Indian Oil Corporation

a) Contingent Liabilities amounting to Rs. 8882.39 crore (2008 : Rs.
 8209.40 crore) are as under:
 
 i) Rs. 1198.86 crore (2008 : Rs. 1207.05 crore) being the demands
 raised by the Central Excise /Customs authorities.
 
 ii) Rs. 5555.39 crore (2008 : Rs. 4687.65 crore) in respect of Sales
 Tax demands.
 
 iii) Rs. 636.54 crore (2008 : Rs. 578.83 crore) including Rs. 466.60
 crore (2008: Rs. 333.49 crore) on account of Projects for which suits
 have been filed in the Courts or cases are lying with Arbitrators.
 
 iv) Rs. 954.03 crore (2008 : Rs. 1319.14 crore) in respect of Income
 Tax demands.
 
 v) Rs. 537.57 crore (2008 : Rs. 416.73 crore) in respect of other
 claims.
 
 The Company has not considered those disputed demands/claims as
 contingent liabilities, the outflow of resources for which would be
 remote.
 
 b) Interest/Penalty, if any, on some of the above claims is
 unascertainable.
 
 c) Income tax, if any, reimbursable to foreign contractors is
 unascertainable.
 
 d) Pending decision of the Government, no liability could be determined
 and provided for in respect of additional compensation, if any, payable
 to the land owners and the Government for certain lands acquired.
 
 e) The Company has issued corporate guarantee in favour of HSBC Bank,
 Mauritius, on behalf of Indian Oil (Mauritius) Limited (IOML), a
 subsidiary of the Company, for raising a loan of Rs. Nil (2008:Rs.23.47
 crore) by IOML.
 
 2.  Estimated amount of contracts remaining to be executed on Capital
 Account not provided for Rs. 17434.92 crore (2008: Rs. 17342.09 crore).
 
 3.  Purchase of crude oil from ONGC, Oil India Limited and Panna Mukta
 Tapti JV and some other oilfields has been accounted for provisionally
 pending finalisation of agreements with respective parties.
 Adjustments, if any, will be made on finalisation of agreements.
 
 4.  Title Deeds for Land and residential apartments as also lease and
 other agreements in respect of certain lands/buildings the book value
 of which is Rs. 173.49 crore (2008 : Rs. 144.75 crore) are pending for
 execution or renewal.
 
 5.  Transactions with other Oil Marketing Companies are jointly
 reconciled on an ongoing basis.
 
 6.  Bond redemption Reserve:
 
 (a) Bond Redemption Reserve of Rs. 31.60 crore (2008 : Rs. 31.60 crore)
 created in respect of Non-Convertible Redeemable Bonds - Series V has
 been written back during the year as the 5th installment of Rs;. 31.60
 crore was paid on 18.07.2008.
 
 (b) Bond Redemption Reserve of Rs. 333.63 crore (2008 : Rs.250. 55
 crore) has been created in respect of Non-Convertible Redeemable Bonds
 VI, Vll-B, VIIIA, VIIIB and IX during the year.
 
 (c) Bond Redemption Reserve of Rs. 237.50 crore (2008 : Rs. Nil crore)
 has been created in respect of short-term unsecured Non-convertible
 Debentures outstanding as at the year end.
 
 7.  Pursuant to orders pronounced by the Honourable Supreme
 CourVvarious High Courts in the matter of Entry Tax on Crude Oil &
 Lubricants, and as advised, the Company has not provided for Entry Tax
 amounting to Rs. 2:658.48: crore (2008 : Rs. 1349.33 crore) including
 Rs. 1332.66 crore for the year (2008 : Rs. 1176.75 crore) in respect of
 Mathura & Panipat Refineries and Asaouti Lube Blending plant. Pending
 final disposal of the matter by the Honourable Supreme Court / various
 High Courts, Entry Tax already paid / deposited / provided for at
 various units has not been considered for write back.
 
 8.  The customs duty on crude oil is accounted for as per the
 prevailing Customs Valuation Rules and net claims recoverable amounting
 to Rs. 174.28 crore (2008 : Rs. 148.57 crore) are pending for final
 assessment/settlement by the authorities. The claims are considered
 good for recovery.
 
 9.  Subsidies on sales of SKO (PDS) and LPG (Domestic) in India
 amounting to Rs. 1555.28 crore (2008 : Rs. 1510.63 crore) and subsidies
 on sales of SKO & LPG to customers in Bhutan amounting to Rs. 33.41
 crore (2008 : Rs. 33.28 crore) have been reckoned as per the schemes
 notified by Government of India.
 
 10.  The Company has accounted for Government of India Special Bonds of
 Rs. 40383.01 crore (2008 : Rs. 18997.00 crore) in lieu of
 under-recoveries on petroleum products for the year. Out of this,
 Special Bonds of Rs. 34175.95 crore for the period from 1st April, 2008
 to 31st December, 2008 (2008 : Rs.  11460.73 crore) have been received
 by the Company and the balance amount of Rs. 6207.06 crore receivable
 for the period from 1 st January, 2009 to 31st March, 2009 (2008 : Rs.
 7536.27 crore) has been accounted for on the basis of advice received
 from Government of India. These Bonds have been accounted in the Profit
 and Loss Account as Revenue Grants.
 
 11.  (a) In line with the scheme formulated by Petroleum Planning and
 Analysis Cell (PPAC), the Company has received during the year,
 discounts of
 
 Rs.16756.55 crore (2008 : Rs.14322.91 crore) on Crude Oii/Products
 purchased from ONGC/GAIL/OIL and Rs. 1306.56 crore (2008 : Nil) from
 CPCL through sale of HSD to IOC out of their purchase of crude oil from
 ONGC, towards part of the under recovery suffered on sale of MS, HSD,
 LPG (Domestic) & SKO (PDS) and the same has been adjusted against the
 purchase cost.
 
 (b) Based on the advice received from Government of India, the Company
 has accounted Rs. 146.42 crore (2008: Nil) towards the discounts
 receivable from ONGC / OIL for compensating under recoveries on import
 losses in respect of MS & HSD, and same has been adjusted against the
 purchase cost.
 
 12.  The Company has an export obligation to the extent of Rs. 2882.87
 crorei (2008 : Rs. 1908.07 crore) on account of concessional rate of
 customs duty availed under EPCG license scheme on import of capital
 goods.
 
 13.  Amalgamation of erstwhile Bongaigaon Refinery & Petrochemicals
 Limited (BRPL) with the Company:
 
 a) BRPL, a subsidiary of the Company, was engaged primarily in the
 business of Refining of petroleum products.
 
 b) Pursuant to the Scheme of Amalgamation (the scheme) of the erstwhile
 BRPL with the Company as approved by the members, secured creditors and
 unsecured creditors in their meetings held.on 22nd February 2008 and
 subsequently sanctioned by the Ministry of Corporate Affairs, Govt, of
 India vide its order dated 9* March, 2009, which became effective on
 25th March, 2009, the assets, liabilities and reserves of erstwhile
 BRPL stand transferred to and vested in the Company with effect from
 the appointed date i.e. 1st April, 2006. Accordingly the scheme has
 been given effect to in these accounts.
 
 c) The Amalgamation has been accounted for under the pooling of
 interest method as prescribed by Accounting Standard -14 on
 Accounting for Amalgamations. Accordingly, the assets, liabilities
 and reserves of the erstwhile BRPL as at 1st April, 2006 along with
 subsequent addition/deletion up to 31st March, 2008 have been
 transferred in accordance with the said scheme. The profits of the
 amalgamating company during the period 1st April, 2006 to 31st March,
 2008 have been transferred to the General Reserve of the Company
 without opening the accounts of the Company for the previous years.
 Current year transactions are duly incorporated in the books of the
 Company.
 
 d) Based on the approved swap ratio as provided in the scheme,
 2,16,01,935 number of equity shares will be issued to the equity share
 holders of erstwhile BRPL in the ratio of 4 equity shares of the face
 value of Rs. 10 each in the Company for every 37 equity shares held in
 erstwhile BRPL. In terms of the scheme, the said equity shares, when
 issued and allotted by the Company, shall rank, in all respects
 pari-passu with the existing equity shares of the Company. Pending
 allotment of the said equity shares, the amount has been disclosed
 under Share Capital Suspense Account in schedule A-1 as of 31st
 March, 2009.  !
 
 e) The difference between the amount of share capital of the erstwhile
 BRPL and the amount of fresh share capital issued by the company on
 amalgamation amounting Rs. 178.22 crore is treated as capital reserve
 and has been added to the capital reserve of the Company.
 
 f) As provided in the scheme, 1,60,85,819 number of equity shares to be
 issued by the Company in lieu of 14,87,93,826 number of equity shares
 held by the Company in the erstwhile BRPL will be transferred to a
 Trust for the sole benefit of the Company. Accordingly, the cost of the
 aforesaid investment of the Company is reflected as Receivable from
 Trusts, under Other Current Assets in Schedule J-1..
 
 g) In view of the above current year figures are not strictly
 comparable to those of the previous year.
 
 14.  The Company has provided a sum of Rs. 2714 crore (2008 : Rs.
 196.76 crore) during the year on estimated basis towards pay revision
 of employees due w.e.f. 1.01.2007, which interalia includes the impact
 on account of proposed enhancement in the gratuity ceiling from the
 existing limit of Rs. 3.5 lakhs to Rs. 10 lakhs as per the guidelines
 of the Department of Public Enterprises.
 
 15.  In absence of relevant notification by the Government of India
 specifying the period and applicable rate at which cess on turnover is
 payable under Section 441A of the Companies Act, 1956, the same is not
 determinable and hence, not provided for.
 
 16.  The Central Government vide notification dated March 31, 2009 has
 amended Accounting Standard (AS-11) on The effect of changes in
 Foreign exchange rates notified underthe Companys (Accounting
 Standard) Rules, 2006. The Company has exercised the option stated in
 paragraph 46 of AS-11 retrospectively w.e.f. April 1,2007. As a result,
 the Company has changed its accounting policy for recognition of
 exchange differences arising on long term foreign currency monetary
 items, which hitherto were charged to the Profit and Loss Account, as
 below:
 
 a.  In so far as they relate to the acquisition of depreciable assets,
 are added to or deducted from the cost of the asset and are depreciated
 over the balance useful life of the asset. The change has resulted in
 increase in Profit by Rs. 786.80 crore for the year, net increase in
 Assets by Rs. 594.74 crore (Including Rs. 237.62 crore in CWIP) and
 increase in accumulated depreciation by Rs.5.67 crore.
 
 b.  In other cases, the said difference amount is accumulated in
 Foreign Currency Monetary Items Translation Difference Account and is
 amortised over the balance period of such long-term foreign currency
 moneary item but not beyond 31 st March, 2011. This change has resulted
 in decrease in Profit by Rs. 4.63 crore for the year. An amount of Rs.
 5.08 crore is remaining unamortised in Foreign Currency Monetary Items
 Translation Difference Account as on 31.03.2009.
 
 This change in policy on (a) and (b) above has resulted in reduction of
 Rs. 127.72 crore (net of tax) in opening general reserve.
 
 17.  During the year the Company had sought opinion from Expert
 Advisory Committee of the Institute of Chartered Accountants of India
 on its accounting policy for treatment of Know-how/ Licence Fees
 pertaining to Production Process. In pursuance of the same, the
 accounting policy hitherto followed by the company of charging the
 Know-how / Licence fee relating to production process to revenue in the
 year of incurrence has been changed. The same is now accounted for as
 Intangible Asset with retrospective effect from 01.04.2003 and will be
 amortised over a period of ten years or life of the said plant/
 facility, whichever is earlier.  !
 
 This change has resulted in increase in Profit by Rs. 535.08 crore for
 the year (including Rs. 447.31 crore for prior periods) and increase in
 Intangible Assets (net of amortisation) by Rs. 628.34 crore (Including
 Rs 380.96 crore for CWIP).
 
 18.  Disclosure in compliance with Accounting Standard-15 (Revised
 2005) on Employee Benefits is given in Annexure-1.
 
 19.  In compliance with Accounting Standard-17 on Segment Reporting,
 the required information is given in Annexure-2 to this schedule.
 
 20.  In compliance of Accounting Standard -18 on Related Party
 Disclosures, the required information is given in Annexure-3 to this
 schedule.
 
 21.  In compliance of Accounting Standard - 27 on Financial Reporting
 of Interest in Joint Ventures the required information is given in
 Annexure-4 to this schedule.
 
 22.  Considering the Government polices and modalities of compensating
 the oil marketing companies towards under-recoveries, future cash flows
 have been worked out based on desired margins for deciding on
 impairment of related Cash Generating Units. Accordingly no further
 impairment as at the year-end has been considered. In view of the
 assumption being technical, peculiar to the; industry and policy
 matter, the auditors have relied on the same.
 
 23.  In compliance of amended clause 32 of the Listing Agreement with
 the Stock Exchanges, the required information is given in Annexure-5 to
 this schedule.
 
 24.  Exposures to Financial and Commodity Trading Derivative
 Instruments outstanding as on 31st March, 2009 is given in Annexure-6
 to this schedule.
 
 25.  In respect of Oil and Gas Exploration activities, Revenue
 Expenditure amounting to Rs. 172.39 crore (2008 : Rs. 207.40 crore) and
 Capital Expenditure amounting to Rs. 37.45 crore (2008: Rs. 49.72
 crore) of Oil and Gas Exploration Projects has been incorporated in
 these accounts on the basis of unaudited statements provided by
 respective operators of Production Sharing Contracts to the Company.
 
 26.  The Profit and Loss Account includes:
 
 a) Expenditure on Public Relations and Publicity amounting to Rs. 27.24
 crore (2008: Rs. 23.60 crore) which is inclusive of Rs. 8.43 crore
 (2008: Rs. 5.93 crore) on account of Staff and Establishment and Rs.
 18.81 crore (2008: Rs. 17.67 crore) for payment to others. The ratio of
 annual expenditure on Public Relations and Publicity to the annual
 turnover (inclusive of excise duty) is 0.00010:1 (2008: 0.00010:1).
 
 b) Research and Development expenses Rs. 117.50 crore (2008: Rs. 98.92
 crore).
 
 c) Entertainment Expenses Rs. 1.98 crore (2008: Rs. 1.80 crore)
 
 33.  Previous years comparative figures have been regrouped and recast
 to the extent practicable, wherever necessary. Figures in brackets
 indicate deductions.
 
 Disclosures- Notes on Accounts: AS-15 (Revised)
 
 (a) Provident Fund
 
 Guidance issued by the Accounting Standards Board (ASB) on implementing
 AS-15, Employee Benefits (revised 2005) states that provident funds set
 up by employers, which require interest shortfall to be met by
 employer, need to be treated as defined benefit plan. The Fund does not
 have any existing deficit or interest shortfall. Accordingly, other
 related disclosures in respect of Provident Fund have not been made.
 During the year, the company has recognised Rs. 143.67 crore (2008: Rs.
 109.07 crore) as Employers contribution to Provident Fund in the
 Profit and Loss Account (included in Contribution to Provident and
 Other Funds in Schedule 0).