Cairn India Ltd Annual Report 2010-11Document Transcript
Energy for India DISCOVER 2010-11 DELIVER TRANSFORM Annual Report & Financial Statements
02 Management Speak 08 Management Discussion & Analysis 54 Corporate Governance 76 Audited Financial Statements 12 8 54 76Management Management Corporate Audited FinancialSpeak Discussion & Analysis Governance StatementsBoard of Directors 2 Introduction 10 Report on Corporate 56 Auditors’ Report 78Chairman’s Letter 4 The Rajasthan Project 20 Governance Balance Sheet 81Managing Director and 6 Connecting Rajasthan to 22 Additional Shareholder 63 Proﬁt and Loss Account 82CEO’s Letter the Market - Mangala Information Statement of Cash Flows 83 Development Pipeline Certiﬁcate of the 67 Schedules to the Financial 85 Pipeline Laying Process 24 CEO & CFO Statements Rajasthan Sales 28 Auditor’s Certiﬁcate 68 Balance Sheet Abstract 106 Finance Overview 29 Directors’ Report and Company’s General 69 Business Proﬁle Other Producing Assets 30 Using Technology to 32 Auditor’s Report on 107 Energise India Consolidated Financial Statements Exploring to Discover and 34 Add Value Consolidated Balance Sheet 108 Human Resources - Consolidated Proﬁt and 109 36 Nurturing our Strength Loss Account HSEA 38 Consolidated Statement of 110 Cash Flows Internal Controls and their 44 Adequacy Schedules to Consolidated 112 Financial Statements Abridged Financials 45 Glossary 139 Business Risks 46 Milestones - FY2011 48 Corporate Social 50 Responsibilty Contents Annual Report 2011This section provides details This section provides a brief This section provides the This section contains theon the Board of Directors, overview of the Company’s disclosures pursuant to audited ﬁnancial statementsand message from the operations; developments Clause 49 of the Listing and report for Cairn IndiaChairman and the Managing in various areas of the Agreement Limited – standalone andDirector & CEO business; its achievements consolidated and future plans
2 CAIRN INDIA ANNUAL REPORT 2010-11Board of DirectorsSIR BILL GAMMELL Business School in Pennsylvania. Mr Dhir Mr Chandra was the Chairman of theChairman and Non-Executive Director started his career as an oil and gas reservoir Committee on Corporate Governance, engineer before moving into investment India’s Ambassador to the USA, Advisor toSir Bill Gammell, 58, holds a BA in banking. He has worked at SBC Warburg, the Prime Minister, Governor of Rajasthan,Economics and Accountancy from Stirling Morgan Stanley and Merrill Lynch. Before Cabinet Secretary to the GovernmentUniversity and was awarded a knighthood joining Cairn India, he was the Managing of India, and Chief Secretary to thein 2006 for services to the industry in Director and Co-Head of Energy and Power Government of Rajasthan. A reputedScotland. He has more than 30 years of Investment Banking at Merrill Lynch. administrator and diplomat, Mr Chandraexperience in the international oil and gas serves as an independent director on theindustry. He founded Cairn Energy PLC and MR AMAN MEHTA boards of a number of companies.was appointed Chief Executive on its initial Non-Executive and Independent Directorlisting in 1988. He is the Chairman and Non- DR OMKAR GOSWAMIExecutive Director of Cairn India Limited Mr Aman Mehta, 64, is an economics Non-Executive and Independent Directorand is a member of the Asia Task Force and graduate from the Delhi University. He wasthe UK India Business Council. Sir Gammell, the Chief Executive Ofﬁcer of HSBC Asia Dr Omkar Goswami, 54, holds a MAwho is an ex-Scotland rugby internationalist, Paciﬁc until 2003. Mr Mehta is currently in Economics from the Delhi School ofis also Chairman of Winning Scotland an independent Non-Executive Director of Economics, and a D.Phil. in EconomicFoundation and a Director of Glasgow 2014 several public companies in India as well as History from the Oxford University. He hasLimited as well as a member of the British overseas. He has also served as a member taught in several academic institutions inOlympic Advisory Board. of the Advisory Council of INSEAD, France, India and abroad; edited one of India’s best International Advisory Boards of Prudential known business magazines; was the ChiefMR RAHUL DHIR Inc., USA and CapitaLand Ltd. of Singapore. Economist of the Confederation of IndianManaging Director and CEO Besides this, he is a member of Governing Industry; and is the Executive Chairman of Body of Indian School of Business, CERG Advisory Private Limited, a consultingMr Rahul Dhir, 45, joined Cairn India as Hyderabad. and advisory ﬁrm. Dr Goswami serves asan Additional Director and was appointed an independent director on the board of aas the CEO and Managing Director on 22 MR NARESH CHANDRA number of companies, and has authoredAugust 2006. He has completed his degree Non-Executive and Independent Director various books and research papers onin Bachelor of Technology from the Indian economic history, industrial economics,Institute of Technology, Delhi. He went on Mr Naresh Chandra, 76, holds an MSc in public sector, bankruptcy laws andto complete his M.Sc from the University of Mathematics from Allahabad University procedures, corporate governance, publicTexas at Austin and MBA from the Wharton and is a retired IAS ofﬁcer. Previously, ﬁnance, tax enforcement and legal reforms.
Management Speak 3 From Left to right: Sir Bill Gammell, Mr Rahul Dhir, Mr Aman Mehta, Mr Naresh Chandra, Dr Omkar Goswami, Mr Indrajit Banerjee, Ms Jann Brown, Mr Edward T StoryMR INDRAJIT BANERJEE Board for seven years. She is a memberExecutive Director and CFO of the Institute of Chartered Accountants of Scotland and the Chartered InstituteMr Indrajit Banerjee, 55,was appointed of Taxation. She is also the Senior Non-as an Additional Director on 26 February Executive Director of Hansen Transmissions2007 and as the Executive Director and International NV, a Belgian engineeringCFO on 1 March 2007. He graduated from company, which is listed on the Londonthe University of Calcutta with a Bachelor’s Stock Exchange.Degree in Commerce. An associate memberof the Institute of Chartered Accountants of MR EDWARD T STORYIndia, Mr Banerjee started his career at Non-Executive and Independent DirectorPricewaterhouseCoopers in Calcutta in1979. He has held several senior positions Mr Edward T Story, 67, is a science graduatethroughout his career, including 17 years at from the Trinity University, San Antonio,the Indian Aluminium Company, formerly Texas and holds an MBA from the Universitypart of the Alcan Group, and at Lucent of Texas. He has been conferred an honoraryTechnologies (India). Before joining Cairn doctorate degree by the Institute of FinanceIndia, he was President-Finance and and Economics of Mongolia. He is thePlanning at Lupin Limited. Chairman of the North America-Mongolia Business Council. Mr Story has more thanMS JANN BROWN 40 years of experience in the internationalNon-Executive Director oil and gas industry and is the founder, President and Chief Executive Ofﬁcer ofMs Jann Brown, 56, was appointed Finance the London Stock Exchange listed SOCODirector of Cairn Energy PLC in 2006 and International plc.is also a Non-Executive Director of CairnIndia Limited. She holds an MA from theEdinburgh University and joined CairnEnergy PLC in 1998 after a career in theaccountancy profession, mainly with KPMG.Prior to her appointment as Finance Director, Note: Mr Malcolm Shaw Thoms (Deputy Chairman) and Mr Rick Bott (Executive Director andshe served on the Group Management Chief Operating Ofﬁcer) stepped down from the Board of Directors in June 2011.
4 CAIRN INDIA ANNUAL REPORT 2010-11 Chairman’s Letter Cairn India’s experience Dear Shareholder, has shown that it is possible to build world- Cairn India is now responsible for the delivery of signiﬁcant domestic class developments crude production from its operated assets across the country. using the latest and most This has brought signiﬁcant beneﬁts to the nation, to the states of innovative technologies. Rajasthan and Gujarat, our joint venture partner, Oil and Natural Gas It has also demonstrated your Company’s ability Corporation Limited, and to the Company. With Cairn India now to operate large scale accounting for more than a ﬁfth of India’s total crude oil output, it has projects in a safe and contributed signiﬁcantly to savings in foreign exchange on account of efﬁcient manner crude oil imports. FY2011 has been a year of delivery for your a record turnover of INR 102.8 billion, or Company. Production from the Rajasthan USD 2.26 billion in FY2011; and proﬁt after block reached 125,000 barrels of oil per day tax of INR 63.3 billion, which translates to with the crude now being transported to a USD 1.39 billion. number of Indian reﬁneries by the world’s longest continuously heated and insulated The total Rajasthan resource base supports a pipeline. This pipeline infrastructure is not vision for a potential production of 240,000 only a global engineering achievement, but bopd, subject to further investment and also a strategically important asset because approvals from the Government of India and all the remaining ﬁelds and discoveries in the joint venture partner. Rajasthan can be quickly connected to the market. I would like to recognise all the hard work and commitment the management, The successful start-up of piped oil employees and contractor teams working production from the Mangala Processing for Cairn India have put in. At the peak of Terminal has provided a tremendous construction, more than 16,000 people platform for future growth, and contributed were involved in building the Mangala
Management Speak 5 Vision to develop a world class project in RajasthanProcessing Terminal, the pipeline and related Rajasthan resource base in the cominginfrastructure — making it, without doubt, years.the biggest onshore oil and gas productionproject in India. The successful completion In the summer of 2010, Cairn Energy PLCof Phase-I of the project stands testament to was approached by Vedanta Resourcesthe skills and ingenuity that the Cairn India Plc with a proposal to purchase theteam has displayed in creating long lasting majority of Cairn’s Energy PLC’s equity invalue to you as a shareholder and to other your Company. The proposed transactionstakeholders in India. was agreed and announced by the two companies in August 2010, and approvedCairn India’s experience has shown that it is by the shareholders of Cairn Energy PLCpossible to build world-class developments and Vedanta Resources Plc in Q4 CY2010.using the latest and most innovative The transaction is currently awaitingtechnologies. The Rajasthan development approval from the Government of India.has demonstrated your Company’s abilityto operate large scale projects in a safe and Irrespective of this transaction, I lookefﬁcient manner and at a low cost. forward to Cairn India producing more hydrocarbons for the nation, andThe support of the Government of India, the generating more income and proﬁts forstate governments, our joint venture partner its shareholders.Oil and Natural Gas Corporation Limited,local communities and key contractors hasbeen vital to the Company’s exciting journey.I would personally like to thank all those whohave played their part in developing this key Sir Bill Gammellproject for India. ChairmanWith a strong and sustainable cash ﬂow, Date: 25 June 2011Cairn India is well positioned for futuregrowth. It is now focused on maximisingvalue from the phased development of the
Corporate Governance 69Directors’ ReportThe Members,Your Directors have pleasure in presenting the Fifth Annual Reporton the business and operations of the Company and the AuditedFinancial accounts for the year ended 31 March, 2011.FINANCIAL HIGHLIGHTS In INR million Standalone Consolidated For the ﬁnancial year ended For the ﬁnancial year ended 31 March, 2011 31 March, 2010 31 March, 2011 31 March, 2010Total Income 951 1,634 104,067 20,307Total Expenditure 3,077 2,367 35,167 10,143Proﬁt/(loss) before tax (2,126) (734) 68,900 10,163Taxes - (44) 5,556 (348)Proﬁt/(loss) after tax (2,126) (689) 63,344 10,511The consolidated statements provide the CONSOLIDATED FINANCIAL employees and Directors of the Companyresults of Cairn India Limited together with STATEMENTS and its subsidiaries. The Company alsothose of its subsidiaries for the ﬁnancial has cash awards option plan (phantomyear ended 31 March, 2011. Your Company is also presenting the stock options) for expatriate employees of audited consolidated ﬁnancial statements the Company and its subsidiaries.DIVIDEND prepared in accordance with the Accounting Standard 21 issued by the During the year, stock/cash options haveIn view of inadequacy of proﬁts in Cairn Institute of Chartered Accountants of been granted to the executive DirectorsIndia Limited, your Directors regret their India. Information in aggregate for each and employees of the Company or of itsinability to recommend any dividend. subsidiary in respect of capital reserves, subsidiaries. On exercise of the options so total assets, liabilities, investments, granted, the paid-up equity share capitalCHANGES IN CAPITAL STRUCTURE turnover, etc. is disclosed separately and of the Company will increase in terms of forms part of the annual report. the Stock Option Plans mentioned above.During the ﬁnancial year under review, The details of stock options granted by4,942,969 equity shares of INR 10/- each OPERATIONS the Company are disclosed in compliancewere allotted on exercise of Employee with Clause 12 of the Securities andStock Options by the employees of A detailed review of operations has been Exchange Board of India (Employee Stockthe Company or of its subsidiaries. included in the Management Discussion Option Scheme and Employee StockAccordingly, the issued and paid up capital and Analysis Report, which forms a part of Purchase Scheme) Guidelines, 1999 andof the Company has increased to INR this Annual Report. set out in Annexure I to this Report.19,019,171,010 divided into 1,901,917,101equity shares of INR 10/- each. EMPLOYEE STOCK OPTION During the period under review, SCHEMES 4,942,969 equity shares of INR 10/- eachSubsequent to the close of the ﬁnancial were allotted pursuant to the exercise ofyear, the Company allotted 213,131 Your Company has established share stock options.equity shares of INR 10/- each on exercise incentive schemes viz., Cairn India Seniorof Stock Options by the employees. Management Plan (CISMP), Cairn India SUBSIDIARY COMPANIESAccordingly, the issued and paid up capital Performance Option Plan (CIPOP) andof the Company has increased to INR Cairn India Employee Stock Option Plan As on 31 March, 2011, the Company19,021,302,320 divided into 1,902,130,232 (CIESOP) pursuant to which options to had 30 subsidiaries including indirectEquity shares of INR 10/- each. acquire shares have been granted to select subsidiaries. All these companies are
70 CAIRN INDIA ANNUAL REPORT 2010-11 beneﬁcially owned 100% by Cairn India April, 2010 and June, 2010 respectively. Limited. During the year under review, The Scheme is now subject to receipt Cairn Energy Developments Pte. Ltd., of certain contractual and regulatory subsidiary Company in Singapore was approvals. The Scheme when approved is voluntarily dissolved w.e.f. 8 March, 2011. proposed to be effective from 1 January, 2010. The subsidiaries have their own Boards of Directors having the rights and obligations OPEN OFFER TO SHAREHOLDERS to manage such companies in the best BY VEDANTA RESOUCES PLC interest of such Companies. The Company has its representatives on the board of During the year under review, Cairn Energy subsidiary Companies and monitors the PLC and Cairn UK Holdings Limited, performance of such Companies regularly. promoters of the Company, agreed to sell a substantial part of their equity stake in The Ministry of Corporate Affairs, the Company to Vedanta Resources PLC vide its circular nos. 2/2011 & 3/2011 and persons acting in concert (‘Vedanta’) dated 8 February, 2011 & 21 February, by way of a share purchase deed dated 15 2011 respectively had granted general August, 2010. In terms of the provisions exemption to holding companies from of SEBI (Substantial Acquisition of Shares attaching the ﬁnancial statements of its and Takeovers) Regulations, 1997, Vedanta subsidiaries to the company’s Annual issued a Public Announcement on 17 Report. In accordance with the said August, 2010 to make an open offer to circulars, the Balance Sheet, Proﬁt & the equity shareholders of the Company. Loss Account and other documents of Vedanta also ﬁled the draft Letter of Offer the subsidiary companies are not being with SEBI, which was received by them attached with the Balance Sheet of the on 31 August, 2010. After the receipt of Company. The Company will make SEBI’s nod, the offer opened on 11 April, available the Annual Accounts of the 2011 and closed on 30 April 2011. Vedanta subsidiary companies to any member of acquired 155,033,172 number of equity the Company who may be interested in shares under the open offer. Vedanta also obtaining the same. The annual accounts acquired 200,000,000 equity shares of of the subsidiary companies will also be the Company from Petronas International kept open for inspection at the Registered Corporation Ltd. Subsequent to these ofﬁce of the Company and respective acquisitions, Vedanta now holds 18.66% of subsidiary Companies. The consolidated the equity capital of the Company. ﬁnancial statements presented by the Company include the ﬁnancial results of The deal for sale of shares by Cairn Energy its subsidiary companies. PLC and Cairn UK Holdings Limited, promoters, to Vedanta is pending for SCHEME OF ARRANGEMENT regulatory approvals. In order to simplify and consolidate the DIRECTORS multi layered structure comprising foreign subsidiaries, your Company had proposed Mr. Philip Tracy ceased to be an alternate a scheme of arrangement between director with effect from 17 August, Cairn India Limited, Cairn Energy India 2010. He was again appointed as an Pty Limited, Cairn Energy India West alternate Director to Ms. Jann Brown on B.V., Cairn Energy Cambay B.V., Cairn 10 February, 2011 and ceased to be so on Energy Gujarat B.V. and their Respective 23 May 2011. shareholders and creditors (the ‘Scheme’). The members of the Company had In accordance with the Articles of approved the scheme with overwhelming Association of the Company, Mr. Naresh majority in the Court Convened meeting Chandra and Mr. Edward T Story, shall held on 18 February, 2010. retire by rotation as Directors at the ensuing Annual General Meeting and being eligible, The Hon’ble High Courts of Madras offer themselves for re- appointment. and Bombay sanctioned the Scheme in
Corporate Governance 71A brief proﬁle of the above-named Company Secretary for the same. LISTINGdirectors forms part of the CorporateGovernance report. CONSERVATION OF ENERGY, The Company has paid the annual listing TECHNOLOGY ABSORPTION AND fee for the year 2011-12 to Bombay StockCORPORATE GOVERNANCE FOREIGN EXCHANGE EARNINGS Exchange Limited and National Stock AND OUTGO Exchange Limited of India.The Corporate Governance andManagement Discussion and Analysis Information on Conservation of Energy APPRECIATIONreports form an integral part of this report Technology Absorption and Foreignand are set out as separate sections to Exchange Earnings and Outgo is given in Your Directors wish to place on recordthis annual report. The Certiﬁcate of S. Annexure II to this report. their sincere appreciation of theR. Batliboi & Co., chartered accountants, concerned efforts and dedicated servicethe statutory auditors of the Company DIRECTORS’ RESPONSIBILITY of all employees, which contributed tocertifying compliance with the conditions STATEMENT the continuous growth and consequentof corporate governance as stipulated in performance of the Company. Yourclause 49 of the listing agreement with Pursuant to Section 217(2AA) of the Directors wish to place on record theirstock exchanges is annexed with the Companies Act, 1956, the Directors gratitude for the valuable assistance andreport on corporate governance. conﬁrm that: co-operation extended to the Company by the Central Government, StateAUDITORS (i) In the preparation of the annual Governments, Joint Venture Partners, accounts, the applicable accounting Banks, Institutions, Investors andM/s. S. R. Batliboi & Co., chartered standards have been followed along with Customers.accountants, auditors of the Company, proper explanation relating to materialretire at the conclusion of the ensuing departures For and on behalf of the Board ofannual general meeting and being eligible, Directorsoffer themselves for re-appointment. The (ii) Appropriate accounting policies haveaudit committee in its meeting held on 25 been selected and applied consistently Sir William B.B. GammellMay, 2011 has also recommended the and have made judgments and estimates Chairmanre-appointment of M/s. S. R. Batliboi & Co., that are reasonable and prudent so as toas Statutory Auditors of the Company. Your give a true and fair view of the state of Place Gurgaondirectors also recommend their appointment. affairs of the Company as at 31 March Date 25 May, 2011 2011 and of the proﬁt of the CompanyFIXED DEPOSITS for the year ended 31 March 2011The Company has not invited any deposits (iii) Proper and sufﬁcient care has beenfrom the public under Section 58A of the taken for maintenance of adequateCompanies Act, 1956. accounting records in accordance with the provisions of the Companies Act, 1956 forHUMAN RESOURCES safeguarding the assets of the Company and for preventing and detecting fraudCompany’s industrial relations continued and other irregularitiesto be harmonious during the period underreview. (iv) The annual accounts have been prepared on a going concern basisPARTICULARS OF EMPLOYEES CORPORATE SOCIALParticulars of employees required to be RESPONSIBILITYfurnished under Section 217(2A) of theCompanies Act, 1956 (‘the Act’) form At Cairn, Corporate Social Responsibilitypart of this report. However, as per the (CSR) emcompasses much more thanprovisions of Section 219(1)(b)(iv) of the social outreach programs and is an integralAct, the report and accounts are being part of the way the Company conductssent to the shareholders of the Company its business. Detailed information on theexcluding the particulars of employees initiatives of the Company towards CSRunder Section 217(2A) of the Act. Any activities is provided in the Corporateshareholder interested in obtaining a copy Social Responsibility section of the Annualof the said statement may write to the Report.
72 CAIRN INDIA ANNUAL REPORT 2010-11 Annexures to the Directors’ Report ANNEXURE I Disclosure pursuant to the provisions of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,1999 Cairn India Performance Cairn India Senior Cairn India Employee Stock S. No. Particulars Option Management Plan Option Plan (2006) Plan (2006)1 Options granted during April 2010 - March 2011 Nil 584,144 3,027,4632. The Pricing Formula Rs. 33.70 per Share Rs. 10 per Share Price determined by the Remu- neration Committee but not less than the fair market value of a share on the date of grant3. Options Vested during April 2010 - March 2011 NIL 777,498 3,903,2654. Options Exercised during April 2010 - March 2011 NIL 922,045 4,020,9245. Total number of Shares arising as a result of exercise of options NIL 922,045 4,020,924 during April 2010 - March 20116. Options lapsed during April 2010 - March 2011 NIL 141,268 922,0207. Variation of terms of options None None None8. Money realized by exercise of options during April 2010 - NIL Rs. 9,220,450 Rs. 661,259,192 March 20119. Total number of options in force as on 31 March 2011 2,238,077 2,147,664 12,730,72610. Employee wise details of options granted during the year to: Indrajit Banerjee 41,036 (i) Senior Managerial Person None None Manu Kapoor 22,041 S V Nair 40,308 P Elango 35,451 Santosh Chandra 30,231 (ii) Any other employee who receives a grant in any one year None Venkatesan T K 30,778 None of option amounting to 5% or more of options granted during Ajay Gupta 35,944 the year iii) Identiﬁed employees who were granted options during None None None any 1 year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants & conversions) of the Company at the time of grant Diluted Earnings Per Share (EPS) pursuant to issue of (1.12) (1.12) (1.12)11. Shares on exercise of options calculated in accordance with Accounting Standard 2012. (i) Method of calculation of employee compensation cost Intrinsic Value Method (ii) Difference between the employee compensation cost so computed at 12(i) above and the employee compensa- 456,750 tion cost that shall have been recognised if it had used the fair value of the options (Rs. in thousands) (iii) The impact of this difference on proﬁts and on EPS of the Company Proﬁt after Tax (PAT) (Rs. in thousands) (2,126,721) Less: Additional employee Compensation cost based on 456,750 fair value (Rs. in thousands) Adjusted PAT (Rs. in thousands) (2,583,471) Adjusted EPS Basic (Rs.) (1.36) Adjusted EPS Diluted (Rs.) (1.36)
Corporate Governance 73 Weighted-average exercise prices of options granted13. NA 10.00 331.25 during April 2010 - March 2011 Weighted-average fair value of each option outstanding as 135.31 248.94 123.83 on 31 March 2011 A description of the method and signiﬁcant assumptions14. used during the year to estimate the fair values of options, including the following weighted-average information:(i) risk-free interest rate 7.05% 7.28% 7.61%(ii) expected life (in years) 2.45 3.09 6.50(iii) expected volatility 44.08% 44.16% 42.98%(iv) expected dividends NA NA NA price of the underlying Share in market at the time of(v) 160.00 256.93 244.48 option grantANNEXURE IICONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,FOREIGN EXCHANGE EARNINGS AND OUTGOCONSERVATION OF ENERGY and was able to maintain emission levels within regulatory standards in 2010-11.Energy conservationmeasures taken Measures taken for reduction of energy consumption &As a responsible Corporate Citizen and in consequent impactadherence to our climate change strategy,we are continuously taking effective During the period under review, severalsteps to conserve energy and to reduce energy conservation initiatives weremethane and other Green House Gas adopted, some of which are listed below:(GHG) emissions, wherever feasible.GHG emissions in 2010 were within • Augmenting renewable energytargets set at the beginning of the year harnessing potential. Additionalnotwithstanding a rise in energy use. windmills were installed at Ravva offshore platforms in March 2010.Cairn India recognises the responsibility Installation of 400 Watt wind mills atto minimise environmental impact from the platforms has resulted in energyits activities. Last year saw on-ground saving of 0.589 MWH.implementation of many such plannedmeasures in Rajasthan upstream as well • Solar powered lights were installed inas pipeline projects that were targeted the plant, living quarters and explosiveat prevention & control of pollution magazine area at Ravva in July 2010.and improvement of environmental Installation of the 14 Watt solarperformance. We have also continued powered lights have resulted in energywith our initiatives on energy and resource saving of 0.1232 MWH.conservation at our Ravva and Suvalifacilities. • During the ongoing Ravva inﬁll drilling campaign new well designs haveThe Company regularly monitored air been implemented by using differentemission sources and the ambient air quality, technology to previous campaigns.
74 CAIRN INDIA ANNUAL REPORT 2010-11 These technologies are: to reduce the carbon foot print of the - ‘Stand alone screens with SSD’ for Company like installation of wind mills zonal isolation and swell packer for and solar arrays on platforms, solar water compartmentalization of open hole heaters and LED street lights, wherever section. feasible. - ‘Stand alone screen with ICDs and swell packers’ in the horizontal TECHNOLOGY ABSORPTION, section of RD-10 to provide uniform ADAPTION & INNOVATION drainage. - Slimline TRSVs for 4-1/2” Tubing Research & Development (R&D) inside 7” casing. Speciﬁc areas in which R & D was • Absorption of these technologies has carried out by the Company helped us reduce total carbon footprint and total cost of each well by: Cairn has been actively pursuing the - Reduction in Casing size in top hole application of EOR (Enhanced Oil section. Recovery) technology in the Mangala, - Replacing the Casing, Cementing, Bhagyam and Aishwariya Fields. Studies Perforation and Gravel Packing in by research institutes to deﬁne optimum the reservoir section with Stand formulations for increased oil recovery Alone screens and swell packers for have been conducted. A ﬁeld scale EOR zonal isolation and sand control. pilot plant has been set up within the - Saving of 2 days of rig time by Mangala Processing Terminal. Eight wells elimination of the above operations. have been drilled and completed for the EOR pilot. The injection sequence • Energy conservation at our Suvali planned in the pilot is nearly 5 months plant was achieved by installation of each of initial water ﬂood followed new “Energy Efﬁcient” Air compressor sequentially by polymer slug, alkali- in February 2011. Determination of surfactant-polymer (ASP) slug, chase energy savings and performance polymer slug and chase water ﬂood. The monitoring is in progress. water ﬂood phase of the EOR pilot has already commenced and the facilities for • Several energy conservation initiatives polymer ﬂood are under construction. Re- at the Cairn’s Gurgaon ofﬁce have injection of produced water separated at resulted in saving of approximately the Ravva terminal, back into the reservoir 200,708 kwh (units) of electricity. helps reduce discharge of waste water These initiatives are: to sea and extraction of ground water - Ensuring that all except the for injection purposes. Produced Water emergency lights are turned Re-Injection (PWRI) has been designed off after working hours and on and implemented to treat and handle a holidays. maximum capacity of 45,000 barrels of - Air handling units start at 7 am and water per day. The PWRI is presently re- are turned off when the employees injecting 50% of the produced water. leave ofﬁce. - Lights in empty cubicles are turned Various other technology absorption, off post 6 pm. adaption and innovation initiatives/ - On all working days, lights are methods like Rapid Rig for drilling wells, turned on only by the employees customised well designs, multi well pad when they arrive on duty. approach reducing the environmental imprint by 85% over single wells, Rotary Additional investments and steerable drilling and high end Logging. proposals being implemented for While Drilling technology, customised conservation of energy compact well head equipment, usage of environmentally friendly bio degradable Additional funds were allocated during base oil in the synthetic oil based mud the year for energy conservation. New system on onshore drilling applications technologies were absorbed & adapted which is not only environmentally
Corporate Governance 75friendly but also re used in multiple wells of new export markets for productsthus avoiding dumping of thousands and services; and export plansof barrels of drilling ﬂuids. The use ofmodern horizontal well technology, sand India imports approximately 75% of its oilcontrol technology integral with sleeve and gas requirement and in this situation,devices, hydraulic fracturing technology, the export of crude oil and natural gas,Sand Jet Perforating, Micro seismic for which are the main products of Cairn arefrac modelling and multiphase metering not relevant in this sector.technology were taken/used for the wellconstruction for the development of the However, by discovering new oil & gasoil ﬁelds in Rajasthan. ﬁnds and bringing them into production, Cairn is working towards enhancingBeneﬁts derived as a result of energy security and increasing the selfthis R&D sufﬁciency of the nation which is in line with policy of the Indian Government. AtAll these initiatives are helping the peak production rate, Rajasthan block isCompany in improving the overall expected to contribute more than 20% ofefﬁciency, lowering the land impact domestic crude oil production.& environmental concerns, costeffectiveness & project economics thus Foreign exchange used and earnedleading to drilling and completing thewells faster than most companies in During the period ended 31 March, 2011,the world leading to much less fuel oil the Company earned INR 23.94 millionand energy consumed / utilised for this and incurred expenditure of INR 345.76project than one would normally do in this million in foreign exchange.scale of development. Cairn’s researchin EOR applications for the MBA ﬁelds For and on behalf of the Board ofhas the potential to unlock additional oil Directorsreserves within these ﬁelds and a longterm strategy for EOR is being developed Sir William B.B. Gammellwith this end in mind. Cairn’s study with Chairmanthe National Geophysical Research Centre(NGRI) on salinity changes of ground Place Gurgaonwater sets an example of ‘good industry Date 25 May, 2011practice’. We are also reassured thatour operation in Ravva does not have anadverse impact on ground water and theenvironment.Expenditure on R&DDetails outlined in the Table below. In INR No. Particulars Amount1 Capital 1,002,025,131*2 Recurring 48,300,1923 Total 1,050,325,323 Total R&D expenditure4 1.01% as a % of total turnover*These are consolidated numbers for theTwelve months period ended 31 March 2011FOREIGN EXCHANGE EARNINGSAND OUTGOActivities relating to exports; initiativestaken to increase exports; development
To read or download the full report log on to www.cairnindia.com/IR/Pages/IRAnnualReportDesigned by Corporate Communication Department, Cairn India Limited & Printed at HT Burda Media Ltd. Cairn India Limited Annual Report & Financial Statements 2010–11