The Directors have pleasure in presenting the 25th Annual Report and audited Financial Statements of the Company for the financial year ended March 31, 2015.

FINANCIAL HIGHLIGHTS

                                                      (Rs.in crore)

Particulars                                   2014-15       2013-14

Gross Revenue from operations               93,206.31    107,438.67

Earnings before finance cost, depreciation and amortisation, exceptional items and tax 5,761.35 4,780.69

Profit / (Loss) before Taxes and 
Exceptional Items                            2,439.47        129.09

Exceptional items                              918.00             -

Net Profit after tax                         1,521.47        125.80

Add: Balance brought forward from 
previous year                               (5,219.58)    (5,345.26)

Less: Transfer to debenture 
redemption reserve                                  -          0.12

Less: Depreciation as per transitional 
provisions specified in Schedule
II of the Companies                            (33.63)            -
Act, 203

OPERATIONS

Operational Performance During the year, the Refinery continued to operate at more than 100% capacity and achieved a throughput of 20.49 Million Metric Tonnes (MMT) as against a throughput of 20.23 MMT during the last year. This is the highest ever annual throughput of the Company. Further, at the Company's fagship Raniganj Coalbed Methane (CBM) field in West Bengal, the Company achieved gas production of 0.55 million standard cubic meters per day as on March 31, 2015 making the Company the largest CBM gas producer in India.

Financial Performance The gross revenue from operations for the financial year ended March 31, 2015 stood at Rs. 93,206 crore compared to Rs. 1,07,439 crore for the financial year ended March 31, 2014. The decrease in revenues was mainly due to decline in oil prices. The Earnings before Interest, Tax, Depreciation and Amortisation (EBIDTA) and exceptional items stood at Rs. 5,761 crore registering an increase of 20% as against EBIDTA of Rs. 4,781 crore for the previous financial year. The net profit for the year surged to Rs. 1,521 crore compared to Rs. 126 crore for the previous year. With the payment of the final instalment of sales tax liability to Government of Gujarat, the Company has fully discharged its entire sales tax liability of Rs. 7,209 crore (including interest of Rs. 1,040 crore) as decided by the Hon'ble Supreme Court vide its judgment dated January 17, 2012.

Considering carry forward of losses and funds requirement for meeting the operations, the Board has not recommended any dividend for the financial year ended March 31, 2015 in spite of current year's profitability. Further, with the Company having accumulated losses at the end of financial year 2014- 15, no amounts could be transferred to General Reserve.

No material changes and commitments have occurred after the closure of the financial year 2014-15 till the date of this Report, which would affect the financial position of your Company.

Increase in share capital Pursuant to the Essar Oil Employees Stock Option Scheme - 2011, the Company has on July 28, 2015 allotted 6,07,498 equity shares of face value of Rs. 10/- each to Corporate Trustee of the Essar Oil Employees Stock Option Scheme Trust to hold the equity shares for the benefit of eligible employees against an equal number of stock options to enable the eligible employees to exercise their Options that have vested so far. In view of the above, the paid-up capital of the Company has increased to Rs. 14,50,12,43,980 divided into 145,01,24,398 equity shares of Rs. 10/- each.

Management Discussion and

Analysis

In compliance with Clause 49 of the Listing Agreement entered into with the Stock Exchanges a separate section on Management Discussion and Analysis forms part of this Annual Report.

Consolidated Financial Statements The audited Consolidated Financial Statements of the Company as required under Section 129 of the Companies Act, 2013 (Act) and Clause 32 of the Listing Agreement form part of this Annual Report.

HOLDING, SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES Holding Company The Company is a subsidiary of Essar Oil & Gas Limited, Mauritius, which as on March 31, 2015 along with its subsidiary, Essar Energy Holdings Limited holds 90.11% of the total share capital (including Global Depository Shares). Essar Oil & Gas Limited in turn is a wholly owned subsidiary of Essar Energy Limited.

Delisting Proposal Last year the Company had informed about receipt of a proposal from Essar Energy Holdings Limited, Mauritius, Promoter Company, to purchase all the publicly held equity shares of the Company and approval obtained from the shareholders by passing of special resolution through postal ballot for delisting of the equity shares from the Stock Exchanges. The Company has received in-principle approval for delisting from the National Stock Exchange of India Limited and BSE Limited on July 2, 2015 and July 15, 2015 respectively. The shareholders' resolution was valid for one year i.e. up to August 5, 2015 for completing the delisting process. The Promoters have made an application to the Securities and Exchange Board of India under regulation 25A of the SEBI (Delisting of Equity Shares Regulations), 2009 seeking extension of time.

Non-binding term sheet executed for sale of 49% stake in the Company

Essar Oil & Gas Limited and Essar Energy Holdings Limited have informed the Company that they have signed a non-binding term sheet with Rosneft Oil Company (Russia) for its participation in the equity capital of Essar Oil Limited with a share of up to 49%. The proposed transaction is conditional upon various factors such as due diligence, determination of the transaction price, execution of definitive transaction documents and receipt of requisite approvals.

Subsidiary and associate

companies

The Company acquired entire equity share capital in Vadinar Properties Limited (VPL) on February 18, 2015. Further, the Company acquired 26% stake in the equity share capital of Vadinar Liquid Terminals Limited on March 27, 2015. As on March 31, 2015, the Company had two subsidiary companies and two associate companies. The Company has no investment in joint venture companies.

Since the controlling stake in your Company is held by foreign entities, any downstream investment by your Company amounts to indirect foreign investment under the Foreign Direct Investment (FDI) Policy. Your Company has obtained a certificate from Statutory Auditors, M/s Deloitte Haskins & Sells, Ahmedabad certifying due compliances with applicable rules of FDI Policy except notifying Foreign Investment Promotion Board (FIPB). The Company has already informed FIPB about the difficulties it is facing in electronic fling, which are being resolved.

A report on the performance and financial position of each of the subsidiaries and associates, is provided in Form AOC -1 attached to consolidated financial statements under financials section of Annual Report and hence is not repeated here for the sake of brevity.

The Financial Statements of these subsidiaries are uploaded on the website of the Company in compliance with Section 136 of the Act. Further, the Financial Statements of these subsidiaries and other related information will be made available to any member of the Company/ its subsidiary(ies) seeking such information at any point of time and are also available for inspection by any member at the Registered Office/ Corporate Office of the Company.

The Company has adopted a policy on Material Subsidiaries. It has been uploaded on the website of the Company and can be accessed at the following link: http://www.essaroil. co.in/investors/investor-information/ corporate-governance.aspx.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Directors

The Board of Directors has appointed Ms. Rugmani Shankar and Dr. Sabyasachi Sen as Independent Directors with effect from March 31, 2015 and May 25, 2015 respectively. Pursuant to the provisions of Section 161 of the Act and the Articles of Association of the Company, Ms. Rugmani Shankar and Dr. Sabyasachi Sen hold office up to the date of ensuing Annual General Meeting of the Company. It is proposed to appoint Ms. Rugmani Shankar and Dr. Sabyasachi Sen as Independent Directors for a period of one year with effect from the respective dates of their appointment.

Further Mr. S. V. Venkatesan and Mr. T. S. Narayanasami who were appointed as Independent Directors on October 10, 2014, tendered resignation effective from March 31, 2015 and May 25, 2015 respectively. Mr. Sushil Maroo stepped down from the Board on October 14, 2014. The Board places on record its sincere appreciation for the valuable services rendered by Mr. S. V. Venkatesan, Mr. T. S. Narayanasami and Mr. Sushil Maroo during their tenure as Directors.

Mr. K. N. Venkatasubramanian and Mr. V. S. Jain will retire by rotation at the ensuing Annual General Meeting. They qualify the criteria of Independence under the Act and Listing Agreement. It is proposed to appoint Mr. K. N. Venkatasubramanian and Mr. V. S. Jain, as Independent Directors for a period of three years each from the date of ensuing Annual General Meeting.

All the Independent Directors have given declarations that they qualify as per the criteria of independence as prescribed under Section 149(6) of the Act and Clause 49 of the Listing Agreement.

Further in terms of the provisions of the Act, Mr. L. K. Gupta and Mr. C. Manoharan are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. Mr. C. Manoharan has completed his term of three years as Director (Refnery) on March 28, 2015. The Board, subject to the approval of shareholders, has re-appointed Mr. Manoharan for a period of three years effective from March 29, 2015. Approval of shareholders is being sought at the ensuing AGM for the reappointment of the Directors.

Particulars of the Directors being appointed/re-appointed, as required under Clause 49 of the Listing Agreement, are given in the Notice/ Explanatory Statement convening the ensuing AGM, forming part of the Annual Report.

Performance Evaluation of the Board, Chairman, Committees and Individual Directors The Board carried out a formal evaluation of the performance of the Board, its Committees and Individual Directors for the financial year 2014-15. In addition to this, Independent Directors have also evaluated performance of the Chairman, non-independent Directors and the Board as a whole. The feedback from the individual Directors was sought on the basis of a structured questionnaire covering among others Board and Committee composition, skills of Directors, quality and content of agenda, performance of Directors at the meetings, etc. Evaluation was carried out on the basis of responses from all the Directors compiled by a professional agency.

Directors' Responsibility Statement Pursuant to the provisions of Section 134(3)(c) of the Act, it is hereby confirmed that:

i) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) the Directors had 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 at the end of the financial year ended on March 31, 2015 and of the profit of the Company for the year ended on that date;

iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the accounts for the financial year ended March 31, 2015 on a 'going concern' basis;

v) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Policy on Appointment of Directors and Remuneration The Board has adopted a policy for Board Diversity, Appointment, Remuneration, Training and Evaluation of Directors and Employees. The policy inter-alia includes the criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178(3) of the Act. Relevant chapters of the Policy relating to Directors' appointment and remuneration are enclosed as Annexure - A.

Key Managerial Personnel The following executives have been designated as Key Managerial Personnel under the Act:

a) Mr. L. K. Gupta - Managing Director & CEO

b) Mr. C. Manoharan - Director (Refinery)

c) Mr. Suresh Jain - Chief Financial Officer

d) Mr. Sheikh S. Shaff - Company Secretary

RISK MANAGEMENT AND INTERNAL FINANCIAL CONTROLS

Audit & Risk Management

Committee

As on March 31, 2015, the Audit & Risk Management Committee of the Board comprises of three Directors out of which two are Independent Directors.

Mr. D. J. Thakkar, an Independent Director, chairs the meetings. During the year, all the recommendations of the Committee were accepted by the Board.

Risk Management During the year, the Company has enhanced the scope of the existing Audit Committee to include Risk management in its scope and renamed it as Audit & Risk Management Committee.

Your Company has in place a robust risk management framework. Commodity price risk and credit & market risks are managed through Risk management policies. Risks management procedures are also in place for health, safety, environment and fire. The perceived risks are documented in Risk Registers pertaining to all the business divisions and functions of the organization along with their mitigations plans. Legal Compliance risks are being monitored through an online compliance management system. The internal audit plans and internal financial controls are also developed based on risks associated with various activities undertaken by the Company.

Major risks associated with business of the Company are set out in the Management Discussion & Analysis forming part of this Report. In the opinion of the Board, the Company has no risks which would threaten the existence of the Company.

Internal Financial Controls and their adequacy

The Company has an adequate system of internal financial control commensurate with its size and nature of business which helps in ensuring orderly and efficient conduct of its business. These systems provide a reasonable assurance in respect of financial and operational information, complying with applicable statutes, safeguarding of assets of the Company, prevention & detection of frauds, accuracy & completeness of accounting records and ensuring compliance with corporate policies.

Vigil Mechanism

The Company has established a Vigil Mechanism process by adopting a Whistle blower Policy for directors and employees. This policy outlines the procedures for reporting, handling, investigating and deciding on the course of action to be taken in case inappropriate conduct/behaviour is/are noticed, reported or suspected. The Policy provides for adequate safeguards against victimization of persons who use the mechanism and has a process for providing direct access to the Chairman of the Audit & Risk Management Committee in appropriate or exceptional cases. The details of establishment of the process can be accessed on the website of the Company at the link http:// www.essaroil.co.in/investors/investor- information/corporate-governance. aspx.

EMPLOYEES

Particulars of Employees

The details of remuneration as prescribed under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed as Annexure - B to this Report.

In terms of the provisions of Section 197(12) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees drawing remuneration in excess of limits prescribed under the said Rules is annexed to this Report. However pursuant to the provisions of Section 136(1) of the Act, the Annual Report excluding the above said details is being sent to all the members. Any member interested in obtaining such details may write to the Company Secretary.

Employees Stock Option In connection with the Essar Oil Employees Stock Option Scheme - 2011 (Scheme) adopted by the Company, the disclosures required to be made under the SEBI (Share Based Employee Benefits) Regulations, 2014 are enclosed as Annexure - C. The Annual Report containing aforesaid details is uploaded on the website of the Company and can be assessed at the link http://www.essaroil.co.in/investors/ financial-performance/annual-reports. aspx. A certificate obtained from the auditors confirming compliance with the SEBI Regulations and shareholders resolution approving the Scheme will be placed at the Annual General Meeting for inspection by the members.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility (CSR) Committee named as CSR, Safety and Sustainability Committee. The Board of Directors on the recommendations of the Committee, has adopted a CSR Policy indicating the activities to be undertaken by the Company. The said policy can be accessed on the website of the Company at the link http://www. essaroil.co.in/sustainability.aspx.

The annual report on CSR containing the details of the CSR Policy adopted by the Company, the CSR initiatives taken during the financial year and other particulars specified in the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this Report as Annexure- D.

CORPORATE GOVERNANCE

In terms of Clause 49 of Listing Agreement entered into with the Stock Exchanges, a certificate from P. K. Pandya & Co., Practicing Company Secretary on compliance of conditions of Corporate Governance is annexed as Annexure - H to the Directors' Report. A report on Corporate Governance as provided in Clause 49 of the Listing Agreement is included in the Annual Report.

AUDITORS AND AUDIT

Statutory Auditor

M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. They have confrmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment. Accordingly, the members' approval is being sought for their appointment as the Auditors of the Company at the ensuing Annual General Meeting.

The reports given by the Auditors on standalone and consolidated financial statements of the Company form part of the Annual Report. There are no qualifications, reservations, adverse remarks or disclaimers given by the Auditors in their reports. The notes on financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

Cost Auditor

M/s. Chandra Wadhwa & Co. was appointed as the Cost Auditor for the financial year ended March 31, 2015. The cost audit report for financial year ended March 31, 2015 will be fled with the Ministry of Corporate Affairs within the prescribed time period. M/s. Chandra Wadhwa & Co. have been reappointed as the Cost Auditor of the Company for the financial year 2015- 16. In terms of the provisions of Section 148(3) of the Act and the applicable rules, shareholders approval is being sought to ratify the remuneration payable to the Cost Auditor for the financial year ending on March 31, 2016.

Secretarial Auditor The Board had appointed Mr. Prakash Pandya of M/s P. K. Pandya & Co., Practicing Company Secretaries, as Secretarial Auditor to conduct the Secretarial Audit for the financial year ended on March 31, 2015.

The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed as Annexure - E to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

DISCLOSURES

Meetings of the Board

During the financial year ended March 31, 2015, six meetings of the Board of Directors were held. The dates on which the said meetings were held, are mentioned in the Corporate Governance Report under the heading "Board of Directors".

Particulars of Contracts or Arrangements with Related Parties

As required under Clause 49(VII) of the Equity Listing Agreement, the Company has adopted a policy on Related Party Transactions. The policy can be accessed on the website of the Company at the link http://www.essaroil. co.in/investors/investor-information/ corporate-governance.aspx.

The objective of the Policy is to ensure proper approval, disclosure and reporting of transactions, as applicable, between the Company and any of its related parties in the best interest of the Company and its stakeholders. All related party transactions are placed before the Audit & Risk Management Committee for its review and approval.

All Related Party Transactions entered during the year were in the ordinary course of the business and on arm's length basis. No Material Related Party Transactions i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, were entered during the year by the Company. Accordingly, the disclosure of Related Party Transactions as required under section 134(3)(h) of the Act in Form AOC-2 is not applicable. Related party disclosure as required by Accounting Standard 18 have been made in note 44 to the Standalone and Consolidated financial statements of the Company.

Particulars of Loans given, Investments made, Guarantees given and Security provided

Particulars of investments made are provided in the standalone financial statements (Please refer to Note 14 to the standalone financial statements). Since your Company belongs to the petroleum and natural gas sector and operates 'infrastructure facilities' as defined under Schedule VI of the Act, it is not required to comply with provisions relating to making of loans, giving guarantees or providing security as prescribed in Section 186 of the Act.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required to be disclosed under the Act are provided as Annexure - F to this Report.

Extract of Annual Return The extract of annual return as on March 31, 2015 is annexed as Annexure - G to this Report.

Fixed Deposits

Your Company has not accepted any deposits from the public in accordance with the provisions of sections 73 to 76 of the Act and the Rules framed there under. Accordingly the details required to be reported under Rule 8(5) of the Companies (Accounts) Rules, 2014, are not applicable.

GENERAL DISCLOSURES

Your Directors state that for the financial year ended March 31, 2015 no disclosure is required in respect of the following items and accordingly confirm as under:

Neither the Managing Director & CEO nor the Director (Refinery) receives any remuneration from the Holding and/or Subsidiary companies.

The Company has neither revised the financial statements nor the report of Board of Directors.

The Company has not issued equity shares with differential rights as to dividend, voting or otherwise or sweat equity shares.

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status or Company's operations in future.

The Company has not bought back any shares during the year.

No cases were fled pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

No instance of fraud has been reported by the Auditors or any other person to either Audit & Risk Management Committee or the Board of Directors of the Company.

ACKNOWLEDGEMENT

The Board wishes to express its sincere appreciation and place on record its gratitude for the faith reposed in and cooperation extended to the Company by the Government of India, State Governments, various Government agencies/departments, financial institutions, banks, customers, suppliers and investors of the Company. The Board also wishes to place on record its deep gratitude to all its employees whose enthusiasm, team efforts, devotion and sense of belonging that has made this Company proud.

                                            For and on behalf of the 
                                                  Board of Directors

D J Thakkar                                                L K Gupta

Director                                           Managing Director
                                                               & CEO