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Oil & Natural Gas Corpn Ltd - Directors' Report

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Code: ONGC
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1 Year : Rs 207.53 (-11.84%)
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Board's Report

Dear Shareholders

I on behalf of the Board of Directors of your Company am pleased to share with youthe achievements and highlights of your Company during the financial year ended March 312017 and to present the 24th Annual Report on the business and operations of Oil andNatural Gas Corporation Ltd. (ONGC) and its Audited Financial Statements with theAuditors' Report and Comments on the Accounts by the Comptroller and Auditor General (CAG)of India and the reply of the management thereto.

The challenges that marked the macro environment viz. low commodity prices uncertaindemand outlook and slow global economic recovery in FY'16 persisted in FY'17 as well.Crude prices today are distinctly higher than they were in early 2016. However it wouldbe prudent for oil and gas companies to remain wary as the recovery has not been as robustand stable as one would have liked it to be. It is reflective of the larger economicenvironment of the world where secular growth has not returned to the markets post theglobal financial meltdown and the subsequent Eurozone slowdown. While this extended periodof low commodity prices poses challenges for E&P companies in terms of ambitiousexploratory efforts and development from difficult areas it is a source of meaningfulmonetary comfort for an import dependent economy likes ours. That being saidprice-related pressures are likely to ease going forward as companies learn to adapt andimprovise in this ‘new normal' of low prices. We must not forget that our industryhas faced numerous challenges in the past and has always come out stronger each time. This‘new normal' will also be defined and influenced by the international politicaldevelopments in the past one year and the remarkable growth (both in terms of investmentas well as capacity addition) of renewable energy sources adding a further layer ofcomplexity to the operating environment of oil and gas. In this prevailing environment ofincreased volatility and uncertainty it has become more important than ever for companiesto sharpen their focus on promising growth avenues while consolidating their key areas ofstrength.

For your Company it meant a more aggressive approach to cost optimization andoperational efficiencies in our legacy business and stepping up activity in the area ofunmonetized discoveries with comprehensive planning and robust project managementphilosophy.

Considering the critical importance of your Company in the country's overall energyinfrastructure the decisions and actions of today will to a large extent not only setthe ground for a significant transformation that will enable it to contribute even moreexpansively to the country's energy sector but also ensure its competitiveness in anyoperating environment.

Our primary goals in FY'16-17 were to keep up the healthy pace of project executionimproved productivity operating costs optimization and wealth generation for allstakeholders while doing our business safely and reliably.

Despite the challenges of the business and its surrounding environment your Companyalong with its group companies has registered yet another year of strong performance andmade substantial progress on most of these priority areas. In addition performance in theother areas of business where your Company has significant interests also recordedimportant milestones.

Backed by an intensive and continuous exploration programme your Company made 23 oiland gas discoveries in various basins of India out of which eight discoveries have alreadybeen monetized. During the year your Company produced 22.25 MMT of oil against 22.37 MMTduring FY'16. Natural gas production was at 22.09 BCM against 21.18 BCM during FY'16thereby recording an increase of 4%. Your Company's share in domestic joint ventures'production has been 3.28 MMT of oil and 1.18 BCM of gas. Combining the two total domesticproduction has been 25.53 MMT of oil and 23.27 BCM of gas. VAP production increased from2.77 MMT in FY'16 to 3.24 MMT in FY'17 (increase of 17%) with contribution from C2-C3 andHazira plants. All joint ventures of your Company established for value-chain integrationi.e.- ONGC Petro-additions Ltd. (OPaL) ONGC Teri Biotech Ltd. (OTBL) ONGC Tripura PowerCompany Ltd. (OTPC) Petronet MHB Ltd. (PMHBL) Dahej SEZ Ltd. (DSEZ) and Mangalore SEZLtd. (MSEZ) are now operational and have started generating revenue. The significantmilestones achieved by your Company during 2016-17:

• Your Company made 23 Oil and Gas discoveries out of which 13 were Onshore and 10were Offshore.

4 of these discoveries are in New Exploration and Licencing Policy (NELP) blocks.Focusing on quick monetization 8 of these discoveries have already been put toproduction.

• With these 23 discoveries your Company accreted 64.32 MMtoe of 2P reserves inthe domestic fields. RRR with 2P reserves during the year has been 1.45.

• With Jabera discovery Vindhayan Basin has made entry into the oil reserves mapof India.

• With recent discoveries in Kutch offshore focus is on bringing this new basinon production.

• Your Company has taken up development of KG-DWN-98/2 block in Krishna-Godavari(KG) Basin with an investment of more than US$ 5000 million (approx. Rs. 340000million). Peak oil from the field is around 78000 bpd and gas @ 15.57 MMSCMD.

• Gas production commenced from S1 Deep Water field (water depth around 280M) inKG Basin @ 0.9 MMSCMD and the first Deep Water gas well to fetch a price of US$ 5.05 perMMBTU under government approved pricing and market freedom policy.

• Gas sales increased from 16.08 BCM in FY'16 to 17.06 BCM in FY'17; an increaseof 5.80 %.

• Your Company deployed 35 rigs in offshore the highest ever and drilled 501wells again the highest ever (401 development wells the highest ever). Commercial speedduring the year has been 1472; an increase of more than 24% compared to 2015-16.

• Testing the efficacy of B-90 culture in the wells of Becharaji field MicrobialEnhanced Oil Recovery (MEOR) job was carried out in 3 wells of Bechraji in 2016-17.

• Gas flaring during the year has been 529 MMSCM which reduced from 3.06% (FY'16)to 2.40% (FY'17); a reduction of 21.6% over the previous year.

• Additional development of Vasai (East): facility creation (2 well platforms andSubsea pipeline) completed. 12 wells out of 20 wells drilled and added additional oilproduction of 7000 BOPD.

• Besides 28 ongoing oil and gas development projects 6 development projectsworth Rs. 76700 million have been taken up during FY'17. The projects are NW B-173AB-147 BSE-11 4th phase of NBP Field and R-Series and redevelopment of Santhal field.

• Your Company signed Farm-in/Farm-out (FIFO) agreement with GSPC on 10th March2017 to acquire 80% PI with operatorship in block KG-OSN-2001/3.

• Commencement of Coal Bed Methane (CBM) field development operations in Bokaroand North Karanpura.

• Gross Revenue of the Company stood at Rs. 779078 million and for ONGC Group ithas been Rs. 1421490 million.

• Your Company recorded a Net Profit of Rs. 179 000 million during the year underreview. Net Profit of ONGC Group increased by 59% to Rs. 204 979 million ( Rs. 128 752million in FY'16).

• ONGC Videsh Limited (OVL) a wholly owned subsidiary of your Company registeredhighest-ever production of 12.80 MMtoe of O+OEG during the year. It recorded Gross Revenueof Rs. 100800 million and Net Profit of Rs. 6974 million (against loss of Rs. 36401million in FY'16).

• Mangalore Refinery and Petrochemicals Limited (MRPL) a subsidiary of yourCompany recorded highest-ever throughput of 16.27 MMT during FY'17.

Hon'ble PM Shri Narendra Modi inaugurated and dedicated ONGC Petro-additions Ltd.(OPaL) promoted by your Company to the nation on 7th March 2017.

• MRPL recorded 17% increase in Turnover to Rs. 599801 million ( Rs. 509 623million during FY'16) and highest ever Net Profit of Rs. 32932 million ( Rs. 5058million in FY'16).

• ONGC Tripura Power Company Ltd. (OTPC) clocked highest-ever Annual GrossGeneration of 4170 million units.

• Six ONGC team members successfully accomplished Mission Everest. This is firsttime that a Corporate has taken a Mission to send its team to mount the highest peak ofthe Earth.

These achievements reflect your Company's proven commitment towards sustained growthand performance excellence. Consistently driven by well-defined growth strategies yourCompany delivers and improves performance year-on-year basis which is the benchmark ofexcellence in various facets of E&P activities and has also been well recognizedthrough peer-and-public evaluations.

Global Recognitions

Your Company has been ranked number one E&P Company in the world by Platts Top 250Global Energy Company Rankings-2016 and 20th among global energy majors based on assetsrevenues profits and Return on Invested Capital. The leading international businessjournal Forbes has ranked ONGC the 3rd largest in India and 220th worldwide based onsales profit assets and market value. Your Company has strengthened its brand positionin India climbing from 10th position during previous year to 7th position according to astudy conducted by consultant Brand Finance. Further the ‘2016 EU Industrial R&DScoreboard' listed your Company at the 12th position in the list of oil and gas companiesbased on Research and Development (R&D) expenditure.

Performance 2016-17

During FY'17 your Company made 23 Oil & Gas discoveries out of which 13 wereOnland and 10 were Offshore including 4 discoveries in the blocks awarded under NELP. Allthese 23 discoveries are healthy pointers to the continued performance of the Company'sexploratory efforts. Details of these discoveries are tabulated as below:

Well No. Basin/Sub-basin Hydrocarbon Type Pool/ Prospect NELP/ Nomination
1 KGS092NA-SRI-1/SRI-AA Krishna Godavari (KG Offshore-SW) Basin Oil & Gas Prospect NELP
2 B-34-2/B-34-B Mumbai Offshore Basin Oil & Gas Prospect PML
3 Suphayam-2/SUAA Assam Shelf Basin Oil & Gas Prospect PEL
4 Jabera-4/RJBF Vindhyan Basin Gas Prospect PML
5 Dayalpur-1/SUAB Assam Shelf Basin Oil & Gas Prospect PML
6 B-157N-1/B-157N-A Mumbai Offshore Basin Oil & Gas Prospect PML
Krishna Godavari (KG
7 GS-71-1/GS-71-AA Oil & Gas Prospect PML
Offshore-SW) Basin
8 B-154N-1/B-154N-A Mumbai Offshore Basin Oil & Gas Prospect PML
South Akholjuni/Akholjuni-29/
9 Cambay Onland Basin Oil & Gas Prospect PML
AKAP
10 D-30-2/ D-30-A Mumbai Offshore Basin Oil & Gas Prospect PML
Krishna Godavari (KG
11 G-1-N-2 / G-1-N-AB Oil & Gas Prospect PML
Offshore-SW) Basin
12 GKS101NCA-1/GKS101NCA-A Kutch Offshore Basin Oil & Gas Prospect NELP
Gas &
13 MBS051NAA-2/NAA-B Saurashtra Offshore Basin Pool NELP
Condensate
14 Dahej/Dahej-20/DJAT Cambay Onland Basin Gas Pool PML
15 Nambar/Nambar-12/NRAF Assam Shelf Basin Gas Pool PML
16 Nadiad/ Nadiad-4/NDDA Cambay Onland Basin Oil Pool PML (NELP)
17 Kesanapalli / Kesanapalli West Deep -1 /KWD-AA Krishna Godavari Onland Basin Oil & Gas Pool PML
18 West Penugonda/ Thurupu Vipparu-1 / TVAA Krishna Godavari Onland Basin Gas Pool PML
Gas &
19 B-12C / B-12C-2 / B-12C-A Mumbai Offshore Basin Pool PML
Condensate
20 Geleki / G-390 / GKHX Assam Shelf Basin Oil Pool PML
21 Khoraghat / Khoraghat-38_Z / KHBB_Z Assam Shelf Basin Oil & Gas Pool PML
22 Olpad/Olpad-47/OPAM Cambay Onland Basin Gas Pool PML
23 Gandhar-724(GGAM) Cambay Onland Basin Oil Pool PML

The significant discoveries are - Kesanapalli West (KG Basin) Suphayam and Dayalpur(Upper Assam). SupahyanandDayalpurhaveopenedupnewexploration targets by establishingmultilayered hydrocarbon occurrence. With Jabera discovery your Company brought BindhayanBasin onto the oil reserve map of India.Withthese23discoveriesyourCompanyaccreted 64.32MMtoe of 2P reserves in the domestic fields.

Discoveries put on production
Dahej-20 Gujarat Suphayam-2 Jorhat
Akholjuni-29 Gujarat Dayalpur-1 Jorhat
Gandhar-724 Gujarat Geleki-390 Assam
Nambar-12 Jorhat Kesanapalli-West AP

In KG Offshore two new oil finds each one in shallow water (GS-71) and deep water(G-1-N) have produced much encouraging results during initial production testing. 8 out of13 onshore discoveries have already been put on production during FY'17 itself. Theultimate reserve of 8 monetized discoveries is 3.4 MMtoe and has production potential of0.218 MMtoe of O+OEG per year.

Re-assessment of Hydrocarbon Resources

Government of India (GoI) initiative for "Re-assessment of HydrocarbonResources" in Indian sedimentary basins has been undertaken by your Company. About100 geoscientists of ONGC in 12 working teams are on the job. These studies are ongoingin 26 different basins - onshore shallow water deepwater. The project is expected to becompleted by Nov'17.

National Seismic Programme

Your Company has been actively associated with National Seismic Programme (NSP)initiated by Government of India under which 48% of unappraised sedimentary in onland areais being covered through seismic survey. Out of proposed acquisition processing andinterpretation (API) of 48243 LKM of onland data your Company will be taking up API of40835 LKM in all states other than North East (NE).

Details of discoveries in NELP blocks (since inception till 01.04.2017)

Out of the 114 NELP blocks awarded to/acquired by your Company as the operator 32blocks are operated presently and the remaining 82 blocks are relinquished so far.Exploration/ appraisal programme is under way in all the active blocks. As on 01.04.2017your Company has a total of 64 discoveries out of these 58 discoveries (18 in deepwater 21 in shallow water and 19 in onland areas) are in 25 NELP blocks and the remaining6 discoveries (4 deep water 2 onland) fall under two blocks acquired from otheroperators. Commencement of production from these discoveries is governed by stipulationlaid down in the respective Production Sharing Contracts (PSCs) and will be taken up aftersuccessful completion of appraisal programme followed by submission of Declaration ofCommerciality (DoC) and approval of Field Development Plan (FDP) by Directorate of HydroCarbon (DHC).

Reserve accretion & Reserve Replacement Ratio (RRR)

During the year accretion to in-place Hydrocarbons (3P-Proved Probable and Possible)from the Company operated fields in India has been 203.24 million metric tonnes (MMT) ofOil and Oil equivalent Gas (O+OEG) out of which about 87 percent accretion has been dueto exploratory efforts. Reserve Replacement Ratio (RRR) during the year has been 1.45.

Total in-place reserve accretion during 2016-17 in domestic basins including theCompany's share in PSC JVs stands at 210.61 MMtoe (7.37 MMtoe from JVs). As on01.04.2017 total in-place hydrocarbon volume of ONGC group stands at 9655.36 MMtoeagainst 9444.74 MMtoe as on 01.04.2016. The ultimate reserves (3P) have been estimated at3132.35 MMtoe as against 3075.51 during the FY'16. Voluntary disclosures in respect ofOil & Gas Reserves conforming to SPE classification 1994 and US Financial AccountingStandards Board (FASB-69) have been followed in your Company. The following table givesthe details of reserve accretion (2P-Proved and Probable) for the last 5 years in domesticbasins as well as from the overseas assets:

Year Domestic Assets (1) ONGC's share in domestic JVs (2) Total Domestic (3)=(1)+(2) ONGC Videsh's Share in Foreign Assets (4) Total (5)=(3)+(4)
2012-13 67.59 4.23 71.82 10.09 81.91
2013-14 56.26 4.29 60.55 213.24 273.79
2014-15 61.06 -1.03 60.03 20.03 80.06
2015-16 65.58 0.80 66.38 -7.22 59.16
2016-17 64.32 0.22 64.54 120.28 184.82

Statement of Reserve Recognition Accounting (RRA)

Reserve Recognition Accounting (RRA) is a voluntary disclosure towards recognizingincome at the point of discovery of reserves and seeks to demonstrate the intrinsicstrength of an organization engaged in exploration and production of hydrocarbons withreference to its future earning capacity in terms of current prices for income as well asexpenditure. This information is based on the estimated net proved reserves (developed andundeveloped) as determined by the Reserves Estimates Committee of the Company. As perFASB-69 on disclosure about Oil and Gas producing activities publicly traded enterprisesin USA that have significant Oil and Gas producing activities are to disclose withcomplete set of annual financial statements the following supplemental information: a)Proved Oil and Gas reserve quantities b) Capitalized costs relating to Oil and Gasproducing activities c) Cost incurred for property acquisition exploration anddevelopment activities d) Results of operations for Oil and Gas producing activities e) Astandardized measure of discounted future net cash flows relating to proved Oil and Gasreserves quantities Your Company has disclosed information in respect of (a) to (d) abovein the Annual Financial Statements. Your Company has also made voluntary disclosure onstandardized measure of discounted future net cash flows relating to proved oil and gasreserves at Annexure-‘A' to this report as statement of RRA.

Oil & Gas Production

On standlone basis in FY'17 the Company's domestic crude oil production levelregistered at 22.25 MMT against 22.37 MMT in FY'16. Oil production from onshore assetsincreased by 2.4% while offhore registered a decline of 1.6%. Increase in onshore oilproduction has been mainly due to various initiatives and early monetization ofdiscoveries in Ankleshwar Cauvery (Madnam) and Rajahmundry (Keshnapalli West) etc.Domestic PSC JVs contributed 3.31 MMT of oil against 3.56 during FY'16.

Natural gas production (from domestic operated fields) during FY'17 has been 4% higherthan the previous year (22.09 BCM against 21.18 during FY'16). The Company's onshore gasproduction increased by healthy 9.1% where as offshore production increased by 2.9%.Onshore gas production increased mainly due to commissioning of GDUs in Rajahmundrydrilling of development wells and commissiong of Sonamura GCS in Tripura and GS-4 well inGandhar. Incremental gas production in offshore was contributed by C-26 cluster/Damanfields in Western Offshore and Deep Water well S2AB in Eastern Offshore. Further most ofAssets registered increase in gas production during the year. Your Company's share in oiland gas production from PSC JVs has been 3.29 MMT and 1.18 BCM respectively.

Oil & Gas production of ONGC Group including PSC-JVs and from overseas assets forFY'17 has been 61.60 MMtoe (against 57.38 MMtoe during FY'16); an increase of 7.4%. Out ofthe total production of 33.96 MMT of crude oil 65.5 per cent production came from theCompany operated domestic fields 24.8 per cent from the overseas assets and balance 9.7per cent from domestic joint ventures. As far as natural gas production is concernedmajority of production (79.9 per cent) came from the Company operated domestic fields15.8 per cent from overseas assets and 4.3 per cent from domestic joint ventures.

Production Qty Sales Qty Value ( Rs. in millions)
Unit FY'17 FY'16 FY'17 FY'16 FY'17 FY'16
Direct
Crude Oil (MMT) 25.53 25.93 23.86 24.15 548036 511316
Natural Gas (BCM) 23.27 22.53 17.94 17.10 139398 182239
Ethane/Propane 000 MT 420 375 420 375 8557 8945
Propane 000 MT 90 29 87 26 2223 496
Ethane 000 MT 137 - 135 - 5354 -
Butane 000 MT 31 - 30 - 1131 -
LPG 000 MT 1355 1195 1352 1191 37276 34951
Naphtha 000 MT 1101 1043 1087 1065 30455 30609
SKO 000 MT 36 67 42 66 1321 2118
Others 1113 894
Sub Total 774864 771568
Trading
Motor Spirit 000 KL 0.21 0.68 11 35
HSD 000 KL 0.43 1.16 20 49
Sub Total 31 84
Total 774895 771652

Production from Overseas Assets

During the year total production from overseas assets has been 12.80 MMtoe of O+OEG(Oil: 8.43 MMT; Gas 4.37 BCM) against 8.92 MMtoe during FY'16; an increase of 43% mainlydue to incremental production from Sakhalin-1 (Russia) and additional production onaccount of acquiring 26% share acquisition in Vankorneft. Russia (56%) Vietnam (12%)Azerbaijan (7%) and Myanmar (7%) contribute 82% of equity oil and gas followed by Brazil(5%) Venezuela (4.9%) Colombia (4.3%) and Sudan (3.8%).

Technology Induction/Upgradation

Your Company gives utmost importance for induction and upgradation of technology invarious areas of its operations to remain competitive. During the year the followingtechnology were inducted:

• Suitable polymer squeezing technology to arrest sudden rise in water cut inNorth Kadi field of Mehsana Asset - Job execution in 8 No. of wells done

• Deep Penetrating Retarded Acid System (DPRAS) & Self Diverting AcidStimulation technology for wells of NBP & other fields of Mumbai Offshore - jobexecution in 30 No. of wells done

• Technology for deliquification for reviving production from gas wells ofAhmedabad Asset. The same is implemented in 2 No. of wells

• Resource optimization through Batch Drilling in Offshore & Pad Drilling inonshore

• Under Balanced Drilling

• Technology penetration in onshore drilling at par with offshore

• Use of Advanced Hybrid bits

Exploration of different hydrocarbon

(a) Basement Exploration:

Concerted efforts for Basement Exploration a frontier exploration play have beentaken up by the Company as a major initiative. The prospects achieved success in MumbaiOffshore Kutch offshore Cambay Cauvery and A&AA Basin have further enhanced thescope of basement exploration. During the year Basement fracture modeling andprospectivity analysis are also in progress in Assam & Arakan Cauvery and KG andKutch Offshore and West of Mumbai High Area of Western Offshore basins. Fracture modeldeveloped for Madnam field has been validated by Production Logging Tool (PLT) logsrecorded in well MD-3 Sub and MD-7. Further 7 exploratory wells and 8 development wellswere drilled in different basins for basement prospect. In A&AA Basin exploratorywell SU-3 flowed 3.5-7.2 m3/day oil with 11000 m3/day gas from basement during productiontesting. B-121-8 in Western Offshore Basin flowed oil @200 Barrels/day through "choke well BH-75 gave oil indications from basement during testing and another wellN-24-5 in Mumbai High Field flowed oil at 190 barrels/day from Basaltic Basement. InCauvery basin development well MD-3 Sidetrack MD-7 MD-8 and MD-9 have flown oil frombasement. In Madnam field cumulative oil gain is around 300 m3/day from basement.

For the development of discoveries in basement play FDP approval has been obtained forMadanam Field and plan is under implementation. PML of Madanam field has been granted byGoI and grant from state government is awaited. FDP of Pandanallur Field which also hasbasement play has been submitted to DGH for approval.

(b) Exploration in HP-HT & Tight Reservoir:

Fields/Reservoirs with a sub-surface pressure of more than 10000 psi and temperatureof more than 350F are classified as HP-HT reservoirs. The Company has prioritizedHP-HT/Tight/Deeper plays in KG Cauvery Western Offshore Basin and Assam & ArakanFold belt where such environment have been encountered during exploration for deeper pays.These plays have been an exploration challenge for drilling as well as for testing. Inaddition your Company after acquiring the operatorship of NELP block KG-ONN-2003/1 hassubmitted the FDP of two discoveries made in the block. Further hiring desiredtechnological support/ services from domain consultants and service providers are exploredto maximize established/potential for monetization. An action plan has been prepared

During the year one well D-33-7 in Mumbai Offshore was drilled and proved thepresence of oil & gas. Another well Bantumilli South-3 in KG basin will be taken upfor further drilling by suitable drilling rig at a later date. An R&D project has beentaken up for formulating alternative clear fluid of weight greater than 15 ppg which cansustain pressure up to 15000 psi and temperature up to 550F through IIT Chennai underPAN India-IIT MoU with the Company.

for monetization of 3 HPHT Fields - Nagayalanka Periyakudi and Bantumilli South andfirst production from these efforts is likely to commence in 2017.

Unconventional & Alternate sources of energy

Your Company plans to continue its endeavor for exploration and development ofunconventional like - Shale (CBM) etc. and alternate sources of energy. Necessary actionplan is being worked out for exploration and exploitation of Non-Conventional andAlternate Sources of energy which has been perceived as the future sources of energy. Theinitiatives towards this are summarized below:

(a) Shale Gas/Oil Exploration:

Exploration for assessing the Shale gas/oil prospectivity has been initiated in 4basins of the country viz. Cambay KG Cauvery and A&AA Basins as per the policyguidelines notified by Government of India (GoI) for exploration and exploitation of shalegas and oil by National Oil Companies (NOCs) your Company has identified 50 nominationPML (Petroleum Mining Lease) blocks under Phase-I. As on 31.03.2017 22 assessment wells(5 exclusive shale gas in Cambay basin and 17 dual objective wells) in 19 PML blocks havebeen drilled and required data are being generated/ evaluated for Shale gas/oilassessment. During the year 4 dual objective wells in Cambay basin have been drilled.Laboratory studies of core and cutting samples collected in wells during the current yearare in different stages of completion. A second zone in well JMSGA (JM#55) (instead ofwell number field/block may be mentioned) has also been hydro-fractured (HF) andindication of oil was observed during post-HF activation. Cumulative oil knocked out till21.03.2017 was 2.35 m3. The well has been put on Gas Lift Value (GLV) for effectiveactivation. Earlier the well cumulatively flowed 19 m3 of oil with gas and about 173 m3of flow back water from first zone.

(b) Coal Bed Methane (CBM):

The Government of India awarded total 33 blocks to various operators through fourrounds of bidding and nomination. Out of these your Company was awarded 9 CBM Blocks. Dueto poor CBM potential concluded on the basis of data generated in the exploratoryactivities five blocks viz. Satpura (Madhya Pradesh) Wardha (Maharashtra)Barmer-Sanchor (Rajasthan) North Karanpura (West) and South Karanpura (Jharkhand) havebeen relinquished.

Currently the Company is operating in four CBM Blocks i.e. Jharia Bokaro and NorthKaranpura in Jharkhand and Raniganj in West Bengal. FDP for Bokaro and North KaranpuraBlocks have been approved and development activities are underway.

(c) Gas Hydrate Exploration:

Your Company has been an active participant in the National Gas Hydrate Programmes(NGHPs). Towards this Gas Hydrate Research & Technology Centre (GHRTC) wasestablished on 14th September 2016 at Panvel. The Centre would give impetus to the GasHydrate research & technology development and contribute to GOI's plan tocommercialize Gas Hydrates as energy resource at the earliest.

(d) Alternate sources of energy

For harnessing alternate sources of energy your Company took structured initiatives.

• The contract for installation of a 10 MW Solar Plant at Hazira was awarded in2016-17. The Notification of Award (NOA) was placed on 23.02.17 with scheduled completionperiod as seven months from NOA

• One 40 KW Roof Top Solar Power plant at KV Hazira was commissioned in2016-17(06.03.17). Another three 20 KW Roof Top Solar Power plants were installed inAhmedabad at IRS Logging Section and Fire Station in December 2016.

Oil & Gas Projects

(a) Projects completed during FY'17

Name of the Projects Completion/ Commencement of Production Total Investment ( Rs. in Million) Envisaged Oil & Gas Gain
1. Additional Development of Vasai East May 2016 24768 1.827 MMT of oil and 1.971 BCM of gas by 2029-30 0.567 MMT of oil and
2. Improved Oil Recovery of B-173A Field December 2016 3525 0.071 BCM of gas by 2025-26
3. Reconstruction of BPA & BPB Platforms March 2017 11385 -
4. Construction of 6 ETPsFive at Ahmedabad and March 2017 3176.4 -
One at Ankleshwar
Total 42854.4

(b) Projects initiated during FY'17

The following 6 development projects were taken up.

Name of the Projects Estimated Cost ( Rs. in Million) Incremental Oil & Gas Gain
1. NW B-173A Development Plan for Exploitation of Mukta pay – NW B-173A Field 4741.5 0.760 MMT of oil and 0.213 BCM of gas respectively by the year 2031-32.
2. 4th Phase Development of NBP field 9686.1 2.08 MMT of oil by the year 2031-32.
3. Development of BSE-11 Block 5113.0 0.20 MMT of oil 0.37 MMT of condensate and 0.568 BCM of gas by 2030-31
4. Development of B-147 field 5461.5 0.489 MMT of oil and 0.708 BCM of gas by year 2029-30
5. Development of R-series fields including revival of R-12 (Ratna) 40068.3 7.03 MMT of oil and 0.881 BCM of gas by the year 2035-36
6. Redevelopment of Santhal field 11625.6 3.44 MMT by the year 2029-30
Total 76696.0

(c) Implementation of IOR/Redevelopment Schemes

To arrest the decline and improve recovery factor from mature fields your company hassuccessfully implemented several IOR schemes to sustain/augment oil & gas productionfrom major offshore producing fields - Mumbai High Heera & Neelam since year 2000-01.To further improve the recovery from the matured fields three major IOR Projects wereinitiated during the FY' 14-15 and 15-16 and are as under: • ?? Two IOR Projects wereinitiated in FY 15 viz. "Mumbai High North Redevelopment Phase-III Projectwith an investment of

Rs. 58132.5 Milliion envisaging 6.997 MMT of oil and 5.253 BCM of gas by 2030 and MumbaiHigh South Redevelopment Phase-III Project with an investment of Rs. 60688 Millionenvisaging 7.547 MMT oil and 3.864 BCM gas by 2030.

Production has commenced on both the above projects.

• ?? One IOR projects was initiated in FY 15-16 i.e. "Neelam RedevelopmentPlan for Exploitation of Bassein and Mukta pay of Neelam field" with aninvestment of

Rs. 28188.8 Million. The project envisages incremental production of 2.76 MMT of oiland 4.786 BCM of gas by year 2034-35.

(d) Fast track monetization of Marginal Fields

Your Company is developing new and marginal fields in fast track to augment the oil andgas production. It is pertinent to mention here that many marginal fields in westernoffshore which were not techno-economically viable for exploitation earlier on standalonebasis are now being developed with cluster concept. Some of the marginal fields put onproduction in the last few years include NBP (D-1) with its additional development/development of lower Pays Vasai West Vasai East with its additional development NorthTapti BHE SB-14 B-46 Cluster fields C-24 cluster fields B-22 Cluster fields B-193cluster fields Cluster-7 fields and WO-16 cluster fields.

In addition production has commenced from "Development of C-26 ClusterFields" and "Daman Development" projects in 2016-17 and would contributefurther with drilling of more wells under these projects. Monetization of marginal fieldsunder B-127 cluster is under implementation and would contribute in the coming years.

(e) Development of fields in Eastern Offshore

Major thrust is being given to develop discoveries made in the Krishna Godavari basinwhich is a promising basin with various discoveries like G1/GS-15 Vasishtha S1 GS-29and KG-DWN-98/2 etc.

Your Company is vigorously pursuing to develop these fields as early as possible. Theproduction from shallow water field GS-15 and deep water field G-1 has already commenced.

Presently "Integrated Development of Vasistha & S-1 Fields" is underimplementation and is aimed to contribute 15.95 BCM of gas by year 2026. The productionhas commenced from deep water well S2AB under this project from May 2016 utilizing theexisting G1 field facilities and remaining wells are under drilling and would contributein coming years. Further to boost up oil and gas production from Eastern Offshore onemega project for development of cluster 2 fields of NELP Block KG-DWN-98/2 was initiatedin March 2016. The project is under implementation and envisages production of 23.526 MMTof oil and 50.7 BCM of gas by 2034-35.

Development of other discoveries in KG offshore such as KG-DWN-98/2 (Cluster-I &III fields) GS-49 and GS-29 G-4-6 fields shallow water NELP block KG-OSN-2004/1 etc.are under various stages of appraisal/approval for development. In addition to aboveinitiatives after the decision of Government of India to revert Ratna and R-Series fieldsin Western Offshore to the Company Project "Development of R-series fields includingrevival of R-12 (Ratna)" has recently been initiated which envisages incrementalproduction of 7.03 MMt of oil and 0.881 BCM of gas by the year 2035-36.

1. Financial Results

The Ministry of Corporate Affairs (MCA) vide its notification in its official gazettedated 16th February 2015 notified Indian Accounting Standards (Ind AS) applicable tocertain class of Companies. Ind AS has replaced the existing Indian GAAP prescribed undersection 133 of the Companies Act 2013 read with Rule 7 of the Companies Accounts Rules2014. For ONGC your company Ind AS is applicable from April 1 2016 with a transitiondate of April 1 2015 and IGAAP as its previous GAAP.

The following are the areas which had an impact on account of transition to Ind AS:

• Fair valuation of certain financial instruments

• Discounting of certain long term provisions like decommissioning provision

• Valuation of loans by Effective Interest rate method

• Accounting for proposed dividend

• Deferred tax on the above adjustments

• Valuation of equity instruments through other Comprehensive income Thereconciliations and descriptions of the effect of the transition from IGAAP to Ind AS havebeen provided in notes to account at note 56 in the Standalone Financial Statements.

Despite volatility in the crude oil prices and reduction in natural gas prices during2016-17 your Company has registered Gross revenue of

Rs. 779078 million and earned a Profit After Tax (PAT) of Rs. 179000 million up by10.91% over FY'16 ( Rs. 161399 million).

Highlights:
• Gross Revenue Rs. 779078 million
• Profit After Tax (PAT) Rs. 179000 million
• Contribution to Rs. 387 341million
Exchequer
• Return on Capital 32.59%
Employed
• Debt-Equity Ratio NA
• Earnings/ Share ( Rs. ) 13.95
• Book Value/ Share ( Rs. ) 145

 

Particulars 2016-17 2015-16
Revenue from Operations 779078 777417
Other Income 75481 70094
Total Revenues 854559 847511
Profit Before Interest Depreciation & Tax (PBIDT) 386266 392495
Profit Before Tax (PBT) 252155 235988
Profit After Tax (PAT) 179000 161399

Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of theCompanies (Accounts) Rules 2014 a separate statement containing the salient features ofthe financial statement of its subsidiaries associate company and joint venture in FormAOC-1 is appended to this report which shall form part of the Financial Statements.

2. Dividend

Your company paid first interim dividend of Rs. 4.50 per share of Rs. 5 each (90%)which was pre-bonus. Second interim dividend of Rs. 2.25 per share (45%) was post- bonus.The Board of Directors have recommended a final dividend of Rs. 0.80 per share (16%) postbonus. This makes the aggregate dividend at Rs. 9.075 per share (181.5%) beforeconsidering bonus as compared to 170% paid in 2015-16. The total dividend for 2016-17 willbe Rs. 77641 million besides Rs. 15789 million as tax on dividend amounting to 52.20%of PAT (inclusive of dividend tax). There was delay in remittance of unpaid dividendaggregating Rs. 13.79 million to Invest Education and Protection Fund due to technicalreasons which was beyond the control of the Company.

3. Management Discussion and Analysis Report

As per the terms of regulations 34(2)(e) of the SEBI Listing Regulations theManagement Discussion and Analysis Report (MDAR) forms part of the Annual Report of theCompany.

4. Financial Accounting

The Financial Statements have been prepared in compliance with Indian AccountingStandards Ind-AS issued by The Institute of Chartered Accountants of India (ICAI)effective from 01.04.2016 and provisions of the Companies Act 2013. Further as perMinistry of Corporate Affairs (MCA) notification the financial statements have beenprepared as per the format prescribed under the Schedule III to the Companies Act 2013.

Loans Guarantees or Investments

Your Company is engaged in Exploration & Production (E&P) business which iscovered under the exemption provided under section 186(11) of the Companies Act 2013.Accordingly the details of loans given investment made or guarantee or security given bythe company to subsidiaries and associates are not required to be reported.

Related Party Transaction

Particulars of contracts or arrangements with related parties referred to in section188 of the Companies Act 2013 under Form AOC-2 are placed in Annexure-B.

5. Subsidiaries

(I) ONGC Videsh Limited

ONGC Videsh the wholly-owned subsidiary of your Company for E&P activities outsideIndia has participation in 38 projects in 17 countries viz. Vietnam (2 projects) Russia(3 projects) Sudan (2 projects) South Sudan (2 projects) Iran (1 project) Iraq (1project) Libya (1 project) Myanmar (6 projects) Syria (2 projects) Brazil (2projects) Colombia (7 projects) Venezuela (2 projects) Kazakhstan (1 project)Azerbaijan (2 projects) Mozambique (1 Project) Bangladesh (2 Projects) and New Zealand(1 Project). Out of 38 projects 14 are producing 4 are discovered/ under development 16are exploratory and 4 are pipeline projects. ONGC Videsh's share of oil and oil equivalentgas (O+OEG) production was 12.803 MMtoe during FY'17 as compared to 8.916 MMtoe duringFY'16 (43.60% higher). The oil production has increased from 5.510 MMT during FY'16 to8.434 MMT during FY'17 (53.1% higher) and the gas production increased from 3.406 BCMduring FY'16 to 4.369 BCM during FY'17 (28.3% higher).

During FY'17 the Company has earned net profit after tax of Rs. 6974 Million ascompared to a net loss of Rs. 36401 Million during FY'16. The increase in profit ismainly on account of higher production higher crude oil prices and lower impairmentprovisions.

(a) Significant Acquisitions Alliances and Operational highlights of ONGCVidesh during FY'17:

ONGC Videsh successfully completed acquisition of 15% interest in Vankor Field locatedin East Siberia of the Russian Federation on 31st May 2016 from Rosneft Oil Company andsubsequently acquired additional 11% interest on 28th October 2016. Vankor is Russia'ssecond largest field by production and accounts for about 4% of Russian crude oilproduction. The daily oil production from the field is around 400000 bopd on an averageand ONGC Videsh's share considering both the acquisitions is about 104000 bopd.

Financing arrangements for above Acquisition:

• ONGC Videsh Vankorneft Pte. Ltd. a step down wholly owned subsidiary of ONGCVidesh raised USD 1 billion comprising of USD 400 million Senior Unsecured Notes due 2022and USD 600 million Senior Unsecured Notes due 2026 in the international capital marketsin July 2016. The bond issuance was made at competitive rates and was well received by theinvestors. The deal was awarded the "Best Corporate Bond" deal from India at TheAsset Triple A Country Awards 2016.

• ONGC Videsh Vankorneft Pte. Ltd also raised finances by way of bridge loan toacquire 11% interest in JSC Vankorneft in October 2016. The bridge loans were replaced inApril 2017 for which the company tied up facilities of USD 500 million and JPY 38 billionsyndicated for longer tenor at competitive prices from International commercial banks.

(b) During FY'17 ONGC Videsh signed the following Memorandum of Understanding (MoUs):

i. MoU with SOCAR Trading SA: ONGC Videsh and SOCAR Trading SA signed an MoU on27th May 2016 for co-operation in identified areas such as co-operation in jointmarketing of Azeri crude other mutually agreed crude oil/gas etc.

ii. MoU with Dana Energy: ONGC Videsh and Dana Energy have entered into an MoU on18th August 2016 for development of possible projects in Iran.

iii. MoU with Roseneft: ONGC Videsh and Rosneft Russia signed an Agreement on 15thOctober 2016 for mutual cooperation in the area of education and training.

iv. MoU with Ecopetrol: ONGC Videsh and Ecopetrol entered into an MoU on 8th March2017 as a way-forward for realizing the common intention of relinquishing Block RC-10 andtransfer of pending Minimum financial commitments of Block RC-10 to new block(s).

v. MoU with Mubadala: ONGC Videsh and Mubadala Petroleum signed an MoU on 6thFebruary 2017 for future collaboration in upstream oil and gas exploration developmentand production projects in third countries.

vi. MoU with Gazprom Neft PJSC: ONGC Videsh and Gazprom Neft signed an MoU on 29thMarch 2017 for cooperation for geological survey exploration appraisal development andproduction of hydrocarbons on the continental shelf of the Russian Federation and thirdcountries.

(c) Operations i. Syria: The ongoing geo-political situation in Syria including EUsanctions and the resulting restrictions on contractors continue to adversely affectingSyrian operations since December 2011.

ii. South Sudan: The operations in South Sudan projects are temporarily undershutdown due to internal conflicts and adverse security situation in the country sinceDecember 2013.

iii. Venezuela: As a part of remediation plan in San Cristobal projectwater injection (45 KBPD) facilities for phase-I are near finalization which will arrestdecline in production.

iv. PetroCarabobo: The crude sale and purchase agreement (SPA) was signed betweenPresident PCB & PPSA in Nov 2016. After construction of pipelines the changeover ofdiluent from Naptha to Mesa-30 has been affected since 11th March 2017 and the JV isproducing Merey-16 to result in better value realization of extra heavy crude (XHO) beingproduced.

v. Sakhalin-I Russia: A new onland rig "Krechet" for Odoptu field hasbeen commissioned in early 2017 for stage 2 development of the Odoptu field with adrilling plan of 32 wells.

Drilling of world's longest ERD well (O5-RD) in Chayvo field with measured length of15000m is in progress. The well was spudded on 6th March 2017. Earlier world record oflongest well of 13500m is also held by Sakhalin-I project.

Direct Subsidiaries and Joint Ventures of ONGC Videsh:

1. ONGC Nile Ganga B.V. (ONGBV): ONGBV a subsidiary of ONGC Videsh isengaged in E&P activities directly or through its subsidiaries/Jvs in Sudan SouthSudan Syria Venezuela Brazil and Myanmar. ONGBV holds 25% Participating Interest (PI)in Greater Nile Oil Project (GNOP) Sudan with its share of oil production of about 0.481MMT during FY'17. ONGBV also holds 25% PI in Greater Pioneer Operating Company (GPOC)South Sudan. Due to adverse geo-political conditions ONGC Videsh could not produce inGPOC South Sudan during FY'17. ONGBV holds 16.66% to 18.75% PI in four Production SharingContracts in Al Furat Project (AFPC) Syria. Due to force majeure conditions in Syriathere was no production in AFPC project during FY'17. ONGBV holds 40% PI in San CristobalProject in Venezuela through its wholly owned subsidiary ONGC Nile Ganga (San Cristobal)BV with its share of oil & oil equivalent gas production of about 0.475 MMTOE duringFY'17. ONGBV holds 27% PI in BC-10 Project in Brazil through its wholly owned subsidiaryONGC Campos Ltd. with its share of oil and oil equivalent gas production of about 0.643MMTOE during FY'17. It also holds 25% PI in Block

BM-SEAL-4 located in deep-water offshore Brazil through its wholly owned subsidiaryONGC Campos Ltd. ONGBV also holds 8.347% PI in South East Asia Gas Pipeline Co. Ltd.(SEAGP) for onshore Pipeline project Myanmar through its wholly owned subsidiary ONGCCaspian E&P B.V.

San Cristobal Project: Consequent to the signing of agreements on Pending Paymentsand Financing of San Cristobal project for remediation plan between PdVSA and ONGC NileGanga (San Cristobal) BV on 4th November 2016 PdVSA has paid USD 19.75 million till March2017 to liquidate partly the outstanding dividend due from the JV Petrolera IndoVenezolanaS.A.(PIVSA)

2. ONGC Narmada Limited (ONL): ONL has been retained for acquisition offuture E&P projects in Nigeria.

3. ONGC Amazon Alaknanda Limited (OAAL): OAAL a wholly-owned subsidiary ofONGC Videsh holds stake in E&P projects in Colombia through Mansarovar EnergyColombia Limited (MECL) a 50:50 joint venture company with Sinopec of China. DuringFY'17 ONGC Videsh's share of oil and oil equivalent gas production in MECL was about0.555 MMTOE.

4. Imperial Energy Limited (IEL): IEL a wholly-owned subsidiary of ONGCVidesh incorporated in Cyprus has its main activities in the Tomsk region of WesternSiberia Russia. During FY'17 Imperial Energy's oil and oil equivalent gas production wasabout 0.298 MMTOE.

5. Carabobo One AB: Carabobo One AB a subsidiary of ONGC Videshincorporated in Sweden indirectly holds 11% PI in Carabobo-1 Project Venezuela. DuringFY'17 ONGC Videsh's share of oil and oil equivalent gas production was about 0.151 MMTOE.

6. ONGC BTC Limited: ONGC BTC Limited holds 2.36% interest in theBaku-Tbilisi-Ceyhan Pipeline ("BTC") which owns and operates 1768 km oilpipeline running through Azerbaijan Georgia and Turkey. The pipeline mainly carry crudefrom the ACG fields from Azerbaijan to the Mediterranean Sea.

7. Beas Rovuma Energy Mozambique Limited (BREML): BREML was incorporated inBritish Virgin Islands (BVI) and holds 6% PI in Rovuma Area 1 Mozambique.

8. ONGC Videsh Atlantic Inc. (OVAI):

ONGC Videsh setup a Geological and Geophysical (G&G) Centre at Houston USA throughits wholly owned subsidiary ONGC Videsh Atlantic Inc. The Centre caters to requirement ofG&G studies for potential new acquisitions of ONGC Videsh including G&G studies ofits existing portfolio of projects.

9. ONGC Videsh Rovuma Limited:

ONGC Videsh Rovuma Limited a wholly owned subsidiary of ONGC Videsh was incorporated inMauritius for re-structuring of 10% PI in Rovuma Area 1 Mozambique.

10. ONGC Videsh Singapore Pte. Ltd.: The Company was incorporated on 18th April2016 in Singapore for acquisition of shares in Vankorneft Russia through its subsidiaryONGC Videsh Vankorneft Pte Limited. OVVL holds 26% shares in Vankorneft Russia and itsshare of production during FY'17 was 4.545 MMTOE.

11. ONGC Mittal Energy Limited (OMEL): ONGC Videsh along with Mittal InvestmentsSarl (MIS) promoted OMEL a joint venture company incorporated in Cyprus. ONGC Videsh andMIS together hold 98% equity shares of OMEL in the ratio of 49.98 : 48.02 remaining 2%shares are held by SBI Capital Markets Ltd. OMEL also holds 1.20% of the issued sharecapital of ONGBV by way of Class-C shares issued by ONGBV exclusively for Syrian Assetsand is being financed by Class-C Preference Shares issued by ONGBV.

(II)Mangalore Refinery and Petrochemicals Limited (MRPL)

Your Company continues to hold 71.62 per cent equity stake in MRPL a Schedule ‘A'Mini Ratna and listed entity which is a single location 15 MMTPA Refinery on the Westcoast.

Performance Highlights FY'17

MRPL achieved the highest-ever throughput of 16.27 MMT in FY 2016-17 against 15.69 MMTin FY 2015-16.

Marketing & Retail Operations

MRPL continues to expand its market spread in the direct sales segment of petroleumproducts in Karnataka and its adjoining states. MRPL has significant market share anddirect customer relations for products such as Bitumen Fuel Oil Sulphur DieselNaphtha Petcoke and Mixed Xylene in its refinery zone. The total sales volume of directmarketing products including polypropylene during FY 2016-17 was 1858 TMT. MRPL haspenetrated the polypropylene market with additional grades and has achieved sales volumeof 264 TMT during FY 2016-17. The Company has in a remarkably short term achieved aleadership position in south India for few large volume polymer grades.

Future projects of MRPL

The Company has taken up the enhancement of the Refinery capacity to 18/25 MMTPA withlow cost revamp. Land allocation of 1050 acres has been made by the Government ofKarnataka. Necessary steps are being taken to ensure compliance with BS- VI fuel qualitystandards by the year 2020.

Acquisition of controlling stake in OMPL

Subsequent to OMPL having become a subsidiary of MRPL and a Government company underCompanies Act 2013 the process of merger/ amalgamation of OMPL into and with MRPL isunder process.

ONGC Mangalore Petrochemicals Limited (OMPL)

OMPL has been promoted by your Company which has set up Aromatic Complex with anannual capacity 914 KTPA of Para-xylene and 283 KPTA of Benzene in Mangalore SpecialEconomic Zone (MSEZ) as value chain integration project of your Company. After thesuccessful commissioning of OMPL MRPL has increased its equity from 3% to 51.002% in Feb2015 with balance 48.998% held by your Company and thus OMPL has became a subsidiary ofMRPL. The total project cost is about Rs. 69110 million. OMPL commenced commercialoperation from 1st October 2014. OMPL is presently operating at 95% capacity utilization.During FY'17 OMPL achieved highest revenue of Rs. 52565 Million with highest exports ofRs. 37412 million establishing a niche presence in the international market.

6. Annual Report of Subsidiaries and Consolidated Financial Statement

The Consolidated Financial Statement for the year ended 31st March 2017 of yourCompany have been prepared in accordance with section 134 of the Companies Act 2013 IndAS 110 "Consolidated Financial Statements" and Ind AS 28 "Investments inAssociates and Joint Ventures". The audited Consolidated Financial Statements for theyear ended 31st March 2017 form part of the Annual Report.

Full Annual Report of subsidiaries of the Company will be made available to anyshareholder upon request which is also available on Company's website. Further AnnualReports of MRPL and ONGC Videsh are also available on website www.mrpl.co.in andwww.ongcvidesh. com respectively.

7. Joint Ventures/ Associates

(a) ONGC Petro additions Limited

ONGC Petro-additions Limited (OPaL) is promoted by your Company as a Joint Venture (JV)Company with envisaged equity stake of 26% along with GAIL (8.85%). GSPC also has a tokenpresence in OPaL. The balance equity would be tied up with Strategic Partners/FIs orthrough Public offer. OPaL is a mega petrochemical project at Dahej SEZ for utilizingin-house production of C2-C3 and Naphtha from various units of ONGC. Hon'able PrimeMinister of India dedicated OPaL to the nation on 7th March 2017. Total project cost ofOPaL is Rs. 270110 million. OPaL successfully raised Rs. 72860 million throughCompulsorily Convertible Debenture at competitive interest rates. With this the entireequity of Rs. 112300 million has been tied up. All units of OPaL were commissioned duringDec'16 to Feb'17. The products of OPaL - Polypropylene HDPE and LLDPE are well acceptedby the market.

(b) ONGC Tripura Power Company Limited (OTPC)

OTPC is promoted by your Company with an equity stake of 50% along with Govt. ofTripura (0.5%) and IL&FS Energy Development Co. Ltd. (IEDCL - an IL&FS subsidiary)(26%); the balance 23.5% has been tied up with India Infrastructure Fund - II actingthrough IDFC alternatives Limited.

OTPC has set up a 726.6 MW (2 X 363.3 MW) gas based Combined Cycle Power Plant atPalatana Tripura at a project cost of Rs. 40470 million. The basic objective of theproject is to monetize idle gas assets of your Company in land-locked Tripura state and toboost exploratory efforts in the region. Power evacuation for both the units is donethrough 663 KM long 400 KV double circuit transmission network by the North-EastTransmission Company Limited (NETC) a joint venture of Power Grid Corporation OTPC andGovernments of the North-Eastern states. OTPC's both power units of 363.3 MW each arefully operational since 4th Jan 2014 and 24th March 2015 respectively. Plant achievedhighest generation of 747 MW (103%) on 15th February 2017. It generated record 4170million units of power during FY'17. The plant meets 35% power requirement of NorthEastern states. It became the first Dividend paying standalone gas based power generationcompany in India. It also obtained CERC certification.

(c) Dahej SEZ Limited (DSL)

Your Company as a Lead Promoter has developed a multi-product SEZ at Dahej in coastalGujarat to set up C2-C3 Extraction Plant as a value-chain integration project – OPaLthrough JV route in this SEZ Area. Your Company has 50% equity in the project with GIDChaving the rest 50%.

Present Status:

SEZ is already operational with total 43 units are in production and units in SEZ haveclocked export of Rs. 6750 million in FY'17 against Rs. 27480 million in FY'16. Totalinvestment is to the tune of Rs. 390000 million with employment of around 12000 people.

(d) Mangalore SEZ Limited (MSEZL)

Your Company has set up MSEZ to serve as site for development of necessaryinfrastructure to facilitate and locate ONGC/MRPL's Aromatic complex. Your Company has anequity stake of 26% in MSEZ and other equity shareholders are

KIADB (23%) IL&FS (50%) OMPL (0.96%) and KCCI (0.04%). SEZ is operational since1st April 2015.

(e) Petronet MHB Limited

PMHBL is a JV company where in your Company has an equity stake of 32.72% HPCL(32.72%) and balance 34.56 % of equity being held by leading banks. PMHBL owns andoperates a multi–product pipeline to transport MRPL's products to the hinterland ofKarnataka. In FY'17 PMHBL pipeline has achieved a throughput of 3.429 MMT against totalthroughput of 3.318 MMT last year. As per audited result for FY'17 the turnover & PATof PMHBL are Rs. 1283 million and Rs. 810 million respectively.

(f) ONGC TERI Biotech Limited

ONGC TERI Biotech Limited (OTBL) which was incorporated on 26th March 2007 is aJoint-venture Company of your Company in association with The Energy Research Institute(TERI) with shareholding of 49.98% and 48.02% respectively. Remaining 2% shareholding isheld by individuals. Through the efforts of joint research of your Company along with TERIover the years OTBL is offering technologies and providing various Biotechnical Solutionsto Oil and Gas Industry both in India and abroad. These technologies include:

Oil zapper Technology (Bioremediation) Used to eliminate & tackle oil spillsoily sludge and hazardous hydrocarbon waste; Paraffin Degrading Bacteria (PDB) - used toprevent Paraffin Deposition in Oilwell Tubing

Wax Deposition Prevention (WDP) – Used to prevent Paraffin Deposition insurface and subsurface flow lines

Microbial Enhanced Oil Recovery (MeOR) – Used for Enhanced Oil Recovery bymobilizing crude oil trapped in pores of Oil Reservoirs

(g) Petronet LNG Limited (PLL)

Your Company has 12.5 per cent equity stake in PLL with the same proportion of stakes(12.5% each) held by other Oil PSU co-promoters viz. IOCL GAIL and BPCL. Dahej LNGTerminal was further expanded from 10 MMTPA to 15 MMTPA in October 2016 and the same isfurther being expanded to 17.50 MMTPA.

A new LNG terminal of capacity 5 MMTPA has been set up at Kochi.

PLL is also planning to set up an LNG terminal of capacity 5 MMTPA at GangavaramAndhra Pradesh. The turnover of PLL during FY'17 is Rs. 246160 million and PAT was Rs.17231 million

(h) Pawan Hans Limited (PHL)

(A Miniratna - Government of India Enterprise)

Your Company has 49 per cent equity stake in PHL (previously known as Pawan HansHelicopters Limited). Balance 51 per cent equity is held by the Government of India.PHLisoneofAsia'slargesthelicopteroperatorshaving a well-balanced operational fleet of 46helicopters. It provides helicopter support for ONGC's offshore operations. The GoI actingthrough the Department of Investment & Public Asset Management ("DIPAM")proposes to disinvest its entire equity shareholding in PHL by way of strategic sale toprospective investor(s) along with transfer of management control. GoI has appointedSBICAP as its advisor to advise and manage the Strategic Sale of PHL("Transaction"). Meanwhile the GoI proposed to convert its loan into equitycapital by way of right issue. PHL has offered proportionate number of shares at facevalue to the Company. Accordingly your Company has decided to invest a sum of Rs. 1528.16million to maintain the present equity shareholding level at 49%.

8. Other Business Initiatives Important MoUs/Agreement

(a) Re-assessment of Hydrocarbon Resources KDMIPE Dehradun

Your Company is carrying out the project on Re-assessment of hydrocarbon resources ofsedimentary basins and deep water areas of India in association with Oil India Ltd. (OIL)and DGH. For this purpose 2 methodologies are being adopted namely Petroleum SystemModelling-for basins with adequate geological information and data availability (11basins) and Areal Yield- for basins with relatively poor data availability (15 basins).The project is to be completed by November 2017. The project is being periodicallyreviewed by National and International Experts to ensure that the workflow for the projectand quality of the deliverables are conforming the best industry practices andinternational standards. Presently the project is being carried out by identified teams atdesignated workcentres of the Company. As on 31.03.2017 the geological model forSatpura-South Rewa-Damodar Bastar Chattishgarh Karewa Vindhyan Mahanadi RajasthanSpiti-Zanskar Mumbai Offshore and Pranhita-Godavari basins have been prepared andresource assessment and estimation of YTF will be carried out in association withinternational experts. The studies for twelve sedimentary basins (Cambay KG CauveryBengal-Purnea Andaman-Nicobar Kutch-Saurashtra Assam Shelf Assam-Arakan fold BeltKerala-Konkan Himalayan Fold Belt Bhima-Kalagdi and Ganga–Punjab Plains) is inprogress at designated work centres of the Company.

(b) National Seismic Programme:

Acquisition Processing & Interpretation of Un-appraised Areas

MoPNG has assigned your Company the responsibility of Acquisition Processing &Interpretation (API) of 40835 LKM of 2D seismic data in Unappraised areas of Indiansedimentary basins falling in 24 onland areas (grouped in 11 sectors) except North eastsituated in 18 States/Union Territory under "National Seismic Project (NSP)".The basic objective of the seismic survey is to map and study Tertiary/Mesozoic/Proterozoic sediments for hydrocarbon prospectivity and assessment of theirpotential. This would enable Government to assess hydrocarbon prospectivity of the areasfor carving out and offering exploration blocks in future bidding rounds as per the GoIpolicies. Under this project 2D seismic data acquisition work has started in Saurashtraarea on 12.09.2016 and in Rajasthan Mahanadi Deccan Synclise Bhima Kaladgi Vindhyanaand Himalayan Foreland areas in October 2016. As on 31.03.2017 5033 LKM of 2D data hasbeen acquired and further acquisition is in progress.

(c) Agreement between ONGC and OPaL

Your Company and OPaL (ONGC Petro Additions Ltd) signed an agreement on 22.04.2016 forsupply of Naphtha through Marine Route.

(d) Crude Oil Sale Agreement (COSA) i. Nominated Fields: Negotiations are inprogress for the new COSA with the PSU Refiners. The existing COSA was valid till31.03.2015 and has been extended till 31.03.2018. ii. NELP Fields: Regarding crude supplyfrom NELP fields in Gujarat to IOCL the JV COSA for NELP fields (Karannagar VadatalNadiad & W Patan) under the Company's operatorship is under negotiation with IOC.Similarly for NELP fields in Karaikal Asset (Madanam & Nagayalanka) the process hasbeen initiated to put COSA in place with CPCL and MRPL.

(e) Regasification Agreement between ONGC and SLPL for LNG:

A definitive regasification agreement was executed on 23.06.2016 for booking of 1.0MMTPA regasification capacity for a period of 20 years in 5.0 MMTPA Floating Storage andRegasification Unit (FSRU) Terminal at Jafrabad Port Gujarat being set up by Swan EnergyLtd. (SEL) through a Special Purpose Vehicle (SPV) Swan LNG Pvt. Ltd. (SLPL).

(f) Agreement of Collaboration (AOC) with National Mining Research Center-SkochinskyInstitute of Mining (NMRC-SIM):

Your Company signed an Agreement of Collaboration (AOC) with National Mining ResearchCenter-Skochinsky Institute of Mining (NMRC-SIM) Russia on 25th November 2004 forUnderground Coal Gasification (UCG). Under this AOC NMRC-SIM provided consultancy to yourCompany for carrying out suitability studies for some coal / lignite blocks in India.Award of mining lease for the said Vastan lignite block by MoC GoI is still awaited. TheAOC with SIM expired on 24th November 2014 and has been extended for another five yearsupto March 4 2020.

(g) Industry Affiliates programme (IAP) Agreement on Chemical EOR was signed on10.03.2015 between IRS and University of Texas Austin Texas USA and it is valid forfive years.

(h) MoC between ONGC PAN IIT:

Your Company has entered into a Memorandum of Collaboration (MoC) with PanIIT inJanuary 19 2015 at New Delhi to work towards a collective R&D Programme fordeveloping indigenous technologies to enhance exploration and exploitation of hydrocarbonsand alternate sources of energy. Pan IIT is a consortium of seven premier IndianInstitutes of Technology namely IIT-Kharagpur IIT-Kanpur IIT-Madras IIT-MumbaiIIT-Delhi IIT-Guwahati and IIT-Roorkee. This is long-term initiative for sustainedresearch development and capacity building. Under this program a total of 15 projectshave been taken up in Phase-I and for Phase-II 12 projects approved by the ProgramAdvisory Committee. Further for Phase-III a total of 55 project proposals have beenreceived from various IITs and the same have been under review by ONGC Institutes.

(i) MoU with Geological Survey of India:

Your Company and GSI Training Institute (GSITI) Hyderabad entered into a Memorandum ofUnderstanding which aimed at providing exposure and advanced field geological training toyoung ONGC geoscientists at GSI Field Training Centers (FTCs) at Kuju (Jharkhand) andAizawl (Mizoram). As per the MoU the first batch of 15 young geoscientists from all theCompany underwent training in Field Geology at the GSI Training Institute's Field TrainingCenters (FTCs) in Kuzu (Jharkhand) and Aizawl (Mizoram) from 8th to 31st March 2017.

(j) Farm-in/Farm-out Agreement with Gujarat State Petroleum Corporation Limited (GSPC)in respect of NELP Block KG-OSN-2001/3:

Your Company has acquired 80% stake in the block KG-OSN-2001/3 falling in KG Offshorealong with Participating Interest (PI) and Operatorship at a purchase consideration of US$995.26 million for DDW Field in the Block. The Farm-in/Farm-out Agreement was executedbetween your Company and GSPC on 10.03.2017. The Farm-in/Farm-out Agreement envisages: thesaid acquisition is subject to satisfaction of a set of conditions precedent includingmandatory Government approval.

9. Information Technology

• Your Company has taken up the ambitious challenge of going Paperless. TheProject has been awarded on 29th Dec 2016 and is aimed at making more than 3000paper-based processes paperless. This initiative will be one of the Company's contributiontowards our Prime Minister's initiative of Digital India. The Project is scheduled to berolled-out in Mumbai by May 2017 and organisation-wide by June 2018.

New version of Sametime Video Conferencing has been deployed which has built-inMultiparty Video conferencing facility.

• Microwave Offshore-Onshore Project was been completed successfully. Under thisproject terrestrial links were established which connect the Company's Bandra and UranOffices with Neelam – B-193 – BPB – BPA and Heera platforms in MumbaiOffshore situated more than 100 kms away into the sea. This high-capacity backboneMicrowave link is capable of carrying multi-service traffic with high spectral efficiencyand providing carrier grade service. This technology driven project has gone through manychallenges while constructing a 125 m Tower on Dronagiri hills off Mumbai with effectiveheight of 205 m above MSL. This is the longest over the sea microwave link longestoffshore hop of the length of 65 kms in the region having total offshore path length of138 kms. Link uses Radios supporting higher-order modulation of 1024 QAM with XPICtechnology for higher throughput of upto 450 Mbps and reduced latency. This project willmeet full gamut of IT and telecommunication needs (including Video Conferencing RTOCRotary equipment monitoring and CCTV) of Neelam and Heera Asset and Bassein and SatelliteAssets of Offshore and will be a stepping stone for further extension to MH Asset.

Initiatives and Development in the field of Information Technology Information Securityservices a) CISO office is taking due initiative in ensuring information securitymeasures across your Company. In this direction additionally 11 Infocom Data Centres(Karaikal Rajahmundry Kolkata Dehradun Vadodara Hazira Jorhat Nazira AgartalaMehsana and Ankleshwar) and 4 G&G Data Centres (Panvel-SPIC VRC EPINET and GEODEC)were taken up for ISMS implementation through in-house resources. ISMS documentation of 11Infocom Data centres have been completed and documentations of 4 Geological and Geophysics(G&G) Data Centres are in progress.

b) For the first time IS awareness session was conducted for GTs during theirMulti-Disciplinary Training (MDT) at Dehradun.

EACS Project:

A state-of-the-art Enterprise wide Access Control and Surveillance (EACS) systemproject has been conceptualized to mitigate any threat perception to the security of theoil installations as well as offices of your Company. For the implementation of thestate-of-the-art EACS system contracts have been awarded to-

• M/s BEL (LSTK contractor) for EACS project implementation.

• M/s RITES (PMC contractor) for EACS project management.

• M/s PDIL (TPI agency) for Third Party Inspection services for EACS project.

Online Project Monitoring and Control (OPMAC) tool of SAP system is used for uploadingall the project related documents and their versions. Suitable trainings have beenprovided to the concerned executives from the various work centres and also to thecontractor's personnel for its use.

10. INDEG-Make in India Campaign in ONGC

Your Company is leading the upstream sector in Make in India Campaign and embarked ona time bound plan by MoPNG for successful implementation of the campaign in the oil andgas industry. This major national program is designed to facilitate investment fosterinnovation enhance skill development protect intellectual property and buildbest-in-class manufacturing/ services infrastructure to make India a manufacturing hub andbringing economic transformation in India. Your Company carries its legacy of being thepioneer corporate in initiative on Import Substitution and indigenisation. In the last fewdecades through its INDEG Group your Company has developed many Indian vendors and someof them are now international players in their areas. ONGC's initiatives has helped PublicSector Units to expand their capabilities and your Company has helped creation of some ofthe large Indian companies in services and projects areas of oil & gas. With the newthrust through the "Make in India" campaign your Company has revived itsmulti-pronged approach to enhance the capabilities of Indian equipment goods servicesand projects market through promotion of Indian vendors for development in India andthrough tie-ups with global players.

Indigenization of Capital Stores and Spares items

A. UPET Rig Spares i. Your Company has done indigenized revamping of WirelessRemote Control System for Romanian 50-IV- Workover Rig at a cost of Rs. 46.8 million. ii.Central Workshop Vadodara of your Company successfully completed capital refurbishment ofimported ROM-100-I rig (Romanian) and Rom-50-IX Rig adding a fresh lease of life to thework-over Rigs. All capital repairs and maintenance of imported equipment of the rig arecarried out indigenously. iii. Your Company during the refurbishment has developed variousspares locally for UPET-ROM make (Romanian) Work over rigs.

B. Drilling Services i. Your Company has developed an in-house innovative PLCcontrolled Safety System for Travelling block movement. This system has been successfullyinstalled on an on-shore drilling rig. ii. Radial drilling a productivity improvingdrilling technology was carried out in four wells for the first time to enhance reach inthe reservoir and increasing flow path.

C. Production Process Equipment i. Your Company has recently developed SRPmonitoring system in-house and introduced it successfully in 57 SRP wells in Limbodra GGSII Ahmedabad. This system will help to attend the fault and revive instantaneously thusreducing the downtime particularly for remote locations. The cost of such system is verylow compared to procurement from an international source. ii. Your Company hasdomestically carried out indigenous repairs on 2 Cryogenic pumps used in LNG facility atDahej manufactured by Ebara International Corporation USA (EIC). The failure of two ofthese three pumps had forced the plant capacity to 50%. Your Company successfullyundertook indigenous repairs of these pumps thus saving 83% of cost at Rs. 3.15 millionagainst Rs. 17.6 million. iii. A chemical formulation of polymeric surfactant wasdeveloped and prepared by RGL Vadodara for treatment of asphaltic or waxy crude for flowimprovement. The solution was successfully tested and used for crude oil in Cambay Basin.

D. Well Services

i. Well Stimulation Services of your Company has indigenized products worth nearly Rs.9.8 million and developed 10 vendors in the process. It has also saved

Rs. 364.4 million through use of indigenous equipment and services in its Make in Indiaefforts. ii. Rig BHEL 120 VI of Well Services was successfully refurbished thereby addinga fresh lease of life to the Workover Rig. iii. Successful fracturing of deepest andhighest temperature well at Rajahmundry was carried out by in-house team (depth of 4069.5Mts and BHT – 165.5C) using in-house developed fracture fluid for this hightemperature.

E. Other Equipment Indigenization

Your Company carried out successful replacement of display monitors in logging unitwith indigenously manufactured advanced feature monitors thereby saving Rs. 0.45 millionper unit of such replacements.

Tie ups with Global Players

a) Global Industry Players – Tie ups in India

i) Riser Maintenance yard in Kakinada in Andhra Pradesh has been developed byTransocean to avoid the need to periodically export & re-import the"Risers" for inspection and reconditioning. This facility includes Risercertification Floatation repairs Preservation – enhancing the life of costly assetand adequate storage area. The facility is operated through JVs with internationalcompanies Vetco/NOV for riser joints and Dynaglass for floatation modules. ii) Equipmentand Services Centre set up by NOV India Pvt. Ltd. (NOVIPL) extends aftermarket supportservices to all Oil/Gas producing companies for Service Repair Parts Supply andextending Technical Training. NOVIPL has acquired 4 workshops in India Mumbai (2)Chennai and Pune one each for repair recertify all NOV supplied equipment. Previouslyall these jobs were done in Singapore and UAE. These workshops are supported by many smallVendors fabricators and suppliers within India. NOV is also sourcing parts manufacturedin India through strategic partnership with local manufacturers. iii) Offshore Vessels andRig Repair set up by Sembmarine Kakinada Limited (SKL) is a JV between Sembwang ShipyardPte. and Kakinada Seaports Limited. SKL is operating within the vicinity of KakinadaSeaports and will be developed in 3 phases to offer shipowners and offshore operators aone-stop integrated offshore service facility for the repairs and servicing of offshorevessels and ships oil and gas riser/equipment repairs as well as platforms and modulesfabrication. Your Company has awarded repair job of its floater rig Sagar Vijay. SKL isalso engaged in repair of various other Indian flag vessels. iv) Land Rig Manufacturingunit set up by Drillmec India Pvt Ltd. Drillmec India has manufactured the First MobileRig Workover & Drilling Mod. MR 8000. It is a joint venture company between DrillmecS.p.A Italy and KMOC Kakinada Marine and Offshore Complex Ltd. India.

b) Domestic Ancillary Companies in India by Global Players

i) NOV Rig system: Repair and servicing of major drilling equipment like BOPsRisers Pressure control equipment etc.

ii) Hydril Pressure Control Pvt. Ltd. :

Hydril BOPs are being inspected and repaired at Hydril facility in Chennai.

11. ‘ONGC Start-up' Initiative

"Start-up India" initiative was launched by the Hon'ble Prime Minister ofIndia on January 16 2016 which aims at fostering entrepreneurship and promotinginnovation by creating an ecosystem that is conducive for growth of "Start-ups".Your Company has launched Rs. 1000 million Start-up fund on its 60th Foundation Day i.e.on 14th August 2016 to foster nurture and incubate new ideas related to energy sector.‘ONGC Startup' Fund shall cater to the "Energy Sector". Your Companyintends to provide the entire support chain for start-ups including seed capitalhandholding mentoring market linkage and follow-ups. The aim of ‘ONGC Start-up' isto increase the contribution of fresh implementable ideas in the oil and gas sector.

The following road-map has been considered for implementation of the Start-upInitiative.

a) Creating a Start Up Fund:

• Your Company has already announced launch of Rs. 1000 million Start-up fund on14th August 2016

b) Creating Awareness & Invitation of Proposals

• Your Company created a webpage on its corporate website for creating awarenessabout the initiative on 14th August 2016

Dedicated Website: A dedicated website startup.ongc.co.in for ‘ONGCStartup' initiative has been created which was launched by Honorable Union Minister ofState (I/C) Petroleum and Natural Gas on 7th December 2016. Start-ups are registeringtheir interest through this website for sharing their ideas and seeking support from ONGC.

c) Collaboration for Technology Business Incubation

• Your Company entered into a MoU with IIT

Bombay (IITB) and Society of Innovation and Entrepreneurship (SINE) on 7th December2016. In collaboration with IITB and SINE your Company intends to nurture and incubatenew ideas related to energy sector. The first batch of incubation of Start-Ups is likelyto happen in early 2017-18.

12. Health Safety and Environment (HSE) Accreditations and Other Achievements

Being a high risk industry safety of its employees is topmost priority for yourCompany. Achieving the annual targets with "Mission-Zero Fatality" is the themeadopted for the year 2016-17 with each employee of the organization as safety officer.

Globally recognized QHSE Management System is implemented conforming to requirements ofQHSE Certifications ISO 9001 ISO 14001 and ISO 18001(OHSAS) at the Company's facilitiesand certified by reputed certification agencies at all its operational units. Corporateguidelines on online incident reporting investigation and compliance monitoring ofvarious rules and regulations have been developed and implemented for maintaininguniformity throughout the organization in line with international practices.

Accreditations: a. Your Company is accredited by National Accreditation Board forEducation & Training (NABET) – Quality Council of India (QCI) accreditation asthe Consultant Organization for the purpose of carrying out Environment Impact Assessmentsof offshore and onshore Oil and Gas Exploration Development & Production andPetroleum refining industry sectors. This helps in saving substantial time and money ingetting EC which helps in an early commencement of the operations.

Highlights of HSE during 2016-17:

a) Performance of Memorandum of Understanding (MoU) with MoPNG on HSE parameters:

Your Company gives highest priority to the implementation of the observations raisedduring External Safety Audits (ESA) and Internal Safety Audits (ISA). Highest complianceto the observations has been achieved as under:

External Safety Audits Internal
OISD DGMS Safety Audits
97.54% 94.09% 88.5%

b) The Mines Vocational Training: 2546 (1329 ONGC+ 1217 Contractualemployees) have been provided to the field going personnel. c) Various safetyawareness programs were conducted at all work centres with the theme

"Safety Rules Saves Lives" for the year 2017. d) Review of HSEpolicies including Improvement in policies on training of

Contractual Employees HSE Manpower Reporting Safety briefing guidelines BehaviouralBased Safety Compliance pending M B Lal recommendations Safety critical equipmentIssuing of SOPs Accident/ incident analysis by Third party and Setting of ERC atCorporate Office.

e) Online incident reporting started as per the requirement of PNGRB regulation.

f) A detailed HSE dossier for each work centre was provided to all Asset/BasinManagers and Services Chiefs for monthly monitoring. Dossier includes ISA compliancestatus OISD audit observations DGMS observations EC decision compliance SOPs SafetyChampion issues related to Environment Mock Drills ERP upgradation Hazard Alert CardAccident/Incidence reporting in SAP compliance to recommendations of inquiry committeesin fatal & major accidents in last three years PME and Safety Critical Equipment. TheVCC at each work centre will discuss all the HSE pending issues as per EC decision andstatus/ ATR will be submitted to Chief HSE on monthly basis.

g) DGMS in association with the Company and other upstream oil companies reviewedand prepared the Draft OMR 2014 based on OISD standards & submitted to the Ministry ofLabour and Employment. The draft OMR Regulation 2016 has been finalised and is expected tobe published shortly.

h) In order to improve monitoring of DGMS observations first time an initiativewas taken to upload DGMS observations in ICE system in pursuance of which all planned6794 observations have been uploaded in ICE system for online monitoring.

i) For onshore locations roll out of e-PTW started with go live at GGS7-KalolAhmedabad Asset on 6th March 2017. The process of training and roll out at Onshore shallbe completed by September 2017. e-PTW is already running at Uran Hazira all offshoreprocess complexes and ONGC owned Rigs.

j) The first Asian Ministerial Conference on Disaster Risk Reduction was hosted byGovernment of India in collaboration with the United Nations International Strategy forDisaster Reduction (UNISDR) from 3rd to 5th November 2016 at Vigyan Bhavan which wasinaugurated by Hon'ble Prime Minister of India. Your Company showcased its capabilitiescontributing towards effective disaster risk reduction mitigation and preparedness withthe help of two working models of fire-fighting systems of fixed oil and gas productioninstallation and drilling / work-over rig. A brochure on crisis management team activitieswas also released.

k) Third Party Audit of 14" & 16" Hazira-KRIBHCO pipelines 10"Sonamura – Monarchak pipeline and 20" Uran Trombay Pipeline has been conductedas per PNGRB regulations.

l) Safety Audit generic observations compendium has been prepared by scanningthrough all observations raised during external and internal audits for last four years. Amechanism has been designed in SAP system (ICE) for monitoring regular compliances ofthese observations every six months installation and rig wise.

m) In view of notification issued for drill cutting (from water base mud) wasteunder non-hazardous category issued in Schedule –1 of Hazardous and Other Wastes(Management & Trans boundary Movement) Rules 2016 the disposal of drill cuttingsfrom water based mud does not attract the provisions of Hazardous and Other Wastes(Management & Trans boundary Movement) Rules 2016 and this will save a lot of time asauthorization under Hazardous Waste Rules will not be required.

n) Dispensation has been obtained from the Ministry of Environment Forest andClimate Change regarding requirement of Forest Clearance for Shot Hole drilling duringseismic survey.

o) The Environment ministry permitted ground flaring without the provision of 100meters green belt. In view of scarcity of land the provision of ground flaring without100 m green belt will be helpful for your Company.

p) Preparation of 5 Nos. of in-house EIA reports resulting in notional savings ofapproximately Rs. 22 million and saving of valuable time.

13. Carbon Management & Sustainable Development

Your Company's hydrocarbon exploration & production (E&P) operations are beingcarried out in varied climate and environment areas ranging from deserts to coastal areashilly terrains to forest areas shallow water to deep waters and also in ultra-deep waterareas.

These E&P activities often interact with the ecosystems and may havephysico-chemical & bio-geochemical impact on the surrounding environment. YourCompany being responsible Corporate not only cares and preserves the environment but alsomakes efforts for its protection. It is fully conscious to see that ecology &environment are preserved and even improved by taking consistent steps and also throughtechnological upgradation. Your Company has put in place an effective EnvironmentManagement Plan and is also taking advance preventive actions so that environment isprotected and its activities can remain in harmony with nature.

The Company adopted Environmental Policy in Commissions meeting no 2(1)/9 dated 16thMay 1983 and declared Environment Protection as one of the prime objectives in July1988. A policy was framed to conduct Environment Audits.

Your Company has also set up a dedicated Institute viz. Institute of Petroleum Safetyand Health Management (IPSHEM) at Goa for conducting trainings for industrial healthsafety and environment management and also to promote practices in the organization aboutthe safety health and environment aspects in every phase of operations by evolving bestpractices and providing trainings in virtual environments.

Your Company has taken requisite measures to minimize the impact of E&P activitiesand taken various measures to mitigate the pollution. It has introduced clean technologiesfor emission control including design and construction facilities for different gaseousliquid and solid effluent generated due to drilling production and processing facilitiesfrom onshore and offshore operations.

Measures taken for Mitigating Air Pollution

There are no major risk for air pollution like process industry. The source of airemissions are flaring of natural gas exhaust from running of DG sets use of heavyequipments construction activities movement of vehicles etc. In order to reduce the gasflaring generators have been installed in the field to utilize low pressure gas forgeneration of electricity for internal consumption. Regular ambient air quality monitoringstudies are carried out around drill sites and production installations as per statutoryrequirement to measure and monitor concentration of air pollutants in ambient air. Theconcentration of air pollutants have been found to be within the permissible limits.

Gaseous Emissions Control through Box Flare:

Box flare facilities have been installed at Uran Terminal Hazira Gas ProcessingComplex and Assam Group Gathering Stations to achieve following

• Complete combustion of the flared gases using several stage multiple burners.

• Use of low NOx burners.

• Cladded in refractory shells with steel enclosures to control the effect of heatand light radiations.

• Acoustical insulation for noise control.

Smokeless Flaring: The smokeless flare is achieved by properly designed tall stackswith following facilities.

• Use of steam injections

• Providing additional Oxygen

• Height of the stack is maintained in such a way that when emissions strike theground they should have ground level concentration within permissible limits.

Real Time Monitoring Stations (RTMS): 5 no's of RTMS are installed each at UranTerminal and Hazira Gas Processing complex to monitor the ambient air quality in andaround plants round the clock.

Reduction in Gas Flaring/Low Carbon Fuel: In order to reduce GHG emissions the lowpressure gases and other natural gas is being utilised to operate Compressors Turbinesand DG Sets.

Vapour Recovery System: Vapour Recovery system has been installed at the crude oilstorage tanks to prevent release of fugitive emissions VOCs etc. besides to check theloss of HC.

De-sulphurization of Sour Gas: The sour gas produced from South Bassein Field ofWest Coast is sweetened at processing plant through Sulphur Recovery Units (SRUs) to avoidthe release of acidic gas to the atmosphere.

Measures taken for Mitigating Water Pollution and its Management Conservation of freshwater: Towards conservation of an important natural resource ‘fresh water'through its replenishment in the aquifer to prevent its further depletion and to sustainground water table. Six wells to collect the discharge water at different locations of theKDMIPE campus are active.

Waste Water Management:

Your Company monitors the use of water resources and quality of effluent discharge.Effluent Treatment Plants have been installed in work centres to treat effluent generatedduring processing of oil and gas to meet statutory requirements for discharge of treatedeffluent at surface/subsurface.

Water Conservation through Rain Water-Harvesting:

For conservation of fresh water your Company has a policy on Rain Water Harvestingwhich is mandatory for all future projects. Details of existing Rain Water Harvestingprojects are given in the section ‘Sustainable Development'.

Treated water is used for various purposes during drilling at drill site and injectinginto the formation for the purpose of maintaining formation pressure. Treated effluent isalso used for gardening purpose floor cleaning and other utilities. Your Company followsthe policy of Recycle Reuse and Recovery for water conservation.

Effluent Treatment Plants:

In view of environmental friendly disposal of produced effluent ONGC has set up 26Nos. of ETPs at different work centres of your Company to treat about 78110 m3/d of wastewater produced during E&P operations.

Lining of drill site waste pit with High Density Poly Ethylene Sheets (HDPE):

To avoid contamination of ground water quality of surrounding areas HDPE lining islaid in waste pit at drill site. In this way percolation of waste water in the groundduring drilling of wells is checked and ground water quality is protected.

Produced Water Conditioners (PWCs):

Produced Water Conditioners (PWCs) have been installed for treatment of offshoreeffluent (produced water). For treatment of sewage water being generated at livingquarters at offshore platforms Sewage Treatment Plants (STPs) have been installed beforedischarging it at offshore. Therefore the waste water separated from oil and gas istreated and pollutants values are maintained as per prescribed limits before dischargingit at onshore/offshore.

Offshore Monitoring to check Marine pollution at West & East Coast:

To study the impact of E&P operations on Marine Environment your Company hasinstituted regular offshore monitoring at West Coast and East Coast covering the entireoperational areas. The reports are regularly submitted to regulatory authorities.

Oil Spill Management - Response and Combat:

Your Company has the capability to handle 700 MT of oil spillage using its Oil SpillResponse equipment stockpile kept on 5 different Multi-Support Vessels which arestrategically positioned 24 x7 round the year to cover the entire operational area toensure minimum response time during emergency. It has also in place a Contingency Planduly approved by the Indian Coast Guard for both West and East Coast. For oil spills ofTier – 3 level i.e. > 10000 MT. Your Company has an agreement with Oil SpillResponse Limited UK for oil spill combatment. Besides the Company participates invarious National Level Exercises with Indian Coast Guard thereby ensuring commitment formarine Environment Protection.

Soil Pollution control:

Bio-remediation:Theoilisrecoveredfromtheoily waste produced during drillingoperation as far as possible.Theremainingwasteandoilcontaminated soil is subjected toBioremediation where the oil content is reduced to less than 1% TPH using a consortium ofHydrocarbon degrading bacteria by the OTBL since March 26 2011. During 2016-17 25220MT of oily sludge/ oil contaminated waste has been bio-remediated.

Noise Pollution Control: Following mitigation measures to control noise impacts:

• Regular noise monitoring is done to measure and monitor sound levels aroundequipments and machineries and high noise areas are demarcated.

• Acoustic enclosures are provided around gen-sets to reduce noise pollution.

• Personnel Protective Equipment (PPE) like ear muff/plugs is provided topersonnel working in noise prone areas.

• Green belt is developed and maintained around major installations which alsocontribute in mitigating noise pollution.

Afforestation projects resulting in CO2 Fixation through Mangrove & RingalPlantation:

Creating Green and Clean Environment: Green belts have been developed up to onethird of total area around all the production installations and processing plants tocomply with the stipulations of various permissions obtained from state as well as centralgovernment. In addition to regular plantation at drill sites and production installationsyour Company has undertaken following massive plantation as part of your Company'sCorporate Social Responsibility for Environment Protection & for mitigation of ClimateChange impacts and also to conserve biodiversity.

Mangrove Plantation: A project on mangrove plantation along the shores of DhadarRiver on West Coast has been taken up by the Company to protect erosion of shoreline. Inthe Phase 1 of the project more than 21.11 lakh mangroves have been planted in the soilerosion-prone area along the coast of the Dhadar River at Gandhar Ankleshwar and Haziraarea.

Ringal Plantation: Ringal plantation (Hill bamboo) has been undertaken by theCompany in Joshimath and Kedarnath forest areas of Upper Himalayas to strengthen fragileHimalayan eco-system. Plantation of 1.075 million Ringal Plantation in Upper Himalayas isalready completed in an area of 430 Hectares in three phases resulting in 1.97 milliontonnes of CO2 fixation per annum. Another 0.75 million Ringal plants will be planted intwo phases in an area of 300 Ha in Upper Himalayan region which shall result in anadditional 1.37 million tonnes of CO2 fixation per annum. An Agreement was also signedwith Uttarakhand Bamboo and Fiber Development Board Dehradun on 01.03.2016 for fourthphase of Ringal Plantation.

Other initiatives: a. Green Building: Your Company acknowledges that buildings havemajor environmental impact over their entire life cycle. Hence the Company has taken upconcept of constructing green building the essence of which would be to address all theseissues in an integrated and scientific manner with due compliance to the guidelines ofGRIHA (Green Rating for Integrated Habitat Assessment). As part of its commitment tosustainable development it is planned to build Green Buildings at Delhi Mumbai Kolkataand Dehradun. These buildings are expected to save 50% to 60% energy save water by about30% harvest 100% rainwater and discharge zero sewage and as compared to baselinebuildings. Currently Green buildings at Delhi Mumbai and Dehradun house the officers ofthe Company.

b. Replacement of Halons: Corporate HSE has obtained a clarification from the OzoneCell MoEF & CC regarding the issue of replacement of Halon based Fire SuppressionSystem. The clarification issued by the Ozone Cell permitted the use of recycled/recovered Halon. Further it was clarified that the roadmap was developed for phasing outof production and consumption of Hydro-fluorcarbons (HCFCs) in India and is not applicablefor Halon. Therefore use of the Company's existing stock of Halon can be continued.

c. Use of Renewable Energy: Wind Energy: Your Company's holistic focus onsustainable growth ensures its thrust on pursuing renewable sources of energy decreasingour internal carbon footprint and exploring unconventional hydrocarbons. Further theCompany has commissioned two energy efficient Wind Power Project one a 51 MW Unit atBhuj Gujarat and another 102 MW Wind Farm in Jaisalmer Rajasthan.

Solar Energy: Many of the residential colonies in ONGC have solar water heaters andsolar powered street lights. Unmanned platforms in offshore areas also use solar energyfor navigation lights and telemetry units.

d. Sustainable Development: i. Sustainable Water Management (SWM): As an E&PCompany the Company business depends on sustainability of fresh water resources which arepresently under pressure. Globally per capita availability of freshwater is steadilydecreasing and trend will inevitably continue with the increasing consumption levels andclimate change unfolds. In this situation it is imperative for the Company to develop newstrategies for water management in order to achieve sustainable growth and development.The details of existing rain water harvesting projects of the Company are given below.

• 29 ground water recharge wells at various locations of Ahmedabad Asset.

• Rain water from rooftop and surface run off harvesting at Green BuildingMumbai.

• Percolation well for bore well recharge at Residential complex AnkleshwarAsset.

• Rain water harvesting system as integral part of C2-C3 plant Dahej Gujarat.

• Rain water harvesting at Rajahmundry Asset base complex.

• 16 infiltration well in IPSHEM Goa.

• 2 ground water recharge wells at IRS Ahmedabad.

• 6 ground water recharge wells at KDMIPE Dehradun.

• 1 ground water recharge well at base complex RFB Jodhpur.

• RWH system at K. V. School NOBH and officers' club at Agartala Tripura Asset.

• RWH system PPCL building Uran Plant Raigad Maharashtra.

• Bhavale Hill RWH system Panvel Maharashtra.

• RWHsystematSPICcampusPanvelMaharashtra.

• RWH systems at various locations at Western Onshore Basin Vadodara.

ii. Clean Development Mechanism Projects Emission Reduction through CDM Projects: YourCompany commenced its Clean Development Mechanism (CDM) journey in 2006. Currently it has15 registered CDM projects with the United Nations Framework Convention on Climate Change(UNFCCC) that yield (potential) Certified Emissisons Reductions (CER) approx. 2.1 millionyearly. The registered CDM projects are as under:

Sl. No. Project CER/annum
1 1 Waste heat recovery from Process Gas Compressors (PGCs) Mumbai high south (offshore platform). 5320
2 Up-gradation of Gas Turbine 1 (GT 1) and Gas Turbine 2 (GT 2) at co-generation plant of Hazira Gas Processing Complex (HGPC). 7802
3 Flare gas recovery project at Uran plant. 97740
4 Flare gas recovery project at Hazira Gas Processing Complex (HGPC) Hazira plant. 8793
5 Amine Circulation Pumps Energy Efficiency at Hazira Plant. 4043
6 51 MW wind power project of ONGC at Surajbari. 85762
7 Energy Efficient Green Building at Mumbai. 544
8 Energy Efficient Green Building at DehraDun. 735
9 Gas Flaring Reduction at Neelam & Heera Asset. 65811
10 OTPC Natural gas based combined cycle power plant in Tripura India. 1612506
11 Energy Efficient Green Building at Kolkata. 1881
12 Energy Efficient Green Building at Delhi. 5944
13 Gas flare reduction at GGS Charali Assam. 15172
14 Replacement of MOL pumps at Neelam and Heera. 10539
15 102 MW Wind Power project at Jaisalmer Rajasthan. 180177
Total 2102769

Four production installations (CPF Gandhar Gandhar GGS-I Ankleshwar CTF and NawagamCTF) were declared carbon neutral for the year 2015-16 after voluntarily retiring 134419CERs of CP-1 credit period from CDM registry account (UNFCC).

iii. Global Methane Initiative (GMI):

GMI launched by United States Environmental Protection Agency (USEPA) is a voluntarymultilateral partnership that aims to reduce methane emissions and to advance the recoveryand use of methane as a clean energy source. Your Company signed a voluntary agreementwith USEPA in 2007 for the purpose of reducing methane releases to the atmosphere byimplementing cost effective emission reduction technologies and practices. Your Companyhas formed a dedicated in-house team procured methane emission detection and measurementequipment in order to undertake fugitive emission detection and quantification at itsoperating facilities. ONGC has also drawn an effective plan to map all its productioninstallations for fugitive hydrocarbon emission and make the installations leak-free inthe near future through gas leak surveys at various production installations using GasFind Infrared Camera for identification of methane emission reduction opportunities.

iv. Sustainability Reporting

ONGC Group Sustainability Report FY'16 was released on 14th March 2017. This being theseventh report of the Company and fourth of ONGC Group (comprising of your Company ONGCVidesh and MRPL) in succession was prepared as per latest GRI G4.0 framework withexternal assurance by third party under "Core" category.

14. Business Responsibility Report –

2016-17

In terms of clause (f) of sub-regulation (2) of regulation 34 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 stipulates that the annualreport shall contain a Business Responsibility Report describing the initiatives taken bythe listed entity from an environmental social and governance perspective in the formatspecified. Accordingly the Business Responsibility Report – for 2016-17 has beendrawn up and appended to this Annual Report.

15. Internal Control System over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting andpreparation of standalone financial statements (Ind AS Compliant) for external purpose inaccordance with generally accepted accounting principles. These internal financial controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standaloneInd AS financial statements in accordance with generally accepted accounting principlesand that receipts and expenditures of the Company are being made only in accordance withauthorizations of management and Directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the Company's assets that could have a material effect on the standaloneInd AS financial statements.

Your company has adequate internal financial controls system over financial reportingin compliance with the provisions of section 134(3) (c) of the companies Act 2013 andsuch internal financial controls over financial reporting were operating effectively.

In addition to the above your Company has a well-established and efficient internalcontrol system and procedure. The Company has a well-defined delegation of financialpowers to its various executives through the Book of Delegated Powers (BPD). TheIntegrated BDP is updated from time-to-time in line with the needs of the organization aswell as to bring further delegation. The Company an in-house Internal Audit Departmentcommensurate with its size of operations. Audit observations are periodically reviewed bythe Audit & Ethics Committee of the Board and necessary directions are issued wheneverrequired.

16. R&D Efforts Through ONGC Energy Centre Trust (OECT)

Your company has taken steps to evaluate various forms of energy to fulfil thecountry's growing energy needs. Towards this end your company has established an ONGCEnergy Centre Trust (OECT) which is mandated to undertake or assist in programs/ projectsof fundamental and applied research for improving and developing commercially viableenergy mediums and sources beyond hydrocarbons especially in clean and/or renewableenergy options. ONGC Energy Centre (OEC) has been set-up under the aegis of the OEC Trustto work on various clean energy options.

Patents granted

Patents granted during FY 2016-17 against three

International PCT patents on Cu-Cl cycle filed earlier jointly by OEC and ICT-Mumbaiin six countries (USA Canada Japan UK Korea and China) were:

1. ‘Hydrogen Production Method by Multi-Step Copper-Chlorine Thermochemical Cycle'- granted in People's Republic of China. (This patent has now been granted in five out ofsix countries)

2. ‘Effect of Operating Parameters on The Performance of Electrochemical Cell inCopper-Chlorine Cycle' - granted in Canada. (Patent already been granted in Japan and USA)

3. ‘Electrochemical Cell Used in Production of Hydrogen Using Cu-Cl ThermochemicalCycle' - granted in UK (Patent already been granted in Canada Japan and USA)

I. R&D Projects by ONGC Energy Centre during 2016-17

The year commenced with 22 projects. Another 15 projects were taken up during the year.Out of the 37 projects under implementation during 2016-17 a total of 6 projects wereconcluded. The year ended with 31 projects in hand.

II. New Projects taken up during the year

During FY 2016-17 the Company's Energy Centre has taken up Fourteen (14) new in-house/collaborative projects besides two new initiatives. The details are given below:

A. Uranium Exploration:

1. "Drilling logging and coring operations in approx. Thirty Eight (38) no ofparametric wells in Son valley and Sagar district in MP and Karjan-Padra in Gujarat":To validate the leads obtained from drilling and 3-D seismic modelling in the areas inorder to assess the potential for sub-surface Uranium.

B. Hydrogen Program:

2. "Scale-up of I-S EED & ED based membrane processes for production andconcentration of HI as Hydrogen source" in collaboration with CSIR-CSMCRIBhavnagar: To scale-up the I-S EED and ED for producing HI by reducing I2 increasing theHI molality (concentration) in the presence of HIx solution using indigenously preparedcation-exchange membrane and anion-exchange membrane.

3. "Development of Ceramic Membranes for Gas Separation Applications in I-S andCu-Cl cycles For Clean Energy Production" in collaboration with CSIR-CGCRI Kolkata:To develop zeolite membranes for separation from HCl of H2 from HI/I2 in I-S cycle H2 inI-S cycle on vapour SO2 and O2 from SO3 indigenously prepared clay alumina support tubeand demonstration of performance of the membrane at economically scaled uplevel.

4. "Design and development of Sulfuric Acid Concentrator and Internals for BayonetConvertor in S-I Cycles" in collaboration with FITT/IIT Delhi: To Design &develop sulfuric acid concentrator for sulfuric acid concentration in S-I Cycle andcatalyst loading and distributor system to be used in bayonet convertor and optimize theprocess/ equipment configuration for future scale up.

5. "Stability tests of IIT-D developed catalysts and materials of constructionsfor HI decomposition reaction of SI cycle" in collaboration with IIT-Delhi:Preparation of Activated Carbon supported bimetallic Ni-Pt catalyst byimpregnation-reduction method and performs long term stability tests of 600 hours andimmersion corrosion coupon test to screen the potential material of construction for HIdecomposition reaction.

6. "Thermo-chemical Hydrogen Generation through Partially Open-Loop S-I processinvolving H2S incineration: H2S incineration to SO2" in collaboration with CSIR-IIPDehradun:

Laboratory study for the incineration of H2S to to develop process know-how in generateSO2 perspective of partially open loop S-I cycle.

7. "Development & demonstration of closed loop I-S process in all glassassembly" in collaboration with FITT/IIT Delhi: To demonstrate integrated closedloop to enable stable continuous and long-term operation of I-S process for hydrogenproduction in all glass /quartz assembly of capacity 5 NL/hr. of hydrogen productioncontinuously for at least 10 hours.

8. "Selective Conversion of to CO using CO2 an inexpensive Nano-porous Carbondoped oxides through plasma/photocatalysis" in collaboration with Maulana AzadNational Institute of Technology (MANIT) Bhopal: To develop inexpensive catalysts(nanoporous carbon doped oxides) that can convert carbon dioxide into carbon monoxideusing plasma-photocatalytic technology.

C. Biotechnology Program

9. "Hotwiring microbial communities for enhanced unconventional gasproduction" in collaboration with TERI as Indian partner and University of New SouthWales Australia as Australian partner under the Australia-India Scientific ResearchFund - 2015 (AISRF-2015) for collaborative research on Clean Energy Technologies.

10. "Development of hybrid nano-zyme-bacterial hydrogels for augmentation ofuranium leaching from subsurface soil" in collaboration with PSG Institute ofAdvanced Studies (PSGIAS) Coimbatore: To develop hybrid nano-zyme-bacterial hydrogels foraugmentation (by 0.01 to 0.35%) of uranium leaching from subsurface soil.

11. "Proof-of-Concept for Investigation on Microbial Bioleaching of Uranium fromSecondary Uranium Deposits" in collaboration with Savitribai Phule Pune University(SPPU) Pune: To understand the geochemical composition and the indigenous microbialcommunity structure of uranium bearing sediments and to develop enriched microbialconsortia with the potential of uranium bioleaching.

D. Geothermal program

12. "Feasibility of Geothermal Energy in India using Single Well and ProductionMethod" in collaboration with Indian Institute of Technology Delhi (IIT-D): Ondevelopment of simulation model experimental work will be planned for Single WellEngineered Geothermal Pilot Power Plant.

13. "Thermal modelling to assess Geothermal Energy Potential in Gandhar area ofCambay Basin" in collaboration with KDMIPE Dehradun: To carry out thermal modellingof area identified by OEC for assessing Geothermal Energy resources in Gandhar Field.

E. Solar Program:

14. "Development of Self-Cleaning Coatings Based on Super-hydrophobicity for SolarPanel Applications" in collaboration with PSG Institute of Advanced Studies(PSGIAS) Coimbatore: To develop a transparent and super-hydrophobic self-cleaningcoatings for photovoltaic solar cells solar thermal and hybrid applications.

17. Human Resources

Your Company values its Human Resources the most. To keep their morale high yourcompany extends several welfare benefits to the employees and their families by way ofcomprehensive medical care education housing and social security.

18. Human Resource Development

• 33660 ONGCians (as on 31st March 2017) dedicated themselves for the excellentperformance of your company during the year. The workforce intake strategy pursued by yourCompany caters to meeting the demands of maintaining a steady flow of talent in abusiness which is characterized by high risks and uncertainties enormous costs fastchanging level of technology physically challenging work environment fluctuating productprices and growing competition. Your Company has drawn up a scientific manpower inductionplan aligned to the business plans as well as factoring the manpower profile of theCompany.

• Your Company believes that continuous development of its human resources fostersengagement and drives competitive advantage. Towards that end during the year yourCompany conducted Business Games to hone the business acumen of its executives in acompetitive scenario under simulated business constraints. Business Game has proved to bevery popular initiative and tests the ability of the executives through business quizzesbusiness simulations and case-study presentations. During the year 2016-17 a total of 163teams and 652 executives participated in the event. Fun Team Games (FTG) were organizedfor E0 and below level employees to inculcate MDT (Multi-disciplinary Team) concept andspirit of camaraderie and belongingness to the organization which was very well receivedby the participants. A total of 94 teams and 376 employees participated in FTG during theyear 2016-17. The winners of Business Games and Fun Team Games were felicitated by the CMDon Republic Day Celebrations.

• Your Company attaches utmost importance to the development of its humanresource. During the year a total of 15846 executives and 5703 non-executives wereimparted appropriate training spanning 187712 executive mandays and 20548 non-executivemandays respectively during 2016-17 to all our work centres.

• In order to absorb new and emerging technological advancements pertaining to oiland gas exploration and production 65 programmes including 21 foreign faculty programmespertaining to functional disciplines were organized with the best of faculties from Indiaand abroad during the year.

19. Employee Welfare

Your Company continues to extend welfare benefits to the employees and their dependantsby way of comprehensive medical care education housing and social security. YourCompany continues to align company policies with changing economy and businessenvironment.

Employee Welfare Trusts –

Your Company has established the following major Trusts for welfare of employees:-

Employees Contributory Provident Fund (ECPF) Trust manages ProvidentFund accounts of employees of your Company.

The Post Retirement Benefit Scheme (PRBS) Trust of your Company managesthe pension fund of employees of your company. The Scheme was converted into a DefinedContribution Scheme as per DPE guidelines in November 2013.

In the converted Defined Contribution Scheme the corpus in the individual employeeaccount shall include employer/ employee contributions and interest thereon.

The benefits under the scheme are dependent on corpus in the individual employeeaccount and accordingly would be market determined which depends on interest rateannuity price etc. During FY 2016-17 1940 cases of retired employees were settledamounting to Rs. 8400 million.

The Composite Social Security Scheme (CSSS) formulated by your companyprovides an assured ex-gratia payment in the event of unfortunate death or permanentdisability of an employee in service. In case of separation other than death/permanenttotal disability employees own contribution along with interest is refunded.

Gratuity Fund Trust exists for payment of gratuity as per the provisionsof the Gratuity Act.

• Your Company has a Sahayog Trust for its Sahayog Yojana to provideex-gratia financial grant for sustenance medical assistance treatment rehabilitationeducation marriage of female dependent and alleviation of any hardship or distress tosecure the welfare of the workforce and their kin who do not have adequate means ofsupport. The beneficiaries under this scheme include casual contingent daily ratedpart-time adhoc contract appointees tenure-based employees apprentices and traineesemployed by your Company besides regular and past employees. Under the scheme an amount ofRs. 54.60 million was disbursed by the Trust during 2016-17.

Extension of Benefits under the Asha Kiran Scheme to Retired Employees:-

You Company has Asha Kiran Scheme to meet the emergency needs of the ex-employeesretired prior to 01.01.2007 who are passing through distressful situation. The scheme waslaunched as per DPE guidelines by creating a corpus of 1.5% of PBT. During the year underthis scheme financial assistance of Rs. 1594.59 million was provided to 14600ex-employee as on 31.03.2017.

Persons with Disabilities

Your Company believes in affording equal opportunities to physically challenged people.As on 31.03.17 there were 245 permanent employees with disabilities (0.73%) on the rollsof your Company.

Implementation of Govt. Directives for Priority Section

Your Company complies with the Government directives for Priority Section of thesociety. The percentage of Scheduled Casts (SC) and Scheduled Tribe (ST) employees were 15percent and 9.9 percent respectively as on 31st March 2017. Your Company is fullycommitted for the welfare of SC and ST communities. The following welfare activities arecarried out by your Company for their upliftment in and around its operational areas:-

Annual Component Plan:

Under Annual Component Plan for SC/ST every year an allocation of Rs. 200 million ismade w.e.f. FY 2011-12. Out of this Rs. 60 million is distributed amongst all the workcentres for taking up activities for welfare of SC/ST Communities in and around the areasof our operations. In addition Rs. 140 million is managed centrally and is earmarked forspecial projects/proposals/schemes for the welfare of areas/persons belonging to SC/STcommunities. The amount under component plan is utilised for taking up various welfaremeasures for the welfare and upliftment of the needy people of SC/ST Communities. Thisfund is especially meant for providing help and support in Education and TrainingCommunity Development and Medical and Health Care.

Scholarship to SC/ST meritorious students for pursuing higher professional courses atdifferent Institutes and Universities in the country.

Your Company provides 500 scholarships for meritorious SC & ST students forpursuing higher professional courses at different Institutes and Universities across thecountry in Graduate Engineering MBBS PG courses of MBA and Geo-Sciences. The majorfeature of the scheme is that the scholarships have been equally divided for both boys andgirl students and the amount of scholarship has been made @ Rs. 4000/- per monthamounting to Rs. 48000/- per annum per student subject to the conditions of the scheme.The financial implication involved in a cycle of four years with 500 scholarships awardedevery year is around Rs. 76 million per annum.

20. Industrial Relations

During the year your Company maintained harmonious Industrial Relations throughout theCorporation. Mandays loss due to internal industrial action was reported as ‘NIL' forthe year 2016-17.

21. Grievance Management System

A structured four-tier Grievance Management System in place in the Company to addressemployee grievances related to policy/policies. The channel of grievance is ReportingAuthority of Individual Sectional in charge Key executive Appeals Committee. AppealsCommittee has outside professionals as members and empowered to suggest measures toprevent similar grievances in future. CMD takes the final decision in totality on thegrievance of the employee with inputs from Director (HR). For external stakeholders theCompany has a well laid down grievance redressal system in place with adequate provisionsto escalate the matters up the hierarchy up to the Board (Stakeholders RelationshipCommittee – a Board level Committee headed by an independent Director). Your Companyvoluntarily facilitates resolving grievances through Independent External Monitors (IEMs)and through Outside Expert Committee (OEC). Further a separate website is maintained forgrievance redressal (https:// grievance.ongc.co.in).

22. Implementation Under the Right to Information Act -2005

Anelaboratemechanismhasbeensetupthroughout the organization to deal with requestsreceived under the RTI Act 2005. A Nodal Officer in the rank of a General Manager hasbeen appointed for the purpose who is based at the Registered Office at Delhi. Besidesthis 22 Central Public Information officers (CPIOs) have been designated at differentwork centers across the country in compliance of Sections 5(1) and 5(2) of the Act.Further an Officer of the level of Executive Director has been appointed to dischargesthe role of an Appellate Authority under the Act. The particulars of all thequasi-judicial authorities under the ambit of RTI Act 2005 have been uploaded on the ONGCCorporate portal (www.ongcindia.com) for wider information of the general public.

In compliance of Government directives your Company has successfully introduced onlineprocessing of applications under the Act from August 2016 onwards.

A total of 123 RTI applications were carried forward from the year 2015-16. Further947 applications were received during the period from April 2016 to July 2016 beforemigration to the RTI online system. A total number of 1397 applications were receivedduring the period from August 2016 to March 2017; making a total of 2344 applications. Outof these 2244 applications were replied to during the year.

Additionally the Department of Public Information/RTI Cell also processed 169 SecondAppeals which were listed for hearing at the CIC during the FY 2016-17 and took follow-upactions to dispose off the same.

23. Implementation of Official Language Policy

Your Company makes concerted efforts to promote Official Language. In this regard someof the steps taken during the year were: -

• Unicode Hindi software installed in all our offices.

• Hindi workshops conducted at regular intervals.

• Hindi Technical seminars ‘Kavi Gosthies' and Hindi plays organized atvarious work centres.

• Vishwa Hindi Diwas (10th January) celebrated at various work centres of ONGC.

• Hindi Teaching Scheme of Govt. of India effectively implemented at all regionalwork centres.

24. Women Empowerment

Women employees constituted over 6.6 percent of your Company's workforce. During theyear programmes on women empowerment and development including programmes on gendersensitization were organized. Your Company actively supported and nominated its womenemployees for programmes organized by reputed agencies. Disclosure under the sexualharassment of women at workplace policy (prevention prohibition & redressal) Act2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013.

Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy. The following is a summary of sexual harassment complaintsreceived and disposed of during FY'17:

• No. of Complaints received: 02

• No. of Complaints disposed of: 02

25. Work-Life Balance

Your Company continued in its endeavors to ensure work-life balance of its employees.The townships at many work-centers were provided facilities like gymnasiums music roomsetc. Outbound programmes with families were also organized at various work-centers. Playson the importance of ‘Work-Life Balance' were staged to create awareness amongst theemployees. In addition cultural programmes involving employees and their families werealso conducted. Mahila Samitis and Resident Welfare Associations (RWAs) were involved inthe organization of these cultural programs. Your Company has an adventure wing named‘ONGC Himalayan Association' which organizes adventure programmes likemountaineering trekking white water rafting snow skiing desert safari aero sportsetc. which adds towards morale engagement team-spirit camaraderie stress managementand spirit to explore unknown traits among the employees.

26. Sports

Your Company continued its large scale support for development of sports in the countryin the form of job offers and scholarships to deserving sportspersons. Sponsorships tovarious sports associations / federations / sports-bodies to organise sports events aswell as develop infrastructure were also extended.

Your Company extended support in 23 game disciplines to 166 players on regular rollsand 201 players on scholarship. The support has enabled many sportspersons to achieve andbring home laurels for the nation and the organisation. Some of the key achievementsduring the year are given below:

• Five ONGCians were conferred the prestigious "Arjuna Award" for theyear 2016 namely Shiv Thapa (Athletics) Amit Kumar (Wrestling) Sourav Kothari (CueSports) Sandeep Singh Maan (Athletics (Para)) and Rajat Chouhan (Archery).

• Cricketer Virat Kohli was conferred the prestigious "Padam ShriAward" for the year 2016. The total number of National Awardees in the organizationstand at 31 (Khel Ratna – 1 Padma Shri – 3 & Arjuna – 27)

• In Rio Olympics 2016 7 ONGCians namely Ms. Kavita Raut (Marathon) Ms. M.R.Poovamma (4x400m relay Athlete) Ms. Ashwini Ponnappa (Doubles Badminton) Ms. Heena Sidhu(Shooting) Shiva Thapa (Boxing) Ms. Jisna Mathew (Scholarship 4x400m relay Athlete) andR. Mohan Kumar (Scholarship 4x400m relay Athlete) participated.

• Shri Pankaj Advani won 16th world title in cue sports. In the year 2016-17 hewon World Billiards title in point format and also in 6 Red Asian Snooker.

• Shri Dhruv Sitwala won his 2nd Asian Billiards Title in April 2016.

• ONGCian Shri Virat Kohli has been appointed as Indian Cricket team's captain inall match format i.e. Test One Day & T-20.

• Shri Pranaav Jerry Chopra of ONGC won Syed Modi GP Gold Badminton Tournamenttitle in the year 2016-17.

• Two Kabaddi players namely Jasvir Singh and Scholarship holder Sandeep Narwalwon World cup kabaddi Championship in the year 2016-17.

• 5 scholarship players namely Mandeep Singh Gurjant Singh Sumit SimranjeetSingh & Vikramjit Singh secured Gold medal at Junior World Hockey Cup as a member ofIndian team in the year 2016-17.

• ONGC Scholarship Athlete Ms. Jisna Mathew (400 mt) and Ajay Kumar Saroj (1500mt)won Gold medal in Asian Jr. Athletics Championship in 2016-17.

27. Corporate Social Responsibility (CSR)

Your Company as a responsible corporate has always been committed towards creating aconducive environment to bring about an inclusive growth in the society. The Company isfully engaged in ensuring equitable and sustainable growth specially in the area of itsoperations besides complying with government directives to discharge its socialresponsibility as a leading Indian corporate.

It is for the first time in the history of the company that the CSR expenditure hasexceeded Rs. 5000 million and funds required for continuing with some of the Projects inthe next fiscal year is Rs. 4010 million. Out of the total CSR budget of Rs. 5356.66million for the year 2016-17 the expenditure is Rs. 5259 million which includesadditional overhead expenditure of Rs. 87.4 million towards salary of officers/ personneldealt with CSR on full time basis. This translates to overall utilization of 98.18% of theCSR budget. Rs. 97.66 million are unspent during the year FY 2016-17.

CSR activities of the company are guided by project based approach in line with theprovisions of Companies Act 2013 promulgated by Ministry of Corporate Affairs. NecessaryCSR & SD Policy has been framed and put in place in line with Companies Act 2013. Aseparate report on Corporate Social Responsibility (CSR) activities undertaken by yourCompany during the FY'17 is enclosed as

Annexure ‘C'.

Reason for non-utilization of CSR budget:

Around 98.18 % of CSR budget has been spent during the financial year 2016-17 whereinmajor PAN India CSR initiatives and work centre specific projects have been implementedsuccessfully. Major flagship CSR projects have a project duration of more than one yearwith milestone based payment spread in different fiscals. Additionally a number of CSRprojects were in the formulation and approving stage. Against the carry forward budget ofRs. 15209 million from balance of CSR unspent funds of previous years Rs. 7111.60million has been committed as on date towards these various ongoing projects and projectsunder approving stage. Expenditure against these will be met in the financial years2017-18 onwards. Major emphasis was laid towards taking up various projects underSwachhata Programme and these concerted efforts resulted in an expenditure of Rs. 1542.30million for such projects during the year 2016-17 across the country. With a view tocreate health infrastructure the company contributed Rs. 801.60 million and Rs. 2001.80million towards different type of education & skill development related projects.Apart from Health and Education project worth Rs. 748.50 million have been implemented inNorth Eastern Region Rs. 113.20 million was spent towards projects for empowerment ofwomen and project worth Rs. 152.90 million were undertaken for welfare of SC/ST.

Board of Directors take pride in reporting the brief details of the important CSRprojects implemented during the year 2016-17:

(a) Healthcare Initiative: i. Multi-Specialty Hospital at Sivasagar:

The 362 bed Multi-Specialty Hospital at Sivasagar is the largest ever CSR project tobe undertaken by your company. The hospital will be developed in three phases at a cost ofRs. 3123.4 million. Dr Babasaheb Ambedkar Vaidyakiya Pratishthan (BAVP) will be theConstruction Operating and Management (COM) partner for this project. MOA has been signedwith BAVP on 10th March 2017. The prime objective of the hospital is to provide qualityhealth care services to the people of Northeast at an affordable cost. The charges fortreatment will be as low as 70% of the market price and further discount of 50% will beprovided

Phase Phase-I Phase-II Phase-III Total
Cost ( Rs. in million) 990.7 960.5 1172.2 3123.4
Number of Beds 100 120 142 362
Cardiology
Internal Medicine Cardiac Surgery
Paediatrics Gastroenterology Renal Transplant
General Surgery Nephrology IVF
ENT Urology Endocrinology
Medical Facilities Orthopaedic Neurology Surgical Oncology
Gynaecology & Obst Neurosurgery Medical Oncology
Pulmonary Medicine Paediatric Surgery Radiation
Ophthalmology Surgical Gastroenterology
Plastic & Cosmetic
Surgery
Timeline July 2019 July 2021 July 2023

ii. Varisthajana Swasthya Sewa Abhiyan:

This flagship CSR project of the Company has succeeded in providing 1.921 million doorstep medical treatment to 63797 elderly citizen through Medical Mobile Unit in theoperational areas of ONGC in last six years at a cost of Rs. 164.5 million. Consideringthe number of elderly citizen being benefited through this project 11 new MMUs wereinitiated in the year 2016-17 in addition to the existing fleet of 20 MMUs for serving thecommunity in the remote areas for the next three years at a cost of Rs. 199 million.Help-Age India is the implementing agency for this project. The total amount sanctionedfor this project till 31.03.2017 is Rs. 363.4 million (for 9 years since 2010)

iii. Lady Goschen Hospital :

Your Company has undertaken this CSR initiative for construction of new ‘ONGC-MRPLWing' for Government Lady Goschen Hospital Mangalore with financial support of Rs. 127.8million. Lady Goschen Hospital was established in 1849 at the heart of Mangalore City.This hospital is exclusively dedicated to the women patient.WomenfromKarnatakaandothersareasofKonkon region are largely dependent on this hospital fortheir treatment. On an average the hospital had to deal with 500 to 600 deliverer cases.Due to increase inflow of patients there was an urgent need for additional facilities. Thenew ONGC- MRPL wing of the hospital will address the long standing need of the womenpatient of the region. The hospital is schedule to be commissioned in August 2017. MRPLhas also contributed Rs. 88.9 million towards this project.

iv. Integrated Muscular Dystrophy Rehabilitation Centre (IMDRC) at Solan:

Your Company is supporting Indian Association of Muscular Dystrophy is setting up anIntegrated Muscular Dystrophy Rehabilitation Centre' (IMDRC) at Solan Himachal Pradesh ata cost of Rs. 6.6 million.

v. Eye-Care Initiative:

Your Company has undertaken eye-care initiative for the benefit of both adult andchildren with two different NGO's namely Anugraha Drishtidan and Praani. While Praanispecifically aims at undertaking screening and eye treatment for school going children ofNCR region whereas Anugraha Drishtidan focuses on eye treatment of adult population nearCompany's operational area of Assam Jharkhand and Andhra Pradesh. Through both theseprograms more than one lakh people have been benefited. The project includes screeningproviding medicine spectacles and cataract operation.

vi. Health Care Initiative in Arunachal Pradesh:

Your Company is working towards improving the health care facilities in the remotehilly areas of Arunachal Pradesh. In the last one year the Company had provided supportfor: I. Ambulance ultra-sound and X-Ray machine for District Government Hospital Ziro II.Ambulance and Medical equipment for Community Health Center Basar (West Siang) III.Medical equipment and hearse van for Government Hospital Aalo IV. Ambulance for Govt.hospital Tawang.

V. Medical equipment's for District. Govt. Hospital Tezu. The total financialimplication for all these project is Rs. 16.8 million.

vii. Indian Menopause Society:

Your Company has supported to Indian Menopause Society towards undertakingUrogynaecological Surgeries. These surgeries were performed by organizing three mobilesurgical camps at Herbetpur Uttrakhand Raxaul Bihar and Manali Himachal Pradesh forthe benefit of the underprivileged women who otherwise remain deprived from gettingmedical facilities. Some of the surgeries which cannot be performed in remote location areoperated in a Hospital in Delhi. More than 90 such surgeries are carried out through thisproject. The total cost of this project is Rs. 983 million

(b) Promoting education Skill Development and livelihood enhancement

Your Company's initiatives promoting education covers a wide range of subject frompromoting Sanskrit language to setting up B. Ed. College for improving the literacy rateof Arunachal Pradesh. It has undertaken various projects which contribute towardspromotion of education skill development and enhancement of livelihood. Some of the majorinitiative in the field of education and skill development are:

i. Setting up of B. Ed. College:

With an objective to improve the literacy rate of Arunachal Pradesh your company issetting up a B. Ed. college at Nirjuli Arunachal Pradesh in association with VivekanandKendra Vidyalaya Arunachal Pradesh Trust at a cost of Rs. 59 million. The college will beimparting training to more than 200 students in a year in B. Ed. and shall also conductother in-house training activities.

ii. ONGC Super 30:

Your Company has set up a Super 30 center at Sivasagar to train 30 aspiring students toget admission in IITs and other premier engineering institutes of our country. Two batchhad already completed the course successfully since 2014 with financial implication of Rs.13.2 million The 3rd batch of 30 students for the year 2016-17 is currently undergoingtraining with the financial implication of Rs. 6.33 million. The project is beingundertaken in partnership with Center for Social Leadership.

iii. Establishment of Indian Institute of Petroleum and Energy (IIPE) Visakhapatnam:

In order to establish IIPE Vizag which will primarily focus on teaching and researchin Petroleum and Energy your company has contributed Rs. 600 million to IIPE Vizagtowards corpus/ Endowment fund for establishment of Indian Institute of Petroleum andEnergy (IIPE) Visakhapatnam Andhra Pradesh. iv.

Promotion of Sanskrit Language

In order to revive the Sanskrit language your company has taken up this initiativethrough Sanskrit Promotion Foundation with a total financial implication of Rs. 50million. This project includes development of online tools & tutorials for studentsteachers and guardians at formal and in-formal school levels. It also involves workshopsseminars leadership programme technology orientation programme continuous learningprogramme to the teaching community. Research on Sanskrit education nationwide surveyand data collection translation of contemporary literature in Sanskrit includingchildren's literature and editing and publications of rare manuscripts etc. are the otherhighlights of the project. This Project is a step-forward towards the revival of Sanskritin India and abroad.

v. ONGC's Support for S-VYASA

University Bangalore:

Your Company has supported ‘Vivekananda Yoga Anusandhana Samsthana' (VYASA) bygranting

Rs. 120 million towards construction of a 350 bed boy's hostel at S-VYASA Universitycampus located at Gidden Halli Jigani Hobli Bangalore. The hostel will have all thelatest facilities including solar lights solar heating system CCTV lift interiorfurniture electrical etc. Free accommodation will be provided to ST/SC and Tribalstudents of S-VYASA University whereas deserving poor students will be given 50%concession

vi. Ekal Vidyalaya:

Your Company has joined hands with Bharat Lok Shiksha Parishad for reaching remotevillages in different parts of the country in order to provide free education to childrenthrough ‘Ekal Vidyalaya'. The beneficiaries are the poor children in 6 to 14 yearsage-group who do not have access of education. The classes are being conducted in theseVidyalayas by a local educated youth who has minimum education of metric level and trainedby team of experts. This project covers 420 Ekal Vidyalayas in as many villages of ruraltribal and backward areas in 10 states.

With average enrolment of 30 students per school Ekal Vidyalaya initiative is targetedto impart free basic informal education to 24000 students at a financial implication ofRs. 19.2 million for two years.

After the completion of the 1st year in November 2016 the project has entered the 2ndyear of implementation.

vii. Job Oriented Computer Training and soft skills development for students mainlybelonging to the weaker sections of Society:

Your Company in association with Bharatiya Vidya Bhavan (BVB) has undertaken a projecttitled "Free Job/ Entrepreneurship Oriented Computer education and soft skillsdevelopment for students mainly belonging to the weaker sections of Society". Thisproject provides free computer education is through BVB's Gandhi Institute of ComputerEducation and Information Technology (GICEIT) at five work centers located at MehsanaDehradun Nazira Karaikal and Rajahmundry. These centers have been named as"ONGC-GICIET" centers. The project started in the year 2010-11. The total costof the project is Rs. 100 million. During the year 2016-17 an amount of Rs. 30 millionhas been released towards implementation of this project and more than 5500 students havebeen trained in computer literacy and soft skill through five centers.

viii. Green Hub Project:

This is an unique initiative to train 20 youth of North East every year in wildlifevideography and documentation. The Green Hub project is implemented in partnership withNorth East Network. The main objective of the project is to create a team of environmententhusiast having expertise in conservation. In the last two year 40 youth has beentrained. The Centre has recently been conferred with Manthan Awards in the category ofEnvironment & Green Energy for leveraging the power of youth to conserve biodiversitythrough a digital platform. The total cost of the project for two years is Rs. 3.94million.

ix. ONGC ISKON Skill Development Center:

Your Company in partnership with Bhaktivedanta Gurukula and International School aneducational wing of ISKCON has set up a Vocational Education Centre at Ajhai nearVrindavan in Mathura at a cost of Rs. 80 lakhs. The Company's Centre for Skilldevelopment will be exclusively for imparting training in electrician carpentry (wood)organic grower hand embroidery and self-tailor.

x. Skill Development through CIPET:

The project is for job oriented technical skill development training on plasticprocessing & manufacturing in tool room mechanic operator and injection moldingmachine operator. 120 no. of youth would be identified through transparent selectionprocedure who would be trained by

CIPET. The youth from the State of West Bengal Odisha and North Eastern will bebenefitted from the project activities. The total cost of the project is Rs. 8.28 million.

xi. Water Hyacinth Craft

50 Women of Sivasagar district in Assam are being trained in Water Hyacinth Craft by ateam of professional from North East Development Financial Corporation Ltd. Out of thefifty women 20 women have been selected to undergo advance training program throughNational Institute of Design Ahmedabad. All these women will become expert in designingcraft made of water hyacinth which are in high demand in North East. The total cost forundertaking this training program is Rs. 3.2 million.

xii. Skill Development Program for Girls of Jammu & Kashmir:

This CSR project is for training of 60 Kashmiri girls of Baramulla region of Jammu& Kashmir in Fashion Designing course through RICHA in association with Chinar 9 JawanClub (Indian Army). These girls are chosen from Baramulla and nearby areas. The total costof the project is Rs. 1.65 million. The project will be for a period of one year.

(c) Adoption of Monuments and iconic places

1. Restoration of Kunds in Varanasi:

Your Company has undertaken a flagship initiative for restoration and beautification offour ancient Kunds of Varanasi. Work is in advance stage of progress in three Kunds havinghistorical importance i.e Durga Kund Lakshmi Kund and Lat Bhairav Kund. An amount of Rs.114.6 million was allocated towards implementation of this project. The project is beingundertaken through M/s National Buildings Construction Corporation Ltd. with activesupport from Nagar Nigam Varanasi. The renovation and beautification of Kunds are nearcompletion.

ii. Cleanliness drive at Tirumala Tirupati Devasthanams (TTD) Tirupati:

The Company's Board has approved an amount of Rs. 149.5 million towards undertakingvarious cleanliness initiatives at Tirumala which includes setting up of solid wastemanagement plant laying pipeline for utilization of recycled water deployment ofeco-friendly vehicle and equipment for waste disposal & cleaning etc.

iii. Beautification of Park near Jantar Mantar:

This is a proactive CSR initiative of your Company towards‘Rejuvenation/Beautification of Park adjacent to Jantar Mantar'. The project wasimplemented through Indian National Trust for Arts and Cultural Heritage (INTACH) DelhiChapter. The total cost of the project is Rs. 7.77 million.

iv. Green Rameshwram Project:

The ‘Green Rameshwram' project is another unique project of your Companyimplemented in association with Hand in Hand India in 4 wards of Rameshwaram MunicipalityTamil Nadu.

The objective of the project is to improve Solid Waste Management System throughdoor-to-door garbage collection effective waste segregation waste recycling /processing using modern technologies like GPS behavioural change in households /commercial establishments / waste pickers / local bodies through various IEC activitiesand sustainable financial model through user charges. Your Company has extended financialsupport of Rs. 6.72 million for two years.

(d) Ensuring Environmental Sustainability and Ecological Balance i. Eastern Swamp DeerConservation project:

Your Company implemented the project for conservation of Eastern Swamp Deer inKaziranga in partnership with Wild Life Trust of India and Department of Environment &Forest Govt. of Assam. Currently the project is in the third phase of implementation.After the initial research work undertaken in the first phase to understand the habitatand different traits of Eastern Swamp deer 19 Swamp Deers were translocate to Manas

National Park from Kaziranganga National Park in the second phase. In Phase III another17 eastern deer swamp deer were trans-located from Kaziranga National Park in the month ofFeb 2017 to Manas National Park creating an alternate breeding ground for the EasternSwamp Deer other than Kaziranga National Park. An amount of Rs. 22.65 million has beensanctioned towards implementing the three phases of this project.

ii. Statue of Unity at Gujarat:

The project aims at building 182 meters (392 feet) tall the World Largest Statue ofSardar Vallabhbhai Patel at the Sadhu Bet Island approximately 3.5 kms south of SardarSarovar Dam at Kevadia in the Narmada district of Gujarat. The monument will havedevelopment oriented Initiatives like Development of banks of River Narmada up to BharuchClean Technology Research Park & Agriculture Training Centers Schools colleges anduniversities for tribal development Education Research Centre and Knowledge City etc. Theproject activities will boost tourism and facilitate development in the surrounding tribalareas. Your Company has supported ‘Sardar Vallabhbhai Patel Rashtriya Ekta Trust'with financial support of Rs. 500 million towards this project.

iii. Pradhan Mantri Ujjwala Yojana (PMUY):

This project is being implemented as per the directives of Ministry of Petroleum &Natural Gas (MoPNG) wherein your company has contributed 20% of its CSR budget forproviding new LPG connection to BPL families free of cost. This project aims atenvironment sustainability and social upliftment by providing smokeless clean fuel inrural/underserved areas so that standard of life in rural areas improves and dependency onfire wood reduces in these areas of the country. In the year 2016-17 your Company hascontributed Rs. 1071.3 million towards this initiative which has been implemented byIOCL.

iv. Ringal Plantation in Upper Himalayas:

Your Company being responsible organization for protection of environment has alwaysgiven great importance to tree plantation not only at its operational work areas but alsoin the areas outside its work center with emphasis on survival of planted saplings. YourCompany undertook an initiative for tree plantation in Uttarakhand on a proposal submittedby Uttaranchal Bamboo and Fiber Development Board (UBFDB) an autonomous organizationunder the Forest Department Govt. of Uttarakhand. This plantation drive had carbonsequestering potential water recharge and soil conservation capacity. It has providedlivelihood to rural community of Uttaranchal living at 5000 – 6000 feet above sealevel. Till 31.03.2017 plantation is done in 430 hectares resulting in 1.97 million tonnesof CO2 fixation/annum.

v. Harit Moksha:

Green Cremation System: This is a unique CSR initiative of your company undertaken withMokshda Paryavaran Evam Van Suraksha Samiti (MPEVSS) to reduce wood consumption duringtraditional cremations through Mokshda Green Cremation Systems (MGCS). The ongoing projectcommenced in 2010 includes installing 30 units of green cremation system in 8 cities of 7different states with a budget of Rs. 91.9 million. The project was successfully completedand helped in saving approximately 13700 tonnes of wood & reduced 26500 tonnes ofGHG emissions annually till date. Considering the impact of this project 4 new units hasbeen approved in FY 2016-17 for installation of one unit at Pilhibit and 3 unit at Delhiat a cost of Rs. 13.8 million.

vi. Solar Lights:

More than 4900 numbers of Solar Street Lights have been installed in the states ofAndhra Pradesh Rajasthan Gujarat Punjab Rajasthan Tamil Nadu Telangana UttarPradesh Uttrakhand and Jharkhand availing services of MNRE Channel partners empanelledunder rate contract at a total financial implication of Rs. 98.2 million.

e. Swachh Bharat Abhiyan i. Information Education Communication program:

Your Company is the only company to initiate Information Education Communication(IEC) activities in 5592 school across India. After the successfully completing theconstruction of toilets under Swachh Vidhyalaya Abhiyan the Company has taken a stepforward by carrying out School Led Total Sanitation (SLTS) initiative through ArovilleFoundation in all 5592 school across India. The project aims at the behavioural andhabitual changes among the students and local public. An amount of Rs. 70 million isearmarked towards implementing this project. Operation & Maintenance of the schooltoilets through community/ parents teachers association has been established in 3003schools by 31.03.2017 and efforts are under progress in other schools.

ii. Open Defecation Free Initiative:

Your Company has undertaken an initiative for making villages near its operation areaOpen Defecation Free (ODF). In the last one year more than 3540 Individual House HoldLatrine (IHHL) had been constructed in the operational areas at cost of Rs. 64.2 million.Besides project worth Rs. 106.8 million has been approved for construction of 7749 IHHL inAssam.

iii. Swachhata Initiative of ONGC reaches Himalaya:

Your Company is one of the first company to take the Swachh Bharat initiative to theHimalaya. The project is implemented in partnership with Indian Mountaineering Foundation(IMF) through which tons of garbage's are brought down from the high altitude mountainranges of Uttarakhand. Specialized trained mountaineers are engaged to carry out thistask. In the last two years the Company had undertaken the following Swachhata initiativein different mountain ranges of the Himalayas with IMF at a cost of Rs. 5.22 million.

( Rs. in Million)

Duration Mountain Ranges covered Project cost ( Rs. )
Aug –Sept 2015 Peak Stok Kangri in Ladakh Shigri Glacier Region Spiti Valley Tapovan Gangotri Region Pindari Area in Uttarakhand Himalaya 1.82
May 2016 and Oct 2016 Gaumukh Tapovan Nandanvan and Gangotri 1.44
Jan-Feb 2017 Chanshal Valley Dhauladhar Range Yamunotri Anini / Mechuka (Arunachal Pradesh) 1.96

iv. Community Toilets at Dharavi:

To address the sanitation problem in the slums of Dharavi (Mumbai) your Company hasimplemented a project for construction of five community toilets at a cost of Rs. 7.72million. This project is being implemented through Sulabh International Social Serviceorganization.

v. Mobile Water ATM:

This project is for provision of clean drinking water for the local population andtourists of Lucknow through Mobile Water ATM. The project has a dual benefit. First theproject has helped in provision of clean and safe drinking water for the local populationand tourists in Lucknow. Secondly the project has helped 7 Person with Disability (PwD)earn livelihood by operating these Mobile Water ATM. All seven mobile water

ATM's are operated by PwD who collect the water from a centralized RO plant and sellthem to on-the-go commuters in various location of Lucknow at a very nominal cost. Theproject is undertaken in association with Margdarshak at a cost of Rs. 1.97 million.Decentrik Technologies (DT) who has developed this innovative Water ATM technology is thetechnical service provider of the project.

vi. Deep Water Tube Wells:

The project for installation of six deep water tube well through National ConsumerCooperative Federation in six different locality of Kamrup district of Assam in underimplementation. The locations has been identified in consultation with districtadministration where there is acute problem of clean drinking water.

vii. Hand Pumps:

More than 400 hand-pumps are installed across different location of the country. Theproject locations are identified based on need where there is scarcity of drinking water.An amount of Rs. 23.6 million has been earmarked for installation of these hand pumps.

f. CSR initiatives exclusively for benefit of SC-ST and tribal population:

Efforts have always been made by your company towards identification and implementationof CSR projects meant exclusively for the benefit of SC-ST in the country. Implementationof such projects has never been restricted to operational areas of the Company alone.Project worth Rs. 152.9 million are implemented during the year 2016-17 for the same.Besides as per the bilateral understanding with AISCSTEWA an amount of Rs. 155 Millionis allocated towards 1000 merit scholarship for a period of 4 years commencing from2016-17 exclusively for the benefit of students belonging to ST/SC. Some of the othermajor CSR initiative for the benefit of SC/ST and Tribal community are:

i. Development of Model Village at Korbongpara:

In Tripura your company in partnership with Tripura Engineering Society (TES) hascontributed towards development of Model Village at Karbongpara under Champabari ADCvillage of Jirania Block West Tripura District with a total project cost of Rs. 6.6million. The Karbong community of Tripura with 120 inhabitants and low literacy rate is onthe verge of extinction. They are deprived of basic needs and belong to the weakestsection of society. Under this project it is planned to develop the said village into aself-sustained model village which includes developing the infrastructural facilities likecommunity centre sanitation drinking water facilities irrigation market shed internalroad connectivity education healthcare income generation to support the livelihoods.

ii. Multi-Purpose Skill Development and Community Centre at Natun Jelom:

Your Company under Sansad Adarsh Gram Yojna supported for construction of MultipurposeSkill development and community center at Natun Jelom Jonai in Dhemaji district of Assamat a cost of Rs. 4 million. More than 98% of Natun Jelom population belongs to STcommunity.

iii. Infrastructure development of Rongagora Junior College:

This project was implemented under ST/SC component plan for construction of RongagoraJunior college at Golaghat at a cost of Rs. 2.69 million.

iv. Construction of Community Hall and Schools:

Your Company has supported construction of three community center one school building12 unit of school toilets and 8 teachers quarter at West Siang District of ArunachalPradesh at a cost of Rs. 10.4 million. The majority of the population of these villagesbelongs to ST community.

v. Infrastructure development of school and hostel:

Your Company in partnership with Kalyan Ashram Tripura has undertaken an initiative forconstruction of Ratnamani Sishu Siksha Niketan School and hostel building atKanchancherra Tripura with an estimated cost of Rs. 3.5 million which will provide hostelfacilities to the tribal students and access to healthy educational environment.

g. Promotion of Sports: i. Chau Lung Syukapha Indoor Stadium.

The Chau Lung Syukapha Indoor Stadium constructed in Sivasagar with funding from yourcompany is one of the major sports infrastructure development project undertaken underCSR. The stadium is constructed at a cost of Rs. 15.2 million which is going to help thebudding young sportsmen of Sivasagar and other district of Assam. ii. Training of IndianWrestlers: Your Company has contributed Rs. 11.5 million to Wrestling Federation of Indiatowards development of wrestling in India.

28. Accolades

Consistent with the trend in preceding years your Company its various operating unitsand its senior management have been recipients of various awards and recognitions. Detailsof such accolades are placed at Annexure- ‘D'.

29. Directors' Responsibility Statement

Pursuant to the requirement under Section 134(3) (c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that: (i) In thepreparation of the annual accounts the applicable accounting standards have been followedand there are no material departures from the same; (ii) The Directors have selected suchaccounting policies and applied them consistently and made judgements and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as on 31st March 2017 and of the profit of the Company for the year ended onthat date; (iii) The Directors have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities; (iv) The Directors have prepared the annual accounts of theCompany on a ‘going concern' basis. (v) The Directors have laid down internalfinancial controls which are being followed by the company and that such internalfinancial controls are adequate and are operating effectively.

(vi) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating.

30. Corporate Governance

Your Company has taken structured initiatives towards Corporate Governance and itspractices are valued by various stakeholders. The practices emanate from the need toposition multi-layered checks and balances at various levels to ensure transparency of itsoperations in the decision making process.

In terms of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015a report on Corporate Governance for the year ended March 31 2017along with a certificatefrom the Company's Statutory Auditors confirming compliance of conditions forms part ofthis report. Your Company has implemented the mandatory Guidelines of Department of PublicEnterprises (DPE) Government of India on Corporate Governance to the maximum extentpossible. Your Company has formulated and uploaded the following policies/codes on itswebsite in line with the Companies Act 2013 and Listing Regulations: (a) Code of Conductfor Board Members and Senior Management Personnel (b) Related Party Transactions 3 Policy& Procedures 2014 (c) Material Subsidiary Policy (d) The Code of Internal Proceduresand Conduct for prohibition of insider trading in dealing with the securities of ONGC

(e) Corporate Policy on Materiality for Disclosure of events to the Stock Exchanges (f)Corporate Policy on Preservation of Documents and their archiving (g) Policy for Trainingof Directors (h) Dividend Distribution Policy In line with global practices your Companyhas made available all information required by investors on the Company's corporatewebsite www.ongcindia.com

In line with the SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 your Company has also implemented other measures of Corporate Governance(mandatory/voluntary) which have been brought out in the Corporate Governance Report andare as follows:

i. Whistle Blower Policy/ Vigil Mechanism: A total of 40 Protected Disclosures till31.03.2017 have been processed through the Whistle Blower mechanism of your Company whichwas implemented from December 01 2009. The policy ensures that a genuine Whistle Bloweris granted due protection from any victimization. The Policy is applicable to allemployees of the Company and has been uploaded on the intranet of the Company. Inaddition the Company has a full-fledged Vigilance Department which is headed by ChiefVigilance Officer who holds the rank of a Functional Director of the Company. With a viewto maintain his independence the CVO reports to the Chief Vigilance Commissioner of theGovernment of India.

ii. Enterprise-wide Risk Management (ERM) Framework: In line with the requirementsof SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 yourCompany has developed and rolled out a comprehensive Enterprise-wide Risk Management (ERM)Policy throughout the organization. The Audit & Ethics Committee periodically reviewsthe risk assessment and minimization process in ONGC.

The Risk Management policy of your Company is as follows:

"ONGC shall identify the possible risks associated with its business and commitsitself to put in place a Risk Management Framework to address the risk involved on anongoing basis to ensure achievement of the business objective without any interruptions.

The Board of Directors have constituted a Board Level Risk Management Committee interms of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015. Tilldate three meetings of the Committee have been held.

ONGC shall optimize the risks involved by managing their exposure and bringing them inline with the acceptable risk appetite of the Company"

iii. Meeting of Independent Directors: Four Meetings of Independent Directors wereheld during FY'17.

iv. Certificate of Independence by Independent Directors: The Independent Directorshave submitted declaration that they meet the criteria of Independence as per section149(6) of the Companies Act 2013.

31. Statutory Disclosures

Your Directors have made necessary disclosures as required under various provisions ofthe Act and SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015.

Extract of Annual Return

As per requirement of section 92(3) of the Companies Act 2013 the extract of theannual return in form MGT-9 is placed at Annexure-E.

Particulars of Employees

Your Company being a Government Company the provisions of section 197(12) of theCompanies Act 2013 and relevant Rules do not apply in view of the Gazette notificationdated 05.06.15 issued by Government of India Ministry of Corporate Affairs. The terms andconditions of the appointment of Functional Directors are subject to the applicableguidelines issued by the Dept. of Public Enterprise Government of India. The salary andterms and conditions of the appointment of Company Secretary a KMP of ONGC is in linewith the parameters prescribed by the Government of India.

32. Energy Conservation

The information required under section 134(m) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 is annexed as

Annexure – ‘F'.

33. Audit And Ethics Committee

In compliance with section 177(8) of the Companies Act 2013 the details regardingAudit & Ethics Committee is provided under Corporate Governance report which formspart of this Annual Report. There has been no instance where the recommendations of theAudit & Ethics Committee have not been accepted by the Board of Directors.

34. Auditors

The Statutory auditors of your company are appointed by the Comptroller & AuditorGeneral of India (C&AG) M/s. Dass Gupta & Associates New Delhi M/s. M K P S& Associates Mumbai M/s. Lodha & Co. Kolkata M/s. PKF Sridhar

& Santhanam LLP Chennai M/s. Khandelwal Jain & Co. Mumbai and M/s. K C Mehta& Co. Baroda Chartered Accountants were appointed as joint Statutory Auditors for thefinancial year 2016-17. The statutory auditors have been paid a total remuneration of Rs.43.41 million (previous year Rs. 26.39 million) towards audit fees certification andother services. The above fees are inclusive of applicable service tax but exclusive ofre-imbursement of reasonable travelling and out of pocket expenses actually incurred.

35. Auditors' Report on the Accounts

The comments of Comptroller & Auditor General of India (C&AG) form part of thisReport and is attached as Annexure ‘G'. There is no qualification in theAuditors Report on the Financial Statements of the Company.

36. Secretarial Audit

In terms of section 204(1) of the Companies Act 2013 the Company has engaged M/s P PAgrawal

& Co. Company Secretaries in whole-time practice as Secretarial Auditors forconducting Secretarial Compliance Audit for the financial year ended 31st March 2017. Thereport has been annexed and forms part of the Annual report.

37. Cost Audit

Six firms of Cost Accountants were appointed as Cost Auditors for auditing the costaccounts of your Company for the year ended 31.03.2017 by the Board of Directors. The CostAudit Report for the year 2015-16 has been filed under XBRL mode on 23.09.2016 which waswell within the due date of filing.

38. Directors

Policy On Directors' Appointment Etc.

Your Company being a Government Company the provisions of section 134(3) (e) of theCompanies Act 2013 do not apply in view of the Gazette notification dated 05.06.15 issuedby Government of India Ministry of Corporate Affairs.

Performance Evaluation

The provisions of Section 134(3)(p) of the Companies Act 2013 relating to evaluationof Board/ Directors do not apply to your Company since necessary exemptions are providedto all government companies. Further similar exemption is awaited from SEBI under theprovisions of Listing Regulations – 2015.

Appointments / Cessation Etc

Since the 23rd Annual General Meeting held on 08.09.2016 Shri Deepak Sethi Shri VivekMallya Shri Sumit Bose were inducted as Independent Directors of the Company with effectfrom 31.01.2017 and Dr. Santrupt B. Misra was inducted as Independent Director of theCompany with effect from 06.02.2017.

Shri A. P. Sawhney Additional Secretary MoP&NG Government Nominee Directorceased to be Director on the Board of the Company w.e.f. 23.06.2017. The Board places onrecord its appreciation for his contribution during his tenure. Shri Rajiv BansalAdditional Secretary MoP&NG joined the Board as Government Nominee Director on10.08.2017 in place of Shri A. P. Sawhney.

The strength of the Board of Directors of the Company is 16 comprising 7 ExecutiveDirectors (Functional Directors including CMD) and 9 Non-Executive Directors including twoGovernment Nominees and seven Independent Directors. Ministry of Petroleum & NaturalGas has been requested to appoint requisite number of independent Directors including awoman Director to comply with the provisions of Companies Act 2013 and ListingRegulations.

A total of 13 meetings of the Board of Directors of ONGC were held during FY'17.

Details of other Key Managerial Personnel as per Rule 8 (5) (iii) of the Companies(Accounts) Rules 2014:

Shri M. E. V. Selvamm took over as Company Secretary on 01.06.2017 in place of Shri V.N. Murthy who superannuated on 31.05.2017.

39. Acknowledgement

Your Directors are highly grateful for all the help guidance and support received fromthe Ministry of Petroleum and Natural Gas Ministry of Finance DPE MCA MEA and otheragencies in Central and State Governments. Your Directors acknowledge the constructivesuggestions received from Statutory Auditors and Comptroller & Auditor General ofIndia and are grateful for their continued support and cooperation. Your Directors thankall share-owners business partners and all members of the ONGC Family for their faithtrust and confidence reposed in the Board. Your Directors wish to place on record theirsincere appreciation for the unstinting efforts and dedicated contributions put in by theONGCians at all levels to ensure that the Company continues to grow and excel.

On behalf of the Board of Directors
Place: New Delhi (Dinesh K Sarraf)
Date: 21.08.2017 Chairman & Managing Director

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