Dear shareholder''s
 
 As you are aware, your Company, ONGC, has reinforced its position as
 one of the most valuable Indian companies through a balanced mix of
 consistent upstream sector growth and value-intergration projects in
 refining, power and petrochecmicals. In addition to robust business
 growth and operational excellence, your Company has also substantially
 enhanced its social investment through focused CSR activities,
 sustainability enagegement through Carbon Management initiatives,
 unstineted investment in Health, Safety and Environment, sports
 promotion and employee welfare measures. Such ''all-inclusive''
 structural maturity is targeted at delivering exceptional value to our
 esteemed shareholders over the long term.
 
 During the year, we made 23 oil and gas discoveries in domestic fields,
 adding 242.50 MTOE of Initial In-place hydrocarbon. This translates
 into 84.13 MTOE of ultimate Reserves (85.44 MTOE including our share in
 joint ventures), which is the highest in last two decades. Our Reserve
 Replacement Ration of 1.79 marks the 7th consecutive fiscal that it has
 exceeded 1; establishing the strength and sustainability of our
 business model.
 
 The total production of ONGC Group in FY-12 (including OVL and ONGC''s
 share in Production Sharing Contracts-JVs) has been 61.18 MTOE. This
 has inched down from the all-time high FY-11 figure of 62.05 MTOE,
 mainly on account of lower last-quarter overseas production from
 geo-politically affected Sudan and Syrian fields. The four assets in
 these affected counties comprise around one-third of ONGC''s overseas
 production volume.
 
 Despite continuing global economic distress, we delivered yet another
 stellar financial performance in FY-12 by registering the highest-ever
 Gross Revenue of Rs.768.87 billion (up 12 per cent from FY-11). It also
 posted the highest-ever Profit-After-Tax of Rs.251.23 billion (Up 32.8
 per cent). This enabled us to pay-out the highest-ever dividend of
 Rs.83.42 billion (195 per cent). Over the past five fiscals, we have
 paid over Rs.365.75 billion in dividend to our valued shareholders,
 excluding dividend tax. The average dividend pay-out ration is again an
 industry-leading 40 per cent. In addition, we delivered the
 highest-ever EPS (Earnings Per Share) of Rs. 29.36 [almost six times
 the face value of Rs. 5] and investor-cheering 51.4 per cent ROCE.
 
 This was facilitated principally by strong cash-flow generation model
 that enables your company sharing earnings generously with valued
 shareholders in addition to providing adequate fiscal comfort to pursue
 attractive business opportunities. We invested a record Rs. 1205.52
 billion in capital expenditures during XI five-year plan period.
 
 Thanks to support from the Indian Government, OVL now manages 30
 hydrocarbon properties in 15 countries with a cumulative investment of
 around USD 15 billion. Despite attenuated production from Syrian and
 Sudan assets, OVL achieved the highest-ever revenue of Rs. 226.37
 billion during FY-12. This translates to 21.2 per cent growth over
 FY-11 revenue of Rs. 186.71 billion.
 
 It is a global phenomenon that mature oil and gas assets enter a
 natural declining production phase on account of their vintage. Our
 major producing fields too are similarly affected, but we have been
 proactive in arresting this decline through Improved Oil Recovery (IOR)
 and Enhanced Oil Recovery (EOR) Projects. These efforts will become
 more intensive through further technology interventions and we expect
 rich dividends to accrue over the life of these producing assets.
 
 With significant success in new exploration plays, ONGC has accumulated
 a large inventory of oil and gas finds with substantial development
 opportunities. The frontier areas and new plays entail significant
 investment in high-end technology and a concomitant increase in
 production costs. ONGC is continuously pursuing a frame work of
 opportunities for their economic development and cost-effective
 monetization, within the next five years.
 
 As large tracts of Indian Sedimentary Basins remain to be intensively
 explored, there are significant opportunities to discover and develop
 these un-explored or partly-explored areas. Around four lakh square
 kilometers of these areas are expected to be offered for exploration in
 the next 5 years and ONGC is well-positioned to participate
 aggressively in such future bidding rounds after careful assessment of
 risk-reward profiles of such unexplored territories.
 
 Government of India divested 420,416,170 equity shares (4.91 per cent)
 of ONGC on 1st March, 2012 through Stock Exchanges using the Offer for
 Sale (OFS) Mechanism, with this, the Government holding of ONGC has
 come down from 74.14 to 69.23 per cent and public holding has gone up
 by the same percentage enhancing our accountability to increased
 number of shareholders.
 
 To sustain growth in the emerging business paradigm, Your Company has
 chalked out an ambitious ''Perspective Plan 2030'', mapping the long-term
 growth model of ONGC as an energy major. Under this plan, we intend to
 double our production by 2030; with nearly 46 per cent contribution
 expected to come from overseas assets. We also have plans to strengthen
 our downstream linkages in refinery, LNG, petrochemicals and other
 emerging areas of opportunities. We are also aggressively looking for
 opportunities in unconventional energy sources and alternate sources of
 energy including nuclear.
 
 Your Company implements best-in-class governance practices through a
 robust corporate governance structure due to which Transparency
 International has evaluated ONGC as the most ''Transparent'' company
 from India as per their recent report on 105 largest listed global
 companies. Your Company is a pioneer in adopting Sustainability
 Development as a mainstream activity and is issuing its third
 ''Corporate Sustainability Report'' under GRI-G3 reporting standards this
 year. We have also made significant strides in engaging our operational
 communities through our structured Corporate Social Responsibility
 (CSR) programmes.
 
 Your Company continues to feature among top-ranked global performers
 and is the only Indian energy giant to have featured in ''Fortune''s Most
 Admired List 2012'' under ''Mining, Crude Oil Production'' category. It is
 also ranked the Number tow Exploration & Production Company in platts
 Top 250 Global Energy Company Ranking 2011 and 171st in Forbes Global
 2000 list 2012 of the world''s biggest companies among several other
 recognitions. 
 
 Your continued support and confidence in our capability to deliver
 results as per your expectations motivate us to constantly refine our
 operational models, induct best-in-class technology and devise new
 business and management templates to deliver stellar performance Year
 on Year.
 
 We derive strength from Your faith and belief in us and we pledge to
 constantly meet with and even exceed your expectations.
 
 
 Stay invested.
 
                                                   Subhir Vasudeva
 
                                      Chairman & Managing Director