ADDITIONAL INFORMATION IN RESPECT OF NOTE NOS. 2 TO 6:

a) Freehold land includes ' 2.20 Crores (Previous year ' 2.20 Crores) which, not being in the Corporation’s possession and being under dispute, has been provided for in books of accounts.

b) Buildings include Ownership Flats having gross block of ' 44.94 Crores (Previous year ' 44.79 Crores) in proposed / existing co-operative societies and others.

c) The Corporation has elected to continue the policy adopted under Previous GAAP for accounting the foreign exchange differences arising on settlement or translation of long-term foreign currency monetary items outstanding as of 31^st March 2016 i.e. foreign exchange differences arising on settlement or translation of longterm foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset. Accordingly, “Other adjustments” include capitalization of foreign exchange differences (net) of ' 617.46 Crores (Previous year ' 236.41 Crores).

d) Additions include capitalization of borrowing costs of ' 0.97 Crores (Previous year ' 264.83 Crores).

e) Freehold Land, Plant and Equipment, Tanks and Pipelines, Railway Sidings, Buildings etc. jointly owned in varying extent with other Oil Companies / Railways / Port Trust: Gross Block ' 935.56 Crores (Previous year ' 925.59 Crores), Cumulative Depreciation ' 163.56 Crores (Previous year ' 126.59 Crores), Net Block ' 772.00 Crores (Previous year ' 799.00 Crores).

f) During the year, useful life of certain assets which have been constructed by the Corporation at Railway Consumer Depots have been reviewed and changed in line with terms and conditions of agreement with Railways resulting in increase in depreciation by ' 29.79 Crores.

g) Certain Long-term borrowings are secured by first charge ranking pari passu on all Property, Plant and Equipment (immovable and movable), both present and future of erstwhile Bharat Oman Refineries Limited (BORL). (Refer Note No. 25).

h) Compensation from third parties in respect of items of Property, Plant and Equipment / Capital work in progress that were impaired, lost or given up during the year included in Statement of Profit and Loss is ' 22.62 Crores (Previous year ' 3.49 Crores).

i) Gross Block Reclassifications / Deductions on account of Retirement / Disposal includes:

i) On account of retirement / disposal during the year ' 864.81 Crores (Previous year ' 602.41 Crores)

ii) Assets classified as held for sale ' 106.66 Crores (Previous year ' 39.49 Crores)

iii) Decapitalization of ' 62.80 Crores (Previous year ' 33.86 Crores)

iv) Deduction on account of reclassifications during the year ' 0.68 Crores (Previous year ' 1.69 Crores).

j) Depreciation and amortization for the year is ' 6,375.68 Crores (Previous year ' 5,429.09 Crores) from which, after reducing -

i) Depreciation on decapitalization of ' 11.36 Crores (Previous year ' 4.62 Crores),

ii) Depreciation on reclassification of assets of ' 16.84 Crores (Previous year ' 0.78 Crores), and

iii) Depreciation on account of Business Combination of Nil (Previous year ' 5.79 Crores) [Refer Note

No. 44], the Net Depreciation and amortization for the year charged to Statement of Profit and Loss is

' 6,347.48 Crores (Previous year ' 5,417.90 Crores).

k) Deduction from accumulated depreciation on account of retirement / disposal / reclassifications during the year is ' 845.29 Crores (Previous year ' 256.40 Crores).

l) The Corporation has assessed the useful life of Right of Way as indefinite where the same is perpetual in nature.

m) During the year, Right of Way (upto 99 years) has been reclassified from Other intangible assets to Property, Plant and Equipment (Right of use assets) considering land taken on Right of Way basis as an identified asset for the purpose of Ind AS 116 Leases.

n) The Residual value of LPG cylinders and Pressure Regulators (other than Composite LPG Cylinders) have been estimated at 25% of the original cost (Previous Year at 15% of the original cost) based on the historical experience and internal technical assessment. The change in residual value has resulted in decrease in depreciation by ' 103.82 Crores for FY 2022-23 and similar impact in future years over remaining useful life.

NOTE 44 BUSINESS COMBINATIONS UNDER COMMON CONTROL

(A) Bharat Oman Refineries Limited (BORL)

BORL was incorporated in 1994 as a Joint Venture between the Corporation and OQ S.A.O.C. (formerly known as Oman Oil Company S.A.O.C.). BORL was mainly engaged in the business of refining crude oil to produce and supply various petroleum products.

The Corporation held 63.38% stake in BORL (i.e. 1,53,82,16,114 Equity Shares) as on 1^st April 2021 and additionally acquired balance 36.62% of Equity Shares (i.e. 88,86,13,336 equity shares) in BORL vide a Share Purchase Agreement (SPA) with Joint Venture Partner OQ S.A.O.C. (formerly known as Oman Oil Company S.A.O.C.) (“OQ”) on 30^th June 2021, for a consideration of ' 2,399.26 Crores. By way of this transaction, BORL became wholly owned subsidiary of the Corporation.

Further, the Corporation acquired the remaining share warrants of BORL, held by Government of Madhya Pradesh, for a consideration of ' 72.65 Crores (including Stamp Duty).

As per the requirement of Ind AS 103, the Corporation, in the Consolidated Financial Statements for FY 2021-22, has recognised a gain on remeasurement of Investment held prior to above acquisition of ' 1,720.13 Crores as an Exceptional Item and Goodwill of ' 1,203.98 Crores on account of change in control.

Subsequently, the Board of Directors of the Corporation, at their meeting held on 22^nd October 2021 approved the Scheme of Amalgamation (BORL Scheme) for merger of BORL with the Corporation. Application seeking approval of the BORL Scheme was subsequently filed with Ministry of Corporate Affairs, New Delhi. The copy of order sanctioning the BORL Scheme was received by the Corporation on 22^nd June 2022 and upon filing the same with Registrar of Companies on 1^st July 2022, BORL stands merged with the Corporation. The BORL Scheme has become effective from the appointed date of 1^st October 2021.

(B) Bharat Gas Resources Limited (BGRL)

BGRL was incorporated in 2018 as a Wholly Owned Subsidiary of the Corporation with the main objective of carrying activities relating to the gas business. BGRL was engaged in City Gas Distribution (CGD) business, supplying natural gas to CGD market segments i.e., CNG Domestic, PNG Domestic, CNG Industrial/Commercial and PNG Industrial/ Commercial.

The Board of Directors of the Corporation, at its meeting held on 22^nd March 2021, approved the Scheme of Amalgamation (BGRL Scheme) for merger of BGRL with the Corporation. Application seeking approval of the BGRL Scheme was subsequently filed with Ministry of Corporate Affairs, New Delhi. The copy of order sanctioning the BGRL Scheme was received by the Corporation on 8^th August 2022 and upon filing the same with Registrar of Companies on 16^th August 2022, BGRL stands merged with the Corporation. The BGRL Scheme has become effective from the appointed date of 1^st April 2021.

(C) Impact of Business Combinations

The Corporation has recorded all the assets, liabilities and reserves of BORL and BGRL vested in it pursuant to the respective merger schemes by applying the principles as set out in Appendix C of IND AS 103 ‘Business Combinations’ and prescribed under Companies (Indian Accounting Standards) Rules, 2015 issued by the Institute of Chartered Accountants of India. Accordingly, the Standalone Financial Statements for FY 2021-22 of the Corporation have been restated, on account of BORL merger from the date of obtaining control i.e. 30^th June 2021 and on account of BGRL merger from the beginning of the preceding financial year i.e. 1^st April 2021. The effect of BORL merger & BGRL merger (“Mergers”) on the Financial Statements for FY 2021-22 of the Corporation, is as shown below:

As per the scheme of amalgamation of the erstwhile Kochi Refineries Limited (KRL) with the Corporation approved by the Government of India, 3,37,28,737 equity shares of the Corporation were allotted (in lieu of the shares held by the Corporation in the erstwhile KRL) to a Trust (“BPCL Trust for Investment in Shares”) for the benefit of the Corporation in the Financial Year 2006-07. Pursuant to the Bonus Shares issuances by the Corporation, “BPCL Trust for Investment in Shares” held 20,23,72,422 equity shares of the Corporation as at 1^st April 2020.

During FY 2020-21, Corporation had announced BPCL Employee Stock Purchase Scheme (ESPS) 2020 and created “BPCL ESPS Trust” for the purpose of acquiring shares for allotting to eligible employees. Accordingly, “BPCL ESPS Trust” had purchased 4,33,79,025 Equity shares from “BPCL Trust for Investment in Shares” in October 2020. The proportionate cost of “BPCL Trust for Investment in Shares” was recognized as cost of shares held by “BPCL ESPS Trust”.

Further, during FY 2020-21, 12,60,33,090 Equity Shares were sold from ”BPCL Trust for Investment in Shares” via Bulk Deal on Stock Exchange for Net Consideration of ' 5,511.79 Crores. Accordingly, Securities Premium of ' 5,101.31 Crores was recognized after adjusting the corresponding cost of ' 410.48 Crores (including Face Value of Equity Shares of ' 126.03 Crores) under Total Equity.

During FY 2021-22, Corporation allotted 3,65,42,077 shares to eligible employees on exercise of options by employees under BPCL Employee Stock Purchase Scheme (ESPS) 2020. Accordingly, Securities Premium of ' 1,204.88 Crores was recognized after adjusting the corresponding cost of ' 119.01 Crores (including Face Value of Equity Shares of ' 36.54 Crores) under Total Equity.

Consequent to the above, “BPCL ESPS Trust” and “BPCL Trust for Investment in Shares” held 68,36,948 and 3,29,60,307 equity shares of the Corporation respectively as at 31^st March 2022. During FY 2022-23, there were no further movements in the shares held by these trusts.

The cost of the original investment together with the additional contribution to the corpus of above trusts have been reduced from “Paid-up Share Capital” to the extent of face value of the shares and from “Other Equity” under separate reserves for the balance amount. The income received from “BPCL Trust for Investment in Shares” and the impact on consolidation of “BPCL ESPS Trust” has been recognized directly under “Other Equity”.

The Corporation has numerous transactions with other oil companies. The outstanding balances (included under Trade Payables / Trade Receivables, etc.) to/ from them and certain other outstanding credit and debit balances are subject to confirmation/ reconciliation. Adjustments, if any, arising therefrom are not likely to be material on settlement and are accounted as and when ascertained.

NOTE 47

Cabinet Committee of Economic Affairs (CCEA) Government of India, in its meeting held on 20^th November 2019, had accorded in-principle approval for strategic disinvestment of Government of India’s Shareholding in the Corporation. Vide its letter dated 3^rd June 2022, the Government of lndia conveyed the decision of Alternative Mechanism to call off the present process for strategic disinvestment of the Corporation. Accordingly, all the activities in connection with the disinvestment process have been discontinued at the Corporation’s end.

NOTE 48 SERVICE CONCESSION ARRANGEMENTS

The Corporation has entered into service concession arrangements with entities supplying electricity (“The Regulator”) to construct, own, operate and maintain a wind energy based electric power generating station (“Plant”).

Under the terms of agreement, the Corporation will operate and maintain the Plant and sell electricity generated to the Regulator for a period which covers the substantial useful life of the Plant which may be renewed for such further period as may be mutually agreed upon between the parties. The Corporation will be responsible for any maintenance services during the concession period.

The Corporation in turn has the right to charge the Regulator agreed rate as stated in the service concession arrangement.

The fair value towards the construction of the Plant has been recognized as an Intangible Asset and is amortized over the useful life of the asset or period of contract whichever is less.

[A] Post Employment Benefit Plans:

Defined Contribution Scheme

Defined Contribution Scheme (DCS) was introduced effective 1^st January 2007 and a defined percentage of the salary of eligible employees out of their total entitlements on account of superannuation benefits is contributed by the Corporation towards the same. A portion of upto 10% of the salary of the eligible employees is currently being contributed to GOI managed PFRDA (Pension Fund Regulatory and Development Authority) National Pension Scheme (NPS) and the balance is being contributed to separate Trusts managed by the Corporation.

Gratuity:

The Corporation has a Defined Benefit Gratuity plan managed by a Trust. Trustees administer the contributions made to the Trust, investments thereof etc. Based on actuarial valuation, the contribution is paid to the trust which is invested in plan assets as per the investment pattern prescribed by the Government. Gratuity is paid to a staff member who has put in a minimum qualifying period of 5 years of continuous service, on superannuation, resignation, termination or to his nominee on death.

Other Defined Benefits include:

(a) Post Retirement Medical Scheme (managed by a Trust) for eligible employees, their spouse, dependent children and dependent parents;

(b) Pension / Ex-Gratia scheme to the retired employees who are entitled to receive the monthly pension / ex-gratia for life;

(c) Death in service / Permanent Disablement benefit given to the spouse of the employee / employee, provided the deceased’s family / disabled employee deposits with the Corporation, retirement dues such as Provident Fund, Gratuity, Leave Encashment etc., payable to them;

(d) Resettlement allowance paid to employees to permanently settle down at the time of retirement;

(e) Felicitation benefits to retired employees on reaching the age related milestones; and

(f) The Corporation makes contribution towards Provident Fund, which is administered by the trustees. The Corporation has an obligation to fund any shortfall on the yield of the trust’s investments over the interest rates declared by the Government under EPF scheme.

These defined benefit plans expose the Corporation to actuarial risks, such as longevity risk, interest rate risk, and market (investment) risk.

The Corporation’s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employees’ salary and charged to Statement of Profit and Loss. Shortfall, if any, in the fund’s revenues based on the EPFO specified rate of return, will need to be made good by the Corporation and is charged to Statement of Profit and Loss. The actual return earned by the fund has been higher than the EPFO specified minimum rate of return in most of the earlier years. During FY 2022-23, subsequent to the merger of Bharat Oman Refineries Limited (BORL) with the Corporation, provident fund contributions of employees of erstwhile BORL, which were earlier deposited with the Regional Provident Fund Commissioner (RPFC), are now being remitted to Provident Fund Trust managed by the Corporation.

During FY 2022-23, settlement of certain defaulted securities (against which provisions were created in earlier periods) were completed. Accordingly, the provision as on 31^st March 2023 is ' 94.17 Crores (' 124.00 Crores as on 31^st March 2022). Against the provision, the advance given by the Corporation to the Trust stands at ' 88.73 Crores as on 31^st March 2023 (' 124.00 Crores as on 31^st March 2022). The Fund balance is sufficient to meet the fund obligations as on 31^st March 2023 and 31^st March 2022.

NOTE 55 SHARE BASED PAYMENT

(a) Employee Option Plan

The Corporation had floated an Employee Stock Purchase Scheme (“BPCL Employee Stock Purchase Scheme-2020” or “Scheme” or “ESPS”) on 28^th September 2020 (Grant Date) after taking Shareholders’ approval on that date, giving the background of proposed disinvestment by the Government of India (“GOI”). As a recognition of contribution of employees in growth of the Corporation and increase in shareholders’ value, the Scheme as a primary objective seeks to reward eligible employees for their loyalty/longevity with the Corporation. The Scheme also covered the employees who had opted for Voluntary Retirement Scheme (VRS) during FY 2020-21.

As per Vesting Condition of the Scheme, the employee had to render services till the date of share transfer or retirement (including VRS) or Death in Service whichever is earlier. In view of the above, the Scheme was accounted as Employee Stock Option Scheme, in line with the applicable Ind AS.

Each option converted into one equity share of the Corporation upon exercise. No amounts were paid or payable by the recipient on receipt of the option. The options carried neither rights to dividends nor voting rights. These options were vested and exercised on 20^th April 2021. All options which remained unexercised during FY 2021-22 have lapsed.

The share-based payments (options) to employees being equity-settled instruments were measured at the fair value of the equity instruments of the Corporation at the grant date. The fair value determined at the grant date of the equity-settled share-based payments was expensed on a straight-line basis over the vesting period, based on the Corporation’s estimate of equity instruments that will eventually vest, with a corresponding increase in Total Equity.

NOTE 56 IMPAIRMENT OF ASSETS

The Corporation assesses at each reporting date, whether there is an indication for impairment of assets. The Corporation takes into consideration external and internal sources of information available about the asset to check whether any indication for impairment exists. If any such indication exists, the Corporation estimates the recoverable amount of the asset. The recoverable amount is the higher of an asset’s fair value less cost of disposal and value in use. The value in use is assessed based on the estimated future cash flows which are discounted to their present value using the discount rate that reflects the time value of money and risk specific to the assets for which the future cash flows estimates have not been adjusted. An impairment loss is recognized in the Statement of Profit and Loss to the extent asset’s carrying amount exceeds its recoverable amount.

Based on the assessment, there is no indication of impairment of assets except for the Corporation’s investment in subsidiary company Bharat PetroResources Limited (BPRL). The gross carrying value of investment in BPRL as of 31^st March 2023 is ' 9,601.37 Crores. BPRL is an upstream company and is having investments in Oil and Gas Blocks globally and in India, either directly or through its Subsidiaries (including step down Subsidiaries), Joint ventures and Associates. During the current financial year, BPRL has impaired investments in its subsidiary company due to change in prospects of its blocks. Accordingly, impairment testing was carried out on equity investment made by the Corporation in BPRL and an impairment loss of ' 1,359.96 Crores has been recognized based on the value in use of assets as on 31^st March 2023. Such impairment loss is shown as an exceptional item in Statement of Profit and Loss for the year ended 31^st March 2023. The accumulated impairment loss on investments in BPRL as of 31^st March 2023 is ' 3,392.75 Crores.

During the previous year, an impairment provision of ' 14.08 Crores was created on investment in one of the associate companies [GSPL India Transco Limited], which is shown under other expenses.

*The above expenditure includes contribution to funds, expenses through registered trusts / registered society, company established under Section 8 of the Companies Act, 2013 and direct expenses towards implementation of CSR activities by the Corporation. Further, the expenditure in FY 2022-23 includes amount of ' 36.24 Crores which was spent in excess of requirements under Companies Act, 2013 in the earlier financial years by erstwhile BORL and is available for set off against the CSR Obligation.

#Includes payables of ' 8.75 Cr (Previous year: ' 8.15 Cr)

@The opening balance of ' 45.96 Crores for FY 2022-23 includes ' 39.40 Crores for FY 2021-22 and ' 6.56 Crores for FY 2020-21 which were transferred to separate bank accounts on 29^th April 2022 & 30^th April 2021 respectively. ^AThe closing balance of ' 108.92 Crores as on 31^st March 2023 consists of ' 79.99 Crores for FY 2022-23 transferred to a separate Unspent CSR bank account on 29^th April 2023, ' 24.18 Crores for FY 2021-22 transferred on 29^th April 2022 and ' 4.75 Crores for FY 2020-21 transferred on 30^th April 2021.

Reason for shortfall

The shortfall of ' 108.92 Crores from the stipulated and prescribed spend is on account of delay in certain projects due to certain limitations faced by Implementing Agencies which were beyond their control. However, the shortfall has been earmarked against the specific projects and would be spent as per the provisions of Companies Act, 2013.

Nature of CSR Activity undertaken by the company

The projects which are in alignment with the areas specified under Schedule VII of the Companies Act, 2013 are undertaken by the Corporation. Further, In order to have quantitative & qualitative impact, Corporation has adopted five crores thrust areas viz. Health & Sanitation, Education, Skill development, Environmental sustainability and Community Development.

C. Financial risk management C.i. Risk management framework

The Corporation’s Board of Directors has overall responsibility for the establishment and for overseeing of the Corporation’s risk management framework. The Risk Management Committee of the Board has defined roles and responsibilities, which includes reviewing and recommending the risk management plan and the risk management report for approval of the Board with the recommendation of the Audit Committee. The Corporation has adopted a Risk Management Charter and Policy for self-regulatory processes and procedures for ensuring the conduct of the business in a risk conscious manner.

The Corporation has exposure to the following risks arising from financial instruments :

i. Credit risk ;

ii. Liquidity risk ; and

iii. Market risk C.ii. Credit risk

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s trade and other receivables, cash and cash equivalents and other bank balances, derivatives and debt securities. The maximum exposure to credit risk in case of all the financial instruments covered below is restricted to their respective carrying amount.

(a) Trade and other receivables from customers

Credit risk in respect of trade and other receivables is managed through credit approvals, establishing credit limits and monitoring the creditworthiness of customers to whom the Corporation grants credit terms in the normal course of business.

As at 31^st March 2023 and 31^st March 2022, the Corporation’s retail dealers, industrial and aviation customers accounted for the majority of the trade receivables.

Expected credit loss assessment for Trade and other receivables from customers as at 31^st March 2023 and 31^st March 2022

The Corporation uses an allowance matrix to measure the expected credit losses of trade and other receivables. The loss rates are computed using a ‘Roll Rate’ method based on the probability of receivable progressing through successive stages of delinquency to write off. Roll rates are calculated separately for exposures in different segments based on the following common credit risk characteristics - type of product purchases, type of customers.

(b) PMUY and Other Loans

As per the Government of India’s scheme - Pradhan Mantri Ujjwala Yojana (PMUY), the Corporation has given interest free loans to PMUY customers towards cost of hot plate and 1^st refill, which is to be recovered from the subsidy amount payable to customer when such customers book refill. During the year, the Corporation has recalculated gross carrying amount of the loans at period end at the present value of the estimated future contractual cash flows discounted at the original effective interest rate due to revision in estimates of receipts based on projections of subsidy amount per refill. Accordingly, the gross carrying amount of the loans has been reduced by ' 5.24 Crores (Previous year: ' 367.29 Crores) with a corresponding recognition of expense in the Statement of Profit and Loss. The Corporation assesses the credit risks / significant increases in credit risk on an ongoing basis throughout each reporting period. For determining the expected credit loss on such loans, the Corporation considers the time elapsed since the last refill for determining probability of default on collective basis. Accordingly, the expected credit loss of ' 128.07 Crores (Previous year: ' 88.15 Crores) has been recognized on carrying amount of ' 577.12 Crores (Previous year: ' 642.56 Crores) of PMUY Loans. (Refer Note No. 9 and 18)

(c) Cash and cash equivalents and Other Bank Balances

The Corporation held cash and cash equivalents and other bank balances of ' 2,120.44 Crores at 31^st March 2023 (Previous year: ' 1,450.90 Crores). The cash and cash equivalents are held with bank / financial institution counterparties have good credit ratings/ good market standing. Also, Corporation invests its short term surplus funds in bank fixed deposits, Tri Party Repo etc., which carry lesser mark to market risks for short duration.

(d) Derivatives

The derivatives are entered into with banks, financial institutions and other counterparties with good credit ratings. Further exposures to counter-parties are closely monitored and kept within the approved limits.

(e) Investment in debt securities

Investment in debt instruments mainly include loans to subsidiary, joint venture companies, investment in government securities and debt schemes of mutual fund which do not carry any significant credit risk.

C.iii. Liquidity risk

Liquidity risk is the risk that the Corporation will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

Liquidity risk is managed by Corporation through effective fund management. The Corporation has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Corporation has access to funds from debt markets through Commercial Paper programs, Foreign Currency Borrowings and other debt instruments.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments;

*These Guarantees have been issued by the Corporation in favour of lenders of subsidiaries with respect to borrowings raised by the respective entities.

The above also includes guarantee amount of ' 283.45 Crores (equivalent USD 34.48 Million) [ Previous Year ' 261.35 Crores (equivalent USD 34.48 Million)] towards BPRL Venture Mozambique BV’s pro rata share of drawdown of USD 28.73 Million (as on 31^st March 2023) [USD 28.73 Million (as on 31^st March 2022)] under the project finance arrangement entered into for 2-train 12.88 MMTPA LNG Project in Mozambique Offshore Area 1, Rovuma basin. This project is being partly funded through project finance under which an amount of USD 15.4 Billion has already been finalised. BPCL has provided a Debt Service Undertaking (DSU) to guarantee its pro rata share (i.e. towards BPRL Venture Mozambique BV’s Participating Interest (PI) of 10% in the project) of project finance obligations to any project finance beneficiaries under project financing arrangement, capped at a maximum of USD 1.92 Billion (out of which the draw down was USD 28.73 Million as at 31^st March 2023) (Draw down was USD 28.73 Million as at 31^st March 2022). These guarantee amounts will be payable on default by the concerned entity. As of the reporting date, none of the subsidiaries have defaulted and hence, the Corporation does not have any present obligation to third parties in relation to such guarantees. The bifurcation of contractual cash flows in different years is based on expiry of said guarantees.

C.iv. Market risk

Market Risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises four types of risk: currency risk, interest rate risk, commodity risk and other price risk.

C.iv.a Currency risk

The Corporation is exposed to currency risk on account of its operating and financing activities. The functional currency of the Corporation is Indian Rupee. Our exposure is mainly denominated in US Dollars (USD). The USD exchange rate has changed substantially in recent periods and may continue to fluctuate substantially in the future. The Corporation has put in place a Financial Risk Management Policy to identify the most effective and efficient ways of managing the currency risks. The Corporation uses derivative instruments, (mainly foreign exchange forward contracts) to mitigate the risk of changes in foreign currency exchange rates in line with the policy.

The Corporation does not use derivative financial instruments for trading or speculative purposes.

Exposure to currency risk

The currency profile in INR of foreign currency denominated financial assets and financial liabilities as at 31^st March 2023 and 31^st March 2022 are as below:

Sensitivity analysis

A reasonably possible strengthening/ (weakening) of the USD against INR at 31^st March would have affected the measurement of financial instruments denominated in US dollars and affected profit or loss (before tax) by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasted sales and purchases. In cases where the related foreign exchange fluctuation is capitalised to Property, Plant and Equipment or recognised directly in reserves, the impact indicated below may affect the Corporation’s income statement over the remaining life of the related Property, Plant and Equipment or the remaining tenure of the borrowing respectively.

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing financial instruments because of fluctuations in the interest rates, in cases where the instruments are measured at fair value through profit or loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing instruments will fluctuate because of fluctuations in the interest rates.

The Corporation’s approach to managing interest rate risk is to have a judicious mix of borrowed funds with fixed and floating interest rate obligation.

In March 2021, the Financial Conduct Authority (FCA), UK had confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be representative:

- immediately after 31^st December 2021, in the case of all Sterling, Euro, Swiss Franc and Japanese Yen settings, and the 1-week and 2-month US Dollar settings; and

- immediately after 30^th June 2023, in the case of the remaining US dollar settings.

The last interest reset of the above exposure will happen before 30^th June 2023 and hence there would be no impact of such migration.

Fair value sensitivity analysis for fixed-rate instruments

The Corporation accounts for certain investments in fixed-rate financial assets such as investments in Oil bonds and Government Securities at fair value through profit or loss. Accordingly, a decrease in 25 basis points in interest rates is likely to increase the profit or loss (before tax) for the year ending 31^st March 2023 by ' 19.26 Crores (Previous year: ' 29.43 Crores) and an increase in 25 basis points in interest rates is likely to decrease the profit or loss (before tax) for the year ending 31^st March 2023 by ' 19.14 Crores (Previous year: ' 29.18 Crores).

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 25 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant. In cases where the related interest rate risk is capitalised to Property, Plant and Equipment, the impact indicated below may affect the Corporation’s income statement over the remaining life of the related Property, Plant and Equipment.

Corporation’s profitability gets affected by the price differential (also known as Margin or Crack spread) between prices of products (output) and the price of the crude oil and other feed-stocks used in production (input). Prices of both are set by markets. Hence Corporation uses derivatives instruments (swaps, futures, options and forwards) to hedge exposures to commodity price risk to cover refinery operating cost using Basic Swaps on various products’ cracks like Naphtha, Gasoline (Petrol), Jet/Kerosene, Gasoil (Diesel) and Fuel Oil against Benchmark Dubai Crude. Further volatility in freight costs is hedged through Freight Forwards and bunker purchases. Settlement of all derivative transactions take place on the basis of monthly average of the daily prices of the settlement month quoted by Platts.

Corporation measures market risk exposure arising from its trading positions using value-at-risk (VaR) techniques. These techniques make a statistical assessment of the market risk arising from possible future changes in market prices over a one-day holding period.

Corporation uses historical model of VaR techniques based on variance/covariance to make a statistical assessment of the market risk arising from possible future changes in market values over a 24-hour period and within a 95% confidence level. The calculation of the range of potential changes in fair value takes into account positions and the history of price movements for last two years. Since there are no open positions as on 31^st March 2023 VAR for open position as on 31^st March 2023 is NIL.

C.iv.d Price risk

The Corporation’s exposure to equity investments’ price risk arises from investments held by the Corporation and classified in the financial statements at fair value through OCI. The Corporation intends to hold these investments for long-term for better returns and price risk will not be significant from a long term perspective.

Notes

A. The Corporation purchases and sells petroleum products from different Oil and Gas Companies. Under the terms of the agreement, the amounts payable by the Corporation are offset against receivables and only the net amounts are settled. The relevant amounts have therefore been presented net in the balance sheet.

NOTE 60 CAPITAL MANAGEMENT

The Corporation’s objective is to maximize the shareholders’ value by maintaining an optimum capital structure. Management monitors the return on capital as well as the debt equity ratio and makes necessary adjustments in the capital structure for the development of the business.

The Corporation’s debt to equity ratio as at 31^st March, 2023 was 0.69 (Previous year: 0.65).

Note: For the purpose of computing debt to equity ratio, Equity includes Equity Share Capital and Other Equity, and Debt includes Current and Non Current Borrowings.

NOTE 61 SEGMENT REPORTING

As per the requirements of Ind AS 108 on “Operating Segments”, segment information has been provided under the Notes to Consolidated Financial Statements.

Note: Apart from the above;

1. Corporation’s subsidiary, Bharat PetroResources Limited (BPRL), is engaged in the business of Exploration and Production (E&P) of oil & gas and has participating interest in several blocks held directly or through group companies. Corporation has issued performance guarantees/ counter-indemnities/ letter of undertakings in favour of Government/ Government Agencies/ Operators/ other partners towards performance obligations

of BPRL (including its group companies) under the Concession Agreement/Joint Operating Agreements/ Production Sharing Contracts/ Licenses/ Farmout Agreements relating to various such E&P oil & gas blocks acquired by them. The outflow that may arise under these performance guarantees/ counter-indemnities/ letter of undertakings is not quantifiable.

2. The Corporation has issued Performance Guarantee for necessary infrastructure of terminal and pipelines at Kochi and obligations of Associate Company Petronet LNG Ltd under the LNG SPA, the outflow that may arise under the same is not quantifiable.

# Calls received for issue of shares during the year from Joint Venture Company for which subscription of shares is pending.

The above list includes balances for the transactions entered with the above parties before their name has been struck off by the respective Registrar of Companies or MCA.

(B) Utilisation of Borrowed Funds and share premium.

During FY 2022-23, other than the transactions undertaken in the normal course of business and in accordance with extant regulatory guidelines and internal policies, as applicable,

1. The Corporation has not granted any advance/loans or investments or provided guarantee or security or the like to any other person(s) or entities with an understanding, whether recorded in writing or otherwise, to further lend/invest/provide guarantee or security or the like to any other person on behalf of the Corporation.

2. The Corporation has not received any funds from any person(s) or entity with an understanding, whether recorded in writing or otherwise, that the Corporation shall further lend or invest or provide guarantee or security or like in any other person on behalf of an identified by such person(s)/entity.

(C) Registration of charges or satisafaction with Registrar of Companies

There are no charges or satisfaction to be registered with ROC beyond the statutory period.

As per MCA website, a charge of ' 246.80 Crores is appearing unsatisfied vide charge ID 90165239. As per information available with the company, the charge was satisfied vide document number 424 on 20^th April 2000 by Registrar of Companies, Mumbai. Hence the same has not been disclosed in Schedule III.

NOTE 69

Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31^st March 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from 1^st April 2023. The Corporation is evaluating the impact, if any, in its financial statements. The Corporation does not expect the amendment to have any significant impact in its financial statements.

NOTE 70 ENERGY SAVING CERTIFICATES (ESCERTS)

As at 31^st March 2023, the Corporation holds 2,06,937 Nos. (31^st March 2022: 2,06,937 Nos.) of ESCerts awarded by Bureau of Energy Efficiency (BEE) in FY 2021-22 as part of “Performance, Achieve & Trade” (PAT) scheme, India for achieving reduction in Specific Energy Consumption above targets set by them for the performance during FY 201819. These can be redeemed to meet refineries own shortfall (if any) or can be used as tradable certificates which can be sold through power exchanges. According to the Indian Energy Exchange’s market fluctuations, current values of ESCerts are volatile. Considering unascertainability of cost of ESCerts since such cost cannot be derived directly, the same has not been carried in inventory.

NOTE 71

Figures of the previous year have been regrouped wherever necessary, to conform to current period presentation.