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நிறுவன பெயரின் முதல் சில எழுத்துக்களை நிரப்பி 'கோ' பட்டனை கிளிக் செய்யவும்

Indian Oil Corporation Ltd. இன் கணக்கு குறிப்புகள்

Mar 31, 2023

A. i) Freehold Land includes H1.61 crore (2022: H1.61 crore) lying vacant due to title disputes/litigation.

ii) Out of the Freehold land measuring 1364.01 acres at Mathura and Agra regions, land measuring 50 acres (approx) has been acquired by NHAI as a part of the NH2 widening project for which the determination of value of compensation is pending. Accordingly, the value of land amounting to H1.18 crore is continued to be included in Freehold land.

iii) Freehold Land of 490 acres at Guwahati Refinery includes land parcel of approx. 32.39 acres (Costing H0.05 crore) on which public roads, drains etc. have been constructed by PWD, Govt. of Assam.

iv) Freehold Land includes H41.75 crore of compensation paid in respect of land at Panipat Refinery as per District and High court orders of earlier dates, which was later quashed by subsequent High Court order dated 18.12.2019. Since, the process of recovery of compensation already paid, has been stayed by Hon''ble Supreme Court vide order dated 21.09.2020, necessary adjustment shall be made in the cost of the land upon actual recovery, if any.

B. i) Buildings include H0.01 crore (2022: H0.01 crore) towards 1605 (2022: 1605) nos. of shares in Co-operative Housing Societies

towards membership of such societies for purchase of flats.

ii) Includes Roads, Bridges etc. (i.e. Assets other than Building) of Gross block amounting to H607796 crore (2022: H5122.57 crore) and net block amounting to H3302.68 crore (2022: H2834.91 crore).

C. Depreciation and amortisation for the year includes H68.39 crore (2022: H19.09 crore) relating to construction period expenses shown in ''Note - 2.2''

D. Land and Buildings (Including ROU Asset) include H899.37 crore (2022: H742.19 crore) in respect of which Title/ Lease Deeds are pending for execution or renewal.

E. During the year, company has provided an impairment loss in the Statement of Profit and Loss under the Head ''Depreciation, Amortisation and Impairment on Tangible Assets'' on windmills in Rajasthan of H18.94 crore (2022: H82.55 crore) considering uncertainty over availment of eligible Renewable Energy Certificates (REC) and retaining tariff of H 3.14/Kwh as per RRECL order dated 05.03.2019.

F. Hitherto, the estimated residual value of LPG cylinders (other than composite cylinders) and Pressure Regulators was considered as 15% of original cost. Based on realization of scrap value in recent past, the estimated residual value of those assets has been increased from 15% to 25% of original cost effective from April 01, 2022. The impact on account of above change is reduction in depreciation charge by H293.08 crore in FY 2022-23 which will be offset over future periods in the Statement of Profit & Loss.

G. During the year, classification of Retail Visual Identity (RVI) elements has been reviewed and some of the items having gross block of H1,213.06 crore classified under Buildings, Plant & Equipment and Office Equipments have been reclassified as ''Furniture and Fixtures'' The impact on account of this change is increase in depreciation charge by H 61.31 crore during FY 2022-23 which will be offset over future periods in the Statement of Profit & Loss.

H. Railways had claimed transfer of ownership of certain assets provided by the Company at Railway premises which was not accepted in prior years by the Company and the said assets were continued to be part of Plant, Property & Equipment of the Company. Railways, in its latest tender has asserted its position on ownership of these assets and has again maintained status quo in their earlier stand/position during FY 2022-23. Management has accepted Railways'' contention in view of the continued business relation. Consequently, assets amounting to H81.26 crore (WDV as on 01.04.2022) has been derecognized and charged to loss on sale/disposal of assets during the year.

I. For further details regarding ROU Assets, refer ''Note - 36''

J. In accordance with the requirements prescribed under Schedule II to Companies Act, 2013, the Company has adopted useful lives as prescribed in that schedule except in some cases as per point no. 2.4.1 of significant accounting policies (Note-1).

3 Out of Oil Marketing Companies 8.20% GOI Special Bonds 2024 classified as Current Investment, bonds of Investment value H 1500 crore (Carrying value H 1560.51 crore) has been used as collateral against availment of overnight borrowings through CROMS platform of CCIL.

4 During the current financial year, IOC Sweden AB had undertaken reduction of share capital by reducing the face value of its shares to offset its accumulated losses in accordance with the applicable laws and regulations and the same has been accounted through impairment. Consequent to capital reduction, the face value of its shares has been reduced from Euro 11.19 to Euro 2.28 per share.

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

B. Includes non-current assets retired from active use earlier used in various segments and held for disposal through tendering process within a year.

C. Cauvery Basin Refinery and Petrochemicals Limited (CBRPL) has been incorporated on 6th January 2023 as a Joint Venture of Indian Oil and Chennai Petroleum Corporation Limited each holding 25% equity and balance by seed equity investors, for construction of new 9 MMTPA refinery at Cauvery Basin Nagapattinam. The JV would be operational upon receipt of approval by Cabinet Committee on Economic Affairs (CCEA) for equity investment in the CBR project by CPCL. The transfer of assets of the Company''s terminal will be taken up thereafter. Accordingly, the land and other facilities held by the Company at Narimanam Marketing Terminal which are to be transferred to the new Joint Venture, are classified under Disposal Group.

D. During the year the company has disposed of the investment in 101095 Equity shares of Woodlands Multispeciality Hospital Limited which was classified in the previous year as asset held for sale.

During the year the company has reclassified Assets Held for sale amounting to H 0.04 crore (2022: H 72.99 crore) as Property, Plant and Equipment/ Other Assets based on the plan for disposal of assets.

During the year, the company has recognized impairment loss of H 10.28 crore (2022: H 1788 crore) on write-down of asset to fair value less costs to sell and the same has been shown in Provision/loss on Other Assets sold or written off under ''Other Expenses'' in the Statement of Profit and Loss.

B. Terms/ Rights attached to Equity Shares

The Company has only one class of equity shares having par value of H 10 each and is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the Company in proportion to the number of equity shares held.

IOC Shares Trust (Shareholder) has waived its right to receive the dividend w.e.f. 02.03.2020.

A. Adjusted for bonus shares pertaining to those held under IOC Shares Trust Nature and Purpose of Reserves

A. Retained Earnings

The retained earnings comprises of general reserve and surplus which is used from time to time to transfer profits by appropriations. Retained earnings is free reserve of the Company and is used for the purposes like issuing bonus shares, buy back of shares and other purposes (like declaring Dividend etc.) as per the approval of Board of Directors. It includes the re-measurement of defined benefit plan as per actuarial valuations which will not be reclassified to statement of profit and loss in subsequent periods.

B. Bond Redemption Reserve

As per the Companies Act 2013, a Bond Redemption Reserve is required to be created for all bonds/ debentures issued by the company at a specified percentage. This reserve is created out of appropriation of profits and is transferred back to general reserve on repayment of bonds for which it is created. In 2019, this requirement was dispensed with in case of public issue/ private placement of debentures by listed companies to NBFCs, Housing Finance Companies and other listed companies.

C. Capital Redemption Reserve

As per the Companies Act 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. Utilization of this reserve is governed by the provisions of the Companies Act 2013 and accordingly has been used in current financial year for issuing bonus shares.

D. Capital Reserve

Capital Reserve was created through business combinations and shall be utilised as per the provisions of the Companies Act 2013.

E. Insurance Reserve

Insurance Reserve is created by the company with the approval of Board of Directors to mitigate risk of loss of assets not insured with external insurance agencies. H20.00 crore is appropriated by the company every year to this reserve. The reserve is utilised to mitigate actual losses by way of net appropriation in case any uninsured loss is incurred. No amount (2022: H0.72 crore) has been utilised for recoupment of uninsured losses.

F. Fair value of Equity Instruments

This reserve represents the cumulative effect of fair value fluctuations of investments made by the company in equity instruments of other entities. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. This will not be reclassified to the statement of profit and loss in subsequent periods.

G. Fair value of Debt Instruments

This reserve represents the cumulative effect of fair value fluctuations in debt investments made by the company to earn contractual cash flows and which are available for sale. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. This amount will be reclassified to the statement of profit and loss in subsequent periods on disposal of respective instruments.

H. Cash Flow Hedge Reserve

The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. Such gains or losses will be reclassified to statement of profit and loss in the period in which the hedged item occurs/ affects the statement of profit and loss.

1. 349677684 (233118456 before issue of bonus shares) shares held under IOC Shares Trust (Shareholder) of face value H 349.68 crore (H 233.12 crore before issue of bonus shares) (2022: H 233.12 crore) have been netted off from paid up capital. IOC Shares Trust have waived its right to receive the Dividend w.e.f. March 02, 2020 and therefore Dividend on shares held by IOC Shares Trust was neither proposed in the last year nor during the current financial year.

2. The Company has also incurred expenses on distribution of final dividend amounting to H 0.19 crore (2022: H 0.24 crore) and on distribution of interim Dividend amounting to Nil (2022: H 0.48 crore) which have been debited to equity.

3. The Board of Directors recommended issue of bonus equity shares in the ratio of one equity share of H10 each for every two equity shares of H10 each held and it was approved by the members of the Company in AGM. Pursuant to this the company has issued bonus equity shares in July 2022.

NOTE-32: EARNINGS PER SHARE (EPS)

Basic and Diluted EPS amounts are calculated by dividing the profit/(loss) for the year attributable to equity holders by the weighted

average number of Equity Shares outstanding during the year.

1. 349677684 (233118456 before issue of bonus shares) Equity Shares held under IOC Shares Trust of face value H 349.68 crore (H 233.12 crore before issue of bonus shares) have been excluded from weighted average number of Equity Shares and EPS is computed accordingly.

2. Pursuant to the approval of the shareholders, the company has issued bonus shares in the ratio of one equity share of H10 for every two equity shares of H10 each held in July 2022. Accordingly, earnings per share (EPS) (basic and diluted) of FY 2021-22 have been adjusted on account of bonus shares.

@ Petronet India Limited is a JV amongst Indian Oil, BPCL, HPCL, RIL, NEL, IL&FS, SBI and ICICI. The company is under winding up and the matter is pending with Official Liquidator since 2018.

@@ Petronet CI Ltd. is a JV amongst Indian Oil, PIL, RIL, NEL and BPCL. The company is under winding up and the matter is pending with Official Liquidator since 2006.

# Indian Oil has exited the Joint Venture, IndianOil Ruchi Biofuels LLP (M/s IORB) by giving notice of its exit from the LLP to the other JV partner viz. Ruchi Soya Industries Limited (M/s Ruchi) as well as to the LLP on December 26, 2018 stating that it will exit the LLP w.e.f. January 25, 2019. The time frame for completing exit formalities by M/s Ruchi by filing requisite forms with ROC was within 30 days of notice expiry period (i.e., by February 24, 2019) but the same is still pending and IndianOil''s name is appearing on ROC website as Partner in the said LLP It has been informed that M/s Ruchi was under Corporate Insolvency Resolution Process and has been taken over by Patanjali Ayurveda Limited, and for the purpose

of carrying out the process of liquidation, M/s. Sanatan has been inducted as the new partner in place of Indian Oil. All necessary documents have been provided to M/s Ruchi for completing formalities relating to exit of IndianOil from IORB LLP

## The Board of IndianOil at its meeting held on 23.11.2022 has accorded in-principle approval for disinvestment of Hindustan Urvarak & Rasayan Limited.

### Cauvery Basin Refinery and Petrochemicals Limited (CBRPL) has been incorporated on 6th January 2023 as a Joint Venture of Indian Oil and Chennai Petroleum Corporation Limited each holding 25% equity and balance by seed equity investors, for construction of new 9 MMTPA refinery at Cauvery Basin Nagapattinam. IndianOil has made equity contribution of 25% stake in Cauvery Basin Refinery and Petrochemicals Limited during the month of March 2023.

Note:

Ujjwala Plus Foundation is a joint venture of IOCL, BPCL and HPCL with fund contribution in the ratio of 50:25:25 which was incorporated as a company limited by guarantee (without share capital) under section 8 of Companies Act, 2013. The Board of IndianOil at its meeting held on 14.03.2023 has accorded in-principle approval for closure of Ujjwala Plus Foundation.

A. Exploration License expired on October 7, 2015. Consortium has requested Directorate General of Hydrocarbon (DGH) for Appraisal phase, however vide letter dated March 6, 2019, it was opined to carry out Exploration activity instead of Appraisal work. Accordingly, Operator requested DGH for extension of exploration period. Response from DGH is awaited.

B. Appraisal period has expired on February 1,2022. Consortium had requested Directorate General of Hydrocarbon (DGH) for extension. Response from DGH is awaited.

C. The project ''s exploration period ended on 24 June 2009. The contractual arrangement with respect to development of the block could not be finalized so far with Iranian Authorities.

D. Under Force Majeure since May 20, 2014

E. Blocks awarded under Discovered Small Field (DSF) Bid Round-III

Frequency

The Proved and Proved & Developed reserves mentioned above are the provisional numbers based on the estimate provided by the operator. For the purpose of estimation of Proved and Proved & Developed reserves, Deterministic method has been used by the operator. The annual revision of Reserve Estimates is based on the yearly exploratory and development activities and results thereof.

NOTE - 35: EMPLOYEE BENEFITS

Disclosures in compliance with Ind-AS 19 on "Employee Benefits" is as under:

A. Defined Contribution Plans- General Description Employee Pension Scheme (EPS-95)

During the year, the company has recognised H2783 crore (2022: H30.27 crore) as contribution to EPS-95 in the Statement of Profit and Loss/CWIP (included in Contribution to Provident and Other Funds in Note - 27/Construction period expenses in Note-2.2). Pension Scheme

During the year, the company has recognised H438.03 crore (2022: H514.19 crore) towards Defined Contributory Employees Pension Scheme (including contribution in corporate National Pension System) in the Statement of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 27/ Construction period expenses in Note-2.2).

B. Defined Benefit Plans- General Description Provident Fund:

The Company''s contribution to the Provident Fund are remitted to the three separate provident fund trusts established for this purpose based on a fixed percentage of the eligible employee''s salary and charged to the Statement of Profit and Loss. Shortfall of net income of trust below Government specified minimum rate of return, if any, and loss to the trust due to its investments turning stressed are being made good by the Company.

In line with the EAC opinion dated 12.05.2022, provision towards distress investment amounting to H413.35 crore has been reversed during the year (2022: additional provision of H350.10 crore) by the company. Additionally, H128.28 crore has been provided as loss due to Remeasurement of Defined Benefit Plans under Other Comprehensive Income as per Actuarial Report.

Gratuity:

Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount based on completed tenure of service subject to maximum of H0.20 crore at the time of separation from the company. Besides, the ceiling of gratuity increases by 25% whenever IDA rises by 50% with reference to January 01, 2017

Post Retirement Medical Benefit Facility (PRMBF):

PRMBF provides medical coverage to retired employees and their eligible dependant family members.

Resettlement Benefit:

Resettlement benefit is allowed to employees to facilitate them to settle down upon retirement.

Ex gratia Scheme:

Ex-gratia is payable to those employees who have retired before January 01, 2007 and either not drawing pension from superannuation benefit fund (as they superannuated prior to January 01, 1987, i.e. introduction of superannuation benefit fund scheme in IndianOil) or are drawing a pension lower than the ex gratia fixed for a Grade (in such case differential amount between pension and ex gratia is paid).

Employees Compensation for injuries arising out of or during the course of employment:

Employees covered under the Employees'' Compensation Act, 1923 who meet with accidents, while on duty, are eligible for compensation under the said Act. Besides, a lumpsum monetary compensation equivalent to 100 months'' Pay (BP DA) is paid in the event of an employee suffering death or permanent total disablement due to an accident arising out of and in the course of his employment.

Felicitation of Retired Employees:

The company has a scheme to felicitate retired employees on attaining different age milestones with a token lumpsum amount.

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

Each employee is entitled to get 8 earned leaves for each completed quarter of service. Encashment of earned leaves is allowed during service leaving a minimum balance of 15 days subject to maximum accumulation of 300 days. In addition, each employee is entitled to get 5 sick leaves (in lieu of 10 Half Pay Leave) at the end of every six months. The entire accumulation of sick leave is permitted for encashment only at the time of retirement. DPE had clarified earlier that sick leave cannot be encashed, though Earned Leave (EL) and Half Pay Leave (HPL) could be considered for encashment on retirement subject to the overall limit of 300 days. Ministry of Petroleum and Natural Gas (MoPNG) has advised the company to comply with the said DPE Guidelines. However, in compliance to the DPE guidelines of 1987 which had allowed framing of own leave rules within broad parameters laid down by the Government and keeping in view operational complications and service agreements the company had requested concerned authorities to reconsider the matter. Subsequently, based on the recommendation of the 3rd Pay Revision Committee, DPE in its guidelines on pay revision, effective from January 01, 2017 has inter-alia allowed CPSEs to frame their own leave rules considering operational necessities and subject to conditions set therein. The requisite conditions are fully met by the company.

Long Service Award:

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded with amounts based on the length of service completed. It is a mode of recognizing long years of loyalty and faithful service in line with Bureau of Public Enterprises (currently DPE) advice vide its DO No. 7(3)/79-BPE (GM.I) dated February 14, 1983. On receipt of communication from MoPNG advising us that the issue of Long Service Award has been made into an audit para in the Annual Report of CAG of 2019, the Corporation has been clarifying its position to MoPNG individually as well as on industry basis as to how Long Service Awards are not in the nature of Bonus or Ex-gratia or honorarium and is emanating from a settlement with the unions under the Industrial Dispute Act as well as with the approval of the Board in line with the DPE''s advice of 1983. The matter is being pursued with MoPNG for resolution. Pending this the provision is in line with Board approved policy.

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

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

NOTE-36: COMMITMENTS AND CONTINGENCIES

A. Leases (a) As Lessee

The Company has entered into various material lease arrangements (including in substance lease arrangements) such as lands and buildings for the purpose of its plants, facilities, offices, retail outlet etc., storage tankages facility for storing petroleum products, time charter arrangements for transportation of crude and petroleum products, transportation agreement for dedicated tank trucks for road transportation of petroleum products, handling arrangement with CFA for providing dedicated storage facility and handling lubes, supply of utilities like Hydrogen, Oxygen, Nitrogen and Water,way leave licences and port facilities among others.

There are no significant sale and lease back transactions and lease agreements entered by the Company do not contain any material restrictions or covenants imposed by the lessor upto the current reporting period.

Details of significant leases entered by the Company (including in substance leases) are as under:

1. BOOT Agreement in respect of Tankages facility at Paradip for a period of 15 years. Lessor will transfer ownership to IOCL after 15 years at Nil value.

2. BOOT Agreement in respect of Water Intake facility at Paradip for a period of 25 years. Lessor will transfer ownership to IOCL after 25 years at H 0.01 crore.

3. Leasehold lands from government for the purpose of plants, facilities and offices for the period 30 to 90 years.

4. Agreements with vessel owners for hiring of dedicated time charter vessels for transportation of Company''s crude and petroleum products, these are classified as Transport Equipments.

5. BOO Agreement for supply of oxygen and nitrogen at Panipat Refinery. The land is owned by IOCL and the plant is being operated by contractor for supply of oxygen and nitrogen to IOCL.

6. BOO Agreement for leasing of Nitrogen & Hydrogen Plant at Paradip for 15 years .

7 BOOT Agreement for leasing of Quality Control Lab at Paradip for 10 years. Lessor will transfer the Assets after 10 years at H 0.01 crore.

8. BOO Agreement for supply of Oxygen and Nitrogen Gas to IOCL Ethylene Glycol project at Paradip Refinery for a period of 20 years.

9. Arrangements with Adani Ports and Special Economic Zone Limited related to port facilities at Mundra for a period of 25 years and 11 months.

10. Arrangements with Adani Ports and Special Economic Zone Limited related to land for a period of 8 years and 2 months for setting up tank farm at Mundra Port, Gujarat for storing crude oil.

11. Arrangement for lease of land for operating Retail Outlets for sale of Petroleum products, setting up terminals/Bottling plant/ Lube Blending plant for storing petroleum products/bottling LPG/Manufacturing Lubes respectively.

12. CFA handling arrangement with CFAs for providing dedicated storage facility for handling lubes.

13. Arrangements with Tank truck operators for providing dedicated tank trucks for transportation of company''s petroleum products.

14. Arrangement for dedicated storage tanks for storing Company''s petroleum products at various locations.

As per requirement of the standard, maturity analysis of Lease Liabilities have been shown separately from the maturity analysis of

other financial liabilities under Liquidity Risk-Note 40: Financial Instruments & Risk Factors.

Details of items of future cash outflows which the Company is exposed as lessee but are not reflected in the measurement

of lease liabilities are as under:

(i) Variable Lease Payments

Variable lease payments that depend on an index or a rate are to be included in the measurement of lease liability although not paid at the commencement date. As per general industry practice, the Company incurs various variable lease payments which are not based any index or rate (variable based on kms covered or % of sales etc.) and are recognized in profit or loss and not included in the measurement of lease liability. Details of some of the arrangements entered by the Company which contain variable lease payments are as under:

1. Transportation arrangement based on number of kms covered for dedicated tank trucks with different operators for road transportation of petroleum, petrochemical and gas products.

2. Leases of Land of Retail Outlets based on Sales volume.

3. Rent for storage tanks for petroleum products on per day basis.

4. Payment of VTS software and VSAT equipment based on performance of equipment.

5. Payment of SD WAN equipment & software based on performance of equipment.

(ii) Extension and Termination Options

The Company lease arrangements includes extension options only to provide operational flexibility. Company assesses at every lease commencement whether it is reasonably certain to exercise the extension options and further reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control. However, where Company has the sole discretion to extend the contract such lease term is included for the purpose of calculation of lease liabilities.

The Company has the sole discretion to terminate the lease in case of lease agreement for Retail Outlets. However, Company is reasonably certain not to exercise the option in view of significant improvement and prominent importance of Retail to the entity''s operations. Accordingly, such lease term without any effect of termination is considered for the purpose of calculation of lease liabilities.

(iii) Residual Value Guarantees

The Company have entered into various BOOT agreements wherein at the end of lease term the leased assets will be transferred to the company at Nominal value which has no significant impact on measurement of lease liabilities.

(iv) Committed leases which are yet to commence

1. The Company has entered into lease agreement on BOO basis for supply of Hydrogen and Nitrogen gas to Barauni Refinery for a period of 20 years. IOCL has sub leased the land for the construction of the plant. Lease will commence once plant is commissioned.

2. The Company has paid Advance Upfront Premium of H 72.56 crore to CIDCO for land for 3 Retail outlets at Mumbai for the period of 60 years. The agreement is yet to be executed and therefore the amount is lying as Capital Advance and shall form part of ROU Assets once lease is commenced.

3. The Company has paid Advance Upfront Premium of H 13.42 crore to MSRDC for land for 6 Retail outlets at Aurangabad and Nagpur for the period of 30 years. Out of this the agreement is yet to be executed for 1 RO with upfront premium of H 4.33 crore and therefore the amount is lying as Capital Advance and shall form part of ROU Assets once lease is commenced.

4. The Company has entered into lease agreement for sourcing e-locks from various vendors for a period of 3 years (with an option to extend at the option of IOCL) at rate ranging from H 1200-1400/month and for 1 vendor H 2450/month. As at March 31, 2023, 3022 no''s are yet to be supplied. However, the same are low value items.

5. The Company has entered into lease agreement with Andhra Pradesh State Civil Supplies for land for 1 Retail Outlet at Vizag for a period of 20 years at an monthly rental of H 20000/- with an increment of 10% in every 3 years. The possession of land is not given and the matter is pending in the court.

6. The Company has entered into centralised lease agreement with M/s Trimble for rent payment of H373/month for VTS software for POL trucks customised to IOCL requirement for a period of 5 years. As at March 31, 2023 total 3354 Nos are yet to be installed. However, payment is in the nature of variable lease payment.

7 The Company has entered into lease agreement with various vendors for VTS software of LPG trucks for a period of 5 years

at a rental ranging from H 108-256/month. As at March 31, 2023 a total of 1976 nos. of VTS are yet to be installed. However,

payment is in the nature of variable lease payment.

8. The Company has entered into lease agreement with M/s Fox Solutions Pvt Ltd for IoT software & equipments for Swagat

RO''s for a period of 3 years at a rental of H4950/month. As at March 31, 2023 a total of 109 nos. of equipments are yet to be installed. However, the same are low value items.

9. The Company has entered into lease agreement with M/s Seven Islands Shipping Ltd for hiring time chartered vessels for the period of 2 years to be commenced from the month of Apr''2023.

10. The Company has entered into lease agreement for Supply, Installation and Maintenance of Dual Network Connectivity Solution (SD-WAN Solutions) with Managed Services on rental basis for ROs for a period of 5 years on OPEX Model with monthly rental of H2113/-. Out of selected RO''s, commissioning is pending in 5204 RO''s. However, payment is in the nature of variable lease payment.

11. The Company has entered into lease agreement with NHAI for lease agreements of 12 sites to set up retail outlets in Delhi/ Haryana Region for a period of 15 years with monthly rentals of H1.43 crore for each RO out of which 8 sites are pending for hand over, hence not capitalized as ROU assets & shown as committed leases. The Company has entered into lease agreement with NHAI for lease agreements of 4 sites to set up retail outlets in Rajasthan Region for a period of 15 years with monthly rentals of H 0.68 crore for each RO out of which 2 sites are pending for hand over, hence not capitalized as ROU assets & shown as committed leases.

(ii) Finance Lease

The Company has entered into the following material finance lease arrangements:

(i) The Company has subleased Telematics Equipments to its Fleet Customers. IOCL has classified the sub lease as a finance lease, because the sub-lease is for the whole of the remaining term of the head lease.

(ii) The Company has entered into sublease arrangement of Office Space to PCRA for a period of 3 years. The same has been classified as finance lease as the sub-lease is for the whole of the remaining term of the head lease.

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

(iv) The Company has subleased certain Office Premises to IHB Limited.

B. Contingent Liabilities

B.1 Claims against the Company not acknowledged as debt

Claims against the Company not acknowledged as debt amounting to H 9072.41 crore (2022: H8441.64 crore) are as under:

B.1.1 H110.12 crore (2022: H23.66 crore) being the demands raised by the Central Excise/Customs/Service Tax/GST Authorities including interest of H49.4 crore (2022: H6.67 crore.)

B.1.2 H38.36 crore (2022: H40.21 crore) in respect of demands for Entry Tax from State Governments including interest of H8.62 crore (2022: H8.62 crore).

B.1.3 H1286.26 crore (2022: H1839.50 crore) being the demands raised by the VAT/Sales Tax Authorities including interest of H534.91 crore (2022: H786.26 crore).

B.1.4 H2266.47 crore (2022: H2266.47 crore) in respect of Income Tax demands including interest of H113.34 crore (2022: H113.34 crore).

B.1.5 H5005.96 crore (2022: H3893.39 crore) including H4068.31 crore (2022: H3306.36 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator. This includes interest of H212.93 crore (2022: H86.59 crore).

B.1.6 H365.24 crore (2022: H378.41 crore) in respect of other claims including interest of H2774 crore (2022: H41.44 crore).

The Company has not considered those disputed demands/claims as contingent liabilities, for which, the outflow of resources has been considered as remote. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position. Contingent liabilities in respect of joint operations are disclosed in Note 33B.

B.2 Guarantees excluding Financial Guarantees

B.2.1 The Company has entered into Master Guarantee Agreement, on behalf of its subsidiaries viz. Indoil Global B.V. and Indoil Montney Ltd. for all of its payments and performance obligations under the various Project Agreements entered by the subsidiaries with PETRONAS Carigali Canada B.V and Progress Energy Canada Ltd. (now renamed as Petronas Energy Canada Ltd.). The total amount sanctioned by the Board of Directors is CAD 3924.76 million. The estimated amount of such obligation (net of amount paid) as on 31st March 2023 is H4,150.21 crore - CAD 683.56 million (2022: H 4,336.93 crore - CAD 716.83 million). The sanctioned amount was reduced by CAD 1,462.00 million due to winding down of LNG Plant during 2017

*B.2.2 The Company has issued Corporate Guarantee in favour of three beneficiaries i.e., Bolivarian Republic of Venezuela (Republic), The Corporation Venezolana del Petroleo S.A. and PeTroCarabobo S.A., on behalf of Indoil Netherlands B.V, Netherlands (an associate Company) to fulfil the associate Company''s future obligations of payment of signature bonus / equity contribution / loan to the beneficiaries. The total amount sanctioned by the Board of Directors is USD 424 million. The estimated amount of such obligation (net of amount paid) as on 31st March 2023 is H 3010.33 crore - USD 366.33 million (2022: H 2776.77 crore - USD 366.34 million).

*B.2.3 The Company has issued Corporate Guarantee, on behalf of IndianOil Adani Gas Private Limited (IOAGPL), to the extent of obligations of later company under Performance Bank Guarantee facility provided to IOAGPL by State Bank of India, Canara Bank, Bank of Baroda, Indian Bank, IndusInd Bank, Jammu and Kashmir Bank, Axis Bank and ICICI Bank. The Company''s share of such obligation is estimated at H 3,533.46 crore (2022: H 3533.46 crore).

*B.2.4 The Company has issued Parent Company Guarantee in favour of Abu Dhabi National Oil Company, on behalf of Urja Bharat Pte. Ltd., Singapore (a joint venture company of Company''s subsidiary i.e. IOCL Singapore Pte Ltd) to fulfill the joint venture Company''s future obligations of payment and performance of Minimum Work Programme. The total amount sanctioned by the Board of Directors is USD 89.7 Million. The estimated amount of such obligation (net of amount paid) is H239.95 crore - USD 29.20 million (2022: H 395.66 crore - USD 52.20 million).

* The Company has sought an opinion from Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India on treatment of these as Financial Guarantee. On receipt of the EAC opinion, appropriate effect will be given in the books of account, if required.

B. 3 Other money for which the Company is Contingently Liable

B.3.1 Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

B. 3.2 As on 31.03.2023 company has contingent liability of H 479.08 crore (2022: H 236.85 crore) towards custom duty for capital

goods imported under Manufacturing & Other operation in Warehouse Regulation (MOOWR) scheme against which company has executed and utilised bond amounting to H 143724 crore (2022: H 710.54 crore) which represents three times of the custom duty. The firm liability towards such custom duty shall be contingent upon conditions (Rate of custom duty/decision of company to export, etc) at the time of filing of ex-bond bill of entry at the time of disposal. In case the Company decides to export such capital goods, the associated costs shall not be significant.

C. Commitments

C. 1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account and thus not provided for is H 74493.28 crore (2022: H 53030.96 crore) inclusive of taxes.

* Petronet India Limited is a JV amongst Indian Oil, BPCL, HPCL, RIL, NEL, IL&FS, SBI and ICICI. The company is under winding up and the matter is pending with Official Liquidator since 2018.

@ Petronet CI Ltd. is a JV amongst Indian Oil, PIL, RIL, NEL and BPCL. The company is under winding up and the matter is pending with Official Liquidator since 2006.

# IndianOil has exited the Joint Venture, IndianOil Ruchi Biofuels LLP (M/s IORB) by giving notice of its exit from the LLP to the other JV partner viz. Ruchi Soya Industries Limited (M/s Ruchi) as well as to the LLP on December 26, 2018 stating that it will exit the LLP w.e.f. January 25, 2019. The time frame for completing exit formalities by M/s Ruchi by filing requisite forms with ROC was within 30 days of notice expiry period (i.e., by February 24, 2019) but the same is still pending and IndianOil''s name is appearing on ROC website as Partner in the said LLP, It has been informed that M/s Ruchi was under Corporate Insolvency Resolution Process and has been taken over by Patanjali Ayurveda Limited, , and for the purpose of carrying out the process of liquidation, M/s. Sanatan has been inducted as the new partner in place of Indian Oil. All necessary documents have been provided to M/s Ruchi for completing formalities relating to exit of IndianOil from IORB LLP,

$ The Board of IndianOil at its meeting held on 23.11.2022 has accorded in-principle approval for disinvestment of Hindustan Urvarak & Rasayan Limited.

AA The Board of IndianOil at its meeting held on 14.03.2023 has accorded in-principle approval for closure of Ujjwala Plus Foundation.

@@ Cauvery Basin Refinery and Petrochemicals Limited (CBRPL) has been incorporated on 6th January 2023 as a Joint Venture of Indian Oil and Chennai Petroleum Corporation Limited each holding 25% equity and balance by seed equity investors, for construction of new 9 MMTPA refinery at Cauvery Basin Nagapattinam. IndianOil has made equity contribution of 25% stake in Cauvery Basin Refinery and Petrochemicals Limited during the month of March 2023.

1, The management has assessed that fair values of Trade Receivables, Trade Payables, Cash and Cash Equivalents, Bank Balances & Bank Deposits, Loans (incl. Security Deposits) other than mentioned above, Short Term Borrowings (incl. Current Maturities of Long Term Borrowings), Floating Rate Borrowings, Lease Liabilities, Other Non-Derivative Current/Non-Current Financial Assets & Other Non-Derivative Current/Non-Current Financial Liabilities approximate their carrying amounts.

2. During the year, the management has re-assessed viability of the project being carried out by Suntera Nigeria 205 Limited. Due to uncertainty involved in carrying out operations and non-utilisation of available reserves of Block - OML 142, the management has assessed the fair value of investment and loan advanced to Suntera Nigeria 205 Limited as NIL.

Methods and Assumptions

The following methods and assumptions were used to estimate the fair values at the reporting date:

A. Level 1 Hierarchy:

(i) Quoted Equity Shares: Closing quoted price (unadjusted) in National Stock Exchange of India Limited

(ii) Quoted Government Securities: Closing published price (unadjusted) in Clearing Corporation of India Limited

(iii) Foreign Currency Bonds - US Dollars: Closing price (unadjusted) for the specific bond collected from active market

B. Level 2 Hierarchy:

(i) Derivative Instruments at FVTPL: Replacement cost quoted by institutions for similar instruments by employing use of market observable inputs.

(ii) Hedging Derivatives at FVTOCI: Replacement cost quoted by institutions for similar instruments by employing use of market observable inputs.

(iii) Loans to employees: Discounting future cash flows using rates currently available for items on similar terms, credit risk and remaining maturities, adjusted for insignificant unobservable inputs specific to such loan like principal and interest repayments are such that employee get more flexibility in repayment as per the respective loan schemes.

(iv) Non-Convertible Debentures, Loan from Odisha Government and USD 100 Mn Term Loan: Discounting future cash flows using rates currently available for items on similar terms, credit risk and remaining maturities (Excluding floating rate borrowings).

C. Level 3 Hierarchy:

(i) Unquoted Equity Instruments: Fair values of the unquoted equity shares have been estimated using Market Approach of valuation techniques with the help of external valuer. Valuation as per this technique is determined by comparing the company''s accounting ratios with another company''s of the same nature and size which are considered to be significant to valuation, such as earnings, cash flow, book value, or sales of various business of the same nature. The probabilities of the various estimates within the range can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments.

(ii) Non Convertible Redeemable Preference Shares, Compulsorily Convertible Debentures (CCDs): Fair value of Preference shares, CCDs is estimated with the help of external valuer by discounting future cash flows. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.

1. Loan to Employees

As per the terms of service, the Company has given long term loan to its employees at concessional interest rate. Transaction price is not fair value because loans are not extended at market rates applicable to employees. Since implied benefit is on the basis of the services rendered by the employee, it is deferred and recognized as employee benefit expense over the loan period.

2. PMUY loan

The PMUY loan is the interest free loan given to PMUY beneficiaries towards cost of burner and 1st refill. The loan is interest free and therefore transaction price is not at fair value. The difference between fair value and transaction price is accumulated in Deferred expenses and amortized over the loan period on straight line basis in the Statement of Profit and Loss.

Financial Liabilities

1. Security Deposits

In case certain deposits payable to deceased employees under one of the superannuation benefit scheme (R2 option) and security deposits received in relation to some revenue expenses contracts, transaction price is not considered as fair value because deposits are interest free. The difference between fair value and transaction price is accumulated in Deferred income and amortized over the tenure of security deposit on straight line basis in the Statement of Profit and Loss.

NOTE - 40: FINANCIAL INSTRUMENTS AND RISK FACTORS

Financial Risk Factors

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

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

The Risk Management Commitee comprised of senior management oversees the management of these risks. The Company''s senior management is supported by a Risk Management Compliance Board that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Board that the Company''s risks are governed by appropriate policies and procedures and that risks are identified, measured and managed in accordance with the Company''s policies, risk objectives and risk appetite.

The Company''s requirement of crude oil are managed through integrated function handled through its international trade and optimization department, All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision, As per the Company''s policy, derivatives contracts are taken only to hedge the various risks that the Company is exposed to and not for speculation purpose,

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

A. Market risk

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

The sensitivity analysis in the following sections relate to the position as at March 31, 2023 and March 31, 2022,

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

1. Interest Rate Risk

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

The Company manages to maintain a mix between fixed and floating rates for rupee and foreign currency loans, based on liquidity, availability of cost effective instruments and considering the market/regulatory constraints etc, The Company also use interest rate swap contracts for managing the interest rate risk of floating interest rate debt, As at March 31, 2023 approximately 38% of the Company''s borrowings are at a fixed rate of interest (March 31, 2022: 55%),

As the publication of USD LIBOR benchmark will be phased out by the end of June 2023, the Company has adopted various strategies like pre-payment and refinancing of existing instruments during the past couple of years for smooth transitioning from USD LIBOR benchmark, For pending loan instruments, the Company has already commenced discussion with the existing lenders for transition to alternate reference rate, viz,, SOFR, However, the Company is not expecting any material financial impact of transition from USD LIBOR to SOFR on its floating rate loans linked to USD LIBOR and associated derivative contracts which are maturing beyond 30th June 2023,

2. Foreign Currency Risk

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

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

The Company has outstanding forward contract of H 2,473,89 crore as at March 31, 2023 (March 31, 2022: H 3,610,54 crore) which has been undertaken to hedge its exposure to borrowings and other financial liabilities,

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

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

3. Commodity Price Risk

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

(ii) Hedging activities

The primary risks managed using derivative instruments are commodity price risk, foreign currency risk and interest rate risk. Commodity Price Risk

IndianOil buys crude and sells petroleum products linked to international benchmark prices and these benchmark prices do not move in tandem. This exposes IndianOil to the risk of variation in refining margins which is managed by margin hedging.

The risk of fall in refining margins of petroleum products in highly probable forecast sale transactions is hedged by undertaking crack spread forward contracts. The Company wants to protect the realization of margins and therefore to mitigate this risk, the Company is taking these forward contracts to hedge the margin on highly probable forecast sale in future. Risk management activities are undertaken in OTC market i.e. these are the bilateral contracts with registered counterparties.

All these hedges are accounted for as cash flow hedges.

Foreign Currency Risk

4. Equity Price Risk

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

At the reporting date, the exposure to unlisted equity securities at fair value was H982.14 crore. Sensitivity analysis of these investments have been provided in Note 39.

The exposure to listed equity securities valued at fair value was H17,970.96 crore. An increase/decrease of 5% on the NSE market index could have an impact of approximately H898.55 crore on the OCI and equity attributable to the Company. These changes would not have an effect on profit or loss.

5. Derivatives and Hedging

(i) Classification of derivatives

The Company is exposed to certain market risks relating to its ongoing business operations as explained above.

Derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives do not meet the hedge accounting criteria, they are accounted for at fair value through profit or loss.

The Company is exposed to various foreign currency risks as explained in A.2 above. As per Company''s Foreign Currency & Interest Rate Risk Management Policy, the Company is required to fully hedge the short term foreign currency loans (other than revolving lines and PCFC loans) and at least 50% of the long term foreign currency loans based on market conditions.

Apart from mandatory hedging of loans, the Company also undertakes foreign currency forward contracts for the management of currency purchase for repayment of crude/product liabilities based on market conditions and requirements. The above hedgings are undertaken through delivery based forward contracts.

All these hedges are accounted for as cash flow hedges.

Interest Rate Risk

The Company is exposed to interest rate risks on floating rate borrowings as explained in A.1 above. Company hedges interest rate risk by taking interest rate swaps as per Company''s Interest Rate Risk Management Policy based on market conditions. The Company uses interest rate derivatives to hedge exposure to interest payments for floating rate borrowings denominated in foreign currencies.

All these hedges are accounted for as cash flow hedges.

Hedge Effectiveness

There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange and commodity forward contracts match the terms of hedge items. The Company has established a hedge ratio of 1:1 for the he


Mar 31, 2022

A. i) Freehold Land includes J 1.61 crore (2021: H 1.61 crore) lying vacant due to title disputes/ litigation.

ii) Out of the Freehold land measuring 1364.01 acres at Mathura and Agra regions, land measuring 50 acres (approx) has been acquired by NHAI as a part of the NH2 widening project for which the determination of value of compensation is pending. Accordingly, the value of land amounting to H 1.18 crore is continued to be included in Freehold land.

iii) Freehold Land includes J 41.75 crore of compensation paid in respect of land at Panipat Refinery as per District and High court orders of earlier dates, which was later quashed by subsequent High Court order dated 18.12.2019. Since, the process of recovery, for compensation already paid, has been stayed by Honble Supreme Court vide order dated 21.09.2020, necessary adjustment shall be made in the cost of the land upon actual recovery, if any.

B. i) Buildings include J 0.01 crore (2021: H 0.01 crore) towards value of 1605 (2021: 1605) Shares in Co-operative Housing

Societies towards membership of such societies for purchase of flats.

ii) Includes Roads, Bridges etc. (i.e. Assets other than Building) of Gross block amounting to J 5122.57 crore (2021: H 4219.39 crore) and net block amounting to J 2834.91 crore (2021: H 2390.91 crore).

C. Depreciation and amortisation for the year includes J 19.09 crore (2021: H 25.86 crore) relating to construction period expenses shown in Note-2.2

D. Railways have claimed transfer of ownership in respect of certain assets provided by the Company at railway premises which has not been accepted by the Company and continue to be part of Property, Plant & Equipment of the Company, WDV of such asset is J 47.97 crore (2021: H 49.28 crore). This includes WDV of assets worth J 17.59 crore (2021: H 17.91 crore) which are being used by other oil companies based on award of tender by Railways. However, considering the right on the assets company, these assets are continued to be reflected as Property, Plant & Equipment.

E. Land and Buildings (Including ROU Asset) include J 733.5 crore (2021: H 1282.78 crore) in respect of which Title/ Lease Deeds are pending for execution or renewal.

F. For details regarding hypothecation/ pledge of assets, refer Note-16. For details regarding ROU Assets, refer Note-36.

G. In accordance with the requirements prescribed under Schedule II to Companies Act, 2013, the Company has adopted useful lives as prescribed in that schedule except in some cases as per point no. 2.4.1 of significant accounting policies (Note-1).

H. During the year, Company has provided an impairment loss in the statement of Profit and Loss under the Head ''Depreciation, Amortisation and Impairment on Tangible Assets'' on windmills in Rajasthan of J 82.55 crore (2021: NIL) considering uncertainty over availment of eligible Renewable Energy Certificates (REC) and retaining tariff of H 3.14/Kwh as per RRECL order dated 05.03.2019.

I. Hitherto, the depreciation was being charged pro-rata on quarterly basis on assets from/ upto the quarter of capitalisation/ disposal. As an improvement in present practice, the company has adopted a shorter time period of monthly grouping for pro-rata depreciation effective from April 01, 2021. The impact on account of above change is reduction in depreciation by J 146.78 crore in FY 2021-22. However, the overall impact over the useful life of asset will be nil.

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

B. A new joint venture is proposed to be formed between IOCL and CPCL with combined equity holding of 50% and balance by strategic / public investors, for construction of new 9 MMTPA refinery at Cauvery Basin Nagapattinam. During the year, NITI Aayog has given approval for formation of joint venture and accordingly, the land and other facilities held by the Company at Narimanam Marketing Terminal which are intended to be transferred to the new Joint Venture are classified under Disposal group.

C. During the year the company has reclassified investment in 101095 Equity shares of Woodlands Multispeciality Hospital Limited with carrying value of J 0.10 crore (2021: H 0.10 crore) as held for sale.

During the year the company has reclassified Assets Held for sale amounting to J 72.99 crore (2021: H 0.09 crore) as Property, Plant and Equipment/ Other Assets based on the plan for disposal of assets.

During the year, the company has recognized impairment loss of J 17.88 crore (2021: H 30.00 crore) on write-down of asset to fair value less costs to sell and the same has been shown in Provision/loss on Other Assets sold or written off under ''Other Expenses'' in the Statement of Profit and Loss.

B. Terms/ Rights attached to Equity Shares

The Company has only one class of equity shares having par value of H 10 each and is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the Company in proportion to the number of equity shares held.

IOC Shares Trust (Shareholder) has waived its right to receive the dividend w.e.f. 02.03.2020.

Nature and Purpose of Reserves

A. Retained Earnings

The retained earnings comprises of general reserve and surplus which is used from time to time to transfer profits by appropriations. Retained earnings is free reserve of the Company and is used for the purposes like issuing bonus shares, buy back of shares and other purposes (like declaring Dividend etc.) as per the approval of Board of Directors. It includes the remeasurement of defined benefit plan as per actuarial valuations which will not be re-classified to statement of profit and loss in subsequent periods.

B. Bond Redemption Reserve

As per the Companies Act 2013, a Bond Redemption Reserve is required to be created for all bonds/ debentures issued by the company at a specified percentage. This reserve is created out of appropriation of profits and is transferred back to general reserve on repayment of bonds for which it is created. In 2019, this requirement was dispensed with in case of public issue/ private placement of debentures by listed companies to NBFCs, Housing Finance Companies and other listed companies.

C. Capital Redemption Reserve

As per the Companies Act 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. Utilization of this reserve is governed by the provisions of the Companies Act 2013.

D. Capital Reserve

Capital Reserve was created through business combinations and shall be utilised as per the provisions of the Companies Act 2013.

E. Insurance Reserve

Insurance Reserve is created by the company with the approval of Board of Directors to mitigate risk of loss of assets not insured with external insurance agencies. H 20.00 crore is appropriated by the company every year to this reserve. The reserve is utilised to mitigate actual losses by way of net appropriation in case any uninsured loss is incurred. Amount of J 0.72 crore (2021: H 8.95 crore) has been utilised for recoupment of uninsured losses.

F. Export Profit Reserve

Amount set aside out of profit from exports for availing income tax benefits u/s 80HHC of the Income tax Act'' 1961 for the Assessment Year 1986-87 to 1988-89. Creation of reserve for claiming deduction u/s 80HHC was dispensed from AY 198990 onwards. In view of settlement of tax dispute with respect to claim under section 80HHC, Export Profit Reserve created in earlier years was no longer required and therefore the balance lying was transferred to General Reserve in FY 2020-21.

G. Fair value of Equity Instruments

This reserve represents the cumulative effect of fair value fluctuations of investments made by the company in equity instruments of other entities. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. This will not be re-classified to the statement of profit and loss in subsequent periods.

H. Fair value of Debt Instruments

This reserve represents the cumulative effect of fair value fluctuations in debt investments made by the company to earn contractual cash flows and are available for sale. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. This amount will be re-classified to the statement of profit and loss in subsequent periods on disposal of respective instruments.

I. Cash Flow Hedge Reserve

The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. Such gains or losses will be reclassified to statement of profit and loss in the period in which the hedged item occurs/ affects the statement of profit and loss.

1. 233118456 shares held under IOC Share Trust (Shareholder) of face value J 233.12 crore (2021: H 233.12 crore) have been netted off from paid up capital. IOC Share Trust have waived its right to receive the Dividend w.e.f. March 02, 2020 and therefore dividend on shares held by IOC Share Trust was neither proposed in the last year nor during the current financial year.

2. The Company has also incurred expenses on distribution of final dividend amounting to J 0.24 crore (2021: H Nil) and on distribution of interim Dividend amounting to J 0.48 crore (2021: H 0.38 crore) which have been debited to equity.

3. The Board of Directors recommended issue of bonus equity shares in the ratio of one equity share of H 10 each for every two equity shares of H 10 each held, subject to approval by the members of the Company. The bonus shares, upon approval, will also be eligible for the final dividend. The Board of Directors also recommended the final dividend of H 3.60 per equity share having face value of H 10/- (pre-bonus), which translates into final dividend of H 2.40 per equity share having face value of H 10/- (post-bonus) for FY 2021-22, subject to approval by the members of the Company.

@ Petronet India Limited is a JV amongst Indian OH, BPCL, HPCL, RIL, NEL, IL&FS, SBI and ICICI. The company is under winding up and the matter is pending with Official Liquidator since 2018.

@@ Petronet CI Ltd. is a JV amongst Indian Oil, PIL, RIL, NEL and BPCL. The company is under winding up and the matter is pending with Official Liquidator since 2006.

# Indian Oil has exited the Joint Venture, IndianOil Ruchi Biofuels LLP (M/s IORB) by giving notice of its exit from the LLP to the other JV partner viz. Ruchi Soya Industries Limited (M/s Ruchi) as well as to the LLP on December 26, 2018 stating that it will exit the LLP w.e.f. January 25, 2019. The time frame for completing exit formalities by M/s Ruchi by filing requisite forms with ROC was within 30 days of notice expiry period (i.e., by February 24, 2019) but the same is still pending and IndianOil name is appearing on ROC website as Partner in the said LLP. It has been informed that M/s Ruchi was under Corporate Insolvency Resolution Process and has been taken over by Patanjali Ayurveda Limited, and for the purpose of carrying out the process of liquidation, M/s. Sanatan has been inducted as the new partner in place of Indian Oil. All necessary documents have been provided to M/s Ruchi for completing formalities relating to exit of IndianOil from IORB LLP

## IndianOil has made equity contribution towards acquisition of 49% stake in Paradeep Plastic Park Limited during the month of January 2022.

Notes:

1. Ujjwala Plus Foundation is a joint venture of IOCL, BPCL and HPCL with fund contribution in the ratio of 50:25:25 which was incorporated as a company limited by guarantee (without share capital) under section 8 of Companies Act, 2013.

2. A subsidiary of the company, Indian Catalyst Private Limited has been dissolved and name has been struck off from the ROC''s register on 25th October 2021.

A. Exploration License expired on October 7, 2015. Consortium has requested Directorate General of Hydrocarbon (DGH) for Appraisal phase, however vide letter dated March 6, 2019, it was opined to carry out Exploration activity instead of Appraisal work. Accordingly, Operator requested DGH for extension of exploration period. Response from DGH is awaited.

B. Appraisal period has expired on February 1,2022. Consortium had requested Directorate General of Hydrocarbon (DGH) for extension. Response from DGH is awaited.

C. The project ''s exploration period ended on 24 June 2009. The contractual arrangement with respect to development of the block could not be finalized so far with Iranian Authorities.

D. Under Force Majeure since May 20, 2014

Frequency

The Proved and Proved & Developed reserves mentioned above are the provisional numbers based on the estimate provided by the operator. For the purpose of estimation of Proved and Proved Developed reserves, Deterministic method has been used by the operator. The annual revision of Reserve Estimates is based on the yearly exploratory and development activities and results thereof.

NOTE - 35 : EMPLOYEE BENEFITS

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

A. Defined Contribution Plans- General Description Employee Pension Scheme (EPS-95) *

During the year, the company has recognised J 30.27 crore (2021: H 32.68 crore) as contribution to EPS-95 in the Statement of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 27/ Construction period expenses in Note-2.2).

Pension Scheme *

During the year, the company has recognised J 514.19 crore (2021: H 449.83 crore) towards Defined Contributory Employees Pension Scheme (including contribution in corporate National Pension System) in the Statement of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 27/ Construction period expenses in Note-2.2).

B. Defined Benefit Plans- General Description Provident Fund: *

The Company''s contribution to the Provident Fund are remitted to the three separate provident fund trusts established for this purpose based on a fixed percentage of the eligible employee''s salary and charged to the Statement of Profit and Loss. Shortfall of net income of trust below Government specified minimum rate of return, if any, and loss to the trust due to its investments turning stressed are being made good by the Company. Actuarial valuation was carried out in this regard and H 350.10 crore (2021: H 132.02 crore) has been provided by the company towards interest shortfall/ losses of PF trusts.

Gratuity: *

Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount based on completed tenure of service subject to maximum of H 0.20 crore at the time of separation from the company. Besides, the ceiling of gratuity increases by 25% whenever IDA rises by 50% with reference to January 01, 2017.

Post Retirement Medical Benefit Facility (PRMBF): *

PRMBF provides medical coverage to retired employees and their eligible dependant family members.

During the year, the Company has contributed H 767.13 crore in respect of services prior to 01.01.2007 for employees on-roll as on that date based on actuarial certificate and as approved by Board. The contribution to the extent of H 643.89 crore has been adjusted in Other Comprehensive Income against amount shown as recoverable advance towards PRMB trust in earlier years.

Resettlement Benefit:

Resettlement benefit is allowed to employees to facilitate them to settle down upon retirement.

Ex gratia Scheme:

Ex-gratia is payable to those employees who have retired before January 01, 2007 and either not drawing pension from superannuation benefit fund (as they superannuated prior to January 01, 1987, i.e. introduction of superannuation benefit fund scheme in IndianOiL) or are drawing a pension lower than the ex gratia fixed for a Grade (in such case differential amount between pension and ex gratia is paid).

Employees Compensation for injuries arising out of or during the course of employment:

Employees covered under the Employees'' Compensation Act, 1923 who meet with accidents, while on duty, are eligible for compensation under the said Act. Besides, a lumpsum monetary compensation equivalent to 100 months'' Pay (BP DA) is paid in the event of an employee suffering death or permanent total disablement due to an accident arising out of and in the course of his employment.

Felicitation of Retired Employees:

The company has a scheme to felicitate retired employees on attaining different age milestones with a token lumpsum amount.

* As per the Guidelines of Department of Public Enterprises (DPE) on Pay Revision, the Company can contribute upto 30% of Basic Pay plus Dearness Allowance of its employees towards superannuation schemes comprising of Provident Fund, Gratuity, Post-Retirement Medical Benefits (PRMBF) and Pension. In this regard, the total charge to Statement of Profit and Loss/ Other Comprehensive Income (OCI) was earlier limited to 30% of Basic pay plus Dearness Allowance and balance amount funded was shown as recoverable advance from the company''s contribution towards superannuation benefits including pension schemes. During the current year, these recoverable advances have been adjusted against the contribution for the year including additional contribution to PRMBF towards services prior to 01.01.2007.

C. Other Long-Term Employee Benefits - General Description

Leave Encashment:

Each employee is entitled to get 8 earned leaves for each completed quarter of service. Encashment of earned leaves is allowed during service leaving a minimum balance of 15 days subject to maximum accumulation of 300 days. In addition, each employee is entitled to get 5 sick leaves (in lieu of 10 Half Pay Leave) at the end of every six months. The entire accumulation of sick leave is permitted for encashment only at the time of retirement. DPE had clarified earlier that sick leave cannot be encashed, though Earned Leave (EL) and Half Pay Leave (HPL) could be considered for encashment on retirement subject to the overall limit of 300 days. Ministry of Petroleum and Natural Gas (MOP&NG) has advised the company to comply with the said DPE Guidelines. However, in compliance to the DPE guidelines of 1987 which had allowed framing of own leave rules within broad parameters laid down by the Government and keeping in view operational complications and service agreements the company had requested concerned authorities to reconsider the matter. Subsequently, based on the recommendation of the 3rd Pay Revision Committee, DPE in its guidelines on pay revision, effective from January 01, 2017 has inter-alia allowed CPSEs to frame their own leave rules considering operational necessities and subject to conditions set therein. The requisite conditions are fully met by the company.

Long Service Award:

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded with amounts based on the length of service completed. It is a mode of recognizing long years of loyalty and faithful service in line with Bureau of Public Enterprises (currently DPE) advice vide its DO No. 7(3)/79-BPE (GM.I) dated February 14, 1983. On receipt of communication from MoPNG advising us that the issue of Long Service Award has been made into an audit para in the Annual Report of CAG of 2019, the Corporation has been clarifying its position to MoP&NG individually as well as on industry basis as to how Long Service Awards are not in the nature of Bonus or Ex-gratia or honorarium and is emanating from a settlement with the unions under the Industrial Dispute Act as well as with the approval of the Board in line with the DPE''s advice of 1983. The matter is being pursued with MOP&NG for resolution. Pending this the provision is in line with Board approved policy.

The amount provided during the year on this account is J 17.37 crore (2021: H 18.49 crore) and the payments made to employees during the year is J 26.58 crore (2021: H 25.33 crore). The actuarial liability of H 173.16 crore in this respect as on March 31, 2022 is included under "Provision for Employees Benefit” in "Note 18 - Provisions”.

A. Leases

(a) As Lessee

The Company has entered into various material lease arrangements (including in substance lease arrangements) such as lands and buildings for the purpose of its plants, facilities, offices, retail outlet etc., storage tankages facility for storing petroleum products, time charter arrangements for coastal transportation of crude and petroleum products, transportation agreement for dedicated tank trucks for road transportation of petroleum products, handling arrangement with CFA for providing dedicated storage facility and handling lubes, supply of utilities like Hydrogen, Oxygen, Nitrogen and Water, and port facilities among others.

There are no significant sale and lease back transactions and lease agreements entered by the Company do not contain any material restrictions or covenants imposed by the lessor upto the current reporting period.

Details of significant leases entered by the Company (including in substance leases) are as under;

1. BOOT Agreement in respect of Tankages facility at Paradip for a period of 15 years. Lessor will transfer ownership to IOCL after 15 years at Nil value.

2. BOOT Agreement in respect of Water Intake facility at Paradip for a period of 25 years. Lessor will transfer ownership to IOCL after 25 years at H 0.01 crore.

3. Leasehold lands from government for the purpose of plants, facilities and offices for the period 30 to 90 years.

4. Agreements with vessel owners for hiring of vessels for various tenures, these are classified as Transport Equipments.

5. BOO Agreement for supply of oxygen and nitrogen at Panipat Refinery. The land is owned by IOCL and the plant is being operated by contractor for supply of oxygen and nitrogen to IOCL.

6. BOO Agreement for leasing of Nitrogen & Hydrogen Plant at Paradip for 15 years.

7. BOOT Agreement for leasing of Quality Control Lab at Paradip for 10 years. Lessor will transfer the Assets after 10 years at H 0.01 crore.

8. Arrangements with Adani Ports and Special Economic Zone Limited related to port facilities at Mundra for a period of 25 years and 11 months.

9. Arrangement for lease of land for operating Retail Outlets for sale of Petroleum products, setting up terminals/Bottling plant/Lube Blending plant for storing petroleum products/bottling LPG/Manufacturing Lubes respectively.

10. CFA handling arrangement with CFAs for providing dedicated storage facility for handling lubes.

11. Arrangements with Tank truck operators for providing dedicated tank trucks for transportation of company''s petroleum products.

12. Arrangements for dedicated time charter vessels for coastal transportation of Company''s petroleum products.

13. Arrangement for dedicated storage tanks for storing Company''s petroleum products at various locations.

14. Arrangement for using hookup facilities for supply of gas to its city gas station in Rewa District with Reliance Gas Pipeline Limited for a period of 15 years.

Details of items of future cash outflows which the Company is exposed as lessee but are not reflected in the measurement

of lease liabilities are as under;

(i) Variable Lease Payments

Variable lease payments that depend on an index or a rate are to be included in the measurement of lease liability although not paid at the commencement date. As per general industry practice, the Company incurs various variable lease payments which are not based any index or rate (variable based on kms covered or % of sales etc..) and are recognized in profit or loss and not included in the measurement of lease liability. Details of some of the arrangements entered by the Company which contain variable lease payments are as under;

1. Transportation arrangement based on number of kms covered for dedicated tank trucks with different operators for road transportation of petroleum, petrochemical and gas products.

2. Leases of Land of Retail Outlets based on Sales volume.

3. Rent for storage tanks for petroleum products on per day basis.

4. Payment of VTS software and VSAT equipment based on performance of equipment.

(ii) Extension and Termination Options

The Company lease arrangements includes extension options only to provide operational flexibility. Company assesses at every lease commencement whether it is reasonably certain to exercise the extension options and further reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control. However, where Company has the sole discretion to extend the contract such lease term is included for the purpose of calculation of lease liabilities.

The Company has the sole discretion to terminate the lease in case of lease agreement for Retail Outlets. However, Company is reasonably certain not to exercise the option in view of significant improvement and prominent importance of Retail to the entity''s operations. Accordingly, such lease term without any effect of termination is considered for the purpose of calculation of lease liabilities.

(iii) Residual Value Guarantees

The Company have entered into various BOOT agreements wherein at the end of lease term the leased assets will be transferred to the company at Nominal value which has no significant impact on measurement of lease liabilities.

(iv) Committed leases which are yet to commence

1. The Company has entered into lease agreement on BOO basis for supply of oxygen and nitrogen gas to IOCL Ethylene Glycol Project at Paradip Refinery for a period of 20 years. IOCL has sub leased the land for the construction of the plant. Lease will commence once plant is commissioned.

2. The Company has entered into lease agreement for hiring of one time charter vessels for a period of 2 years to be commenced in the month of April 2022.

3. The Company has entered into lease agreement on BOO basis for supply of Hydrogen and Nitrogen gas to Barauni Refinery for a period of 20 years. IOCL has sub leased the land for the construction of the plant. Lease will commence once plant is commissioned.

4. The Company has paid Advance Upfront Premium of H 71.89 crore to CIDCO for land for 3 Retail outlets at Mumbai for the period of 60 years. The agreement is yet to be executed and therefore the amount is lying as Capital Advance and shall form part of ROU Assets once lease is commenced.

5. The Company has paid Advance Upfront Premium of H 13.42 crore to MSRDC for land for 6 Retail outlets at Aurangabad and Nagpur for the period of 30 years. The agreement is yet to be executed and therefore the amount is lying as Capital Advance and shall form part of ROU Assets once lease is commenced.

6. The Company has entered into lease agreement for sourcing e-locks from various vendors for a period of 3 years (with an option to extend at the option of IOCL) at rate ranging from H 1050-1300/month and for 1 vendor H 2450/ month. As at March 31, 2022, 6215 no''s are yet to be supplied. However, the same are low value items.

7. The Company has entered into lease agreement with Andhra Pradesh State Civil Supplies for land for 1 Retail Outlet at Vizag for a period of 20 years at an monthly rental of H 20000/- with an increment of 10% in every 3 years. The possession of land is not given and the matter is pending in the court.

8. The Company has entered into centralised lease agreement with M/s Trimble for rent payment of H 373/month for VTS software for POL trucks customised to IOCL requirement for a period of 5 years. As at March 31, 2022 total 601 Nos are yet to be installed. However, payment is in the nature of variable lease payment.

9. The Company has entered into lease agreement with M/s Geovista, M/s Rosevmerta for VTS software of LPG trucks for a period of 5 years at a rental ranging from H 103-300/month. As at March 31, 2022 lease a total of 5392 nos. of VTS are yet to be installed. However, payment is in the nature of variable lease payment.

10. The Company has amended the lease agreement entered with Adani Ports and Special Economic Zone Limited, for leasing 120 acres of additional developed land at Mundra Port, up to February 16, 2031, for storage facility. Lease will commence when the land is developed by the provider and the rights for same is transferred to IOCL.

(ii) Finance Lease

The Company has entered into the following material finance lease arrangements:

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

(ii) The Company has subleased Telematics Equipments to its Fleet Customers. IOCL has classified the sub lease as a finance lease, because the sub-lease is for the whole of the remaining term of the head lease.

(iii) The Company has entered into sublease arrangement of Office Space to PCRA for a period of 3 years. The same has been classified as finance lease as the sub-lease is for the whole of the remaining term of the head lease.

(iv) The Company has entered into arrangement with Chandigarh administration for subleasing LPG Godowns to LPG Distributors for a period of 15 years. The same has been classified as finance lease as the sub-lease is for the whole of the remaining term of the head lease.

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

(vi) The Company has subleased certain Office Premises to IHB Limited.

B. Contingent Liabilities

B.1 Claims against the Company not acknowledged as debt

Claims against the Company not acknowledged as debt amounting to J 8,441.64 crore (2021: H 8,069.65 crore) are as under:

B.1.1 J 23.66 crore (2021: H 49.15 crore) being the demands raised by the Central Excise /Customs/ Service Tax Authorities including interest of J 6.67 crore (2021: H 22.43 crore.)

B.1.2 J 40.21 crore (2021: H 42.81 crore) in respect of demands for Entry Tax from State Governments including interest of J 8.62 crore (2021: H 8.61 crore).

B.1.3 J 1,839.5 crore (2021: H 2,033.87 crore) being the demands raised by the VAT/ Sales Tax Authorities including interest of J 7,86.26 crore (2021: H 848.96 crore).

B.1.4 J 2,266.47 crore (2021: H 1,812.86 crore) in respect of Income Tax demands including interest of J 113.34 crore (2021: H 80.15 crore).

B.1.5 J 3,893.39 crore (2021: H 3,837.68 crore) including J 3,306.36 crore (2021: H 3,150.9 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator. This includes interest of J 86.59 crore (2021: H 110.53 crore).

B.1.6 J 378.41 crore (2021: H 293.28 crore) in respect of other claims including interest of J 41.44 crore (2021: H 25.22 crore).

The Company has not considered those disputed demands/claims as contingent liabilities, for which, the outflow of resources has been considered as remote. Contingent liabilities in respect of joint operations are disclosed in Note 33B.

B.2 Guarantees excluding Financial Guarantees

B.2.1 The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporation Venezolana del Petroleo S.A. and PeTroCarabobo S.A., on behalf of Indoil Netherlands B.V., Netherlands (an associate Company) to fulfill the associate Company''s future obligations of payment of signature bonus / equity contribution / loan to the beneficiaries. The total amount sanctioned by the Board of Directors is USD 424 million. The estimated amount of such obligation (net of amount paid) is J 2,776.77 crore - USD 366.34 million (2021: H 2,678.71 crore -USD 366.37 million).

B.2.2 The Company has entered into Master Guarantee Agreement, on behalf of its subsidiaries viz. Indoil Global B.V. and Indoil Montney Ltd. for all of its payments and performance obligations under the various Project Agreements entered by the subsidiaries with PETRONAS Carigali Canada B.V. and Progress Energy Canada Ltd. (now renamed as Petronas Energy Canada Ltd.). The total amount sanctioned by the Board of Directors is CAD 3,924.76 million. The estimated amount of such obligation (net of amount paid) is J 4,336.93 crore - CAD 716.83 million (2021: H 4,332.44 crore - CAD 746.55 million). The sanctioned amount was reduced by CAD 1,462.00 million due to winding down of LNG Plant during 2017.

B.2.3 The Company has issued Corporate Guarantee, on behalf of IndianOil Adani Gas Private Limited (IOAGPL), to the extent of obligations of later company under Performance Bank Guarantee facility provided to IOAGPL by State Bank of India, Canara Bank, Bank of Baroda, Indian Bank, IndusInd Bank, Jammu and Kashmir Bank, Axis Bank and ICICI Bank. The Company''s share of such obligation is estimated at J 3,533.46 crore (2021: H 3,533.46 crore).

B.2.4 The Company has issued Parent Company Guarantee in favor of Abu Dabhi National Oil Company, on behalf of Urja Bharat Pte. Ltd., Singapore (a joint venture company of Company''s subsidiary i.e. IOCL Singapore Pte Ltd) to fulfill the joint venture Company''s future obligations of payment and performance of Minimum Work Programme. The total amount sanctioned by the Board of Directors is USD 89.7 Million. The estimated amount of such obligation (net of amount paid) is J 395.66 crore - USD 52.20 million (2021: H 418.22 crore - USD 57.20 million).

B. 3 Other money for which the Company is Contingently Liable

B.3.1 Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any, payable to the land owners and the Government for certain lands acquired.

B.3.2 As on 31.03.2022 company has contingent liability of J 236.85 crore (2021: Nil) towards custom duty for capital goods imported under Manufacturing & Other operation in Warehouse Regulation (MOOWR) scheme against which company has executed and utilised bond amounting to J 710.54 crore (2021: Nil) which represents three times of the custom duty. The firm liability towards such custom duty shall be contingent upon conditions (Rate of custom duty/decision of company to export, etc) at the time of filing of ex-bond bill of entry at the time of disposal.

C. Commitments

C.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account and thus not provided for is J 53,030.96 crore (2021: H 30,538.25 crore) inclusive of taxes.

C.2 Other Commitments

Estimated amount of commitments in respect of CY-ONHP-2018/1 block is J 146.83 crore (2021: H 141.64 crore). Commitments in respect of Joint Operations are disclosed in Note 33B.

D. Contingent assets

(J in crore)

Particulars

March 31, 2022

March 31, 2021

a In respect of M/s Khazana Projects and Industries (P) Ltd. for the amount of risk & cost claim along with 15% supervision charges admitted by the Arbitrator in favour of the Company.

A

-

3.85

b In respect of M/s Metro Builders for the amount of risk & cost claim along with 15% supervision charges, price discount and interest admitted by the Arbitrator in favour of the Company.

7.16

c In respect of interest claim

19.50

-

Total

19.50

11.01

A. The disclosure as a contingent asset has been discontinued, based on reassessment of the realisablity of this claim in the current year.

The management has assessed that fair values of Trade Receivables, Trade Payables, Cash and Cash Equivalents, Bank

Balances & Bank Deposits, Loans (inch Security Deposits) other than mentioned above, Short Term Borrowings (inch Current

Maturities of Long Term Borrowings), Floating Rate Borrowings, Lease Liabilities, Other Non-Derivative Current/ Non-Current

Financial Assets & Other Non-Derivative Current/ Non-Current Financial Liabilities approximate their carrying amounts.

METHODS AND ASSUMPTIONS

The following methods and assumptions were used to estimate the fair values at the reporting date:

A. Level 1 Hierarchy:

(i) Quoted Equity Shares: Closing quoted price (unadjusted) in National Stock Exchange of India Limited

(ii) Quoted Government Securities: Closing published price (unadjusted) in Clearing Corporation of India Limited

(iii) Foreign Currency Bonds - US Dollars: Closing price (unadjusted) for the specific bond collected from active market

B. Level 2 Hierarchy:

(i) Derivative Instruments at FVTPL: Replacement cost quoted by institutions for similar instruments by employing use of market observable inputs.

(ii) Hedging Derivatives at FVTOCI: Replacement cost quoted by institutions for similar instruments by employing use of market observable inputs.

(iii) Loans to employees: Discounting future cash flows using rates currently available for items on similar terms, credit risk and remaining maturities, adjusted for insignificant unobservable inputs specific to such loan like principal and interest repayments are such that employee get more flexibility in repayment as per the respective loan schemes.

(iv) Non-Convertible Debentures, Foreign Currency Bonds - Singapore Dollars , Loan from Odisha Government and

USD 100 Mn Term Loan: Discounting future cash flows using rates currently available for items on similar terms, credit risk and remaining maturities (Excluding floating rate borrowings).

(v) Term Loans from Oil Industry Development Board (OIDB): Discounting future cash flows using rates currently available for similar type of borrowings (OIDB Borrowing Rate) using exit model as per Ind AS 113.

C. Level 3 Hierarchy:

(i) Unquoted Equity Instruments: Fair values of the unquoted equity shares have been estimated using Market Approach of valuation techniques with the help of external valuer. Valuation as per this technique is determined by comparing the company''s accounting ratios with another company''s of the same nature and size which are considered to be significant to valuation, such as earnings, cash flow, book value, or sales of various business of the same nature. The probabilities of the various estimates within the range can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments.

(ii) Non Convertible Redeemable Preference Shares, Compulsorily Convertible Debentures (CCDs) and Loan to Related parties - Suntera: Fair value of Preference shares, CCDs and Loan to Suntera is estimated with the help of external valuer by discounting future cash flows. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.

(iii) PMUY Loan: Fair value of PMUY loans is estimated by discounting future cash flows using approximate interest rates applicable on loans given by Banks duly adjusted for significant use of unobservable inputs in estimating the cash flows comprising of specific qualitative and quantitative factors like consumption pattern, assumption of subsidy rate etc.

II. Disclosures relating to recognition of differences between the fair value at initial recognition and the transaction price

In the following cases, the Company has not recognized gains/losses in profit or loss on initial recognition of financial assets/ financial liability, instead, such gains/losses are deferred and recognized as per the accounting policy mentioned below.

Financial Assets

1. Loan to Employees

As per the terms of service, the Company has given long term loan to its employees at concessional interest rate. Transaction price is not fair value because loans are not extended at market rates applicable to employees. Since implied benefit is on the basis of the services rendered by the employee, it is deferred and recognised as employee benefit expense over the loan period.

2. PMUY loan

The PMUY loan is the interest free loan given to PMUY beneficiaries towards cost of burner and 1st refill. The loan is interest free and therefore transaction price is not at fair value. The difference between fair value and transaction price is accumulated in Deferred expenses and amortized over the loan period on straight line basis in the Statement of Profit and Loss.

Financial Liabilities 1. Security Deposits

In case certain deposits payable to deceased employees under R2 option and security deposits received in relation to some revenue expenses contracts, transaction price is not considered as fair value because deposits are interest free. The difference between fair value and transaction price is accumulated in Deferred income and amortized over the tenure of security deposit on straight line basis in the Statement of Profit and Loss.

Financial Risk Factors

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

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

The Risk Management Commitee comprised of senior management oversees the management of these risks. The Company''s senior management is supported by a Risk Management Compliance Board that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Board that the Company''s risks are governed by appropriate policies and procedures and that risks are identified, measured and managed in accordance with the Company''s policies, risk objectives and risk appetite.

The Company''s requirement of crude oil are managed through integrated function handled through its international trade and optimization department. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. As per the Company''s policy, derivatives contracts are taken only to hedge the various risks that the Company is exposed to and not for speculation purpose.

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

A. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The major components of market risk are interest rate risk, foreign currency risk, commodity price risk and

other price risk viz. equity shares etc. Financial instruments affected by market risk include Borrowings, Deposits, FVTOCI investments and derivative financial instruments.

The sensitivity analysis in the following sections relate to the position as at March 31, 2022 and March 31, 2021.

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

1. Interest Rate Risk

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

The Company manages to maintian a mix between fixed and floating rates for rupee and foreign currency loans, based on liquidity, availability of cost effective instruments and considering the market/ regulatory constraints etc. The Company also use interest rate swap contracts for managing the interest rate risk of floating interest rate debt. As at March 31, 2022, approximately 55% of the Company''s borrowings are at a fixed rate of interest (March 31, 2021: 63%).

In 2017 Financial Conduct Authority ("FCA”) of UK, the regulator of the LIBOR rates, announced LIBOR benchmark will be phased out after end of December 2021. Subsequently, on 5th March 2021 ICE Benchmark Administrator (IBA), the administrator of the LIBOR rates and FCA formally announced the extension of the last date of publication of USD LIBOR for overnight, one, three, six and twelve month tenors from end of December 2021 to end of June 2023 to accommodate easy transition of existing USD LIBOR based contracts to alternate benchmark. However, the liquidity of SOFR loans in ECB loan market started to develop only towards the fag end of the Year 2021. The Company is not expecting any material financial impact of transition from USD LIBOR to SOFR on its floating rate loans linked to USD LIBOR and associated derivative contracts which are maturing beyond 30th June 2023.

The company''s exposure to LIBOR transition is only in respect of USD LIBOR as IndianOil''s entire foreign currency borrowing is US Dollar denominated. IndianOil has been exploring various strategies of transitioning its existing USD LIBOR benchmarked loans into the alternate reference rate, viz., SOFR. IndianOil is the first Corporate in India to tie-up long term USD loan using SOFR as benchmark. Further, IndianOil also went ahead of the curve and transitioned part of existing LIBOR linked loan to SOFR benchmark during FY 2021-22 by refinancing the existing loan. The Company has initiated the process of discussion with the existing lenders of the loans for transition.

2. Foreign Currency Risk

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

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

The Company has outstanding forward contract of J 3,610.54 crore as at March 31, 2022 (March 31, 2021: H Nil) which has been undertaken to hedge its exposure to borrowings and other financial liabilities.

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

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

3. Commodity Price Risk

The Company is exposed to various commodity price related risk such as Refinery Margins i.e. Differential between the prices of petroleum products & crude oil, Crude Oil Price fluctuation on accounts of inventory valuation fluctuation and crude oil imports etc. As per approved risk management policy, the Company can undertake refinery margin hedging,

4. Equity Price Risk

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

At the reporting date, the exposure to unlisted equity securities at fair value was J 926.22 crore. Sensitivity analysis of these investments have been provided in Note 39.

The exposure to listed equity securities valued at fair value was J 19,145.62 crore. An increase / decrease of 5% on the NSE market index could have an impact of approximately J 957.28 crore on the OCI and equity attributable to the Company. These changes would not have an effect on profit or loss.

5. Derivatives and Hedging

(i) Classification of derivatives

The Company is exposed to certain market risks relating to its ongoing business operations as explained above.

Derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives do not meet the hedge accounting criteria, they are accounted for at fair value through profit or loss. Information about the derivatives used by the Company and outstanding as at the end of the financial year is provided below:

(ii) Hedging activities

The primary risks managed using derivative instruments are commodity price risk, foreign currency risk and interest rate risk. Commodity Price Risk

IndianOiL buys crude and sells petroleum products linked to international benchmark prices and these benchmark prices do not move in tandem. This exposes IndianOiL to the risk of variation in refining margins which is managed by margin hedging.

The risk of fall in refining margins of petroleum products in highly probable forecast sale transactions is hedged by undertaking crack spread forward contracts. The Company wants to protect the realization of margins and therefore to mitigate this risk, the Company is taking these forward contracts to hedge the margin on highly probable forecast sale in future. Risk management activities are undertaken in OTC market i.e. these are the bilateral contracts with registered counterparties.

All these hedges are accounted for as cash flow hedges.

Foreign Currency Risk

The Company is exposed to various foreign currency risks as explained in A.2 above. As per Company''s Foreign Currency & Interest Rate Risk Management Policy , the Company is required to fully hedge the short term foreign currency loans (other than revolving lines and PCFC loans) and at least 50% of the long term foreign currency loans based on market conditions.

Apart from mandatory hedging of loans, the Company also undertakes foreign currency forward contracts for the management of currency purchase for repayment of crude/ product LiabiLities based on market conditions and requirements. The above hedgings are undertaken through delivery based forward contracts.

All these hedges are accounted for as cash flow hedges.

Interest Rate Risk

The Company is exposed


Mar 31, 2021

A. i) Freehold Land includes J 1.61 Crore (2020: H 22.38 Crore) lying vacant due to title disputes/ litigation.

ii) Out of the Freehold land measuring 1364.01 acres at Mathura and Agra regions, land measuring 50 acres (approx) has been acquired by NHAI as a part of the NH2 widening project for which the determination of value of compensation is pending. Accordingly, the value of land amounting to J 1.18 Crore is continued to be included in Freehold land.

iii) Freehold Land includes J 41.75 Crore of compensation paid in respect of land at Panipat Refinery as per District and High court orders of earlier dates, which was later quashed by subsequent High Court order dated 18.12.2019. Since, the process of recovery, for compensation already paid, has been stayed by Honble Supreme Court vide order dated 21.09.2020, necessary adjustment shall be made in the cost of the land upon actual recovery, if any.

B. i) Buildings include J 0.01 Crore (2020: H 0.01 Crore) towards value of 1605 (2020: 1605) Shares in Co-operative Housing

Societies towards membership of such societies for purchase of flats.

ii) Includes Roads, Bridges etc. (i.e. Assets other than Building) of Gross block amounting to J 4,219.39 Crore (2020: H 3,547.27 Crore) and net block amounting to J 2,390.91 Crore (2020: H 2,072.21 Crore).

C. During the year J 1,586.03 Crore (2020: H 1,296.54 Crore) has been availed as GST ITC out of capital expenditure on CWIP/ assets.

D. Depreciation and amortisation for the year includes J 25.86 Crore (2020: H 37.64 Crore) relating to construction period expenses shown in Note-2.2

E. Railways have claimed transfer of ownership in respect of certain assets provided by the Company at railway premises which has not been accepted by the Company and continue to be part of Property, Plant & Equipment of the Company, WDV of such assets is J 49.28 Crore (2020: H 51.14 Crore). This includes WDV of assets worth J 17.91 Crore (2020: H 7.82 Crore) which are being used by other oil companies based on award of tender by Railways. However, considering the right on the assets and future commercial interest of the company, these assets are continued to be reflected as Property, Plant & Equipment.

F. Land and Buildings (Including ROU Asset) include J 1,282.78 Crore (2020: H 1,020.43 Crore) in respect of which Title/ Lease Deeds are pending for execution or renewal.

G. For details regarding hypothecation/ pledge of assets, refer Note-16.

H. In accordance with the requirements prescribed under Schedule II to Companies Act, 2013, the Company has adopted useful lives as prescribed in that schedule except in some cases as per point no. 2.4.1 of significant accounting policies (Note-1).

I. The estimated residual value of movable assets provided at the residence of employees for official use under various approved schemes has been revised from 1% of original cost to Nil effective from April, 01, 2020. The impact on account of above change is increase in depreciation by J 1.57 Crore during current year. Overall future impact on the assets existing as on 31.03.2021 will be J 2.58 Crore by way of increase in depreciation over the remaining useful life of these assets, which will be offset by profit/ loss on sale of assets.

J. Leasehold Land (included in ROU Assets) includes an amount of J 716.47 Crore (2020: H 716.41 Crore) for Land Development Cost.

Nature and Purpose of Reserves

A. Retained Earnings

The retained earnings comprises of general reserve and surplus which is used from time to time to transfer profits by appropriations. Retained earnings is free reserve of the Company and is used for the purposes like issuing bonus shares, buy back of shares and other purposes (like declaring Dividend etc.) as per the approval of Board Of Directors. It includes the remeasurement of defined benefit plan as per actuarial valuations which will not be re-classified to statement of profit and loss in subsequent periods.

B. Bond Redemption Reserve

As per the Companies Act 2013, a Bond Redemption Reserve was required to be created for all bonds/ debentures issued by the company at a specified percentage. This reserve is created out of appropriation of profits over the tenure of bonds and will be transferred back to general reserve on repayment of bonds for which it is created.

C. Capital Redemption Reserve

As per the Companies Act 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. Utilisation of this reserve is governed by the provisions of the Companies Act 2013.

D. Capital Reserve

Capital Reserve was created through business combinations and shall be utilised as per the provisions of the Companies Act 2013.

E. Insurance Reserve

Insurance Reserve is created by the company with the approval of Board of Directors to mitigate risk of loss of assets not insured with external insurance agencies. H 20.00 Crore is appropriated by the company every year to this reserve. The reserve is utilised to mitigate actual losses by way of net appropriation in case any uninsured loss is incurred. Amount of H 8.95 Crore (2020 : NIL) has been utilised for recoupment of uninsured losses.

F. Export Profit Reserve

Amount set aside out of profits from exports for availing income tax benefits u/s 80HHC of the Income Tax Act, 1961 for the Assessments Years 1986-87 to 1988-89. Creation of reserve for claiming deduction u/s 80HHC was dispensed from AY 198990 onwards. In view of settlement of tax dispute with respect to claim under Section 80HHC, Export profit reserve created in earlier year is no longer required and therefore the balance lying has been transfered to General Reserve.

G. Corporate Social Responsibility Reserve

Corporate Social Responsibility (CSR) Reserve was being created till FY 2019-20 for meeting expenses relating to CSR activities in line with CSR policy of the Company. Pursuant to the recent amendments in Companies Act, 2013 & CSR Rules (January 22, 2021), entire CSR amount required to be spent in a financial year is to be recorded as expenditure in the financial statements. CSR expenditure is being recognised by Company as expense in the statement of profit and loss as and when such expenditure is incurred. However, at the end of the financial year, liability is created for any unspent amount while asset is created for the overspent amount.

H. Foreign Currency Monetary Item Translation Difference Account

This reserve is created to accumulate and amortise exchange fluctuations on Long-Term Monetary Items (other than those related to depreciable PP&E) over the remaining life of these items. This is as per the transition exemption taken by the company at the time of implementation of Ind-AS wherein the company has chosen to continue the old GAAP practice for items upto 31.03.2016.

I. Fair value of Equity Instruments

This reserve represents the cumulative effect of fair value fluctuations of investments made by the company in equity instruments of other entities. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. This will not be re-classified to the statement of profit and loss in subsequent periods.

J. Fair value of Debt Instruments

This reserve represents the cumulative effect of fair value fluctuations in debt investments made by the company which are classified as available for sale investments. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. This amount will be re-classified to the statement of profit and loss in subsequent periods on disposal of respective instruments.

K. Cash Flow Hedge Reserve

The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on such changes are recognised through Other Comprehensive Income (OCI) and accumulated under this reserve. Such gains or losses will be reclassified to statement of profit and loss in the period in which the hedged item occurs/ affects the statement of profit and loss.

#App[ication has been submitted to RoC Ahmedabad on December 30, 2020 for striking-off the Company''s name from the ROC''s Register.

@ Liquidator has been appointed for winding up of Company w.e.f August 30, 2018.

@@ IndianOil has exited the Joint Venture by selling its entire stake in IPPCL to SCION Exports Private Limited on March 5, 2021.

@@@ The Company is under winding up process and the appointed liquidator has submitted his report to the official liquidator who is still to submit its report to Tribunal for winding up of the company.

## IndianOil has exited the Joint Venture, IndianOil Ruchi Biofuels LLP (M/s IORB) by giving notice of its exit from the LLP to the other JV partner viz. Ruchi Soya Industries Limited (M/s Ruchi) as well as to the LLP on December 26, 2018 stating that it will exit the LLP w.e.f. January 25, 2019. The time frame for completing exit formalities by M/s. Ruchi by filing requisite forms with ROC was within 30 days of notice expiry period (i.e., by February 24, 2019) but the same is still pending and IndianOil name is appearing on ROC website as Partner in the said LLP. M/s Ruchi was under Corporate Insolvency Resolution Process and has been taken over by Patanjali Ayurveda Limited. All necessary documents have been provided to M/s Ruchi for completing formalities relating to exit of IndianOil from IORB LLP.

Notes:

1. Ujjwala Plus Foundation is a joint venture of IOCL, BPCL and HPCL with fund contribution in the ratio of 50:25:25 which was incorporated as a limited by guarantee Company (without share capital) under section 8 of Companies Act, 2013.

2. IOC Phinergy Pvt. Limited is a joint venture of IOCL and Phinergy Limited, Israel and was incorporated on 19th February,2021 having shareholding in the ratio of 50:50 for development of indigenous batteries using locally available Aluminum to boost India''s pursuit of e-mobility.

A. Exploration License expired on October 7, 2015. Consortium has requested Directorate General of Hydrocarbon (DGH) for Appraisal phase, however vide letter dated March 6, 2019, it was opined to carry out Exploration activity instead of Appraisal work. Accordingly, Operator requested DGH for extension of exploration period. Response from DGH is awaited.

B. Blocks relinquished during the year 2020-21 vide approval dated November 27, 2020.

C. The project ''s exploration period ended on 24 June 2009. The contractual arrangement with respect to development of the block could not be finalised so far with Iranian Authorities.

D. Under Force Majeure since May 20, 2014

E. Members in Petroleum India International (AOP) are HPCL, BPCL, EIL, IOCL, CPCL, ONGC, OIL and Reliance Industries Ltd. During the current financial year, final communication is received from PII for bringing an end to the MOU (entered on 01/03/1986) vide letter dated March 31, 2021 as all the balance activities facilitating the dissolution mentioned in termination agreement dated March 18, 2020 for dissolution of AOP is completed.

A. Defined Contribution Plans- General Description

Provident Fund (EPS-95)*

During the year, the company has recognised J 32.68 Crore (2020: H 34.89 Crore) as contribution to EPS-95 in the Statement of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 27/ Construction period expenses in Note-2.2).

Pension Scheme*

During the year, the company has recognised J 449.83 Crore (2020: H 312.3 Crore) towards Defined Contributory Employees Pension Scheme (including contribution in corporate National Pension System) in the Statement of Profit and Loss/ CWIP (included in Contribution to Provident and Other Funds in Note - 27/ Construction period expenses in Note-2.2).

B. Defined Benefit Plans- General Description Provident Fund:*

The Company''s contribution to the Provident Fund is remitted to separate provident fund trusts established for this purpose based on a fixed percentage of the eligible employee''s salary and charged to the Statement of Profit and Loss. Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the Company. The Company has three Provident Funds maintained by respective PF Trusts in respect of which actuarial valuation is carried out and J 132.02 Crore (2020: H 130.24 Crore) has been provided by the company for current and future interest shortfall/ losses of PF trusts beyond available surplus at respective trust level.

Gratuity:*

Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount based on completed tenure of service subject to maximum of H 0.20 Crore at the time of separation from the company. Besides, the ceiling of gratuity increases by 25% whenever IDA rises by 50% with reference to January 01, 2017.

Post Retirement Medical Benefit Facility (PRMBF):*

PRMBF provides medical coverage to retired employees and their eligible dependant family members.

Resettlement Benefit:

Resettlement benefit is allowed to employees to facilitate them to settle down upon retirement.

Ex gratia Scheme:

Ex-gratia is payable to those employees who have retired before January 01, 2007 and either not drawing pension from superannuation benefit fund (as they superannuated prior to January 01, 1987, i.e. introduction of superannuation benefit fund scheme in IndianOil) or are drawing a pension lower than the ex gratia fixed for a Grade (in such case differential amount between pension and ex gratia is paid).

Employees Compensation for injuries arising out of or during the course of employment:

Employees covered under the Employees'' Compensation Act, 1923 who meet with accidents, while on duty, are eligible for compensation under the said Act. Besides, a lumpsum monetary compensation equivalent to 100 months'' Pay (BP DA) is paid in the event of an employee suffering death or permanent total disablement due to an accident arising out of and in the course of his employment.

Felicitation of Retired Employees:

The company has a scheme to felicitate retired employees on attaining different age milestones with a token lumpsum amount.

* As per the DPE Guidelines on Pay Revision, the company can contribute upto 30% of Basic Pay plus Dearness Allowance towards Provident Fund, Gratuity, Post-Retirement Medical Benefits (PRMB) and Pension of its employees. The superannuation benefits expenditure charged to Statement of Profit and Loss / Other Comprehensive Income has been limited to 30% of Basic pay plus Dearness Allowance and the balance amount is shown as recoverable advance from the company''s contribution towards superannuation benefits including pension schemes.

Accordingly, as per the actuarial valuation of Gratuity and PRMB, H 369.01 Crore was charged to the Statement of Profit and Loss, H (-) 28.87 Crore has been adjusted in Other Comprehensive income during the year and H 648.80 Crore (i.e. H 214.24 Crore and H 434.56 Crore towards Gratuity and PRMBF respectively) has been shown as recoverable advance. This advance amount is included in Advance to Employee Benefits Trust / Funds of H 870.53 Crore in Note 6.

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

Each employee is entitled to get 8 earned leaves for each completed quarter of service. Encashment of earned leaves is allowed during service leaving a minimum balance of 15 days subject to maximum accumulation of 300 days. In addition, each employee is entitled to get 5 sick leaves (in lieu of 10 HPL) at the end of every six months. The entire accumulation is permitted for encashment only at the time of retirement. DPE had clarified earlier that sick leave cannot be encashed, though Earned Leave (EL) and Half Pay Leave (HPL) could be considered for encashment on retirement subject to the overall limit of 300 days. MOP&NG has advised the company to comply with the said DPE Guidelines. However, in compliance to the DPE guidelines of 1987 which had allowed framing of own leave rules within broad parameters laid down by the Government and keeping in view operational complications and service agreements the company had requested concerned authorities to reconsider the matter. Subsequently, based on the recommendation of the 3rd PRC, DPE in its guidelines on pay revision, effective from January 01, 2017 has inter-alia allowed CPSEs to frame their own leave rules considering operational necessities and subject to conditions set therein. The requisite conditions are fully met by the company.

Long Service Award:

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded with amounts based on the length of service completed. It is a mode of recognising long years of loyalty and faithful service in line with Bureau of Public Enterprises (currently DPE) advice vide its DO No. 7(3)/79-BPE (GM.I) dated February 14, 1983. On receipt of communication from MoPNG advising us that the issue of Long Service Award has been made into an audit para in the Annual Report of CAG of 2019, the Corporation has been clarifying its position to MoP&NG individually as well as on industry basis as

Note - 35 : EMPLOYEE BENEFITS FOR THE YEAR ENDED ON MARCH 31, 2021 (Contd..)

the unions under the ID Act as well as with the approval of the Board in line with the DPE''s advice of 1983. The matter is being pursued with MOP&NG for resolution. Pending this the provision is in line with Board approved policy.

The amount provided during the year on this account is J 18.49 Crore (2020: H 28.4 Crore) and the payments made to employees during the year is J 25.33 Crore (2020: H 26.28 Crore). The actuarial liability of H 182.36 Crore in this respect as on March 31, 2021 is included under "Provision for Employees Benefit” in "Note 18 - Provisions”.

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

LFA/ LTC is allowed once in a period of two calendar years (viz. two yearly block).

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

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

A. Leases

(a) As Lessee

The Company has entered into various material lease arrangements (including in substance lease arrangements) such as lands and buildings for the purpose of its plants, facilities, offices, retail outlet etc., storage tankages facility for storing petroleum products, time charter arrangements for coastal transportation of crude and petroleum products, transportation agreement for dedicated tank trucks for road transportation of petroleum products, handling arrangement with CFA for providing dedicated storage facility and handling lubes, supply of utilities like Hydrogen, Oxygen, Nitrogen and Water, and port facilities among others.

There are no significant sale and lease back transactions and lease agreements entered by the Company do not contain any material restrictions or covenants imposed by the lessor upto the current reporting period.

Details of significant leases entered by the Company (including in substance leases) are as under;

1. BOOT Agreement in respect of Tankages facility for a period of 15 years. Lessor will transfer ownership to IOCL after 15 years at Nil value.

2. BOOT Agreement in respect of Water Intake facility for a period of 25 years. Lessor will transfer ownership to IOCL after 25 years at H 0.01 Crore.

3. Leasehold lands from government for the purpose of plants, facilities and offices for the period 30 to 90 years.

4. Agreements with vessel owners for hiring of vessels for various tenures, these are classified as Transport Equipments.

5. BOO agreement for supply of oxygen and nitrogen at Panipat Refinery. The land is owned by IOCL and the plant is being operated by contractor for supply of oxygen and nitrogen to IOCL.

6. BOO Agreement for leasing of Nitrogen & Hydrogen Plant at Paradip for 15 years .

7. BOOT Agreement for leasing of Quality Control Lab at Paradip for 10 years. Lessor will transfer the Assets after 10 years at H 0.01 Crore.

8. Arrangements with Gujarat Adani Port Limited related to port facilities at Gujarat for a period of 25 years and 11 months.

9. Arrangement for lease of land for operating Retail Outlets for sale of Petroleum products, setting up terminals/Bottling plant/Lube Blending plant for storing petroleum products/bottling LPG/Manufacturing Lubes respectively.

10. CFA handling arrangement with CFAs for providing dedicated storage facility for handling lubes.

11. Arrangements with Tank truck operators for providing dedicated tank trucks for transportation of company''s petroleum products.

12. Arrangements for dedicated time charter vessels for coastal transportation of Company''s petroleum products.

13. Arrangement for dedicated storage tanks for storing Company''s petroleum products at various locations.

As per requirement of the standard, maturity analysis of Lease Liabilities have been shown separately from the maturity analysis of other financial liabilities under Liquidity Risk-Note 40: Financial Instruments & Risk Factors.

Details of items of future cash outflows which the Company is exposed as lessee but are not reflected in the measurement of lease liabilities are as under;

(i) Variable Lease Payments

Variable lease payments that depend on an index or a rate are to be included in the measurement of lease liability although not paid at the commencement date. As per general industry practice, the Company incurs various variable lease payments which are not based any index or rate (variable based on kms covered or % of sales etc..) and are recognised in profit or loss and not included in the measurement of lease liability. Details of some of the arrangements entered by the Company which contain variable lease payments are as under;

1. Transportation arrangement based on number of kms covered for dedicated tank trucks with different operators for road transportation of petroleum, petrochemical and gas products.

2. Leases of Land of Retail Outlets based on Sales volume.

3. Rent for storage tanks for petroleum products on per day basis.

4. Payment of VTS software and VSAT equipment based on performance of equipment.

5. DG Set charges based on usage.

(ii) Extension and Termination Options

The Company lease arrangements includes extension options only to provide operational flexibility. Company assesses at every lease commencement whether it is reasonably certain to exercise the extension options and further reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control. However, where Company has the sole discretion to extend the contract such lease term is included for the purpose of calculation of lease liabilities.

The Company has the sole discretion to terminate the lease in case of lease agreement for Retail Outlets. However, Company is reasonably certain not to exercise the option in view of significant improvement and prominent importance of Retail to the entity''s operations. Accordingly, such lease term without any effect of termination is considered for the purpose of calculation of lease liabilities.

(iii) Residual Value Guarantees

The Company have entered into various BOOT agreements wherein at the end of lease term the leased assets will be transferred to the company at Nominal value which has no significant impact on measurement of lease liabilities.

(iv) Committed leases which are yet to commence

1. The Company has entered into lease agreement on BOO basis for supply of oxygen and nitrogen gas to IOCL Ethylene Glycol Project at Paradip Refinery for a period of 20 years. IOCL has sub leased the land for the construction of the plant. Lease will commence once plant is commissioned.

2. The Company has entered into lease agreement with VSAT providers (Highes,Nelco and Airtel) for VSAT equipment at H 1175/ month upto Sep/Oct 2024 for subleasing to Retail outlet to ensure seamless connectivity of automated and online data from them. Out of total contracts, 499 no''s are pending as at March 31, 2021. However, payment is in the nature of variable lease payment.

3. Advance upfront premium is paid to Greater Noida Developement Authority for leasing of land for the period of 90 years for New Retail Outlet of H 7.58 Crore at Greater Noida. The agreement is yet to be executed and therefore the amount is lying as Capital advance and shall form part of ROU once lease is commenced.

4. The Company has entered into lease agreement for 1 Nos of Retail Outlet at Rajkot for a period of 20 years at an annual rental of H 4,20,000/- with an increment of 10% in every 5 years. Lease for such case will commence once RO is commisioned.

5. The Company has entered into lease agreement with various lessors for 3 no''s of Retail outlet at Ahmedabad for a period of 19 years 11 months at an annual rental of H 90,000/-, H 1,08,000/-, H 2,40,000/- respectively with an increment of 10% in every 5 years. Leases for all such cases will commence once RO is commissioned.

6. The Company has entered into lease agreement for providing e-locks from various vendors for a period of 3 years (with an option to extend at the option of IOCL) at rate ranging from H 1050-1300/month and for 1 vendor H 2,450/-month. As at March 31, 2021, 8897 no''s are yet to be supplied. However, the same are low value items.

7. The Company has entered into lease agreement with Andhra Pradesh State Civil Supplies for 1 Nos of Retail Outlet at Vizag for a period of 20 years at an monthly rental of H 20,000/- with an increment of 10% in every 3 years. The possession of land is not given and the matter is pending in the court.

8. The Company has entered into centralised lease agreement with M/s Trimble for rent payment of H 373/month for VTS software for POL trucks customised to IOCL requirement for a period of 5 years. As at March 31, 2021 total 1776 Nos are yet to be installed. However, payment is in the nature of variable lease payment.

9. The Company has entered into lease agreement with M/s Geovista for VTS software for 2800 Nos of LPG trucks for a period of 5 years. As at March 31, 2021 lease pending to be commence for all 2800 Nos.

(b) As Lessor

(ii) Finance Lease

The Company has entered into the following material finance lease arrangements:

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

(ii) The Company has subleased Telematics Equipments to its Fleet Customers. IOCL has classified the sub lease as a finance lease, because the sub-lease is for the whole of the remaining term of the head lease.

(iii) The Company has entered into sublease arrangement of Office Space to PCRA for a period of 3 years. The same has been classified as finance lease as the sub-lease is for the whole of the remaining term of the head lease.

(iv) The Company has entered into arrangement with Chandigarh administration for subleasing LPG Godowns to LPG Distributors for a period of 15 years. The same has been classified as finance lease as the sub-lease is for the whole of the remaining term of the head lease.

(v) The Company has entered into a lease agreement with Indian Synthetic Rubber Private Limited in which the Company has leased out land for one time upfront payment of H 16.65 Crore

(vi) The Company has subleased certain Office Premises to IHB Private Limited.

B. Contingent Liabilities

B.1 Claims against the Company not acknowledged as debt

Claims against the Company not acknowledged as debt amounting to J 8,069.65 Crore (2020: H 8,862.31 Crore) are as under:

B.1.1 J 49.15 Crore (2020: H 48.02 Crore) being the demands raised by the Central Excise /Customs/ Service Tax Authorities including interest of J 22.43 Crore (2020: H 21.31 Crore.)

B.1.2 J 42.81 Crore (2020: H 52.39 Crore) in respect of demands for Entry Tax from State Governments including interest of J 8.61 Crore (2020: H 11.69 Crore).

B.1.3 J 2,033.87 Crore (2020: H 2,027.91 Crore) being the demands raised by the VAT/ Sales Tax Authorities including interest of J 848.96 Crore (2020: H 841.17 Crore).

B.1.4 J 1,812.86 Crore (2020: H 2,589.45 Crore) in respect of Income Tax demands including interest of J 80.15 Crore (2020: Nil).

B.1.5 J 3,779.27 Crore (2020: H 2,980.96 Crore) including J 3,169.42 Crore (2020: H 2,404.28 Crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator. This includes interest of J 110.53 Crore (2020: H 210.53 Crore).

B.1.6 J 351.69 Crore (2020: H 1,163.58 Crore) in respect of other claims including interest of J 25.22 Crore (2020: H 545.86 Crore).

The Company has not considered those disputed demands/claims as contingent liabilities, for which, the outflow of resources has been considered as remote. Contingent liabilities in respect of joint operations are disclosed in Note 33B.

B.2 Guarantees excluding Financial Guarantees

B.2.1 The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporation Venezolana del Petroleo S.A. and PeTroCarabobo S.A., on behalf of Indoil Netherlands B.V., Netherlands (an associate Company) to fulfill the associate Company''s future obligations of payment of signature bonus / equity contribution / loan to the beneficiaries. The total amount sanctioned by the Board of Directors is USD 424 Million. The estimated amount of such obligation (net of amount paid) is J 2,678.71 Crore - USD 366.37 Million (2020: H 2,772.13 Crore - USD 366.37 Million).

B.2.2 The Company has entered into Master Guarantee Agreement, on behalf of its subsidiaries viz. Indoil Global BV. and Indoil Montney Ltd. for all of its payments and performance obligations under the various Project Agreements entered by the subsidiaries with PETRONAS Carigali Canada B.V. and Progress Energy Canada Ltd. (now renamed as Petronas Energy Canada Ltd.). The total amount sanctioned by the Board of Directors is CAD 3924.76 Million. The estimated amount of such obligation (net of amount paid) is J 4,332.44 Crore - CAD 746.55 Million (2020: H 4,317.78 Crore - CAD 813.51 Million). The sanctioned amount was reduced by CAD 1,462.00 Million due to winding down of LNG Plant during 2017.

B.2.3 The Company has issued Corporate Guarantee, on behalf of IndianOil Adani Gas Private Limited (IOAGPL), to the extent of obligations of later company under Performance Bank Guarantee facility provided to IOAGPL by State Bank of India, Canara Bank, Bank of Baroda, Indian Bank, IndusInd Bank, Jammu and Kashmir Bank, Axis Bank and ICICI Bank. The Company''s share of such obligation is estimated at J 3,533.46 Crore (2020: H 3,533.46 Crore).

B.2.4 The Company has issued Corporate Guarantee, on behalf of IndianOil LNG Private Limited (IOLPL), to the extent of obligations of IOLPL under Performance Bank Guarantee Facility provided to IOLPL by State Bank of India. The estimated amount of such obligation is at Nil (2020: H 11.40 Crore).

B.2.5 The Company has issued Parent Company Guarantee in favor of Abu Dabhi National Oil Company, on behalf of Urja Bharat Pte. Ltd., Singapore (a joint venture company of Company''s subsidiary i.e. IOCL Singapore Pte Ltd) to fulfill the joint venture Company''s future obligations of payment and performance of Minimum Work Programme. The total amount sanctioned by the Board of Directors is USD 89.7 Million. The estimated amount of such obligation (net of amount paid) is J 418.22 Crore - USD 57.20 Million (2020: H 565.22 Crore - USD 74.70 Million).

B. 3 Other money for which the Company is Contingently Liable

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

C. Commitments

C.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account and not provided for is J 30,679.89 Crore (2020: H 26,677.10 Crore) inclusive of taxes.Capital Commitments in respect of Joint Operations are disclosed in Note 33B.

C.2 Other Commitments

C.2.1 The Company has an export obligation to the extent of Nil (2020: H 583.56 Crore) on account of concessional rate of duty availed under EPCG license scheme on procurement of capital goods and the same is expected to be fulfilled by way of exports.

C.2.2 IndianOil LNG Private Limited (IOLPL), the JV Company, entered into Debenture Subscription Agreement with ICICI Bank (ICICI), in which, the Company, as promoter of IOLPL, provided put option under certain conditions in which ICICI has option to sell Compulsory Convertible Debenture (CCD) to the Company. During the year, ICICI Bank has exercised put option and the Company (IOCL) has paid J 787.00 Crore and its share of obligation is H Nil as on March 31, 2021 (2020 H 808.44 Crore).

3. Government related entities where significant transactions carried out

Apart from transactions reported above, the Company has transactions with other Government related entities, which includes but not limited to the following:

Name of Government: Government of India (Central and State Government)

Nature of Transactions:

• Sale of Products and Services

• Purchase of Products

• Purchase of Raw Materials

• Handling and Freight Charges, etc.

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

*Liquidator has been appointed for winding up of Company w.e.f. August 30, 2018.

@@IndianOil has exited the Joint Venture by selling its entire stake in IPPCL to SCION Exports Private Limited on March 5, 2021.

@The Company is under winding up process and the appointed liquidator has submitted his report to the official liquidator who is still to submit its report to Tribunal for winding up of the company.

#IndianOil has exited the Joint Venture, IndianOiL Ruchi Biofuels LLP (M/s IORB) by giving notice of its exit from the LLP to the other JV partner viz. Ruchi Soya Industries Limited (M/s Ruchi) as well as to the LLP on December 26, 2018 stating that it will exit the LLP w.e.f. January 25, 2019. The time frame for completing exit formalities by M/s Ruchi by filing requisite forms with ROC was within 30 days of notice expiry period (i.e., by February 24, 2019) but the same is still pending and IndianOil name is appearing on ROC website as Partner in the said LLP M/s Ruchi was under Corporate Insolvency Resolution Process and has been taken over by Patanjali Ayurveda Limited. All necessary documents have been provided to M/s Ruchi for completing formalities relating to exit of IndianOil from IORB LLP.

The management has assessed that fair value of Trade Receivables, Cash and Cash Equivalents, Bank Balances/ Deposits,

Advances for Investment, Recoverable from Employee Benefits Trusts, Other Non-derivative Current Financial Assets, Finance

Lease Receivable, B site RO modernisation loans, Security Deposits paid and received, Short-term Borrowings (including

Current Maturities of Long term Borrowings), Trade Payables, Floating Rate Borrowings/ Receivables, Other Non-derivative

Current Financial Liabilities and Liabilities towards financial guarantees approximate their carrying amounts.

METHODS AND ASSUMPTIONS

The following methods and assumptions were used to estimate the fair values at the reporting date:

A. Level 1 Hierarchy:

(i) Quoted Equity Shares: Closing quoted price (unadjusted) in National Stock Exchange of India Limited

(ii) Quoted Government Securities: Closing published price (unadjusted) in Clearing Corporation of India Limited

(iii) Foreign Currency Bonds - US Dollars: Closing price for the specific bond collected from Bank

B. Level 2 Hierarchy:

(i) Derivative Instruments at FVTPL: Replacement cost quoted by institutions for similar instruments by employing use of market observable inputs.

(ii) Hedging Derivatives at FVTOCI: Replacement cost quoted by institutions for similar instruments by employing use of market observable inputs.

(iii) Loans to employees: Discounting future cash flows using rates currently available for items on similar terms, credit risk and remaining maturities, adjusted for insignificant unobservable inputs specific to such loan like principal and interest repayments are such that employee get more flexibility in repayment as per the respective loan schemes.

(iv) Non-Convertible Redeemable Bonds, Foreign Currency Bonds - Singapore Dollars , Loan from Odisha Government

and USD 100 Mn Term Loan: Discounting future cash flows using rates currently available for items on similar terms, credit risk and remaining maturities (Excluding floating rate borrowings).

(v) Term Loans from Oil Industry Development Board (OIDB): Discounting future cash flows using rates currently available for similar type of borrowings (OIDB Borrowing Rate) using exit model as per Ind AS 113.

C. Level 3 Hierarchy:

(i) Unquoted Equity Instruments: Fair values of the unquoted equity shares have been estimated using Market Approach & Income Approach of valuation techniques. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments.

(ii) Non Convertible Redeemable Preference Shares, Compulsorily Convertible Debentures (CCDs) and Loan to Related parties - Suntera: Fair value of Preference shares, CCDs and Loan to Suntera is estimated with the help of external valuer by discounting future cash flows. The CCDs are valued considering conversion into equity shares at face value on conversion date. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.

(iii) PMUY Loan: Fair value of PMUY loans is estimated by discounting future cash flows using approximate interest rates applicable on loans given by Banks duly adjusted for significant use of unobservable inputs in estimating the cash flows comprising of specific qualitative and quantitative factors like consumption pattern, assumption of subsidy rate, deferment of loan etc.

II. Disclosures relating to recognition of differences between the fair value at initial recognition and the transaction price

In the following cases, the Company has not recognised gains/losses in profit or loss on initial recognition of financial assets/ financial liability, instead, such gains/losses are deferred and recognised as per the accounting policy mentioned below.

Financial Assets

1. Loan to Employees

As per the terms of service, the Company has given long term loan to its employees at concessional interest rate. Transaction price is not fair value because loans are not extended at market rates applicable to employees. Since implied benefit is on the basis of the services rendered by the employee, it is deferred and recognised as employee benefit expense over the loan period.

2. PMUY loan

The PMUY loan is the interest free loan given to PMUY beneficiaries towards cost of burner and 1st refill. The loan is interest free and therefore transaction price is not at fair value. The difference between fair value and transaction price is accumulated in Deferred expenses and amortised over the loan period on straight line basis in the Statement of Profit and Loss.

3. Security Deposits

The security deposit is paid to landlord in relation to lease of land. The security deposit is interest free and therefore transaction price is not fair value.The difference between fair value and transaction price is accumulated in Deferred expenses and amortised over the loan period on straight line basis in the statement of Profit and loss till March 31,2019 prior to introduction of IND AS 116.

Financial Risk Factors

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

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

The Risk Management Commitee comprised of senior management oversees the management of these risks. The Company''s senior management is supported by a Risk Management Compliance Board that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Board that the Company''s risks are governed by appropriate policies and procedures and that risks are identified, measured and managed in accordance with the Company''s policies, risk objectives and risk appetite.

The Company''s requirement of crude oil are managed through integrated function handled through its international trade and optimisation department. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. As per the Company''s policy, derivatives contracts are taken only to hedge the various risks that the Company is exposed to and not for speculation purpose.

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

The sensitivity analysis in the following sections relate to the position as at March 31, 2021 and March 31, 2020.

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

1. Interest Rate Risk

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

The Company manages to maintian a mix between fixed and floating rates for rupee and foreign currency loans, based on liquidity, availability of cost effective instruments and considering the market/ regulatory constraints etc. The Company also use interest rate swap contracts for managing the interest rate risk of floating interest rate debt. As at March 31, 2021, approximately 66% of the Company''s borrowings are at a fixed rate of interest (March 31, 2020: 58%).

3. Commodity Price Risk

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

Company is exposed to USD LIBOR interest rate benchmark reform with respect to floating rate debts raised by it and associated derivative contracts. Company is closely monitoring the market and the announcements from the various agencies managing the transition to new benchmark interest rates. Secured Overnight Financing Rate (SOFR) has been identified by the regulators as the replacement benchmark for USD LIBOR. This is applicable for both loans as well as interest rate derivatives contracts benchmarked to USD LIBOR. Based on announcements made in March 2021 by various agencies involved in USD LIBOR transition, the transition from USD LIBOR to SOFR will take effect immediately after 30 June 2023. The Company is not expecting any material financial impact of transition from USD LIBOR to SOFR on its floating rate loans linked to USD LIBOR and associated derivative contracts which are maturing beyond 30th June 2023.

2. Foreign Currency Risk

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

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

4. Equity Price Risk

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

At the reporting date, the exposure to unlisted equity securities at fair value was J 855.52 Crore. Sensitivity analysis of these investments have been provided in Note 39.

The exposure to listed equity securities valued at fair value was J 12,213.69 Crore. An increase / decrease of 5% on the NSE market index could have an impact of approximately J 610.68 Crore on the OCI and equity attributable to the Company. These changes would not have an effect on profit or loss.

5. Derivatives and Hedging

(i) Classification of derivatives

The Company is exposed to certain market risks relating to its ongoing business operations as explained above.

Derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives do not meet the hedge accounting criteria, they are accounted for at fair value through profit or loss. Information about the derivatives used by the Company and outstanding as at the end of the financial year is provided below:

(ii) Hedging activities

The primary risks managed using derivative instruments are commodity price risk, foreign currency risk and interest rate risk.

Commodity Price Risk Margin Hedging

IndianOil buys crude and sells petroleum products linked to international benchmark prices and these benchmark prices do not move in tandem. This exposes IndianOil to the risk of variation in refining margins.

The risk of fall in refining margins of petroleum products in highly probable forecast sale transactions is hedged by undertaking crack spread forward contracts. The Company wants to protect the realisation of margins and therefore to mitigate this risk, the Company is taking these forward contracts to hedge the margin on highly probable forecast sale in future. Risk management activities are undertaken in OTC market i.e. these are the bilateral contracts with registered counterparties.

All these hedges are accounted for as cash flow hedges.

Foreign Currency Risk

The Company is exposed to various foreign currency risks as explained in A.2 above. As per Company''s Foreign Currency & Interest Rate Risk Management Policy , the Company is required to fully hedge the short term foreign currency loans (other than revolving lines and PCFC loans) and at least 50% of the long term foreign currency loans based on market conditions.

Apart from mandatory hedging of loans, the Company also undertakes foreign currency forward contracts for the management of currency purchase for repayment of crude/ product liabilities based on market conditions and requirements. The above hedgings are undertaken through delivery based forward contracts.

All these hedges are accounted for as cash flow hedges.

Interest Rate Risk

The Company is exposed to interest rate risks on floating rate borrowings as explained in A.1 above. Company hedges interest rate risk by taking interest rate swaps as per company''s Interest Rate Risk Management Policy based on market conditions. The Company uses interest rate derivatives to hedge exposure to interest payments for floating rate borrowings denominated in foreign currencies.

All these hedges are accounted for as cash flow hedges.

Hedge Effectiveness

There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange and commodity forward contracts match the terms of hedge items. The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange, interest rate and commodity forward contracts are identical to the hedged risk components. To test the hedge effectiveness, the Company compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks. In case of interest rate swaps, as the critical terms of the interest rate swap contracts and their corresponding hedged items are the same, the company performs a qualitative assessment of effectiveness and it is expected that the value of the interest rate swap contracts and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying interest rates.

Source of Hedge ineffetiveness

In case of commodity price risk, the Company has identified the following sources of ineffectiveness, which are not expected to be material:

• Differences in the timing of the cash flows of the hedged items and the hedging instruments

• Different indexes linked to the hedged risk of the hedged items and hedging instruments

• The counterparties'' credit risk differently impacting the fair value movements of the hedging instruments and hedged items

• Changes to the forecasted amount of cash flows of hedged items and hedging instruments

B. Credit risk

Mar 31, 2019

NOTE - 1B : SIGNIFICANT ACCOUNTING ESTIMATES & JUDGEMENTS

mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

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

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

Fair value measurement of financial instruments

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

Impairment of Financial Assets

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

A. i) Freehold Land includes Rs,22.13 crore (2018: Rs,21.26 crore) lying vacant due to title disputes/litigation.

ii) Out of the Freehold land measuring 1,364.01 acres at Mathura and Agra regions, land measuring 50 acres (approx) has been acquired by NHAI as a part of the NH2 widening project for which the determination of value of compensation is pending. Accordingly, the value of land amounting to Rs,1.18 crore is continued to be included in Freehold land.

B. i) Buildings include Rs,0.01 crore (2018: Rs,0.01 crore) towards value of 1605 (2018: 1605) Shares in Co-operative Housing Societies

towards membership of such societies for purchase of flats.

ii) Includes Roads, Bridges etc. (i.e. Assets other than Building) of Gross block amounting to Rs,2,945.52 crore (2018: Rs,2,040.91 crore) and net block amounting to Rs,1,809.3 crore (2018: Rs,1,271.68 crore).

C. During the year Rs,1,758.66 crore (2018: Rs,942.39 crore) has been availed as VAT CREDIT/CENVAT/GST ITC out of capital expenditure on CWIP/assets. The cost of assets are net of VAT CREDIT/CENVAT/GST ITC, wherever applicable.

D. Depreciation and amortization for the year includes Rs,8.22 crore (2018: Rs,2.34 crore) relating to construction period expenses shown in Note-2.2

E. Railways have claimed transfer of ownership in respect of certain assets provided by the Company at railway premises which has not been accepted by the Company and continue to be part of Axed assets of the Company, WDV of such assets is Rs,70.1 crores (2018: Rs,70.63 crores). This includes WDV of assets worth Rs,7.09 crore (2018: Rs,8.21 crore) which are not in operation at present. However, considering the right on the assets and future commercial interest of the company, these assets are continued to be reflected as PPE.

F. Land and Buildings include Rs,199.83 crore (2018: Rs,211.94 crore) in respect of which Title/Lease Deeds are pending for execution or renewal.

G. For details regarding hypothecation/pledge of assets, refer Note-16.

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

B. Includes non current assets retired from active use earlier used in various segments and held for disposal through tendering process within a year.

C. During the year, the company has recognized impairment loss of Rs,150.36 crore (2018: Rs,97.91 crore) on write-down of the asset to fair value less costs to sell and the same has been shown in Provision/loss on Other Assets sold written off under ‘Other Expenses’ in the Statement of Profit and Loss.

B. Terms/Rights attached to Equity Shares

The Company has only one class of equity shares having par value of Rs,10 each and is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the corporation, the holders of equity shares will be entitled to receive the remaining assets of the Company in proportion to the number of equity shares held.

*The Board of Directors of the Company, at its meeting held on December 13, 2018 had approved a proposal to buyback upto 297651006 (Twenty Nine Crores Seventy Six Lakhs Fifty One Thousand and Six) equity shares of the Company for an aggregate amount not exceeding Rs,4,435.00 crores (Rupees Four Thousand Four Hundred Thirty Five Crore only) representing 3.06% of the total paid up equity share capital of the Company at a price of Rs,149 (Rupees One Hundred and Forty Nine Only) per equity share. The process of buyback was duly completed on February 14, 2019.

Nature and Purpose of Reserves

A. Retained Earnings

The retained earnings comprises of general reserve and surplus which is used from time to time to transfer profits by appropriations. Retained earnings is free reserve of the company and is used for purposes like issuing bonus shares, buy back of shares and other purposes (like declaring Dividend etc.) as per the approval of BOD. It includes the re-measurement of defined benefit plan as per actuarial valuations which will not be re-classified to statement of profit and loss in subsequent periods.

B. Bond Redemption Reserve

As per Companies Act 2013, a Bond Redemption Reserve is required to be created for all bonds/debentures issued by the company at a specified percentage. This reserve is created out of appropriation of profits over the tenure of bonds and will be transferred back to general reserve on repayment of bonds for which it is created.

C. Capital Redemption Reserve

As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. Utilization of this reserve is governed by the provisions of Companies Act 2013.

D. Capital Reserve

Capital Reserve was created thru business combinations and shall be utilized as per the provisions of Companies Act 2013.

E. Insurance Reserve

Insurance Reserve is created by the company with the approval of BOD to mitigate risk of loss of assets not insured with external insurance agencies. Rs,20.00 crore is appropriated by the company every year to this reserve. The reserve is utilized to mitigate actual losses by way of net appropriation in case any uninsured loss is incurred.

F. Export Profit Reserve

Amount set aside out of profits from exports for availing income tax benefits u/s 80HHC of Income Tax Act, 1961 for the assessments years 1986-87 to 1988-89. Creation of reserve for claiming deduction u/s 80HHC was dispensed from AY 1989-90 onwards. This amount shall be transferred to general reserve on completion of assessment/disposal of case.

G. Corporate Social Responsibility Reserve

Corporate Social Responsibility (CSR) Reserve is created for meeting expenses relating to CSR activities in line with CSR policy of the Company. During the year, an amount of Rs,490.60 crore (2018: Rs,327.94 crore) has been appropriated as per provisions of the Companies Act 2013. Out of total available fund for CSR (including unspent amount carried forward from previous year), an amount of Rs,490.60 crore (2018: Rs,331.05 crore) has been spent during the year.

H. Foreign Currency Monetary Item Translation Difference Account

This reserve is created to accumulate and amortize exchange fluctuations on Long-Term Monetary Items (other than those related to depreciable PP&E) over the remaining life of these items. This is as per the transition exemption taken by the company at the time of implementation of Ind AS wherein the company has chosen to continue the old GAAP practice for items up to March, 31 2016.

I. Fair value of Equity Instruments

This reserve represents the cumulative effect of fair value fluctuations of investments made by the company in equity instruments of other entities. The cumulative gain or loss arising on such changes are recognized thru Other Comprehensive Income (OCI) and accumulated under this reserve. This will not be re-classified to the statement of profit and loss in subsequent periods.

J. Fair value of Debt Instruments

This reserve represents the cumulative effect of fair value fluctuations in debt investments made by the company which are classified as available for sale investments. The cumulative gain or loss arising on such changes are recognized thru Other Comprehensive Income (OCI) and accumulated under this reserve. This amount will be re-classified to the statement of profit and loss in subsequent periods on disposal of respective instruments.

K. Cash Flow Hedge Reserve

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on such changes are recognized thru Other Comprehensive Income (OCI) and accumulated under this reserve. Such gains or losses will be reclassified to statement of profit and loss in the period in which the hedged item occurs/affects the statement of profit and loss.

NOTE - 2 : LONG TERM BORROWINGS (At Amortized Cost) (Contd...)

C. Secured Term Loans

1. Security Details for OIDB Loans:

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

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

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

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

e) First charge on the facilities at SMPL System

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

H. Repayment Schedule of Unsecured Interest Free Loans from Govt of Odisha

1 Interest free loan given by Odisha Government for 15 years is to be disbursed in quarterly installment of Rs,175 crore started from April 1, 2016 repayble after 15 years. The first installment of loan for the period April to December 2017 of Rs,1,225 crore has been received on January 15, 2018 and thereafter Rs,175 crore will be received every quarter. Total loan disbursed till now is Rs,2,100 crore which is repayable after 15 years from the quarter for which the same is given i.e. in quarterly installments starting from last week of June 2031 onwards. This loan being interest free loan is accounted at fair value and accordingly accounting for government grant is done.

A. Includes Rs,11.62 crore (2018: Rs,16.74 crore) towards compensation to executives for working in shift duty in the plant/operation area on which the Company has taken up the matter with MOP&NG/DPE. This allowance has been discontinued w.e.f. November 1, 2018.

B. Excludes Rs,372.88 crore (2018: Rs,310.43 crore) included in capital work in progress (Note - 2.2)/intangible assets under development (Note - 3.1) and Rs,21.92 crore (2018: Rs,13.94 crore) included in CSR expenses (Note - 29.1). The amount included in capital work in progress also includes Rs,0.28 crore (2018: Rs,0.54 crore) paid to executives as Project Allowance working in grass root projects till commercial production, where the company has taken up the matter with MOP&NG. The Project allowance has been discontinued w.e.f. March 1, 2019.

C. Includes Rs,1,266.52 crore towards SABF defined benefit contribution for the transition phase arising as on January 1, 2007 (refer Note - 35).

D. IncludesRs,555.18 crore (2018: NIL) [Including acturial liability ofRs,475.90 (2018: NIL)] for felicitation award to retired employees (refer Note - 35)

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

1. Proposed dividend on equity shares are subject to approval at the annual general meeting and are not recognized as a liability (including DDT thereon) as at March 31, 2019.

2. Shares held under IOC Share Trust of face value Rs,233.12 crore (2018: Rs,233.12 crore) has been netted off from paid up capital.

3. The Company has also incurred expenses on distribution of Anal dividend amounting to Rs,0.14 crore (2018: Rs,0.13 crore) and on distribution of interim dividend amounting to Rs,0.34 crore (2018: Rs,0.14 crore) which has been debited to equity.

4. The Board of Directors of the Company, at its meeting held on December 13, 2018 had approved a proposal to buyback upto 297651006 (Twenty Nine Crores Seventy Six Lakhs Fifty One Thousand and Six) equity shares of the Company. The Company bought back 297651006 (Twenty Nine Crores Seventy Six Lakh Fifty One Thousand and Six) equity shares out of the shares that were tendered by eligible shareholders and the shares bought back were cancelled and extinguished on February 14, 2019.

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

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

Notes

1. Equity Shares held under IOC Share Trust of face value Rs,233.12 crore has been netted off from weighted average number of Equity Shares and EPS is worked out accordingly.

2. The Board of Directors of the Company, at its meeting held on December 13, 2018 had approved a proposal to buyback up to 297651006 (Twenty Nine Crores Seventy Six Lakhs Fifty One Thousand and Six) Equity Shares of the Company. The Company bought back 297651006 (Twenty Nine Crores Seventy Six Lakh Fifty One Thousand and Six) Equity Shares out of the shares that were tendered by eligible shareholders and the shares bought back were cancelled and extinguished on February 14, 2019. Accordingly, earnings per share (EPS) (basic and diluted) for FY 2018-19 have been adjusted on account of buy back.

NOTE - 3 : EMPLOYEE BENEFITS

Disclosures in compliance with Ind AS 19 on -Employee Benefits- is as under:

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

During the year, the company has recognized Rs,37.32 crore (2018 : Rs,39.66 crore) as contribution to EPS-95 in the Statement of Profit and Loss/CWIP (included in Contribution to Provident and Other Funds in Note - 27/Construction period expenses in Note-2.2). Pension Scheme

During the year, the company has recognized Rs,474.20 crore (2018 : Rs,516.68 crore) towards Defined Contributory Employees Pension Scheme in the Statment of Profit and Loss/CWIP (included in Contribution to Provident and Other Funds in Note - 27/ Construction period expenses in Note-2.2).

Further, during the year an amount of Rs,1,266.52 crore has been contributed on one time basis towards Defined Benefit contribution for the transition phase arising as on January 1, 2007 i.e. at the time of commencement of Defined Contribution pension scheme.

B. Defined Benefit Plans- General Description

Provident Fund:

The Company’s contribution to the Provident Fund is remitted to separate provident fund trusts established for this purpose based on a fixed percentage of the eligible employee’s salary and charged to Statement of Profit and Loss. Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the Company. The Company has three Provident Funds maintained by respective PF Trusts in respect of which actuarial valuation is carried out and all three trusts do not have any deficit as on March 31, 2019.

Gratuity:

Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount equal to 15/26 of the eligible salary for every completed year of service subject to maximum of Rs,0.20 crore at the time of separation from the company. Besides, the ceiling of gratuity increases by 25% whenever IDA rises by 50%.

Post Retirement Medical Scheme (PRMS):

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

Resettlement Allowance:

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

Ex gratia:

Ex-gratia is payable to those employees who have retired before November 1, 1987 and not covered under the pension scheme. Further, for employees who have retired on or after November 1, 1987 and their entitlement under the pension scheme is less than applicable amount under Ex- Gratia Scheme, such employees are also eligible to the extent of shortfall or difference under Ex-gratia scheme. The scheme of ex-gratia has been restricted to cover only those eligible employees who have retired up to December 31, 2006, and not thereafter.

Staff Pension fund at AOD:

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

Workmen Compensation:

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

The Company has introduced a scheme to pay specified amount as felicitation award to retired employees on achieving specific age milestones. Rs,555.18 crore has been recognized as expenses (including actuarial liability of Rs,475.90 crore) during the year on this account.

NOTE - 4 : EMPLOYEE BENEFITS (Contd...)

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

Each employee is entitled to get 8 earned leaves for each completed quarter of service. Encashment of earned leaves is allowed during service leaving a minimum balance of 15 days subject to maximum accumulation of 300 days. In addition, each employee is entitled to get 5 sick leaves (in lieu of 10 HPL) at the end of every six months. The entire accumulation is permitted for encashment only at the time of retirement. DPE had clarified that sick leave cannot be encashed, though Earned Leave (EL) and Half Pay Leave (HPL) could be considered for encashment on retirement subject to the overall limit of 300 days. MOP&NG has advised the company to comply with the DPE Guidelines. However, keeping in view operational complications and service agreements the company has continued with the present practice and requested concerned authorities to reconsider the matter.

Long Service Award:

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded with amounts based on the duration of service completed. MOP&NG vide its letter dated December 12, 2018 has intimated that the scheme is not forming part of DPE guidelines as of now and thus is irregular and has advised to make recovery of payments made. IOCL has clarified its position to MOP&NG vide its letter dated March 27, 2019 and April 25, 2019 stating that award based on length of meritorious and faithful service of employees (Long Service Award) was specifically allowed by DPE (formerly BPE) thru its letter dated February 14, 1983. The matter is being pursued with MOP&NG for resolution. Pending this the provision is in line with Board approved policy. The amount provided during 2018-19 on this account is Rs,21.08 crores (2018: Rs,20.47 Crore) and the payments made to employees during 2018-19 is Rs,30.66 Crores (2018: Rs,34.98 Crores). The actuarial liability of Rs,187.07 Crores in this respect as on March 31, 2019 is included under -Provision for Employees Benefit- in -Note 18 - Provisions-.

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

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

D. The summarized position of various Defined Benefit Plans recognized in the Statement of Profit & Loss, Balance Sheet and Other Comprehensive Income areas under:

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

These relate to storage tankage facilities for petroleum products, BOO contract for Nitrogen and Hydrogen Plant, QC lab rotary at Para dip Refinery and various other leases in substance as mentioned in (iv) below.

(ii) The Company has paid advance of Rs,215.90 Crore for acquisition of leasehold buildings for which offer of possession is issued by the contractor during the year. Company has not taken the physical possession of property as stay is imposed by Hon’ble Delhi High Court for handing over of the office premises. Pending taking over of possession, amount paid to contractor is continued as advances under Note 8 and no amortization of lease rental is being done.

(iii) The Company has taken certain assets (including lands, office/residential premises) on Operating Lease which are cancellable by giving appropriate notice as per the respective agreements incl. applicable cases as per (iv) below. During the current year, Rs,995.68 crore (2018: Rs,1,038.21 crore) has been paid towards cancellable Operating Lease. Also refer Note IB for more details on judgments made for lease classification in case of lands.

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

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

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

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

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

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

(c) Finance Lease — As Lessee

The Company has entered into the following material finance lease arrangements:

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

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

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

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

(d) Finance Lease — as Lessor

The Company has entered into following material finance lease arrangements:

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

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

B. Contingent Liabilities

B.1 Claims against the Company not acknowledged as debt

Claims against the Company not acknowledged as debt amounting to Rs,10,095.39 crore (2018: Rs,8,025.58 crore) are as under:

B.1.1 Rs,568.18 crore (2018: Rs,373.35 crore;) being the demands raised by the Central Excise/Customs/Service Tax Authorities including interest of Rs,171.74 crore (2018: Rs,113.24 crore.)

B.1.2 Rs,52.39 crore (2018: Rs,31.23 crore) in respect of demands for Entry Tax from State Governments including interest of Rs,11.69 crore (2018: Rs,3.07 crore).

B.1.3 Rs,2,623.21 crore (2018: Rs,2,773.87 crore) being the demands raised by the VAT/Sales Tax Authorities including interest of Rs,1,195.85 crore (2018: Rs,1,332.72 crore).

B.1.4 Rs,3,263.12 crore (2018: Rs,1,834.36 crore;) in respect of Income Tax demands including interest of Rs,419.74 crore (2018: Rs,614.06 crore).

B.1.5 Rs,2,402.98 crore (2018: Rs,2,005.42 crore) including Rs,1,689.87 crore (2018: Rs,1,616.36 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator. This includes interest of Rs,187.48 crore (2018: Rs,155.86 crore).

B.1.6 Rs,1,185.51 crore (2018: Rs,1,007.35 crore) in respect of other claims including interest of Rs,513.66 crore (2018: Rs,405.84 crore).

The Company has not considered those disputed demands/claims as contingent liabilities, for which, the outflow of resources has been considered as remote. Contingent liabilities in respect of joint operations are disclosed in Note 33 B.

B.2 Guarantees excluding Financial Guarantees

B.2.1 The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporation Venezuelan del Petroleo S.A. and PeTroCarabobo S.A., on behalf of Indoil Netherlands

B.V., Netherlands (an associate company) to fulfill the associate company’s future obligations of payment of signature bonus/equity contribution/loan to the beneficiaries. The total amount sanctioned by the Board of Directors is USD 424 million. The estimated amount of such obligation (net of amount paid) is Rs,2,533.81 crore - USD 366.37 million (2018: Rs,2,387.99 crore - USD 366.37 million).

B.2.2 The Company has entered into Master Guarantee Agreement, on behalf of its subsidiaries viz. Indoil Global B.V. and Indoil Montney Ltd. for all of its payments and performance obligations under the various Project Agreements entered by the subsidiaries with PETRONAS Carigali Canada B.V. and Progress Energy Canada Ltd. The total amount sanctioned by the Board of Directors is CAD 3,924.76 million. The estimated amount of such obligation (net of amount paid) is Rs,4,558.93 crore - CAD 884.39 million (2018: 4,588.28 crore - CAD 905.65 million). The sanctioned amount was reduced by CAD 1,462 million due to winding down of LNG Plant during 2017.

B.2.3 The Company has issued Corporate Guarantee, on behalf of Indian Oil Adani Gas Private Limited (IOAGPL), to the extent of obligations of later company under Performance Bank Guarantee Facility provided to IOAGPL by ‘State Bank of India, Syndicate Bank, Canara Bank, Bank of Baroda, Allahabad Bank, Induslnd Bank, Jammu and Kashmir Bank, Axis Bank and ICICI Bank’. The Company’s share of such obligation is estimated at Rs,3,533.46 crore (2018: Rs,3,280.94 crore).

B.2.4The Company has issued Corporate Guarantee, on behalf of Indian Oil LNG Private Limited (I0LPL), to the extent of obligations of I0LPL under Performance Bank Guarantee Facility provided to I0LPL by State Bank of India. The estimated amount of such obligation is at Rs,11.40 crore (2018: Rs,11.40 crore).

B.2.5The Company has issued Parent Company Guarantee in favour of Abu Dabhi National Oil Company, on behalf of Urja Bharat Pte. Ltd., Singapore (a joint venture company of Company’s subsidiary i.e IOCL Singapore Pte Ltd) to fulfill the joint venture company’s future obligations of payment and performance of Minimum Work Programme. The total amount sanctioned by the Board of Directors is USD 89.7 Million. The estimated amount of such obligation (net of amount paid) is Rs,581.98 crore - USD 84.15 million (2018: ''NIL - USD NIL).

B.3 Other money for which the Company is Contingently Liable

Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if any,

payable to the land owners and the Government for certain lands acquired.

C. Commitments

C.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs,23,638.90 crore (2018:

Rs,14,748.60 crore). Capital Commitments in respect of Joint Operations are disclosed in Note 33B.

C.2 Other Commitments

C.2.1 The Company has an export obligation to the extent of Rs,785.17 crore (2018: Rs,2,822.44 crore) on account of concessional rate of duty availed under EPCG license scheme on procurement of capital goods and the same is expected to be fulfilled by way of exports.

C.2.2 To meet the direction of Honourable High Court of Orissa, the Company has a commitment to pay Rs,280.10 crore (2018: Rs,280.10 crore) towards providing high tech ambulances, removal of old anicut and construction of water treatment plant in the State of Orissa. In addition the Company has to incur cost towards dredging through Orissa Construction Co, a state government agency estimate for which yet to be finalized.

C.2.3 Indian Oil LNG Private Limited (I0LPL), the JV Company, has entered into Debenture Subscription Agreement with ICICI Bank (ICICI), in which, the Company (IOCL), as promoter of I0LPL, has provided put option under which ICICI has option to sell Compulsory Convertible Debenture (CCD) to the Company (IOCL) before the expiry date. In addition to this, the Company, at the sole discretion, has right to acquire CCD from ICICI on or before the expiry date. The Company’s (IOCL) share of such obligation is Rs,808.44 Crore (2018: Rs,949.05 Crore).

1) Transactions in excess of 10% of the total related party transactions for each type has been disclosed above.

2) In case of Subsidiary Companies constituted/acquired during the year, transactions w.e.f. date of constitution/acquisition are disclosed.

3) In case of S ubsidiary C ompanies w hich have been closed/divested during the year, transactions up to the date of closure/disinvestment only are disclosed.

# The Company is under process of closure

2. Relationship with Entities

A) Details of Joint Ventures (JV)/Associate Entities to IOCL & its subsidiaries

1) Indian Oiltanking Limited 18) GSPL India Transco Limited (Formerly known as IOT Infrastructure & Energy Services Ltd.)

2) Lubrizol India Private Limited 19) GSPL India Gasnet Limited

3) Petronet VK Limited 20) Indian Oil - Adani Gas Private Limited

4) Indian Oil Petronas Private Limited 21) Mumbai Aviation Fuel Farm Facility Private Limited

5) Avi-Oil India Private Limited 22) Kochi Salem Pipeline Private Limited

6) Petronet India Limited * 23) Hindustan Urvarak & Rasayan Limited

7) Petronet LNG Limited 24) Ratnagiri Refinery & Petrochemicals Limited

8) Green Gas Limited 25) Indradhanush Gas Grid Limited (Incorporated on 10.08.18)

9) Indian Oil Panipat Power Consortium Limited @ 26) Indian Additives Limited

10) Petronet Cl Limited @ 27) National Aromatics & Petrochemicals Corporation Limited

11) Indian Oil LNG Private Limited 28) INDOIL Netherlands B.V.

12) Indian Oil SkyTanking Private Limited 29) Taas India PTE Limited

13) Suntera Nigeria 205 Limited 30) Vankor India PTE Limited

14) Delhi Aviation Fuel Facility Private Limited 31) Ceylon Petroleum Storage Terminals Limited

15) Indian Synthetic Rubber Private Limited 32) Falcon Oil & Gas B.V.

16) Indian Oil Ruchi Biofuels LLP # 33) Urja Bharat PTE Ltd (Incorporated on 12.02.19)

17) NPCIL- Indian Oil Nuclear Energy Corporation Limited

B) Details of Subsidiaries to JV''s of IOCL

1) IOT Engineering & Construction Services Ltd. 7) Indian Oiltanking Engineering & Construction Services LLC Oman

2) Stewarts and Lloyds of India Limited 8) JSC KazakhstanCaspishelf

3) IOT Infrastructures Private Limited 9) IOT VITO MUHENDISLIK INSAAT VE TAAHUT A.S.

4) IOT Utkal Energy Services Limited 10) Indian Oil Skytanking Delhi Pvt. Limited

5) PT IOT EPC Indonesia 11) IOT Biogas Private Limited

6) IOT Engineering Projects Limited_(Formerly known as IOT Mabagas Private Limited)_

1) Transactions in excess of 10% of the total related party transactions for each type has been disclosed above.

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

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

3. Relatives of Key Managerial Personnel and nature of relation with whom transactions are undertaken during the year:

Shri B V Raghav Raju (Manager, Indian Oil Corporation Limited): Son of Key Managerial Personnel

4. Government related entities where significant transactions carried out

Apart from transactions reported above, the company has transactions with other Government related entities, which includes but not limited to the following:

Name of Government: Government of India (Central and State Government)

Nature of Transactions:

- Sale of Products and Services

- Purchase of Products

- Purchase of Raw Materials

- Handling and Freight Charges, etc.

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

- Liquidator has been appointed for winding up of company w.e.f. August 30, 2018

@ The JVC has not been closed/wound up as yet, however the company is not carrying out any operations.

- Indian Oil has decided to exit the Joint Venture and has given notice of its exit from the LLP to the other JV partner viz. Ruchi Soya Industries as well as to the LLP on December 26, 2018 stating that it will exit the LLP w.e.f. January 25, 2019.

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

2) In addition, whole-time Directors are also allowed the use of Corporation’s car for private purposes up to 12,000 kms. per annum on a payment of Rs,2,000/- per mensem.

1. The management assessed that fair value of Trade Receivables, Cash and Cash Equivalents, Bank Balances, Recoverable from Employee Benefits Trusts, Other Non-derivative Current Financial Assets, Finance Lease Receivable, Security Deposits paid and received, Short-term Borrowings (including Current Maturities of Long term Borrowings), Trade Payables, Floating Rate Borrowings/ Receivables, Other Non-derivative Current Financial Liabilities and Liabilities towards financial guarantees approximate their carrying amounts.

2. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Methods and assumptions

The following methods and assumptions were used to estimate the fair values at the reporting date:

A. Level 1 Hierarchy:

(i) Quoted Equity Shares: Closing quoted price (unadjusted) in National Stock Exchange of India Limited

(ii) Quoted Government Securities: Closing published price (unadjusted) in Clearing Corporation of India Limited

(iii) Foreign Currency Bonds - US Dollars: Closing price for the specific bond collected from Bank

B. Level 2 Hierarchy:

(i) Derivative instruments at fair value through profit or loss: Replacement cost quoted by institutions for similar instruments by employing use of market observable inputs.

(ii) Hedging Derivatives at fair value through OCI : Replacement cost quoted by institutions for similar instruments by employing use of market observable inputs.

(iii) Loans to employees/PMUY Loan: Discounting future cash flows using rates currently available for items on similar terms, credit risk and remaining maturities.

(iv) Finance Lease Obligation: For obligation arrived based on IRR, implicit rate applicable on the reporting date and for obligation arrived based on incremental borrowing rate, applicable rate for remaining maturity.

(v) Non-Convertible Redeemable Bonds, Foreign Currency Bonds - Singapore Dollars, Senior Notes (Bank of America) and Loan from Odisha Government: Discounting future cash flows using rates currently available for items on similar terms, credit risk and remaining maturities (Excluding floating rate borrowings).

(vi) Term Loans from Oil Industry Development Board (OIDB): Discounting future cash flows using rates currently available for similar type of borrowings (OIDB Borrowing Rate) using exit model as per Ind AS 113.

C. Level 3 Hierarchy:

(i) Unquoted Equity Instruments: Fair values of the unquoted equity shares have been estimated using a DCF model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management’s estimate of fair value for these unquoted equity investments.

(ii) Non Convertible Redeemable Preference Shares, Compulsorily Convertible Debentures and Loan to Related parties - Suntera: Fair value of Preference shares, Debentures and Loan to Suntera is estimated with the help of external valuer by discounting future cash flows. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.

Financial Risk Factors

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

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

The Risk Management Committee comprised of senior management oversees the management of these risks. The Company’s senior management is supported by a Risk Management Compliance Board that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Company’s senior management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies, risk objectives and risk appetite.

The Company’s requirement of crude oil are managed through integrated function handled through its international trade and optimization department. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. As per Company’s policy, derivatives contracts are taken only to hedge the various risks that the Company is exposed to and not for speculation purpose.

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

A. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.

The major components of market risk are interest rate risk, foreign currency risk, commodity price risk and other price risk viz. equity shares etc. Financial instruments affected by market risk include Borrowings, Deposits, FVTOCI investments and derivative financial instruments.

The sensitivity analysis in the following sections relate to the position as at March 31, 2019 and March 31, 2018.

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

1. Interest Rate Risk

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

The Company manages to maintain a mix between fixed and floating rates for rupee and foreign currency loans, based on liquidity, availability of cost effective instruments and considering the market/regulatory constraints etc. As at March 31, 2019, approximately 59% of the Company’s borrowings are at a fixed rate of interest (March 31, 2018: 49%).

2. Foreign Currency Risk

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

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

The Company has outstanding forward contract of Rs,2,873.43 crore as at March 31, 2019 (March 31, 2018: Rs,4,210.75 crore) which has been undertaken to hedge its exposure to borrowings and other financial liabilities.

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

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

3. Commodity Price Risk

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

Due to variation in prices, the Company incurred inventory gain/(Loss) of Rs,4,172.26 crores during the current year (Previous Year: Rs,6,794.64 crores)

4. Equity Price Risk

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

At the reporting date, the exposure to unlisted equity securities at fair value was Rs,651.87 crore. Sensitivity analysis of these investments have been provided in Note 39.

The exposure to listed equity securities valued at fair value was Rs,18,650.71 crore. An increase/decrease of 5% on the NSE market index could have an impact of approximately Rs,932.54 crore on the OCI and equity attributable to the Company. These changes would not have an effect on profit or loss.

5. Derivatives and Hedging

(i) Classification of derivatives

The Company is exposed to certain market risks relating to its ongoing business operations as explained above. The Company has applied hedge accounting for designated derivative contracts w.e.f April 1, 2018 as per Ind AS 109 -Financial Instruments-. Due to this, gain amounting to Rs,22.04 crore (net of tax) has been accounted in Other Comprehensive income which will be recycled to Statement of Profit and Loss in subsequent periods on settlement of respective contracts.

(ii) Hedging activities

The primary risks managed using derivative instruments are foreign currency risk and commodity price risk.

Commodity Price Risk

Indian Oil buys crude and sells petroleum products linked to international benchmark prices and these benchmark prices do not move in tandem. This exposes Indian Oil to the risk of variation in crack spreads i.e. decrease in the difference between the price of a refined product and the price of crude.

The risk of fall in crack spreads of certain petroleum products in highly probable forecast sale transactions is hedged by undertaking crack spread forward contracts. The Company wants to protect the realization of margins and therefore to mitigate this risk, the Company is taking the crack spread forward contracts to hedge the margin on highly probable forecast sale in future. Risk management activities are undertaken in OTC market i.e. these are the bilateral contracts with registered counterparties.

All these hedges are accounted for as cash flow hedges.

Foreign Currency Risk

The Company is exposed to various foreign currency risks as explained in A.2 above. As per Company’s Foreign Currency & Interest Rate Risk Management Policy, the Company is required to fully hedge the short term foreign currency loans (other than revolving lines and PCFC loans) and at least 50% of the long term foreign currency loans based on market conditions.

Apart from mandatory hedging of loans, the Company also undertakes foreign currency forward contracts for the management of currency purchase for repayment of crude/product liabilities based on market conditions and requirements. The above hedgings are undertaken through delivery based forward contracts.

All these hedges are accounted for as cash flow hedges.

Hedge Effectiveness

There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange and commodity forward contracts match the terms of hedge items. The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange and commodity forward contracts are identical to the hedged risk components. To test the hedge effectiveness, the Company compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks.

Source of Hedge ineffectiveness

In case of commodity price risk, the Company has identified the following sources of ineffectiveness, which are not expected to be material:

- Differences in the timing of the cash flows of the hedged items and the hedging instruments

- Different indexes linked to the hedged risk of the hedged items and hedging instrument

- The counterparties’ credit risk differently impacting the fair value movements of the hedging instruments and hedged items

- Changes to the forecasted amount of cash flows of hedged items and hedging instruments Disclosures of effects of Cash Flow Hedge Accounting

The Company has applied the hedge accounting prospectively from the April 1, 2018. The related disclosures are made for the current year only.

Hedging instruments

The Company is holding the following foreign exchange and commodity forward contracts:

B. Credit risk Trade Receivables

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

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

Financial instruments and cash deposits

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

The Company’s maximum exposure to credit risk for the components of the Balance Sheet at March 31, 2019 and March 31, 2018 is the carrying amounts as provided in Note 4,5,6, 11& 12.

C. Liquidity risk

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

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

* Based on the maximum amount that can be called for under the financial guarantee contract.

D. Excessive risk concentration

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

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

E. Collateral

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

NOTE - 5 : CAPITAL MANAGEMENT

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

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

1. As per the applicable provisions of Indian Accounting Standards, the loan given to Suntera Nigeria 205 Ltd. is measured at fair value through Statement of Profit and Loss in the financial statements and fair value of the loan is Rs,147.29 crore as on March 31, 2019 (2018: Rs,120.56 crore). Refer Note -39 for further details regarding fair valuation.

*Amount of Rs,51.67 crore (2018: Rs,29.85 crore) included in Note 17: Other Financial Liabilities.

NOTE - 6 : DISCLOSURE ON GOVERNMENT GRANTS

A. Revenue Grants

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

Subsidies on sales of SKO (PDS) and LPG (Domestic) in India amounting to Rs,128.21 crore (2018: Rs,63.65 crore) and subsidies on sales of SKO and LPG to customers in Bhutan amounting to Rs,21.79 crore (2018: Rs,17.46 crore) have been reckoned as per the schemes notified by Governments.

2 Compensation against under recoveries

The company has accounted for Budgetary Support of Rs,4,110.18 crore (2018: Rs,3,196.34 crore) towards under-recovery on sale of SKO (PDS) in the Statement of Profit and Loss as Revenue Grant.

3 Export of Notified Goods under MEIS Claims

The company has recognized Rs,6.32 crore (2018: NIL) on export of notified goods under Merchandise Exports from India Scheme (MEIS) in the Statement of Profit and Loss as Revenue Grant.

4 Stidend to apprentices under NATS scheme

The company has received grant of Rs,8.57 crore (2018: NIL) in respect of stipend paid to apprentices registered under National Apprenticeship Training Scheme (NATS) and the same has been accounted on net basis against training expenses.

5 Grant in respect of revenue expenditure for research projects

During the year, the company has received revenue grant of Rs,0.95 crore (2018: Rs,1.53 crore) in respect of meeting out revenue expenditure such as Manpower, Consumables, Travel & Contingency etc for research projects undertaken with various agencies.

6 Incentive on sale of power

Company is getting incentive from Department of Renewable Energy, GOI for wind power generation of Electricity at the rate of Rs,0.50 paise for per unit of power generated. The Company has received grant of Rs,3.08 crore during the current year (2018: Rs,2.51 crore).

7 EPCG Grant

Grant recognized in respect of duty waiver on procurement of capital goods under EPCG scheme of Central Govt, which allows procurement of capital goods including spares for pre production and post production at zero duty subject to an export obligation of 6 times of the duty saved on capital goods procured. The unamortized grant amount as on March 31, 2019 is Rs,57.56 crore (2018: Rs,241.42 crore). During the year, the company has recognized Rs,200.43 crore (2018: Rs,232.16 crore) in the statement of profit and loss as amortization of revenue grant. The company expects to meet the export obligations and therefore equivalent deferred grant has not been treated as liability.

8 Excise duty benefit in North East

Excise duty exemption of 50% of goods manufactured and cleared from north east refineries has been reckoned at full value in revenue and on net basis in expenses under ‘Excise Duty’ (to the extent of duty paid). Financial impact for the current year is Rs,2,831.40 crore (2018: Rs,3,050.90 crore).

9 Entry Tax exemption

The company has recognized grant on net basis in respect of entry tax exemption of crude/Naptha purchased in Panipat Refinery, Panipat Naptha Cracker Complex and Paradip Refinery in cost of materials consumed/Purchase of Stock-in Trade. Entry tax exemption on crude/Naptha procured in the state of Haryana and Odisha has been received amounting to NIL (2018: Rs,162.32 crore).

B. Capital Grants

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

The company has received government grant from OIDB (Oil Industry Directorate Board) for strengthening distribution of PDS Kerosene as per the directions of MoP&NG to be used in construction of 20KL underground Tank, Mechanical Dispensing Units and Barrel Shed. The unamortized capital grant amount as on March 31, 2019 is Rs,1.28 crore (2018: Rs,1.56 crore). During the year, the company has recognized Rs,0.28 crore (2018: Rs,0.27 crore) in statement of profit and loss as amortization of capital grants.

2 DBTL Capital Grant

The company has received Government grant for roil out of DBTL scheme launched by MOPNG towards development, acquisition of software/licenses & data processing equipment for effective implementation of platform for dispesning of subsidy to customers purchasing LPG under DBTL scheme. The unamortized capital grant amount as on March 31, 2019 is NIL (2018: NIL). During the year, the company has recognized NIL (2018: Rs,0.47 crore) in the statement of profit and loss as amortization of capital grants.

3 Capital Grant in respect of Excise duty, Custom duty and GST waiver

The company has received grant in respect of Custom duty waiver on import on capital goods,Excise duty waiver and GST waiver on purchase of goods from local manufacturer in India under the certificate issued by Department of Scientific and Industrial Research (DSIR). The unamortized capital grant amount as on March 31, 2019 is Rs,52.52 crore (2018: Rs,44.75 crore) The goods so imported or procured from local manufacturer shall not be transferred or sold for a period of five years from date of installation. During the year, the company has recognized Rs,7.41 crore (2018: Rs,5.20 crore) in the statement of profit and loss as amortization of capital grants.

4 Capital Grant in respect of Research projects

The company has received capital grant from various agencies in respect of procurement/setting up of Capital assets for research projects undertaken. The unamortized capital grant amount as on March 31, 2019 is Rs,13.61 crore (2018: Rs,15.33 crore). During the year, the company has recognized Rs,3.64 crore (2018: Rs,2.82 crore) in the statement of profit and loss as amortization of capital grants.

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

Entry Tax exemption received from Odisha Government for Paradip Refinery Project has been recognized as Capital Grant and grossed up with the concerned Assets. The unamortized capital grant amount as on March 31, 2019 is Rs,116.31 crore (2018: Rs,121.62 crore). During the year, the company has recognized Rs,5.29 crore (2018: Rs,5.28 crore) in the statement of profit and loss as amortization of capital grants.

6 Capital Grant in respect of demonstration unit

Grant received from OIDB for setting up of demonstration unit at Guwahati refinery w ith the company’s R&D developed IndaDeptG technology. The unamortized capital grant amount as on March 31, 2019 is Rs,78.65 crore (2018: Rs,83.04 crore). During the year, the company has recognized Rs,4.38 crore (2018: Rs,4.38 crore) in the statement of profit and loss as amortization of capital grants.

7 Capital Grant in respect of interest subsidy

The company has received capital grant in respect of interest subsidy on loans taken from OIDB. The unamortized capital grant amount as on March 31, 2019 is Rs,6.21 crore (2018: Rs,6.40 crore). During the year, the company has recognized Rs,0.27 crore (2018: Rs,0.27 crore) in the statement of profit and loss as amortization of capital grants.

8 Capital Grant in form of Interest Free Loan

The company has received capital grant in the form of interest free loans from Orissa Government for a period of 15 years. The unamortized capital grant amount as on March 31, 2019 is Rs,1,352.98 crore (2018: Rs,915.94 cro


Mar 31, 2018

21. EARNINGS PER SHARE

The basic Earnings Per Share ("EPS") is computed by dividing the net profit / (loss) after tax for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares. The company did not have any potentially dilutive securities in the years presented.

III. Amendments to Standards effective April 1,2017

Amendments to Ind AS 7, Statement of Cash flows

Effective April 1, 2017, the Company adopted the amendment to Ind AS 7, which require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non cash changes. The adoption of the amendment has resulted into additional disclosures in relation to cash flow statement.

Amendments to Ind AS 102, Share Based payments

The amendment to Ind AS 102 is not relevant for the Company as it does not have any cash-settled share based payments or share based payments with a net-settled feature.

IV. Standards issued but not yet effective

Amendments to Ind AS 21, The Effects of Changes in Foreign Exchange Rates.

The amendment to Ind AS 21, Foreign currency transactions and advance consideration clarifies the date of the

transaction for the purpose of determining the exchange rate to be used on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The Company will adopt the amendments w.e.f April 1, 2018. The effect on adoption of Ind AS 21 is expected to be insignificant

Ind AS 115, Revenue from Contract with Customers

MCA has notified Ind AS 115 (Revenue from Contracts with Customers) on March 28, 2018 as part of the Companies (Indian Accounting Standards) Amendment Rules, 2018. Ind-AS 115 supersedes Ind-AS 11 Construction Contracts and Ind-AS 18 Revenue. According to the new standard, revenue is recognized to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Ind-AS 115 establishes a five step model that will apply to revenue earned from a contract with a customer.

The standard allows for two methods of adoption:

1) retrospectively to each prior period presented with or without practical expedients, or 2) retrospectively with cumulative effect of adoption as an adjustment to opening retained earnings in the period of adoption. The standard is effective for periods beginning on or after April 1, 2018. Early adoption is not permitted. The Company will adopt this standard retrospectively with cumulative effect of adoption as an adjustment to opening retained earnings effective April 1, 2018.

The Company charges non-refundable fees for new retail outlets from dealers. Under the existing Ind-AS-18, these are recorded as Income immediately on receipt whenever a new dealership agreement is signed. As per Ind-AS-115, receipt of non-refundable fees does not result in transfer of any promised good or service to the customer and therefore, this is to be considered as an advance payment for performance obligations to be satisfied in future. Hence, non-refundable fees are recognized as revenue when those future goods or services are provided to dealers. As goods are sold on regular basis to customer over the dealership agreement, the same will be amortized over the dealership period. The estimated reduction of ''129 crore is expected in Profit before tax in the Financial Year 2018-19. No significant impact is expected in the opening retained earnings during 2018-19.

NOTE-1 B: SIGNIFICANT ACCOUNTING ESTIMATES & JUDGEMENTS

The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. These include recognition and measurement of financial instruments, estimates of useful lives and residual value of Property, Plant and Equipment and Intangible Assets, valuation of inventories, measurement of recoverable amounts of cash-generating units, measurement of employee benefits, actuarial assumptions, provisions etc. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods affected.

JUDGEMENTS

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

Lease classification in case of leasehold land

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

Intangible Asset under Development

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

Contingencies

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

ESTIMATES AND ASSUMPTIONS

The key assumptions concerning the future and other key sources of estimation at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.

Defined benefit plans/ Other Long term employee benefits

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

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

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

Fair value measurement of financial instruments

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

Impairment of Financial Assets

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

A. i) Freehold land includes Rs,21.26 crore (2017: Rs,9.51 crore)

lying vacant due to title disputes/ litigation.

ii) Out of the Freehold land measuring 1364.01 acres at Mathura and Agra regions, land measuring 50 acres (approx) has been acquired by NHAI as a part of the NH2 widening project for which the determination of value of compensation is pending. Accordingly, the value of land amounting to Rs,1.19 crore is continued to be included in Freehold land

iii) Addition to Freehold land includes Rs,731.53 crores on account of additional amount provided on settlement of land compensation cases.

B. i) Buildings includeRs,0.01 crore ((2017: Rs,0.01 crore) towards

value of 1605 ((2017: 1605) Shares in Co-operative Housing Societies towards membership of such societies for purchase of flats.

ii) Includes Roads, Bridges etc. (i.e Assets other than Building) of Gross block amounting to Rs,2038.43 crore ((2017: Rs,1785.69 crore) and net block amounting to Rs,1271.09 crore (2017: Rs,1230.24 crore).

C. During the year Rs, 942.39 crore has been availed as VAT CREDIT /CENVAT/GST ITC out of capital expenditure on CWIP/ assets. The cost of assets are net of VAT CREDIT / CENVAT/GST ITC. wherever applicable.

D. Depreciation and amortization for the year includes Rs,2.34 crore (2017: Rs,25.82 crore) relating to construction peried expenses shown Note-2.2.

E. Railways have claimed transfer of ownership in respect of certain assets provided by the Company at railway premises which has not been accepted by the company and continue to be part of fixed assets of the Company. WDV of such assets is Rs, 70.63 crores (2017: Rs, 67.00 crores)

F. Land and Building includes Rs, 211.94 crore (2017: Rs,186.63 crore) in respect of which Title / Lease Deeds are pending for execution or renewal

G. For details regarding hypothecation/ pledge of assets. refer Note-16.

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

B. Includes non current assets retired from active use earlier used in various segments and held for disposal through tendering process within a year.

C. During the year, the company has recognized impairment loss of Rs, 97.91 crore (2017: Rs, 27.10 crore) on write-down of the asset to fair value less costs to sell and the same has been shown under the caption ''Other Expenses'' in the Statement of Profit and Loss.

B. Terms/Rights attached to Equity Shares

The Company has only one class of equity shares having par value of '' 10 each and is entitled to one vote per share. The dividend proposed by Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the corporation, the holders of equity shares will be entitled to receive the remaining assets of the company in proportion to the number of equity shares held

A. Reserve is created for meeting expenses relating to CSR activities in line with CSR policy of the Company. During the year, an amount of Rs, 327.94 crore (2017: Rs, 212.67 crore) has been appropriated as per provisions of Companies ActRs,2013. Out of total available fund for CSR (including unspent amount carried forward from previous year), an amount of Rs, 331.05 crore (2017: Rs, 213.99 crore) has been spent during the year. Also refer Note-46.

B. Reserve is created to mitigate risk of loss of assets not insured with external insurance agencies.

C. Amount set aside out of profits from exports for availing income tax benefits.

C. Secured Term Loans 1. Security Details for OIDB Loans:

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

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

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

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

e) First charge on the facilities at SMPL System

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

D. Finance Lease Obligations

The Finanace Lease Obligations is against assets aquired under Finance Lease. The net carrying value of the same is Rs, 3555 crores (2017: Rs, 3698.77 crore).

H. Repayment Schedule of Unsecured Interest Free Loans from Govt of Odisha

1. Interest free loan given by Odisha Government for 15 years disbursed in quarterly installment of Rs,175 crore starting from 01.04.2016 repayable after 15 years. The first installment of loan for the period April 2016 to December 2017 of Rs, 1225 crore has been received on 15.01.2018 and thereafter Rs,175 crore is received every quarter. Total loan disbused till now is Rs, 1400 crore which is repayable after 15 years from the quarter for which the same is given i.e. in quarterly installments starting from last week of June 2031 onwards. This loan being interest free loan is discounted for fair value and Government grant accounting is done. Also refer Note-47.

Notes

1. Proposed dividend on equity shares are subject to approval at the annual general meeting and are not recognized as a liability (including DDT thereon) as at 31 March, 2018.

2. Shares held under IOC Share Trust of face value Rs,233.12 crore (Pre-bonus Rs,116.56 crore) has been netted off from paid up capital.

3. The Company has also incurred expenses on distribution of final dividend amounting to Rs,0.13 crore (2017: Rs,0.12 crore) and on distribution of interim dividend amounting to Rs,0.14 crore (2017: Rs,0.26 crore) which has been debited to equity.

NOTE-32: EARNINGS PER SHARE (EPS)

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

Notes

1. Equity Shares held under IOC Share Trust of face value Rs,233.12 crore (Pre-bonus Rs,116.56 crore) has been netted off from weighted average number of equity shares and EPS is worked out accordingly.

2. Pursuant to the approval of the shareholders, the company has issued bonus shares in the ratio of one Equity Shares of Rs,10/- each for one existing equity share of Rs,10/- each in March 2018. Accordingly, earnings per share (EPS) (basic and diluted) of FY 2016-17 have been adjusted on account of bonus shares.

*Block Yemen 82 relinquished during 2017-18

** Participating interest changed to 25% for exclusive operations in Appraisal phase on account of non participation by GSPC A The project ''s exploration period ended on 24 June 2009. Negotiations with Iranian Authorities are in progress for development of the Block

# Blocks are under relinquishment.

~ Under Force Majeure since 20.05.2014

@ Exploration License expired on 07.10.2015 and approval of entry into Appraisal phase awaited from MoP&NG through DGH.

NOTE-34B: IN COMPLIANCE OF REVSIED GUIDANCE NOTE ON ACCOUNTING FOR OIL AND GAS PRODUCING ACTIVITIES, THE REQUIRED DISCLOSURES IN RESPECT OF RESERVES ARE AS UNDER:

During the year, Dirok field of Pre-NELP block AAP-ON-94/1 commenced production of gas and condensate on 26th August 2017 having producing life cycle of 20 years. Indian Oil has the participating interest of 29.03% in the block.

Frequency

The Proved (PD) and Proved & Developed (PDD) reserves mentioned above are the provisional numbers based on the estimate provided by the operator. For the purpose of estimation of Proved (PD) and Proved Developed (PDD) reserves, Deterministic method has been used by the operator. The annual revision of Reserve Estimates is based on the yearly exploratory and development activities and results thereof.

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

During the year, the company has recognized Rs,39.66 crore (2017 : Rs,39.88 crore) as contribution to EPS-95 in the Statment of Profit and Loss/CWIP (included in Contribution to Provident and Other Funds in Note - 27/ Construction period expenses in Note-2.2).

Pension Scheme

During the year, the company has recognized Rs,516.68 crore (2017 : Rs,354.13 crore) towards Defined Contributory Employees Pension Scheme in the Statment of Profit and Loss/CWIP (included in Contribution to Provident and Other Funds in Note - 27 Construction period expenses in Note-2.2).

B. Defined Benefit Plans- General Description Provident Fund:

The Company''s contribution to the Provident Fund is remitted to separate provident fund trusts established for this purpose based on a fixed percentage of the eligible employee''s salary and charged to Statement of Profit and Loss. Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the company. The company has three Provident Funds maintained by respective PF Trusts in respect of which actuarial valuation is carried out and all three trusts do not have any deficit as on 31st March 2018.

Gratuity:

Each employee rendering continuous service of 5 years or more is entitled to receive gratuity amount equal to 15/26 of the eligible salary for every completed year of service subject to maximum of Rs, 0.20 crore at the time of separation from the company. Besides, the ceiling of gratuity increases by 25% whenever IDA rises by 50%.

Post Retirement Medical Scheme (PRMS):

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

Resettlement Allowance:

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

Ex gratia:

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

Staff Pension fund at AOD:

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

Workmen Compensation:

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

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

Each employee is entitled to get 8 earned leaves for each completed quarter of service. Encashment of earned leaves is allowed during service leaving a minimum balance of 15 days subject to maximum accumulation of 300 days. In addition, each employee is entitled to get 5 sick leaves (in lieu of 10 HPL) at the end of every six months. The entire accumulation is permitted for encashment only at the time of retirement. DPE had clarified that sick leave cannot be encashed, though Earned Leave (EL) and Half Pay Leave (HPL) could be considered for encashment on retirement subject to the overall limit of 300 days. MOP&NG has advised the company to comply with the DPE Guidelines. However, keeping in view operational complications and service agreements the

company has continued with the present practice and requested concerned authorities to reconsider the matter.

Long Service Award:

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

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

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

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

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

Note-36: COMMITMENTS AND CONTINGENCIES

A. LEASES

(a) Operating lease-as Lessee

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

These relate to storage tankage facilities for petroleum products, BOO contract for Nitrogen and Hydrogen Plant, QC labarotary at Paradip Refinery and various other leases in substance as mentioned in (iii) below.

(ii) The company has taken certain assets (including lands, office/residential premises) on Operating Lease which are cancellable by giving appropriate notice as per the respective agreements Incl. applicable cases as per (iii) below. During the current year, Rs,1038.21 crore (2017: Rs,366.06 crore) has been paid towards cancellable Operating Lease. Also refer Note 1B for more details on judgements made for lease classification in case of lands.

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

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

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

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

(c) BOO agreement with Air Liquide Industries is for supply of oxygen and nitrogen at Panipat Refinery for a period of 18 years. The land is owned by IOCL and the plant is being operated by contractor for supply of oxygen and nitrogen to IOCL. There is a commitment to pay monthly minimum amount as per the agreement. IOCL shall always have first right of use of Nitrogen

& Oxygen manufactured at the plant. Nitrogen gas manufactured by the contractor is mainly supplied to IOCL. Hence this arrangement is classified as lease as per Appendix C to Ind AS 17.

(c ) Finance lease - was Lessee

The company has entered into following material finance lease arrangements:

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

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

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

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

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

(d) Finance lease - as Lessor

The company has entered into following material finance lease arrangements:

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

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

B. 1.2Rs,31.23 crore (2017: Rs,73.59 crore) in respect of demands for Entry Tax from State Governments including interest of Rs,3.07 crore (2017: Rs,8.98 crore).

B.1.3 Rs,2773.87 crore (2017: Rs,2844.9 crore) being the demands raised by the VAT/ Sales Tax Authorities including interest of Rs,1332.72 crore (2017: Rs,1416.64 crore).

B.1.4 Rs,1834.36 crore (2017: Rs,2363.48 crore; ) in respect of Income Tax demands including interest of Rs,614.06 crore (2017: Rs,594.57 crore).

B.1.5 Rs,2005.42 crore (2017: Rs,2656 crore) including Rs,1616.36 crore (2017: Rs,2401.88 crore) on account of Projects for which suits have been filed in the Courts or cases are lying with Arbitrator. This includes interest of Rs,155.86 crore (2017: Rs,44.24 crore).

B.1.6 Rs,1007.35 crore (2017: Rs,1160.89 crore) in respect of other claims including interest of Rs,405.84 crore (2017:

Rs,258.38 crore).

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

been considered as remote. Contingent liabilities in respect of joint operations are disclosed in Note 33 B.

B.2 Guarantees excluding financial guarantees

B.2.1 The Company has issued Corporate Guarantee in favour of three beneficiaries i.e. Bolivarian Republic of Venezuela (Republic), The Corporacion Venezolana del Petroleo S.A. and PeTroCarabobo S.A., on behalf of Indoil Netherlands B.V., Netherlands (an associate company) to fulfill the associate company''s future obligations of payment of signature bonus / equity contribution/ loan to the beneficiaries. The total amount sanctioned by the Board of Directors is USD 424 million. The estimated amount of such obligation (net of amount paid) is Rs,2,387.99 crore - USD 366.37 million (2017: Rs,2,376.09 crore - USD 366.37 million).

B.2.2 The Company has entered into Master Guarantee Agreement, on behalf of its subsidiaries viz. Indoil Global B.V. and Indoil Montney Ltd. for all of its payments and performance obligations under the various Project Agreements entered by the subsidiaries with PETRONAS Carigali Canada B.V. and Progress Energy Canada Ltd. The total amount sanctioned by the Board of Directors is CAD 3,924.76 million. The estimated amount of such obligation (net of amount paid) is Rs, 4,588.28 crore - CAD 905.65 million (2017: 11,570.97 crore - CAD 2,380.74 million). In 2017, the sanctioned amount is reduced by CAD 1,462 million due to winding down of LNG plant.

B.2.3 The company has issued Corporate Guarantee, on behalf of Indian Oil Adani Gas Private Limited (IOAGPL), to the extent of obligations of later company under Performance Bank Guarantee Facility provided to IOAGPL by Rs,State Bank of India, Syndicate Bank, Canara Bank, Bank of Baroda and Axis bankRs,. The CompanyRs,s share of such obligation is estimated at Rs, 3,280.94 crore (2017: Rs, 2,471.38 crore).

B.2.4 The Company has issued Corporate Guarantee, on behalf of Indian Oil LNG Private Limited (IOLPL), to the extent of obligations of IOLPL under Performance Bank Guarantee Facility provided to IOLPL by State Bank of India. The estimated amount of such obligation is at Rs, 11.40 crore (2017: Rs, 11.40 crore).

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

Pending decision of the Government, no liability could be determined and provided for in respect of additional compensation, if

any, payable to the land owners and the Government for certain lands acquired.

COMMITMENTS C.1 Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs,14748.6 crore (2017: Rs, 12902.79 crore)."Capital Commitments in respect of Joint Operations are disclosed in Note 33B.

C.2 Other Commitments

C.2.1 The Company has an export obligation to the extent of Rs, 2822.44 crore (2017: Rs, 5325.89 crore) on account of concessional rate of duty availed under EPCG license scheme on procurement of capital goods and the same is expected to be fulfilled by way of exports.

C.2.2 To meet the direction of Honourable High court of Orissa, the company has a commitment to pay Rs,280.1 crore (2017: Rs,280.1 crore) towards providing high tech ambulances, removal of old anicut and construction of water treatment plant in the state of Orissa . In addition the company has to incur cost towards dredging through Orissa Construction Co , a state government agency estimate for which yet to be finalised"

C.2.3 Indian Oil LNG Private Limited (IOLPL), the JV company, has entered into Debenture Subscription Agreement with ICICI Bank (ICICI), in which, the Company (IOCL), as promoter of IOLPL, has provided put option under which ICICI has option to sell Compulsory Convertible Debenture (CCD) to the Company (IOCL) before the expiry date. In addition to this, the Company, at the sole discretion, has right to acquire CCD from ICICI on or before the expiry date. The company''s (IOCL) share of such obligation is '' 949.05 Crore (2017: '' 341.28 Crore).

C.2.4 The Company through IOCL Singapore Pte Ltd has entered into an agreement with Shell Overseas Holding Ltd to acquire 17% participating interest in the Mukhaizna Oil Field, Oman by acquiring 100% of the share capital in Shell Exploration & Production Oman Ltd (SEPOL). The Company has outstanding investment commitment of Rs, 2144.42 Crore payable as on 31 March 2018. The acquisition of SEPOL was completed on 05th April 2018.

NOTE-37: RELATED PARTY DISCLOSURES

As required by Ind-AS -24 "Related Party Disclosures", are given below :

1. Relationship with Entities

A) Details of Subsidiary Companies/ Entities and their Subsidiaries:

1) Chennai Petroleum Corporation Limited 7) ioc Sweden AB

2) Indian Oil (Mauritius) Limited 8) IOCL (USA) INC

3) Lanka |OC PLC 9) indOil Global B.V., Netherlands

4) |OC Middle East FZE 10) iocl Singapore Pte. Limited

5) |ndianOil - CREDA Biofuels Limited 11) |ndOil Montney Limited

6) Indian Catalyst Private Limited 12) |OC Cyprus Limited

Note: 1) Transactions in excess of 10% of the total related party transactions for each type has been disclosed above.

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

3) In case of Subsidiary Companies which have been closed/divested during the period, transactions up to the date of closure / disinvestment only are disclosed.

2. Relationship with Entities A) Details of Joint Ventures (JV) / Associate Entities to IOCL & its subsidiary

1 ) IOT Infrastructure & Energy Services Limited

2 ) Lubrizol India Private Limited 24) Ratnagiri Refinery & Petrochemicals Limited

3 ) Petronet VK Limited 25) |ndian Additives Limited

4 ) Indian Oil Petronas Private Limited 26) National Aromatics & Petrochemicals Corporation Limited

5 ) Avi-Oil India Private Limited 27) INDOIL Netherlands BV Netherland

6 ) Petronet India Limited 28) Taas |ndia PTE Limited

7 ) Petronet LNG Limited 29) Vankor |ndia PTE Limited

8 ) Green Gas Limited 30) Ceylon Petroleum Storage Terminals Limited

9 ) Indian Oil Panipat Power Consortium Limited 31) Falcon Oil & Gas B.V.

10) Petronet CI Limited B) Details of Subsidiary to JV''s of IOCL

11) Indian Oil LNG Private Limited 1) IOT Engineering & Construction Services Ltd.

12) Indian Oil SkyTanking Private Limited 2) Stewarts and Lloyds of |ndia Limited

13) Suntera Nigeria 205 Limited 3) IOT |nfrastructures Private Limited

14) Delhi Aviation Fuel Facility Private Limited 4) IOT Canada Limited

15) Indian Synthetic Rubber Private Limited 5) IOT Utkal Energy Services Limited

16) Indian Oil Ruchi Biofuels LLP 6) PT IOT EPC |ndonesia

17) NPCIL- Indian Oil Nuclear Energy Corporation Limited 7) IOT Engineering Projects Limited

18) GSPL India Transco Limited 8) O^ Oiltanking Engineering & Construction Services LLC

19) GSPL |ndia Gasnet Limited 9) |OT En gingering & Construction Services Pte. Ltd. Singapore

20) |ndianOil - Adani Gas Private Limited 10) JSC KazakhstanCaspishelf

21) Mumbai Aviation Fuel Farm Facility Private Limited 11) |OT vito MUHENDISLIKINSAAT VE TAAHUT A.S.

22) Kochi Salem Pipeline Private Limited 12) mdian Oil Skytanking Delhi Pvt. Limited

23) Hindustan Urvarak & Rasayan Limited 13) | Anwesha FZE

Note:

1) Transactions in excess of 10% of the total related party transactions for each type have been disclosed above.

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

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

3. Relatives of Key Managerial Personnel and nature of relation with whom transactions are undertaken during the year:

1) M/s. JOT Filling Station, Rureke, Punjab (Indian Oil Retail Outlet): Owned by brother of Key Managerial Personnel

2) Shri Harvinder Singh Kainth (Manager, Indian Oil Corporation Limited): Brother of Key Managerial Personnel

3) Mindtree Limited (Company): Managed by Key Managerial Personnel

4. Government related entities where significant transactions carried out

Apart from transactions reported above, the company has transactions with other Government related entities, which includes but not limited to the following:

Name of Government : Government of India (Central and State Government)

Nature of Transactions :

- Sale of Products and Services

- Purchase of Products

- Purchase of Raw Materials

- Handling and Freight Charges, etc.

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

5) Key Managerial Personnel

A. Whole Time Directors/ Company Secretary B. Independent Directors

1) Shri Sanjiv Singh 1) Shri Sanjay Kapoor

2) Shri B. Ashok (upto 31.05.2017) 2) Shri Parindu K. Bhagat

3) Shri A.K. Sharma 3) Shri Vinoo Mathur (w.e.f. 22.09.2017)

4) Shri Anish Aggarwal 4) Shri Samirendra Chatterjee (w.e.f. 22.09.2017)

5) Shri B. S. Canth (upto 31.01.2018) 5) Shri Vivek Rae (w.e.f. 22.09.2017)

6) Shri G. K. Satish (w.e.f. 01.°9.2°16) 6) Shri Chitta Ranjan Biswal (w.e.f. 22.09.2017)

7) Shri S. S. V. Ramakumar (w.e.f. 01.02.2017) 7) Dr. Jagdish Kishwan (w.e.f. 22.09.2017)

8) Shri B V Rama Gopal (w.e.f. 12.02.2018) 8) Shri Sankar Chakraborti (w.e.f. 22.09.2017)

9) Shri Ranjan Kumar Mohapatra (w.e.f. 19.02.2018) 9) Dr. B. Mahadevan (w.e.f. 22.09.2017 and upto 19.03.2018)

10) Shri Verghese Cherian (upto 31.10.2017) 10) Shri Dharmendra S. Shekhawat (w.e.f. 22.09.2017)

11) Shri Kamal Kumar Gwalani (w.e.f. 01.09.2017) 11) Shri Subroto Bagchi (upto 29.06.2017)

12) Shri Raju Ranganathan (upto 31.08.2017) C. Government Nominee Directors

1) Shri Ashutosh Jindal

2) Smt. Urvashi Sadhwani (w.e.f. 27.10.2017)

3) Shri A. P. Sawhney (Upto 22.06.2017)

Notes :

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

2) In addition, whole-time Directors are also allowed the use of Corporation''s car for private purposes up to 12,000 kms. per annum on a payment of Rs, 2,000/- per mensem.

3) Refer Note 5 for Present value of Outstanding Loans/ Advance Receivables from Directors

1. The Company is engaged in the following business segments:

a) Sale of Petroleum Products

b) Sale of Petrochemicals

c) Other Businesses, which comprises Sale of Gas, Explosives & Cryogenics, Wind Mill & Solar Power Generation and Oil & Gas Exploration Activities.

Segments have been identified and reported taking into account, the nature of products and services and differing risks and returns

2. Segment Revenue comprises of the following:

a) Turnover (Inclusive of Excise Duties)

b) Net Claim/(Surrender) of SSC

c) Subsidy / Grants received from Governments

d) Other Operating Revenue

3. Inter segment pricing are at Arm''s length basis

4. There are no reportable geographical segments.

NOTE:

1. The management assessed that fair value of Trade Receivables, Cash and Cash Equivalents, Bank Balances, Deposit for Leave Encashment Fund, Recoverable from Employee Benefits Trusts, Other Non-derivative Current Financial Assets, Finance lease Receivable, Security Deposit paid and received, Short-term Borrowing (including Current Maturities), Trade Payables, Floating Rate Borrowings/ Receivables, Other Non-derivative Current Financial Liabilities and Liabilities towards financial guarantees approximate their carrying amounts.

2. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Methods and assumptions

The following methods and assumptions were used to estimate the fair values at the reporting date:

A. Level 1 Hierarchy:

(i) Quoted equity shares: Closing quoted price (unadjusted) in National Stock Exchange of India Limited

(ii) Quoted Government securities: Closing published price (unadjusted) in Clearing Corporation of India Limited

(iii) Foreign Currency Bonds - US Dollars: Closing price for the specific bond collected from Bank

B. Level 2 Hierarchy:

(i) Derivative instruments at fair value through profit or loss: Replacement cost quoted by institutions for similar instruments by employing use of market observable inputs.

(ii) Loans to employees, PMUY Loan: Discounting future cash flows using rates currently available for items on similar terms, credit risk and remaining maturities.

(iii) Finance lease obligation: For obligation arrived based on IRR, implicit rate applicable on the reporting date and for obligation arrived based on incremental borrowing rate, applicable rate for remaining maturity.

(iv) Non-Convertible Redeemable Bonds, Foreign Currency Bonds - Singapore Dollars and Senior Notes (Bank of America), Loan from Odisha Government: Discounting future cash flows using rates currently available for items on similar terms, credit risk and remaining maturities (Excluding floating rate borrowings).

(v) Term Loans from Oil Industry Development Board (OIDB): Discounting future cash flows using rates currently available for similar type of borrowings (OIDB Borrowing Rate) using exit model as per Ind AS 113.

C. Level 3 Hierarchy:

(i) Unquoted equity instruments: Fair values of the unquoted equity shares have been estimated using a DCF model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments

(ii) Non Convertible Redeemable Preference shares, Compulsorily Convertible Debentures and Loan to Related parties - Suntera:

Fair value of Preference shares, Debentures and Loan to Suntera is estimated with the help of external valuer by discounting future cash flows. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.

NOTE - 40 FINANCIAL INSTRUMENTS AND RISK FACTORS Financial Risk Factors

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

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

The Risk Management Committee comprised of senior management oversees the management of these risks. The Company''s senior management is supported by a Risk Management Compliance Board that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Company''s senior management that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies, risk objectives and risk appetite.

The Company''s requirement of crude oil are managed through integrated function handled through its international trade and optimization department. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. As per Company''s policy, derivatives contracts are taken only to hedge the various risks that the Company is exposed to and not for speculation purpose.

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

A. Market risk

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

The sensitivity analysis in the following sections relate to the position as at 31 March 2018 and 31 March 2017.

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

1. Interest rate risk

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

The Company manages to maintain a mix between fixed and floating rates for rupee and foreign currency loans, based on liquidity, availability of cost effective instruments and considering the market/ regulatory constraints etc. As at 31 March 2018, approximately 49% of the Company''s borrowings are at a fixed rate of interest (31 March 2017: 37%).

2. Foreign currency risk

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

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

The Company has outstanding forward contract of Rs,4,210.75 crore as at 31 March 2018 (31 March 2017: Rs,1,702.22 crore) which has been undertaken to hedge its exposure to borrowings and other financial liabilities.

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

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

3. Commodity price risk

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

4. Equity price risk

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

At the reporting date, the exposure to unlisted equity securities at fair value was Rs,726.87 crore. Sensitivity analysis of these investments have been provided in Note-39.

The exposure to listed equity securities valued at fair value was Rs,20,493.36 crore. An increase / decrease of 5% on the NSE market index could have an impact of approximately Rs,1,024.67 crore on the OCI and equity attributable to the Company. These changes would not have an effect on profit or loss.

B. Credit risk

Trade receivables

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

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

Financial instruments and cash deposits

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

The Company''s maximum exposure to credit risk for the components of the Balance Sheet at 31 March 2018 and 31 March 2017 is the carrying amounts as provided in Note 4, 5, 6, 11 & 12.

C. Liquidity risk

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

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

* Based on the maximum amount that can be called for under the financial guarantee contract. Includes other commitments disclosed in C.2.3.

D. Excessive risk concentration

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

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

E. Collateral

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

NOTE-41: CAPITAL MANAGEMENT

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

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

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2018 and 31 March 2017.

Note

1 As per the applicable provisions of Accounting Standards, the loan given to Suntera Nigeria 205 Ltd. is measured at fair value through Statement of Profit and Loss in the financial statements and fair value of the loan is Rs, 120.56 crore as on 31.03.2018 (2017: Rs, 102.46 crore). Refer Note -39 for further details regarding fair valuation.

NOTE-47: DISCLOSURE ON GOVERNMENT GRANTS

A. Revenue Grants

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

Subsidies on sales of SKO (PDS) and LPG (Domestic) in India amounting to Rs, 63.65 crore (2017: Rs, 62.01 crore) and subsidies on sales of SKO and LPG to customers in Bhutan amounting to Rs, 17.46 crore (2017: Rs, 18.01 crore) have been reckoned as per the schemes notified by Governments.

2 Compensation against under recoveries

The company has accounted for Budgetary Support of Rs, 3196.34 crore (2017: Rs, 5149.21 crore) towards under-recovery on sale of SKO (PDS) in the Statement of Profit and Loss as Revenue Grants.

3 Grant in respect of revenue expenditure for research projects

During the year, the company has received revenue grant of Rs, 1.53 crore (2017: Rs, 0.73 crore) in respect of meeting out revenue expenditure such as Manpower, Consumables, Travel & Contingency etc for research projects undertaken with various agencies.

4 Incentive on sale of power

Company is getting incentive from Department of Renewable Energy, GOI for wind power generation of Electricity at the rate of Rs, 0.50 paise for per unit of power generated. The Company has received grant of Rs, 2.51 crore during the current year (2017: Rs, 3.19 crore).

5 EPCG Grant

Grant recognized in respect of duty waiver on procurement of capital goods under EPCG scheme of Central Govt. which allows procurement of capital goods including spares for pre production and post production at zero duty subject to an export obligation of 6 times of the duty saved on capital goods procured. The unamortized grant amount as on 31.03.2018 is Rs, 241.42 crore (2017: Rs, 435.72 crore) . During the year, the company has recognized Rs, 232.16 crore (2017: Rs, 4.04 crore) in the statement of profit and loss as amortization of revenue grant. The company expects to meet the export obligations and therefore equivalent deferred grant has not been treated as liability.

6 Excise duty benefit in North East

Excise duty exemption of 50% of goods manufactured and cleared from north east refineries has been reckoned at full value in revenue and on net basis in expenses under ''Excise Duty'' (to the extent of duty paid). Financial impact for the current year is Rs, 3050.90 crore (2017: Rs, 3072.91 crore).

7 Entry Tax exemption

The company has recognized grant on net basis in respect of entry tax exemption of crude/ Naptha purchased in Panipat Refinery, Panipat Naptha Cracker Complex and Paradip Refinery in cost of materials consumed/ Purchase of Stock-in Trade. Entry tax exemption on crude/Naptha procured in the state of Haryana and Odisha has been received amounting to Rs, 162.32 crore (2017: Rs, 505.84 crore).

B. Capital Grants

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

The company has received government grant from OIDB (Oil Industry Directorate Board) for strengthening distribution of PDS Kerosene as per the directions of MoP&NG to be used in construction of 20KL underground Tank, Mechanical Dispensing Units and Barrel Shed. The unamortized capital grant amount as on 31.03.2018 is Rs, 1.56 crore (2017: Rs, 1.84 crore). During the year, the company has recognized Rs, 0.27 crore (2017: Rs, 0.28 crore) in statement of profit and loss as amortization of capital grants.

2 DBTL Capital Grant

The company has received Government grant for roll out of DBTL scheme launched by MOPNG towards development, acquisition of software/licenses & data processing equipment for effective implementation of platform for dispesning of subsidy to customers purchasing LPG under DBTL scheme. The unamortized capital grant amount as on 31.03.2018 is NIL (2017: Rs, 0.47 crore). During the year, the company has recognized Rs, 0.47 crore (2017: Rs, 1.32 crore) in the statement of profit and loss as amortization of capital grants.

3 Capital Grant in respect of Excise duty, Custom duty and GST waiver

The company has received grant in respect of Custom duty waiver on import on capital goods, Excise duty waiver and GST waiver on purchase of goods from local manufacturer in India under the certificate issued by Department of Scientific and Industrial Research (DSIR). The unamortized capital grant amount as on 31.03.2018 is Rs, 44.75 crore (2017: Rs, 44.52 crore) The goods so imported or procured from local manufacturer shall not be transferred or sold for a period of five years from date of installation. During the year, the company has recognized Rs, 5.2 crore (2017: Rs, 4.78 crore) in the statement of profit and loss as amortization of capital grants.

4 Capital Grant in respect of Research projects

The company has received capital grant from various agencies in respect of procurement/ seeting up of Capital assets for research projects undertaken. The unamor


Mar 31, 2017

A. Corporate information

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

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

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

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

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

B. Standards issued but not yet effective

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

- Amendments to Ind AS 7, Statement of Cash flows

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

- Amendments to Ind AS 102, Share Based payments

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

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

The preparation of the company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures and the disclosure of contingent liabilities. These include recognition and measurement of financial instruments, estimates of useful lives and residual value of Property, Plant and Equipment and intangible assets, valuation of inventories, measurement of recoverable amounts of cash-generating units, measurement of employee benefits, actuarial assumptions, provisions etc.

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

JUDGEMENTS

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

Lease classification in case of leasehold land

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

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

Contingencies

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

ESTIMATES AND ASSUMPTIONS

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

Defined benefit plans / Other Long term employee benefits

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

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

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

Fair value measurement of financial instruments

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

Impairment of financial assets

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

NOTE-2: PROPERTY PLANT AND EQUIPMENT

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

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

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

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

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

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

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

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

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

Secured Loans (Term Loans : H)

1. Security Details for OIDB Loans:

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

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

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

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

e) First charge on the facilities at SMPL System

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

A. Finance Lease Obligations

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

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

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

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

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

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

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

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

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

Notes

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

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

NOTE-3: EMPLOYEE BENEFITS

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

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

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

Pension Scheme

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

B. Defined Benefit Plans- General Description Provident Fund:

The Company’s contribution to the Provident Fund is remitted to separate provident fund trusts established for this purpose based on a fixed percentage of the eligible employee’s salary and charged to Statement of Profit and Loss. Shortfall, if any, in the fund assets, based on the Government specified minimum rate of return, will be made good by the Company. The Company has three Provident Funds maintained by respective PF Trusts in respect of which actuarial valuation is carried out and all three trusts do not have any deficit as on 31stMarch 2017.

Gratuity:

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

Post Retirement Medical Scheme (PRMS):

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

Resettlement Allowance:

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

Ex gratia:

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

Staff Pension fund at AOD:

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

Workmen Compensation:

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

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

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

Long Service Award:

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

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

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

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

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

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

NOTE-4: COMMITMENTS AND CONTINGENCIES

A. LEASES

(a) Operating lease-as lessee

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

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

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

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

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

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

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

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

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

(b) Operating lease-as lessor

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

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

(c ) Finance lease-as lessee

The Company has entered into following material finance lease arrangements:

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

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

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

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

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

(d) Finance lease-as lessor

The company has entered into following material finance lease arrangements:

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

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

B. CONTINGENT LIABILITIES

B.1 Claims against the Company not acknowledged as debt

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

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

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

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

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

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

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

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

B.2 Guarantees excluding financial guarantees

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

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

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

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

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

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

C. COMMITMENTS

C.1 Capital Commitments

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

C.2 Other Commitments

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

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

NOTE-5: FINANCIAL INSTRUMENTS AND RISK FACTORS

Financial Risk Factors

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

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

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

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

A. Market risk

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

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

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

1. Interest rate risk

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

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

2. Foreign Curency Risk

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

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

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

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

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

3. Commodity price risk

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

4. Equity price risk

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

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

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

B. Credit risk Trade receivables

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

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

Financial instruments and cash deposits

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

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

C. Liquidity risk

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

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

D. Excessive risk concentration

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

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

E. Collateral

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

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

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

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

NOTE-6: RESEARCH AND DEVELOPMENT COSTS

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

NOTE-7: DISCLOSURE ON GOVERNMENT GRANTS

A. Revenue Grants

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

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

2 Compensation against under recoveries

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

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

3 Grant in respect of revenue expenditure for research projects

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

4 Incentive on sale of power

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

5 EPCG Grant

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

6 Excise duty benefit in North East

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

7 Entry Tax exemption

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

B. Capital Grants

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

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

2 DBTL Capital Grant

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

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

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

4 Capital Grant in respect of Research projects

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

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

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

6 Capital Grant in respect of demonstration unit

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

7 Capital Grant in respect of interest subsidy

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

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

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

Exemptions applied 1. Mandatory exemptions

a) Estimates

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

- FVTOCI - unquoted equity shares

- FVTOCI - debt securities

- Impairment of financial assets based on expected credit loss model

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

b) De-recognition of financial assets and financial liability

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

c) Derivative accounting

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

d) Classification and measurement of financial instruments

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

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

e) Impairment of financial assets

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

f) Embedded Derivatives

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

g) Government Loans

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

2. Optional exemptions

A. Long Term Foreign Currency Monetary Items

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

B. Deemed cost-Previous GAAP

carrying amount

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

C. Arrangements containing a lease

i) Arrangement in the nature of leases

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

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

ii) Composite leases: (Land and Building elements)

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

D. Investment in subsidiaries, Joint ventures and associates

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

E. Designate of previously recognised financial instrument

The Company has elected this exemption and opted to

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

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

F. Decommissioning liability

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

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

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

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

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

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

G. Business combinations

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

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

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

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

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

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

(i) Loan given to related parties

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

(ii) Non Convertible redeemable preference shares

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

(iii) Compusorily Convertible Debentures

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

2. Financial assets classified at fair value through OCI

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

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

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

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


Mar 31, 2015

NOTE - 1

CONTINGENT LIABILITIES & COMMITMENTS

A. Contingent Liabilities

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

B. Commitments

B.1 Capital Commitments

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

B.2 Other Commitments

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

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

NOTE - 2: EMPLOYEE BENEFITS

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

(A) PROVIDENT FUND

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

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

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

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

(B) PENSION SCHEME

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

(C) DEFINED BENEFIT PLANS- GENERAL DESCRIPTION Gratuity:

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

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

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

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

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

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

NOTE - 3: LEASES

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

FINANCE LEASES:

a) As Lessee

The company has entered into following finance leases:

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

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

NOTE - 4: EXPOSURE TO FINANCIAL AND COMMODITY DERIVATIVES

Financial and Derivative Instruments:

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

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

(a) For Hedging Currency Risks:

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

(b) For Hedging Commodity Related Risks:

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

NOTE - 5: RESEARCH AND DEVELOPMENT EXPENDITURE

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

NOTE - 6: OTHER DISCLOSURES

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

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

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

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

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

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

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

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

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


Mar 31, 2014

Contingent Liabilities & Commitments

A. Contingent Liabilities

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

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

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

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

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

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

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

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

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

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

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

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

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

Commitments

B.1 Capital Commitments

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

B.2 Other Commitments

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

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

(A) PROVIDENT FUND

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

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

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

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

(B) PENSION SCHEME

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

(C) DEFINED BENEFIT PLANS- GENERAL DESCRIPTION

Gratuity:

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

Leave Encashment:

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

PRMS:

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

Resettlement Allowance:

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

Long Service Award:

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

Ex gratia:

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

Staff Pension fund at AOD:

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

1. RELATIONSHIP

A) Details of Joint Venture Entities/Associates

1) IOT Infrastructure Energy Services Ltd.

2) Lubrizol India Pvt. Ltd.

3) Petronet VK Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt.Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

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

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facility Private Ltd.

15) Indian Synthetic Rubber Ltd.

16) Indian Oil Ruchi Biofuels LLP

17) NPCIL- IndianOil Nuclear Energy Corporation Ltd.

18) GSPL India Transco Ltd.

19) GSPL India Gasnet Ltd.

20) IndianOil Adani Gas Pvt. Ltd.

21) Petroleum India International - AOP (An Associate)

B) Details of Joint Ventures (Unincorporated)

1) MN-OSN-2000/2

2) AA-ONN-2001/2

3) MB-OSN-2004/1

4) MB-OSN-2004/2

5) KG-DWN-2005/1

6) GK-OSN-2009/1

7) GK-OSN-2009/2

8) CB-ONN-2010/6

9) AAP-ON-94/1

10) BK-CBM-2001/1

11) NK-CBM-2001/1

12) FARSI BLOCK IRAN

13) LIBYA BLOCK 86

14) LIBYA BLOCK 102/4

15) SHAKTHI GABON

16) YEMEN 82

17) YEMEN 83

18) AREA 95-96

C) Whole-time Directors

1) Shri R.S.Butola

2) Dr. R.K.Malhotra

3) Shri Sudhir Bhalla

4) Shri A.M.K.Sinha

5) Shri P.K.Goyal

6) Shri R.K.Ghosh

7) Shri Makarand Nene

8) Shri V.S. Okhde

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

FINANCE LEASES: a) As Lessee

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

b) As Lessors

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

NOTE - 2: OTHER DISCLOSURES

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

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

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

MOP&NG Order dated 30.03.2013.

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

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

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

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

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

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

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

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

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


Mar 31, 2013

NOTE - 1

1. CONTINGENT LIABILITIES & COMMITMENTS

A. Contingent Liabilities

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

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

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

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

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

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

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

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

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

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

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

B. Commitments

B.1 Capital Commitments

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

B.2 Other Commitments

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

NOTE - 2: EMPLOYEE BENEFITS

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

(A) PROVIDENT FUND

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

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

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

(B) PENSION SCHEME

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

NOTE - 3: RELATED PARTY DISCLOSURES

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

1. Relationship

A) Details of Joint Venture Entities/Associates

1) IOT Infrastructure & Energy Services Ltd.

2) Lubrizol India Pvt. Ltd

3) Petronet VK Ltd

4) IndianOil Petronas Pvt. Ltd

5) Avi-Oil India Pvt.Ltd

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facility Private Ltd.

15) Indian Synthetic Rubber Ltd.

16) Indian Oil Ruchi Biofuels LLP

17) NPCIL- IndianOil Nuclear Energy Corporation Ltd.

18) GSPL India Transco Ltd.

19) GSPL India Gasnet Ltd.

20) Petroleum India International - AOP (An Associate)

B) Whole-time Directors

1) Shri R.S.Butola

2) Dr. R.K.Malhotra

3) Shri Sudhir Bhalla

4) Shri A.M.K.Sinha

5) Shri P.K.Goyal

6) Shri R.K.Ghosh

7) Shri Makarand Nene

8) Shri V.S. Okhde

NOTE - 4: LEASES

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

FINANCE LEASES:

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

OPERATING LEASES:

a) As Lessees

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

b) As Lessors

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

NOTE - 5: INTEREST IN JOINT VENTURES

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

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

(a) Jointly Controlled Operations:-

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

(b) Jointly Controlled Assets:-

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

(c) Jointly Controlled Entities:-

NOTE - 6: EXPOSURE TO FINANCIAL AND COMMODITY TRADING DERIVATIVES

Financial and Derivative Instruments:

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

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

(a) For Hedging Currency Risks

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

NOTE - 7: OTHER DISCLOSURES

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

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

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

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

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

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


Mar 31, 2012

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

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

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

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

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

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

B. Terms/Rights attached to equity shares

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

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

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

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

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

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

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

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

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

I. Security Details for OIDB Loans:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

B. Expenses Includes:

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

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

1. Contingent Liabilities & Commitments

A. Contingent Liabilities

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

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

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

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

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

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

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

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

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

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

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

B. Commitments

B.1 Capital Commitments -

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

B.2 Other Commitments

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

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

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

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

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

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

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

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

"Employee Benefits" is as under:

(A) PROVIDENT FUND

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

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

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

(B) PENSION SCHEME

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

NOTE - 1: RELATED PARTY DISCLOSURES

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

1. RELATIONSHIP

A) Details of Joint Venture Companies/ Entities

1) IOT Infrastructure Energy Services Ltd.

2) Lubrizol India Pvt. Ltd

3) Petronet VK Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt. Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet Cl Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facilty Pvt. Limted

15) Indian Synthetic Rubber Limited

16) IndianOil Ruchi Biofuels LLP

17) NPCIL- IndianOil Nuclear Energy Corporation Limited

B) Whole-time Directors

1) Shri R.S.Butola

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

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

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

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

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

7) Shri Anand Kumar (upto 30.06.2010)

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

9) Shri R.K.Malhotra

10) Shri Sudhir Bhalla

11) Shri A.M.K.Sinha

12) Shri RK.Goyal

13) Shri R.K.Ghosh

14) Shri Makarand Nene

15) Shri V.S. Okhade

Notes:

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

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

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

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

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

Financial and Derivative Instruments:

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

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

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

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


Mar 31, 2011

For the Year Ended 31st March, 2011

1. Contingent Liabilities:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

28. The Profit and Loss Account includes :

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

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

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

(A) PROVIDENT FUND

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

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

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

(B) PENSION SCHEME

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

1. RELATIONSHIP

A) DETAILS OF JOINT VENTURE COMPANIES/ENTITIES

1) IOT Infrastructure & Energy Services Ltd.

2) Lubrizol India Pvt. Ltd.

3) Petronet VK Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt.Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

14) Delhi Aviation Fuel Facility Pvt. Ltd.

15) Indian Synthetic Rubber Limited

16) Indian Oil Ruchi Biofuels LLP

B) WHOLE-TIME DIRECTORS

1) Shri R.S. Butola

2) Shri S.Behuria (upto 28.02.2010)

3) Shri B.M.Bansal

4) Shri S.V.Narasimhan

5) Shri V.C.Agrawal

6) Shri G.C.Daga

7) Shri B.N.Bankapur

8) Shri Anand Kumar

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

10) Shri K.K. Jha

11) Dr. R.K. Malhotra

12) Shri Sudhir Bhalla

13) Shri A.M.K.Sinha


Mar 31, 2010

1) Contingent Liabilities:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

6. Bond Redemption Reserve:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

26. The Profit and Loss Account includes:

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

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

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

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

1. Relationships:

A) Details of Joint Venture Companies

1) I0T Infrastructure Energy Services Ltd.

2) Lubrizol India Pvt. Ltd.

3) Petronet V.K. Ltd.

4) IndianOil Petronas Pvt. Ltd.

5) Avi-Oil India Pvt. Ltd.

6) Petronet India Ltd.

7) Petronet LNG Ltd.

8) Green Gas Ltd.

9) IndianOil Panipat Power Consortium Ltd.

10) Petronet CI Ltd.

11) Indo Cat Pvt. Ltd.

12) IndianOil SkyTanking Ltd.

13) Suntera Nigeria 205 Ltd.

B) Whole-time Directors

1) Shri S. Behuria

2) Shri B.M. Bansal

3) Shri S.V. Narasimhan

4) Shri V.C. Agrawal

5) Shri G.C. Daga

6) Shri B.N. Bankapur

7) Shri Anand Kumar

8) Shri PK. Chakraborti

9) Shri K.K. Jha

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