CONTENTS. Financial details of the Subsidiary Companies Secretarial Audit Report...039

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3 BPRL ANNUAL REPORT CONTENTS Particulars Page Board of Directors...3 Notice to Members...4 Directors Report...1 Financial details of the Subsidiary Companies...37 Secretarial Audit Report...39 Comments of the Comptroller & Auditor General of India...47 Independent Auditor s Report...49 Balance Sheet & Statement of Profit & loss...57 Cash Flow Statement...59 Independent Auditor s Report on Consolidated Financial Statements...14 Consolidated Balance Sheet & Statement of Profit & Loss Consolidated Cash Flow Statement

4 BHARAT PETRORESOURCES LIMITED Bankers State Bank of India BNP Paribas Statutory Auditors M.B.Agrawal & Co, Chartered Accountants Secretarial Auditors Dholakia & Associates LLP Company Secretaries Registered Office Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41 Tel : Fax : CIN : U2329MH26GOI Corporate Office E Wing, 9 th Floor, Maker Towers, Cuffe Parade, Mumbai 45 Tel : Fax : Area Office 1, Ranganathan Garden, 11 th Main Road, Anna Nagar, Chennai 64 Tel : Fax : st Floor, Golden Triangle Bldg. Near Sardar Patel Stadium, Navarangpura, Ahmedabad , Gujarat Tel : Fax : MAP OF VENUE 2

5 BPRL ANNUAL REPORT Management Team Board of Directors S. Varadarajan (upto ) D. Rajkumar (Managing Director upto Director w.e.f ) Ajay Kumar V. Director (Operations & Business Development) and Managing Director (I/c) (w.e.f ) B. K. Datta (upto ) P. Balasubramanian (upto ) K Sivakumar (w.e.f ) Pankaj Kumar Director (Finance) Dr. Praphullachandra Sharma Director P.C.Siva President (Services) (upto ) Milind S. Patke President (Assets & Services) (upto ) Easwaran Mahadevan Vice-President (Assets) Barnali Tokhi Vice-President (Technical) U. S. N. Bhat Vice-President (Assets & Services) Prasanna Kumar Sahoo Asst. Vice-President (Finance) Narendra Dixit Company Secretary (upto ) Swapna Sawant Company Secretary 3

6 BHARAT PETRORESOURCES LIMITED NOTICE TO THE MEMBERS Notice is hereby given that the 1 th Annual General Meeting of the members of Bharat PetroResources Limited will be held at the Registered office of the Company at Bharat Bhavan, 4&6 Currimbhoy Road, Ballard Estate, Mumbai 41, on Monday, 4 th September, 217, at 113 hrs to transact the following Businesses:- ORDINARY BUSINESS 1. To receive, consider and adopt the audited financial statements (including the audited consolidated financial statements) of the Company for the financial year ended 31 st March 217, the reports of the Board of Directors and Statutory Auditors. 2. To appoint a Director in place of Shri Pankaj Kumar (DIN No ) who retires by rotation. Shri Pankaj Kumar being eligible, offers himself for re-appointment. SPECIAL BUSINESS 3. Appointment of Shri Rajkumar Duraiswamy as Director To consider and, if thought fit, to pass the following Resolution, with or without modifications, as an Ordinary Resolution:- RESOLVED that pursuant to the provisions of Section 152 and other applicable provisions of the Companies Act, 213 and the Rules framed thereunder, Shri Rajkumar Duraiswamy (DIN ) who was appointed as additional Director w.e.f and in respect of whom the company has received a notice in writing under Section 16 of the Companies Act, 213 from a member, proposing his candidature for the office of Director, be and is hereby appointed as Director of the Company, liable to retire by rotation. 4

7 BPRL ANNUAL REPORT Appointment of Shri Sivakumar Krishnamurthy as Director To consider and, if thought fit, to pass the following Resolution, with or without modifications, as an Ordinary Resolution:- RESOLVED that pursuant to the provisions of Section 152 and other applicable provisions of the Companies Act, 213 and the Rules framed thereunder, Shri Sivakumar Krishnamurthy (DIN ) who was appointed as additional Director w.e.f and in respect of whom the company has received a notice in writing under Section 16 of the Companies Act, 213 from a member, proposing his candidature for the office of Director, be and is hereby appointed as Director of the Company, liable to retire by rotation. Registered Office: Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai Date: 9 th August, 217 Tel: Fax: CIN No U2329MH26GOI By Order of the Board For Bharat PetroResources Limited Sd/- (Swapna Sawant) Company Secretary Notes:- 1. The Explanatory Statements under Section 12 of the Companies Act, 213, in respect of the items of Special Business are 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 & affixed with the revenue stamp and be deposited at the Registered Office 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 fifty 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. 5

8 BHARAT PETRORESOURCES LIMITED Explanatory Statements pursuant to Section 12 of the Companies Act, 213 Item No.3 Appointment of Shri Rajkumar Duraiswamy as Director Shri Rajkumar Duraiswamy was appointed as Additional Director by the Board of Directors, under the provision of Articles 9 and 11 of the Articles of Association of the Company, read with Section 161 of the Companies Act, 213 with effect from 1 st October 216. He has attended all six Board meetings held after his appointment. Being, Additional Director, Shri Rajkumar Duraiswamy holds office upto the date of the ensuing Annual General Meeting. The Company has received a notice, u/s 16 of the Companies Act, 213 from a member, proposing his name as Director of the Company. His brief resume containing age, qualification, experience etc is attached. Shri Rajkumar Duraiswamy is not disqualified from being appointed as Director in terms of the Section 164 of the Companies Act, 213. He holds ten shares in the Company. He does not have any relationship with other Directors and Key Managerial Personnel of the Company. Except Shri Rajkumar Duraiswamy, no other Director, Key Managerial Personnel or their relatives are interested in the Resolution. The Directors recommend the Resolution at Item No 3 for the approval of the members of the Company. Item No.4 Appointment of Shri Sivakumar Krishnamurthy as Director Shri Sivakumar Krishnamurthy was appointed as Additional Director by the Board of Directors, under the provision of Articles 9 and 11 of the Articles of Association of the Company, read with Section 161(3) of the Companies Act, 213 with effect from 9 th May, 217. Being, Additional Director, Shri Sivakumar Krishnamurthy holds office upto the date of the ensuing Annual General Meeting. The Company has received a notice, u/s 16 of the Companies Act, 213 from a member, proposing his name as Director of the Company. His brief resume containing age, qualification, experience etc is attached. Shri Sivakumar Krishnamurthy is not disqualified from being appointed as Director in terms of the Section 164 of the Companies Act, 213. He neither holds any share in the Company nor has any relationship with other Directors and Key Managerial Personnel of the Company. Except Shri Sivakumar Krishnamurthy, no other Director, Key Managerial Personnel or their relatives are interested in the Resolution. The Directors recommend the Resolution at Item No 4 for the approval of the members of the Company. Registered Office: Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai Date: 9 th August, 217 Tel: Fax: CIN No U2329MH26GOI By Order of the Board For Bharat PetroResources Limited Sd/- (Swapna Sawant) Company Secretary 6

9 BPRL ANNUAL REPORT Brief Resume of Directors seeking Appointment / Re-appointment at the 1 th Annual General meeting Name Shri Pankaj Kumar Shri Rajkumar Duraiswamy Shri Sivakumar Krishnamurthy Date of Birth 22 nd November nd August, st May 196 Date of Appointment Qualifications 31 st July st October th May 217 Chartered Accountant, Cost Accountant. B. Tech (Elect.) from IIT, Madras, PGDM from IIM, Bangalore. Chartered Accountant, Cost Accountant, Company Secretary. Experience in specific functional areas Directorships held in other Companies Memberships/ Chairmanships of Audit Committee No of Shares held in BPRL Shri Pankaj Kumar has vast experience of 27 years in Financial Management in BPCL and BPRL. As Director (Finance), BPRL, he is responsible for Treasury Management, M&A, Corporate Governance, Budgeting, Corporate taxation etc. Prior to his appointment as Director (Finance) in BPRL, he has held senior positions in BPCL and handled various areas of finance covering Corporate Finance, Risk Management & governance, Budgeting, Fund Management, International Trade, Taxation, etc. He has also handled various commercial roles in Business Finance under Marketing Departments in BPCL. Director 1) Bharat PetroResources JPDA Ltd 2) BPRL International B.V. 3) BPRL Ventures B.V. 4) BPRL Ventures Mozambique B.V. 5) BPRL Ventures Indonesia B.V. Shri D. Rajkumar has 32 years of experience in Bharat Petroleum Corporation Limited (BPCL) out of which close to 15 years of Board experience as Managing Director of BPCL s Joint Venture/ Subsidiary Companies. Prior to appointment in BPCL, he held the post of Managing Director of Bharat PetroResources Ltd. His work experience span across areas of marketing function, pipeline projects to integrated upstream and downstream oil sector. He has global exposure of working closely with international majors and multinational companies. He also has extensive exposure to fiscal, legal, contractual and political regimes in foreign countries. Chairman & Managing Director 1) Bharat Petroleum Corporation Ltd. Chairman 1) Numaligarh Refinery Ltd 2) Bharat Oman Refineries Ltd Director 1) Petronet LNG Ltd -- Chairman- Audit Committee Bharat PetroResources Ltd. Ten Ten -- Shri K Sivakumar joined Bharat Petroleum Corporation Limited in 1987 and has worked in various facets of Finance, Internal Audit, ERP, Secretarial functions. He was part of the organization restructuring effort CUSECS and was a key member in formulation of IT strategy and also has played a pivotal role in SAP implementation. He has contributed significantly in the Governance, Risk and Control aspects of various processes across the corporation. Director (Finance) 1) Bharat Petroleum Corporation Ltd. Director 1) Bharat Oman Refineries Ltd. 2) Petronet CCK Ltd. 3) Delhi Aviation Fuel Facility Pvt. Ltd. 4) Kochi Salem Pipeline Pvt. Ltd. Member Stakeholders Relationship Committee: Bharat Petroleum Corporation Limited Member Audit Committee- Bharat PetroResources Ltd 7

10 BHARAT PETRORESOURCES LIMITED Well Drilling activities in Operatorship block in Cambay basin, India Operations in progress in Madanam Field of Cauvery Basin, India 8

11 BPRL ANNUAL REPORT Central Processing Facility in Vankor Field, Russia Well PADS in Taas-Yuryakh Field, Russia 9

12 BHARAT PETRORESOURCES LIMITED DIRECTORS REPORT The Directors present their 1 th Report of Bharat PetroResources Limited (BPRL) for the Financial Year ended 31 st March 217:- OPERATIONS OF THE COMPANY BPRL has participating interest (PI) in twenty two blocks of which twelve are located in India and ten overseas, along with equity stake in two Russian entities holding licence to four producing blocks in Russia. Seven of the twelve blocks in India were acquired under different rounds of New Exploration Licensing Policy (NELP) and five blocks were awarded under the recently concluded Discovered small fields bid round 216. Of the overseas blocks, six are in Brazil and one each in Mozambique, Indonesia, Australia and Timor Leste. The blocks of BPRL are in various stages of exploration, appraisal, pre-development and production. The total acreage held by BPRL and its subsidiaries is around 23,878 sq km of which approx 76% is offshore. The PI in respect of Blocks in India and Australia are held directly by BPRL. The PI of 2% in Block-JPDA 6-13, in Timor Leste is held by BPRL s wholly owned subsidiary company, i.e. Bharat PetroResources JPDA Limited in India. Further, BPRL has three wholly owned subsidiary companies located in Netherlands, Singapore and India. The subsidiary located in Netherlands, i.e. BPRL International BV, 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 5% stake in IBV Brasil Petroleo Limitada, which currently holds PI ranging from 2% to 4% in six blocks in offshore Brazil. BPRL Ventures Mozambique BV has PI of 1% in a block in Mozambique, and BPRL Ventures Indonesia BV holds PI of 12.5% in a block in Indonesia. In Financial Year , BPRL has formed a wholly owned subsidiary located in Singapore, i.e. BPRL International Singapore Pte Ltd (BISPL). BISPL alongwith Oil India Ltd and Indian Oil Corporation Ltd has formed two Joint Venture Companies as Special purpose vehicles (SPV) i.e. Taas India Pte Ltd and Vankor India Pte Ltd in May 216 with BPRL International Singapore Pte Ltd holding 33% stake in each of the SPV to hold stakes in the Companies in Russia. BPRL and its consortia have a total of 25 discoveries in respect of Blocks held in five countries i.e. Brazil, Mozambique, Indonesia, Australia and in India. Recently, BPRL has taken steps towards revenue generation by acquiring equity stake in Russian entities operating producing assets. As a result, the portfolio mix of BPRL has moved from that of Exploration, Appraisal and Pre-development stage to one which includes producing assets. Today, BPRL has assets from Exploration to Appraisal to Pre-development, and with stakes now in producing assets. BPRL had a successful exploration campaign in its maiden operatorship block located in Cambay basin 1

13 BPRL ANNUAL REPORT with two discoveries being notified to Directorate General of Hydrocarbons. BPRL is moving up the Hydrocarbon value chain and has enhanced its skill base through Operatorship. In order to enhance and complement the existing in-house skills, BPRL has inducted senior G&G staff during the year. Ministry of Corporate Affairs (MCA) vide their notification dated 16 th February 215 notified the Companies (Indian Accounting Standards) Rules, 215 applicable for companies having net-worth of ` 5 crores or more or for subsidiary company of a Listed Company for accounting periods beginning on or after 1 st April 216. Accordingly, Ind AS is applicable to BPRL from Financial Year onwards. The transition was carried out from Generally Accepted Accounting Principles in India (Indian GAAP) as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 214, which was the Previous GAAP. As per the requirements of Ind AS, BPRL has prepared the financial statement for the year ended 31 st March 217, 31 st March 216 and the opening Ind AS Balance sheet as on the date of Transition i.e. 1 st April 215. In preparing the Ind AS Balance Sheet as at 1 st April 215 and in presenting the comparative information for the year ended 31 st March 216, the Company has adjusted amounts previously reported in the financial statements prepared in accordance with Previous GAAP. As on 31 st March 217, BPRL has an authorized share capital of ` 3, crore and paid up share capital of ` 2,92 crore which is entirely held by Bharat Petroleum Corporation Limited (BPCL), the holding company. BPRL has recorded consolidated income of ` 5.92 crore and a consolidated loss of ` 5.3 crore for the Financial Year ending 31 st March, 217. The consolidated loss was mainly due to interest on loans taken for investments in Russian assets and due to fair valuation of financial assets. The Comptroller and Auditor General of India (C&AG) has vide letter dated 2 th July, 217 which is enclosed to the Directors Report as Annexure E, stated that on the basis of the audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to the Statutory Auditor s report. MANAGEMENT DISCUSSION AND ANALYSIS 1. Industry structure and developments Brent crude has averaged around US$52 per barrel in first half of 217, up around 8% from its 216 average of US$48 per barrel. Since the crude prices have been range-bound between US$4-5 per barrel in the recent past, Upstream Exploration & Production sector is currently treading carefully with respect to new field developments. Growth in oil supply is expected to outpace the growth in demand in the short-term thereby inhibiting price recovery. However, demand may overtake 11

14 BHARAT PETRORESOURCES LIMITED supply over the medium to long-term due to deferment of key development activities and prolonged OPEC cuts leading to recovery of crude oil prices. The recent downturn in oil prices has led to significant steps being taken by the Upstream Exploration & Production industry to reduce costs. These steps, along with improved recovery techniques and more efficient operations, are paving the way for lower break-evens across the industry. In the near future, the recent oil price gains which are due to a rebalancing of supply and demand fundamentals, partly accelerated by OPEC s recent decision to cut production are expected to remain in place. Oil and gas industry capital expenditures are expected to increase by as much as 7 percent in 217. In addition, global rig counts, particularly in the U.S., have been on the rise since the middle of 216. It is estimated that the global consumption of petroleum and other liquid fuels is expected to increase by 1.5 million barrels per day in the year 217 and by 1.6 million barrels per day in the year 218. Similarly, India s consumption of petroleum and other liquid fuels is expected to drive year-on-year increase of.26 million barrels per day in the year Strength and Weaknesses BPRL deals with the operators of international repute, multinational companies, national oil companies and International Government Authorities. BPRL is recognized as preferred partner by major operators with proven track record. BPRL is a lead operator in Cambay Block CB-ONN-21/8 and is handling all the operations of the project. BPRL has 25 discoveries in five countries including world class discoveries in Mozambique and Brazil. In order to balance its portfolio and commence revenue generation, BPRL has acquired equity stake in two Russian entities holding license to four producing assets. BPRL has been supported by its Parent Company, i.e. BPCL, a Navratna & Fortune 5 company. BPRL has gained operatorship experience in an onland block and has taken steps to enhance its operatorship capabilities. BPRL, being a Government Company and wholly owned subsidiary of BPCL, requires to depend largely on BPCL and Govt. of India for major investment decisions. 3. Opportunities and Threats Although the global demand for oil and gas has been stagnant, there is an increase in the demand for crude oil and petroleum products in India in the last two years and is expected to remain one of the fastest growing energy markets in the next two decades. In view of discoveries in the various blocks in which it holds PI, BPRL will have significant opportunities for growth in India and abroad. Further, 12

15 BPRL ANNUAL REPORT BPRL has in the Financial Year acquired equity stakes in two companies in Russia that hold the license to 4 producing assets, which is a big leap towards fulfillment of its aspiration for revenue generation. The fall in the international crude prices has been arrested to some extent in the year due to OPEC production cuts and sporadic outages in the Middle East. Increasing certainty in the Permian basin and other shale assets in U.S. could also have an impact on the crude prices. Besides, increasing competition, change in Government policies, crude price volatility, macro-economic conditions, exchange rate fluctuations, delay in obtaining regulatory approvals from Government are some of the other factors that BPRL may encounter in the upstream space. Political developments in Brazil and depressed oil prices could have an impact in the development of deepwater discoveries of Brazil. 4. Outlook BPRL has PI in various blocks in India and abroad in consortium with world renowned companies. BPRL s discoveries in Mozambique and Indonesia are on the threshold of development planning with respective operators working out the detailed plan of development while the discoveries in Brazil are in the appraisal stage. In spite of the current price scenario and geopolitical developments, the Operators of the Mozambique and Brazil blocks are evaluating various options to commence the pre-development activities and look into developing these projects to achieve first oil/gas early next decade. The dividends from Russian assets have commenced in Financial Year From Exploration to Appraisal to Pre-development and Production, and now with acquisition of equity stakes in companies in Russian entities, BPRL is moving up the Hydrocarbon value chain and has also enhanced its skill base through Operatorship in onland block. 5. Risks and Concerns The world is seeing an acceleration in spread and scale of new technologies like renewables and clean technologies with factors like climate change and environmental concerns providing an impetus to the same. Recent studies by oil majors and the International Energy Agency (IEA) point to the fact that oil, gas and coal are expected to remain the dominant sources of energy powering the world economy, accounting for more than three-quarters of total energy supplies till 235. Oil growth is expected to continue, although its pace of growth could be gradual. Gas, however, is expected to be the fastest growing fuel, with its share in primary energy projected to increase as it overtakes coal to be the second-largest fuel source by

16 BHARAT PETRORESOURCES LIMITED 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 the efficiency, reliability and completeness of accounting records and compliance of applicable laws and regulations. Further, all transactions adheres to the requisite procedures, policies and are in accordance with the statutory requirements. The Internal Audit of BPRL for the Financial Year ended was carried out by the team of Internal Audit in BPCL headed by ED (Audit), BPCL. Additionally, the non-operator audit for Blocks in Mozambique, Brazil, Indonesia and select Indian Blocks has been carried out during the Financial Year. The Audit Committee of the Board periodically reviews significant findings of the Internal Auditor covering operational, financial and other areas and provides guidance on internal controls. 7. Discussion on financial 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 BPRL comprises optimum combination of professionals from different background such as geology, engineering and finance. A separate cell exists for Human Resources which looks after the activities relating to manpower, training of staff and administration. Most of the employees in BPRL are deputed from the parent Company i.e. BPCL. During the year, 2 staffs have joined directly in BPRL cadre. The activities relating to Human Resources are looked after in line with the policies of BPCL. All necessary training, programmes, are conducted for Human resources development to operate in international environment. Further, senior Geoscientists are engaged as consultants to add value to its projects and to evaluate new projects. The total manpower of BPRL including 4 consultants is 54. BPRL is also accessing options for placement of other domain specialists like production engineers, facilities engineers, petrophysicists and drilling engineers as it moves to become a producing company and handle more Blocks as Operator. 9. Environmental Protection and conservation, Technological conservation, Renewable energy developments, Foreign Exchange conservation BPRL is lead Operator of one on-land block situated in Cambay basin and a Joint Operator in two onland blocks, one each in Jaisalmer Basin in Rajasthan and Cambay basin in Gujarat. In the other blocks including Foreign Blocks, BPRL is consortium partner and hence not directly involved in the execution of works related to the Blocks and the Operator of respective block performs the activities 14

17 BPRL ANNUAL REPORT related to Environmental Protection and conservation, Technological conservation, Renewable energy developments and Foreign Exchange conservation. In on land operatorship Block in Cambay basin, the Environmental Clearance (EC) has been obtained from Ministry of Environment & Forest (MOEF) to carry out drilling of exploratory wells. Further, consent to Establish (CTE) from Gujarat Pollution Control Board (GPCB) for drilling of wells was also obtained. BPRL has followed all the GPCB, DGMS and other statutory norms for the operations of the said Block and submitted compliance report from time to time to statutory authorities. 1. Corporate Social Responsibility At present, the blocks of BPRL are in various stages of exploration/appraisal/ pre-development/production and there are no profits recorded during the Financial Year. Accordingly, no expenditure is being incurred on the Corporate Social Responsibility (CSR) by BPRL directly. However, BPRL is a consortium member of various blocks wherein the activities related to CSR are undertaken by the Operator. In terms of the Companies Act, 213, CSR committee shall comprise minimum three Directors including at least one Independent Director. Accordingly, BPRL will be able to reconstitute the CSR committee after receiving nomination of Independent Directors from Govt. of India. CURRENT STATUS OF BLOCKS BLOCKS ACQUIRED THROUGH FOREIGN SUBSIDIARY COMPANIES RUSSIA BPRL along with Oil India Limited (OIL) and India Oil Corporation Ltd (IOC), jointly referred to as the Indian Consortium (IC) entered into definitive agreements for the Vankor transaction in June 216 after completion of due diligences on 2 nd June 216. Similar agreement for Taas transaction was executed in March 216. Subsequently, the proposal for Cabinet Committee of Economic Affairs (CCEA) approval for the Russian acquisition was submitted to the Government of India on 12 th July 216 and approval for the same was accorded. BPRL along with OIL and IOC, through joint venture companies formed by their wholly owned subsidiaries in Singapore, completed on 5 th October 216 two transactions, viz. acquisition of 23.9% shares of the charter capital of JSC Vankorneft, a company organised under the laws of the Russian Federation, which is the owner of Vankor and North Vankor Field licenses, from Rosneft Oil Company (Rosneft), a National Oil Company of Russia; and acquisition of 29.9% of the participatory share in charter capital of LLC Taas Yuryakh Neftegazodobycha ( TYNGD ), from LLC RN Razvedka I Dobycha, a wholly owned subsidiary of Rosneft. 15

18 BHARAT PETRORESOURCES LIMITED Currently Rosneft holds about 5.1% shares in JSC Vankorneft, ONGC Videsh Ltd (through its subsidiary) holds 26% shares of JSC Vankorneft and IC (through subsidiary companies) holds the remaining 23.9%. In TYNGD, presently, Rosneft (through subsidiary) holds 5.1% share, BP (through a subsidiary) holds 2% share and IC (through subsidiary companies) holds the remaining 29.9% stake. Vankor field, located in East Siberia is Russia s second largest field by production and accounts for around 4% of Russian production. During the year 216, the Vankor field produced approx MMT of oil and 9 BCM of gas. TYNGD is currently producing approx. 1.1 MMTPA of oil and is expected to ramp up the oil production to 5 MMTPA of oil by 221. Both the acquisitions strengthen BPRL s existing E&P portfolio and is consistent with its strategic objective of adding high quality international assets to its portfolio. MOZAMBIQUE BPRL, through its overseas subsidiary company, holds 1% participating interest (PI) in the Mozambique Area 1 block. The other consortium members in the block are Anadarko 26.5% (operator), Beas Rovuma Energy Mozambique Limited (OVL- OIL) (1% PI), ONGC Videsh Limited (1%), PTTEP AI (8.5% PI) and Mitsui E&P Mozambique Area 1, Limited (2% PI). The balance 15% PI is with Empressa Nacional de Hidrocarbonetos E.P (ENH), the National oil Company of Mozambique. Mozambique LNG is emerging as a future leader in the global LNG industry as it works to develop an LNG facility on the Afungi peninsula in Cabo Delgado province. With approximately 75 trillion cubic feet of recoverable natural gas discovered in the Offshore Area 1, the Mozambique LNG Project represents an extraordinary opportunity to meet increasing world demand for a sustainable, reliable and cleaner source of energy. The partnership is planning an initial development of approximately 12 MMTPA (2x6 MMPTA onshore liquefaction trains) and a site plan that will facilitate future expansions of more than 5 MMPTA.Mozambique s favourable central geographic location means the country is well positioned to meet the needs of customers in the Atlantic and Asia-Pacific markets plus tap into the growing demand for energy in the Middle East and Indian sub-continent. The partnership is committed to working collaboratively with Mozambican communities and government officials to safely develop these natural gas resources in a manner that protects the environment, encourages additional foreign investment and contributes to the long-term economic stability of the region. The development plan for the project has been submitted to Mozambique Government in December 216 and discussions to arrive at an aligned position are in progress. 16

19 BPRL ANNUAL REPORT With the support of the Mozambican Government, the partnership continues to advance the project to a Final Investment Decision (FID) and have made progress toward delivering the key elements required for FID. The key agreements including the marine concessions are approved by the Council of Ministers and the execution of the marine concession agreements would mark the completion of the core components of the legal and contractual framework that provide stability to the project throughout its economic life and supports continued equity investment and access to project finance. The Mozambican Government has approved the resettlement plan in December 216 which entails construction of the resettlement village and livelihood restoration programs. The operator is presently working on permits and licenses. Construction would commence on receipt of these. On the marketing front, negotiations are in progress to arrive at Sales and Purchase Agreements with key strategic buyers and completion of these would determine the timing of FID. Despite Mozambique s current macroeconomic situation, the project financing activities are continuing with engaged lenders who have indicated strong support for project financing debt of approximately 2/3 of the capital required. The project will take FID once the three elements legal and contractual framework, offtake agreements and project financing are fully in place. BRAZIL IBV Brasil Petroleo Limitada (incorporated in Brazil) a joint venture company of BPRL Ventures BV, and Videocon Energy Brazil Ltd, a foreign subsidiary of Videocon Industries Limited, holds PI in 6 blocks in 3 concessions in Brazil. 5 out of 6 blocks are operated by Brazil s National Oil Company Petrobras, and 1 block is operated by Anadarko Petroleum Corporation, USA. Sergipe Alagoas (BM-SEAL-11) concession The exploration phase consists of two exploration periods. All the minimum work program activities for the two exploration periods in these blocks have been completed. During the exploration periods, four discoveries of Oil & Gas i.e. Barra, Farfan, Cumbe and Barra#1 have been made in this concession. Presently, the consortium is carrying out activities in four appraisal plans namely Barra, Farfan, Cumbe & Verde and the area under Papangu appraisal plan, in SEAL-M-569 block has been relinquished after completing the firm activities. During appraisal, two additional oil and gas discoveries have been made. ANP has approved the proposal for extension of all BM-SEAL-11 appraisal plans upto 1 st December

20 BHARAT PETRORESOURCES LIMITED The Operator is taking steps for assessing reservoir extent including extended well testing. Petrobras has formed Joint Working Team to interact closely for expediting the Sergipe Project development. Potiguar (BM-POT-16) concession During the first exploration period (26- mid 214), the minimum commitment activities have since been completed, including drilling of one exploration well called Ararauna in POT-M-76. Based on the oil and gas shows observed in Ararauna well, ANP has approved Ararauna appraisal plan, covering both the blocks in BM-POT-16 concession, consisting of firm commitment of drilling one well & G&G studies. Regulator ANP has approved the postponement of deadline of Ararauna Appraisal Plan till November 221. There are number of sizable prospects identified based on the old 3D seismic data interpretation. To mature these prospects to drilling, consortium is in process to acquire new 3D seismic data for better understanding of fault entrapment. The planned new 3D seismic study will help to reduce the risk/ uncertainty involved in fault entrapment. Campos (BM-C-3) concession During the exploration periods, Wahoo discovery was announced. After the completion of the exploratory periods in Nov 21 the consortium decided to move on to Appraisal phase. Under the Appraisal plan drilling of two firm Appraisal wells, screening of Development concepts, Pre-FEED engineering studies on identified facility options were completed. ANP has, in March 216, approved the extension of Wahoo Appraisal Plan from September 3, 215 to November 3, 218. The consortium is in process to study various available options before any firm commitment is made towards field development. The objective is to address all the uncertainties involved in the project to facilitate a commercially viable field development option. INDONESIA BPRL Ventures Indonesia BV, has Participating Interest (PI) of 12.5% in Nunukan Block PSC. Other Joint Venture (JV) partners are PT Pertamina Hulu Energi with 64.5% PI as Operator; and Videocon Indonesia with 23% PI. There has been discovery of oil and natural gas in Badik 1 well and hydrocarbon discovery confirmed in all appraisal wells. The Plan of Development (POD) for Nunukan PSC in Indonesia has been approved by both the Regulator SKKMigas and the Ministry of Energy and Mineral Resources, Govt. of Indonesia. The activities pertaining to FEED for the Nunukan block were deferred in lieu of exploration of an additional prospect (Parang) in order to create additional value for the approved Plan of Development and to meet market requirements. Accordingly, 18

21 BPRL ANNUAL REPORT the Operator proposed to drill an additional prospect to augment the reserves and production. Subsequently, an exploration well was spud in a new prospect Parang, which led to discovery of Oil and Gas. BLOCK ACQUIRED THROUGH INDIAN SUBSIDIARY Bharat PetroResources JPDA Limited ( the Company ) was incorporated as a wholly owned Subsidiary Company of BPRL. The Company was formed as a Special Purpose Vehicle for undertaking the exploration activities in the Block JPDA 6-13 awarded to the Company, in the Joint Petroleum Development Area (JPDA), by the Autoridade Nacional do Petroleo of Timor Leste. The Company currently holds 2% participating interest (PI) each, in this block. The other consortium members are Videocon JPDA 6-13 Limited & GSPC JPDA Limited, both holding 2% PI, Pan Pacific Petroleum (JPDA 6-13) Pty Limited holding 15% PI, Oilex Limited (as Operator) holding 1% PI and Japan Energy E&P JPDA Pty Limited holding 15% PI in the said block. Timor Leste Government has initiated arbitration proceedings against the Government of Australia to have the Certain Maritime Arrangements in 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 JPDA, and in effect the Production Sharing Contract (PSC). In view of the uncertainty arising out of arbitration proceedings, the Joint Venture (JV) had submitted its request to ANP for termination of PSC without claim or penalty. ANP, however rejected the claim of the JV and delivered its notice to terminate the PSC imposing Contractors Liability upon Termination. JV, while accepting the termination requested for negotiation for amicable settlement of contractor s liabilities upon termination which is still under consideration. BLOCKS IN INDIA A. Operated Block: Under NELP-IX bid round, BPRL led consortium has been awarded on-land block CB-ONN-21/8, in Cambay basin. BPRL is the Lead Operator with 25% Participating Interest (PI) and the other consortium partners are GAIL (India) Ltd - 25% PI ( Joint Operator), Engineers India Ltd (EIL) - 2% PI, BF Infrastructure Ltd (BFIL) - 2% PI and Monnet Ispat & Energy Ltd (MIEL) - 1% PI. As Lead Operator of the block, BPRL has completed the committed Work Programme for without time and cost overrun by drilling & testing of four wells and associated G&G activities. During testing, two wells (PA#1 & PA#2) flowed oil (API bbl/day to the surface on self-flow, confirming the presence of producible hydrocarbon from the reservoirs. 19

22 BHARAT PETRORESOURCES LIMITED The above discoveries have been approved by Directorate General of Hydrocarbon (DGH). The Declaration of Commerciality (DOC) of these discoveries has been submitted as per Format-C to MOP&NG/DGH on B. Non-Operated Blocks i) NELP IV Block (CY-ONN-22/2 Madanam Field, Cauvery Basin) BPRL has PI of 4% in on land Block CY-ONN-22/2 in Cauvery Basin wherein ONGC is Operator. In the said Block, post discovery of oil in MD#3 well, the consortium has completed drilling of two appraisal wells MD-5 and MD-6. The first appraisal well, MD-5 flowed Gas from both basement and Kamalapuram Formation and the second appraisal well MD-6 flowed oil/gas from Kamalapuram Formation and basement. The Field Development Plan (FDP) of the Block has been approved by MoP&NG and accordingly grant of Petroleum Mining Lease (PML) for 14 sq.km. of Block area is in final stages of approval with Tamil Nadu State Government. As on 31 st March 217, the consortium completed drilling of three Development wells MDDA, MDDB and MDDC. All the three development wells successfully flowed hydrocarbons during trial production. Initial revenues from the Madanam block have commenced. ii) NELP VI Block (CY-ONN-24/2, Cauvery Basin) BPRL has PI of 2% in an on land Block, CY-ONN-24/2 wherein ONGC is Operator. The consortium has completed drilling of two appraisal wells for the discovery well PN-8. The Consortium completed the MWP commitments in block by completing the drilling of one exploratory well (PN-11) in exploration Phase II. Post approval of Declaration of Commerciality (DOC), the Field Development Plan (FDP) of the block for PN-8 discovery has been submitted which is being reviewed by DGH. iii) NELP VII Block (RJ-ONN-25/1, Rajasthan Basin) BPRL has PI of 25% in RJ/ONN/25/1 on land Block in Rajasthan as Joint operator with Hindustan Oil Exploration Company Ltd. Indian Molasses Company (IMC) is the other partner in the Block. Minimum Work Program (MWP) activities related to acquisition, processing and interpretation of 2D/3D seismic data have been completed in this Block. The Operator has submitted proposal to relinquish the block and the consortium is awaiting for MoPNG/DGH decision for further way forward in the block. iv) NELP IX Blocks a) CB-ONN-21/11 In Cambay basin block CB-ONN-21/11, BPRL is the Joint operator 2

23 BPRL ANNUAL REPORT in the block in Cambay Basin along with GAIL India Ltd as the Lead Operator with a PI of 25% each. During the consortium has completed site preparation and drilling of 5 exploratory wells. Testing of first exploratory well (Dugari-1) got completed with the testing of 3 identified Objects. Based on the testing results the Operator has submitted FORMAT A to DGH which is under consideration. b) AA-ONN-21/3 In Assam basin block AA-ONN-21/3, BPRL is having a PI of 2%. OIL with a PI of 4% is the Operator of the block and ONGC is other partner with PI of 4%. Processing and interpretation of Seismic data has been completed and the consortium is in the process of finalizing the location for the committed one MWP well. c) MB-OSN-21/2 In shallow water off shore block, MB-OSN-21/2 in Mumbai basin, BPRL is having a PI of 2%. OIL with a PI of 5% is the Operator of the block and HPCL is other partner with PI of 3%. The Seismic Data which was interpreted in-house as well as by independent consultants showed that the prospectivity of the block is not encouraging to proceed with further exploration in the block, hence it was decided to relinquish the block. The proposal for relinquishment of the block has been submitted by the Operator to DGH and the same is under consideration. C. New Project BPRL has been awarded 5 contract areas (2 offshore and 3 onshore) in the recently concluded Discovered Small field bid round 216.The blocks are B15 and B127E are in the Mumbai Offshore basin, Karaikal Cauvery Basin, Tamil Nadu and Bakhri Tibba & Sadewala Rajasthan. The exploration risk in these blocks are minimal as discoveries have been made but only commercial viability is to be established. The next steps are to Transfer the Petroleum Mining Lease (PML) from ONGC to BPRL for areas where it is already available (viz. B127E, B15, Karaikal and parts of Bakhri Tibba & Sadewala) and submit pplication of new PML for parts of Bakhri Tibba & Sadewala not covered in existing PML of ONGC. After transfer of PML, DGH will provide additional data for all contract areas. Based on the analysis of the subsurface data, a Field Development Plan is required to be submitted to DGH within 6 months of transfer of PML. OTHER FOREIGN BLOCKS AUSTRALIA: BPRL currently has a PI of 27.83% in Block EP (on land) in consortium with Norwest Energy NL, (Operator) and ARC Energy, 1% subsidiary of Australia 21

24 BHARAT PETRORESOURCES LIMITED Worldwide Exploration. This Block is being explored for Shale gas/tight gas. As a part of the Renewal Phase work commitment, acquisition of 3D seismic data has been carried out over 15 sq kms of the block area. The processing and interpretation of 3D Seismic data that was acquired earlier has been completed during the year. The work commitments of permit year 3 have been swapped by the work commitment of permit year 4. The permit is currently due to expire on 22nd February 22. UNITED KINGDOM: BPRL had a PI of 25% in 48/1b & 2c (offshore UK) with consortium partners Premier Oil (Operator), Verus Petroleum (formerly known as Bridge Energy) and Tata Petrodyne Ltd. The consortium has withdrawn from the License at the completion of the phase in view of project risks. The balance liabilities for the plug and abandonment of the well would be fulfilled in due course. DIVIDEND The Directors do not recommend any dividend for the Financial Year ended 31 st March 217. FIXED DEPOSITS BPRL has not accepted any Fixed Deposits during the Financial Year CORPORATE GOVERNANCE REPORT The Corporate Governance Report of the Company as required under the DPE Guidelines on Corporate Governance is enclosed as Annexure D. 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. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES BPRL, being a Government Company, the provisions of Section 134(3)(e) of the Companies Act, 213 regarding the disclosure of details of company s policy on Directors appointment and other matters under Section 178(3) are not applicable. The appointment of Directors are made as per the nomination from the Govt. of India. Further, information in respect of the ratio of the remuneration of each director to the median employee s remuneration and other details such as particulars of employees remuneration are not required to be given in terms of Section 197 of the said Act read with Rules, as BPRL is a Government Company. NUMBER OF MEETINGS OF THE BOARD There were 1 meetings of the Board held during the Financial Year, the details of which are given in the Corporate Governance Report that forms part of the Annual Report. The intervening gap between any two meetings was within the period prescribed under the Companies Act,

25 BPRL ANNUAL REPORT EXTRACT OF ANNUAL RETURN In accordance with Section 92(3) of the Companies Act, 213, an extract of the annual return in the prescribed format is enclosed as Annexure A. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details regarding Loans, guarantees or investments in terms of Section 186 of the Companies Act, 213 are covered suitably, in the notes 5 and 6 to the standalone financial statements provided in the Annual Report. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES There are no contracts or arrangements made with related parties in terms of Section 188(1) of the Companies Act, 213. IMPLEMENTATION OF RISK MANAGEMENT BPRL has Risk management policy. The risks are identified, categorized from high risk to low risk and requisite actions are taken by the concerned team to mitigate the risks. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS There are no significant and materials orders passed by the regulators or courts or tribunals impacting the going concern status and company s operations in future. HUMAN RESOURCES BPRL comprises optimum combination of professionals from different background such as geology, engineering and finance. At present, majority of 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, Sexual Harassment of Women Act, 213, Disability Act 1995, 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, 25, PUBLIC PROCUREMENT POLICIES FOR MICRO & SMALL ENTERPRISES, 212 All possible steps are being taken with regard to Citizens Charter, Official Language implementation, fulfillment of Social Obligations and Right to Information Act, 25 and Public Procurement policy for Micro & Small Enterprises, 212, with the support of the holding company, BPCL. 23

26 BHARAT PETRORESOURCES LIMITED MEMORANDUM OF UNDERSTANDING WITH BPCL BPRL has entered into a Memorandum of Understanding (MOU) with BPCL for the Financial Year BPRL has achieved an Excellent rating for its performance till the Financial Year ended VIGILANCE Corporate Vigilance guidelines are applicable to BPRL. The Chief Vigilance Officer of BPCL looks after the activities of BPRL and its Indian subsidiaries. All the assistance is given to Chief Vigilance Officer by BPRL. INFORMATION OF SUBSIDIARY COMPANIES BPRL has prepared consolidated financial statements of the Company and all its subsidiaries, joint ventures in terms of Section 129(3) of the Companies Act, 213, which forms part of the report. Further, a statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC-1 is enclosed as Annexure B. The statement also provides the details of performance, financial positions of each of the subsidiaries. The Audited Annual Accounts of Subsidiary Companies and related detailed information are open for inspection by any member at the Registered Office. These documents would be made available on request, to any of the members. During the Financial Year , BPRL has formed a wholly owned subsidiary company i.e. BPRL International Singapore Pte Ltd in Singapore for enabling the acquisition of stakes in the Companies in Russia. Further, BPRL International Singapore Pte Ltd has alongwith Oil India Ltd and Indian Oil Corporation Ltd formed two Joint Venture Companies as Special purpose vehicles (SPV) i.e. Taas India Pte Ltd and Vankor India Pte Ltd in May 216 with BPRL International Singapore Pte Ltd holding 33% stake in each of the two SPVs to hold stakes in the Companies in Russia. The Directors have not received any remuneration or commission from any of its subsidiaries. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 134(3)(c)/(5) of the Companies Act, 213, the Directors of the Company confirm that: 1. In the preparation of the annual accounts for the year ended 31 st March, 217, 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 at 31 st March 217 and of the profit and loss of the Company for the year ended on that date. 24

27 BPRL ANNUAL REPORT The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 213, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. 4. The Directors have prepared the annual accounts on a going concern basis. 5. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. BOARD EVALUATION The provisions of Section 134(3)(p) of the Companies Act, 213 shall not apply in case the Directors are evaluated by the Ministry, which is administratively in charge of the Company as per its own evaluation methodology. Accordingly, BPRL, being a Government Company, the above provisions are not applicable. DIRECTORS Shri S. Varadarajan, Shri B. K. Datta and Shri P. Balasubramanian ceased to be Directors of the Company w.e.f , and respectively on their retirement from the services of BPCL. The Directors have placed on record their deep appreciation and gratitude for the valuable contributions made by them in the deliberations of the Board meetings and Audit Committee meetings and for the guidance and the support by them for the development and progress of the business of the Company during their tenure. Shri D. Rajkumar ceased to be Managing Director w.e.f on his appointment as Chairman & Managing Director of BPCL. He was appointed as Additional Director on the Board w.e.f The Directors have placed on record their deep appreciation and gratitude for the valuable contributions made by Shri D. Rajkumar as Managing Director 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. Being Additional Director, he holds office till the ensuing Annual General Meeting. The notice under Section 16 of the Act has been received from a member proposing his name for appointment as Director at the ensuing Annual General Meeting. As per Ministry of Petroleum & Natural Gas letter, Shri Ajay Kumar V., Director (Operations & Business Development) has been entrusted with additional charge of the post of Managing Director w.e.f Shri K. Sivakumar was appointed as Additional Director w.e.f Being Additional Director, he holds office till the ensuing Annual General Meeting. The notice under Section 16 of the Act has been received from a member proposing his name for appointment as Director at the ensuing Annual General Meeting. 25

28 BHARAT PETRORESOURCES LIMITED Shri Narendra Dixit ceased to be Company Secretary of the Company w.e.f and Smt Swapna Sawant was appointed as Company Secretary in his place w.e.f AUDIT COMMITTEE Presently, the Audit Committee of BPRL comprises Shri D. Rajkumar, Shri Sivakumar K. and Dr Praphullachandra Sharma as members. Shri D. Rajkumar 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. STATUTORY AUDITORS M/s M.B. Agrawal & Co, Chartered Accountants were appointed as Statutory Auditors of BPRL for the Financial Year ended 31 st March 217, by the C&AG under the provisions of Section 139 of the Companies Act, 213. They will hold office till the ensuing Annual General Meeting. The Auditors Report does not contain any qualification, reservation or adverse remark. The C&AG has been approached for the appointment of Statutory Auditors for the Financial Year ending 31 st March 218. SECRETARIAL AUDITOR The Board has appointed M/s Dholakia & Associates LLP, Company Secretaries to conduct the Secretarial Audit of the company for the Financial Year ended 31 st March 217, as required under Section 24 of the Companies Act, 213 and Rules thereunder. The Secretarial Auditor s report for the Financial Year is enclosed as Annexure C. The Secretarial Audit Report contains observations about non compliance of the provisions of the Companies Act, 213, with regard to appointment of Independent Directors, Woman Director, constitution/ reconstitution of Audit Committee, Corporate Social Responsibility Committee, Remuneration & Nomination Committee under the said Act. BPRL, being a Government Company under the administrative control of Ministry of Petroleum & Natural Gas, the appointment of Independent Directors and woman Director can be made after receiving nominations from Govt. of India. The Govt. of India has been approached suitably for nomination of adequate number of Independent Directors including woman Director. After receiving nomination from Govt. of India, BPRL will be able to comply with the above requirements. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO BPRL is a lead Operator in one onland Block in Cambay basin, Gujarat. In the other blocks, BPRL is not directly involved in the execution of works related to the blocks. Also, BPRL is not the Operator in any of the blocks held in foreign countries. 26

29 BPRL ANNUAL REPORT The sources of energy used by the Company for operations in the various Blocks predominantly are Electricity, Diesel and Motor Spirit. These sources are monitored by the respective head of Blocks on a continuous basis. The provisions of the Companies Act, 213, relating to the technology absorption are not applicable at this stage of BPRL s operations. The details of foreign exchange earned in terms of actual inflows and foreign exchange outgo during the year in terms of actual outflows are given below:- Foreign Exchange Inflow: ` 6,95.62 Lakhs Foreign Exchange Outgo: ` 1, Lakhs ACKNOWLEDGEMENTS The Directors gratefully acknowledge the support and guidance received from various ministries of the Government of India & State Governments, Directorate General of Hydrocarbons, particularly from the Ministry of Petroleum & Natural Gas, and from BPCL, the parent company in BPRL s operations and developmental plans. Date : 9 th August, 217 Place : Delhi For and on Behalf of the Board of Directors Sd/- (D. Rajkumar) Chairman 27

30 BHARAT PETRORESOURCES LIMITED Form No. MGT-9 EXTRACT OF ANNUAL RETURN AS ON THE FINANCIAL YEAR ENDED ON 31 ST MARCH 217 [Pursuant to Section 92(3) of the Companies Act, 213 and Rule 12(1) of the Companies (Management and Administration) Rules, 214] I. REGISTRATION AND OTHER DETAILS: i) CIN U2329MH26GOI ii) Registration Date 17 th October 26 iii) Name of the Company Bharat PetroResources Ltd iv) Category/Sub-Category of the Company Company Limited by Share / Indian Government Company v) Address of the Registered office and contact details vi) Whether listed company No vii) Name, Address and Contact details of Not applicable Registrar and transfer Agent, if any Annexure A Bharat Bhavan, 4&6 Currimbhoy Road, Ballard Estate, Mumbai - 41 Tel: Fax: II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY The Company was incorporated as a wholly owned subsidiary of BPCL under its Navratna powers on 17th October, 26 with the main objective of undertaking exploration and production of oil & gas. The Company has participating interest (PI) in 22 blocks spread across 6 countries apart from equity stake in two Russian entities holding license to four producing assets. The Company is the lead operator in an Indian on-land block in the Cambay Basin in India. These blocks are in various stage of exploration, appraisal, predevelopment and production. 28

31 BPRL ANNUAL REPORT III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES Sl. No Name and address of the Company CIN/GLN Holding/ Subsidiary/ Associate % of shares held Applicable Section 1 Bharat Petroleum Corporation Limited, Bharat Bhavan, 4&6 Currimbhoy Road, Ballard Estate, Mumbai 41 L2322MH1952GOI8931 Holding Company 1% Section 2(46) 2 Bharat PetroResources JPDA Limited, Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41 U2329MH26GOI Subsidiary Company 1% Section 2(87) 3 BPRL International BV., Haaksbergweg 71, 111 BR Amsterdam The Netherlands Not applicable Subsidiary Company 1% Section 2(87) 4 BPRL Ventures BV. Haaksbergweg 71, 111 BR Amsterdam The Netherlands Not applicable Subsidiary Company 1% Section 2(87) 5 BPRL Ventures Mozambique BV Haaksbergweg 71, 111 BR Amsterdam The Netherlands Not applicable Subsidiary Company 1% Section 2(87) 6 BPRL Ventures Indonesia BV Haaksbergweg 71, 111 BR Amsterdam The Netherlands Not applicable Subsidiary Company 1% Section 2(87) 7 BPRL International Singapore Pte. Ltd., 8 Cross Street, #24-3/4, PWC Building, Singapore Not applicable Subsidiary Company 1% Section 2(87) 29

32 BHARAT PETRORESOURCES LIMITED IV. SHARE HOLDING PATTERN (Equity Share Capital Break up as percentage of Total Equity) i) Category-wise Share Holding Category of Shareholders No. of Shares held at the beginning of the year (1 st April 216) A. Promoters (1) Indian a) Individual/ HUF b) Central Govt. c) State Govt(s) d) Bodies Corp. e) Banks/FI f) Any Other Sub-total (A) (1):- Demat Physical Total % of Total Shares % 1% No. of Shares held at the end of the year (31 st March 217) Demat Physical Total % of Total Shares % 1% (2) Foreign a) NRIs- Individuals b) Other Individuals c) Bodies Corp. d) Banks/FI e) Any Other Sub-total (A) (2):- Total share holding of Promoter (A) = (A) (1) + (A) (2) % % % Change during the year 3

33 BPRL ANNUAL REPORT Category of Shareholders No. of Shares held at the beginning of the year (1 st April 216) Demat Physical Total % of Total Shares B. Public Share holding (1) Institutions a) Mutual Funds b) Banks/FI c) Central Govt d) State Govt(s) e) Venture Capital Funds f) Insurance Companies g) FIIs h) Foreign Venture Capital Funds i) Others (specify) Sub-total (B) (1):- (2) Non-Institutions a) Bodies Corp. i) Indian ii) Overseas b) Individuals i) Individual shareholders holding nominal share capital upto ` 1 lakh ii) Individual shareholders holding nominal share capital in excess of ` 1 lakh c) Others (specify) Sub-total (B) (2):- Total Public share holding (B) = (B) (1) + (B) (2) C. Shares held by Custodian for GDRs & ADRs Grand Total (A + B + C) % No. of Shares held at the end of the year (31 st March 217) Demat Physical Total % of Total Shares % Change during the year % 31

34 BHARAT PETRORESOURCES LIMITED (ii) Shareholding of Promoters Sl No. Shareholder s Name Shareholding at the beginning of the year (as on ) No. of Shares % of total Shares of the company % of Shares Pledged/ encumbered to total shares No. of Shares Shareholding at the end of the year (as on ) % of total Shares of the company % of Shares Pledged/ encumbered to total shares 1 Bharat Petroleum Corporation Limited (BPCL) % change in share holding during the year 2 Shri D. Rajkumar jointly with BPCL Shri P.C. Siva jointly with BPCL 1 4 Shri S.K. Agrawal jointly with BPCL Shri Ajay Kumar V. jointly with BPCL Shri Pankaj kumar jointly with BPCL Shri Narendra Dixit jointly with BPCL Shri Milind S. Patke Jointly with BPCL 1 Total (iii) Change in Promoters Shareholding (please specify, if there is no change) Sl. No. Particulars Shareholding at the beginning of the year Cumulative Shareholding during the year No. of shares % of total shares of the company No. of shares % of total shares of the company 1 At the beginning of the year (as on ) Bharat Petroleum Corporation Limited Shri D. Rajkumar jointly with BPCL Shri P.C. Siva jointly with BPCL Shri S.K. Agrawal jointly with BPCL Shri Ajay Kumar V.jointly with BPCL Shri Pankaj Kumar jointly with BPCL Shri Narendra Dixit jointly with BPCL

35 BPRL ANNUAL REPORT Sl. No. Particulars Shareholding at the beginning of the year Cumulative Shareholding during the year No. of shares % of total shares of the company No. of shares % of total shares of the company 2 Date wise Increase/ Decrease in Promoters Shareholding during the year specifying there reasons for increase /decrease (e.g. allotment/ transfer/ bonus/ sweat equity etc) Shri P.C. Siva (Decrease on transfer ) Shri Milind S. Patke (Increase on transfer ) At the end of the year (as on ) Bharat Petroleum Corporation Limited Shri D. Rajkumar jointly with BPCL Shri S.K. Agrawal jointly with BPCL Shri Ajay Kumar V. jointly with BPCL Shri Pankaj Kumar jointly with BPCL Shri Narendra Dixitjointly with BPCL Shri Milind S. Patke jointly with BPCL (iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): Sl. No. Particulars Shareholding at the beginning of the year Cumulative Shareholding during the year No. of shares % of total shares of the company No. of shares % of total shares of the company 1 At the beginning of the year as on ( ) 2 Date wise Increase/ Decrease in Shareholding during the year specifying the reasons for increase/decrease (e.g. allotment/ transfer/ bonus/sweat equity etc): 3 At the end of the year (as on ) 33

36 BHARAT PETRORESOURCES LIMITED (v) Shareholding of Directors and Key Managerial Personnel: Sl. No. Particulars Shareholding at the beginning of the year Cumulative Shareholding during the year No. of shares % of total shares of the company No. of shares % of total shares of the company At the beginning of the year (as on ) 1 Shri S. Varadarajan 2 Shri B.K. Datta 3 Shri P. Balasubramanian 4 Shri D. Rajkumar Shri Ajay Kumar V., Director (Ops & BD) Shri Pankaj Kumar, Director (Finance) Dr. Praphullachandra Sharma, Director 8 Shri Narendra Dixit, Company Secretary Date wise Increase/ Decrease in Shareholding during the year specifying the reasons for increase /decrease (e.g. allotment/ transfer/ bonus/ sweat equity etc): --- At the end of the year (i.e ) 1 Date of increase / decrease --- Reasons Shri D. Rajkumar Shri P. Balasubramanian 3 Shri Ajay Kumar V., Managing Director (I/c) and Director (Ops & BD) Shri Pankaj Kumar, Director (Finance) Dr.Praphullachandra Sharma, Director 6 Shri Narendra Dixit, Company Secretary

37 BPRL ANNUAL REPORT V. INDEBTEDNESS Indebtedness of the Company including interest outstanding / accrued but not due for payment () Secured Loans excluding deposits Unsecured Loans Deposits Total Indebtedness Indebtedness at the beginning of the financial year (as on ) i) Principal Amount 17,918.13* 17,918.13* ii) Interest due but not paid iii) Interest accrued but not due Total (i + ii + iii) 17, , Change in Indebtedness during the financial year Addition Reduction 186, , Net Change 186, , Indebtedness at the end of the financial year (as on ) i) Principal Amount 24,79.94* 24,79.94* ii) Interest due but not paid iii) Interest accrued but not due 7, , Total (i + ii + iii) 211, , *Under previous GAAP, interest free borrowings were measured at transaction value. Under Ind AS, interest free borrowing being financial liability, is required to be initially recognized at fair value. Accordingly, cash flows have been discounted using market rate of interest and differential is accounted as equity component of financial instrument. Accordingly, as on 31 st March, 216, borrowing was fair valued at ` 17, lakhs and as on 31 st March, 217 at ` 24,79.94 lakhs in the Financial Statement. VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL A. Remuneration to Managing Director, Whole-time Directors and / or Manager: Sl. no. Particulars of Remuneration Name of Managing Director and Whole Time Directors Shri D. Shri Ajay Shri Rajkumar Kumar V. Pankaj (Upto ) Kumar* Total 1. Gross salary (a) Salary as per provisions contained in section 17(1) of the Income-tax Act,1961 (b) Value of perquisites u/s 17(2) Incometax Act,1961 (c) Profits in lieu of salary under Section 1,32,895 39, ,387,7 367, ,169,981 62, ,859,946 1,27, (3) Income- tax Act, Stock Option Sweat Equity Commission - as % of profit - others, specify Others: Allowance / Contribution 41, ,9 522,641 1,166,928 Total (A) 1,752,99 2,988,771 3,312,695 8,54,456 Ceiling as per the Act NA NA NA NA * Shri Pankaj Kumar, Director (Finance) acts as a CFO of the Company. 35

38 BHARAT PETRORESOURCES LIMITED B. Remuneration to other directors: Sl. no. Particulars of Remuneration Name of Directors Total Amount (`) 1. Independent Directors Fee for attending board committee meetings N.A. N.A Commission Others, please specify Total (1) N.A. N.A. 2. Other Non-Executive Directors S. Varadarajan (upto ) B. K. Datta (upto ) P. Balasubramanian Dr. Praphullachandra Sharma D. Rajkumar (w.e.f ) Fee for attending board committee meetings Commission Nil Nil Others, please specify Total (2) Nil Nil Total Managerial N.A N.A. Remuneration Overall Ceiling as per the Act N.A N.A C. Remuneration to Key Managerial Personnel other than MD/ Manager / WTD Sl. no. Particulars of Remuneration 1. Gross salary (a) Salary as per provisions contained in Section 17(1) of the Income-tax Act,1961 (b) Value of perquisites u/s 17(2)Income-tax Act,1961 (c) Profits in lieu of salary under section 17(3) Income-tax Act,1961 Key Managerial Personnel Narendra Dixit Company Secretary (`) 2,239, , N.A Total (`) 2,239, , Stock Option Nil Nil 3. Sweat Equity Nil Nil 4. Commission Nil Nil - as% of profit - others, specify 5. Others : Allowance / Contribution 76, ,166. Total 3,149,1.95 3,149,1.95 VII. PENALTIES / PUNISHMENT / COMPOUNDING OF OFFENCES: There were no penalties / punishment / compounding of offences for breach of any section of Companies Act against the Company or its Directors or other officers in default, if any, during the year

39 BPRL ANNUAL REPORT Annexure - B Salient Features of the Financial Statement of Subsidiaries/Associate Companies/Joint Ventures as per Companies Act, 213 [Pursuant to first proviso to sub-section (3) of Section 129 of the Companies Act, 213, read with rule 5 of Companies (Accounts) Rules, AOC -1] Part A : Subsidiaries ` In Lacs USD in Millions Sr. No. Name of the subsidiary Date since when subsidiary was acquired 1 Bharat PetroResources JPDA Ltd. Reporting period of the Subsidiary concerned, if different from the holding company 's reporting period 2 BPRL International B.V. 26-Mar-8 NA Reporting currency Share capital Reserves & surplus Total Assets Total Liabilities Investments Turnover (#) Profit/ (Loss) before taxation (#) Provision for taxation (#) Profit/ (Loss) after taxation (#) Proposed Dividend (#) % of shareholding 28-Oct-6 NA INR 6,. (12,161.61) , (86.49) - (86.49) - 1% ## INR 315, (457,11.26) 589, , , , , USD * (74.99) , ** ** - 1% INR 195,49.44 (342,34.25) 29, , , , , BPRL Ventures 26-Mar-8 NA 1% USD (527.99) BPRL Ventures Mozambique 23-Jul-8 NA INR 189,764.5 (111,643.94) 292, , (1,74.59) - (1,74.59) - USD (172.19) (16.32) - (16.32) - 1% 5 BPRL Ventures Indonesia 21-Aug-9 NA INR 13, (5,984.39) 26, , (984.83) - (984.83) - USD 2.62 (9.23) (1.5) - (1.5) - 1% INR 172, , , , , , , BPRL International 6 Singapore Pte 12-May-16 NA 1% USD , , Exchange rate: As on 31st March, 217-1US$ = INR As on 31st March, 216-1US$ = INR # In respect of BPRL International B.V., BPRL Ventures B.V., BPRL Ventures Mozambique B.V., BPRL Ventures Indonesia B.V. & BPRL International Singapore Pte Ltd. - The figures are converted from USD to Indian Currency taking average exchange rate. * Amount also includes share application money received by the company. ## 6 Shares held by six individuals, who are nominees of BPCL, each hold ten shares of ` 1 each of the 1% subsidiary of BPRL International B.V. ** Loss of BPRL International B.V. is consolidated loss i.e. including losses of BPRL Ventures B.V., BPRL Ventures Mozambique B.V. and BPRL Ventures Indonesia B.V. Note: 1 Names of subsidiaries which are yet to commence operations - NIL 2 Names of subsidiaries which have been liquidated or sold during the year - NIL 37

40 BHARAT PETRORESOURCES LIMITED Part B : Associates and Joint Ventures Statement pursuant to Section 129 (3) of the Companies Act, 213 related to Associate Companies and Joint Ventures Sr. No. Name of Associates/Joint Ventures IBV Brasil Petroleo Limitada Taas India Pte Ltd Vankor India Pte Ltd Mozambique LNG1 Pte. Ltd. 1 Latest Audited Balance Sheet 31 st December, st December, st December, Date on which the Associate or Joint 18-Sept May May Mar-217 Venture was associated or acquired 3 Shares of Associate/Joint Ventures held by the company on the year end: Number share of BRL 1 each Amount of Investment in Associates/Joint Venture (` In Lacs) share of USD 1 each share of USD 1 each 25 share of USD 1 each 698, , , ,. Extend of Holding % 5% 33% 33% 1% 4 Description of how there is significant influence 5 Reason why the associate/joint venture is not consolidated 6 Networth attributable to Shareholding as per latest audited Balance Sheet (` In Lacs) 5% of Share Capital is held by BPRL Ventures B.V. (Step Down Subsidiary) 33% of Share Capital is held by BISPL 33% of Share Capital is held by BISPL 1% of Share Capital is held by BPRL Ventures Mozambique BV Not Applicable Not Applicable Not Applicable Not Applicable 279, , , ,. 7 Profit / (Loss) for the year i Considered in Consolidation (` In Lacs) 3, (2,51.6) 11, ii Not Considered in Consolidation Names of associates or joint ventures which are yet to commence operations - NIL 2 Names of associates or joint ventures which have been liquidated or sold during the year - NIL As per our attached report of even date For and on behalf of the Board of Directors For and on behalf of M.B. Agrawal & Co. Chartered Accountants Sd/- D. Rajkumar Chairman Sd/- Ajay Kumar V. Managing Director (I/c) Sd/- Sd/- Sd/- Harshal Agrawal Pankaj Kumar Narendra Dixit Partner Director (Finance) Company Secretary Membership No.: Place: Mumbai Dated: 19 th May,

41 BPRL ANNUAL REPORT Annexure C FORM NO. MR-3 SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED 31 ST MARCH, 217 [Issued in pursuance to section 24(1) of the Companies Act, 213 and Rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 214 with modifications as deemed necessary, without changing the substance of format given in Form MR-3] To, The Members, Bharat PetroResources Limited Bharat Bhavan, 4 & 6 Currimbhoy Road Ballard Estate, Mumbai 41 We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Bharat PetroResources Limited (CIN:U2329MH26GOI165152) (hereinafter called the Company ) for the financial year ended 31st March, 217. Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon. A. In expressing our opinion it must be noted thati. Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit. ii. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices we followed provide a reasonable basis of our opinion. iii. We have not verified the correctness and appropriateness of financial records and books of accounts of the Company. iv. The Company being a Central Government Company under the administrative control of the Ministry of Petroleum & Natural Gas (MoP&NG), the power to appoint Directors (including Independent Directors and Woman Director ) and the terms and conditions of such appointment, including remuneration and evaluation, vests with the Government of India. v. Wherever required, we have obtained the management representation about the compliance of laws, rules and regulations and happening of events, etc. vi. The compliance and provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of the management. Our examination was limited to the verification of procedures on test basis. vii. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company. 39

42 BHARAT PETRORESOURCES LIMITED B. Based on our verification of the Company s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, We hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31 st March, 217 complied with the statutory provisions listed hereunder and also that the Company has proper Board-process (duly evolved) and compliance-mechanism in place to the extent and as applicable to the Company (being an unlisted entity) in the manner and subject to the reporting made hereinafter: C. We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on 31 st March, 217 according to the provisions of: I. The Companies Act, 213 (the Act) and the rules made thereunder; II. The Securities Contracts (Regulation) Act, 1956 ( SCRA ) and the rules made thereunder; III. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; IV. None of the Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ( SEBI Act ) is applicable to the Company, as the Securities of the Company are not listed on any stock exchange and the Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder are also not applicable to the Company since the shares of the Company are in physical form; V. Guidelines on Corporate Governance for Central Public Sector Enterprises issued by the Department of Public Enterprises. VI. And the Company being in the business of Exploration and Discovery of Natural Gas, the Special Acts as applicable to it are Guidelines/Regulations for Petroleum & Exploration Industries, Petroleum and Natural Gas Rules, 1959 under Oilfields (Regulation and Development) Act, We have also examined the compliance with the Secretarial Standards in respect of Meetings of Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India. During the period under review the Company has also complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards etc. mentioned above except to the extent as mentioned below: a) The Company has not appointed Independent Directors to their Board pursuant to Section 149(4) of the Act read with Companies (Appointment & Qualification of Directors) Rules, 214. b) The Company has not constituted Nomination and Remuneration Committee of the Board pursuant to Section 178(1) of the Act read with Companies (Meetings of Board and its Powers) Rules, 214 due to non-appointment of Independent Directors on the Board. c) The Company has not constituted Corporate Social Responsibility Committee according to the provisions of Section 135 of the Act read with Companies (Corporate Social Responsibility) Rules, 214 due to non-appointment of Independent Directors on the Board. 4

43 BPRL ANNUAL REPORT d) The Company has not reconstituted its Audit Committee according to Section 177 of the Act read with Companies (Meetings of Board and its Powers) Rules, 214 due to non-appointment of Independent Directors on the Board. e) The Company has not appointed Woman Director for the financial year pursuant to second proviso of Sub-section (1) of Section 149 of the Act read with Companies (Appointment and Qualification of Directors) Rules, 214. D. We further report that-- I. The Board of Directors of the Company is duly constituted with proper balance of Executive Directors and Non-Executive Directors except that the Company has not appointed Independent Directors pursuant to Section 149(4) of the Act and the Company has not appointed Woman Director for the financial year pursuant to second proviso of Sub-section (1) of Section 149 of the Act. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Companies Act, 213 and the provisions pertaining to the constitution of the Board of Directors of the Company as provided in the Articles of Association of the Company. II. Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent well in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. III. Majority decision is carried through and there was no instance of any director expressing any dissenting views. E. We further report that there are reasonable systems and process in the Company commensurate with its size and operations to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. F. We further report that during the audit period: I. The Company has increased the borrowing limits under Section 18(1)(c) from ` 15, Crores to ` 25, Crores at the Extra Ordinary General Meeting of the Company held on 1 th October, 216. II. We further report that during the audit period none of the following events has taken place: a. Public/Preferential issue of shares/debentures/sweat equity etc. b. Redemption/buy back of securities. c. Merger/Amalgamation/Reconstruction, etc. d. Merger/Amalgamation/Reconstruction, etc. For DHOLAKIA & ASSOCIATES LLP (Company Secretaries) Place: Mumbai Date: 1 th July,217 Sd/- CS Bhumitra V. Dholakia Designated Partner FCS-977 CP No

44 BHARAT PETRORESOURCES LIMITED Report on Corporate Governance Annexure D 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 fifteen. As on 31 st March 217, BPRL Board comprised of two Whole-time Directors and two Part-time Directors nominated by BPCL and one Govt. Nominee Director. The Company has approached the Govt. of India for the nomination of two Independent Directors including woman Director on the Board of BPRL. 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 1 Board Committees nor Chairmanships of more than 5 Committees as specified 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 Ten Board Meetings were held during the financial year on the following dates:- 13 th May th Jul th Jul th Aug st Oct th Nov th Dec th Jan th Feb th March 217 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 affirmed compliance of the Code of Conduct. Further, no case and / or suit of any material or substantial nature are pending against BPRL. 3. Audit Committee In terms of Companies Act, the Board at the meeting held on 2 nd April 28 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. The quorum for the meetings of the Committee is two members. Shri S. Varadarajan chaired all the meetings of the Audit Committee till Thereafter, Shri D. Rajkumar chairs all the meetings of Audit Committee. Shri B. K. Datta ceased to be Member of Audit Committee on relinquishment as Director from the Board w.e.f and Dr. Praphullachandra Sharma was appointed as Member of Audit Committee w.e.f Dr. Praphullachandra Sharma and Shri P. Balasubramanian were the other members of the Audit Committee as on

45 BPRL ANNUAL REPORT Particulars of Directors including their attendance at the Board / Shareholders Meetings during the financial year Names of the Directors Academic Qualifications Non-Executive Directors Shri S. Varadarajan (upto ) Shri D. Rajkumar (w.e.f ) Attendance out of 1 Board Meetings held during the year and percentage thereof No. of Meetings Attended % Attendance at the last Annual General Meeting Details of Directorships held in other Public Limited Companies A.C.A., A.I.C.W.A. 4* * Attended Chairman & Managing Director Bharat Petroleum Corporation Ltd. Chairman 1) Numaligarh Refinery Ltd 2) Bharat Oman Refineries Ltd Director- Petronet LNG Ltd B.Tech (Elect) from IIT Madras, PGDM from I.I.M., Bangalore 6* 1* N.A. Chairman & Managing Director Bharat Petroleum Corporation Ltd. Chairman 1) Numaligarh Refinery Ltd 2) Bharat Oman Refineries Ltd Director- Petronet LNG Ltd Memberships held in Committees Chairman - Audit Committee Bharat PetroResources Ltd. Chairman - Audit Committee Bharat PetroResources Ltd. Shri B.K.Datta (upto ) B.E. (Chem) 3* 1* N.A. Director (Refineries) Bharat Petroleum Corporation Ltd Director - Bharat Oman Refineries Ltd Shri P. Balasubramanian A.C.A. 1 1 Attended Director (Finance) Bharat Petroleum Corporation Ltd. Director - Bharat Oman Refineries Ltd. Dr. Praphullachandra Sharma Executive Director Shri D. Rajkumar Managing director (upto ) Member - Audit Committee Bharat PetroResources Ltd Member - Audit Committee Bharat PetroResources Ltd Member - Stakeholders Relationship Committee Bharat Petroleum Corporation Ltd. B.A.M.S. 1 1 Attended Member-Audit Committee Bharat PetroResources Ltd B.Tech (Elect) from IIT Madras, PGDM from I.I.M., Bangalore 4 1* Attended Director Bharat PetroResources JPDA Ltd Chairman - Audit Committee Bharat PetroResources JPDA Ltd Shri Ajay Kumar V. Managing director (I/c) (w.e.f ) & Director (Ops & BD) Shri Pankaj Kumar Director (Finance) M.Sc (Geology) 1st rank from University of Kerela 1 1 Attended Director 1) Bharat PetroResources JPDA Ltd 2) BPRL International Singapore Pte.Ltd 3) Taas India Pte. Ltd. 4) Vankor India Pte. Ltd F.C.A, A.I.C.W.A 1 1 Attended Director 1) Bharat PetroResources JPDA Ltd 2) BPRL International B.V. 3) BPRL Ventures B.V. 4) BPRL Ventures Mozambique B.V. 5) BPRL Ventures Indonesia B.V. *percentage computed by considering the meetings attended with the total meetings held during the tenure. Chairman - Audit Committee Bharat PetroResources JPDA Ltd 43

46 BHARAT PETRORESOURCES LIMITED Shri D. Rajkumar, Chairman and Shri P. Balasubramanian, member possess 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 Key Managerial Personals also attend the said meetings. The Executive Director (Audit), BPCL is a permanent invitee for all the meetings of the Audit Committee. Further, the Statutory Auditors and other senior management members also attend and participate at the meetings on invitation. There were 9 meetings of the Audit Committee held during the financial year on the following dates:- 13 th May th Jul th Jul th Aug th Sept th Nov th Dec th Feb th Mar 217 The attendance of the members is given below:- Name of Member No of meetings attended Shri S. Varadarajan 4* Shri B. K. Datta 3* Shri D. Rajkumar 6* Dr. Praphullachandra Sharma 6* Shri P. Balasubramanian 9 *out of total meetings held during their tenure. Audit Committee reviewed the annual financial statements during the year at the meeting held on Remuneration to Directors BPRLis a wholly owned subsidiary of BPCL, a Government Company. Two Part -Time Directors of BPRL are the nominees of BPCL and one Part Time Director nominated by Govt. of India. The Part-time Directors do not receive any remuneration from the Company. The details of remuneration paid to whole time Directors during the financial year is given below:- Name All elements of remuneration packages of the Directors i.e. Salary, benefits, bonus, pension etc. (`) Details of fixed component and performance linked incentive (`) Other benefits Shri D. Rajkumar Managing Director 1,752,99 1,713,92 39,898 (upto ) Shri Ajay Kumar V. Managing Director (I/c) (w.e.f ) 2,988,771 2,621,16 367,611 & Director (Ops & BD) Shri Pankaj Kumar Director (Finance) 3,312,695 2,692,622 62,73 BPRL has not introduced any Stock Options Scheme. None of the non executive Directors hold any share in BPRL. (`) 44

47 BPRL ANNUAL REPORT Management Discussion and Analysis Management Discussion and Analysis Report is covered in the Directors Report. 6. Annual / Extraordinary General Meetings(AGM) for last three years Date and Time of the meeting 5 th September 214 at 11.3 a.m. (AGM) 24 th August 215 at 11.3 a.m. (AGM) 15 th September 216 at 12.3 p.m. (AGM) 1 th October 216 at 1. a.m. (EGM) Venue Registered office at Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41 The Special Resolution regarding approval for borrowing powers and creation/providing of security was approved by the shareholders at the AGM held on 5 th September, 214 and subsequently at the EGM held on 1 th October, Disclosures There were no transactions of material nature that may have potential conflict with the interest of the Company at large. BPRL has been adhering to the provisions of all the laws and guidelines of regulatory authorities. BPRL has complied with all the applicable provisions of these guidelines except with regard to appointment of Independent Directors; & woman Directors for which Govt. of India is approached suitably. BPRL has its own Whistle Blower Policy for its employees. 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 (other than Madanam Block which generated revenue for the first time through oil production based on Operator s accounts) 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 office expenses. 8. General Shareholders Information Annual General Meeting : Date, Time and Venue Financial Calendar Monday, 4 th September, 217 at 113 hrs at the Registered office of the Company at Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41 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 Ended Date of Board Meeting Apr-June th Aug 216 July-Sept th Nov 216 Oct-Dec th Feb 217 Shareholding Pattern Audited Statements For the year th May 217 BPCL along with its nominees is holding entire paid up equity share capital of 292,2,67 equity shares of ` 1 each in the Company. 45

48 BHARAT PETRORESOURCES LIMITED Location Registered Office Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41 Tel Fax Corporate Office 9 th Floor, E Wing, Maker Towers, Cuffe Parade, Mumbai 45 Tel Fax Area Office 1, Ranganathan Garden, 11 th Main Road, Anna Nagar, Chennai 64 Tel Fax st Floor, Golden Triangle Bldg. Near Sardar Patel Stadium, Navarangpura, Ahmedabad -3814, Gujarat Tel Fax CIN No. U2329MH26GOI Corporate Governance To, The Members of Bharat 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, 21 issued by the Ministry of Heavy Industries and Public Enterprises, Department of Public Enterprises, Government of India, for the financial year ended 31 st March, 217. The Compliance of conditions of Corporate Governance as stipulated in the Guidelines is the responsibility of 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 financial 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 the Company has complied with the conditions of the Corporate Governance as stipulated in the Guidelines on Corporate Governance for Central Public Sector Enterprises, 21 issued by the Ministry of Heavy Industries and Public Enterprises as aforesaid with the exception of appointment of requisite number of Independent Directors on the Board. Absence of requisite number of Independent Directors had an impact on the proper constitution of Audit Committee and Nomination & Remuneration Committee. I further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. Sd/- (U.C. Shukla) Place: Mumbai Company Secretary Date: 1 th July, 217 FCS: 2727/CP:

49 BPRL ANNUAL REPORT Annexure E-1 COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THE COMPANIES ACT, 213 on the financial statements of Bharat PetroResources Limited For the year ended 31 st March, 217 The preparation of financial statements of Bharat PetroResources Limited for the year ended 31 st March 217 in accordance with the financial reporting framework prescribed under the Companies Act, 213 (Act) is the responsibility of the management of the company. The statutory auditors appointed by the Comptroller and Auditor General of India under Section 139(5) of the Act is responsible for expressing opinion on the financial statements under Section 143 of the Act based on independent audit in accordance with the standards on auditing prescribed under Section 143(1) of the Act. This is stated to have been done by them vide their Audit Report dated 19 th May 217. I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under Section 143(6)(a) of the Act of the financial statements of Bharat PetroResources Limited for the year ended 31 st March 217. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of some of the accounting records. On the basis of my audit nothing significant has come to my knowledge which would give rise to any comments upon or supplement to Statutory Auditors report. For and on the behalf of the Comptroller and Auditor General of India Place: Mumbai Date: 2 th July 217 Sd/- Tanuja Mittal Principal Director of Commercial Audit & ex-officio Member Audit Board II, Mumbai 47

50 BHARAT PETRORESOURCES LIMITED Annexure E-2 COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) READ WITH SECTION 129(4) OF THE COMPANIES ACT, 213 ON THE CONSOLIDATED FINANCIAL STATEMENTS OF Bharat PetroResources Limited For the year ended 31 st March, 217 The preparation of consolidated financial statements of Bharat PetroResources Limited for the year ended 31 st March 217 in accordance with the financial reporting framework prescribed under the Companies Act, 213(Act) is the responsibility of the management of the company. The statutory auditor appointed by the Comptroller and Auditor General of India under Section 139(5) read with Section 129(4) of the Act is responsible for expressing opinion on the financial statements under Section 143 read with Section 129(4) of the Act based on Independent audit in accordance with the standards on auditing prescribed under Section 143(1) of the Act. This is stated to have been done by them vide their Audit Report dated 19 th May 217. I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under Section 143(6)(a) read with Section 129(4) of the Act of the consolidated financial statements of Bharat PetroResources Limited for the year ended 31 st March 217.We did not conduct supplementary audit of the financial statements of (Bharat PetroResources JPDA Limited), for the year ended on that date. Further Section 139(5) and 143(6)(b) of the Act are not applicable to BPRL International BV, being private entity, for appointment of their Statutory Auditor nor for conduct of supplementary audit. Accordingly, C&AG has neither appointed the Statutory Auditors nor conducted the supplementary audit of these Companies. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of some of the accounting records. On the basis of my audit nothing significant has come to my knowledge which would give rise to any comments upon or supplement to Statutory Auditors report. For and on the behalf of the Comptroller and Auditor General of India Place: Mumbai Date: 2 th July 217 Sd/- Tanuja Mittal Principal Director of Commercial Audit & ex-officio Member Audit Board II, Mumbai 48

51 BPRL ANNUAL REPORT To, The Members of Bharat PetroResources Limited INDEPENDENT AUDITORS REPORT Report on the Standalone Ind AS Financial Statements 1. We have audited the accompanying standalone Ind AS financial statements of M/s. Bharat PetroResources Limited ( the Company ), which comprise the Balance Sheet as at March 31 st, 217, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the statement of changes in equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as Standalone Ind AS financial statements ). Management s Responsibility for the Standalone Financial Statements 2. The Company s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 213 ( the Act ) with respect to the preparation of these standalone Ind AS financial statements to give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility 4. Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. 5. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. 6. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(1) of the Act and other applicable authoritative pronouncements 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 financial statements are free from material misstatement. 49

52 BHARAT PETRORESOURCES LIMITED 7. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company s preparation of the standalone Ind AS financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. 8. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements. Opinion 9. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial 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 including Ind AS, of the financial position of the Company as at 31st March, 217, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date. Emphasis of Matter 1. Attention is invited to Note no. 33 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 two blocks, no audited statements have been received by the Company. Total assets, liabilities, income and expenses in respect of the block, amounts to ` 7,4.25 Lakhs, ` Lakhs, NIL and NIL respectively. In case of one foreign block (EP413), the information relating to the same is provided on the basis of audited financial statements for the year ended 31st December, 216 and unaudited statement for subsequent 3 months. Total assets, liabilities, income and expenses related to the said block amounts to ` 6, lakhs, ` lakhs, NIL 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 III to the Act; 5

53 BPRL ANNUAL REPORT 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 one blocks where the Company has invested ` 3,766.2 Lakhs including provision for site restoration cost. 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 Statements and related disclosures contained in the enclosed financial 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 11. As required by the Companies (Auditor s Report) Order, 216, issued by the Central Government of India in terms of sub section (11) of section 143 of the Act (hereinafter referred to as Order ), we give in the Annexure A, statement of the matters specified in paragraphs 3 and 4 of the Order. 12. As required by Section 143 (3) of the Act, we report that: a) We have sought and 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 account as required by law have been kept by the Company so far as it appears from our examination of those books. c) The Balance Sheet, Statement of Profit and Loss, the Cash Flow Statement and the statement of changes in equity dealt with by this Report are in agreement with the books of accounts of the company. d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 214. e) As per the notification no. G.S.R. 463(E) dated June 5, 215, the Government companies are exempted from provisions of section 164(2) of the Act. Accordingly we are not required to report whether any directors are disqualified in terms of provisions contained in the said section. f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B and 51

54 BHARAT PETRORESOURCES LIMITED g) With respect to the other matters to be included in the Auditor s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 214, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us: i. The Company does not have any pending litigations which would impact its financial position; ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31 st, 217 and iv. The Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November, 216 to 3 December, 216 and these are in accordance with the books of accounts maintained by the Company. Refer Note no.38 to the standalone Ind AS financial statements. For M B Agrawal & Co. Chartered Accountants FRN No. 1137W Sd/- Harshal Agrawal Place: Mumbai Partner Date: 19 th May, 217 Membership No:

55 BPRL ANNUAL REPORT Annexure A to Independent Auditors Report Referred to in Paragraph 11 of the Independent Auditors Report of even date on the financial statement as of and for the year ended March 31st, 217 (i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information. (b) As explained to us, all the assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. (c) According to the information and explanation given to us and on the basis of our examination of the records of the Company, the Company does not have any immovable property in its name and therefore the said clause is not applicable. 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. (ii) As per information and explanation given to us and in our opinion, the company has entered into production stage for one block, the inventory for the said block have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable having regard to the size of the Company and the nature of its inventory. No material discrepancies were noticed on such verification. In respect of other blocks, the Company is still in exploration stage, hence there is no inventory. (iii) In respect of the loans, secured or unsecured, granted by the company to/from companies, firms, limited liability partnership or other parties covered in the register maintained under section 189 of the Companies Act, 213. (a) The Company has not granted loans, secured or unsecured to companies, firms, limited liability partnership or other parties covered in the register maintained under Section 189 of Companies Act, 213. Accordingly, clauses (b) and (c) are not applicable to the Company. (iv) In our opinion and according the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, with respect to loans and investments made. (v) According to information and explanations provided to us, the company has not obtained deposit from public as defined according to the provisions of Section 73 to 76 of the Companies Act, 213 and the Rules framed there under. (vi) The Ministry of Corporate Affairs have notified the cost accounting records, however, the management is of the view that the said requirements are not applicable to the Company. (vii) (a) According to information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues, including income tax, sales tax, service tax, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities. As explained to us, the Company did not have any dues on account of provident fund, employees state insurance, duty of customs, duty of excise. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, sales tax, service tax, value added tax, cess and 53

56 BHARAT PETRORESOURCES LIMITED other material statutory dues were in arrears as at March 31 st, 217 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us and based on the records of the company examined by us, there are no dues of income tax, sales tax, service tax and value added tax which have not been deposited on account of any disputes. (viii) In our opinion and according to the information and explanations given to us, the company has not raised any loans or borrowings from financial institutions, banks, Government or debenture holders. Accordingly, para 3(viii) of the Order is not applicable (ix) The company has not raised any money via initial public offer or by way of further public offer or new term loans. The term loans outstanding at the beginning of the year have been applied for the purpose for which they were raised. Accordingly, para 3(ix) of the Order is not applicable. (x) According to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management. (xi) As per the Notification No. G.S.R. 463 (E) dated June 5, 215 the provision of section 197 r.w. Schedule V of the Act is not applicable to the Company. Accordingly, para 3(xi) of the order is not applicable. (xii) In our opinion, the company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable. (xiii) According to the information and explanations provided to us, and based on our examination of the records of the Company, all transactions with the related parties are in compliance with Section 177 and 188 of Companies Act, 213 where applicable and the details have been disclosed in the standalone Ind AS financial statements as required by the applicable Indian accounting standards. (xiv) According to the information and explanations provided to us, the company has not made preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. (xv) According to the information and explanations provided to us, and based on our examination of the records of the Company, the company has not entered into any noncash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable. (xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, For M B Agrawal & Co. Chartered Accountants F.R.N.: 1137W Sd/- Harshal Agrawal Place: Mumbai (Partner) Date: 19 th May, 217 M. No:

57 BPRL ANNUAL REPORT Annexure - B to INDEPENDENT Auditors Report Referred to in Paragraph 12(f) of the Independent Auditors Report of even date on the financial statement as of and for the year ended March 31st, 217. Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 213 ( the Act ) 1. We have audited the internal financial controls over financial reporting of Bharat PetroResources Limited ( the Company ) as of March 31st, 217 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date. Management s Responsibility for Internal Financial Controls 2. The Company s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India ( ICAI ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 213. Auditors Responsibility 3. Our responsibility is to express an opinion on the Company s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(1) of the Companies Act, 213, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. 4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. 5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company s internal financial controls system over financial reporting. 55

58 BHARAT PETRORESOURCES LIMITED Meaning of Internal Financial Controls over Financial Reporting 6. A company s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company s internal financial control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company s assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls Over Financial Reporting 7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion 8. In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 217, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. For M B Agrawal & Co. Chartered Accountants F.R.N.: 1137W Sd/- Harshal Agrawal Place: Mumbai (Partner) Date: 19 th May, 217 M. No:

59 BPRL ANNUAL REPORT Particulars BALANCE SHEET AS AT MARCH 31, 217 Note no. March 31, 217 March 31, 216 April 1, 215 I Assets (1) Non-current assets (a) Property, Plant and Equipment (b) Other Intangible assets 3 7, (c) Intangible assets under development 4 22, , ,88.87 (d) Financial Assets (i) Investment in subsidiaries 5 43, , , (ii) Loans Total non current assets 461, , ,19.88 (2) Current Assets (a) Financial Assets (i) Cash and cash equivalents 7 6, (ii) Bank Balances other than (i) above 8 1, , ,362.9 (iii) Others 9 1, , (b) Current Tax assets (net) 9A (c) Other current assets Total current assets 9, , , TOTAL ASSETS 471, , , Particulars Note no. March 31, 217 March 31, 216 April 1, 215 II EQUITY AND LIABILITIES (1) Equity (a) Equity share capital , , ,.27 (b) Other equity 12 (67,57.99) (46,759.93) (11,171.9) Total equity 224, , , (2) Non current liabilities (a) Financial liabilities - Borrowings 13 24, , , (b) Provisions 14 1, , ,56.16 (c) Deferred tax liabilities (Net) 28 14, , ,52.89 Total non current liabilities 22, , ,898.2 (3) Current liabilities (a) Financial liabilities - Other financial liabilities 15 17, , , (b) Other current liabilities (c) Provisions 17 8, Total Current liabilities 25, , ,28.77 Total liabilities 246, , , TOTAL EQUITY AND LIABILITIES 471, , , Significant accounting policies 1 Notes to the financial statements 2-41 The notes referred to above form an integral part of the financial statements. As per our attached report of even date For and on behalf of the Board of Directors For and on behalf of M.B. Agrawal & Co. Chartered Accountants Sd/- D. Rajkumar Chairman Sd/- V. Ajay Kumar Managing Director (I/c) Sd/- Sd/- Sd/- Harshal Agrawal Pankaj Kumar Narendra Dixit Partner Director (Finance) Company Secretary Membership No.: Place: Mumbai Dated: 19 th May,

60 BHARAT PETRORESOURCES LIMITED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 217 Particulars Revenue Note no. For the year For the year I Revenue from Operations 18 4, II Other income , III Total Income (I+II) 5,5.12 1, IV Expenses Production expenditure 21 1, Employee Benefits Expenses ,14.15 Finance costs 23 7, Depreciation, Depletion, Amortisation 2 & 3 4, Other Expenses 24 11, ,241.9 Total Expenses (IV) 25, , V Profit/(loss) before Exceptional Items and Tax (2,89.41) (5,663.7) VI Exceptional Items - - VII Profit/(loss) before Tax (2,89.41) (5,663.7) VIII Tax expense: 1. Current Tax Deferred Tax 28 (511.36) (74.85) IX Profit/(Loss) for the period (2,298.5) (5,588.85) X Earnings per equity share Basic (.7) (.19) 2. Diluted (.7) (.19) Significant accounting policies 1 Notes to the financial statements 2-41 The notes referred to above form an integral part of the financial statements. As per our attached report of even date For and on behalf of the Board of Directors For and on behalf of M.B. Agrawal & Co. Chartered Accountants Sd/- D. Rajkumar Chairman Sd/- V. Ajay Kumar Managing Director (I/c) Sd/- Sd/- Sd/- Harshal Agrawal Pankaj Kumar Narendra Dixit Partner Director (Finance) Company Secretary Membership No.: Place: Mumbai Dated: 19 th May,

61 BPRL ANNUAL REPORT A STATEMENT OF CASH FLOW FOR THE YEAR ENDED MARCH 31, 217 Particulars For the year ended For the year ended March 31, 217 March 31, 216 Cash Flow from Operating Activities Profit Before Tax from Continuing Operations (2,89.41) (5,663.7) Adjustments for: Depreciation, Depletion, Amortisation 4, Impairment for Intangible assets under development , Interest income (238.81) (1,361.69) Provision no longer required written back (27.79) (87.83) Net (gain) / loss on sale of asset Finance costs 7, Provision for bad and doubtful loans & advances Unrealised foreign exchange (gain) / loss (251.88) (67.28) Operating Profit / (Loss) before Working Capital changes (9,354.46) (3,238.21) Working capital adjustments: (Increase) / Decrease in loans (5.82) 8.91 (Increase) / Decrease in Other current financial assets (833.39) 1,53.58 (Increase) / Decrease in Current Assets (219.19) (228.22) Increase / (Decrease) in other current financial liabilities 2,627.4 (1,68.93) Increase / (Decrease) in provisions 7, Increase / (Decrease) in Other current liabilities (2.47) 48.1 Cash generated / (used) from operations (78.4) (3,6.95) Income tax (paid) / refunds (net) (86.25) Net cash flow from / (used in) operating activities (555.61) (3,93.19) B C Cash Flow from Investing Activities Addition to Property, plant and equipment (66.47) (118.36) Investment (Share Application) in Subsidiary company - (61,52.41) Investment in share capital of Subsidiary company (177,265.8) - Deposit with banks 7, , Interest Income , Additions to Intangible assets under development (5,485.22) (2,217.29) Additions to Intangible assets (3,469.7) - Proceeds from sale of Fixed Assets -.29 Loan given (47.) - Net Cash Flow from/(used) in Investing Activities (178,8.22) 3, Cash Flow from Financing Activities Proceeds from long-term borrowings from parent company 185,. - D Net Increase/(Decrease) in Cash and Cash equivalents (A+B+C) 5, Cash and cash equivalents at the beginning of the year Bank Balance Cash and cash equivalents at the end of the year Bank Balance 6, Net increase in Cash and Cash equivalents 5, Significant accounting policies 1 Notes to the financial statements 2-41 The notes referred to above form an integral part of the financial statements. As per our attached report of even date For and on behalf of the Board of Directors For and on behalf of M.B. Agrawal & Co. Chartered Accountants Sd/- D. Rajkumar Chairman Sd/- V. Ajay Kumar Managing Director (I/c) Sd/- Sd/- Sd/- Harshal Agrawal Pankaj Kumar Narendra Dixit Partner Director (Finance) Company Secretary Membership No.: Place: Mumbai Dated: 19 th May,

62 BHARAT PETRORESOURCES LIMITED Statement of Changes in Equity (SOCIE) (a) Equity share capital March 31, 217 March 31, 216 No. of Shares Amount No. of Shares Amount Balance at the beginning of the year 2,92,2,67 292, 2,62,2,67 262, Changes in equity share capital during the year - - 3,, 3, Balance at the end of the year 2,92,2,67 292, 2,92,2,67 292, (b) Other equity Particulars Share Application money Capital Reserves Retained earnings Total Equity Balance at April 1, 215 3, 48, (89,885.93) (11,171.9) Share alloted during the year (3,.) - (3,.) Profit for the year - - (5,588.85) (5,588.85) Other comprehensive income for the year Total comprehensive income for the year - - (5,588.85) (5,588.85) Transfer to retained earnings - (1,632.98) 1, Balance at March 31, ,81.87 (93,841.8) (46,759.93) Profit/(Loss) for the year - - (2,298.5) (2,298.5) Other comprehensive income for the year Total comprehensive income for the year - - (2,298.5) (2,298.5) Transfer to retained earnings - (1,791.81) 1, Balance at March 31, ,29.6 (112,348.4) (67,57.99) 6

63 BPRL ANNUAL REPORT Statement of Significant Accounting Policy for the year ended 31 st March, 217 Company Overview Bharat PetroResources Limited referred to as BPRL or the Company was incorporated on 17th October, 26. It is wholly owned subsidiary of Bharat Petroleum Corporation Limited (BPCL) which is a Government of India Enterprise listed on BSE Limited and National Stock Exchange of India Limited. The company is engaged in the business of exploration and production of Hydrocarbons. 1. Statement of Significant Accounting Policies Basis for preparation: The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 213 ( Act ) read with Companies (Indian Accounting Standards) Rules, 215; and the other relevant provisions of the Act and Rules thereunder. The Financial Statements have been prepared under historical cost convention basis, except for certain assets and liabilities measured at fair value. These financial statements are the first financial statements of the Company under Ind AS. The date of transition to Ind AS is 1 April, 215. Refer note 4 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company s financial position and its net profit. The Company has adopted all the Ind AS provisions and the adoption was carried out in accordance with Ind AS 11 First time adoption of Indian Accounting Standards. The transition was carried out from generally accepted accounting principles in India (Indian GAAP) as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 214 (IGAAP), which was the previous GAAP. The Company s presentation and functional currency is Indian Rupees. All figures appearing in the financial statements are rounded to the nearest lakhs (` Lakhs), except where otherwise indicated. Authorisation of Financial Statements: The Financial Statements were authorized for issue in accordance with a resolution of the Board of Directors in its meeting held on 19th May Use of Judgement and Estimates The preparation of the Company s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as below: Assessment of functional currency; Useful lives of property, plant and equipment and intangible assets; Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. - Note 4 impairment of exploration and evaluation assets: key assumptions for underlying recoverable amounts; - Note 5 impairment of investment in subsidiary 61

64 BHARAT PETRORESOURCES LIMITED - Note 17 recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow resources; - Note 28 recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used; - Note 29 (ii) impairment of financial assets; Estimation of oil and natural gas reserves - The determination of the group s estimated oil and natural gas reserves requires significant judgements and estimates to be applied and these are regularly reviewed and updated. Factors such as the availability of geological and engineering data, reservoir performance data, acquisition and divestment activity, drilling of new wells, and commodity prices all impact on the determination of the group s estimates of its oil and natural gas reserves. The group bases its proved reserves estimates on the requirement of reasonable certainty with rigorous technical and commercial assessments based on conventional industry practice and regulatory requirements. - Estimates of oil and natural gas reserves are used to calculate depreciation, depletion and amortization charges for the group s oil and gas properties. The impact of changes in estimated proved reserves is dealt with prospectively by amortizing the remaining carrying value of the asset over the expected future production. Oil and natural gas reserves also have a direct impact on the assessment of the recoverability of asset carrying values reported in the financial statements. If proved reserves estimates are revised downwards, retained earnings could be affected by changes in depreciation expense or an immediate write-down of the property s carrying value. 1.2 Property, plant and equipment Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses, if any The initial cost of an asset comprises its purchase price or construction cost (including import duties and non-refundable taxes), any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation, if any, and, borrowing cost for qualifying assets (i.e. assets that necessarily take a substantial period of time to get ready for their intended use) Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company Expenditures on Assets other than plant and machinery, not exceeding the threshold limit are charged to revenue Spare parts which meet the definition of Property, Plant and Equipment are capitalized as Property, Plant and Equipment in case the unit value of the spare part is above the threshold limit. In other cases, the spare part are inventorised on procurement and charged to Statement of Profit and Loss on consumption An item of Property, Plant and Equipment and any significant part initially recognised separately as part of Property, Plant and Equipment is derecognised upon disposal; or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in the Statement of Profit and Loss when the asset is derecognised The residual values and useful lives of Property, Plant and Equipment are reviewed at each financial year end and changes, if any, are accounted in the line with revisions to accounting estimates. 62

65 BPRL ANNUAL REPORT On date of transition to Ind AS i.e 1 st April 215, the Company has elected to continue with the carrying value of the Property, Plant and Equipment existing as per previous GAAP and use that as its deemed cost. 1.3 Depreciation Depreciation on Property, Plant and Equipment are provided on the straight line basis, over the estimated useful lives of assets (after retaining the estimated residual value of upto 5%). These useful lives determined are in line with the useful lives as prescribed in the Schedule II of the Act, except in following cases: Items of Property, Plant and Equipment costing not more than the threshold limit are depreciated at 1 percent in the year of acquisition Computer equipments are depreciated over a period of 4 years. Mobile phones are depreciated over a period of 2 years. Furniture, other than computer equipment and mobile phones, provided at the residence of management staff are depreciated over a period of 6 years (Previously 7 Years) as per internal assessment Workstations are depreciated over a period of 5 years. The useful lives are estimated based on the internal assessment. Depreciation is charged on additions/deletions on pro-rata monthly basis including the month of addition/deletion Intangible Assets Intangible assets are carried at cost net of accumulated amortization, accumulated depletion and accumulated impairment losses, if any. Internally generated intangibles, excluding exploration and development costs, are not capitalised and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalised if, and only if, technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Company has an intention and ability to complete and use or sell the asset and the costs can be measured reliably Expenditure incurred for creating / acquiring other than hydrocarbon producing intangible assets above threshold limit from which future economic benefits will flow over a period of time, is amortised over the estimated useful life of the asset or five years, whichever is lower, on a straight line basis, from the time the intangible asset starts providing the economic benefit. In other cases, the expenditure is reflected in the Statement of Profit and Loss in the year in which the expenditure is incurred. The amortisation period and the amortisation method for an intangible asset with a finite life are reviewed at each year end. The amortisation expense on intangible asset with finite useful lives and impairment loss in case there is an indication that the intangible asset may be impaired, is recognised in the Statement of Profit and Loss On transition to Ind AS i.e 1 st April 215, the Company has elected to continue with the carrying value of the intangible assets as per previous GAAP and use that as its deemed cost Oil and natural gas producing activities The company follows the accounting policy as explained below for its oil and natural gas exploration and production activities. i. Acquisition costs such as costs incurred to purchase, lease or otherwise acquired a property or mineral right proved or unproved are capitalised. Any pre-acquisition costs are expensed as and when incurred. ii. All costs which are directly attributable to the exploration and evaluation 63

66 BHARAT PETRORESOURCES LIMITED iii. iv. activities of oil and gas are capitalised. General and administrative costs are included in the exploration and evaluation costs only to the extent that those costs can be directly attributable to the related exploration and evaluation assets. In all other cases, these costs are expensed as incurred. The Company classifies the acquisition costs, exploration and evaluation assets as tangible asset or intangible asset according to nature of assets acquired. Once the technical feasibility and commercial viability of extracting oil and gas is determinable, exploration and evaluation assets are classified as intangible assets under development. Exploration and evaluation asset is assessed for impairment, and impairment loss if any, is recognized, before such reclassification. Subsequent development costs are capitalised as and when incurred. v. When a block or cost centre is ready to commence commercial production, the capitalised costs referred above are reclassified as intangible assets. The cost centre is not normally smaller than a country except where warranted by major difference in economic, fiscal or other factors in the country. vi. When the block or cost centre are relinquished, accumulated cost is charged off as an expense in the said year. vii. The Company recognizes the obligations for removal and restoration that are incurred during a particular period as a consequence of having undertaken the exploration for and evaluation of mineral resources. The Company capitalises the same as part of property, plant and equipment or intangible asset, as the case may be, the amount of provision required to be created for subsequent abandonment. The provision for estimated abandonment costs is made at current prices considering the environment and social obligations, terms of mining lease agreement, industry practice, etc. Where the effect of the time value of money is material, the amount of the provision is the present value of the expenditures expected to be required to settle the obligation. The discount rate (or rates) is pre-tax rate (or rates) that reflect current market assessments of the time value of money and the risks specific to the liability. Where there is uncertainty of timing on incurrence of the expenditure, time value of money is not considered while providing for the obligations. Changes in the measurement of existing abandonment costs that result from changes in the estimated timing or amount of the outflow of resources embodying economic benefits required to settle the obligation or a change in the discount rate is added to, or deducted from the related field in the current period and is considered for necessary depletion (depreciation) prospectively. The change in the estimated provision due to the periodic unwinding of the discount is recognized in statement of profit and loss as it occurs. viii. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Impairment test is performed in accordance with the procedures given in para 1.9 for impairment of non-financial assets. Impairment loss, if any is recognized as an expense. ix. The Company allocates exploration and evaluation assets to cash generating units or group of cash generating units for the purpose of assessing such assets for impairment. 64

67 BPRL ANNUAL REPORT 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 UOP rate for computing depreciation charge for the acquisition cost within a field is arrived at by dividing the acquisition cost of the field by the Proved Oil and Gas Reserves and for all capitalised cost excluding acquisition cost by dividing the depreciation base of the cost centre by the Proved Developed 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 Borrowing costs Borrowing costs consist of interest and other costs incurred in connection with the borrowing of funds. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs Borrowing costs that are specifically attributable to the acquisition or construction of qualifying assets (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use) are capitalized as a part of the cost of such assets. All other borrowing costs are capitalised at the capitalisation rate in respect of qualifying assets and balance borrowing cost after capitalisation are charged to the Statement of Profit and Loss Leases Finance Lease Lease agreements are classified as finance leases, if substantially all the risks and rewards incidental to ownership of leased asset is transferred to lessee. Lease agreements in respect of land for lease period above threshold limit are classified as a finance lease Operating Lease Payments made under operating leases are recognised in Statement of Profit and Loss with reference to lease terms and other relevant considerations. Lease incentives received / lease premium paid (if any) are recognised as an integral part of the total lease expense, over the term of the lease. Payments made under Operating Leases are generally recognised in Statement of Profit and Loss on a straight-line basis over the term of the lease, unless such payments are structured to increase in line with expected general inflation Impairment of Non-financial Assets Non-financial assets other than inventories, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset s recoverable amount. The recoverable amount is the higher of the asset s or Cash-Generating Units (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. 65

68 BHARAT PETRORESOURCES LIMITED When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount Revenue Recognition Sale of goods Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be measured reliably, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government Income from sale of crude oil and gas produced from wells until start of commercial production is adjusted against the cost of such wells Income from sale of crude oil and gas is recognized net of applicable CST/VAT, as applicable when it can be reliably measured and it is reasonable to expect ultimate collection. Any retrospective revision in prices of crude oil and gas is accounted for in the year of such revision Revenue in respect of interest on delayed realizations from customers, if any, is recognized when it can be reliably measured and it is reasonable to expect ultimate collection Interest income is recognised using effective interest rate (EIR) method Dividend is recognised when right to receive the payment is established, it is probable that the economic benefits associated with the dividend will flow to the entity and the amount of dividend can be measured reliably 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 Classification of Income / Expenses Income / expenditure in aggregate pertaining to prior year(s) above the threshold limit are corrected retrospe ctively in the first set of financial statements approved for issue after their discovery by restating the comparative amounts and / or restating the opening Balance Sheet for the earliest prior period presented Prepaid expenses upto threshold limit in each case, are charged to revenue as and when incurred Liabilities for expenses are provided for only if the amount exceeds the threshold limit in each case Deposits placed with Government agencies/ local authorities which are perpetual in nature are charged to revenue in the year of payment Employee Benefits Short-term employee benefit Short term employee benefits are recognized as an expense at an undiscounted amount in the Statement of Profit and Loss of the year in which the related services are rendered Post-employment benefits Liability towards post retirement benefits and other long term benefits in 66

69 BPRL ANNUAL REPORT respect of staff deputed from BPCL is provided based on the debit notes from BPCL. In respect of BPRL cadre, liability is provided based on the employer s contribution towards Provident Fund, Gratuity, etc. as per respective schemes. Defined contribution scheme: Obligations for contribution to defined contribution plans such as Provident Fund, etc. are recognised as an expense in the statement of profit and loss as the related services are provided. Defined benefits scheme: Obligations for contribution to defined benefits plans such as Gratuity, etc. are recognised as an expense in the statement of profit and loss as the related services are provided Other long-term employee benefits Liability towards long term employee benefits in respect of staff deputed from BPCL is provided based on the debit notes from BPCL. In respect of BPRL cadre, liability is provided based on the employer s contribution towards leave encashment etc. as per respective schemes Foreign Currency Transactions Monetary items: Transactions in foreign currencies are initially recorded at their respective exchange rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit and Loss either as profit or loss on foreign currency transaction Non Monetary items: Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions Investment in Subsidiary Investments in equity shares of Subsidiaries, Joint Venture & Associates are recorded at cost and reviewed for impairment at each reporting date Provisions, Contingent Liabilities and Capital Commitments Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation The expenses relating to a provision is presented in the Statement of Profit and Loss net of reimbursements, if any If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. 67

70 BHARAT PETRORESOURCES LIMITED Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Company, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote Contingent liabilities and Capital Commitments disclosed are in respect of items which in each case are above the threshold limit Fair Value measurement The Company measures certain financial instruments at fair value at each reporting date Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Company has access at that date. The fair value of a liability also reflects its non-performance risk The Company regularly reviews significant unobservable inputs and valuation adjustments. If the third party information, such as broker quotes or pricing services, is used to measure fair values, then the Company assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified While measuring the fair value of an asset or liability, the Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows: - Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. - Level 2: inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) - Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs) Certain accounting policies and disclosures require the measurement of fair values, for both financial and non- financial assets and liabilities When quoted price in active market for an instrument is available, the Company measures the fair value of the instrument using that price. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis If there is no quoted prices in an active market, then the Company uses a valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction. 68

71 BPRL ANNUAL REPORT The best estimate of the fair value of a financial instrument on initial recognition is normally the transaction price i.e. the fair value of the consideration given or received. If the Company determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently that difference is recognised in Statement of Profit and Loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out Financial Assets Initial recognition and measurement All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset. Subsequent measurement Subsequent measurement is determined with reference to the classification of the respective financial assets. Based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial asset, the Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit and loss. Debt instruments at amortised cost A debt instrument is measured at the amortised cost if both the following conditions are met: The asset is held within a business model whose objective is - To hold assets for collecting contractual cash flows, and - Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. Debt instruments at Fair value through Other Comprehensive Income (FVOCI) A debt instrument is measured at the fair value through other comprehensive income if both the following conditions are met: The asset is held within a business model whose objective is achieved by both - collecting contractual cash flows and selling financial assets - Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding. After initial measurement, these assets are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and losses and 69

72 BHARAT PETRORESOURCES LIMITED impairment are recognised in the Statement of Profit and Loss. Other net gains and losses are recognised in other comprehensive Income. Debt instruments at Fair value through profit and loss (FVTPL) Fair value through profit and loss is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as at amortised cost or as FVOCI, is classified as at FVTPL. After initial measurement, any fair value changes including any interest income, foreign exchange gain and losses, impairment loss and other net gains and losses are recognised in the Statement of Profit and Loss Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company s Balance Sheet) when. The rights to receive cash flows from the asset have expired, or The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through arrangement; and either: - The Company has transferred substantially all the risks and rewards of the asset, or - The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. On de-recognition, any gains or losses on all debt instruments (other than debt instruments measured at FVOCI) and equity instruments (measured at FVTPL) are recognised in the Statement of Profit and Loss. Gains and losses in respect of debt instruments measured at FVOCI and that are accumulated in OCI are reclassified to profit and loss. Gains or losses on equity instruments measured at FVOCI are recognised and that are accumulated in OCI and are not reclassified to profit and loss Impairment of financial assets In accordance with Ind-AS 19, the Company applies Expected Credit Loss ( ECL ) model for measurement and recognition of impairment loss on the financial assets measured at amortised cost and debt instruments measured at FVOCI. In respect of financial assets measured at amortised cost, the loss allowance is measured at 12 months ECL for financial assets with low credit risk at the reporting date and there is a significant deterioration in the credit risk since initial recognition of the asset Financial Liabilities Initial recognition and measurement Financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are initially measured at fair value net off, for a financial liability not at fair value through profit and loss, transaction costs that are directly attributable to the respective financial liability. 7

73 BPRL ANNUAL REPORT Subsequent measurement Subsequent measurement is determined with reference to the classification of the respective financial liabilities. The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities at fair value through profit and loss. Financial Liabilities at fair value through profit and loss (FVTPL) A financial liability is classified as at fair value through profit and loss if it is classified as held-for-trading or is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and changes therein, including any interest expense, are recognised in Statement of Profit and Loss. Financial Liabilities measured at amortised cost After initial recognition, financial liabilities other than those which are classified as fair value through profit and loss are subsequently measured at amortised cost using the effective interest rate method ( EIR ). Amortised cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss Loans and borrowings After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognized. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss Financial guarantees Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of the debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 19 and the fair value initially recognised less cumulative amortisation Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. 71

74 BHARAT PETRORESOURCES LIMITED 1.2. Taxes on Income Current Tax Income-tax Assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, by the end of reporting period. Current Tax items are recognised in correlation to the underlying transaction either in the Statement of Profit and Loss, other comprehensive income or directly in equity Deferred tax Joint operations Deferred tax is provided using the Balance Sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Deferred Tax items are recognised in correlation to the underlying transaction either in the Statement of Profit and Loss, other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. The Company has Joint arrangement in the nature of Production Sharing Contracts (PSC) with the Government of respective countries and/or various bodies corporate for exploration, development and production activities. The income, expenditure, assets and liabilities of the Joint operations are merged on line by line basis according to the participating interest with the similar items in the financial statements of the Company. 72

75 BPRL ANNUAL REPORT Earnings per share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares Classification of Assets and Liabilities as Current and Non-Current All assets and liabilities are classified as current or non-current as per the Company s normal operating cycle (determined at 12 months) and other criteria set out in Schedule III of the Act Cash and Cash equivalents Cash and cash equivalents include cash at bank, cash, cheque and draft on hand. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents Cash Flows Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated Threshold Limit: Threshold limits adopted in respect of financials statements is given below: Threshold Item Accounting Policy Reference Unit Threshold Limit Value Allocation of other expenses to projects ` Crores 5. Expenditure on certain assets charged to revenue Capitalisation of spare parts meeting the definition of Property, Plant and Equipment Expenditure incurred for creating / acquiring other intangible assets 1.3 ` 1, 1.2 ` Lakhs ` Lakhs 5. Leases Agreements in respect of land 1.8 Period (years) 99. Income / expenditure in aggregate pertaining to prior year(s) 1.11 ` Crores 5. Prepaid expenses 1.11 ` Lakhs 5. Disclosure of Contingent liabilities and Capital Commitments 1.15 ` Lakhs 5. 73

76 BHARAT PETRORESOURCES LIMITED Notes forming part of Financial Statements Note 2 Property, Plant and Equipment Following are the changes in the carrying value of property, plant and equipment for the year ended March 31, 217: Description Plant and Equipment Office Equipments Furniture & Fixtures Total Cost as at April 1, Additions Deletions Cost as at March 31, 217 (A) Accumulated depreciation as at April 1, Depreciation for the current period Deletions Accumulated depreciation as at March 31, 217 (B) Net carrying amount as at March 31, 217 (A) - (B) Following are the changes in the carrying value of property, plant and equipment for the year ended March 31, 216: Description Plant and Equipment Office Equipments Furniture & Fixtures Cost as at April 1, Additions Deletions Cost as at March 31, 216 (A) Total Accumulated depreciation as at April 1, Depreciation for the current period* Deletions Accumulated depreciation as at March 31, 216 (B) Net carrying amount as at March 31, 216 (A) - (B) *Includes the Property, Plant and Equipment owned by the Unincorporated Joint Venture block (CY/ ONN/22/2) which was transferred by Oil and Natural Gas Corporation Ltd. (ONGC) (Operator) in F.Y for permanent usage to the block at Madhanam. Since, the commercial production was not started in F.Y , depreciation of ` 3.3 lakhs on these assets have been charged to Intangible assets under development of respective block in F.Y In F.Y the same has been charged to Profit & Loss. Deemed cost exemption The Company has availed the deemed cost exemption in relation to the property plant and equipment on the date of transition and hence the net block carrying amount has been considered as the gross block carrying amount on that date. Refer note below for the gross block value and the accumulated depreciation on April 1, 215 under the previous GAAP. DESCRIPTION Plant and Equipment Office Equipments Furniture & Fixtures Total Gross Block Accumulated Depreciation Net Block

77 BPRL ANNUAL REPORT Notes forming part of Financial Statements Note 3 Other intangible asset Following are the changes in the carrying value of other intangible assets for the year ended March 31, 217: Description Oil and Gas Assets Computer Software Total Cost as at April 1, Transfer from Intangible asset under development 8, ,28.74 Additions 3, ,469.7 Deletions Cost as at March 31, 217 (A) 11, , Accumulated amortization as at April 1, Amortization for the current period 4, ,645.3 Deletions Accumulated amortization as at March 31, 217 (B) 4, , Net carrying amount as at March 31, 217 (A) - (B) 7, ,33.14 Following are the changes in the carrying value of other intangible assets for the year ended March 31, 216: Description Computer Software Total Cost as at April 1, Additions - - Deletions - - Cost as at March 31, 216 (A) Accumulated amortization as at April 1, Amortization for the current period Deletions - - Accumulated amortization as at March 31, 216 (B) Net carrying amount as at March 31, 216 (A) - (B) - - Deemed cost exemption The Company has availed the deemed cost exemption in relation to other intangible assets on the date of transition and hence the net block carrying amount has been considered as the gross block carrying amount on that date. Refer note below for the gross block value and the accumulated depreciation on April 1, 215 under the previous GAAP. Description Computer Software Total Gross Block Accumulated amortization Net Block Addition during the year Upon commencement of commercial production in block CY/ONN/22/2, based on the advise from the operator and audited block statement the cost of ` 8,28.74 lakhs has been transferred from Intangible assets under development to Intangible assets in F.Y

78 BHARAT PETRORESOURCES LIMITED Notes forming part of Financial Statements Note 4 Intangible assets under development Description March 31, 217 March 31, 216 April 1, 215 Exploratory Wells-in-Progress: Acquisition Cost 3, , , Exploration Cost - Geological & Geophysical Cost 6, , , Drilling Cost 14, , , General & Administrative Cost 2, , ,73.37 Exploratory Wells-in-Progress (A) 26, , ,88.87 Less: Provision for Exploratory Wells-in progress (3,92.5) (3,893.99) - Exploratory Wells-in-Progress (Total) 22, , ,88.87 Development Wells-in-Progress: - Opening balance 8, Transfer from Exploratory wells - 7, Expenditure during the year Development Wells-in-Progress (Total) 8, , Transfer during the year to intangible asset (8,28.74) - - Intangible assets under development (Total) 22, , ,88.87 Deemed cost exemption The Company has availed the deemed cost exemption in relation to the oil and gas related assets on the date of transition and hence the carrying amount of intangible assets under development has been considered as the deemed cost on that date. Capital Expenditure During F.Y , the capital Expenditure in respect of Indian Blocks and Foreign block is ` 1, Lakhs and ` lakhs respectively. (F.Y Indian blocks ` 2,5.71 lakhs and Foreign blocks ` lakhs). Borrowing cost capitalised During the year ended March 31, 217, the company has capitalised interest cost of ` 1,7 Lakhs (March 31, 216: ` 1, Lakhs; April 1, 215: NIL) at the capitalization rate of 9.47% (March 31, 216: 1.3%; April 1, 215: NIL) Development wells in progress In respect of CY-ONN-22/2, the block entered into Development Phase subsequent to the approval of Field Development Plan (FDP) for 14 sq.km of block area by Management Committee in their meeting held on 16th October 215 and an application for Mining Licence was made to Goverment of Tamilnadu which is under active consideration. The cost incurred in respect of this block was shown under Development wells-in-progress as at March 31, 216. During the F.Y , an amount of ` Lakhs (F.Y ` Lakhs) (net of Royalty of ` 117. Lakhs (F.Y ` 2.76 Lakhs)) generated from production & sale of Pit Oil/Test Oil was reduced from the Intangible assets under development. Upon commencement of commercial production in block CY/ONN/22/2, based on the advise from the operator and audited block statement cost of ` 8,28.74 lakhs has been transferred from Intangible assets under development to Intangible assets in F.Y Impairment The provision for impairment as at March 31, 217 is ` 3,92.5 lakhs (as at March, 31, 216 ` 3, lakhs; April 1, 215 Nil) for Block RJ/ONN/25/1 & MB/OSN/21/2. 76

79 BPRL ANNUAL REPORT Notes forming part of Financial Statements Note 5 Investment in Subsidiaries March 31, 217 March 31, 216 April 1, 215 Unquoted equity instruments BPRL International B.V 151, , , ,417,394 (March 31, 216: 235,417,394; April 1, 215: 235,417,394) shares of face value Euro 1 each fully paid up Bharat Petroresources JPDA Ltd 6,. 6,. 6,. 6,, (March 31, 216: 6,,: April 1, 215: 6,,) shares of face value ` 1 each fully paid up BPRL International Singapore Pte Limited* 177, ,885,63 (March 31, 216: Nil; April 1, 215: Nil) shares of face value of USD 1 each fully paid up Less: Provision for impairment for investment in subsidiary Bharat Petroresources JPDA Ltd 6,. 6,. 6,. 328, , , Others Share Application Money with BPRL International B.V. 12,3.7 12,3.7 4, ,3.7 12,3.7 4, , , , Aggregate book value of quoted investments Aggregate market value of quoted investments Aggregate carrying value of unquoted investments 436, , , Aggregate amount of impairment in the value of investments 6,. 6,. 6,. During the Financial Year , BPRL had formed a wholly owned subsidiary located in Singapore, BPRL International Singapore Pte. Ltd. (BISPL) which in turn holds a 33% stake in two Joint Venture Companies as Special purpose vehicles (SPV) i.e. Taas India Pte Ltd and Vankor India Pte Ltd in May 216 alongwith Oil India Ltd. and Indian Oil Corporation Ltd. During the year BPRL has made equity investment of USD Million in the equity capital of BISPL. Impairment of investment in subsidiary Refer note 29 (ii) for impairment of investment in subsidiary Note 6 Loans March 31, 217 March 31, 216 April 1, 215 (Unsecured unless otherwise stated) Security deposits Considered good Loan to employees Loans to subsidiary Considered doubtful Loan to Bharat Petroresources JPDA Ltd 3, , ,841.2 Less : Provision for impairment towards loan* (3,888.2) (3,841.2) (3,841.2) * Refer note 29 (ii) for impairment of loan granted Note 7 Cash and cash equivalents March 31, 217 March 31, 216 April 1, 215 Balances with Banks: On Current Account 6, ,

80 BHARAT PETRORESOURCES LIMITED Notes forming part of Financial Statements Note 8 Other bank balances Fixed deposits with banks with original maturity of more than three months and less than twelve months* March 31, 217 March 31, 216 April 1, 215 1, , , , , ,362.9 * It includes bid bond with government authorities ` 8 lakhs (March 31, 216: Nil; April 1, 215: Nil) Note 9 Other current financial assets March 31, 217 March 31, 216 April 1, 215 Receivable from Subsidiary Companies BPRL International B.V ,47.63 BPRL Ventures B.V Receivable from consortium partners 1, Other receivables Notes forming part of Financial Statements Note 9A Current Tax assets (net) 1, , March 31, 217 March 31, 216 April 1, 215 TDS Receivable Income Tax Refund receivable Note 1 Other current assets March 31, 217 March 31, 216 April 1, 215 Prepaid Expense Cenvat Credit Advance paid to operators Others Note 11 Authorised Share Capital 3,,, (March 31, 216: 3,,,) (April 1, 215: 3,,,) equity shares fully paid-up Issued, subscribed and paid-up 2,92,2,67 (March 31, 216: 2,92,2,67) (April 1, 215: 2,62,2,67) equity shares fully paid-up March 31, 217 March 31, 216 April 1, 215 3,. 3,. 3,. 292, , ,.27 Total 292, , ,.27 78

81 BPRL ANNUAL REPORT Notes forming part of Financial Statements The Company has only one class of shares namely equity shares having a par value of ` 1 per share. Each holder of equity shares is entitled to one vote per share. Reconciliation of No. of Equity Shares March 31, 217 March 31, 216 April 1, 215 A. Opening Balance 2,92,2,67 2,62,2,67 2,62,2,67 B. Shares Issued - 3,, - C. Closing Balance 2,92,2,67 2,92,2,67 2,62,2,67 Details of shareholders holding more than 5% shares March 31, 217 March 31, 216 April 1, 215 Name of shareholder No. of shares No. of shares No. of shares Bharat Petroleum Corporation Ltd 2,92,2,61 2,92,2,61 2,62,2,61 Percentage of holding 1% # 1% # 1% # # 6 shares held by others Notes forming part of Financial Statements Note 12 Reserves and Surplus March 31, 217 March 31, 216 (a) Share application money pending allotment Opening balance - 3,. Less: Shares alloted during the year - 3,. Closing balance - - (b) Retain earnings Opening balance (93,841.8) (89,885.93) Add : Profit/(Loss) for the year as per Statement of Profit and Loss (2,298.5) (5,588.85) Add : Transfer from equity component of loan 1, , Closing balance (112,348.4) (93,841.8) (c) Capital reserve Opening balance 47, , Less: Transfer made during the year to retained earnings 1, , Closing balance 45, ,81.87 Total Other Equity (67,57.99) (46,759.93) Nature and purpose of components of other equity (a) Retained earnings Retained earnings includes the Company's cumulative earnings and losses. It also includes the amount transferred from capital reserves as mentioned above. (b) Capital reserves The company had received interest free borrowing of ` 65, lakhs from its parent company. Under Ind AS, at the date of transition, the company recognised for the said financial liability at fair value with the differential recognised as equity component to be spread over the tenure of the loan. 79

82 BHARAT PETRORESOURCES LIMITED Notes forming part of Financial Statements Note 13 Borrowings Unsecured March 31, 217 March 31, 216 April 1, 215 Term loan from parent company 24, , , Terms of Repayment Schedule of Long-term borrowings: Non current 24, , , Maturity in F.Y. Rate of Interest Loan from Parent Company 3, Interest free Loan from Parent Company 35, Interest free Loan from Parent Company* 185, % *The Lender (BPCL) has the right to demand at any time that the borrower (BPRL) shall issue shares to the Lender in lieu of the loan amount on such date, or any pro rata part of the loan as the Lender demands to be converted. Note 14 Provisions March 31, 217 March 31, 216 April 1, 215 Non current Provision for abandonment 1, , , , , ,56.16 Note 15 Current - Other financial liabilities March 31, 217 March 31, 216 April 1, 215 Due to Parent Company Due to Operators 4, ,1.17 5, Accrual for expenses 2, Interest accrued but not due 7, Security/Earnest Money deposits Other Payables , Capital creditors Employee benefits obligation , , , Note 16 Other current liabilities March 31, 217 March 31, 216 April 1, 215 Statutory Dues Payable

83 BPRL ANNUAL REPORT Notes forming part of Financial Statements Note 17 Provisions March 31, 217 March 31, 216 April 1, 215 Current Provision for Liquidated Damages 7, Provision for abandonment , Movements in provisions - Includes Non Current and Current Liquidated Damages Abandonment Balance as at 1 April , ,98.54 Provisions made during the year Provisions reversed during the year (22.98) - (22.98) Foreign exchange fluctuation - (48.25) (48.25) Balance as at 31 March , , Balance as at 1 April , , Provisions made during the year* 7, , Provisions reversed during the year (411.92) (42.42) (454.34) Foreign exchange fluctuation (1.76) (225.91) (236.67) Balance as at 31 March 217 7, , , * ` 7, lakhs has been charged to Statement of Profit & Loss and ` has been capitalised. Liquidated Damages 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. Accordingly, Company has provided `7, lakhs towards liquidated damages as on March 31, 217 (March 31, 216 ` lakhs; April 1, 215 ` lakhs) in respect to various blocks. A provision of `7, lakhs has been made in F.Y in respect of block RJ ONN 25/1, CB ONN 21/8 and MB 21/2. Abandonment BPRL has Participating Interest in different oil and gas blocks along with other consortium partners. The company has made a provison of `1, lakhs as on March 31, 217 (March 31, 216 `1,692.1 lakhs; April 1, 215 `1,623.8 lakhs) in respect of company s share of the abandonment obligation. Total Note 18 Revenue from Operations For the year For the year Sales of products 4, Total 4,

84 BHARAT PETRORESOURCES LIMITED Notes forming part of Financial Statements Upon block CY/ONN/22/2 entering the production phase in F.Y , Company has recognised ` 4, lakhs during the year from sale of crude oil. Note 19 Quantitative Details of Sales Revenue For the year For the year Product Crude Oil* Unit (in MT) 18, Value (` In Lakhs) 4, * Quantity includes share from Joint Ventures as per the Participating Interest. Note 2 Other Income For the year For the year Interest income on instruments measured at amortised cost , Miscelleneous Income Foreign Exchange fluctuations (net) Provision no longer required written back Total , Note 21 Production Expenditure For the year For the year Operating expenditure Royalty Total 1, Note 22 Employee Benefit Expense For the year For the year Salaries and Wages Payment towards PF and other Funds Payment towards gratuity Welfare Expenses Total ,14.15 For the year For the year Note 23 Finance Costs Interest Expense 7, Total 7,

85 BPRL ANNUAL REPORT Notes forming part of Financial Statements Note 24 Other Expenses For the year For the year Irrecoverable Taxes Impairment for Intangible assets under development , Provision for abandonment Provision for bad and doubtful loans & advances Repairs and maintenance : Machinery Others Insurance Rent Rates and taxes Legal and Professional Fees 2, Liquidated Damages 7, Share in Exploration Expenditure Travelling and Conveyance Advertisement Bank Charges Printing & Stationery Software Expenses Postage, Telephone etc Electricity Charges Security Expenses Payment to Auditors For Audit Fees For Certification Loss on sale of asset Foreign Exchange fluctuations (net) Other Expenses Total 11, ,

86 BHARAT PETRORESOURCES LIMITED Notes to the financial statements Note 25 Segment Reportings An operating segment is one whose operating results are regularly reviewed by the entity s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. The Company has identified the Chief Operating Decision Maker (CODM) as its Managing Director. The CODM reviews performance of exploration and production of oil and gas business on an overall business. As the Company has a single reportable segment, the segment wise disclosure requirements of Ind AS 18 on Operating Segment is not applicable. In compliance to the said standard, Entity-Wise disclosures are as under : Particulars For the year ended March 31, 217 For the year ended March 31, 216 For the year ended April 1, 215 A. Revenues from external customers attributed to the country of domicile and attributed to all foreign countries from which the company derives revenues Revenue from the Country of Domicile- India 4, Revenue from foreign countries B. Details of non current asset Non Current asset from the Country of Domicile- India 22, , , Non Current asset from foreign country - Australia 7, , ,76.2 Total 3, , , C. Information about major customers Revenue from one major customer of the Company was INR 4, lakhs as on 31 March 217 (Previous year March : INR Nil.) Note 26 Earnings per share (EPS) Basic EPS and Dilueted EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year. i. Profit/(Loss) attributable to Equity holders March 31, 217 March 31, 216 Profit/(Loss) after tax (2,298.5) (5,588.85) ii. Weighted average number of ordinary shares March 31, 217 March 31, 216 Issued ordinary shares at the beginning of the year 2,92,2,67 2,62,2,67 Shares issued and allotted during the year - 3,, Weighted Average Number of shares issued during the year 2,92,2,67 258,196,721 Weighted average number of shares 2,92,2,67 2,878,199,391 Basic and Diluted earnings per share (.7) (.19) 84

87 BPRL ANNUAL REPORT Notes to the financial statements Note 27 Employee benefits Majority of the employees are on deputation from Bharat Petroleum Corporation Limited (BPCL). a) Expenditure under the head Employee benefits expenditure includes debit notes raised by BPCL towards employees on deputation including in respect of employee benefits i.e. leave encashment and retirement benefits towards Provident Fund, Gratuity, etc. The details of expenses debited to the profit and loss account under this head are as follows: Sr No Particulars For the year For the year Provident Fund Gratuity Leave encashment Superannuation (NPS) Total b) Pursuant to Company been upgraded to Schedule B, Government of India has appointed three Whole time directors on the Board of BPRL. (A) Defined Contribution Plan The Company has long-term benefits such as Provident Fund and superannuation fund for its employees. In respect of directors and employees on deputation from BPCL, the cost towards these benefits is recognised based on debit notes from the respective companies. (B) Defined Benefit Plan The Company has different schemes such as Gratuity, Retirement Medical Scheme, etc. for its employees. In respect of directors and employees on deputation from BPCL, the cost towards these benefits is recognised based on debit notes from the respective companies. Charge to the Statement of Profit and Loss in respect of above: Sr No Particulars For the year For the year Provident Fund Superannuation (including gratuity) Total (C) Other long-term employee benefits: The charge towards leave encashment for the year ended 31 March 217 is ` lakhs (March 31, 216 : ` 6.21 lakhs ). (D) In view of the above, the management is of the view that no additional disclosure is required in terms of Indian Accounting Standard 19 on Employee Benefits notified under Section 133 of the Companies Act, 213 [ Companies (Indian Accounting Standards) Rules, 215]. 85

88 BHARAT PETRORESOURCES LIMITED Notes to the financial statements Note-28 Tax Reconciliation (a) Amounts recognised in profit and loss For the year ended March 31, 217 For the year ended March 31, 216 Current income tax - - Deferred income tax liability / (asset), net Origination and reversal of temporary differences (511.36) (74.85) Deferred tax expense (511.36) (74.85) Tax expense/(income) for the year (511.36) (74.85) (b) Reconciliation of effective tax rate For the year ended March 31, 217 For the year ended March 31, 216 Profit before tax (2,89.41) (5,663.7) Tax using the Company s domestic tax rate (Current year 3.9% and Previous Year 3.9%) (6,43.11) (1,75.8) Tax effect of: Tax losses for which no deferred income tax was recognised 5, Expenses not deductible for tax purposes ,33.41 Income not chargeble to tax - (27.14) Tax expense/(income) for the year (511.36) (74.85) (c) Movement in deferred tax balances March 31, 217 Net balance April 1, 216 Recognised in profit or loss Recognised in OCI Recognised directly in equity Net Deferred tax asset / (liability) Deferred tax Liability Borrowings (14,623.15) (14,69.48) Intangible asset under development (354.89) (42.31) - - (397.2) (14,978.4) (14,466.68) (d) Movement in deferred tax balances March 31, 216 Net balance April 1, 215 Recognised in profit or loss Recognised in OCI Recognised directly in equity Net Deferred tax asset / (liability) Deferred tax Liability Borrowings (15,52.89) (14,623.15) Intangible asset under development - (354.89) - - (354.89) (15,52.89) (14,978.4) 86

89 BPRL ANNUAL REPORT Notes to the financial statements The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority. Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets. Tax losses carried forward Deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable profit will be available against which the Company can use the benefits therefrom: March 31, 217 March 31, 217 March 31, 216 March 31, 216 April 1, 215 April 1, 215 Gross Gross Gross Expiry date Expiry date amount amount amount Expiry date Business loss Business loss - - 1, , Business loss 1, , , Business loss 1, , , Business loss 5, , , Business loss 39, , , Business loss 6, , , Business loss 2, , , Long-term Capital loss Unabsorbed depreciation 5, No expiry date No expiry date No expiry date Business loss Business loss 11, Note 29 Financial Instruments 1. Financial instruments Fair values and risk management A. Accounting classification and fair values The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Carrying amount Fair value March 31, 217 FVTPL FVTOCI Amortised Total Level 1 Level 2 Level 3 Total Cost Financial assets Cash and cash equivalents - - 6, , Bank Balances - - 1, , Security deposits Other Current financial asset - - 1, , , , Financial liabilities Long Term loans , , , , Other current financial liabilities , , , , , ,

90 BHARAT PETRORESOURCES LIMITED Notes to the financial statements Carrying amount Fair value March 31, 216 FVTPL FVTOCI Amortised Total Level 1 Level 2 Level 3 Total Cost Financial assets Cash and cash equivalents Bank Balances - - 8,57.3 8, Security deposits Other Current financial asset , , Financial liabilities Long term loans , , , , Other current financial liabilities - - 7, , , , , , Carrying amount Fair value April 1, 215 FVTPL FVTOCI Amortised Total Level 1 Level 2 Level 3 Total Cost Financial assets Cash and cash equivalents Bank Balances , , Security deposits Other Current financial asset - - 2, , , , Financial liabilities Long term loans , , , , Other current financial liabilities - - 8, , , , , , B. Measurement of fair values Valuation techniques and significant unobservable inputs The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used: Financial instruments measured at fair value Type Non current financial liabilities measured at amortised cost Valuation technique Discounted cash flows: The valuation model considers the present value of expected receipt/ payment discounted using appropriate discounting rates. Significant unobservable inputs Not applicable Inter-relationship between significant unobservable inputs and fair value measurement Not applicable Transfers between Levels There are no transfers between the levels C. Financial risk management The Company has exposure to the following risks arising from financial instruments: Credit risk ; Liquidity risk ; and Market risk i. Risk management framework The Company s Board of Directors has overall responsibility for the establishment and oversight of the Company s risk management framework. The Board of Directors has established the Risk Management Committee (the Committee), which is responsible for developing and monitoring the Company s risk management policies. 88

91 BPRL ANNUAL REPORT Notes to the financial statements The Company s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The audit committee oversees how management monitors compliance with the company s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Notes to the financial statements ii. Credit Risk Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company s cash and bank deposits kept with banks, receivables from joint operators and loan to subsidiary. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counter party. The maximum exposure to credit risk in case of all the financial instruments covered below is restricted to their respective carrying amount. Loan to Bharat PetroResources JPDA Limited (BPR JPDA), 1% subsidiary BPR JPDA has a participating interest of 2% in JPDA 6-13 blocks. The company has invested ` 6, lakhs as equity and has given interest free loan of ` 3,888.2 lakhs to BPR JPDA. The consortium submitted formal request to ANP (Regulator) towards termination of PSC for consent, without claim or penalty, citing expenditure in excess of commitment. ANP rejected the JV s offer to terminate without claim and penalty. The regulator terminated the PSC on 15th July 215 and demanded the payment of the liability upon termination. Negotiations are on-going by the consortium with the regulator to reach at final decision. In view of the uncertainties regarding the continuation of activities in the block, the management had provided for ` 3, lakhs towards impairment loss of loans by way of charge to Statement of profit and loss account in FY During the year, additional ` 47. lakhs has been provided (F.Y : NIL). The movement in the allowance for impairment in respect of loan to BPR JPDA during the year was as follows. Balance as at April 1, 215 3,841.2 Impairment loss recognised - Amounts written off - Balance as at March 31, 216 3,841.2 Impairment loss recognised 47. Amounts written off - Balance as at March 31, 217 3,888.2 Cash and cash equivalents The Company held cash and cash equivalents with banks with good credit ratings. Other Bank balance - Fixed Deposits with Bank The Company has fixed deposits with banks with good credit ratings. Receivables from subsidiaries The Company had receivables from subsidiaries on each reporting dates. However credit risk for these receivables are considered to be insiginificant as the Company does not foresee any risk since these are receivable from subsidiaries. Other receivables The credit worthiness of receivables from others is evaluated by the management on an ongoing basis and is considered to be good. The Company does not have financial assets that are past due but not impaired. 89

92 BHARAT PETRORESOURCES LIMITED Notes to the financial statements Note 29 Financial instruments Fair values and risk management (continued) iii. Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company s reputation. The company has not availed any credit facilities from banks and financial institutions. Exposure to liquidity risk The table below analyses the Company s financial liabilities into relevant maturity groupings based on their contractual maturities for all non derivative financial liabilities. The amounts are gross and undiscounted, and includes contractual interest payments. March 31, 217 Non-derivative financial liabilities Carrying amount Total Upto 1 year Contractual cash flows 1-3 years 3-5 years More than 5 years Borrowings and interest thereon 24, , , , , , Other financial liabilities 17, , , Contractual cash flows March 31, 216 Carrying amount Total Upto 1 year 1-3 years 3-5 years More than 5 years Non-derivative financial liabilities Borrowings and interest thereon 17, , ,. Other financial liabilities 7, , , Contractual cash flows April 1, 215 Carrying amount Total Upto 1 year 1-3 years 3-5 years More than 5 years Non-derivative financial liabilities Borrowings and interest thereon 16, , ,. Other financial liabilities 8, , , iv. Market risk Currency risk The Company is exposed to currency risk on account of its operating activities. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. The Company has not taken derivative instruments to hedge the foreign currency risk and strives to achieve asset liability offset of foreign currency exposure. Also, the company continuously monitors the fluctuation in currency risk and ensures that the company does not have adverse impact on account of fluctuation in exchange rates. 9

93 BPRL ANNUAL REPORT Notes to the financial statements Exposure to currency risk The currency profile of financial assets and financial liabilities as at March 31, 217, March 31, 216 and April 1, 215 are as below: Total March 31, 217 USD March 31, 217 AUD Financial assets Other Current financial asset Financial liabilities Other Current financial liabilities Net exposure (Assets - Liabilities) (257.7) (257.7) - Total March 31, 216 USD March 31, 216 AUD Financial assets Other Current financial asset Financial liabilities Other Current financial liabilities Net exposure (Assets - Liabilities) (32.11) Total April 1, 215 USD April 1, 215 AUD Financial assets Other Current financial asset 2, , Financial liabilities Other Current financial liabilities Net exposure (Assets - Liabilities) 2, , (9.38) Sensitivity analysis A reasonable possible strenghtening / weakening of the respective foreign currencies with respect to functional currency of Company would result in increase or decrease in profit or loss as shown in table below. This analysis assumes that all other variables, in particular interest rates, remain constant. The following analysis has been worked out based on the exposures as of the date of statements of financial position. Effect in INR (before tax) Strengthening / Profit or loss Weakening % Strengthening Weakening March 31, 217 USD 3% (7.71) 7.71 (7.71) 7.71 Effect in INR (before tax) Strengthening / Weakening % Profit or loss Strengthening Weakening March 31, 216 USD 3% 2.72 (2.72) AUD 5% (1.61) (1.11) 91

94 BHARAT PETRORESOURCES LIMITED Notes to the financial statements Note 29 Financial instruments Fair values and risk management (continued) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing instruments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing instruments will fluctuate because of fluctuations in the interest rates. The Company s exposure to market risk for changes in interest rates relates to fixed deposits with banks and borrowings from parent company. For details of the Company s long term loans and borrowings, including interest rate profiles, refer to Note 13 of these financial statements. March 31, 217 March 31, 216 April 1, 215 Fixed-rate instruments Financial Assets - measured at amortised cost Bank Balances 1, , ,362.9 Total 1, , ,362.9 Financial liabilities - measured at amortised cost Borrowings 19, , , Total 19, , , Variable-rate instruments Financial liabilities - measured at amortised cost Borrowings 185,. - - Total 185,. - - Fair value sensitivity analysis for fixed-rate instruments The company's fixed rate deposits with banks are carried at amortised cost. They are therefore not subject to interest rate risk as defined in IND AS 17, since neither the carrying amount nor the future cash flow will fluctuate because of a change in market interest rates. Cash flow sensitivity analysis for variable-rate instruments A reasonably possible change of 1 basis points in interest rates at the reporting date would have increased / (decreased) profit or loss by amounts shown below. This analyses assumes that all other variables, remain constant. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The period end balances are not necessarily representative of the average debt outstanding during the period. The impact is indicated on the profit/(loss) before tax. Profit or loss 1 bps increase 1 bps decrease 31/3/217 Variable-rate instruments (1,85.) 1,85. Cash flow sensitivity (net) (1,85.) 1,85. 92

95 BPRL ANNUAL REPORT Notes to the financial statements Note 3 Capital Management The Company s policy is to maintain a strong capital base to sustain future development of the business. The holding company, BPCL has been extending financial support to the Company to meet its obligation under production sharing contracts and for other activities, as required, and is committed to provide the necessary level of financial support, to enable the operations of the company. The Company has adequate cash and bank balances. The company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements including funding from the parent company in form of share capital or debt. Note 31 Exchange Rate Exchange rate as at March 31, USD = INR , 1 GBP = INR & 1 AUD = INR Note 32 Leases - Operating leases The company has taken commercial premises and land under cancellable operating leases Particulars 31-March March-16 The rental expenses recognised in Profit and Loss account for operating leases : Minimum lease payments Total rental expenses relating to operating lease In addition to above, the company has paid rent ` 35.7 lakhs (March 31, 216: ` lakhs) towards commercial premises and land. The same is capitalised under Intangible asset under development. Note 33 Interest in Joint operation The Company has participating interest in the nature of Production Sharing Contracts (PSC) with the Government of India and/or various bodies corporate in the oil and gas blocks for exploration, development and production activities. The arrangements require consent from consortium partners for all relevant activities and hence it is classified as joint operations. The partners to the agreement have direct right to the assets and are jointly liable for the liabilities incurred by the un- incorporated joint operation. In accordance with Ind AS 111 on Joint Arrangements, the financial statements of the Company includes the Company s share in the assets, liabilities, incomes and expenses relating to joint operations based on the financial statements received from the respective operators. The income, expenditure, assets and liabilities of the joint operations are merged on line by line basis according to the participating interest with the similar items in the Financial Statements of the Company as given below: i) In respect of Block CB/ONN/21/8, the Company is the operator. The Company s share of the assets and liabilities have been recorded under respective heads based on the audited statement. ii) Out of the remaining six Indian Blocks (previous year six) the Company has received one (previous year three) audited financial statements as at March 31, 217 and this has been considered for the financial statements of the company. The Company has not received financial statement for five (previous year three) blocks and expenses for these blocks are accounted based on unaudited financial statement from the operator for the period Upto 31st March 217. iii) 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 financial statements as on 31st March

96 BHARAT PETRORESOURCES LIMITED Notes to the financial statements The table below provides summarised financial information of the company s share of assets, liabilities, income and expenses in the joint operations to mention the number of joint operation. Sr. Particulars March 31, 217 March 31, 216 April 1, 215 No. 1 Property, plant and equipment Other Intangible assets 7, Intangible asset under development 22, , , Other Non-Current Assets Current Assets including financial assets 1, Cash and Bank Balances Current & Non Current Liabilities/Provisions including financial liabilities 1, , , Expenses 1, Details of the blocks including blocks as on March 31, 217 are as under: NELP IV Name Country March 31, 217 March 31, 216 April 1, 215 CY/ONN/22/2 India 4.% 4.% 4.% NELP VI CY/ONN/24/2 India 2.% 2.% 2.% NELP VII RJ/ONN/25/1 India 33.33% 33.33% 33.33% NELP IX CB/ONN/21/11 India 25.% 25.% 25.% AA/ONN/21/3 India 2.% 2.% 2.% CB/ONN/21/8 India 25.% 25.% 25.% MB/OSN/21/2 India 2.% 2.% 2.% Discovered Small Fields (DSF)* CY/ONDSF/KARAIKAL/216 India 1.% - - RJ/ONDSF/BAKHRI TIBBA/216 India 1.% - - RJ/ONDSF/SADEWALA/216 India 1.% - - MB/OSDF/B15/216 India 1.% - - MB/OSDF/B127E/216 India 1.% - - Blocks outside India EP-413 Australia 27.8% 27.8% 27.8% * Contracts for the blocks have been signed on March 27,

97 BPRL ANNUAL REPORT Notes to the financial statements Note 34 Related party transactions A. Related Party Relationships (i). Parent entity The Company is controlled by the following entity: Name Bharat Petroleum Corporation Limited (BPCL) Type Immediate and Ultimate parent entity (ii). Subsidiaries, joint ventures and associates Interest in subsidiaries, joint ventures and associates are set out below Name Bharat PetroResources JPDA Ltd. (BPR JPDA) Type Ownership interest Place of March 31, March 31, incorporation April 1, 215 India 1% 1% 1% Ownership interest Place of March 31, March 31, incorporation April 1, 215 Subsidiary India 1% 1% 1% BPRL International BV Subsidiary Netherlands 1% 1% 1% BPRL International Singapore Pte Ltd. ** Subsidiary Singapore 1% Nil Nil BPRL Ventures BV * Subsidiary Netherlands 1% 1% 1% BPRL Ventures Mozambique BV * Subsidiary Netherlands 1% 1% 1% BPRL Ventures Indonesia BV * Subsidiary Netherlands 1% 1% 1% IBV (Brasil) Petroleo Ltda. # Joint Venture Brazil 5% 5% 5% Taas India Pte Joint Venture Singapore 33% Nil Nil Vankor India Pte Joint Venture Singapore 33% Nil Nil Mozambique LNG 1 Pte Associate Singapore 1% Nil Nil LLC Joint Venture Russia 29.9% Nil Nil JSC Vankorneft ## Associate Russia 23.9% Nil Nil * BPRL Ventures BV, BPRL Ventures Mozambique BV and BPRL Ventures Indonesia BV are wholly owned subsidiaries of BPRL International BV. ** BPRL International Singapore Pte Ltd. Incorporated on May 12, 216 # IBV Brasil Petroleo Ltda. is a 5% joint venture of BPRL Ventures BV and Videocon Energy Brazil Taas India Pte Ltd. And Vankor India Pte Ltd., incorporated on May 23, 216 and May 2, 216 are joint venture companies of Oil India International Pte Ltd, IOCL Singapore Pte Ltd and BPRL International Singapore Pte Ltd (BISPL) where BISPL holds 33% Taas India Pte Ltd acquired 29.9% stake in LLC TYNGD on 5 October 216 ## Vankor India Pte Ltd acquired 23.9% stake in JSC Vankorneft on 5 October BPRL Ventures Mozambique BV acquired 1% stake in Mosambique LNG 1 Pte Ltd on March 18,

98 BHARAT PETRORESOURCES LIMITED Notes to the financial statements C) Key management personnel Shri D. Rajkumar, Managing Shri Ajay Kumar, Director (Ops & BD) w.e.f 21 May 215 Shri Pankaj Kumar, Director (Finance) w.e.f. 31 July 215 Shri P. Balasubramanian, Director w.e.f. 16 May 214 Shri K.K.Gupta, resigned on 28 May 214 Dr. Praphullachandra Sharma w.e.f 11 March 216 Ms. Mary Jacob w.e.f. 18 August 215 and resigned on 11 March 216 Shri S. Varadarajan, resigned on 3 September 216 Shri B.K.Datta, resigned on 31 July from office of Managing Director on 2 July 215 as nominee of BPCL in view of his appointment as Managing Director by Ministry of Petroleum and Natural Gas on July Later, resigned from the Board as Managing Director, BPRL on September on his appointment as C&MD in BPCL. Subsequently, appointed as part time Director of BPRL on October after receiving nomination from BPCL. D. Transactions with related parties a) Key management personnel compensation March 31, 217 March 31, 216 Short-term employee benefits Post-retirement benefits Other long-term benefits b) The nature wise transactions with the above related parties are as follows: Nature of Transactions Subsidiaries Key Management Personnel Particulars For the year ended March 31, 217 For the year ended March 31, 216 For the year ended March 31, 217 For the year ended March 31, 216 Money remitted towards share application money - 61, Money remitted towards investment in share capital 177, Recovery of SBLC commission 6, , Recovery of deputed employee cost Reimbursement of expenses Loan given during the period Provision for bad and doubtful loans c) Outstanding Balances Subsidiaries March 31, 217 March 31, 216 April 1, 215 Investments in subsidiaries 328, , , Share Application Money with BPRL International B.V. 12,3.7 12,3.7 4, Other receivables , Loan given 3, , ,841.2 Provision for bad and doubtful loans 3, , ,841.2 Key Management Personnel Loan given

99 BPRL ANNUAL REPORT Notes to the Financial Statement The loan given to BPR JPDA is interest free. Refer note 29 (ii) on impairment of outstanding balance of loan and investment in equity shares of BPR JPDA. In accordance with the paragraph 25 of Ind AS 24 Related Party Disclosures, the company is exempt from the disclosure requirements of in relation to related party transactions and outstanding balances with government and government related entity. Hence transactions and outstanding balances with Parent company are not disclosed. All other transactions with these related parties are priced on an arm s length basis and resulting outstanding balances are to be settled in cash. None of the balances are secured. Note 35 Capital Commitments & Contingent Liabilities: a) Capital Commitments: Based on the estimation by the Management, BPRL s share of Minimum Work Programme (MWP) commitments as on the reporting date amounted to ` 1, lakhs. (Previous year ` 41,565. lakhs). Company has provided Bank Guarantees to Director General of Hydrocarbon (DGH) to the extent of ` lakhs (` 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. Note 36 BPRL had earlier entered into Standby Letter of Credit (SBLC) facility agreement with a number of Indian PSU banks to the extent of 2,5 Mn dollars (` 1,62,965. Lakhs). As per the SBLC facility agreement banks will issue SBLC s, in favour of the foreign currency lenders for loans taken by BPRL International BV, a wholly owned subsidiary. As of the date of Balance Sheet, SBLC s to the tune of Mn dollars (` 736,86.4 Lakhs) has been issued. Note 37 March 31, 217, there are no creditors covered under the Micro, Small and Medium Enterprises Development Act, 26 and hence no disclosures under the Act are made. Note 38 Pursuant to notification of MCA, details of Specified Bank Notes (SBN) held and transacted during the period 8 November 216 to 3 December 216 Particulars Special Bank notes Other denominated notes Total Closing cash in hand as on 8 November Permitted receipts Permitted payments Amount deposited in banks Closing cash in hand as on 3 December Note 39 Details of Reserves BPRL s share of Estimated Ultimate Recovery (EUR) as approved by Management Committee for the block CY-ONN-22/2 as at 31st March 217 is given below: Project Details Crude Oil (MMm3) Gas (MMm3) CY-ONN-22/2 Opening.492 1,8.5 MMm3 = Million Cubic Meters Production Closing.469 1,78. 97

100 BHARAT PETRORESOURCES LIMITED Notes to the financial statements Note 4 First - time adoption of Ind AS I. First-time adoption of Ind AS These are the company s first financial statements prepared in accordance with Ind AS. The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended 31 March 217, the comparative information presented in these financial statements for the year ended 31 March 216 and in the presentation of an opening Ind AS balance sheet at 1 April 215 (the Company s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amount reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 26 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the company s financial position and financial performance is set out in the following tables and notes. II. Exemptions from retrospective application Ind AS 11 allows first-time adopter certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions: a) Deemed cost for Property, Plant and Equipment (PPE) and Intangible assets Ind AS 11 permits a first time adopter to continue with the carrying value for all its property, plant and equipment and intangible assets as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. Accordingly, the company has elected to measure all of its PPE and intangible asset at their previous GAAP carrying values. b) Deemed cost for investment in subsidiary The Company has elected to use the previous GAAP carrying amount of its investment in subsidiary on the date of transition as its deemed cost on that date, in its separate financial statements. c) Deemed cost for exploration and evaluation assets Ind AS 11 permits a first time adopter to measure oil and gas assets at the date of transition to Ind As on the following basis: (a) exploration and evaluation assets at the amount determined under the entity s previous GAAP; and (b) assets in the development or production phases at the amount determined for the cost centre under the entity s previous GAAP. The entity shall allocate this amount to the cost centre s underlying assets pro rata using reserve volumes or reserve values as of that date. Accordingly, the company has elected to measure all of its exploration and evaluation assets at their previous GAAP carrying values. The remaining voluntary exemptions as per Ind AS 11 - First time adoption either do not apply or are not relevant to the Company. III. Exceptions from full retrospective application: a) Estimates Upon an assessment of the estimates made under Indian GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by Indian GAAP. The remaining mandatory exceptions either do not apply or are not relevant to the Company. 98

101 BPRL ANNUAL REPORT Notes to the financial statements Transition to Ind AS: For the purposes of reporting as set out in Note 1, we have transitioned our basis of accounting from Indian generally accepted accounting principles ( IGAAP ) to Ind AS. The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 217, the comparative information presented in these financial statements for the year ended 31 March 216 and in the preparation of an opening Ind AS balance sheet at 1 April 215 (the transition date ). In preparing our opening Ind AS balance sheet, we have adjusted amounts reported in financial statements prepared in accordance with IGAAP. An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, we did not revise estimates previously made under IGAAP except where required by Ind AS. Reconciliation of net worth as at April 1, 215 & March 31, 216 Footnote ref. Particulars April 1, 215 March 31, 216 (Net of deferred tax) (Net of deferred tax) Net worth under IGAAP 217, , Summary of Ind AS adjustments Fair valuation of loan taken from BPCL 1 48, ,81.87 Capitalisation of general borrowing cost 2-1, Impairment of interest capitalised - (242.24) Prior period recognized in adjusted in reserves 3 (27.47) - Deferred tax on fair valuation of loan (15,52.89) (14,978.4) Total Ind AS adjustments 33, , Net worth under Ind AS 25, ,24.33 Reconciliation of Comprehensive income for the year ended on 31 March 216 Particulars Footnote ref. March 31, 216 Comprehensive income under IGAAP (5,448.95) Summary of Ind AS adjustments Fair valuation of interest free loan given to BPRL 1 (1,632.98) Capitalisation of general borrowing cost 2 1, Prior period adjusted in opening reserves Impairment of interest cost capitalised on blocks suspended from active use (242.24) Deferred tax on above Total Ind AS adjustments (139.92) Comprehensive income under Ind AS (5,588.87) Notes to the reconciliation: 1. Under previous GAAP, interest free borrowing were measured at transaction value. Under Ind AS, interest free borrowing being financial liability, is required to be initially recognized at fair value. Accordingly, cashflows have been discounted using market rate of interest and differential is acocunted as equity component of financial instrument. 2. Under previous GAAP, the company did not have any interest bearing liabilities. Under Ind AS, interest free borrowing has been fair valued and interest expense has been accounted for. The said interest has been capitalised as the company has qualifying assets. 3. Under previous GAAP, prior periods items are recognized in the year in which it is identified. Under Ind AS, prior period items are recognized in the year to which it pertains to. 99

102 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements I. Reconciliation of Balance Sheet as at 1 st April, 215 Particulars Note Reference Amount as per IGAAP* Effects of transition to Ind AS Amount as per Ind AS I. ASSETS Non-current assets Property, Plant and Equipment Other Intangible assets Intangible Assets Under Development 22, ,88.87 Financial Assets Investment in Subsidiaries 192, , Loans Total non current assets 215, ,19.88 Current Assets Financial Assets Cash And Cash Equivalents (.2) Bank Balances Other Than Above 74, ,362.9 Others 2, , Other Current Assets Current Tax Assets Total current assets 77, (.2) 77, TOTAL ASSETS 292, (.2) 292, II. EQUITY AND LIABILITIES Equity Equity share capital 262, ,.27 Other equity (44,85.58) 33, (11,171.9) Total equity 217, , , LIABILITIES Non current liabilities Financial Liabilities Borrowings 1 65,. (48,714.85) 16, Provisions 1, ,56.16 Deferred Tax Liabilities (Net) 6-15, ,52.89 Total non current liabilities 66,56.16 (33,661.96) 32,898.2 Current liabilities Financial liabilities Other Current Financial Liabilities 3 8, , Other Current Liabilities Provisions Total Current liabilities 9, ,28.77 Total liabilities 75, (33,634.46) 41, TOTAL EQUITY AND LIABILITIES 292, , * Previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purpose of this note 1

103 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements II. Reconciliation of Balance Sheet as at 31 st March, 216 Particulars Note Reference Amount as per IGAAP* Effects of transition to Ind AS Amount as per Ind AS I. ASSETS Non-current assets Property, Plant and Equipment Intangible Assets Under Development 2, 4, 5 22, , ,617.3 Financial Assets - Investments 253, , Loans Total non current assets 276, , ,49.31 Current Assets Financial Assets Cash And Cash Equivalents Bank Balances Other Than Above 8,57.3-8,57.3 Others Other Current Assets Current Tax Assets Total current assets 1, , TOTAL ASSETS 286, , ,27.19 II. EQUITY AND LIABILITIES Equity Equity share capital 292, ,.27 Other equity (8,254.51) 33, (46,759.93) Total equity 211, , ,24.33 LIABILITIES Non current liabilities Financial Liabilities Borrowings 1 65,. (47,81.87) 17, Provisions 1, ,511.9 Deferred Tax Liabilities (Net) 6-14, ,978.4 Total non current liabilities 66,511.9 (32,13.83) 34,48.7 Current liabilities Financial liabilities Other Current Financial Liabilities 7, (.2) 7, Other Current Liabilities Provisions Total Current liabilities 8, , Total liabilities 75,82.67 (32,52.82) 43,29.85 TOTAL EQUITY AND LIABILITIES 286, , ,27.18 * Previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purpose of this note 11

104 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements III. Reconciliation of Statement of Profit and Loss for the period ended 31 st March, 216 Note Reference Amount as per IGAAP Effects of transition to Ind AS Amount as per Ind AS INR (in Lakhs) INR (in Lakhs) INR (in Lakhs) Revenue Revenue from Operations (Gross) Other income 1, , Total Income 1, , Expenses Employee Benefits Expense 1, ,14.15 Depreciation and Amortization Expense Other Expenses 3,4 6, ,241.9 Total Expenses 7, , Profit/(loss) before Tax (5,448.93) (214.77) (5,663.7) Tax expense: 1. Current Tax Deferred Tax 6 - (74.85) (74.85) 3. Short/(Excess) provision of earlier years Profit for the period (5,448.93) (139.92) (5,588.85) Other comprehensive income Items that will not be subsequently reclassified to profit and loss Income tax related to items that will not be reclassified to profit and loss Total comprehensive income for the period (5,448.93) (139.92) (5,588.85) IV. On account of transition to Ind AS, there is no material adjustment to the Statement of Cash Flows for the year ended 31 st March 216 Notes to the reconciliation: 1 Under previous GAAP, interest free borrowing were measured at transaction value. Under Ind AS, interest free borrowing being financial liability, is required to be initially recognized at fair value. Accordingly, cashflows have been discounted using market rate of interest and differential is accounted as equity component of financial instrument. 2 Under previous GAAP, the company did not have any interest bearing liabilities. Under Ind AS, interest free borrowing has been fair valued and interest expense has been accounted for. The said interest has been capitalised as the company has qualifying assets. 3 Under previous GAAP, prior periods items are recognized in the year in which it is identified. Under Ind AS, prior period items are recognized in the year to which it pertains to. 4 Interest capitalised as per point 2 referred above, has been charged off to the Profit and loss account due to impairment considered on the blocks suspended from active use. 5 Under Ind AS, additional provision created for abandonment cost in respect of company s share of the abandonment obligation. 6 Under Previous GAAP, deferred tax accounting was done using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Under Ind AS, accounting of deferred taxes is done using the Balance Sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. 12

105 BPRL ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS OF BHARAT PETRORESOURCES LIMITED 13

106 BHARAT PETRORESOURCES LIMITED To, The Members of Bharat PetroResources Limited INDEPENDENT AUDITORS REPORT Report on the Consolidated Ind AS Financial Statements 1. We have audited the accompanying consolidated Ind AS financial statements of M/s. Bharat PetroResources Limited ( the Holding Company ) and its subsidiaries and associate (collectively referred to as the Group ), comprising of the consolidated balance sheet as at March 31 st, 217, the consolidated statement of profit and loss, the consolidated cash flow statement and the consolidated statement of changes in equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the consolidated Ind AS financial statements ). Management s Responsibility for the Consolidated Ind AS Financial Statements 2. The Holding Company s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 213 ( the Act ) with respect to the preparation of these consolidated Ind AS financial statements to give a true and fair view of the consolidated financial position, consolidated financial performance including other comprehensive income, consolidated cash flows and consolidated changes in equity of the Group in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 215. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of consolidated Ind AS financial statements by the Directors of the Holding Company, as aforesaid. Auditor s Responsibility 3. Our responsibility is to express an opinion on these consolidated Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report and the rules made there under. 4. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(1) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply 14

107 BPRL ANNUAL REPORT with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated Ind AS financial statements are free from material misstatement. 5. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated Ind AS financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company s preparation of the consolidated Ind AS financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Holding Company s Directors, as well as evaluating the overall presentation of the consolidated Ind AS financial statements. 6. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the consolidated Ind AS financial statements. Opinion 7. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated Ind AS financial 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, including Ind AS, of the consolidated financial position of the Group, as at 31 st March 217 and its consolidated financial performance including other comprehensive income, its consolidated cash flows and the consolidated changes in equity for the year then ended. Other Matter 8. We did not audit the financial statement of 3 (three) subsidiaries and 1 (one) jointly controlled entity, whose adjusted financial statements reflect total assets of ` 11,41,85.15 lakhs as at March 31, 217 and total revenues including other comprehensive income of ` 2, lakhs and net cash flows amounting to ` 4, lakhs for the year ended on that date, as considered in the consolidated Ind AS financial statements. The consolidated Ind AS financial statements also include the Group s net loss of ` 29,75.76 lakhs for the year ended 31 st March, 217. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the consolidated Ind AS financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and jointly controlled entities, and our report in terms of sub-section (3) and (11) of Section 143 of the Act, insofar as it relates to aforesaid subsidiaries and jointly controlled entities, is based solely on the reports of the other auditors. 9. Financial statements of BPR JPDA Ltd are prepared under Indian GAAP including Ind AS and audited by another firm of auditors on which we have placed reliance for the 15

108 BHARAT PETRORESOURCES LIMITED purpose of this report. Financial statements of other entities are prepared under respective GAAP and audited by the local firm of auditors. For the purposes of consolidation, we are furnished with financial statements prepared and certified by the management, which are prepared based on audited financial statements prepared under Indian GAAP including Ind AS, on which we have placed reliance for the purpose of this report. 1. We report that the consolidated Ind AS financial statements have been prepared by the Company in accordance with the requirements of the Indian Accounting Standard specified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, The auditors of IBV Brasil Petroleo Ltda. have drawn attention to the fact that the said joint venture has spent significant 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 financial statements for the year ended December 31, 216 were prepared based on the assumption that the Company will continue to operate as a going concern. Emphasis of Matter 12. Attention is drawn to our observation in our Audit Report of the Holding Company regarding incorporation of details about the Holding 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 two blocks, no audited statements have been received by the Company. Total assets, liabilities, income and expenses in respect of this blocks, amounts to ` Lakhs, ` Lakhs, NIL and NIL respectively. In case of one foreign block (EP413), the information relating to the same is provided on the basis of audited financial statements for the year ended 31 st December, 216 and unaudited statement for subsequent 3 months. Total assets, liabilities, income and expenses related to the said block amounts to ` lakhs, ` lakhs, NIL 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 III 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 16

109 BPRL ANNUAL REPORT No break up of assets and liabilities is available in respect of one blocks where the Company has invested ` 3,766.2 Lakhs including provision for site restoration cost of ` 1 lakhs. 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 financial statements and our observations there; on are based on such audit reports and statements from the operators to the extent available with the Company. 13. Attention is drawn to the observation in the Audit Report of Bharat PetroResources JPDA Limited (Standalone) regarding the financial statements indicating that the Company has accumulated losses and negative net worth. The Company has incurred a net loss of ` Lakhs during the current year (Previous Year Loss ` Lakhs) as at the balance sheet date. This conditions, along with other matters indicates the existence of a material uncertainty that cast significant doubt about the company s ability to continue as a going concern. Report on Other Legal and Regulatory Requirements 14. As required by Section 143(3) of the Act, we report that: a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated Ind AS financial statements. b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated Ind AS financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors. c) The consolidated balance sheet, consolidated statement of profit and loss, the consolidated cash flow statement and consolidated statement of changes in equity dealt with by this Report are in agreement with the relevant books of accounts maintained for the purpose of preparation of the consolidated Ind AS financial statements. d) In our opinion, the aforesaid consolidated Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 215. e) As per the notification no. G.S.R. 463(E) dated June 5, 215, the Government companies are exempted from provisions of section 164(2) of the Act. Accordingly, we are not required to report whether any directors are disqualified in terms of provisions contained in the said section. f) With respect to the adequacy of the financial controls over financial reporting of the Group and the operating effectiveness of such controls, refer to our separate report in Annexure A and 17

110 BHARAT PETRORESOURCES LIMITED g) With respect to the other matters to be included in the Auditor s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 214, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us: i. The Group does not have any pending litigations which would impact its financial position. ii. The Group did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Group during the year ended March 31 st, 217. iv. The Company has provided requisite disclosures in its consolidated Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November 216 to 31 December 216 and these are in accordance with the books of accounts maintained by the Company. Refer Note no. 27A to the consolidated Ind AS financial statements. For M B Agrawal & Co. Chartered Accountants FRN No. 1137W Sd/- Harshal Agrawal Place: Mumbai Partner Date: 19 th May, 217 Membership No:

111 BPRL ANNUAL REPORT Annexure A to Independent Auditors Report Referred to in Paragraph 14(f) of the Independent Auditors Report of even date on the financial statement as of and for the year ended March 31 st, 217 Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 213 ( the Act ) 1. In conjunction with our audit of the consolidated Ind AS financial statements of the Company as of and for the year ended 31 st March 217, we have audited the internal financial controls over financial reporting of Bharat PetroResources Limited ( the Holding Company ) and its subsidiary companies which are companies incorporated in India, as of that date. Management s Responsibility for Internal Financial Controls 2. The Respective Board of Directors of Holding Company and its subsidiary companies, which are companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India ( ICAI ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 213. Auditors Responsibility 3. Our responsibility is to express an opinion on the Company s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(1) of the Companies Act, 213, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. 4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. 5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company s internal financial controls system over financial reporting. 19

112 BHARAT PETRORESOURCES LIMITED Meaning of Internal Financial Controls over Financial Reporting 6. A company s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company s internal financial control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company s assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls over Financial Reporting 7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion 8. In our opinion, the Holding Company and its subsidiary companies, which are companies incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 217, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. For M B Agrawal & Co. Chartered Accountants F.R.N.: 1137W Sd/- Harshal Agrawal Place: Mumbai (Partner) Date: 19 th May, 217 M. No:

113 BPRL ANNUAL REPORT Particulars Consolidated Balance sheet as at March 31, 217 Note no. 111 March 31, 217 March 31, 216 April 1, 215 I. ASSETS (1) Non-current assets (a) Property, Plant and Equipment (b) Other Intangible assets 3 7, (c) Intangible assets under development 4 469, , , (d) Equity accounted investees 5 946, (e) Financial Assets Loans 6 154, , , Total non current assets 1,578, , , (2) Current Assets (a) Financial Assets (i) Cash and cash equivalents 7 29, , , (ii) Bank Balances other than (i) above 8 1, , ,362.9 (iii) Others 9 1, (b) Current Tax assets (net) 9A (c) Other current assets 1 2, , , Total current assets 34, , , TOTAL ASSETS 1,612, , ,747.4 Particulars March 31, 217 March 31, 216 April 1, 215 II. EQUITY AND LIABILITIES (1) Equity (a) Equity share capital , , ,.27 (b) Other equity 12 (141,241.83) (111,536.6) (92,821.26) Total equity 15, , ,179.2 (2) Non current liabilities (a) Financial liabilities - Borrowings 13 1,119, , , (b) Provisions 14 1, , ,56.16 (c) Deferred tax liabilities (Net) 14, , ,52.89 Total non current liabilities 1,135, , ,556.8 (3) Current liabilities (a) Financial liabilities (i) Borrowings 15 97, (ii) Other financial liabilities , , ,47.35 (b) Other current liabilities (c) Provisions 18 1, , , Total Current liabilities 326, , ,11.58 Total liabilities 1,462, , , TOTAL EQUITY AND LIABILITIES 1,612, , ,747.4 Significant accounting policies 1 Notes to the financial statements 2-34 The notes referred to above form an integral part of the financial statements. As per our attached report of even date For and on behalf of the Board of Directors For and on behalf of M.B. Agrawal & Co. Chartered Accountants Sd/- Sd/- Sd/- Harshal Agrawal Pankaj Kumar Narendra Dixit Partner Director (Finance) Company Secretary Membership No.: Place: Mumbai Dated: 19 th May, 217 Sd/- D. Rajkumar Chairman Sd/- V. Ajay Kumar Managing Director (I/c)

114 BHARAT PETRORESOURCES LIMITED Particulars Significant accounting policies 1 Notes to the financial statements 2-34 The notes referred to above form an integral part of the financial statements. As per our attached report of even date For and on behalf of the Board of Directors For and on behalf of M.B. Agrawal & Co. Chartered Accountants Consolidated Statement of profit and loss for the year ended March 31, Note no. Sd/- Sd/- Sd/- Harshal Agrawal Pankaj Kumar Narendra Dixit Partner Director (Finance) Company Secretary Membership No.: Place: Mumbai Dated: 19 th May, 217 Sd/- D. Rajkumar Chairman For the Year For the Year Revenue I. Revenue from Operations 19 4, II. Other income ,89.85 III. Total Income (I+II) 5,91.8 9,89.85 IV. Expenses Production expenditure 21 1, Employee Benefits Expenses ,14.15 Finance costs 23 24, , Depreciation, Depletion, Amortisation 2 & 3 4, Other Expenses 24 37, , Total Expenses (IV) 69, ,4.79 V. Profit/(loss) before share of profit of equity accounted investees and income tax (64,292.47) (7,914.94) VI. Share of profit /(loss) from equity accounted investees (net of tax) 13, (9,821.83) VII. Profit/(loss) before Tax (5,514.3) (17,736.77) VIII. Tax expense: 1. Current Tax Deferred Tax (511.36) (74.85) IX. Profit/(Loss) for the year (5,2.94) (17,661.92) X. Other comprehensive income Items that will be reclassified to profit or loss (a) Exchange differences on translation of foreign operations (b) Share of Other comprehensive income of equity accounted investee (2,273.81) 28, , , , XI. Total comprehensive income for the year (29,75.76) 11,285.2 XII. Earnings per equity share 1. Basic (1.71) (.61) 2. Diluted (1.71) (.61) Sd/- V. Ajay Kumar Managing Director (I/c)

115 BPRL ANNUAL REPORT Consolidated Cash flow statement for the year ended March 31, 217 A B Particulars For the For the Year ended Year ended March 31, 217 March 31, 216 Cash Flow from Operating Activities Profit Before Tax from Continuing Operations (5,514.3) (17,736.77) Adjustments for: Share of (profit) / loss from equity accounted investees (13,778.17) 9, Depreciation, Depletion, Amortisation 4, Provision for abandonment (Gain) / Loss on fair valuation of loan 25, (7,39.4) Impairment for Intangible assets under development , Interest income (255.79) (1,366.7) Provision no longer required written back (27.79) (87.83) Net (gain) / loss on sale of asset Finance costs 24, , Exchange differences on translation of assets and liabilities (9,278.6) 28, of foreign operations Unrealised foreign exchange (gain) / loss (34.86) Operating Profit / (Loss) before Working Capital changes (19,13.12) 25, Working capital adjustments: (Increase) / Decrease in loans (14,948.93) (67,451.6) (Increase) / Decrease in Other current financial assets (88.38) (35.77) (Increase) / Decrease in Current Assets (487.34) (213.76) Increase / (Decrease) in other current financial liabilities (321,465.79) Increase / (Decrease) in provisions 7, Increase / (Decrease) in Other current liabilities (.36) Cash generated / (used) from operations (27,479.54) (363,384.45) Income tax (paid) / refunds (net) (86.21) Net cash flow from / (used in) operating activities (27,255.9) (363,47.66) Cash Flow from Investing Activities Addition to Fixed Assets (66.47) (115.6) Investment in equity accounted investees (636,72.36) - Loan to equity accounted investees - (21,259.51) Loan repaid by equity accounted investee 8, Deposit with banks 7, , Interest Income Additions to Intangible assets under development (9,9.31) (57,923.79) Additions to Intangible assets (3,469.7) - Net Cash Flow from/(used) in Investing Activities (633,848.1) (12,82.28) 113

116 BHARAT PETRORESOURCES LIMITED C D Cash Flow from Financing Activities Proceeds from issue of bonds 389, Proceeds from short term borrowings 486, Proceeds from long term borrowings from bank 18, , Proceeds from long term borrowings from parent company 185,. - Repayment of short term borrowings (389,31.6) - Interest paid including upfront processing fees (3,8.28) (21,389.88) Payment of transaction cost related to borrowings - - Net Cash Flow from/(used) in Financing Activities 66, ,182.3 Net Increase/(Decrease) in Cash and Cash equivalents (A+B+C) (999.26) 24,629.1 Cash and cash equivalents at the beginning of the year Bank Balance 7, , Demand deposits with Banks with original maturity of less than three 23, months Add/(Less:) Exchange difference on Cash and Cash equivalent - - Cash and cash equivalents at the end of the year Bank Balance 29, , Demand deposits with Banks with original maturity of less than three - 23,216. months Net increase/(decrease) in Cash and Cash equivalents (999.26) 24,629.1 Significant accounting policies 1 Notes to the financial statements 2-34 The notes referred to above form an integral part of the financial statements. As per our attached report of even date For and on behalf of the Board of Directors For and on behalf of M.B. Agrawal & Co. Chartered Accountants Sd/- Sd/- Sd/- Harshal Agrawal Pankaj Kumar Narendra Dixit Partner Director (Finance) Company Secretary Membership No.: Place: Mumbai Dated: 19 th May, 217 Sd/- D. Rajkumar Chairman Sd/- V. Ajay Kumar Managing Director (I/c) 114

117 BPRL ANNUAL REPORT Consolidated Statement of Changes in Equity (SOCIE) March 31, 217 March 31, 216 April 1, 215 (a) Equity share capital No. of Shares Amount No. of Shares Amount No. of Shares Amount Balance at the beginning of the year Shares issued during the year Balance at the end of the year (b) Other equity Particulars 2,92,2,67 292,.27 2,62,2,67 262,.27 2,62,2,67 262, ,, 3, ,92,2,67 292,.27 2,92,2,67 292,.27 2,62,2,67 262,.27 Share Application Money Capital Reserve Retained Earnings Foreign Currency Translation Reserve Total Equity Balance at April 1, 215 3,. 48, (211,38.63) 39, (92,821.26) Shares alloted during the year (3,.) (3,.) Profit/ (Loss) for the year - - (17,661.92) - (17,661.92) Other comprehensive income for the year Total comprehensive income for the year , , (17,661.92) 28, ,285.2 Transfer to retained earnings - (1,632.98) 1, Balance at March 31, ,81.87 (227,337.57) 68, (111,536.6) Profit/ (Loss) for the year - - (5,2.94) - (5,2.94) Other comprehensive , , income for the year Total comprehensive - - (5,2.94) 2, (29,75.77) income for the year Transfer to retained earnings - (1,791.81) 1, Balance at March 31, ,29.6 (275,548.7) 89,16.82 (141,241.83) 115

118 BHARAT PETRORESOURCES LIMITED Company Overview NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 st MARCH 217 Bharat PetroResources Limited referred to as BPRL or the Group was incorporated on 17th October, 26. It is wholly owned subsidiary of Bharat Petroleum Corporation Limited which is a Government of India Enterprise listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The company is engaged in the business of exploration and production of Hydrocarbons. 1. Statement of Significant Accounting Policies Basis for preparation: The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 213 ( Act ) read with Companies (Indian Accounting Standards) Rules, 215; and the other relevant provisions of the Act and Rules thereunder. The Financial Statements have been prepared under historical cost convention basis, except for certain assets and liabilities measured at fair value. These financial statements are the first financial statements of the Company under Ind AS. The date of transition to Ind AS is 1 April, 215. Refer note 32 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company s financial position and its net profit. The Company has adopted all the Ind AS and the adoption was carried out in accordance with Ind AS 11 First time adoption of Indian Accounting Standards. The transition was carried out from generally accepted accounting principles in India (Indian GAAP) as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 214 (IGAAP), which was the previous GAAP. The Company s presentation and functional currency is Indian Rupees. All figures appearing in the financial statements are rounded to the nearest lakhs, except where otherwise indicated. Authorisation of Financial Statements: The Financial Statements were authorized for issue in accordance with a resolution of the Board of Directors in its meeting held on 19 th May Use of Judgement and Estimates The preparation of the Company s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Assumptions and estimation uncertainties Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31 March 217 is included in the following notes: 116

119 BPRL ANNUAL REPORT Note 4 impairment test of non financial assets: key assumptions for underlying recoverable amounts - Note 18 recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow resources - Note 25 recognition of deferred tax assets: availability of future taxable profits against which tax losses carried forward can be used Judgements Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as below: Assessment of functional currency; Useful lives of property, plant and equipment and intangible assets; Assessment whether the company has interest in joint arrangement Estimation of oil and natural gas reserves - The determination of the group s estimated oil and natural gas reserves requires significant judgements and estimates to be applied and these are regularly reviewed and updated. Factors such as the availability of geological and engineering data, reservoir performance data, acquisition and divestment activity, drilling of new wells, and commodity prices all impact on the determination of the group s estimates of its oil and natural gas reserves. The group bases its proved reserves estimates on the requirement of reasonable certainty with rigorous technical and commercial assessments based on conventional industry practice and regulatory requirements. - Estimates of oil and natural gas reserves are used to calculate depreciation, depletion and amortization charges for the group s oil and gas properties. The impact of changes in estimated proved reserves is dealt with prospectively by amortizing the remaining carrying value of the asset over the expected future production. Oil and natural gas reserves also have a direct impact on the assessment of the recoverability of asset carrying values reported in the financial statements. If proved reserves estimates are revised downwards, retained earnings could be affected by changes in depreciation expense or an immediate write-down of the property s carrying value Principles of Consolidation: Subsidiaries Subsidiaries are all entities (including structured entities) that are controlled by the Company. Control exists when the Company is exposed to, or has the ability to affect those returns through power over the entity. In assessing control, potential voting rights are considered only if the rights are substantive. The financial statements of subsidiaries are included in these consolidated financial statements from the date that control commences until the date that control ceases. For the purpose of preparing these consolidated financial statements, the accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Company. Upon loss of control, the Company derecognizes the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognized in the consolidated income statement. If the Company retains any interest in the previous 117

120 BHARAT PETRORESOURCES LIMITED subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-forsale financial asset, depending on the level of influence retained. Associates and joint arrangements (equity accounted investees) Associates are those entities over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the entities but is not control or joint control of those policies. Significant influence is presumed to exist when the Company holds between 2% and 5% of the voting power of another entity. Joint arrangements are those arrangements over which the Company has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Investments in associates and jointly controlled entities are accounted for using the equity method (equity accounted investees) and are initially recognized at cost. The carrying value of the Company s investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The Company does not consolidate entities where the non-controlling interest ( NCI ) holders have certain significant participating rights that provide for effective involvement in significant decisions in the ordinary course of business of such entities. Investments in such entities are accounted by the equity method of accounting. When the Company s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to zero and the recognition of further losses is discontinued except to the extent that the Company has an obligation or has made payments on behalf of the investee. For the purpose of preparing these consolidated financial statements, the accounting policies of associates/joint ventures have been changed where necessary to align them with the policies adopted by the Company. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in full while preparing these consolidated financial statements. Unrealized gains or losses arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Company s interest in the investee Property, plant and equipment Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses, if any The initial cost of an asset comprises its purchase price or construction cost (including import duties and non-refundable taxes), any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation, if any, and, borrowing cost for qualifying assets (i.e. assets that necessarily take a substantial period of time to get ready for their intended use) Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company. 118

121 BPRL ANNUAL REPORT Spare parts which meet the definition of Property, Plant and Equipment are capitalized as Property, Plant and Equipment in case the unit value of the spare part is above the threshold limit. In other cases, the spare part are inventorised on procurement and charged to Statement of Profit and Loss on consumption An item of Property, Plant and Equipment and any significant part initially recognised separately as part of Property, Plant and Equipment is derecognised upon disposal; or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in the Statement of Profit and Loss when the asset is derecognised The residual values and useful lives of Property, Plant and Equipment are reviewed at each financial year end and changes, if any, are accounted in the line with revisions to accounting estimates On date of transition to Ind AS i.e 1 st April 215, the Company has elected to continue with the carrying value of the Property, Plant and Equipment existing as per previous GAAP and use that as its deemed cost Depreciation Depreciation on Property, Plant and Equipment are provided on the straight line basis, over the estimated useful lives of assets (after retaining the estimated residual value of upto 5%). These useful lives determined are in line with the useful lives as prescribed in the Schedule II of the Act, except in following cases: Items of Property, Plant and Equipment costing not more than the threshold limit are depreciated at 1 percent in the year of acquisition Computer equipments are depreciated over a period of 4 years. Mobile phones are depreciated over a period of 3 years. Furniture, other than computer equipment and mobile phones, provided at the residence of management staff are depreciated over a period of 6 years as per internal assessment. The useful lives are estimated based on the HR policy for replacement/renewal of entitlements Workstations are depreciated over a period of 5 years. The useful lives are estimated based on the internal assessment. Depreciation is charged on additions/deletions on pro-rata monthly basis including the month of addition/deletion Intangible Assets Intangible assets are carried at cost net of accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding development costs, are not capitalised and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalised if, and only if, technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Company has an intention and ability to complete and use or sell the asset and the costs can be measured reliably Expenditure incurred for creating/acquiring other intangible assets above threshold limit from which future economic benefits will flow over a period of time, is amortised over the estimated useful life of the asset or five years, whichever is lower, on a straight line basis, from the time the intangible asset starts providing the economic benefit. In other cases, the expenditure is reflected in the Statement of Profit and Loss in the year 119

122 BHARAT PETRORESOURCES LIMITED in which the expenditure is incurred. The amortisation period and the amortisation method for an intangible asset with a finite life are reviewed at each year end. The amortisation expense on intangible asset with finite useful lives and impairment loss in case there is an indication that the intangible asset may be impaired, is recognised in the Statement of Profit and Loss On transition to Ind AS i.e 1 st April 215, the Company has elected to continue with the carrying value of the intangible assets as per previous GAAP and use that as its deemed cost Oil and natural gas producing activities The company follows the accounting policy as explained below for its oil and natural gas exploration and production activities. i. Acquisition costs such as costs incurred to purchase, lease or otherwise acquired a property or mineral right proved or unproved are capitalised. Any pre-acquisition costs are expensed as and when incurred. ii. All costs which are directly attributable to the exploration and evaluation activities of oil and gas are capitalised. General and administrative costs are included in the exploration and evaluation costs only to the extent that those costs can be directly attributable to the related exploration and evaluation assets. In all other cases, these costs are expensed as incurred. iii. The Company classifies the acquisition costs, exploration and evaluation assets as tangible asset or intangible asset according to nature of assets acquired. iv. Once the technical feasibility and commercial viability of extracting oil and gas is determinable, exploration and evaluation assets are classified as capital work in progress or intangible assets under development. Exploration and evaluation asset is assessed for impairment, and impairment loss if any, is recognized, before such reclassification. Subsequent development costs are capitalised as and when incurred. v. When a block or cost centre is ready to commence commercial production, the capitalised costs referred above are reclassified as intangible assets. The cost centre is not normally smaller than a country except where warranted by major difference in economic, fiscal or other factors in the country. vi. When the block or cost centre are relinquished, accumulated cost is charged off as an expense in the said year. vii. 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 UOP rate for computing depreciation charge for the acquisition cost within a field is arrived at by dividing the acquisition cost of the field by the Proved Oil and Gas Reserves and for all capitalised cost excluding acquisition cost by dividing the depreciation base of the cost centre by the Proved Developed 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. 12

123 BPRL ANNUAL REPORT viii. The Company recognizes the obligations for removal and restoration that are incurred during a particular period as a consequence of having undertaken the exploration for and evaluation of mineral resources. The Company capitalises as part of property, plant and equipment or intangible asset, as the case may be, the amount of provision required to be created for subsequent abandonment. The provision for estimated abandonment costs is made at current prices considering the environment and social obligations, terms of mining lease agreement, industry practice, etc. Where the effect of the time value of money is material, the amount of the provision is the present value of the expenditures expected to be required to settle the obligation. The discount rate (or rates) is pre-tax rate (or rates) that reflect current market assessments of the time value of money and the risks specific to the liability. Where there is uncertainty of timing on incurrence of the expenditure, time value of money is not considered while providing for the obligations. Changes in the measurement of existing abandonment costs that result from changes in the estimated timing or amount of the outflow of resources embodying economic benefits required to settle the obligation or a change in the discount rate is added to, or deducted from the related field in the current period and is considered for necessary depletion (depreciation) prospectively. The change in the estimated provision due to the periodic unwinding of the discount is recognized in statement of profit and loss as it occurs. ix. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Impairment test is performed in accordance with the procedures given below for impairment of non-financial assets. Impairment loss, if any is recognized as an expense. x. The Company allocates exploration and evaluation assets to cash generating units or group of cash generating units for the purpose of assessing such assets for impairment Borrowing costs 1.8. Leases Borrowing costs consist of interest and other costs incurred in connection with the borrowing of funds. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use) are capitalized as a part of the cost of such assets. All other borrowing costs are charged to the Statement of Profit and Loss Operating Lease Payments made under operating leases are recognised in Statement of Profit and Loss with reference to lease terms and other relevant considerations. Lease incentives received / lease premium paid (if any) are recognised as an integral part of the total lease expense, over the term of the lease. Payments made under Operating Leases are generally recognised in Statement of Profit and Loss on a straight-line basis over the term of the lease, unless such payments are structured to increase in line with expected general inflation. 121

124 BHARAT PETRORESOURCES LIMITED 1.9. Impairment of Non-financial Assets Non-financial assets other than, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset s recoverable amount. The recoverable amount is the higher of the asset s or Cash-Generating Units (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount Revenue Recognition Sale of goods Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be measured reliably, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government Income from sale of crude oil and gas produced from wells until start of commercial production is adjusted against the cost of such wells Income from sale of crude oil and gas is recognized net of applicable CST/VAT, as applicable when it can be reliably measured and it is reasonable to expect ultimate collection. Any retrospective revision in prices of crude oil and gas is accounted for in the year of such revision Revenue in respect of interest on delayed realizations from customers, if any, is recognized when it can be reliably measured and it is reasonable to expect ultimate collection Interest income is recognised using effective interest rate (EIR) method Dividend is recognised when right to receive the payment is established, which is generally when shareholders approve the dividend 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 Classification of Income / Expenses Income / expenditure in aggregate pertaining to prior year(s) above the threshold limit are corrected retrospectively in the first set of financial statements approved for issue after their discovery by restating the comparative amounts and / or restating the opening Balance Sheet for the earliest prior period presented Prepaid expenses upto threshold limit in each case, are charged to revenue as and when incurred. 122

125 BPRL ANNUAL REPORT Liabilities for expenses are provided for only if the amount exceeds the threshold limit in each case Deposits placed with Government agencies/ local authorities which are perpetual in nature are charged to revenue in the year of payment Employee Benefits Short-term employee benefit Short term employee benefits are recognized as an expense at an undiscounted amount in the Statement of Profit and Loss of the year in which the related services are rendered Post-employment benefits Liability towards post retirement benefits and other long term benefits in respect of staff deputed from BPCL is provided based on the debit notes from BPCL. In respect of BPRL cadre, liability is provided based on the employer s contribution towards Provident Fund, Gratuity, etc. as per respective schemes. Defined contribution scheme: Obligations for contribution to defined contribution plans such as Provident Fund, etc. are recognised as an expense in the statement of profit and loss as the related services are provided. Defined benefits scheme: Obligations for contribution to defined benefits plans such as Gratuity, etc. are recognised as an expense in the statement of profit and loss as the related services are provided Other long-term employee benefits Liability towards long term employee benefits in respect of staff deputed from BPCL is provided based on the debit notes from BPCL. In respect of BPRL cadre, liability is provided based on the employer s contribution towards leave encashment etc. as per respective schemes Foreign Currency Transactions Functional and presentation currency Items included in the financial statements of each of the group s entities are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Indian rupee (INR), which is company s functional and presentation currency Transactions and balances Monetary items: Transactions in foreign currencies are initially recorded at their respective exchange rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at spot rates of exchange at the reporting date. 123

126 BHARAT PETRORESOURCES LIMITED Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit and Loss. Non Monetary items: Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions Group companies The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: Assets and liabilities are translated at the closing rate at the date of that balance sheet Income and expenses are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and All resulting exchange differences are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate Provisions, Contingent Liabilities and Capital Commitments Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation The expenses relating to a provision is presented in the Statement of Profit and Loss net of reimbursements, if any If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Company, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote. 124

127 BPRL ANNUAL REPORT Contingent liabilities and Capital Commitments disclosed are in respect of items which in each case are above the threshold limit Fair Value measurement The Company measures certain financial instruments at fair value at each reporting date Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Company has access at that date. The fair value of a liability also reflects its non-performance risk The Company regularly reviews significant unobservable inputs and valuation adjustments. If the third party information, such as broker quotes or pricing services, is used to measure fair values, then the Company assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified While measuring the fair value of an asset or liability, the Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows: - Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. - Level 2: inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) - Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs) Certain accounting policies and disclosures require the measurement of fair values, for both financial and non- financial assets and liabilities When quoted price in active market for an instrument is available, the Company measures the fair value of the instrument using that price. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis If there is no quoted prices in an active market, then the Company uses a valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction The best estimate of the fair value of a financial instrument on initial recognition is normally the transaction price i.e. the fair value of the consideration given or received. If the Company determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is 125

128 BHARAT PETRORESOURCES LIMITED initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently that difference is recognised in Statement of Profit and Loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out Financial Assets Initial recognition and measurement All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset. Subsequent measurement Subsequent measurement is determined with reference to the classification of the respective financial assets. Based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial asset, the Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit and loss. Debt instruments at amortised cost A debt instrument is measured at the amortised cost if both the following conditions are met: The asset is held within a business model whose objective is - To hold assets for collecting contractual cash flows, and - Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. Debt instruments at Fair value through Other Comprehensive Income (FVOCI) A debt instrument is measured at the fair value through other comprehensive income if both the following conditions are met: The asset is held within a business model whose objective is achieved by both - collecting contractual cash flows and selling financial assets - Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding. After initial measurement, these assets are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and 126

129 BPRL ANNUAL REPORT losses and impairment are recognised in the Statement of Profit and Loss. Other net gains and losses are recognised in other comprehensive Income. Debt instruments at Fair value through profit and loss (FVTPL) Fair value through profit and loss is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as at amortised cost or as FVOCI, is classified as at FVTPL. After initial measurement, any fair value changes including any interest income, foreign exchange gain and losses, impairment loss and other net gains and losses are recognised in the Statement of Profit and Loss Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company s Balance Sheet) when, The rights to receive cash flows from the asset have expired, or The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through arrangement; and either: - The Company has transferred substantially all the risks and rewards of the asset, or - The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. On de-recognition, any gains or losses on all debt instruments and equity instruments (measured at FVTPL) are recognised in the Statement of Profit and Loss. Gains and losses in respect of debt instruments measured at FVOCI and that are accumulated in OCI are reclassified to profit and loss. Gains or losses on equity instruments measured at FVOCI are recognised and that are accumulated in OCI and are not reclassified to profit and loss Impairment of financial assets In accordance with Ind-AS 19, the Company applies Expected Credit Loss ( ECL ) model for measurement and recognition of impairment loss on the financial assets measured at amortised cost Financial Liabilities In respect of financial assets measured at amortised cost, the loss allowance is measured at ECL for financial assets with low credit risk at the reporting date and there is a significant deterioration in the credit risk since initial recognition of the asset Initial recognition and measurement Financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument. All financial liabilities other than those measured subsequently at fair value through profit and loss are recognised initially at fair value net of transaction costs that are attributable to the respective liabilities. 127

130 BHARAT PETRORESOURCES LIMITED Subsequent measurement Subsequent measurement is determined with reference to the classification of the respective financial liabilities. The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities at fair value through profit and loss. Financial Liabilities at fair value through profit and loss (FVTPL) A financial liability is classified as at fair value through profit and loss if it is classified as held-for-trading or is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and changes therein, including any interest expense, are recognised in Statement of Profit and Loss. Financial Liabilities measured at amortised cost After initial recognition, financial liabilities other than those which are classified as fair value through profit and loss are subsequently measured at amortised cost using the effective interest rate method ( EIR ). Amortised cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss Loans and borrowings After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognized. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss Financial guarantees Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of the debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 19 and the fair value initially recognised less cumulative amortisation. 128

131 BPRL ANNUAL REPORT Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously Taxes on Income Current Tax Income-tax Assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, by the end of reporting period. Current Tax items are recognised in correlation to the underlying transaction either in the Statement of Profit and Loss, other comprehensive income or directly in equity Deferred tax Deferred tax is provided using the Balance Sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Deferred Tax items are recognised in correlation to the underlying transaction either in the Statement of Profit and Loss, other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority Joint operations The Company has Joint arrangement in the nature of Production Sharing Contracts (PSC) with the Government of respective countries and/or various bodies corporate for exploration, development and production activities. 129

132 BHARAT PETRORESOURCES LIMITED The income, expenditure, assets and liabilities of the Joint operations are merged on line by line basis according to the participating interest with the similar items in the financial statements of the Company Earnings per share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares Classification of Assets and Liabilities as Current and Non-Current: All assets and liabilities are classified as current or non-current as per the Company s normal operating cycle (determined at 12 months) and other criteria set out in Schedule III of the Act Cash and Cash equivalents Cash and cash equivalents include cash at bank, cash, cheque and draft on hand. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents Cash Flows Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated. 13

133 BPRL ANNUAL REPORT Notes forming part of financial statements Note-2 Property, plant and equipment Following are the changes in the carrying value of property, plant and equipment for the year ended March 31, 217: Plant and Office Furniture Total Description Equipment Equipments & Fixtures Cost as at April 1, Additions Deletions - - (1.21) (1.21) Cost as at March 31, 217 (A) Accumulated depreciation as at April 1, Depreciation for the current period* Deletions - - (.38) (.38) Accumulated depreciation as at March 31, 217 (B) Net carrying amount as at March 31, 217 (A) - (B) Following are the changes in the carrying value of property, plant and equipment for the year ended March 31, 216: Plant and Office Furniture Total Description Equipment Equipments & Fixtures Cost as at April 1, Additions Deletions (1.5) (.8) - (1.13) Cost as at March 31, 216 (A) Accumulated depreciation as at April 1, Depreciation for the current period * Deletions Accumulated depreciation as at March 31, 216 (B) Net carrying amount as at March 31, 216 (A) - (B) * Includes the Property, Plant and Equipment owned by the Unincorporated Joint Venture block (CY/ ONN/22/2) which was transferred by Oil and Natural Gas Corporation Ltd. (ONGC) (Operator) in F.Y for permanent usage to the block at Madhanam. Since, the commercial production was not started in F.Y , depreciation of ` 3.3 lakhs on these assets have been charged to Intangible assets under development of respective block in F.Y In F.Y the same has been charged to Profit & Loss. Deemed cost exemption The Group has availed the deemed cost exemption in relation to the property plant and equipment on the date of transition and hence the net block carrying amount has been considered as the gross block carrying amount on that date. Refer note below for the gross block value and the accumulated depreciation on April 1, 215 under the previous GAAP. Description Plant and Equipment Office Equipments Furniture & Fixtures Total Gross Block Less: Accumulated Depreciation Net Block

134 BHARAT PETRORESOURCES LIMITED Notes forming part of financial statements Note 3 Intangible Assets Following are the changes in the carrying value of other intangible assets for the year ended March 31, 217: Description Computer Oil and Gas Software assets Total Cost as at April 1, Transfer from Intangible asset under development - 8, ,28.74 Additions - 3, ,469.7 Cost as at March 31, 217 (A) , , Accumulated amortization as at April 1, Depletion for the current period - 4, ,645.3 Accumulated amortization as at March 31, 217 (B) , , Net carrying amount as at March 31, 217 (A) - (B) - 7, ,33.14 Following are the changes in the carrying value of other intangible assets for the year ended March 31, 216: Description Computer Software Total Cost as at April 1, Additions - - Foreign exchange adjustment - - Deletions - - Cost as at March 31, 216 (A) Accumulated amortization as at April 1, Amortization for the current period Deletions - - Accumulated amortization as at March 31, 216 (B) Net carrying amount as at March 31, 216 (A) - (B) - - Deemed cost exemption The Group has availed the deemed cost exemption in relation to other intangible assets on the date of transition and hence the net block carrying amount has been considered as the gross block carrying amount on that date. Refer note below for the gross block value and the accumulated depreciation on April 1, 215 under the previous GAAP. Description Computer Software Total Gross Block Less:Accumulated amortization Net Block Additions during the year Upon commencement of commercial production in block CY/ONN/22/2, based on the advise from the operator and audited block statement the cost of ` 8,28.74 lakhs has been transferred from Intangible assets under development to Intangible assets in F.Y

135 BPRL ANNUAL REPORT Notes forming part of financial statements Note 4 Intangible Assets Under Development Description March 31, 217 March 31, 216 April 1, 215 Exploratory Wells-in-Progress: Acquisition Cost 3, , ,47.35 Exploration Cost - Geological & Geophysical Cost 24, , , Drilling Cost 428, , , General & Administrative Cost 26, , ,12.13 Exploratory Wells-in-Progress 482, , ,9.56 Less: Provision for Exploratory Wells-in progress (12,835.73) (12,68.32) (8,723.59) Exploratory Wells-in-Progress Total (A) 469, , , Development Wells-in-Progress: - Opening balance 8, Transferred from Exploratory Wells-in-Progress - 7, Expenditure during the year Transfer during the year to intangible asset (8,28.74) - - Development Wells-in-Progress (B) - 8, Total=(A)+(B) 469, , , Deemed cost exemption The Group has availed the deemed cost exemption in relation to the oil and gas related assets on the date of transition and hence the carrying amount of intangible assets under development has been considered as the deemed cost on that date. Borrowing cost capitalised During the year ended March 31, 217, the Group has capitalised interest cost of ` 16,669.7 Lakhs (March 31, 216: ` 15,18.26 Lakhs; April 1, 215: 11,516.83) at a capitalisation rate of 9.47% for Indian blocks and 3.53% for foreign blocks (March 31, 216: 1.3% for Indian blocks and 3.25% for foreign blocks; April 1, 215: 3.31% for foreign blocks ) Development wells in progress In respect of CY-ONN-22/2, the block entered into Development Phase subsequent to the approval of Field Development Plan (FDP) for 14 sq.km of block area by Management Committee in their meeting held on 16 th October 215 and an application for Mining Licence was made to Goverment of Tamil Nadu which is under active considerstion. The cost incurred in respect of this block has shown under Development wells-in-progress as at March 31, 216. During the F.Y , an amount of ` Lakhs (F.Y ` Lakhs) (net of Royalty of ` 117. Lakhs (F.Y ` 2.76 Lakhs) generated from production & sale of Pit Oil/Test Oil was reduced from the Intangible assets under development. Upon commencement of commercial production, as per the advise and audited block accounts from the operator, an amount of ` 8,28.74 lakhs has been transferred from Intangible assets under development to Intangible assets in F.Y Impairment The provision for impairment is ` 12, lakhs as at March 31, 217 (as at March 31, 216 ` 12,68.32 lakhs; April 1, 215 ` 8, lakhs) in respect of Block RJ/ONN/25/1 ; MB/OSN/21/2 and JPDA 6-13 blocks. Capital expenditure The Capital expenditure incurred by the Group in the blocks in India & overseas during the year is ` 45, Lakhs; (March 31, 216: ` 135, Lakhs). Of this, ` 3, lakhs has been incurred in blocks held directly by BPRL or held through its subsidiaries and forming part of the gross block / Intangible asset under development of the consolidated financial statements. The balance ` 15, Lakhs has been incurred on blocks in Brazil held through IBV Brasil Petroleo Ltda., a JV in which BPRL through its Netherland subsidiary holds 5% stake and the accounts of which have been considered in consolidated financial statements of the Group as on March 31, 217 on equity method of accounting under Ind AS and therefore not directly forming part of the gross block / Intangible asset under development as on March 31, 217; though were forming part till March 31, 216 under IGAAP. Additionally the Group has in FY , paid cash calls amounting to ` 9, lakhs to LLC TYNGD, holding oil and gas blocks, in which the group hold 9.87% equity stake, the accounts of which have been considered for consolidation in the financial statements of the Group by equity menthod and not directly forming part of the gross block / Intangible asset under development as on March 31,

136 BHARAT PETRORESOURCES LIMITED Notes forming part of financial statements Note 5 Equity accounted investees Information of interest of the Group in its equity accounted investees: Note reference March 31, 217 March 31, 216 April 1, 215 Interest in Joint Ventures See Note (A) below 946, Interest in Associates See Note (B) below [A] Interest in Joint Ventures (I) List of material Joint Ventures of the Group Sr No Name Total 946, Country of Incorporation Proportion of Ownership Interest March 31, 217 March 31, 216 April 1, IBV (Brasil) Petroleo Ltda. Brazil 5.% 5.% 5.% 2 Taas India Pte Ltd Singapore 33.% Nil Nil 3 Vankor India Pte Ltd Singapore 33.% Nil Nil The principal place of business of all the entities listed above is the same as their respective country of incorporation. IBV (Brasil) Petroleo Ltda. is principally engaged in the business of exploration of oil and gas. Taas India Pte Ltd and Vankor India Pte Ltd are special purpose vehicles (SPVs) formed by BPRL, IOC and OIL for holding equity stake of 29.9% and 23.9% respectively in TYNGD LLC and JSC Vankorneft. BPRL s wholly owned subsidiary BISPL, Singapore holds 33% stake in these two SPVs. The acquisition was completed on 5 October 216. The following table comprises the financial information of the Group s material Joint Venture and their respective carrying amount. IBV (Brasil) Petroleo Ltda. Taas India Vankor India Particulars March 31, 217 March 31, 216 April 1, 215 Dec 31, 216 * Dec 31, 216 * Non-current Assets 915, , , , ,239, Current Assets Cash and cash equivalents Other Assets , , Total Current Assets 33. 2, , Non-current liabilities Financial liabilities 356, , , Total Non-current liabilities 356, , , Current liabilities Financial liabilities 4,67.8 3, , Other liabilities Total current liabilities 4,67.8 3, , Net Assets (1%) 553, (47,196.26) (13,574.15) 83, ,24,81.7 Group s share of net assets 276,898.8 (23,598.13) (51,787.7) 265, , Consolidation adjustment (4,944.3) 23, , Carrying amount of interest in joint venture 271, , , Total Carrying amount of interest in material joint venture as at March 31, ,

137 BPRL ANNUAL REPORT Notes forming part of Financial Statements IBV (Brasil) Petroleo Ltda. Taas India Vankor India Particulars March 31, 217 March 31, 216 Dec 31, 216 * Dec 31, 216 * Revenue Depreciation and amortization 5.86 (7.47) - - Finance costs.19 (.2) - - Income tax expense Profit for the year (1%) 7, (19,643.66) (6,216.98) 35,86.79 Other comprehensive income for the year (1%) 14,653. 2, , , Total Comprehensive income for the year 22, , ,7.22 Group s share of profit 11, , ,621.7 Dividends received by the Group * BISPL has considered share of net assets in Taas India Pte Ltd and Vankor India Pte. Ltd as at December 31, 216 based on audited financial statements [B] Interest in Associates Mozambique LNG 1 Pte Ltd - 1% Particulars March 31, 217 March 31, 216 April 1, 215 Agregate carrying amount in its interest in Associates Share of Profit or loss from Associates Share of Other Comprehensive Income from Associates Share of Total Comprehensive Income from Associates Note 6 Loans March 31, 217 March 31, 216 April 1, 215 (Unsecured, considered good unless otherwise stated) Loan to IBV (Brasil) Petroleo Ltda 154, , , Security deposits Loan to employees , , , Note 7 Cash and cash equivalents March 31, 217 March 31, 216 April 1, 215 Balances with Banks: On Current Account 29, , , Demand deposits with Banks with original maturity of less than three months - 23, , , , Note 8 Bank balances Fixed deposits with banks with original maturity of more than three months and less than twelve months* March 31, 217 March 31, 216 April 1, 215 1, , , , , ,362.9 * It includes bid bond with government authorities ` 8 lakhs (March 31, 216: Nil; April 1, 215: Nil) Note 9 Other current financial assets March 31, 217 March 31, 216 April 1, 215 Receivable from consortium partners 1, Other receivables ,

138 BHARAT PETRORESOURCES LIMITED Notes forming part of Financial Statements Note 9A Current Tax assets (net) March 31, 217 March 31, 216 April 1, 215 TDS Receivable Income Tax Refund receivable Note 1 Other current assets March 31, 217 March 31, 216 April 1, 215 Prepaid Expense Cenvat Credit Advance paid to operators 2, , , Other current assets , , , Note 11 Share Capital March 31, 217 March 31, 216 April 1, 215 Authorised Share Capital 3,,, (March 31, 216: 3,,,) (April 1, 215: 3,,,) equity shares fully paid-up 3,. 3,. 3,. Issued, subscribed and paid-up 2,92,2,67 (March 31, 216: 2,92,2,67) (April 1, 215: 2,62,2,67) equity shares fully paid-up 292, , ,.27 Total 292, , ,.27 The Company has only one class of shares namely equity shares having a par value of `1 per share. Each holder of equity shares is entitled to one vote per share. Reconciliation of No. of Equity Shares March 31, 217 March 31, 216 April 1, 215 A. Opening Balance 2,92,2,67 2,62,2,67 2,62,2,67 B. Shares Issued - 3,, - C. Closing Balance 2,92,2,67 2,92,2,67 2,62,2,67 Details of shareholders holding more than 5% shares March 31, 217 March 31, 216 April 1, 215 Name of shareholder No. of shares No. of shares No. of shares Bharat Petroleum Corporation Ltd 2,92,2,61. 2,92,2,61. 2,62,2,61. Percentage of holding 1% # 1% # 1% # # 6 shares held by others 136

139 BPRL ANNUAL REPORT Notes forming part of Financial Statements Note 12 Reserves and Surplus (a) Share application money pending allotment March 31, 217 March 31, 216 Opening balance - 3,. Add/(Less): Shares issued during the year - (3,.) Closing balance - - (b) Retained earnings Opening balance (227,337.56) (211,38.63) Add/(Less): Loss for the year as per Statement of Profit and Loss (5,2.94) (17,661.92) Add/(Less): Transfer from equity component of loan 1, , Closing balance (275,548.7) (227,337.56) (c) Capital reserve Opening balance 47, , Add/(Less): Transfer made during the year to retained earnings (1,791.81) (1,632.98) Closing balance 45, ,81.87 (d) Foreign currency translation reserve Opening balance 68, , Add/(Less): Effect of foreign exchange rate variations during the year 2, , Closing balance 89, , Total Other Equity (141,241.83) (111,536.6) Nature and purpose of reserves (a) Share Application money pending allotment The Company received `3, lakhs from its holding company towards the general funding requirement of the company in FY The same were deposited in the separate bank account until the allotment of shares. The monies were subsequently deployed in FY (b) Retained earnings Retained earnings includes the Company s cumulative earnings and losses. It also includes the amount transferred from capital reserves as mentioned above. (c) Capital reserves The Company had received interest free borrowing of ` 65, lakhs from its Parent Company. Under Ind AS, at the date of transition, the company recognised for the said financial liability at fair value with the differential recognised as equity component to be spread over the tenure of the loan. (d) Foreign currency translation reserve Exchange differences arising on translation of foreign operations are recognized in other comprehensive income as described in accounting policies and accumulated in separate reserves within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed. 137

140 BHARAT PETRORESOURCES LIMITED Notes forming part of Financial Statements Note 13 Borrowings March 31, 217 March 31, 216 April 1, 215 Term loans Secured From banks 526, , ,658.6 Unsecured From Parent Company 24, , , Bonds (Unsecured) 387, Terms of Repayment Schedule of Long-term borrowings: Secured Loan from Banks Repayment date 1,119, , , Loan value as on March 31, 217 Loan value as on Loan value as on March 31, 216 April 1, , , , , , , , , , , , , The above loan carries interest of 3 Months Libor + margin. The above loans are secured against: i) Pledge of shares held in BPRL Ventures Mozambique BV and BPRL Ventures Indonesia BV ii) A first rank security interest on fixed and current assets and cash flows of BPRL Ventures Mozambique BV and BPRL Ventures Indonesia BV Unsecured: Maturity in F.Y. Rate of Interest Loan from Parent Company 35, Interest free Loan from Parent Company 3, Interest free Loan from Parent Company 185,.* % * The Lender (Parent Company) has the right to demand at any time that the borrower (the Company) shall issue shares to the lender in lieu of the loan amount on such date or any pro rata part of the loan as the Lender demands to be converted. Unsecured: Maturity in F.Y. Rate of Interest Bonds 389, % On January 18, 217, BPRL International Singapore Pte. Ltd issued bonds for a tenor of 1 years which is listed on the Singapore Stock Exchange. These bonds are guaranteed by the parent company, BPCL. 138

141 BPRL ANNUAL REPORT Notes forming part of Financial Statements Note 14 Long Term Provisions March 31, 217 March 31, 216 April 1, 215 Provision for abandonment 1, , ,56.16 (Refer Note 18 for movement of provision) 1, , ,56.16 Note 15 Borrowings March 31, 217 March 31, 216 April 1, 215 Unsecured From Bank 97, , Unsecured: Repayment date Loan from Banks 97,17.9 October 2, 217 Rate of Interest 1 Month Libor + margin These borrowings are guaranteed by the parent. Note 16 Current - Other financial liabilities March 31, 217 March 31, 216 April 1, 215 Due to Parent Company Due to Operators 7, , ,5.7 Current maturities of long term borrowings 194, ,954. Interest accrued but not due on borrowings 12, , ,549.5 Security/Earnest Money deposits Other Payables 1, , Accrual for expenses 2, Capital creditors Employee benefit obligation , , ,47.35 Note 17 Other current liabilities March 31, 217 March 31, 216 April 1, 215 Statutory Dues Payable Note 18 Provisions March 31, 217 March 31, 216 April 1, 215 Current Provision for Liquidated Damages 1, , , Provision for abandonment , , ,

142 BHARAT PETRORESOURCES LIMITED Notes forming part of Financial Statements Movements in provisions - includes Non current and current Liquidated Damages Abandonment Total Balance as at 1 April 215 2, , , Provisions made during the year Provisions reversed during the year (22.96) - (22.96) Foreign exchange fluctuation (48.25) Balance as at 31 March 216 3, , , Balance as at 1 April 216 3, , , Provisions made during the year* 7, , Provisions reversed during the year (411.92) (42.42) (454.34) Foreign exchange fluctuation (63.6) (225.91) (288.98) Balance as at 31 March 217 1, , ,954.7 * Includes provision made during the year ended March 31, 217 and capitalised `363.1 lakhs under Intangible asset under development. Liquidated Damages 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. Accordingly, Company has provided ` 1,12.84 lakhs towards liquidated damages as on March 31, 217 (March 31, 216 ` 3,54.13 lakhs; April 1, 215 ` 2, lakhs) in respect to various blocks. A provision of ` 7,541.7 lakhs has been made in F.Y in respect of block RJ ONN 25/1, CB ONN 21/8 and MB 21/2. Abandonment BPRL has Participating Interest in different oil and gas blocks along with other consortium partners. The company has made a provison of ` 1, lakhs as on March 31, 217 (March 31, 216 ` 1,692.1 lakhs; April 1, 215 ` 1, lakhs) in respect of company s share of the abandonment obligation. Note 19 Revenue from Operations For the year For the year Sales of products 4, , Upon block CY/ONN/22/2 entering the production phase in F.Y , Company has recognised ` 4, lakhs during the year from sale of crude oil. Note 19(a) Quantitative Details of Revenue For the year For the year Product Crude Oil* (in MT) 18, * Quantity includes share from Joint Ventures as per the Participating Interest. Note 2 Other Income For the year For the year Financial assets at FVTPL - net change in fair value (Refer Note 29) - 7,39.4 Interest Income on instruments measured at amortised cost Miscelleneous Income Foreign Exchange fluctuations (net) Provision no longer required written back ,

143 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements Note 21 Production expenditure For the year For the year Operating expenditure Royalty , Note 22 Employee Benefits Expense For the year For the year Salaries and wages Payment towards PF and other Funds Payment towards gratuity Welfare expenses ,14.15 Note 23 Finance Costs For the year For the year Interest Expense 24, , , , Note 24 Other Expenses For the year For the year Irrecoverable Taxes Financial assets at FVTPL - net change in fair value (Refer Note 29) 25, Impairment for Intangible assets under development , Provision for abandonment Repairs and maintenance : Machinery Others Insurance Rent Rates and taxes Legal and Professional Fees 2, Liquidated Damages 7, Share in Exploration Expenditure Travelling and Conveyance Advertisement Bank Charges Printing & Stationery Software Expenses Postage, Telephone etc Electricity Charges Security Expenses Payment to Auditors For Audit Fees For Management Services For Certification Loss on sale of asset Other Expenses , ,

144 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements Note-25 Tax Expense (a) Amounts recognised in profit and loss Current tax expense Current year - - Deferred tax expense / (benefit) Origination and reversal of temporary differences (511.36) (74.85) Tax expense / (benefit) recognised in the income statement (511.36) (74.85) (b) Amounts recognised in other comprehensive income For the year ended March 31, 217 For the year ended March 31, 216 Before tax Tax expense / (benefit) Net of tax Before tax Tax expense/ (benefit) Net of tax Items that will be reclassified to profit or loss Exchange differences on translation of foreign operations Share of Other comprehensive income of equity accounted investee (2,273.81) - (2,273.81) 28, , , , , , , , (c) Reconciliation of effective tax rate For the year ended March 31, 217 For the year ended March 31, 216 Profit/(loss) before Tax (5,514.3) (17,736.77) Tax using the Company s domestic tax rate (Current year 3.9% and Previous Year 3.9%) (15,68.92) (5,48.66) Tax effect of: Differences in the tax rate of foreign jurisdictions* (224.24) 1,293.9 Tax losses for which no deferred income tax was recognised 18, ,614.7 Expenses not deductible for tax purposes , Income not chargeble to tax (4,66.37) (1,489.1) Tax expense as per Statement of Profit & Loss (511.36) (74.85) * BPRL International BV, Netherland and BPRL International Singapore Pte Ltd., subsidiaries operates in a tax jurisdiction with different tax rates. 142

145 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements Note-25 Deferred Tax reconciliation (d) Movement in deferred tax balances Net balance April 1, 216 Recognised in profit or loss Recognised in OCI Recognised directly in equity March 31, 217 Net Deferred tax asset / (liability) Deferred tax Liability Borrowings (14,623.15) (14,69.48) Intangible asset under development (354.89) (42.31) - - (397.2) (14,978.4) (14,466.68) (e) Movement in deferred tax balances March 31, 216 Recognised Recognised Net Deferred Net balance Recognised in profit or directly in tax asset / April 1, 215 in OCI loss equity (liability) Deferred tax Liability Borrowings (15,52.89) (14,623.15) Intangible asset under development - (354.89) - - (354.89) (15,52.89) (14,978.4) The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority. Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets. 31 March 217, undistributed earning of subsidiaries and joint ventures amounted to ` 9, lakhs (March : ` Nil. April 1 215: Nil). The corresponding deferred tax liability of ` 1,474 lakhs. (March : ` Nil; April 1 215: Nil) was not recognised because the Company controls the dividend policy of its subsidiaries and is able to veto the payment of dividends of its joint ventures - i.e. the Company controls the timing of reversal of the related taxable temporary differences and management is satisfied that they will not reverse in the foreseeable future. Tax losses carried forward Deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable profit will be available against which the Group can use the benefits therefrom: March 31, March 31, March 31, March 31, April 1, 215 April 1, 215 Gross amount Expiry date Gross amount Expiry date Gross amount Expiry date Business loss Business loss - - 1, , Business loss 9, , , Business loss 11, , , Business loss 27, , , Business loss 39, , , Business loss 6, , , Business loss 2, , , Long-term Capital loss Unabsorbed depreciation 5, No expiry date No expiry date No expiry date Business loss Business loss 11,

146 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements Note 26 Earnings per share (EPS) Basic EPS and Diluted EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year. i. Profit attributable to Equity holders of parent March 31, 217 March 31, 216 Profit / (loss) attributable to equity holders of the parent (5,2.94) (17,661.92) ii. Weighted average number of ordinary shares March 31, 217 March 31, 216 Issued ordinary shares at the beginning of the year 2,92,2,67 2,62,2,67 Shares issued and allotted during the year - 3,, Weighted Average Number of shares issued during the year - 258,196,721 Weighted average number of shares 2,92,2,67 2,878,199,391 Basic and Diluted earnings per share (1.71) (.61) Note 27 Leases - Operating Leases The Group has taken commercial premises and land under cancellable operating leases March 31, 217 March 31, 216 The rental expenses recognised in Profit and Loss account for operating leases : Minimum lease payments Total rental expenses relating to operating lease In addition to above, the Group has paid rent ` 35.7 lakhs (March 31, 216: ` lakhs) towards commercial premises and land. The same is capitalised under Intangible asset under development. Note 27A Specified Bank Notes Pursuant to notification of MCA, details of Specified Bank Notes (SBN) held and transacted during the period 8 November 216 to 3 December 216 Particulars Special Bank notes Other denominated notes Closing cash in hand as on 8 November 216 Nil Nil Permitted receipts Nil Nil Permitted payments Nil Nil Amount deposited in banks Nil Nil Closing cash in hand as on 3 December 216 Nil Nil 144

147 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements Note 28 Employee benefits Majority of the employees are on deputation from Bharat Petroleum Corporation Limited (BPCL). a) Expenditure under the head Employee benefits expenditure includes debit notes raised by BPCL towards employees on deputation including in respect of employee benefits i.e. leave encashment and retirement benefits towards Provident Fund, Gratuity, etc. The details of expenses debited to the profit and loss account under this head are as follows: Sr No Particulars For the year For the year Provident Fund Gratuity Leave encashment Superannuation (NPS) Total b) Pursuant to Company been upgraded to Schedule B, Government of India has appointed three Whole time directors on the Board of BPRL. (A) Defined Contribution Plan The Company has long-term benefits such as Provident Fund and superannuation fund for its employees. In respect of directors and employees on deputation from BPCL, the cost towards these benefits is recognised based on debit notes from the respective companies. (B) Defined Benefit Plan The Company has different schemes such as Gratuity, Retirement Medical Scheme, etc. for its employees. In respect of directors and employees on deputation from BPCL, the cost towards these benefits is recognised based on debit notes from the respective companies. Charge to the Statement of Profit and Loss in respect of above: Sr No Particulars For the year For the year Provident Fund Superannuation (including gratuity) Total (C) Other long-term employee benefits: The charge towards leave encashment for the year ended 31 March 217 is ` lakhs (March 31, 216 : ` 6.21 lakhs ). (D) In view of the above, the management is of the view that no additional disclosure is required in terms of Indian Accounting Standard 19 on Employee Benefits notified under Section 133 of the Companies Act, 213 [ Companies (Indian Accounting Standards) Rules, 215]. 145

148 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements Note 29 Financial instruments Fair values and risk management 1. Financial instruments Fair values and risk management A. Accounting classification and fair values The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Carrying amount Fair value March 31, 217 Financial assets Cash and cash equivalents FVTPL FVTOCI Amortised Cost Total Level 1 Level 2 Level 3 Total , , Other Bank Balances - - 1, , Loan to joint venture* 154, , , ,439.7 Security deposit Other Current financial asset - - 1, , , , , , , Financial liabilities Bonds , , , , Term loans - Secured , , , , Term loans - Unsecured , , , , Short term borrowings , , Other current liabilities , , ,435, ,435, ,12, ,12, Carrying amount Fair value March 31, 216 FVTPL FVTOCI Amortised Cost Total Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents - - 3, , Other Bank Balances - - 8, , Loan to joint venture* 44, , , ,35.49 Security deposit Other Current financial asset , , , , ,42.42 Financial liabilities Term loans - Secured , , , ,23.51 Term loans - Unsecured , , , , Other current liabilities , , , , , ,

149 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements Note 29 Financial instruments Fair values and risk management (continued) Carrying amount Fair value April 1, 215 Amortised FVTPL FVTOCI Cost Total Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents - - 5, , Other Bank Balances , , Loan to joint venture* 353, , , , Security deposit Other Current financial asset , , , , , Financial liabilities Term loans - Secured , , , ,658.6 Term loans - Unsecured , , , , Other current liabilities , , , , , , * BPRL Ventures BV, subsidiary of BPRL has given loan to its joint venture company i.e. IBV (Brasil) Petroleo Ltda (IBV) at interest rate Libor + 4% for the tenure of 5 years. Principal amount of the loan can be converted into IBV equity shares anytime at the option of BPRL. Conversion ratio of equity share is amount outstanding divide by USD 1 and than convert into Brazilian reias. Face value of the IBV Brazil is 1 Brazilian reias. Interest is payable in the next year in which IBV makes profit and Interest is payable only for that year not for prior period years. As it does not meet the definition of amortised cost and nor it is an equity instrument due to its conversion option. The Company has fair valued the loan and classify as FVTPL. The gain / loss on fair valuation is debited to Statement of Profit and Loss. - refer note 2 and 24. B. Measurement of fair values Valuation techniques and significant unobservable inputs The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used: Financial instruments measured at fair value Type Valuation technique Loan to joint venture* Binomial model: The share price is simulated using a Binomial model from the valuation date to the maturity of the loan. As the number of shares is dependent on USDBRL exchange rate, the same was simulated using a GARCH model Non current financial assets and liabilities measured at amortised cost Discounted cash flows: The valuation model considers the present value of expected receipt/payment discounted using appropriate discounting rates. Significant unobservable inputs Share price (31 March 217: 1.9) Credit spread (31 March 217: 2.5%) Not applicable Inter-relationship between significant unobservable inputs and fair value measurement Not applicable Not applicable Level 3 fair values Reconciliation of Level 3 fair values The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values. Paticulars Loan to joint venture* Opening Balance(1 April 215) 353, Net change in fair value 7,39.4 Addition 78, Closing Balance (31 March 216) 44,35.49 Opening Balance(1 April 216) 44,35.49 Net change in fair value (25,258.47) (26,337.95) Closing Balance (31 March 217) During the year ended March 31, 217, a part of the loan has been converted to equity. 147

150 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements Note 29 Financial instruments Fair values and risk management (continued) Sensitivity analysis For the fair values of loan to joint venture, reasonably possible changes at the reporting date to one of the significant observable inputs, holding other inputs constant, would have the following effects. ` In lakhs March 31, 217 Profit or loss March 31, 216 Profit or loss Significant unobservable inputs Increase Decrease Increase Decrease Credit spread (1% movement) (2,576.8) 2,63.69 (8,938.5) 9, Share price (1% movement) 2, (2,897.69) 57, (57,415.94) C. Financial risk management The Company has exposure to the following risks arising from financial instruments: Credit risk ; Liquidity risk ; and Market risk i. Risk management framework The Company s Board of Directors has overall responsibility for the establishment and oversight of the Company s risk management framework. The Board of Directors has established the Risk Management Committee (the Committee), which is responsible for developing and monitoring the Company s risk management policies. The Company s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The audit committee oversees how management monitors compliance with the company s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. ii. Credit risk Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group s cash and bank deposits kept with banks, receivables from joint operators and loan to subsidiary. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counter party. The maximum exposure to credit risk in case of all the financial instuments covered below is resticted to their respective carrying amount. The Group does not have significant credit risk on account of receivables from customers Cash and bank deposit The Group held cash and bank balance with banks with good credit ratings. Other receivables The credit worthiness of receivables from others is evaluated by the management on an ongoing basis and is considered to be good. The Group does not have financial assets that are past due but not impaired. 148

151 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements Note 29 Financial instruments Fair values and risk management (continued) iii. Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group s reputation. The Group has access to funds from banks for long term borrowings, bonds issued in capital market and loan from holding Group. The Group also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility. Exposure to liquidity risk The table below analyses the Group s financial liabilities into relevant maturity groupings based on their contractual maturities for all non derivative financial liabilities. The amounts are gross and undiscounted, and include contractual interest payments. Contractual cash flows ` In lakhs March 31, 217 Carrying amount Total Upto 1 year 1-3 years 3-5 years More than 5 years Non-derivative financial liabilities Term loan from bank 721, , , , , , Bonds 387, , , , , , Short term borrowings 97, , , Term loan from parent company 24, , , , , , Other financial liabilities 24, , , Contractual cash flows ` In lakhs March 31, 216 Carrying amount Total Upto 1 year 1-3 years 3-5 years More than 5 years Non-derivative financial liabilities Term loan from bank 73, , , , , ,96.4 Term loan from parent company 17, , ,. Other financial liabilities 12, , , ` In lakhs Contractual cash flows April 1, 215 Carrying amount Total Upto 1 year 1-3 years 3-5 years More than 5 years Non-derivative financial liabilities Term loan from bank 594, , , , Term loan from parent company 16, , ,. Other financial liabilities 19, , ,

152 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements Note 29 Financial instruments Fair values and risk management (continued) iv. Market risk Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect the Group s income or the value of its holdings of financial instruments.market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs. Currency risk The Group is exposed to currency risk on account of its operating and financing activities. The functional currency of the Group is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. The Group has not taken derivative instruments to hedge the foreign currency risk and strives to achieve asset liability offset of foreign currency exposure. Also, the Group continuously monitors the fluctuation in currency risk and ensures that the company does not have adverse impact on account of fluctuation in exchange rates. Exposure to currency risk The currency profile of financial assets and financial liabilities as at March 31, 217, March 31, 216 and April 1, 215 are as below: Total ` In lakhs March 31, 217 March 31, 217 March 31, 217 March 31, 217 USD AUD EUR SGD Financial assets Cash and cash equivalents Other Current financial asset Financial liabilities Other Current financial liabilities Net exposure (Assets - Liabilities) (341.33) (254.7) (1.99) (56.57) (28.7) ` In lakhs Total March 31, 216 March 31, 216 March 31, 216 March 31, 216 USD AUD EUR SGD Financial assets Cash and cash equivalents Other Current financial asset Financial liabilities Other Current financial liabilities Net exposure (Assets - Liabilities) (8.49) (37.64) (78.4) - ` In lakhs Total April 1, 215 April 1, 215 April 1, 215 April 1, 215 USD AUD EUR SGD Financial assets Cash and cash equivalents Other Current financial asset 2, , Financial liabilities Other Current financial liabilities Net exposure (Assets - Liabilities) 2, , (15.15) (61.47) - 15

153 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements Note 29 Financial instruments Fair values and risk management (continued) Sensitivity analysis A reasonable possible strenghtening / weakening of the respective foreign currencies with respect to functional currency of Company would result in increase or decrease in profit or loss as shown in table below. This analysis assumes that all other variables, in particular interest rates, remain constant. The following analysis has been worked out based on the exposures as of the date of statements of financial position. Strengthening / Weakening % Profit or loss Effect (before tax) ` In lakhs Strengthening Weakening March 31, 217 USD 3% (7.62) 7.62 AUD 5% (.1).1 EURO 2% (1.13) 1.13 SGD 3% (.86).86 (9.71) 9.71 Strengthening / Weakening % Profit or loss Effect (before tax) ` In lakhs Strengthening Weakening March 31, 216 USD 3% 3.22 (3.22) AUD 5% (1.88) 1.88 EURO 2% (1.56) 1.56 SGD 3% - - (.23).23 Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing instruments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing instruments will fluctuate because of fluctuations in the interest rates. Exposure to interest rate risk Group s interest rate risk arises from borrowings. The interest rate profile of the Group s interest-bearing financial instruments as reported to the management of the Group is as follows. Carrying amount in INR Lakhs March 31, 217 March 31, 216 April 1, 215 Fixed-rate instruments Financial assets - measured at amortised cost 1, , , Financial liabilities - measured at amortised cost (47,657.15) (17,918.13) (16,285.15) (46,427.55) (9,398.5) 58,92.4 Variable-rate instruments Financial Assets - measured at Fair Value through profit & loss 154, , , Financial liabilities - measured at amortised cost (1,3,182.) (73,23.51) (594,612.6) (848,742.93) (263,195.3) (24,784.33) Interest rate sensitivity - fixed rate instruments The Group s fixed rate deposits with banks and bonds issued in capital markets are carried at amortised cost. They are therefore not subject to interest rate risk as defined in IND AS 17, since neither the carrying amount nor the future cash flow will fluctuate because of a change in market interest rates. 151

154 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements Interest rate sensitivity - variable rate instruments A reasonably possible change of 1 basis points in interest rates at the reporting date would have increased / decreased profit or loss by amounts shown below. This analyses assumes that all other variables, in particular, foreign currency exchange rates, remain constant. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The period end balances are not necessarily representative of the average debt outstanding during the period. Cash flow sensitivity (net) Profit or loss INR in lakhs 1 bps increase 1 bps decrease March 31, 217 Variable-rate instruments (8,487.43) 8, Cash flow sensitivity (net) (8,487.43) 8, March 31, 216 Variable-rate instruments (2,631.95) 2, Cash flow sensitivity (net) (2,631.95) 2, Commodity Risk The company has entered into production stage in the current year and therefore has insignificant exposure to market risk with respect to commodity prices primarily arising from the Company s sale of the crude oil. The prices may fluctuate significantly over short periods of time for this commodity. The prices of the Company s commodity generally fluctuate in line with global market conditions. Commodity price risk exposure is evaluated and managed through operating procedures and policies. As of March 31, 217, the Company had not entered into any material derivative contracts to hedge exposure to fluctuations in commodity prices Note 3 Capital Management The Group s policy is to maintain a strong capital base to sustain future development of the business. The Group manages fund requirements through combination of equity and debts. Note 31 Related party transactions A. Parent entity The group is controlled by the following entity: Name Bharat Petroleum Corporation Limited Place of Type incorporation Immediate and Ultimate parent entity B. Subsidiaries, joint ventures and associates Interest in subsidiaries, joint ventures and associates are set out below Name Type March 31, 217 Ownership interest March 31, 216 April 1, 215 India 1% 1% 1% Place of incorporation Ownership interest March 31, March 31, April 1, 215 Bharat PetroResources JPDA Ltd. (BPR JPDA) Subsidiary India 1% 1% 1% BPRL International BV Subsidiary Netherlands 1% 1% 1% BPRL International Singapore Pte Ltd. ** Subsidiary Singapore 1% Nil Nil BPRL Ventures BV * Subsidiary Netherlands 1% 1% 1% BPRL Ventures Mozambique BV * Subsidiary Netherlands 1% 1% 1% BPRL Ventures Indonesia BV * Subsidiary Netherlands 1% 1% 1% IBV (Brasil) Petroleo Ltda. # Joint Venture Brazil 5% 5% 5% Taas India Pte Joint Venture Singapore 33% Nil Nil Vankor India Pte Joint Venture Singapore 33% Nil Nil Mozambique LNG 1 Pte Associate Singapore 1% Nil Nil LLC Associate Russia 29.9% Nil Nil JSC Vankorneft ## Associate Russia 23.9% Nil Nil 152

155 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements * BPRL Ventures BV, BPRL Ventures Mozambique BV and BPRL Ventures Indonesia BV are wholly owned subsidiaries of BPRL International BV. ** BPRL International Singapore Pte Ltd. Incorporated on 12 May 216 # IBV Brasil Petroleo Ltda. is a 5% joint venture of BPRL Ventures BV and Videocon Energy Brazil Taas India Pte Ltd. And Vankor India Pte Ltd., incorporated on May 23, 216 and May 2, 216 are joint venture companies of Oil India International Pte Ltd, IOCL Singapore Pte Ltd and BPRL International Singapore Pte Ltd (BISPL) where BISPL holds 33% Taas India Pte Ltd acquired 29.9% stake in LLC TYNGD on 5 October 216 ## Vankor India Pte Ltd acquired 23.9% stake in JSC Vankorneft on 5 October BPRL Ventures Mozambique BV acquired 1% stake in Mozambique LNG 1 Pte Ltd on March 18, 217 C) Key management personnel Shri D. Rajkumar, Managing Shri Ajay Kumar, Director (Ops & BD) w.e.f 21 May 215 Shri Pankaj Kumar, Director (Finance) w.e.f. 31 July 215 Shri P. Balasubramanian, Director w.e.f. 16 May 214 Shri K.K.Gupta, resigned on 28 May 214 Dr. Praphullachandra Sharma w.e.f 11 March 216 Ms. Mary Jacob w.e.f. 18 August 215 and resigned on 11 March 216 Shri S. Varadarajan, resigned on 3 September 216 Shri B.K.Datta, resigned on 31 July from office of Managing Director on 2 July 215 as nominee of BPCL in view of his appointment as Managing Director by Ministry of Petroleum and Natural Gas on July Later, resigned from the Board as Managing Director, BPRL on September on his appointment as C&MD in BPCL. Subsequently, appointed as part time Director of BPRL on Ocober after receiving nomination from BPCL. C. Transactions with related parties a) Key management personnel compensation (` in lakhs) March 31, 217 March 31, 216 Short-term employee benefits Post-retirement benefits Other long-term benefits b) The nature wise transactions with the above related parties are as follows: (` in lakhs) Nature of Transactions Joint venture Key Management Personnel March 31, 217 March 31, 216 March 31, 217 March 31, 216 Repayment of Loan by IBV 8, Conversion of loan into equity shares 267, Loan given to IBV - 21, Loan given during the period c) Outstanding Balances (` in lakhs) Joint venture March 31, 217 March 31, 216 April 1, 215 Loan Receivable - IBV (Brasil) Petroleo Ltda. at fair value 154, , , All transactions with these related parties are priced on an arm's length basis and resulting outstanding balances are to be settled in cash. None of the balances are secured. 153

156 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements Note 32 Ind AS 11 I. First-time adoption of Ind AS These are the Group s first financial statements prepared in accordance with Ind AS. The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31 March 217, the comparative information presented in these financial statements for the year ended 31 March 216 and in the presentation of an opening Ind AS balance sheet at 1 April 215 (the Company s date of transition). In preparing its opening Ind AS balance sheet, the Group has adjusted the amount reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 26 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the company s financial position and financial performance is set out in the following tables and notes. II. Exemptions from retrospective application Ind AS 11 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Group has applied the following exemptions: a) Deemed cost for Property, Plant and Equipment (PPE) and Intangible assets Ind AS 11 permits a first time adopter to continue with the carrying value for all its property, plant and equipment and intangible assets as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. Accordingly, the Group has elected to measure all of its PPE and intangible asset at their previous GAAP carrying values. b) Deemed cost for exploration and evaluation assets Ind AS 11 permits a first time adopter to measure oil and gas assets at the date of transition to Ind AS on the following basis: (a) exploration and evaluation assets at the amount determined under the entity s previous GAAP; and (b) assets in the development or production phases at the amount determined for the cost centre under the entity s previous GAAP. The entity shall allocate this amount to the cost centre s underlying assets pro rata using reserve volumes or reserve values as of that date. Accordingly, the Group has elected to measure all of its exploration and evaluation assets at their previous GAAP carrying values. c) Business combination Ind AS 11 provide the option to apply Ind AS 13 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Group elected to apply Ind AS 13 prospectively to business combinations occuring after its transition date. Business combinations occurring prior to the transition date have not been restated. d) Joint ventures - transition from proportionate consolidation to the equity method As per Ind AS 11, when changing from proportionate consolidation to the equity method, an entity may measure its investment in a joint venture at date of transition as the aggregate of the carrying amounts of the assets and liabilities that the entity had previously proportionately consolidated, including any goodwill arising from acquisition. The resultant amount is regarded as the deemed cost of the investment in the joint venture at the initial recognition. The group has opted to avail this exemption. The remaining voluntary exemptions as per Ind AS 11 - First time adoption either do not apply or are not relevant to the Group III. Exceptions from full retrospective application: a) Estimates Upon an assessment of the estimates made under Indian GAAP, the Group has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by Indian GAAP. The Group made estimate for following items in accrodance with Ind AS at the date of transition as these were not required under previous GAAP: Loan to equity accounted investee, joint venture carried at FVTPL. The remaining mandatory exceptions either do not apply or are not relevant to the Group. 154

157 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements Note 32 Ind AS 11 Transition to Ind AS: For the purposes of reporting as set out in Note 1, we have transitioned our basis of accounting from Indian generally accepted accounting principles ( IGAAP ) to Ind AS. The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 217, the comparative information presented in these financial statements for the year ended 31 March 216 and in the preparation of an opening Ind AS balance sheet at 1 April 215 (the transition date ). In preparing our opening Ind AS balance sheet, we have adjusted amounts reported in financial statements prepared in accordance with IGAAP. An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, we did not revise estimates previously made under IGAAP except where required by Ind AS. Reconciliation of net worth as at April 1, 215 & March 31, 216 Particulars As on 1 April 215 As on 31 March 216 Footnote ref. ` In Lakhs (Net of ` In Lakhs (Net of deferred tax) deferred tax) Net worth under IGAAP 142, ,126.5 Summary of Ind AS adjustments Fair valuation of loan taken from BPCL 1 48, ,81.87 Deferred tax on fair valuation of loan taken from BPCL 6 (15,52.89) (15,52.89) Capitalisation of general borrowing cost 2-1, Impairment of CWIP 4 - (242.24) Fair valuation of loan given to IBV Brazil 5 (7,417.5) (156.4) Prior period recognized in adjusted in reserves 3 (27.47) - Reversal of deferred tax Total Ind AS adjustments 26, , Net worth under Ind AS 169, , Reconciliation of Comprehensive income for the year ended on 31 March 216 Particulars Foot note ref. As on 31 March 216 ` In Lakhs (Net of deferred tax) Comprehensive income under IGAAP (24,831.38) Summary of Ind AS adjustments Fair valuation of loan taken from BPCL 1 (1,632.98) Reversal of deferred tax Capitalisation of general borrowing cost 2 1, Impairment of CWIP 4 (242.24) Prior period recognized in adjusted in reserves Fair valuation of loan given to IBV Brazil 5 7,39.4 Total Ind AS adjustments 7, Comprehensive income under Ind AS (17,661.9) Notes to the reconciliation: 1 Under previous GAAP, interest free borrowing were measured at transaction value. Under Ind AS, interest free borrowing being financial liability, is required to be initially recognized at fair value. Accordingly, cashflows have been discounted using market rate of interest and differential is acocunted as equity component of financial instrument. 2 Under previous GAAP, the company did not have any interest bearing liabilities. Under Ind AS, interest free borrowing has been fair valued and interest expense has been accounted for. The said interest has been capitalised as the company has qualifying assets. Also interest cost capitalisation has been realigned at consolidated financial statement level. 3 Under previous GAAP, prior period items are recognized in the year in which it is identified. Under Ind AS, prior period items are recognized in the year to which it pertains to. 4 Interest capitalised as per point 2 referred above, has been charged off to the Profit and loss account due to impairment considered on the blocks suspended from active use 5 Under Ind AS, the loan given to IBV Brazil has been measured at fair value through profit and loss due to the presence of conversion option. Under previous GAAP, the same was accounted at face value. 6 Under Previous GAAP, deferred tax accounting was done using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Under Ind AS, accounting of deferred taxes is done using the Balance Sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. 155

158 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements Transition to Ind AS: I. Reconciliation of Balance Sheet as at 1st April, 215 () Particulars Note Reference Amount as per IGAAP* 156 Effects of transition to Ind AS Amount as per Ind AS I. ASSETS Non-current assets Property, Plant and Equipment (11.59) Intangible Assets Under Development 1,3,5,7 732, (35,317.66) 382, Other Intangible assets 1 27, (27,467.1) 17.7 Financial Assets Loans 1 1, , , Total non current assets 761, (25,145.12) 736, Current Assets Cash And Cash Equivalents 1 6, (46.49) 5, Bank Balances Other Than Above 74, ,362.9 Others Other Current Assets 1 1, (16.) 1, Current Tax Assets Total current assets 82,88.13 (422.45) 82, TOTAL ASSETS 844, (25,567.57) 818,747.4 II. EQUITY AND LIABILITIES Equity Equity share capital 262, ,.27 Other equity (119,38.25) 26, (92,821.26) Share Application Money Total equity 142, , ,179.1 LIABILITIES Non current liabilities Financial Liabilities Borrowings 2 346,658.6 (48,714.85) 297, Other Financial Liabilities Provisions 1, ,56.16 Deferred Tax Liabilities (Net) 8-15, ,52.89 Other non-current liabilities Total non current liabilities 348, (33,661.96) 314,556.8 Current liabilities Financial liabilities Short Term Borrowings Trade payables Other Current Financial Liabilities 1,4 35, (18,122.62) 332,47.35 Other Current Liabilities Provisions 2, , Current Tax Liabilities (Net) Total Current liabilities 353,134.2 (18,122.62) 335,11.59 Total liabilities 71, (51,784.58) 649, TOTAL EQUITY AND LIABILITIES 844, (25,567.57) 818,747.4 * Previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purpose of this note

159 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements II. Reconciliation of Balance Sheet as at 31st March, 216 Particulars Note Reference Amount as per IGAAP* Effects of transition to Ind AS () Amount as per Ind AS I. ASSETS Non-current assets Property, Plant and Equipment (6.73) Other Intangible assets 1 26, (26,471.62) - Intangible Assets Under Development 1,3,5,7 864, (412,993.41) 451, Financial Assets Loans , ,42.42 Total non current assets 892,1.15 (316.61) 891, Current Assets Cash And Cash Equivalents 1 7, , ,62.56 Bank Balances Other Than Above 31,728.7 (23,216.) 8,512.7 Others Other Current Assets 1 1, (87.47) 1, Current Tax Assets (.) Total current assets 42,146.3 (257.89) 41, TOTAL ASSETS 934, (574.5) 933, II. EQUITY AND LIABILITIES Equity Equity share capital 292, ,.27 Other equity (144,874.21) 33, (111,536.6) Total equity 147, , , LIABILITIES Non current liabilities Financial Liabilities Borrowings 2 768,23.51 (47,81.87) 721, Other Financial Liabilities Provisions 1, ,511.9 Deferred Tax Liabilities (Net) 8-14, ,978.4 Other non-current liabilities Total non current liabilities 769, (32,13.83) 737, Current liabilities Financial liabilities Short Term Borrowings Trade payables Other Current Financial Liabilities 1 14,22.49 (1,859.87) 12, Other Current Liabilities Provisions 7 3, , Current Tax Liabilities (Net) Total Current liabilities 17,278.7 (1,88.83) 15, Total liabilities 787,21.12 (33,912.66) 753,18.45 TOTAL EQUITY AND LIABILITIES 934, (574.5) 933, * Previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purpose of this note 157

160 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements III. Reconciliation of Statement of Profit and Loss for the period ended 31st March, 216 Note Reference Amount as per IGAAP Effects of transition to Ind AS () Amount as per Ind AS Revenue Revenue from Operations Other income 1 1, , ,89.85 Total Income 1, , ,89.85 Expenses Employee Benefits Expense 1 1,18.76 (94.61) 1,14.15 Finance costs 9, , Depreciation and Amortization Expense (3.73) Other Expenses 1 16,181.9 (9,459.25) 6, Total Expenses 26, (9,557.58) 17,4.79 Profit / (loss) before share of profit/(loss) of joint venture and tax (24,831.39) 16, (7,914.94) Share of profit of Joint Ventures (net of tax) (9,821.83) Profit before Tax (24,831.39) 16, (17,736.77) Tax expense: 1. Current Tax Deferred Tax 8 - (74.85) (74.85) Profit for the year (24,831.39) 16,991.3 (17,661.92) Other comprehensive income Items that will not be subsequently reclassified to profit or loss Income tax related to items that will not be reclassified to profit or loss - 28, , , , Total comprehensive income for the period (24,831.39) 45, ,285.2 IV. On account of transition to Ind AS, there is no material adjustment to the Statement of Cash Flows for the year ended 31st March The Group had investment in one joint venture company as at March 31, 216 and April 1, 215. Under Indian GAAP, the Group had proportionately consolidated its interest in the company in the consolidated financial statements. On the date of transition, the Group has accounted for its interest in the company using the equity method as against proportionate consolidation. For the application of equity method, the intial investment is measured as the aggregate of Ind AS amounts of assets and liabilities that the group had previously proportionately consolidated. Further, the Group has adjusted share of losses against loan due to share of losses exceeding invetsment in joint venture. 2. Under previous GAAP, interest free borrowing were measured at transaction value. Under Ind AS, interest free borrowing being financial liability, is required to be initially recognized at fair value. Accordingly, cashflows have been discounted using market rate of interest and differential is acocunted as equity component of financial instrument. 158

161 BPRL ANNUAL REPORT Notes to the consolidated financial statements 3. Under previous GAAP, the company did not have any interest bearing liabilities. Under Ind AS, interest free borrowing has been fair valued and interest expense has been accounted for. The said interest has been capitalised as the company has qualifying assets. Also interest cost capitalisation has been realigned at consolidated financial statement level. 4. Under previous GAAP, prior periods items are recognized in the year in which it is identified. Under Ind AS, prior period items are recognized in the year to which it pertains to. 5. Interest capitalised as per point 2 referred above, has been charged off to the Profit and loss account due to impairment considered on the blocks suspended from active use 6. Under Ind AS, the loan given to IBV Brazil has been measured at fair value through profit and loss. 7. Under Ind AS, the Group has accounted for abandoment pertaining to certain blocks 8. Under Previous GAAP, deferred tax accounting was done using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Under Ind AS, accounting of deferred taxes is done using the Balance Sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Note 33 Contingent Liabilities and Commitments Contingent liabilities and commitments (a) Capital Commitments Based on the estimation by the Management, BPRL s share of Minimum Work Programme (MWP) commitments as on the reporting date amounted to ` 1, lakhs. (Previous year ` 41,565. lakhs). Company has provided Bank Guarantees to Director General of Hydrocarbon (DGH) to the extent of ` lakhs (` 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 operator. Note 33A Micro, Small and Medium Enteprises March 31, 217, March 31, 216 and April 1, 215, there are no creditors covered under the micro small and medium enterprises development Act 26 and hence no disclosure under the act are made. Note 33B BPRL had earlier entered into Standby Letter of Credit (SBLC) facility agreement with a number of Indian PSU banks to the extent of 2,5 Mn dollars (` 1,62,965. Lakhs). As per the SBLC facility agreement banks will issue SBLC s, in favour of the foreign currency lenders for loans taken by BPRL International BV, a wholly owned subsidiary. As of the date of Balance Sheet, SBLC s to the tune of Mn dollars (` 736,86.4 Lakhs) has been issued. 159

162 BHARAT PETRORESOURCES LIMITED Notes Forming Part of Financial Statements Note 34 Joint Operations The Group has particiapting interest in the nature of Production Sharing Contracts (PSC) with the Government of India and/ or various bodies corporate in the oil and gas blocks for exploration, development and production activities. The arrangements require unanimous consent from all parties for all relevant activities and hence it is classified as joint operations. The partners to the agreement have direct right to the assets and are jointly and severally liable for the liabilities incurred by the un- incorporated joint operation. In accordane with Ind AS 111 on Joint Arrangements, the financial statements of the Group includes the Group s share in the assets, liabilities, incomes and expenses relating to joint operations based on the financial statements received from the respective operators. The income, expenditure, assets and liabilities of the joint operations are merged on line by line basis according to the participating interest with the similar items in the Financial Statements of the Company. i) In respect of Block CB/ONN/21/8, the Company is the operator. The Company s share of the assets and liabilities have been recorded under respective heads based on the audited statement. ii) Out of the remaining six Indian Blocks (previous year six) the Company has received one (previous year three) audited financial statements as at March 31, 217 and this has been considered for the financial statements of the company. The Company has not received financial statement for five (previous year three) blocks and expenses for these blocks are accounted based on unaudited financial statement from the operator for the period Upto 31st March 217. iii) 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 financial statements as on 31st March 217 The following table provides the details of the blocks: Name Company Country Participating Interest of the Group March 31, 217 March 31, 216 April 1, 215 Blocks in India NELP IV CY/ONN/22/2 BPRL India 4.% 4.% 4.% NELP VI CY/ONN/24/1 BPRL India - - CY/ONN/24/2 BPRL India 2.% 2.% 2.% - NELP VII RJ/ONN/25/1 BPRL India 33.33% 33.33% 33.33% NELP IX CB/ONN/21/11 BPRL India 25% 25% 25% AA/ONN/21/3 BPRL India 2% 2% 2% CB/ONN/21/8 BPRL India 25% 25% 25% MB/OSN/21/2 BPRL India 2% 2% 2% Discovery of New field* CY/ONDSF/KARAIKAL/216 BPRL India 1% - - RJ/ONDSF/BAKHRI TIBBA/216 BPRL India 1% - - RJ/ONDSF/SADEWALA/216 BPRL India 1% - - MB/OSDF/B15/216 BPRL India 1% - - MB/OSDF/B127E/216 BPRL India 1% - - *Alloted on 27 Mar 217 Blocks outside India JPDA 6-13 BPR JPDA Australia / Timor EP-413 BPRL Australia 27.8% 27.8% 27.8% Mozambique Rovuma Basin BPRL Ventures Mozambique B.V. Mozambique 1.% 1.% 1.% Nunukan PSC, Tarakan Basin BPRL Ventures Indonesia B.V. Indonesia 12.5% 12.5% 12.5% The table below provides summarised financial information of the company s share of assets, liabilities, income and expenses in the joint operatons () Sr. No. Particulars March 31, 217 March 31, 216 April 1, Property, plant and equipment Other Intangible assets 7, Intangible asset under development 44, , , Other Non-Current Assets Current Assets 1, Cash and Bank Balances Current & Non Current Liabilities/Provisions 1, , , Expenses 1,

163 BPRL ANNUAL REPORT Notes Forming Part of Financial Statements Note 34A Segment reporting A. Basis for segmentation The Group has following three reportable segments based on geography. Details of the segments are as follows: - India - Mozambique -Singapore The Managing Director, Chief Operating Decision Maker for the Group, periodically reviews the internal management reports and evaluates performance/allocates resources based on the analysis of various performance indicators relating to the segments referred to above. B. Information about reportable segments Information related to each reportable segment is set out below. Segment profit/(loss) before tax is used to measure performance because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industry. (` In lakhs) For the year ended 31st March, 217 Reportable segments Particulars* India Mozambique Singapore Total Segments Revenue External Customers 4, , Total Revenue 4, , Segment profit / (loss) before tax (8,644.73) (13.65) 2,212.5 (6,562.88) Segment profit / (loss) before tax includes: Interest expense - - 7, , Depreciation, Depletion, Amortisation (4,645.3) - - (4,645.3) Share of profit of equity accounted investees - - 9, , Material non-cash items other than depreciation, depletion, amortisation Impairment losses on non financial assets (155.41) - - (155.41) Segment assets 36, , , ,139, Segment assets include: Investment in equity accounted investees , ,643.7 Capital expenditure during the year 1, , ,16.53 Segment liabilities 16, , , ,85.15 For the year ended 31st March, 216 Reportable segments Particulars India Mozambique Singapore Total Segments Revenue External Customers Total Revenue Segment profit / (loss) (4,4.98) (55.28) - (4,456.26) Segment profit / (loss) before tax includes: Impairment losses on non financial assets 3, , Segment assets 24, , , Segment assets include: Investment in equity accounted investees Capital expenditure during the year , , Segment liabilities 9, , , st April, 215 Reportable segments Particulars India Mozambique Singapore Total Segments Segment assets 23, , , Segment liabilities 9, , ,

164 BHARAT PETRORESOURCES LIMITED C. Reconciliations of information on reportable segments to Ind AS Particulars For the year ended March 31, 217 For the year ended March 31, 216 (a) Revenue Total revenue for reportable segments 4, Revenue for other segments - - Total revenue as per Statement of profit and Loss 4, For the year ended March 31, 217 For the year ended March 31, 216 (b) Profit / loss before tax Total profit before tax for reportable segments (6,562.88) 3, Unallocated amounts: Other expenses / income (43,44.6) (21,618.65) Total profit before tax from operations as per Statement of profit and Loss (5,2.94) (17,661.92) March 31, 217 March 31, 216 April 1, 215 (c) Assets Total assets for reportable segments 1,139, , , Other unallocated amounts 473, , , Total assets as per balance sheet 1,612, , ,747.4 (d) Liabilities Total liabilities for reportable segments 696, , ,65.11 Other unallocated amounts 766, , ,53.27 Total liabilities as per balance sheet 1,462, , ,

165 BPRL ANNUAL REPORT BHARAT PETRORESOURCES LIMITED Corporate Identification No. (CIN) U2329MH26GOI Registered Office: Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41 Tel Fax ATTENDANCE SLIP (To be presented at the entrance) 1 TH ANNUAL GENERAL MEETING ON Monday, 4 th September, 217 AT 11.3 A.M. at Registered Office: Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41 Folio No. No. of Shares held. Name of the Shareholder/Proxy holder I /We hereby record my/our presence at the 1 th Annual General Meeting of the Company on Monday, 4 th September, 217 at 11.3 a.m., at the Registered Office of the Company Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41. Signature of the Member/Proxy 163

166 BHARAT PETRORESOURCES LIMITED BHARAT PETRORESOURCES LIMITED PROXY FORM (Pursuant to Section 15(6) of the Companies Act, 213 and Rule 19(3) of the Companies (Management and Administration) Rules, 214) Corporate Identification No. (CIN) U2329MH26GOI Name of the Company Bharat PetroResources Ltd Registered Office Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41 Tel Fax Name of the Member(s) : Registered address : Id : Folio No/Client ID : DP ID : I / We, being the member(s) of 1. Name : Address : ID or failing him 2. Name : Address : ID or failing him 3. Name : Address : Shares of Bharat PetroResources Limited, hereby appoint Signature Signature ID Signature or failing him as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at 1 th Annual General Meeting of the Company to be held on Monday, 4 th September, 217 at 11.3 a.m. at Registered Office of the Company Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41, and at any adjournment thereof in respect of such resolutions as are indicated below: 1. To receive, consider and adopt the audited financial statements (including the audited consolidated financial statements) of the Company for the financial year ended 31st March 217, the reports of the Board of Directors and Statutory Auditors. 2. To appoint a Director in place of Shri Pankaj Kumar (DIN No ) who retires by rotation. Shri Pankaj Kumar being eligible, offers himself for re-appointment. 3. Appointment of Shri Rajkumar Duraiswamy as Director. 4. Appointment of Shri Sivakumar Krishnamurthy as a Director. Affix Signed this day of 217 Revenue Stamp Signature of shareholder Signature of Proxyholder(s) NOTE: This form of Proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company not less than 48 hours before the commencement of the meeting. 164

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