FROM PUBLISHED ACCOUNTS

From Notes to results
4. The Company operates an oil and gas production facility in Rajasthan under a Production Sharing Contract (‘PSC’). The management is of the opinion that the Company is eligible for automatic extension of the PSC for Rajasthan (‘RJ’) block on the same terms w.e.f. 15th May, 2020, a matter which was being adjudicated at the Delhi High Court. The Division Bench of the Delhi High Court in March, 2021 set aside the single judge order of May, 2018 which allowed automatic extension of the PSC. The Company is studying the order and all available legal remedies are being evaluated for further action as appropriate. In parallel, the Government of India (‘GoI’) accorded its approval for extension of the PSC under the Pre-NELP Extension Policy as per notification dated 7th April, 2017 (‘Pre-NELP Policy’) for RJ block by a period of ten years w.e.f. 15th May, 2020 vide its letter dated 26th October, 2018, subject to fulfilment of certain conditions.

One of the conditions for extension relates to notification of certain audit exceptions raised for F.Y. 16-17 as per the PSC provisions and provides for payment of amounts, if such audit exceptions result into any creation of liability. In connection with the said audit exceptions, a demand of US $364 million (~ Rs. 2,669 crores) has been raised by the DGH on 12th May, 2020 relating to the share of the Company and its subsidiary. This amount was subsequently revised to US $458 million (~ Rs. 3,360 crores) till March, 2018 vide DGH letter dated 24th December, 2020. The Company has disputed the demand and the other audit exceptions, notified till date, as in the Company’s view the audit notings are not in accordance with the PSC and are entirely unsustainable. Further, as per PSC provisions, disputed notings do not prevail and accordingly do not result in creation of any liability. The Company believes it has reasonable grounds to defend itself which are supported by independent legal opinions. In accordance with the PSC terms, the Company has also commenced arbitration proceedings. Further, on 23rd September, 2020, the GoI had filed an application for interim relief before the Delhi High Court seeking payment of all disputed dues. This matter is scheduled for hearing on 20th May, 2021.

Simultaneously, the Company is also pursuing with the GoI for executing the RJ PSC addendum at the earliest. In view of extenuating circumstances surrounding Covid-19 and pending signing of the PSC addendum for extension after complying with all stipulated conditions, the GoI has been granting permission to the Company to continue petroleum operations in the RJ block. The latest permission is valid up to 31st July, 2021 or signing of the PSC addendum, whichever is earlier. For reasons aforesaid, the Company is not expecting any material liability to devolve on account of these matters or any disruptions in its petroleum operations.

5. The Company’s application for renewal of Consent to Operate (‘CTO’) for the existing copper smelter at Tuticorin was rejected by the Tamil Nadu Pollution Control Board (‘TNPCB’) in April, 2018. Subsequently, the Government of Tamil Nadu issued directions to close and seal the existing copper smelter plant permanently. The Principal Bench of the National Green Tribunal (‘NGT’) ruled in favour of the Company but its order was set aside by the Supreme Court vide its judgment dated 18th February, 2019 on the sole basis of maintainability. Vedanta Limited has filed a writ petition before the Madras High Court challenging various orders passed against the Company. On 18th August, 2020, the Madras High Court dismissed the writ petitions filed by the Company which has been challenged by the Company in the Supreme Court while also seeking interim relief to access the plant for care and maintenance. The Supreme Court Bench did not allow the interim relief. The matter shall now be heard on merits. The matter was again mentioned before the bench on 17th March, 2021, wherein the matter was posted for hearing on 17th August, 2021.

However, subsequent to the year-end, the Company approached the Supreme Court offering to supply medical oxygen from the said facility in view of the prevailing Covid-19 situation, which was allowed by the Supreme Court under supervision of a committee constituted by the Government of Tamil Nadu. The Company was also in the process of expanding its capacities at an adjacent site (‘Expansion Project’). The High Court of Madras, in a Public Interest Litigation held that the application for renewal of the Environmental Clearance (‘EC’) for the Expansion Project shall be processed after a mandatory public hearing and in the interim ordered the Company to cease construction and all other activities on the site with immediate effect. In the meanwhile, SIPCOT cancelled the land allotted for the Expansion Project, which was later stayed by the Madras High Court. Further, TNPCB issued an order directing the withdrawal of the Consent to Establish (‘CTE’) which was valid till 31st March, 2023. The Company has also appealed this action before the TNPCB Appellate Authority and the matter is pending for adjudication. As per the Company’s assessment, it is in compliance with the applicable regulations and hence it does not expect any material adjustments to these financial results as a consequence of the above actions.

From Auditors’ Report in terms of SEBI (LODR), 2015 (as amended)