ESSAR OIL AND GAS EXPLORATION AND

PRODUCTION LIMITED (EOGEPL)

Leader in Unconventional Hydrocarbons

2nd ANNUAL REPORT

2017 - 2018
 CORPORATE INFORMATION
CIN: U11203GJ2016PLC091903

BOARD OF DIRECTORS AND

KEY MANAGEMENT PERSONNEL

Mr. K N Venkatasubramanian, Independent Director

Mr. Rajkumar Sukhdevsinhji, Independent Director
Mr. Vilas Shreedhar Tawde, Managing Director and Chief Executive Officer
Mr. Gopal Pallipuram Srinivasan, Whole-time Director and Chief Financial Officer
Ms. Glyniss Oscar Fernandes, Whole-time Director

COMMITTEES REGISTRAR AND SHARE TRANSFER AGENT

Audit Committee Data Software Research Company Private Limited

Mr. K N Venkatasubramanian Kasturi Towers, No.11,
Mr. Vilas Shreedhar Tawde Smith Road, Chennai -600002
Mr. Rajkumar Sukhdevsinhji Phone: 044-28213738 / 044-28214636
Website: www.dsrc.com
Nomination and Remuneration Committee
Mr. K N Venkatasubramanian
Mr. Rajkumar Sukhdevsinhji CORPORATE OFFICE
Ms. Suparna Singh (till 31st Jan’2018)
Essar House, 11, K. K. Marg,
Mahalaxmi Mumbai-400034, India
BANKERS AND FINANCIAL INSTITUTIONS Tel: +91 6660 1100, Fax: +91 6666 9429

Axis Bank Ltd Fort, Mumbai-400001

State Bank of India CAG Branch Kolkata-700071 PROJECT OFFICE-RANIGANJ
Indian Overseas Bank Fort, Mumbai-400001
Yes Bank Ltd Jamnagar Gujarat-361008 AN 81B, Sector 2B,
IIFC (UK)L London EC4N7HR Martin Luther King Road,
HDFC Bank Ltd Worli Mumbai-400018 Bidhan Nagar,
Punjab National Bank Fort, Mumbai-400001 Durgapur-713212, West Bengal.
Bank of Baroda Navrangpura Ahmedabad-380014 Tel : +91 343 633000

STATUTORY AUDITORS PROJECT OFFICE-MEHSANA

KHANDELWAL JAIN & CO 95, Radhe Kunj –Vibhag-1,

Chartered Accountants Behind Wide Angle,
Mumbai Mehsana-384002,
Gujarat,
M +91 93768 41414
REGISTERED OFFICE

Essar Oil and Gas Exploration and Production Ltd.

F 20, Balaji Shopping, Wide Angle,
Highway, Nagalpur, Mehsana, Gujarat-384002, India
M +91 93768 41414
Email: eogepl@essar.com

1
 Annual Report 2017-18

Co n ten t s
Company Overview .................................................................................................... 3
Board of Directors ...................................................................................................... 6
Senior Management Team .......................................................................................... 8
Leader in Unconventional Hydrocarbons .................................................................. 10
Performance at a Glance .......................................................................................... 11
Message from MD & CEO ........................................................................................ 12
Director’s Report ....................................................................................................... 14
Annexure to Director’s Report ................................................................................... 23
Management Discussion & Analysis Report .............................................................. 33
Business Responsibility Report ................................................................................. 37
Independent Auditor’s Report on Financial Statements.............................................. 40
Balance Sheet........................................................................................................... 46
Statement of Profit & Loss......................................................................................... 47
Statement of Changes in Equity................................................................................. 48
Cash Flow Statement................................................................................................ 49
Notes to the Financial Statements............................................................................. 51

2
 Company Overview

The world of Essar Oil and Gas Exploration Production Limited

EOGEPL is an independent Upstream oil and gas company mainly focused on unconventional hydrocarbon sector with a multi-
disciplinary workforce having wide range of expertise. The company is leading explorer and producer of Coal Bed Methane (CBM)
gas in India. The company has five unconventional energy (CBM) blocks and one conventional hydrocarbon block. Its main CBM
producing block is situated in the Raniganj Coalfield, Durgapur, West Bengal.

EOGEPL Portfolio

Company has more than two decades of operating experience in Exploration and Production in conventional and un-conventional
hydrocarbon space.

Unconventional Energy Space

 Leading Operator in the unconventional sector in India.

 First CBM operator to reach the threshold of 1.0 million scmd of gas production in India

 Licensee of five prime CBM Blocks in India.

 Total acreage holder of about 2700 sq. km

 About 10 Trillion Cubic Feet (TCF) of Resources.

Conventional Energy Space

 Onshore block (Mehsana), located in Cambay Basin, Gujarat

 Block has 4 Producing fields

 Achieved crude oil production of 130 bbls/day

Solar Compressors at Main Compressing Station

3
 Annual Report 2017-18

WE HAVE ACHIEVED MAJOR MILESTONES

EXPLORATION & PRODUCTION BUSINESS

Essar was the first Indian company to recognize the potential of unconventional hydrocarbon source of CBM in India.

First in India to drill three test wells to appraise CBM Potential in Mehsana, Gujarat in year 1993-1994.

CB-ON/3 Mehsana block awarded and PSC signed in year 1998.

CBM Raniganj Block awarded in round one bidding for CBM blocks and PSC signed in year 2002.

Petroleum Exploration License (PEL) granted for CB-ON/3 Mehsana block in year 2003.

Petroleum Exploration License (PEL) granted for CBM Raniganj block in year 2005.

Drilled five wells in CB-ON/3 Mehsana block and started Crude Oil Production in year 2005.

Drilled another fourteen wells in CB-ON/3 Mehsana block during year 2006 to 2010 and installed facilities.

Two Assam blocks (AA-ONN-2004/5 and AA-ONN-2004/3) awarded and PSC signed in year 2007.

Petroleum Exploration License (PEL) granted for two Assam blocks in year 2008.

4
First test production of CBM Gas in CBM Raniganj block in year 2009.

Field Development Plan (FDP) approved for CBM Raniganj block in year 2010.

Four CBM Blocks viz RM(E)-CBM-2008-IV, SP(NE)-CBM-2008-IV, TL-CBM-2008-IV, IB-CBM-2008-IV awarded in

fourth round of CBM and PSC signed in year 2010.

Development phase of CBM Raniganj block commenced in year 2012 to year 2016

Drilling and Hydro-fracturing of 143 Wells and installation of Facilities (Phase-I) completed Year 2013

Petroleum Exploration License (PEL) granted for CBM Rajmahal block in year 2015.

Petroleum Exploration License (PEL) granted for CBM Sohagpur block in year 2015.

Drilling and Hydrofracturing of additional 205 Wells making total 348 Wells and installation of Facilities for
2.3 MMSCMD (Phase-II) completed in year 2017.

Crossed milestone of 1 MMSCMD of CBM Gas in CBM Raniganj block and first in India to achieve production of
1 MMSCMD of CBM Gas in year 2017 .

Long term Gas Supply and Purchase Agreement (GSPA) at a highly remunerative price executed with Gas Authority
of India (GAIL) in year 2018.

5

Board Of Directors
MR. VILAS SHREEDHAR TAWDE
Managing Director and Chief Executive Officer
Mr. Vilas Shreedhar Tawde is a B.E. (Instrumentation &
Controls) with a Diploma in Business Management. He
was appointed to the Board of Directors on September 7,
2017. Mr Vilas Tawde joined Essar Group in July 2005 and
has worked with its oil and gas business. In Essar he has
held the leadership positions like Head Commercial, Head
Surface Facility, Project Director and was responsible for,
inter alia, commercial and procurements, surface facilities,
project execution, corporate affairs, boundary issues ,
CSR, corporate communications, HSE and marketing
function.
Prior to joining Essar, Mr Tawde had worked with ONGC
for 20 years in several responsible positions, last being
Project Manager –offshore projects in Mumbai. In his
tenure with ONGC, he was involved in Development of
Onshore and Offshore projects and was also part of the
Management Team for development of Sakhalin 1 project
in Russia with Exxon-Mobil.
6
Annual Report 2017-18
MR. GOPAL PALLIPURAM SRINIVASAN
Whole-Time Director and Chief Finance Officer
Mr Srinivasan is a graduate in Commerce from the
University of Delhi, a Fellow of the Institute of Cost
Accountants of India and a postgraduate in general
management from IIM, Calcutta. He was appointed as the
Chief Financial officer of the Company effective from 11
September 2017 and further appointed as a Whole-Time
Director effective from February 28, 2018. He has over 34
years of experience in finance, commercial, accounts and
business development related functions.
Previous to joining Essar Group, Mr. Srinivasan has held
positions of CFO at Great Eastern Energy Limited and
has also served as CFO at Gujarat State Petroleum
Corporation Ltd. At Interlink Petroleum Limited, a BSE
listed entity, Mr Srinivasan was the Managing Director,
with an additional charge as CFO. A veteran in the oil &
gas sector, he began his career with Oil India Limited and
later moved to ONGC Mittal Energy Ltd, UK, and Ezra
Holdings Limited, Singapore.
MS. GLYNISS OSCAR FERNANDES
Head HR and Whole-time Director
Ms. Glyniss Fernandes has completed
her MBA in Human Resources from
ITM, Mumbai. She is currently working
as Head – Human Resources of Essar
Oil & Gas Exploration & Production
Limited. She has over 22 years of
experience in handling the entire
gamut of Human Resource functions
such as Talent Acquisition, Rewards &
Recognition, Compensation & Benefits
and Training & Development. She has
also received many GEM awards for
going extra mile apart from receiving an
appreciation letter from CEO for saving
cost. Prior to working with Essar, she
was working at the HR Department of
Reliance Industries Limited.
MR. K N VENKATASUBRAMANIAN
Independent Director
Mr. K. N. Venkatasubramanian was
appointed to the Board of Directors
on June 12, 2017. He has over 54
years of experience in the oil & gas and
petrochemicals sectors having worked
for IPCL, IOCL and Gulf Oil Limited.
He has previously served as Director,
Marketing and Director, Operations of
IPCL, Chairman and Managing Director
of Engineers India Ltd., Chairman and
Managing Director of IOCL and as
Chairman of Gulf Oil Ltd.
He is a Chemical Engineer from A.C.
College of Technology, Chennai and an
M.Tech from IIT, Kharagpur.
MR. RAJKUMAR SUKHDEVSINHJI
Independent Director
R. K. Sukhdevsinhji, graduated from St.
Stephens College, Delhi, with a Bachelors
Degree in Economics and joined Burmah
Shell in 1957 in the All India Executive Cadre,
where he held key senior positions. In 1981,
he was deputed to the Ministry of Petroleum
and Natural Gas as Director (Operations) in
the Oil Coordination Committee (OCC), and
was responsible for all crude oil and product
imports into the country, refining operations
and tanker charters.
He was appointed as Chairman and
Managing Director of Bharat Petroleum
Corporation Ltd and during his tenure
initiated successfully joint ventures with
Shell International Petroleum Company
with the formation of Bharat Shell and later
a refining joint venture with the Oman Oil
Company i.e. Bharat Oman Refineries Ltd
for the Bina Refinery.
He joined the Essar Group as Managing
Director of Essar Oil and initiated the
Essar Refinery Project at Vadinar and the
successful IPO to launch the initiative.
Subsequently, he has been leading
Corporate Relations Group and is a Director
in companies in the hydro carbon sector,
textiles, information technology, etc.
7
 Annual Report 2017-18

Senior Management Team – Mumbai

Mr. Ashish Kumar Mr. Vijay Vispute Mr. Sanjay Tiwari

Chief Operating Officer Exploration Asset Manager Head Legal
Conventional & CBM – IV Blocks Mehsana and CBM-IV Block

Mr. Nayan Gosar Mr. Rajeev Sugathan Mr. Tejas Shah

Joint General Manager Joint General Manager - F & A Joint General Manager-Finance

8
 Durgapur Team & Management

Mr C. D. Narayanswamy Mr. Sopan Ghosh Mr. Nilesh Kamat

Chief Operating Officer Joint General Manager- Head Projects & New
Procurement & Contracts Constructions

Mr. Manabendra Guharoy Mr. Rajesh Mishra Mr. Jonathan Tandon

Advisor Joint General Manager Joint General Manager- Drilling
Projects & New Constructions

9
 Annual Report 2017-18

Leader in Unconventional Hydrocarbons

The demand for energy is ever increasing and the world needs
more of it. As developing economies across the globe grow
further, the demand for energy keeps increasing at a rapid
pace. Oil & Gas (conventional and unconventional) would
continue to have more than 50% of world energy mix. The
conventional resources are decreasing fast and discoveries are
far and few, so the trend for unconventional hydrocarbons is
going strong globally.

Financial Year 2017-2018 has ended with positive notes from

the management’s as well as various stakeholders’ perspective
with major milestones achieved during the year of re-attaining
one (1.0) MMSCMD of CBM production from Raniganj Block
and highest monthly crude oil production achieved in Mehsana
Block with three wells put on stream. Also achieved a year Coal Bed Methane extraction

without Lost Time Incident (LTI).

As we continue to focus on unconventional source, we have

re-emphasised our focus on Health, Environment, and Safety
(HSE) while looking at planning for further capex and good
governance. We also plan to improve credit profile and finances
towards building a good value proposition and an excellent
brand value.

In order to keep our personnel aligned with the company’s

long-term vision, the Company is seeking their active
involvement in cross functional areas, task assignment,
development of new initiatives and future plans. Through
all these initiatives, we continue to strive for excellence and
a viable future that would help us in making the Company a
leader in unconventional energy source.

10
 Performance at a Glance

Financial Performance: Amount in ` Lakhs

Particulars Year ended Period ended
31st March, 2018 31st March, 2017
Total Income 1,000.28 0.00
Total Expenditure 11,648.73 4.36
Profit before exceptional & extraordinary items & tax (10,648.45) (4.36)
Exceptional Items 1,79,044.09 (1,79,965.30)
Profit/Loss before Tax 1,68,395.64 (1,79,969.66)
Provision for Taxation 0.00 0.00
Deferred Tax 0.00 0.00
Income tax related to earlier year 0.00 0.00
Other Comprehensive Income 3.00 0.00
Profit/ Loss after Tax 1,68,398.64 (1,79,969.66)

Operational Performance:
Over the years, Essar has played a pioneering role in CBM gas
development in India. Keeping up with this tradition, EOGEPL
has completed another year with strong performance. During
the year, your company achieved a production of 1.0 million
standard cubic meter per day (MMSCMD) CBM gas from its
Raniganj Block and crude oil production of 130 barrels per day
from Mehsana block.
In a bid to further expand its CBM gas sale outreach from its
Raniganj Block, it has concluded a Gas Sale and Purchase
Agreement (GSPA) with GAIL (India) Limited (a GoI’s Maharatna
Company) on the 6th August 2018. During the year, the
Company has discovered a highly remunerative gas price
for its CBM gas that is linked to internationally traded Brent
Crude oil prices through an open tender process, as per the
Government of India guidelines. This is expected to provide
a stability to its CBM gas operations from continuous flow of
funds.
Broadly Financial Year 2017-2018 has ended with positive
notes from the management’s as well as various stakeholders’
perspective with major milestones achieved during the year as
detailed below:
 Re-attaining one (1.0) MMSCMD of CBM production from
Raniganj Field
 Pursuant to directive from Government of India for early
monetization of CBM, discovered of a remunerative gas
price for the CBM gas being produced at Raniganj Block.
 Signing of a long term Gas Sale Purchase Agreement
(GSPA) with GAIL (INDIA) Ltd., a AAA rated Public Sector
Undertaking that is likely to provide revenue stability to the
Company going forward.
 Establishment of huge infrastructure in terms of GGS and
pipelines for delivering the produced gas to the market.
 Quick tie up of CBM gas with various customers on fall-
back basis post major consumer shutdown.

During the year, the Company has also attained a highest daily
production of 130 bbls of crude oil from its Mehsana asset in
the State of Gujarat and a monthly production of around 3500
bbls.
Given the company’s commitment to superior performance, it
has adopted the best available technology and practices for
exploration and production and has achieved many milestones.
Adopting innovative drilling, completion & production practices
the company has been successful in achieving faster drilling,
early production and improved economics for the Raniganj
CBM Project.
 Achieved a year without Lost Time Incident (LTI).
 Innovative marketing strategy to enhance Gas sales in
local market.
 One well in each of the fields (EEU, ENP and ENS) put on
stream during the year at Mehsana Block.
 Highest monthly crude oil production achieved in Mehsana
Block and achieved higher than target crude oil production
during FY 2017-2018.
 Crude Off take and Sale Agreement (COSA) terms and
conditions re-negotiated and finalised with Indian Oil
Corporation Ltd (IOCL).

11
 Annual Report 2017-18

Message from Managing Director and Chief Executive Officer

 The Mehsana asset has finally started producing

more than 3500 barrels a month, and we have
surpassed the target of FY 2017-18. This has
helped to re-establish the trust on this asset.

 We have also completed Phase-II development

involving drilling and completion of 204 wells (In
addition to 143 wells drilled and completed in
Phase-I) and allied facilities of Raniganj CBM Block
and declared Commercial Operation as on 1st April,
2018. With this entire CBM Raniganj project now
turns in to Operational Phase.

The above mentioned achievements has given

a very good platform in FY 2017-2018 in terms
of our key assets delivering in terms of target &
milestones.

There are so many other achievements linked

directly and indirectly to the success of these
assets like

1. Effective handing of customers/ stakeholders after

abrupt disruption of supplies

2. Reaching 1.0 MMSCMD production, which was

eluding us for long
FY 2017-2018 has come to a close on a very positive and encouraging
note. With the achievement of certain targets and milestones, our 3. Fast restoration of customers on fall-back basis
Company, which is just ONE year old, is ready to consolidate and post shutdown of major consumer.
expand its horizons. I thought it may be worthwhile to just take a brief
4. Innovative marketing strategy to enhance gas sales
pause and look back upon the year gone by. We should draw strength
in local market.
from all the achievements and also stimulate ourselves to achieve what
we could not, last year and target for more 5. Releasing of CBM operational handbook that
covers the technical aspects required to understand
 The Year was completed without Lost Time Incident (LTI) which a
CBM basics.
significant achievement.
Needless to say that the year had been financially
 An important milestone achieved was the signing of the GSPA with
challenging and the hurdles have been many, but we
GAIL recently. This has given us the single-most important setting i.e.
have done a very adept handling of the multitude of
establish our credentials as a bankable player with robust technology
legal and regulatory issues arising out of this. There
and commercial standards. With the improving crude price we
are many other contributions at an individual and team
foresee this is a great achievement for the future of the Company in
levels.
general and Raniganj CBM project in specific.

12
Human Resources are most valuable to a knowledge based
industry like ours. We did rationalise the policies in this year
with appropriate elevation, increments and awards/rewards to
performing employees. On training front, we would definitely like
to focus more over the coming years to maintain and upgrade
the skill levels of employees.
The forward plan for EOGEPL is in diversifying ourselves to
operationalizing our other CBM and conventional blocks.
The plans for Raniganj and Mehsana are to further boost our
production in light of the commerciality achieved by these blocks.
We also look forward to the upcoming policy of Simultaneous
Exploration which will open up additional resources in terms of
Shale in Raniganj and CBM in Mehsana.
Conventional gas production is dominated in India by a handful
of ageing conventional fields. Limited number of new plays been
added over the years. The current scenario is expanding Natural
Gas demand-supply gap and a strong need to decarbonize
the fuel mix. High import costs of R-LNG and increased Crude
prices are also some factors. Therefore, Hon. PM has given
a strong mandate of 10% reduction in Hydrocarbon Import
dependency by 2022.
As per projections, there is a significant opportunity for growth
in Unconventional Gas resources like CBM and futuristically
Shale Gas (IEA, 2015). CBM development already a reality and
thus may be a ‘Preferred Future Energy Resource’
I’m very happy to see that the CBM scenario in the Damodar
Valley area has been changing rapidly with our peer CBM
developers coming online. We as a company, are looked up by
all these investors as an example of success in CBM and we are
reaching out to each one of them to co-operate by sharing our
experience and expertise on a suitable commercial set-up. I may
share here that the initial dialogue with these players have been
extremely encouraging. This is definitely going to be a parallel
business model we are sure to breakthrough. The infrastructure
support (Urja Ganga Pipeline) we would get during this future
development would help to monetise every single molecule
of gas. The Government has recently approved the Policy
Framework for exploration and exploitation of Unconventional
Hydrocarbons in the existing acreages which would also help
towards this objective.
Vilas Shreedhar Tawde
Managing Director and Chief Executive Officer
13
 Annual Report 2017-18

Director’s Report

To,

The Members of

ESSAR OIL AND GAS EXPLORATION AND PRODUCTION LIMITED

GUJARAT

Your Directors have the pleasure in presenting to you the 2nd Annual Report of the Company together with the Audited Statement
of Accounts for the year ended 31st March, 2018.

1. FINANCIAL SUMMARY OR HIGHLIGHTS/PERFORMANCE OF THE COMPANY 

Amount in ` Lakhs
Particulars Year ended Period ended
31st March, 2018 31st March, 2017
Total Income (a) 1,000.28 0.00
Total Expenditure (b) 11,648.73 4.36
Profit / (Loss) before exceptional & extraordinary items & tax (c) = (a) – (b) (10,648.45) (4.36)
Exceptional Items (d) 1,79,044.09 (1,79,965.30)
Profit/(Loss) before Tax (e) = (c) – (d) 1,68,395.64 (1,79,969.66)
Provision for Taxation 0.00 0.00
Deferred Tax 0.00 0.00
Income tax related to earlier year 0.00 0.00
Other Comprehensive Income 3.00 0.00
Profit/ (Loss) after Tax 1,68,398.64 (1,79,969.66)

2. BRIEF DESCRIPTION OF THE COMPANY’S
WORKING DURING THE YEAR/STATE OF
COMPANY’S AFFAIR
State of Company Affairs
In financial year ending March 31, 2018, our Raniganj
block has delivered excellent performance, by reaching a
Coal Bed Methane (CBM) gas production of 1.04 Million
Standard Cubic Meters per day (mmscmd). However,
due to the technical shutdown of its plant by a major gas
consumer, gas production was systematically reduced to
0.64 mmscmd (flaring and planned production reduction).
Despite this, the average gas production of 0.9 mmscmd
was achieved in the year.
Your Company could however successfully tie up with 23
local customers to sell the produced gas on a fall back
basis that helped the Company sustain its operations.
Also, in line with the Government of India guidelines,
your Company concluded a CBM gas price discovery
process and discovered a remunerative gas price linked
to internationally traded Brent crude oil price with a
floor price of US$5.794 per Million British Thermal Units
(mmbtu) and ceiling price of US$14.944/mmbtu. This is
expected to provide stability to your Company’s cash flow
in the coming years and also protect from any surprise in
the crude oil prices internationally.
In the conventional oil and gas blocks, Mehsana asset
has delivered improved performance and reached highest
crude production of 130 barrels (bbls)/day during the year
with four wells on production.
The Industry we operate in has heavy machinery, gas
processing, compression stations and rigs and has
significant exposure to potential hazards. Company is
committed to achieve excellence in the area of health,
safety & environment and community engagement by
providing and maintaining safe and healthy working
environment for its employee, contractors and customers.

14
 Raniganj CBM Block
Raniganj block has made remarkable step forward in its
journey during the year where Company has achieved
significant milestone. Your Company could scale up its
performance and reached heights due to committed hard
work, excellent co-ordinations, focus on execution and
innovation. This gave huge satisfaction and assurance that
Raniganj asset will achieve greater heights in the future.
Gas Gathering Station :Raniganj
Continuing operating with high efficiency, your Company
has achieved highest CBM gas production of 1.04
mmscmd during the year. Of the total 348 wells drilled,
232 wells were producing gas and the balance wells
were either producing water or were under maintenance.
Your Company also achieved highest gas sales of 0.84
mmscmd through supply of gas to its major consumer,
a fertilizer plant. Your Company was also able to tie up
with the local customers instantly to sell gas upon the
shutdown of the major consumer and generate revenue
required to sustain operations. Your Company could also
slowed down gas production in a phased manner from
around 1.0 mmscmd to 0.60 mmscmd to reduce the gas
flaring and preserve natural resource.
After technical evaluation of all the wells in the field,
selectively wells were shut-down, from which gas can
be recovered quickly upon restarting. Few wells were
also taken up for planned work over jobs to improve the
longevity of well and obtain stabilized gas production.
All steps were taken, ensuring that there is minimal impact
on the reservoir and the production operations. This was
due mainly to technical reasons ascribed to CBM reservoir
wherein once started, stopping the dewatering process
by temporarily closing of wells is not a recommended
practice in CBM reservoirs as it increases the water
saturation in the near-wellbore region i.e. it increases the
reservoir pressure, thus delaying the recovery of gas upon
restarting of wells. Therefore, once dewatering is initiated
it has to be continued.
As per Government of India (GOI) guidelines, Company
undertook a price discovery process for sale of all CBM
gas from Raniganj Block. GAIL (India) Limited (GAIL) was
the successful bidder for the entire gas available for sale.
The price receivable from GAIL under the Gas Purchase
and Sale Agreement (GSPA) would be highly remunerative
since it is linked to international crude oil prices. It is
anticipated that in near future GAIL would complete its
Jagdishpur-Haldia-Bokaro-Damra pipeline (JHBDPL) (also
known as the ‘Pradhan Mantri Urja Ganga’ project) up to
Durgapur. Post that all the saleable gas from Raniganj can
also be easily evacuated through the GAIL line in case of
any eventuality. JHBDPL pipeline has opened up a great
opportunity for the Company and also eliminated the risk
of gas sale/evacuation from Raniganj Block by providing
opportunity for your Company to reach out to consumers
along the pipeline
At present, CBM Gas production from the field is
downsized and stabilized at 0.6 mmscmd with a current
sales volume ranging from 0.35 to 0.40 mmscmd to
current customers. Your Company has already aligned the
required resources and optimized the gas production for
future gas demand in the region. Best efforts are made
to service and maintain the producing wells, so that gas
production can be ramped-up without much lag.
Along with GAIL’s JHBDPL Pipeline Project, state owned
agency PNGRB has also planned to establish City Gas
Distribution (CGD) pipeline network in major districts in the
eastern states (Jharkhand, Bihar, West Bengal, Tripura,
and Odisha & Assam). This will also open new avenues
of gas sales in domestic and industrial markets in these
states.
Sucker Rod pumping unit at Mehasana
15

Other CBM Exploratory Blocks
Company has four other blocks in unconventional coal bed
methane space spread across the country. These blocks
are situated in the prime Gondwana coal basins which has
been the center of CBM exploration and production. All
these four blocks are in different stages of clearances and
effort are on to start operating in at least two of the blocks
in next year after all clearances have been received.
Conventional Energy Space
The Company continued to produce crude oil from it
conventional energy block. Currently CB-ON/3 block
located in Mehsana has been producing crude oil about
100 bbls/d. Block CB-ON/3 is located on the eastern
flank of Sanchor-Patan and Mehsana-Ahmedabad
tectonic block of the Cambay Basin in Western India.
Your Company has carried out a meticulous exploration
work in the block and discovered four oilfields viz. Essar
South Unawa (ESU), Essar North Pali (ENP), Essar North
Sapad (ENS), and Essar East Unawa (EEU), by carrying
out a detailed 3D seismic survey and after having drilled
as many as 18 exploratory wells over the period of 3
exploration phases with 6 wells converted to producers.
Except for the ML areas, the rest of the leased area of 574
SKM has been surrendered. Currently four wells are on
production in the block.
Hydrofracturing operation in Raniganj
16
Annual Report 2017-18
Sustainability
Your Company continued to undertake several actions
during the year ranging from environmental protection
initiatives, safety campaigns, strengthening of process
safety to institutionalizing a culture of continual learning.
Raniganj block achieved a record of lost time free (LTI)
year and major fire free year.
The Company continued to strive for an injury-free and
healthy workplace to institutionalize a culture of safety in
the organization. Along with complying with the statutory,
industry and Company’s requirements, we ensure health
and safety of the people delivering or using our services.
Dedicated teams are in place to manage Health, Safety
and Environment (HSE) issues.
All the facilities have a Health Safety Environment
Management System (HSEMS) which has evolved over
the years. During the year, several HSEMS interventions
were undertaken that included not only training but also
communication, gap analyses, compliance studies,
incident investigations and trainings.
Key HSE performance highlights during the year are as
follows:
 Achieved Zero lost time injury frequency rate.
 Provided 1941 Man-hour health & safety training to
employees and contractors
 Reported 409 STOP observation.
 100% Environmental compliance of the Project.
 Planted 297 saplings at different locations at project
site to improve the green belt coverage
Global Market and Industry Overview
Global economy has grown by 3.8% in the year 2017 and
is expected to pick up to 3.9% in 2018 and beyond. It was
driven by economic activities in advanced economies and
strong growth in Asia and notable upswing in emerging
Europe.
Long-term oil demand is expected to increase by 15.8
million barrels per day (mb/d), rising from 95.4 mb/d in
2017 to 111.2 mb/d in 2040. Demand in the OECD region
is anticipated to show a significant decline of 8.9 mb/d
over the period. Driven by an expanding middle class, high
population growth rates and stronger economic growth
potential, developing countries’ oil demand is expected
to increase by almost 24 mb/d. China is anticipated to
continue to be the largest oil consumer over the forecast
period, adding 6 mb/d to reach 17.8 mb/d by 2040. India
will be the region with the second largest overall demand
growth, adding 5.9 mb/d by 2040. Indian demand growth
is also set to witness the fastest average growth of 3.6%
p.a.
Long term global oil demand growth is forecast to
decelerate steadily, falling from an annual average of
around 1.3 mb/d to 0.3 mb/d in by 2035 due to expected
stagnation in economic growth, oil price increase and
a structural shift of economies towards a more service-
oriented structure, efficiency improvements as a result of
tightening energy efficiency policies and/or technological
improvements, and oil facing strong competition from
other energy sources. The advent of electric cars and use
of alternate energy source like renewable etc. would also
slowed down the demand for oil.
Natural gas would be major player in the energy mix and is
expected to play a pivotal role in economies as countries
around the world are looking for ways to reduce the
carbon footprint. Natural gas grows strongly supported by
broad based demand, strong increases in low cost supply
and continuing expansion of supplies of liquefied natural
gas (LNG) along with increased availability of gas globally.
The global demand for natural gas is expected to grow by
40% as its share of the world’s energy mix rises from 26%
to 40% between 2016 and 2040. Natural gas resources
are geologically and geographically diverse. Technology
such as horizontal drilling and hydro-fracturing, have
unlocked vast unconventional resources, which have
dramatically altered the natural gas supply landscape
in the last decade. Unconventional gas resources will
continue to play a major role contributing more than half
of the growth in natural gas demand in coming years.
Natural gas supply would play an important role in fuelling
economic growth in Asia, Africa and Latin America.
Indian Perspective
In last few years, where global economy is in shamble,
Indian economy is the only shining star. India has emerged
as the fastest growing major economy in the world as per
the Central Statistics Organization (CSO) and International
Monetary Fund (IMF) and it is expected to be one of the
top three economic powers of the world over the next
10-15 years. India’s gross domestic product (GDP) is
estimated to have increased 6.6 per cent in 2017-18 and
is expected to grow 7.3 per cent in 2018-19.
India’s GDP is expected to reach US$ 6 trillion by FY27
and achieve upper-middle income status on the back of
digitization, globalization, favorable demographics, and
reforms. India is expected to be the third largest consumer
economy as its consumption may triple to US$ 4 trillion by
2025, owing to shift in consumer behavior and expenditure
pattern (Boston Consulting Group report) and is estimated
to surpass USA to become the second largest economy in
terms of purchasing power parity (PPP) by the year 2040.
India is expected to be one of the largest contributors to
non-OECD petroleum consumption growth globally. Oil
imports rose sharply year-on-year by 27.89 per cent to
US$ 9.29 billion in October 2017. India’s oil consumption
grew 8.3 per cent year-on-year to 212.7 million tons in
2016, as against the global growth of 1.5 per cent,
thereby making it the third-largest oil consuming nation
in the world.
India is the fourth-largest LNG importer after Japan, South
Korea and China, and accounts for 5.8 per cent of the
total global trade. Domestic LNG demand is expected to
grow at a CAGR of 16.89 per cent to 306.54 MMSCMD
by 2021 from 64 MMSCMD in 2015.
The country’s gas production is expected to touch 90
Billion Cubic Meters (BCM) in 2040 from 21.3 BCM in
2017-2018 (Apr-Nov). Gas pipeline infrastructure in the
country stood at 16,470 km in September 2017.
India’s oil demand is expected to grow at a Compound
Annual Growth Rate (CAGR) of 3.6 per cent to 458 Million
Tons of Oil Equivalent (MTOE) by 2040, while demand for
energy will more than double by 2040 as economy will
grow to more than five times its current size.
Domestic production accounts for more than three-
quarter of the country’s total gas consumption. Demand
is expected to increase due to higher economic growth,
ensure less dependency on imported crude and a
desire to use cleaner fuel. India’s gas consumption has
increased at CAGR of 2.44% between 2007 and 2016
and demand is not likely to simmer down anytime soon.
Given strong economic growth and raising urbanization
gas consumption is projected to reach 216 Billion Cubic
Meters (BCM) by 2021-2022. LNG imports increased at a
CAGR of 8.14 per cent during FY-2008–FY-2018 where as
domestic gas production in India stood at around 30.92
BCM in FY-2017.
17

SCADA Panels at Main Compressing Station (MCS)
India’s energy consumption expected to grow by 4.2%
and gas consumption is expected to increase by 5% to
account for 11% of the world energy consumption. The
government of India has brought in a policy to increase the
gas consumption in Indian energy mix to 15%, which is a
challenging proposition.
3. DIVIDEND & TRANSFER TO RESERVES
During the year under review, since the Company has not
earned any profits, your Director’s do not recommend any
dividend for the financial year 2017-2018.
The Company has transferred excess purchase
consideration to Capital Reserves.
4. CHANGE IN THE NATURE OF BUSINESS
There is no change in the nature of the business carried
out by the Company.
5. MATERIAL CHANGES AND COMMITMENTS, IF ANY,
AFFECTING THE FINANCIAL POSITION OF THE
COMPANY WHICH HAVE OCCURRED BETWEEN THE
END OF THE FINANCIAL YEAR OF THE COMPANY
TO WHICH THE FINANCIAL STATEMENTS RELATE
AND THE DATE OF THE REPORT.
The Company declared Commercial Operation of CBM
Raniganj Block as on 1st April, 2018. With this, entire CBM
Raniganj project now turns in to Operational Phase.
6. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS IMPACTING THE GOING CONCERN
STATUS AND COMPANY’S OPERATIONS IN FUTURE
There are no significant material orders passed by the
Regulators / Courts or Tribunals which would impact
the going concern status of the Company and its future
operations.
18
Annual Report 2017-18
7. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL
FINANCIAL CONTROLS WITH REFERENCE TO THE
FINANCIAL STATEMENTS. 
The internal financial controls with reference to financial
statements as designed and implemented by the Company
are adequate. During the year under review, such controls
have been assessed taking into consideration the essential
components of internal controls stated in the guidance
note on audit of internal financial controls over financial
reporting issued by The Institute of Chartered Accountants
of India. Based on the results of such assessment carried
out by management, no reportable material weakness
or significant deficiencies in the design or operation of
internal financial controls was observed. Nonetheless the
Company recognizes that any internal control framework,
no matter how well designed, has inherent limitations and
accordingly, regular audit and review processes ensure
that such systems are reinforced on an ongoing basis.
8. DEPOSITS
During the year under review, the Company has not
accepted any deposit from the public under Section 73
of the Companies Act, 2013 (Act), read with Companies
(Acceptance of Deposits) Rules, 2014.
9. PARTICULARS OF LOANS, GUARANTEES OR
INVESTMENTS UNDER SECTION 186
Particulars of investments made are provided in the
financial statements (please refer to Note 9 to the
financial statements). Since your Company belongs
to the petroleum and natural gas sector and operates
‘infrastructure facilities’ as defined under Schedule VI of
the Act, it is not required to comply with provisions relating
to making of loans, giving guarantees, or providing security
as prescribed in Section 186 of the Act.
10. AUDITORS AND THEIR REPORTS
The Auditor’s Report do not contain any qualifications,
observations or adverse remarks or disclaimer.
10.1 OBSERVATIONS OF STATUTORY AUDITORS ON
ACCOUNTS FOR THE YEAR ENDED 31ST MARCH,
2018.
The Auditor’s Report do not contain any qualifications,
observations or adverse remarks or disclaimer.
10.2 STATUTORY AUDITORS
M/s Khandelwal Jain & Co., Chartered Accountants were
appointed as the Statutory Auditors of the Company
for a term of 5(five) consecutive years, at the 1st Annual
General Meeting held on December 15, 2017. They have
confirmed that they are not disqualified from continuing as
Auditors of the Company.
10.3 INTERNAL AUDITOR
Mr. Nayan Gosar was appointed as the Internal Auditor of
the Company in the Board Meeting held on September
07, 2017 for the financial year under review.
In the Board Meeting held on February 28, 2018, Mr.
Dheeraj Paroch was appointed as the Internal Auditor of
the Company for financial year 2018-19.
11. DETAILS OF SUBSIDIARY/JOINT VENTURES/
ASSOCIATE COMPANIES
The Company does not have any Subsidiary, Joint Venture
Company or Associate Company as on 31st March, 2018
and hence information for this purpose is not applicable to
the Company.
12. SHARE CAPITAL
During the year under review, there is no change in the
Share Capital of the Company.
The Company has not issued any equity shares with
differential rights/ sweat equity shares/ employee stock
options or not made any provision of its own shares by
employees or by trustees for the benefit of employees
during the financial year 2017-2018.
The Company has not made any purchase or provision of
its own shares by employees or by trustees for the benefit
of employees during the financial year 2017-2018.
13. OTHER DISCLOSURES
Other disclosures as per provisions of Section 134 of the
Act read with Companies (Accounts) Rules, 2014 are
furnished as under:
13.1 EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 134(3)(a) of the Act,
extract of the Annual Return for the financial year ended
March 31, 2018 made under the provisions of Section
92(3) of the Act is attached as Annexure “A“ which forms
part of this report.
13.2 CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS
AND OUTGO
The particulars relating to conservation of energy,
technology absorption and foreign exchange earnings
and outgo as required to be disclosed under the Act, are
provided in Annexure “B“ to this report.
14. PARTICULARS OF CONTRACTS OR
ARRANGEMENTS WITH RELATED PARTIES
During the year under review, the contracts entered into
by the Company with related parties were in the ordinary
course of business and at arm’s length basis.
15. MATTERS RELATED TO DIRECTORS AND KEY
MANAGERIAL PERSONNEL
Changes in Directors and Key Managerial Personnel
In accordance with the provisions of the Act and Articles
of Association of the Company, Mr. Gopal Pallipuram
Srinivasan, Whole-Time Director of the Company, retires
by rotation at the ensuing Annual General Meeting. The
Board of Directors, on the recommendation of Nomination
and Remuneration Committee, recommended his re-
appointment.
The Board of Directors on recommendation of Nomination
and Remuneration Committee has appointed Mr. Kuthoore
Natarajan Venkatasubramanian as Independent Director
of the Company w. e. f. June 12. 2017 for a period of 5
(five) years. The said appointment was approved by the
Shareholders of the Company at the 1st Annual General
Meeting held on December 15, 2017.
Mr. Amitabh Bhargava and Ms. Suparna Singh ceased
to be the Directors of the Company w. e. f September
27, 2017 and January 31, 2018, respectively. The Board
places on record its appreciation towards valuable
contribution made by them during their tenure as Directors
of the Company.
The Board of Directors, on recommendation of Nomination
and Remuneration Committee, appointed Mr. Gopal
Pallipuram Srinivasan and Ms. Glyniss Oscar Fernandes
as Whole-Time Directors of the Company w. e. f. February
28, 2018 for a period of 3 (three) years subject to approval
of Shareholders at the ensuing Annual General Meeting.
19
 Annual Report 2017-18

The appointment of Mr. Rajkumar Sukhdevsinhji was 17.2 COMMITTEE MEETINGS

approved by the Shareholders of the Company at the 1st
Your Company constituted Audit Committee on June 12,
Annual General Meeting held on December 15, 2017.
2017 with the following members:
The Company has received declaration from all the Mr. Kuthoore Natarajan Venkatasubramanian
Independent Directors of the Company confirming that
Mr. Rajkumar Sukhdevsinhji
they meet the criteria of independence prescribed under
the Act. Mr. Amitabh Bhargava

16. COMPLIANCE WITH SECRETARIAL STANDARDS
Your Company has complied with the provisions of
Secretarial Standards 1 (SS 1) on Board / Committee
Meetings and Secretarial Standards 2 (SS 2) on the
General Meetings of Shareholders pursuant to Section
118 of the Act.
Pursuant to resignation of Mr. Amitabh Bhargava on
September 27, 2017, the Audit Committee was re-
constituted on December 12, 2017 with the following
members:
Mr. Kuthoore Natarajan Venkatasubramanian
Mr. Rajkumar Sukhdevsinhji

17. DISCLOSURES RELATED TO BOARD, COMMITTEES Mr. Vilas Shreedhar Tawde

AND POLICIES The dates of Audit Committee Meetings are:
17.1 NUMBER AND DATES OF BOARD MEETINGS 1. September 7, 2017
During the year under review, meetings of the Board of 2. December 12, 2017
Directors were held 5 (five) times to take decisions on
3. February 28, 2018
various matters from time to time. All the meetings were
well-attended and decisions were taken unanimously. The SR. DIRECTORS MEETING MEETING
intervening gap between meetings was within the period NO. HELD ATTENDED
prescribed under the Act. The dates of Board Meetings
1 Mr. Vilas Shreedhar Tawde 3 1
are:
2 Mr. Kuthoore Natarajan 3 3
1. June 12, 2017
Venkatasubramanian
2. July 31, 2017
3 Mr. Rajkumar Sukhdevsinhji 3 3
3. September 7, 2017
4 Mr. Amitabh Bhargava 3 1
4. December 12, 2017
Your Company constituted Nomination and Remuneration
5. February 28, 2018 Committee on June 12, 2017 with the following members:
SR. MEETING MEETING Mr. Kuthoore Natarajan Venkatasubramanian
DIRECTORS
NO. HELD ATTENDED
Mr. Rajkumar Sukhdevsinhji
1 Mr. Vilas Shreedhar Tawde 5 2
Mr. Kuthoore Natarajan Ms. Suparna Singh (up to January 31, 2018)
2 5 3
Venkatasubramanian
The dates of Nomination and Remuneration Committee
Mr. Rajkumar
3 5 5 Meetings are:
Sukhdevsinhji
Mr. Gopal Pallipuram 1. September 7, 2017
4 5 1
Srinivasan 2. December 12, 2017
Ms. Glyniss Oscar
5 5 1 3. February 28, 2018
Fernandes
6 Mr. Amitabh Bhargava 5 3
7 Ms. Suparna Singh 5 4

20
 SR. DIRECTORS MEETING MEETING
NO. HELD ATTENDED
1 Mr. Kuthoore Natarajan 3 3
Venkatasubramanian
2 Mr. Rajkumar Sukhdevsinhji 3 3
3 Ms. Suparna Singh 3 2
During the year under review, a separate meeting of
Independent Directors was held on 12th December, 2017.
17.3 POLICIES
a. VIGIL MECHANISM
Your Company has established a Vigil Mechanism process
by adopting a Whistle Blower Policy for its Directors
and employees. This policy outlines the procedures for
reporting, handling, investigating, and deciding on the
course of action to be taken in case inappropriate conduct
or behaviour is noticed, reported, or suspected. The policy
provides for adequate safeguards against victimization
of persons who use the mechanism and has a process
for providing direct access to the members of the Audit
Committee in appropriate or exceptional cases.
b. RISK MANAGEMENT
Your Company recognizes that risk is an integral part of
business and is committed to managing the risks in a
proactive and efficient manner. Your Company periodically
assesses risks in the internal and external environment, along
with the cost of treating risks and incorporates risk mitigation
plans in its strategy, business and operational plans.
c. PREVENTION, PROHIBITION AND REDRESSAL OF
SEXUAL HARASSMENT AT WORKPLACE
In accordance with ‘The Sexual Harassment of Women
at Workplace (Prevention, Prohibition and Redressal) Act,
2013’ [‘Prevention of Sexual Harassment (POSH) Act’]
the Company has set up POSH Committee to promote
a safe working environment for women. The Company
emphasises the need for regular awareness and training
session for both male and female employees to sensitize
them on the issue. We had no POSH complaints registered
in the financial year under review.
d. NOMINATION AND REMUNERATION POLICY
Pursuant to the requirement of Section 178 of the Act, the
Company adopted the policy on Director’s Appointment
& Remuneration. The objective of the policy is to ensure
that Executive Directors and employees are sufficiently
compensated for their performance. The policy seeks
to provide criteria for determining qualification, positive
attributes and independence of a director, matters relating
to remuneration, appointment, removal and evaluation
of performance of directors, key managerial personnel,
senior management and other employees to determine
professional suitability and documentation of the integrity
and credibility verification process to ensure that individual
remain competent on continuing basis for the positions
they hold. Relevant chapters of the Policy relating to
Directors’ appointment and remuneration is enclosed as
Annexure – C.
18. DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(3) (c) of the
Act, with respect to Directors’ Responsibility Statement, it
is hereby confirmed that;
a) In the preparation of the annual financial statements for
year ended 31st March, 2018, the applicable accounting
standards had been followed along with proper explanation
relating to material departures;
b) The directors had selected such accounting policies
and applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the Company
as at 31st March, 2018 and of the profit and loss of the
Company for the year ended on that date;
c) The directors had taken proper and sufficient care for
the maintenance of adequate accounting records in
accordance with the provisions of the Companies Act,
2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
d) The Directors had prepared the accounts for the year
ended March 31, 2018 on a going concern basis;
e) The Directors had devised proper systems to ensure
compliance with the provisions of all applicable laws
and that such systems were adequate and operating
effectively.
19. DECLARATION GIVEN BY INDEPENDENT
DIRECTORS UNDER SECTION 149(6).
During the year, Company has received declaration of
Independence provided under section 149(6) by Mr.
Rajkumar Sukhdevsinhji and Mr. Kuthoore Natarajan
Venkatasubramanian, Independent Directors of the
Company.
21

20. GENERAL DISCLOSURES
For the year ended March 31, 2018, no disclosure is
required in respect of the following items and accordingly
we confirm as under:
• The Executive Directors did not receive any remuneration
from the holding and/or subsidiary companies.
• The Company has neither revised the financial statements
nor the report of Board of Directors.
• The Company has not bought back any shares during the
year.
• There were no instances of fraud committed against
the Company by its officers or employees as specified
under Section 143(12) of the Companies Act, 2013 and
accordingly no such reporting was done by the Auditors
of the Company.
21. VISION & MISSION OF THE COMPANY
Your Company’s Vision is to remain a “Leader” in the
un-conventional hydrocarbon space of the oil and gas
industry in India with substantial interest in the CBM as well
as shale gas reserves and production, retain its interest in
the conventional oil and gas space selectively, continue
respecting the Health-Safety-Environment, adopting best
standards and practices in all aspects of operations and
create value for all its stakeholders.
Towards this, your Company is on a Mission to expedite
the development of the Raniganj CBM project to achieve
a peak production of 3 MMSCMD by the year 2021,
exploration and development of CBM in Sohagpur and
22
Annual Report 2017-18
Rajmahal blocks and also taking advantage of the new
policy framework for exploration and exploitation of
unconventional hydrocarbons in the existing acreages
which would allow the Company to explore and develop
shale gas in its Raniganj Block and CBM in its Mehsana
block.
22. ACKNOWLEDGEMENTS
Your Directors thank the various central and state
government departments, organizations and agencies
for the continued help and co-operation extended by
them. The Directors also gratefully acknowledge all
stakeholders of the Company viz. customers, members,
dealers, vendors, banks and other business partners for
the excellent support received from them during the year.
The Directors place on record their sincere appreciation
to all employees of the Company for their unstinted
commitment and continued contribution to the Company.
For and on behalf of the Board of Directors
Vilas Shreedhar Tawde Gopal Pallipuram Srinivasan
Managing Director & CEO Whole-Time Director & CFO
DIN: 07808011 DIN: 02011557
Date: August 31, 2018
Place: Mumbai
 Annexure A

FORM NO. MGT-9

EXTRACT OF ANNUAL RETURN
As on the financial year ended on 31.03.2018

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies
(Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

i) CIN U11203GJ2016PLC091903

ii) Registration Date 10/05/2016

iii) Name of the Company Essar Oil and Gas Exploration and Production Limited

iv) Category / Sub-Category of the Company Indian Non –Government Company Limited by Share Capital

v) Address of the Registered Office and F-20, Balaji Shopping, Wide angle, Highway, Nagalpur, Mehsana,
contact details Gujarat -384002.

vi) Whether listed Company No

vii) Name, address and contact details of Data Software Research Company Private Limited.
Registrar and Transfer Agent, if any Kasturi Towers, No.11, Smith Road, Chennai -600002
Tel: 044-28213738/4487, Fax: 044-28214636

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of the Company shall be stated:-

Sr. Name and Description of main products / Activity Code of the % to total turnover of the Company
No. services Product/ service

1 Extraction of crude petroleum 06102 100%

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES –

Sr. Name And Address of the Company CIN/GLN Holding/ % of shares Applicable
No. Subsidiary / held Section
Associate

1 Essar Exploration & Production Limited NA Holding 100% 2 (46)

*On 31st July, 2017, Nayara Energy Limited (Formerly Essar Oil Limited), the then 100% Holding Company transferred all
the shares held in the Company to Essar Exploration & Production Limited (EEPL). Since then, EEPL is the 100% Holding
Company.

23
 Annual Report 2017-18

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)-

i) Category-wise Share Holding

Category of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year %
Demat Physical Total % of Total Demat Physical Total % of Change
Shares Total during
Shares the year
A. Promoters
(1) Indian - - - - - - - - -
a) Individual / HUF - - - - - - - - -
b) Central Govt. - - - - - - - - -
c) State Govt.(s) - - - - - - - - -
d) Bodies Corporate - - - - - - - - -
e) Banks / FI - - - - - - - - -
f) Any Other…. - - - - - - - - -
Sub-Total (A)(1): - -
(2) Foreign - - - - - - - - -
a) NRIs - Individuals - - - - - - - - -
b) Other - Individuals - - - - - - - - -
c) Bodies Corporate 49,940 60 50,000 100% 49,940 60 50,000 100% -
d) Banks / FI - - - - - - - - -
e) Any Other…. - - - - - - - - -
Sub-Total (A)(2): 49,940 60 50,000 100% 49,940 60 50,000 100%
Total Shareholding of 49,940 60 50,000 100% 49,940 60 50,000 100%
Promoters (A) = (A)(1)+(A)(2)
B. Public Shareholding - - - - - - - - -
(1) Institutions - - - - - - - - -
a) Mutual Funds - - - - - - - - -
b) Banks / FI - - - - - - - - -
c) Central Govt - - - - - - - - -
d) State Govt.(s) - - - - - - - - -
e) Venture Capital Funds - - - - - - - - -
f) Insurance Companies - - - - - - - - -
g) FIIs - - - - - - - - -
h) Foreign VentureCapital - - - - - - - - -
Funds
i) Others (specify) - - - - - - - - -
Sub-Total (B)(1): - - - - - - - - -
(2) Non-Institutions - - - - - - - - -
a) Bodies Corporate - - - - - - - - -
i) Indian - - - - - - - - -
ii) Overseas - - - - - - - - -
b) Individuals - - - - - - - - -
i) Individual Shareholders
holding nominal share capital
upto Rs. 1 lakh

24
 Category of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year %
Demat Physical Total % of Total Demat Physical Total % of Change
Shares Total during
Shares the year
ii) Individual Shareholders - - - - - - - - -
holding nominal share capital
in excess of Rs. 1 lakh
c) Others (specify) - - - - - - - - -
Sub-Total (B)(2): - - - - - - - - -
Total Public Shareholding - - - - - - - - -
(B)=(B)(1)+ (B)(2)
C. Shares held by - - - - - - - - -
Custodian for GDRs &
ADRs
Grand Total (A+B+C) 49,940 60 50,000 100% 49,940 60 50,000 100% -

ii) Shareholding of the Promoters

Sr. Shareholder’s Name Shareholding at the beginning of the year Shareholding at the end of the year % of change in
No. No. of Shares % of total % of Shares No. of % of total %of Shares shareholding
Shares Pledged / Shares Shares Pledged / during the year
of the encumbered of the encumbered
Company to total Company to total
shares shares
1 Essar Exploration & 0 0% 0% 50,000 100% 99.88 100%
Production Limited
Total 0 0% 0% 50,000 100% 99.88 100%

iv) Change in Promoters’ Shareholding

Sr. Name of Shareholding at the Date Reason Increase / Decrease in Cumulative shareholding
No. Shareholder beginning of the year as shareholding during the year
on April 1, 2017
No. of % of total No. of % of total No. of % of total
Shares shares Shares shares Shares shares
of the of the of the
Company Company Company
1 Nayara Energy 50,000 100 31/07/2017 Transfer of 50,000 100 0 0
Limited ( Formerly Shares
Known as Essar
Oil Limited
2 Essar Exploration 0 0 31/07/2017 Acquisition of 50,000 100 50,000 100
& Production Shares
Limited

v) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): NA

vi) Shareholding of Directors and Key Managerial Personnel: NA

25
 Annual Report 2017-18

V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment:
(Amount in ` Lakhs)
Particulars Secured Unsecured Deposits Total
Loans Loans Indebtedness
excluding
deposits
Indebtedness at the beginning of the financial year
i) Principal Amount 1,42,167.76 806.83 - 1,42,974.59
ii) Interest due but not paid - - - -
iii) Interest accrued but not due 134.18 - - 134.18
Total (i+ii+iii) 1,42,301.94 806.83 - 1,43,108.77
Change in Indebtedness during the financial year
· Addition 4,034.77 - 4,036.60
· Reduction 6,751.48 1.83 - 6,751.48
Net Change -2,716.71 1.83 - -2,714.88
Indebtedness at the end of the financial year
i) Principal Amount 136,581.69 808.66 - 1,37,390.35
ii) Interest due but not paid 2,278.01 - - 2,278.01
iii) Interest accrued but not due 725.53 - - 725.53
Total (i+ii+iii) 1,39,585.23 808.66 - 1,40,393.89

Note1: In case of unsecured loan, addition is due in change in exchange variation only. There is no additional amount borrowed.
In case of secured loan, Addition includes `171.21 Lakhs on account of change in exchange variation. Balance ` 860.02 lakhs
Note2:
is additional amount borrowed.

VI.    REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

Sr. Particulars of Name of MD/WTD/ Manager Total Amount (`)

No. Remuneration
Name *Mr. Vilas *Mr. Gopal *Ms. Glyniss *Mr. Amitabh
Shreedhar Pallipuram Oscar Bhargava
Tawde Srinivasan Fernandes
Designation Managing Whole-Time Whole-Time Whole-Time
Director and Director and Director Director
CEO CFO
1 Gross salary#
(a) Salary as per 76,16,000 10,38,833 1,57,453 93,96,858 1,82,09,144
provisions contained
in section 17(1) of
the Income-tax Act,
1961
(b) Value of - - - -
perquisites under
section 17(2)
Income-tax Act,
1961

26
 Sr. Particulars of Name of MD/WTD/ Manager Total Amount (`)
No. Remuneration
Name *Mr. Vilas *Mr. Gopal *Ms. Glyniss *Mr. Amitabh
Shreedhar Pallipuram Oscar Bhargava
Tawde Srinivasan Fernandes
Designation Managing Whole-Time Whole-Time Whole-Time
Director and Director and Director Director
CEO CFO
(c) Profits in lieu of - - - -
salary under section
17(3) Income- tax
Act, 1961
2 Stock Option - - - -
3 Sweat Equity - - - -
4 Commission - - - -
as % of profit
others, specify
5 Others, please
specify
Employers 4,76,000 19,500 7,993 3,20,081 8,23,574
Contribution to
Provident Fund
Total (A) 80,92,000 10,58,333 1,65,446 97,16,939 1,90,32,718
Ceiling as per the Act As per Part II of Schedule V

* Salaries paid to the above Directors are only for that period during which they held the position of Whole Time Director, which
are given below:

Mr. Amitabh Bhargava (from 1st April 2017 to 27th September, 2017)

Mr. Vilas Shreedhar Tawde (from 7th September, 2017 to 31st March, 2018)

Mr. Gopal Pallipuram Srinivasan (from 28th February to 31st March, 2018)

Ms. Glyniss Oscar Fernandes (from 28th February to 31st March, 2018)

#As per the Company policy, Annual Performance Linked Incentive (APLI) is a part of the remuneration and included in
the Gross Salary reported above. APLI is determined having regard to both business performance as well as individual
performance during a particular financial year and is paid in subsequent financial year. Therefore, APLI paid to the Directors
and included in the above Gross Salary pertains to financial year 2016-17 but paid in financial year 2017-18.

27
 Annual Report 2017-18

B. Remuneration to other Directors:

Sr. Particulars of Name of Director Total

No. Remuneration Amount
(INR)
Name Mr. Kuthoore Natarajan Mr. Rajkumar Ms. Suparna Singh
Venkatasubramanian Sukhdevsinhji
Designation Independent Director Independent Director Non-Executive Director
Independent Directors
• Fee for attending 1,50,000 Nil 1,50,000
board / committee
meetings
• Commission Nil Nil Nil
• Others, please Nil Nil Nil
specify
Other Non-Executive
Directors
• Fee for attending Nil Nil
board / committee
meetings
Nil Nil
• Commission
• Others, please
Nil Nil
specify
TOTAL 1,50,000 Nil Nil 1,50,000

C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD: Company does not have any Key Managerial
Personnel within the meaning of Section 203 of the Companies Act, 2013 as this is not applicable to the Company.

VII.  PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: Nil

For and on behalf of the Board of Directors

Vilas Shreedhar Tawde Gopal Pallipuram Srinivasan

Managing Director & CEO Whole-Time Director & CFO
DIN: 07808011 DIN: 02011557

Date: August 31, 2018

Place: Mumbai

28
 Annexure –“B”
A) Energy Conservation
1) Steps taken or impact on conservation of energy.
Energy cost is a major operating cost in exploration and
production of Oil & Gas. The Company has been taking
sustained efforts for energy conservation by initiating and
implementing several energy saving schemes, some of
them are listed below.
a) Installation and commissioning of Harmonic Filters to
improve the power efficiency of the generators.
In CBM wells for “Dewatering” process, the artificial lifts
used are powered by generators sets. For optimizing
speed of the pumps, Variable Frequency Drives (VFDs)
are used. The VFDs are 6 pulse types and are a major
cause of Harmonics. Harmonics draw electric current in
abrupt short pulses which has several adverse effects
like Total Harmonic Distortion, increase in current of the
system, stress on the electric network and equipment
damage, decrease in power factor and so increase in fuel
consumption.
The above problems have been mitigated by installing
and successfully commissioning 55 numbers of Active
Harmonic Filters at Raniganj. This has led to an overall
energy savings of 4.31 MWh power till March 31, 2018
(1.7 MMSCM gas savings).
b) Replacing the Diesel Generators with Gas Generators at
well sites and GGS.
At Raniganj, primary energy source for operation of
production pumps were Diesel Generators (DG). However,
with advancement in the project operations and increase
in CBM gas production, the DG sets were methodically
converted to Gas Engine Generators (GEG).The fuel
conversion helped the Project to attain fuel cost savings
by about ` 57 lakh from November, 2017 till March 31,
2018.
c) Trimming of impellers of water pumps at well pads done at
Raniganj.
The modified configuration of pump-sets has reduced
fuel consumption, as a result the power consumption is
reduced by 15% to 20%.
d) Processing of crude oil collected from all the wells
in Mehsana Block was carried out by managing the
associated gas at ESU#4 well. This led to savings of 16
KLHSD for the financial year under review.
e) Operation of Sucker Rod Pump (SRP) at EEU#1 was
reduced from 24 hours to 12 hours ( by running 4 hours
alternate start/stop cycle) after having conducted the
well influx study. This has resulted in reduction of power
requirement.
2) the steps taken by the Company for utilizing alternate
sources of energy, if any:
Generators used for power generations for operation
of production pumps at well sites were converted from
conventional fuel i.e. diesel to CBM gas.
3) the capital investment on energy conservation equipments:
Nil
B) Technology absorption-
(i) the efforts made towards technology absorption: None
(ii) the benefits derived like product improvement, cost
reduction, product development or import substitution:
cost reduction.
(iii) in case of imported technology (imported during the last
three years reckoned from the beginning of the financial
year)-None
(iv) the expenditure incurred on Research and Development:
Nil
C) Foreign exchange earnings and Outgo-
During the financial year, the Company earned foreign
exchange of ` 37,56,96,200/- while foreign exchange
outgo was ` 60,38,46,053/-.
For and on behalf of the Board of Directors
Vilas Shreedhar Tawde Gopal Pallipuram Srinivasan
Managing Director & CEO Whole-Time Director & CFO
DIN: 07808011 DIN: 02011557
Date: August 31, 2018
Place: Mumbai
29
 Annual Report 2017-18

Annexure - C

Relevant Chapters (No. 2 and 3) of the Nomination and 2.2.4 A determination of a Director’s qualifications to serve
Remuneration Policy on the Board shall be made by the Board, upon
the recommendation of the Committee, prior to
1. General
nominating said Director for election at the Company’s
1.1 The Companies Act, 2013 requires the Company to next General Meeting.
formulate the criteria for determining qualifications,
2.2.5 Appointment of all Directors, other than Directors
positive attributes and independence of Directors.
appointed pursuant to nomination by Financial
The Company is also required to adopt a policy,
Institutions under section 161(3) of the Act will be
relating to the remuneration for the Directors, key
approved by shareholders at a general meeting or
managerial personnel and other employees.
through postal ballot.
1.2 To meet these objectives, the policy on appointment,
2.2.6 The Company shall issue a formal letter of appointment
remuneration, training and evaluation of Directors has
to Independent Directors in the manner as provided
been adopted by the Nomination and Remuneration
in Paragraph IV(4) of Schedule IV the Act.
Committee on September 07, 2017.
2.3 Director qualification criteria
2. Selection, identification and appointment of Directors
2.3.1 The Director candidates should have completed the
2.1 The Nomination and Remuneration Committee is
age of 21 years. The maximum age of executive
responsible for evaluating the qualifications of each
Directors shall not be more than 70 years at the
Director candidate and of those Directors who
time of appointment / re-appointment. However a
are to be nominated for election by shareholders
candidate who has attained the age of 70 years may
at each General Meeting of shareholders, and for
be appointed if approved by shareholders by passing
recommending duly qualified Director nominees to
of special resolution.
the full Board for election. The qualification criteria set
forth herein are designed to describe the qualities and 2.3.2 The Board has not established specific education,
characteristics desired for the Board as a whole and years of business experience or specific types of
for Board members individually. skills for Board members, but, in general, expects
qualified Directors to have ample experience and a
2.2 Director Selection Procedures
proven record of professional success, leadership
2.2.1 Human Resources (HR) department shall identify and and the highest level of personal and professional
shortlist prospective candidates for election to the ethics, integrity and values.
Board based on Directors qualification criteria.
2.3.3 The candidate to be appointed as Director shall
2.2.2 For each shortlisted Director candidate considered have a Director Identification Number allotted under
for election to the Board, the Nomination and section 154 of the Companies Act, 2013 (Act).
Remuneration Committee shall evaluate each
2.3.4 A person shall not be eligible for appointment as
Director candidate and recommend to the Board any
Director of the Company if:
duly qualified Director candidates.
2.3.4.1 He is disqualified for being appointed under section
2.2.3 To aid in the short listing and screening process
164 of the Act.
the Nomination and Remuneration Committee may
take the support of professional agencies, conduct 2.3.4.2 The number of directorships post appointment as
interviews or have a personality check undertaken Director in the Company exceed the total number of
or take any other steps to ensure that the right directorships permitted under section 165 of the Act.
candidates are identified.

30
2.3.5 In addition any person to be appointed as a Managing
Director or whole time Director in the Company
(hereinafter referred to as ‘Executive Directors’) for
being eligible for appointment shall have to meet the
requirements set out in Part I of Schedule V of the
Act.
2.3.6 Further, while selecting Independent Directors:
2.3.6.1 the Company may select the candidate from data
bank(s) containing names, address, qualification
of persons who are eligible and willing to act as
Independent Directors maintained by anybody,
institute or association as may be notified by the
Central Government having expertise in creation and
maintenance of such data bank.
2.3.6.2 the prospective candidates for appointment as
Independent Directors shall have to meet the criteria
of Independence laid down in sub-section (6) of
section 149 of the Act.
2.3.7 In the process of short listing Independent Directors,
the Board shall ensure that there is appropriate
balance of skills, experience and knowledge in the
Board so as to enable the Board to discharge its
functions and duties effectively.
2.4 Tenure in office
2.4.1 The appointment of all Directors by the Board except
for Directors appointed under section 161(3) of
the Act shall be up to the date of the next Annual
General Meeting and shall be subject to approval of
shareholders at the Annual General Meeting unless
approved by the shareholders earlier.
2.4.2 The Executive Directors shall be appointed for a term
of up to 5 years.
2.4.3 Subject to the provisions of the Act and Article 84 and
other applicable Articles of the Articles of Association
of the Company all Executive Directors other than
the Managing Director & CEO and all Non-Executive
Directors other than the Independent Directors shall
be liable to retire by rotation.
2.4.4 Independent Directors shall hold office for a term up
to 5 consecutive years on the Board of the Company
but shall be eligible for reappointment on passing of a
special resolution by the Company.
2.4.5 Independent Directors shall not hold office for more
than 2 consecutive terms. Each such term may be of
5 years or less.
2.4.6 After expiry of the 2 terms, the Independent Director
would be eligible for appointment only after expiry of 3
years from ceasing to being an Independent Director.
2.4.7 While appointing the Independent Directors, the Board
shall decide the term in office of the Independent
Directors which may vary depending on the age of
the candidate, the professional background, the
outcome of evaluation of the individual Director and
the Committees of which he is a member.
3. Remuneration
3.1 All remuneration / fees / compensation, payable to
directors shall be fixed by the Board of Directors and
payment of such remuneration fees / compensation
shall require approval of shareholders in general
meeting except for sitting fee payable to Non-
Executive Directors for attending Board / Committee.
3.2 The Board shall decide on the remuneration /
fees / compensation, payable to Directors based
on the recommendations of the Nomination and
Remuneration Committee.
3.3 The total managerial remuneration payable, to its
Directors, including managing Director and Whole-
Time Director, (and its manager) in respect of any
financial year shall not exceed eleven per cent of
the net profits of the Company for that financial year
computed in the manner laid down in section 198
of the Act. Provided that the Company in general
meeting may, authorise the payment of remuneration
exceeding eleven per cent of the net profits of the
Company, subject to the provisions of Schedule V of
the Act.
3.4 The Nomination and Remuneration Committee
shall ensure the following while recommending
the remuneration / fee / compensation payable to
Directors:
3.4.1 Executive Directors
3.4.1.1 The remuneration payable to any one managing
Director; or Whole-Time Director or manager shall
not exceed five per cent of the net profits of the
Company and if there is more than one such Director
31

remuneration shall not exceed ten per cent of the
net profits to all such Directors and manager taken
together. Else the remuneration will be subject to
provisions specified in Schedule V of the Act.
3.4.1.2 In case of inadequacy of profits mentioned in 4.3 and
4.4.1 above, The Committee while approving the
remuneration for executive Directors
3.4.1.2.1 take into account, financial position of the Company,
trend in the industry, appointee’s qualification,
experience, past performance, past remuneration,
etc.
3.4.1.2.2 be in a position to bring about objectivity in
determining the remuneration package while striking
a balance between the interest of the Company and
the shareholders.
3.4.2 While considering payment of remuneration / increase
in remuneration payable to executive Directors,
key managerial personnel and other executives,
the Nomination and Remuneration Committee may
among other factors consider the following:
3.4.2.1 the level and composition of remuneration is
reasonable and sufficient to attract, retain and
motivate Directors of the quality required to run the
Company successfully
3.4.2.2 relationship of remuneration to performance is clear
and meets appropriate performance benchmarks;
and
32
Annual Report 2017-18
3.4.2.2.1 remuneration to Directors, key managerial personnel
and senior management involves a balance between
fixed and incentive pay reflecting short and long-term
performance objectives appropriate to the working of
the Company and its goals.
3.4.2.2.2 the factors mentioned in The Companies (Appointment
and Remuneration of Managerial Personnel) Rules
2014, may be considered, which are required to be
disclosed in the Directors’ Report.
3.4.3 Non executive Directors including Independent
Directors
3.4.3.1 The remuneration payable to Non-Executive Directors
shall not exceed 1% of the net profits of the Company.
3.4.3.2 A Non-Executive Director may be paid remuneration
by way of fee for attending meetings of the Board
or for any other purpose whatsoever. The amount of
such fee shall not exceed Rs. 50,000 for attending
each meeting of the Board or such higher amount as
may be prescribed by the Central Government.
3.4.3.3 An independent Director shall not be entitled to any
stock option
For and on behalf of the Board of Directors
Vilas Shreedhar Tawde Gopal Pallipuram Srinivasan
Managing Director & CEO Whole-Time Director & CFO
DIN: 07808011 DIN: 02011557
Date: August 31, 2018
Place: Mumbai
 Management Discussion & Analysis report
Global Energy Overview
GDP growth has been increasing continuously every quarter
with growth of 7.7 percent in Q4 of 2017-18. IMF has projected
India’s GDP growth rate at 7.4% in 2018 and 7.8% in 2019,
making it the fastest growing economy in the world.
India’s footprint in global energy markets increases materially
over the outlook, with India emerging as the largest growth
market for global energy. The rise in India’s energy demand is
supported by continued robust economic growth
Gas consumption almost triples, with strong growth in
industrial sector use, including as a feedstock for production
of fertilizers. Growth of gas in power is less strong, held back
by the continued dominance of coal and the rapid growth of
renewables.
Another trend that comes into sharper focus by moving out
to 2040 is the shift from China to India as the primary driver of
global energy demand. The progressively smaller increments
in China’s energy demand –as its economic growth slows and
energy intensity declines –contrasts with the continuing growth
in India. Between 2035 and 2040, India’s demand growth is
more than 2.5 times that of China, representing more than a
third of the global increase.
Strong Natural Gas Growth
Natural gas grows strongly, supported by broad-based
demand, strong increases in low-cost supplies, and continuing
expansion of supplies of liquefied natural gas (LNG) increasing
the availability of gas globally.
Natural gas growth is supported by a number of factors:
increasing levels of industrialization and power demand
(particularly in emerging Asia and Africa); continued coal-to-gas
switching (especially in China); and the increasing availability of
low-cost supplies (in North America and the Middle East).
India Energy
India, the world’s largest democracy, is increasingly asserting
its influence on global energy and climate change discussions.
With an expanding economy, a growing population and
an increasing dependence on fossil fuels, India’s energy
policies and consumption are being watched closely by
world leaders and energy experts.
As per India Energy Outlook 2015, India is heavily reliant on
imports for the bulk of its crude oil supply. Its smaller natural
gas sector is likewise dependent on imports. India’s economy,
already the world’s third-largest, is growing rapidly and policies
are in place to press ahead with the country’s modernization
and an expansion of its manufacturing. India has a relatively
small but still under-explored hydrocarbon resource base,
leaving potential upside to our projected 700 kb/d of oil
output in 2040 and, in particular, to the 90 bcm of gas output,
if licensing and pricing arrangements are right. India is the
world’s third-largest importer of crude oil.
India, home to 18% of the world’s population, uses only 6%
of the world’s primary energy. India’s energy consumption has
almost doubled since 2000 and the potential for further rapid
growth is enormous. India is set to contribute more than any
other country to the projected rise in global energy demand,
around one-quarter of the total: even so, energy demand per
33

capita in 2040 is still 40% below the world average. Production
of oil and gas falls well behind the growth in demand. India’s
reliance on oil imports expected to rise above 90% by 2040,
requiring constant vigilance as to the implications for energy
security. Meeting India’s energy needs requires a huge
commitment of capital and further to GoI policy of “Make in
India” would further increase the demand for the energy.
Gap in Demand and Supply
India was the fourth-largest consumer of crude oil and
petroleum products after the United States, China, and Japan
in 2015, and it was also the fourth-largest net importer of
crude oil and petroleum products. The gap between India’s oil
demand and supply is widening.
Natural Gas Demand
India was the world’s fourth-largest LNG importer in 2015,
following Japan, South Korea, and China, and the country
consumed nearly 7% of the global trade.
Natural gas consumption grew at an annual rate of 6% from
2000 and 2014. In 2014, India consumed 1.8 trillion cubic
feet (Tcf) of natural gas. LNG imports accounted for about
37% of 2014 demand and are expected to account for an
increasing portion of demand at least in the next several years.
Higher LNG imports will depend on the pace of expansion
in regasification terminal capacity and pipeline infrastructure
connecting natural gas supplies to markets that currently
lack access. The government’s recently revised natural gas
pricing system that provides a premium for production from
India’s more technically-challenging fields acts as an economic
incentive for producers to invest upstream and raise domestic
output. India’s demand will rely on both LNG imports and
production to supply the country’s growing fuel needs.
Most of the natural gas demand in 2014 came from the power
sector (23%), the fertilizer industry (32%), and the replacement
of LPG for cooking oil and other uses in the residential sector
(14%), according to India’s MOPNG. The government has
labeled these as priority sectors for receiving new natural gas
supplies. The fertilizer sector, which is highly price-sensitive,
has been able to maintain low fuel costs by using natural gas.
The recent unexpected dry natural gas production declines
since 2011 have forced electric generators to seek fuel
alternatives, primarily coal, and this sector has seen the largest
decline in natural gas use. The government is promoting the
use of natural gas in the residential sector as an alternative to
LPG and biomass as cooking fuels.
34
Annual Report 2017-18
Exploration & Production Business - Future Outlook
Essar has established itself as a leader of Unconventional Coal
Bed Methane (CBM) in India, with its Raniganj CBM block
being the first to cross 1.0 mmscmd of CBM gas production.
The Govt. of India has taken key policy decision viz. Hydrocarbon
Exploration & Licensing Policy (HELP) & Open Acreage
Licensing Policy (OALP), Policy for Early Monetization of CBM,
Discovered Small Field Round and freeing coal mining area for
CBM exploration by Coal India Ltd. All these policy decisions
would encourage further investment in upstream space.
The government’s move to relax rules for Coal India to ease
CBM extraction is likely to offer business opportunity for service
providers who have proven track record in CBM gas production.
This will unlock the CBM resources in eastern India, which will
further boost the CBM exploration and production activities.
On policy front, the company is of the view that now the industry
has the much needed marketing freedom. And distribution
infrastructure is developing that will eventually help the players
to reach the end-users quickly. The key developments taking
place in City Gas Distribution across states like West Bengal,
Odisha, Bihar, Uttar Pradesh, Chhattisgarh and Jharkhand is
likely to change the entire picture and CBM gas will see its
usage in multiple applications.
The Government has also recently approved the policy
framework for exploration and exploitation of Unconventional
Hydrocarbons in the existing acreages that allows the company
to explore and produce shale gas from its CBM blocks and
CBM from its conventional blocks. This is expected to provide
the much needed growth to the company.
Going forward, the Government of India is expected to come
up with announcement for Discovered Small Field Round II,
and bid rounds on Production from ageing fields & Enhanced
Oil Recovery. All these has created an extremely conducive
investment environment in E&P sector and company is keen
to leverage our extensive E&P experience and expertise for
accretion of new resource and its production in the next 3-5
years.
Operational Performance
Over the years Essar has played a pioneering role in developing
CBM in India. Keeping up with this tradition the Company
has completed another year with stellar performance. The
company clocked a production of 1.0 mmscmd CBM gas
at Raniganj asset and 130 bbls/day crude production at our
Mehsana asset during the year under review.
In line with our focus to supply maximum gas, the Company A. Raniganj CBM Block
supplied 0.8 mmscmd of gas during August 2017 to November Till date the Company has drilled 348 wells in our Raniganj
2017 to a large fertilizer plant in the area of operation at CBM Block, which is supported by a robust Surface
Durgapur, West Bengal, which also resulted in complete Facilities and Pipeline Network. A compression facility
stoppage of flaring of gas. In a bid to further expand it gas for 2.2 mmscmd is in place. It has set an example by
sale outreach it has entered in to gas sale purchase agreement producing 1.0 mmscmd of gas, first in the country.
with GAIL (a GoI’s Maharatna Company). Highly remunerative
The Company undertook a price discovery process for
gas price has been achieved linked to crude prices by price
sale of all its gas from Raniganj field. Gas Authority of India
discovery process. This gives us added advantages in case of
Limited (GAIL) was the successful bidder for the entire
crude price upsurge.
production. Company has entered in to a 15-year gas
In line with its focus to conventional oil and gas block, the supply contract with GAIL with remunerative pricing for
Company has attained maximum production of crude oil of ~130 gas linked to last 3 month’s average price of Brent Crude.
bbls/day from Mehsana asset and currently is self-sufficient. Contract with GAIL was initiated on 31st day of Mar’18.
Given the company’s commitment to superior performance, As per recent NSAI 2016 certification, block has an
we have adopted the best available technology and practices estimated resource of 4043 bcf, and gross reserves of
for exploration and production and achieved many milestones. 1096 bcf (3P).
Adopting innovative drilling, completion & production practices
the company has been successful in achieving faster drilling,
early production and improved economics.

Signing of Gas Sale Purchase Agreement between the company & GAIL Ltd. Seen in the picture (from left to right) Mr. S Bairagi (CGM Marketing), Mr. Manoj jain (Director Buisness Development), Shri Gajendra Singh
(Director Marketing) from GAIL Ltd and Shri Vilas Tawde (Managing director & CEO), Mr. Gopal Srinivasan (Director & CFO) from the company.

35
 Annual Report 2017-18

B. Mehsana, Gujarat - Block CB-ON3 The Rajmahal East & Sohagpur North East blocks has also
As a way forward, the Company has planned to drill been evaluated independently by external agencies and
another 150 wells to achieve a production level of ~2.4 initial assessment of these blocks are encouraging. Most
mmscmd by year April, 2022. of the required approvals and clearances in place for these
The Company has carried out a meticulous exploration two blocks and exploration activities may start soon.
work in the block and discovered four oilfields with Field
Development Plans approved
• Essar South Unawa (ESU)
• Essar North Pali (ENP)
• Essar North Sapad (ENS)
• Essar East Unawa (EEU)
Currently there is one well on production from each field
and the fields together are producing ~3500 barrels/month.
It has achieved annual production of 15,979.5 Bbls against
target of 14,820 Bbls and with such production level the
field has become self-sufficient. The block has recoverable
reserves of 0.634 MMbbls (as on 31 March, 2018).
A separate area within the block has been applied under Drilling in Progress : Raniganj
RFPSC which is under negotiation. The Simultaneous
Hydrocarbon Exploitation Policy expected to be
announced by Govt.of India within the next few months will Conclusion
give access to additional CBM Resources. The Mehsana
The Company is poised to transform itself into a strong E&P
block has a CBM resource of 1.27 TCF in contingent
player focused on the unconventional hydrocarbon space
category in the RFPSC area. There is also an estimated
in India. It is already an established lead in Unconventional
potential of 2.6 Tcfe of shale hydrocarbons (Invenire-ARI,
Hydrocarbons with the discovery and production of CBM in
2015) in this area.
the Raniganj block. Thereby there is a strong learning curve is
C. Four Exploratory CBM Block in place.
Four CBM blocks awarded in 4th bidding round of CBM The positive results that have come across during the financial
in 2008. Total acreage of about 2200 Sq. Km having a year 2017-18 viz. achievement of good production levels,
resource of around 9.0 TCF. discovery of new gas price for CBM and the signing of the
• Rajmahal East (Jharkhand) GSPA with a strong buyer are noteworthy. In addition, with the
country’s focus towards a gas based economy wherein policy
• Sohagpur North East (MP and Chhattisgarh)
and infrastructure benefits have acted as additional enablers
• Talchir (Odisha) towards an organic growth. With all the above factors EOGEPL
• IB Valley (Odisha) looks forward to a strong organic growth and ensuring stable
revenues that will help the Company to attain profitable levels
in the coming years.

36
 Business Responsibility Report
We are committed to innovative growth, through our personal
passion, reinforced by a professional mind-set, creating value
for all those we touch.
CSR activities surrounding the Raniganj-CBM project are
spread across the Durgapur-Faridpur and Kanksa Blocks and
a small pocket of DMC, covering 44 villages in totality and
serving more than 50 thousand people.
The Company focuses on all-round development of the
community around the operations, located mostly in distant
rural areas and tribal belts. The partners in development are
the government bodies, district authorities, village panchayats
and the Blocks and undoubtedly the end beneficiaries, that is,
the villagers.
Under the thematic area ‘Education’, 4 Free Primary, 1 High
School and 3 annual sports meets, have been supported.
Under the thematic area “Infrastructure development”,
Company aims to contribute positively to global sustainability
through operations, the development of fields, adoption of
new technologies and the conduct of relationships with all
stakeholders. Community development and infrastructure
is important for the Company to build up developed soiciety
around. Various activities were conducted by company like
supply of Drinking water by tanker to address the acute
shortage of drinking water during the summer season in
villages. The villages are identified by the BDO of Laudoha
block. And also Construction of rest room at burning ghat in
Rakhitpur village under Kanksa block .Company aims to to
promote the sharing of social benefit created by our activities
through the conduct of our community relationships.
Under the thematic area “Sports and Culture”, Essar
supported various Sports activities in their operational area like
Essar supported one-day Cricket tournament by Vivekananda
Club, Bamunarrha village under Kanksa Block, also supported
a running football tournament at Gopalpur under Kanksa
Block. The company also provided Sports kit to youth clubs
in villages at Molandighi under Kanksa Block. Various Knock-
out tournaments were also conducted by Essar to protect and
promote the culture and sports of their catchment area.

Graphical Representation of Thematic Area Wise Beneficiary Data

Initiative has been always taken to address all major problems

of the localities through the various projects catering to health,
education, infrastructure, livelihood and sports & culture.
For special projects to provide the best of services through
professional experts at times, Essar Oil and Gas Exploration
and Production Ltd., invites other organizations in the role of
implementing agencies that customize welfare-projects as per
the need of the mass.
This financial year 35,293 lives have been touched across the
operational area, through the CSR activities of EOGEPL.
Under the thematic area ‘Health’, the Mobile Medical Unit
project successfully completed the programmed activities by
providing preventive and curative health services in the target Infrastructure Development
areas.

37

CSR Activities
Health Campaign : OPD Services
Health
During FY 2017 to 2018, 20294 beneficiaries of 25
villages under Pratappur, Bidbehar, Malandighi and
Gopalpur Gram Panchayats of two administrative blocks,
i.e. Durgapur- Faridpur and Kanksa and also DMC area,
were reached with preventive and curative services.
Health Activities
 OPD service provided with a team of 1 doctor, 1
nurse and one lab technician. Total 8344 community
people benefitted by this service.
 This FY 4 Community Outreach Workers (COW)
conduct various type of Community Awareness
program (on prevention of Anemia, AIDS, Hygiene,
Nutrition, Dehydration, Menstrual Hygiene,
Hand Washing, Family Planning ,Youth Meeting,
Tuberculosis and Life Skill Education and all
Special day-celebration and other programs). Total
11950 community people benefitted through these
services.
38
Annual Report 2017-18
Health Campaign : OPD Services
 School health checkup camps at 23 free primary
schools. Total 979 students benefited through these
camps.
 2 awareness programs on adolescent issues for
school drop-outs were organized. Total 19 students
benefitted through these programmes.
 Life skill training program held at 2 high schools.
Total 164 students benefited through these services.
 Special day celebration with various activities (World
Population Pay, National Nutrition Week, AIDS Day,
Diabetes Day, Children’s Day and Breast Feeding
Week and World Health Day)
 Hemoglobin/anemia test camps in 25 villages. Total
433 villagers benefitted through these camps.
 Education Support

Education  Supported Pratappur Anchalik (Regional) Annual Free

Government schools in operational area often lack basic utility
goods and amenities like electrical fans, storage shelves and
other school furniture like desk-bench. Under CSR, support is
extended to schools within the operational area. Also this FY
with the onset of winter requests to support the annual school
sports reached the CSR dept. As requested, Essar provided
various types of prize items for the school students. The events
supported so far are as below,
Primary School Sports Meet
 Supported Laodoha and Kanksa Circle-level Annual
Free Primary School Sports Meet
 Supported Durgapur Sub-Division (inter Junior High
School) & Burdwan District Athletic Meet – 2018.
No. of beneficiaries- 1631

 Essar supported to Kuldiha, Malandighi and Parulia

FP School with electric items like celling fans and tube
lights for the school students.

 Support to Kalikapur-Pratappur Tapoban Vidyapith

High school with high & low desk bench for the school
students.

 Essar supported Jatgoria FP School with basic

Roads safety programme
infrastructure like book shelves teachers table and chair.

39

Independent Auditor’s Report
To the Members of
Essar Oil and Gas Exploration and Production Limited
1. Report on the Indian Accounting Standards (Ind AS)
Financial Statements
We have audited the accompanying Ind AS financial
statements of Essar Oil and Gas Exploration and
Production Limited (‘the Company’), which comprise
the Balance Sheet as at March 31, 2018, the Statement
of Profit and Loss (including Other Comprehensive
Income), the Statement of Cash Flow and the Statement
of Changes in Equity for the year then ended, and a
summary of the significant accounting policies and other
explanatory information prepared based on the relevant
records (hereinafter referred to as ‘the Ind AS Financial
Statements’).
2. Management’s Responsibility for the Ind AS Financial
Statements
The Company’s Board of Directors is responsible for the
matters stated in Section 134(5) of the Companies Act,
2013 (‘the Act’) with respect to the preparation of these
Ind AS financial statements that give a true and fair view of
the state of affairs (financial position), profit or loss (financial
performance including other comprehensive income), cash
flows and changes in equity of the Company in accordance
with the accounting principles generally accepted in India,
including the Indian Accounting Standards prescribed
under Section 133 of the Act.
This responsibility also includes maintenance of adequate
accounting records in accordance with the provisions
of the Act for safeguarding the assets of the Company
and for preventing and detecting frauds and other
irregularities; selection and application of appropriate
accounting policies; making judgments and estimates that
are reasonable and prudent; and design, implementation
and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy
and completeness of the accounting records, relevant to
the preparation and presentation of the Ind AS financial
statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
3. Auditor’s Responsibility
Our responsibility is to express an opinion on these Ind AS
financial statements based on our audit.
We have taken into account the provisions of the Act and
the Rules made there under including the accounting and
40
Annual Report 2017-18
auditing standards and matters which are required to be
included in the audit report under the provisions of the Act
and the Rules made there under.
We conducted our audit of the Ind AS financial statements
in accordance with the Standards on Auditing specified
under Section 143(10) of the Act and other applicable
authoritative pronouncements issued by the Institute of
Chartered Accountants of India. Those Standards and
pronouncements require that we comply with ethical
requirements and plan and perform the audit to obtain
reasonable assurance about whether the Ind AS financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and the disclosures in the Ind
AS financial statements. The procedures selected depend
on the auditor’s judgment, including the assessment of
the risks of material misstatement of the Ind AS financial
statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal financial
control relevant to the Company’s preparation of the Ind
AS financial statements that give a true and fair view, in
order to design audit procedures that are appropriate in
the circumstances. An audit also includes evaluating the
appropriateness of the accounting policies used and the
reasonableness of the accounting estimates made by the
Company’s Directors, as well as evaluating the overall
presentation of the Ind AS financial statements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
qualified audit opinion on the Ind AS financial statements.
4. Basis for Qualified Opinion
The outstanding balances as at March 31, 2018 in respect
of certain balances, of trade receivables, trade payables,
loans & advances, unsecured loans and deposits, are
subject to confirmation from respective parties and
consequential reconciliation and adjustment arising there
from, if any (Refer note no. 43).
5. Opinion
In our opinion and to the best of our information and
according to the explanations given to us, except for
the possible effects of the matter described in Basis for
Qualified Opinion paragraph above, the aforesaid Ind AS
financial statements give the information required by the
Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally
accepted in India, of the state of affairs (financial position)
 of the Company as at March 31, 2018, and its loss
(including other comprehensive income), its cash flows
and the changes in equity for the year ended on that date.
6. Emphasis of Matter
We draw attention to Note No. 45 forming part of
financial statement, the Company’s accumulated losses
are (13,112.42 Lakhs) (Previous year ` 1,81,620.54
Lakhs), however based on the management’s business
plans and necessary operational support from the
holding company, in the opinion of the management, no
adjustment is required to the carrying value of the assets
and liabilities of the Company as on the Balance Sheet
date and accordingly these financial statements have
been prepared on a going concern basis.
Our opinion is not modified in respect of this matter.
7. Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor’s Report) Order,
2016, issued by the Central Government of India in terms
of sub-section (11) of section 143 of the Act (‘the Order’),
and on the basis of such checks of the books and records
of the Company as we considered appropriate and
according to the information and explanations given to us,
we give in the Annexure – A, a statement on the matters
specified in paragraphs 3 and 4 of the Order.
As required by Section 143 (3) of the Act, we report that:
(a) We have sought and, except for the matters described
in the Basis for Qualified Opinion paragraph, obtained
all the information and explanations which to the best
of our knowledge and belief were necessary for the
purposes of our audit;
(b) Except for the possible effects of the matter prescribed
in the Basis for Qualified Opinion paragraph above,
in our opinion, proper books of account as required
by law have been kept by the Company so far as it
appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss
including other comprehensive income, the Statement
of Cash Flow and the Statement of Changes in Equity
dealt with by this Report are in agreement with the
books of account;
(d) Except for the effects of the matters described in the
Basis for Qualified Opinion paragraph above, in our
opinion, the aforesaid Ind AS financial statements
comply with the Accounting Standards prescribed
under Section 133 of the Act;
(e) The matter described in the Basis for Qualified
Opinion paragraph above, in our opinion, may have
an adverse effect on the functioning of the Company;
(f) On the basis of the written representations received
from the directors as on March 31, 2018 taken
on record by the Board of Directors, none of the
directors is disqualified as on March 31, 2018 from
being appointed as a director in terms of Section 164
(2) of the Act;
(g) The qualification relating to the maintenance of
accounts and other matters connected therewith are
as stated in the Basis for Qualified Opinion paragraph;
(h) With respect to the adequacy of the internal financial
controls over financial reporting of the Company and
the operating effectiveness of such controls, refer to
our separate report in Annexure - B; and
(i) With respect to the other matters to be included in the
Auditor’s Report in accordance with Rule 11 of the
Companies (Audit and Auditors) Rules, 2014, in our
opinion and to the best of our knowledge and belief
and according to the information and explanations
given to us:
i. The Company has disclosed the impact of
pending litigations on its financial position in its
Ind AS financial statements – Refer note no.41
to the Ind AS financial statements;
ii. There were no material foreseeable losses on
any long term contracts including derivative
contracts. Refer note no. 15 to the Ind AS
financial statements; and
iii. There were no amounts which were required
to be transferred to the Investor Education and
Protection Fund by the Company.
For Khandelwal Jain & Co.
Chartered Accountants
ICAI Firm Registration No. 105049W
Chirag Doshi
Partner
Membership No: 119079
Place: Mumbai
Date: August 31, 2018
41

Annexure – A to Independent Auditor’s Report
(Referred to in paragraph 7 of the Independent Auditor’s Report
of even date to the members of Essar Oil and Gas Exploration
and Production Limited on the Ind AS financial statements as
of and for the year ended March 31, 2018)
(i) (a) The Company is maintaining proper records showing
full particulars including quantitative details and
situation of fixed assets.
(b) There is a regular programme of verification which, in
our opinion, is reasonable having regard to the size of
the company and the nature of its assets. No material
discrepancies were noticed on such verification.
(c) According to the information and explanations given
to us and on the basis of our examination of the
records of the Company, the title deeds of immovable
properties are held in the name of the Company.
(ii) (a) The inventory has been physically verified during the
year by the management at reasonable intervals.
(b) The procedures of physical verification of inventories
followed by the management are reasonable and
adequate in relation to the size of the company and
the nature of its business.
(c) In our opinion and according to the explanations given
to us, the Company is maintaining proper records of
inventory. The discrepancies noticed on verification
between the physical stocks and the book records
were not material and properly dealt with in the books
of account
(iii) The Company has not granted any loans, secured
or unsecured to Companies, Firms, Limited Liability
Partnerships or other parties covered in the register
maintained under Section 189 the Act. Therefore, the
provisions of Clause 3(iii), (iii)(a), (iii)(b) and (iii)(c) of the said
Order are not applicable to the Company.
(iv) In our opinion and according to the information and
explanations given to us, the Company has complied with
the provisions of section 185 and 186 of the Companies
Act, 2013 in respect of the loans and investments made
and guarantees and security provided by it.
42
Annual Report 2017-18
(v) According to the information and explanations given to
us, the Company has not accepted any deposits from the
public within the meaning of Sections 73, 74, 75 and 76
of the Act and the Rules framed there under to the extent
notified.
(vi) As informed to us by the management, the Central
Government of India has not specified the maintenance of
cost records under sub-section (1) of section 148 of the
Act for any of the products of the Company.
(vii) (a) According to the information and explanations given
to us and records of the Company examined by us,
in our opinion, the Company is generally regular in
depositing the undisputed statutory dues including
Provident Fund, Employees’ State Insurance, Income
Tax, Sales Tax, Service Tax, Cess, Goods and Service
Tax, duty of custom, duty of excise, Value Added Tax,
and other material statutory dues, as applicable, with
the appropriate authorities.
According to the records of the Company, there were
no undisputed amounts payable in respect of above
in arrears, as at March 31, 2018 for a period of more
than six months from the date they became payable.
(b) According to the records of the Company, there are
no dues of income tax, sales tax, service tax, goods
and service tax, duty of custom, duty of excise and
cess which have not been deposited on account of
any dispute except the following:
Name of the Amount Period to which Forum where
statute/ Nature (` in lakhs) amount relates the dispute is
of dues pending
Central Excise Act 527.87 F.Y.-2011-2012 to CESTAT
F.Y.-2014-2015 Kolkata
(viii) According to the records of the company examined by
us and information and explanations given to us, as at
the year end, the company has defaulted in repayment of
loans and working capital facilities to banks and financial
institutions. The Company did not have any outstanding
dues to government or debenture holders during the year.
The lender wise details of default are as under:
 Default in (` in lakhs) Default from (xiii) According to the information and explanations given to
Name of us and based on our examination of the records of the
Lenders Principal Principal
Interest Interest Company, transactions with the related parties are in
Repayment Repayment
compliance with Sections 177 and 188 of the Act where
Indian Overseas
700.00 161.36 31-03-2018 28-02-2018 applicable and details of such transactions have been
Bank Term Loan
disclosed in the Ind AS financial statements as required by
Axis Bank Term
227.50 51.07 31-03-2018 28-02-2018 the applicable accounting standards.
Loan Phase I
Yes Bank Term (xiv) According to the information and explanations given to
782.05 90.63 31-03-2018 31-03-2018
Loan us and based on our examination of the records of the
Axis Bank Term Company, the Company has not made any preferential
- 1,180.76 - 01-02-2018
Loan Phase II allotment or private placement of shares or fully or partly
IIFC(UK)L ECB* - 794.18 - 31-01-2018 convertible debentures during the year under review.
1,709.55 2,278.01 Accordingly, the provisions of clause 3 (xiv) of the Order
are not applicable to the Company.
* IIFCL Interest is net of TDS which is already paid by
EOGEPL on date (xv) According to the information and explanations given to
us and based on our examination of the records of the
(ix) The Company has not raised any moneys by way of initial
Company, the Company has not entered into any non-
public offer, further public offer (including debt instruments)
cash transactions with directors or persons connected
and term loans. Accordingly, provisions of clause 3(ix) of
with him. Accordingly, the provisions of clause 3(xv) of the
the Order are not applicable to the Company.
Order are not applicable to the Company.
(x) Based upon the audit procedures performed and
(xvi) The Company is not required to be registered under
according to the information and explanations given to us,
section 45-IA of the Reserve Bank of India Act, 1934.
no material fraud by the Company or on the Company
Accordingly, the provisions of clause 3(xvi) of the Order
by its officers or employees has been noticed or reported
are not applicable to the Company.
during the course of our audit.

(xi) According to the information and explanations give

For Khandelwal Jain & Co.
to us and based on our examination of the records
Chartered Accountants
of the Company, the Company has paid / provided for ICAI Firm Registration No. 105049W
managerial remuneration in accordance with the requisite
approvals mandated by the provisions of Section 197
read with Schedule V to the Act. Chirag Doshi
Partner
(xii) In our opinion and according to the information and Membership No: 119079
explanations given to us, the Company is not a nidhi
Company. Accordingly, paragraph 3(xii) of the Order is not
applicable to the Company. Place: Mumbai
Date: August 31, 2018

43

Annexure – B to Independent Auditor’s Report
(Referred to in Paragraph 7(h) of the Independent Auditor’s
Report of even date to the members of Essar Oil and Gas
Exploration and Production Limited on the Ind AS financial
statements for the year ended March 31, 2018)
Report on the Internal Financial Controls under Clause (i)
of Sub-section 3 of Section 143 of the Act
We have audited the internal financial controls over financial
reporting of Essar Oil and Gas Exploration and Production
Limited (“the Company”) as of 31 March, 2018, in conjunction
with our audit of the Ind AS financial statements of the Company
for the year ended on that date.
Management’s Responsibility for Internal Financial
Controls
The Company’s management is responsible for establishing and
maintaining internal financial controls based on the internal control
over financial reporting criteria established by the Company
considering the essential components of internal control stated
in the Guidance Note on Audit of Internal Financial Controls
over Financial Reporting issued by the Institute of Chartered
Accountants of India (‘ICAI’). These responsibilities include the
design, implementation and maintenance of adequate internal
financial controls that were operating effectively for ensuring
the orderly and efficient conduct of its business, including
adherence to company’s policies, the safeguarding of its assets,
the prevention and detection of frauds and errors, the accuracy
and completeness of the accounting records, and the timely
preparation of reliable financial information, as required under
the Act.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Company’s
internal financial controls over financial reporting based on our
audit. We conducted our audit in accordance with the Guidance
Note on Audit of Internal Financial Controls over Financial
Reporting (the “Guidance Note”) and the Standards on Auditing
deemed to be prescribed under section 143(10) of the Act, to
the extent applicable to an audit of internal financial controls,
both applicable to an audit of internal financial controls and
both issued by ICAI. Those Standards and the Guidance Note
require that we comply with ethical requirements and plan and
44
Annual Report 2017-18
perform the audit to obtain reasonable assurance about whether
adequate internal financial controls over financial reporting was
established and maintained and if such controls operated
effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence
about the adequacy of the internal financial controls system over
financial reporting and their operating effectiveness. Our audit
of internal financial controls over financial reporting included
obtaining an understanding of internal financial controls over
financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk.
The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement
of the Ind AS financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on
the Company’s internal financial controls system over financial
reporting.
Meaning of Internal Financial Controls over Financial
Reporting
A company’s internal financial control over financial reporting is
a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of Ind
AS financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s
internal financial control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of Ind AS financial statements in
accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made
only in accordance with authorisations of management and
directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorised
acquisition, use, or disposition of the company’s assets that
could have a material effect on the Ind AS financial statements.
Inherent Limitations of Internal Financial Controls Over
Financial Reporting
Because of the inherent limitations of internal financial controls
over financial reporting, including the possibility of collusion
or improper management override of controls, material
misstatements due to error or fraud may occur and not be
detected. Also, projections of any evaluation of the internal
financial controls over financial reporting to future periods are
subject to the risk that the internal financial control over financial
reporting may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an
adequate internal financial controls system over financial
reporting and such internal financial controls over financial
reporting were operating effectively as at March 31, 2018, based
on the internal control over financial reporting criteria established
by the Company considering the essential components of
internal control stated in the Guidance Note on Audit of Internal
Financial Controls Over Financial Reporting issued by the
Institute of Chartered Accountants of India.
For Khandelwal Jain & Co.
Chartered Accountants
ICAI Firm Registration No. 105049W
Chirag Doshi
Partner
Membership No: 119079
Place: Mumbai
Date: August 31, 2018

45
 Annual Report 2017-18

Balance Sheet as at 31 March 2018

(` in lakhs)
Note As at As at
Particulars
No. 31 March 2018 31 March 2017
I. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment 6 11,132.07 7,094.76
(b) Capital work-in-progress 7 3,89,742.82 1,94,896.14
(c) Other Intangible assets 8 9.36 42.27
(d) Financial Assets
(i) Investments 9 2,050.00 -
(e) Other non-current assets 10 227.72 491.17
Total Non-Current Assets 4,03,161.97 2,02,524.34
2. Current Assets
(a) Inventories 11 429.58 421.52
(b) Financial Assets
(i) Trade receivables 12 5,818.63 1,624.68
(ii) Cash and cash equivalents 13 238.23 546.80
(iii) Bank balances other than (ii) above 14 1,436.11 4,115.14
(iv) Others 15 380.31 1,338.00
(c) Current Tax Assets (net) 16 60.66 -
(d) Other current assets 17 24,629.29 40,927.68
Total Current Assets 32,992.81 48,973.82
Total Assets 4,36,154.78 2,51,498.16
II. EQUITY & LIABILITIES
Equity
(a) Equity Share capital 18 5.00 5.00
(b) Other Equity
(i) Equity component of Compulsorily Convertible Debentures 19 2,76,831.56 2,76,831.56
(ii) Reserves and Surplus 20 (13,112.42) (1,81,620.54)
Total Equity 2,63,724.14 95,216.02
Liabilities
1. Non-current liabilities
(a) Financial Liabilities
(i) Borrowings 21 1,19,474.52 1,33,033.77
(b) Long Term Provisions 22 469.88 303.14
Total Non-current liabilities 1,19,944.40 1,33,336.91
2. Current liabilities
(a) Other Financial Liabilities 23 51,705.02 22,023.75
(b) Other current liabilities 24 766.48 695.61
(c) Provisions 25 14.75 225.87
Total Current liabilities 52,486.25 22,945.23
Total Liabilities 1,72,430.64 1,56,282.14
Total Equity & Liabilities 4,36,154.78 2,51,498.16
See accompanying notes to the financial statements
In terms of our report attached

For Khandelwal Jain & Co For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration No: 105049W

Chirag Doshi Vilas Tawde Gopal Srinivasan

Partner MD and CEO WTD and CFO
Membership No: 119079

Date: 31 August 2018 Date: 31 August 2018

Place: Mumbai Place: Mumbai

46
 Statement of Profit & Loss for the year ended 31 March 2018

(` in lakhs)
Note For the year ending For the period ending
Particulars
No. 31st March 2018 31st March 2017
INCOME
Revenue from operations 26 416.42 -
Other income 27 583.86 -
I. Total Income 1,000.28
EXPENSES
Changes in inventories of finished goods and WIP 28 (57.98) -
Employee benefits expense 29 223.56 -
Finance costs 30 21.55 -
Depreciation and amortisation expense 31 390.30 -
Exploration costs written off 32 246.58 -
Other expenses 33 10,824.72 4.36
II. Total Expenses 11,648.73 4.36
III. Profit / (loss) before exceptional items and tax (II - I) (10,648.45) (4.36)
IV. Exceptional Items 34 1,79,044.09 (1,79,965.30)
V. Profit / (loss) before tax (III - IV) 1,68,395.64 (1,79,969.66)
VI. Tax expense:
a. Current Tax
b. Deferred Tax
Total Tax Expenses
VII. Profit (Loss) for the year (V - VI) 1,68,395.64 (1,79,969.66)
VIII. Other Comprehensive Income (OCI) 3.00 -
i. Items that will not be reclassified to profit or loss
a. Re-measurement of defined benefit plans 3.00 -
Total Other Comprehensive income 3.00 -
IX. Total Comprehensive income for the Year (VII + VIII) 1,68,398.64 (1,79,969.66)
X. Earnings per Share 35
(1) Basic before exceptional item (in `) (21,296.92) (8.72)
(2) Diluted before exceptional item (in `) (21,296.92) (8.72)
(3) Basic after exceptional item (in `) 3,36,791.28 (3,59,939.32)
(4) Diluted after exceptional item (in `) 607.20 (3,59,939.32)
Accompanying notes to the Financial Statements
See accompanying notes to the financial statements

In terms of our report attached

For Khandelwal Jain & Co For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration No: 105049W

Chirag Doshi Vilas Tawde Gopal Srinivasan

Partner MD and CEO WTD and CFO
Membership No: 119079

Date: 31 August 2018 Date: 31 August 2018

Place: Mumbai Place: Mumbai

47
 Annual Report 2017-18

Statement of Changes in Equity

Statement of changes in equity for the year ended 31st March 2018
a. Equity Share Capital (` in lakhs)
As at As at
Particulars
March 31, 2018 March 31, 2017
Balance at the beginning of the reporting period 5.00 -
Changes in equity share capital during the period - 5.00
Balance at the end of the reporting period 5.00 5.00

b. Other Equity (` in lakhs)

Equity component of Re-measurements
Capital Retained
Particulars compound financial of the net defined Total
reserve Earnings
instruments benefit Plans
Balance as at 10 May 2016 - - - - -
Loss for the year (181,620.54) (1,81,620.54)
Equity component of
Compulsorily Convertible 2,76,831.56 2,76,831.56
Debentures
Balance as at
2,76,831.56 (1,81,620.54) - 95,211.02
April 01, 2017
Profit for the year 2017-2018 - - 1,68,395.64 - 1,68,395.64
Other Comprehensive Income
3.00 3.00
for the year
Adjustment during the year
(1,541.40) 1,650.88 109.48
(Refer note 20.1)
Equity component of
Compulsorily Convertible - - - - -
Debentures
Balance as at As at
2,76,831.56 (1,541.40) (11,574.02) 3.00 2,63,719.14
March 31, 2018

See accompanying notes to the financial statements

In terms of our report attached
For Khandelwal Jain & Co For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration No: 105049W

Chirag Doshi Vilas Tawde Gopal Srinivasan

Partner MD and CEO WTD and CFO
Membership No: 119079

Date: 31 August 2018 Date: 31 August 2018

Place: Mumbai Place: Mumbai

48
 Cash Flow Statement for the year ended 31 March 2018

(` in lakhs)
For the year ending For the period ending
Particulars
31 March 2018 31 March 2017
A Cash flow from operating activities
Net profit before tax 1,68,395.64 (1,79,969.66)
Adjustments for :
Depreciation / amortization and depletion expense 390.30 13.84
Provision for Impairment Loss / (Reversal of Provision for Impairment Loss) (1,79,951.46) 1,79,951.46
Excess Purchase Consideration 156.13
Provision for LD 907.37 -
Unrealized exchange differences 333.03 -
Unwinding of Site Restoration Fund 21.22 -
Unrealized (Gain)/Loss on MTM - Derivative Asset (162.52) -
Provision for doubtful debts and debit balances written off 8,980.28 -
Fixed assets / CWIP written off 423.41 -
Advances Written off 78.23 -
Exploration Expenditure written off 246.58 -
Profit on Sale of Fixed Assets (79.16)
Provision for Slow Moving Inventory 53.08 -
Amortization of Derivative Assets 170.14 -
Operating loss before working capital changes (37.73) (4.36)
Adjustments for:
Changes in inventories (33.93) -
Changes in receivables, advances and other assets 2,112.40 -
Changes in payables, liabilities and provision 18,182.08 3.54
Net Cash generated from operating activities 20,222.82 (0.82)
Income tax refund / (payment) (net) (including interest) (60.66) -
Net cash used in operating activities (A) 20,162.16 (0.82)
Cash flow from investing activities
Sale of fixed assets 79.16 -
Investments in CCPS (2,050.00) -
Reduction / (additions) to fixed assets / Capital Work in Progress (500.82) -

49
 Annual Report 2017-18

For the year ending For the period ending

Particulars
31 March 2018 31 March 2017
Net cash used in investing activities (B) (2,471.66) -
Cash flow from financing activities
Proceeds from issue of Equity Shares - 5.00
Proceeds from Borrowings 860.02 -
Repayment of borrowings (6,621.88) -
Interest paid (including funding of interest) (12,237.21) -
Net cash generated from financing activities (C) (17,999.07) 5.00
Net (decrease) / increase in cash and cash equivalents (A+B+C) (308.57) 4.18
Cash and cash equivalents at the beginning of the period 546.80 -
Add: Cash & Cash Equivalent balance of business acquired during
- 542.62
the period
Cash and cash equivalents at the end of the period 238.23 546.80
Cash flow statement is prepared and reported under indirect method as prescribed under Ind-AS 7 “Statement of Cash flows
statement.”

See accompanying notes to the financial statements

In terms of our report attached

For Khandelwal Jain & Co For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration No: 105049W

Chirag Doshi Vilas Tawde Gopal Srinivasan

Partner MD and CEO WTD and CFO
Membership No: 119079

Date: 31 August 2018 Date: 31 August 2018

Place: Mumbai Place: Mumbai

50
 Notes to the Standalone Financial Statements for the year ended 31
FOR THE YEAR ENDED 31ST MARCH, 2018
1. CORPORATE INFORMATION
Essar Oil and Gas Exploration and Production Limited
(EOGEPL) (the Company) is a public limited company
incorporated on 10 May 2016 under the provisions of the
Companies Act, 2013. The Corporate Identity Number
(CIN) of the Company is U11203GJ2016PLC091903. It is
primarily engaged in oil and gas exploration and production
activities. As on March 31, 2017, Essar Oil Limited (EOL)
was the parent company. EOL is wholly owned subsidiary
of Essar Energy Holdings Limited (EEHL). Consequent to
transfer of stake in equity share capital of the Company
to Essar Exploration and Production Limited (EEPL)
Mauritius, by its parent company. EOL on July 31, 2017,
EOL ceased to be holding company effective from July 31,
2017. Essar Exploration and Production Limited (EEPL)
Mauritius became the parent company with effect from 31
July 2017.
2. STATEMENT OF COMPLIANCE
The Financial statements have been prepared in
accordance with accounting principles generally accepted
in India including Indian Accounting Standards (IND AS)
prescribed under section 133 of the Companies Act, 2013
read with rule 3 of the Companies (Indian Accounting
Standard) Rules, 2015 and the Companies (Accounting
Standards) Amendment Rules, 2016, read with Guidance
Note on Accounting for Oil and Gas Producing Activities
issued by the Institute of Chartered Accountants of India
(revised 2013).
3. TRANSFER OF EXPLORATION & PRODUCTION
BUSINESS
During previous financial year, Essar Oil Limited (EOL)
had hived off Refining and marketing business and
had transferred E&P business to one of the subsidiary
Company EOGEPL of Essar Group. Pursuant to Business
Transfer Agreement dated February 15, 2017, entered
in to between the Company and Essar Oil Limited, its
erstwhile Parent Company, the Company has acquired
Exploration and Production (E&P) division of Essar Oil
Limited effected on 31 March 2017. The E&P business
was transferred entirely to the Company as a going
concern by way of a slump sale. The purchase price for
the acquired E&P business was calculated by subtracting
the Book Value of Liabilities from the Book Value of
Assets, which was discharged by issue of Compulsorily
St
March, 2018
Convertible Debentures (CCDs). Accordingly the
Company has discharged its obligation towards purchase
price by issuing 276,831,556 Compulsorily Convertible
Debentures (CCDs) of the face value of Rs.100 each to
the Holding Company.
4.
CRITICAL ACCOUNTING JUDGMENTS,
ASSUMPTIONS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
4.1 Critical judgements in applying accounting policies
The preparation of financial statements in conformity
with IND AS requires management to make judgments,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities
and disclosures relating to contingent liabilities, at the
end of the reporting period. Actual results could differ
from these estimates and adjustments are recognised in
the periods in which the results are known / materialise.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are
revised and future periods are affected. Key source of
judgments, assumptions and estimation uncertainty in the
preparation of the Financial Statements which may cause
a material adjustment to the carrying amounts of assets
and liabilities within the next financial year, are in respect of
Oil and Gas reserves, impairment, useful lives of Property,
Plant and Equipment, depletion of oil and gas assets,
decommissioning provision, employee benefit obligations,
impairment, provision for income
Tax, measurement of deferred tax assets and contingent
assets and liabilities.
The following are the critical judgements, apart from those
involving estimations, that the Management have made
in the process of applying the Company’s accounting
policies and that have the significant effect on the amounts
recognized in the Financial Statements.
i. Determination of functional currency :
Currency of the primary economic environment
in which the Company operates (“the functional
currency”) is Indian Rupee (`) in which the Company
primarily generates and expends cash. Accordingly,
the Management has assessed its functional currency
to be Indian Rupee (`).
51

ii. Determining whether an arrangement contain
leases and classification of leases :
The Company enters into service/hiring arrangements
for various assets/services. The determination of lease
and classification of the service/hiring arrangement
as a finance lease or operating lease is based on
an assessment of several factors, including, but
not limited to, transfer of ownership of leased asset
at end of lease term, lessee’s option to purchase
and estimated certainty of exercise of such option,
proportion of lease term to the asset’s economic
life, proportion of present value of minimum lease
payments to fair value of leased asset and extent of
specialized nature of the leased asset.
iii. Evaluation of indicators for impairment of Oil
and Gas Assets :
The evaluation of applicability of indicators of
impairment of assets or restatement of previous
impairment, requires assessment of external factors
(significant decline in asset’s value, significant
changes in the technological, market, economic or
legal environment, market interest rates etc.) and
internal factors (obsolescence or physical damage of
an asset, poor economic performance of the asset,
ability to sell etc.) which could result in significant
change in recoverable amount of the Oil and Gas
Assets.
iv. Oil & Gas Accounting :
The determination of whether potentially economic oil
and natural gas reserves have been discovered by
an exploration well is usually made within one year
of well completion, but can take longer, depending
on the complexity of the geological structure.
Exploration wells that discover potentially economic
quantities of oil and natural gas and are in areas
where major capital expenditure (e.g. an offshore
platform or a pipeline) would be required before
production could begin, and where the economic
viability of that major capital expenditure depends on
the successful completion of further exploration work
in the area, remain capitalized on the balance sheet
as long as additional exploration or appraisal work is
under way or firmly planned. It is not unusual to have
exploration wells and exploratory-type stratigraphic
test wells remaining suspended on the balance sheet
for several years while additional appraisal drilling and
seismic work on the potential oil and natural gas field
is performed or while the optimum development plans
52
Annual Report 2017-18
and timing are established. All such carried costs
are subject to regular technical, commercial and
management review on at least an annual basis to
confirm the continued intent to develop, or otherwise
extract value from the discovery. Where this is no
longer the case, the costs are immediately expensed.
4.2 ASSUMPTIONS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
Information about estimates and assumptions
that have the significant effect on recognition and
measurement of assets, liabilities, income and
expenses is provided below. Actual results may
differ from these estimates.
i. Estimation of oil and gas reserves:
The determination of the Company’s estimated oil and
natural gas reserves requires significant judgements
and estimates to be applied and these are regularly
reviewed and updated. Factors such as the availability
of geological and engineering data, reservoir
performance data, acquisition and divestment activity,
drilling of new wells, and commodity prices all impact
on the determination of the Company’s estimates of
its oil and natural gas reserves. The Company bases
it’s proved reserves estimates on the requirement
of reasonable certainty with rigorous technical and
commercial assessments based on conventional
industry practice and regulatory requirements.
Estimates of oil and natural gas reserves are used
to calculate depletion charges for the Company’s
oil and gas properties. The impact of changes in
estimated proved reserves is dealt with prospectively
by amortizing the remaining carrying value of the
asset over the expected future production. Oil and
natural gas reserves also have a direct impact on the
assessment of the recoverability of asset carrying
values reported in the financial statements.
ii. Asset retirement obligations/Decommissioning
liabilities
The liability for decommissioning costs are recognized
when the Company has obligation to perform site
restoration activity. Most of these decommissioning
activities would be in the future, the exact
requirements that may have to be met when the
removal events occur are uncertain. The recognition
and measurement of decommissioning provisions
involves the use of estimates and assumptions.
These include; the timing of abandonment of well
 and related facilities which would depend upon the
ultimate life of the field, expected utilization of assets
by other fields, the scope of abandonment activity
and pre-tax rate applied for discounting.
iii. Depreciation / amortisation and useful lives
of property plant and equipment / intangible
assets:
Property, plant and equipment / intangible assets are
depreciated / amortised over their estimated useful
lives. Management reviews the estimated useful
lives annually in order to determine the amount of
depreciation / amortisation to be recorded during any
reporting period. The useful lives are based on the
Company’s historical experience with similar assets
and take into account anticipated technological
changes. The depreciation / amortisation for future
periods is revised if there are significant changes from
previous estimates.
iv. Recoverability of trade receivable
Judgements are required in assessing the
recoverability of overdue trade receivables and
determining whether a provision against those
receivables is required. Factors considered include
the credit rating of the counterparty, the amount
and timing of anticipated future payments and any
possible actions that can be taken to mitigate the risk
of non-payment.
v. Provisions
Provisions and liabilities are recognized in the period
when it becomes probable that there will be a future
outflow of funds resulting from past operations or
events and the amount of cash outflow can be
reliably estimated. The timing of recognition and
quantification of the liability requires the application of
judgement to existing facts and circumstances, which
can be subject to change. The carrying amounts
of provisions and liabilities are reviewed regularly
and revised to take account of changing facts and
circumstances.
vi. Impairment of assets
As part of determination of the recoverable value of
assets for impairment, the estimates, assumptions
and judgements mainly concern future oil & gas
prices, ability of company to sell the oil and/or gas,
effect of inflation on operating costs, discount rates,
production profile and proved reserves of oil & gas.
The discount rate used for estimating the value in
use is reviewed annually. Changes in assumptions
could affect the carrying amount of assets and any
impairment losses and reversals will affect revenues.
vii. Employee benefit obligations
The benefit obligation and plan assets can be subject
to significant volatility due to changes in market values
and actuarial assumptions. These assumptions vary
between different plans and thus takes into account
market conditions. They are determined following
actuarial valuation method certified by external
independent actuarial valuer. The assumptions for
each plan are reviewed annually and adjusted if
necessary to reflect changes from the experience and
actuarial advices.
5. SIGNIFICANT ACCOUNTING POLICIES
5.1.
BASIS OF PREPARATION OF FINANCIAL
STATEMENTS
The financial statements have been prepared on the
historical cost basis except for certain financial instruments
that are measured at fair values at the end of each
reporting period, as explained in the accounting policies
set out below.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
As the operating cycle cannot be identified in normal
course due to the special nature of industry, the same has
been assumed to have duration of 12 months. Accordingly,
all assets and liabilities have been classified as current or
non-current as per the Company’s operating cycle and
other criteria set out in IND AS 1 ‘Presentation of Financial
Statements’ and Schedule III to the Companies Act, 2013.
The Standalone Financial Statements are presented
in hundred thousand Indian Rupees and all values are
rounded off to the nearest two decimal lakhs except
otherwise stated.
Fair value is the price that would be realised upon
selling an asset or payable to transfer a liability in an
orderly transaction between market participants at the
measurement date, regardless of whether that price is
directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or a
liability, the Company takes into account the characteristics
of the asset or liability if market participants would take
those characteristics into account when pricing the asset
or liability at the measurement date on such basis as
provided under IND AS 113.
53

The Company categorizes assets and liabilities measured
at fair value into one of three levels depending on the
ability to observe inputs employed in their measurement
which are described as follows:
(a) Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities.
(b) Level 2 inputs are inputs, other than quoted prices
included in level 1, that are observable, either directly
or indirectly, for the asset or liability.
(c) Level 3 inputs are unobservable inputs for the
asset or liability reflecting significant modifications
to observable related market data or Company’s
assumptions about pricing by market participants.
5.2
OIL & GAS EXPLORATION, EVALUATION
DEVELOPMENT EXPENDITURE
The Company follows the successful Efforts Method (SEM)
of accounting in respect of its oil and gas exploration and
production activities in accordance with IND AS 106 and
the ‘Guidance Note on Accounting for Oil & Gas Producing
Activities (IND AS)’ issued by ICAI.
Pre-acquisition costs incurred prior to obtaining right to
explore, develop & produce Oil & Gas like data collection
and analysis costs etc. are expensed as and when
incurred.
The policy of recognition of exploration and evaluation
expenditure is considered in line with the principle of SEM.
The exploration and evaluation expenditure which does
not result in discovery of proved oil and gas reserves
and all cost pertaining to production are charged to the
Statement of Profit and Loss.
The costs incurred on acquisition of interest in oil and
gas blocks and on exploration and evaluation other than
those which are expensed off are accounted for as Capital
Work in Progress-Oil & Gas Assets. All development costs
incurred in respect of Proved reserves are also capitalized
under Capital Work in Progress-Oil & Gas Assets. These
costs under Capital Work in Progress-Oil & Gas Assets
would be capitalized by transferring to ‘Producing
Property’ when a well is ready to commence commercial
production.
Production costs consists of direct and indirect costs
incurred to operate and maintain wells and related
equipment and facilities, including depreciation and
applicable operating cost of support equipment and
facilities.
54
Annual Report 2017-18
5.3 PROPERTY, PLANT & EQUIPMENT (PPE)
i. Property Plant and Equipment were recorded at
cost of acquisition or construction less recognised
impairment losses. The cost of acquisition comprises
its purchase price including import duties and non-
refundable taxes, any costs directly attributable
to bringing the asset to location and condition
necessary for it to be capable of operating in the
manner intended by management, initial estimate of
any decommissioning obligation wherever applicable
and eligible borrowing costs. Parts of an item of
PPE having different useful lives and significant value
and subsequent expenditure on Property, Plant and
Equipment arising on account of capital improvement
or other factors are accounted for as separate
& components. Costs of day to day servicing of PPE
are recognised in the statement of profit or loss as
incurred. Major shutdown and overhaul expenditure
is capitalised as the activities undertaken to improve
the economic benefits expected to arise from the
asset.
ii. Oil and Gas Assets or Producing Property are stated
at historical cost less accumulated depletion and
impairment losses. These are created in respect of
an area/field having proved developed oil and gas
reserves, when the well in the area/field is ready
to commence commercial production. Cost of
successful exploratory wells, all development wells
(including service wells), and depreciation on support
equipment used for drilling and estimated future
decommissioning costs are capitalised and classified
as Oil and Gas Assets or Producing Property.
Oil and Gas Assets are depleted using the “Unit
of Production Method”. The rate of depletion is
computed with reference to an area covered by
individual lease/license/asset/amortization base
by considering the proved developed reserves and
related capital costs incurred including estimated
future decommissioning/ abandonment costs net of
salvage value. Acquisition cost of Oil and Gas Assets
is depleted by considering the proved reserves. These
reserves are estimated by external independent
agency and reviewed by internal technical experts
of the Company, which follows the International
Reservoir Engineering Procedures.
iii. Other Property, Plant & Equipment are depreciated
using the Straight line method over the useful life
of PPE based on technical assessment by the
Company. Depreciation of these PPE commences
when the assets are ready for their intended use.
 Depreciation on subsequent expenditure on PPE Cost of Computer software is amortised over the useful
(other than of Oil and Gas Assets) arising on account life not exceeding five years from the date of capitalisation.
of capital improvement or other factors is provided for
Intangible assets is derecognised on disposal, or when
prospectively over the remaining useful life. Estimated
no future economic benefits are expected from use or
useful lives of these assets are as under:
disposal. Gains or losses arising from derecognition of an
Expected intangible asset are determined as the difference between
Depreciation the net disposal proceeds and the carrying amount of the
Assets Useful Life
Method
(Years) asset, and recognised in the Statement of Profit and Loss
Buildings Straight line 8 - 60 when the asset is derecognised. Any intangible assets,
Plant & when determined of no further use, is written off.
Straight line 2 - 30
Equipment 5.5 IMPAIRMENT OF ASSETS OTHER THAN FINANCIAL
Producing Unit of ASSETS
UOP
Properties production basis
Office Equipment Straight line 2-6 At the end of each reporting period, the Company reviews
Furniture & the carrying amounts of its Property, Plant & Equipment
Straight line 10 including Capital Work in Progress to determine whether
Fixtures
Software Straight line 5 there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the Company
iv. The estimated useful lives, residual values and estimates the recoverable amount of the asset. If such
depreciation method are reviewed on an annual basis recoverable amount of the asset is less than its carrying
and if necessary, changes in estimates are accounted amount, the carrying amount is reduced to its recoverable
for prospectively. amount. The reduction is treated as an impairment loss
and is recognised in the statement of profit and loss. If
v. Depreciation on refurbished/revamped PPE (other
at the balance sheet reporting date, there is an indication
than of Oil and Gas Assets) which are capitalized
that a previously assessed impairment loss no longer
separately is provided for over the reassessed useful
exists, the recoverable amount is reassessed and the
life.
asset is reflected at the recoverable amount but limited
vi. Depreciation on PPE (other than Oil and Gas Assets) to the carrying amount that would have been determined
including support equipment and facilities used for (net of depreciation / amortization and depletion) had
exploratory/development drilling is initially capitalised no impairment loss been recognised in prior accounting
as part of drilling cost and expensed/depleted as periods.
per note 5.3. ii. Depreciation on equipment/assets
Recoverable amount is the higher of fair value less costs of
deployed for survey activities is charged to the
disposal and its value in use. If the recoverable amount of
Statement of Profit and Loss.
an asset (or cash-generating unit) is estimated to be less
vii. An item of PPE is de-recognised upon disposal or than its carrying amount, the carrying amount of the asset
when no future economic benefits are expected to (or cash-generating unit) is reduced to its recoverable
arise from the continued use of the asset. Any gain or amount. An impairment loss is recognised immediately in
loss arising on the disposal or retirement of an item of profit or loss.
PPE is determined as the difference between the net
5.6 INVENTORIES
sales proceeds and the carrying amount of the asset
and is recognised as in the Statement of Profit and Finished goods of Crude Oil are valued at cost or net
Loss. realisable value whichever is lower. Cost of finished goods
is determined based on direct cost and directly attributable
5.4 INTANGIBLE ASSETS
service cost including royalty wherever applicable but
Costs of intangible assets are capitalised when the asset excludes cess.
is ready for its intended use. Intangible assets include
Crude Oil in unfinished condition in the flow line up to
expenditure on computer software and are stated at the
Early Production System (EPS) is not valued as same is
amount initially recognised less accumulated amortisation
not measurable. Natural Gas in pipeline is not valued as it
and accumulated impairment losses.
is not stored and these pipelines fills are necessary to the
operation of the facility.

55
 Annual Report 2017-18

Stores and spares are valued at weighted average cost c) Loan commitments which are not measured as
or net realisable value whichever is lower. Obsolete or at FVTPL
unserviceable items, as and when identified, are written
d) Financial guarantee contracts which are not
off. Provisions are made for non-moving inventories.
measured as at FVTPL
5.7 FINANCIAL INSTRUMENTS – ASSETS & LIABILITIES
The Company follows ‘simplified approach’ for
i. Initial recognition and measurement recognition of impairment loss allowance on Trade
receivables;
All financial assets and liabilities are initially recognized
at fair value. Transaction costs that are directly iv. De-recognition of financial assets
attributable to the acquisition or issue of financial
The Company derecognises a financial asset when
assets and financial liabilities, which are not at fair
the contractual rights to the cash flows from the asset
value through profit or loss, are adjusted to the fair
expire, or when it transfers the financial asset and
value on initial recognition. Purchase and sale of
substantially all the risks and rewards of ownership
financial assets are recognised using trade date
of the asset to another party. On de-recognition
accounting.
of a financial asset in its entirety (except for equity
ii. Subsequent measurement of Financial Asset instruments designated as FVTOCI),the difference
between the asset’s carrying amount and the sum
A financial asset is measured at amortised cost
of the consideration received and receivable is
using the effective interest method if it is held within
recognised in the Statement of Profit and Loss.
a business model whose objective is to hold the
asset in order to collect contractual cash flows and v. Subsequent measurement of Financial liability
the contractual terms of the financial asset give
All financial liabilities are subsequently measured at
rise on specified dates to cash flows that are solely
amortised cost using effective interest method or at
payments of principal and interest on the principal
FVTPL. Financial liabilities are classified as at FVTPL
amount outstanding.
when the financial liability is either held for trading or it
A financial asset is measured at FVTOCI if it is held is designated as at FVTPL.
within a business model whose objective is achieved
Debt and equity instruments issued by the Company
by both collecting contractual cash flows and selling
are classified as either financial liabilities or as equity
financial assets and the contractual terms of the
in accordance with the substance of the contractual
financial asset give rise on specified dates to cash
arrangements and the definitions of a financial liability
flows that are solely payments of principal and interest
and an equity instrument.
on the principal amount outstanding.
For trade and other payables maturing within one year
A financial asset which is not classified in any of the
from the balance sheet date, the carrying amounts
above categories are measured at FVTPL.
approximate fair value due to the short maturity of
iii. Impairment of Financial Asset these instruments.

In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of Impairment loss on the following
financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and
are measured at amortized cost e.g., loans, debt
securities, deposits, trade receivables and bank
balance.
b) Trade receivables or any contractual right to
receive cash or another financial asset that result
from transactions that are within the scope of Ind
AS 11 and Ind AS 18
vi. Derivative financial instruments
The Company enters into derivative financial
instruments to manage its exposure to interest rate
and foreign exchange rate risks, including foreign
exchange forward contracts and interest rate swaps.
Derivatives are initially recognised at fair value at the
date the derivative contracts are entered into and
are subsequently re-measured to their fair value at
the end of each reporting period. The resulting gain
or loss is recognised in profit or loss immediately
unless the derivative is designated and effective as a
hedging instrument, in which event the timing of the

56
 recognition in profit or loss depends on the nature of
the hedging relationship and the nature of the hedged
item. Derivatives are carried as financial assets when
the fair value is positive and as financial liabilities
when the fair value is negative.
vii. De-recognition of financial liabilities
The Company derecognises financial liabilities when,
and only when, the Company’s obligations are
discharged, cancelled or have expired. The difference
between the carrying amount of the financial liability
derecognised and the consideration paid and payable
is recognised in the Statement of Profit and Loss.
viii. Fair Value Measurement
The Company measures financial instruments, such
as, derivatives at fair value at each balance sheet
date.
5.8 REVENUE RECOGNITION
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date.
A fair value measurement of a non-financial asset
takes into account a market participant’s ability to
generate economic benefits by using the asset in its
highest and best use or by selling it to another market
participant that would use the asset in its highest and
best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs.
The Company categorizes assets and liabilities
measured at fair value into one of three levels as
follows:
• Level 1 — Quoted (unadjusted)
This hierarchy includes financial instruments
measured using quoted prices.
• Level 2
Level 2 inputs are inputs other than quoted prices
included within Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 2 inputs include the following:
a) quoted prices for similar assets or liabilities in
active markets.
b) quoted prices for identical or similar assets or
liabilities in markets that are not active.
c) inputs other than quoted prices that are
observable for the asset or liability.
d) Market – corroborated inputs.
• Level 3
They are unobservable inputs for the asset or liability
reflecting significant modifications to observable
related market data or Company’s assumptions
about pricing by market participants. Fair values are
determined in whole or in part using a valuation model
based on assumptions that are neither supported by
prices from observable current market transactions in
the same instrument nor are they based on available
market data.
Revenue from the sale of petroleum products is measured
at the fair value of consideration received or receivable,
net of trade discounts, volume rebates.
Revenue from sale of goods is recognised when the
goods are delivered and titles have passed, at which time
all the following conditions are satisfied:
• The Company has transferred to the buyer the
significant risks and rewards of ownership of the
goods:
• The Company retains neither continuing managerial
involvement to the degree usually associated with
ownership nor effective control over the goods sold;
• The amount of revenue can be measured reliably;
• It is probable that the economic benefits associated
with the transaction will flow to the Company, and
• The costs incurred or to be incurred in respect of the
transaction can be measured reliably.
Revenue from services is recognized when the outcome
of services can be estimated reliably and it is probable
that the economic benefits associated with rendering of
services will flow to the Company, and the amount of
revenue can be measured reliably. Revenue from sale of
services such as transportation of natural gas is recognised
when service is rendered in line with the agreements.
Interest income from a financial asset is recognised when
it is probable that the economic benefits will flow to the
Company and the amount of income can be measured
57

reliably. Interest income is accrued on a time proportion
basis, by reference to the principal outstanding and at
the effective interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts through
the expected life of the financial asset to that asset’s net
carrying amount on initial recognition.
Revenue from sale of scrap sold as “as-is-where-is” basis,
is recognised in the statement of Profit & Loss as other
income.
5.9 GOVERNMENT GRANTS
Government grants are not recognised until there is
reasonable assurance that the Company will comply with
the conditions attaching to them and that the grants will
be received.
Government grants are recognised in statement of profit
or loss on a systematic basis over the periods in which the
Company recognises as expenses the related costs for
which the grants are intended to compensate.
Specifically, government grants whose primary condition
is that the Company should purchase, construct or
otherwise acquire non-current assets are recognised as
deferred revenue in the balance sheet and transferred to
profit or loss on a systematic and rational basis over the
useful lives of the related assets, Government grants that
are receivable as compensation for expenses or losses
already incurred or for the purpose of giving immediate
financial support to the Company with no future related
costs are recognised in statement of profit or loss in the
period in which they become receivable.
5.10 EMPLOYEE BENEFITS
Employee benefits include salaries, wages, provident
fund, leave encashment towards un-availed leave and
other terminal benefits.
All short term employee benefits accruing to employees in
respect of performance related pay are recognised at their
undiscounted amount in the accounting period in which
they are incurred.
Defined Contribution plans
Employee benefits under defined contribution plans such
as provident fund and pension under National Pension
scheme is recognised based on the undiscounted
amount of obligations of the company to contribute to the
plan. The same is paid to a fund administered through a
separate trust.
58
Annual Report 2017-18
Defined benefits plans
Employee benefits under defined benefits plans such as
Gratuity and Leave Encashment are recognised based
on the present value of defined benefit obligation which
is computed using the projected unit credit method, with
actuarial valuations being carried out at the end of each
annual reporting period. This attributes the increase in
present value of the defined benefit obligation resulting
from employee service in the current period to determine
current service cost.
The current service cost as stated above and past service
cost resulting from plan amendment are recognised in
the statement of profit and loss under ‘Employee benefit
expense’.
Net interest which is recognised in the statement of profit
and loss under ‘Employee benefit expense’ represents the
net change in present value of plan obligations and the
value of plan assets resulting from passage of time, and
is determined by applying the discount rate to the present
value of the benefit obligations at the start of the year, and
to the fair value of plan assets at the beginning of the year,
taking into account expected changes in the obligation or
plan assets during the year.
Re-measurement of the defined benefit liability and asset,
comprising actuarial gains and losses, and the return of
plan asset are recognised in other comprehensive income
in the period in they occur and are not subsequently
reclassified to the statement of profit and loss.
The Company contributes all ascertained liabilities with
respect to gratuity to the EOGEPL’s Gratuity Fund Trust
(EOGEPLGFT) and Life Insurance Corporation of India
(LIC), respectively. Other defined benefit schemes such as
un-availed leave are unfunded.
The defined benefit plan surplus or deficit recognised in
the balance sheet for each plan comprises the difference
between the present value of defined benefit obligation and
the fair value of plan assets out of which the obligations
are to be settled directly.
5.11 BORROWING COSTS
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets are
capitalised as part of the cost of such asset up to the
date when the asset is ready for its intended use and
also includes exchange differences arising from foreign
currency borrowing to the extent that they are regarded
as on adjustment to interest cost. A qualifying asset is
one that necessarily takes substantial period of time to
 get ready for intended use. Other borrowing costs are Deferred income tax assets and deferred income tax
expensed as incurred. liabilities are offset if a legally enforceable right exists to
set off current income tax assets against current income
5.12 TAXATION
tax liabilities and if the deferred income taxes relate to the
Current tax is provided on taxable income at amounts same taxable entity and the same tax authority.
expected to be paid or recovered, using the tax rates and
5.13 CASH FLOW STATEMENT
laws that have been enacted or substantively enacted by
the balance sheet date. The Cash Flow Statement is prepared using the “indirect
method” as set out in IND AS 7 “Statement of Cash flow”
Deferred tax if any is provided, using the balance sheet
and presents the cash flows by operating, investing and
method, on all temporary differences at the balance sheet
financing activities of the Company.
date between tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes. Cash and Cash equivalents presented in the Cash Flow
Statement consist of cash on hand and unencumbered,
The current tax payable by a company is charged to the
highly liquid bank balances.
income statement in the applicable period at the corporate
tax rate computed under normal provisions of the Income 5.14 PROVISIONS, CONTINGENT ASSETS AND
tax Act or the minimum alternate tax (MAT), whichever CONTINGENT LIABILITIES
is higher. Excess tax paid under the MAT provisions can
Provisions are recognised when there is a present
be carried forward up to 15 years as a credit against
obligation (legal or constructive) as a result of a past event
corporate income tax in the future. Where the MAT credit
and it is probable that an outflow of resources embodying
satisfies the relevant criteria under IND AS 12 Income
economic benefits will be required to settle the obligation
taxes, it is recognised as a deferred tax asset.
and a reliable estimate can be made of the amount of the
Deferred tax liabilities are generally recognised for all obligation.
taxable temporary differences. Deferred tax assets are
The amount recognised as a provision is the best estimate
recognised for all deductible temporary differences,
of the consideration required to settle the present obligation
unused tax credits carried forward and unused tax losses,
at the end of the reporting period, taking into account the
to the extent that it is probable that sufficient taxable profit
risks and uncertainties surrounding the obligation. When
will be available to allow all or part of the assets to be
a provision is measured using the cash flows estimated
recovered. The carrying amount of deferred tax assets is
to settle the present obligation, its carrying amount is the
reviewed at each balance sheet date and is adjusted to
present value of those cash flows (when the effect of the
the extent that is no longer probable that sufficient taxable
time value of money is material).
profit will be available to allow all or part of the asset to be
recovered. When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
Deferred tax assets and liabilities are measured at the
third party, a receivable is recognised as an asset if it is
tax rates that are expected to apply to the year when the
virtually certain that reimbursement will be received and
asset will be realized or liability will be settled, based on tax
the amount of the receivable can be measured reliably.
rates and tax laws that have been enacted or substantively
enacted at the balance sheet date. Contingent liabilities are not recognised but disclosed in
financial statement by way of notes to accounts unless
Current and deferred taxes are recognised as an expense
the probability of an outflow of resources is remote.
or income, as the case may be, in the income statement,
Contingent assets are not recognized but disclosed when
except when they relate to items credited or debited
an inflow of economic benefits is probable.
directly to equity, in which case the tax is also recognised
directly in equity. The Company records a provision for decommissioning
costs towards site restoration activity. Provision for
Deferred Tax assets are not recognised for all deductible
decommissioning costs are recognized when the
temporary differences since it may not be probable that
Company has a legal or constructive obligation to plug
future taxable profit will be available against which the
and abandon a well, dismantle and remove a facility or
deductible temporary difference can be utilised.
an item of Property, Plant and Equipment and to restore
the site on which it is located. The full eventual estimated

59

liability towards costs relating to dismantling, abandoning
and restoring well sites and allied facilities are recognized
in respective assets when the well is complete/facilities
or Property, Plant and Equipment are installed and
commissioned for operations. The amount recognized
is the present value of the estimated future expenditure
determined using existing technology at current prices
5.17 INTERESTS IN JOINT OPERATIONS
and escalated using appropriate inflation rate till the
expected date of decommissioning and discounted up to
the reporting rate using the appropriate risk free discount
rate. Any change in the present value of the estimated
decommissioning expenditure other than the periodic
unwinding of discount is adjusted to the decommissioning
provision and the corresponding carrying value of the
related asset. In case reversal of decommissioning
provision exceeds the corresponding carrying amount of
the related asset, the excess amount is recognized in the
Statement of Profit and Loss. The unwinding of discount
on provision is charged in the Statement of Profit and Loss
as finance cost.
5.15 FOREIGN CURRENCY TRANSACTIONS AND
TRANSLATIONS
The functional currency of the Company is Indian Rupees
(`) which represents the currency of the primary economic
environment in which it operates.
The transactions in currencies other than the Company’s
functional currency (foreign currencies) are recognized
at the exchange rate prevailing at the dates of the
transactions. At the end of each reporting period, monetary
items denominated in foreign currency are retranslated at
the exchange rate prevailing at that date. Non-monetary
items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing at the
date when the fair value was determined. Non-monetary
5.18 LEASES
items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange difference on monetary items are recognised in
Statement of Profit and Loss in the period in which they
arise except for exchange differences on foreign currency
borrowings relating to the assets under construction for
future productive use, which are included in the cost of
those assets when they are regarded as an adjustment to
interest costs on those foreign currency borrowings.
5.16 EARNINGS PER SHARE
Basic earnings per share are computed by dividing the net
profit after tax by the weighted average number of equity
shares outstanding during the period. Diluted earnings per
60
Annual Report 2017-18
share is computed by dividing the profit after tax by the
weighted average number of equity shares considered for
deriving basic earnings per share and also the weighted
average number of equity shares that could have been
issued upon conversion of all dilutive potential equity
shares.
A joint operation is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to
the assets, and obligations for the liabilities, relating to the
arrangement. The Company has Joint Operations in the
nature of Production Sharing Contracts (PSC) executed
with Government of India along with other entities to
undertake exploration, development & production of Oil
& Gas and related activities in various blocks/area. The
financial statements of the company reflects the share
of company’s assets, liabilities and also the income
and expenditure of joint venture in proportion to the
participating interest of the company as per the terms
of PSCs, on line by line basis. Depreciation, depletion,
impairment and value of stock of crude oil are accounted
for as per the relevant accounting policies of the company.
Proved reserve of oil & gas in such blocks/areas is also
considered in proportion to participating interest of the
company.
Gain or loss on sale of interest in a joint operation, is
recognized in the Statement of Profit and Loss, except
that no gain is recognized at the time of such sale if
substantial uncertainty exists about the recovery of the
costs applicable to the retained interest or if the Group
has substantial obligation for future performance. The gain
in such situation is treated as recovery of cost related to
that block.
Leases are classified as finance leases whenever the
terms of the lease transfer substantially all the risks and
rewards incidental to the ownership of an asset to the
Company. All other leases are classified as operating
leases. Land under non-perpetual leases are treated as
operating leases. Operating lease payments for land are
recognized as prepayments and amortised on a straight-
line basis over the term of the lease. Contingent rentals, if
any, arising under operating leases are recognised as an
expense in the period in which they are incurred.
6. PROPERTY, PLANT AND EQUIPMENT (PPE) (` in lakhs)
Plant & Furniture & Office Producing
Description of Assets Land Buildings Total
Machinery Fixtures Equipment Property
Gross carrying amount
As at 10 May 2016 - - - - - - -
Additions during the period 217.68 1,721.05 2,161.30 401.55 53.36 2,539.82 7,094.76
Balance as at 31 March 2017 217.68 1,721.05 2,161.30 401.55 53.36 2,539.82 7,094.76
Additions during the year - 86.19 1,768.67 4.01 63.01 3,885.79 5,807.67
Adjustment / transfer during the
- - (24.51) (303.62) (7.87) - (336.00)
year
Balance as at March 31, 2018 217.68 1,807.24 3,905.46 101.94 108.50 6,425.61 12,566.43
Depreciation / amortisation
As at 10 May 2016 - - - - - - -
For the period - - - - - - -
Closing as at 31 March 2017 - - - - - - -
For the year - 37.49 901.70 63.74 52.63 378.80 1,434.36
Withdrawal / write back during
- - - - - - -
the period
Balance as at March 31, 2018 - 37.49 901.70 63.74 52.63 378.80 1,434.36
Net Block As at March 31, 2017 217.68 1,721.05 2,161.30 401.55 53.36 2,539.82 7,094.76
Net Block As at March 31, 2018 217.68 1,769.75 3,003.76 38.20 55.87 6,046.81 11,132.07

7. CAPITAL WORK IN PROGRESS (` in lakhs)

Capital Raniganj
Plant & CB-ON/3 Other CBM
Description of Assets Inventory CBM Total
Machinery block IV Blocks
(Raniganj) Project
Carrying amount
As at 10 May 2016 - - - - - -
Additions/Reductions during the
15,238.87 74,384.53 2,81,395.09 3,829.11 - 3,74,847.60
period
Less: Provision for Impairment
- (35,018.91) (1,44,932.55) - - (1,79,951.46)
during the period
Balance as at 31 March 2017 15,238.87 39,365.62 1,36,462.54 3,829.11 - 1,94,896.14
Additions/Reductions during the
(5,066.62) 4,192.89 19,591.22 (3,822.27) - 14,895.22
period
Less: Reversal of Provision for
- 35,018.91 1,44,932.55 - - 1,79,551.46
Impairment during the period
As at March 31, 2018 10,172.25 78,577.42 3,00,986.31 6.84 - 3,89,742.82

61
 Annual Report 2017-18

8. OTHER INTANGIBLE ASSETS (` in lakhs)

Intangible
Description of Assets Total
Assets
Gross carrying amount
As at 10 May 2016 - -
Additions/Reductions during the period 42.27 42.27
Balance as at 31 March 2017 42.27 42.27
Additions during the period 17.70 17.70
Adjustment / transfer during the period (7.62) (7.62)
As at March 31, 2018 52.35 52.35
Amortisation & impairment
As at 10 May 2016 - -
Additions/Reductions during the period - -
Balance as at 31 March 2017 - -
Amortisation charges for the period 42.99 42.99
Adjustment / transfer during the period - -
As at March 31, 2018 42.99 42.99
Net Block As at March 31, 2017 42.27 42.27
Net Block As at March 31, 2018 9.36 9.36

9. INVESTMENTS (` in lakhs)
As at As at
Particulars
31st March 2018 31st March 2017
Investment in Compulsory convertible Preference Shares of Fellow subsidiary
(205000 0.01% Compulsory Convertible Preference Shares at face value of 2,050.00 -
` 10/- per share)
9.1 Pursuant to the Business Transfer Agreement (BTA) between the Company and Essar Oil Limited (EOL) as on 31 March 2017,
Exploration & Production (E&P) business was transferred from EOL to the Company. Capital advance of ` 2,050.00 Lakhs
was given to Essar Oilfields Services India Limited (EOSIL) and was forming part of assets acquired. The said advance was
given to EOSIL towards acquisition of rigs. Subsequently, based on recommendation from the Board of Directors, and Audit
Committee to convert capital advances in to Compulsory Convertible Preference Shares (CCPS) at their Meeting held on
December 12, 2017, the said capital advances has been converted in to CCPS
9.2. Terms & conditions of Compulsory Convertible Preference Shares
Particulars Details
Name of the Security 0.01% Compulsory Convertible Preference Shares (CCPS)
Face value/CCPS ` 10/- (Rupees Ten only) each - Fully paid up
Dividend 0.01% of the discretion of Issuer
Cumulative/Non-Cumulative Non-Cumulative
Redemption Not Applicable
Conversion Each CCPS shall be convertible to Equity Shares:
- At any time after 6 months from the date of issue at the request of the shareholder
or the issuer by giving 30 days' notice or
- Compulsorily at the end of 10 years from the date if issue
Conversion Price 1 (One) CCPS shall be converted into 1 (One) Equity share at the face value of ` 10/-
(Rupees Ten only) fully paid up, ranking in pari-passu with the existing Equity shares
Other terms/Participation CCPS holders shall be entitled to participate in any distribution of assets upon liquidation
of the company in the same ratio as that of equity shareholders of the company.
Listing on Stock Exchange The CCPS shall not be listed on any Stock Exchange

62
10. OTHER NON-CURRENT ASSETS (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Capital Advances - -
Security Deposits
Unsecured, Considered good 112.01 72.36
Other Advances
Unsecured, Considered good 115.71 418.81
227.72 491.17

11. INVENTORIES (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Finished goods 65.86 7.88
Stores and spare parts 363.72 413.64
429.58 421.52

12. TRADE RECEIVABLES (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Trade Receivables
Unsecured, Considered good 5,818.63 1,440.29
Considered doubtful 4,711.06 -
Less Impairment for doubtful receivables (4,711.06) -
5,818.63 1,440.29
Receivables from other Related Parties
Unsecured, Considered good - 184.39
- 184.39
5,818.63 1,624.68

12.1 On 31st March 2017, the Company had taken over a long term Gas Sale and Purchase Agreement (GSPA) with Matix
Fertilizers and Chemical Limited (MFCL), from the erstwhile Essar Oil Limited as part of the business transfer, for supplying the
entire Coal Bed Methane (CBM) gas produced and saved from the Raniganj field located in the Burdwan district in State of
West Bengal. While the applicable gas price under the GSPA at the time of signing was US$ 4.20 per Million British Thermal
Units (MMBTU) plus the Marketing Margin and transportation charges, The Company had to adopt the Government of India
(GOI) gas price policy and apply the administrative gas price notified by the Petroleum Planning and Analysis Cell (PPAC),
Ministry of Petroleum and Natural Gas (MoP&NG) to the GSPA till 31st March 2017. However, with the revision in the policy
framework for Early Monetization of Coal Bed Methane (CBM) which provided for freedom for marketing and pricing of CBM
gas vide GOI notification dated 11 April 2017, the Company had to discover a new gas price through a tender process. The
Company successfully completed the price discovery process and discovered a new gas price that would be applicable for all
future gas sales from the Raniganj field. Accordingly, the Company is in the process entering into a new long term GSPA with
the successful highest bidder, M/s GAIL India Ltd., a Government of India enterprise that superseded the existing GSPA with
MFCL.

63
 Annual Report 2017-18

Gas supplied to MFCL until 16th November 2017, the date on which the MFCL took a technical shutdown of its plant to
which the gas was being supplied, continued to be governed by the GOI notified pricing since the new gas price discovery
was made in February 2018 only. Though MFCL was required to pay the new discovered gas price for all supplies beyond
16th November 2017, MFCL has so far not agreed to pay such price and the matter continues to be in discussion. Pending
the same, gas supplied to MFCL is continued to be provisionally on a reasonable endeavour basis priced at the GOI notified
price.
The net amount (after making adjustments for any previous “Supply or Pay” penalty under the superseded agreement) invoiced
and due from MFCL towards gas supplied till 31st March 2018 and other charges viz. lease rent for land for their propane plant
is ` 7,132.25 Lakhs. MFCL has not paid the dues despite repeated reminders and has instead raised a counter claim of `
13,375.07 Lakhs till 31st March 2018 towards penalty for “Supply or Pay” under the superseded agreement that was settled
by Essar Oil Limited (EOL) prior to novation of the GSPA to the Company. The Company has refuted the claim and has not
accepted the same since an amount of `. 24,000 Lakhs was paid as a one-time settlement for the entire GSPA period through
the 6th Amendment dated of the GSPA with MFCL. The amount was partly paid in cash and the balance adjusted against gas
supplies till 31st march 2017.
However, in view of the dispute, the Company, following a conservative principle, has provided for an estimated amount of `
4,620.89 Lakhs as doubtful debt during the current financial year (previous year NIL).

13. CASH AND CASH EQUIVALENTS (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Balances with Banks
Current Accounts 238.23 546.80
238.23 546.80

14. BANK BALANCES (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Balances with Banks
Held as Margin deposits against bank guarantees 1,215.37 4,115.14
Other deposits (against Letter of credit facilities) 220.74 -
1,436.11 4,115.14

14.1 Deposit account comprises ` 1,215.37 Lakhs (previous year ` 4,115.14 Lakhs) as margin deposits placed for bank guarantees
and ` 220.74 Lakhs placed for letters of credit facilities.
15. OTHER CURRENT FINANCIAL ASSETS (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Receivables from Related parties
Unsecured, Considered good - 1,277.67
Receivables from Others
Unsecured, Considered good 88.64 -
Interest accrued on deposits 21.36 60.33
Derivative financial instruments - gain on outstanding foreign currency
270.31 -
forward and option contract
380.31 1338.00

64
15.1 The company holds two derivative financial instrument contracts towards foreign currency forward and options contract to
mitigate the risk of changes in exchange rates on foreign currency exposures and interest rate swap for foreign currency
borrowings to mitigate risk of changes in LIBOR interest rate. The counterparty for these contracts are generally a bank. These
derivative financial instruments are valued based on marked to market inputs sought from bank.
The foreign exchange forward and options contracts mature within 12 months. The table below analyses derivative financial
instruments in to relevant maturity groupings based on the remaining period as at the Balance Sheet date:
(` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Not later than one month 6.02 -
Later than one month and not later than three months 13.95 -
Later than three months and not later than one year 250.34 -
TOTAL 270.31 -

16. CURRENT TAX ASSETS (NET) (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Advance income tax / Tax deducted at source
Unsecured, Considered good 60.66 -
60.66 -

17. OTHER CURRENT ASSETS (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Capital Advances to Related Parties
Unsecured, Considered good - 12,550.00
Capital Advances to others
Unsecured, Considered good 23,157.76 19,797.41
Security Deposits
Unsecured, Considered good 23.36 23.10
Advances recoverable from Related Parties
Unsecured, Considered good - 3,050.17
Advances recoverable from others
Unsecured, Considered good 1,448.17 5,507.00
24,629.29 40,927.68

65
 Annual Report 2017-18

18. EQUITY SHARE CAPITAL (` in lakhs)

As at 31st March 2018 As at 31st March 2017

Particulars Number of Number of
Amount Amount
Shares Shares
Authorised
Equity shares of ` 10 each 50,000 5.00 50,000 5.00
Issued and subscribed
Equity shares of ` 10 each 50,000 5.00 50,000 5.00
Fully paid up
Equity shares of ` 10 each fully paid up 50,000 5.00 50,000 5.00

19. OTHER EQUITY (` in lakhs)

As at 31 March 2018
st
As at 31 March 2017
st

Particulars Number of Number of

Amount Amount
Shares Shares
Equity component of Compulsorily
Convertible Debentures (CCDs)
Unsecured Compulsorily Convertible Debentures
27,68,31,556 2,76,831.56 27,68,31,556 2,76,831.56
(CCDs) of ` 100 each

19.1 Reconciliation of the number of shares/equity component of CCDs and amount outstanding at the beginning and at the end
of the period:
As at 31st March 2018 As at 31st March 2017
Particulars Number of Amount Number of Amount
Shares (` in lakhs) Shares (` in lakhs)
Equity Shares
Shares outstanding at the beginning of the period 50,000 5.00 - -
Add : Equity shares issued during the period - - 50,000 5.00
Shares outstanding at the end of the period 50,000 5.00 50,000 5.00
Equity component of Compulsorily
Convertible Debentures (CCDs)
CCDs outstanding at the beginning of the period 27,68,31,556 2,76,831.56 - -
Add : CCDs issued during the period - - 27,68,31,556 2,76,831.56
CCDs outstanding at the end of the period 27,68,31,556 2,76,831.56 27,68,31,556 2,76,831.56

66
19.2 Details of shares held by each shareholder holding more than 5%:
As at 31st March 2018 As at 31st March 2017
Particulars Number of Number of
Amount Amount
Shares Shares
Equity Shares
Essar Exploration & Production Ltd-
50,000 100% - -
Mauritius
Essar Oil Limited 50,000 100%
Equity component of Compulsorily
Convertible Debentures (CCDs)
Essar Exploration & Production Ltd-
27,68,31,556 100% - -
Mauritius
Essar Oil Limited - - 27,68,31,556 100%

19.3 Rights, preferences & restrictions attached to each of shares:

• The Company has only one class of equity shares having a par value of ` 10 per share.
• Each holder of an equity share is entitled to one vote per share.
• In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of
the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity
shares held by the shareholders.
19.4 Terms of Unsecured Compulsorily Convertible Debentures (CCDs):
• CCDs shall not carry any interest.
• The CCDs shall be converted in to Equity Shares of ` 10 each at the option of holder any time after issuance but before
the end of 120 months from the date of issuance of CCDs.
• From the date of conversion of all CCDs, the voting percentage of all shareholders holding equity shares in the Company
shall be in proportion of their shareholding in the Company.

20. RESERVE & SURPLUS (` in lakhs)

Particulars As at 31st March 2018 As at 31st March 2017

Retained Earnings
Balance as at the beginning of the period (1,79,969.66) -
Add : Net loss for the period 1,68,398.64 (1,79,969.66)
Total (11,571.02) (1,79,969.66)
Capital Reserve
Balance as at the beginning of the period (1,650.88) -
Add : Excess Purchase consideration transferred 109.48 (1,650.88)
Total (1,541.40) (1,650.88)
Grand Total (13,112.42) (1,81,620.54)

67
 Annual Report 2017-18

20.1 During the previous period, Essar Oil Limited (EOL), had hived off Refinery business outside Essar Group and had transferred
Exploration & Production division of Essar Oil Limited to one of the Essar Group Company Essar Oil and Gas Exploration
and Production Limited (EOGEPL) as on 31 March 2017. The purchase price of E&P business was agreed as per provisional
Financials of E&P business on the basis of the net book value of Assets of ` 2,76,831.56 Lakhs as on 31 March 2017. The
said purchase price was discharged by the company by issuing 27,68,31,556 Compulsorily Convertible Debentures (CCDs)
of the face value of ` 100 each. However, after Audit of books of accounts of E&P business as on 31 March 2017, the net
book value of Assets was worked out at ` 2,75,180.68 Lakhs (which is lower than the aforesaid agreed purchase price). Thus
the resultant excess purchase price of ` 1,650.88 Lakhs is charged off to the statement of Profit and Loss during the previous
period. However correct treatment of the same should have been negative Capital Reserve. Accordingly to correct the error
made in previous period Financial Statements, during the year excess Purchase Consideration amount of ` 1,650.88 Lakhs
has been transferred and shown as negative Capital Reserve. Further during the current year, transfer of Gratuity fund assets
of ` 109.48 Lakhs was received, the same has also been adjusted against the Capital Reserve.

Net Profit of ` 1,68,398.64 Lakhs during F.Y. 2017-2018 was mainly on account of reversal of provision for impairment for
CBM Raniganj Block provided during F.Y. 2016-2017.

21. NON-CURRENT FINANCIAL LIABILITIES-BORROWINGS (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
A. Secured Borrowings
Term loans - At amortised cost
From banks 90,250.23 96,849.88
From financial institutions 46,331.46 45,317.88
Less: Unamortised portion of ancillary borrowing cost (1,620.19) (1,628.69)
Less: Amount included under Other current liabilities (16,295.64) (8,312.13)
1,18,665.86 1,32,226.94
B. Unsecured Borrowings
Other loans - At amortised cost
Conditional grant from a bank 808.66 806.83
808.66 806.83
1,19,474.52 1,33,033.77

21.1 During the financial year 2017-2018, the Company’s existing lender State Bank of India (SBI) assigned its outstanding exposure
of ` 10,385.78 lakhs to Yes Bank Ltd on same terms and conditions.
21.2 Security for term loans from banks and financial institutions:
(` in lakhs)
As at As at
Particulars
31st March 2018 31st March 2017
Term loans are secured / to be secured by first charge on immovable assets
and movable assets (present and future), first charge over book debts,
operational cash flows, receivables, trust and retention account, Debt Service
Reserve account, participating interest under CBM contract, security interest 26,250.23 32,849.88
on rights, title and interests under the project documents, insurance policies,
clearances, rights under letter of credit and guarantees, performance bond,
corporate guarantee and bank guarantees, all in relation to CBM Project.

68
 As at As at
Particulars
31st March 2018 31st March 2017
Term loans are secured / to be secured by first charge on all present and future
movable assets, immovable assets, current assets and intangible assets,
first charge on all the bank accounts of the Company including Trust and
Retention Account, Debt Service Reserve account and the monies deposited
therein, a sub-ordinate charge on participating interest under CBM contract,
1,10,331.46 1,09,317.89
security interest on all present and future right, title, interest, benefits, claims
and demands under the project documents and under the approvals and
insurance contracts/insurance proceeds including all right, title and interest,
claims and demands under any letter of credit, guarantees related to the
project.
1,36,581.69 1,42,167.77

21.3 Repayment and other terms: (` in lakhs)

As at As at
Term loan from bank Terms of repayment
31st March 2018 31st March 2017
Term loans carry interest rate linked to base rate /
Axis, IOB & Yes Bank MCLR plus margin and are repayable in 30 Quarterly 19,210.51 24,346.95
instalments ending on June 2021.
Term loan carries interest rate linked to base rate
Axis Bank / MCLR rate plus margin and are repayable in 34 64,000 64,000
Quarterly instalments ending on September 2026.
External Commercial As at As at
Terms of repayment
Borrowings 31st March 2018 31st March 2017
External Commercial Borrowing carry interest rate
linked with 3 months LIBOR plus margin and are
Axis 7,039.72 8,502.93
repayable in 14 Half yearly instalments ending on
April 2022.
External Commercial Borrowing carry interest rate
linked with 6 months LIBOR plus margin and are
IIFC(UK)L 46,331.46 45,317.88
repayable in 42 Quarterly instalments ending on
September 2028.
As at As at
Grant Terms of repayment
31st March 2018 31st March 2017
The pilot project for Coal Bed Methane (CBM) gas
was partially financed by a conditional grant of USD
0.89 million and ` 231 Lakhs received from a bank
by Essar Oil and Gas Exploration and Production
Limited (EOGEPL).
The conditional grant, in terms of the agreement,
will be repayable in the event the Company puts
ICICI bank 808.66 806.83
the project to commercial use, and repayments
to the bank will be based on gross annual sales
derived from the commercial exploitation of the
project, subject to a maximum repayment of 200%
of the conditional grant. Commercial exploitation of
the project is dependent upon getting necessary
approvals from the Government of India.

69
 Annual Report 2017-18

21.4 Details of Loan Principal & Interest overdue as on 31st Mar 2018:
Default in (` in lakhs) Default from
Name of Lenders Principal Principal
Interest Interest
Repayment Repayment
Indian Overseas Bank Term Loan 700.00 161.36 31-03-2018 28-02-2018
Axis Bank Term Loan Phase I 227.50 51.07 31-03-2018 28-02-2018
Yes Bank Term Loan 782.05 90.63 31-03-2018 31-03-2018
Axis Bank Term Loan Phase II - 1,180.76 - 01-02-2018
IIFC(UK)L ECB* - 794.18 - 31-01-2018
1,709.55 2,278.01
*IIFCL Interest is net of TDS which is already paid by EOGEPL on date

21.5 During the year, the Company has defaulted in the payment of certain dues to the Banks and Financial Institution due
to various factors beyond its control. The Company is in continuous dialogue with the Banks and Financial Institution for
restructuring of RTL/ECB facilities so as to elongate the tenure of the loan and provide interest moratorium, considering the
same as a corrective measures.

22. NON-CURRENT PROVISIONS (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
A. Provision for employee benefits
Earned leave 58.75 -
Gratuity 86.72 -
B. Other Provision
Site restoration - CB/ON-3 324.41 303.14
Site restoration - CBM Raniganj block - -
469.88 303.14

23. OTHER CURRENT FINANCIAL LIABILITIES (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Current maturities of Long term borrowings (Net of unamortized upfront fees of
16,062.23 7,979.64
` 233.4 Lakhs in CY and ` 332.49 Lakhs in PY )
Interest accrued but not due on borrowings 725.53 134.18
Interest accrued and due on loans/borrowings 2,278.01 -
Capital Creditors
Payable to related parties - 352.69
Payable to others 13,100.40 12,200.47
Other than Capital Creditors
Payable to related parties 18,663.30 -
Payable to others 0.21 -
Security Deposits
Payable to related parties - 2.19
Payable to others 875.34 1,354.58
51,705.02 22,023.75

70
24. OTHER CURRENT LIABILITIES (` in lakhs)
As at As at
Particulars
31st March 2018 31st March 2017
Statutory dues 525.66 538.90
Advances received from customers 240.82 156.71
766.48 695.61

25. CURRENT PROVISIONS (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Provision for employee benefits
Earned leave 14.75 83.40
Gratuity - 142.47
14.75 225.87

26. REVENUE FROM OPERATIONS (` in lakhs)

For the year ended For the period ended
Particulars
31st March 2018 31st March 2017
Sale of Crude Oil 415.80 -
Other operating revenues 0.62 -
416.42 -

26.1 The Company being the operator of the Mehsana CB-ON/3 block, has been selling entire Crude Oil produced from the field
to IOCL. Pending finalization of COSA, the crude oil was sold during the year at 20% discount to the International Brent
Crude prices (Platt’s). Revenue from sale of Crude Oil is recognised in the statement of profit and loss is based on the price
derived as per above referred formula.

27. OTHER INCOME (` in lakhs)

For the year ended For the period ended
Particulars
31st March 2018 31st March 2017
Interest on deposits 20.44 -
Scrap Sale 295.33 -
Profit on sale of fixed assets 79.16 -
Unrealised gain foreign currency forward and option contracts 162.52 -
Others 26.41 -
583.86 -

28. CHANGES IN INVENTORIES OF FINISHED GOODS AND WIP (` in lakhs)

As at As at
Particulars
31st March 2018 31st March 2017
Opening inventory
Finished goods 7.88 -
Closing inventory
Finished goods 65.86 -
Net Decrease / (Increase) in Inventory (57.98) -

71
 Annual Report 2017-18

29. EMPLOYEE BENEFITS EXPENSE (` in lakhs)

For the year ended For the period ended

Particulars
31st March 2018 31st March 2017
Salaries, wages and bonus 165.63 -
Contribution to provident and other funds 27.62 -
Staff welfare expenses 30.31 -
223.56 -

30. FINANCE COSTS (` in lakhs)

For the year ended For the period ended

Particulars
31st March 2018 31st March 2017
Interest
On fixed loans - -
On others 0.33 -
Unwinding of decommissioning liability 21.22 -
21.55 -

31. DEPRECIATION AND AMORTISATION EXPENSE (` in lakhs)

For the year ended For the period ended

Particulars
31st March 2018 31st March 2017
Depreciation of Tangible Assets 347.31 -
Amortisation of intangible Assets 42.99 -
390.30 -

32. EXPLORATION & EVALUATION EXPENDITURE (` in lakhs)

For the year ended For the period ended

Particulars
31st March 2018 31st March 2017
Exploration expenditure written off 246.58 -
246.58 -

33. OTHER EXPENSES (` in lakhs)

For the year ended For the period ended

Particulars
31st March 2018 31st March 2017
Operating Expenses
Consumption of stores and spare parts 24.05 -
Other operating expenses 155.01 -
179.06 -
General and Administrative Expenses
Rates and taxes 136.17 0.36
Insurance 3.63
Rent 9.24
Repairs and maintenance 35.49

72
 For the year ended For the period ended
Particulars
31st March 2018 31st March 2017
Communication expenses 0.59
Travelling & Conveyance 5.52
Interest Others 156.13
Legal and professional fees 13.94 4.00
Provision for Slow moving Inventory Items 53.08
Allowances for doubtful debts & advances 8,980.28
Fixed assets written off 423.41
Advances/deposits written off 78.23
Exchange differences (net) 371.17
Amortisation - Derivative Asset 170.14
Sundry expenses 208.64
10,645.66 4.36
Total 10,824.72 4.36

33.1 Payment to Auditor as: (` in lakhs)

For the year ended For the period ended

Particulars
31st March 2018 31st March 2017
As an Auditor
Statutory Audit Fees 5.90 3.54
Tax Audit Fees 1.18 -
Limited review Audit fees 1.48 -
8.56 3.54

33.2 During the year, company has spent expenditure on corporate social responsibility as below: (` in lakhs)

For the year ended For the period ended

Particulars
31st March 2018 31st March 2017
Health 32.44 -
Education 2.90 -
Community Infrastructure 8.34 -
Sport and Cultural 1.31 -
44.99 -

33.3 Allowances for doubtful debts & advances

Pursuant to the Business Transfer Agreement (BTA) between the Company and Essar Oil Limited (EOL) as on 31 March
2017, E&P business was transferred from EOL to the Company. Capital advances were given to EPC Construction India
Limited (earlier known as Essar Projects India Limited) and was part of assets acquired. Subsequent to 31 March 2018, EPC
Construction India Limited has been served a notice from National Company Law Tribunal (NCLT) for insolvency proceedings.
Accordingly the recovery of the advances given to EPC Construction Company Limited seems to be doubtful. Considering
the initiation of NCLT proceedings, the Company has provided full amount of ` 8,980.28 Lakhs against the capital advance
outstanding.

73
 Annual Report 2017-18

34. EXCEPTIONAL ITEM (` in lakhs

For the year ended For the period ended

Particulars
31st March 2018 31st March 2017
Impairment Loss 1,79,951.46 (1,79,951.46)
Extra Ordinary Income / Expenses (907.37) (13.84)
1,79,044.09 (1,79,965.30)
34.1 During the previous period, the company acquired Exploration & Production division of Essar Oil Limited on 31 March
2017. Post-acquisition the Company had carried out impairment assessment for CBM Raniganj Block.
As on 31 March 2017, the Company has carried out review of recoverable amount of CBM Raniganj Block which was having
carrying value as per books of accounts of ` 3,60,202.77 Lakhs. Estimated recoverable value of CBM Raniganj Block based on
expert valuation report obtained by the Company on 01 August 2017 for valuation date as on 31 March 2017, worked out to be
` 1,80,251.31 Lakhs.
Accordingly the differential amount of ` 1,79,951.46 Lakhs in value as per valuation report and books of account is recognised
as impairment loss in statement profit and loss, for the year ended March 31, 2017.
During the current year 2017-18, the Company has reviewed the impairment assessment of the CBM Raniganj block as
on reporting date. Up on review of the carrying value of CBM Raniganj block against future estimated recoverable value,
the management based on the expert opinion received, is of the view that, considering the present market conditions and
subsequent signing of GSPA with GAIL Ltd., future estimated recoverable value would be significantly higher than earlier
carrying value. Thus the entire amount of provision for impairment of ` 1,79,951.46 Lakhs provided during the previous year
has been reversed during the current year as required under Ind AS 36 Impairment of Assets and Ind AS 10 Events after the
Reporting Period and disclosed under the head ‘Exceptional Items’ in the Statement of Profit & Loss account.

35. EARNINGS PER SHARE (` in lakhs)

For the year ended For the period ended

Particulars UOM
31st March 2018 31st March 2017
Profit / (Loss) after Tax ` in Lakhs 1,68,395.64 (1,79,969.66)
Profit / (Loss) attributable to ordinary shareholders for Basic
` in Lakhs (10,648.45) (4.36)
EPS before exceptional items
Impact on Profit (Net of Tax) due to Exceptional Items ` in Lakhs 1,79,044.09 (1,79,965.30)
Profit / (Loss) attributable to ordinary shareholders after
` in Lakhs 1,68,395.64 (1,79,969.66)
Exceptional Items
Weighted average number of ordinary shares for Basic EPS Numbers 50,000 50,000
Add:- Shares deemed to be issued (CCDs-Potential Equity
Numbers 2,76,83,156 75,844
Share)
Weighted average number of ordinary shares for Diluted EPS
Numbers 2,77,33,156 1,25,844
– CCDs
Nominal value of ordinary shares ` 10.00 10.00
Basic earnings per share before exceptional item `/Share (21,296.90) (8.72)
Diluted earnings per share before exceptional item `/Share (21,296.90) (8.72)
Basic earnings per share after exceptional item `/Share 3,36,791.28 (3,59,939.32)
Diluted earnings per share-CCDs (Not Annualised) `/Share 607.20 (3,59,939.32)

74
36. FINANCIAL INSTRUMENTS
36.1 Capital Management
The company’s objective while managing capital is to safeguard its ability to continue as a going concern while maximising the
return to stakeholders through optimisation of the debt and equity balance.
‘The capital structure of the Company consists of net debt and total equity. As part of externally imposed capital requirements,
the Company is required to maintain certain financial covenants as specified in the loan agreements. The Company monitors
its capital using gearing ratio, which is net debt divided to total equity. Net debt includes borrowings less cash and cash
equivalents and other bank balances.
(` in lakhs)
Long Term and Short Term Borrowings As at March 31, 2018 As at March 31, 2017
Interest-bearing loans and borrowings 1,36,581.69 1,42,167.76
Less: cash and cash equivalents (238.23) (546.80)
1,36,343.46 1,41,620.96
Other financial assets-Other bank balances (1,436.11) (4,115.14)
Underlying net debt 1,34,907.35 1,37,505.82
Total equity and CCDs 84,680.04 95,216.02
Equity and underlying net debt 2,19,587.39 2,32,721.84
Gearing ratio 61.44% 59.09%

36.2 Categories of Financials Instruments (` in lakhs)

As at 31 March 2018
st
As at 31 March 2017
st

Particulars FVTPL FVTOCI Amortised FVTPL FVTOCI Amortised

Cost Cost
Financial assets
Trade receivables - - 5,818.63 - - 1,624.68
Cash and cash equivalent - - 238.23 - - 546.80
Bank balances other than cash and cash - -
- 1,436.11 - 4,115.14
equivalent
Other financial assets - - 380.31 - - 1,338.00
Non-current investments - - 2,050.00 - - -
Total financial assets at amortised cost (A) - - 9,923.28 - - 7,624.62
Non-current investments - - - -
Current investments - - - -
Other financial assets - - - -
Total financial assets at fair value through - - - -
profit and loss (B)
Total financial assets (A+B) - - 9,923.28 - - 7,624.62
Financial liabilities
Long-term borrowings# - - 1,19,474.52 - - 1,33,033.77
Other financial liabilities - - 51,705.02 - - 22,023.75
Total financial liabilities at amortised cost (A) - - 1,71,179.54 - - 1,55,057.52
Other financial liabilities - - - - - -
Total financial liabilities at fair value through - -
- - - -
profit and loss (B)
Total financial liabilities (A+B) 1,71,179.54 - 1,55,057.52
# including current maturities of long-term borrowings and finance lease obligations

75
 Annual Report 2017-18

36.3 Financial risk management objectivesThe company’s principal financial liabilities, other than derivatives, comprises
loans and trade payables. The main purpose of these financial liabilities is to raise finance for the company’s operations.
The company has various financial assets such as trade receivables, investment in preference shares, cash, and short-term
deposits, which arise directly from its operations.
The Company monitors and manages the financial risks relating to the operation of the Company by analysing exposures by
degree and magnitude of risks. These risks include market risks (including currency risk, interest rate risk and price risk), credit
risk and liquidity risk that are measured using sensitivity analysis.
The primary commodity price risks that the Company is exposed to include international crude oil or natural gas prices that
could adversely affect the value of the Company’s financial assets or expected future cash flows. In case of any upward
or downward movement in the international prices of crude oil or natural gas, the revenue of the company get affected
correspondingly.
36.3.1 Foreign currency risk management
The Company undertakes transactions denominated in different foreign currencies and consequently exposed to exchange
rate fluctuations. Sale price of crude oil and natural gas is denominated in USD though billed and received in Indian Rupees
(`). The Company is, therefore, exposed to foreign currency risk principally out of ` appreciating against USD.
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:
(` in lakhs)
As at March 31, 2018 As at March 31, 2017
Particulars
USD GBP EURO USD GBP EURO

Assets

Trade & other receivables (7,968.23) - - (775.74) - -

Liabilities

Loan 54,831.78 - - 54,487.84 - -

Trade & other Payables 7,232.21 0.46 - 7,396.44 6.61 34.62

Net Exposures 54,095.76 0.46 - 61,108.54 6.61 34.62

The following table details the Company’s sensitivity to a 5% increase and decrease in ` against the relevant foreign
currencies. 5% is the sensitivity rate used when reporting foreign currency risk and represents management’s assessment of
the reasonably possible change in foreign currency exchange rates. The sensitivity analysis includes only outstanding foreign
currency denominated monetary items and adjusts their translation at the year-end for a 5% change in foreign currency rates
with all the variables held constant. A positive number below indicates an increase in profit or equity where ` strengthens 5%
against the relevant currency. For a 5% weakening of ` against the relevant currency, there would be an inverse impact on
profit or equity.

76
 (` in lakhs)
Impact on Profits (net of taxes)
Particulars
As at March 31, 2018 As at March 31, 2017
5% Appreciation in `
Receivables
USD (398.41) (25.36)
Payables
USD 3,103.20 2,023.37
GBP 0.02 0.22
EUR - 1.13
5% Depreciation in `
Receivables
USD 398.41 25.36
Payables
USD (3,103.20) (2,023.37)
GBP (0.02) (0.22)
EUR - (1.13)
The foreign currency exposure of the Company as at balance sheet date that have not been hedged by a derivative instrument
or otherwise are given below:
As at March 31, 2018:
Loan Liabilities (Including
Payables Receivables
Particulars Interest accrued)
` in Lakhs FC in Lakhs ` in Lakhs FC in Lakhs ` in Lakhs FC in Lakhs
USD 7,232.21 111.19 7,698.23 123.22 44,852.72 689.60
GBP 0.46 0.01 - - - -
EUR - - - - - -
TOTAL 7,232.68 111.19 7,698.23 123.22 44,852.72 689.60

As at March 31, 2017:

Particulars Payables Receivables Loan Liabilities (Including
Interest accrued)
` in Lakhs FC in Lakhs ` in Lakhs FC in Lakhs ` in Lakhs FC in Lakhs
USD 7,396.44 114.07 775.74 11.96 54,487.84 840.36
GBP 6.61 0.08 - - - -
EUR 34.62 0.50 - - - -
TOTAL 7,437.67 114.66 775.74 11.96 54,487.84 840.36

36.3.2 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The company’s’ exposure to the risk of changes in market interest rates relates primarily to the
company’s long-term debt obligations with floating interest rates.

77
 Annual Report 2017-18

The borrowings of the Company are denominated in rupees and US dollars with floating interest rate. The Company hedges
its US dollar interest rate risk through interest rate swaps to reduce the floating interest rate risk. The Company has exposure
to interest rate risk, arising principally on changes in base lending rates and LIBOR rates. Hedging activities are evaluated
regularly to align with interest rate views and define risk appetite, ensuring that the most cost effective hedging strategies are
applied.
Sensitivity to risk
As an estimation of the approximate impact of the interest rate risk, with respect to financial instruments, the Company has
calculated the impact of a 1% change in interest rates as tabulated below:
(` in lakhs)
Particulars As at March 31, 2018 As at March 31, 2017
Increase by 1% (1,365.82) (1,421.68)
Decrease by 1% 1,365.82 1,421.68
36.3.3 Credit risk
As per Ind AS 109 the Company uses Expected Credit Loss (ECL) model to assess the impairment loss or gain. The company
uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into
account available external and internal credit risk factors, such as credit default swap quotes, credit ratings from international
credit rating agencies and the company’s historical experience for customers.
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.
Company’s credit risk arises principally from the trade receivables, Advances, Deposits, investment, cash & bank balances
and derivatives.
Trade receivables:
The outstanding trade receivables are regularly monitored and appropriate action is taken for collection of overdue trade
receivables. The credit period on sale of goods ranges from 0 to 180 days with or without security. The company has provided
allowance for trade receivables using expected loss method based on provision matrix and ageing of the days the receivables
are due.
Given below is the ageing of trade receivables of the Company:
(` in lakhs)
Particulars As at March 31, 2018 As at March 31, 2017
Not due 1,177.56 697.99
0-30 days 359.41 442.98
31-60 days 389.72 28.86
61-90 days 439.57 45.97
91-180 days 4,677.65 77.30
More than 181 days 3,485.78 331.58
Total 10,529.69 1,624.68
The details in respect of percentage of revenues generated from top customer and top 5 customers are as follows:

(In %)
Particulars Year ended 31st March 2018 Year ended 31st March 2017
Revenue from top customer 34.77 18.97
Revenue from top 5 customers 68.32 58.23

Above is part of revenue netted off in Capital Work in Progress (CWIP) in case of CBM Raniganj project.

78
 Advances, Deposits & investment:

The Company’s treasury function manages the financial risks related to the business. Deposits and Advances are extended
to counterparties after assessing their financial capabilities. Counterparty credit limits are reviewed and approved by Board
of the Company. These limits are set to minimise the concentration of risks and therefore mitigates the financial loss through
counterparty’s potential failure to make payments.

Cash and bank balances and derivatives:

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high
credit-ratings assigned by international credit rating agencies.

36.4 Liquidity Risk

The Company monitors its risk of shortage of funds using cash flow forecasting models. Management monitors rolling forecasts
of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management
also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity
profiles of financial assets & liabilities. The following tables detail the Company’s remaining contractual maturity for its non-
derivative financial liabilities with agreed repayment periods. The information in the tables have been drawn up based on the
undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The
tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the
Company may be required to pay.
(` in lakhs)
As at March 31, 2018 < 1 Year 1 > 5 Years > 5 Years Total
Long term Borrowings (including interest) 19,299.18 67,307.28 53,787.42 1,40,939.89
Current maturities of Long term borrowings (Net of
(16,062.23) - - (16,062.23)
unamortized upfront fees of ` 332.49 Lakhs)
Liabilities for capital expenditures and others 31,112.35 - - 31,112.35
Security deposit from Contractors 875.34 - - 875.34
Total 35,224.64 67,307.28 53,787.42 1,56,319.35

(` in lakhs)
As at March 31, 2017 < 1 Year 1 > 5 Years > 5 Years Total
Long term Borrowings (including interest) 8,312.13 58,381.77 76,280.70 1,42,974.60
Current maturities of Long term borrowings (Net of
(7,979.64) - - (7,979.64)
unamortized upfront fees of ` 332.49 Lakhs)
Liabilities for capital expenditures and others - - - -
Security deposit from Contractors - - - -
Total 332.49 58,381.77 76,280.70 1,34,994.96

37. DISCLOSURE PURSUANT TO INDIAN ACCOUNTING STANDARD (IND AS) 19 - EMPLOYEE BENEFITS
37.1 Defined Contribution Plans
Company’s contribution to Provident fund and pension fund are recognised in the statement of profit and loss / expenditure
during construction / pre-production activities, as applicable. There is no obligation other than the contribution payable.
Contribution to Defined Contribution Plans, recognised as expense for the year is as under:
(` in lakhs)
Particulars 2017-18 2016-17
Employer's Contribution to Provident Fund 132.72 128.35
Employer's Contribution to Pension scheme 14.50 9.71

79
 Annual Report 2017-18

37.2 Defined Benefit Plans

The benefit plans in operation are Gratuity fund and Leave encashment fund. The Gratuity Scheme is treated as a post-
employment benefit under IND AS 19 and the actuarial gains/losses are recognised immediately through the Other
Comprehensive Income via retained earnings. The Leave Benefit Scheme is treated as other long term benefit under IND AS
19 and the actuarial gains/losses are recognised immediately through the P&L Account. The present value of the obligation is
determined based on actuarial valuation made at the end of the financial year using the projected unit credit method.
a. Reconciliation of opening and closing balances of Defined Benefit Obligation
(` in lakhs)
Compensated Absences
Gratuity (Funded)
Particulars (Unfunded)
2017-18 2016-17 2017-18 2016-17
Defined Benefit Obligation at beginning of the year 293.82 - 83.40 -
Current Service Cost 26.94 - - -
Past service cost - plan amendments 44.82 - - -
Interest Cost 20.05 - 5.65 -
Actuarial (Gain) / Loss (8.09) - (7.91) -
Benefits Paid (22.73) - (7.63) -
Defined Benefit Obligation at year end 354.81 293.82 73.51 83.40
b. Reconciliation of opening and closing balances of fair value of Plan Assets
(` in lakhs)
Compensated Absences
Gratuity (Funded)
Particulars (Unfunded)
2017-18 2016-17 2017-18 2016-17
Fair value of Plan Assets at beginning of year 151.35 - - -
Acquisition adjustment* 109.48 - - -
Interest income on plan assets 14.41 - - -
Actuarial Gain / (Loss) (0.98) - - -
Employer Contribution 16.57 - - -
Return on plan assets greater/(lesser) than discount rate (0.98) - - -
Benefits Paid (22.73) - - -
Fair value of Plan Assets at year end 267.12 151.35 - -
* Employees were transferred from Holding Company Essar Oil Limited as a part of Business Transfer Agreement.

c. Reconciliation of fair value of Assets and Obligations

(` in lakhs)
Compensated Absences
Gratuity (Funded)
Particulars (Unfunded)
2017-18 2016-17 2017-18 2016-17
Fair value of Plan Assets 267.12 151.35 - -
Present value of Obligation 354.81 293.82 73.51 83.40
Amount recognised in Balance Sheet (Surplus/(Deficit) (87.69) (142.47) (73.51) -83.40

d. Expenses recognised during the year

80
 (` in lakhs)
Compensated Absences
Gratuity (Funded)
Particulars (Unfunded)
2017-18 2016-17 2017-18 2016-17
In Income Statement
Current Service Cost 71.76 - - -
Interest Cost 5.64 - 5.65 -
Return on Plan Assets - - - -
Net Cost 77.40 - 5.65 -
In Other Comprehensive Income
Actuarial (Gain) / Loss (8.09) - (7.91) -
Return On Plan Assets 0.98 - - -
Net (Income)/ Expense For the period Recognised
(7.11) - (7.91) -
in OCI
e. Current and Non-Current Liability Breakup as at 31 March 2018:
(in ` Lakhs)
Compensated
Particulars Gratuity (Funded)
Absences (Unfunded)
Current Liability - (14.75)
Non-Current Asset/ (Liability) (86.72) (58.75)
Net Asset / (Liability) as at 31 March 2018 (86.72) (73.51)

f. Sensitivity Analysis
The sensitivity analysis results determine their individual impact on the Plan’s end of year Defined Benefit Obligation. In reality,
the Plan is subject to multiple external experience items which may move the Defined Benefit Obligation in similar or opposite
directions, while the Plan’s sensitivity to such changes can vary over time.
(` in lakhs)
Compensated Absences
Particulars Gratuity (Funded)
(Unfunded)
DBO on base assumptions as at 31 March 2018 73.51 354.82
Discount Rate as on 31st Mar18 7.40% 7.40%
Effect on DBO due to 0.5% increase in Discount Rate (1.30) (9.62)
Effect on DBO due to 0.5% decrease in Discount Rate 1.36 10.17
Salary escalation Rate as on 31st Mar18 0% 10%
Effect on DBO due to 0.5% increase in Salary Escalation Rate - 8.02
Effect on DBO due to 0.5% decrease in Salary Escalation Rate - (7.86)
Attrition/withdrawal Rate as on 31st Mar18 12% 12%
Effect on DBO due to 5% increase in Attrition Rate 5.10 (8.67)
Effect on DBO due to 5% decrease in Attrition Rate (7.42) 13.02

81
 Annual Report 2017-18

g. Actuarial assumptions
(` in lakhs)
Compensated Absences
Gratuity (Funded)
Particulars (Unfunded)
2017-18 2016-17 2017-18 2016-17
Discount Rate (per annum) 7.40% 7.10% 7.40% 7.10%
Rate of escalation in Salary (per annum) 10.00% 12.00% 0.00% 0.00%
Mortality Rate Indian Assured Lives Mortality (2006-2008) Ult.
h. These plans typically expose the Company to actuarial risks such as: interest rate risk, salary risk and demographic risk
Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields
fall, the defined benefit obligation will tend to increase.
Salary Inflation risk: Higher than expected increases in salary will increase the defined benefit obligation Demographic risk:
This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability
and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the
combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the
financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service
employee.
i. Assumptions:
• One of the principal assumptions is the discount rate, which should be based upon the market yields available on
Government bonds at the accounting date with a term that matches that of the liabilities. The Discount Rate as at 31
March 2018 is based on the government bond yields as at 28 March 2018 corresponding to a term of approximately 6
years which is the expected term of Defined Benefit Obligation .
• There will be no future accumulation of leave balances effective 1st January 2015. Hence, there will be no service cost in
case of leave encashment.
• Salary escalation rate will be 0% effective 31 December 2015 since the CTC applicable in respect to leave encashment
on separation has been frozen to this date.
• No allowance had been made for any corporate income tax. Similarly, all amounts in OCI are displayed on a pre-tax basis.
38. INFORMATION AS PER INDIAN ACCOUNTING STANDARDS (IND AS) 24 “RELATED PARTY DISCLOSURES”
38.1 Names of related parties and description of relationship:

Relationship Name of Related Parties

Ultimate Parent Essar Global Fund Limited, Cayman Islands
Immediate Parent Essar Exploration & Production Ltd., Mauritius
Intermediate Parent Essar Energy Limited, United Kingdom from 1 August 2017
Essar Energy Holdings Limited, Mauritius up to 31 July 2017
Essar Oil Limited ( up to 31st Jul'2017 )
Holding Company
Essar Exploration & Production Ltd., Mauritius (from 1 August 2017)
Fellow Subsidiary EPC Construction India Limited (Formerly known as Essar Projects India Limited)
Essar Power Madhya Pradesh Limited
Essar Oilfields Services India Limited
Aegis Limited
Essar Exploration & Production Ltd., Nigeria
Edwell Metal & Trading Limited (Formerly known as Essar Steel Jharkhand Limited)

82
 Relationship Name of Related Parties
Associate of Ultimate Parent Essar Logistics Ltd. (Arkay Logistics)
Subsidiary of Fellow Subsidiary Futura Travels Limited
Key Management Personnel
Director Ms Suparna Singh (till 31st January 2018)
Mr Amitabh Bhargava (till 27th September 2017)
Director Mr Gopal Pallipuram Srinivasan (effective from 28th Feb 2018)
Ms Glyniss Oscar Fernandes (effective from 28th February 2018)
Independent Director Mr K N Venkatasubramanian (effective from 12th June 2017)
Mr Rajkumar Sukhdevsinhji (effective from 21st March 2017)
Managing Director Mr Vilas Shreedhar Tawde (effective from 28th February 2018)

38.2 Transaction with Related Parties:

(` in lakhs)
Sl. As on As on
Name of Related Party Nature of Transactions
No 31st Mar’18 31st Mar'17
1 Issue of Share Capital
Essar Oil Limited Issue of Share Capital - 5.00
Issue of Compulsorily Convertible
2
Debentures
Issue of Compulsorily
Essar Oil Limited - 2,76,831.56
Convertible Debentures
3 Receiving of services
Futura Travels Limited Travel Services received 58.63 -
Purchase of Fixed/Intangible Assets
4
(Including CWIP)
EPC Construction India Limited (Formerly
Purchase of tangible Assets 1,550.73 -
known as Essar Projects India Limited)
Essar Oilfields Services India Limited Purchase of tangible Assets 1,237.06 -
5 Inter Division Receipt or Payment/Contra
Futura Travels Limited Payment against services 52.54 -
EPC Construction India Limited (Formerly Advance paid against
60.32 -
known as Essar Projects India Limited) purchase
Advance paid against
Essar Oilfields Services India Limited 418.76 -
purchase
Essar Exploration & Production Ltd-Nigeria Receipt against services 184.39 -
Essar Energy Holdings Limited Receipt against cash call 2,558.09 -
Essar Exploration & Production Ltd-Mauritius Receipt against services 174.67 -
Adjust against capital
Essar Logistics Ltd (Arkay Logistics) 20.00 -
Advance
Adjust against capital
Aegis Limited 44.06 -
Advance
Adjust against capital
Essar Power Madhya Pradesh Limited 191.96 -
Advance
6 Provision for doubtful debts
EPC Construction India Limited (Formerly
Allowance for doubtful debt 8,979.72 -
known as Essar Projects India Limited)

83
 Annual Report 2017-18

38.3 Outstanding balances with Related Parties: (` in lakhs)

Sl. As on As on
Name of Related Party Nature of Transactions
No 31st Mar'18 31st Mar'17
1 Financial Assets
Essar Oil Limited* Other Receivable - 864.48
Essar Oilfields Services India Limited Interest Receivable - 413.19
Essar Exploration & Production Ltd-Nigeria Trade Receivables - 184.39
Investment in Compulsory
Essar Oilfields Services India Limited convertible Preference 2,050.00 -
Shares
2 Other Current Asset
Essar Energy Holdings Limited Advances recoverable - 2,558.09
Essar Exploration & Production Ltd-Mauritius Advances recoverable - 174.67
Essar Oilfields Services India Limited Advances recoverable - 248.41
EPC Construction India Limited Advances recoverable - 69.00
3 Other Non-Current Asset
EPC Construction India Limited (Formerly known
Capital Advance - 10,500.00
as Essar Projects India Limited)
Essar Oilfields Services India Limited Capital Advance - 2,050.00
4 Other Financial Liabilities
EPC Construction India Limited (Formerly known
Security Deposit - Retention - 2.19
as Essar Projects India Limited)
EPC Construction India Limited (Formerly known
Capital Creditors - 96.68
as Essar Projects India Limited)
Essar Logistics Ltd (Arkay Logistics) Capital Creditors - 20.00
Aegis Limited Capital Creditors - 44.06
Essar Power Madhya Pradesh Limited Capital Creditors - 191.96
Futura Travels Limited Capital Creditors 8.59 -
Essar Oilfields Services India Limited Capital Creditors 156.71 -
Edwell Metal & Trading Ltd. (Formerly known as
Capital Creditors 18,498.00 -
Essar Steel Jharkhand Limited)
5 Equity / Other Equity
Essar Oil Limited* Issue of Share Capital - 5.00
Issue of Compulsorily
Essar Oil Limited* - 2,76,836.56
Convertible Debentures
* As on 31st Mar’2018, this party is not related and hence its outstanding balance is not appearing here.

84
39. EXPLORATION AND PRODUCTION ACTIVITIES
39.1 On 31 March 2017 the Company had acquired E&P business from its Holding Company, which had adopted
Successful Efforts Method (SEM) of Accounting, prescribed under the Guidance Note on “Accounting for Oil and Gas
Producing Activities” issued by the “Institute of Chartered Accountants of India”.
39.2 Company’s interest in oil & gas and CBM Joint Ventures as at March 31, 2018:
Sl. No. Name of the Block As at March 31, 2018
1 CB-ON/3 (Gujarat, India) # 100%
2 RG (East) 2001/1 (West Bengal, India)s 100%
3 RM-(E)-CBM-2008/IV (Rajmahal, Jharkhand, India) 100%
4 TL-CBM-2008/IV (Talcher, Orissa, India) 100%
5 IB-CBM-2008/IV (IB Valley, Orissa, India) 100%
6 SP(NE)-CBM-2008/4 (Sohagpur, Madhya Pradesh, India) 100%
# CB-ON/3 Mehsana block has four fields viz. ESU, EEU, ENP, ENS. ONGC has Participating Interest (PI) in ESU field except
ESU # 4 well. Remaining three fields PI is 100% with the Company.
39.3.1 Company’s interest in Proved (1P) and Proved Developed reserves of crude oil as on March 31, 2018 in Essar South
Unawa (ESU) Field is as under:
Proved Proved developed
MT MT MT MT
Area of Operation
As at March As at March As at March As at March
31, 2018 31, 2017 31, 2018 31, 2017
Opening 45,296 45,895 13,890 14,489
Essar South Unawa (ESU) field Block Addition - - - -
CB-ON/3 - onshore Cambay Basin,
India (70%) Production 701 599 701 599
Closing 44,595 45,296 13,189 13,890
39.3.2 Company’s interest in Proved (1P) and Proved Developed reserves of crude oil as on March 31, 2018 is Essar East
Unawa (EEU) Field is as under:
Proved Proved developed
MT MT MT MT
Area of Operation
As at March As at March As at March As at March
31, 2018 31, 2017 31, 2018 31, 2017
Opening - - - -
Essar East Unawa (EEU) field Block CB- Addition 8,613 - 8,613 -
ON/3 - onshore Cambay Basin, India
(100%) Production 549 - 549 -
Closing 8,064 - 8,064 -

85
 Annual Report 2017-18

39.3.3 Company’s interest in Proved (1P) and Proved Developed reserves of crude oil as on March 31, 2018 in Essar North
Pali (ENU) Field is as under:

Proved Proved developed

MT MT MT MT
Area of Operation
As at March As at March As at March As at March
31, 2018 31, 2017 31, 2018 31, 2017
Opening - - - -
Essar North Pali (ENP) field Block CB- Addition 7,703 - 4,606 -
ON/3 - onshore Cambay Basin, India
(100%) Production 490 - 490 -
Closing 7,213 - 4,116 -
39.3.4 Company’s interest in Proved (1P) and Proved Developed reserves of crude oil as on March 31, 2018 in Essar North
Sapad (ENS) Field is as under:

Proved Proved developed

MT MT MT MT
Area of Operation
As at March As at March As at March As at March
31, 2018 31, 2017 31, 2018 31, 2017
Opening - - - -
Essar North Sapad (ENS) field Block CB- Addition 28,571 - 7,576 -
ON/3 - onshore Cambay Basin, India.
(100%) Production 197 - 197 -
Closing 28,374 - 7,379 -
39.4 Company’s interest in Proved (1P) and Proved Developed reserves of coal bed methane gas as on March 31, 2018 is
as under:
Proved Proved developed
MMSCM MMSCM MMSCM MMSCM
Area of Operation
As at March As at March As at March As at March
31, 2018 31, 2017 31, 2018 31, 2017
Opening 7,765 253 18,838 24

RG (East)-CBM-2001/1 block, Addition - 7,897 - 19,199

West Bengal, India (100%) Production 328 385 328 385
Closing 7,437 7,765 18,510 18,838
39.5.1 The Company uses proved and probable reserves as the basis for impairment assessment for both crude oil and coal
bed methane gas blocks.
39.5.2 Fields, which uses common production and transportation facilities and are economically interdependent, have been
considered as single cash generating unit for impairment purpose. Accordingly, Essar South Unawa (ESU), Essar North Pali
(ENP), Essar North Sapad (ENS) and the Essar East Unawa (EEU) fields in block CB-ON/3 have been considered as single
cash generating unit. CBM Raniganj Block has been considered as separate cash generating unit for impairment purpose.
39.5.3 Crude oil reserves are evaluated on yearly basis by in house technical team, based on available geological, geophysical
and production data.
39.5.4 CBM reserve certification exercise was carried out by an independent external agency in June 2016. All estimates
have been prepared in accordance with the definition and guidelines set forth in the 2007 Petroleum Resource Management
System (PRMS) approved by Society of Petroleum Engineers (SPE).

86
40. CAPITAL AND OTHER COMMITMENTS
(` in lakhs)
As at March As at March
Particulars
31, 2018 31, 2017
Capital commitments:
Estimated amount of contracts remaining to be executed on capital account and not
provided for (net of advances)
- in respect of company 4,477.89 22,207.98
- in respect of Joint Operations 20.89 -
Other commitments:
Estimated amount of contracts remaining to be executed on revenue account and not
provided for (net of advances)
- in respect of company 6,073.90 9,392.87
- in respect of Joint Operations 2.34 11.49
Balance of minimum work programme commitment under production sharing contracts
entered for Rajmahal Bock with Government of India. The commitment is covered by 6,049.10 -
bank guarantee.
Balance of minimum work programme commitment under production sharing contracts
5,236.05 -
entered for Sohagpur Bock with Government of India

41. CONTINGENT LIABILITIES (` in lakhs)

As at March As at March
Particulars
31, 2018 31, 2017
Claims against the Company not acknowledged as debts:
- By Contractor pending in Arbitration / Courts 3,732.92 3,291.97
- Under Central Excise Act and Service Tax, Rule 14 of Cenvat Credit Rule,2004 527.87 -
- Anchor customer Matix Chemical and Fertilizers Limited has written for a claim as per Gas
13,375.07 -
Supply and Purchase Agreement (GSPA) on the Company.
In respect of Guarantees
-Bank Guarantee in respect of minimum work programme for Rajmahal block 554.00 -
-Bank Guarantee in respect of minimum work programme for CBM Mehsana ring faced PSC 233.00 -

42. RECENT ACCOUNTING PRONOUNCEMENTS:

Appendix B to IND AS 21, Foreign currency transactions and advance consideration: On March 28, 2018 the Ministry of
Corporate Affairs (‘the MCA’) notified the Companies (Indian Accounting Standards) Amendments Rules, 2018 containing
Appendix B to IND AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction
for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when
an entity has received or paid advance consideration in a foreign currency.

The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial
statements and the impact is not material.

IND AS 115, Revenue from Contract with Customers: On March 28, 2018, the MCA notified the IND AS 115. The core
principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. Further, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty
of revenue and cash flows arising from the entity’s contracts with customers.

87
 Annual Report 2017-18

The standard permits two possible methods of transaction:

• Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period
presented in accordance with IND AS 8, Accounting Policies, Changes in Accounting Estimates and Errors.

• Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application
(Cumulative catch - up approach)

The effective date for adoption of IND AS 115 is financial period beginning on or after April 1, 2018.

The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly,
comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of IND
AS 115 is expected to be insignificant.

43. The outstanding balances as at March 31, 2018 in respect of certain balances of trade receivables, trade payables, loans &
advances, unsecured loans and deposits, are subject to confirmation from respective parties and consequential reconciliation
and adjustment arising there from, if any.

44. The Company had initiated the process of updating database through online portal and had approached and intimated various
suppliers / vendors to provide relevant information for Medium, Small and Medium Enterprises category. However as on
reporting date of this Financial Statements, relevant information is not readily available with the Company. Accordingly due to
non-availability of information, required disclosure under the Micro, Small and Medium Enterprises Development Act, (MSME)
2006, is not made in the financial statements

45. At the Financial Year ending 31 March 2018, the Company’s accumulated losses are ` (13,112.42 Lakhs) (Previous year
` 1,81,620.54 Lakhs). The Company has received letter of commitment from its parent company for their operational support
to the Company. Considering the same and based on business plan of the Company, in the opinion of the management,
no adjustment is required to the carrying value of the assets and liabilities as of the balance sheet date and hence financial
statements are prepared on a going concern basis.

46. As the company has been incorporated on 10 May 2016, the previous period includes transactions for the period from 10 May
2016 to March 31, 2017.

47. Figures relating to previous year have been rearranged / regrouped whenever necessary. As the Company was incorporated
on 10 May 2016, previous period includes transactions for the period 10th May, 2016 to 31st March, 2017 and hence not
comparable.

48. The Financial Statements of the Company are reviewed and approved by the Board of Directors as well as Audit Committee
vide their meeting dated 31 August 2018.

See accompanying notes to the financial statements

In terms of our report attached

For Khandelwal Jain & Co For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration No: 105049W

Chirag Doshi Vilas Tawde Gopal Srinivasan

Partner MD and CEO WTD and CFO
Membership No: 119079

Date: 31 August 2018 Date: 31 August 2018

Place: Mumbai Place: Mumbai

88
Notes

89
 Annual Report 2017-18

Notes

90
Notes

91
 Annual Report 2017-18

Notes

92
Corporate Team - Mumbai

Project Team – Raniganj

Project Team – Mehsana

Women Empowerment - Corporate Office

If Underlivered, please return to:
www.westernpress.in

ESSAR OIL AND GAS EXPLORATION AND

PRODUCTION LIMITED (EOGEPL)
Essar House, 11, K. K. Marg,
Mahalaxmi Mumbai-400034, India
Tel: +91 6660 1100, Fax: +91 6666 9429