The Directors have pleasure in presenting the Sixth Annual Report on
the business and operations of the Company and the Audited Financial
accounts for the year ended 31 March, 2012.
FINANCIAL HIGHLIGHTS In INR million
Standalone Consolidated
For the financial
year ended For the financial
year ended
31 March,
2012 31 March,
2011 31 March,
2012 31 March,
2011
Total Income 2,489 951 127,987 104,067
Total Expenditure 2,014 3,077 43,752 35,167
Profit/(loss) before tax 475 (2,126) 84,235 68,900
Taxes 35 - 4,857 5,556
Profit/(loss) after tax 440 (2,126) 79,378 63,344
The consolidated statements provide the results of Cairn India Limited
together with those of its subsidiaries for the financial year ended 31
March, 2012.
DIVIDEND
In view of inadeguacy of profits in Cairn India Limited, your Directors
regret their inability to recommend any dividend.
CHANGES IN CAPITAL STRUCTURE
During the financial year under review, 5,479,007 eguity shares of INR
10/- each were allotted on exercise of Employee Stock Options by the
employees of the Company and its subsidiaries. Accordingly, the issued
and paid up capital of the Company has increased to INR 19,073,961,080
divided into 1,907,396,108 eguity shares of INR 10/- each.
Subseguent to the close of the financial year, the Company allotted
79,588 eguity shares of INR 10/- each on exercise of Stock Options by
the employees. Accordingly, the issued and paid up capital of the
Company has increased to INR 19,074,756,960 divided into 1,907,475,696
Eguity shares of INR 10/- each.
REDEMPTION OF DEBENTURES
During the year under review, the Company has redeemed 10,000 Unsecured
Redeemable Non-convertible "Series C" Debentures (NCDs) having face
value aggregating to INR 100 crores. NCDs issued by your Company have a
credit rating of CARE AAA.
CONSOLIDATED FINANCIAL STATEMENTS
Your Company is also presenting the audited consolidated financial
statements prepared in accordance with the Accounting Standard 21
issued by the Institute of Chartered Accountants of India. Information
in aggregate for each subsidiary in respect of capital reserves, total
assets, liabilities, investments, turnover, etc. is disclosed
separately and forms part of the annual report.
OPERATIONS & PROJECTS
A detailed review of operations and projects has been included in the
Management Discussion and Analysis Report, which forms a part of this
Annual Report.
EMPLOYEE STOCK OPTION SCHEMES
Your Company has established share incentive schemes viz., Cairn India
Senior Management Plan (CISMP), Cairn India Performance Option Plan
(CIPOP) and Cairn India Employee Stock Option Plan (CIESOP) pursuant to
which options to acguire shares have been granted to select employees
and Directors of the Company and its subsidiaries. The Company also
has cash awards option plan (phantom stock options) for expatriate
employees of the Company and its subsidiaries.
During the financial year, stock options have been granted to the
employees of the Company and its subsidiaries under CIPOP & CIESOP
schemes. On exercise of the options so granted, the paid-up eguity
share capital of the Company will increase in terms of the Stock Option
Plans mentioned above. The details of stock options granted by the
Company are set out in Annexure I to this Report in compliance with
Clause 12 of the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
During the year under review, 5,479,007 eguity shares of INR 10 each
were alloted pursuant to the exercise of stock options.
SUBSIDIARY COMPANIES
As on 31 March, 2012, the Company had 30 subsidiaries including
indirect subsidiaries. All these companies are 100% beneficially owned
by Cairn India Limited. The Company has its representatives on the
boards of subsidiary companies and monitors the performance of such
companies regularly.
The Ministry of Corporate Affairs, vide its circular no. 2/2011 dated 8
February, 2011, had granted exemption to holding companies from
attaching the financial statements of its subsidiaries to the company's
Annual Report. In accordance with the said circular, the Balance Sheet,
Profit & Loss Account and other documents of the subsidiary companies
are not being attached with the Balance Sheet of the Company. The
Company will make available the Annual Accounts of the subsidiary
companies to any member of the Company who may be interested in
obtaining the same. The annual accounts of the subsidiary companies
will also be kept open for inspection at the Registered office of the
Company and respective subsidiary companies. Further, the annual
acounts of the subsidiaries are also available on the website of the
Company. The consolidated financial statements presented by the
Company include the financial results of its subsidiary companies.
SCHEME OF ARRANGEMENT
In order to simplify and consolidate the multi layered structure
comprising foreign susidiaries, your Company had proposed a scheme of
arrangement between Cairn India Limited, Cairn Energy India Pty
Limited, Cairn Energy India West B.V., Cairn Energy Cambay B.V., Cairn
Energy Gujarat B.V. and their respective shareholders and creditors
(the 'Scheme'). The members of the Company had approved the scheme
with overwhelming majority in the Court Convened meeting held on 18
February, 2010.
The Hon'ble High Courts of Madras and Bombay sanctioned the Scheme in
April, 2010 and June, 2010 respectively. The Scheme is now subject to
receipt of contractual & regulatory approvals and the same are expected
shortly. The Scheme when approved is proposed to be effective from 1
January, 2010.
COMPLETION OF CAIRN VEDANTA DEAL
Cairn Energy PLC and Cairn UK Holdings Limited, promoters of the
Company, agreed to sell a substantial part of their equity stake in the
Company to Vedanta Resources PLC and persons acting in concert
('Vedanta') by way of a share purchase deed dated 15 August, 2010.
In terms of the provisions of SEBI (Substantial Acquisition of Shares
and Takeovers) Regulations, 1997, Vedanta acquired 155,033,172 equity
shares under an open offer made to the shareholders of the Company in
April, 2011. It subsequently acquired 200,000,000 equity shares of the
Company from Petronas International Corporation Ltd.
Pursuant to the conditions imposed by the Government of India, the
Company along with its subsidiary Companies viz., Cairn Energy India
Pty. Ltd. and Cairn Energy Hydrocarbons Limited, entered into an
agreement with Oil and Natural Gas Corporation (ONGC) for acceptance of
royalty as cost recoverable and withdrawal of the arbitration
pertaining to cess in respect of Block RJ-0N-90/1. Subsequently, the
cess arbitration was withdrawn effective 30 November, 2011. Post
fulfillment of conditions imposed by the Government of India, shares
aggregating 30% of the issued share capital of the Company were
transferred by Cairn UK Holdings Ltd. to Vedanta Group on 8 December,
2011. The shareholding of Vedanta Group, i.e. Twin Star Mauritius
Holdings Limited, Sesa Goa Ltd. and Sesa Resources Ltd. now aggregates
59% of the issued capital. These Vedanta Group Companies now
constitute the Promoter Group of the Company.
DIRECTORS
During the period under review, following changes were made in the
composition of the Board:
- Mr. Rahul Dhir has been re-appointed as Managing Director and Chief
Executive Officer of the Company for a period of 5 years commencing
from 22 August, 2011.
- Mr. Malcolm Shaw Thoms resigned as non-executive Director with
effect from 14 June, 2011.
- Mr. Rick Bott resigned as Executive Director and Chief Operating
Officer with effect from 15 June, 2011.
- Mr. Indrajit Banerjee resigned as Executive Director and Chief
Financial Officer with effect from 23 August, 2011.
- Mr. Mike Watts was appointed as an alternate Director to Ms. Jann
Brown with effect from 26 September, 2011 and later ceased to be an
alternate Director from 20 October, 2011.
- Sir Bill Gammell and Ms. Jann Brown resigned as non- executive
Directors with effect from 8 December, 2011.
- Mr. Navin Agarwal and Mr. Tarun Jain were appointed as additional
Directors of the Company with effect from 16 December, 2011. Mr. Navin
Agarwal was also appointed as the Chairman of the Company on the said
date.
- Ms. Priya Agarwal was appointed as additional Director of the
Company effective 2 January, 2012.
Pursuant to the provisions of Section 260 of the Companies Act, 1956,
Mr. Navin Agarwal, Mr. Tarun Jain and Ms. Priya Agarwal, hold office
up to this Annual General Meeting. The Company has received notices
from members of the Company sponsoring their candidature as Directors
of the Company. They are proposed to be appointed as non-rotational
Directors.
In accordance with the Articles of Association of the Company, Dr.
Omkar Goswami and Mr. Aman Mehta, shall retire by rotation as Directors
at the ensuing Annual General Meeting and are eligible for
re-appointment.
A brief profile of the above-named Directors seeking appointment/re-
appointment forms part of the Corporate Governance report.
CORPORATE GOVERNANCE
Your company strives to ensure that best Corporate Governance practices
are identified, adopted and consistently followed. Your Company
believes that good governance is the basis for sustainable growth of
the business and for enhancement of stakeholder value. The Corporate
Governance and Management Discussion and Analysis reports form an
integral part of this report and are set out as separate sections to
this annual report. The Certificate of S. R. Batliboi & Co., chartered
accountants, the statutory auditors of the Company certifying
compliance with the conditions of corporate governance as stipulated in
clause 49 of the listing agreement with stock exchanges is annexed with
the report on corporate governance.
AUDITORS & AUDITORS' REPORT
M/s. S. R. Batliboi & Co., chartered accountants, auditors of the
Company, retire at the conclusion of the ensuing annual general meeting
and being eligible, offer themselves for re-appointment. The audit
committee at its meeting held on 20 April, 2012 has also recommended
the re- appointment of M/s. S. R. Batliboi & Co., as Statutory Auditors
of the Company. Your Directors also recommend their appointment.
Notes to the accounts, as referred to in the Auditors' Report, are self
explanatory and therefore do not require further comments and
explanation.
FIXED DEPOSITS
The Company has not invited any deposits from the public under Section
58A of the Companies Act, 1956.
HUMAN RESOURCES
Company's industrial relations continued to be harmonious during the
period under review.
PARTICULARS OF EMPLOYEES
Particulars of employees required to be furnished under Section 217(2A)
of the Companies Act, 1956 ('the Act') form part of this report.
However, as per the provisions of Section 219(1)(b)(iv) of the Act, the
report and accounts are being sent to the shareholders of the Company
excluding the particulars of employees under Section 217(2A) of the
Act. Any shareholder interested in obtaining a copy of the said
statement may write to the Company Secretary for the same.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information on Conservation of Energy Technology Absorption and Foreign
Exchange Earnings and Outgo is given in Annexure II to this report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that:
(i) In the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
(ii) Appropriate accounting policies have been selected and applied
consistently and have 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 31 March, 2012 and of the profit of the Company
for the year ended 31 March, 2012;
(iii) Proper and sufficient care has been taken for maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) The annual accounts have been prepared on a going concern basis.
CORPORATE SOCIAL RESPONSIBILITY
At Cairn, Corporate Social Responsibility (CSR) encompasses much more
than social outreach programs and is an integral part of the way the
Company conducts its business. Detailed information on the initiatives
of the Company towards CSR activities is provided elsewhere in the
Annual Report.
SHARE TRANSFER SYSTEM AND LISTING OF SHARES
Details pertaining to share transfers and listing of shares are given
in the Corporate Governance Report which forms part of the Annual
Report. The Company has paid the annual listing fee for the year
2012-2013 to Bombay Stock Exchange Limited and National Stock Exchange
of India Limited.
APPRECIATION
Your Directors wish to place on record their sincere appreciation of
the efforts and dedicated service of all employees, which contributed
to the continous growth and conseguent performance of the Company. Your
Directors wish to place on record their gratitude for the valuable
assistance and co-operation extended to the Company by the Central
Government, State Governments, Joint Venture Partners, Banks,
Institutions, Investors and Customers.
For and on behalf of the Board of
Directors
Navin Agarwal
Chairman
Place; Gurgaon
Date; 20 April, 2012