FUTURE CAIRN Notes to Accounts

* Shares issued during the current year are less than 0.01 crore.

(a) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of Rs,
10 per share. Each holder of equity shares is entitled to one vote per
share. The dividend, if any, proposed by the Board of Directors will be
subject to the approval of the shareholders in the ensuing Annual
General Meeting.

In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive assets of the Company remaining
after settlement of all liabilities. The distribution will be in
proportion to the number of equity shares held by the shareholders.

(b) Aggregate number of shares issued for consideration other than cash
during the period of five years immediately preceding the reporting

The Company has issued total 0.96 crore (31 March 2015: 1.46 crore)
equity shares during the period of five years immediately preceding the
reporting date on exercise of options granted under the employee stock
option plan (ESOP scheme) wherein part consideration was received in
form of employee services. No other equity shares have been issued for
consideration other than cash during the period five years immediately
preceding the end of current period.

(c) Aggregate number and class of shares bought back during the period
of five years immediately preceding the reporting date:

The Company bought back 3.67 crore equity shares (31 March 2015 : 3.67
crore) during the period of five years immediately preceding the
reporting date.

(d) Details of shareholders holding more than 5% shares in the Company

* The Company had bought back 3.34 crore equity shares during the
previous year, prior to declaration of final dividend for FY 2013-14.
Hence, accrual for final dividend of Rs, 21.73 crore and tax thereon
Rs, 3.69 crore made during the FY 2013-14, on these shares, was
reversed in the previous year.

*Due to fall in crude oil prices in the international market, the
management is continuously reassessing its future strategy and is
carrying on development and exploration only in regions where it
believes that the reserves and resources are commercially viable.
Accordingly, development and exploration activities have been suspended
in certain fields and management has assessed the recoverable value of
the entire oil and gas blocks to which they relate, being separate
CGUs. The recoverable amounts have been determined based on the fair
value less costs of disposal approach using the discounted cash fow
technique, wherever the CGUs included some producing assets. For all
other CGUs, where there are no oil and gas producing assets and
activities have been suspended the recoverable amounts have been
assessed as nil.

** represents Rs, 57.18 crore (31 March 2015: Rs, 399.65 crore)
relating to oil and gas producing facilities and Rs, 569.85 crore (31
March 2015: Rs, 747.73 crore) relating to other tangible assets.

* CIHL holds interest in RJ-ON-90/1 oil and gas field, through a step
down subsidiary. The Production Sharing Contract (''''PSC'''') for the said
field provides for an extension of the contract by a maximum period of
ten years, in case there is a continued production of commercial
natural gas from the said field. Since the management expects to
continue with the production and sale of natural gas for a period of
ten years even after the completion of the initial contract period,
they believe that market participants would consider cash fows from the
said asset for the said additional period of ten years as well without
any modification in the term of PSC, and the same has been confirmed by
independent legal opinions available with the Company. For the purpose
of determining future cash fows from RJ-ON-90/1, the Company has used
assumption for short-term (four years) oil price which scales up to US$
70 per barrel by May 2020 as per consensus of various analyst
recommendations. Thereafter, oil price has been escalating at a rate
of 2.5% p.a.. The cash fows are discounted using the post-tax nominal
discount rate of 11.00% and factors in the risks associated with the
business including extension of the PSC, which is due for renewal in
May 2020.

Basis the above valuation and also considering the fact that CIHL and
its subsidiaries have other assets, the cumulative value of which

the carrying value of the investments, the Company believes that there
is no long term diminution in the carrying value of its investments in


**The Company''''s investment in CMHPL was for funding the operations of
an oil and gas block in Srilanka, held by CMHPL''''s step down subsidiary,

Cairn Lanka Private limited. Given the level of gas prices and fiscal
terms, the development of hydrocarbons in the said block was not

viable. Therefore, the value of the investment had been considered as
permanently diminished in the previous year. The said subsidiary has

been transferred during the year.

In accordance with the provisions of Accounting Standard 22 ''''Accounting
for taxes on income'''', the Company would have had deferred tax assets of
Rs, 256.27 crore (31 March 2015: Rs, 144.02 crore) in respect of
additional accumulated capital losses. However, as the management is
not virtually certain of subsequent realization of the asset, the same
has not been recognized in these financial statements.


a) Recoverable from statutory authorities includes Rs, 30.00 crore (31
March 2015: Rs, 30.00 crore) on account of education and secondary and
higher education cess paid for the financial year 2013-14, for which
the Company has filed the refund applications pursuant to circular no
978/2/2014-CX issued by Central Board of Excise & Customs. The said
refund applications have been rejected by the tax authorities, which
have been appropriately challenged by the Company before Commissioner
(Appeal), and also a writ petition has been filed before Honorable
Rajasthan High Court.

b) Considering the current business plans, including production
profiles, oil price forecast and management''''s expectation of an
extension of the RJ-ON-90/1 PSC (refer note 10 above), the Company
expects to recover the amount of MAT credit entitlement over its
stipulated period of ten years from origination.

c) During the current year, the Company has utilized MAT credit
aggregating to Rs, 251.72 crore (31 March 2015: Nil) which has been set
off against provision for tax. This comprises of Rs, 250.60 crore shown
as a current tax charge and Rs, 1.12 crore adjusted against General

* Pursuant to the implementation of Schedule II of Companies Act 2013
on 1 April 2014, the Group had retrospectively changed the method of
depreciation on some of its oil and gas assets from ''''Straight Line''''
method to the ''''Unit of Production'''' method. The additional charge of Rs,
1,046.39 crore due to the same for the period up to 31 March 2014 had
been disclosed as an exceptional item for year ended 31 March 2015.


The Company has a defined benefit gratuity plan for its employees.
Under the gratuity plan, every employee who has completed atleast five
years of service gets a gratuity on departure @ 15 days of last drawn
salary for each completed year of service. The scheme is funded with an
insurance company in the form of qualifying insurance policy.

The following tables summarize the components of net benefit expense
recognized in the statement of profit and loss, the funded status and
amounts recognized in the balance sheet for the respective plans.

* includes 169,944 & 260,288 options converted from CIPOP to CIPOP
Phantom in 29-Jul-09 & 27-Jul-10 grants respectively during the
financial year 2011-12.

The vesting conditions of the above plans are as under- CIPOP plan
(including phantom options)

Options will vest (i.e., become exercisable) at the end of a
"performance period" which has been set by the remuneration committee
at the time of grant (although such period will not be less than three
years). However, the percentage of an option which vests on this date
will be determined by the extent to which pre-determined performance
conditions have been satisfied. Phantom options are exercisable
proportionate to the period of service rendered by the employee subject
to completion of one year.

CIESOP plan (including phantom options)

There are no specific vesting conditions under CIESOP plan other than
completion of the minimum service period. Phantom options are
exercisable proportionate to the period of service rendered by the
employee subject to completion of one year.

Volatility is the measure of the amount by which the price has
fluctuated or is expected to fuctuate during the period. The measure of
volatility used in Black-Scholes option-pricing model is the annualized
standard deviation of the continuously compounded rates of return on
the stock over a period of time. Time to maturity /expected life of
options is the period for which the Company expects the options to be
live. Time to maturity has been calculated as an average of the minimum
and maximum life of the options.


Names of related parties and related party relationship Related parties
where control exists

Holding / Ultimate holding company Vedanta Resources Plc.

Vedanta Resources Holdings Limited

Volcan Investments Limited

Vedanta Limited (formerly Sesa Sterlite Limited)

Subsidiary companies 1. Cairn Energy Australia Pty Limited

2. Cairn Energy India Pty Limited

3. CEH Australia Limited**

4. Cairn India Holdings Limited (''''CIHL'''')

5. CIG Mauritius Holding Private Limited (''''CMHPL'''')

6. CIG Mauritius Private Limited

7. Cairn Energy Holdings Limited

8. Cairn Energy Discovery Limited

9. Cairn Exploration (No. 2) Limited

10. Cairn Exploration (No. 6) Limited*

11. Cairn Energy Hydrocarbons Limited (''''CEHC'''')

12. Cairn Energy Gujarat Block 1 Limited

13. Cairn Exploration (No. 7) Limited***

14. Cairn Lanka (Pvt) Limited

15. Cairn Energy India West BV**

16. Cairn Energy Netherlands Holdings BV**

17. Cairn Energy Gujarat BV**

18. Cairn Energy Cambay BV**

19. Cairn South Africa Proprietary Limited

Enterprises controlled by the Company Cairn Enterprise Centre

* Liquidated in current year. ** Liquidated during previous year. ***
Liquidated subsequent to the year end

Related parties with whom transactions have taken place

Fellow subsidiaries Twin Star Mauritius Holdings Limited ****

Sesa Resources Limited

****also has Significant infuence over the Company.

Key management personnel Mayank Ashar, Managing Director and Chief
Executive Officer (from 17 November 2014)

Sudhir Mathur, Chief Financial Officer (Interim Head, from 2 May 2014
to 16 November 2014) P. Elango, Whole time Director and Interim Chief
Executive officer (up to 2 May 2014)


Capital commitments (net of advances)

Company''''s share of Joint Ventures'''' Exploration activities and
Development activities ? Nil (31 March 2015: Rs, 238.70 crore) and Rs,
81.27 crore (31 March 2015: Rs, 915.80 crore) respectively.

Other commitments

Company''''s share of Joint Ventures'''' minimum exploration commitments as
per the production sharing contracts : Rs,114.48 crore (31 March 2015:
Rs, 1,540.94 crore).


a. Ravva Joint Venture Arbitration proceedings : Base Development Cost

Ravva joint venture had received the notice from Ministry of Petroleum
& Natural Gas, Government of India (GOI) for the period from 2000-2005
for USD 129 million for an alleged underpayment of profit petroleum to
the Indian Government, out of which, Group''''s share will be USD 29
million (approximately Rs, 192.34 crore) [31 March 2015: USD 29 million
(approximately Rs, 181.65 crore)] plus potential interest at applicable
rate (LIBOR plus 2% as per PSC).

This claim relates to the Indian Government''''s allegation that the Ravva
JV had recovered costs in excess of the Base Development Costs ("BDC")
cap imposed in the PSC and that the Ravva JV had also allowed these
excess costs in the calculation of the Post Tax Rate of Return (PTRR).
Joint venture partners initiated the arbitration proceedings and
Arbitration Tribunal published the Award on 18 January 2011 at Kuala
Lumpur, allowing claimants (including the Company) to recover the
Development costs spent to the tune of USD 278 million and disallowed
over run of USD 22.3 million spent in respect of BDC along with 50%
legal costs reimbursable to the Joint venture partners. High Court of
Kuala Lumpur dismissed Government of India''''s (GOI) application of
setting aside the part of the Award on 30 August 2012 with costs.
However, GOI appealed against the High Court''''s order before the Court
of Appeal and the same has dismissed the GOI''''s appeal on 27 June 2014.
GOI still preferred to challenge the same before the Federal Court,
Kuala Lumpur and their Leave to Appeal is currently due for hearing
before Federal Court on 17 May 2016. GOI has also issued Show

Cause Notice on this matter which the Company has replied to and also
filed an application for enforcement of Award before Delhi High Court
as an abundant caution. Next hearing is due on 29 April 2016.
Furthermore, GOI is yet to agree on quantum of arbitration costs &
expenses (legal fees and expenses) for reimbursing to the companies as
per the Award. Therefore, the Companies have approached the Tribunal to
quantify the costs. The GOI has obtained a stay order from Hon''''ble
High Court of Delhi,on 14 August 2015 against the Tribunal proceedings
on quantum of arbitration costs on the grounds of Tribunal being
functus offcio. Cairn has filed an appeal before the Hon''''ble High Court
of Delhi against the aforesaid ''''stay order'''' granted by the Hon''''ble High
Court of Delhi against the Tribunal ''''proceedings on determination of
costs''''. The matters are due for hearing on 3 October 2016 and 26 April
2016 respectively.

b. Ravva Joint Venture Arbitration proceedings: ONGC Carry

The Company is involved in a dispute with GOI relating to the
calculation of payments that it was required to make in connection with
the Ravva field. The Ravva PSC obliges the Company to pay proportional
share of ONGC''''s exploration, development, production and contract costs
in consideration for ONGC''''s payment of costs related to construction
and other activities it conducted in Ravva prior to the effective date
of the Ravva PSC (the ''''''''ONGC Carry''''''''). The question as to how the ONGC
Carry is to be calculated, along with other issues, was submitted to an
international arbitration panel in August 2002 which rendered a
decision on the ONGC Carry in the Company''''s favour and four other
issues in favour of GOI in October 2004 ("Partial Award"). The GOI
filed a challenge to the ONGC Carry decision in the Malaysian courts,
as Kuala Lumpur was the seat of the arbitration. The Federal Court of
Malaysia which adjudicated the matter on 11 October 2011, upheld the
Partial Award. Company persuaded with Ministry of Petroleum and Natural
Gas (MoPNG) to implement the Partial Award while reconciling the
statement of accounts as outlined in Partial Award ever since the
Federal Court adjudication in place. However, MoPNG has issued a Show
Cause Notice on 10 July 2014 alleging that profit petroleum has been
short-paid. The Company had requested for Tribunal''''s reconstitution to
publish the Final Award since it has retained the jurisdiction if
parties are unable to agree on quantification sums due and payable to
each other pursuant to the Partial Award. Accordingly, Tribunal was
reconstituted and the next hearing is scheduled in June 2016. While the
Company does not believe the GOI will be successful in its challenge,
if the arbitral award is reversed and such reversal is binding, the
Company could be liable for up to approximately USD 63.90 million
(approximately Rs, 423.94 crore) [31 March 2015: USD 63.90 million
(approximately Rs, 400.26 crore)] plus interest.

c. Service tax

"The Company has received ten show cause notices (SCN''''s) relating to
the period 1 April 2006 to 31 March 2015, citing non-payment of service
tax on various services. Out of ten SCN ''''s, nine SCN''''s have been
adjudicated by the department relating to the period 1 April 2006 to 31
March 2014 for which the Company has filed an appeal. Further, with
respect to the last SCN, relating to the period 1 April 2014 to 31
March 2015, Company is in the process of fling the reply.

Should future adjudication go against the Company, it will be liable to
pay service tax of approximately Rs,49.53 crore ( 31 March 2015: Rs,
119.41 crore) plus potential interest of approximately Rs, 68.55 crore
(31 March 2015: Rs, 132.70 crore), although this could be recovered in
part, where it relates to services provided to Joint Venture of which
the Company is operator.

d. Tax holiday on gas production

Section 80-IB (9) of the Income Tax Act, 1961 allows the deduction of
100% of profits from the commercial production or refning of mineral
oil. The term ''''mineral oil'''' is not defined but has always been
understood to refer to both oil and gas, either separately or

The 2008 Indian Finance Bill appeared to remove this deduction by
stating [without amending section 80-IB (9)] that "for the purpose of
section 80-IB (9), the term ''''mineral oil'''' does not include petroleum
and natural gas, unlike in other sections of the Act". Subsequent
announcements by the Finance Minister and the Ministry of Petroleum and
Natural Gas have confrmed that tax holiday would be available on
production of crude oil but have continued to exclude gas.

The Company filed a writ petition to the Gujarat High Court in December
2008 challenging the restriction of section 80-IB to the production of
oil. Gujarat High Court did not admit the writ petition on the ground
that the matter needs to be first decided by lower tax authorities. A
Special Leave Petition has been filed before Supreme Court against the
decision of Gujarat High court. However in an another similar case, the
Gujarat High Court has held that tax holiday benefit would extend to
production of gas.

In the event this challenge is unsuccessful, the potential liability
for tax and related interest on tax holiday claimed on gas is
approximately Rs, 279.64 crore (31 March 2015: Rs, 263.35 crore).

e. Withholding tax on payments made on acquiring a subsidiary

In March 2014 the Company received a notice from the Indian Tax
Authorities (""Tax Authorities"") alleging failure by the Company to
withhold tax on the consideration paid to Cairn UK Holdings Limited
("CUHL") in the year 2006-07, the then holding company. The said
transaction relates to the acquisition of the shares of Cairn India
Holdings Limited ("CIHL"), a 100% subsidiary of the Company, from CUHL
during the financial year 2006-2007 as a part of group reorganization
by the then ultimate parent company Cairn Energy Plc. Based upon the
retrospective amendment(s) made in the year 2012 by inserting
explanation 5 of section 9(1)(i) of the Income Tax Act, 1961, the Tax
Authorities vide its order dated 11 March 2015, have raised a demand of
approx. Rs, 20,494.73 crore (comprising tax of approx. Rs, 10,247.36
crore and interest of an equivalent amount) for not withholding tax on
the consideration paid to CUHL, for acquiring shares of CIHL. Tax
Authorities have stated in the said order that a short term capital
gain of Rs, 24,503.50 crore accrued to CUHL on transfer of the shares
of CIHL to the Company in financial year 2006-2007, on which tax should
have been withheld by the Company. The Company understands that a tax
demand has also been raised by the Tax Authorities on CUHL with respect
to taxability of alleged capital gain earned by CUHL.

In this regard, Vedanta Resources Plc. filed a Notice of Claim against
the Government Of India under the UK-India Bilateral Investment Treaty
(the "BIT") in order to protect its legal position and shareholder
interests. Management has been advised that Vedanta Resources Plc. has
a good case to defend as per provisions of BIT, the benefit of which
would ultimately accrue to the Company.

Further, the Company has been advised that there could be no liability
on the Company on account of not withholding the taxes in the year
2006-07 based on provisions of law prevailing at the time of
transaction as the aforesaid retrospective amendment has cast an
impossible obligation on the Company to deduct tax by having to predict
and anticipate that the retrospective amendment will be made by
legislature on a future date. The Company has approached the Hon''''ble
Delhi High Court against the said order and also filed an appeal before
the Commissioner of Income Tax

(Appeals) to defend its said position.

f. Others

i) Pursuant to the provisions of the Rajasthan Entry Tax Act, 1999, an
entry tax demand has been raised for Rs, 24.66 crore (31 March 2015:
Rs, 5.93 crore) plus penalty and interest which the Company has
contested before appellate authorities. The Company believes that this
levy is not constitutionally valid and its Special Leave Petition in
this regard is pending before the Honorable Supreme Court.

ii) Other claims raised by contractors and vendors of the Group Rs,
24.56 crore (31 March 2015: Rs, 32.51 crore)

Based on an analysis of the legal positions, the management is of the
view that the liabilities in the cases mentioned in (a) to (f) above
are not probable and accordingly no provision has been considered
necessary there against.

*Includes probable oil reserves of 44.95 mmstb (of which 17.37 mmstb is
developed) and probable gas reserves of 29.72 bscf (of which 7.89 bscf
is developed)

** Includes probable oil reserves of 36.95 mmstb (of which 13.84 mmstb
is developed) and probable gas reserves of 34.32 bscf (of which 5.94
bscf is developed)

*** Includes probable oil reserves of 22.69 mmstb (of which 15.05 mmstb
is developed) and probable gas reserves of 18.31 bscf (of which 5.02
bscf is developed)

mmboe = million barrels of oil equivalent

mmstb = million stock tank barrels

bscf = billion standard cubic feet

1 million metric tonnes = 7.4 mmstb

1 standard cubic meter =35.315 standard cubic feet

MBA = Mangala, Bhagyam & Aishwariya

EOR = Enhanced Oil Recovery

*Includes Rs, 22.97 crore (31 March 2015: Rs, 3.21 crore) paid to
related party (refer note 30)


During the year, Company has discounted certain receivables with bank
on non-recourse basis. Accordingly, closing balance of trade
receivables and advances receivable in cash or kind have been reduced
by Rs, 277.25 crore (31 March 2015: Nil) and Rs, 485.00 crore ( 31
March 2015: Nil) respectively.


Business segments

The primary reporting of the Company has been prepared on the basis of
business segments. The Company has only one business segment, which is
the exploration, development and production of oil and gas and operates
in a single business segment based on the nature of the products, the
risks and returns, the organization structure and the internal
financial reporting systems. Accordingly, the fgures appearing in these
financial statements relate to the Company''''s single business segment.

Geographical segments

The Company''''s secondary segments are the geographic distribution of
activities. Revenue and receivables are specified by location of
customers while the other geographic information is specified by
location of the assets. The figures appearing in these financial
statements relate to the Company''''s single geographical segment, being
operations in the Indian sub-continent.


The Board of Directors at their meeting held on 14 June 2015, have
approved a Scheme of Arrangement (the "Scheme") between the Company and
its parent company Vedanta Limited and their respective shareholders
and creditors. As per the Scheme, the implementation of which is
subject to the receipt of necessary approvals from the non-promoter
group shareholders and relevant regulatory authorities, the Company is
proposed to be amalgamated into Vedanta Limited, with effect from 1
April 2015 or such date as may be approved by the High Court.


The Company has reclassified and regrouped the previous year figures to
confirm to this year''''s classification.

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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