CONTENTS. Particulars. Financial details of the Subsidiary Companies Secretarial Audit Report...033

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3 BPRL ANNUAL REPORT CONTENTS Particulars Page Board of Directors...3 Notice to Members...4 Directors Report...8 Financial details of the Subsidiary Companies...31 Secretarial Audit Report...33 Comments of the Comptroller & Auditor General of India...41 Independent Auditor s Report...43 Balance Sheet & Statement of Profit & loss...5 Cash Flow Statement...52 Independent Auditor s Report on Consolidated Financial Statements...72 Consolidated Balance Sheet & Statement of Profit & Loss...78 Consolidated Cash Flow Statement...8 1

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 : MAP OF VENUE 2

5 BPRL ANNUAL REPORT Management Team Board of Directors S. Varadarajan D. Rajkumar Managing Director B. K. Datta P. Balasubramanian Ajay Kumar V. Director (Operations & Business Development) (w.e.f ) Pankaj Kumar Director (Finance) (w.e.f ) Dr. Praphullachandra Sharma (w.e.f ) Mary Jacob (w.e.f upto ( ) Milind S. Patke President (Assets & Services) Mahesh Narain Vice-President (Assets) India Arun K. Singh President (Africa & Australasia) (upto ) Easwaran Mahadevan Vice-President (Assets) Narendra Dixit Company Secretary P. C. Siva President (Services) (upto ) Barnali Tokhi Vice-President (Technical) Indranil Mittra Vice-President (Finance) (upto ) Prasanna Kumar Sahoo Chief Manager (Finance) 3

6 BHARAT PETRORESOURCES LIMITED NOTICE TO THE MEMBERS Notice is hereby given that 9 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 Tuesday, 3 th August, 216, 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 216, the reports of the Board of Directors and Statutory Auditors. 2. To appoint a Director in place of Shri Ajay Kumar V. (DIN No ) who retires by rotation. Shri Ajay Kumar V. being eligible, offers himself for re-appointment. 3. To fix the remuneration of the Statutory Auditors for the financial year and to authorise Board of Directors to fix the remuneration of the Statutory Auditors of the Company for subsequent financial years. 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 142 and other applicable provisions, if any, of the Companies Act, 213, remuneration of the Statutory Auditors as appointed by the Comptroller & Auditor General of India (C&AG) under Section 139 of the said Act, be and is hereby approved at ` 5,75,, in addition to the actual reasonable travelling and out of pocket expenses and service tax as applicable, for the financial year RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to fix the remuneration of the Single/Joint Statutory Auditors of the Company, as appointed by the C&AG for the financial year and for the subsequent financial years, as may be deemed fit by the Board. 4

7 BPRL ANNUAL REPORT Registered Office: Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai Date: 29 th July 216 Tel: Fax: CIN No U2329MH26GO By Order of the Board For Bharat PetroResources Limited Sd/- (Narendra Dixit) Company Secretary SPECIAL BUSINESS 4. Appointment of Dr. Praphullachandra Sharma 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, Dr. Praphullachandra Sharma (DIN ) who was appointed as additional Director w.e.f. 11 th March 216 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. Notes:- 1. The Explanatory Statement under Section 12 of the Companies Act, 213, in respect of the item of Special Business is annexed hereto. 2. A Member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy or proxies, in the alternative, to attend and vote instead of himself and such proxy need not be a Member. Proxies, in order to be effective, should be duly completed & 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 Statement pursuant to Section 12 of the Companies Act, 213 Item No.4 Appointment of Dr. Praphullachandra Sharma as Director Dr. Praphullachandra Sharma 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 11 th March 216. He has attended all four Board meetings held after his appointment. Being Additional Director, Dr. Praphullachandra Sharma 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. Dr. Praphullachandra Sharma 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 Dr. Praphullachandra Sharma, 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: 29 th July 216 Tel: Fax: CIN No U2329MH26GOI By Order of the Board For Bharat PetroResources Limited Sd/- (Narendra Dixit) Company Secretary 6

9 BPRL ANNUAL REPORT Brief Resume of Directors seeking Appointment / Re-appointment at the 9 th Annual General meeting Name Shri Ajay Kumar V. Dr. Praphullachandra Sharma Date of Birth 3 rd March nd May 1978 Date of Appointment 21 st May th March 216 Qualifications Experience in specific functional areas Directorships held in other Companies Memberships / Chairmanships of Audit Committee No. of Shares held in the Company M.Sc.(Geology) with first rank from University of Kerala Shri Ajay Kumar V has vast experience of 33 years in various facets of upstream industry spanning from wellsite operations, exploration and development drilling, field development studies and preparation of FDP for discoveries, resources & reserve estimates for prospects and fields, Techeconomic assessments, subsurface mapping and interpretation leading to discoveries in India and abroad. Prior to taking over as Director (Ops & BD) in BPRL, he was General Manager in ONGC Videsh Ltd with experience of around eight years in Business Development leading to key asset acquisitions for ONGC Videsh ltd and a Director on the Boards of ONGC Mittal Energy India Ltd and ONGC Mittal Energy Services India Ltd. Director i) Bharat PetroResources JPDA Ltd ii) BPRL International Singapore Pte Ltd iii) Taas India Pte Ltd iv) Vankor India Pte Ltd Member Audit Committee, Bharat PetroResources JPDA Ltd Ten -- Bachelor of Ayurvedic Medicine and Surgery from University of Kuvempu, Karnataka Dr Praphullachandra Sharma served in the Government District Hospital, Shimoga, Karnataka from the year 21 to 23. Subsequently, he entered Indian Foreign Service in the year 26. He served in the Ministry of External Affairs on India-Sri Lanka bilateral affairs. He was also posted at the Embassy of India(EoI) Brussels, Belgium. The EoI Brussels covers India s relationship with the European Union, Belgium and Luxembourg apart from several other international organization that are located in Brussels such as World Trade Organization and NATO. Since January 216, he holds position as Deputy Secretary in the International Cooperation Division, Ministry of Petroleum and Natural Gas

10 BHARAT PETRORESOURCES LIMITED DIRECTORS REPORT The Directors present their 9 th Report of Bharat PetroResources Limited (BPRL) for the financial year ended 31 st March 216:- OPERATIONS OF THE COMPANY The operations of BPRL are carried out through subsidiaries and joint ventures both, incorporated and unincorporated, in India and abroad. BPRL, currently, has participating interest (PI) in seventeen Blocks spread across six Countries. Out of seventeen blocks, seven blocks are located in India which were acquired under different rounds of New Exploration Licensing Policy (NELP) and ten blocks are located overseas. Most of the blocks are in advanced stages of exploration, appraisal and pre-development. The total area of these seventeen blocks is around 24,375 sqkm of which approx 88% is offshore. BPRL has a wholly owned subsidiary company, BPRL International BV, in the Netherlands which in turn has three wholly owned subsidiary companies viz. BPRL Ventures BV, BPRL Ventures Mozambique BV, and BPRL Ventures Indonesia BV. BPRL Ventures BV has 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. Further, BPRL has a wholly owned subsidiary company, Bharat PetroResources JPDA Limited in India which holds a PI of 2% in Block-JPDA 6-13, in Timor Leste. The PIs in Blocks in Brazil, Mozambique, Indonesia, Timor Leste are held through these subsidiaries. Further, the PI in respect of Blocks in India and Australia are held by BPRL alongwith other consortium members. BPRL and its consortia have a total of 22 discoveries in respect of Blocks held in five countries i.e. Brazil, Mozambique, Indonesia, Australia and in India. Recently, as concrete steps towards fulfillment of its aspiration for revenue generation, BPRL has signed definitive agreements to acquire stakes in companies in Russia which have Oil & gas producing assets in their portfolio. Subsequently, in May 216, BPRL has formed another 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 formed 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 with BPRL International Singapore Pte Ltd holding 33. % stake in each of the two SPVs to hold stakes in the Companies in Russia. From Exploration to Appraisal to Pre-development and now with stake in producing assets, BPRL is moving up the Hydrocarbon value chain in addition enhancing its skill base through Operatorship in an onland Block in Cauvery Basin, India. Also, senior G&G staff have been recruited, to enhance and complement the existing inhouse skills. As on 31 st March 216, 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 ` 17.3 crore and a consolidated loss of ` crore for the financial year ending 31 st March,

11 BPRL ANNUAL REPORT The consolidated loss was due to relinquishment of PI in few blocks as prospectivity assessed based on drilling results in these blocks was very poor. The Comptroller and Auditor General of India (C&AG) has vide letter dated 25 th July 216 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 There was substantial drop in the price of crude oil in the past year due to various reasons including high production by the Oil Producing and Exporting Countries (OPEC), the United States and Russia coupled with low demand. Further, natural gas prices have been decreasing in countries around the world. This is one of the most dramatic changes the sector has experienced in decades. In view of the same, the outlook for the upstream sector is likely to remain subdued due to continued depressed oil and gas prices for some more time. However, it is expected that going forward the situation could see a change as demand picks up. As per estimation from U.S. Energy Information Administration(EIA), Global consumption of petroleum and other liquid fuels is expected to increase by 1.4 million b/d in the year 216 and by 1.5 million b/d in the year 217 mostly driven by growth in countries outside of the Organization for Economic Cooperation and Development (OECD). Non-OECD consumption growth is expected to be 1.3 million b/d in the year 216 and 1.5 million b/d in the year 217. EIA estimates that global petroleum and other liquid fuels inventory builds will average.9 million b/d in the year 216. Similarly, EIA expects continued strength in India s consumption growth of petroleum and other liquid fuels, to drive year-on-year increases of.3 million b/d in the years 216 and Strength and Weaknesses BPRL deals with the operators of international repute, multinational companies, national oil companies and International Government Authorities and some of the major Operators with proven track record have recognized BPRL as preferred partner. As a lead operator in Cambay Block CB-ONN-21/8, BPRL is gaining experience of handling all the operations of the project. BPRL has been supported by BPCL, a Navratna & Fortune 5 company. BPRL has 22 discoveries in five countries. At present, the revenues are not generated since all the blocks are under exploration / appraisal / pre-development. BPRL, being a Government Company and wholly owned subsidiary of BPCL, requires to depend largely on BPCL and Govt. of India for major decisions such as investment, strategy etc. As on date, BPRL does not have any production accruing to it as most of the discovered assets are in the appraisal stage or final stage of development. 9

12 BHARAT PETRORESOURCES LIMITED 3. Opportunities and Threats There is an increase in the demand for crude oil and petroleum products in India. In view of discoveries and PI in various blocks, BPRL will have significant opportunities for growth in India and abroad. Further, BPRL has signed definitive agreements to acquire stakes in companies in Russia, which is a big leap towards fulfillment of its aspiration for revenue generation. The decline of international oil prices continued in the current year. 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. Political changes in Brazil and depressed oil prices could have an impact in the development of deepwater discoveries of Brazil. There will be impact on business due to changing health of the big operators in some of the consortium. 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 continue to be in the appraisal stage. The Field Development plan of the Madanam discovery submitted by ONGC, the Operator and BPRL has been approved by DGH, the Regulator. Development activities have commenced and BPRL is likely to start revenue generation from this Indian Block in the next fiscal. In addition, BPRL has signed definitive agreements to acquire stakes in companies in Russia. The acquisition of equity stake in the Russian assets may also lead to revenue generation immediately, on closing, expected in the next fiscal. From Exploration to Appraisal to Pre-development, and now with acquisition of stakes in companies in Russia, BPRL is moving up the Hydrocarbon value chain and has also enhanced its skill base through Operatorship in onland block. 5. Risks and Concerns BPRL operates in varied environments geologically, politically & geographically leading to uncertainties such as non commerciality of discoveries, change in fiscal regime, additional taxes, technology risk, long tenure for execution of projects, HSE and increase in government share or restrictions on exports of oil & gas etc. BPRL is non operator in most of the blocks and the respective Operator of the block manages the risk relating to technology and HSE. Further, the variations between the estimates of Crude oil and natural gas reserves and actual recoveries can be significant. BPRL could have additional financial burden in view of weak financial condition of some of BPRLs partners in the blocks. There would be a huge funding requirements for BPRLs major projects in Brazil and Mozambique which are moving ahead toward the appraisal/development stage. 1

13 BPRL ANNUAL REPORT BPRL will be investing in the Russian Companies wherein there could be difficulties in obtaining international sanctions, funds from banks, etc. due to certain types of sanctions by U.S. & ECI on Russia. BPRL has in place a Risk Management Policy. 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 and BPRL group for the financial year ended was carried out by the team of Internal Audit in BPCL headed by ED(Audit), BPCL. In addition, Independent Audit for Blocks in Mozambique, Brazil and Australia was carried out by them. Internal Auditor has not reported any significant findings. 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, finance etc. During the year, BPRL has created separate cell for Human Resources which looks after the activities relating to manpower, administration etc. Most of the employees in BPRL are deputed from the parent Company i.e. BPCL. 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 values to its projects and to evaluate new projects. The total approved manpower of BPRL including 4 consultants is 5. BPRL is also planning to increase its manpower through induction of more specialists like production engineers, facilities engineers, HSE 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 on-land blocks situated in Jaisalmer Basin, 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 related to Environmental Protection and conservation, Technological conservation, Renewable energy developments, Foreign Exchange conservation etc. 11

14 BHARAT PETRORESOURCES LIMITED In on land Block in Cambay basin, the Environmental Clearance (EC) has been obtained from Ministry of Environment & Forest (MOEF) for the operations of the Block. Further, consent to Establish (CTE) from Gujarat Pollution Control Board (GPCB) for drilling of wells was also obtained. BPRL has followed all the GPCB 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, BPRL is in the stage of exploration/appraisal/pre-development 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 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 (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 global LNG leader with approximately 75 Tcf of recoverable natural gas resources discovered to-date, in the Offshore Area 1 of Mozambique. The consortium has made significant advancements in the world-scale LNG development. The consortium is planning an initial development of approximately 12 MMTPA (2x6 MMPTA onshore liquefaction trains) and a site plan that will facilitate future expansions to more than 5 MMPTA. For early monetization of the project the consortium is working concurrently on three processes. The first of them is negotiations with the government on a legal and contractual framework that would provide stability to the project throughout its life. Concurrently, the consortium is making steady progress to secure long term Sale Purchase Agreements for ~8 MMTPA of LNG with premium Asian buyers. Also, the consortium is progressing project financing debt of approximately 2/3 rd of the total capital required. To date, the consortium has made considerable progress on all these fronts. 12

15 BPRL ANNUAL REPORT An agreement has been secured with the Government of Mozambique for the land where the onshore LNG park will be located. The Front End Engineering Design (FEED) is complete. For the offshore gathering system, the selection process has been narrowed down 2 contractors and a final selection is expected in the near future. Reserves have been independently certified and approval for the Environmental Impact Assessment has been obtained. The consortium is also well advanced in preparing for resettlement and has taken actions to prepare for operations, through local recruitment and training, site preparation work and improvements to the local infrastructure. The consortium plans an FID when the elements are in place to bring value to the project, viz: the agreements with the Government that make up the legal and contractual framework, sales and purchase agreements with the customers, and the project financing. Taken together these elements, which are all linked, will provide certainty for the project. From a construction perspective, the consortium is positioning the project to deliver first cargoes from an onshore LNG development early next decade. This schedule, however, remains dependent on the delivery of the remaining legal and contractual framework, offtake agreements and project financing debt. BPRL, through its subsidiary i.e. BPRL Ventures Mozambique BV has positioned its Country Manager in Mozambique. Recently, the Branch office of the Subsidiary company has started operations in Maputo. 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 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 In the Sergipe Alagoas basin, a new oil province was established in the ultra deep waters with the Barra discovery in the year 21. The promising potential of blocks in Sergipe Alagoas Basin was established through 5 additional discoveries namely Barra#1, Farfan & Cumbe, Farfan ADR, Farfan#3 ANP, the Brazilian Regulator, has approved 4 appraisal plans in BM-SEAL-11. During the year, drilling of Cumbe#2 appraisal well under Cumbe appraisal plan, seismic reprocessing/interpretation on the new 3D broadband seismic data, pre-development engineering studies and other geological & geophysical studies were carried out. The Cumbe#2 well indicated gas show of 6.3m in Maastrictian level and water bearing Campanian reservoirs. Pre-development engineering studies towards studying / exploring the various options for development of the Barra and Farfan discoveries were progressed. The operator has obtained approval from ANP, the Brazilian upstream regulator, for extension of appraisal activities upto December 22 and for equalization of deadlines of various appraisal plans. Potiguar (BM-POT-16) concession In the Potiguar Basin, G&G studies are ongoing in respect of Ararauna exploration well and consortium has approached ANP, the Brazilian regulator for deferring the drilling by commitment of new 3D seismic in this concession. The farm-in of British Petroleum (BP) with 3% participating interest has been approved by ANP during the year. 13

16 BHARAT PETRORESOURCES LIMITED Campos (BM-C-3) concession In the Campos Basin, integration of well data to seismic data, velocity modeling and other G&G studies are ongoing in respect of two appraisal wells having good oil shows. Pre-FEED engineering studies have been completed. Extension of Wahoo appraisal plan was approved by ANP upto the year 222, with a decision date for contingent long term test in the year 218. 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 HC 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 Consortium plans to start FEED, Gas Marketing negotiations and other activities to arrive at Final Investment Decision in the block. BLOCK ACQUIRED THROUGH INDIAN SUBSIDIARY Bharat PetroResources JPDA Limited (the Company) was incorporated as a wholly owned Subsidiary Company of BPRL and operates as a Special Purpose Vehicle as required under the terms on which Block JPDA 6-13 was awarded to consortium in the year 26 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. In view of the uncertainty arising out of arbitration proceedings by Timor Leste Government against Govt. of Australia with regard to the Certain Maritime Arrangements in Timor Sea, (CMATS) Treaty, the Joint Venture (JV) had submitted its request to ANP for termination of PSC without claim or penalty. After granting few temporary suspension of PSC, ANP delivered its notice to terminate the PSC and imposed Contractor s Liability upon Termination. The termination was accepted by the JV while liabilities upon termination are under negotiation for amicable settlement. BLOCKS IN INDIA i) NELP IV Block: BPRL has PI of 4% in on land Block CY-ONN-22/2 in Cauvery Basin wherein ONGC is Operator with PI of 6%. In the said Block, post discovery of oil & gas 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. 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. 14

17 BPRL ANNUAL REPORT ii) iii) iv) The commercial production from the block area shall commence on granting of PML by the State Government. During the year , major developmental activities towards production of oil and gas including drilling of development wells are planned to be taken up. NELP VI Block BPRL has PI of 2% in an onland Block, CY-ONN-24/2 wherein ONGC is Operator with PI of 8%. The consortium has completed drilling of two appraisal wells for the discovery well PN-8. 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. The drilling of one exploratory well in exploration phase II is nearing completion. During the financial year , development activities related to PN-8 discovery is likely to be taken up on approval of FDP. NELP VII Block: BPRL has PI of 33.33% in RJ/ONN/25/1 on land Block in Rajasthan as Joint operator with Hindustan Oil Exploration Company Ltd with PI of 33.33%. IMC is the other partner with PI of 33.33%. All Minimum Work Program (MWP) activities related to acquisition, processing and interpretation of 2D / 3D seismic data have been completed in this Block. The consortium has requested for reduction of well programme due to delay in obtaining clearance from environmental authorities. The matter is under discussion with Govt. of India and DGH. NELP IX Blocks Operated Block : BPRL is a lead Operator with 25% PI in the Block CB-ONN-21/8 in Cambay Basin, Gujarat. The other consortium members of the Blocks are GAIL (India) Ltd as Joint Operator with PI of 25%, Engineers India Ltd with PI of 2%, BF Infrastructure Ltd with PI of 2% and Monnet Ispat & Energy Ltd with PI of 1%. In line with the MWP, the seismic data acquisition, processing and interpretation is already completed in the Block. After review of the interpreted data, the consortium had decided to drill four exploratory wells initially. The site preparation and drilling activities in respect of first two exploratory well have been completed. Based on the results of the two wells, the consortium has plans to drill another two exploratory wells, during the financial year Non-Operated Blocks: BPRL has PI of 25% in an on-land Block in Cambay basin, Gujarat, PI of 2% in on land Block in Assam Arakan basin & PI of 2% in shallow water Block in Mumbai Basin. BPRL is the Joint Operator in the Block in Cambay Basin along with GAIL India Ltd. In other two Blocks in Assam- Arakan & Mumbai Basin, Oil India Limited is the Operator. In Cambay basin Block, drilling activities for MWP wells are in progress. In Assam- Arakan Block, the processing of acquired data is in final stages and subsequently interpretation of data shall be taken up to identify the drillable prospects in the Block. In Mumbai basin, the interpreted data is being critically reviewed to decide on the presence of drillable prospect with commercial viability in the Block area. 15

18 BHARAT PETRORESOURCES LIMITED OTHER FOREIGN BLOCKS AUSTRALIA: BPRL has a PI of 27.83% in Block EP (on land) in consortium with Norwest Energy NL, (the Operator with PI of %) and ARC Energy, 1 % subsidiary of Australia Worldwide Exploration, with PI of %. 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 JV has been granted a six months extension to the Second Permit year so that it can evaluate the seismic data completely before committing to well drilling in third year. The second permit year was extended until February 216 and thus the renewal phase is extended by six months and will now end in February 219. JV had sought variation of Work Program of third Permit Year by changing it to commercial studies, instead of well drilling and same has been granted. Drilling has accordingly been shifted to 4 th Permit year. UNITED KINGDOM: BPRL had a PI of 25% in 48/1b & 2c (offshore UK) with consortium partners Premier Oil (Operator) with PI of 25%, Verus Petroleum (formerly known as Bridge Energy) with PI of 25% and Tata Petrodyne Ltd with PI of 25%. 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. RUSSIA: BPRL along with Oil India Limited (OIL) and Indian Oil Corporation Limited (IOCL), acting jointly as the Indian Consortium, signed definitive agreement in March 216 to acquire participatory shares representing 29.9% of the charter capital of LLC TYNGD, a Company organized under the law of Russian Federation, from LLC RN Razvedka I Dobycha, a whollyowned subsidiary of Rosneft Oil Company, the National Oil Company (NOC) of Russia. Further, an MoU was signed in March 216 between Rosneft and the consortium of BPRL, OIL and IOCL for joint evaluation of certain other assets of Rosneft in Russia. In addition to the above, a Heads of Agreement (HoA) was signed in March 216 for evaluation of 23.9% participatory shares in the CJSC Vankorneft by the consortium of OIL, IOCL and BPRL with Rosneft Oil Company. CJSC Vankorneft, a company organized under the laws of the Russian Federation, is the owner of Vankor Field and North Vankor license. Further, definitive agreement was signed in June 216 for acquisition of 23.9 % shares of the charter capital of JSC Vankorneft. BPRL has formed another 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 formed 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 with BPRL International Singapore Pte Ltd holding 33. % stake in each of the two SPVs to hold stakes in the Companies in Russia. These acquisitions are subject to relevant Board, Government and regulatory approvals and are expected to close by September

19 BPRL ANNUAL REPORT BPRL currently has a substantial portfolio of discovered assets most of which are progressing to development stage. In order to have a balanced portfolio and revenue generation, BPRL is in the final stages of acquiring stake in producing assets in Russia. All these efforts would shortly result in steady stream of revenue generation adequate to support a balanced portfolio of assets thereby turning BPRL into a self-sustaining / revenue generating company. DIVIDEND The Directors do not recommend any dividend for the financial year ended 31 st March 216. 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 12 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, 213. 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 1, 1 & 11 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,

20 BHARAT PETRORESOURCES LIMITED 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, Finance etc. 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. 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. 18

21 BPRL ANNUAL REPORT During the financial year , no company has become/ceased to be subsidiaries, joint venture / associate company of BPRL. Subsequently, in May 216, 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 formed 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 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) of the Companies Act, 213, the Directors confirm that: 1. In the preparation of the annual accounts, all the applicable accounting standards have been followed and there are no material departures. 2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 st March 216 and of the profit and loss of the Company for the year ended on that date. 3. 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 annual accounts have been prepared 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 Dr. Praphullachandra Sharma, Deputy Secretary (International Cooperation), Ministry of Petroleum & Natural Gas was appointed as Additional Director with effect from 11 th March 216. 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. 19

22 BHARAT PETRORESOURCES LIMITED Smt. Mary Jacob, Deputy Secretary (Admin & CA), Ministry of Petroleum & Natural Gas, was appointed as Additional Director with effect from 18 th August 215 and being Additional Director, held office up to the date of last Annual General Meeting held on 24 th August 215. She was again reappointed as Additional Director by the Board with effect from 24 th August 215. She relinquished the office as Director with effect from 11 th March 216. The Directors have placed on record their appreciation and gratitude for the valuable contributions made by her in the deliberations of the Board meeting. Shri D. Rajkumar was appointed as additional Director and also as Managing Director w.e.f. 3 rd July 215, in terms of his appointment from Govt. of India. The members have appointed him as Director at the Annual General Meeting held on 24 th August 215. Shri Ajay Kumar V. was appointed as additional Director and also as Director (Operations & Business Development) w.e.f. 21 st May 215, in terms of his appointment from Govt. of India. The members have appointed him as Director at the Annual General Meeting held on 24 th August 215. Shri Pankaj Kumar was appointed as additional Director and also as Director (Finance) w.e.f. 31 st July 215, in terms of his appointment from Govt. of India. The members have appointed him as Director at the Annual General Meeting held on 24 th August 215. He acts as a Chief Financial Officer of the Company. As required under the Companies Act, 213, Shri Ajay Kumar V, Director (Ops & BD) will retire by rotation at the Annual General Meeting, and being eligible, offers himself for reappointment as Director at the said meeting. AUDIT COMMITTEE Presently, the Audit Committee of BPRL comprises Shri S.Varadarajan, Shri B.K.Datta and Shri P.Balasubramanian as members. Shri S. Varadarajan acts as the Chairman of the Committee. The Audit Committee is functioning in accordance with the terms of reference set out for it by the Board of Directors. 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 216, 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 appointed the said firm as Statutory Auditors again for the financial year ending 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 216, 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. 2

23 BPRL ANNUAL REPORT The Secretarial Audit Report contains observations about non compliance of the provisions of the Companies Act, 213, with regard to appointment of Independent Directors, constitution/ reconstitution of Audit Committee, Corporate Social Responsibility Committee, Remuneration & Nomination Committee; and appointment of woman Director in terms of the said Act for part of the financial year BPRL, being a Government Company, the appointment of Independent Directors and woman Director can be made after receiving nominations from Govt. of India. BPRL has appointed a woman Director, as Govt. Nominee Director, for part of the year after receiving nomination from Govt. of India. Since, the woman Director has relinquished the office as Director, the Govt. of India has been approached suitably for nomination 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 on land Block in Cambay basin, Gujarat and a joint Operator in two other on land Blocks one each in Rajasthan and 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. 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:- Earning /Gain in Foreign Exchange : ` lakh Foreign Exchange Outgo : ` lakh 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 : 29 th July, 216 Place : Mumbai For and on Behalf of the Board of Directors Sd/- (S. Varadarajan) Chairman 21

24 BHARAT PETRORESOURCES LIMITED Annexure A Form No. MGT-9 EXTRACT OF ANNUAL RETURN AS ON THE FINANCIAL YEAR ENDED ON 31 ST MARCH 216 [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 Bharat Bhavan, 4&6 Currimbhoy Road, Ballard Estate, Mumbai-41 Tel: Fax: vi) Whether listed company No vii) Name, Address and Contact details of Registrar and transfer Agent, if any Not applicable II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY The Company was incorporated as a wholly owned subsidiary of BPCL under its Navratna powers on 17 th October, 26 with the main objective of undertaking exploration and production of oil & gas. The Company has participating interest in 17 blocks spread across six Countries. 22

25 BPRL ANNUAL REPORT III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES Sr. 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 N.A. Subsidiary Company 1% Section 2(87) 4 BPRL Ventures BV Haaksbergweg 71, 111 BR Amsterdam, The Netherlands N.A. Subsidiary Company 1% Section 2(87) 5 BPRL Ventures Mozambique BV Haaksbergweg 71, 111 BR Amsterdam, The Netherlands N.A. Subsidiary Company 1% Section 2(87) 6 BPRL Ventures Indonesia BV Haaksbergweg 71, 111 BR Amsterdam, The Netherlands N.A. Subsidiary Company 1% Section 2(87) 23

26 BHARAT PETRORESOURCES LIMITED IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup 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 215) No. of Shares held at the end of the year (31 st March 216) Demat Physical Total % of Total Shares Demat Physical Total % of Total Shares 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): % 1% % 1% (2) Foreign a) NRIs- Individuals b) Other Individuals c) Bodies Corp. d) Banks / FI e) Any Other Sub-total (A) (2):- Total shareholding of Promoter (A) = (A)(1)+(A)(2) % % % Change during the year 24

27 BPRL ANNUAL REPORT Category of Shareholders No. of Shares held at the beginning of the year (1 st April 215) Demat Physical Total % of Total Shares No. of Shares held at the end of the year (31 st March 216) Demat Physical Total % of Total Shares % Change during the year B. Public Shareholding 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 Shareholding (B)=(B)(1)+ (B)(2) C. Shares held by Custodian for GDRs & ADRs Grand Total (A+B+C) % % % 25

28 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 Share holding at the end of the year (as on ) No. of Shares % of total Shares of the company %of Shares Pledged / encumbered to total shares 1 Bharat Petroleum Corporation Limited % change in share holding during the year 2 Shri D. Rajkumar jointly with BPCL Shri P.C. Siva jointly with BPCL Shri S.K. Agrawal jointly with BPCL Shri Arun Kumar Singh jointly with BPCL 1 6 Shri Indranil Mittra jointly with BPCL 1 7 Shri Ajay Kumar V. jointly with BPCL 1 8 Shri Pankaj kumar jointly with BPCL 1 9 Shri Narendra Dixit jointly with BPCL 1 1 Total (iii) Change in Promoters Shareholding (please specify, if there is no change) Sl. No. 1 At the beginning of the year (as on ) Bharat Petroleum Corporation Limited Shri D. Rajkumar jointly with BPCL Shri S.K. Agrawal jointly with BPCL Shri Arun Kumar Singh jointly with BPCL Shri Indranil Mittra jointly with BPCL Shri P.C. Siva jointly with BPCL Shri Narendra Dixit jointly with BPCL Shareholding at the beginning of the year No. of shares % of total shares of the company 1 Cumulative Shareholding during the year No. of shares % of total shares of the company 1 26

29 BPRL ANNUAL REPORT Sl. No. 2 Date wise Increase / Decrease in Promoters Share holding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus/ sweat equity etc) Bharat Petroleum Corporation Limited (Increase on allotment on ) Shri Arun Kumar Singh (Decrease on transfer ) Shri Indranil Mittra (Decrease on transfer ) Shri Ajay Kumar V. (Increase on transfer ) Shri Pankaj Kumar (Increase on transfer ) 3 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 P.C. Siva jointly with BPCL Shri Ajay Kumar V. jointly with BPCL Shri Pankaj Kumar jointly with BPCL Shri Narendra Dixit jointly with BPCL Shareholding at the beginning of the year No. of shares % of total shares of the company 1 1 Cumulative Shareholding during the year No. of shares % of total shares of the company 1 1 (iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): Sl. No. For each of the Top 1 Shareholders Shareholding at the beginning of the year No. of shares % of total shares of the Company Cumulative Shareholding during the year No. of shares % of total shares of the company 1 At the beginning of the year as on ( ) 2 Date wise Increase / Decrease in Share holding 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 ) 27

30 BHARAT PETRORESOURCES LIMITED (v) Shareholding of Directors and Key Managerial Personnel: Sl. No. For each of the Directors and Key Managerial Personnel Shareholding at the beginning of the year No. of shares % of total shares of the company At the beginning of the year (as on ) Shri S. Varadarajan Shri B.K. Datta Shri P. Balasubramanian Shri D. Rajkumar Shri Indranil Mittra, Vice-President (F) & CFO Shri Narendra Dixit, Company Secretary Date wise Increase / Decrease in Share holding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus/ sweat equity etc): Shri Indranil Mittra, Vice-President (F) & CFO Shri Ajay Kumar V., Director (Ops & BD) Shri Pankaj Kumar, Director (Finance) Date of increase / decrease 27/11/215 27/11/215 27/11/215 Reasons Decrease/Transfer Increase/Transfer Increase /Transfer At the end of the year (i.e ) Shri S. Varadarajan Shri B.K. Datta Shri P. Balasubramanian Shri D. Rajkumar Shri Ajay Kumar V., Director (Ops & BD) Shri Pankaj Kumar, Director (Finance) Dr. Praphullachandra Sharma, Director Shri Narendra Dixit, Company Secretary Cumulative Shareholding during the year No. of shares % of total shares of the company

31 BPRL ANNUAL REPORT V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment (` in Lakhs) Secured Loans excluding deposits Unsecured Loans Deposits Total Indebtedness Indebtedness at the beginning of the financial year (as on ) i) Principal Amount ii) Interest due but not paid iii) Interest accrued but not due 65, 65, Total (i+ii+iii) 65, 65, Change in Indebtedness during the financial year Addition Reduction Net Change Indebtedness at the end of the financial year (as on ) i) Principal Amount ii) Interest due but not paid iii) Interest accrued but not due 65, 65, Total (i+ii+iii) 65, 65, VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL A. Remuneration to Managing Director, Whole-time Directors and/or Manager: Amount in ` Sl. no. Particulars of Remuneration Name of Managing Director and Whole Time Directors Shri D. Rajkumar Shri Ajay Kumar V. (w.e.f ) Shri Pankaj Kumar* (w.e.f ) Total 1. Gross salary (a) Salary as per provisions contained 2,798,282 1,65,259 1,249,575 5,653,116 in section 17(1) of the Income-tax Act, 1961 (b) Value of perquisites u/s 17(2) 767,137 1,45, ,174 2,77,765 Income-tax Act, 1961 (c) Profits in lieu of salary under Section 17(3) Income- tax Act, Stock Option Sweat Equity Commission as % of profit others, specify 5. Others: Allowance / Contribution 711,99 261, ,577 1,143,212 Total (A) 4,277,328 2,912,439 2,314,326 9,54,93 Ceiling as per the Act NA NA NA NA * Shri Pankaj Kumar, Director (Finance) acts as a CFO of the Company. 29

32 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 Total (1) N.A. N.A. 2. Other Non-Executive Directors S. Varadarajan P. Balasubramanian Dr. Praphullachandra Sharma (w.e.f ) B.K.Datta Smt Mary Jacob (Upto ) Fee for attending board committee meetings Commission Nil Nil Others, please specify Total (2) Nil Nil Total Managerial Remuneration N.A N.A Overall Ceiling as per the Act N.A N.A C. Remuneration to Key Managerial Personnel other than MD / Manager / WTD Key Managerial Personnel Sl. no. Particulars of Remuneration Indranil Mittra, CFO (upto ) (` ) Narendra Dixit Company Secretary (` ) Total 1. Gross salary (a) Salary as per provisions 674,552 2,499,2 3,173,752 contained in Section 17(1) of the Income-tax Act, 1961 (b) Value of perquisites u/s 17(2) 283, , ,27 Income-tax Act, 1961 (c) Profits in lieu of salary under section 17(3) Income-tax Act, Stock Option Nil Nil Nil 3. Sweat Equity Nil Nil Nil 4. Commission Nil Nil Nil - as % of profit - others, specify 5. Others: Allowance / Contribution 62,76 197,94 26,7 Total 1,21,128 2,955,531 3,976,659 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. (` ) 3

33 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 Sr. No. Name of the subsidiary Reporting currency Share capital Reserves & surplus Total assets Turn Total Liabilities Investments Over (#) Profit/ (Loss) before taxation (#) Provision for taxation (#) Profit/ (Loss) after taxation (#) Proposed Dividend (#) USD in Millions % of shareholding 1 Bharat PetroResources JPDA Ltd. INR 6,. (12,75.12) , (22.43) - (22.43) - 1% ## 2 BPRL International B.V. INR 322, (58,18.15) 529, , , , USD * (765.86) , (246.31)** - (246.31)** - 1% 3 BPRL Ventures INR 199, (397,781.72) 137, , (154,472.95) - (154,472.95) - USD (599.67) (239.63) - (239.63) - 1% 4 BPRL Ventures INR 194, (13,391.7) 288, , (7,723.38) - (7,723.38) - Mozambique USD (155.87) (11.98) - (11.98) - 1% 5 BPRL Ventures Indonesia INR 13,681. (5,126.3) 24,91. 16, (795.22) - (795.22) - USD 2.62 (7.73) (1.23) - (1.23) - 1% Exchange rate: As on 31 st March, 216-1US$ = INR As on 31 st March, 215-1US$ = INR (#) In respect of BPRL International B.V., BPRL Ventures B.V., BPRL Ventures Mozambique B.V. & BPRL Ventures Indonesia B.V. - 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 31

34 BHARAT PETRORESOURCES LIMITED Part "B" : Associates and Joint Ventures Sr. No. Statement pursuant to Section 129 (3) of the Companies Act, 213 related to Associate Companies and Joint Ventures Name of Associates/Joint Ventures IBV Brasil Petroleo Limitada 1 Latest Audited Balance Sheet 31 st December, Shares of Associate/Joint Ventures held by the company on the year end: No. Amount of Investment in Associates/Joint Venture (` In Lacs) 323,334,28 share of BRL 1 each 26,982.1 Extend of Holding % 5% 3 Description of how there is significant influence 5% of Share Capital is held by BPRL Ventures B.V. (Step Down Subsidiary) 4 Reason why the associate/joint venture is not consolidated Not Applicable 5 Networth attributable to Shareholding as per latest audited Balance Sheet (` In Lacs) 6 Profit / (Loss) for the year (299,969.78) i Considered in Consolidation (` In Lacs) (9,822.6) ii Not Considered in Consolidation - 1 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 For and on behalf of the Board of Directors As per our attached report of even date Sd/- Sd/- Sd/- For and on behalf of D. Rajkumar Ajay Kumar V Pankaj Kumar M.B. Agrawal & Co. Managing Director Director (Ops & BD) Director (Finance) Chartered Accountants Sd/- Narendra Dixit Company Secretary Place: Mumbai Dated: 13 th May, 216 Sd/- Harshal Agrawal Partner Membership No.:

35 BPRL ANNUAL REPORT FORM NO. MR-3 SECRETARIAL AUDIT REPORT 33 Annexure C FOR THE FINANCIAL YEAR ENDED 31 ST MARCH, 216 [Pursuant 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 ). 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. iii. iv. 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. We have not verified the correctness and appropriateness of financial records and books of accounts of the Company. 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 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.

36 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, 216 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, 216 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 is also not applicable to the Company since the shares of the Company are in physical form; 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, Effective 1 st July 215, the Company has complied with Secretarial Standards by the Institute of Company Secretaries of India with regard to Board meetings and Annual General Meeting. The Company has also complied with the provisions of the Act, Rules, Regulations, Guidelines, 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 and 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. 34

37 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 had appointed woman Director for part of 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 had appointed woman Director for part of 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 while the dissenting members views are captured and recorded as part of the minutes. 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. The Company has issued and allotted 3,,, (Thirty Crore) equity shares of ` 1/- each aggregating to ` 3 Crore (Rupees Thee Hundred Crores) on Rights basis. Except the above, none of the following events has taken place during the Financial Year under review- I. Public/Preferential issue of shares/debentures/sweat equity etc. II. Redemption/buy back of securities. III. Merger/Amalgamation/Reconstruction, etc. IV. Major decisions taken by the members in pursuance to Section 18 of the Companies Act, 213. V. Foreign Technical Collaborations. For DHOLAKIA & ASSOCIATES LLP (Company Secretaries) Place: Mumbai Date: 22 nd June, 216 Sd/- CS Bhumitra V. Dholakia Designated Partner FCS-977 CP No

38 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 216, BPRL Board comprised of three Whole-time Directors and three 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 Twelve Board Meetings were held during the financial year on the following dates:- 2 th May th Jun 215 3rd Jul th Jul st Jul th Oct th Oct th Nov th Jan nd Feb nd Mar st Mar 216 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. 36

39 BPRL ANNUAL REPORT Particulars of Directors including their attendance at the Board/Shareholders Meetings during the financial year Memberships held in Committees Names of the Directors Academic Qualifications Non-Executive Directors Attendance out of 12 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 Shri S. Varadarajan A.C.A., A.I.C.W.A. 12 1% Attended Chairman & Managing Director Bharat Petroleum Corporation Ltd. Chairman 1) Numaligarh Refinery Ltd 2) Bharat Oman Refineries Ltd Director - Petronet LNG Ltd Shri B.K.Datta B.E. (Chem) 9 75% Attended Director (Refineries) Bharat Petroleum Corporation Ltd Director - Bharat Oman Refineries Ltd Shri P. Balasubramanian A.C.A % Attended Director (Finance) Bharat Petroleum Corporation Ltd. Director - Bharat Oman Refineries Ltd. Smt Mary Jacob (w.e.f upto ) Dr. Praphullachandra Sharma (w.e.f ) Executive Director Shri D. Rajkumar Managing Director Shri Ajay Kumar V. Director (Ops & BD) (w.e.f ) Shri Pankaj Kumar Director (Finance) (w.e.f ) B.Com., Dipl. in Journalism 1 *16.66 N.A. Director - Balmer Lawrie Investments Ltd B.A.M.S. 1 *1 N.A B.Tech (Elect) from IIT, Madras PGDM from I.I.M., Bangalore M.Sc (Geology) 1 st rank from University of Kerela 12 1% Attended Director Bharat PetroResources JPDA Ltd * Attended Director Bharat PetroResources JPDA Ltd F.C.A, A.I.C.W.A 7 1 * Attended Director 1. Bharat PetroResources JPDA Ltd 2. BPRL International BV 3. BPRL Ventures BV 4. BPRL Ventures Mozambique BV 5. BPRL Ventures Indonesia BV *percentage computed by considering the meetings attended with the total meetings held during the tenure. Chairman- Audit Committee Bharat PetroResources Ltd Member Audit Committee Bharat PetroResources Ltd Member-Audit Committee Bharat PetroResources Ltd Member- Stakeholders Relationship Committee Bharat Petroleum Corporation Ltd. Member-Audit Committee Nomination and Remuneration Committee, Stakeholders Relationship Committee-Balmer Lawrie Investments Ltd Chairman - Audit Committee Bharat PetroResources JPDA Ltd Member - Audit Committee Bharat PetroResources JPDA Ltd -- 37

40 BHARAT PETRORESOURCES LIMITED 3. Audit Committee In terms of Companies Act, the Board at the meeting held on 2nd 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 chairs all the meetings of the Audit Committee. Shri B.K. Datta and Shri P. Balasubramanian are the other members. Shri S. Varadarajan, Chairman and Shri P. Balasubramanian, member possesees 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. Shri J. Dinaker, 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 7 meetings of the Audit Committee held during the financial year on the following dates:- 2 th May th Jun th Jul th Oct nd Feb nd Mar st Mar 216 The attendance of the members is given below:- Name of Member No of meetings attended Shri S. Varadarajan 7 Shri B. K. Datta 6 Shri P. Balasubramanian 7 The Audit Committee reviewed annual financial statements for the year at the meeting held on 13 th May, Remuneration to Directors BPRL is a wholly owned subsidiary of BPCL, a Government Company. Three Part -Time Directors of BPRL are nominated by BPCL and one Part Time Director is 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 Shri D. Rajkumar Managing Director Shri Ajay Kumar V. Director (Ops & BD) (w.e.f ) Shri Pankaj Kumar Director(Finance) (w.e.f ) 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 (` ) 42,77,328 39,56,726 3,2,62 29,12,439 26,61,772 2,5,667 23,14,326 2,1,138 3,4,188 BPRL has not introduced any Stock Options Scheme. None of the non executive Directors hold any share in BPRL. 38

41 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 Venue 29 th August, 213 at 113 a.m. (AGM) Registered office at Bharat Bhavan, 5 th September, 214 at 113 a.m. (AGM) 24 th August, 215 at 113 a.m. (AGM) 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 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 Director for part of the year for which Govt. of India is approached suitably. Further, during the year, all the employees are deputed from parent Company BPCL, which has its own Whistle Blower policy. There are no items of expenditure in the books of accounts, which are not for the purpose of business. Further, no expenses were incurred which were personal in nature and incurred for the Board of Directors and Top management. All the blocks of the Company are in various stages of exploration / appraisal and capital expenditure is considered as capital work in progress. Hence, revenue expenditure mainly consists of administrative & other office expenses. 8. General Shareholders Information Annual General Meeting : Date, Time and Venue Financial Calendar Tuesday, 3 th August 216 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 Jul 215 July-Sept th Oct 215 Oct-Dec nd Feb 216 Audited Statements for the year th May 216 Shareholding Pattern BPCL alongwith its nominees is holding entire paid up equity share capital of 292,2,67 equity shares of ` 1 each in the Company. 39

42 BHARAT PETRORESOURCES LIMITED Location Registered Office Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41 Tel Fax Corporate Office Area Office 9 th Floor, E Wing, Maker Towers, Cuffe Parade, Mumbai 45 Tel Fax , Ranganathan Garden, 11 th Main Road Anna Nagar, Chennai 64 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, 216. The Compliance of conditions of Corporate Governance as stipulated in the Guidelines is the responsibility of the management. My examination was limited to the procedures and implementation thereof adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on 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 except the composition of the Board of Directors and Audit Committee with regard to Independent Directors, the Company has complied with the conditions of the Corporate Governance as stipulated in the Guidelines on Corporate Governance for Central Public Sector Enterprises, 21 issued by the Ministry of Heavy Industries and Public Enterprises as aforesaid. I further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. Place : Mumbai Date: 2 th July 216 Sd/- U. C. Shukla Company Secretary FCS: 2727/CP:

43 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 The preparation of financial statements of Bharat PetroResources Limited for the year ended 31 st March 216 in accordance with the financial reporting framework prescribed under the Companies Act, 213 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, 213 is responsible for expressing opinion on the financial statements under Section 143 of the Companies Act, 213 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 13 th May 216. I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under Section 143(6)(a) of the Act, 213 of the financial statements of Bharat PetroResources Limited for the year ended 31 st March 216. The 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. Place : Mumbai Date: 25 th July 216 For and on the behalf of the Comptroller and Auditor General of India Sd/- Tanuja Mittal Principal Director of Commercial Audit & ex-officio Member Audit Board II, Mumbai 41

44 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 The preparation of consolidated financial statements of Bharat PetroResources Limited for the year ended 31 st March 216 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 / auditors appointed by the Comptroller and Auditor General of India under Section 139(5) read with Section 129(4) of the Act is/are 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 13 th May 216. 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 216. We conducted a supplementary audit has of the financial statements of (Bharat PetroResources JPDA Ltd), 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. Place : Mumbai Date: 25 th July 216 For and on the behalf of the Comptroller and Auditor General of India Sd/- Tanuja Mittal Principal Director of Commercial Audit & ex-officio Member Audit Board II, Mumbai 42

45 BPRL ANNUAL REPORT INDEPENDENT AUDITORS REPORT To, The Members of Bharat PetroResources Limited Report on the Standalone Financial Statements 1. We have audited the accompanying financial statements of M/s. Bharat PetroResources Limited ( the Company ), which comprise the Balance Sheet as at March 31 st, 216, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. 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 financial statements to give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 214. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility 3. Our responsibility is to express an opinion on these standalone financial statements based on our audit. 4. 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. 5. 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. 6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. 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. In making those risk assessments, the auditor considers internal financial control relevant to the Company s preparation of the 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 financial statements. 43

46 BHARAT PETRORESOURCES LIMITED 7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements. Opinion 8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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: a. In case of its Balance Sheet, of the State of Affairs of the Company as at March 31 st, 216, b. In case of Statement of Profit & Loss, of the Loss for the year ended on that date, and c. In case of Cash Flow Statement, of its cash flow for the year ended on that date. Emphasis of Matter Attention is invited to Note no. 18 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 three blocks, no audited statements have been received by the Company. Total assets, liabilities, income and expenses in respect of the 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 ompany 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 ` 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 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 9. 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. 44

47 BPRL ANNUAL REPORT 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 and the Cash Flow Statement dealt with by this Report are in agreement with the books of accounts of the company. d) In our opinion, the aforesaid standalone 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 financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B and 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, 216. For M B Agrawal & Co. Chartered Accountants FRN No. 1137W Sd/- Place: Mumbai Date: 13 th May, 216 Harshal Agrawal Partner M.No:

48 BHARAT PETRORESOURCES LIMITED Annexure A to Independent Auditors Report Referred to in Paragraph 9 of the Independent Auditors Report of even date on the financial statement as of and for the year ended March 31 st, 216. i) In respect of Fixed Assets: ii) iii) iv) (a) (b) (c) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information. 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. 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. In respect of its Inventories As per information and explanation given to us and in our opinion, since the company is still in exploration/development stage, the Company is not carrying any inventory and hence sub clause (a) regarding physical verification of stock, (b) regarding procedure of physical verification, and (c) regarding maintenance of proper records of inventories are not applicable to the Company. 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. 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 as it has not commenced production. vii) In respect of Statutory Dues: (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. 46

49 BPRL ANNUAL REPORT (b) 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 other material statutory dues were in arrears as at March 31 st, 216 for a period of more than six months from the date they became payable. 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. 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. 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 Financial Statements as required by the applicable accounting standards. xiv. According to the information and explanations provided to us, the company has made 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 non-cash 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 FRN No. 1137W Sd/- Harshal Agrawal Place: Mumbai Partner Date: 13 th May, 216 M.No:

50 BHARAT PETRORESOURCES LIMITED Annexure B to Independent Auditors Report Referred to in Paragraph 1(f) of the Independent Auditors Report of even date on the financial statement as of and for the year ended March 31 st, 216. 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 31 st, 216 in conjunction with our audit of the standalone 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. 48

51 BPRL ANNUAL REPORT 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) (b) (c) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; 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 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, 216, 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 FRN No. 1137W Place: Mumbai Date: 13 th May, 216 Sd/- Harshal Agrawal Partner M.No:

52 BHARAT PETRORESOURCES LIMITED BALANCE SHEET AS AT MARCH 31, 216 Particulars ` Lakhs ` Lakhs Note no. As at As at 31/3/216 31/3/215 I EQUITY AND LIABILITIES (1) Shareholders' Funds (a) Share Capital 2 292, ,.27 (b) Reserves & Surplus 3 (8,254.51) (74,85.58) 211, , (2) Share Appplication Money Pending Allotment - 3,. (3) Non-current liabilities (a) Long-term borrowings 4 65,. 65,. (b) Trade payables - - (c) Deferred tax liabilities (Net) - - (d) Other Long term liabilities - - (e) Long-term provisions 5 1, , , ,56.16 (4) Current liabilities (a) Short-term borrowings - - (b) Trade payables - - (c) Other current liabilities 6 7, , (d) Short-term provisions , ,1.31 TOTAL 286, , II ASSETS (1) Non-current assets (a) Fixed assets (i) Tangible assets (ii) Intangible assets (iii) Capital work-in-progress 9 22, ,88.87 (b) Non-current investments 1 253, , (c) Long-term loans and advances , , (2) Current assets (a) Cash and cash equivalents 12 9, ,74.91 (b) Other current assets 13 1, , , , TOTAL 286, , Notes forming part of Accounts 1-35 For and on behalf of the Board of Directors As per our attached report of even date Sd/- Sd/- Sd/- For and on behalf of D. Rajkumar Ajay Kumar V Pankaj Kumar M.B. Agrawal & Co. Managing Director Director (Ops & BD) Director (Finance) Chartered Accountants Sd/- Sd/- Narendra Dixit Harshal Agrawal Company Secretary Partner Place: Mumbai Membership No.: Dated: 13 th May, 216 5

53 BPRL ANNUAL REPORT STATEMENT OF PROFIT AND LOSS FOR THE PERIOD ENDED MARCH 31, 216 Particulars Notes ` Lakhs ` Lakhs For the year April- March 216 For the period April- March 215 I Other Income 14 1, ,63.67 II Total Revenue 1, ,63.67 III Expenses: Employee benefits expenses 15 1, Provision for CWIP 3, Project Cost Charged Off - 3, Provision for abandonment Provision for bad and doubtful loans & advances Depreciation and amortization expenses Other expenses 16 2, , Total expenses 7,84.9 6,68.51 IV Profit/(Loss) before tax (II - III) (5,448.93) (3,437.84) V Tax Expense: - - (i) Current tax - - (ii) Deferred Tax - (8.88) (iiii) Excess provision of tax relating to earlier years VI Profit/(Loss) for the period from continuing operations (IV-V) (5,448.93) (3,428.96) VII Profit (Loss) from discontinuing operations - - VIII Tax expense of discountinuing operations - - IX Profit/(Loss) from discontinuing operations (after tax) (VII-VIII) - - X Profit/(Loss) for the period (VI+IX) (5,448.93) (3,428.96) XI Earnings per share (i) Basic (.19) (.13) (ii) Diluted (.19) (.13) Notes forming part of Accounts 1-35 For and on behalf of the Board of Directors As per our attached report of even date Sd/- Sd/- Sd/- For and on behalf of D. Rajkumar Ajay Kumar V Pankaj Kumar M.B. Agrawal & Co. Managing Director Director (Ops & BD) Director (Finance) Chartered Accountants Sd/- Sd/- Narendra Dixit Harshal Agrawal Company Secretary Partner Place: Mumbai Membership No.: Dated: 13 th May,

54 BHARAT PETRORESOURCES LIMITED Cash Flow Statement for the period ending 31 st March 216 Particulars For the year For the year ` Lakhs ` Lakhs A Cash Flow from Operating Activities Profit Before Tax from Continuing Operations (5,448.93) (3,437.84) Profit Before Tax from Discontinuing Operations - - Adjustments for: Depreciation and Amortisation Provision for abandonment Provision for LD Write off of Assets 3, , Interest income (1,361.69) (2,498.78) Provision no longer required written back (87.83) (1.24) Net (gain) / loss on sale of asset.84 - Provision for bad and doubtful loans & advances Foreign Exchange (Gain)/Loss (176.56) (61.29) Operating Profit / (Loss) before Working Capital changes (2,936.43) (2,498.27) (Increase) / Decrease in Current Assets 1, (1,478.73) (Increase) / Decrease in Non Current Assets Increase / (Decrease) in Non Current Liabilities (48.26) - Increase / (Decrease) in Current Liabilities (1,181.24) 1,338.6 Cash generated from operations (2,278.47) (2,638.4) Net income tax (paid) / refunds (86.25) (29.81) Net cash flow from / (used in) operating activities (2,364.72) (2,929.21) B Net Cash Flow from Investing Activities Addition to Fixed Assets (118.36) (1.7) Investment (Share Application) in Subsidiary company (61,52.41) (4,528.29) Advances and deposits Deposit with banks 65, (16,29.61) Interest Income 1, , Additions to Capital Work-in-progress (2,946.15) (8,53.5) Proceeds from sale of Fixed Assets.29 - Net Cash Flow from/(used) in Investing Activities 2, (62,523.76) C Net Cash Flow from Financial Activities Issue of share capital 3,. - Receipt of Share Application Money (3,.) 3,. Proceeds from long-term borrowings - 35,. Net Cash Flow from/(used) in Financing Activities - 65,. D Net Increase/(Decrease) in Cash and Cash equivalents (A+B+C) (452.97) Cash and cash equivalents at the beginning of the year ` Lakhs ` Lakhs Bank Balance Share of Interest in Joint Venture ,55.41 Cash and cash equivalents at the end of the year ` Lakhs ` Lakhs Bank Balance Share of Interest in Joint Venture Net change in Cash and Cash equivalents (452.97) Notes: 1. The Cash Flow Statement is prepared in accordance with Accounting Standard 3 issued by the Institute of Chartered Accountants of India. 2. In Part-A of the Cash Flow Statement, figures in brackets indicate deductions made from the Net Profit / (Loss) for deriving the net cash flow from operating activities. In Part-B and Part-C, figures in brackets indicate cash outflows. 3. Figures of previous year have been regrouped wherever necessary, to conform to current year s presentation For and on behalf of the Board of Directors As per our attached report of even date Sd/- Sd/- Sd/- For and on behalf of D. Rajkumar Ajay Kumar Pankaj Kumar M.B. Agrawal & Co. Managing Director Director (Ops & BD) Director (Finance) Chartered Accountants Sd/- Narendra Dixit Company Secretary Place: Mumbai Dated: 13 th May, 216 Sd/- Harshal Agrawal Partner Membership No.:

55 BPRL ANNUAL REPORT STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31 ST MARCH 216 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES 1) ACCOUNTING CONVENTION: The financial statements are prepared under historical cost convention in accordance with the mandatory Accounting Standards issued by the Companies (Accounting standard) Rules, 26 and the provisions of the Companies Act, 213, adopting accrual system of accounting except where otherwise stated. 2) USE OF ESTIMATES The preparation of financial statement in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of the assets and liabilities and disclosures relating to contingent liabilities as at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Difference between actual results and estimates are recognized in the period in which the results get materialized. 3) OPERATING CYCLE All assets and liabilities have been classified as current or non-current as per the Company s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 213. The Company has ascertained its operating cycle as 12 months for the purpose of current non-current classification of assets and liabilities. 4) OIL AND NATURAL GAS PRODUCING ACTIVITIES 4.1 The Company follows the Full Cost method of accounting for its oil and natural gas exploration and production activities read with the Guidance Note(A) 15 (Revised 213) on Accounting for Oil and Gas Producing Activities issued by the Institute of Chartered Accountants of India. Accordingly, all acquisition, exploration and development costs are treated as capital work-in-progress and are accumulated in a cost centre. General & Administrative expenses identifiable in respect of blocks or cost centre is capitalised along with block or cost centre. The cost centre is not normally smaller than a country except where warranted by major difference in economic, fiscal or other factors in the country. When any well in a cost centre is ready to commence commercial production, these costs are capitalised from capital work-in-progress to the gross block of assets regardless of whether or not the results of specific costs are successful. Depletion is charged on all capitalised costs according to the unit of production method. On completion of the minimum work programme or on the expiration of licence period and if hydrocarbons are not found in any of the block or the cost centre then expenditure accumulated under the head Capital work-in-progress in relation to the block or cost centre is written off. 4.2 The Net quantities of the Company s interests in proved reserves and proved developed reserves of Oil & Gas at the beginning and additions, deductions, production and closing balance for the year and disclosure of quantities on the geographical basis in respect of blocks which are in development phase have been reported based on Management Committee approval of the respective block. 53

56 BHARAT PETRORESOURCES LIMITED 4.3 SURRENDER OF FIELD / DISPOSAL OF PARTICIPATION INTEREST If the Company were to surrender a field, the accumulated acquisition, exploration, development and General & Administrative costs in respect of such field are deemed to be fully depreciated if the remainder of the wells in the cost centre continue to produce oil or gas. Gain or loss is recognised only when the last well on the cost centre ceases to produce and the entire cost centre is abandoned. Also, in the event the Company assigns or farms out the whole or any part of its participating interest, the corresponding carrying value of the capitalised amount is adjusted against the consideration and the net amount credited or, as the case may be, is charged to the profit and loss account in the year in which the Company s participating interest is assigned, surrendered or farmed out. 4.4 DEPLETION Depletion charge is calculated on the capitalised cost according to the unit of production method. The depreciation charge or the unit of production (UOP) charge for all costs within a cost centre is calculated by multiplying the UOP rate with the production for the period. The unit of production rate is arrived at by dividing the depreciation base of the cost centre by the Proved Oil and Gas Reserves. The depreciation base of a cost centre includes gross block of the cost centre, estimated future development expenditure and estimated site restoration expenditure and is reduced by the accumulated depreciation and accumulated impairment charge of the cost centre. The estimates of proved reserves used are based on the latest technical assessment available with the Company. 4.5 SITE RESTORATION COSTS Liabilities for site restoration costs (net of salvage values) are recognized when the Company has an obligation to dismantle and remove a facility such as oil and natural gas production or transportation facility or an item of plant and to restore the site on which it is located and when a reasonable estimate of that liability can be made. Where an obligation exists for a new facility, the liability is recognized on construction or installation. An obligation may also crystallize during the period of operation of a facility through a change in legislation or through a decision to terminate operations. The amount recognized is the value of estimated future expenditure determined in accordance with local conditions and requirements. The corresponding amount is added to the cost of the tangible fixed asset and is subsequently depleted as part of the capital costs of the facility or item of plant. Any change in the value of the estimated expenditure is reflected as an adjustment to the provision and the corresponding tangible fixed assets. 5) FIXED ASSETS 5.1 INTANGIBLE ASSETS Expenditure incurred for creating/acquiring intangible assets of ` 5 Lakhs and above, 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, from the time the intangible asset starts providing the economic benefit In other cases, the expenditure is charged to revenue in the year the expenditure is incurred. 5.2 TANGIBLE ASSETS Fixed Assets are stated at cost of acquisition (including incidental expenses) less accumulated depreciation. 54

57 BPRL ANNUAL REPORT ) IMPAIRMENT OF ASSETS According to Accounting Standard 28 Impairment of Assets issued by the Companies (Accounting standard) Rules, 26, the carrying values of fixed assets of identified cash generating units (CGU) are reviewed for impairment at each Balance Sheet date when events or changes in circumstances indicate that the carrying values may not be recoverable. If the carrying values exceed the estimated recoverable amount, the assets of the CGU are written down to the recoverable amount and the impairment losses are recognized in the profit and loss account. The recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor. 7) DEPRECIATION 7.1 Depreciation on fixed assets is provided on the straight line basis, over the useful lives of assets (after retaining the residual value) as prescribed by the Schedule II of the Companies Act 213, except in following cases: a) Fixed assets costing not more than ` 5, each are 1 percent in the year of acquisition. b) 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 7 years as per internal assessment. The useful lives are estimated based on the HR policy for replacement/renewal of entitlements. c) Workstations are depreciated over a period of 5 years. The useful lives are estimated based on the internal assessment. 8) REVENUE RECOGNITION 8.1 Revenue is respect of interest on deposit is recognised on accrued basis. 8.2 Liquidated Damages for delay in execution of contracts/supplies are accounted for as per the terms of the contracts and are recognized as income in the year of deduction. 9) INVESTMENTS 9.1 Current investments are valued at lower of cost or fair market value. 9.2 According to AS 13 issued by Institute of Chartered Accountants of India, Long-term investments are valued at cost. Provision for diminution is made to recognize a decline, other than of temporary nature, in the value of such investments. 1) JOINT VENTURES The Company has Joint Ventures in the nature of Production Sharing Contracts (PSC) with the Government of India and/or various bodies corporate for exploration, development and production activities. The income, expenditure, assets and liabilities of the Jointly Controlled Assets are merged on line by line basis according to the participating interest with the similar items in the Financial Statements of the Company. 11) FOREIGN CURRENCY TRANSACTIONS 11.1 Transactions in foreign currency are accounted at the exchange rate prevailing on the date of transaction. 55

58 BHARAT PETRORESOURCES LIMITED 11.2 According to Accounting Standard 11 The Effects of Changes in Foreign Exchange Rates issued by the Companies (Accounting standard) Rules, 26, Monetary items in form of Advances, Current Assets and Current Liabilities denominated in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate exchange rates prevailing on the date of Balance Sheet. Any profit/loss arising out of such conversion is charged to Profit and Loss Account Foreign exchange differences on long term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in other cases, if any, accumulated in Foreign Currency Monetary Item Translation Difference Account and amortised over the balance period of the asset or liability. 12) PROVISIONS, CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS 12.1 According to Accounting Standard 29 Provisions, Contingent Liabilities and Contingent Assets issued by the Companies (Accounting standard) Rules, 26, Provision is recognised when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made Disclosure for a contingent liability is made when there is a possible obligation that may, but probably will not, require an outflow of resources Capital commitments and Contingent liabilities disclosed are those which exceed ` 1 Lakhs in each case Show cause notices issued by various Government authorities are considered for the evaluation of Contingent liabilities only when converted into demand. 13) TAXES ON INCOME 13.1 Provision for current tax is computed in accordance with the provisions of the Income Tax Act, According to Accounting Standard 22 Accounting for Taxes on Income issued by the Companies (Accounting standard) Rules, 26, Deferred tax on account of timing difference between taxable and accounting income is provided using the tax rates and tax laws enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised with regard to all deductible timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences can be utilised. When the Company carries forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing evidence that sufficient taxable income will be available against which deferred tax assets can be realised. 14) CLASSIFICATION OF INCOME/EXPENSES Being not material: 14.1 Prepaid expenses up to `.1 lakh in each case are charged to revenue as and when incurred Liabilities for expenses are provided for only if the amount exceeds `.1 lakh in each case Acquisition cost which cannot be assigned/ identified to particular block is expensed during the year. 56

59 BPRL ANNUAL REPORT Note '2' SHARE CAPITAL As at 31 st March, 216 As at 31 st March, 215 Equity Share Capital Number of shares ` Lakhs Number of shares ` Lakhs i Authorised Equity shares of ` 1 each with voting 3,,, 3,. 3,,, 3,. rights * Total 3,,, 3, 3,,, 3, ii Issued, subscribed and paid-up Capital: Issued and Subscribed Capital: Equity shares of ` 1 each fully paid-up 2,92,2,67 292,.27 2,62,2,67 262,.27 with voting rights * Paid up Capital: Equity shares of ` 1 each fully paid-up 2,92,2,67 292,.27 2,62,2,67 262,.27 with voting rights * Total 2,92,2,67 292,.27 2,62,2,67 262,.27 iii Par value of equity shares: ` 1 each ` 1 each iv No. of shares outstanding Equity shares of ` 1 each fully paid-up As at beginning of the year 2,62,2,67 262,.27 2,62,2,67 262,.27 Issued during the year 3,, 3,. - - As at the year end 2,92,2,67 292,.27 2,62,2,67 262,.27 v Shareholders holding more than 5% shares No. of Shares Name of shareholder % holding 31 st March 216 No. of Shares % holding 31 st March 215 Bharat Petroleum Corporation Ltd 1% # 2,92,2,61 1% # 2,62,2,61 vi Shareholders held by Holding Company Name of shareholder 31 st March st March 215 Bharat Petroleum Corporation Ltd. 1% # 2,92,2,61 1% # 2,62,2,61 # 6 shares held by others * The Company has only one class of shares referred to as equity shares having a par value of ` 1/- Each holder of equity shares is entitled to one vote per share. 57

60 BHARAT PETRORESOURCES LIMITED Note '3' RESERVES & SURPLUS ` Lakhs ` Lakhs As at As at Surplus (Deficit) in Statement of Profit and Loss Balance as at the beginning of the year (74,85.58) (71,376.62) Profit / (loss) for the year (5,448.93) (3,428.96) Total (8,254.51) (74,85.58) Note 4 Long-term borrowings ` Lakhs ` Lakhs As at As at Unsecured Term Loan from Parent Company 65,. 65,. Total 65,. 65,. Terms & Repayment Schedule of Term Loan: Loans & Borrowings ` Lakhs ` Lakhs Maturity in Rate of As at As at F.Y. Interest Loan from Parent Company 35,. 35, % Loan from Parent Company 3,. 3, % Note 5 - Long Term Provisions ` Lakhs ` Lakhs As at As at In respect of Joint ventures: Provision for abandonment 1, ,56.16 Total 1, ,56.16 Note 6 - Other current liabilities ` Lakhs ` Lakhs As at As at Due to Holding Company Due to Operators 4, ,56.85 Other Payables: (i) Payable for Legal and Professional fees (ii) Payable for Contract Services (iii) Security/Earnest Money deposits (iv) Stautory Dues Payable (v) Payable for Rent (vi) Other Charges Payable In respect of Joint ventures Total 7, , Note 7 - Short Term Provisions ` Lakhs ` Lakhs As at As at Provision for employee benefits Provision for Liquidated Damages Provision for abandonment Total

61 BPRL ANNUAL REPORT Note 8 - Tangible and Intangible assets ` Lakhs PARTICULARS GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK AS AT 1/4/215 ADDITIONS DEDUCTIONS ON ACCOUNT OF RETIREMENT / RECLASSIFI- CATIONS AS AT 31/3/216 UPTO 1/4/215 This Period DEDUCTIONS ON ACCOUNT OF RETIREMENT / RECLASSIFI- CATIONS UPTO 31/3/216 AS AT 31/3/216 (1) (2) (3) (4) (5) (6) (7) (8) (9) (1) (11) AS AT 31/3/215 Tangible Assets a) Plant and Equipment b) Office Equipments c) Furniture & Fixtures d) In respect of Joint Venture* TOTAL PREVIOUS YEAR (214-15) Intangible Assets Computer Software TOTAL PREVIOUS YEAR (214-15) TOTAL PREVIOUS YEAR (214-15) * Represents the fixed assets owned by the Unincorporated Joint Venture block (CY 22/2) which was transferred by ONGC (Operator) in current financial year for permanent usage to the block at Madhanam # 3 EPS. Since the commercial production has not yet started, depreciation on these assets have been charged to CWIP of respective block. 59

62 BHARAT PETRORESOURCES LIMITED Note 9 - Capital Work-In-Progress ` Lakhs ` Lakhs As at As at Exploratory Wells-in-Progress: Acquisition Cost 2, , Exploration Cost Geological & Geophysical Cost 5, , Drilling Cost 8, ,54.47 General & Administrative Cost 1, Exploratory Wells-in-Progress (A) 18, ,88.87 Development Wells-in-Progress: - Transfer from Exploratory wells 7, Expenditure during the year Development Wells-in-Progress (B) 7, Total (C=A+B) 25, ,88.87 Less: Provision for CWIP (D) (3,651.75) - Total (C-D) 22, ,88.87 Note 1 - Non-Current Investments No. of Shares Unquoted Trade Investments (At cost): Investment in equity instruments of subsidiaries Face Value Book Value ` Lakhs ` Lakhs a) BPRL International B.V. 235,417,394 Euro 1 151, , (235,417,394) (Euro 1) b) Bharat Petroresources JPDA Ltd. 6,, ` 1 6,. 6,. (6,,) (` 1) 157, , Less: Provision for dimunition in the value of investment Bharat Petroresources JPDA Ltd. 6,. 6,. Total 151, , Share Application Money with BPRL International B.V. 12,3.7 4, Total 253, , Figures in Bracket represents Previous years Figures ` Lakhs ` Lakhs Aggregate Value of Quoted Investments Market Value of Quoted Investments Aggregate Value of Unquoted Investments 157, ,

63 BPRL ANNUAL REPORT Note 11 - Long term Loans and Advances (Unsecured, Considered good unless otherwise stated) ` Lakhs As at ` Lakhs As at Capital advances Security Deposit Loans and advances to subsidiaries Bharat Petroresources JPDA Ltd a) Unsecured considered good - - b) Considered doubtful 3, ,841.2 Less: Provision for bad and doubtful loans (3,841.2) (3,841.2) In respect of Joint Venture Total Note 12 - Cash and cash equivalents ` Lakhs ` Lakhs As at As at Cash on Hand - - Balance with banks In current accounts Bank deposits 8, , In respect of Joint Venture Total 9, ,74.91 Note '13' Other current assets ` Lakhs ` Lakhs As at As at Prepaid Expense Receivable from Subsidiary Companies BPRL International B.V ,47.63 BPRL Ventures B.V Cenvat Credit Accrued Interest Income Tax Refund Receivable TDS receivable In Respect of Joint Venture Total 1, ,

64 BHARAT PETRORESOURCES LIMITED Note 14 Other Income ` Lakhs ` Lakhs For the year April - Mar 216 For the year April - March 215 Interest Income Interest Income on Bank Deposits 1, , Miscelleneous Income Foreign Exchange fluctuations (net) Prior Period Item (net) Provision no longer required written back Total 1, ,63.67 Note 15 - Employee benefits expenses ` Lakhs ` Lakhs For the year April - Mar 216 For the year April - March 215 Salaries and wages Payment to Parent Company towards PF and other Funds Payment to Parent Company towards gratuity Welfare expenses Total 1, Note 16 - Other expenses ` Lakhs ` Lakhs For the year April - Mar 216 For the year April - March 215 Irrecoverable Taxes Repairs and maintenance : Machinery Building - - Others Insurance Rent Rates and taxes Legal and Professional Fees Liquidated Damages Paid Share in Exploration Expenditure Travelling and Conveyance Advertisement Bank Charges Printing & Stationery Software Expenses Postage, Telephone etc Electricity Charges Prior Period Item (net) Security Expenses Payment to Auditors For Audit Fees For Services For Certification Loss on sale of asset.84 - Other Expenses Total 2, ,

65 BPRL ANNUAL REPORT Notes forming part of accounts (Notes 17 to 35) 17. The Company was incorporated as a 1% subsidiary of Bharat Petroleum Corporation Limited (BPCL) to focus on Exploration and Production Activities. The Board of Directors of BPCL approved the transfer of Exploration and Production assets, liabilities and investments along with the commitments and expenditure, through the assignment of its participating interests to the Company, in respect of Blocks awarded to the Company under NELP IV and NELP VI rounds in India. The Board of Directors of the Company approved the assignment from BPCL to the Company. Details of the blocks including blocks assigned by BPCL as on 31/3/216 are as under: Name Country Participating Interest of BPRL 31/3/216 31/3/215 NELP IV CY/ONN/22/2 India 4.% 4.% NELP VI CY/ONN/24/1 (a) India - - CY/ONN/24/2 India 2.% 2.% NELP VII RJ/ONN/25/1 (c) India 33.33% 33.33% NELP IX CB/ONN/21/11 India 25% 25% AA/ONN/21/3 India 2% 2% CB/ONN/21/8 India 25% 25% MB/OSN/21/2 (d) India 2% 2% Blocks outside India EP-413 Australia 27.8% 27.8% a) In the previous year , on completion of Minimum Work Programme Commitments and based on analysis of seismic and well drilling results indicating poor prospectivity, as assessed by the Management, the Company had withdrawn in respect of Block CY/ONN/24/1. Consequently, an amount of ` 3, lakhs had been written off to the Statement of Profit and Loss of b) In respect of CY-ONN-22/2, the block has 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. Hence, cost incurred in respect of this block has shown under Development wellsin-progress. During the year, an amount of ` Lakhs (previous year ` Lakhs) (net of Royalty of ` 117. Lakhs (previous year ` 2.76 Lakhs)) has been generated from production & sale of Pit Oil/Test Oil during testing of Wells NMAD (MD#6) in the block CY/ONN/22/2. Pending Petroleum Mining Lease from State Government this has been reduced from the cost of development wells in progress expenditure. 63

66 BHARAT PETRORESOURCES LIMITED c) On account of the poor prospectivity, as assessed by Management, Company has provided ` 2, lakhs in the financial statements for the year towards impairment loss for Block RJ/ONN/25/1. d) Based on analysis of 3D seismic data indicating poor prospectivity, as assessed by Management, Company has provided ` 1, lakhs in the financial statements for the year towards impairment loss for Block MB/OSN/21/2. Company has also provided ` 398. lakhs as Provision for Liquidated Damages in the financial statement for the year. 18. The Company has interest in various Un-incorporated Joint Ventures. Since these interest is in the nature of Jointly Controlled Assets (JCA), in terms of AS 27 on Financial Reporting of Interests in Joint Ventures, the financial statements of the Company includes the Company s share in the assets, liabilities, incomes and expenses relating to JCA. The Company recognises such assets, liabilities, incomes and expenses based on the financial statements received from the respective operators. The company s share in the assets, liabilities, incomes and expenses in Joint Ventures as furnished by the respective operators has been incorporated in the financial statements as given below: (` In Lakhs) Sr. No. Particulars 31 st March, st March, Fixed Asset Capital Work in Progress (Gross) 25, , Other Non-Current Assets Current Assets Cash and Bank Balances Current Liabilities/Provisions Expenses In respect of Block CB/ONN/21/8, the Company is the operator. The Companies share of the assets and liabilities have been recorded under respective heads. Out of the remaining six Indian Blocks (previous year six), the Company has received three (previous year five) audited financial statements as at March 216. The Company has not received financial statement for three (previous year one) blocks and expenses for these blocks are accounted based on unaudited financial statement from the operator for the period Upto 31 st March 216. 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 31 st March 216. During , the capital Expenditure in respect of Indian Blocks and Foreign block is ` 2,5.71 Lakhs and ` lakhs respectively. 64

67 BPRL ANNUAL REPORT Bharat PetroResources JPDA Ltd.(BPR JPDA) 1% subsidiary of BPRL has a participating interest of 2% in JPDA 6-13 blocks. BPRL has invested ` 6, lakhs as equity and has given interest free loan of ` 3,841.2 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 15 th July 215 and demanded the payment of the liability upon termination. In view of the uncertainties regarding the continuation of activities in the block, the management had provided ` 6, lakhs as provision for diminution in value of investments and ` 3,841.2 lakhs towards bad and doubtful loans in Negotiations are on-going by the consortium with the regulator to reach at final decision. 2. The Company requires significant amounts of funds to carry on its operations. The recovery against funds invested is subject to the success of exploration activities leading to monetization. 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 Company to continue as a going concern. 21. BPRL had earlier entered into Standby Letter of Credit (SBLC) facility agreement with a number of Indian banks to the extent of 175 Mn dollars (` 11,6, Lakhs). During the year, Company has entered into additional Standby Letter of Credit (SBLC) facility agreement of 75 Mn dollars (` 4,97, Lakhs) with an Indian bank. 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 $ 1,89 Mn (` 7,22, Lakhs) has been issued. 22. Employee Benefits: All employees of the Company, below board level, 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: (` In Lakhs) Sr No Particulars For the year For the year Provident Fund Gratuity Leave encashment Super-Annuation (NPS) Total

68 BHARAT PETRORESOURCES LIMITED b) Pursuant to Company been upgraded to Schedule B, Government of India has appointed three Whole time directors on the Board of BPRL. Expenses in relation to Provident Fund, NPS and Gratuity of Directors are paid to the respective Parent Company s trust. Directors are also entitled to accumulate Leave which can be availed or encashed during the service period. Provision in respect of Leave encashment has been made in the books of the Company. The details of expenses debited to the profit and loss account under this head are as follows: Sr No Particulars 1 Provident Fund and other benefits For the year (` In Lakhs) For the year Leave encashment Total In view of the above, the management is of the view that no additional disclosure is required in terms of Accounting Standard 15 on Employee Benefits issued by the Companies Accounting Standard Rules 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 31 st March 216 is given below: Project Details Crude Oil (MMm3) Gas (MMm3) CY-ONN-22/2 Opening Extended.33.3 Production Testing Closing MMm3 = Million Cubic Meters 24. Disclosure under Accounting Standard -2 on Earnings Per Share (EPS) : The basic/diluted earnings per equity share are calculated as stated below: Particulars Net profit/ (loss) after tax ` in (5,448.93) (3,428.96) Lakhs Weighted average equity shares Nos. 287,81,99, ,,2,67 outstanding during the period (for Basic Earnings Per Share) Weighted average equity shares Nos. 287,81,99, ,8,24,588 outstanding during the period (for Diluted Earnings Per Share) Basic earnings per equity share ` (.19) (.13) Diluted earnings per equity share ` (.19) (.13) 66

69 BPRL ANNUAL REPORT Calculation of Weighted Average number of equity shares: Particulars 31 st March st March 215 Shares existing at the beginning of the year 262,,2,67 262,,2,67 Shares issued and allotted during the year 3,,, Nil Application money received during the year Nil 3,,, pending allotment Weighted Average Number of shares issued during 25,81,96,721 8,21,917 the year Weighted Average Number of shares for EPS Calculation 287,81,99, ,8,24, Expenditure incurred by BPCL on behalf of the Company is accounted for on the basis of the debit notes raised by BPCL. Supporting documents for such debit notes are available with BPCL. 26. Disclosure under Accounting Standard 18 on Related party Disclosure 1) Name of the related parties and description of relationship: a) Subsidiaries: i) BPRL International B.V. ii) Bharat PetroResources JPDA Ltd. b) Step-down subsidiaries: i) BPRL Ventures B.V. ii) BPRL Ventures Mozambique iii) BPRL Ventures Indonesia B.V. c) Joint Venture/ Jointly Controlled Entities: IBV Brasil Petroleo Private Ltda d) Key Management Personnel: i) Shri D. Rajkumar (Managing Director) ii) Shri Ajay Kumar, Director (Ops & BD) iii) Shri Pankaj Kumar, Director (Finance) 2) Details of Transactions: i) BPRL International B.V.: (` In Lakhs) Transaction during the year Share Application Money 61, , Reimbursement of SBLC expenses 5, , Closing Balance 31 st March, st March, 215 Investments 1,51, ,51, Share Application Money with BPRL 1,2,3.7 4, International B.V. Receivable from BPRL International B.V ,

70 BHARAT PETRORESOURCES LIMITED ii) BPRL Ventures B.V.: (` In Lakhs) Transaction during the year Deputation employee cost Closing Balance 31 st March, st March, 215 Receivable from BPRL Ventures B.V iii) There were no transactions entered during the year with BPRL Ventures Mozambique B.V. and BPRL Ventures Indonesia B.V. iv) Bharat PetroResources JPDA Ltd.: (` In Lakhs) Closing Balance 31 st March, st March, 215 Outstanding Loan 3, ,841.2 v) IBV Brasil Petroleo Pvt Ltda: No Transactions vi) Key Management Personnel: (` In Lakhs) Name Shri D. Rajkumar Shri Pankaj Kumar Shri Ajay Kumar In view of the exemption provided under AS-18 Related Party Disclosures, related party relationship with other state-controlled enterprises and transactions with such enterprises are not included in the above. 27. 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. 28. Capital commitments and Contingent Liabilities: a) Capital Commitments: Based on the estimation by the Management, BPRL s share of MWP commitments as on the reporting date amounted to ` 41,565 Lakhs. (Previous year ` 1,44.59 Lakhs). Company has provided Bank Guarantees to Director General of Hydrocarbon (DGH) to the extent of ` Lakhs (` 2, Lakhs) towards MWP. b) Contingent Liabilities: i) Contingent liabilities in respect of operations where BPRL is not the operator are recognised based on inputs received from the operator. 68

71 BPRL ANNUAL REPORT Expenditure in Foreign Currency: (` In Lakhs) Sr. No. Particulars Professional Consultancy Fees Drilling and other related charges Travelling & Conveyance Software Charges Others As at March 31, 216, there are no creditors covered under the Micro, Small and Medium Enterprises Development Act, 26 and hence no disclosures under the Act are made. 31. Segment Information The Company has identified the geographical segment as its primary segment. Geographic segments of the Company are determined based on the location of the assets viz. Within India and Outside India. The Company is operating in a single business segment i.e. Exploration & Production of Hydrocarbons and as such all business activities revolve around this segment. Hence, there is no separate secondary segment to be reported in line with the requirement of AS 17 on Segment Reporting issued by the Companies Accounting Standard Rules 26. The segment information is as under: (` In Lakhs) Within India Outside India Total Revenue External Revenue Inter Segment Revenue Total Revenue Result Segment Results (3,698.) (3,89.55) (4.53) 1.11 (3,738.53) (3,88.44) Unallocated Corporate Expenses (3,31.93) (2,248.6) Operating Profit (7,4.46) (6,57.4) Add: Interest & Other Income Prior period income Unallocated Corporate Income , , Profit after Tax (5,44.5) (3,428.96) Other Information Segment Assets 2, , , , , , Unallocated Corporate Assets , ,89.64 Total Assets 2, , , , , , Segment Laibilities 1,5.96 8, , , ,68.7 9, Unallocated Corporate Liabilities , , Total Liabilities 1,5.96 8, , , , , Capital Expenditure 2,5.7 5, , ,98.26 Depreciation Non Cash Exp (other than depreciation) Capital Expenditure for the period for Indian Blocks is ` 2,5.71 lacs and for foreign block is ` lacs 69

72 BHARAT PETRORESOURCES LIMITED 32. Taxation:- a. Deferred Tax Provision Since all the blocks are in the exploration phase (one in development), there is no virtual/reasonable certainty supported by convincing evidence that sufficient future taxable income will be available against which unabsorbed depreciation and carry forward tax losses can be realised. Hence, no deferred tax asset has been recognised as per AS 22 in the accounts in respect of unabsorbed depreciation and carry forward losses. b. Current Tax Provision During the year there is no taxable income, hence no provision for tax has been made in the current year. 33. The Company s unhedged exposure towards foreign exchange is given below: Currency 31 st March, st March, 215 USD Receivable 2,4,768 3,466,42 USD Payable 1,4,299 21,99 AUD Payable 63,2 19,613 GBP Payable 1,593, 1,562,5 34. Exchange Rate - 1 USD = INR & 1 AUD = INR 5.8, 1 GBP = as at Figures of previous year have been regrouped wherever necessary to confirm to current year presentation. For and on behalf of the Board of Directors As per our attached report of even date Sd/- Sd/- For and on behalf of D. Rajkumar Ajay Kumar V M.B. Agrawal & Co. Managing Director Director (Ops & BD) Chartered Accountants Sd/- Sd/- Sd/- Pankaj Kumar Narendra Dixit Harshal Agrawal Director (Finance) Company Secretary Partner Place: Mumbai Membership No.: Dated: 13 th May, 216 7

73 BPRL ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS OF BHARAT PETRORESOURCES LIMITED 71

74 BHARAT PETRORESOURCES LIMITED To, The Members of Bharat PetroResources Limited INDEPENDENT AUDITOR S REPORT Report on the Consolidated Financial Statements 1. We have audited the accompanying consolidated 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, 216, the consolidated statement of profit and loss, the consolidated cash flow statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the consolidated financial statements.). Management s Responsibility for the Consolidated 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 financial statements to give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 214. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility 3. Our responsibility is to express an opinion on these consolidated 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 with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. 72

75 BPRL ANNUAL REPORT An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated 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 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 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 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 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: a. In case of its Consolidated Balance Sheet, of the State of Affairs of the Company as at March 31 st, 216, b. In case of Consolidated Statement of Profit & Loss, of the Loss for the year ended on that date, and c. In case of Consolidated Cash Flow Statement, of its cash flow for the year ended on that date. Other Matter 8. We did not audit the financial statement of 2 (two) subsidiaries and 1 (one) jointly controlled entity, whose adjusted financial statements reflect total assets of ` 12,9, lakhs as at March 31, 216 and total revenues of ` lakhs and net cash flows amounting to ` (2,64.82) lakhs for the year ended on that date, as considered in the consolidated financial statements. The consolidated financial statements also include the Group s net loss of ` 24, lakhs for the year ended 31 st March, 216, as considered in the consolidated financial statements. Theses financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the consolidated 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 are prepared under Indian GAAP and audited by another firm of auditors on which we have placed reliance for the purpose of this report. Financial statements of other entities are prepared under respective GAAP and audited by the local firm of auditors. For the purposes of consolidation, we are furnished with financial statements prepared and certified by the management under Indian GAAP, which are prepared based on audited financial statements prepared under Indian GAAP, on which we have placed reliance for the purpose of this report. 73

76 BHARAT PETRORESOURCES LIMITED 1. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of the Accounting Standard (AS) 21 on Consolidated Financial Statements, Accounting Standard (AS) 27 Financial Reporting of Interest in Joint Ventures notified pursuant to the Companies (Accounting Standards) Rules, The auditors of IBV Brazil 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, 215 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 three 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 Lakhs 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 No break up of assets and liabilities is available in respect of one blocks where the Company has invested ` 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 thereon 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 PetroResourcesJPDA 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 ` 2,294.5 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. 74

77 BPRL ANNUAL REPORT 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 financial statements. b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated 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 and the consolidated cash flow statement dealt with by this Report are in agreement with the relevant books of accounts maintained for the purpose of preparation of the consolidated financial statements. d) In our opinion, the aforesaid consolidated 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 financial controls over financial reporting of the Holding Company and its Indian Subsidiary and the operating effectiveness of such controls, refer to our separate report in Annexure A and 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, 216. For M B Agrawal & Co. Chartered Accountants FRN No. 1137W Place: Mumbai Date: 13 th May, 216 Sd/- Harshal Agrawal Partner M.No:

78 BHARAT PETRORESOURCES LIMITED 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, 216. 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 financial statements of the Company as of and for the year ended 31 st March 216, 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. 76

79 BPRL ANNUAL REPORT 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, 216, 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 FRN No. 1137W Place: Mumbai Date: 13 th May, 216 Sd/- Harshal Agrawal Partner M.No:

80 BHARAT PETRORESOURCES LIMITED CONSOLIDATED BALANCE SHEET AS AT 31 ST MARCH, 216 Particulars Note no. ` Lakhs ` Lakhs As at As at 31/3/216 31/3/215 I EQUITY AND LIABILITIES (1) Shareholders' Funds (a) Share Capital 2 292, ,.27 (b) Reserves & Surplus 3 (144,874.21) (149,38.25) 147, ,962.2 (2) Share application money pending allotment - 3,. (3) Non-current liabilities (a) Long-term borrowings 4 778, ,658.6 (b) Trade payables - - (c) Deferred tax liabilities (Net) - - (d) Other Long term liabilities - - (e) Long-term provisions 5 1, , , , (4) Current liabilities (a) Short-term borrowings - - (b) Trade payables - - (c) Other current liabilities 6 13, ,48.7 (d) Short-term provisions 7 3, , , ,134.2 TOTAL 943, , II ASSETS (1) Non-current assets (a) Fixed assets (i) Tangible assets (ii) Intangible assets 8 26, , (iii) Capital work-in-progress 9 864, , (b) Long-term loans and advances 1 2, , (c) Other non current assets 11 9, , , (2) Current assets (a) Cash and cash equivalents 12 39, , (b) Short-term loans and advances - - (c) Other current assets , , TOTAL 943, , Notes forming part of Accounts 1-35 For and on behalf of the Board of Directors As per our attached report of even date Sd/- Sd/- For and on behalf of D. Rajkumar Ajay Kumar V M.B. Agrawal & Co. Managing Director Director (Ops & BD) Chartered Accountants Sd/- Sd/- Sd/- Pankaj Kumar Narendra Dixit Harshal Agrawal Director (Finance) Company Secretary Partner Place: Mumbai Membership No.: Dated: 13 th May,

81 BPRL ANNUAL REPORT CONSOLIDATED STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED 31 st MARCH, 216 Particulars Note No. ` Lakhs ` Lakhs For the For the year year I Other Income 14 1, ,72.32 II Total Revenue 1, ,72.32 III Expenses: Employee benefits expenditures 15 1, Provision for abandonment Project cost charged off - 18,551.3 Provision for CWIP 3, Liability upon termination - 2,19.68 Finance Costs 16 9, , Depreciation and amortization expenses Other expenses 17 12, , Total expenses 26, ,379.2 IV Profit (Loss) before tax (II - III) (24,831.38) (38,676.88) V Tax Expense: (i) Current tax - - (ii) Deferred Tax (in respect of Joint Venture) - - (iiii) Excess provision of tax relating to earlier years - (8.88) VI Profit (Loss) for the period from continuing operations (IV - V) (24,831.38) (38,668.) VII Profit (Loss) from discontinuing operations - - VIII Tax expense of discountinuing operations - - IX Profit /(Loss) from discontinuing operations (after tax) (VII- VIII) - - X Profit / (Loss) for the period (IV + IX) (24,831.38) (38,668.) XI Earnings per share (i) Basic (.86) (1.48) (ii) Diluted (.86) (1.48) Notes forming part of Accounts 1-35 For and on behalf of the Board of Directors As per our attached report of even date Sd/- Sd/- For and on behalf of D. Rajkumar Ajay Kumar V M.B. Agrawal & Co. Managing Director Director (Ops & BD) Chartered Accountants Sd/- Sd/- Sd/- Pankaj Kumar Narendra Dixit Harshal Agrawal Director (Finance) Company Secretary Partner Place: Mumbai Membership No.: Dated: 13 th May,

82 BHARAT PETRORESOURCES LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 st MARCH, 216 Particulars For the year ended 31 st March, 216 For the year ended 31 st March, 215 ` Lakhs ` Lakhs ` Lakhs ` Lakhs A CASH FLOW FROM OPERATING ACTIVITIES Net Profit before Tax and Extraordinary Items (24,831.38) (38,668.) Adjustments for : Depreciation / Amortisation (Profit) / loss on sale of assets.84 - Finance costs 9, , Interest income (1,366.7) (2,59.) Provision for abandonment Provision for LD 3, Liability upon termination - 2,19.68 Provision for impairment Project Cost charged off - 18,551.3 Goodwill written off - 1,58.7 Provisions written back (87.83) (1.24) Net unrealised exchange (gain) / loss 9,34.7 (7.35) Short /(Excess) Provision for other items (Net) - 2, , (4,22.61) (2,799.15) Operating Profit before working capital changes Adjustments for: (Increase) / Decrease in Current Assets (65.74) (15.86) (Increase) / Decrease in Non Current Assets (925.39) Increase / (Decrease) in Non Current Liabilities (5.84) Increase / (Decrease) in Current Liabilities (23,233.11) (22,993.49) 11, ,87.19 Cash generated from Operations (27,214.1) 7,288.4 Direct taxes paid (86.25) (3.42) Net cash from Operating Activities (A) (27,3.35) 6, B C CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets and Intangible Assets (118.36) (1.7) Additions to CWIP (135,516.59) (217,328.74) Sale of Fixed Assets Deposits with Banks 42, (16,29.61) Interest received 1, , Net Cash used in Investing Activities (B) (91,824.89) (23,874.18) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of equity shares 3,. - Proceeds from borrowings 431, , Proceeds from Share Application Money (3,.) 3,. Repayment of Loan (312,954.) - Finance Cost (19,311.81) (7,132.94) Net cash used in Financing Activities (C) 99, , Net increase / (decrease) in Cash and cash equivalents (A+B+C) (19,97.97) (67,223.64) Cash and cash equivalents at the beginning of the year 6, ,48.83 Effect of exchange differences on restatement of foreign currency Cash 2, , and cash equivalents Cash and cash equivalents at the end of the year 7, ,58.44 Reconciliation of Cash and cash equivalents with the Balance Sheet: Cash and cash equivalents at the beginning of the year Bank Balance 5, , Share of Interest in Joint Venture , ,48.83 Cash and cash equivalents at the end of the year Bank Balance 6, , Share of Interest in Joint Venture , ,58.44 Notes: 1 The Cash Flow Statement is prepared in accordance with Accounting Standard 3 issued by the Institute of Chartered Accountants of India. 2 In Part-A of the Cash Flow Statement, figures in brackets indicate deductions made from the Net Profit / (Loss) for deriving the net cash flow from operating activities. In Part-B and Part-C, figures in brackets indicate cash outflows. 3 Figures of previous year have been regrouped wherever necessary, to conform to current year s presentation. For and on behalf of the Board of Directors As per our attached report of even date Sd/- Sd/- For and on behalf of D. Rajkumar Ajay Kumar V M.B. Agrawal & Co. Managing Director Director (Ops & BD) Chartered Accountants Sd/- Sd/- Sd/- Pankaj Kumar Narendra Dixit Harshal Agrawal Director (Finance) Company Secretary Partner Membership No.: Place: Mumbai, 13 th May, 216 8

83 BPRL ANNUAL REPORT NOTES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF PROFIT AND LOSS NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES 1. DESCRIPTION OF BUSINESS Bharat PetroResources Limited ( the Holding Company ) was incorporated as a 1% subsidiary of Bharat Petroleum Corporation Limited (BPCL) to focus on Exploration and Production activities. The Holding Company and its subsidiaries are hereinafter collectively referred to as the Group. 2. PRINCIPLES OF CONSOLIDATION (a) (b) The Consolidated Financial Statements include the financial statements of the Holding Company and its subsidiaries and joint venture. Subsidiaries are those companies in which Bharat PetroResources Limited, directly or indirectly, has an interest of more than one half of voting power or otherwise has power to exercise control over the composition of the Board of Directors. Subsidiaries and joint ventures are consolidated from the date on which effective control is transferred to the Group to the date such control exists. The subsidiaries and joint ventures considered in the consolidated financial statements are given below: Sr. No. Name of the Group Relationship Country of Incorporation Percentage of Group holding as at March 31, Bharat PetroResources JPDA Ltd. Subsidiary India 1% (BPR JPDA) 2 BPRL International BV Subsidiary Netherlands 1% 3 BPRL Ventures BV Subsidiary Netherlands 1% 4 BPRL Ventures Mozambique BV Subsidiary Netherlands 1% 5 BPRL Ventures Indonesia BV Subsidiary Netherlands 1% 6 IBV (Brazil) Petroleo Pvt Ltda. Joint Venture Brazil 5% Notes: i) BPRL Ventures BV, BPRL Ventures Mozambique BV and BPRL Ventures Indonesia BV are wholly owned subsidiaries of BPRL International BV. ii) IBV Brazil Petroleo Pvt Ltda. is a 5% joint venture of BPRL Ventures BV and Videocon Energy Brazil Limited. iii) The ownership interest as given above has been calculated based on the effective interest of Bharat PetroResources Limited in the various subsidiaries and joint ventures including the investments made by its subsidiaries. (c) The Consolidated Financial Statements have been prepared in accordance with historical cost convention and Accounting Standard 21 - Consolidated Financial Statements and Accounting Standard 27 Financial Reporting of Interest in Joint Ventures issued by the Companies (Accounting Standard) Rules, 26 and the relevant provisions of the Companies Act,

84 BHARAT PETRORESOURCES LIMITED (d) The Consolidated Financial Statements have been prepared on the following basis: i) The financial statements of each of the subsidiaries drawn up to the same reporting date i.e. year ended March 31, 216, have been used for the purpose of consolidation. ii) The financial statements of the Joint Venture, drawn up to the same reporting date i.e. year ended March 31, 216, have been used for the purpose of consolidation. iii) All the subsidiaries and joint venture of the Holding Company are incorporated outside India except Bharat PetroResources JPDA Ltd. The activities of the subsidiaries and joint venture are not an integral part of those of the Holding Company and hence, these have been considered to be Non-Integral foreign operations in terms of Accounting Standard 11 The Effects of Changes in Foreign Exchange Rates. Consequently, the assets and liabilities, both monetary and non-monetary, of such subsidiaries and joint venture have been translated at the closing rates of exchange of the respective currencies as at March 31, 216. Revenue items are consolidated at the average rate prevailing during the year. Exchange Rate considered as on 31 st March 215 is 1 USD = ` , 1 Reais = ` and on 31 st March 216 is 1 USD = ` , 1 Reais = ` iv) All inter group transactions, balances and unrealized surplus and deficit on transactions between group companies are eliminated. v) Changes have been made in the accounting policies followed by each of the subsidiaries and joint venture to the extent they were material and identifiable from their respective audited accounts to make them uniform with the accounting policies followed by the Holding Company. Where it has not been practicable to use uniform accounting policies in preparing the consolidated financial statements, the different accounting policies followed by each of the group companies have been followed. (Refer Note No.3 below) 3. SIGNIFICANT ACCOUNTING POLICIES (a) Accounting Convention The consolidated financial statements are prepared under historical cost convention in accordance with the mandatory Accounting Standards issued by the the Companies (Accounting Standard) Rules, 26 and the provisions of the Companies Act, 213, adopting accrual system of accounting except where otherwise stated. (b) Use of Estimates The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognised in the period in which they materialise. 82

85 BPRL ANNUAL REPORT (c) Oil and natural gas producing activities (i) The Company follows the Full Cost method of accounting for its oil and natural gas exploration and production activities read with the Guidance Note (A) 15 (Revised 213) on Accounting for Oil and Gas Producing Activities issued by the Institute of Chartered Accountants of India. Accordingly, all acquisition, exploration and development costs are treated as capital work-inprogress and are accumulated in a cost centre. General & Administrative expenses identifiable in respect of blocks or cost centre is capitalised along with block or cost centre. The cost centre is not normally smaller than a country except where warranted by major difference in economic, fiscal or other factors in the country. When any well in a cost centre is ready to commence commercial production, these costs are capitalised from capital work-in-progress to the gross block of assets regardless of whether or not the results of specific costs are successful. Depletion is charged on all capitalised costs according to the unit of production method. On Completion of the minimum work programme or on the expiration of licence period and if hydrocarbons are not found in any of the block or the cost centre, then expenditure accumulated under the head Capital work-in-progress in relation to the block or cost centre is written off. (ii) The Net quantities of the Company s interests in proved reserves and proved developed reserves of Oil & Gas at the beginning and additions, deductions, production and closing balance for the year and disclosure of quantities on the geographical basis. In respect of blocks which are in development phase have been reported based on Management Committee approval of the respective block. (iii) Surrender of field / disposal of participation interest If the Company were to surrender a field, the accumulated acquisition, exploration, development and General & Administrative costs in respect of such field are deemed to be fully depreciated if the remainder of the wells in the cost centre continue to produce oil or gas. Gain or loss is recognised only when the last well on the cost centre ceases to produce and the entire cost centre is abandoned. Also, in the event the Company assigns or farms out the whole or any part of its participating interest, the corresponding carrying value of the capitalised amount is adjusted against the consideration and the net amount credited or, as the case may be, is charged to the profit and loss account in the year in which the Company s participating interest is assigned, surrendered or farmed out. (iv) Depletion Depletion charge is calculated on the capitalised cost according to the unit of production method. The depreciation charge or the unit of production (UOP) charge for all costs within a cost centre is calculated by multiplying the UOP rate with the production for the period. The unit of production rate is arrived at by dividing the depreciation base of the cost centre by the Proved Oil and Gas Reserves. The depreciation base of a cost centre includes gross block of the cost centre, estimated future development expenditure and estimated site restoration expenditure and is reduced by the accumulated depreciation and accumulated impairment charge of the cost centre. The estimates of proved reserves used are based on the latest technical assessment available with the Group. 83

86 BHARAT PETRORESOURCES LIMITED (d) (e) (v) Site restoration costs Liabilities for site restoration costs (net of salvage values) are recognised when the Group has an obligation to dismantle and remove a facility such as oil and natural gas production or transportation facility or an item of plant and to restore the site on which it is located and when a reasonable estimate of that liability can be made. Where an obligation exists for a new facility, the liability is recognized on construction or installation. An obligation may also crystallize during the period of operation of a facility through a change in legislation or through a decision to terminate operations. The amount recognized is the value of estimated future expenditure determined in accordance with local conditions and requirements. The corresponding amount is added to the cost of the tangible fixed asset and is subsequently depleted as part of the capital costs of the facility or item of plant. Any change in the value of the estimated expenditure is reflected as an adjustment to the provision and the corresponding tangible fixed assets. Fixed assets (i) Intangible assets Holding Company Expenditure incurred for creating/acquiring other intangible assets of ` 5 lacs and above, 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, from the time the intangible asset starts providing the economic benefit. In other cases, the expenditure is charged to revenue in the year the expenditure is incurred. Subsidiary Company Software is amortised over the estimated useful life of the asset or five years, whichever is lower. (ii) Tangible Assets Fixed Assets are stated at cost of acquisition (including incidental expenses) less accumulated depreciation. Impairment of assets According to AS 28 issued by ICAI, the carrying values of fixed assets of identified cash generating units (CGU) are reviewed for impairment at each Balance Sheet date when events or changes in circumstances indicate that the carrying values may not be recoverable. If the carrying values exceed the estimated recoverable amount, the assets of the CGU are written down to the recoverable amount and the impairment losses are recognized in the profit and loss account. The recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor. 84

87 BPRL ANNUAL REPORT (f) (g) (h) (i) Depreciation (i) Depreciation on fixed assets is provided on the straight line basis, over the useful lives of assets (after retaining the residual value) as prescribed by the Schedule II of the Companies Act 213, except in following cases: i. Fixed assets costing not more than ` 5, each are 1 percent in the year of acquisition. ii. iii. 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 7 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. Revenue Recognition Revenue is respect of interest on deposit is recognised on accrual basis. Liquidated Damages for delay in execution of contracts/supplies are accounted for as per the terms of the contracts and are recognized as income in the year of deduction. Investments a) Current investments are valued at lower of cost or fair market value. b) According to Accounting Standard 13 Accounting for Investments issued by the Companies (Accounting Standard) Rules, 26, long-term investments are valued at cost. Provision for diminution is made to recognize a decline, other than of temporary nature, in the value of such investments Foreign currency transactions i. Transactions in foreign currency are accounted in the reporting currency at the exchange rate prevailing on the date of transaction. ii. iii. According to Accounting Standard 11 The Effects of Changes in Foreign Exchange Rates issued by the Companies (Accounting Standard) Rules, 26, Monetary items in form of Advances, Current Assets and Current Liabilities denominated in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate exchange rates prevailing on the date of Balance Sheet. Any profit/loss arising out of such conversion is charged to Profit and Loss Account. Foreign exchange differences on long term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in other cases, if any, accumulated in Foreign Currency Monetary Item Translation Difference Account and amortised over the balance period of the asset or liability. 85

88 BHARAT PETRORESOURCES LIMITED (j) (k) (l) Provisions, contingent liabilities and capital commitments a. According to Accounting Standard 29 Provisions, Contingent Liabilities and Contingent Assets issued by the Companies (Accounting Standard) Rules, 26, provision is recognised when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. b. Disclosure for a contingent liability is made when there is a possible obligation that may, but probably will not, require an outflow of resources. c. Capital commitments and Contingent liabilities disclosed are those which exceed ` 1 Lakhs in each case. d. Show cause notices issued by various Government authorities are considered for the evaluation of Contingent liabilities only when converted into demand. Taxes on income a. Provision for current tax is calculated on the basis of the provisions of local laws of respective entity.. b. According to Accounting Standard 22 Accounting for Taxes on Income issued by the Companies (Accounting standard) Rules, 26, deferred tax on account of timing difference between taxable and accounting income is provided using the tax rates and tax laws enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised with regard to all deductible timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences can be utilised. When the Group carries forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing evidence that sufficient taxable income will be available against which deferred tax assets can be realised. Classification of income/expenses Holding Company a. Prepaid expenses upto `.1 Lakh in each case, are charged to revenue as and when incurred. b. Liabilities for expenses are provided for only if the amount exceeds `.1 Lakhs in each case. c. Acquisition cost which cannot be assigned / identified to particular block is expensed during the year. 86

89 BPRL ANNUAL REPORT Note '2' SHARE CAPITAL Equity Share Capital As at 31 March, 216 As at 31 March, 215 Number of shares ` Lakhs Number of shares ` Lakhs i Authorised Equity shares of ` 1 each with voting rights * 3,,,. 3,. 3,,,. 3,. Total 3,,,. 3,. 3,,,. 3,. ii Issued, subscribed and paid-up Capital: Issued and Subscribed Capital: Equity shares of ` 1 each fully paid-up with voting rights * 2,92,2, ,.27 2,62,2, ,.27 Paid up Capital: Equity shares of ` 1 each fully paid-up with voting rights * 2,92,2, ,.27 2,62,2, ,.27 Total 2,92,2, ,.27 2,62,2, ,.27 iii Par value of equity shares: ` 1 each ` 1 each iv No. of shares outstanding Equity shares of ` 1 each fully paid-up As at beginning of the year 2,62,2, ,.27 2,62,2, ,.27 Issued during the year 3,,. 3,. - - As at the year end 2,92,2, ,.27 2,62,2, ,.27 v Shareholders holding more than 5% shares No.ofShares No.ofShares Name of shareholder % holding 31 st March 216 % holding 31 st March 215 Bharat Petroleum Corporation Ltd 1% # 2,92,2,61. 1% # 2,62,2,61. vi Shareholders held by Holding Company Name of shareholder 31 st March st March 215 Bharat Petroleum Corporation Ltd. 1% # 2,92,2,61. 1% # 2,62,2,61. * 6 shares held by other shareholders * The Company has only one class of shares referred to as equity shares having a par value of ` 1/-. Each holder of equity shares is entitled to one vote per share. In the event of liquidition for the Company, the holders of equity share will be entitled to receive any of the remaining assets of the company, after distribution for all preferential amounts. However, no such preferential amounts exist currently. The distriubtion will be in proportion to the number of equity shares held by the shareholders. 87

90 BHARAT PETRORESOURCES LIMITED Note '3' RESERVES & SURPLUS ` Lakhs ` Lakhs As at As at (a) Foreign currency translation reserve Opening balance 39, (5,615.79) Add / (Less): Effect of foreign exchange rate variations during the year 28, , Add / (Less): Transferred to Statement of Profit and Loss on disposal of the net - - investment in non-integral foreign operations Closing balance 68, , (b) Surplus/(Deficit) in Statement of Profit & Loss Opening balance (188,766.88) (15,98.88) Add: Transferred from surplus/ (deflicit) in Statement of Profit and Loss (24,831.38) (38,668.) Closing balance (213,598.26) (188,766.88) Total (144,874.2) (149,38.25) Note 4 -Borrowings ` Lakhs ` Lakhs As at As at Current Non Current Current Non Current Term loans Secured From banks - 713, , ,658.6 Unsecured From banks From Parent Company - 65,. - 65,. Total - 778, , ,658.6 Terms & Repayment Schedule of Term Loans: ` Lakhs Loans & Borrowings Book value as on 31 st March, 216 Book value as on 31 st March, 215 Date of Maturity Rate of Interest (%) Security Secured: i) Loan from Bank - 312, /11/215 ii) Loan from Bank - 93, /6/216 iii) Loan from Bank 198, , /12/217 iv) Loan from Bank 82, /8/22 v) Loan from Bank 165, /11/22 vi) Loan from Bank 265, /11/222 Margin + 3 months LIBOR 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. Subtotal 713, ,612.6 Unsecured: i) Loan from Bank ii) Loan from Parent Company iii) Loan from Parent Company Subtotal 65,. 65,. Subtotal 778, , ,. 35, % 3,. 3, % - 88

91 BPRL ANNUAL REPORT Note 5 - Long Term Provisions ` Lakhs ` Lakhs In respect of Joint ventures: As at As at Provision for abandonment 1, ,56.16 Total 1, ,56.16 Note 6 - Other current liabilities ` Lakhs ` Lakhs As at As at Due to Holding Company Due to Operator 8, , Current maturities of long term borrowings (note no. 4) - 312,954. Interest accrued but not due on borrowings 1, ,549.5 Other Payables: (i) Payable for Legal and Professional fees (ii) Payable for Contract Services (iii) Security deposits received (iv) Statutory Dues Payable (v) Payable for rent (vi) Other Charges Payable Share of interest in Joint ventures 2, , Total 13, ,48.7 Note 7 - Short Term Provisions ` Lakhs ` Lakhs As at As at Provision for liquidated damages 3, , Provision for employee benefits Provision for abandonment Total 3, ,

92 BHARAT PETRORESOURCES LIMITED Note 8 Tangible and Intangible assets ` Lakhs Sr. No. PARTICULAR GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK AS AT 1/4/215 ADDITIONS Foreign Exchange Adjustment DEDUCTIONS ON ACCOUNT OF RETIREMENT / RECLASSIFI- CATIONS AS AT 31/3/216 UPTO 1/4/215 This Period DEDUCTIONS ON ACCOUNT OF RETIREMENT / RECLASSIFI- CATIONS Foreign Exchange Adjustment UPTO 31/3/216 AS AT 31/3/216 AS AT 31/3/215 (1) (2) (3) (4) (5) (6) (7) (8) (9) (1) (11) Tangible Assets 1 Plant and Equipment Office Equipments Furniture & Fixtures Share of interest in Joint Venture* (34.52) (34.62) TOTAL (34.52) (34.62) PREVIOUS YEAR (214-15) (5.39) Intangible Assets 2 1 Computer Software Share of interest in Joint 27, (995.47) - 26, ,467.9 Venture (Goodwill) 26, TOTAL 27, (995.47) - 26, , , PREVIOUS YEAR (214-15) 48, (1,56.27) (1,58.7) 27, , ,66.31 GRAND TOTAL 28, (1,3.) , (34.62) , , * includes ` Lakhs of fixed assets owned by the Unincorporated Joint Venture block (CY 22/2) which was transferred by ONGC (Operator) in current financial year for permanent usage to the block at Madhanam # 3 EPS. Since the commercial production has not yet started, depreciation of ` 3.3 lakhs on these assets have been charged to CWIP of respective block. 9

93 BPRL ANNUAL REPORT Note 9 - Capital Work-In-Progress ` Lakhs ` Lakhs As at As at Exploratory Wells-in-Progress: Acquisition Cost 3, ,47.35 Exploration Cost - Geological & Geophysical Cost 23, , Drilling Cost 46, , General & Administrative Cost 21, ,12.13 Exploratory Wells-in-Progress (A) 454, ,9.56 Development Wells-in-Progress: - Transferred from Exploratory Wells-in-Progress 7, Expenditure during the year Development Wells-in-Progress (B) 7, Sub-Total (C)=(A)+(B) 462, ,9.56 Share of Interest in Joint Venture (D) 414, , Less: Provision for CWIP (E) (12,438.8) (8,723.59) Total (C+D+E) 864, , Note 1 - Long term Loans and Advances (Unsecured, Considered good unless otherwise stated) ` Lakhs ` Lakhs As at As at Capital advances 1, , Security Deposit Share of interest in Joint Venture , Total 2, , Note 11 - Other Non Current Assets ` Lakhs ` Lakhs As at As at Unammortised borrowing expenses 9, Total 9, Note '12' - Cash and cash equivalents ` Lakhs ` Lakhs As at As at Cash on Hand - - With banks : - - In current accounts 6, , Bank deposits 31, , Share of interest in Joint Venture Total 39, ,

94 BHARAT PETRORESOURCES LIMITED Note 13 - Other current assets ` Lakhs ` Lakhs As at As at Prepaid Expense Cenvat Credit Accrued Interest Income Tax refund receivable TDS receivable Share of interest in Joint Venture Total Note 14 - Other Income ` Lakhs ` Lakhs For the year For the year Interest Income Interest Income on refund of Cash Calls / Deposits 1, ,59. Liabilities / provisions no longer required written back Miscelleneous Income Priot Period Item Foreign Exchange fluctuations (net) Share of interest in Joint Venture - - Total 1, ,72.32 Note 15 - Employee benefits expenditures ` Lakhs ` Lakhs For the year For the year Salaries and wages Payment to Parent Company towards Provident fund Payment to Parent Company towards gratuity Welfare expenses Share of interest in Joint Venture Total 1, Note 16 - Finance Cost ` Lakhs ` Lakhs For the year For the year (a) Interest expense on: Borrowings 9, , Total 9, ,

95 BPRL ANNUAL REPORT Note 17 - Other expenses ` Lakhs ` Lakhs For the year For the year Irrecoverable Service Tax Repairs and maintenance : Machinery Building - - Others Insurance Rent, Rates and taxes Legal and Professional Fees Share in Operators Expenditure Travelling and Conveyance Advertisement Liquidated Damages Bank Charges Printing & Stationery Software Expenses Telephone, Telex, Cables, Postage,etc Electricity Charges Prior Period Item (net) Security Expenses Other Expenses Remuneration to auditors: Audit fees Fees for Management Service Fees for other services-certification Loss on sale of asset.84 - Foreign Exchange fluctuations (net) 9, Share of interest in Joint Ventures , Total 12, ,

96 BHARAT PETRORESOURCES LIMITED 18) In line with the General Circular No. 39/214 dated 14 th October 214, issued by the Ministry of Corporate Affairs, the disclosures relevant to Consolidated Financial Statements only have been provided. 19) Disclosure under Accounting Standard-27 on Financial Reporting of Interest in Joint Venture: Details of the Blocks and JV s as on : Name Company Country Participating Interest of the Group NELP IV CY/ONN/22/2 (b) BPRL India 4.% 4.% NELP VI CY/ONN/24/1(a) BPRL India - - CY/ONN/24/2 BPRL India 2.% 2.% NELP VII RJ/ONN/25/1 (c) BPRL India 33.33% 33.33% NELP IX CB/ONN/21/11 BPRL India 25% 25% AA/ONN/21/3 BPRL India 2% 2% CB/ONN/21/8 BPRL India 25% 25% MB/OSN/21/2 (d) BPRL India 2% 2% Blocks outside India JPDA 6-13 (e) BPR JPDA Australia / - - Timor EP-413 BPRL Australia 27.8% 27.8% Sergipe and Alagoas SEAL-M-349 IBV Brazil Petroleo Pvt Ltda. Brazil SEAL-M-426 IBV Brazil Petroleo Pvt Ltda. Brazil 4.% 4.% SEAL-M-497 IBV Brazil Petroleo Pvt Ltda. Brazil SEAL-M-569 (f) IBV Brazil Petroleo Pvt Ltda. Brazil - 4% Espirito Santo ES (g) IBV Brazil Petroleo Pvt Ltda. Brazil - - Campos C-M-3-11 IBV Brazil Petroleo Pvt Ltda. Brazil 25.% 25.% Portiguar POT IBV Brazil Petroleo Pvt Ltda. Brazil POT IBV Brazil Petroleo Pvt Ltda. Brazil 2.% 2.% Mozambique Rovuma Basin (h) Nunukan PSC, Tarakan Basin BPRL Ventures Mozambique B.V. BPRL Ventures Indonesia B.V. Mozambique 1.% 1.% Indonesia 12.5% 12.5% 94

97 BPRL ANNUAL REPORT (a) (b) On completion of Minimum Work Programme Commitments and based on analysis of seismic and well drilling results indicating poor prospectivity, as assessed by the Management, the Company has withdrawn in respect of Block CY/ONN/24/1. Consequently, an amount of ` 3, lakhs has been written off to the Statement of Profit and Loss in In respect of CY-ONN-22/2, the block has entered into Development Phasesubsequent 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. Hence, cost incurred in respect of this block has shown under Development wellsin-progress. During the year, an amount of ` Lakhs (previous year ` Lakhs) (net of Royalty of ` 117. Lakhs (previous year ` 2.76 Lakhs)) has been generated from production & sale of Pit Oil/Test Oil during testing of Wells NMAD (MD#6) in the block CY/ONN/22/2. Pending Petroleum Mining Lease from State Government this has been adjusted from the cost of development wells in progress expenditure. (c) (d) (e) (f) On account of the poor prospectivity, as assessed by Management, Company has provided ` 2, lakhs in the financial statements for the year towards impairment loss for Block RJ/ONN/25/1. Based on analysis of 3D seismic data indicating poor prospecitvity, as assessed by Management, Company has provided ` 1, lakhs in the financial statements for the year towards impairment loss for Block MB/OSN/21/2. Company has also provided ` 398 lakhs as Provision for Liquidated Damages being liability on termination in the financial statement for the year. Group has a participating interest of 2% in JPDA 6-13 block. The JV 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 15 th July 215 and demanded the payment of the liability upon termination. Based on the notice a provision of ` 2,19.68 (in Lacs) towards company s share of contractor s liability towards termination was created in the accounts of F.Y This has been restated as on 31 st March, 216 at the closing exchange rate i.e. ` and the revised amount work out to ` 2, (in Lacs). Negotiations are on-going with the regulator to reach at final decision. During the previous year , upon completion of Minimum Work Programme Commitments and based on analysis of G&G data indicating limited prospectivity, as assessed by the Management, the group has relinquished the area under Papangu appraisal plan in SEAL-M-569 block, retaining an area of 2 sq. km (out of a total of 774 sq. km) in SEAL-M-569 as part of Verde joint appraisal plan. Accordingly the group has written off 97.4% of the capitalized costs pertaining to block SEAL-M-569 amounting to ` 17,68.95 Lakhs in the previous year

98 BHARAT PETRORESOURCES LIMITED (g) (h) During the previous year , upon completion of Minimum Work Programme Commitments and based on analysis of G&G data indicating limited prospectivity, as assessed by the Management, the group along with other consortium partners has withdrawn participating interest in respect of Block ES-M-661. Consequently an amount of ` 8, lakhs has been written off in the books of the accounts, in the previous year The group has 1% participating interest in exploration and production concession contract signed by Anadarko Mozambique Area 1 Limitada with Empresa Nacional de hidrocarbonetos E.P. and the Government of Mozambique. As per the obligations contained in Exploration & Production Concession Contract (EPCC) entered with Mozambique Government, BPRL Ventures Mozambique B.V. is paying for its proportionate share of the EMPRESA NACIONAL DE HIDROCARBONETOS, E.P.(ENH) carry of 1.765%. The carry shall be limited to all costs incurred by the Concessionaire in discharging its obligations under this EPC, up to and including the date upon which the first development plan has been approved. From the date of commencement of Commercial Production, ENH shall reimburse in full the Carry in cash or in kind. All Carry amount owed by ENH up to approval of the first development plan shall be subject to payment of interest compounded quarterly calculated at the 3 months LIBOR plus one percentage point. However if there is no commercial success no such reimbursement will be applicable. (i) During , the capital Expenditure in respect of Indian Blocks and Foreign block is ` 2,5.71 Lakhs and ` 1,32, lakhs respectively. 2) The Group requires significant amounts of funds to carry on its operations. The recovery of funds invested is subject to the success of exploration activities leading to monetization. BPCL has been extending financial support to the Holding Company (BPRL) 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 Holding Company to continue as a going concern. 21) Group had earlier entered into Standby Letter of Credit (SBLC) facility agreement with a number of Indian banks to the extent of 175 Mn dollars (` 11,6, Lakhs). During the year, Company has entered into additional Standby Letter of Credit (SBLC) facility agreement of 75 Mn dollars (` 4,97, Lakhs) with an Indian bank. 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 $ 1,89 Mn (` 7,22, Lakhs) has been issued. 22) Pursuant to the Ministry of Corporate Affairs Notification G.S.R. 914 (E) dated 29 th December 211, the Company has exercised the option under Para 46 A of AS-11 (notified under the Company s Accounting Standard Rules, 26) and has recognised the exchange differences arising on reporting of long term foreign currency monetary items. Accordingly foreign exchange differences are adjusted against Capital Work in Progress. 23) In accordance with AS 27 Financial Reporting of Interests in Joint Ventures, the financial statements include the Group s share in the assets, liabilities, incomes and expenses of jointly controlled assets. 96

99 BPRL ANNUAL REPORT In respect of joint ventures, the Group s share of assets, liabilities, income, and expenditure compiled on the basis of unaudited/audited financial statements received from these joint ventures are as follows: (` in Lacs) i) Current Assets (including Cash & Cash equivalents) 1, , ii) Non-current assets , iii) Capital work-in-progress 13,31, ,32, iii) Current Liabilities 2, , v) Expenses , In respect of Block CB/ONN/21/8, the Company is the operator. The Companies share of the assets and liabilities have been recorded under respective heads. Out of the remaining six Indian Blocks (previous year six) the Company has received three (previous year five) audited financial statements as at March 216. The Company has not received financial statement for three (previous year one) blocks and expenses for these blocks are accounted based on unaudited financial statement for the period Upto 31 st March 216. In respect of six (previous year : six) blocks outside India held through the Joint Venture, the assets, liabilities, income and expenditure have been incorporated on the basis of audited financial statements as on 31 st December 215. As per para 18 of AS 21 Consolidated Financial Statements adjustments have been made for the effects of significant transactions or other events that have occurred between 31 st December 215 and 31 st March 216. 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 31 st March ) Employee Benefits: All employees of the Company, below board level, 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: (` in Lakhs) Sr No Particulars For the year For the year Provident Fund Gratuity Leave encashment Super-Annuation (NPS) Total

100 BHARAT PETRORESOURCES LIMITED b) Pursuant to Company been upgraded to Schedule B, Government of India has appointed three Whole time directors on the Board of BPRL. Expenses in relation to Provident Fund, NPS and Gratuity of Directors are paid to the respective Parent Company s trust. Directors are also entitled to accumulate Leave which can be availed or encashed during the service period. Provision in respect of Leave encashment has been made in the books of the Company. The details of expenses debited to the profit and loss account under this head are as follows: Sr No Particulars For the year (` In Lakhs) For the year Provident Fund and other benefits Leave encashment Total c) In view of the above, the management is of the view that no additional disclosure is required in terms of Accounting Standard 15 on Employee Benefits issued by the Companies Accounting Standard Rules ) 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 31 st March 216 is given below: Project Details Crude Oil (MMm3) Gas (MMm3) CY-ONN-22/2 Opening Extended Production Testing.33.3 Closing (MMm3) = Million Cubic Meter 26) Consolidated Earnings Per Share (EPS): The basic/diluted earnings per equity share is calculated as stated below: Particulars Net profit/ (loss) after tax ` in Lacs (24,831.37) (38,668.) Weighted average equity shares outstanding during the period Nos. 287,81,99, ,,2,61 Basic earnings per equity share ` (.86) (1.48) Diluted earnings per equity share ` (.86) (1.48) 98

101 BPRL ANNUAL REPORT Calculation of Weighted Average number of equity shares: Particulars 31 st March st March 215 Shares existing at the beginning of the year 262,,2,61 262,,2,61 Shares issued and allotted during the year 3,,, NIL Application money received during the year pending allotment Weighted Average Number of shares issued during the year Nil 3,,, 25,81,96, ,917 Weighted Average Number of shares for EPS Calculation 287,81,99, ,8,24,588 27) Related Party Disclosure as per AS-18: (a) Name of Related Parties: IBV Brasil Petroleo Ltda. Nature of Transactions: Loan to IBV Brazil Petroleo Ltda.- Brazil Reals( ) 24,912.3 (previous year: 21,218.17) As on 31 st March 216 (` in Lacs) As on 31 st March ,79.2 4,13,32.85 (b) Name of Related Parties: Videocon Energy Brazil Ltd. Nature of Transactions: (` in Lacs) As on 31 st March 216 As on 31 st March 215 Reimbursement of expenditure Key Management Personnel: i) Shri D. Rajkumar (Managing Director) ii) Shri Ajay Kumar, Director (Ops & BD) iii) Shri Pankaj Kumar, Director (Finance) Managerial Remuneration (` in Lacs) Name Shri D. Rajkumar Shri Pankaj Kumar Shri Ajay Kumar In terms of para 9 of Accounting Standard 18 on Related Party Disclosures, no disclosure in the financial statements have been made for transactions with the Company and other related party relationships with other state-controlled enterprises. 99

102 BHARAT PETRORESOURCES LIMITED 28) Expenditure incurred by BPCL on behalf of the Company are accounted for on the basis of the debit notes raised by BPCL. Supporting documents for such debit notes are available with BPCL. 29) Taxation:- a) Deferred Tax Provision Since all the blocks are in the exploration / appraisal phase(except in one development), there is no virtual/reasonable certainty supported by convincing evidence that sufficient future taxable income will be available against which unabsorbed depreciation and carry forward tax losses can be realised. Hence, no deferred tax asset has been recognised as per AS 22 in the accounts in respect of unabsorbed depreciation and carry forward losses. b) Current Tax Provision During the year there is no taxable income, hence no provision for tax has been made in the current year. 3) In respect of blocks held in India, as per the Production Sharing Contracts signed by the Company with the Government of India (GoI), the Company is required to complete Minimum Work Programme (MWP) within stipulated time. In case of delay in completion of the MWP, Liquidated Damages (LD) is payable for extension of time to complete MWP. Further, in case the Company does not complete MWP or surrender the block without completing the MWP, the estimated cost of completing balance work programme is required to be paid to the GoI. 31) As at March 31, 216, there are no creditors covered under the Micro, Small and Medium Enterprises Development Act, 26 and hence no disclosures under the Act are made. 32) The Group has identified the geographical segment as its primary segment. Segments have been identified and reported taking into account, the organizational and management structure for internal reporting and significantly different risk and return perception in different geographical regions. Geographic segments of the Group are determined based on the location of the assets. The Group companies are operating in a single business segment i.e. Exploration & Production of Hydrocarbons and as such all business activities revolve around this segment. Hence, there is no separate secondary segment to be reported in line with the requirement of AS 17 on Segment Reporting issued by the Institute of Chartered Accountants of India. 1

103 BPRL ANNUAL REPORT Brazil Mozambique India Unallocated Grand Total (` in lacs) Revenue External Revenue Inter Segment Revenue Total Revenue Result Segment Results (9,768.64) (25,94.31) (55.28) (26.52) (4,96.) (3,89.55) (256.68) (2,318.67) (14,176.6) (32,59.5) Unallocated Corporate Expenses (3,114.6) (2,167.9) (3,114.6) (2,167.9) Operating Profit / (Loss) (9,768.64) (25,94.31) (55.28) (26.52) (4,96.) (3,89.55) (3,37.74) (4,486.57) (17,29.66) (34,226.95) Add: Interst & Other Income , , , ,72.32 Less : Interest Expenses , , , , Less: Prior Period (Income)/ Expenses Less: (Provision)/Reversal for Tax (8.88) Profit After Tax from Ordinary (9,768.64) (25,94.31) (55.28) (26.52) (4,8.17) (3,89.55) (1,951.13) (8,917.2) (24,783.22) (38,668.) Activities Other Information Segment Assets 44, , , , , , , , , ,47.28 Unallcoated Corporate Assets 51, , , ,844.7 Total Assets 44, , , , , , , , , , Segment Liabilites 1, ,15.1 3, , ,4.96 8, , , , , Unallocated Corporate Liabilites 781, , , , Total Liabilities 1, ,15.1 3, , ,4.96 8, , , , , Capital Expenditure 64, , , , ,5.71 5,37.4 3, , , ,68.48 Depreciation / Amortisation Non cash expenses other than - - Depreication Expenditure for Unallocated also includes cost incurred towards Indonesia, EP-413 and JPDA. Capital Expenditure incurred during the year for Indian block is ` 2,5.71 Lacs and for overseas block is ` 1,32, lacs. 11

104 BHARAT PETRORESOURCES LIMITED 33) Capital commitments and Contingent Liabilities: (a) (b) Capital Commitments: Based on the estimation by the Management, BPRL s share of MWP commitments as on the reporting date amounted to ` 41,565 Lakhs. (Previous year ` 1,44.59 Lakhs). Company has provided Bank Guarantees to Director General of Hydrocarbon (DGH) to the extent of ` Lakhs (` 2, Lakhs) towards MWP. Contingent Liabilities: Contingent liabilities in respect of operations where BPRL is not the operator are recognized based on inputs received from the operator. 34) The Group s unhedged exposure towards foreign exposure is given below: Particulars As on 31 st March 216 As on 31 st March 215 AUD Payable 63,2 19,613 Reias Payable 9,937,717 93,24, GBP Payable 1,593, 1,593, USD Payable 14,299 17,295,347 35) Figures of previous year have been regrouped wherever necessary to confirm to current year presentation. For and on behalf of the Board of Directors As per our attached report of even date Sd/- Sd/- For and on behalf of D. Rajkumar Ajay Kumar V M.B. Agrawal & Co. Managing Director Director (Ops & BD) Chartered Accountants Sd/- Sd/- Sd/- Pankaj Kumar Narendra Dixit Harshal Agrawal Director (Finance) Company Secretary Partner Place: Mumbai Dated: 13 th May, 216 Membership No.:

105 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) 9 TH ANNUAL GENERAL MEETING ON TUESDAY, 3 TH AUGUST, 216 AT 113 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 9 th Annual General Meeting of the Company on Tuesday, 3 th August 216 at 113 a.m., at the Registered Office of the Company at Bharat Bhavan, 4 & 6 Currimbhoy Road, Ballard Estate, Mumbai 41. Signature of the Member/Proxy 13

106 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 Shares of Bharat PetroResources Limited, hereby appoint 1. Name: Address:... ID....Signature... or failing him 2. Name: Address:... ID....Signature... or failing him 3. Name: Address:... ID....Signature... as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at 9 th Annual General Meeting of the Company to be held on Tuesday, 3 th August 216 at 113 a.m. at Registered Office of the Company at 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. Receive, consider and adopt the Audited Financial Statement (including audited consolidated financial statements) for the financial year ended 31 st March 216, the Directors Report and the Report of the Statutory Auditors 2. Re-appointment of Shri Ajay Kumar V. as Director. 3. Fixation of the remuneration of the Statutory Auditors for the financial year and authorisation to Board of Directors to fix the remuneration of the Statutory Auditors of the Company for subsequent financial years. 4. Appointment of Dr. Praphullachandra Sharma as Director Signed this... day of. 216 Affix 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. 14

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