1.  During the current financial year 2010-11, ONGC and GAIL offered
 discount on prices of crude, PDS SKO and Domestic LPG purchased from
 them. Accordingly, the Corporation has accounted the discount as under
 :
 
 (a) Rs. 1,378.15 crores (2009-10 : Rs. 796.00 crores) discount received on
 purchase of PDS SKO and Domestic LPG from ONGC and GAIL has been
 adjusted against Purchase of Product for Resale.
 
 (b) Rs. 5,259.40 crores (2009-10 : Rs. 2,451.14 crores) discount received
 on Crude Oil purchased from ONGC has been adjusted against Raw Material
 Cost.
 
 2.  In principle approval of Government of India for Budgetary Support
 amounting to Rs. 8,976.28 crores (2009-10: Rs. 5,563.13 crores), has been
 received and the same has been accounted under ‘Recovery under Subsidy
 Schemes''.
 
 3.  (a) Inter-Oil Company transactions are reconciled on a continuous
 basis. However, year end balances are subject to
 confrmation/reconciliation.
 
 (b) Customers'' Accounts are reconciled on an ongoing basis and such
 reconciliation is not likely to have a material impact on the
 outstanding or classifcation of the accounts.
 
 4.  The Corporation has, as at the balance sheet date, entered into
 foreign exchange hedging contracts amounting to USD 1,563.39 million
 (2009-10 : USD 1,560.12 million) to hedge its foreign currency exposure
 towards loans/export earnings.  The Corporation normally does not hedge
 the foreign currency exposure in respect of payment for crude/product
 which is due for payment generally within 30 days. Exposures not hedged
 as of balance sheet date amounted to USD 1,177.89 million (2009-10 :
 USD 925.47 million) towards purchase of crude and USD 1,854.59 million
 (2009-10 : USD 170.12 million) in respect of loans taken.
 
 5.  a) Considering the uncertainties attached to certain benefits under
 the Income Tax Act, the Corporation has been continuing to account for
 such tax benefits in the year they are allowed in the
 Appeals/Assessments. Further, where issues are strong on merits/covered
 by favourable decisions, tax has not been provided for.
 
 Accordingly, upon receipt of Appellate Orders (for the assessment years
 2006-07 & 2007-08) and Assessment Order (for the assessment year
 2008-09) during the year, the Corporation has reversed provision for
 tax/deferred tax amounting to Rs. 271.39 Crores (2009-10: Additional
 provision of Rs. 57.51 Crores) after duly considering MAT Credit,
 available for set off u/s 115JAA of the Income Tax Act, 1961.
 
 b) For the assessment years 2009-10 & 2010-11, a further provision of
 tax/deferred tax amounting to Rs. 46.26 Crores (2009-10: Nil ) is made
 after duly considering MAT Credit, available for set off u/s 115JAA of
 the Income Tax Act, 1961.  Deferred Tax provision at the beginning of
 the year is reassessed and Rs. 307.30 Crores has been provided for.
 
 c) MAT Credit Entitlement consists of Rs. 409.36 crores towards earlier
 years and Rs. 91.51 crores in current year, arising primarily on account
 of higher depreciation considered in Return of Income, is shown under
 Loans & Advances.
 
 6. In accordance with the option as per AS – 11 (notifed under the
 Company''s Accounting Standards Rules, 2006) exercised in the year 2008
 – 09, the Corporation has adjusted the exchange differences arising on
 long term foreign currency monetary items to the cost of assets.
 
 7.  The employee cost for the year 2010-11 is higher due to the
 absorption of Rs. 330 Crores based on actuarial valuation towards
 shortfall in HPCL Employees'' Superannuation Fund Scheme.
 
 The names of related parties are as follows:
 
 Joint Venture Companies: 
 
 HPCL-Mittal Energy Ltd., Hindustan Colas Ltd., South Asia LPG Company
 Pvt. Ltd., Prize Petroleum Co. Ltd., Petronet India Ltd., and Aavantika
 Gas Ltd.
 
 Key Management Personnel:      
 
 Shri Arun Balakrishnan, Chairman & Managing Director (till 31/07/2010),
 Shri S Roy Choudhury, Chairman and Managing Director (w.e.f.
 01/08/2010), Shri S Roy Choudhury, Director – Marketing (till
 31/07/2010), Dr. V. Vizia Saradhi , Director – Human Resources, Shri B.
 Mukherjee, Director – Finance, Shri K. Murali, Director – refineries
 
 Details of remuneration to directors are given in note 20 B. 16 E of
 Notes to Accounts and dues from Directors are given in Schedule 12 of
 the Balance Sheet.
 
 The above disclosure does not include HPCL Biofuels Ltd. & Creda-HPCL
 Biofuel Ltd. (Subsidiary Companies) and Mangalore Refinery and
 Petrochemicals Ltd., Petronet MHB Ltd. and Bhagyanagar Gas Ltd. (Joint
 Venture Companies) for which no disclosure is required as they are
 state-controlled enterprises.
 
 B) For Block AA-ONN-2003/3, proposal of consortium for extension of
 time till 29.11.2013 in Phase-I of exploration under special
 dispensation i.e, due to logistic problems was not accepted by MOP&NG.
 Hence on expiry of Phase-I (i.e., Effective 29.05.2010) block stands
 relinquished as per PSC provisions.
 
 C) Block 56-Oman was relinquished during the year along with other
 consortium partners since discoveries in the block were not
 commercially viable at existing fscal terms.
 
 D) During the year in block WA-388-P, all consortium partners
 farmed-out 40% of their respective participating interest to M/s Apache
 Energy, Australia. Hence HPCL''s participating interest in the block
 stands reduced to 8.4% from 14%.
 
 E) Two exploration blocks at Egypt were awarded during the FY 2008-09
 with GSPC (Operator) and Oil India. HPCL has 25% participating interest
 in both of these blocks. Production sharing contract for these blocks
 is yet to be signed.
 
 F) During the NELP-IX bidding round, HPCL in consortia with NOC''s were
 declared provisional winner in the two blocks i.e, KK-OSN-2010/3 and
 MB-OSN-2010/2.
 
 8. Operating Leases :
 
 Assets taken on lease primarily consist of properties for use by the
 Corporation and leased land taken for the purpose of setting up retail
 outlets. These lease arrangements are normally renewed on expiry of the
 term. Amount of lease rental expenses recognized in the Profit and Loss
 Account is given under Schedule 17 – Other Operating Expenses.
 
 9. Considering the Government policies and modalities of compensating
 the oil marketing companies towards under-recoveries, future cash fows
 have been worked out based on the desired margins for deciding on
 impairment of related Cash Generating Units. Since there is no
 indication of impairment of assets as at Balance Sheet date as per the
 assessment carried out, no impairment has been considered. In view of
 assumptions being technical, peculiar to the industry and Government
 policy, the auditors have relied on the same.
 
                                                  Rs. / Crores 
 
                                              2010-11       2009-10
 
 C (I) Contingent Liabilities not provided 
 for in respect of appeals fled against 
 the Corporation
 
 i.  Sales Tax/Octroi                          14.48          4.68
 
 ii.  Excise/Customs                           28.71         36.13
 
 iii. Employee Benefits/Demands
 (to the extent quantifable)                  152.73        131.09
 
 iv. Claims against the Corporation not 
 acknowledged as debts                        334.62        170.98
 
 v.  Others                                   214.79        191.21
 
                                              745.32        534.10