CAIRN ENERGY INDIA PTY LIMITED A.C.N. 002 066 784 SPECIAL PURPOSE FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2010 Directors' Report Income Statement Statement of Comprehensive Income Statement of Financial Position Statement of Cash Flows Statement of Changes in Equity Notes to the Financial Statements Directors’ Declaration 38 Independent Auditor's Report 39 ‘Auditor's Independence Declaration a eearoanas References to “the Company" or “Cairn are reference to Calin Energy India Pty LimitedCaim Energy Indi Directors’ Report Pty Limited ‘The Board of Directors of Cairn Energy India Pty Limited submit their report for the year ended 31 December 2010, Directors The names of the directors in office during the financial year and until the date of this report are: Mr. A. F. Batley Ms. V. S. Lehner Mr. LW. Smyth (resigned 21 January 2009) Mr. |, Banerjee (appointed 7 January 2008) Mr. H.P. Bhalla (appointed 15 February 2010) Mr. Winston Frederick Bott Jr. (appointed 05 July 2010) Registered office The registered office of Cain Energy India Pty Limited is located at 9 White Rock Road, White Rock, NSW 2795, Australia The principal place of business of Caim Energy India Pty Limited is Vipul Plaza, Suncity, Sector 54, Gurgaon, india Corporate structure Caim Energy India Pty Limited is a company limited by shares that is incorporated and domiciled in Australia Employees The entity employed 1,045 employees as at 31 December 2010 (2008: 752) Nature of operations and principal activities ‘The principal activities during the course of the financial year were oil and gas exploration and production. During the year there were no significant changes in the nature of these activities. Dividends No dividends have been paid or declared since the end of the last financial year and no dividends have been recommended by the directors in respect of the year ended 31 December 2010 (2009: $nil) Results and review of operations The company derived gross revenue from oil and gas production during the year of $832.7 million (2009: $70.8 milion) from permit interests in India. The operating profit after income tax expense for the year ended 31 December 2010 is $338.8 million (Operating loss after tax 2008: $6.5 milion). Significant changes in the state of affairs ‘There were no significant changes in the state of affairs of the company during the financial year. Events subsequent to Statement of Financial Position date ‘There is no event occurred after the balance sheet date.Cairn Energy India Pty Limited Directors’ Report (continued) Likely developments and expected results ‘The company will continue to focus on Rajasthan as Cairn progresses the main fields from discovery to production. The company intends to build on the strong strategic position that Cairn has established in South Asia, whilst capitalising on the opportunity to turn world class Rajasthan into large scale developments, generating significant cash flow. Rajasthan is a major resource base and the joint venture partners are focused on realising the full potential through conventional and enhanced oil recovery techniques. The size and scale of the overall potential opportunity in the basin continues to grow, offering scope for further optimisation which could translate into a significant growth in operating cash flows. Directors’ benefits Since the end of the previous financial year no director has received or become entitled to receive any benefit, other than benefits as emoluments or a fixed salary as a full-time employee of the company or a related body corporate, by reason of a contract made by the company or a related body corporate with the director or with a firm of which he or she is a member, or with an entity in which he or she has a substantial financial interest. Indemnification of directors and officers ‘The Constitution of the company provides that, subject to the Corporations Act 2001, the company shall indemnify its directors, managers and officers with authority to bind the company, and auditors against all liabilities incurred by them in successfully defending proceedings, and also indemnify its directors, ‘managers and officers against liabilities incurred in the conduct of their duties unless the labilty arises Cut of conduct involving a lack of good faith. ‘A premium has been paid by Cairn India Limited in respect of a contract of insurance relating to liability of directors, managers and officers mentioned above. The terms of that contract of insurance prohibit the disclosure of the nature of the liabilities insured and the amount of premium paid Rounding of amounts The amounts contained in this report and in the financial statements have been rounded off under the option available to the company under ASIC Class Order 98/100. The company is an entity to which the Class Order applies. Amounts in the financial statements have been rounded to the nearest thousand dollars unless specifically stated otherwise. Environmental regulation and performance ‘The economic entity participates in ventures which are parties to various production sharing contracts and exploration and development licences. These contracts and licences specify the environmental regulations applicable to the exploration, construction and operation of petroleum assets in the respective jurisdictions. There have been no known significant breaches of the environmental obligations of the company’s contracts or licences.