6.6 Numaligarh Refinery Limited vide Shareholders Resolution dated 19th September,2022 approved Bonus Share in the ratio of 1:1 of face value of ' 10 per share fully paid and on 30th November,2022 accordingly the Company has received 51,22,20,385 nos of Bonus share. Subsequent to the Bonus issue, only 12 are held by the Company in the name of nominee shareholders.
6.7 The Board of Directors of Oil India Cyprus Ltd. in its meeting held on 8th July, 2021 had accorded in principle approval for initiating the procedure for striking-off the Company and striked-off application have been filed with the Registrar of the Company, Republic of Cyprus and Official Receiver, Nicosia, Cyprus. The Company has been officially strike-off from the Registrar of the Company, Republic of Cyprus on 23rd September, 2022 and accordingly the investment in Oil India Cyprus Ltd has been written off during the year ended 31st March, 2023.
6.8 Oil India (USA), Inc. the wholly owned subsidiary of the Company held a stake in Niobrara shale oil and gas asset in USA. On 14th January 2022, Oil India (USA), Inc., closed the deal to divest its entire stake in Niobrara shale oil and gas asset in USA. Subsequent to the divestment, the subsidiary Company has repatriated US$ 35.45 million including divestment proceeds to the parent Company during the year 2022-23. The Board of the parent cCompany in its 536th Meeting held on 23rd September, 2022 approved winding up of Oil India (USA), Inc. After compliance of applicable US laws, the subsidiary company has been wound up on 2nd May,2023.
6.9 Oil India International BV, Netharlands, the wholly owned subsidiary of OIL has 50% stake in a JV Company WorldAce Investments Limited, Cyprus (the other 50% is owned by Petroneft Resources Plc., Ireland) which in turn owns 100% of the voting equity in Stimul-T LLC, a Russian registered legal entity, which owns and operates Licence 61 in the Tomsk region of the Russian Federation. Stimul-T, LLC has filed for bankruptcy in the Arbitration Court of Tomsk, Russia on 10th May, 2023. A liquidator will be appointed by the Court for the bankruptcy proceedings. Considering the recent development, the Company has carried out impairment testing of its investment in subsidiary company and recognised impairment loss of ' 5.99 crore during the year ended 31st March, 2023.
6.10 The Company is holding 16,086 nos (12,600 nos as on 31st March, 2022) fully paid 10% Cumulative Redeemable preference share of No par value in Beas Rovuma Energy Mozambique Ltd as on 31st March, 2023. 5120 ordinary equity shares and 15,416 preference shares of the Company in Beas Rovuma Energy Mozambique Limited (BREML) have been provided under custody of Area 1 shared security custodian (Standard Bank, S.A.) under project finance arrangement entered into by BREML.
6.11 The Company has been alloted 60500000 nos of equity share of the face value of ' 10 per share fully paid up by Assam Petro - Chemicals Limited, the Joint Venture of the Company, during the year ended 31st March, 2023 as right shares.
6.12 The Company has been alloted 1130000000 nos of equity share of the face value of ' 10 per share fully paid up by Indradhanush Gas Grid Limited, the Joint Venture of the Company, during the year ended 31st March, 2023 as right shares.
9.2 Advance against acquisition of Equity to NRL represents 1st Call money of ' 550.95 crore (' 27.50 per share for 20,03,44,555 shares) paid by the Company against Right Issue Offer of NRL dated 23rd February,2023. Board of Directors of NRL has passed a resolution by circulation dated 9th May,2023 for allotment of partly paid-up equity shares against the right offer. The new equity shares so allotted shall rank pari passu with the existing equity shares of the Company and shall be entitled to dividend to the extent of the amount paid up per equity share.
9.3 10% Cummulative Redeemable Preference Shares to be received by the Company against the advance's paid to Beas Rovuma Energy Mozambique Limited.
9.4 Advance against acquisition of Equity Shares to HPOIL Gas Private Limited represents payment of ' 15.50 Crore made against the Right issue of 1,55,00,000 Equity Shares of '10 /- face value offered by HP OIL Gas Private Limited to the Company.
14.2 Trade receivables primarily comprise of government related entities. These government related entities have very strong capacity to meet their obligations. The Company allows credit period of 15-30 days to its customers for payment. Normally, payments are made by the customers on or before the due dates. The management does not anticipate any payment default from these customers other than those already provided for. Hence, as per the prevailing circumstances, management does not consider the increase in credit risk from the time of initial recognition of trade receivables and at the reporting date as significant.
14.3 The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information.
16.1 If the dividend has not been paid or claimed within 30 days from the date of its declaration, the Company is required to transfer the total amount of the dividend which remains unpaid or unclaimed, to a special account maintained by the Company in a scheduled bank as "Unpaid Dividend Account". The unclaimed dividend lying with the Company is required to be transferred to the Investor Education and Protection Fund (IEPF), administered by the Central Government after a period of seven years of its declaration.
16.2 Bank Balance with Repatriation restrictions represents an amount of FCFA 9,519,694 (USD equivalent 15,787.85 and INR equivalent ' 0.13 crore as on 31.03.2023) is freezed by CITI Bank, Gabon and ORABANK Gabon in the Bank Account of Block Shakthi Gabon Project, consequent to a direction of the Gabonese court in a legal case.
16.3 Deposit in Escrow Account represent amount deposited with State Bank of India, New Delhi for Kharsang Field which is related to dispute regarding calculation of share of profit petroleum including interest payable to Government of India as per Production Sharing Contract (PSC) and also to secure an extension of PSC, which was valid till 15th June 2020. Thereafter Ministry of Petroleum & Natural Gas vide various communications has issued permissions to continue petroleum operations in the Kharsang Field as interim measure of facilitation.
21.1 Terms/rights attached to equity shares:
The Company has only one class of equity shares having par value of '10 per share. Each holder of equity shares is entitled to one vote per share and carry a right to dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company in proportion to the number of equity shares held.
22.1 Nature and purpose of reserves:
(a) Foreign Currency Monetary Item Translation Difference Account: Exchange difference on long-term foreign currency monetary items are accumulated in a Foreign Currency Monetary Item Difference Account and amortised over the balance period of such long term foreign currency monetary item in continuance of policy as permitted under D13AA of Ind AS 101.
(b) Debenture Redemption Reserve: Debenture Redemption Reserve is created out of the profits of the Company, and the amount credited to such account shall not be utilised by the Company except for the redemption of bonds.
(c) Capital Redemption Reserve: Capital Redemption Reserve is created out of the Securities Premium/General Reserve, a sum equal to nominal value of the fully paid up own equity shares purchased by the Company during the period. The amount credited to such account may be applied in paying up unissued shares of the Company to be issued to members of the Company as fully paid bonus shares.
(d) General Reserve: The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. General Reserve is free reserve of the Company and is used for the purposes like issuing bonus shares, buy back of shares etc as per the approval of Board of Directors.
(e) Retained Earnings: The retained earnings comprises of Profit / (loss) transferred from statement of profit and loss after payment of interim and final dividend if any. It also includes remeasurement of net defined benefit plan as per actuarial valuations.
22.2 Other Comprehensive Income: It includes the cumulative gains/losses arising on measurement of equity instruments designated at fair value through Other Comprehensive Income. On disposal of such equity instruments the net amount shall be reclassified to retained earnings.
22.3 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.
On 24th September, 2022 the final dividend of ' 5 per share (50%) for FY-2021-22 was paid to equity shareholders.
On November 10, 2022 and on February 10, 2023, the Company had declared interim dividend of ' 4.50 per share (45%) and ' 10.00 per share (100%) respectively, which has since been paid.
In respect of the year ended March 31, 2023, the Board of Directors has proposed a final dividend of ' 5.50 per share (55%) be paid on fully paid-up equity shares. This final dividend shall be subject to approval by shareholders at the ensuing Annual General Meeting and has not been included as a liability in these financial statements. The total estimated equity dividend to be paid is ' 596.42 cr.
32.1 As per the directives of MOP&NG, Crude Oil price calculation is based on the monthly average price of benchmarked International Basket of Crude Oil which is further adjusted for quality differential.
32.2 Natural Gas price is as notified by MOP&NG and applicable to operating areas of the Company. Subsidy extended to the eligible customers in North East India is reimbursed by Government of India and shown as Other Operating Revenue.
32.3 On application of Ind AS 115 - Revenue from contracts with customers, the sale of crude oil includes transportation of own crude oil to customers upto the delivery point which coincides with the transfer of risk & rewards and transfer of custody. Income from pipeline transportation includes ' 81.84 crore (previous year ' 75.18 crore) for transportation of own crude oil.
37.1 Pursuant to directives from Government of India, the Company has raised overseas borrowings for acquiring 4% participating interest in Rovuma 1 offshore block in Mozambique. In the opinion of the Management, there is no explicit restriction by Government of India with regard to servicing of such overseas borrowings from domestic resources of the Company. Interest servicing of ' 542.76 crore (previous year ' 437.43 crore) on such overseas borrowings have been met from domestic resources. The Company has informed MoP&NG that servicing of interest on the overseas borrowings raised for financing of above transaction is being done from domestic resources.
41.1.1 Capital Management
The Company manages its capital to ensure that Company will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the capital structure.
The capital structure of the Company consists of total equity and debt, (Refer note 21,22, 23 and 28). The Company is not subject to any externally imposed capital requirements except the guidelines issued by Government of India.
The Company's management reviews the capital structure on a regular basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital.The Company aims to maintain gearing ratio target around 45% at Group level. The gearing ratio of the Company is provided below.
41.3 Financial Risk Management
41.3.1 Objective
The Company monitors and manages the 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, interest rate risk and price risk), credit risk and liquidity risk.
41.3.2 Commodity Risk
Crude oil and Natural gas price of the Company are linked to international prices of crude oil/natural gas. In case of any upward or downward movement in the international prices of crude oil/natural gas, the revenue of the Company get affected correspondingly. Therefore, the Company is exposed to commodity price risk.
41.3.3 Market Risk
The Company activities exposes it primarily to the financial risks of changes in foreign currency exchange rates, interest rate risk , market exposures that are measured using sensitivity analysis.
41.4 Foreign Currency Risk Management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise.
The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
The price of crude oil and natural gas produced and sold by the Company are linked to US Dollars, though billed and received in INR. Hence any movement in the USD against INR has direct impact on the future cash flows of the Company on account of sale of these products.
41.4.1 Foreign Currency Sensitivity Analysis
The Company is mainly exposed to the currency of United States of America (USD).
The following table details the Company's sensitivity to a 5% increase and decrease in the INR against USD. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as at period end and adjusts their translation at the period end for a 5% change in foreign currency rates.
41.4.2 Forward foreign exchange contracts
There is no forward foreign exchange contract outstanding as on balance sheet date.
41.5 Interest rate risk management
The Company is exposed to interest rate risk because the Company borrows funds at both fixed and floating interest rates and make investment in mutual funds. Periodical interest rate on floating interest loan or receivable on mutual fund investment are linked to market rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. The Company policy allows to use forward interest rate agreements (FRA's) or interest rate swap as per the rquirements
The Company's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management Refer note 43.8.
41.5.1 Interest Rate Sensitivity Analysis
The sensitivity analysis below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. The analysis is prepared based on the floating interest rate assets and liabilities, assuming that the amount outstanding at the end of the reporting period was outstanding for the whole year.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company's: Loan Given
• Profit and Equity for the year ended March 31, 2023 would increase / decrease by ' 1.80 crore (for the year ended March 31, 2022: increase / decrease by ' 1.66 crore).
Loan Taken
• Profit and Equity for the year ended March 31, 2023 would decrease/increase by ' 9.44 crore (for the year ended March 31, 2022 : decrease/increase by ' 8.15 crore).
41.6 Price risk
The Company is exposed to equity price risks arising from equity investments in Indian Oil Corporation Limited. Exposure in mutual funds
The Company also manages surplus fund through investments in debt mutual fund plans regulated by Securities Exchange Board of India (SEBI). The NAV declared by Asset Management Companies(AMC) has generally remained constant on the mutual funds plan taken by the Company. However, if the NAV of the fund is increased/decreased by 5%, the sensitivity analysis has been mentioned below:
• Profit and Equity for the year ended March 31, 2023 would increase/decrease by ' 7.42 crore (for the year ended March 31, 2022: decrease/increase by ' 12.91 crore).
41.6.1 Equity Price Sensitivity Analysis
The sensitivity analysis below have been determined based on the exposure to price risks at the end of the reporting period.
If equity prices had been 5% higher/lower:
• Other comprehensive income and Equity for the year ended March 31, 2023 would increase/decrease by ' 255.34 crore (for the year ended March 31, 2022 would increase/decrease by ' 259.92 crore.).
41.7 Credit Risk Management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company regularly monitors its counterparty limits by reviewing the outstanding balance and ageing of the same.
The Company has a credit policy that is designed to ensure that consistent processes are in place to measure and control credit risk. Credit risk is considered as part of the risk-reward balance of doing business. On entering into any business contract the extent to which the arrangement exposes the Company to credit risk is considered.
41.8 Liquidity Risk Management
Liquidity risk is the risk that suitable sources of funding for the Company's business activities may not be available. The Company manages liquidity risk by monitoring its forecast and actual cash flows, maintaining adequate reserves
42.1.2 Defined Benefit Plans
The various Benefit Plans which are in operation in the Company are Oil India Gratuity Fund (OIGF), Oil India Employees' Pension Fund (OIEPF), Oil India Pension Fund (OIPF), Leave Encashment Fund and Post-Retirement Medical Benefit. The present value of the obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation.
The amount recognized in the Balance Sheet as the present value of the defined benefit obligation is net of the fair value of plan assets at the Balance Sheet date.
In respect of the plans in India, 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 was measured using the projected unit credit method.
42.1.5 Provision of Oil India Employees' Pension Fund (OIEPF):
The Company is maintaining an irrevocable Trust Fund named as "Oil India Employees' Pension Fund" (OIEPF) for providing pensionary benefit to its employees on their retirement, permanent disablement and on their death to their beneficiaries which is in line with Employees' Pension Scheme, 1995.
The Board of Directors in its 501st meeting held on 23rd April, 2019 accorded approval to give opportunity annually to the employees, including retired employees, to exercise their option to contribute on the basis of Actual Salary.
In view above, opportunity for exercising the change of contribution option was given to active employees, including retired employees during the financial year 2022-23.
The actuarial valuation for active employees as on 31st March, 2023 was carried out as per Ind AS 19 to quantify the net deficit to be borne by the Company. Based on the actuarial valuation ' 164.18 crore (previous year ' 164.44 crore) has been recognized in the Statement of Profit and Loss and ' 81.98 crore (previous year ' 260.53 crore) has been routed through Other Comprehensive Income during the year ended 31st March, 2023. The liability of the Company towards the Trust Fund is ' 810.27 crore as on 31st March, 2023 (previous year ' 1,147.12 crore) and the same is disclosed under Other Current Liabilities in the financial statements.
Based on the Hon'ble Supreme Court judgement dated 04.11.2022 in SLP (C) No. 8658-8659 of 2019, last opportunity for exercising the change of contribution option is given to active employees, including retired employees until 26th June, 2023. The actual number of applications received from active members till 31st March, 2023 have been considered in Actuarial Valuation. The actual number of remaining active employees, including retired employees, who may opt, for change of contribution option on actual salary basis in lieu of minimum salary basis cannot be forecasted with precision. The effect for same will be recognized in the financial statement for FY 2023-24.
42.1.6 Oil India Social Security Scheme Fund
The Board of Directors of the Company in its 535th meeting held on 10th August 2022 approved creation of a trust fund named as "Oil India Social Security Scheme Fund" effective from 01.04.2022 to provide lumpsum benefits to the dependents of deceased employee of the Company who dies during service period. As approved, both the Company and employees will contribute fixed monthly contribution to the fund and in addition, the Company will contribute ' 4.29 crore annually as base contribution.
The Company contributed immediately, on formation of the Trust Fund, an amount of '15 crore as Seed Capital to maintain the initial solvency and liquidity. The Seed Capital will be recovered by the Company in five equal annual instalments.
Further, if in any year the cash required for meeting the liabilities of the Trust Fund is less than the value of the assets available, the shortfall shall be made good by the Company by making additional contribution equivalent to the amount of deficit.
1. Revenue mentioned above, represents revenue from external customers. No revenue is generated from transactions with other operating segments of the same entity.
2. Revenue and expenses directly identifiable to the segments have been allocated to the relative primary reportable segments.
3. Segment revenue and expenses which are not directly identifiable to the primary reportable segments have been disclosed under others which primarily include business development services.
4. Assets and liabilities which are directly identifiable to the segments have been allocated to relative segments.
5. Assets and liabilities which are not directly identifiable to the segments have been disclosed under unallocated.
6. All assets are allocated to reportable segments other than investments in subsidiaries, associates and joint ventures, other investments, loans and current and deferred tax assets.
7. There are no reportable geographical segments.
9. Information about major customers:
The Company's significant revenue comes from sales to Public Sector Undertakings (PSUs). The total sales to such PSUs during the year ended 31st March 2023 amounted to ' 22,312.24 crore (previous year ' 14,252.31 crore). Sales to such PSUs during the year ended contributed around 95.88% of the total sales (previous year 98.09%). The Company has lodged ' 888.60 crore (previous year ' 253.00 crore) to Ministry of Petroleum & Natural Gas against claim recovery of Natural Gas during the year ended 31st March 2023. The contribution of claim recovery of Natural Gas towards sales revenue during the year ended 31st March 2023 is 3.82% (previous year 1.74%). No other single customer contributed 10% or more to the Company's revenue for the year ended 31st March 2023.
42.3 Information as per Indian Accounting Standard (Ind AS) 23 "Borrowing Costs"
Finance cost on lease liability capitalized to wells during the year ended 31st March 2023 is ' 6.72 crore (previous year ' 8.63 crore).
*The Board of Directors of Oil India Cyprus Ltd in its meeting held on 8th July, 2021 accorded in principle approval for initiating the process for striking-off the Company and accordingly application was filed with the Registrar of Companies, Nicosia, Republic of Cyprus. On 23rd September, 2022, the Company has been struck off from the Register under the Companies Law of Republic of Cyprus.
**On 14th January 2022, Oil India (USA) Inc., the wholly owned subsidiary of the Company closed the deal to divest its entire stake in Niobrara shale oil and gas asset in USA. Subsequent to the divestment, OIL Board, in its 536th Meeting held on 23rd September, 2022 approved winding up of Oil India (USA) Inc. Along with the divestment proceeds, the US Corporation repatriated its available funds to the parent Company. After compliance of applicable US laws, Oil India (USA) Inc. has been wound up on 2nd May,2023.
***Oil India International BV, Netherlands, the wholly owned subsidiary of OIL has 50% stake in a JV Company WorldAce Investments Limited, Cyprus (the other 50% is owned by Petroneft Resources Plc., Ireland) which in turn owns 100% of the voting equity in Stimul-T LLC, a Russian registered legal entity, which owns and operates Licence 61 in the Tomsk region of the Russian Federation. Stimul-T LLC has filed for bankruptcy in the Arbitration Court of Tomsk, Russia on 10th May, 2023. A liquidator will be appointed by the Court for the bankruptcy proceedings.
****The Company through its subsidiary Oil India International Pte Limited, registered in Singapore, has invested in oil blocks in Russia through Joint Ventures registered in Singapore. The Russian oil block entities have declared dividends which have been received in bank accounts in Russia of Singapore Joint Ventures. However, on account of restrictions imposed by the Central Bank of Russia during the reporting period (for now valid till 30th September 2023), the funds cannot be repatriated to Singapore till said restriction is in force.
On application of Ind AS 115 - 'Revenue from Contracts with Customers', sale of crude oil include transportation of own crude oil upto the delivery point which generally coincides with the transfer of risk and rewards and transfer of custody. Income from pipeline transportation includes ' 81.84 crore (previous year ' 75.18 crore) for transportation of own crude.
42.8 Information as per Indian Accounting Standard (Ind AS) 116 "Leases"
The Company has adopted Ind AS 116 "Leases" with effect from 1st April, 2019. The Company has elected to apply modified prospective transition approach to measure the right-to-use asset at an amount equal to the lease liability and initial estimate of decommissioning obligation at the date of transition.
The Company has applied Ind AS 116 to hiring contracts of vehicles, rigs, cranes, crawlers, compressors, buildings, etc. to evaluate whether these contracts contains lease components. Based on evaluation of the terms and conditions, the Company has evaluated the lease components of such contracts falling under the purview of Ind AS 116. The lease contracts, with limited exceptions, are recognised in the financial statements by way of right-of-use assets corresponding lease liabilities and initial estimate of decommissioning obligation. The lease liabilities were measured at the present value of the remaining lease payment and discounted using Government of India Bond rate.
The Company had also elected to apply the following practical expedients available under Ind AS 116:
a) Short term leases / Low-value assets: The Company has elected short term leases and low value assets leases for recognition exemption in terms of Ind AS 116. The Company recognises the lease rental payment associated with short term leases and low value assets as expense in the Statement of Profit & Loss.
b) Discount rate: The Company has applied Government of India Bond rate as discounting factor to each lease of similar assets in similar economic environment with a similar end rate. The Government of India Bond rate has been bucketed into 0-3 years, 3-5 years, 5-10 years and above 10 years to different lease contract falling in those periods. The Company has applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
The contracts such as vehicle hiring, drilling rigs hiring, bundle service contracts, etc. involve a number of additional services and components including personnel cost, maintenance, drilling related activities, consumables and other items. In most of such contacts, the additional services/non-lease components constitute significant portion of the overall contract value. Where the additional services/non-lease components are not separately priced, the consideration paid has been allocated based on the relative stand-alone prices of the lease and non-lease components.
The following effects have been given in the financial statement for the Financial year ended 31st March, 2023:
42.15 Physical verification of Property, Plant and Equipment (PPE):
Physical verification of the property, plant and equipment is carried out by the Company in phased manner over the period of 3 years. The current block started from 2021-22. Physical verification of PPE carried out till 31st March, 2023 covers 96.84% of PPE in terms of value. A provision of ' 12.17 crore has been made in the accounts towards physical verification of PPE during the period ended 31st March, 2023.
42.16 Service Tax and GST on Royalty payment:
1. a. Service Tax demand was raised on the Company for the period March'2016 to June' 2017 seeking to levy Service Tax on Royalty paid on Crude Oil & Natural Gas under the Oil Fields (Regulation & Development) Act, 1948 for the states of Assam, Arunachal Pradesh and Rajasthan. The Company has challenged the demand on various grounds by filing writ petitions before different High Courts. However, pending adjudication of the Writs, the Company has deposited under protest the entire Service Tax demand of ' 257.13 crore.
b. Goods and Services Tax (GST) was implemented w.e.f. 01st July, 2017 and as per the FAQs on Government Services issued by CBIC, GST is payable on Royalty paid for assignment of right to use natural resources. However, based on a legal opinion obtained by the Company Service tax/GST is not payable on Royalty paid under the Oil Fields (Regulation & Development) Act, 1948. The Company has accordingly filed writ petitions in different High Courts challenging such levy. Further, the Hon'ble Gauhati High Court, vide its interim order dated 2nd November, 2021 has granted stay on the GST on royalty payments made by the Company in the state of Assam until further orders.
The total GST amount deposited under protest till 31st March, 2023 is ' 1,232.23 crore. Further out of the above-mentioned amount the Company has received refund of ' 24.41 crore in the State of Assam. The estimated amount (including interest and penalty) of ' 259.67 crore for Service Tax and ' 2010.09 crore for GST (including ' 121.89 crore and ' 533.38 crore for quarter and year ended 31st March, 2023) have been considered as Contingent Liability as on 31st March, 2023, being disputed levies.
2. The Company has challenged the levy of Service Tax/GST on Royalty paid under the Oil Fields (Regulation & Development) Act, 1948 on various grounds before the Jodhpur Bench of Hon'ble Rajasthan High Court and the Hon'ble Gauhati High Court. Considering the expert opinion and in the light of various judicial pronouncements, pending adjudication of the matter, the service tax /GST paid under protest has been claimed as an allowable deduction under the Income Tax Act, 1961.
42.17 Government Grants
Revenue Grants
Stipend to apprentices under NATS scheme
As per Ministry of HRD, 50% of the cost of stipend for apprentices paid under National Apprenticeship Training Scheme (NATS) will be reimbursed by Government of India subject to prescribed threshold limit. During the year the Company has received reimbursement of stipend amounting to ' 1.89 crore (previous year ' 2.53 crore) paid to apprentices appointed under NATS.
Generation-based Incentive
Company is getting incentive from Department of Renewable Energy, GOI for wind power generation of Electricity at the rate of 50 paise per unit of power generated. The Company has received grant of ' 2.00 crore during the current year (previous year ' 2.92 crore).
42.20 Others:
42.20.1 Disclosure for COVID - 19
The Company has assessed the potential impact of Covid-19 pandemic on its existing operations. The total revenue of the Company is mainly from sale of crude oil and natural gas which constitute 95% of the total revenue from operations. Around 25% of domestic consumption of crude oil in the Country is from domestic source and any fall in demand of petroleum products is unlikely to adversely affect the domestic crude oil production.
Majority of the Natural Gas produced currently is supplied by the Company to fertilizers and thermal power plants and no significant impact on demand has been witnessed due to Covid-19 pandemic.
The Company does not anticipate any major challenge in continuing its operations and meeting financial obligations. Hence, no impact is expected on Company's ability to continue as a going concern and meeting its obligations.
Due to Covid-19, there is no effect on useful life / residual life of Property, Plant and Equipment, Trade Receivable, Inventories and Lease Arrangements.
Further, the management has tested Property, Plant and Equipment including Oil & Gas assets for impairment and there is no additional loss on impairment due to the pandemic.
42.20.2 Disclosure on Expiry of Power Purchase Agreement (PPA)
The Company entered into Power Purchase Agreement (PPA) with Jodhpur Vidyut Vitaran Nigam Limited (JdVVNL) for supply of electricity generated from solar power plants validity of which expired on 31.03.2019. The Company vide letter no R/TS/RE/2019-80 dated 26.03.2019, submitted its request for extension of validity of the PPAs of both the Solar Power Plants for the remaining useful life to Rajasthan Urja Vikas Nigam Limited (RUVNL), under the Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework which is yet to be finalized.
In view of inordinate delay in response from JdVVNL in execution of the agreement, the Company has filed a writ petition with Hon'ble Rajasthan High Court, Jaipur Bench for finalization of Power Purchase Agreement. During the hearing held on 05.11.2019, Hon'ble Rajasthan High Court, Jaipur Bench ordered that the pending disposal of the writ petition, the joint meter reading reports shall be signed, without prejudice to the rights of the either party.
The sale of renewable energy as disclosed in Note 32 of the financial statement includes an amount of ' 7.31 crore (previous year ' 7.19 crore) in respect of sale of renewable power from solar power plants. The revenue has been recognised as per the rate prescribed by the Hon'ble Rajasthan Electricity Regulatory Commission (RERC) pending renewal of the Power Purchase Agreement (PPA) with JdVVNL. Any adjustment arising on finalisation of the PPA will be accounted in the year of incidence. As per the estimates of the management, the adjustments to the final price will not be material upon execution of PPA.
42.20.3 Disclosure on Overseas Investments
a. Provision for / reversal of diminution in value of certain Overseas Investments through impairment test:
The Company during the year has assessed the impact of impairment of its overseas investments and has recognised impairment in equity investment of ' 7.32 crore for Oil India International B.V. and ' 0.05 crore for Suntera Nigeria 205 Ltd. and ' 154.78 crore towards loan to Suntera Nigeria 205 Ltd., Nigeria.
b. Disclosure on Debt Service Undertaking of Mozambique Area 1 Project
Mozambique Area 1 project, wherein OIL has a participating interest (PI) of 4%, has secured debt commitment of US$15.40 Billion under Export Credit Agencies (ECA) Direct Loans, ECA Covered Facilities, Commercial Bank Facilities and a Loan Facility from African Development Bank. It is one of the condition precedents under project finance arrangement to provide Debt Service Undertaking (DSU) by each of the sponsors of the project. OIL as a DSU provider undertakes to pay its portion of obligation which is equal to pro-rata share of aggregate amount of advances at a given point in time based on its PI in the project. In case of OIL, the maximum amount that may be claimed by the Senior creditors has been capped at US$ 768 Million. As on 31st March 2023, a debt of US$ 287.30 Million (date of drawal US$ 199.30 Million 26th March, 2021 and USD 88 Million on 1st April 2021) has been drawn from the lenders at project level. OIL's share of liability under the DSU for its 4% share is US$ 11.49 Million.
42.20.4 Balance Confirmation
The Company has a system of obtaining periodic confirmation of balances from banks and other parties. Further, 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.
42.20.5 (a) Disclosure on COSA
Crude oil produced by the Company is sold to state owned companies. The price of such crude oil is agreed upon between the buyer and seller through Crude Off-take and Sale Agreement (COSA) based on directives of the Ministry of Petroleum & Natural Gas (MoP&NG)dated May 1, 2009. COSA for the crude oil produced in state of Assam and Arunachal
Pradesh is in place with Indian Oil Corporation Limited (IOCL) and Numaligarh Refinery Limited (NRL). However, the Company is in process of executing the COSA with IOCL for crude oil produced in Rajasthan Fields. Crude oil price for heavy crude in Rajasthan fields delivered to IOCL is determined and billed provisionally, based on 70% of the monthly average of the quoted price of brent crude as mutually agreed upon. Change in price of heavy crude oil, if any, arising out of the signing of COSA with IOCL will be adjusted in the year of incidence. As per the estimates of the management, the adjustments to the final price will not be material upon execution of COSA. (Refer Note 32 for revenue from sale of crude oil).
42.20.5 (b) Arrear crude oil transportation revenue and tariff revision
The Company is engaged in the business of transportation of imported crude oil of Indian Oil Corporation Limited (IOCL) through its crude oil trunk pipeline from Barauni, Bihar to IOCL's refineries at Bongaigaon and Guwahati.
During the year, tariff for the aforesaid transportation segment has been revised from FY 2017-18, as mutually agreed upon by both the parties and formalisation of same through the execution of an Agreement is expected shortly.
The Company, as per significant accounting policy [refer Note no 1.3.1], recognised the arrears of transportation income of ' 156.97 crore for the period FY 2017-18 to FY 2021-22 during the year as Income from Pipeline Transportation (Crude Oil). (refer Note no.32 of the Standalone Financial Statements).
42.20.6 OIDB Loan Assistance to M/s IGGL
In Pursuance of the approval granted by Oil Industry Development Board (OID Board) in its 103rd meeting held on 16.08.2021 for OIDB loan assistance of ' 2,594 Crore (Rupees Two Thousand Five Hundred Ninety Four Crore) to M/s Indradhanush Gas Grid Limited (IGGL), a Company promoted by GAIL (India) Ltd., Indian Oil Corporation Ltd., Oil & Natural Gas Corporation Ltd., Oil India Ltd. and Numaligarh Refinery Ltd. with a share of 20% each, Oil India Limited , being one of the promoters, have provided an unconditional and unequivocal guarantee to pay an amount of ' 518.80 crore to OIDB in the event of M/s Indradhanush Gas Grid Limited (IGGL), the borrower, being unable to fulfil its obligation for repayment of loan amounting to ' 2,594 crore & interest accrued thereon on the due dates and other monies payables by the said borrower to OIDB in accordance with terms and conditions of the Loan agreement executed between OIDB and IGGL. The Corporate Guarantee will remain valid and unrevoked till the loan & interest is fully repaid by M/s IGGL to OIDB. As on 31st March 2023 M/s IGGL has withdrawn two installments of Loan against the Loan Facility from OIDB as follows.
1. 1st installment drawn on 22.07.2022 is ' 200 crore.
2. 2nd installment drawn on 02.09.2022 is ' 100 crore.
M/s IGGL, on 15.11.2022 has repaid back the 1st loan of ' 200 crore drawn on 22.07.2022.
42.20.7 Blowout of well Baghjan #5
On 27th May, 2020 a blowout occurred in a producing well (Baghjan #5) of Baghjan Oilfield in Tinsukia district, Assam, while carrying out workover operations and well subsequently caught fire. The fire was finally put out on 15th November, 2020 and the well was permanently capped and abandoned on 3rd December, 2020. The total losses/damages for the blowout of ' 449.03 crore has been shown as Exceptional Item in the Statement of Profit and Loss for the year ended 31st March, 2021.
National Green Tribunal (NGT), Principle Bench, New Delhi through its order dated 19th February 2021 constituted a ten-member Committee headed by the Chief Secretary, Assam to look into the probable damage caused by the blowout to the environment and restoration measures, including measures for restoration of Dibru-Saikhowa National Park (DSBR) and the Maguri - Motapung Wetland (MMW). It also constituted two other committees to fix responsibility for the failure as well as non-compliance of statutory procedures.
An appeal was filed before the Hon'ble Supreme Court challenging the order of NGT regarding formation of the committees. Hon'ble Supreme Court vide order dated 2nd September 2021 re-constituted the Committee with five members for "Assessment of the damage and preparation of restoration plan of Dibru-Saikhowa National Park and
Maguri-Motapung Wetland". The said Committee proposed a cost of ' 1196 crore in its final report (which includes ' 625 crore towards livelihood and socio-economic aspect of victims) for redressal of damage and putting in place systems and institutional mechanisms.
The Hon'ble Supreme Court stated in its order dated 23rd January, 2023 that the "NGT shall hear such objections as the parties in the proceedings have, before issuing necessary directions on the aspects including restoration of the environment, reparation of environmental damage and compensation".
The NGT in its order dated 10th March 2023 stated that NGT is unable to accept in entirety of the SC expert committee's report with respect to recommendations and assessment of cost of restoration measures. Restoration measures to be determined by NGT Committee on further studies, site visits and interaction with stake holders, including OIL. Assessment of expenditure of ' 625 crore towards livelihood and socio-economic aspect proposed is against the view taken by NGT vide order dated 10th February 2021, which recorded that the said issue shall be taken as concluded in view of steps taken by OIL.
As against the assessed cost of ' 571 crore for restoration of the accident site, the DSBR and MMW, the tribunal directed the Company to initially set apart an amount of ' 200 crore in a separate account to be spent as per recommendation of the Committee.
The directions to the Company by NGT vide the above order, has been restricted and broadly limited only to incur expenses for the restoration work which is to be carried out in the areas on a need basis as per assessment to be done by the NGT Committee, for which availability of an amount of ' 200 crore has been arranged and shall be facilitated as and when required and informed to the Pollution Control Board, Assam. Accordingly, the management is of the view that there will be no further liability in this respect. However, actual cost, if any, as and when incurred towards remediation of environment, will be accounted for.
42.20.8 Special Additional Excise Duty (SAED):
Government of India (Gol) vide notification no. 05/2022 dated 30th June, 2022 had levied Special Additional Excise Duty (SAED) on crude oil with effect from 1st July, 2022 which has been revised and notified by Gol from time to time. During the year, an amount of ' 1,887.35 crore is charged to Statement of Profit & Loss under head "Excise Duty".
42.20.9 Details of charge:
(a) The Company has created charge against Current Assets to the tune of ' 377.45 crore (previous year ' 377.45 crore) for availing Bank Guarantee.
(b) Further the Company has created charge against the Current Assets to the tune of ' 700.00 crore (previous year ' 700.00 crore) for availing Cash Credit/Letter of Credit/Bank Guarantee Facility.
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42.21 Other disclosure under Schedule III to the Companies Act, 2013 42.21.1 Contingent Liabilities and Commitments (to the extent not provided for)
A. Contingent Liabilities:
[a) Claims against the Company not acknowledged as debts:
(' in crore)
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Sl. No.
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Particulars
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As at 31st March 2023
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As at 31st March 2022
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i.
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Under Central Excise Act, Service Tax and GST
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2,613.51
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2,048.09
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ii.
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Under Income Tax Act
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256.69
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256.76
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iii.
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Under Other Acts
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90.79
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247.85
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iv.
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By Contractor pending in Arbitration / Courts
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22.00
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22.36
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v.
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Claim on JVC/PSC account
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103.95
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56.96
|
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vi.
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Demand raised under Assam Taxation (on specified lands) Amendment Act,2004 for the period from 2010 to 2017
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1,495.30
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1,404.53
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vii
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Additional demand of 2% NPV by CCF(Assam) against afforestation
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82.77
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82.77
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Total
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4,665.02
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4,119.32
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[b) In respect of Guarantees:
(' in crore)
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Sl. No.
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Particulars
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As at 31st March 2023
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As at 31st March 2022
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i.
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Bank Guarantee issued to Superintendent of Taxes, Naharkatia, Assam, in relation to demand raised by the Department under Assam Taxation (on specified lands) Amendment Act, 2004 for the period from 2005 to 2009.
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702.02
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702.02
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ii.
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Bank Guarantee for Domestic Minimum Work Program (MWP) commitment
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675.28
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581.10
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iii.
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Bank Guarantee for Overseas Minimum Work Program (MWP) commitment
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273.87
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328.98
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iv.
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Bank Guarantee in respect of NLD, Solar & City gas Distribution
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974.00
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974.00
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v.
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Bank Guarantee against OALP
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1,094.07
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978.48
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vi.
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Bank Guarantee against DSF Blocks
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152.28
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152.28
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vii.
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Against Letter of Credit
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175.18
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228.31
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viii.
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Others
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4.81
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4.68
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ix.
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Bank Guarantee in respect of Renewable Energy Projects
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0.33
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0.32
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x.
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Bank Guarantee in respect of lead partner of AGCL-OIL Consortium
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44.10
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-
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Total
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4,095.94
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3,950.17
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B. Other matters for which the Company is contingently liable:
Commitments:
(a) Capital Commitments:
(i) The estimated amount of contracts remaining to be executed on Capital Account and not provided for in the accounts are ' 940.00 crore (previous year ' 566.79 crore).
(ii) The Company's share of Capital Commitment in Non-Operated Joint Venture Block AAP-ON-94/1 is ' 0.05 crore (previous year ' 0.20 crore).
(b) Other Commitments:
(i) The estimated amount of contracts remaining to be executed on Revenue Account and not provided for in the accounts are ' 26.16 crore (previous year ' 54.62 crore).
(ii) The balance of Minimum Work Program (MWP) by the Company under Production Sharing Contracts (PSCs) / Revenue Sharing Contract (RSCs) entered for NELP / HELP / DSF Blocks with Govt. of India is ' 4,600.32 crore (previous year ' 4,266.26 crore). The commitment is covered by Bank Guarantee as referred in point no 42.21.1 (A) (b) (ii).
(iii) The balance of Minimum Work Program (MWP) by the Company under Production Sharing Contracts (PSCs) entered for overseas Blocks is ' 416.51 crore (previous year ' 487.83 crore). The commitment is covered by Bank Guarantee as referred in point no 42.21.1 (A) (b) (iii).
(iv) Commitment towards Right issue of equity shares w.r.t., M/s Numaligarh Refinery Limited is '1,652.84 crore (previous year ' Nil).
42.22 The financial statements were approved by the Board of Directors on 24th May, 2023.
42.23 Figures of previous year have been regrouped/reclassified, wherever necessary, to conform to current years classification.
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