The is indeed my proud privilege to present, on behalf of the Board of
Directors, the 19th Annual Report on the business and operations of Oil
And Natural Gas Corporation Ltd. and its Audited Statements of Accounts
for the year ended 31st March, 2012, together with the Auditors'' Report
and Comments on the Accounts by the Comptroller & Auditor General (CAG)
FY''12 has been a year of achievements for your Company as it performed
exceedingly well in almost all the areas of its activities.
Significant highlights for the year have been:
- Your Company accreted 84.13 mmtoe & ultimate reserves in the domestic
fields (operated by ONGC), the highest in last two decades.
- Reserve replacement ratio has been 1.79; in 7th consecutive year more
- The Gross Revenue (Rs. 7766,871 million) and PAT (Rs. 251,229
million) has been the highest-ever.
- ONGC paid the highest-ever dividend of Rs. 83,416 million; the
Government of India''s share has been Rs. 60,372 million.
- ONGC''s standalone Net worth crossed Rs. 1,000,000 million benchmark
(Rs. 1,117,841 million as on 31.03.2012).
- Actual Plan expenditure for domestic operations during XI Plan period
has been Rs. 1,205,523 million against the plan outlay of Rs. 759,638
You will appreciate the fact that your company is growth driven which
is reflected through its consistent performance over a long period of
time despites growing complexities in the industry and global
economies. Due to this consistent performance, efforts of your company
are well recognised the word over.
Your Company is the only Indian energy giant in Fortune''s Most Admired
List 2012 under ''Mining, Crude Oil Production'' category (March 2012).
ONGC has been ranked as the Number 2 Exploration & Production Company
in the World and 21st in the overall listing of global energy companies
as per ''Platts Top 250 Global Energy Company Ranking 2011 (November,
2011). ONGC has been ranked at 171st position in Forbes Global 2000
list 2012 of world''s biggest companies for 2011 (April 2012).
Physical Performance: 2011-12
Your Company has made 23 discoveries in domestic fields (operated by
ONGC); 15 new prospects and eight new pool discoveries. Out of the 15
new prospect discoveries 7 are in NELP blocks. The new prospect
discoveries are- East Linch (Oil) and Uber (Gas) in Cambay basin; North
Patheria (Gas) and Nohta-2 in Vindhyan Basin; GS-70 (Oil & gas).
Alankari (Gas) aid Chandrika South (Gas) from Krishna Godavari offshore
basin; B-127E (Oil) & BH-67 (Gas) in Mumbai Offshore basin. GK-42 (Gas)
and GS-OSN-2004/1 (Gas) in Kutch offshore basin; MDW-13 (Gas) in the
deepwater of Mahanadi offshore and ANDW-1 (Gas) in deepwater Andaman
offshore. Hortoki discovery is the first hydrocarbon discovery in
Outer 23 discoveries, 15 discoveries are in nomination blocks. Seven
onland discoveries have already been put on production and other four
discoveries in the offshore nomination blocks have the possibility of
cluster development with nearby existing infrastructure. Two onland
discoveries are in the process of appraisal/delineation. Total 8
discoveries (two onland and six offshore) are in NELP blocks which are
governed by the PSC guidelines and appraisal/development activities
will be taken upon keeping in view the time-lines of the respective
So far, your Company has made 26 discoveries in NELP blocks (up to 31st
March, 2012). Out of which, DOC (Declaration of Commerciality) has
already been submitted for 13 discoveries; including the Significant
discoveries in KG-DWN-98/2 in KG basin and Mahanadi basin. Rest of the
discoveries are under assessment/appraisal.
Reserve accretion & RRR
Your Company accreted 242.53 million metric tonnes of oil equivalent
(mmtoe) of in-place volume of hydrocarbon in domestic basins (operated
by ONGC). The ultimate reserves accretion has been 84.13 mmtoe. Total
ultimate reserve accretion in domestic basins including ONGC''s share in
PSC JVs has been 85.44 mmtoe. This fiscal also your Company maintained
Reserve Replacement Ratio (RRR) more than one with RRR of 1.79 (with 3P
Production of Oil and Gas
The combined production of oil and oil equivalent gas (O OEG) for ONGC,
including OVL and ONGC''s share in PSC-JVs. in FY''12 has been 61.18
mmtoe, marginally lower by 1.4% compared to the production in FY''11
(62.05 mmtoe). The major reason for lower production during FY''12 has
been the unrest in Sudan, South Sudan and Syria fields and natural
decline in domestic fields (operated by ONGC).
Out of total production of 33.13 MMT of crude oil, 71 % production came
from the ONGC operated domestic fields. 19% from the overseas assets
and balance 10% from ONGCs share in domestic joint ventures. As far as
natural gas production is concerned, majority of production (83%) came
from ONGC operated domestic fields and balance 9% from overseas assets
and 8% from domestic joint ventures.
Production from overseas assets
ONGC Videsh Limited (OVL), the wholly owned subsidiary of your company,
has ten producing assets in eight countries - Venezuela (1), Brazil
(1), Colombia (1), Sudan (1), South Sudan (2), Syria (1), Vietnam (1)
and Russia (2). Total production from these assets during FY''12 has
been 8.75 mmtoe of O OEG (Crude oil: 6.21 MMT & Gas: 2.54 BCM).
The Board of your Company approved development of two discovered fields
i.e. B-127 cluster and C-26 cluster in FY''12, with an investment of Rs.
46,518 million. Besides this, phase-2 redevelopment of Heera and South
Heera was also approved with an investment of Rs. 56,084 million.
B-173A field has also been taken up for additional development with and
investment of Rs. 3,525 million.
New sources of energy
After establishing the presence of Shale gas in the country in
Durgapur, your Company is planning to explore for shale gas in the
identified basins such as – Cambay, Krishna Godavari, Cauvery and
Bengal basins. A landmark alliance has been linked with ConocoPhillip
to explore for stale gas in India and abroad. Your Company has also
entered into Shale gas research consortium agreement with Energy &
Geoscience Institute (EGI), University of Utah. USA. At the same time
a project has been sponsored in Indian School of Mines, Dhanbad for
shale gas research.
Coal Bed Methane (CBM)
Your company is currently operating in four CBM blocks i.e., Jharia,
Bokaro, North Karanpura and Raniganj. In all Blocks, Phase-l activities
have been completed. In two blocks i.e., Bokaro and North Karanpura,
Development Plan has been submitted after completion of Phase-II
activities Development Plan of Bokaro block has been approved in
February, 2012, while approval for the development plan of North
Karnapura block is awaited. In remaining two blocks i.e. Jharia and
Raniganj, Phase-II activities are nearing completion and development
plans will be submitted. Your Company is also looking for farm-in
opportunities for expeditious exploration of the CBM resources.
Underground Coal Gasification(UCG)
Your company has selected Vastan Mine block in Sural district, Gujarat
for UCG Pilot project. Environmental clearance for the project has been
obtained from Ministry of Environment and Forest, Government of India
and request has been submitted to Ministry of Coal for award of mining
lease which is awaited.
Alternate sources of energy
Your Company, through ONGC Energy Centre (OEC), a trust set up by your
Company, is actively pursuing alternate energy opportunities. The
Energy Centre is poised to contribute significantly towards your
Company endeavours to have a healthy portfolio of alternate energy,
Some of the significant initiatives in this regard are:
- Generation of hydrogen through Thermo-chemical processes: First phase
of work on Cu-Cl (Copper-Chlorine) cycle has been successfully
completed and the second stage i.e. Laboratory Scale Closed Loop
studies of Cu-Cl is being pursued with Institute of Chemical Technology
- Geothermal Power Project in Cambay Basin: OEC has planned a pilot
scale Geothermal Pilot Project in Cambay Basin, which has high
geothermal gradient. M/s. Talboom, Belgium will be the technology
partner in this project. Through this collaborative project OEC aims to
explore the possibilities of harnessing Geothermal Energy in
Sedimentary Basins of India.
- Kinetic Hydro Power Project: ONGC Energy Centre has entered into an
agreement with M/s. Natural Power Concepts (NPC), Hawaii, USA for the
project on Kinetic Hydro Power Generation in Rivers/Water
Channels/Tail Races of Dams''.
- Wind Power Generation Project at Offshore Installations: Your company
has already installed wind energy farm of 51 MW and another 102 MW wind
farm project is under progress. As your Company has vast experience in
offshore and has more than 200 offshore installation for production of
oil & gas, the possibility of installation of suitable wind generation
facilities at these Installations is being explored for harnessing wind
energy in offshore.
- Uranium exploration: Your Company has successfully completed two
parametric wells for Uranium exploration in Tamil Nadu.
One of the major highlights of the year that passed was that the Govt.
of India divested 420,416,170 number of equity shares (4.91%) of ONGC
on 1st March, 2012 using the offer for sale through Stock Exchange
Mechanism. With this, the Govt. holding of ONGC has come down from
74.14% to 69.23%, In the process Govt. has raised a sum of Rs. 127,668
million resulting in an average price of Rs. 303.67 per share against
the floor price of Rs. 290 per share. LIC came out as the latest buyer
acquiring 377,107,488 no. of shares (4,408% out of the total divestment
of 4.91% of the paid up share capital of ONGC) raising its total
holding to 810,617,088 shares (9.475% as on 1st March, 2012).
1. Financial Results
Despite volatile markets your Company has earned a profit After Tax
(PAT) of Rs. 251,229 million (Rs. 189,240 million in 2010-11), up
32.76%, which is incidentally the highest-ever. During the year under
review, your Company, on standalone basis, registered Gross revenue of
Rs. 768.488 million in 2010-11), up 12.00%.
Gross Revenue : Rs. 768,871 million
Profit After Tax (PAT) : Rs. 251,229 million
Contribution to Exchequer : Rs. 382,874 million*
Return on Capital Employed : 45.15%
Debt-Equity Ratio : 0.00
Earnings Per Share (Rs.) : 29.36
Book Value Per Share (Rs.) : 131
* OID Cess, Excise duty, Royalty, Corporate and Dividend Distribution
Tax, sales tax/VAT and Dividend on Government shareholding.
(Rs. in million)
Particulars 2011-12 2010-11
Revenue from Operations 768,871 686,488
Other Income 44,529 34,069
Total Revenues 813,400 720,557
Profit before Interest Depreciation
& Tax (PBIDT) 410,327 353,182
Profit before tax (PBT) 366,425 276,164
Profit After Tax (PAT) 251,229 189,240
Interim Dividend 66,305 68,444
Proposed Final Dividend 17,111 6,417
Tax on Dividend 13,286 12,156
Transfer to General Reserve 154,527 102,223
Total 251,229 189,240
Previous year figures have been regrouped wherever necessary.
Your Company paid interim dividends amounting to a total of Rs. 7.75
per share of Rs. 5 each (155%) in two phases (Rs.6.25 and Rs. 1.50) in
January and March 2011, respectively. The Board of Directors has
recommended a final dividend of Rs. 2 per share (40%). This makes the
aggregate dividend at Rs. 975 per share of Rs. 5 each i.e. 195% of the
paid up share capital - post split and bonus, as compared to 175% paid
In 2010-11 The total dividend will absorb Rs. 83,416 million, besides
Rs. 13,286 million as tax on dividend which is the highest ever
dividend payout by the Company.
3. Management Discussion and Analysis Report
In terms of Clause 49(IV)(F) of the Listing Agreement with the Stock
Exchanges, a Management Discussion and Analysis Report has been
included and forms part of the Annual Report of the Company
4. Production and Sales
Highlights of Productions and sales of Crude Oil, Natural Gas and
Unit Production Qty Sales Qty
FY FY FY FY
2011-12 2010-11 2011-12 2010-11
Crude Oil (MMT) *26.93 27.28 23.08 22.93
Natural Gas (BCM) **25.51 25.32 20.17 20.25
Ethane/Propane 000 MT 463 388 461 387
LPG 000 MT 1,037 1,054 1,033 1,057
Naphtha 000 MT 1,557 1,570 1,557 1,600
SKO 000 MT 79 116 79 118
Motor Spirit 000 KL 0.43 0.63
HSD 000 KL 0.07 3.27
Unit Value (Rs. in million)
Crude Oil (MMT) 507,873 448,645
Natural Gas (BCM) 141,396 127,544
Ethane/Propane 000 MT 12,741 8,796
LPG 000 MT 23,711 16,369
Naphtha 000 MT 72,167 56,342
SKO 000 MT 1,520 679
Others 1,850 1,002
Sub Total 761,258 661,377
Motor Spirit 000 KL 30 36
HSD 000 KL 3 134
Others 0 2
Sub Total 33 172
Total 761,291 661,549
* includes 3.21 MMT (Previous year 2.86 MMT) from Joint Ventures.
** includes 2.19 BCM (Previous year 2.23 BCM) from Joint Ventures.
5. Oil & Gas Reserves
Your Company has made voluntary disclosures m respect of Oil & Gas
Reserves, conforming to SPE classification 1994 and US Financial
Accounting Standards Board (FASB-69). ONGC has added 242.50 MTOE of oil
and oil-equivalent gas (O OEG) initial in-place volume with 84.13 MTOE
of O OEG as the ultimate reserve component during FY''12 in domestic
fields (operated by ONGC).
The ultimate reserve accretion, inducing its share in joint ventures is
85.44 MTOE of O OEG, which is the highest in last two decades.
Ultimate Reserve (3P) accretion O OEG (in MTOE)
Year Domestic ONGC''s Total OVL''s Total
Assets share in Domestic share in
(1) Domestic Reserve Foreign
JVs (2) (3)=(1) (2) Assets (5)=(3) (4)
2008-09 68.90 2.82 71.72 135.08 206.80
2009-10 82.98 4.39 87.37 0.35 87.72
2010-11 83.56 0.29 83.85 46.23 130.08
2011-12 84.13 1.31 85.44 -0.31 85.13
6. Statement of Reserve Recognition Accounting
The concept of Reserve Recognition Accounting attempts to recognize
income at the point of discovery of reserves and seeks to demonstrate
the intrinsic strength of an organization with reference to its future
earning capacity in terms of current prices for income as well as
expenditure. This information is based on the estimated net proved
reserves (developed and undeveloped) as determined by the Reserves
As per FASB-69 on disclosure about Oil and Gas producing activities,
publicly traded enterprises that have significant Oil and Gas producing
activities, are so disclose with complete set of annual financial
statements, the following supplemental information:
a) Proved Oil and Gas reserve quantities
b) Capitalized costs relating to Oil and Gas producing activities
c) Cost incurred for properly acquisition, exploration and development
d) Results of operations for Oil and Gas producing activities
e) A standardized measure of discounted future net cash flows relating
to proved Oil and Gas reserve quantities
Your Company has disclosed information in respect of (a) and (d) above
in the Annual Financial Statements.
Your Company has made voluntary disclosure on standardized measure of
discounted future net cash flows relating to proved oil and gas reserve
at Annexure-A to this report as Statement of Reserve Recognition
7. Financial Accounting
The Financial Statements have been prepared in accordance with the
Generally Accepted Accounting Principles (GAAP) and in compliance with
all applicable Accounting Standards (AS-1 to AS-29) and Successful
Efforts Method as per the Guidance Note on Accounting for Oil & Gas
Producing Activities issued by The Institute of Chartered Accountants
of India (ICAI) and provisions of the Companies Act, 1956. Further, as
per Ministry of Corporate Affairs (MCA) notification, the financial
statements have been prepared under the Revised Schedule VI format of
the Companies Act, 1956.
8. Internal Control System
Your Company has well established and efficient internal control system
and procedures. The Company has a well defined delegation of the
financial powers to its various executives through Book of Delegated
Powers (BDP). The Integrated BDP is updated from time-to-time in line
with the needs of the organisation as well as to bring further
delegation. The Company has in-house Internal Audit Department
commensurate with its size of operations. Audit observations are
periodically reviewed by the Audit & Ethics Committee of the Board and
necessary directions are issued wherever required.
9.1 ONGC Videsh Ltd. (OVL)
OVL, the wholly-owned subsidiary of your Company for E&P activities
outside India, achieved the highest-ever total revenue of Rs. 226,374
Million for the financial year (FY) 2011-12, an increase of 21.2% as
compared to the total revenue of Rs. 186,711 Million for the FY
2010-11. OVL''s share in production of oil and oil equivalent gas
(O OEG) together with its wholly-owned subsidiaries ONGC Nile Ganga
B.V., ONGC Amazon Alaknanda Limited and Jarpeno Limited was 8.753 MTOE
during the FY 2011-12 as compared to 9.448 MTOE during the FY 2010-11.
The Production has decreased in FY 2011-12 mainly due to geopolitical
problems in Sudan and Syria. Post secession of South Sudan from Sudan
w.e.f. 9th July, 2011, Blocks 1, 2 and 4 straddle between the two
countries and Stock 5A is now entirely in South Sudan. Company''s
operations in South Sudan are temporarily under shutdown with effect
from 23rd January, 2012 because of non-resolution of various issues
between the Governments of South Sudan and Sudan for use of processing,
transportation and port facilities in Sudan for crude oil produced in
South Sudan Also, the current geo-political situation in Syria
including EU sanction and the resulting restrictions on Contractors has
created a difficult situation in AI Furat Petroleum Company (AFPC)
project since December 2011. Excluding Syria and Sudan, the production
during FY 2011-12 was almost at the level as that of FY 2010-11.
The Profit after tax (PAT) (or the FY 2011 -12 was marginally up by
1.1% from Rs. 26,905 Million during the FY 2010-11 to Rs. 27,212
Million during the FY 2011-12 mainly due to a provision made for
Impairment of Rs. 19,534 Million in respect of subsidiary, Jarpeno Ltd.
as the ''Value In use'' computed for the asset as on 31st March, 2012 was
lower than its carrying value. During the year, the company has
acquired 25% Participating Interest (PI) In Satpayev Block, Kazakhstan
and the exploration activities have started in the block. The remaining
75% PI is held by KMG, the National Oil Company of Kazakhstan.
ONGC Videsh presently has participation in 30 projects in 15 countries.
Out of 30 projects, OVL is operator in nine projects and joint operator
in six projects. The producing projects in OVL are Greater Nile Oil
Project in Sudan, Greater Pioneer Operating Company and Block 5A in
South Sudan, Block 06.1 in Veitnam, AI Furat Project in Syria,
Sakhalin-I Project and imperial Energy in Russia, Mansarovar Energy
Project in Colombia, San Cristobal Project in Venezuela and Block BC-10
in Brazil. Exploration Block XXIV. Syria is on extended production
testing. OVL currently has three projects under development namely
Carabobo 1, in Venezuela, where first oil is expected in December 2012
and Blocks A1 & A3 in Myanmar, which are likely to commence production
in May 2013. Farsi Block, Iran has discoveries and further work is
being earned out. One Pipeline Project was executed and completed by
OVL and handed over to Government of Sudan in October, 2005 and is
currently under lease. The remaining projects are in exploration phase.
Direct Subsidiaries of ONGC Videsh Limited:
a) ONGC Nila Ganga B.V. (ONGBV):
ONGBV, a subsidiary of OVL, is engaged in E&P activities in Sudan,
South Sudan, Syria, Venezuela, Brazil and Myanmar. ONGBV holds 25%
Participating Interest (PI) in Greater Nile Oil Project (GNOP), Sudan
with its share of oil production of about 1.324 MMT during 2011-12.
Post secession of South Sudan from Republic of Sudan effective from 9th
July 2011, about 60% of fields are in South Sudan. However, major
processing facilities, pipeline and port facilities are in Republic of
Sudan. A new Joint Operating Company (JOC) Greater Pioneer Operating
Company (GPOC) has been registered in Mauritius for petroleum
operations of Block 1, 2 & 4 in Republic of South Sudan. The
shareholding of ONGBV in GPOC is 25% in accordance with PI and project
is jointly operated by all partners.
ONGBV holds 16.66% to 18.75% PI in four Production Sharing Contracts in
AI Furat Project (AFPC), Syria with its share of oil and gas production
of about 0.503 MTOE during 2011-12 ONGBV holds 40% PI in San Cristobal
Project in Venezuela through its wholly owned subsidiary ONGC Nile
Ganga (San Cristobal) BV with its share of oil production of about
0.894 MMT during 2011-12 ONGBV holds 15% PI in BC-10 project Brazil
through its wholly owned subsidiary ONGC Campos Ltd. with its share of
oil and gas production of about 0.465 MTOE during 2011-12.
b) ONGC Narmada Limited (ONL)
ONL, a wholly-owned subsidiary of OVL held 13.5% PI in deep water
exploration Block-2, Nigeria-Sao Tome & Principe. Joint Development
Zone (JDZ). OVL has communicated its intention of not continuing the
block to the Operator and Joint Development Authority (JDA) of Joint
Development Zone Nigeria-Sao Tome & Principe as the development of the
project is not commercially viable.
C) ONGC Amazon Alaknanda Limited (OAAL): OAAL, a wholly-owned
subsidiary of OVL, holds stake in E&P projects in Colombia, through
Mansarovar Energy Colombia Limited (MECL), a 50:50 joint venture
company with Sinopec of China During 2011-12, OVL''s share of oil
production in MECL was about 0.561 MMT.
d) Jarpeno Limited:
Jarpeno Limited, a wholly-owned subsidiary of OVL incorporated in
Cyprus, acquired Imperial Energy Corporation plc., a UK listed upstream
oil exploration and production entity with its main activities in Tomsk
region of Western Siberia in Russia, in January 2009. During 2011-12,
Imperial Energy’s oil production was about 0.771 MMT.
e) Carabobo One AB:
Carabobo One AB, a wholly-owned subsidiary of OVL Incorporated in
Sweden, holds 11% PI in Carabobo-I Project, Venezuela, The upstream
production facilities are expected to produce about 400,0Q0 barrels per
day of which approximately 200,000 barrels per day would be upgraded
into light crude oil in a facility to be located in the Soledad area.
Anzoategui state. The license term is for 25 years with the potential
for a further extension of 15 years. Four stratigraphic wells and six
slant wells were drilled for collection of samples and study of petro
physical properties for drilling development wells was carried out for
Accelerated Early Production of first oil in 4th quarter of 2012.
Presently, Basic Engineering & feed for Upgrader and Downstream
facilities and 3D-Seismic study, civil works for well pads have been
awarded and awarding of drilling contract for Development of the Field
is in progress.
Joint Venture of OVL
f) ONGC Mittal Energy Limited (OMEL)
OVL along with Mittal Investments Sari (MIS) promoted OMEL, a joint
venture company incorporated in Cyprus. OVL and MIS holds 98% equity
shares of OMEL, in the ratio of 51 (OVL):49(MIS) with balance 2% shares
held by SBI Capital Markets Ltd, OMEL held 45.5% PI In exploration
block OPL 279, Nigeria and holds 64.33% PI in exploration Block OPL
285, Nigeria. OMEL also holds 1.11% of the issued share capital of
ONGBV by way of Classic shares issued by ONGBV exclusively for AFPC
Syrian Assets; such investment being financed by Class-C Preference
Shares issued by OMEL in the ratio of 51:49 to OVL and MIS
9.2 Mangalore Refinery & Petrochemicals Limited (MRPL)
Your Company continues to hold 71.62% equity stake in MRPL, a Category
I Mini Ratna, which is single location 15 MMTPA Refinery at the west
Performance Highlights of FY 2011 -12;
- GRM of 7.07$/bbl in the fourth quarter despite sleep Rupee
depreciation at the end of the quarter.
- Highest ever throughput of 12.82 MMTPA and turnover of Rs. 572,068
million during FY 2011-12. - Commissioned its 3 MMTPA CDU/VDU on
25.3.2012, which enhanced its nameplate capacity from 11.86 MMTPA to 15
- Revamp of CDU/VDU I and Hydrocracker successfully completed in record
time. Revamp of HCU II completed in April-May 2012.
- OPE Adjudged performance as compared to MoU targets as Excellent for
the year 2010-11.
Particulars 2011-12 2010-11
Throughput (MMT) 12.82 12.84
Gross Turnover (Rs. in million) 572,068 437,237
GRM ($/bbl) 5.60 5.90
(gain/loss) (Rs. in million) 6,490 (18)
PBT (Rs. in million) 13,202 17,371
PAT (Rs. in million) 9,084 11,766
The Board of directors considering the performance and continuing
projects expenditure during the FY 2012-13 recommends a dividend of Rs.
1.00 Per equity share of Rs. 10/- each (Previous year Rs. 10/- each).
In spite of the continued under-recoveries in retail marketing of Auto
fuels, the Company has continued with its significant performance,
thereby, limiting the under recoveries, The Direct Marketing sales
turnover covering Bitumen/CRMB, ATF, Furnace Oil, Mixed Xylene, Naphtha
and Sulphur amounts to Rs. 27,550 million as compared to Rs. 22.910
million during 2010-11, thereby registering an increase of 20% over
last year. The Company is in all readiness to take up within a short
time the retail marketing if under recoveries are eliminated.
Phase-III Refinery Project:
The Financial Year 2011-12 has been a significant year for Phase-III
expansion of refinery. In spite of sporadic adverse working conditions
in and around the project site, the overall project progress is
extremely good. The overall project progress as on 15th May, 2012 is
MRPL has commissioned the Primary Crude Processing Unit, Crude
Distillation & Vacuum Distillation Unit along with the required offsite
facilities on 25-03-2012. The other units, Diesel Hydrotreater and
Hydrogen, are under commissioning. The balance units are scheduled for
commissioning progressively from June 2012 and last of the units is
expected to be completed by October 2012. The Poly Propylene Unit is
expected to be completed by December 2012. The SPM facility is
scheduled to be commissioned by July 2012.
The first phase of Captive Power Plant being built by M/s. BHEL which
was scheduled for commissioning in April 2011 is now expected to be
commissioned by September 2012. This has considerably affected the
commissioning schedule of units.
10. Exemption in respect of Annual Report of Subsidiaries and
Consolidated Financial Statement
MCA vide circular dated 08.02.2011 and clarification dated 21.02.2011
decided to grant a general exemption from the applicability of Section
212 of the Companies Act, 1956 from attaching the Balance Sheet and
Profit & Loss Account prepared regarding the financial year ending on
or after 31.03.2011, in rotation to subsidiaries of those companies
which fulfill various conditions including inter-alia approval of the
Board of Directors for not attaching the balance sheet and profit &
loss account of the subsidiary concerned. Your Board has accorded
necessary approval in this regard for not attaching the Balance Sheet
and Profit & Loss Account of its subsidiaries (i) ONGC Videsh Limited
(OVL) and (ii) Mangalore Refinery & Petrochemical Ltd. (MRPL). All the
conditions mentioned in the circular are being complied with by ONGC.
Full Annual Report of ONGC including its subsidiaries will be made
available to any shareholder, if he/she desires. Further, Annual
Reports of MRPL and OVL are also available on website www.mrpl.co.in
and www.ongcvidesh.com respectively.
In accordance with the Accounting Standard (AS)-21 on Consolidated
Financial Statements read with AS-23 on Accounting for Investments in
Associates'' and AS-27 on Financial Reporting of Interests in Joint
Ventures, audited Consolidated Financial Statements for the year ended
31st March, 2012 of the Company and its subsidiaries form part of the
11. Joint Ventures/Associates
i. ONGC Tripura Power Company limited (OTPC)
Your company has promoted OTPC with envisaged equity stake of 50% along
with Govt. of Tripura (0.5%) and IL&FS (26%) to set-up 726.6 MW (2 x
363.3 MW) gas based Combined Cycle Power Plant (CCPP) at Palatana in
Tripura to monetize its idle gas assets in Tripura. The generation
project is in the advanced stage of implementation by Bharat Heavy
Electricals Limited, as the turnkey EPC contractor. The financial
closure of the project has been achieved and various linkages like gas
supply from ONGC and power off-take by NE states have already been tied
up. The company has successfully accomplished, riding on the back of a
breakthrough transport agreement with the Government of Bangladesh, the
highly challenging task of transporting the heavy and over dimensional
project equipment to the site through multi-modal transportation route
through Bangladesh. In view of the enormous challenges involved in
setting up the project at such a remote location, the project timelines
have been revised. The commissioning of Unit-I is expected in August
2012, and that of Unit II in December 2012. The total approved cost of
the project is Rs. 34,290 million and the financial progress in terms
of expenditure incurred till 30th April 2012 is Rs. 23,210 million.
ii. ONGC Petro-additions Limited (OPaL)
Your Company has promoted a JV company OPaL with envisaged equity stake
of 26% along with GAIL (15%) and Gujarat State Petroleum Corporation
Ltd (GSPCL) (5%) to Implement a mega petrochemical complex comprising
1.1 MMTPA ethylene Cracker and global scale polymer units within Dahej
SEZ, as a step towards downstream integration at a total revised cost
of Rs. 213,960 million. Project Implementation is in full swing with
95% of contracts awarded and overall progress of the project is 53.2%
as on 30th April, 2012.
iii. Mangalore Special Economic Zone Limited (MSEZ)
ONGC with envisaged equity stake of 26% in MSEZ along with KIADB (23%)
and IL & FS KCCI (51%) is promoting an SEZ in coastal Mangalore.
Ministry of Commerce & Industry has formally notified to set up a
Petro-chemical Specific SEZ in 1830 acres of land. Total land in
possessions 2323 acres which includes 1543 acres of land for MSEZ and
other Domestic Tariff Area(DTA) land for Resettlement & Rehabilitation
(R&R) for MRPL etc. MSEZ has already allotted land to OMPL and lease
agreement for 441 acres signed. Commercial terms have also been
finalized with ISPRL for land. Infrastructure development for river
water conveyance, water treatment plants, corridor development, power
supply etc. is in progress. Development of R& R colony is undergoing
with allotment of 931 pots to Project Displaced Family (PDF) out of
total 951 plots planned. Other R&R package is also under
implementation. The company has started earning operating revenue from
FY 2011-12 with revenue of Rs. 1.90 million.
iv. ONGC Mangalore Petrochemicals Limited (OMPL)
ONGC has promoted OMPL with envisaged equity participation of 46%.
along with MRPL (3%) for setting up manufacturing facilities for 0.92
MMTPA Para-Xylene and 0.270 MMTPA Benzene from MRPL''s aromatic streams
in Mangalore SEZ, as a value added project Around 97% of the project
cost has been awarded which includes I major contracts relating to
project management, technology licensor and LSTK contract for process
packages etc.The project Implementation is in full swing. The total
approved cost of the project is Rs. 57,500 million and total
expenditure is Rs.25.920 million, till 30th April, 2012.
v. ONGC TERI Biotech Limited (OTBL)
OTBL is a Joint Venture company of ONGC, incorporated on 26th March,
2007, with The Energy Research Institute (TERI) with shareholding of
49% each and balance 2% equity held by the Financial Institution. The J
V has been promoted for addressing the requirement of Bioremediation of
oily sludge. Microbial Enhanced Oil Recovery, prevention of wax
deposition in tubular and solution for other oil field problems. The
turnover of OTBL in FY 2011-12 is Rs. 129 .96 million and Profit after
Tax is Rs. 32.78 million as against turnover of Rs. 129 .54 million and
PAT of Rs. 27.48 million in FY 2010-11.
vi. Petronet MHB Limited (PMHBL)
PMHBL is a JV company of ONGC (28.766%). HPCL (28.766%) and PIL
(7.898%). Balance 34.57% of equity is held by the leading banks. It
owns and operates a multi-product pipeline to transport MRPL''s products
to hinterland of Karnataka. Throughput in FY 2011-12 is 2.771 MMT
against total throughput of 2.576 MMT last year. As per un-audited
results for the year 2011-2012,the turnover and PAT of PMHBL are Rs.
8,602 million and Rs. 3.650 million respectively.
vii. Petronet LNG Limited (PLL)
Your company has 12.5% equity staked PIL, identical to similar stake by
other Oil PSU co-promoters viz., IOCL. GAIL and BPCL.Dahej LNG terminal
of PLL which was expended to 10 MMTPA capacities in June 2009 is
currently meeting around 20% of the total gas demand of the country. A
new LNG terminal of capacity 5 MMTPA is under construction at Kochi and
is expected to be completed by 2nd quarter of FY 2012. The turnover of
PLL during 2011-12 is Rs.226,959 million(previous year Rs.131.973
million) and net profit Rs. 10,575million).
viii. Dahej SEZ Limited (DSL)
Your Company with envisaged equity stake of 23 % along with Gujarat
Industrial Development Corporation (26%), is developing a multi-product
SEZ at Dahej in coastal Gujarat. Dahej SEZ covers the total land area
of 1732 Hectares where in 1717 Hectares is processing area and 15
Hectares is non-processing area. 90% of the leasable land has already
been alloted to 65 units and 13 units have already started export from
the SEZ. The SEZ is operational audits turnover during FY 11-12 is
Rs.484 million and profit after tax is Rs.198 million against the
turnover of Rs.651 million in FY 10-11 and profit after tax of Rs.412
ix. Pawan Hans Helicopters Limited (PHHL)
ONGC has 49% equity stake in PHHL, Balance 51% equity is held by the
Government of India. PHHL is one of Asia''s largest helicopter operators
with a well balanced operational fleet of 40 helicopters. it provides
helicopter support for ONGC''s offshore operations. PHHL was successful
in providing all the 12 Dauphin N and N3 helicopters fully compliant
with AS-4 as per the new contract with ONGC.
The accounts of PHHL for 2011 -12 are under finalisation.
12. Other Projects/Business initiatives
C2-C3-C4 Extraction Plant;
Your company has set up a C2-C3-C4 Extraction Plant at Dahej with LNG
from PLL as feed stock. Commissioning of the Plant would be taken up
after allocation of domestic gas for swap and resolution of taxation
issue for which your company is actively pursuing with MoP&NG and
Central Board of Excise & Customs (CBEC)/Department of Revenue
respectively. Presently, the plant systems are under preservation and
periodic inspection of static & rotary equipments is continuing as per
Partnerships for growth
ONGC signs path breaking MOU with Conoco Phillips
A Memorandum of Understanding was linked between ONGC and US oil major
M/s Conoco Phillips on 30th March, 2012. The inking of the MOU is
envisaged to go a long way in cooperation between two companies in the
areas of shale gas exploration in India, USA and elsewhere in ova
world; and Deepwater in India. Sharing of data and transfer of
technology would help this competitive technological partnership for
mutual benefit of the two organizations in times to come.
ONGC signs MOU with CNPC for cooperation in hydrocarbon sector
ONGC signed a MoU with China National Petroleum Corporation (CNPC) on
18th June, 2012 at New Delhi, (or cooperation in hydrocarbon sector. As
per MOU, ONGC and CNPC intend to promote their cooperation and
coordination in the existing petroleum projects in the midstream and
downstream sectors in India. China and abroad.
ONGC signs MOU with SCCL
ONGC and Singareni Collieries Company Limited (SCCL) inKed an MoU for
cooperation in the areas of service, operation, process development and
research related to Underground Coal Gasification (UCG). Surface Coal
Gasification (SCG) and Coal Bed Methane(CBM)on 18th July,2011 at New
SCCL has indicated readiness to provide requisite coal linkage with due
approval of the Ministry of Coal (MoC). The MOU aims at promoting clean
coal technology to utilize high ash content indigenous coal in an
environment friendly manner.
13. Information Technology
1. For pro-active management of enterprise-wide IT Infrastructure,
state-of-the-art NOC (Network Operations Centre) has been established
in Delhi at a cost of Rs.177.7 million As a part of this initiative,
the IT processes have also been standardized as per Industry best
practices for IT Service Management in the organization leading to
accreditation of ISO 2000 Certification for six IT Maintenance Service
locations at Mumbai and Delhi.
2. Enterprise-wide e-mail system has been upgraded with architectural
and storage enhancements for improved performance and manageability at
a cost of Rs. 109.3 million The license capacity has also been expanded
to 30,000 client licenses to provide access to all ONGC employees. This
has enabled providing official e-mail facilities to all employees of
ONGC with functionalities at par with industry best practices. The
upgraded e-mail system also features large mail-boxes and collaborative
platform for push mail facility through smart phones mobile devices,
instant messaging, file & profile sharing and audio and video
3. In order to identify network bottlenecks and upgrade IT
infrastructure to make the network future ready, services of consultant
is being hired. The gaps identified shall be bridged through
appropriate up gradation/enhancement projects. Presently the case is
under Tendering process.
4. Under IT-Ready people initiative, an ''End-user PC Training'' Project
christened as IT Chethana has been undertaken at a cost of Rs.5.5
million. The Project aims to enhance the IT skill and proficiency of
all employees across the organization through training interventions
over a period of three years through the rate contract
5. ONGC has always been a pioneer in adopting state-of-the-art
contemporary technologies. In this direction, WiMax based Broadband
Communication has been another technology initiative to provide
communication facilities to remote installations in Gujarat and Mumbai
Offshore which has been inducted at a cost of Rs.247.8 million. This
will provide connectivity at the remote installations and fields
similar to our offices enabling faster collaborative working.
6. Based on the experience gained from the above initiative, another
Wimax Broadband communication project for similar technology presence
across ONGC has been planned for North East and South Region at an
estimated cost of Rs. 340 million. The project is in final stage of
7. To have a captive VC network, 22 Nos. of HD (High Definition) Video
Conferencing Systems have been installed at 18 locations at a cost of
Rs. 62 million.
8. The augmentation of VATMS System at Mumbai Offshore has been
completed at a cost of Rs. 28.6 million.
9. For security surveillance 33 Nos of CCTV camera with recording
facilities have been installed at various residential colonies of
Mumbai Region at a cost of Rs. 2.23 million.
14. Health, Safety & Environment (HSE)
Safety, occupational heath and protection of environment in and around
its working area are prime concerns of ONGC. Your Company has
implemented globally recognized QHSE management systems conforming to
requirements of ISO 9001, OHSAS 18001 and ISO 14001 at ONGC facilities
and certified by reputed certification agencies at ail its operational
units. Corporate guidelines on incident reporting, investigation and
monitoring of recommendations was developed and Implemented for
maintaining uniformity throughout the organization in line with
international practice. During 2011-12. the following were the
highlights of HSE
- 20% reduction in incidents
- 131 environmental clearance (EC/TOR) obtained
- 4 Lakh Ringal Bamboo Planted in Upper Himalayas
- 25000 MT of oily waste treated using Bioremediation
- 412 installations certified with QHSE
- 240 operational units audited for HSE Performance
- 130 employees trained on HUET
- 14 HSE awareness programs completed
- Contractor Safety workshop at Ahmedabad on 4th August, 2011 with the
theme Zero injury Goal (ZIG) a Zero Accident Goal (ZAG) in guest to
reduce the accidents which predominantly involved contractual
- Following new training programmes have been introduced;
1. Effective implementation of PTW
2. SSSV-Theory and practices. Failure, Remedies and SCP
3. Control of work practices for offshore going personnel
4. Radioactive safety in logging operation.
- The implementation status of the amended OISD standards 116 & 117 was
reviewed by Hon''ble Minister. MoPNG on 13th January 2012 & further on
16th February 2012 by Secretary, MoPNG.
- Corporate Disaster Management Pan (COMP) and guidelines have been
developed for uniform disaster management all across ONGC. Your Company
has also developed Occupational Health Physical Fitness criteria for
employees deployed for offshore operations. Occupational Health (OH)
module has now been populated on SAP system.
15. Sustainability Development
Department of Public Enterprises. Government of India has issued
Guidelines on Sustainable Development (SO) for the Central Public
Sector Enterprises'' (CPSE''s) on 23th September, 2011 for
implementation with immediate effect by CPSEs. From the year 2010-11.
the Department of Public Enterprises (DPE) has also included
Sustainable Development (SD) as a compulsory evaluation parameters for
CPSEs under Non-Financial Parameters” having 5% weight age in the MOU
for CPSEs. Further each CPSE is required to form a Board level
designated committee on Sustainable Development headed by an
Independent Director as its Chairman to approve Sustainable Development
(SO) Plan and oversee the Sustainable Development performance. Keeping
in view that ONGC already has a Board committee on Health. Safety
^Environment (HSE), the HSE committee has been re- designated as
''Committee on HSE and Sustainable Development. The terms of reference
of the re-designated HSE & Sustainable Development Committee remain the
same as mat of the existing HSE committee, with the addition of the SD
related role as stated in the mandatory DPE guidelines.
As a part of the Sustainability Development the following efforts have
been undertaken by ONGC
(i) Water Management
- Water Foot printing of 2 Assets
- Rainwater Harvesting at4 locations
(ii) Global Methane initiative
- Fugitive methane leak survey of production installation at 2 Assets
(iii) Carbon Management
- Carbon foot-printing & identification of GHG mitigation opportunities
& development of viable CDM projects. Details of these measures are
given under Energy Conservation.
ONGC Corporate Sustainability Report
- The second Corporate Sustainability Report of ONGC was adopted on
14th December, 2011. This report covers the sustainability performance
i.e. organizational performance across the economic, environmental and
social dimensions for the period 2010-11.
- The report; externally assured GRI-G3 based A level report, has
been assured against Account Ability''s AA1000 Assurance Standard 20G8
(AA1000AS 2008) by Emst & Young.
- This reporting is an improvement over 2010 Corporate Sustainability
Report which was at B level.
16. Energy Conservation
a. Gas Flaring:
Gas flaring in Onshore Assets Has gradually been reduced from 555 MMSCM
in 20O1-O2 to 116 MMSCM in 2011-12 by taking various measures like
creating necessary Infrastructure 1.e pipelines, compressors etc,
direct marketing of isolated low volume and low pressure gas and
adopting innovative measures as GTW (Gas to wire). Considering 2001-02
as the base year, these measures have resulted in meaningful
utilization of 439 MMSCM of gas in 2011-12 alone.
b. Clean Development Mechanism:
During the year 2011-12. two CDM projects titled Green Building at
Mumbai and Green Building at Dehradun were accorded host country
approval by me Designated National Authority. MoEF. Four CDM projects
have been validated during this year with annual accruable CERs of
59278. ONGC tally of registered CDM projects as of now stands at six.
Annual CERs accruable from these projects are 209460.
Four previously registered CDM projects have been successfully verified
during 2011-12. Issuance of 4439 CERs from the first project has been
effected n February 2012. The total issued CERs are now around 15000.
Issuance of CERs from the other three projects is expected soon With
all the expected issuance in place, the total issued CERs would be
c. Carbon Foot-printing:
An organization wide carbon footprint activity has been initiated in
the year 2011-12 as a part of carbon and energy management The aim is
to map the GHG emission of all the facilities across ONGC and identify
the possible GHG mitigation and opportunities through technical
d. Carbon Disclosure Project(CDP):
ONGC has taken part in the global initiative on Carbon Disclosure
Project (CDP 9) last year. ONGC has been participating in Carbon
Disclosure Project since the last five years (since CDP 7). The CDP.
launched at London In December 2000 represents an efficient process
where by many institutional investors collectively sign a single global
request for disclosure of information on GHG emission. The CDP provides
the secretariat for the world''s largest institutional investor
collaboration on the business implications of climate change, covering
a large cross section of industry across the world. The CII -ITC Centre
of excellence for Sustainable development has spearheaded the movement
in India and the CDP in India has been launched In May 2007.By joining
the project ONGC has bolstered its reputation as the leader among
central PSUs in climate change and sustainable development through
transparency and openness. Besides, ONGC will have the access to the
technologies adapted by different signatory compares m achieving
17. Human Resources
ONGC values its Human Resources the most. To keep their morale high,
your company extends several welfare benefits to the employees and
their families by way of comprehensive medical care, education, housing
and social security. During the year 2011 - 12. your company
implemented various new and revised welfare policies for its employees.
105 employees were released under the Voluntary Retirement Scheme
during the year. The Human Resource value of the employees based on
Lev and Schwartz Model is enclosed at Annexure-B
Wage revision of unionised staff
Consequent upon the tripartite settlement under section 12(3) of the
Industrial Disputes Act. 1947 in respect of wage revision of
non-executive cadre, the Performance Related Pay was discussed with the
recognized unions in a number of meetings before the scheme was
finalized and accorded approval of Board of Directors in June, 2011.
Accordingly, the payment for the financial year 2010-2011 was released
in December, 2011. Thereafter, the 73rd Joint Committee Meeting with
recognized unions was held on 19-20th March, 2012 at New Delhi for
redressal of various Organizational. Welfare and RAP related issues.
The Wage Revision of Contingent/Casual employees which was due for
revision w.e.f. 1st January, 2012 has been implemented with additional
emoluments i.e. House Rent Subsidy, Educational Grant and ex-Gratia for
a period of three years w.e.f. 1st January, 2012
18. Employee Warfare Trusts
a. Your company has established the following major trusts for welfare
of the employees:
_ Employees Contributory Provident Fund(ECPF)Trust, managing Provident
Fund accounts of employees of your company.
_ The Post Retirement Benefit Scheme(PRBS)Trust of your company manages
the pension scheme of the employees.
- The Composite Social Security Scheme (CSSS) formulated by your
company provides an assured ex-gratia payment in the event of
unfortunate death or permanent disability of an employee in service.
Fannies of deceased employees get a financial assistance under the
scheme ranging between Rs. 1.5 million to 72.0 million.
- ONGC Sahayog Trust has been created for welfare of secondary
workforce or their heirs, who are in financial distress.
- Gratuity Fund Trust has been created for payment of gratuity intime,
incompliance with provision of Gratuity rules.
Your Company implemented the Employees Pension Scheme (EPS-1995),
w.e.f. 16th November, 1996 Your Company implemented a single
integrated seamless computerised accounting system for all welfare
trusts pertaining to investments, accounts, settlement and contribution
etc. Employee accounts are now maintained on the new system, duly
reconciled and updated, and can be viewed by the employees themselves
on Company''s internal All payments are made to the members through
b. Implementation of Government Directives for the priority section
Your Company complies with the Government directives for Priority
Section of the society. The percentage of Scheduled Caste (SC) and
Scheduled Tribe (ST) employees were 15.7% and 8.8% respectively as on
31st March, 2012. Your Company is fully committed for the welfare of SC
& ST communities The following welfare activities are carried out by
your Company for their upliftment in and around its operational areas:
i) Annual component plan:
An amount of Rs. 200 million is distributed to various work centers of
ONGC for implementation of welfare schemes. This fund is especially
meant for providing help and support in areas like Education and
training. Community development, Health care, etc.
ii) Scholarship to SC and ST meritorious students:
Your Company spent Rs. 4.02 million for supporting 100 students of the
SC and ST community for pursuing higher professional courses at
different recognized institutes and universities.
19. Industrial Relations
During the period, harmonious industrial Relations were maintained
throughout the Corporation in terms of the agreement dated 16th
September, 2010 jointly and mutually reached between ASTO and ONGC. it
was decided to conduct me fresh elections and to facilitate the
convening of ASTO CEC for revival of representation of officers
The elections for new ASTO body was conducted and completed in all 20
work-centres and the entire process was completed on 3rd February,
2012. The CEC of ASTO was convened and facilitated by the management
for conducting elections of ASTO President-CWC and formation of CWC.
Subsequently, recognition was conferred on the new ASTO body, subject
to the revised Policy on Recognition of Officers Association and
related Code of Conduct dated 30th September. 2010. This a based on the
agreement dated 16th September, 2010, between the management and ASTO,
which was endorsed by the High Court of Delhi in W.P.N0.11568 of 2009
vide its order dated 30th September, 2010.
With reference to contracts entered into by the Company, periodic
training programmers were conducted to sensitize the Principal
Employers about their obligations, roles, responsibilities under the
Contract Labour Regulation Act and other welfare legislations.
Considering the competitive market situations, a concept of fair wage
for secondary work force has been devised for better working and living
conditions. Periodic audits of Principal Employers were carried out to
ensure near 100% compliances of Labour statutes. Contacts were
standardized and aligned to the Model Service Agreements to protect the
interest of ONGC as well as the secondary work force. Contracts are
being awarded in line with laid down principles of ONGC.
20. Grievance Management System
Your Company provides an easily accessible mechanism to the employees
for redressal of their grievances, either through informal or formal
channels. All key executives of your Company have designated a
publicized time slot, thrice a week, to meet public representatives for
speedy redressal of their grievances. Your Company has also approved
creation of a ''single window front office'' at all work-centres. An
officer not below Chief Manager level is responsible for ensuring
accessibility and responsiveness to public grievances
21. Right to information Act, 2005 (RTI Act)
An elaborate mechanism has been set up throughout the organization to
deal with the requests received under the RTI Act. During the year
2011-12,1413 applications were received, out of which 1362 were deposed
off and Balance 51 applications (as on 01.04.2012) are under process
22. Implementation of Official Language Policy
During the year, a series of initiatives were undertaken for promotion
and propagation of Rajbhasha in official communication. Literary works
in official language continued to be financially supported by your
Company. In addition, all inductees at the executive level were exposed
to the Official Language Policy of the Govt of India. Your Company also
contributed actively in publishing the bilingual Petroleum Terminology,
an initiative of the Ministry of Petroleum and Natural Gas and in
effective implementation of the Hindi Teaching Scheme of Govt of India
at all its regional work centres Your company has received appreciation
from the Parliamentary Committee on Official Language and the
Government of India for excellent progress of implementation of
Official language directives.
23. Human Resource Development
All the 32.862 ONGCians (as on 31th March, 2012) dedicated themselves
for the excellent performance of your company during the year. During
the year, HR group of your company ensured that adequate numbers with
requisite skills-sets were inducted to meet the requirements of the
Company as well as replenish the manpower loss on account of high
Your company believes that continuous development of its human resource
fosters engagement and drives competitive advantage. Towards this end,
it conducted Business Games all over the organization to none the
business acumen of its executives. Fun Team Games(FTGs) were conducted
second time since its inception in 2010. for EG and staff level
employees to inculcate MDT(Multi-disciplinary Team) concept and spirit
of camaraderie and belongingness to the organization, which was very
well received by the participants. A climate survey was conducted in
which over 17,500 employees responded. The responses were collated and
analysed work centre wise. Based upon the outcome of the survey
analysis, the work centers have designed action plans for
implementation. It also conducted the Assessment Development Centre
(ADC) for 306 DGM level executives and provided them developmental
a. Performance Management System and Performance Related Pay
Your Company. in line with the DPE Guidelines is devising a robust
performance management system which is effective in identifying and
rewarding high performers. As part of the process, the performance
appraisal system has been completely e-enabled. To strengthen
transparency in the system, performance ratings of the executives have
been disclosed to them. Incentive payments for the year 2010-11 were
made during the year to the executives of your Company based on the MoU
rating of the Company and the individual''s performance.
Skill up-gradation is a vital component for the Human Resource
Development For the first time in ONGC Academy, an external agency M/s
Emst & Young was engaged to review and evaluate the current process of
training, infrastructure and present system of course/faculty
evaluation. ONGC Academy has taken the initiatives of formulating new
training policy for the organization.
In pursuance to the mandate of equipping the executives with latest
knowledge in the specialized fields of upstream oil and gas sector,
attempts were made to organise training programs with the best of
faculties from India and abroad. During the year 2011-12. ONGC
conducted various training programmes for its executives and staff
spanning 1,72,208 training mandays.
Consistent with the trend in preceding years, your Company, its various
operating unit and its senior management officials have been in receipt
of various awards and recognitions. Details of such accolades are
placed at Annexure-C.
Your company has 171 International & National sports persons who
represent ONGC as well as the country in various national and
international events throughout the year. In addition to this, ONGC
supports around 128 young and budding sportspersons through
scholarships. During the year, ONGC sportspersons left an indelible
mark in various sporting events. Cricket icons Gautam Gambhir, Munaf
Patel and Virat Kohli of ONGC continued to display their Prowess in the
recently concluded IPL-2012 edition. Key achievements of ONGC sports in
2011-12 are as follows:
Mayookha Johny became Asian champion in long jump event by securing
Gold medal. in Asian Athletics championship held at Kobe.
1. Ashwini Ponnappa bagged bronze medal in World Championship held at
London from 8th to 14th August 2011. Best ever performance by any
Indian shuffler in World Championship.
2. Sourabn Verma. ranked No. 1 in the country, recently reached finals
in the Syed Modi Grand Prix Badminton tournament beating players like
Tommy Sugiarto (World No. 17), Hun yun (World No. 23) eventually losing
to Taufik Hidayat World No. 11. He has been crowned National Champion
in Singles in January 2012.
Billiards and Snooker
Alok Kumar won Asian Billiards title held at Iran in April 2011 and
became the fast player achieve the rare feat of winning both the
Billiards and Snooker Asian title at different points of time, the
only Assn to do so.
ONGC Hockey team has won four major National level tournaments
including Nehru Hockey Cup and Lal Bahadur Shastri Cup.
Shagun Chaudhary won the Quota Place for the 2012 London Olympics and
became the first ever Indian woman to qualify for Olympics in the
shotgun event. Ranked World No. 8th and Asian No. 2.
Amal Raj became National Champion in Singles on 29th January, 2012.
You will be Proud to know that ONGC has the distinction of the
Principal Sponsor of the contingent to the London Olympic 2012.Out of
the 81 Indian sports persons who qualified for the Olympics, 15 belong
26. Women Empowerment
Women employees constitute 6% of ONGC''s workforce During the year,
programmes for empowerment and development, including a programme on
gender sensitization was organized. Your Company actively supported and
nominated its lady employees for programmes organised by Women in
Public Sector (WIPS) and Women in Leadership Roles (WLL).
27. Corporate Social Responsibility (CSR)
In recognition of its role as a ''responsible leader''. ONGC continued
its quest to make positive, tangible difference in the fives of the
vulnerable and disenfranchised stakeholders. Seeking to herald a
business paradigm based on an interconnected vision - of people''s
welfare, societal growth and environmental conservation, in 2011-12
ONGC continued to cater to the developmental needs across its 12 focus
areas: Education including vocational courses; Health Care;
Entrepreneurship (self-help 4 livelihood generation) schemes;
infrastructure support-roads, bridges, schools, hospitals in and around
our operational areas; Environment protection. Ecological conservation
& promotion: Protector of heritage sites, UNESCO heritage monuments
etc.; Promotion of artisans, craftsman, musicians, artists etc. for
preservation of heritage, art & culture. Women''s empowerment. Girl
child development gender sensitive projects; Water management including
ground water recharge; Initiatives for physically and mentally
challenged; Sponsorship of seminars, conferences, workshops etc;
Promoting sports/sports persons; supporting agencies promoting
In 2011 -12. some of the key projects undertaken by ONGC include:
i. Varisthajana Swasthya Sewa Abhiyan: ONGC along with Help Age India
continues its efforts to taken healthcare to the doorsteps of the
elderly through Mobile Medicare Units (MMUs). In 2011-12, all the 20
MMUs were launched and treatment worth 1.9 lakh was provided across the
eight states and one Union Territory.
ii. ONGC-GICEIT Computer Centre: Under this initiative, implementing
partner Bharatiya Vidya Bhavan operates five computer centers providing
employment-related computer training to underprivileged youth across
different operational areas of ONGC. In 2011 -12, more than 1400
students received training through these centers.
iii. Project Utkarsh-An ONGC-AROH Effort for Economic Upliftment of
People in Sibasagar: Initiated in 2011-12, this project seeks to expand
livelihood opportunities for 400 households in one year through
training of women in skills like tailoring, soft toy making etc. with
linkages for income generation as well as training the elderly in
vocations like goatery, piggery, mushroom cultivation etc. while
establishing adequate forward and backward linkages.
iv. Harit Moksha: This unique CSR initiative where wood consumption
during traditional cremations is significantly reduced due to
innovatively designed Mokshda Green Cremation Systems (MGCS) was
expanded in 2011-12. Now, there are 10 such MGCS units across the
cities of Vadodara, Carrtbay. Ahmedabad and Delhi.
v. ONGC-NSTFDC Hathkargha Prashikshan: The CSR project was aimed at
economically empowering the women tribal handloom artisans in Assam to
facilitate cluster development for economically marginalized tribal
populations. In 2011 -12, around 100 tribal handloom artisans were
provided on-the-job training in the improvised looms by master
craftsmen that included training in intricate designs for catering to
vi. ONGC & Ramaknshna Ashram Mobile Medicare Unit: Initiated in
2011-12. this CSR project was envisaged with intent to cater to the
health and awareness needs of the underprivileged in the extremely
backward region of Kalahandi, Orissa. A Mobile Medical cum
Physiotherapy unit to provide free treatment and a Mobile library cum
audio visual unit to spread awareness among me community in the field
of health, education, agriculture will be set up under this project
vii. ONGC Hospitals ONGC is planning to set up multi-specialty hospitals
at Sibsagar, Assam and Ankteshwar, Gujarat and a Community Hospital at
Lakhtmpur-Kheri, Uttar Pradesh.
viii. ONGC- Eastern Swamp Deer Conservation Project in Kaziranga
National Part: The prefect aims at successfully conserving the species
or the Eastern Swamp Deer. Understanding the species and the habitat,
developing stringent conservation initiatives that could prevent
extinction, examining the possibility of translocation of the species
to additional areas to conserve special and habitat will be important
project activities. The project is in the first phase, which consists
of gathering information on the species.
28. Directors'' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of me Companies Act
1966. with respect to Directors'' Responsibility Statement, it is hereby
(i) In the preparation of the annual accounts, the applicable
accounting standards have been followed and there are no material
departures from the same;
(ii) 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 31st March, 2012 and of the profit of the Company
for the year ended on that date;
(iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956. for safeguarding the assets of
the Company and for preventing and detecting fraud and other
(iv) The Directors have prepared the annual accounts of the Company on
a ''going concern'' basis.
29. Corporate Governance
Your Company has taken structured initiatives towards Corporate
Governance and its practices are valued by the various stakeholders.
The practices evolve around multi-layered checks and balances to ensure
In terms of Clause 49 of the Listing Agreement, a report on Corporate
Governance for the year ended 31st March, 2012 supported by a
certificate from the Company''s Statutory Auditors confirming compliance
o conditions, from part of this Report
Guidelines of Department of Public Enterprises (DPE), Government of
India, on Corporate Governance have been made mandatory from May, 2010.
ONGC has implemented the DPE guidelines to the maximum extent possible.
Your Company has voluntarily got its Secretarial Compliance Audit
conducted for the financial year ended 31st March, 2012 from M/s A.N.
Kukreja & Co., Company Secretaries in whole-time practice; their report
part of this Annual Report
In line with global practices, your Company has made all information,
required by investors, available on the Company''s corporate website
Apart from the mandatory measures required to be implemented as a part
of Corporate Governance. ONGC has gone the extra mile in this regard
for me benefit of the stakeholders:
(a) Whistle Blower Policy: A Whistle Blower Policy has been implemented
and is functional from 1st December, 2009.The policy ensures that a
genuine Whistle Blower is granted due protection from any
victimization. The Policy is available to all employees of the Company
and has been uploaded on the intranet of the Company.
(b) Annual Report on working of the Audit & Ethics Committee: with a
view to apprise the Board of the working of the Audit & Ethics
Committee during the year, annual report on the working of the Audit 4
Ethics Committee for FY ''10 and FY ''11 has been prepared and putup to
Board for information. This is in line with recommendation of the C&AG.
(c) MCA Voluntary Guidelines on Corporate Governance: ONGC has
implemented the voluntary guidelines on Corporate Governance issued by
Ministry of Corporate Affairs to the extent feasible and within the
competency domain of the management
(d) Enterprise-wide Risk Management (ERM) framework: In line with the
requirements of Clause 49 (of the Listing Agreement), your Company has
developed a comprehensive Enterprise-wide Risk Management (ERM)
framework. Under the framework. Risk Register portfolio has been
complied and an ERM Policy has been firmed up. The Risk Register and
the draft Risk Management policy of ONGC has been reviewed by the Audit
and Ethics Committee and approved by the Board of Directors. The ERM
framework has been rolled out across the organization and the risk
policy adopted by the company is being displayed at all the
Assets/Basins/Plants/Institutes across all the locations of ONGC. The
risk policy of ONGC is started below:
ONGC shall identify the possible risks associated with its business
and commits itself to put in place a Risk Management Framework to
address the risks involved on an ongoing basis to ensure achievement of
the business objectives without any interruptions.
ONGC shall optimize the risks involved by managing their exposure and
bringing them in the with the acceptable risk appetite of the company*,
The risk reporting structure has already been put in place and all the
stake holders are being trained to enumerate risks in their functional
area. The Risk Management Cell is receiving reports from the various
functional areas. The Risk Management Committee is reviewing the same
on a periodical basis.
(e) Board Charter: In line with the requirements of mandatory
Guidelines of Department of Public Enterprises (DPE). Government of
India, on Corporate Governance a detailed charter of the Board has been
(f) Evaluation of Performance of the Board; A draft policy on
evaluation of the permanence of the Independent Directors has been
(a) Lead Independent Director, Shri Arun Ramanathan, Director, has been
appointed as Lead Independent Director.
30. Statutory Disclosures
Section 274(1)(g) of the Companies Act, 1956 is not applicable to the
Government Companies Your Directors have made necessary disclosures, as
required under various provisions of the Act and Clause 49 of the
Particulars of Employees
As per Notification No. GSR 289(E) dated 31st March. 2011 issued by the
Ministry of Corporate Affairs, amending the provisions of the Companies
(Particulars of Employees) Rules, 1975 issued in terms of section
217(2A)of the Companies Act. 1856, it is not necessary for Government
companies to include the particulars of employees drawing salaries of
Rs. 60 lakhs or more per annum, employed throughout the financial year
or, 75 lakhs per month, if employed for part of the financial year. As
your company is a Government company, the information has not been
included as a part of the Directors'' Report
31. Energy Conservation
The information required under section 217(1)(e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, is annexed as Annexure-D.
The Statutory Auditors of your Company are appointed by the Comptroller
& Auditor General of treat (C&AG), M/s Mehra Goel & Co. M/s
Kalyaniwalla & Mistry, M/s S Bhandari & Co. M/s Ray & Ray and M/s Varma
& varma. Chartered Accountants were appointed as joint Statutory
Auditors for the financial year 2011-12. The Statutory Auditors have
been paid a remuneration of 71620 million (previous year Rs.15.85
million) awards audit fee and certification of Corporate Governance
Report. The above fees are exclusive of applicable service tax and
reimbursement of reasonable travelling and out of pocket expenses
33. Auditors'' Report on the Accounts
The Comments of Comptroller 4 Auditor General of India (C4AG) form part
of this Report as per Annexure-6. There is no qualification in the
Auditors Report and there are no supplementary comments by C&AG under
section 619(4) of the Companies Act, 1958 Notes to the Accounts
referred to in the Auditors Report are self explanatory and therefore
do not call for any further comments.
You would be pleased to know that your Company has received
''Nil'' comments from CAG and Statutory Auditors for the year 2011- 12.
This is the sixth time in a row that the organization has received
''Nil'' comments and eight times in last nine years.
34. Cost Audit
Pursuant to the directions of the Central Government tor audit of Cost
Accounts, the proposal for appointment of 7 firms of cost Accountants
as Cost Auditors for auditing the cost accounts of your Company for the
year ended 31st March,2012 was approved by the Central Government and
they have accordingly been appointed. The Cost Audit Report for the
year 2010-11 has been filed by 21st September, 2011, against the due
date of filing of 27th September. 2011.
During the year under report, Shri Sudhir Vasudeva was appointed as
Chairman & Managing Director. ONGC on 3rd October,2011, Shri Aloke
Kumar Banerjee was appointed as Director (Finance), ONGC on 22nd May,
2012 in place of Shri D.K. Sarraf who was nominated as a Government
Director in place of Smt L M Vas on 4th April, 2012. Shri A Giridhar,
Joint Secretary (Exploration), MoP&NG was nominated as a Government
Director in place of Shri Sudhir Bhargava on 3rd August, 2012. Smt Usha
Thorat, non-official part-time director resigned on 10th February, 2012
The tenure of Shri S. S. Rajsekar, Shri S. Balachandran and Shri
Santosh Nautiya concluded or 10th November, 2011. The Government has
appointed Shri 0 P Bhatt Prof.S.K. Barua and Smt. Sushama Nath as
Non-official Part-time Directors on the Board of ONGC on 14th December,
2011. The tenure of Smt, Anita Das concluded on 4th August, 2012.
The Board places on record its deep appreciation for the excellent
contributions made by Shri D.K. Sarraf, Shri S.S. Rajsekar, Shri S.
Balachandran. Shri Santosh Nautiyal, Smt Usha Thorat, Smt. L.M. Vas.
Shri Sudhir Bhargava and Smt Anita Das during their tenure.
The strength of the Board of Directors of ONGC as on date is 14
Directors, comprising six Executive Directors (Functional Directors
including CMD) and eight Non-Executive Directors-two Government
nominees and six Independent Directors. Ministry of Petroleum & Natural
Gas has been requested to appoint requisite number of independent
Directors to comply with Listing Agreement.
Pursuant to the provision of section 255 and 256 of the Companies Act,
1956 and Clause 104(i) of the Articles of Association of the Company.
Shri A.K. Hazsrika and Shri U.N. Bose retire by rotation at the 19th
Annual General Meeting (AGM) and being eligible, offer themselves for
Prof. SK. Barua, Shri O.P. Bhatt, Smt Sushama Nath, Shri Bimal Julka,
Shri Aloke Kumar Banerjee and Shri A. Giridhar, who were appointed as
Additional Directors after the last AGM. hold office up to the 19th
AGM. The Company has received notice In writing from a member pursuant
to the provisions of Section 257 of the companies Act,1956,proposing
their candidature for appointment as Directors of the Company liable to
retire by rotation.
Brief resume of the Directors seeking Appointment/Re-appointment,
together with the nature of their expertise in specific functional
areas and names of the companies in which they had the directorship,
number of shares had and the membership/ chairmanship of committees of
the Board, as stipulated under Clause 49 of the Listing Agreement with
the Stock Exchanges are given in the notice convening the 19th AGM of
the Company, and form part of the Annual Report.
Your Directors are highly grateful for all the help, guidance and support
relived from the Ministry of Petroleum and Natural Gas, Ministry of
Finance, DPE. MCA, MEA, and other agencies in Central and State
Governments. Your Directors acknowledge the constructive suggestions
received from Statutory Auditors and Comptroller & Auditor General of
India and are grateful for their continued support and cooperation.
Your Directors thank all share-owners, business partners and members of
the ONGC Family for their faith, trust and confidence reposed in ONGC.
Your Directors wish to place on record their sincere appreciation for
the unstinting efforts and dedicated contributions put in by the
ONGCCians at all levels, to ensure that the Company continues to grow
On behalf of the Board of Directors
Chairman and Managing Director
Place: New Delhi
Date : August 13.2012