Oil and Natural Gas Corporation Directors Report, ONGC Reports by Directors

Directors Report	Year End : Mar '12 � Mar 11

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) of India. 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 than 1. - 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 million. 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. Global recognitions 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 Exploration 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 Mizoram. 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 blocks. 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 reserves). 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). New projects 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 Shale gas 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 (ICT), Mumbai. - 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. Disinvestment 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%. Highlights 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 Appropriations 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. 2. Dividend: 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 Value-added products. Unit Production Qty Sales Qty FY FY FY FY 2011-12 2010-11 2011-12 2010-11 Direct 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 Others Sub Total Trading Motor Spirit 000 KL 0.43 0.63 HSD 000 KL 0.07 3.27 Others Sub Total Total Unit Value (Rs. in million) FY FY 2011-12 2010-11 Direct 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 Trading 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) (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 Estimates Committee. 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 activities 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 Accounting (RRA). 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. Subsidiaries 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 respectively. 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 coast. Performance Highlights of FY 2011 -12; - GRM of 7.07$/bbl in the fourth quarter despite sleep Rupee depreciation at the end of the quarter. - Highest ever throughput of 12.82 MMTPA and turnover of Rs. 572,068 million during FY 2011-12. - Commissioned its 3 MMTPA CDU/VDU on 25.3.2012, which enhanced its nameplate capacity from 11.86 MMTPA to 15 MMTPA. - Revamp of CDU/VDU I and Hydrocracker successfully completed in record time. Revamp of HCU II completed in April-May 2012. - OPE Adjudged performance as compared to MoU targets as Excellent for the year 2010-11. FY Particulars 2011-12 2010-11 Throughput (MMT) 12.82 12.84 Gross Turnover (Rs. in million) 572,068 437,237 GRM ($/bbl) 5.60 5.90 Net Exchange Variation (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). Marketing: 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 94.70%. 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 Annual Report. 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 million. 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 Preservation Plan. 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 Delhi. 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 Project ICE 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 conferencing. 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 award. 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 employees.) - 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 approx 160.000. 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 intervention. 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 sustainable development. 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 e-payment gateway. 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 community. 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. Contract Management 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 for disposal. 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 superannuation. 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 inputs. 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. b. Training 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. 24. Accounts 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. 25. Sports 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: Athletics Mayookha Johny became Asian champion in long jump event by securing Gold medal. in Asian Athletics championship held at Kobe. Badminton 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. Hockey ONGC Hockey team has won four major National level tournaments including Nehru Hockey Cup and Lal Bahadur Shastri Cup. Shooting 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. Table Tennis 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 to ONGC. 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 sports/sports persons. 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 wider markets. 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 confirmed that; (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 irregularities; and (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 transparency. 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 www.ongcindia.com/investercenter.asp. 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 firmed up. (f) Evaluation of Performance of the Board; A draft policy on evaluation of the permanence of the Independent Directors has been drawn up. (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 Listing Agreement. 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. 32. Auditors 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 actually incurred. 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. 35. Directors 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 reappointment. 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. 36. Acknowledgement 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 and excel. On behalf of the Board of Directors (SUDHIR VASUDEVA) Chairman and Managing Director Place: New Delhi Date : August 13.2012

Source : Dion Global Solutions Limited

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