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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 500312ISIN: INE213A01029INDUSTRY: Oil Drilling And Exploration

BSE   ` 147.00   Open: 145.50   Today's Range 144.35
148.30
+2.95 (+ 2.01 %) Prev Close: 144.05 52 Week Range 127.90
194.15
Year End :2018-03 

12.1 Loans to employees include an amount of Rs,0.70 million (As at March 31, 2017 '0.72 million) outstanding from Key Managerial Personnel.

The above amount has been deposited with banks under section 33ABA of the Income Tax Act, 1961 and can be withdrawn only for the purposes specified in the Scheme i.e. towards removal of equipment's and installations in a manner agreed with Central Government pursuant to an abandonment plan to prevent hazards to life, property, environment etc. This amount is considered as restricted cash and hence not considered as ‘Cash and cash equivalents'.

14.1    During the financial year 2010-11, the Oil Marketing Companies, nominees ofthe GoI recovered USD 32.07 million (equivalent to '2,081.98 million) ONGC's share as per directives of GoI in respect of Joint Operation - Panna Mukta and Tapti. The recovery is towards certain observations raised by auditors appointed by the Director General of Hydrocarbons (DGH) under Production Sharing Contract (PSC) for the period 2002-03 to 2005-06 in respect of cost and profit petroleum share payable to GoI. BGEPIL along with RIL ("Claimants”) have served a notice of arbitration on the GoI in respect of dispute, differences and claims arisen in connection with the terms of Panna, Mukta and Tapti PSCs. Since the Company is not a party to the arbitration proceedings, it had requested MoP&NG that in case of an arbitral award the same be made applicable to ONGC also, as a constituent of contractor for both the PSCs. Subsequently, vide letter dated July 4, 2011 MoP&NG has advised ONGC not to participate in the arbitration initiated by RIL and BGEPIL under Panna Mukta and Tapti PSCs. MoP&NG has also stated that in case of an arbitral award, the same will be applicable to ONGC also as a constituent of the contractor for both the PSCs. A Final Partial Award (FPA) was pronounced by the Tribunal in the arbitration matter between RIL, BGEPIL and Union of India.

RIL and BGEPIL the JO partners have challenged the FPA before the English Commercial Court. Pending final quantification of liabilities by the Arbitration Tribunal and decision of English Commercial Court, the same has been shown as Receivable from GoI under ‘Advance Recoverable in Cash. (Figures in ' are restated).

14.2    In Ravva Joint Operation, the demand towards additional profit petroleum raised by Government of India (GoI), due to differences in interpretation of the provisions of the Production Sharing Contract (PSC) in respect of computation of Post Tax Rate of Return (PTRR), based on the decision of the Malaysian High Court setting aside an earlier arbitral tribunal award in favor of operator, was disputed by the operator M/s Vedanta Ltd (erstwhile M/s Cairn India Ltd). The Company is not a party to the dispute but has agreed to abide by the decision applicable to the operator. The Company is carrying an amount of Rs,10,896.48 million (equivalent to USD 167.84 million) after adjustments for interest and exchange rate fluctuations which has been recovered by GoI, this includes interest amounting to USD 54.88 million (Rs,3,562.81 million). The Company has made impairment provision towards this recovery made by the GoI.

In subsequent legal proceedings, the Appellate Authority of the Honorable Malaysian High Court of Kuala Lumpur had set aside the decision of the Malaysian High Court and the earlier decision of arbitral tribunal in favour of operator was restored, against which the GoI has preferred an appeal before the Federal Court of Malaysia. The Federal Court of Malaysia, vide its order dated October 11, 2011, has dismissed the said appeal of the GoI.

The Company has taken up the matter regarding refund of the recoveries made in view of the favorable judgment of the Federal Court of Malaysia with MoP&NG. However, according to a communication dated January 13, 2012, MoP&NG expressed the view that ONGC's proposal would be examined when the issue of ONGC carry under Ravva PSC is decided in its entirety by the Government along with other partners.

19.1    The deposits maintained by the Company with banks comprise time deposit, which can be withdrawn by the Company at any point without prior notice or penalty on the principal.

19.2    Amount deposited in unclaimed dividend account is earmarked for payment of dividend and cannot be used for any other purpose. No amount is due for deposit in Investor Education and Protection Fund.

19.3    Matter of Dispute on Delivery Point of Panna-Mukta gas between Government of India and PMT JO Partners arose due to differing interpretation of relevant PSC clauses. According to the JO Partners, Delivery Point for Panna-Mukta gas is at Offshore, however, MoP&NG and GAIL maintained that the delivery point is onshore at Hazira. The gas produced from Panna-Mukta fields was transported through Company's pipelines. Owing to the delivery point dispute neither the seller (PMT JO) nor the buyer of gas (GAIL) was paying any compensation to ONGC for usage of its pipeline for gas transportation.

Hon'ble Gujarat High Court decided that the Panna Mukta oil fields from where the movement of goods is occasioned fall within the customs frontiers of India. Consequently, the sale of goods cannot be said to have taken place in the course of import of goods into the territory of India. The state Government of Gujarat has filed a petition with the Hon'ble Supreme Court of India against the decision of Hon'ble Gujarat High Court.

Since the said matter of determination of delivery point is pending with the Hon'ble Supreme Court of India, the amount is maintained in the escrow accounts by the JO Partners.

20.2    Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of '5 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive 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.

20.3    The Company had allotted 4,277,745,060 number of fully paid Bonus shares on December 18, 2016 in the ratio of one equity share of Rs,5 each fully paid up for every two existing equity shares of Rs,5 each fully paid up.

20.5 18,972 equity shares of Rs,10 each (equivalent to 37,944 equity shares of Rs,5 each) were forfeited in the year 2006-07 against which amount originally paid up was Rs,0.15 million.

21.1    Represent assessed value of assets received as gift.

21.2    The Company has elected to recognize changes in the fair value of certain investments in equity securities in other comprehensive income. This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are disposed.

21.3    The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes, as the same is created by transfer from one component of equity to another.

21.4 The amount that can be distributed by the Company as dividends to its equity shareholders is determined considering the requirements of the Companies Act, 2013 and the dividend distribution policy of the Company.

On September 29, 2017, a final dividend of Rs,0.80 per share (16%) for 2016-17 was paid to holders of fully paid equity shares.

On October 28, 2017 and on March 1, 2018 the Company had declared interim dividend of Rs,3.00 per share (60%) and Rs,2.25 per share (45%) respectively which has since been paid.

In respect of the year ended March 31, 2018, the Board of Directors has proposed a final dividend of Rs,1.35 per share (27 %) be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs,17,324.87 million and the dividend distribution tax thereon amounts to Rs,3,561.18 million.

23.1    This represents the fair value of fee towards financial guarantee issued on behalf of subsidiaries, recognized as financial guarantee obligation with corresponding debit to investment in subsidiaries.

23.2    No amount is due for deposit in Investor Education and Protection Fund.

24.2 The Company estimates provision for decommissioning as per the principles of Ind AS 37 ‘Provisions, Contingent Liabilities and Contingent Assets' for the future decommissioning of Oil and Gas assets at the end of their economic lives. Most of these decommissioning activities would be in the future for which the exact requirements that may have to be met when the removal events occur are uncertain. Technologies and costs for decommissioning are constantly changing. The timing and amounts of future cash flows are subject to significant uncertainty. The economic life of the Oil and Gas assets is estimated on the basis of long term production profile of the relevant Oil and Gas asset. The timing and amount of future expenditures are reviewed annually, together with rate of inflation for escalation of current cost estimates and the interest rate used in discounting the cash flows.

26.1    Includes Rs,7,615.73 million in respect of Tapti A series assets, facilities and inventory which were a part of the assets of PMT Joint Operation and surrendered by the JO to the Government of India as per the terms and conditions of the JO Agreement. These assets, facilities and inventory have been transferred by Government of India to the Company free of cost as its nominee. The Company has assessed the fair value of the said assets & facilities at Rs,7,156.89 million based on the valuation report by a third party agency, which has been accounted as Capital work in progress with a corresponding liability as Deferred Government Grant. Inventory valuing Rs,458.84 million has been accounted with a corresponding liability as Deferred Government Grant.

26.2    Includes Rs,8.31 million (previous year Rs,8.57 million) is on account of reimbursement of capital expenditure of research & development.

27.1 The Foreign currency and Rupee term loans have been taken from banks to part finance the strategic acquisition of 51.11% shareholding in HPCL from Government of India.

27.3.1 Loan of Rs,30,000.00 million drawn on January, 31, 2018 benchmarked to 1- month MIBOR was refinanced on 31st March, 2018 by loan benchmarked to overnight MCLR.

27.4 Working Capital Loan:

Line of Credit was obtained from consortium of banks to meet the working capital requirement. The interest is benchmarked to overnight MCLR.

28.2 Payment towards trade payables is made as per the terms and conditions of the contract / purchase orders. The average credit period on purchases is 21 days.

30.1    No subsidy discount was extended by the company to the Oil Marketing Companies during the year.

30.2    Revenue from nominated crude (except North East crude) is accounted for in terms of Crude Oil Sales Agreements (COSAs) signed and made effective from April 1, 2010. For Crude Oil produced in Assam, sales revenue is based on the pricing formula provided by Ministry of Petroleum and Natural Gas, Government of India.

30.3    Sales revenue of Natural Gas is based on domestic gas price of US$ 2.48 /mmbtu and US$ 2.89 /mmbtu (on GCV basis) notified by GoI for the period April 1, 2017 to September 30, 2017 and October 1, 2017 to March 31, 2018 respectively in terms of "New Domestic Natural Gas Pricing Guidelines, 2014”. For gas consumers in North-East, consumer price is 60% of the domestic gas price and the difference between domestic gas price and consumer price is paid to the Company through GoI Budget and classified as ‘North-East Gas Subsidy'.

*Under the lease agreement, the Company is required to pay annual lease rental of Rs,35.03 million till perpetuity. The finance lease obligation represents the perpetuity value of annualized lease payment, which is Rs,417.96 million and will remain same till perpetuity. The finance charge will be Rs,35.03 million on annual basis till perpetuity.

41.2 Operating lease arrangements

41.2.1 Leasing arrangements

The Company has applied Appendix C to Ind AS 17 ‘Leases' to hiring / service contracts of rigs, vessels, helicopters, etc. to evaluate whether these contracts contains a lease or not. Based on evaluation of the terms and conditions of the arrangements, the Company has evaluated such arrangements to be operating leases.

Operating leases relate to leases of rigs, vessels, helicopters etc. with lease terms up to 10 years. The Company does not have an option to purchase the leased rigs, vessels, helicopters etc. at the expiry of the lease periods.

42. Employee benefit plans

42.1    Defined Contribution plans:

42.1.1    Provident Fund

The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The obligation of the Company is to make such fixed contribution and to ensure a minimum rate of return to the members as specified by GoI. As per report of the actuary, overall interest earnings and cumulative surplus is more than the statutory interest payment requirement. Hence, no further provision is considered necessary. The details of fair value of plan assets and obligations are as under:

Provident Fund is governed through a separate trust. The board of trustees of the Trust functions in accordance with any applicable guidelines or directions that may be issued in this behalf from time to time by the Central Government or the Central Provident Fund Commissioner, the board of trustees have the following responsibilities:

(i)    Investments of the surplus as per the pattern notified by the Government in this regard so as to meet the requirements of the fund from time to time.

(ii)    Raising of moneys as may be required for the purposes of the fund by sale, hypothecation or pledge of the investment wholly or partially.

(iii)    Fixation of rate of interest to be credited to members' accounts.

42.1.2 Post Retirement Benefit Scheme

The defined contribution pension scheme of the Company for its employees is administered through a separate trust. The obligation of the Company is to contribute to the trust to the extent of amount not exceeding 30% of basic pay and dearness allowance as reduced by the employer's contribution towards provident fund, gratuity, post-retirement medical Benefit (PRMB) or any other retirement benefits.

The board of trustees of the Trust functions in accordance with any applicable guidelines or directions that may be issued in this behalf from time to time by the Central Government, the board of trustees have the following responsibilities:

(i)    Investments of the surplus as per the pattern notified by the Government in this regard so as to meet the requirements of the fund from time to time.

(ii)    Fixation of rate of contribution and interest thereon.

(iii)    Purchase of annuities for the members.

42.2    Employee Pension Scheme 1995

The Employee Pension Scheme -1995 is administered by Employees Provident Fund Organization of India, wherein the Company has to contribute 8.33% of salary (subject to maximum of '15,000 per month) out of the employer's contribution to Provident Fund.

42.3    Composite Social Security Scheme (CSSS)

The Composite Social Security Scheme is formulated by the Company for the welfare of its regular employees and it is administered through a separate Trust, named as Composite Social Security Scheme Trust. The obligation of the Company is to provide matching contribution to the Trust to the extent of contribution of the regular employees of the company. The Trust provides an assured lump sum support amount in the event of death or permanent total disablement of an employee while in service. In case of Separation other than Death/Permanent total disability, employees own contribution along with interest is refunded.

The Board of trustees of the Trust functions in accordance with Trust deed, Rule, Scheme and applicable guidelines or directions that may be issued by Management from time to time.

The Board of trustees has the following responsibilities:

(i) Investments of the surplus as per the pattern notified by the Government in this regard so as to meet the requirements of the fund from time to time.

(ii)    Fixation of rate of interest to be credited to members' accounts.

(iii)    To provide cash benefits to the nominees in the event of death of an employee or Permanent Total Disablement leading to the cessation from service and refund of own contribution along with interest in case of separation other than death.

42.5 Defined benefit plans

42.5.1    Brief Description: A general description of the type of Employee Benefits Plans is as follows:

42.5.2    All the employee benefit plans of the Company are run as Group administration plans (Single Employer Scheme) including employees seconded to ONGC Videsh Limited (OVL), 100% subsidiary.

42.5.3    Gratuity

15 days salary for each completed year of service. Vesting period is 5 years and the payment is restricted to Rs,2 million on superannuation, resignation, termination, disablement or on death.

Scheme is funded through own Gratuity Trust. The liability for gratuity as above is recognized on the basis of actuarial valuation.

42.5.4    Post-Retirement Medical Benefits

The Company has Post-Retirement Medical benefit (PRMB), under which the retired employees and their spouses are provided medical facilities in the Company hospitals/empanelled hospitals. They can also avail treatment as out-patient. The liability for the same is recognized annually on the basis of actuarial valuation. Full medical benefits on superannuation and on voluntary retirement are available subject to the completion of minimum 20 years of service and 50 years of age.

An employee should have put in a minimum of15 years of service rendered in continuity in ONGC at the time of superannuation to be eligible for availing post-retirement medical facilities.

42.5.5    Terminal Benefits

At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Settlement Allowance.

42.5.6    These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

No other post - retirement benefits are provided to these employees.

In respect of the above plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2018 by a member firm of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

42.6 Other long term employee benefits

42.5.1    Brief Description: A general description of the type of Other long term employee benefits is as follows:

42.5.2    All the employee benefit plans of the Company are run as Group administration plans (Single Employer Scheme) including employees seconded to ONGC Videsh Limited (OVL), 100% subsidiary.

42.5.3    Earned Leave (EL) Benefit

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

Scheme is funded through Life Insurance Corporation of India (LIC).

42.5.4    Good Health Reward (Halfpay leave)

Accrual - 20 days per year Encashment while in service - Nil

Encashment on retirement - 50% of Half Pay Leave balance.

Scheme is funded through Life Insurance Corporation of India. (LIC).

The liability for the same is recognized annually on the basis of actuarial valuation.

42.12.2    Cost of Investment is taken as fair value of Investment in Unit Linked Plan of Insurance Company (ULIPs) and Bank TDR.

42.12.3    All Investments in PSU Bonds, G Sec and T Bill are quoted in active market.

42.12.4    Fair value of Investment in Group Gratuity Cash Accumulation Scheme (Traditional Fund) of Insurance Company is taken as book value on reporting date.

42.12.5    Net Current Assets represent Accrued Interest on Investments minus outstanding gratuity reimbursements as on reporting date.

42.12.6    The actual return on plan assets of gratuity during FY 2017-18 was Rs,1,807.69 million (during FY 2016-17 Rs,1,888.26 million) and for Leave Rs,1,986.70 million (during FY 2016-17 Rs,1,739.55 million)

42.13 Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Sensitivity due to mortality & withdrawals are not material & hence impact of change not calculated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

43. Segment Reporting

43.1    The Company has identified and reported segments taking into account the different risks and returns, the organization structure and the internal reporting systems. Accordingly, the Company has identified following geographical segments as reportable segments

A.    Offshore

B.    Onshore

43.2    Segment revenue and results

The following is an analysis of the Company's revenue and results from continuing operations by reportable segment.

43.2.1    Segment revenue reported above represents revenue generated from external customers. There were no intersegment sale in the current year (year ended March 31, 2017: Nil)

43.2.2    The accounting policies of the reportable segments are the same as the Company's accounting policies described in Note no. 3. Segment profit represents the profit before tax earned by each segment excluding finance cost and other income like interest/dividend income. This is the measure reported to the Chief Operating Decision maker for the purposes of resource allocation and assessment of segment performance.

43.3.1    All assets are allocated to reportable segments other than investments in subsidiaries, associates and joint ventures, other investments, loans and current and deferred tax assets.

43.3.2    All liabilities are allocated to reportable segment other than borrowing, current and deferred tax liabilities.

43.3.3    Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segments and amount allocated on reasonable basis. Unallocated expenditure includes common expenditure incurred for all the segments and expenses incurred at the corporate level. Finance cost includes unwinding of discount on decommissioning provisions not allocated to segment.

44. Related Party Disclosures

44.1    Name of related parties and description of relationship:

A. Subsidiaries

1.    ONGC Videsh Limited (OVL)

1.1.    ONGC Nile Ganga B.V. (ONGBV)

1.1.1.ONGC Campos Ltda.

1.1.2.ONGC Nile Ganga (Cyprus) Ltd.

1.1.3.ONGC Nile Ganga (San Cristobal) B.V 1.1.4.ONGC Caspian E&P B.V

1.2.    ONGC Narmada Limited (ONL)

1.3.    ONGC Amazon Alaknanda Limited (OAAL)

1.4.    Imperial Energy Limited 1.4.1.Imperial Energy Tomsk Limited 1.4.2.Imperial Energy (Cyprus) Limited 1.4.3.Imperial Energy Nord Limited

1.4.4.Biancus    Holdings Limited

1.4.5.Redcliffe    Holdings Limited 1.4.6.Imperial Frac Services (Cyprus) Limited 1.4.7.San Agio Investments Limited

1.4.8.LLC    Sibinterneft (Note 44.1.1)

1.4.9.LLC    Allianceneftegaz

1.4.10.LLC    Nord Imperial 1.4.11LLC Rus Imperial Group

1.4.12.LLC Imperial Frac Services (Note 44.1.2)

1.5.    Carabobo One AB

1.5.1. Petro Carabobo Ganga B.V.

1.6.    ONGC (BTC) Limited

1.7.    Beas Rovuma Energy Mozambique Ltd.

1.8.    ONGC Videsh Rovuma Ltd. (OVRL)

1.9.    ONGC Videsh Atlantic Inc. (OVAI)

1.10.    ONGC Videsh Singapore Pte. Ltd.

1.10.1    ONGC Videsh Vankorneft Pte. Ltd.

1.11 Indus East Mediterranean Exploration Ltd., Israel

2.    Mangalore Refinery and Petrochemicals Ltd.

(MRPL)

3.    ONGC Mangalore Petrochemicals Ltd. (OMPL)

4.    Hindustan Petroleum Corporation Ltd.(HPCL)

(w.e.f. January 31,2018, Note no 10.1.3)

4.1    Prize Petroleum Company Ltd.

4.2    HPCL Bio Fuels Ltd.

4.3    Prize Petroleum International pte Ltd.

4.4    HPCL Middle East FZCO

5.    Petronet MHB Ltd (PMHBL) (w.e.f. January

31.2018,    Note no 10.1.4)

B. Joint Ventures

1.    Petronet MHB Ltd (PMHBL) (up to January

30.2018,    Note no 10.1.4)

2.    Mangalore SEZ Ltd (MSEZ)

3.    ONGC Petro additions Ltd. (OPaL)

4.    ONGC Tripura Power Company Ltd. (OTPC)

5.    ONGC Teri Biotech Ltd. (OTBL)

6.    Dahej SEZ Limited (DSEZ)

7.    ONGC Mittal Energy Limited (OMEL) (through OVL)

8.    SUDD Petroleum Operating Company(through OVL)

9.    Mansarovar Energy Colombia Limited, Colombia (through OVL)

10.    Himalaya Energy Syria BV, Netherlands (through OVL)

11.    Shell MRPL Aviation Fuels & Services Limited (SMASL) (through MRPL)

12.    Mangalam Retail Services Ltd (through MRPL) upto January 16,2017

13.    HPCL Rajasthan refinery Ltd.

14.    CREDA HPCL Biofuels Ltd.

15.    HPCL Mittal Energy Ltd.

16.    Hindustan Coals Pvt. Ltd.

17.    South Asia LPF Co. Private Ltd.

18.    Bhagyanagar Gas Ltd.

19.    Godavari Gas Pvt Ltd

20.    Petronet India Ltd.

21.    HPCL Shapoorji Energy Pvt. Ltd.

22.    Mumbai Aviation Fuel Farm Facility Pvt Ltd.

23.    North East Transmission Company Ltd. (NETC) (through OTPC)

24.    Mangalore STP Limited (through MSEZ)

25.    MSEZ Power Ltd (through MSEZ)

26.    Adani Petronet Dahej Port Pvt Ltd (APPPL) (through PLL))

27.    Aavantika Gas Ltd. (through HPCL)

28.    Ratnagiri Refinery & Petrochemical Ltd. (through HPCL)

C.    Associates

1.    Pawan Hans Ltd. (PHL)

2.    Petronet LNG Limited (PLL)

3.    Mozambique LNG 1 Company Pte. Ltd. (through OVL)

4.    Petro Carabobo S.A., Venezuela (through OVL)

5.    Carabobo Ingenieria Y Construcciones, S.A, Venezuela (through OVL)

6.    Petrolera Indovenezolana SA, Venezuela (through OVL)

7.    South East Asia Gas Pipeline Ltd, Hongkong (through OVL)

8.    Tamba BV, Netherlands (through OVL)

9.    JSC Vankorneft, Russia (through OVL)

10.    Falcon Oil & Gas BV, Netherlands (through OVL)

11.    GSPL India Gasnet Ltd.(through HPCL)

12.    GSPL India Transco Ltd. (through HPCL)

D.    Trusts (including post retirement employee benefit trust) wherein ONGC having control

1.    ONG C Contributory Provident Fund Trust

2.    ONGC CSSS Trust

3.    ONGC Sahyog Trust

4.    ONGC PRBS Trust

5.    ONG C Gratuity Fund

6.    ONG C Energy Center

7.    ONGC Foundation

8.    Ujjawala plus foundation

E.    Key Management Personnel E.1. Whole time directors

1.    Shri Shashi Shanker, Chairman and Managing Director (w.e.f. October 01,2017)

2.    Shri D K Sarraf, Chairman and Managing Director (up to September 30, 2017)

3.    Shri D D Misra, Director (HR)

4.    Shri A K Dwivedi, Director (Exploration)

5.    Shri Rajesh Kakkar, Director (Offshore) (w.e.f. February 19, 2018)

6.    Shri Subhash Kumar, Director (Finance) (w.e.f. January 31, 2018)

7.    Shri Sanjay Kumar Moitra, Director (Onshore) (w.e.f. April 18, 2018)

8.    Shri V P Mahawar, Director (Onshore) (up to February 28, 2018)

9.    Shri Shashi Shanker, Director (T&FS) (up to September 30, 2017)

10.    Shri A K Srinivasan, Director (Finance) (up to October 31, 2017)

11.    Shri T K Sengupta Director (Offshore) (up to December 31, 2017)

E.2. Company Secretary

1.    Shri M E V Selvamm, Company Secretary (w.e.f. June 01, 2017)

2.    Shri V N Murthy, Company Secretary (up to May 31, 2017)

E.3. Independent Directors

1.    Shri Ajai Malhotra

2.    Shri K. M. Padmanabhan

3.    Prof. S. B. Kedare

4.    Shri Vivek Mallya

5.    Shri Sumit Bose

6.    Shri Deepak Sethi

7.    Dr. Santrupt Misra

8.    Smt. Ganga Murthy w.e.f September 23, 2017

9.    Shri Sambit Patra w.e.f. October 28, 2017

E.3. Government nominee - Directors

1.    Shri Amar Nath

2.    Shri Rajiv Bansal (w.e.f. August 10, 2017)

3.    Shri A P Shawhney (up to June 23, 2017)

4.    Shri U. P. Singh (up to June 28, 2016)

Notes

44.1.1 Subsidiary Company OVL has 47.52% effective ownership interest, but it has 55.90% of voting rights in LLC Sibinterneft.

The above transactions with the government related entities cover transactions that are significant individually and collectively. The Company has also entered into other transactions such as telephone expenses, air travel, fuel purchase and deposits etc. with above mentioned and other various government related entities. These transactions are insignificant individually and collectively and hence not disclosed.

45. Financial instruments Disclosure

45.1    Capital Management

The Company's objective when managing capital is to:

-    Safeguard its ability to continue as going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders; and

-    Maintain an optimal capital structure to reduce the cost of capital.

The Company maintains its financial framework to support the pursuit of value growth for shareholders, while ensuring a secure financial base. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The capital structure of the Company consists of total equity (Note no. 20 & 21). The Company is not subject to any externally imposed capital requirements.

The Company's financial management committee reviews the capital structure on a regular basis. As part of this review, the committee considers the cost of capital, risks associated with each class of capital requirements and maintenance of adequate liquidity.

45.1.1    Gearing Ratio

The Company has outstanding short term debt of Rs,255,922.08 million as at the end of reporting period (previous year nil). Accordingly, the gearing ratio is worked out as followed:

45.3    Financial risk management objectives

While ensuring liquidity is sufficient to meet Company's operational requirements, the Company's financial management committee also monitors and manages key financial risks relating to the operations of the Company by analyzing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and price risk), credit risk and liquidity risk.

45.4    Market Risk

Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. The major components of market risk are commodity price risk, foreign currency risk and interest rate risk.

The primary commodity price risks that the Company is exposed to include international crude oil prices that could adversely affect the value of the Company's financial assets or expected future cash flows. Substantial or extended decline in international prices of crude oil and natural gas may have an adverse effect on the Company's reported results.

45.5    Foreign currency risk management

Sale price of crude oil is denominated in United States dollar(USD) though billed and received in Indian Rupees (INR). The Company is, therefore, exposed to foreign currency risk principally out of INR appreciating against USD. Foreign currency risks on account of receipts / revenue and payments / expenses are managed by netting off naturally-occurring opposite exposures through export earnings, wherever possible and carry unheeded exposures for the residual considering the natural hedge available to it from domestic sales.

45.5.1 Foreign currency sensitivity analysis

The Company is principally exposed to foreign currency risk against USD. Sensitivity of profit or loss arises mainly from USD denominated receivables and payables.

In management's opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

45.5.2 Forward foreign exchange contracts

The Company has not entered into any forward foreign exchange contracts during the reporting period.

45.6 Interest rate risk management

The Company is exposed to interest rate risk because the Company has borrowed funds benchmarked to overnight MCLR, Treasury Bills and USD LIBOR. The Company's exposure to interest rates on financial assets and financial liabilities are detailed in note no. 27.2.

45.7 Price risks

The Company's equity securities price risk arises from investments held and classified in the balance sheet either at fair value through OCI or at fair value through profit or loss. The Company's equity investments in IOC and GAIL are publicly traded.

Investment of short-term surplus funds of the Company in liquid schemes of mutual funds provides high level of liquidity from a portfolio of money market securities and high quality debt and categorized as ‘low risk' product from liquidity and interest rate risk perspectives.

45.7.1 Price sensitivity analysis

The sensitivity of profit or loss in respect of investments in equity shares and mutual funds at the end of the reporting period for +/-5% change in price and net asset value is presented below:

-    Other comprehensive income for the year ended March 31, 2018 would increase/ decrease by Rs,13,596.66 million (for the year ended March 31, 2017 would increase/ decrease by Rs,14,478.68 million) as a result of 5% changes in fair value of equity investments measured at FVTOCI; and

-    As there was no investment in mutual funds as on 31st March, 2018, changes in net asset value of investment are not applicable for the year ended March 31, 2018 (For the year ended March 31, 2017 would increase/decrease by Rs,1,817.16 million as a result of 5% changes in net asset value of investment in mutual funds).

The Sensitivity of Revenue from operation to change in +/- 1 USD in prices of crude oil, natural gas & value added products (VAP)

45.8    Interest rate risk management

The Company invests the surplus fund generated from operations in term deposits with banks and mutual funds. Bank deposits are made for a period of upto 12 months carry interest rate as per prevailing market interest rate. Considering these bank deposits are short term in nature, there is no significant interest rate risk. Average interest earned on term deposit and a mutual fund for the year ended March 31, 2018 was 6.16%.

45.9    Credit risk management

Credit risk arises from cash and cash equivalents, investments carried at amortized cost and deposits with banks as well as customers including receivables. Credit risk management considers available reasonable and supportive forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate).

Major customers, being public sector oil marketing companies (OMCs) and gas companies having highest credit ratings, carry negligible credit risk. Concentration of credit risk to any other counterparty did not exceed 4.17% (previous year 3.19%) of total monetary assets at any time during the year.

Credit exposure is managed by counterparty limits for investment of surplus funds which is reviewed by the Management. Investments in liquid plan/schemes are with public sector Asset Management Companies having highest rating. For banks, only high rated banks are considered for placement of deposits.

Bank balances are held with reputed and creditworthy banking institutions.

The Company is exposed to default risk in relation to financial guarantees given to banks / vendors on behalf of subsidiaries / joint venture companies for the estimated amount that would be payable to the third party for assuming the obligation. The Company's maximum exposure in this regard on as at March 31, 2018 is Rs,441,956.86 million (As at March 31, 2017 is Rs,443,308.48 million).

45.10 Liquidity risk management

The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due. Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios.

The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The information included in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.

*Represents Company's maximum exposure in respect of financial guarantee obligation given to banks / vendors on behalf of subsidiaries / joint venture companies for the estimated amount that would be payable to the third party for assuming the obligation.

The Company has access to committed credit facilities as described below, all of which remain unused at the end of the reporting period (as at March 31, 2017 Nil). The Company expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.

45.11 Fair value measurement

This note provides information about how the Company determines fair values of various financial assets and financial liabilities.

45.12 Fair value of the Company’s Financial Assets/ Financial Liabilities that are measured at fair value on a recurring basis

Some of the Company's financial assets/ financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets/ financial liabilities are determined.

45.13 Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)

Management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements except as per note no. 45.12 approximate their fair values.

46. Disclosure of Interests in Joint Arrangements and Associates:

46.1 Joint Operations

In respect of certain unincorporated PSC/NELP/CBM blocks, the Company's Joint Operation (JO) with certain body corporate have entered into Production Sharing Contracts (PSCs) with GoI for operations in India. As per signed PSC & JOA, Company's has direct right on Assets, liabilities, income & expense of blocks. Details of these Joint Operation Blocks are as under:

46.1.1 Approval towards assignment of PI is awaited from GoI

Abbreviations:- APGIC- AP Gas Infrastructure Corporation Limited, AWEL- Adani Welspun Exploration Limited, BGEPIL- British Gas Exploration & Production India Limited, BPRL- Bharat Petro Resources Limited, Cairn India-Cairn India Limited, CEHL- Cairn Energy Hydrocarbons Limited, CIL- Coal India Limited, EEPL- Essar Exploration & production Limited, ENI- Ente Nazionale Idrocarburi, EOL-Essar Oil Limited, GAIL- Gas Authority of India Limited, GSPC- Gujarat State Petroleum Corporation Limited, HEPI- Hardy Exploration & Production India Limited, HOEC-Hindustan Oil Exploration Company Limited, IOC- Indian Oil Corporation Limited, NTPC- National Thermal Power Corporation Limited, OIL- Oil India Limited, PEPL-Prabha Energy Pvt Limited, RIL- Reliance Industries Limited, ROPL- Ravva Oil (Singapore) Private Limited, TPL- Tata Petrodyne Limited, VIL- Videocon Industries Limited, JODPL- Jubilant Offshore Drilling Private Limited, EWP- East West Petroleum

46.1.3    The financial statements of 125 (125 in FY 2016-17 ) out of 136 (135 in FY 2016-17) Joint operation (PSC/ NELP/CBM blocks) have been incorporated in the accounts to the extent of Company's participating interest in assets, liabilities, income, expenditure and profit / (loss) before tax on the basis of statements certified in accordance with production sharing contract and in respect of balance 11 (10 in FY 2016-17) Joint operation (PSC/NELP/CBM blocks), the figures have been incorporated on the basis of uncertified statements prepared under the production sharing contracts. Financial statements of Joint operated blocks have been adjusted for changes as per Note no. 3.4. The financial positions of Company share of Joint operation (PSC/NELP/CBM blocks) are disclosed in note 46.1.4

46.1.4    Financial position of the Joint Operation -Company’s share are as under:

The financial statements of 125 nos. (125 in FY 2016-17), out of 136 nos. (135 in FY 16-17) Joint operation block (JOs/NELP), have been incorporated in the accounts to the extent of Company's participating interest in assets, liabilities, income, expenditure and profit / (loss) before tax on the basis of statements certified in accordance with production sharing contract and in respect of balance 11 (10 in FY 2016-17) Joint operation blocks (JOs/NELP), the figures have been incorporated on the basis of uncertified statements prepared under the production sharing contracts. Both the figures have been adjusted for changes as per Note no. 3.4. The financial positions of JO/NELP are as under:-

46.1.6 In respect of 4 NELP blocks (previous year 6) which have expired as at March 31, 2018, the Company's share of Unfinished Minimum Work Programme (MWP) amounting to Rs,753.13 million (previous year to Rs,1,167.54 million) has not been provided for since the Company has already applied for further extension of period in these blocks as ‘excusable delay'/ special dispensations citing technical complexities, within the extension policy of NELP Blocks, which are under active consideration of GoI. The delays have occurred generally on account of pending statutory clearances from various Govt. authorities like Ministry of Defense, Ministry of Commerce, environmental clearances, State Govt. permissions etc. The above MWP amount of '753.13 million (previous year '1,167.54 million) is included in MWP commitment under Note no. 48.2.2 (i).

As per the Production Sharing Contracts signed by the Company with the GoI, the Company is required to complete Minimum Work Programme (MWP) within stipulated time. In case of delay in completion of the MWP, Liquidated Damages (LD) are payable for extension of time to complete MWP. Further, in case the Company does not complete MWP or surrender the block without completing the MWP, the estimated cost of completing balance work programme is required to be paid to the GoI. LD (net of reversal) amounting to Rs,688.06 million (Previous year (-) Rs,14.90 million) and cost of unfinished MWP (net of reversal) Rs,160.71 million (Previous year Rs,965.69 million), paid/payable to the GoI is included in survey and wells written off expenditure respectively.

46.1.7    Govt. of India has approved the relinquishment of 30% Participating Interest (PI) of ONGC in SGL Field with future interest in block RJ-ON/6 in Jaisalmer Basin Rajasthan to Focus Energy Limited (Operator), on the condition that Focus Energy Limited (Operator) will pay towards 100 % past royalty obligation, PEL/ ML fees, other statutory levies (total amount Rs,1557.81 million as on March 31, 2018) and waive off development/production cost payable by ONGC in SGL Field of the block as well as take all future 100% royalty obligation ofONGC as licensee. Pending the execution of Farm-out Agreement and amendment in Production Sharing Contract (PSC), no adjustment is made in the accounts in respect of relinquishment of RJ-ON/6.

46.1.8    The Company is having 30% Participating interest in Block RJ-ON-90/1 with Vedanta Ltd (erstwhile Cairn India Ltd) (Operator) and Cairn Energy Hydrocarbons Ltd. There are certain unresolved issues relating to cost recovery in respect of exploration, development and production cost amounting to US$ 1071.51 million (Rs,69,562.43 million). The issues are under discussions between the JV partners for settlement. Pending settlement of issues, the amount of US$ 824.30 (Rs,53,513.56 million) million pertaining to development and production cost have been accounted for as per the participating interest of the company

46.1.9    In respect of Jharia CBM block, there are certain overlapping issues with Steel Authority of India Limited (SAIL). Due to overlap issue, Developmental activities (except incidental gas production), was suspended since June 2014. Recently, Directorate General of Mines Safety (DGMS) has accorded permission to ONGC to resume operation in the overlap area with SAIL abiding by in-principle approval of CoDevelopment Agreement (by DGMS/DGH). However, the execution of the Co-Development Agreement with SAIL is pending. Similarly, in Raniganj CBM Block, Airport City Project of Bengal Aerotropolis Projects Limited (BAPL) overlaps part of the FDP area of Raniganj CBM Block. The issue is being discussed with BAPL and Government of West Bengal. However, the Public Hearing for obtaining Environmental Clearance (EC) has been conducted and EC application submitted to Ministry of Environment and Forest, Government of India. Techno-economics of the Block is being reworked with cost optimization. Pending final decision on the block, an impairment provision of Rs,611.95 million has been provided in the books.

46.1.10 During the year the Company has acquired the entire 80% Participating Interest (PI) of Gujarat State Petroleum Corporation Limited (GSPC) along with operatorship rights, at a purchase consideration of US$ 995.26 million (Rs,62,950.20 million) for Deen Dayal West (DDW) Field in the Block KG-OSN-2001/3. A Farm-in - Farm- out Agreement (FIFO) was signed with GSPC on 10th March, 2017 with an economic date of 31st March, 2017 (23:59 Hrs - IST) and the said consideration has been paid on 4th August, 2017 being the closing date.

As per FIFO, the company is required to pay / receive sums as adjustments to the consideration already paid based on the actual gas production and the differential in agreed gas price. Pending executing mother wells and estimating future production, the contingent adjustment to consideration remains to be quantified.

Accounting for the closing adjustment (i.e. working capital and other adjustments) to sale consideration viz. transactions from the economic date up to the closing date has been carried out on provisional basis and a sum of Rs,198.31 million is net receivable from GSPC which is subject to final settlement as per mutual agreement between GSPC and the company.

The company has also paid part consideration of US$ 200 million (Rs,12,650.00 million) for six discoveries other than DDW Field in the Block KG-OSN-2001/3 to GSPC towards acquisition rights for these discoveries in the Block KG-OSN-2001/3 to be adjusted against the valuation of such fields based on valuation parameters agreed between GSPC and the Company.

47. Disclosure under Indian Accounting Standard 36 - Impairment ofAssets

47.1    The Company is engaged mainly in the business of oil and gas exploration and production in On-shore and Offshore. In case of onshore assets, the fields are using common production/ transportation facilities and are sufficiently economically interdependent to constitute a single cash generating unit (CGU). Accordingly, impairment test of all onshore fields is performed in aggregate of all those fields at the Asset Level. In case of Offshore Assets, a field is generally considered as CGU except for fields which are developed as a Cluster, for which common facilities are used, in which case the impairment testing is performed in aggregate for all the fields included in the cluster.

47.2    The Value in Use of producing/developing CGUs is determined under a multi-stage approach, wherein future cash flows are initially estimated based on Proved Developed Reserves. Under the circumstances where further development of the fields in the CGUs is under progress and where the carrying value of the CGUs is not likely to be recovered through exploitation of proved developed reserves alone, the Proved and probable reserves (2P) of the CGUs are also taken for the purpose of estimating future cash flows. In such cases, full estimate of the expected cost of evaluation/development is also considered while determining the value in use.

47.3    In assessing value in use, the estimated future cash flows from the continuing use of assets and from its disposal at the end of its useful life are discounted to their present value. The present value of cash flows has been determined by applying discount rates of 14.48% (as at March 31, 2017 - 14.88 %) for Rupee transactions and 9.68% (as at March 31, 2017- 10.57 %) for crude oil and value added products revenue, which are measured in USD. Future cash inflows from sale of crude oil and value added products have been computed using the future prices, on the basis of market-based average prices of dated Brent crude oil as per ‘Platt's Crude oil market wire' and its Co-relations with benchmark crude and other petroleum products. Future cash flows from sale of natural gas are also computed based on the expected future prices on the basis of notification issued by the Government of India and discounted applying the rate applicable to the cash flows measured in USD in view of the new pricing guidelines issued by GOI. (Note no. 30.3)

47.4    The company has assessed the impairment as at March 31, 2018 for its CGUs. There has been an improvement in prices of Crude Oil and Natural Gas in the current financial year. As a result of the change in prices and other variables, there has been a reversal of an amount of Rs,6,985.33 million (As on 31 March, 2017 Rs,13,979.63 million) mainly consisting of Rs,6,954.96 million (As on 31 March, 2017 Rs,12,203.54 million) for onshore CGU Sibsagar and balance reversal of impairment pertains to other CGUs.

47.5    During the year Rs,1,342.92 million (Previous year Rs,715.62 million) has been provided for impairment loss mainly consisting of onshore

48. Contingent liabilities, Contingent Assets and commitments (to the extent not provided for)

48.1    Contingent Liabilities & Contingent Assets:

48.1.1    Claims against the Company/ disputed demands not acknowledged as debt:-

CGU Silchar and Jodhpur amounting to Rs,241.96 million (Previous year Rs,235.11 million). Balance impairment loss amounting to Rs,1,100.96 million (Previous year Rs,480.51 million) pertains to Tapti field, CB-OS-1and other CGUs.

47.6 The following 2P reserves for respective CGU were considered as a basis for the impairment testing as at March 31, 2018

Impairment testing of assets under exploratory phase (Exploratory wells in progress) has been carried out as on March 31, 2018 and an amount of Rs,1,820.94 million (For the year ended March 31, 2017 Rs,4,539.44 million) has been provided during the year 2017-18 as impairment loss. Further, Rs,1,065.43 million (For the year ended March 31, 2017 Rs,966.05 million) impairment losses has been reversed in the Standalone statement of Profit and Loss as exploratory phase assets have been transferred to dry well expenditure.

a.    The Company's pending litigations comprise claims against the Company and proceedings pending with Tax / Statutory/ Government Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial position. Future cash outflows in respect of the above are determinable only on receipt of judgments/ decisions pending with various forums/ authorities.

b.    During the year, the Company has received show cause notices at various work centers on account of service tax along with interest and penalty, on royalty on Crude oil and Natural gas levied under Oil Field (Regulation & Development) Act, 1948. The Company has worked out service tax (including interest) of Rs,19,834.29 million for the period from April 1, 2016 to June 30, 2017. Further, the Company has worked out GST (including interest) of Rs,14,315.98 million for the period from July 1, 2017 to March 31, 2018. Penalty in respect of the same is not quantifiable. Based on legal opinion obtained by the Company, service tax / GST on royalty are not applicable. The Company is contesting the same at appropriate authorities and accordingly the same has been shown as contingent liability. However, as an abundant caution, the company has deposited Service tax, GST and interest under protest in May, 2018 amounting to Rs,25,153.29 million.

c. The Company, with 40% Participating Interest (PI), is a Joint Operator in Panna-Mukta and Mid and South Tapti Fields along with Reliance Industries Limited (RIL) and BG Exploration and Production India Limited (BGEPIL), each having 30% PI. The Production Sharing Contracts (PSCs) with respect to Panna-Mukta and Mid and South Tapti contract areas were signed between the Contractors and Government of India on December 22, 1994 for a period of 25 years. In December 2010, RIL & BGEPIL invoked an arbitration proceeding against the Union of India in respect of certain disputes, differences and claims arising out of or in connection with both the PSCs in respect to Panna-Mukta and Mid and South Tapti contract areas pursuant to the provisions of Article 33 of the PSCs and UNCITRAL Rules, 1976. The Ministry of Petroleum and Natural Gas (MoP&NG), vide letter dated July 4, 2011, had advised the Company not to participate in the arbitration initiated by RIL and BGEPIL under Panna-Mukta & Tapti PSCs. However, in case of an arbitral award, the same will be applicable to the Company also as a constituent of the contractor for both the PSCs. On October 12, 2016, a Final Partial Award (FPA) was pronounced by the Tribunal in the arbitration matter between RIL, BGEPIL and Union of India. However, details of proceedings in this regard are not known to the Company since the Company is not a party to this arbitration. Directorate General of Hydrocarbons (DGH), vide letter dated May 25, 2017 marked to all Joint Venture Partners (RIL, BGEPIL & ONGC) has asked for payment of differential GOI share of Profit Petroleum and Royalty alleged to be payable by contractor pursuant to Governments interpretation of the FPA (40% share of the Company amounting to US$ 1,574.76 million equivalent to Rs,102,233.41 million including interest up to November 30, 2016 ). However, in response to letter dated May 25, 2017 of DGH, RIL and BGEPIL the JV partners (with a copy marked to all the Joint Venture partners) have stated that demand of DGH is premature as the FPA does not make any money award in favour of GOI as quantification of liabilities are to be determined during the final proceedings of the arbitration and the same has been challenged before the English Commercial Court.

Further, subsequent to London High Court Orders dated April 16, 2018 and May 2, 2018, DGH vide letter dated May 4, 2018 and May 15, 2018 has asked for re-casting of accounts of the JV and for remitting respective PI share of balance dues including interest till the date of remittance. Details of proceedings thereof and the London High Court orders are not known to the Company since the Company is not a party to the arbitration. In response to the letter of DGH RIL & BGEPIL have responded (with a copy marked to all the Joint Venture partners) that FPA of October 2016 does not make any money award in favour of the Government. Further it has also been stated by RIL & BGEPIL that the English Court has upheld challenge 4 of the claimants (RIL & BGEPIL) in relation to "Agreement Case” and held that there had been a serious irregularity in the Award of the Tribunal. Further in the court order of May 2, 2018, the English Court has directed the Tribunal to re-consider the “Agreement Case” and issue a fresh award within three months of that date. The “Agreement Case” is closely linked with the Cost recovery limit (CRL) increase application filed by the contractor with the Management Committee and Tribunals re-consideration of this issue necessarily impacts the re-computation of accounts.

Re-computation of accounts and consequential determination of any amount due and payable by the contractor (Constituents of the JV including the Company) are to be determined during the final stage of the arbitration proceedings after determination of all substantive issues by the Tribunal (including any application for an increase in the Tapti and Panna Mukta CRL and an award on the Agreement Case). The Company has also responded to DGH that as of now, neither the Arbitral Tribunal nor the Court has passed any order or quantified any amount due and payable by the Company. In the circumstances, the demand of DGH from the Company for any sum or interest thereon is premature and not justified. The company has requested DGH to keep the issue in abeyance till finality in the award is achieved.

Pending the final quantification of liabilities by the Arbitration Tribunal, no provision for the same has been considered necessary. However, the same has been considered as contingent liability

48.1.2    A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. During the normal course of business, several unresolved claims are currently outstanding. The inflow of economic benefits, in respect of such claims cannot be measured due to uncertainties that surround the related events and circumstances.

48.2    Commitments

48.2.1    Capital Commitments:

Estimated amount of contracts remaining to be executed

on capital account:-

i)    In respect of Company: Rs,82,223.61 million (Previous year Rs,110,082.89 million).

ii)    In respect of Joint Operations: Rs,2,753.09 million (Previous year Rs,2,596.09 million).

48.2.2    Other Commitments

(i) Estimated amount of Minimum Work Programme (MWP) committed under various ‘Production Sharing Contracts' with Government of India / Nominated Blocks:

a) In respect of NELP blocks in which the Company has 100% participating interest: Rs,2,750.40 million (Previous year Rs,3,325.69 million).

b) In respect of NELP blocks in Joint Operations, Company's share: Rs,2,581.97 million (Previous year Rs,7,576.08 million).

(ii)    In respect of ONGC Petro additions Limited, AJoint Venture Company Rs,480.50 million on account of subscription of Share Warrants with a condition to convert it to shares after a balance payment of Rs,0.25/- per share.

(iii)    The Company has entered into an arrangement on July 2, 2016 for backstopping support towards repayment of principal and cumulative coupon amount for three years compulsorily convertible debentures amounting to Rs,77,780.00 million (previous year Rs,56,150.00 million) issued by ONGC Petro additions Limited and interest for the year ending March 31, 2018 amounting to Rs,4,670.19 million (previous year Rs,3,612.06 million)

(iv)    During the year the Company has acquired the entire 80% Participating Interest (PI) of Gujarat State Petroleum Corporation Limited (GSPC) along with operatorship rights, at a purchase consideration of US$ 995.26 million (Rs,62,950.20 million) for Deen Dayal West (DDW) Field in the Block KG-OSN-2001/3.The company has also paid part consideration of US$ 200 million (Rs,12,650.00 million) for six discoveries other than DDW Field in the Block KG-OSN-2001/3 to GSPC towards acquisition rights for these discoveries in the Block KG-OSN-2001/3 to be adjusted against the valuation of such fields based on valuation parameters agreed between GSPC and the Company (Note no. 46.1.10).

51.1    Loan to OVL is interest free and unsecured repayable within a notice period of minimum one year and carries no interest during the years 2016-17 and 2017-18 till January 31, 2018. Thereafter 7.65% p.a. is charged

51.2    Loan to MRPL carries interest as G-Sec yield for 5-year tenor as on March 31, 2017 (as per FIMMDA) plus a spread of 40 (forty) basis points which amounts to 7.17% (previous year 8.12%) for financial year 2017-18. Interest rate shall be reset on 1st April every year by applying G-Sec yield for 5-year tenor, as per FIMMDA as on 31st March of the preceding financial year. Spread of 40 (forty) basis points over and above G-Sec yield for 5-year tenor shall continue to remain applicable for the entire tenure of the loan. The Loan is repayable quarterly in 28 equal installments. The repayment of loan had started from the last quarter of FY 2013-14. ONGC can call these loans on notice of 90 days. MRPL can prepay whole or part of the loan to ONGC as per its requirement.

51.3    The Company has not advanced any money to its employees for the purposes of investment in the securities of the Company.

53.1    The Company has a system of physical verification of Inventory, Fixed assets and Capital Stores in a phased manner to cover all items over a period of three years. Adjustment differences, if any, are carried out on completion of reconciliation.

53.2    The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

53.3    Further, some balances of Trade and other receivables, Trade and other payables and Loans are subject to confirmation/reconciliation. Adjustments, if any, will be accounted for on confirmation/reconciliation of the same, which will not have a material impact.

53.4    Previous year's figures have been regrouped, wherever necessary, to confirm to current year's grouping.

54 Approval of financial statements

The Standalone Financial Statements were approved by the Board of Directors on May 30, 2018