Annual Report 2008-2009 - Bharat Petroleum

SCHEDULE ‘X’ – (CONSOLIDATED) (CONTD.)
B. NOTES FORMING PART OF ACCOUNTS
1. In respect of sharing of under-recoveries on sensitive petroleum products viz. MS, HSD, LPG (Domestic) and
SKO (PDS), as advised by the Ministry of Petroleum & Natural Gas, a part of the under-recovery suffered by
BPCL during the year was compensated by ONGC and GAIL by offering discount on price of Crude Oil, SKO and
LPG purchased from them. Further, the under-recoveries on import losses in respect of petrol and diesel to the
extent of Rs. 237.86 crores (previous year Rs. Nil) was also compensated by way of discount on price of crude
oil purchased from ONGC. Accordingly, BPCL has accounted the discount as follows:
a) Rs. 6,709.94 crores (previous year Rs. 5,243.03 crores) discount on crude oil purchased from ONGC has
been adjusted against raw material cost; and
b) Rs. 846.50 crores (previous year Rs.732.09 crores) discounts on SKO and LPG purchased from
ONGC/GAIL has been adjusted against “Purchase of product for resale”.
2. In lieu of the under-recoveries on sale of sensitive petroleum products during 2008-09, based on the approval
of Government of India, BPCL has accounted for Oil Marketing Companies Government of India Special Bonds
amounting to Rs. 16,216.38 crores (previous year Rs. 8,589.50 crores) as income. This compensation
has been received in the form of Oil Marketing Companies Government of India Special Bonds amounting to
Rs. 14,151.10 crores (previous year Rs. 4,618.05 crores) and accounted for as investments. The balance
amount of Rs. 2,065.28 crores (previous year Rs. 3,971.45 crores) which is receivable as on 31st March, 2009
from Government of India is shown as Other Current Asset in Schedule J.
3. BPCL has allotted redeemable non-convertible 10.35% Debentures of face value of Rs. 1,000 crores on
12th December 2008. These are secured by English mortgage, on first pari passu charge basis, by way of a
Registered Debenture Trust Deed over the fixed assets of the Company, viz., a Flat at Mumbai and the Plant
and Machinery in respect of Hydrocracker Unit and Aromatic Recovery Unit of the Mumbai Refinery. In order
to maintain the security cover of 1.25 times, all future immovable properties including Land, Plant & Machinery
and Fixtures & Fittings shall be a part of the Premises and Plant & Machinery which are mortgaged. These
Debentures are redeemable at par on 11th June, 2010.
4. As per the scheme of Amalgamation of the erstwhile Kochi Refineries Limited with BPCL approved by the
Government of India, 3,37,28,738 equity shares of BPCL were allotted (in lieu of the shares held by BPCL in the
erstwhile Kochi Refineries Limited) to a trust for the benefit of BPCL in the financial year 2006-07. Accordingly
the cost of the original investment of Rs. 659.10 crores is reflected as ‘Others’ in Schedule ‘J ’ – Other Current
Assets. The income distributed by the trust during the year 2008-09 amounting to Rs. 13.49 crores (previous
year Rs. 33.73 crores) has been included in ‘Other income’ in Schedule ‘O’ – Miscellaneous Income.
One shareholder of erstwhile KRL has challenged the amalgamation before Delhi High Court, which is pending
adjudication.
5. Provision for taxation in the Profit and Loss Account includes Rs. 1.68 crores (previous year Rs. 1.11 crores)
towards wealth tax.
6. BPCL and Numaligarh Refinery Limited have numerous transactions with other oil companies, which are reconciled
on an ongoing basis and are subject to confirmation. Adjustments, if any, arising therefrom are not likely to be
material.
7. The impact of pay revision due to Management staff of BPCL w.e.f. 1st January, 2007 based on the guidelines
given by Department of Public Enterprises is estimated at Rs. 243 crores. After considering Rs. 129 crores already
provided in 2007-08, the balance amount of Rs. 114 crores has been provided in 2008-09. Further, this estimated
increase in pay along with the increase in gratuity limit at Rs. 10 lakhs per employee have been considered for
making provision at the year end for leave encashment and gratuity benefits based on actuarial valuations.
NRL has made provision towards revision of Pay Scales amounting to Rs. 17.53 crores (previous year Rs. 4.57
crores) is made in accordance with the Pay Revision Committee’s recommendation as per directives received
from Department of Public Enterprises.
In addition to above there has been revision in certain allowances and the amount of Rs. 0.94 crores has been
provided for in the books of account.
8. Provision has not been made in the accounts towards revision in salary of: i) workmen at Mumbai Refinery
of BPCL w.e.f. 1st January, 2007; ii) workmen at Kochi Refinery of BPCL w.e.f. 1st August, 2008; and
iii) workmen at Marketing division of BPCL w.e.f. 1st June, 2008 as the additional liability arising from such
revision is unascertainable since no reliable estimate of this revision can be made as of date.
142 Bharat Petroleum Corporation Limited