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25
th AN
NU
AL R
EPO
RT 2
00
8-2
00
9
Hindustan Oil Exploration Company Limited
25th Annual Report 2008-2009
vakils
Hin
du
stan O
il Exp
loratio
n C
om
pany L
imited
Hindustan Oil Exploration Company Limited Website: www.hoec.com
Date : September 29, 2009
Day : Tuesday
Time : 10:30 A.M.
Place : “Tropicana Hall” The Gateway Hotel Vadodara Akota Gardens, Akota Vadodara-390 020
ContentsHighlights of FY2008-09 1
Operational Highlights At A Glance 2
Board of Directors 4
Directors’ Report 5
Management Discussion and Analysis Report 10
Report on Corporate Governance 15
Accounts with Auditors’ Report 26
Information pertaining to HOEC Bardahl India Limited (Subsidiary) 62
Consolidated Accounts with Auditors’ Report 79
Glossary 103
Disclaimer Note:Certain sections of this Annual Report, in particular the Management Discussion and Analysis, and Operational Highlights may contain forward-looking statements concerning the financial condition and results of operations of HOEC. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. No assurances can be given as to future results, levels of activity and achievements and actual results, levels of activity and achievements may differ materially from those expressed or implied by any forward-looking statements contained in this report. HOEC does not undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information.
AUDITORSDeloitte Haskins & Sells Chartered Accountants
COMPANY SECRETARY Mr. Vikash Jain
PRINCIPAl BANKERS
• Axis Bank
• HDFC Bank
• IDBI Bank
• State Bank of India
REGISTERED OFFICE
‘HOEC House’, Tandalja RoadVadodara – 390 020 (India)E-mail: [email protected]: www.hoec.com
CHENNAI OFFICE
‘Lakshmi Chambers’192, St. Mary’s RoadAlwarpet Chennai – 600 018 (India)
REGISTRARS AND SHARE TRANSFER AGENT
Link Intime India Pvt. Limited(formerly Intime Spectrum Registry Limited)1st Floor, 308, Jaldhara ComplexOpp. Manisha SocietyVasna Road, Off Old Padra RoadVadodara – 390 015 (India)E-mail: [email protected]
25th Annual General Meeting
Highlights of FY 2008-09
FINANCIAL HIGHLIGHTS
• Profit After TaxofRs.535million(FY2007-08:Rs.241million)
• RevenueofRs.1,292million(FY2007-08:Rs.1,036million)
• Operating Cash Flow*ofRs.446million(FY2007-08:Rs.485million)
* Operating Cash Flow is before Working Capital Changes and Taxes.Figures have been rounded off.
Operational Highlights At A Glance
Oil
Gas
Production/Development
Appraisal/Exploration
O = HOEC as Operator
D = Development Phase
E = Exploration Phase
PI= Participating Interest
HOEC’s oil and gas assets consist of operated & non-operated acreages in Cauvery, Cambay, Assam-Arakan and Rajasthan basins in India
Notes: Production figures are gross for respective fields for Financial Year 2008-2009. Location of Contract Area is indicative and not to scale.
Legend:
Asjol HOEC PI:50% (O)
Production: approx. 20 bopd
PY-3 HOEC PI: 21%
Production: approx. 2,563 bopd
CB-ON-7 HOEC PI: 35% (O)
Production: approx. 267 bopd
CB-OS/1 HOEC PI: 57.11% (E) /38.07% (D)
Gulf “A” Discovery Plan of Development approved by DGH
RJ-ONN-2005/1 HOEC PI: 25% (O)
NELP VII BlockPEL Received; PSC Effective: July 13, 2009
GN-ON-90/3 HOEC PI: 75% (O)
Under Arbitration
AAP-ON-94/1 HOEC PI: 40.32% (O)
Dirok Gas Discovery:• Appraisal programme in progress • 3D Seismic Acquisition completed; processing
in progress• Drilling of appraisal well(s) planned in 2010
PY-1 HOEC PI: 100% (O)
• Installation of Offshore facilities (Platform & Pipeline) completed
• Earth Well tied to the Platform• Drilling of additional development well(s) in
progress • Onshore terminal construction is in progress
North Balol HOEC PI: 25% (O)
Production: approx. 41,622 scmd
RJ-ONN-2005/2 HOEC PI: 20%
NELP VII BlockPEL Received; PSC Effective: July 13, 2009
Rajasthan
Andhr
a Pr
ades
h
Tam
il N
adu
Assam
Gujarat
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
5
DIRECTORS’ REPORT
To the Members of HINDUSTAN OIL EXPLORATION COMPANY LIMITED
Your Directors have the pleasure in placing before you the 25th Annual Report including the Audited Statement of Accounts for the year ended March 31, 2009.
FINANCIAL HIGHLIGHTS(Rs. million)
Particulars Standalone Consolidated
2008-2009 2007-2008 2008-2009 2007-2008
Turnover 830 835 964 964
Other Income 462 202 465 205
Profit before Depreciation/Depletion/Amortisation/Write Offs/Taxation
752 610 766 636
Less : Depreciation/Depletion/Amortisation
118 53 119 53
Less : Provisions & Write Offs 0 166 0 167
Profit Before Tax 634 391 647 416
Less : Provision for Tax 99 150 102 158
Profit After Tax 535 241 545 258
Profit/(Loss) brought forward * 919 843 945 853
Profit available for Appropriation 1,454 1,084 1,490 1,111
Balance carried to the Balance Sheet 1,454 932 1,490 958
Previous year figures have been regrouped to conform to the current year presentation.
Figures have been rounded off.
* Net of transitional adjustment of Rs. 13 million consequent to the exercise of the option available in the new paragraph 46 of the Accounting Standard 11 – The Effects of Changes in Foreign Exchange Rates notified by the Ministry of Corporate Affairs vide Notification dated March 31, 2009 on Companies (Accounting Standards) Amendment Rules, 2009 (G.S.R. 225 (E) dated March 31, 2009).
The Turnover of the Company during the year as compared with previous year was lower on account of (a) lower net entitlement from PY-3 field, and (b) decline of production from Pramoda field, partially offseted by the commencement of production from SPD development area in block CB-ON-07. The Profit before Depreciation/Depletion/Amortisation/Write Offs/Taxation was higher due to higher interest and dividend on investment of surplus funds, pending utilization. During the year depletion was higher on account of capitalisation of the expenditure pertaining to SPD development area in block CB-ON-7 and side tracking of PY3-D4-RL well in PY-3 field. Provision for tax was lower as the Company has recognized “MAT credit entitlement” to the extent of Rs. 31 million taking into consideration the future profitability and the taxable position of the Company.
DIVIDEND
Your Company is positioned on a growth trajectory and is actively pursuing both exploration opportunities and appraisal /development of discoveries established in its existing portfolio. To finance this growth, the Company needs financial resources in the immediate term and hence your Directors do not recommend any dividend for the year.
RIGHTS ISSUE
The Company has, in terms of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, appointed IDBI Bank Limited as the monitoring agency to monitor the utilization of the proceeds of the Rights Issue – 2008 amounting to Rs. 6,105 million. The Company has received the half-yearly reports from the monitoring agency confirming the utilization of funds as per the objects of the Rights Issue. During the year, the Company has temporarily invested unutilized funds in liquid debt funds and/or bank deposits (for details refer Notes to Accounts), pending utilization.
OPERATIONAL HIGHLIGHTS
Operations review has been provided in the Management Discussion and Analysis Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis Report is appended to and forms part of this Report.
CORPORATE GOVERNANCE
A separate report on Corporate Governance, along with a Certificate on Corporate Governance from a Company Secretary in Practice is appended to and forms part of this Report.
COST ACCOUNTING RECORDS
The Company has maintained cost records as required by Cost Accounting Records (Petroleum Industry) Rules, 2002 notified on October 8, 2002.
HOEC BARDAHL INDIA LIMITED [HBIL] (WHOLLY OWNED SUBSIDIARY OF HOEC)
During the year, Total Income of HBIL has increased to Rs. 166 million as compared to Rs. 156 million in the previous year. However, Gross Profit decreased by 2.5% to Rs. 102 million as a result of higher cost of inputs and higher exchange rates prevailing during the year.
Director Report Main.indd 5 8/18/2009 4:45:01 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
6
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to Accounting Standard AS-21 and the Listing Agreement entered into with the Stock Exchanges, Consolidated Financial Statements for the financial year 2008-2009 are appended to and form part of this Annual Report.
CREDIT RATING
ICRA has assigned a rating of LA+ to the USD 100 million term loan facility for PY-1 field development. LA+ is the adequate-credit quality rating assigned by ICRA and the rated instrument carries average credit risk.
AUDITORS’ REPORT
With reference to the observations made in the Auditor’s Report regarding one non-producing unincorporated Joint Venture’s accounts for the FY 2008-09, we have to state that the Company has not received the Audited Accounts of block GN-ON-90/3 (Pranhita-Godavari) being under arbitration. As the above joint venture has not entered the production phase there is no effect on the profit for the year.
UNINCORPORATED JOINT VENTURES
The financial statements of the Company reflect its share of assets, liabilities, income and expenditure of the Joint Venture operations which are accounted on the basis of available information on line by line basis with similar items in the Company’s accounts to the extent of the participating interest of the Company as per the various “Production Sharing Contracts”. The financial statements of the Unincorporated Joint Ventures are prepared by the respective Operators in accordance with the requirements prescribed by the respective Production Sharing Contracts of the Unincorporated Joint Ventures.
FIXED DEPOSITS
Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as at the balance sheet date.
DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Mr. R. Vasudevan will retire by rotation and the term of office of Mr. Sunil Behari Mathur, Mr. Mukesh Butani and Mr. Sergio Adriano Laura would expire at/on the date of the ensuing Annual General Meeting. All of them, being eligible have offered themselves for reappointment. The Company has received valid notice and requisite deposits from
a member of the Company under Section 257 of the Companies Act, 1956, signifying the intention to propose the names of Mr. Sunil Behari Mathur, Mr. Mukesh Butani and Mr. Sergio Adriano Laura for the office of Director. The Board recommends their appointments.
EMPLOYEES STOCK OPTION SCHEME
Members’ approval was obtained at the Annual General Meeting held on September 22, 2005 for introduction of Employees Stock Option Scheme (ESOS). ESOS was approved and implemented by the Company and options were granted to employees in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 (‘the SEBI Guidelines’). The Compensation and Remuneration Committee of the Board had constituted HOEC ESOS Trust having independent Trustees to monitor and administer the Scheme.
The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2009 are given below:
PARTICULARS 2008-2009 2006-2007
(a) Option Granted : 17,613 15,069
(b) Pricing Formula : Nil Nil
(c) Options Vested : Nil Nil
(d) Options Exercised : Nil Nil
(e) The total number of shares arising upon/after exercise of Option
: 17,613 15,069
(f) Options Lapsed : Nil Nil
(g) Variation in terms of Options
: Nil Nil
(h) Money realized by exercise of Options
: Nil Nil
(i) Total number of Options in force
: 17,613 15,069
(j) Employee wise details of Options granted to:
Senior Management Personnel
Mr. R. Vasudevan : 9,274 Nil
Director Report Main.indd 6 8/18/2009 4:45:01 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
7
PARTICULARS 2008-2009 2006-2007
Mr. Manish Maheshwari : 4,498 9,590
Any other employee who received a grant in any one year of Options amount to 5% or more of Options granted during that year
Mr. K. N. Prabhakar : 927 Nil
Mr. Sagar Mehta : 1,369 4,039
Mr. Rajiv Hura : * 1,096
Identified employees who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding equity share) of the Company at the time of grant.
: None None
(k) Diluted Earnings Per Share (EPS) before exceptional items pursuant to issue of shares on exercise of Options calculated in accordance with Accounting Standard (AS) 20 ‘Earning Per Share’.
: Rs. 4.10 Rs. 0.31
* Less than 5% of the total options granted during the year, for details refer statement u/s. 217(2A) annexed herewith.
Figures for the financial year 2006-2007 have been recomputed in accordance with the long term incentive plan of the Company.
No options were granted during the financial year 2007-2008
Since the exercise price is Nil, the fair value approximates the intrinsic value of the option on the date of the grant.
Other details as required by the SEBI Guidelines are as under:
Weighted-average exercise price : Nil
Weighted-average fair values of options, separately for options, whose exercise price either equal or exceed or is less than the market price of the stock on the grant date (FY 2008-2009)
: Rs. 129.40
As of July 23, 2009, HOEC ESOS Trust has purchased 32,682 shares at an aggregate cost of Rs. 4,086,091 from the market for distribution of stocks to the eligible employees and Directors as per the long term incentive plan of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
A. Conservation of energy:
(a) energy conservation measures taken : Our focus on the impact of our operations on climate change leads to our energy conservation strategy. To give effect to energy conservation efforts in our operations, the Company has taken following initiatives to reduce flaring of associated natural gas from our producing field in Cambay basin:
(i) Increasing internal utilization of associated natural gas as fuel; and
(ii) Identifying potential end users and sale of associated natural gas to such end users on as-is-available basis.
Additionally, your Company has made provision in the sub-sea pipeline which has been installed as part of PY-1 Development Project to potentially receive associated natural gas from PY-3 Field (operated by HEPI), which is presently being flared for lack of evacuation infrastructure.
(b) additional investments and proposals, if any, being implemented for reduction of consumption of energy : Nil
(c) impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods : Reduction in emission of Green House Gases (GHGs) due to reduction in flaring and additional revenue realisation on sale of associated natural gas.
(d) total energy consumption and energy consumption per unit of production as per Form A of the annexure in respect of industries specified in the schedule thereto : Not applicable
B. Technology absorption:
Efforts made in technology absorption as per Form B of the annexure: Nil
Director Report Main.indd 7 8/20/2009 10:58:47 AM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
8
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
C. Foreign exchange earnings and outgo:
(a) activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans : Nil
(b) total foreign exchange used and earned
Particulars Rs. million
A. Foreign Exchange Earnings (See note 1) 1.88
B. Foreign Exchange Used
• CashCallPaymenttoJointVentures 1,815.96
• ExpenditureinForeignCurrency (See note 2)
31.96
Total Foreign Exchange used 1,847.92
Note: 1. The above represents Interest received in foreign currency netted off against Borrowing Cost in accordance with the Accounting Standard 16.
Note: 2. The above includes Interest paid in foreign currency amounting to Rs. 31.48 million capitalized as Borrowing Cost in accordance with the Accounting Standard 16.
HUMAN RESOURCES
The Company’s industrial relations continued to be harmonious during the period under review.
PARTICULARS OF EMPLOYEES
The particulars of employees required to be furnished pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are appended hereto and forms part of this Report.
AUDITORS
The Auditors, M/s. Deloitte Haskins & Sells, will retire at the forthcoming Annual General Meeting. Based on the recommendation of the Audit Committee, the Board has at its meeting held on July 23, 2009 recommended their appointment as Statutory Auditors to hold office from the conclusion of the ensuing Annual General Meeting to the conclusion of the next Annual General Meeting.
DIRECTORS’ RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, with respect to Directors’ Responsibility Statement, it is hereby confirmed:
(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(ii) that the directors have selected such accounting policies and applied them consistently unless otherwise stated and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;
(iii) that the directors have taken proper and sufficient 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 fraud and other irregularities;
(iv) that the directors have prepared the accounts on a ‘going concern’ basis.
ACKNOWLEDGEMENT
Your Directors place on record their gratitude for the support and co-operation received from Government agencies namely, Ministry of Petroleum & Natural Gas, Directorate General of Hydrocarbons, Government of Gujarat, Government of Tamil Nadu, Government of Assam, Government of Andhra Pradesh and Government of Rajasthan and the authorities working under them. Your directors express their gratitude to the Company’s stakeholders, shareholders, business partners, and bankers for their understanding and support. We express our sincere appreciation to our dedicated and committed team of employees who have contributed to the growth of the organization.
For and on behalf of the Board
R. VasudevanDate : July 23, 2009 Chairman
Director Report Main.indd 8 8/18/2009 4:45:01 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
9
AN
NE
XU
RE
TO
TH
E D
IRE
CTO
RS’
RE
PO
RT
Stat
emen
t of p
artic
ular
s of
em
ploy
ees
purs
uant
to th
e pr
ovis
ions
of S
ectio
n 21
7(2A
) of t
he C
ompa
nies
Act
, 195
6 re
ad w
ith th
e C
ompa
nies
(Pa
rtic
ular
s of
Em
ploy
ees)
Rul
es, 1
975
and
form
ing
part
of
the
Dir
ecto
rs’ R
epor
t for
the
year
end
ed M
arch
31,
200
9.
Nam
eD
esig
nati
onR
emun
erat
ion
rece
ived
(not
in
clud
ing
St
ock
opti
ons)
Stoc
k op
tion
s g
rant
ed
dur
ing
th
e ye
ar
(No.
of
shar
es)
Nat
ure
of
emp
loym
ent
Nat
ure
of d
utie
s of
the
em
plo
yee
Qua
li-fic
atio
ns
of t
he
emp
loye
e
Exp
eri-
ence
of
the
em
plo
yee
(in y
ears
)
Dat
e of
co
mm
ence
- m
ent
of
emp
loy-
m
ent
Ag
eTh
e la
st
emp
loym
ent
held
by
such
em
plo
yee
bef
ore
join
ing
the
co
mp
any
The
num
ber
of
eq
uity
sh
ares
hel
d
by
the
emp
loye
e
The
per
cent
age
of e
qui
ty
shar
es
held
by
the
emp
loye
e
Peri
od o
f E
mp
loym
ent
dur
ing
the
Fin
anci
al
year
Mr.
Man
ish
Mah
eshw
ari
Joint
Man
agin
g
Dire
ctor
14,
816,
557
4,4
98
Perm
anen
tO
vera
ll m
anag
emen
t of
th
e C
omp
any
B.E
. (H
ons)
, M
BA
(UK
)19
1-O
ct-0
341
Dan
ish
Inte
rnat
iona
l In
vest
men
t Fu
nd
Nil
Nil
1-A
pr-
0831
-Mar
-09
Mr.
K. N
. Pra
bha
kar
Hea
d -
Ex
plo
ratio
n Ve
ntur
es
4,8
10,2
21
927
Pe
rman
ent
Exp
lora
tion
activ
ites
M.S
c (G
eolo
gy)
3314
-Jun
-07
55O
il an
d
Nat
ural
Gas
C
orp
orat
ion
Lim
ited
500
Neg
ligib
le1-
Ap
r-08
31-M
ar-0
9
Mr.
Rajiv
Hur
aC
hief
O
per
atio
ns
Geo
log
ist
4,6
85,5
96
850
Pe
rman
ent
Op
erat
ions
G
eolo
gic
al
activ
ities
Mas
ters
in
Ap
plie
d
Geo
log
y –
IIT
Bom
bay
2614
-Mar
-05
50O
il In
dia
Li
mite
dN
ilN
il1-
Ap
r-08
31-M
ar-0
9
Mr.
Sag
ar M
ehta
Chi
ef -
C
amb
ay
Bus
ines
s U
nit
4,3
91,9
79
1,3
69
Perm
anen
tC
amb
ay A
sset
s ac
tiviti
esM
.Sc
(Geo
log
y),
MB
A
201-Ju
l-89
45N
ot
Ap
plic
able
240
Neg
ligib
le1-
Ap
r-08
31-M
ar-0
9
Mr.
R. R
aghu
nath
Rao
Prin
cip
al
Log
istic
s &
M
ater
ials
C
oord
inat
or
3,2
41,4
34
–Pe
rman
ent
Log
istic
s &
M
ater
ials
B.T
ech
(Mec
hani
cal)
1415
-Sep
-05
36Re
lianc
e In
dus
trie
s Li
mite
d
Nil
Nil
1-A
pr-
0831
-Mar
-09
Mr.VikashJa
inC
omp
any
Secr
etar
y,
Chi
ef T
ax &
Le
gal
3,0
23,7
49
–Pe
rman
ent
Com
pan
y Se
cret
aria
l, Le
gal
and
Ta
xatio
n
B.C
om, F
CS,
LL
B, A
III,
ICW
A (I
nter
)
135-
Oct
-05
31H
igh
Tech
nolo
gy
Tran
smis
sion
Sy
stem
s Pv
t.
Lim
ited
Nil
Nil
1-A
pr-
0831
-Mar
-09
Mr.
Sand
eep
Kha
mes
raC
hief
A
ccou
nts
Con
trol
ler
2,5
25,6
60
–Pe
rman
ent
Acc
ount
ing
&
Fina
nce
B.C
om, C
A8
1-O
ct-0
429
Exec
utiv
e Sh
ip
Man
agem
ent
Pte
Ltd
.
Nil
Nil
1-A
pr-
0831
-Mar
-09
Mr.
Bhu
wan
Cha
ndra
Gar
iya
Chi
ef
Geo
phy
sici
st 1
,619
,082
–
Perm
anen
tG
eop
hysi
cal
activ
ities
M.S
c (P
hysi
cs)
255-
Sep
-08
48O
il an
d
Nat
ural
Gas
C
orp
orat
ion
Lim
ited
Nil
Nil
5-Se
p-0
831
-Mar
-09
Mr.
Sud
hans
hu C
hug
h *
Prin
cip
al
Geo
phy
sici
st 1
,161
,574
–
Perm
anen
tG
eop
hysi
cal
activ
ities
M.T
ech
(Ap
plie
d
Geo
phy
sics
)
153-
Ap
r-00
38Sh
iv V
ani
Uni
vers
al
Lim
ited
Nil
Nil
1-A
pr-
0830
-Jun
-08
Mr.
K. R
avi S
anka
r *
Prin
cip
al
Faci
lity
Eng
inee
r
1,5
17,7
32
–Pe
rman
ent
Faci
litie
s
Proj
ect
Imp
lem
enta
tion
B.E
. (C
hem
)25
20-S
ep-0
448
Nik
o Re
sour
ces
Lim
ited
Nil
Nil
1-A
pr-
0830
-Aug
-08
Not
es:
Gro
ss r
emun
erat
ion
as a
bove
incl
udes
sal
ary,
allo
wan
ces,
Com
pany
’s co
ntri
butio
n to
Pro
vide
nt F
und
and
Supe
rann
uatio
n Fu
nd, G
ratu
ity p
aid
(but
exc
lude
s C
ompa
ny’s
cont
ribu
tion
to G
ratu
ity F
und)
, rei
mbu
rsem
ent o
f med
ical
exp
ense
s, le
ave
trav
el a
ssis
tanc
e an
d m
onet
ary
valu
e of
per
quis
ites
calc
ulat
ed in
acc
orda
nce
with
the
prov
isio
ns o
f the
Inc
ome
Tax
Act
, 196
1 an
d th
e R
ules
ther
e-un
der.
Long
term
ince
ntiv
e be
nefit
s in
clud
ing
Stoc
k O
ptio
ns h
ave
been
incl
uded
in th
e re
mun
erat
ion
of th
e ye
ar in
whi
ch th
ey a
re a
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Director Report Main.indd 9 8/18/2009 4:45:01 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
10
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
Management Discussion and Analysis Report
INDUSTRY STRUCTURE, DEVELOPMENT AND OPPORTUNITIESIndia imports nearly 70% of its Crude Oil requirements with its oil import bill being close to USD 90 billion in 2008-09. Further given India’s targeted GDP growth, India’s need for primary energy is likely to expand at substantial rate. Given this context coupled with the fact that India remains vastly unexplored territory by far with only a small portion of its sedimentary basins have been explored and developed, the Oil and Gas sector in India presents significant opportunity to the industry.
HOEC operates in the Oil & Gas Exploration and Production (E&P) Industry, with its current portfolio of assets located in India. HOEC is dedicated to contribute in meeting the energy needs of India and in this endeavor, the Company, in association with its consortium partners, works in close collaboration with the Government of India through Production Sharing Contracts (PSCs) to explore, develop and produce hydrocarbons to meet the energy demands of the country.
COMPANY’S BUSINESS AND STRATEGYThe Company’s core business is to explore, develop and produce hydrocarbons. HOEC’s strategy is to grow Company’s core business with improving profitability. The key elements of our Company’s strategy continue as follows:
• To increase our production by development of discoveries in existing assets/licenses;
• To increase our reserve base by exploring and establishing upside potential in our existing licenses;
• To constrain our exposure to exploration risk within prudent limits;
• To seek new investment opportunities wherein HOEC can leverage its position as a low cost operator; and
• To monetise assets with a view to value realization or risk sharing.
In executing this strategy, management intends to preserve a robust capital structure targeting an optimal mix of borrowings and shareholders equity.
The results achieved by the Company against the objectives set for the FY 2008-09 are summarized below:
• Appraisal of the “Dirok” discovery in AAP-ON-94/1 Block is underway, 3D Seismic Data acquisition has been completed;
• The construction and installation of the PY-1 Offshore Facilities (platform and pipeline) has been completed,
construction of Onshore Terminal is underway; Drilling of additional development well(s) are in progress;
• SPD Development Area in CB-ON-7 block has been put on commercial production;
• DGH has approved the Plan of Development for Gulf “A” Discovery, submitted by Oil and Natural Gas Corporation Limited (“ONGC”), the Operator, in Block CB-OS/1;
• Under the New Exploration Licensing Policy (“NELP”) VII, HOEC, in consortium with other companies has been successful in securing two new acreages in Rajasthan basin i.e. RJ-ONN-2005/1 and RJ-ONN-2005/2.
Building up on the outcome of the objectives set for last year, we have defined the following objectives for the FY 2009-10:
• Complete the construction and installation of the PY-1 Onshore Facilities and drilling of two Development Wells and establish Phase I plateau production;
• Drill Appraisal Well(s) in the “Dirok” Discovery Area in AAP-ON-94/1 Block post 3D seismic data interpretation;
• Continue to facilitate development initiative of Gulf “A” discovery in Block CB-OS/1 operated by ONGC;
• Assist HEPI, the Operator, to remodel G & G and Reservoir in PY-3 post result of PY3-D4-RL well sidetrack; and
• Continue to seek new opportunities which provide strategic fit to our existing portfolio/competencies while providing basis of reserve replacement.
OPERATIONS REVIEW
OverviewThe Company’s activities relate to exploration, development and production (based on exploration success) of hydrocarbons (crude oil and natural gas), which are natural resources.
Product-wise Performance The Company’s aggregate production during the FY 2008-09 was 254,039 barrels of oil equivalent (boe) (crude oil: 231,119 bbls; gas: 4,040,474 scm) as against 344,475 barrels of oil equivalent (boe) (crude oil: 329,286 bbls; gas: 2,677,570 scm) during the previous year. Production of crude oil from PY-3 Field located in Cauvery Basin continued to be the predominant source of the Company’s production during the year.
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
11
ReservesAs of March 31, 2009, the internal estimates of Proved and Probable (P+P) reserves on working interest basis for the Company is 53.4 mmboe, the reserve upgrade being based on CB-OS/1 “Gulf A” Development Plan submitted by ONGC.
CAUVERY BASIN
PY-1 FieldThe Company has completed construction and installation of offshore production cum wellhead platform and 56 kms sub sea pipeline. The construction of Onshore Terminal is progressing at Pillai Perumalnallur village in Tamil Nadu. HOEC has successfully tied back Earth Well to the platform and drilling of additional development wells ( Jupiter and Mercury) is in progress using jackup rig Deep Driller 8.
PY-3 FieldThe average gross production from the PY-3 Field decreased to approx 2,563 bopd in FY 2008-09 from 3,573 bopd in the previous year as the field was shut down due to bad weather and cyclonic conditions for certain period, besides the natural decline from the existing well(s). Operator is presently undertaking G&G remodelling post result of PY3-D4-RL well sidetrack. Production on net entitlement basis to HOEC averaged 538 bopd in FY 2008-09, as against 557 bopd in FY 2007-08, a decline of 3%. The Government share of Profit Petroleum was lower due to higher cost petroleum entitlement of the Company as per the terms of Production Sharing Contract.
Forward PlanHEPI, the Operator is reworking the G & G and Reservoir model of the field factoring in production history match and outcome of result of sidetrack of PY3-D4-RL well. After completion of the remodeling exercise, the consortium shall implement balance Phase III Development plan which envisages drilling of additional production well(s) and injector well.
CAMBAY BASIN
Block CB-ON-7The production from the block CB-ON-7 averaged approx 267 boepd. Production on net entitlement basis to HOEC averaged approx 94 boepd during the year, a decrease of 33% primarily due to natural decline. During the financial year 2008-09, the SPD Discovery was hooked up for production to existing infrastructure in the CB-ON-7 block, with initial production being 100 bopd from SPD-1 well.
Forward PlanThe Joint Venture partners comprising of GSPCL, ONGC and HOEC have requested the Government for retention of certain block area in accordance with the Government guidelines for further exploration, which is being considered by the Government. Should the Government grant consent, the JV shall acquire 3D seismic data and drill additional well(s) in the said area.
North Balol Gas FieldNorth Balol Field produced 15,191,871 scm of natural gas during the year with an average production rate of approx 41,622 scmd, up by 66% over the previous year.
Asjol FieldThe field produced at an average rate of approx 20 bopd during the year with an aggregate production of 7,150 bbls.
Block CB-OS/1The Directorate General of Hydrocarbons has approved the Plan of Development for Gulf “A” Discovery as submitted by ONGC, the Operator.
Operator has established a dedicated team and evolved a comprehensive framework to execute the project. Further, the Operator has initiated actions towards Environment Impact Assessment related activities, land survey etc.
ASSAM-ARAKAN BASIN
Block AAP-ON-94/1The Management Committee of the block has approved the Appraisal Programme of the Dirok Discovery, which envisages acquisition and interpretation of 3D Seismic data and drilling of Appraisal Well(s). The Company, as Operator, has already acquired 3D Seismic data and processing and interpretation of the same is underway.
RISKS, THREATS, UNCERTAINTIES, CONCERNS AND OPPORTUNITIESThe principal risks and uncertainties faced by the Company and the action taken to mitigate these risks, are as follows:
Oil Price VolatilityHOEC is exposed to volatility in the oil price since the Company does not undertake any oil price hedge. The impact of a falling oil price is however partly mitigated via the production sharing formula in the PSCs, whereby our share of gross production increases in a falling oil price environment due to cost recovery mechanism. We believe that our shareholders as a body prefer
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
to retain exposure to the oil price, so our policy is not to hedge against a fall in oil prices.
The PY-1 gas price being fixed under term contract entered by the Company coupled with take-or-pay provisions provides the Company with certainty in terms of cash inflows from sale of gas.
Cost Inflation impacting both Goods and ServicesThe current environment for oil field goods and services and for skilled human resources, has been described herein below (see ‘Outlook’). Under the terms of the PSCs, operating expenditure and capital costs are recoverable through cost recovery mechanism, so the effect of cost increase is cushioned to a certain degree, subject to approval of expenditure by the Management Committees under the terms of PSCs. The retention of key staff at an acceptable cost is addressed through our remuneration and incentive plan to give key staff a long term stake in the Company’s performance.
Geological RiskExploration is inherently a risky business, with statistically only a relatively small proportion of exploration wells resulting in commercial discovery. It is not possible to insure against the risk of exploration failure. HOEC’s policy is to contain this exposure within prudent limits.
Risk on account of adverse outcome of LitigationsThe Company is party to various ongoing litigations/arbitrations (also refer “Notes to Accounts”), which if decided against the Company, may have an adverse impact on the operations and/or financial position of the Company.
OpportunitiesThe Company continues to seek new opportunities which provide strategic fit to our existing portfolio/competencies while providing basis of reserve replacement.
Health, Safety and EnvironmentOil and gas operations carry a potentially high level of attendant risk, and the impact of an accident can be significant in terms of human, environmental and financial cost. HOEC carries out HAZOP, HAZID, SIMOPs for operated projects, maintains risk register covering risks specific to various operations and has Emergency Response Plan (ERP) in place. The Company has standard insurance policies, including Construction All Risk insurance (for construction projects) control-of-well cover in place covering all of its operated and non-operated assets.
FINANCIAL REVIEWPerformanceRevenueRevenue was up by 25% to Rs. 1,292 million on account of (a) higher Interest and Dividend on Investment of surplus funds, pending utilisation; and (b) the higher crude oil price realisation of USD 80/bbl (2007-08: 77/bbl).
Production on working interest basis during the year was 254,039 boe, 26% lower than the previous year. The net entitlement volume was 698 boepd, 6% lower than the previous year. Sales volume at 251,199 boe was 28% lower than in previous year. The inventory at the year end was 17% lower than the previous year.
Refer Annexure to this report for illustrative pre-tax distribution of Barrel.
Operating ProfitCost of sales increased from Rs. 360 million to Rs. 540 million, due to applicability of increased charter hire charges of the offshore production facilities in PY-3 Field for full year and higher exchange rate prevailing during the year.
There was no write off (nil unsuccessful exploration expenses) during the financial year 2008-09 (write off in previous year was Rs. 166.4 million on account of exploration cost pertaining to North Ledo-1 well and residual cost relating to block CY-OSN-97/1).
Interest and finance charges were Rs. 103.8 million, up from previous year due to increase in costs associated with secured term loan.
The operating profit was Rs. 738.1 million compared to Rs. 466.6 million in the previous year on account of (a) higher revenue in the current financial; and (b) unsuccessful exploration expenses of Rs. 166.4 million charged to Profit & Loss account in the previous year.
Net ProfitThe total tax charge after MAT Credit entitlement was Rs. 98.7 million for the year compared to total tax charge of Rs. 150.0 million. Profit after tax increased to Rs. 535.7 million (2007-08: Rs. 241.0 million).
Cash Flow and Capital Expenditure
During FY 2008-09, Operating Cash Flow, before Working Capital changes and Taxes, was Rs. 446.3 million.
Net cash flow from operations, after deduction of Rs. 47.1 million of tax and working capital increase of Rs. 2,167.1 million, was Rs. 2,566.3 million as compared to Rs. 558.5 million for the previous year.
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
13
Investment expenditure totaled Rs. 6,689.3 million (2007-08: Rs. 1,419.4 million) of which the exploration expenditure accounted for Rs. 152.4 million, development expenditure Rs. 6,466.2 million and others Rs. 70.7 million.
Term Debt decreased by Rs. 167.4 million to Rs. 1,304.8 million. Net decrease in cash balance was Rs. 4,345.7 million during the year.
FINANCIAL POSITION
LiquidityAt the year end, HOEC had cash and cash equivalent balances of Rs. 2,594.9 million and outstanding debt of Rs. 1,304.8 million.
Cash surplus to immediate requirements has been placed in debt oriented Liquid Funds and Bank Deposits as approved by the Board.
During the financial year 2008-09, the Company has issued a termination notice of the Dollar Facility Agreement (DFA) of USD 100 million towards PY-1 Field development from a consortium of domestic banks due to request by lenders for negotiating on increase in interest spread cost over Libor higher than provided in DFA. Further during the year, the Company has entered into a Loan Agreement with Eni Coordination Centre, S.A., Brussels (ECC) for availing a US Dollar denominated Term Loan by way of External Commercial Borrowing (ECB) amounting to USD 125 million to part finance the various development activities of the Company including PY-1 Field. The Company has applied for approval from Reserve Bank of India under the “approval route” and the same is awaited.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACYThe Company has a proper and adequate system of internal control commensurate with the size and nature of business. A review of risks and internal controls is carried out by the Company on behalf of the Audit Committee. The policies, internal control systems and measures in place are also reviewed by the Internal Auditors and necessary actions are recommended to the Audit Committee and the Board. No significant control failings were reported during the year.
The Company has implemented Maximo ERP system to further strengthen its procurement-to-payment function. Maximo ERP System, covers most of the Company’s operations with a defined online authorization protocol and provides a proper budgetary control system to monitor capital related
as well as other costs, against approved budget on an ongoing basis.
OUTLOOKBased on the forward plan in various assets, our outlook remains positive. On certain macro economic factors which impact the business, we share the following views:
Oil and Gas MarketsThe crude oil price slipped from a high of USD 147/bbl to USD 34/bbl during the year. Ignoring seasonal variations, we expect oil prices to remain in the range of USD 55 to 65/bbl in the immediate to short term period. Gas prices in India have been evolving over the years from an administered price regime of sub USD 2/mmbtu and eventually would become linked to energy equivalent pricing mechanism. With the Government finalizing the gas allocation policy and development of regulatory framework to establish gas transmission infrastructure spanning the country, the gap in producer gas prices can be expected to progressively close.
Price InflationThe global economics slowdown has also eased demand on oil service resources which have caused rig day rates, marine spread cost and costs of the attendant services to remain flat or register a modest decline.
MATERIAL DEVELOPMENT IN HUMAN RESOURCE FRONTHuman ware is your Company’s key resource. The Company views its employees as valuable resources who are important stakeholders in the growth, prosperity and development of the organization. Our ability to continuously enhance value of our core E&P assets depends largely on our ability to attract, train, motivate and retain the best professionals. Your company is exposed to the inherent risk associated with our ability to hire and retain skilled and experienced professionals.
Your Company has over the years evolved a favourable work environment that creates and promotes culture of performance for teams to maximize their potential. As you are aware of, the Company has a long-term incentive plan (LTIP), duly approved by the shareholders, to provide incentives by way of cash and employee stock options, to act as a retention tool. The employees are eligible beneficiaries, under the LTIP scheme.
The number of employees as at March 31, 2009 was 56 (previous year: 43).
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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HEALTH, SAFETY, ENVIRONMENT AND CORPORATE SOCIAL RESPONSIBILITY (HSEC)Your Company has taken account of the significance of health, safety, environment and corporate social responsibility (HSEC). FY 2008-09 has seen a focus on implementing HSEC standards across areas of operations.
In line with the Company’s HSE Management System, site specific HSE Procedures for the producing assets have been put in place. Emergency Response Plans for production operations, drilling campaigns and construction site activities have been developed to ensure timely response in times of emergency. HSE Management System Interface (Bridging) Plans are developed for alignment of HSE systems between the Company and its Contractors. Risk Assessment and Management studies have been carried out for onshore and offshore operations.
Special skills training on Job Safety Awareness ( JSA) and Risk Assessment and HSE awareness campaigns have been conducted and best practices have been felicitated by HSE Awards Program.
During the year under review, there were no fatalities, lost time incidents (LTI) and environmental incidents. The key performance
indicators (KPIs) related to HSE tracked by the Company are as below:
KPI’s Statistics 2008- 09 2007- 08Total man-hours up to 31 March 3,678,165
without LTI1,073,861
Fatalities 0 0No. of LTI Incidents 0 0Days since last LTI 943 578Oil Spill Incident 0 0
2008-09 Result
Industry statistics OGP
March 2009Fatal Accident Rate 0 3.12LTI Frequency 0 0.55LTI Severity 0 34.7
Thus, you would notice that the Company crossed three and half million man-hours mark with no LTI or fatality accident.
The Company, as part of its Corporate Social Responsibility (CSR) measure, has participated in “Self Help Programs” at panchayat level in areas of its operations to facilitate development of rural infrastructure and promoting rural employment. To promote the cause of education, the Company has distributed school books, stationary and uniforms to students in local schools in its areas of operations.
Notes:
* For pre NELP Blocks, Royalty borne by Licensee
** Cost Recovery Limit defined in PSC; biddable term
*** Profit Oil Sharing is based on Investment Multiple biddable term. Investment Multiple computation is as below:
Investment Multiple (IM) = Cumulative Net Cash Income of Contractor ÷ Cumulative Investment
wherein:
Net Cash Income of Contractor = Cost Petroleum + Contractors’ Profit Petroleum – Production Costs – Notional Income Tax
Investment = Exploration Costs + Development Costs
Annexure to the Management Discussion and Analysis Report
Director Report Main.indd 14 8/18/2009 4:45:03 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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RepoRt on CoRpoRate GoveRnanCeCompany’s philosophy on Code of CoRpoRate GoveRnanCe
Hindustan Oil Exploration Company Limited (hereinafter ‘HOEC’/‘the Company’) has always been committed to the principles of good Corporate Governance to promote the effective functioning of the Board and its Committees and to assist it in the exercise of its responsibilities. The Board of Directors, the Company’s highest policy making body, is committed in its responsibility for all constituents including investors, regulatory authorities and employees. The Company believes that the essence of Corporate Governance is integrity, transparency, accountability, ethical conduct, investor protection, better compliance with statutory laws and regulations and value creation for stakeholders.
HOEC further believes that all its operations and actions must serve the underlying goal of enhancing overall shareholders’ value over a sustained period of time and at the same time protect the interest of other stakeholders.
HOEC is compliant with the mandatory provisions of Clause 49 of the Listing Agreement as amended from time to time.
investor protectionHOEC’s core goal is to maintain the shareholders’ trust, faith and has been trying to enhance the value of their investments. HOEC, during execution of all its operations and actions, evaluates the risk factors involved therein and attempts to protect the interest of the shareholders.
statutory ComplianceIn pursuit of its goals, the Company will not compromise in complying with applicable laws and regulations at all levels and at all times.
Code of ConductAn important element of the revised Clause 49 relates to adoption of Code of Conduct for the Board of Director and Senior Management. HOEC has adopted separate codes viz. Directors’ Code of Conduct and Code of Ethics for Senior Management of the Company. All Board Members, Senior Management inter alia including personnels who are below the Senior Management level, but instrumental in the critical operations/functions are also covered under the said code. The said codes have been posted on the Company’s web site: www.hoec.com.
separation of Board’s supervisory role from executive managementThe Company has in line with the best Corporate Governance practice separated the Board’s supervisory role from that of the executive management. The Chairman of the Company is a non-executive independent director.
prohibition of insider tradingPursuant to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, as amended from time to time, the Company has also adopted the Code of Conduct for Prevention of Insider Trading. The said Code incorporates the amendments made in the aforementioned Insider Trading Regulations from time to time. The Company inter alia observes a closed period for trading in securities of the Company for Directors/Officers and Designated Employees of the Company for the period of atleast seven days prior to the consideration of quarterly/yearly results. The trading window is also closed in case of the price sensitive information/announcements/events. The said closure extends upto atleast 24 hours after the disclosure of the said results/price sensitive information/announcements/events to the Stock Exchanges.
secretarial auditA Secretarial Audit is carried out by a qualified Practicing Company Secretary for reconciling the total capital with National Securities Depository Limited (NSDL), Central Depository Services (India) Limited (CDSL) and in physical form vis-a-vis total issued and listed capital. The audit confirms that the total paid up capital is in accordance with the total number of shares held in physical form listed with the stock exchanges and the total number of dematerialized shares held with NSDL and CDSL.
The audit is carried out every quarter and the report thereon is submitted to the stock exchanges. The report is also placed before the Shareholders /Investors Grievance Committee and the Board of Directors for noting purpose.
promotersIn the beginning of the year 2008, Eni UK Holding plc., a wholly owned subsidiary of Eni S.p.A (hereinafter ‘ENI’), purchased a 27.17% indirect shareholding in HOEC following the purchase of Burren Energy plc., the holding Company of the Promoter viz. Burren Shakti Limited and Burren Energy India Limited. Subsequently, Eni UK Holding plc. came out with the mandatory open offer for an additional 20% of the issued share capital of HOEC and thereby acquired an overall stake of 47.18% of the paid up capital of the Company. Subsequent to the open offer, Eni UK Holding plc has assumed the status of the Promoter of the Company along with Burren Shakti Limited and Burren Energy India Limited.
ENI, present in 70 countries with about 79,000 employees, operates in the oil and gas industry, power generation and marketing and oilfield services, construction and engineering. In these businesses it has a strong edge and leading international market position.
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
as the Managing Director of the Company for a period of two years or until the conclusion of 26th Annual General Meeting of the Company, whichever is earlier. Further, the members had also approved the re-appointment of Mr. Manish Maheshwari as the Joint Managing Director of the Company for a period of three years or until the conclusion of 27th Annual General Meeting, whichever is earlier.
Further, the Board has at its meeting held on September 30, 2008 appointed Mr. Sunil Behari Mathur as an additional director (Independent) and on October 23, 2008 appointed Mr. Mukesh Butani as Director in Casual Vacancy (Independent) caused due to the resignation of Mr. Rahul Bhasin.
After the close of the year under review, Mr. Franco Conticini has resigned as the director of the Company. The Board has at its meeting held on June 11, 2009 appointed Mr. Sergio Adriano Laura as an additional director.
The Company has not paid any remuneration, other than sitting fees, to any Director except the Joint Managing Director. Stock options have been granted to two directors during the year. For details please refer to the Directors’ Report. None of the Directors are relatives of each other.
Further, based on the declaration of the Promoters, it is confirmed that they have not pledged any of their shareholding in the Company.
The requirements of Corporate Governance adhered to during the year has been given under the relevant parameters as set out below.
BoaRd of diReCtoRsThe Board has an optimum combination of Executive and Non-executive Directors. The strength of the Board of Directors is nine out of which three are Independent Directors, being not less than one-third of the total number of Directors. The Company has a Non-Executive Chairman. The number of Non-Executive Directors is seven, being not less than two-third of the total number of Directors.
During the year under reference, Mr. Atul Gupta, Managing Director, Mr. Finian O’Sullivan, Director and Mr. Rahul Bhasin, Director resigned from the Board of HOEC. Further, Mr. Paolo Carmosino, Mr. Santo Lagana’, Mr. Franco Conticini and Mr. Luigi Ciarrocchi had been appointed as the Directors of the Company at the 24th Annual General Meeting held on September 30, 2008. Mr. Luigi Ciarrocchi was also appointed
name of directors Category no. of attendance at the Board
meeting
Whether last aGm attended
memberships on Board of other public
Companies *
Board Committee Chairmanship/
membership of Board Committees of other public Companies@
no. of shares & % held in the Company
Mr. R. Vasudevan Non-Executive, Independent Director (Chairman)
5 of 5 Yes 3 Membership – 2 Nil
Mr. Deepak S. Parekh Non-Executive Non-Independent Director
1 of 5 No 17 # Chairmanship – 5 Membership – 2
Nil
Mr. Franco Conticini(from Sept. 30, 2008 and up to May 27, 2009)
Non Executive Director 3 of 3 Yes Nil Nil Nil
Mr. Paolo Carmosino(from Sept. 30, 2008)
Non- Executive Director 1 of 3 Yes Nil Nil Nil
Mr. Santo Lagana’(from Sept. 30, 2008)
Non-Executive Director 3 of 3 Yes Nil Nil Nil
Mr. Sunil Behari Mathur(from Sept. 30, 2008)
Non-Executive, Independent Director
1 of 3 N.A. 11 Chairmanship – 4 Membership – 3
Nil
Mr. Mukesh Butani(from Oct. 23, 2008) Casual Vacancy
Non-Executive, Independent Director
2 of 2 N.A. Nil Nil Nil
Mr. Sergio Adriano Laura (from June 11, 2009)
Non-Executive Director N.A. N.A. N.A. Nil Nil
Mr. Rahul Bhasin (upto Oct. 23, 2008)
Non-Executive, Independent Director
3 of 3 Yes N.A. N.A. Nil
Mr. Finian O’ Sullivan*(upto Aug. 20, 2008)
Non-Executive, Promoter Nominee Director
1 of 2 N.A. N.A. Nil Nil
Mr. Atul Gupta*(upto Aug. 21, 2008)
Managing Director, Promoter Nominee Director
2 of 2 Yes N.A. Nil Nil
Mr. Luigi Ciarrocchi(from Sep. 30, 2008)
Managing Director 1 of 3 Yes Nil Nil Nil
Mr. Manish Maheshwari $ Joint Managing Director 5 of 5 Yes 1 Nil Nil * Excludes directorship on the Board of foreign companies registered out side India.Status as on March 31, 2009.# Including alternate directorship in four companies and one company where as special director by the Ministry of Corporate Affairs, Government of India.@ Represents Memberships/Chairmanships of Audit Committee and Shareholders/Investors Grievance Committee across all public limited companies, whether listed on the stock exchange(s)
or not.$ Mr. Manish Maheshwari is also the Chairman of HOEC Bardahl India Limited, wholly owned subsidiary of the Company.
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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BoaRd meetinGsThe Board shall have four regularly scheduled meetings per year. During the year under review, five (5) Board Meetings were held and the gap between any two meetings did not exceed four months. The maximum and the minimum time gap between two Board meetings was 95 days and 23 days respectively.
The dates on which the Board Meetings were held are June 06, 2008, July 28, 2008, September 30, 2008, October 23, 2008 and January 15, 2009.
The Board periodically reviews compliance of all laws applicable to the Company and takes steps to rectify non-compliances, if any.
The Company did not have any pecuniary relationship with the Non-executive directors during the year under review, except for the payment of sitting fees to the Directors and grant of 9,274 stock options to the Chairman.
diReCtoR seeKinG Re-appointmentIn accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Mr. R. Vasudevan will retire by rotation and the term of office of Mr. Sunil Behari Mathur, Mr. Mukesh Butani and Mr. Sergio Adriano Laura would expire at/on the date of the ensuing Annual General Meeting. All of them, being eligible have offered themselves for reappointment. The Company has received valid notice and requisite deposits from a member of the Company under Section 257 of the Companies Act, 1956, signifying the intention to propose the names of Mr. Sunil Behari Mathur, Mr. Mukesh Butani and Mr. Sergio Adriano Laura for the office of Director.
The brief resume and nature of expertise of Mr. R. Vasudevan, Mr. Sunil Behari Mathur, Mr. Mukesh Butani and Mr. Sergio Adriano Laura in specific areas, their directorships in the Companies and memberships of Board Committees, shareholding etc. are given in the Notes to the Notice of the Annual General Meeting and hence not provided here.
insURanCe CoveRaGeThe Company has obtained Directors’ liability insurance coverage inter alia in respect of any legal actions that might be initiated against the Directors.
aUdit Committeeterms of ReferenceThe terms of reference of the Audit Committee inter alia are to review financial reporting process, reports of the Internal Auditors, internal control systems and quarterly/annual financial statements. The Audit Committee also meets Statutory Auditors and Internal Auditors periodically to discuss their findings, suggestions and other matters.
The Audit Committee also reviews the financial statements including investments of the Subsidiary Company. The scope of the activities of the Audit Committee is as prescribed under Section 292A of the Companies Act, 1956 as well as Clause 49.II of the Listing Agreement entered into with the Stock Exchanges.
Composition of audit CommitteeMajority of the members of the Committee are non-executive independent directors. During the year the Board had appointed Mr. Sunil Behari Mathur, Mr. Paolo Carmosino and Mr. Mukesh Butani as the members of the Committee respectively. Mr. Mukesh Butani, an independent director, is the Chairman of the Committee.
The composition of the Audit Committee and the details of meetings attended by the Directors are given below.
sr. no.
name of members and their position no. of Committee meetings attended
1. Mr. Rahul Bhasin, Chairman (up to 30.09.2008)
2 of 2
2. Mr. Mukesh Butani, Chairman (w.e.f. 23.10.2008)
2 of 2
3. Mr. R. Vasudevan, Member 4 of 4
4. Mr. Atul Gupta, Member (up to 21.08.2008)
2 of 2
5. Mr. Sunil Behari Mathur, Member (w.e.f. 23.10.2008)
1 of 2
6. Mr. Paolo Carmosino, Member (w.e.f. 30.09.2008)
0 of 2
All the members of this Committee possess good knowledge of finance, accounts and basic elements of Corporate Laws. The Company Secretary is also the Secretary to the Audit Committee.
date of audit Committee meetingsDuring the year under review, four (4) Audit Committee Meetings were held on June 06, 2008, July 28, 2008, October 23, 2008 and January 15, 2009.
Compensation & RemUneRation Committeeterms of ReferenceThe terms of reference of the Compensation & Remuneration Committee inter alia are to decide the term of services and compensation payable to Whole-time/Managing Director/Joint Managing Director and to discharge such other functions as may be referred by the Board from time to time. Additionally, the Committee also considers the compensation payable to senior executives of the Company. It is also entrusted with the duty to administer the Long Term Incentive Plan of the Company.
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
Composition of CommitteeThe Committee comprises of four directors. Mr. R. Vasudevan, an independent director, is the Chairman of the Committee. During the year the Board had appointed Mr. Franco Conticini, Mr. Santo Lagana’ and Mr. Mukesh Butani as the members of the Committee. Subsequent to the financial year end, Mr. Franco Conticini has, upon his resignation as a director, ceased to be a member of the Committee. Further, the Board has appointed Mr. Sergio Adriano Laura as a member of the Committee w.e.f. July 23, 2009.
The composition of the Compensation & Remuneration Committee and the details of meetings attended by the Members are given below.
Sr. No.
Name of member and their position No. of Committee meetings attended
1. Mr. R. Vasudevan, Chairman 3 of 3
2. Mr. Rahul Bhasin, Member (up to 30.09.2008) 2 of 2
3. Mr. Finian O’Sullivan, Member (up to 20.08.2008) 1 of 2
4. Mr. Atul Gupta, Member (up to 21.08.2008) 2 of 2
5. Mr. Franco Conticini, Member (w.e.f. 30.09.2008 upto 27.05.2009)
1 of 1
6. Mr. Santo Lagana, Member (w.e.f. 30.09.2008) 1 of 1
7. Mr. Mukesh Butani, Member (w.e.f. 23.10.2008) 1 of 1
8. Mr. Sergio Adriano Laura, Member (w.e.f. July 23, 2009) N.A.
During the year under review, three (3) Compensation & Remuneration Committee meetings were held on June 06, 2008, July 28, 2008 and January 15, 2009.
REMUNERATION POLICYThe Company while deciding the remuneration package takes into consideration, the following:
(A) Employment scenario.
(B) Remuneration package of the industry/other industries for the requisite managerial talent.
(C) The qualification and experience held by the appointee.
The Managing Director of the Company is appointed as per the terms and conditions decided by the Board of Directors of the Company. Mr. Atul Gupta, erstwhile Managing Director of the Company did not draw any remuneration from the Company, except sitting fee for attending the Board/Committee Meetings. Mr. Luigi Ciarrocchi, Managing Director of the Company does not draw any remuneration from the Company.
The remuneration package of the Joint Managing Director comprises of salary, allowances, perquisites and bonuses as approved by the shareholders at the Annual General Meeting held on September 30, 2008 and as revised by the Board from time to time.
REMUNERATION PAID TO THE MANAGING DIRECTOR / JOINT MANAGING DIRECTOR DURING THE YEAR 2008-09.
In Rupees
Name FIXED COMPONENT PERFORMANCE LINKED INCENTIVE Total Remuneration
(Refer Note 2 below)
Salaries Contribution to provident
fund & super- annuation
fund
Other allowances/ perquisites
(Refer note 1 below)
Total Bonus Stock Options (No. of shares)
(Refer Note 2 below)
Total (Refer Note 2 below)
(A) (B) (A+B)
Mr. Manish Maheshwari, Joint Managing Director
5,400,000 1,458,000 6,600,420 13,458,420 1,358,137 4,498 1,358,137 14,816,557
Notes:1. Other allowance / perquisites include house rent allowance, flexible allowance
and reimbursement of medical expenses incurred for self and family.2. As per the terms of the Long Term Incentive Plan 2005, the Stock Options
are granted at “NIL” exercise price. For details please refer the Directors’ Report.
3. During the year ended March 31, 2009, following benefits were provided to the Joint Managing Director, the value whereof is not included in the table above;
• Personal accident insurance for self and medical insurance for self and family • Provisionofcompanycarwithdriver • Telephoneandothercommunicationfacilitiesatresidence • ContributiontoGroupSavingLinkedScheme • ContributiontoEmployee’sDepositLinkedInsuranceScheme4. Actuarial valuation based contribution/provision with respect to gratuity
and provision for compensated absences have not been included as these are determined for the Company as a whole. Long term incentive benefits including stock options have been included in the remuneration of the year in which they are awarded/granted to the Director(s).
5. In computing Managerial Remuneration, perquisites have been valued in terms of actual expenditure incurred by the Company in providing the benefits except in case of certain expenses, where the actual amount of expenditure cannot be ascertained with reasonable accuracy notional amount as per Income Tax Rules has been added.
6. Mr. Atul Gupta, erstwhile Managing Director, has been paid a sitting fee of Rs. 40,000 during the year, which is not included in the table above.
Period of Contract with the Managing Director Mr. Luigi Ciarrocchi’s appointment as the Managing Director is for a period of about two years commencing from September 30, 2008 until the conclusion of 26th Annual General Meeting (year 2010).
Period of Contract with the Joint Managing Director Mr. Manish Maheshwari’s appointment as the Joint Managing Director is for a period of about three years commencing from September 30, 2008 until the conclusion of 27th Annual General Meeting of the Company (year 2011). The notice period under the terms of appointment is three months. For details of stock options granted please refer to the Directors’ Report.
Directors of the Company, other than Joint Managing Director, have been paid remuneration, if any, by way of sitting fees, for attending the meetings of the Board of Directors and its
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Committees. The details of sitting fees paid during the financial year 2008-09 is given below:
sr. no.
name of director amount in Rs.
1. Mr. R. Vasudevan 80,000*
2. Mr. Deepak S. Parekh 5,000
3. Mr. Rahul Bhasin (up to 30.09.2008) 35,000
4. Mr. Finian O’Sullivan (up to 20.08.2008) 10,000
5. Mr. Atul Gupta (up to 21.08. 2008) 40,000
6. Mr. Sunil Behari Mathur (from 30.09.2008) 10,000
7. Mr. Mukesh Butani (from 23.10.2008) 25,000
* Does not include cost of 9,274 stock options granted to him during the
financial year 2008-09.
The Employee Stock Option Scheme is not applicable to the Promoter Director(s) or Director(s) who either by himself/themselves or through his/their relative or through any body corporate, directly or indirectly hold(s) more than 10% of the outstanding equity shares of the Company. For further details please refer to the Directors’ Report.
shaReholdeRs / investoRs GRievanCe CommitteeThe terms of reference of the Shareholders/Investors Grievance Committee inter alia are to look into the shareholders/investors complaints pertaining to transfer and transmission of shares, issue of duplicate shares, non-receipt of balance sheet, dividends etc.
To facilitate prompt services to the shareholders of the Company, Mr. Vikash Jain, Company Secretary, Chief Tax & Legal and Mr. Minesh Bhatt, Assistant Company Secretary are severally authorised to approve the Share Transfer and its related processes/ procedures/activities viz., splitting, consolidation, replacement, issue of duplicate share certificate, dematerialisation and rematerialisation of equity shares etc. They present their reports to the Shareholders/Investors Grievance Committee from time to time for noting.
During the year under review, four (4) Shareholders/Investors Grievance Committee meetings were held on June 06, 2008, July 28, 2008, October 23, 2008 and January 15, 2009. The composition of the Shareholders/Investors Grievance Committee and the details of meetings attended by committee members are given below.
sr. no.
name of members and their position no. of Committee meetings attended
1. Mr. R. Vasudevan, Chairman 4 of 4
2. Mr. Atul Gupta, Member (up to 21.08.2008) 2 of 2
3. Mr. Manish Maheshwari, Member 4 of 4
4. Mr. Paolo Carmosino, Member (from 30.09.2008) 0 of 2
The Shareholders/Investors Grievance Committee meetings are also attended by the Company Secretary & Compliance Officer.
Name, Designation & Address of Company Secretary & Compliance Officer
Mr. Vikash Jain Company Secretary, Chief Tax & Legal Hindustan Oil Exploration Company Limited ‘Lakshmi Chambers’, 192, St. Mary’s Road, Alwarpet Chennai-600 018 (Tamil Nadu) India Tel:+91-(044)66229000•Fax:+91-(044)66229011/12 E-mail : [email protected]
investoR edUCation and pRoteCtion fUndDuring the year under review, the Company has in compliance with Section 205C of the Companies Act, 1956, deposited an amount of Rs. 689,718 being the amount of unclaimed /unpaid dividend for the financial year 2000-2001, with the Investor Education and Protection Fund.
sUBsidiaRy CompanyThe Company does not have any material unlisted subsidiary and hence is not required to have an Independent Director of the Company on the Board of such subsidiary. The Audit Committee reviews the financial statements of the Company’s unlisted subsidiary company. The minutes of the meeting of the Board of directors of the subsidiary company are periodically placed before and reviewed by the Board of Directors of the Company.
Details of number of grievances received and replied/resolved during the year are as under:
particulars total Grievances/Complaints
received
total Grievances/Complaints resolved/replied
pending Grievances/Complaints
as on 31.03.2009
Received from Investors 57 57 Nil
Received from NSDL/CDSL 5 5 Nil
Referred by SEBI 72 72 Nil
Referred by Stock Exchanges/Depositories
13 13 Nil
RBI/Govt. Authorities Nil Nil Nil
Total 147* 147* Nil
* excludes 29 complaints for which sought additional/relevant information from the complainants.
There are no grievance/complaints from shareholders remaining unreplied/unresolved except disputed court cases etc. as every effort is maintained to immediately redress investors’ grievances/complaints without loss of time. There was no pending share transfer request for transfer as on March 31, 2009.
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
Whistle BloWeR poliCyThough Whistle Blower Policy is non mandatory, the Company has adopted the Whistle Blower Policy as recommended by the Audit Committee and approved by the Board of Directors.
During the year, no personnel have been denied access to the Audit Committee. The Whistle Blower Policy is available on the web site of the Company.
details on GeneRal Body meetinGsLocation, Date and Time of last three Annual General Meetings is as under
year location date time
2005-2006 “Tropicana Hall”, Taj Residency Vadodara, Akota Gardens, Akota, Vadodara – 390 020.
September 28, 2006
10:30 a.m.
2006-2007 “Chandarva”, WelcomHotel Vadodara, R. C. Dutt Road, Alkapuri, Vadodara – 390 007.
September 28, 2007
10:30 a.m.
2007-2008 “Tropicana Hall”, Taj Residency Vadodara, Akota Gardens, Akota, Vadodara – 390 020.
September 30, 2008
10:30 a.m.
NOTES :
1. The details of the Special Resolutions passed at the Annual General Meeting (AGM) for the last 3 years are as under:
(a) Appointment of Mr. Atul Gupta as the Managing Director of the Company w.e.f. August 01, 2006 upto the conclusion of the 24th Annual General Meeting of the Company. (22nd AGM held on September 28, 2006).
(b) Appointment of Mr. Manish Maheshwari, as the Joint Managing Director of the Company w.e.f. August 01, 2006 upto the conclusion of the 24th Annual General Meeting of the Company. (22nd AGM held on September 28, 2006).
(c) Ratification and approval of Remuneration paid to Mr. Rakesh Jain, erstwhile Managing Director of the Company, being in excess of the limits specified in Schedule XIII. (23rd AGM held on September 28, 2007).
(d) Ratification and approval of Remuneration paid to Mr. Manish Maheshwari, Joint Managing Director of the Company, being in excess of the limits specified in Schedule XIII. (23rd AGM held on September 28, 2007).
(e) Appointment of Mr. Luigi Ciarrocchi as the Managing Director of the Company w.e.f. September 30, 2008
until the conclusion of the 26th Annual General Meeting of the Company. (24th AGM held on September 30, 2008).
(f ) Appointment of Mr. Manish Maheshwari as the Joint Managing Director of the Company w.e.f. September 30, 2008 until the conclusion of the 27th Annual General Meeting of the Company. (24th AGM held on September 30, 2008).
(g) Payment of remuneration/commission (including cash bonuses under Long Term Incentive Plan of the Company) in addition to the sitting fees for attending the meetings of the Board or Committees thereof, to the Non-executive Directors of the Company at the rate not exceeding 1% of the net profits of the Company for the particular financial year in relation to which the remuneration/commission is payable. (24th AGM held on September 30, 2008).
2. No Special Resolution was passed through postal ballot during the last year.
The Company is not anticipating any Special Resolution to be passed through Postal Ballot and hence procedure for postal ballot has not been provided for.
disClosURes1. Related Party Transactions are disclosed in the Notes to
Accounts forming part of the Annual Report. None of the transactions with any of the related parties were in conflict with the interest of the Company.
2. There are no penalties, strictures imposed on the Company by Stock Exchange or SEBI or any Statutory Authority for non-compliance by the Company, on any matter related to capital markets, during the last three years.
3. Though Whistle Blower Policy is non-mandatory, the Company has adopted the same, which has been approved by the Board. No personnel has been denied access to the Audit Committee.
4. All the mandatory requirements under Clause 49 of Listing Agreement in respect of Corporate Governance have been complied with. The Company is inter alia in compliance with the non-mandatory requirements relating the Remuneration Committee and Whistle Blower Policy. In respect of adoption of other non-mandatory requirements, the Company will review its implementation from time to time. Further, the Company has also ensured that the persons who are appointed as independent director /(s) have the requisite qualifications and experience which would be of use to the Company and which, in the opinion of the Company, would enable them to contribute effectively to the Company in his capacity as an independent director.
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means of CommUniCationThe quarterly, half yearly, annual financial results are normally published in the Economic Times, Ahmedabad edition and Vadodara Samachar, Vadodara edition. Apart from this, the Company has been also publishing its Audited Annual Accounts in the leading news papers. The results along with official news release are promptly displayed on the Company’s web site at www.hoec.com. As the Company publishes the audited annual results within the stipulated period of three months as required by the listing agreement with the Stock Exchanges hence the unaudited results for the last quarter of the financial year are not published.
No presentations were made to institutional investors or to the analysts during the year under review.
Management Discussion & Analysis Report forms part of the Annual Report.
GeneRal shaReholdeRs infoRmation
1. Day, Date, Time and Venue of 25th Annual General Meeting.
Tuesday, 29th day of September, 2009 at 10:30 a.m at “Tropicana Hall”, The Gateway Hotel Vadodara, Akota Gardens, Akota, Vadodara – 390 020.
2. Financial Year/Financial Year Calendar
April 1, to March 31Results for the quarter ending on:
June 30, 2009 : on or before July 31, 2009
September 30, 2009: on or before October 31, 2009
December 31, 2009 : on or before January 31, 2010
March 31, 2010 : on or before June 30, 2010
3. Book Closure Date August 7, 2009 to August 11, 2009 (both days inclusive).
4. Dividend Payment Date
Not Applicable (No dividend recommended)
Equity Shares of the Company at present are listed at following Stock Exchanges
1. Bombay Stock Exchange Limited (BSE)
2. National Stock Exchange of India Limited (NSE)
The Company has paid annual listing fees for the Financial Year 2009-10 to the said Stock Exchanges and annual maintenance/custodial charges/fees to the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).
Stock Code:
Bombay Stock Exchange Limited (BSE) : 500186
National Stock Exchange of India Limited (NSE) : HINDOILEXP Series : Eq
The Company has established the connectivity for trading of equity shares in the depository system with both depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). International Security Identification Number (ISIN) of the Company’s equity shares with NSDL and CDSL is INE345A01011.
Stock Market Data: BSE/NSE
month
Bse share price Bse sensex (high)
nse s&p nifty (high)
high price
low price
April-2008 157.80 101.20 17,480.74 5,230.75 May-2008 159.90 133.10 17,735.70 5,298.85 June-2008 140.20 116.00 16,632.72 4,908.80 July-2008 138.90 124.10 15,130.09 4,539.45 August-2008 144.00 117.10 15,579.78 4,649.85 September-2008 125.50 91.00 15,107.01 4,558.00 October-2008 98.85 42.90 13,203.86 4,000.50 November-2008 90.50 58.00 10,945.41 3,240.55 December-2008 74.40 56.10 10,188.54 3,110.45 January-2009 74.80 51.70 10,469.72 3,147.20 February-2009 61.00 50.85 9,724.87 2,969.75 March-2009 63.35 44.05 10,127.09 3,123.35
Share Price Chart
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
ReGistRaRs and tRansfeR aGentsLink Intime India Private Limited (formerly Intime Spectrum Registry Limited) Unit: Hindustan Oil Exploration Company Limited 308, Jaldhara Complex, 1st Floor, Opp. Manisha Society, Vasna Road, Vadodara - 390 015 (Gujarat) India. Email : [email protected] Tel : +91 (0265) 2250241,3249857 Fax : +91 (0265) 2250246
shaRe tRansfeR & demat system• Share Transfer in physical form requests are generally
registered and returned within a period of 21 days from the date of receipt and request for dematerialisation, rematerialisation generally confirmed within a period of 21 days from the date of its receipt, if documents are complete in all respect.
• As on March 31, 2009 Company has dematerialized92,231,879 equity shares, which is 70.68% of the total equity shares.
distRiBUtion of shaReholdinG as on maRCh 31, 2009
CateGoRy (shares)
physiCal nsdl Cdsl total
no. of shareholders
no. of shares
no. of shareholders
no. of shares
no. of shareholders
no. of shares
no. of shareholders
no. of shares
1 to 5000 12,937 2,592,537 44,376 14,485,556 18,883 4,675,004 76,196 21,753,097
5,001 to 10,000 1 8,750 263 1,875,909 78 569,096 342 2,453,755
10,001 to 20,000 1 12,766 141 1,994,006 41 547,241 183 2,554,013
20,001 to 30,000 1 20,600 42 1,032,465 11 280,968 54 1,334,033
30,001 to 40,000 – – 20 683,212 6 217,991 26 901,203
40,001 to 50,000 – – 17 786,711 3 135,618 20 922,329
50,001 to 1,00,000 1 69,178 33 2,287,535 5 347,407 39 2,704,120
Above 1,00,000 2 35,557,579 40 60,492,195 5 1,820,965 47 97,870,739
TOTAL 12,943 38,261,410 44,932 83,637,589 19,032 8,594,290 76,907 130,493,289
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shaReholdinG patteRn as on maRCh 31, 2009
Category code
Category of shareholder number of shareh-
olders
total number of shares
number of shares held in
dematerialized form
total shareholding as a percentage of total number of shares
shares pledged or otherwise encumbered
as a percentage
of (a+B)
as a percentage of
(a+B+C)
number of shares
as a percent-
tage
I II III IV V VI VII VIIIIX = VIII ÷ IV x 100
(a) promoter and promoter Group
1. Indian
2. Foreign(Foreign Companies) 4 61,569,134 26,046,277 47.18 47.18 Nil Nil
total shareholding of promoter and promoter Group (a) = (a)(1) + (a)(2) 4 61,569,134 26,046,277 47.18 47.18 nil nil
(B) public shareholding
1. institutions
(a) Mutual Funds/UTI 7 86,300 83,200 0.06 0.06 Nil Nil
(b) Financial Institutions/Banks 13 129,549 127,289 0.10 0.10 Nil Nil
(c) Insurance Companies 2 2,183,975 2,183,975 1.67 1.67 Nil Nil
(d) Foreign Institutional Investors 14 4,563,870 4,562,870 3.50 3.50 Nil Nil
sub-total (B)(1) 36 6,963,694 6,957,334 5.33 5.33 nil nil
2. non-institutions
(a) Bodies Corporate 1,305 26,068,832 25,905,382 19.98 19.98 Nil Nil
(b) Individuals including Office Bearers
i Individual shareholders holding nominal share capital up to Rs. 1 lakh 73,598 21,233,606 19,044,490 16.27 16.27 Nil Nil
ii Individual shareholders holding nominal share capital in excess of Rs. 1 lakh 236 12,911,537 12,911,537 9.89 9.89 Nil Nil
(c) Any Other
i Clearing Member 312 378,175 378,175 0.29 0.29 Nil Nil
ii Non Resident Shareholders 1,416 1,368,311 988,684 1.05 1.05 Nil Nil
sub-total (B)(2) 76,867 61,960,461 59,228,268 47.48 47.48 nil nil
total public shareholding (B) = (B) (1)+ (B) (2)
76,903
68,924,155
66,185,602
52.82
52.82 nil nil
GRand total (a)+(B) 76,907 130,493,289 92,231,879 100.00 100.00 nil nil
NOTE:
1. The classification of the shareholders as provided by the depositories has been relied upon, except for correction of prima facie errors. Each folio/client id has been regarded as a separate shareholder.
2. Promoters shares pledge data is based on their declaration dated April 14, 2009 & April 15, 2009.
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
statement showing shareholding of persons belonging to the category “promoter and promoter Group”
sr. no.
name of the shareholder total shares held shares pledged or otherwise encumbered
numberas a % of grand total (a)+(B)+(C)
number as a percentage
as a % of grand total (a)+(B)+(C)
of sub-clause (i) (a)
i ii iii iv v IX = VIII ÷ IV x 100 vii
1. Eni UK Holding plc. 26,046,277 19.96 NIL NIL NIL
2. Eni UK Holding plc. 69,178 0.05 NIL NIL NIL
3. Burren Shakti Limited 35,440,913 27.16 NIL NIL NIL
4. Burren Energy (India) Limited 12,766 0.01 NIL NIL NIL
TOTAL 61,569,134 47.18 NIL NIL NIL
statement showing shareholding of persons belonging to the category “public” and holding more than 1% of the total number of shares
sr. no.
name of the shareholder number of shares
shares as a percentage of total number of shares
{i.e., Grand total (a)+(B)+(C) indicated in statement at para (i)(a) above}
1. Housing Development Finance Corporation Limited 14,826,303 11.362. Matterhorn Ventures 3,308,997 2.54
3. Jhunjhunwala Rakesh Radheshyam 2,300,643 1.76
4. General Insurance Corporation of India 2,106,938 1.61 TOTAL 22,542,881 17.27
oUstandinG adR/GdR/WaRRants etC.:Not Applicable
pRoCess / plant / pRodUCtion faCilities loCationThe Company is engaged in the business of Oil and Gas exploration, development & production, and is at present operating at various fields as mentioned in section Operational Highlights in the Annual Report. The address of the various production facilities is as follows:
Palej Production Facilities [PPF] Block CB-ON-7, Village Makan, Near Palej, Vadodara District, Gujarat
North Balol Gas Collection Station [GCS] Block North Balol, Near Palaj, Mehsana District, Gujarat
Asjol Early Production System [EPS] Block Asjol, Village Katosan, Mehsana District, Gujarat
Tahara Floating Production Unit [under the control of Hardy Exploration & Production (India) Inc. (Operator of the Block)]Offshore Cauvery Basin, Block CY-OS-90/1, Tamil Nadu
Please note that the production facilities for PY-1 field are under construction/installation.
addRess foR CoRRespondenCeSecretarial Department Hindustan Oil Exploration Company Limited ‘Lakshmi Chambers’, 192, St. Mary’s Road Alwarpet, Chennai – 600 018 (Tamil Nadu) India Tel : + 91-(044)- 66229000 Fax : +91-(044)- 66229011/12 Email : [email protected]
For and on behalf of the Board
R. VasudevanDate: July 23, 2009 Chairman
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deClaRation
I hereby declare that all the members of the Board and the senior management personnel of the Company have affirmed compliance with their respective Code of Conduct, as applicable to them for the Financial Year ended 31st March, 2009.
It is further, declared that the Board of Directors of the Company had at its meeting held on June 11, 2009 taken note of the CEO/CFO Certificate.
For and on behalf of the Board
Manish MaheshwariDate: July 23, 2009 Joint Managing Director
CeRtifiCate on CoRpoRate GoveRnanCeTo,The MembersHindustan Oil Exploration Company Limited
I have examined the compliance of the conditions of Corporate Governance by Hindustan Oil Exploration Company Limited, for the financial year ended 31st March, 2009 as stipulated in Clause 49, as amended, of the Listing Agreement of the said Company with the Stock Exchanges in India.
The compliance of conditions of Corporate Governance is the responsibility of the management. My examination was limited to procedures and implementation thereof adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statement of the Company.
In my opinion and to the best of my information and according to the explanations given to me, I certify that the Company has complied with the conditions of Corporate Governance as stipulated in the Listing Agreement.
I state that as per the records maintained, no investor complaint/grievances against the Company are pending for a period exceeding one month before Shareholders/Investors Grievance Committee.
I further state that such compliance is neither an assurance as to the future viability of the Company nor efficiency or effectiveness with which the management has conducted the affairs of the Company.
Niraj TrivediPlace : Vadodara Company SecretaryDate : July 23, 2009 CP. No. 3123
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
AUDITORS’ REPORT
TO THE MEMBERS OF HINDUSTAN OIL EXPLORATION COMPANY LIMITED
1. We have audited the attached Balance Sheet of Hindustan Oil Exploration Company Limited (“the Company”) as at March 31, 2009, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the 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 misstatement. 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, (CARO) issued by the Government in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the Company. Our comments in the Annexure are restricted to the activities of the Company only and exclude matters relating to the Company’s interest in the unincorporated joint ventures, which are not subject to audit under the Companies Act, 1956 and their auditors have not reported on matters specified in paragraphs 4 and 5 of the Order.
4. Without qualifying our opinion, we draw attention to the following:
(a) The Accounts have been drawn up in accordance with the statement of Significant Accounting Policies (Schedule 14). Accounting Policy 3 relating to “Successful Efforts Method”, Accounting Policy 4 relating to “Site Restoration”, the treatment of exploration and development costs and the estimates of proved developed hydrocarbon reserves are significant to the oil and gas exploration and production industry.
(b) Categorisation of the wells as exploratory, development and producing and the depletion of producing wells on the basis of proved developed hydrocarbon reserves
and expensing of the estimated site restoration liability on the basis of proved hydrocarbon reserves are made according to technical evaluation by the Management, on which we have placed reliance.
(c) As stated in Accounting Policy 6 of the statement of Significant Accounting Policies (Schedule 14), the financial statements of the unincorporated joint ventures are prepared in accordance with the requirements prescribed by the respective Production Sharing Contracts of the unincorporated joint ventures. Hence, certain adjustments/disclosures required under the mandatory accounting standards and the Companies Act, 1956 have been made in these accounts to the extent of information available with the Company.
5. (a) The accounts for the year ended March 31, 2009 include assets aggregating Rs. 11,003,824,831, liabilities aggregating Rs. 3,214,976,841, income aggregating Rs. 652,211 and expenditure aggregating Rs. 16,818,421 relating to the Company’s share in seven unincorporated joint ventures, which have been incorporated on the basis of accounts audited by other auditors.
(b) In respect of one non-producing unincorporated joint venture, assets aggregating Rs. 87,875 and liabilities aggregating Rs. 2,936,859 as at March 31, 2009 have been incorporated on the basis of the unaudited information available, in the absence of audited accounts.
6. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
a. 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, except for the unaudited financial information relating to one unincorporated joint venture for the year ended March 31, 2009 referred to in paragraph 5(b) above and read with our comments in paragraph 4(c) above.
b. in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
c. the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
d. in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 read with paragraph 4(c) above;
Auditors (main).indd 26 8/18/2009 4:43:26 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
27
(e) Subject to our comments with respect to the unincorporated joint ventures in paragraph 5(b) above to the extent of the unaudited amounts stated therein, 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 thereon and our comments in paragraph 4 and 5(a) above, 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:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2009;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
7. On the basis of the written representations/declarations received from the Directors and taken on record by the Board and according to the information and explanations given to us, we report that none of the Directors of the Company is disqualified as at March 31, 2009 from being appointed as a Director under Section 274(1)(g) of the Companies Act, 1956 on the said date.
For Deloitte Haskins & SellsChartered Accountants
K. Sai RamPlace : New Delhi PartnerDate : June 11, 2009 (Membership No. 022360)
Auditors (main).indd 27 8/18/2009 4:43:26 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
28
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
(i) Considering the nature of the Company’s business/activities during the year and read together with our comment relating to unincorporated joint ventures in paragraph 3 of our report, clauses 4(ii), 4(viii), 4(xii), 4(xiii), 4(xiv), 4(xv), 4(xviii), 4(xix) and 4(xx) of CARO are not applicable.
(ii) In respect of its fixed assets:
(a) The Company has generally maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) Some of the fixed assets were physically verified during the year by the Management in accordance with a programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.
(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.
(iii) According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained in pursuance of Section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of goods and rendering of services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of continuing failure to correct major weaknesses in the aforesaid internal control system.
(v) In respect of contracts or arrangements entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956, on the basis of audit procedures applied by us and to the best of our knowledge and belief and according to the information and explanations given to us on our enquiries on this behalf and the records produced to us for our verification:
(a) All the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under the said Section.
(b) Where the transactions are in excess of Rs. 5 lakhs in respect of any party during the year, the transactions have been made at prices which are, prima facie, reasonable having regard to the prevailing market prices at the relevant time except that in respect of certain services provided by the Company, no comparison of prices could be made as the Company informed us that there are no comparable prices and sources of supply.
(vi) The Company has not accepted any deposits from the public during the year.
(vii) In our opinion, the internal audit functions carried out during the year by an external agency appointed by the Management have been commensurate with the size of the Company and the nature of its business.
(viii) In respect of statutory dues:
(a) According to information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, the Company has been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Income Tax, Fringe Benefit Tax, Sales Tax, Value Added Tax, Service Tax, Wealth Tax, Customs Duty, Cess and other material statutory dues with the appropriate authorities during the year.
(b) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, no undisputed amounts in respect of Provident Fund, Investor Education and Protection Fund, Income Tax, Fringe Benefit Tax, Sales Tax, Value Added Tax, Service Tax, Wealth Tax, Customs Duty, Cess and other material statutory dues applicable to the Company was in arrears as on March 31, 2009 for a period of more than six months from the date they became payable.
(c) According to the records of the Company and the information and explanations given to us, details of disputed dues which have not been deposited as on March 31, 2009 are as follows:
Name of Statute
Nature of the Dues
Assessment Year
Amount (Rs.) Forum where Dispute is Pending
Income Tax Act, 1961
Tax and Interest
2003-2004 87,690,588 Income Tax Appellate Tribunal
2004-2005 97,052,469 Commissioner of Income Tax (Appeals)
2006-2007 1,430,040 Commissioner of Income Tax (Appeals)
Sub-total 186,173,097Less: Refunds Adjusted *
(34,202,040)
Net Amount 151,971,057Fringe Benefit Tax
2006-2007 741,728 Commissioner of Income Tax (Appeals)
* Refunds pertaining to other assessment years adjusted against disputed dues, based on intimations received from the Income Tax Department.
ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 3 of our report of even date)
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
29
(ix) The Company does not have any accumulated losses as at March 31, 2009. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.
(x) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and financial institutions.
(xi) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained, other than temporary deployment pending application.
(xii) According to the information and explanations given to us, and on an overall examination of the Balance Sheet
of the Company, funds raised on short term basis have, prima facie, not been used for long term investment.
(xiii) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and to the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company was noticed or reported during the year.
For Deloitte Haskins & SellsChartered Accountants
K. Sai RamPlace : New Delhi PartnerDate : June 11, 2009 (Membership No. 022360)
Auditors (main).indd 29 8/18/2009 4:43:26 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
30
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
Balance Sheet aS at March 31, 2009
In terms of our report of even date attached. On behalf of the Board of Directors
For Deloitte Haskins & Sells R. Vasudevan Manish MaheshwariChartered Accountants Chairman Joint Managing Director
K. Sai RamPartnerMembership No: 022360
Vikash Jain Company Secretary, Chief Tax and Legal
Place : New Delhi Place : New DelhiDate : June 11, 2009 Date : June 11, 2009
in rupees
Scheduleas at
March 31, 2009As at
March 31, 2008SOUrceS OF FUnDS SharehOlDerS’ FUnDSShare Capital 1 1,305,093,005 1,305,093,005Reserves and Surplus 2 9,295,551,440 8,776,409,756lOan FUnDSSecured Loans 3 1,304,840,843 1,472,198,692
11,905,485,288 11,553,701,453aPPlIcatIOn OF FUnDSFIXeD aSSetS 4
Gross Block 2,396,967,281 1,612,771,578 Less : Depreciation, Depletion and
Amortisation 1,361,096,742 1,232,899,406 Net Block 1,035,870,539 379,872,172 Capital Work in Progress 10,255,489,079 4,021,871,328
11,291,359,618 4,401,743,500 InVeStMentS 5 115,185,816 5,682,525,412 FOreIGn cUrrencY MOnetarY IteM tranSlatIOn DIFFerence accOUnt(See note 26(i) of Schedule 15)
17,179,351 0
DeFerreD taX aSSet (net) (See note 17(ii) of Schedule 15)
284,147,919 374,478,090
cUrrent aSSetS, lOanS anD aDVanceS
6
a. Inventories 662,914,303 238,215,358 b. Sundry Debtors 209,914,306 136,686,853 c. Cash and Bank Balances 2,762,716,670 1,571,965,784 d. Other Current Assets 3,596,085 7,394,535 e. Loans and Advances 591,775,112 555,265,832
4,230,916,476 2,509,528,362 less : cUrrent lIaBIlItIeS anD
PrOVISIOnS7
a. Current Liabilities 3,693,212,769 980,839,416 b. Provisions 340,091,123 433,734,495
4,033,303,892 1,414,573,911 net cUrrent aSSetS 197,612,584 1,094,954,451
11,905,485,288 11,553,701,453 Significant Accounting Policies 14 Notes to the Accounts 15 Schedules referred to above form an integral part of the Balance Sheet.
Account.indd 30 8/18/2009 5:53:17 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
31
PrOFIt anD lOSS accOUnt FOr the Year enDeD March 31, 2009
in rupees
ScheduleYear ended
March 31, 2009Year ended
March 31, 2008IncOMeSales and Services 8 851,783,601 833,469,169 (Decrease) / Increase in Stock of Crude Oil 9 (22,436,780) 1,306,409 Other Income 10 462,365,923 201,534,791
1,291,712,744 1,036,310,369
eXPenDItUre anD charGeSField Operating Expenses 11 430,057,407 310,835,347 Corporate Expenses (Net) 12 5,384,165 39,851,422 Depreciation & Amortisation on Fixed Assets 4 8,309,355 3,434,762 Depletion of Producing Properties 4 109,875,745 49,178,835 Provisions and Write Offs (See Item 3 of Schedule 14 & Note 33 of Schedule 15)
0 166,392,861
Interest and Finance Charges 13 103,771,815 75,611,744 657,398,487 645,304,971
PrOFIt BeFOre taX 634,314,257 391,005,398 Provision for Current Income Tax [including Rs. 1,350,000 (Previous Year Rs. Nil) for Prior Years]
32,350,000 35,000,000
Provision for Deferred Tax (See Note 17(ii) of Schedule 15) 95,000,000 113,000,000 Provision for Wealth Tax 200,000 200,000 Provision for Fringe Benefit Tax 2,100,000 1,800,000 MAT Credit Entitlement (See Note 17(i) of Schedule 15) (31,000,000) 0 PrOFIt aFter taX 535,664,257 241,005,398 Profit Brought Forward 931,505,283 843,170,508 Less : Transitional Adjustment (See Note 26(i) of Schedule 15) (13,139,573) 0 PrOFIt aVaIlaBle FOr aPPrOPrIatIOn 1,454,029,967 1,084,175,906
aPPrOPrIatIOnS :Proposed Dividend 0 130,493,289 Dividend Tax 0 22,177,334 Balance Carried to Balance Sheet 1,454,029,967 931,505,283 1,454,029,967 1,084,175,906 Earnings Per Share of Rs. 10 Face Value (Basic and Diluted)(See Note 16 of Schedule 15) rs. 4.10 Rs. 2.47Significant Accounting Policies 14Notes to the Accounts 15Schedules referred to above form an integral part of the Profit and Loss Account.
In terms of our report of even date attached. On behalf of the Board of Directors
For Deloitte Haskins & Sells R. Vasudevan Manish MaheshwariChartered Accountants Chairman Joint Managing Director
K. Sai RamPartnerMembership No: 022360
Vikash Jain Company Secretary, Chief Tax and Legal
Place : New Delhi Place : New DelhiDate : June 11, 2009 Date : June 11, 2009
Account.indd 31 8/18/2009 5:53:17 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
32
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
in rupees
Particulars Year ended March 31, 2009
Year ended March 31, 2008
a. caSh FlOW FrOM OPeratInG actIVItIeS Net Profit Before Tax 634,314,257 391,005,398 Adjustments for: Compensated Absences 300,000 962,900 Depreciation, Depletion and Amortisation 118,185,100 52,613,597 Exploration Expenses Written Off 0 166,392,861 Dividend / Interest Income (419,349,710) (168,985,321) Loss / (Profit) on Sale of / Discarded Assets (Net) 416,349 (16,602) Amortisation of Foreign Currency Monetary Item Translation Difference Account 4,345,806 0 Unrealized Exchange Loss / (Gain) 4,338,596 (32,699,821) Interest and Finance Charges 103,771,815 75,611,744 OPeratInG PrOFIt BeFOre WOrKInG caPItal chanGeS 446,322,213 484,884,756 Adjustments for: Trade and Other Receivables # (123,363,163) (48,773,748) Inventories (424,698,945) 5,717,342 Payables 2,715,196,825 259,760,616 caSh FrOM OPeratIOnS 2,613,456,930 701,588,966 Taxes Paid (47,123,501) (143,134,859) net caSh FrOM OPeratInG actIVItIeS 2,566,333,429 558,454,107
B. caSh FlOW FrOM InVeStInG actIVItIeS Purchase of Fixed Assets # (70,653,036) (9,544,498) Proceeds from Sale of Fixed Assets 127,232 46,040 Insurance Claim Received 7,768,846 0 Development Expenditure * (6,466,245,373) (961,934,531) Exploration Expenditure (152,377,373) (447,880,536) Dividend / Interest Received 423,148,160 171,349,501 net caSh USeD In InVeStInG actIVItIeS (6,258,231,544) (1,247,964,024)
c. caSh FlOW FrOM FInancInG actIVItIeS Proceeds from Issue of Share Capital 0 6,105,132,657 Secured Loans Taken – Long Term 0 515,463,791 Secured Loans Repaid – Long Term (349,159,505) (331,513,674) Interest and Finance Charges Paid * (151,940,637) (140,046,165) Dividend Paid (including Dividend Tax) (152,670,623) 0 Rights Issue Expenses (Net) 0 (15,304,389) net caSh (USeD In) / FrOM FInancInG actIVItIeS (653,770,765) 6,133,732,220
net (DecreaSe) / IncreaSe In caSh anD caSh eQUIValentS (a+B+c) (4,345,668,880) 5,444,222,303
Cash, Cash Equivalents: Opening Balance 6,940,555,784 1,496,333,481 Closing Balance 2,594,886,904 6,940,555,784
(4,345,668,880) 5,444,222,303 Cash and Bank Balance as per Schedule 6 2,762,716,670 1,571,965,784 Current Investment as per Schedule 5 110,136,573 5,677,476,169 Adjustment for Unpaid Dividend Account and Share Application Money Account (7,198,804) (10,022,276) Adjustment for Site Restoration Deposit (See Note 4 of Schedule 15) (214,966,840) (192,978,180) Adjustment for Lien Marked Deposits / Accounts (See Note 4 of Schedule 15) (55,800,695) (105,885,713) Total Cash and Cash Equivalents as at Year End 2,594,886,904 6,940,555,784
* Interest and Finance Charges Paid includes and Development Expenditure excludes Borrowing Cost capitalised amounting to Rs. 75,593,734 (Previous Year: Rs. 47,131,621).# Purchase of Fixed Assets includes and Trade and Other Receivables excludes Capital Advances paid Rs. Nil (Previous Year: Rs. 1,693,406).
caSh FlOW StateMent FOr the Year enDeD March 31, 2009
In terms of our report of even date attached. On behalf of the Board of Directors
For Deloitte Haskins & Sells R. Vasudevan Manish MaheshwariChartered Accountants Chairman Joint Managing Director
K. Sai RamPartnerMembership No: 022360
Vikash Jain Company Secretary, Chief Tax and Legal
Place : New Delhi Place : New DelhiDate : June 11, 2009 Date : June 11, 2009
Account.indd 32 8/18/2009 5:53:17 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
33
in rupees
as at March 31, 2009
As at March 31, 2008
ScheDUle 1
Share caPItal
aUthOrISeD200,000,000 Equity Shares of Rs. 10 each 2,000,000,000 2,000,000,000
ISSUeD130,563,363 Equity Shares of Rs. 10 each 1,305,633,630 1,305,633,630
SUBScrIBeD anD FUllY PaID-UP130,493,289 Equity Shares of Rs. 10 each fully paid-up 1,304,932,890 1,304,932,890 Add : Amount Paid-up on Shares Forfeited 160,115 160,115
1,305,093,005 1,305,093,005
note:On January 24, 2008, an allotment of 52,180,621 Equity Shares was made consequent to the Rights Issue of 52,217,720 Equity Shares of Rs. 10 each at a premium of Rs. 107 per Share to the then existing Shareholders of the Company in the ratio of two Equity Shares for Every three Equity Shares held.
ScheDUle 2
reSerVeS anD SUrPlUS
Securities Premium Opening Balance 7,841,521,473 2,273,499,415 Additions (See Note 1 below) 0 5,583,326,447 Rights Issue Expenses (Net) (See Note 2 below) 0 (15,304,389) Closing Balance 7,841,521,473 7,841,521,473
General Reserve Opening Balance 3,383,000 3,383,000 Additions 0 0 Transitional Adjustment (See Note 26(i) of Schedule 15) (3,383,000) 0 Closing Balance 0 3,383,000
Balance in Profit and Loss Account 1,454,029,967 931,505,283
9,295,551,440 8,776,409,756 notes:1. Represents premium on allotment of 52,180,621 Equity Shares of Rs. 10 each on
January 24, 2008 at a premium of Rs. 107 per Share consequent to the Rights Issue during the previous year.
2. The Net Rights Issue Expenses incurred during the previous year had been adjusted against the Securities Premium balance in accordance with Section 78 of the Companies Act, 1956.
ScheDUle 3
SecUreD lOanS(See Note 2 of Schedule 15)Loans from Banks Foreign Currency Term Loan 787,931,076 747,424,139 Rupee Term Loan 480,000,000 696,000,000 Loan from Financial Institution Foreign Currency Term Loan 36,909,767 28,774,553
1,304,840,843 1,472,198,692
Schedules Forming Part of the Balance Sheet as at March 31, 2009
Account.indd 33 8/18/2009 5:53:18 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
34
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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Account.indd 34 8/18/2009 5:53:18 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
35
in rupees
as at March 31, 2009
As at March 31, 2008
ScheDUle 5
InVeStMentS (FUllY PaID) – at cost (See note 6 of Schedule 15)
lOnG terM
IN WHOLLY OWNED SUBSIDIARY COMPANY – UNQUOTED
50,002 Equity Shares of Rs. 100 each of HOEC Bardahl India Limited 5,000,200 5,000,200
QUOTED (TRADE)
318 Equity Shares of Rs. 10 each of Reliance Industries Limited 25,975 25,975
318 Equity Shares of Rs. 5 each of Reliance Communication Ventures Limited 19,332 19,332
318 Equity Shares of Rs. 5 each of Reliance Natural Resources Limited 350 350
23 Equity Shares of Rs. 10 each of Reliance Energy Limited 3,219 3,219
15 Equity Shares of Rs. 10 each of Reliance Capital Limited 166 166
UNQUOTED (NON TRADE)
100,000 Equity Shares of Rs. 10 each of Gujarat Securities Limited 1,000,000 1,000,000
cUrrent
UNQUOTED (NON TRADE)
UNITS OF MUTUAL FUNDS (See Note 3 of Schedule 15)
927,731 (Previous Year Nil) Units of Rs. 10 each of HDFC Cash Management Fund – Saving Plan – Daily Dividend 9,867,728 0
98,356 (Previous Year 12,784) Units of Rs. 1,000 each of UTI Liquid Cash Plan Institutional – Daily Income Option – Reinvestment 100,268,845 13,033,015
Nil (Previous Year 58,637,655) Units of Rs. 10 each of UTI Fixed Maturity Plan – QFMP – (02/08-I) – Institutional Dividend Plan – Reinvestment 0 586,376,552
Nil (Previous Year 68,402,101) Units of Rs. 10 each of Tata Fixed Horizon Fund – Series 17 scheme D – Institutional Plan – Periodic Dividend 0 684,021,011
Nil (Previous Year 68,397,607) Units of Rs. 10 each of Reliance Fixed Horizon Fund-VI-Series 2-Institutional Dividend Plan 0 683,976,071
Nil (Previous Year 68,169,937) Units of Rs. 10 each of ICICI Prudential FMP 42 – 3 Months – Plan A – Retail Dividend – Pay Dividend 0 681,699,370
Nil (Previous Year 35,092,865) Units of Rs. 10 each of SBI – Debt Fund Series – 90 Days – 20 – (26-Feb-08) – Dividend 0 350,935,900
Nil (Previous Year 35,000,000) Units of Rs. 10 each of Principal PNB – Fixed Maturity Plan (FMP-43) 91 Days – Series XIII – Feb. 08 0 350,000,000
Nil (Previous Year 68,877,000) Units of Rs. 10 each of BSL – Quarterly Interval Fund – Series 2 – Dividend – Reinvestment 0 688,770,993
Schedules Forming Part of the Balance Sheet as at March 31, 2009
Contd.
Account.indd 35 8/18/2009 5:53:18 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
36
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
in rupees
as at March 31, 2009
As at March 31, 2008
Nil (Previous Year 30,178,387) Units of Rs. 10 each of ABN Amro – Flexible Short Term Plan – Series D Calender Quarterly Dividend 0 301,785,423
Nil (Previous Year 15,036,603) Units of Rs. 10 each of ABN Amro – Flexible Short Term Plan – Series D – Quarterly Dividend 0 150,366,868
Nil (Previous Year 10,000,000) Units of Rs. 10 each of Standard Chartered FMP – Quarterly Series 27 – Dividend 0 100,000,000
Nil (Previous Year 10,028,237) Units of Rs. 10 each of HSBC Interval Fund Plan 2 Institutional Dividend 0 100,346,334
Nil (Previous Year 33,553,573) Units of Rs. 10 each of HDFC FMP 90 days March 2008 – VII (2) 0 335,535,726
Nil (Previous Year 35,000,000) Units of Rs. 10 each of UTI Fixed Maturity Plan – HFMP 03/08-I – Institutional Plan – Reinvestment 0 350,000,000
Nil (Previous Year 29,727,509) Units of Rs. 10 each of TATA Floating Rate Fund Long Term – Income / Bonus 0 300,628,906
116,185,815 5,683,525,411
Less : Provision for Diminution in Value of Investments 999,999 999,999
115,185,816 5,682,525,412
Aggregate Cost of Quoted Investments 49,042 49,042
Market Value of Quoted Investments 571,319 960,674
Aggregate Cost of Unquoted Investments 116,136,773 5,683,476,369
Schedule 5 Investments (contd.)
Schedules Forming Part of the Balance Sheet as at March 31, 2009
Account.indd 36 8/18/2009 5:53:18 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
37
in rupees
as at March 31, 2009
As at March 31, 2008
ScheDUle 6cUrrent aSSetS, lOanS anD aDVanceS(a) InVentOrIeS Crude Oil (See Note 22 (ii) of Schedule 15) 49,587,439 72,024,219 Stores, Spares, Capital Stock and Drilling Tangibles (See Note 25 of Schedule 15) 613,326,864 166,191,139
662,914,303 238,215,358 (B) SUnDrY DeBtOrS (Unsecured, Considered Good) Outstanding for a Period more than Six Months 38,380,106 0 Outstanding for a Period Less than Six Months
Receivable from Wholly Owned Subsidiary – HOEC Bardahl India Limited (See Note 1 below) 24,786,332 23,383,442
Other Receivables 146,747,868 113,303,411 209,914,306 136,686,853
(c) caSh anD BanK BalanceS Cash on Hand 3,366 157,316 Balances with Scheduled Banks Current Accounts (See Notes 3 & 4 (a) of Schedule 15) 51,950,163 974,883,290 Unclaimed / Unpaid Dividend Accounts 6,725,124 5,901,732 Unclaimed / Unpaid Share Application Money 473,680 4,120,544 Deposit Accounts (See Notes 3 & 4 (b) of Schedule 15) 2,642,890,982 583,358,946 Balances with Non-Scheduled Bank Current Account (See Note 5 of Schedule 15) 60,673,355 3,543,956
2,762,716,670 1,571,965,784 (D) Other cUrrent aSSetS Interest Accrued on Bank Deposits 3,596,085 7,394,535
3,596,085 7,394,535 (e) lOanS anD aDVanceS (See note 2 below) Advances Recoverable in Cash or in Kind or for Value to be Received (See Note 3 below) 397,320,768 402,273,861 Service Tax Input Credit 648,796 1,404,571 MAT Credit Entitlement (See Note 17(i) of Schedule 15) 31,000,000 0 Advance Income Tax [Net of Provision for Taxation of Rs. 129,963,496 (Previous Year Rs. 78,000,000)] 177,127,028 166,658,880 Advance Fringe Benefit Tax [Net of Provision for Fringe Benefit Taxation of Rs. 5,900,000
(Previous Year Rs. 3,800,000)] 1,235,376 485,376 607,331,968 570,822,688
Less : Provision for Doubtful Advances (See Notes 2 & 3 below) 15,556,856 15,556,856 591,775,112 555,265,832
tOtal (a) + (B) + (c) + (D) + (e) 4,230,916,476 2,509,528,362 notes:1. Maximum Amount Due from HOEC Bardahl India Limited at any time during the year 24,786,332 23,383,442 2. Of the above : Secured, Considered Good 0 0 Unsecured, Considered Good 591,775,112 555,265,832 Unsecured, Considered Doubtful (See Note 3 (a) below) 15,556,856 15,556,856
607,331,968 570,822,688 3. Advances Recoverable in Cash or in Kind or for Value to be Received includes: (a) Capital Advance Rs. 1,354,621 (Previous Year Rs. 3,048,027) for which a provision of
Rs. 1,354,621 (Previous Year Rs. 1,354,621) has been made. (b) Unamortised Borrowing Cost of Rs. 19,884,941 (Previous Year Rs. 69,781,407). (c) Advance Profit Petroleum Payment made to Government of India Rs. 114,594,339
(Previous Year Rs. Nil).
Schedules Forming Part of the Balance Sheet as at March 31, 2009
Account.indd 37 8/18/2009 5:53:18 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
38
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
Schedules Forming Part of the Balance Sheet as at March 31, 2009
in rupeesas at
March 31, 2009As at
March 31, 2008ScheDUle 7cUrrent lIaBIlItIeS anD PrOVISIOnS(a) cUrrent lIaBIlItIeS Sundry Creditors – Outstanding Dues to Micro Enterprises and Small Enterprises
(See Note 7 of Schedule 15) 0 0 – Outstanding Dues to Creditors other than Micro Enterprises and
Small Enterprises (See Notes 1 & 2 below) 3,519,983,491 964,282,634 Unclaimed / Unpaid Dividend (See Note 3 below) 6,725,124 5,901,732 Unclaimed / Unpaid Share Application Money (See Note 3 below) 473,680 4,120,544 Other Liabilities 166,030,474 6,534,506 3,693,212,769 980,839,416 (B) PrOVISIOnS Provision for Compensated Absences 2,800,000 2,500,000 Provision for Site Restoration (See Note 21 of Schedule 15) 286,112,500 225,177,500 Provision for Taxation – Income Tax [Net of Advance Tax of Rs. 651,356,382
(Previous Year Rs. 669,650,638)] 50,643,618 52,915,254 – Wealth Tax [Net of Advance Tax of Rs. 480,311 (Previous Year Rs. 344,198)] 357,689 293,802 – Fringe Benefit Tax [Net of Advance Tax of Rs. 2,422,684
(Previous Year Rs. 2,422,684)] 177,316 177,316 Proposed Dividend 0 130,493,289 Dividend Tax 0 22,177,334
340,091,123 433,734,495
tOtal (a) + (B) 4,033,303,892 1,414,573,911 notes:1. Includes Security deposit of Rs. 6,000,000 (Previous Year Rs. Nil) received from HOEC
Bardahl India Ltd., the Wholly Owned Subsidiary of the Company2. Includes Profit Petroleum Payable to Government of India Rs. 3,055,263 (Previous Year
Rs. 28,406).3. Does not include any amount due and outstanding, to be credited to the Investor
Education and Protection Fund.
in rupeesYear ended
March 31, 2009Year ended
March 31, 2008ScheDUle 8SaleS anD SerVIceS(A) SALES (See Note 22(i) and 32 of Schedule 15) Sale of Crude Oil and Gas 831,411,800 1,040,272,662 Less : Profit Petroleum to Government of India (See Note 30 of Schedule 15) 6,322,445 230,273,866
825,089,355 809,998,796 (B) SERVICES Management Fee
[Tax Deducted at Source Rs. 3,167,125 (Previous Year Rs. 2,659,193)] 24,930,246 23,470,373 Warehousing Services [Tax Deducted at Source Rs. 222,947 (Previous Year Rs. Nil)] 1,764,000 0
26,694,246 23,470,373
(A) + (B) 851,783,601 833,469,169 ScheDUle 9(DecreaSe) / IncreaSe In StOcK OF crUDe OIl(Decrease) / Increase in Gross Stock of Crude Oil (See Note 22(ii) of Schedule 15) (22,436,780) 21,777,460 Less : Profit Petroleum to Government of India (See Note 30 of Schedule 15) 0 20,471,051
(22,436,780) 1,306,409
Schedules Forming Part of the Profit and loss account for the Year ended March 31, 2009
Account.indd 38 8/18/2009 5:53:19 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
39
in rupees
Year ended March 31, 2009
Year ended March 31, 2008
ScheDUle 10
Other IncOMe
Interest Income (Gross) on Bank Deposits[Tax Deducted at Source Rs. 2,860,251 (Previous Year Rs. 6,484,992)] 24,994,351 43,137,046
Dividend from Long Term – Trade Investments 4,134 281
Dividend from Current – Non Trade Investments 394,351,225 125,847,994
Profit on Sale of Assets (Net) 0 16,602
Gain on Foreign Exchange Fluctuation (Net) (See Notes 23 and 26 of Schedule 15) 37,052,587 32,386,153
Miscellaneous Income (See Notes 1 and 31 of Schedule 15) 5,963,626 146,715
462,365,923 201,534,791
ScheDUle 11
FIelD OPeratInG eXPenSeS
Hire Charges (See Note 19 of Schedule 15) 379,941,808 270,942,825
Insurance 2,703,219 3,375,127
Fuel, Water and Others 12,716,654 10,790,024
Production Expenses 22,905,921 13,745,589
Royalty, Cess & Other Duties 1,985,516 4,293,885
Other Expenses 9,804,289 7,687,897
430,057,407 310,835,347
ScheDUle 12
cOrPOrate eXPenSeS (net)
(a) StaFF eXPenSeS
Salaries, Allowances and Bonus (See Note 11 of Schedule 15) 79,132,311 55,457,252
Contribution to Provident and Other Funds 8,562,704 7,492,721
Welfare Expenses 2,839,526 2,160,127
90,534,541 65,110,100
(B) eStaBlIShMent eXPenSeS
Office and Guest House Rent 9,779,389 9,091,926
Electricity 1,970,970 2,151,744
Rates and Taxes 396,241 414,995
Repairs and Maintenance – Others 10,809,624 8,191,961
General Office Expenses 547,519 450,325
23,503,743 20,300,951
Schedules Forming Part of the Profit and loss account for the Year ended March 31, 2009
Account.indd 39 8/18/2009 5:53:19 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
40
Schedules Forming Part of the Profit and loss account for the Year ended March 31, 2009
in rupees
Year ended March 31, 2009
Year ended March 31, 2008
ScheDUle 12cOrPOrate eXPenSeS (net) (contd.)(c) Other eXPenSeS Travelling and Conveyance 6,585,776 4,186,485 Communication Expenses 5,143,831 3,801,528 Printing and Stationery 2,410,885 3,104,282 Legal and Professional Expenses 40,367,176 32,079,232 Insurance 190,480 325,074 Directors’ Sitting Fees 205,000 305,000 Auditors’ Remuneration (See Notes below) As Statutory Auditors 1,250,000 1,200,000 For Tax Matters 150,000 150,000 For Other Matters 30,000 60,000 Reimbursement of Expenses 36,749 10,993 Service Tax [Net of Service Tax Input Credit of Rs. 154,088 (Previous Year Rs. 174,252)]
0 0
1,466,749 1,420,993 Loss on Sale of / Discarded Assets (Net) 416,349 0 Miscellaneous Expenses 7,423,811 15,212,988
64,210,057 60,435,582 (D) tOtal cOrPOrate eXPenSeS (a + B + c) 178,248,341 145,846,633 (e) less : recOVerY OF eXPenSeS (See note 24 of Schedule 15) 172,864,176 105,995,211
5,384,165 39,851,422 notes:1. Auditors’ Remuneration for the current year excludes Rs. Nil (Previous Year
Rs. 2,031,777) paid to the Auditors for attest services rendered in relation to the Rights Issue, which is included as part of Rights Issue expenses adjusted against Securities Premium.
2. Auditors’ Remuneration for the current year excludes Rs. 1,225,000 (Previous Year Rs. 1,340,462) paid towards tax matters to a firm in which some partners of the audit firm are partners.
ScheDUle 13IntereSt anD FInance charGeSInterest on Fixed Term Loans 56,802,638 70,533,415 Bank Charges and Commission 307,671 2,521,137 Other Finance Charges 46,661,506 2,557,192
103,771,815 75,611,744 notes:1. The above excludes Interest and Finance Charges capitalised during the year to
Development Expenditure Rs. 75,593,734 (Previous Year Rs. 43,778,316) and to Exploration Expenditure Rs. Nil (Previous Year Rs. 3,353,305) in accordance with Accounting Standard 16 – Borrowing Costs.
2. Other Finance Charges includes exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs covered under Accounting Standard 16 – Borrowing Costs amounting to Rs. 5,112,247 (Previous Year Rs. Nil)
Account.indd 40 8/18/2009 5:53:19 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
41
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 14
SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Convention
The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India including relevant provisions of the Companies Act, 1956 and accounting standards notified by the Government of India, as applicable.
2. Use of Estimates
The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period like depletion of producing properties, estimate of site restoration liability, expensing of the estimated site restoration liability, provision for employee benefits, useful lives of fixed assets, provision for doubtful advances, provision for tax etc. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates.
3. Exploration and Development Costs
The Company generally follows the “Successful Efforts Method” of accounting for its exploration and production activities as explained below:
(i) Cost of exploratory wells, including survey costs, is expensed in the year when the well is determined to be dry/abandoned or is transferred to the producing properties on attainment of commercial production.
(ii) Cost of all appraisal programmes related to a Discovery are initially capitalised as “Capital work in Progress”. If a Discovery is determined to be commercial pursuant to the appraisal programme, all appraisal costs, including the cost of unsuccessful appraisal wells, if any, are capitalised on attainment of commercial production. If at the end of the appraisal programme, the Discovery is relinquished, then all appraisal costs related to the Discovery are charged to Profit and Loss Account.
(iii) Cost of temporary occupation of land, successful exploratory wells, appraisal wells, development wells and all related development costs, including depreciation on support equipment and facilities, are considered as development expenditure. These expenses are capitalised as producing properties on attainment of commercial production.
(iv) Producing properties, including the cost incurred on dry/abandoned wells in development areas, are depleted using “ Unit of Production’’ method based on estimated proved developed reserves. Any changes in Reserves and/or Cost are dealt with prospectively from the beginning of the year of such change. Hydrocarbon reserves are estimated and/or approved by the Management Committees of the Unincorporated Joint Ventures, which follow the International Reservoir Engineering Principles.
(v) If the Company/Unincorporated Joint Venture were to relinquish a block or part thereof, the accumulated acquisition and exploration costs carried in the books related to the block or part thereof, as the case may be, are written off as a charge to the Profit and Loss Account in the year of relinquishment.
Explanatory Note 1. All exploration costs including acquisition of geological and geophysical seismic information, license, depreciation on support equipment
and facilities and acquisition costs are initially capitalized as “Capital Work in Progress – Exploration Expenditure”, until such time as either the exploration well(s) in the first drilling campaign is determined to be successful, at which point the costs are transferred to “Producing Properties”, or it is unsuccessful in which case such costs are written off consistent with para 2 below.
2. Exploration costs associated with drilling, testing and equipping exploratory well(s) are initially capitalized as “Capital Work in Progress – Exploration Expenditure” and retained in Capital Work in Progress – Exploration Expenditure so long as:
(a) such well has found potential commercial reserves; or
(b) such well test result is inconclusive and is subject to further exploration or appraisal activity like acquisition of seismic, or re-entry of such well, or drilling of additional exploratory/step out well in the area of interest, such activity to be carried out no later than 2 years from the date of completion of such well testing;
— until such time as such costs are transferred to “Producing Properties” on attainment of commercial production; or — else charged to the Profit and Loss Account.
Management makes quarterly assessment of the amounts included in “Capital Work in Progress – Exploration Expenditure” to determine whether capitalization is appropriate and can continue. Exploration well(s) capitalized beyond 2 years are subject to additional judgment as to whether facts and circumstances have changed and therefore the conditions described in 2(a) and (b) no longer apply.
Notes.indd 41 8/18/2009 4:47:30 PM
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
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SCHEDULE 14 — SIGNIFICANT ACCOUNTING POLICIES (Contd.)
4. Site Restoration
Estimated future liability relating to dismantling and abandoning producing well sites and facilities is recognised when the installation of the production facilities is completed based on the estimated future expenditure determined by the Management in accordance with the local conditions and requirements. The corresponding amount is added to the cost of the producing property and is expensed in proportion to the production for the year and the remaining estimated proved reserves of hydrocarbons based on latest technical assessment available with the Company. Any change in the value of the estimated liability is reflected as an adjustment to the provision and the corresponding producing property.
5. Impairment
At each Balance Sheet date, the Company reviews the carrying amount of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss.
Where the impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior accounting periods.
6. Unincorporated Joint Ventures
The financial statements of the Company reflect its share of assets, liabilities, income and expenditure of the Joint Venture operations which are accounted on the basis of available information on line by line basis with similar items in the Company’s accounts to the extent of the participating interest of the Company as per the various “Production Sharing Contracts”. The financial statements of the Unincorporated Joint Ventures are prepared by the respective Operators in accordance with the requirements prescribed by the respective Production Sharing Contracts of the Unincorporated Joint Ventures. Hence, in respect of these Unincorporated Joint Ventures, certain adjustments/disclosures required under the mandatory Accounting Standards as notified by the Government of India and the Companies Act, 1956 have been made in the financial statements of the Company only to the extent of information available with the Company. Such information may pertain to particulars relating to micro, small and medium enterprises, particulars of expenditure in foreign currency, particulars of earnings in foreign currency, particulars of CIF value of imports, transactions with related parties, details of leases, details of commitments and contingencies, information relating to valuation and consumption of stores, spares, capital stock and drilling tangibles, information relating to foreign exchange differences and details relating to fixed assets of the respective Unincorporated Joint Ventures. See Notes 7, 9(i), 9(ii), 9(iii), 15, 18, 22 and 23 of Schedule 15.
7. Fixed Assets Fixed assets are stated at cost inclusive of all incidental expenses.
8. Depreciation
(i) Depreciation is provided on the “Written Down Value’’ method at the rates specified in Schedule XIV of the Companies Act, 1956.
(ii) In the case of additions during the year, depreciation is provided for the full year irrespective of the date of installation and no depreciation is provided in the year of sale/disposal.
(iii) Improvements to Leasehold premises are amortised over the remaining primary lease period.
(iv) Computer software is amortised over their license periods or 10 years, whichever is lower.
(v) Assets individually costing less than or equal to Rs. 5,000 are fully depreciated in the year of acquisition.
(vi) Depreciation is accelerated on fixed assets, based on their condition, usability etc. as per the estimates of the Management, wherever necessary.
9. Investments Investments are capitalised at cost plus brokerage and stamp charges. Long-term investments are valued at cost. Provision is made for other than
temporary diminution in the value of long-term investments. Current investments are valued at the lower of cost and fair value on individual scrip basis.
10. Inventories
(i) Closing stock of crude oil in saleable condition is valued at estimated Net Realisable Value less estimated selling costs.
(ii) Stores, spares, capital stock and drilling tangibles are valued at cost on FIFO/weighted average basis, as applicable or estimated net realisable value, whichever is lower.
Notes.indd 42 8/18/2009 4:47:30 PM
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Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 14 — SIGNIFICANT ACCOUNTING POLICIES (Contd.)
11. Miscellaneous Expenditure
Share issue expenses are either debited to the Profit and Loss Account or adjusted against the securities premium account in accordance with Section 78 of the Companies Act, 1956, based on Management’s decision.
12. Revenue Recognition
(i) Revenue from the sale of crude oil and gas, net of Government’s share of Profit Petroleum (calculated as per the provisions of the respective Production Sharing Contracts) and Value Added Tax, is recognised on transfer of custody.
(ii) Sale is recorded at the invoiced price, which is subject to the approval of the Government of India, Ministry of Petroleum & Natural Gas (MOP&NG). The difference between the invoiced price and the final approved price, if any, is adjusted in the year in which the aforesaid approval is received.
(iii) Service Income is recognised on accrual basis as per the contractual terms and is net of Service Tax.
(iv) Delayed payment charges, interest on delayed payments and interest on income tax refunds are recognised as and when there is no uncertainty in the determination/receipt of the amount, on grounds of prudence.
13. Retirement Benefits
(a) Defined Contribution Plan
(i) Provident Fund: Contributions towards Employees’ Provident Fund are made to the Employees Provident Fund Scheme in accordance with the statutory provisions.
(ii) Superannuation: The Company contributes a sum equivalent to 15% of eligible employees basic salary to a Superannuation Fund administered by trustees. The Company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred.
(b) Defined Benefit Plan
The Company makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life Insurance Corporation of India. The Company accounts its liability for future gratuity benefits based on actuarial valuation, as at the Balance Sheet date, determined every year by an Actuary appointed by the Company using the Projected Unit Credit method. Actuarial gains/losses are recognised in the Profit and Loss Account. Obligation under the defined benefit plan is measured at the present value of estimated future cash flows. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.
(c) Compensated Absences
Accumulated compensated absences is recognized based on the eligible leave at credit on the Balance Sheet date and is estimated based on the terms of the employment contract.
14. Borrowing Cost
Borrowing cost (including amortisation of ancillary costs and net of income on temporary investment of funds) specifically identified to the acquisition, construction or production of qualifying assets are capitalized as part of such asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are charged to the Profit and Loss Account.
15. Foreign Currency Transactions
Foreign currency transactions are accounted at the exchange rates ruling on the date of the transactions. Foreign currency monetary items, as at the Balance Sheet date are restated at the closing exchange rates. Exchange differences arising on actual payments/realisations and year-end restatements of foreign currency monetary items, excluding long term foreign currency monetary items (see below), are dealt with in the Profit and Loss Account.
Exchange differences, both realised and unrealised, arising on reporting of long term foreign currency monetary items (as defined in the Accounting Standard-11 notified by the Government of India) relating to the acquisition of a depreciable capital asset are added to/deducted from the cost of the asset and in other cases unrealised exchange differences are accumulated in a “Foreign Currency Monetary Item Translation Difference Account” in the Company’s Balance Sheet and amortized over the balance period of such long term asset/liability but not beyond March 31, 2011, by recognition as income or expense in each of such periods.
Also See Note 26 of Schedule 15.
Notes.indd 43 8/18/2009 4:47:30 PM
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
SCHEDULE 14 — SIGNIFICANT ACCOUNTING POLICIES (Contd.)
16. Taxation Income Tax: Current tax is the amount of tax payable on the taxable income for the year and is provided with reference to the provisions of the
Income Tax Act, 1961.
Deferred Tax: Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax asset is recognised when there is a reasonable certainty of future taxable income except for deferred tax assets in respect of unabsorbed loss or depreciation where it is recognised only if there is a virtual certainty with convincing evidence.
MAT Credit: Minimum Alternate Tax (MAT) Credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT Credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.
SCHEDULE 15
NOTES TO THE ACCOUNTS
1. CY-OSN-97/1 Accounts Closure As per the terms of the Production Sharing Contract for CY-OSN-97/1 Block, if no Commercial Discovery is made in the Contract Area by end
of the Exploration Period, the Contract Area shall be relinquished. In the absence of any discovery being declared by the Unincorporated Joint Venture at the end of the Exploration Period the Contract Area CY-OSN-97/1 was relinquished on March 15, 2008. During the year ended March 31, 2009, the Company has settled its ongoing dispute with DIOG Limited which was a subject matter of arbitration initiated by DIOG Limited ( Joint Venture Partner) before London Court of International Arbitration (LCIA). With the relinquishment of the Area and settlement of dispute with DIOG Limited, the accounts of the Joint Venture have been formally closed and the assets and liabilities of the Joint Venture has been consolidated 100% in the Company’s Accounts. Further, a net amount of Rs. 3,247,354 has been written back based on the audited accounts of the said joint venture and included as Miscellaneous Income.
2. Secured Loans (Foreign Currency and Rupee Term Loans) (a) The term loans from State Bank of India, Axis Bank and HDFC Bank amounting to Rs. 712,047,320 as at March 31, 2009 (Previous Year
Rs. 957,758,261), are secured by way of charge on the Company’s Participating Interest in PY-3 and Palej Fields, first charge on the Company’s share of Crude Oil Receivables from PY-3 and Palej Fields and charge on the Debt Service Reserve Account. See Note 4 below.
(b) The term loans from Axis Bank, Bank of India, Canara Bank, Export-Import Bank of India, Indian Overseas Bank, IDBI Bank Ltd., Syndicate Bank, The Federal Bank Limited and Union Bank of India amounting to Rs. 592,793,523 as at March 31, 2009 (Previous Year Rs. 514,440,431) are secured by way of charge on all movable properties pertaining to PY-1 Gas Project, the Company’s Participating Interest in PY-1 Field and on the PY-1 Trust and Retention Accounts. See Note 4 below.
3. Rights Issue of Equity Shares
On January 24, 2008, an allotment of 52,180,621 Equity Shares of Rs. 10 each was made consequent to the Rights Issue of 52,217,720 Equity Shares of Rs. 10 each at a premium of Rs. 107 per Share to the then existing Shareholders of the Company in the ratio of Two Equity Shares for every Three Equity Shares held aggregating to Rs. 6,105,132,657. In terms of Clause No. 6.13.2.28 of SEBI (Disclosure and Investor Protection) Guidelines, 2000, as amended, the details of the utilisation of the proceeds of the Rights Issue are as under:
in Rupees
Block Defined Programme Utilisation up to March 31, 2009
Utilisation up to March 31, 2008
PY-1 Contribution towards Cash Calls for Development of Basement Gas Reservoir in PY-1 Field 3,546,064,141 61,807,122
PY-3 (CY-OS-90/1)
Contribution towards Cash Calls for Phase III Drilling Programme 341,404,559 0
Rights Issue Expenses
Rights Issue Expenses (Net)15,304,389 15,304,389
Total 3,902,773,089 77,111,511
Notes.indd 44 8/18/2009 4:47:30 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
The balance amount of Rs. 2,202,359,568 (Previous Year: Rs. 6,028,021,146) has been invested in the following forms of investment as at March 31, 2009
in Rupees
Form of Investment Schedule Reference Amount as at March 31, 2009
Amount as at March 31, 2008
Bank Deposits Cash and Bank Balances – Schedule 6 2,202,359,568 0Bank Account Cash and Bank Balances – Schedule 6 0 900,000,000Mutual Funds Investment – Schedule 5 0 5,128,021,146
Total 2,202,359,568 6,028,021,146
4. Bank Balances – Scheduled Banks
(a) Current Accounts with Scheduled Banks include Lien Marked Accounts Rs. 3,025,946 (Previous Year Rs. 3,294,327). See Note 2 above. (b) Deposits with Scheduled Banks include: — Lien Marked Deposits Rs. 52,774,749 (Previous Year Rs. 102,591,386). See Note 2 above. — Deposits amounting to Rs. 214,966,840 (Previous Year Rs. 192,978,180) placed as “Site Restoration Fund” under Section 33ABA of
the Income Tax Act, 1961.
5. Bank Balances – Non-Scheduled Bank The balance with Non-Scheduled Bank represents the Company’s share in the balance in a foreign currency account with Barclays Bank, London.
The maximum amount outstanding at any time during the year in respect of this account was Rs. 159,637,993 (Previous Year Rs. 34,090,109).
6. Purchase and Sale of Investments The details of purchase and sale of Investments are as under:
A. Year 2008 – 2009in Rupees
Name of the FundsPurchase Sales
Units Amount Units AmountSBI – Premier Liquid Fund – Super Institutional Plan – Daily dividend 127,085,549 1,274,985,774 127,085,549 1,274,985,774SBI SHFI-Liquid Plus Institutional Plan – Daily Dividend 83,159,194 832,007,740 83,159,194 832,007,740Templeton India Treasury Management Account – Super Institutional Option – Daily Dividend Reinvestment 549,990 550,150,003 549,990 550,150,003Templeton Floating Rate Income Fund – Long Plan Super Institutional Option – Daily Dividend Reinvestment 45,240,296 452,891,560 45,240,296 452,891,560Templeton India Treasury Management Account Super Institutional Option – Daily Dividend Reinvestment 865,901 866,287,333 865,901 866,287,333Templeton Ultra Short Bond Fund – Super Institutional Option – Daily Dividend Reinvestment 36,901,860 369,711,618 36,901,860 369,711,618HDFC Cash Management Fund – Savings Plan – Daily Dividend – Reinvestment 118,936,625 1,265,057,524 118,008,894 1,255,189,796HDFC Cash Management Fund – Savings Plus Plan – Wholesale Daily Dividend – Reinvestment 61,152,021 613,446,501 61,152,021 613,446,501
ICICI Prudential Institutional Liquid Plan – Super Institutional Daily Dividend – Reinvestment Dividend 68,140,035 681,434,419 68,140,035 681,434,419ICICI Prudential Flexible Income Plan – Dividend – Daily – Reinvestment Dividend 65,864,889 696,422,403 65,864,889 696,422,403
(Contd.)
Notes.indd 45 8/18/2009 4:47:30 PM
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
in Rupees
Name of the FundsPurchase Sales
Units Amount Units AmountHSBC – Cash Fund-Institutional Plus – Daily Dividend 7,508,875 75,130,804 7,508,875 75,130,804HSBC – Liquid Plus – Institutional Plus – Daily Dividend 13,261,974 132,786,842 13,261,974 132,786,842TATA Liquid Super High Investment Fund – Daily Dividend 25,801,909 1,104,944,917 25,801,909 1,104,944,917
TFLD TATA Floater Fund – Daily Dividend 60,399,297 606,143,186 60,399,297 606,143,186
Kotak Flexi debt Scheme Institutional – Daily Dividend 20,967,708 210,668,915 20,967,708 210,668,915
Kotak Liquid Fund (Institutional Premium) – Daily Dividend 23,160,957 283,214,503 23,160,957 283,214,503
BIRLA Cash Plus Fund 67,568,843 676,663,286 67,568,843 676,663,286
Birla Sunlife Short term fund – Institutional. Daily Dividend – Reinvestment 20,136,307 201,500,000 20,136,307 201,500,000
Birla Sunlife Liquid Plus – Institutional. Daily Dividend – Reinvestment 64,089,431 641,246,797 64,089,431 641,246,797
Reliance Liquidity Fund – Institutional Plan – Daily Dividend Plan 516,335 516,921,416 516,335 516,921,416
Reliance Medium Term Fund – Daily Dividend Plan 41,093,405 702,512,313 41,093,405 702,512,313
UTI Liquid Fund – Cash Plan – IP – Daily Dividend Option – Reinvestment 207,838 211,879,977 122,267 124,644,147
UTI Liquid Plus Fund – IP – Daily Dividend Option – Reinvestment 924,300 924,497,618 924,300 924,497,618
Principal Cash Management Fund – Liquid Option – Dividend Reinvestment 1,807,725 18,113,409 1,807,725 18,113,409
Principal Liquid Plus Fund – Dividend Reinvestment – Daily Dividend 5,406,651 54,080,306 5,406,651 54,080,306
Principal Fixed Floating Rate Fund – FMP – Institutional Option – Dividend Reinvestment – Daily 19,262,813 192,865,063 19,262,813 192,865,063
DWS Insta Cash Plus Fund 39,945,155 400,250,449 39,945,155 400,250,449
DWS Liquid Plus Fund – Institutional – Daily Dividend 40,960,716 410,221,570 40,960,716 410,221,570
ABN AMRO Money Plus Institutional Plan – Daily Dividend 15,518,803 155,236,143 15,518,803 155,236,143
ING-Liquid Fund – Institutional Daily Dividend Option 5,001,114 50,071,653 5,001,114 50,071,653
ING-Liquid Fund Plus – Institutional Daily Dividend Option 3,060,239 30,612,487 3,060,239 30,612,487
IDFC Liquid Plus Fund – TP – Super Inst Plan C – Daily Dividend 31,222,312 312,269,957 31,222,312 312,269,957
UTI Fixed Income Interval Fund – Quarterly Plan Series III – Institutional Dividend Plan – Re-investment 56,039,377 560,393,774 56,039,377 560,393,774
UTI Fixed Maturity Plan – QFMP – (02/08-I) – Institutional Dividend Plan – Reinvestment 680,266 6,802,654 59,317,921 593,179,206
UTI Fixed Maturity Plan – HFMP 03/08 – I – Institutional Plan – Re-investment 778,412 7,784,119 35,778,412 357,784,119
SBI SDFS 90D – May 24 – Dividend 61,793,059 617,933,950 61,793,059 617,933,950
TATA Fixed Horizon Fund – Series 17 Scheme D – Institutional Plan – Periodic Dividend 828,200 8,283,493 69,230,301 692,304,504
(Contd.)
Notes.indd 46 8/18/2009 4:47:31 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
in Rupees
Name of the FundsPurchase Sales
Units Amount Units AmountTATA Fixed Horizon Fund Series 17 – Scheme E – Inst – Monthly – Dividend 55,960,220 559,607,861 55,960,220 559,607,861
TATA Floating Rate Fund Long Term – Income/Bonus 564,032 5,710,654 30,291,541 306,339,560
Reliance Fixed Horizon Fund VIII – Series 11 – Institutional Dividend Plan 68,000,000 680,000,000 68,000,000 680,000,000
Reliance Fixed Horizon Fund VI – Series 2 – Institutional Dividend Plan 0 0 68,397,607 683,976,071
ICICI Prudential FMP 42 – 3 Months – Plan A – Retail Dividend – Pay Dividend 0 0 68,169,937 681,699,370
SBI – Debt Fund Series – 90 Days – 20 – (26-Feb-08) – Dividend 619,634 6,196,347 35,712,499 357,132,247
Principal PNB – Fixed Maturity Plan (FMP-43) 91 Days – Series XIII-Feb08 0 0 35,000,000 350,000,000
BSL – Quarterly Interval Fund – Series 2 – Dividend – Reinvestment 1,937,786 19,377,866 70,814,786 708,148,859
ABN Amro – Flexible Short Term Plan – Series D Quarterly Dividend 270,291 2,702,908 15,306,894 153,069,776
ABN Amro – Flexible Short Term Plan – Series D Calendar Quarterly Dividend 15,615,586 156,156,666 45,793,973 457,942,089
Fortis Flexible Short Term Plan Series D Monthly Div – Red 10,178,661 101,787,598 10,178,661 101,787,598
HSBC Interval Fund Plan 2 Institutional Dividend 178,740 1,787,418 10,206,977 102,133,752
HDFC FMP 90 Days March 2008 VII (2) 0 0 33,553,573 335,535,726
ABN Amro – Interval Fund Quarterly I – Monthly Dividend – Red 15,277,057 152,771,926 15,277,057 152,771,926
IDFC Fixed Maturity Plan – Quarterly Series 39 – Dividend 30,661,723 306,618,515 30,661,723 306,618,515
TATA Fixed Horizon Fund Series 19 – Scheme E – Institutional Plan – Periodic Dividend 57,329,100 573,304,755 57,329,100 573,304,755
Standard Chartered FMP – Quarterly Series 27 – Dividend 0 0 10,000,000 100,000,000
IDFC Fixed Maturity Plan – Quarterly Series 27 – Dividend 209,900 2,099,000 209,900 2,099,000
IDFC Quarterly Interval Fund – Plan A – Institutional – Dividend 30,683,867 306,910,655 30,683,867 306,910,655
Fortis Interval Fund Series 2 Quarterly Plan M Interval Dividend – Auto 30,709,638 307,246,362 30,709,638 307,246,362
DSPML FMP – 1M – Series 3 20,154,033 201,540,840 20,154,033 201,540,840
BSL Interval Income – Instl – Monthly – Series 2 – Dividend 20,160,640 201,606,400 20,160,640 201,606,400
Kotak Monthly Interval Plan – Series 3 – Div Reinvestment 20,124,453 201,310,552 20,124,453 201,310,552
Total 1,614,473,742 20,502,160,799 2,179,561,914 26,069,500,395
Notes.indd 47 8/18/2009 4:47:31 PM
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
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SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
B. Year 2007-2008
in Rupees
Name of the Funds Purchase Sales
Units Amount Units Amount
SBI Premier Liquid Fund – Institutional Plus – Daily Dividend 67,808,972 680,293,517 67,808,972 680,293,517
SBI SHF Liquid Plus – Institutional Plan – Daily Dividend 68,437,527 684,717,453 68,437,527 684,717,453
ICICI Prudential Institutional Liquid Plan – Super Institutional Daily Dividend – Reinvestment 117,724,303 1,177,312,132 148,209,916 1,482,168,258
ICICI Prudential Flexible Income Plan – Daily Dividend – Reinvestment 129,595,373 1,370,276,672 129,595,373 1,370,276,672
Templeton India TMA Super Institutional Plan Daily Dividend – Reinvestment 1,061,099 1,061,364,721 1,064,834 1,065,100,717
Templeton Floating Rate Income Fund Long Term Plan Super Institutional Option – Daily Dividend Reinvestment 67,594,837 676,678,395 67,594,837 676,678,395
Templeton Ultra Short Bond Fund – Super Institutional Option – Daily Dividend Reinvestment 67,794,279 679,217,323 67,794,279 679,217,323
HDFC Cash Management Fund – Savings Plan Daily Dividend 73,419,031 780,914,186 74,815,080 795,763,124
HDFC Cash Management Fund – Savings Plus Plan – Wholesale – Daily Dividend 68,338,307 685,535,726 68,338,307 685,535,726
UTI Liquid Cash Plan Institutional – Daily Income Option – Reinvestment 1,251,367 1,275,700,843 1,303,383 1,328,727,754
Kotak Liquid (Institutional Premium) – Daily Dividend 55,618,702 680,111,052 55,618,702 680,111,052
Kotak Flexi Debt Scheme – Daily Dividend 68,256,165 684,684,412 68,256,165 684,684,412
HSBC Cash Fund Institutional Plus – Daily Dividend 100,527,329 1,005,836,239 100,527,329 1,005,836,239
HSBC Liquid Plus Institutional Plus – Daily Dividend 75,961,211 760,569,223 75,961,211 760,569,223
Birla Cash Plus – Institutional Premium – Daily Dividend – Reinvestment 99,822,767 1,000,174,216 99,822,767 1,000,174,216
Birla Sun Life Liquid Plus – Institutional – Daily Dividend – Reinvestment 100,628,067 1,006,964,940 100,628,067 1,006,964,940
Reliance Liquidity Fund – Daily dividend Reinvestment Option 67,990,577 680,116,543 67,990,577 680,116,543
Reliance Liquid Plus Fund – Institutional Option Daily Dividend 683,200 683,976,071 683,200 683,976,071
(Contd.)
Notes.indd 48 8/18/2009 4:47:31 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
in Rupees
Name of the Funds Purchase Sales
Units Amount Units Amount
TATA Liquid Super High Investment Fund – Daily Dividend 610,339 680,235,408 610,339 680,235,408
TATA Floater Fund – Daily Dividend 68,159,453 684,021,010 68,159,453 684,021,010
Principal Cash Management Fund – Liquid Option – Institutional Plan – Daily Reinvestment 8,035,250 80,370,177 8,035,250 80,370,177
UTI Fixed Maturity Plan – QFMP – (02/08-I) – Institutional Dividend Plan – Reinvestment 58,637,655 586,376,552 0 0
Tata Fixed Horizon Fund – Series 17 Scheme D – Institutional Plan – Periodic Dividend 68,402,101 684,021,011 0 0
Reliance Fixed Horizon Fund-VI – Series 2 – Institutional Dividend Plan 68,397,607 683,976,071 0 0
ICICI Prudential FMP 42 – 3 Months – Plan A – Retail Dividend – Pay Dividend 68,169,937 681,699,370 0 0
SBI-Debt Fund Series – 90 Days – 20 (26-Feb-08) – Dividend 35,092,865 350,935,900 0 0
Principal PNB – Fixed Maturity Plan (FMP-43) 91 Days – Series XIII – Feb. 08 35,000,000 350,000,000 0 0
BSL-Quarterly Interval Fund – Series 2 – Dividend – Reinvestment 68,877,000 688,770,993 0 0
ABN Amro – Flexible Short Term Plan – Series D Calendar Quarterly Dividend 30,178,387 301,785,423 0 0
ABN Amro – Flexible Short Term Plan – Series D – Quarterly Dividend – Reinvestment 15,036,603 150,366,868 0 0
Standard Chartered FMP – Quarterly Series 27 – Dividend 10,000,000 100,000,000 0 0
HSBC Interval Fund Plan 2 – Institutional Dividend 10,028,237 100,346,334 0 0
HDFC FMP 90 Days March 2008 VII (2) 33,553,573 335,535,726 0 0
UTI Fixed Maturity Plan – HFMP 03/08 – I – Institutional Plan – Reinvestment 35,000,000 350,000,000 0 0
TATA Floating Rate Fund Long Term – Income/Bonus 29,727,509 300,628,904 0 0
Total 1,889,479,959 22,919,028,159 1,373,210,141 17,930,786,910
7. Sundry Creditors In order to comply with the requirement of the Micro, Small and Medium Enterprises Development Act, 2006, the Company has sought
confirmation from the vendors whether they are falling in the category of Micro/Small/Medium Enterprises. The Company has received an intimation from one supplier as being registered under the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was payable/overdue to the said supplier at any time during the year. Accordingly, as at March 31, 2009 and March 31, 2008, the Company did not have any outstanding amounts payable to Micro, Small and Medium Enterprises. The information relating to dues to Micro, Small and Medium Enterprises has not been provided in respect of the Unincorporated Joint Ventures as the details with respect to the same are not available.
Notes.indd 49 8/18/2009 4:47:31 PM
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
8. Managerial Remuneration
(a) Details of Managerial Remuneration Paid to Executive Directorsin Rupees
Particulars 2008-2009 2007-2008
Salary, Allowances, Bonus and Perquisites 13,358,557 6,959,140
Contribution to Provident and Superannuation Funds 1,458,000 847,350
Total 14,816,557 7,806,490
Notes: 1. The above Managerial Remuneration does not include an amount of Rs. 40,000 (Previous Year Rs. 85,000) paid to the erstwhile
Managing Director as sitting fee for attending Board/Committee meetings. The erstwhile Managing Director and the current Managing Director do not draw any other remuneration from the Company.
2. In computing the above Managerial Remuneration, perquisites have been valued in terms of actual expenditure incurred by the Company in providing the benefits except in case of certain expenses where the actual amount of expenditure cannot be ascertained with reasonable accuracy, notional amount as per Income Tax Rules has been added. Actuarial valuation based contribution/provision with respect to gratuity and provision for compensated absences have not been included as these are determined for the Company as a whole. Annual variable pay and long term incentive benefits have been included as remuneration on cash basis.
3. The above Managerial Remuneration does not include the cost of 4,498 Employee Stock Options granted during the year 2008-09 for the year 2007-08, pursuant to LTIP Scheme 2005. See Note 11 below.
4. Remuneration paid to erstwhile Managing Director in FY 2006-07. The Company, after obtaining the necessary approval from the Shareholders, had made an application to the Central Government
for approval under Clause 1(C) of Section II of Part II of Schedule XIII of the Companies Act, 1956 for the remuneration paid to the erstwhile Managing Director during the financial year 2006-07 in excess of the limits prescribed under Schedule XIII of the Companies Act, 1956. The Central Government approval has been received for the same during the financial year 2008-09.
(b) Details of Managerial Remuneration Paid to Non-Executive Directors in Rupees
Particulars 2008-2009 2007-2008
Sitting Fees 165,000 220,000
Total 165,000 220,000
Note: The above does not include the cost of 9,274 Employee Stock Options granted during the year, to the Chairman of the Company for the
year 2007-08, pursuant to LTIP scheme 2005. See Note 11 below.
9. Foreign Currency Transactions
(i) Expenditure in Foreign Currency (on cash basis, excluding share in Unincorporated Joint Ventures)in Rupees
Particulars 2008-2009 2007-2008
Travelling 215,713 57,607
Membership & Subscription 0 247,959
Training & Development 219,690 0
Others 39,747 34,119
Note: The above excludes interest paid in foreign currency amounting to Rs. 31,479,401 (Previous Year Rs. 22,641,685) capitalised as Development Expenditure in accordance with Accounting Standard 16 – Borrowing Costs, and cash call advances paid in foreign currency to the Operator of the Unincorporated Joint Ventures.
Notes.indd 50 8/18/2009 4:47:31 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
(ii) Earnings in Foreign Currency (on cash basis, excluding share in Unincorporated Joint Ventures) Rs. Nil (Previous Year Rs. Nil)
Note: The above excludes interest received in foreign currency amounting to Rs. 1,879,227 (Previous Year Rs. 6,083,787) netted off against Borrowing Cost capitalised as Development Expenditure in accordance with Accounting Standard 16 – Borrowing Costs.
(iii) CIF Value of Imports (on cash basis, excluding share in Unincorporated Joint Ventures) Rs. Nil (Previous Year Rs. Nil)
10. Dividend Paid in Foreign Currency to Non-Resident Shareholders
Particulars of Dividend Paid to Non Resident Shareholders (including Foreign Institutional Investors) are as under:
in Rupees
Particulars 2008-2009 2007-2008
Financial Year to which the Dividend relates 2007-08
N.A.Number of Non-Resident Shareholders 431
Number of Equity Shares Held by Them 37,757,162
Gross Amount of Dividend 37,757,162
11. Long Term Incentive Plan, Scheme 2005
Under the HOEC Limited Employee Stock Option Scheme – 2005 (ESOS Scheme) approved by the Shareholders, and as amended from time to time, the Board had on July 28, 2008 approved grant of 17,613 options to the eligible Employees and eligible Directors at Nil exercise price as part of the Long Term Incentive Plan (LTIP) for the financial year 2007-08. In terms of the ESOS Scheme, the options would vest at the third anniversary of the end of the financial year for which the grant corresponds to. For the financial year 2008-2009 an aggregate amount of Rs. 20,900,000 (Previous Year Rs. 9,400,000) has been provided towards cash bonus and ESOS (deferred bonus) as per the LTIP Scheme 2005.
Method used for Accounting for Share Based Payment Plan:
Under the LTIP Scheme 2005, the eligible employees are granted options in the succeeding year after adoption of the Annual Audited Accounts for the given year. The Company charges the entire amount provided towards cash bonus and ESOS (deferred bonus) to the Profit and Loss Account for the year for which the grant corresponds to. Any upward variation in the market price/acquisition price of the ESOS stocks, as may be applicable, as on the date of Balance Sheet, is charged to the Profit and Loss Account for the period as per LTIP.
Particulars 2008-2009 2007-2008
Shares Arising Out of Options
Exercise Price Rs.
Shares Arising Out of Options
Exercise Price Rs.
Outstanding at the beginning of the year 15,069 Nil 15,069 Nil
Granted during the year 17,613 Nil – Nil
Forfeited during the year – Nil – Nil
Exercised during the year – Nil – Nil
Outstanding at the end of the year 32,682 Nil 15,069 Nil
Exercisable at the end of the year – Nil – Nil
Fair Value Methodology:
Since the exercise price is Nil, the fair value approximates the intrinsic value of the option on the date of the grant.
Notes.indd 51 8/18/2009 4:47:32 PM
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
12. Gratuity
The Company’s obligation towards the Gratuity Fund is a Defined Benefit Plan.
Details of Actuarial Valuation as at March 31, 2009in Rupees
Particulars 2008-2009 2007-2008
Projected Benefit Obligation as at the Beginning of the Year 6,696,883 4,519,852Service Cost 1,397,580 1,178,717Interest Cost 535,751 377,407Actuarial Losses 30,916 979,387Benefits Paid (350,000) (358,480)Projected Benefit Obligation at the End of the Year 8,311,130 6,696,883
Change in Plan Assets
Fair Value of Plan Assets as at the Beginning of the Year 1,041,648 1,050,751
Expected Returns on Plan Assets 138,231 84,705Employer’s Contribution 1,338,515 250,046Benefits Paid (350,000) (358,480)Actuarial Gains 35,621 14,626
Fair Value of Plan Assets as at the End of the Year 2,204,015 1,041,648
Amount Recognised in the Balance SheetPresent Value of Obligations as at the End of the Year 8,311,130 6,696,883Fair Value of Plan Assets as at the End of the Year 2,204,015 1,041,648Liability Recognised in the Balance Sheet 6,107,115 5,655,235
Cost of the Defined Benefit Plan for the Year Current Service Cost 1,397,580 1,178,717Interest on Obligation 535,751 377,407Expected Return on Plan Assets (138,231) (84,705)
Net Actuarial (Gains)/Losses (4,705) 964,761
Net Cost Recognised in the Profit and Loss Account 1,790,395 2,436,180
Assumptions Discount Rate 8.00% 8.35%Future Salary Increase 9.00% 10%Attrition Rate 1% to 5% 1% to 3%Mortality Table LIC (1994-96)
published table LIC (1994-96)
published table
Expected Rate of Return on Plan Assets 9.00% 8.50%
Notes: 1. The entire plan assets are managed by Life Insurance Corporation of India (LIC). The data on plan assets has not been furnished by the LIC. 2. The expected return on plan assets is as furnished by an Independent Actuary appointed by the Company. 3. Discount rate is based on the prevailing market yields of Indian Government Bonds as at the Balance Sheet date for the estimated term of
the obligation.
13. Segmental Reporting
The Company is primarily engaged in a single business segment of “Hydrocarbons and other incidental services”. All the activities of the Company revolve around the main business. Further, the Company does not have any separate geographic segments other than India. Hence, there are no separate reportable segments as per AS-17 “Segmental Reporting”.
Notes.indd 52 8/18/2009 4:47:32 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
14. Unincorporated Joint Venture Operations The Company has entered into Production Sharing Contracts (PSC) and Unincorporated Joint Ventures (UJV) in respect of certain properties
with the Government of India and some bodies corporate. Details of these PSCs/UJVs are as follows:
Unincorporated Joint Ventures #
Partners Share (%)As at
March 31, 2009As at
March 31, 2008Licensed Production Sharing Contracts:PY–1 Hindustan Oil Exploration Company Ltd. 100.00 100.00CY-OS/90-1 (PY–3) Hardy Exploration & Production (India) Inc. 18.00 18.00
Oil and Natural Gas Corporation Ltd. 40.00 40.00Hindustan Oil Exploration Company Ltd. 21.00 21.00Tata Petrodyne Ltd. 21.00 21.00
Asjol Hindustan Oil Exploration Company Ltd. 50.00 50.00Gujarat State Petroleum Corporation Ltd. 50.00 50.00
North Balol Hindustan Oil Exploration Company Ltd. 25.00 25.00Gujarat State Petroleum Corporation Ltd. 45.00 45.00Heramec Ltd. 30.00 30.00
CB-ON/7 (Palej) Exploration AreaHindustan Oil Exploration Company Ltd. 50.00 50.00Gujarat State Petroleum Corporation Ltd. 50.00 50.00Development AreaHindustan Oil Exploration Company Ltd. 35.00 35.00Gujarat State Petroleum Corporation Ltd. 35.00 35.00Oil and Natural Gas Corporation Ltd. 30.00 30.00
CB-OS/1 Exploration AreaOil and Natural Gas Corporation Ltd. 32.89 32.89Hindustan Oil Exploration Company Ltd. 57.11 57.11Tata Petrodyne Ltd. 10.00 10.00Development Area*Oil and Natural Gas Corporation Ltd. 55.26 55.26Hindustan Oil Exploration Company Ltd. 38.07 38.07 Tata Petrodyne Ltd. 6.67 6.67
GN-ON-90/3(Pranhita Godavari **)
Hindustan Oil Exploration Company Ltd. 75.00 75.00Mafatlal Industries Limited 25.00 25.00
AAP-ON-94/1 Hindustan Oil Exploration Company Ltd. 40.323 40.323Indian Oil Corporation Ltd. 43.548 43.548Oil India Ltd. 16.129 16.129
RJ-ONN-2005/1 $ Hindustan Oil Exploration Company Ltd. 25.00 0Bharat Petro Resources Ltd. 25.00 0Jindal Steel and Power Ltd. 25.00 0IMC Ltd. 25.00 0
RJ-ONN-2005/2 $ Oil India Limited 60.00 0Hindustan Oil Exploration Company Ltd. 20.00 0HPCL & Mittal Energy Ltd. 20.00 0
Also see Note 1 above with respect to CY-OSN-97/1. # All the Unincorporated Joint Ventures are for the blocks awarded within the territorial limits of India. * As per the terms of the Production Sharing Contract (PSC), Oil and Natural Gas Corporation Ltd. has exercised its option to acquire 30%
Participating Interest in the Gulf “A” Development Area of the said field w.e.f. February 13, 2008. ** As discussed in Note 18(v) below, the Contract Area is subject matter of arbitration and the arbitration award is awaited. $ The Production Sharing Contract (PSC) has been signed on December 22, 2008. As per the terms of the PSC, the PSC is effective from
the date of the Petroleum Exploration License (PEL). The PEL is awaited from the Government of Rajasthan as on March 31, 2009, hence no accounts have been prepared for the financial year 2008-09.
Notes.indd 53 8/18/2009 4:47:32 PM
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
15. Related Party Disclosures
(i) As per the Accounting Standard on ‘Related Party Disclosures’ (AS 18), the related parties of the Company as at March 31, 2009 are as follows:
(A) Wholly Owned Subsidiary Company: HOEC Bardahl India Limited
(B) Promoter Group: ENI UK Holdings plc. (Wholly Owned Subsidiary of ENI S.p.A, Italy) Burren Shakti Limited (Wholly Owned Indirect Subsidiary of ENI UK Holdings plc.) Burren Energy (India) Limited (Wholly Owned Indirect Subsidiary of ENI UK Holdings plc.)
(C) Unincorporated Joint Ventures: As per details given in Note 14 above. As stated in Item 6 of Significant Accounting Policies (Schedule 14), the financial statements of the Unincorporated Joint Ventures
are incorporated in the Company’s accounts to the extent of the Company’s share. Hence, particulars of transactions with the Unincorporated Joint Ventures have not been separately disclosed.
(D) Key Management Personnel: Mr. Luigi Ciarrocchi – Managing Director (w.e.f. September 30, 2008) Mr. Manish Maheshwari – Joint Managing Director Mr. Atul Gupta – Erstwhile Managing Director (upto August 21, 2008)
Notes: Related party relationships are as identified by the Management and relied upon by the Auditors.
(ii) The nature and volume of transactions of the Company during the year with the above parties were as follows: in Rupees
Particulars Wholly Owned Subsidiary Company
Promoter Group
Unincorporated Joint Ventures’
Partners
Key Management
Personnel
INCOME – Management Fee 24,930,246
(23,470,373)0(0)
0(0)
0(0)
– Warehousing Services 1,764,000(0)
0(0)
0(0)
0(0)
EXPENDITURE – Remuneration to Joint Managing Director (See
Note 8(a) above)0(0)
0(0)
0(0)
14,816,557(7,806,490)
– Sitting Fees to Erstwhile Managing Director (See Note 8(a) above)
0(0)
0(0)
0(0)
40,000(85,000)
– Recovery of Expenses 0(0)
0(0)
37,781,411 (37,545,357)
0(0)
– Dividends Paid 0(0)
35,453,679(0)
0(0)
0(0)
OTHERS – Warehouse Deposit Received 6,000,000
(0)0(0)
0(0)
0(0)
AS AT YEAR ENDNet Amounts Receivable as at Year End
18,786,332(23,383,442)
0(0)
0(0)
0(0)
Notes: 1. Figures in brackets relate to the Previous Year. 2. The above excludes transactions, if any, entered into between the Unincorporated Joint Ventures and the related parties mentioned in
(i) above in the absence of necessary information in the audited accounts of the Unincorporated Joint Ventures.
Notes.indd 54 8/18/2009 4:47:32 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
55
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
16. Earnings Per Share (EPS) The basic and diluted Earnings per Equity Share is calculated as stated below:
Particulars 2008-2009 2007-2008Net Profit after Tax Rs. 535,664,257 Rs. 241,005,398Weighted Average Numbers of Equity Shares 130,493,289 97,546,759Basic and Diluted Earnings Per Share (EPS) Rs. 4.10 Rs. 2.47Nominal Value per Share Rs. 10 Rs. 10
Note: Earnings per Share calculations are done in accordance with Accounting Standard 20 “Earnings per Share”.
17. Taxation
(i) MAT Credit Provision for Income Tax for the current year as well as the previous year has been computed based on Minimum Alternate Tax in
accordance with Section 115JB of the Income Tax Act, 1961. Taking into consideration the future profitability and the taxable position in the subsequent years, the Company has recognised “MAT Credit Entitlement” to the extent of Rs. 31,000,000 (Previous Year Rs. Nil) in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under Income Tax Act, 1961 issued by the Institute of Chartered Accountants of India.
(ii) Deferred Tax Asset (Net) The net Deferred Tax Asset of Rs. 284,147,919 (Previous Year Rs. 374,478,090) as at March 31, 2009 has arisen on account of the following: in Rupees
Particulars 2008-2009 2007-2008Deferred Tax AssetExploration Expenditure 308,300,000 290,500,000Doubtful Advances 5,290,000 5,300,000Employee Related Costs 4,490,000 4,438,090Unabsorbed Business Losses * 250,927,919 164,500,000
Sub total (A) 569,007,919 464,738,090Deferred Tax LiabilityDepreciation on Fixed Assets 1,590,000 4,800,000Depletion of Producing Properties 260,360,000 70,060,000Site Restoration 17,070,000 15,400,000Foreign Currency Monetary Item Translation Difference Account 5,840,000 0
Sub total (B) 284,860,000 90,260,000Net Deferred Tax Asset before Transitional Adjustment (A – B) 284,147,919 374,478,090Deferred Tax relating to AS – 11 Adjustment (See Note 26(i) below) 0 4,669,829Net Deferred Tax Asset after Transitional Adjustment 284,147,919 379,147,919
* On the basis of proven reserves of the existing Unincorporated Joint Ventures
18. Commitments and Contingencies in Rupees
Particulars 2008-2009 2007-2008(i) Counter Guarantees on account of Bank Guarantees 12,998,995 137,788,741(ii) Corporate Guarantee for Housing Loans to Employees 0 235,523(iii) Estimated amount of Contracts remaining to be Executed on
Capital Account and Not Provided For: (Including Rs. 156,922,500 (Previous Year Rs. 122,335,500) in respect of a
farm-in consideration for acquisition of participating right, in one of the Unincorporated Joint Ventures)
159,950,859
130,833,217
(iv) Claims against the Company Not Acknowledged as Debt* – Dispute with Contractors under Arbitration 3,286,632 3,206,685 – Income Tax Demands under Appeal 511,787,766 399,502,024
Notes.indd 55 8/18/2009 4:47:32 PM
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
Particulars 2008-2009 2007-2008(v) The Government had encashed the Performance Bank Guarantee of
Rs. 10,149,000 for PG Block abandoned by the consortium under the force majeure clause of the Production Sharing Contract (PSC). The Government has also raised an additional demand of Rs. 304,725,187 (including interest) (Previous Year Rs. 282,417,042). The Company has been advised that the said actions of the Government are not justified. The Company has initiated legal proceeding as per the provisions of the PSC in the matter. Pending the outcome of this, provision has been made in this regard to the extent of Rs. 10,149,000 (Previous Year Rs. 10,149,000) only.* 304,725,187 282,417,042
* The Company is contesting these claims and demands and the Company, based on the opinion of its tax/legal advisors, believes that the Company’s position will quite likely be upheld in the appellate process/court of law.
Notes: 1. The above does not include Interest claims amounting to Rs. 27,576 (to the extent quantifiable) pertaining to secured loan for PY-1 field,
which is not as per provisions of the Dollar Facility Agreement. 2. Other than the contingent liabilities disclosed in Notes 19 and 20 below, information relating to the Commitments and Contingencies of
the unincorporated joint ventures is not available in the audited accounts of the Unincorporated Joint Ventures.
19. Hire Charges
In PY-3 Field operated by Hardy Exploration & Production (India) Inc., the Floating Production System (“FPS”) was shutdown for a period of 33.47 days from November 26, 2008 to December 29, 2008. Accordingly, the invoice for the hire charges of FPS amounting to US$ 3,290,718 for the above period has been disallowed by the Operator. The above disallowance is disputed by the contractor and therefore, the Company has treated its share amounting to US$ 691,051 (equivalent to Rs. 35,554,574) as a contingent liability.
20. Capital Work in Progress During the year, PY3-D4-RL well was sidetracked. The expenditure for the well based on the invoices already received and accrued for various
services is US$ 56.31 million and a deduction of US$ 4.00 million is expected from the invoices of various contractors by negotiation. Accordingly, an amount of US$ 52.31 million, as approved by the Joint Venture, is included in the development cost for PY3-D4-RL well. Pending the completion of negotiation by the Operator, the Company has treated its share of the above deduction amounting to US$ 0.84 million (equivalent to Rs. 43,218,000) as a contingent liability.
21. Provision for Site Restoration In accordance with Accounting Standard 29, the movement in Provision for Site Restoration is as follows: in Rupees
Provision for Site Restoration 2008-2009 2007-2008Opening Balance 225,177,500 244,392,500Add : Provision for the Year 1,400,000 0Effects of Changes in Foreign Exchange Rates 59,535,000 (19,215,000)Closing Balance 286,112,500 225,177,500
As per the terms of the Production Sharing Contracts this liability will arise at the time of abandonment of the respective fields.
22. Quantitative and Other Related Disclosures The Company is not a manufacturing company but holds participating interest in Unincorporated Joint Ventures engaged in prospecting, exploring
and producing oil and gas. The information given below as required under items 4-C and 4-D of Part II of Schedule VI to the Companies Act, 1956 represents the Company’s share in the Unincorporated Joint Ventures.
(i) Sales Turnover in Rupees
Description Unit Quantity Value Crude Oil Bbl. 228,279
(332,087)808,344,860
(1,026,493,810)Gas M3 4,040,474
(2,677,570)23,066,940(13,778,852)
Less: Profit Petroleum to Government of India 6,322,445(230,273,866)
Net 825,089,355(809,998,796)
Notes.indd 56 8/18/2009 4:47:33 PM
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Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
(ii) Opening and Closing Stock of Goods Produced in Rupees
Description Unit Quantity Value* Opening StockCrude Oil Bbl. 16,335
(19,136)72,024,219(50,246,759)
Closing StockCrude Oil Bbl. 19,175
(16,335)49,587,439(72,024,219)
Decrease/(Increase) in Stock of Crude Oil Bbl. 2,840(2,801)
22,436,780((21,777,460))
* Excluding adjustment for Profit Petroleum to Government of India. * Inventory valuation of crude oil is done at estimated Net Realisable Value less estimated selling cost, if any.
(iii) Licensed Capacity, Installed Capacity and Actual Production
Description UnitLicensed Capacity
Per AnnumInstalled Capacity
Per AnnumActual Production
for the Year Crude Oil Bbl. N.A. N.A. 231,119 *
(329,286) *Gas M3 N.A. N.A. 4,040,474
(2,677,570)
* Excludes loss/internal consumption of 1,622 Bbl (Previous Year 84 Bbl) Notes: 1. Figures in brackets relate to the Previous Year. 2. Particulars relating to consumption of stores and spares (including capital stock and drilling tangibles) have not been given in the
absence of information in the audited accounts of the Unincorporated Joint Ventures.
23. Break up of Foreign Exchange (Gain)/Loss charged to Profit and Loss Account
Net Gain on Foreign exchange includes exchange (gain)/loss as per the following: in Rupees
Particulars 2008-09 2007-08
Net Exchange (Gain)/Loss on Current Assets and Current Liabilities (65,713,755) 13,624,441
Net Exchange Loss/(Gain) on Revaluation of Current Assets and Current Liabilities of the Joint Ventures
PY-1 9,707,808 (7,960,469)
AAP-ON-94/1 4,096,967 (24,581)
CY-OSN-97/1 285,574 (5,310,054)
CB-ON-7 (Palej) 4,337 (243,443)
North Balol 1,047 (33,981)
Asjol 0 63
PY-3 6,586 181,654
Amortisation of Foreign Currency Monetary Item Translation Difference Account 4,345,806 0
Exchange Differences on Foreign Currency Loans 10,248,123 (32,699,812)
Others (35,080) 80,029
Total (37,052,587) (32,386,153)
Note: With respect to the exchange differences arising in respect of the Company’s share of the assets and liabilities in two of the Unincorporated
Joint Ventures, the required information is not available in the audited financial statements of the respective audited financial statements of the Unincorporated Joint Ventures which are prepared in accordance with the requirements of the Production Sharing Contract. Hence, such details of the foreign exchange differences have been obtained from the Operators of the respective Unincorporated Joint Ventures.
Notes.indd 57 8/18/2009 4:47:33 PM
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
24. Recovery of Expenses Recovery of expenses represents expenditure incurred by the Company for the Unincorporated Joint Ventures where the Company is the
Operator. Such cost has been recovered from the respective Unincorporated Joint Ventures as per the terms of the respective Production Sharing Contracts.
Recovery of expense also includes an amount of Rs. 59,373,679 (Previous Year Rs. 17,929,765) recovered as parent company overhead pursuant to the respective Production Sharing Contracts.
25. Stores, Spares, Capital Stock and Drilling Tangibles Stores, Spares, Capital Stock and Drilling Tangibles include the Company’s share of Rs. 3,156,384 towards inventories purchased by the Operator
before March 31, 2004 in PY-3 block. As per the Operator, the potential future usage of this PY-3 inventory will be reviewed periodically and will be dealt with appropriately.
26. Changes in Accounting Policy – Accounting Standard 11 – The Effects of Changes in Foreign Exchange Rates
(i) FY 2008-09
As indicated in (ii) below, hitherto the Company was following a policy of accounting for all exchange differences in the Profit and Loss Account. Effective April 1, 2008, consequent to the exercise of the option available as per the new paragraph 46 of the Accounting Standard 11 – The Effects of Changes in Foreign Exchange Rates notified by the Ministry of Corporate Affairs vide Notification dated March 31, 2009 on Companies (Accounting Standards) Amendment Rules, 2009 (G.S.R. 225 (E) dated 31.3.2009), the Company has capitalised a net amount of Rs. 133,793,106 to fixed assets (Development Expenditure) and transferred a net amount of Rs. 17,179,351 to Foreign Currency Monetary Item Translation Difference Account, as of March 31, 2009. Had the Company not changed the Accounting Policy, the profit before tax for the year ended March 31, 2009 would have been lower by Rs. 173,117,256.
The details are summarised below:
Particulars in Rupees
Exchange Differences capitalised to Fixed Assets (Development Expenditure) 133,793,106Closing Balance of Foreign Currency Monetary Item Translation Difference Account as at March 31, 2009 to be amortised in subsequent periods
17,179,351
Amount of Net Amortisation of Foreign Currency Monetary Item Translation Difference Account charged to the Profit and Loss Account for the year ended March 31, 2009
4,345,806
Amount debited to General Reserve as at April 1, 2008 (to the extent available and Net of Taxes)
3,383,000
Amount debited to Accumulated Profit and Loss Account as at April 1, 2008 (Net of Taxes)* 13,139,573Net Impact on Profit Before Tax for the year ended March 31, 2009 173,117,256
*Includes Total Adjustment for Deferred Tax – Rs. 4,669,829.
(ii) FY 2007-08 Upto March 31, 2007, the Company had capitalised the exchange differences arising from foreign currency liabilities relating to fixed assets
acquired from outside India. Effective April 1, 2007, consequent to the applicability of Accounting Standard (AS) 11 – The Effects of Changes in Foreign Exchange Rates, notified by the Government of India, the Company had accounted for such exchange differences amounting to a net gain of Rs. 13,612,540 (including share in Unincorporated Joint Ventures) in the Profit and Loss Account for the previous year.
With respect to such transactions/liabilities, had the Company not changed the Accounting Policy the profit before tax for the previous year would have been lower by Rs. 13,612,540.
With respect to the effect of such change in policy in respect of the Company’s share of the assets and liabilities in the Unincorporated Joint Ventures, the required information relating to foreign exchange differences are not available in the audited financial statements of the Unincorporated Joint Ventures which are prepared in accordance with the requirements of the Production Sharing Contract. Hence, the details of such foreign exchange differences have been obtained from the Operators of the respective Unincorporated Joint Ventures.
27. CB-ON-7 Exploration Area The Operator of the Unincorporated Joint Venture CB-ON-7 Block has sought extension for conducting additional exploration in certain areas of
Block. While the additional work programme has been considered, the final regulatory consents are awaited. The exploration expenses amounting to Rs. 53,235,101 included under “Exploration Expenditure” (Schedule 4) will be appropriately dealt with based on final regulatory consents in line with the Company’s Accounting Policy.
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59
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 15 — NOTES TO THE ACCOUNTS (Contd.)
28. CB-OS/1 Exploration Area The Operator has declared Commercial Discovery in CB-OS-1 Block and is pursuing with the authorities for necessary approvals. The exploration
expenses amounting to Rs. 184,543,335 included under “Exploration Expenditure” (Schedule 4) will be appropriately dealt with based on final regulatory consents in line with the Company’s Accounting Policy.
29. GAIL Arbitration On February 15, 2008, the Arbitral Tribunal has passed Final Award in the Arbitration Proceedings between GAIL India Ltd. (“GAIL”) and
Hindustan Oil Exploration Company Limited (“HOEC”) concerning the Gas Sale and Transportation Agreement (“GSTA”) dated July 1, 2003 executed between GAIL and HOEC in relation to the PY-1 Gas. In the said proceedings GAIL had sought specific performance of the GSTA. By way of the majority award the Arbitral Tribunal has granted the relief of specific performance of GSTA in favour of GAIL and against HOEC. The Company has filed a petition before the Hon’ble High Court, Delhi for setting aside the majority award of the Arbitral Tribunal and the said petition has been admitted. Further, GAIL has also filed a petition before the Hon’ble High Court, Delhi for seeking specific performance of the Arbitral Award, which is pending before the Court.
In the meanwhile, HOEC has initiated a tripartite discussion with GAIL and PPN Power Generating Company Pvt. Ltd. to reach a solution for outstanding issues including the aforesaid dispute.
30. Profit Petroleum Profit Petroleum for the year ended March 31, 2009 includes an amount of Rs. 4,803,040 (Previous Year Rs. Nil) paid for the financial year
2005-2006 as submitted by the Operator of PY-3.
31. Miscellaneous Income Miscellaneous Income includes an amount of Rs. 1,799,237 being the net gain on Current Non Trade Investments.
32. Sales Sales is net of an amount of Rs. 406,863 adjusted for Reid Vapour Pressure specifications as per the terms of the Crude Oil Sale Agreement for
PY-3 field pertaining to prior years as submitted by the Operator of PY-3.
33. Provision and Write Off – Year Ended March 31, 2008 During the previous year ended March 31, 2008, Exploratory Well North Ledo-1 drilled in Block AAP-ON-94/1 did not encounter hydrocarbons
of commercial interest and the same has been plugged and abandoned. Consistent with the Company’s Accounting Policies, the Company had written off the Exploration Cost of Rs. 158,033,311 associated with the drilling of the said well.
As per the terms of the Production Sharing Contract for CY-OSN-97/1 Block, if no Commercial Discovery is made in the Contract Area by end of the Exploration Period, the Contract Area shall be relinquished. In the absence of any discovery during the Exploration Period the Contract Area stands relinquished. Hence Exploration Cost pertaining to the CY-OSN-97/1 Block of Rs. 8,359,550 had been written off during the previous year ended March 31, 2008. Also See Note 1 above.
34. Particulars of Unhedged Foreign Currency Exposure (excluding Unincorporated Joint Ventures) The particulars of Unhedged Foreign Currency Exposure of the Company, either by a derivative instrument or otherwise, as at March 31, 2009
are as under: in Rupees
Particulars Exposure as at March 31, 2009
Exposure as at March 31, 2008
Secured Loans 824,840,843 776,198,692Sundry Debtors 173,613,578 109,285,585Loans and Advances 114,594,339 0Sundry Creditors 242,526,429 27,351,087
35. Details of Oil and Gas Reserves As at March 31, 2009, the internal estimates of the Management of Proved and Probable reserves on working interest basis for the Company is
53.4 Million Barrel of Oil Equivalent (Previous Year 53.4 Million Barrel of Oil Equivalent). This has been relied upon by the auditors, being a technical matter.
36. Previous Year Figures Previous year’s figures have been regrouped wherever necessary to conform to the current year presentation.
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
NAME OF THE SUBSIDIARY HOEC BARDAHL INDIA LIMITED
1. The Financial year of the subsidiary ended on March 31, 2009
2. (a) Number of Shares held by Hindustan Oil Exploration Company Limited (holding company) as on March 31, 2009 50,002 Equity Shares of Rs. 100/- each fully paid
(b) Extent of interest of the holding company at the end of the financial year of the subsidiary 100%
3. Date from which it became a subsidiary March 30, 1992
4. The net aggregate amount of Profit/ (Loss) and reserves of the subsidiary so far as it concerns the members of the holding company:
(a) dealt with in the holding company's accounts
(i) for the financial year of the subsidiary company NIL*
(ii) for the previous financial year of the subsidiary since it became the holding company' s subsidiary NIL**
(b) not dealt with in the holding company's accounts:
(i) for the financial year of the subsidiary Rs. 9,157,653
(ii) for the previous financial years of the subsidiary since it became the holding company's subsidiary Rs. 28,871,441
* The subsidiary has paid an amount of Rs. 24,930,247 (excluding Service Tax of Rs. 3,023,212) towards management fee and Rs. 1,764,000 (excluding Service Tax of Rs. 203,755) towards warehousing services to the holding company.
** The subsidiary has paid an amount of Rs. 23,470,373 (excluding Service Tax of Rs. 2,900,939) towards management fee to the holding company.
Statement pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary
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(I) Registration Details CIN L11100GJ1996PLC029880 Registration No. 29880 State Code 04 Balance Sheet Date 31.03.2009
(II) Capital raised during the year (Rs. in Thousand)
Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement Nil
(III) Position of Mobilisation and Deployment of Funds (Rs. in Thousand)
Total Liabilities 15,938,789 Total Assets 15,938,789
Sources of Funds Paid-up Capital 1,305,093
Reserves and Surplus 9,295,551 Secured Loans 1,304,841
Application of Funds Net Fixed Assets 11,291,360 Investments 115,186 Net Current Assets 197,612 Other Assets 301,327 Misc. Expenditure NIL Accumulated Losses NIL
(IV) Performance of the Company (Rs. in Thousand)
Turnover 1,291,712 Total Expenditure 657,398 Profit Before Tax 634,314 Profit After Tax 535,664 Earning Per Share in Rs. 4.10
(V) Generic Names of Three Principal Products/Services of the Company (as per monetary terms)
Item Code No. (ITC Code) 27090000 Product Description CRUDE OIL Item Code No. (ITC Code) 27112100 Product Description NATURAL GAS
Balance Sheet Abstract and Company‘s General Business Profile
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62
HOEC BARDAHL INDIA LIMITEDHOEC BARDAHL INDIA LIMITED HOEC BARDAHL INDIA LIMITEDHOEC BARDAHL INDIA LIMITED
BOARD OF DIRECTORS Mr. Manish Maheshwari
Mr. Vikash Jain
Mr. Sagar Mehta
Mr. Sandeep Khamesra
Mr. Minesh Bhatt
ChairmanDirectorDirectorDirectorDirector
AUDITORS M/s. H. R. Lalka & CompanyChartered Accountants
BANKERS Axis Bank LimitedHDFC Bank Limited
SENIOR MANAGEMENT Mr. Hashit Rawal Vice President –Operations
REGISTERED OFFICE
“HOEC House”Tandalja Road,Vadodara – 390 020 (India)
CORPORATE OFFICE
C-101, 1st Floor, The Platinum, C. D. Barfiwala Marg, Juhu Lane,Andheri (W), Mumbai – 400 058.Tel. No.: 022-26704415, 26704155Fax No.: 022-26704453Email : [email protected]
DIRECTORS’ REPORT
TO THE MEMBERS OF HOEC BARDAHL INDIA LIMITED
Your Directors have pleasure in placing before you the Annual Report including the Audited Statement of Accounts for the year ended March 31, 2009.
FINANCIAL HIGHLIGHTS(Rs. in Lacs)
2008-2009 2007-2008
Net Sales 1,618.19 1,527.68Less: Cost of Goods Sold 600.90 484.51Gross Profit 1,017.29 1,043.17
Less: Operational Expenses 920.40 820.72Add: Other Income 38.09 34.46Profit before Depreciation, Provisions & Write Offs and Taxation 134.98 256.91Less: Depreciation 4.61 4.41Less: Provisions & Write Offs 3.18 5.47Profit Before Taxation 127.19 247.03Less: Provision for Current Taxation 35.20 83.25Less: Provision for Deferred
Taxation (3.89) (4.14)Less: Provision for Fringe
Benefit Tax 4.30 (0.35)Profit After Tax 91.58 168.27Add: Profit brought forward from previous year 268.71 100.44Profit carried forward to Balance Sheet 360.29 268.71
Previous year figures have been regrouped to conform to the Current year presentation.
OPERATIONS REVIEWPERFORMANCEDuring the year Net Sales has increased by 5.92% over previous year. However, Gross Profit and Profit before tax decreased by 2.48% and 48.51% respectively over the previous year as a result of steep increase in base oil prices and continued adverse forex.Operational expenses increased by 12.15%. During the year the Company has paid to Hindustan Oil Exploration Company Limited, its holding company Rs. 249.30 lacs as Management Fee for the valued advice, guidance and support received from them and Rs. 17.64 lacs for warehousing services towards services rendered by them and utilization of their premises for warehousing.
BUSINESS OVERVIEWThe steep rise in crude oil prices in the first half of the fiscal and the depreciating Rupee severely impacted our raw material cost. The cost of goods sold increased by over 24% during the year. Further, economic slow down impacted automotive sales and vehicular movement in dealerships, which adversely affected our sales growth.During the year, Company has received approval from Honda Siel Cars India Limited for select car care products. The two-wheeler segment also saw an encouraging growth for our products. Our efforts on acquiring more approvals/endorsements of both four and two wheeler OEM’s continue, as well as introducing more related products in the car care segment, to support our future growth.
DIVIDENDThe Board of Directors of the Company do not recommend any dividend for the year.
FIXED DEPOSITSYour Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as at the balance sheet date.
DIRECTORSIn accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Mr. Minesh Bhatt, Director will retire by
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rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment.
The Board recommends his appointment.
HUMAN RESOURCEThe Company’s relationship with its employees and staff continued to be harmonious during the period under review.
PARTICULARS OF EMPLOYEESThe particulars of employees required to be furnished pursuant to Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules, 1975 are annexed hereto and forms part of this Report.
DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm:
(a) that in the preparation of the annual accounts the applicable accounting standards have been followed and that no material departures have been made from the same;
(b) that the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;
(c) that the directors have taken proper and sufficient 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 fraud and other irregularities;
(d) that the directors have prepared the annual accounts on a going concern basis.
COMPLIANCE CERTIFICATEAs per the requirements of Section 383A of the Companies Act, 1956, the Company has obtained a certificate from a Company Secretary in whole time practice confirming that the Company has complied with all the provisions of the Companies Act, 1956. The certificate is appended herewith.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTIONAs the Company is not a manufacturing concern, the requirements of 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 relating to conservation of energy and technology absorption are not applicable.
FOREIGN EXCHANGE EARNINGS AND OUTGO(a) Activities relating to exports, initiatives taken to increase : Nil
exports, development of new export market for products and services, and export plans.
(b) Total foreign exchange used and earnedRs. in lacs
Particulars 2008-2009 2007-2008
A. Foreign Exchange Used On import of raw materials
For business travel
348.57
Nil
387.18
1.14
B. Foreign Exchange Earned Nil Nil
AUDITORSThe Statutory Auditors of the Company, M/s. H. R. Lalka & Co., Chartered Accountants, will retire at the forthcoming Annual General Meeting and being eligible have offered themselves for re-appointment.
ACKNOWLEDGEMENTDirectors are pleased to place on record their appreciation for the hard work and dedication of all the employees. Directors would also like to thank Hyundai Motor India Limited, Tata Motors Limited, Honda Siel Cars India Limited, TVS Motor Company Limited, and Bajaj Auto Limited, Hindustan Oil Exploration Company Limited, Distributors, Dealers, Customers, Bankers and Bardahl Manufacturing Corporation for their support.
On behalf of the Board of Directors
Place : Chennai Manish MaheshwariDate : June 05, 2009 Chairman
ANNEXURE TO THE DIRECTORS’ REPORTStatement of particulars of employees pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors’ Report for the year ended March 31, 2009.
Name Designation Remuneration received
Nature of employment
Nature of duties of the employee
Qualifications of the employee
Experience of the employees (in years)
Date of commence- ment of employment
Age The last employment held by such employee before joining the Company
The number of equity shares held by the employee
The percentage of equity shares held by the employee
Period of employment during the financial year
Mr. Hashit Rawal
Vice President Rs. 48,13,138 Permanent Over all management of the Company under the suprintendence of the Board
B.Com. P.G.D.B.M.
29 years 2-Apr-01 55 years Bajaj Tempo Limited
Nil NA 1-Apr-08 31-Mar-09
Note: Gross remuneration as above includes salary, allowances, performance linked incentives, Company’s contribution to Provident Fund & Superannuation Fund, Gratuity paid (but excludes Company’s contribution to Gratuity Fund), reimbursement of medical expenses, leave travel assistance and monetary value of perquisites calculated in accordance with the provisions of the Income Tax Act, 1961 and the Rules there-under.
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HOEC BARDAHL INDIA LIMITEDHOEC BARDAHL INDIA LIMITED HOEC BARDAHL INDIA LIMITEDHOEC BARDAHL INDIA LIMITED
ANNEXURE TO DIRECTORS’ REPORTCorporate Identity Number (CIN): U11100GJ1988PLC011536Nominal Capital Rs. 1,00,00,000/-
ToThe MembersHOEC Bardahl India Limited
I have examined the registers, records, books, forms and papers of HOEC Bardahl India Limited (the Company) as required to be maintained under the Companies Act, 1956, (“the Act”) and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on March 31, 2009 (“financial year”). In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company, its officers and agents, I certify that in respect of the aforesaid financial year:
1. The Company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate as per the provisions of the Companies Act, 1956 and the rules made thereunder and entries therein have been duly recorded.
2. The Company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate with the Registrar of Companies generally within the time prescribed under the Companies Act, 1956 and the rules made thereunder. However, no forms or returns were required to be filed with the Regional Director, Central Government, Company Law Board or other authorities.
3. The Company, being a public limited company, the restriction clauses as provided in Section 3(1)(iii) of the Companies Act, 1956 is not applicable.
4. The Board of Directors duly met four (4) times on May 08, 2008, July 09, 2008, October 14, 2008, and March 19, 2009, in respect of which meetings proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose.
5. The Company has not closed its Register of Members during the financial year under review.
6. The Annual General Meeting for the financial year ended on March 31, 2008 was held on September 27, 2008 after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose.
7. No Extraordinary General Meeting was held during the financial year.
8. The Company had not advanced any loans to its directors or persons or firms or companies referred to under Section 295 of the Companies Act, 1956.
9. The Company had not entered into any contracts to which the provisions of Section 297 of the Companies Act, 1956 applies except as specified hereinafter.
10. The Company has been paying a Management Fee to its Holding Company in line with the approval of the Board. Further, w.e.f.
January 1, 2009 availed warehousing services provided by its Holding Company. The Company has further extended an interest free security of Rs. 60,00,000/- to its Holding Company. The said transactions have been entered into the register maintained under Section 301 of the Companies Act, 1956.
11. The provisions of Section 314 of the Companies Act, 1956 have not been attracted and therefore no approvals were required to be taken.
12. The Company has not issued any duplicate share certificates during the financial year under review.
13. The Company has:
(i) Delivered all the certificates on lodgment thereof for transfer, if any, in accordance with the provisions of the Companies Act, 1956. The Company has not received any request for transfer during the year.
(ii) Duly complied with the requirements of Section 217 of the Companies Act, 1956.
14. The Board of Directors of the Company is duly constituted and the appointment of directors has been duly made.
15. The Company’s paid up capital being less than the prescribed Rs. 5 crores, it is not required to appoint a Managing Director/Whole-Time Director/Manager and accordingly the provisions of Section 269 of the Companies Act, 1956 to that extent, are not applicable.
16. The Company has not appointed any sole-selling agents during the financial year under review.
17. During the said financial year, no approvals have been required from the specified authorities under the Companies Act, 1956.
18. The Directors have disclosed their interest in other firms/ companies to the Board of Directors pursuant to the provisions of the Companies Act, 1956 and the rules made thereunder.
19. The Company has not issued any shares, debentures or other securities during the financial year.
20. The Company has not bought back any shares during the financial year.
21. The Company has not issued any redeemable preference shares/ debentures.
22. During the year under review the Company has not declared rights shares & bonus shares and hence the question of keeping in abeyance right to dividend, rights shares and bonus shares pending registration of transfer of shares does not arise.
23. The Company has not invited/accepted any deposits including any unsecured loans falling within the purview of Section 58A of the Companies Act, 1956, during the financial year.
24. The Company has not made any borrowing during the financial year ended 31st March, 2009.
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25. The Company has not made any loans or advances or given guarantees or provided securities to other bodies corporate and consequently no entries have been made in the register kept for the purpose.
26. The Company has not altered the provisions of the Memorandum with respect to situation of the Company’s registered office from one state to another during the year under scrutiny.
27. The Company has not altered the provisions of the Memorandum with respect to the objects of the Company during the year under scrutiny.
28. The Company has not altered the provisions of the Memorandum with respect to name of the Company during the year under scrutiny.
29. The Company has not altered the provisions of the Memorandum with respect to share capital of the Company during the year under scrutiny.
30. The Company has not altered its Articles of Association during the financial year.
31. There was no prosecution initiated against or show cause notices received by the Company during the financial year, for offences under the Companies Act, 1956.
32. The provisions of Section 417(1) of the Companies Act, 1956 is not applicable.
33. The Company has deposited both employees’ and employer’s contribution to Provident Fund with prescribed authorities pursuant to Section 418 of the Act.
KANU M. GANDHIPlace : Vadodara Practising Company SecretaryDate : May 30, 2009 CP No. 3089
ANNEXURE - ARegisters as maintained by the Company
1. Register of Members u/s 150 of the Companies Act, 1956.
2. Register of transfers.
3. Register of Directors u/s 303.
4. Register of Directors’ shareholding u/s 307.
5. Register of Contracts, Companies and Firms in which Directors of the Company are interested u/s 297, 299, 301 and 301(3).
6. Minutes of the Annual General Meeting/Extraordinary General Meeting & Board Meetings u/s 193 along with the Attendance Register.
ANNEXURE - BForms and Returns as filed by the Company during the financial year ended March 31, 2008.
1. Form No. 23AC and 23ACA (Balance sheet as at March 31, 2008 and Profit & Loss Account for the year ending March 31, 2008) was filed with Ministry of Corporate Affairs on October 11, 2008.
2. Form 20B (Annual Return) for the financial year was filed on December 01, 2008.
3. Form 66 (Compliance Certificate) was filed with Ministry of Corporate Affairs on October 11, 2008.
KANU M. GANDHIPlace : Vadodara Practising Company SecretaryDate : May 30, 2009 CP No. 3089
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HOEC BARDAHL INDIA LIMITEDHOEC BARDAHL INDIA LIMITED HOEC BARDAHL INDIA LIMITEDHOEC BARDAHL INDIA LIMITED
AUDITOR’S REPORT
To the members of HOEC BARDAHL INDIA LIMITED
1. We have audited the attached Balance Sheet of HOEC BARDAHL INDIA LIMITED (“the Company”), as at 31st March, 2009 and also the Profit and Loss Account and the Cash Flow statement for the year on that date, both annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial 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 an 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we report that:
(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the Books of Account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;
(e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;
(f ) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, 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:
(i) in the case of the Balance sheet, of the state of affairs of the Company as at 31st March, 2009,
(ii) in the case of the Profit and Loss Account, of the Profit for the year ended on that date, and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For H. R. LALKA & CO. Chartered Accountants Place : Chennai Hiren LalkaDate : June 5, 2009 Proprietor
Membership No. 040242
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS REPORT ON THE ACCOUNTS OF HOEC BARDAHL INDIA LIMITED
1. In respect of its fixed assets
(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets;
(b) The Fixed Assets have been physically verified by the management. In our opinion the frequency of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been noticed on such verification.
(c) Fixed assets have being disposed off during the year, in our opinion do not constitute a substantial part of the fixed assets of the Company and such disposal has in our opinion not affected the going concern status of the Company.
2. In respect of its inventories
(a) The inventories except goods in transit have been physically verified by the management during the year at reasonable intervals. In respect of inventory lying with third parties and not physically verified, confirmations have been obtained.
(b) The procedures of physical verification of the inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.
(c) The Company is maintaining proper records of inventory. The discrepancies noticed on physical verification between physical stock and book records were not material and have been adequately dealt with in the books of account.
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3. The Company has neither granted nor taken any loan secured or unsecured, to or from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956;
4. In our opinion and according to the information and explanation given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods. There were no transactions in respect of sale of services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.
5. (a) In our opinion and according to the information and explanations given to us, the particulars of arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.
(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees Five Lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time except in respect of purchase of certain services, where because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at the prevailing market prices at the relevant time.
6. The Company has not accepted any deposits from the public within the meaning of Section 58A, 58AA of the Act and the rules framed there under.
7. In our opinion, the internal audit functions carried out during the year by an external entity appointed by the Management have been commensurate with the size of the Company and nature of its business.
8. We are informed that the Central Government has not prescribed the maintenance of cost records under Section 209 (1)(d) of the Companies Act, 1956.
9. In respect of statutory dues:
(a) According to the information and explanation given to us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income tax, Sales tax, Customs Duty, Central Excise, Municipal Cess and other material statutory dues with appropriate authorities.
According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues, which have remained outstanding as at 31st March, 2009 for a period more than six months from the date they became payable.
(b) According to information and explanation given to us the details of disputed dues which are not deposited as on March 31, 2009 are as follows:
Nature of Statue
Nature of Dues
Amount (Rs.)
Forum where dispute is pending
Income Tax, 1961
Disallowance of expenses
8,865/- Commissioner of Income Tax
Fringe Benefit Tax
Disallowance of relief
523,345/- Commissioner of Income Tax
Customs Act, 1962
Classification of Chapter
540,464/- Appellate Tribunal
10. The Company does not have any accumulated losses as at the end of the financial year. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.
11. In our opinion and according to the information and explanation given to us, the Company has not obtained any borrowings from any banks or financial institutions or by way of Debentures.
12. In our opinion, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.
13. The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company.
14. In our opinion and according to the information and explanation given to us, the Company is not a dealer or trader in shares, securities, debentures or other investments and hence the requirements of Para 4 (xiv) are not applicable to the Company.
15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.
16. The Company has not obtained any term loans.
17. According to the information and explanation given to us, and on an overall examination of the Balance Sheet of the Company, in our opinion, there are no funds raised on a short-term basis, which has been used for long term purposes and vice versa.
18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.
19. The Company has not issued any debentures.
20. The Company has not raised any money by way of Public issues during the year.
21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud, on or by the Company, was noticed or reported during the year.
For H. R. LALKA & CO. Chartered Accountants
Place : Chennai Hiren LalkaDate : June 5, 2009 Proprietor
Membership No. 040242
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Balance Sheet as at March 31,
in Rupees
Schedule 2009 2008
FUNDS EMPLOYED
SHAREHOLDERS’ FUNDS
Share Capital 1 5,000,200 5,000,200
Reserves & Surplus 2 38,029,094 28,871,441
43,029,294 33,871,641
APPLICATION OF FUNDS
FIXED ASSETS 3
Gross block 4,343,405 3,248,406
Less: Depreciation 2,108,743 1,755,989
NET BLOCK 2,234,662 1,492,417
INVESTMENTS 4 46,766,609 45,210,850
DEFERRED TAX ASSETS (Refer Note 7 of Schedule 16) 1,743,058 1,353,869
CURRENT ASSETS, LOANS & ADVANCES 5
Inventories 20,886,176 15,648,338
Sundry Debtors 7,863,453 7,415,898
Cash & Bank Balances 4,062,816 4,983,459
Loans & Advances 19,596,262 10,814,538
Total 52,408,707 38,862,233
Less: CURRENT LIABILITIES AND PROVISIONS 6
Current Liabilities 57,462,947 50,690,743
Provisions 2,660,795 2,356,985
Total 60,123,742 53,047,728
NET CURRENT ASSETS (7,715,035) (14,185,495)
43,029,294 33,871,641
Accounting Policies 15
Notes Forming Part of Accounts 16
Schedule referred to above form part of the balance Sheet
In terms of our report of even date attached. On behalf of the Board of Directors
For H. R. LALKA & CO. Manish Maheshwari Chartered Accountants Chairman
Hiren Lalka Vikash Jain } Directors(Proprietor) Sandeep KhamesraMembership No. 040242 Minesh Bhatt
Place : Chennai Place : ChennaiDate : June 5, 2009 Date : June 5, 2009
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Profit and Loss Account for the year ended March 31,
in Rupees
Schedule 2009 2008
INCOME
Sales (Gross) (Refer Note 8 of Schedule 15) 184,368,988 177,170,250
Less: Excise 22,549,970 24,401,977
Net Sales 161,819,018 152,768,273
Other Income 7 3,808,769 3,446,255
165,627,787 156,214,528
EXPENDITURE AND CHARGES
Cost of goods for resale 8 60,089,755 48,451,089
Staff Expenses 9 14,838,767 13,063,028
Establishment Expenses 10 6,681,227 2,679,387
Management & Professional Fees (Refer Note 8 of Schedule 16) 25,764,211 23,744,845
Administrative Expenses 11 2,786,008 1,468,847
Marketing & Selling Expenses 12 41,724,394 40,854,715
Provisions and Write offs 13 318,052 546,654
Interest and Finance Charges 14 245,752 262,243
Depreciation and Amortisation 3 460,994 440,509
152,909,160 131,511,317
Profit for the year before tax 12,718,627 24,703,211
Less: Taxation for the year – Income Tax (3,520,163) (8,325,000)
[Includes Rs. 149,837 (Previous Year: Rs. NIL) in respect of Prior Years]
Deferred Tax (Refer Note 7 of Schedule 16) 389,189 414,010
Fringe benefit Tax (430,000) 35,000
[Includes Rs. NIL (Previous Year: Rs. 460,000) in respect of Prior Years]
Profit for the year after tax 9,157,653 16,827,221
Add: Profit brought forward 26,871,441 10,044,220
balance carried to balance sheet 36,029,094 26,871,441
Earnings Per Share of Rs. 100 Face Value (basic and Diluted) (Refer Note 9 of Schedule 16) Rs. 183.15 Rs. 336.53
Schedule referred to above form part of Profit and Loss Account
In terms of our report of even date attached. On behalf of the Board of Directors
For H. R. LALKA & CO. Manish Maheshwari Chartered Accountants Chairman
Hiren Lalka Vikash Jain } Directors(Proprietor) Sandeep KhamesraMembership No. 040242 Minesh Bhatt
Place : Chennai Place : ChennaiDate : June 5, 2009 Date : June 5, 2009
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Cash Flow Statement for the year ended March 31,
In terms of our report of even date attached. On behalf of the Board of Directors
For H. R. LALKA & CO. Manish Maheshwari Chartered Accountants Chairman
Hiren Lalka Vikash Jain } Directors(Proprietor) Sandeep KhamesraMembership No. 040242 Minesh Bhatt
Place : Chennai Place : ChennaiDate : June 5, 2009 Date : June 5, 2009
in Rupees
2009 2008
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before Tax 12,718,627 24,703,211
Adjustments for:
Depreciation and Amortisation 460,994 440,509
Interest and Finance Charges 245,752 262,243
Provision for Doubtful Debts (Net) 318,052 394,615
Unrealised Exchange (Gain) / Loss 0 829
Loss on Sale / discard of assets 67,540 87,539
Provision for Compensated Absences & Gratuity (Net) 433,647 943,416
Interest Income (2,199) (21,835)
Dividend Income (3,157,006) (1,895,783)
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 11,085,407 24,914,744
Adjustment for:
(Increase) / Decrease in Trade Debtors and Other Receivables (8,333,404) (2,038,505)
(Increase) / Decrease in Inventories (5,237,838) (1,860,145)
Increase / (Decrease) in Payables 6,772,204 24,069,949
CASH FROM OPERATIONS 4,286,369 45,086,043
Taxes paid (Net) (5,293,927) (13,958,220)
NET CASH (USED IN) FROM OPERATING ACTIVITIES (1,007,558) 31,127,823
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (1,270,779) (475,113)
Interest Received 2,199 21,835
Dividend Received 3,157,006 1,895,783
NET CASH RAISED FROM INVESTING ACTIVITIES 1,888,426 1,442,505
C. CASH FLOW FROM FINANCING ACTIVITIES
Interest and Finance Charges (245,752) (262,243)
NET CASH (USED IN) FINANCING ACTIVITIES (245,752) (262,243)
NET (DECREASE) / INCREASE IN CASH OR CASH EQUIVALENTS 635,116 32,308,085
Cash Equivalents:
Opening balance 50,194,309 17,886,224
Closing balance 50,829,425 50,194,309
635,116 32,308,085
Cash & bank balance (As per Schedule 5) 4,062,816 4,983,459
Current Investments (As per Schedule 4) 46,766,609 45,210,850
Total Cash and Cash Equivalents at the Year End 50,829,425 50,194,309
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Schedules to the Balance Sheet as at March 31,
in Rupees
2009 2008 SCHEDULE 1
SHARE CAPITAL AUTHORISED 100,000 Equity Shares of Rs. 100 each 10,000,000 10,000,000
ISSUED, SUbSCRIbED AND FULLY PAID-UP 50,002 Equity Shares of Rs. 100 each 5,000,200 5,000,200 (All the Shares are held by Hindustan Oil Exploration Company Limited, the Holding Company,
& its nominees)5,000,200 5,000,200
SCHEDULE 2
RESERVES AND SURPLUS General Reserve 2,000,000 2,000,000 balance in Profit and Loss Account 36,029,094 26,871,441 Total 38,029,094 28,871,441
SCHEDULE 3
FIXED ASSETS in Rupees
G R O S S B L O C K D E P R E C I A T I O N N E T B L O C K
Name of the Assets As atMarch 31,
2008
Additions Deductions As atMarch 31,
2009
As atMarch 31,
2008
For theYear
Deductions As atMarch 31,
2009
As atMarch 31,
2009
As atMarch 31,
2008
Freehold Land 0 935,601 0 935,601 0 0 0 0 935,601 0Office Equipments 334,780 19,690 8,894 345,576 193,253 33,350 5,732 220,871 124,705 141,527Computers 341,473 198,426 38,250 501,649 236,867 119,230 33,293 322,804 178,845 104,606Office Furniture 642,787 25,062 5,841 662,008 275,404 79,811 4,553 350,662 311,346 367,383Plant & Machinery 677,309 5,000 122,795 559,514 319,503 46,683 64,662 301,524 257,990 357,806Dies & Moulds 372,885 87,000 0 459,885 287,179 51,811 0 338,990 120,895 85,706Electrical Equipment 24,337 0 0 24,337 24,337 0 0 24,337 0 0Vehicles 620,835 0 0 620,835 335,206 73,949 0 409,155 211,680 285,629Improvement to Lease Hold Premises 234,000 0 0 234,000 84,240 56,160 0 140,400 93,600 149,760
TOTAL 3,248,406 1,270,779 175,780 4,343,405 1,755,989 460,994 108,240 2,108,743 2,234,662 1,492,417
PREVIOUS YEAR 2,912,286 475,113 138,993 3,248,406 1,366,934 440,509 51,454 1,755,989 1,492,417 1,545,352
2009 2008
SCHEDULE 4
INVESTMENTSCURRENTUNQUOTED (NON TRADE) Investment in Mutual Funds (Refer note 3 of Schedule 16 for details of mutual funds purchased and sold
during the year) 3,835,547.402 (Previous Year 3,761,316.426) Units of Rs. 10 each of HDFC Liquid Fund - Daily Dividend Plan 40,796,416 40,006,866 503,754.217 (Previous Year 439,102.876) Units of Rs. 10 each of Prudential ICICI Liquid Fund - Daily Dividend Plan 5,970,193 5,203,984
46,766,609 45,210,850
Aggregate Cost of Unquoted Investments 46,766,609 45,210,850
SCHEDULE 5
CURRENT ASSETS, LOANS AND ADVANCESINVENTORIES Materials unpacked (Refer Note 11 of Schedule 16) 3,364,302 690,500 Materials packed (Refer Note 11 of Schedule 16) 9,626,839 7,581,746 Packing Material 1,407,641 1,433,574
GOODS IN TRANSIT 6,487,394 5,942,518
20,886,176 15,648,338
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Schedules to the Balance Sheet as at March 31,
in Rupees
2009 2008 SUNDRY DEbTORSSecured, considered good Due for more than six months 0 0 Others 1,577,948 2,347,204Unsecured, considered good Due for more than six months 16,686 738 Others 6,268,819 5,067,956Unsecured, Considered Doubtful 2,020,519 1,702,467
9,883,972 9,118,365 Less: Provision for doubtful debts 2,020,519 1,702,467
7,863,453 7,415,898CASH & bANK bALANCES Cash on hand 24,892 17,697 bank balance With Scheduled banks Current Accounts 4,037,924 4,965,762
4,062,816 4,983,459LOANS AND ADVANCES(Unsecured, considered good) Advances recoverable in cash or in kind or for value to be received 5,303,439 4,613,839 Security Deposits 1,308,900 1,307,750 Security Deposit to Holding Company (Refer Note 8 of Schedule 16)
[Maximum amount due during the year Rs. 6,000,000 (Previous Year Rs. NIL)]6,000,000 0
Cenvat Input Credit 901,138 24,091 Advance Income Tax
[Net of Provision for Taxation of Rs. 11,995,000 (Previous Year Rs. 19,044,890)]6,080,785 4,367,858
Advance Fringe benefit Tax [Net of Provision for Taxation of Rs. 1,510,000 (Previous Year Rs. 1,080,000)]
2,000 501,000
19,596,262 10,814,53852,408,707 38,862,233
SCHEDULE 6CURRENT LIABILITIES & PROVISIONSCURRENT LIAbILITIES Sundry Creditors (Refer Note 4 of Schedule 16) – Outstanding Dues to Micro Small and Medium Enterprises 7,146 0 – Outstanding Dues to other than Micro Small and Medium Enterprises 24,399,995 19,376,408 Hindustan Oil Exploration Company Limited (Holding Company) (Refer Note 8 of Schedule 16) 24,786,332 23,383,441 Deposits 1,755,842 3,019,604 Other Liabilities 6,513,632 4,911,290
(A) 57,462,947 50,690,743PROVISIONS Provision for Compensated Absences & Gratuity 2,615,795 2,182,148 Provision for Taxation
[Net of Advance Tax of Rs. 17,397,780 (Previous Year Rs. 23,061,053)]0 158,837
Provision for Fringe benefit Tax [Net of Advance Tax of Rs. 1,467,000 (Previous Year Rs. 1,066,000)]
45,000 16,000
(b) 2,660,795 2,356,985 Total (A+b) 60,123,742 53,047,728
Schedules to the Profit & Loss Account for the year ended March 31, in Rupees
2009 2008 SCHEDULE 7OTHER INCOME Interest Income (Gross) (Refer Note 6 of Schedule 16) [Tax deducted at source Rs. NIL (Previous Year Rs. NIL)]
2,199 21,835
Excess Provision written back 2,730 73,188 balance written off 0 62,086 Dividend from Current Investments – Non Trade Investments 3,157,006 1,895,783 Gain on foreign exchange fluctuation (Net) (Refer Note 12 of Schedule 16) 0 902,761 Miscellaneous Income 646,834 490,602
3,808,769 3,446,255
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Schedules to the Profit & Loss Account for the year ended March 31,
in Rupees
2009 2008
SCHEDULE 8
COST OF GOODS FOR RESALE:MATERIALS PACKED & UNPACKED Opening stock 8,272,246 6,788,775 Add: Purchases 45,860,041 32,749,171
Sub-Total 54,132,287 39,537,946 Less: Closing Stock 12,991,141 8,272,246 Less: Cost of Samples & Replacements 463,818 885,066
40,677,328 30,380,634PACKING MATERIALS Opening stock 1,433,574 807,816 Add: Purchases 13,226,521 14,350,461
Sub-Total 14,660,095 15,158,277 Less: Closing Stock 1,407,641 1,433,574
13,252,454 13,724,703 Repacking Expenses 4,203,014 3,779,786 Excise Duty 1,276,682 0 Municipal Cess Tax 680,277 567,260 Cost of Damaged Goods 0 (1,294)
60,089,755 48,451,089
SCHEDULE 9
STAFF EXPENSESSalaries 10,235,814 7,812,505Performance bonus 2,382,000 3,241,000Contribution to Provident and Other Funds 1,095,804 989,649Welfare Expenses[including Compensated Absences Rs. 611,264 (Previous Year Rs. 598,427)]
1,125,149 1,019,874
14,838,767 13,063,028
SCHEDULE 10
ESTABLISHMENT EXPENSES
Rent 4,336,870 2,324,253Warehousing Services 1,764,000 0Repairs and Maintenance 151,198 68,936General Office Expenses 259,198 115,534Electricity 169,961 170,664
6,681,227 2,679,387
SCHEDULE 11
ADMINISTRATIVE EXPENSES
Auditor’s RemunerationAudit Fees 70,000 75,000 Other Matters 7,300 14,800 Reimbursement of Expenses 23,509 14,057
100,809 103,857 books and Periodicals 2,251 1,971 Computer Expenses 25,971 26,550 Loss on foreign exchange fluctuation (Net) (Refer Note 12 of Schedule 16) 849,422 0 Insurance 11,916 13,907 Travelling & Conveyance 354,872 446,447 Postage and Telephone 312,768 368,318 Printing and Stationery 209,173 178,720 Loss on sale / discard of assets 67,540 87,539
Miscellaneous Expenses 851,286 241,538
2,786,008 1,468,847
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(C) Value of Imports on CIF basis in respect of: in Rupees
Current Year Previous Year(i) Materials 39,210,335 28,188,113(ii) Components & Spare parts Nil Nil(iii) Capital goods Nil Nil
(D) Expenditure in foreign currency:(i) Business Travelling Nil 111,411(ii) Others Nil Nil
(E) The amount remitted in foreign currency during the year on account of dividends Nil Nil
(F) Earnings in foreign exchange Nil Nil
12. Foreign Currency Transaction Effective April 1, 2008, the Company has exercised the option available in Para 46 of the Accounting Standard 11 notified by the Ministry of Corporate Affairs. Since the Company does not have
any Long Term Foreign Currency Monetary Item, there is no impact on Assets, Liabilities, incomes and expenses, and consequently there is no impact on the financial statements for the year.
13. Long Term Compensated Absences Details of the Key Assumptions used in the determination of the Long Term Compensated Absences are as under :
Discount Rate: 7.50% Future Salary Increase: 6.50% Attrition Rate: 1% to 5%
14. Figures of the previous year have been regrouped and rearranged wherever necessary.
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. Registration DetailsCIN U11100GJ1988PLC011536Registration No. 11536State Code 04Balance Sheet Date 31.03.2009
II. Capital Raised During The YearPublic Issue NILRights Issue NILBonus Issue NILPrivate Placement NIL
III. Position of Mobilisation and Deployment of Funds (In Rupees)Total Liabilities 103,153,036Total Assets 103,153,036Sources of Funds
Paid-up Capital 5,000,200Reserves & Surplus 38,029,094Secured Loans NILUnsecured Loans NIL
Application of FundsNet Fixed Assets 2,234,662Investments 46,766,609Net Current Assets (7,715,035)Miscellaneous Expenditure NILAccumulated Losses NIL Others Assets 1,743,058
IV. Performance of Company (In Rupees)Turnover 165,627,787Total Expenditure 152,909,160Profit Before Tax 12,718,627Profit After Tax 9,157,653
V. Generic Names of Three Principal Products/Services of Company (as per monetary terms)Item Code No. (ITC Code) 38112900Product Description Oil AdditivesItem Code No. (ITC Code) 38112900Product Description Fuel AdditivesItem Code No. (ITC Code) 32082000Product Description Car Care Products
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 16 — NOTES FORMING PART OF THE ACCOUNTS (Contd.)
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9. Retirement and Other Benefits (Refer Note 13 of Schedule 16) a. Defined Contribution Plan: Contributions towards Employees Provident Fund are made to the Employees Provident Fund Scheme in accordance with the statutory provisions.
b. Defined Benefit Plan: Funded Plan: The Company has Defined Benefit Plan for post employment benefits in the form of Gratuity for all employees administered through trust, funded with Life Insurance
Corporation of India. Liability for the above Defined Benefit Plans is provided on the basis of actuarial valuation, as at the Balance Sheet date, carried out by independent actuary. The actuarial method
used for measuring the liability is the Projected Unit Credit Method.
c. Other Employee Benefits: Long Term compensated absences are provided based on actuarial valuation using Projected Unit Credit Method. Other employee benefits are recognised on accrual basis based on
the terms of the employment contract.
10. Foreign Currency Transactions Foreign Currency Transaction are accounted at the exchange rates ruling on the date of transactions. Foreign currency monetary items, excluding long term foreign currency monetary
items, as at the Balance Sheet date are restated at the closing exchange rates. Exchange differences arising on actual payments/realisations and year-end restatements are dealt with in the Profit and Loss Account. Exchange differences, both realised and unrealised, arising on reporting of long term foreign currency monetary items (as defined in the Accounting Standard – 11 notified by the Government of India) relating to the acquisition of a depreciable capital asset are added to or deducted from the cost of the asset and in other cases unrealised exchange differences are accumulated in a “Foreign Currency Monetary Item Translation Difference Account” in the Company’s Balance Sheet and amortized over the balance period of such long term asset/liability but not beyond 31st March, 2011, by recognition as income or expense in each of such periods.
11. Leases Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are
recognised as expenses on straight line basis.
12. Taxation Income Taxes are accounted for in accordance with Accounting Standard 22 on “Accounting for Taxes on Income”. Tax expense comprises of current tax, deferred tax and fringe benefit tax. Current Tax: Current tax includes Income Tax and Fringe Benefit Tax. Income Tax is measured at the amount expected to be paid or recovered from the tax authorities using the applicable
tax rates. Fringe Benefit Tax is measured in respect of employee benefits and other specified expenses as determined under the Income Tax Act, 1961.
Deferred Tax: Deferred Taxes are recognised for future tax consequence attributable to timing differences, being the difference between taxable income and accounting income measured at relevant enacted tax rates and in the case of deferred tax assets, on consideration of prudence, are recognised and carried forward to the extent of reasonable certainty/virtual certainty, as the case may be.
13. Provisions and Contingencies A provision is recognised when an enterprise has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in
respect of which a reliable estimate can be made. Provisions are not discontinued to its present value and are determined based on management estimate required to settle the obligation at each Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.
SCHEDULE 16
NOTES FORMING PART OF THE ACCOUNTS
1. Commitments Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advances, Rs. NIL (Previous year – Rs. 47,000/-)
2. Contingent LiabilitiesClaims against the Company not acknowledged as debt:
in Rupees
Year ended March 31,
2009 2008
Income tax demand where the matter is in appeal 723,468 324,545
Fringe Benefit Tax Demand where the matter is in appeal 523,345 Nil
Custom demand where the matter is in appeal 540,464 540,464
3. InvestmentsDetails of units in Mutual Funds purchased and sold during the year
2009 2008
Name of the Funds No. of units purchased
including accumulated
No. of units sold No. of units purchased including
accumulated
No. of units sold
HDFC Liquid Fund – Daily Dividend Plan 1,277,645.665 1,203,414.689 2,537,681.796 173,931.029
Prudential ICICI Liquid Fund – Daily Dividend Plan 4,815,250.144 4,750,598.803 3,662,350.792 3,223,247.886
4. Disclosure under Micro Small and Medium Enterprises Development Act, 2006 On the basis of the confirmation obtained from suppliers who have registered themselves under the Micro Small and Medium Enterprises Development Act, 2006 (MSMED Act) and
based on the information available with the Company, the balance due to Micro & Small Enterprises as defined under the MSMED Act, 2006 is Rs. 7,146 (Previous year NIL). Further, no interest during the year has been paid or accrued under the terms of the MSMED Act, 2006.
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 15 — SIGNIFICANT ACCOUNTING POLICIES (Contd.)
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5. Employees Benefits The Company’s obligation towards the Gratuity Fund is a Defined Benefit Plan. Details of Actuarial Valuation as at March 31, 2009.
in Rupees
Particulars As at March 31, 2009 2008
Projected Benefit Obligation as at Beginning of the Year 1,231,648 724,562Service Cost 156,526 167,387Interest Cost 92,374 59,994Actuarial Losses/(Gains) 233,427 279,705Benefits paid (100,380) 0Projected Benefit Obligation at the End of the Year 1,613,595 1,231,648Change in Plan AssetsFair value of plan assets as at the Beginning of the year 648,094 499,655Expected Return on Plan Assets 70,869 46,510Employers Contributions 379,051 95,034Benefits paid (100,380) 0Actuarial Gains/(Losses) 15,100 6,895Fair Value of Plan Assets as at the End of the Year 1,012,734 648,094Amount Recognised in the Balance sheetPresent Value of Obligations as at the End of the Year 1,613,595 1,231,648Fair Value of Plan Assets as at the End of the Year 1,012,734 648,094Liability Recognised in the Balance Sheet 600,861 583,554Cost of Defined Benefit Plan for the YearCurrent Service Cost 156,526 167,387Interest on Obligation 92,374 59,994Expected Return on Plan Assets (70,869) (46,510)Net Actuarial Losses (Gains) Recognised in the Year 218,327 272,810Net Cost recognized in the Profit and Loss Account 396,358 453,681AssumptionsDiscount Rate 7.50% 8.28%Future Salary Increase 6.50% 6.50%Attrition Rate 1% to 5% 1% to 5%Mortality LIC 94-96 LIC 94-96Expected Rate of Return on Plan Assets 9.00% 8.50%
Notes : (a) The entire plan assets are managed by Life Insurance Corporation of India (LIC). The data on plan assets has not been furnished by LIC. (b) The expected return on plan assets is as furnished by an independent Actuary appointed by the Company. (c) The estimates of future salary increase takes into account inflation, likely increments, promotions and other relevant factors. (d) Discount Rate is based on the prevailing market yields of Indian Government Bonds as at the Balance Sheet date for the estimated term of the obligation.
6. Interest Income Interest Income includes interest on
in Rupees
Particulars Year Ended March 31,
2009 2008
Staff Loans 2,135 2,835
Others 64 19,000
Total 2,199 21,835
7. Deferred Tax Asset Deferred tax assets arising due to timing differences has been arrived as follows: in Rupees
Particulars Year ended March 31,
2008 Current year Charge 2009
Deferred Tax Assets
Provision for Doubtful Debts 578,668 108,106 686,774
Compensated Absences & Gratuity 612,873 106,564 719,437
Depreciation on Fixed Assets 162,328 69,150 231,478
Others 0 105,369 105,369
Sub-Total (A) 1,353,869 389,189 1,743,058
Deferred Tax Liability (B) 0 0 0
Net Deferred Tax Assets (A–B) 1,353,869 389,189 1,743,058
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 16 — NOTES FORMING PART OF THE ACCOUNTS (Contd.)
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77
8. Related Party Disclosures As per the Accounting Standard on ‘Related Party Disclosures’ (AS 18) issued by the Institute of Chartered Accountants of India, the related parties of the Company are as follows: Holding Company: Hindustan Oil Exploration Company Limited The Nature and volume of transactions of the Company during the year with the above party are as follows: in Rupees
Particulars For the year ended March 31,2009 2008
ExpenditureWarehousing Services 1,764,000 NilManagement Fees 24,930,247 23,470,373DepositSecurity Deposit 6,000,000 NilAs at Year EndNet Amount Payable as at Year End 18,786,332 23,383,441
Note: Related party relationships are as identified by the Management and relied upon by the Auditors.
9. Earnings Per Share (EPS) The components of basic and diluted earnings per share are as follows: in Rupees
Particulars For the year ended March 31,2009 2008
Net Profit After Tax (Rs.) 9,157,653 16,827,221Weighted average number of Equity Shares 50,002 50,002Nominal Value of Equity Shares (Rs.) 100 100Basic and Diluted Earnings Per Share (Rs.) 183.15 336.53
Note : Earning Per Share calculations are done in accordance with Accounting Standard 20 “Earnings Per Share”.
10. Segment Reporting The business of the Company falls under a single segment i.e. Automotive and related components, hence segment information as per Accounting Standard AS-17 is not required to be
disclosed. The Company is catering only to the need of the domestic market; as such there is no reportable Geographical Segments.
11. Additional Information pursuant to provisions of paragraph 3 & 4 of part II of Schedule VI of the Companies Act, 1956. (A) The Company’s business activity is classified as a “Deemed Manufacturer” under the provision of Section 2(f )(iii) of Central Excise Act 1944; however the main activity of the
Company is Trading of Fuel & Oil Additives, Car Care Products, Grease and Spares.
(B) Sales, purchases and inventories in relation to Trading Activity as per below:
Particulars Unit Opening Purchase Turnover Closing
Additives Litres Qty. 50,924.188 334,212.178 334,548.391 51,907.375 Value Rs. 8,100,636 43,562,005 158,895,679 11,483,913 Qty. (50,222.808) (299,172.500) (299,285.415) (50,924.188)Value Rs. (6,600,529) (32,217,398) (151,568,152) (8,100,636)
Car Care Litres Qty. 773.000 10,347.000 6,838.820 4,054.720 Value Rs. 104,914 1,761,692 2,271,299 1,240,852 Qty. (115.000) (2,769.000) (2,111.000) (773.000)Value Rs. (30,188) (317,046) (587,101) (104,914)
Grease Kgs. Qty. 418.890 0 0 418.890 Value Rs. 202 0 0 202 Qty. (418.890) 0 0 (418.890)Value Rs. (202) 0 0 (202)
Cream Nos. Qty. 482 1,440 1,372 550 Value Rs. 63,581 238,015 544,631 100,245Qty. (269) (1,440) (1,227) (482)Value Rs. (51,014) (214,727) (502,188) (63,581)
Spares Nos. Qty. 9 170 82 97 Value Rs. 2,913 298,329 107,409 165,929 Qty. (105) 0 (96) (9)Value Rs. (106,842) 0 (110,832) (2,913)
Total Value Rs. 8,272,246 45,860,041 161,819,018 12,991,141
(Previous Year) (6,788,775) (32,749,171) (152,768,273) (8,272,246)
Note: (i) Quantities of closing stock of goods mentioned above are after adjustments of excess/shortage upon physical stock counts, normal wastages during repacking process. (ii) Figures of the brackets indicate those of the Previous Year.
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 16 — NOTES FORMING PART OF THE ACCOUNTS (Contd.)
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(C) Value of Imports on CIF basis in respect of: in Rupees
Current Year Previous Year(i) Materials 39,210,335 28,188,113(ii) Components & Spare parts Nil Nil(iii) Capital goods Nil Nil
(D) Expenditure in foreign currency:(i) Business Travelling Nil 111,411(ii) Others Nil Nil
(E) The amount remitted in foreign currency during the year on account of dividends Nil Nil
(F) Earnings in foreign exchange Nil Nil
12. Foreign Currency Transaction Effective April 1, 2008, the Company has exercised the option available in Para 46 of the Accounting Standard 11 notified by the Ministry of Corporate Affairs. Since the Company does not have
any Long Term Foreign Currency Monetary Item, there is no impact on Assets, Liabilities, incomes and expenses, and consequently there is no impact on the financial statements for the year.
13. Long Term Compensated Absences Details of the Key Assumptions used in the determination of the Long Term Compensated Absences are as under :
Discount Rate: 7.50% Future Salary Increase: 6.50% Attrition Rate: 1% to 5%
14. Figures of the previous year have been regrouped and rearranged wherever necessary.
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. Registration DetailsCIN U11100GJ1988PLC011536Registration No. 11536State Code 04Balance Sheet Date 31.03.2009
II. Capital Raised During The YearPublic Issue NILRights Issue NILBonus Issue NILPrivate Placement NIL
III. Position of Mobilisation and Deployment of Funds (In Rupees)Total Liabilities 103,153,036Total Assets 103,153,036Sources of Funds
Paid-up Capital 5,000,200Reserves & Surplus 38,029,094Secured Loans NILUnsecured Loans NIL
Application of FundsNet Fixed Assets 2,234,662Investments 46,766,609Net Current Assets (7,715,035)Miscellaneous Expenditure NILAccumulated Losses NIL Others Assets 1,743,058
IV. Performance of Company (In Rupees)Turnover 165,627,787Total Expenditure 152,909,160Profit Before Tax 12,718,627Profit After Tax 9,157,653
V. Generic Names of Three Principal Products/Services of Company (as per monetary terms)Item Code No. (ITC Code) 38112900Product Description Oil AdditivesItem Code No. (ITC Code) 38112900Product Description Fuel AdditivesItem Code No. (ITC Code) 32082000Product Description Car Care Products
Schedules Forming Part of the Accounts for the Year Ended March 31, 2009
SCHEDULE 16 — NOTES FORMING PART OF THE ACCOUNTS (Contd.)
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AUDITORS’ REPORT
TO THE BOARD OF DIRECTORS OF HINDUSTAN OIL EXPLORATION COMPANY LIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF HINDUSTAN OIL EXPLORATION COMPANY LIMITED AND ITS SUBSIDIARY
1. We have examined the attached Consolidated Balance Sheet of HINDUSTAN OIL EXPLORATION COMPANY LIMITED (“the Company”) and its subsidiary (hereinafter collectively referred to as “the Group”) as at March 31, 2009, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. Without qualifying our report, we draw attention to the following:
(a) The Accounts have been drawn up in accordance with the statement of Significant Accounting Policies (Schedule 16). Accounting Policy 4 relating to “Successful Efforts Method”, Accounting Policy 5 relating to “Site Restoration”, the treatment of exploration and development costs and the estimates of proved developed hydrocarbon reserves are significant to the oil and gas exploration and production industry.
(b) Categorisation of the wells as exploratory, development and producing and the depletion of producing wells on the basis of proved developed hydrocarbon reserves and expensing of the estimated site restoration liability on the basis of proved hydrocarbon reserves are made according to technical evaluation by the Management, on which we have placed reliance.
(c) As stated in Accounting Policy 7 of the statement of Significant Accounting Policies (Schedule 16), the financial statements of the unincorporated joint ventures are prepared in accordance with the requirements prescribed by the respective Production Sharing Contracts of the unincorporated joint ventures. Hence, certain adjustments/disclosures required under the mandatory accounting standards have been made in these accounts to the extent of information available with the Company.
4. (a) The accounts for the year ended March 31, 2009 include assets aggregating Rs. 11,003,824,831, liabilities aggregating Rs. 3,214,976,841, income aggregating Rs. 652,211 and expenditure aggregating Rs. 16,818,421 relating to the Company’s share in seven unincorporated joint ventures, which have been incorporated on the basis of accounts audited by other auditors.
(b) In respect of one non-producing unincorporated joint venture, assets aggregating Rs. 87,875 and liabilities aggregating Rs. 2,936,859 as at March 31, 2009 have been incorporated on the basis of the unaudited information available, in the absence of audited accounts.
5. We did not audit the financial statements of the subsidiary, whose financial statements reflect net total assets of Rs. 43,029,294 as at March 31, 2009, total revenues of Rs. 165,627,787 and net increase in cash flows amounting to Rs. 635,116 for the year ended on that date. These financial statements and other financial information of the subsidiary have been audited by another auditor whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included in respect of the subsidiary, is based solely on the report of the other auditor.
6. We report that the consolidated financial statements have been prepared by the Company’s Management in accordance with the requirements of Accounting Standard 21 (Consolidated Financial Statements), and on the basis of the separate audited financial statements of the Company and its subsidiary included in the consolidated financial statements.
7. Subject to our comments with respect to the unincorporated joint venture in paragraph 4(b) above to the extent of the unaudited amounts stated therein and based on our audit and on consideration of the report of the other auditor on the separate financial statements and other financial information of the subsidiary referred to in paragraph 5 above and to the best of our information and according to the explanations given to us, we are of the opinion that the aforesaid consolidated financial statements, read with the notes thereon and our comments in paragraphs 3 and 4(a) above, give a true and fair view in conformity with the accounting principles generally accepted in India:
(i) in the case of the Consolidated Balance Sheet, of the consolidated state of affairs of the Group as at March 31, 2009;
(ii) in the case of the Consolidated Profit and Loss Account, of the consolidated profit of the Group for the year ended on that date; and
(iii) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.
For Deloitte Haskins & SellsChartered Accountants
K. Sai RamPlace : New Delhi PartnerDate : June 11, 2009 (Membership No. 022360)
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2009
in Rupees
Schedule As at March 31, 2009
As at March 31, 2008
SOURCES OF FUNDS SHAREHOLDERS' FUNDSShare Capital 1 1,305,093,005 1,305,093,005 Reserves and Surplus 2 9,333,580,534 8,805,281,197 LOAN FUNDSSecured Loans 3 1,304,840,843 1,472,198,692
11,943,514,382 11,582,572,894 APPLICATION OF FUNDSFIXED ASSETS 4 Gross Block 2,401,310,686 1,616,019,983 Less: Depreciation, Depletion
and Amortisation 1,363,205,485 1,234,655,394 Net Block 1,038,105,201 381,364,589 Capital Work in Progress 10,255,489,079 4,021,871,328
11,293,594,280 4,403,235,917 INVESTMENTS 5 156,952,225 5,722,736,062 FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT (See Note 20(i) of Schedule 17) 17,179,351 0 DEFERRED TAX ASSET (NET) (See Note 13 of Schedule 17) 285,890,977 375,831,959 CURRENT ASSETS, LOANS AND ADVANCES 6 a. Inventories 683,800,479 253,863,696 b. Sundry Debtors 192,991,427 120,719,309 c. Cash and Bank Balances 2,766,779,486 1,576,949,243 d. Other Current Assets 3,596,085 7,394,535 e. Loans and Advances 605,371,374 566,080,370
4,252,538,851 2,525,007,153 Less: CURRENT LIABILITIES AND
PROVISIONS 7 a. Current Liabilities 3,720,490,245 1,008,146,717 b. Provisions 342,151,057 436,091,480
4,062,641,302 1,444,238,197 NET CURRENT ASSETS 189,897,549 1,080,768,956
11,943,514,382 11,582,572,894 Significant Accounting Policies 16Notes to the Consolidated Accounts 17Schedules referred to above form an integral part of the Consolidated Balance Sheet.
In terms of our report of even date attached. On behalf of the Board of Directors
For Deloitte Haskins & Sells R. Vasudevan Manish MaheshwariChartered Accountants Chairman Joint Managing Director
K. Sai RamPartnerMembership No: 022360
Vikash Jain Company Secretary, Chief Tax and Legal
Place : New Delhi Place : New DelhiDate : June 11, 2009 Date : June 11, 2009
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81
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009
in Rupees
Schedule Year ended March 31, 2009
Year ended March 31, 2008
INCOMESales 8 986,908,373 962,767,069 (Decrease)/Increase in Stock of Crude Oil 9 (22,436,780) 1,306,409 Other Income 10 465,325,270 204,964,444
1,429,796,863 1,169,037,922
EXPENDITURE AND CHARGESField Operating Expenses 11 430,057,407 310,835,347 Cost of Goods for Resale 12 60,089,755 48,451,089 Corporate Expenses (Net) 13 27,910,710 57,320,554 Depreciation & Amortisation on Fixed Assets 4 8,770,349 3,875,271 Depletion of Producing Properties 4 109,875,745 49,178,835 Marketing & Selling Expenses 14 41,724,394 40,854,715 Provisions and Write Offs (See Item 4 of Schedule 16 & Note 28 of Schedule 17)
318,052 166,939,515
Interest and Finance Charges 15 104,017,567 75,873,987 782,763,979 753,329,313
PROFIT BEFORE TAX 647,032,884 415,708,609 Provision for Current Income Tax [including Rs. 1,499,837 (Previous Year Rs. Nil) for Prior Years] 35,870,163 43,325,000 Provision for Deferred Tax (See Note 13 of Schedule 17) 94,610,811 112,585,990 Provision for Wealth Tax 200,000 200,000 Provision for Fringe Benefit Tax 2,530,000 1,765,000 MAT Credit Entitlement (See Note 12 of Schedule 17) (31,000,000) 0 PROFIT AFTER TAX 544,821,910 257,832,619 Profit Brought Forward 958,376,724 853,214,728 Less: Transitional Adjustment (See Note 20(i) of Schedule 17) (13,139,573) 0 PROFIT AVAILABLE FOR APPROPRIATION 1,490,059,061 1,111,047,347 APPROPRIATIONS:Proposed Dividend 0 130,493,289 Dividend Tax 0 22,177,334 Balance Carried to Balance Sheet 1,490,059,061 958,376,724 1,490,059,061 1,111,047,347 Earning per Share of Rs. 10 Face Value (Basic and Diluted) Rs. 4.18 Rs. 2.64 (See Note 11 of Schedule 17)Significant Accounting Policies 16Notes to the Consolidated Accounts 17Schedules referred to above form an integral part of the Consolidated Profit and Loss Account.
In terms of our report of even date attached. On behalf of the Board of Directors
For Deloitte Haskins & Sells R. Vasudevan Manish MaheshwariChartered Accountants Chairman Joint Managing Director
K. Sai RamPartnerMembership No: 022360
Vikash Jain Company Secretary, Chief Tax and Legal
Place : New Delhi Place : New DelhiDate : June 11, 2009 Date : June 11, 2009
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
CONSOLIDATED CASH FLOw STATEMENT FOR THE YEAR ENDED MARCH 31, 2009
In terms of our report of even date attached. On behalf of the Board of Directors
For Deloitte Haskins & Sells R. Vasudevan Manish MaheshwariChartered Accountants Chairman Joint Managing Director
K. Sai RamPartnerMembership No: 022360
Vikash Jain Company Secretary, Chief Tax and Legal
Place : New Delhi Place : New DelhiDate : June 11, 2009 Date : June 11, 2009
in Rupees
Particulars Year ended March 31, 2009
Year ended March 31, 2008
A. CASH FLOw FROM OPERATING ACTIVITIES
Net Profit Before Tax 647,032,884 415,708,609
Adjustments for:
Compensated Absences 733,647 1,906,316
Provision for Doubtful Debts 318,052 394,615
Depreciation, Depletion and Amortisation 118,646,094 53,054,106
Exploration Expenses Written Off 0 166,392,861
Dividend/Interest Income (422,508,915) (170,902,939)
Loss on Sale of/Discarded Assets (Net) 483,889 70,937
Amortisation of Foreign Currency Monetary Item Translation
Difference Account 4,345,806 0
Unrealized Exchange Loss / (Gain) 4,338,596 (32,698,992)
Interest and Finance Charges 104,017,567 75,873,987
OPERATING PROFIT BEFORE wORKING CAPITAL CHANGES 457,407,620 509,799,500
Adjustments for:
Trade and Other Receivables # (100,910,232) (27,310,261)
Inventories (429,936,783) 3,857,197
Payables 2,691,182,695 260,360,192
CASH FROM OPERATIONS 2,617,743,300 746,706,628
Taxes Paid (52,417,429) (157,124,698)
NET CASH FROM OPERATING ACTIVITIES 2,565,325,871 589,581,930
B. CASH FLOw FROM INVESTING ACTIVITIES
Purchase of Fixed Assets # (71,923,815) (10,019,611)
Proceeds from Sale of Fixed Assets 127,232 46,040
Insurance Claim Received 7,768,846 0
Development Expenditure * (6,466,245,373) (961,934,531)
Exploration Expenditure (152,377,373) (447,880,536)
Dividend/Interest Received 426,307,365 173,267,119
NET CASH USED IN INVESTING ACTIVITIES (6,256,343,118) (1,246,521,519)
C. CASH FLOw FROM FINANCING ACTIVITIES
Proceeds from Issue of Share Capital 0 6,105,132,657
Secured Loans Taken – Long Term 0 515,463,791
Secured Loans Repaid – Long Term (349,159,505) (331,513,674)
Interest and Finance Charges Paid * (152,186,389) (140,308,408)
Dividend Paid (including Dividend Tax) (152,670,623) 0
Rights Issue Expenses (Net) 0 (15,304,389)
NET CASH (USED IN)/FROM FINANCING ACTIVITIES (654,016,517) 6,133,469,977
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) (4,345,033,764) 5,476,530,388
Cash, Cash Equivalents:
Opening Balance 6,990,750,093 1,514,219,705
Closing Balance 2,645,716,329 6,990,750,093
(4,345,033,764) 5,476,530,388
Cash and Bank Balance as per Schedule 6 2,766,779,486 1,576,949,243
Current Investments as per Schedule 5 156,903,182 5,722,687,019
Adjustment for Unpaid Dividend Account and Share Application Money Account (7,198,804) (10,022,276)
Adjustment for Site Restoration Deposit (See Note 5 of Schedule 17) (214,966,840) (192,978,180)
Adjustment for Lien Marked Deposits/Accounts (See Note 5 of Schedule 17) (55,800,695) (105,885,713)
Total Cash and Cash Equivalents as at Year End 2,645,716,329 6,990,750,093
* Interest and Finance Charges Paid includes and Development Expenditure excludes Borrowing Cost capitalised amounting to Rs. 75,593,734 (Previous Year: Rs. 47,131,621).
# Purchase of Fixed Assets includes and Trade and Other Receivables excludes Capital Advances paid Rs. Nil (Previous Year: Rs. 1,693,406)
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
83
Schedules Forming Part of the Consolidated Balance Sheet as at March 31, 2009
in Rupees
As at March 31, 2009
As at March 31, 2008
SCHEDULE 1
SHARE CAPITAL
AUTHORISED200,000,000 Equity Shares of Rs. 10 each 2,000,000,000 2,000,000,000
ISSUED130,563,363 Equity Shares of Rs. 10 each 1,305,633,630 1,305,633,630
SUBSCRIBED AND FULLY PAID-UP130,493,289 Equity Shares of Rs. 10 each fully paid 1,304,932,890 1,304,932,890 Add: Amount Paid-up on Shares Forfeited 160,115 160,115
1,305,093,005 1,305,093,005 Note:1. On January 24, 2008, an allotment of 52,180,621 Equity Shares was made consequent
to the Rights Issue of 52,217,720 Equity Shares of Rs. 10 each at a premium of Rs. 107 per Share to the then existing Shareholders of the Company in the ratio of Two Equity Shares for every Three Equity Shares held.
SCHEDULE 2RESERVES AND SURPLUSSecurities Premium
Opening Balance 7,841,521,473 2,273,499,415 Additions (See Note 1 below) 0 5,583,326,447 Rights Issue Expenses (Net) (See Note 2 below) 0 (15,304,389)Closing Balance 7,841,521,473 7,841,521,473
General ReserveOpening Balance 5,383,000 5,383,000 Additions 0 0 Transitional Adjustments (See Note 20(i) of Schedule 17) (3,383,000) 0 Closing Balance 2,000,000 5,383,000 Balance in Profit and Loss Account 1,490,059,061 958,376,724
9,333,580,534 8,805,281,197 Notes:1. Represents premium on allotment of 52,180,621 Equity Shares on January 24,
2008 at a premium of Rs. 107 per Share consequent to the Rights Issue during the previous year.
2. The Net Rights Issue Expenses incurred during the previous year had been adjusted against the Securities Premium balance in accordance with Section 78 of the Companies Act, 1956.
SCHEDULE 3SECURED LOANS(See Note 3 of Schedule 17)Loans from Banks
Foreign Currency Term Loan 787,931,076 747,424,139 Rupee Term Loan 480,000,000 696,000,000
Loan from Financial InstitutionForeign Currency Term Loan 36,909,767 28,774,553
1,304,840,843 1,472,198,692
Consolidated.indd 83 8/18/2009 4:38:35 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
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and
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of S
ched
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Consolidated.indd 84 8/18/2009 4:38:35 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
85
Schedules Forming Part of the Consolidated Balance Sheet as at March 31, 2009
in Rupees
As at March 31, 2009
As at March 31, 2008
SCHEDULE 5
INVESTMENTS (FULLY PAID) – At Cost
LONG TERM
318 Equity Shares of Rs. 10 each of Reliance Industries Ltd. 25,975 25,975
318 Equity Shares of Rs. 5 each of Reliance Communication Ventures Ltd. 19,332 19,332
318 Equity Shares of Rs. 5 each of Reliance Natural Resources Ltd. 350 350
23 Equity Shares of Rs. 10 each of Reliance Energy Ltd. 3,219 3,219
15 Equity Shares of Rs. 10 each of Reliance Capital Ltd. 166 166
UNQUOTED (NON TRADE)
100,000 Equity Shares of Rs. 10 each of Gujarat Securities Ltd. 1,000,000 1,000,000
CURRENT
UNQUOTED (NON TRADE)
UNITS OF MUTUAL FUNDS (See Note 4 of Schedule 17) 156,903,182 5,722,687,019
157,952,224 5,723,736,061
Less: Provision for Diminution in Value of Investments 999,999 999,999
156,952,225 5,722,736,062
Aggregate Cost of Quoted Investments 49,042 49,042 Market Value of Quoted Investments 571,319 960,674 Aggregate Cost of Unquoted Investments 157,903,182 5,723,687,019
SCHEDULE 6CURRENT ASSETS, LOANS AND ADVANCES
(A) INVENTORIESCrude Oil 49,587,439 72,024,219 Stores, Spares, Capital Stock and Drilling Tangibles (See Note 19 of Schedule 17) 613,326,864 166,191,139 Goods in Transit 6,487,394 5,942,518 Materials Unpacked 3,364,302 690,500 Materials Packed 9,626,839 7,581,746 Packing Material 1,407,641 1,433,574
683,800,479 253,863,696 (B) SUNDRY DEBTORS
(Unsecured)Outstanding for a Period More Than Six Months
Considered Good 38,396,792 738 Considered Doubtful 2,020,519 1,702,467
OthersConsidered Good 154,594,635 120,718,571
195,011,946 122,421,776 Less: Provision for Doubtful Debts 2,020,519 1,702,467
192,991,427 120,719,309
Consolidated.indd 85 8/18/2009 4:38:35 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
86
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
Schedules Forming Part of the Consolidated Balance Sheet as at March 31, 2009
in Rupees
As at March 31, 2009
As at March 31, 2008
SCHEDULE 6 (Contd.)
CURRENT ASSETS, LOANS AND ADVANCES (Contd.)
(C) CASH AND BANK BALANCES
Cash on Hand 28,258 175,013
With Scheduled Banks
Current Accounts (See Note 4 & 5 (a) of Schedule 17) 55,988,087 979,849,052
Unclaimed/Unpaid Dividend Accounts 6,725,124 5,901,732
Unclaimed/Unpaid Application Money 473,680 4,120,544
Deposit Accounts (See Note 4 & 5(b) of Schedule 17) 2,642,890,982 583,358,946
With Non-Scheduled Bank
Current Account 60,673,355 3,543,956
2,766,779,486 1,576,949,243
(D) OTHER CURRENT ASSETS
Interest Accrued on Bank Deposits 3,596,085 7,394,535
3,596,085 7,394,535
(E) LOANS AND ADVANCES (See Note 1 below)
Advances Recoverable in Cash or in Kind or for Value to be Received (See Note 2 below) 403,933,107 408,187,773
CENVAT/Service Tax Input Credit 1,549,934 1,404,571
MAT Credit Entitlement (See Note 12 of Schedule 17) 31,000,000 0
Advance Income Tax [Net of Provision for Taxation of Rs. 141,958,496 (Previous Year Rs. 97,044,890)] 183,207,813 171,537,506
Advance Fringe Benefit Tax [Net of Provision for Taxation of Rs. 7,410,000 (Previous Year Rs. 4,880,000)] 1,237,376 507,376
620,928,230 581,637,226
Less: Provision for Doubtful Advances (See Notes 1 & 2 below) 15,556,856 15,556,856
605,371,374 566,080,370
TOTAL (A+B+C+D+E) 4,252,538,851 2,525,007,153
Notes:
1. Of the above:
Unsecured, Considered Good 605,371,374 566,080,370
Unsecured, Considered Doubtful (See Note 2(a) below) 15,556,856 15,556,856
620,928,230 581,637,226
2. Advances Recoverable in Cash or in Kind or for Value to be Received includes:
a. Capital Advance Rs. 1,354,621 (Previous Year Rs. 3,048,027) for which a provision of Rs. 1,354,621 (Previous Year Rs. 1,354,621) has been made.
b. Unamortised Borrowing Cost of Rs. 19,884,941 (Previous Year Rs. 69,781,407)
c. Advance Profit Petroleum Payment made to Government of India Rs. 114,594,339 (Previous Year Rs. Nil).
Consolidated.indd 86 8/18/2009 4:38:35 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
87
Schedules Forming Part of the Consolidated Balance Sheet as at March 31, 2009
in RupeesAs at
March 31, 2009As at
March 31, 2008SCHEDULE 7CURRENT LIABILITIES AND PROVISIONSCURRENT LIABILITIESSundry Creditors – Outstanding Dues to Micro Enterprises & Small Enterprises 7,146 0 – Outstanding Dues to Creditors other than Micro Enterprises &
Small Enterprises (See Notes 1 and 3 below) 3,538,984,347 983,659,041 Unclaimed/Unpaid Dividend (See Note 2 below) 6,725,124 5,901,732 Unclaimed/Unpaid Application Money (See note 2 below) 473,680 4,120,544 Other Liabilities 174,299,948 14,465,400 3,720,490,245 1,008,146,717 PROVISIONSProvision for Compensated Absences 4,814,934 4,682,148 Provision for Site Restoration (Refer Note 17 of Schedule 17) 286,112,500 225,177,500 Provision for Taxation – Income Tax [Net of Advance Tax of Rs. 668,754,162 (Previous Year
Rs. 680,211,801)] 50,643,618 53,074,091
– Wealth Tax [Net of Advance Tax of Rs. 480,311 (Previous Year Rs. 344,198)] 357,689 293,802 – Fringe Benefit Tax [Net of Advance Tax of Rs. 3,889,684 (Previous Year
Rs. 3,488,684)] 222,316 193,316 Proposed Dividend 0 130,493,289 Dividend Tax 0 22,177,334
342,151,057 436,091,480
TOTAL 4,062,641,302 1,444,238,197 Notes:1. Includes Profit Petroleum Payable to Government of India Rs. 3,055,263
(Previous Year Rs. 28,406).2. Does not include any amount due and outstanding, to be credited to the
Investor Education and Protection Fund.3. Includes Deposits received by HOEC Bardahl India Limited, the Wholly
Owned Subsidiary Rs. 1,755,842 (Previous Year Rs. 3,019,604).
in Rupees
Year ended March 31, 2009
Year ended March 31, 2008
SCHEDULE 8SALESSale of Crude Oil and Gas (See Note 27 of Schedule 17) 831,411,800 1,040,272,662 Less: Profit Petroleum to Government of India (See Note 25 of Schedule 17) 6,322,445 230,273,866
825,089,355 809,998,796 Gross Sale of Oil Additives 184,368,988 177,170,250 Less: Excise 22,549,970 24,401,977 Net Sale of Oil Additives 161,819,018 152,768,273
986,908,373 962,767,069 SCHEDULE 9(DECREASE)/INCREASE IN STOCK OF CRUDE OIL(Decrease)/Increase in Gross Stock of Crude Oil (22,436,780) 21,777,460 Less: Profit Petroleum to Government of India (See Note 25 of Schedule 17) 0 20,471,051
(22,436,780) 1,306,409
Schedules Forming Part of the Consolidated Profit and Loss Account for the Year Ended March 31, 2009
Consolidated.indd 87 8/18/2009 4:38:36 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
88
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
Schedules Forming Part of the Consolidated Profit and Loss Account for the Year Ended March 31, 2009
in Rupees
Year ended March 31, 2009
Year ended March 31, 2008
SCHEDULE 10
OTHER INCOME
Interest Income (Gross) on Bank Deposits [Tax Deducted at Source Rs. 2,860,251 (Previous Year Rs. 6,484,992)]
24,996,550 43,158,881
Dividend from Long Term – Trade Investments 4,134 281
Dividend from Current – Non Trade Investments 397,508,231 127,743,777
Gain on Foreign Exchange Fluctuation (Net) (See Note 20(i) of Schedule 17) 36,203,165 33,288,914
Excess Provision Written Back 2,730 135,274
Miscellaneous Income (See Note 26 of Schedule 17) 6,610,460 637,317
465,325,270 204,964,444
SCHEDULE 11
FIELD OPERATING EXPENSES
Hire Charges (See Note 15 of Schedule 17) 379,941,808 270,942,825
Insurance 2,703,219 3,375,127
Fuel, Water and Others 12,716,654 10,790,024
Production Expenses 22,905,921 13,745,589
Royalty, Cess & Other Duties 1,985,516 4,293,885
Other Expenses 9,804,289 7,687,897
430,057,407 310,835,347
SCHEDULE 12
COST OF GOODS FOR RESALE
Materials Packed & Unpacked
Opening Stock 8,272,246 6,788,775
Add: Purchases 45,860,041 32,749,171
54,132,287 39,537,946
Less: Closing Stock 12,991,141 8,272,246
Less: Cost of Samples & Replacements 463,818 885,066
40,677,328 30,380,634
Packing Materials
Opening Stock 1,433,574 807,816
Add: Purchases 13,226,521 14,350,461
14,660,095 15,158,277
Less: Closing Stock 1,407,641 1,433,574
13,252,454 13,724,703
Packing Cost
Repacking Expenses 4,203,014 3,778,492
Excise Duty 1,276,682 0
Municipal Cess Tax 680,277 567,260
6,159,973 4,345,752
60,089,755 48,451,089
Consolidated.indd 88 8/18/2009 4:38:36 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED 25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
89
Schedules Forming Part of the Consolidated Profit and Loss Account for the Year Ended March 31, 2009
in Rupees
Year ended March 31, 2009
Year ended March 31, 2008
SCHEDULE 13
CORPORATE EXPENSES (NET)
(A) STAFF EXPENSES
Salaries, Allowances and Bonus (See Note 7 of Schedule 17) 91,750,125 67,109,184
Contribution to Provident and Other Funds 9,658,508 8,482,370
Welfare Expenses 3,964,675 2,581,574
105,373,308 78,173,128
(B) ESTABLISHMENT EXPENSES
Office and Guest House Rent 14,116,259 11,416,179
Electricity 2,140,931 2,322,408
Rates and Taxes 396,241 414,995
Repairs and Maintenance – Others 10,960,822 8,260,897
General Office Expenses 806,717 565,859
28,420,970 22,980,338
(C) OTHER EXPENSES
Travelling and Conveyance 6,940,648 4,632,932
Communication Expenses 5,456,599 4,169,846
Printing and Stationery 2,620,058 3,283,002
Legal and Professional Expenses 41,201,141 32,353,704
Insurance 202,396 338,981
Directors’ Sitting Fees 205,000 305,000
Auditors’ Remuneration (including Other Auditors) (See Notes Below)
As Statutory Auditors 1,320,000 1,275,000
For Tax Matters 150,000 150,000
For Other Matters 37,300 74,800
For Reimbursement of Expenses 60,258 25,050
Service Tax 0 0
[Net of Service Tax Input Credit of Rs. 154,088 (Previous Year Rs. 174,252)]
1,567,558 1,524,850
Loss on Sale of/Discarded Assets (Net) 483,889 70,937
Miscellaneous Expenses 8,303,319 15,483,047
66,980,608 62,162,299
(D) TOTAL CORPORATE EXPENSES (A+B+C) 200,774,886 163,315,765
(E) LESS: RECOVERY OF EXPENSES (See Note 18 of Schedule 17) 172,864,176 105,995,211
27,910,710 57,320,554
Notes:1. Auditors' Remuneration for the current year excludes Rs. Nil (Previous Year Rs. 2,031,777) paid to the Auditors of the
Company for attest services rendered in relation to the Rights Issue, which is included as part of Rights Issue expenses adjusted against Securities Premium.
2. Auditors' Remuneration for the current year excludes Rs. 1,225,000 (Previous Year Rs. 1,340,462) paid towards tax matters to a firm in which some partners of the audit firm appointed as Statutory Auditors of the Company are partners.
Consolidated.indd 89 8/18/2009 4:38:36 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
90
Schedules Forming Part of the Consolidated Profit and Loss Account for the Year Ended March 31, 2009
in Rupees
Year ended March 31, 2009
Year ended March 31, 2008
SCHEDULE 14
MARKETING & SELLING EXPENSES
MARKETING & DISTRIBUTION EXPENSES
Incentives 6,385,522 4,968,680
Product Promotion Expenses 14,820,947 13,875,203
Advertisement 158,557 200,004
Rebates and Discounts 14,153,464 11,059,449
Sales Promotion 2,557,491 2,790,470
Samples & Replacement 489,159 894,007
Others 724,618 831,370
39,289,758 34,619,183
SELLING EXPENSES
Commission 393,713 4,317,224
Field Staff Expenses 2,040,923 1,918,308
2,434,636 6,235,532
41,724,394 40,854,715
SCHEDULE 15
INTEREST AND FINANCE CHARGES
Interest on Fixed Term Loans 56,802,638 70,533,415
Bank Charges and Commission 466,942 2,687,973
Other Finance Charges 46,747,987 2,652,599
104,017,567 75,873,987
Notes:1. The above excludes Interest and Finance Charges capitalised during the year to Development Expenditure Rs. 75,593,734
(Previous Year Rs. 43,778,316) and to Exploration Expenditure Rs. Nil (Previous Year Rs. 3,353,305) in accordance with Accounting Standard 16 – Borrowing Costs.
2. Other Finance Charges include exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs covered under Accounting Standard 16 – Borrowing Costs amounting to Rs. 5,112,247 (Previous Year Rs. Nil).
Consolidated.indd 90 8/18/2009 4:38:37 PM
25th Annual Report 2008-2009HINDUSTAN OIL EXPLORATION COMPANY LIMITED
91
Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
SCHEDULE 16
SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Convention The financial statements of the Company and its wholly owned subsidiary (“the Group”) have been prepared under the historical cost convention
in accordance with the generally accepted accounting principles in India including relevant provisions of the Companies Act, 1956 and accounting standards notified by the Government of India, as applicable.
2. Use of Estimates The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of
assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period like depletion of producing properties, estimate of site restoration liability, expensing of the estimated site restoration liability, provision for employee benefits, useful lives of fixed assets, provision for doubtful debts and advances, provision for tax etc. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates.
3. Basis of Consolidation The financial statements of the Group have been consolidated on a line by line basis after eliminating all significant intra-group transactions in
accordance with the Accounting Standard 21 ‘Consolidated Financial Statements’.
4. Exploration and Development Costs The Company generally follows the “Successful Efforts Method” of accounting for its exploration and production activities as explained below: (i) Cost of exploratory wells, including survey costs, is expensed in the year when determined to be dry/abandoned or is transferred to the
producing properties on attainment of commercial production. (ii) Cost of all appraisal programmes related to a Discovery are initially capitalised as “Capital Work in Progress”. If a Discovery is determined to
be commercial pursuant to appraisal programme, all appraisal costs, including the cost of unsuccessful appraisal wells, if any, are capitalised on attainment of commercial production. If at the end of the appraisal programme, the Discovery is relinquished, then all appraisal costs related to Discovery are charged to Profit and Loss Account.
(iii) Cost of temporary occupation of land, successful exploratory wells, development wells and all related development costs, including depreciation on support equipment and facilities, are considered as development expenditure. These expenses are capitalised as producing properties on attainment of commercial production.
(iv) Producing properties, including the cost incurred on dry/abandoned wells in development areas, are depleted using “ Unit of Production’’ method based on estimated proved developed reserves. Any changes in Reserves and/or Cost are dealt with prospectively. Hydrocarbon reserves are estimated and/or approved by the Management Committees of the Unincorporated Joint Ventures, which follow the International Reservoir Engineering Principles.
(v) If the Company/Unincorporated Joint Venture were to relinquish a block or part thereof, the accumulated acquisition and exploration costs carried in the books related to the block or part thereof, as the case may be, are written off as a charge to the Profit and Loss Account in the year of relinquishment.
Explanatory Note 1. All exploration costs including acquisition of geological and geophysical seismic information, license, depreciation on support equipment
and facilities and acquisition costs are initially capitalized as “Capital Work in Progress – Exploration Expenditure”, until such time as either the exploration well(s) in the first drilling campaign is determined to be successful, at which point the costs are transferred to “Producing Properties”, or it is unsuccessful in which case such costs are written off consistent with para 2 below.
2. Exploration costs associated with drilling, testing and equipping exploratory well(s) are initially capitalized as “Capital Work in Progress – Exploration Expenditure” and retained in Capital Work in Progress – Exploration Expenditure so long as:
(a) such well has found potential commercial reserves; or (b) such well test result is inconclusive and is subject to further exploration or appraisal activity like acquisition of seismic, or re-entry of
such well, or drilling of additional exploratory/step out well in the area of interest, such activity to be carried out no later than 2 years from the date of completion of such well testing;
— until such time as such costs are transferred to “Producing Properties” on attainment of commercial production; or — else charged to the Profit and Loss Account. Management makes quarterly assessment of the amounts included in “Capital Work in Progress – Exploration Expenditure” to determine whether
capitalization is appropriate and can continue. Exploration well(s) capitalized beyond 2 years are subject to additional judgment as to whether facts and circumstances have changed and therefore the conditions described in 2(a) and (b) no longer apply.
5. Site Restoration Estimated future liability relating to dismantling and abandoning producing well sites and facilities is recognised when the installation of the
production facilities is completed based on the estimated future expenditure determined by the Management in accordance with the local conditions
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and requirements. The corresponding amount is added to the cost of the producing property and is expensed in proportion to the production for the year and the remaining estimated proved reserves of hydrocarbons based on latest technical assessment available with the Company. Any change in the value of the estimated liability is reflected as an adjustment to the provision and the corresponding producing property.
6. Impairment At each Balance Sheet date, the Group reviews the carrying amount of its assets to determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss.
Where the impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior accounting periods.
7. Unincorporated Joint Ventures The financial statements of the Group reflect the Company’s share of assets, liabilities, income and expenditure of the Joint Venture operations
which are accounted on the basis of available information on line by line basis with similar items in the Group’s accounts to the extent of the participating interest of the Company as per the various “Production Sharing Contracts”. The financial statements of the Unincorporated Joint Ventures are prepared by the respective Operators in accordance with the requirements prescribed by the respective Production Sharing Contracts of the Unincorporated Joint Ventures. Hence, in respect of these Unincorporated Joint Ventures, certain adjustments/disclosures required under the mandatory Accounting Standards as notified by the Government of India and the Companies Act, 1956 have been made in the financial statements of the Group only to the extent of information available with the Company. Such information may pertain to transactions with related parties, details of leases, details of commitments and contingencies, information relating to valuation of stores, spares capital stock and drilling tangibles, information relating to foreign exchange differences and details relating to fixed assets of the respective Unincorporated Joint Ventures.
8. Fixed Assets Fixed assets are stated at cost inclusive of all incidental expenses.
9. Depreciation (i) Depreciation is provided on the “Written Down Value’’ method at the rates specified in Schedule XIV of the Companies Act, 1956. (ii) In the case of additions during the year, depreciation is provided for the full year irrespective of the date of installation and no depreciation
is provided in the year of sale/disposal. (iii) Improvements to Leasehold premises are amortised over the remaining primary lease period. (iv) Computer software is amortised over their respective license periods or 10 years, whichever is lower. (v) Assets individually costing less than or equal to Rs. 5,000 are fully depreciated in the year of acquisition. (vi) Depreciation is accelerated on fixed assets, based on their condition, usability etc. as per the estimates of the Management, wherever necessary.
10. Investments Investments are capitalised at cost plus brokerage and stamp charges. Long-term investments are valued at cost. Provision is made for other than
temporary diminution in the value of long-term investments. Current investments are valued at the lower of cost and fair value on individual scrip basis.
11. Inventories (i) Closing stock of crude oil in saleable condition is valued at estimated Net Realisable Value less estimated selling costs. (ii) Stores, spares, capital stock and drilling tangibles are valued at cost on FIFO/weighted average basis, as applicable or estimated net realisable
value, whichever is lower. (iii) Inventory of Oil additives are valued at lower of Cost or Net Realisable Value. Cost is identified on a specific identification basis. Cost of unpacked
materials includes freight, customs duty, insurance, clearing charges and is net of excise duty. Cost of packed materials includes materials and repacking cost. Obsolescence of inventory is determined on the material consumption pattern/specific review and is accordingly provided for.
12. Miscellaneous Expenditure Share issue expenses are either debited to the Profit and Loss Account or adjusted against the securities premium account in accordance with
Section 78 of the Companies Act, 1956, based on Management’s decision.
13. Revenue Recognition (i) Revenue from the sale of crude oil and gas, net of Government’s share of Profit Petroleum (calculated as per the provisions of the respective
Production Sharing Contracts) and Value Added Tax, is recognised on transfer of custody. (ii) Sale is recorded at the invoiced price, which is subject to the approval of the Government of India, Ministry of Petroleum & Natural Gas
(MOP&NG). The difference between the invoiced price and the final approved price, if any, is adjusted in the year in which the aforesaid approval is received.
Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
SCHEDULE 16 — SIGNIFICANT ACCOUNTING POLICIES (Contd.)
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(iii) Delayed payment charges, interest on delayed payments and interest on income tax refunds are recognised as and when there is no uncertainty in the determination/receipt of the amount, on grounds of prudence.
(iv) Sales of Oil Additives are recognised on shipment or dispatch to customers. Such Sales are stated exclusive Value Added Tax, Central Sales Tax and are net of Sales return and Trade Discount. Excise duty deducted from turnover (gross) is the amounts that are included in the amount of turnover (gross) and not the entire amount of liability that arose during the year.
14. Retirement Benefits (a) Defined Contribution Plan (i) Provident Fund: Contributions towards Employees’ Provident Fund are made by the Group to the Employees Provident Fund Scheme
in accordance with the statutory provisions. (ii) Superannuation: The Company contributes a sum equivalent to 15% of eligible employees basic salary to a Superannuation Fund
administered by trustees. The Company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred.
(b) Defined Benefit Plan The Group makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life Insurance Corporation of India.
The Group accounts its liability for future gratuity benefits based on actuarial valuation, as at the Balance Sheet date, determined every year by an Actuary appointed by the Group using the Projected Unit Credit method. Actuarial gains/losses are recognised in the Profit and Loss Account. Obligation under the defined benefit plan is measured at the present value of estimated future cash flows. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.
(c) Compensated Absences In the case of the Company, accumulated short term compensated absences is recognized based on the eligible leave at credit on the Balance
Sheet date and is estimated based on the terms of the employment contract. In the case of the Wholly Owned Subsidiary, accumulated long term compensated absences are provided based on actuarial valuation using
Projected Unit Credit Method.
15. Borrowing Cost Borrowing cost (including amortisation of ancillary costs and net of income on temporary investment of funds) specifically identified to the
acquisition, construction or production of qualifying assets are capitalized as part of such asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are charged to the Profit and Loss Account.
16. Foreign Currency Transactions Foreign currency transactions are accounted at the exchange rates ruling on the date of the transactions. Foreign currency monetary items, as at the
Balance Sheet date are restated at the closing exchange rates. Exchange differences arising on actual payments/realisations and year-end restatements of foreign currency monetary items, excluding long term foreign currency monetary items (see below), are dealt with in the Profit and Loss Account.
Exchange differences, both realised and unrealised, arising on reporting of long term foreign currency monetary items (as defined in the Accounting Standard 11 notified by the Government of India) relating to the acquisition of a depreciable capital asset are added to/deducted from the cost of the asset and in other cases unrealised exchange differences are accumulated in a “Foreign Currency Monetary Item Translation Difference Account” in the Group’s Balance Sheet and amortized over the balance period of such long term asset/liability but not beyond March 31, 2011, by recognition as income or expense in each of such periods.
Also See Note 20(i) of Schedule 17.
17. Taxation Income Tax: Current tax is the amount of tax payable on the taxable income for the year and is provided with reference to the provisions of the
Income Tax Act, 1961. Deferred Tax: Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent periods. Deferred tax asset is recognised when there is a reasonable certainty of future taxable income except for deferred tax assets in respect of unabsorbed loss or depreciation where it is recognised only if there is a virtual certainty with convincing evidence.
MAT Credit: Minimum Alternate Tax (MAT) Credit is recognised as an asset only when and to the extent there is convincing evidence that the Company/its Wholly Owned Subsidiary (as applicable) will pay normal income tax during the specified period. In the year in which the MAT Credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement. The Group reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Group will pay normal income tax during the specified period.
Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
SCHEDULE 16 — SIGNIFICANT ACCOUNTING POLICIES (Contd.)
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SCHEDULE 17
NOTES TO THE CONSOLIDATED ACCOUNTS
1. Consolidated Financial Statements The Group’s consolidated financial statements include those of HOEC Bardahl India Limited, a wholly owned subsidiary, incorporated in India.
2. CY-OSN-97/1 Accounts Closure As per the terms of the Production Sharing Contract for CY-OSN-97/1 Block, if no Commercial Discovery is made in the Contract Area by end
of the Exploration Period, the Contract Area shall be relinquished. In the absence of any discovery being declared by the Unincorporated Joint Venture at the end of the Exploration Period the Contract Area CY-OSN-97/1 was relinquished on March 15, 2008. During the year ended March 31, 2009, the Company has settled its ongoing dispute with DIOG Limited which was a subject matter of arbitration initiated by DIOG Limited ( Joint Venture Partner) before London Court of International Arbitration (LCIA). With the relinquishment of the Area and settlement of dispute with DIOG Limited, the accounts of the Joint Venture have been formally closed and the assets and liabilities of the Joint Venture has been consolidated 100% in the Group’s Accounts. Further, a net amount of Rs. 3,247,354 has been written back based on the audited accounts of the said joint venture and included as Miscellaneous Income.
3. Secured Loans (Foreign Currency and Rupee Term Loans) (a) The term loans from State Bank of India, Axis Bank and HDFC Bank amounting to Rs. 712,047,320 as at March 31, 2009 (Previous
Year Rs. 957,758,261), are secured by way of charge on the Company’s Participating Interest in PY-3 and Palej Fields, first charge on the Company’s share of Crude Oil Receivables from PY-3 and Palej Fields and charge on the Debt Service Reserve Account. See Note 5 below.
(b) The term loans from Axis Bank, Bank of India, Canara Bank, Export-Import Bank of India, Indian Overseas Bank, Syndicate Bank, IDBI Bank Limited, The Federal Bank Limited and Union Bank of India amounting to Rs. 592,793,523 as at March 31, 2009 (Previous Year Rs. 514,440,431) are secured by way of charge on all movable properties pertaining to PY-1 Gas Project, the Company’s Participating Interest in PY-1 Field and on the PY-1 Trust and Retention Accounts. See Note 5 below.
4. Rights Issue of Equity Shares On January 24, 2008, an allotment of 52,180,621 Equity Shares of Rs. 10 each was made consequent to the Rights Issue of 52,217,720 Equity
Shares of Rs. 10 each at a premium of Rs. 107 per Share to the then existing Shareholders of the Company in the ratio of Two Equity Shares for every Three Equity Shares held aggregating to Rs. 6,105,132,657.
In terms of Clause No. 6.13.2.28 of SEBI (Disclosure and Investor Protection) Guidelines, 2000, as amended, the details of the utilisation of the proceeds of the Rights Issue are as under:
in Rupees
Block Defined Programme Utilisation up to March 31, 2009
Utilisation up to March 31, 2008
PY-1 Contribution towards Cash Calls for Development of Basement Gas Reservoir in PY-1 Field
3,546,064,141 61,807,122
PY-3 (CY-OS-90/1) Contribution towards Cash Calls for Phase III Drilling Programme
341,404,559 0
Rights Issue Expenses Rights Issue Expenses (Net) 15,304,389 15,304,389
Total 3,902,773,089 77,111,511
The balance amount of Rs. 2,202,359,568 (Previous Year: Rs. 6,028,021,146) has been invested in the following forms of investment as at March 31, 2009.
in Rupees
Form of Investment Schedule Reference Amount as at March 31, 2009
Amount as at March 31, 2008
Bank Deposits Cash and Bank Balances – Schedule 6 2,202,359,568 0
Bank Account Cash and Bank Balances – Schedule 6 0 900,000,000
Mutual Funds Investment – Schedule 5 0 5,128,021,146
Total 2,202,359,568 6,028,021,146
Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
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5. Bank Balances – Scheduled Banks (a) Current Accounts with Scheduled Banks include Lien Marked Accounts Rs. 3,025,946 (Previous Year Rs. 3,294,327). See Note 3 above. (b) Deposits with Scheduled Banks include — Lien Marked Deposits Rs. 52,774,749 (Previous Year Rs. 102,591,386). See Note 3 above. — Deposit amounting to Rs. 214,966,840 (Previous Year Rs. 192,978,180) placed as “Site Restoration Fund” under Section 33ABA of
the Income Tax Act, 1961.
6. Managerial Remuneration a. Details of Managerial Remuneration Paid to Executive Directors of the Company
in Rupees
Particulars 2008-2009 2007-2008Salary, Allowances, Bonus and Perquisites 13,358,557 6,959,140Contribution to Provident and Superannuation Funds 1,458,000 847,350
Total 14,816,557 7,806,490
Notes:
1. The above Managerial Remuneration does not include an amount of Rs. 40,000 (Previous Year Rs. 85,000) paid to the erstwhile Managing Director as sitting fee for attending Board/Committee meetings. The erstwhile Managing Director and the current Managing Director do not draw any other remuneration from the Company.
2. In computing the above Managerial Remuneration, perquisites have been valued in terms of actual expenditure incurred by the Company in providing the benefits except in case of certain expenses where the actual amount of expenditure cannot be ascertained with reasonable accuracy, notional amount as per Income Tax Rules has been added. Actuarial valuation based contribution/provision with respect to gratuity and provision for compensated absences have not been included as these are determined for the Company as a whole. Annual variable pay and long term incentive benefits have been included as remuneration on cash basis.
3. The above Managerial Remuneration does not include the cost of 4,498 Employee Stock Options granted during the year 2008-09 for the year 2007-08, pursuant to LTIP Scheme 2005. See Note 7 below.
4. Remuneration paid to Erstwhile Managing Director in FY 2006-07 The Company, after obtaining the necessary approval from the Shareholders, had made an application to the Central Government
for approval under Clause 1(C) of Section II of Part II of Schedule XIII of the Companies Act, 1956 for the remuneration paid to the erstwhile Managing Director during the financial year 2006-07 in excess of the limits prescribed under Schedule XIII of the Companies Act, 1956. The Central Government approval has been received for the same during the financial year 2008-09.
b. Details of Managerial Remuneration Paid to Non Executive Directorsin Rupees
Particulars 2008-2009 2007-2008Sitting Fees 165,000 220,000
Total 165,000 220,000
Note: The above does not include the cost of 9,274 Employee Stock Options granted during the year, to the Chairman of the Company for the
year 2007-08, pursuant to LTIP scheme 2005. See Note 7 below.
7. Long Term Incentive Plan, Scheme 2005 Under the Employee Stock Option Scheme – 2005 (ESOS Scheme) approved by the Shareholders, and as amended from time to time, the Board
had on July 28, 2008 approved grant of 17,613 options to the eligible Employees and eligible Directors at Nil exercise price as part of the Long Term Incentive Plan (LTIP) for the financial year 2007-08. In terms of the ESOS Scheme, the options would vest at the third anniversary of the end of the financial year for which the grant corresponds to. For the financial year 2008-2009 an aggregate amount of Rs. 20,900,000 (Previous Year Rs. 9,400,000) has been provided towards cash bonus and ESOS (deferred bonus) as per the LTIP Scheme 2005.
Method used for Accounting for Share Based Payment Plan: Under the LTIP Scheme 2005, the eligible employees are granted options in the succeeding year after adoption of the Annual Audited Accounts
for the given year. The Company charges the entire amount provided towards cash bonus and ESOS (deferred bonus) to the Profit and Loss
Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
SCHEDULE 17 — NOTES TO THE CONSOLIDATED ACCOUNTS (Contd.)
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Account for the year for which the grant corresponds to. Any upward variation in the market price/acquisition price of the ESOS stocks, as may be applicable, as on the date of Balance Sheet, is charged to the Profit and Loss Account for the period as per LTIP.
Particulars 2008-2009 2007-2008Shares Arising Out of Options
Exercise Price Rs.
Shares Arising Out of Options
Exercise Price Rs.
Outstanding at the beginning of the year 15,069 Nil 15,069 NilGranted during the year 17,613 Nil – NilForfeited during the year – Nil – NilExercised during the year – Nil – NilOutstanding at the end of the year 32,682 Nil 15,069 NilExercisable at the end of the year – Nil – Nil
Fair Value Methodology: Since the exercise price is Nil, the fair value approximates the intrinsic value of the option on the date of the grant.
8. Gratuity The Group’s Obligation towards the Gratuity Fund is a Defined Benefit Plan. Details of Actuarial Valuation as at March 31, 2009 are as under:
in RupeesParticulars 2008-2009 2007-2008Projected Benefit Obligation as at the Beginning of the Year 7,928,531 5,244,414Service Cost 1,554,106 1,346,104Interest Cost 628,125 437,401Actuarial Losses 264,343 1,259,092Benefits Paid (450,380) (358,480)Projected Benefit Obligation at the End of the Year 9,924,725 7,928,531Change in Plan AssetsFair Value of Plan Assets as at the Beginning of the Year 1,689,742 1,550,406Expected Returns on Plan Assets 209,100 131,215Employer’s Contribution 1,717,566 345,080Benefits Paid (450,380) (358,480)Actuarial Gains 50,721 21,521Fair Value of Plan Assets as at the End of the Year 3,216,749 1,689,742Amount Recognised in the Balance SheetPresent Value of Obligations as at the End of the Year 9,924,725 7,928,531Fair Value of Plan Assets as at the End of the Year 3,216,749 1,689,742Liability Recognised in the Balance Sheet 6,707,976 6,238,789Cost of the Defined Benefit Plan for the YearCurrent Service Cost 1,554,106 1,346,104Interest on Obligation 628,125 437,401Expected Return on Plan Assets (209,100) (131,215)Net Actuarial Losses 213,622 1,237,571Net Cost Recognised in the Profit and Loss Account 2,186,753 2,889,861AssumptionsDiscount Rate 7.50%-8.00% 8.28%-8.35%Future Salary Increase (%) 6.50%-9.00% 6.50%-10.00%Attrition Rate 1% to 5% 1% to 3%Mortality Table LIC (1994-96)
published table LIC (1994-96)
published tableExpected Rate of Return on Plan Assets 9.00% 8.50%
Notes: 1. The entire plan assets are managed by Life Insurance Corporation of India (LIC). The data on plan assets has not been furnished by the LIC. 2. The expected return on plan assets is as furnished by an Independent Actuary appointed by the Company. 3. Discount rate is based on the prevailing market yields of Indian Government Bonds as at the Balance Sheet date for the estimated term of
the obligation.
Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
SCHEDULE 17 — NOTES TO THE CONSOLIDATED ACCOUNTS (Contd.)
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9. Segmental Reporting Segment reporting in terms of Accounting Standard 17 is as under:
in Rupees
Particulars 2008-09 2007-081. Segment Revenue
— Hydro Carbon 872,363,034 867,308,446
— Oil Additives 161,619,160 154,296,910
— Inter-Company Elimination (26,694,246) (23,470,373)
— Unallocated 422,508,915 170,902,939
Gross Sales/Income from Operations 1,429,796,863 1,169,037,922
2. Segment Results
— Hydro Carbon 214,964,547 198,533,102
— Oil Additives 9,559,422 46,255,966
— Unallocated 422,508,915 170,919,541
Total Profit before Tax 647,032,884 415,708,609
3. Segment Assets
— Hydro Carbon 12,656,548,351 6,118,563,836
— Oil Additives 41,172,052 29,511,506
— Unallocated 3,308,435,281 6,878,735,749
Total Assets 16,006,155,684 13,026,811,091
4. Segment Liabilities
— Hydro Carbon (3,982,125,269) (1,351,165,263)
— Oil Additives (60,078,742) (29,489,449)
— Unallocated (1,325,278,134) (1,535,782,177)
Total Liabilities (5,367,482,145) (2,916,436,889)
5. Addition in Tangible & Intangible Fixed Assets
— Hydro Carbon 7,691,117,821 1,505,160,965
— Oil Additives 335,178 475,113
— Unallocated 0 0
Total Addition in Tangible & Intangible Fixed Assets 7,691,452,999 1,505,636,078
6. Depreciation, Depletion and Amortisation
— Hydro Carbon 118,185,100 52,613,597
— Oil Additives 460,994 440,509
— Unallocated 0 0
Total Depreciation, Depletion and Amortisation 118,646,094 53,054,106
7. Non-Cash Expenses other than Depreciation and Amortisation
— Hydro Carbon 0 166,392,861
— Oil Additives 318,052 546,654
— Unallocated 0 0
Total Non-Cash Expenses other than Depreciation and Amortisation 318,052 166,939,515
Note: The Group’s operations are carried out only in India and the Group does not have any geographical segments other than India.
Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
SCHEDULE 17 — NOTES TO THE CONSOLIDATED ACCOUNTS (Contd.)
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10. Related Party Disclosures
(i) As per the Accounting Standard on ‘Related Party Disclosures’ (AS 18), the related parties of the Group as at March 31, 2009 are as follows:
(A) Promoter Group:
ENI UK Holdings plc (Wholly Owned Subsidiary of ENI S.p.A, Italy) Burren Shakti Limited (Wholly Owned Indirect Subsidiary of ENI UK Holdings plc.) Burren Energy (India) Limited (Wholly Owned Indirect Subsidiary of ENI UK Holdings plc.)
(B) Unincorporated Joint Venture Partners:
Bharat Petro Resources Limited Gujarat State Petroleum Corporation Limited Hardy Exploration & Production (India) Inc. Heramec Limited HPCL & Mittal Energy Limited IMC Limited Indian Oil Corporation Limited Jindal Steel and Power Limited Mafatlal Industries Limited Oil and Natural Gas Corporation Limited Oil India Limited Tata Petrodyne Limited
As stated in Item 7 of Significant Accounting Policies (Schedule 16), the financial statements of the Unincorporated Joint Ventures are incorporated in the Group’s accounts to the extent of the Group’s share. Hence, particulars of transactions with the Unincorporated Joint Ventures have not been separately disclosed.
(C) Key Management Personnel:
Mr. Luigi Ciarrocchi – Managing Director (w.e.f. September 30, 2008) Mr. Manish Maheshwari – Joint Managing Director Mr. Atul Gupta – Erstwhile Managing Director (upto August 21, 2008)
Note: Related party relationships are as identified by the Management and relied upon by the Auditors.
(ii) The nature and volume of transactions of the Group during the year with the above parties were as follows:in Rupees
Particulars Promoter Group
Unincorporated Joint Ventures’
Partners
Key Management
PersonnelEXPENDITURE – Remuneration to Joint Managing Director
(See Note 6 above)0(0)
0(0)
14,816,557(7,806,490)
– Sitting Fees to erstwhile Managing Director (See Note 6 above)
0(0)
0(0)
40,000(85,000)
– Recovery of Expenses 0(0)
37,781,411(37,545,357)
0(0)
– Dividends Paid 35,453,679(0)
0(0)
0(0)
Notes: 1. Figures in brackets relate to the Previous Year. 2. The above excludes transactions, if any, entered into between the Unincorporated Joint Ventures and the related parties mentioned in
(i) above in the absence of necessary information in the audited accounts of the Unincorporated Joint Ventures.
Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
SCHEDULE 17 — NOTES TO THE CONSOLIDATED ACCOUNTS (Contd.)
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11. Earnings Per Share (EPS) The basic and diluted Earnings per Equity Share is calculated as stated below:
Particulars 2008-2009 2007-2008
Net Profit after Tax Rs. 544,821,910 Rs. 257,832,619
Weighted Average Number of Equity Shares 130,493,289 97,546,759
Basic/Diluted Earnings per Share (EPS) Rs. 4.18 Rs. 2.64
Nominal Value per Share Rs. 10 Rs. 10
Note: Earnings per Share calculations are done in accordance with Accounting Standard 20 “Earnings per Share”.
12. MAT Credit Provision for Income Tax of the Company for the current year as well as the previous year has been computed based on Minimum Alternate Tax
in accordance with Section 115JB of the Income Tax Act, 1961. Taking into consideration the future profitability and the taxable position in the subsequent years, the Company has recognised “MAT Credit Entitlement” to the extent of Rs. 31,000,000 (Previous Year Rs. Nil) in accordance with the “Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under Income Tax Act, 1961” issued by the Institute of Chartered Accountants of India.
13. Deferred Tax Asset (Net) The net Deferred Tax Asset of Rs. 285,890,977 as at March 31, 2009 has arisen on account of the following:
in Rupees
Particulars 2008-2009 2007-2008
Deferred Tax Asset
Exploration Expenditure 308,300,000 290,500,000
Doubtful Debts/Advances 5,976,774 5,878,668
Employee Related Costs 5,209,437 5,050,963
Unabsorbed Business Losses* 250,927,919 164,500,000
Others 105,369 0
Sub total (A) 570,519,499 465,929,631
Deferred Tax Liability
Depreciation on Fixed Assets (Net) 1,358,522 4,637,672
Site Restoration 17,070,000 15,400,000
Depletion of Producing Properties 260,360,000 70,060,000
Foreign Currency Monetary Item Translation Difference Account 5,840,000 0
Sub total (B) 284,628,522 90,097,672
Net Deferred Tax Asset before Transitional Adjustment (A – B) 285,890,977 375,831,959
Deferred Tax relating to AS – 11 Adjustment (See Note 20(i) below) 0 4,669,829
Net Deferred Tax Asset after Transitional Adjustment 285,890,977 380,501,788
* Recognised on the basis of proven reserves of the existing Unincorporated Joint Ventures.
Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
SCHEDULE 17 — NOTES TO THE CONSOLIDATED ACCOUNTS (Contd.)
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Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
14. Commitments and Contingenciesin Rupees
Particulars 2008-2009 2007-2008(i) Counter Guarantees on account of Bank Guarantees 12,998,995 137,788,741(ii) Corporate Guarantee for Housing Loans to Employees 0 235,523(iii) Estimated amount of Contracts remaining to be Executed on Capital
Account and Not Provided For: (Including Rs. 156,922,500 (Previous Year Rs. 122,335,500) in respect of
a farm-in consideration for acquisition of participating right, in one of the Unincorporated Joint Ventures)
159,950,859 130,880,217
(iv) Claims against the Group Not Acknowledged as Debt* — Dispute with Contractors under Arbitration 3,286,632 3,206,685 — Income Tax Demands under Appeal 512,511,234 399,826,569 — Fringe Benefit Tax Demand where the matter is in appeal 523,345 0 — Customs Duty under Appeal 540,464 540,464(v) The Government had encashed the Performance Bank Guarantee of
Rs. 10,149,000 for PG Block abandoned by the consortium under the force majeure clause of the Production Sharing Contract (PSC). The Government has also raised an additional demand of Rs. 304,725,187 (including interest) (Previous Year Rs. 282,417,042). The Company has been advised that the said actions of the Government are not justified. The Company has initiated legal proceeding as per the provisions of the PSC in the matter. Pending the outcome of this, provision has been made in this regard to the extent of Rs. 10,149,000 (Previous Year Rs. 10,149,000) only.*
304,725,187 282,417,042
* The Group is contesting these claims and demand and the Company, based on the opinion of its tax/legal advisors, believes that the Group’s position will quite likely be upheld in the appellate process/court of law.
Notes: 1. The above does not include Interest claims amounting to Rs. 27,576 (to the extent quantifiable) pertaining to secured loan for PY-1 field,
which is not as per provisions of the Dollar Facility Agreement. 2. Other than the contingent liabilities disclosed in Note 15 and 16 below, information relating to the Commitments and Contingencies of the
unincorporated joint ventures is not available in the audited accounts of the Unincorporated Joint Ventures.
15. Hire Charges In PY-3 Field operated by Hardy Exploration & Production (India) Inc., the Floating Production System (“FPS”) was shutdown for a period of
33.47 days from November 26, 2008 to December 29, 2008. Accordingly, the invoice for the hire charges of FPS amounting to US$ 3,290,718 for the above period has been disallowed by the Operator. The above disallowance is disputed by the contractor and therefore, the Company has treated its share amounting to US$ 6,91,051 (equivalent to Rs. 35,554,574) as a contingent liability.
16. Capital Work in Progress During the year, PY3-D4-RL well was sidetracked. The expenditure for the well based on the invoices already received and accrued for various
services is US$ 56.31 million and a deduction of US$ 4.00 million is expected from the invoices of various contractors by negotiation. Accordingly, an amount of US$ 52.31 million, as approved by the Joint Venture, is included in the development cost for PY3-D4-RL well. Pending the completion of negotiation by the Operator, the Company has treated its share of the above deduction amounting to $ 0.84 million (equivalent to Rs. 43,218,000) as a contingent liability.
17. Provision for Site Restoration In accordance with Accounting Standard 29, the movement in Provision for Site Restoration is as follows.
in Rupees
Provision for Site Restoration 2008-2009 2007-2008Opening Balance 225,177,500 244,392,500Add: Provision for the Year 1,400,000 0Effects of Changes in Foreign Exchange Rates 59,535,000 (19,215,000)Closing Balance 286,112,500 225,177,500
As per the terms of the Production Sharing Contracts this liability will arise at the time of abandonment of the respective fields.
SCHEDULE 17 — NOTES TO THE CONSOLIDATED ACCOUNTS (Contd.)
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Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
SCHEDULE 17 — NOTES TO THE CONSOLIDATED ACCOUNTS (Contd.)
18. Recovery of Expenses Recovery of expenses represents expenditure incurred by the Company for the Unincorporated Joint Ventures where the Company is the Operator.
Such cost has been recovered from the respective Unincorporated Joint Ventures as per the terms of the respective Production Sharing Contracts. Recovery of expense also includes an amount of Rs. 59,373,679 (Previous Year Rs. 17,929,765) recovered as parent company overhead pursuant
to the respective Production Sharing Contracts.
19. Stores, Spares, Capital Stock and Drilling Tangibles Stores, Spares, Capital Stock and Drilling Tangibles include the Company’s share of Rs. 3,156,384 towards inventories purchased by the Operator
before March 31, 2004 in PY-3 block. As per the Operator, the potential future usage of this PY-3 inventory will be reviewed periodically and will be dealt with appropriately.
20. Changes in Accounting Policy – Accounting Standard 11 – The Effects of Changes in Foreign Exchange Rates (i) FY 2008-09 As indicated in (ii) below, hitherto the Group was following a policy of accounting for all exchange differences in the Profit and
Loss Account. Effective April 1, 2008, consequent to the exercise of the option available in the new paragraph 46 of the Accounting Standard 11 – The Effects of Changes in Foreign Exchange Rates notified by the Ministry of Corporate Affairs vide Notification dated March 31, 2009 on Companies (Accounting Standards) Amendment Rules, 2009 (G.S.R. 225 (E) dated 31.3.2009), the Group has capitalised a net amount of Rs. 133,793,106 to fixed assets (Development Expenditure) and transferred a net amount of Rs. 17,179,351 to Foreign Currency Monetary Item Translation Difference Account, as of March 31, 2009. Had the Group not changed the Accounting Policy, the profit before tax for the year ended March 31, 2009 would have been lower by Rs. 173,117,256.
Particulars in Rupees
Exchange Differences capitalised to Fixed Assets (Development Expenditure) 133,793,106
Closing Balance of Foreign Currency Monetary Item Translation Difference Account as at March 31, 2009 to be amortised in subsequent periods
17,179,351
Amount of Net Amortisation of Foreign Currency Monetary Item Translation Difference Account charged to the Profit and Loss Account for the year ended March 31, 2009
4,345,806
Amount debited to General Reserve as at April 1, 2008 (to the extent available and Net of Taxes)* 3,383,000
Amount debited to Accumulated Profit and Loss Account as at April 1, 2008 (Net of Taxes)* 13,139,573
Net Impact on Profit Before Tax for the year ended March 31, 2009 173,117,256
* Includes Total Adjustment for Deferred Tax – Rs. 4,669,829
(ii) FY 2007-08 Upto March 31, 2007, the Group had capitalised the exchange differences arising from foreign currency liabilities relating to fixed assets
acquired from outside India. Effective April 1, 2007, consequent to the applicability of Accounting Standard (AS) 11 – The Effects of Changes in Foreign Exchange Rates, notified by the Government of India, the Group had accounted for such exchange differences amounting to a net gain of Rs. 13,612,540 (including share in Unincorporated Joint Ventures) in the Profit and Loss Account for the previous year.
With respect to such transactions/liabilities, had the Group not changed the Accounting Policy the profit before tax for the previous year would have been lower by Rs. 13,612,540.
With respect to the effect of such change in policy in respect of the Company’s share of the assets and liabilities in the Unincorporated Joint Ventures, the required information relating to foreign exchange differences are not available in the audited financial statements of the Unincorporated Joint Ventures which are prepared in accordance with the requirements of the Production Sharing Contract. Hence, the details of such foreign exchange differences have been obtained from the Operators of the respective Unincorporated Joint Ventures.
21. CB-ON-7 Exploration Area The Operator of the Unincorporated Joint Venture CB-ON-7 Block has sought extension for conducting additional exploration in certain areas of
Block. While the additional work programme has been considered, the final regulatory consents are awaited. The exploration expenses amounting to Rs. 53,235,101 included under “Exploration Expenditure” (Schedule 4) will be appropriately dealt with based on final regulatory consents inline with the Group’s Accounting Policy.
22. CB-OS / 1 Exploration Area The Operator has declared Commercial Discovery in CB-OS-1 Block and is pursuing with the authorities for necessary approvals. The exploration
expenses amounting to Rs. 184,543,335 included under “Exploration Expenditure” (Schedule 4) will be appropriately dealt with based on final regulatory consents inline with the Group’s Accounting Policy.
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Schedules Forming Part of the Consolidated Accounts for the Year Ended March 31, 2009
SCHEDULE 17 — NOTES TO THE CONSOLIDATED ACCOUNTS (Contd.)
23. GAIL Arbitration On February 15, 2008, the Arbitral Tribunal has passed Final Award in the Arbitration Proceedings between GAIL India Ltd. (“GAIL”) and
Hindustan Oil Exploration Company Limited (“HOEC”) concerning the Gas Sale and Transportation Agreement (“GSTA”) dated July 1, 2003 executed between GAIL and HOEC in relation to the PY-1 Gas. In the said proceedings GAIL had sought specific performance of the GSTA. By way of the majority award the Arbitral Tribunal has granted the relief of specific performance of GSTA in favour of GAIL and against HOEC. The Company has filed a petition before the Hon’ble High Court, Delhi for setting aside the majority award of the Arbitral Tribunal and the said petition has been admitted. Further, GAIL has also filed a petition before the Hon’ble High Court, Delhi for seeking specific performance of the Arbitral Award, which is pending before the Court.
In the meanwhile, HOEC has initiated a tripartite discussion with GAIL and PPN Power Generating Company Pvt. Ltd. to reach a solution for the outstanding issues including the aforesaid dispute.
24. Details of Oil and Gas Reserves As of March 31, 2009, the internal estimates of Proved and Probable reserves on working interest basis for the Company is 53.4 Million Barrel
of Oil Equivalent (Previous year 53.4 Million Barrel of Oil Equivalent). This has been relied upon by the Auditors, being a technical matter.
25. Profit Petroleum Profit Petroleum for the year ended March 31, 2009 includes an amount of Rs. 4,803,040 (Previous Year Rs. Nil) paid for the financial year
2005-2006 as submitted by the Operator of PY-3.
26. Miscellaneous Income Miscellaneous Income includes an amount of Rs. 1,799,237 being the net gain on Current Non Trade Investments.
27. Sales Sales is net of an amount of Rs. 406,863 adjusted for Reid Vapour Pressure specifications as per the terms of the Crude Oil Sale Agreement for
PY-3 field pertaining to prior years as submitted by the Operator of PY-3.
28. Provision and Write Off – Year Ended March 31, 2008 During the previous year ended March 31, 2008, Exploratory Well North Ledo -1 drilled in Block AAP-ON-94/1 did not encounter hydrocarbons
of commercial interest and the same has been plugged and abandoned. Consistent with the Company’s Accounting Policies, the Company had written off the Exploration Cost of Rs. 158,033,311 associated with the drilling of the said well.
As per the terms of the Production Sharing Contract for CY-OSN-97/1 Block, if no Commercial Discovery is made in the Contract Area by end of the Exploration Period, the Contract Area shall be relinquished. In the absence of any discovery during the Exploration Period the Contract Area stands relinquished. Hence Exploration Cost pertaining to the CY-OSN-97/1 Block of Rs. 8,359,550 had been written off during the previous year ended March 31, 2008. Also See Note 2 above.
29. Particulars of Unhedged Foreign Currency Exposure The particulars of Unhedged Foreign Currency Exposure of the Group as at March 31, 2009 is as under:
in Rupees
Particulars Exposure as at March 31, 2009
Exposure as at March 31, 2008
Secured Loans 824,840,843 776,198,692
Sundry Debtors 173,613,578 109,285,585
Loans and Advances 114,594,339 0
Sundry Creditors 249,013,823 28,733,905
30. Long Term Compensated Absences Details of the Key Assumptions used in the determination of the Long Term Compensated Absences of the Wholly Owned Subsidiary are as
under: Discount Rate : 7.50% Future Salary Increase : 6.50% Attrition Rate : 1% to 5%
31. Previous Year Figures Previous year’s figures have been regrouped wherever necessary to conform to the current year presentation.
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2D Seismic – Two Dimensional Seismic3D Seismic – Three Dimensional Seismic2P/P+P Reserves – Proven and Probable Reserves Proven Reserves are those quantities of petroleum which, by analysis of geological and engineering data, can be estimated
with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods, and government regulations. If probabilistic methods are used, there should be at least 90% probability that the quantities actually recovered will equal or exceed the estimate.
Probable Reserves are those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable. In this context, when probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the sum of estimated proven plus probable reserves.
bbl – barrelboe – barrels of oil equivalentbopd – barrels of oil per dayboepd – barrels of oil equivalent per dayCSR _ Corporate Social ResponsibilityDP – Depository ParticipantDevelopment well – A well drilled within the proved area of an oil and /or natural gas reservoir to the depth of a stratigraphic horizon known
to be productive.DGH – Directorate General of HydrocarbonsDST – Drill Stem TestECB – External Commercial BorrowingECC – Eni Coordination Center S.A.ERP – Emergency Response PlanExploratory well – A well drilled to find oil and /or gas in an unproved area, to find a new reservoir in an existing field or to extend a known
reservoir.E&P – Exploration and ProductionFIFO – First in First outG&G – Geological & GeophysicalGDP – Gross Domestic ProductGHG – Green House GasGSPCL – Gujarat State Petroleum Corporation Ltd.HAZID – Hazard Identification (Risk Analysis)HAZOP – Hazard and Operability AnalysisHEPI – Hardy Exploration and Production (India) Inc.HOEC – Hindustan Oil Exploration Company LimitedHSEC – Health, Safety, Environment & Corporate Social ResponsibilityJOA – Joint Operating AgreementJV – Joint VentureKPI _ Key Performance IndicatorLTI _ Loss Time IncidentLTIP – Long Term Incentive PlanMAT _ Minimum Alternate TaxMDT – Modular Dynamics Testmmboe – Million barrels of oil equivalentmmbtu – Million british thermal unitmmscfd – Million standard cubic feet per daymmscm – Million standard cubic metersML – Mining LeaseNELP – New Exploration Licensing PolicyOEM – Original Equipment ManufacturerOGP – International Association of Oil & Gas ProducersONGC – Oil & Natural Gas Corporation LimitedPI – Participating InterestPSC – Production Sharing Contract Revenue – Sales+Increase/(Decrease) in stock of crude oil+Other Incomescmd – standard cubic meters per dayscm – standard cubic metersSEBI – Securities and Exchange Board of IndiaSIMOP – Simultaneous OperationsUSD – United States DollarWorking interest basis – Field Production x Participating InterestEntitlement basis – Working interest basis less Government of India Profit Petroleum takeTurnover – Sales + Increase/(Decrease) in Stock of Crude Oil
Glossary
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NoTEs
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Date : September 29, 2009
Day : Tuesday
Time : 10:30 A.M.
Place : “Tropicana Hall” The Gateway Hotel Vadodara Akota Gardens, Akota Vadodara-390 020
ContentsHighlights of FY2008-09 1
Operational Highlights At A Glance 2
Board of Directors 4
Directors’ Report 5
Management Discussion and Analysis Report 10
Report on Corporate Governance 15
Accounts with Auditors’ Report 26
Information pertaining to HOEC Bardahl India Limited (Subsidiary) 62
Consolidated Accounts with Auditors’ Report 79
Glossary 103
Disclaimer Note:Certain sections of this Annual Report, in particular the Management Discussion and Analysis, and Operational Highlights may contain forward-looking statements concerning the financial condition and results of operations of HOEC. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. No assurances can be given as to future results, levels of activity and achievements and actual results, levels of activity and achievements may differ materially from those expressed or implied by any forward-looking statements contained in this report. HOEC does not undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information.
AUDITORSDeloitte Haskins & Sells Chartered Accountants
COMPANY SECRETARY Mr. Vikash Jain
PRINCIPAl BANKERS
• Axis Bank
• HDFC Bank
• IDBI Bank
• State Bank of India
REGISTERED OFFICE
‘HOEC House’, Tandalja RoadVadodara – 390 020 (India)E-mail: [email protected]: www.hoec.com
CHENNAI OFFICE
‘Lakshmi Chambers’192, St. Mary’s RoadAlwarpet Chennai – 600 018 (India)
REGISTRARS AND SHARE TRANSFER AGENT
Link Intime India Pvt. Limited(formerly Intime Spectrum Registry Limited)1st Floor, 308, Jaldhara ComplexOpp. Manisha SocietyVasna Road, Off Old Padra RoadVadodara – 390 015 (India)E-mail: [email protected]
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Hindustan Oil Exploration Company Limited Website: www.hoec.com