BPRL ANNUAL REPORT 2013-14 - Bharat Petroleum · BPRL ANNUAL REPORT 2013-14 3 NOTICE TO THE MEMBERS...

BPRL ANNUAL REPORT 2013-14

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CONTENTS

Particulars Page

Board of Directors ................................................................................................................................ 002

Notice to Members ............................................................................................................................... 003

Directors’ Report .................................................................................................................................. 006

Comments of the Comptroller & Auditor General of India ......................................................... 025

Auditor’s Report ................................................................................................................................. 026

Balance Sheet & Statement of Profi t & loss .................................................................................... 032

Cash Flow Statement ........................................................................................................................... 034

Information of Subsidiary Companies ............................................................................................... 052

Auditor’s Report on Consolidated Financial Statements ............................................................... 053

Consolidated Balance Sheet & Statement of Profi t & Loss ............................................................ 056

Consolidated Cash Flow Statement .................................................................................................. 058

Statement pursuant to Section 212 of the Companies Act, 1956 ................................................... 080

BHARAT PETRORESOURCES LIMITED

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Management Team

R.K. Singh(upto 30.9.2013)

S. Varadarajan

Arun K. Singh President (Africa & Australasia)

P.C. SivaPresident (Americas)

Vijayagopal N. Vice-President (Finance) I/c (upto 31.5.2014)

Indranil Mittra Vice-President (Finance) (w.e.f. 17.7.2013)

Mahesh Narain Vice-President (Assets & Ops) Narendra Dixit(w.e.f. 1.4.2014) Company Secretary

Board of Directors

K.K.Gupta(w.e.f. 15.10.2013 upto 27.5.2014)

B.K.Datta D. RajkumarManaging Director

P. Balasubramanian(w.e.f. 16.5.2014)


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NOTICE TO THE MEMBERSNotice is hereby given that the seventh Annual General Meeting of the members of Bharat PetroResources Limited will be held at the Registered Offi ce of the Company at Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 400001, on Friday, 5th September 2014, at 1130 hrs to transact the following Businesses:-

Ordinary Business

1. To receive, consider and adopt the Audited Statement of Profi t & Loss for the fi nancial year ended 31st March 2014 and the Balance Sheet as at 31st March 2014 and the Directors’ Report and the Report of the Statutory Auditors.

2. To appoint a Director in place of Shri D. Rajkumar (DIN No 00872597), who retires by rotation. Shri D. Rajkumar, being eligible, offers himself for re-appointment.

3. To fi x the remuneration of the Statutory Auditors

To consider and if thought fi t, to pass the following Resolution, with or without modifi cations, as an Ordinary Resolution:-

“RESOLVED that pursuant to the provisions of Section 142 and all other applicable provisions of the Companies Act, 2013, remuneration of the Statutory Auditors, to be appointed by the Comptroller & Auditor General of India (C&AG) under Section 139 of the said Act, be and is hereby approved at `3,50,000, in addition to the actual reasonable travelling and out of pocket expenses and service tax as applicable, for the fi nancial year ending 2014-15 and also for subsequent fi nancial years.”

SPECIAL BUSINESS

4. Appointment of Director

To consider and, if thought fi t, to pass the following Resolution, with or without modifi cations, as an Ordinary Resolution:-

“RESOLVED that Shri P. Balasubramanian(DIN 05262654) who was appointed as additional Director w.e.f. 16th May 2014 and in respect of whom the Company has received a notice in writing under Section 160 of the Companies Act, 2013 from a member proposing his candidature for the offi ce of Director, be and is hereby appointed as Director of the Company, liable to retire by rotation.”

5. Approval for Borrowing Powers and creation/providing of security

To consider and, if thought fi t, to pass the following Resolution, with or without modifi cations, as a Special Resolution:-

“RESOLVED THAT in supersession of the Ordinary Resolution passed under Section 293(1)(d) and Section 293(1)(a) of the Companies Act, 1956, at the Extraordinary General Meeting held on 6th August 2012 and pursuant to Section 180(1)(c) and other applicable provisions, if any, of the Companies Act, 2013 and statutory guidelines, as amended from time to time, the consent of the Company be and is hereby accorded to the Board of Directors of the Company to borrow from time to time, for the business of the Company, any sum or sums of monies, from Government of India or abroad, and/or its agencies, any Bank(s), Financial Institution(s)/any other Institution(s), parent company,


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bodies corporates, or other person(s) in India or abroad, whether secured or unsecured, in Indian or foreign currency or by way of any other securities, notwithstanding that monies so to be borrowed together with the monies already borrowed by the Company (apart from temporary loans obtained from and/or to be obtained from the Company’s bankers in the ordinary course of business), may exceed the aggregate of the paid up share capital of the Company and its free reserves, provided that the total amount so borrowed and outstanding shall not, at any time exceed the limit of `15000 crore over and above the paid up share capital and free reserves of the Company.

RESOLVED FURTHER that the consent of the Company be and is hereby accorded, pursuant to Section 180(1)(a) of the Companies Act, 2013 and all other applicable provisions & statutory guidelines, as amended from time to time, to the Board of Directors of the Company to create / provide any security, for the sums borrowed on such terms and conditions, and in such forms and manner as the Board in its absolute discretion thinks fi t on the assets of the Company, as may be agreed to between the Company and the Lenders so as to secure the borrowings by the Company to the concerned Lenders under the respective arrangements entered into / to be entered into by the Company.

RESOLVED FURTHER that for the purpose of giving effect to this Resolution, the Board or any Committee or person(s) authorised by the Board, be and is / are hereby authorised to fi nalise, settle all the terms and conditions, execute such documents, deeds, agreements etc. and to do all acts, deeds, matters and things as may be required to give effect to the Resolution.”

By Order of the Board For Bharat PetroResources Limited

Sd/-(Narendra Dixit)

Registered Offi ce: Company SecretaryBharat Bhavan, 4 & 6 Currimbhoy Road,Ballard Estate, Mumbai - 400 001.Date: 11th August 2014Tel : 022-22714000 Fax : 022-22713874CIN No. U23209MH2006GOI165152

Notes :-1. The Explanatory Statement under Section 102 of the Companies Act, 2013, in respect of

the items of Special Business is annexed hereto.2. A Member entitled to attend and vote at the Annual General Meeting is entitled to

appoint a proxy or proxies, in the alternative, to attend and vote instead of himself and such proxy need not be a Member. Proxies, in order to be effective, should be duly completed & affi xed with the revenue stamp and be deposited at the Registered Offi ce of the Company not less than forty eight hours before commencement of the Meeting. A person can act as proxy on behalf of the members not exceeding fi fty and holding in the aggregate not more than ten percent of the total share capital of the company carrying voting rights. A member holding more than ten percent of the total share capital of the Company carrying voting rights may appoint a single person as proxy and such person cannot act as proxy for any other person or shareholder.


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Explanatory Statement pursuant to Section 102 of the Companies Act, 2013Item No.4 Appointment of DirectorShri P. Balasubramanian was appointed as Additional Director, by the Board of Directors, under the provisions of Section 161 of the Companies Act, 2013 with effect from 16th May 2014. Shri P. Balasubramanian, being Additional Director, holds offi ce up to the date of the ensuing Annual General Meeting. The Company has received a notice in writing, u/s 160 of the said Act, from a member, proposing the name of Shri P. Balasubramanian, as a Director of the Company. A brief resume of Shri P. Balasubramanian as required under the DPE guidelines on Corporate Governance is provided separately in the Corporate Governance Report enclosed to the Directors’ Report.The Directors recommend the Resolution at Item No 4 for the approval of the members of the Company.Shri P. Balasubramanian is not disqualifi ed from being appointed as Director in terms of the Section 164 of the Companies Act, 2013. Except Shri P. Balasubramanian, no other Director, Key Managerial Personnel or their relatives are concerned or interested in the Resolution.

Item No 5 Approval for Borrowing Powers and creation / providing of securityAt the Extraordinary General Meeting of the Company held on 6th August 2012, the members had, by way of Ordinary Resolution and in pursuance of Section 293(1)(d) and Section 293(1)(a) of the Companies Act, 1956, approved the borrowing of monies on behalf of the Company (apart from the temporary loans obtained or to be obtained from the Companys Bankers in the ordinary course of Business) in excess of the aggregate of the paid up share capital of the company and free reserves subject to the total amount not exceeding `15000 crore over and above the paid up share capital and free reserves of the Company and creation / providing of security for the said amount.In terms of Section 180 of the Companies Act, 2013, such powers of the Board are required to be exercised only with the consent of the Company by a Special Resolution. However, in terms of circular dated 25th March 2014 from the Ministry of Corporate Affairs, the said Ordinary Resolution passed under Section 293 of the Companies Act, 1956 with reference to borrowings and / or creation of security on asset of the Company would be suffi cient compliance of the Act untill 11th September 2014. Accordingly, separate approval is requested for such borrowings and creation / providing of security on such amounts by way of Special Resolution in terms of Section 180 of the Companies Act, 2013.The Directors recommend the Resolution at Item No. 5 for the approval of the members of theCompany. None of the Directors, Key Managerial Personnels or their relatives are concerned or interested in the Resolution.

By Order of the Board For Bharat PetroResources Limited

Sd/-(Narendra Dixit)

Registered Offi ce: Company SecretaryBharat Bhavan, 4 & 6 Currimbhoy Road,Ballard Estate, Mumbai - 400 001.Date: 11th August 2014Tel : 022-22714000 Fax : 022-22713874CIN No. U23209MH2006GOI165152


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DIRECTORS’ REPORTThe Directors present their seventh Report of Bharat PetroResources Limited (BPRL) for the fi nancial year ended 31st March 2014.

OPERATIONS OF THE COMPANY

BPRL has participating interests (PI) in nineteen Blocks spread across six Countries. Eight Blocks are located in India which were acquired under different rounds of New Exploration Licensing Policy (NELP) and balance blocks are located abroad in fi ve countries. Most of the blocks of BPRL are in advanced stage of exploration and several of them are at the appraisal stage. The total area of these nineteen blocks where BPRL and its subsidiaries have PI, is around 24685 sqkm of which approx 88% is offshore acreage.

BPRL has incorporated a wholly owned subsidiary company, BPRL International BV, in the Netherlands which in turn has three wholly owned subsidiary companies viz. BPRL Ventures BV, BPRL Ventures Mozambique BV, and BPRL Ventures Indonesia BV. BPRL Ventures BV has 50% stake in IBV Brasil Petroleo Limitada, which currently holds PI ranging from 20% to 40% in seven blocks in offshore Brazil. BPRL Ventures Mozambique BV has PI of 10% in a block in Mozambique, and BPRL Ventures Indonesia BV holds PI of 12.5% in a block in Indonesia. Further, BPRL has a wholly owned subsidiary company, Bharat PetroResources JPDA Limited in India which holds a PI of 20% in Block-JPDA 06-103, in East Timor. BPRL manages most of its overseas projects through these subsidiary companies. BPRL has total of 19 discoveries in Brazil, Mozambique, Indonesia, Australia and in India.

Looking ahead, BPRL is focused on value enhancement through early monetization, moving up the Hydrocarbon value chain and skill based expansion through Operatorship. New opportunities are regularly being studied with a keen eye on assets with long term value. In a days ahead, there will be numerous challenges in terms of large investments and complexity of dealing with assets spread across six Countries, etc.

As on 31st March 2014, BPRL has an authorized share capital of `3000 crores and paid up share capital of ̀ 2620 crores which is entirely held by Bharat Petroleum Corporation Limited(BPCL), the holding company. BPRL has recorded consolidated income of `9.75 crores and a consolidated loss of `531.09 crores for the fi nancial year ending 31st March, 2014 which was due to relinquishment of our PI in few blocks in view of poor prospectivity assessed based on drilling results.

The Comptroller and Auditor General of India (C&AG) has vide letter dated 22nd July, 2014 which is enclosed to the Directors’ Report as Annexure B, stated that on the basis of the audit, nothing signifi cant has come to their knowledge which would give rise to any comment upon or supplement to the Statutory Auditor’s report under Section 619(4) of the Companies Act, 1956.


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MANAGEMENT DISCUSSION AND ANALYSIS

1. Industry structure and developments

In the early part of the year 2014, events like confl ict in the Ukraine, turbulence in fi nancial market, inclement weather in the United States led to uncertainty for the global economy. However, the economic recovery remains on track, due to fi rming of output and demand in high income countries. The economy of most developing countries is also strengthening due to support from high income demand.

In terms of BP statistical review during the year 2013, global oil consumption grew by 1.4 million barrels per day which was just above the historical average. The Countries outside the OECD accounted for the majority of 51% of global oil consumption. OECD consumption declined by 0.4%. Global oil production rose by 560,000 barrel per day. The US accounted for all of the non OPEC output increase of 1.2 million barrel per day to reach a record 50 million barrel per day. Worlds natural gas consumption grew by 1.4% which is below the historical average of 2.6%. Globally natural gas accounted for 23.7% of primary energy consumption. India recorded largest volumetric decline in consumption of natural gas in the world. Global natural gas production grew by 1.1% which was below 10 year average of 2.5%. India’s natural gas production was 33.7 billion cubic meters (bcm) and consumption was 51.4 bcm in the year 2013.

2. Strength and Weaknesses

BPRL has presence in 19 blocks in 6 Countries. Sustained efforts, focus on a balanced business strategy coupled with agility and sensitivity to the business requirements have earned a place of eminence for BPRL in the upstream arena. The recent world class discoveries, as many as 19, have put BPRL on a high trajectory as an established and recognised E&P player. BPRL is greeted today as a ‘preferred partner’ by some of the major operators with proven track record. As a Lead Operator in Cambay Block, BPRL is now independently handling all operational matters related to the project.

BPRL doesnot have robust experience as an Operator. However, BPRL is gaining experience as a lead Operator in one on land block in Cambay basin, Gujarat. At present, BPRL doesnot have any producing assets and not generated any revenue. However, owing to its current discoveries wherein the projects are being taken forward to the appraisal / development phase, BPRL is working towards the revenue generation in the medium term.

3. Opportunities and Threats

There has been increasing demand for crude oil and petroleum products. Considering the fact that the economy will continue to grow in the coming years, the energy demand is expected to remain strong. BPRL, therefore, will have signifi cant opportunities for growth in view of its discoveries and PI in various blocks.


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However, increasing competition, change in Government policies, crude price volatility, funds availability, macro economic conditions, exchange rate fl uctuations, delay in obtaining regulatory approvals from Government etc. are some of the threats that BPRL is expected to encounter.

4. Outlook

BPRL has PI in various blocks in India and abroad in partnership with world renowned companies like Petrobras, Anadarko, BP, ONGC, Mitsui, Maersk etc., Most of the blocks are in an advanced stage of exploration. After the initial success in exploration, BPRL is moving towards expediting appraisal & development related works, to realize early monetization.

5. Risks and Concerns

BPRL operates in a varied environment geologically, politically & geographically. Risks and possible losses due to geology, non commerciality, expropriation, change in fi scal regime, additional taxes, technology risk, long execution of projects, HSE and increase in Government share or restrictions on exports of oil & gas could materially affect BPRL’s performance. Technology and HSE risks are, however mostly managed by the respective Operators. Further, there can be signifi cant variation between the estimates of Crude oil and natural gas reserves and actual recoveries. The fi nancial condition of some of BPRLs partners in the blocks continues to be stressed & the same could from time to time create additional fi nancial burden on BPRL. Exploration business depends upon multiple equipment and services providers and construction contractors and ensuring the timely service of such equipment and services, getting right quality of materials, as per the budget, ensuring all compliances etc. In case of any gap in these requirements, there would be impact on the operational and fi nancial performance of BPRL. BPRL has in place a Risk Management Policy.

BPRLs major projects are in Brazil and Mozambique and these are moving ahead toward the appraisal/development stage. The huge funding requirements for these projects will be a major concern to BPRL.

6. Internal Control systems and their adequacy

BPRLs internal control systems are commensurate with the nature of its business and the size & complexity of its operations and ensures that all transactions adhere to the requisite procedures, policies and are in accordance with the statutory requirements. BPRL has appointed M/s Borker and Mazumdar, Chartered Accountants, for the fi nancial year ended 2013-14 to carry out Internal Audit. The Internal Auditors have not reported any signifi cant fi ndings. Further, Internal Audit Department of BPCL, parent company also conducts the review of the investments made by BPRL in various blocks in line with their Audit Plan.


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7. Discussion on fi nancial performance with respect to operational performance

Performance details pertaining to various blocks have been covered suitably in the Report.

8. Material developments in Human Resources/Industrial Relations front, including number of people employed

The manpower in BPRL has been deputed from the parent Company i.e. BPCL. Accordingly, BPRL manages its HR issues as per the policies of BPCL. In addition, BPRL arranges all necessary training, exposure to obtain required skill to operate in the international environment. Further, BPRL has engaged Geologists/Geoscientists as consultants. BPRL takes continuous efforts to upgrade skills in terms of training personnel in new technologies and working in challenging business environment.

The total approved manpower of BPRL including 5 consultants was 39 as on 31st March 2014.

9. Environmental Protection and conservation, Technological conservation, Renewable energy developments, Foreign Exchange conservation

The activities related to environment protection and conservation, technology absorption, renewable energy developments, foreign exchange conservation, are performed by the Operators of the respective blocks. BPRL will also address these requirements at the time of commencement of activities in the blocks wherein BPRL is a lead Operator.

10. Corporate Social Responsibility

As required under the new Companies Act, 2013, BPRL has constituted a Committee for Corporate Social Responsibility comprising two part time Directors and Managing Director in March 2014. At present, no expenditure is being incurred on the Corporate Social Responsibility (CSR) as BPRL has not commenced the revenues. However, BPRL is a consortium member of various blocks wherein the activities related to CSR are undertaken by the Operator.

CURRENT STATUS OF BLOCKS

BLOCKS ACQUIRED THROUGH FOREIGN SUBSIDIARY COMPANIES

MOZAMBIQUE

In Mozambique, BPRL through its subsidiary company, BPRL Ventures Mozambique BV, holds a 10% interest, in the Area 1 offshore block where Anadarko Petroleum Corporation (USA) is the Operator. In this block, exploration and appraisal activities continued during the year, with the drilling of four more exploration wells and seven appraisal wells. Two of these exploration wells and all the seven appraisal wells were successful.


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These culminated in identifying one more distinct accumulation of Natural Gas in the block, apart from the Prosperidade and Golfi nho - Atum reservoirs that were discovered during the previous year. The Area 1 Offshore Block is now estimated to have a recoverable resource of 50 to 70 plus trillion cubic feet (Tcf) of Natural Gas. Few more exploration wells and their appraisals are planned this year in order to completely evaluate the potential of the block. The Operator of our block is in discussions with Eni (Operator of the adjoining block) for unitization of the Prosperidade reservoir which is straddling both the blocks.

In order to monetize these discoveries, the consortium has made signifi cant advancements on a world-scale LNG development in Northern Mozambique which would consist of an initial development of approximately 10 MMTPA(million metric tones per annum) onshore liquefaction trains with provisions for future expansions of more than 50 MMTPA. The consortium has independently certifi ed proven reserves in the block suffi cient to support a two train development(10 MMTPA) and consortium expect further certifi cation for additional sales volumes shortly. The consortium has a land for setting up the LNG processing facility for the project. The environmental Impact Assessment has been completed and submitted to the Government. The competitive Front End Engineering Design (FEED) for both the offshore gathering system and onshore liquefaction processing has been completed and evaluation of bids for the Engineering Procurement and Construction (EPC) proposals are under way. The consortium continues to make steady progress towards selling LNG on a long term basis into the Asian market and has non-binding agreements with multiple Asian customers for approximately 60% of the targeted volumes to reach a Final Investment Decision. To summarize, therefore, from a construction and marketing perspective, the consortium is on-track to deliver cargoes in the calendar year 2019 timeframe. But the success and timing of the project depends on the speed at which the consortium can secure the legal, contractual and fi scal stability from the Government of Mozambique that will enable the buyers, lenders, contractors, and investors to take on the large fi nancial liabilities associated with an LNG project of this scale and magnitude. To achieve the same, the Operator of the block is in discussions with the Government of Mozambique to legislate suitable and commensurate Enabling Law, Decree Law and Special Regime rules to facilitate a viable LNG Project. The engagement has been intense on this front and the Govt. of Mozambique has tabled such framework legislations to their Assembly. After passage of these framework legislations, the key terms will be worked upon and negotiated between the Govt. of Mozambique and the Operator/Consortium. The planned commencement of fi rst cargo delivery in the year 2019 is contingent upon the closure of necessary legal and fi scal framework in ensuing months.

BRAZIL

IBV Brasil Petroleo Limitada (incorporated in Brazil) a joint venture company of BPRL Ventures BV, a foreign subsidiary of BPRL in the Netherlands and Videocon Energy Brazil Ltd, a foreign subsidiary of Videocon Industries Limited, now holds 7 blocks in 3 concessions at Brazil. 6 out of 7 blocks are operated by Brazil’s National Oil Company Petrobras, and 1 block is operated by Anadarko Petroleum Corporation.


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Sergipe Alagoas

In the Sergipe Alagoas basin, a new oil province was established in the ultra deep waters with the Barra discovery in the year 2010. Further 3 additional discoveries namely Barra#1, Farfan & Cumbe has established the promising potential of our blocks in Sergipe Alagoas Basin. A total of 5 exploratory wells and 4 appraisal wells have been drilled over the past few years in this concession. ANP, the Brazilian Regulator, has approved 5 appraisal plans in BM-SEAL-11, including 4 appraisal plans in the fi nancial year ended 2013-14.

At present, various appraisal activities are underway as per the appraisal plan, in BM-SEAL-11 concession. During the year, 3 appraisal wells were drilled namely in Barra, Farfan and Cumbe appraisal area. The Barra#2 appraisal well successfully achieved the objective of establishing the water contact for the Barra Maastrictian reservoirs. The Farfan#1 appraisal well encountered 44m of light oil pay and subsequently a successful Drill Stem Test(DST) was carried out. The Cumbe#1 appraisal well could not reach its target reservoir sands due to operational problems and the well had to be abandoned. Presently, drilling of Farfan #2 appraisal well has been completed and Barra#3 appraisal well is in progress. Petrobras, the Operator and the national oil company of Brazil, has indicated that the fi rst oil from Farfan discovery in Sergipe Alagoas Basin is expected by the year 2019.

Potiguar

In the Potiguar Basin, the fi rst exploratory well “Ararauna” was completed during the year. The well has indicated presence of hydrocarbons in two zones. Consortium has decided to enter into an appraisal plan for Ararauna discovery instead of entry into second exploration period. The formal approval from ANP, the Brazilian regulator is awaited.

Campos

In the Campos Basin, drilling of second appraisal well (Wahoo#5) has been completed with good oil shows in the target pre-salt upper sag reservoir. Post drilling, the seismic data has been reprocessed for further studies. The operator is studying various options for development of the Wahoo discovery.

Espirito Santos

In the Espirito Santos Basin, after completion of the exploration activities, two appraisal plans namely “Grana Padano Appraisal Plan” and “Coalho Appraisal Plan” were submitted to ANP. Coalho Appraisal Plan was submitted jointly with the adjacent concession BM-ES-25 with fi rm commitment to carry out G&G studies / seismic data reprocessing and contingent commitment for drilling of two wells. The consortium has decided to relinquish this block, as no commercial discovery was made in the exploration period.

The other appraisal plan namely Grana Padano Appraisal Plan in ES-M-661 block, BM-ES-24A concession, was submitted to evaluate the size of Grana Padano discovery, establish the commerciality of Albian play and to evaluate the remaining geological structures/prospects.


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ANP had approved the Grana Padano Appraisal plan submitted by the consortium consisting of G&G studies, seismic data reprocessing as fi rm activities and Drilling of appraisal well, G&G studies, economic studies as contingent activities. The reprocessing of seismic data has since been completed and in spite of improvement of data quality, the prospectivity perception for the block has not improved. Also, the resources estimated for Grana Padano discovery are below the economic fi eld size for similar discoveries of heavy oil in deepwater. Hence, the consortium partners have proposed to relinquish this block in the fi nancial year 2014-15.

INDONESIA

BPRL Ventures Indonesia B.V. had farmed-in into an exploration block in Indonesia in the Nunukan PSC, Tarakan basin with a PI of 12.5%, in consortium with PT Pertamina Hulu Energy (Operator), PT Medco and Videocon Indonesia. There has been discovery of oil and natural gas in one exploratory well drilled in the Nunukan Block. During the year, the sale of asset by previous operator Anadarko to PT Pertamina Hulu Energy was completed. An exploratory well, Badik-1 drilled in the fi rst phase of exploration, encountered approx. 40 net mts of oil and natural gas pay. 3D seismic data acquisition and processing was completed in the block. Appraisal well Badik 2, has been drilled and sidetracked (Badik 2 Dir) updip towards Badik – 1 ST1 to penetrate the full hydrocarbon column. Badik 3 well was drilled updip towards the crest of the Badik structure to penetrate full hydrocarbon column. Four DSTs were conducted. Drilling of the Fourth well is underway which will enable the consortium to ascertain the commerciality of the Block.

BLOCK ACQUIRED THROUGH INDIAN SUBSIDIARY

BPRL has one wholly owned subsidiary Company in India i.e. Bharat PetroResources JPDA Limited (BPR JPDA) through which it holds a PI of 20% in Block JPDA 06-103 awarded to BPR JPDA, by Autoridade Nacional do Petroleo of Timor Leste (ANP), (earlier known as Timor Sea Development Authority) in the Joint Petroleum Development Area (JPDA).

The Minimum Work Programme (MWP) Commitment in the block comprises a primary term of exploration phase of three years, a secondary term of two years and a third term of another two years subsequently. The block is currently in the primary term which includes drilling of four wells in the said block. ANP had granted conditional extension till January 2014 after relinquishment of 50% of the block area, subject to the execution of a rig contract or award of Letter of Intent for well drilling. The two commitment wells drilled in the block were found to be dry. Bazartete is identifi ed as the prospect for drilling of the third commitment well and Rig operators were being approached for obtaining a suitable drilling slot to drill the third well. Regulator ANP had agreed that if the third commitment well turns out dry, ANP would consider waiver of drilling the fourth commitment well.

Meanwhile, Timor Leste Government has initiated arbitration proceedings against the Government of Australia to have the Certain Maritime Arrangements in the Timor Sea (CMATS) Treaty declared void ab initio. The termination of CMATS results in automatic Termination of Timor Sea Treaty, governing petroleum operations in the Joint Petroleum Development Area (JPDA), and in effect the Production Sharing Contract (PSC). The consortium has approached the regulatory authority and the Countries involved in this regard.


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In light of the uncertainty of tenure and no adequate response from ANP towards JV’s concerns, the JV has approached ANP for termination of PSC without claim or penalty. The PSC has been suspended temporarily and the decision of the Regulator is awaited.

BLOCKS IN INDIA

NELP IV

BPRL has participating interest (PI) of 10% in offshore Blocks Krishna Godavari Basin wherein ONGC & OIL are partners. Acquisition, processing & interpretation seismic data for the said blocks was completed. Consortium also drilled four commitment wells in this block. However, there has been no hydrocarbon discovery. The Minimum Work Programme (MWP) commitments in the Krishna Godavari block for exploration Phase-I have been fulfi lled as per Production Sharing Contract (PSC) and the block is being relinquished.

BPRL has PI of 40% in on land Block at Cauvery basin wherein ONGC is Operator. Discovery of Oil & Gas was announced in exploration phase III MD#3 well. The Block is currently under appraisal phase of discovery. Two appraisal wells are planned for drilling in the fi nancial year ending 2014-15.

NELP VI

BPRL has PI of 10% in two deep water (off shore) Blocks i.e. KG/DWN/2004/2 and KG/DWN/2004/5 at Krishna Godavari wherein ONGC is Operator. The Minimum Work Programme(MWP) commitments in both the blocks for exploration Phase-I have been fulfi lled as per Production Sharing Contract (PSC) and it has been decided to relinquish these blocks.

BPRL has PI of 20% in two Cauvery onland Blocks wherein ONGC is Operator. In CY-ONN-2004/1 block at Cauvery, fi rst commitment well has been drilled. Further, two commitment wells are under drilling & will be completed in the fi nancial year 2014-15. Three exploratory wells have been drilled in CY-ONN-2004/2 block at Cauvery as per minimum work commitment of Phase-I of Exploration Period. Further, one commitment well is planned in Phase-II of Exploration Period which is valid till 29th May 2015. Discovery of Oil & Gas was announced in PN#8 well. Two appraisal wells of the discovery are planned for drilling in the fi nancial year ending 2014-15.

BPRL has PI of 11.11% in RJ/ONN/2004/1 on-land Block in Rajasthan wherein GSPC & GAIL are Operators. As there is no signifi cant hydrocarbon show in this block, it has been decided to relinquish the block.

NELP VII

BPRL has PI of 33.33% in RJ/ONN/2005/1 on land block in Rajasthan under NELP VII round as Joint operator with Hindustan Oil Exploration Company Ltd. Acquisition, processing & interpretation of 3D seismic data has been completed in this block and at present drilling preparation & well planning is underway.


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NELP IX

BPRL has PI of 25% in two on-land Blocks at Cambay, Gujarat, PI of 20% in on land block at Assam – Arakan & PI of 20% in shallow water block in Mumbai Basin acquired under NELP IX round. BPRL is the lead operator in one Cambay basin Block & Joint operator in another block in Cambay Basin alongwith GAIL India Ltd. In other two blocks in Assam-Arakan & Mumbai Basin, Oil India Limited is the operator. Seismic Data acquisition was in progress in all four NELP-IX blocks during the fi nancial year 2013-14.

FOREIGN BLOCKS

Australia:

BPRL currently has a PI of 27.803% in Block EP - 413 (on land) in consortium with Norwest Energy NL(Operator) and ARC Energy, 100 % subsidiary of Australia Worldwide Exploration. This block is being explored for Shale gas/tight gas Drilling of an exploratory well and testing of cores etc. has been completed. Vertical fracking of well to evaluate shale gas and tight gas reserves were carried out before two years. Hydrocarbon shows were observed in all the zones. The permit has been renewed for 5 years upto August 2018. The fi nal phase of testing of Arrowsmith-2 well was completed involving a comingled fl ow from Carynginea, IRCM and HCSS formations. The results of the same are being studied. Environmental and other regulatory approvals for undertaking Seismic API are also in progress.

United Kingdom:

BPRL had a PI of 25% in 48/1b & 2c (offshore UK) with consortium partners Premier Oil (Operator), Bridge Energy and Tata Petrodyne Ltd. The commitment for the blocks including drilling of a well (Cobra) has been completed. The fl ow rates, however, were sub commercial due to low permeability and tight reservoir conditions. Hence, in view of the project risks, the consortium has withdrawn from the License at the completion of the phase. The balance liabilities for the plug and abandonment of the well would be fulfi lled in due course.

DIVIDEND

The Directors do not recommend any dividend for the fi nancial year ended 31st March 2014.

FIXED DEPOSITS

BPRL has not accepted any Fixed Deposits during the fi nancial year 2013-14.

CORPORATE GOVERNANCE REPORT

The Corporate Governance Report of the Company as required under the DPE Guidelines on Corporate Governance is enclosed as Annexure A. The forward looking statements made in this report are based on certain assumptions & expectations of future events. The Directors cannot guarantee that these assumptions are accurate or these expectations will materialize.


15

EMPLOYEES PARTICULARS

There are no employees covered by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, for the fi nancial year ended 31st March 2014.

HUMAN RESOURCES

At present, all the employees of BPRL have been assigned from the holding company i.e. BPCL wherein the guidelines from the Government with regard to reservation and other welfare measures to Schedule Caste, Schedule Tribes and other Backward classes, employment opportunities to persons with disabilities are complied with. The employees of BPRL are governed by the policies applicable in BPCL.

CITIZENS’ CHARTER, OFFICIAL LANGUAGE & FULFILLMENT OF SOCIAL OBLIGATIONS, RIGHT TO INFORMATION ACT, 2005, PUBLIC PROCUREMENT POLICIES FOR MICRO & SMALL ENTERPRISES, 2012

With BPRL having commenced its operations, all possible steps are being taken with regard to Citizens Charter, Offi cial Language implementation and fulfi llment of Social Obligations and Right to Information Act, 2005, with the support of the holding company, BPCL. Further, all major procurements in BPRL are made through the parent company BPCL which complies the requirements of Public Procurment policy for Micro & Small Enterprises, 2012.

MEMORANDUM OF UNDERSTANDING WITH BPCL

BPRL has entered into a Memorandum of Understanding (MOU) with BPCL for the fi nancial year 2014-15. BPRL has achieved an “Excellent” rating for its performance till the fi nancial year ended 2012-13.

VIGILANCE

Corporate Vigilance guidelines relevant to BPCL, the holding Company, are also applicable to BPRL.

Annual Accounts of the Subsidiary Companies

In view of the general circular from the Ministry of Corporate Affairs, Balance Sheet, Statement of Profi t and Loss, and other documents of the Subsidiary Companies are not attached to the Balance Sheet of BPRL. In compliance with the conditions of the said circular, the Consolidated Financial Statements have been presented in the Annual Report and the requisite fi nancial information of Subsidiary Companies are also enclosed as Annexure C to the Directors’ Report. The Audited Annual Accounts of Subsidiary Companies and related detailed information are open for inspection by any member at the Registered Offi ce. Further, BPRL would make available these documents, on request, to any of its members.


16

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confi rm that:

1. In the preparation of the Annual Accounts, all the applicable Accounting Standards have been followed and there are no material departures.

2. The Directors have selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the State of Affairs of the Company as on 31st March 2014 and of the Loss of the Company for the year ended on that date.

3. The Directors have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. These Accounts have been prepared on a going concern basis.

DIRECTORS

Shri R.K.Singh relinquished his offi ce w.e.f. 1.10.2013 on his retirement from the services of BPCL. The Directors have placed on record their deep appreciation and gratitude for the valuable contributions made by Shri R.K.Singh in the deliberations of the Board meetings and Audit Committee meetings and for the guidance and the support by him for the development and progress of the business of the Company during his tenure.

Shri K.K.Gupta who was appointed as additional Director w.e.f. 15.10.2013, resigned from the Board w.e.f. 28.5.2014. The Directors have placed on record their deep appreciation and gratitude for the valuable contributions made by him in the deliberations of the Board & Audit Committee meetings and for the guidance and the support by him during his tenure.

Shri P. Balasubramanian was appointed as additional Director w.e.f. 16.5.2014. Being additional Director, he holds offi ce upto the date of the Annual General Meeting. The Company has received a notice in writing under Section 160 of the Companies Act, 2013, from a member proposing his name for appointment of Director at the ensuing Annual General Meeting.

As required under the Companies Act, 2013, Shri D. Rajkumar, Managing Director will retire by rotation at the Annual General Meeting, and being eligible, offers himself for re-appointment as Director at the said meeting.

AUDIT COMMITTEE

Presently, the Audit Committee of BPRL comprises Shri S.Varadarajan, Shri B.K.Datta and Shri P.Balasubramanian as members. Shri S. Varadarajan acts as the Chairman of the Committee. The Audit Committee is functioning in accordance with the terms of reference set out for it by the Board of Directors.


17

STATUTORY AUDITORS

M/s M.B. Agrawal & Co, Chartered Accountants were appointed as Statutory Auditors of BPRL for the fi nancial year ended 31st March 2014, by the C&AG under the provisions of Section 619(2) of the Companies Act, 1956. They will hold offi ce till the ensuing Annual General Meeting. The application for the appointment of Statutory Auditors for the fi nancial year ending 2014-15 has been made to C&AG.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

BPRL is not the Operator in any of the Foreign blocks. Further, BPRL is a joint Operator in two other on land Blocks in Rajasthan and Gujarat. In these blocks, BPRL is not directly involved in the execution of works related to the blocks. BPRL is a lead Operator in one on land block in Cambay basin, Gujarat for which the activities related to conservation of energy and technology absorption have not commenced at this stage of BPRL’s operations and hence, no separate form for disclosure of particulars with respect to Conservation of Energy, and technology absorption has been given.

Earning/(Loss) in Foreign Exchange (`9.96) lakh

Foreign Exchange Outgo `200.33 lakh

ACKNOWLEDGEMENTS

The Directors would like to acknowledge the valuable guidance and continued support from the Government of India through Ministry of Petroleum & Natural Gas, Ministry of External Affairs, and Directorate General of Hydrocarbons and from BPCL, the parent Company.

For and on Behalf of the Board of Directors

Sd/-(S. Varadarajan)

ChairmanDate : 11th August 2014Place : Mumbai


18

Annexure - AReport on Corporate Governance

1. Company’s philosophy on Code of Governance

Bharat PetroResources Ltd’s corporate philosophy on Corporate Governance has been to ensure sound corporate practices and business ethics through transparency, fairness, professionalism, accountability & reliability.

2. Board of Directors

As per the Articles of Association of the Company, the number of Directors shall not be less than three and more than fi fteen. As on 31st March 2014, BPRL Board comprised of one Whole-time Director(Managing Director) and three Part-time Directors. The Company has approached the Govt. of India for the nomination of two Independent Directors on the Board of BPRL as required under DPE guidelines on corporate governance.

None of the Non-executive Directors of BPRL had any pecuniary relationship / transaction with the Company, during the year.

The Directors neither held membership of more than 10 Board Committees nor Chairmanship of more than 5 Committees as specifi ed in DPE guidelines on corporate governance, across all the companies in which they were Directors.

Details regarding the Board Meetings; Directors’ attendance thereat; Annual General Meeting (AGM); Directorships and Committee positions held by the Directors are given separately.

Board Meetings

Eleven Board Meetings were held during the fi nancial year on the following dates:-

9th Apr 2013 23rd May 2013 25th July 2013 7th Aug 2013

23rd Aug 2013 12th Sept 2013 31st Oct 2013 2nd Dec 2013

20th Dec 2013 27th Jan 2014 12th Mar 2014

The Board has reviewed the compliance of all laws applicable to the Company. The Board has adopted the Code of Conduct for the Directors and also for the senior management of the Company. The Board members and the senior management have affi rmed compliance of the Code of Conduct.

Further, no case and/or suit of any material or substantial nature is pending against BPRL.

3. Audit Committee

In terms of Section 292A of the Companies Act, 1956, the Board at the meeting held on 2nd April 2008 had constituted the Audit Committee comprising all the Non-Executive Directors. The Board of Directors has approved the terms of reference of the Audit Committee.


19

The quorum for the meetings of the Committee is two members. Shri S. Varadarajan chairs all the meetings of the Audit Committee. Prior to him, Shri R.K.Singh chaired all the meetings of the Audit Committee till 30th September 2013. Shri K. K. Gupta was a member of Audit Committee from 15th October 2013 to 27th May 2014. Shri P. Balasubramanian was appointed as a member of Audit committee w.e.f. 16th May 2014. Shri S. Varadarajan, Chairman and Shri P. Balasubramanian, member possesses the requisite knowledge of Finance & Accounting for effective functioning of the Audit Committee. The Company Secretary acts as the Secretary of the Audit Committee. The other senior management members also attend the Audit Committee meetings. The Statutory Auditors and the Internal Auditors also attend and participate at the meetings on invitation.

There were 7 meetings of the Audit Committee held during the fi nancial year on the following dates:-

23rd May 2013 25th July 2013 12th Sept 2013 31st Oct 2013

2nd Dec 2013 27th Jan 2014 12th Mar 2014

The attendance of the members is given below:-

Name of Member No of meetings attended

Shri S.Varadarajan 7

Shri R. K. Singh 3 out of 3 meetings held during his tenure

Shri B. K. Datta 5

Shri K.K. Gupta 4 out of 4 meetings held during his tenure

The Audit Committee reviewed the quarterly/ half yearly/annual fi nancial statements during the year 2013-14.

4. Remuneration to Directors

BPRL is a wholly owned subsidiary of BPCL, a Government Company. All the Directors of BPRL are the nominees of BPCL. The Part-time Directors do not receive any remuneration from the Company. Shri D. Rajkumar, Managing Director was paid a total remuneration of `37,23,426 during the fi nancial year 2013-14. The Part-time Directors do not receive any remuneration from the Company.

Name All elements of remuneration packages of

the Directors i.e. Salary, benefi ts, bonus, pension etc.

(`)

Details of fi xed component and

performance linked incentive

(`)

Other benefi ts

(`)

Shri D. RajkumarManaging Director

37,23,426 30,02,022 7,21,404

BPRL has not introduced any Stock Options Scheme. None of the non executive Directors hold any share in BPRL.


20

5 Management Discussion and Analysis

Management Discussion and Analysis Report is covered in the Directors’ Report.

6 Annual / Extraordinary General Meetings (AGM/EGM) for last three years

Date and Time of the meeting Venue

29th August 2011 at 11.30 a.m. (AGM) Registered offi ce at Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 400001

6th August 2012 at 3.30 p.m.(EGM) Corporate offi ce at Maker Tower E Wing, 9th Floor, Cuffe Parade, Mumbai 400005

10th September 2012 at 12.30 p.m. (AGM)

Registered offi ce at Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 400001

3rd December 2012 at 2.00 p.m. (EGM) Corporate offi ce at Maker Tower E Wing, 9th Floor, Cuffe Parade, Mumbai 400005

29th August, 2013 at 11.30 a.m. (AGM) Registered offi ce at Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 400001

The Special Resolutions for amendment to the Articles of Association towards further issue of shares to BPCL were approved by the shareholders at the EGM held on 3rd

December 2012.

7 Brief Resume of Directors seeking appointment / re-appointment

1. Shri D. Rajkumar

Shri D. Rajkumar, Manging Director, BPRL is a B. Tech in Electrical Engineering from Indian Institute of Technology, Chennai and Post-Graduate Diploma in Management (PGDM) from Indian Institute of Management, Bangalore with Energy Sectoral Specialisation. Prior to taking assignment as Managing Director, Shri D. Rajkumar was holding the position of President in the Company. During his tenure, he was involved in successful fi nalization of deeds for acquisition of blocks in Mozambique and Brasil which have created substantial value and recognition in Oil & Gas Industry for BPRL/BPCL through hydrocarbon discoveries. He had also handled various assignments in E&P projects in BPCL, parent company covering POL, LPG etc and laying of MMPL, a cross country pipeline project executed for the fi rst time in BPCL. He was also deputed by BPCL as Managing Director of Petronet CCK Limited which had successfully implemented a cross-country pipeline from Cochin to Coimbatore to Karur. In addition to BPRL, he is a Director on the Board of Bharat PetroResources JPDA Ltd (BPR JPDA) and Chairman of Audit Committee in BPR JPDA.


21

Shri D. Rajkumar is liable to retire by rotation at the ensuing AGM and being eligible, offers himself for reappointment.

2. Shri P. Balasubramanian

Shri P. Balasubramanian, Director (Finance) of BPCL is a member of the Institute of Chartered Accountants of India. Prior to his appointment as Director (Finance) in BPCL, he was responsible for the entire Corporate Finance function including Corporate Treasury, Corporate Finance, Taxation, Investor Relations and overseeing Corporate Governance Structure in BPCL. Under his leadership, BPCL became the fi rst Indian non fi nancial corporate to tap the Swiss Francs(CHF) market, when it raised an ECB of CHF 200 million in March 2014. In addition, BPCL had raised another USD 800 million by ECB for fi nancing working capital requirements. He was closely involved in BPCLs merger and acquisition activities. He also oversaw the implementation of SBLC facility of about USD 2 billion for BPRL. He was a Chief Risk Offi cer and responsible for effective risk identifi cation, mitigation and review in BPCL.

He is a Director on the Boards of Bharat Oman Refi neries Ltd and Delhi Aviation Fuel Facility Pvt. Ltd.

Shri P. Balasubramanian was appointed as Additional Director w. e. f. 16th May 2014 by the Board of Directors. Being an Additional Director, he holds offi ce upto the date of Annual General Meeting. The Company has received a notice in writing under Section 160 of the Companies Act, 2013 from a member proposing his name as a Director of the Company.

8. Disclosures

There were no transactions of material nature that may have potential confl ict with the interest of the Company at large.

BPRL has been adhering to the provisions of all the laws and guidelines of regulatory authorities.

There was no instance of non compliance of any provisions of law, guidelines from regulatory authorities except with regard to provisions relating to the composition of the Board of Directors for which the matter is referred to Govt. of India. There are no items of expenditure in the books of accounts, which are not for the purpose of business. Further, no expenses were incurred which were personal in nature and incurred for the Board of Directors and Top management. All the blocks of the Company are in various stages of exploration / appraisal and capital expenditure is considered as capital work in progress. Hence, revenue expenditure mainly consists of administrative & other offi ce expenses.

All the employees are deputed from parent Company BPCL, which has its own Whistle Blower policy which covers the employees on deputation. Hence, there is no separate Whistle Blower policy for the company.


22

9. General Shareholders’ Information

Annual General Meeting : Date, Time and Venue

Friday, 5th September 2014 at 1130 hrs at the Registered offi ce of the Company at Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 400001

Financial Calendar BPRL follows the Financial year from April to March.

The Unaudited / Audited Statements for the three quarters/ year were taken on record by the Board on the following dates :-Quarter Date of BoardEnded MeetingApr-June’2013 25th July 2013July-Sept’2013 31st Oct 2013Oct-Dec’ 2013 27th Jan 2014Audited Statements –for the year 2013-14 16th May 2014

Shareholding Pattern BPCL alongwith its nominees is holding entire paid up equity share capital of 2620,002,670 equity shares of `10 each in the Company

Location Registered Offi ceBharat Bhavan, 4 & 6 Currimbhoy Road,Ballard Estate, Mumbai 400001Tel 022-22714000 Fax 022-22713874

Corporate Offi ce9th Floor, E Wing, Maker Towers,Cuffe Parade, Mumbai 400005Tel 022-22175600 Fax 022-22154364

Area Offi ce1, Ranganathan Garden, 11th Main RoadChennai 600040Tel 044-26216869 Fax 044-26142175

CIN No. U23209MH2006GOI165152


23

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24

Auditor’s Certifi cate on Corporate Governance

To,The Members ofBharat PetroResources Limited

I have examined the compliance of the conditions of Corporate Governance by Bharat PetroResources Limited, as stipulated in Guidelines on Corporate Governance for Central Public Sector Enterprises, 2010 issued by the Ministry of Heavy Industries and Public Enterprises, Department of Public Enterprises, Government of India, for the fi nancial year ended 31st March, 2014.

The Compliance of conditions of Corporate Governance as stipulated in the Guidelines is the responsibility of the management. My examination was limited to the procedures and implementation thereof adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on fi nancial statements of the Company.

In my opinion and to the best of my information and according to the explanation given to me by the management, I hereby certify that except the composition of the Board of Directors and Audit Committee with regard to independent Directors, the Company has complied with the conditions of the Corporate Governance as stipulated in the Guidelines on Corporate Governance for Central Public Sector Enterprises, 2010 issued by the Ministry of Heavy Industries and Public Enterprises as aforesaid.

I further state that such compliance is neither an assurance as to the future viability of the Company nor the effi ciency or effectiveness with which the management has conducted the affairs of the Company.

Sd/-U. C. Shukla

Company SecretaryFCS: 2727/CP: 1654

Place : Mumbai

Date: 11th August 2014


25

ANNEXURE B

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF BHARAT PETRORESOURCES LIMITED FOR THE YEAR ENDED 31ST MARCH 2014

The preparation of fi nancial statements of Bharat PetroResources Limited for the year ended 31st March 2014 in accordance with the fi nancial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the management of the company. The statutory auditors appointed by the Comptroller and Auditor General of India under Section 619 (2) of the Companies Act, 1956 are responsible for expressing opinion on these fi nancial statements under Section 227 of the Companies Act, 1956 based on independent audit in accordance with the auditing assurance standards prescribed by their professional body, the Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit Report dated 16th May 2014.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under Section 619 (3) (b) of the Companies Act, 1956 of the fi nancial statements of Bharat PetroResources Limited for the year ended 31st March 2014. On the basis of my audit, nothing signifi cant has come to my knowledge which would give rise to any comments upon or supplement to Statutory Auditors” report under Section 619(4) of the Companies Act, 1956.

For and on the behalf of the Comptroller and Auditor General of India

Sd/-Parama Sen

Principal Director of Commercial Audit& ex-offi cio Member Audit Board II,

Mumbai

Place : Mumbai

Date : 22nd July 2014


26

INDEPENDENT AUDITORS’ REPORTTo the Members of Bharat PetroResources Ltd.

Report on the Financial Statements

We have audited the accompanying fi nancial statements of Bharat PetroResources Ltd which comprise the Balance sheet as at 31st March, 2014, the Statement of Profi t and Loss for the year ended on that date, the Cash Flow Statement for the year ended on that date and a summary of signifi cant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements. We believe that audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the fi nancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

1. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

2. in the case of the Statement Profi t and Loss, of the Loss for the year ended on that date; and

3. in the case of the Cash Flow Statement, of the Cash fl ows for the year ended on that date.


27

Emphasis of Matter

1. Attention is invited to Note no. 17 regarding incorporation of details about the Company’s share in assets, liabilities, income and expense in the operations of the joint ventures based on the audited / unaudited statements received from the respective Operators. In these regards, it has been observed that:

In case of one block, no audited statements have been received by the Company. Total assets, liabilities, income and expenses in respect of this blocks, amounts to `6,020.15 lacs, `136.82 lacs, `3.38 lacs and NIL respectively;

The audited statements referred above are prepared, as stated there in, to meet requirements of production sharing contracts and are special purpose statement;

None of the statements, audited as well as unaudited, are drawn up in the format prescribed under Schedule VI to the Act;

Some of the Operators use accounting policies other than those adopted by the Company for like transactions. The Company has made appropriate adjustments while incorporating relevant data; and

No break up of assets and liabilities is available in respect of two blocks where the Company has invested `270.43 lacs.

The Company’s proportionate share in jointly controlled assets, liabilities for which the Company is jointly responsible, Company’s proportionate share of income and expenses for the year, the elements making up the Cash Flow Statement and related disclosures contained in the enclosed fi nancial statements and our observations thereon are based on such audit reports and statements from the Operators to the extent available with the Company.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books.

(c) The Balance Sheet, Statement of Profi t and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;


28

(d) In our opinion, the Balance Sheet, Statement of Profi t and Loss and Cash Flow Statement dealt with in this report comply with the requirements of the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act;

(e) As per Notifi cation no. G.S.R. 829(E) dated October 21, 2003, the Government companies are exempted from the provisions of clause 274(1)(g) of the Act, accordingly, we are not required to report whether any directors are disqualifi ed in terms of provisions contained in the said section.

For M.B.Agrawal & Co.Chartered AccountantsFirm’s Registration Number: 100137W

Sd/-Harshal Agrawal(Partner)Membership Number: 109438

Place: Mumbai

Date: 16th May 2014


29

ANNEXURE TO THE AUDITOR’S REPORTReferred to in paragraph 3 of our report of even date,(i) (a) The Company has maintained proper records showing full particulars, including

quantitative details and situation of the fi xed assets in its accounting package. (b) As informed to us, the fi xed assets were physically verifi ed by the management

during the year at reasonable intervals. We have been further informed that no material discrepancies were noticed on such verifi cation by the management between the book records and physical verifi cation.

(c) During the year, the Company has not disposed off a substantial part of the fi xed assets.

With regard to the expenditure incurred by the Company on exploration and production of Oil/Gas considered as capital work in progress, we report that the details of such expenditure is recorded by the Company based on details of such expenditure received from the Operators of the respective exploration blocks. Out of the total expenditure of `22,568.98 lacs incurred upto March 31, 2014, the Company has written off substantial expenditure aggregating to ̀ 5058.51 lacs being expenses on the blocks where the Company has surrendered its participating interest or where the license has expired. In our view, these write-offs would not affect the going concern.

(ii) As per information and explanation given to us and in our opinion, since the Company is still in exploration stage, the Company is not carrying any inventory and hence sub clauses (a) regarding physical verifi cation of stock (b) regarding procedure of physical verifi cation, and (c) regarding material discrepancies on physical verifi cation of stocks, of clause 4 (ii) of the Order are not applicable to the Company.

(iii) The Company has not granted or taken any loans secured or unsecured, to or from the companies, fi rms or other parties in the register maintained under Section 301 of the Act as referred to in sub-clauses (a) and (e) of the clause 4(iii) of the Order. Accordingly, the provisions of sub-clauses (b) regarding the rate of interest and other terms and conditions, (c) regarding the receipt of the principle amount and interest, (d) regarding overdue amount, (f) regarding the rate of interest and other terms and conditions of loans taken and (g) regarding regularity of payment by the Company of the principal amount and interest of clause 4(iii) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, the Company has an adequate internal control procedure commensurate with the size of the Company and the nature of its business, for the purchase of fi xed assets. During the course of our audit, we have not observed any major weakness in such internal control.

(v) (a) Based on the audit procedures applied by us, to the best of our knowledge and belief and according to the information and explanations given to us, there were no transactions that needed to be entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956.

(b) Sub-clause (b) of sub-para (v) of para 4 of the Order regarding reasonability of prices at which such transactions have been entered into is not applicable, as there are no such transactions.


30

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public and accordingly the provisions contained in the Sections 58A and 58AA Act and the Rules there under are not applicable to the Company in this regards.

(vii) The Company has appointed a fi rm of Chartered Accountants to carry out the internal audit of the head offi ce functions. In addition, the management deputes internal team in a phased manner to verify the billing statements received from the Operators. In our opinion, such internal audit is adequate commensurate with its size and nature of its business.

(viii) The Ministry of Corporate Affairs have notifi ed the cost accounting records, however, the management is of the view that the said requirements are not applicable to the Company as it has not commenced production.

(ix) (a) According to the information and explanations given to us and according to the the records of the Company examined by us, in our opinion, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues, wherever applicable. According to the information and explanation given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding as at 31st March 2014 for a period of more than 6 months from the date they become payable.

(b) According to the information and explanations given to us and the records examined by us, there are no disputed dues of Income Tax/Sales Tax/Wealth Tax/Service Tax/Customs Duty/Excise Duty/Cess.

(x) The Company’s accumulated loss at the end of the fi nancial year is not more than fi fty per cent of net worth of the Company. The Company has incurred cash loss during the year, and during the immediately preceding fi nancial year.

(xi) According to the information and explanations given to us and based on the records made available to us, the Company has not raised any loans from Financial Institutions or Bank or on Debentures.

(xii) According to the information and explanations given to us and based on our examination of the records made available to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefi t fund / society. Therefore, the provisions of this clause are not applicable to the Company.

(xiv) (a) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments.

(b) The Company does not hold any Shares, Securities, Debentures and Other Investments apart from shares of its subsidiary companies.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or fi nancial institutions. As stated in note no.21, the Company has entered into a standby letter of credit facility agreement with a number of Indian banks to the extent of $1750mn (`10,51,750 lacs).


31

As per the SBLC facility agreement, the banks will issue SBLCs on behalf of BPRL International BV, a subsidiary of the Company for loans taken by BPRL International BV in favour of foreign currency lenders. As per the practice followed, all expenses are reimbursed by BPRL International BV. As of the date of Balance sheet, SBLC’s to the tune of $ 833.37mn (`5,00,855.37 lakhs) has been issued. Such practice is not prima facie prejudicial to the interest of the Company.

(xvi) According to the information and explanations given to us and the records made available to us, the Company has not obtained any term loans during the period covered by our audit report.

(xvii) According to the Cash Flow Statement and other records examined by us and the information and explanations given to us and on an overall examination of the fi nancial statements of the Company, we report that no funds raised on short-term basis have been utilized for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year. Hence the question of reporting under clause 4 (xviii) of the Order regarding whether the price at which shares have been issued is prejudicial to the interest of the Company does not arise.

(xix) The Company has not issued any debentures hence the question of reporting under clause 4 (xix) of the Order regarding creation of securities or charge does not arise.

(xx) According to the information and explanations given to us and the records made available to us, the Company has not raised any money by public issue during the period covered by our audit report.

(xxi) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, no fraud (i.e. intentional material misstatements resulting from fraudulent fi nancial reporting and misappropriation of assets) on or by the Company has been noticed or reported during the year by the Company.


Sd/-Harshal Agrawal(Partner)Membership Number: 109438

Place:MumbaiDate: May 16, 2014


32

BALANCE SHEET AS AT MARCH 31, 2014

ParticularsNote no.

` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013I EQUITY AND LIABILITIES

(1) Shareholders' Funds(a) Share Capital 2 262,000.27 237,000.27 (b) Reserves & Surplus 3 (71,376.62) (54,760.00)(c) Money received against share warrants – –

190,623.65 182,240.27(2) Non-current liabilities

(a) Long-term borrowings 4 30,000.00 –(b) Trade payables – –(c) Deferred tax liabilities (Net) – –(d) Other Long term liabilities – –(e) Long-term provisions

30,000.00 –(3) Current liabilities

(a) Short-term borrowings – –(b) Trade payables – –(c) Other current liabilities 5 7,116.15 6,484.16 (d) Short-term provisions 6 2,178.24 1,771.10

9,294.39 8,255.26TOTAL 229,918.04 190,495.53

II ASSETS(1) Non-current assets

(a) Fixed assets (i) Tangible assets 7 86.24 111.91 (ii) Intangible assets 7 78.25 187.68 (iii) Capital work-in-progress 8 17,510.47 18,306.38 (b) Non-current investments 9 151,686.88 154,186.88 (c) Long-term loans and advances 10 377.40 6,899.11

169,739.24 179,691.96(2) Current assets

(a) Cash and cash equivalents 11 59,164.27 9,019.12 (b) Other current assets 12 1,014.53 1,784.45

60,178.80 10,803.57 TOTAL 229,918.04 190,495.53

Statement of Signifi cant Accounting Policies Notes forming part of Accounts

1 1-33

For and on behalf of the Board of Directors As per our attached report of even date

Sd/- Sd/- For and on behalf ofP. Balasubramanian D. Rajkumar M.B. Agrawal & Co.Director Managing Director Chartered Accountants

Sd/- Sd/-Narendra Dixit Harshal AgrawalCompany Secretary Partner

Place: Mumbai Membership No.: 109438Dated: 16th May, 2014


33


1 1-33





STATEMENT OF PROFIT AND LOSS FOR THE PERIOD ENDED MARCH 31, 2014

Notes

` Lakhs ` Lakhs For the year

2013-14 For the year

2012-13I Other Income 13 563.32 130.78II Total Revenue 563.32 130.78III Expenses:

Deputed Employee benefi ts expenditures 14 873.27 659.70Project Cost Charged Off 5,058.51 33,599.56Provision towards diminution in value of investments 6,000.00 –Provision for abandonment – 1,627.51Provision for bad and doubtful loans & advances 3,578.16 –Depreciation and amortization expenses 8 134.83 136.45Other expenses 15 1,535.17 2,390.08Total expenses 17,179.94 38,413.30Profi t Before Tax and Prior Period Items (16,616.62) (38,282.52)Prior Period Income – 18.29

IV Profi t (Loss) before tax (II – III) (16,616.62) (38,264.23)V Tax Expense: – –

(i) Current tax – –(ii) Deferred Tax – –(iiii) Short provision of current tax relating to earlier years – –

VI Profi t (Loss) for the period from continuing operations (IV-V) (16,616.62) (38,264.23)

VII Profi t (Loss) from discontinuing operations – –VIII Tax expense of discountinuing operations – –IX Profi t (Loss) from discontinuing operations

(after tax) (VII-VIII)– –

X Profi t / (Loss) for the period (IV+IX) (16,616.62) (38,264.23)XI Earnings per share

(i) Basic (0.70) (2.32)(ii) Diluted (0.70) (2.32)


34

Cash Flow Statement for the period ending 31st March 2014For the year 2013-14 For the year 2012-13

` Lakhs ` LakhsA Cash Flow from Operating Activities

Profi t Before Tax from Continuing Operations (16,616.62) (38,282.52)Profi t Before Tax from Discontinuing Operations – –Adjustments for:Depreciation and Amortisation 134.83 136.45Provision for Reduction in CWIP – –Provision for abandonment – 1,622.37Provision for LD 419.14 143.59Write off of Assets 5,058.51 33,599.56Interest income (481.95) (85.95)Provision no longer required written back (62.19) –Net (gain) / loss on sale of asset 0.25 –Provision towards diminution in value of investments 6,000.00 –Provision for bad and doubtful loans & advances 3,578.16 –Net unrealised exchange (gain) / loss (9.96) 97.48Operating Profi t / (Loss) before Working Capital changes (1,979.83) (2,769.02)(Increase) / Decrease in Current Assets 869.99 (1,183.08)(Increase) / Decrease in Non Current Assets – –Increase / (Decrease) in Non Current Liabilities – –Increase / (Decrease) in Current Liabilities 692.14 (2,724.28)Cash generated from operations (417.70) (6,676.38)Net income tax (paid) / refunds (28.55) (8.21)Net cash fl ow from / (used in) operating activities (446.25) (6,684.60)

B Net Cash Flow from Investing ActivitiesAddition to Fixed Assets – (4.55)Investment in Equity of Subsidiary company – (10,634.32)Advances and deposits (45.40) (48.93)Loan to Subsidiary Company (511.04) (385.00)Deposit with banks (50,608.86) (7,500.00)Interest Income 410.44 12.05Additions to Capital Work-in-progress (4,262.60) (10,002.48)Proceeds from sale of long-term investments – –Net Cash Flow from/(used) in Investing Activities (55,017.46) (28,563.23)

C Net Cash Flow from Financial ActivitiesIssue of share capital 25,000.00 30,000.00Receipt of Share Application Money – –Proceeds from long-term borrowings 30,000.00 9,500.00Repayment of Loan – (3,185.00)Net Cash Flow from/(used) in Financing Activities 55,000.00 36,315.00

D Net Increase/(Decrease) in Cash and Cash equivalents (A+B+C) (463.71) 1,067.18Cash and cash equivalents at the beginning of the year

` Lakhs ` LakhsBank Balance 1,167.20 250.61Deposits with Bank – 10.00Share of Interest in Joint Venture 351.92 191.33

1,519.12 451.94Cash and cash equivalents at the end of the year

` Lakhs ` LakhsBank Balance 977.45 1,167.20Deposits with Bank – –Share of Interest in Joint Venture 77.96 351.92

1,055.41 1,519.12Net change in Cash and Cash equivalents (463.71) 1,067.18

Notes: 1. The Cash Flow Statement is prepared in accordance with Accounting Standard 3 issued by the Institute of Chartered Accountants of India.2. In Part-A of the Cash Flow Statement, fi gures in brackets indicate deductions made from the Net Profi t / (Loss) for deriving the net cash fl ow

from operating activities. In Part-B and Part-C, fi gures in brackets indicate cash outfl ows.3. Figures of previous year have been regrouped wherever necessary, to conform to current year's presentation.4. During the year `3500 (lacs) of loan to Bharat PetroResources JPDA Limited was converted to equity.




Place: Mumbai Membership No.: 109438

Dated: 16th May, 2014


35

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2014

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

1) ACCOUNTING CONVENTION

The fi nancial statements are prepared under historical cost convention in accordance with the mandatory Accounting Standards issued by the Companies (Accounting standard) Rules, 2006 and the provisions of the Companies Act, 1956, adopting accrual system of accounting except where otherwise stated.

2) USE OF ESTIMATES

The preparation of fi nancial statement in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of the assets and liabilities and disclosures relating to contingent liabilities as at the date of fi nancial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates Difference between actual results and estimates are recognized in the period in which the results get materialized.

3) OPERATING CYCLE

All assets and liabilities have been classifi ed as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956. Since the Company is in the exploration stage, the Company has ascertained its operating cycle as 12 months for the purpose of current – non-current classifi cation of assets and liabilities.

4) OIL AND NATURAL GAS PRODUCING ACTIVITIES

4.1 The Company follows the “Full Cost” method of accounting for its oil and natural gas exploration and production activities read with the Guidance Note (A) 15 (Revised 2013) on Accounting for Oil and Gas Producing Activities issued by the Institute of Chartered Accountants of India. Accordingly, all acquisition, exploration and development costs are treated as capital work-in-progress and are accumulated in a cost centre. General & Administrative expenses identifi able in respect of blocks or cost centre is capitalised along with block or cost centre. The cost centre is not normally smaller than a country except where warranted by major difference in economic, fi scal or other factors in the country. When any well in a cost centre is ready to commence commercial production, these costs are capitalised from capital work-in-progress to the gross block of assets regardless of whether or not the results of specifi c costs are successful. Depletion is charged on all capitalised costs according to the unit of production method. On Completion of the minimum work programme or on the expiration of licence period and if hydrocarbons are not found in any of the block or the cost centre then expenditure accumulated under the head Capital work-in-progress in relation to the block or cost centre is written off.


36

4.2 The Net quantities of the Company’s interests in proved reserves and proved developed reserves of Oil & Gas at the beginning and additions, deductions, production and closing balance for the year and disclosure of quantities on the geographical basis are not mentioned as the Company is in exploratory phase.

4.3 SURRENDER OF FIELD / DISPOSAL OF PARTICIPATION INTEREST

If the Company were to surrender a fi eld, the accumulated acquisition, exploration, development and General & Administrative costs in respect of such fi eld are deemed to be fully depreciated if the remainder of the wells in the cost centre continue to produce oil or gas. Gain or loss is recognised only when the last well on the cost centre ceases to produce and the entire cost centre is abandoned. Also, in the event the Company assigns or farms out the whole or any part of its participating interest, the corresponding carrying value of the capitalised amount is adjusted against the consideration and the net amount credited or, as the case may be, is charged to the profi t and loss account in the year in which the Company’s participating interest is assigned, surrendered or farmed out.

4.4 DEPLETION

Depletion charge is calculated on the capitalised cost according to the unit of production method. The depreciation charge or the unit of production (UOP) charge for all costs within a cost centre is calculated by multiplying the UOP rate with the production for the period. The unit of production rate is arrived at by dividing the depreciation base of the cost centre by the Proved Oil and Gas Reserves. The depreciation base of a cost centre includes gross block of the cost centre, estimated future development expenditure and estimated site restoration expenditure and is reduced by the accumulated depreciation and accumulated impairment charge of the cost centre. The estimates of proved reserves used are based on the latest technical assessment available with the Company.

4.5 SITE RESTORATION COSTS

Liabilities for site restoration costs (net of salvage values) are recognized when the Company has an obligation to dismantle and remove a facility such as oil and natural gas production or transportation facility or an item of plant and to restore the site on which it is located and when a reasonable estimate of that liability can be made. Where an obligation exists for a new facility, the liability is recognized on construction or installation. An obligation may also crystallize during the period of operation of a facility through a change in legislation or through a decision to terminate operations. The amount recognized is the value of estimated future expenditure determined in accordance with local conditions and requirements. The corresponding amount is added to the cost of the tangible fi xed asset and is subsequently depleted as part of the capital costs of the facility or item of plant. Any change in the value of the estimated expenditure is refl ected as an adjustment to the provision and the corresponding tangible fi xed assets.


37

5) FIXED ASSETS

5.1 INTANGIBLE ASSETS

5.1.1 Expenditure incurred for creating/acquiring intangible assets of `50 Lac. and above, from which future economic benefi ts will fl ow over a period of time, is amortised over the estimated useful life of the asset or fi ve years, whichever is lower, from the time the intangible asset starts providing the economic benefi t.

5.1.2 In other cases, the expenditure is charged to revenue in the year the expenditure is incurred.

5.2 TANGIBLE ASSETS

Fixed Assets are stated at cost of acquisition (including incidental expenses) less accumulated depreciation.

6) IMPAIRMENT OF ASSETS

According to Accounting Standard – 28 “Impairment of Assets” issued by the Companies (Accounting standard) Rules, 2006, the carrying values of fi xed assets of identifi ed cash generating units (CGU) are reviewed for impairment at each Balance Sheet date when events or changes in circumstances indicate that the carrying values may not be recoverable. If the carrying values exceed the estimated recoverable amount, the assets of the CGU are written down to the recoverable amount and the impairment losses are recognized in the profi t and loss account. The recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value based on an appropriate discount factor.

7) DEPRECIATION

7.1 Fixed assets costing not more than `5,000 each are depreciated @ 100 percent in the year of capitalization.

7.2 Computer equipments and peripherals, and mobile phones are depreciated over a period of 4 years.

7.3 Depreciation on fi xed assets other than mentioned in 7.2 are provided under the straight line method, at rates prescribed under Schedule XIV to the Companies Act, 1956. Additions to fi xed assets during the year are being depreciated on pro rata basis from the beginning of the month in which such assets are capitalized.

8) REVENUE RECOGNITION

8.1 Revenue is respect of interest on deposit is recognised on accrued basis.

8.2 Liquidated Damages for delay in execution of contracts/supplies are accounted for as per the terms of the contracts and are recognized as income in the year of deduction.


38

9) INVESTMENTS

9.1 Current investments are valued at lower of cost or fair market value.

9.2 According to AS – 13 issued by ‘Institute of Chartered Accountants of India’, Long-term investments are valued at cost. Provision for diminution is made to recognize a decline, other than of temporary nature, in the value of such investments.

10) JOINT VENTURES

The Company has Joint Ventures in the nature of Production Sharing Contracts (PSC) with the Government of India and/or various bodies corporate for exploration, development and production activities.

The income, expenditure, assets and liabilities of the Jointly Controlled Assets are merged on line by line basis according to the participating interest with the similar items in the Financial Statements of the Company.

11) FOREIGN CURRENCY TRANSACTIONS

11.1 Transactions in foreign currency are accounted at the exchange rate prevailing on the date of transaction.

11.2 According to Accounting Standard – 11 The Effects of Changes in Foreign Exchange Rates issued by the Companies (Accounting standard) Rules, 2006, Monetary items in form of Advances, Current Assets and Current Liabilities denominated in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate exchange rates prevailing on the date of Balance Sheet. Any profi t/loss arising out of such conversion is charged to Profi t and Loss Account.

11.3 Foreign exchange differences on long term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in other cases, if any, accumulated in “Foreign Currency Monetary Item Translation Difference Account” and amortised over the balance period of the asset or liability.

12) PROVISIONS, CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

12.1 According to Accounting Standard– 29 “Provisions, Contingent Liabilities and Contingent Assets” issued by the Companies (Accounting standard) Rules, 2006, Provision is recognised when there is a present obligation as a result of past event and it is probable that an outfl ow of resources will be required to settle the obligation in respect of which a reliable estimate can be made.

12.2 Disclosure for a contingent liability is made when there is a possible obligation that may, but probably will not, require an outfl ow of resources.

12.3 Capital commitments and Contingent liabilities disclosed are those which exceed `100 thousands in each case.

12.4 Show cause notices issued by various Government authorities are considered for the evaluation of Contingent liabilities only when converted into demand.


39

13) TAXES ON INCOME

13.1 Provision for current tax is computed in accordance with the provisions of the Income Tax Act, 1961.

13.2 According to Accounting Standard – 22 “Accounting for Taxes on Income” issued by the Companies (Accounting standard) Rules, 2006 , Deferred tax on account of timing difference between taxable and accounting income is provided using the tax rates and tax laws enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised with regard to all deductible timing differences to the extent that it is probable that taxable profi t will be available against which deductible timing differences can be utilised. When the Company carries forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing evidence that suffi cient taxable income will be available against which deferred tax assets can be realised.

14) CLASSIFICATION OF INCOME/EXPENSES

Being not material:

14.1 Prepaid expenses up to `10 thousands in each case are charged to revenue as and when incurred.

14.2 Liabilities for expenses are provided for only if the amount exceeds `10 thousands in each case.

14.3 Acquisition cost which cannot be assigned/ identifi ed to particular block is expensed during the year.


40

Note '2' – SHARE CAPITAL As at 31st March, 2014 As at 31st March, 2013

Equity Share Capital Number of shares

` Lakhs Number of shares

` Lakhs

i Authorised

Equity shares of `10 each with voting rights *

3,000,000,000 300,000 3,000,000,000 300,000

Total 3,000,000,000 300,000 3,000,000,000 300,000

ii Issued, subscribed and paid-up Capital:

Issued and Subscribed Capital:

Equity shares of `10 each fully paid-up with voting rights *

2,620,002,670 262,000.27 2,370,002,670 237,000.27

Paid up Capital:


2,620,002,670 262,000.27 2,370,002,670 237,000.27

Total 2,620,002,670 262,000.27 2,370,002,670 237,000.27

iii Par value of equity shares: ` 10 each ` 10 each

iv No. of shares outstanding

Equity shares of `10 each fully paid-up

As at beginning of the year 2,370,002,670 237,000.27 1,100,002,670 110,000.27

Issued during the year 250,000,000 25,000.00 1,270,000,000 127,000.00

As at the year end 2,620,002,670 262,000.27 2,370,002,670 237,000.27

v Shareholders holding more than 5% shares

No. of Shares

No. of Shares

Name of shareholder % holding 31st March 2014

% holding 31st March 2013

Bharat Petroleum Corporation Ltd 100%# 2,620,002,610 100%# 2,370,002,610

vi Shareholders held by Holding Company No. of Shares

Name of shareholder 31st March 2014

31st March 2013

Bharat Petroleum Corporation Ltd. 100%# 2,620,002,610 100%# 2,370,002,610

# 60 shares held by others * The Company has only one class of shares referred to as equity shares having a par value of `10/-. Each

holder of equity shares is entitled to one vote per share.


41

Note '3' – RESERVES & SURPLUS ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013Surplus (Defi cit) in Statement of Profi t and LossBalance as at the beginning of the year (54,760.00) (16,495.77)Profi t / (loss) for the year (16,616.62) (38,264.23)

Total (71,376.62) (54,760.00)

Note ‘4’ – Long-term borrowings ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013UnsecuredTerm Loan from Parent Company 30,000.00 –

Total 30,000.00 –

Terms & Repayment Schedule of Term Loans:Loans & Borrowings Book

value as on 31st March,

2014

Book value as on

31st March, 2013

Date of Maturity

Rate of Interest (%)

Loan from Parent Company 30,000.00 – 15 years from date

of drawing the loan

0.00%

Note ‘5’ – Other current liabilities ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013 Due to Holding Company 511.62 356.45 Due to Operator 461.09 858.56 Other Payables: (i) Payable for Legal and Professional fees 57.07 53.80 (ii) Payable for Contract Services 2.53 43.37 (iii) Trade / security deposits received 8.21 4.76 (iv) Stautory Dues Payable 27.67 6.91 (v) Bonus Payable 113.00 98.81 (vi) Other Charges Payable 65.10 – In respect of Joint ventures: (i) Payable for Contract Supplies/works 5,794.55 5,061.50 (ii) Payable for professional services 0.11 – (ii) Payable to other Joint Venture partners 75.20 –

Total 7,116.15 6,484.16

Note ‘6’ – Short Term Provisions ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013In respect of Joint ventures:

Provision for Liquidated Damages 562.73 143.59Provision for abandonment 1,615.51 1,627.51

Total 2,178.24 1,771.10


42

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12


43

Note ‘8’ – Capital Work-In-Progress ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013

Capital work-in-progress (at cost)Acquisition Cost 2,965.56 2,838.37Exploration Cost– Geological & Geophysical Cost 3,388.87 7,049.11– Drilling Cost 10,504.47 8,418.90– General & Administrative Cost 651.57 –

Total 17,510.47 18,306.38

Note ‘9’ – Non-Current Investments No. of Shares

Face Value

Book Value

31-03-2014 31-03-2013

` Lakhs ` Lakhs

Unquoted Trade Investments (At cost):

Investment in equity instruments of subsidiaries

a) BPRL International B.V 235,417,394 Euro 1 151,686.88 151,686.88

(235,417,394) (Euro 1)

b) Bharat Petroresources JPDA Ltd 60,000,000 `10 6,000.00 2,500.00

(25,000,000) (`10)

157,686.88 154,186.88

Less: Provision for dimunition in the value of investment

Bharat Petroresources JPDA Ltd 6,000.00 –

Total 151,686.88 154,186.88

Figures in Bracket represents Previous years Figures

31-03-2014 31-03-2013

` Lakhs ` Lakhs

Aggregate Value of Quoted Investments – –

Market Value of Quoted Investments – –

Aggregate Value of Unquoted Investments 157,686.88 154,186.88


44

Note ‘10’ – Long term Loans and Advances(Unsecured, Considered good unless otherwise stated)


31-03-2014 As at

31-03-2013Capital advances 111.35 58.24Security Deposit 1.00 1.00Loans and advances to subsidiariesBharat Petroresources JPDA Ltda) Unsecured considered good 263.05 6,830.17b) considered doubtful 3,578.16 –Less: Provision for bad and doubtful loans (3,578.16) –In respect of Joint Venture – Petroleum Exploration Licence Deposit 2.00 9.13 – Interest Accurred and due on above deposit – 0.57

Total 377.40 6,899.11

Note ‘11’ – Cash and cash equivalents ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013Cash on HandBalance with banksIn current accounts 977.45 1,167.20Bank deposits 58,108.86 7,500.00In respect of Joint VentureWith Bank in Current Accounts* 77.96 351.92

Total 59,164.27 9,019.12

* Earmarked for Joint Venture Operations

Note '12' – Other current assets ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013Prepaid Expense 11.76 11.11Receivable from Subsidiary Company BPRL International B.V. 840.25 880.45Cenvat Credit 6.01 6.56Accrued Interest 71.51 73.90TDS receivable 28.55 8.21In Respect of Joint Venture: Prepaid Expenses 2.89 13.16 Consumables 33.32 34.23 Receivable from other Joint Venture partners 20.24 756.83

Total 1,014.53 1,784.45


45

Note ‘13’ – Other Income ` Lakhs ` Lakhs For the year


2012-13Interest Income

Interest Income on Bank Deposits and Others 481.95 85.95(TDS amount of `16.45 lacs, previous year `8.21)

Foreign Exchange fl uctuations (net) – 38.77Provision no longer required written back 62.19 –

Others 19.18 6.06 Total 563.32 130.78

Note ‘14’ – Deputed Employee benefi ts expenditures ` Lakhs ` Lakhs For the year


2012-13Salaries and wages 698.51 473.39Payment to Parent Company towards PF and other Funds 99.73 80.36Payment to Parent Company towards gratuity 22.95 15.36Welfare expenses 52.08 90.59

Total 873.27 659.70

Note ‘15’ – Other expenses ` Lakhs ` Lakhs For the year


2012-13Repairs and maintenance :

Machinery 1.57 1.37 Building – – Others 125.39 94.81

Insurance 0.42 0.05Rent Rates and taxes 18.17 56.78Legal and Professional Fees 353.27 440.19Liquidated Damages Paid 428.64 216.91Share in Operators Expenditure 111.24 1,054.67Foreign Exchange fl uctuations (net) 9.96 –Travelling and Conveyance 238.17 204.79Advertisement 0.45 –Bank Charges 148.56 228.35Printing & Stationery 12.12 15.03Postage, Telephone etc 11.52 7.19Electricity Charges 23.63 28.00Security Expenses 6.55 4.32Payment to Auditors

For Audit Fees 3.93 3.93For Managemnet Services 1.69 3.93For Certifi cation 0.26 1.94

Loss on sale of asset 0.24 –Other Expenses 39.39 27.82Total 1,535.17 2,390.08


46

Notes forming part of accounts (Notes 15 to 33)

15) The Company was incorporated as a 100% subsidiary of Bharat Petroleum Corporation Limited (BPCL) to focus on Exploration and Production Activities. The Board of Directors of BPCL approved the transfer of Exploration and Production assets, liabilities and investments along with the commitments and expenditure, through the assignment of its participating interests to the Company, in respect of Blocks awarded to the Company under NELP –IV and NELP VI rounds in India. The Board of Directors of the Company approved the assignment from BPCL to the Company. Details of the blocks including blocks assigned by BPCL as on 31/03/2014 are as under:

Name Country Participating Interest of BPRL31/03/2014 31/03/2013

NELP – IVCY/ONN/2002/2 India 40.00% 40.00%

NELP – VIKG/DWN/2004/2 (a) India 0.00% 10.00%KG/DWN/2004/5 (a) India 0.00% 10.00%CY/ONN/2004/1 India 20.00% 20.00%CY/ONN/2004/2 India 20.00% 20.00%RJ/ONN/2004/1 (a) India 0.00% 11.11%

NELP – VIIRJ/ONN/2005/1 India 33.33% 33.33%

NELP – IXCB/ONN/2010/11 India 25% 25%AA/ONN/2010/3 India 20% 20%CB/ONN/2010/8 India 25% 25%MB/OSN/2010/2 India 20% 20%

Blocks outside IndiaEP-413 Australia 27.80% 27.80%

(a) On completion of Minimum Work Programme Commitments and based on analysis of seismic and well drilling results indicating poor prospectivity, as assessed by the Management, the Company has withdrawn in respect of Blocks: KG/DWN/2004/2, KG/DWN/2004/5 and RJ/ONN/2004/1. Consequently an amount of `5,058.51 Lakhs has been written off to the Statement of Profi t and Loss.

(b) In the previous year 2012-13, the Company has withdrawn from the permit in respect of blocks: KG/DWN/2002/1, MN/DWN/2002/1, ACP/32, WA/388/P and 48/1b & 2c. Consequent to that an amount of `33,599.56 lakhs had been written off to the statement of Profi t and Loss net of provision of `3,000 lakhs in 2012-13. Provision of `1,627.51 lakhs had been accounted towards estimated abandonment in 2012-13.


47

16) The Company has interest in various Un-incorporated Joint Ventures. Since these interest is in the nature of Jointly Controlled Assets (JCA), in terms of AS 27 on ‘Financial Reporting of Interests in Joint Ventures’, the fi nancial statements of the Company includes the Company’s share in the assets, liabilities, incomes and expenses relating to JCA. The Company recognises such assets, liabilities, incomes and expenses based on the fi nancial statements received from the respective operators. The company’s share in the assets, liabilities, incomes and expenses in Joint Ventures as furnished by the respective operators has been incorporated in the fi nancial statements as given below:

(` in Lakhs)

31st March 2014 31st March 2013

1 Cash and Bank Balances 77.96 351.922 Current Assets 56.46 862.473 Capital Work in Progress 17,510.47 18,306.384 Non-Current Assets 2.00 9.705 Liabilities 5,869.86 5,920.066 Income 3.01 56.927 Expenses 349.41 1,054.67

In respect of CB/ONN/2010/8, the Company is the operator. The Companies share of the assets and liabilities have been recorded under respective heads.

Out of the remaining 7 Indian Blocks (previous year ten), the Company has received fi ve (previous year eight) audited fi nancial statements as at March 2014. The Company has not received fi nancial statement for two (previous year two) blocks. Expenses for these blocks are accounted based on Billing Statement for the period Upto 31st March 2014.

In respect of one (previous year one) Joint Venture block outside India the assets, liabilities, income and expenditure have been incorporated on the basis of unaudited fi nancial statements as on 31st March 2014.

17) BPRJPDA Ltd 100% subsidiary of BPRL has a participating interest of 20% in JPDA 06-103 blocks. BPRL has invested `6,000 lacs as equity and has given interest free loan of `3,841.21 lacs to BPRJPDA Ltd. Commercial uncertainties have arised due to dispute between the Government of Timor Leste and the Government of Australia with respect to the Certain Maritime Arrangements in the Timor Sea Treaty (CMATS) for which the Timor Leste Government has initiated arbitration proceedings against the Government of Australia. The consortium partners have requested Autoridade Nacional do Petróleo (ANP) to terminate the PSC. Decision from the authority (ANP) is still awaited.

In view of the uncertainties regarding the continuation of activities in the block, the management has provided for `6,000 lacs as provision for diminution in value of investments and `3,578.16 lacs as provision for bad and doubtful loans in respect of its subsidiary.

18) In line with the revised guidance note on “Accounting for Oil and Gas Producing Activities”, issued by Institute of Chartered Accountants of India, applicable from 1st April 2013, General & Administrative expenses, which were earlier taken to Profi t and Loss Account, have now been capitalized as Capital Work In Progress. The impact of the same for the year is `651.57 lacs.


48

19) The group requires signifi cant amounts of funds to carry on its operations. The recovery of funds invested is subject to the success of exploration activities leading to monetization. BPCL has been extending fi nancial support to the Holding Company to meet its obligation under production sharing contracts and for other activities, as required, and is committed to provide the necessary level of fi nancial support, to enable the Holding Company to continue as a going concern.

20) BPRL has entered into Standby Letter of Credit (SBLC) facility agreement with a number of Indian banks to the extent of $ 1750 Mn dollars (` 10,51,750 Lakhs). As per the SBLC facility agreement banks will issue SBLC’s, on behalf of BPRL International BV, a wholly owned subsidiary, for loans taken by BPRL International BV in favour of the foreign currency lenders, to the extent of their respective commitments. As of the date of Balance Sheet, SBLC’s to the tune of $ 833.37 Mn (`500,855.37 Lakhs) has been issued.

21) Employee Benefi ts:

All employees of the Company are on deputation from Bharat Petroleum Corporation Limited (BPCL). Expenditure under the head “Deputed employee benefi ts expenditure” represent the amount charged by BPCL vide various debit notes to the Company. Such debit notes include debit for the Company’s share of the employee benefi ts including leave encashment and retirement benefi ts towards Provident Fund and Gratuity. The details of expenses debited to the profi t and loss account under this head are as follows:

` in Lakhs

Sr No

Particulars For the year 2013-2014

For the year 2012-13

1 Provident Fund 48.87 37.292 Gratuity 22.94 15.363 Leave encashment 37.39 29.59

Total 109.20 82.24

In view of the above, the management is of the view that no additional disclosure is required in terms of Accounting Standard 15 on “Employee Benefi ts” issued by the Companies Accounting Standard Rules, 2006.

22) Disclosure under Accounting Standard -20 on “Earnings Per Share (EPS)”:

The basic/diluted earnings per equity share are calculated as stated below:

Particulars 2013-14 2012-13

Net profi t/ (loss) after tax `in Lakhs (16,616.62) (38,264.23)

Weighted average equity shares outstanding during the period

Nos. 237,54,82,122 1,64,91,69,337

Basic earnings per equity share ` (0.70) (2.32)

Diluted earnings per equity share ` (0.70) (2.32)


49

Calculation of Weighted Average number of equity shares:

Particulars31st March

201431st March

2013Shares existing at the beginning of the year 237,00,02,670 1,22,00,02,670Shares issued and allotted during the year 25,00,00,000 1,15,00,00,000Weighted Average Number of shares issued during the year 54,79,452 42,91,66,667Weighted Average Number of shares for EPS Calculation 237,54,82,122 1,64,91,69,337

23) Expenditure incurred by BPCL on behalf of the Company is accounted for on the basis of the debit notes raised by BPCL. Supporting documents for such debit notes are available with BPCL.

24) Disclosure under Accounting Standard – 18 on “Related party Disclosure”

1) Name of the related parties and description of relationship:a) Subsidiaries : i) BPRL International B.V. ii) Bharat Petro Resources JPDA Ltd

b) Step-down subsidiaries: i) BPRL Ventures B.V. ii) BPRL Ventures Mozambique B.V. iii) BPRL Ventures Indonesia B.V.

c) Joint Venture/ Jointly Controlled Entities: IBV Brasil Petroleo Private Ltd.

d) Key Management Personnel: Shri D. Rajkumar (Managing Director)

2) Details of Transactions:

a) Bharat Petroresources International BV

(` in Lacs)Transaction during the year 2013-14 2012-13Equity Contribution NIL 10,634.32Reimbursement of SBLC expenses 3,485.97 2,296.92

Closing Balance 2013-14 2012-13Receivable from Subsidiary 840.25 880.45

b) There were no transactions entered during the year with BPRL Ventures B.V., BPRL Ventures Mozambique B.V. and BPRL Ventures Indonesia B.V.

c) Bharat PetroResources JPDA Ltd.(` in Lacs)

Transaction during the year 2013-14 2012-13Equity Contribution* 3,500.00 1,000.00Loans and Advances to Subsidiary Company 511.02 385.00

*Out of the outstanding loans an amount of `3,500 Lakhs was converted to Equity Share Capital during the year.

Closing Balance 2013-14 2012-13Outstanding Loan 3,841.20 6,830.17


50

d) IBV Brasil Petroleo Pvt Ltda: No Transactions

e) Key Management Personnel

Shri. D. Rajkumar(` in Lacs)

2013-14 2012-13

Salary and allowances 31.04 30.51Contribution to Provident Fund and other funds 4.32 3.86Other benefi ts 1.87 2.29Total 37.23 36.66

25) Segment Information

The Company has identifi ed the geographical segment as its primary segment. Geographic segments of the Company are determined based on the location of the assets viz. “Within India” and “Outside India”. The Company is operating in a single business segment i.e. Exploration & Production of Hydrocarbon and as such all business activities revolve around this segment. Hence, there is no separate secondary segment to be reported considering the requirement of AS 17 on Segment Reporting issued by the Companies Accounting Standard Rules, 2006. The segment information is as under:

Within India Outside India Total2013-14 2012-13 2013-14 2012-13 2013-14 2012-13

RevenueExternal Revenue – – – – – –Inter Segment Revenue – – – – – –Total Revenue – – – – – –ResultSegment Results (5,595.77) (29,911.59) 50.56 (6,530.14) (5,545.20) (36,441.73)Unallocated Corporate Expenses – – – – (11,571.61) (1,908.59) (17,116.82) (38,350.32)Operating Profi t (17,116.82) (38,350.32)Add: Interest & Other Income – – – – – –Prior period income – – – – – 18.29Unallocated Corporate Income – – – – 500.19 67.80 500.19 86.09Profi t after Tax (5,595.77) (29,911.59) 50.56 (6,530.14) (16,616.62) (38,264.23)Other InformationSegment Assets 11,719.00 18,847.79 6,039.25 652.91 17,758.25 19,530.46Unallocated Corporate Assets – – – – 212,159.80 170,965.07Total Assets 11,719.00 18,847.79 6,039.25 652.91 229,918.04 190,495.53Segment Laibilities 6,809.03 5,868.30 1,700.04 1,822.85 8,509.08 7,691.15Unallocated Corporate Liabilities 30,785.31 564.11Total Liabilities 6,809.03 5,868.30 1,700.04 1,822.85 39,294.39 8,255.26Capital Expenditure – – – – 17,510.47 18,306.38Depreciation – – – – 134.83 136.45Non Cash Exp (other than depreciation)

– – – – 9,997 1,765.96

(` in Lacs)


51

26) In respect of blocks held in India, as per the Production Sharing Contracts signed by the Company with the Government of India (GoI), the Company is required to complete Minimum Work Programme (MWP) within stipulated time. In case of delay, Liquidated Damages (LD) is payable for extension of time to complete MWP. Further, in case the Company does not complete MWP or surrender the block without completing the MWP, the estimated cost of completing balance work programme is required to be paid to the GoI.

27) Capital commitments and Contingent Liabilities:

(a) Capital Commitments:

Based on the estimation by the Management, BPRL’s share of MWP commitments as on the reporting date amounted to `38,773.07Lakhs. (Previous year `27,655.79 Lakhs.).

Company has provided Bank Guarantees to Directorate General of Hydrocarbons (DGH) to the extent of `3,525.65 Lakhs (`2,564.39 Lakhs) towards MWP.

(b) Contingent Liabilities:

Contingent liabilities in respect of operations where BPRL is not the operator are recognised based on inputs received from the operator.

28) Expenditure in Foreign Currency

(` in Lacs) 2013-14 2012-13

(a) Professional Consultancy Fees 145.50 156.78

(b) General & Administrative Expenses 29.51 80.25

(c) Travelling & Conveyance 25.32 27.17

29) As at March 31, 2014, there are no creditors covered under the Micro, Small and Medium Enterprises Development Act, 2006 and hence no disclosures under the Act are made.

30) Foreign Exchange loss of `9.96 (in Lakhs) [previous year gain of `38.77 (in Lakhs)] are in line with Signifi cant Accounting Policy No. 8 due to applicability of AS-11 (Revised).

31) Taxation:–

a. Deferred Tax Provision

Since all the blocks are in the exploration phase, there is no virtual/reasonable certainty supported by convincing evidence that suffi cient future taxable income will be available against which unabsorbed depreciation and carry forward tax losses can be realised. Hence, no deferred tax asset has been recognised as per AS – 22 in the accounts in respect of unabsorbed depreciation and carry forward losses.

b. Current Tax Provision

During the year, there is no taxable income hence no provision for tax has been made in the current year.


52

32) The Company’s unhedged exposure towards foreign exposure is given below:

Currency 2013-14 2012-13

USD Receivable 1,382,918 1,618,790

AUD Receivable – 283,382

AUD Payable 51,499 –

GBP Payable 1,600,000 1,600,000

33) Figures of previous year have been regrouped wherever necessary to confi rm to current year presentation.


Sd/- Sd/- For and on behalf ofP. Balasubramanian D. Rajkumar M.B. Agrawal & Co.Director Managing Director Chartered Accountants Sd/- Sd/-Narendra Dixit Harshal AgrawalCompany Secretary Partner


Annexure ‘C’ Information of Subsidiary Companies for the fi nancial year ended 31.3.2014

BPR JPDA

BPRL International BV

BPRL Ventures BV

BPRL Ventures Mozambique BV

BPRL Ventures Indonesia BV

Rs. in Lacs

USD Mn

Rs. in Lacs USD Mn

Rs. in Lacs USD Mn

Rs. in Lacs

USD Mn

Rs. in Lacs

1 Capital 6,000.00 324.01 194,726.77 301.38 181,126.37 292.68 175,897.75 20.62 12,392.41

2 Reserves (9,578.19) (430.01) (258,431.71) (285.42) (171,534.57) (121.47) (73,002.26) (5.00) (3,004.95)

3 Total Assets 281.54 722.90 434,455.67 346.58 208,291.11 300.66 180,693.65 28.25 16,977.97

4 Total Liabilities

3,859.73 828.90 498,160.61 330.62 198,699.31 129.45 77,798.16 12.63 7,590.50

5 Investments (exclusing investments in subsidiary)

- - - - - - - - -

6 Turnover - - - - - - - - -

7 Profi t (Loss) before tax

(8,637.81) (220.85) (126,423.71) (144.26) (82,580.41) (75.92) (43,459.76) (0.71) (406.43)

8 Provison for Tax

- - - - - - - - -

9 Profi t (Loss) after tax

(8,637.81) (220.85) (126,423.71) (144.26) (82,580.41) (75.92) (43,459.76) (0.71) (406.43)

10 Proposed Dividend

- - - - - - - - -


53

Independent Auditor’s Report to the members of Bharat PetroResources Limited on the Consolidated Financial Statements of Bharat PetroResources Limited

Report on the Financial Statements

We have audited the accompanying consolidated fi nancial statements of Bharat PetroResources Ltd. (“the Company”) and its subsidiaries as described in Note 1 para 2(b) and joint venture (together referred to as the ‘Group’) as at March 31, 2014 which comprise the Consolidated Balance Sheet as at 31st March 2014, Consolidated Statement of Profi t and Loss and Consolidated Cash Flow for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of the Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements. We believe that audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the fi nancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

1. in the case of the Consolidated Balance Sheet, of the state of affairs of the Company and its subsidiaries and interest in joint venture as at March 31, 2014;

2. in the case of the Consolidated Statement of Profi t and Loss, of the Consolidated Loss of the Company and its subsidiaries and interest in joint venture for the year ended on that date;


54

3. in the case of Consolidated Cash Flow Statement, of the Consolidated Cash Flows of the Company and its subsidiaries and interest in joint venture for the year ended on that date.

Other Matter

1. We did not audit the standalone fi nancial statements of Bharat PetroResources JPDA Ltd. (BPR JPDA) and consolidated fi nancial statements of BPRL International B.V, the subsidiaries of the Company, whose fi nancial statements refl ect total assets of ̀ 640,620.35 lacs as at March 31, 2014, total revenues of `442.65 lacs for the year ended on that date.

We did not audit the standalone fi nancial statements of IBV (Brazil) Petroleo Pvt Ltda, a Joint Venture of the Company, whose fi nancial statements refl ect total assets of ̀ 270,313.49 lacs as at March 31, 2014, Nil revenues for the year ended on that date.

2. Financial statements of BPR JPDA are prepared under Indian GAAP and audited by another fi rm of auditors on which we have placed reliance for the purpose of this report.

Financial statements of other entities are prepared under respective GAAP and audited by the local fi rm of auditors. For the purpose of consolidation, we are furnished with fi nancial statements prepared and certifi ed by the management under Indian GAAP, which are prepared based on audited fi nancial statements prepared under local GAAP, on which we have placed reliance for the purpose of this report.

3. We report that the consolidated fi nancial statements have been prepared by the Company in accordance with the requirements of the Accounting Standard (AS) 21 on “Consolidated Financial Statements”, Accounting Standards (AS) 27 “Financial Reporting of interest in Joint Ventures” notifi ed pursuant to the Companies (Accounting Standards) Rules, 2006.

4. The auditors of IBV Brazil Petroleo Ltda. have drawn attention to the fact the said Joint Venture has spent signifi cant amounts that are related mainly to exploration and evaluation costs, the recovery of which is subject to the success of all its exploration campaigns. The management of the said joint venture understands that the members of the joint ventures will continue to provide the funds necessary for keeping the Company’s operations and, therefore, the fi nancial statements for the year ended December 31, 2013 were prepared based on the assumption that the Company will continue to operate as a going concern.

Emphasis of Matter

1. Attention is drawn to our observation in our Audit Report of Bharat PetroResources Limited (Standalone) regarding incorporation of details about the Company’s share in assets, liabilities, income and expense in the operations of the joint ventures based on the audited / unaudited statements received from the respective Operators. In these regards, it has been observed that:

In case of one block, no audited statements have been received by the Company. Total assets, liabilities, income and expenses in respect of this blocks, amounts to `6020.15 lacs, `136.82 lacs, `2.96 lacs and `0.42 lacs respectively;

The audited statements referred above are prepared, as stated there in, to meet requirements of production sharing contracts and are special purpose statement;


55

None of the statements, audited as well as unaudited, are drawn up in the format prescribed under Schedule VI to the Companies Act, 1956;

Some of the Operators use accounting policies other than those adopted by the Company for like transactions. The Company has made appropriate adjustments while incorporating relevant data; and

No break up of assets and liabilities is available in respect of two blocks where the Company has invested `80.46 lacs.

The Company’s proportionate share in jointly controlled assets, liabilities for which the Company is jointly responsible, Company’s proportionate share of income and expenses for the year, the elements making up the Cash Flow Statement and related disclosures contained in the enclosed fi nancial statements and our observations thereon are based on such audit reports and statements from the operators to the extent available with the Company.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that: (a) We have obtained all the information and explanations which to the best of our

knowledge and belief were necessary for the purposes of our audit; (b) In our opinion proper books of accounts as required by law have been kept by the

Company so far as appears from our examination of those books. (c) The Consolidated Balance Sheet, Consolidated Statement of Profi t and Loss dealt

with by this report are in agreement with the books of account; (d) In our opinion, the Consolidated Balance Sheet, Consolidated Statement of Profi t

and Loss and Consolidated Cash Flow comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(e) As per Notifi cation no. G.S.R. 829(E) dated October 21, 2003, the Government companies are exempted from the provisions of clause 274(1)(g) of the Act, accordingly, we are not required to report whether any directors are disqualifi ed in terms of provisions contained in the said section.


Sd/-Harshal AgrawalPartnerMembership Number: 109438

Place:MumbaiDate: 16th May, 2014


56

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2014

Particulars Note no.


31-03-2014 As at

31-03-2013I EQUITY AND LIABILITIES

(1) Shareholders' Funds(a) Share Capital 2 262,000.27 237,000.27(b) Reserves & Surplus 3 (155,714.67) (99,077.39)(c) Money received against share warrants

106,285.60 137,922.88

(2) Share application money pending allotment – –

(3) Non-current liabilities(a) Long-term borrowings 4 525,816.75 304,580.08(b) Trade payables – –(c) Deferred tax liabilities (Net) – –(d) Other Long term liabilities – –(e) Long-term provisions – –

525,816.75 304,580.08(4) Current liabilities

(a) Short-term borrowings – –(b) Trade payables – –(c) Other current liabilities 5 25,784.86 24,632.50(d) Short-term provisions 6 2,178.24 1,771.10

27,963.10 26,403.60TOTAL 660,065.45 468,906.56

II ASSETS(1) Non-current assets

(a) Fixed assets(i) Tangible assets 7 96.95 126.93(ii) Intangible assets 7 47,660.31 45,951.00(iii) Capital work-in-progress 8 533,906.92 402,587.41(b) Long-term loans and advances 9 1,690.44 2,000.18

583,354.62 450,665.52(2) Current assets

(a) Cash and cash equivalents 10 76,517.69 17,332.46(b) Short-term loans and advances – –(c) Other current assets 11 193.14 908.58

76,710.83 18,241.04TOTAL 660,065.45 468,906.56Statement of Signifi cant Accounting Policies and Notes forming part of Accounts

1-32







57

CONSOLIDATED STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED MARCH 31, 2014

Notes ` Lakhs ` Lakhs

As at31-03-2014

As at31-03-2013

I Other Income 12 975.76 144.34II Total Revenue 975.76 144.34III Expenses:

Employee benefi ts expenditures 13 940.70 729.59Provision for abandonment – 1,627.51Project cost charged off [including in respect of Joint Venture] 38,004.80 33,599.56Provision for impairment 8,640.21 –Finance Costs 14 7,141.17 15,749.94Depreciation and amortization expenses 7 138.02 141.50Other expenses 15 4,268.54 14,723.88Total expenses 59,133.44 66,571.98Profi t before Tax and Prior Period Items (58,157.68) (66,427.64)Prior Period Income 5,017.83 18.29

IV Profi t (Loss) before tax (II – III) (53,139.85) (66,409.35)V Tax Expense:

(i) Current tax – –(ii) Deferred Tax (in respect of Joint Venture) – –(iiii) (Short)/Excess provision of tax relating to earlier years 30.23 –

VI Profi t (Loss) for the period from continuing operations (IX – X) (53,109.62) (66,409.35)VII Profi t (Loss) from discontinuing operations – –VIII Tax expense of discountinuing operations – –IX Profi t (Loss) from discontinuing operations (after tax) (XII – XIII) – –X Profi t / (Loss) for the period (XI + XIV) (53,109.62) (66,409.35)XI Earnings per share

(i) Basic (2.24) (4.03)(ii) Diluted (2.24) (4.03)


1-32







58

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2014For the year ended

31st March, 2014For the year ended

31st March, 2013 ` Lakhs ` Lakhs ` Lakhs ` Lakhs

A CASH FLOW FROM OPERATING ACTIVITIESNet Profi t before Tax and Extraordinary Items (53,109.62) (66,409.36)Adjustments for :

Depreciation / Amortisation 138.02 141.50(Profi t) / loss on sale / write off of assets 0.24 –Finance costs 7,139.10 15,749.94Interest income (650.27) (97.62)Provision for abandonment – 1,627.51Provision for LD 419.13 143.59Provision for impairment 8,640.21 –Project Cost charged off 38,004.80 33,599.56Goodwill written off 1,773.19 –Provisions written back (62.19)Net unrealised exchange (gain) / loss 12.03 97.48Short /(Excess) Provision for other items (Net) – 55,414.26 51,261.96

2,304.64 (15,147.39)Operating Profi t before working capital changesAdjustments for:

(Increase) / Decrease in Current Assets 297.71 (60.49)(Increase) / Decrease in Non Current Assets 815.49 626.79Increase / (Decrease) in Non Current Liabilities 50.20 –Increase / (Decrease) in Current Liabilities 1,152.36 2,315.76 7,311.46 7,877.76

Cash generated from Operations 4,620.40 (7,269.63)Direct taxes paid (28.55) (8.21)Net cash from Operating Activities (A) 4,591.85 (7,277.84)

B CASH FLOW FROM INVESTING ACTIVITIESPurchase of fi xed assets and Intangible Assets (3,590.78) (9.80)Additions to CWIP (177,964.52) (167,858.81)Deposits with Banks (50,608.86) (7,500.00)Interest received 578.77 23.72Net Cash used in Investing Activities (B) (231,585.39) (175,344.89)

C CASH FLOW FROM FINANCING ACTIVITIESProceeds from Issue of equity shares 25,000.00 30,000.00Proceeds from borrowings (Net of exchange gain/loss) 221,236.67 314,080.08Repayment of Loan – (138,552.65)Finance Cost (7,139.10) (15,749.94)Net cash used in Financing Activities (C) 239,097.57 189,777.49Net increase / (decrease) in Cash and cash equivalents (A+B+C) 12,104.03 7,154.76Cash and cash equivalents at the beginning of the year 9,832.46 7,424.40Effect of exchange differences on restatement of foreign currency Cash and cash equivalents

(3,527.66) (4,746.70)

Cash and cash equivalents at the end of the year 18,408.83 9,832.46Reconciliation of Cash and cash equivalents with the Balance Sheet:Cash and cash equivalents at the beginning of the yearBank Balance 9,387.81 6,853.09Deposit with the Bank 10.00Share of Interest in Joint Venture 444.65 561.31

9,832.46 7,424.40Cash and cash equivalents at the end of the yearBank Balance 18,312.85 9,387.81Share of Interest in Joint Venture 95.98 444.65

18,408.83 9,832.46

Notes: 1 The Cash Flow Statement is prepared in accordance with Accounting Standard 3 issued by the Institute of Chartered Accountants of India.2 In Part-A of the Cash Flow Statement, fi gures in brackets indicate deductions made from the Net Profi t / (Loss) for deriving the net cash fl ow

from operating activities. In Part-B and Part-C, fi gures in brackets indicate cash outfl ows.3 Figures of previous year have been regrouped wherever necessary, to conform to current year’s presentation

As per our report of even date For and on behalf of the Board ofFor M.B. Agrawal & Co. Bharat Petroresources Limited

Chartered AccountantsSd/- Sd/- Sd/- Sd/-Harshal Agrawal P. Balasubramanian D. Rajkumar Narendra DixitPartner Director Managing Director Company Secretary

Place: Mumbai Date: 16th May 2014


59

NOTES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF PROFIT AND LOSS

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

1. DESCRIPTION OF BUSINESS

Bharat PetroResources Limited (‘the Holding Company’) was incorporated as a 100% subsidiary of Bharat Petroleum Corporation Limited (BPCL) to focus on Exploration and Production activities. The Holding Company and its subsidiaries are hereinafter collectively referred to as ‘the Group’.

2. PRINCIPLES OF CONSOLIDATION

(a) The Consolidated Financial Statements include the fi nancial statements of the Holding Company and its subsidiaries and joint venture. Subsidiaries are those companies in which Bharat PetroResources Limited, directly or indirectly, has an interest of more than one half of voting power or otherwise has power to exercise control over the composition of the Board of Directors. Subsidiaries and joint ventures are consolidated from the date on which effective control is transferred to the Group to the date such control exists.

(b) The subsidiaries and joint ventures considered in the consolidated fi nancial statements are given below:

Sr. No.

Name of the Group Relationship Country of Incorporation

Percentage of Group holding as at March 31, 2014

1 Bharat PetroResources JPDA Ltd. (BPR JPDA)

Subsidiary India 100%

2 BPRL International BV Subsidiary Netherlands 100%3 BPRL Ventures BV Subsidiary Netherlands 100%4 BPRL Ventures Mozambique BV Subsidiary Netherlands 100%5 BPRL Ventures Indonesia BV Subsidiary Netherlands 100%6 IBV (Brazil) Petroleo Pvt Ltda. Joint Venture Brazil 50%

Notes: i) BPRL Ventures BV, BPRL Ventures Mozambique BV and BPRL Ventures Indonesia

BV are wholly owned subsidiaries of BPRL International BV ii) IBV Brazil Petroleo Pvt Ltda. is a 50% joint venture of BPRL Ventures BV and

Videocon Energy Brazil Limited. iii) The ownership interest as given above has been calculated based on the effective

interest of Bharat PetroResources Limited in the various subsidiaries and joint ventures including the investments made by its subsidiaries.

(c) The Consolidated Financial Statements have been prepared in accordance with historical cost convention and Accounting Standard 21 – “Consolidated Financial Statements” and Accounting Standard 27 – “Financial Reporting of Interest in Joint Ventures” issued by the Companies (Accounting standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956.


60

(d) The Consolidated Financial Statements have been prepared on the following basis:

i) The fi nancial statements of each of the subsidiaries drawn up to the same reporting date i.e. year ended March 31, 2014, have been used for the purpose of consolidation.

ii) The fi nancial statements of the Joint Venture, drawn up to the same reporting date i.e. year ended March 31, 2014, have been used for the purpose of consolidation.

iii) All the subsidiaries and joint venture of the Holding Company are incorporated outside India except Bharat PetroResources JPDA Ltd. The activities of the subsidiaries and joint venture are not an integral part of those of the Holding Company and hence, these have been considered to be Non-Integral foreign operations in terms of Accounting Standard 11 – ‘The Effects of Changes in Foreign Exchange Rates. Consequently, the assets and liabilities, both monetary and non-monetary, of such subsidiaries and joint venture have been translated at the closing rates of exchange of the respective currencies as at March 31, 2014. Revenue items are consolidated at the average rate prevailing during the year. Exchange Rate considered as on 31st March 2013 is 1 USD = `54.40, 1 Reais = `26.8318 and on 31st March 2014 is 1 USD = `60.09, 1 Reais = `26.427.

iv) All inter group transactions, balances and unrealized surplus and defi cit on transactions between group companies are eliminated.

v) Changes have been made in the accounting policies followed by each of the subsidiaries and joint venture to the extent they were material and identifi able from their respective audited accounts to make them uniform with the accounting policies followed by the Holding Company. Where it has not been practicable to use uniform accounting policies in preparing the consolidated fi nancial statements, the different accounting policies followed by each of the group companies have been followed. (Refer Note No.3 below)

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Accounting Convention

The consolidated fi nancial statements are prepared under historical cost convention in accordance with the mandatory Accounting Standards issued by the Companies (Accounting standard) Rules, 2006 and the provisions of the Companies Act, 1956, adopting accrual system of accounting except where otherwise stated.

(b) Use of Estimates

The preparation of fi nancial statements requires management to make certain estimates and assumptions that affect the amounts reported in the fi nancial statements and notes thereto. Differences between actual results and estimates are recognised in the period in which they materialise.


61

(c) Oil and natural gas producing activities (i) The Company follows the “Full Cost” method of accounting for its oil and

natural gas exploration and production activities read with the Guidance Note (A) 15 (Revised 2013) on Accounting for Oil and Gas Producing Activities issued by the Institute of Chartered Accountants of India. Accordingly, all acquisition, exploration and development costs are treated as capital work-in-progress and are accumulated in a cost centre. General & Administrative expenses identifi able in respect of blocks or cost centre is capitalised along with block or cost centre. The cost centre is not normally smaller than a country except where warranted by major difference in economic, fi scal or other factors in the country. When any well in a cost centre is ready to commence commercial production, these costs are capitalised from capital work-in-progress to the gross block of assets regardless of whether or not the results of specifi c costs are successful. Depletion is charged on all capitalised costs according to the unit of production method. On Completion of the minimum work programme or on the expiration of licence period and if hydrocarbons are not found in any of the block or the cost centre, then expenditure accumulated under the head Capital work-in-progress in relation to the block or cost centre is written off.

(ii) The net quantities of the Group’s interests in proved reserves and proved developed reserves of oil and gas at the beginning and additions, deductions, production and closing balance for the year and disclosure of quantities on the geographical basis are not mentioned as the Group is in exploratory phase.

(iii) Surrender of fi eld / disposal of participation interest If the Company were to surrender a fi eld, the accumulated acquisition,

exploration, development and General & Administrative costs in respect of such fi eld are deemed to be fully depreciated if the remainder of the wells in the cost centre continue to produce oil or gas. Gain or loss is recognised only when the last well on the cost centre ceases to produce and the entire cost centre is abandoned. Also, in the event the Company assigns or farms out the whole or any part of its participating interest, the corresponding carrying value of the capitalised amount is adjusted against the consideration and the net amount credited or, as the case may be, is charged to the profi t and loss account in the year in which the Company’s participating interest is assigned, surrendered or farmed out.

(iv) Depletion Depletion charge is calculated on the capitalised cost according to the unit of

production method. The depreciation charge or the unit of production (UOP) charge for all costs within a cost centre is calculated by multiplying the UOP rate with the production for the period. The unit of production rate is arrived at by dividing the depreciation base of the cost centre by the Proved Oil and Gas Reserves. The depreciation base of a cost centre includes gross block of the cost centre, estimated future development expenditure and estimated site restoration expenditure and is reduced by the accumulated depreciation and accumulated impairment charge of the cost centre. The estimates of proved reserves used are based on the latest technical assessment available with the Group.


62

(v) Site restoration costs

Liabilities for site restoration costs (net of salvage values) are recognised when the Group has an obligation to dismantle and remove a facility such as oil and natural gas production or transportation facility or an item of plant and to restore the site on which it is located and when a reasonable estimate of that liability can be made. Where an obligation exists for a new facility, the liability is recognized on construction or installation. An obligation may also crystallize during the period of operation of a facility through a change in legislation or through a decision to terminate operations. The amount recognized is the value of estimated future expenditure determined in accordance with local conditions and requirements. The corresponding amount is added to the cost of the tangible fi xed asset and is subsequently depleted as part of the capital costs of the facility or item of plant. Any change in the value of the estimated expenditure is refl ected as an adjustment to the provision and the corresponding tangible fi xed assets.

(d) Fixed assets

(i) Intangible assets

Holding Company

Expenditure incurred for creating/acquiring other intangible assets of `50 lacs and above, from which future economic benefi ts will fl ow over a period of time, is amortised over the estimated useful life of the asset or fi ve years, whichever is lower, from the time the intangible asset starts providing the economic benefi t.

In other cases, the expenditure is charged to revenue in the year the expenditure is incurred.

Subsidiary Company

Software is amortised over the estimated useful life of the asset or fi ve years, whichever is lower.

(ii) Tangible Assets

Fixed Assets are stated at cost of acquisition (including incidental expenses) less accumulated depreciation.

(e) Impairment of assets

According to AS – 28 issued by ICAI, the carrying values of fi xed assets of identifi ed cash generating units (CGU) are reviewed for impairment at each Balance Sheet date when events or changes in circumstances indicate that the carrying values may not be recoverable. If the carrying values exceed the estimated recoverable amount, the assets of the CGU are written down to the recoverable amount and the impairment losses are recognized in the profi t and loss account. The recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value based on an appropriate discount factor.


63

(f) Depreciation

(i) Holding Company

Fixed assets costing not more than `5,000 each are depreciated @ 100 percent in the year of capitalization.

Computer equipments and peripherals, and mobile phones are depreciated over a period of 4 years.

Depreciation on fi xed assets other than computer equipments and peripherals and mobile phones are provided under the straight line method, at rates prescribed under Schedule XIV to the Companies Act, 1956. Additions to fi xed assets during the year are being depreciated on pro rata basis from the beginning of the month in which such assets are capitalised.

(ii) IBV Brazil Petroleo Pvt Ltda.

Depreciation is calculated on straight line method, in accordance with the rates as described below:

Furniture and Fixtures 10%Vehicles 20%IT Equipments 20%Machinery & Communication equipment 35%Installations 10%

g) Revenue Recognition

Revenue is respect of interest on deposit is recognised on accrual basis.

Liquidated Damages for delay in execution of contracts/supplies are accounted for as per the terms of the contracts and are recognized as income in the year of deduction.

h) Investments

i) Current investments are valued at lower of cost or fair market value.

ii) According to Accounting Standard – 13 “Accounting for Investments” issued by the Companies (Accounting standard) Rules, 2006, long-term investments are valued at cost. Provision for diminution is made to recognize a decline, other than of temporary nature, in the value of such investments.

i) Foreign currency transactions

i) Transactions in foreign currency are accounted in the reporting currency at the exchange rate prevailing on the date of transaction.

ii) Monetary items denominated in foreign currency are converted at exchange rates prevailing on the date of Balance Sheet.

iii) Foreign Exchange differences arising at the time of translation or settlement are recognised as income or expense in the Statement of Profi t & Loss either under foreign exchange fl uctuation or interest as the case may be.


64

j) Provisions, contingent liabilities and capital commitments

i. According to Accounting Standard– 29 “Provisions, Contingent Liabilities and Contingent Assets” issued by the Companies (Accounting standard) Rules, 2006, provision is recognised when there is a present obligation as a result of past event and it is probable that an outfl ow of resources will be required to settle the obligation in respect of which a reliable estimate can be made.

ii. Disclosure for a contingent liability is made when there is a possible obligation that may, but probably will not, require an outfl ow of resources.

iii. Capital commitments and Contingent liabilities disclosed are those which exceed `0.10 million in each case.

iv. Show cause notices issued by various Government authorities are considered for the evaluation of Contingent liabilities only when converted into demand.

k) Taxes on income

i. Provision for current tax is calculated on the basis of the provisions of local laws of respective entity.

ii. According to Accounting Standard – 22 “Accounting for Taxes on Income” issued by the Companies (Accounting standard) Rules, 2006, deferred tax on account of timing difference between taxable and accounting income is provided using the tax rates and tax laws enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised with regard to all deductible timing differences to the extent that it is probable that taxable profi t will be available against which deductible timing differences can be utilised. When the Group carries forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing evidence that suffi cient taxable income will be available against which deferred tax assets can be realised.

l) Classifi cation of income/expenses

Holding Company

i. Prepaid expenses upto ` 0.10 Lacs in each case, are charged to revenue as and when incurred.

ii. Liabilities for expenses are provided for only if the amount exceeds ` 0.10 Lacs in each case.

iii. Acquisition cost which cannot be assigned / identifi ed to particular block is expensed during the year.


65

Note '2' – SHARE CAPITAL Equity Share Capital

As at 31 March, 2014 As at 31 March, 2013

Number of shares

` Lakhs Number of shares

` Lakhs

i Authorised

Equity shares of `10 each with voting rights * 3,000,000,000.00 300,000.00 3,000,000,000 300,000.00

Total 3,000,000,000.00 300,000.00 3,000,000,000.00 300,000.00

ii Issued, subscribed and paid-up Capital:

Issued and Subscribed Capital:


2,620,002,670.00 262,000.27 2,370,002,670.00 237,000.27

Paid up Capital:


2,620,002,670.00 262,000.27 2,370,002,670.00 237,000.27

Total 2,620,002,670.00 262,000.27 2,370,002,670.00 237,000.27

iii Par value of equity shares: `10 each `10 each

iv No. of shares outstanding

Equity shares of `10 each fully paid-up

As at beginning of the year 2,370,002,670.00 237,000.27 1,100,002,670.00 110,000.27

Issued during the year 250,000,000.00 25,000.00 1,270,000,000.00 127,000.00

As at the year end 2,620,002,670.00 262,000.27 2,370,002,670.00 237,000.27

v Shareholders holding more than 5% shares No. of Shares No. of Shares

Name of shareholder % holding 31st March 2014 % holding 31st March 2013Bharat Petroleum Corporation Ltd 100%# 2,620,002,610.00 100%# 2,370,002,610

vi Shareholders held by Holding Company

Name of shareholder 31st March 2014 31st March 2013Bharat Petroleum Corporation Ltd. 100%# 2,620,002,610.00 100%# 2,370,002,610

* 60 shares held by other shareholders* The Company has only one class of shares referred to as equity shares having a par value of `10/–. Each holder

of equity shares is entitled to one vote per share. In the event of liquidition for the Company, the holders of equity share will be entitled to receive any of the

remaining assets of the company, after distribution for all preferential amounts. However, no such preferential amounts exist currently. The distriubtion will be in proportion to the number of equity shares held by the shareholders.


66

Note '3' – RESERVES & SURPLUS ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013(a) Foreign currency translation reserve

Opening balance (2,088.13) 238.35Add / (Less): Effect of foreign exchange rate variations during the year (3,527.66) (2,326.48)Add / (Less): Transferred to Statement of Profi t and Loss on disposal of the net investment in non-integral foreign operations

Closing balance (5,615.79) (2,088.13)(b) Surplus/(Defi cit) in Statement of Profi t & Loss

Opening balance (96,989.26) (30,579.91)Add: Transferred from surplus/ (defl icit) in Statement of Profi t and Loss (53,109.62) (66,409.35)Closing balance (150,098.88) (96,989.26)

(c) Foreign Currency Monetary Item Translation Difference Account Opening balance – (41.59)Add: Transferred during the year – –Less: Amortised during the year – 41.59

Closing balance – –Total (155,714.67) (99,077.39)

` Lakhs

Note ‘4’ -Borrowings As at 31-03-2014 As at 31-03-2013Current Non Current Current Non Current

Term loans SecuredFrom banks – 495,816.75 – 304,580.08UnsecuredFrom banks – – – –From Parent Company – 30,000.00 – –Total – 525,816.75 – 304,580.08Grand Total – 525,816.75 – 304,580.08

Terms & Repayment Schedule of Term Loans: ` LakhsLoans & Borrowings Book value

as on 31st March,

2014

Book value as on

31st March, 2013

Date of Maturity

Rate of Interest

(%)

Security

Secured: i) Loan from Bank 495,816.75 304,580.08 29/11/2015 Margin

+ 3 months LIBOR

i) Pledge of shares held in BPRL Ventures Mozambique BV and BPRL Ventures Indonesia BV

ii) A fi rst rank security interest on fi xed and current assets and cash fl ows of BPRL Ventures Mozambique BV and BPRL Ventures Indonesia BV

Unsecured: i) Loan from Bank – –ii) Loan from Parent

Company30,000.00 – 15 years

from date of drawal

0.00% –


67

Note ‘5’ – Other current liabilities ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013

Due to Holding Company 511.62 356.45

Due to Operator 3,935.64 5,074.36

Interest accrued but not due on borrowings 1,478.68 632.46

Other Payables: (i) Payable for Legal and Professional fees 95.39 94.26(ii) Payable for Contract Services 17.45 79.47(iii) Payable for Purchase of Assets – –(iv) Trade / security deposits received 8.21 4.76(v) Payable to employees 113.00 106.25(vi) Stautory Dues Payable 27.67 6.92(vii) Other Charges Payable 65.10 –

In respect of Joint ventures: (i) Due to Operator 13,632.86 13,015.85(ii) Stautory Dues Payable 2.86 1.34(iii) Payable for Contract Supplies/works 5,815.58 5,260.38(iv) Payable to Employees 5.49 –(v) Payable to other Joint Venture partners 75.20 –(vi) Payable for professional services 0.11 –

Total 25,784.86 24,632.50

Note ‘6’ – Short Term Provisions ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013

Provision for liquidated damages 562.73 143.59

Provision for abandonment (In respect of Joint ventures) 1,615.51 1,627.51

Total 2,178.24 1,771.10


68

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202.4

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3


69

Note ‘8’ – Capital Work-In-Progress ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013Capital work-in-progress (at cost)Acquisition Cost 3,047.35 2,920.16Exploration Cost– Geological & Geophysical Cost 18,325.95 19,169.89– Drilling Cost 260,508.84 160,269.90– General & Administrative Cost 11,919.23 –Share of Interest in Joint Venture 248,745.76 220,227.46

542,547.13 402,587.41Less Provision for CWIP (8,640.21) –

533,906.92 402,587.41Video Conference Equipments and Accessories – –Total 533,906.92 402,587.41

Note ‘9’ – Long term Loans and Advances (Unsecured, Considered good unless otherwise stated)


31-03-2014 As at

31-03-2013Capital advances 111.35 545.09Security Deposit 1.00 1.00In respect of Joint Venture – Capital Advances 1,552.83 1,436.09 – Petroleum Exploration Licence Deposit 2.00 9.13 – Interest Accurred and due on above deposit – 0.57 – Security Deposit 4.16 4.23 – Other Receivables 19.10 4.07 Total 1,690.44 2,000.18

Note ‘10’ – Cash and cash equivalents ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013Cash on Hand With banks : In current accounts 18,312.85 9,387.81 Bank deposits 58,108.86 7,500.00With Banks in Current Accounts (in respect of Joint ventures) 95.98 444.65Total 76,517.69 17,332.46

Note ‘11’ – Other current assets ` Lakhs ` Lakhs As at

31-03-2014 As at

31-03-2013Prepaid Expense 11.76 11.11Cenvat Credit 6.01 6.56Accrued Interest 71.51 73.90TDS receivable 28.55 8.21In Respect of Joint Venture:Prepaid Expenses 5.18 14.91Consumables 33.32 34.23Receivable from others / Joint Venture partners 20.24 756.83Receivable from Contract Supplies/works 15.17Taxes receivable 1.40 2.83Total 193.14 908.58


70

Note ‘12’ – Other Income ` Lakhs ` Lakhs For the year


2012-13Interest IncomeInterest Income on refund of Cash Calls / Deposits 650.27 97.61

Gain/Loss on sale of InvestmentsProfi t on Sale of Investment – –

Other Non-operating IncomeLiquidated damages retained – –

Interest Income in respect of Joint Venture – –

Liabilities / provisions no longer required written back (above includes in respect of Joint venture also)

62.19 –

Miscelleneous Income 263.30 8.76

Foreign Exchange fl uctuations (net) (above includes in respect of Joint venture)

– 37.97

Total 975.76 144.34

Note ‘13’ – Employee benefi ts expenditures ` Lakhs ` Lakhs For the year


2012-13Salaries and wages 698.51 473.39Payment to Parent Company towards Provident fund 99.73 80.36Payment to Parent Company towards gratuity 22.95 15.37Welfare expenses 52.08 90.59Salaries and Allowances (In respect of Joint Venture) 67.43 69.88Total 940.70 729.59

Note ‘14’ Finance Cost ` Lakhs ` Lakhs For the year


2012-13(a) Interest expense on: Borrowings 7,139.10 5,472.80(b) Exchange difference on borrowing 2.07 0.45(c) Loan Processing Charges – –(d) Other Finanacial Charges – 10,276.69 Total 7,141.17 15,749.94


71

Note ‘15’ – Other expenses ` Lakhs ` Lakhs For the year


2012-13 Repairs and maintenance :

Machinery 1.57 1.37 Building – – Others 125.39 94.81

Insurance 0.42 – Rates and taxes 43.67 64.78 Legal and Professional Fees 679.05 877.91 Share in Operators Expenditure 111.24 4,477.10 Travelling and Conveyance 238.17 204.79 Advertisement 0.45 – Liquidated Damages Paid 428.64 216.91 Bank Charges 162.13 241.66 Printing & Stationery 12.12 15.03 Telephone, Telex, Cables, Postage,etc. 11.52 7.19 Electricity Charges 23.63 28.00 Business Promotion Expenses – – Security Expenses 6.55 4.32 Other Expenses 40.65 28.33 Remuneration to auditors: Audit fees 30.11 28.81 Fees for other services-certifi cation 0.26 1.94 Loss on sale of asset 0.24 –Ammortization of FCMITDA – 41.59 Share in Administration Expenditure of Joint Venture:

Goodwill written off 1,773.19 – Repairs & Maintenance 33.63 – Insurance 0.15 – Legal and Professional Fees 88.99 162.08 Rent Rates and taxes 54.21 125.74 Travelling and Conveyance 10.13 16.85 Electricity Charges 2.53 3.46 Repairs and maintenance-others 8.53 50.35 Business Promotion Expenses 54.23 35.87 Liquidated Damages Paid 240.44 – Bank Charges 0.51 – Printing & Stationery 1.70 – Telephone, Telex, Cables, Postage,etc. 60.11 – Security Expenses 6.00 – Write off of assets 0.11 – Other Expenses 3.11 – Audit fees 5.20 – Foreign Exchange fl uctuations (net) 9.96 Share in Operators Expenditure – 7,994.99

4,268.54 14,723.88


72

16) Disclosure under Accounting Standard-27 on Financial Reporting of Interest in Joint Venture:

Details of the Blocks and JV’s as on 31.03.2014:

Name Company Country Participating Interest of the Group

31.03.2014 31.03.2013NELP – IVCY/ONN/2002/2 BPRL India 40.00% 40.00%

NELP – VIKG/DWN/2004/2 (a) BPRL India 0.00% 10.00%KG/DWN/2004/5 (a) BPRL India 0.00% 10.00%CY/ONN/2004/1 BPRL India 20.00% 20.00%CY/ONN/2004/2 BPRL India 20.00% 20.00%RJ/ONN/2004/1 (a) BPRL India 0.00% 11.11%

NELP – VIIRJ/ONN/2005/1 BPRL India 33.33% 33.33%

NELP – IXCB/ONN/2010/11 BPRL India 25% 25%AA/ONN/2010/3 BPRL India 20% 20%CB/ONN/2010/8 BPRL India 25% 25%MB/OSN/2010/2 BPRL India 20% 20%

Blocks outside IndiaJPDA 06-103 (c) BPR JPDA Australia /

Timor20.00% 20.00%

EP-413 BPRL Australia 27.80% 27.80%Sergipe and AlagoasSEAL-M-349 IBV Brazil Petroleo

Pvt Ltda.Brazil

40.00% 40.00%

SEAL-M-426 IBV Brazil Petroleo Pvt Ltda.

Brazil


Brazil


Brazil

Espirito SantoES-24-588 (d) IBV Brazil Petroleo

Pvt Ltda.Brazil 0.00%

30.00%ES-24-661 (d) IBV Brazil Petroleo Pvt Ltda.

Brazil 30.00%

ES-24-663 IBV Brazil Petroleo Pvt Ltda.

Brazil 0.00%


73

Name Company Country Participating Interest of the Group

31.03.2014 31.03.2013CamposC-M-30-101 IBV Brazil Petroleo

Pvt Ltda.Brazil 25.00% 25.00%

PortiguarPOT-16-663 IBV Brazil Petroleo

Pvt Ltda.Brazil

20.00% 20.00%POT-16-760 IBV Brazil Petroleo

Pvt Ltda.Brazil

Mozambique Rovuma Basin

BPRL Ventures Mozambique B.V.

Mozambique 10.00% 10.00%

Nunukan PSC, Tarakan Basin

BPRL Ventures Indonesia B.V.

Indonesia 12.50% 12.50%

(a) On completion of Minimum Work Programme Commitments and based on analysis of seismic and well drilling results indicating poor prospectivity, as assessed by the Management, the Company has withdrawn in respect of Blocks: KG/DWN/2004/2, KG/DWN/2004/5 and RJ/ONN/2004/1. Consequently an amount of `5,058.51 Lakhs has been written off to the Statement of Profi t and Loss.

(b) In the previous year 2012-13, the Company has withdrawn from the permit in respect of blocks: KG/DWN/2002/1, MN/DWN/2002/1, ACP/32, WA/388/P and 48/1b & 2c. Consequent to that an amount of `33,599.56 lakhs had been written off to the statement of Profi t and Loss net of provision of `3,000 lakhs in 2012-13. Provision of `1,627.51 lakhs had been accounted towards estimated abandonment in 2012-13.

(c) Group has a participating interest of 20% in JPDA 06-103 block. The continuation of activities in the block has been adversely affected due to dispute between the Government of Timor Leste and the Government of Australia with respect to the Certain Maritime Arrangements in the Timor Sea Treaty (CMATS) for which the Timor Leste Government has initiated arbitration proceedings against the Government of Australia.

These developments have created signifi cant commercial uncertainty which has negatively impacted the ability of the Joint Venture partners to meet the obligations under the PSC. The consortium partners have requested ANP to terminate the PSC with all parties remaining in good standing. The decision of authority is awaited.

In light of the uncertainties, the management has provided ̀ 8,640.21 lakhs being the cumulative expenditure accounted under capital work in progress in the fi nancial statements for the year.


74

(d) On completion of Minimum Work Programme Commitments and based on analysis of G&G data indicating limited prospectivity, as assessed by the Management, the group has withdrawn the participating in respect of Blocks ES-M-588 and ES-M-663 in BM-ES-24 concession, Brazil. Consequently an amount of ̀ 32,946.29 lacs has been written off in the books of the accounts. IBV Brazil, Joint Venture of holding company does not follow the same accounting policy as the holding company. The amount of `32,946.29 lacs written off has been determined, using best judgment, on the basis of billing statement received by the holding company and adjustments if any, in respect of these blocks. In the opinion of the management there are no signifi cant difference arising on account of using judgment. The auditor has relied upon the computation prepared by the management.

(e) The group has 10% participating interest in exploration and production concession contract signed by Anadarko Mozambique Area 1 Limitada with Empresa Nacional de Hidrocarbonetos E.P. and the Government of Mozambique.

As per the obligations contained in Exploration & Production Concession Contract (EPCC) entered with Mozambique Government, BPRL Ventures Mozambique B.V. is taking over its proportionate share of the EMPRESA NACIONAL DE HIDROCARBONETOS, E.P.(ENH) carry of 1.765%. The carry shall be limited to all costs incurred by the Concessionaire in discharging its obligations under this EPC, up to and including the date upon which the fi rst development plan has been approved. From the date of commencement of Commercial Production, ENH shall reimburse in full the Carry in cash or in kind. All Carry amount owed by ENH up to approval of the fi rst development plan shall be subject to payment of interest compounded quarterly calculated at the 3 months LIBOR plus one percentage point. However, if there is no commercial success no such reimbursement will be applicable.

17) The Group requires signifi cant amounts of funds to carry on its operations. The recovery of funds invested is subject to the success of exploration activities leading to monetization. BPCL has been extending fi nancial support to the Holding Company to meet its obligation under production sharing contracts and for other activities, as required, and is committed to provide the necessary level of fi nancial support, to enable the Holding Company to continue as a going concern.

18) The Holding Company has entered into Standby Letter of Credit (SBLC) facility agreement with a number of Indian banks to the extent of $ 1750 Mn dollars (`10,51,750 Lakhs). As per the SBLC facility agreement banks will issue SBLC’s, on behalf of BPRL International BV, a wholly owned subsidiary, for loans taken by BPRL International BV in favour of the foreign currency lenders, to the extent of their respective commitments. As of the date of Balance Sheet, SBLC’s to the tune of $ 833.37 Mn (`500,855.37 Lakhs) has been issued.

19) In line with the revised guidance note on “Accounting for Oil and Gas Producing Activities”, issued by Institute of Chartered Accountants of India, applicable from 1st April 2013, General & Administrative expenses, which were earlier taken to Profi t and Loss Account, have now been capitalized as Capital Work In Progress. The impact of the same for the year is `11,919.23 lacs.


75

20) In accordance with AS 27 ‘Financial Reporting of Interests in Joint Ventures’, the fi nancial statements include the Group’s share in the assets, liabilities, incomes and expenses of jointly controlled assets.

In respect of joint ventures, the Group’s share of assets, liabilities, income, and expenditure complied on the basis of unaudited/audited fi nancial statements received from these joint ventures are as follows:

(` in Lacs)

31.03.2014 31.03.2013

i) Current Assets 171.31 1,190.51

ii) Non-current assets 2,50,323.85 2,21,681.54

iii) Current Liabilities 21,710.34 18,277.57

iv) Income 3.01 56.92

v) Expenses 40,954.87 13,153.23

In respect of CB/ONN/2010/8, the Holding Company is the operator. The Holding Company’s shares of the assets and liabilities have been recorded under respective heads.

Out of the remaining 7 Indian Blocks (previous year ten) the Holding Company has received fi ve (previous year eight) audited fi nancial statements as at March 2014. The Company has not received fi nancial statement for two (previous year two) blocks. Expenses for these blocks are accounted based on Billing Statement for the period Upto 31st March 2014.

In respect of eight (previous year : ten) blocks outside India held through the joint venture, the assets, liabilities, income and expenditure have been incorporated on the basis of audited fi nancial statements as on 31st December 2013. As per para 18 of AS 21 “Consolidated Financial Statements” adjustments have been made for the effects of signifi cant transactions or other events that have occurred between 31st December 2013 and 31st March 2014.

In respect of one (previous year one) Joint Venture block outside India the assets, liabilities, income and expenditure have been incorporated on the basis of unaudited fi nancial statements as on 31st March 2014.

21) The borrowing cost on bank loan used by BPRL International to facilitate loan to its wholly owned subsidiaries for their project purposes is capitalized from the current year 2013-14. The Company’s policy was to charge these borrowing costs to the profi t and loss account before adopting the above change in the accounting policy. As a result of this change in accounting policy, an amount of `15,114.53 lacs has been capitalized. Out of this, `5,017.83 is pertaining to previous year’s (2012-13) interest which has shown under prior period item.


76

22) Employee Benefi ts:

All employees of the Holding Company are on deputation from Bharat Petroleum Corporation Limited (BPCL). Expenditure under the head “Employee benefi ts expenditure” include the amount charged by BPCL vide various debit notes to the Holding Company. Such debit notes include debit notes for the Holding Company’s share of the employee benefi ts including retirement benefi ts towards Provident Fund, Gratuity and Leave Encashment, The details of expenses debited to the profi t and loss account are as under:

` Lacs

Sr No

Particulars For the year 2013-2014

For the year 2012-13

1 Provident Fund 48.87 37.292 Gratuity 22.94 15.363 Leave encashment 37.39 29.59

Total 109.20 82.24

In view of the above, the management is of the view that no additional disclosure is required in terms of Accounting Standard 15 on “Employee Benefi ts” issued by the Companies Accounting Standard Rules, 2006.

23) Consolidated Earnings Per Share (EPS):

The basic/diluted earnings per equity share is calculated as stated below:

Particulars 2013-14 2012-13

Net profi t/ (loss) after tax ` in Lacs (53,109.62) (66,409.36)

Weighted average equity shares outstanding during the period

Nos. 237,54,82,122 1649169337

Basic earnings per equity share ` (2.24) (4.03)

Diluted earnings per equity share ` (2.24) (4.03)

Calculation of Weighted Average number of equity shares:

Particulars 31st March 2014 31st March 2013

Shares existing at the beginning of the year 237,00,02,670 1,22,00,02,670

Shares issued and allotted during the year 25,00,00,000 1,15,00,00,000

Weighted Average Number of shares issued during the year 54,79,452 42,91,66,667

Weighted Average Number of shares for EPS Calculation 237,54,82,122 1,64,91,69,337


77

24) Related Party Disclosure as per AS-18:

(a) Name of Related Parties: Videocon Energy Brazil Ltd.

Nature of Transactions:` in Lacs

Cumulative upto Mar 2014

Cumulative upto Mar 2013

Loan to IBV Brazil Petroleo Pvt Ltd.– Brazil Reals (‘00000) 13,244.66 (previous year : 9,725.67)

3,50,016.63 2,60,957.08

Key Management Personnel:

b) Shri D. Rajkumar (Managing Director)

Managerial Remuneration` in Lacs

2013-14 2012-13Salary and allowances 31.04 30.51Contribution to Provident Fund and other funds 4.32 3.86Other benefi ts 1.87 2.29Total 37.23 36.66

In terms of para 9 of Accounting Standard 18 on Related Party Disclosures, no disclosure in the fi nancial statements have been made for transactions with the Company and other related party relationships with other state-controlled enterprises.

25) Expenditure incurred by BPCL on behalf of the Company are accounted for on the basis of the debit notes raised by BPCL. Supporting documents for such debit notes are available with BPCL.

26) The Group has identifi ed the geographical segment as its primary segment. Segments have been identifi ed and reported taking into account, the organizational and management structure for internal reporting and signifi cantly different risk and return perception in different geographical regions. Geographic segments of the Group are determined based on the location of the assets.

The Group companies are operating in a single business segment i.e. Exploration & Production of Hydrocarbons and as such all business activities revolve around this segment. Hence, there is no separate secondary segment to be reported considering the requirement of AS 17 on Segment Reporting issued by the Institute of Chartered Accountants of India.

27) Taxation:–

a) Deferred Tax Provision

Since all the blocks are in the exploration and in appraisal phase, there is no virtual/reasonable certainty supported by convincing evidence that suffi cient future taxable income will be available against which unabsorbed depreciation and carry forward tax losses can be realised. Hence, no deferred tax asset has been recognised as per AS – 22 in the accounts in respect of unabsorbed depreciation and carry forward losses.


78

(` in

lacs

) B

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Una

lloca

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Gra

nd T

otal

2013

-14

2012

-13

2013

-14

2012

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2013

-14

2012

-13

2013

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2012

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2013

-14

2012

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Reve

nue

––

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–

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ter S

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even

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––

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–

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(3

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79

b) Current Tax Provision

During the year, there is no taxable income hence no provision for tax has been made in the current year.

28) In respect of blocks held in India, as per the Production Sharing Contracts signed by the Company with the Government of India (GoI), the Company is required to complete Minimum Work Programme (MWP) within stipulated time. In case of delay in completion of the MWP, Liquidated Damages (LD) is payable for extension of time to complete MWP. Further, in case the Company does not complete MWP or surrender the block without completing the MWP, the estimated cost of completing balance work programme is required to be paid to the GoI.

29) Capital commitments and Contingent Liabilities:

(a) Capital Commitments:

Based on the estimation by the Management, BPRL’s share of MWP commitments for all the blocks as on the reporting date amounted to `131,938.54 lacs. (Previous year `178,316.09 Lacs.).

(b) Contingent Liabilities:

Contingent liabilities in respect of operations where BPRL is not the operator are recognised based on inputs received from the operator.

30) As at March 31, 2014, there are no creditors covered under the Micro, Small and Medium Enterprises Development Act, 2006 and hence no disclosures under the Act are made.

31) The Group’s unhedged exposure towards foreign exposure is given below:

Currency 2013-14 2012-13AUD Receivable – 283,382AUD Payable 51,499 –Reias Payable 103,201,370 48,509,040GBP Payable 1,600,000 1,600,000USD Payable – 1,80,972

32) Figures of previous year have been regrouped wherever necessary to confi rm to current year presentation.






80

STA

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No.

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Exte

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8)

The

Net

A

ggre

gate

A

mou

nt

of

the

Subs

idia

ry C

ompa

ny's

Profi

t/(L

oss)

so

far

as i

t co

ncer

ns t

he M

embe

rs o

f th

e H

oldi

ng C

ompa

ny an

d de

alt w

ith in

the

Acc

ount

s of t

he H

oldi

ng C

ompa

ny.

For t

he p

erio

d en

ded

on

31.03

.2014

(` in

Lac

s )

For t

he p

revi

ous

fi nan

cial

yea

rs si

nce i

t be

cam

e a su

bsid

iary

co

mpa

ny (`

in L

acs )

For t

he p

erio

d en

ded

on

31.03

.2014

(` in

lacs

)

For t

he p

revi

ous

fi nan

cial

yea

rs si

nce i

t be

cam

e a su

bsid

iary

co

mpa

ny (`

in la

cs )

12

34

56

78

Bhar

at P

etro

Reso

urce

s JPD

A L

imite

d (w

ith ef

fect

from

28.

10.2

006)

31.0

3.20

145,

99,9

9,94

0 sh

ares

of `

10 ea

ch

fully

pai

d up

(Ref

er N

ote 1

)10

0%(8

637.

81)

(940

.38)

– –

BPRL

Inte

rnat

iona

l B.V

.(R

efer

Not

e 2 &

3)

(with

effe

ct fr

om 2

6.3.

2008

)

31.0

3.20

1423

,54,

17,3

94 sh

ares

of

Euro

1 ea

ch10

0%(1

,26,

423.

71)

(1,2

5,70

4.15

)–

–

BPRL

Ven

ture

s B.V

.(w

ith ef

fect

from

26.

03.2

008)

(100

% S

ubsid

iary

of B

PRL

Inte

rnat

iona

l B.V

) (Re

fer N

ote 2

)

31.0

3.20

1422

,45,

66,3

11 sh

ares

of

Euro

1 ea

ch10

0%(8

2,58

0.41

)(8

4,83

7.26

)–

–

BPRL

Ven

ture

s Moz

ambi

que B

.V.

(with

effe

ct fr

om 2

3.07

.200

8)(1

00%

Sub

sidia

ry o

f BPR

L In

tern

atio

nal B

.V) (

Refe

r Not

e 2)

31.0

3.20

1421

,94,

35,7

57 sh

ares

of

Euro

1 ea

ch10

0%(4

3,45

9.76

)(2

7,37

2.80

)–

–

BPRL

Ven

ture

s Ind

ones

ia B

.V.

(with

effe

ct fr

om 2

1.08

.200

9)(1

00%

Sub

sidia

ry o

f BPR

L In

tern

atio

nal B

.V) (

Refe

r Not

e 2)

31.0

3.20

141,

50,0

1,44

1 sh

ares

of

Euro

1 ea

ch10

0%(4

06.4

3)(2

,578

.24)

––

Not

es :–

1.

In a

dditi

on to

the s

hare

s hel

d by

hol

ding

com

pany

, six

indi

vidu

als,

who

are

nom

inee

s of B

PCL,

each

hol

d te

n sh

ares

of `

10 ea

ch o

f the

Com

pany

.2.

In

resp

ect o

f BPR

L In

tern

atio

nal B

.V.,

BPRL

Ven

ture

s B.V

., BP

RL V

entu

res M

ozam

biqu

e B.

V. a

nd B

PRL

Vent

ures

Indo

nesia

B.V

.– –

The

fi gu

res a

re co

nver

ted

from

USD

to In

dian

Cu

rren

cy ta

king

ave

rage

exch

ange

rate

s for

profi t

s of fi

nan

cial y

ear e

nded

201

3-14

and

clos

ing

exch

ange

rate

s for

all

othe

r fi g

ures

.3.

Loss

of B

PRL

Inte

rnat

iona

l B.V

. is c

onso

lidat

ed lo

ss i.

e. in

cludi

ng lo

sses

of B

PRL

Vent

ures

B.V

., BPR

L Ve

ntur

es M

ozam

biqu

e B.V

. and

BPR

L Ve

ntur

es In

done

sia B

.V.

For a

nd o

n be

half

of th

e Bo

ard

of D

irec

tors

Sd/-

Sd

/-

Sd/-

P. B

alas

ubra

man

ian

D

. Raj

kum

ar

Nar

endr

a D

ixit

Dir

ecto

r M

anag

ing

Dir

ecto

r C

ompa

ny S

ecre

tary

Plac

e: M

umba

iD

ate:

11th

July

, 201

4

BPRL ANNUAL REPORT 2013-14 - Bharat Petroleum · BPRL ANNUAL REPORT 2013-14 3 NOTICE TO THE MEMBERS...

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Transcript of BPRL ANNUAL REPORT 2013-14 - Bharat Petroleum · BPRL ANNUAL REPORT 2013-14 3 NOTICE TO THE MEMBERS...