(Rs. in Crore)
 
                                         Year ended       Year ended
 
                                     March 31, 2011   March 31, 2010
 
 1.  Contingent liabilities
 
 a) Income tax/sales tax/VAT and other 
 demands of various years against
 which appeals have                           33.93            37.91
 been fled by department/company
 
 b) Claims against the Company not 
 acknowledged as debts:
 
 (i) In respect of custom duty/excise duty    67.74            34.48
 
 (ii) In respect of encashment of 
 performance guarantee                         7.98             7.98
 
 (iii) Others                                249.14           128.17
 
 The above includes counter claims on the 
 Company in certain arbitration matters 
 Rs.100.67 crore (Previous year Rs.99.05 
 crore), stamp duty on import of 
 crude Rs.126.47 crore (Previous year Rs.Nil),
 bank charges Rs.Nil (Previous year 
 Rs.7.47 crore), demand of road tax on
 certain heavy equipment Rs.10.56 
 crore (Previous year Rs.10.51 crore), 
 Gujarat entry tax Rs.5.38
 crore (Previous year Rs.5.38
 crore), litigation for additional 
 compensation in land acquisition
 matter Rs.1.96 crore (Previous
 year Rs.1.96 crore), other miscellaneous 
 claims of Rs.4.10 crore (Previous
 year Rs.3.80 crore)
 
 c) Interest not payable, if certain 
 funded interest facilities are
 prepaid {Refer note B (11) (a) of           574.91          417.47 
 schedule XVI}
 
 d) In respect of custom duty/FEMA matter, 
 where the department has gone in appeal      79.21           76.90
 
 e) Deferred sales tax/VAT liability 
 assigned {Refer note B (16) of
 schedule XVI}                             4,801.93        2,990.52
 
 f) Guarantees given by the Company 
 on behalf of others                         277.49          498.57
 The claims by parties in respect of 
 which the management has been legally 
 advised that the same are frivolous 
 and not tenable, have not been 
 considered as contingent liabilities as 
 the possibility of an outfow of resources
 embodying economic benefits is highly remote.
 
 2.  The Company is in the process of increasing the existing capacity
 of the Refnery from 10.50 MMTPA to 20 MMTPA and the expenditure
 incurred for this purpose is accounted as a part of capital
 work-in-progress which includes advances on capital account and
 expenditure during construction
 
 3.  a) The Master Restructuring Agreement (MRA) dated December 17,
 2004 entered pursuant to Corporate Debt Restructuring Scheme, gives an
 option, subject to the consent of its lenders, to the Company to prepay
 certain funded interest loans of Rs.2,471.63 crore (Previous year
 Rs.2,467.81 crore) arising from funding of interest for the period
 October 1, 1998 to December 29, 2003, at any point in time during their
 term at a reduced amount computed in accordance with the mechanism
 provided in the MRA or in full by one bullet payment in March, 2026.
 Similarly, Rs.206.88 crore (Previous year Rs.206.88 crore) due to a lender
 is payable by a single bullet payment in 2031 with an option to prepay
 this amount as per the agreed terms at a reduced rate at any point of
 time during its term (Refer schedule III).
 
 In order to give accounting effect to refect the substance of the above
 transactions and considering the option available to prepay the funded
 interest loans and in the absence of specifc guidance available under
 the accounting standards referred to in sub-section (3C) of Section 211
 of the Companies Act, 1956, the principles laid down in International
 Financial Reporting Standard (IAS 39) (Revised) Financial Instruments –
 Recognition and Measurement, Statement of Financial Accounting Standard
 (SFAS 15) Accounting by Debtors and Creditors for Troubled Debt
 Restructuring under United States Generally Accepted Accounting
 Principles (US-GAAP) and Accounting Standard (AS 30) Financial
 Instruments – Recognition and Measurement issued by the Institute of
 Chartered Accountants of India, have been followed.
 
 In view of the above, an amount of Rs.2,088.06 crore (Previous year
 Rs.2,140.56 crore) shown under secured loans (Refer schedule III) being
 the amount not payable as at balance sheet date, has been shown as
 deduction from the funded interest facilities of the fnancial
 institutions and the banks to refect in substance the present
 obligation under the mechanism on the balance sheet date, with
 consequential deduction from Expenditure during construction till
 date of capitalisation of the Refnery Project. The changes in the
 present obligation of the said loans subsequent to capitalisation of
 the Refnery Project till the date of balance sheet is treated as fnance
 cost in the statement of proft and loss (Refer schedule XV).
 
 In case the Company is unable to prepay the funded interest loans
 repayable in 2026 by 2012, the Company will be liable to pay interest
 as per MRA on the said loans w.e.f. April 24, 2007. Accordingly, the
 same is considered as a contingent liability (Refer note B(2)(c) of
 Schedule XVI).
 
 b) (i) Secured redeemable non – convertible debentures (NCDs) of
 Rs.105/- each consists of:
 
 16,918,250 (Previous year 16,918,250) – 12.50% NCDs amounting to
 Rs.177.64 crore (Previous year Rs.177.64 crore) with repayment starting
 from January 24, 2015;
 
 (ii) 700,000 – 12.50 per cent secured redeemable NCDs, of Rs.100 each on
 private placement basis are partly paid up at Rs.93.86 per debenture
 amounting to Rs.6.57 crore (Previous year Rs.6.57 crore), with repayment
 starting from January 24, 2015.
 
 The Hon''ble High Court of Gujarat has, in response to the Company''s
 petition, ruled vide its orders dated August 04, 2006 and August 11,
 2006 that the interest on certain categories of debentures should be
 accounted on cash basis. In accordance with the said petition/order,
 funded/accrued interest liabilities amounting to Rs.355.95 crore
 (Previous year Rs.340.34 crore) as at March 31, 2011 have not been
 accounted for. Out of the above, funded interest liabilities of Rs.219.93
 crore (Previous year Rs.219.93 crore) are payable in March, 2026 and
 April, 2027 and balance on various dates ranging between April, 2010 to
 April, 2026.
 
 4.  The Company had fled an insurance claim with respect to the losses
 caused due to the damages to the Refnery project by a cyclone in the
 year 1998. The claim was disputed by the insurer and it has since been
 agreed by the insurer and the Company to settle the claim by
 arbitration. Pending the outcome of arbitration, the claim amount of
 Rs.3,020.22 crore is not recognised in the books of account.
 
 5.  The Company issued Foreign Currency Convertible Bonds (FCCB) on
 June 15, 2010 and July 9, 2010 amounting to US5 million and US7
 million due on June 15, 2028 and Sep 30, 2028 respectively to Essar
 Energy Holdings Ltd., a promoter Company. The Bonds will not bear any
 interest from the issue date up to and including December 31, 2015 and
 subject to certain conditions, the bonds will bear interest of 5 per
 cent per annum on the outstanding principal amount of the bonds from
 (and including) January 1, 2016 payable semi-annually in arrears on
 July 1 and January 1 in each year.
 
 The bonds of US5 million issued on June 15, 2010 are convertible at
 any time on and after June 15, 2011 or from the date the shares of the
 Company cease to be listed, whichever is earlier, into fully paid
 equity shares of Rs.10 each at a conversion price of Rs.138 per share or
 global depositary shares each representing 153 equity shares subject to
 adjustments in terms of the Trust Deed dated June 15, 2010, with a fxed
 rate of exchange on conversion of Rs.46.60 to US.00.
 
 The bonds of US7 million issued on July 9, 2010 are convertible at
 any time on and after July 9, 2011 or from the date the shares of the
 Company cease to be listed, whichever is earlier, into fully paid
 equity shares of Rs.10 each at a conversion price of Rs.153 per share or
 global depositary shares each representing 153 equity shares subject to
 adjustment in terms of the Trust Deed dated July 9, 2010, with a fxed
 rate of exchange on conversion of Rs.46.85 to US.00.
 
 As the bonds are convertible into global depositary shares at the
 option of the bondholder, debenture redemption reserve under section
 117 (C) of the Companies Act, 1956 is not created.
 
 6.  Pursuant to the adoption by the Company of the notifcation under
 the Companies (Accounting Standards) Amendment Rules 2006, issued on
 March 31, 2009 and exercise of the option prescribed therein, the
 Company has de-capitalized cost of fxed assets to the extent of gain on
 exchange differences amounting to Rs.1.47 crore (Previous year gain de-
 capitalized Rs.69.15 crore). On account of this, the proft for the year
 is lower by Rs.1.47 crore (Previous year proft lower by Rs.69.15 crore),
 with a corresponding impact on fxed assets which is lower by Rs.1.47
 crore (Previous year lower by Rs.69.15 crore).
 
 7.  As at balance sheet date, out of the unutilized balance of
 proceeds from issue of global depository shares amounting to Rs.19.29
 crore (Previous year Rs.60.29 crore from advance towards issue of global
 depository shares proceeds), Rs.19.29 crore (Previous year Rs.60.00 crore)
 is lying in bank/bank deposit accounts and Rs.Nil (Previous year Rs.0.29
 crore) is lying in bank current accounts.
 
 8.  With respect to the Hon''ble High Court of Gujarat order dated
 April 22, 2008 directing the State Government to consider the Company''s
 application for granting benefits of deferment of sales tax/value added
 tax under the Capital Investment Incentive Premier/Prestigious Units
 Scheme 1995-2000, the Special Leave Petition fled by the State
 Government in the Hon''ble Supreme Court, challenging the order of the
 Hon''ble High Court, is yet to be decided.  During the year, the Company
 has deferred payment of sales tax/VAT liability Rs.1,811.41 crore
 (Previous year Rs.1,474.05 crore) and has defeased the same to a related
 party at its present value amounting to Rs.591.48 crore (Previous year
 Rs.441.21 crore). Sales tax/VAT amounting to Rs.917.12 crore (Previous year
 Rs.813.87 crore) shown as deduction from Turnover (net) in the
 statement of proft and loss includes the defeased value of sales
 tax/VAT liability of Rs.591.48 crore (Previous year Rs.441.21 crore) as per
 the defeasance agreement pursuant to which the assignee has undertaken
 to discharge the sales tax/VAT liability on the due dates.
 
 9.  Other receivables include Rs.146.49 crore (Previous year Rs.93.38
 crore) due from government companies/agencies in respect of the
 Company''s erstwhile oil drilling and offshore construction activities
 for which the Company received favorable awards in arbitration
 proceedings. The awards have since been challenged by the parties.
 Pending outcome of the litigations, the debts are considered as
 recoverable based on the arbitration awards and assessment of the
 management.
 
 b) General description of the leasing arrangements:
 
 – Lease Assets – Residential township, Transit accommodation and supply
 depot.
 
 – Future lease rental payments are determined on the basis of
 quarterly/monthly lease payments as provided in the agreements.
 
 – At the expiry of the lease term, the Company has an option to extend
 the lease on mutual terms and conditions. In case of the supply depot,
 the ownership gets transferred to the Company at the end of the lease
 term.
 
 – Assets are taken on lease over a period of 10 to 20 years.
 
 c) The above disclosures pertain to lease arrangements where leases
 have commenced upon assets becoming ready to use.
 
 10.  The pilot project for coal bed methane gas was partially fnanced
 by a conditional grant of US{FILE_CONTENT}.89 million (Previous year US{FILE_CONTENT}.89
 million) and Rs.2.31 crore (Previous year Rs.2.31 crore) received from a
 bank.
 
 The conditional grant, in terms of the agreement, will be repayable in
 the event the Company puts the project to commercial use, and
 repayments to the bank will be based on gross annual sales derived from
 the commercial exploitation of the project, subject to a maximum
 repayment of 200 per cent of the conditional grant. Commercial
 exploitation of the project is dependent upon getting necessary
 approvals from the Government of India.
 
 11.  a) As per the Company''s policy of Full Cost method of accounting
 prescribed by the Guidance Note in Accounting for Oil and Gas
 Producing Activities issued by the Institute of Chartered Accountants
 of India, the Company has identifed the following 2 Cost Pools:
 
 (i) India CBM (Coal Bed Methane) Pool:
 
 a) Mehsana Pilot Project held outside Pool
 
 b) RG (East) 2001/1 Block – Commercial Production not yet started and
 held outside Pool
 
 c) RM-(E)-CBM-2008/IV (Rajmahal, Jharkhand, India) - in exploration
 phase, held outside pool
 
 d) TL-CBM-2008/IV (Talcher, Orissa, India)- in exploration phase, held
 outside pool
 
 e) IB-CBM-2008/IV (IB Valley, Orissa, India)- in exploration phase,
 held outside pool
 
 f) SP(NE)-CBM-2008/4 (Sohagpur, Madhya Pradesh, India)- in exploration
 phase, held outside pool
 
 (ii) India Oil & Gas Pool:
 
 (1) Block CB-ON/3 - existence of commercial reserves established in ESU
 feld, held inside Pool
 
 (2) Ratna & R-Series - discovered oilfeld but contract not executed and
 hence held outside Pool
 
 (3) AA-ONN-2004/3 - In exploration phase, held outside pool
 
 (4) AA-ONN-2004/5 - In exploration phase, held outside pool
 
 On commencement of commercial production from ESU feld forming part of
 CB-ON/3 block, the Pool has been transferred to Producing Properties.
 Depletion on Producing Properties is being charged on a Unit of
 Production basis.
 
 12. The Company had earlier decided to assign 90% of Participating
 Interest in block RG (East)-2001/1 to Essar Exploration & Production
 Ltd. (EEPL). For this purpose, EEPL had paid Rs.89.80 crore (US
 million) to the Company up to March 31, 2010.  Meanwhile, the Company
 decided not to pursue the assignment further and accordingly wrote to
 the Government of India on February 24, 2010 withdrawing the
 application for approval of assignment. Accordingly, the entire amount
 was refunded to EEPL on April 22, 2010.
 
 13. a) During the year, the Company transferred Rs.Nil (Previous year
 Rs.0.45 crore) from foreign project reserve created up to 2003- 04
 (Previous year 2003-04) to statement of proft and loss upon fulfllment
 of conditions prescribed u/s 80HHB of the Income Tax Act, 1961.
 
 b) Rs.60.33 crore (Previous year Rs.29.46 crore) has been appropriated
 towards debenture redemption reserve under Section 117 (C) of the
 Companies Act, 1956.
 
 14. Turnover (gross) includes sale of goods net of trade discount, duty
 draw back income, recoverable sales tax/Value added tax (VAT) from
 customers, hedging loss/gain on product/cracks and excise duty.
 
 15. Interest - others includes interest on arbitration award Rs.25.73
 crore (Previous year Rs.3.10 crore), on currency swap Rs.11.20 crore
 (Previous year Rs.Nil), from customers Rs.2.88 crore (Previous year Rs.4.90
 crore) and on income tax refund Rs.1.70 crore (Previous year Rs.1.21
 crore).
 
 16. Professional fees include fees to auditors for audit Rs.1.00 crore
 (Previous year Rs.1.00 crore), and IFRS audit Rs.0.75 crore including Rs.0.05
 crore for earlier years (Previous year Rs.2.02 crore including Rs.1.23
 crore for earlier years), certifcation and other work Rs.0.45 crore
 (Previous year Rs.0.54 crore) and out of pocket expenses Rs.0.12 crore
 (Previous year Rs.0.10 crore).
 
 b) Defned contribution plans:
 
 Company''s contribution to superannuation fund aggregating to Rs.0.68
 crore (Previous year Rs.0.68 crore) are recognised in the state- ment of
 proft and loss/expenditure during construction, as applicable. There is
 no obligation other than the contribution payable to the respective
 trusts.
 
 Notes:
 
 1) Names of related parties and description of relationship:
 
 Holding Companies Essar Global Limited - Caymen (Ultimate Holding
 Company)
 
 Essar Energy Plc - U.K. (Holding Company of Vadinar Oil - Mauritius)
 
 Vadinar Oil - Mauritius (Holding Company) Associate Vadinar Power
 Company Limited (VPCL)
 
 Key management personnel Shri Naresh Nayyar, Managing Director
 
 Shri P Sampath (Director Finance Upto October 18, 2010)
 
 Individuals having signifcant infuence on the Company (Promoters)
 
 Shri S. N. Ruia, Chairman
 
 Shri P. S. Ruia, Director
 
 Shri A. S. Ruia, Director
 
 Fellow Subsidiaries
 
 Aegis Limited (Merger of Essar Engineering Services Limited, Aegis BPO
 Services (GURGAON) Limited with Aegis Limited) (AEGIS), Aegis Aspire
 Consultancy Services Limited (AACSL), Bhandar Power Limited (BPOL),
 Essar Bulk Terminal Limited (EBTL), Essar Bulk Terminal (Salaya)
 Limited (EBTSL), Essar Electrical Power Development Corporation Limited
 (EEPDCL), Essar Energy Overseas Limited (EEOL), Essar Exploration &
 Production India Limited (EEXPIL), Essar Exploration & Production
 Limited (EEXPL), Essar Exploration & Production Southeast Asia Limited
 (EEXPSEAL), Essar Energy Holdings Limited - Mauritius (EEHL), Essar
 Gujarat Petrochemicals Limited (EGPL), Essar Logistics Limited (ELL),
 Essar Offshore Subsea Limited (EOSL), Essar Oilfeld Services India
 Limited (EOFSIL), Essar Oilfeld Services Limited (EOFSL), Essar Oil UK
 Limited (EOLUK), Essar Power Gujarat Limited (EPGL), Essar Projects
 (India) Limited (EPIL), Essar Project Management Consultants Limited
 (EPMCL), Essar Power Limited (EPOL), Essar Steel Limited (Merger of
 Essar Steel Orissa Limited, Essar Steel Hazira Limited, Hazira Pipe
 Mills Limited and Hazira Plates Limited w.e.f April 1, 2009) (ESTL),
 Essar SEZ Hazira Limited (ESHL-SEZ), Essar Shipping & Logistics Limited
 (ESLL), Essar Shipping Ports & Logistics Limited (ESL), Vadinar Oil
 Terminal Limited (VOTL), Vadinar Ports and Terminals Limited (VPTL).
 
 Companies in which promoters have signifcant infuence / control:
 
 Arkay Holdings Limited (ARKAYHPL), Asia Motor Works Limited (AMW)
 (Related Party upto March 31, 2010), Essar Agrotech Limited (EATL),
 Essar Energy Services Limited (EESL), Essar Heavy Engineering Services
 Limited (EHESL), Essar House Limited (EHL), Essar Investments Limited
 (EIL), Essar Information Technology Limited (EITL), Essar
 Infrastructure Services Limited (EISL), Essar Properties Limited (EPL),
 Essar Steel (Jharkhand) Limited (ESTLR), Futura Travels Limited
 (FUTURA), Ibrox Estates Private Limited (HILLPL), India Securities
 Limited (ISL), Kanak Communications Limited (KANAKCL), Kartik Estates
 Private Limited (KEPL), Neelkamal Traders Private Limited (NEELKAMAL),
 New Ambi Trading & Investments Private Limited (NEWAMBITPL), Paprika
 Media Limited, Sinter-Keramos & Composites Private Limited (SKCPL), The
 Mobile Stores Limited (TMSL), Teletech Investments (India) Ltd (TIL)
 (Related party upto March 31, 2010), Vadinar Properties Limited (VPL).
 
 2) Names of related parties, where the transaction during the year with
 single party is 10 per cent or more, are disclosed under each nature of
 transaction.
 
 3) Previous year''s fgures have been shown in brackets.
 
 17 During the year, the Company incurred a loss (net) of Rs.289.90 crore
 (Previous year loss (net) Rs.180.12 crore) on commodity hedging
 transactions. The loss (net) of Rs.70.27 crore (Previous year loss (net)
 Rs.242.14 crore) on the instruments for hedge of risk of movement in
 prices of crude oil has been added to consumption of raw material in
 the statement of proft and loss. The loss (net) of Rs.219.63 crore
 (Previous year gain (net) Rs.62.02 crore) on the instruments for hedge of
 risk of movement in prices of fnished goods and margins have been added
 to/netted off from Turnover (Gross) in the statement of proft and loss.
 
 18 Miscellaneous income during the year includes an amount of Rs.27.39
 crore receivable against an arbitration award declared in favor of the
 Company (Previous year Rs.41.48 crore arising out of settlement of a
 foreign currency loan).
 
 19 Figures of previous year have been regrouped/rearranged, wherever
 necessary, to conform to those of the current year.