032 16,759 12,635 8,234 6,797 3,283 137
Net Pro?t 27,369 21,152 28,530 23,971 16,633 8,703 7,614 4,284 590
Less: Share of Pro?t/loss – Minority
Interest
464 256 463 – – –309 – – –
GROUP PROFIT AFTER TAX (PAT) 26,905 20,896 28,067 23,971 16,633 9,012 7,614 4,284 590
Dividend – – – – – – 1,050 – –
Tax on Dividend – – – – – – 147 – –
Share Capital 10,000 10,000 10,000 10,000 10,000 3,000 3,000 3,000 3,000
Net Worth 145,530 116,449 115,156 63,059 43,736 21,977 12,227 8,720 5,022
Borrowings 205,907 206,983 206,790 113,738 132,347 159,242 116,610 87,581 70,534
Working Capital 52,938 30,676 33,339 29,592 29,438 74,399 42,371 23,364 11,372
Capital Employed 295,547 269,047 264,819 153,556 159,451 140,105 81,084 63,645 52,853
Internal Resources Generation 57,578 49,726 67,996 36,733 41,774 21,158 6,275 4,887 835
Plan Expenditure 56,502 49,919 161,049 45,293 71,519 63,306 43,101 23,422 49,683
Expenditure on Employees 2,209 1,992 1,573 628 666 602 346 322 71
Number of employees 233 231 196 190 110 90 85 63 51
FINANCIAL PERFORMANCE RATIOS
PBIDT to Turnover (%) 50.77 50.87 50.60 52.30 41.03 33.64 37.36 42.19 49.68
PBDT to Turnover (%) 49.30 49.77 45.69 45.88 42.90 34.84 36.89 39.38 41.31
Pro?t Margin (%) 14.40 13.58 15.23 14.21 14.10 11.16 12.72 12.31 25.44
ROCE (PBIDT to Capital employed) (%) 32.10 29.09 35.20 57.45 30.35 19.40 27.57 23.06 2.18
Net Pro?t to Equity (%) 18.49 17.94 24.37 38.01 38.03 41.01 62.27 49.13 11.75
BALANCE SHEET RATIOS
Current Ratio 2.01:1 1.68:1 1.69:1 2.23:1 2.56:1 7.27:1 5.30:1 3.63:1 2.99:1
Debt Equity Ratio 1.41:1 1.78:1 1.80:1 1.80:1 3.03:1 7.25:1 9.54:1 10.04:1 14.05:1
Debtors Turnover Ratio (Days) 78 70 49 33 35 18 46 13 268
PER SHARE DATA
Earnings per share (`) 269 209 281 240 224 300 254 143 20
Dividend(%) – – – – – – 35 – –
Book Value per share (`) 1,455 1,164 1,152 631 437 733 408 291 167
CONSOLIDATED PERFORMANCE AT A GLANCE
(` in Million, unless otherwise stated)
2011–12 2010–11
PHYSICAL
Crude oil (Including condensate) (MMT) 6.214 6.756
Gas (BCM) 2.539 2.692
FINANCIAL
Income formOperations (Net) 223,473 184,111
Other Non–operating Income 1,990 2,111
Total Revenue 225,463 186,223
Statutory Levies 65,672 56,947
Operating Expenses 63,223 34,948
Exchange Loss/(Gain) 1,474 (815)
Pro?t Before Interest, Depreciation & Tax (PBIDT) 95,094 95,143
Depreciation, Depletion, Amortisation and Impairment 41,870 42,683
Pro?t Before Interest & Tax (PBIT) 53,224 52,461
Financial Costs
Interest
Payments 2,970 3,531
Receipts 911 488
Net 2,058 3,043
Pro?t before Tax and Exceptional Items 51,166 49,418
Exceptional item
Pro?t before Tax 51,166 49,418
Corporate Tax 23,627 22,048
Pro?t after Tax 27,538 27,369
Pro?t relating to minority 327 464
Group Pro?t after Tax 27,212 26,905
Share Capital 10,000 10,000
Net Worth 199,411 145,530
Long–termBorrowings 195,161 204,554
Working Capital 45,614 49,047
Capital Employed 293,562 294,194
Internal Resources Generation 89,307 57,578
Plan Expenditure 79,995 56,502
Expenditure on Employees 2,187 2,209
Number of employees 246 233
FINANCIAL PERFORMANCE RATIOS
PBIDT to Turnover (%) 42.55 51.68
PBDT to Turnover (%) 41.63 50.02
Pro?t Margin (%)– including exceptional items 7.74 14.61
ROCE (PBIDT to Capital Employed) (%) 32.39 32.34
Net Pro?t to Equity (%)– including exceptional items 13.65 18.49
BALANCE SHEET RATIOS
Current Ratio 1.63 1.92
Debt Equity Ratio 0.98 1.41
Debtors Turnover Ratio (Days) 48 79
PER SHARE DATA (Face Value ` 100)
Earning Per Share (`) 272.12 269.05
Dividend (%) – –
Book Value Per Share (`) 1,994.11 1,455.30
In viewof the Noti?cation no. S.O 447(E) dated 28.02.2011, issued by Ministry of Corporate A?airs, the Balance Sheet of the Company
is mandatorily required to be prepared in Revised Schedule VI w.e.f 1st April 2011 onwards. Accordingly, the ?gures of FY 2011–12 and
FY 2010–11 are given as per the requirement of Revised Schedule VI and earlier years ?gures (including FY 2010–11 for ready reference)
are as per Old Schedule VI.
10 11
STATEMENT OF CONSOLIDATED INCOME & RETAINED EARNINGS
(` in Million)
2010–11 2009–10 2008–09 2007–08 2006–07 2005–06 2004–05 2003–04 2002–03
REVENUES
Sales
Crude oil 173,500 140,444 169,088 155,430 102,426 64,415 47,696 30,881 1,690
Gas 8,280 7,608 7,307 6,780 8,004 6,668 4,552 1,469 99
Condensate 2,233 1,706 2,109 2,081 1,841 1,466 833 97 –
Construction Contract Revenue – – – – – 2,174 5,430 – –
Transportation and other Services 434 2,048 2,938 3,122 3,269 3,199 – – –
Overlifted Quantity of Crude 581 – – – – – – – –
Less: VAT (916) –816 –800 –685 –1,063 –927 –410 –235 –9
Sub Total 184,111 150,989 180,642 166,728 114,477 76,995 58,101 32,212 1,780
Other Income
Interest Income 357 104 1,570 1,442 2273 3127 1418 814 366
Lease Income 253 317 377 352 435 271 – – –
Other Income 1,990 1,302 801 333 365 373 332 1720 165
Increase/(Decrease) in Stock 121 1,116 845 (198) 397 14 (3) 42 8
TOTAL INCOME FROM OPERATIONS 186,832 153,828 184,235 168,657 117,947 80,780 59,848 34,788 2,319
COST & EXPENSES
Operating, Selling & General
(a) Production, Transportation & Other
operating expenses
32,213 23,949 18,891 13,554 12,531 7256 5060 3824 404
(b) Royalties 55,156 48,693 66,640 60,350 51,130 39061 27781 16289 761
(c) Other Taxes 1,791 694 2,217 24 316 9 – – –
(d) Construction Contract Expenditure – – – – – 2699 4253 – –
(e) Provisions and write o?s 3,448 2,819 3,163 5,595 1,409 394 13 – –
(f) Adjustments for overlift / (underlift) (351) – – – – – – – –
(g) Prior Period adjustments (Net) (283) –582 103 921 4,167 4185 383 (3) 2
Sub Total (a to g) 91,974 75,574 91,014 80,444 69,553 53,604 37,490 20,110 1,167
Depletion, Depreciation & Amortisation
(a) Depletion 23,664 16,941 13,735 11,777 12,590 4615 2952 2424 140
(b) Depreciation 3,462 4,230 3,159 9,894 2,678 1170 883 919 41
(c) Amortisation 15,180 15,100 12,999 13,654 5,275 4272 3769 1119 –
(d) Others 376 244 727 1,325 792 1147 66 1672 50
Sub Total (a to d) 42,683 36,513 30,620 36,650 21,335 11,204 7,670 6,134 231
TOTAL COST AND EXPENSES 134,657 112,087 121,634 117,094 90,888 64,808 45,160 26,244 1,398
OPERATING INCOME BEFORE FINAN-
CIAL COST & TAX
52,175 41,741 62,601 51,563 27,059 15,972 14,688 8,544 921
Financial Costs
Exchange Loss / (Gain) (815) (2,651) 1904 3,243 (2,527) (1005) 264 913 164
Interest Payments 3,531 4,370 7289 7,373 318 40 13 64 30
Hedging Cost 42 (19) (154) 217 – – – – –
Sub Total 2,758 1,700 9,039 10,833 (2,209) (965) 277 977 194
PROFIT BEFORE TAX 49,418 40,041 53,562 40,730 29,268 16,937 14,411 7,567 727
Corporate Tax (Net) 22,048 18,889 25,032 16,759 12,635 8234 6797 3283 137
Net Pro?t 27,369 21,152 28,530 23,971 16,633 8,703 7,614 4,284 590
Less: Share of Pro?t/Loss – Minority
Interest
464 256 463 – – (309) – – –
GROUP PROFIT AFTER TAX 26,905 20,896 28,067 23,971 16,633 9,012 7,614 4,284 590
Dividend – – – – – – 1050 – –
Tax on Dividend – – – – – – 147 – –
Retained Earnings for the Year 26,905 20,896 28,067 23,971 16,633 9,012 6,417 4,284 590
STATEMENT OF CONSOLIDATED INCOME & RETAINED EARNINGS
(` in Million)
2011–12 2010–11
REVENUES
Sales
Crude Oil 211,687 174,081
Natural Gas 9,924 8,280
Condensate 3,189 2,233
Sub– Total 224,800 184,594
Traded Products
Other Operating Revenue 1,240 434
Total Revenue fromOperations (Gross) 226,041 185,027
Less: VAT 2,568 916
Total Revenue fromOperations (Net) 223,473 184,111
Other Non–operating Income 1,990 2,111
Total Revenues 225,463 186,223
COST & EXPENSES
Operating, Selling & General
Statutory Levies
(a) Royalties 57,571 55,156
(b) Other Taxes 8,101 1,791
Sub–total (a to b) 65,672 56,947
Accretion / (Decretion) in stock (632) (121)
Production, Transportation, Selling and Distribution Expenditure 35,866 32,213
Provisions and Write–o?s 27,929 3,448
Adjustments for overlift / (underlift) (414) (283)
Adjustments relating to Prior Period (Net) (73) (351)
Pro?t Before Depreciation, Interest &Tax 97,115 94,370
Depreciation, Depletion, Amortisation and Impairment 41,870 42,683
Total Cost & Expenses 170,218 134,535
Operating Income Before Interest &Tax 55,245 51,688
Financial Costs
Exchange Loss / (Gain) 1,474 (815)
Interest
Payments 2,970 3,531
Receipts 911 488
Hedging Cost 547 42
Net 4,079 2,270
Pro?t before Tax and Extraordinary Items 51,166 49,418
Exceptional item
Pro?t before Tax 51,166 49,418
Corporate Tax ( Net) 23,627 22,048
Pro?t after Tax 27,538 27,369
Pro?t relating to minority 327 464
Group Pro?t after Tax 27,212 26,905
Pro?t & Loss Account Balance b/f 122,532 102,077
Adjustments due to change in share holding /other adjustment – –
Transfer to Capital Redemption Reserve – –
Dividend – –
Tax on Dividend – –
Transfer to general Reserve 1,876 2,142
Transfer to Debenture Redemption Reserve 4,319 4,308
Retained Earnings for the Year 143,549 122,532
In viewof the Noti?cation no. S.O 447(E) dated 28.02.2011, issued by Ministry of Corporate A?airs, the Balance Sheet of the Company
is mandatorily required to be prepared in Revised Schedule VI w.e.f 1st April 2011 onwards. Accordingly, the ?gures of FY 2011–12 and
FY 2010–11 are given as per the requirement of Revised Schedule VI and earlier years ?gures (including FY 2010–11 for ready reference)
are as per Old Schedule VI.
12 13
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(` in Million)
2011–12 2010–11
RESOURCES
A. Own
1. Net Worth
(a) Equity
i) Share Capital 10,000 10,000
ii) Reserves & Surplus 189,411 135,530
Sub–Total 199,411 145,530
(b) Less Miscellaneous Expenditure
Net Worth 199,411 145,530
B. Long–termBorrowings 195,161 204,554
C. Deferred Tax Liability (Net) 4,983 8,353
D. Minority Interest 1,003 682
TOTAL RESOURCES ( A+B+C+D ) 400,558 359,119
DISPOSITION OF RESOURCES
A. Non–current assets
1. Fixed Assets( Net)
i) Tangible assets 35,590 42,304
ii) Producing Properties 144,236 136,140
iii) Intangible assets 126 37
Total Block Capital 179,953 178,480
2. Goodwill on consolidation 75,045 86,998
3. Long–termLoans and Advances (Excluding Capital Advance) 917 281
4. Deposit with Bank Under Site Restoration Fund Scheme 2,927 107
5. Other non–current Assets (Excluding DRE) 17,348 2,655
6. Subtotal = (1+2+3+4+5) 276,190 268,522
7. Less Non–current Liabilities
a. Other Long TermLiabilities 82 –
b. Liability for Abandonment Cost 27,609 22,861
c. Long TermProvisions 551 513
Sub total (7) 28,242 23,374
Net Non Current Asset (A)=(6)–(7) 247,948 245,147
B. Net Working Capital
1. Current Assets
i) Inventories 5,733 4,699
ii) Trade Receivables 29,615 40,044
iii) Cash & Cash equivalents 51,528 36,998
iv) Short–termLoans & Advances 8,227 4,485
v) Others Current Assets (Excluding DRE) 22,497 16,261
Sub–Total 117,600 102,486
Less
2. Current Liabilities
i) Short–termborrowings 623 331
ii) Trade payables 25,782 19,728
iii) Other current liabilities 45,392 33,365
iv) Short–termprovisions 189 16
Sub–Total 71,986 53,440
Net Working Capital 45,614 49,047
C. Capital Employed 293,562 294,194
3. Capital Works in Progress (Including Capital Advance) 76,256 40,018
4. Exploratory/Development Wells in Progress 30,740 24,907
TOTAL DISPOSITION (A+B) 400,558 359,119
In viewof the Noti?cation no. S.O 447(E) dated 28.02.2011, issued by Ministry of Corporate A?airs, the Balance Sheet of the Company
is mandatorily required to be prepared in Revised Schedule VI w.e.f 1st April 2011 onwards. Accordingly, the ?gures of FY 2011–12 and
FY 2010–11 are given as per the requirement of Revised Schedule VI and earlier years ?gures (including FY 2010–11 for ready reference)
are as per Old Schedule VI.
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(` in Million)
2010–11 2009–10 2008–09 2007–08 2006–07 2005–06 2004–05 2003–04 2002–03
RESOURCES
A. Own
1. Net Worth
(a) Equity
i) Share Capital 10,000 10,000 10,000 10,000 10,000 3,000 3,000 3,000 3,000
ii) Reserves and Surplus 135,530 106,449 105,156 53,059 33,736 18,977 9,227 5,720 2,096
Sub Total 145,530 116,449 115,156 63,059 43,736 21,977 12,227 8,720 5,096
(b) Less: Intangible Assets – – – – – – – – 74
Net Worth 145,530 116,449 115,156 63,059 43,736 21,977 12,227 8,720 5,022
2. Minority Interest 682 (220) (45) – – 6708 – – –
3. Long TermLiability– Deferred Tax
Liability (Net)
8,353 6,884 8,369 8,211 9,759 6,635 4,253 1,734 1,822
Total Own Funds (1+2+3) 154,564 123,113 123,480 71,270 53,495 35,320 16,480 10,454 6,844
B. Outside
Loans
Oil Industry Development Board – – – – – 61 157 253 349
Oil and Natural Gas Corporation Ltd 172,786 162,723 153,065 112,649 130,941 157,618 115,469 84,849 67,313
Non Resource Deferred Credit 777 934 1,225 1,089 1,406 1,519 984 – –
Bank Loans/Overdraft/Short Term
Loans/Debentures/ Other Liabilities
8,944 9,026 – – – 44 – 2,479 2,872
Commercial Paper/ Non Convertible
Redeemable Bonds
23,400 34,300 52,500 – – – – – –
Total Outside Resources 205,907 206,983 206,790 113,738 132,347 159,242 116,610 87,581 70,534
TOTAL RESOURCES (A+B) 360,471 330,096 330,270 185,008 185,842 194,562 133,090 98,035 77,378
DISPOSITION RESOURCES
A. Block Capital
1. Fixed Assets 42,332 47,657 40,331 45,144 50,774 17,247 12,013 12,716 14,323
2. Producing Properties (Net of
depletion)
136,140 108,843 91,401 60,840 56,056 36,806 15,947 15,904 15,497
Less: Liability for abandonment cost 22,861 10,584 11,361 4,867 4,503 2,519 – – –
Net Producing property 113,279 98,259 80,040 55,973 51,553 34,287 15,947 15,904 15,497
3. Goodwill 86,998 92,455 111,109 22,847 27,686 14,172 10,753 11,661 11,661
Total Block Capital (1+2+3) 242,609 238,371 231,480 123,964 130,013 65,706 38,713 40,281 41,481
B. Working Capital
(a) Current Assets
i) Inventories 4,699 6,201 5,941 3,200 3,649 2,163 1,175 885 882
ii) Debtors (Net of Provision) 40,061 29,384 24,701 15,222 11,203 3,944 7,566 1,211 1,701
iii) Cash and Bank Balances 37,106 16,598 15,997 21,564 12,125 2,563 7,083 8,267 3,627
iv) Loans and Advances and others 23,672 23,729 34,853 13,669 21,306 77,599 36,402 21,901 10,869
Sub Total 105,538 75,912 81,492 53,655 48,283 86,269 52,226 32,264 17,079
Less:
(b) Current Liabilities and Provisions 52,600 45,236 48,153 24,063 18,845 11,870 9,855 8,900 5,707
Working Capital (a – b) 52,938 30,676 33,339 29,592 29,438 74,399 42,371 23,364 11,372
C. Capital Employed (A+B) 295,547 269,047 264,819 153,556 159,451 140,105 81,084 63,645 52,853
D. Capital Works in Progress 40,018 36,421 33,780 12,503 14,149 43,746 45,476 30,770 23,910
E. Exploratory/Development Wells In
Progress
24,907 24,628 31,671 18,949 12,242 10,711 6,530 3,620 615
TOTAL DISPOSITION (C TO E) 360,471 330,096 330,270 185,008 185,842 194,562 133,090 98,035 77,378
14 15
OPERATIONAL & FINANCIAL
HIGHLIGHTS
16 17
DIRECTORS’ REPORT
On behalf of the Board of Directors of your Company,
I take great pleasure in presenting before you the
47
th
Annual Report on the working of the Company
for the ?nancial year ended 31
st
March, 2012,
together with the Audited Financial Statements,
the Auditors’ Report and the Comments on the
Accounts by the Comptroller and Auditor General
of India.
1. PERFORMANCE HIGHLIGHTS
Your Company has completed another successful
year despite geo–political challenges. Signi?cant
performance highlights for the year are as below:
• Your Company’s consolidated production
of Oil plus Oil–Equivalent Gas (O+OEG) was
8.753 MMTOE during FY’12 as compared to
9.448 MMTOE during FY’11. The production
during the year was adversely a?ected due to
geo–political situation (force majeure) in Syria,
Sudan and South Sudan. Excluding Syria, Sudan
and South Sudan, production during FY’12 was
almost at the same level as that of FY’11. If the
operations in the assets had been normal, your
Company’s crude oil production would have
been higher by 0.334 MMT during FY’12.
• Your Company’s share of proved reserves as on
1
st
April 2012 stood at 193.381 MMTOE (O+OEG),
which is the second largest holding of proved oil
and gas reserves by any Indian Company next
to ONGC.
• Your Company’s consolidated gross revenue
was up by 21%, from `186,711 million during FY’11
to `226,374 million during FY’12.
Dear Members,
• Your Company’s consolidated net pro?t was
marginally up by 1.1%, from `26,905 million
for FY’11 to `27,212 million for FY’12 despite
two extraordinary items, ?rst, provisioning
of `19,534 million for impairment in Imperial
Energy, Russia and second, levy of Windfall tax
amounting to `8,087 million for San Cristobal
Project, Venezuela by the host Government.
• Your Company achieved an overall rating of
“Excellent” in actual performance as compared
to MOU parameters for the year 2010–11.
• Your Company’s consolidated net worth
increased to `199,411 million as on 31
st
March,
2012 as compared to `145,530 million as on 31
st
March, 2011.
• Your Company’s actual production during
XI Plan period was 44.649 MMTOE against
projected production of 43.568 MMTOE.
• Your Company has been conferred with the
Mini–Ratna Category–I status by MoP&NG on
19
th
July, 2011.
• Your Company has been conferred with the
prestigious “SCOPE Award for Excellence and
Outstanding Contribution to the Public Sector
Management Institutional III (other Pro?t
making PSE Category – Non Ratna) for 2009–10.
2. FINANCIAL RESULTS
a) Consolidated Accounts:
The Consolidated Accounts incorporate accounts of
subsidiaries viz., ONGC Nile Ganga BV–Consolidated,
ONGC Narmada Limited, ONGC Amazon Alaknanda
Limited–Consolidated, JarpenoLimited–Consolidated,
Carabobo One AB–Consolidated and Jointly
Controlled Entity i.e., ONGC Mittal Energy Limited–
Consolidated and form part of the Annual Report
and Accounts.
Historic co–operation contract being signed by Petro Vietnam Chairman Mr. Phung Dinh Thuc and OVL CEO & MD Mr. D K Sarraf in the
presence of Vietnamese President Mr. Truong Tan Sang and the Indian Prime Minister Dr. Manmohan Singh
Mr. Sudhir Vasudeva, CMD ONGC & Mr. D.K. Sarraf CEO & MD ONGC Videsh receiving SCOPE Award for the year 2009-10
from the Hon’ble Prime Minister of India, Dr. Manmohan Singh
South Sudan rig
18 19
Highlights:–
(` in Million)
Particulars 2011–12 2010–11
Total Income 226,374 186,711
Expenditure 175,208 137,293
Pro?t Before Tax 51,166 49,418
Provision for Tax (including Deferred Tax) 23,627 22,048
Share of Pro?t – Minority Interest 327 464
Pro?t After Tax 27,212 26,905
Paid–up Equity Share Capital 10,000 10,000
Net Worth 199,411 145,530
Earnings Per Share of `100 each (`) 272.12 269.05
b) Stand–alone Accounts:
(` in Million)
Particulars 2011–12 2010–11
Total Income 80,133 57,832
Expenditure 49,978 32,126
Pro?t Before Tax 30,155 25,706
Provision for Tax (including Deferred Tax) 11,394 4,281
Pro?t After Tax 18,761 21,425
Transfer to General Reserve 1,876 2,142
Transfer to Debenture Redemption Reserve 4,319 4,308
Paid–up Equity Share Capital 10,000 10,000
Net Worth 100,881 80,659
Earnings Per Share of `100 each (`) 187.61 214.25
c) Dividend:
No dividend has been proposed for the FY’12 so as to conserve resources for further growth.
d) Market Borrowings:
(i) Debentures:
During the FY’10, the Company had raised funds from the ?nancial markets by issuance of non–convertible
redeemable bonds guaranteed by the parent company ONGC as follows:
Sl No. Particulars
Amount
(` in Million)
Date of issue
01 8.40% 5 Year UnsecuredNon–ConvertibleRedeemableBonds
in the nature of Debentures– Series I
19,700 23
rd
December 2009
02 8.54% 10 Year Unsecured Non– Convertible Redeemable
Bonds in the nature of Debentures– Series II
3,700 6
th
January 2010
The above mentioned debentures were rated “AAA/Stable” and “LAAA” by CRISIL and ICRA respectively
which represents highest degree of safety and lowest credit risk. The above securities have been listed in
the National Stock Exchange of India Ltd. (NSE).
Debenture Redemption Reserve amounting to `3,948.64 million and `370.80 million has been created during
the year in respect of above Debentures Series I and Debentures Series II respectively. The aggregated
balance of Debenture Redemption Reserve as on 31
st
March, 2012 stood at `8,954.54 million and `826.73
million in respect of Debentures Series I and Debentures Series II respectively.
ii) Currency Swap Transactions:
During the year, your Company has entered into cross currency swap transactions with various banks
whereby it has swapped the principal and interest amounts payable towards the aforesaid Bonds issued in
domestic markets into USD liability so as to align the currency of its assets and liabilities as follows:
Underlying
Notional Principal
Amount (`/Million)
Notional Principal
Amount (USD/
Million)
Termination Date
8.40% 5–Year Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures– Series I 15,000.00 299.23 23
rd
December, 2014
8.54% 10–Year Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures– Series II 3,700.00 56.30 6
th
January, 2020
TOTAL 18,700.00 355.53
On the occasion of signing of MOU between ONGC and ONGC Videsh Limited, Mr. Sudhir Vasudeva, CMD, ONGC & Mr. D.K. Sarraf, CEO &
MD, ONGC Videsh along with Mr. S.P. Garg, Director Finance, ONGC Videsh
20 21
a) The above swap positions were outstanding on 31
st
March 2012 and have been revalued on that date
based on Mark–to–Market positions reported by counter–party banks. Mark–to–market loss amounting
to `498.56 Million has been charged to foreign exchange gain/loss in pro?t and loss account.
b) During the year, the Company had also entered into foreign exchange forward transactions for hedging
its underlying exposures which were settled during the year itself. The net gain on settlement of such
transactions amounting to `222.45 Million has been credited to foreign exchange gain/loss in pro?t and
loss account.
3. RESERVES
Details of remaining proved Oil and Gas reserves held by your Company, including that of the subsidiaries,
are placed at Para No. 47 of Notes to Consolidated Financial Statements. In brief, your Company’s remaining
reserves under di?erent categories are as under:
As on 31st March, 2012 As on 31st March, 2011
1P Reserves (Proved)
Oil (including Condensate) (In MMT) 98.303 104.564
Gas (In BCM) 95.078 98.344
Total 1P Reserves (In MTOE) 193.381 202.908
2P Reserves (Proved + Probable)
Oil (including Condensate) (In MMT) 250.455 256.478
Gas (In BCM) 142.246 145.037
Total 2P Reserves (In MTOE) 392.701 401.515
3P Reserves (Proved + Probable + Possible)
Oil (including Condensate) (In MMT) 264.186 270.457
Gas (In BCM) 161.756 164.547
Total 3P Reserves (In MTOE) 425.942 435.004
4. EXISTING PROJECTS
4.1 PRODUCING ASSETS
4.1.1 Block 06.1, Vietnam:
Block 06.1 is an o?shore Block located 370 km south–east of Vung
Tau on the southern Vietnamese coast with an area of 955 sq.km. The
exploration License for Block 06.1 was acquired by your Company in
1988. After subsequent assignments and transfers of PI between the
parties to Block 06.1 and Petro Vietnam, the present holdings of PIs
with e?ect from 17
th
October 2011 are ONGC Videsh 45%, TNK Vietnam
B.V. 35% (Operator) and Petro Vietnam 20%. Lan Tay ?eld in the Block
has been developed and the ?eld started commercial production in
January, 2003. Your Company’s share of production from the project
was 2.023 BCM of gas and 0.036 MMT of condensate during 2011–12
as compared to 2.249 BCM of gas and 0.038 MMT of condensate
during 2010–11. Lan Do ?eld in the Block is under development with
?rst gas expected in October 2012. Wells Lan Do–2P and Lan Do–1P
have been drilled and completed between 14
th
January, 2012 to 18
th
April, 2012. Presently, subsea construction works are in progress
and ?rst gas from Lan Do ?eld is expected in October 2012. Your
Company’s share of the development expenditure in the block was
about USD 342.78 million till 31
st
March, 2012.
4.1.2 Sakhalin–I, Russia:
Sakhalin–1 is a large oil and gas ?eld in Far East o?shore in Russia, spread over an area of approx. 1,146
sq.km. Your Company acquired stake in the ?eld in July, 2001. Your Company holds 20% PI in the ?eld with
Exxon holding 30% PI as Operator; Sodeco, a consortium of Japanese companies holding 30% and balance
20% PI held by Rosneft, the Russian National Oil Company (NOC). Your Company’s investment in the ?eld is
within the maximum net cash sink for investment approved at USD 1,556 million (excluding carry ?nance).
The project includes three o?shore ?elds: Chayvo, Odoptu, and Arkutun Dagi. The ?rst phase of Sakhalin–1
of Chayvo ?eld has been developed. Production started in October, 2005. Odoptu ?rst stage production
started in September, 2010. Development of Arkutun Dagi is in progress and ?rst oil is expected to be
produced in third quarter of 2014. During 2011–12, your Company’s share of production from the project
was 1.498 MMT of oil and 0.494 BCM during 2011–12 as compared to 1.474 MMT of oil and 0.415 BCM of gas
during 2010–11.
4.1.3 Greater Nile Oil Project (GNOP), Republic of Sudan and Greater Pioneer Operating Company
(GPOC), Republic of South Sudan:
Your Company holds 25% PI in the GNOP through its wholly owned subsidiary ONGC Nile Ganga BV (ONGBV)
which was acquired on 12
th
March, 2003. Other partners in this project are CNPC (40% PI), Petronas of
Malaysian (30% PI) and Sudapet of Sudan (5% PI). GNOP consisted of the upstream assets of on–land Block
1, 2 & 4 spread over 49,500 sq.km in the Muglad Basin, located about 700 km South–West of the capital city
of Khartoum in Sudan.
GNOP has downstream facility of 1504–Km 28”crude oil pipeline from the oil ?eld in Heglig to Port Sudan at
Red Sea. As per “Settlement Agreement” between the Government of Sudan (GOS) and Foreign Partners
(FP’s) concluded in December 2010, 70% of the ownership in the Sudan Crude Oil Transportation System
(SCOTS) got transferred to the GOS e?ective from 1
st
October 2006. Your Company’s PI in downstream
pipeline is 11.25% e?ective from 1
st
October 2006 after transfer of 55% of its ownership in the downstream
pipeline as against 75.36% ceded by CNPC and Petronas. The pipeline continues to be managed by GNOP.
The project is jointly operated by all partners through a joint operating company Greater Nile Petroleum
Operating Company (GNPOC), registered in Mauritius.
Upon secession of South Sudan from Republic of Sudan (ROS) e?ective from 9th July 2011, while majority
production and reserves are situated in Republic of South Sudan (RSS), with a few ?elds straddled the
boundaries of ROS and RSS, the major processing facilities and crude oil transportation system along with
export terminal are situated in ROS. Post secession, the GOS share of total production is not su?cient to
meet its local re?nery requirements. Since August 2011, the GOS has been asking to lift/purchase Foreign
Oil wells at Snezhnoye oil ?eld
Installation at Khabarovsk, Sakhalin
22 23
Partners’ (FPs) share of crude oil for the local re?nery feedstock requirements. During October, 2011, the
FPs sold 0.8 million barrels of oil to GOS. Further in respect of the directive from GOS to take FPs share of
oil to re?neries, about 3.3 million barrels of FPs’ crude oil have been taken by GOS for the local re?neries
during the period January to June, 2012. However, payment has not been received fully from GOS for
purchase of FPs’ oil for local re?nery requirements. Your Company’s share of estimated dues from GOS as
on 30th June 2012 was about USD 112 million.
Consequent upon the separation of RSS, share of Sudapet stands transferred to Nilepet, the National Oil
Company of Republic of South Sudan as per the Decree issued by the President of RSS on 8th November,
2011. Partners of Block 1, 2 & 4 along with Nilepet executed a Transition Agreement with GOSS on 13th
January 2012 for the continuation of rights of petroleum exploration and exploitation for contract area of
Block 1, 2 & 4 in RSS.
RSS being a land locked country, is dependent on ROS’s pipeline system for evacuation of crude oil for
export through Port Sudan and continued to utilise the existing pipeline system till December, 2011. Post–
secession, both governments had been engaged in the process of negotiations on various issues. Pending
settlement of unresolved geopolitical and commercial issues between the two countries, GOSS enforced
shut down of all oil ?eld operations e?ective from 21st January 2012. The production from Blocks 1, 2 & 4 in
RSS has been shutdown as per decision from GOSS. However, GNPOC continued to produce 52,000 barrels
of oil per day till 31st March, 2012 from areas in ROS.
A new Joint Operating Company (JOC), Greater Pioneer Operating Company (GPOC) has been registered
in Mauritius for petroleum operations of Block 1, 2 & 4 in RSS. Your Company holds 25% equity share in
GPOC through its wholly owned subsidiary ONGC Nile Ganga B.V. and the project is jointly operated by all
partners
On 10th April, 2012, crude oil pumping from the Central Processing Facility (CPF) in Heglig to Marine
Terminal, Port Sudan had to be stopped due to bombing and shelling in the vicinity of the base camp area.
The CPF Heglig was subsequently reported to be in the occupation of RSS forces till 20th April 2012. Due
to the intrusion, there have been damages in the oil facilities in Heglig. The repair work has started and the
production restored partially from 1st May, 2012; average production during June, 2012 was about 44,000
barrels of oil per day.
Your Company’s share in oil production from GNPOC, ROS and RSS was 1.324 MMT during 2011–12 as
compared to 1.801 MMT during 2010–11. If the operations had been normal, your Company’s share of
production in the asset would be higher by 0.219 MMT during 2011–12.
4.1.4 San Cristobal Project, Venezuela:
Your Company signed an agreement with
Corporación Venezolana del Petróleo S.A.
(CVP), a subsidiary of PDVSA on 8
th
April,
2008 and acquired 40% PI in San Cristobal
Project, Venezuela. San Cristobal project
covers an area of 160.18 Sq. Km in the Zuata
Subdivision of proliferous Orinoco Heavy Oil
belt in Venezuela. The project is operated
jointly by your Company and the PDVSA.
The JV Company has been named “Petrolera
IndoVenezolana SA” (PIVSA). CVP, a subsidiary
of PDVSA holds 60% equity in JVC and Your
Company holds 40% equity through ONGC
Nile Ganga (San Cristobal) BV, a wholly owned
subsidiary of ONGC Nile Ganga B.V. Though
your Company received its dividend of USD 56.224 million for 2008, dividend for 2009 and 2010 amounting
to USD 72.34 million and USD 83.2 million respectively remained unpaid due to cash ?ow di?culties being
faced by PDVSA/CVP, which is being followed–up. In April 2011, new special contribution (windfall tax) on
extraordinary/exorbitant prices had been imposed in Venezuela at sliding scales from 20% to 95% depending
upon Venezuelan oil basket prices, Your Company’s share of windfall tax levied by the host Government
during the year was USD 168.89 million, having downward impact on pro?t of your Company .
During 2011–12, your Company’s share of oil production was 0.894 MMT as compared to 0.757 MMT during
2010–11 and current production is approx. 40000 bopd. Your Company’s share of investment was about
USD 191 million till 31
st
March, 2012 in the project.
4.1.5 Imperial Energy, Russia :
Your Company acquired Imperial Energy Corporation Plc., an independent upstream oil Exploration and
Production Company having its main activities in the Tomsk region of Western Siberia, Russia on 13
th
January,
2009 at a total cost of USD 2.1 billion. Imperial’s interests currently comprise of nine blocks in the Tomsk
region i.e. Block 69, 70–1, 70–2, 70–3, 77, 80, 85–1, 85–2 and 86 with a total licensed area of approximately
13,500 square kilometres with 14 licenses. The Production licenses were granted to the Company during
2005 to 2010 and are valid till 2027 to 2031. As on 1
st
April, 2012, ONGC Videsh Ltd.’s share of 2P reserves in
the project was 110.122 MTOE (O+OEG).
The post acquisition development activities of Imperial Energy included drilling of 72 development wells
and construction of facilities increasing the production level to above 15,000 bopd in April 2012. On the
exploratory front, a total of 28 exploratory/ appraisal wells have been drilled from 2009 to April 2012.
Oil Tank Farm at Snezhnoye oil ?eld of Imperial Energy
Visit of Indian delegation at MECL installations in December 2011
Discussion on Transition Aggrement between Mr. S.P. Garg, Director (Finance) and the Hon’ble Mr. Pagan Amum, Secretary General,
SPLM, Republic of South Sudan
24 25
Further 270 sq. km of 3D seismic data and 2536 Lkm of 2D seismic data were acquired, processed and
interpreted. The processing & interpretation of 2D and 3D seismic data acquired during 2011 and 2012 are
currently in progress. The exploration e?orts have shown positive results. Based on the exploration /
development e?orts put forward so far, Imperial Energy has primarily focussed on exploiting from Upper
Jurassic formation with relative good reservoir characteristics. Concurrently, Imperial is consolidating all
the data generated so far to develop its strategy for exploitation of oil from its tight sand reservoirs as
next course of action, for which the job of scouting and identi?cation of a suitable technologies is in hand.
A provision for impairment of `1,953 Crore has been made for this project as the asset is performing lower
as compared to the estimates and the ‘value in use’ computed for the asset as on 31
st
March, 2012 was
lower than its carrying value. During the year 2011–12, production of Imperial Energy was 0.771 MMT of oil
as compared to 0.770 MMT during 2010–11.
4.1.6 Mansarovar Energy Project, Colombia:
Mansarovar Energy Colombia Limited (MECL), Colombia is a 50:50 joint venture of your Company and Sinopec
of China. E?ective 1
st
April, 2006, MECL’s assets constitute a 100% interest in Velasquez fee mineral property
and a 50% interest in the Nare Association contracts where the Colombian national oil company, Ecopetrol
holds the remaining 50%. MECL also owns 100% of the 189–km Velasquez–Galan pipeline, connecting the
Velasquez property to Ecopetrol’s Barrancabermeja re?nery. Your Company’s share of oil production from
MECL was 0.561 MMT during 2011–12 as compared to 0.468 MMT during 2010–11.
4.1.7 Al Furat Project, Syria:
The project is owned by Himalaya Energy Syria B.V. (HESBV), a Joint Venture Company of ONGC Nile
Ganga B. V., a wholly owned subsidiary of your Company and Fulin Investments Sarl, a subsidiary of China
National Petroleum Company International (CNPCI), holding 50% shares each. The ?elds are operated by
Al Furat Petroleum Company (AFPC), jointly owned by Syrian Petroleum Company (50%), the National Oil
Company of Syria, Shell Syria Petroleum Development Co. (31.25%) and HESBV (18.75%). Due to geo–political
development in gulf countries, European Union (EU) imposed oil trade sanctions on Syria in September,
2011. The EU sanctions were speci?cally targeted at crude oil exports making vessel availability, associated
insurance and payment extremely di?cult. EU further imposed enhanced sanctions on 1
st
December, 2011
and included AFPC and GPC in the list of sanctioned Syrian entities. Shell has issued a letter informing
AFPC and Syrian authorities that the present situation is preventing the contractor from discharging their
obligation under PSC Contract due to EU sanctions and was like a Force Majeure situation for foreign
partners. Shell has withdrawn all its expatriates’ from ?eld operations and Damascus o?ce work. The
national employees were running the AFPC operations at ?elds and no details are being shared with the
partners. In the absence of details, the accounting of revenue and expenditure has not been carried
out from December, 2011 till March, 2012. Your Company’s share in the oil and OEG production was 0.503
MMTOE during 2011–12 as compared to 0.662 MMT during 2010–11. If the operations had been normal, your
Company’s share of production in the asset would be higher by 0.069 MMT during 2011–12.
4.1.8 Block BC–10, Brazil:
Block BC–10 is a deepwater o?shore Block located in the Campos Basin approximately 120 km southwest
from the city of Vitoria o? the coast of Brazil with a water depth of around 1800 meters spread over 600
sq.km. Your Company holds 15% PI in the project. Other partners in the Block are Shell with 50% PI as
operator and Petrobras with 35% PI. Phase–1 development of the Block was completed using sub–sea
wells which connect via sub–sea manifolds, ?owlines, and risers to a Floating Production, Storage and
O?oading Vessel (FPSO). Drilling of 11 wells (10 producers and 1 gas injector) is operational; oil production
commenced on 12
th
July 2009. The Phase II development would involve drilling of seven producer wells
and four water injector wells. The Batch drilling of wells has started in April 2012. The Subsea & Pipeline
installation work is scheduled in October 2012 and ?rst Oil is expected in October 2013. Your Company’s
share of oil and gas production was 0.450 MMT and 0.015 BCM respectively during 2011–12 as compared to
oil production of 0.573 MMT and gas production of 0.013 BCM during 2010–11.
4.1.9 Block 5A, South Sudan:
Block 5A is located in the Muglad basin and spread over an area of about 20,917 sq.km. Your Company
acquired stake in the Block from OMV of Austria on 12
th
May, 2004 and holds 24.125% PI along with Petronas
of Malaysia (67.875% PI) and Sudapet (8% PI). The Block was operated by White Nile Petroleum Operating
Company (WNPOC), a consortium of Petronas and Sudapet. Since 9
th
July 2011, on cessation of South Sudan
from Republic of Sudan (ROS), the entire block area is located in the territory of the Republic of South
Sudan (ROSS). Subsequently, the PI of Sudapet has been transferred to Nilepet, the National Oil Company
of ROSS as per the Presidential Decree issued on 8
th
November, 2011. The Company along with Petronas
and Nilepet has signed a Transition Agreement on 13
th
January 2012 with the Government of RSS for the
continuation of its right for petroleum exploration and exploitation in Block 5A. The partners of Block 5A,
including your Company, have incorporated a new operating company SUDD Petroleum Operating Co. Ltd.
(SPOC) registered in Mauritius on 7
th
March 2012. The block will now be jointly operated by all partners. Your
Company’s share of oil production from the project was 0.174 MMT during 2011–12 as compared to 0.226
MMT during 2010–11. If the operations had been normal, your Company’s share of production in the asset
would be higher by 0.046 MMT during 2011–12.
KAR– 1 rig at Syria
Sudan Onshore Rig
26 27
4.1.10 Pipeline Project, Sudan:
Your Company (90% PI) along with Oil India Limited (10% PI) had ?nanced & constructed a 12”, 741 km multi–
product pipeline from Khartoum re?nery to Port Sudan at a base lump sum price of USD 194 million. The
pipeline was handed over to Government of Sudan (GOS) in October, 2005. The lease amount is payable to
the Company in 18 equal half yearly installments e?ective from December 2005. Payment of eleven half–
yearly installments due till December, 2010 has been received by your Company from the GOS. However, the
12
th
, 13
th
and 14
th
installments due on 30
th
June 2011, 30
th
December 2011 and 30
th
June, 2012 respectively are
yet to be released by the GOS. Your Company has been following up for the realization of the amount from
GOS at various levels. Dodsal, the EPC contractor has invoked arbitration against your Company staking
claim of USD 28.70 million plus interest and cost towards alleged additional work carried out in the project.
The arbitral proceedings in the matter between your Company and Dodsal are under adjudication.
4.2 DISCOVERED / DEVELOPMENT ASSETS:
4.2.1 Carabobo–1 Project
Your Company along Indian Oil Corporation Limited (IOCL), Oil India Limited (OIL), Repsol YPF (Repsol) and
Petroliam Nasional Berhad (PETRONAS) (collectively, the “Consortium”), was awarded by the Government of
the Bolivarian Republic of Venezuela 40% ownership interest in an “Empresa Mixta” (or “Mixed Company”)
which will develop the Carabobo 1 North (203 sq.km) and Carabobo 1 Central (180 sq.km) blocks located in
the Orinoco Heavy Oil Belt in eastern Venezuela. Your Company holds 11% PI in Carabobo–I project through
its subsidiary Carabobo One AB. Repsol and Petronas holds 11% PI each and IOCL and OIL holds 3.5% PI each
in the project. The Corporación Venezolana del Petróleo (“CVP”), a subsidiary of Petróleos de Venezuela S.A.
(“PDVSA”), Venezuela’s state oil company, holds the remaining 60% equity interest. The Mixed Company was
incorporated as Petro Carabobo S.A. (PCB). The project has estimated Oil in Place of about 27 Billion barrels.
The Mixed Company would build heavy (8°–9° API) oil production facilities, upgrading (32° API) facilities
and associated infrastructure for producing extra–heavy crude oil. The upstream production facilities are
expected to produce about 400,000 barrels per day of which approximately 200,000 barrels per day will
be upgraded into light crude oil in a facility to be located in the Soledad area, Anzoátegui State. The license
term is for 25 years with the potential for a further 15 year extension i.e., for a total of 40 years. One Service
Company Carabobo Ingenieria Y Construcciones S.A (CICSA) for executing the Jobs under Development plan
has been incorporated on 21
st
January 2011. Four Stratigraphic wells and six slant wells drilled for collection of
samples and study of petrophysical properties for drilling development wells for accelerated production of
?rst oil in 2013. Presently, basic engineering & FEED for upgrader and downstream facilities and 3D–Seismic
study, civil works for well pads have been awarded and other tendering Processes/approval from PCB &
awarding of drilling contract for Development of the Field are in progress.
4.2.2 Block XXIV, Syria:
The Contract for Exploration, Development and Production of Petroleum for the Block XXIV, Syria was
signed on 15
th
January, 2004 with e?ective date from 29
th
May, 2004. Your Company holds 60% PI in the Block
with IPR Mediterranean Exploration Ltd. (Operator) and Tri Ocean Mediterranean holding PI of 25% and 15%
respectively.
The exploration phase for the block has expired on 28
th
September, 2011. The consortium over achieved
the physical Work Commitment by drilling a total of 14 wells in the Block in this phase. During the FY’12,
the consortium drilled 7 exploratory wells, out of which 3 wells ?owed oil/gas and 1 well showed presence
of hydrocarbon. Extended production testing of three exploratory wells in Abu Khashab area was carried
out to acquire reservoir data and also to know its production potential. 1 development well was also drilled
during the current FY’12. Based on the exploration results, the Government of Syria granted development
rights for additional areas of three formations in Abu Khashab area. Presently, Plan of Development (PoD)
of Abu Khashab area is being prepared by the Operator. Further, the consortium’s request for granting of
development right for Romman Area is under active considerations of the Syrian Authorities. Meanwhile,
the Operator has invoked ‘Force Majeure’ in the Block w.e.f. 30
th
April, 2012 citing e?ects of US sanctions
and deteriorating law and order situation in the operational areas. Rashid Field has been under extended
production testing with an average rate of production of 180 BOPD. However, due to worsening law and
order situation in and around Rashid ?eld, the facilities have been shut down w.e.f. 13
th
June, 2012. Your
Company’s share of oil production from the project was 0.010 MMT for 2011–12 compared to 0.002 MMT for
the year 2010–11. The Company has invested about USD 70.17 Million till 31
st
March, 2012, on cash sink basis,
in the block.
AK – 3 L Dib Test, Syria
28 29
Onshore Gas Transportation Pipeline
Your Company has participation in the Onshore Gas Pipeline Transportation project through a joint venture
company South–East Asia Gas Pipeline Company Limited (SEAGP) registered in Hong Kong on 25
th
June 2010, in
which the stake of your Company is 8.347%. The shareholding of other partners is CNPC, China– 50.9%, Daewoo–
25.041%, MOGE, Myanmar 7.365%, GAIL and KOGAS 4.1735% each. The joint company will lay an on–land pipeline
of 793 km X 40” from land fall point at Ramree Island to Ruilli at Myanmar–China border. To achieve the ?rst gas
from Shwe Gas Development Project in mid–2013, the onshore pipeline project is scheduled to be completed by
March 2013. Out of the 5 EPC sections, 2 EPC sections are nearing completion and work on other 3 EPC sections is
progressing. Out of the 6 HDD projects, 3 have been completed and work on other 3 HDD projects is progressing.
Your Company’s share of investment in the project till 31
st
March, 2012 was about USD 43.07 million.
Your Company’s share in the Combined Development of Blocks A–1 and A–3 including O?shore Mid–stream
project and Onshore Gas Transportation pipeline is estimated at about USD 880.61 million.
4.3 EXPLORATORY ASSETS:
4.3.1 Blocks 34 and 35, Cuba:
Blocks 34 and 35 are deep water o?shore exploration Blocks located in Cuba’s Exclusive Economic Zone
(EEZ) for which the PSC was signed on 10
th
September, 2006. Your Company holds 100% PI in the Blocks as
the Operator. Acquisition, processing and interpretation of 2D and 3D seismic data have been completed.
The block area has increased from 4300 to 4800 sq.km after annexation of additional 500 sq.km of area.
The exploration period would expire on 12
th
September 2012.
Your Company is watching the post–drilling results/analysis in the neighbouring blocks to ?rm up its future
plans for the blocks. The Company has invested about USD 46.50 million in the blocks till 31
st
March, 2012.
4.3.2 Blocks 25, 26, 27, 28, 29 and 36, Cuba:
Blocks 25, 26, 27, 28, 29 and 36 are deep water o?shore exploration Blocks located in Cuba’s Exclusive
Economic Zone (EEZ) for which the agreement for acquisition of 30% PI in the Blocks from Repsol–YPF of
Spain was signed on 23
rd
May, 2006. The other partners in the Blocks are Repsol–YPF with 40% PI as operator
and Statoil with 30% PI. The Consortium entered into extended exploration sub period–IV with commitment
of drilling of two exploration wells after relinquishing 5,962 sq.km area of the Blocks. The consortium
now holds 5,269 sq.km of area. The drilling of ?rst of the two commitment wells has been completed on
11
th
May, 2012 without any oil and gas ?nd and the well was declared dry. The Company’s share of cost of
drilling the ?rst exploratory well till 31
st
March 2012 was about USD 31.91 million. Data collected from the
well is under analysis to decide the future course of action. Your Company’s share of investment in these
blocks was about USD 49.58 million till 31
st
March, 2012.
4.2.3 Farzad B Offshore Exploration Block, Iran:
Farzad B is an o?shore exploration Block spread over 3,500 sq.km in Persian Gulf Iran with a water depth of
20–90 meters. The contract for the Block was signed on 25
th
December, 2002. Your Company holds 40% PI as
operator, with the remaining PI held by Indian Oil Corporation Limited (40%) and Oil India Limited (20%). Pursuant
to the discovery of gas made by the Consortium led by your Company, it had submitted a commerciality report
to National Iranian Oil Company (NIOC), Iran on 23
rd
December, 2007. NIOC approved the Commerciality of
the Farzad B area on 18
th
August 2008. The Master Development Plan (MDP) for the Farzad B Gas Field was
submitted to Iranians during April, 2009. Development Service Contract for the ?eld remains under discussion.
Your Company’s share of investment in the Block till 31
st
March, 2012 was about USD 36.32 million.
4.2.4 Blocks A–1 and A–3, Myanmar:
Your Company holds 17% PI in Blocks A1 and A3 and remaining stakes are held by Daewoo (51%), GAIL and
KOGAS (8.5% each) and MOGE (15%).
Block A–1 extends over an area of 2,129 sq.km of Rakhine Coast in Arakan o?shore in north–western
Myanmar. Commercial quantity of natural gas has been discovered in the Block in two ?elds, Shwe and
Shwe Phyu. The Shwe and Shwe Phyu ?eld appraisals have been completed by the consortium and the Gas
Initially In–Place reserves certi?ed by an independent ?rm for the Shwe and Shwe Phyu gas ?elds are 3.83
TCF. Out of 16 wells drilled so far in the block, 9 have been found gas bearing.
Block A–3, the adjacent block of Block A–1, covers presently an area of 3,441 sq.km with bathymetry up
to 1,500 meters in the Rakhine o?shore. So far six exploratory wells were drilled in this Block out of which
three are gas bearing. Commercial quantity of natural gas has been discovered from Mya Gas Field. The
Gas initially in–place reserves certi?ed by an independent ?rm for the Mya Gas ?eld are 1.52 TCF.
A combined Field Development Plan for Blocks A–1 and A–3 comprising of Shwe, Shwe Phyu and Mya gas
?elds approved by Consortium Partners is expected to be commissioned by May 2013. Your Company’s
share of investment till 31
st
March, 2012 was about USD 166.94 million and USD 105.61 million for Block A–1
and A–3 respectively.
Shwe Offshore Mid–Stream Project:
The mid–stream project which is a part of the combined development of A–1 and A–3 blocks, is in progress
through an EPCIC contract and includes construction of o?shore pipeline of 110 km X 32” from Shwe
O?shore Platform to land fall point at Ramree Island, onshore gas terminal, supply base and jetty. The
construction of 32” o?shore pipeline and supply base and jetty has been completed. The Project is scheduled
to be completed by March 2013. Your Company’s share of investment was about USD 39.33 million till
31
st
March, 2012.
Aerial Viewof MTB Moriche facility
30 31
4.3.3 Blocks SSJN–7 & CPO–5, Colombia:
Your Company participated in the Bidding Round 2008 in Colombia and was awarded two onland Blocks i.e.
SSJN–7 with 50% PI and CPO–5 with 100% PI. Later in the year 2010, 30% PI in CPO–5 Block was divested to
Petrodorado. Block CPO–5 is operated by your Company with 70% PI and the Block SSJN–7 is operated by
Paci?c Stratus Energy, Colombia with 50% PI. The concession contracts for the Blocks SSJN–7 and CPO–5
were signed on 24
th
December, 2008 and 26
th
December, 2008 respectively. Two exploratory locations
have been released for drilling in Block CPO 5 under Phase–1. In Block SSJN–7, acquisition & processing
of 2D seismic data in part of the identi?ed area has been concluded. The Phase–I of exploration of these
blocks expired in June, 2012. Due to delay in grant of environment permits and approvals from concerned
authorities, Operator of SSJN–7 and ONGC Videsh in case of block CPO–5 have sought extension to the
running exploration period. Your Company’s share of investment was about USD 5.81 million for Block
SSJN–7 and about USD 18.39 million for the Block CPO–5 till 31
st
March, 2012.
4.3.4 Blocks RC–8, RC–9 and RC–10, Colombia:
Your Company acquired exploration blocks RC–8, RC–9 and RC–10 in o?shore Colombia, e?ective date of
concession contracts being 30
th
November, 2007. Currently Blocks are running in Phase–II, expiring on
29
th
November, 2013. The current area of the blocks RC–8, RC–9 and RC–10 after entering into phase–II are
1,385 sq.km, 1,060 sq.km and 1,340 sq.km respectively with water depths of 70 to 1,500 meters in o?shore
Colombia. In Block RC–8, your Company as Operator holds 40% PI with Ecopetrol and Petrobras holding 40%
PI and 20% PI respectively. In Blocks RC–9 and RC–10, your Company and Ecopetrol hold 50% PI each. Your
Company is Operator in RC–10 Block while Ecopetrol is Operator in RC–9 Block. All the three Blocks have
completed three years of exploration Phase–I on 29
th
November, 2010, successfully completing minimum
committed work of the Blocks. Your Company’s share of investment was about USD 2.3 million in Block
RC–8, USD 5.43 million in Block RC–9 and about USD 3.47 million in Block RC–10 till 31
st
March, 2012.
4.3.5 Satpayev E&P Project, Kazakhstan:
Your Company signed agreements with KazMunaiGas (KMG), the National Oil Company of Kazakhstan for
acquisition of 25% participating interest in Satpayev exploration block on 16
th
April, 2011 at Astana, Kazakhstan
in the presence of Hon’ble Prime Minister of India and the President of Kazakhstan. This transaction marks
the entry of your Company in hydrocarbon rich Kazakhstan. Satpayev exploration block, located in the
Kazakhstan sector of the Caspian Sea, covers an area of 1482 sq.km at a water depth of 6–8 mts. Satpayev Block
is situated in close proximity to major discoveries in the North Caspian Sea. Your Company carries KMG for its
75% share and therefore bear the 100% expenditure during the exploration and appraisal phase of the Project.
Acquisition, Processing and Interpretation of 1200 LKM of 2D Seismic data have already been completed and
location for drilling has been identi?ed. Your Company’s share of investment in the project was about USD
113.93 million which includes carry ?nance amount of about USD 11.16 million till 31
st
March, 2012.
4.3.6 Block BM–S–73, Brazil:
Your Company through its indirect wholly owned subsidiary ONGC Campos Ltda (OCL) holds 43.5% PI and is
the Operator in o?shore Block BM–S–73, Brazil. Petrobras and Ecopetrol are the other partners in the block
having 43.5% and 13% PI respectively. The block spreads over an area of 160 sq.km with water depths of around
200 meters. 3D Seismic data acquisition, processing, G&G study and drilling of one committed well have been
completed for the ful?lment of MWP of 1
st
Exploration phase. As the exploratory well has been declared dry,
the block has been surrendered in February 2012. Your Company’s share of investment was about USD 89
million till 31
st
March 2012. There is dispute with the partners against the rig hire charges for stand–by period
and penalties imposed by Agencia Nacional de Petroleo (ANP), the Brazilian regulatory authority, for about
USD 82 million, which is under discussion with partners. Further, there is potential liability of about USD 27.5
million on account of non–ful?llment of Local Content (LC), for which waiver from ANP has been sought.
4.3.7 Block BM–ES–42, Brazil:
Your Company through its indirect wholly owned subsidiary OCL, holds 100% PI in the deep water o?shore
Block BM–ES–42 in Brazil. The block spreads over an area of 725 sq.km with water depths of around 1,500
meters. Seismic data acquisition, processing and G&G studies of PSTM & PSDM data have been completed.
As your Company could not farm out up to 50% PI to mitigate exploration risk in the block as per Board’s
decision, the block has been surrendered at the end of 1
st
exploration phase i.e., 11
th
March, 2012. The
Company has invested about USD 47 million till 31
st
March 2012.
4.3.8 Blocks BM–SEAL–4 & BM–BAR–1, Brazil:
Your Company through its indirect wholly owned subsidiary OCL, acquired PI in exploration blocks BM–SEAL–4
and BM–BAR–1 in Brazil in August 2008. Your Company holds 25% PI in each of these blocks with Petrobras
(operator) holding remaining 75%. Drilling of an exploratory well is currently in progress in block BM–SEAL–4.
In Block BM–BAR–1, two exploratory wells have been drilled without success for which your Company has
conveyed its decision to relinquish its share in the venture. Your Company’s share of investment till 31
st
March,
2012 was about USD 7 million for Block BM–SEAL–4 and about USD 98 million for Block BM–BAR–1.
4.3.9 Block BM–S–74, Brazil:
Your Company through its indirect wholly owned subsidiary OCL, holds 43.5% PI in Brazil o?shore Block
BM–S–74 covering an area of 165.4 sq.km. Other partners in the block are Petrobras (operator) and
Ecopetrol with 43.5% and 13% PI respectively. Seismic data acquisition, processing and G&G studies and
drilling of 1 commitment well have been completed. The well has been declared dry and hence abandoned.
The consortium has decided to relinquish the block. Your Company’s share of investment in the block till
31
st
March, 2012 was about USD 15 million.
Minister of State for Petroleum and Natural Gas, India Mr. RPN Singh & Mr. Sauat Mynbayev Minister of Oil & Gas of Kazakhstan signing
the agreement
Apex Management on the occasion of Signing of MOU between ONGC & CNPC to jointly explore oil and gas worldwide
32 33
4.3.10 Block OPL 279, Nigeria:
OPL 279 is a deepwater o?shore exploration Block in Nigeria with an area of 1,125 sq.km. The e?ective
date of the PSC was 23
rd
February, 2007. Your Company’s Joint Venture Company ONGC Mittal Energy
Limited (OMEL) through its wholly owned subsidiary company OMEL Exploration & Production Nigeria
Ltd. (operator) held 45.5% PI in the Block. Other partners in the Block are EMO, a local Nigerian company
with 40% PI and TOTAL with 14.5% PI. The Phase I of exploration expired on 22
nd
February 2012. All MWP
commitments under exploration phase I in the Block have been ful?lled including acquisition of 534 sq.km
of 3D seismic data and drilling of well Kuyere–1 in Jan–Feb., 2010 with discovery of hydrocarbons in three
pay zones. Based on the post–drill analysis of G&G data, some prospects were identi?ed in deeper stratigraphic
levels of this block. However the identi?ed prospects do not o?er a standalone discovery case for any viable
commercial development. A notice of relinquishment was accordingly issued to NNPC on 21
st
November
2011. OMEL’s share of investment, including the carry obligations to EMO, till 31
st
March, 2012 was about
USD 156 million.
4.3.11 Block OPL 285, Nigeria:
OPL 285 is a deepwater o?shore exploration Block in Nigeria with an area of 1,167 sq.km. The e?ective date of
the PSC was 23
rd
February, 2007. Currently, OMEL through its wholly owned subsidiary company OMEL Energy
Nigeria Ltd., as operator, holds 64.33% PI in the Block. Other partners in the Block are EMO, a local Nigerian
company with 10% PI and TOTAL with 25.67% PI. As per terms of the agreement, EMO is carried by other
participants in their respective share of participation. The committed MWP of the block for the ?rst phase of
exploration has been completed with acquisition of 524 sq.km of 3D data and drilling of one well, Opueyi–1
in August–September, 2010. Two sub–commercial hydrocarbon zones are encountered in the well. Based on
post drilling analysis, review of G&G data and the commitment to the downstream project attached to the
PSC, the operator, decided to enter the second phase of exploration period if the regulator NNPC grants
the waiver from the downstream project commitment. A request letter was sent to NNPC in this regard on
24
th
November, 2011. No response has been received from NNPC on waiver request so far. OMEL’s share of
investment, including the carry obligations to EMO, till 31
st
March, 2012 was about USD 79 million.
4.3.12 Contract Area 43, Libya:
Your Company acquired Contract Area 43 located in Cyrenaica o?shore basin in the Mediterranean Sea
under an Exploration and Production Sharing Agreement (EPSA) e?ective from 17
th
April, 2007. Contract
Area 43 consists of four blocks spread over an area of 7,449 Sq. Km. The block boundaries extend from
the coastline to a water depth of about 2200 meters. Your Company holds 100% PI in Contract Area 43 with
operatorship. The acquisition and processing of 1011 LKM 2D and 4000 Sq. Km. 3D seismic data have been
completed. Finalization of interpretation report of Geo scienti?c data is in progress at G&G centre of your
Company in New Delhi. Due to civil unrest in Libya, notice for Force Majeure was served to NOC, Libya
w.e.f. 26
th
February 2011 and the operations at Libya were suspended. However after improvement of civil
unrest and safety situation at Libya, the Force Majeure notice has been revoked and the operations have
been resumed w.e.f. 1
st
June, 2012. Your Company has invested about USD 39.22 million in Contract Area 43
till 31
st
March, 2012.
4.3.13 Exploration Block–8, Iraq:
Your Company is the sole licensee of Block–8, a large on–land exploration Block in Western Desert, Iraq
spread over 10500 sq.km. The Exploration & Development Contract (EDC) for the Block was signed on
28
th
November, 2000. The contract was rati?ed by the Government of Iraq on 22
nd
April, 2001 and was
e?ective from 15
th
May 2001. Since then, the work relating to archival, reprocessing and interpretation of
the existing seismic data has been completed. However, your Company had to notify the force majeure
situation to the Ministry of Oil, Iraq in April, 2003 due to prevailing conditions in Iraq. In 2008, your Company
was informed that Government of Iraq had decided to re–negotiate the Block–8 contract in line with the
provisions of the new oil and gas law which was expected to be promulgated soon. Re–negotiation is yet
to commence. Your company is following up the matter with Iraq authorities. The Company has invested
about USD 2 Million till 31
st
March, 2012.
4.3.14 Block 128, Vietnam:
Block 128 is an o?shore deepwater Block, located at water depth of more than 400 metres with 7,058 sq.km
area in Vietnam. The PSC for the Block was signed on 24
th
May, 2006 and the extension to the exploration
Phase–I for the Block 128 was valid till 15
th
June, 2012. Your Company holds 100% PI in the Block with
Operatorship. 1650 sq.km of 3D seismic data was acquired and interpreted in the Block by your Company
and location for drilling of exploration well was identi?ed. Drilling was attempted on the location during
September 2009; however, the well could not be drilled as the rig had di?culty in anchoring at the location
due to hard carbonate sea bottom. Meanwhile, your Company has found solution to the anchoring problem
and asked for extension to the exploration phase to undertake review of additional G&G data to ?nd out a
viable location for drilling to ful?ll the PSC commitment. PetroVietnam (PVN) has suggested ONGC Videsh
to continue the exploration programme in the block for additional two years with e?ect from 16
th
June,
2012 by revisiting the geological model with the integration of data likely to be available with the assistance
from PVN. Till 31
st
March, 2012, the Company has invested about USD 49.14 million in the Block.
Block 6.1 partners visit the rig Ocean Monarch, Vietnam
Oil Tank Farm at Maiskoye oil?eld of Imperial Energy
34 35
5. DIRECT SUBSIDIARIES OF ONGC VIDESH LIMITED:
5.1 ONGC Nile Ganga BV (ONGBV) – Wholly owned Subsidiary:
ONGC Nile Ganga B. V. (ONGBV) is incorporated in Netherlands and engaged in Exploration and Production
(E&P) activities in Sudan, South Sudan, Syria, Venezuela, Brazil and Myanmar. Your Company has ownership
interest in following projects through ONGBV:
5.1.1 25% Participating Interest (PI) in Greater Nile Oil Project (GNOP), Sudan and Greater Pioneer Operating
Company (GPOC);
5.1.2 16.66% to 18.75% PI in four Production Sharing Contracts in Al Furat Petroleum Company (AFPC) in Syria;
5.1.3 40% PI in San Cristobal Project in Venezuela;
5.1.4 15% PI in BC–10 Project in Brazil;
5.1.5 held 43.5% PI and 100% PI as operator of exploratory blocks BM–S–73 and BM–ES–42 respectively;
and as non–operator holds 43.5% PI in exploratory block BM–S–74 and 25% PI each in exploratory
blocks Block BM–SEAL–4 and Block BM–BAR–1 all located in Deepwater O?shore, Brazil;
5.1.6 8.347% PI in South East Asia Gas Pipeline Co. Ltd., (SEAGP) for Pipeline project, Myanmar.
5.2 ONGC Narmada Limited (ONL) – Wholly owned Subsidiary:
ONGC Narmada Limited (ONL) is registered in Lagos, Nigeria. ONL is a Special Purpose Vehicle for E&P
activities in Nigeria.
5.3 ONGC Amazon Alaknanda Limited (OAAL) – Wholly owned Subsidiary:
ONGC Amazon Alaknanda Limited (OAAL) is registered in Bermuda. OAAL holds stake in E&P projects
in Colombia, through Mansarovar Energy Colombia Limited (MECL), a 50:50 joint venture company with
Sinopec of China.
5.4 Jarpeno Limited – Wholly owned Subsidiary:
Jarpeno Limited is registered in Cyprus, acquired Imperial Energy Corporation plc., a United Kingdom listed
upstream oil exploration and production entity with its main activities in Tomsk region of Western Siberia
in Russia, in January 2009.
5.5 Carabobo One AB – Wholly Owned Subsidiary:
Carabobo One AB is registered in Sweden, holds 11% PI in Carabobo–1 Project, Venezuela.
6. EXEMPTION IN RESPECT OF ANNUAL REPORT OF SUBSIDIARIES AND
CONSOLIDATED FINANCIAL STATEMENTS
Ministry of Corporate A?airs (MCA) vide its circular dated 8
th
February 2011 and clari?cation dated 21
st
January
2011 has decided to grant a general exemption from the applicability of Section 212 of the Companies Act,
1956 from attaching the Balance Sheet and Pro?t & Loss Account prepared for the ?nancial year ending on
or after 31
st
March 2011, in relation to subsidiaries of those companies which ful?l the various conditions
including inter–alia approval of the Board of Directors for not attaching the Balance Sheet of the subsidiary
concerned. Your Board has accorded necessary approval in this regard for not attaching the Balance Sheet
and Pro?t & Loss Account of all direct and indirect subsidiaries of the Company with its Annual Accounts
for the ?nancial year ended 31
st
March 2012. All other conditions mentioned in the circular are also being
complied by your Company.
7. JOINT VENTURE COMPANY – ONGC MITTAL ENERGY LIMITED
Your Company along with Mittal Investments Sarl (MIS) had promoted ONGC Mittal Energy Limited (OMEL),
a joint venture company incorporated in Cyprus. Your Company and MIS hold 98% shares of OMEL in the
ratio of 51% (ONGC Videsh), 49%(MIS) with 2% shares held by SBI Capital Markets Ltd. OMEL holds interest
in the AFPC Syrian Assets through ONGBV and exploration Blocks OPL 279 and OPL 285 through its 100%
subsidiaries OMEL Exploration and Production Nigeria Limited (OEPNL) and OMEL Energy Nigeria Limited
(OENL) respectively in Nigeria.
Onshore processing facilities Yuzhno, Russia
36 37
8. OVERSEAS OFFICES
The overseas o?ces of your Company are located in Ho Chi Minh City (Vietnam), Yuzhno Sakhalinsk
(Russia), Baghdad (Iraq), Tehran (Iran), Tripoli (Libya), Havana (Cuba), Caracas (Venezuela), Astana & Atyrau
(Kazakhstan), Bogota (Colombia), Damascus (Syria) and Calgary (Canada). ONGC Nile Ganga BV has its
registered o?ce in Amsterdam (The Netherlands), o?ces in Khartoum (Sudan), Juba (South Sudan) and
its subsidiaries have o?ces in Rio de Janeiro (Brazil) and Nicosia (Cyprus). ONGC Narmada Limited and
ONGC Amazon Alaknanda Limited have their registered o?ces in Lagos (Nigeria) and Hamilton (Bermuda)
respectively. Jarpeno Limited has its registered o?ce in Cyprus and its subsidiaries have o?ces in Cyprus,
Moscow & Tomsk (Russia). Carabobo One AB has its registered o?ce in Sweden.
9. INFORMATION TECHNOLOGY
Your Company keeps itself abreast of the latest advancements in the ?eld of information technology so as
to adopt them to the extent required in its pursuit of achieving operational excellence.
During the current year, your Company has implemented Disaster Recovery (DR) solution for its business
data. The DR is located at ONGC, Baroda. The Corporate E–mail system has been successfully migrated to
Microsoft Exchange 2010 Enterprise messaging & collaboration platform. Your Company has updated its
IT Security Policy based on ISO 27001 standards and has put in place a mechanism for periodic review of IT
security system.
10. HUMAN RESOURCE DEVELOPMENT
Your Company has been operating with pool of highly skilled manpower provided by the parent company
ONGC, in the core areas of E&P globally. Your Company would calibrate its manpower levels and quality
with its expanding requirements and challenges in various parts of the world. The total manpower of
your Company was 246 as on 31
st
March, 2012 as compared to 233 as on 31
st
March, 2011 out of which 83
executives stood posted to various overseas projects/o?ces.
11. IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
Your Company continues to make concerted e?ort to spread and promote O?cial Language. During the
year, Hindi Fortnight was organised from 14
th
September, 2011 to 30
th
September, 2011. In the Hindi fortnight,
a large number of employees participated in Hindi competitions and successful ones were awarded.
Your Company’s In–house magazine “Aadharshila”, Hindi fortnight awardees compilation, Corporate
Brochure and Annual Reports were also printed in Hindi. Statutory advertisements were released in Hindi
also. Quarterly Hindi Progress Report of the Company is being sent to Headquarter regularly and Hindi
workshops are being organised.
12. BOARD OF DIRECTORS
• Mr. D. K. Sarraf joined as Managing Director of your Company on 16
th
September 2011.
• Mr. Joeman Thomas was relieved from the additional charge of Managing Director of your Company
w.e.f. 16
th
September 2011 and also submitted his resignation from the Board of Directors of your
Company with e?ect from 1
st
January 2012 upon his retirement from the services on attaining the age
of superannuation.
• Mr. Arun Ramanathan, former Union Finance Secretary, Government of India and Independent Director
of ONGC joined your Company as an Independent Director on 22
nd
September 2011.
• Mr. Sudhir Vasudeva took over the Chairmanship of your Company on 4
th
October, 2011 in place of
Mr. A. K. Hazarika.
• Mr. A. K. Hazarika, Mr. U. N. Bose, Mr. S. V. Rao and Mr. K. S. Jamestin are Special Invitees to the Board
of your Company w.e.f. 25
th
October 2011. Your Company is continuing to get bene?ts of their valuable
contributions.
• Mr. N. K. Verma joined as Director (Exploration) of your Company on 1
st
January 2012.
• Mr. Shyam Saran, Former Foreign Secretary to the Government of India, joined your Company as an
Independent Director on 5
th
June 2012.
Oil tanks Dekastri terminal
38 39
• Prof. Sanjay Govind Dhande, Director, IIT, Kanpur, joined your Company as an Independent Director on
5
th
June 2012.
• Prof. Shyamal Roy, Chairperson, Executive Education, IIM, Bangalore, joined your Company as an
Independent Director on 5
th
June 2012.
• Mr. Shyamal Bhattacharya joined as Director (Operations) of your Company on 1
st
July 2012 in place of
Mr. S. Roychaudhury, who submitted his resignation from the Board of Directors of your Company
pursuant to his superannuation on 30
th
June 2012.
Your Directors place on record their sincere appreciation for the excellent contributions made by Mr.
Joeman Thomas and Mr. S. Roychaudhury and extend a warm welcome to Mr. Sudhir Vasudeva, Chairman,
Mr. D. K. Sarraf, Managing Director, Mr. N. K. Verma, Director (Exploration), Mr. Shyamal Bhattacharya,
Director (Operations), Mr. Arun Ramanathan, Mr. Shyam Saran, Prof. Sanjay G. Dhande and Prof. Shyamal
Roy, Independent Directors.
Guidelines on Corporate Governance 2011 issued by Department of Public Enterprises require that atleast
one–third of the Board members should be Independent Directors. The appointment of three new
independent Directors by ONGC as per letter of MoP&NG vide no. C–31024/3/2008–CA dated 5
th
June 2012,
has ful?lled the requisite numbers of independent Directors on the Board of your Company.
As required under Section 255 and 256 of the Companies Act, 1956, Mr. S. P. Garg, Director (Finance) and
Mr. R. K. Khullar, Director retire by rotation at the ensuing Annual General Meeting and being eligible, o?er
themselves for re–appointment at the said meeting.
13. AUDITORS
M/s GSA & Associates, Chartered Accountants and M/s S Mann & Co., Chartered Accountants were appointed
as Joint Statutory Auditors of your Company by the Comptroller & Auditor General (C&AG) of India for the
?nancial year 2011–12. The Notes on Accounts referred to in the Auditors’ Report are self–explanatory and
therefore do not call for any further comments.
You would be pleased to know that your Company has received ‘Nil’ comments from C&AG and Statutory
Auditors for the year 2011–12.
14. COST AUDIT
Pursuant to clari?cations provided by the Cost Audit Branch of Ministry of Corporate A?airs vide letter no.
F. No. 52/21/CAB/2007 dated 26
th
May, 2008, the Company maintains its cost records under section 209(1)(d)
of the Companies Act, 1956 and these records are duly audited by Cost Auditors of the Company. Ministry
of Corporate A?airs vide letter F. No. 52/26/CAB–2010 dated 2
nd
May, 2011 had issued an order under Section
233B(1) of the Companies Act, 1956 which inter–alia states that all companies to which Cost Accounting
Records (Petroleum Industry) Rules, 2002 apply, and wherein the aggregate value of the turnover made
by the Company from sale or supply of all products or activities during the immediate preceding ?nancial
year exceeds twenty crore of rupees; or wherein the company’s equity or debt securities are listed or are in
the process of listing on any stock exchange, whether in India or outside India, shall get its cost accounting
records, in respect of each of its ?nancial year commencing on or after the 1
st
day of April, 2011, audited by a
Cost Auditor. Accordingly, Your Company got covered under the Cost Audit from the Financial Year 2011–12
onwards and further appointed M/s Gurdeep Singh & Associates, Cost Accountants as Cost Auditors for
the year 2011–12.
15. STATUTORY DISCLOSURES
(i) None of the employees posted in your Company drew remuneration more than the prescribed limits
during the year 2011–12 as required to be disclosed as per Companies (Particulars of Employees)
Amendment Rules, 2011 vide GSR 289 (E) dated 31.03.2011 read with the provision of Section 217(2A)
of the Companies Act, 1956.
(ii) None of the Directors of your Company is disquali?ed under the provisions of Section 274 (1) (g) of the
Companies Act, 1956.
(iii) Information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 regarding Energy
Conservation, Technology Absorption and Foreign Exchange earnings and outgo during the ?nancial
year 2011–12 is given below:
a) the sources of energy used by the Company are Electricity, Diesel and Motor Spirit (Petrol);
b) the Board, as part of its existing internal control measures, is striving for the conservation of
electricity, diesel and petrol under the supervision of Managing Director on a continuous basis and
is satis?ed that the utilisation of energy is optimum for the operations of the Company in India;
Signing of transition agreement with the government of South Sudan in Juba on 13
th
January, 2012
Signing of MOU with government of South Sudan in Juba on 19
th
December,2011
40 41
c) the provisions of the Companies Act, 1956, in regard to technology absorption are not applicable
to the Company; and
d) the details of foreign exchange earned and outgo during the year 2011–12 are as follows:
(` in Million)
• Foreign Exchange earned 81029.73
• Foreign Exchange outgo 92508.52
16. SECRETARIAL COMPLIANCE REPORT
Secretarial Compliance Report con?rming compliance to the applicable provisions of Companies Act,
1956 and applicable Rules there under, Securities and Exchange Board of India (Issue and listing of Debt
Securities) Regulations, 2008, Debt Listing Agreement with the National Stock Exchange, Depositories Act,
1996 given by a practicing Company Secretary, is annexed and forms part of the Directors’ Report.
17. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report, is annexed and forms part of the Directors’ Report.
18. CORPORATE GOVERNANCE REPORT
The Company strives to attain high standards of corporate governance. A separate section on Corporate
Governance is annexed and forms part of the Directors’ Report.
19. IMPLEMENTATION OF RISK MANAGEMENT POLICY
In line with the requirements of Clause 49 of Equity Listing Agreement and DPE Guidelines on Corporate
Governance, your Company has developed a comprehensive Enterprise–wide Risk Management (ERM)
framework inter–alia identifying the causes of risks and its mitigating measures. The Risk Register and
the Risk Management Policy of your Company was reviewed by the Audit Committee and approved by the
Board of Directors. The Risk Management Policy of ONGC Videsh is reproduced below:
“ONGC Videsh shall identify the possible risks associated with its business and commits itself to put
in place a Risk Management Framework to address the risks involved on an ongoing basis to ensure
achievement of the business objectives without any interruptions.
ONGC Videsh shall optimize the risks involved by managing their exposure and bringing them in line
with the acceptable risk appetite of the company”.
The ERM framework has been rolled out and the risk reporting structure has already been put in place.
20. DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to provisions of Section 217(2AA) of the Companies Act, 1956, the following statements relating
to Annual Accounts for the ?nancial year ended 31
st
March, 2012 are made:
(i) in the preparation of the annual accounts for the ?nancial year 2011–12, the applicable accounting
standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been
followed and that there are no material departures from the same;
(ii) the Directors have selected such accounting policies as described in the Notes to the Accounts of
the Financial Statements for the ?nancial year ended March 31, 2012 and applied them consistently as
stated in the annual accounts and made judgments and estimates that are reasonable and prudent so
as to give a true and fair view of the state of a?airs of the Company as at 31
st
March, 2012 and of the
pro?t of the Company for the year ended on that date;
(iii) the Directors had taken proper and su?cient care for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting frauds and other irregularities; and
(iv) the Directors had prepared the annual accounts on a “going concern” basis.
21. AUDIT COMMITTEE
The details of Audit Committee are given separately in the Corporate Governance Report.
22. ACKNOWLEDGEMENT
Your Directors would like to acknowledge with deep appreciation the valuable guidance and support extended
by the Government of India, especially the Ministry of Petroleum & Natural Gas, Ministry of Finance, Ministry
of External A?airs, Department of Public Enterprises, Indian Embassies / High Commissions abroad and the
Reserve Bank of India etc. Your Directors also wish to place on record their deep sense of appreciation for the
dedicated services by the employees of the Company. Your Directors recognize that the achievements of your
Company would not have been possible without the unstinted and total support from the parent company, Oil
and Natural Gas Corporation Limited.
On behalf of the Board of Directors
New Delhi (Sudhir Vasudeva)
30
th
July, 2012 (Chairman)
GBS is ready to move from Nakhodka to the North of Sakhalin
42 43
Asia is expected to continue to be the principal
driver of global oil demand in the medium term.
Asian incremental demand has increased during
2009–2011, while over the same period the rest
of the world saw demand register almost no net
incremental rise.
These facts pose important questions for our
industry and the countries where we produce.
They demonstrate the need to redouble e?orts to
reduce energy intensity and pursue a sustainable
mix for the future. They also point to the need for
continuing investments to provide the increasing
volumes of energy that the world requires.
Political risk is seen as posing a considerably greater
threat to international E&P business over the next
?ve years than in the recent past. This is especially so
for high potential markets, where generic political
risk is identi?ed as the main investment constraint.
All four forms of political risk (risks of political
violence, FDI protectionism, threats associated
with geopolitical tensions and governmental
instability having a material impact on business) in
emerging markets are seen as increasing over the
next ?ve years. However, Opportunities appear
to predominate over political risk concerns, even
though these are seen as posing a considerably
greater threat to business in near future than in the
recent past.
The political risks of energy investments gel with the
tightness of global oil supplies. When markets are
tight and oil prices are high, as they are now, existing
contracts are renegotiated to the bene?t of host
countries and some of the hydrocarbon reserves
are re–nationalised. The absence of internationally
agreed norms for foreign investments in energy
sector hinders economic development in the
host countries, foments aggressive geopolitical
competition that threatens global energy security
and may block the scale of investment and co–
operation necessary to overhaul a strained global
energy system. Political risks facing FDI in energy
are likely to continue to rise in the coming years.
Crude oil prices have been highly volatile since 2011,
?uctuating on a daily basis but month on month
prices have been fairly stable. Factors that have
contributed to the upside in 2011 are:
1. INTRODUCTION
ONGC Videsh Limited (ONGC Videsh) is a wholly
owned subsidiary of Oil and Natural Gas Corporation
Limited (ONGC), the ?agship National Oil Company
and a Central Public Sector Enterprise/Undertaking
(CPSE/CPSU) of the Government of India, under the
administrative control of the Ministry of Petroleum
& Natural Gas (MoP&NG). ONGC Videsh is engaged
in prospecting for oil and gas acreages outside
India including acquisition of oil and gas acreages,
exploration, development and production of
oil and gas. ONGC Videsh was incorporated as
Hydrocarbons India Private Limited, on March 5,
1965 with registered o?ce in New Delhi to perform
international exploration and production business
and the Company was rechristened as ONGC
Videsh Limited w.e.f. 15
th
June, 1989. With the
widening of the energy demand/supply gap from
domestic production, participation in overseas
oil and gas assets for equity oil was revived in the
mid–nineties.
combination of 10 producing, 5 discovered and 14
exploration assets. In addition, ONGC Videsh has
successfully completed a 741 km product pipeline
project in 2005 in Sudan.
2. INDUSTRY STRUCTURE AND
DEVELOPMENTS
Worldwide, 2011 has been another excellent
year for conventional exploration, with reserves
additions of almost 12 billion barrels (bbl) of oil
and over 82 tcf of gas. In 2011, the demand for
total petroleum products in the Asia–Paci?c region
grew by an estimated 3.1%. This was slower than
the 5.6% seen in 2010, but on expected lines given
the strengths of the rebound in demand the year
before. Demand slowed markedly in the second
half on lower growth from China, even as Japan
continued to consume more low– sulphur crudes
and fuel oil due to dwindling nuclear power.
In January, 2000, ONGC Videsh was granted
special empowerment by the Government of India
that facilitated better and smooth functioning of
the Company in the international environment as
evidenced by a string of successful acquisitions
post January, 2000. As on 31
st
March,2012,
ONGC Videsh has participation either directly or
through wholly owned subsidiaries/joint venture
companies in 30 E&P projects in 15 countries
namely Vietnam (1 projects), Russia (2 projects),
Sudan (2 projects), South Sudan(2 projects),
Iran (1 project), Iraq (1 project), Libya (1 project),
Myanmar (2 projects), Syria (2 projects), Cuba (2
projects), Brazil (4 projects), Nigeria (1 project),
Colombia (6 projects), Venezuela (2 projects) and
Kazakhstan (1 project) and is actively seeking more
opportunities across the world. Out of 30 projects,
ONGC Videsh is Operator in 9 projects and Joint
Operator in 7 projects. The Company adopts a
balanced portfolio approach and maintains a
Management Discussion
And Analysis Report
Block 6.1 signing of agreement for training under CSR, Vietnam
44 45
• Disruption to the ?ow of crude from Libya where most crude oil production came to a halt in early 2011
and led to a loss of around 1.3 million barrels/day of light–sweet crude oil exports. This led to tightening
of the supply/demand balance that was prolonged. Saudi Arabia, UAE and Kuwait raised their output
to help calm the markets.
• A fear that the US hurricane season (July to September 2011) and the accompanying storms might
damage oil facilities in the US Gulf and O?shore Mexico.
• A general drawdown of OECD oil inventories particularly during the end of 2011 that led to the market
to believe that supply was tightening.
• Geo–political issues in Yemen, Nigeria, Sudan, South Sudan, Syria, Egypt, Libya, Iran and Iraq with
genuine disruption to supplies in some cases whilst potential disruption concerns in others.
Benchmark crude prices fell signi?cantly between late July,2011 and early August, 2011 before rebounding
towards end–August 2011. This trend remained during the remaining period of 2011 resulting in considerable
volatility in benchmark crude prices.
North America has become the fastest growing oil and gas region in the world and is likely to remain so
for the rest of the decade and during 2020’s, with the main obstacles as political rather than geological or
technological. Surging supply growth could transform North America from an importing country to an
exporting country, driven by growth in shale oil and gas, deepwater and oil sands resources. And US liquid
fuels demand is in structural, secular decline due to demographics, fuel e?ciency, transport technology
shifts.
The US and Canada could see rise in natural gas production by 22–Bcf/d by 2020, with 14–Bcf/d from the
Lower 48 states, 4–Bcf/d from Alaska and 4–Bcf/d from Canada. Abundant shale plays accessed by hydraulic
fracturing and horizontal drilling technology is the key driver behind North America becoming the globe’s
“energy island” by 2020. US shale liquids projections could see +3.8–m b/d of growth by 2020. A signi?cant
qualitative shift in investment is underway among the IOC’s. Development capital is progressively moving
from conventional assets to more complex projects associated with new resource themes. The Majors
generally tend to be more dependent on LNG, deepwater and unconventional oil and gas resources to
drive growth.
Conventional assets make up almost half of the average portfolio value based on NPV 2011. This will fall
to around 40% by 2016 as the current investment programme comes to an end. LNG is by far the biggest
growth theme over this period. Returns from new–?eld projects have fallen to 18% in 2011, down from 23%
in 2005. This re?ects the higher capital intensity and longer lead–times of current new projects relative
to 2005, as well as cost in?ation and ?scal e?ects. Returns of the companies have converged around this
lower average, with few material high–return projects available now than in the past.
All the Majors will be producing at or above current levels in 2020. The current investment cycle is also
focused on projects with longer production plateaus. This should lead to more stable earnings and cash
?ow as the decade unfolds.
Most Asian companies face a decline in production later this decade due to their dependence on
conventionally–biased portfolios and maturing domestic assets. At the same time, domestic supply
de?cits continue to fuel the need to secure oil and gas production overseas. International assets currently
comprise just 25% of Asian companies’ portfolios by NPV. Emulating the scale, diversity and long–term
growth potential of the leading international companies will take huge further investment.
Asian companies have access to substantial ?nancial resources to fund further international expansion.
Several of the larger Asian national oil companies (NOCs) have net cash on their balance sheets and it is
estimated that cumulative upstream cash generation would be about US$450 billion from the peer group
over the next ?ve years. Some companies have already begun to take bolder steps in building overseas
Water treatment plant
46 47
portfolios, targeting long–life resources. We expect an increasing focus on technically–challenging growth
resource themes such as deepwater, LNG and unconventional oil and gas.
M&A is likely to remain the primary route to capture resources and build technical expertise in the
near–term. High–impact exploration will play an increasingly important role in longer–term portfolio
development, re?ecting a rising appetite for risk as well as exploration’s potential for multi–billion boe
resource additions and value creation.
Near–term production levels for Asian companies have been boosted by recent internationalization but it is
believed that the longer–term story has yet to change materially. Medium to longer term production pro?les
are threatened by underlying decline from domestic assets, particularly legacy oil projects. Production
from outside Asia will grow to account for 28% of combined output by 2015. However, international growth
will ?atten thereafter at which point domestic production will also enter decline.
Consequently, there are strong drivers for the Asian companies to continue their e?orts to access growth
projects overseas. In the near–term, achieving sustained production growth is likely to be targeted through
further M&A activity.
Developing resources that currently lie in the sub–commercial category and a greater emphasis on high–
impact exploration will also be a priority for some companies. Although some of the Asian companies have
substantial remaining domestic investment opportunities, their global ambition, long–term growth aims
and the need to build technical expertise will mean internationalisation remains high on the agenda.
Addressing a lack of exposure to deepwater resource development and high–impact exploration acreage
could be speci?c deal themes over the next few years. Further acquisitive moves to build positions in LNG
and other growth resource themes such as oil sands and unconventional/tight oil and gas can also be
expected. Establishing exposure to emerging resource rich regions such as East African gas will also be
high on the agenda. Corporate as well as asset acquisitions could also become more prominent for those
companies seeking international capability development.
Oil tanks Dekastri terminal, Sakhalin project
One of the largest single point mooring at Dekastri
48 49
Many of the Asian companies now seem willing to compete for assets by paying considerations over and
above the base case asset valuations. Optimistic views on oil prices, con?dence in asset resource upside
potential, lower discount rate assumptions and signi?cant strategic incentives may be the factors in driving
asset considerations upwards.
Natural gas prices remained weak in North America, where production of shale gas continued to climb and
were on an average lower in continental Europe, in part due to changes in contractual pricing arrangements.
Global LNG and UK spot prices increased more strongly in the face of robust consumption growth. Coal
prices grew robustly in Europe, but were weak in the US and Japan. Events so far this year have kept the
world’s focus on energy: the tragic tsunami in Japan and unrest in the Arab world have disrupted energy
?ows and rising prices ‘at the pump’ have raised concerns about slowing the economic recovery.
During the year, ONGC Videsh screened many opportunities and participated in the bidding rounds.
2.1 International Industry Environment
Capital spending in the global upstream industry has fully recovered from the dark days of 2009. Development
spending in 2011 has amounted to almost US$450 billion, around US$35 billion more than in 2010. The most
active sectors over the next ?ve years will be the US Gulf Coast, Russia, China, Australia and Brazil.
The biggest regional impact has been in onshore US and Canada, where the recovery that began in late–
2009 has kicked on in spectacular fashion. Operators are building major new production capacity, most
notably in the US Gulf Coast and Canadian oil sands. Over US$210 billion of new investment is planned in
these two sectors alone, over the next four years. The higher levels of spending are the result of several
factors. High oil prices have supported many major new project approvals. There is also growing con?dence
in the commercial performance of a wide range of unconventional oil and gas plays. By 2013, one–third of
development spending around US$130 billion, could be in unconventional projects.
ExxonMobil has the highest development expenditure amongst oil and gas companies in 2011, but it will
be hard–pressed in the next few years. Chevron has embarked on a major investment programme, with
giant capital projects in Australia, Gulf of Mexico and the US Lower 48. Its annual development spending
will increase by over US$10 billion by 2013. Petrobras has the most ambitious investment plans amongst
national oil companies (NOCs) and could rival ExxonMobil and Chevron’s capital spending within the next
few years.
With the industry’s con?dence restored, the threat of cost in?ation has returned. The biggest impact to
date has been in Australia and Canadian oil sands, where cost increase of over 10% have a?ected every
element of project design and construction. There are growing signs of higher costs in other prominent
sectors, where demand for materials and services are particularly high. This includes most deepwater
provinces and liquids–rich plays in the Lower 48. Despite the high levels of con?dence in the industry, the
macroeconomic environment remains highly uncertain. The outlook has soured as the Eurozone sovereign
debt crisis intensi?ed – with implications for household and business con?dence. The investment plans of
the upstream industry are ambitious and progressive, but they could yet be undermined by fragility in the
global economy.
Recent social and political upheaval in Middle East and North Africa has drastically increased the risk pro?le
of quite a few proli?c international basins holding a substantial percentage of world’s hydrocarbons. This
increased geopolitical turmoil and spiraling crude prices have complicated potential capital allocation
decisions of NOCs and IOCs.
M&A divesture and acquisitions, short–term and long–term strategies will be greatly challenged in this
turbulent and increasingly crowded and competitive M&A space.
3. STRENGTH AND WEAKNESS
Your Company is the ?rst Indian International E&P Company to produce Equity Oil and Gas outside India.
Your Company has now presence in 15 countries and from 8 countries, Your company has oil and gas
production from 10 projects.
A fair degree of risk mitigation has already been exercised by your Company by partnering with some of
the leading international oil and gas companies like Exxon, Shell, TNK–BP, Rosneft, TOTAL, ENI, Repsol,
Petrobras, PDVSA, PetroVietnam, CNPC, Sinopec, Ecopetrol, Petronas, KazMunaiGas etc. ONGC Videsh
Aerial view of Yastreb rig in Odoptu process facility, Sakhlin
50 51
has emerged as a credible player in the international E&P market, which is evident from the fact that
it has been able to register its presence in most of the oil producing provinces. Your Company aims
to sustain the exploration e?ort through allocation of its internal resources except for high value but
attractive projects.
Further, being a Public Sector Undertaking, there are some limitations for the Company, in terms of
decision making process. The Company is pursuing with MoP&NG for enhancement of empowerment of
its Board as the present empowerment is insu?cient even for carrying out the minimum work program in
an exploratory asset.
4. OPPORTUNITIES AND THREATS
ONGC Videsh has been participating in opportunities for acquisition through various routes like bidding
rounds, direct negotiations, advised acquisitions etc. In the last few years, many countries like Libya,
Nigeria, Vietnam, Syria, Yemen, Angola, Brazil, Iraq, Colombia and Venezuela have o?ered acreages through
bidding rounds. Your Company has been pursuing an Exploration Project in Kazakhstan, which was ?nally
signed in April 2011. Your Company expects good results out of the exploration prospects over the next
couple of years. If proved successful in these ventures, the Company shall be adding reserves through
drill–bit thereby reducing its overall acquisition cost of reserves considerably.
The performance of the Company hinges on oil prices on the revenue side and factor cost of raw material,
equipment, services etc. on the input side. High volatility in oil price and scarcity or high input costs of factor
inputs could materially a?ect the performance of the Company. Though most of the projects are under
production sharing contracts, the entitlement and cost oil recoveries may be altered by host Governments
in attempt to net the windfall pro?ts emerging from high oil prices.
5. OUTLOOK
Your Company has registered presence in various oil provinces of the world and continues to look for
attractive assets. It has earned a high reputation for itself and therefore multiple opportunities keep
coming for its consideration. ONGC Videsh had earlier set a production target of 20 MMTPA of oil and gas
from its overseas assets by 2020. In the 9th Strategy Meet of ONGC group held during November, 2011
under the Chairmanship of Secretary P&NG, it was decided that ONGC Videsh should produce equity oil and
gas of 20 MTOE by FY’18 and 35 MTOE by FY’30.
ONGC has initiated an exercise in February 2012, to formulate a bottom–up Perspective Plan 2030 (PP2030)
for ONGC group. The PP 2030 has been ?nalized and was presented to ONGC Board on 29th May 2012. As
per the plan, the 1st Shaping Move of ONGC is to grow ONGC Videsh to 60 MTOE/year by 2030.
This needs to be achieved by new acquisitions to yield additional 50 MTOE/ Year by 2030 and to build
positions of scale in 3–5 focus plays. With this plan in place, the two internal targets for ONGC Videsh are
to (i) Increase production to 20 MTOE by FY’18 and (ii) Increase production to 60 MTOE by FY’30. As the
production targets are quite steep involving a CAGR of more than 14% up to FY’18 and CAGR of 9% from
FY’18 to FY’30, Your Company needs to concentrate on acquiring assets in development and production
phase initially and then concentrate on high potential exploration acreages and also venture capitalist type
of opportunities.
This will involve substantial fund requirement to the tune of USD 20 billion and ONGC Videsh needs to use
full headroom of balance sheet of ONGC and ONGC Videsh to ?nance these acquisitions coupled with equity
and project ?nancing. This will also require acquiring, retention and training of manpower with speci?c skill
sets, revamping of many internal processes and taking a relook at the way business development is to be
done in future.
Key priorities for going forward of your Company include the following:
5.1 New Ventures:
Your Company in last few years has adopted a balanced portfolio approach by maintaining a combination of
producing, discovered and exploration assets. While acquiring producing properties, enhanced emphasis is
also being given to add to the company’s reserves through exploratory e?orts to contribute to production
in future. ONGC Videsh intends to maintain this trend and focus on all the three types of assets.
Lan Tay 1, Vietnam
Panoramic viewof Maiskoye oil?eld in winters
52 53
5.2 Exploration:
Your Company has set up a state–of–the–art data center and has constituted a knowledge team to scan
and identify value in the existing exploration assets, assets with discovery and in new opportunities so as
to enhance the reserve base of the Company.
5.3 International Alliances:
The Company has also plan to forge alliances to attain a collaborative approach on value creation and
knowledge sharing. The Company shall continue to engage more and more in such alliances through
agreements and Joint Ventures.
5.4 Geographic spread:
The Company has presence in 15 countries and it has been able to enhance participation in more than one
project in some countries. The Company shall endeavor to consolidate its position in the regions/countries
where it is already present while making attempt to enter attractive acreages in other hydrocarbon rich
countries/regions.
6. RISKS AND CONCERNS
The Company participates and operates in varied environments, both politically and geographically, where
exploration, production and development is more challenging technologically, operationally and ?nancially.
In the projects and countries where your Company has large investments, the risks and losses due to
expropriation, change in ?scal regime, additional taxes and increase in Government share or restrictions
on exports of oil could materially a?ect the performance. However, due to prime importance of oil and gas
industry in these countries, their Governments would not in their own interest like to destabilize the oil
companies. Most of the international investments in the past had been in the form of joint ventures where
your Company was not the operator. In the course of such investments, your Company was dependent
to an extent on the operating partner, including for the success of the joint venture. The Company may
sometime disagree with actions proposed to be taken by the operating partner. However, this is the format
in which international E&P industry works to take care of sharing of exploration risks. Further, of late, the
Company is acting as Operator in several projects.
Some of the projects are in countries where there are unresolved unrest and larger issues of governance
and territorial/ethnic divisions; some also have terrorism and reactionary protests on continued basis.
Though your Company has not been the target, yet in future it may face the threat from these as closely
as any one operating in such hostile environments. Further, the business involves high exploration and
technology risks and there are inherent HSE risks in the oil & gas business.
7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has adequate internal audit and internal control systems to ensure that all transactions
adhere to procedure and meet statutory requirements. The Company has already implemented SAP R/3
ERP system for integration of various business processes. The internal control system consists of regular
operative performance evaluation and devising corrective measures thereof and comprehensive internal
and external audit including audit by C&AG. During the year 2011–12, internal audit on a four tier mechanism
was got carried out from M/s Deloitte Haskin and Sells, which had independently evaluated adequacy of
internal control system. The audit observations are periodically reviewed by the Audit Committee and
necessary directions are issued wherever required.
8. PHYSICAL PERFORMANCE
8.1 Reserve Accretion:
ONGC Videsh share of total reserves (3P) of oil and oil equivalent gas as on 1
st
April, 2012 was 425.941 MMTOE.
As on 31
st
March, 2012, the Reserves–to–Production (R/P) Ratio considering proved reserves was 22.09.
8.2 Production:
The Crude Oil Production (including condensate) was 6.214 MMT during 2011–12 as compared to 6.756 MMT
during 2010–11. Production of natural gas was 2.539 BCM during 2011–12 as compared to 2.692 BCM during
2010–11. The production had been adversely a?ected during the year 2011–12 mainly due to geo–political
situation in Sudan, South Sudan and Syria. The detail of production during the last nine years is given below:
Working at South Sudan Pipeline
54 55
Particulars YE
Mar’12
YE
Mar’11
YE
Mar’10
YE
Mar’09
YE
Mar’08
YE
Mar’07
YE
Mar’06
YE
Mar’05
YE
Mar’05
YE
Mar’04
Crude Oil
(MMT)*
6.214 6.756 6.513 6.556 6.840 5.804 4.584 3.714 3.714 3.345
Gas (BCM) 2.539 2.692 2.357 2.220 1.962 2.148 1.755 1.349 1.349 0.523
Total
(O+OEG)
(MTOE)
8.753 9.448 8.870 8.776 8.802 7.952 6.339 5.063 5.063 3.868
* Including Condensate
9. FINANCIAL PERFORMANCE
Your Company’s consolidated gross revenue was up by 21%, from `186,711 million during 2010–11 to `226,374
million during 2011–12. Your Company’s consolidated net pro?t was up by 1% from `26,905 million for the
year 2010–11 to `27,212 million for the year 2011–12.
The Consolidated ?nancial results of ONGC Videsh, including wholly owned subsidiary companies viz.
ONGBV (consolidated), ONL, OAAL (consolidated), Jarpeno Limited (consolidated), Carabobo one AB
(consolidated) and jointly controlled entity viz. OMEL (consolidated) for the year 2011–12 as compared to
2010–11 are as follows :
(` in Million)
Particulars
Audited for the Year ended
Var. %
YE Mar, 2012 YE Mar, 2011
A INCOME
i Revenue fromOperations 223,473 184,111 21.4
ii Interest Income 911 488 86.9
iii Other Income 1,990 2,111 (5.8)
TOTAL REVENUE (A) 226,374 186,711 21.2
B EXPENSES
i Production, Transportation, Selling and Distribution Expenditure 101,418 89,160 13.7
ii Change in inventories of ?nished goods (632) (121) 421.0
iii Other Expenses 2,141 (773) 376.9
iv Decrease/(increase) due to overlift/underlift quantity (414) (283) 46.2
v Provisions & Write–O?s 27,929 3,448 710.0
TOTAL EXPENSES (B) 130,442 91,431 42.7
C Earning Before Interest, Tax, DD&A (EBITDA) (A – B) 95,932 95,280 0.7
i Financing Costs 2,970 3,531 (15.9)
ii Depreciation, Depletion and Amortisation (DD&A) 41,870 42,683 (1.9)
D Pro?t Before Prior Period, Exceptional and Extraordinary Items and Tax 51,092 49,067 4.1
i Adjustments relating to Prior Period (Net) (73) (351) 79.1
E Pro?t Before Exceptional and Extraordinary Items and Tax 51,166 49,418 3.5
i Exceptional and Extraordinary items 0 0 –
F Tax expense
i Current Year Tax 27,385 23,688 15.6
ii Deferred Tax (3,951) 1,651 (339.4)
iii Earlier Years Tax 193 (3,290) 105.9
Particulars
Audited for the Year ended
Var. %
YE Mar, 2012 YE Mar, 2011
Total Tax Expenses (F) 23,627 22,048 7.2
G Less: Share of Pro?t / (Loss) – Minority Interest 327 464 (29.5)
H Group Pro?t After Tax (E–F–G) 27,212 26,905 1.1
The position of major items in the Consolidated Balance Sheet as at 31 March, 12 and 31 March, 2011 is
given below:
(` in Million)
Sl.
No.
Particulars
As at 31
st
March,
2012
As at 31
st
March,
2011
% Variation
A EQUITY AND LIABILITIES
1 SHAREHOLDERS' FUNDS
i Share Capital 10,000 10,000 –
ii Reserves and Surplus 189,411 135,530 39.8
TOTAL SHAREHOLDERS' FUNDS 199,411 145,530 37.0
2 MINORITY INTEREST 1,003 682 47.0
3 NON–CURRENT LIABILITIES
i Long–termborrowings 195,161 204,554 (4.6)
ii Deferred tax liabilities 10,204 9,555 6.8
iii Liability for abandonment 27,504 22,861 20.3
iv Other Long termliabilities 82 – –
v Long–termprovisions 551 513 7.4
TOTAL NON–CURRENT LIABILITIES 233,502 237,484 (1.7)
4 CURRENT LIABILITIES
i Short–termborrowings 623 331 88.1
ii Liability for abandonment 104 – –
iii Trade payables 25,782 19,728 30.7
iv Other current liabilities 45,392 33,365 36.0
v Short–termprovisions 189 16 1,087.1
TOTAL CURRENT LIABILITIES 72,091 53,440 34.9
TOTAL EQUITY AND LIABILITIES 506,007 437,135 15.8
B ASSETS
1 NON–CURRENT ASSETS
i Fixed Assets
a Tangible assets 35,590 42,304 (15.9)
b Intangible assets 126 37 243.3
c Producing properties 144,236 136,140 5.9
d Development & exploratory wells in progress 30,740 24,907 23.4
e Capital work in progress 76,256 40,018 90.6
ii Goodwill 75,045 86,998 (13.7)
iii Non–Current Investment 2,927 107 2,625.0
iv Deferred Tax Assets 5,221 1,202 334.3
v Long TermLoans and Advances 917 281 226.8
56 57
Sl.
No.
Particulars
As at 31
st
March,
2012
As at 31
st
March,
2011
% Variation
vi Other Non–Current Assets 17,348 2,655 553.3
TOTAL NON CURRENT ASSETS 388,407 334,649 16.1
2 CURRENT ASSETS
i Inventories 5,733 4,699 22.0
ii Trade receivables 29,615 40,044 (26.0)
iii Cash & Bank balances 51,528 36,998 39.3
iv Short termloans & advances 8,227 4,485 83.4
v Other current assets 22,497 16,260 38.4
TOTAL CURRENT ASSETS 117,600 102,486 14.7
TOTAL ASSETS 506,007 437,135 15.8
10. HUMAN RESOURCES / INDUSTRIAL RELATIONS
The Company follows the HR policies of its parent company ONGC. However, being international operator,
the Company provides necessary training and conducts development programmes to imbibe the necessary
skills required to operate in the international environment. Further, the Company deputes its personnel
along with other international experts, in joint venture projects with major oil and gas companies which
enable them to upgrade their skills in terms of new technologies, working in international environment
etc. The Company has been operating mainly with manpower provided by the parent company. The total
manpower of the Company was 246 as on 31
st
March, 2012 as compared to 233 as on 31
st
March, 2011. As on
31
st
March, 2012, 83 executives stood posted to various overseas projects/o?ces.
11. ENVIRONMENT
As per HSE policy of the Company, it is committed to maintain the highest standards of Occupational Health,
Safety and Environment protection and ensures compliance with all applicable Statutory, Regulatory
requirements. In the projects operated by Company, it’s endeavor is to achieve Operational Excellence
through HSE governance and continual improvement with business policies compatible to socio–economic
needs of local communities.
In the projects operated by other global E&P operators where your Company is a partner, it is ensured
that operating company maintains the highest standards of Occupational Health, Safety and Environment
protection and ensures compliance with all applicable Statutory, Regulatory requirements.
12. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company, being operating overseas, understands its responsibility to contribute to the communities
and economies of the countries in which it operates. The Company is committed to create a positive and
lasting social impact by developing successful partnerships built on mutual trust and respect, ultimately
raising the standard of living and the stability of the communities of the countries in which the Company
operates. The Company makes valuable contribution in many ways such as through payment of tax
revenues to governments; by investing in education and training and improving employment opportunities
for nationals; providing medical/sports/agricultural facilities to the local community etc. Keeping in view
the CSR guidelines issued by DPE, ONGC Videsh has framed CSR Policy for achieving the CSR objectives
in all its overseas Projects / Assets. Budget of 0.5% of previous year’s Pro?t After Tax (PAT) or target as
per MOU with ONGC, whichever is higher has been allocated towards CSR every year from ?nancial year
2011–12 onwards. This budget allocation is non–lapsable. The Company spent `239 million on CSR activities
during 2011–12.
13. RIGHT TO INFORMATION ACT, 2005 (RTI ACT)
Further, with the objective to ensure access by any citizen to information under the control of the Company
and in order to bring in transparency and accountability, an appropriate mechanism has been set up at
registered o?ce of the Company in New Delhi in line with the requirements of RTI Act. The status of RTI
requests during the year 2011–12 are as follows:
Details
Received during the
Year (including cases
transferred to other
Public Authority)
No. of cases
transferred to other
Public Authorities
Decisions where
request / appeals
rejected
Decisions where
requests / appeals
accepted
Requests 27 5 4 18
First appeals 2 0 2 (Partly rejected) 2 (Partly accepted)
14. CAUTIONARY STATEMENT
Statements in this management discussion and analysis may be ‘forward looking’ within the meaning
of the applicable Laws and Regulations. Actual performance may deviate from the explicit or implicit
expectations.
Health Mobile Unit purchased for rural communities
58 59
ONGC Videsh Limited continues to make e?orts
towards achieving highest standards of corporate
governance and responsible management
practices. The details of compliance of Guidelines
on Corporate Governance by the Company are
provided in the following sections.
1. COMPANY’S PHILOSOPHY ON
CORPORATE GOVERNANCE
The Company’s vision is to be a world–class
exploration and production company providing
energy security oil to the nation. Its philosophy on
Corporate Governance is to conduct business in
an e?cient, transparent, ethical and responsible
manner. The Company believes that good corporate
governance goes beyond legal compliances and
therefore embedded in the system all across.
2. BOARD OF DIRECTORS
2.1 Composition of the Board:
The Company is managed by the Board of Directors,
which formulates strategies & policies and reviews
its performance periodically. As per Articles of
Association (AOA) of the Company, the number
of Directors shall not be less than three and more
than ?fteen. As per AOA, Oil and Natural Gas
Corporation Limited (ONGC), the parent company,
appoints the Chairman and all part time Directors
and the President of India appoints all whole–time
Directors, including Managing Director on the
Board of the Company. Presently, the Board of
your Company comprises four Functional Directors
(including the Managing Director) and seven Non–
executive Directors (one Non–Executive Chairman,
two part–time o?cial nominee Directors and four
independent Directors).
The Chairman & Managing Director of ONGC is
also the Chairman of the Company. The Managing
Director who is the Chief Executive O?cer of
the Company and three whole–time Directors
i.e. Director (Finance), Director (Operations) and
Director (Exploration) manage the business of the
Company under the overall supervision, control
and guidance of the Board.
In accordance with letter No. C–31012/4/2010–CA
(Pt.) dated 16
th
September, 2011 from Ministry
of Petroleum & Natural Gas (MoP&NG), ONGC
appointed Mr. Arun Ramanathan, former Finance
Secretary, Government of India and an independent
Director on the Board of ONGC, as an Independent
Director on the Board of the Company. Similarly, in
accordance with letter No. 31024/3/2008–CA dated
5
th
June, 2012 from MoP&NG, ONGC appointed
Mr. Shyam Saran, former Foreign Secretary,
Government of India, Mr. Sanjay Govind Dhande,
Director, IIT, Kanpur and Mr. Shyamal Roy, Chairperson,
Executive Foundation, IIM, Bangalore as Independent
Directors on the Board of the Company.
2.2 Scheduling and selection of Agenda items
for Board/ Committee Meetings:
The meetings are convened by giving appropriate
advance notice after obtaining approval of the
Chairman of the Board/ Committee. Detailed
agenda, management reports and other explanatory
statements are circulated in advance in the de?ned
agenda format amongst the members/ invitees
to facilitate meaningful, informed and focused
decisions at the meetings. To address speci?c
urgent need, sometimes meetings are being called
at a shorter notice. In case of exigencies, resolutions
are also sometimes passed by circulation, which are
put up for con?rmation in the next meeting of the
Board/ Committee.
Where it is not practicable to circulate any
document or the agenda, being of confidential
nature, the same is tabled with the approval of
Managing Director. In special and exceptional
circumstances, additional or supplementary
item(s) on the agenda are permitted with the
permission of the Chairman. Sensitive subject
matters are sometimes discussed at the meeting
without written material being circulated.
The meetings of the Board/ Committee are
generally held at New Delhi. Directors may also
participate in the meetings through electronic
mode in case they are not able to be present in
person for the meeting.
In addition, Joint Secretary (International
Cooperation), MoP&NG, Government of India and
Joint Secretary, Department of Economic A?airs,
Ministry of Finance (MoF) are part–time Directors
on the Board of the Company.
To get bene?ts of broader domain expertise, Joint
Secretary (Exploration), MoP&NG and all functional
Directors on the Board of ONGC are permanent
invitees to the Board meetings.
Present composition of the Board of Directors of the Company is as follows:
Non–Executive Chairman:
Mr. Sudhir Vasudeva Chairman w.e.f. 4.10.2011
Whole–time Directors:
Mr. D. K. Sarraf Managing Director w.e.f. 16.09.2011
Mr. S.P. Garg Director (Finance)
Mr. N.K. Verma Director (Exploration) w.e.f. 01.01.2012
Mr. S. Bhattacharya Director (Operations) w.e.f. 01.07.2012
Part–time O?cial Nominee Directors:
Mr. Vivek Kumar, Joint Secretary (IC), MoP&NG Director
Mr. R.K. Khullar, Joint Secretary, DEA, MoF Director
Part–time Non–O?cial Directors:
Mr. Arun Ramanathan Independent Director w.e.f. 22.09.2011
Mr. ShyamSaran Independent Director w.e.f. 05.06.2012
Prof. Sanjay Govind Dhande Independent Director w.e.f. 05.06.2012
Prof. Shyamal Roy Independent Director w.e.f. 05.06.2012
Permanent Invitees:
Mr. A.K. Hazarika, Director (Onshore), ONGC Director upto 24.10.2011 and
Chairman upto 03.10.2011
Mr. U.N. Bose, Director (T&FS), ONGC Director upto 24.10.2011
Mr. S.V. Rao, Director (Exploration), ONGC Director upto 24.10.2011
Mr. K.S. Jamestin, Director (HR), ONGC Director upto 24.10.2011
Mr. A.K. Banerjee, Director (Finance), ONGC
Mr. A. Giridhar, Joint Secretary (Exploration), MoP&NG
CORPORATE GOVERNANCE REPORT
ONGC Videsh Limited’s presence in Brazil
60 61
Name of the Directors No. of Board
Meetings held
during the Tenure
No. of Board
Meetings
attended
Attendance at
the last AGM
(12–Aug–2011)
Details of
Directorships
held in other
Companies*
Membership held
in Committees,
including ONGC
Videsh**
Mr. D. K. Sarraf 8 8 Yes – –
Mr. Joeman Thomas 6 5 No – –
Mr. S.P. Garg 8 7 Yes – –
Mr. S. Roychaudhury 8 8 Yes – –
Mr. N.K. Verma 2 2 NA – –
Mr. Sudhir Vasudeva 8 8 Yes 8 –
Mr. Vivek Kumar 8 6 No 1 1
Mr. R.K. Khullar 8 2 No 3 1
Mr. Arun Ramanathan 4 4 NA 5 6
Mr. A.K. Hazarika 5 4 Yes 3 –
Mr. U.N. Bose 5 3 Yes 1 1
Mr. S.V. Rao 5 4 No – –
Mr. K.S. Jamestin 4 3 Yes 5 1
* The other directorships do not include directorships of Companies registered under Section 25 of the Companies Act, 1956, Foreign
Companies and Private Limited Companies.
** Membership of the Audit Committees and Shareholders’/ Investors’ Grievance Committees only of all Public Limited Companies have
been considered.
Notes:
(i) Directors are not related to each other;
(ii) Directors do not have any pecuniary relationships or transactions with the Company;
(iii) The Directorships/ Committee memberships are based on the latest disclosure received fromDirectors;
(iv) None of the Director is a Member of more than 10 Committees or Chairman of more than 5 Committees, across all the companies
in which he is a Director.
2.7 Resume of Directors proposed to be appointed/ re–appointed:
The brief resume of Directors including nature of their experience in speci?c functional areas and names of
companies in which they hold directorship and membership/ chairmanship of Board/ Committee, who have
been appointed after the date of the last report or are retiring by rotation and seeking re–appointment
are as below:
The agenda papers are prepared by the concerned o?cials, sponsored by the concerned functional Directors
and concurred by Director (Finance), wherever necessary and are approved by the Managing Director. Duly
approved agenda papers are circulated amongst the Board members/ Invitees by the Company Secretary.
Presentations are made to the Board/ Committee covering Exploration, Production, Operations, Financial,
Human Resources, Risk assessment, Marketing and operations of Joint Ventures/ Subsidiaries of the
Company etc. at the pre–scheduled Board/ Committee meetings.
The members of the Board/ Committee have complete access to all information of the Company. The
Board is also free to recommend inclusion of any matter in agenda for discussion. Senior management
o?cials are called to provide additional inputs on the items being discussed by the Board/ Committee, as
and when required.
2.3 Recording minutes of proceedings at the Board/ Committee Meeting:
Minutes of the proceedings of each Board/ Committee meeting are recorded. Draft minutes are approved
by the Chairman of the Board/ Audit Committee. These minutes are con?rmed/ noted in the next meeting
of the Board/ Audit Committee. The approved Minutes of the proceedings of the meetings are entered in
the Minutes Book.
2.4 Follow–up mechanism:
The guidelines for the Board/ Committee meetings facilitate an e?ective post–meeting follow–up, review
and reporting process for the action taken on decisions of the Board and Committee. The follow–up Action
Taken Report (ATR) on the decisions/ instructions/ directions of the Board/ Committee is submitted to the
Board/ Committee regularly.
2.5 Board Meetings:
Eight Board Meetings were held during the ?nancial year 2011–12 on the following dates:
20
th
May, 2011 27
th
July, 2011 12
th
August, 2011 16
th
September, 2011
7
th
October, 2011 14
th
November, 2011 11
th
January, 2012 22
nd
February, 2012
The minimumand maximuminterval between any two Board meetings was 15 days and 67 days respectively.
2.6 Board Attendance:
The details of attendance, directorship held in other companies etc. during the ?nancial year 2011–12 are
as under:
Republic Day Celebration in Tehran Signing of MOU with Government of South Sudan
62 63
2.7.1 Directors to be appointed:
Name Mr. D.K. Sarraf Mr. N.K. Verma Mr. Shyamal Bhattacharya
Date of Birth &
Age
September 3, 1957;
54 Years
January 2, 1959;
53 Years
October 18, 1954
57 Years
Date of
Appointment
September 16, 2011 (Appointed
as Managing Director)
January 1, 2012 July 1, 2012
Quali?cation – B.Com(Hons.)
– M.Com
– AICWA
– ACS
– M.Sc. (Geology) Special
– M.Tech (Petroleum
Exploration), Gold Medalist
– MBA (Finance)
– B.Tech (Petroleum)
No. of Shares held 1 (as Nominee of ONGC) Nil Nil
Experience in
speci?c Functional
Areas
Mr. D. K. Sarraf carries a very
rich and varied experience of
three decades in oil industry. In
the past, he held the position of
Director (Finance), ONGC and
ONGC Videsh Limited.
Mr. N.K. Verma has to his credit
experience of more than 30
years in various facets of
petroleumexploration and
development with ONGC.
Mr. Shyamal Bhattacharya has rich
experience of more than three
decades in various ?elds majority
being in reservoir studies. During
his stint as Executive Director of
ONGC Videsh, he was looking after
all aspects of overseas operations
of development and producing
assets.
Directorship
held in other
Companies*
Nil Nil Nil
Membership/
Chairmanship
of Committees,
including ONGC
Videsh**
Nil Nil Nil
Name Mr. Arun Ramanathan Mr. ShyamSaran Prof. Sanjay G Dhande Prof. Shyamal Roy
Date of Birth &
Age
April 25, 1949
63 years
September 4, 1946
65 Years
February 14, 1948
64 Years
August 25, 1946
65 Years
Date of
Appointment
September 22, 2011 June 5, 2012 June 5, 2012 June 5, 2012
Quali?cation – IAS (Retd.)
–PG in Nuclear Physics
–PG in Business
Administration and
Development Economics
–AICWA
– IFS (Retd.)
– Post Graduate
degree in Economics
– B.E. (Mech.)
– Ph. D. (Mech.)
– M. A.
– Ph. D.
No. of Shares held Nil Nil Nil Nil
Experience in
speci?c Functional
Areas1
Mr. Arun Ramanathan
joined the IAS in July
1973 and held several
assignments in various
ministries of Govt. of
India (GOI), such as
Secretary (Chemicals
& Petrochemicals),
Secretary (Financial
Services) and ?nally the
Union Finance Secretary.
Mr. ShyamSaran
belongs to the 1970
batch of the Indian
Foreign Service (IFS).
After career spanning
34 years in the IFS,
he was appointed
India’s Foreign
Secretary in 2004 and
held that position till
September, 2006.
He was awarded the
Padma Bhushan for
contribution to Civil
Service.
Mr. Sanjay Govind
Dhande, a brilliant
academician of high
caliber is presently
working as the Director
of IIT, Kanpur. He
served as a part–time
member of Telecom
Regulatory Authority
of India. He is also
credited with his
pioneering work in
the ?elds of Rapid
Prototyping, Rapid
Tooling and Reverse
Engineering.
Mr. Shyamal Roy is
presently Chairperson,
Executive Education IIM,
Bangalore. He was earlier
Professor, Economics and
Social Science Area, IIM,
Bangalore. He has been
an Economist/ consultant
of International Bank
for Reconstruction and
Development, (World
Bank) and also worked
as an Advisor, Policy
Analysis Division, Food &
Agriculture Organisation of
UN, Rome, Italy.
Name Mr. Arun Ramanathan Mr. ShyamSaran Prof. Sanjay G Dhande Prof. Shyamal Roy
Directorship
held in other
Companies*
1. JCT Electronics Limited
2. National Textile
Corporation Limited
3. Shipping Corporation
of India Limited
4. Indian Clearing
Corporation
Limited
5. Oil and Natural Gas
Corporation Limited
1. Wipro Limited
2. Indian Oil
Corporation Limited
Neyveli Lignite
Corporation Limited
Nil
Membership/
Chairmanship
of Committees,
including ONGC
Videsh Limited**
Member–Audit
Committee
1. JCT Electronics Limited
2. National Textile
Corporation Limited
3. Shipping Corporation
of India Limited
(Chairman)
4. Indian Clearing
Corporation Limited
5. Oil and Natural Gas
Corporation Limited
6. ONGC Videsh Limited
(Chairman)
Member – Shareholders’
/ Investors’ Grievance
Committee
1. Shipping Corporation
of India (Chairman)
2. Oil and Natural Gas
Corporation Limited
Nil Nil Nil
2.7.2 Directors to be reappointed:
Name Mr. S.P. Garg Mr. Rajesh Kumar Khullar
Date of Birth & Age August 15, 1956; 55 years August 31, 1963; 48 Years
Date of Appointment September 8, 2008 March 11, 2011
Quali?cation – B.Com(Hons.)
– FCA
– FCS
– AICWA
– IAS
– M.Sc in Physics
No. of Shares held 1 (as Nominee of ONGC) Nil
Experience in
speci?c Functional
Areas
Mr. S.P. Garg carries a very rich and varied
experience in the ?eld of Finance including
Corporate Accounts, Project Management,
Taxation, Internal Audit etc. He previously held the
position of GM(Finance) and Company Secretary,
ONGC.
Mr. Rajesh Kumar Khullar is an IAS o?cer of
1988 batch and currently holding the position of
Joint Secretary in the Department of Economic
A?airs, Ministry of Finance. He previously served
on various positions in the Government such as
Director, Public Relations Department, Haryana,
Managing Director, Haryana Tourism Corporation,
Commissioner, Municipal Corporation, Faridabad
etc.
64 65
Name Mr. S.P. Garg Mr. Rajesh Kumar Khullar
Directorship held in
other Companies*
Nil 1. Indian Railway Finance Corporation Ltd.
2. Union Bank of India
3. Indian Infrastructure Finance Co. Ltd.
Membership/
Chairmanship
of Committees
including ONGC
Videsh Limited**
Nil Member, Audit Committee – ONGC Videsh Limited
* The other directorships do not include directorships of Companies registered under Section 25 of the Companies Act, 1956, Foreign
Companies and Private Limited Companies.
** Membership/ Chairmanship of the Audit Committees and Shareholders’/ Investors’ Grievance Committees of all Public limited companies
only have been considered.
3. AUDIT COMMITTEE
3.1 Composition of the Audit Committee:
The composition of the Audit Committee during the year 2011–12 was as follows:
• Mr. Arun Ramanathan – Member (w.e.f. 26
th
September, 2011) and Chairman
(w.e.f. 14
th
November, 2011);
• Mr. Vivek Kumar – Member (Chairman up to 13
th
November, 2011);
• Mr. U.N. Bose – Member upto 24
th
October, 2011;
• Mr. D. K. Sarraf – Member upto 15
th
September, 2011
• Mr. Sudhir Vasudeva – Member upto 3
rd
October, 2011;
• Mr. S.V. Rao – Member w.e.f. 4
th
October, 2011 till 24
th
October, 2011;
• Mr. R. K. Khullar – Member w.e.f. 31
st
October, 2011
The terms of reference of the Audit Committee are in accordance with Section 292A of the Companies
Act, 1956 and the guidelines on Corporate Governance issued by the Department of Public Enterprises.
Mr. Arun Ramanathan, Independent Director, was appointed as Chairman of the Committee w.e.f. 14
th
Nov. 2011. Mr. Arun Ramanathan joined the IAS in July 1973 and held several assignments in various
ministries of Govt. of India (GOI). In the GOI, he was Secretary (Chemicals & Petrochemicals), Secretary
(Financial Services) and finally the Union Finance Secretary. Mr. Arun Ramanathan was the Finance
Secretary at the time of the global financial crisis and was nominated by the Prime Minister to Chair
the Group of Secretaries to recommend measures needed to counter the meltdown in the financial
and industrial sectors. Mr. Vivek Kumar, Chairman of the Committee (upto 13
th
November, 2011) and
Government nominee Director is an IAS officer and MA (International Relations). He is currently
holding the position of Joint Secretary (International Cooperation) in MoP&NG and has served on
various positions in the Government.
All members of the Committee have requisite ?nancial and management experience. All Functional
Directors of ONGC Videsh, Director (Finance), ONGC and Internal Auditors are the permanent invitees to
Committee’s meetings. Representatives of Statutory Auditors are invited to attend and participate in the
meetings. Executives of Finance and other departments are invited on need basis. Company Secretary acts
as the Secretary to the Committee.
3.2 Role of the Audit Committee:
The role of the Audit Committee includes the following:
3.2.1 Oversight of the company’s ?nancial reporting process and the disclosure of its ?nancial information
to ensure that the ?nancial statement is correct, su? cient and credible.
3.2.2 Recommending the ?xation of audit fees to the Board.
3.2.3 Approval of payment to statutory auditors for any other services rendered by the statutory
auditors.
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66 67
3.2.12 To review the functioning of the Whistle Blower Mechanism.
3.2.13 To review the follow up action on the audit observations of the C&AG audit, if any.
3.2.14 Review/ check the contracts on nomination basis as per CVC guidelines.
3.2.15 To review the follow up action taken on the recommendations of Committee on Public Undertakings
(COPU) of the Parliament.
3.2.16 Provide an open avenue of communication between the independent auditor, internal auditor and
the Board of Directors.
3.2.17 Review and pre–approve all related party transactions in the company. For this purpose, the Audit
Committee may designate a member who shall be responsible for pre–approving related party
transactions.
3.2.18 Review with the independent auditor the co–ordination of audit e?orts to assure completeness of
coverage, reduction of redundant e?orts, and the e?ective use of all audit resources.
3.2.19 Consider and review the following with the independent auditor and the management:
– The adequacy of internal controls including computerized information system controls and
security, and
– Related ?ndings and recommendations of the independent auditor and internal auditor, together
with the management responses.
3.2.20 Consider and review the following with the management, internal auditor and the independent
auditor:
– Signi?cant ?ndings during the year, including the status of previous audit recommendations.
– Any di?culties encountered during audit work including any restrictions on the scope of activities
or access to required information,
3.3 Minutes of the Audit Committee:
Minutes of the meetings of the Audit Committee are approved by the Chairman of the Committee and are
noted by the Board of Directors in the subsequent meeting.
3.2.4 Reviewing, with the management, the annual ?nancial statements before submission to the Board
for approval, with particular reference to:
a. Matters required to be included in the Directors’ Responsibility Statement and in the Director’s
report in terms of clause (2AA) of section 217 of the Companies Act, 1956;
b. Changes, if any, in accounting policies and practices and reasons for the same.
c. Major accounting entries involving estimates based on the exercise of judgment by
management;
d. Signi?cant adjustments made in the ?nancial statements arising out of audit ?ndings;
e. Compliance with legal requirements relating to ?nancial statements;
f. Disclosure of any related party transactions; and
g. Quali?cations in the draft audit report, if any.
3.2.5 Reviewing, with the management, the quarterly/ half yearly ?nancial statements as may be required
before submission to the Board for approval.
3.2.6 Reviewing, with the management, performance of internal auditors and adequacy of the internal
control systems.
3.2.7 Reviewing the adequacy of internal audit function, it any, including the structure of the internal
audit department, sta?ng and seniority of the o?cial heading the department, reporting structure
coverage and frequency of internal audit.
3.2.8 Discussion with internal auditors and/ or auditors any signi?cant ?ndings and follow up there on.
3.2.9 Reviewing the ?ndings of any internal investigations by the internal auditors/ auditors/ agencies into
matters where there is suspected fraud or irregularity or a failure of internal control systems of a
material nature and reporting the matter to the Board.
3.2.10 Discussion with statutory auditors before the audit commences, about the nature and scope of
audit as well as post–audit discussion to ascertain any area of concern.
3.2.11 To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,
shareholders and creditors, if any.
Presentation on Far East economic forum, Sakhalin
Tanker Loading DeKastro
68 69
3.4 Meetings:
Six meetings of the Audit Committee were held during the ?nancial year on the following dates:
20
th
May, 2011 27
th
July, 2011 12
th
August, 2011
14
th
November, 2011 11
th
January, 2012 22
nd
February, 2012
3.5 Attendance:
Members Meetings held during the tenure Meetings attended
Mr. Vivek Kumar 6 4
Mr. Arun Ramanathan 3 3
Mr. U. N. Bose 3 3
Mr. D. K. Sarraf 3 3
Mr. Sudhir Vasudeva 3 3
Mr. R. K. Khullar 3 1
Mr. S.V. Rao 0 0
In viewof induction of three more Independent Directors on the Board of your Company with e?ect from5
th
June, 2012, your Company
has reconstituted the Audit Committee with three Independent Directors as members and constituted the following newcommittees
of the Board as this would strengthen the deliberations and functioning of the Board:
1. Human Resource Management and Remuneration Committee
2. Project Appraisal, HSE and Risk Management Committee
3. Financial Management Committee
4. EQUITY SHARES HELD BY DIRECTORS (AS ON 31
ST
MARCH, 2012)
Mr. Sudhir Vasudeva, Mr. D.K. Sarraf and Mr. S.P. Garg hold one share each of the Company as nominee of
Oil and Natural Gas Corporation Limited.
5. CODE OF CONDUCT FOR MEMBERS OF THE BOARD AND SENIOR
MANAGEMENT
The Company is committed to conduct its business in accordance with the highest standards of business
ethics and comply with applicable laws, rules and regulations. A code of conduct, evolved in line with the
parent Company ONGC was adopted by the Board which is applicable to all Members of the Board and
Senior Management who have con?rmed compliance with the Code of Conduct for the year under review.
A copy of the Code is available on the Company’s website www.ongcvidesh.com.
A declaration signed by Chairman is given below:
“I hereby con?rm that:
The Company has obtained from the Members of the Board and Senior Management, a?rmation that they
have complied with the Code of Conduct for Directors and Senior Management during the ?nancial year
2011–12.”
(Sudhir Vasudeva)
(Chairman)
6. SUBSIDIARY MONITORING FRAMEWORK
All subsidiaries of the Company, except one subsidiary in Brazil, are managed by their respective Boards
having the duties to manage such companies in the best interest of their stakeholders. Brazilian company
is managed through administrators as permitted under the local laws. Being 100% shareholder, the
Company nominates its representatives on the Boards of subsidiaries and monitors the performance of its
subsidiaries periodically.
ONGC Videsh had twenty nine subsidiaries (comprising ?ve direct subsidiaries and twenty four indirect
subsidiaries) as on 31
st
March 2012. Details of Subsidiaries are as under:
Sl
No.
Name of the Subsidiary Date of Incorporation/
Acquisition
Country in which
Incorporated
Direct Subsidiaries:
1 ONGC Nile Ganga B.V. 12.03.2003 Netherlands
2 ONGC Narmada Limited 07.12.2005 Nigeria
3 ONGC Amazon Alaknanda Limited 08.08.2006 Bermuda
4 Jarpeno Limited 12.08.2008 Cyprus
5 Carabobo One AB 25.02.2010 Sweden
Indirect Subsidiaries:
1 ONGC Campos Ltda. 16.03.2007 Brazil
2 ONGC Nile Ganga (Cyprus) Ltd. 26.11.2007 Cyprus
3 ONGC Nile Ganga (San Cristobal) B.V. 29.02.2008 Netherlands
4 ONGC Satpayev E&P B.V 07.06.2010 Netherlands
5 ONGC Caspian E&P B.V 07.06.2010 Netherlands
6 Biancus Holdings Limited 13.01.2009 Cyprus
7 Imperial Energy Tomsk Limited 13.01.2009 Cyprus
8 Imperial Energy (Cyprus) Limited 13.01.2009 Cyprus
9 Imperial Energy Nord Limited 13.01.2009 Cyprus
10 Imperial Energy Gas Limited 13.01.2009 Cyprus
11 Nefsilius Holdings Limited 13.01.2009 Cyprus
12 RK Imperial Energy Kostanai Limited 13.01.2009 Cyprus
13 Imperial Frac Services ( Cyprus) Limited 13.01.2009 Cyprus
14 Freshspring Investments Limited 13.01.2009 Cyprus
15 Redcli?e Holdings Limited 13.01.2009 Cyprus
16 San Agio Investments Limited 13.01.2009 Cyprus
17 LLC Sibinterneft 13.01.2009 Russian Federation
18 LLC Allianceneftegaz 13.01.2009 Russian Federation
19 LLC Nord Imperial 13.01.2009 Russian Federation
20 LLC Imperial Energy Tomsk Gas 13.01.2009 Russian Federation
21 LLC Stratum 13.01.2009 Russian Federation
22 LLC Imperial Trans Service 13.01.2009 Russian Federation
23 LLC Rus Imperial Group 13.01.2009 Russian Federation
24 Petro Carabobo Ganga B.V 26.02.2010 Netherlands
7. ANNUAL GENERAL MEETINGS (AGMs)
Location, date and time, where the AGMs were held during the preceding three years:
Year Location Date Time (IST)
2008–09 4
th
Floor, Kailash Building, 26, Kasturba Gandhi
Marg, NewDelhi – 110 001.
16
th
September, 2009 12.00 Noon
2009–10 4
th
Floor, Kailash Building, 26, Kasturba Gandhi
Marg, NewDelhi – 110 001.
15
th
September, 2010 10.00 AM
2010–11 4
th
Floor, Kailash Building, 26, Kasturba Gandhi
Marg, NewDelhi – 110 001.
12
th
August, 2011 11:00 AM
Special Resolutions passed during last 3 AGMs
No Special Resolution was passed during the last three AGMs of the Company.
70 71
a. Executive Directors
(` in Million)
SI
No.
Names Salary Including
DA
Other bene?ts &
perks
Performance
Incentives
Contribution to PF &
other Funds
Grand Total
1 Mr. D.K. Sarraf 1.03 (0.01) 1.16 0.09 2.27
2 Mr. S.P. Garg 1.75 0.07 0.96 0.16 2.94
3 Mr. S. Roychaudhury 1.80 0.97 0.91 0.16 3.84
4 Mr. N.K. Verma 0.41 0.35 – 0.04 0.80
5 Mr. Joeman Thomas 5.20 0.59 0.93 0.12 6.84
b. Non–Executive Directors (Part–time non–offcial)
The details of sitting fees paid to Non–Executive non–o?cial Director during the year 2011–12 are as
follows:
Name Sitting fees (` in Million)
Mr. Arun Ramanathan 0.16
8.4 Details of administrative and o?ce expenses as a percentage of total expenses and reasons for
increase:
Particulars 2011–12 2010–11 Reasons for variation
Total expenses * 16,050.36 13,035.76 Though the increase in administrative and
o?ce expenses in absolute terms is marginal, in
percentage terms, the administrative and o?ce
expenses has reduced due to increase in total
expenses mainly due to increase in royalty.
Administrative and o?ce expenses 1,272.83 1,250.28
Administrative and o?ce expenses as
a percentage of total expenses
8% 9.6%
*Includes Production, Transportation, Selling & Distribution Expenditure but excludes Provisions & Write O? (Net).
9. COMPLIANCES
The Company has complied with applicable rules and the requirement of regulatory authorities and no
penalties or strictures were imposed on the Company on any matter related to any guidelines issued
by Government during last three years. All statutory ?lings were within stipulated time with various
authorities. No Presidential Directives have been issued during 2011–12.
10. MEANS OF COMMUNICATION
• Half–Yearly Results: Pursuant to listing of the debt securities in the National Stock Exchange of India
Ltd., the Company intimated half–yearly ?nancial results/ audited annual ?nancial results during 2011–
12 to the Stock Exchange immediately after being taken on record and approved by the Board. These
?nancial results were published in the leading English and Hindi dailies having wide circulation. The
results were also sent to Debenture Trustee M/s IDBI Trusteeship Services Limited and displayed on the
website of the Company www.ongcvidesh.com.
• News Release, Presentation etc.: The o?cial news releases are displayed on the Company’s website
www.ongcvidesh.com.
• Website: The Company’s website is www.ongcvidesh.com. Annual Report and Audited ?nancial
statements are also available on the web–site.
• Annual Report: Annual Report containing inter–alia, Audited Accounts, Consolidated Financial
Statements, Directors’ Report, Auditors’ Report, and other important information is circulated to the
members and others entitled thereto. The Management Discussion and Analysis (MD&A) Report and
Corporate Governance Report form part of the Directors’ Report in the Annual Report.
• Compliance O?cer: The Company has designated Mr. V. Sreedher, Company Secretary as Compliance
O?cer for servicing of debenture investors. The email id [email protected] has
been created exclusively for addressing the queries of debenture investors:
8. DISCLOSURES
8.1 Material Contracts/ Related Party Transactions:
The Company has not entered into any material ?nancial or commercial transactions with the Directors
or the Senior Management personnel or their relatives or the companies and ?rms, etc. in which they are,
either directly or through their relatives, interested as Directors and/ or Partners except with certain PSUs,
where the Directors are Directors without the required threshold of shareholdings. The Company has
obtained declarations from all concerned in this regard, which were noted by the Board.
Transactions with related parties are disclosed in Note No. 54 to the Stand–alone Accounts of the Company
in the Annual Report. Being a State enterprise, no disclosure has been made in respect of the transactions
with state enterprises including subsidiary companies in line with Accounting Standard (AS) 18 on Related
Party Disclosures.
8.2 The Company has not incurred any expenditure during the year 2011–12, which was not for the purpose
of the business of the Company or which was personal in nature and incurred for the members of the
Board of Directors and Senior Management personnel.
8.3 DIRECTORS’ REMUNERATION
ONGC Videsh Limited being a Government Company, appointment and terms and conditions of remuneration
of Executive Directors (whole–time functional) are determined by the Government through administrative
ministry, the MoP&NG. Non–executive part–time o?cial Director do not draw any remuneration. The part–
time non–o?cial Director received sitting fees of `20,000 for each Board meeting and Board Committee
meeting attended during the year 2011–12.
Remuneration of Directors for the year ended 31
st
March, 2012 was as follows:
AK ?elds temporary production facility, Syria
72 73
11. ANNUAL GENERAL MEETING
Date : 17
th
August, 2012
Time : 5.00 PM
Venue : 4
th
Floor, Kailash Building, 26, K.G. Marg,
New Delhi – 110001
12. SHARE OWNERSHIP PATTERN AS ON 31
ST
MARCH, 2012
Category No. of shares held of `100 each Percentage of shareholding
Oil and Natural Gas Corporation Limited and its
nominees
100,000,000 100%
13. MAJOR PROJECTS:
The list of projects of ONGC Videsh, including held through subsidiaries/ Joint Venture companies, presently
is as below:
1. Block 06.1, Vietnam
2. Block 8, Iraq
3. Sakhalin–1, Russia
4. Block A–1, Myanmar
5. Block A–3, Myanmar
6. Farsi O?shore Block, Iran
7. Area 43, Libya
8. GNPOC Blocks 1, 2 & 4, Sudan
9. Pipeline Project, Sudan
Yastreb rig in Odoptu process facilities
Orlan Platform
74 75
10. Block 5A, South Sudan
11. GPOC Blocks 1, 2 & 4, South Sudan
12. Block XXIV, Syria
13. Al Furat Project (4 PSAs), Syria
14. Block BC–10, Brazil
15. Block BM–S–74, Brazil
16. Blocks 25, 26, 27, 28, 29 & 36, Cuba
17. Block 128, Vietnam
18. Blocks 34 & 35, Cuba
19. Mansarovar Energy Project, Colombia
20. Block RC–8, Colombia
21. Block RC–9, Colombia
22. Block RC–10, Colombia
23. Block CPO–5, Colombia
24. Block SSJN–7, Colombia
25. OPL – 285, Nigeria
26. Block BM–SEAL–4, Brazil
27. Block BM–BAR–1, Brazil
28. San Cristobal Project, Venezuela
29. Carabobo–1 Project, Venezuela
30. Imperial Energy (7 blocks), Russia
31. Satpayev Project, Kazakhstan
14. RISK MANAGEMENT
The framework for risk assessment and minimization thereto has been implemented in the Company.
15. CEO/CFO CERTIFICATION
In terms of Department of Public Enterprises Guidelines on Corporate Governance, the certi?cation by the
CEO/ CFO on the ?nancial statements and internal controls relating to ?nancial reporting for the ?nancial
year 2011–12 was submitted for review to the Audit Committee/ Board of Directors on 21
st
May, 2012.
Main O?ce Building & Living quarter, Chyvo Onshore process facilities
76 77
16. SECRETARIAL AUDIT REPORT
Secretarial Audit Report con?rming compliance to the applicable provisions of the Companies Act, Debt
Listing Agreement, SEBI guidelines etc. and Certi?cate on compliance of guidelines on Corporate Governance
issued by DPE has been obtained M/s A. N. Kukreja & Co., practicing Company Secretaries for the ?nancial
year ended 31
st
March, 2012 which was noted by the Board and forms part of the Directors’ Report.
17. AUDIT QUALIFICATION
The Company is in the regime of unquali?ed ?nancial statements.
18. TRAINING OF BOARD MEMBERS
Though, no speci?c training programmes were arranged for Board members, detailed presentations are
made by senior executives/ professionals/ consultants on business related issues, risk assessment, strategy
e?ect of regulatory changes etc. at the Board/ Committee meetings. The Company has recently adopted
“Policy for Training of Directors”.
19. WHISTLE BLOWER POLICY
A Whistle Blower Policy has been implemented by our parent company ONGC and is functional from
1
st
December, 2009. The policy ensures that a genuine Whistle Blower is granted due protection from any
victimization.
20. FEE TO STATUTORY AUDITORS
The total fee paid/ payable to the Statutory Auditors for the ?nancial year 2011–12 was `3.85 million (previous
year `3.49 million).
21. GENERAL INVESTOR (DEBENTURE HOLDERS) INFORMATION:
t -JTUJOH0O4UPDL&YDIBOHF
Company’s debt securities are listed on the Wholesale Debt Market (WDM) segment of National Stock
Exchange of India Limited (NSE).
t %FCFOUVSF5SVTUFF
IDBI Trusteeship Services Limited
Asian Building, Ground Floor,
17, R. Kamani Marg, Ballard Estate,
Mumbai – 400 023.
t 1BZNFOUPGMJTUJOH'FFT
Annual listing fee till the year 2012–13 has been paid by the Company.
Marine Tanker
78 79
The preparation of ?nancial statements of ONGC Videsh Limited for the year ended 31 March 2012 in
accordance with the ?nancial reporting framework prescribed under the Companies Act, 1956 is the
responsibility of the management of the Company. The Statutory Auditors appointed by the Comptroller
and Auditor General of India under Section 619 (2) of the Companies Act, 1956 are responsible for expressing
opinion on these ?nancial statements under Section 227 of the Companies Act, 1956 based on independent
audit in accordance with the auditing and assurance standards prescribed by their professional body, the
Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit
Report dated 21 May, 2012.
I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under
section 619 (3) (b) of the Companies Act, 1956 of the ?nancial statements of ONGC Videsh Limited for the
year ended 31 March 2012. This supplementary audit has been carried out independently without access
to the working papers of the statutory auditors and is limited primarily to the inquiries of the Statutory
Auditors and company personnel and a selective examination of some of the accounting records. On the
basis of my audit nothing signi?cant has come to my knowledge which would give rise to any comment
upon or supplement to Statutory Auditors’ report under section 619 (4) of the Companies Act, 1956.
For and on behalf of the
Comptroller and Auditor General of India
(Naina A. Kumar)
Principal Director of Commercial Audit
Place : New Delhi. & Ex–O? cio Member, Audit Board –II
Date : July 10, 2012. New Delhi.
Sd/–
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA
UNDER SECTION 619 (4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS
OF ONGC VIDESH LIMITED FOR THE YEAR ENDED 31 MARCH, 2012
100 ton capacity Workover rig
80 81
India (Issue and Listing of Debt Securities)
Regulations, 2008.
4) The conditions of Listing Agreement for Debt
Securities entered into with the National Stock
Exchange of India Ltd.
5) In our opinion and to the best of our information
and according to explanations given to us by
the management, we certify that, except the
compositions of the Board of Directors and
Audit Committee with regard to independent
Directors, the Company has complied with the
DPE guidelines on Corporate Governance.
For A.N. Kukreja & Co
Company Secretaries
(A.N. Kukreja)
New Delhi Proprietor
May 21, 2012. CP 2318
The Board of Directors
ONGC Videsh Ltd.
601 “Kailash”
26, Kasturba Gandhi Marg
New Delhi – 110 001
We have examined the registers records and
documents of ONGC Videsh Ltd. (the Company) for
the period 1.4.2011 to 31.03.2012 according to the
provision of:
1. The Companies Act, 1956 and Rules made under
Act;
2. The Depositories Act, 1996 and Regulations
framed under Act;
3. Securities and Exchange Board of India (Issue
and Listing of Debt Securities) Regulations
2008.
4. The Listing Agreement for Debt Securities with
the National Stock Exchange of India Ltd., and
5. Guidelines on Corporate Governance for
Central Public Sector Enterprises as stipulated
in the O.M. No. 18 (8) 2005– GM dated 14
th
May,
2010 of the Ministry of Heavy Industries and
Public Enterprises, Government of India (the
DPE Guidelines on Corporate Governance”).
1) Based on our examination and veri?cation of
records produced to us and according to the
information and explanations given to us by
the Company, in our opinion, the Company has
complied with the provisions of the Companies
Act, 1956 (‘the Act) and Rules made under
the Act and the Memorandum and Articles of
Association of the Company with regard to:
a) Maintenance of statutory registers and
documents and making necessary entries
therein;
b) Filing of requisite forms and returns with
the Registrar of Companies, NCT of Delhi
and Haryana within the time prescribed
under the Act;
c) Service of documents by the Company on
its and the Registrar of Companies;
q) The Company has deposited both the
employees’ and employer’s contribution
with the ONGC Employees Contributory
Provident Fund Trust within the prescribed
time pursuant to Section 418 of the Act
during the relevant period.
r) There was no prosecution initiated against or
show cause notice received by the Company
and no ?nes or any other punishment was
imposed on the Company, its Directors and
o?cers during the relevant period for any
o?ences under the Act.
We further report that
2) The Company has complied with the provisions
of the Depositories Act, 1956 and reconciliation
of records of dematerialized non–convertible
redeemable bonds in the nature of
debentures.
3) The Company has complied with the
provisions of Securities and Exchange Board
d) Notice of Board Meetings and Committee
Meetings of Directors;
e) Convening and holding of the meetings
of Directors and Committees of Directors
including passing of resolutions by
circulation;
f) The 46
th
Annual General Meeting held on
12.08.2011;
g) Minutes of proceedings of General Meeting
and meetings of Board and its Committee;
h) Constitution of Board of Directors
and appointment, retirement and re–
appointment of directors;
i) Appointment of Chairman, Managing
Director, Whole Time Directors and
non–executive directors and their
remuneration;
j) The Directors disclosed their interests and
concerns in contracts and arrangements,
shareholdings and directorships in other
companies and interests in order entities
and their disclosures have been noted and
recorded by the Board;
k) Transfer of share and issue and delivery
of original and duplicate certi?cates of
shares.
l) Investment of Company’s funds including
inter corporate loans and investments, and
borrowing powers;
m) Appointment and remuneration of Auditors/
Cost Auditor;
n) The Company has not invited/accepted
any deposits falling within the purview of
Section 58A of the Act during the relevant
period;
o) The Company has not made any secured
borrowings during the relevant period;
p) The Company has not bought back any
shares during the relevant period;
Sd/–
SECRETARIAL AUDIT REPORT AND CERTIFICATE ON COMPLIANCE
OF DPE GUIDELINES ON CORPORATE GOVERNANCE FOR THE
FINANCIAL YEAR ENDED 31st MARCH, 2012.
82 83
AUDITORS’ REPORT
To
THE MEMBERS
ONGC VIDESH LIMITED
1 We have audited the accompanying ?nancial
statements of “ONGC VIDESH LIMITED”, (the
company) which comprise the Balance Sheet as
at 31st March 2012, and the statement of Pro?t &
Loss Account and the Cash Flow Statement for
the year then ended, in which are incorporated,
the company’s share in the total value of
assets, liabilities, expenses and net pro?ts of
7 International Joint Ventures audited by other
auditors appointed by the management of the
respective joint ventures/the company under
respective local laws / Production Sharing
Contract / Joint Operating Agreement as at
31st March 2012 and 5 International Joint
Ventures audited by such other auditors as at
31st December 2011, however updated
for position as at 31st March 2012 by the
management and unaudited 7 international
Joint Ventures. These audited joint ventures
accounts (including for the period ended Dec
31, 2011) cover 95% of Income, 89% of Fixed
Assets, 92% of Producing Properties, 92% of
CWIP and 76% of EWIP & DWIP. These ?nancial
statements are the responsibility of the
Company’s Management. Our responsibility
is to express an opinion on these ?nancial
statements based on our audit.
Considering the fact that actual operations
are performed outside India and operator is
responsible for maintaining the original books
of account on behalf of all the members as
per Joint operating agreement, we have
conducted our audit by relying on such
information furnished by the operator based
on the audited statements or where Joint
Ventures are not audited, relying upon the
information furnished by the management.
2 We conducted our audit in accordance with
auditing standards generally accepted in
India. Those standards require that we plan
and perform the audit to obtain reasonable
assurance about whether the ?nancial
statements are free of material misstatements.
An audit includes examining, on a test basis,
evidence supporting the amounts and
disclosures in the ?nancial statements. An
audit also includes assessing the accounting
principles used and signi?cant estimates made
by the management, as well as evaluating the
overall ?nancial statements presentation. We
believe that our audit provides a reasonable
basis for our opinion.
3 We have placed reliance on technical/
commercial evaluation by the management
in respect of categorization of expenditure
on project in Exploratory & Development
Wells in Progress, Producing Properties
and Capital Work in Progress, Wells Status,
allocation of cost incurred on them, depletion
of producing properties on the basis of proved
developed hydrocarbon reserves as estimated
by REC of the parent company, provision for
abandonment costs, allocation of depreciation
on ?xed assets (including support equipment
and facilities) and liabilities against agreed
minimum work program. We have also placed
reliance on the management’s assessment of
impairment indicators and impairment results.
4 As required by the Companies (Auditors Report)
Order, 2003 and read together with the Companies
(Auditor’s Report) Amendment order, 2004
(hereinafter referred to as the order) issued by
the Central Government of India in terms of sub–
section (4A) of section 227 of the Companies Act,
1956, we enclose in the Annexure a statement on
the matters speci?ed in paragraphs 4 and 5 of the
said order.
5 Further to our comments above, we report
that:
(i) We have obtained all the information and
explanations, which to the best of our
knowledge and belief were necessary for
the purposes of our audit;
(ii) In our opinion, proper books of account
as required by law have been kept by the
Company at head o?ce so far as appears
from our examination of the books.
(iii) The Balance Sheet and Statement of Pro?t
and Loss and Cash Flow Statement dealt
with by this report are in agreement with
the books of account.
(iv) In our opinion and based on the information
given to us, the Statement of Pro?t and
Lossand Balance Sheet and Cash Flow
Statement referred to in this report comply
with the Accounting Standards referred
to in sub–section (3C) of Section 211 of the
Companies Act, 1956.
(v) Disclosure in terms of clause (g) of sub
section (1) of section 274 of the Companies
Act, 1956 is not required as per noti?cation
no. GSR829 (E) dated October 21
st
, 2003
issued by the Department of Company
a?airs.
6 In our opinion and to the best of our information
and according to the explanations given to us, the
said accounts read with the Notes on accounts
and the Signi?cant Accounting Policies give the
information required by the Companies Act,
1956, in the manner so required and give a true
and fair view in conformity with the accounting
principles generally accepted in India:
a) In the case of Balance Sheet, of the state of
a?airs of the Company as at 31
st
March 2012;
and
b) In the case of the Pro?t and Loss Account, of
the pro?t of the Company for the year ended
on that date; and
c) In the case of Cash Flow Statement, of the
cash ?ows of the Company for the year
ended on that date.
Data centre at ONGC Videsh Corporate o?ce
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
84 85
1. In respect of ?xed assets
a) The company has generally maintained
proper records showing full particulars,
including quantitative details and situation
of ?xed assets in India at headquartersand in
case of operated projects/branches outside
India. In respect of non– operated ventures
outside India ?xed assets are accounted for
based on the information made available by
the respective operators of joint ventures
and such ?xed assetsare in the custody of
the consortium and/or operator on behalf
of the partners for business operation
throughout the term of the respective
agreements.
b) As explained to us, during the year, the
management has carried out physical
veri?cation of ?xed assets situated at
headquarters, operated ventures outside
India as well as major non operated
joint ventures in accordance with the
requirements of the respective agreements.
There was no material discrepancies noticed
during such physical veri?cation.
c) We have been informed by the management
that no substantial part of ?xed assets has
been disposed o? by the company during
the year.
2. In respect of its inventories:
a) The company does not have any inventory
in India. However, inventories lying outside
India in non operated projects are in the
custody of the consortium and/or operator
on behalf of the consortium partners. During
the year under audit, physical veri?cation of
majority of inventories lying in non operated
projects was conducted by the operator of
the joint ventures in accordance with the
requirements of the respective agreements.
It was informed that the inventory held by
the company representing company’s share
of participating interest in joint ventures
outside India is incorporated in the books
of accounts on the basis of information
provided by the respective operators.
b) As informed by the management the
procedures of physical veri?cation of
inventory lying outside India, followed by
the management in respect of operated and
non–operated Joint Ventures are reasonable
and adequate in relation to the size of the
company and the nature of its business.
c) There was no material discrepancies noticed
during such physical veri?cations.
3. In respect of loans:
a) According to the information and
explanations given to us, the Company has
not granted or taken any loan, secured or
unsecured, to / from companies, ?rms or
other parties listed in the register maintained
under Section 301 of the Companies Act,
1956. In view of this, sub clauses (b), (c) and
(d) of clause (iii) are not applicable.
b) As per information and explanation given
to us, the Company has not taken any loan
from the parties covered under the register
maintained u/s 301 of the Companies Act,
1956. In view of this sub clause (e), (f) & (g)
of clause (iii) are not applicable.
4. In our opinion and according to the
information and explanations given to us,
in general, there is an adequate internal
control procedure commensurate with the
size of the Company and the nature of its
business for the purchase of inventories
and ?xed assets acquired at headquarters
in India. According to information and
explanations given to us, internal control
system in respect of inventory and ?xed
assets purchased by the company and sales
for the operated ventures outside India is
commensurate with the nature and size of
its business. However, all purchases of ?xed
assets and inventory in respect of the non–
operated Joint Ventures are made outside
India by the respective operators. It is not
practically feasible or appropriate to check
the internal control system being prevalent
at respective project sites for non–operated
joint ventures.
5. In respect of its inventories:
a) According to the information and
explanations given to us, during the year
under audit there have been no contracts
or arrangements which need to be entered
in the register maintained under section 301
of the Companies Act, 1956.
b) Accordingly the provisions of the clause v (b)
of paragraph 4 of the order (as amended)
are not applicable to the company.
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in Paragraph 4 of our report of even date)
6. In our opinion and according to the information
and explanations given to us, the Company has
not accepted any deposit from public within
the meaning of section 58A and 58AA and any
other relevant provisions of the Companies
Act, 1956 and the rules framed there under.
7. The company has a system of internal audit,
which in our opinion, is commensurate with the
size and nature of its business.However e?orts
be made to further strengthen the same.
8. We have broadly reviewed the books of account
maintained by the Company pursuant to the
rules made by the Central Government for the
maintenance of cost records under section 209
(1) (d) of the Companies Act, 1956 and we are
of the opinion that prima facie the prescribed
accounts and records have been made and
maintained. However, as explained to us, cost
audit is yet to be conducted for FY 2011–12.
9. a) Provident fund contributions are transferred
by the company to its parent company,
ONGC. ONGC is responsible for depositing
the same with appropriate authority.
According to the information given to us,
there are no undisputed statutory dues
pending as on last day of current ?nancial
year for a period of more than six months
from the date they become payable.
b) As per information and explanations
provided to us, no dues of income tax/
sales tax/VAT/ wealth tax/ custom duty/
excise duty/ cess (except cess under section
441A of the Companies Act 1956 since the
aforesaid section has not yet been made
e?ective by the Central Government) are
pending on account of any dispute.
10. The company has no accumulated losses at the
end of the current ?nancial year and has not
incurred cash losses during the current and in
the immediately preceding ?nancial year.
11. As per the information and explanation given
by the management, we are of the opinion that
company has not defaulted in the repayment
of dues to any ?nancial institution, banks and
debenture holders.
12. According to the information and explanations
given to us and based on the documents and
records produced to us, the Company has not
granted loans and advances on the basis of
security by way of pledge of shares, debentures
and other securitiesand accordingly paragraph
4 (xii) of the Order is not applicable.
13. In our opinion, the Company is not a chit
fund or a nidhi / mutual bene?t fund / society.
Therefore, the provisions of this clause are not
applicable to the Company.
14. The Company is not dealing in or trading
in shares, securities, debentures and other
investments. In view of the same, provisions of
this clause are not applicable.
15. According to information and explanations
given to us, the company has not given any
guarantee for loan taken by others from bank
and ?nancial institutions.
16. According to information and explanation
given to us, term loans were broadly applied by
the company for the purpose for which loans
were obtained.
17. According to the information and explanations
given to us and on an overall examination of
the balance sheet of the Company, we report
that no funds raised on short–term basis have
been used for long–term investment.
18. The Company has not made any preferential
allotment of shares during the period under
audit to parties and companies covered in the
register maintained under section 301 of the
Companies Act, 1956.
19. Company has not issued any debentures during
the year; hence the question of securities to
be created for debentures issued does not
arise.In earlier years, the company has issued
non–convertible redeemable Bonds in the
nature of Debentures amounting to Rs. 23,400
million. As explained to us, the company is
maintaining 100% assets cover as required in
SEBI guidelines.
20. The company has not raised any money by way
of public issue during the year.
21. According to the information and explanations
given by the management and to the best of
our knowledge and belief, no fraud on or by
the company was noticed or reported during
the year.
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
86 87
8ALAh6E 8hEET A8 AT 31 MAP6h, 2012
(` in Million)
Notes As at 31 March, 2012 As at 31 March, 2011
EQUITY AND LIABILITIES
SHAREHOLDERS' FUNDS
Share capital 3 10,000.00 10,000.00
Reserves and surplus 4 90,880.77 70,659.07
NON CURRENT LIABILITIES
Long termborrowings 5 192,036.03 196,741.06
Deferred tax liabilities (Net) 6 3,876.60 3,783.02
Liability for abandonment 7 19,529.59 13,799.58
Long termprovisions 8 389.45 362.27
215,831.67 214,685.93
CURRENT LIABILITIES
Short termborrowings 9 622.82 331.18
Trade payables 10 11,396.81 8,925.08
Other current liabilities 11 15,534.43 7,034.86
Short termprovisions 12 29.37 15.95
27,583.43 16,307.07
TOTAL 344,295.87 311,652.07
ASSETS
NON CURRENT ASSETS
Fixed Assets
Tangible assets 13 28,491.89 36,600.31
Intangible assets 14 94.96 28.38
Producing properties 15 61,599.39 56,707.85
Development & exploratory wells in progress 16 16,493.15 7,389.07
Capital work in progress 17 62,231.85 31,696.37
168,911.24 132,421.98
Non Current Investment 18 137,357.65 138,032.28
Long TermLoans and Advances 19 96.73 85.11
Other Non Current Assets 20 1,911.91 2,655.30
CURRENT ASSETS
Inventories 21 1,882.46 1,578.98
Trade receivables 22 6,709.55 5,940.94
Cash & Bank balances 23 5,459.50 6,063.49
Short termloans & advances 24 1,496.09 10,249.74
Other current assets 25 20,470.74 14,624.25
36,018.34 38,457.40
TOTAL 344,295.87 311,652.07
The accompanying notes are integral part of the ?nancial statements 1–54
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
8TATEMEhT 0F FP0FIT Ahß L088 F0P ThE ¥EAP EhßEß
31 MAP6h, 2012
(` in Million)
Notes 2011–12 2010–11
INCOME
Revenue fromoperations 26 74,313.77 55,682.63
Other Income 27 5,819.25 2,149.08
TOTAL REVENUE 80,133.02 57,831.71
EXPENSES
Production, Transportation, Selling and Distribution Expenditure 28 16,050.36 13,035.76
Decrease/(Increase) In Stock (Finished Goods) 29 (4.40) (2.02)
Financing Costs 30 1,974.74 2,241.13
Depreciation, Depletion and Amortisation 31 11,061.30 14,614.76
Other Expenses 32 510.73 (101.03)
Provisions & Write–O?s (Net) 33 20,470.75 2,593.34
Decrease/(increase) due to overlift/underlift quantity 34 (58.69) (283.32)
TOTAL EXPENSES 50,004.79 32,098.62
PROFIT BEFORE PRIOR PERIOD, EXCEPTIONAL AND EXTRAORDINARY ITEMS
AND TAX
30,128.23 25,733.09
Less: Adjustment relating to Prior Period 35 (26.62) 27.11
PROFIT BEFORE EXCEPTIONAL AND EXTRAORDINARY ITEMS AND TAX 30,154.85 25,705.98
Exceptional And Extraordinary Items – –
Tax expense
Current Year Tax 36 11,141.78 7,255.81
Deferred Tax 37 93.58 (3.06)
Earlier Years Tax 38 158.69 (2,971.37)
PROFIT / (LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS 18,760.80 21,424.60
Pro?t / (Loss) FromDiscontinuing Operations – –
PROFIT (LOSS) FOR THE PERIOD 18,760.80 21,424.60
EARNINGS PER EQUITY SHARE
Basic 39 187.61 214.25
Diluted 187.61 214.25
The accompanying notes are integral part of the ?nancial statements 1–54
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
88 89
1. Corporate information
ONGC Videsh Limited (the Company) is a public limited company domiciled in India and incorporated
under the provisions of the Companies Act, 1956. The Company is engaged in exploration, development
and production of crude oil and natural gas outside India.
2. Basis of preparation
2.1 The ?nancial statements are prepared under the historical cost convention on accrual basis in
accordance with Generally Accepted Accounting Principles (GAAP), applying the Successful E?orts
Method as per the Guidance Note on Accounting for Oil and Gas Producing Activities issued by the
Institute of Chartered Accountants of India and Accounting Standards issued under the Companies
(Accounting Standards) Rules, 2006 and provisions of the Companies Act, 1956. The ?nancial statements
are presented in Indian Rupees and all values are rounded to the nearest million (`million) except when
otherwise indicated.
2.2 Summary of Signifcant Accounting Policies
a.1 Change in accounting Policies
During the year ended 31 March 2012, the revised Schedule VI noti?ed under the Companies Act 1956, has
become applicable to the Company for preparation and presentation of its ?nancial statements. Balance
Sheet has been prepared based on the format prescribed under Part I and statement of Pro?t and Loss
based on the format prescribed under Part II in Revised Schedule VI of the Act . However, in view of the
technical nature of operation of the Company i.e. exploration, development and Producing oil and gas,
functional wise expenses has been classi?ed in Statement of Pro?t and Loss as disclosed consistently in
earlier years. The adoption of revised Schedule VI does not impact recognition and measurement principles
followed for preparation of ?nancial statements. The Company has also reclassi?ed the previous years
?gures in accordance with the requirements applicable in the current year.
The ?nancial statements for the year 2011–12 are prepared following the same accounting policies and
practices as followed in the annual ?nancial statements for the year ended March 31, 2011, except for
change in the policy with regard to amortisation of intangible assets which has been changed during
the current period to align with the accounting policy of parent company and AS–26 from Written Down
Value Method @ 40% to Straight Line Method over the useful life not exceeding a period of 5 years in
order to systematically amortize its intangible assets. This has resulted in decrease in Depreciation,
Depletion, Amortisation and Impairment by `86.67 million, consequently Pro?t before tax increased
by `86.67 million.
a.2 Documentation, rewording or re–alignment of Accounting Policies to properly refect existing
accounting practice
Certain accounting policies were re–worded or re–align with the existing accounting practice
consistently followed by the Company in ?nancial statements. However, these does not have any
impact on recognition and measurement principles followed for preparation of ?nancial statements.
Policy
no.
Existing Policy Accounting policy documented in FY 2011–12 Financial Impact
over the ?nancial
statements
2.2.p.7 Nil Dividend income is recognized when the Company’s right
to receive dividend is established by the reporting date.
Nil
2.2.u Nil Abnormal Rig days' costs are considered as unallocable
and charged to Statement of Pro?t and Loss.
Nil
h0TE8 T0 ThE FIhAh6IAL 8TATEMEhT F0P ThE ¥EAP EhßEß
MAP6h 2012
OPF Modules transportation across Chayvo Bridge
90 91
b. Use of Estimates:
The preparation of ?nancial statements requires estimates and assumptions which a?ect the
reported amount of assets, liabilities, revenues and expenses of the reporting period. The di?erence
between the actual results and estimates are recognized in the period in which the results are known
or materialized. Although these estimates are based on the management's best knowledge of current
events and actions, uncertainity about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets and liabilities in future periods.
c. Acquisition, Exploration, Development, Abandonment and Production Costs:
c.1 Acquisition Cost:
Acquisition costs of an oil and gas property in exploration/development stage are taken to capital
work in progress. Such costs are capitalized by transferring to Producing Property when it is ready to
commence commercial production. In case of abandonment of the property, such costs are expensed.
Acquisition costs of a producing oil and gas property are capitalized as Producing Property.
c.2 Survey Costs:
Cost of Surveys and prospecting activities conducted in the search of oil and gas are expensed in the
year in which these are incurred.
c.3 Exploratory/Development Wells in Progress Costs:
c.3.1 Exploration costs involved in drilling and equipping exploratory and appraisal wells, cost of drilling
exploratory type stratagraphic test wells are initially taken to capital work in progress as exploratory
wells in progress till the time these are either capitalized to producing properties when ready to
commence commercial production or expensed when determined to be dry or of no further use, as
the case may be.
c.3.2 All costs relating to development wells, development type stratagraphic test wells, service wells,
are initially taken to capital work in progress as development wells in progress and capitalized to
producing properties when ready to commence commercial production.
c.3.3 Exploratory wells in progress which are more than two years old from the date of completion of
drilling are charged to Statement of Pro?t and Loss except those wells which have proved reserves
and the development of the ?elds in which the wells are located; has been planned.
c.4 Abandonment Costs:
Costs relating to dismantling, abandoning and restoring well sites and allied facilities are provided
as abandonment costs based on the provisions under respective agreements governing Company’s
activities in the ?eld/ projects.
c.5 Production Costs:
Production costs include pre–wellhead and post–wellhead expenses including depreciation and
applicable operating costs of support equipment and facilities.
2.2.k.1 Depreciation on tangible assets
(including those taken on
?nance lease) is provided for
under the written down value
method in accordance with
Schedule XIV to the Companies
Act, 1956.
Depreciation on tangible assets (including those taken
on ?nance lease) is provided for under the written down
value method in accordance with Schedule XIV to the
Companies Act, 1956. Low value items not exceeding
`5,000/– are fully depreciated at the time of addition.
Nil
2.2.r.4 Nil In respect of local sta? in foreign o?ces of the company,
employees (other than those on deputation/secondment
from the company) of joint ventures (incorporated/
unincorporated)/ subsidiaries, the liabilities for employee
bene?ts are recognised in accordance with the applicable
laws of their respective jurisdictions and/or the respective
labor agreements with the employees.
Nil
d. Producing Properties:
d.1 Producing properties are created in respect of a ?eld/project having proved developed oil and gas
reserves when any well in the ?eld/project is ready to commence commercial production. Development
wells are capitalized to producing properties when ready to commence commercial production.
d.2 All acquisition costs, cost of successful exploratory wells and all development wells, all related
development costs including depreciation on support equipment and facilities and estimated future
abandonment costs relating to producing properties are capitalized as Producing Properties.
e. Depletion of Producing Properties:
Producing properties are depleted using the “Unit of Production Method”. The rate of depletion for
all capitalized costs is computed with reference to the ?eld/project/amortization base by considering
the related proved and developed reserves excepting for acquisition costs which are depleted by
considering the proved reserves. These reserves are estimated annually by the Reserve Estimates
Committee formed by the parent company Oil and Natural Gas Corporation Limited (ONGC), which
follows the International Reservoir Engineering Procedures.
f. Side tracking:
f.1 The cost of abandoned portion of side tracked exploratory wells is charged to Statement of Pro?t
and Loss as dry wells.
f.2 The cost of abandoned portion of side tracked development wells is considered as part of cost of
development wells.
f.3 The cost of sidetracking in respect of existing producing wells is capitalized if it increases the Proved
Developed Reserve otherwise, charged to Statement of Pro?t and Loss as workover expenditure.
g. Impairment:
g.1 Producing Properties, Development Wells in Progress (DWIP) and Fixed Assets (Including Capital
Works in Progress) of a “Cash Generating Unit” (CGU) are reviewed for impairment at each Balance
Sheet date. In case, event and circumstances indicates any impairment, recoverable amount of
these assets is determined, being the higher of net selling price and value in use. An impairment loss
is recognized, whenever the carrying amount of such assets exceeds the recoverable amount by
writing down such assets to their recoverable amount. In assessing value in use, the estimated future
cash ?ows from the use of assets and from its disposal at the end of its useful life are discounted to
their present value at appropriate rate.
g.2 An impairment loss is reversed if there is change in the recoverable amount and such loss either no
longer exists or has decreased. Impairment loss / reversal thereof is adjusted to the carrying value of
the respective assets, which in case of CGU, is allocated to its assets on a pro–rata basis. Subsequent
to impairment, depreciation is provided on the revised carrying value of the assets over the remaining
useful life.
h. Joint Ventures:
h.1 The Company has entered into overseas joint ventures with others. In such joint ventures as per the
contractual arrangements, the Company shares control with other venturers. The ?nancial statements
re?ect the share of the Company’s assets and liabilities as well as income and expenditure of Joint
Venture Operations which are accounted for as per various joint venture agreements on a line by
line basis along with similar items in the Company’s ?nancial statements, except in case of leases,
abandonment, impairment, depletion and depreciation which are accounted based on accounting
policies of the Company.
h.2 The reserves of hydrocarbons in the joint ventures are taken in proportion to the participating
interest of the Company.
i. Tangible Assets:
i.1 Tangible assets (including those taken on ?nance lease, support equipment and facilities) are stated
at historical cost.
i.2 All costs relating to acquisition of tangible assets till the time of commissioning of such assets are
capitalized.
92 93
j. Intangible Assets:
j.1 Costs incurred on intangible assets, resulting in future economic bene?ts are capitalized as
intangible assets.
k. Depreciation:
k.1 Depreciation on tangible assets (including those taken on ?nance lease) is provided for under the
written down value method in accordance with Schedule XIV to the Companies Act, 1956. Low value
items not exceeding `5,000/– are fully depreciated at the time of addition.
k.2 Intangible Assets are amortised over the useful life not exceeding ?ve years from the date of
capitalisation.
k.3 Leasehold land (other than perpetual lease and lease over 99 years) is amortized over the lease
period.
k.4 Depreciation on adjustments to tangible assets on account of price variation is provided for prospectively
over the remaining useful life of such assets.
k.5 Depreciation on tangible assets (including those taken on ?nance lease, support equipment and
facilities) used for exploration and drilling activities and on facilities is initially capitalized as part of
exploration or development costs and expensed/depleted as stated in policy c and d above.
l. Inventories:
l.1 Crude oil and condensate are valued at cost or net realizable value, whichever is lower.
l.2 Natural gas in pipeline and crude oil/condensate stock in ?ow lines/Gathering Stations are
not valued.
l.3 Inventory of stores and spares is valued at weighted average cost or net realizable value, if available,
whichever is lower. Wherever, weighted average cost or net realizable value is not available, the cost
made available by the operator is considered for valuation of Stores and Spares. Provisions are made
for obsolete and non–moving inventories.
m. Investments:
m.1 Long–term investments are valued at cost. Provision is made for any diminution, other than temporary,
in the value of such investments.
m.2 Current investments are valued at lower of cost or fair value.
n. Foreign Currency Transactions and Foreign Operations:
n.1 Foreign currency transactions on initial recognition in the reporting currency are accounted for at the
exchange rates prevailing on the date of transaction.
n.2 At each Balance Sheet date, foreign currency monetary items are translated using the average of the
exchange rates prevailing on the balance sheet date and non–monetary items are translated using the
exchange rate prevailing on the date of transaction or on the date when the fair value of such item was
determined.
n.3 All exchange di?erences arising on the settlement of monetary items or on reporting of monetary items
at rates di?erent from those at which they were initially recorded during the period, or reported in
previous ?nancial statements are recognised as income or as expenses in the period in which they arise.
n.4 In respect of the Company’s integral foreign operations:
n.4.1 The foreign currency transactions on initial recognition in the reporting currency are recorded
following the policy stated in n.1. For practical reasons, the average exchange rate of the relevant
month/quarter is taken for the transactions of the month/quarter in respect of joint venture
operations, where actual date of transaction is not available.
n.4.2 At each Balance Sheet date, monetary and non–monetary items are translated following the policy
stated in n.2.
n.4.3 All exchange di?erences are treated following the policy stated in n.3.
n.5 The ?nancial statements of the non–integral foreign operations of the company are incorporated in
the ?nancial statements using the following principles:
n.5.1 The assets and liabilities, both monetary and non–monetary, of the non–integral foreign operation
are translated at the average of the exchange rate prevailing on the date of the balance sheet;
n.5.2 Income and expense items of the non–integral foreign operation are translated at the average
exchange rates for the period to which the ?nancial statements relate; and
n.5.3 All resulting exchange di?erences are accumulated in a foreign currency translation reserve until the
disposal of the net investment in the non–integral foreign operation.
n.6 Exchange di?erences arising on the company’s net investment in a non–integral foreign operation
are accumulated in a foreign currency translation reserve until the disposal of such investment, at
which time they are recognized as income or as expenses.
o. Finance Leases
o.1 Assets given on Lease:
o.1.1 Assets given on ?nance lease are accounted for as per Accounting Standard (AS) 19 “Leases” issued by
the Institute of Chartered Accountant of India. Such assets are included as a receivable at an amount
equal to the net investment in the lease.
o.1.2 Initial direct costs incurred in respect of ?nance leases are recognized in the statement of pro?t and
loss in the year in which such costs are incurred.
o.2 Assets taken on Lease:
Assets taken on ?nance lease are capitalised and recognised at the lower of the fair value of the asset
and the discounted value of the minimum lease installments. The lease payments are bifurcated into
repayment and interest components, based on a ?xed interest rate and installment as derived from
the underlying agreement. The lease commitments are carried under liabilities exclusive of interest.
The interest component is recognised in the Statement of Pro?t and Loss in accordance with the lease
installments.
p. Revenue Recognition:
p.1 Revenue from sale of products is recognized on transfer of custody to customers. Any di?erence as of
the reporting date between the entitlement quantity minus the quantities sold in respect of crude oil
(including condensate), if positive (i.e. under lift quantity) the proportionate production expenditure is
treated as prepaid expenses and, if negative (i.e. over lift quantity), a liability for the best estimate of
the Company’s proportionate share of production expenses as per the JOA / PSA is created in respect
of the quantity of crude oil to be foregone in future period towards settlement of the overlift quantity
of crude oil with corresponding charge to Statement of Pro?t and Loss.
p.2 Sales are inclusive of all statutory levies and any tax liability of the Company that may be paid by
the government based on the provisions under agreements governing Company’s activities in the
respective ?eld/ project.
p.3 Any payment received in respect of short lifted gas quantity for which an obligation exists to supply
such gas in subsequent periods is recognized as Deferred Revenue in the year of receipt. The same is
recognized as revenue in the year in which such gas is actually supplied for the quantity supplied or in
the year in which the obligation to supply such gas ceases, whichever is earlier.
p.4 Revenue in respect of ?xed price contracts is recognized for the quantum of work done on the basis
of percentage of completion method. The quantum of work done is measured in proportion of cost
incurred to date to the estimated total cost of the contract or based on reports of physical work
done.
p.5 Finance income in respect of assets given on ?nance lease is recognized based on a pattern re?ecting
a constant periodic rate of return on the net investment outstanding in respect of the ?nance lease.
p.6 Revenue in respect of interest on delayed realization is recognized when there is reasonable certainty
regarding ultimate collection.
p.7 Dividend income is recognized when the Company’s right to receive dividend is established by the
reporting date
q. Transportation Costs:
Any payment made in respect of the quantity of gas short transported, for which the right exists to
transport such gas in subsequent periods at no charge, is treated as Deferred Expenditure in the year of
payment. The same is treated as cost in the year in which the gas is actually transported for the quantity
transported or in the year in which the right to transport such gas ceases, whichever is earlier.
94 95
r. Employee Benefts:
r.1 All short term employee bene?ts are recognized at their undiscounted amount in the accounting
period in which they are incurred.
r.2 Contribution to Provident Fund and Composite Social Security Scheme is made as per the rules of the
parent company. The same is paid to funds administered through trusts.
r.3 Provisions for gratuity, leave encashment and other employee bene?ts are made as per actuarial
valuation at the end of the ?nancial year. The same are not funded.
r.4 In respect of local sta? in foreign o?ces of the company, employees (other than those on deputation/
secondment from the company) of joint ventures (incorporated/unincorporated)/ subsidiaries,
the liabilities for employee bene?ts are recognised in accordance with the applicable laws of their
respective jurisdictions and/or the respective labor agreements with the employees.
s. Borrowing Costs:
Borrowing Costs speci?cally identi?ed to the acquisition or constructions of qualifying assets are
capitalized as part of such asset till such time when all the activities necessary to prepare the qualifying
asset for its intended use or sale are complete. A qualifying asset is one that necessarily takes substantial
period of time to get ready for intended use. All other borrowing costs are charged to Statement of
Pro?t and Loss.
t. Insurance Claims:
The Company accounts for insurance claims as under:–
t.1 In case of total loss of asset by transferring, either the carrying cost of the relevant asset or Insurance
value (subject to deductibles), whichever is lower under the head “Claims Recoverable – Insurance”
on intimation to Insurer. In case insurance claim is less than carrying cost, the di?erence is charged to
Statement of Pro?t and Loss.
t.2 In case of partial or other losses, expenditure incurred/payments made to put such assets back into
use, to meet third party or other liabilities (less policy deductibles) if any, are accounted for as “Claims
Recoverable–Insurance”. Insurance Policy deductibles are expensed in the year when the corresponding
expenditure is incurred.
t.3 As and when claims are ?nally received from Insurer, the di?erence, if any, between Claims Recoverable
– Insurance and Claims received is adjusted to Statement of Pro?t and Loss.
u. Abnormal Rig days' costs:
Abnormal Rig days' costs are considered as unallocable and charged to Statement of Pro?t and Loss.
v. Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement are recognized when there is a
present obligation as a result of past events and it is probable that there will be an out?ow of resources.
Contingent Assets are neither recognized nor disclosed in the ?nancial statements. Contingent
Liabilities, if material, are disclosed by way of notes to the accounts.
w. Taxes on Income:
Provision for current tax is made as per the provisions of the Income Tax Act, 1961/ other applicable tax
laws. Deferred Tax Liability / Asset resulting from ‘timing di?erence’ between book and taxable pro?t
is accounted for considering the tax rate and laws that have been enacted or substantively enacted as
on the Balance Sheet date. Deferred Tax Asset is recognized and carried forward only to the extent
that there is virtual certainty that the asset will be realized in future.
x. Accounting for derivatives:
As per the ICAI Announcement, Accounting for Derivatives, other than those covered under AS–11, is
done on marked to market basis and the losses are charged to Statement of Pro?t and Loss. Unrealized
gains are ignored.
y. Goodwill Amortization:
The Company amortizes Goodwill (on consolidation) based on “Unit of Production Method” considering
the related Proved Reserves.
(` in Million)
3 Share Capital As at 31 March, 2012 As at 31 March, 2011
Authorised
100,000,000 (Previous year 100,000,000) Equity Shares of `100 each 10,000.00 10,000.00
Issued, Subscribed, Called and Paid Up 10,000.00 10,000.00
100,000,000 (Previous year 100,000,000) Equity Shares of `100 each fully
paid up in cash
(The entire share capital is held by Oil and Natural Gas Corporation
Limited and its nominees)
TOTAL 10,000.00 10,000.00
a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period:
31 March 2012 31 March 2011
No. million `million No. million `million
Equity Shares :
At the beginning of the period 100.00 10,000.00 100.00 10,000.00
Issued during the period – – – –
Outstanding at the end of the period 100.00 10,000.00 100.00 10,000.00
b. Terms / rights attached to the equity shares:
The company has only one class of equity shares having a par value of `100 per share. Each holder of
equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees.
The dividend, if any, proposed by the Board of Director is subject to the approval of the shareholders
in the meeting.
During the year ending 31 March 2012, the amount of dividend per share declared for distribution to
equity shareholders was Nil (31 March 2011: Nil).
In the event of liquidation of the company, the holders of equity shares will be entitled to receive
remaining assets of the company, after distribution of all preferential amounts. The distribution will be
in proportion to the number of equity shares held by the shareholders.
c. Shares held by holding / ultimate holding company and/or their subsidiaries/ associates:
Out of the equity shares issued by the company, the shares held by its holding company, ultimate
holding company and their subsidiaries / associates are as below:
31 March 2012 31 March 2011
No. Million `Million No. Million `Million
Oil and Natural Gas Corporation Limited, the hold-
ing company and its nominees
100 10,000.00 100 10,000.00
d. Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares
bought back during the period of ?ve years immediately preceding the reporting date: Nil
e. Details of shareholders holding more than 5% shares in the company:
31 March 2012 31 March 2011
No. million % holding No. million % holding
Oil and Natural Gas Corporation Limited, the
holding company and its nominees
100 100% 100 100%
f Shares reserved for issue under options: Nil.
96 97
(` in Million)
4 Reserves and Surplus
As at
31 March
2012
As at
31 March
2011
Capital Reserve 174.08 174.08
Debenture Redemption Reserve
Opening balance 5,461.83 1,154.19
Add: Current year transfer 4,319.44 9,781.27 4,307.64 5,461.83
General Reserve
Opening balance 7,893.64 5,751.18
Add: Current year transfer 1,876.08 9,769.72 2,142.46 7,893.64
Foreign Exchange Translation Reserve (5,547.27) (7,008.17)
Pro?t and Loss Account
Opening balance 64,137.69 49,163.19
Add: Net pro?t/(Net loss) for the year 18,760.80 21,424.60
Less: Transfer to Debenture Redemption Reserve 4,319.44 4,307.64
Less: Transfer to General Reserve 1,876.08 76,702.97 2,142.46 64,137.69
TOTAL 90,880.77 70,659.07
a. Debentures and Debentures Redemption Reserve:
During the ?nancial year 2009–10, the Company had raised funds from the ?nancial markets by issuance
of non–convertible redeemable bonds in the nature of debentures as follows:
(` in Million)
Particulars Amount (`Million) Date of issue Date repayable on
8.40% 5 Years Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures– Series I
19,700 23–Dec–09 23–Dec–14
8.54% 10 Years Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures– Series II
3,700 06–Jan–10 06–Jan–20
The above securities have been listed in National Stock Exchange of India Ltd. (NSE). Both the bonds
are guaranteed for repayment of principal and payment of interest by Oil and Natural Gas Corporation
Limited, the holding company. Further the company is required to maintain 100% asset cover as per
SEBI guidelines. There is no put/ call option.
The Debentures Redemption Reserve position for above is as under:–
(` in Million)
Particulars Balance as at 31
March 2011
Additions during
the year
Balance as at
31 March 2012
8.40% 5 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series I
5,005.91 3,948.63 8,954.54
8.54% 10 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series II
455.92 370.81 826.73
Total 5,461.83 4,319.44 9,781.27
(` in Million)
5 Long TermBorrowings As at 31 March, 2012 As at 31 March, 2011
Non Convertible Redeemable Debenture 23,400.00 23,400.00
Foreign Currency Loans
Non–Recourse Deferred Credit – Unsecured 380.59 554.90
(In respect of Joint venture)
Fromrelated parties
Oil and Natural Gas Corporation Limited – Unsecured 168,255.44 172,786.16
TOTAL 192,036.03 196,741.06
a. Non–convertible redeemable debentures: Attention is invited to Note: 4(a)
b. Non–recourse deferred credit: `888.06 Million (Previous Year `776.88 Million) represents the non–
recourse deferred credit from contractors of pipeline project executed by the Company in Sudan. The
credit is repayable from the installments of pipeline lease rentals from Ministry of Energy and Mining
(MEM), Sudan. Attention is also invited to Note 44.
(` in Million)
As at 31 March 2012 As at 31 March 2011
Current (Note 9) 507.47 221.98
Non Current (Note 5) 380.59 554.90
Total 888.06 776.88
c. The Company has taken loans from ONGC for various projects. The outstanding balance of such loans
as of 31 March 2012 was `168,255.44 Million (31 March 2011 `172,786.16 Million). The loan is normally
repayable out of the cash ?ows of the projects for which the respective funds were lent. However,
ONGC have the right to demand repayment with a notice period of minimum 15 months. The loan
carried no interest during the period. Accordingly, interest expenditure on loan from parent company
during the period is `Nil (previous year: `Nil).
(` in Million)
6 Deferred Tax Liabilities As at 31 March 2012 As at 31 March 2011
Deferred Tax Liabilities (net) 3,876.60 3,783.02
TOTAL 3,876.60 3,783.02
a. The Net Deferred Tax Liability of the Company as at 31 March 2012 is `3,876.60 Million (year ending 31
March 2011 `3,783.02 Million). An amount of `93.58 Million has been adjusted to the current period’s
Statement of Pro?t and Loss.
b. The item wise details of Net Deferred Tax Liability as on 31 March 2012 accounted for in accordance with
Accounting Standard (AS) 22 viz. Accounting for Taxes on Income are as under:
(` in Million)
Deferred Tax Assets : As at 31 March, 2012 As at 31 March, 2011
Carried Forward Expenditure u/s 42 of Income Tax Act, 1961 11,213.98 10,222.01
Other disallowables under Income Tax Act, 1961* 1,043.13 814.33
Total Deferred Tax Assets 12,257.11 11,036.34
Deferred Tax Liability :
Di?erence in Net Block of Fixed Assets for Tax 16,133.71 14,819.36
Total Deferred Tax Liability 16,133.71 14,819.36
Net Deferred Tax Liability 3,876.60 3,783.02
*Disallowance u/s 43B, provisions for doubtful debts and non–moving inventory.
98 99
(` in Million)
7 Liability for Abandonment
As at
31 March
2012
As at
31 March
2011
Liability for abandonment 19,529.59 13,799.58
TOTAL 19,529.59 13,799.58
The above liability is in respect of Sakhalin–1 project. Against the above liability, funding of `2927.15 Million
has been made as per Note 18.
(` in Million)
8 Long TermProvisions
Balance as at 1st
April 2011
Utilisation /
Reversal during
the year
Provision made
for the year
Balance as at 31st
March 2012
Provisions for employee bene?ts
Gratuity 161.90 – 8.16 170.06
Leave Encashment 131.36 – 15.90 147.26
Post Retirement Medical Bene?ts/Other
Terminal Bene?ts
69.01 – 3.12 72.13
362.27 – 27.18 389.45
Other provisions – – – –
TOTAL 362.27 – 27.18 389.45
Previous Year 325.75 – 36.52 362.27
The Provisions for employee bene?ts have been bifurcated into current and non–current based on the
acturial valuation.
As at 31 March, 2012 As at 31 March, 2011
Current (Note 12) 29.37 15.95
Non Current (Note 8) 389.45 362.27
Total Provisions for Employee bene?ts 418.82 378.22
(` in Million)
9 Short TermBorrowings As at 31 March, 2012 As at 31 March, 2011
Foreign Currency Loans
Non–Recourse Deferred Credit – Unsecured *
(In respect of Joint venture)
507.47 221.98
Deposits – Unsecured 115.35 109.20
TOTAL 622.82 331.18
*Non–Recourse Deferred Credit : Attention is also invited to Note–5(b)
(` in Million)
10 Trade Payables As at 31 March 2012 As at 31 March 2011
Deferred Credit on Gas Sales 229.37 20.80
Trade payables for Supplies / Works 1,843.55 1,519.13
Trade payables for Supplies / Works 9,323.89 7,385.15
(In respect of Joint Venture)
TOTAL 11,396.81 8,925.08
Deferred credit on gas sales represents amounts received from gas customers against Take or Pay obligations under relevant gas sales
agreements. The amounts are to be utilised to supply the gas in subsequent year(s) free of charge to such customers.
(` in Million)
11 Other Current Liabilities
As at
31 March
2012
As at
31 March
2011
Interest accrued but not due on Debentures 526.38 522.42
Advance fromcustomers / Income received in advance 320.09 161.09
Amount Payable to Operators 11,157.41 5,397.56
Payable to Oil and Natural Gas Corporation Limited 646.87 118.18
Other Liabilities 2,883.68 835.61
TOTAL 15,534.43 7,034.86
(` in Million)
12 Short TermProvisions
Balance as at 1
April 2011
Utilisation/
Reversal during the
Year
Provision made for
the Year
Balance as at 31
March 2012
Provisions for employee bene?ts
Gratuity 7.64 7.00 9.20 9.84
Leave Encashment 8.31 42.23 53.10 19.18
Post Retirement Medical Bene?ts/
Other Terminal Bene?ts
– 0.34 0.69 0.35
15.95 49.57 62.99 29.37
Other provisions – – – –
TOTAL 15.95 49.57 62.99 29.37
Previous Year 25.06 37.35 28.24 15.95
Attention is invited to Note: 8
100 101
13 Tangible Assets
PARTICULARS
GROSS BLOCK
As at 1 April 2011
Additions during
the Period
Deletions /
Adjustments
during the Period
As at
31 March 2012
1. Land (Leasehold) 1,700.53 31.65 – 1,732.18
2. Building 5,608.09 68.79 (61.72) 5,615.16
3. Plant & Machinery 74,877.12 1,883.34 4.99 76,765.45
4. Computers 263.30 71.69 (14.86) 320.13
5. Vehicles 344.75 21.46 (9.51) 356.70
6. Furniture & Fittings and Equipments 3,826.49 40.18 (160.43) 3,706.24
TOTAL 86,620.28 2,117.11 (241.53) 88,495.86
Previous Year 69,266.03 17,464.84 (110.59) 86,620.28
The above includes the company's share
in Joint Venture Assets: Current Year
84,698.61 2,027.25 (204.96) 86,520.90
Previous Year 67,408.64 17,399.76 (109.79) 84,698.61
14 Intangible Assets
PARTICULARS
GROSS BLOCK
As at 1 April 2011
Additions during
the Period
Deletions /
Adjustments
during the Period
As at
31 March 2012
Software 245.50 26.47 6.72 278.68
TOTAL 245.50 26.47 6.72 278.68
Previous Year 239.37 12.43 (6.30) 245.50
The above includes the company's share
in Joint Venture Assets: Current Year
146.45 22.66 6.72 175.83
Previous Year 140.33 12.43 (6.30) 146.45
Attention is invited to Note: 2.2 a.1
a. Title to Fixed Assets under Production Sharing Agreements
The Company, the Subsidiaries and Joint Venture Company, in consortium with other partners (Consortium) carries on its business in respect of exploration, development and production of hydrocarbons
under agreements with the host governments. Several of these agreements, governing Company’s activities in the ?elds / projects, provide that the title to the ?xed assets and other ancillary installations
shall pass to host Government or its nominated entities either upon acquisition / ?rst use of such assets or upon 100% recovery of such costs through allocation of “Cost Oil” and “Cost Gas” or upon
relinquishment of the relevant contract areas or termination of the relevant agreement. However, as per the terms of the agreements, the Consortium and/ or Operator has the custody of all such assets
and is entitled to use, free of charge all such assets for Petroleum Operations throughout the term of the respective agreements. The Consortium also has the custody and maintenance of such assets
and bears all risks of accidental loss and damage and all costs necessary to maintain such assets and to replace or repair such damage or loss. Under the circumstances, such assets are kept in the records of the
Company during the currency of the respective agreements.
(` in Million)
DEPRECIATION NET BLOCK
Up to 31 March 2011 For the Period
Deletions /
Adjustments
during the Period
As at 31 March 2012 As at 31 March 2012
As at
31 March 2011
– – – – 1,732.18 1,700.53
907.83 241.53 (10.30) 1,139.06 4,476.10 4,700.26
46,982.96 9,415.88 22.88 56,421.72 20,343.73 27,894.16
177.03 38.55 (8.17) 207.41 112.72 86.27
222.19 36.19 (7.15) 251.23 105.47 122.56
1,729.96 279.28 (24.69) 1,984.55 1,721.69 2,096.53
50,019.97 10,011.43 (27.43) 60,003.97 28,491.89 36,600.31
39,470.03 10,596.40 (46.45) 50,019.97 36,600.31 29,796.00
49,893.77 10,021.59 (55.01) 59,860.34 26,660.56 34,804.84
39,368.64 10,571.15 (46.02) 49,893.77 34,804.84 28,032.99
(` in Million)
DEPRECIATION NET BLOCK
Up to 31 March 2011 For the Period
Deletions /
Adjustments
during the Period
As at 31 March 2012 As at 31 March 2012
As at
31 March 2011
217.12 (34.89) 1.49 183.72 94.96 28.38
217.12 (34.89) 1.49 183.72 94.96 28.38
204.85 17.22 (4.95) 217.12 28.38 34.51
133.66 (13.05) 1.49 122.10 53.73 12.80
131.77 6.84 (4.95) 133.66 12.80 15.56
102 103
(` in Million)
15 Producing Properties
As at
31 March
2012
As at
31 March
2011
Gross Cost
Opening Balance 86,482.76 68,546.90
Expenditure during the year 7,964.51 8,154.94
Transfer fromDevelopment & Exploratory Wells–in–Progress 19.91 2,767.57
Estimated Abandonment Costs 3,873.37 7,013.35
Total Gross (A) 98,340.55 86,482.76
Less: Depletion
Opening Balance 29,774.91 23,225.48
Depletion for the year 6,966.25 6,549.43
Total Depletion (B) 36,741.16 29,774.91
NET PRODUCING PROPERTIES (A – B) 61,599.39 56,707.85
(` in Million)
16 Development & Exploratory Wells In Progress
As at
31 March
2012
As at
31 March
2011
A. Development Wells in Progress
Opening Balance 2,213.40 481.21
Addition during the year 6,393.27 4,361.40
Less: Transfer to Producing Properties (15.07) 2,629.21
Development Wells in Progress (A) 8,621.74 2,213.40
B. Exploratory Wells in Progress
Opening Balance (Gross EWIP) 6,642.52 10,406.11
Addition during the year 3,449.43 329.03
Less: Transfer to Producing Properties 34.97 138.36
Less: Wells written o? during the year 706.43 3,954.26
Closing Balance (Gross EWIP) 9,350.55 6,642.52
Less: Provision For Wells drilled under service Contract
Opening Balance 1,466.85 1,444.65
Add: Provided during the year 12.29 22.20
Total Provision 1,479.14 1,466.85
Exploratory Wells in Progress (B) 7,871.41 5,175.67
TOTAL WELLS IN PROGRESS (A + B) 16,493.15 7,389.07
(` in Million)
17 Capital Work In Progress
As at
31 March
2012
As at
31 March
2011
Block 06.1, Vietnam 2,503.28 1,188.30
Block 128, Vietnam – 92.54
Sakhalin–1 Project, Russia 46,764.05 26,994.93
Block 5A, Sudan 27.26 268.86
Block A1, Myanmar 3,960.76 700.46
Block A3, Myanmar 840.95 842.73
O?shore MidstreamPipeline, Myanmar 1,966.65 568.78
Block 25, 26, 27, 28, 29, 36 and 35 (Part), Cuba 346.91 346.91
Block 1,2,3&4 (Area 43), Libya 408.90 408.90
Block Satpayev, Kazakhstan 4,753.53 –
Corporate O?ce Building, Vasant Kunj, NewDelhi 659.56 283.96
TOTAL 62,231.85 31,696.37
(` in Million)
18 Non– Current Investment
No. of Shares/
Bonds/
Units
Face Value per
Share/Bond/
Unit
As at
31 March
2012
As at
31 March
2011
Long TermInvestments (Fully Paid Up) (At Cost)
Trade Investments in Shares Unquoted
In Wholly Owned Subsidiaries:
ONGC Narmada Limited
Equity Shares 20,000,000 1 (Naira) 6.94 6.94
(20,000,000)
ONGC Amazon Alaknanda Limited
Equity Shares 12,000 1 (USD) 0.56 0.56
(12,000)
Preference Shares 367,995,174 1 (USD) 16,982.98 20,190.07
(437,488,000)
Jarpeno Limited
Equity Shares 1,450 1 (USD) 15,574.46 0.06
(1,350)
Preference Shares
(at a premiumof USD 9,999)
192,210 1(USD) 86,744.37 86,744.37
(192,210)
Carabobo One AB
Equity Shares 377,678
(1,000)
11.19457
(EURO)
2,822.02 0.76
104 105
18 Non– Current Investment
No. of Shares/
Bonds/
Units
Face Value per
Share/Bond/
Unit
As at
31 March
2012
As at
31 March
2011
In Partially Owned Subsidiaries:
ONGC Nile Ganga B.V.
Equity Shares Class A 40
(40)
453.78 (Euro) 8,462.12 8,462.12
Equity Shares Class B 100
(100)
453.78 (Euro) 21,155.29 21,155.29
Equity Shares Class C 880
(880)
1 (Euro) 234.25 234.25
In Jointly Controlled Entity :
ONGC Mittal Energy Limited
Equity Shares 24,990,000
(24,990,000)
1 (USD) 1,113.72 1,113.72
Preference Shares –
(42)
1 (USD) – 16.72
Investment with Bank for Site Restoration 2,927.15 107.42
TOTAL 156,023.86 138,032.28
Less : Provision for diminution in the Value of
Investment
18,666.21 –
Total Non– Current Investment 137,357.65 138,032.28
a. Carabobo One AB : ONGC Videsh Limited (“ONGC Videsh Ltd.”, 11.0%), Indian Oil Corporation Limited
(“IOC”, 3.5%), Oil India Limited (“OIL”, 3.5%), Repsol YPF (“Repsol”, 11.0%) and Petroliam Nasional Berhad
(“PETRONAS”, 11.0%), hold aggregate 40% equity interest in an “EmpresaMixta” (or “Mixed Company”)
which will develop the “Carabobo 1 Norte” and “Carabobo 1 Centro” blocks located in the Orinoco
Heavy Oil Belt. The CorporaciónVenezolanadelPetróleo (“CVP”), a subsidiary of Petróleos de Venezuela
S.A. (“PDVSA”), Venezuela's state oil company, holds the remaining 60% equity interest. A joint venture
company “Petro Carabobo S.A.” has been incorporated in Venezuela with the above mentioned equity
interests. The Company has set up a wholly owned subsidiary, Carabobo One AB (“COAB”) in Sweden,
which has set up a wholly–owned subsidiary, Petro Carabobo Ganga B.V. (“PCGBV”) in the Netherlands.
PCGBV holds 11% shares in the Mixed Company. The Mixed Company contract for the development and
production from Carabobo–1 Project was signed on 12 May 2010. COAB has changed its accounting
currency to Euro from Swedish Krona from FY 2011–12 and accordingly face value of shares has been
changed.
b. ONGC Nile Ganga B.V.: The Company holds 100% of Class A and Class B equity shares of ONGC Nile Ganga
B.V., the Netherlands (“ONGBV”). Further, the Company holds 55% of Class C equity shares of ONGBV
and the balance 45% Class C equity shares are held by ONGC Mittal Energy Limited. Class C shares are
entitled only and exclusively to the results of Class C business representing ONGBV’s investments in
Himalaya Energy (Syria) B.V., the Netherlands (the joint venture company for its investments in AFPC
Project, Syria).
c. ONGC Amazon Alaknanda Limited and ONGC Mittal Energy Limited have redeemed 69,492,826 and 42
preference shares respectively during the year at premium. The resulting gain amounting to `2,726.77
Million has been disclosed in Note–27.
d. An amount of USD 314 million out of the outstanding loans to Jarpeno has been adjusted against the
allotment and issuance of 100 Ordinary Shares in the share capital of the Jarpeno of nominal value of
USD 1 each at a premium of USD 3,139,999 per share (total value for each share being USD 3,140,000).
e. The company has assessed the carrying value of its long term investments and has observed diminution
in the carrying value in respect of Jarpeno Limited. Provision of `18,666.21 million has been made for
the diminution in value of the investment as on 31 March 2012 (Previous year `Nil).
(` in Million)
19 Long TermLoans And Advances
As at
31 March
2012
As at
31 March
2011
Secured, considered good
Loans and advances to related party 0.38 0.09
Other loans and advances 83.64 75.28
Unsecured, considered good
Other loans and advances 12.71 9.74
Doubtful
Loans and advances to related party 1,401.83 1,428.74
Other loans and advances 534.16 –
Sub Total (A) 2,032.72 1,513.85
Less : Provision for bad and doubtful loans and advances
Loans and advances to related party 1,401.83 1,428.74
Other loans and advances 534.16 –
Sub Total (B) 1,935.99 1,428.74
TOTAL (A)–(B) 96.73 85.11
(` in Million)
a Loans and advances
As at
31 March
2012
As at
31 March
2011
Current (Note 24) 1,496.09 10,249.74
Non Current (Note 19) 96.73 –1,343.63
Total 1,592.82 8,906.11
Attention is invited to Note 33 (b) also.
b. Loans and advances due to related party represent due from directors (` in Million)
Non–current Current
As at
31 March 2012
As at
31 March 2011
As at
31 March 2012
As at
31 March 2011
Loans and advances due fromdirectors 0.38 0.09 0.05 –
(` in Million)
20 Other Non Current Assets
As at
31 March
2012
As at
31 March
2011
Secured, considered good
Investment in Lease realisable beyond 12 months fromthe end of reporting
period
1,846.25 2,567.91
Interest Accrued on Loans to Employees 34.16 30.85
Unsecured, considered good
Other Deposits 31.49 56.54
Doubtful
Trade receivables (sundry debtors) realisable beyond 12 months 2.16 –
Non moving Inventories 930.62 558.24
Sub Total (A) 2,844.69 3,213.54
Less : Allowance
Trade receivables (sundry debtors) realisable beyond 12 months 2.16 –
Provision for Non moving Inventories 930.62 558.24
Sub Total (B) 932.78 558.24
TOTAL (A)–(B) 1,911.91 2,655.30
106 107
Other Assets As at
31 March
2012
As at
31 March
2011
Current (Note 25) 20,470.74 14,624.25
Non Current (Note 20) 1,911.91 2,655.30
Total 22,382.65 17,279.55
(` in Million)
21
Inventories
(As taken, valued and certi?ed by the Management)
As at
31 March
2012
As at
31 March
2011
Finished Goods 16.78 12.38
Stores & Spares 1,865.68 1,566.60
TOTAL 1,882.46 1,578.98
(` in Million)
22 Trade Receivables
As at
31 March
2012
As at
31 March
2011
Considered good
Debts outstanding for a period exceeding six months: 0.18 –
Other Debts: – –
Considered good
Secured – –
Unsecured
Debts outstanding for a period less than six months: 6,709.37 5,940.94
TOTAL 6,709.55 5,940.94
(` in Million)
23 Cash & Bank balances
As at
31 March
2012
As at
31 March
2011
A. Balances with Banks
a) Current account 3,411.52 4,728.55
b) Deposits 35.38 12.79
B. Cash on hand
a) At NewDelhi 0.25 0.26
b) At Overseas 0.17 0.09
C. Cash & Bank Balance
(In respect of Joint Ventures)
2,012.18 1,321.80
TOTAL 5,459.50 6,063.49
(` in Million)
24 Short TermLoans & Advances
As at
31 March
2012
As at
31 March
2011
A. Secured – Considered Good
Loans & Advances to Employees 19.28 14.45
Secured – Considered Good (A) 19.28 14.45
B. Unsecured – Considered Good
Carry Finance to JV Partners 69.38 282.92
Loans & Advances to Employees 5.86 10.58
Loans & Advances to Directors 0.05 –
Advances recoverable in cash or in kind or for value to be received 716.18 419.60
Loans and advances to related parties
Receivable fromONGC Nile Ganga BV (Subsidiary Company) 294.64 174.25
Receivable fromPetro Carabobo Ganga BV (Subsidiary Company) 53.55 46.82
Receivable fromOAAL (Subsidiary Company) 2.83 –
Receivable fromONGC Mittal Energy Ltd. 183.88 156.67
Advance to Jarpeno Limited 1.24 6,651.93
Advance to AB Startkapitalet nr 5636
(Carabobo ONE AB Limited)
149.20 2,492.52
Unsecured – Considered Good (B) 1,476.81 10,235.29
C. Unsecured – Considered Doubtful
Carry Finance to Shell, Egypt (NEMED) – 6,156.23
Less: Provisions for Doubtful Advances and Claims – –
Less: Written O? during the Year – – 6,156.23 –
Unsecured – Considered Doubtful (C) – –
LOANS AND ADVANCES (A+B+C) 1,496.09 10,249.74
a. Carry Finance to Sudapet: The Company carried the share of investment of Sudapet, a company owned
by the Government of Sudan, for its 3.375% share in Block 5A till the commencement of ?rst commercial
production (Sudapet Carry). The carried amounts are repayable without interest in form of oil out of the
production share of Sudapet as per the terms of the Exploration and Production hearing Agreement
(EPSA). Currently, Block 5A is under exploration, production and development and due to certainty of
the recovery, the net carried amount of USD 1.36 Million equivalent to `69.38 Million (previous year
USD 6.33 Million equivalent to `282.92 Million) has been shown as Loans and Advances.
108 109
(` in Million)
25 Other Current Assets
As at
31 March 2012
As at
31 March 2011
Prepaid expenses for Underlift Quanity 342.01 283.32
Interest Accrued On:
Deposits with Banks – 0.13
Others 4.14 195.69
Other Deposits 27.02 0.25
Other Current Assets 11.69 7.48
VAT Receivable 926.56 541.05
Investment in Lease 2,427.35 975.68
Advances recoverable in Cash or in kind or for value to be received
(In respect of Joint Venture)
6,318.76 4,477.50
Taxes (Income Tax, Wealth Tax and Fringe Bene?t Tax) :
Advance Payment 21,841.37 19,094.64
Less: Provision 11,428.16 10,413.21 10,951.49 8,143.15
TOTAL 20,470.74 14,624.25
Attention is invited to Note 20
(` in Million)
26 Revenue fromOperations 2011–12 2010–11
Sale of products
(A) Sale of products
Crude Oil 62,889.77 46,138.49
Gas 9,567.78 7,896.11
Condensate 3,090.51 1,982.75
TOTAL 75,548.06 56,017.35
(B) Overlifted Quantity of Crude – 581.28
Total Sales (A)+(B) 75,548.06 56,598.63
Less: VAT 1,234.29 916.00
Total revenue fromoperations 74,313.77 55,682.63
(` in Million)
27 Other Income 2011–12 2010–11
Income fromDividend fromONGBV (Subsidiary Company) 1,049.40 818.11
Interest income :
On Deposits with Banks 46.28 55.30
On Loans & Advances to Subsidiaries 429.27 194.19
On Loans and Advances to Employees 5.54 3.86
Other interest income 93.63 126.85
Pro?t on Redemption/ Sale of Investment 2,726.77 28.40
Gain on Foreign Exchange Forward Contract 222.45 –
Lease Income 207.36 252.94
Miscellaneous Receipts 1,038.55 669.43
TOTAL 5,819.25 2,149.08
(` in Million)
28 Production, Transportation, Selling and Distribution Expenditure 2011–12 2010–11
Production Expenditure 5,928.31 5,174.64
Transportation Expenditure 3,083.46 2,612.19
Royalty 5,116.27 3,680.30
Service Tax and Other Levies 13.08 37.55
Sta? Exp 786.56 672.53
Rent 166.41 196.16
Repair & Maintenance 67.90 47.43
Insurance 28.07 2.97
Crude oil received against Carry Finance 231.66 –
Other Expenses 628.64 611.99
TOTAL 16,050.36 13,035.76
The above expenses have been reclassi?ed in accordance with Part II of Revised Schedule VI to the Companies Act ,1956
a. Details of Production, Transportation, Selling and Distribution Expenditure
(` in Million)
Particulars 2011–12 2010–11
(i) (a) Salaries, Wages, Ex–gratia, etc. 519.64 458.52
(b) Contribution to Provident and other Funds 33.02 29.59
(c) Provision for Gratuity 17.36 11.65
(d) Provision for Leave Encashment 69.00 43.18
(e) Provision of Medical/Terminal Bene?ts 3.82 9.92
(f) Sta? Welfare Expenses 143.72 119.67
Sub–Total 786.56 672.53
(ii) Rent 166.41 196.16
(iii) Electricity, Water and Power 18.22 17.33
(iv) Repairs to Building – –
(v) Repairs to Plant and Machinery 0.03 –
(vi) Other Repairs 67.87 47.43
(vii) Hire Charges of Vehicles 96.04 103.62
(viii) Professional Charges 71.59 160.72
(ix) Telephone and Telex 18.08 12.88
(x) Printing and Stationary 2.43 1.84
(xi) Training and Seminar – 0.56
(xii) Business Meeting Expenses 3.08 13.15
(xiii) Traveling Expenses 104.06 177.46
(xiv) Insurance 28.07 2.97
(xv) Advertisement and Exhibition Expenditure 10.06 7.32
(xvi) Statutory Levies 13.08 37.55
(xvii) Contractual Transportation 3,083.46 2,612.18
(xviii) Miscellaneous Expenditure 19.59 18.04
(xix) Other Operating Expenditure 6,445.46 5,273.72
(xx) Royalty 5,116.27 3,680.30
TOTAL 16,050.36 13,035.76
110 111
b. Crude oil received against Carry Finance represents the value of the Carry Finance Refund in kind as
per the terms of Exploration and Production Sharing Agreement. During the year ended 31 March,
2012, total crude oil sales for Block 5A Sudan were `3,284.96 Million (Previous year `2,928.49 Million).
The Sudapet carry ?nance recovery in kind during the current period amounted to USD 4.97 Million
equivalent to `231.66 Million . The amount of Sudapet Carry ?nance recovery in kind is recognized as
expenses under Note 28 – Production Transportation, Selling and Distribution Expense with the value
of the loan recovered which was adjusted from sales revenue till the previous year ended 31 March 2011.
However there is no impact on the pro?tability during the year due to the change in such accounting
of the Sudapet Carry ?nance recovery. Sales revenue is recognized for the sales quantity net of quality
bank compensation taken in kind by the transporter. Pending ?nalization of the transportation
agreement with the transporters, the transport charges and quality bank compensation are accounted
based upon the invoices of the transporter.
c. The Other Operating Expenditure (sl.no. (xix) above) includes the expenses in respect of Sakhalin–1
Project, Russia where the above details are not made available by the Operator.
d. Auditors’ Remuneration: (` in Million)
Particulars 2011–12 2010–11
Audit Fee 3.09 2.21
Tax Audit Fee 0.28 0.32
Certi?cation Fee 0.48 0.96
TOTAL 3.85 3.49
e. The expenditure incurred by Oil and Natural Gas Corporation Limited or its subsidiaries on behalf of the
Company are accounted for on the basis of debit raised by them for which supporting documents are
held by the respective parent company/subsidiaries.
(` in Million)
29
Increase/(Decrease) in Stock (Finished Goods)
* As taken, Valued and Certi?ed by the Management
2011–12 2010–11
Closing Stock 16.78 12.38
Opening Stock 12.38 10.36
Less: Adjustment – 12.38 – 10.36
NET (INCREASE)/DECREASE IN STOCK (4.40) (2.02)
(` in Million)
30 Financing Costs 2011–12 2010–11
A. Interest expenses
Amortized Financial Charges on Commercial Papers – 267.60
Interest on Bonds 1,974.74 1,970.78
Other interest expenses – 2.75
Sub–Total 1,974.74 2,241.13
B. Foreign Exchange Fluctuation related to borrowing cost – –
TOTAL 1,974.74 2,241.13
(` in Million)
31 Depreciation, Depletion and Amortisation 2011–12 2010–11
Depreciation on Fixed Assets 10,011.43 10,596.40
Add: Amortisation – Intangibles (34.89) 17.22
Less: Capitalised 7,982.82 1,993.72 8,245.20 2,368.42
Depletion 6,966.25 6,549.43
Survey Expenditure 1,204.25 1,366.67
Dry Wells Written O? 706.43 3,954.26
Pre–Acquisition Expenses 190.65 375.98
TOTAL 11,061.30 14,614.76
(` in Million)
32 Other Expenses 2011–12 2010–11
Net (gain) or loss on foreign currency transactions and translation (other
than considered as ?nance cost)
12.17 (101.03)
Provision for Mark to Market loss on Derivative Contracts 498.56 –
TOTAL 510.73 (101.03)
(` in Million)
33 Provisions and write o?s 2011–12 2010–11
Provision for Diminution in the Value of Investment 18,666.21 –
Provisions for Doubtful Debts/Claims 509.41 1,428.74
Provision for Wells under service contract 12.29 22.20
Provision for Non Moving Inventory 372.38 557.36
Provisions Written Back – (6,156.23)
Acquisition Cost Written O? 92.54 423.23
Other Write O? 817.92 6,318.04
TOTAL 20,470.75 2,593.34
a. Provision for diminution in value of investment is made against non–current investments (Note–18)
b. Provision for doubtful debts/claims includes carry loan of `534.16 Million (previous year `Nil) to KMG.
In view of the block being under exploration and there is no certainty of commercial discovery and
provision against loan to subsidiary `(26.91) Million (previous year `1,428.74 Million) and others `2.16
Million (previous year 31 March 2011 `Nil)
c. Provision has been made for well under service contract in Iran.
d. Provision amounting to `Nil (previous year `6,156.23) made in earlier years has been written–back in
respect of NEMED exploration block, Egypt in previous year. The same amount has been written–o?
and included under Other Write O? in previous year.
e. Acquisition cost has been written o? in respect of exploration projects upon relinquishment.
f. Other write–o? includes `766.80 Million (previous year : `88.20 Million) in respect of minimum
exploration commitment upon relinquishment of exploration blocks.
112 113
(` in Million)
34 Decrease/(increase) due to overlift/underlift quantity 2011–12 2010–11
A. Overlift previous period – –
B. Underlift Previous period 283.32 –
C. Overlift current period – –
D.Underlift current period 342.01 283.32
Decrease/(increase) due to overlift/underlift quantity (B+C)–(A+D) (58.69) (283.32)
(` in Million)
35 Adjustment relating to Prior Period (Net) 2011–12 2010–11
A. Expense
Survey Expenses (23.20) –
Other Expenses 2.84 27.18
Depreciation (0.02) (0.07)
Sub–Total (20.38) 27.11
B. Income
Other Income 6.24 –
Sub–Total 6.24 –
TOTAL (A) – (B) (26.62) 27.11
(` in Million)
36 Current Year Tax 2011–12 2010–11
Corporate Tax 11,141.60 7,255.77
Wealth Tax 0.18 0.04
TOTAL 11,141.78 7,255.81
The provision for corporate income–tax has been made for `11,141.60 Million (previous year `7255.77),
including the tax payable in respect of Sakhalin–1, Russia Project as well as taking into account the tax
credits under applicable double taxation avoidance agreements.
(` in Million)
37 Deferred Tax 2011–12 2010–11
Deferred Tax 93.57 (3.06)
TOTAL 93.58 (3.06)
(` in Million)
38 Earlier Years Tax 2011–12 2010–11
Corporate Tax 158.56 (2,971.37)
Wealth Tax 0.13 –
TOTAL 158.69 (2,971.37)
(In `)
39 Earning Per Equity Share 2011–12 2010–11
Net Pro?t 18,760,795,568 21,424,602,996
No of Shares 100,000,000 100,000,000
Basic and Diluted Earnings Per Equity Share
(Per Share of `100 each)
187.61 214.25
40. The required disclosure under the Accounting Standard 15 (Revised) is given
below:
(A) Brief Description: A general description of the type of De?ned Bene?t Plans is as follows:
(i) Earned Leave (EL) Bene?t
Accrual –30 days per year
Encashment while in service–75% of Earned Leave balance subject to a maximum of 90 days per
calendar year
Encashment on retirement – maximum 300 days.
(ii) Good Health Reward (Half Pay Leave)
Accrual –20 days per year
Encashment while in service –Nil
Encashment on retirement – 50% of Half Pay Leave balance.
(iii) Gratuity
15 days salary for every completed year of service. Vesting period is 5 years and the payment is
restricted to `1.00 million.
(iv) Post–Retirement Medical Bene?ts
Upon payment of one time prescribed contribution by the employees, full medical bene?ts on
superannuation and on voluntary retirement subject to the completion of minimum 20 years of
service and 50 years of age.
(v) Terminal Bene?ts
At the time of superannuation, employees are entitled to settle at a place of their choice and they
are eligible for Transfer Travelling Allowance. Employees are given a silver plaque as a memento
on superannuation, depending upon their level.
(B) The amounts recognized in ?nancial statements for de?ned contribution plans are as under:
(` in Million)
DEFINED CONTRIBUTION PLANS
Expense
Recognized
during 2011–12
Contribution for
Key Management
Personnel during
2011–12
Expense
Recognized
during 2010–11
Contribution for
Key Management
Personnel during
2010–11
Contributory Provident Fund 29.53 0.54 26.53 0.61
Employee Pension Scheme –95 1.40 0.01 1.40 0.01
Composite Social Security Scheme 1.53 0.02 1.66 0.03
114 115
(D) The amounts included in the fair value of plan assets of gratuity fund in respect of Reporting
Enterprise’s own ?nancial instruments and any property occupied by, or other assets used by the
reporting enterprise are `Nil (Previous Year `Nil)
(E) Reconciliation showing the movements during the period in the net liability recognized in the balance
sheet:
(` in Million)
PARTICULARS Gratuity Leave
Post–Retirement
Medical Bene?ts
Terminals
Bene?ts
Opening de?ned bene?t obligation 169.54 139.67 61.14 7.86
164.23 127.04 54.74 4.79
Current Service Cost 7.39 6.81 2.48 0.35
7.01 5.80 2.23 0.31
Past Service Cost – – – –
– – – –
Interest Cost 14.41 11.87 5.20 0.67
13.14 10.16 4.38 0.38
Actuarial Losses (Gains) (4.44) 50.32 (5.33) 0.45
(8.50) 27.22 (0.21) 2.83
Exchange di?erences on foreign plans – – – –
– – – –
Less: Bene?ts paid (7.00) (42.24) – (0.34)
6.34 30.55 – 0.45
Closing de?ned bene?t obligation 179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
(C) The amounts recognized in the balance sheet for post–employment bene?t plans are as under:
(` in Million)
PARTICULARS Gratuity Leave
Post–Retirement
Medical Bene?ts
Terminals
Bene?ts
Present Value of Funded Obligation – – – –
– – – –
Fair Value of Plan Assets – – – –
– – – –
Present Value of Unfunded Obligation 179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
Unrecognized Past Service Cost – – – –
– – – –
Net Liability 179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
(F) The total expenses recognized in the statement of pro?t and loss are as follows:
(` in Million)
PARTICULARS Gratuity Leave
Post Retirement
Medical Bene?ts
Terminals
Bene?ts
Current Service Cost 7.38 6.80 2.48 0.35
7.01 5.80 2.23 0.31
Interest on Obligation 14.41 11.87 5.20 0.67
13.14 10.16 4.38 0.38
Expected Return on plan assets – – – –
– – – –
Net Actuarial Losses (–Gains) recognised
in year
(4.44) 50.32 (5.33) 0.45
(8.50) 27.22 (0.21) 2.83
Past Service Cost – – – –
– – – –
Losses (Gains) on curtailments and
settlement
– – – –
– – – –
Total included in ‘Employee Bene?t
Expense’
17.35 68.99 2.35 1.47
11.65 43.18 6.40 3.52
Actual return on Plan Assets – – – –
– – – –
(G) Principal actuarial assumption at the balance sheet date (expressed as weighted averages):
(` in Million)
PARTICULARS Gratuity Leave
Post Retirement
Medical Bene?ts
Terminals
Bene?ts
Discount Rate 8.50% 8.50% 8.50% 8.50%
8.00% 8.00% 8.00% 8.00%
Expected Return on Plan Assets – – – –
– – – –
Annual Increase in health care costs – – – –
– – – –
Annual Increase in Salary 6.00% 6.00% 6.00% 6.00%
5.50% 5.50% 5.50% 5.50%
116 117
(H) E?ect of 1.00 % increase and decrease in in?ation rate on Post Retirement Medical Bene?ts as on
31
st
March 2012:
(` in Million)
1.00 % (+) 1.00 % (–)
a) E?ect on service and interest cost 1.57 (1.13)
1.31 (1.05)
b) E?ect on Present Bene?ts Obligation
(Closing)
14.24 (8.03)
11.41 (9.25)
Note: Figures in bold represent current year’s ?gures
41.1 Tax Assessment
i. The Company had appealed to Hon’ble Delhi High Court against the decision of Income Tax Appellate
Tribunal (ITAT) for the Assessment Years 1981–82 to 1987–88 regarding disallowance of its claim for
`94.04 Million (As on 31st March 2011: `94.04 Million) on account of depreciation, development allowance
and receipt of interest on delayed payments in respect of Iran Project. However, pending decision
the tax demand in this regard was paid by the Company. The matter has been remanded back by the
Hon’ble Delhi High Court to the ITAT for fresh hearing vide order dated 30 March 2011.
ii. The Company had ?led appeals with Commissioner of Income Tax (Appeals) [CIT (Appeals)] against
the disallowance of depreciation on acquisition costs of the projects and other expenses as well as
addition to income aggregating to `3,958.54 Million, `3,006.17 Million, `3,470.29 Million, `3, 212.03
Million, `4,683.46 Million , `5,617.51 Million and `4,578.92 Million for assessment years 2002–03, 2003–04,
2004–05, 2005–06, 2006–07, 2007–08 and 2008–09 respectively by the assessing o?cer (“AO”). CIT
(Appeals), while disposing o? the appeals for assessment years 2002–03 and 2003–04 partially deleted
the disallowances. The Company ?led appeals with the Income Tax Appellate Tribunal (ITAT) against
the orders of CIT (Appeals). The Company got a favorable decision from ITAT for AY 2002–03 and all
disallowances (depreciation on acquisition cost and pre–acquisition expenses) made by the AO have
been deleted by ITAT. While the Department has ?led appeal in the High Court of Delhi (the “Delhi HC”)
against the said order of ITAT for 2002–03, the Company has also approached the Delhi HC against the
said order with the appeal that the acquisition cost be treated as revenue expenditure.
iii. For the assessment years 2004–05 and 2005–06, CIT (Appeals) has decided the appeals in favor of the
Company. However, the Department has ?led appeal against the above orders in the ITAT.
iv. For the assessment year 2004–05, the AO had reassessed the income under u/s 147 of the Income Tax
Act, 1961 making additions to income amounting to `165.98 Million towards exchange gain adjustments
and change in method of accounting during the relevant year. The tax demanded due to reassessment
is nil. The AO has also initiated penalty proceedings. Company has ?led an appeal before CIT (Appeals)
against the order of the AO and requested the AO to keep the penalty proceedings in abeyance till the
disposal of the appeal by CIT (Appeals).
v. For the assessment year 2005–06, the Company had claimed tax credit of `111.33 Million (increased to
`709.88 Million due to assessment by Department under regular provisions rather than under MAT, as
returned) under the India–Vietnam double tax avoidance agreement with respect to tax deemed to
be paid. The claim was duly supported by report of a reputed accounting and tax ?rm in Vietnam and
accepted by the AO. The CIT had issued an order dated 29 March 2010 holding the allowance of the
credit to be erroneous and directed the AO to re–compute the tax payable and allow credit only on
the basis of certi?cate to be obtained by the Company from Vietnam tax authorities. The Company
had ?led appeal with the Income Tax Appellate Tribunal (ITAT) to contest the same on the ground that
the decision of the CIT is not in accordance with the law. The Company had also approached Vietnam
Tax Authorities (VTA) for required certi?cate. However, the AO vide his order dated 21 December 2010
has withdrawn the credit allowed for `709.88 Million and the resulting demand for `958.34 Million has
been adjusted by the AO against refunds due to the Company. The Company has ?led appeal with CIT
(A) against the order of the AO. Further, the VTA vide their notice dated 5 August 2011 have con?rmed
the tax amounts for the calendar years 2003 to 2006. The Company has ?led the documents with CIT
(A) and further proceedings before CIT(A) are pending.
vi. For the assessment year 2008–09, the AO has made certain disallowances/additions (depreciation
on acquisition costs of the projects, adjustment of Sudan crude oil inventory, provision in respect of
Farsi exploration service contract and other expenses) amounting to `4,578.92 Million and assessed
total income as `32,469.15 Million against returned income of `27,890.22 Million. The disallowances/
additions include an amount of `1,654,88 Million on protective basis. In consequence, the AO has
raised a demand of `2,238.65 Million payable by the Company. The Company does not agree with the
disallowances made and ?led appeal with CIT (Appeals) against such assessment order. No provision
has been made for additional tax liability, if any, on this account.
vii. For the assessment year 2005–06, AO has initiated action on 28 March 2012 u/s 147 of the Income Tax
Act, 1961 for re–assessing company’s assessed income. The AO also conveyed the reasons whereby the
AO has indicated additions to income amounting to `25.87 Million towards exchange loss adjustments
due to change in method of accounting during the year. No demand has been raised by the AO
41.2 Disclosure pursuant to the clause 28 of the Listing Agreement:
Loans & Advances in the Nature of Loans
(` in Million)
2011–12 2010–11
Particulars
Outstand-
ing as on
31.03.2012
Maximum
Amount
Outstanding
during the
Year
Outstand-
ing as on
31.03.2011
Maximum
Amount
Outstanding
during the
Year
a) Loans and advances to Subsidiaries
i) Advance to Jarpeno Limited 1.24 15,329.61 6,651.93 6,668.37
ii) Advance to Carabobo One AB 149.20 2,547.42 2,492.52 2,622.23
iii) Loan to ONGC Narmada Limited 1,401.83 1,428.74 1,428.74 1,428.74
iv) Advance to ONGC Caspian E&P B.V. Nil Nil Nil 733.42
b) Loans to Associates
Advance to ONGC Mittal Energy Limited
Nil Nil Nil 75.55
c) Loans having no repayment schedule or repayment
schedule of more than seven years to employees
103.35 104.34 89.82 89.82
d) Loans having no interest or interest belowsection
372A of Companies Act, 1956
NA NA NA NA
e) Investment by the loanee (borrower) in the shares
of parent company and subsidiary company
Nil Nil Nil Nil
f) Loan to ?rms/companies in which Directors are
interested
Nil Nil Nil Nil
42. Details of Joint Ventures:
The details of Company’s and its Subsidiaries’ signi?cant joint ventures as on 31 March, 2012 are as
under
Sr.
No.
Name of the Project and Country
of Operation
Company’s
participating
share (%)
Other Consortium
Members*
Operator* Project Status
1
Block 06.1 Project, Vietnam,
O?shore
45%
TNK VietnamB.V.**
–35%
TNK Vietnam
B.V.**
The project is under
development and
production. Petrovietnam– 20%
2
Sakhalin –1 Project, Russia,
O?shore
20%
ENL – 30%
ENL
The project is under
development and
production.
SODECO – 30%
SMNG – 11.5%
R N Astra– 8.5%
3 Block 5A Project, Sudan, Onshore 24.125%
Petronas – 67.875% Petronas
and Sudapet
– Joint
Operatorship
The project is under
exploration, development
and production.
Sudapet – 8%
118 119
Sr.
No.
Name of the Project and Country
of Operation
Company’s
participating
share (%)
Other Consortium
Members*
Operator* Project Status
4 Block A–1 Myanmar, O?shore 17%
Daewoo – 51%
Daewoo
The project is under
development.
KOGAS – 8.5%
GAIL – 8.5%
MOGE– 15%
5
Block A–3 Project,
Myanmar, O?shore
17%
Daewoo – 51%
Daewoo
The project is under
development.
KOGAS – 8.5%
GAIL – 8.5%
MOGE– 15%
6 Farsi Block Project, Iran, O?shore 40%
IOC – 40%
OIL – 20%
ONGC Videsh
Ltd.
The project ’s exploration
service contract ended
on 24 June 2009. The
Master Development
Plan (MDP) for the Farzad
‘B’ Gas Field has been
submitted to National
Iranian Oil Company and
Development Service
Contract for the ?eld is
under discussion.
7 Block XXIV Project, Syria, Onshore 60%
IPRMEL – 25%
IPR MEL
The project is under
exploration, development
and production.
Triocean–15%
8
Block 25–29, 35 (Part) & 36
Project, Cuba, O?shore
30%
Repsol YPF – 40%
Repsol YPF
The project is under
exploration. StatOil – 30%
9
Khartoum–Port Sudan Pipeline
Project, Sudan
90% OIL – 10%
ONGC Videsh
Ltd.
The pipeline has been
completed and is under
lease.
10 Block RC–8, Colombia, O?shore 40%
Ecopetrol – 40% ONGC Videsh
Ltd.
The project is under
exploration Petrobras – 20%
11 Block RC–9, Colombia, O?shore 50% Ecopetrol – 50% Ecopetrol
The project is under
exploration
12 Block RC–10, Colombia, O?shore 50% Ecopetrol – 50%
ONGC Videsh
Ltd.
The project is under
exploration
13 Block SSJN–7, Colombia, Onshore 50% Paci?c – 50% Paci?c
The project is under
exploration
14 Block CPO–5, Colombia, Onshore 70% PetroDorado – 30%
ONGC Videsh
Ltd.
The project is under
exploration
15
SHWE O?shore Pipeline,
Myanmar, O?shore
17%
Daewoo – 51%
Daewoo
The project is under
construction.
KOGAS – 8.5%
GAIL – 8.5%
MOGE – 15%
16
Satpayev Contract Area 3575,
Kazakhstan
25% KMG – 75% SOLLP
The project is under
exploration
*Abbreviations used: BPEOC – BP Exploration Operating Company Limited; Daewoo – Daewoo International Corporation; Ecopetrol –
Ecopetrol S.A, Colombia; ENL – Exxon Neftegas Limited; GAIL – GAIL (India) Limited; IOC – Indian Oil Corporation Limited; IPRMEL – IPR
Mediterranean Exploration Limited; KMG – Kazmunaygas; KOGAS – Korea Gas Corporation; MOGE– Myanmar Oil and Gas Enterprise;
OIL – Oil India Limited; Petrobas – Petrobras Colombia Ltd; Paci?c – Paci?c Stratus Energy, Colombia ; Petro–Dorado – Petro–Dorado
South America S.A.; Petronas – PetronasCarigali Overseas SdnBhd; Petrovietnam – Vietnam Oil and Gas Group; Repsol YPF – Repsol
YPF Cuba SA; SMNG – Sakhalinmorneftegas Shelf; SODECO– Sakhalin Oil Development Company Limited; SOLLP – Satpayev Operating
Company LLP (100% subsidiary of KMG); Sudapet – Sudapet Limited; Triocean: Tri–Ocean Mediterranean.
** BPEOC has transferred its PI and Operatorship to TNK VietnamB.V. which is e?ective from17
th
October 2011.
43.1 Company’s share in Joint Ventures
The Company’s share of assets, liabilities, income and expenses in the Joint Ventures as furnished by
the Operator has been incorporated in the ?nancial statements as given below:
(` in Million)
Project Net Fixed
Assets
Net
Producing
Property
Capital
Work in
Progress
Explor-
atory and
Develop-
ment
Wells in
Progress
Current
Assets
Cash and
Bank Bal-
ance
Liabilities Income Expendi-
ture*
(Including
deprecia-
tion)
A. Audited as of 31 March 2012
Block 06.1, Vietnam 1,160.94 1,700.14 2,503.28 3,868.07 2,585.96 22.96 12,227.59 10,124.13 3,666.03
Farsi Block, Iran 0.27 – – – 1.45 1.08 116.18 0.33 10.90
Sudan Pipeline,
ONGC Videsh Ltd.'s
Share (90%)
– – – – 2,436.45 9.10 3,861.74 207.37 (914.15)
Total (A) 1,161.21 1,700.14 2,503.28 3,868.07 5,023.86 33.14 16,205.51 10,331.83 2,762.78
B. Audited as of 31 January 2012
Block 5A, Sudan 2,834.54 5,016.93 27.26 2,006.76 1,204.69 125.42 325.40 3,287.07 1,911.68
Total (B) 2,834.54 5,016.93 27.26 2,006.76 1,204.69 125.42 325.40 3,287.07 1,911.68
C. Audited as of 31 December 2011
Sakhalin 1, Russia 22,632.87 54,960.77 46,764.05 1,344.42 9,759.26 799.88 80,642.67 60,737.72 28,442.46
Block RC–8, Co-
lombia
0.15 – – – 11.06 – 126.73 0.35 40.91
Block RC–10, Co-
lombia
0.21 – – – 14.33 – 150.08 0.49 38.39
Block RC–9, Co-
lombia
– – – – 0.09 0.24 7.59 0.26 (13.91)
Block SSJN–7,
Colombia
– – – – 2.20 – 50.93 0.07 260.33
Blocks 25–29, 35
(Part) & 36, Cuba
6.12 – 346.91 1,811.86 248.44 – 748.71 – 20.32
Block A–1, Myanmar 20.97 – 3,960.76 2,753.72 734.58 444.92 1,827.11 3.14 78.55
Block A–3, Myanmar 2.01 – 840.95 2,695.10 186.02 162.42 317.60 3.54 10.13
CPO 5 Block 0.24 – – 15.20 67.06 – 219.11 1.16 166.43
SHWE O?shore
Pipeline, Myanmar
– – 1,966.65 – 444.18 443.79 440.26 1.74 (5.61)
Total (C)
22,662.57
54,960.77 53,879.32 8,620.30 11,467.22 1,851.25 84,530.79 60,748.47 29,038.00
D. Unaudited
Block XXIV, Syria 53.67 (78.46) – 1,998.02 314.97 – 270.06 191.49 246.74
Block 6 North Rama-
dan, Egypt+
– – – – 50.96 – 60.82 0.80 (68.50)
Block NC–189,
Libya+
– – – – 24.79 2.34 0.23 – (0.75)
Block NEMED,
Egypt+
– – – – – – (1.88) – 30.79
Satpayev Block,
Kazakhstan
2.30 – 4,753.53 – 18.66 – 646.57 – 703.45
Total (D ) 55.97 (78.46) 4,753.53 1,998.02 409.38 2.34 975.80 192.29 911.73
Grand Total 26,714.29 61,599.38 61,163.39 16,493.15 18,105.15 2,012.15 102,037.50 74,559.66 34,624.19
*Represents expenditure as per joint venture statement. In the accounts of the Company, the amount is re?ected after netting o? as
per the Accounting Standard (AS) 27 viz. Financial Reporting of interests in Joint Ventures.
+Projects surrendered during the year
The Company’s share of assets, liabilities, income andexpenses has beenconvertedintothe reporting currency at the average exchange
rate over the period for which the details are provided by the Operators. Generally the details are provided by the operators on monthly
basis except in respect of Sakhalin–1, Russia Project, where the details are provided by the Operator on quarterly basis.
120 121
43.2 Block 5A, Republic of South Sudan
The Company has 24.125% participating interest in Block 5A Republic of Sudan (ROS). South Sudan
separated from ROS as an independent country e?ective from 9
th
July 2011. In view of the separation
of South Sudan, the entire contract area of Block 5A is now situated in Republic of South Sudan
(RSS), whereas the downstream crude oil transportation system and export terminal are situated
in ROS.
The company signed a Transition Agreement (TA) with RSS on 13
th
January 2012 continuing its right for
oil exploration and exploitation for contract area of Block 5A in Republic of South Sudan. Republic
of South Sudan is a landlocked country. Government of Sudan and Government of South Sudan has
been negotiating an agreement for the evacuation of crude produced from Republic of South Sudan
concessional area through the processing and transportation facilities of Republic of Sudan and has
yet to reach an agreement. As per the directives of Ministry of Petroleum & Mines, Government of
South Sudan, petroleum operation has been temporarily shut down in concession area of Block 5A
e?ective from 23
rd
January 2012. In view of the above, currently petroleum operations in the Block have
been limited to the maintenance of the facilities to ensure integrity for swift resumption of production
operation.
Due to the secession of South Sudan from ROS, the operator has been shifting o?ce from Khartoum
in ROS to Juba in RSS. Due to the shifting process the operator has not been able to provide the
monthly expenditure statement for the month of February and March 2012. Hence the expenditure
for the month of February and March are booked based on the cash call request for those two months
amounting to USD 4.39 Million equivalent `218.24 Million. Necessary adjustments would be carried out
in the accounts on receipt of the expenditure statement.
43.3 Satpayev Block, Kazakhstan:
E?ective 12
th
October 2011, the Company has acquired 25% Subsoil use rights from National Company
JSC Kaz Munai Gas (KMG) in the Contract for Exploration and Production of Hydrocarbon (Contract) in
Satpayev Area which was signed on 15
th
June, 2010 between Ministry of Oil and Gas (MOG), Kazakhstan
and KMG. KMG now holds subsoil use rights of 75% in the Block. The amounts paid toward initial payment
and signature bonus aggregating to `4,753.53 Million are disclosed as Capital Work in Progress in
Note 17.
44. Disclosure pursuant to as 19 – Leases
a. Khartoum – Port Sudan Pipeline Project:
The Company had completed the 12”X741 Kms multi–product pipeline from Khartoum re?nery to Port
Sudan for the Ministry of Energy and Mining of the Government of Sudan (GOS) on Build, Own, Lease
and Transfer (BOLT) basis and handed over the same to GOS during the ?nancial year 2005–06. The
project was implemented in consortium with Oil India Limited, Company’s share being 90%.
The EPC Contractor executing the project claimed additional costs aggregating to USD 37.15 Million,
Company’s share being USD 33.43 Million (90%), which have not been accepted by the Company. The
Company, in turn has ?led a claim as per the contract with GOS for their approval of an aggregate amount
of USD 46.18, Company’s share being USD 41.56. The EPC Contractor has initiated arbitration with a claim
for USD 25.49 Million plus interest (amount uncertainable) against the Company. Pending settlement with
the EPC Contractor, an amount of USD 22.94 Million, being the Company’s 90% share out of total claim of
USD 25.49 Million has been accounted as liability in the relevant year. No revenue in this respect has been
recognized since the claim has not been accepted by GOS. ONGC Videsh Ltd. has served a pre–arbitral
notice on GOS which is a requirement prior to initiating any legal proceedings in Sudan.
The payment under the contract with GOS would be received over a period of 10 years including a
moratorium of one year from the date of the contract (30 June, 2004) in 18 equal semi–annual
installments along with lease rental. The lease period commenced from the date of handing over of
the pipeline system and will continue till all payments by GOS are completed. All titles in the works
and the transportation system shall vest in the Company and the title shall pass to GOS in proportion
to the payments made by GOS against total payments due to Company under the contract. Further,
subject to regular payments on due dates by GOS to the Company, GOS shall have the exclusive right
to use and operate the pipeline system and the Company shall not assign, transfer, sub–let, sub–
contract, mortgage or create any rights to any third party or encumbrances or make any disposition
to any third party. Accordingly, the amount of net investment in the lease (i.e. aggregate of Minimum
b. The disclosure in accordance with the Accounting Standard (AS) 19 viz. Leases is as under:
(` in Million)
Particulars
31 March 2012 31–Mar–11
Gross Net Gross Net
a) Reconciliation between the total gross
investment in the lease and the present value
of minimumlease payments as at year end
– Not later than one year 2,581.50 2,427.35 1129.15 975.68
– Later than one year and not later
than ?ve years
1,936.13 1,846.25 2822.89 2567.91
– Later than ?ve years – – – –
Total 4517.63 4273.60 3952.04 3543.59
b) Unearned Finance Income 244.03 408.45
c) Unguaranteed residual value accruing to
Company’s bene?t
Nil Nil
d) Accumulated provision for uncollectible
minimumlease payments receivable
Nil Nil
e) Contingent rentsrecognisedinthestatement
of pro?t and loss for the period
Nil Nil
f) General description of the signi?cant leasing
arrangement
As described in para above As described in para above
g) Accounting Policy followed in respect of
initial direct costs
As per Accounting Policy O.1.2 As per Accounting Policy O.1.2
Lease Payments minus Unearned Finance Income) is recognized and recorded as receivables under the
lease. The ?nance income thereon has been recognized based upon the pattern re?ecting the constant
periodic rate of return on the outstanding net investment in the lease.
The ?rst 11 installments under the contract due till 30
th
December 2010 have been received. The 12
th
Installment due on 30
th
June 2011 and 13
th
installment due on 30
th
December 2011 have not yet been
received. Company has taken a political risk insurance policy for 12
th
and 13
th
installments. As per the
provisions of policy contract, the company has ?led the claim for 12
th
and 13
th
installments with Export
Credit Guarantee Corporation of India (ECGC).
45. Details of Reserves: (as determined by the Reserves Estimation Committee):
(a) Company’s share of Proved Reserves in respect of di?erent projects as on 31 March, 2012 is as under:
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total Oil Equivalent**
(Million Tonne)
Block 06.1, Vietnam Opening 0.672 10.540 11.212
Addition – – –
Ded/Adj – – –
Production 0.036 2.023 2.059
Closing 0.636 8.517 9.153
Sakhalin–1, Russia Opening 35.501 71.537 107.038
Addition 0.258 0.138 0.396
Ded/Adj – – –
Production 1.498 0.494 1.992
Closing 34.261 71.182 105.442
122 123
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total Oil Equivalent**
(Million Tonne)
Block 5A, Sudan Opening 6.627 – 6.627
Addition (0.105) – (0.105)
Ded/Adj – – –
Production 0.174 – 0.174
Closing 6.348 – 6.348
Block–24, Syria Opening 1.813 – 1.813
Addition – – –
Ded/Adj – – –
Production 0.010 – 0.010
Closing 1.803 – 1.803
Block–A1 & A3,
Myanmar
Opening – 10.297 10.297
Addition – – –
Ded/Adj – – –
Production – – –
Closing – 10.297 10.297
* Crude Oil includes Condensate.
** For calculating “Oil Equivalent” 1,000M
3
of Gas has been taken to be equal to 1 Tonne of Crude Oil.
b) Company’s share of Proved and Developed Reserves in respect of di?erent projects as on 31 March 2012
is as under:
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total Oil Equivalent**
(Million Tonne)
Block 06.1, Vietnam Opening 0.663 6.985 7.648
Addition – – –
Deductions/ Adjustment – – –
Production 0.036 2.023 2.059
Closing 0.627 4.962 5.589
Sakhalin–1, Russia Opening 10.620 11.288 21.908
Addition – – –
Deductions/ Adjustment – – –
Production 1.498 0.494 1.992
Closing 9.122 10.794 19.916
Block 5A, Sudan Opening 2.467 – 2.467
Addition 0.306 – 0.306
Deductions/ Adjustment – – –
Production 0.174 – 0.174
Closing 2.599 – 2.599
Block–24, Syria Opening – – –
Additions 0.060 – 0.060
Deductions/ Adjustment – – –
Production 0.010 – 0.010
Closing 0.050 – 0.050
* Crude Oil includes Condensate.
** For calculating “Oil Equivalent” 1,000M
3
of Gas has been taken to be equal to 1 Tonne of Crude Oil.
(c ) The year end reserves of the company has been estimated by the Reserves Estimation Committee
(REC) of the parent company ONGC, which follows international reservoir engineering procedures
consistently.
124 125
46. Segment Information
(` in Million)
Particulars Asia FSU Countries Latin
2011–12 2010–11 2011–12 2010–11 2011–12
External sales 10,309.10 7,927.45 60,719.71 44,950.27 –
Inter Segment sales – – – – –
Total Revenue 10,309.10 7,927.45 60,719.71 44,950.27 –
Results 3,942.68 4,474.08 32,277.25 29,051.08 (690.63)
Segment results 3,942.68 4,474.08 32,277.25 29,051.08 (690.63)
Unallocated corporate Expenses (Net) – – – – –
Operating pro?t or (Loss) 3,942.68 4,474.08 32,277.25 29,051.08 (690.63)
Interest expenses – – – – –
Interest and other income 15.28 19.21 18.02 44.55 2.32
Income & other Tax – – – – –
Pro?t / (loss) from ordinary activities 3,957.95 4,493.30 32,295.26 29,095.62 (688.32)
Net pro?t / (Loss) 3,957.95 4,493.30 32,295.26 29,095.62 (688.32)
Other information – – – – –
Segment Assets 39,129.49 21,297.22 161,600.88 140,162.61 2,525.54
Unallocated Corporate Assets – – – – –
Total Assets 39,129.49 21,297.22 161,600.88 140,162.61 2,525.54
Segment Liabilities 17,727.89 12,757.12 80,642.66 72,585.33 1,456.15
Unallocated Corporate Liabilities – – – – –
Total Liabilities 17,727.89 12,757.12 80,642.66 72,585.33 1,456.15
Capital Expenditure 17,086.89 3,371.58 33,162.28 34,426.68 1,616.75
Recouped cost 1,821.11 856.97 7,561.55 7,139.27 683.53
Non cash Exp. – – – – –
Information about Secondary Business Segments (Product–wise):
(` in Million)
Revenue from 2011–12 2010–11
Crude Oil* and Natural Gas 74,313.77 55,682.63
Lease Finance Income 207.36 252.94
*Crude Oil includes Condensate.
(` in Million)
America Africa Unallocated Grand Total
2010–11 2011–12 2010–11 2011–12 2010–11 2011–12 2010–11
– 3,284.96 2,804.92 – – 74,313.77 55,682.64
– – – – – – –
– 3,284.96 2,804.92 – – 74,313.77 55,682.64
(1,232.50) 2,283.93 (3,403.66) – – 37,813.23 28,889.00
(1,232.50) 2,283.93 (3,403.66) – – 37,813.23 28,889.00
– – – (11,502.88) (3,090.95) (11,502.88) (3,090.95)
(1,232.50) 2,283.93 (3,403.66) (11,502.88) (3,090.95) 26,310.35 25,798.05
– – (2.75) (1,974.74) (2,238.39) (1,974.74) (2,241.14)
0.88 284.53 276.67 5,499.11 1,807.77 5,819.26 2,149.08
– – – (11,394.05) (4,281.38) (11,394.05) (4,281.38)
(1,231.63) 2,568.46 (3,129.74) (19,372.56) (7,802.95) 18,760.79 21,424.60
(1,231.63) 2,568.46 (3,129.74) (19,372.56) (7,802.95) 18,760.79 21,424.60
– – – – – – –
778.97 16,924.85 16,588.55 – – 220,180.76 178,827.35
– – – 124,115.11 132,824.72 124,115.11 132,824.72
778.97 16,924.85 16,588.55 124,115.11 132,824.72 344,295.87 311,652.07
688.63 5,061.22 11,250.23 – – 104,887.92 97,281.31
– – – 138,527.19 133,722.00 138,527.19 133,722.00
688.63 5,061.22 11,250.23 138,527.19 133,722.00 243,415.11 231,003.31
97.37 1,119.82 (3,591.05) 432.67 348.17 53,418.41 34,652.75
1,099.59 801.57 5,109.52 193.55 409.41 11,061.31 14,614.76
– – – – – – –
Notes:
i. Segments have been identi?ed and reported taking into account the organization and management structure for internal
reporting and signi?cantly di?erent risk and return perception in di?erent geographical regions. These have been re–organized
into ?ve segments viz. Asia, FSU Countries, Latin America, Africa and Unallocated.
ii. The segment revenue in the business segment (Product–wise) is revenue fromsale of Crude Oil and Natural Gas and Lease Finance
Income.
iii. Segment Revenue, Results, Assets and Liabilities include the respective amounts identi?able to each of the segments and amount
allocated on a reasonable basis. “Unallocated” includes common expenditure incurred for all the segments and expenses incurred
at corporate level.
iv. Revenue ?gures are shown as net of VAT.
126 127
47. Capital Commitments:
(i) Other Capital Commitments based upon the details provided by the operators: `29,252.78 Million
(Previous year `31,168.63 Million).
(ii) Contracts remaining to be executed on capital account amounting to `1,570.00 Million ( Previous year
`1,960.30 Million) towards ONGC Videsh Ltd. share for building at Vasant Kunj, Delhi wherein the
contracts have been awarded by parent company to various agencies and ONGC Videsh Ltd. is to share
the costs.
47.a Other Commitments:
(i) The Company either on its own or in consortium with other partners carries on its business in respect
of exploration, development and production of hydrocarbons under agreements with the host
governments. Several of these agreements provide for certain minimum work obligations/ certain
minimum ?nancial commitments over a period of time. The Company’s share of such obligations/
commitments in respect of agreements where such obligations / commitments have not been
completed as of the reporting date amounted to USD 121.02 Million equivalent to `6,186.61 Million
(Previous year USD 131.52 Million equivalent to `5,881.62 Million). The Company is con?dent of meeting
the obligations/ commitments.
48. Contingent Liability:
i Liability for payment to contractual workers for regularization of their services is pending with Labor
Court under civil suit. The amount of liability is not ascertainable.
ii Claims not acknowledged as debt: USD 10.49 Million plus interest (amount uncertainable). (Refer note
44 above).
iii Disputed income–tax demands (excluding cases decided in favour of Company and addition made by
the AO on protective basis): `7,145.56 Million (As on 31 March 2011: `4,967.43 million). Against disputed
tax demands,`9,438.08 Million (As on 31 March 2011: `5,714.31 million) has been paid by the Company
or adjusted by the authorities against refunds due to the Company from time–to–time. Attention is
invited to note 41 above.
iv In respect of bank guarantees/standby letters of credit obtained from banks for performance
guarantee/bid bonds: `4,861.23 Million (Previous Year `4,234.98 Million).
v The Company has issued Performance Guarantee in respect of concessionary contract for Block BC–10,
Brazil and Blocks BM–S–73 and BM–ES–42 on behalf of ONGC Campos Ltda (OCL). The Company is
con?dent that OCL will be able to honor its obligations.
vi The Company has given a Performance Guarantee on behalf of Petro Carabobo Ganga B.V. to Government
of Venezuela in respect of Carabobo 1 Project. The total investment commitment is estimated at USD
1,333 Million (`68,142.96 Million).
vii The Service Tax Department has issued a demand cum show–cause notice dated 11 October 2011
requiring the Company to show cause why service tax amounting to `28,163.14 Million (including
Education Cess and SHE cess), the interest on such amount and penalty should not be demanded and
recovered from the Company. Service Tax Department has calculated these tax amounts based on
foreign currency expenditure reported in the Company’s ?nancial statements covering the reporting
periods from 1 April 2006 to 31 December 2010 and contending that these expenses represent business
auxiliary services rendered by ONGC Videsh Ltd.’s foreign branches and operator of the Joint Venture/
Consortium to the Company. The Company is of the view that the said service tax is not payable and
proposes to contest the same. No provision has been made on this account.
viii All known contingent liabilities have been indicated. The contingent liabilities, if any, in respect of joint
ventures, where the Company is the non–operator are not ascertainable except Sakhalin–1 where the
Operator has intimated that the status of contingent liability is Nil.
49. Derivative instruments and unhedged foreign currency exposure:
During the year, ONGC Videsh Ltd. has entered into cross currency swap transactions with various
banks whereby it has swapped the principal and interest amounts payable towards Bonds issued in
domestic markets into USD liability as follows:
Underlying
Notional Principal
Amount ( `Million)
Notional Principal
Amount (USD
Million)
Termination Date
8.40% 5 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series I
15,000.00 299.23 23 December 2014
8.54% 10 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series II
3,700.00 56.30 6 January 2020
Total 18,700.00 355.53
The business of the Company is carried out entirely outside India. The revenues of the Company are
received entirely in foreign currency and substantially all the expenses are incurred in foreign currency.
Accordingly, the Company has swapped the Bonds issued in Indian Rupees into USD so as to align the
currency of its liabilities and assets, thereby hedging the resulting exposure.
The above swap positions were outstanding on 31 March 2012 and have been revalued on that date based
on Mark–to–Market positions reported by counter–party banks. Mark–to–market loss amounting to
`498.56 Million has been charged to foreign exchange gain/loss in the Statement of pro?t and loss.
Further, during the year, the Company had entered into foreign exchange forward transactions for
hedging its underlying exposures which have settled during the year itself. The net gain on settlement
of such transactions amounting to `222.45 Million has been charged to foreign exchange gain/loss in
the Statement of pro?t and loss.
50. Expenditure in foreign currency:
(` in Million)
Particulars 2011–12 2010–11
Import Nil Nil
Professional and Consultation Fee 171.50 457.09
Interest 367.95 102.51
Others 91,969.07 32,574.67
51. Earnings in foreign currency (accrual basis):
(` in Million)
Particulars 2011–12 2010–11
Export/ Sales (incl. advance received/ adjusted)* 75,548.06 56,017.35
Royalty/Technical know–how Nil Nil
Interest 667.64 501.87
Dividend 1,049.40 818.11
Others 3,764.63 1,382.35
* Attention Is also invited to Note–28
128 129
52. Previous year ?gures have been re–grouped/re–arranged and nomenclature re–named
wherever necessary to make them comparable with current year classi?cation.
53. Some balances of Debtors, Creditors and Loans & Advances are subject to con?rmation/
reconciliation. Adjustments, if any, will be accounted for on receipt/con?rmation of the same
after examination.
54. Information as per Accounting Standard (AS) 18 viz. Related Party Disclosures is given below
(excluding with State Controlled Entities):
(` in Million)
Subsidiaries Joint ventures
Key Managerial
personnel
Total 2011–12 Total 2010–11
Income fromrendering services 685.36 167.29 – 852.65 639.84
Expenses on receiving services – – – – –
Reimbursement of expenditure
(travelling etc)
106.99 78.46 – 185.45 109.09
Interest Income 428.74 34.43 – 463.17 497.23
Dividend Income 1,049.40 – – 1,049.40 818.11
Redemption of shares 6,113.25 21.17 – 6,134.42 315.45
Loans Given 7,890.90 – – 7,890.90 8,945.57
Remuneration – – 16.69 16.69 16.05
Capital Contribution* 17,751.15 – – 17,751.15 –
* Loans and Advances converted into shares.
Note :
Name of related parties and description of relationship (excluding State Controlled Entities):
Subsidiaries ONGC Nile Ganga B.V., The Netherlands
ONGC Nile G anga Cyprus Limited,Cyprus
ONGC Nile Ganga (San Cristobal) B.V. , The Netherlands
ONGC Campos Ltda, Brazil
ONGC Do Brasil Explorancao Petrolifera Ltda,Brazil (liquidated in Jan–12)
ONGC Caspian E&P B.V., The Netherlands
ONGC Satpayev E&P B.V., The Netherlands
ONGC Narmada Limited, Nigeria
ONGC Amazon Alakananda Limited, Bermuda
Jarpeno Limited, Cyprus
Imperial Energy Tomsk Limited, Cyprus
Imperial Energy (Cyprus) Limited, Cyprus
Imperial Energy Nord Limited, Cyprus
RK Imperial Energy (Kostanai) Limited, Cyprus
Nefsilius Holdings Limited, Cyprus
Imperial Frac Services ( Cyprus) Limited, Cyprus
Freshspring Investments Limited, Cyprus
Redcli?e Holdings Limited, Cyprus
Imperial Energy Gas Limited
San Agio Investments Limited, Cyprus
Biancus Holdings Limited, Cyprus
LLC Sibinterneft, Russian Federation
LLC Allianceneftegaz, Russian Federation
LLC Nord Imperial, Russian Federation
LLC Imperial Energy Tomsk Gas, Russian Federation (under liquidation)
LLC Stratum, Russian Federation
LLC Imperial Trans Service, Russian Federation
LLC Rus Imperial Group, Russian Federation
Carabobo One AB, Sweden
Petro Carabobo Ganga B.V., the Netherlands
Joint Ventures Block 06.1 Project, Vietnam
Sakhalin–1 Project, Russia
Block 5A Project, Sudan
Block A–1 Project, Myanmar
Block A–3 Project, Myanmar
SHWE O?shore Pipeline Project, Myanmar
Farsi Block Project, Iran
Block XXIV Project, Syria
Block 25–29, 35 (Part) & 36 (Part), Cuba
Khartoum– Port Sudan Pipeline Project, Sudan
ONGC Mittal Energy Limited, Cyprus
Block RC–8, Colombia
Block RC–9, Colombia
Block RC–10, Colombia
Block SSJN–7, Colombia
Block CPO–5, Colombia
Satpayev Project, Kazakhstan
Key Management personnel Mr D K Sarraf, Managing Director (with e?ect fromSeptember 16, 2011)
Mr J Thomas, Managing Director (till September 15, 2011 )
and Director (Exploration) (till December 31, 2011)
Mr S P Garg, Director (Finance)
Mr S. Roychoudhary, Director (Operations)
Mr N K Verma, Director (Exploration) (with e?ect from1st January, 2012)
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
130 131
6A8h FL0W 8TATEMEhT F0P ThE ¥EAP EhßEß 31
MAP6h, 2012
(` in Million)
Year Ended
31 March , 2012
Year Ended
31 March, 2011
A CASH FLOWFROM OPERATING ACTIVITIES:
Net pro?t before tax and prior period items 30,128.23 25,733.09
Adjustments For:
– Foreign Exchange Translation Reserve 1,460.90 (250.94)
– Provision for Diminution in the Value of Investment 18,666.21 –
– Provisions for Doubtful Debts/Claims 509.41 1,428.74
– Provision for Non Moving Inventory 372.38 557.36
– Provisions Written Back – (6,156.23)
– Other Provisions and Write O?s 922.76 6,763.47
– Unrealized Foreign Exchange Loss/(Gain) 12.17 (101.03)
– Provision for Mark to Market loss on Derivative Contracts 498.56 –
– Depreciation on Tangible Assets (Net) 2,028.62 2,351.20
– Amortisation – Intangibles (34.89) 17.22
– Depletion on Producing Properties 6,966.25 6,549.43
– Interest Expenses 1,974.74 2,241.13
– Foreign Exchange Fluctuation related to borrowing cost – –
– Dividend Income (1,049.40) (818.11)
– Interest Income (574.73) (380.20)
– Pro?t on Redemption/ Sale of Investment (2,726.77) (28.40)
– Gain on Foreign Exchange Forward Contract (222.45) 28,803.76 – 12,173.64
Operating Pro?t before Working Capital Changes 58,931.99 37,906.73
Adjustments for:–
– Decrease/(Increase) in Inventories (675.86) (216.80)
– Decrease/(Increase) in Trade Receivables (768.60) (1,633.04)
– Decrease/(Increase) in Short TermLoans and Advances 8,753.64 (7,383.36)
– Decrease/(Increase) in Long TermLoans and Advances (521.03) (1,428.74)
– Decrease/(Increase) in Other Current Assets (5,846.49) (186.07)
– Decrease/(Increase) in Other Non Current Assets 743.39 –
– Increase/(Decrease) in Short TermBorrowings 291.65 (10,900.00)
– Increase/(Decrease) in Trade Payables 2,471.73 (467.69)
– Increase/(Decrease) in Other current Liabilities 8,499.57 –
– Increase/(Decrease) in Other Long TermLiabilities (174.32) (157.38)
– Increase/(Decrease) in Short TermProvisions 13.42 27.40
– Increase/(Decrease) in Long TermProvisions 27.18 –
– Increase/(Decrease) in Liability for Abandonment 5,730.02 6,930.78
– Increase/(Decrease) in Deferred Tax Liabilities (Net) 93.57 18,637.87 (3.07) (15,417.97)
Cash generated from/(used in) Operations 77,569.86 22,488.76
Direct Taxes Paid (net of refunds) (11,394.05) (4,281.38)
Net Cash Flow before Prior period items 66,175.81 18,207.38
Prior period items 26.62 (27.11)
Net Cash Flow from/(used in) Operating Activities (A) 66,202.43 18,180.27
Year Ended
31 March , 2012
Year Ended
31 March, 2011
B CASH FLOWFROM INVESTING ACTIVITIES:
– Purchase of Tangible Assets (Net) (1,903.01) (17,400.71)
– Purchase of Intangible Assets (Net) (31.69) (11.09)
– Expenditure on Projects (44,948.03) (9,531.18)
– Investment in Subsidiaries/JV's (15,171.84) 229.40
– Investment with Bank for Site Restoration (2,819.74) (0.05)
– Dividend Income 1,049.40 818.11
– Interest Income 574.73 380.20
– Pro?t on Redemption/ Sale of Investment 2,726.77 28.40
– Gain on Foreign Exchange Forward Contract 222.45 –
Net Cash Flow from/(used in) Investing Activities (B) (60,300.96) (25,486.92)
C CASH FLOWFROM FINANCING ACTIVITIES:
– Proceeds fromNon Convertible Redeemable Bonds – –
– Proceeds fromIssue of Share Capital – –
– Net Long TermBorrowings fromONGC (4,530.72) 10,063.58
– Interest Expenses (1,974.74) (2,241.13)
– Foreign Exchange Fluctuation related to borrowing cost – –
Net Cash Flow from/(used in) Financing Activities (C) (6,505.46) 7,822.45
Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) (603.99) 515.80
Cash and Cash Equivalents as at 31 March, 2011 6,063.49 5,547.69
(Opening Balance)
Cash and Cash Equivalents as at 31 March, 2012 5,459.50 6,063.49
(Closing Balance)
Note:
1 The above Cash FlowStatement has been prepared under the 'Indirect Method' as set out in the Accounting Standard–3 on Cash
FlowStatements issued by The Institute of Chartered Accountants of India.
2 Bracket indicates cash out?ow.
3 Previous year ?gures have been regrouped wherever necessary to con?rmthe current year's classi?cation.
4 Adjustment have not been made to purchase of ?xed assets etc. (investing activities), on account of increase / decrease in Capital
Creditors. The impact of the above is not readily ascertainable.
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
132 133
8TATEMEhT FüP8üAhT T0 8E6TI0h 212 0F ThE 60MFAhIE8 A6T,
1956, PELATIh6 T0 60MFAh¥'8 IhTEPE8T Ih ThE 8ü88IßIAPIE8
Sl.
No.
Name of the
Subsidiaries
1. The Financial
Year of the
Subsidiary
ends on
2. Date
fromwhich
it became
Subsidiary
3. (a) Number of shares held
by ONGC Videsh Ltd. in the
Subsidiary at the end of the ?-
nancial year of the Subsidiary
3. (b) Extent
of interest
of Holding
Company at
the end of
the ?nancial
year of the
Subsidiary
4. The net aggregate amount of the Subsidiary’s Pro?t/
(Loss) so far it concerns the members of the Holding
Company:
4. (a) Not dealt within
the Holding Company’s
accounts*
4. (b) Dealt within the
Holding Company’s ac-
counts:
4. (a) (i)
For the
period 1st
April, 2011
to 31st
March,
2012 (` in
million)
4. (a) (ii) For
the previous
period (s)
of the Sub-
sidiary since
it became
the Holding
Company's
Subsidiary (`
in million)
4. (b) (i)
For the
period 1st
April, 2011
to 31st
March,
2012 (` in
million)
4. (b) (ii) For
the previous
period (s)
of the Sub-
sidiary since
it became
the Holding
Company's
Subsidiary (`
in million)
1 ONGC Nile Ganga
B.V.
31st December,
2011
12th March,
2003
40 Class “A” & 100 Class "B"
shares of Euro 453.78 each
& 880 Class "C" Shares of
Euro 1 each directly, rest 720
Class "C" shares are held by
OMEL which is JV Company
of ONGC Videsh Ltd. & Mittal
Investment Sarl (MIS)
Class A & B
100%
Class C
77.491%
11,534.48 64,668.56 1,049.40 14,916.88
2 ONGC Narmada
Limited
31st March, 2012 7th December,
2005
20 million shares of one Naira
each
100% – (1,373.60) – –
3 ONGC Amazon
Alaknanda Limited
31st March, 2012 8th August,
2006
12,000 Equity & 367,995,174
Preference shares of one
USD each
100% 7,185.50 13,066.09 – –
4 ONGC Campos
Ltda.
31st December,
2011
16th March,
2007
353,958,050 quotas of BRL
1 each
100% (2,369.73) 440.85 – –
5 ONGC Nile Ganga
(Cyprus) Ltd.
31st December,
2011
26th
November,
2007
241,223 Shares of 0.01 USD
each
100% 188.09 218.27 – –
6 ONGC Nile Ganga
(San Cristobal) B.V.
31st December,
2011
29th February,
2008
54,000 shares of Euro 1 each 100% 76.10 11,028.50 – –
7 ONGC Satpayev
E&P B.V
31st December,
2011
7th June, 2010 18,000 shares of Euro 1 each 100% (0.10) (0.38) – –
8 ONGC Caspian
E&P B.V
31st December,
2011
7th June, 2010 36,000 shares of Euro 1 each 100% (0.15) (8.37) – –
9 Jarpeno Limited 31st March, 2012 12th August,
2008
1,450 Equity shares of 1 USD
each & 192,210 Optionally
Convertible Redeemable
Preference shares of USD
1 each
100% (19,676.10) 1,528.42 – –
10 Biancus Holdings
Limited
31st March, 2012 13th January,
2009
1,000 shares of 1.71 EUR each 100% 21.07 97.53 – –
11 San Agio
Investments
Limited
31st March, 2012 13th January,
2009
1,000 shares of 1.71 EUR each 100% 127.85 (213.13) – –
12 Redcli?e Holdings
Limited
31st March, 2012 13th January,
2009
2,520 shares of 1 USD each 100% (44.05) (127.54) – –
13 Imperial Energy
Nord Limited
31st March, 2012 13th January,
2009
25,920 shares of 1 USD each 100% (416.11) (908.20) – –
14 Imperial Energy
(Cyprus) Limited
31st March, 2012 13th January,
2009
25,720 shares of 1 USD each 100% (245.65) (763.27) – –
15 Imperial Energy
Tomsk Limited
31st March, 2012 13th January,
2009
850 shares of 1.71 EUR each 85% (28.49) (67.11) – –
Sl.
No.
Name of the
Subsidiaries
1. The Financial
Year of the
Subsidiary
ends on
2. Date
fromwhich
it became
Subsidiary
3. (a) Number of shares held
by ONGC Videsh Ltd. in the
Subsidiary at the end of the ?-
nancial year of the Subsidiary
3. (b) Extent
of interest
of Holding
Company at
the end of
the ?nancial
year of the
Subsidiary
4. The net aggregate amount of the Subsidiary’s Pro?t/
(Loss) so far it concerns the members of the Holding
Company:
4. (a) Not dealt within
the Holding Company’s
accounts*
4. (b) Dealt within the
Holding Company’s ac-
counts:
4. (a) (i)
For the
period 1st
April, 2011
to 31st
March,
2012 (` in
million)
4. (a) (ii) For
the previous
period (s)
of the Sub-
sidiary since
it became
the Holding
Company's
Subsidiary (`
in million)
4. (b) (i)
For the
period 1st
April, 2011
to 31st
March,
2012 (` in
million)
4. (b) (ii) For
the previous
period (s)
of the Sub-
sidiary since
it became
the Holding
Company's
Subsidiary (`
in million)
16 Imperial Energy Gas
Limited
31st March, 2012 13th January,
2009
2,000 shares of 1 EUR each 100% (0.96) (2.33) – –
17 Imperial Frac
Services (Cyprus)
Limited
31st March, 2012 13th January,
2009
1,000 shares of 1.71 EUR each 100% (0.96) (2.51) – –
18 Nefsilius Holdings
Limited
31st March, 2012 13th January,
2009
2,420 shares of 1 USD each 100% (2.87) (5.73) – –
19 Freshspring
Investments
Limited
31st March, 2012 13th January,
2009
1,000 shares of 1.71 EUR each 100% (0.48) (2.37) – –
20 RK Imperial Energy
Kostanai Limited
31st March, 2012 13th January,
2009
1,000 shares of 1.71 EUR each 100% (0.48) (2.02) – –
21 LLC Nord Imperial 31st December,
2011
13th January,
2009
full charter capital 100,000RUR 100% (4,660.57) (11,518.77) – –
22 LLC
Allianceneftegaz
31st December,
2011
13th January,
2009
full charter capital 50,000RUR 100% (395.04) (4,408.17) – –
23 LLC Sibinterneft 31st December,
2011
13th January,
2009
charter capital 55,900RUR 55.9%
(Net Interest
47.5%)
(50.49) (608.51) – –
24 LLC Rus Imperial
Group
31st December,
2011
13th January,
2009
full charter capital 100,000RUR 100% (420.42) (498.38) – –
25 LLC Imperial Trans
Service
31st December,
2011
13th January,
2009
full charter capital 100,000RUR 100% (0.48) (50.45) – –
26 LLC Imperial Energy
Tomsk Gas
31st December,
2011
13th January,
2009
charter capital 9,500 RUR 95% (1.36) (5.18) – –
27 LLC Stratum 31st December,
2011
13th January,
2009
full charter capital 100,000RUR 100% – (0.19) – –
28 Carabobo One AB 31st March, 2012 25th February,
2010
377,678 ordinary shares of
11.19457 Euro each
100% (144.13) (9.51) – –
29 Petro Carabobo
Ganga B.V.
31st December,
2011
26th February,
2010
18,000 shares of 1 Euro each 100% (4.41) (9.89) – –
*At the closing rate of exchange, there is a Foreign Exchange Translation Reserve of `19,655.59 million, which has not been adjusted.
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
134 135
To
THE BOARD OF DIRECTORS
ONGC VIDESH LIMITED
1 We have audited the attached Consolidated
?nancial statements of ONGC Videsh Limited
(‘the Company’) and its Subsidiaries and Joint
Ventures (hereinafter referred to as ‘Group’),
which comprises the Balance Sheet as at 31
st
March 2012 and the Consolidated Statement
of Statement of Pro?t and Loss Consolidated
Cash Flow Statement for the year ended on
that date and annexed thereto. These ?nancial
statements are the responsibility of the
management of the Company and have been
prepared by the management on the basis
of separate ?nancial statements and other
?nancial information regarding components.
Our responsibility is to express an opinion on
these ?nancial statements based on our audit.
2 We conducted our audit in accordance
with auditing standards generally accepted
in India. Those standards require that
we plan and perform the audit to obtain
reasonable assurance about whether the
financial statements are free of material
misstatements. An audit includes examining,
on a test basis, evidence supporting the
amounts and disclosures in the financial
statements. An audit also includes assessing
the accounting principles used and significant
estimates made by the management, as well
as evaluating the overall financial statements
presentation. We believe that our audit
provides a reasonable basis for our opinion.
3 We report that the consolidated ?nancial
statements have been prepared by the
Company’s management in accordance with
the requirements of the Accounting Standard
(AS) 21, ‘Consolidated Financial Statements’
and Accounting Standard (AS) 27, ‘Financial
Reporting of Interest in Joint Ventures’, issued
pursuant to the Companies (Accounting
Standards) Rules, 2006 as per Section 211(3C)
of the Companies Act, 1956.
4 Considering the fact that actual operations
are performed outside India and operator is
responsible for maintaining the original books
of account on behalf of all the members as per
Joint operating agreement, we have conducted
our audit by relying on such information
furnished by the operator based on the audited
statement or where Joint Ventures are not
audited, reliance on the information furnished
by the management.
5 We have placed reliance on technical/
commercial evaluation by the management
in respect of categorization of expenditure
on project in Exploratory & Development
Wells in Progress, Producing Properties
and Capital Work in Progress, Wells Status,
allocation of cost incurred on them, depletion
of producing properties on the basis of proved
developed hydrocarbon reserves as estimated
by REC of the parent company, provision for
abandonment costs, allocation of depreciation
on ?xed assets (including support equipment
and facilities) and liabilities against agreed
minimum work program. We have also placed
reliance on the management’s assessment of
impairment indicators and impairment results.
6 We did not audit the ?nancial statements
of the 5 Subsidiaries and 1 Joint venture
company which are considered in preparation
of “Consolidated Financial Statements” of the
Company. Out of 5 Subsidiaries, consolidated
accounts of 3 Subsidiaries were audited by the
other auditors. In case of unaudited ?nancial
statements of 2 Subsidiary and 1 Joint Venture
Auditors’ Report on the Consolidated Financial Statements of the
group (ONGC Videsh Limited, its Subsidiaries and Joint Ventures)
Aniva Bay, Transfer of equipment
136 137
company, ?nancial information has been derived from the ?nancial statements certi?ed by the
Management. (Refer ‘Annexure–1’ attached)
Total Assets & Revenue from Subsidiary Companies and Company’s shares in the Joint Venture Company
for the year ended March 31, 2012, included in the Audited Consolidated Financial Statements, re?ects at
`321,883.95 million and `152,019.00 million, respectively. Our opinion on the ?nancial statements for
the year ended March 31, 2012 to the extent they have been derived from such ?nancial statements
is based solely on the report of such other auditors in case of 3 Subsidiaries and unaudited ?nancial
statement of 2 Subsidiary and 1 Joint Venture Company certi?ed by the Management.
7 Further to our comments above and on the basis of information and explanation given to us and on the
consideration of the separate audit reports on individual audited ?nancial statements of the company, its
subsidiaries and certi?cation of management in respect of unaudited accounts referred to in Para 7 above,
we are of the opinion that the consolidated ?nancial statements read with notes to accounts give a true and
fair view:
(a) In the case of Consolidated Balance Sheet, of the state of a?airs of the Group as at 31
st
March 2012;
(b) In the case of the Consolidated Statement of Pro?t and Loss, of the pro?t of the Group for the year
ended on that date; and
(c) In the case of the Consolidated Cash Flow Statement, of the cash ?ows of the Group for the year
ended on that date.
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
AhhEXüPE-1
Summary of the Financial Information (*) of Subsidiaries and Joint Venture as of the year ended
31st March 2012:
(` in Million)
S.
No.
Name of the Sub-
sidiaries / Joint
Venture
Total Assets as
of March 31,
2012
(Consolidated)
` million
Total Liabilities
as of March 31,
2012
(Consolidated)
` million
Total Revenue
for the year
ended March
31, 2012
(Consolidated)
` million
Total Pro?t/
(Loss) after tax
for the year
ended March
31, 2012 (Con-
solidated)
` million
Name of the auditor and
date of audit report
Subsidiaries
1 ONGC Nile Ganga
B.V. (ONGBV)
180,982.97 46,546.22 115,164.72 17,308.50 M/s Ernst & Young Ac-
countants LLP, Amster-
dam, the Netherlands
Report date May 9, 2012
2 ONGC Amazon
Alaknanda Lim-
ited (OAAL)
44,704.27 6,244.08 16,384.85 7,195.33 M/s BDO Audit S.A.,
Bogota, Colombia
Report date May 6, 2012
3 Jarpeno Limited 88,771.60 20,423.16 20,006.65 (25,656.16) M/s Ernst & Young LLC,
Moscow, Russia
Report date May 14, 2012
4 ONGC Narmada
Limited (ONL)
101.91 1,644.03 – – Unaudited
5 Carabobo One
AB
6,302.10 399.12 – (143.99) Unaudited
Joint Venture Company’s
shares in the
Pro?t/(Loss)
1 ONGC Mittal
Energy Limited
(OMEL)
1,021.09 7,560.76 462.79 (2,428.84) Unaudited
Total 321,883.95 82,817.36 152,019.00 (3,725.16)
Note :–
(*) These ?nancial statements include company’s share of assets, liabilities, income and expenses in respect of international joint
ventures.
138 139
Scarabeo 9 Navigation, CUBA
140 141
60h80LIßATEß 8ALAh6E 8hEET A8 AT 31 MAP6h, 2012
(` in Million)
Notes As at 31 March, 2012 As at 31 March, 2011
EQUITY AND LIABILITIES
SHAREHOLDERS' FUNDS
Share Capital 3 10,000.00 10,000.00
Reserves and Surplus 4 189,411.15 135,529.73
199,411.15 145,529.73
MINORITY INTEREST 1,002.53 681.99
NON CURRENT LIABILITIES
Long termborrowings 5 195,161.02 204,554.35
Deferred tax liabilities 6 10,203.88 9,554.84
Liability for abandonment 7 27,504.49 22,861.16
Other Long termliabilities 8 81.86 –
Long termprovisions 9 551.16 513.31
233,502.41 237,483.66
CURRENT LIABILITIES
Short termborrowings 10 622.81 331.18
Liability for abandonment 11 104.37 –
Trade payables 12 25,782.33 19,728.11
Other current liabilities 13 45,391.72 33,364.56
Short termprovisions 14 189.34 15.95
72,090.57 53,439.80
TOTAL 506,006.66 437,135.18
ASSETS
NON CURRENT ASSETS
Fixed Assets
Tangible assets 15 35,590.45 42,303.82
Intangible assets 16 126.28 36.79
Producing properties 17 144,236.09 136,139.76
Development & exploratory wells in progress 18 30,740.28 24,906.82
Capital work in progress 19 76,255.68 40,017.94
Goodwill 20 75,045.32 86,998.12
Non Current Investment 21 2,927.15 107.42
Deferred Tax Assets 22 5,220.65 1,202.19
Long TermLoans and Advances 23 916.92 280.60
Other Non Current Assets 24 17,347.71 2,655.30
388,406.53 334,648.76
CURRENT ASSETS
Inventories 25 5,732.91 4,699.03
Trade receivables 26 29,614.55 40,043.50
Cash & Bank balances 27 51,528.33 36,998.27
Short termloans & advances 28 8,226.93 4,485.08
Other current assets 29 22,497.41 16,260.54
117,600.13 102,486.42
TOTAL 506,006.66 437,135.18
The accompanying notes are integral part of the ?nancial statements 1 to 53
60h80LIßATEß 8TATEMEhT 0F FP0FIT Ahß L088 F0P ThE ¥EAP EhßEß
31, MAP6h 2012
(` in Million)
Notes 2011–12 2010–11
CONTINUING OPERATIONS
INCOME
Revenue fromOperations 30 223,473.12 184,111.49
Other Income 31 2,901.13 2,599.22
TOTAL REVENUE 226,374.25 186,710.71
EXPENSES
Production, Transportation, Selling and Distribution Expenditure 32 101,417.96 89,160.18
Changes in inventories of ?nished goods 33 (631.69) (121.25)
Financing Costs 34 2,969.80 3,531.05
Depreciation, Depletion and Amortisation 35 41,869.78 42,682.50
Other Expenses 36 2,141.07 (773.24)
Provisions & Write–O?s 37 27,929.11 3,448.25
Decrease/(increase) due to overlift/underlift quantity 38 (414.11) (283.32)
TOTAL EXPENSES 175,281.92 137,644.17
PROFIT BEFORE PRIOR PERIOD, EXCEPTIONAL AND EXTRAORDINARY ITEMS
AND TAX
51,092.33 49,066.54
Adjustments relating to Prior Period (Net) 39 (73.48) (351.03)
PROFITBEFOREEXCEPTIONALANDEXTRAORDINARYITEMSANDTAX 51,165.81 49,417.57
Exceptional and Extraordinary items – –
Tax expense
Current Year Tax 27,385.31 23,688.08
Deferred Tax (3,950.76) 1,650.55
Earlier Years Tax 192.78 (3,290.24)
Total Tax Expenses 23,627.33 22,048.39
Less: Share of Pro?t or (loss) – Minority Interest 326.92 463.73
Group Pro?t After Tax fromcontinuing operations (A) 27,211.56 26,905.45
DISCONTINUING OPERATIONS
PROFIT / (LOSS) FROM DISCONTINUING OPERATIONS (B) – –
GROUP PROFIT AFTER TAX (A + B) 27,211.56 26,905.45
EARNINGS PER EQUITY SHARE (`)
(Face Value `100/– Per Share)
Basic 40 272.12 269.05
Diluted 272.12 269.05
The accompanying notes are integral part of the ?nancial statements 1 to 53
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
142 143
Sl No. Name of the Subsidiaries / Jointly Con-
trolled Entities
Country of
Incorporation
Proportion of Ownership Interest Status of Audit
as at
31 March 2012
As at
31 March 2012
As at
31 March 2011
1.1 ONGC Nile Ganga B.V. (ONGBV) The Netherlands Class A and Class
B 100%
Class A and Class
B 100%
Audited
1.1 (i) ONGC Do Brasil Exploracao Petrolifera
Ltda.***
Brazil – 100% Audited
1.1 (ii) ONGC Campos Ltda. Brazil 100% 100% Audited
1.1 (iii) ONGC Nile Ganga (Cyprus) Ltd. Cyprus 100% 100% Audited
1.1 (iv) ONGC Nile Ganga (San Cristobal) B.V. The Netherlands 100% 100% Audited
1.1 (v) ONGC Satpayev E&P B.V. The Netherlands 100% 100% Audited
1.1 (vi) ONGC Caspian E&P B.V. The Netherlands 100% 100% Audited
1.2 ONGC Nile Ganga B.V. (ONGBV) The Netherlands Class C 55% direct
(balance 45% held
by OMEL)
Class C 55% direct
(balance 45% held
by OMEL)
Audited
2 ONGC Narmada Limited (ONL) Nigeria 100% 100% Unaudited
3 ONGC Amazon Alaknanda Limited (OAAL) Bermuda 100% 100% Audited
4 ONGC Mittal Energy Limited (OMEL) Cyprus 49.98% 49.98% Unaudited
5 Jarpeno Limited Cyprus 100% 100% Audited
5 (i) Imperial Energy Corporation plc(*) UK – 100% Audited
5 (ii) Imperial Energy Limited(*) UK – 100% Audited
5 (iii) Imperial Energy Kostanai Limited(*) UK – 100% Audited
5 (iv) Imperial Energy Tomsk Limited Cyprus 85% 85% Audited
5 (v) Imperial Energy (Cyprus) Limited Cyprus 100% 100% Audited
Sl No. Name of the Subsidiaries / Jointly Con-
trolled Entities
Country of
Incorporation
Proportion of Ownership Interest Status of Audit
as at
31 March 2012
As at
31 March 2012
As at
31 March 2011
5 (vi) Imperial Energy Nord Limited Cyprus 100% 100% Audited
5 (vii) RK Imperial Energy (Kostanai) Limited Cyprus 100% 100% Audited
5 (viii) Freshspring Investments Limited Cyprus 100% 100% Audited
5 (ix) Nefsilius Holdings Limited Cyprus 100% 100% Audited
5 (x) Biancus Holdings Limited Cyprus 100% 100% Audited
5 (xi) Redcli?e Holdings Limited Cyprus 100% 100% Audited
5 (xii) Imperial Energy Gas Limited Cyprus 100% 100% Audited
5(xiii) Imperial Frac Services (Cyprus) Limited Cyprus 100% 100% Audited
5 (xiv) San Agio Investments Limited Cyprus 100% 100% Audited
5 (xv) LLC Imperial Energy(*) Russia – 100% Audited
5 (xvi) LLC Sibinterneft (**) Russia 48% 48% Audited
5 (xvii) LLC Allianceneftegaz Russia 100% 100% Audited
5 (xviii) LLC Nord Imperial Russia 100% 100% Audited
5 (xix) LLC Imperial Trans service Russia 100% 100% Audited
5 (xx) LLC Rus Imperial Group Russia 100% 100% Audited
5(xxi) LLC Stratum Russia 100% 100% Audited
5(xxii) LLC Imperial Energy Tomsk Gas(***) Russia 95% 95% Audited
5(xxiii) LLC Imperial Frac Services Russia 50% 50% Audited
6 Carabobo One AB Sweden 100% 100% Unaudited
6 (i) Petro Carabobo Ganga B.V. The Netherlands 100% 100% Unaudited
ho|es To The 6onsoIida|ed FinanciaI 8|a|emen|s for |he year ended
31 March 2012
1. Corporate information
ONGC Videsh Limited (the company) is a public limited company domiciled in India and incorporated
under the provisions of the Companies Act 1956. The Company is engaged in exploration, development
and production of crude oil and natural gas outside India.
A. Basis of preparation
A.1 The ?nancial statements are prepared under the historical cost convention on accrual basis in
accordance with Generally Accepted Accounting Principles (GAAP), applying the Successful E?orts
Method as per the Guidance Note on Accounting for Oil and Gas Producing Activities issued by the
Institute of Chartered Accountants of India (ICAI) and Accounting Standards issued under the
Companies (Accounting Standards) Rules, 2006 and provisions of the Companies Act, 1956. The ?nancial
statements are presented in Indian Rupees and all values are rounded to the nearest million (`million)
except when otherwise indicated
A.2 Principles of Consolidation:
The Consolidated Financial Statements relate to ONGC Videsh Limited (Company), ONGC Nile Ganga
B.V., The Netherlands (Subsidiary), ONGC Narmada Limited, Nigeria (Subsidiary), ONGC Amazon
Alaknanda Limited (Subsidiary), Jarpeno Limited, Cyprus (Subsidiary) , Carabobo One AB (Subsidiary)
and jointly controlled entity ONGC Mittal Energy Limited, Cyprus (Joint Venture Company). The Financial
Statements of the Company, its Subsidiaries and Joint Venture Company have been consolidated
on a line–by–line basis by adding together the book values of like items of assets, liabilities, income
and expenses after fully eliminating intra–group balances and intra–group transactions resulting in
unrealized pro?ts or losses, unless indicated otherwise.
The ?nancial statements of the foreign subsidiaries and Joint Venture Company have been incorporated
in the consolidated ?nancial statements by translating to Indian rupees following the principles for
translation of the ?nancial statements of Non–integral Foreign Operation as laid down in Accounting
Standard (AS) 11 viz. E?ects of changes in foreign exchange rates (revised 2003) issued by ICAI.
The consolidated accounts incorporate ?nancial statements of the Company and its Subsidiaries and
the Joint Venture Company for the year ended 31 March, 2012 are as detailed below:
(*) Liquidated during the reporting period.
(**) Although the Company has 47.52 per cent e?ective ownership interest, it has 55.9 per cent of voting rights in LLC
Sibinterneft. LLC Sibinterneft is therefore a subsidiary of the Company, in accordance with The Companies Act, 1956 of India and
included in consolidation of accounts accordingly.
(***) Under liquidation
A.3 In view of di?erent set of environments in which the Subsidiaries and the Joint Venture Company
operate, the accounting policies followed for treatment of depreciation on ?xed assets, sales
revenue and royalties and retirement bene?ts in respect of the below mentioned subsidiaries and
the Joint Venture Company are di?erent from the accounting policies of the Company. Such di?erent
accounting policies have been adopted in respect of the following:
A.3.1 Depreciation on Fixed Asset:
The Subsidiary – OAAL and joint venture company OMEL provide depreciation on ?xed assets using the
straight line method. The amount involved is `709.36 Million (Previous year `936.97 Million including
in respect of Jarpeno Ltd) shown as depreciation under Note 32. Jarpeno Ltd, which had been
providing depreciation on ?xed assets using SLM based on useful life of the ?xed assets till previous
year has changed its policy to written down value (WDV) method in line with parent company ONGC
Videsh Ltd. during the current period with retrospective e?ect. As a result, the depreciation for the
prior years of `192.97 Million (USD 4.03 Million) was written back. Further, under the new policy, the
depreciation is lower by `16.57 Million (USD 0.35 Million) during the reporting period.
A.3.2 Revenue recognition
The Subsidiary – ONGBV follows the entitlement method for revenue recognition associated with
sale of crude oil and liquids for its share of petroleum production as speci?ed in the Exploration
Production Sharing Agreement (EPSA) and Crude Oil Pipeline Agreement (COPA). The amount
reported using such method is `68,757.64 Million (Previous year `71,432.78 Million) shown as sales
under Note 26.
A.3.3 Royalties
The Subsidiary – ONGBV conducts its operations in Sudan jointly with Sudapet the national oil company
of Sudan among others. All government stakes other than income taxes are considered to be royalty
interest. Royalties on production represent the entitlement of the government of Sudan to a portion
of ONGBV’s share of crude oil and liquid production and are recorded using the rates in e?ect under the
terms of the contract at the time of production. Royalties / taxes in Syrian concession are accounted
similarly by ONGBV. The amount of royalty reported in respect of Sudan and Syrian concession is
`38,770.10 Million (Previous year `40, 848.27 Million) under the head Royalty in Note 28.
144 145
Policy
no.
Existing Policy Accounting policy documented in FY
2011–12
Financial Impact over
the ?nancial statements
2.2.k.1 Depreciation on tangible assets (including
those taken on ?nance lease) is provided
for under the written down value method
in accordance with Schedule XIV to the
Companies Act, 1956.
Depreciation on tangible assets (including those
taken on ?nance lease) is provided for under
the written down value method in accordance
with Schedule XIV to the Companies Act, 1956.
Lowvalue items not exceeding `5,000/– are fully
depreciated at the time of addition.
Nil
2.2.q.7 Nil Dividend income is recognized when the Com-
pany’s right to receive dividend is established by
the reporting date.
Nil
2.2.s.4 Nil In respect of local sta? in foreign o?ces of
the company, employees (other than those on
deputation/secondment fromthe company) of
joint ventures (incorporated/unincorporated)/
subsidiaries, the liabilities for employee bene?ts
are recognised in accordance with the applicable
laws of their respective jurisdictions and/or the
respective labor agreements with the employees.
Nil
2.2.v Nil Abnormal Rig days' costs are considered as unal-
locable and charged to Statement of Pro?t and
Loss.
Nil
c. Acquisition, Exploration, Development, Abandonment and Production Costs:
c.1 Acquisition Cost:
Acquisition costs of an oil and gas property in exploration/development stage are taken to capital
work in progress. Such costs are capitalized by transferring to Producing Property when it is ready to
commence commercial production. In case of abandonment of the property, such costs are expensed.
Acquisition costs of a producing oil and gas property are capitalized as Producing Property.
c.2 Survey Costs:
Cost of Surveys and prospecting activities conducted in the search of oil and gas are expensed in the
year in which these are incurred.
c.3 Exploratory/Development Wells in Progress Costs:
c.3.1 Exploration costs involved in drilling and equipping exploratory and appraisal wells, cost of drilling
exploratory type stratagraphic test wells are initially taken to capital work in progress as exploratory
wells in progress till the time these are either capitalized to producing properties when ready to
commence commercial production or expensed when determined to be dry or of no further use, as
the case may be.
c.3.2 All costs relating to development wells, development type stratagraphic test wells, service wells,
are initially taken to capital work in progress as development wells in progress and capitalized to
producing properties when ready to commence commercial production.
c.3.3 Exploratory wells in progress which are more than two years old from the date of completion of
drilling are charged to Statement of Pro?t and Lossexcept those wells which have proved reserves
and the development of the ?elds in which the wells are located; has been planned.
c.4 Abandonment Costs:
Costs relating to dismantling, abandoning and restoring well sites and allied facilities are provided
as abandonment costs based on the provisions under respective agreements governing company’s
activities in the ?eld/ projects.
c.5 Production Costs:
Production costs include pre–wellhead and post–wellhead expenses including depreciation and
applicable operating costs of support equipment and facilities.
d. Producing Properties:
d.1 Producing properties are created in respect of a ?eld/project having proved developed oil and gas
reserves when any well in the ?eld/project is ready to commence commercial production. Development
wells are capitalized to producing properties when ready to commence commercial production.
d.2 All acquisition costs, cost of successful exploratory wells and of all development wells, all related
development costs including depreciation on support equipment and facilities and estimated future
abandonment costs relating to producing properties are capitalized as Producing Properties.
e. Depletion of Producing Properties:
Producing properties are depleted using the “Unit of Production Method”. The rate of depletion for
all capitalized costs is computed with reference to the ?eld/project/amortization base by considering
the related proved and developed reserves excepting for acquisition costs which are depleted by
considering the proved reserves. These reserves are estimated annually by the Reserve Estimates
Committee formed by the parent company Oil and Natural Gas Corporation Limited (ONGC), which
follows the International Reservoir Engineering Procedures.
f. Side tracking:
f.1 The cost of abandoned portion of side tracked exploratory wells is charged to Statement of Pro?t
and Lossas dry wells.
f.2 The cost of abandoned portion of side tracked development wells is considered as part of cost of
development wells.
f.3 The cost of sidetracking in respect of existing producing wells is capitalized if it increases the Proved
Developed Reserve otherwise, charged to Statement of Pro?t and Lossas workover expenditure.
b Use of Estimates:
The preparation of ?nancial statements requires estimates and assumptions which a?ect the
reported amount of assets, liabilities, revenues and expenses of the reporting period. The di?erence
between the actual results and estimates are recognized in the period in which the results are known
or materialized.
A.3.4 Retirement Benefts
The Subsidiaries and the Joint Venture Company provide for the retirement bene?ts in accordance
with the laws of their respective jurisdictions. The net impact on account of the di?erence in
accounting policy is not ascertainable.
2. Signifcant Accounting Policies
a.1 Change in accounting Policy
During the year ended 31 March 2012, the revised Schedule VI noti?ed under the Companies Act 1956, has
become applicable to the Company for preparation and presentation of its ?nancial statements. Balance
Sheet has been prepared based on the format prescribed under Part I and Statement of pro?t and loss
based on the format prescribed under Part II in Schedule VI of the Act. However, in view of the technical
nature of operation of the Company i.e. exploration, development and Producing oil and gas, functional
wise expenses has been classi?ed in Statement of Pro?t and Loss as disclosed consistently in earlier years.
The adoption of revised Schedule VI does not impact recognition and measurement principles followed
for preparation of ?nancial statements. The Company has also reclassi?ed the previous years ?gures in
accordance with the requirements applicable in the current year.
The ?nancial statements for the year 2011–12 are prepared following the same accounting policies and
practices as followed in the annual ?nancial statements for the year ended March 31, 2011, except for
change in the policy with regard to amortisation of intangible assets which has been changed during
the current period to align with the accounting policy of parent company and AS–26 from Written
Down Value Method @ 40% to Straight Line Method over the useful life not exceeding a period
of 5 years in order to systematically amortize its intangible assets. This has resulted in decrease in
Depreciation, Depletion, Amortisation and Impairment by `86.67 million, consequently Pro?t before
tax increased by `86.67 million
a.2 Documentation, rewording or re–alignment of Accounting Policies to properly re?ect existing
accounting practice
Certain accounting policies were re–worded or re–align with the existing accounting practice
consistently followed by the Company in ?nancial statements. However, these do not have any impact
on recognition and measurement principles followed for preparation of ?nancial statements.
146 147
g. Impairment:
g.1 Producing Properties, Development Wells in Progress (DWIP) and Fixed Assets (Including Capital
Works in Progress) of a “Cash Generating Unit” (CGU) are reviewed for impairment at each Balance
Sheet date. In case, event and circumstances indicates any impairment, recoverable amount of
these assets is determined, being the higher of net selling price and value in use. An impairment loss
is recognized, whenever the carrying amount of such assets exceeds the recoverable amount by
writing down such assets to their recoverable amount. In assessing value in use, the estimated future
cash ?ows from the use of assets and from its disposal at the end of its useful life are discounted to
their present value at appropriate rate.
g.2 An impairment loss is reversed if there is change in the recoverable amount and such loss either no
longer exists or has decreased. Impairment loss / reversal thereof is adjusted to the carrying value of
the respective assets, which in case of CGU, is allocated to its assets on a pro–rata basis. Subsequent
to impairment, depreciation is provided on the revised carrying value of the assets over the remaining
useful life.
h. Joint Ventures:
h.1 The Company has entered into overseas joint ventures with others. In such joint ventures as per the
contractual arrangements, the Company shares control with other venturers. The ?nancial statements
re?ect the share of the Company’s assets and liabilities as well as income and expenditure of Joint
Venture Operations which are accounted for as per various joint venture agreements on a line by
line basis along with similar items in the Company’s ?nancial statements, except in case of leases,
abandonment, impairment, depletion and depreciation which are accounted based on accounting
policies of the Company.
h.2 The reserves of hydrocarbons in the joint ventures are taken in proportion to the participating
interest of the Company.
i. Tangible Assets:
i.1 Tangible assets (including those taken on ?nance lease, support equipment and facilities) are stated
at historical cost.
i.2 All costs relating to acquisition of tangible assets till the time of commissioning of such assets are
capitalized.
i.3 Costs incurred on intangible assets, resulting in future economic benefits are capitalized as
intangible assets and amortized on written down value method beginning from the date
of capitalization.
j. Intangible Assets:
j.1 Costs incurred on intangible assets, resulting in future economic bene?ts are capitalized as intangible
assets.
k. Depreciation:
k.1 Depreciation on tangible assets (including those taken on ?nance lease) is provided for under the
written down value method in accordance with Schedule XIV to the Companies Act, 1956. Low value
items not exceeding `5,000/– are fully depreciated at the time of addition.
k.2 Intangible Assets are amortised over the useful life not exceeding ?ve years from the date of
capitalisation.
k.3 Leasehold land (other than perpetual lease and lease over 99 years) is amortized over the lease
period.
k.4 Depreciation on adjustments to tangible assets on account of price variation is provided for
prospectively over the remaining useful life of such assets.
k.5 Depreciation on tangible assets (including those taken on ?nance lease, support equipment and
facilities) used for exploration and drilling activities and on facilities is initially capitalized as part of
exploration or development costs and expensed/depleted as stated in policy 3 and 4 above.
l. Inventories:
l.1 Crude oil and condensate are valued at cost or net realizable value, whichever is lower.
l.2 Natural gas in pipeline and crude oil/condensate stock in ?ow lines/Gathering Stations are not
valued.
l.3 Inventory of stores and spares is valued at weighted average cost or net realizable value, if available,
whichever is lower. Wherever, weighted average cost or net realizable value is not available, the cost
made available by the operator is considered for valuation of Stores and Spares. Provisions are made for
obsolete and non–moving inventories.
m. Investments:
m.1 Long–term investments are valued at cost. Provision is made for any diminution, other than temporary,
in the value of such investments.
m.2 Current investments are valued at lower of cost or fair value.
n. Foreign Currency Transactions and Foreign Operations:
n.1 Foreign currency transactions on initial recognition in the reporting currency are accounted for at the
exchange rates prevailing on the date of transaction.
n.2 At each Balance Sheet date, foreign currency monetary items are translated using the average of the
exchange rates prevailing on the Balance Sheet date and non–monetary items are translated using
the exchange rate prevailing on the date of transaction or on the date when the fair value of such
item was determined.
n.3 All exchange di?erences arising on the settlement of monetary items or on reporting of monetary
items at rates di?erent from those at which they were initially recorded during the period, or reported
in previous ?nancial statements are recognised as income or as expenses in the period in which they
arise.
n.4 In respect of the Company’s integral foreign operations:
n.4.a The foreign currency transactions on initial recognition in the reporting currency are recorded
following the policy stated in m.1. For practical reasons, the average exchange rate of the relevant
month/quarter is taken for the transactions of the month/quarter in respect of joint venture
operations, where actual date of transaction is not available.
n.4.b At each Balance Sheet date, monetary and non–monetary items are translated following the policy
stated in m.2.
n.4.c All exchange di?erences are treated following the policy stated in m.3.
n.5 The ?nancial statements of the non–integral foreign operations of the company are incorporated in
the ?nancial statements using the following principles:
n.5.a The assets and liabilities, both monetary and non–monetary, of the non–integral foreign operation
are translated at the average of the exchange rate prevailing on the date of the Balance Sheet;
n.5.b Income and expense items of the non–integral foreign operation are translated at the average
exchange rates for the period to which the ?nancial statements relate; and
n.5.c All resulting exchange di?erences are accumulated in a foreign currency translation reserve until the
disposal of the net investment in the non–integral foreign operation.
n.6 Exchange di?erences arising on the company’s net investment in a non–integral foreign operation
are accumulated in a foreign currency translation reserve until the disposal of such investment, at
which time they are recognized as income or as expenses.
o. Finance Leases
o.1 Assets given on Lease:
o.1.a Assets given on ?nance lease are accounted for as per Accounting Standard (AS) 19 “Leases” issued
by the Institute of Chartered Accountants of India. Such assets are included as a receivable at an
amount equal to the net investment in the lease.
o.1.b Initial direct costs incurred in respect of ?nance leases are recognized in the statement of pro?t and
loss in the year in which such costs are incurred.
148 149
o.2 Assets taken on Lease:
Assets taken on ?nance lease are capitalised and recognised at the lower of the fair value of the asset
and the discounted value of the minimum lease installments. The lease payments are bifurcated into
repayment and interest components, based on a ?xed interest rate and installment as derived from
the underlying agreement. The lease commitments are carried under liabilities exclusive of interest.
The interest component is recognised in the Statement of Pro?t and Lossin accordance with the
lease installments.
p. Revenue Recognition:
p.1 Revenue from sale of products is recognized on transfer of custody to customers. Any di?erence as of
the reporting date between the entitlement quantity minus the quantities sold in respect of crude oil
(including condensate), if positive (i.e. under lift quantity) the proportionate production expenditure
is treated as prepaid expenses and, if negative (i.e. over lift quantity), a liability for the best estimate
of the Company’s proportionate share of production expenses as per the JOA / PSA is created in
respect of the quantity of crude oil to be foregone in future period towards settlement of the overlift
quantity of crude oil with corresponding charge to P&L.
p.2 Sales are inclusive of all statutory levies and any tax liability of the Company that may be paid by
the government based on the provisions under agreements governing Company’s activities in the
respective ?eld/ project.
p.3 Any payment received in respect of short lifted gas quantity for which an obligation exists to supply
such gas in subsequent periods is recognized as Deferred Revenue in the year of receipt. The same is
recognized as revenue in the year in which such gas is actually supplied for the quantity supplied or in
the year in which the obligation to supply such gas ceases, whichever is earlier.
p.4 Revenue in respect of ?xed price contracts is recognized for the quantum of work done on the basis
of percentage of completion method. The quantum of work done is measured in proportion of cost
incurred to date to the estimated total cost of the contract or based on reports of physical work
done.
p.5 Finance income in respect of assets given on ?nance lease is recognized based on a pattern re?ecting
a constant periodic rate of return on the net investment outstanding in respect of the ?nance lease.
p.6 Revenue in respect of interest on delayed realization is recognized when there is reasonable certainty
regarding ultimate collection.
p.7 Dividend income is recognized when the company’s right to receive dividend is established by the reporting
date.
q. Transportation Costs:
Any payment made in respect of the quantity of gas short transported, for which the right exists
to transport such gas in subsequent periods at no charge, is treated as Deferred Expenditure in the
year of payment. The same is treated as cost in the year in which the gas is actually transported for
the quantity transported or in the year in which the right to transport such gas ceases, whichever is
earlier.
r. Employee Bene?ts:
r.1 All short term employee bene?ts are recognized at their undiscounted amount in the accounting
period in which they are incurred.
r.2 Contribution to Provident Fund and Composite Social Security Scheme is made as per the rules of the
parent company. The same is paid to funds administered through trusts.
r.3 Provisions for gratuity leave encashment and other employee bene?ts are made as per actuarial
valuation at the end of the ?nancial year. The same are not funded.
r.4 In respect of local sta? in foreign o?ces of the company, employees (other than those on deputation/
secondment from the company) of joint ventures (incorporated/unincorporated)/ subsidiaries,
the liabilities for employee bene?ts are recognised in accordance with the applicable laws of their
respective jurisdictions and/or the respective labour agreements with the employees.
s. Borrowing Costs:
Borrowing Costs speci?cally identi?ed to the acquisition or constructions of qualifying assets
are capitalized as part of such asset till such time when all the activities necessary to prepare the
qualifying asset for its intended use or sale are complete. A qualifying asset is one that necessarily
takes substantial period of time to get ready for intended use. All other borrowing costs are charged
to Pro?t and Loss Account.
t. Insurance Claims:
The Company accounts for insurance claims as under:–
t.1 In case of total loss of asset by transferring, either the carrying cost of the relevant asset or Insurance
value (subject to deductibles), whichever is lower under the head “Claims Recoverable – Insurance”
on intimation to Insurer. In case insurance claim is less than carrying cost, the di?erence is charged to
Pro?t and Loss Account.
t.2 In case of partial or other losses, expenditure incurred/payments made to put such assets back
into use, to meet third party or other liabilities (less policy deductibles) if any, are accounted for as
“Claims Recoverable–Insurance”. Insurance Policy deductibles are expensed in the year when the
corresponding expenditure is incurred.
t.3 As and when claims are ?nally received from Insurer, the di?erence, if any, between Claims Recoverable
– Insurance and Claims received is adjusted to pro?t and loss Account.
u. Abnormal Rig days' costs:
Abnormal Rig days' costs are considered as unallocable and charged to Statement of Pro?t and
Loss.
v. Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement are recognized when there
is a present obligation as a result of past events and it is probable that there will be an out?ow
of resources. Contingent Assets are neither recognized nor disclosed in the ?nancial statements.
Contingent Liabilities, if material, are disclosed by way of notes to the accounts.
w. Taxes on Income:
Provision for current tax is made as per the provisions of the Income Tax Act, 1961/ other applicable
tax laws. Deferred Tax Liability / Asset resulting from ‘timing di?erence’ between book and taxable
pro?t is accounted for considering the tax rate and laws that have been enacted or substantively
enacted as on the Balance Sheet date. Deferred Tax Asset is recognized and carried forward only to
the extent that there is virtual certainty that the asset will be realized in future.
x. Accounting for derivatives:
As per the ICAI Announcement, Accounting for Derivatives, other than those covered under –AS–11,
is done on marked to market basis and the losses are charged to Pro?t & Loss A/c. Unrealized gains
are ignored.
y. Goodwill Amortization:
The Company amortizes Goodwill (on consolidation) based on “Unit of Production Method”
considering the related Proved Reserves.
150 151
ho|es To The 6onsoIida|ed FinanciaI 8|a|emen|s for |he year ended
31 March 2012
(` in Million)
3 Share Capital As at 31 March, 2012 As at 31 March, 2011
Authorised
100,000,000 (Previous year 100,000,000) Equity Shares of `100 each 10,000.00 10,000.00
Issued, Subscribed, Called and Paid Up 10,000.00 10,000.00
100,000,000 (Previous year 100,000,000) Equity Shares of `100 each fully
paid up in cash
(The entire share capital is held by Oil and Natural Gas Corporation Lim-
ited and its nominees)
TOTAL 10,000.00 10,000.00
a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period:
31 March 2012 31 March 2011
No. Million `Million No. Million `Million
Equity Shares
At the beginning of the period 100 10,000.00 100 10,000.00
Issued during the period – – – –
Outstanding at the end of the period 100 10,000.00 100 10,000.00
b. Terms / rights attached to the equity shares:
The company has only one class of equity shares having a par value of `100 per share. Each holder of
equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees.
The dividend, if any, proposed by the Board of Director is subject to the approval of the shareholders
in the meeting.
During the year ending 31 March 2012, the amount of per share dividend declared for distribution to
equity shareholders was Nil (31 March 2011: Nil).
In the event of liquidation of the company, the holders of equity shares will be entitled to receive
remaining assets of the company, after distribution of all preferential amounts. The distribution will be
in proportion to the number of equity shares held by the shareholders.
c. Shares held by holding / ultimate holding company and/or their subsidiaries/ associates:
Out of the equity shares issued by the company, the shares held by its holding company, ultimate
holding company and their subsidiaries / associates are as below:
Holding Company 31 March 2012 31 March 2011
No. Million `Million No. Million `Million
Oil and Natural Gas Corporation Limited, the hold-
ing company and its nominee
100 10,000.00 100 10,000.00
d. Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares
bought back during the period of ?ve years immediately preceding the reporting date: Nil
e. Details of shareholders holding more than 5% shares in the company:
Share holders 31 March 2012 31 March 2011
No. millions % Holding No. millions % Holding
Oil and Natural Gas Corporation Limited, the
holding company and its nominee
100 100% 100 100%
f. Shares reserved for issue under options: Nil
(` in Million)
4 Reserves and Surplus
As at
31 March
2012
As at
31 March
2011
Capital Reserve 941.35 845.29
Capital Redemption Reserve 0.09 0.09
Debenture Redemption Reserve
Balance as per last Financial statement Note 4a 5,461.83 1,154.19
Add: Transfer fromsurplus in statement of
pro?t and loss
4,319.44 9,781.27 4,307.64 5,461.83
General Reserve
Balance as per last Financial statement 8,623.86 6,481.40
Add: Transfer fromsurplus in statement of
pro?t and loss
1,876.08 10,499.94 2,142.46 8,623.86
Foreign Exchange Translation Reserve Note 4b
Balance as per last Financial statement (1,933.82) (4,115.28)
Additions during the year 26,573.80 24,639.98 2,181.46 (1,933.82)
Surplus in the statement of pro?t and loss
Balance as per last Financial statement 122,532.48 102,077.13
Add: Addition during the year 27,211.56 26,905.45
Less: Transfer to Debenture Redemption
Reserve
4,319.44 4,307.64
Transfer to General reserve 1,876.08 143,548.52 2,142.46 122,532.48
TOTAL 189,411.15 135,529.73
a Debentures and Debentures Redemption Reserve:
During the ?nancial year 2009–10, the Company had raised funds from the ?nancial markets by issuance
of non–convertible redeemable bonds in the nature of debentures as follows:
(` in Million)
Particulars Amount (`Million) Date of issue Date repayable on
8.40 % 5 Years Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures–Series I
19,700.00 23–Dec–09 23–Dec–14
8.54 % 10 Years Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures– Series II
3,700.00 6–Jan–10 6–Jan–20
The above securities have beenlistedinNational Stock Exchange of India Ltd. (NSE). Boththe bonds are guaranteedfor repayment
of principal and payment of interest by Oil and Natural Gas Corporation Limited, the holding company. Further the company is
required to maintain 100% asset cover as per SEBI guidelines. There is no put/ call option.
Debenture redemption reserve has been created as follows in respect of the above Bonds:
(` in Million)
Particulars Balance as at 31
March 2011
Additions Balance as at 31 March
2012
8.40 % 5 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series I
5,005.91 3,948.64 8,954.54
8.54 % 10 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series II
455.92 370.81 826.73
Total 5,461.83 4,319.44 9,781.27
152 153
b. Foreign Currency Translation Reserve
The Company has followed the Accounting Standard (AS) 11 viz. E?ects of Changes in Foreign Exchange
Rates (revised 2003) issued by the Institute of Chartered Accountants of India for incorporating in the
consolidated ?nancial statements following the principles for translation of the ?nancial statements
of Non–integral Foreign Operation. Accordingly, the resulting exchange gain of `26,573.80 Million
(Previous Year `2,181.46 Million exchange gain) has been accounted as foreign currency translation
reserve and shown in Schedule 2 as per details given below:
(` in Million)
Particulars 2011–12 2010–11
Opening Balance (1,933.82) (4,115.28)
Additions during the year 26,573.80 2,181.46
Closing Balance 24,639.98 (1,933.82)
(` in Million)
5 Long TermBorrowings
As at
31 March
2012
As at
31 March
2011
Non Convertible Redeemable Bonds Note 5a 23,400.00 23,400.00
Foreign Currency Loans
frombanks (unsecured) Note 5b – 4,472.00
Non–Recourse Deferred Credit (unsecured) Note 5c 380.60 554.91
(In respect of Joint venture)
Loans and advances
fromOil and Natural Gas Corporation Limited Note 5d 168,255.44 172,786.16
Non current maturities of ?nance lease obligations (unsecured) Note 46.b 3,124.98 3,341.28
TOTAL 195,161.02 204,554.35
a. Non–convertible redeemable bonds: Attention is invited to Note: 4(a) above. The bonds are
unsecured.
b. Foreign currency loan from Bank: Represents USD 100 Million (Noncurrent Nil / current USD 100
Million(`5,112.00 Million) (31st March 2011 USD 200 Million `8,944.00 Million (Non Current USD 100 Million
(`4,472 Million) Current USD 100 Million (`4,472 Million) syndicated loan taken by Jarpeno Limited,
Cyprus, in January –2010 from a consortium of banks led by Sumitomo Mitsui Banking Corporation,
Singapore. The loan is repayable in 8 equal quarterly installments starting April 2011. Four installments
of USD 25 Million each were paid on due dates during the period.
(` in Million)
Foreign Currency Loans As at 31 March 2012 As at 31 March 2011
Current (Note 13) 5,112.00 4,472.00
Non Current (Note 5) – 4,472.00
Total 5,112.00 8,944.00
(` in Million)
6 Deferred Tax Liabilities
As at
31 March
2012
As at
31 March
2011
Deferred Tax Liabilities 10,203.88 9,554.84
TOTAL
Refer Note No 42(c)
10,203.88 9,554.84
(` in Million)
7 Liability for Abandonment
As at
31 March
2012
As at
31 March
2011
Liability for Abandonment 27,504.49 22,861.16
TOTAL
Refer Note No 21 and table below
27,504.49 22,861.16
(` in Million)
Liability for Abandonment As at 31st March 2012 As at 31st March 2011
Current (Note 11) 104.37 –
Non Current (Note 7) 27,504.49 22,861.16
Total 27,608.86 22,861.16
(` in Million)
8 Other Long TermLiabilities
As at
31 March
2012
As at
31 March
2011
Trade payables 81.86 –
TOTAL 81.86 –
c. Non–recourse deferred credit: `888.06 Million (Previous Year `776.89 Million) represents the non–
recourse deferred credit from contractors of pipeline project executed by the Company in Sudan. The
credit is repayable from the installments of pipeline lease rentals from Ministry of Energy and Mining
(MEM), Sudan. Attention is also invited to Note 43. This credit is unsecured.
(` in Million)
Non–Recourse Deferred Credit (unsecured) As at 31 March 2012 As at 31 March 2011
Current (Note 10) 507.47 221.98
Non Current (Note 5) 380.60 554.91
Total 888.07 776.89
d. The Company has taken loans from ONGC for various projects. The outstanding balance of such loans
as of 31 March 2012 was `168,255.44 Million (Previous year `172,786.16 Million). The loan is normally
repayable out of the cash ?ows of the projects for which the respective funds were lent. However,
ONGC have the right to demand repayment with a notice period of minimum 15 months. The loan
carried no interest during the period. Accordingly, interest expenditure on loan from parent company
during the period is `Nil (Previous year: `Nil).
154 155
(` in Million)
9 Long TermProvisions
Balance as at 1
April 2011
Utilisation/
Reversal during
the Year
Provision/
Adjustment
made for the
Year
Foreign
Currency
Translation
Adjustment
Balance as at 31
March 2012
Gratuity 161.90 – 8.16 – 170.06
Leave Encashment 190.09 – (42.83) – 147.26
Post Retirement Medical
Bene?ts/Other Terminal Bene?ts
161.33 83.97 141.13 15.35 233.84
513.31 83.97 106.47 15.35 551.16
Refer Note 41
(` in Million)
10 Short TermBorrowings
As at
31 March
2012
As at
31 March
2011
Non–Recourse Deferred Credit – Unsecured 507.46 221.98
Deposits 115.35 109.20
TOTAL 622.81 331.18
Non–Recourse Deferred Credit : Attention is also invited to Note–5(c)
(` in Million)
11 Current Liability for Abandonment
As at
31 March
2012
As at
31 March
2011
Liability for Abandonment 104.37 –
TOTAL 104.37 –
Refer Note No 21 & 7
(` in Million)
12 Trade Payables
As at
31 March
2012
As at
31 March
2011
Deferred Credit on Gas Sales 229.37 20.80
Trade payables for Supplies / Works 2,516.73 4,103.19
Trade payables for Supplies / Works
(In respect of Joint Ventures)
23,036.23 15,604.12
TOTAL 25,782.33 19,728.11
(` in Million)
13 Other Current Liabilities
As at
31 March
2012
As at
31 March
2011
Current maturities of long termdebts 6,025.68 5,151.72
Interest accrued but not due on borrowings 122.33 –
Interest accrued but not due on Debentures 526.38 522.42
Advance fromcustomers / Income received in advance 765.60 230.36
Amount Payable to Operators 13,528.92 10,748.91
Payable to ONGC 646.87 121.89
Tax Payable by Subsidiaries and JV Companies in foreign Country 6,231.39 10,712.96
Other Liabilities 17,544.55 5,876.30
TOTAL 45,391.72 33,364.56
Current maturities of long termliabilities – Refer Note no 5
(` in Million)
14 Short TermProvisions
Balance as at 1
April 2011
Utilisation/
Reversal during
the Year
Provision/
Adjustment
made for the
Year
Foreign
Currency
Translation
Adjustment
Balance as at 31
March 2012
Gratuity 7.64 9.20 11.40 – 9.84
Leave Encashment 8.31 113.75 248.09 8.34 150.99
Post Retirement Medical
Bene?ts/Other Terminal Bene?ts
– 0.69 22.47 6.73 28.51
TOTAL 15.95 123.64 281.96 15.07 189.34
Attention is invited to Note 41
156 157
15. Tangible Assets
PARTICULARS
GROSS BLOCK
As at 1 April 2011
Additions
during the
Period
Foreign
Currency
Translation
Adjustment/
Other Adj.
Deletions /
Adjustments
during the
Period
As at
31 March 2012
1. Land (Leasehold) 1,999.30 113.73 48.24 – 2,161.27
2. Building 6,568.73 115.59 128.43 61.82 6,750.93
3. Plant & Machinery 87,128.38 3,091.94 –1,755.70 0.42 88,464.20
4. Computers 673.41 91.96 46.01 15.20 796.18
5. Vehicles 1,406.85 150.43 95.29 17.90 1,634.67
6. Furniture &Fittings and
Equipments
4,397.89 88.01 3,657.79 174.80 7,968.89
TOTAL 102,174.56 3,651.66 2,220.06 270.14 107,776.14
Previous year 103,428.09 18,962.93 100.19 20,316.65 102,174.56
The above includes the
company’s share in Joint
Venture Assets: Current Year
98,593.07 3,450.31 2,071.24 198.74 103,915.87
Previous Year 100,216.83 18,448.54 52.58 20,124.88 98,593.07
a. Title to Fixed Assets under Production Sharing Agreements
The Company, the Subsidiaries and Joint Venture Company, in consortium with other partners (Consortium) carries on its business in respect of exploration, development and production of hydrocarbons
under agreements with the host governments. Several of these agreements, governing Company's activities in the ?elds / projects, provide that the title to the ?xed assets and other ancillary installations shall
pass to host Government or its nominated entities either upon acquisition / ?rst use of such assets or upon 100% recovery of such costs through allocation of "Cost Oil" and "Cost Gas" or upon relinquishment of
the relevant contract areas or termination of the relevant agreement. However, as per the terms of the agreements, the Consortium and/ or Operator has the custody of all such assets and is entitled to use, free
of charge all such assets for Petroleum Operations throughout the term of the respective agreements. The Consortium also has the custody and maintenance of such assets and bears all risks of accidental loss
and damage and all costs necessary to maintain such assets and to replace or repair such damage or loss. Under the circumstances, such assets are kept in the records of the Company during the currency of the
respective agreements.
(` in Million)
DEPRECIATION NET BLOCK
Up to 31 March
2011
For the Period
Foreign
Currency
Translation
Adjustment/
Other Adj.
Deletions /
Adjustments
during the
Period
Up to 31 March
2012
Up to 31 March
2012
As at 31 March
2011
– – – – – 2,161.27 1,999.30
1,107.72 233.50 27.91 9.54 1,359.59 5,391.34 5,461.01
55,445.08 10,035.55 –1,969.17 17.60 63,493.87 24,970.33 31,683.30
441.30 96.47 39.84 8.17 569.44 226.74 232.11
825.56 224.33 56.60 14.60 1,091.89 542.78 581.29
2,051.09 349.61 3,306.74 36.53 5,670.91 2,297.98 2,346.80
59,870.75 10,939.46 1,461.92 86.44 72,185.69 35,590.45 42,303.82
55,805.46 11,705.28 (9.57) 7,630.42 59,870.75 42,303.81 47,622.63
59,575.22 10,912.40 1,349.70 125.07 71,712.26 32,203.61 39,017.85
55,155.05 17,847.71 (30.72) 13,396.81 59,575.22 39,020.55 45,054.77
16 Intangible Assets
PARTICULARS
GROSS BLOCK
As at 1 April 2011
Additions
during the
Period
Foreign
Currency
Translation
Adjustment/
Other Adj.
Deletions /
Adjustments
during the
Period
As at
31 March 2012
1. Software 254.67 68.48 7.17 (3.75) 334.07
TOTAL 254.67 68.48 7.17 (3.75) 334.07
Previous year 239.37 12.43 0.04 5.58 246.26
The above includes the
company’s share in Joint
Venture Assets: Current Year
159.06 22.66 0.00 6.72 175.01
Previous year 140.33 12.43 0.00 (6.30) 159.06
(` in Million)
DEPRECIATION NET BLOCK
Up to 31 March
2011
For the Period
Foreign
Currency
Translation
Adjustment/
Other Adj.
Deletions /
Adjustments
during the
Period
Up to 31 March
2012
Up to 31 March
2012
As at 31 March
2011
217.88 (12.57) 2.22 (0.27) 207.80 126.28 36.79
217.88 (12.57) 2.22 (0.27) 207.80 126.28 36.79
204.85 17.22 0.03 4.22 217.88 28.38 34.52
143.56 (13.05) 0.00 1.49 129.01 45.99 15.50
131.77 6.84 0.00 (4.95) 143.56 12.80 15.56
158 159
(` in Million)
17 Producing Properties
As at
31 March
2012
As at
31 March
2011
Gross Cost
Opening Balance 240,348.24 187,961.97
Acquisition Cost – 164.99
Expenditure during the year 10,493.91 24,413.40
Transfer fromDevelopment & Exploratory Wells–in–Progress 11,723.63 11,981.68
Estimated Abandonment Costs 1,726.67 12,365.84
Foreign Currency Translation Adjustment 15,189.82 3,460.36
Total Gross (A) 279,482.27 240,348.24
Less: Depletion
Opening Balance 104,208.48 79,119.11
Depletion for the year 21,607.06 23,663.82
Prior period depletion – 136.02
Foreign Currency Translation Adjustment 9,430.64 1,289.53
Total Depletion (B) 135,246.18 104,208.48
NET PRODUCING PROPERTIES (A – B) 144,236.09 136,139.76
(` in Million)
18 Development & Exploratory Wells In Progress
As at
31 March
2012
As at
31 March
2011
A. Development Wells in Progress
Opening Balance 8,270.33 4,050.09
Addition during the year 16,266.08 14,706.70
Adjustments during the year – (5.30)
Less: Transfer to Producing Properties 10,583.51 10,914.11
Foreign Currency Translation Adjustment 2,780.78 432.95
Development Wells in Progress (A) 16,733.68 8,270.33
B. Exploratory Wells in Progress
Opening Balance 18,103.35 22,022.65
Addition during the year 8,916.69 5,111.30
Adjustments during the year – 152.66
Less: Transfer to Producing Properties 1,140.12 1,067.57
Less: Wells written o? during the year 9,264.44 7,262.48
Foreign Currency Translation Adjustment (1,129.73) (853.21)
Closing Balance (Gross EWIP) 15,485.75 18,103.35
Opening Balance 1,466.86 1,444.66
Add: Provided during the year 12.29 22.20
Total Provision 1,479.15 1,466.86
Exploratory Wells in Progress (B) 14,006.60 16,636.49
TOTAL WELLS IN PROGRESS (A + B) 30,740.28 24,906.82
Provision has been created in respect of Farsi block Iran under service contract pending the agreements on development
(` in Million)
19 Capital Work In Progress
As at
31 March
2012
As at
31 March
2011
Block 06.1, Vietnam 2,503.28 1,188.30
Block 128, Vietnam – 92.54
Sakhalin–1 Project, Russia 46,764.05 26,994.93
Block 5A, Sudan 27.26 268.86
Block A1, Myanmar 3,960.76 700.46
Block A3, Myanmar 840.95 842.73
Pipeco Midstream, Myanmar 1,966.65 568.78
Block 25, 26, 27, 28, 29, 36 and P35 (Part), Cuba 346.91 346.91
Block 1,2,3 &4 (Area 43), Libya 408.90 408.90
Tamba BV, The Netherlands 2,562.69 666.54
Block BC–10, Brazil – 840.41
Sancristobal Project, Venezuela 2,466.28 1,339.23
Pipeco 1 – Onland Pipeline A1 A3, Myanmar 2,275.55 147.37
Petro Carabobo, Venezuela 5,923.96 2,459.60
Block OPL 297, Nigeria 638.74 558.77
Block 279, Nigeria – 1,580.40
Block 285, Nigeria – 647.00
Block Satpayev, Kazakhstan 4,753.53 –
Corporate O?ce Building, Vasant Kunj, NewDelhi 659.56 283.96
Others 156.61 82.25
TOTAL 76,255.68 40,017.94
(` in Million)
20 Goodwill
As at
31 March
2012
As at
31 March
2011
Gross Goodwill (A) 122,029.76 106,839.23
Accumulated Amortisation (B) 27,450.75 19,841.11
Less: Provision for impairment (C) 19,533.69 –
Net Goodwill (A – B – C) 75,045.32 86,998.12
The company has carried out impairment assessment as per Accounting Standard 28, wherein indicators were noted for four Cash
Generating Units (CGU). Based on the impairment test, provision of USD 407.97 Million(`19,533.69) (Previous Year– Nil) has been
provided in respect of one CGU and has been provided for in the Goodwill.
160 161
(` in Million)
21 Non Current Investment
As at
31 March
2012
As at
31 March
2011
Investment with bank for Site Restoration 2,927.15 107.42
TOTAL 2,927.15 107.42
Please refer to Note No 7 & Note No 17
(` in Million)
22 Deferred Tax Assets
As at
31 March
2012
As at
31 March
2011
Deferred Tax Assets 5,220.65 1,202.19
TOTAL 5,220.65 1,202.19
Refer Note No 45.c
(` in Million)
23 Long TermLoans And Advances
As at
31 March
2012
As at
31 March
2011
Secured, considered good
Other loans and advances (secured) 899.65 270.86
Unsecured, considered good
Other loans and advances (unsecured) 17.27 9.74
Doubtful
Loans and advances to related party (doubtful) 1,401.83 1,428.74
Other loans and advances 534.16 –
Sub Total (A) 2,852.91 1,709.34
Less : Provision for bad and doubtful loans and advances
Loans and advances to related party 1,401.83 1,428.74
Other loans and advances 534.16 –
Sub Total (B) 1,935.99 1,428.74
TOTAL 916.92 280.60
a Loans and advances due by directors or other o?cers
(` in Million)
Non–current Current
31 March 2012 31 March 2011 31 March 2012 31 March 2011
Loans and advances to employees include
Dues fromDirectors 0.38 0.09 0.05 –
(` in Million)
24 Other Non Current Assets
As at
31 March
2012
As at
31 March
2011
Secured, considered good
Investment in Lease realisable beyond 12 months fromthe end of report-
ing period
1,846.25 2,567.91
Interest Accrued on Loans to Employees 34.16 30.85
Unsecured, considered good
Trade receivables on deferral credit terms realisable beyond 12 months
fromthe end of reporting period
15,192.42 –
Other Deposits 274.88 56.54
Doubtful
Trade receivables (sundry debtors) realisable beyond 12 months fromthe
end of reporting period
2.16 –
Inventory 1,577.56 558.24
Sub Total (A) 18,927.43 3,213.54
Less : Allowance for bad and doubtful loans and advances / Provision for
inventory
Trade receivables on deferral credit terms realisable beyond 12 months
fromthe end of reporting period
2.16 –
Inventory 1,577.56 558.24
Sub Total (B) 1,579.72 558.24
TOTAL (A –B) 17,347.71 2,655.30
Investment in Lease – refer note no 46 (a)
(` in Million)
25
Inventories
(As taken, valued and certi?ed by the Management)
As at
31 March
2012
As at
31 March
2011
Finished Goods 1,034.71 564.06
Stores & Spares 4,698.20 4,134.97
TOTAL 5,732.91 4,699.03
162 163
(` in Million)
26 Trade Receivables
As at
31 March
2012
As at
31 March
2011
Secured, considered good
Trade receivable outstanding for a period exceeding six months: 3,286.52 3,020.72
Others 7.48 –
Unsecured, considered good
Trade receivable outstanding for a period exceeding six months: 21,904.54 22,570.04
Other Debts: 4,416.01 14,452.74
Doubtful
Trade receivable outstanding for a period exceeding six months: – –
Other Debts: 5.19 10.73
Sub Total (A) 29,619.74 40,054.23
Less : Allowance for bad and doubtful loans and advances
Debts outstanding for a period exceeding six months: 5.19 10.73
Sub Total (B) 5.19 10.73
TOTAL (A–B) 29,614.55 40,043.50
(` in Million)
27 Cash & Bank balances
As at
31 March
2012
As at
31 March
2011
A) Balances with Banks
in current account 46,966.00 29,317.14
in deposits 35.38 –
B) Cash on hand
i) At NewDelhi 0.25 0.26
ii) At Overseas 7.05 6.98
C) Others
Cash & Bank Balance 4,519.65 7,673.89
(In respect of Joint Ventures)
TOTAL 51,528.33 36,998.27
(` in Million) (` in Million)
28 Short TermLoans & Advances
As at
31 March
2012
As at
31 March
2011
A. Secured – Considered Good
Loans & Advances to Employees 43.27 32.10
B. Unsecured – Considered Good
Carry Finance to JV Partners 69.38 282.92
Loans & Advances to Employees 12.34 23.52
Advances recoverable in cash or in kind or for value to be received 920.05 2,220.50
Advances recoverable in cash or in kind or for value to be received
(In respect of Joint Ventures)
7,181.89 1,926.04
Unsecured – Considered Good (B) 8,183.66 4,452.98
C. Unsecured – Considered Doubtful
Advances recoverable in cash or in kind or for value to be received 1,741.95 –
Carry Finance to JV Partners 1,474.04 6,271.93
Less: Allowances
Less: Provisions for Doubtful Advances and Claims 3,215.99 6,271.93
Unsecured – Considered Doubtful (C) – –
LOANS AND ADVANCES (A+B+C) 8,226.93 4,485.08
a. Carry Finance to Sudapet:
The Company carried the share of investment of Sudapet, a company owned by the Government of
Sudan, for its 3.375% share in Block 5A till the commencement of ?rst commercial production(Sudapet
Carry). The carried amounts are repayable without interest in form of oil out of the production share
of Sudapet as per the terms of the Exploration and Production Sharing Agreement (EPSA).Currently,
Block 5A is under exploration, production and development and due to certainty of the recovery, the
net carried amount of USD 1.36 Million equivalent to `69.38 Million (previous year USD 6.33 Million
equivalent to `282.92 Million) has been shown as Loans and Advances.
(` in Million) (` in Million)
29 Other Current Assets
As at
31 March
2012
As at
31 March
2011
Prepaid expenses for Underlift Quantity 745.48 283.33
Interest Accrued On
Deposits with Banks 313.91 37.92
Others 369.19 2.19
Other Deposits 74.00 239.54
Other Current Assets 31.68 280.99
VAT Receivable 1,169.94 1,374.10
Investment in Lease 2,427.35 975.68
Advances recoverable in Cash or in kind or for value to be received
(In respect of Joint Ventures)
6,532.28 4,695.46
Taxes (Income Tax, Wealth Tax and Fringe Bene?t Tax) :
Advance Payment 22,420.44 19,322.81
Less: Provision 11,586.86 10,833.58 10,951.48 8,371.33
TOTAL 22,497.41 16,260.54
Investment in lease – Refer Note No. 41
164 165
(` in Million)
30 Revenue fromOperations 2011–12 2010–11
(A) Sales
Crude Oil 211,687.47 173,499.75
Gas 9,923.88 8,279.65
Condensate 3,189.04 2,232.91
Subtotal (A) 224,800.39 184,012.31
(B) Overlifted Quantity of Crude – 581.28
Total Sales (A)+(B) 224,800.39 184,593.59
Less: Value Added Tax 2,567.68 916.00
(C) Net Sales 222,232.71 183,677.59
(D) Other Operating Revenue
Other Operating income 1,240.41 433.90
Total Revenue fromOperations (C + D) 223,473.12 184,111.49
(` in Million)
31 Other Income 2011–12 2010–11
Interest Income on:
Deposits with Banks 812.22 356.72
Loans and Advances to Employees 5.54 4.19
Others 93.63 126.85
Lease Income 346.95 354.26
Pro?t on Redemption/ Sale of Investment – 0.57
Gain on Foreign Exchange Forward Contract 222.45 –
Miscellaneous Receipts 1,420.34 1,756.63
TOTAL 2,901.13 2,599.22
(` in Million)
32 Production, Transportation, Selling and Distribution Expenditure 2011–12 2010–11
Production Expenditure 22,673.78 17,763.48
Transportation Expenditure 5,094.13 4,368.88
Royalty 57,571.23 55,155.66
Sta? Expenditure 2,187.13 2,209.21
Service Tax and Other Levies 8,100.89 1,791.15
Rent 1,032.17 890.82
Repair to Buildings 73.48 47.54
Repair to Machinery 3.96 0.13
Other Repairs and Maintenance 124.85 18.30
Insurance 69.90 53.81
Payment due to surrender of Sudan Crude Oil Pipeline – 5,079.72
Idle rig cost 1,746.75 –
Crude oil received against Carry Finance 231.66 –
Others 2,508.03 1,781.48
TOTAL 101,417.96 89,160.18
a. The Subsidiary – ONGBV conducts its operations in Sudan jointly with Sudapet the national oil company
of Sudan among others. All government takes other than income taxes are considered to be royalty
interest. Royalties on production represent the entitlement of the Government of Sudan to a portion
of ONGBV’s share of crude oil and liquid production and are recorded using the rates in e?ect under the
terms of the contract at the time of production. Royalties / taxes in Syrian concession are accounted
similarly by ONGBV. The amount involved is `38,770.10 Million (Previous year `40, 848.27 Million) under
the head Royalty in Note 33.
b. Details of Production, Transportation, Selling and Distribution Expenditure
(` in Million)
Particulars 2011–12 2010–11
i a. Salaries, Wages, Ex–gratia etc. 1,775.38 1,995.20
b. Contribution to Provident Fund and other Funds. 61.50 29.59
c. Provision for Gratuity 69.97 11.65
d. Provision for Leave Encashment 130.37 43.18
e. Provision for medical / Terminal Bene?ts 6.19 9.92
f. Sta? Welfare Expenses 143.72 119.67
Sub Total (A) 2,187.13 2,209.21
ii Rent 1,032.17 890.82
iii Electricity, Water and Power 429.79 321.87
iv Repairs to buildings 73.48 –
v Repairs to Plant and Machinery 3.96 61.08
vi Other Repairs 124.85 272.43
vii Hire Charges of Vehicles 260.33 257.37
viii Professional Charges 400.12 390.68
ix Telephone and Telex 71.25 69.56
166 167
Particulars 2011–12 2010–11
x Printing and Stationery 13.12 11.84
xi Training and Seminar 4.76 4.56
xii Business Meeting Expenses 31.15 30.15
xiii Traveling Expenses 254.57 219.09
xiv Pipeline construction Cost – –
xv Insurance 69.90 53.81
xvi Advertisement and Exhibition Expenditure 36.64 23.01
xvii Contractual Transportation 5,094.13 4,368.88
xviii Miscellaneous Expenditure 2,733.78 2,398.36
xix Other Operating Expenditure* 22,924.71 20,630.65
xx Royalty 57,571.23 55,155.66
xxi Statutory Levies (Service Tax and Other Levies, Windfall Tax & VAT) 10,668.57 2,707.15
Sub Total (B) 101,798.51 87,866.97
Total (A+B) 103,985.64 90,076.18
*The other operating expenditure (no. xix above) includes the expenses in respect of Sakhalin–1, Russia project, where the above
details are not made available by the Operator.
c. Managerial Remuneration:
(` in Million)
Particulars 2011–12 2010–11
Salary and Allowances 20.13 40.59
Contribution to Provident Fund 0.57 0.65
Other Bene?ts and Perquisites 1.97 2.76
Total 22.67 44.00
d. Auditors’ Remuneration (excluding subsidiaries and joint venture company):
(` in Million)
Particulars 2011–12 2010–11
Audit Fee 3.09 2.21
Tax Audit Fee 0.28 0.32
Certi?cation Fee 0.48 0.96
Total 3.85 3.49
e. The expenditure incurred by Oil and Natural Gas Corporation Limited or its subsidiaries on behalf of the
Company are accounted for on the basis of debit raised by them for which supporting documents are
held by the respective relevant company/subsidiaries.
(` in Million)
33 Changes in Inventories of Finished Goods 2011–12 2010–11
As taken, valued and certi?ed by the Management
Closing Stock 1,034.71 564.06
Opening Stock 564.06 1,326.17
Less: Adjustment 161.04 403.02 883.35 442.81
NET (INCREASE)/DECREASE IN STOCK (631.69) (121.25)
(` in Million)
34 Finance Costs 2011–12 2010–11
A. Interest On
Finance Lease 371.31 1,154.83
Discount on Commercial Papers – 267.60
Interest on Bonds 1,974.74 1,970.78
Others 614.60 137.84
B. Foreign Exchange Fluctuation related to borrowing cost 9.15 –
TOTAL 2,969.80 3,531.05
(` in Million)
35 Depreciation, Depletion and Amortisation 2011–12 2010–11
Depreciation 11,132.60 11,705.28
Amortisation –Intangibles (12.75) 17.22
Less: Capitalised 7,995.20 3,124.65 8,260.05 3,462.45
Depletion 21,607.06 23,663.82
Survey Expenditure 2,537.43 2,867.35
Dry Wells 9,264.44 7,262.48
Pre–Acquisition Expenses 190.65 375.98
Amortisation of Goodwill 5,145.55 5,050.42
TOTAL 41,869.78 42,682.50
Refer to Note No A 3.1
Intangible Asset depreciation please refer to note no 2 a.1
(` in Million)
36 Other Expenses 2011–12 2010–11
Net (gain) or loss on foreign currency transactions and translation (other
than considered as ?nance cost)
1,473.54 (815.09)
Hedging (Gain)/Loss 48.52 41.85
Other Expenses 120.45 –
Provision for Mark to Market loss on Derivative Contracts 498.56 –
TOTAL 2,141.07 (773.24)
Hedging Gain/Loss:
The hedging loss for the year is `48.52 Million (Previous year gain `41.85 Million) in respect of hedging of crude oil against prices
by joint venture company.
168 169
(` in Million)
37 Provisions & Write–O?s (Net) 2011–12 2010–11
Provision for Impairment 19,533.69 –
Provisions for Doubtful Debts/Claims 2,269.42 215.97
Provision for Wells under Service Contract 12.29 22.20
Provision for Non Moving Inventory 740.62 696.60
Excess Provisions Written Back – (6,156.23)
Acquisition Cost Written O? 3,257.84 941.85
Other Write O? 2,115.25 7,727.86
TOTAL 27,929.11 3,448.25
Provision for Impairment – Attention is invited to Note 20
(` in Million)
38 Decrease/(increase) due to overlift/underlift quantity 2011–12 2010–11
UnderLift Previous year 283.33 –
UnderLift current year 697.44 283.32
Decrease/(increase) due to overlift/underlift quantity (414.11) (283.32)
(` in Million)
39 Adjustments Relating to Prior Period (Net) 2011–12 2010–11
A. Expenses
Survey Expenses (23.20) 0.00
Amortisation of Goodwill 11.14 (480.54)
Other Expenses 137.80 27.18
Depreciation (192.98) (0.07)
Depletion – 136.02
Sub–Total (67.24) (317.41)
B. Income
Miscellaneous Items 6.24 33.62
Sub–Total 6.24 33.62
TOTAL (A – B) (73.48) (351.03)
(` in Million)
40 Earnings Per Equity Share 2011–12 2010–11
Net Pro?t 27,211,559,601 26,905,441,958
No of Shares 100000000 100000000
Basic and Diluted Earnings Per Equity Share 272.12 269.05
(Per Share of `100 each)
41. The required disclosure under the Accounting Standard 15 (Revised) is given
below:
(A) Brief Description: A general description of the type of De?ned Bene?t Plans is as follows:
(i) Earned Leave (EL) Bene?t
Accrual – 30 days per year
Encashment whileinservice–75%of EarnedLeavebalancesubject toamaximumof 90daysper calendar year
Encashment on retirement – maximum 300 days.
(B) The amounts recognized in ?nancial statements for de?ned contribution plans are as under:
De?ned Contribution Plans
Expense
Recognized
during 2011–12
Contribution for
Key Management
Personnel during
2011–12
Expense
Recognized
during 2010–11
Contribution for
Key Management
Personnel during
2010–11
Contributory Provident Fund 29.53 0.54 26.53 0.61
Employee Pension Scheme –95 1.40 0.01 1.4 0.01
Composite Social Security Scheme 1.53 0.02 1.66 0.03
(C) The amounts recognized in the balance sheet for post–employment bene?t plans are as under:
Particulars Gratuity Leave
Post–Retirement
Medical Bene?ts
Terminals
Bene?ts
Present Value of Funded Obligation
– – – –
– – – –
Fair Value of Plan Assets
– – – –
– – – –
Present Value of Unfunded Obligation
179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
Unrecognized Past Service Cost
– – – –
– – – –
Net Liability
179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
(D) The amount included in the fair value of plan assets of gratuity fund is as follows
De?ned Contribution Plan
Expense Recognized
during 2011–12
Expense Recognized
during 2010–11
Reporting Enterprise’s own ?nancial instruments Nil Nil
Any Property occupied by, or assets used by the reporting enterprise Nil Nil
(ii) Good Health Reward (Half Pay Leave)
Accrual –20 days per year
Encashment while in service –Nil
Encashment on retirement – 50% of Half Pay Leave balance.
(iii) Gratuity
15 days salary for every completed year of service. Vesting period is 5 years and the payment is restricted to
`1.00 million.
(iv) Post–Retirement Medical Bene?ts
Upon payment of one time prescribed contribution by the employees, full medical bene?ts on
superannuation & on voluntary retirement subject to the completion of minimum 20 years of service
and 50 years of age.
(V) Terminal Bene?ts
At the time of superannuation, employees are entitled to settle at a place of their choice and they
are eligible for Transfer Traveling Allowance. Employees are gifted a silver plaque as a memento on
superannuation, depending upon their level.
170 171
(E) Reconciliation showing the movements during the period in the net liability recognized in the balance
sheet:
Particulars Gratuity Leave
Post Retirement
Medical Bene?ts
Terminals
Bene?ts
Opening de?ned bene?t obligation 169.54 139.67 61.14 7.86
164.23 127.04 54.74 4.79
Current Service Cost 7.39 6.81 2.48 0.35
7.01 5.80 2.23 0.31
Past Service Cost – – – –
– – – –
Interest Cost 14.41 11.87 5.20 0.67
13.14 10.16 4.38 0.38
Actuarial Losses (–Gains) –4.44 50.32 –5.33 0.45
–8.50 27.22 –0.21 2.83
Exchange di?erences on foreign plans – – – –
– – – –
Less: Bene?ts paid –7.00 –42.24 0.00 –0.34
6.34 30.55 – 0.45
Closing de?ned bene?t obligation 179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
(F) The total expenses recognized in the statement of pro?t and loss are as follows:
Particulars Gratuity Leave
Post Retirement
Medical Bene?ts
Terminals
Bene?ts
Current Service Cost 7.38 6.80 2.48 0.35
7.01 5.80 2.23 0.31
Interest on Obligation 14.41 11.87 5.20 0.67
13.14 10.16 4.38 0.38
Expected Return on plan assets – – – –
– – – –
Net Actuarial Losses (–Gains) recognised
in year
–4.44 50.32 –5.33 0.45
–8.50 27.22 –0.21 2.83
Past Service Cost – – – –
– – – –
Losses (Gains) on curtailments and settle-
ment
– – – –
– – – –
Total included in ‘Employee Bene?t
Expense’
17.35 68.99 2.35 1.47
11.65 43.18 6.40 3.52
Actual return on Plan Assets – – – –
– – – –
(G) Principal actuarial assumption at the balance sheet date (expressed as weighted averages):
Particulars Gratuity Leave
Post Retirement
Medical Bene?ts
Terminals
Bene?ts
Discount Rate 8.50% 8.50% 8.50% 8.50%
8.00% 8.00% 8.00% 8.00%
Expected Return on Plan Assets – – – –
– – – –
Annual Increase in health care costs – – – –
– – – –
Annual Increase in Salary 6.00% 6.00% 6.00% 6.00%
5.50% 5.50% 5.50% 5.50%
(H) E?ect of 1.00 % increase and decrease in in?ation rate on Post Retirement Medical Bene?ts as on
31
st
March 2012:
1.00 % (+) 1.00 % (–)
a) E?ect on service and interest cost 1.57 –1.13
1.31 –1.05
b) E?ect on Present Bene?ts Obligation (Closing) 14.24 –8.03
11.41 –9.25
Note: Figures in bold represent current year’s ?gures.
The above information pertains to the company only and does not include subsidiaries.
42 Taxation
(a) Current Tax provision :
The current provision for tax has been made for `27,385.31 Million (period ending 31
st
March 2011
`23,688.08 Million) in respect of income–tax liability of the company and its consolidated subsidiaries/
joint ventures. The tax liabilities take into account the tax credits available under applicable tax
treaties.
(b) Tax Assessment
(i) The Company had appealed to Hon’ble Delhi High Court against the decision of Income Tax Appellate
Tribunal (ITAT) for the Assessment Years 1981–82 to 1987–88 regarding disallowance of its claim
for `94.04 Million (As on 31
st
March 2011: `94.04 Million) on account of depreciation, development
allowance and receipt of interest on delayed payments in respect of Iran Project. However, pending
decision the tax demand in this regard was paid by the Company. The matter has been remanded
back by the Hon’ble Delhi High Court to the ITAT for fresh hearing vide order dated 30
th
March 2011.
(ii) The Company had ?led appeals with Commissioner of Income Tax (Appeals) [CIT (Appeals)] against
the disallowance of depreciation on acquisition costs of the projects and other expenses as well as
addition to income aggregating to `3,958.54 Million, `3,006.17 Million, `3,470.29 Million, `3, 212.03
Million,`4,683.46 Million , `5,617.51 Million and `4,578.92 Million for assessment years 2002–03, 2003–
04, 2004–05, 2005–06, 2006–07, 2007–08 and 2008–09 respectively by the assessing o?cer (“AO”).
CIT (Appeals), while disposing o? the appeals for assessment years 2002–03 and 2003–04 partially
deleted the disallowances. The Company ?led appeals with the Income Tax Appellate Tribunal (ITAT)
against the orders of CIT (Appeals). The Company got a favorable decision from ITAT for AY 2002–03
and all disallowances (depreciation on acquisition cost and pre–acquisition expenses) made by the
AO have been deleted by ITAT. While the Department has ?led appeal in the High Court of Delhi (the
“Delhi HC”) against the said order of ITAT for 2002–03, the Company has also approached the Delhi HC
against the said order with the appeal that the acquisition cost be treated as revenue expenditure.
(iii) For the assessment years 2004–05 and 2005–06, CIT (Appeals) has decided the appeals in favor of the
Company. However, the Department has ?led appeal against the above orders in the ITAT.
172 173
(iv) For the assessment year 2004–05, the AO had reassessed the income u/s 147 of the Income Tax Act,
making additions to income amounting to `165.98 Million towards exchange gain adjustments and
change in method of accounting during the relevant year. The tax demanded due to reassessment is
nil. The AO has also initiated penalty proceedings. Company has ?led an appeal before CIT (Appeals)
against the order of the AO and requested the AO to keep the penalty proceedings in abeyance till
the disposal of the appeal by CIT (Appeals).
(v) For the assessment year 2005–06, the Company had claimed tax credit of `111.33 Million (increased to
`709.88 Million due to assessment by Department under regular provisions rather than under MAT,
as returned) under the India–Vietnam double tax avoidance agreement with respect to tax deemed
to be paid. The claim was duly supported by report of a reputed accounting and tax ?rm in Vietnam
and accepted by the AO. The CIT had issued an order dated 29
th
March 2010 holding the allowance of
the credit to be erroneous and directed the AO to re–compute the tax payable and allow credit only
on the basis of certi?cate to be obtained by the Company from Vietnam tax authorities. The Company
had ?led appeal with the Income Tax Appellate Tribunal (ITAT) to contest the same on the ground that
the decision of the CIT is not in accordance with the law. The Company had also approached Vietnam
Tax Authorities (VTA) for required certi?cate. However, the AO vide his order dated 21
st
December
2010 has withdrawn the credit allowed for `709.88 Million and the resulting demand for `958.34
Million has been adjusted by the AO against refunds due to the Company. The Company has ?led
appeal with CIT (A) against the order of the AO. Further, the VTA vide their notice dated 5
th
August
2011 have con?rmed the tax amounts for the calendar years 2003 to 2006. The Company has ?led the
documents with CIT (A) and further proceedings before CIT (A) are pending.
(vi) For the assessment year 2008–09, the AO has made certain disallowances/additions (depreciation
on acquisition costs of the projects, adjustment of Sudan crude oil inventory, provision in respect of
Farsi exploration service contract and other expenses) amounting to `4,578.92 Million and assessed
total income as `32,469.15 Million against returned income of `27,890.22 Million. The disallowances/
additions include an amount of `1,654,88 Million on protective basis. In consequence, the AO has
raised a demand of `2,238.65 Million payable by the Company. The Company does not agree with the
disallowances made and ?led appeal with CIT (Appeals) against such assessment order. No provision
has been made for additional tax liability, if any, on this account.
(vii) For the assessment year 2005–06, AO has initiated action on 28
th
March 2012 u/s 147 of the Income Tax
Act for re–assessing company’s assessed income. The AO also conveyed the reasons whereby the AO
has indicated additions to income amounting to `25.87 Million towards exchange loss adjustments
due to change in method of accounting during the year. No demand has been raised by the AO
(c) Deferred Tax Provision
Net consolidated deferred tax liability as at 31
st
March, 2012 aggregated to `10,203.88 Million (Previous
year: `9,554.84 Million) and Net consolidated deferred tax asset as at 31 March, 2012 aggregated to
`5,220.65 Million (Previous year: `1,202.19 Million).
The item wise details of Net Deferred Tax Liability/Asset as on 31 March, 2012 accounted for in
accordance with Accounting Standard (AS) 22 viz. accounting for Taxes on Income are as under:
(` in Million) (` in Million)
Particulars As at 31 March 2012 As at 31 March 2011
Deferred Tax Liability of ONGC Videsh Ltd.
Deferred Tax Assets :
Carried Forward Expenditure U/S 42 of Income Tax Act, 1961* 11,213.98 10,222.01
Other disallowances under Income Tax Act, 1961 1,043.13 814.33
Total Deferred Tax Assets 12,257.11 11,036.34
Deferred Tax Liability : – 0
Di?erence in Net Block of Fixed Assets for Tax 16,133.71 14,819.36
Total Deferred Tax Liability 16,133.71 14,819.36
Net Deferred Tax Liability of the Company (ONGC Videsh Ltd.) 3,876.60 3,783.02
Net Deferred Tax Liability of ONGBV 6,178.54 5,591.06
Net Deferred Tax Liability of OAAL 148.74 180.76
Consolidated Net Deferred Tax Liability 10,203.88 9,554.84
Net Deferred Tax Asset of ONGBV 5,049.90 1,202.19
Net Deferred Tax Asset of OAAL 170.75 –
Net Deferred Tax Asset of OMEL – –
Consolidated Net Deferred Tax Asset 5,220.65 1,202.19
*Disallowance u/s 43B, provisions for doubtful debts and non–moving inventory.
An amount of `3,950.76 Million (Previous year: `1,650.55 Million debited) has been credited to the
Statement of Pro?t and Loss and `581.34 Million (Previous year: `182.21 Million) has been adjusted to
foreign currency translation reserve.
43 Details of Joint Ventures:
The details of Company’s and its Subsidiaries’ signi?cant joint ventures as on 31 March 2012 are as
under
Sr.
No.
Name of the Project and Country
of Operation
Company’s
participating
share (%)
Other Consortium
Members
Operator Status
1
Block 06.1 Project,
Vietnam, O?shore
45%
TNK – 35%
Petrovietnam– 20%
TNK*
The project is under
development and
production
2
Block 1a, 1b, 2a, 2b & 4 (GNOP)
Project,
Sudan, Onshore (Through ONGC
Nile Ganga B.V.)
25%
CNPC – 40%
Petronas – 30%
Sudapet – 5%
Joint
Operatorship
The project is under
production.
3
Sakhalin –1 Project,
Russia, O?shore
20%
ENL – 30%
SODECO – 30%
SMNG – 11.5%
R N Astra – 8.5%
ENL
The project is under
development and
production
4
AFPC Project
Syria, Onshore (Through ONGC
Nile Ganga B.V.) **
38.75%
Fulin – 50%
Mittals – 11.25%
SSPD **
The project is under
production.
5
MECL, Colombia, Onshore
(Through ONGC Amazon
Alaknanda Limited)
50% Sinopec – 50%
Joint
Operatorship
The project is under
exploration, development
and production
174 175
Sr.
No.
Name of the Project and Country
of Operation
Company’s
participating
share (%)
Other Consortium
Members
Operator Status
6
Block 5A Project,
Sudan, Onshore
24.13%
Petronas – 67.875%
Sudapet – 8%
Petronas
and Sudapet
– Joint
Operatorship
The project is under
exploration, development
and production
7
Block BC–10 Project,
Brazil, O?shore (Through ONGC
Nile Ganga B.V.)
15%
Shell – 50%
Petrobras – 35%
Shell
The project is under
development and
production
8
OOO Imperial Frac Service
(Through Jarpeno Ltd)
50%
Mr. Vladimir
Aleksandrovich
Borisov – 50%
ONGC Videsh
Ltd.
The company provides
Fraccing Services
9
"San Cristobal Project, Venezuela,
Onshore
(Through ONGC Nile Ganga B.V.)"
40% CVP– 60%
Joint
Operatorship
The project is under
development and
production
10
Block A–1 Project,
Myanmar, O?shore
17%
Daewoo – 51%
KOGAS – 8.5%
GAIL – 8.5%
MOGE– 15%
Daewoo
The project is under
development.
11
Block A–3 Project,
Myanmar, O?shore
17%
Daewoo – 51%
KOGAS – 8.5%
GAIL – 8.5%
MOGE– 15%
Daewoo
The project is under
development.
12
Farsi Block Project,
Iran, O?shore
40%
IOC – 40%
OIL – 20%
ONGC Videsh
Ltd.
The project ’s exploration
service contract ended
on 24 June 2009. The
Master Development
Plan (MDP) for the Farzad
‘B’ Gas Field has been
submitted to National
Iranian Oil Company and
Development Service
Contract for the ?eld is
under discussion.
13 Block XXIV Project, Syria, Onshore 60%
IPRMEL – 25%
Triocean–15%
IPR MEL
The project is under
exploration, development
and production.
14
Block 25–29, 35 (Part) & 36
Project,
Cuba, O?shore
30%
Repsol YPF – 40%
Stat Oil – 30%
Repsol YPF
The project is under
exploration.
15
Khartoum–Port Sudan Pipeline
Project,
Sudan
90% OIL – 10%
ONGC Videsh
Ltd.
The pipeline has been
completed and is under
lease.
16 Block RC–8, Colombia, O?shore 40%
Ecopetrol – 40%
Petrobras – 20%
ONGC Videsh
Ltd.
The project is under
exploration
17 Block RC–9, Colombia, O?shore 50% Ecopetrol – 50% Ecopetrol
The project is under
exploration
18 Block RC–10, Colombia, O?shore 50% Ecopetrol – 50%
ONGC Videsh
Ltd.
The project is under
exploration
19
Block BM–SEAL–4, Brazil.
(Through ONGC Nile Ganga B.V)
25% Petrobras– 75% Petrobras
The project is under
exploration
Sr.
No.
Name of the Project and Country
of Operation
Company’s
participating
share (%)
Other Consortium
Members
Operator Status
20
Block BM–BAR–1, Brazil (Through
ONGC Nile Ganga B.V)
25% Petrobras– 75% Petrobras
The project is under
exploration
21 Block SSJN–7, Colombia, Onshore 50% Paci?c – 50% Paci?c
The project is under
exploration
22
OPL–279, Nigeria
(Through ONGC Mittal Energy
Limited)
22.74%
(OMEL 45.5%)
EMO– 40%
Total –14.5%
OMEL
Exploration;surrendered
in 2011–12
23
OPL–285, Nigeria
(Through ONGC Mittal Energy
Limited)
32.15%
(OMEL
64.33%)
EMO– 10%
Total –25.67%
OMEL
Exploration;surrendered
in 2011–12
24 Block CPO–5, Colombia, Onshore 70% PetroDorado – 30%
ONGC Videsh
Ltd.
The project is under
exploration
25
SHWE O?shore Pipeline Project,
Myanmar
17%
Daewoo – 51%,
KOGAS – 8.5%,
GAIL – 8.5%,
MOGE – 15%
Daewoo
The project is under
construction.
26
Onshore Gas Pipeline Project
(SEAGPCL), Myanmar
(Through ONGC Nile Ganga B.V.)
8.35%
CNPC–SEAP– 50.9%
Daewoo – 25.041%,
KOGAS– 4.1735%,
GAIL – 4.1735%,
MOGE – 7.365%
CNPC–SEAP
The project is under
construction
27
BM–S–73, Brazil
(Through ONGC Nile Ganga B.V.)
43.50%
Petrobras – 43.5%
Eco Petrol – 13%
OCL
The project is under
exploration
28
BM–S–74, Brazil (Through ONGC
Nile Ganga B.V.)
43.50%
Petrobras – 43.5%
Eco Petrol – 13%
Petrobras
The project is under
exploration
29
Carabobo Project, Venezuela
(Through Carabobo One AB)
11%
CVP – 60%
Repsol Exp–11%
Petronas Ve–11%
INDOIL–7%
Joint
operatorship
The project is under
development
30
Satpayev Contract Area 3575,
Kazakhstan
25% KMG – 75% SOLLP
The project is under
Exploration
Abbreviations used: Addax – Addax Energy Nigeria Limited; BPEOC – BP Exploration Operating Company Limited; CNPC – China
National PetroleumCorporation; CNPC–SEAP–CNPC South–East Asia Pipeline Co Ltd; CVP – Corporacion Venezolana Del Petroleo
S.A.; Daewoo – Daewoo International Corporation; Devon – Devon Energy do Brazil Ltda ; EMO – EMO Exploration & Production
Limited; Equator – Equator Exploration JDZ Block 2 Limited; ERHC – ERHC Energy Nigeria JDZ Block 2 Limited; ENL – Exxon
Neftegas Limited; Foby – Foby Energy Company Limited; Fulin – Fulin Investments Sarl; GAIL – GAIL (India) Limited; IOC – Indian
Oil Corporation Limited; INDOIL– Indoil Netherlands B.V.; IPRMEL – IPR Mediterranean Exploration Limited; KOGAS – Korea
Gas Corporation; B.V; Mittals – Mittal Investments Sarl; MOGE– Myanmar Oil and Gas Enterprise ; Amber – Momo Deepwater
JDZ Limited; OCL – ONGC Campos Ltda.. OIL – Oil India Limited; Paci?c – Paci?c Stratus Energy, Colombia; Petrobras – Petroleo
Brasileiro S.A.; Petro–Dorado – Petro–Dorado South America S.A.; Petronas – Petronas Carigali Overseas Sdn Bhd; Petronas Ve:
PC Venezuela Ltd; Petrovietnam– VietnamOil and Gas Group; Repsol – Repsol YPF Cuba SA; Repsol Exp– Repsol Exploracion S.A.;
SEAGPCL – South East Asia Gas Pipeline Company Ltd.; Shell – Shell Brazil Ltda; Sinopec – Sinopec Overseas Oil and Gas Limited;
Sinopec JDZ– Sinopec JDZ Block 2 Limited; SMNG – Sakhalinmorneftegas Shelf; SODECO – Sakhalin Oil Development Company
Limited; SOLLP – Satpayev Operating Company LLP (100% subsidiary of KMG); SSPD: Syria Shell Petroleum Development B.V.;
Sudapet – Sudapet Limited; Triocean: Tri–Ocean Mediterranean
* BPEOC has transferred its PI and Operatorship for the Block–6.1 to TNK–VietnamB.V. e?ective from17thOctober, 2011
** ONGC Videsh Ltd. has e?ectively 38.75% interest in Himalaya Energy Syria B.V. (HESBV) with Mittals and Fulin e?ectively holding
11.25% and 50% interest respectively. HESBV, through its subsidiaries, holds 33.33%, 37.5% and 36% interest in Ash Sham (including
deep and lateral) concession, Deir–Ez–Zor and Annexure–IV (including deep and lateral) concessions and a gas utilization
agreement in Syria; the balance interest in the concessions being held by SSPD– the Operator.
176 177
44. Company’s share in Joint Ventures
The Company, its Subsidiaries’ and the Joint Venture Company’s share of assets, liabilities, income and
expenses in the Joint Ventures as furnished by the Operator has been incorporated in the ?nancial
statements as given below:
(` in Million)
Project Net Fixed
Assets
Net
Producing
Property
Capital
Work in
Progress
Explor-
atory and
Develop-
ment
Wells in
Progress
Current
Assets
Cash and
Bank Bal-
ance
Liabilities Income Expendi-
ture*
(Including
deprecia-
tion)
A. Audited as of 31 March 2012
Block 06.1 Vietnam 1,160.94 1,700.14 2,503.28 3,868.07 2,585.96 22.96 12,227.59 10,124.13 3,666.03
Farsi Block, Iran 0.27 – – – 1.45 1.08 116.18 0.33 10.90
Sudan Pipeline,
ONGC Videsh Ltd.'s
Share (90%)
– – – – 2,436.45 9.10 3,861.74 207.37 (914.15)
Block 1a, 1b, 2a, 2b &
4, Sudan
434.36 21,655.12 – 4,065.73 5,496.61 1,065.62 4,694.70 51,161.16 34,218.54
Block BC–10 &
Exploratory Blocks,
Brazil
– 21,466.30 – 1,954.69 2,680.75 261.84 3,764.59 17,486.37 18,695.80
PIVSA (San Cristo-
bal), Venezuela
992.37 1,917.26 2,466.28 – 16,821.40 130.99 11,238.61 26,554.20 16,072.04
Pipeco 1 onshore
Project, Myan-
mar (SEAGP)
14.54 – 2,275.55 – 2.70 83.72 969.49 – –
Tamba – – 2,562.69 – 8,665.74 816.60 4,672.24 1,490.54 3.89
AFPC, Syria 0.87 2,180.50 – 66.72 2,106.32 13.43 658.51 18,619.54 15,506.74
MECL 3,089.19 5,971.94 131.64 2,888.02 4,111.37 – 1,334.52 12,935.66 9,580.58
LLC Imperial Frac
Service–Jarpeno
97.74 – – – 57.15 13.60 30.26 247.70 183.44
Total (A) 5,790.27 54,891.27 9,939.44 12,843.22 44,965.90 2,418.94 43,568.43 138,827.01 97,023.82
B. Audited as of 31 January 2012
Block 5A, Sudan 2,834.54 5,016.93 27.26 2,006.76 1,204.69 125.42 325.40 3,287.07 1,911.68
Total (B) 2,834.54 5,016.93 27.26 2,006.76 1,204.69 125.42 325.40 3,287.07 1,911.68
C. Audited as of 31 December 2011
Sakhalin 1 Russia
22,632.87
54,960.77 46,764.05 1,344.42 9,759.26 799.88 80,642.67 60,737.72 28,442.46
Block RC–8, Co-
lombia
0.15 – – – 11.06 – 126.73 0.35 40.91
Block RC–10, Co-
lombia
0.21 – – – 14.33 – 150.08 0.49 38.39
Block RC–9, Co-
lombia
– – – – 0.09 0.24 7.59 0.26 (13.91)
Block SSJN–7,
Colombia
– – – – 2.20 – 50.93 0.07 260.33
Blocks 25–29, 35
(Part) & 36, Cuba
6.12 – 346.91 1,811.86 248.44 – 748.71 – 20.32
Block A–1, Myanmar 20.97 – 3,960.76 2,753.72 734.58 444.92 1,827.11 3.14 78.55
Block A–3, Myanmar 2.01 – 840.95 2,695.10 186.02 162.42 317.60 3.54 10.13
CPO 5 Block 0.24 – – 15.20 67.06 – 219.11 1.16 166.43
SHWE O?shore
Pipeline Myanmar
– – 1,966.65 – 444.18 443.79 440.26 1.74 (5.61)
Total (C)
22,662.57
54,960.77 53,879.32 8,620.30 11,467.22 1,851.25 84,530.79 60,748.47 29,038.00
D. Unaudited
Block XXIV, Syria 53.67 (78.46) – 1,998.02 314.97 – 270.06 191.49 246.74
Block 6 North Rama-
dan, Egypt+
– – – – 50.96 – 60.82 0.80 (68.50)
Block NC–189,
Libya+
– – – – 24.79 2.34 0.23 – (0.75)
Block NEMED,
Egypt+
– – – – – – (1.88) – 30.79
Petro carabobo** – – 300.76 – 250.41 121.70 246.83 – –
Project Net Fixed
Assets
Net
Producing
Property
Capital
Work in
Progress
Explor-
atory and
Develop-
ment
Wells in
Progress
Current
Assets
Cash and
Bank Bal-
ance
Liabilities Income Expendi-
ture*
(Including
deprecia-
tion)
Satpayev Block,
Kazakhstan
2.30 – 4,753.53 – 18.66 – 646.57 – 703.45
Block 279, Nigeria – – – – – – – – 8.07
Block 285, Nigeria 22.55 – – – – – – – 79.29
Total (D ) 78.52 (78.46) 5,054.29 1,998.02 659.79 124.04 1,222.63 192.29 999.09
Grand Total 31,365.90 114,790.51 68,900.31 25,468.30 58,297.60 4,519.65 129,647.25 203,054.84 128,972.59
*Represents expenditure as per joint venture statement. In the accounts of the Company, the amount is re?ected after netting o? as
per the Accounting Standard (AS) 27 viz. Financial Reporting of interests in Joint Ventures.
** Excludes signature bonus paid by subsidiary and classi?ed under capital work in progress.
The Company’s share of assets, liabilities, income andexpenses has beenconvertedintothe reporting currency at the average exchange
rate over the period for which the details are provided by the Operators. Generally the details are provided by the operators on monthly
basis except in respect of Sakhalin–1, Russia Project, where the details are provided by the Operator on quarterly basis.
The Company’s share of assets, liabilities, income and expenses incorporated in the ?nancial statements in
respect of Joint Venture Company – OMEL is given below:
Particulars Amount
a) Net Fixed Assets 22.55
b) Net Producing Property –
c) Capital Work in Progress 638.74
d) Exploratory & Development Wells–in–Progress –
e) Current Assets 138.79
f) Cash and Bank 105.95
g) Liabilities 7,560.76
h) Income –
i) Expenditure 2,887.67
45.1 Block 5A, Blocks 1,2 & 4 in Republic of South Sudan
The Company has 24.125% participating interest in Block 5A Republic of Sudan (ROS). South Sudan
separated from ROS as an independent country e?ective from 9
th
July 2011. In view of the separation
of South Sudan, the entire contract area of Block 5A is now situated in Republic of South Sudan (RSS),
whereas the downstream crude oil transportation system and export terminal are situated in ROS.
The company signed a Transition Agreement (TA) with RSS on 13
th
January 2012 continuing its right for
oil exploration and exploitation for contract area of Block 5A in Republic of South Sudan. Republic
of South Sudan is a landlocked country. Government of Sudan and Government of South Sudan has
been negotiating an agreement for the evacuation of crude produced from Republic of South Sudan
concessional area through the processing and transportation facilities of Republic of Sudan and has yet
to reach an agreement. As per the directives of Ministry of Petroleum & Mines, Government of South
Sudan, petroleum operation has been temporarily shut down in concession area of Block 5A e?ective
from 23
rd
January 2012. In view of the above, currently petroleum operations in the Block have been
limited to the maintenance of the facilities to ensure integrity for timely resumption of production
operation.
Due to the secession of South Sudan from ROS, the operator has been shifting o?ce from Khartoum
in ROS to Juba in RSS. Due to the shifting process the operator has not been able to provide the
monthly expenditure statement for the month of February and March 2012. Hence the expenditure
for the month of February and March are booked based on the cash call request for those two months
amounting to USD 4.39 Million equivalent `218.24 Million. Necessary adjustments would be carried out
in the accounts on receipt of the expenditure statement.
45.2 Satpayev Block, Kazakhstan:
E?ective 12
th
October 2011, the Company has acquired 25% Subsoil use rights from National Company
JSC Kaz Munai Gas (KMG) in the Contract for Exploration and Production of Hydrocarbon (Contract)
178 179
in Satpayev Area which was signed on 15
th
June, 2010 between Ministry of Oil and Gas (MOG),
Kazakhstan and KMG. KMG now holds subsoil use rights of 75% in the Block. The amounts paid toward
initial payment and signature bonus aggregating to `4,753.53 Million are disclosed as Capital Work in
Progress in Note 19.
45.3 AFPC, Syria
ONGC Nile Ganga BV (ONGBV) and Fulin Investments Sarl, a subsidiary of China National Petroleum
Company International (CNPCI), hold 50% shareholding each in the Dutch joint venture company, named
Himalaya Energy Syria B.V. (HESBV). HES B.V. in turn through three German entities i.e. HES Sham, HES
Dez and HES Gas Syria hold 33.33% to 37.5% PI in four Production Sharing Contracts (PSCs) in Syria. The
Syria business for the above PSC of ONGBV is structured as separate class business (Class C).
E?ective 1
st
December 2011 Al Furat Petroleum Company (AFPC) an Operating Company jointly held
by the Contractor and General Petroleum Company (GPC), which represents Govt. of Syria in the
Operating Company, were included in the list of sanctioned enterprises by the European Union as
part of the strengthening of the sanctions on Syria. Due to the sanctions, HESBV, as an EU company,
has been forbidden to directly or indirectly make funds or resources available to or for the bene?t of
AFPC and GPC.
In December 2011, SSPD’s nominee on the Board of Directors of AFPC communicated to the Chairman
of AFPC, the Minister of Petroleum and the General Manager, GPC, Syria that at the moment
circumstances (including EU sanctions) exist which are beyond the reasonable control of SSPD and
HESBV, which prevents the parties from discharging their obligations under the Contract. He further
informed in his letter that based on the opinion of an independent law ?rm, the restrictions that the
Contractor face lead to a Force Majeure (FM) situation under the Contracts.
In an opinion obtained by ONGC Videsh Ltd. from an Independent law ?rm, nothing in the PSC would
permit GPC to take, own or dispose of the Contractor's share in the event of force majeure being
called. Further, once the sanctions have been lifted, the Contractor could then claim its share in
production done during the period of the sanctions and pay for the expenditure of those operations
if appropriate.
Post the Force Majeure, the operation of the project is continued to be carried out by AFPC. HESBV
while preparing its accounts for the period ended 31
st
March 2012 has accounted for revenue and
expenses based on the Joint Interest Billings received by HESBV up to the period November 2011 and
has also accounted for its share of expenditure of SSPD for the period up to March 2012.
As per the ?nancials prepared by HESBV for the period ended 31
st
March 2012, ONGBV’s share of
net ?xed assets in HESBV is EURO 32.92 Mn and trade receivables of EURO 56.44 Mn. Due to the
political situation in Syria and the EU sanction, this Cash Generating Unit (CGU), including the above
mentioned assets and receivables was tested for impairment by comparing the carrying value with
the recoverable value as at 31
st
March 2012. No impairment provision was required in view of the
recoverable value being higher than the carrying value.
46. Disclosure pursuant to AS 19 – Leases
a. Khartoum – Port Sudan Pipeline Project:
The Company had completed the 12”X741 Kms multi–product pipeline from Khartoum re?nery to Port
Sudan for the Ministry of Energy and Mining of the Government of Sudan (GOS) on Build, Own, Lease
and Transfer (BOLT) basis and handed over the same to GOS during the ?nancial year 2005–06. The
project was implemented in consortium with Oil India Limited, Company’s share being 90%.
The EPC Contractor executing the project claimed additional costs aggregating to USD 37.15 Million,
Company’s share being USD 33.43 Million (90%), which have not been accepted by the Company. The
Company, in turn has ?led a claim as per the contract with GOS for their approval of an aggregate
amount of USD 46.18, Company’s share being USD 41.56. The EPC Contractor has initiated arbitration
with a claim for USD 25.49 Million plus interest against the Company. Pending settlement with the EPC
Contractor, an amount of USD 22.94 Million, being the Company’s 90% share out of total claim of USD
25.49 Million has been accounted as liability in the relevant year. No revenue in this respect has been
recognized since the claim has not been accepted by GOS. ONGC Videsh Ltd. has served a pre–arbitral
notice on GOS which is a requirement prior to initiating any legal proceedings in Sudan.
The payment under the contract with GOS would be received over a period of 10 years including a
moratorium of one year from the date of the contract (30th June, 2004) in 18 equal semi–annual
installments along with lease rental. The lease period commenced from the date of handing over of
the pipeline system and will continue till all payments by GOS are completed. All titles in the works and
the transportation system shall vest in the Company and the title shall pass to GOS in proportion to the
payments made by GOS against total payments due to Company under the contract. Further, subject
to regular payments on due dates by GOS to the Company, GOS shall have the exclusive right to use
and operate the pipeline system and the Company shall not assign, transfer, sub–let, sub–contract,
mortgage or create any rights to any third party or encumbrances or make any disposition to any
third party. Accordingly, the amount of net investment in the lease (i.e. aggregate of Minimum Lease
Payments MINUS Unearned Finance Income) is recognized and recorded as receivables under the
lease. The ?nance income thereon has been recognized based upon the pattern re?ecting the constant
periodic rate of return on the outstanding net investment in the lease.
The ?rst 11 installments under the contract due till 30th December 2010 have been received. The 12th
Installment due on 30th June 2011 and 13th installment due on 30th December 2011 have not yet been
received. Company has taken a political risk insurance policy for 12th and 13th installments. As per
the provisions of policy contract, the company has ?led the claim for 12th and 13th installments with
Export Credit Guarantee Corporation of India (ECGC).
The disclosure in accordance with the Accounting Standard (AS) 19 viz. Leases is as under:
(` in Million)
Particulars 31 March 2012 31 March 2011
Gross Net Gross Net
a) Reconciliation between the total
gross investment in the lease and the
present value of minimumlease pay-
ments as at year end
– Not later than one year 2,581.50 2,427.35 1,129.15 975.68
– Later than one year and not later than
?ve years
1,936.13 1,846.25 2,822.89 2,567.91
– Later than ?ve years – – – –
Total 4,517.63 4,273.60 3,952.04 3,543.59
b) Unearned Finance Income 244.03 408.45
c) Unguaranteed residual value accruing
to Company’s bene?t
Nil Nil
d) Accumulated provision for uncollect-
ible minimumlease payments receiv-
able
Nil Nil
e) Contingent rents recognised in the
statement of pro?t and loss for the
period
Nil Nil
f) General description of the signi?cant
leasing arrangement
As described in para above As described in para above
g) Accounting Policy followed in respect
of initial direct costs
As per Accounting Policy O.1.2 As per Accounting Policy O.1.2
180 181
Revenue of ?nance lease contracts represents the transfer of economic ownership from Tamba BV
(lessor) to the lessee of the asset, being an a?liate. Cost of sales represents the costs associated
with the ?nance lease contracts. The Company’s share of the lease liability (at USD 1= `51.12) are
tabulated below:
Lease liability (` in Million)
Opening balance as at 1 April 2011 4,021.60
Interest 396.40
Lease Payments (954.88)
Foreign Currency Translation Adjustment 575.54
Closing balance as at 31 March 2012 4,038.66
The Company’s 15% share of future estimated minimumlease expenses in the year and their present values are scheduled to be as
follows:
(` in Million)
< 1Year 1–5 Years >5Years Total
Future minimumlease payments: 950.31 2,649.73 2,035.52 5,635.57
Present value of minimumlease payments 913.68 2,073.20 1,051.77 4,038.66
Tamba B.V., JV company of ONGBV (15%) has entered into a 15–year lease contract for the supply of
the FPSO with a third party. The lease contract contains priced termination options for each of the 15
years and priced extension options for the 4 years following the initial 15–year term. The Company can
exercise a priced purchase option during the term of the lease. The interest rate implicit in the lease is
9.5% (Previous year 9.5%).
47. Details of Reserves: (As determined by the Reserves Estimation Committee):
(a) Company’s share of Proved Reserves in respect of different projects as on 31 March 2012 is
as under:
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total
(Million Tonne)
GNOP, Sudan Opening 17.425 – 17.425
Addition 0.870 – 0.870
Ded/Adj – – –
Production 1.324 – 1.324
Closing 16.971 – 16.971
b. Financial Lease for BC–10 Project
ONGBV owns 15% equity shares in Tamba B.V. The Netherlands’ with the balance held by Shell E and P
O?shore Services B.V., The Netherlands (“SEPBV”), and Petrobras Netherlands B.V. The Netherlands
(“PNBV”). Tamba B.V. has been established to facilitate the development and production of
hydrocarbons in the BC–10 concession, Campos Basin area in Brazil. Tamba B.V. has a third party lease
for a major oil ?eld equipment (FPSO) and constructed other sub–sea assets for onwards lease to the
BC–10 Project. Both ?nacial leases commenced on 31
st
December 2008. For the period, April 1, 2011 to
March 31, 2012, the ?nancial statements were reviewed by the auditors of Tamba BV.
Tamba BV leases part of its assets from a third party, Brazilian Deepwater and re–leased these to BC–10
joint venture operated by Shell Brasil Ltda. The risks and rewards incidental to ownership are largely
transferred to the lessee. These assets are capitalised and recognised in the balance sheet of BC–10
as from the date the lease contract is concluded, at the lower of the fair value of the asset and the
discounted value of the minimum lease installments. The lease installments payable are broken down
into repayment and interest components, based on a ?xed interest rate and installments as derived from
the underlying agreement. The lease commitments are carried under long–term liabilities exclusive of
interest. The interest component is recognised in the Statement of Pro?t and Lossin accordance with
the lease installments.
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total
(Million Tonne)
Block 5A, Sudan Opening 6.627 – 6.627
Addition –0.105 – –0.105
Ded/Adj – – –
Production 0.174 – 0.174
Closing 6.348 – 6.348
Sakhalin–1, Russia Opening 35.501 71.537 107.038
Addition 0.258 0.138 0.396
Ded/Adj – – –
Production 1.498 0.494 1.992
Closing 34.261 71.182 105.442
Block 06.1, Vietnam Opening 0.672 10.540 11.212
Addition – – –
Ded/Adj – – –
Production 0.036 2.023 2.059
Closing 0.636 8.517 9.153
AFPC, Syria Opening 3.210 – 3.210
Addition – – –
Ded/Adj – – –
Production 0.503 – 0.503
Closing 2.707 – 2.707
BC–10, Brazil Opening 5.317 0.659 5.976
Addition (0.089) (0.244) (0.333)
Ded/Adj – – –
Production 0.450 0.015 0.465
Closing 4.778 0.400 5.178
MECL, Columbia Opening 4.131 – 4.131
Addition (0.065) – (0.065)
Ded/Adj 0.001 – 0.001
Production 0.561 – 0.561
Closing 3.504 – 3.504
IEC, Russia Opening 17.181 5.309 22.491
Addition (0.880) (0.626) (1.506)
Ded/Adj – – 0.000
Production 0.771 – 0.771
Closing 15.530 4.683 20.213
PIVSA, Venezuela Opening 12.688 – 12.688
Addition (0.030) – –0.030
Ded/Adj (0.001) – (0.001)
Production 0.894 – 0.894
Closing 11.765 – 11.765
BLOCK–24, Syria Opening 1.813 – 1.813
Addition – – –
Ded/Adj – – –
Production 0.010 – 0.010
Closing 1.803 – 1.803
182 183
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total
(Million Tonne)
BLOCK–A1 & A3,
Myanmar
Opening – 10.297 10.297
Addition – – –
Ded/Adj – – –
Production – – –
Closing – 10.297 10.297
Total Reserves, ONGC
Videsh Ltd.
Opening 104.566 98.343 202.909
Addition (0.042) (0.732) (0.772)
Ded/Adj – – 0.001
Production 6.221 2.532 8.754
Closing 98.303 95.079 193.383
* Crude Oil includes Condensate.
** For calculating “Oil Equivalent” 1,000M
3
of Gas has been taken to be equal to 1 Tonne of Crude Oil.
(b) Company’s share of Proved and Developed Reserves in respect of different projects as on 31
March 2012 is as under:
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total
(Million Tonne)
GNOP, Sudan Opening 7.831 – 7.831
Addition 0.200 – 0.200
Ded/Adj – – –
Production 1.324 – 1.324
Closing 6.707 – 6.707
Block 5A, Sudan Opening 2.467 – 2.467
Addition 0.306 – 0.306
Ded/Adj – – –
Production 0.174 – 0.174
Closing 2.599 – 2.599
Sakhalin–1, Russia Opening 10.620 11.288 21.908
Addition – – –
Ded/Adj – – –
Production 1.498 0.494 1.992
Closing 9.122 10.794 19.916
Block 06.1, Vietnam Opening 0.663 6.985 7.648
Addition – – –
Ded/Adj – – –
Production 0.036 2.023 2.059
Closing 0.627 4.962 5.589
AFPC, Syria Opening 2.835 – 2.835
Addition – – –
Ded/Adj – – –
Production 0.503 – 0.503
Closing 2.332 – 2.332
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total
(Million Tonne)
BC–10, Brazil Opening 1.931 0.443 2.374
Addition (0.044) (0.273) (0.317)
Ded/Adj – – –
Production 0.450 0.015 0.465
Closing 1.437 0.155 1.592
MECL, Columbia Opening 3.240 – 3.240
Addition 0.692 – 0.692
Ded/Adj – – –
Production 0.561 – 0.561
Closing 3.371 – 3.371
IEC, Russia Opening 4.793 – 4.793
Addition 1.369 – 1.369
Ded/Adj – – –
Production 0.771 – 0.771
Closing 5.391 – 5.391
PIVSA, Venezuela Opening 1.901 – 1.901
Addition 0.012 – 0.012
Ded/Adj – – –
Production 0.894 – 0.894
Closing 1.019 – 1.019
BLOCK–24, Syria Opening 0.000 – –
Addition 0.060 – 0.060
Ded/Adj – – –
Production 0.010 – 0.010
Closing 0.050 – 0.050
Total Reserves, ONGC
Videsh Ltd.
Opening 36.281 18.716 54.997
Addition 2.595 (0.273) 2.322
Ded/Adj – – –
Production 6.221 2.532 8.753
Closing 32.655 15.911 48.566
* Crude Oil includes Condensate.
** For calculating “Oil Equivalent” 1,000 M
3
of Gas has been taken to be equal to 1 Tonne of Crude Oil.
(c ) The year end reserves of the company has been estimated by the Reserves Estimation Committee
(REC) of the parent company ONGC, which follows international reservoir engineering procedures
consistently.
184 185
48. Segment Information
Particulars Asia FSU Countries Latin
2011–12 2010–11 2011–12 2010–11 2011–12
Revenue
External sales 28,928.64 31,694.07 80,591.95 59,257.96 59,506.41
Inter Segment sales – – – – –
Total Revenue 28,928.64 31,694.07 80,591.95 59,257.96 59,506.41
Results 7,058.76 8,970.38 7,278.30 22,579.17 16,056.41
Segment results 7,058.76 8,970.38 7,278.30 22,579.17 16,056.41
Unallocated corporate Expenses (Net) – – – – –
Operating pro?t or (Loss) 7,058.76 8,970.38 7,278.30 22,579.17 16,056.41
Interest expenses – – 858.18 786.15 1,308.18
Interest and other income 15.28 140.56 176.37 207.04 24.73
Income Tax – 1,902.54 93.42 193.64 3,257.72
Pro?t / (loss) fromordinary activities 7,074.04 7,087.16 6,503.07 21,744.65 11,515.24
Extra–ordinary losses – – – – –
Net pro?t / (Loss) 7,074.04 7,087.16 6,503.07 21,744.65 11,515.24
Other information
Segment Assets 48,886.65 31,338.88 250,372.50 157,088.25 74,558.94
Unallocated Corporate Assets – – – – –
Total Assets 48,886.65 31,338.88 250,372.50 157,088.25 74,558.94
Segment Liabilities 19,355.89 19,761.01 101,065.82 102,218.69 55,919.73
Unallocated Corporate Liabilities – – – – –
Total 19,355.89 19,761.01 101,065.82 102,218.69 55,919.73
Capital Expenditure 19,341.14 3,371.58 36,649.69 34,427.68 11,656.41
Recouped cost 2,516.27 1,603.48 15,772.85 14,256.15 14,159.60
Non cash Exp.
Information about Secondary Business Segments (Product–wise):
(` in Million)
Revenue from 2011–12 2010–11
Crude Oil* and Natural Gas (Net of VAT) 222,232.71 183,677.59
Transportation Income 1,240.41 433.90
Lease Finance Income 346.95 252.94
*Crude Oil includes Condensate.
(` in Million)
America Africa Unallocated Grand Total
2010–11 2011–12 2010–11 2011–12 2010–11 2011–12 2010–11
41,972.27 54,446.12 51,187.19 – – 223,473.12 184,111.49
– – – – – – –
41,972.27 54,446.12 51,187.19 – – 223,473.12 184,111.49
15,660.24 19,220.09 6,809.67 – – 49,613.55 54,019.46
15,660.24 19,220.09 6,809.67 – – 49,613.55 54,019.46
– – – 1,294.00 (4,255.04) 1,294.00 (4,255.04)
15,660.24 19,220.09 6,809.67 1,294.00 (4,255.04) 50,907.55 49,764.42
496.10 – 2.75 803.44 2,246.05 2,969.80 3,531.05
172.88 429.38 392.22 2,255.37 1,807.77 2,901.13 2,720.47
8,097.11 – 5,715.12 20,276.19 6,139.98 23,627.33 22,048.39
8,934.22 19,649.47 1,484.03 (17,530.26) (12,344.61) 27,211.55 26,905.45
– – – – – – –
8,934.22 19,649.47 1,484.03 (17,530.26) (12,344.61) 27,211.55 26,905.45
67,616.96 89,106.75 47,064.18 – – 462,924.83 303,108.27
– – – 43,081.82 134,026.91 43,081.82 134,026.91
67,616.96 89,106.75 47,064.18 43,081.82 134,026.91 506,006.65 437,135.18
14,709.65 10,710.02 20,512.11 – – 187,051.45 157,201.46
– – – 118,541.53 133,722.00 118,541.53 133,722.00
14,709.65 10,710.02 20,512.11 118,541.53 133,722.00 305,592.98 290,923.46
97.37 6,180.83 (3,591.05) 12,978.75 348.17 86,806.82 34,653.75
15,690.75 7,890.68 10,216.93 1,530.38 915.19 41,869.78 42,682.50
Notes:
(i) Segments have been identi?ed and reported taking into account, the organization and management structure for internal
reporting and signi?cantly di?erent risk and return perception in di?erent geographical regions. These are organized into ?ve
segments viz. Asia, FSU Countries, Latin America, Africa and Unallocated.
(ii) The segment revenue in the business segment (Product–wise) is revenue from sale of Crude Oil and Natural Gas, Crude Oil
Transportation Income and Lease Finance Income.
(iii) Segment Revenue, Results, Assets and Liabilities include the respective amounts identi?able to each of the segments and amount
allocated on a reasonable basis. “Unallocated” includes common expenditure incurred for all the segments and expenses incurred
at corporate level.
(iv) Revenue ?gures are shown as net of VAT.
186 187
49. Capital Commitments
The Company either on its own or in consortium with other partners carries on its business in respect
of exploration, development and production of hydrocarbons under agreements with the host
governments. Several of these agreements provide for certain minimum work obligations/ certain
minimum ?nancial commitments over a period of time. The Company’s share of such obligations/
commitments in respect of agreements where such obligations / commitments have not been
completed as of the reporting date amounted to USD 121.02 Million equivalent to `6,186.61 Million
(Previous year USD 131.52 Million equivalent to `5,881.62 Million). The Company is con?dent of meeting
the obligations/ commitments.
Other Capital Commitments based upon the details provided by the operators: `29,252.78 Million
(Previous year `31,168.63 Million).
Contracts remaining to be executed on capital account amounting to `1,570 Million ( Previous year
`1,960.30 Million ) towards ONGC Videsh Ltd. share for building at Vasant Kunj, Delhi wherein the
contracts have been awarded by parent company to various agencies and ONGC Videsh Ltd. is to share
the costs.
Capital Commitments in respect of Subsidiaries is `11,537.44 Million eqvt of USD 225.69 Million) (Previous
year `5,804.86 Million eqvt of USD 129.80 Million).
50. Contingent Liability
Liability for payment to contractual workers for regularization of their services is pending with Labor
Court under civil suit. The amount of liability is not ascertainable.
Claims against the company not acknowledged as debt: USD 10.49 Million. (Refer note 43 above).
Disputed income–tax demands (excluding cases decided in favour of Company and addition made by
the AO on protective basis): `7,145.56 Million (As on 31
st
March 2011: `4,967.43 million). Against disputed
tax demands,`9,438.08 Million (As on 31
st
March 2011: `5,714.31 million) has been paid by the Company
or adjusted by the authorities against refunds due to the Company from time–to–time. Attention is
invited to note 42 above.
The Service Tax Department has issued a demand cum show–cause notice dated 11th October 2011
requiring the Company to show cause why service tax amounting to `28,163.14 Million (including
Education Cess and SHE cess), the interest on such amount and penalty should not be demanded and
recovered from the Company. Service Tax Department has calculated these tax amounts based on
foreign currency expenditure reported in the Company’s ?nancial statements covering the reporting
periods from 1
st
April 2006 to 31
st
December 2010 and contending that these expenses represent business
auxiliary services rendered by ONGC Videsh Ltd.’s foreign branches and operator of the Joint Venture/
Consortium to the Company. The Company is of the view that the said service tax is not payable and
proposes to contest the same. No provision has been made on this account.
In respect of bank guarantees/standby letters of credit obtained from banks for performance
guarantee/bid bonds: `4,861.23 Million (Previous Year `4,234.98 Million).
The Company has issued Performance Guarantee in respect of concessionary contract for Block BC–10,
Brazil and Blocks BM–S–73 and BM–ES–42 on behalf of ONGC Campos Ltda (OCL). The Company is
con?dent that OCL will be able to honor its obligations.
The Company has given a Performance Guarantee on behalf of Petro Carabobo Ganga B.V. to Government
of Venezuela in respect of Carabobo 1 Project. The total investment commitment is estimated at
USD 1,333 Million (`68,142.96 Million).
ONGBV has given counter guarantee to the State Bank of India for the issue of performance bonds in
favour of Nigerian National Petroleum Corporation, on behalf of ONGC Mittal Energy Limited, with a
maximum of 51% of the guaranteed amounts. The outstanding guarantee obligation of the company
was `3,910.68 Million (USD 76.50 million) (previous year `3,421.08 (USD 76.50 million)) as at March 31,
2012.
ONGBV has given performance guarantee to ANP, the regulatory authority in Brazil, favoring ONGC
Campos Ltda (OCL) for BC–10 Project where OCL has a 15% participating interest and Shell Brazil is the
operator.
Other contingent liability in respect of subsidiares is `4,295.12 Million eqvt to USD 84.03 Million (Previous
year `3,394.70 Million eqvt to USD 75.91 Million).
All known contingent liabilities have been indicated. The contingent liabilities, if any, in respect of joint
ventures, where the Company is the non–operator are not ascertainable except Sakhalin–1 where the
Operator has intimated that the status of contingent liability is nil.
51. Derivative instruments and unhedged foreign currency exposure:
During the year, ONGC Videsh Ltd. has entered into cross currency swap transactions with various
banks whereby it has swapped the principal and interest amounts payable towards Bonds issued in
domestic markets into USD liability as follows:
Underlying
Notional Principal
Amount ( `/Mn)
Notional Principal
Amount ( USD/Mn)
Termination Date
8.40 % 5 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series I
15000 299.23 23
rd
Dec 2014
8.54% 10 Years UnsecuredNonConvertible Redeemable
Bonds in the nature of Debentures– Series II
3700 56.30 6
th
Jan 2020
Total 18700 355.53
The business of the Company is carried out entirely outside India. The revenues of the Company are
received entirely in foreign currency and substantially all the expenses are incurred in foreign currency.
Accordingly, the Company has swapped the Bonds issued in Indian Rupees into USD so as to align the
currency of its liabilities and assets, thereby hedging the resulting exposure.
The above swap positions were outstanding at 31 March 2012 and have been revalued on that date based
on Mark–to–Market positions reported by counter–party banks. Mark–to–market loss amounting to
`498.56 Million (previous year Nil) has been charged to foreign exchange gain/loss in statement of
pro?t and loss.
Further, during the year, the Company had entered into foreign exchange forward transactions for
hedging its underlying exposures which have settled during the year itself. The net gain on settlement
of such transactions amounting to `222.45 Million (previous year Nil) has been charged to foreign
exchange gain/loss in pro?t and loss account.
52. The ?gures in respect of Subsidiaries / Joint Venture Company have been regrouped / re–arranged
based upon the details obtained from the managements of the Subsidiaries / Joint Venture Company,
wherever their audited accounts did not provide the break up details required for the consolidated
?nancial statements.
53. Information as per Accounting Standard (AS) 18 viz. Related Party Disclosures is given below (excluding
with State Controlled Entities):
(` in Million)
Joint ventures
Key Managerial
personnel
Total 2011–12 Total 2010–11
Income fromrendering services 167.29 – 167.29 182.05
Interest Income 34.43 – 34.43 303.04
Remuneration – 22.68 22.68 44.00
Capital Contribution – – – –
188 189
Note: Name of related parties and description of relationship (excluding State Controlled Entities):
Joint Ventures Block 06.1 Project, Vietnam
Sakhalin–1 Project, Russia
Block 1a, 1b, 2a, 2b & 4 Project, Sudan
Block 5A Project, Sudan
MECL, Colombia
AFPC, Syria
Block BC–10, Brazil
Block BM–SEAL–4, Brazil
Block BM–BAR–1, Brazil
Block BM–S–73, Brazil
Block BM–S–74, Brazil
Block A–1 Project, Myanmar
Block A–3 Project, Myanmar
Farsi Block Project, Iran
Block XXIV Project, Syria
Block 2, JDZ, Nigeria / STP
Block 25–29, 35 (Part) & 36 Project, Cuba
Khartoum– Port Sudan Pipeline Project, Sudan
ONGC Mittal Energy Limited, Cyprus
Block RC–8, Colombia
Block RC–9, Colombia
Block RC–10, Colombia
Block SSJN–7, Colombia
Block CPO–5, Colombia
San Cristobal Project, Venezuela
Carabobo Project, Venezuela
ONGC Nile Ganga B.V. , The Netherlands
OOO Imperial Frac Service, Russian Federation
Satpayev Project, Kazakhstan
Key Management personnel (excludes Joint
Venture Company)
Mr D K Sarraf, Managing Director (with e?ect fromSeptember 16, 2011)
Mr J Thomas, Managing Director (till September 15, 2011 )
and Director (Exploration) (till December 31, 2011)
Mr S P Garg, Director (Finance)
Mr S. Roychoudhary, Director (Operations)
Mr N K Verma, Director (Exploration) (with e?ect from1
st
January, 2012)
Mr. A R Baron Mackay Holding B.V., Director, ONGC Nile Ganga B.V.
Mr Costas Christoforou, Director, Jarpeno Limited
Ms Arlene Nahikian, Director, Jarpeno Limited
Ms. K. Antoniadou, Director, Jarpeno Limited
Ms. E. Chrysanthou, Director, Jarpeno Limited
Mr A. Loizou, Director, Jarpeno Limited
Mr. Roland Göransson, Director, Carabobo One AB
Mr. Richard Chindt, Director, Carabobo One AB
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
190 191
60h80LIßATEß 6A8h FL0W 8TATEMEhT F0P ThE ¥EAP EhßEß
31
8T
MAP6h, 2012
(` in Million)
Year Ended
31st March , 2012
Year Ended
31st March, 2011
A CASH FLOWFROM OPERATING ACTIVITIES:
Net pro?t before tax and prior period items 51,092.33 49,066.54
Adjustments For:
– Foreign Exchange Translation Reserve 26,573.80 2,181.46
– Provision for Impairment 19,533.69 –
– Provisions for Doubtful Debts/Claims 2,269.42 215.97
– Provision for Non Moving Inventory 740.62 696.60
– Other Provisions and Write O?s 5,385.38 2,535.68
– Unrealized Foreign Exchange Loss/(Gain) 1,473.54 (815.09)
– Hedging (Gain)/Loss 48.52 41.85
– Provision for Mark to Market loss on Derivative Contracts 498.56 –
– Depreciation on Tangible Assets (Net) 3,137.40 3,444.73
– Amortisation – Intangibles (12.75) 17.22
– Amortisation of Goodwill 5,145.55 5,050.42
– Depletion on Producing Properties 21,607.06 23,663.82
– Interest Expenses 2,960.65 3,531.05
– Foreign Exchange Fluctuation related to borrowing cost 9.15 –
– Interest Income (911.39) (1,002.81)
– Pro?t on Redemption/ Sale of Investment – (0.57)
– Gain on Foreign Exchange Forward Contract (222.45) 88,236.74 – 39,560.33
Operating Pro?t before Working Capital Changes 139,329.07 88,626.87
Adjustments for:–
– Decrease/(Increase) in Inventories (1,774.48) 1,501.81
– Decrease/(Increase) in Trade Receivables 10,428.96 (10,676.77)
– Decrease/(Increase) in Short TermLoans and Advances (3,741.85) 94.20
– Decrease/(Increase) in Long TermLoans and Advances (636.32) –
– Decrease/(Increase) in Other Current Assets (6,236.97) (37.77)
– Decrease/(Increase) in Other Non Current Assets (16,961.83) –
– Decrease/(Increase) in Deferred Tax Assets (Net) (4,018.47) 1,094.34
– Decrease/(Increase) in Goodwill (12,726.40) 5,456.89
– Increase/(Decrease) in Short TermBorrowings 291.64 (10,900.00)
– Increase/(Decrease) in Trade Payables 6,054.22 7,261.24
– Increase/(Decrease) in Other current Liabilities 12,027.81 –
– Increase/(Decrease) in Other Long TermLiabilities (148.97)
– Increase/(Decrease) in Short TermProvisions 173.39 103.22
– Increase/(Decrease) in Long TermProvisions 37.88 –
– Increase/(Decrease) in Liability for Abandonment 4,747.64 12,277.47
– Increase/(Decrease) in Deferred Tax Liabilities (Net) 649.04 374.00
Cash generated from/(used in) Operations (11,834.71) 127,494.36 6,548.63 88,626.87
Direct Taxes Paid (net of refunds) (23,627.32) (22,048.39)
Net Cash Flow before Prior period items 103,867.04 66,578.48
Year Ended
31st March , 2012
Year Ended
31st March, 2011
Prior period items 73.48 351.03
Net Cash Flow from/(used in) Operating Activities (A) 103,940.52 66,929.51
B CASH FLOWFROM INVESTING ACTIVITIES:
– Purchase of Tangible Assets (Net) (4,419.22) (6,386.46)
– Purchase of Intangible Assets (Net) (76.74) (11.08)
– Expenditure on Projects (71,136.90) (48,750.98)
– Investment with Bank for Site Restoration (2,819.74) (0.05)
– Interest Income 911.39 1,002.81
– Pro?t on Redemption/ Sale of Investment – 0.57
– Hedging Gain/(Loss) (48.52) (41.85)
– Gain on Foreign Exchange Forward Contract 222.45 –
Net Cash Flow from/(used in) Investing Activities (B) (77,367.28) (54,187.04)
C CASH FLOWFROM FINANCING ACTIVITIES:
– Proceeds fromNon Convertible Redeemable Bonds – –
– Proceeds fromIssue of Share Capital – –
– Change in Minority Interest 320.54 901.81
– Net Long TermBorrowings fromONGC (4,530.72) 10,063.58
– Change in Finance Lease Obligations (Unsecured) (216.90)
– Change in Foreign Currency Loans (4,646.31) (239.38)
– Interest Expenses (2,960.65) (2,960.65)
– Foreign Exchange Fluctuation related to borrowing cost (9.15) –
Net Cash Flow from/(used in) Financing Activities (C) (12,043.19) 7,765.36
Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) 14,530.06 20,507.83
Cash and Cash Equivalents as at 31 March, 2011 36,998.27 16,490.44
(Opening Balance)
Cash and Cash Equivalents as at 31 March, 2012 51,528.33 36,998.27
(Closing Balance)
Notes:
1 The above Cash FlowStatement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard–3 on Cash
FlowStatements issued by The Institute of Chartered Accountants of India.
2. Bracket indicates cash out?ow.
3. Previous year ?gures have been regrouped wherever necessary to con?rmthe current year’s classi?cation.
4 Adjustment have not been made to purchase of ?xed assets etc. (investing activities), on account of increase / decrease in Capital
Creditors. The impact of the above is not readily ascertainable.
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
192
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doc_777849009.pdf
ONGC Videsh Limited Annual Report 2011-12
etc. Your Company also wish to place on record
their deep sense of appreciation for the credible
services by the employees of your Company. Your
Company recognizes that the achievements of
your Company have been possible with support
from the parent company, Oil and Natural Gas
Corporation Limited.
We rea?rm our commitment to excellence in the
coming year with a determination to sustain our
success and momentum.
With Best Compliments,
(Sudhir Vasudeva)
(Chairman)
Address of the Chairman at the 47
th
Annual General Meeting scheduled on
17
th
August 2012
Dear Shareholders,
It gives me great pleasure to welcome you to the
47
th
Annual General Meeting of ONGC Videsh Ltd.
Before I speak about the performance of the year
2011–12 and the business plans, I would like to
outline the global scenario which prevailed during
the year, with reference to countries where ONGC
Videsh operates:
Global Economic Environment:
Worldwide, 2011 has been another excellent year for
conventional exploration, with reserves additions
of almost 12 billion barrels (bbl) of oil and over 82
tcf of gas. In 2011, the demand for total petroleum
products in the Asia–Paci?c region grew by an
estimated 3.1%. Asia is expected to continue to
be the principal driver of global oil demand. The
demand has prompted increased investments in the
exploration and production (E&P) sector, however,
political risk is seen as posing a considerably greater
threat to international E&P business in the recent
past. This is especially true for emerging markets,
where generic political risks i.e. risks of political
violence, FDI protectionism, threats associated with
geopolitical tensions and governmental instability,
are main investment constraints.
Performance:
Your Company has completed another successful
year i.e., 2011–12 despite geo–political challenges.
The major performance highlights of the year are
as under:
• Your Company’s consolidated production of
Oil plus Oil–Equivalent Gas (O+OEG) was 8.753
MMT during FY’12 as compared to 9.448 MMT
during FY’11. The production during the year
was adversely a?ected due to geo–political
situation (force majeure) in Syria, Sudan and
South Sudan. Excluding Syria, Sudan and
South Sudan, production during FY’12 was
Corporate Governance:
Your Company believes that good corporate
governance goes beyond compliance of the
provisions of various laws and
therefore strives to inculcate the
practice of transparency in conduct of
all across its business practices. Your
Company has complied with the DPE
Guidelines on Corporate Governance
and a separate section on Corporate
Governance Report has been included
in its Annual Report.
Perspective Plan:
As a Company, ONGC Videsh and
its employees have always sought
to put their best and this approach
has helped to achieve milestones
year after year. As an attempt to
maintain ONGC’s relevance in India’s
hydrocarbon sector, ONGC as a group
has drawn a Perspective Plan 2030
to double its present production to
around 130 MMTOE/yr by FY 2030,
which would require production
growth @4–5% per annum to ONGC.
ONGC Videsh’s share of production
contribution is targeted to 20 MMTOE
by FY’ 2018 and 60 MMTOE by FY’
2030 i.e. 46% of group production.
The target has thrown a challenging
task to the Management. However, all
e?orts are being made to achieve the
above targets by ONGC Videsh Team.
Government Support:
To achieve energy security, the Govt. of India is
encouraging investment plan of your Company
and facilitates all possible diplomatic supports in
overseas acquisitions.
Acknowledgements:
On behalf of the Board of Directors, I would
like to acknowledge with deep appreciation the
valuable guidance and support extended by the
Government of India, especially the Ministry of
Petroleum & Natural Gas, Ministry of Finance,
Ministry of External A?airs, Indian Embassies / High
Commissions abroad and the Reserve Bank of India
almost at the same level as that of FY’11. If the
operations in these projects had been normal,
your Company’s crude oil production would
have been higher by 0.334 MMT during FY’12.
• Your Company’s share of proved reserves as on
1
st
April 2012 stood at 193.381 MMTOE (O+OEG),
which is the second largest holding of proved
oil and gas reserves by any Indian Company,
next only to parent ONGC.
• Your Company’s consolidated gross revenue
was up by 21%, from `186,711 million during FY’11
to `226,374 million during FY’12.
• Your Company’s consolidated net pro?t was
marginally up by 1.1%, from `26,905 million
for FY’11 to `27,212 million for FY’12 despite
two extraordinary items, ?rst, provisioning
of `19,534 million for impairment in Imperial
Energy, Russia and second, levy of Windfall tax
amounting to `8,087 million for San Cristobal
Project, Venezuela by the host Government.
• Your Company achieved an overall rating of
“Excellent” in actual performance as compared
to MOU parameters for the year 2010–11.
• Your Company’s consolidated net worth
increased to `199,411 million as on 31
st
March,
2012 as compared to `145,530 million as on
31
st
March, 2011.
• Your Company’s actual production during
XI Plan period was 44.649 MMTOE against
projected production of 43.568 MMTOE.
• Your Company has been conferred with the
prestigious “SCOPE Award for Excellence and
Outstanding Contribution to the Public Sector
Management Institutional III (other Pro?t
making PSE Category – Non Ratna) for 2009–10.
Conferment of Mini–Ratna Status:
Your Company was accorded with Mini–Ratna
Category–I status by MoP&NG during the year 2011–
12. With appointment of three new independent
Directors w.e.f. 5
th
June 2012, the powers granted
on the conferment of Mini–Ratna status have been
operationalised.
CHAIRMAN’S MESSAGE
4 5
Boards of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06
Consolidated Performance at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08
Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Management Discussion and Analysis Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Corporate Governance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Comments of C&AG on the Stand – alone Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Secretarial Compliance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Auditors’ Report – ONGC Videsh Stand–alone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Balance Sheet, Pro?t & Loss Account and Schedules including
Accounting Policies & Notes to the Accounts – ONGC Videsh Stand–alone . . . . . . . . . . . 86
Cash Flow Statement– ONGC Videsh Stand–alone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Statement Pursuant to Section 212 of the Companies Act, 1956 . . . . . . . . . . . . . . . . . . . . 132
Auditors’ Report – ONGC Videsh Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Balance Sheet, Pro?t & Loss Account and Schedules including
Accounting Policies & Notes to the Accounts – ONGC Videsh Consolidated . . . . . . . . . 140
Cash Flow Statement– ONGC Videsh Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
Details of the Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
CONTENTS
6 7
BOARD OF DIRECTORS
8 9
CONSOLIDATED PERFORMANCE AT A GLANCE
(` in Million, unless otherwise stated)
2010–11 2009–10 2008–09 2007–08 2006–07 2005–06 2004–05 2003–04 2002–03
PHYSICAL
Crude oil (Including condensate) – MMT 6.756 6.513 6.556 6.84 5.804 4.584 3.714 3.345 0.183
Gas (BCM) 2.692 2.357 2.220 1.962 2.148 1.755 1.349 0.523 0.070
FINANCIAL
Income fromOperations (Turnover) 186,832 153,828 184,235 168,657 117,947 80,780 59,848 34,788 2,319
Statutory Levies 56,947 49,387 68,857 60,374 51,446 39,070 27,781 16,289 761
Operating expenses 35,027 26,186 22,157 20,070 18,107 14,534 9,709 3,821 406
Pro?t before Interest Depreciation &
Tax (PBIDT)
94,858 78,254 93,221 88,213 48,394 27,176 22,358 14,678 1,152
Depreciation, Depletion & Amortisation 42,683 36,513 30,620 36,650 21,335 11,204 7,670 6,134 231
Operating Income (PBIT) 52,175 41,741 62,601 51,563 27,059 15,972 14,688 8,544 921
Exchange loss / (Gain) (815) –2,651 1,904 3,243 –2,527 –1,005 264 913 164
Interest Payment 3,531 4,370 7,289 7,373 318 40 13 64 30
Hedging Cost 42 (19) (154) 217 – – – – –
Pro?t Before Tax 49,418 40,041 53,562 40,730 29,268 16,937 14,411 7,567 727
Corporate Tax 22,048 18,889 25,032 16,759 12,635 8,234 6,797 3,283 137
Net Pro?t 27,369 21,152 28,530 23,971 16,633 8,703 7,614 4,284 590
Less: Share of Pro?t/loss – Minority
Interest
464 256 463 – – –309 – – –
GROUP PROFIT AFTER TAX (PAT) 26,905 20,896 28,067 23,971 16,633 9,012 7,614 4,284 590
Dividend – – – – – – 1,050 – –
Tax on Dividend – – – – – – 147 – –
Share Capital 10,000 10,000 10,000 10,000 10,000 3,000 3,000 3,000 3,000
Net Worth 145,530 116,449 115,156 63,059 43,736 21,977 12,227 8,720 5,022
Borrowings 205,907 206,983 206,790 113,738 132,347 159,242 116,610 87,581 70,534
Working Capital 52,938 30,676 33,339 29,592 29,438 74,399 42,371 23,364 11,372
Capital Employed 295,547 269,047 264,819 153,556 159,451 140,105 81,084 63,645 52,853
Internal Resources Generation 57,578 49,726 67,996 36,733 41,774 21,158 6,275 4,887 835
Plan Expenditure 56,502 49,919 161,049 45,293 71,519 63,306 43,101 23,422 49,683
Expenditure on Employees 2,209 1,992 1,573 628 666 602 346 322 71
Number of employees 233 231 196 190 110 90 85 63 51
FINANCIAL PERFORMANCE RATIOS
PBIDT to Turnover (%) 50.77 50.87 50.60 52.30 41.03 33.64 37.36 42.19 49.68
PBDT to Turnover (%) 49.30 49.77 45.69 45.88 42.90 34.84 36.89 39.38 41.31
Pro?t Margin (%) 14.40 13.58 15.23 14.21 14.10 11.16 12.72 12.31 25.44
ROCE (PBIDT to Capital employed) (%) 32.10 29.09 35.20 57.45 30.35 19.40 27.57 23.06 2.18
Net Pro?t to Equity (%) 18.49 17.94 24.37 38.01 38.03 41.01 62.27 49.13 11.75
BALANCE SHEET RATIOS
Current Ratio 2.01:1 1.68:1 1.69:1 2.23:1 2.56:1 7.27:1 5.30:1 3.63:1 2.99:1
Debt Equity Ratio 1.41:1 1.78:1 1.80:1 1.80:1 3.03:1 7.25:1 9.54:1 10.04:1 14.05:1
Debtors Turnover Ratio (Days) 78 70 49 33 35 18 46 13 268
PER SHARE DATA
Earnings per share (`) 269 209 281 240 224 300 254 143 20
Dividend(%) – – – – – – 35 – –
Book Value per share (`) 1,455 1,164 1,152 631 437 733 408 291 167
CONSOLIDATED PERFORMANCE AT A GLANCE
(` in Million, unless otherwise stated)
2011–12 2010–11
PHYSICAL
Crude oil (Including condensate) (MMT) 6.214 6.756
Gas (BCM) 2.539 2.692
FINANCIAL
Income formOperations (Net) 223,473 184,111
Other Non–operating Income 1,990 2,111
Total Revenue 225,463 186,223
Statutory Levies 65,672 56,947
Operating Expenses 63,223 34,948
Exchange Loss/(Gain) 1,474 (815)
Pro?t Before Interest, Depreciation & Tax (PBIDT) 95,094 95,143
Depreciation, Depletion, Amortisation and Impairment 41,870 42,683
Pro?t Before Interest & Tax (PBIT) 53,224 52,461
Financial Costs
Interest
Payments 2,970 3,531
Receipts 911 488
Net 2,058 3,043
Pro?t before Tax and Exceptional Items 51,166 49,418
Exceptional item
Pro?t before Tax 51,166 49,418
Corporate Tax 23,627 22,048
Pro?t after Tax 27,538 27,369
Pro?t relating to minority 327 464
Group Pro?t after Tax 27,212 26,905
Share Capital 10,000 10,000
Net Worth 199,411 145,530
Long–termBorrowings 195,161 204,554
Working Capital 45,614 49,047
Capital Employed 293,562 294,194
Internal Resources Generation 89,307 57,578
Plan Expenditure 79,995 56,502
Expenditure on Employees 2,187 2,209
Number of employees 246 233
FINANCIAL PERFORMANCE RATIOS
PBIDT to Turnover (%) 42.55 51.68
PBDT to Turnover (%) 41.63 50.02
Pro?t Margin (%)– including exceptional items 7.74 14.61
ROCE (PBIDT to Capital Employed) (%) 32.39 32.34
Net Pro?t to Equity (%)– including exceptional items 13.65 18.49
BALANCE SHEET RATIOS
Current Ratio 1.63 1.92
Debt Equity Ratio 0.98 1.41
Debtors Turnover Ratio (Days) 48 79
PER SHARE DATA (Face Value ` 100)
Earning Per Share (`) 272.12 269.05
Dividend (%) – –
Book Value Per Share (`) 1,994.11 1,455.30
In viewof the Noti?cation no. S.O 447(E) dated 28.02.2011, issued by Ministry of Corporate A?airs, the Balance Sheet of the Company
is mandatorily required to be prepared in Revised Schedule VI w.e.f 1st April 2011 onwards. Accordingly, the ?gures of FY 2011–12 and
FY 2010–11 are given as per the requirement of Revised Schedule VI and earlier years ?gures (including FY 2010–11 for ready reference)
are as per Old Schedule VI.
10 11
STATEMENT OF CONSOLIDATED INCOME & RETAINED EARNINGS
(` in Million)
2010–11 2009–10 2008–09 2007–08 2006–07 2005–06 2004–05 2003–04 2002–03
REVENUES
Sales
Crude oil 173,500 140,444 169,088 155,430 102,426 64,415 47,696 30,881 1,690
Gas 8,280 7,608 7,307 6,780 8,004 6,668 4,552 1,469 99
Condensate 2,233 1,706 2,109 2,081 1,841 1,466 833 97 –
Construction Contract Revenue – – – – – 2,174 5,430 – –
Transportation and other Services 434 2,048 2,938 3,122 3,269 3,199 – – –
Overlifted Quantity of Crude 581 – – – – – – – –
Less: VAT (916) –816 –800 –685 –1,063 –927 –410 –235 –9
Sub Total 184,111 150,989 180,642 166,728 114,477 76,995 58,101 32,212 1,780
Other Income
Interest Income 357 104 1,570 1,442 2273 3127 1418 814 366
Lease Income 253 317 377 352 435 271 – – –
Other Income 1,990 1,302 801 333 365 373 332 1720 165
Increase/(Decrease) in Stock 121 1,116 845 (198) 397 14 (3) 42 8
TOTAL INCOME FROM OPERATIONS 186,832 153,828 184,235 168,657 117,947 80,780 59,848 34,788 2,319
COST & EXPENSES
Operating, Selling & General
(a) Production, Transportation & Other
operating expenses
32,213 23,949 18,891 13,554 12,531 7256 5060 3824 404
(b) Royalties 55,156 48,693 66,640 60,350 51,130 39061 27781 16289 761
(c) Other Taxes 1,791 694 2,217 24 316 9 – – –
(d) Construction Contract Expenditure – – – – – 2699 4253 – –
(e) Provisions and write o?s 3,448 2,819 3,163 5,595 1,409 394 13 – –
(f) Adjustments for overlift / (underlift) (351) – – – – – – – –
(g) Prior Period adjustments (Net) (283) –582 103 921 4,167 4185 383 (3) 2
Sub Total (a to g) 91,974 75,574 91,014 80,444 69,553 53,604 37,490 20,110 1,167
Depletion, Depreciation & Amortisation
(a) Depletion 23,664 16,941 13,735 11,777 12,590 4615 2952 2424 140
(b) Depreciation 3,462 4,230 3,159 9,894 2,678 1170 883 919 41
(c) Amortisation 15,180 15,100 12,999 13,654 5,275 4272 3769 1119 –
(d) Others 376 244 727 1,325 792 1147 66 1672 50
Sub Total (a to d) 42,683 36,513 30,620 36,650 21,335 11,204 7,670 6,134 231
TOTAL COST AND EXPENSES 134,657 112,087 121,634 117,094 90,888 64,808 45,160 26,244 1,398
OPERATING INCOME BEFORE FINAN-
CIAL COST & TAX
52,175 41,741 62,601 51,563 27,059 15,972 14,688 8,544 921
Financial Costs
Exchange Loss / (Gain) (815) (2,651) 1904 3,243 (2,527) (1005) 264 913 164
Interest Payments 3,531 4,370 7289 7,373 318 40 13 64 30
Hedging Cost 42 (19) (154) 217 – – – – –
Sub Total 2,758 1,700 9,039 10,833 (2,209) (965) 277 977 194
PROFIT BEFORE TAX 49,418 40,041 53,562 40,730 29,268 16,937 14,411 7,567 727
Corporate Tax (Net) 22,048 18,889 25,032 16,759 12,635 8234 6797 3283 137
Net Pro?t 27,369 21,152 28,530 23,971 16,633 8,703 7,614 4,284 590
Less: Share of Pro?t/Loss – Minority
Interest
464 256 463 – – (309) – – –
GROUP PROFIT AFTER TAX 26,905 20,896 28,067 23,971 16,633 9,012 7,614 4,284 590
Dividend – – – – – – 1050 – –
Tax on Dividend – – – – – – 147 – –
Retained Earnings for the Year 26,905 20,896 28,067 23,971 16,633 9,012 6,417 4,284 590
STATEMENT OF CONSOLIDATED INCOME & RETAINED EARNINGS
(` in Million)
2011–12 2010–11
REVENUES
Sales
Crude Oil 211,687 174,081
Natural Gas 9,924 8,280
Condensate 3,189 2,233
Sub– Total 224,800 184,594
Traded Products
Other Operating Revenue 1,240 434
Total Revenue fromOperations (Gross) 226,041 185,027
Less: VAT 2,568 916
Total Revenue fromOperations (Net) 223,473 184,111
Other Non–operating Income 1,990 2,111
Total Revenues 225,463 186,223
COST & EXPENSES
Operating, Selling & General
Statutory Levies
(a) Royalties 57,571 55,156
(b) Other Taxes 8,101 1,791
Sub–total (a to b) 65,672 56,947
Accretion / (Decretion) in stock (632) (121)
Production, Transportation, Selling and Distribution Expenditure 35,866 32,213
Provisions and Write–o?s 27,929 3,448
Adjustments for overlift / (underlift) (414) (283)
Adjustments relating to Prior Period (Net) (73) (351)
Pro?t Before Depreciation, Interest &Tax 97,115 94,370
Depreciation, Depletion, Amortisation and Impairment 41,870 42,683
Total Cost & Expenses 170,218 134,535
Operating Income Before Interest &Tax 55,245 51,688
Financial Costs
Exchange Loss / (Gain) 1,474 (815)
Interest
Payments 2,970 3,531
Receipts 911 488
Hedging Cost 547 42
Net 4,079 2,270
Pro?t before Tax and Extraordinary Items 51,166 49,418
Exceptional item
Pro?t before Tax 51,166 49,418
Corporate Tax ( Net) 23,627 22,048
Pro?t after Tax 27,538 27,369
Pro?t relating to minority 327 464
Group Pro?t after Tax 27,212 26,905
Pro?t & Loss Account Balance b/f 122,532 102,077
Adjustments due to change in share holding /other adjustment – –
Transfer to Capital Redemption Reserve – –
Dividend – –
Tax on Dividend – –
Transfer to general Reserve 1,876 2,142
Transfer to Debenture Redemption Reserve 4,319 4,308
Retained Earnings for the Year 143,549 122,532
In viewof the Noti?cation no. S.O 447(E) dated 28.02.2011, issued by Ministry of Corporate A?airs, the Balance Sheet of the Company
is mandatorily required to be prepared in Revised Schedule VI w.e.f 1st April 2011 onwards. Accordingly, the ?gures of FY 2011–12 and
FY 2010–11 are given as per the requirement of Revised Schedule VI and earlier years ?gures (including FY 2010–11 for ready reference)
are as per Old Schedule VI.
12 13
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(` in Million)
2011–12 2010–11
RESOURCES
A. Own
1. Net Worth
(a) Equity
i) Share Capital 10,000 10,000
ii) Reserves & Surplus 189,411 135,530
Sub–Total 199,411 145,530
(b) Less Miscellaneous Expenditure
Net Worth 199,411 145,530
B. Long–termBorrowings 195,161 204,554
C. Deferred Tax Liability (Net) 4,983 8,353
D. Minority Interest 1,003 682
TOTAL RESOURCES ( A+B+C+D ) 400,558 359,119
DISPOSITION OF RESOURCES
A. Non–current assets
1. Fixed Assets( Net)
i) Tangible assets 35,590 42,304
ii) Producing Properties 144,236 136,140
iii) Intangible assets 126 37
Total Block Capital 179,953 178,480
2. Goodwill on consolidation 75,045 86,998
3. Long–termLoans and Advances (Excluding Capital Advance) 917 281
4. Deposit with Bank Under Site Restoration Fund Scheme 2,927 107
5. Other non–current Assets (Excluding DRE) 17,348 2,655
6. Subtotal = (1+2+3+4+5) 276,190 268,522
7. Less Non–current Liabilities
a. Other Long TermLiabilities 82 –
b. Liability for Abandonment Cost 27,609 22,861
c. Long TermProvisions 551 513
Sub total (7) 28,242 23,374
Net Non Current Asset (A)=(6)–(7) 247,948 245,147
B. Net Working Capital
1. Current Assets
i) Inventories 5,733 4,699
ii) Trade Receivables 29,615 40,044
iii) Cash & Cash equivalents 51,528 36,998
iv) Short–termLoans & Advances 8,227 4,485
v) Others Current Assets (Excluding DRE) 22,497 16,261
Sub–Total 117,600 102,486
Less
2. Current Liabilities
i) Short–termborrowings 623 331
ii) Trade payables 25,782 19,728
iii) Other current liabilities 45,392 33,365
iv) Short–termprovisions 189 16
Sub–Total 71,986 53,440
Net Working Capital 45,614 49,047
C. Capital Employed 293,562 294,194
3. Capital Works in Progress (Including Capital Advance) 76,256 40,018
4. Exploratory/Development Wells in Progress 30,740 24,907
TOTAL DISPOSITION (A+B) 400,558 359,119
In viewof the Noti?cation no. S.O 447(E) dated 28.02.2011, issued by Ministry of Corporate A?airs, the Balance Sheet of the Company
is mandatorily required to be prepared in Revised Schedule VI w.e.f 1st April 2011 onwards. Accordingly, the ?gures of FY 2011–12 and
FY 2010–11 are given as per the requirement of Revised Schedule VI and earlier years ?gures (including FY 2010–11 for ready reference)
are as per Old Schedule VI.
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(` in Million)
2010–11 2009–10 2008–09 2007–08 2006–07 2005–06 2004–05 2003–04 2002–03
RESOURCES
A. Own
1. Net Worth
(a) Equity
i) Share Capital 10,000 10,000 10,000 10,000 10,000 3,000 3,000 3,000 3,000
ii) Reserves and Surplus 135,530 106,449 105,156 53,059 33,736 18,977 9,227 5,720 2,096
Sub Total 145,530 116,449 115,156 63,059 43,736 21,977 12,227 8,720 5,096
(b) Less: Intangible Assets – – – – – – – – 74
Net Worth 145,530 116,449 115,156 63,059 43,736 21,977 12,227 8,720 5,022
2. Minority Interest 682 (220) (45) – – 6708 – – –
3. Long TermLiability– Deferred Tax
Liability (Net)
8,353 6,884 8,369 8,211 9,759 6,635 4,253 1,734 1,822
Total Own Funds (1+2+3) 154,564 123,113 123,480 71,270 53,495 35,320 16,480 10,454 6,844
B. Outside
Loans
Oil Industry Development Board – – – – – 61 157 253 349
Oil and Natural Gas Corporation Ltd 172,786 162,723 153,065 112,649 130,941 157,618 115,469 84,849 67,313
Non Resource Deferred Credit 777 934 1,225 1,089 1,406 1,519 984 – –
Bank Loans/Overdraft/Short Term
Loans/Debentures/ Other Liabilities
8,944 9,026 – – – 44 – 2,479 2,872
Commercial Paper/ Non Convertible
Redeemable Bonds
23,400 34,300 52,500 – – – – – –
Total Outside Resources 205,907 206,983 206,790 113,738 132,347 159,242 116,610 87,581 70,534
TOTAL RESOURCES (A+B) 360,471 330,096 330,270 185,008 185,842 194,562 133,090 98,035 77,378
DISPOSITION RESOURCES
A. Block Capital
1. Fixed Assets 42,332 47,657 40,331 45,144 50,774 17,247 12,013 12,716 14,323
2. Producing Properties (Net of
depletion)
136,140 108,843 91,401 60,840 56,056 36,806 15,947 15,904 15,497
Less: Liability for abandonment cost 22,861 10,584 11,361 4,867 4,503 2,519 – – –
Net Producing property 113,279 98,259 80,040 55,973 51,553 34,287 15,947 15,904 15,497
3. Goodwill 86,998 92,455 111,109 22,847 27,686 14,172 10,753 11,661 11,661
Total Block Capital (1+2+3) 242,609 238,371 231,480 123,964 130,013 65,706 38,713 40,281 41,481
B. Working Capital
(a) Current Assets
i) Inventories 4,699 6,201 5,941 3,200 3,649 2,163 1,175 885 882
ii) Debtors (Net of Provision) 40,061 29,384 24,701 15,222 11,203 3,944 7,566 1,211 1,701
iii) Cash and Bank Balances 37,106 16,598 15,997 21,564 12,125 2,563 7,083 8,267 3,627
iv) Loans and Advances and others 23,672 23,729 34,853 13,669 21,306 77,599 36,402 21,901 10,869
Sub Total 105,538 75,912 81,492 53,655 48,283 86,269 52,226 32,264 17,079
Less:
(b) Current Liabilities and Provisions 52,600 45,236 48,153 24,063 18,845 11,870 9,855 8,900 5,707
Working Capital (a – b) 52,938 30,676 33,339 29,592 29,438 74,399 42,371 23,364 11,372
C. Capital Employed (A+B) 295,547 269,047 264,819 153,556 159,451 140,105 81,084 63,645 52,853
D. Capital Works in Progress 40,018 36,421 33,780 12,503 14,149 43,746 45,476 30,770 23,910
E. Exploratory/Development Wells In
Progress
24,907 24,628 31,671 18,949 12,242 10,711 6,530 3,620 615
TOTAL DISPOSITION (C TO E) 360,471 330,096 330,270 185,008 185,842 194,562 133,090 98,035 77,378
14 15
OPERATIONAL & FINANCIAL
HIGHLIGHTS
16 17
DIRECTORS’ REPORT
On behalf of the Board of Directors of your Company,
I take great pleasure in presenting before you the
47
th
Annual Report on the working of the Company
for the ?nancial year ended 31
st
March, 2012,
together with the Audited Financial Statements,
the Auditors’ Report and the Comments on the
Accounts by the Comptroller and Auditor General
of India.
1. PERFORMANCE HIGHLIGHTS
Your Company has completed another successful
year despite geo–political challenges. Signi?cant
performance highlights for the year are as below:
• Your Company’s consolidated production
of Oil plus Oil–Equivalent Gas (O+OEG) was
8.753 MMTOE during FY’12 as compared to
9.448 MMTOE during FY’11. The production
during the year was adversely a?ected due to
geo–political situation (force majeure) in Syria,
Sudan and South Sudan. Excluding Syria, Sudan
and South Sudan, production during FY’12 was
almost at the same level as that of FY’11. If the
operations in the assets had been normal, your
Company’s crude oil production would have
been higher by 0.334 MMT during FY’12.
• Your Company’s share of proved reserves as on
1
st
April 2012 stood at 193.381 MMTOE (O+OEG),
which is the second largest holding of proved oil
and gas reserves by any Indian Company next
to ONGC.
• Your Company’s consolidated gross revenue
was up by 21%, from `186,711 million during FY’11
to `226,374 million during FY’12.
Dear Members,
• Your Company’s consolidated net pro?t was
marginally up by 1.1%, from `26,905 million
for FY’11 to `27,212 million for FY’12 despite
two extraordinary items, ?rst, provisioning
of `19,534 million for impairment in Imperial
Energy, Russia and second, levy of Windfall tax
amounting to `8,087 million for San Cristobal
Project, Venezuela by the host Government.
• Your Company achieved an overall rating of
“Excellent” in actual performance as compared
to MOU parameters for the year 2010–11.
• Your Company’s consolidated net worth
increased to `199,411 million as on 31
st
March,
2012 as compared to `145,530 million as on 31
st
March, 2011.
• Your Company’s actual production during
XI Plan period was 44.649 MMTOE against
projected production of 43.568 MMTOE.
• Your Company has been conferred with the
Mini–Ratna Category–I status by MoP&NG on
19
th
July, 2011.
• Your Company has been conferred with the
prestigious “SCOPE Award for Excellence and
Outstanding Contribution to the Public Sector
Management Institutional III (other Pro?t
making PSE Category – Non Ratna) for 2009–10.
2. FINANCIAL RESULTS
a) Consolidated Accounts:
The Consolidated Accounts incorporate accounts of
subsidiaries viz., ONGC Nile Ganga BV–Consolidated,
ONGC Narmada Limited, ONGC Amazon Alaknanda
Limited–Consolidated, JarpenoLimited–Consolidated,
Carabobo One AB–Consolidated and Jointly
Controlled Entity i.e., ONGC Mittal Energy Limited–
Consolidated and form part of the Annual Report
and Accounts.
Historic co–operation contract being signed by Petro Vietnam Chairman Mr. Phung Dinh Thuc and OVL CEO & MD Mr. D K Sarraf in the
presence of Vietnamese President Mr. Truong Tan Sang and the Indian Prime Minister Dr. Manmohan Singh
Mr. Sudhir Vasudeva, CMD ONGC & Mr. D.K. Sarraf CEO & MD ONGC Videsh receiving SCOPE Award for the year 2009-10
from the Hon’ble Prime Minister of India, Dr. Manmohan Singh
South Sudan rig
18 19
Highlights:–
(` in Million)
Particulars 2011–12 2010–11
Total Income 226,374 186,711
Expenditure 175,208 137,293
Pro?t Before Tax 51,166 49,418
Provision for Tax (including Deferred Tax) 23,627 22,048
Share of Pro?t – Minority Interest 327 464
Pro?t After Tax 27,212 26,905
Paid–up Equity Share Capital 10,000 10,000
Net Worth 199,411 145,530
Earnings Per Share of `100 each (`) 272.12 269.05
b) Stand–alone Accounts:
(` in Million)
Particulars 2011–12 2010–11
Total Income 80,133 57,832
Expenditure 49,978 32,126
Pro?t Before Tax 30,155 25,706
Provision for Tax (including Deferred Tax) 11,394 4,281
Pro?t After Tax 18,761 21,425
Transfer to General Reserve 1,876 2,142
Transfer to Debenture Redemption Reserve 4,319 4,308
Paid–up Equity Share Capital 10,000 10,000
Net Worth 100,881 80,659
Earnings Per Share of `100 each (`) 187.61 214.25
c) Dividend:
No dividend has been proposed for the FY’12 so as to conserve resources for further growth.
d) Market Borrowings:
(i) Debentures:
During the FY’10, the Company had raised funds from the ?nancial markets by issuance of non–convertible
redeemable bonds guaranteed by the parent company ONGC as follows:
Sl No. Particulars
Amount
(` in Million)
Date of issue
01 8.40% 5 Year UnsecuredNon–ConvertibleRedeemableBonds
in the nature of Debentures– Series I
19,700 23
rd
December 2009
02 8.54% 10 Year Unsecured Non– Convertible Redeemable
Bonds in the nature of Debentures– Series II
3,700 6
th
January 2010
The above mentioned debentures were rated “AAA/Stable” and “LAAA” by CRISIL and ICRA respectively
which represents highest degree of safety and lowest credit risk. The above securities have been listed in
the National Stock Exchange of India Ltd. (NSE).
Debenture Redemption Reserve amounting to `3,948.64 million and `370.80 million has been created during
the year in respect of above Debentures Series I and Debentures Series II respectively. The aggregated
balance of Debenture Redemption Reserve as on 31
st
March, 2012 stood at `8,954.54 million and `826.73
million in respect of Debentures Series I and Debentures Series II respectively.
ii) Currency Swap Transactions:
During the year, your Company has entered into cross currency swap transactions with various banks
whereby it has swapped the principal and interest amounts payable towards the aforesaid Bonds issued in
domestic markets into USD liability so as to align the currency of its assets and liabilities as follows:
Underlying
Notional Principal
Amount (`/Million)
Notional Principal
Amount (USD/
Million)
Termination Date
8.40% 5–Year Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures– Series I 15,000.00 299.23 23
rd
December, 2014
8.54% 10–Year Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures– Series II 3,700.00 56.30 6
th
January, 2020
TOTAL 18,700.00 355.53
On the occasion of signing of MOU between ONGC and ONGC Videsh Limited, Mr. Sudhir Vasudeva, CMD, ONGC & Mr. D.K. Sarraf, CEO &
MD, ONGC Videsh along with Mr. S.P. Garg, Director Finance, ONGC Videsh
20 21
a) The above swap positions were outstanding on 31
st
March 2012 and have been revalued on that date
based on Mark–to–Market positions reported by counter–party banks. Mark–to–market loss amounting
to `498.56 Million has been charged to foreign exchange gain/loss in pro?t and loss account.
b) During the year, the Company had also entered into foreign exchange forward transactions for hedging
its underlying exposures which were settled during the year itself. The net gain on settlement of such
transactions amounting to `222.45 Million has been credited to foreign exchange gain/loss in pro?t and
loss account.
3. RESERVES
Details of remaining proved Oil and Gas reserves held by your Company, including that of the subsidiaries,
are placed at Para No. 47 of Notes to Consolidated Financial Statements. In brief, your Company’s remaining
reserves under di?erent categories are as under:
As on 31st March, 2012 As on 31st March, 2011
1P Reserves (Proved)
Oil (including Condensate) (In MMT) 98.303 104.564
Gas (In BCM) 95.078 98.344
Total 1P Reserves (In MTOE) 193.381 202.908
2P Reserves (Proved + Probable)
Oil (including Condensate) (In MMT) 250.455 256.478
Gas (In BCM) 142.246 145.037
Total 2P Reserves (In MTOE) 392.701 401.515
3P Reserves (Proved + Probable + Possible)
Oil (including Condensate) (In MMT) 264.186 270.457
Gas (In BCM) 161.756 164.547
Total 3P Reserves (In MTOE) 425.942 435.004
4. EXISTING PROJECTS
4.1 PRODUCING ASSETS
4.1.1 Block 06.1, Vietnam:
Block 06.1 is an o?shore Block located 370 km south–east of Vung
Tau on the southern Vietnamese coast with an area of 955 sq.km. The
exploration License for Block 06.1 was acquired by your Company in
1988. After subsequent assignments and transfers of PI between the
parties to Block 06.1 and Petro Vietnam, the present holdings of PIs
with e?ect from 17
th
October 2011 are ONGC Videsh 45%, TNK Vietnam
B.V. 35% (Operator) and Petro Vietnam 20%. Lan Tay ?eld in the Block
has been developed and the ?eld started commercial production in
January, 2003. Your Company’s share of production from the project
was 2.023 BCM of gas and 0.036 MMT of condensate during 2011–12
as compared to 2.249 BCM of gas and 0.038 MMT of condensate
during 2010–11. Lan Do ?eld in the Block is under development with
?rst gas expected in October 2012. Wells Lan Do–2P and Lan Do–1P
have been drilled and completed between 14
th
January, 2012 to 18
th
April, 2012. Presently, subsea construction works are in progress
and ?rst gas from Lan Do ?eld is expected in October 2012. Your
Company’s share of the development expenditure in the block was
about USD 342.78 million till 31
st
March, 2012.
4.1.2 Sakhalin–I, Russia:
Sakhalin–1 is a large oil and gas ?eld in Far East o?shore in Russia, spread over an area of approx. 1,146
sq.km. Your Company acquired stake in the ?eld in July, 2001. Your Company holds 20% PI in the ?eld with
Exxon holding 30% PI as Operator; Sodeco, a consortium of Japanese companies holding 30% and balance
20% PI held by Rosneft, the Russian National Oil Company (NOC). Your Company’s investment in the ?eld is
within the maximum net cash sink for investment approved at USD 1,556 million (excluding carry ?nance).
The project includes three o?shore ?elds: Chayvo, Odoptu, and Arkutun Dagi. The ?rst phase of Sakhalin–1
of Chayvo ?eld has been developed. Production started in October, 2005. Odoptu ?rst stage production
started in September, 2010. Development of Arkutun Dagi is in progress and ?rst oil is expected to be
produced in third quarter of 2014. During 2011–12, your Company’s share of production from the project
was 1.498 MMT of oil and 0.494 BCM during 2011–12 as compared to 1.474 MMT of oil and 0.415 BCM of gas
during 2010–11.
4.1.3 Greater Nile Oil Project (GNOP), Republic of Sudan and Greater Pioneer Operating Company
(GPOC), Republic of South Sudan:
Your Company holds 25% PI in the GNOP through its wholly owned subsidiary ONGC Nile Ganga BV (ONGBV)
which was acquired on 12
th
March, 2003. Other partners in this project are CNPC (40% PI), Petronas of
Malaysian (30% PI) and Sudapet of Sudan (5% PI). GNOP consisted of the upstream assets of on–land Block
1, 2 & 4 spread over 49,500 sq.km in the Muglad Basin, located about 700 km South–West of the capital city
of Khartoum in Sudan.
GNOP has downstream facility of 1504–Km 28”crude oil pipeline from the oil ?eld in Heglig to Port Sudan at
Red Sea. As per “Settlement Agreement” between the Government of Sudan (GOS) and Foreign Partners
(FP’s) concluded in December 2010, 70% of the ownership in the Sudan Crude Oil Transportation System
(SCOTS) got transferred to the GOS e?ective from 1
st
October 2006. Your Company’s PI in downstream
pipeline is 11.25% e?ective from 1
st
October 2006 after transfer of 55% of its ownership in the downstream
pipeline as against 75.36% ceded by CNPC and Petronas. The pipeline continues to be managed by GNOP.
The project is jointly operated by all partners through a joint operating company Greater Nile Petroleum
Operating Company (GNPOC), registered in Mauritius.
Upon secession of South Sudan from Republic of Sudan (ROS) e?ective from 9th July 2011, while majority
production and reserves are situated in Republic of South Sudan (RSS), with a few ?elds straddled the
boundaries of ROS and RSS, the major processing facilities and crude oil transportation system along with
export terminal are situated in ROS. Post secession, the GOS share of total production is not su?cient to
meet its local re?nery requirements. Since August 2011, the GOS has been asking to lift/purchase Foreign
Oil wells at Snezhnoye oil ?eld
Installation at Khabarovsk, Sakhalin
22 23
Partners’ (FPs) share of crude oil for the local re?nery feedstock requirements. During October, 2011, the
FPs sold 0.8 million barrels of oil to GOS. Further in respect of the directive from GOS to take FPs share of
oil to re?neries, about 3.3 million barrels of FPs’ crude oil have been taken by GOS for the local re?neries
during the period January to June, 2012. However, payment has not been received fully from GOS for
purchase of FPs’ oil for local re?nery requirements. Your Company’s share of estimated dues from GOS as
on 30th June 2012 was about USD 112 million.
Consequent upon the separation of RSS, share of Sudapet stands transferred to Nilepet, the National Oil
Company of Republic of South Sudan as per the Decree issued by the President of RSS on 8th November,
2011. Partners of Block 1, 2 & 4 along with Nilepet executed a Transition Agreement with GOSS on 13th
January 2012 for the continuation of rights of petroleum exploration and exploitation for contract area of
Block 1, 2 & 4 in RSS.
RSS being a land locked country, is dependent on ROS’s pipeline system for evacuation of crude oil for
export through Port Sudan and continued to utilise the existing pipeline system till December, 2011. Post–
secession, both governments had been engaged in the process of negotiations on various issues. Pending
settlement of unresolved geopolitical and commercial issues between the two countries, GOSS enforced
shut down of all oil ?eld operations e?ective from 21st January 2012. The production from Blocks 1, 2 & 4 in
RSS has been shutdown as per decision from GOSS. However, GNPOC continued to produce 52,000 barrels
of oil per day till 31st March, 2012 from areas in ROS.
A new Joint Operating Company (JOC), Greater Pioneer Operating Company (GPOC) has been registered
in Mauritius for petroleum operations of Block 1, 2 & 4 in RSS. Your Company holds 25% equity share in
GPOC through its wholly owned subsidiary ONGC Nile Ganga B.V. and the project is jointly operated by all
partners
On 10th April, 2012, crude oil pumping from the Central Processing Facility (CPF) in Heglig to Marine
Terminal, Port Sudan had to be stopped due to bombing and shelling in the vicinity of the base camp area.
The CPF Heglig was subsequently reported to be in the occupation of RSS forces till 20th April 2012. Due
to the intrusion, there have been damages in the oil facilities in Heglig. The repair work has started and the
production restored partially from 1st May, 2012; average production during June, 2012 was about 44,000
barrels of oil per day.
Your Company’s share in oil production from GNPOC, ROS and RSS was 1.324 MMT during 2011–12 as
compared to 1.801 MMT during 2010–11. If the operations had been normal, your Company’s share of
production in the asset would be higher by 0.219 MMT during 2011–12.
4.1.4 San Cristobal Project, Venezuela:
Your Company signed an agreement with
Corporación Venezolana del Petróleo S.A.
(CVP), a subsidiary of PDVSA on 8
th
April,
2008 and acquired 40% PI in San Cristobal
Project, Venezuela. San Cristobal project
covers an area of 160.18 Sq. Km in the Zuata
Subdivision of proliferous Orinoco Heavy Oil
belt in Venezuela. The project is operated
jointly by your Company and the PDVSA.
The JV Company has been named “Petrolera
IndoVenezolana SA” (PIVSA). CVP, a subsidiary
of PDVSA holds 60% equity in JVC and Your
Company holds 40% equity through ONGC
Nile Ganga (San Cristobal) BV, a wholly owned
subsidiary of ONGC Nile Ganga B.V. Though
your Company received its dividend of USD 56.224 million for 2008, dividend for 2009 and 2010 amounting
to USD 72.34 million and USD 83.2 million respectively remained unpaid due to cash ?ow di?culties being
faced by PDVSA/CVP, which is being followed–up. In April 2011, new special contribution (windfall tax) on
extraordinary/exorbitant prices had been imposed in Venezuela at sliding scales from 20% to 95% depending
upon Venezuelan oil basket prices, Your Company’s share of windfall tax levied by the host Government
during the year was USD 168.89 million, having downward impact on pro?t of your Company .
During 2011–12, your Company’s share of oil production was 0.894 MMT as compared to 0.757 MMT during
2010–11 and current production is approx. 40000 bopd. Your Company’s share of investment was about
USD 191 million till 31
st
March, 2012 in the project.
4.1.5 Imperial Energy, Russia :
Your Company acquired Imperial Energy Corporation Plc., an independent upstream oil Exploration and
Production Company having its main activities in the Tomsk region of Western Siberia, Russia on 13
th
January,
2009 at a total cost of USD 2.1 billion. Imperial’s interests currently comprise of nine blocks in the Tomsk
region i.e. Block 69, 70–1, 70–2, 70–3, 77, 80, 85–1, 85–2 and 86 with a total licensed area of approximately
13,500 square kilometres with 14 licenses. The Production licenses were granted to the Company during
2005 to 2010 and are valid till 2027 to 2031. As on 1
st
April, 2012, ONGC Videsh Ltd.’s share of 2P reserves in
the project was 110.122 MTOE (O+OEG).
The post acquisition development activities of Imperial Energy included drilling of 72 development wells
and construction of facilities increasing the production level to above 15,000 bopd in April 2012. On the
exploratory front, a total of 28 exploratory/ appraisal wells have been drilled from 2009 to April 2012.
Oil Tank Farm at Snezhnoye oil ?eld of Imperial Energy
Visit of Indian delegation at MECL installations in December 2011
Discussion on Transition Aggrement between Mr. S.P. Garg, Director (Finance) and the Hon’ble Mr. Pagan Amum, Secretary General,
SPLM, Republic of South Sudan
24 25
Further 270 sq. km of 3D seismic data and 2536 Lkm of 2D seismic data were acquired, processed and
interpreted. The processing & interpretation of 2D and 3D seismic data acquired during 2011 and 2012 are
currently in progress. The exploration e?orts have shown positive results. Based on the exploration /
development e?orts put forward so far, Imperial Energy has primarily focussed on exploiting from Upper
Jurassic formation with relative good reservoir characteristics. Concurrently, Imperial is consolidating all
the data generated so far to develop its strategy for exploitation of oil from its tight sand reservoirs as
next course of action, for which the job of scouting and identi?cation of a suitable technologies is in hand.
A provision for impairment of `1,953 Crore has been made for this project as the asset is performing lower
as compared to the estimates and the ‘value in use’ computed for the asset as on 31
st
March, 2012 was
lower than its carrying value. During the year 2011–12, production of Imperial Energy was 0.771 MMT of oil
as compared to 0.770 MMT during 2010–11.
4.1.6 Mansarovar Energy Project, Colombia:
Mansarovar Energy Colombia Limited (MECL), Colombia is a 50:50 joint venture of your Company and Sinopec
of China. E?ective 1
st
April, 2006, MECL’s assets constitute a 100% interest in Velasquez fee mineral property
and a 50% interest in the Nare Association contracts where the Colombian national oil company, Ecopetrol
holds the remaining 50%. MECL also owns 100% of the 189–km Velasquez–Galan pipeline, connecting the
Velasquez property to Ecopetrol’s Barrancabermeja re?nery. Your Company’s share of oil production from
MECL was 0.561 MMT during 2011–12 as compared to 0.468 MMT during 2010–11.
4.1.7 Al Furat Project, Syria:
The project is owned by Himalaya Energy Syria B.V. (HESBV), a Joint Venture Company of ONGC Nile
Ganga B. V., a wholly owned subsidiary of your Company and Fulin Investments Sarl, a subsidiary of China
National Petroleum Company International (CNPCI), holding 50% shares each. The ?elds are operated by
Al Furat Petroleum Company (AFPC), jointly owned by Syrian Petroleum Company (50%), the National Oil
Company of Syria, Shell Syria Petroleum Development Co. (31.25%) and HESBV (18.75%). Due to geo–political
development in gulf countries, European Union (EU) imposed oil trade sanctions on Syria in September,
2011. The EU sanctions were speci?cally targeted at crude oil exports making vessel availability, associated
insurance and payment extremely di?cult. EU further imposed enhanced sanctions on 1
st
December, 2011
and included AFPC and GPC in the list of sanctioned Syrian entities. Shell has issued a letter informing
AFPC and Syrian authorities that the present situation is preventing the contractor from discharging their
obligation under PSC Contract due to EU sanctions and was like a Force Majeure situation for foreign
partners. Shell has withdrawn all its expatriates’ from ?eld operations and Damascus o?ce work. The
national employees were running the AFPC operations at ?elds and no details are being shared with the
partners. In the absence of details, the accounting of revenue and expenditure has not been carried
out from December, 2011 till March, 2012. Your Company’s share in the oil and OEG production was 0.503
MMTOE during 2011–12 as compared to 0.662 MMT during 2010–11. If the operations had been normal, your
Company’s share of production in the asset would be higher by 0.069 MMT during 2011–12.
4.1.8 Block BC–10, Brazil:
Block BC–10 is a deepwater o?shore Block located in the Campos Basin approximately 120 km southwest
from the city of Vitoria o? the coast of Brazil with a water depth of around 1800 meters spread over 600
sq.km. Your Company holds 15% PI in the project. Other partners in the Block are Shell with 50% PI as
operator and Petrobras with 35% PI. Phase–1 development of the Block was completed using sub–sea
wells which connect via sub–sea manifolds, ?owlines, and risers to a Floating Production, Storage and
O?oading Vessel (FPSO). Drilling of 11 wells (10 producers and 1 gas injector) is operational; oil production
commenced on 12
th
July 2009. The Phase II development would involve drilling of seven producer wells
and four water injector wells. The Batch drilling of wells has started in April 2012. The Subsea & Pipeline
installation work is scheduled in October 2012 and ?rst Oil is expected in October 2013. Your Company’s
share of oil and gas production was 0.450 MMT and 0.015 BCM respectively during 2011–12 as compared to
oil production of 0.573 MMT and gas production of 0.013 BCM during 2010–11.
4.1.9 Block 5A, South Sudan:
Block 5A is located in the Muglad basin and spread over an area of about 20,917 sq.km. Your Company
acquired stake in the Block from OMV of Austria on 12
th
May, 2004 and holds 24.125% PI along with Petronas
of Malaysia (67.875% PI) and Sudapet (8% PI). The Block was operated by White Nile Petroleum Operating
Company (WNPOC), a consortium of Petronas and Sudapet. Since 9
th
July 2011, on cessation of South Sudan
from Republic of Sudan (ROS), the entire block area is located in the territory of the Republic of South
Sudan (ROSS). Subsequently, the PI of Sudapet has been transferred to Nilepet, the National Oil Company
of ROSS as per the Presidential Decree issued on 8
th
November, 2011. The Company along with Petronas
and Nilepet has signed a Transition Agreement on 13
th
January 2012 with the Government of RSS for the
continuation of its right for petroleum exploration and exploitation in Block 5A. The partners of Block 5A,
including your Company, have incorporated a new operating company SUDD Petroleum Operating Co. Ltd.
(SPOC) registered in Mauritius on 7
th
March 2012. The block will now be jointly operated by all partners. Your
Company’s share of oil production from the project was 0.174 MMT during 2011–12 as compared to 0.226
MMT during 2010–11. If the operations had been normal, your Company’s share of production in the asset
would be higher by 0.046 MMT during 2011–12.
KAR– 1 rig at Syria
Sudan Onshore Rig
26 27
4.1.10 Pipeline Project, Sudan:
Your Company (90% PI) along with Oil India Limited (10% PI) had ?nanced & constructed a 12”, 741 km multi–
product pipeline from Khartoum re?nery to Port Sudan at a base lump sum price of USD 194 million. The
pipeline was handed over to Government of Sudan (GOS) in October, 2005. The lease amount is payable to
the Company in 18 equal half yearly installments e?ective from December 2005. Payment of eleven half–
yearly installments due till December, 2010 has been received by your Company from the GOS. However, the
12
th
, 13
th
and 14
th
installments due on 30
th
June 2011, 30
th
December 2011 and 30
th
June, 2012 respectively are
yet to be released by the GOS. Your Company has been following up for the realization of the amount from
GOS at various levels. Dodsal, the EPC contractor has invoked arbitration against your Company staking
claim of USD 28.70 million plus interest and cost towards alleged additional work carried out in the project.
The arbitral proceedings in the matter between your Company and Dodsal are under adjudication.
4.2 DISCOVERED / DEVELOPMENT ASSETS:
4.2.1 Carabobo–1 Project
Your Company along Indian Oil Corporation Limited (IOCL), Oil India Limited (OIL), Repsol YPF (Repsol) and
Petroliam Nasional Berhad (PETRONAS) (collectively, the “Consortium”), was awarded by the Government of
the Bolivarian Republic of Venezuela 40% ownership interest in an “Empresa Mixta” (or “Mixed Company”)
which will develop the Carabobo 1 North (203 sq.km) and Carabobo 1 Central (180 sq.km) blocks located in
the Orinoco Heavy Oil Belt in eastern Venezuela. Your Company holds 11% PI in Carabobo–I project through
its subsidiary Carabobo One AB. Repsol and Petronas holds 11% PI each and IOCL and OIL holds 3.5% PI each
in the project. The Corporación Venezolana del Petróleo (“CVP”), a subsidiary of Petróleos de Venezuela S.A.
(“PDVSA”), Venezuela’s state oil company, holds the remaining 60% equity interest. The Mixed Company was
incorporated as Petro Carabobo S.A. (PCB). The project has estimated Oil in Place of about 27 Billion barrels.
The Mixed Company would build heavy (8°–9° API) oil production facilities, upgrading (32° API) facilities
and associated infrastructure for producing extra–heavy crude oil. The upstream production facilities are
expected to produce about 400,000 barrels per day of which approximately 200,000 barrels per day will
be upgraded into light crude oil in a facility to be located in the Soledad area, Anzoátegui State. The license
term is for 25 years with the potential for a further 15 year extension i.e., for a total of 40 years. One Service
Company Carabobo Ingenieria Y Construcciones S.A (CICSA) for executing the Jobs under Development plan
has been incorporated on 21
st
January 2011. Four Stratigraphic wells and six slant wells drilled for collection of
samples and study of petrophysical properties for drilling development wells for accelerated production of
?rst oil in 2013. Presently, basic engineering & FEED for upgrader and downstream facilities and 3D–Seismic
study, civil works for well pads have been awarded and other tendering Processes/approval from PCB &
awarding of drilling contract for Development of the Field are in progress.
4.2.2 Block XXIV, Syria:
The Contract for Exploration, Development and Production of Petroleum for the Block XXIV, Syria was
signed on 15
th
January, 2004 with e?ective date from 29
th
May, 2004. Your Company holds 60% PI in the Block
with IPR Mediterranean Exploration Ltd. (Operator) and Tri Ocean Mediterranean holding PI of 25% and 15%
respectively.
The exploration phase for the block has expired on 28
th
September, 2011. The consortium over achieved
the physical Work Commitment by drilling a total of 14 wells in the Block in this phase. During the FY’12,
the consortium drilled 7 exploratory wells, out of which 3 wells ?owed oil/gas and 1 well showed presence
of hydrocarbon. Extended production testing of three exploratory wells in Abu Khashab area was carried
out to acquire reservoir data and also to know its production potential. 1 development well was also drilled
during the current FY’12. Based on the exploration results, the Government of Syria granted development
rights for additional areas of three formations in Abu Khashab area. Presently, Plan of Development (PoD)
of Abu Khashab area is being prepared by the Operator. Further, the consortium’s request for granting of
development right for Romman Area is under active considerations of the Syrian Authorities. Meanwhile,
the Operator has invoked ‘Force Majeure’ in the Block w.e.f. 30
th
April, 2012 citing e?ects of US sanctions
and deteriorating law and order situation in the operational areas. Rashid Field has been under extended
production testing with an average rate of production of 180 BOPD. However, due to worsening law and
order situation in and around Rashid ?eld, the facilities have been shut down w.e.f. 13
th
June, 2012. Your
Company’s share of oil production from the project was 0.010 MMT for 2011–12 compared to 0.002 MMT for
the year 2010–11. The Company has invested about USD 70.17 Million till 31
st
March, 2012, on cash sink basis,
in the block.
AK – 3 L Dib Test, Syria
28 29
Onshore Gas Transportation Pipeline
Your Company has participation in the Onshore Gas Pipeline Transportation project through a joint venture
company South–East Asia Gas Pipeline Company Limited (SEAGP) registered in Hong Kong on 25
th
June 2010, in
which the stake of your Company is 8.347%. The shareholding of other partners is CNPC, China– 50.9%, Daewoo–
25.041%, MOGE, Myanmar 7.365%, GAIL and KOGAS 4.1735% each. The joint company will lay an on–land pipeline
of 793 km X 40” from land fall point at Ramree Island to Ruilli at Myanmar–China border. To achieve the ?rst gas
from Shwe Gas Development Project in mid–2013, the onshore pipeline project is scheduled to be completed by
March 2013. Out of the 5 EPC sections, 2 EPC sections are nearing completion and work on other 3 EPC sections is
progressing. Out of the 6 HDD projects, 3 have been completed and work on other 3 HDD projects is progressing.
Your Company’s share of investment in the project till 31
st
March, 2012 was about USD 43.07 million.
Your Company’s share in the Combined Development of Blocks A–1 and A–3 including O?shore Mid–stream
project and Onshore Gas Transportation pipeline is estimated at about USD 880.61 million.
4.3 EXPLORATORY ASSETS:
4.3.1 Blocks 34 and 35, Cuba:
Blocks 34 and 35 are deep water o?shore exploration Blocks located in Cuba’s Exclusive Economic Zone
(EEZ) for which the PSC was signed on 10
th
September, 2006. Your Company holds 100% PI in the Blocks as
the Operator. Acquisition, processing and interpretation of 2D and 3D seismic data have been completed.
The block area has increased from 4300 to 4800 sq.km after annexation of additional 500 sq.km of area.
The exploration period would expire on 12
th
September 2012.
Your Company is watching the post–drilling results/analysis in the neighbouring blocks to ?rm up its future
plans for the blocks. The Company has invested about USD 46.50 million in the blocks till 31
st
March, 2012.
4.3.2 Blocks 25, 26, 27, 28, 29 and 36, Cuba:
Blocks 25, 26, 27, 28, 29 and 36 are deep water o?shore exploration Blocks located in Cuba’s Exclusive
Economic Zone (EEZ) for which the agreement for acquisition of 30% PI in the Blocks from Repsol–YPF of
Spain was signed on 23
rd
May, 2006. The other partners in the Blocks are Repsol–YPF with 40% PI as operator
and Statoil with 30% PI. The Consortium entered into extended exploration sub period–IV with commitment
of drilling of two exploration wells after relinquishing 5,962 sq.km area of the Blocks. The consortium
now holds 5,269 sq.km of area. The drilling of ?rst of the two commitment wells has been completed on
11
th
May, 2012 without any oil and gas ?nd and the well was declared dry. The Company’s share of cost of
drilling the ?rst exploratory well till 31
st
March 2012 was about USD 31.91 million. Data collected from the
well is under analysis to decide the future course of action. Your Company’s share of investment in these
blocks was about USD 49.58 million till 31
st
March, 2012.
4.2.3 Farzad B Offshore Exploration Block, Iran:
Farzad B is an o?shore exploration Block spread over 3,500 sq.km in Persian Gulf Iran with a water depth of
20–90 meters. The contract for the Block was signed on 25
th
December, 2002. Your Company holds 40% PI as
operator, with the remaining PI held by Indian Oil Corporation Limited (40%) and Oil India Limited (20%). Pursuant
to the discovery of gas made by the Consortium led by your Company, it had submitted a commerciality report
to National Iranian Oil Company (NIOC), Iran on 23
rd
December, 2007. NIOC approved the Commerciality of
the Farzad B area on 18
th
August 2008. The Master Development Plan (MDP) for the Farzad B Gas Field was
submitted to Iranians during April, 2009. Development Service Contract for the ?eld remains under discussion.
Your Company’s share of investment in the Block till 31
st
March, 2012 was about USD 36.32 million.
4.2.4 Blocks A–1 and A–3, Myanmar:
Your Company holds 17% PI in Blocks A1 and A3 and remaining stakes are held by Daewoo (51%), GAIL and
KOGAS (8.5% each) and MOGE (15%).
Block A–1 extends over an area of 2,129 sq.km of Rakhine Coast in Arakan o?shore in north–western
Myanmar. Commercial quantity of natural gas has been discovered in the Block in two ?elds, Shwe and
Shwe Phyu. The Shwe and Shwe Phyu ?eld appraisals have been completed by the consortium and the Gas
Initially In–Place reserves certi?ed by an independent ?rm for the Shwe and Shwe Phyu gas ?elds are 3.83
TCF. Out of 16 wells drilled so far in the block, 9 have been found gas bearing.
Block A–3, the adjacent block of Block A–1, covers presently an area of 3,441 sq.km with bathymetry up
to 1,500 meters in the Rakhine o?shore. So far six exploratory wells were drilled in this Block out of which
three are gas bearing. Commercial quantity of natural gas has been discovered from Mya Gas Field. The
Gas initially in–place reserves certi?ed by an independent ?rm for the Mya Gas ?eld are 1.52 TCF.
A combined Field Development Plan for Blocks A–1 and A–3 comprising of Shwe, Shwe Phyu and Mya gas
?elds approved by Consortium Partners is expected to be commissioned by May 2013. Your Company’s
share of investment till 31
st
March, 2012 was about USD 166.94 million and USD 105.61 million for Block A–1
and A–3 respectively.
Shwe Offshore Mid–Stream Project:
The mid–stream project which is a part of the combined development of A–1 and A–3 blocks, is in progress
through an EPCIC contract and includes construction of o?shore pipeline of 110 km X 32” from Shwe
O?shore Platform to land fall point at Ramree Island, onshore gas terminal, supply base and jetty. The
construction of 32” o?shore pipeline and supply base and jetty has been completed. The Project is scheduled
to be completed by March 2013. Your Company’s share of investment was about USD 39.33 million till
31
st
March, 2012.
Aerial Viewof MTB Moriche facility
30 31
4.3.3 Blocks SSJN–7 & CPO–5, Colombia:
Your Company participated in the Bidding Round 2008 in Colombia and was awarded two onland Blocks i.e.
SSJN–7 with 50% PI and CPO–5 with 100% PI. Later in the year 2010, 30% PI in CPO–5 Block was divested to
Petrodorado. Block CPO–5 is operated by your Company with 70% PI and the Block SSJN–7 is operated by
Paci?c Stratus Energy, Colombia with 50% PI. The concession contracts for the Blocks SSJN–7 and CPO–5
were signed on 24
th
December, 2008 and 26
th
December, 2008 respectively. Two exploratory locations
have been released for drilling in Block CPO 5 under Phase–1. In Block SSJN–7, acquisition & processing
of 2D seismic data in part of the identi?ed area has been concluded. The Phase–I of exploration of these
blocks expired in June, 2012. Due to delay in grant of environment permits and approvals from concerned
authorities, Operator of SSJN–7 and ONGC Videsh in case of block CPO–5 have sought extension to the
running exploration period. Your Company’s share of investment was about USD 5.81 million for Block
SSJN–7 and about USD 18.39 million for the Block CPO–5 till 31
st
March, 2012.
4.3.4 Blocks RC–8, RC–9 and RC–10, Colombia:
Your Company acquired exploration blocks RC–8, RC–9 and RC–10 in o?shore Colombia, e?ective date of
concession contracts being 30
th
November, 2007. Currently Blocks are running in Phase–II, expiring on
29
th
November, 2013. The current area of the blocks RC–8, RC–9 and RC–10 after entering into phase–II are
1,385 sq.km, 1,060 sq.km and 1,340 sq.km respectively with water depths of 70 to 1,500 meters in o?shore
Colombia. In Block RC–8, your Company as Operator holds 40% PI with Ecopetrol and Petrobras holding 40%
PI and 20% PI respectively. In Blocks RC–9 and RC–10, your Company and Ecopetrol hold 50% PI each. Your
Company is Operator in RC–10 Block while Ecopetrol is Operator in RC–9 Block. All the three Blocks have
completed three years of exploration Phase–I on 29
th
November, 2010, successfully completing minimum
committed work of the Blocks. Your Company’s share of investment was about USD 2.3 million in Block
RC–8, USD 5.43 million in Block RC–9 and about USD 3.47 million in Block RC–10 till 31
st
March, 2012.
4.3.5 Satpayev E&P Project, Kazakhstan:
Your Company signed agreements with KazMunaiGas (KMG), the National Oil Company of Kazakhstan for
acquisition of 25% participating interest in Satpayev exploration block on 16
th
April, 2011 at Astana, Kazakhstan
in the presence of Hon’ble Prime Minister of India and the President of Kazakhstan. This transaction marks
the entry of your Company in hydrocarbon rich Kazakhstan. Satpayev exploration block, located in the
Kazakhstan sector of the Caspian Sea, covers an area of 1482 sq.km at a water depth of 6–8 mts. Satpayev Block
is situated in close proximity to major discoveries in the North Caspian Sea. Your Company carries KMG for its
75% share and therefore bear the 100% expenditure during the exploration and appraisal phase of the Project.
Acquisition, Processing and Interpretation of 1200 LKM of 2D Seismic data have already been completed and
location for drilling has been identi?ed. Your Company’s share of investment in the project was about USD
113.93 million which includes carry ?nance amount of about USD 11.16 million till 31
st
March, 2012.
4.3.6 Block BM–S–73, Brazil:
Your Company through its indirect wholly owned subsidiary ONGC Campos Ltda (OCL) holds 43.5% PI and is
the Operator in o?shore Block BM–S–73, Brazil. Petrobras and Ecopetrol are the other partners in the block
having 43.5% and 13% PI respectively. The block spreads over an area of 160 sq.km with water depths of around
200 meters. 3D Seismic data acquisition, processing, G&G study and drilling of one committed well have been
completed for the ful?lment of MWP of 1
st
Exploration phase. As the exploratory well has been declared dry,
the block has been surrendered in February 2012. Your Company’s share of investment was about USD 89
million till 31
st
March 2012. There is dispute with the partners against the rig hire charges for stand–by period
and penalties imposed by Agencia Nacional de Petroleo (ANP), the Brazilian regulatory authority, for about
USD 82 million, which is under discussion with partners. Further, there is potential liability of about USD 27.5
million on account of non–ful?llment of Local Content (LC), for which waiver from ANP has been sought.
4.3.7 Block BM–ES–42, Brazil:
Your Company through its indirect wholly owned subsidiary OCL, holds 100% PI in the deep water o?shore
Block BM–ES–42 in Brazil. The block spreads over an area of 725 sq.km with water depths of around 1,500
meters. Seismic data acquisition, processing and G&G studies of PSTM & PSDM data have been completed.
As your Company could not farm out up to 50% PI to mitigate exploration risk in the block as per Board’s
decision, the block has been surrendered at the end of 1
st
exploration phase i.e., 11
th
March, 2012. The
Company has invested about USD 47 million till 31
st
March 2012.
4.3.8 Blocks BM–SEAL–4 & BM–BAR–1, Brazil:
Your Company through its indirect wholly owned subsidiary OCL, acquired PI in exploration blocks BM–SEAL–4
and BM–BAR–1 in Brazil in August 2008. Your Company holds 25% PI in each of these blocks with Petrobras
(operator) holding remaining 75%. Drilling of an exploratory well is currently in progress in block BM–SEAL–4.
In Block BM–BAR–1, two exploratory wells have been drilled without success for which your Company has
conveyed its decision to relinquish its share in the venture. Your Company’s share of investment till 31
st
March,
2012 was about USD 7 million for Block BM–SEAL–4 and about USD 98 million for Block BM–BAR–1.
4.3.9 Block BM–S–74, Brazil:
Your Company through its indirect wholly owned subsidiary OCL, holds 43.5% PI in Brazil o?shore Block
BM–S–74 covering an area of 165.4 sq.km. Other partners in the block are Petrobras (operator) and
Ecopetrol with 43.5% and 13% PI respectively. Seismic data acquisition, processing and G&G studies and
drilling of 1 commitment well have been completed. The well has been declared dry and hence abandoned.
The consortium has decided to relinquish the block. Your Company’s share of investment in the block till
31
st
March, 2012 was about USD 15 million.
Minister of State for Petroleum and Natural Gas, India Mr. RPN Singh & Mr. Sauat Mynbayev Minister of Oil & Gas of Kazakhstan signing
the agreement
Apex Management on the occasion of Signing of MOU between ONGC & CNPC to jointly explore oil and gas worldwide
32 33
4.3.10 Block OPL 279, Nigeria:
OPL 279 is a deepwater o?shore exploration Block in Nigeria with an area of 1,125 sq.km. The e?ective
date of the PSC was 23
rd
February, 2007. Your Company’s Joint Venture Company ONGC Mittal Energy
Limited (OMEL) through its wholly owned subsidiary company OMEL Exploration & Production Nigeria
Ltd. (operator) held 45.5% PI in the Block. Other partners in the Block are EMO, a local Nigerian company
with 40% PI and TOTAL with 14.5% PI. The Phase I of exploration expired on 22
nd
February 2012. All MWP
commitments under exploration phase I in the Block have been ful?lled including acquisition of 534 sq.km
of 3D seismic data and drilling of well Kuyere–1 in Jan–Feb., 2010 with discovery of hydrocarbons in three
pay zones. Based on the post–drill analysis of G&G data, some prospects were identi?ed in deeper stratigraphic
levels of this block. However the identi?ed prospects do not o?er a standalone discovery case for any viable
commercial development. A notice of relinquishment was accordingly issued to NNPC on 21
st
November
2011. OMEL’s share of investment, including the carry obligations to EMO, till 31
st
March, 2012 was about
USD 156 million.
4.3.11 Block OPL 285, Nigeria:
OPL 285 is a deepwater o?shore exploration Block in Nigeria with an area of 1,167 sq.km. The e?ective date of
the PSC was 23
rd
February, 2007. Currently, OMEL through its wholly owned subsidiary company OMEL Energy
Nigeria Ltd., as operator, holds 64.33% PI in the Block. Other partners in the Block are EMO, a local Nigerian
company with 10% PI and TOTAL with 25.67% PI. As per terms of the agreement, EMO is carried by other
participants in their respective share of participation. The committed MWP of the block for the ?rst phase of
exploration has been completed with acquisition of 524 sq.km of 3D data and drilling of one well, Opueyi–1
in August–September, 2010. Two sub–commercial hydrocarbon zones are encountered in the well. Based on
post drilling analysis, review of G&G data and the commitment to the downstream project attached to the
PSC, the operator, decided to enter the second phase of exploration period if the regulator NNPC grants
the waiver from the downstream project commitment. A request letter was sent to NNPC in this regard on
24
th
November, 2011. No response has been received from NNPC on waiver request so far. OMEL’s share of
investment, including the carry obligations to EMO, till 31
st
March, 2012 was about USD 79 million.
4.3.12 Contract Area 43, Libya:
Your Company acquired Contract Area 43 located in Cyrenaica o?shore basin in the Mediterranean Sea
under an Exploration and Production Sharing Agreement (EPSA) e?ective from 17
th
April, 2007. Contract
Area 43 consists of four blocks spread over an area of 7,449 Sq. Km. The block boundaries extend from
the coastline to a water depth of about 2200 meters. Your Company holds 100% PI in Contract Area 43 with
operatorship. The acquisition and processing of 1011 LKM 2D and 4000 Sq. Km. 3D seismic data have been
completed. Finalization of interpretation report of Geo scienti?c data is in progress at G&G centre of your
Company in New Delhi. Due to civil unrest in Libya, notice for Force Majeure was served to NOC, Libya
w.e.f. 26
th
February 2011 and the operations at Libya were suspended. However after improvement of civil
unrest and safety situation at Libya, the Force Majeure notice has been revoked and the operations have
been resumed w.e.f. 1
st
June, 2012. Your Company has invested about USD 39.22 million in Contract Area 43
till 31
st
March, 2012.
4.3.13 Exploration Block–8, Iraq:
Your Company is the sole licensee of Block–8, a large on–land exploration Block in Western Desert, Iraq
spread over 10500 sq.km. The Exploration & Development Contract (EDC) for the Block was signed on
28
th
November, 2000. The contract was rati?ed by the Government of Iraq on 22
nd
April, 2001 and was
e?ective from 15
th
May 2001. Since then, the work relating to archival, reprocessing and interpretation of
the existing seismic data has been completed. However, your Company had to notify the force majeure
situation to the Ministry of Oil, Iraq in April, 2003 due to prevailing conditions in Iraq. In 2008, your Company
was informed that Government of Iraq had decided to re–negotiate the Block–8 contract in line with the
provisions of the new oil and gas law which was expected to be promulgated soon. Re–negotiation is yet
to commence. Your company is following up the matter with Iraq authorities. The Company has invested
about USD 2 Million till 31
st
March, 2012.
4.3.14 Block 128, Vietnam:
Block 128 is an o?shore deepwater Block, located at water depth of more than 400 metres with 7,058 sq.km
area in Vietnam. The PSC for the Block was signed on 24
th
May, 2006 and the extension to the exploration
Phase–I for the Block 128 was valid till 15
th
June, 2012. Your Company holds 100% PI in the Block with
Operatorship. 1650 sq.km of 3D seismic data was acquired and interpreted in the Block by your Company
and location for drilling of exploration well was identi?ed. Drilling was attempted on the location during
September 2009; however, the well could not be drilled as the rig had di?culty in anchoring at the location
due to hard carbonate sea bottom. Meanwhile, your Company has found solution to the anchoring problem
and asked for extension to the exploration phase to undertake review of additional G&G data to ?nd out a
viable location for drilling to ful?ll the PSC commitment. PetroVietnam (PVN) has suggested ONGC Videsh
to continue the exploration programme in the block for additional two years with e?ect from 16
th
June,
2012 by revisiting the geological model with the integration of data likely to be available with the assistance
from PVN. Till 31
st
March, 2012, the Company has invested about USD 49.14 million in the Block.
Block 6.1 partners visit the rig Ocean Monarch, Vietnam
Oil Tank Farm at Maiskoye oil?eld of Imperial Energy
34 35
5. DIRECT SUBSIDIARIES OF ONGC VIDESH LIMITED:
5.1 ONGC Nile Ganga BV (ONGBV) – Wholly owned Subsidiary:
ONGC Nile Ganga B. V. (ONGBV) is incorporated in Netherlands and engaged in Exploration and Production
(E&P) activities in Sudan, South Sudan, Syria, Venezuela, Brazil and Myanmar. Your Company has ownership
interest in following projects through ONGBV:
5.1.1 25% Participating Interest (PI) in Greater Nile Oil Project (GNOP), Sudan and Greater Pioneer Operating
Company (GPOC);
5.1.2 16.66% to 18.75% PI in four Production Sharing Contracts in Al Furat Petroleum Company (AFPC) in Syria;
5.1.3 40% PI in San Cristobal Project in Venezuela;
5.1.4 15% PI in BC–10 Project in Brazil;
5.1.5 held 43.5% PI and 100% PI as operator of exploratory blocks BM–S–73 and BM–ES–42 respectively;
and as non–operator holds 43.5% PI in exploratory block BM–S–74 and 25% PI each in exploratory
blocks Block BM–SEAL–4 and Block BM–BAR–1 all located in Deepwater O?shore, Brazil;
5.1.6 8.347% PI in South East Asia Gas Pipeline Co. Ltd., (SEAGP) for Pipeline project, Myanmar.
5.2 ONGC Narmada Limited (ONL) – Wholly owned Subsidiary:
ONGC Narmada Limited (ONL) is registered in Lagos, Nigeria. ONL is a Special Purpose Vehicle for E&P
activities in Nigeria.
5.3 ONGC Amazon Alaknanda Limited (OAAL) – Wholly owned Subsidiary:
ONGC Amazon Alaknanda Limited (OAAL) is registered in Bermuda. OAAL holds stake in E&P projects
in Colombia, through Mansarovar Energy Colombia Limited (MECL), a 50:50 joint venture company with
Sinopec of China.
5.4 Jarpeno Limited – Wholly owned Subsidiary:
Jarpeno Limited is registered in Cyprus, acquired Imperial Energy Corporation plc., a United Kingdom listed
upstream oil exploration and production entity with its main activities in Tomsk region of Western Siberia
in Russia, in January 2009.
5.5 Carabobo One AB – Wholly Owned Subsidiary:
Carabobo One AB is registered in Sweden, holds 11% PI in Carabobo–1 Project, Venezuela.
6. EXEMPTION IN RESPECT OF ANNUAL REPORT OF SUBSIDIARIES AND
CONSOLIDATED FINANCIAL STATEMENTS
Ministry of Corporate A?airs (MCA) vide its circular dated 8
th
February 2011 and clari?cation dated 21
st
January
2011 has decided to grant a general exemption from the applicability of Section 212 of the Companies Act,
1956 from attaching the Balance Sheet and Pro?t & Loss Account prepared for the ?nancial year ending on
or after 31
st
March 2011, in relation to subsidiaries of those companies which ful?l the various conditions
including inter–alia approval of the Board of Directors for not attaching the Balance Sheet of the subsidiary
concerned. Your Board has accorded necessary approval in this regard for not attaching the Balance Sheet
and Pro?t & Loss Account of all direct and indirect subsidiaries of the Company with its Annual Accounts
for the ?nancial year ended 31
st
March 2012. All other conditions mentioned in the circular are also being
complied by your Company.
7. JOINT VENTURE COMPANY – ONGC MITTAL ENERGY LIMITED
Your Company along with Mittal Investments Sarl (MIS) had promoted ONGC Mittal Energy Limited (OMEL),
a joint venture company incorporated in Cyprus. Your Company and MIS hold 98% shares of OMEL in the
ratio of 51% (ONGC Videsh), 49%(MIS) with 2% shares held by SBI Capital Markets Ltd. OMEL holds interest
in the AFPC Syrian Assets through ONGBV and exploration Blocks OPL 279 and OPL 285 through its 100%
subsidiaries OMEL Exploration and Production Nigeria Limited (OEPNL) and OMEL Energy Nigeria Limited
(OENL) respectively in Nigeria.
Onshore processing facilities Yuzhno, Russia
36 37
8. OVERSEAS OFFICES
The overseas o?ces of your Company are located in Ho Chi Minh City (Vietnam), Yuzhno Sakhalinsk
(Russia), Baghdad (Iraq), Tehran (Iran), Tripoli (Libya), Havana (Cuba), Caracas (Venezuela), Astana & Atyrau
(Kazakhstan), Bogota (Colombia), Damascus (Syria) and Calgary (Canada). ONGC Nile Ganga BV has its
registered o?ce in Amsterdam (The Netherlands), o?ces in Khartoum (Sudan), Juba (South Sudan) and
its subsidiaries have o?ces in Rio de Janeiro (Brazil) and Nicosia (Cyprus). ONGC Narmada Limited and
ONGC Amazon Alaknanda Limited have their registered o?ces in Lagos (Nigeria) and Hamilton (Bermuda)
respectively. Jarpeno Limited has its registered o?ce in Cyprus and its subsidiaries have o?ces in Cyprus,
Moscow & Tomsk (Russia). Carabobo One AB has its registered o?ce in Sweden.
9. INFORMATION TECHNOLOGY
Your Company keeps itself abreast of the latest advancements in the ?eld of information technology so as
to adopt them to the extent required in its pursuit of achieving operational excellence.
During the current year, your Company has implemented Disaster Recovery (DR) solution for its business
data. The DR is located at ONGC, Baroda. The Corporate E–mail system has been successfully migrated to
Microsoft Exchange 2010 Enterprise messaging & collaboration platform. Your Company has updated its
IT Security Policy based on ISO 27001 standards and has put in place a mechanism for periodic review of IT
security system.
10. HUMAN RESOURCE DEVELOPMENT
Your Company has been operating with pool of highly skilled manpower provided by the parent company
ONGC, in the core areas of E&P globally. Your Company would calibrate its manpower levels and quality
with its expanding requirements and challenges in various parts of the world. The total manpower of
your Company was 246 as on 31
st
March, 2012 as compared to 233 as on 31
st
March, 2011 out of which 83
executives stood posted to various overseas projects/o?ces.
11. IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
Your Company continues to make concerted e?ort to spread and promote O?cial Language. During the
year, Hindi Fortnight was organised from 14
th
September, 2011 to 30
th
September, 2011. In the Hindi fortnight,
a large number of employees participated in Hindi competitions and successful ones were awarded.
Your Company’s In–house magazine “Aadharshila”, Hindi fortnight awardees compilation, Corporate
Brochure and Annual Reports were also printed in Hindi. Statutory advertisements were released in Hindi
also. Quarterly Hindi Progress Report of the Company is being sent to Headquarter regularly and Hindi
workshops are being organised.
12. BOARD OF DIRECTORS
• Mr. D. K. Sarraf joined as Managing Director of your Company on 16
th
September 2011.
• Mr. Joeman Thomas was relieved from the additional charge of Managing Director of your Company
w.e.f. 16
th
September 2011 and also submitted his resignation from the Board of Directors of your
Company with e?ect from 1
st
January 2012 upon his retirement from the services on attaining the age
of superannuation.
• Mr. Arun Ramanathan, former Union Finance Secretary, Government of India and Independent Director
of ONGC joined your Company as an Independent Director on 22
nd
September 2011.
• Mr. Sudhir Vasudeva took over the Chairmanship of your Company on 4
th
October, 2011 in place of
Mr. A. K. Hazarika.
• Mr. A. K. Hazarika, Mr. U. N. Bose, Mr. S. V. Rao and Mr. K. S. Jamestin are Special Invitees to the Board
of your Company w.e.f. 25
th
October 2011. Your Company is continuing to get bene?ts of their valuable
contributions.
• Mr. N. K. Verma joined as Director (Exploration) of your Company on 1
st
January 2012.
• Mr. Shyam Saran, Former Foreign Secretary to the Government of India, joined your Company as an
Independent Director on 5
th
June 2012.
Oil tanks Dekastri terminal
38 39
• Prof. Sanjay Govind Dhande, Director, IIT, Kanpur, joined your Company as an Independent Director on
5
th
June 2012.
• Prof. Shyamal Roy, Chairperson, Executive Education, IIM, Bangalore, joined your Company as an
Independent Director on 5
th
June 2012.
• Mr. Shyamal Bhattacharya joined as Director (Operations) of your Company on 1
st
July 2012 in place of
Mr. S. Roychaudhury, who submitted his resignation from the Board of Directors of your Company
pursuant to his superannuation on 30
th
June 2012.
Your Directors place on record their sincere appreciation for the excellent contributions made by Mr.
Joeman Thomas and Mr. S. Roychaudhury and extend a warm welcome to Mr. Sudhir Vasudeva, Chairman,
Mr. D. K. Sarraf, Managing Director, Mr. N. K. Verma, Director (Exploration), Mr. Shyamal Bhattacharya,
Director (Operations), Mr. Arun Ramanathan, Mr. Shyam Saran, Prof. Sanjay G. Dhande and Prof. Shyamal
Roy, Independent Directors.
Guidelines on Corporate Governance 2011 issued by Department of Public Enterprises require that atleast
one–third of the Board members should be Independent Directors. The appointment of three new
independent Directors by ONGC as per letter of MoP&NG vide no. C–31024/3/2008–CA dated 5
th
June 2012,
has ful?lled the requisite numbers of independent Directors on the Board of your Company.
As required under Section 255 and 256 of the Companies Act, 1956, Mr. S. P. Garg, Director (Finance) and
Mr. R. K. Khullar, Director retire by rotation at the ensuing Annual General Meeting and being eligible, o?er
themselves for re–appointment at the said meeting.
13. AUDITORS
M/s GSA & Associates, Chartered Accountants and M/s S Mann & Co., Chartered Accountants were appointed
as Joint Statutory Auditors of your Company by the Comptroller & Auditor General (C&AG) of India for the
?nancial year 2011–12. The Notes on Accounts referred to in the Auditors’ Report are self–explanatory and
therefore do not call for any further comments.
You would be pleased to know that your Company has received ‘Nil’ comments from C&AG and Statutory
Auditors for the year 2011–12.
14. COST AUDIT
Pursuant to clari?cations provided by the Cost Audit Branch of Ministry of Corporate A?airs vide letter no.
F. No. 52/21/CAB/2007 dated 26
th
May, 2008, the Company maintains its cost records under section 209(1)(d)
of the Companies Act, 1956 and these records are duly audited by Cost Auditors of the Company. Ministry
of Corporate A?airs vide letter F. No. 52/26/CAB–2010 dated 2
nd
May, 2011 had issued an order under Section
233B(1) of the Companies Act, 1956 which inter–alia states that all companies to which Cost Accounting
Records (Petroleum Industry) Rules, 2002 apply, and wherein the aggregate value of the turnover made
by the Company from sale or supply of all products or activities during the immediate preceding ?nancial
year exceeds twenty crore of rupees; or wherein the company’s equity or debt securities are listed or are in
the process of listing on any stock exchange, whether in India or outside India, shall get its cost accounting
records, in respect of each of its ?nancial year commencing on or after the 1
st
day of April, 2011, audited by a
Cost Auditor. Accordingly, Your Company got covered under the Cost Audit from the Financial Year 2011–12
onwards and further appointed M/s Gurdeep Singh & Associates, Cost Accountants as Cost Auditors for
the year 2011–12.
15. STATUTORY DISCLOSURES
(i) None of the employees posted in your Company drew remuneration more than the prescribed limits
during the year 2011–12 as required to be disclosed as per Companies (Particulars of Employees)
Amendment Rules, 2011 vide GSR 289 (E) dated 31.03.2011 read with the provision of Section 217(2A)
of the Companies Act, 1956.
(ii) None of the Directors of your Company is disquali?ed under the provisions of Section 274 (1) (g) of the
Companies Act, 1956.
(iii) Information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 regarding Energy
Conservation, Technology Absorption and Foreign Exchange earnings and outgo during the ?nancial
year 2011–12 is given below:
a) the sources of energy used by the Company are Electricity, Diesel and Motor Spirit (Petrol);
b) the Board, as part of its existing internal control measures, is striving for the conservation of
electricity, diesel and petrol under the supervision of Managing Director on a continuous basis and
is satis?ed that the utilisation of energy is optimum for the operations of the Company in India;
Signing of transition agreement with the government of South Sudan in Juba on 13
th
January, 2012
Signing of MOU with government of South Sudan in Juba on 19
th
December,2011
40 41
c) the provisions of the Companies Act, 1956, in regard to technology absorption are not applicable
to the Company; and
d) the details of foreign exchange earned and outgo during the year 2011–12 are as follows:
(` in Million)
• Foreign Exchange earned 81029.73
• Foreign Exchange outgo 92508.52
16. SECRETARIAL COMPLIANCE REPORT
Secretarial Compliance Report con?rming compliance to the applicable provisions of Companies Act,
1956 and applicable Rules there under, Securities and Exchange Board of India (Issue and listing of Debt
Securities) Regulations, 2008, Debt Listing Agreement with the National Stock Exchange, Depositories Act,
1996 given by a practicing Company Secretary, is annexed and forms part of the Directors’ Report.
17. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report, is annexed and forms part of the Directors’ Report.
18. CORPORATE GOVERNANCE REPORT
The Company strives to attain high standards of corporate governance. A separate section on Corporate
Governance is annexed and forms part of the Directors’ Report.
19. IMPLEMENTATION OF RISK MANAGEMENT POLICY
In line with the requirements of Clause 49 of Equity Listing Agreement and DPE Guidelines on Corporate
Governance, your Company has developed a comprehensive Enterprise–wide Risk Management (ERM)
framework inter–alia identifying the causes of risks and its mitigating measures. The Risk Register and
the Risk Management Policy of your Company was reviewed by the Audit Committee and approved by the
Board of Directors. The Risk Management Policy of ONGC Videsh is reproduced below:
“ONGC Videsh shall identify the possible risks associated with its business and commits itself to put
in place a Risk Management Framework to address the risks involved on an ongoing basis to ensure
achievement of the business objectives without any interruptions.
ONGC Videsh shall optimize the risks involved by managing their exposure and bringing them in line
with the acceptable risk appetite of the company”.
The ERM framework has been rolled out and the risk reporting structure has already been put in place.
20. DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to provisions of Section 217(2AA) of the Companies Act, 1956, the following statements relating
to Annual Accounts for the ?nancial year ended 31
st
March, 2012 are made:
(i) in the preparation of the annual accounts for the ?nancial year 2011–12, the applicable accounting
standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been
followed and that there are no material departures from the same;
(ii) the Directors have selected such accounting policies as described in the Notes to the Accounts of
the Financial Statements for the ?nancial year ended March 31, 2012 and applied them consistently as
stated in the annual accounts and made judgments and estimates that are reasonable and prudent so
as to give a true and fair view of the state of a?airs of the Company as at 31
st
March, 2012 and of the
pro?t of the Company for the year ended on that date;
(iii) the Directors had taken proper and su?cient care for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting frauds and other irregularities; and
(iv) the Directors had prepared the annual accounts on a “going concern” basis.
21. AUDIT COMMITTEE
The details of Audit Committee are given separately in the Corporate Governance Report.
22. ACKNOWLEDGEMENT
Your Directors would like to acknowledge with deep appreciation the valuable guidance and support extended
by the Government of India, especially the Ministry of Petroleum & Natural Gas, Ministry of Finance, Ministry
of External A?airs, Department of Public Enterprises, Indian Embassies / High Commissions abroad and the
Reserve Bank of India etc. Your Directors also wish to place on record their deep sense of appreciation for the
dedicated services by the employees of the Company. Your Directors recognize that the achievements of your
Company would not have been possible without the unstinted and total support from the parent company, Oil
and Natural Gas Corporation Limited.
On behalf of the Board of Directors
New Delhi (Sudhir Vasudeva)
30
th
July, 2012 (Chairman)
GBS is ready to move from Nakhodka to the North of Sakhalin
42 43
Asia is expected to continue to be the principal
driver of global oil demand in the medium term.
Asian incremental demand has increased during
2009–2011, while over the same period the rest
of the world saw demand register almost no net
incremental rise.
These facts pose important questions for our
industry and the countries where we produce.
They demonstrate the need to redouble e?orts to
reduce energy intensity and pursue a sustainable
mix for the future. They also point to the need for
continuing investments to provide the increasing
volumes of energy that the world requires.
Political risk is seen as posing a considerably greater
threat to international E&P business over the next
?ve years than in the recent past. This is especially so
for high potential markets, where generic political
risk is identi?ed as the main investment constraint.
All four forms of political risk (risks of political
violence, FDI protectionism, threats associated
with geopolitical tensions and governmental
instability having a material impact on business) in
emerging markets are seen as increasing over the
next ?ve years. However, Opportunities appear
to predominate over political risk concerns, even
though these are seen as posing a considerably
greater threat to business in near future than in the
recent past.
The political risks of energy investments gel with the
tightness of global oil supplies. When markets are
tight and oil prices are high, as they are now, existing
contracts are renegotiated to the bene?t of host
countries and some of the hydrocarbon reserves
are re–nationalised. The absence of internationally
agreed norms for foreign investments in energy
sector hinders economic development in the
host countries, foments aggressive geopolitical
competition that threatens global energy security
and may block the scale of investment and co–
operation necessary to overhaul a strained global
energy system. Political risks facing FDI in energy
are likely to continue to rise in the coming years.
Crude oil prices have been highly volatile since 2011,
?uctuating on a daily basis but month on month
prices have been fairly stable. Factors that have
contributed to the upside in 2011 are:
1. INTRODUCTION
ONGC Videsh Limited (ONGC Videsh) is a wholly
owned subsidiary of Oil and Natural Gas Corporation
Limited (ONGC), the ?agship National Oil Company
and a Central Public Sector Enterprise/Undertaking
(CPSE/CPSU) of the Government of India, under the
administrative control of the Ministry of Petroleum
& Natural Gas (MoP&NG). ONGC Videsh is engaged
in prospecting for oil and gas acreages outside
India including acquisition of oil and gas acreages,
exploration, development and production of
oil and gas. ONGC Videsh was incorporated as
Hydrocarbons India Private Limited, on March 5,
1965 with registered o?ce in New Delhi to perform
international exploration and production business
and the Company was rechristened as ONGC
Videsh Limited w.e.f. 15
th
June, 1989. With the
widening of the energy demand/supply gap from
domestic production, participation in overseas
oil and gas assets for equity oil was revived in the
mid–nineties.
combination of 10 producing, 5 discovered and 14
exploration assets. In addition, ONGC Videsh has
successfully completed a 741 km product pipeline
project in 2005 in Sudan.
2. INDUSTRY STRUCTURE AND
DEVELOPMENTS
Worldwide, 2011 has been another excellent
year for conventional exploration, with reserves
additions of almost 12 billion barrels (bbl) of oil
and over 82 tcf of gas. In 2011, the demand for
total petroleum products in the Asia–Paci?c region
grew by an estimated 3.1%. This was slower than
the 5.6% seen in 2010, but on expected lines given
the strengths of the rebound in demand the year
before. Demand slowed markedly in the second
half on lower growth from China, even as Japan
continued to consume more low– sulphur crudes
and fuel oil due to dwindling nuclear power.
In January, 2000, ONGC Videsh was granted
special empowerment by the Government of India
that facilitated better and smooth functioning of
the Company in the international environment as
evidenced by a string of successful acquisitions
post January, 2000. As on 31
st
March,2012,
ONGC Videsh has participation either directly or
through wholly owned subsidiaries/joint venture
companies in 30 E&P projects in 15 countries
namely Vietnam (1 projects), Russia (2 projects),
Sudan (2 projects), South Sudan(2 projects),
Iran (1 project), Iraq (1 project), Libya (1 project),
Myanmar (2 projects), Syria (2 projects), Cuba (2
projects), Brazil (4 projects), Nigeria (1 project),
Colombia (6 projects), Venezuela (2 projects) and
Kazakhstan (1 project) and is actively seeking more
opportunities across the world. Out of 30 projects,
ONGC Videsh is Operator in 9 projects and Joint
Operator in 7 projects. The Company adopts a
balanced portfolio approach and maintains a
Management Discussion
And Analysis Report
Block 6.1 signing of agreement for training under CSR, Vietnam
44 45
• Disruption to the ?ow of crude from Libya where most crude oil production came to a halt in early 2011
and led to a loss of around 1.3 million barrels/day of light–sweet crude oil exports. This led to tightening
of the supply/demand balance that was prolonged. Saudi Arabia, UAE and Kuwait raised their output
to help calm the markets.
• A fear that the US hurricane season (July to September 2011) and the accompanying storms might
damage oil facilities in the US Gulf and O?shore Mexico.
• A general drawdown of OECD oil inventories particularly during the end of 2011 that led to the market
to believe that supply was tightening.
• Geo–political issues in Yemen, Nigeria, Sudan, South Sudan, Syria, Egypt, Libya, Iran and Iraq with
genuine disruption to supplies in some cases whilst potential disruption concerns in others.
Benchmark crude prices fell signi?cantly between late July,2011 and early August, 2011 before rebounding
towards end–August 2011. This trend remained during the remaining period of 2011 resulting in considerable
volatility in benchmark crude prices.
North America has become the fastest growing oil and gas region in the world and is likely to remain so
for the rest of the decade and during 2020’s, with the main obstacles as political rather than geological or
technological. Surging supply growth could transform North America from an importing country to an
exporting country, driven by growth in shale oil and gas, deepwater and oil sands resources. And US liquid
fuels demand is in structural, secular decline due to demographics, fuel e?ciency, transport technology
shifts.
The US and Canada could see rise in natural gas production by 22–Bcf/d by 2020, with 14–Bcf/d from the
Lower 48 states, 4–Bcf/d from Alaska and 4–Bcf/d from Canada. Abundant shale plays accessed by hydraulic
fracturing and horizontal drilling technology is the key driver behind North America becoming the globe’s
“energy island” by 2020. US shale liquids projections could see +3.8–m b/d of growth by 2020. A signi?cant
qualitative shift in investment is underway among the IOC’s. Development capital is progressively moving
from conventional assets to more complex projects associated with new resource themes. The Majors
generally tend to be more dependent on LNG, deepwater and unconventional oil and gas resources to
drive growth.
Conventional assets make up almost half of the average portfolio value based on NPV 2011. This will fall
to around 40% by 2016 as the current investment programme comes to an end. LNG is by far the biggest
growth theme over this period. Returns from new–?eld projects have fallen to 18% in 2011, down from 23%
in 2005. This re?ects the higher capital intensity and longer lead–times of current new projects relative
to 2005, as well as cost in?ation and ?scal e?ects. Returns of the companies have converged around this
lower average, with few material high–return projects available now than in the past.
All the Majors will be producing at or above current levels in 2020. The current investment cycle is also
focused on projects with longer production plateaus. This should lead to more stable earnings and cash
?ow as the decade unfolds.
Most Asian companies face a decline in production later this decade due to their dependence on
conventionally–biased portfolios and maturing domestic assets. At the same time, domestic supply
de?cits continue to fuel the need to secure oil and gas production overseas. International assets currently
comprise just 25% of Asian companies’ portfolios by NPV. Emulating the scale, diversity and long–term
growth potential of the leading international companies will take huge further investment.
Asian companies have access to substantial ?nancial resources to fund further international expansion.
Several of the larger Asian national oil companies (NOCs) have net cash on their balance sheets and it is
estimated that cumulative upstream cash generation would be about US$450 billion from the peer group
over the next ?ve years. Some companies have already begun to take bolder steps in building overseas
Water treatment plant
46 47
portfolios, targeting long–life resources. We expect an increasing focus on technically–challenging growth
resource themes such as deepwater, LNG and unconventional oil and gas.
M&A is likely to remain the primary route to capture resources and build technical expertise in the
near–term. High–impact exploration will play an increasingly important role in longer–term portfolio
development, re?ecting a rising appetite for risk as well as exploration’s potential for multi–billion boe
resource additions and value creation.
Near–term production levels for Asian companies have been boosted by recent internationalization but it is
believed that the longer–term story has yet to change materially. Medium to longer term production pro?les
are threatened by underlying decline from domestic assets, particularly legacy oil projects. Production
from outside Asia will grow to account for 28% of combined output by 2015. However, international growth
will ?atten thereafter at which point domestic production will also enter decline.
Consequently, there are strong drivers for the Asian companies to continue their e?orts to access growth
projects overseas. In the near–term, achieving sustained production growth is likely to be targeted through
further M&A activity.
Developing resources that currently lie in the sub–commercial category and a greater emphasis on high–
impact exploration will also be a priority for some companies. Although some of the Asian companies have
substantial remaining domestic investment opportunities, their global ambition, long–term growth aims
and the need to build technical expertise will mean internationalisation remains high on the agenda.
Addressing a lack of exposure to deepwater resource development and high–impact exploration acreage
could be speci?c deal themes over the next few years. Further acquisitive moves to build positions in LNG
and other growth resource themes such as oil sands and unconventional/tight oil and gas can also be
expected. Establishing exposure to emerging resource rich regions such as East African gas will also be
high on the agenda. Corporate as well as asset acquisitions could also become more prominent for those
companies seeking international capability development.
Oil tanks Dekastri terminal, Sakhalin project
One of the largest single point mooring at Dekastri
48 49
Many of the Asian companies now seem willing to compete for assets by paying considerations over and
above the base case asset valuations. Optimistic views on oil prices, con?dence in asset resource upside
potential, lower discount rate assumptions and signi?cant strategic incentives may be the factors in driving
asset considerations upwards.
Natural gas prices remained weak in North America, where production of shale gas continued to climb and
were on an average lower in continental Europe, in part due to changes in contractual pricing arrangements.
Global LNG and UK spot prices increased more strongly in the face of robust consumption growth. Coal
prices grew robustly in Europe, but were weak in the US and Japan. Events so far this year have kept the
world’s focus on energy: the tragic tsunami in Japan and unrest in the Arab world have disrupted energy
?ows and rising prices ‘at the pump’ have raised concerns about slowing the economic recovery.
During the year, ONGC Videsh screened many opportunities and participated in the bidding rounds.
2.1 International Industry Environment
Capital spending in the global upstream industry has fully recovered from the dark days of 2009. Development
spending in 2011 has amounted to almost US$450 billion, around US$35 billion more than in 2010. The most
active sectors over the next ?ve years will be the US Gulf Coast, Russia, China, Australia and Brazil.
The biggest regional impact has been in onshore US and Canada, where the recovery that began in late–
2009 has kicked on in spectacular fashion. Operators are building major new production capacity, most
notably in the US Gulf Coast and Canadian oil sands. Over US$210 billion of new investment is planned in
these two sectors alone, over the next four years. The higher levels of spending are the result of several
factors. High oil prices have supported many major new project approvals. There is also growing con?dence
in the commercial performance of a wide range of unconventional oil and gas plays. By 2013, one–third of
development spending around US$130 billion, could be in unconventional projects.
ExxonMobil has the highest development expenditure amongst oil and gas companies in 2011, but it will
be hard–pressed in the next few years. Chevron has embarked on a major investment programme, with
giant capital projects in Australia, Gulf of Mexico and the US Lower 48. Its annual development spending
will increase by over US$10 billion by 2013. Petrobras has the most ambitious investment plans amongst
national oil companies (NOCs) and could rival ExxonMobil and Chevron’s capital spending within the next
few years.
With the industry’s con?dence restored, the threat of cost in?ation has returned. The biggest impact to
date has been in Australia and Canadian oil sands, where cost increase of over 10% have a?ected every
element of project design and construction. There are growing signs of higher costs in other prominent
sectors, where demand for materials and services are particularly high. This includes most deepwater
provinces and liquids–rich plays in the Lower 48. Despite the high levels of con?dence in the industry, the
macroeconomic environment remains highly uncertain. The outlook has soured as the Eurozone sovereign
debt crisis intensi?ed – with implications for household and business con?dence. The investment plans of
the upstream industry are ambitious and progressive, but they could yet be undermined by fragility in the
global economy.
Recent social and political upheaval in Middle East and North Africa has drastically increased the risk pro?le
of quite a few proli?c international basins holding a substantial percentage of world’s hydrocarbons. This
increased geopolitical turmoil and spiraling crude prices have complicated potential capital allocation
decisions of NOCs and IOCs.
M&A divesture and acquisitions, short–term and long–term strategies will be greatly challenged in this
turbulent and increasingly crowded and competitive M&A space.
3. STRENGTH AND WEAKNESS
Your Company is the ?rst Indian International E&P Company to produce Equity Oil and Gas outside India.
Your Company has now presence in 15 countries and from 8 countries, Your company has oil and gas
production from 10 projects.
A fair degree of risk mitigation has already been exercised by your Company by partnering with some of
the leading international oil and gas companies like Exxon, Shell, TNK–BP, Rosneft, TOTAL, ENI, Repsol,
Petrobras, PDVSA, PetroVietnam, CNPC, Sinopec, Ecopetrol, Petronas, KazMunaiGas etc. ONGC Videsh
Aerial view of Yastreb rig in Odoptu process facility, Sakhlin
50 51
has emerged as a credible player in the international E&P market, which is evident from the fact that
it has been able to register its presence in most of the oil producing provinces. Your Company aims
to sustain the exploration e?ort through allocation of its internal resources except for high value but
attractive projects.
Further, being a Public Sector Undertaking, there are some limitations for the Company, in terms of
decision making process. The Company is pursuing with MoP&NG for enhancement of empowerment of
its Board as the present empowerment is insu?cient even for carrying out the minimum work program in
an exploratory asset.
4. OPPORTUNITIES AND THREATS
ONGC Videsh has been participating in opportunities for acquisition through various routes like bidding
rounds, direct negotiations, advised acquisitions etc. In the last few years, many countries like Libya,
Nigeria, Vietnam, Syria, Yemen, Angola, Brazil, Iraq, Colombia and Venezuela have o?ered acreages through
bidding rounds. Your Company has been pursuing an Exploration Project in Kazakhstan, which was ?nally
signed in April 2011. Your Company expects good results out of the exploration prospects over the next
couple of years. If proved successful in these ventures, the Company shall be adding reserves through
drill–bit thereby reducing its overall acquisition cost of reserves considerably.
The performance of the Company hinges on oil prices on the revenue side and factor cost of raw material,
equipment, services etc. on the input side. High volatility in oil price and scarcity or high input costs of factor
inputs could materially a?ect the performance of the Company. Though most of the projects are under
production sharing contracts, the entitlement and cost oil recoveries may be altered by host Governments
in attempt to net the windfall pro?ts emerging from high oil prices.
5. OUTLOOK
Your Company has registered presence in various oil provinces of the world and continues to look for
attractive assets. It has earned a high reputation for itself and therefore multiple opportunities keep
coming for its consideration. ONGC Videsh had earlier set a production target of 20 MMTPA of oil and gas
from its overseas assets by 2020. In the 9th Strategy Meet of ONGC group held during November, 2011
under the Chairmanship of Secretary P&NG, it was decided that ONGC Videsh should produce equity oil and
gas of 20 MTOE by FY’18 and 35 MTOE by FY’30.
ONGC has initiated an exercise in February 2012, to formulate a bottom–up Perspective Plan 2030 (PP2030)
for ONGC group. The PP 2030 has been ?nalized and was presented to ONGC Board on 29th May 2012. As
per the plan, the 1st Shaping Move of ONGC is to grow ONGC Videsh to 60 MTOE/year by 2030.
This needs to be achieved by new acquisitions to yield additional 50 MTOE/ Year by 2030 and to build
positions of scale in 3–5 focus plays. With this plan in place, the two internal targets for ONGC Videsh are
to (i) Increase production to 20 MTOE by FY’18 and (ii) Increase production to 60 MTOE by FY’30. As the
production targets are quite steep involving a CAGR of more than 14% up to FY’18 and CAGR of 9% from
FY’18 to FY’30, Your Company needs to concentrate on acquiring assets in development and production
phase initially and then concentrate on high potential exploration acreages and also venture capitalist type
of opportunities.
This will involve substantial fund requirement to the tune of USD 20 billion and ONGC Videsh needs to use
full headroom of balance sheet of ONGC and ONGC Videsh to ?nance these acquisitions coupled with equity
and project ?nancing. This will also require acquiring, retention and training of manpower with speci?c skill
sets, revamping of many internal processes and taking a relook at the way business development is to be
done in future.
Key priorities for going forward of your Company include the following:
5.1 New Ventures:
Your Company in last few years has adopted a balanced portfolio approach by maintaining a combination of
producing, discovered and exploration assets. While acquiring producing properties, enhanced emphasis is
also being given to add to the company’s reserves through exploratory e?orts to contribute to production
in future. ONGC Videsh intends to maintain this trend and focus on all the three types of assets.
Lan Tay 1, Vietnam
Panoramic viewof Maiskoye oil?eld in winters
52 53
5.2 Exploration:
Your Company has set up a state–of–the–art data center and has constituted a knowledge team to scan
and identify value in the existing exploration assets, assets with discovery and in new opportunities so as
to enhance the reserve base of the Company.
5.3 International Alliances:
The Company has also plan to forge alliances to attain a collaborative approach on value creation and
knowledge sharing. The Company shall continue to engage more and more in such alliances through
agreements and Joint Ventures.
5.4 Geographic spread:
The Company has presence in 15 countries and it has been able to enhance participation in more than one
project in some countries. The Company shall endeavor to consolidate its position in the regions/countries
where it is already present while making attempt to enter attractive acreages in other hydrocarbon rich
countries/regions.
6. RISKS AND CONCERNS
The Company participates and operates in varied environments, both politically and geographically, where
exploration, production and development is more challenging technologically, operationally and ?nancially.
In the projects and countries where your Company has large investments, the risks and losses due to
expropriation, change in ?scal regime, additional taxes and increase in Government share or restrictions
on exports of oil could materially a?ect the performance. However, due to prime importance of oil and gas
industry in these countries, their Governments would not in their own interest like to destabilize the oil
companies. Most of the international investments in the past had been in the form of joint ventures where
your Company was not the operator. In the course of such investments, your Company was dependent
to an extent on the operating partner, including for the success of the joint venture. The Company may
sometime disagree with actions proposed to be taken by the operating partner. However, this is the format
in which international E&P industry works to take care of sharing of exploration risks. Further, of late, the
Company is acting as Operator in several projects.
Some of the projects are in countries where there are unresolved unrest and larger issues of governance
and territorial/ethnic divisions; some also have terrorism and reactionary protests on continued basis.
Though your Company has not been the target, yet in future it may face the threat from these as closely
as any one operating in such hostile environments. Further, the business involves high exploration and
technology risks and there are inherent HSE risks in the oil & gas business.
7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has adequate internal audit and internal control systems to ensure that all transactions
adhere to procedure and meet statutory requirements. The Company has already implemented SAP R/3
ERP system for integration of various business processes. The internal control system consists of regular
operative performance evaluation and devising corrective measures thereof and comprehensive internal
and external audit including audit by C&AG. During the year 2011–12, internal audit on a four tier mechanism
was got carried out from M/s Deloitte Haskin and Sells, which had independently evaluated adequacy of
internal control system. The audit observations are periodically reviewed by the Audit Committee and
necessary directions are issued wherever required.
8. PHYSICAL PERFORMANCE
8.1 Reserve Accretion:
ONGC Videsh share of total reserves (3P) of oil and oil equivalent gas as on 1
st
April, 2012 was 425.941 MMTOE.
As on 31
st
March, 2012, the Reserves–to–Production (R/P) Ratio considering proved reserves was 22.09.
8.2 Production:
The Crude Oil Production (including condensate) was 6.214 MMT during 2011–12 as compared to 6.756 MMT
during 2010–11. Production of natural gas was 2.539 BCM during 2011–12 as compared to 2.692 BCM during
2010–11. The production had been adversely a?ected during the year 2011–12 mainly due to geo–political
situation in Sudan, South Sudan and Syria. The detail of production during the last nine years is given below:
Working at South Sudan Pipeline
54 55
Particulars YE
Mar’12
YE
Mar’11
YE
Mar’10
YE
Mar’09
YE
Mar’08
YE
Mar’07
YE
Mar’06
YE
Mar’05
YE
Mar’05
YE
Mar’04
Crude Oil
(MMT)*
6.214 6.756 6.513 6.556 6.840 5.804 4.584 3.714 3.714 3.345
Gas (BCM) 2.539 2.692 2.357 2.220 1.962 2.148 1.755 1.349 1.349 0.523
Total
(O+OEG)
(MTOE)
8.753 9.448 8.870 8.776 8.802 7.952 6.339 5.063 5.063 3.868
* Including Condensate
9. FINANCIAL PERFORMANCE
Your Company’s consolidated gross revenue was up by 21%, from `186,711 million during 2010–11 to `226,374
million during 2011–12. Your Company’s consolidated net pro?t was up by 1% from `26,905 million for the
year 2010–11 to `27,212 million for the year 2011–12.
The Consolidated ?nancial results of ONGC Videsh, including wholly owned subsidiary companies viz.
ONGBV (consolidated), ONL, OAAL (consolidated), Jarpeno Limited (consolidated), Carabobo one AB
(consolidated) and jointly controlled entity viz. OMEL (consolidated) for the year 2011–12 as compared to
2010–11 are as follows :
(` in Million)
Particulars
Audited for the Year ended
Var. %
YE Mar, 2012 YE Mar, 2011
A INCOME
i Revenue fromOperations 223,473 184,111 21.4
ii Interest Income 911 488 86.9
iii Other Income 1,990 2,111 (5.8)
TOTAL REVENUE (A) 226,374 186,711 21.2
B EXPENSES
i Production, Transportation, Selling and Distribution Expenditure 101,418 89,160 13.7
ii Change in inventories of ?nished goods (632) (121) 421.0
iii Other Expenses 2,141 (773) 376.9
iv Decrease/(increase) due to overlift/underlift quantity (414) (283) 46.2
v Provisions & Write–O?s 27,929 3,448 710.0
TOTAL EXPENSES (B) 130,442 91,431 42.7
C Earning Before Interest, Tax, DD&A (EBITDA) (A – B) 95,932 95,280 0.7
i Financing Costs 2,970 3,531 (15.9)
ii Depreciation, Depletion and Amortisation (DD&A) 41,870 42,683 (1.9)
D Pro?t Before Prior Period, Exceptional and Extraordinary Items and Tax 51,092 49,067 4.1
i Adjustments relating to Prior Period (Net) (73) (351) 79.1
E Pro?t Before Exceptional and Extraordinary Items and Tax 51,166 49,418 3.5
i Exceptional and Extraordinary items 0 0 –
F Tax expense
i Current Year Tax 27,385 23,688 15.6
ii Deferred Tax (3,951) 1,651 (339.4)
iii Earlier Years Tax 193 (3,290) 105.9
Particulars
Audited for the Year ended
Var. %
YE Mar, 2012 YE Mar, 2011
Total Tax Expenses (F) 23,627 22,048 7.2
G Less: Share of Pro?t / (Loss) – Minority Interest 327 464 (29.5)
H Group Pro?t After Tax (E–F–G) 27,212 26,905 1.1
The position of major items in the Consolidated Balance Sheet as at 31 March, 12 and 31 March, 2011 is
given below:
(` in Million)
Sl.
No.
Particulars
As at 31
st
March,
2012
As at 31
st
March,
2011
% Variation
A EQUITY AND LIABILITIES
1 SHAREHOLDERS' FUNDS
i Share Capital 10,000 10,000 –
ii Reserves and Surplus 189,411 135,530 39.8
TOTAL SHAREHOLDERS' FUNDS 199,411 145,530 37.0
2 MINORITY INTEREST 1,003 682 47.0
3 NON–CURRENT LIABILITIES
i Long–termborrowings 195,161 204,554 (4.6)
ii Deferred tax liabilities 10,204 9,555 6.8
iii Liability for abandonment 27,504 22,861 20.3
iv Other Long termliabilities 82 – –
v Long–termprovisions 551 513 7.4
TOTAL NON–CURRENT LIABILITIES 233,502 237,484 (1.7)
4 CURRENT LIABILITIES
i Short–termborrowings 623 331 88.1
ii Liability for abandonment 104 – –
iii Trade payables 25,782 19,728 30.7
iv Other current liabilities 45,392 33,365 36.0
v Short–termprovisions 189 16 1,087.1
TOTAL CURRENT LIABILITIES 72,091 53,440 34.9
TOTAL EQUITY AND LIABILITIES 506,007 437,135 15.8
B ASSETS
1 NON–CURRENT ASSETS
i Fixed Assets
a Tangible assets 35,590 42,304 (15.9)
b Intangible assets 126 37 243.3
c Producing properties 144,236 136,140 5.9
d Development & exploratory wells in progress 30,740 24,907 23.4
e Capital work in progress 76,256 40,018 90.6
ii Goodwill 75,045 86,998 (13.7)
iii Non–Current Investment 2,927 107 2,625.0
iv Deferred Tax Assets 5,221 1,202 334.3
v Long TermLoans and Advances 917 281 226.8
56 57
Sl.
No.
Particulars
As at 31
st
March,
2012
As at 31
st
March,
2011
% Variation
vi Other Non–Current Assets 17,348 2,655 553.3
TOTAL NON CURRENT ASSETS 388,407 334,649 16.1
2 CURRENT ASSETS
i Inventories 5,733 4,699 22.0
ii Trade receivables 29,615 40,044 (26.0)
iii Cash & Bank balances 51,528 36,998 39.3
iv Short termloans & advances 8,227 4,485 83.4
v Other current assets 22,497 16,260 38.4
TOTAL CURRENT ASSETS 117,600 102,486 14.7
TOTAL ASSETS 506,007 437,135 15.8
10. HUMAN RESOURCES / INDUSTRIAL RELATIONS
The Company follows the HR policies of its parent company ONGC. However, being international operator,
the Company provides necessary training and conducts development programmes to imbibe the necessary
skills required to operate in the international environment. Further, the Company deputes its personnel
along with other international experts, in joint venture projects with major oil and gas companies which
enable them to upgrade their skills in terms of new technologies, working in international environment
etc. The Company has been operating mainly with manpower provided by the parent company. The total
manpower of the Company was 246 as on 31
st
March, 2012 as compared to 233 as on 31
st
March, 2011. As on
31
st
March, 2012, 83 executives stood posted to various overseas projects/o?ces.
11. ENVIRONMENT
As per HSE policy of the Company, it is committed to maintain the highest standards of Occupational Health,
Safety and Environment protection and ensures compliance with all applicable Statutory, Regulatory
requirements. In the projects operated by Company, it’s endeavor is to achieve Operational Excellence
through HSE governance and continual improvement with business policies compatible to socio–economic
needs of local communities.
In the projects operated by other global E&P operators where your Company is a partner, it is ensured
that operating company maintains the highest standards of Occupational Health, Safety and Environment
protection and ensures compliance with all applicable Statutory, Regulatory requirements.
12. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company, being operating overseas, understands its responsibility to contribute to the communities
and economies of the countries in which it operates. The Company is committed to create a positive and
lasting social impact by developing successful partnerships built on mutual trust and respect, ultimately
raising the standard of living and the stability of the communities of the countries in which the Company
operates. The Company makes valuable contribution in many ways such as through payment of tax
revenues to governments; by investing in education and training and improving employment opportunities
for nationals; providing medical/sports/agricultural facilities to the local community etc. Keeping in view
the CSR guidelines issued by DPE, ONGC Videsh has framed CSR Policy for achieving the CSR objectives
in all its overseas Projects / Assets. Budget of 0.5% of previous year’s Pro?t After Tax (PAT) or target as
per MOU with ONGC, whichever is higher has been allocated towards CSR every year from ?nancial year
2011–12 onwards. This budget allocation is non–lapsable. The Company spent `239 million on CSR activities
during 2011–12.
13. RIGHT TO INFORMATION ACT, 2005 (RTI ACT)
Further, with the objective to ensure access by any citizen to information under the control of the Company
and in order to bring in transparency and accountability, an appropriate mechanism has been set up at
registered o?ce of the Company in New Delhi in line with the requirements of RTI Act. The status of RTI
requests during the year 2011–12 are as follows:
Details
Received during the
Year (including cases
transferred to other
Public Authority)
No. of cases
transferred to other
Public Authorities
Decisions where
request / appeals
rejected
Decisions where
requests / appeals
accepted
Requests 27 5 4 18
First appeals 2 0 2 (Partly rejected) 2 (Partly accepted)
14. CAUTIONARY STATEMENT
Statements in this management discussion and analysis may be ‘forward looking’ within the meaning
of the applicable Laws and Regulations. Actual performance may deviate from the explicit or implicit
expectations.
Health Mobile Unit purchased for rural communities
58 59
ONGC Videsh Limited continues to make e?orts
towards achieving highest standards of corporate
governance and responsible management
practices. The details of compliance of Guidelines
on Corporate Governance by the Company are
provided in the following sections.
1. COMPANY’S PHILOSOPHY ON
CORPORATE GOVERNANCE
The Company’s vision is to be a world–class
exploration and production company providing
energy security oil to the nation. Its philosophy on
Corporate Governance is to conduct business in
an e?cient, transparent, ethical and responsible
manner. The Company believes that good corporate
governance goes beyond legal compliances and
therefore embedded in the system all across.
2. BOARD OF DIRECTORS
2.1 Composition of the Board:
The Company is managed by the Board of Directors,
which formulates strategies & policies and reviews
its performance periodically. As per Articles of
Association (AOA) of the Company, the number
of Directors shall not be less than three and more
than ?fteen. As per AOA, Oil and Natural Gas
Corporation Limited (ONGC), the parent company,
appoints the Chairman and all part time Directors
and the President of India appoints all whole–time
Directors, including Managing Director on the
Board of the Company. Presently, the Board of
your Company comprises four Functional Directors
(including the Managing Director) and seven Non–
executive Directors (one Non–Executive Chairman,
two part–time o?cial nominee Directors and four
independent Directors).
The Chairman & Managing Director of ONGC is
also the Chairman of the Company. The Managing
Director who is the Chief Executive O?cer of
the Company and three whole–time Directors
i.e. Director (Finance), Director (Operations) and
Director (Exploration) manage the business of the
Company under the overall supervision, control
and guidance of the Board.
In accordance with letter No. C–31012/4/2010–CA
(Pt.) dated 16
th
September, 2011 from Ministry
of Petroleum & Natural Gas (MoP&NG), ONGC
appointed Mr. Arun Ramanathan, former Finance
Secretary, Government of India and an independent
Director on the Board of ONGC, as an Independent
Director on the Board of the Company. Similarly, in
accordance with letter No. 31024/3/2008–CA dated
5
th
June, 2012 from MoP&NG, ONGC appointed
Mr. Shyam Saran, former Foreign Secretary,
Government of India, Mr. Sanjay Govind Dhande,
Director, IIT, Kanpur and Mr. Shyamal Roy, Chairperson,
Executive Foundation, IIM, Bangalore as Independent
Directors on the Board of the Company.
2.2 Scheduling and selection of Agenda items
for Board/ Committee Meetings:
The meetings are convened by giving appropriate
advance notice after obtaining approval of the
Chairman of the Board/ Committee. Detailed
agenda, management reports and other explanatory
statements are circulated in advance in the de?ned
agenda format amongst the members/ invitees
to facilitate meaningful, informed and focused
decisions at the meetings. To address speci?c
urgent need, sometimes meetings are being called
at a shorter notice. In case of exigencies, resolutions
are also sometimes passed by circulation, which are
put up for con?rmation in the next meeting of the
Board/ Committee.
Where it is not practicable to circulate any
document or the agenda, being of confidential
nature, the same is tabled with the approval of
Managing Director. In special and exceptional
circumstances, additional or supplementary
item(s) on the agenda are permitted with the
permission of the Chairman. Sensitive subject
matters are sometimes discussed at the meeting
without written material being circulated.
The meetings of the Board/ Committee are
generally held at New Delhi. Directors may also
participate in the meetings through electronic
mode in case they are not able to be present in
person for the meeting.
In addition, Joint Secretary (International
Cooperation), MoP&NG, Government of India and
Joint Secretary, Department of Economic A?airs,
Ministry of Finance (MoF) are part–time Directors
on the Board of the Company.
To get bene?ts of broader domain expertise, Joint
Secretary (Exploration), MoP&NG and all functional
Directors on the Board of ONGC are permanent
invitees to the Board meetings.
Present composition of the Board of Directors of the Company is as follows:
Non–Executive Chairman:
Mr. Sudhir Vasudeva Chairman w.e.f. 4.10.2011
Whole–time Directors:
Mr. D. K. Sarraf Managing Director w.e.f. 16.09.2011
Mr. S.P. Garg Director (Finance)
Mr. N.K. Verma Director (Exploration) w.e.f. 01.01.2012
Mr. S. Bhattacharya Director (Operations) w.e.f. 01.07.2012
Part–time O?cial Nominee Directors:
Mr. Vivek Kumar, Joint Secretary (IC), MoP&NG Director
Mr. R.K. Khullar, Joint Secretary, DEA, MoF Director
Part–time Non–O?cial Directors:
Mr. Arun Ramanathan Independent Director w.e.f. 22.09.2011
Mr. ShyamSaran Independent Director w.e.f. 05.06.2012
Prof. Sanjay Govind Dhande Independent Director w.e.f. 05.06.2012
Prof. Shyamal Roy Independent Director w.e.f. 05.06.2012
Permanent Invitees:
Mr. A.K. Hazarika, Director (Onshore), ONGC Director upto 24.10.2011 and
Chairman upto 03.10.2011
Mr. U.N. Bose, Director (T&FS), ONGC Director upto 24.10.2011
Mr. S.V. Rao, Director (Exploration), ONGC Director upto 24.10.2011
Mr. K.S. Jamestin, Director (HR), ONGC Director upto 24.10.2011
Mr. A.K. Banerjee, Director (Finance), ONGC
Mr. A. Giridhar, Joint Secretary (Exploration), MoP&NG
CORPORATE GOVERNANCE REPORT
ONGC Videsh Limited’s presence in Brazil
60 61
Name of the Directors No. of Board
Meetings held
during the Tenure
No. of Board
Meetings
attended
Attendance at
the last AGM
(12–Aug–2011)
Details of
Directorships
held in other
Companies*
Membership held
in Committees,
including ONGC
Videsh**
Mr. D. K. Sarraf 8 8 Yes – –
Mr. Joeman Thomas 6 5 No – –
Mr. S.P. Garg 8 7 Yes – –
Mr. S. Roychaudhury 8 8 Yes – –
Mr. N.K. Verma 2 2 NA – –
Mr. Sudhir Vasudeva 8 8 Yes 8 –
Mr. Vivek Kumar 8 6 No 1 1
Mr. R.K. Khullar 8 2 No 3 1
Mr. Arun Ramanathan 4 4 NA 5 6
Mr. A.K. Hazarika 5 4 Yes 3 –
Mr. U.N. Bose 5 3 Yes 1 1
Mr. S.V. Rao 5 4 No – –
Mr. K.S. Jamestin 4 3 Yes 5 1
* The other directorships do not include directorships of Companies registered under Section 25 of the Companies Act, 1956, Foreign
Companies and Private Limited Companies.
** Membership of the Audit Committees and Shareholders’/ Investors’ Grievance Committees only of all Public Limited Companies have
been considered.
Notes:
(i) Directors are not related to each other;
(ii) Directors do not have any pecuniary relationships or transactions with the Company;
(iii) The Directorships/ Committee memberships are based on the latest disclosure received fromDirectors;
(iv) None of the Director is a Member of more than 10 Committees or Chairman of more than 5 Committees, across all the companies
in which he is a Director.
2.7 Resume of Directors proposed to be appointed/ re–appointed:
The brief resume of Directors including nature of their experience in speci?c functional areas and names of
companies in which they hold directorship and membership/ chairmanship of Board/ Committee, who have
been appointed after the date of the last report or are retiring by rotation and seeking re–appointment
are as below:
The agenda papers are prepared by the concerned o?cials, sponsored by the concerned functional Directors
and concurred by Director (Finance), wherever necessary and are approved by the Managing Director. Duly
approved agenda papers are circulated amongst the Board members/ Invitees by the Company Secretary.
Presentations are made to the Board/ Committee covering Exploration, Production, Operations, Financial,
Human Resources, Risk assessment, Marketing and operations of Joint Ventures/ Subsidiaries of the
Company etc. at the pre–scheduled Board/ Committee meetings.
The members of the Board/ Committee have complete access to all information of the Company. The
Board is also free to recommend inclusion of any matter in agenda for discussion. Senior management
o?cials are called to provide additional inputs on the items being discussed by the Board/ Committee, as
and when required.
2.3 Recording minutes of proceedings at the Board/ Committee Meeting:
Minutes of the proceedings of each Board/ Committee meeting are recorded. Draft minutes are approved
by the Chairman of the Board/ Audit Committee. These minutes are con?rmed/ noted in the next meeting
of the Board/ Audit Committee. The approved Minutes of the proceedings of the meetings are entered in
the Minutes Book.
2.4 Follow–up mechanism:
The guidelines for the Board/ Committee meetings facilitate an e?ective post–meeting follow–up, review
and reporting process for the action taken on decisions of the Board and Committee. The follow–up Action
Taken Report (ATR) on the decisions/ instructions/ directions of the Board/ Committee is submitted to the
Board/ Committee regularly.
2.5 Board Meetings:
Eight Board Meetings were held during the ?nancial year 2011–12 on the following dates:
20
th
May, 2011 27
th
July, 2011 12
th
August, 2011 16
th
September, 2011
7
th
October, 2011 14
th
November, 2011 11
th
January, 2012 22
nd
February, 2012
The minimumand maximuminterval between any two Board meetings was 15 days and 67 days respectively.
2.6 Board Attendance:
The details of attendance, directorship held in other companies etc. during the ?nancial year 2011–12 are
as under:
Republic Day Celebration in Tehran Signing of MOU with Government of South Sudan
62 63
2.7.1 Directors to be appointed:
Name Mr. D.K. Sarraf Mr. N.K. Verma Mr. Shyamal Bhattacharya
Date of Birth &
Age
September 3, 1957;
54 Years
January 2, 1959;
53 Years
October 18, 1954
57 Years
Date of
Appointment
September 16, 2011 (Appointed
as Managing Director)
January 1, 2012 July 1, 2012
Quali?cation – B.Com(Hons.)
– M.Com
– AICWA
– ACS
– M.Sc. (Geology) Special
– M.Tech (Petroleum
Exploration), Gold Medalist
– MBA (Finance)
– B.Tech (Petroleum)
No. of Shares held 1 (as Nominee of ONGC) Nil Nil
Experience in
speci?c Functional
Areas
Mr. D. K. Sarraf carries a very
rich and varied experience of
three decades in oil industry. In
the past, he held the position of
Director (Finance), ONGC and
ONGC Videsh Limited.
Mr. N.K. Verma has to his credit
experience of more than 30
years in various facets of
petroleumexploration and
development with ONGC.
Mr. Shyamal Bhattacharya has rich
experience of more than three
decades in various ?elds majority
being in reservoir studies. During
his stint as Executive Director of
ONGC Videsh, he was looking after
all aspects of overseas operations
of development and producing
assets.
Directorship
held in other
Companies*
Nil Nil Nil
Membership/
Chairmanship
of Committees,
including ONGC
Videsh**
Nil Nil Nil
Name Mr. Arun Ramanathan Mr. ShyamSaran Prof. Sanjay G Dhande Prof. Shyamal Roy
Date of Birth &
Age
April 25, 1949
63 years
September 4, 1946
65 Years
February 14, 1948
64 Years
August 25, 1946
65 Years
Date of
Appointment
September 22, 2011 June 5, 2012 June 5, 2012 June 5, 2012
Quali?cation – IAS (Retd.)
–PG in Nuclear Physics
–PG in Business
Administration and
Development Economics
–AICWA
– IFS (Retd.)
– Post Graduate
degree in Economics
– B.E. (Mech.)
– Ph. D. (Mech.)
– M. A.
– Ph. D.
No. of Shares held Nil Nil Nil Nil
Experience in
speci?c Functional
Areas1
Mr. Arun Ramanathan
joined the IAS in July
1973 and held several
assignments in various
ministries of Govt. of
India (GOI), such as
Secretary (Chemicals
& Petrochemicals),
Secretary (Financial
Services) and ?nally the
Union Finance Secretary.
Mr. ShyamSaran
belongs to the 1970
batch of the Indian
Foreign Service (IFS).
After career spanning
34 years in the IFS,
he was appointed
India’s Foreign
Secretary in 2004 and
held that position till
September, 2006.
He was awarded the
Padma Bhushan for
contribution to Civil
Service.
Mr. Sanjay Govind
Dhande, a brilliant
academician of high
caliber is presently
working as the Director
of IIT, Kanpur. He
served as a part–time
member of Telecom
Regulatory Authority
of India. He is also
credited with his
pioneering work in
the ?elds of Rapid
Prototyping, Rapid
Tooling and Reverse
Engineering.
Mr. Shyamal Roy is
presently Chairperson,
Executive Education IIM,
Bangalore. He was earlier
Professor, Economics and
Social Science Area, IIM,
Bangalore. He has been
an Economist/ consultant
of International Bank
for Reconstruction and
Development, (World
Bank) and also worked
as an Advisor, Policy
Analysis Division, Food &
Agriculture Organisation of
UN, Rome, Italy.
Name Mr. Arun Ramanathan Mr. ShyamSaran Prof. Sanjay G Dhande Prof. Shyamal Roy
Directorship
held in other
Companies*
1. JCT Electronics Limited
2. National Textile
Corporation Limited
3. Shipping Corporation
of India Limited
4. Indian Clearing
Corporation
Limited
5. Oil and Natural Gas
Corporation Limited
1. Wipro Limited
2. Indian Oil
Corporation Limited
Neyveli Lignite
Corporation Limited
Nil
Membership/
Chairmanship
of Committees,
including ONGC
Videsh Limited**
Member–Audit
Committee
1. JCT Electronics Limited
2. National Textile
Corporation Limited
3. Shipping Corporation
of India Limited
(Chairman)
4. Indian Clearing
Corporation Limited
5. Oil and Natural Gas
Corporation Limited
6. ONGC Videsh Limited
(Chairman)
Member – Shareholders’
/ Investors’ Grievance
Committee
1. Shipping Corporation
of India (Chairman)
2. Oil and Natural Gas
Corporation Limited
Nil Nil Nil
2.7.2 Directors to be reappointed:
Name Mr. S.P. Garg Mr. Rajesh Kumar Khullar
Date of Birth & Age August 15, 1956; 55 years August 31, 1963; 48 Years
Date of Appointment September 8, 2008 March 11, 2011
Quali?cation – B.Com(Hons.)
– FCA
– FCS
– AICWA
– IAS
– M.Sc in Physics
No. of Shares held 1 (as Nominee of ONGC) Nil
Experience in
speci?c Functional
Areas
Mr. S.P. Garg carries a very rich and varied
experience in the ?eld of Finance including
Corporate Accounts, Project Management,
Taxation, Internal Audit etc. He previously held the
position of GM(Finance) and Company Secretary,
ONGC.
Mr. Rajesh Kumar Khullar is an IAS o?cer of
1988 batch and currently holding the position of
Joint Secretary in the Department of Economic
A?airs, Ministry of Finance. He previously served
on various positions in the Government such as
Director, Public Relations Department, Haryana,
Managing Director, Haryana Tourism Corporation,
Commissioner, Municipal Corporation, Faridabad
etc.
64 65
Name Mr. S.P. Garg Mr. Rajesh Kumar Khullar
Directorship held in
other Companies*
Nil 1. Indian Railway Finance Corporation Ltd.
2. Union Bank of India
3. Indian Infrastructure Finance Co. Ltd.
Membership/
Chairmanship
of Committees
including ONGC
Videsh Limited**
Nil Member, Audit Committee – ONGC Videsh Limited
* The other directorships do not include directorships of Companies registered under Section 25 of the Companies Act, 1956, Foreign
Companies and Private Limited Companies.
** Membership/ Chairmanship of the Audit Committees and Shareholders’/ Investors’ Grievance Committees of all Public limited companies
only have been considered.
3. AUDIT COMMITTEE
3.1 Composition of the Audit Committee:
The composition of the Audit Committee during the year 2011–12 was as follows:
• Mr. Arun Ramanathan – Member (w.e.f. 26
th
September, 2011) and Chairman
(w.e.f. 14
th
November, 2011);
• Mr. Vivek Kumar – Member (Chairman up to 13
th
November, 2011);
• Mr. U.N. Bose – Member upto 24
th
October, 2011;
• Mr. D. K. Sarraf – Member upto 15
th
September, 2011
• Mr. Sudhir Vasudeva – Member upto 3
rd
October, 2011;
• Mr. S.V. Rao – Member w.e.f. 4
th
October, 2011 till 24
th
October, 2011;
• Mr. R. K. Khullar – Member w.e.f. 31
st
October, 2011
The terms of reference of the Audit Committee are in accordance with Section 292A of the Companies
Act, 1956 and the guidelines on Corporate Governance issued by the Department of Public Enterprises.
Mr. Arun Ramanathan, Independent Director, was appointed as Chairman of the Committee w.e.f. 14
th
Nov. 2011. Mr. Arun Ramanathan joined the IAS in July 1973 and held several assignments in various
ministries of Govt. of India (GOI). In the GOI, he was Secretary (Chemicals & Petrochemicals), Secretary
(Financial Services) and finally the Union Finance Secretary. Mr. Arun Ramanathan was the Finance
Secretary at the time of the global financial crisis and was nominated by the Prime Minister to Chair
the Group of Secretaries to recommend measures needed to counter the meltdown in the financial
and industrial sectors. Mr. Vivek Kumar, Chairman of the Committee (upto 13
th
November, 2011) and
Government nominee Director is an IAS officer and MA (International Relations). He is currently
holding the position of Joint Secretary (International Cooperation) in MoP&NG and has served on
various positions in the Government.
All members of the Committee have requisite ?nancial and management experience. All Functional
Directors of ONGC Videsh, Director (Finance), ONGC and Internal Auditors are the permanent invitees to
Committee’s meetings. Representatives of Statutory Auditors are invited to attend and participate in the
meetings. Executives of Finance and other departments are invited on need basis. Company Secretary acts
as the Secretary to the Committee.
3.2 Role of the Audit Committee:
The role of the Audit Committee includes the following:
3.2.1 Oversight of the company’s ?nancial reporting process and the disclosure of its ?nancial information
to ensure that the ?nancial statement is correct, su? cient and credible.
3.2.2 Recommending the ?xation of audit fees to the Board.
3.2.3 Approval of payment to statutory auditors for any other services rendered by the statutory
auditors.
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66 67
3.2.12 To review the functioning of the Whistle Blower Mechanism.
3.2.13 To review the follow up action on the audit observations of the C&AG audit, if any.
3.2.14 Review/ check the contracts on nomination basis as per CVC guidelines.
3.2.15 To review the follow up action taken on the recommendations of Committee on Public Undertakings
(COPU) of the Parliament.
3.2.16 Provide an open avenue of communication between the independent auditor, internal auditor and
the Board of Directors.
3.2.17 Review and pre–approve all related party transactions in the company. For this purpose, the Audit
Committee may designate a member who shall be responsible for pre–approving related party
transactions.
3.2.18 Review with the independent auditor the co–ordination of audit e?orts to assure completeness of
coverage, reduction of redundant e?orts, and the e?ective use of all audit resources.
3.2.19 Consider and review the following with the independent auditor and the management:
– The adequacy of internal controls including computerized information system controls and
security, and
– Related ?ndings and recommendations of the independent auditor and internal auditor, together
with the management responses.
3.2.20 Consider and review the following with the management, internal auditor and the independent
auditor:
– Signi?cant ?ndings during the year, including the status of previous audit recommendations.
– Any di?culties encountered during audit work including any restrictions on the scope of activities
or access to required information,
3.3 Minutes of the Audit Committee:
Minutes of the meetings of the Audit Committee are approved by the Chairman of the Committee and are
noted by the Board of Directors in the subsequent meeting.
3.2.4 Reviewing, with the management, the annual ?nancial statements before submission to the Board
for approval, with particular reference to:
a. Matters required to be included in the Directors’ Responsibility Statement and in the Director’s
report in terms of clause (2AA) of section 217 of the Companies Act, 1956;
b. Changes, if any, in accounting policies and practices and reasons for the same.
c. Major accounting entries involving estimates based on the exercise of judgment by
management;
d. Signi?cant adjustments made in the ?nancial statements arising out of audit ?ndings;
e. Compliance with legal requirements relating to ?nancial statements;
f. Disclosure of any related party transactions; and
g. Quali?cations in the draft audit report, if any.
3.2.5 Reviewing, with the management, the quarterly/ half yearly ?nancial statements as may be required
before submission to the Board for approval.
3.2.6 Reviewing, with the management, performance of internal auditors and adequacy of the internal
control systems.
3.2.7 Reviewing the adequacy of internal audit function, it any, including the structure of the internal
audit department, sta?ng and seniority of the o?cial heading the department, reporting structure
coverage and frequency of internal audit.
3.2.8 Discussion with internal auditors and/ or auditors any signi?cant ?ndings and follow up there on.
3.2.9 Reviewing the ?ndings of any internal investigations by the internal auditors/ auditors/ agencies into
matters where there is suspected fraud or irregularity or a failure of internal control systems of a
material nature and reporting the matter to the Board.
3.2.10 Discussion with statutory auditors before the audit commences, about the nature and scope of
audit as well as post–audit discussion to ascertain any area of concern.
3.2.11 To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,
shareholders and creditors, if any.
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Tanker Loading DeKastro
68 69
3.4 Meetings:
Six meetings of the Audit Committee were held during the ?nancial year on the following dates:
20
th
May, 2011 27
th
July, 2011 12
th
August, 2011
14
th
November, 2011 11
th
January, 2012 22
nd
February, 2012
3.5 Attendance:
Members Meetings held during the tenure Meetings attended
Mr. Vivek Kumar 6 4
Mr. Arun Ramanathan 3 3
Mr. U. N. Bose 3 3
Mr. D. K. Sarraf 3 3
Mr. Sudhir Vasudeva 3 3
Mr. R. K. Khullar 3 1
Mr. S.V. Rao 0 0
In viewof induction of three more Independent Directors on the Board of your Company with e?ect from5
th
June, 2012, your Company
has reconstituted the Audit Committee with three Independent Directors as members and constituted the following newcommittees
of the Board as this would strengthen the deliberations and functioning of the Board:
1. Human Resource Management and Remuneration Committee
2. Project Appraisal, HSE and Risk Management Committee
3. Financial Management Committee
4. EQUITY SHARES HELD BY DIRECTORS (AS ON 31
ST
MARCH, 2012)
Mr. Sudhir Vasudeva, Mr. D.K. Sarraf and Mr. S.P. Garg hold one share each of the Company as nominee of
Oil and Natural Gas Corporation Limited.
5. CODE OF CONDUCT FOR MEMBERS OF THE BOARD AND SENIOR
MANAGEMENT
The Company is committed to conduct its business in accordance with the highest standards of business
ethics and comply with applicable laws, rules and regulations. A code of conduct, evolved in line with the
parent Company ONGC was adopted by the Board which is applicable to all Members of the Board and
Senior Management who have con?rmed compliance with the Code of Conduct for the year under review.
A copy of the Code is available on the Company’s website www.ongcvidesh.com.
A declaration signed by Chairman is given below:
“I hereby con?rm that:
The Company has obtained from the Members of the Board and Senior Management, a?rmation that they
have complied with the Code of Conduct for Directors and Senior Management during the ?nancial year
2011–12.”
(Sudhir Vasudeva)
(Chairman)
6. SUBSIDIARY MONITORING FRAMEWORK
All subsidiaries of the Company, except one subsidiary in Brazil, are managed by their respective Boards
having the duties to manage such companies in the best interest of their stakeholders. Brazilian company
is managed through administrators as permitted under the local laws. Being 100% shareholder, the
Company nominates its representatives on the Boards of subsidiaries and monitors the performance of its
subsidiaries periodically.
ONGC Videsh had twenty nine subsidiaries (comprising ?ve direct subsidiaries and twenty four indirect
subsidiaries) as on 31
st
March 2012. Details of Subsidiaries are as under:
Sl
No.
Name of the Subsidiary Date of Incorporation/
Acquisition
Country in which
Incorporated
Direct Subsidiaries:
1 ONGC Nile Ganga B.V. 12.03.2003 Netherlands
2 ONGC Narmada Limited 07.12.2005 Nigeria
3 ONGC Amazon Alaknanda Limited 08.08.2006 Bermuda
4 Jarpeno Limited 12.08.2008 Cyprus
5 Carabobo One AB 25.02.2010 Sweden
Indirect Subsidiaries:
1 ONGC Campos Ltda. 16.03.2007 Brazil
2 ONGC Nile Ganga (Cyprus) Ltd. 26.11.2007 Cyprus
3 ONGC Nile Ganga (San Cristobal) B.V. 29.02.2008 Netherlands
4 ONGC Satpayev E&P B.V 07.06.2010 Netherlands
5 ONGC Caspian E&P B.V 07.06.2010 Netherlands
6 Biancus Holdings Limited 13.01.2009 Cyprus
7 Imperial Energy Tomsk Limited 13.01.2009 Cyprus
8 Imperial Energy (Cyprus) Limited 13.01.2009 Cyprus
9 Imperial Energy Nord Limited 13.01.2009 Cyprus
10 Imperial Energy Gas Limited 13.01.2009 Cyprus
11 Nefsilius Holdings Limited 13.01.2009 Cyprus
12 RK Imperial Energy Kostanai Limited 13.01.2009 Cyprus
13 Imperial Frac Services ( Cyprus) Limited 13.01.2009 Cyprus
14 Freshspring Investments Limited 13.01.2009 Cyprus
15 Redcli?e Holdings Limited 13.01.2009 Cyprus
16 San Agio Investments Limited 13.01.2009 Cyprus
17 LLC Sibinterneft 13.01.2009 Russian Federation
18 LLC Allianceneftegaz 13.01.2009 Russian Federation
19 LLC Nord Imperial 13.01.2009 Russian Federation
20 LLC Imperial Energy Tomsk Gas 13.01.2009 Russian Federation
21 LLC Stratum 13.01.2009 Russian Federation
22 LLC Imperial Trans Service 13.01.2009 Russian Federation
23 LLC Rus Imperial Group 13.01.2009 Russian Federation
24 Petro Carabobo Ganga B.V 26.02.2010 Netherlands
7. ANNUAL GENERAL MEETINGS (AGMs)
Location, date and time, where the AGMs were held during the preceding three years:
Year Location Date Time (IST)
2008–09 4
th
Floor, Kailash Building, 26, Kasturba Gandhi
Marg, NewDelhi – 110 001.
16
th
September, 2009 12.00 Noon
2009–10 4
th
Floor, Kailash Building, 26, Kasturba Gandhi
Marg, NewDelhi – 110 001.
15
th
September, 2010 10.00 AM
2010–11 4
th
Floor, Kailash Building, 26, Kasturba Gandhi
Marg, NewDelhi – 110 001.
12
th
August, 2011 11:00 AM
Special Resolutions passed during last 3 AGMs
No Special Resolution was passed during the last three AGMs of the Company.
70 71
a. Executive Directors
(` in Million)
SI
No.
Names Salary Including
DA
Other bene?ts &
perks
Performance
Incentives
Contribution to PF &
other Funds
Grand Total
1 Mr. D.K. Sarraf 1.03 (0.01) 1.16 0.09 2.27
2 Mr. S.P. Garg 1.75 0.07 0.96 0.16 2.94
3 Mr. S. Roychaudhury 1.80 0.97 0.91 0.16 3.84
4 Mr. N.K. Verma 0.41 0.35 – 0.04 0.80
5 Mr. Joeman Thomas 5.20 0.59 0.93 0.12 6.84
b. Non–Executive Directors (Part–time non–offcial)
The details of sitting fees paid to Non–Executive non–o?cial Director during the year 2011–12 are as
follows:
Name Sitting fees (` in Million)
Mr. Arun Ramanathan 0.16
8.4 Details of administrative and o?ce expenses as a percentage of total expenses and reasons for
increase:
Particulars 2011–12 2010–11 Reasons for variation
Total expenses * 16,050.36 13,035.76 Though the increase in administrative and
o?ce expenses in absolute terms is marginal, in
percentage terms, the administrative and o?ce
expenses has reduced due to increase in total
expenses mainly due to increase in royalty.
Administrative and o?ce expenses 1,272.83 1,250.28
Administrative and o?ce expenses as
a percentage of total expenses
8% 9.6%
*Includes Production, Transportation, Selling & Distribution Expenditure but excludes Provisions & Write O? (Net).
9. COMPLIANCES
The Company has complied with applicable rules and the requirement of regulatory authorities and no
penalties or strictures were imposed on the Company on any matter related to any guidelines issued
by Government during last three years. All statutory ?lings were within stipulated time with various
authorities. No Presidential Directives have been issued during 2011–12.
10. MEANS OF COMMUNICATION
• Half–Yearly Results: Pursuant to listing of the debt securities in the National Stock Exchange of India
Ltd., the Company intimated half–yearly ?nancial results/ audited annual ?nancial results during 2011–
12 to the Stock Exchange immediately after being taken on record and approved by the Board. These
?nancial results were published in the leading English and Hindi dailies having wide circulation. The
results were also sent to Debenture Trustee M/s IDBI Trusteeship Services Limited and displayed on the
website of the Company www.ongcvidesh.com.
• News Release, Presentation etc.: The o?cial news releases are displayed on the Company’s website
www.ongcvidesh.com.
• Website: The Company’s website is www.ongcvidesh.com. Annual Report and Audited ?nancial
statements are also available on the web–site.
• Annual Report: Annual Report containing inter–alia, Audited Accounts, Consolidated Financial
Statements, Directors’ Report, Auditors’ Report, and other important information is circulated to the
members and others entitled thereto. The Management Discussion and Analysis (MD&A) Report and
Corporate Governance Report form part of the Directors’ Report in the Annual Report.
• Compliance O?cer: The Company has designated Mr. V. Sreedher, Company Secretary as Compliance
O?cer for servicing of debenture investors. The email id [email protected] has
been created exclusively for addressing the queries of debenture investors:
8. DISCLOSURES
8.1 Material Contracts/ Related Party Transactions:
The Company has not entered into any material ?nancial or commercial transactions with the Directors
or the Senior Management personnel or their relatives or the companies and ?rms, etc. in which they are,
either directly or through their relatives, interested as Directors and/ or Partners except with certain PSUs,
where the Directors are Directors without the required threshold of shareholdings. The Company has
obtained declarations from all concerned in this regard, which were noted by the Board.
Transactions with related parties are disclosed in Note No. 54 to the Stand–alone Accounts of the Company
in the Annual Report. Being a State enterprise, no disclosure has been made in respect of the transactions
with state enterprises including subsidiary companies in line with Accounting Standard (AS) 18 on Related
Party Disclosures.
8.2 The Company has not incurred any expenditure during the year 2011–12, which was not for the purpose
of the business of the Company or which was personal in nature and incurred for the members of the
Board of Directors and Senior Management personnel.
8.3 DIRECTORS’ REMUNERATION
ONGC Videsh Limited being a Government Company, appointment and terms and conditions of remuneration
of Executive Directors (whole–time functional) are determined by the Government through administrative
ministry, the MoP&NG. Non–executive part–time o?cial Director do not draw any remuneration. The part–
time non–o?cial Director received sitting fees of `20,000 for each Board meeting and Board Committee
meeting attended during the year 2011–12.
Remuneration of Directors for the year ended 31
st
March, 2012 was as follows:
AK ?elds temporary production facility, Syria
72 73
11. ANNUAL GENERAL MEETING
Date : 17
th
August, 2012
Time : 5.00 PM
Venue : 4
th
Floor, Kailash Building, 26, K.G. Marg,
New Delhi – 110001
12. SHARE OWNERSHIP PATTERN AS ON 31
ST
MARCH, 2012
Category No. of shares held of `100 each Percentage of shareholding
Oil and Natural Gas Corporation Limited and its
nominees
100,000,000 100%
13. MAJOR PROJECTS:
The list of projects of ONGC Videsh, including held through subsidiaries/ Joint Venture companies, presently
is as below:
1. Block 06.1, Vietnam
2. Block 8, Iraq
3. Sakhalin–1, Russia
4. Block A–1, Myanmar
5. Block A–3, Myanmar
6. Farsi O?shore Block, Iran
7. Area 43, Libya
8. GNPOC Blocks 1, 2 & 4, Sudan
9. Pipeline Project, Sudan
Yastreb rig in Odoptu process facilities
Orlan Platform
74 75
10. Block 5A, South Sudan
11. GPOC Blocks 1, 2 & 4, South Sudan
12. Block XXIV, Syria
13. Al Furat Project (4 PSAs), Syria
14. Block BC–10, Brazil
15. Block BM–S–74, Brazil
16. Blocks 25, 26, 27, 28, 29 & 36, Cuba
17. Block 128, Vietnam
18. Blocks 34 & 35, Cuba
19. Mansarovar Energy Project, Colombia
20. Block RC–8, Colombia
21. Block RC–9, Colombia
22. Block RC–10, Colombia
23. Block CPO–5, Colombia
24. Block SSJN–7, Colombia
25. OPL – 285, Nigeria
26. Block BM–SEAL–4, Brazil
27. Block BM–BAR–1, Brazil
28. San Cristobal Project, Venezuela
29. Carabobo–1 Project, Venezuela
30. Imperial Energy (7 blocks), Russia
31. Satpayev Project, Kazakhstan
14. RISK MANAGEMENT
The framework for risk assessment and minimization thereto has been implemented in the Company.
15. CEO/CFO CERTIFICATION
In terms of Department of Public Enterprises Guidelines on Corporate Governance, the certi?cation by the
CEO/ CFO on the ?nancial statements and internal controls relating to ?nancial reporting for the ?nancial
year 2011–12 was submitted for review to the Audit Committee/ Board of Directors on 21
st
May, 2012.
Main O?ce Building & Living quarter, Chyvo Onshore process facilities
76 77
16. SECRETARIAL AUDIT REPORT
Secretarial Audit Report con?rming compliance to the applicable provisions of the Companies Act, Debt
Listing Agreement, SEBI guidelines etc. and Certi?cate on compliance of guidelines on Corporate Governance
issued by DPE has been obtained M/s A. N. Kukreja & Co., practicing Company Secretaries for the ?nancial
year ended 31
st
March, 2012 which was noted by the Board and forms part of the Directors’ Report.
17. AUDIT QUALIFICATION
The Company is in the regime of unquali?ed ?nancial statements.
18. TRAINING OF BOARD MEMBERS
Though, no speci?c training programmes were arranged for Board members, detailed presentations are
made by senior executives/ professionals/ consultants on business related issues, risk assessment, strategy
e?ect of regulatory changes etc. at the Board/ Committee meetings. The Company has recently adopted
“Policy for Training of Directors”.
19. WHISTLE BLOWER POLICY
A Whistle Blower Policy has been implemented by our parent company ONGC and is functional from
1
st
December, 2009. The policy ensures that a genuine Whistle Blower is granted due protection from any
victimization.
20. FEE TO STATUTORY AUDITORS
The total fee paid/ payable to the Statutory Auditors for the ?nancial year 2011–12 was `3.85 million (previous
year `3.49 million).
21. GENERAL INVESTOR (DEBENTURE HOLDERS) INFORMATION:
t -JTUJOH0O4UPDL&YDIBOHF
Company’s debt securities are listed on the Wholesale Debt Market (WDM) segment of National Stock
Exchange of India Limited (NSE).
t %FCFOUVSF5SVTUFF
IDBI Trusteeship Services Limited
Asian Building, Ground Floor,
17, R. Kamani Marg, Ballard Estate,
Mumbai – 400 023.
t 1BZNFOUPGMJTUJOH'FFT
Annual listing fee till the year 2012–13 has been paid by the Company.
Marine Tanker
78 79
The preparation of ?nancial statements of ONGC Videsh Limited for the year ended 31 March 2012 in
accordance with the ?nancial reporting framework prescribed under the Companies Act, 1956 is the
responsibility of the management of the Company. The Statutory Auditors appointed by the Comptroller
and Auditor General of India under Section 619 (2) of the Companies Act, 1956 are responsible for expressing
opinion on these ?nancial statements under Section 227 of the Companies Act, 1956 based on independent
audit in accordance with the auditing and assurance standards prescribed by their professional body, the
Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit
Report dated 21 May, 2012.
I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under
section 619 (3) (b) of the Companies Act, 1956 of the ?nancial statements of ONGC Videsh Limited for the
year ended 31 March 2012. This supplementary audit has been carried out independently without access
to the working papers of the statutory auditors and is limited primarily to the inquiries of the Statutory
Auditors and company personnel and a selective examination of some of the accounting records. On the
basis of my audit nothing signi?cant has come to my knowledge which would give rise to any comment
upon or supplement to Statutory Auditors’ report under section 619 (4) of the Companies Act, 1956.
For and on behalf of the
Comptroller and Auditor General of India
(Naina A. Kumar)
Principal Director of Commercial Audit
Place : New Delhi. & Ex–O? cio Member, Audit Board –II
Date : July 10, 2012. New Delhi.
Sd/–
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA
UNDER SECTION 619 (4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS
OF ONGC VIDESH LIMITED FOR THE YEAR ENDED 31 MARCH, 2012
100 ton capacity Workover rig
80 81
India (Issue and Listing of Debt Securities)
Regulations, 2008.
4) The conditions of Listing Agreement for Debt
Securities entered into with the National Stock
Exchange of India Ltd.
5) In our opinion and to the best of our information
and according to explanations given to us by
the management, we certify that, except the
compositions of the Board of Directors and
Audit Committee with regard to independent
Directors, the Company has complied with the
DPE guidelines on Corporate Governance.
For A.N. Kukreja & Co
Company Secretaries
(A.N. Kukreja)
New Delhi Proprietor
May 21, 2012. CP 2318
The Board of Directors
ONGC Videsh Ltd.
601 “Kailash”
26, Kasturba Gandhi Marg
New Delhi – 110 001
We have examined the registers records and
documents of ONGC Videsh Ltd. (the Company) for
the period 1.4.2011 to 31.03.2012 according to the
provision of:
1. The Companies Act, 1956 and Rules made under
Act;
2. The Depositories Act, 1996 and Regulations
framed under Act;
3. Securities and Exchange Board of India (Issue
and Listing of Debt Securities) Regulations
2008.
4. The Listing Agreement for Debt Securities with
the National Stock Exchange of India Ltd., and
5. Guidelines on Corporate Governance for
Central Public Sector Enterprises as stipulated
in the O.M. No. 18 (8) 2005– GM dated 14
th
May,
2010 of the Ministry of Heavy Industries and
Public Enterprises, Government of India (the
DPE Guidelines on Corporate Governance”).
1) Based on our examination and veri?cation of
records produced to us and according to the
information and explanations given to us by
the Company, in our opinion, the Company has
complied with the provisions of the Companies
Act, 1956 (‘the Act) and Rules made under
the Act and the Memorandum and Articles of
Association of the Company with regard to:
a) Maintenance of statutory registers and
documents and making necessary entries
therein;
b) Filing of requisite forms and returns with
the Registrar of Companies, NCT of Delhi
and Haryana within the time prescribed
under the Act;
c) Service of documents by the Company on
its and the Registrar of Companies;
q) The Company has deposited both the
employees’ and employer’s contribution
with the ONGC Employees Contributory
Provident Fund Trust within the prescribed
time pursuant to Section 418 of the Act
during the relevant period.
r) There was no prosecution initiated against or
show cause notice received by the Company
and no ?nes or any other punishment was
imposed on the Company, its Directors and
o?cers during the relevant period for any
o?ences under the Act.
We further report that
2) The Company has complied with the provisions
of the Depositories Act, 1956 and reconciliation
of records of dematerialized non–convertible
redeemable bonds in the nature of
debentures.
3) The Company has complied with the
provisions of Securities and Exchange Board
d) Notice of Board Meetings and Committee
Meetings of Directors;
e) Convening and holding of the meetings
of Directors and Committees of Directors
including passing of resolutions by
circulation;
f) The 46
th
Annual General Meeting held on
12.08.2011;
g) Minutes of proceedings of General Meeting
and meetings of Board and its Committee;
h) Constitution of Board of Directors
and appointment, retirement and re–
appointment of directors;
i) Appointment of Chairman, Managing
Director, Whole Time Directors and
non–executive directors and their
remuneration;
j) The Directors disclosed their interests and
concerns in contracts and arrangements,
shareholdings and directorships in other
companies and interests in order entities
and their disclosures have been noted and
recorded by the Board;
k) Transfer of share and issue and delivery
of original and duplicate certi?cates of
shares.
l) Investment of Company’s funds including
inter corporate loans and investments, and
borrowing powers;
m) Appointment and remuneration of Auditors/
Cost Auditor;
n) The Company has not invited/accepted
any deposits falling within the purview of
Section 58A of the Act during the relevant
period;
o) The Company has not made any secured
borrowings during the relevant period;
p) The Company has not bought back any
shares during the relevant period;
Sd/–
SECRETARIAL AUDIT REPORT AND CERTIFICATE ON COMPLIANCE
OF DPE GUIDELINES ON CORPORATE GOVERNANCE FOR THE
FINANCIAL YEAR ENDED 31st MARCH, 2012.
82 83
AUDITORS’ REPORT
To
THE MEMBERS
ONGC VIDESH LIMITED
1 We have audited the accompanying ?nancial
statements of “ONGC VIDESH LIMITED”, (the
company) which comprise the Balance Sheet as
at 31st March 2012, and the statement of Pro?t &
Loss Account and the Cash Flow Statement for
the year then ended, in which are incorporated,
the company’s share in the total value of
assets, liabilities, expenses and net pro?ts of
7 International Joint Ventures audited by other
auditors appointed by the management of the
respective joint ventures/the company under
respective local laws / Production Sharing
Contract / Joint Operating Agreement as at
31st March 2012 and 5 International Joint
Ventures audited by such other auditors as at
31st December 2011, however updated
for position as at 31st March 2012 by the
management and unaudited 7 international
Joint Ventures. These audited joint ventures
accounts (including for the period ended Dec
31, 2011) cover 95% of Income, 89% of Fixed
Assets, 92% of Producing Properties, 92% of
CWIP and 76% of EWIP & DWIP. These ?nancial
statements are the responsibility of the
Company’s Management. Our responsibility
is to express an opinion on these ?nancial
statements based on our audit.
Considering the fact that actual operations
are performed outside India and operator is
responsible for maintaining the original books
of account on behalf of all the members as
per Joint operating agreement, we have
conducted our audit by relying on such
information furnished by the operator based
on the audited statements or where Joint
Ventures are not audited, relying upon the
information furnished by the management.
2 We conducted our audit in accordance with
auditing standards generally accepted in
India. Those standards require that we plan
and perform the audit to obtain reasonable
assurance about whether the ?nancial
statements are free of material misstatements.
An audit includes examining, on a test basis,
evidence supporting the amounts and
disclosures in the ?nancial statements. An
audit also includes assessing the accounting
principles used and signi?cant estimates made
by the management, as well as evaluating the
overall ?nancial statements presentation. We
believe that our audit provides a reasonable
basis for our opinion.
3 We have placed reliance on technical/
commercial evaluation by the management
in respect of categorization of expenditure
on project in Exploratory & Development
Wells in Progress, Producing Properties
and Capital Work in Progress, Wells Status,
allocation of cost incurred on them, depletion
of producing properties on the basis of proved
developed hydrocarbon reserves as estimated
by REC of the parent company, provision for
abandonment costs, allocation of depreciation
on ?xed assets (including support equipment
and facilities) and liabilities against agreed
minimum work program. We have also placed
reliance on the management’s assessment of
impairment indicators and impairment results.
4 As required by the Companies (Auditors Report)
Order, 2003 and read together with the Companies
(Auditor’s Report) Amendment order, 2004
(hereinafter referred to as the order) issued by
the Central Government of India in terms of sub–
section (4A) of section 227 of the Companies Act,
1956, we enclose in the Annexure a statement on
the matters speci?ed in paragraphs 4 and 5 of the
said order.
5 Further to our comments above, we report
that:
(i) We have obtained all the information and
explanations, which to the best of our
knowledge and belief were necessary for
the purposes of our audit;
(ii) In our opinion, proper books of account
as required by law have been kept by the
Company at head o?ce so far as appears
from our examination of the books.
(iii) The Balance Sheet and Statement of Pro?t
and Loss and Cash Flow Statement dealt
with by this report are in agreement with
the books of account.
(iv) In our opinion and based on the information
given to us, the Statement of Pro?t and
Lossand Balance Sheet and Cash Flow
Statement referred to in this report comply
with the Accounting Standards referred
to in sub–section (3C) of Section 211 of the
Companies Act, 1956.
(v) Disclosure in terms of clause (g) of sub
section (1) of section 274 of the Companies
Act, 1956 is not required as per noti?cation
no. GSR829 (E) dated October 21
st
, 2003
issued by the Department of Company
a?airs.
6 In our opinion and to the best of our information
and according to the explanations given to us, the
said accounts read with the Notes on accounts
and the Signi?cant Accounting Policies give the
information required by the Companies Act,
1956, in the manner so required and give a true
and fair view in conformity with the accounting
principles generally accepted in India:
a) In the case of Balance Sheet, of the state of
a?airs of the Company as at 31
st
March 2012;
and
b) In the case of the Pro?t and Loss Account, of
the pro?t of the Company for the year ended
on that date; and
c) In the case of Cash Flow Statement, of the
cash ?ows of the Company for the year
ended on that date.
Data centre at ONGC Videsh Corporate o?ce
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
84 85
1. In respect of ?xed assets
a) The company has generally maintained
proper records showing full particulars,
including quantitative details and situation
of ?xed assets in India at headquartersand in
case of operated projects/branches outside
India. In respect of non– operated ventures
outside India ?xed assets are accounted for
based on the information made available by
the respective operators of joint ventures
and such ?xed assetsare in the custody of
the consortium and/or operator on behalf
of the partners for business operation
throughout the term of the respective
agreements.
b) As explained to us, during the year, the
management has carried out physical
veri?cation of ?xed assets situated at
headquarters, operated ventures outside
India as well as major non operated
joint ventures in accordance with the
requirements of the respective agreements.
There was no material discrepancies noticed
during such physical veri?cation.
c) We have been informed by the management
that no substantial part of ?xed assets has
been disposed o? by the company during
the year.
2. In respect of its inventories:
a) The company does not have any inventory
in India. However, inventories lying outside
India in non operated projects are in the
custody of the consortium and/or operator
on behalf of the consortium partners. During
the year under audit, physical veri?cation of
majority of inventories lying in non operated
projects was conducted by the operator of
the joint ventures in accordance with the
requirements of the respective agreements.
It was informed that the inventory held by
the company representing company’s share
of participating interest in joint ventures
outside India is incorporated in the books
of accounts on the basis of information
provided by the respective operators.
b) As informed by the management the
procedures of physical veri?cation of
inventory lying outside India, followed by
the management in respect of operated and
non–operated Joint Ventures are reasonable
and adequate in relation to the size of the
company and the nature of its business.
c) There was no material discrepancies noticed
during such physical veri?cations.
3. In respect of loans:
a) According to the information and
explanations given to us, the Company has
not granted or taken any loan, secured or
unsecured, to / from companies, ?rms or
other parties listed in the register maintained
under Section 301 of the Companies Act,
1956. In view of this, sub clauses (b), (c) and
(d) of clause (iii) are not applicable.
b) As per information and explanation given
to us, the Company has not taken any loan
from the parties covered under the register
maintained u/s 301 of the Companies Act,
1956. In view of this sub clause (e), (f) & (g)
of clause (iii) are not applicable.
4. In our opinion and according to the
information and explanations given to us,
in general, there is an adequate internal
control procedure commensurate with the
size of the Company and the nature of its
business for the purchase of inventories
and ?xed assets acquired at headquarters
in India. According to information and
explanations given to us, internal control
system in respect of inventory and ?xed
assets purchased by the company and sales
for the operated ventures outside India is
commensurate with the nature and size of
its business. However, all purchases of ?xed
assets and inventory in respect of the non–
operated Joint Ventures are made outside
India by the respective operators. It is not
practically feasible or appropriate to check
the internal control system being prevalent
at respective project sites for non–operated
joint ventures.
5. In respect of its inventories:
a) According to the information and
explanations given to us, during the year
under audit there have been no contracts
or arrangements which need to be entered
in the register maintained under section 301
of the Companies Act, 1956.
b) Accordingly the provisions of the clause v (b)
of paragraph 4 of the order (as amended)
are not applicable to the company.
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in Paragraph 4 of our report of even date)
6. In our opinion and according to the information
and explanations given to us, the Company has
not accepted any deposit from public within
the meaning of section 58A and 58AA and any
other relevant provisions of the Companies
Act, 1956 and the rules framed there under.
7. The company has a system of internal audit,
which in our opinion, is commensurate with the
size and nature of its business.However e?orts
be made to further strengthen the same.
8. We have broadly reviewed the books of account
maintained by the Company pursuant to the
rules made by the Central Government for the
maintenance of cost records under section 209
(1) (d) of the Companies Act, 1956 and we are
of the opinion that prima facie the prescribed
accounts and records have been made and
maintained. However, as explained to us, cost
audit is yet to be conducted for FY 2011–12.
9. a) Provident fund contributions are transferred
by the company to its parent company,
ONGC. ONGC is responsible for depositing
the same with appropriate authority.
According to the information given to us,
there are no undisputed statutory dues
pending as on last day of current ?nancial
year for a period of more than six months
from the date they become payable.
b) As per information and explanations
provided to us, no dues of income tax/
sales tax/VAT/ wealth tax/ custom duty/
excise duty/ cess (except cess under section
441A of the Companies Act 1956 since the
aforesaid section has not yet been made
e?ective by the Central Government) are
pending on account of any dispute.
10. The company has no accumulated losses at the
end of the current ?nancial year and has not
incurred cash losses during the current and in
the immediately preceding ?nancial year.
11. As per the information and explanation given
by the management, we are of the opinion that
company has not defaulted in the repayment
of dues to any ?nancial institution, banks and
debenture holders.
12. According to the information and explanations
given to us and based on the documents and
records produced to us, the Company has not
granted loans and advances on the basis of
security by way of pledge of shares, debentures
and other securitiesand accordingly paragraph
4 (xii) of the Order is not applicable.
13. In our opinion, the Company is not a chit
fund or a nidhi / mutual bene?t fund / society.
Therefore, the provisions of this clause are not
applicable to the Company.
14. The Company is not dealing in or trading
in shares, securities, debentures and other
investments. In view of the same, provisions of
this clause are not applicable.
15. According to information and explanations
given to us, the company has not given any
guarantee for loan taken by others from bank
and ?nancial institutions.
16. According to information and explanation
given to us, term loans were broadly applied by
the company for the purpose for which loans
were obtained.
17. According to the information and explanations
given to us and on an overall examination of
the balance sheet of the Company, we report
that no funds raised on short–term basis have
been used for long–term investment.
18. The Company has not made any preferential
allotment of shares during the period under
audit to parties and companies covered in the
register maintained under section 301 of the
Companies Act, 1956.
19. Company has not issued any debentures during
the year; hence the question of securities to
be created for debentures issued does not
arise.In earlier years, the company has issued
non–convertible redeemable Bonds in the
nature of Debentures amounting to Rs. 23,400
million. As explained to us, the company is
maintaining 100% assets cover as required in
SEBI guidelines.
20. The company has not raised any money by way
of public issue during the year.
21. According to the information and explanations
given by the management and to the best of
our knowledge and belief, no fraud on or by
the company was noticed or reported during
the year.
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
86 87
8ALAh6E 8hEET A8 AT 31 MAP6h, 2012
(` in Million)
Notes As at 31 March, 2012 As at 31 March, 2011
EQUITY AND LIABILITIES
SHAREHOLDERS' FUNDS
Share capital 3 10,000.00 10,000.00
Reserves and surplus 4 90,880.77 70,659.07
NON CURRENT LIABILITIES
Long termborrowings 5 192,036.03 196,741.06
Deferred tax liabilities (Net) 6 3,876.60 3,783.02
Liability for abandonment 7 19,529.59 13,799.58
Long termprovisions 8 389.45 362.27
215,831.67 214,685.93
CURRENT LIABILITIES
Short termborrowings 9 622.82 331.18
Trade payables 10 11,396.81 8,925.08
Other current liabilities 11 15,534.43 7,034.86
Short termprovisions 12 29.37 15.95
27,583.43 16,307.07
TOTAL 344,295.87 311,652.07
ASSETS
NON CURRENT ASSETS
Fixed Assets
Tangible assets 13 28,491.89 36,600.31
Intangible assets 14 94.96 28.38
Producing properties 15 61,599.39 56,707.85
Development & exploratory wells in progress 16 16,493.15 7,389.07
Capital work in progress 17 62,231.85 31,696.37
168,911.24 132,421.98
Non Current Investment 18 137,357.65 138,032.28
Long TermLoans and Advances 19 96.73 85.11
Other Non Current Assets 20 1,911.91 2,655.30
CURRENT ASSETS
Inventories 21 1,882.46 1,578.98
Trade receivables 22 6,709.55 5,940.94
Cash & Bank balances 23 5,459.50 6,063.49
Short termloans & advances 24 1,496.09 10,249.74
Other current assets 25 20,470.74 14,624.25
36,018.34 38,457.40
TOTAL 344,295.87 311,652.07
The accompanying notes are integral part of the ?nancial statements 1–54
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
8TATEMEhT 0F FP0FIT Ahß L088 F0P ThE ¥EAP EhßEß
31 MAP6h, 2012
(` in Million)
Notes 2011–12 2010–11
INCOME
Revenue fromoperations 26 74,313.77 55,682.63
Other Income 27 5,819.25 2,149.08
TOTAL REVENUE 80,133.02 57,831.71
EXPENSES
Production, Transportation, Selling and Distribution Expenditure 28 16,050.36 13,035.76
Decrease/(Increase) In Stock (Finished Goods) 29 (4.40) (2.02)
Financing Costs 30 1,974.74 2,241.13
Depreciation, Depletion and Amortisation 31 11,061.30 14,614.76
Other Expenses 32 510.73 (101.03)
Provisions & Write–O?s (Net) 33 20,470.75 2,593.34
Decrease/(increase) due to overlift/underlift quantity 34 (58.69) (283.32)
TOTAL EXPENSES 50,004.79 32,098.62
PROFIT BEFORE PRIOR PERIOD, EXCEPTIONAL AND EXTRAORDINARY ITEMS
AND TAX
30,128.23 25,733.09
Less: Adjustment relating to Prior Period 35 (26.62) 27.11
PROFIT BEFORE EXCEPTIONAL AND EXTRAORDINARY ITEMS AND TAX 30,154.85 25,705.98
Exceptional And Extraordinary Items – –
Tax expense
Current Year Tax 36 11,141.78 7,255.81
Deferred Tax 37 93.58 (3.06)
Earlier Years Tax 38 158.69 (2,971.37)
PROFIT / (LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS 18,760.80 21,424.60
Pro?t / (Loss) FromDiscontinuing Operations – –
PROFIT (LOSS) FOR THE PERIOD 18,760.80 21,424.60
EARNINGS PER EQUITY SHARE
Basic 39 187.61 214.25
Diluted 187.61 214.25
The accompanying notes are integral part of the ?nancial statements 1–54
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
88 89
1. Corporate information
ONGC Videsh Limited (the Company) is a public limited company domiciled in India and incorporated
under the provisions of the Companies Act, 1956. The Company is engaged in exploration, development
and production of crude oil and natural gas outside India.
2. Basis of preparation
2.1 The ?nancial statements are prepared under the historical cost convention on accrual basis in
accordance with Generally Accepted Accounting Principles (GAAP), applying the Successful E?orts
Method as per the Guidance Note on Accounting for Oil and Gas Producing Activities issued by the
Institute of Chartered Accountants of India and Accounting Standards issued under the Companies
(Accounting Standards) Rules, 2006 and provisions of the Companies Act, 1956. The ?nancial statements
are presented in Indian Rupees and all values are rounded to the nearest million (`million) except when
otherwise indicated.
2.2 Summary of Signifcant Accounting Policies
a.1 Change in accounting Policies
During the year ended 31 March 2012, the revised Schedule VI noti?ed under the Companies Act 1956, has
become applicable to the Company for preparation and presentation of its ?nancial statements. Balance
Sheet has been prepared based on the format prescribed under Part I and statement of Pro?t and Loss
based on the format prescribed under Part II in Revised Schedule VI of the Act . However, in view of the
technical nature of operation of the Company i.e. exploration, development and Producing oil and gas,
functional wise expenses has been classi?ed in Statement of Pro?t and Loss as disclosed consistently in
earlier years. The adoption of revised Schedule VI does not impact recognition and measurement principles
followed for preparation of ?nancial statements. The Company has also reclassi?ed the previous years
?gures in accordance with the requirements applicable in the current year.
The ?nancial statements for the year 2011–12 are prepared following the same accounting policies and
practices as followed in the annual ?nancial statements for the year ended March 31, 2011, except for
change in the policy with regard to amortisation of intangible assets which has been changed during
the current period to align with the accounting policy of parent company and AS–26 from Written Down
Value Method @ 40% to Straight Line Method over the useful life not exceeding a period of 5 years in
order to systematically amortize its intangible assets. This has resulted in decrease in Depreciation,
Depletion, Amortisation and Impairment by `86.67 million, consequently Pro?t before tax increased
by `86.67 million.
a.2 Documentation, rewording or re–alignment of Accounting Policies to properly refect existing
accounting practice
Certain accounting policies were re–worded or re–align with the existing accounting practice
consistently followed by the Company in ?nancial statements. However, these does not have any
impact on recognition and measurement principles followed for preparation of ?nancial statements.
Policy
no.
Existing Policy Accounting policy documented in FY 2011–12 Financial Impact
over the ?nancial
statements
2.2.p.7 Nil Dividend income is recognized when the Company’s right
to receive dividend is established by the reporting date.
Nil
2.2.u Nil Abnormal Rig days' costs are considered as unallocable
and charged to Statement of Pro?t and Loss.
Nil
h0TE8 T0 ThE FIhAh6IAL 8TATEMEhT F0P ThE ¥EAP EhßEß
MAP6h 2012
OPF Modules transportation across Chayvo Bridge
90 91
b. Use of Estimates:
The preparation of ?nancial statements requires estimates and assumptions which a?ect the
reported amount of assets, liabilities, revenues and expenses of the reporting period. The di?erence
between the actual results and estimates are recognized in the period in which the results are known
or materialized. Although these estimates are based on the management's best knowledge of current
events and actions, uncertainity about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets and liabilities in future periods.
c. Acquisition, Exploration, Development, Abandonment and Production Costs:
c.1 Acquisition Cost:
Acquisition costs of an oil and gas property in exploration/development stage are taken to capital
work in progress. Such costs are capitalized by transferring to Producing Property when it is ready to
commence commercial production. In case of abandonment of the property, such costs are expensed.
Acquisition costs of a producing oil and gas property are capitalized as Producing Property.
c.2 Survey Costs:
Cost of Surveys and prospecting activities conducted in the search of oil and gas are expensed in the
year in which these are incurred.
c.3 Exploratory/Development Wells in Progress Costs:
c.3.1 Exploration costs involved in drilling and equipping exploratory and appraisal wells, cost of drilling
exploratory type stratagraphic test wells are initially taken to capital work in progress as exploratory
wells in progress till the time these are either capitalized to producing properties when ready to
commence commercial production or expensed when determined to be dry or of no further use, as
the case may be.
c.3.2 All costs relating to development wells, development type stratagraphic test wells, service wells,
are initially taken to capital work in progress as development wells in progress and capitalized to
producing properties when ready to commence commercial production.
c.3.3 Exploratory wells in progress which are more than two years old from the date of completion of
drilling are charged to Statement of Pro?t and Loss except those wells which have proved reserves
and the development of the ?elds in which the wells are located; has been planned.
c.4 Abandonment Costs:
Costs relating to dismantling, abandoning and restoring well sites and allied facilities are provided
as abandonment costs based on the provisions under respective agreements governing Company’s
activities in the ?eld/ projects.
c.5 Production Costs:
Production costs include pre–wellhead and post–wellhead expenses including depreciation and
applicable operating costs of support equipment and facilities.
2.2.k.1 Depreciation on tangible assets
(including those taken on
?nance lease) is provided for
under the written down value
method in accordance with
Schedule XIV to the Companies
Act, 1956.
Depreciation on tangible assets (including those taken
on ?nance lease) is provided for under the written down
value method in accordance with Schedule XIV to the
Companies Act, 1956. Low value items not exceeding
`5,000/– are fully depreciated at the time of addition.
Nil
2.2.r.4 Nil In respect of local sta? in foreign o?ces of the company,
employees (other than those on deputation/secondment
from the company) of joint ventures (incorporated/
unincorporated)/ subsidiaries, the liabilities for employee
bene?ts are recognised in accordance with the applicable
laws of their respective jurisdictions and/or the respective
labor agreements with the employees.
Nil
d. Producing Properties:
d.1 Producing properties are created in respect of a ?eld/project having proved developed oil and gas
reserves when any well in the ?eld/project is ready to commence commercial production. Development
wells are capitalized to producing properties when ready to commence commercial production.
d.2 All acquisition costs, cost of successful exploratory wells and all development wells, all related
development costs including depreciation on support equipment and facilities and estimated future
abandonment costs relating to producing properties are capitalized as Producing Properties.
e. Depletion of Producing Properties:
Producing properties are depleted using the “Unit of Production Method”. The rate of depletion for
all capitalized costs is computed with reference to the ?eld/project/amortization base by considering
the related proved and developed reserves excepting for acquisition costs which are depleted by
considering the proved reserves. These reserves are estimated annually by the Reserve Estimates
Committee formed by the parent company Oil and Natural Gas Corporation Limited (ONGC), which
follows the International Reservoir Engineering Procedures.
f. Side tracking:
f.1 The cost of abandoned portion of side tracked exploratory wells is charged to Statement of Pro?t
and Loss as dry wells.
f.2 The cost of abandoned portion of side tracked development wells is considered as part of cost of
development wells.
f.3 The cost of sidetracking in respect of existing producing wells is capitalized if it increases the Proved
Developed Reserve otherwise, charged to Statement of Pro?t and Loss as workover expenditure.
g. Impairment:
g.1 Producing Properties, Development Wells in Progress (DWIP) and Fixed Assets (Including Capital
Works in Progress) of a “Cash Generating Unit” (CGU) are reviewed for impairment at each Balance
Sheet date. In case, event and circumstances indicates any impairment, recoverable amount of
these assets is determined, being the higher of net selling price and value in use. An impairment loss
is recognized, whenever the carrying amount of such assets exceeds the recoverable amount by
writing down such assets to their recoverable amount. In assessing value in use, the estimated future
cash ?ows from the use of assets and from its disposal at the end of its useful life are discounted to
their present value at appropriate rate.
g.2 An impairment loss is reversed if there is change in the recoverable amount and such loss either no
longer exists or has decreased. Impairment loss / reversal thereof is adjusted to the carrying value of
the respective assets, which in case of CGU, is allocated to its assets on a pro–rata basis. Subsequent
to impairment, depreciation is provided on the revised carrying value of the assets over the remaining
useful life.
h. Joint Ventures:
h.1 The Company has entered into overseas joint ventures with others. In such joint ventures as per the
contractual arrangements, the Company shares control with other venturers. The ?nancial statements
re?ect the share of the Company’s assets and liabilities as well as income and expenditure of Joint
Venture Operations which are accounted for as per various joint venture agreements on a line by
line basis along with similar items in the Company’s ?nancial statements, except in case of leases,
abandonment, impairment, depletion and depreciation which are accounted based on accounting
policies of the Company.
h.2 The reserves of hydrocarbons in the joint ventures are taken in proportion to the participating
interest of the Company.
i. Tangible Assets:
i.1 Tangible assets (including those taken on ?nance lease, support equipment and facilities) are stated
at historical cost.
i.2 All costs relating to acquisition of tangible assets till the time of commissioning of such assets are
capitalized.
92 93
j. Intangible Assets:
j.1 Costs incurred on intangible assets, resulting in future economic bene?ts are capitalized as
intangible assets.
k. Depreciation:
k.1 Depreciation on tangible assets (including those taken on ?nance lease) is provided for under the
written down value method in accordance with Schedule XIV to the Companies Act, 1956. Low value
items not exceeding `5,000/– are fully depreciated at the time of addition.
k.2 Intangible Assets are amortised over the useful life not exceeding ?ve years from the date of
capitalisation.
k.3 Leasehold land (other than perpetual lease and lease over 99 years) is amortized over the lease
period.
k.4 Depreciation on adjustments to tangible assets on account of price variation is provided for prospectively
over the remaining useful life of such assets.
k.5 Depreciation on tangible assets (including those taken on ?nance lease, support equipment and
facilities) used for exploration and drilling activities and on facilities is initially capitalized as part of
exploration or development costs and expensed/depleted as stated in policy c and d above.
l. Inventories:
l.1 Crude oil and condensate are valued at cost or net realizable value, whichever is lower.
l.2 Natural gas in pipeline and crude oil/condensate stock in ?ow lines/Gathering Stations are
not valued.
l.3 Inventory of stores and spares is valued at weighted average cost or net realizable value, if available,
whichever is lower. Wherever, weighted average cost or net realizable value is not available, the cost
made available by the operator is considered for valuation of Stores and Spares. Provisions are made
for obsolete and non–moving inventories.
m. Investments:
m.1 Long–term investments are valued at cost. Provision is made for any diminution, other than temporary,
in the value of such investments.
m.2 Current investments are valued at lower of cost or fair value.
n. Foreign Currency Transactions and Foreign Operations:
n.1 Foreign currency transactions on initial recognition in the reporting currency are accounted for at the
exchange rates prevailing on the date of transaction.
n.2 At each Balance Sheet date, foreign currency monetary items are translated using the average of the
exchange rates prevailing on the balance sheet date and non–monetary items are translated using the
exchange rate prevailing on the date of transaction or on the date when the fair value of such item was
determined.
n.3 All exchange di?erences arising on the settlement of monetary items or on reporting of monetary items
at rates di?erent from those at which they were initially recorded during the period, or reported in
previous ?nancial statements are recognised as income or as expenses in the period in which they arise.
n.4 In respect of the Company’s integral foreign operations:
n.4.1 The foreign currency transactions on initial recognition in the reporting currency are recorded
following the policy stated in n.1. For practical reasons, the average exchange rate of the relevant
month/quarter is taken for the transactions of the month/quarter in respect of joint venture
operations, where actual date of transaction is not available.
n.4.2 At each Balance Sheet date, monetary and non–monetary items are translated following the policy
stated in n.2.
n.4.3 All exchange di?erences are treated following the policy stated in n.3.
n.5 The ?nancial statements of the non–integral foreign operations of the company are incorporated in
the ?nancial statements using the following principles:
n.5.1 The assets and liabilities, both monetary and non–monetary, of the non–integral foreign operation
are translated at the average of the exchange rate prevailing on the date of the balance sheet;
n.5.2 Income and expense items of the non–integral foreign operation are translated at the average
exchange rates for the period to which the ?nancial statements relate; and
n.5.3 All resulting exchange di?erences are accumulated in a foreign currency translation reserve until the
disposal of the net investment in the non–integral foreign operation.
n.6 Exchange di?erences arising on the company’s net investment in a non–integral foreign operation
are accumulated in a foreign currency translation reserve until the disposal of such investment, at
which time they are recognized as income or as expenses.
o. Finance Leases
o.1 Assets given on Lease:
o.1.1 Assets given on ?nance lease are accounted for as per Accounting Standard (AS) 19 “Leases” issued by
the Institute of Chartered Accountant of India. Such assets are included as a receivable at an amount
equal to the net investment in the lease.
o.1.2 Initial direct costs incurred in respect of ?nance leases are recognized in the statement of pro?t and
loss in the year in which such costs are incurred.
o.2 Assets taken on Lease:
Assets taken on ?nance lease are capitalised and recognised at the lower of the fair value of the asset
and the discounted value of the minimum lease installments. The lease payments are bifurcated into
repayment and interest components, based on a ?xed interest rate and installment as derived from
the underlying agreement. The lease commitments are carried under liabilities exclusive of interest.
The interest component is recognised in the Statement of Pro?t and Loss in accordance with the lease
installments.
p. Revenue Recognition:
p.1 Revenue from sale of products is recognized on transfer of custody to customers. Any di?erence as of
the reporting date between the entitlement quantity minus the quantities sold in respect of crude oil
(including condensate), if positive (i.e. under lift quantity) the proportionate production expenditure is
treated as prepaid expenses and, if negative (i.e. over lift quantity), a liability for the best estimate of
the Company’s proportionate share of production expenses as per the JOA / PSA is created in respect
of the quantity of crude oil to be foregone in future period towards settlement of the overlift quantity
of crude oil with corresponding charge to Statement of Pro?t and Loss.
p.2 Sales are inclusive of all statutory levies and any tax liability of the Company that may be paid by
the government based on the provisions under agreements governing Company’s activities in the
respective ?eld/ project.
p.3 Any payment received in respect of short lifted gas quantity for which an obligation exists to supply
such gas in subsequent periods is recognized as Deferred Revenue in the year of receipt. The same is
recognized as revenue in the year in which such gas is actually supplied for the quantity supplied or in
the year in which the obligation to supply such gas ceases, whichever is earlier.
p.4 Revenue in respect of ?xed price contracts is recognized for the quantum of work done on the basis
of percentage of completion method. The quantum of work done is measured in proportion of cost
incurred to date to the estimated total cost of the contract or based on reports of physical work
done.
p.5 Finance income in respect of assets given on ?nance lease is recognized based on a pattern re?ecting
a constant periodic rate of return on the net investment outstanding in respect of the ?nance lease.
p.6 Revenue in respect of interest on delayed realization is recognized when there is reasonable certainty
regarding ultimate collection.
p.7 Dividend income is recognized when the Company’s right to receive dividend is established by the
reporting date
q. Transportation Costs:
Any payment made in respect of the quantity of gas short transported, for which the right exists to
transport such gas in subsequent periods at no charge, is treated as Deferred Expenditure in the year of
payment. The same is treated as cost in the year in which the gas is actually transported for the quantity
transported or in the year in which the right to transport such gas ceases, whichever is earlier.
94 95
r. Employee Benefts:
r.1 All short term employee bene?ts are recognized at their undiscounted amount in the accounting
period in which they are incurred.
r.2 Contribution to Provident Fund and Composite Social Security Scheme is made as per the rules of the
parent company. The same is paid to funds administered through trusts.
r.3 Provisions for gratuity, leave encashment and other employee bene?ts are made as per actuarial
valuation at the end of the ?nancial year. The same are not funded.
r.4 In respect of local sta? in foreign o?ces of the company, employees (other than those on deputation/
secondment from the company) of joint ventures (incorporated/unincorporated)/ subsidiaries,
the liabilities for employee bene?ts are recognised in accordance with the applicable laws of their
respective jurisdictions and/or the respective labor agreements with the employees.
s. Borrowing Costs:
Borrowing Costs speci?cally identi?ed to the acquisition or constructions of qualifying assets are
capitalized as part of such asset till such time when all the activities necessary to prepare the qualifying
asset for its intended use or sale are complete. A qualifying asset is one that necessarily takes substantial
period of time to get ready for intended use. All other borrowing costs are charged to Statement of
Pro?t and Loss.
t. Insurance Claims:
The Company accounts for insurance claims as under:–
t.1 In case of total loss of asset by transferring, either the carrying cost of the relevant asset or Insurance
value (subject to deductibles), whichever is lower under the head “Claims Recoverable – Insurance”
on intimation to Insurer. In case insurance claim is less than carrying cost, the di?erence is charged to
Statement of Pro?t and Loss.
t.2 In case of partial or other losses, expenditure incurred/payments made to put such assets back into
use, to meet third party or other liabilities (less policy deductibles) if any, are accounted for as “Claims
Recoverable–Insurance”. Insurance Policy deductibles are expensed in the year when the corresponding
expenditure is incurred.
t.3 As and when claims are ?nally received from Insurer, the di?erence, if any, between Claims Recoverable
– Insurance and Claims received is adjusted to Statement of Pro?t and Loss.
u. Abnormal Rig days' costs:
Abnormal Rig days' costs are considered as unallocable and charged to Statement of Pro?t and Loss.
v. Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement are recognized when there is a
present obligation as a result of past events and it is probable that there will be an out?ow of resources.
Contingent Assets are neither recognized nor disclosed in the ?nancial statements. Contingent
Liabilities, if material, are disclosed by way of notes to the accounts.
w. Taxes on Income:
Provision for current tax is made as per the provisions of the Income Tax Act, 1961/ other applicable tax
laws. Deferred Tax Liability / Asset resulting from ‘timing di?erence’ between book and taxable pro?t
is accounted for considering the tax rate and laws that have been enacted or substantively enacted as
on the Balance Sheet date. Deferred Tax Asset is recognized and carried forward only to the extent
that there is virtual certainty that the asset will be realized in future.
x. Accounting for derivatives:
As per the ICAI Announcement, Accounting for Derivatives, other than those covered under AS–11, is
done on marked to market basis and the losses are charged to Statement of Pro?t and Loss. Unrealized
gains are ignored.
y. Goodwill Amortization:
The Company amortizes Goodwill (on consolidation) based on “Unit of Production Method” considering
the related Proved Reserves.
(` in Million)
3 Share Capital As at 31 March, 2012 As at 31 March, 2011
Authorised
100,000,000 (Previous year 100,000,000) Equity Shares of `100 each 10,000.00 10,000.00
Issued, Subscribed, Called and Paid Up 10,000.00 10,000.00
100,000,000 (Previous year 100,000,000) Equity Shares of `100 each fully
paid up in cash
(The entire share capital is held by Oil and Natural Gas Corporation
Limited and its nominees)
TOTAL 10,000.00 10,000.00
a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period:
31 March 2012 31 March 2011
No. million `million No. million `million
Equity Shares :
At the beginning of the period 100.00 10,000.00 100.00 10,000.00
Issued during the period – – – –
Outstanding at the end of the period 100.00 10,000.00 100.00 10,000.00
b. Terms / rights attached to the equity shares:
The company has only one class of equity shares having a par value of `100 per share. Each holder of
equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees.
The dividend, if any, proposed by the Board of Director is subject to the approval of the shareholders
in the meeting.
During the year ending 31 March 2012, the amount of dividend per share declared for distribution to
equity shareholders was Nil (31 March 2011: Nil).
In the event of liquidation of the company, the holders of equity shares will be entitled to receive
remaining assets of the company, after distribution of all preferential amounts. The distribution will be
in proportion to the number of equity shares held by the shareholders.
c. Shares held by holding / ultimate holding company and/or their subsidiaries/ associates:
Out of the equity shares issued by the company, the shares held by its holding company, ultimate
holding company and their subsidiaries / associates are as below:
31 March 2012 31 March 2011
No. Million `Million No. Million `Million
Oil and Natural Gas Corporation Limited, the hold-
ing company and its nominees
100 10,000.00 100 10,000.00
d. Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares
bought back during the period of ?ve years immediately preceding the reporting date: Nil
e. Details of shareholders holding more than 5% shares in the company:
31 March 2012 31 March 2011
No. million % holding No. million % holding
Oil and Natural Gas Corporation Limited, the
holding company and its nominees
100 100% 100 100%
f Shares reserved for issue under options: Nil.
96 97
(` in Million)
4 Reserves and Surplus
As at
31 March
2012
As at
31 March
2011
Capital Reserve 174.08 174.08
Debenture Redemption Reserve
Opening balance 5,461.83 1,154.19
Add: Current year transfer 4,319.44 9,781.27 4,307.64 5,461.83
General Reserve
Opening balance 7,893.64 5,751.18
Add: Current year transfer 1,876.08 9,769.72 2,142.46 7,893.64
Foreign Exchange Translation Reserve (5,547.27) (7,008.17)
Pro?t and Loss Account
Opening balance 64,137.69 49,163.19
Add: Net pro?t/(Net loss) for the year 18,760.80 21,424.60
Less: Transfer to Debenture Redemption Reserve 4,319.44 4,307.64
Less: Transfer to General Reserve 1,876.08 76,702.97 2,142.46 64,137.69
TOTAL 90,880.77 70,659.07
a. Debentures and Debentures Redemption Reserve:
During the ?nancial year 2009–10, the Company had raised funds from the ?nancial markets by issuance
of non–convertible redeemable bonds in the nature of debentures as follows:
(` in Million)
Particulars Amount (`Million) Date of issue Date repayable on
8.40% 5 Years Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures– Series I
19,700 23–Dec–09 23–Dec–14
8.54% 10 Years Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures– Series II
3,700 06–Jan–10 06–Jan–20
The above securities have been listed in National Stock Exchange of India Ltd. (NSE). Both the bonds
are guaranteed for repayment of principal and payment of interest by Oil and Natural Gas Corporation
Limited, the holding company. Further the company is required to maintain 100% asset cover as per
SEBI guidelines. There is no put/ call option.
The Debentures Redemption Reserve position for above is as under:–
(` in Million)
Particulars Balance as at 31
March 2011
Additions during
the year
Balance as at
31 March 2012
8.40% 5 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series I
5,005.91 3,948.63 8,954.54
8.54% 10 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series II
455.92 370.81 826.73
Total 5,461.83 4,319.44 9,781.27
(` in Million)
5 Long TermBorrowings As at 31 March, 2012 As at 31 March, 2011
Non Convertible Redeemable Debenture 23,400.00 23,400.00
Foreign Currency Loans
Non–Recourse Deferred Credit – Unsecured 380.59 554.90
(In respect of Joint venture)
Fromrelated parties
Oil and Natural Gas Corporation Limited – Unsecured 168,255.44 172,786.16
TOTAL 192,036.03 196,741.06
a. Non–convertible redeemable debentures: Attention is invited to Note: 4(a)
b. Non–recourse deferred credit: `888.06 Million (Previous Year `776.88 Million) represents the non–
recourse deferred credit from contractors of pipeline project executed by the Company in Sudan. The
credit is repayable from the installments of pipeline lease rentals from Ministry of Energy and Mining
(MEM), Sudan. Attention is also invited to Note 44.
(` in Million)
As at 31 March 2012 As at 31 March 2011
Current (Note 9) 507.47 221.98
Non Current (Note 5) 380.59 554.90
Total 888.06 776.88
c. The Company has taken loans from ONGC for various projects. The outstanding balance of such loans
as of 31 March 2012 was `168,255.44 Million (31 March 2011 `172,786.16 Million). The loan is normally
repayable out of the cash ?ows of the projects for which the respective funds were lent. However,
ONGC have the right to demand repayment with a notice period of minimum 15 months. The loan
carried no interest during the period. Accordingly, interest expenditure on loan from parent company
during the period is `Nil (previous year: `Nil).
(` in Million)
6 Deferred Tax Liabilities As at 31 March 2012 As at 31 March 2011
Deferred Tax Liabilities (net) 3,876.60 3,783.02
TOTAL 3,876.60 3,783.02
a. The Net Deferred Tax Liability of the Company as at 31 March 2012 is `3,876.60 Million (year ending 31
March 2011 `3,783.02 Million). An amount of `93.58 Million has been adjusted to the current period’s
Statement of Pro?t and Loss.
b. The item wise details of Net Deferred Tax Liability as on 31 March 2012 accounted for in accordance with
Accounting Standard (AS) 22 viz. Accounting for Taxes on Income are as under:
(` in Million)
Deferred Tax Assets : As at 31 March, 2012 As at 31 March, 2011
Carried Forward Expenditure u/s 42 of Income Tax Act, 1961 11,213.98 10,222.01
Other disallowables under Income Tax Act, 1961* 1,043.13 814.33
Total Deferred Tax Assets 12,257.11 11,036.34
Deferred Tax Liability :
Di?erence in Net Block of Fixed Assets for Tax 16,133.71 14,819.36
Total Deferred Tax Liability 16,133.71 14,819.36
Net Deferred Tax Liability 3,876.60 3,783.02
*Disallowance u/s 43B, provisions for doubtful debts and non–moving inventory.
98 99
(` in Million)
7 Liability for Abandonment
As at
31 March
2012
As at
31 March
2011
Liability for abandonment 19,529.59 13,799.58
TOTAL 19,529.59 13,799.58
The above liability is in respect of Sakhalin–1 project. Against the above liability, funding of `2927.15 Million
has been made as per Note 18.
(` in Million)
8 Long TermProvisions
Balance as at 1st
April 2011
Utilisation /
Reversal during
the year
Provision made
for the year
Balance as at 31st
March 2012
Provisions for employee bene?ts
Gratuity 161.90 – 8.16 170.06
Leave Encashment 131.36 – 15.90 147.26
Post Retirement Medical Bene?ts/Other
Terminal Bene?ts
69.01 – 3.12 72.13
362.27 – 27.18 389.45
Other provisions – – – –
TOTAL 362.27 – 27.18 389.45
Previous Year 325.75 – 36.52 362.27
The Provisions for employee bene?ts have been bifurcated into current and non–current based on the
acturial valuation.
As at 31 March, 2012 As at 31 March, 2011
Current (Note 12) 29.37 15.95
Non Current (Note 8) 389.45 362.27
Total Provisions for Employee bene?ts 418.82 378.22
(` in Million)
9 Short TermBorrowings As at 31 March, 2012 As at 31 March, 2011
Foreign Currency Loans
Non–Recourse Deferred Credit – Unsecured *
(In respect of Joint venture)
507.47 221.98
Deposits – Unsecured 115.35 109.20
TOTAL 622.82 331.18
*Non–Recourse Deferred Credit : Attention is also invited to Note–5(b)
(` in Million)
10 Trade Payables As at 31 March 2012 As at 31 March 2011
Deferred Credit on Gas Sales 229.37 20.80
Trade payables for Supplies / Works 1,843.55 1,519.13
Trade payables for Supplies / Works 9,323.89 7,385.15
(In respect of Joint Venture)
TOTAL 11,396.81 8,925.08
Deferred credit on gas sales represents amounts received from gas customers against Take or Pay obligations under relevant gas sales
agreements. The amounts are to be utilised to supply the gas in subsequent year(s) free of charge to such customers.
(` in Million)
11 Other Current Liabilities
As at
31 March
2012
As at
31 March
2011
Interest accrued but not due on Debentures 526.38 522.42
Advance fromcustomers / Income received in advance 320.09 161.09
Amount Payable to Operators 11,157.41 5,397.56
Payable to Oil and Natural Gas Corporation Limited 646.87 118.18
Other Liabilities 2,883.68 835.61
TOTAL 15,534.43 7,034.86
(` in Million)
12 Short TermProvisions
Balance as at 1
April 2011
Utilisation/
Reversal during the
Year
Provision made for
the Year
Balance as at 31
March 2012
Provisions for employee bene?ts
Gratuity 7.64 7.00 9.20 9.84
Leave Encashment 8.31 42.23 53.10 19.18
Post Retirement Medical Bene?ts/
Other Terminal Bene?ts
– 0.34 0.69 0.35
15.95 49.57 62.99 29.37
Other provisions – – – –
TOTAL 15.95 49.57 62.99 29.37
Previous Year 25.06 37.35 28.24 15.95
Attention is invited to Note: 8
100 101
13 Tangible Assets
PARTICULARS
GROSS BLOCK
As at 1 April 2011
Additions during
the Period
Deletions /
Adjustments
during the Period
As at
31 March 2012
1. Land (Leasehold) 1,700.53 31.65 – 1,732.18
2. Building 5,608.09 68.79 (61.72) 5,615.16
3. Plant & Machinery 74,877.12 1,883.34 4.99 76,765.45
4. Computers 263.30 71.69 (14.86) 320.13
5. Vehicles 344.75 21.46 (9.51) 356.70
6. Furniture & Fittings and Equipments 3,826.49 40.18 (160.43) 3,706.24
TOTAL 86,620.28 2,117.11 (241.53) 88,495.86
Previous Year 69,266.03 17,464.84 (110.59) 86,620.28
The above includes the company's share
in Joint Venture Assets: Current Year
84,698.61 2,027.25 (204.96) 86,520.90
Previous Year 67,408.64 17,399.76 (109.79) 84,698.61
14 Intangible Assets
PARTICULARS
GROSS BLOCK
As at 1 April 2011
Additions during
the Period
Deletions /
Adjustments
during the Period
As at
31 March 2012
Software 245.50 26.47 6.72 278.68
TOTAL 245.50 26.47 6.72 278.68
Previous Year 239.37 12.43 (6.30) 245.50
The above includes the company's share
in Joint Venture Assets: Current Year
146.45 22.66 6.72 175.83
Previous Year 140.33 12.43 (6.30) 146.45
Attention is invited to Note: 2.2 a.1
a. Title to Fixed Assets under Production Sharing Agreements
The Company, the Subsidiaries and Joint Venture Company, in consortium with other partners (Consortium) carries on its business in respect of exploration, development and production of hydrocarbons
under agreements with the host governments. Several of these agreements, governing Company’s activities in the ?elds / projects, provide that the title to the ?xed assets and other ancillary installations
shall pass to host Government or its nominated entities either upon acquisition / ?rst use of such assets or upon 100% recovery of such costs through allocation of “Cost Oil” and “Cost Gas” or upon
relinquishment of the relevant contract areas or termination of the relevant agreement. However, as per the terms of the agreements, the Consortium and/ or Operator has the custody of all such assets
and is entitled to use, free of charge all such assets for Petroleum Operations throughout the term of the respective agreements. The Consortium also has the custody and maintenance of such assets
and bears all risks of accidental loss and damage and all costs necessary to maintain such assets and to replace or repair such damage or loss. Under the circumstances, such assets are kept in the records of the
Company during the currency of the respective agreements.
(` in Million)
DEPRECIATION NET BLOCK
Up to 31 March 2011 For the Period
Deletions /
Adjustments
during the Period
As at 31 March 2012 As at 31 March 2012
As at
31 March 2011
– – – – 1,732.18 1,700.53
907.83 241.53 (10.30) 1,139.06 4,476.10 4,700.26
46,982.96 9,415.88 22.88 56,421.72 20,343.73 27,894.16
177.03 38.55 (8.17) 207.41 112.72 86.27
222.19 36.19 (7.15) 251.23 105.47 122.56
1,729.96 279.28 (24.69) 1,984.55 1,721.69 2,096.53
50,019.97 10,011.43 (27.43) 60,003.97 28,491.89 36,600.31
39,470.03 10,596.40 (46.45) 50,019.97 36,600.31 29,796.00
49,893.77 10,021.59 (55.01) 59,860.34 26,660.56 34,804.84
39,368.64 10,571.15 (46.02) 49,893.77 34,804.84 28,032.99
(` in Million)
DEPRECIATION NET BLOCK
Up to 31 March 2011 For the Period
Deletions /
Adjustments
during the Period
As at 31 March 2012 As at 31 March 2012
As at
31 March 2011
217.12 (34.89) 1.49 183.72 94.96 28.38
217.12 (34.89) 1.49 183.72 94.96 28.38
204.85 17.22 (4.95) 217.12 28.38 34.51
133.66 (13.05) 1.49 122.10 53.73 12.80
131.77 6.84 (4.95) 133.66 12.80 15.56
102 103
(` in Million)
15 Producing Properties
As at
31 March
2012
As at
31 March
2011
Gross Cost
Opening Balance 86,482.76 68,546.90
Expenditure during the year 7,964.51 8,154.94
Transfer fromDevelopment & Exploratory Wells–in–Progress 19.91 2,767.57
Estimated Abandonment Costs 3,873.37 7,013.35
Total Gross (A) 98,340.55 86,482.76
Less: Depletion
Opening Balance 29,774.91 23,225.48
Depletion for the year 6,966.25 6,549.43
Total Depletion (B) 36,741.16 29,774.91
NET PRODUCING PROPERTIES (A – B) 61,599.39 56,707.85
(` in Million)
16 Development & Exploratory Wells In Progress
As at
31 March
2012
As at
31 March
2011
A. Development Wells in Progress
Opening Balance 2,213.40 481.21
Addition during the year 6,393.27 4,361.40
Less: Transfer to Producing Properties (15.07) 2,629.21
Development Wells in Progress (A) 8,621.74 2,213.40
B. Exploratory Wells in Progress
Opening Balance (Gross EWIP) 6,642.52 10,406.11
Addition during the year 3,449.43 329.03
Less: Transfer to Producing Properties 34.97 138.36
Less: Wells written o? during the year 706.43 3,954.26
Closing Balance (Gross EWIP) 9,350.55 6,642.52
Less: Provision For Wells drilled under service Contract
Opening Balance 1,466.85 1,444.65
Add: Provided during the year 12.29 22.20
Total Provision 1,479.14 1,466.85
Exploratory Wells in Progress (B) 7,871.41 5,175.67
TOTAL WELLS IN PROGRESS (A + B) 16,493.15 7,389.07
(` in Million)
17 Capital Work In Progress
As at
31 March
2012
As at
31 March
2011
Block 06.1, Vietnam 2,503.28 1,188.30
Block 128, Vietnam – 92.54
Sakhalin–1 Project, Russia 46,764.05 26,994.93
Block 5A, Sudan 27.26 268.86
Block A1, Myanmar 3,960.76 700.46
Block A3, Myanmar 840.95 842.73
O?shore MidstreamPipeline, Myanmar 1,966.65 568.78
Block 25, 26, 27, 28, 29, 36 and 35 (Part), Cuba 346.91 346.91
Block 1,2,3&4 (Area 43), Libya 408.90 408.90
Block Satpayev, Kazakhstan 4,753.53 –
Corporate O?ce Building, Vasant Kunj, NewDelhi 659.56 283.96
TOTAL 62,231.85 31,696.37
(` in Million)
18 Non– Current Investment
No. of Shares/
Bonds/
Units
Face Value per
Share/Bond/
Unit
As at
31 March
2012
As at
31 March
2011
Long TermInvestments (Fully Paid Up) (At Cost)
Trade Investments in Shares Unquoted
In Wholly Owned Subsidiaries:
ONGC Narmada Limited
Equity Shares 20,000,000 1 (Naira) 6.94 6.94
(20,000,000)
ONGC Amazon Alaknanda Limited
Equity Shares 12,000 1 (USD) 0.56 0.56
(12,000)
Preference Shares 367,995,174 1 (USD) 16,982.98 20,190.07
(437,488,000)
Jarpeno Limited
Equity Shares 1,450 1 (USD) 15,574.46 0.06
(1,350)
Preference Shares
(at a premiumof USD 9,999)
192,210 1(USD) 86,744.37 86,744.37
(192,210)
Carabobo One AB
Equity Shares 377,678
(1,000)
11.19457
(EURO)
2,822.02 0.76
104 105
18 Non– Current Investment
No. of Shares/
Bonds/
Units
Face Value per
Share/Bond/
Unit
As at
31 March
2012
As at
31 March
2011
In Partially Owned Subsidiaries:
ONGC Nile Ganga B.V.
Equity Shares Class A 40
(40)
453.78 (Euro) 8,462.12 8,462.12
Equity Shares Class B 100
(100)
453.78 (Euro) 21,155.29 21,155.29
Equity Shares Class C 880
(880)
1 (Euro) 234.25 234.25
In Jointly Controlled Entity :
ONGC Mittal Energy Limited
Equity Shares 24,990,000
(24,990,000)
1 (USD) 1,113.72 1,113.72
Preference Shares –
(42)
1 (USD) – 16.72
Investment with Bank for Site Restoration 2,927.15 107.42
TOTAL 156,023.86 138,032.28
Less : Provision for diminution in the Value of
Investment
18,666.21 –
Total Non– Current Investment 137,357.65 138,032.28
a. Carabobo One AB : ONGC Videsh Limited (“ONGC Videsh Ltd.”, 11.0%), Indian Oil Corporation Limited
(“IOC”, 3.5%), Oil India Limited (“OIL”, 3.5%), Repsol YPF (“Repsol”, 11.0%) and Petroliam Nasional Berhad
(“PETRONAS”, 11.0%), hold aggregate 40% equity interest in an “EmpresaMixta” (or “Mixed Company”)
which will develop the “Carabobo 1 Norte” and “Carabobo 1 Centro” blocks located in the Orinoco
Heavy Oil Belt. The CorporaciónVenezolanadelPetróleo (“CVP”), a subsidiary of Petróleos de Venezuela
S.A. (“PDVSA”), Venezuela's state oil company, holds the remaining 60% equity interest. A joint venture
company “Petro Carabobo S.A.” has been incorporated in Venezuela with the above mentioned equity
interests. The Company has set up a wholly owned subsidiary, Carabobo One AB (“COAB”) in Sweden,
which has set up a wholly–owned subsidiary, Petro Carabobo Ganga B.V. (“PCGBV”) in the Netherlands.
PCGBV holds 11% shares in the Mixed Company. The Mixed Company contract for the development and
production from Carabobo–1 Project was signed on 12 May 2010. COAB has changed its accounting
currency to Euro from Swedish Krona from FY 2011–12 and accordingly face value of shares has been
changed.
b. ONGC Nile Ganga B.V.: The Company holds 100% of Class A and Class B equity shares of ONGC Nile Ganga
B.V., the Netherlands (“ONGBV”). Further, the Company holds 55% of Class C equity shares of ONGBV
and the balance 45% Class C equity shares are held by ONGC Mittal Energy Limited. Class C shares are
entitled only and exclusively to the results of Class C business representing ONGBV’s investments in
Himalaya Energy (Syria) B.V., the Netherlands (the joint venture company for its investments in AFPC
Project, Syria).
c. ONGC Amazon Alaknanda Limited and ONGC Mittal Energy Limited have redeemed 69,492,826 and 42
preference shares respectively during the year at premium. The resulting gain amounting to `2,726.77
Million has been disclosed in Note–27.
d. An amount of USD 314 million out of the outstanding loans to Jarpeno has been adjusted against the
allotment and issuance of 100 Ordinary Shares in the share capital of the Jarpeno of nominal value of
USD 1 each at a premium of USD 3,139,999 per share (total value for each share being USD 3,140,000).
e. The company has assessed the carrying value of its long term investments and has observed diminution
in the carrying value in respect of Jarpeno Limited. Provision of `18,666.21 million has been made for
the diminution in value of the investment as on 31 March 2012 (Previous year `Nil).
(` in Million)
19 Long TermLoans And Advances
As at
31 March
2012
As at
31 March
2011
Secured, considered good
Loans and advances to related party 0.38 0.09
Other loans and advances 83.64 75.28
Unsecured, considered good
Other loans and advances 12.71 9.74
Doubtful
Loans and advances to related party 1,401.83 1,428.74
Other loans and advances 534.16 –
Sub Total (A) 2,032.72 1,513.85
Less : Provision for bad and doubtful loans and advances
Loans and advances to related party 1,401.83 1,428.74
Other loans and advances 534.16 –
Sub Total (B) 1,935.99 1,428.74
TOTAL (A)–(B) 96.73 85.11
(` in Million)
a Loans and advances
As at
31 March
2012
As at
31 March
2011
Current (Note 24) 1,496.09 10,249.74
Non Current (Note 19) 96.73 –1,343.63
Total 1,592.82 8,906.11
Attention is invited to Note 33 (b) also.
b. Loans and advances due to related party represent due from directors (` in Million)
Non–current Current
As at
31 March 2012
As at
31 March 2011
As at
31 March 2012
As at
31 March 2011
Loans and advances due fromdirectors 0.38 0.09 0.05 –
(` in Million)
20 Other Non Current Assets
As at
31 March
2012
As at
31 March
2011
Secured, considered good
Investment in Lease realisable beyond 12 months fromthe end of reporting
period
1,846.25 2,567.91
Interest Accrued on Loans to Employees 34.16 30.85
Unsecured, considered good
Other Deposits 31.49 56.54
Doubtful
Trade receivables (sundry debtors) realisable beyond 12 months 2.16 –
Non moving Inventories 930.62 558.24
Sub Total (A) 2,844.69 3,213.54
Less : Allowance
Trade receivables (sundry debtors) realisable beyond 12 months 2.16 –
Provision for Non moving Inventories 930.62 558.24
Sub Total (B) 932.78 558.24
TOTAL (A)–(B) 1,911.91 2,655.30
106 107
Other Assets As at
31 March
2012
As at
31 March
2011
Current (Note 25) 20,470.74 14,624.25
Non Current (Note 20) 1,911.91 2,655.30
Total 22,382.65 17,279.55
(` in Million)
21
Inventories
(As taken, valued and certi?ed by the Management)
As at
31 March
2012
As at
31 March
2011
Finished Goods 16.78 12.38
Stores & Spares 1,865.68 1,566.60
TOTAL 1,882.46 1,578.98
(` in Million)
22 Trade Receivables
As at
31 March
2012
As at
31 March
2011
Considered good
Debts outstanding for a period exceeding six months: 0.18 –
Other Debts: – –
Considered good
Secured – –
Unsecured
Debts outstanding for a period less than six months: 6,709.37 5,940.94
TOTAL 6,709.55 5,940.94
(` in Million)
23 Cash & Bank balances
As at
31 March
2012
As at
31 March
2011
A. Balances with Banks
a) Current account 3,411.52 4,728.55
b) Deposits 35.38 12.79
B. Cash on hand
a) At NewDelhi 0.25 0.26
b) At Overseas 0.17 0.09
C. Cash & Bank Balance
(In respect of Joint Ventures)
2,012.18 1,321.80
TOTAL 5,459.50 6,063.49
(` in Million)
24 Short TermLoans & Advances
As at
31 March
2012
As at
31 March
2011
A. Secured – Considered Good
Loans & Advances to Employees 19.28 14.45
Secured – Considered Good (A) 19.28 14.45
B. Unsecured – Considered Good
Carry Finance to JV Partners 69.38 282.92
Loans & Advances to Employees 5.86 10.58
Loans & Advances to Directors 0.05 –
Advances recoverable in cash or in kind or for value to be received 716.18 419.60
Loans and advances to related parties
Receivable fromONGC Nile Ganga BV (Subsidiary Company) 294.64 174.25
Receivable fromPetro Carabobo Ganga BV (Subsidiary Company) 53.55 46.82
Receivable fromOAAL (Subsidiary Company) 2.83 –
Receivable fromONGC Mittal Energy Ltd. 183.88 156.67
Advance to Jarpeno Limited 1.24 6,651.93
Advance to AB Startkapitalet nr 5636
(Carabobo ONE AB Limited)
149.20 2,492.52
Unsecured – Considered Good (B) 1,476.81 10,235.29
C. Unsecured – Considered Doubtful
Carry Finance to Shell, Egypt (NEMED) – 6,156.23
Less: Provisions for Doubtful Advances and Claims – –
Less: Written O? during the Year – – 6,156.23 –
Unsecured – Considered Doubtful (C) – –
LOANS AND ADVANCES (A+B+C) 1,496.09 10,249.74
a. Carry Finance to Sudapet: The Company carried the share of investment of Sudapet, a company owned
by the Government of Sudan, for its 3.375% share in Block 5A till the commencement of ?rst commercial
production (Sudapet Carry). The carried amounts are repayable without interest in form of oil out of the
production share of Sudapet as per the terms of the Exploration and Production hearing Agreement
(EPSA). Currently, Block 5A is under exploration, production and development and due to certainty of
the recovery, the net carried amount of USD 1.36 Million equivalent to `69.38 Million (previous year
USD 6.33 Million equivalent to `282.92 Million) has been shown as Loans and Advances.
108 109
(` in Million)
25 Other Current Assets
As at
31 March 2012
As at
31 March 2011
Prepaid expenses for Underlift Quanity 342.01 283.32
Interest Accrued On:
Deposits with Banks – 0.13
Others 4.14 195.69
Other Deposits 27.02 0.25
Other Current Assets 11.69 7.48
VAT Receivable 926.56 541.05
Investment in Lease 2,427.35 975.68
Advances recoverable in Cash or in kind or for value to be received
(In respect of Joint Venture)
6,318.76 4,477.50
Taxes (Income Tax, Wealth Tax and Fringe Bene?t Tax) :
Advance Payment 21,841.37 19,094.64
Less: Provision 11,428.16 10,413.21 10,951.49 8,143.15
TOTAL 20,470.74 14,624.25
Attention is invited to Note 20
(` in Million)
26 Revenue fromOperations 2011–12 2010–11
Sale of products
(A) Sale of products
Crude Oil 62,889.77 46,138.49
Gas 9,567.78 7,896.11
Condensate 3,090.51 1,982.75
TOTAL 75,548.06 56,017.35
(B) Overlifted Quantity of Crude – 581.28
Total Sales (A)+(B) 75,548.06 56,598.63
Less: VAT 1,234.29 916.00
Total revenue fromoperations 74,313.77 55,682.63
(` in Million)
27 Other Income 2011–12 2010–11
Income fromDividend fromONGBV (Subsidiary Company) 1,049.40 818.11
Interest income :
On Deposits with Banks 46.28 55.30
On Loans & Advances to Subsidiaries 429.27 194.19
On Loans and Advances to Employees 5.54 3.86
Other interest income 93.63 126.85
Pro?t on Redemption/ Sale of Investment 2,726.77 28.40
Gain on Foreign Exchange Forward Contract 222.45 –
Lease Income 207.36 252.94
Miscellaneous Receipts 1,038.55 669.43
TOTAL 5,819.25 2,149.08
(` in Million)
28 Production, Transportation, Selling and Distribution Expenditure 2011–12 2010–11
Production Expenditure 5,928.31 5,174.64
Transportation Expenditure 3,083.46 2,612.19
Royalty 5,116.27 3,680.30
Service Tax and Other Levies 13.08 37.55
Sta? Exp 786.56 672.53
Rent 166.41 196.16
Repair & Maintenance 67.90 47.43
Insurance 28.07 2.97
Crude oil received against Carry Finance 231.66 –
Other Expenses 628.64 611.99
TOTAL 16,050.36 13,035.76
The above expenses have been reclassi?ed in accordance with Part II of Revised Schedule VI to the Companies Act ,1956
a. Details of Production, Transportation, Selling and Distribution Expenditure
(` in Million)
Particulars 2011–12 2010–11
(i) (a) Salaries, Wages, Ex–gratia, etc. 519.64 458.52
(b) Contribution to Provident and other Funds 33.02 29.59
(c) Provision for Gratuity 17.36 11.65
(d) Provision for Leave Encashment 69.00 43.18
(e) Provision of Medical/Terminal Bene?ts 3.82 9.92
(f) Sta? Welfare Expenses 143.72 119.67
Sub–Total 786.56 672.53
(ii) Rent 166.41 196.16
(iii) Electricity, Water and Power 18.22 17.33
(iv) Repairs to Building – –
(v) Repairs to Plant and Machinery 0.03 –
(vi) Other Repairs 67.87 47.43
(vii) Hire Charges of Vehicles 96.04 103.62
(viii) Professional Charges 71.59 160.72
(ix) Telephone and Telex 18.08 12.88
(x) Printing and Stationary 2.43 1.84
(xi) Training and Seminar – 0.56
(xii) Business Meeting Expenses 3.08 13.15
(xiii) Traveling Expenses 104.06 177.46
(xiv) Insurance 28.07 2.97
(xv) Advertisement and Exhibition Expenditure 10.06 7.32
(xvi) Statutory Levies 13.08 37.55
(xvii) Contractual Transportation 3,083.46 2,612.18
(xviii) Miscellaneous Expenditure 19.59 18.04
(xix) Other Operating Expenditure 6,445.46 5,273.72
(xx) Royalty 5,116.27 3,680.30
TOTAL 16,050.36 13,035.76
110 111
b. Crude oil received against Carry Finance represents the value of the Carry Finance Refund in kind as
per the terms of Exploration and Production Sharing Agreement. During the year ended 31 March,
2012, total crude oil sales for Block 5A Sudan were `3,284.96 Million (Previous year `2,928.49 Million).
The Sudapet carry ?nance recovery in kind during the current period amounted to USD 4.97 Million
equivalent to `231.66 Million . The amount of Sudapet Carry ?nance recovery in kind is recognized as
expenses under Note 28 – Production Transportation, Selling and Distribution Expense with the value
of the loan recovered which was adjusted from sales revenue till the previous year ended 31 March 2011.
However there is no impact on the pro?tability during the year due to the change in such accounting
of the Sudapet Carry ?nance recovery. Sales revenue is recognized for the sales quantity net of quality
bank compensation taken in kind by the transporter. Pending ?nalization of the transportation
agreement with the transporters, the transport charges and quality bank compensation are accounted
based upon the invoices of the transporter.
c. The Other Operating Expenditure (sl.no. (xix) above) includes the expenses in respect of Sakhalin–1
Project, Russia where the above details are not made available by the Operator.
d. Auditors’ Remuneration: (` in Million)
Particulars 2011–12 2010–11
Audit Fee 3.09 2.21
Tax Audit Fee 0.28 0.32
Certi?cation Fee 0.48 0.96
TOTAL 3.85 3.49
e. The expenditure incurred by Oil and Natural Gas Corporation Limited or its subsidiaries on behalf of the
Company are accounted for on the basis of debit raised by them for which supporting documents are
held by the respective parent company/subsidiaries.
(` in Million)
29
Increase/(Decrease) in Stock (Finished Goods)
* As taken, Valued and Certi?ed by the Management
2011–12 2010–11
Closing Stock 16.78 12.38
Opening Stock 12.38 10.36
Less: Adjustment – 12.38 – 10.36
NET (INCREASE)/DECREASE IN STOCK (4.40) (2.02)
(` in Million)
30 Financing Costs 2011–12 2010–11
A. Interest expenses
Amortized Financial Charges on Commercial Papers – 267.60
Interest on Bonds 1,974.74 1,970.78
Other interest expenses – 2.75
Sub–Total 1,974.74 2,241.13
B. Foreign Exchange Fluctuation related to borrowing cost – –
TOTAL 1,974.74 2,241.13
(` in Million)
31 Depreciation, Depletion and Amortisation 2011–12 2010–11
Depreciation on Fixed Assets 10,011.43 10,596.40
Add: Amortisation – Intangibles (34.89) 17.22
Less: Capitalised 7,982.82 1,993.72 8,245.20 2,368.42
Depletion 6,966.25 6,549.43
Survey Expenditure 1,204.25 1,366.67
Dry Wells Written O? 706.43 3,954.26
Pre–Acquisition Expenses 190.65 375.98
TOTAL 11,061.30 14,614.76
(` in Million)
32 Other Expenses 2011–12 2010–11
Net (gain) or loss on foreign currency transactions and translation (other
than considered as ?nance cost)
12.17 (101.03)
Provision for Mark to Market loss on Derivative Contracts 498.56 –
TOTAL 510.73 (101.03)
(` in Million)
33 Provisions and write o?s 2011–12 2010–11
Provision for Diminution in the Value of Investment 18,666.21 –
Provisions for Doubtful Debts/Claims 509.41 1,428.74
Provision for Wells under service contract 12.29 22.20
Provision for Non Moving Inventory 372.38 557.36
Provisions Written Back – (6,156.23)
Acquisition Cost Written O? 92.54 423.23
Other Write O? 817.92 6,318.04
TOTAL 20,470.75 2,593.34
a. Provision for diminution in value of investment is made against non–current investments (Note–18)
b. Provision for doubtful debts/claims includes carry loan of `534.16 Million (previous year `Nil) to KMG.
In view of the block being under exploration and there is no certainty of commercial discovery and
provision against loan to subsidiary `(26.91) Million (previous year `1,428.74 Million) and others `2.16
Million (previous year 31 March 2011 `Nil)
c. Provision has been made for well under service contract in Iran.
d. Provision amounting to `Nil (previous year `6,156.23) made in earlier years has been written–back in
respect of NEMED exploration block, Egypt in previous year. The same amount has been written–o?
and included under Other Write O? in previous year.
e. Acquisition cost has been written o? in respect of exploration projects upon relinquishment.
f. Other write–o? includes `766.80 Million (previous year : `88.20 Million) in respect of minimum
exploration commitment upon relinquishment of exploration blocks.
112 113
(` in Million)
34 Decrease/(increase) due to overlift/underlift quantity 2011–12 2010–11
A. Overlift previous period – –
B. Underlift Previous period 283.32 –
C. Overlift current period – –
D.Underlift current period 342.01 283.32
Decrease/(increase) due to overlift/underlift quantity (B+C)–(A+D) (58.69) (283.32)
(` in Million)
35 Adjustment relating to Prior Period (Net) 2011–12 2010–11
A. Expense
Survey Expenses (23.20) –
Other Expenses 2.84 27.18
Depreciation (0.02) (0.07)
Sub–Total (20.38) 27.11
B. Income
Other Income 6.24 –
Sub–Total 6.24 –
TOTAL (A) – (B) (26.62) 27.11
(` in Million)
36 Current Year Tax 2011–12 2010–11
Corporate Tax 11,141.60 7,255.77
Wealth Tax 0.18 0.04
TOTAL 11,141.78 7,255.81
The provision for corporate income–tax has been made for `11,141.60 Million (previous year `7255.77),
including the tax payable in respect of Sakhalin–1, Russia Project as well as taking into account the tax
credits under applicable double taxation avoidance agreements.
(` in Million)
37 Deferred Tax 2011–12 2010–11
Deferred Tax 93.57 (3.06)
TOTAL 93.58 (3.06)
(` in Million)
38 Earlier Years Tax 2011–12 2010–11
Corporate Tax 158.56 (2,971.37)
Wealth Tax 0.13 –
TOTAL 158.69 (2,971.37)
(In `)
39 Earning Per Equity Share 2011–12 2010–11
Net Pro?t 18,760,795,568 21,424,602,996
No of Shares 100,000,000 100,000,000
Basic and Diluted Earnings Per Equity Share
(Per Share of `100 each)
187.61 214.25
40. The required disclosure under the Accounting Standard 15 (Revised) is given
below:
(A) Brief Description: A general description of the type of De?ned Bene?t Plans is as follows:
(i) Earned Leave (EL) Bene?t
Accrual –30 days per year
Encashment while in service–75% of Earned Leave balance subject to a maximum of 90 days per
calendar year
Encashment on retirement – maximum 300 days.
(ii) Good Health Reward (Half Pay Leave)
Accrual –20 days per year
Encashment while in service –Nil
Encashment on retirement – 50% of Half Pay Leave balance.
(iii) Gratuity
15 days salary for every completed year of service. Vesting period is 5 years and the payment is
restricted to `1.00 million.
(iv) Post–Retirement Medical Bene?ts
Upon payment of one time prescribed contribution by the employees, full medical bene?ts on
superannuation and on voluntary retirement subject to the completion of minimum 20 years of
service and 50 years of age.
(v) Terminal Bene?ts
At the time of superannuation, employees are entitled to settle at a place of their choice and they
are eligible for Transfer Travelling Allowance. Employees are given a silver plaque as a memento
on superannuation, depending upon their level.
(B) The amounts recognized in ?nancial statements for de?ned contribution plans are as under:
(` in Million)
DEFINED CONTRIBUTION PLANS
Expense
Recognized
during 2011–12
Contribution for
Key Management
Personnel during
2011–12
Expense
Recognized
during 2010–11
Contribution for
Key Management
Personnel during
2010–11
Contributory Provident Fund 29.53 0.54 26.53 0.61
Employee Pension Scheme –95 1.40 0.01 1.40 0.01
Composite Social Security Scheme 1.53 0.02 1.66 0.03
114 115
(D) The amounts included in the fair value of plan assets of gratuity fund in respect of Reporting
Enterprise’s own ?nancial instruments and any property occupied by, or other assets used by the
reporting enterprise are `Nil (Previous Year `Nil)
(E) Reconciliation showing the movements during the period in the net liability recognized in the balance
sheet:
(` in Million)
PARTICULARS Gratuity Leave
Post–Retirement
Medical Bene?ts
Terminals
Bene?ts
Opening de?ned bene?t obligation 169.54 139.67 61.14 7.86
164.23 127.04 54.74 4.79
Current Service Cost 7.39 6.81 2.48 0.35
7.01 5.80 2.23 0.31
Past Service Cost – – – –
– – – –
Interest Cost 14.41 11.87 5.20 0.67
13.14 10.16 4.38 0.38
Actuarial Losses (Gains) (4.44) 50.32 (5.33) 0.45
(8.50) 27.22 (0.21) 2.83
Exchange di?erences on foreign plans – – – –
– – – –
Less: Bene?ts paid (7.00) (42.24) – (0.34)
6.34 30.55 – 0.45
Closing de?ned bene?t obligation 179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
(C) The amounts recognized in the balance sheet for post–employment bene?t plans are as under:
(` in Million)
PARTICULARS Gratuity Leave
Post–Retirement
Medical Bene?ts
Terminals
Bene?ts
Present Value of Funded Obligation – – – –
– – – –
Fair Value of Plan Assets – – – –
– – – –
Present Value of Unfunded Obligation 179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
Unrecognized Past Service Cost – – – –
– – – –
Net Liability 179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
(F) The total expenses recognized in the statement of pro?t and loss are as follows:
(` in Million)
PARTICULARS Gratuity Leave
Post Retirement
Medical Bene?ts
Terminals
Bene?ts
Current Service Cost 7.38 6.80 2.48 0.35
7.01 5.80 2.23 0.31
Interest on Obligation 14.41 11.87 5.20 0.67
13.14 10.16 4.38 0.38
Expected Return on plan assets – – – –
– – – –
Net Actuarial Losses (–Gains) recognised
in year
(4.44) 50.32 (5.33) 0.45
(8.50) 27.22 (0.21) 2.83
Past Service Cost – – – –
– – – –
Losses (Gains) on curtailments and
settlement
– – – –
– – – –
Total included in ‘Employee Bene?t
Expense’
17.35 68.99 2.35 1.47
11.65 43.18 6.40 3.52
Actual return on Plan Assets – – – –
– – – –
(G) Principal actuarial assumption at the balance sheet date (expressed as weighted averages):
(` in Million)
PARTICULARS Gratuity Leave
Post Retirement
Medical Bene?ts
Terminals
Bene?ts
Discount Rate 8.50% 8.50% 8.50% 8.50%
8.00% 8.00% 8.00% 8.00%
Expected Return on Plan Assets – – – –
– – – –
Annual Increase in health care costs – – – –
– – – –
Annual Increase in Salary 6.00% 6.00% 6.00% 6.00%
5.50% 5.50% 5.50% 5.50%
116 117
(H) E?ect of 1.00 % increase and decrease in in?ation rate on Post Retirement Medical Bene?ts as on
31
st
March 2012:
(` in Million)
1.00 % (+) 1.00 % (–)
a) E?ect on service and interest cost 1.57 (1.13)
1.31 (1.05)
b) E?ect on Present Bene?ts Obligation
(Closing)
14.24 (8.03)
11.41 (9.25)
Note: Figures in bold represent current year’s ?gures
41.1 Tax Assessment
i. The Company had appealed to Hon’ble Delhi High Court against the decision of Income Tax Appellate
Tribunal (ITAT) for the Assessment Years 1981–82 to 1987–88 regarding disallowance of its claim for
`94.04 Million (As on 31st March 2011: `94.04 Million) on account of depreciation, development allowance
and receipt of interest on delayed payments in respect of Iran Project. However, pending decision
the tax demand in this regard was paid by the Company. The matter has been remanded back by the
Hon’ble Delhi High Court to the ITAT for fresh hearing vide order dated 30 March 2011.
ii. The Company had ?led appeals with Commissioner of Income Tax (Appeals) [CIT (Appeals)] against
the disallowance of depreciation on acquisition costs of the projects and other expenses as well as
addition to income aggregating to `3,958.54 Million, `3,006.17 Million, `3,470.29 Million, `3, 212.03
Million, `4,683.46 Million , `5,617.51 Million and `4,578.92 Million for assessment years 2002–03, 2003–04,
2004–05, 2005–06, 2006–07, 2007–08 and 2008–09 respectively by the assessing o?cer (“AO”). CIT
(Appeals), while disposing o? the appeals for assessment years 2002–03 and 2003–04 partially deleted
the disallowances. The Company ?led appeals with the Income Tax Appellate Tribunal (ITAT) against
the orders of CIT (Appeals). The Company got a favorable decision from ITAT for AY 2002–03 and all
disallowances (depreciation on acquisition cost and pre–acquisition expenses) made by the AO have
been deleted by ITAT. While the Department has ?led appeal in the High Court of Delhi (the “Delhi HC”)
against the said order of ITAT for 2002–03, the Company has also approached the Delhi HC against the
said order with the appeal that the acquisition cost be treated as revenue expenditure.
iii. For the assessment years 2004–05 and 2005–06, CIT (Appeals) has decided the appeals in favor of the
Company. However, the Department has ?led appeal against the above orders in the ITAT.
iv. For the assessment year 2004–05, the AO had reassessed the income under u/s 147 of the Income Tax
Act, 1961 making additions to income amounting to `165.98 Million towards exchange gain adjustments
and change in method of accounting during the relevant year. The tax demanded due to reassessment
is nil. The AO has also initiated penalty proceedings. Company has ?led an appeal before CIT (Appeals)
against the order of the AO and requested the AO to keep the penalty proceedings in abeyance till the
disposal of the appeal by CIT (Appeals).
v. For the assessment year 2005–06, the Company had claimed tax credit of `111.33 Million (increased to
`709.88 Million due to assessment by Department under regular provisions rather than under MAT, as
returned) under the India–Vietnam double tax avoidance agreement with respect to tax deemed to
be paid. The claim was duly supported by report of a reputed accounting and tax ?rm in Vietnam and
accepted by the AO. The CIT had issued an order dated 29 March 2010 holding the allowance of the
credit to be erroneous and directed the AO to re–compute the tax payable and allow credit only on
the basis of certi?cate to be obtained by the Company from Vietnam tax authorities. The Company
had ?led appeal with the Income Tax Appellate Tribunal (ITAT) to contest the same on the ground that
the decision of the CIT is not in accordance with the law. The Company had also approached Vietnam
Tax Authorities (VTA) for required certi?cate. However, the AO vide his order dated 21 December 2010
has withdrawn the credit allowed for `709.88 Million and the resulting demand for `958.34 Million has
been adjusted by the AO against refunds due to the Company. The Company has ?led appeal with CIT
(A) against the order of the AO. Further, the VTA vide their notice dated 5 August 2011 have con?rmed
the tax amounts for the calendar years 2003 to 2006. The Company has ?led the documents with CIT
(A) and further proceedings before CIT(A) are pending.
vi. For the assessment year 2008–09, the AO has made certain disallowances/additions (depreciation
on acquisition costs of the projects, adjustment of Sudan crude oil inventory, provision in respect of
Farsi exploration service contract and other expenses) amounting to `4,578.92 Million and assessed
total income as `32,469.15 Million against returned income of `27,890.22 Million. The disallowances/
additions include an amount of `1,654,88 Million on protective basis. In consequence, the AO has
raised a demand of `2,238.65 Million payable by the Company. The Company does not agree with the
disallowances made and ?led appeal with CIT (Appeals) against such assessment order. No provision
has been made for additional tax liability, if any, on this account.
vii. For the assessment year 2005–06, AO has initiated action on 28 March 2012 u/s 147 of the Income Tax
Act, 1961 for re–assessing company’s assessed income. The AO also conveyed the reasons whereby the
AO has indicated additions to income amounting to `25.87 Million towards exchange loss adjustments
due to change in method of accounting during the year. No demand has been raised by the AO
41.2 Disclosure pursuant to the clause 28 of the Listing Agreement:
Loans & Advances in the Nature of Loans
(` in Million)
2011–12 2010–11
Particulars
Outstand-
ing as on
31.03.2012
Maximum
Amount
Outstanding
during the
Year
Outstand-
ing as on
31.03.2011
Maximum
Amount
Outstanding
during the
Year
a) Loans and advances to Subsidiaries
i) Advance to Jarpeno Limited 1.24 15,329.61 6,651.93 6,668.37
ii) Advance to Carabobo One AB 149.20 2,547.42 2,492.52 2,622.23
iii) Loan to ONGC Narmada Limited 1,401.83 1,428.74 1,428.74 1,428.74
iv) Advance to ONGC Caspian E&P B.V. Nil Nil Nil 733.42
b) Loans to Associates
Advance to ONGC Mittal Energy Limited
Nil Nil Nil 75.55
c) Loans having no repayment schedule or repayment
schedule of more than seven years to employees
103.35 104.34 89.82 89.82
d) Loans having no interest or interest belowsection
372A of Companies Act, 1956
NA NA NA NA
e) Investment by the loanee (borrower) in the shares
of parent company and subsidiary company
Nil Nil Nil Nil
f) Loan to ?rms/companies in which Directors are
interested
Nil Nil Nil Nil
42. Details of Joint Ventures:
The details of Company’s and its Subsidiaries’ signi?cant joint ventures as on 31 March, 2012 are as
under
Sr.
No.
Name of the Project and Country
of Operation
Company’s
participating
share (%)
Other Consortium
Members*
Operator* Project Status
1
Block 06.1 Project, Vietnam,
O?shore
45%
TNK VietnamB.V.**
–35%
TNK Vietnam
B.V.**
The project is under
development and
production. Petrovietnam– 20%
2
Sakhalin –1 Project, Russia,
O?shore
20%
ENL – 30%
ENL
The project is under
development and
production.
SODECO – 30%
SMNG – 11.5%
R N Astra– 8.5%
3 Block 5A Project, Sudan, Onshore 24.125%
Petronas – 67.875% Petronas
and Sudapet
– Joint
Operatorship
The project is under
exploration, development
and production.
Sudapet – 8%
118 119
Sr.
No.
Name of the Project and Country
of Operation
Company’s
participating
share (%)
Other Consortium
Members*
Operator* Project Status
4 Block A–1 Myanmar, O?shore 17%
Daewoo – 51%
Daewoo
The project is under
development.
KOGAS – 8.5%
GAIL – 8.5%
MOGE– 15%
5
Block A–3 Project,
Myanmar, O?shore
17%
Daewoo – 51%
Daewoo
The project is under
development.
KOGAS – 8.5%
GAIL – 8.5%
MOGE– 15%
6 Farsi Block Project, Iran, O?shore 40%
IOC – 40%
OIL – 20%
ONGC Videsh
Ltd.
The project ’s exploration
service contract ended
on 24 June 2009. The
Master Development
Plan (MDP) for the Farzad
‘B’ Gas Field has been
submitted to National
Iranian Oil Company and
Development Service
Contract for the ?eld is
under discussion.
7 Block XXIV Project, Syria, Onshore 60%
IPRMEL – 25%
IPR MEL
The project is under
exploration, development
and production.
Triocean–15%
8
Block 25–29, 35 (Part) & 36
Project, Cuba, O?shore
30%
Repsol YPF – 40%
Repsol YPF
The project is under
exploration. StatOil – 30%
9
Khartoum–Port Sudan Pipeline
Project, Sudan
90% OIL – 10%
ONGC Videsh
Ltd.
The pipeline has been
completed and is under
lease.
10 Block RC–8, Colombia, O?shore 40%
Ecopetrol – 40% ONGC Videsh
Ltd.
The project is under
exploration Petrobras – 20%
11 Block RC–9, Colombia, O?shore 50% Ecopetrol – 50% Ecopetrol
The project is under
exploration
12 Block RC–10, Colombia, O?shore 50% Ecopetrol – 50%
ONGC Videsh
Ltd.
The project is under
exploration
13 Block SSJN–7, Colombia, Onshore 50% Paci?c – 50% Paci?c
The project is under
exploration
14 Block CPO–5, Colombia, Onshore 70% PetroDorado – 30%
ONGC Videsh
Ltd.
The project is under
exploration
15
SHWE O?shore Pipeline,
Myanmar, O?shore
17%
Daewoo – 51%
Daewoo
The project is under
construction.
KOGAS – 8.5%
GAIL – 8.5%
MOGE – 15%
16
Satpayev Contract Area 3575,
Kazakhstan
25% KMG – 75% SOLLP
The project is under
exploration
*Abbreviations used: BPEOC – BP Exploration Operating Company Limited; Daewoo – Daewoo International Corporation; Ecopetrol –
Ecopetrol S.A, Colombia; ENL – Exxon Neftegas Limited; GAIL – GAIL (India) Limited; IOC – Indian Oil Corporation Limited; IPRMEL – IPR
Mediterranean Exploration Limited; KMG – Kazmunaygas; KOGAS – Korea Gas Corporation; MOGE– Myanmar Oil and Gas Enterprise;
OIL – Oil India Limited; Petrobas – Petrobras Colombia Ltd; Paci?c – Paci?c Stratus Energy, Colombia ; Petro–Dorado – Petro–Dorado
South America S.A.; Petronas – PetronasCarigali Overseas SdnBhd; Petrovietnam – Vietnam Oil and Gas Group; Repsol YPF – Repsol
YPF Cuba SA; SMNG – Sakhalinmorneftegas Shelf; SODECO– Sakhalin Oil Development Company Limited; SOLLP – Satpayev Operating
Company LLP (100% subsidiary of KMG); Sudapet – Sudapet Limited; Triocean: Tri–Ocean Mediterranean.
** BPEOC has transferred its PI and Operatorship to TNK VietnamB.V. which is e?ective from17
th
October 2011.
43.1 Company’s share in Joint Ventures
The Company’s share of assets, liabilities, income and expenses in the Joint Ventures as furnished by
the Operator has been incorporated in the ?nancial statements as given below:
(` in Million)
Project Net Fixed
Assets
Net
Producing
Property
Capital
Work in
Progress
Explor-
atory and
Develop-
ment
Wells in
Progress
Current
Assets
Cash and
Bank Bal-
ance
Liabilities Income Expendi-
ture*
(Including
deprecia-
tion)
A. Audited as of 31 March 2012
Block 06.1, Vietnam 1,160.94 1,700.14 2,503.28 3,868.07 2,585.96 22.96 12,227.59 10,124.13 3,666.03
Farsi Block, Iran 0.27 – – – 1.45 1.08 116.18 0.33 10.90
Sudan Pipeline,
ONGC Videsh Ltd.'s
Share (90%)
– – – – 2,436.45 9.10 3,861.74 207.37 (914.15)
Total (A) 1,161.21 1,700.14 2,503.28 3,868.07 5,023.86 33.14 16,205.51 10,331.83 2,762.78
B. Audited as of 31 January 2012
Block 5A, Sudan 2,834.54 5,016.93 27.26 2,006.76 1,204.69 125.42 325.40 3,287.07 1,911.68
Total (B) 2,834.54 5,016.93 27.26 2,006.76 1,204.69 125.42 325.40 3,287.07 1,911.68
C. Audited as of 31 December 2011
Sakhalin 1, Russia 22,632.87 54,960.77 46,764.05 1,344.42 9,759.26 799.88 80,642.67 60,737.72 28,442.46
Block RC–8, Co-
lombia
0.15 – – – 11.06 – 126.73 0.35 40.91
Block RC–10, Co-
lombia
0.21 – – – 14.33 – 150.08 0.49 38.39
Block RC–9, Co-
lombia
– – – – 0.09 0.24 7.59 0.26 (13.91)
Block SSJN–7,
Colombia
– – – – 2.20 – 50.93 0.07 260.33
Blocks 25–29, 35
(Part) & 36, Cuba
6.12 – 346.91 1,811.86 248.44 – 748.71 – 20.32
Block A–1, Myanmar 20.97 – 3,960.76 2,753.72 734.58 444.92 1,827.11 3.14 78.55
Block A–3, Myanmar 2.01 – 840.95 2,695.10 186.02 162.42 317.60 3.54 10.13
CPO 5 Block 0.24 – – 15.20 67.06 – 219.11 1.16 166.43
SHWE O?shore
Pipeline, Myanmar
– – 1,966.65 – 444.18 443.79 440.26 1.74 (5.61)
Total (C)
22,662.57
54,960.77 53,879.32 8,620.30 11,467.22 1,851.25 84,530.79 60,748.47 29,038.00
D. Unaudited
Block XXIV, Syria 53.67 (78.46) – 1,998.02 314.97 – 270.06 191.49 246.74
Block 6 North Rama-
dan, Egypt+
– – – – 50.96 – 60.82 0.80 (68.50)
Block NC–189,
Libya+
– – – – 24.79 2.34 0.23 – (0.75)
Block NEMED,
Egypt+
– – – – – – (1.88) – 30.79
Satpayev Block,
Kazakhstan
2.30 – 4,753.53 – 18.66 – 646.57 – 703.45
Total (D ) 55.97 (78.46) 4,753.53 1,998.02 409.38 2.34 975.80 192.29 911.73
Grand Total 26,714.29 61,599.38 61,163.39 16,493.15 18,105.15 2,012.15 102,037.50 74,559.66 34,624.19
*Represents expenditure as per joint venture statement. In the accounts of the Company, the amount is re?ected after netting o? as
per the Accounting Standard (AS) 27 viz. Financial Reporting of interests in Joint Ventures.
+Projects surrendered during the year
The Company’s share of assets, liabilities, income andexpenses has beenconvertedintothe reporting currency at the average exchange
rate over the period for which the details are provided by the Operators. Generally the details are provided by the operators on monthly
basis except in respect of Sakhalin–1, Russia Project, where the details are provided by the Operator on quarterly basis.
120 121
43.2 Block 5A, Republic of South Sudan
The Company has 24.125% participating interest in Block 5A Republic of Sudan (ROS). South Sudan
separated from ROS as an independent country e?ective from 9
th
July 2011. In view of the separation
of South Sudan, the entire contract area of Block 5A is now situated in Republic of South Sudan
(RSS), whereas the downstream crude oil transportation system and export terminal are situated
in ROS.
The company signed a Transition Agreement (TA) with RSS on 13
th
January 2012 continuing its right for
oil exploration and exploitation for contract area of Block 5A in Republic of South Sudan. Republic
of South Sudan is a landlocked country. Government of Sudan and Government of South Sudan has
been negotiating an agreement for the evacuation of crude produced from Republic of South Sudan
concessional area through the processing and transportation facilities of Republic of Sudan and has
yet to reach an agreement. As per the directives of Ministry of Petroleum & Mines, Government of
South Sudan, petroleum operation has been temporarily shut down in concession area of Block 5A
e?ective from 23
rd
January 2012. In view of the above, currently petroleum operations in the Block have
been limited to the maintenance of the facilities to ensure integrity for swift resumption of production
operation.
Due to the secession of South Sudan from ROS, the operator has been shifting o?ce from Khartoum
in ROS to Juba in RSS. Due to the shifting process the operator has not been able to provide the
monthly expenditure statement for the month of February and March 2012. Hence the expenditure
for the month of February and March are booked based on the cash call request for those two months
amounting to USD 4.39 Million equivalent `218.24 Million. Necessary adjustments would be carried out
in the accounts on receipt of the expenditure statement.
43.3 Satpayev Block, Kazakhstan:
E?ective 12
th
October 2011, the Company has acquired 25% Subsoil use rights from National Company
JSC Kaz Munai Gas (KMG) in the Contract for Exploration and Production of Hydrocarbon (Contract) in
Satpayev Area which was signed on 15
th
June, 2010 between Ministry of Oil and Gas (MOG), Kazakhstan
and KMG. KMG now holds subsoil use rights of 75% in the Block. The amounts paid toward initial payment
and signature bonus aggregating to `4,753.53 Million are disclosed as Capital Work in Progress in
Note 17.
44. Disclosure pursuant to as 19 – Leases
a. Khartoum – Port Sudan Pipeline Project:
The Company had completed the 12”X741 Kms multi–product pipeline from Khartoum re?nery to Port
Sudan for the Ministry of Energy and Mining of the Government of Sudan (GOS) on Build, Own, Lease
and Transfer (BOLT) basis and handed over the same to GOS during the ?nancial year 2005–06. The
project was implemented in consortium with Oil India Limited, Company’s share being 90%.
The EPC Contractor executing the project claimed additional costs aggregating to USD 37.15 Million,
Company’s share being USD 33.43 Million (90%), which have not been accepted by the Company. The
Company, in turn has ?led a claim as per the contract with GOS for their approval of an aggregate amount
of USD 46.18, Company’s share being USD 41.56. The EPC Contractor has initiated arbitration with a claim
for USD 25.49 Million plus interest (amount uncertainable) against the Company. Pending settlement with
the EPC Contractor, an amount of USD 22.94 Million, being the Company’s 90% share out of total claim of
USD 25.49 Million has been accounted as liability in the relevant year. No revenue in this respect has been
recognized since the claim has not been accepted by GOS. ONGC Videsh Ltd. has served a pre–arbitral
notice on GOS which is a requirement prior to initiating any legal proceedings in Sudan.
The payment under the contract with GOS would be received over a period of 10 years including a
moratorium of one year from the date of the contract (30 June, 2004) in 18 equal semi–annual
installments along with lease rental. The lease period commenced from the date of handing over of
the pipeline system and will continue till all payments by GOS are completed. All titles in the works
and the transportation system shall vest in the Company and the title shall pass to GOS in proportion
to the payments made by GOS against total payments due to Company under the contract. Further,
subject to regular payments on due dates by GOS to the Company, GOS shall have the exclusive right
to use and operate the pipeline system and the Company shall not assign, transfer, sub–let, sub–
contract, mortgage or create any rights to any third party or encumbrances or make any disposition
to any third party. Accordingly, the amount of net investment in the lease (i.e. aggregate of Minimum
b. The disclosure in accordance with the Accounting Standard (AS) 19 viz. Leases is as under:
(` in Million)
Particulars
31 March 2012 31–Mar–11
Gross Net Gross Net
a) Reconciliation between the total gross
investment in the lease and the present value
of minimumlease payments as at year end
– Not later than one year 2,581.50 2,427.35 1129.15 975.68
– Later than one year and not later
than ?ve years
1,936.13 1,846.25 2822.89 2567.91
– Later than ?ve years – – – –
Total 4517.63 4273.60 3952.04 3543.59
b) Unearned Finance Income 244.03 408.45
c) Unguaranteed residual value accruing to
Company’s bene?t
Nil Nil
d) Accumulated provision for uncollectible
minimumlease payments receivable
Nil Nil
e) Contingent rentsrecognisedinthestatement
of pro?t and loss for the period
Nil Nil
f) General description of the signi?cant leasing
arrangement
As described in para above As described in para above
g) Accounting Policy followed in respect of
initial direct costs
As per Accounting Policy O.1.2 As per Accounting Policy O.1.2
Lease Payments minus Unearned Finance Income) is recognized and recorded as receivables under the
lease. The ?nance income thereon has been recognized based upon the pattern re?ecting the constant
periodic rate of return on the outstanding net investment in the lease.
The ?rst 11 installments under the contract due till 30
th
December 2010 have been received. The 12
th
Installment due on 30
th
June 2011 and 13
th
installment due on 30
th
December 2011 have not yet been
received. Company has taken a political risk insurance policy for 12
th
and 13
th
installments. As per the
provisions of policy contract, the company has ?led the claim for 12
th
and 13
th
installments with Export
Credit Guarantee Corporation of India (ECGC).
45. Details of Reserves: (as determined by the Reserves Estimation Committee):
(a) Company’s share of Proved Reserves in respect of di?erent projects as on 31 March, 2012 is as under:
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total Oil Equivalent**
(Million Tonne)
Block 06.1, Vietnam Opening 0.672 10.540 11.212
Addition – – –
Ded/Adj – – –
Production 0.036 2.023 2.059
Closing 0.636 8.517 9.153
Sakhalin–1, Russia Opening 35.501 71.537 107.038
Addition 0.258 0.138 0.396
Ded/Adj – – –
Production 1.498 0.494 1.992
Closing 34.261 71.182 105.442
122 123
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total Oil Equivalent**
(Million Tonne)
Block 5A, Sudan Opening 6.627 – 6.627
Addition (0.105) – (0.105)
Ded/Adj – – –
Production 0.174 – 0.174
Closing 6.348 – 6.348
Block–24, Syria Opening 1.813 – 1.813
Addition – – –
Ded/Adj – – –
Production 0.010 – 0.010
Closing 1.803 – 1.803
Block–A1 & A3,
Myanmar
Opening – 10.297 10.297
Addition – – –
Ded/Adj – – –
Production – – –
Closing – 10.297 10.297
* Crude Oil includes Condensate.
** For calculating “Oil Equivalent” 1,000M
3
of Gas has been taken to be equal to 1 Tonne of Crude Oil.
b) Company’s share of Proved and Developed Reserves in respect of di?erent projects as on 31 March 2012
is as under:
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total Oil Equivalent**
(Million Tonne)
Block 06.1, Vietnam Opening 0.663 6.985 7.648
Addition – – –
Deductions/ Adjustment – – –
Production 0.036 2.023 2.059
Closing 0.627 4.962 5.589
Sakhalin–1, Russia Opening 10.620 11.288 21.908
Addition – – –
Deductions/ Adjustment – – –
Production 1.498 0.494 1.992
Closing 9.122 10.794 19.916
Block 5A, Sudan Opening 2.467 – 2.467
Addition 0.306 – 0.306
Deductions/ Adjustment – – –
Production 0.174 – 0.174
Closing 2.599 – 2.599
Block–24, Syria Opening – – –
Additions 0.060 – 0.060
Deductions/ Adjustment – – –
Production 0.010 – 0.010
Closing 0.050 – 0.050
* Crude Oil includes Condensate.
** For calculating “Oil Equivalent” 1,000M
3
of Gas has been taken to be equal to 1 Tonne of Crude Oil.
(c ) The year end reserves of the company has been estimated by the Reserves Estimation Committee
(REC) of the parent company ONGC, which follows international reservoir engineering procedures
consistently.
124 125
46. Segment Information
(` in Million)
Particulars Asia FSU Countries Latin
2011–12 2010–11 2011–12 2010–11 2011–12
External sales 10,309.10 7,927.45 60,719.71 44,950.27 –
Inter Segment sales – – – – –
Total Revenue 10,309.10 7,927.45 60,719.71 44,950.27 –
Results 3,942.68 4,474.08 32,277.25 29,051.08 (690.63)
Segment results 3,942.68 4,474.08 32,277.25 29,051.08 (690.63)
Unallocated corporate Expenses (Net) – – – – –
Operating pro?t or (Loss) 3,942.68 4,474.08 32,277.25 29,051.08 (690.63)
Interest expenses – – – – –
Interest and other income 15.28 19.21 18.02 44.55 2.32
Income & other Tax – – – – –
Pro?t / (loss) from ordinary activities 3,957.95 4,493.30 32,295.26 29,095.62 (688.32)
Net pro?t / (Loss) 3,957.95 4,493.30 32,295.26 29,095.62 (688.32)
Other information – – – – –
Segment Assets 39,129.49 21,297.22 161,600.88 140,162.61 2,525.54
Unallocated Corporate Assets – – – – –
Total Assets 39,129.49 21,297.22 161,600.88 140,162.61 2,525.54
Segment Liabilities 17,727.89 12,757.12 80,642.66 72,585.33 1,456.15
Unallocated Corporate Liabilities – – – – –
Total Liabilities 17,727.89 12,757.12 80,642.66 72,585.33 1,456.15
Capital Expenditure 17,086.89 3,371.58 33,162.28 34,426.68 1,616.75
Recouped cost 1,821.11 856.97 7,561.55 7,139.27 683.53
Non cash Exp. – – – – –
Information about Secondary Business Segments (Product–wise):
(` in Million)
Revenue from 2011–12 2010–11
Crude Oil* and Natural Gas 74,313.77 55,682.63
Lease Finance Income 207.36 252.94
*Crude Oil includes Condensate.
(` in Million)
America Africa Unallocated Grand Total
2010–11 2011–12 2010–11 2011–12 2010–11 2011–12 2010–11
– 3,284.96 2,804.92 – – 74,313.77 55,682.64
– – – – – – –
– 3,284.96 2,804.92 – – 74,313.77 55,682.64
(1,232.50) 2,283.93 (3,403.66) – – 37,813.23 28,889.00
(1,232.50) 2,283.93 (3,403.66) – – 37,813.23 28,889.00
– – – (11,502.88) (3,090.95) (11,502.88) (3,090.95)
(1,232.50) 2,283.93 (3,403.66) (11,502.88) (3,090.95) 26,310.35 25,798.05
– – (2.75) (1,974.74) (2,238.39) (1,974.74) (2,241.14)
0.88 284.53 276.67 5,499.11 1,807.77 5,819.26 2,149.08
– – – (11,394.05) (4,281.38) (11,394.05) (4,281.38)
(1,231.63) 2,568.46 (3,129.74) (19,372.56) (7,802.95) 18,760.79 21,424.60
(1,231.63) 2,568.46 (3,129.74) (19,372.56) (7,802.95) 18,760.79 21,424.60
– – – – – – –
778.97 16,924.85 16,588.55 – – 220,180.76 178,827.35
– – – 124,115.11 132,824.72 124,115.11 132,824.72
778.97 16,924.85 16,588.55 124,115.11 132,824.72 344,295.87 311,652.07
688.63 5,061.22 11,250.23 – – 104,887.92 97,281.31
– – – 138,527.19 133,722.00 138,527.19 133,722.00
688.63 5,061.22 11,250.23 138,527.19 133,722.00 243,415.11 231,003.31
97.37 1,119.82 (3,591.05) 432.67 348.17 53,418.41 34,652.75
1,099.59 801.57 5,109.52 193.55 409.41 11,061.31 14,614.76
– – – – – – –
Notes:
i. Segments have been identi?ed and reported taking into account the organization and management structure for internal
reporting and signi?cantly di?erent risk and return perception in di?erent geographical regions. These have been re–organized
into ?ve segments viz. Asia, FSU Countries, Latin America, Africa and Unallocated.
ii. The segment revenue in the business segment (Product–wise) is revenue fromsale of Crude Oil and Natural Gas and Lease Finance
Income.
iii. Segment Revenue, Results, Assets and Liabilities include the respective amounts identi?able to each of the segments and amount
allocated on a reasonable basis. “Unallocated” includes common expenditure incurred for all the segments and expenses incurred
at corporate level.
iv. Revenue ?gures are shown as net of VAT.
126 127
47. Capital Commitments:
(i) Other Capital Commitments based upon the details provided by the operators: `29,252.78 Million
(Previous year `31,168.63 Million).
(ii) Contracts remaining to be executed on capital account amounting to `1,570.00 Million ( Previous year
`1,960.30 Million) towards ONGC Videsh Ltd. share for building at Vasant Kunj, Delhi wherein the
contracts have been awarded by parent company to various agencies and ONGC Videsh Ltd. is to share
the costs.
47.a Other Commitments:
(i) The Company either on its own or in consortium with other partners carries on its business in respect
of exploration, development and production of hydrocarbons under agreements with the host
governments. Several of these agreements provide for certain minimum work obligations/ certain
minimum ?nancial commitments over a period of time. The Company’s share of such obligations/
commitments in respect of agreements where such obligations / commitments have not been
completed as of the reporting date amounted to USD 121.02 Million equivalent to `6,186.61 Million
(Previous year USD 131.52 Million equivalent to `5,881.62 Million). The Company is con?dent of meeting
the obligations/ commitments.
48. Contingent Liability:
i Liability for payment to contractual workers for regularization of their services is pending with Labor
Court under civil suit. The amount of liability is not ascertainable.
ii Claims not acknowledged as debt: USD 10.49 Million plus interest (amount uncertainable). (Refer note
44 above).
iii Disputed income–tax demands (excluding cases decided in favour of Company and addition made by
the AO on protective basis): `7,145.56 Million (As on 31 March 2011: `4,967.43 million). Against disputed
tax demands,`9,438.08 Million (As on 31 March 2011: `5,714.31 million) has been paid by the Company
or adjusted by the authorities against refunds due to the Company from time–to–time. Attention is
invited to note 41 above.
iv In respect of bank guarantees/standby letters of credit obtained from banks for performance
guarantee/bid bonds: `4,861.23 Million (Previous Year `4,234.98 Million).
v The Company has issued Performance Guarantee in respect of concessionary contract for Block BC–10,
Brazil and Blocks BM–S–73 and BM–ES–42 on behalf of ONGC Campos Ltda (OCL). The Company is
con?dent that OCL will be able to honor its obligations.
vi The Company has given a Performance Guarantee on behalf of Petro Carabobo Ganga B.V. to Government
of Venezuela in respect of Carabobo 1 Project. The total investment commitment is estimated at USD
1,333 Million (`68,142.96 Million).
vii The Service Tax Department has issued a demand cum show–cause notice dated 11 October 2011
requiring the Company to show cause why service tax amounting to `28,163.14 Million (including
Education Cess and SHE cess), the interest on such amount and penalty should not be demanded and
recovered from the Company. Service Tax Department has calculated these tax amounts based on
foreign currency expenditure reported in the Company’s ?nancial statements covering the reporting
periods from 1 April 2006 to 31 December 2010 and contending that these expenses represent business
auxiliary services rendered by ONGC Videsh Ltd.’s foreign branches and operator of the Joint Venture/
Consortium to the Company. The Company is of the view that the said service tax is not payable and
proposes to contest the same. No provision has been made on this account.
viii All known contingent liabilities have been indicated. The contingent liabilities, if any, in respect of joint
ventures, where the Company is the non–operator are not ascertainable except Sakhalin–1 where the
Operator has intimated that the status of contingent liability is Nil.
49. Derivative instruments and unhedged foreign currency exposure:
During the year, ONGC Videsh Ltd. has entered into cross currency swap transactions with various
banks whereby it has swapped the principal and interest amounts payable towards Bonds issued in
domestic markets into USD liability as follows:
Underlying
Notional Principal
Amount ( `Million)
Notional Principal
Amount (USD
Million)
Termination Date
8.40% 5 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series I
15,000.00 299.23 23 December 2014
8.54% 10 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series II
3,700.00 56.30 6 January 2020
Total 18,700.00 355.53
The business of the Company is carried out entirely outside India. The revenues of the Company are
received entirely in foreign currency and substantially all the expenses are incurred in foreign currency.
Accordingly, the Company has swapped the Bonds issued in Indian Rupees into USD so as to align the
currency of its liabilities and assets, thereby hedging the resulting exposure.
The above swap positions were outstanding on 31 March 2012 and have been revalued on that date based
on Mark–to–Market positions reported by counter–party banks. Mark–to–market loss amounting to
`498.56 Million has been charged to foreign exchange gain/loss in the Statement of pro?t and loss.
Further, during the year, the Company had entered into foreign exchange forward transactions for
hedging its underlying exposures which have settled during the year itself. The net gain on settlement
of such transactions amounting to `222.45 Million has been charged to foreign exchange gain/loss in
the Statement of pro?t and loss.
50. Expenditure in foreign currency:
(` in Million)
Particulars 2011–12 2010–11
Import Nil Nil
Professional and Consultation Fee 171.50 457.09
Interest 367.95 102.51
Others 91,969.07 32,574.67
51. Earnings in foreign currency (accrual basis):
(` in Million)
Particulars 2011–12 2010–11
Export/ Sales (incl. advance received/ adjusted)* 75,548.06 56,017.35
Royalty/Technical know–how Nil Nil
Interest 667.64 501.87
Dividend 1,049.40 818.11
Others 3,764.63 1,382.35
* Attention Is also invited to Note–28
128 129
52. Previous year ?gures have been re–grouped/re–arranged and nomenclature re–named
wherever necessary to make them comparable with current year classi?cation.
53. Some balances of Debtors, Creditors and Loans & Advances are subject to con?rmation/
reconciliation. Adjustments, if any, will be accounted for on receipt/con?rmation of the same
after examination.
54. Information as per Accounting Standard (AS) 18 viz. Related Party Disclosures is given below
(excluding with State Controlled Entities):
(` in Million)
Subsidiaries Joint ventures
Key Managerial
personnel
Total 2011–12 Total 2010–11
Income fromrendering services 685.36 167.29 – 852.65 639.84
Expenses on receiving services – – – – –
Reimbursement of expenditure
(travelling etc)
106.99 78.46 – 185.45 109.09
Interest Income 428.74 34.43 – 463.17 497.23
Dividend Income 1,049.40 – – 1,049.40 818.11
Redemption of shares 6,113.25 21.17 – 6,134.42 315.45
Loans Given 7,890.90 – – 7,890.90 8,945.57
Remuneration – – 16.69 16.69 16.05
Capital Contribution* 17,751.15 – – 17,751.15 –
* Loans and Advances converted into shares.
Note :
Name of related parties and description of relationship (excluding State Controlled Entities):
Subsidiaries ONGC Nile Ganga B.V., The Netherlands
ONGC Nile G anga Cyprus Limited,Cyprus
ONGC Nile Ganga (San Cristobal) B.V. , The Netherlands
ONGC Campos Ltda, Brazil
ONGC Do Brasil Explorancao Petrolifera Ltda,Brazil (liquidated in Jan–12)
ONGC Caspian E&P B.V., The Netherlands
ONGC Satpayev E&P B.V., The Netherlands
ONGC Narmada Limited, Nigeria
ONGC Amazon Alakananda Limited, Bermuda
Jarpeno Limited, Cyprus
Imperial Energy Tomsk Limited, Cyprus
Imperial Energy (Cyprus) Limited, Cyprus
Imperial Energy Nord Limited, Cyprus
RK Imperial Energy (Kostanai) Limited, Cyprus
Nefsilius Holdings Limited, Cyprus
Imperial Frac Services ( Cyprus) Limited, Cyprus
Freshspring Investments Limited, Cyprus
Redcli?e Holdings Limited, Cyprus
Imperial Energy Gas Limited
San Agio Investments Limited, Cyprus
Biancus Holdings Limited, Cyprus
LLC Sibinterneft, Russian Federation
LLC Allianceneftegaz, Russian Federation
LLC Nord Imperial, Russian Federation
LLC Imperial Energy Tomsk Gas, Russian Federation (under liquidation)
LLC Stratum, Russian Federation
LLC Imperial Trans Service, Russian Federation
LLC Rus Imperial Group, Russian Federation
Carabobo One AB, Sweden
Petro Carabobo Ganga B.V., the Netherlands
Joint Ventures Block 06.1 Project, Vietnam
Sakhalin–1 Project, Russia
Block 5A Project, Sudan
Block A–1 Project, Myanmar
Block A–3 Project, Myanmar
SHWE O?shore Pipeline Project, Myanmar
Farsi Block Project, Iran
Block XXIV Project, Syria
Block 25–29, 35 (Part) & 36 (Part), Cuba
Khartoum– Port Sudan Pipeline Project, Sudan
ONGC Mittal Energy Limited, Cyprus
Block RC–8, Colombia
Block RC–9, Colombia
Block RC–10, Colombia
Block SSJN–7, Colombia
Block CPO–5, Colombia
Satpayev Project, Kazakhstan
Key Management personnel Mr D K Sarraf, Managing Director (with e?ect fromSeptember 16, 2011)
Mr J Thomas, Managing Director (till September 15, 2011 )
and Director (Exploration) (till December 31, 2011)
Mr S P Garg, Director (Finance)
Mr S. Roychoudhary, Director (Operations)
Mr N K Verma, Director (Exploration) (with e?ect from1st January, 2012)
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
130 131
6A8h FL0W 8TATEMEhT F0P ThE ¥EAP EhßEß 31
MAP6h, 2012
(` in Million)
Year Ended
31 March , 2012
Year Ended
31 March, 2011
A CASH FLOWFROM OPERATING ACTIVITIES:
Net pro?t before tax and prior period items 30,128.23 25,733.09
Adjustments For:
– Foreign Exchange Translation Reserve 1,460.90 (250.94)
– Provision for Diminution in the Value of Investment 18,666.21 –
– Provisions for Doubtful Debts/Claims 509.41 1,428.74
– Provision for Non Moving Inventory 372.38 557.36
– Provisions Written Back – (6,156.23)
– Other Provisions and Write O?s 922.76 6,763.47
– Unrealized Foreign Exchange Loss/(Gain) 12.17 (101.03)
– Provision for Mark to Market loss on Derivative Contracts 498.56 –
– Depreciation on Tangible Assets (Net) 2,028.62 2,351.20
– Amortisation – Intangibles (34.89) 17.22
– Depletion on Producing Properties 6,966.25 6,549.43
– Interest Expenses 1,974.74 2,241.13
– Foreign Exchange Fluctuation related to borrowing cost – –
– Dividend Income (1,049.40) (818.11)
– Interest Income (574.73) (380.20)
– Pro?t on Redemption/ Sale of Investment (2,726.77) (28.40)
– Gain on Foreign Exchange Forward Contract (222.45) 28,803.76 – 12,173.64
Operating Pro?t before Working Capital Changes 58,931.99 37,906.73
Adjustments for:–
– Decrease/(Increase) in Inventories (675.86) (216.80)
– Decrease/(Increase) in Trade Receivables (768.60) (1,633.04)
– Decrease/(Increase) in Short TermLoans and Advances 8,753.64 (7,383.36)
– Decrease/(Increase) in Long TermLoans and Advances (521.03) (1,428.74)
– Decrease/(Increase) in Other Current Assets (5,846.49) (186.07)
– Decrease/(Increase) in Other Non Current Assets 743.39 –
– Increase/(Decrease) in Short TermBorrowings 291.65 (10,900.00)
– Increase/(Decrease) in Trade Payables 2,471.73 (467.69)
– Increase/(Decrease) in Other current Liabilities 8,499.57 –
– Increase/(Decrease) in Other Long TermLiabilities (174.32) (157.38)
– Increase/(Decrease) in Short TermProvisions 13.42 27.40
– Increase/(Decrease) in Long TermProvisions 27.18 –
– Increase/(Decrease) in Liability for Abandonment 5,730.02 6,930.78
– Increase/(Decrease) in Deferred Tax Liabilities (Net) 93.57 18,637.87 (3.07) (15,417.97)
Cash generated from/(used in) Operations 77,569.86 22,488.76
Direct Taxes Paid (net of refunds) (11,394.05) (4,281.38)
Net Cash Flow before Prior period items 66,175.81 18,207.38
Prior period items 26.62 (27.11)
Net Cash Flow from/(used in) Operating Activities (A) 66,202.43 18,180.27
Year Ended
31 March , 2012
Year Ended
31 March, 2011
B CASH FLOWFROM INVESTING ACTIVITIES:
– Purchase of Tangible Assets (Net) (1,903.01) (17,400.71)
– Purchase of Intangible Assets (Net) (31.69) (11.09)
– Expenditure on Projects (44,948.03) (9,531.18)
– Investment in Subsidiaries/JV's (15,171.84) 229.40
– Investment with Bank for Site Restoration (2,819.74) (0.05)
– Dividend Income 1,049.40 818.11
– Interest Income 574.73 380.20
– Pro?t on Redemption/ Sale of Investment 2,726.77 28.40
– Gain on Foreign Exchange Forward Contract 222.45 –
Net Cash Flow from/(used in) Investing Activities (B) (60,300.96) (25,486.92)
C CASH FLOWFROM FINANCING ACTIVITIES:
– Proceeds fromNon Convertible Redeemable Bonds – –
– Proceeds fromIssue of Share Capital – –
– Net Long TermBorrowings fromONGC (4,530.72) 10,063.58
– Interest Expenses (1,974.74) (2,241.13)
– Foreign Exchange Fluctuation related to borrowing cost – –
Net Cash Flow from/(used in) Financing Activities (C) (6,505.46) 7,822.45
Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) (603.99) 515.80
Cash and Cash Equivalents as at 31 March, 2011 6,063.49 5,547.69
(Opening Balance)
Cash and Cash Equivalents as at 31 March, 2012 5,459.50 6,063.49
(Closing Balance)
Note:
1 The above Cash FlowStatement has been prepared under the 'Indirect Method' as set out in the Accounting Standard–3 on Cash
FlowStatements issued by The Institute of Chartered Accountants of India.
2 Bracket indicates cash out?ow.
3 Previous year ?gures have been regrouped wherever necessary to con?rmthe current year's classi?cation.
4 Adjustment have not been made to purchase of ?xed assets etc. (investing activities), on account of increase / decrease in Capital
Creditors. The impact of the above is not readily ascertainable.
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
132 133
8TATEMEhT FüP8üAhT T0 8E6TI0h 212 0F ThE 60MFAhIE8 A6T,
1956, PELATIh6 T0 60MFAh¥'8 IhTEPE8T Ih ThE 8ü88IßIAPIE8
Sl.
No.
Name of the
Subsidiaries
1. The Financial
Year of the
Subsidiary
ends on
2. Date
fromwhich
it became
Subsidiary
3. (a) Number of shares held
by ONGC Videsh Ltd. in the
Subsidiary at the end of the ?-
nancial year of the Subsidiary
3. (b) Extent
of interest
of Holding
Company at
the end of
the ?nancial
year of the
Subsidiary
4. The net aggregate amount of the Subsidiary’s Pro?t/
(Loss) so far it concerns the members of the Holding
Company:
4. (a) Not dealt within
the Holding Company’s
accounts*
4. (b) Dealt within the
Holding Company’s ac-
counts:
4. (a) (i)
For the
period 1st
April, 2011
to 31st
March,
2012 (` in
million)
4. (a) (ii) For
the previous
period (s)
of the Sub-
sidiary since
it became
the Holding
Company's
Subsidiary (`
in million)
4. (b) (i)
For the
period 1st
April, 2011
to 31st
March,
2012 (` in
million)
4. (b) (ii) For
the previous
period (s)
of the Sub-
sidiary since
it became
the Holding
Company's
Subsidiary (`
in million)
1 ONGC Nile Ganga
B.V.
31st December,
2011
12th March,
2003
40 Class “A” & 100 Class "B"
shares of Euro 453.78 each
& 880 Class "C" Shares of
Euro 1 each directly, rest 720
Class "C" shares are held by
OMEL which is JV Company
of ONGC Videsh Ltd. & Mittal
Investment Sarl (MIS)
Class A & B
100%
Class C
77.491%
11,534.48 64,668.56 1,049.40 14,916.88
2 ONGC Narmada
Limited
31st March, 2012 7th December,
2005
20 million shares of one Naira
each
100% – (1,373.60) – –
3 ONGC Amazon
Alaknanda Limited
31st March, 2012 8th August,
2006
12,000 Equity & 367,995,174
Preference shares of one
USD each
100% 7,185.50 13,066.09 – –
4 ONGC Campos
Ltda.
31st December,
2011
16th March,
2007
353,958,050 quotas of BRL
1 each
100% (2,369.73) 440.85 – –
5 ONGC Nile Ganga
(Cyprus) Ltd.
31st December,
2011
26th
November,
2007
241,223 Shares of 0.01 USD
each
100% 188.09 218.27 – –
6 ONGC Nile Ganga
(San Cristobal) B.V.
31st December,
2011
29th February,
2008
54,000 shares of Euro 1 each 100% 76.10 11,028.50 – –
7 ONGC Satpayev
E&P B.V
31st December,
2011
7th June, 2010 18,000 shares of Euro 1 each 100% (0.10) (0.38) – –
8 ONGC Caspian
E&P B.V
31st December,
2011
7th June, 2010 36,000 shares of Euro 1 each 100% (0.15) (8.37) – –
9 Jarpeno Limited 31st March, 2012 12th August,
2008
1,450 Equity shares of 1 USD
each & 192,210 Optionally
Convertible Redeemable
Preference shares of USD
1 each
100% (19,676.10) 1,528.42 – –
10 Biancus Holdings
Limited
31st March, 2012 13th January,
2009
1,000 shares of 1.71 EUR each 100% 21.07 97.53 – –
11 San Agio
Investments
Limited
31st March, 2012 13th January,
2009
1,000 shares of 1.71 EUR each 100% 127.85 (213.13) – –
12 Redcli?e Holdings
Limited
31st March, 2012 13th January,
2009
2,520 shares of 1 USD each 100% (44.05) (127.54) – –
13 Imperial Energy
Nord Limited
31st March, 2012 13th January,
2009
25,920 shares of 1 USD each 100% (416.11) (908.20) – –
14 Imperial Energy
(Cyprus) Limited
31st March, 2012 13th January,
2009
25,720 shares of 1 USD each 100% (245.65) (763.27) – –
15 Imperial Energy
Tomsk Limited
31st March, 2012 13th January,
2009
850 shares of 1.71 EUR each 85% (28.49) (67.11) – –
Sl.
No.
Name of the
Subsidiaries
1. The Financial
Year of the
Subsidiary
ends on
2. Date
fromwhich
it became
Subsidiary
3. (a) Number of shares held
by ONGC Videsh Ltd. in the
Subsidiary at the end of the ?-
nancial year of the Subsidiary
3. (b) Extent
of interest
of Holding
Company at
the end of
the ?nancial
year of the
Subsidiary
4. The net aggregate amount of the Subsidiary’s Pro?t/
(Loss) so far it concerns the members of the Holding
Company:
4. (a) Not dealt within
the Holding Company’s
accounts*
4. (b) Dealt within the
Holding Company’s ac-
counts:
4. (a) (i)
For the
period 1st
April, 2011
to 31st
March,
2012 (` in
million)
4. (a) (ii) For
the previous
period (s)
of the Sub-
sidiary since
it became
the Holding
Company's
Subsidiary (`
in million)
4. (b) (i)
For the
period 1st
April, 2011
to 31st
March,
2012 (` in
million)
4. (b) (ii) For
the previous
period (s)
of the Sub-
sidiary since
it became
the Holding
Company's
Subsidiary (`
in million)
16 Imperial Energy Gas
Limited
31st March, 2012 13th January,
2009
2,000 shares of 1 EUR each 100% (0.96) (2.33) – –
17 Imperial Frac
Services (Cyprus)
Limited
31st March, 2012 13th January,
2009
1,000 shares of 1.71 EUR each 100% (0.96) (2.51) – –
18 Nefsilius Holdings
Limited
31st March, 2012 13th January,
2009
2,420 shares of 1 USD each 100% (2.87) (5.73) – –
19 Freshspring
Investments
Limited
31st March, 2012 13th January,
2009
1,000 shares of 1.71 EUR each 100% (0.48) (2.37) – –
20 RK Imperial Energy
Kostanai Limited
31st March, 2012 13th January,
2009
1,000 shares of 1.71 EUR each 100% (0.48) (2.02) – –
21 LLC Nord Imperial 31st December,
2011
13th January,
2009
full charter capital 100,000RUR 100% (4,660.57) (11,518.77) – –
22 LLC
Allianceneftegaz
31st December,
2011
13th January,
2009
full charter capital 50,000RUR 100% (395.04) (4,408.17) – –
23 LLC Sibinterneft 31st December,
2011
13th January,
2009
charter capital 55,900RUR 55.9%
(Net Interest
47.5%)
(50.49) (608.51) – –
24 LLC Rus Imperial
Group
31st December,
2011
13th January,
2009
full charter capital 100,000RUR 100% (420.42) (498.38) – –
25 LLC Imperial Trans
Service
31st December,
2011
13th January,
2009
full charter capital 100,000RUR 100% (0.48) (50.45) – –
26 LLC Imperial Energy
Tomsk Gas
31st December,
2011
13th January,
2009
charter capital 9,500 RUR 95% (1.36) (5.18) – –
27 LLC Stratum 31st December,
2011
13th January,
2009
full charter capital 100,000RUR 100% – (0.19) – –
28 Carabobo One AB 31st March, 2012 25th February,
2010
377,678 ordinary shares of
11.19457 Euro each
100% (144.13) (9.51) – –
29 Petro Carabobo
Ganga B.V.
31st December,
2011
26th February,
2010
18,000 shares of 1 Euro each 100% (4.41) (9.89) – –
*At the closing rate of exchange, there is a Foreign Exchange Translation Reserve of `19,655.59 million, which has not been adjusted.
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
134 135
To
THE BOARD OF DIRECTORS
ONGC VIDESH LIMITED
1 We have audited the attached Consolidated
?nancial statements of ONGC Videsh Limited
(‘the Company’) and its Subsidiaries and Joint
Ventures (hereinafter referred to as ‘Group’),
which comprises the Balance Sheet as at 31
st
March 2012 and the Consolidated Statement
of Statement of Pro?t and Loss Consolidated
Cash Flow Statement for the year ended on
that date and annexed thereto. These ?nancial
statements are the responsibility of the
management of the Company and have been
prepared by the management on the basis
of separate ?nancial statements and other
?nancial information regarding components.
Our responsibility is to express an opinion on
these ?nancial statements based on our audit.
2 We conducted our audit in accordance
with auditing standards generally accepted
in India. Those standards require that
we plan and perform the audit to obtain
reasonable assurance about whether the
financial statements are free of material
misstatements. An audit includes examining,
on a test basis, evidence supporting the
amounts and disclosures in the financial
statements. An audit also includes assessing
the accounting principles used and significant
estimates made by the management, as well
as evaluating the overall financial statements
presentation. We believe that our audit
provides a reasonable basis for our opinion.
3 We report that the consolidated ?nancial
statements have been prepared by the
Company’s management in accordance with
the requirements of the Accounting Standard
(AS) 21, ‘Consolidated Financial Statements’
and Accounting Standard (AS) 27, ‘Financial
Reporting of Interest in Joint Ventures’, issued
pursuant to the Companies (Accounting
Standards) Rules, 2006 as per Section 211(3C)
of the Companies Act, 1956.
4 Considering the fact that actual operations
are performed outside India and operator is
responsible for maintaining the original books
of account on behalf of all the members as per
Joint operating agreement, we have conducted
our audit by relying on such information
furnished by the operator based on the audited
statement or where Joint Ventures are not
audited, reliance on the information furnished
by the management.
5 We have placed reliance on technical/
commercial evaluation by the management
in respect of categorization of expenditure
on project in Exploratory & Development
Wells in Progress, Producing Properties
and Capital Work in Progress, Wells Status,
allocation of cost incurred on them, depletion
of producing properties on the basis of proved
developed hydrocarbon reserves as estimated
by REC of the parent company, provision for
abandonment costs, allocation of depreciation
on ?xed assets (including support equipment
and facilities) and liabilities against agreed
minimum work program. We have also placed
reliance on the management’s assessment of
impairment indicators and impairment results.
6 We did not audit the ?nancial statements
of the 5 Subsidiaries and 1 Joint venture
company which are considered in preparation
of “Consolidated Financial Statements” of the
Company. Out of 5 Subsidiaries, consolidated
accounts of 3 Subsidiaries were audited by the
other auditors. In case of unaudited ?nancial
statements of 2 Subsidiary and 1 Joint Venture
Auditors’ Report on the Consolidated Financial Statements of the
group (ONGC Videsh Limited, its Subsidiaries and Joint Ventures)
Aniva Bay, Transfer of equipment
136 137
company, ?nancial information has been derived from the ?nancial statements certi?ed by the
Management. (Refer ‘Annexure–1’ attached)
Total Assets & Revenue from Subsidiary Companies and Company’s shares in the Joint Venture Company
for the year ended March 31, 2012, included in the Audited Consolidated Financial Statements, re?ects at
`321,883.95 million and `152,019.00 million, respectively. Our opinion on the ?nancial statements for
the year ended March 31, 2012 to the extent they have been derived from such ?nancial statements
is based solely on the report of such other auditors in case of 3 Subsidiaries and unaudited ?nancial
statement of 2 Subsidiary and 1 Joint Venture Company certi?ed by the Management.
7 Further to our comments above and on the basis of information and explanation given to us and on the
consideration of the separate audit reports on individual audited ?nancial statements of the company, its
subsidiaries and certi?cation of management in respect of unaudited accounts referred to in Para 7 above,
we are of the opinion that the consolidated ?nancial statements read with notes to accounts give a true and
fair view:
(a) In the case of Consolidated Balance Sheet, of the state of a?airs of the Group as at 31
st
March 2012;
(b) In the case of the Consolidated Statement of Pro?t and Loss, of the pro?t of the Group for the year
ended on that date; and
(c) In the case of the Consolidated Cash Flow Statement, of the cash ?ows of the Group for the year
ended on that date.
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
AhhEXüPE-1
Summary of the Financial Information (*) of Subsidiaries and Joint Venture as of the year ended
31st March 2012:
(` in Million)
S.
No.
Name of the Sub-
sidiaries / Joint
Venture
Total Assets as
of March 31,
2012
(Consolidated)
` million
Total Liabilities
as of March 31,
2012
(Consolidated)
` million
Total Revenue
for the year
ended March
31, 2012
(Consolidated)
` million
Total Pro?t/
(Loss) after tax
for the year
ended March
31, 2012 (Con-
solidated)
` million
Name of the auditor and
date of audit report
Subsidiaries
1 ONGC Nile Ganga
B.V. (ONGBV)
180,982.97 46,546.22 115,164.72 17,308.50 M/s Ernst & Young Ac-
countants LLP, Amster-
dam, the Netherlands
Report date May 9, 2012
2 ONGC Amazon
Alaknanda Lim-
ited (OAAL)
44,704.27 6,244.08 16,384.85 7,195.33 M/s BDO Audit S.A.,
Bogota, Colombia
Report date May 6, 2012
3 Jarpeno Limited 88,771.60 20,423.16 20,006.65 (25,656.16) M/s Ernst & Young LLC,
Moscow, Russia
Report date May 14, 2012
4 ONGC Narmada
Limited (ONL)
101.91 1,644.03 – – Unaudited
5 Carabobo One
AB
6,302.10 399.12 – (143.99) Unaudited
Joint Venture Company’s
shares in the
Pro?t/(Loss)
1 ONGC Mittal
Energy Limited
(OMEL)
1,021.09 7,560.76 462.79 (2,428.84) Unaudited
Total 321,883.95 82,817.36 152,019.00 (3,725.16)
Note :–
(*) These ?nancial statements include company’s share of assets, liabilities, income and expenses in respect of international joint
ventures.
138 139
Scarabeo 9 Navigation, CUBA
140 141
60h80LIßATEß 8ALAh6E 8hEET A8 AT 31 MAP6h, 2012
(` in Million)
Notes As at 31 March, 2012 As at 31 March, 2011
EQUITY AND LIABILITIES
SHAREHOLDERS' FUNDS
Share Capital 3 10,000.00 10,000.00
Reserves and Surplus 4 189,411.15 135,529.73
199,411.15 145,529.73
MINORITY INTEREST 1,002.53 681.99
NON CURRENT LIABILITIES
Long termborrowings 5 195,161.02 204,554.35
Deferred tax liabilities 6 10,203.88 9,554.84
Liability for abandonment 7 27,504.49 22,861.16
Other Long termliabilities 8 81.86 –
Long termprovisions 9 551.16 513.31
233,502.41 237,483.66
CURRENT LIABILITIES
Short termborrowings 10 622.81 331.18
Liability for abandonment 11 104.37 –
Trade payables 12 25,782.33 19,728.11
Other current liabilities 13 45,391.72 33,364.56
Short termprovisions 14 189.34 15.95
72,090.57 53,439.80
TOTAL 506,006.66 437,135.18
ASSETS
NON CURRENT ASSETS
Fixed Assets
Tangible assets 15 35,590.45 42,303.82
Intangible assets 16 126.28 36.79
Producing properties 17 144,236.09 136,139.76
Development & exploratory wells in progress 18 30,740.28 24,906.82
Capital work in progress 19 76,255.68 40,017.94
Goodwill 20 75,045.32 86,998.12
Non Current Investment 21 2,927.15 107.42
Deferred Tax Assets 22 5,220.65 1,202.19
Long TermLoans and Advances 23 916.92 280.60
Other Non Current Assets 24 17,347.71 2,655.30
388,406.53 334,648.76
CURRENT ASSETS
Inventories 25 5,732.91 4,699.03
Trade receivables 26 29,614.55 40,043.50
Cash & Bank balances 27 51,528.33 36,998.27
Short termloans & advances 28 8,226.93 4,485.08
Other current assets 29 22,497.41 16,260.54
117,600.13 102,486.42
TOTAL 506,006.66 437,135.18
The accompanying notes are integral part of the ?nancial statements 1 to 53
60h80LIßATEß 8TATEMEhT 0F FP0FIT Ahß L088 F0P ThE ¥EAP EhßEß
31, MAP6h 2012
(` in Million)
Notes 2011–12 2010–11
CONTINUING OPERATIONS
INCOME
Revenue fromOperations 30 223,473.12 184,111.49
Other Income 31 2,901.13 2,599.22
TOTAL REVENUE 226,374.25 186,710.71
EXPENSES
Production, Transportation, Selling and Distribution Expenditure 32 101,417.96 89,160.18
Changes in inventories of ?nished goods 33 (631.69) (121.25)
Financing Costs 34 2,969.80 3,531.05
Depreciation, Depletion and Amortisation 35 41,869.78 42,682.50
Other Expenses 36 2,141.07 (773.24)
Provisions & Write–O?s 37 27,929.11 3,448.25
Decrease/(increase) due to overlift/underlift quantity 38 (414.11) (283.32)
TOTAL EXPENSES 175,281.92 137,644.17
PROFIT BEFORE PRIOR PERIOD, EXCEPTIONAL AND EXTRAORDINARY ITEMS
AND TAX
51,092.33 49,066.54
Adjustments relating to Prior Period (Net) 39 (73.48) (351.03)
PROFITBEFOREEXCEPTIONALANDEXTRAORDINARYITEMSANDTAX 51,165.81 49,417.57
Exceptional and Extraordinary items – –
Tax expense
Current Year Tax 27,385.31 23,688.08
Deferred Tax (3,950.76) 1,650.55
Earlier Years Tax 192.78 (3,290.24)
Total Tax Expenses 23,627.33 22,048.39
Less: Share of Pro?t or (loss) – Minority Interest 326.92 463.73
Group Pro?t After Tax fromcontinuing operations (A) 27,211.56 26,905.45
DISCONTINUING OPERATIONS
PROFIT / (LOSS) FROM DISCONTINUING OPERATIONS (B) – –
GROUP PROFIT AFTER TAX (A + B) 27,211.56 26,905.45
EARNINGS PER EQUITY SHARE (`)
(Face Value `100/– Per Share)
Basic 40 272.12 269.05
Diluted 272.12 269.05
The accompanying notes are integral part of the ?nancial statements 1 to 53
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
142 143
Sl No. Name of the Subsidiaries / Jointly Con-
trolled Entities
Country of
Incorporation
Proportion of Ownership Interest Status of Audit
as at
31 March 2012
As at
31 March 2012
As at
31 March 2011
1.1 ONGC Nile Ganga B.V. (ONGBV) The Netherlands Class A and Class
B 100%
Class A and Class
B 100%
Audited
1.1 (i) ONGC Do Brasil Exploracao Petrolifera
Ltda.***
Brazil – 100% Audited
1.1 (ii) ONGC Campos Ltda. Brazil 100% 100% Audited
1.1 (iii) ONGC Nile Ganga (Cyprus) Ltd. Cyprus 100% 100% Audited
1.1 (iv) ONGC Nile Ganga (San Cristobal) B.V. The Netherlands 100% 100% Audited
1.1 (v) ONGC Satpayev E&P B.V. The Netherlands 100% 100% Audited
1.1 (vi) ONGC Caspian E&P B.V. The Netherlands 100% 100% Audited
1.2 ONGC Nile Ganga B.V. (ONGBV) The Netherlands Class C 55% direct
(balance 45% held
by OMEL)
Class C 55% direct
(balance 45% held
by OMEL)
Audited
2 ONGC Narmada Limited (ONL) Nigeria 100% 100% Unaudited
3 ONGC Amazon Alaknanda Limited (OAAL) Bermuda 100% 100% Audited
4 ONGC Mittal Energy Limited (OMEL) Cyprus 49.98% 49.98% Unaudited
5 Jarpeno Limited Cyprus 100% 100% Audited
5 (i) Imperial Energy Corporation plc(*) UK – 100% Audited
5 (ii) Imperial Energy Limited(*) UK – 100% Audited
5 (iii) Imperial Energy Kostanai Limited(*) UK – 100% Audited
5 (iv) Imperial Energy Tomsk Limited Cyprus 85% 85% Audited
5 (v) Imperial Energy (Cyprus) Limited Cyprus 100% 100% Audited
Sl No. Name of the Subsidiaries / Jointly Con-
trolled Entities
Country of
Incorporation
Proportion of Ownership Interest Status of Audit
as at
31 March 2012
As at
31 March 2012
As at
31 March 2011
5 (vi) Imperial Energy Nord Limited Cyprus 100% 100% Audited
5 (vii) RK Imperial Energy (Kostanai) Limited Cyprus 100% 100% Audited
5 (viii) Freshspring Investments Limited Cyprus 100% 100% Audited
5 (ix) Nefsilius Holdings Limited Cyprus 100% 100% Audited
5 (x) Biancus Holdings Limited Cyprus 100% 100% Audited
5 (xi) Redcli?e Holdings Limited Cyprus 100% 100% Audited
5 (xii) Imperial Energy Gas Limited Cyprus 100% 100% Audited
5(xiii) Imperial Frac Services (Cyprus) Limited Cyprus 100% 100% Audited
5 (xiv) San Agio Investments Limited Cyprus 100% 100% Audited
5 (xv) LLC Imperial Energy(*) Russia – 100% Audited
5 (xvi) LLC Sibinterneft (**) Russia 48% 48% Audited
5 (xvii) LLC Allianceneftegaz Russia 100% 100% Audited
5 (xviii) LLC Nord Imperial Russia 100% 100% Audited
5 (xix) LLC Imperial Trans service Russia 100% 100% Audited
5 (xx) LLC Rus Imperial Group Russia 100% 100% Audited
5(xxi) LLC Stratum Russia 100% 100% Audited
5(xxii) LLC Imperial Energy Tomsk Gas(***) Russia 95% 95% Audited
5(xxiii) LLC Imperial Frac Services Russia 50% 50% Audited
6 Carabobo One AB Sweden 100% 100% Unaudited
6 (i) Petro Carabobo Ganga B.V. The Netherlands 100% 100% Unaudited
ho|es To The 6onsoIida|ed FinanciaI 8|a|emen|s for |he year ended
31 March 2012
1. Corporate information
ONGC Videsh Limited (the company) is a public limited company domiciled in India and incorporated
under the provisions of the Companies Act 1956. The Company is engaged in exploration, development
and production of crude oil and natural gas outside India.
A. Basis of preparation
A.1 The ?nancial statements are prepared under the historical cost convention on accrual basis in
accordance with Generally Accepted Accounting Principles (GAAP), applying the Successful E?orts
Method as per the Guidance Note on Accounting for Oil and Gas Producing Activities issued by the
Institute of Chartered Accountants of India (ICAI) and Accounting Standards issued under the
Companies (Accounting Standards) Rules, 2006 and provisions of the Companies Act, 1956. The ?nancial
statements are presented in Indian Rupees and all values are rounded to the nearest million (`million)
except when otherwise indicated
A.2 Principles of Consolidation:
The Consolidated Financial Statements relate to ONGC Videsh Limited (Company), ONGC Nile Ganga
B.V., The Netherlands (Subsidiary), ONGC Narmada Limited, Nigeria (Subsidiary), ONGC Amazon
Alaknanda Limited (Subsidiary), Jarpeno Limited, Cyprus (Subsidiary) , Carabobo One AB (Subsidiary)
and jointly controlled entity ONGC Mittal Energy Limited, Cyprus (Joint Venture Company). The Financial
Statements of the Company, its Subsidiaries and Joint Venture Company have been consolidated
on a line–by–line basis by adding together the book values of like items of assets, liabilities, income
and expenses after fully eliminating intra–group balances and intra–group transactions resulting in
unrealized pro?ts or losses, unless indicated otherwise.
The ?nancial statements of the foreign subsidiaries and Joint Venture Company have been incorporated
in the consolidated ?nancial statements by translating to Indian rupees following the principles for
translation of the ?nancial statements of Non–integral Foreign Operation as laid down in Accounting
Standard (AS) 11 viz. E?ects of changes in foreign exchange rates (revised 2003) issued by ICAI.
The consolidated accounts incorporate ?nancial statements of the Company and its Subsidiaries and
the Joint Venture Company for the year ended 31 March, 2012 are as detailed below:
(*) Liquidated during the reporting period.
(**) Although the Company has 47.52 per cent e?ective ownership interest, it has 55.9 per cent of voting rights in LLC
Sibinterneft. LLC Sibinterneft is therefore a subsidiary of the Company, in accordance with The Companies Act, 1956 of India and
included in consolidation of accounts accordingly.
(***) Under liquidation
A.3 In view of di?erent set of environments in which the Subsidiaries and the Joint Venture Company
operate, the accounting policies followed for treatment of depreciation on ?xed assets, sales
revenue and royalties and retirement bene?ts in respect of the below mentioned subsidiaries and
the Joint Venture Company are di?erent from the accounting policies of the Company. Such di?erent
accounting policies have been adopted in respect of the following:
A.3.1 Depreciation on Fixed Asset:
The Subsidiary – OAAL and joint venture company OMEL provide depreciation on ?xed assets using the
straight line method. The amount involved is `709.36 Million (Previous year `936.97 Million including
in respect of Jarpeno Ltd) shown as depreciation under Note 32. Jarpeno Ltd, which had been
providing depreciation on ?xed assets using SLM based on useful life of the ?xed assets till previous
year has changed its policy to written down value (WDV) method in line with parent company ONGC
Videsh Ltd. during the current period with retrospective e?ect. As a result, the depreciation for the
prior years of `192.97 Million (USD 4.03 Million) was written back. Further, under the new policy, the
depreciation is lower by `16.57 Million (USD 0.35 Million) during the reporting period.
A.3.2 Revenue recognition
The Subsidiary – ONGBV follows the entitlement method for revenue recognition associated with
sale of crude oil and liquids for its share of petroleum production as speci?ed in the Exploration
Production Sharing Agreement (EPSA) and Crude Oil Pipeline Agreement (COPA). The amount
reported using such method is `68,757.64 Million (Previous year `71,432.78 Million) shown as sales
under Note 26.
A.3.3 Royalties
The Subsidiary – ONGBV conducts its operations in Sudan jointly with Sudapet the national oil company
of Sudan among others. All government stakes other than income taxes are considered to be royalty
interest. Royalties on production represent the entitlement of the government of Sudan to a portion
of ONGBV’s share of crude oil and liquid production and are recorded using the rates in e?ect under the
terms of the contract at the time of production. Royalties / taxes in Syrian concession are accounted
similarly by ONGBV. The amount of royalty reported in respect of Sudan and Syrian concession is
`38,770.10 Million (Previous year `40, 848.27 Million) under the head Royalty in Note 28.
144 145
Policy
no.
Existing Policy Accounting policy documented in FY
2011–12
Financial Impact over
the ?nancial statements
2.2.k.1 Depreciation on tangible assets (including
those taken on ?nance lease) is provided
for under the written down value method
in accordance with Schedule XIV to the
Companies Act, 1956.
Depreciation on tangible assets (including those
taken on ?nance lease) is provided for under
the written down value method in accordance
with Schedule XIV to the Companies Act, 1956.
Lowvalue items not exceeding `5,000/– are fully
depreciated at the time of addition.
Nil
2.2.q.7 Nil Dividend income is recognized when the Com-
pany’s right to receive dividend is established by
the reporting date.
Nil
2.2.s.4 Nil In respect of local sta? in foreign o?ces of
the company, employees (other than those on
deputation/secondment fromthe company) of
joint ventures (incorporated/unincorporated)/
subsidiaries, the liabilities for employee bene?ts
are recognised in accordance with the applicable
laws of their respective jurisdictions and/or the
respective labor agreements with the employees.
Nil
2.2.v Nil Abnormal Rig days' costs are considered as unal-
locable and charged to Statement of Pro?t and
Loss.
Nil
c. Acquisition, Exploration, Development, Abandonment and Production Costs:
c.1 Acquisition Cost:
Acquisition costs of an oil and gas property in exploration/development stage are taken to capital
work in progress. Such costs are capitalized by transferring to Producing Property when it is ready to
commence commercial production. In case of abandonment of the property, such costs are expensed.
Acquisition costs of a producing oil and gas property are capitalized as Producing Property.
c.2 Survey Costs:
Cost of Surveys and prospecting activities conducted in the search of oil and gas are expensed in the
year in which these are incurred.
c.3 Exploratory/Development Wells in Progress Costs:
c.3.1 Exploration costs involved in drilling and equipping exploratory and appraisal wells, cost of drilling
exploratory type stratagraphic test wells are initially taken to capital work in progress as exploratory
wells in progress till the time these are either capitalized to producing properties when ready to
commence commercial production or expensed when determined to be dry or of no further use, as
the case may be.
c.3.2 All costs relating to development wells, development type stratagraphic test wells, service wells,
are initially taken to capital work in progress as development wells in progress and capitalized to
producing properties when ready to commence commercial production.
c.3.3 Exploratory wells in progress which are more than two years old from the date of completion of
drilling are charged to Statement of Pro?t and Lossexcept those wells which have proved reserves
and the development of the ?elds in which the wells are located; has been planned.
c.4 Abandonment Costs:
Costs relating to dismantling, abandoning and restoring well sites and allied facilities are provided
as abandonment costs based on the provisions under respective agreements governing company’s
activities in the ?eld/ projects.
c.5 Production Costs:
Production costs include pre–wellhead and post–wellhead expenses including depreciation and
applicable operating costs of support equipment and facilities.
d. Producing Properties:
d.1 Producing properties are created in respect of a ?eld/project having proved developed oil and gas
reserves when any well in the ?eld/project is ready to commence commercial production. Development
wells are capitalized to producing properties when ready to commence commercial production.
d.2 All acquisition costs, cost of successful exploratory wells and of all development wells, all related
development costs including depreciation on support equipment and facilities and estimated future
abandonment costs relating to producing properties are capitalized as Producing Properties.
e. Depletion of Producing Properties:
Producing properties are depleted using the “Unit of Production Method”. The rate of depletion for
all capitalized costs is computed with reference to the ?eld/project/amortization base by considering
the related proved and developed reserves excepting for acquisition costs which are depleted by
considering the proved reserves. These reserves are estimated annually by the Reserve Estimates
Committee formed by the parent company Oil and Natural Gas Corporation Limited (ONGC), which
follows the International Reservoir Engineering Procedures.
f. Side tracking:
f.1 The cost of abandoned portion of side tracked exploratory wells is charged to Statement of Pro?t
and Lossas dry wells.
f.2 The cost of abandoned portion of side tracked development wells is considered as part of cost of
development wells.
f.3 The cost of sidetracking in respect of existing producing wells is capitalized if it increases the Proved
Developed Reserve otherwise, charged to Statement of Pro?t and Lossas workover expenditure.
b Use of Estimates:
The preparation of ?nancial statements requires estimates and assumptions which a?ect the
reported amount of assets, liabilities, revenues and expenses of the reporting period. The di?erence
between the actual results and estimates are recognized in the period in which the results are known
or materialized.
A.3.4 Retirement Benefts
The Subsidiaries and the Joint Venture Company provide for the retirement bene?ts in accordance
with the laws of their respective jurisdictions. The net impact on account of the di?erence in
accounting policy is not ascertainable.
2. Signifcant Accounting Policies
a.1 Change in accounting Policy
During the year ended 31 March 2012, the revised Schedule VI noti?ed under the Companies Act 1956, has
become applicable to the Company for preparation and presentation of its ?nancial statements. Balance
Sheet has been prepared based on the format prescribed under Part I and Statement of pro?t and loss
based on the format prescribed under Part II in Schedule VI of the Act. However, in view of the technical
nature of operation of the Company i.e. exploration, development and Producing oil and gas, functional
wise expenses has been classi?ed in Statement of Pro?t and Loss as disclosed consistently in earlier years.
The adoption of revised Schedule VI does not impact recognition and measurement principles followed
for preparation of ?nancial statements. The Company has also reclassi?ed the previous years ?gures in
accordance with the requirements applicable in the current year.
The ?nancial statements for the year 2011–12 are prepared following the same accounting policies and
practices as followed in the annual ?nancial statements for the year ended March 31, 2011, except for
change in the policy with regard to amortisation of intangible assets which has been changed during
the current period to align with the accounting policy of parent company and AS–26 from Written
Down Value Method @ 40% to Straight Line Method over the useful life not exceeding a period
of 5 years in order to systematically amortize its intangible assets. This has resulted in decrease in
Depreciation, Depletion, Amortisation and Impairment by `86.67 million, consequently Pro?t before
tax increased by `86.67 million
a.2 Documentation, rewording or re–alignment of Accounting Policies to properly re?ect existing
accounting practice
Certain accounting policies were re–worded or re–align with the existing accounting practice
consistently followed by the Company in ?nancial statements. However, these do not have any impact
on recognition and measurement principles followed for preparation of ?nancial statements.
146 147
g. Impairment:
g.1 Producing Properties, Development Wells in Progress (DWIP) and Fixed Assets (Including Capital
Works in Progress) of a “Cash Generating Unit” (CGU) are reviewed for impairment at each Balance
Sheet date. In case, event and circumstances indicates any impairment, recoverable amount of
these assets is determined, being the higher of net selling price and value in use. An impairment loss
is recognized, whenever the carrying amount of such assets exceeds the recoverable amount by
writing down such assets to their recoverable amount. In assessing value in use, the estimated future
cash ?ows from the use of assets and from its disposal at the end of its useful life are discounted to
their present value at appropriate rate.
g.2 An impairment loss is reversed if there is change in the recoverable amount and such loss either no
longer exists or has decreased. Impairment loss / reversal thereof is adjusted to the carrying value of
the respective assets, which in case of CGU, is allocated to its assets on a pro–rata basis. Subsequent
to impairment, depreciation is provided on the revised carrying value of the assets over the remaining
useful life.
h. Joint Ventures:
h.1 The Company has entered into overseas joint ventures with others. In such joint ventures as per the
contractual arrangements, the Company shares control with other venturers. The ?nancial statements
re?ect the share of the Company’s assets and liabilities as well as income and expenditure of Joint
Venture Operations which are accounted for as per various joint venture agreements on a line by
line basis along with similar items in the Company’s ?nancial statements, except in case of leases,
abandonment, impairment, depletion and depreciation which are accounted based on accounting
policies of the Company.
h.2 The reserves of hydrocarbons in the joint ventures are taken in proportion to the participating
interest of the Company.
i. Tangible Assets:
i.1 Tangible assets (including those taken on ?nance lease, support equipment and facilities) are stated
at historical cost.
i.2 All costs relating to acquisition of tangible assets till the time of commissioning of such assets are
capitalized.
i.3 Costs incurred on intangible assets, resulting in future economic benefits are capitalized as
intangible assets and amortized on written down value method beginning from the date
of capitalization.
j. Intangible Assets:
j.1 Costs incurred on intangible assets, resulting in future economic bene?ts are capitalized as intangible
assets.
k. Depreciation:
k.1 Depreciation on tangible assets (including those taken on ?nance lease) is provided for under the
written down value method in accordance with Schedule XIV to the Companies Act, 1956. Low value
items not exceeding `5,000/– are fully depreciated at the time of addition.
k.2 Intangible Assets are amortised over the useful life not exceeding ?ve years from the date of
capitalisation.
k.3 Leasehold land (other than perpetual lease and lease over 99 years) is amortized over the lease
period.
k.4 Depreciation on adjustments to tangible assets on account of price variation is provided for
prospectively over the remaining useful life of such assets.
k.5 Depreciation on tangible assets (including those taken on ?nance lease, support equipment and
facilities) used for exploration and drilling activities and on facilities is initially capitalized as part of
exploration or development costs and expensed/depleted as stated in policy 3 and 4 above.
l. Inventories:
l.1 Crude oil and condensate are valued at cost or net realizable value, whichever is lower.
l.2 Natural gas in pipeline and crude oil/condensate stock in ?ow lines/Gathering Stations are not
valued.
l.3 Inventory of stores and spares is valued at weighted average cost or net realizable value, if available,
whichever is lower. Wherever, weighted average cost or net realizable value is not available, the cost
made available by the operator is considered for valuation of Stores and Spares. Provisions are made for
obsolete and non–moving inventories.
m. Investments:
m.1 Long–term investments are valued at cost. Provision is made for any diminution, other than temporary,
in the value of such investments.
m.2 Current investments are valued at lower of cost or fair value.
n. Foreign Currency Transactions and Foreign Operations:
n.1 Foreign currency transactions on initial recognition in the reporting currency are accounted for at the
exchange rates prevailing on the date of transaction.
n.2 At each Balance Sheet date, foreign currency monetary items are translated using the average of the
exchange rates prevailing on the Balance Sheet date and non–monetary items are translated using
the exchange rate prevailing on the date of transaction or on the date when the fair value of such
item was determined.
n.3 All exchange di?erences arising on the settlement of monetary items or on reporting of monetary
items at rates di?erent from those at which they were initially recorded during the period, or reported
in previous ?nancial statements are recognised as income or as expenses in the period in which they
arise.
n.4 In respect of the Company’s integral foreign operations:
n.4.a The foreign currency transactions on initial recognition in the reporting currency are recorded
following the policy stated in m.1. For practical reasons, the average exchange rate of the relevant
month/quarter is taken for the transactions of the month/quarter in respect of joint venture
operations, where actual date of transaction is not available.
n.4.b At each Balance Sheet date, monetary and non–monetary items are translated following the policy
stated in m.2.
n.4.c All exchange di?erences are treated following the policy stated in m.3.
n.5 The ?nancial statements of the non–integral foreign operations of the company are incorporated in
the ?nancial statements using the following principles:
n.5.a The assets and liabilities, both monetary and non–monetary, of the non–integral foreign operation
are translated at the average of the exchange rate prevailing on the date of the Balance Sheet;
n.5.b Income and expense items of the non–integral foreign operation are translated at the average
exchange rates for the period to which the ?nancial statements relate; and
n.5.c All resulting exchange di?erences are accumulated in a foreign currency translation reserve until the
disposal of the net investment in the non–integral foreign operation.
n.6 Exchange di?erences arising on the company’s net investment in a non–integral foreign operation
are accumulated in a foreign currency translation reserve until the disposal of such investment, at
which time they are recognized as income or as expenses.
o. Finance Leases
o.1 Assets given on Lease:
o.1.a Assets given on ?nance lease are accounted for as per Accounting Standard (AS) 19 “Leases” issued
by the Institute of Chartered Accountants of India. Such assets are included as a receivable at an
amount equal to the net investment in the lease.
o.1.b Initial direct costs incurred in respect of ?nance leases are recognized in the statement of pro?t and
loss in the year in which such costs are incurred.
148 149
o.2 Assets taken on Lease:
Assets taken on ?nance lease are capitalised and recognised at the lower of the fair value of the asset
and the discounted value of the minimum lease installments. The lease payments are bifurcated into
repayment and interest components, based on a ?xed interest rate and installment as derived from
the underlying agreement. The lease commitments are carried under liabilities exclusive of interest.
The interest component is recognised in the Statement of Pro?t and Lossin accordance with the
lease installments.
p. Revenue Recognition:
p.1 Revenue from sale of products is recognized on transfer of custody to customers. Any di?erence as of
the reporting date between the entitlement quantity minus the quantities sold in respect of crude oil
(including condensate), if positive (i.e. under lift quantity) the proportionate production expenditure
is treated as prepaid expenses and, if negative (i.e. over lift quantity), a liability for the best estimate
of the Company’s proportionate share of production expenses as per the JOA / PSA is created in
respect of the quantity of crude oil to be foregone in future period towards settlement of the overlift
quantity of crude oil with corresponding charge to P&L.
p.2 Sales are inclusive of all statutory levies and any tax liability of the Company that may be paid by
the government based on the provisions under agreements governing Company’s activities in the
respective ?eld/ project.
p.3 Any payment received in respect of short lifted gas quantity for which an obligation exists to supply
such gas in subsequent periods is recognized as Deferred Revenue in the year of receipt. The same is
recognized as revenue in the year in which such gas is actually supplied for the quantity supplied or in
the year in which the obligation to supply such gas ceases, whichever is earlier.
p.4 Revenue in respect of ?xed price contracts is recognized for the quantum of work done on the basis
of percentage of completion method. The quantum of work done is measured in proportion of cost
incurred to date to the estimated total cost of the contract or based on reports of physical work
done.
p.5 Finance income in respect of assets given on ?nance lease is recognized based on a pattern re?ecting
a constant periodic rate of return on the net investment outstanding in respect of the ?nance lease.
p.6 Revenue in respect of interest on delayed realization is recognized when there is reasonable certainty
regarding ultimate collection.
p.7 Dividend income is recognized when the company’s right to receive dividend is established by the reporting
date.
q. Transportation Costs:
Any payment made in respect of the quantity of gas short transported, for which the right exists
to transport such gas in subsequent periods at no charge, is treated as Deferred Expenditure in the
year of payment. The same is treated as cost in the year in which the gas is actually transported for
the quantity transported or in the year in which the right to transport such gas ceases, whichever is
earlier.
r. Employee Bene?ts:
r.1 All short term employee bene?ts are recognized at their undiscounted amount in the accounting
period in which they are incurred.
r.2 Contribution to Provident Fund and Composite Social Security Scheme is made as per the rules of the
parent company. The same is paid to funds administered through trusts.
r.3 Provisions for gratuity leave encashment and other employee bene?ts are made as per actuarial
valuation at the end of the ?nancial year. The same are not funded.
r.4 In respect of local sta? in foreign o?ces of the company, employees (other than those on deputation/
secondment from the company) of joint ventures (incorporated/unincorporated)/ subsidiaries,
the liabilities for employee bene?ts are recognised in accordance with the applicable laws of their
respective jurisdictions and/or the respective labour agreements with the employees.
s. Borrowing Costs:
Borrowing Costs speci?cally identi?ed to the acquisition or constructions of qualifying assets
are capitalized as part of such asset till such time when all the activities necessary to prepare the
qualifying asset for its intended use or sale are complete. A qualifying asset is one that necessarily
takes substantial period of time to get ready for intended use. All other borrowing costs are charged
to Pro?t and Loss Account.
t. Insurance Claims:
The Company accounts for insurance claims as under:–
t.1 In case of total loss of asset by transferring, either the carrying cost of the relevant asset or Insurance
value (subject to deductibles), whichever is lower under the head “Claims Recoverable – Insurance”
on intimation to Insurer. In case insurance claim is less than carrying cost, the di?erence is charged to
Pro?t and Loss Account.
t.2 In case of partial or other losses, expenditure incurred/payments made to put such assets back
into use, to meet third party or other liabilities (less policy deductibles) if any, are accounted for as
“Claims Recoverable–Insurance”. Insurance Policy deductibles are expensed in the year when the
corresponding expenditure is incurred.
t.3 As and when claims are ?nally received from Insurer, the di?erence, if any, between Claims Recoverable
– Insurance and Claims received is adjusted to pro?t and loss Account.
u. Abnormal Rig days' costs:
Abnormal Rig days' costs are considered as unallocable and charged to Statement of Pro?t and
Loss.
v. Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement are recognized when there
is a present obligation as a result of past events and it is probable that there will be an out?ow
of resources. Contingent Assets are neither recognized nor disclosed in the ?nancial statements.
Contingent Liabilities, if material, are disclosed by way of notes to the accounts.
w. Taxes on Income:
Provision for current tax is made as per the provisions of the Income Tax Act, 1961/ other applicable
tax laws. Deferred Tax Liability / Asset resulting from ‘timing di?erence’ between book and taxable
pro?t is accounted for considering the tax rate and laws that have been enacted or substantively
enacted as on the Balance Sheet date. Deferred Tax Asset is recognized and carried forward only to
the extent that there is virtual certainty that the asset will be realized in future.
x. Accounting for derivatives:
As per the ICAI Announcement, Accounting for Derivatives, other than those covered under –AS–11,
is done on marked to market basis and the losses are charged to Pro?t & Loss A/c. Unrealized gains
are ignored.
y. Goodwill Amortization:
The Company amortizes Goodwill (on consolidation) based on “Unit of Production Method”
considering the related Proved Reserves.
150 151
ho|es To The 6onsoIida|ed FinanciaI 8|a|emen|s for |he year ended
31 March 2012
(` in Million)
3 Share Capital As at 31 March, 2012 As at 31 March, 2011
Authorised
100,000,000 (Previous year 100,000,000) Equity Shares of `100 each 10,000.00 10,000.00
Issued, Subscribed, Called and Paid Up 10,000.00 10,000.00
100,000,000 (Previous year 100,000,000) Equity Shares of `100 each fully
paid up in cash
(The entire share capital is held by Oil and Natural Gas Corporation Lim-
ited and its nominees)
TOTAL 10,000.00 10,000.00
a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period:
31 March 2012 31 March 2011
No. Million `Million No. Million `Million
Equity Shares
At the beginning of the period 100 10,000.00 100 10,000.00
Issued during the period – – – –
Outstanding at the end of the period 100 10,000.00 100 10,000.00
b. Terms / rights attached to the equity shares:
The company has only one class of equity shares having a par value of `100 per share. Each holder of
equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees.
The dividend, if any, proposed by the Board of Director is subject to the approval of the shareholders
in the meeting.
During the year ending 31 March 2012, the amount of per share dividend declared for distribution to
equity shareholders was Nil (31 March 2011: Nil).
In the event of liquidation of the company, the holders of equity shares will be entitled to receive
remaining assets of the company, after distribution of all preferential amounts. The distribution will be
in proportion to the number of equity shares held by the shareholders.
c. Shares held by holding / ultimate holding company and/or their subsidiaries/ associates:
Out of the equity shares issued by the company, the shares held by its holding company, ultimate
holding company and their subsidiaries / associates are as below:
Holding Company 31 March 2012 31 March 2011
No. Million `Million No. Million `Million
Oil and Natural Gas Corporation Limited, the hold-
ing company and its nominee
100 10,000.00 100 10,000.00
d. Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares
bought back during the period of ?ve years immediately preceding the reporting date: Nil
e. Details of shareholders holding more than 5% shares in the company:
Share holders 31 March 2012 31 March 2011
No. millions % Holding No. millions % Holding
Oil and Natural Gas Corporation Limited, the
holding company and its nominee
100 100% 100 100%
f. Shares reserved for issue under options: Nil
(` in Million)
4 Reserves and Surplus
As at
31 March
2012
As at
31 March
2011
Capital Reserve 941.35 845.29
Capital Redemption Reserve 0.09 0.09
Debenture Redemption Reserve
Balance as per last Financial statement Note 4a 5,461.83 1,154.19
Add: Transfer fromsurplus in statement of
pro?t and loss
4,319.44 9,781.27 4,307.64 5,461.83
General Reserve
Balance as per last Financial statement 8,623.86 6,481.40
Add: Transfer fromsurplus in statement of
pro?t and loss
1,876.08 10,499.94 2,142.46 8,623.86
Foreign Exchange Translation Reserve Note 4b
Balance as per last Financial statement (1,933.82) (4,115.28)
Additions during the year 26,573.80 24,639.98 2,181.46 (1,933.82)
Surplus in the statement of pro?t and loss
Balance as per last Financial statement 122,532.48 102,077.13
Add: Addition during the year 27,211.56 26,905.45
Less: Transfer to Debenture Redemption
Reserve
4,319.44 4,307.64
Transfer to General reserve 1,876.08 143,548.52 2,142.46 122,532.48
TOTAL 189,411.15 135,529.73
a Debentures and Debentures Redemption Reserve:
During the ?nancial year 2009–10, the Company had raised funds from the ?nancial markets by issuance
of non–convertible redeemable bonds in the nature of debentures as follows:
(` in Million)
Particulars Amount (`Million) Date of issue Date repayable on
8.40 % 5 Years Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures–Series I
19,700.00 23–Dec–09 23–Dec–14
8.54 % 10 Years Unsecured Non–Convertible Redeemable
Bonds in the nature of Debentures– Series II
3,700.00 6–Jan–10 6–Jan–20
The above securities have beenlistedinNational Stock Exchange of India Ltd. (NSE). Boththe bonds are guaranteedfor repayment
of principal and payment of interest by Oil and Natural Gas Corporation Limited, the holding company. Further the company is
required to maintain 100% asset cover as per SEBI guidelines. There is no put/ call option.
Debenture redemption reserve has been created as follows in respect of the above Bonds:
(` in Million)
Particulars Balance as at 31
March 2011
Additions Balance as at 31 March
2012
8.40 % 5 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series I
5,005.91 3,948.64 8,954.54
8.54 % 10 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series II
455.92 370.81 826.73
Total 5,461.83 4,319.44 9,781.27
152 153
b. Foreign Currency Translation Reserve
The Company has followed the Accounting Standard (AS) 11 viz. E?ects of Changes in Foreign Exchange
Rates (revised 2003) issued by the Institute of Chartered Accountants of India for incorporating in the
consolidated ?nancial statements following the principles for translation of the ?nancial statements
of Non–integral Foreign Operation. Accordingly, the resulting exchange gain of `26,573.80 Million
(Previous Year `2,181.46 Million exchange gain) has been accounted as foreign currency translation
reserve and shown in Schedule 2 as per details given below:
(` in Million)
Particulars 2011–12 2010–11
Opening Balance (1,933.82) (4,115.28)
Additions during the year 26,573.80 2,181.46
Closing Balance 24,639.98 (1,933.82)
(` in Million)
5 Long TermBorrowings
As at
31 March
2012
As at
31 March
2011
Non Convertible Redeemable Bonds Note 5a 23,400.00 23,400.00
Foreign Currency Loans
frombanks (unsecured) Note 5b – 4,472.00
Non–Recourse Deferred Credit (unsecured) Note 5c 380.60 554.91
(In respect of Joint venture)
Loans and advances
fromOil and Natural Gas Corporation Limited Note 5d 168,255.44 172,786.16
Non current maturities of ?nance lease obligations (unsecured) Note 46.b 3,124.98 3,341.28
TOTAL 195,161.02 204,554.35
a. Non–convertible redeemable bonds: Attention is invited to Note: 4(a) above. The bonds are
unsecured.
b. Foreign currency loan from Bank: Represents USD 100 Million (Noncurrent Nil / current USD 100
Million(`5,112.00 Million) (31st March 2011 USD 200 Million `8,944.00 Million (Non Current USD 100 Million
(`4,472 Million) Current USD 100 Million (`4,472 Million) syndicated loan taken by Jarpeno Limited,
Cyprus, in January –2010 from a consortium of banks led by Sumitomo Mitsui Banking Corporation,
Singapore. The loan is repayable in 8 equal quarterly installments starting April 2011. Four installments
of USD 25 Million each were paid on due dates during the period.
(` in Million)
Foreign Currency Loans As at 31 March 2012 As at 31 March 2011
Current (Note 13) 5,112.00 4,472.00
Non Current (Note 5) – 4,472.00
Total 5,112.00 8,944.00
(` in Million)
6 Deferred Tax Liabilities
As at
31 March
2012
As at
31 March
2011
Deferred Tax Liabilities 10,203.88 9,554.84
TOTAL
Refer Note No 42(c)
10,203.88 9,554.84
(` in Million)
7 Liability for Abandonment
As at
31 March
2012
As at
31 March
2011
Liability for Abandonment 27,504.49 22,861.16
TOTAL
Refer Note No 21 and table below
27,504.49 22,861.16
(` in Million)
Liability for Abandonment As at 31st March 2012 As at 31st March 2011
Current (Note 11) 104.37 –
Non Current (Note 7) 27,504.49 22,861.16
Total 27,608.86 22,861.16
(` in Million)
8 Other Long TermLiabilities
As at
31 March
2012
As at
31 March
2011
Trade payables 81.86 –
TOTAL 81.86 –
c. Non–recourse deferred credit: `888.06 Million (Previous Year `776.89 Million) represents the non–
recourse deferred credit from contractors of pipeline project executed by the Company in Sudan. The
credit is repayable from the installments of pipeline lease rentals from Ministry of Energy and Mining
(MEM), Sudan. Attention is also invited to Note 43. This credit is unsecured.
(` in Million)
Non–Recourse Deferred Credit (unsecured) As at 31 March 2012 As at 31 March 2011
Current (Note 10) 507.47 221.98
Non Current (Note 5) 380.60 554.91
Total 888.07 776.89
d. The Company has taken loans from ONGC for various projects. The outstanding balance of such loans
as of 31 March 2012 was `168,255.44 Million (Previous year `172,786.16 Million). The loan is normally
repayable out of the cash ?ows of the projects for which the respective funds were lent. However,
ONGC have the right to demand repayment with a notice period of minimum 15 months. The loan
carried no interest during the period. Accordingly, interest expenditure on loan from parent company
during the period is `Nil (Previous year: `Nil).
154 155
(` in Million)
9 Long TermProvisions
Balance as at 1
April 2011
Utilisation/
Reversal during
the Year
Provision/
Adjustment
made for the
Year
Foreign
Currency
Translation
Adjustment
Balance as at 31
March 2012
Gratuity 161.90 – 8.16 – 170.06
Leave Encashment 190.09 – (42.83) – 147.26
Post Retirement Medical
Bene?ts/Other Terminal Bene?ts
161.33 83.97 141.13 15.35 233.84
513.31 83.97 106.47 15.35 551.16
Refer Note 41
(` in Million)
10 Short TermBorrowings
As at
31 March
2012
As at
31 March
2011
Non–Recourse Deferred Credit – Unsecured 507.46 221.98
Deposits 115.35 109.20
TOTAL 622.81 331.18
Non–Recourse Deferred Credit : Attention is also invited to Note–5(c)
(` in Million)
11 Current Liability for Abandonment
As at
31 March
2012
As at
31 March
2011
Liability for Abandonment 104.37 –
TOTAL 104.37 –
Refer Note No 21 & 7
(` in Million)
12 Trade Payables
As at
31 March
2012
As at
31 March
2011
Deferred Credit on Gas Sales 229.37 20.80
Trade payables for Supplies / Works 2,516.73 4,103.19
Trade payables for Supplies / Works
(In respect of Joint Ventures)
23,036.23 15,604.12
TOTAL 25,782.33 19,728.11
(` in Million)
13 Other Current Liabilities
As at
31 March
2012
As at
31 March
2011
Current maturities of long termdebts 6,025.68 5,151.72
Interest accrued but not due on borrowings 122.33 –
Interest accrued but not due on Debentures 526.38 522.42
Advance fromcustomers / Income received in advance 765.60 230.36
Amount Payable to Operators 13,528.92 10,748.91
Payable to ONGC 646.87 121.89
Tax Payable by Subsidiaries and JV Companies in foreign Country 6,231.39 10,712.96
Other Liabilities 17,544.55 5,876.30
TOTAL 45,391.72 33,364.56
Current maturities of long termliabilities – Refer Note no 5
(` in Million)
14 Short TermProvisions
Balance as at 1
April 2011
Utilisation/
Reversal during
the Year
Provision/
Adjustment
made for the
Year
Foreign
Currency
Translation
Adjustment
Balance as at 31
March 2012
Gratuity 7.64 9.20 11.40 – 9.84
Leave Encashment 8.31 113.75 248.09 8.34 150.99
Post Retirement Medical
Bene?ts/Other Terminal Bene?ts
– 0.69 22.47 6.73 28.51
TOTAL 15.95 123.64 281.96 15.07 189.34
Attention is invited to Note 41
156 157
15. Tangible Assets
PARTICULARS
GROSS BLOCK
As at 1 April 2011
Additions
during the
Period
Foreign
Currency
Translation
Adjustment/
Other Adj.
Deletions /
Adjustments
during the
Period
As at
31 March 2012
1. Land (Leasehold) 1,999.30 113.73 48.24 – 2,161.27
2. Building 6,568.73 115.59 128.43 61.82 6,750.93
3. Plant & Machinery 87,128.38 3,091.94 –1,755.70 0.42 88,464.20
4. Computers 673.41 91.96 46.01 15.20 796.18
5. Vehicles 1,406.85 150.43 95.29 17.90 1,634.67
6. Furniture &Fittings and
Equipments
4,397.89 88.01 3,657.79 174.80 7,968.89
TOTAL 102,174.56 3,651.66 2,220.06 270.14 107,776.14
Previous year 103,428.09 18,962.93 100.19 20,316.65 102,174.56
The above includes the
company’s share in Joint
Venture Assets: Current Year
98,593.07 3,450.31 2,071.24 198.74 103,915.87
Previous Year 100,216.83 18,448.54 52.58 20,124.88 98,593.07
a. Title to Fixed Assets under Production Sharing Agreements
The Company, the Subsidiaries and Joint Venture Company, in consortium with other partners (Consortium) carries on its business in respect of exploration, development and production of hydrocarbons
under agreements with the host governments. Several of these agreements, governing Company's activities in the ?elds / projects, provide that the title to the ?xed assets and other ancillary installations shall
pass to host Government or its nominated entities either upon acquisition / ?rst use of such assets or upon 100% recovery of such costs through allocation of "Cost Oil" and "Cost Gas" or upon relinquishment of
the relevant contract areas or termination of the relevant agreement. However, as per the terms of the agreements, the Consortium and/ or Operator has the custody of all such assets and is entitled to use, free
of charge all such assets for Petroleum Operations throughout the term of the respective agreements. The Consortium also has the custody and maintenance of such assets and bears all risks of accidental loss
and damage and all costs necessary to maintain such assets and to replace or repair such damage or loss. Under the circumstances, such assets are kept in the records of the Company during the currency of the
respective agreements.
(` in Million)
DEPRECIATION NET BLOCK
Up to 31 March
2011
For the Period
Foreign
Currency
Translation
Adjustment/
Other Adj.
Deletions /
Adjustments
during the
Period
Up to 31 March
2012
Up to 31 March
2012
As at 31 March
2011
– – – – – 2,161.27 1,999.30
1,107.72 233.50 27.91 9.54 1,359.59 5,391.34 5,461.01
55,445.08 10,035.55 –1,969.17 17.60 63,493.87 24,970.33 31,683.30
441.30 96.47 39.84 8.17 569.44 226.74 232.11
825.56 224.33 56.60 14.60 1,091.89 542.78 581.29
2,051.09 349.61 3,306.74 36.53 5,670.91 2,297.98 2,346.80
59,870.75 10,939.46 1,461.92 86.44 72,185.69 35,590.45 42,303.82
55,805.46 11,705.28 (9.57) 7,630.42 59,870.75 42,303.81 47,622.63
59,575.22 10,912.40 1,349.70 125.07 71,712.26 32,203.61 39,017.85
55,155.05 17,847.71 (30.72) 13,396.81 59,575.22 39,020.55 45,054.77
16 Intangible Assets
PARTICULARS
GROSS BLOCK
As at 1 April 2011
Additions
during the
Period
Foreign
Currency
Translation
Adjustment/
Other Adj.
Deletions /
Adjustments
during the
Period
As at
31 March 2012
1. Software 254.67 68.48 7.17 (3.75) 334.07
TOTAL 254.67 68.48 7.17 (3.75) 334.07
Previous year 239.37 12.43 0.04 5.58 246.26
The above includes the
company’s share in Joint
Venture Assets: Current Year
159.06 22.66 0.00 6.72 175.01
Previous year 140.33 12.43 0.00 (6.30) 159.06
(` in Million)
DEPRECIATION NET BLOCK
Up to 31 March
2011
For the Period
Foreign
Currency
Translation
Adjustment/
Other Adj.
Deletions /
Adjustments
during the
Period
Up to 31 March
2012
Up to 31 March
2012
As at 31 March
2011
217.88 (12.57) 2.22 (0.27) 207.80 126.28 36.79
217.88 (12.57) 2.22 (0.27) 207.80 126.28 36.79
204.85 17.22 0.03 4.22 217.88 28.38 34.52
143.56 (13.05) 0.00 1.49 129.01 45.99 15.50
131.77 6.84 0.00 (4.95) 143.56 12.80 15.56
158 159
(` in Million)
17 Producing Properties
As at
31 March
2012
As at
31 March
2011
Gross Cost
Opening Balance 240,348.24 187,961.97
Acquisition Cost – 164.99
Expenditure during the year 10,493.91 24,413.40
Transfer fromDevelopment & Exploratory Wells–in–Progress 11,723.63 11,981.68
Estimated Abandonment Costs 1,726.67 12,365.84
Foreign Currency Translation Adjustment 15,189.82 3,460.36
Total Gross (A) 279,482.27 240,348.24
Less: Depletion
Opening Balance 104,208.48 79,119.11
Depletion for the year 21,607.06 23,663.82
Prior period depletion – 136.02
Foreign Currency Translation Adjustment 9,430.64 1,289.53
Total Depletion (B) 135,246.18 104,208.48
NET PRODUCING PROPERTIES (A – B) 144,236.09 136,139.76
(` in Million)
18 Development & Exploratory Wells In Progress
As at
31 March
2012
As at
31 March
2011
A. Development Wells in Progress
Opening Balance 8,270.33 4,050.09
Addition during the year 16,266.08 14,706.70
Adjustments during the year – (5.30)
Less: Transfer to Producing Properties 10,583.51 10,914.11
Foreign Currency Translation Adjustment 2,780.78 432.95
Development Wells in Progress (A) 16,733.68 8,270.33
B. Exploratory Wells in Progress
Opening Balance 18,103.35 22,022.65
Addition during the year 8,916.69 5,111.30
Adjustments during the year – 152.66
Less: Transfer to Producing Properties 1,140.12 1,067.57
Less: Wells written o? during the year 9,264.44 7,262.48
Foreign Currency Translation Adjustment (1,129.73) (853.21)
Closing Balance (Gross EWIP) 15,485.75 18,103.35
Opening Balance 1,466.86 1,444.66
Add: Provided during the year 12.29 22.20
Total Provision 1,479.15 1,466.86
Exploratory Wells in Progress (B) 14,006.60 16,636.49
TOTAL WELLS IN PROGRESS (A + B) 30,740.28 24,906.82
Provision has been created in respect of Farsi block Iran under service contract pending the agreements on development
(` in Million)
19 Capital Work In Progress
As at
31 March
2012
As at
31 March
2011
Block 06.1, Vietnam 2,503.28 1,188.30
Block 128, Vietnam – 92.54
Sakhalin–1 Project, Russia 46,764.05 26,994.93
Block 5A, Sudan 27.26 268.86
Block A1, Myanmar 3,960.76 700.46
Block A3, Myanmar 840.95 842.73
Pipeco Midstream, Myanmar 1,966.65 568.78
Block 25, 26, 27, 28, 29, 36 and P35 (Part), Cuba 346.91 346.91
Block 1,2,3 &4 (Area 43), Libya 408.90 408.90
Tamba BV, The Netherlands 2,562.69 666.54
Block BC–10, Brazil – 840.41
Sancristobal Project, Venezuela 2,466.28 1,339.23
Pipeco 1 – Onland Pipeline A1 A3, Myanmar 2,275.55 147.37
Petro Carabobo, Venezuela 5,923.96 2,459.60
Block OPL 297, Nigeria 638.74 558.77
Block 279, Nigeria – 1,580.40
Block 285, Nigeria – 647.00
Block Satpayev, Kazakhstan 4,753.53 –
Corporate O?ce Building, Vasant Kunj, NewDelhi 659.56 283.96
Others 156.61 82.25
TOTAL 76,255.68 40,017.94
(` in Million)
20 Goodwill
As at
31 March
2012
As at
31 March
2011
Gross Goodwill (A) 122,029.76 106,839.23
Accumulated Amortisation (B) 27,450.75 19,841.11
Less: Provision for impairment (C) 19,533.69 –
Net Goodwill (A – B – C) 75,045.32 86,998.12
The company has carried out impairment assessment as per Accounting Standard 28, wherein indicators were noted for four Cash
Generating Units (CGU). Based on the impairment test, provision of USD 407.97 Million(`19,533.69) (Previous Year– Nil) has been
provided in respect of one CGU and has been provided for in the Goodwill.
160 161
(` in Million)
21 Non Current Investment
As at
31 March
2012
As at
31 March
2011
Investment with bank for Site Restoration 2,927.15 107.42
TOTAL 2,927.15 107.42
Please refer to Note No 7 & Note No 17
(` in Million)
22 Deferred Tax Assets
As at
31 March
2012
As at
31 March
2011
Deferred Tax Assets 5,220.65 1,202.19
TOTAL 5,220.65 1,202.19
Refer Note No 45.c
(` in Million)
23 Long TermLoans And Advances
As at
31 March
2012
As at
31 March
2011
Secured, considered good
Other loans and advances (secured) 899.65 270.86
Unsecured, considered good
Other loans and advances (unsecured) 17.27 9.74
Doubtful
Loans and advances to related party (doubtful) 1,401.83 1,428.74
Other loans and advances 534.16 –
Sub Total (A) 2,852.91 1,709.34
Less : Provision for bad and doubtful loans and advances
Loans and advances to related party 1,401.83 1,428.74
Other loans and advances 534.16 –
Sub Total (B) 1,935.99 1,428.74
TOTAL 916.92 280.60
a Loans and advances due by directors or other o?cers
(` in Million)
Non–current Current
31 March 2012 31 March 2011 31 March 2012 31 March 2011
Loans and advances to employees include
Dues fromDirectors 0.38 0.09 0.05 –
(` in Million)
24 Other Non Current Assets
As at
31 March
2012
As at
31 March
2011
Secured, considered good
Investment in Lease realisable beyond 12 months fromthe end of report-
ing period
1,846.25 2,567.91
Interest Accrued on Loans to Employees 34.16 30.85
Unsecured, considered good
Trade receivables on deferral credit terms realisable beyond 12 months
fromthe end of reporting period
15,192.42 –
Other Deposits 274.88 56.54
Doubtful
Trade receivables (sundry debtors) realisable beyond 12 months fromthe
end of reporting period
2.16 –
Inventory 1,577.56 558.24
Sub Total (A) 18,927.43 3,213.54
Less : Allowance for bad and doubtful loans and advances / Provision for
inventory
Trade receivables on deferral credit terms realisable beyond 12 months
fromthe end of reporting period
2.16 –
Inventory 1,577.56 558.24
Sub Total (B) 1,579.72 558.24
TOTAL (A –B) 17,347.71 2,655.30
Investment in Lease – refer note no 46 (a)
(` in Million)
25
Inventories
(As taken, valued and certi?ed by the Management)
As at
31 March
2012
As at
31 March
2011
Finished Goods 1,034.71 564.06
Stores & Spares 4,698.20 4,134.97
TOTAL 5,732.91 4,699.03
162 163
(` in Million)
26 Trade Receivables
As at
31 March
2012
As at
31 March
2011
Secured, considered good
Trade receivable outstanding for a period exceeding six months: 3,286.52 3,020.72
Others 7.48 –
Unsecured, considered good
Trade receivable outstanding for a period exceeding six months: 21,904.54 22,570.04
Other Debts: 4,416.01 14,452.74
Doubtful
Trade receivable outstanding for a period exceeding six months: – –
Other Debts: 5.19 10.73
Sub Total (A) 29,619.74 40,054.23
Less : Allowance for bad and doubtful loans and advances
Debts outstanding for a period exceeding six months: 5.19 10.73
Sub Total (B) 5.19 10.73
TOTAL (A–B) 29,614.55 40,043.50
(` in Million)
27 Cash & Bank balances
As at
31 March
2012
As at
31 March
2011
A) Balances with Banks
in current account 46,966.00 29,317.14
in deposits 35.38 –
B) Cash on hand
i) At NewDelhi 0.25 0.26
ii) At Overseas 7.05 6.98
C) Others
Cash & Bank Balance 4,519.65 7,673.89
(In respect of Joint Ventures)
TOTAL 51,528.33 36,998.27
(` in Million) (` in Million)
28 Short TermLoans & Advances
As at
31 March
2012
As at
31 March
2011
A. Secured – Considered Good
Loans & Advances to Employees 43.27 32.10
B. Unsecured – Considered Good
Carry Finance to JV Partners 69.38 282.92
Loans & Advances to Employees 12.34 23.52
Advances recoverable in cash or in kind or for value to be received 920.05 2,220.50
Advances recoverable in cash or in kind or for value to be received
(In respect of Joint Ventures)
7,181.89 1,926.04
Unsecured – Considered Good (B) 8,183.66 4,452.98
C. Unsecured – Considered Doubtful
Advances recoverable in cash or in kind or for value to be received 1,741.95 –
Carry Finance to JV Partners 1,474.04 6,271.93
Less: Allowances
Less: Provisions for Doubtful Advances and Claims 3,215.99 6,271.93
Unsecured – Considered Doubtful (C) – –
LOANS AND ADVANCES (A+B+C) 8,226.93 4,485.08
a. Carry Finance to Sudapet:
The Company carried the share of investment of Sudapet, a company owned by the Government of
Sudan, for its 3.375% share in Block 5A till the commencement of ?rst commercial production(Sudapet
Carry). The carried amounts are repayable without interest in form of oil out of the production share
of Sudapet as per the terms of the Exploration and Production Sharing Agreement (EPSA).Currently,
Block 5A is under exploration, production and development and due to certainty of the recovery, the
net carried amount of USD 1.36 Million equivalent to `69.38 Million (previous year USD 6.33 Million
equivalent to `282.92 Million) has been shown as Loans and Advances.
(` in Million) (` in Million)
29 Other Current Assets
As at
31 March
2012
As at
31 March
2011
Prepaid expenses for Underlift Quantity 745.48 283.33
Interest Accrued On
Deposits with Banks 313.91 37.92
Others 369.19 2.19
Other Deposits 74.00 239.54
Other Current Assets 31.68 280.99
VAT Receivable 1,169.94 1,374.10
Investment in Lease 2,427.35 975.68
Advances recoverable in Cash or in kind or for value to be received
(In respect of Joint Ventures)
6,532.28 4,695.46
Taxes (Income Tax, Wealth Tax and Fringe Bene?t Tax) :
Advance Payment 22,420.44 19,322.81
Less: Provision 11,586.86 10,833.58 10,951.48 8,371.33
TOTAL 22,497.41 16,260.54
Investment in lease – Refer Note No. 41
164 165
(` in Million)
30 Revenue fromOperations 2011–12 2010–11
(A) Sales
Crude Oil 211,687.47 173,499.75
Gas 9,923.88 8,279.65
Condensate 3,189.04 2,232.91
Subtotal (A) 224,800.39 184,012.31
(B) Overlifted Quantity of Crude – 581.28
Total Sales (A)+(B) 224,800.39 184,593.59
Less: Value Added Tax 2,567.68 916.00
(C) Net Sales 222,232.71 183,677.59
(D) Other Operating Revenue
Other Operating income 1,240.41 433.90
Total Revenue fromOperations (C + D) 223,473.12 184,111.49
(` in Million)
31 Other Income 2011–12 2010–11
Interest Income on:
Deposits with Banks 812.22 356.72
Loans and Advances to Employees 5.54 4.19
Others 93.63 126.85
Lease Income 346.95 354.26
Pro?t on Redemption/ Sale of Investment – 0.57
Gain on Foreign Exchange Forward Contract 222.45 –
Miscellaneous Receipts 1,420.34 1,756.63
TOTAL 2,901.13 2,599.22
(` in Million)
32 Production, Transportation, Selling and Distribution Expenditure 2011–12 2010–11
Production Expenditure 22,673.78 17,763.48
Transportation Expenditure 5,094.13 4,368.88
Royalty 57,571.23 55,155.66
Sta? Expenditure 2,187.13 2,209.21
Service Tax and Other Levies 8,100.89 1,791.15
Rent 1,032.17 890.82
Repair to Buildings 73.48 47.54
Repair to Machinery 3.96 0.13
Other Repairs and Maintenance 124.85 18.30
Insurance 69.90 53.81
Payment due to surrender of Sudan Crude Oil Pipeline – 5,079.72
Idle rig cost 1,746.75 –
Crude oil received against Carry Finance 231.66 –
Others 2,508.03 1,781.48
TOTAL 101,417.96 89,160.18
a. The Subsidiary – ONGBV conducts its operations in Sudan jointly with Sudapet the national oil company
of Sudan among others. All government takes other than income taxes are considered to be royalty
interest. Royalties on production represent the entitlement of the Government of Sudan to a portion
of ONGBV’s share of crude oil and liquid production and are recorded using the rates in e?ect under the
terms of the contract at the time of production. Royalties / taxes in Syrian concession are accounted
similarly by ONGBV. The amount involved is `38,770.10 Million (Previous year `40, 848.27 Million) under
the head Royalty in Note 33.
b. Details of Production, Transportation, Selling and Distribution Expenditure
(` in Million)
Particulars 2011–12 2010–11
i a. Salaries, Wages, Ex–gratia etc. 1,775.38 1,995.20
b. Contribution to Provident Fund and other Funds. 61.50 29.59
c. Provision for Gratuity 69.97 11.65
d. Provision for Leave Encashment 130.37 43.18
e. Provision for medical / Terminal Bene?ts 6.19 9.92
f. Sta? Welfare Expenses 143.72 119.67
Sub Total (A) 2,187.13 2,209.21
ii Rent 1,032.17 890.82
iii Electricity, Water and Power 429.79 321.87
iv Repairs to buildings 73.48 –
v Repairs to Plant and Machinery 3.96 61.08
vi Other Repairs 124.85 272.43
vii Hire Charges of Vehicles 260.33 257.37
viii Professional Charges 400.12 390.68
ix Telephone and Telex 71.25 69.56
166 167
Particulars 2011–12 2010–11
x Printing and Stationery 13.12 11.84
xi Training and Seminar 4.76 4.56
xii Business Meeting Expenses 31.15 30.15
xiii Traveling Expenses 254.57 219.09
xiv Pipeline construction Cost – –
xv Insurance 69.90 53.81
xvi Advertisement and Exhibition Expenditure 36.64 23.01
xvii Contractual Transportation 5,094.13 4,368.88
xviii Miscellaneous Expenditure 2,733.78 2,398.36
xix Other Operating Expenditure* 22,924.71 20,630.65
xx Royalty 57,571.23 55,155.66
xxi Statutory Levies (Service Tax and Other Levies, Windfall Tax & VAT) 10,668.57 2,707.15
Sub Total (B) 101,798.51 87,866.97
Total (A+B) 103,985.64 90,076.18
*The other operating expenditure (no. xix above) includes the expenses in respect of Sakhalin–1, Russia project, where the above
details are not made available by the Operator.
c. Managerial Remuneration:
(` in Million)
Particulars 2011–12 2010–11
Salary and Allowances 20.13 40.59
Contribution to Provident Fund 0.57 0.65
Other Bene?ts and Perquisites 1.97 2.76
Total 22.67 44.00
d. Auditors’ Remuneration (excluding subsidiaries and joint venture company):
(` in Million)
Particulars 2011–12 2010–11
Audit Fee 3.09 2.21
Tax Audit Fee 0.28 0.32
Certi?cation Fee 0.48 0.96
Total 3.85 3.49
e. The expenditure incurred by Oil and Natural Gas Corporation Limited or its subsidiaries on behalf of the
Company are accounted for on the basis of debit raised by them for which supporting documents are
held by the respective relevant company/subsidiaries.
(` in Million)
33 Changes in Inventories of Finished Goods 2011–12 2010–11
As taken, valued and certi?ed by the Management
Closing Stock 1,034.71 564.06
Opening Stock 564.06 1,326.17
Less: Adjustment 161.04 403.02 883.35 442.81
NET (INCREASE)/DECREASE IN STOCK (631.69) (121.25)
(` in Million)
34 Finance Costs 2011–12 2010–11
A. Interest On
Finance Lease 371.31 1,154.83
Discount on Commercial Papers – 267.60
Interest on Bonds 1,974.74 1,970.78
Others 614.60 137.84
B. Foreign Exchange Fluctuation related to borrowing cost 9.15 –
TOTAL 2,969.80 3,531.05
(` in Million)
35 Depreciation, Depletion and Amortisation 2011–12 2010–11
Depreciation 11,132.60 11,705.28
Amortisation –Intangibles (12.75) 17.22
Less: Capitalised 7,995.20 3,124.65 8,260.05 3,462.45
Depletion 21,607.06 23,663.82
Survey Expenditure 2,537.43 2,867.35
Dry Wells 9,264.44 7,262.48
Pre–Acquisition Expenses 190.65 375.98
Amortisation of Goodwill 5,145.55 5,050.42
TOTAL 41,869.78 42,682.50
Refer to Note No A 3.1
Intangible Asset depreciation please refer to note no 2 a.1
(` in Million)
36 Other Expenses 2011–12 2010–11
Net (gain) or loss on foreign currency transactions and translation (other
than considered as ?nance cost)
1,473.54 (815.09)
Hedging (Gain)/Loss 48.52 41.85
Other Expenses 120.45 –
Provision for Mark to Market loss on Derivative Contracts 498.56 –
TOTAL 2,141.07 (773.24)
Hedging Gain/Loss:
The hedging loss for the year is `48.52 Million (Previous year gain `41.85 Million) in respect of hedging of crude oil against prices
by joint venture company.
168 169
(` in Million)
37 Provisions & Write–O?s (Net) 2011–12 2010–11
Provision for Impairment 19,533.69 –
Provisions for Doubtful Debts/Claims 2,269.42 215.97
Provision for Wells under Service Contract 12.29 22.20
Provision for Non Moving Inventory 740.62 696.60
Excess Provisions Written Back – (6,156.23)
Acquisition Cost Written O? 3,257.84 941.85
Other Write O? 2,115.25 7,727.86
TOTAL 27,929.11 3,448.25
Provision for Impairment – Attention is invited to Note 20
(` in Million)
38 Decrease/(increase) due to overlift/underlift quantity 2011–12 2010–11
UnderLift Previous year 283.33 –
UnderLift current year 697.44 283.32
Decrease/(increase) due to overlift/underlift quantity (414.11) (283.32)
(` in Million)
39 Adjustments Relating to Prior Period (Net) 2011–12 2010–11
A. Expenses
Survey Expenses (23.20) 0.00
Amortisation of Goodwill 11.14 (480.54)
Other Expenses 137.80 27.18
Depreciation (192.98) (0.07)
Depletion – 136.02
Sub–Total (67.24) (317.41)
B. Income
Miscellaneous Items 6.24 33.62
Sub–Total 6.24 33.62
TOTAL (A – B) (73.48) (351.03)
(` in Million)
40 Earnings Per Equity Share 2011–12 2010–11
Net Pro?t 27,211,559,601 26,905,441,958
No of Shares 100000000 100000000
Basic and Diluted Earnings Per Equity Share 272.12 269.05
(Per Share of `100 each)
41. The required disclosure under the Accounting Standard 15 (Revised) is given
below:
(A) Brief Description: A general description of the type of De?ned Bene?t Plans is as follows:
(i) Earned Leave (EL) Bene?t
Accrual – 30 days per year
Encashment whileinservice–75%of EarnedLeavebalancesubject toamaximumof 90daysper calendar year
Encashment on retirement – maximum 300 days.
(B) The amounts recognized in ?nancial statements for de?ned contribution plans are as under:
De?ned Contribution Plans
Expense
Recognized
during 2011–12
Contribution for
Key Management
Personnel during
2011–12
Expense
Recognized
during 2010–11
Contribution for
Key Management
Personnel during
2010–11
Contributory Provident Fund 29.53 0.54 26.53 0.61
Employee Pension Scheme –95 1.40 0.01 1.4 0.01
Composite Social Security Scheme 1.53 0.02 1.66 0.03
(C) The amounts recognized in the balance sheet for post–employment bene?t plans are as under:
Particulars Gratuity Leave
Post–Retirement
Medical Bene?ts
Terminals
Bene?ts
Present Value of Funded Obligation
– – – –
– – – –
Fair Value of Plan Assets
– – – –
– – – –
Present Value of Unfunded Obligation
179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
Unrecognized Past Service Cost
– – – –
– – – –
Net Liability
179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
(D) The amount included in the fair value of plan assets of gratuity fund is as follows
De?ned Contribution Plan
Expense Recognized
during 2011–12
Expense Recognized
during 2010–11
Reporting Enterprise’s own ?nancial instruments Nil Nil
Any Property occupied by, or assets used by the reporting enterprise Nil Nil
(ii) Good Health Reward (Half Pay Leave)
Accrual –20 days per year
Encashment while in service –Nil
Encashment on retirement – 50% of Half Pay Leave balance.
(iii) Gratuity
15 days salary for every completed year of service. Vesting period is 5 years and the payment is restricted to
`1.00 million.
(iv) Post–Retirement Medical Bene?ts
Upon payment of one time prescribed contribution by the employees, full medical bene?ts on
superannuation & on voluntary retirement subject to the completion of minimum 20 years of service
and 50 years of age.
(V) Terminal Bene?ts
At the time of superannuation, employees are entitled to settle at a place of their choice and they
are eligible for Transfer Traveling Allowance. Employees are gifted a silver plaque as a memento on
superannuation, depending upon their level.
170 171
(E) Reconciliation showing the movements during the period in the net liability recognized in the balance
sheet:
Particulars Gratuity Leave
Post Retirement
Medical Bene?ts
Terminals
Bene?ts
Opening de?ned bene?t obligation 169.54 139.67 61.14 7.86
164.23 127.04 54.74 4.79
Current Service Cost 7.39 6.81 2.48 0.35
7.01 5.80 2.23 0.31
Past Service Cost – – – –
– – – –
Interest Cost 14.41 11.87 5.20 0.67
13.14 10.16 4.38 0.38
Actuarial Losses (–Gains) –4.44 50.32 –5.33 0.45
–8.50 27.22 –0.21 2.83
Exchange di?erences on foreign plans – – – –
– – – –
Less: Bene?ts paid –7.00 –42.24 0.00 –0.34
6.34 30.55 – 0.45
Closing de?ned bene?t obligation 179.90 166.44 63.49 8.99
169.54 139.67 61.14 7.86
(F) The total expenses recognized in the statement of pro?t and loss are as follows:
Particulars Gratuity Leave
Post Retirement
Medical Bene?ts
Terminals
Bene?ts
Current Service Cost 7.38 6.80 2.48 0.35
7.01 5.80 2.23 0.31
Interest on Obligation 14.41 11.87 5.20 0.67
13.14 10.16 4.38 0.38
Expected Return on plan assets – – – –
– – – –
Net Actuarial Losses (–Gains) recognised
in year
–4.44 50.32 –5.33 0.45
–8.50 27.22 –0.21 2.83
Past Service Cost – – – –
– – – –
Losses (Gains) on curtailments and settle-
ment
– – – –
– – – –
Total included in ‘Employee Bene?t
Expense’
17.35 68.99 2.35 1.47
11.65 43.18 6.40 3.52
Actual return on Plan Assets – – – –
– – – –
(G) Principal actuarial assumption at the balance sheet date (expressed as weighted averages):
Particulars Gratuity Leave
Post Retirement
Medical Bene?ts
Terminals
Bene?ts
Discount Rate 8.50% 8.50% 8.50% 8.50%
8.00% 8.00% 8.00% 8.00%
Expected Return on Plan Assets – – – –
– – – –
Annual Increase in health care costs – – – –
– – – –
Annual Increase in Salary 6.00% 6.00% 6.00% 6.00%
5.50% 5.50% 5.50% 5.50%
(H) E?ect of 1.00 % increase and decrease in in?ation rate on Post Retirement Medical Bene?ts as on
31
st
March 2012:
1.00 % (+) 1.00 % (–)
a) E?ect on service and interest cost 1.57 –1.13
1.31 –1.05
b) E?ect on Present Bene?ts Obligation (Closing) 14.24 –8.03
11.41 –9.25
Note: Figures in bold represent current year’s ?gures.
The above information pertains to the company only and does not include subsidiaries.
42 Taxation
(a) Current Tax provision :
The current provision for tax has been made for `27,385.31 Million (period ending 31
st
March 2011
`23,688.08 Million) in respect of income–tax liability of the company and its consolidated subsidiaries/
joint ventures. The tax liabilities take into account the tax credits available under applicable tax
treaties.
(b) Tax Assessment
(i) The Company had appealed to Hon’ble Delhi High Court against the decision of Income Tax Appellate
Tribunal (ITAT) for the Assessment Years 1981–82 to 1987–88 regarding disallowance of its claim
for `94.04 Million (As on 31
st
March 2011: `94.04 Million) on account of depreciation, development
allowance and receipt of interest on delayed payments in respect of Iran Project. However, pending
decision the tax demand in this regard was paid by the Company. The matter has been remanded
back by the Hon’ble Delhi High Court to the ITAT for fresh hearing vide order dated 30
th
March 2011.
(ii) The Company had ?led appeals with Commissioner of Income Tax (Appeals) [CIT (Appeals)] against
the disallowance of depreciation on acquisition costs of the projects and other expenses as well as
addition to income aggregating to `3,958.54 Million, `3,006.17 Million, `3,470.29 Million, `3, 212.03
Million,`4,683.46 Million , `5,617.51 Million and `4,578.92 Million for assessment years 2002–03, 2003–
04, 2004–05, 2005–06, 2006–07, 2007–08 and 2008–09 respectively by the assessing o?cer (“AO”).
CIT (Appeals), while disposing o? the appeals for assessment years 2002–03 and 2003–04 partially
deleted the disallowances. The Company ?led appeals with the Income Tax Appellate Tribunal (ITAT)
against the orders of CIT (Appeals). The Company got a favorable decision from ITAT for AY 2002–03
and all disallowances (depreciation on acquisition cost and pre–acquisition expenses) made by the
AO have been deleted by ITAT. While the Department has ?led appeal in the High Court of Delhi (the
“Delhi HC”) against the said order of ITAT for 2002–03, the Company has also approached the Delhi HC
against the said order with the appeal that the acquisition cost be treated as revenue expenditure.
(iii) For the assessment years 2004–05 and 2005–06, CIT (Appeals) has decided the appeals in favor of the
Company. However, the Department has ?led appeal against the above orders in the ITAT.
172 173
(iv) For the assessment year 2004–05, the AO had reassessed the income u/s 147 of the Income Tax Act,
making additions to income amounting to `165.98 Million towards exchange gain adjustments and
change in method of accounting during the relevant year. The tax demanded due to reassessment is
nil. The AO has also initiated penalty proceedings. Company has ?led an appeal before CIT (Appeals)
against the order of the AO and requested the AO to keep the penalty proceedings in abeyance till
the disposal of the appeal by CIT (Appeals).
(v) For the assessment year 2005–06, the Company had claimed tax credit of `111.33 Million (increased to
`709.88 Million due to assessment by Department under regular provisions rather than under MAT,
as returned) under the India–Vietnam double tax avoidance agreement with respect to tax deemed
to be paid. The claim was duly supported by report of a reputed accounting and tax ?rm in Vietnam
and accepted by the AO. The CIT had issued an order dated 29
th
March 2010 holding the allowance of
the credit to be erroneous and directed the AO to re–compute the tax payable and allow credit only
on the basis of certi?cate to be obtained by the Company from Vietnam tax authorities. The Company
had ?led appeal with the Income Tax Appellate Tribunal (ITAT) to contest the same on the ground that
the decision of the CIT is not in accordance with the law. The Company had also approached Vietnam
Tax Authorities (VTA) for required certi?cate. However, the AO vide his order dated 21
st
December
2010 has withdrawn the credit allowed for `709.88 Million and the resulting demand for `958.34
Million has been adjusted by the AO against refunds due to the Company. The Company has ?led
appeal with CIT (A) against the order of the AO. Further, the VTA vide their notice dated 5
th
August
2011 have con?rmed the tax amounts for the calendar years 2003 to 2006. The Company has ?led the
documents with CIT (A) and further proceedings before CIT (A) are pending.
(vi) For the assessment year 2008–09, the AO has made certain disallowances/additions (depreciation
on acquisition costs of the projects, adjustment of Sudan crude oil inventory, provision in respect of
Farsi exploration service contract and other expenses) amounting to `4,578.92 Million and assessed
total income as `32,469.15 Million against returned income of `27,890.22 Million. The disallowances/
additions include an amount of `1,654,88 Million on protective basis. In consequence, the AO has
raised a demand of `2,238.65 Million payable by the Company. The Company does not agree with the
disallowances made and ?led appeal with CIT (Appeals) against such assessment order. No provision
has been made for additional tax liability, if any, on this account.
(vii) For the assessment year 2005–06, AO has initiated action on 28
th
March 2012 u/s 147 of the Income Tax
Act for re–assessing company’s assessed income. The AO also conveyed the reasons whereby the AO
has indicated additions to income amounting to `25.87 Million towards exchange loss adjustments
due to change in method of accounting during the year. No demand has been raised by the AO
(c) Deferred Tax Provision
Net consolidated deferred tax liability as at 31
st
March, 2012 aggregated to `10,203.88 Million (Previous
year: `9,554.84 Million) and Net consolidated deferred tax asset as at 31 March, 2012 aggregated to
`5,220.65 Million (Previous year: `1,202.19 Million).
The item wise details of Net Deferred Tax Liability/Asset as on 31 March, 2012 accounted for in
accordance with Accounting Standard (AS) 22 viz. accounting for Taxes on Income are as under:
(` in Million) (` in Million)
Particulars As at 31 March 2012 As at 31 March 2011
Deferred Tax Liability of ONGC Videsh Ltd.
Deferred Tax Assets :
Carried Forward Expenditure U/S 42 of Income Tax Act, 1961* 11,213.98 10,222.01
Other disallowances under Income Tax Act, 1961 1,043.13 814.33
Total Deferred Tax Assets 12,257.11 11,036.34
Deferred Tax Liability : – 0
Di?erence in Net Block of Fixed Assets for Tax 16,133.71 14,819.36
Total Deferred Tax Liability 16,133.71 14,819.36
Net Deferred Tax Liability of the Company (ONGC Videsh Ltd.) 3,876.60 3,783.02
Net Deferred Tax Liability of ONGBV 6,178.54 5,591.06
Net Deferred Tax Liability of OAAL 148.74 180.76
Consolidated Net Deferred Tax Liability 10,203.88 9,554.84
Net Deferred Tax Asset of ONGBV 5,049.90 1,202.19
Net Deferred Tax Asset of OAAL 170.75 –
Net Deferred Tax Asset of OMEL – –
Consolidated Net Deferred Tax Asset 5,220.65 1,202.19
*Disallowance u/s 43B, provisions for doubtful debts and non–moving inventory.
An amount of `3,950.76 Million (Previous year: `1,650.55 Million debited) has been credited to the
Statement of Pro?t and Loss and `581.34 Million (Previous year: `182.21 Million) has been adjusted to
foreign currency translation reserve.
43 Details of Joint Ventures:
The details of Company’s and its Subsidiaries’ signi?cant joint ventures as on 31 March 2012 are as
under
Sr.
No.
Name of the Project and Country
of Operation
Company’s
participating
share (%)
Other Consortium
Members
Operator Status
1
Block 06.1 Project,
Vietnam, O?shore
45%
TNK – 35%
Petrovietnam– 20%
TNK*
The project is under
development and
production
2
Block 1a, 1b, 2a, 2b & 4 (GNOP)
Project,
Sudan, Onshore (Through ONGC
Nile Ganga B.V.)
25%
CNPC – 40%
Petronas – 30%
Sudapet – 5%
Joint
Operatorship
The project is under
production.
3
Sakhalin –1 Project,
Russia, O?shore
20%
ENL – 30%
SODECO – 30%
SMNG – 11.5%
R N Astra – 8.5%
ENL
The project is under
development and
production
4
AFPC Project
Syria, Onshore (Through ONGC
Nile Ganga B.V.) **
38.75%
Fulin – 50%
Mittals – 11.25%
SSPD **
The project is under
production.
5
MECL, Colombia, Onshore
(Through ONGC Amazon
Alaknanda Limited)
50% Sinopec – 50%
Joint
Operatorship
The project is under
exploration, development
and production
174 175
Sr.
No.
Name of the Project and Country
of Operation
Company’s
participating
share (%)
Other Consortium
Members
Operator Status
6
Block 5A Project,
Sudan, Onshore
24.13%
Petronas – 67.875%
Sudapet – 8%
Petronas
and Sudapet
– Joint
Operatorship
The project is under
exploration, development
and production
7
Block BC–10 Project,
Brazil, O?shore (Through ONGC
Nile Ganga B.V.)
15%
Shell – 50%
Petrobras – 35%
Shell
The project is under
development and
production
8
OOO Imperial Frac Service
(Through Jarpeno Ltd)
50%
Mr. Vladimir
Aleksandrovich
Borisov – 50%
ONGC Videsh
Ltd.
The company provides
Fraccing Services
9
"San Cristobal Project, Venezuela,
Onshore
(Through ONGC Nile Ganga B.V.)"
40% CVP– 60%
Joint
Operatorship
The project is under
development and
production
10
Block A–1 Project,
Myanmar, O?shore
17%
Daewoo – 51%
KOGAS – 8.5%
GAIL – 8.5%
MOGE– 15%
Daewoo
The project is under
development.
11
Block A–3 Project,
Myanmar, O?shore
17%
Daewoo – 51%
KOGAS – 8.5%
GAIL – 8.5%
MOGE– 15%
Daewoo
The project is under
development.
12
Farsi Block Project,
Iran, O?shore
40%
IOC – 40%
OIL – 20%
ONGC Videsh
Ltd.
The project ’s exploration
service contract ended
on 24 June 2009. The
Master Development
Plan (MDP) for the Farzad
‘B’ Gas Field has been
submitted to National
Iranian Oil Company and
Development Service
Contract for the ?eld is
under discussion.
13 Block XXIV Project, Syria, Onshore 60%
IPRMEL – 25%
Triocean–15%
IPR MEL
The project is under
exploration, development
and production.
14
Block 25–29, 35 (Part) & 36
Project,
Cuba, O?shore
30%
Repsol YPF – 40%
Stat Oil – 30%
Repsol YPF
The project is under
exploration.
15
Khartoum–Port Sudan Pipeline
Project,
Sudan
90% OIL – 10%
ONGC Videsh
Ltd.
The pipeline has been
completed and is under
lease.
16 Block RC–8, Colombia, O?shore 40%
Ecopetrol – 40%
Petrobras – 20%
ONGC Videsh
Ltd.
The project is under
exploration
17 Block RC–9, Colombia, O?shore 50% Ecopetrol – 50% Ecopetrol
The project is under
exploration
18 Block RC–10, Colombia, O?shore 50% Ecopetrol – 50%
ONGC Videsh
Ltd.
The project is under
exploration
19
Block BM–SEAL–4, Brazil.
(Through ONGC Nile Ganga B.V)
25% Petrobras– 75% Petrobras
The project is under
exploration
Sr.
No.
Name of the Project and Country
of Operation
Company’s
participating
share (%)
Other Consortium
Members
Operator Status
20
Block BM–BAR–1, Brazil (Through
ONGC Nile Ganga B.V)
25% Petrobras– 75% Petrobras
The project is under
exploration
21 Block SSJN–7, Colombia, Onshore 50% Paci?c – 50% Paci?c
The project is under
exploration
22
OPL–279, Nigeria
(Through ONGC Mittal Energy
Limited)
22.74%
(OMEL 45.5%)
EMO– 40%
Total –14.5%
OMEL
Exploration;surrendered
in 2011–12
23
OPL–285, Nigeria
(Through ONGC Mittal Energy
Limited)
32.15%
(OMEL
64.33%)
EMO– 10%
Total –25.67%
OMEL
Exploration;surrendered
in 2011–12
24 Block CPO–5, Colombia, Onshore 70% PetroDorado – 30%
ONGC Videsh
Ltd.
The project is under
exploration
25
SHWE O?shore Pipeline Project,
Myanmar
17%
Daewoo – 51%,
KOGAS – 8.5%,
GAIL – 8.5%,
MOGE – 15%
Daewoo
The project is under
construction.
26
Onshore Gas Pipeline Project
(SEAGPCL), Myanmar
(Through ONGC Nile Ganga B.V.)
8.35%
CNPC–SEAP– 50.9%
Daewoo – 25.041%,
KOGAS– 4.1735%,
GAIL – 4.1735%,
MOGE – 7.365%
CNPC–SEAP
The project is under
construction
27
BM–S–73, Brazil
(Through ONGC Nile Ganga B.V.)
43.50%
Petrobras – 43.5%
Eco Petrol – 13%
OCL
The project is under
exploration
28
BM–S–74, Brazil (Through ONGC
Nile Ganga B.V.)
43.50%
Petrobras – 43.5%
Eco Petrol – 13%
Petrobras
The project is under
exploration
29
Carabobo Project, Venezuela
(Through Carabobo One AB)
11%
CVP – 60%
Repsol Exp–11%
Petronas Ve–11%
INDOIL–7%
Joint
operatorship
The project is under
development
30
Satpayev Contract Area 3575,
Kazakhstan
25% KMG – 75% SOLLP
The project is under
Exploration
Abbreviations used: Addax – Addax Energy Nigeria Limited; BPEOC – BP Exploration Operating Company Limited; CNPC – China
National PetroleumCorporation; CNPC–SEAP–CNPC South–East Asia Pipeline Co Ltd; CVP – Corporacion Venezolana Del Petroleo
S.A.; Daewoo – Daewoo International Corporation; Devon – Devon Energy do Brazil Ltda ; EMO – EMO Exploration & Production
Limited; Equator – Equator Exploration JDZ Block 2 Limited; ERHC – ERHC Energy Nigeria JDZ Block 2 Limited; ENL – Exxon
Neftegas Limited; Foby – Foby Energy Company Limited; Fulin – Fulin Investments Sarl; GAIL – GAIL (India) Limited; IOC – Indian
Oil Corporation Limited; INDOIL– Indoil Netherlands B.V.; IPRMEL – IPR Mediterranean Exploration Limited; KOGAS – Korea
Gas Corporation; B.V; Mittals – Mittal Investments Sarl; MOGE– Myanmar Oil and Gas Enterprise ; Amber – Momo Deepwater
JDZ Limited; OCL – ONGC Campos Ltda.. OIL – Oil India Limited; Paci?c – Paci?c Stratus Energy, Colombia; Petrobras – Petroleo
Brasileiro S.A.; Petro–Dorado – Petro–Dorado South America S.A.; Petronas – Petronas Carigali Overseas Sdn Bhd; Petronas Ve:
PC Venezuela Ltd; Petrovietnam– VietnamOil and Gas Group; Repsol – Repsol YPF Cuba SA; Repsol Exp– Repsol Exploracion S.A.;
SEAGPCL – South East Asia Gas Pipeline Company Ltd.; Shell – Shell Brazil Ltda; Sinopec – Sinopec Overseas Oil and Gas Limited;
Sinopec JDZ– Sinopec JDZ Block 2 Limited; SMNG – Sakhalinmorneftegas Shelf; SODECO – Sakhalin Oil Development Company
Limited; SOLLP – Satpayev Operating Company LLP (100% subsidiary of KMG); SSPD: Syria Shell Petroleum Development B.V.;
Sudapet – Sudapet Limited; Triocean: Tri–Ocean Mediterranean
* BPEOC has transferred its PI and Operatorship for the Block–6.1 to TNK–VietnamB.V. e?ective from17thOctober, 2011
** ONGC Videsh Ltd. has e?ectively 38.75% interest in Himalaya Energy Syria B.V. (HESBV) with Mittals and Fulin e?ectively holding
11.25% and 50% interest respectively. HESBV, through its subsidiaries, holds 33.33%, 37.5% and 36% interest in Ash Sham (including
deep and lateral) concession, Deir–Ez–Zor and Annexure–IV (including deep and lateral) concessions and a gas utilization
agreement in Syria; the balance interest in the concessions being held by SSPD– the Operator.
176 177
44. Company’s share in Joint Ventures
The Company, its Subsidiaries’ and the Joint Venture Company’s share of assets, liabilities, income and
expenses in the Joint Ventures as furnished by the Operator has been incorporated in the ?nancial
statements as given below:
(` in Million)
Project Net Fixed
Assets
Net
Producing
Property
Capital
Work in
Progress
Explor-
atory and
Develop-
ment
Wells in
Progress
Current
Assets
Cash and
Bank Bal-
ance
Liabilities Income Expendi-
ture*
(Including
deprecia-
tion)
A. Audited as of 31 March 2012
Block 06.1 Vietnam 1,160.94 1,700.14 2,503.28 3,868.07 2,585.96 22.96 12,227.59 10,124.13 3,666.03
Farsi Block, Iran 0.27 – – – 1.45 1.08 116.18 0.33 10.90
Sudan Pipeline,
ONGC Videsh Ltd.'s
Share (90%)
– – – – 2,436.45 9.10 3,861.74 207.37 (914.15)
Block 1a, 1b, 2a, 2b &
4, Sudan
434.36 21,655.12 – 4,065.73 5,496.61 1,065.62 4,694.70 51,161.16 34,218.54
Block BC–10 &
Exploratory Blocks,
Brazil
– 21,466.30 – 1,954.69 2,680.75 261.84 3,764.59 17,486.37 18,695.80
PIVSA (San Cristo-
bal), Venezuela
992.37 1,917.26 2,466.28 – 16,821.40 130.99 11,238.61 26,554.20 16,072.04
Pipeco 1 onshore
Project, Myan-
mar (SEAGP)
14.54 – 2,275.55 – 2.70 83.72 969.49 – –
Tamba – – 2,562.69 – 8,665.74 816.60 4,672.24 1,490.54 3.89
AFPC, Syria 0.87 2,180.50 – 66.72 2,106.32 13.43 658.51 18,619.54 15,506.74
MECL 3,089.19 5,971.94 131.64 2,888.02 4,111.37 – 1,334.52 12,935.66 9,580.58
LLC Imperial Frac
Service–Jarpeno
97.74 – – – 57.15 13.60 30.26 247.70 183.44
Total (A) 5,790.27 54,891.27 9,939.44 12,843.22 44,965.90 2,418.94 43,568.43 138,827.01 97,023.82
B. Audited as of 31 January 2012
Block 5A, Sudan 2,834.54 5,016.93 27.26 2,006.76 1,204.69 125.42 325.40 3,287.07 1,911.68
Total (B) 2,834.54 5,016.93 27.26 2,006.76 1,204.69 125.42 325.40 3,287.07 1,911.68
C. Audited as of 31 December 2011
Sakhalin 1 Russia
22,632.87
54,960.77 46,764.05 1,344.42 9,759.26 799.88 80,642.67 60,737.72 28,442.46
Block RC–8, Co-
lombia
0.15 – – – 11.06 – 126.73 0.35 40.91
Block RC–10, Co-
lombia
0.21 – – – 14.33 – 150.08 0.49 38.39
Block RC–9, Co-
lombia
– – – – 0.09 0.24 7.59 0.26 (13.91)
Block SSJN–7,
Colombia
– – – – 2.20 – 50.93 0.07 260.33
Blocks 25–29, 35
(Part) & 36, Cuba
6.12 – 346.91 1,811.86 248.44 – 748.71 – 20.32
Block A–1, Myanmar 20.97 – 3,960.76 2,753.72 734.58 444.92 1,827.11 3.14 78.55
Block A–3, Myanmar 2.01 – 840.95 2,695.10 186.02 162.42 317.60 3.54 10.13
CPO 5 Block 0.24 – – 15.20 67.06 – 219.11 1.16 166.43
SHWE O?shore
Pipeline Myanmar
– – 1,966.65 – 444.18 443.79 440.26 1.74 (5.61)
Total (C)
22,662.57
54,960.77 53,879.32 8,620.30 11,467.22 1,851.25 84,530.79 60,748.47 29,038.00
D. Unaudited
Block XXIV, Syria 53.67 (78.46) – 1,998.02 314.97 – 270.06 191.49 246.74
Block 6 North Rama-
dan, Egypt+
– – – – 50.96 – 60.82 0.80 (68.50)
Block NC–189,
Libya+
– – – – 24.79 2.34 0.23 – (0.75)
Block NEMED,
Egypt+
– – – – – – (1.88) – 30.79
Petro carabobo** – – 300.76 – 250.41 121.70 246.83 – –
Project Net Fixed
Assets
Net
Producing
Property
Capital
Work in
Progress
Explor-
atory and
Develop-
ment
Wells in
Progress
Current
Assets
Cash and
Bank Bal-
ance
Liabilities Income Expendi-
ture*
(Including
deprecia-
tion)
Satpayev Block,
Kazakhstan
2.30 – 4,753.53 – 18.66 – 646.57 – 703.45
Block 279, Nigeria – – – – – – – – 8.07
Block 285, Nigeria 22.55 – – – – – – – 79.29
Total (D ) 78.52 (78.46) 5,054.29 1,998.02 659.79 124.04 1,222.63 192.29 999.09
Grand Total 31,365.90 114,790.51 68,900.31 25,468.30 58,297.60 4,519.65 129,647.25 203,054.84 128,972.59
*Represents expenditure as per joint venture statement. In the accounts of the Company, the amount is re?ected after netting o? as
per the Accounting Standard (AS) 27 viz. Financial Reporting of interests in Joint Ventures.
** Excludes signature bonus paid by subsidiary and classi?ed under capital work in progress.
The Company’s share of assets, liabilities, income andexpenses has beenconvertedintothe reporting currency at the average exchange
rate over the period for which the details are provided by the Operators. Generally the details are provided by the operators on monthly
basis except in respect of Sakhalin–1, Russia Project, where the details are provided by the Operator on quarterly basis.
The Company’s share of assets, liabilities, income and expenses incorporated in the ?nancial statements in
respect of Joint Venture Company – OMEL is given below:
Particulars Amount
a) Net Fixed Assets 22.55
b) Net Producing Property –
c) Capital Work in Progress 638.74
d) Exploratory & Development Wells–in–Progress –
e) Current Assets 138.79
f) Cash and Bank 105.95
g) Liabilities 7,560.76
h) Income –
i) Expenditure 2,887.67
45.1 Block 5A, Blocks 1,2 & 4 in Republic of South Sudan
The Company has 24.125% participating interest in Block 5A Republic of Sudan (ROS). South Sudan
separated from ROS as an independent country e?ective from 9
th
July 2011. In view of the separation
of South Sudan, the entire contract area of Block 5A is now situated in Republic of South Sudan (RSS),
whereas the downstream crude oil transportation system and export terminal are situated in ROS.
The company signed a Transition Agreement (TA) with RSS on 13
th
January 2012 continuing its right for
oil exploration and exploitation for contract area of Block 5A in Republic of South Sudan. Republic
of South Sudan is a landlocked country. Government of Sudan and Government of South Sudan has
been negotiating an agreement for the evacuation of crude produced from Republic of South Sudan
concessional area through the processing and transportation facilities of Republic of Sudan and has yet
to reach an agreement. As per the directives of Ministry of Petroleum & Mines, Government of South
Sudan, petroleum operation has been temporarily shut down in concession area of Block 5A e?ective
from 23
rd
January 2012. In view of the above, currently petroleum operations in the Block have been
limited to the maintenance of the facilities to ensure integrity for timely resumption of production
operation.
Due to the secession of South Sudan from ROS, the operator has been shifting o?ce from Khartoum
in ROS to Juba in RSS. Due to the shifting process the operator has not been able to provide the
monthly expenditure statement for the month of February and March 2012. Hence the expenditure
for the month of February and March are booked based on the cash call request for those two months
amounting to USD 4.39 Million equivalent `218.24 Million. Necessary adjustments would be carried out
in the accounts on receipt of the expenditure statement.
45.2 Satpayev Block, Kazakhstan:
E?ective 12
th
October 2011, the Company has acquired 25% Subsoil use rights from National Company
JSC Kaz Munai Gas (KMG) in the Contract for Exploration and Production of Hydrocarbon (Contract)
178 179
in Satpayev Area which was signed on 15
th
June, 2010 between Ministry of Oil and Gas (MOG),
Kazakhstan and KMG. KMG now holds subsoil use rights of 75% in the Block. The amounts paid toward
initial payment and signature bonus aggregating to `4,753.53 Million are disclosed as Capital Work in
Progress in Note 19.
45.3 AFPC, Syria
ONGC Nile Ganga BV (ONGBV) and Fulin Investments Sarl, a subsidiary of China National Petroleum
Company International (CNPCI), hold 50% shareholding each in the Dutch joint venture company, named
Himalaya Energy Syria B.V. (HESBV). HES B.V. in turn through three German entities i.e. HES Sham, HES
Dez and HES Gas Syria hold 33.33% to 37.5% PI in four Production Sharing Contracts (PSCs) in Syria. The
Syria business for the above PSC of ONGBV is structured as separate class business (Class C).
E?ective 1
st
December 2011 Al Furat Petroleum Company (AFPC) an Operating Company jointly held
by the Contractor and General Petroleum Company (GPC), which represents Govt. of Syria in the
Operating Company, were included in the list of sanctioned enterprises by the European Union as
part of the strengthening of the sanctions on Syria. Due to the sanctions, HESBV, as an EU company,
has been forbidden to directly or indirectly make funds or resources available to or for the bene?t of
AFPC and GPC.
In December 2011, SSPD’s nominee on the Board of Directors of AFPC communicated to the Chairman
of AFPC, the Minister of Petroleum and the General Manager, GPC, Syria that at the moment
circumstances (including EU sanctions) exist which are beyond the reasonable control of SSPD and
HESBV, which prevents the parties from discharging their obligations under the Contract. He further
informed in his letter that based on the opinion of an independent law ?rm, the restrictions that the
Contractor face lead to a Force Majeure (FM) situation under the Contracts.
In an opinion obtained by ONGC Videsh Ltd. from an Independent law ?rm, nothing in the PSC would
permit GPC to take, own or dispose of the Contractor's share in the event of force majeure being
called. Further, once the sanctions have been lifted, the Contractor could then claim its share in
production done during the period of the sanctions and pay for the expenditure of those operations
if appropriate.
Post the Force Majeure, the operation of the project is continued to be carried out by AFPC. HESBV
while preparing its accounts for the period ended 31
st
March 2012 has accounted for revenue and
expenses based on the Joint Interest Billings received by HESBV up to the period November 2011 and
has also accounted for its share of expenditure of SSPD for the period up to March 2012.
As per the ?nancials prepared by HESBV for the period ended 31
st
March 2012, ONGBV’s share of
net ?xed assets in HESBV is EURO 32.92 Mn and trade receivables of EURO 56.44 Mn. Due to the
political situation in Syria and the EU sanction, this Cash Generating Unit (CGU), including the above
mentioned assets and receivables was tested for impairment by comparing the carrying value with
the recoverable value as at 31
st
March 2012. No impairment provision was required in view of the
recoverable value being higher than the carrying value.
46. Disclosure pursuant to AS 19 – Leases
a. Khartoum – Port Sudan Pipeline Project:
The Company had completed the 12”X741 Kms multi–product pipeline from Khartoum re?nery to Port
Sudan for the Ministry of Energy and Mining of the Government of Sudan (GOS) on Build, Own, Lease
and Transfer (BOLT) basis and handed over the same to GOS during the ?nancial year 2005–06. The
project was implemented in consortium with Oil India Limited, Company’s share being 90%.
The EPC Contractor executing the project claimed additional costs aggregating to USD 37.15 Million,
Company’s share being USD 33.43 Million (90%), which have not been accepted by the Company. The
Company, in turn has ?led a claim as per the contract with GOS for their approval of an aggregate
amount of USD 46.18, Company’s share being USD 41.56. The EPC Contractor has initiated arbitration
with a claim for USD 25.49 Million plus interest against the Company. Pending settlement with the EPC
Contractor, an amount of USD 22.94 Million, being the Company’s 90% share out of total claim of USD
25.49 Million has been accounted as liability in the relevant year. No revenue in this respect has been
recognized since the claim has not been accepted by GOS. ONGC Videsh Ltd. has served a pre–arbitral
notice on GOS which is a requirement prior to initiating any legal proceedings in Sudan.
The payment under the contract with GOS would be received over a period of 10 years including a
moratorium of one year from the date of the contract (30th June, 2004) in 18 equal semi–annual
installments along with lease rental. The lease period commenced from the date of handing over of
the pipeline system and will continue till all payments by GOS are completed. All titles in the works and
the transportation system shall vest in the Company and the title shall pass to GOS in proportion to the
payments made by GOS against total payments due to Company under the contract. Further, subject
to regular payments on due dates by GOS to the Company, GOS shall have the exclusive right to use
and operate the pipeline system and the Company shall not assign, transfer, sub–let, sub–contract,
mortgage or create any rights to any third party or encumbrances or make any disposition to any
third party. Accordingly, the amount of net investment in the lease (i.e. aggregate of Minimum Lease
Payments MINUS Unearned Finance Income) is recognized and recorded as receivables under the
lease. The ?nance income thereon has been recognized based upon the pattern re?ecting the constant
periodic rate of return on the outstanding net investment in the lease.
The ?rst 11 installments under the contract due till 30th December 2010 have been received. The 12th
Installment due on 30th June 2011 and 13th installment due on 30th December 2011 have not yet been
received. Company has taken a political risk insurance policy for 12th and 13th installments. As per
the provisions of policy contract, the company has ?led the claim for 12th and 13th installments with
Export Credit Guarantee Corporation of India (ECGC).
The disclosure in accordance with the Accounting Standard (AS) 19 viz. Leases is as under:
(` in Million)
Particulars 31 March 2012 31 March 2011
Gross Net Gross Net
a) Reconciliation between the total
gross investment in the lease and the
present value of minimumlease pay-
ments as at year end
– Not later than one year 2,581.50 2,427.35 1,129.15 975.68
– Later than one year and not later than
?ve years
1,936.13 1,846.25 2,822.89 2,567.91
– Later than ?ve years – – – –
Total 4,517.63 4,273.60 3,952.04 3,543.59
b) Unearned Finance Income 244.03 408.45
c) Unguaranteed residual value accruing
to Company’s bene?t
Nil Nil
d) Accumulated provision for uncollect-
ible minimumlease payments receiv-
able
Nil Nil
e) Contingent rents recognised in the
statement of pro?t and loss for the
period
Nil Nil
f) General description of the signi?cant
leasing arrangement
As described in para above As described in para above
g) Accounting Policy followed in respect
of initial direct costs
As per Accounting Policy O.1.2 As per Accounting Policy O.1.2
180 181
Revenue of ?nance lease contracts represents the transfer of economic ownership from Tamba BV
(lessor) to the lessee of the asset, being an a?liate. Cost of sales represents the costs associated
with the ?nance lease contracts. The Company’s share of the lease liability (at USD 1= `51.12) are
tabulated below:
Lease liability (` in Million)
Opening balance as at 1 April 2011 4,021.60
Interest 396.40
Lease Payments (954.88)
Foreign Currency Translation Adjustment 575.54
Closing balance as at 31 March 2012 4,038.66
The Company’s 15% share of future estimated minimumlease expenses in the year and their present values are scheduled to be as
follows:
(` in Million)
< 1Year 1–5 Years >5Years Total
Future minimumlease payments: 950.31 2,649.73 2,035.52 5,635.57
Present value of minimumlease payments 913.68 2,073.20 1,051.77 4,038.66
Tamba B.V., JV company of ONGBV (15%) has entered into a 15–year lease contract for the supply of
the FPSO with a third party. The lease contract contains priced termination options for each of the 15
years and priced extension options for the 4 years following the initial 15–year term. The Company can
exercise a priced purchase option during the term of the lease. The interest rate implicit in the lease is
9.5% (Previous year 9.5%).
47. Details of Reserves: (As determined by the Reserves Estimation Committee):
(a) Company’s share of Proved Reserves in respect of different projects as on 31 March 2012 is
as under:
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total
(Million Tonne)
GNOP, Sudan Opening 17.425 – 17.425
Addition 0.870 – 0.870
Ded/Adj – – –
Production 1.324 – 1.324
Closing 16.971 – 16.971
b. Financial Lease for BC–10 Project
ONGBV owns 15% equity shares in Tamba B.V. The Netherlands’ with the balance held by Shell E and P
O?shore Services B.V., The Netherlands (“SEPBV”), and Petrobras Netherlands B.V. The Netherlands
(“PNBV”). Tamba B.V. has been established to facilitate the development and production of
hydrocarbons in the BC–10 concession, Campos Basin area in Brazil. Tamba B.V. has a third party lease
for a major oil ?eld equipment (FPSO) and constructed other sub–sea assets for onwards lease to the
BC–10 Project. Both ?nacial leases commenced on 31
st
December 2008. For the period, April 1, 2011 to
March 31, 2012, the ?nancial statements were reviewed by the auditors of Tamba BV.
Tamba BV leases part of its assets from a third party, Brazilian Deepwater and re–leased these to BC–10
joint venture operated by Shell Brasil Ltda. The risks and rewards incidental to ownership are largely
transferred to the lessee. These assets are capitalised and recognised in the balance sheet of BC–10
as from the date the lease contract is concluded, at the lower of the fair value of the asset and the
discounted value of the minimum lease installments. The lease installments payable are broken down
into repayment and interest components, based on a ?xed interest rate and installments as derived from
the underlying agreement. The lease commitments are carried under long–term liabilities exclusive of
interest. The interest component is recognised in the Statement of Pro?t and Lossin accordance with
the lease installments.
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total
(Million Tonne)
Block 5A, Sudan Opening 6.627 – 6.627
Addition –0.105 – –0.105
Ded/Adj – – –
Production 0.174 – 0.174
Closing 6.348 – 6.348
Sakhalin–1, Russia Opening 35.501 71.537 107.038
Addition 0.258 0.138 0.396
Ded/Adj – – –
Production 1.498 0.494 1.992
Closing 34.261 71.182 105.442
Block 06.1, Vietnam Opening 0.672 10.540 11.212
Addition – – –
Ded/Adj – – –
Production 0.036 2.023 2.059
Closing 0.636 8.517 9.153
AFPC, Syria Opening 3.210 – 3.210
Addition – – –
Ded/Adj – – –
Production 0.503 – 0.503
Closing 2.707 – 2.707
BC–10, Brazil Opening 5.317 0.659 5.976
Addition (0.089) (0.244) (0.333)
Ded/Adj – – –
Production 0.450 0.015 0.465
Closing 4.778 0.400 5.178
MECL, Columbia Opening 4.131 – 4.131
Addition (0.065) – (0.065)
Ded/Adj 0.001 – 0.001
Production 0.561 – 0.561
Closing 3.504 – 3.504
IEC, Russia Opening 17.181 5.309 22.491
Addition (0.880) (0.626) (1.506)
Ded/Adj – – 0.000
Production 0.771 – 0.771
Closing 15.530 4.683 20.213
PIVSA, Venezuela Opening 12.688 – 12.688
Addition (0.030) – –0.030
Ded/Adj (0.001) – (0.001)
Production 0.894 – 0.894
Closing 11.765 – 11.765
BLOCK–24, Syria Opening 1.813 – 1.813
Addition – – –
Ded/Adj – – –
Production 0.010 – 0.010
Closing 1.803 – 1.803
182 183
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total
(Million Tonne)
BLOCK–A1 & A3,
Myanmar
Opening – 10.297 10.297
Addition – – –
Ded/Adj – – –
Production – – –
Closing – 10.297 10.297
Total Reserves, ONGC
Videsh Ltd.
Opening 104.566 98.343 202.909
Addition (0.042) (0.732) (0.772)
Ded/Adj – – 0.001
Production 6.221 2.532 8.754
Closing 98.303 95.079 193.383
* Crude Oil includes Condensate.
** For calculating “Oil Equivalent” 1,000M
3
of Gas has been taken to be equal to 1 Tonne of Crude Oil.
(b) Company’s share of Proved and Developed Reserves in respect of different projects as on 31
March 2012 is as under:
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total
(Million Tonne)
GNOP, Sudan Opening 7.831 – 7.831
Addition 0.200 – 0.200
Ded/Adj – – –
Production 1.324 – 1.324
Closing 6.707 – 6.707
Block 5A, Sudan Opening 2.467 – 2.467
Addition 0.306 – 0.306
Ded/Adj – – –
Production 0.174 – 0.174
Closing 2.599 – 2.599
Sakhalin–1, Russia Opening 10.620 11.288 21.908
Addition – – –
Ded/Adj – – –
Production 1.498 0.494 1.992
Closing 9.122 10.794 19.916
Block 06.1, Vietnam Opening 0.663 6.985 7.648
Addition – – –
Ded/Adj – – –
Production 0.036 2.023 2.059
Closing 0.627 4.962 5.589
AFPC, Syria Opening 2.835 – 2.835
Addition – – –
Ded/Adj – – –
Production 0.503 – 0.503
Closing 2.332 – 2.332
Project Details Crude Oil*
(Million Tonne)
Gas
(Billion Cubic Meter)
Total
(Million Tonne)
BC–10, Brazil Opening 1.931 0.443 2.374
Addition (0.044) (0.273) (0.317)
Ded/Adj – – –
Production 0.450 0.015 0.465
Closing 1.437 0.155 1.592
MECL, Columbia Opening 3.240 – 3.240
Addition 0.692 – 0.692
Ded/Adj – – –
Production 0.561 – 0.561
Closing 3.371 – 3.371
IEC, Russia Opening 4.793 – 4.793
Addition 1.369 – 1.369
Ded/Adj – – –
Production 0.771 – 0.771
Closing 5.391 – 5.391
PIVSA, Venezuela Opening 1.901 – 1.901
Addition 0.012 – 0.012
Ded/Adj – – –
Production 0.894 – 0.894
Closing 1.019 – 1.019
BLOCK–24, Syria Opening 0.000 – –
Addition 0.060 – 0.060
Ded/Adj – – –
Production 0.010 – 0.010
Closing 0.050 – 0.050
Total Reserves, ONGC
Videsh Ltd.
Opening 36.281 18.716 54.997
Addition 2.595 (0.273) 2.322
Ded/Adj – – –
Production 6.221 2.532 8.753
Closing 32.655 15.911 48.566
* Crude Oil includes Condensate.
** For calculating “Oil Equivalent” 1,000 M
3
of Gas has been taken to be equal to 1 Tonne of Crude Oil.
(c ) The year end reserves of the company has been estimated by the Reserves Estimation Committee
(REC) of the parent company ONGC, which follows international reservoir engineering procedures
consistently.
184 185
48. Segment Information
Particulars Asia FSU Countries Latin
2011–12 2010–11 2011–12 2010–11 2011–12
Revenue
External sales 28,928.64 31,694.07 80,591.95 59,257.96 59,506.41
Inter Segment sales – – – – –
Total Revenue 28,928.64 31,694.07 80,591.95 59,257.96 59,506.41
Results 7,058.76 8,970.38 7,278.30 22,579.17 16,056.41
Segment results 7,058.76 8,970.38 7,278.30 22,579.17 16,056.41
Unallocated corporate Expenses (Net) – – – – –
Operating pro?t or (Loss) 7,058.76 8,970.38 7,278.30 22,579.17 16,056.41
Interest expenses – – 858.18 786.15 1,308.18
Interest and other income 15.28 140.56 176.37 207.04 24.73
Income Tax – 1,902.54 93.42 193.64 3,257.72
Pro?t / (loss) fromordinary activities 7,074.04 7,087.16 6,503.07 21,744.65 11,515.24
Extra–ordinary losses – – – – –
Net pro?t / (Loss) 7,074.04 7,087.16 6,503.07 21,744.65 11,515.24
Other information
Segment Assets 48,886.65 31,338.88 250,372.50 157,088.25 74,558.94
Unallocated Corporate Assets – – – – –
Total Assets 48,886.65 31,338.88 250,372.50 157,088.25 74,558.94
Segment Liabilities 19,355.89 19,761.01 101,065.82 102,218.69 55,919.73
Unallocated Corporate Liabilities – – – – –
Total 19,355.89 19,761.01 101,065.82 102,218.69 55,919.73
Capital Expenditure 19,341.14 3,371.58 36,649.69 34,427.68 11,656.41
Recouped cost 2,516.27 1,603.48 15,772.85 14,256.15 14,159.60
Non cash Exp.
Information about Secondary Business Segments (Product–wise):
(` in Million)
Revenue from 2011–12 2010–11
Crude Oil* and Natural Gas (Net of VAT) 222,232.71 183,677.59
Transportation Income 1,240.41 433.90
Lease Finance Income 346.95 252.94
*Crude Oil includes Condensate.
(` in Million)
America Africa Unallocated Grand Total
2010–11 2011–12 2010–11 2011–12 2010–11 2011–12 2010–11
41,972.27 54,446.12 51,187.19 – – 223,473.12 184,111.49
– – – – – – –
41,972.27 54,446.12 51,187.19 – – 223,473.12 184,111.49
15,660.24 19,220.09 6,809.67 – – 49,613.55 54,019.46
15,660.24 19,220.09 6,809.67 – – 49,613.55 54,019.46
– – – 1,294.00 (4,255.04) 1,294.00 (4,255.04)
15,660.24 19,220.09 6,809.67 1,294.00 (4,255.04) 50,907.55 49,764.42
496.10 – 2.75 803.44 2,246.05 2,969.80 3,531.05
172.88 429.38 392.22 2,255.37 1,807.77 2,901.13 2,720.47
8,097.11 – 5,715.12 20,276.19 6,139.98 23,627.33 22,048.39
8,934.22 19,649.47 1,484.03 (17,530.26) (12,344.61) 27,211.55 26,905.45
– – – – – – –
8,934.22 19,649.47 1,484.03 (17,530.26) (12,344.61) 27,211.55 26,905.45
67,616.96 89,106.75 47,064.18 – – 462,924.83 303,108.27
– – – 43,081.82 134,026.91 43,081.82 134,026.91
67,616.96 89,106.75 47,064.18 43,081.82 134,026.91 506,006.65 437,135.18
14,709.65 10,710.02 20,512.11 – – 187,051.45 157,201.46
– – – 118,541.53 133,722.00 118,541.53 133,722.00
14,709.65 10,710.02 20,512.11 118,541.53 133,722.00 305,592.98 290,923.46
97.37 6,180.83 (3,591.05) 12,978.75 348.17 86,806.82 34,653.75
15,690.75 7,890.68 10,216.93 1,530.38 915.19 41,869.78 42,682.50
Notes:
(i) Segments have been identi?ed and reported taking into account, the organization and management structure for internal
reporting and signi?cantly di?erent risk and return perception in di?erent geographical regions. These are organized into ?ve
segments viz. Asia, FSU Countries, Latin America, Africa and Unallocated.
(ii) The segment revenue in the business segment (Product–wise) is revenue from sale of Crude Oil and Natural Gas, Crude Oil
Transportation Income and Lease Finance Income.
(iii) Segment Revenue, Results, Assets and Liabilities include the respective amounts identi?able to each of the segments and amount
allocated on a reasonable basis. “Unallocated” includes common expenditure incurred for all the segments and expenses incurred
at corporate level.
(iv) Revenue ?gures are shown as net of VAT.
186 187
49. Capital Commitments
The Company either on its own or in consortium with other partners carries on its business in respect
of exploration, development and production of hydrocarbons under agreements with the host
governments. Several of these agreements provide for certain minimum work obligations/ certain
minimum ?nancial commitments over a period of time. The Company’s share of such obligations/
commitments in respect of agreements where such obligations / commitments have not been
completed as of the reporting date amounted to USD 121.02 Million equivalent to `6,186.61 Million
(Previous year USD 131.52 Million equivalent to `5,881.62 Million). The Company is con?dent of meeting
the obligations/ commitments.
Other Capital Commitments based upon the details provided by the operators: `29,252.78 Million
(Previous year `31,168.63 Million).
Contracts remaining to be executed on capital account amounting to `1,570 Million ( Previous year
`1,960.30 Million ) towards ONGC Videsh Ltd. share for building at Vasant Kunj, Delhi wherein the
contracts have been awarded by parent company to various agencies and ONGC Videsh Ltd. is to share
the costs.
Capital Commitments in respect of Subsidiaries is `11,537.44 Million eqvt of USD 225.69 Million) (Previous
year `5,804.86 Million eqvt of USD 129.80 Million).
50. Contingent Liability
Liability for payment to contractual workers for regularization of their services is pending with Labor
Court under civil suit. The amount of liability is not ascertainable.
Claims against the company not acknowledged as debt: USD 10.49 Million. (Refer note 43 above).
Disputed income–tax demands (excluding cases decided in favour of Company and addition made by
the AO on protective basis): `7,145.56 Million (As on 31
st
March 2011: `4,967.43 million). Against disputed
tax demands,`9,438.08 Million (As on 31
st
March 2011: `5,714.31 million) has been paid by the Company
or adjusted by the authorities against refunds due to the Company from time–to–time. Attention is
invited to note 42 above.
The Service Tax Department has issued a demand cum show–cause notice dated 11th October 2011
requiring the Company to show cause why service tax amounting to `28,163.14 Million (including
Education Cess and SHE cess), the interest on such amount and penalty should not be demanded and
recovered from the Company. Service Tax Department has calculated these tax amounts based on
foreign currency expenditure reported in the Company’s ?nancial statements covering the reporting
periods from 1
st
April 2006 to 31
st
December 2010 and contending that these expenses represent business
auxiliary services rendered by ONGC Videsh Ltd.’s foreign branches and operator of the Joint Venture/
Consortium to the Company. The Company is of the view that the said service tax is not payable and
proposes to contest the same. No provision has been made on this account.
In respect of bank guarantees/standby letters of credit obtained from banks for performance
guarantee/bid bonds: `4,861.23 Million (Previous Year `4,234.98 Million).
The Company has issued Performance Guarantee in respect of concessionary contract for Block BC–10,
Brazil and Blocks BM–S–73 and BM–ES–42 on behalf of ONGC Campos Ltda (OCL). The Company is
con?dent that OCL will be able to honor its obligations.
The Company has given a Performance Guarantee on behalf of Petro Carabobo Ganga B.V. to Government
of Venezuela in respect of Carabobo 1 Project. The total investment commitment is estimated at
USD 1,333 Million (`68,142.96 Million).
ONGBV has given counter guarantee to the State Bank of India for the issue of performance bonds in
favour of Nigerian National Petroleum Corporation, on behalf of ONGC Mittal Energy Limited, with a
maximum of 51% of the guaranteed amounts. The outstanding guarantee obligation of the company
was `3,910.68 Million (USD 76.50 million) (previous year `3,421.08 (USD 76.50 million)) as at March 31,
2012.
ONGBV has given performance guarantee to ANP, the regulatory authority in Brazil, favoring ONGC
Campos Ltda (OCL) for BC–10 Project where OCL has a 15% participating interest and Shell Brazil is the
operator.
Other contingent liability in respect of subsidiares is `4,295.12 Million eqvt to USD 84.03 Million (Previous
year `3,394.70 Million eqvt to USD 75.91 Million).
All known contingent liabilities have been indicated. The contingent liabilities, if any, in respect of joint
ventures, where the Company is the non–operator are not ascertainable except Sakhalin–1 where the
Operator has intimated that the status of contingent liability is nil.
51. Derivative instruments and unhedged foreign currency exposure:
During the year, ONGC Videsh Ltd. has entered into cross currency swap transactions with various
banks whereby it has swapped the principal and interest amounts payable towards Bonds issued in
domestic markets into USD liability as follows:
Underlying
Notional Principal
Amount ( `/Mn)
Notional Principal
Amount ( USD/Mn)
Termination Date
8.40 % 5 Years Unsecured Non Convertible Redeemable
Bonds in the nature of Debentures– Series I
15000 299.23 23
rd
Dec 2014
8.54% 10 Years UnsecuredNonConvertible Redeemable
Bonds in the nature of Debentures– Series II
3700 56.30 6
th
Jan 2020
Total 18700 355.53
The business of the Company is carried out entirely outside India. The revenues of the Company are
received entirely in foreign currency and substantially all the expenses are incurred in foreign currency.
Accordingly, the Company has swapped the Bonds issued in Indian Rupees into USD so as to align the
currency of its liabilities and assets, thereby hedging the resulting exposure.
The above swap positions were outstanding at 31 March 2012 and have been revalued on that date based
on Mark–to–Market positions reported by counter–party banks. Mark–to–market loss amounting to
`498.56 Million (previous year Nil) has been charged to foreign exchange gain/loss in statement of
pro?t and loss.
Further, during the year, the Company had entered into foreign exchange forward transactions for
hedging its underlying exposures which have settled during the year itself. The net gain on settlement
of such transactions amounting to `222.45 Million (previous year Nil) has been charged to foreign
exchange gain/loss in pro?t and loss account.
52. The ?gures in respect of Subsidiaries / Joint Venture Company have been regrouped / re–arranged
based upon the details obtained from the managements of the Subsidiaries / Joint Venture Company,
wherever their audited accounts did not provide the break up details required for the consolidated
?nancial statements.
53. Information as per Accounting Standard (AS) 18 viz. Related Party Disclosures is given below (excluding
with State Controlled Entities):
(` in Million)
Joint ventures
Key Managerial
personnel
Total 2011–12 Total 2010–11
Income fromrendering services 167.29 – 167.29 182.05
Interest Income 34.43 – 34.43 303.04
Remuneration – 22.68 22.68 44.00
Capital Contribution – – – –
188 189
Note: Name of related parties and description of relationship (excluding State Controlled Entities):
Joint Ventures Block 06.1 Project, Vietnam
Sakhalin–1 Project, Russia
Block 1a, 1b, 2a, 2b & 4 Project, Sudan
Block 5A Project, Sudan
MECL, Colombia
AFPC, Syria
Block BC–10, Brazil
Block BM–SEAL–4, Brazil
Block BM–BAR–1, Brazil
Block BM–S–73, Brazil
Block BM–S–74, Brazil
Block A–1 Project, Myanmar
Block A–3 Project, Myanmar
Farsi Block Project, Iran
Block XXIV Project, Syria
Block 2, JDZ, Nigeria / STP
Block 25–29, 35 (Part) & 36 Project, Cuba
Khartoum– Port Sudan Pipeline Project, Sudan
ONGC Mittal Energy Limited, Cyprus
Block RC–8, Colombia
Block RC–9, Colombia
Block RC–10, Colombia
Block SSJN–7, Colombia
Block CPO–5, Colombia
San Cristobal Project, Venezuela
Carabobo Project, Venezuela
ONGC Nile Ganga B.V. , The Netherlands
OOO Imperial Frac Service, Russian Federation
Satpayev Project, Kazakhstan
Key Management personnel (excludes Joint
Venture Company)
Mr D K Sarraf, Managing Director (with e?ect fromSeptember 16, 2011)
Mr J Thomas, Managing Director (till September 15, 2011 )
and Director (Exploration) (till December 31, 2011)
Mr S P Garg, Director (Finance)
Mr S. Roychoudhary, Director (Operations)
Mr N K Verma, Director (Exploration) (with e?ect from1
st
January, 2012)
Mr. A R Baron Mackay Holding B.V., Director, ONGC Nile Ganga B.V.
Mr Costas Christoforou, Director, Jarpeno Limited
Ms Arlene Nahikian, Director, Jarpeno Limited
Ms. K. Antoniadou, Director, Jarpeno Limited
Ms. E. Chrysanthou, Director, Jarpeno Limited
Mr A. Loizou, Director, Jarpeno Limited
Mr. Roland Göransson, Director, Carabobo One AB
Mr. Richard Chindt, Director, Carabobo One AB
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
190 191
60h80LIßATEß 6A8h FL0W 8TATEMEhT F0P ThE ¥EAP EhßEß
31
8T
MAP6h, 2012
(` in Million)
Year Ended
31st March , 2012
Year Ended
31st March, 2011
A CASH FLOWFROM OPERATING ACTIVITIES:
Net pro?t before tax and prior period items 51,092.33 49,066.54
Adjustments For:
– Foreign Exchange Translation Reserve 26,573.80 2,181.46
– Provision for Impairment 19,533.69 –
– Provisions for Doubtful Debts/Claims 2,269.42 215.97
– Provision for Non Moving Inventory 740.62 696.60
– Other Provisions and Write O?s 5,385.38 2,535.68
– Unrealized Foreign Exchange Loss/(Gain) 1,473.54 (815.09)
– Hedging (Gain)/Loss 48.52 41.85
– Provision for Mark to Market loss on Derivative Contracts 498.56 –
– Depreciation on Tangible Assets (Net) 3,137.40 3,444.73
– Amortisation – Intangibles (12.75) 17.22
– Amortisation of Goodwill 5,145.55 5,050.42
– Depletion on Producing Properties 21,607.06 23,663.82
– Interest Expenses 2,960.65 3,531.05
– Foreign Exchange Fluctuation related to borrowing cost 9.15 –
– Interest Income (911.39) (1,002.81)
– Pro?t on Redemption/ Sale of Investment – (0.57)
– Gain on Foreign Exchange Forward Contract (222.45) 88,236.74 – 39,560.33
Operating Pro?t before Working Capital Changes 139,329.07 88,626.87
Adjustments for:–
– Decrease/(Increase) in Inventories (1,774.48) 1,501.81
– Decrease/(Increase) in Trade Receivables 10,428.96 (10,676.77)
– Decrease/(Increase) in Short TermLoans and Advances (3,741.85) 94.20
– Decrease/(Increase) in Long TermLoans and Advances (636.32) –
– Decrease/(Increase) in Other Current Assets (6,236.97) (37.77)
– Decrease/(Increase) in Other Non Current Assets (16,961.83) –
– Decrease/(Increase) in Deferred Tax Assets (Net) (4,018.47) 1,094.34
– Decrease/(Increase) in Goodwill (12,726.40) 5,456.89
– Increase/(Decrease) in Short TermBorrowings 291.64 (10,900.00)
– Increase/(Decrease) in Trade Payables 6,054.22 7,261.24
– Increase/(Decrease) in Other current Liabilities 12,027.81 –
– Increase/(Decrease) in Other Long TermLiabilities (148.97)
– Increase/(Decrease) in Short TermProvisions 173.39 103.22
– Increase/(Decrease) in Long TermProvisions 37.88 –
– Increase/(Decrease) in Liability for Abandonment 4,747.64 12,277.47
– Increase/(Decrease) in Deferred Tax Liabilities (Net) 649.04 374.00
Cash generated from/(used in) Operations (11,834.71) 127,494.36 6,548.63 88,626.87
Direct Taxes Paid (net of refunds) (23,627.32) (22,048.39)
Net Cash Flow before Prior period items 103,867.04 66,578.48
Year Ended
31st March , 2012
Year Ended
31st March, 2011
Prior period items 73.48 351.03
Net Cash Flow from/(used in) Operating Activities (A) 103,940.52 66,929.51
B CASH FLOWFROM INVESTING ACTIVITIES:
– Purchase of Tangible Assets (Net) (4,419.22) (6,386.46)
– Purchase of Intangible Assets (Net) (76.74) (11.08)
– Expenditure on Projects (71,136.90) (48,750.98)
– Investment with Bank for Site Restoration (2,819.74) (0.05)
– Interest Income 911.39 1,002.81
– Pro?t on Redemption/ Sale of Investment – 0.57
– Hedging Gain/(Loss) (48.52) (41.85)
– Gain on Foreign Exchange Forward Contract 222.45 –
Net Cash Flow from/(used in) Investing Activities (B) (77,367.28) (54,187.04)
C CASH FLOWFROM FINANCING ACTIVITIES:
– Proceeds fromNon Convertible Redeemable Bonds – –
– Proceeds fromIssue of Share Capital – –
– Change in Minority Interest 320.54 901.81
– Net Long TermBorrowings fromONGC (4,530.72) 10,063.58
– Change in Finance Lease Obligations (Unsecured) (216.90)
– Change in Foreign Currency Loans (4,646.31) (239.38)
– Interest Expenses (2,960.65) (2,960.65)
– Foreign Exchange Fluctuation related to borrowing cost (9.15) –
Net Cash Flow from/(used in) Financing Activities (C) (12,043.19) 7,765.36
Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) 14,530.06 20,507.83
Cash and Cash Equivalents as at 31 March, 2011 36,998.27 16,490.44
(Opening Balance)
Cash and Cash Equivalents as at 31 March, 2012 51,528.33 36,998.27
(Closing Balance)
Notes:
1 The above Cash FlowStatement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard–3 on Cash
FlowStatements issued by The Institute of Chartered Accountants of India.
2. Bracket indicates cash out?ow.
3. Previous year ?gures have been regrouped wherever necessary to con?rmthe current year’s classi?cation.
4 Adjustment have not been made to purchase of ?xed assets etc. (investing activities), on account of increase / decrease in Capital
Creditors. The impact of the above is not readily ascertainable.
Sd/– Sd/– Sd/– Sd/–
(V Sreedher) (S P Garg) (D K Sarraf) (Sudhir Vasudeva)
Company Secretary Director (Finance) Managing Director Chairman
As per our report of even date attached
For S. Mann & Co. For GSA & Associates
Chartered Accountants Chartered Accountants
Sd/– Sd/–
(Subhash Mann) (Sunil Aggarwal)
Partner Partner
Place : New Delhi M. No. 80500 M. No. 83899
Date : May 21, 2012 Firm Regn No. 000075N Firm Regn No. 000257N
192
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doc_777849009.pdf