7.1 Additions to CWIP includes borrowing costs amounting to A 23.38 million (For the year ended March 31, 2022 A 508.80 million) and allocated / will be allocated to different class of assets. The rate used to determine the amount of borrowing costs eligible for capitalisation was 5.22 % (For the year ended March 31, 2022 was 6.20%) which is the effective interest rate on borrowings.

7.2 An amount of A 0.90 million (Year ended March 31, 2022 A 76.93 million) towards Finance cost on lease liability has been capitalized as a component of cost of Capital Work-in-Progress (CWIP).

7.3 An amount of A 0.71 million (Year ended March 31, 2022 A 32.35 million) towards depreciation charged to Right-of-Use Asset has been capitalized as a component of cost of Capital Work-in-Progress (CWIP).

7.4 Capital Work-in-Progress (CWIP) includes Unsecured Rupee Term Loan for Capex [refer note 22.7.1] and Unsecured Foreign Currency Term Loan (FCNR) (B) for Capex [refer note 22.8].

8.1 Includes land measuring 102.995 acres is held for capital appreciation.

8.2 There is no contractual obligation to purchase, construct or develop investment property.

8.3 The net amount recognised in the Statement of Profit and Loss for investment property for current year is A Nil (Year ended March 31, 2022 A Nil).

8.4 No Right-of-Use Asset has been included in the investment property as given above.

8.5 The best evidence of fair value is current prices in an active market for similar properties.

8.6 The Company has considered the fair value of the freehold land amounting to A 412.00 million as at March 31, 2023 (As at March 31, 2022 A 409.24 million) based on the valuation carried out by independent valuer report dated November 17, 2022.

9.1 Goodwill includes A 4.04 million towards excess consideration paid over net assets acquired for acquisition of Nitrogen plant.

9.2 Goodwill has been recognised in the books of the Company on account of amalgamation of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) as per the clarification in Indian Accounting Standard (Ind AS) Transition Facilitation Group (ITFG) Clarification Bulletin 9.

11.2.1 Details of Investment: Startup Fund

During the year the company has subscribed 5,94,207 no’s units of ONGC Startup Fund Trust (registered with SEBI as an Alternative Investment Fund category I) for total consideration of A 5.94 million. Further an amount of A 1.00 million has been paid towards subscription of units pending allotment as at March 31, 2023 [refer note 13 (f)].

The investment in Mangalam Retail Services Limited, Mangalore SEZ Limited and ONGC Startup Fund have been measured at fair value through profit or loss. The management has considered the fair value (level 3 hierarchy) of such investment equivalent to the carrying amount as at reporting period.

12.1 Company has policy of providing financial assistance to Schedule Caste / Schedule Tribe category dealers for Retail Outlets under the Corpus Fund Scheme (CFS). Under this scheme upon written request seeking working capital loan / assistance by dealer, the company provides working capital loan for a full cycle of operation (equivalent to seven days sales volume) of the dealer. This working capital loan as well as the interest at the specified rate thereon will be recovered in hundred equal monthly instalments from the thirteenth month of commissioning of the dealer operated Retail Outlet.

13.1 As per the Government of India’s scheme for Promotion of flagging of merchant ships in India by providing subsidy support to Indian Shipping companies in global tenders floated by Ministries / Departments / Central Public Sector Enterprises (CPSEs), the eligible Indian shipping company shall be paid the subsidy amount along with the charter hire amount as per the contract term by the Company and the Company will be then reimbursed by Government under the scheme.

13.2 Earmarked in favour of Commercial Taxes Authority.

14.1 During the financial year ended March 31, 2020, the Company opted to settle Income Tax Disputes under the Direct Tax Vivad Se Vishwas Act, 2020, and accordingly, a sum of A 1,084.76 million payable under the said scheme was charged as prior year tax in the Statement of Profit and Loss in the financial year ended March 31, 2020. Pursuant to this, the tax assets and liabilities were reclassified for the year ended March 31, 2020. The tax assets of A 2,908.37 million and liabilities of A 1,084.76 million pertaining to assessment years for which the Company exercised the option were considered as current tax assets and current tax liabilities respectively, as the same were expected to be settled within a year. The same treatment is continued in the financial year 2021-22 and also during current financial year, as the final orders under the said scheme are awaited.

14.2 The Taxation Laws (Amendment) Act, 2019 inserted a new section 115BAA in the Income Tax Act, 1961, which gives domestic companies a non-reversible option to pay corporate tax at reduced rate, subject to certain conditions. Such option can be exercised for the financial year 2019-20 or any subsequent financial year. The Company did not exercise the option for the financial years ended March 31, 2020, March 31, 2021 and March 31, 2022. The financial statements of the Company for the year ended March 31, 2023 have been prepared considering the old Corporate Tax rate. However, the option for the new lower tax rate for the financial year 2022-23 can be exercised by the Company on or before the due date for filing of the return of income for the financial year 2022-23.

15.1 Includes A 2,125.25 million relating to an appeal in the matter of classification of Reformate import pending before Hon’ble CESTAT and other amount paid under protest.

16.1 The cost of inventories recognized as an expense includes A Nil million (Year ended March 31, 2022 A 222.82 million) in respect of write down of inventories to net realisable value. There has been no reversal of such write down in current year and previous year.

16.2 Includes stock lying with others amounting to A Nil million (As at March 31, 2022 A 5.23 million)

16.3 The method of valuation of inventories has been stated in Note 3.19.

17.1 Generally, the Company enters into long-term sales arrangement with Oil Marketing Companies for domestic sales and short term arrangement with others. Besides, the export of products are undertaken through term contracts, spot international tenders, short term tender arrangements, B2B arrangements and supplies to SEZ customers. The average credit period on sales ranges from 7 to 45 days (Year ended March 31, 2022 ranges from 7 to 45 days). Interest is not charged on trade receivables for the applicable credit period from the date of invoice. For delayed period of payments, interest is charged as per respective arrangements, which is upto 2 % per annum (Year ended March 31, 2022 upto 2% per annum) over the applicable bank rate on the outstanding balance.

17.3 Usually, the Company collects all receivables from its customers within the applicable credit period. The Company assesses impairment on trade receivables from all the customers on facts and circumstances relevant to each transaction.

17.4 Secured by bank guarantees / letter of credit received from customers.

17.5 The Company has concentration of credit risk due to the fact that the Company has significant receivables from customers mentioned in note 17.2, however these customers are reputed and creditworthy.

17.6 There are no outstanding receivables due from directors or other officers of the Company.

20.1 Terms/rights attached to Equity shares

The Company has two classes of equity shares having a par value of A 10 per share and A 10,000 per share. Each holder of equity shares is entitled to one vote per share. The dividend (if any) proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

20.5 Equity shares reserved for issue under options and contracts or commitments for the sale of shares or disinvestment: Nil (As at March 31, 2022: Nil).

20.6 Equity shares of A 10 each (equivalent to 303,550 equity shares of A 10 each) were forfeited in the year 2009-10 against which amount originally paid up was A 654,000.

21.1 An amount of A 51.99 million as at March 31, 2023 (As at March 31, 2022 A 42.17 million) shown as deemed equity which denotes the difference between the fair value of Corporate Guarantee received from Holding Company and the consideration paid by the company.

21.2 The Company created capital redemption reserve on redemption of preference share capital during the financial years 2011-12 and 2012-13.

21.3 The Company created securities premium on issue of equity share capital and the same can be utilized as per the requirement of the Companies Act, 2013.

21.4 The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to Statement of Profit and Loss.

21.5 Other reserve represents excess consideration paid towards acquisition of non-controlling interest in erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) from non-controlling share holder.

21.6 The amount that can be distributed by the Company as dividends to its equity shareholders is determined considering the requirements of the Companies Act, 2013 and the dividend distribution policy of the Company. Thus, the amount reported in general reserves are not entirely distributable.

21.7 The company has a dividend distribution policy in line with SEBI (LODR) Regulation, 2016, Department of Investment and Public Asset Management (DIPAM) guidelines, Provisions of Companies Act, 2013, Companies (Declaration & Payment of Dividend) Rules, 2014 and other guidelines to the extent applicable. As per the guidelines with respect to payment of dividend issued by DIPAM, Government of India, the company is required to pay a minimum annual dividend of 30% of PAT or 5% of the net-worth, whichever is higher subject to maximum dividend permitted under extant legal provisions. Nonetheless, CPSEs are expected to pay the maximum dividend permissible under the Act under which a CPSE has set up, unless lower dividend proposed to be paid is justified after the analyses of the aspects on case to case basis viz. net-worth of CPSE and its capacity to borrow, Long Term Borrowings, CAPEX / Business Expansion needs, Retention of profit for further leveraging in line with the CAPEX needs; and Cash and Bank balance. Though the company endeavors to declare dividend as per these guidelines, during the Financial Year, considering Company's Capital Expenditure plans and loan repayments due in FY 2023-24 and cash position of the company, the Company did not pay/declare dividends as prescribed by the DIPAM. The cumulative dividend for 2021-22 and 2022-23 as per the guidelines works out to A 16,781 million. The Company has represented (August 2022) to the Ministry of Petroleum and Natural Gas being its Administrative Ministry for getting exemption from payment of dividend for financial year 2021-22 as prescribed by DIPAM. The reply of the Ministry of Petroleum and Natural Gas was awaited (March 2023).

22.1 External Commercial Borrowings (ECB) :

22.1.1 ECB-1 amounting to A 4,107.30 million as at March 31,2023 (As at March 31, 2022 A 11,356.37 million) are USD denominated loans and carries variable rate of interest which is six month Libor plus spread (Interest rate as at March 31, 2023 is 6.13 % and interest rate as at March 31, 2022 was 1.32%).

22.1.2 ECB-2 taken by the erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) amounting to A 125.14 million as at March 31, 2023 (As at March 31, 2022 A 671.13 million) are USD denominated Loans and carries variable rate of interest, which is six month libor plus spread (Interest Rate as at March 31, 2023 is 7.21% and Interest rate as at March 31, 2022 was 3.89%).

22.1.3 ECB-1 is secured by first pari passu charge over immovable Property, Plant & Equipment and first ranking pari passu charge over movable Property, Plant & Equipment (including but not limited to Plant and Machinery, Spares, Tools, Furniture, Fixture, Vehicles and all other Movable Property, Plant & Equipment) both present and future.

22.1.4 ECB-2 is secured by first pari passu charge over all immovable and movable properties both present and future and second charge on all current assets of the erstwhile subsidiary company OMPL and after merger on MRPL.

22.1.5 A 4,232.44 million (As at March 31, 2022 of A 8,135.45 million) is repayable within one year i.e. Current Maturities of long term debt has been shown as Current Borrowing.

22.2 Foreign Currency Borrowings (FCTL) :

22.2.1 Foreign Currency Borrowings taken by the erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) are USD denominated Loans and carries variable rate of interest, which is linked with six month Libor & three month SOFR plus spread (Interest Rate as at March 31, 2023 is 7.25% & 6.10% and Interest rate as at March 31, 2022 was 2.93%).

22.2.2 Foreign Currency Borrowing is secured by way of first pari passu charge on Fixed Assets of the Company both present and future.

22.2.3 A 5,555.03 million (As at March 31, 2022 of A 3,026.81 million) is repayable within one year i.e. Current Maturities of long term debt has been shown as Current Borrowing.

22.3.1 Loan from OIDB taken by the Company carries fixed rate of interest (Interest rate as at March 31, 2023 and March 31, 2022 is in range of 6.01% to 7.98% ).

22.3.2 OIDB loan is secured by way of first ranking pari passu charge by way of hypothecation / mortgage only on Property, Plant & Equipment / projects financed out of loan proceeds of OIDB.

22.3.3 A 1,485.63 million (As at March 31, 2022 of A 1,485.63 million) is repayable within one year i.e. Current Maturities of long term debt has been shown as Current Borrowings.

22.4 Interest Free Loan from Govt. of Karnataka - VAT Loan

22.4.1 This Loan represents amounts payable on account of “Interest free loan” received from Government of Karnataka. This interest free loan against VAT will be repayable from March 31, 2028.

22.4.2 The benefit of a Government loan at a below-market rate of interest is treated as a government grant (Ind AS 20). The Interest free loan is recognised and measured in accordance with Ind AS 109, Financial Instruments. The benefit of the Interest free loan is measured as the difference between the initial carrying value of the loan determined in accordance with Ind AS 109, and the proceeds received. The benefit is accounted for in accordance with this Standard.

22.4.3 Interest Free Loan from Govt.of Karnataka - VAT Loan are secured by bank guarantees given by the company.

22.5.1 Working capital borrowings pertaining to the company amounting to A 180.26 million as at March 31, 2023 (As at March 31, 2022 A 181.94 million) from consortium banks are secured by way of first ranking pari passu charge by way of hypothecation of Company’s stocks of Raw Material, Finished Goods, Stock-in-Process, Stores, Spares, Components, Trade receivables, outstanding Money Receivables, Claims, Bills, Contract, Engagements, Securities both present and future and further secured by second ranking pari passu charge over companies movable and immovable property (all Property, Plant & Equipment) both present and future.

Short Term Rupee loan pertaining to erstwhile subsidiary company OMPL amounting to A Nil as at March 31, 2023 (As at March 31, 2022 A 5,000.00 million) is sanctioned by earmarking existing Overdraft Limit of a Bank which is secured by way of first pari passu charge on inventories, receivables and other current assets and second pari passu charge on the fixed assets of the erstwhile subsidiary company OMPL.

22.7.1 Term loan - 1 amounting to A 2,342.96 million as at March 31, 2023 (As at March 31, 2022 A 2,343 million) carries variable rate of interest which is linked to RBI Repo Rate plus spread (Interest rate as at March 31, 2023 is 7.95 % and Interest rate as at March 31,2022 was 5.75%).

22.7.2 Term loan-2 taken by the erstwhile subsidiary company OMPL amounting to A 9,868.26 million as at March 31, 2023 (As at March 31, 2022 A 9,870.22 million) carries variable rate of interest which is linked to One Month MCLR rate (Interest rate as at March 31, 2023 is 8.10% and Interest rate as at March 31,2022 was 6.35%).

22.10.1 Refinancing of existing two External Commercial Borrowing of USD 150 million and USD 400 million with a single loan of USD 550 million has been done during the Financial year. The loan refinanced is USD denominated and linked to three month SOFR plus spread (Interest rate as at March 31, 2023 is 6.06 % and Interest rate as at March 31, 2022 was 2.56%)

22.11 Deferred Payment Liabilities - From Government of Karnataka :

22.11.1 Deferred payment liability against tax payable under Central Sales Tax (CST) represents amount payable on account of “Interest free loan” received from Govt. of Karnataka. This sum of the deferred CST loan against Central Sales Tax (CST) shall be repayable in five equal annual instalments without interest after the closure of deferment period.

22.11.2 The benefit of a Government loan at a below-market rate of interest is treated as a government grant (Ind AS 20). The Interest free loan is recognised and measured in accordance with Ind AS 109, Financial Instruments. The benefit of the Interest free loan is measured as the difference between the initial carrying value of the loan determined in accordance with Ind AS 109, and the proceeds received. The benefit is accounted for in accordance with this Standard.

22.12 Bill Discounting Facility :

22.12.1 Unsecured Bill discounting facility against Non LC bill drawn on erstwhile Subsidiary Company “ONGC Mangalore Petrochemicals Limited” (OMPL) amounting to Nil as at March 31, 2023 (As at March 31, 2022 A 1,149.30 million) (Interest rate as at March 31, 2023 is Nil and March 31, 2022 was 4.20% ).

22.13 Other Working Capital Loan :

22.13.1 Unsecured short term working capital loan from bank amounting to A 16,955.86 million as at March 31, 2023 (As at March 31, 2022 A 21,136.40 million) (Interest rate as at March 31, 2023 is in range of 6.84% to 7.15% and March 31, 2022 was in range of 3.88% to 4.00% ).

22.13.2 Unsecured Short Term Rupee loan from Banks pertaining to erstwhile subsidiary company OMPL amounting to Nil as at March 31, 2023 (As at March 31, 2022 A 17,213.47 million) (Interest rate as at March 31, 2023 is Nil and interest rate as at March 31,2022 was in the range of 4.10% to 4.20%).

22.14 The repayment schedules disclosed above are based on contractual cash outflows and hence will not reconcile to carrying amounts of such borrowings which are accounted at amortised cost.

23.1 No amount is due for payment to the Investor Education Protection Fund.

23.2 Price reduction schedule

Payable against capital goods includes A 154.40 million (As at March 31, 2022 A 203.67 million) relating to amounts withheld from vendors pursuant to price reduction schedule which will be settled on finalisation of proceedings with such vendors. When the withheld amounts are ultimately finalised, the related adjustment is made to the Property, Plant and Equipment prospectively.

25.1 In accordance with Ind AS 12 - Income Taxes, the Company has recognised deferred tax asset for all deductible temporary differences and also for carry-forward of unused tax losses and unused tax credits. The recognition of Deferred Tax Asset (DTA) is based on the probability of earning sufficient taxable profits in the future years as projected by the management (duly considering capacity utilization and price realisation) against which the deductible temporary difference and carry forward of unused tax losses and unused tax credits can be utilised. Deferred Tax asset has been recognised net of deferred tax liability.

25.2 Pursuant to the Scheme of Amalgamation of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) (‘Amalgamating Company’) with the Company (‘Amalgamated Company’) effective from the appointed date i.e. April 1, 2021, Company had reassessed and recognised the Deferred Tax Assets on unused tax losses and unused tax credits of OMPL in line with Ind AS 12 -Income Taxes, resulting in increase in the Deferred Tax Assets by A 14,554.27 million for the year ended March 31, 2022.

26.1 Trade payables include A Nil million (As at March 31, 2022 of A 20,793.60 million) for which ONGC has given guarantees on behalf of the Company.

26.2 The average credit period on purchases of crude, stores and spares, other raw material, services, etc. ranges from 7 to 60 days (Year ended March 31, 2022 ranges from 7 to 60 days). Thereafter, interest is charged upto 6.75 % per annum (Year ended March 31, 2022 upto 6.75% per annum) over the relevant bank rate as per respective arrangements on the outstanding balances. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

36.1 The company has generated a total of 10,293,143 Kwh of Solar power for the year ended March 31, 2023 (Year ended March 31, 2022 a total of10,683,169 Kwh) and the same are captively consumed. The monetary values of such power generated that are captively consumed are not recognised for the purpose of disclosure in the financial statement.

36.2 Excise Duty on sale of goods (domestic sales) has been included in “Revenue from operations”. Despite increase in sales of petroleum products for the current year, the Excise duty on sale of goods (includes SAED on exports) is lower mainly on account of decrease in excise duty rate. Excise duty shown above represents the difference between excise duty on opening and closing stock of finished goods.

36.3 The CSR expenditure comprises the following:

(a) Gross amount required to be spent by the Company during the year: A 50 million (Year ended March 31, 2022 A Nil).

36.5 Includes an amount of A 301.32 million and A 100.60 million respectively incurred towards Coker Heavy Gas Oil Hydro Treating Unit (CHTU) and 2G Ethanol project related activities, as no future economic benefits is expected to be derived from the corresponding expenditure towards the said activities.

With regard to amalgamation of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) with the company as per the scheme of amalgamation approved by Ministry of Corporate Affairs (MCA), an amount of A 300 million had been provided towards payment of stamp duty for the year ended March 31, 2022 and out of the said amount during the year an amount of A 275 million has been paid and balance A 25 million has now been written back as same is no longer required to be paid.

39 Leases39.1 Obligations under finance leases

39.1.1 The Company has adopted Ind AS 116 ‘Leases’ effective April 1, 2019. The Company has entered into lease agreements for lands which have been classified as finance leases and the same is now disclosed as Right of Use Assets (ROU). The ownership of the lands will be transferred to the Company at the end of the lease term with nominal payment of administrative charges. The lease term ranges from 5 to 44 years.

Financial lease obligation as at March 31, 2023 is immaterial (As at March 31, 2022 : immaterial).

39.2 Operating lease arrangements39.2.1 Leasing arrangements

The Company has adopted Ind AS 116 ‘Leases’ effective April 1, 2019. The Company has entered into arrangements for right of way for pipelines and lease of land which have been classified as operating leases and the same is now disclosed as Right of Use Assets (ROU). The lease period for right of way ranges from 11 months to 30 years and for leases of land ranges from 11 months to 99 years. In case of leasehold land, the Company does not have option to purchase the land at the end of the lease period. Generally, the lease arrangements for land requires Company to make upfront payments at the time of the execution of the lease arrangement with annual recurring charges with escalations in annual lease rentals.

39.2.2 Payments recognized as an expense

The Company has adopted Ind AS 116 ‘Leases’ effective April 1, 2019 and wherever the lease is short term lease, lease for low value assets or having variable lease payments are not included in lease liabilities.

39.2.3 Non-cancellable operating lease commitments

The Company does not have any non-cancellable lease arrangements.

40 Employee Benefits :

Pursuant to the scheme of Amalgamation (‘the Scheme’) approved by the Ministry of Corporate Affairs (MCA) vide its order No. 24/3/2021-CL-III dated April 14, 2022, during the current financial year, Human Resource (HR) integration of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) with the company is carried out w.e.f May 1, 2022 (effective date of the scheme). Consequently, during current financial year, the Employee Benefit Expenses including Actuarial valuation is accounted in the books of accounts factoring the financial implication on integrated basis.

During the current financial year, pursuant to HR Integration of erstwhile subsidiary company OMPL (Aromatics Complex) with the company, Employer’s contribution including Aromatics Complex have been paid to Superannuation Fund with effect from the effective date of HR integration i.e. w.e.f May 1, 2022.

* Previous year figure includes contribution to Superannuation for erstwhile subsidiary company OMPL for A 16.79 million.

For previous financial year the contribution for the company towards provident fund was recognized under “Other Long Term Benefits” whereas contribution made by erstwhile subsidiary company OMPL was recognized under “Defined Contribution Plan”.

# During the current financial year, the Company has contributed to MRPL Provident Fund Trust upto December 31, 2022 and from January 1, 2023 onwards contributions were made to EPFO.

* Previous year figure includes contribution to Provident Fund for erstwhile subsidiary company OMPL for A 35.77 million and out of which A 1.08 million recognized towards key management personnel.

A brief description on Provident Fund is as follows:

(a) Provident Fund is governed through a separate trust established for this purpose in accordance with The Employee Provident Fund and Miscellaneous Provisions Act, 1952. The Company’s contribution to the Provident Fund is remitted to this trust based on a fixed percentage of the eligible employee’s salary and charged to Statement of Profit and Loss upto December 31, 2022. The Board of trustees of the Trust functions in accordance with any applicable guidelines or directions that may be issued in this behalf from time to time by the Central Government or the Central Provident Fund Commissioner. The board of trustees have the following responsibilities :

i. The investments shall be made in accordance with the pattern of investment prescribed by the Government of India in Rule 67 of Income Tax Rules, 1962, and /or directions given by the Central Government, from time to time.

ii. The Board of Trustees may raise such sum or sums of money as may be required for meeting obligatory expenses such as settlement of claims, grant of advances as per rules, and transfer of member’s P.F. accumulations in the event of his / her leaving service of the Employer and any other receipts by sale of the securities or other investments standing in the name of the Fund subject to the prior approval of the Regional Provident Fund Commissioner.

iii. Fixation of rate of interest to be credited to members’ accounts.

(b ) During the current financial year, pursuant to HR Integration of erstwhile subsidiary company OMPL with

the company, the entire Employer’s contribution have been paid to the Provident Fund Trust managed by the company except for the employees of OMPL for the month of April 2022 which was remitted to EPFO.

(c) Based on the request from the Board of Trustees of Provident Fund of MRPL and also by the Company, EPFO has issued the order dated December 12, 2022, stating that the exemption granted to the establishment stands surrendered w.e.f December 31, 2022 and the company has to report the compliances as un-exempted establishment with effect from January 2023. Accordingly, from January 2023 onwards the company has started remitting the contribution towards the Provident Fund to EPFO along with the applicable administrative charges thereon . The Trustees of the Provident Fund of MRPL are in the process of surrending the entire fund and securities along with the relevant records thereof to EPFO.

(d) Under the Statute, the shortfall, if any, in the interest obligation in comparison to minimum rate of return declared by Government of India will have to be made good by the Employer and therefore, for the current financial year upto December 31, 2022 an amount of A Nil million (Year ended March 31, 2022 A 82.21 million) has been provided and charged to Statement of Profit and Loss. As on December 31, 2022, the Trust investments included few Non-convertible Debentures of certain companies amounting to A 245.30 million (Year ended March 31, 2022 A 295.30 million) which have witnessed default in meeting interest obligations from financial year 2020-21 upto December 31, 2022. In anticipation of probable default in principal repayment, Provident Fund Trust had marked down these investments by 70% in its books in

financial year 2020-21, which continues to be the true and fair valuation as of31.12.2022 as per management assessment. Thus, no additional provision (Year ended March 31, 2022 A Nil million) is warranted during this financial year.

Purusant to surrendering of PF Trust during the current year, interest shortfall provided during year ending March 31, 2022 amounting to A 220.41 millions on account of differential value of plan assets arising out of Actuarial valuation has been written back during the current year as the payment of future interest obligation rests with EPFO on account of surrendering of the exemption granted by EPFO.

40.1.2 Defined benefit plans

40.1.2.1Brief Description: A general description of the type of Defined benefit plans are as follows:

a) Gratuity:

15 days salary for every completed year of service. Vesting period is 5 years and the payment is restricted to A 2 million. Besides the ceiling of gratuity increase by 25% whenever IDA rises by 50%.

The MRPL Gratuity Fund Trust was formed on April 20, 2007 and investments of the funds received from the company after actuarial valuation and the investment of the funds upto June 28, 2013 was made in the manner prescribed by Income tax Rule 67(1) of the Income Tax Rules ,1962 as amended from time to time.

The Funds of MRPL Gratuity Fund Trust after June 28, 2013 are being invested in Group Gratuity Cash Accumulation Scheme (Traditional Fund) of various insurance companies.

The gratuity provision for erstwhile subsidiary company OMPL was unfunded and consequent to the HR Integration with the company during the current financial year, the same has now been classified as funded in line with the policy followed by the company.

b) Post-Retirement Medical Benefits:

After retirement, on payment of one time lump sum contribution, the superannuated employee and his/her dependent spouse and dependent parents will be covered for medical benefit as per the rules of the Company. During the current financial year, pursuant to HR Integration, employees of erstwhile subsidiary company OMPL are also being covered under Post Retirement Medical Benefit scheme of the Company.

c) Resettlement :

At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Settlement Allowance.

During the current financial year, pursuant to HR Integration, employees of erstwhile subsidiary company OMPL are also being covered under the Resettlement Allowance benefits of the Company.

In respect of the plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2023 by a member firm of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method. The liabilities for Defined Benefit Plans are recognized and charged to Statement of Profit and Loss.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

40.2 Other long term employee benefits

40.2.1 Leave encashment

A brief description on Leave encashment are as follows:

a) Earned Leave Benefit (EL):

Accrual - 32 days per year Accumulation up to 300 days allowed

EL accumulated in excess of15 days is allowed for encashment while in service provided the EL encashed is not less than 5 days.

b) Half Pay Leave (HPL)

Accrual - 20 days per year Encashment while in service is not allowed

Encashment on retirement is permitted; restricted up to 300 days along with Earned leave.

The liability for above leaves (a & b) are recognized on the basis of actuarial valuation.

40.3 Termination Benefits :

40.3.1 Premature Retirement on Medical Grounds

The Company has an approved scheme of Premature Retirement on Medical Grounds. Ex-gratia payment equivalent 60 days emolument for each completed year of service or the monthly emoluments at the time of retirement multiplied by the balance months of service left before normal date of retirement, whichever is less is payable apart from Superannuation Benefits.

40.3.2 Scheme for Self Insurance for providing lump-sum monetary compensation

Under the scheme of ‘Post Retirement Benefit and Benefit on Separation’, in case of employee suffering death or permanent total disablement due to an accident arising out of and in the course of employment, a compensation equivalent to 100 months Basic Pay plus Dearness Allowance (DA) without laying down any minimum amount is payable.

40.3.3 Benefits of Separation under SABF (re-nomenclatured now as MDCPS)

In case of death / permanent disablement of an employee while in service in the Company, the beneficiary has to exercise desired options available within 6 months from the date of death / permanent total disablement

40.3.4 Terminal benefits are unfunded plans, and no plan assets are involved.

40.3.5 Termination Benefits are charged to Statement of Profit and Loss as and when incurred.

41 Segment Reporting

The Company has “Petroleum Products” as single reportable segment.

41.1 Information about major customers

Company’s significant revenues are derived from sales to oil marketing companies which is 57% and 52% of the Company’s sales related to petroleum products for the year ending March 31, 2023 & March 31, 2022 respectively. The total sales to such companies amounted to A 7,04,816.95 million for the year ended March 31, 2023 and A 4,51,302.90 million for the year ended March 31, 2022.

No customer (excluding oil marketing companies mentioned above) for the years ended March 31, 2023 and March 31, 2022 contributed 10% or more to the Company’s revenue.

The above transactions with the government related entities cover transactions that are significant individually and collectively. The Company has also entered into other transactions such as telephone expenses, air travel, fuel purchase and deposits etc. with above mentioned and other various government related entities. These transactions are insignificant individually and collectively and hence not disclosed.

42.3.4 Relationship, transactions and outstanding balances with ONGC, HPCL, PMHBL, ONGC Nile Ganga BV, OPAL and ONGC Videsh Ltd. have been disclosed in Noe 42.21 to 42.2.8 above.

43 Financial instruments43.1 Capital Management

The Company’s objective when managing capital is to safeguard its ability to continue as going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders; and maintain an optimal capital structure to reduce the cost of capital.

The Company maintains its financial framework to support the pursuit of value growth for shareholders, while ensuring a secure financial base. In order to maintain or adjust the capital structure, the Company may vary the distribution of dividends to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The capital structure of the Company consists of net debt (borrowings as detailed in note 22 offset by cash and bank balances) and total equity of the Company.

The Company’s management reviews the capital structure of the Company on quarterly basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital requirements and maintenance of adequate liquidity.

43.2.1 Investment in Joint Venture has not been disclosed above as these are measured at cost less impairment, if any.

43.3 Financial risk management objectives

The Company’s Risk Management Committee monitors and manages key financial risks relating to the operations of the Company by analysing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

43.4 Market Risk

Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. The major components of market risk are foreign currency exchange risk and interest rate risk.

43.6 Interest rate risk management

The Company has availed borrowings at fixed and floating interest rates, hence is exposed to interest rate risk. The Company has not entered into any of the interest rate swaps and hence the Company is exposed to interest rate risk.

Interest rate sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate borrowings, the analysis is prepared assuming the amount of the borrowings outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used for disclosing the sensitivity analysis.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company’s profit for the year ended March 31, 2023 would decrease/increase by A 480.79 million (for the year ended March 31, 2022 : decrease/increase by A 677.74 million). This is mainly attributable to the Company’s exposure to interest rates on its variable rate borrowings (considered on closing balance of borrowings as at year end).

43.7 Credit risk management

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from cash and cash equivalents, deposits with banks as well as customers including receivables. Credit risk management considers available reasonable and supportive forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate etc.).

Major customers comprise of public sector undertakings (Oil Marketing Companies - OMCs) having highest credit ratings and carry negligible credit risk. Concentration of credit risk to any other counterparty did not exceed 10% of total monetary assets at any time during the year.

Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.

43.8 Liquidity risk management

The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due. Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios. The Company manages liquidity risk by maintaining adequate cash & credit lines and continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.

In respect of all these claims, it is being contested by the Company as not admissible. It is not practicable to make a realistic estimate of the outflow of resource, if any, for settlement of such claim, pending resolution / award from Arbitrators/ Court.

45.2 Disputed tax / Duty demands pending in appeal as at 31st March,2023

45.2.1 Income Tax: A 198.62 million as at March 31,2023 (As at March 31, 2022 A 224.05 million). Against this A 9.00 as at March 31,2023 (As at March 31, 2022 A Nil) is pre-deposit / paid under protest and is included under tax assets/ liability [refer note 14].

45.2.2 Excise Duty: A 11,077.05 million as at March 31,2023 (As at March 31, 2022 A 10,581.06 million). Against this A 185.89 million as at March 31,2023 (As at March 31, 2022 A 185.89 million) is predeposit / paid under protest and is included under other assets [refer note 15].

45.2.3 Customs Duty: A 1,039.34 million as at March 31,2023 (As at March 31, 2022 A 996.28 million). Against this A 379.40 million as at March 31,2023 (As at March 31, 2022 A 378.71 million) is adjusted / paid under protest and is included under other assets [It excludes the amount mentioned at 45.2.4] [refer note 15].

45.2.4 There is a claim from the custom department for customs duty amounting to A 2,121.14 million as at March 31,2023 (As at March 31, 2022 A 2,121.14 million) along with applicable interest and penalties totally amounting to A 6,168.37 million as at March 31,2023 (As at March 31, 2022 A 6,168.37 million) in respect of classification of tariff of the reformate for the purpose of payment of import duty. An appeal

has been filed before the Appellate Authority contesting the entire demand. Pending outcome of the appeal proceedings, no provision for the said demand has been made in the books [refer note 15].

45.3 Others :

As informed by a vendor company, there is a claim from the Deputy Commissioner of Commercial Tax (CT) amounting to A 4,359.27 million as at March 31,2023 (As at March 31, 2022 A 4,117.01 million) against which a writ petition has been filed by them before Hon’ble Karnataka High Court . In terms of the contract entered with the vendor company, the said liability as and when reaches finality is to be discharged by the company on back to back basis.

45.4 Contingent Asset :

An amount of A 95.28 million as at March 31, 2023 (As at March 31, 2022 A 95.28 million) earmarked by MSEZL as third party share payable to the company towards pipeline-cum-road corridor usage which is not considered in the current period, as the same has not been finalized pending freezing of the project cost of pipeline corridor project.

46 Commitments46.1 Capital Commitments:

46.1.1 The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as at March 31, 2023 A 4,461.45 million (As at March 31, 2022 A 3,069.74 million).

46.1.2 The Company has requested KIADB for an allotment of 1,050 acres of land for Phase IV expansion. The balance capital commitment in this regard is around A 6,407.14 million (As at March 31,2022 A 6,407.14 million).

46.2 Other Commitments

46.2.1 Pending commitment on account of Refinery-MRPL is in possession of certain land provisionally measuring 36.69 acres ceded by HPCL for use by MRPL Phase III expansion and upgradation work .The consideration for such land is mutually agreed to be by way of swapping of land in possession of MRPL/HPCL. The final documentation in this regard is pending to be executed.

46.2.2 Pending commitment on account of Refinery performance improvement programme by M\s.Shell Global International Solution (M\s.Shell GIS) as at March 31, 2023 is USD Nil million net of advance (As at March 31, 2022 USD 1.46 million net of advance).

46.2.3 Pending commitments on account of Corporate Environment Responsibility (CER) and Enterprise Social Commitment (ESC) as at March 31, 2023 A 755.23 million (As at March 31, 2022 A 758.79 million).

47 Reconciliation of liabilities arising from financing activities.

The table below details change in the Company’s liabilities arising from financing activities, including both cash and non cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Company’s Statement of Cash Flows as cash flows from financing activities.

From the current financial year the Company has identified and reported the shareholders whose name has been struck off by the Registrar of Companies.

48.6 No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions Prohibitions Act, 1988 and the rules thereunder as at March 31, 2023 and March 31, 2022.

48.7 The Company has not been declared a wilful defaulter by any bank or financial institution or other lender as at March 31, 2023 and March 31, 2022.

48.8 All charges or satisfaction have been registered with Registrar of Companies (RoC) within the statutory period as at March 31, 2023 and March 31, 2022.

48.9 The requirement of number of layers as prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable to the Company.

48.10 The company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken as at March 31, 2023 and March 31, 2022.

48.11 The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (ultimate beneficiaries) or provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

48.12 The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding party) with the understanding (whether recorded in writing or otherwise) that the company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

48.13 The Company did not have any transaction which was not recorded in the books of accounts that has been surrendered or disclosed as income during the previous year in the tax assessments under the Income Tax Act, 1961.

48.14 The Company has not traded or invested in Crypto currency or virtual currency during the year ended March 31, 2023 and year ended March 31, 2022.

48.15 The Company has complied with the approved Scheme(s) of Arrangements.

50 Integration of Human Resouse of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited:

Pursuant to the scheme of Amalgamation (‘the Scheme’) approved by the Ministry of Corporate Affairs (MCA) vide its order No. 24/3/2021-CL-III dated April 14, 2022, during the current financial year, Human Resource (HR) integration of erstwhile subsidiary company ONGC Mangalore Petrochemicals Limited (OMPL) with the company is carried out w.e.f May 1, 2022 (effective date of the scheme). Consequently, during current financial year, the Employee Benefit Expenses including Actuarial valuation is accounted in the books of accounts factoring the financial implication on integrated basis.

Subsequently, the management grade employees of erstwhile subsidiary company OMPL represented the matter before Honourable High Court of Karnataka with regard to their salary and grade fixation and the matter is subjudice.

Furthermore, the memorandum of settlement with respect to non-management employees of erstwhile subsidiary company OMPL is under negotiation and yet to be concluded. Necessary provision on estimated basis towards the financial implication on account of the settlement has been duly considered in the books of accounts.

51 The Company also operates in special economic zone (SEZ) in Mangalore, accordingly is eligible for certain economic benefits such as exemptions from GST, custom duty, excise duty, service tax , value added tax, entry tax, etc. which are in the nature of government assistance. These benefits are subject to fulfilment of certain obligations by the Company.

52 The Company has a periodic system of physical verification of Inventory, Property, Plant and Equipment and capital stores in a phased manner to cover all items over a period. Adjustment differences, if any, is carried out on completion of reconciliation.

53 The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

54 Some balances of trade and other receivables, trade and other payables and loans are subject to confirmation/reconciliation. Adjustments, if any, will be accounted for on confirmation/reconciliation of the same, which will not have a material impact.

55 During FY 2021-22, company was awarded with 87,748 Nos of Energy Saving Certificates (EScerts) from Bureau by Energy Efficiency (BEE) as part of “Perform, Achieve and Trade” (PAT) scheme, India for achieving reduction in Specific Energy Consumption above targets set by them for the performance during FY 2018-19. These can be redeemed to meet Refinery’s own shortfall (if any) or can be used as tradable certificates which can be sold through power exchanges in future periods. As per formula prescribed by Hon’ble Ministry of Power for determining the floor price, the calculated floor value of the ESCerts worksout to Rs. 161.47 million. The Company intends to redeem the ESCerts only to meet refineries own shortfall (if any) based on Monitoring & Verification to be conducted in future and hence the same has not been carried in inventory as at March 31, 2023.

56 The number of independent directors during previous financial years were less than the minimum number of Independent Directors required in terms of the provisions of the Listing Agreement and the Companies Act, 2013 and composition of the Board Level Committees viz., Audit Committee, Nomination & Remuneration Committee and Risk Management Committee. Consequently penalty for the said noncompliances was levied by both BSE and NSE for an amount of A 10.88 million and A 8.80 million

respectively upto December 2022. The company being a Central Public Sector Enterprise (CPSE), the nomination of Directors on the Board of the Company is made by the Administrative Ministry of the company, i.e. Ministry of Petroleum and Natural Gas (MoP&NG), Government of India (GoI). The company has been continuously following up with MoP&NG for appointment of requisite number of Independent Directors on the Board. MoP&NG has appointed 4 (Four) independent directors during 2021-22 which enabled the Company to comply with regard to only composition of above referred Committees. Further the Policy for exemption of fines, which provides for waiver/ reduction of penalty in case of inability of the Company to make any appointment on the Board due to pending approval from the Government (Ministry) / Regulator or any statutory Authority. In view of the above, the Exchanges were requested by the company to waive off the fine citing the above fact and subsequently based on the request by the company, BSE waived fines up to December, 2020 under Regulation 17(1), 18(1), 19(1) & 21(1) of SEBI (LODR), Regulations, 2015 and NSE from December 2020 to March 2022 under Regulation 18(1), 19(1) & 21(1) of SEBI (LODR), Regulations, 2015 for an amount of A 3.29 million and A 2.17 million, respectively. For the balance amount of A 7.58 million and A 6.63 million levied by BSE and NSE, waiver is expected.

57 The Company has assessed the possible effect that may result from Russia-Ukraine War, which is not significant on the carrying amounts of Property, Plant and Equipment, Inventories, Receivables and Other Current Assets. In the opinion of the management, the carrying amount of these assets will be recovered.

58 Figures in parenthesis as given in these notes to financial statements relate to previous years. Previous year figures have been regrouped wherever required.

59 Approval of financial statements

The financial statements were approved for issue by the Board of Directors on April 28, 2023.