Cairn India Limited Annual Report and Financial Statements 2008–09

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Cairn India Limited

3rd & 4th Floors, Vipul Plaza, Sun City
Sector 54, Gurgaon 122 002, India

www.cairnindia.com
 Company
Contents Highlights Information

board of directors company secretary

Sir William B.B. Gammell (Chairman) Neerja Sharma
2 Board of Directors Malcolm Shaw Thoms (Deputy Chairman)
Jann Brown statutory auditors
Total acreage of the Total capacity of the
4 Letter from the CEO Naresh Chandra S.R. Batliboi & Associates
Rajasthan fields four trains of the MPT Dr Omkar Goswami Golf View Corporate Tower B
6 Management Discussion
and Analysis
3,111 km2 205,000 Aman Mehta
Edward T. Story
Sector 42, Sector Road
Gurgaon 122 002, India
Nearly the same as the
combined area of National
bopd Rahul Dhir (Managing Director & Chief Executive Officer)
32 Cairn Milestones Indrajit Banerjee (Executive Director & Chief Financial Officer) bankers
Capital Region of Delhi and Rick Bott (Executive Director & Chief Operating Officer) Citibank | State Bank of India | ABN AMRO
34 Corporate Social Responsibility Greater London The MPT will have four crude
oil processing trains, together board committees stock exchanges listed on
40 Report on Corporate Governance designed to handle a total Bombay Stock Exchange Limited
Area of the Mangala capacity of 205,000 bopd. Audit Committee National Stock Exchange of India Limited
58 Directors’ Report Processing Terminal Aman Mehta (Chairman)
(MPT) These are: Naresh Chandra registered office
TRAIN 1 Capacity of 30,000 Dr Omkar Goswami 101, West View
65 Auditors’ Report
1.6 km2 bopd from the Mangala Edward T. Story Veer Savarkar Marg
68 Balance Sheet or approximately field which is ready to start Jann Brown Prabhadevi
production. Initial evacuation Mumbai 400 025, India
69 Profit and Loss Account 400 acres by trucking Remuneration Committee
Equivalent to 200 football Naresh Chandra (Chairman) corporate office
grounds, or 27 times the size TRAIN 2 Capacity of 50,000 Sir William B.B. Gammell 3rd & 4th Floors, Vipul Plaza
70 Statement of Cash Flows
Malcolm Shaw Thoms Sun City, Sector 54
of the Eden Garden cricket bopd, also from the Mangala
Aman Mehta Gurgaon 122 002, India
71 Schedules to the ground at Kolkata, or three field is targeted for completion
Dr Omkar Goswami
Financial Statements times the area of the Red Fort by Q4 2009, along with the
registrar & share transfer agent
Complex in Delhi heated pipeline.
Nomination Committee Link Intime India Private Limited
92 Balance Sheet Abstract
Sir William B.B. Gammell (Chairman) (formerly Intime Spectrum Registry Limited)
and Company’s General TRAIN 3 Capacity of
Rahul Dhir C-13, Pannalal Silk Mills Compound
Business Profile 50,000 bopd — targeted for Jann Brown L.B.S.Marg , Bhandup (West)
Mangala, Bhagyam completion in H1 of 2010. Will Malcolm Shaw thoms Mumbai 400 078, India
93 Auditors’ Report on Consolidated and Aishwariya plan access the plateau production Edward T. Story
Financial Statements to produce of the Mangala field

94 Consolidated Balance Sheet 175,000 TRAIN 4 Capacity of

Shareholders’ / Investors’ Grievance Committee
Dr Omkar Goswami (Chairman)

95 Consolidated Profit
bopd 75,000 bopd, designed to
accommodate production from
Naresh Chandra
Rahul Dhir
and Loss Account (barrels of oil per day) Bhagyam and Aishwariya and
further expansion. Will be
96 Consolidated Statement At peak production which is commissioned by 2011
of Cash Flows estimated to account for more
than 20% of India’s crude oil
97 Schedules to Consolidated production
Financial Statements

123 Glossary
Cairn is ready to produce
first oil from Rajasthan,
which can go up to
30,000
bopd
Given the progress at the MPT,
we are targeting producing
oil from Train 2 — up to an
additional 50,000 bopd — by
Q4 2009
EOR resource base
of incremental
recoverable oil
> 300
mmbbls
(million barrels)
The current assessment of the
enhanced oil recovery (EOR)
resource base is greater than
300 mmbbls of incremental
recoverable oil from Mangala,
Bhagyam and Aishwariya fields
Building facilities
to handle
80,000
bopd
by Q4 2009
Cairn is targeting completion of
the pipeline in time to evacuate
crude oil by the time Train 2 is
operational. The Company is
building facilities that will have
the capacity to handle 80,000
bopd by Q4 2009
Operational expense
at Ravva and Cambay
US$ 2.4
per barrel
The field direct operational
expense for the current
producing blocks, Ravva and
Cambay is one of the lowest in
the world
Estimated Rajasthan
Upstream operating
expenses
around
US$ 3.50
per barrel during field life
If one were to add to that the
cost of pipeline operating
expenses, the total opex of
Rajasthan crude is targeted at
around US$ 5 per barrel during
field life
Vehicle accident
frequency rate
1.33 per
million km
travelled
During 2008, contractor
vehicles travelled for more
than 15 million km without any
fatalities or serious accidents.
The motor vehicle accident
frequency rate was 1.33 per
million km travelled — which
is well below international
benchmark in this industry
The 24” heated &
insulated pipeline runs
for approximately
700 km
It runs from the MPT at Barmer
to a marine terminal on the
Gujarat Coast. Of the 700 km
of pipeline, 154 km is located
in Rajasthan and the rest is in
Gujarat
Headcount in 2008
increased by
50%
While many businesses faced
reducing employee numbers
or revisited their recruitment
plans, Cairn has been hiring
throughout 2008, and will
continue to do so in 2009
H I G H L I G H TS 1
 Board of
Directors
Sir Bill Gammell, 56, holds
a BA in Economics and
Accountancy from Stirling
University and was awarded
a knighthood in 2006 for
services to industry in
Scotland. He has over 25
years’ experience in the
international oil and gas
industry. He founded Cairn
Energy PLC and was ap-
pointed Chief Executive on
its initial listing in 1988. He
is the non-executive Chair-
man of Cairn India Limited
and is a member of the
Asia Task Force and the UK
India Business Council. Sir
Bill, who is an ex–Scotland
rugby internationalist, is
also Chairman of Winning
Scotland Foundation and a
director of sport Scotland
and Glasgow 2014 Limited
sir bill gammell
Chairman and
Non-Executive Director
2 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
Ms Jann Brown, 54,
holds an MA degree from
Edinburgh University and
joined Cairn Energy PLC in
1998 after a career in the
accountancy profession,
mainly with KPMG. She
was appointed Finance
Director of Cairn Energy
PLC in 2006. Prior to her
appointment as Finance
Director, she served on the
Group Management Board
for seven years. She is a
member of the Institute of
Chartered Accountants of
Scotland and the Chartered
Institute of Taxation
jann brown
Non-Executive Director
Mr Aman Mehta, 62, is an
economics graduate from
Delhi University. He was
earlier the Chief Executive
Officer of HSBC Asia Pacific
until 2003. Mr Mehta is
currently an independent
non-executive director of
several public companies
in India as well as overseas.
Besides this he is also a
member of the Advisory
Council of INSEAD, France
and International Advisory
Boards of Prudential Inc.,
USA and CapitaLand Ltd. of
Singapore
aman mehta
Non-Executive and
Independent Director
Dr Omkar Goswami, 52,
holds a Master of Econom-
ics Degree from the Delhi
School of Economics. He
is a D. Phil. in Economics
from Oxford University. He
has authored various books
and research papers on
economic history, industrial
economics, public sector,
bankruptcy laws and proce-
dures, economic policy, cor-
porate finance, corporate
governance, public finance,
tax enforcement and legal
reforms
dr omkar goswami
Non-Executive and
Independent Director
Mr Indrajit Banerjee, 53,
graduated from the Univer-
sity of Calcutta with a Bach-
elor’s degree in Commerce.
An associate member of
the Institute of Chartered
Accountants of India,
Mr Banerjee started his
career at Price Waterhouse
Coopers in Calcutta in 1979
and has held several senior
positions throughout his
career, including 17 years
at the Indian Aluminium
Company which was part of
the Alcan Group, and two
years in Lucent Technolo-
gies (India). Before joining
the Company, he was
President-Finance and Plan-
ning at Lupin Limited
indrajit banerjee
Executive Director
and CFO

Mr Malcolm Thoms, 53,
holds a BSc Hons degree
in Physics from Edinburgh
University and is an MBA
from Heriot-Watt Univer-
sity. He started his career in
the oil industry as a field en-
gineer with Schlumberger
and subsequently became
manager of their businesses
in Qatar and Brunei. He
joined Cairn Energy PLC
in 1989 where he held a
number of senior manage-
ment positions prior to his
appointment as an Execu-
tive Director in 2000. He is
currently Chief Operating
Officer of Cairn Energy
PLC. Mr Thoms is also a
trustee of the University of
Edinburgh Development
Trust. He has been a regular
visitor to South Asia since
1994 and was instrumental
in developing Cairn’s busi-
ness interests in the region
malcolm
shaw thoms
Non-Executive Director
Mr Rahul Dhir, 43, joined
Cairn India in May 2006
and was appointed Chief
Executive Officer on 22
August 2006. He was
educated at the Indian In-
stitute of Technology, Delhi
(Bachelor of Technology),
the University of Texas at
Austin (M.Sc) and at the
Wharton Business School
in Pennsylvania (MBA). Mr
Dhir started his career as
an oil and gas reservoir en-
gineer before moving into
investment banking. He has
worked at SBC Warburg,
Morgan Stanley and Merrill
Lynch, where he managed
a team advising several
major oil companies and
a number of independent
E&P companies on mergers
and acquisitions and capital
market related issues.
Before joining Cairn India,
he was Managing Director
and Co-Head of Energy and
Power Investment Banking
at Merrill Lynch
rahul dhir
Managing Director
and CEO
Mr Naresh Chandra, 74,
is a post graduate (MSc.
in Mathematics) from
Allahabad University
and a retired IAS officer.
Previously, Mr Chandra was
Chairman of the Committee
on Corporate Governance,
India’s Ambassador to the
US, Advisor to the Prime
Minister, Governor of Raj-
asthan, Cabinet Secretary
to the Government of
India, and Chief Secretary
of Rajasthan. A reputed
administrator and diplomat,
Mr Chandra serves as an
independent director on
the boards of a number of
companies
naresh chandra
Non-Executive and
Independent Director
Mr Rick Bott, 49, was
appointed as Additional
Director on 29 April 2008
and assumed office of Ex-
ecutive Director and Chief
Operating Officer with ef-
fect from 15 June 2008. Mr
Bott holds a B.S in Marine
Sciences and Masters in
Geology from Texas A & M.
He joined Cairn India from
Devon Energy’s Interna-
tional division where he was
Vice President responsible
for developing and imple-
menting business growth
and exploration strategy
for assets in 12 countries
outside of North America,
focusing on the deepwater,
West Africa, South America
and the Middle East /Asia.
Previously he served as
President of Ocean Egypt
Companies and as President
of Ocean Yemen Corpora-
tion. He also served in a
number of international
management and technical
positions with British Gas
and Tenneco and has exten-
sive global exploration and
production experience with
more than 21 years in the
industry leading integrated
organisations, developing
new business and focusing
on cross-cultural leadership
development
rick bott
Executive Director
and COO
Mr Edward T Story, 65, is
a science graduate from
Trinity University, San
Antonio, Texas and holds a
Masters degree in Business
Administration from the
University of Texas. He has
also been conferred an hon-
orary Doctorate degree by
the Institute of Finance and
Economics of Mongolia and
is Chairman of the North
America Mongolia Business
Council.
Mr Story has more than
40 years experience in
the international oil and
gas industry and is the
founder, President and
Chief Executive Officer of
SOCO International PLC,
an international explora-
tion and production (E&P)
company listed on the
London Stock Exchange.
SOCO International has E&P
interests in South East Asia
and Africa
edward t. story
Non-Executive and
Independent Director
BOARD OF DIRECTORS 3
 Letter from
the CEO
Dear Shareholder,
If I were to describe the progress of your Company from the previous annual
report to this one, the most apt phrase would be: “From Concept to Reality”.
Let me explain what this means
first oil
Concept In April 2008, in my previous letter to
you, I had written of “the commitment of Cairn
India to deliver first oil from Rajasthan by the
second half of 2009”.
Reality Your Company and its joint venture
partner ONGC, is ready to deliver first oil from
Rajasthan. Cairn will be able to produce up to
30,000 barrels of oil per day (bopd) from the
Train 1 of the Mangala Processing Terminal
(MPT).The initial production is targeted to be
evacuated by trucking to refineries in different
parts of India.
Spread over 400 acres, the size of the MPT
is equivalent to 200 football grounds or three
times the area of the Red Fort complex in
Delhi. The infrastructure to and from the MPT
involves some 500 kilometres (km) of intra- and
inter-field pipelines (more than the distance
from Delhi to Lucknow), and 80 km of inter-field
roads.
At peak production, Mangala, Bhagyam
and Aishwariya (MBA) together will produce
175,000 barrels of oil per day (bopd) — which
will account for more than 20% of India’s crude
oil production. The MPT will have the capacity
to process not only this 175,000 bopd, but
also any additional crude oil produced through
enhanced oil recovery and from other fields.
the pipeline
Concept We had promised to complete the
insulated heated pipeline from the MPT to Guja-
rat before the end of 2009. When we made this
pledge last year, there were still several hurdles
to overcome regarding acquiring the rights of
use and the laying of the pipeline in Rajasthan.
Reality Thanks to cooperation from the Gov-
ernment of India (GoI) and the State Govern-
ments of Rajasthan and Gujarat, your Company
is targeting completion of the pipeline from the
MPT to the Gujarat coast by Q4 2009.
This is one of the longest continously heated
4 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
and insulated pipelines in the world— approxi-
mately 700 kilometres (km) in length. The insu-
lated pipeline has an outer diameter of 24” with
an 8” pipeline running along it that will carry gas
from the Raageshwari field for heating the main
pipeline to ensure that the crude remains at a
constant temperature of 65°C. Along the pipe-
line, there will be more than 35 heating stations.
In addition, there is an intermediate terminal at
Viramgam for storage and further pumping to
the coast. There are also two pigging stations to
clean the pipe and scour it of wax.
funding
Concept In December 2007, there was an
increase in the Rajasthan project cost conse-
quent to an increase in the scale and scope with
a greater engineering need and higher input
prices. At that time, neither was the capital
requirement for the Rajasthan upstream project
precisely defined, nor the funding for the pipe-
line firmly established.
Reality In April 2008, Cairn India obtained
US$ 625 million through a private placement
of its shares — the largest such placement in
the Indian equity market during 2008–09. This
included 63.3 million shares at Rs. 224.30 per
share to our existing shareholder, Petronas.
In addition, despite the global financial crisis,
your Company was able to fully draw down its
earlier debt facility of US$ 850 million. This,
together with the US$ 625 million private place-
ment, has eliminated funding uncertainties for
the core upstream and pipeline development in
Rajasthan.
In addition the Company has an ongoing dia-
logue with various international and domestic
institutions to review its financing options — to
create financial flexibility by securing competi-
tively priced long term debt
We are, thus, financially well placed to imple-
ment our business plans.

optimising costs
Concept By the end of 2007, there was signifi-
cant inflation in the oil industry, driven by rising
levels of activity, increases in steel prices and
an acute shortage of skilled professionals. The
planned capital expenditure on the Rajasthan
project for 2008 and 2009 rose to US$ 1.8 billion
on net basis (i.e. net to Cairn, the 70% partner of
the Cairn–ONGC joint venture). We had to trim
project costs — and yet ensure that the target
for production of first oil was maintained.
Reality The project cost was reduced by US$
400 million to US$ 1.4 billion through a tight
control on expenses and the phased develop-
ment of the MPT and the pipeline. The field
direct operating expense at Ravva and CB/
OS-2 in 2008 was US$ 2.4 per barrel — one of
the lowest in the world. We plan to apply these
skill sets in Rajasthan and continue as a low cost
operator. The Rajasthan upstream operating
expenses are estimated at US$ 3.5 per barrel
and the pipeline opex is estimated at US$ 1.5
per barrel during the life of field.
Thanks to cost optimisation, your Company
will be well placed to create shareholder value
under any reasonable price scenario for crude oil.
reserves and enhanced
oil recovery
The stock tank oil initially in place (STOIIP) for
the MBA fields is now estimated at 2,054 million
barrels of oil equivalent (mmboe).
We continue to improve our understanding
of these fields through the application of in-
novative techniques. At Mangala, these efforts
have resulted in a 20% increase in our estimated
oil in place; and a 30% increase in reserves and
resources, resulting in a 25% rise in the potential
plateau rate to 125,000 bopd.
Similarly, the STOIIP at Aishwariya has
increased by over 37% — from 213 million
barrels (mmbbls) in the originally approved
field development plan to 293 mmbbls. This has
RAHUL DHIR
doubled the field’s production potential from
10,000 bopd to 20,000 bopd.
We continue to explore for additional hy-
drocarbons in the Barmer basin. In December
2008, our efforts resulted in Cairn’s 25th oil and
gas discovery adjacent to Raageshwari field.
Tests indicate an oil flow of around 500 bopd,
plus 0.4 mmscfd gas. In addition, the Barmer
Hill formation has an estimated STOIIP of ap-
proximately 400 mmbbls.
We are also focusing on the early application
of enhanced oil recovery (EOR) techniques in
the MBA fields. Our laboratory and computer
studies indicate that an additional 308 mmbbls
of oil can be recovered through the use of EOR
from these fields.
Cairn will make use of all the viable Rajasthan
fields to optimise both the life of the different
hydrocarbon resources and the associated
revenue streams.
ravva and cambay (cb/os-2)
Cairn’s gross production from these two op-
erating assets in India during 2008 was 66,146
boepd. It’s net working interest was 17,264
boepd.
These assets highlight our ability to maximise
recovery and manage costs. In Ravva, we have
now produced over 200 million barrels, and ex-
pect to recover over 60% of the STOIIP. Around
US$ 4 billion has been contributed to the GoI
from the share of profits following the oil and gas
sales at Ravva.
In Cambay, we have applied new seismic
interpretations to identify further hydrocarbons
and with minimal investment, we managed to
convert the processing facilities to handle oil pro-
duction as well. In addition to gas, we are now
producing over 10,000 bopd from these fields.
Cambay is a case where discovery to delivery
took place in only 28 months and during 2008 it
generated its highest revenues since the start of
production.
exploration
In September 2008, the Sri Lanka Board of In-
vestment and your Company signed a commit-
ment for the Mannar Basin which lies offshore
north-west Sri Lanka and covers approximately
3,000 km2 in water depths of 200 metres to
1,800 metres. The work programme includes
the acquisition of seismic data and the drilling of
three wells in the first three years of the explora-
tion period.
health and safety
During 2008, occupational health and safety
management systems at Ravva and Suvali were
certified to best-in-class international standards,
namely OHSAS 18001 and ISO 14001. For the
year, our contractor vehicles travelled over
15 million km without any fatalities or serious
accidents.
These are a few examples of what I began
the letter with — the determined journey
of Cairn from concept to reality.
This journey would not have been possible
without the efforts of all your Company’s em-
ployees — many of whom have been working
day and night in Rajasthan and along the pipe-
line in testing weather conditions, where day
temperatures can soar to more than 48°C.
It is a journey that fulfils your Company’s
pledge — to be a major supplier of crude oil to
India and to generate long term shareholder
value.
Thank you for your support. You have had
faith in us. The results will now be for you to see.
Rahul Dhir
Managing Director and CEO
LE T T E R FR OM TH E C E O 5
 Management
Discussion
& Analysis

Much has happened at Cairn India Limited (‘Cairn’ or ‘the Company’) between what
was reported in last year’s Management Discussion and Analysis and this one —
changes that can be described in a single phrase: “From Concept to Reality”

6 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

To understand the importance of this phrase,
it is best to begin this Management Discussion
and Analysis by describing what the Company
has accomplished in the course of one year in
Rajasthan — in terms of developing the up-
stream facility at the Mangala Processing Termi-
nal (MPT) at Barmer as well as the progress in
constructing the approximately 700 kilometres
(km) insulated heated pipeline that will flow the
crude oil from MPT to the coast of Gujarat.

the rajasthan project

Broadly speaking, the Company’s immedi-
ate project in Rajasthan involves three sets of
activities:

Production of crude oil from the three

main fields: first Mangala, then Bhagyam,
followed by Aishwariya, as well as the develop-
ment and operations of the MPT.

Laying and completing the insulated heat-

ed pipeline from the MPT to the Gujarat coast,
including more than 35 heating stations and an
intermediate terminal at Viramgam (Gujarat).

Enhancing Rajasthan resources — through

reservoir development, enhanced oil recovery
(EOR), the phased development of the other
22 fields and potential for further discoveries in
Rajasthan.

rajasthan upstream
The discovery of the Mangala oil field among
others in Rajasthan, spurred the flotation and
the creation of a separate Indian business.
It has provided the Company with the right
platform to translate the exploration success
into real and tangible operational excellence.
The flow of oil from the fields in Rajasthan at
a planned peak of 175,000 barrels of oil per
day (bopd) will help meet more than one fifth
of the country’s domestic production and is
a significant contribution to aid the nation’s
energy security.
Cairn first came into Rajasthan in the late
1990s, when it acquired an interest in the block
RJ-ON-90/1. The Company firmly believed that
the area was not only rich in hydrocarbons but
also had all the key ingredients for successful
commercial production. By 2003, Cairn had
acquired 100% of the exploration interest and
assumed the role of operator of this acreage.
In 2004, a major discovery of crude oil was
made in the Mangala field which has been the
largest onshore discovery in India over the last
25 years. This was followed by key discoveries
at Bhagyam and Aishwariya which, along with
Mangala, comprise the MBA fields. In all, 25
discoveries have now been made in Rajasthan.
Today, Cairn is the operator of the Rajasthan
block, with a 70% development and production
interest. The balance 30% is held by India’s
public sector oil and gas major, the Oil and

M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 7


Natural Gas Corporation Limited (ONGC) fol-
lowing their exercise of an option provided for
in the PSC.
Chart A gives the location of the Rajasthan
resources.
The development areas in Rajasthan consist
of three contiguous areas: (i) Mangala, Aish-
wariya, Raageshwari and Saraswati (MARS)
fields; (ii) Bhagyam; and (iii) Kaameshwari
West. The total acreage of the development
areas in Rajasthan accounts for 3,111 square
kilometers (km2). This is nearly the same as
the combined area of national capital region
of Delhi and Greater London. More than 350
wells and over 40 well pads are currently
planned throughout the Rajasthan fields.
Peak production from the MBA fields is
planned at a rate of 175,000 bopd — which
is estimated to account for more than 20% of
India’s crude oil production.
mangala processing terminal
In order to produce the oil and separate associ-
ated gas and water, the Company has set up
the Mangala Processing Terminal (MPT). The
capacity to produce 30,000 bopd will be devel-
oped at the MPT by Q3 2009, to be evacuated
by road tankers. As stated in last year’s annual
report, the next phase is targeting a capac-
ity to handle 80,000 bopd before the end of
2009 — all of which is planned to be evacuated
ultimately by the insulated heated pipeline.
The MPT will have four crude oil processing
trains, designed to handle a total capacity of
205,000 bopd with scope for expansion:
train 1 Capacity of 30,000 bopd from the
Mangala field which is ready to start production.
Initial evacuation will be by trucking.
train 2 Capacity of 50,000 bopd, also from
the Mangala field is targeted for completion by
Q4 2009, along with the heated pipeline.
train 3 Capacity of 50,000 bopd — targeted
for completion in H1 of 2010 — will access the
plateau production of the Mangala field.
8 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
Peak production from Mangala, Bhagyam and Aishwariya is
planned at a rate of 175,000 barrels of oil per day (bopd) —
which is estimated to account for more than 20% of India’s
crude oil production
train 4 Capacity of 75,000 bopd, designed to
accommodate production from Bhagyam and
Aishwariya and further expansion. Will be com-
missioned by 2011.
After Train 4 is commissioned, the MPT will
have the capacity to process not only the pla-
teau production of the MBA fields of 175,000
bopd, but will also have additional capacity to
support further potential production from EOR
and the 22 other fields.
Spread over an area of 1.6 square km, or
approximately 400 acres, the size of the MPT is
equivalent to 200 football grounds, or 27 times
the size of the Eden Garden cricket ground at
Kolkata, or three times the area of the Red Fort
complex in Delhi.
The processing of crude oil from four trains
requires the MPT to have an extensive water
heating, circulating and recycling system; gas
recovery systems; heat and power systems; and
built-in fire and safety systems. The infrastruc-
ture to and from the MPT involves some 500 km
of intra- and inter-field pipelines (more than the
distance from Delhi to Lucknow), and 80 km of
inter-field roads.
Steam will be the main source of heat to help
produce the Rajasthan crude, with the use of
five 115 metric ton / hour boilers. The advan-
tage of steam is that it is an efficient, pollution-
free and renewable resource. All power require-
ments of the MPT will be met by captive power
plants, comprising four 12 megawatt (MW)
steam turbine generators, plus three 2 MW
emergency diesel generators. There will be 20
water and oil storage tanks, 16 buildings hous-
ing various equipment, including the power sta-
tions and different control systems, and several
kilometres of pipe racks to carry all the pipes
and cables across the facility. When completed,
the MPT will have used up more than 98,000
cubic metres of concrete and 23,600 metric
tons of steel — excluding the steel used for the
insulated heated pipeline.
Chart B gives a geographical snapshot of the
Rajasthan Field and the MPT. The water to cre-
ate steam and for flooding the oil reservoirs to
 Barrel of Oil The standard oil barrel of
42 US gallons (159 litres) is used in the
United States as a measure of crude oil.
A Cairn’s
Rajasthan Block
BHAGYAM
DEVELOPMENT AREA

MANGALA
The measurement originated in the Pennsylvania PROCESSING
oil fields in the 1860s, when there was no TERMINAL (MPT)
standard container for oil. To remove distrust, the
oil producers decided to use the 40 gallon whisky KAAMESHWARI WEST
barrel, and add a couple more gallons to ensure DEVELOPMENT AREA
buyers’ confidence — like the baker’s dozen.
Of course, nobody uses barrels any more
INDIA

MANGALA,
AISHWARIYA,
RAAGESHWARI
& SARASWATI
DEVELOPMENT AREA

M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 9

 C The Steam and Power System at the MPT
S C H E M AT I C D I AG R A M

TO EXPORT
PIPELINE

Process Oil Processing Tank Heaters

Heaters System

ASSOCIATED
GAS
48 MW Power
for Plant Utilities Steam Turbine Injection Boilers
Generators Heaters
TO INJECTION MAKE UP WATER FROM THUMBLI SALINE WELLS MAKE UP
AND POWER GAS FROM
RECOVERED WATER
WATER SYSTEMS Thumbli Well RAAGESHWARI

10 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

B O E

Barrels of oil equivalent is a unit based on the The water to create steam and
approximate energy released by burning one barrel for flooding the oil reservoirs
(42 US gallons) of crude oil.
for extraction of crude comes
1 boe = 5.8 x 10 6 BTU (British Thermal Unit) from the Thumbli saline water
= 6.1178632 x 10 9 J (joule), or approximately
6.1 GJ (giga joule).
aquifer discovered by Cairn in
2004. The Thumbli reservoir is
A boe is roughly 6,000 cubic feet (170 cubic 22 km away from the MPT
metres) of typical natural gas. The boe or mmboe
is used by oil and gas companies as a way of
combining oil and natural gas reserves and
production into a single measure.

help extract the crude comes from the Thumbli

saline water aquifer discovered by Cairn in

B Rajasthan Block &

Mangala Processing Unit
2004. The Thumbli reservoir is 22 km away from
the MPT (see (B) in Chart B). Cairn has drilled
five water wells, each with a capacity of 63,000
barrels per day. The saline water is transported
to the MPT by a pipeline 20” in diameter. The
water is desalinated and then fed to the five
BHAGYAM boilers at the MPT to generate steam.
MANGALA
The gas needed to fire the boilers and, more
MPT &
WELL PADS importantly, to generate the power to heat the
AISHWARIYA waxy crude at an average of 65°C along the
THUMBLI
WATER
pipeline, comes from the Raageshwari gas field,
SYSTEM located some 90 km away from the MPT (see
(C) in Chart B). The Raageshwari Gas Terminal
(RGT), with four gas well pads and 35 wells, is
designed to produce dry gas of over 30 million
standard cubic feet per day (mmscfd). The gas
will be transported via a 12” gas pipeline to the
MPT and the gas liquids, or condensate, by a 4”
RAA GES
RAAGES S HWA
H
HW RI
GASS TE
E RMI
RMINAL
NAL
NA L
pipeline. This will involve 180 km of pipeline.
AND
ND WE
W LL All the power requirements will be met by
P
PAD S three 1250 KVA steam turbine generators. The
O EX
OIL EXPORP
POR T gas from Raageshwari will be used to supple-
P ELI
PI
PIP LII NE & ment the produced gas at MPT as fuel for the
HEATIN
H TING G
boilers. Steam from the boilers will be used to
STAATIO
T NS
TI N
produce power and also for heating of fluids at
the MPT.
Chart C explains the closed-loop steam
and power system of the MPT. Water from
the Thumbli aquifer is desalinated and fed to
the boilers, along with gas from Raageshwari.
Steam generated from the five boilers is used
for four purposes:

First, to drive the four steam turbines to create

48 MW of power for the MPT.

Second, to heat water to inject into the oil wells

for extracting the crude oil.

Third, to heat the crude oil process heaters to

maintain the minimum heat needed for ensuring
that the waxy crude flows freely to the oil tanks.

Fourth, to continuously heat the oil tanks that

hold the crude at the MPT — again to ensure

M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 11

 D Overview of the Processing System at the MPT
S C H E M AT I C D I AG R A M
FLUIDS FROM
OIL WELLS
Slug Catcher Heater
INJECTED
BACK INTO
OIL WELLS
FIRST STAGE PREPARATION SECOND STAGE PREPARATION
that the oil is maintained at the required tem-
perature.
The water recovered from well injection is then
stripped of its oil, desalinated, re-heated and
re-used for further injection in the wells or for
generating steam at the boilers.
The scheme of the processing system at the
MPT is depicted in Chart D. The crude goes
through various stages of separation to yield oil,
associated gas and water. The associated gas is
recovered for use as fuel for steam generation.
The water is separated out and re-injected into
the wells following treatment. The separated oil
goes through a dehydrator, where any remain-
ing water is removed. Finally the oil is sent to
the oil storage tanks from where it is pumped to
the heated pipeline.
The process system is designed in such a way
that there is no flaring of gas during the normal
course of operation and also all the water
produced is re-used in the crude extraction
process. This ensures minimal impact to the
environment.
Desalinated water from the Thumbli saline
water system is injected into the wells to extract
crude oil. The crude goes through a first stage
separation of oil, associated gas and water. The
associated gas is recovered to fire the steam tur-
bines; and the separated water is treated. The
crude then goes through a heater for the sec-
ond stage of separation, with the same results.
Thereafter, it goes to a settling tank, where the
final associated residual gas is taken off from the
top, as is the water that settles at the bottom.
Thereafter, it is processed through a dehydrator
to take out the last remnants of water. Finally it
goes to the oil storage tanks, from where it is
pumped to the heated pipeline. All separated
water is recycled.
12 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
MAKEUP GAS FROM RAAGESHWARI TO FUEL GAS
DISTRIBUTION
ASSOCIATED GAS RECOVERY
SYSTEM
Separator Settling Tank Dehydrator Export Oil Oil
Storage Tank Pump
PRODUCED WATER TREATMENT
TO EXPORT
MAKEUP WATER FROM THUMBLI SALINE WELLS
PIPELINE
STORAGE & EXPORT
At the time of writing this Management
Discussion and Analysis:
 There are more than 450 engineers from
the Indian construction major, Larsen and
Toubro (L&T), 100 engineers from Cairn and
more than 6,000 workmen at the MPT site,
all focused on the goal of producing oil from
Train 1 by Q3 2009, from Train 2 by Q4 2009
and from Train 3 by H1 2010.
 Work is on schedule for the completion of
the 20 tanks at the MPT along with the facili-
ties at the Raageshwari Gas Terminal. At the
MPT the boilers have been erected and the
steam turbine generators are being erected
according to schedule.
In addition to all these activities, Cairn has built
a wide channel and a Gabion Wall running
across the MPT as a flood mitigation measure.
Barmer was flooded by unseasonal and unprec-
edented heavy rains in August 2006. Despite
the statistically improbable nature of the heavy
rains at Barmer, the Company decided to create
a floodwater outflow channel and protect the
MPT by a Gabion Wall through an innovative
engineering solution that reduced the cost from
an initial estimate of US$ 57 to US$ 30 million.
A full schematic presentation of the entire
crude oil extraction process at the MPT is given
in Chart E.
Cairn is ready to produce first oil from Rajast-
han via the first train, which can be scaled up to
30,000 bopd. The completion of Train 2 — with
an additional capacity of 50,000 bopd — is
targeted for Q4 2009.
E The Oil Recovery System
S C H E M AT I C D I AG R A M Separator + Heat
Gas Recovery
System
TO FUEL GAS
DISTRIBUTION
SYSTEM

Heater
Vertical Horizontal Water Saline Water
TO EXPORT
Well Well Injector Abstraction Export Oil PIPELINE
Storage Tank

A THUMBLI SALINE AQUIFIER

B BARMER HILL
C FATEHGARH

WATER TABLE

A FRESH WATER

C B OIL

M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 13

 Pigging is the practice of using pipeline
inspection gauges or ‘pigs’ to perform
various operations on a pipeline without stopping Cairn is targeting completion
the flow of oil. They make a squealing sound while
traveling through a pipeline not unlike the sound a
of the pipeline in time to
pig makes. Cleaning and inspection of the pipeline evacuate crude oil by the
is done by inserting the pig into a ‘pig launcher’
— a funnel shaped Y section in the pipeline. The
time Train 2 is operational.
launcher is then closed and the pressure of the The Company is building
product in the pipeline is used to push it along
down the pipe until it reaches the receiving trap —
facilities that will have the
the ‘pig catcher’ capacity to handle 80,000
bopd through the pipeline
by Q4 2009

the rajasthan–gujarat pipeline  Nine spreads (which are teams of trenchers,

On 30 April 2008, the Government of India
(GoI) approved the shifting of the crude oil de-
livery point as defined under the PSC from the
MPT at Barmer to the Gujarat coast. Thereafter,
‘in principle’ approval of RoU (Right of Use)
was granted to lay the pipeline up to the marine
terminal on the Gujarat coast.
The GoI had granted the Right of Use (RoU)
to Cairn on 22 August 2007 and had directed
the state governments of Rajasthan and Gujarat
to nominate competent authorities to process
the RoU. The Gujarat authorities granted their
RoUs to enable an early start on that section of
the pipeline. The Rajasthan RoUs followed in
February 2009, and the company took the nec-
essary steps to source the construction teams
to commence work with the aim of meeting the
initial target for completion of Q4 2009.
The 24” heated and insulated pipeline is
approximately 700 km long from the MPT at
Barmer to a marine terminal on the Gujarat
Coast. Some 154 km of the pipeline is located in
Rajasthan and the rest is in Gujarat.
The heated and insulated pipeline has an
outer diameter of 24” with an 8” pipeline run-
ning along it that will carry Raageshwari gas,
that will be used for power generation. The
heating of the pipeline is based on an electric
heat induction technology named Skin Effect
Heat Management System (SEHMS). Along the
length of the pipeline, there will be more than
35 SEHMS heating stations or Above Ground
Installations (AGIs). Gas will be supplied at
each station to generate the power required to
heat the pipeline for approximately 10 km on
either side — to ensure that the crude remains
constantly heated above 65°C. In addition,
there is an intermediate terminal at Viramgam
for storage and further pumping to the coast.
There are also two pigging stations at Sanchore
and Wankaner to insert ‘pigs’ (basically metal
cylinders) that are used to clean the pipe and
scour it of wax.
As on 31 March 2009, the status of the heat-
ed and insulated pipeline — India’s first, and
one of the world’s longest — was as follows:
welders and layers) are in operation — five in
Gujarat and four in Rajasthan
 Significant length of pipeline has been
lowered.
F Map of the ~700 km
Rajasthan–Gujarat Pipeline
In addition to the main pipeline, there will
be a 22 km spur line at Radhanpur (Gujarat), M gala
Man
culminating in an export terminal having two Terrmin
minal
pre-heated tanks, each with a capacity of 9,000
RAJASTHAN
barrels.
A comprehensive SEHMS test was carried
out on a suitable length of pipeline. The test Sancho
Sa
San hore
e
performed as per design — confirming that the
system should be capable of meeting the heat-
ing needs for the pipeline.
Thara
Tha ra
Cairn is targeting completion of the pipeline Radhan
anpur
in time to evacuate crude oil by the time Train 2
is operational. The Company is building facilities G U J A R AT Viramgam
Terminal
that will have the capacity to handle 80,000
bopd through the pipeline by Q4 2009.
Wankan
ka er
kaner
hydrocarbon resources
in rajasthan
To date, estimates of the hydrocarbon reserves Ter
errmin
minal on
o
Guj
ujara
arat
ara
ratt Coas
Coa t
and resources in the MBA fields calculated by
Cairn are consistent with those of the indepen-
dent specialists, DeGolyer and McNaughton.
 Stock Tank Oil Initially in Place (STOIIP), or
the estimate of the size of the accumulations
in MBA: 2,054 million barrels of oil (mmbbls).
 Of this, the proved plus probable (2P)
reserves and resources that can be produced
from MBA under water flooding techniques
are estimated to be 685 mmbbls. 2P implies
that there is at least a 50% probability of
equalling or exceeding the estimate.
 In addition to this, the 2P estimate of oil
resource that can be produced by EOR tech-
niques is 308 mmbbls. The total 2P estimate
of MBA reserves and resources therefore
stands at 993 mmbbls.
 Since Cairn holds a 70% participating interest
in the approved development areas under
the PSC — the other 30% partner being
ONGC — the net 2P estimate of reserves and
resources in MBA is 695 mmbbls, or 70% of
the gross 2P estimate of 993 mmbbls.

14 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

G The Rajasthan–Gujarat Pipeline
S C H E M AT I C D I AG R A M
Sanchore
SHEMS Pigging Station
MANGALA
PROCESSING HEATED CRUDE OIL PIPELINE
TERMINAL GAS PIPELINE

RAAGESHWARI
GAS SUPPLY VIRAMGAM
Distribution
INTERMEDIATE
TERMINAL to buyer

Storage,
COASTAL TERMINAL
STORAGE AND EXPORT
Pumping
and Export

Distribution Wankaner
to Refiners Pigging Station

M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 15

 Proved volume is equivalent to P90
S T O I I P 1 P
volumes of hydrocarbon, i.e. defined as the
Stock Tank Oil Initially in Place is the total point on an expectation curve at which reserves have
hydrocarbon content of an oil reservoir, referring a 90% probability of exceeding the quoted value
to the oil in place before the commencement of
production. STOIIP must not be confused with Proved plus Probable volume is
2 P
oil reserves — which refer to the technically and equivalent to P50, the median point on an
economically recoverable portion of oil volume in expectation curve — with at least a 50% probability
the reservoir. Current recovery factors for oil fields of equaling or exceeding the estimate
around the world range between 10% and 60%,
with a few at over 80%. This wide variance is due Proved plus Probable plus Possible
3 P
to the diversity of fluid and reservoir characteristics volumes is equivalent to P10, the point
for different deposits on the expectation curve where there is a 10% chance
of exceeding the estimate

Chart H gives the details.

Application of technologies such as hi-density

3D seismic, detailed core studies, detailed data
I The Rajasthan Fields
R AJA S T HA N BLOC K R J - ON - 9 0 / 1
OIL
GAS
0 5 10

Kilometers
20

gathering and analysis among others at Mangala

SHAKTI NE
has resulted in:
• 20% increase in STOIIP over the original FDP; SHAKTI
• 30% increase in reserves and resources; and NC WEST OIL & GAS
N-I-NORTH
• 25% increase in the plateau rate of the field. BHAGYAM N-I
BHAGYAM MANGALA
SOUTH
The FDP for the Bhagyam field has been ap- AISHWARIYA
proved by the GoI, and is based on a plateau off- N-E
N-P VIJAYA & VANDANA
take rate of 40,000 bopd. Front end engineering
design has been completed for Bhagyam. N-R
The STOIIP at Aishwariya has increased by
over 37% — from 213 million barrels (mmbbls) in KAAMESHWARI
the originally approved FDP to 293 mmbbls. This WEST 6
rise in STOIIP provides a commensurate increase
in 2P reserves and resources from Aishwariya
to 62 mmbbls. It also doubles the field’s plateau
KAAMESHWARI
production potential from 10,000 bopd to WEST 3 GS-V
20,000 bopd, subject to regulatory approvals.
Additional hydrocarbon resources have been KAAMESHWARI SARASWATI
WEST 2 KAAMESHWARI
discovered in the Barmer Hill formation over
the Mangala and Aishwariya fields, estimated at
around 400 mmbbls of STOIIP in tighter reser-
voir rocks with lower permeability. This Barmer RAAGESHWARI OIL
Hill reservoir has tested oil at flow rates of up RAAGESHWARI GAS
to 250 bopd (from a single well) after stimula- RAAGESHWARI EAST
tion. Fields of similar structures elsewhere in
the world have been developed with recoveries
ranging 7%–10% of the STOIIP under primary GUDA

recovery, and around 20% as secondary recov-

ery. Cairn is planning to conduct pilot activities
to evaluate this additional resource potential
and the associated development options.
There are also a series of smaller fields in
Rajasthan (see Chart I). The Kaameshwari
H Hydrocarbon Estimates
at the MBA Fields
IN MMBOE
West Development Area has been awarded by
the GoI and an FDP is under preparation. The
Shakti FDP has been submitted to the Operat- 2,054
ing Committee; and the Guda FDP is under STOIIP MANGALA, BHAGYAM, AISHWARIYA
preparation. Cairn proposes to develop these 308
993
resources at low cost by optimising technologi- + 685
2P GROSS EOR + WATERLOG
cal applications such as low cost drilling and
216
modular facilities, and by leveraging the main + 479
695
infrastructure. When developed, these fields 2P NET TO CAIRN INDIA

16 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009


will tie in to the MPT.
An example of the potential for future growth
was highlighted at the end of 2008. In addition
to the existing Raageshwari gas field, Cairn test-
ed a new play in the southern part of the Barmer
Basin and made another oil and gas discovery
in an adjacent field in December 2008 named
as the Shaheed Tukaram Ombale ASI (Tukaram)
field. This is located approximately 1.5 km east
of the Raageshwari 1 well in the southern part of
the MARS development area. Early tests indicate
a potential oil flow of around 500 bopd, plus 0.4
mmscfd gas. Other such finds could easily tie
into the infrastructure that is being built.
Cairn intends to make use of all the viable
Rajasthan fields — so as to optimise both the
life of the different hydrocarbon resources and
the associated revenue streams.
enhanced oil recovery
EOR techniques are exactly what they mean
— methods of increasing recovery from oil
fields. Historically, EOR has been considered as
a tertiary recovery method — to be applied at
the late stage of field life after the primary and
secondary recovery schemes.
Cairn recognised the opportunity to imple-
ment EOR techniques in MBA very early in the
field life, and is planning to conduct a field pilot
to demonstrate its applicability in the Mangala
field. The reservoir quality, oil properties and
temperature make these fields ideal for chemical
flooding EOR methods such as polymer or Alkali
Surfactant Polymer (ASP) flooding. The potential
benefits of such applications are: an increase
in reserves, extended oil plateau production
period, reduced water production thereby ac-
celerating oil production. Chart J illustrates the
advantages of EOR application in MBA fields.
Given the wax content of the oil in MBA,
under a conventional water–flood scenario,
the injected water will ‘finger’ through the oil
and reach the producer wells early — leaving
behind un-drained crude. Adding polymer to
the injection water brings the viscosity of the
injected water closer to the oil viscosity, and
thus improves the sweep of oil. In addition, the
E O R
Enhanced Oil Recovery is a term for special
techniques to increase the amount of crude oil
that can be extracted from a field, over and above
conventional methods which typically recover 20% to
40% of the STOIIP. Using EOR methods, an additional
10% to 20% of STOIIP can be extracted. For example,
polymers can be used to increase the viscosity of
injected water, forcing it to move into regions of
the reservoir that would not be contacted by water,
resulting in a more efficient flood and sweeping of
more oil.Small amounts of detergent-like surfactants
can also be injected with the water and polymer;
these “soaps” help “scrub” more oil out of the rock,
further enhancing oil recovery
use of alkali and surfactant makes the injected
water act like soap, further helping to wash
more oil off the reservoir rock. Both these EOR
processes will aim to increase the overall recov-
ery from the MBA fields.
Studies conducted by two independent labo-
ratories show favourable results of 30%–40%
incremental recovery from the application of
EOR. However, field recoveries are expected
to be lower. Detailed field scale modelling and
simulation studies carried out incorporating the
findings of the laboratory evaluation indicate
incremental recoveries of some 15% from the
MBA fields.
If the pilot is successful, the intention is to
implement chemical flooding on a field scale in
Mangala, followed by Bhagyam and Aishwariya.
The current assessment of the EOR resource
base is greater than 300 mmbbls of incremental
recoverable oil from the MBA fields.
funding rajasthan and the
pipeline: securing finance
and optimising costs
Innovations in Securing Finance
As covered in last year’s Management Discus-
sion and Analysis, April 2008 saw Cairn obtain
US$ 625 million through a private placement
of its shares — the largest private placement
in the Indian equity market during 2008–09.
J Effect of Enhanced Oil Recovery
SCHEMAT IC R E P R E S E N TAT ION
OIL RATE
CURRENT FDP
175,000 bopd
EOR
Potential to extend
& enhance plateau
WATER FLOOD
Mangala, Bhagyam
& Aishwariya
Q3 2009 2011 2013 2015 2017 2019
M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 17
 As a response to the global financial crisis Cairn has tailored its
spending plans to the available liquidity — demonstrating its
commitment to preserving financial and operational flexibility.
The Company remains focused on maintaining strict capital
discipline and is continually evaluating opportunities to reduce
costs even further

18 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

This included 63.3 million shares at Rs. 224.30
per share to our existing shareholder, Petronas.
This proactive move enabled Cairn to work on
building the pipeline and to keep the Rajasthan
development plan on track and ensure timely
production of first oil from the Mangala field.
In addition, Cairn had a debt financing facil-
ity for US$ 850 million to fund the upstream
development. Since the Rajasthan project has
grown in scale and scope — especially with the
inclusion of the pipeline — there was a need for
additional financing. This has been met by the
private placement of shares.
The Company is well placed financially with
significant cash on its balance sheet, and a full
drawdown of the US$ 850 million credit facility
that was provided by our bankers.
In addition, the Company has an ongoing dia-
logue with various international and domestic
institutions to review its financing options — to
create financial flexibility by securing competi-
tively priced long term debt.
In this, the guiding principle is always to
secure terms that will enhance long term share-
holder value.
Innovations in Optimising Project Costs
Simultaneously, Cairn has been focusing on
various ways of optimising costs in Rajasthan.
The introduction of a more economical smaller
Train 1 with a capacity of 30,000 bopd, phasing
Bhagyam and Aishwariya to 2010–11, limiting
the number of wells during the initial period,
and ensuring greater flexibility in delivery points
have reduced costs and optimised the develop-
ment of the Rajasthan project.
As a response to the global financial crisis
Cairn has tailored its spending plans to the avail-
able liquidity — demonstrating its commitment
to preserving financial and operational flexibility.
The Company remains focused on maintaining
a strict capital discipline and is continually evalu-
ating opportunities to reduce costs even further.
The earlier planned capital expenditure for
2008 and 2009 was US$ 1.8 billion on net basis
(i.e. net to Cairn, the 70% partner of the Cairn–
ONGC joint venture). This has been reduced to
US$ 1.4 billion through tight control on expens-
es and innovative project design and planning
for the MPT and the pipeline. Examples of these
include — proactive placement and ordering of
equipment and material prior to global price rise
in steel; the ordering of customised rapid drill
rigs that work at a faster rate thereby reduc-
ing movement time between wells; optimising
well designs and pads; and the incorporation
of closed loop systems to ensure proper and
complete energy utilisation while achieving zero
flaring during normal operations.
Cairn has spent approximately US$ 610 mil-
lion in finding the oil in Rajasthan — the largest
onshore discovery in India since 1985. Post
exploration, the Company is planning to spend
between US$ 3.8 billion to US$ 4.1 billion on a
gross basis (US$ 2.7 billion to US$ 2.9 billion on
net basis) up to 2011 on the development of the
MBA fields the largest discoveries in Rajasthan.
Cairn aims to run low cost operations in Raj-
asthan. Given that its field direct opex at Ravva
and CB/OS-2 in 2008 was US$ 2.4 per barrel,
the Company has one of the lowest operating
expenses in the world. We plan to apply these
skill sets in Rajasthan and continue as a low cost
operator.
The Rajasthan upstream operating expenses
are estimated at US$ 3.5 per barrel and the
pipeline opex is estimated at US$ 1.5 per barrel
during the life of the field.
M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 19
 K Weekly West Texas Intermediate Spot Price
US$ PER BARREL

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 200

20 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

 150
1 Cost vs Funds Available for the Rajasthan Project
IN US$ BILLION
Estimated Costs
120
2008 & 2009
90 Gross (Upstream 1.2, Pipeline 0.8)
60
Net to Cairn
2010 & 2011
30
Gross 1.5–1.8 Existing debt facility
0 Net to Cairn ~1.1-1.3 Total
04 2005 2006 2007 2008 2009
* from Ravva and CB, for January 2008 – March 2009
rajasthan: the ‘what ifs’
What if global crude oil prices crash once
again, as occurred in the second half of
2008?
It is indeed true that oil prices have been ex-
tremely volatile in recent times, especially since
the beginning of 2007. The price of West Texas
Intermediate (WTI), a leading benchmark crude,
rose from US$ 54 per barrel in January 2007 and
hit an intra-day peak of over US$ 145 per barrel
in July 2008. Thereafter, it fell to a low of
US$ 40 per barrel in December 2008, before
rising again. At the time of writing this Manage-
ment Discussion and Analysis, the crude oil
price is above US$ 60 per barrel. Chart K plots
the average weekly FOB spot price of WTI since
January 1986.
What Chart K shows is that, despite volatility,
crude oil prices have been above US$ 40 per
barrel since May 2004. The average long term
analysts’ expectation for the oil price is in the
range of US$ 75 to US$ 100 per barrel.
We remain focussed on leveraging our low
cost operations to drive the competitive advan-
tage. With opex of the existing operations at
Ravva and CB/OS-2 of US$ 2.4 per barrel and
the estimated Rajasthan opex costs of US$ 5
per barrel, we are well placed to create greater
shareholder value even at lower oil prices.
What if MPT doesn’t produce oil according
to schedule?
Train 1 is completed and is ready to start pro-
duction in Q3 2009 with a capacity of 30,000
bopd via trucking to the Gujarat coast. We are
targeting completion of Train 2 by Q4 2009,
with a capacity of up to 80,000 bopd by the
end of 2009.
Financed by
2.0 Opening cash on 1 January 2008 0.4
1.4 Cash flow from operations * 0.2
Preferential allotment of equity (2008) 0.6
0.9
2.1
What if the pipeline is delayed?
The pipeline is targeting completion by Q4
2009, in line with the additional oil to be pro-
duced through Train 2. As of now, we remain
committed to this date. However, in spite of
the hard work put in by the teams, some risk
remains — particularly on account of the
monsoons. Trucking shall continue to be an
interim measure.
What if Cairn ran out of funds for the
Rajasthan project?
The prompt action to raise funds through
private placement of equity, re-phasing of Bhag-
yam and Aishwariya and the targeting of cost
savings through innovative project design and
planning has placed Cairn in a strong financial
position. With most of the contracts entered
into — providing a level of certainty over the
cost base — the Company believes it has taken
the necessary steps to prevent a funding short-
fall. Table 1 gives the estimated costs for 2008
to 2011, versus the funding already in place.
Moreover, Cairn will have additional sources
of funds. These are:
• Continuous cash flows from existing opera-
tions from Ravva and CB/OS-2
• Start of cash generation from the Rajasthan
operations
Thus we believe that there is adequate
funding for Rajasthan. Equally, we continue
to explore possibilities for additional financing
— if necessary and available at terms that can
enhance long term corporate value.
M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 21
22 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
cairn’s operating assets:
ravva and cambay
At present, Cairn has two significant producing
assets: at CB/OS-2 in the Cambay Basin, off
the Gujarat coast in western India, and Ravva,
located in the Krishna–Godavari basin off the
Andhra Pradesh coastline in Eastern India.
Cairn’s gross operated production from these
two assets in India during 2008 was 66,146
boepd (net working interest: 17,264 boepd).
Cambay Basin
Offshore, Western India
BLOCK CB/OS-2 (Cairn is the operator
with 40% participating interest)
In CB/OS-2 block, the Lakshmi and Gauri off-
shore fields are currently producing oil and gas,
while the onshore field, CB-X, is producing only
gas. The average gross production from the
CB/OS-2 block for 2008 was 13,607 boepd —
comprising average oil production 7,376 bopd
and average gas production of 37.4 mmscfd.
The drilling and work-over campaign carried
out during 2007–08 has not only transformed
the CB/OS-2 block from a predominately gas
to an oil producing asset, but has also extended
its economic life. Two development wells were
drilled successfully. The onshore facilities were
fully upgraded to handle and process 10,000
bopd, and the field is currently producing
around 8,500 bopd.
Cambay has some notable field milestones;
Discovery to delivery took just 28 months;
health, safety and environment (HSE) —
1.4 million hours of work with no lost time
injury (LTI); the facility is both ISO14001 and
OHSAS18001 certified. Cambay generated its
historically highest revenues during 2008 aided
by greater oil production from the new wells
and higher oil prices.
Cairn intends to maintain and consolidate its position as a low
cost operator. The field direct operational expenses for the
current producing blocks, Ravva and Cambay, were
US$ 2.4 per barrel in 2008 — one of the lowest in the world
Krishna–Godavari (KG) Basin
Offshore, Eastern India
RAVVA (Cairn is the operator with
22.5% participating interest)
Average gross from the Ravva field for 2008
was 52,539 boepd — comprising average oil
production of 41,227 bopd and average gas
production of 68 mmscfd.
Ravva has been producing for more than 14
years. Well optimisation measures and surface
de-bottlenecking in the last quarter of 2008
helped extend the plateau and arrest the ex-
pected production decline. The RD-9 and RB-4
LM sands are producing under extended well
test at an average rate of 1,600 bopd. Reservoir
pressure was maintained by optimal water injec-
tion. 4D time-lapse seismic surveys have been
initiated to locate potential bypassed oil, and
preparations are underway for the execution
of critical development projects to maintain
production rates.
Ravva field milestones are: increased produc-
tion from 3,700 bopd to 50,000 bopd; plateau
extended to nine years and reserves doubled;
produced over 200 mmbbls; 2.4 million hours
worked with no LTI; ISO14001 and OH-
SAS18001 certified; around US$ 4 billion profit
on petroleum paid to GoI.
Cairn intends to maintain and consolidate its
position as a low cost operator. The field direct
operational expenses for the current producing
blocks, Ravva and Cambay, were US$ 2.4 per
barrel in 2008 — one of the lowest in the world.
M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 23
 L Cairn’s Exploration
Assets
non-operated blocks

operated blocks

r ajas t h an ga n g a va l l e y b a s i n

rj-onn-2003/1
cairn india 30%, eni
operator

vn-onn-2003/1 B H U TA N
rj-on-90/1 cairn india 49%, operator
cairn india 70%,
operator, ongc 30% gv-onn-2003/1
cairn india 24%, operator

gv-onn-2002/1
cairn india 50%, operator

sauras h t ra and ca mb ay b a s i n BANGLADESH

cb-x
gauri INDIA
gs-osn-2003/1 lakshmi
cairn india 49%,
ongc operator ambe

cb/os-2
lakshmi, gauri, cb-x, ambe
cairn india 40%, operator
k ri s h n a - g od ava r i b a s i n
kk-dwn-2004/1
cairn india 40%,
ongc operator
ravva
cairn india 22.5%, operator

kg-dwn-98/2
cairn india 10%, ongc operator

kg-onn-2003/1
cairn india 49%, operator

pr-osn-2004/1
cairn india 35%, operator
ARABIAN SEA

ma n n a r b a s i n
B AY O F B E N G A L

sl2007-01-001
cairn india 100%, operator

24 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009


exploration
Cairn is a major long term player in oil and gas
exploration. It has an experienced team, a large
proprietary database, and a record of successful
exploration over 10 years by its parent company
Cairn Energy — with a success ratio that is close
to 40%. The exploration strategy is based on
building a portfolio of high reward prospects
across the risk spectrum in a diversity of basins,
plays and operating environments. The key
tools of the Company’s exploration methodol-
ogy are:
 Acquisition and processing of best-in-class
seismic data
 Integrated petroleum systems evaluation and
predictive basin modelling
 Reprocessed and enhanced regional gravity
and magnetic data for basin delineation
 Application of appropriate leading-edge
technology.
Chart L shows the map with Cairn’s exploration
assets.
Last year’s Management Discussion and
Analysis presented a detailed overview of
Cairn’s exploration assets. This time, the focus
is on key developments that have occurred
since then.
discoveries in rajasthan
In December 2008, Cairn made a separate
oil and gas discovery adjacent to the existing
Raageshwari gas field in Rajasthan. Early tests
indicate a waxy oil of 40° API gravity with a
potential flow of around 500 bopd, plus 0.4
mmscfd gas.
Also in Rajasthan, a third development area
was awarded to Cairn by the GoI. This is the
Kaameshwari West Development Area measur-
ing 822 km2, where there have been three dis-
coveries: Kaameshwari West 2, 3 and 6 — with
Kaameshwari West 2 and 3 lying in a new play
in the Upper Barmer Hill / Lower Dharvi Dungar
sandstones.
sri lanka
In September 2008, the Sri Lanka Board of
Investment (BoI) and Cairn India signed a com-
mitment to explore the Mannar Basin, a frontier
Cairn will witness
transformational growth —
with production rising from
roughly 63,000 bopd (gross) in
Q4 of calendar 2008 to around
200,000 bopd (gross) in 2011
petroleum province. Block SL 2007-01-001
lies offshore north–west Sri Lanka and covers
approximately 3,000 km2 in water depths of 200
metres to 1,800 metres. The work programme
includes the commitment to acquire significant
quantities of seismic data and drill three wells
in the initial three of the eight years exploration
period. Cairn will explore the block by applying
the best in class technologies and industry
practices. The plan is to acquire 2D and 3D
seismic in late 2009 and 2010 and, depending
on results, start exploration drilling in 2011.
building the future and
transformational growth
To summarise, therefore, Cairn’s strategy going
forward is based on four building blocks as
given below.
1 Maximize recovery from production base
• Successful drilling at Ravva and CB/OS-2
• Maintain low operating cost base
• Time lapse (4D) seismic in Ravva
2 Execute Rajasthan development
• First production Mangala Q3 2009
• Major regulatory clearances obtained
• Delivery point shifted
• Major contracts awarded
• Mangala FDP revision submitted
3 Maximize potential in Rajasthan
• Over 3,000 km2 under long term contract
• Growing resource base
• Increased Mangala recovery
• EOR
• Monetise Barmer Hill and other fields
4 Identify new growth opportunities
• Unrisked potential of 1.4 billion bbls
• New leads in existing portfolio
• Seismic programmes completed
• Acreage in Sri Lanka
If each of these work according to plan,
Cairn will witness transformational growth —
with production rising from roughly 63,000
bopd (gross) in Q4 of calendar 2008 to around
200,000 bopd (gross) in 2011.
M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 25
26 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

health, safety and
environment (hse)
The Company’s policies on HSE are clear: no
harm to the people, and no adverse impact on
the environment and the communities in which
we operate. Hence, the priorities were excel-
lence in construction safety, minimising the
environmental impact of all activities including
those carried out by contractors, and continuing
to improve HSE across all assets and operations.
health and safety
Cairn has successfully developed and rolled out
a Corporate Responsibility Management System
(CRMS) in line with international best practices.
The CRMS has five key sub-systems — health,
safety, environment, security and corporate
social responsibility (details on CSR are given in
a separate chapter).
During 2008, Ravva and Suvali were re-
certified to the ISO 14001 standard and also to
OHSAS 18001 for their occupational health and
safety management systems.
Road Safety
In 2008, road safety training was upgraded with
the help of the Institute of Road Traffic Educa-
tion (IRTE), with all drivers given additional
training.
Journey management plans are key to road
travel safety, and all Cairn vehicles are being
fitted with an ‘in-vehicle monitoring system’
(IVMS). A heavy vehicle safety programme has
been initiated to ensure that trailers and other
heavy vehicles have appropriate safeguards and
are regularly inspected.
During 2008, contractor vehicles travelled for
more than 15 million km without any fatalities or
serious accidents. The motor vehicle accident
frequency rate was 1.33 per million km travelled
— which is well below the international bench-
mark in this industry.
Operational & Construction Safety
With over 10,000 contract workers of varying
skill levels at multiple project sites across the
country, it was a challenge to ensure all–round
2008 saw an excellent health and safety record. There were
no fatalities or serious injuries involving permanent disability.
The Lost Time Injury Frequency Rate (LTIFR) was 0.27 which
is below the International Association of Oil & Gas Producers
average of 0.66
safety at the work place. A comprehensive
Safety Management System was implemented
across all sites. All workers have been trained in
site rules and safe work practices.
In Rajasthan Mine Safety Week 2008, Cairn’s
rig site judged as the best entry in overall opera-
tional and HSE performance.
2008 saw an excellent health and safety re-
cord. There were no fatalities or serious injuries
involving permanent disability. The Lost Time
Injury Frequency Rate (LTIFR) was 0.27 which
is below the International Association of Oil &
Gas Producers average of 0.66. There were 10
further recordable incidents involving minor in-
juries with a Total Recordable Injury Frequency
Rate (TRIFR) of 0.49.
Process Safety
Operating assets continue to focus on the pro-
cess safety management programmes to ensure
asset integrity and emergency preparedness.
Emergency exercises involving employees, con-
tractors and the surrounding communities have
been conducted at various Company sites.
Health
During 2008, a study was conducted on
workplace ergonomics and feedback given to
employees. A clinic with a doctor and / or para-
medics and an ambulance were deployed at all
construction sites. Workforce pre-employment
medical assessments were also carried out.
Loss time Injury
Frequency Rate
0.6
0.39
0.27
2006 2007 2008
environment
Cairn recognises its responsibility to minimise
environmental impacts from its activities. Work-
ing closely with our contractors, we are manag-
ing the environmental issues during construc-
tion of our projects to achieve our goals.
Performance Highlights
Environmental impacts were assessed for our
new exploration activities.
Environmental and social management plans
developed for Rajasthan project.
Air emissions in 2008 have been maintained at
similar rates to 2007 despite a quantum rise in
energy demand.
Several initiatives were taken at Ravva towards
reducing energy consumption. It is estimated
that these initiatives have led to a saving of
1,659 giga joule (GJ) in 2008. Power supply
for offshore platforms at Ravva is now being
met by solar arrays and back up wind turbine
generators.
Treated waste water marine discharge has gone
down drastically at Ravva with produced water
now being re-injected into the reservoir.
Discharges to Water
M G OF OIL P E R LIT R E OF WAT E R LO S T
8.91
7.56
6.64
2006 2007 2008
M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 27
28 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
human resources
Cairn’s human resource strategy and direction
has been aligned with the ongoing business pri-
orities. The focus during 2008 was on hiring and
creating robust people management practices in
four key areas:
 Improving the efficiency of acquiring new
staff
 Focusing on staff development
 Overall retention of staff, especially those
with high potential
 Leveraging SAP to improve the operational
effectiveness of HR processes.
The introduction of SAP Employee Self Service
(ESS) in 2008 marked the beginning of a
journey to make all HR processes seamless
and available at all times to employees. The
new system resulted in process and time sav-
ing efficiencies. The goal is to introduce new
modules and functions — thereby leveraging a
world class Enterprise Resource Planning (ERP)
system in support of integrated human resource
management.
While many businesses reduced their em-
ployee count or put on hold their recruitment
plans, Cairn has been hiring throughout 2008,
and will continue to do so in 2009. During the
financial year under review, the head count
increased by 50%.
As part of a Company-wide focus on improv-
ing talent management initiatives, the technical
competency framework was introduced during
2008 and is intended to ultimately form the core
of many people processes. As a first step, the
framework was introduced for all roles in the
geo-technical functions. It has provided a struc-
tured basis for the development of staff, with
each employee given a personal development
plan that clearly articulates the areas of strength
and areas for redevelopment.
The leadership development initiative was
targeted to help provide a supply of leaders, to
aid succession planning. Cairn has a partner-
ship with the Indian Institute of Management
(Ahmedabad) to provide classroom training
on leadership skills. The two-phase leadership
development programme is interspersed with
a cross-functional project assignments focusing
on the business challenges.
Retention levels improved with focus on
development of staff. During 2008, 94% of staff
and 98% of key personnel retained.
As on 31 March 2009, Cairn had 902 full
time employees.

M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 29

 The Cairn Business Risk Management System has been
implemented for all activities. Emergency response plans are
in place for key operations and the IT disaster recovery plan
and business continuity plans have been developed
internal control systems
and their adequacy
In 2008, Cairn implemented the SAP enterprise
resource planning system, which significantly
enhanced the Company’s internal control en-
vironment. SAP implementation was widened
with the launch of the Maintenance Manage-
ment and Employee Self Service modules. The
Programme Office was certified as ISO 27001
compliant for information systems. A review
of management processes was carried out by
an external consultant, which has resulted in
improved programmes being developed for
implementation in the areas of contracts and
procurement, project management and human
resources.
The Cairn Business Risk Management System
has been implemented for all activities.
Operational policies and procedures have
been documented and disseminated to appro-
priate departments / functions. However, the
process is still ongoing in Rajasthan — which
will be put in place before first oil. Cairn’s
operational activities have been subjected to
audits and peer reviews — and the recom-
mendations and actions arising from such audit
reports are regularly and formally monitored by
senior management.
Financial management policies, standards
and delegations of authority have been dissemi-
nated to appropriate levels of management.
Cairn’s financial activities are subjected to inde-
pendent audits — both internal and statutory —
and these reports are placed before the senior
management and the Audit Committee of the
Board of Directors.
An updated Code of Business Ethics has
been prepared which, after approval by senior
management and the Board of Directors, will be
disseminated throughout the Company.
Emergency response plans are in place for
key operations and the IT disaster recovery plan
and business continuity plans have been
developed.
As part of improvement in the system of
internal controls, the following are the major
programmes planned in 2009:
30 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
 Implementation of a robust mechanism for
identification, updating and tracking of regu-
latory requirements.
 Implementation of improved processes in the
areas of contracts and procurement, project
management and human resources.
abridged financial results
The year ending for Cairn India was changed
from 31 December to 31 March to align the
Company’s financial year with India’s tax year.
Consequently, the results for the current ac-
counting period covers 15 months, while for the
previous it was 12 months. Thus, one cannot
readily compare the results over the two suc-
cessive periods. Table 2 gives the consolidated
and audited results.
outlook
At the time of writing this Management Discus-
sion and Analysis, Cairn is targeting delivering
transformational growth — beginning Q3 2009.
We will soon start delivering first oil from
Rajasthan — with the capacity to produce up to
30,000 bopd through Train 1.
We aim to complete the pipeline by Q4 2009.
We are targeting completion of Train 2 at the
MPT by Q4 2009 — and thus should have the
capacity to produce up to 80,000 bopd of oil.
By 2011, with Bhagyam and Aishwariya coming
on stream, Rajasthan will have the ability to pro-
duce up to 175,000 bopd of oil — all of which
will be processed at the MPT.
Thus, by 2011, we will have a targeted increase
in overall operated production from approxi-
mately 63,000 bopd (gross) in Q4 of calender
2008 to around 200,000 bopd (gross) in 2011.
We are, therefore, confident of being a signifi-
cant provider of India’s energy needs in the
near future.
 cautionary statement

2 Abridged Consolidated Audited

Financials for Cairn India
RS. MILLION EXCEPT FO R EPS, WHICH IS IN RS.
Statements in this Management Discussion and
Analysis describing the Company’s objectives,
projections, estimates and expectations may be
‘forward looking statements’ within the mean-
For 12 months For 15 months
ended 31 Dec 07 ended 31 Mar 09 ing of applicable laws and regulations. Actual
results might differ substantially or materially
income from those expressed or implied. Important
Income from Operations 10,123 14,327 developments that could affect the Company’s
Other Income 1,324 5,072 operations include a downtrend in the sector,
Total Income 11,447 19,398 significant changes in political and economic
environment in India, exchange rate fluctua-
expenditure tions, tax laws, litigation, labour relations and
(Increase)/Decrease in Stock-in-trade -112 222 interest costs.
Operating Expenses 1,946 2,130
Employees Cost 1,257 1,145
Depreciation, Depletion, Amortisation & Site Restoration 2,077 2,698
Other Administration Cost 360 1,732
Exploration Costs 2,512 1,684
Foreign Exchange Fluctuation 2,120
Total Expenditure 10,161 9,611
Interest and Finance Cost 27 64
Exceptional Items 156
Profit/(Loss) before taxation 1,259 9,879
provision for taxation
a) Current Tax 388 1,111
b) Deferred Tax 764 623
c) Fringe Benefit Tax 353 110
Net Profit/(Loss) for the period -245 8,035
Paid up Equity Share Capital (face value of Rs.10 each) 17,784 18,967
Reserves excluding Revaluation Reserves 275,627 308,668
earnings/(loss) per share (not annualised)
a) Basic -0.14 4.31
b) Diluted -0.14 4.28
public shareholding
a) Number of Shares 551,555,629 669,824,025
b) Percentage of Shareholding 31.01% 35.32%

M A N AG E M E N T DIS C US S ION A N D A NA LYS I S 31

 RJ BLOCK MILESTONES
RAJ A STH A N B A SIN

MAY 95 Production 1998 Cairn farmed DEC 1999 Cairn farmed NOV 2001
Sharing Contract signed in for 27.5% in for an additional 22.5% Saraswati discovery

1999 Guda
(discovered by Shell)

SEPT 2001
RAVVA MILESTONES Ravva Satellite Gas
Development Project
K RI SH N A G O DAVA RI BA SI N
JULY 2001
Zero flaring
1999
OCT 1994 DEC 1996 Phase-II of Ramped up production to JUN 2001
Production Sharing development commissioned 50,000 bopd Third associate gas
Contract signed recovery compressor

JAN 1995 1998 Ravva field NOV 2000 Water

Command Petroleum took- doubled its injection up gradation
over as JV Operator
oil reserves
OCT 1997 Cairn took over 2001 Additional subsea lines
from Command Petroleum for Ravva satellite gas project

CB/OS-2 MILESTONES
CAM B AY B A SIN
JUN 1998
Production Sharing
Contract signed

JAN 2001
Gauri oil & gas
DATE DATE DATE Oil produced field discovery
Description of milestone Description of milestone Description of milestone in bopd
for Rajasthan Field for CBOS2 Field for Ravva Field
DISCOVERY DATE DISCOVERY DATE 100 million barrels 100 million barrels JAN 2001
Well discovered in Well discovered in of oil produced of oil produced Ambe oil & gas
the Rajasthan Field the CBOS2 Field field discovery

MAY 2000
Lakshmi oil & gas
field discovery
Fastest progress in India
Discovery to production
in only 28 months
1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1
O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

WHEN THE BRENT CRUDE OIL PRICES WERE…

US$ PER BARREL
$9.8 PER BARREL

32
 JAN 2004 NOV 2005 GSV & JAN 2007
Mangala discovery N-C-West discovered IPO of Cairn India

MAR 2004 DEC 2005 FEB 2007

Aishwariya discovery Bhagyam South N-I-North discovery

JUNE 2003 APR 2004 JAN 2006 MAY 2007

Shakti discovery Raag Deep gas K-W-3 & Saraswati-
Cairn acquired N-E discovered Crest - 1 discoveries
100% interest AUG 2004
Bhagyam discovery APR 2006 AUG 2007 DEC 2008
N-P & Mangala K-W-6 Raageshwari-
FEB 2003 SEPT 2004 Barmer Hill discovery East-1z discovery
Raageshwari discovery Vijaya discovery discoveries

NOV 2003 JUNE 2005 DEC 2006

G-R-F-1 discovery N-I discovered K-W-2 discovery
(now part of Guda)
OCT 2003 MAY 2005 NOV 2006
Kaameshwari discovery Vandana discovery Shakti-NE-1 discovery
JAN 2003 MAY 2008 2008 – 2009
100 mn barrels Commissioned Produced additional subsea lines
of oil production by JV planned for Ravva
Water Re- Injection project
JUN 2002 Micro vendor development- programme JAN 2005 & SEPT 2008 making Ravva Eco-Friendly
Additional initiated to encourage the local village ISO 14001 & OSHAS 18001 certification
crude oil contractors at site- for which Casurina Installation of additional compressors APR 2008
storage tank plantation in an area of 110 acres at Ravva 200 mn barrels
installed onshore (along the beach) of oil production by JV

2002 DEC 2005 Innovative technology MARCH 2008

Ramped up gas Sales application of drag reducing additive for Completion of Infill drilling
incremental oil production programme in 17 months
30 » 70
mmscfd mmscfd 2004 TERI Awards conferred for the JAN 2008
Micro vendor development Programme First of its kind in India
Multiphase pumps
for incremental oil production

JUL 2002 DEC 2004 APR 2005 CB/OS-2 onshore & offshore MAY 2009 Upgraded oil
Safety case Hydrocarbon facilities certified for ISO 14001:2004 standards processing capacity to

developed Dew Point project 10,000 bopd

for the first time in India completed to meet sales gas JUN 2006 CB/OS-2 onshore & offshore
specifications facilities certified for OHSAS
Reverse Osmosis plant 18001:2007 standards
installed at Suvali village

APR 2004 Gauri field developed and NOV 2005 Gauri Oil Development
Gas production commenced First oil from Gauri

JAN 2006 FEB 2008

Oil production up to Oil production up to
3,000 bopd 6,000 bopd

JUNE 2003 Lakshmi fields APR 2006 Ambe field

ramped up gas production to
130 mmscfd Commerciality declared

OCT 2002 Lakshmi gas field developed and MAR 2005 Lakshmi field Phase-II development – JUNE 2007
Gas production commenced 5 new wells drilled CB-X field development completed and
Gas sales commenced

FEB 2004
CB-X onshore discovery
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M

VA LUED
AT $133.9

33
 Corporate Social
Responsibility

Our vision is ‘sustainable development’, which we interpret as growing our business

in a socially and environmentally responsible way, while simultaneously meeting the
legitimate interests of our stakeholders

34 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

overview
Our activities are of importance to the social
and economic environment of the communities
in which we operate. Helping to bring positive
benefits to such communities not only improves
their state of well-being but also facilitates the
smooth running of our operations. As an exam-
ple, helping people have access to clean water
has been a common issue for the communities
we have worked with in India. Our first projects
to bring fresh water supplies to local communi-
ties started around our Ravva plant in Andhra
Pradesh. This initiative continues in Rajasthan.
stakeholder engagement
At Cairn, we believe that building strong, open
and lasting relationships with our stakeholders
is as much a social responsibility, as it is vital
to achieve our business goals. Our activities
are typically large in scale and often involve
the neighbouring communities. Therefore, it is
important for us to continuously cooperate with
governments and local communities to ensure
‘win-win’ outcomes for all — the people in com-
munities around us and our businesses.
In Rajasthan, for instance, the scale of
our development project requires extensive
consultation. This continues to be guided by
a Public Consultation and Disclosure Plan that
completed 54 consultation meetings in 2008:
34 grievances were received for the project in
2008, all of which were successfully resolved.
community development
Cairn recognises that its activities can affect the
social and economic environment of the com-
munities in which we operate. This is particu-
larly true where its presence dominates local
industrial or commercial activity — as is the
case in the remote and arid part of Rajasthan. In
2008, we have continued our partnership with
the International Finance Corporation (IFC) a
part of the World Bank group, to establish an
Enterprise Centre at Barmer for promoting local
economic development, a rural dairy develop-
ment project and a child and maternal health
awareness initiative.
human rights
Cairn recognises the importance of human
rights. In Rajasthan, we continue to apply a
‘Rights Aware’ approach to safeguard the
local community’s right to water in an area
with limited water resources while accessing
the water required to support our operations.
Similarly, land acquisition which is critical for
the Rajasthan project, has been carried out after
extensive consultations with local communities
and immediate stakeholders.
policy
Cairn is committed to maintaining the highest
standards of corporate social responsibility in
its business activities. To meet this commit-
ment, we seek to respect the rule of law, adopt
appropriate international standards, implement
management systems, and strive to maintain the
highest standard of ethics with regard to our
employees, investors, shareholders, local com-
munities and suppliers.
vision
Our vision is ‘sustainable development’, which
we interpret as growing our business in a
socially and environmentally responsible way,
while simultaneously meeting the legitimate
interests of our stakeholders. Executing this
vision involves community involvement, which
means taking an active role and responsibility in
empowering local communities to achieve their
ambitions.
Cairn’s vision of CSR is further encapsulated in
3Rs: Respect, Relationships and Responsibility.
Respect Respect for the people, who are
Cairn’s key asset. This is not only respect for
Cairn’s employees, but also for everyone who
works in our facilities and lives in the communi-
ties with which we interact.
Relationships Cairn’s success would not be
possible without the consistent support that we
have enjoyed. Relationships are all-important,
whether with people living next to a drill site in
Rajasthan, people from nearby villages or of-
ficials and politicians making decisions.
Responsibility We have a responsibility to
manage the expectations of the people who are
affected by Cairn’s operations. Working in any
country is only possible when values are shared.
We believe that our core values of integrity,
social and environmental responsibility, team-
work and nurturing of individuals, creativity, risk
management and alliances with key partners are
all ingredients that are central to our success.
Cairn operates in areas that are economi-
cally, socially and environmentally sensitive
and therefore needs to take due recognition of
these challenges when developing its plans.
objectives
At Cairn, we seek to:
 Proactively manage stakeholder expectations
to attain and maintain the ‘social licence’ to
operate
 Partner with communities for sustainable
development
 Create and sustain a positive perception of
Cairn in its areas of operation
 Show leadership in corporate citizenship.
csr initiatives
Cairn aims to promote inclusive and sustainable
development. Hence, it focuses on:
 Development of social capital through health
and education initiatives
 Economic development of the disadvantaged
CO R P OR AT E S OC IA L R E S P O NS I B I L I TY 35
 A self-employment
programme focusing on
making handicrafts and
establishing linkages with
locally-based exporters has
brought economic benefits to
more than 200 women
— in enhancing their well-being and wealth
by increasing their opportunities and access
In Bihar, more than 5,500 to services
 Infrastructure development to facilitate the
farmers were given training
process of economic regeneration
in organic farming techniques  Effective protection of the environment and
and organised into farmers’ prudent use of natural resources.
clubs for sustainability. Cairn In 2008, Cairn achieved a number of
supported more than 20,000 milestones in CSR across all its operations.
flood affected families by We won the prestigious TERI (The Energy
providing shelters in relief Research Institute) CSR Award, 2008, for our
camps and by making micro-vendor programme at Ravva.
provisions for medical aid, At a corporate level, the framework for our
water and sanitation Pubic Consultation and Disclosure Plan (PCDP)
and the Land Acquisition and Compensation
Plan (LACP) has been defined; and this has
been aligned with the requirements of the
IFC’s Policies and Performance Standards on
Social and Environmental Sustainability. This
framework has been embedded within the
systems and operations of Cairn throughout the
project life cycle. During 2008, IFC carried out
independent audits of Cairn, which showed that
the Company is progressing well towards full
compliance with the IFC standards.
In Rajasthan, the IFC–Cairn Linkage Programme
launched in 2007 led to skills development of
36 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
more than 5,000 local people — enabling them
to be associated with construction-related job
opportunities. Efforts were made to strengthen
relationships with the local community, espe-
cially those who had contributed land to Cairn
for the Rajasthan project, so as to enhance their
economic possibilities and outreach.
In Bihar, the major CSR objective was to address
the socio-economic needs of the communities
around our project areas and build an environ-
ment of trust and cooperation. More than 5,500
farmers were given training in organic farming
techniques and organised into farmers’ clubs
for sustainability. Cairn supported more than
20,000 flood affected families by providing shel-
ters in relief camps and by making provisions for
medical aid, water and sanitation.
CSR initiatives were also launched in the
exploration blocks of Uttar Pradesh (UP). The
major focus in UP is on improving reproduc-
tive and child health care practices through a
project called ‘Janani Pariyojna’ in four districts
of eastern UP, namely Gorakhpur, Maharajganj,
Deoria, and Kushinagar.
The CSR programmes at Ravva and Suvali focus
on promoting health, education, sustainable
livelihoods and improving local infrastructure
together with the local administration.
infrastructure development
Several initiatives have been undertaken that
recognise the importance of infrastructure de-
velopment in growth and poverty reduction:
Working for the last five years to create water
security in the district of Barmer by constructing
over 1,300 water harvesting structures. This
year, a water vending outlet was constructed at
Naya Nagar, Barmer — which is an important
location for the community on the highway.
Supporting the construction of 200 houses
for the poor at Ravva, under the Indira Awaas
Yojana.
Supporting schools around its operational area
by constructing classrooms, providing drinking
water facilities, building boundary walls and
establishing computer learning centres.
Constructing panchayat offices, community
halls and internal roads in Ravva, benefiting
over 35,000 villagers.
Constructing an emergency ward in the Com-
munity Health Centre, Baitu (Barmer) which will
cater to the needs of more than 25,000 people
and handle several emergency cases, especially
road accidents.
education
Education is a key area of focus for Cairn.
Several initiatives are underway across the
operational areas:
Supporting an interactive mode of learning
for children in 27 government schools in rural
Barmer called ‘Theatre in Education’. This pro-
gramme has been instrumental in breaking the
monotony of classroom teaching and making
education more lively and interesting.
Supporting infrastructure improvements for
rural schools in our operational areas which
has aided enrolment and reduced the numbers
dropping out of schools.
Partnering with All India Radio to broadcast
two community awareness programmes ‘Gaon
Ki Dhani’ and ‘Hello Doctor’. ‘Gaon Ki Dhani’
provides expert advice on agriculture, livestock
rearing; while ‘Hello Doctor’ advises on health
related issues. The programmes have been very
effective and have reached out to more than
10,000 villagers.
Supporting a computer literacy programme in
various government schools in Bihar since 2007.
The objective is to give students of Classes IX
and X exposure to computers to improve their
academic options and career opportunities.
Starting adult education centres. Contract work-
men at the Ravva terminal have been attending
these centres, and some have qualified for
the graduation courses entrance examination
conducted by the Andhra University. Cairn
also supports the education of girl students to
continue their studies — especially those who
dropped out after matriculation.
economic development
Cairn is working on a two-fold strategy:
 Developing capabilities of SMEs /general
suppliers /contractors /micro-entrepreneurs
to act as vendors to large industries and supply
them with goods and services.
 Developing the skills of locals to match the
market requirements for employment.
Cairn received the TERI Corporate Award for
Social Responsibility, 2008, in recognition of
its efforts for the Micro-Vendor Programme at
Ravva. The programme was initiated in 2005.
It registers local people as potential suppliers
and provides training in quality, safety and en-
vironmental skills. The training helped create a
pool of vendors that can supply goods and ser-
vices to Cairn and other business enterprises.
Contracts worth over US$ 1 million have been
awarded to about 80 micro-vendors at Ravva.
CO R P OR AT E S OC IA L R E S P O NS I B I L I TY 37
 More than 780 economically marginal households have
become members of 13 milk collection societies which are
supplying milk to the Barmer district cooperative society
(SARAS). Over 400,000 litres of milk was collected in 2008,
compared with 200,000 litres in 2007 — and generated total
revenue of over Rs.4.8 million

38 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

 Under the IFC–Cairn Linkage Programme,
an enterprise centre (EC) has been set up at the
Industrial Training Institute (ITI) Barmer. The
EC aims to develop the skills of local youth —
enabling them to be employed with Cairn or
other industries in the area. The EC also acts as
a catalyst for micro, small and medium enter-
prise growth and development in Barmer.
By the end of 2008, the Barmer EC had
trained more than 5,000 individuals in construc-
tion related skills (reinforced concrete construc-
tion, masonry, bar bending, electrical, plumbing
carpentry, scaffolding and fabrication); in
handicrafts (garments and key chain making);
in auto repairs; mobile and electrical appliances
repairing; and in teaching spoken English. Ap-
proximately 70% of the trainees have secured
employment following such training.
A self-employment programme focusing on
making handicrafts and establishing linkages
with locally-based exporters has brought eco-
nomic benefits to more than 200 women.
Another component of the IFC-Cairn Linkage
Programme is the community-based rural dairy
development project at Barmer.
More than 780 economically marginal
households have become members of 13
milk collection societies which are supplying
milk to the Barmer district cooperative society
(SARAS). Over 400,000 litres of milk was col-
lected in 2008, compared with 200,000 litres in
2007 — and generated total revenue of over
Rs. 4.8 million.
health
Cairn’s community based health initiatives work
at three levels:
 Supporting GoI initiatives with health care
through infrastructure support and capacity
building of health service providers
 Helping improve health literacy so that
people can make informed choices
 Creating partnerships with stakeholders to
build capacity for leadership development at
the grassroot level, supported by health promo-
tional practices.
Cairn’s health initiatives have been:
Child and Maternal Health (CMH) Awareness:
This is a component of IFC–Cairn Linkage
programme and is being implemented in part-
nership with the Centre for Development and
Population Activities (CEDPA), an international
NGO. The project aims to increase awareness
regarding HIV/AIDS prevention, reproductive,
child and other major health concerns by em-
powering Government of Rajasthan health prac-
titioners and elected panchayat representatives.
Under the project, both in- and out-of- school
adolescents are empowered through life skill
education programmes. The other component
is awareness generation on HIV/AIDS for more
than 4,000 truckers in the area, who are consid-
ered to be in the high risk group.
Cairn has been addressing the issue of commu-
nity health in Ravva by running a village clinic
for the community in Surasaniyanam. This has
helped improve the health status of more than
6,000 people in and around the village.
A 12 bed hospital has been constructed by
Cairn in Surasaniyanam — as well as a veteri-
nary clinic at the mandal headquarters.
Health camps are organised periodically for
specific health issues and health education.
Reproductive and Child Health (RCH): Cairn is
implementing a project on RCH in four districts
of Uttar Pradesh. The aim is to increase commu-
nity action that directly and indirectly improves
reproductive and child health care practices.
CO R P OR AT E S OC IA L R E S P O NS I B I L I TY 39
 Report on
Corporate
Governance
The philosophy of Cairn India Limited (‘Cairn India’ or ‘the Company’) is to assist the
management in conducting its business in a fair, ethical, efficient and transparent
manner to ensure higher long term stakeholder and shareholder value
company»s philosophy on
corporate governance
Transparency, integrity, professionalism and
accountability are the cornerstones of our value
system. These guide the Company’s manage-
ment in all aspects of business conduct, and
in its relationship with all its stakeholders —
including shareholders, customers, employees
and the communities in which it operates.
In India, corporate governance standards for
listed companies are regulated by the Securities
and Exchange Board of India (SEBI) through
Clause 49 of the Listing Agreement of the Stock
Exchanges. This chapter, along with those on
Management Discussion and Analysis, reports
Cairn India’s compliance with Clause 49.
board of directors
composition of the board
The Company believes that good corporate
governance begins with setting the tone at the
top. Its Board of Directors, therefore, com-
prises not only eminent experts from various
fields, but also people who are committed to
all the key underlying principles and values
that constitute the best standards of corporate
governance.
For most of 2008-09, the Company had an
appropriate mix of independent and executive
/ promoter Directors, as specified by Clause 49
of the Listing Agreement. However, subsequent
to the SEBI clarification issued on 23 October
2008, the Company was required to increase
the number of independent Directors to at least
half the strength of the Board. To this end, the
Company has inducted Mr Edward T. Story —
an international expert in oil exploration and
production — as an independent Director. It is
actively in the process of inducting two more
independent Directors with requisite expertise.
By the end of 2009-10, Cairn India intends to
have half of the Board comprising independent
Directors.
40 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
As on 31 March 2009, the Company’s Board
comprised ten Directors, including seven
non-executive Directors, four of whom are also
independent. The Chairman of the Board is a
non-executive promoter Director. All non-
executive Directors are professionals who have
rich experience in a wide spectrum of functions
including management, finance, economics, oil
and gas exploration and general administration.
The executive Directors have been ap-
pointed for a term of five years barring Mr Rick
Bott, who has a three-year contract.
As mandated by the Clause 49, the indepen-
dent Directors on the Company’s Board:
Apart from receiving Director’s remuneration,
do not have any material pecuniary relationships
or transactions with the Company, its promot-
ers, its Directors, its senior management or its
holding company, its subsidiaries and associates
which may affect their independence.
Are not related to promoters or persons occu-
pying management positions at the Board level
or at one level below the Board.
Have not been executives of the Company in
the immediately preceding three financial years.
Are not partners or executives, or were not
partners or executives, during the preceding
three years of the:
• Statutory audit firm or the internal audit firm
that is associated with the Company.
• Legal firm(s) and consulting firm(s) that have
a material association with the Company.
Are not material suppliers, service providers or
customers or lessors or lessees of the Company
which may affect their independence.
Are not substantial shareholders of the
Company i.e. do not own two percent or more
of a block of voting Shares.
Are not less than 21 years of age.
information supplied
to the board
The Board has complete access to all informa-
tion with the Company. The quantum and qual-
ity of information supplied by the management
to the Board goes well beyond the minimum
requirement stipulated in Clause 49. All infor-
mation, except critical price sensitive informa-
tion (which is considered immediately by the
Board), is given to the Directors well in advance
of the Board and Committee meetings.
The Board periodically reviews compliance
reports of all applicable laws as well as steps
taken by the Company to rectify instances of
non-compliances, if any. Significant transactions
and arrangements entered into by the unlisted
subsidiary companies are also discussed and
deliberated in advance by the Board.
board procedure
The Company follows a structured process
of decision-making by the Board and its
Committees. The meeting dates are usually
finalised at the beginning of the year. Meetings
are generally convened by fixing dates a year in
advance. The meetings are usually held at the
Company’s corporate office in Gurgaon. Detailed
agenda, management reports and other explana-
tory statements are circulated at least seven days
ahead of the meeting for facilitating meaningful,
informed and focused discussions and decision-
making. To address specific urgent needs, meet-
ings are also called at shorter notice — but never
less than a minimum of seven days. In some
instances, resolutions are passed by circulation.
Directors have complete access to all
information of the Company. The Board is also
free to recommend inclusion of any matter in
the agenda for discussion. Senior management
officials are called to provide additional inputs
on the matters being discussed by the Board/
Committee, as and when necessary.
During the course of the financial year ended 31
March 2009, the following changes were made
in the composition of the Board:
 Mr Lawrence W. Smyth resigned from the
Board with effect from 21 January 2008.
 Mr Rick Bott was appointed as an additional
Director with effect from 29 April 2008 and as
an executive Director and chief operating of-
ficer with effect from 15 June 2008.
 Ms Jann Brown was appointed as an alter-
nate Director to Mr Norman L. Murray with ef-
fect from 25 November 2008, and ceased to be
an alternate Director from 10 December 2008.
Thereafter, she was appointed as additional
Director with effect from 19 December 2008.
 Mr Norman L. Murray resigned from the
Board with effect from 18 December 2008, and
was appointed as an alternate Director to
Ms Jann Brown on 19 December 2008.
Thereafter, he ceased to be an alternate
Director effective 10 February 2009.
 Mr Edward T. Story was appointed as an
additional Director with effect from 18 March
2009.
 Mr Philip Tracy was appointed as an
alternate Director to Sir William B. B. Gammell
on 18 March 2009. He ceased to be an alternate
Director effective 26 May 2009.
The composition of the Board as on 31
March 2009 is given in Table 1. As mandated
by Clause 49 of the Listing Agreement, none

1 Composition of the Board

AS O N 31 M ARCH 2009

S.No. Name of Director Executive/ No. of other Directorships Memberships/ Chairmanships

Non-Executive of Board-level Committees**
Indian Foreign * Member Chairman
1 Sir William B.B. Gammell Chairman, Non-Executive Director - 29 - -
2 Ms Jann Brown1 Non-Executive Director - 42 1 -
3 Mr Aman Mehta Non-Executive & Independent Director 6 3 7 3
4 Mr Naresh Chandra Non-Executive & Independent Director 15 2 10 1
5 Dr Omkar Goswami Non-Executive & Independent Director 9 - 9 2
6 Mr Malcolm Shaw Thoms Non-Executive Director - 30 - -
7 Mr Rahul Dhir Managing Director & CEO - 5 1 -
8 Mr Indrajit Banerjee Executive Director & CFO - 29 - -
2
9 Mr Rick Bott Executive Director & COO - - - -
10 Mr Edward T. Story 3 Non-Executive & Independent Director - 1 1 -
11 Mr Philip Tracy 4 Non-Executive Director - 1 - -

* Includes Foundations
** Only the Audit Committee and the Shareholders’ / Investors’ Grievance Committee of Indian public limited companies have been considered
1
Appointed as an additional Director with effect from 19 December 2008
2
Appointed as an additional Director with effect from 29 April 2008
3
Appointed as an additional Director with effect from 18 March 2009
4
Appointed as an alternate Director to Sir William B.B. Gammell with effect from 18 March 2009 and ceased to be alternate Director with effect from 26 May 2009

CO R P OR AT E GOV E RNA NC E 41
 Report on Corporate
Governance Continued

of the Directors is a member of more than ten directors‘ remuneration

Board-level committees of public limited Indian
companies; nor are they chairmen of more
than five committees in which they are mem-
bers. Moreover, none of the Directors of the
Company is related to the other, or to any other
employee of the Company.
number of board meetings
During the financial year ended 31 March 2009,
the Board of Directors met 10 times. The dates
were: 21 January 2008, 17 March 2008,
27 March 2008, 31 March 2008, 29 April 2008,
25 June 2008, 29 July 2008, 29 October 2008,
10 December 2008 and 18 March 2009. The
maximum gap between any two meetings was
less than four months.
directors’ attendance record
Table 2 gives the Directors’ attendance at
Board Meetings and the Annual General
Meeting (AGM) during the financial year ended
31 March 2009.
Table 3 lists the remuneration paid or payable
to the Directors. The non-executive Directors
do not have any material pecuniary relationship
or transactions with the Company, other than
sitting fees paid to them. The non-executive
Directors are also eligible for commission up to
1% of net profits as permitted by the Companies
Act, 1956 and as approved by sharehold-
ers in the annual general meeting held on 20
September 2007.
During the year under review, 69,630 options
were granted to Mr Indrajit Banerjee under
the Cairn India Performance Option Plan, 2006
(CIPOP). These options have been granted
based on performance in contributing to busi-
ness results, organisational strength and market
position of the Company and criticality of the role
assigned. The vesting period is minimum three
years, subject to the fulfillment of performance
conditions in the Plan. The exercise period is
three months from the date of vesting of options.
Table 4 details the options exercised by the
executive Directors during the year.

2 Directors’ Attendance Record

FO R T HE FI N AN CIAL YEAR END ED 31 MAR CH 2009

Name of the Director No. of meetings held during the No. of Meetings attended Presence at the last AGM
period the Director was on Board
Sir William B. B. Gammell 10 5* Yes
1
Ms Jann Brown 1 1 NA
Mr Norman L. Murray 2 9 7 Yes
Mr Rahul Dhir 10 8 Yes
Mr Malcolm Shaw Thoms 10 7 Yes
Mr Aman Mehta 10 9 No
Mr Naresh Chandra 10 10 Yes
Dr Omkar Goswami 10 8 Yes
Mr Indrajit Banerjee 10 10 Yes
3
Mr Rick Bott 5 5 Yes
Mr Edward T. Story 4 - - NA
5
Mr Philip Tracy 1 1 NA
Mr Lawrence W. Smyth 6 - - NA

* Sir William B. B. Gammell also participated in the proceedings of 3 Board Meetings through audio conference
1
Appointed as an additional Director with effect from 19 December 2008
2
Resigned from an the Board with effect from 18 December 2008
3
Appointed as additional Director with effect from 29 April 2008
4
Appointed as an additional Director with effect from 18 March 2009
5
Appointed as an alternate Director to Sir William B.B. Gammell with effect from 18 March 2009 and ceased to be alternate Director with effect from 26 May 2009
6
Resigned from the Board with effect from 21 January 2008

42 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

Report on Corporate
Governance Continued

3 Details of Directors’ Remuneration

FO R T HE FI N AN CIAL YEAR END ED 31 MAR CH 2009, IN R S.

Name of the Director Salary Bonus and Retirement Commission Sitting Fee Total
Performance Benefits
incentives
Sir William B. B. Gammell - - - - - -
1
Ms Jann Brown - - - - - -
Mr Norman L. Murray 2 - - - - - -
Mr Rahul Dhir * 56,334,353 13,423,473 1,701,442 - - 71,459,268
Mr Malcom Shaw Thoms - - - - - -
Mr Aman Mehta - - - - 440,000 440,000
Mr Naresh Chandra - - - - 480,000 480,000
Dr Omkar Goswami - - - - 400,000 400,000
Mr Indrajit Banerjee ** 16,274,192 8,099,000 1,749,600 - - 26,122,792
Mr Rick Bott 3 *** 26,783,554 86,598,000 1,169,703 - - 114,551,257
Mr Edward T. Story 4 - - - - - -
5
Mr Lawrence W. Smyth **** 11,373,143 14,141,503 - - - 25,514,646

1
Appointed as an additional Director with effect from 19 December 2008
2
Resigned from the Board with effect from 18 December 2008
3
Appointed as an additional Director with effect from 29 April 2008
4
Appointed as an additional Director with effect from 18 March 2009
5
Resigned from the Board with effect from 21 January 2008
* Rs. 71,459,268 includes Rs. 3,000,000 paid by Cairn India Limited as salary and retiral benefits. Further benefits and perquisites valued at Rs. 54,000,436 were provided by Cairn Energy
India Pty Limited (CEIPL, incorporated in Australia).
** Salary of Rs. 2,008,929 and retirement benefits / perquisites of Rs. 241,071 was paid by Cairn India Limited and balance by CEIPL.
*** Rs. 114,551,257 includes Rs. 950,000 paid by Cairn India Limited as salary and retiral benefits. Further benefits and perquisites valued at Rs. 67,936,605 were provided by CEIPL.
**** Lawrence W. Smyth, who resigned from the Board on 21 January 2008, was paid salary of Rs.11,373,143 and perquisites of Rs. 14,141,503 by CEIPL. Further benefits
and perquisites valued at Rs. 13,821,800 were provided by CEIPL.
Mr Philip Tracy, alternate Director was paid retirement benefits / perquisites of Rs. 1,353,642 by CEIPL for the period for which he was alternate Director.

4 Employee Stock Options

U N DER T H E CAIRN IND IA SENIOR MANAG EMENT PLAN, 2006 ( C IS M P )

Name of the Director No. of Options No. of Options No. of Options No. of Options No. of Options Exercise Price
granted vested exercised cancelled outstanding (in Rs.)
Mr Rahul Dhir 6,714,233 4,476,156 4,476,156 - 2,238,077 * 33.70
1
Mr Lawrence W. Smyth 1,584,480 792,240 792,240 792,240 - 33.70

1
Resigned from the Board with effect from 21 January 2008
* The outstanding options of Mr Rahul Dhir will vest on Company’s achieving 30 days’ consecutive production of over 150,000 bopd from the Rajasthan Block and can be exercised within a
period of eighteen months from the date of vesting

CO R P OR AT E GOV E RNA NC E 43
 Report on Corporate
Governance Continued
shareholding of
non-executive directors
Sir William B. B. Gammell, Ms Jann Brown
and Mr Malcolm Shaw Thoms, who are non-
executive Directors of the Company hold one
equity share each in the Company as nominees
of Cairn UK Holdings Limited, the holding
company. Apart from this, none of the non-
executive Directors holds any equity shares or
convertible instruments of the Company.
code of conduct
The Company’s Board of Directors has laid
down a ‘Code of Conduct for the Board of
Directors and Senior Management’ of the
Company. For details, see www.cairnindia.
com. All Directors and senior management
have affirmed compliance with the Code for the
financial year ended 31 March 2009.
committees of the board
(a) audit committee
The Audit Committee of the Company plays a
key role in ensuring maintenance of high level
of governance standards in the organisation. It
oversees, monitors, and advises the Company’s
management and auditors in conducting audits
and preparing financial statements, subject to
the ultimate authority of the Board of Directors.
It ensures accountability on the part of man-
agement and internal and external auditors;
makes certain that all groups involved in the
financial reporting and internal controls process
understand their roles; gains input from the
auditors and external experts when needed and
safeguards the overall objectivity of the financial
reporting and internal controls process.
The Company has an adequately qualified
and independent Audit Committee. As on 31
March 2009, the Committee comprised five
non-executive Directors: Mr Aman Mehta
(Chairman), Mr Naresh Chandra, Ms Jann
Brown, Dr Omkar Goswami and Mr Edward T.
Story. Four of the five members are indepen-
dent. All members have the financial knowledge
and expertise mandated by Clause 49 of the
Listing Agreement.
Mr Indrajit Banerjee, Executive Director and
CFO, Mr Raj Agarwal, Partner S. R. Batliboi
and Associates and Mr Raman Sobti, Director
KPMG are invitees to the meetings of the Audit
Committee. Ms Neerja Sharma, Company
Secretary is the Secretary to the Committee.
The current Charter of the Audit Committee
is in line with international best practices as well
as the regulatory requirements mandated by
SEBI and Clause 49 of the Listing Agreement
44 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
with the Stock Exchanges on which the
Company is listed. The brief terms of reference
of the Company’s Audit Committee are listed
below.
Terms of Reference
Overseeing the Company’s financial reporting
process and the disclosure of its financial infor-
mation to ensure correct, sufficient and credible
financial information
Recommending to the Board the appointment,
re-appointment or replacement of statutory
auditors and the setting up of audit fees
Approval of payment to statutory auditors for
any other services rendered by the statutory
auditors
Reviewing, with management, the annual finan-
cial information before submission to the Board
for approval, with particular reference to:
• matters required to be included in the
Directors’ Responsibility Statement in the
Board’s Report pursuant to subsection (2AA)
of Section 217 of the Companies Act, 1956
• changes, if any, in accounting policies and
practices and reasons for such changes;
• major accounting entries involving estimates
based on the exercise of judgement by the
Company’s management
• any significant adjustments made in the finan-
cial information arising out of audit findings;
• compliance with listing and other legal or
regulatory requirements relating to financial
information
• disclosure of any ‘related party transactions’
• any qualifications in the draft Audit Report
Reviewing, with management, the quarterly
financial information before submission to the
Board for approval
Reviewing, with the management, the state-
ment of uses / application of funds raised
through an issue (public issue, rights issue,
preferential issue, etc.), the statement of funds
utilized for purposes other than those stated
in the offer document/prospectus/notice and
the report submitted by the monitoring agency
monitoring the utilisation of proceeds of a
public or rights issue, and making appropriate
recommendations to the Board to take up steps
in this matter
Reviewing, with management, the performance
Report on Corporate
Governance Continued

of statutory and internal auditors, and the
adequacy of the internal control systems of the
Company
Approving the appointment, removal and terms
of remuneration of the chief internal auditor
Reviewing the adequacy of the internal audit
function, if any, including the structure of the
internal audit department, staffing and seniority
of the official heading the department, reporting
structure coverage and frequency of internal
audit
Discussing with internal auditors any significant
findings and following up on any such signifi-
cant findings
Reviewing the findings of any internal investiga-
tion by internal auditors into matters relating
to irregularities, fraud, or a failure in internal
control systems of a material nature, and report-
ing such matters to the Board
Having pre-audit discussions with the statutory
auditors as to the nature and scope of the audit,
and post-audit discussions to ascertain any
areas of concern
Looking into the reasons for any substantial
defaults in payments to debenture holders,
shareholders (in case of the non-payment of
declared Dividends) and creditors
Reviewing the Company’s financial and risk
management policies
Monitoring the utilisation of funds to be raised
pursuant to a public issue
Carrying out any other function as the Board
may from time to time refer to the Audit
Committee
The Audit Committee also reviews the
following information:
Management discussion and analysis of finan-
cial condition and results of operations
Statement of significant related party transac-
tions (as defined by the Audit Committee),
submitted by management
Management letters / letters of internal control
weaknesses issued by the statutory auditors
Internal audit reports relating to internal control
weaknesses
During the financial year ended 31 March
2009, the Audit Committee met six times: on 21
January 2008, 27 March 2008, 29 April 2008,
29 July 2008, 29 October 2008 and 29 January
2009. The attendance record of the Audit
Committee is given in Table 5.
As Mr Aman Mehta, Chairman of the Audit
Committee was out of the country on the date
of annual general meeting held on 25 June
2008, Mr Naresh Chandra attended the meet-
ing as an Interim Audit Committee Chairman to
answer queries from the shareholders.
(b) shareholders’/ investors’
grievance committee
The Company has constituted a Shareholders’/
Investors’ Grievance Committee primarily with
the objective of redressal of shareholders’ and
investors’ complaints such as relating to transfer
of shares, non-receipt of Balance Sheet and
non-receipt of declared Dividends.
During the year, the terms of reference of the
Shareholders’ / Investors’ Grievance Committee
was amended with the addition of following
powers and duties:
To approve / refuse / reject registration of trans-
fer / transmission / transposition of shares
To authorise issue of duplicate share certificates
and issue of share certificates after split / con-
solidation / rematerialisation of shareholding
To authorise printing of share certificates
To authorise affixation of common seal of the
Company on share certificates of the Company
To authorise directors / managers / officers
/ signatories for signing / endorsing share
certificates

5 Attendance Record of Audit Committee

FO R T HE FI N AN CIAL YEAR END ED 31 MAR CH 2009

Name of the Member Position Status No. of Meetings held No. of Meetings
during the period the attended
Director was a Member
of the Committee
Mr Aman Mehta Independent Director Chairman 6 6
Mr Naresh Chandra Independent Director Member 6 6
Dr Omkar Goswami Independent Director Member 6 5
Mr Norman L. Murray 1 Non-executive Director Member 5 5
Ms Jann Brown 2 Non-executive Director Member 1 -
3
Mr Edward T. Story Non-executive Director Member - -

1
Resigned from the Board with effect from 18 December 2008
2
Appointed as an additional Director and co-opted on the Audit Committee with effect from 19 December 2008
3
Appointed as an additional Director and co-opted on the Audit Committee with effect from 18 March 2009

CO R P OR AT E GOV E RNA NC E 45
 Report on Corporate
Governance Continued
Procedure laid down for Shareholders’ /
Investors’ Grievance Committee
The Company has appointed Link Intime India
Private Limited (formerly Intime Spectrum
Registry Limited) as the Registrar and Transfer
Agent to handle the investor grievances in
co-ordination with the Compliance Officer. All
grievances can be addressed to the Registrar
and Share Transfer Agent. The Company moni-
tors the work of the Registrar to ensure that the
investor grievances are settled expeditiously
and satisfactorily. The Shareholders’/ Investors’
Grievance Committee oversees redressal of
shareholders’ grievances.
As on 31 March 2009, the Committee
comprised three Directors: Dr Omkar Goswami
(Chairman), Mr Naresh Chandra and Mr
Rahul Dhir. Two of these members, including
the Chairman, are independent. Ms Neerja
Sharma, Company Secretary, is the Compliance
Officer of the Company and the Secretary of the
Committee. The Committee met twice during
the financial year: on 29 April 2008 and
10 December 2008. Table 6 details the atten-
dance record of the Committee.
The status of complaints received during the
15-month period ended 31 March 2009 by the
6 Attendance record of Shareholders’/ Investors’ Grievance Committee
FO R T HE FI N AN CIAL YEAR END ED 31 MAR CH 2009
Name of the Member Position
Dr Omkar Goswami Independent Director
Mr Naresh Chandra Independent Director
Mr Rahul Dhir Managing Director and CEO
7 Nature of Complaints received and attended
DU RIN G T H E FI N ANCIAL YEAR END ED 31 MAR CH 2009
Nature of Complaint
Non-receipt of refund orders / revalidation
Referred by SEBI
Referred by Stock Exchanges
Received from Investors
Non receipt of Annual Report
Total
46 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
Company and the Registrar and Share Transfer
Agent is given in Table 7.
(c) remuneration committee
The Board has a Remuneration Committee to
make recommendations to the Board as to the
Company’s framework or broad policy for the
remuneration of the Chairman, the executive
Directors of the Board, and senior executives
one level below the Board.
The objective of the Company’s remunera-
tion policy is to ensure the Company’s execu-
tive Directors and senior executives receive suf-
ficient incentive for enhanced performance and
are fairly rewarded for their contribution to the
Company’s overall performance. In determining
this policy, the Committee takes into account all
factors it deems relevant and give due regard to
the interests of the shareholders and to the fi-
nancial and commercial health of the Company.
The Committee ensures that levels of remunera-
tion are sufficient to attract and retain executive
directors and senior executives of the quality
required to run the Company successfully.
Within the terms of the agreed policy, the
Committee determines the entire individual
remuneration packages for the Chairman and
Status No. of Meetings held
Chairman
Member
Member
No. of Complaints
Received
26
58
19
188
7 7
298
the executive Directors. The Committee en-
sures that a significant proportion of executive
Directors’ remuneration is structured so as to
link rewards to corporate and individual perfor-
mance. In determining packages of remunera-
tion, the Committee consults with the Chairman
as appropriate.
The Committee is responsible for overseeing
the Company’s share option schemes and long
term incentive plans, including determining
eligibility for benefits and approving total annual
payments. The Committee also recommends
and monitors the level and structure of remu-
neration for the first layer of management below
Board level.
As on 31 March 2009, the Remuneration
Committee comprised five non-executive
Directors: Mr Naresh Chandra (Chairman),
Sir William B.B. Gammell, Mr Malcolm Shaw
Thoms, Mr Aman Mehta and Dr Omkar
Goswami. Three of these members are
independent. Ms Neerja Sharma, Company
Secretary, is the Secretary to the Committee.
During the financial year ended 31 March
2009, six meetings of the Remuneration
Committee were held: on 21 January 2008,
27 March 2008, 29 April 2008, 29 July 2008,
No. of Meetings attended
2 2
2 2
2 2
Attended Pending
26 Nil
58 Nil
19 Nil
188 Nil
Nil
298 Nil
Report on Corporate
Governance Continued
10 December 2008 and 18 March 2009.
The attendance record of the Remuneration
Committee is given in Table 8.
(d) nomination committee
As on 31 March 2009, the Nomination
Committee comprised five Directors: Sir William
B.B. Gammell (Chairman), Mr Rahul Dhir,
Ms Jann Brown, Mr Malcolm Shaw Thoms
and Mr Edward T. Story. Ms Jann Brown and
Mr Edward T. Story were inducted on the
Committee on 19 December 2008 and
18 March 2009 respectively.
The functions of the Nomination
Committee are:
Reviewing the structure, size and composition
of the Board, with a view to ensuring continued
ability of the Company to compete effectively in
the market place, and make recommendations
to the Board with regard to any changes
Identifying and nominating, for the approval of
the Board, appropriate individuals to fill Board
vacancies as and when they arise
Evaluating the balance of skills, knowledge and
experience of the Board and, in the light of this
evaluation, preparing a description of the role
and capabilities required for particular appoint-
ments; and then identifying suitable candidates
for the Board
Reviewing time required from each non-exec-
utive Director and assessing whether s(he) has
given sufficient commitment to the role
Considering succession planning in the course
of its work, taking into account the challenges
and opportunities facing the Company, and
what skills and expertise are needed from mem-
8 Attendance record of Remuneration Committee
FO R T HE FI N AN CIAL YEAR END ED 31 MAR CH 2009
Name of the Member Position
Mr Naresh Chandra Independent Director
Sir William B.B. Gammell Non-Executive Director
Dr Omkar Goswami Independent Director
Mr Aman Mehta Independent Director
Mr Malcolm Shaw Thoms Non-Executive Director
bers of the Board in the future
Ensuring that on appointment to the Board,
the non-executive Directors receive a formal
letter of appointment setting out clearly what is
expected of them in terms of time commitment,
committee service and involvement outside
Board meetings
The Nomination Committee met once during
the financial year on 10 January 2009.
management
management discussion
and analysis
This Annual Report has a detailed chapter on
Management Discussion and Analysis.
disclosures
The Company follows the accounting standards
and guidelines laid down by the Institute
of Chartered Accountants of India (ICAI) in
preparation of its financial statements. No mate-
rial financial and commercial transactions were
reported by the management to the Board, in
which the management had any personal inter-
est that either had or could have had a conflict
with the interest of the Company at large.
There were no transactions with the
Directors or Management, their associates or
their relatives etc. that either had or could have
had a conflict with the interest of the Company
at large.
any non-compliance
by the company
There were no penalties or strictures imposed
on the Company by Stock Exchange or SEBI or
any statutory authority, on any matter related to
capital markets, during the last three years.
Status No. of Meetings held
Chairman
Member
Member
Member
Member
code for prevention of
insider trading practices
In compliance with the SEBI regulation on
prevention of insider trading, the Company has
instituted a comprehensive Code of Conduct
for its management and staff. The Code lays
down guidelines which advise management
and staff on procedures to be followed and
disclosures to be made while dealing with
shares of the Company, and cautions them of
the consequences of violations.
risk management
Cairn India follows well-established and detailed
risk assessment and minimisation procedures,
which are periodically reviewed by the Board.
ceo / cfo certification
The CEO and CFO certification of the financial
statements for the financial year under review is
enclosed at the end of the report.
subsidiary companies
All subsidiaries of the Company are unlisted
wholly owned subsidiary companies and are
foreign subsidiaries. These subsidiaries have
their own Board of Directors having the rights
and obligations to manage such companies in
best interest of the Company. The Company has
its representatives on the Boards of subsidiary
companies and monitors the performance of
such companies regularly.
No. of Meetings attended
6 6
6 2
6 5
6 6
6 5
CO R P OR AT E GOV E RNA NC E 47
 Report on Corporate
Governance Continued

shareholders
disclosure regarding
appointment or re-appointment
of directors
Brief profiles of the persons to be appointed /
re-appointed as Director at the annual general
meeting of the Company are given below.
Mr Edward T. Story, 65, was appointed
as an additional Director with effect from 18
March 2009. He is a science graduate from
Trinity University, San Antonio, Texas and holds
a Masters degree in Business Administration
from the University of Texas. He has also been
conferred an honorary Doctorate degree by the
Institute of Finance and Economics of Mongolia
and is Chairman of the North America Mongolia
Business Council.
Mr Story has more than 40 years experience
in the international oil and gas industry and is
the Founder, President and Chief Executive
Officer of SOCO International PLC, an inter-
national exploration and production (E&P)
company listed on the London Stock Exchange.
Soco International has E&P interests in South
East Asia and Africa.
Ms Jann Brown, 54, was appointed as an ad-
ditional Director with effect from 19 December
2008. She holds an MA degree from Edinburgh
University and joined Cairn Energy PLC in 1998
after a career in the accountancy profession,
mainly with KPMG. She was appointed Finance
Director of Cairn Energy PLC in 2006. Prior
to her appointment as Finance Director, she
served on the Group Management Board for
seven years. She is a member of the Institute
of Chartered Accountants of Scotland and the
Chartered Institute of Taxation.
Mr Aman Mehta, 62, is an Economics gradu-
ate from Delhi University. He was earlier the
Chief Executive Officer of HSBC Asia Pacific
until 2003. Mr Mehta is currently an indepen-
dent non-executive Director of several public
companies in India as well as overseas. Besides
this he is also a member of the Advisory Council
of INSEAD, France and International Advisory
Boards of Prudential Inc, USA and CapitaLand
Ltd of Singapore.
Dr Omkar Goswami, 52, holds a Master of
Economics Degree from the Delhi School of
Economics and a D. Phil. in Economics from
Oxford University. He has authored various
books and research papers on economic history,
industrial economics, public sector, bank-
ruptcy laws and procedures, economic policy,
corporate finance, corporate governance, public
finance, tax enforcement and legal reforms.
Dr Goswami was Chief Economist for the
Confederation of Indian Industry and the Editor
of Business India. He is founder and chairman
of CERG Advisory Private Limited which advises
companies on corporate governance, investor
relations, business restructuring and economic
research. Dr Goswami is currently a non-exec-
utive Director on a number of Boards of other
companies.
The directorships and committee positions
held by these Directors as at 31 March 2009 is
detailed in Table 9 below.

9 Details of Directorship & Committee Positions held in other Companies

Name of Director Name of the Company in which Directorship held Committee Chairmanship# Committee Membership#
Mr Edward T. Story SOCO International PLC - -
Ms Jann Brown Cairn Energy PLC - -
Hansen Transmissions International N.V. - Audit Committee
Cairn India Holdings Limited - -
Cairn Energy Birganj Limited - -
Cairn Energy Dhangari Limited - -
Cairn Energy Exploration & Production Company Limited - -
Cairn Energy Karnali Limited - -
Cairn Energy Lumbini Limited - -
Cairn Energy Malangawa Limited - -
Cairn Energy Nepal Holdings Limited - -
Cairn Energy Search Limited - -
Cairn Exploration (No. 1) Limited - -
Cairn Resources Management Limited - -
Capricorn Energy Limited - -
Cairn Resources (2002) PLC - -
Medoil PLC - -
Cairn UK Holdings Limited - -
Capricorn Oil Limited - -
Capricorn Exploration Limited - -

48 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

Report on Corporate
Governance Continued
Name of Director Name of the Company in which Directorship held
Ms Jann Brown Capricorn Greenland Exploration 1 Limited
Capricorn Greenland Exploration 2 Limited
Capricorn Greenland Exploration 3 Limited
Capricorn Greenland Exploration 4 Limited
Capricorn Greenland Exploration 5 Limited
Capricorn Greenland Exploration 6 Limited
Capricorn Greenland Exploration 7 Limited
Capricorn Greenland Exploration 8 Limited
Capricorn Petroleum Limited
Capricorn Oil and Gas Limited
Plectrum Oil and Gas Limited
Plectrum Oil Limited
Plectrum Petroleum Limited
Banchory Exploration Limited
Medoil Resources Limited
Capricorn Albania Limited
Capricorn Atammik Limited
Capricorn Lady Franklin Limited
Capricorn Greenland Exploration 9 Limited
Capricorn Greenland Exploration 10 Limited
Capricorn Greenland Exploration 11 Limited
Capricorn Bangladesh Limited
Capricorn Spain Limited
Mr Aman Mehta PCCW Ltd, Hongkong
Tata Consultancy Services Limited
Vedanta Resources PLC, UK
Godrej Consumer Products Limited
Emaar MGF Land Limited
ING Group N.V.Netherlands
Max India Limited
Jet Airways Limited
Wockhardt Pharmaceuticals Limited
Dr Omkar Goswami Dr Reddy’s Laboratories Limited
Infosys Technologies Limited
DSP BlackRock Investment Managers Limited
IDFC Limited
Crompton Greaves Limited
Ambuja Cements Limited
Godrej Consumer Products Limited
Max New York Life Insurance Company Limited
CERG Advisory Private Limited
# Only Audit and Shareholders’/Investors’ Grievance Committees included.
Committee Chairmanship# Committee Membership#
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
Audit Committee -
Audit Committee -
Audit Committee -
- Audit Committee
- Audit Committee
- -
- -
Audit Committee -
- Audit Committee, Shareholders/
Investor Grievance Committee
Audit Committee -
- Audit Committee,
Shareholders Committee
- -
- Audit Committee,
Shareholders Committee
- Audit Committee
- -
- Audit Committee
- -
- -
CO R P OR AT E GOV E RNA NC E 49
 Report on Corporate
Governance Continued

10 Location and Time of General Meetings

LA S T T HR E E YE A R S ( 2 0 0 6 - 2 0 0 8 )

Financial Location of the meeting Date Time

Year
AGMs
2006 Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 20 Sept 2007 11:00 AM
2007 Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 25 June 2008 11:00 AM
EGMs
2006 50 Lothian Road, Edinburgh, EH3, 9BY 8 Sept 2006 3:00 PM
2006 50 Lothian Road, Edinburgh, EH3, 9BY 21 Sept 2006 2:00 PM
2006 50 Lothian Road, Edinburgh, EH3, 9BY 17 Nov 2006 2:15 PM
2008 Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 16 April 2008 2:30 PM

means of communication special resolutions passed

financial results in the last three years
The Company intimates un-audited as well as
audited financial results to the Stock Exchanges, Annual General Meetings
immediately after the Board / Committee meet- In the previous AGMs held on 20 September
ings at which they are approved. The results of 2007 and 25 June 2008, the following special
the Company are also published in at least one resolutions were passed:
prominent national and one regional newspaper
having wide circulation. The financial results are 20 September 2007
also displayed on the Company’s website • Keeping register of members and other
www.cairnindia.com and posted on Corporate related documents
Filing and Dissemination System at • Consent of shareholders for issue of further
www.corpfiling.co.in. securities
• Payment of commission to non-executive
news release, analyst Directors
presentation etc.
The official news releases, detailed presenta- 25 June 2008
tions made to media, institutional investors, • Keeping register of members and other
financial analysts etc. are displayed on the related documents
Company’s website www.cairnindia.com.
Extraordinary General Meetings
Website At the EGMs held on 8 September 2006,
The Company’s website www.cairnindia.com 21 September 2006, 17 November 2006 and
contains a separate dedicated section ‘Investor 16 April 2008, the following special resolutions
Relations’ where shareholders information is were passed:
available. The full Annual Report, shareholding
pattern and Corporate Governance Report is also 8 September 2006
available on the website in a user-friendly manner. • Investment in shares of Cairn India Holdings
Limited
general body meetings
The Company in its brief history has had two 21 September 2006
Annual General Meetings (AGM) and four • Amendment in the memorandum of associa-
Extraordinary General Meetings (EGM). The tion of the Company
third AGM is scheduled to take place on • Amendment in the articles of association of
18 August 2009. The desired details in respect of the Company
General Meetings are given in Table 10 above. • Appointment of non- retiring Directors

50 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

Report on Corporate
Governance Continued
• Issue of equity shares of the Company on a
private placement basis
• Issue of equity shares of the Company by an
initial public offering
• Increase in the limit of foreign institutional
investment in the Company
• Investment in the shares of Cairn India
Holdings Limited
17 November 2006
• Appointment of Chief Executive Officer of
the Company
• Employee stock option plans
• Amendment in the articles of association of
the Company
• Remuneration of non-executive Directors
16 April 2008
• Allotment of the equity shares of the
Company on preferential basis
resolution passed through
postal ballot last year
The Company passed a special resolution
through a postal ballot, where the sharehold-
ers approved change in financial year of
the Company beginning 1 January 2008, by
extending it by a period of three months, so
as to end on 31 March 2009 and subsequent
financial year(s) from the first day of April in
each calendar year to the last day of March in
the subsequent calendar year.
The Company followed a transparent postal
ballot process, where all members on the books
as of 12 December 2008 were sent a postal bal-
lot form along with postage pre-paid business
reply envelope. All replies received up to close
of working hours on 21 January 2009 were con-
sidered. All postal ballot forms were kept in the
control of the scrutiniser, Mr Sunil K. Grover,
a practicing Company Secretary. The postal
ballots were opened on 21 January 2009 under
the scrutiny of Mr Grover. Table 11 shows the
11 Voting Result of Special Resolution
passed through Postal Ballot
Number of valid postal ballot forms received
Votes in favour of the resolution
Votes against the resolution
Resolution passed by % of valid votes received
details of the voting pattern.
compliance with clause 49
Mandatory Requirements
The Company is fully compliant with the ap-
plicable mandatory requirements of the revised
Clause 49 except with respect to composition of
the Board as stated in this report, which it intends
to comply with fully in the course of 2009-10.
Adoption of Non-Mandatory Requirements
Remuneration Committee The Board has
constituted a Remuneration Committee, details
of which have been given earlier.
Shareholder Rights A half-yearly declaration
of financial performance including summary of
the significant events in last six-months, is sent
to the shareholders.
Audit qualifications The Company’s financial
statements are free from any qualifications by
the Auditors.
Training of Board Members The Board of
Directors is periodically updated on the busi-
ness model, company profile, and the risk pro-
file of the business parameters of the Company.
Whistle Blower Policy Though there is no
formal Whistle Blower Policy, the Company
takes cognizance of the complaints made and
suggestions given by employees and others.
Complaints are looked into and whenever
necessary, suitable corrective steps are taken.
No employee of the Company has been denied
access to the Audit Committee of the Board
of Directors of the Company. Further, the
Company is in the process of finalising a formal
Whistle Blower Policy to provide a mechanism
to enable employees and others to raise con-
cerns in a responsible and effective manner.
1,751
1,467,378,264
1,823
99.99
CO R P OR AT E GOV E RNA NC E 51
 Additional Shareholder
Information

annual general meeting listing

Date 18 August 2009
Time 11:00 AM
Venue Birla Matushri Sabhagar, 19, New
Marine Lines, Mumbai 400 020.
financial calendar
For the year ended 31 March 2009, results were
announced on:
 29 April 2008: First quarter
 29 July 2008: Half yearly
 29 October 2008: Third quarter
 29 January 2009 : Fourth quarter
 27 May 2009: Fifth (last) quarter and the
The equity shares of the Company are listed on
Bombay Stock Exchange Limited (BSE) and the
National Stock Exchange of India Limited (NSE).
The annual listing fee for the financial year
2009-10 has been paid to BSE and NSE.
stock codes
Table 1 gives the details.
1 Stock
Codes
Exchange

15-month financial year’s results Name of the Stock Exchange Code

For the year ending 31 March 2010, results will National Stock Exchange of India Limited CAIRN
be announced by Bombay Stock Exchange Limited 532792
 Last week of July 2009: First quarter
 Last week of October 2009: Half yearly
 Last week of January 2010: Third quarter
 Last week of June 2010: Fourth quarter market price data
and full financial year’s results. Table 2 and Chart A and B give the details.

book closure Distribution of Shareholding

The dates of book closure are from Tuesday, Tables 3 and 4 list the distribution of the
11 August 2009 to Tuesday, 18 August 2009, Shareholding and Shareholding pattern of the
inclusive of both days. Company by size and by ownership class as on

2 High, low and volume of Company’s Shares traded at BSE and NSE
FIN AN CIAL YEAR END ED 31 MAR CH 2009

Month BSE NSE

High (in Rs.) Low (in Rs.) No. of Shares traded High (in Rs.) Low (in Rs.) No. of Shares traded
January 2008 268.50 136.00 22,875,865 268.90 125.00 94,497,993
February 2008 232.15 180.25 20,054,261 231.00 180.15 67,078,925
March 2008 255.90 187.50 35,871,458 255.85 187.60 118,341,281
April 2008 270.00 219.10 25,973,973 269.90 219.50 88,965,150
May 2008 342.50 242.10 102,080,820 342.70 242.00 262,823,438
June 2008 304.90 251.00 53,467,345 304.90 250.95 152,074,023
July 2008 277.00 205.00 47,488,361 278.00 206.50 170,252,458
August 2008 254.50 226.50 17,092,651 254.55 229.85 70,131,190
September 2008 251.80 189.90 15,417,795 251.80 190.00 63,555,709
October 2008 218.70 88.15 21,467,558 219.20 88.20 91,523,174
November 2008 162.80 122.05 21,044,237 163.20 122.15 76,067,146
December 2008 176.80 129.25 23,676,299 176.90 129.10 90,987,024
January 2009 184.70 142.50 14,766,974 184.00 140.00 65,556,537
February 2009 170.75 148.20 12,425,863 170.75 147.10 51,998,380
March 2009 199.00 150.00 15,162,536 199.00 152.25 79,457,245

52 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

Additional Shareholder
Information Continued

A Share Performance on BSE versus BSE Sensex

FIN AN CIAL YEAR E ND ED 31 MAR CH 2009

150
SENSEX
CAIRN
125

100

75

50

25
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC JAN FEB MAR
2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2009 2009 2009

B Share Performance on NSE versus Nifty

FI N AN CIAL YEAR END ED 31 MAR CH 2009

150
NIFTY
CAIRN
125

100

75

50

25
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC JAN FEB MAR
2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2009 2009 2009

Share prices, BSE Sensex and Nifty indexed to 100 as on the first working day of the financial year 2008–09 i.e.1 January 2008

3 Distribution of Shareholding
AS ON 31 MARCH 2009

No. of Shares No. of Shareholders % of Shareholders Total Shares % of Shares

Up to 5,000 245,780 99.61 41,785,436 2.20
5,001-10,000 282 0.11 2,076,139 0.11
10,001-20,000 173 0.07 2,493,051 0.13
20,001-30,000 66 0.03 1,649,854 0.09
30,001-40,000 47 0.02 1,675,699 0.09
40,001-50,000 30 0.01 1,375,077 0.07
50,001-100,000 72 0.03 5,179,409 0.27
100,001 & above 283 0.12 1,840,433,151 97.04
Total 246,733 100.00 1,896,667,816 100.00

CO R P OR AT E GOV E RNA NC E 53
 Additional Shareholder
Information Continued

4 Shareholding Pattern by Ownership

AS ON 3 1 M A R C H 2 0 0 9

No. of Equity Shares Shares

(Face Value Rs. 10 each) Held (%)

promoters holding
Indian Promoters - -
Foreign Promoters 1,226,843,791 64.68
Persons acting in concert - -
non-promoters holding
(a) Banks, Financial Institutions, Insurance Companies
(Central / State Govt. / Non-Government Institutions) 75,162,817 3.96
(b) Foreign Institutional Investors 166,620,923 8.78
(c) Foreign Company 49,700,000 2.62
(d) Public 50,560,707 2.67
(e) Mutual Funds 31,842,774 1.68
(f) NRI (Repatriable) 1,067,598 0.06
(g) NRI (Non-Repatriable) 381,195 0.02
(h) Bodies Corporate 43,588,865 2.30
(i) Foreign Bodies Corporate 246,882,573 13.02
(j) Clearing Member 3,973,515 0.21
(k) Trusts 43,058 -
Grand Total 1,896,667,816 100.00

31 March 2009. Further details of top twenty details of funding obtained

shareholders are given in Table 5.
dematerialisation of shares
As on 31 March 2009, over 99.99% shares of
the Company were held in dematerialised form.
The shares of the Company are permitted to be
traded only in dematerialised form under ISIN
INE910H01017.
outstanding gdr s / adr s /
warrants or any convertible
instruments, conversion date
and likely impact on equity
There are no outstanding GDRs / ADRs / war-
rants or any convertible instruments issued by
the Company. However, the Company has out-
standing employee stock options, the details of
which as on 31 March 2009 are as per Table 6.
The last date of exercise in case of CIPOP is
considered on the assumption that the options
shall vest after three years of their grant.
If all the outstanding Stock Options granted
get vested and exercised, the number of equity
shares will increase by 16,352,417.
in the last three years
The Company’s Initial Public Offering (IPO) of
328,799,675 equity shares, which closed on
15 December 2006, was fully subscribed aggre-
gating Rs. 52,608 million at the issue price of
Rs. 160. The Company also placed Rs. 33,547
million through a pre-IPO placement and
exercised its Green Shoe Option for 13,085,041
shares. The total proceeds aggregated
Rs. 88,249 million.
The Company made a preferential issue
of 113,000,000 equity shares to Petronas
International Corporation Ltd and Orient Global
Tamarind Fund Pte Ltd. amounting to
Rs. 25,345.9 million on 22 April 2008. The
shares were issued at a premium of Rs. 214.30
per share.
share suspense account
In pursuance of Clause 5A of the Listing
Agreement, the status of the Equity Shares lying
in the Suspense Account is given in Table 7.

54 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

Additional Shareholder
Information Continued

5 Top Twenty Shareholders

AS O N 31 M ARCH 2009

S.No. Name No. of Shares

Equity Shares Held (%)
1 Cairn UK Holdings Limited 1,226,843,791 64.68
2 Petronas International Corporation Limited 239,831,438 12.64
3 Orient Global Tamarind Fund Pte Ltd 49,700,000 2.62
4 Life Insurance Corporation of India 38,852,092 2.05
5 Merrill Lynch International Investment Funds 13,245,952 0.70
6 LIC of India - Market Plus 12,872,266 0.68
7 Europacific Growth Fund 12,812,190 0.68
8 State Bank of India (Equity) 12,423,119 0.65
9 ICICI Prudential Life Insurance Company Ltd 10,404,456 0.55
10 FID Funds (Mauritius) Limited 7,061,281 0.37
11 International Finance Corporation 7,050,035 0.37
12 New World Fund Inc 6,587,000 0.35
13 Reliance Capital Trustee Co Ltd - Reliance 6,536,219 0.34
Natural Resources Fund
14 Bajaj Allianz Life Insurance Company Ltd. 6,422,984 0.34
15 PRU India Equity Open Limited 6,260,658 0.33
16 Government of Singapore 4,956,608 0.26
17 Emerging Markets Management, L.L.C. 4,955,677 0.26
A/C EMSAF - Mauritius
18 Rahul Dhir 4,476,156 0.24
19 DWS Invest - DWS Invest Bric Plus 4,000,025 0.21
20 Fortis Banque Luxembourg Sa A/C Fortis L Fund 3,963,504 0.21

6 Outstanding Employee Stock Options

AS ON 31 MARCH 2009

ESOP No. of options Last date for exercise Exercise

Scheme outstanding Price (Rs.)
CIESOP 2,468,615 31 December 2016 160.00
4,757,911 19 September 2017 166.95
3,651,678 28 July 2018 227.00
36,040 9 December 2018 143.00
CIPOP * 759,809 31 March 2010 10.00
1,673,335 19 December 2010 10.00
766,952 28 October 2011 10.00
CISMP 2,238,077 18 months after the vesting date which will occur on the 33.70
Company achieving 30 days’ consecutive production
of over 150,000 bopd from the Rajasthan Block
Total 16,352,417

* The vesting period is minimum three years, subject to the fulfillment of performance conditions as defined in the Plan. The
exercise period is three months from the date of vesting of options.

CO R P OR AT E GOV E RNA NC E 55
 Additional Shareholder
Information Continued

share transfer system investor relations

The Company has appointed Link Intime India
Private Limited as its Registrar and Transfer
Agent with effect from 1 January 2008. All share
transfers and related operations are conducted
by Link Intime India Private Limited, which is
registered with the SEBI. The Company has a
Shareholders’/Investors’ Grievance Committee
for redressing the complaints/queries of share-
holders and investors.
Investor correspondence should
be addressed to either:
Registrar and Transfer Agent
Link Intime India Private Limited
(formerly Intime Spectrum Registry Limited)
(Unit: Cairn India Limited)
C-13, Pannalal Silk Mills Compound
L.B.S Marg, Bhandup (West)
Mumbai 400 078, India
E-Mail rnt.helpdesk@linkintime.co.in
Phone +91 22 25946970
Fax +91 22 25946969
or
Company Secretary
Cairn India Limited
4th Floor, Vipul Plaza, Sun City, Sector 54
Gurgaon 122 002, India
E-Mail investor.complaints@cairnindia.com
Phone +91 124 2703000
Fax +91 124 2889320
Investors can e-mail their queries/complaints
to investor.complaints@cairnindia.com. The
weblink to this E-Mail ID is also available on
Company’s website www.cairnindia.com under
Investor Relations section.
The Company has a dedicated Shares Investor
Relations Department which helps investors,
including FIIs and institutional investors, in mak-
ing informed decisions. This team also maintains
close liaison with investors and shares informa-
tion through periodic meetings including tele-
conferencing in India and abroad, regular press
meeting with investment bankers, research
analysts, the media, institutional investors etc.
The ‘Investor Relations’ section on the
Company’s website www.cairnindia.com
updates information sought by investors and
analysts. It provides the latest information on
financial statements, investor-related events and
presentations, annual reports and sharehold-
ing pattern along with media releases and the
current Company overview. The section helps
existing and potential investors to interact with
the Company.
operational locations
The Company’s oil and gas fields are located at:
 Ravva (Andhra Pradesh)
 Cambay Basin (Gujarat)
 Barmer (Rajasthan)
registered office address
Cairn India Limited
101, West View
Veer Savarkar Marg
Prabhadevi
Mumbai 400 025, India

7 Status of Equity Shares lying in the Suspense Account

DU RIN G T H E 15 MONTH PER IOD END ED 31 MAR CH 2009

Particulars Number of Number of

Shareholders Shares
Aggregate number of Shareholders and the outstanding Shares in the suspense account lying 112 19,950
as on 1 January 2008
Shares transferred to suspense account - Recovery against incorrect credit 1 525
No. of Shareholders who approached for transfer of shares from suspense account 40 7,980
No. of Shareholders to whom Shares were transferred from suspense account 40 7,980
Aggregate number of Shareholders and the outstanding shares in the suspense account 73 12,495
as on 31 March 2009

56 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

Certifications Under Clause 49
of Listing Agreement
certification by the chief executive officer
and chief financial officer of the company
We, Rahul Dhir, Chief Executive Officer, and Indrajit Banerjee, Chief
Financial Officer, of Cairn India Limited hereby certify to the Board that:
a. We have reviewed financial statements and the cash flow statement
for the financial year ended 31 March 2009 and that to the best of our
knowledge and belief:
i. These statements do not contain any materially untrue statement
or omit any material fact or contain statements that might be
misleading;
ii. These statements together present a true and fair view of the
Company’s affairs and are in compliance with existing accounting
standards, applicable laws and regulations.
b. There are, to the best of our knowledge and belief, no transactions en-
tered into by Cairn India Limited during the year which are fraudulent,
illegal or violative of the Company’s Code of Ethical Conduct.
c. We are responsible for establishing and maintaining internal controls
for financial reporting in Cairn India Limited, and we have evaluated
the effectiveness of the internal control systems of the Company per-
taining to financial reporting. We have disclosed to the auditors and
the Audit Committee, deficiencies in the design or operation of such
internal controls, if any, of which we are aware and the steps we have
taken or propose to take to rectify these deficiencies.
d. We have indicated to the auditors and the Audit Committee
i. Significant changes in internal control over financial reporting dur-
ing the year;
ii. Significant changes in accounting policies during the year and the
same have been disclosed in the notes to the financial statements;
and
iii. Instances of significant fraud of which we have become aware and
the involvement therein, if any, of the management or an employee
having a significant role in the Company’s internal control system
over financial reporting.
e. We affirm that we have not denied any personnel access to the Audit
Committee of the Company (in respect of matters involving alleged
misconduct).
f. We further declare that all Board members and senior management
have affirmed compliance with the Company’s Code of Conduct for
the financial year ended 31 March 2009.
Rahul Dhir
Managing Director & CEO
Indrajit Banerjee
Executive Director & CFO
Place Gurgaon
Date 27 May 2009
auditors» certificate
To
The Members of
Cairn India Limited
We have examined the compliance of conditions of corporate gover-
nance by Cairn India Limited (‘the Company’), for the fifteen months
period ended on 31 March 2009, as stipulated in clause 49 of the Listing
Agreement of the said Company with stock exchanges.
The compliance of conditions of corporate governance is the responsi-
bility of the management. Our examination was limited to procedures and
implementation thereof, adopted by the Company for ensuring the com-
pliance of the conditions of Corporate Governance. It is neither an audit
nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the
explanations given to us, subject to the fact that the proportion of the
independent directors to the total strength of the Board being 40% is less
than the minimum prescribed limit of 50%, the Chairman of the Board
being related to the promoter of the Company in terms of clarification
dated 23 October 2008 issued by the Securities and Exchange Board
of India, we certify that the Company has complied with the conditions
of Corporate Governance as stipulated in the above mentioned Listing
Agreement.
We further state that such compliance is neither an assurance as to the
future viability of the Company nor the efficiency or effectiveness with
which the management has conducted the affairs of the Company.
For S. R. Batliboi & Associates
Chartered Accountants
per Raj Agrawal
Partner
Membership No. 82028
Place Gurgaon
Date 27 May 2009
CO R P OR AT E GOV E RNA NC E 57
 Directors’
Report

Your Directors have pleasure in presenting the third Annual Report, together with
the Audited Accounts of your Company for the Financial Year ended 31 March 2009

Financial Results
I N R U PEES T HO U SAN DS

Standalone Consolidated
For the financial year ended For the financial year ended
31 March 2009 31 December 2007 31 March 2009 31 December 2007
(Fifteen months) (Twelve months) (Fifteen months) (Twelve months)
Total income 2,980,403 339,623 20,271,368 11,446,716
Total expenditure 1,859,687 807,300 10,392,502 10,187,488
Profit / (Loss) before tax 1,120,716 (467,677) 9,878,866 1,259,228
Taxes 578,309 320,489 1,844,360 1,504,669
Profit / (Loss) after tax 542,407 (788,166) 8,034,506 (245,441)

The consolidated statements provide the results operations

of Cairn India Limited together with those of
its subsidiaries for the financial year ended
31 March 2009.
dividend
This being just the third year since inception
of the Company and in the absence of enough
distributable income, your Directors do not
recommend any dividend.
change in financial year
The current financial year of the Company
beginning 1 January 2008 has been changed, by
extending it by a period of three months, so as
to end on 31 March 2009 and subsequent finan-
cial year(s) have been changed to start from the
first day of April in each calendar year to the last
day of March in the subsequent calendar year.
Accordingly, previous year’s numbers are not
comparable with numbers of the current year.
Further, with the change, the Company is now
compliant with the IFRS provisions which would
be applicable effective 1 April 2011.
A detailed review of operations has been
included in the Management Discussion and
Analysis Report, which forms a part of this
Annual Report.
changes in capital structure
During the financial year under review, your
Company made a successful Preferential is-
sue of 113,000,000 equity shares to Petronas
International Corporation Ltd and Orient Global
Tamarind Fund Pte Ltd. amounting to
Rs. 25,345.9 million. The Shares were issued at
a premium of Rs. 214.30 per share.
Further, 5,268,396 equity shares of Rs. 10/-
each were allotted on exercise of Employee
Stock Options by executive Directors.
Accordingly the issued and paid up capital of
the Company has increased to
Rs. 18,966,678,160 divided into 1,896,667,816
equity shares of Rs. 10/- each.
utilization of ipo proceeds
In December 2006, the Company raised
Rs. 88,249 million from its maiden offer to the

58 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

public for the stated objects in the Prospectus
dated 22 December 2006. The amounts ear-
marked for each object category, as mentioned
in the prospectus, were based on the plans and
requirements of the business at the time of is-
suance of the prospectus in December 2006. In
view of the dynamic environment, the business
plans and requirements have changed since the
public offer and necessitate rescheduling of the
capital expenditure programme and increase /
decrease of the amount needed to meet each
object category.
Three object categories namely (a) consid-
eration to Cairn UK Holdings Limited (CUHL),
(b) contingencies and (c) issue expenses, have
some unutilized balances as on 31 March 2009.
The end purpose of these object categories has
been achieved and no further expenditure is
envisaged to be incurred under these catego-
ries. It is proposed to transfer the unutilized
balance of Rs. 5,449 million inter-se from
above mentioned three categories to the object
category of “Development” after obtaining the
approval of the Shareholders of the Company in
the forthcoming Annual General Meeting. The
proposed revised utilization schedule is given in
the table below.

Proposed Revised Utilization Schedule

IN RS. MILLION

S.No. Particulars Total funding Funding Amount Balance Revised

requirement envisaged actually unutilised utilization
as per the from IPO utilised till amount schedule
prospectus proceeds as 31 March
per prospectus 2009
1 Acquisition of shares of Cairn India Holdings Limited 62,250 62,250 59,581 2,669 59,581
2 Contingencies 2,530 2,530 Nil 2,530 Nil
3 Issue expenses 1,850 1,850 1,600 250 1,600
4 Development in the Rajasthan Block and additional 55,250 16,120 21,153 1,877 26,838 *
drilling activities in Ravva and Cambay
5 Exploration and appraisal activities including funding
minimum work program for capital commitments and
any additional appraisal expenditure that may arise as
a result of exploration success in existing blocks and Included Included
blocks that may be awarded in NELP VI round 6,910 6,910 in 4 above in 4 above -
6 General corporate purposes 230 230 230 - 230
7 Less: Shortfall in Issue Proceeds 1,641
Total 129,020 89,890 82,563 5,686 88,249*

* After adjusting shortfall in issue proceeds of Rs. 1641 million

DIRECTORS’ REPORT 59
 Directors’ Report
Continued
employee stock option scheme
The Company has established share incentive
schemes viz., Cairn India Senior Management
Plan (CISMP), Cairn India Performance Option
Plan (CIPOP) and Cairn India Employee Stock
Option Plan (CIESOP) pursuant to which op-
tions to acquire shares have been granted to
select employees and Directors of the Company
and its subsidiaries. The Company also has cash
awards option plan (phantom stock options) for
expatriate employees of the Company and its
subsidiaries.
During the year, stock options have been
granted to the executive Directors and employ-
ees of the Company. On exercise of the options
so granted, the paid-up equity share capital of
the Company will increase in terms of the Stock
Option Plans mentioned above. The details
of stock options granted by the Company are
disclosed in compliance with Clause 12 of
the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and
set out in Annexure I to this Report.
subsidiary companies
During the financial year under review, CIG
Mauritius Holding Pvt. Limited, CIG Mauritius
Pvt. Limited, Cairn Lanka Pvt. Limited and Cairn
Energy Developments Pte. Limited became
subsidiaries of the Company. As on 31 March
2009 the Company had 31 subsidiaries includ-
ing indirect subsidiaries.
Pursuant to the provisions of Section 212(8)
of the Companies Act, 1956, the Company
has obtained exemption from the Ministry of
Corporate Affairs, Government of India from
attaching the accounts of its subsidiaries to the
Company’s Annual Accounts for the financial
year ended 31 March 2009. The accounts of
the subsidiaries are available for inspection by
members on any working day at the Registered
Office of the Company between 10 a.m. and
12 noon. A statement in respect of subsidiary
companies is attached to the accounts.
consolidated financial
statements
Your Company is also presenting the audited
consolidated financial statements prepared in
accordance with the Accounting Standard 21 is-
sued by the Institute of Chartered Accountants
of India. Information in aggregate for each
subsidiary in respect of capital reserves, total
assets, liabilities, investments, turnover, etc.
is disclosed separately and forms part of the
annual report.
60 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
directors
Mr Rick Bott was appointed as additional
Director on the Board with effect from 29 April
2008, and as Executive Director and Chief
Operating Officer with effect from 15 June
2008.
During the financial year under review,
Ms Jann Brown, was appointed as an
alternate Director to Mr Norman L. Murray
with effect from 25 November 2008 and later
ceased to be an alternate Director from 10
December 2008. Thereafter, she was appointed
as additional Director effective 19 December
2008. Pursuant to the provisions of Section 260
of the Companies Act, 1956, she holds office
up to the ensuing annual general meeting. The
Company has received a notice from a member
of the Company sponsoring her candidature
as Director of the Company. Ms Jann Brown is
proposed to be appointed as a non-rotational
Director.
Mr Edward T. Story was appointed as ad-
ditional Director on 18 March 2009. Pursuant to
the provisions of Section 260 of the Companies
Act, 1956, he holds office up to the ensuing
annual general meeting. The Company has re-
ceived a notice from a member of the Company
sponsoring his candidature as Director of the
Company.
Mr Lawrence Smyth resigned as Executive
Director and COO with effect from 21 January
2008. Mr Norman L. Murray resigned from
the Board with effect from 18 December 2008,
and was appointed as alternate Director to
Ms Jann Brown on 19 December 2008. Later
he ceased to be an alternate Director effective
10 February 2009. Your Directors wish to place
on record their sincere appreciation of the valu-
able contribution made by Mr Lawrence Smyth
and Mr Norman Murray during their tenure on
the Board of the Company.
Mr Philip Tracy was appointed as alternate
Director to Sir Bill Gammell on 18 March 2009
and later ceased to be alternate Director with
effect from 26 May 2009.
Mr Aman Mehta and Dr Omkar Goswami
retire by rotation at the ensuing annual general
meeting and being eligible, offer themselves for
re-appointment.
Directors’ Report
Continued
corporate governance
The Corporate Governance and Management
Discussion and Analysis Reports form an
integral part of this report and are set out as
separate sections to this annual report. The
Certificate of S. R. Batliboi & Associates,
chartered accountants, the statutory auditors
of the Company certifying compliance with the
conditions of corporate governance as stipu-
lated in Clause 49 of the listing agreement with
stock exchanges is annexed with the report on
corporate governance.
auditors
M/s. S. R. Batliboi & Associates, chartered
accountants, auditors of the Company, retire at
the conclusion of the ensuing annual general
meeting and being eligible, offer themselves
for re-appointment. The audit committee in
its meeting held on 27 May 2009 has recom-
mended the re-appointment of M/s. S. R.
Batliboi & Associates, as statutory auditors of
the Company.
fixed deposits
The Company has not invited any deposits from
the public under Section 58A of the Companies
Act, 1956.
human resources
Company’s industrial relations continued to be
harmonious during the period under review.
particulars of employees
Particulars of employees required to be
furnished under Section 217(2A) of the
Companies Act, 1956 (‘the Act’) form part of
this report. However, as per the provisions
of Section 219(1)(b)(iv) of the Act, the report
and accounts are being sent to the sharehold-
ers of the Company excluding the particulars
of employees under Section 217(2A) of the
Act. Any shareholder interested in obtaining
a copy of the said statement may write to the
Company Secretary at the Registered Office of
the Company.
conservation of energy,
technology absorption and
foreign exchange earnings
and outgo
Information on Conservation of Energy,
Technology Absorption and Foreign Exchange
Earnings and Outgo is given in Annexure II to
this report.
directors’ responsibility
statement
Pursuant to Section 217(2AA) of the Companies
Act, 1956, the Directors confirm that:
(i) in the preparation of the annual accounts,
the applicable accounting standards have
been followed along with proper explana-
tion relating to material departures
(ii) appropriate accounting policies have been
selected and applied consistently and have
made judgments and estimates that are
reasonable and prudent so as to give a true
and fair view of the state of affairs of the
Company as at 31 March 2009 and of the
profit of the Company for the year ended
31 March 2009
(iii) proper and sufficient care has been taken
for maintenance of adequate accounting
records in accordance with the provisions
of the Companies Act, 1956 for safeguard-
ing the assets of the Company and for
preventing and detecting fraud and other
irregularities
(iv) the annual accounts have been prepared on
a going concern basis
appreciation
Your Directors wish to place on record their
gratitude for the valuable assistance and
co-operation extended to the Company by
the Central Government, State Governments,
Banks, Institutions, Investors and Customers.
For and on behalf of the Board of Directors
Sir William B.B. Gammell
Chairman
Place Gurgaon
Date 27 May 2009
DIRECTORS’ REPORT 61
 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
S.No. Particulars Cairn India Senior Cairn India Cairn India
Management Plan Performance Employee Stock
Option Plan (2006) Option Plan (2006)
1 Options granted during January 2008 - March 2009 Nil 789,567 3,809,896
2 The Pricing Formula Rs. 33.70 per Share Rs. 10 per Share Price determined by
the Remuneration
Committee but not
less than the fair
market value of a share
on the date of grant
3 Options Vested during January 2008 - March 2009 2,238,078 NIL NIL
4 Options Exercised during January 2008 - March 2009 5,268,396 NIL NIL
5 Total number of Shares arising as a result of exercise of options during 5,268,396 NIL NIL
January 2008 - March 2009
6 Options lapsed during January 2008 - March 2009 792,240 2,344,715 1,441,362
7 Variation of terms of options None None None
8 Money realized by exercise of options during January 2008 - March 2009 Rs. 177,544,945 NIL NIL
9 Total number of options in force as on 31 March 2009 2,238,077 3,200,096 10,914,244
10 Employee wise details of options granted during the year to:
(i) Senior Managerial Person None Indrajit Banerjee : 69,630 None
Santosh Chandra : 48,676
Elango P. : 78,269
Senthil Kumar P. : 32,605
S. V. Nair : 89,195
Ananthakrishnan B. : 48,024
(ii) Any other employee who receives a grant in any one year of option None Venkateshan T. K. : 45,978 None
amounting to 5% or more of options granted during the year Narayanan P. S. : 49,204
Ajay Gupta : 75,191
(iii) Identified employees who were granted options during any 1 year, equal None None None
to or exceeding 1% of the issued capital (excluding outstanding warrants &
conversions) of the Company at the time of grant
11 Diluted Earnings Per Share (EPS) pursuant to issue of Shares on exercise of Rs. 0.29 NA NA
options calculated in accordance with Accounting Standard 20
12 (i) Method of calculation of employee compensation cost Intrinsic Value Method
(ii) Difference between the employee compensation cost so computed at 485,151
12(i) above and the employee compensation 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) 542,407
Less: Additional employee Compensation cost based on fair value (Rs. in thousands) 485,151
Adjusted PAT (Rs. in thousands) 57,256
Adjusted EPS Basic (Rs.) 0.03
Adjusted EPS Diluted (Rs.) 0.03
13 Weighted-average exercise prices of options granted during NA 10.00 226.21
January 2008 - March 2009
Weighted-average fair value of each option outstanding as on 131.50 165.46 101.47
31 March 2009

62 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009

Annexures to the
Directors’ Report Continued
S.No. Particulars
14 A description of the method and significant assumptions used during
the year to estimate the fair values of options, including the following
weighted-average information:
(i) risk-free interest rate
(ii) expected life (in years)
(iii) expected volatility
(iv) expected dividends
(v) price of the underlying Share in market at the time of option grant
annexure ii
conservation of energy,
technology absorption,
foreign exchange earnings
and outgo
conservation of energy
Energy conservation measures taken
We have continued our efforts in conserving
energy from our operating assets. In line with
our climate change strategy, we have been
monitoring and setting targets for both methane
and other Green House Gas (GHG) emissions
since 2000. We have implemented several
initiatives to reduce these emissions including
the installation of high efficiency flares, third
stage compression, gas ejector systems and
improving plant operations to minimise volumes
of gas flared during plant upsets.
At Ravva , energy audits were carried out
and certain energy conservation measures were
recommended. Some of the recommendations
that were implemented include:
1 Installation of additional solar arrays
at offshore platforms
The power supply requirement for offshore
platforms is met by using solar arrays. With the
increase in load, additional solar arrays were
installed to minimize the usage of the DG set.
With this addition, the total solar energy utiliza-
tion is 5.87 MWH per annum.
2 Installation of wind turbine generators
at offshore platforms
The back up power supply requirement for
offshore platforms during the rainy season is
met by installing the wind turbine generators at
platforms to minimize usage of the DG set. The
estimated energy usage is 7.2 MWH per annum.
3 Variable frequency drives
Variable frequency drives were introduced in
Cairn India Senior Cairn India Cairn India
Management Plan Performance Employee Stock
Option Plan (2006) Option Plan (2006)
7.05% 7.77% 8.13%
2.45 3.12 6.50
44.08% 37.90% 40.14%
NA NA NA
160.00 180.06 185.93
Multi Phase Pump (MPP) and Produced Water
Reinjection (PWRI) projects as an energy con-
servation measure.
Energy conservation initiatives were adopted
at the Gurgaon corporate office through better
operational practices. An estimated 156 MWH
energy saving was achieved.
Additional investments and proposals
being implemented for conservation
of energy
We have implemented major design modifica-
tions at the MPT in Rajasthan to reduce overall
energy consumption. As per the earlier plan
crude / natural gas based thermal power plant
was considered with additional heaters for
meeting the heating requirements for main-
taining the pour point of the crude. This was
replaced with natural gas fired steam turbines
and elimination of heaters. This initiative will not
only ensure much lower gaseous emissions but
also efficient use of energy.
Impact of the above measures for
reduction of energy consumption and
consequent impact on the cost of
production
The design modifications at the MPT will sub-
stantially reduce emissions and will ensure effi-
cient use of energy. This design change will not
affect production of hydrocarbons. The installa-
tion of renewable energy sources at the Ravva
plant will reduce dependence on conventional
energy and the aim is to carry out all operations
at the platforms using renewable energy.
technology absorption
Research and Development (R&D)
Specific areas in which R&D was carried
out by the Company
Cairn has been actively pursuing the applica-
tion of EOR (Enhanced Oil Recovery) technol-
DIRECTORS’ REPORT 63
 Annexures to the
Directors’ Report Continued
Expenditure on R&D
IN R S.
Particulars
(i) Capital
(ii) Recurring
(iii) Total
(iv) Total R&D expenditures as a % of total turnover
* These are consolidated numbers for the fifteen months period ended 31 March 2009
ogy in the Mangala, Bhagyam and Aishwariya
Fields. Coreflood studies have been carried
out in 2 independent laboratories in order to
determine the efficiency of the chemical flood
processes and also to determine the optimum
chemical formulations. In house simulation work
has also been carried out to determine the ef-
ficiency at field level. The laboratory studies are
ongoing to optimise the chemical formulations.
Re-injection of produced water separated
at the Ravva terminal, back into the reservoir
helps reduce discharge of waste water to sea
and abstraction of ground water for injection
purposes. PWRI has been designed and imple-
mented to treat and handle a maximum capacity
of 90,000 BWPD. The PWRI was successfully
commissioned in Q2 2008 and is presently re-
injecting 90% of the produced water.
Benefits derived as a result of this R&D
Cairn ’s research in EOR applications for the
MBA fields has the potential to unlock addi-
tional oil reserves within these fields and a long
term strategy for EOR is being developed with
this end in mind.
Cairn ’s study with the National Geophysical
Research Centre (NGRI) on salinity changes of
ground water sets an example of ‘good industry
practice’. We are reassured that our operation
in Ravva does not have an adverse impact on
ground water and the environment.
Expenditure on R&D
Details outlined in the Table above.
64 C A I R N IN DIA L IM ITE D A NNUAL R EPORT 2008-2009
Amount
3,704,225 *
-
3,704,225
0.02%
foreign exchange earnings
and outgo
Activities relating to exports; initiatives
taken to increase exports ; development
of new export markets for products and
services ; and export plans
India imports approximately 75% of its oil
& gas requirement and in this situation; the
export of crude oil & natural gas which are
the main products of Cairn are not relevant in
this sector. However, by discovering new oil &
gas finds and bringing them into production,
Cairn is working towards enhancing energy
security and increasing the self sufficiency of
the nation which is in line with policy of the
Indian Government. At peak production rate,
Rajasthan block is expected to contribute upto
20% of domestic crude oil production.
Foreign exchange used and earned.
During the period ended 31 March 2009, the
Company earned Rs. 37.58 million and incurred
expenditure of Rs. 1036.31 million in foreign
exchange.
For and on behalf of the Board of Directors
Sir William B.B. Gammell
Chairman
Place Gurgaon
Date 27 May 2009
Auditors' Report

TO
THE MEMBERS OF CAIRN INDIA LIMITED

1. We have audited the attached balance sheet of Cairn India Limited ('the Company') as at March 31, 2009 and also the profit and loss account and
the cash flow statement for the fifteen months period ended on that date annexed thereto, which include the Company's share of net liabilities,
expenses and cash outflows aggregating to Rs. 44,467 thousand, Rs. 213,225 thousand and Rs. 20,344 thousand, respectively in the
unincorporated joint ventures ('JVs') not operated by the Company or its subsidiaries, the accounts of which have been audited by the auditors of
the respective JVs and further include the Company's share of net assets, expenses and cash flows aggregating to Rs. 1,871 thousand,
Rs. 137,193 thousand and Rs. Nil, respectively in certain JVs, the accounts of which have been certified by the operators of the respective JVs
(for which, as informed to us, the audits are in progress) and relied upon by us. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) ('the Order') issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order. In respect of clauses (ix)(a), (ix)(b), (ix)(c) and (xxi), our comments are restricted to the operations of the Company and
the JV's where the Company is the operator and does not cover the JV's where any third party is the operator.

4. Further to our comments in the Annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of
our audit;
ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those
books;
iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
v. On the basis of the written representations received from the directors, as on March 31, 2009, and taken on record by the Board of Directors,
we report that none of the directors is disqualified as on March 31, 2009 from being appointed as a director in terms of clause (g) of sub-
section (1) of section 274 of the Companies Act, 1956;
vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles
generally accepted in India;
a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2009;
b) in the case of the profit and loss account, of the profit for the fifteen months period ended on that date; and
c) in the case of cash flow statement, of the cash flows for the fifteen months period ended on that date.

For S. R. Batliboi & Associates

Chartered Accountants

per Raj Agrawal

Partner
Membership No.: 82028

Place : Gurgaon
Date : 27th May, 2009

65
 Auditors' Report

Annexure referred to in paragraph 3 of our report of even date

Re: Cairn India Limited (‘the Company’)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such
verification.
(c) There was no substantial disposal of fixed assets during the year.
(ii) The Company has not started commercial production in any of its oil and gas blocks and has not purchased any inventories.
Therefore the provisions of clause 4(ii) of the Order are not applicable to the Company.
(iii) (a-d) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956. Therefore the provisions of clause 4(iii) (b), (c) and (d) of the
Order are not applicable to the Company.
(e-g) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956. Therefore the provisions of clause 4(iii) (f) and (g) of the Order
are not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system
commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale services.
During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. Since
the Company has not started commercial production in any of its oil and gas blocks, it has neither purchased any inventories nor sold
any goods.
(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts
or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under
section 301 have been so entered.
(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered
into during the financial year, because of the unique and specialized nature of the items involved and absence of any comparable
prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.
(viii) The Company has not commenced commercial production in any of its oil and gas blocks. Accordingly, the provisions of clause 4(viii)
of the Order are not applicable to the Company.
(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, income-tax, service tax, cess have
generally been regularly deposited with the appropriate authorities. The provisions relating to employees' state insurance, sales tax,
wealth tax, customs duty and excise duty are not applicable to the Company.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor
education and protection fund, income-tax, service tax, cess and other undisputed statutory dues were outstanding, at the year end,
for a period of more than six months from the date they became payable. The provisions relating to employees' state insurance, sales
tax, wealth tax, customs duty and excise duty are not applicable to the Company.
(c) According to the information and explanation given to us, there are no dues of income tax and cess which have not been deposited
on account of any dispute. The provisions relating to sales tax, wealth tax, customs duty and excise duty are not applicable to the
Company.
(x) The Company has been registered for a period of less than five years and hence we are not required to comment on whether or not
the accumulated losses at the end of the financial year is fifty per cent or more of its net worth and whether it has incurred cash
losses in such financial year and in the immediately preceding financial year.
(xi) The Company has no outstanding dues in respect of a financial institution, bank or debenture holders.
(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company
has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of
the Order are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the Company.
(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from
bank or financial institutions.
(xvi) The Company did not have any term loans outstanding during the period.
(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we
report that no funds raised on short-term basis have been used for long-term investment.
(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under
section 301 of the Companies Act, 1956.

66 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Auditors' Report

(xix) The Company did not have any outstanding debentures during the year.
(xx) We have verified that the end use of money raised by public issue is as disclosed in the note no. 5 of schedule 18 to the financial
statements.
(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or
reported during the course of our audit.

For S. R. Batliboi & Associates

Chartered Accountants

per Raj Agrawal

Partner
Membership No.: 82028

Place : Gurgaon
Date : 27th May, 2009

67
 Balance Sheet
AS AT MARCH 31, 2009

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Schedules As at As at
March 31, 2009 December 31, 2007

SOURCES OF FUNDS
Shareholders’ funds
Share capital 1 18,966,678 17,783,994
Stock options outstanding 2 388,978 947,084
Reserves and surplus 3 301,090,274 276,084,115
320,445,930 294,815,193

APPLICATION OF FUNDS
Fixed assets 4
Gross cost 974 –
Less: Accumulated amortisation 365 –
Net book value 609 –
Exploratory work in progress 5 540,299 –
Investments 6 292,253,966 294,137,285
Current assets, loans and advances
Sundry debtors 7 17,942 12,708
Cash and bank balances 8 27,632,762 7,757
Other current assets 9 633,645 –
Loans and advances 10 220,814 35,950
28,505,163 56,415
Less: Current liabilities and provisions
Current liabilities 11 1,076,734 138,410
Provisions 12 315,373 320,504
1,392,107 458,914
Net current assets 27,113,056 (402,499)
Profit and loss account 538,000 1,080,407
320,445,930 294,815,193
Notes to accounts 18

The schedules referred to above and the notes to accounts form an integral part of the balance sheet.
As per our report of even date

For S. R. Batliboi & Associates For and on behalf of the Board of Directors
Chartered Accountants Rahul Dhir Managing Director and Chief Executive Officer
per Raj Agrawal Aman Mehta Director
Partner Indrajit Banerjee Executive Director and Chief Financial Officer
Membership No.: 82028 Neerja Sharma Company Secretary

Place : Gurgaon
Date : 27th May, 2009

68 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Profit and Loss Account
FOR THE PERIOD ENDED MARCH 31, 2009

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Schedules Fifteen months ended Twelve months ended

March 31, 2009 December 31, 2007

INCOME
Revenue from operating activities 37,331 12,708
Other income 13 2,943,072 326,915
2,980,403 339,623

EXPENDITURE
Staff costs 14 212,519 623,374
Data acquisition and pre exploration cost 36,235 –
Administrative expenses 15 793,554 174,838
Unsuccessful exploration costs 5 813,568 8,879
Amortisation 4 365 –
Finance costs 16 3,446 209
1,859,687 807,300
Profit/(Loss) before taxation 1,120,716 (467,677)
Current tax 543,800 –
Fringe Benefit Tax 34,509 320,489
Profit/(Loss) for the period / year 542,407 (788,166)
Add: Accumulated losses at the beginning of (1,080,407) (292,241)
the period / year
Deficit carried forward to balance sheet (538,000) (1,080,407)
Earnings/(Loss) per share in INR 17
Basic 0.29 (0.44)
Diluted (previous year considered anti-dilutive) 0.29 (0.44)
[Nominal value of shares Rs. 10]
Notes to accounts 18

The schedules referred to above and the notes to accounts form an integral part of the profit and loss account.
As per our report of even date

For S. R. Batliboi & Associates For and on behalf of the Board of Directors
Chartered Accountants Rahul Dhir Managing Director and Chief Executive Officer
per Raj Agrawal Aman Mehta Director
Partner Indrajit Banerjee Executive Director and Chief Financial Officer
Membership No.: 82028 Neerja Sharma Company Secretary

Place : Gurgaon
Date : 27th May, 2009

69
 Statement of Cash Flows
FOR THE PERIOD ENDED MARCH 31, 2009

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Particulars Fifteen months ended Twelve months ended

March 31, 2009 December 31, 2007

Cash flow from operating activities

Profit / (loss) before taxation for the period / year 1,120,716 (467,677)
Adjustments for:
– Employee compensation expense (stock options) - net of exceptional gains (33,325) 602,025
– Interest income (1,341,376) (96,166)
– Dividend from unquoted current investments (200,225) (203,117)
– Depreciation, depletion and site restoration costs 365 –
– Profit on sale of unquoted current investments (net) (1,245,686) (27,632)
– Share issue expenses 208,410 –
– Unrealised exchange loss / (gain) on restatement of assets and liabilities (net) 183,896 –
– Unsuccessful exploration cost 813,568 –
– Interest expense 388 209
Operating (loss) before working capital changes (493,269) (192,358)
Movements in working capital:
(Increase)/decrease in debtors (5,234) (12,708)
(Increase)/decrease in loans and advances and other current assets (212,729) (16,395)
Increase/(decrease) in current liabilities and provisions 909,781 125,944
Cash generated from / (used in) operations 198,549 (95,517)
Direct taxes paid including fringe benefit tax (553,060) (24,488)
Net cash (used in) operating activities (A) (354,511) (120,005)
Cash flow from investing activities
Payment made for exploration and development activities (1,371,119) –
Long term investments made in subsidiaries during the period (1,562,784) (55,028,070)
Payment for purchase of fixed assets (974) –
Fixed deposits made (37,573,811) –
Proceeds from matured fixed deposits 10,005,000 –
Current, unquoted investments made during the period (43,293,242) (13,297,748)
Interest received 707,732 107,819
Dividend received from unquoted current investments 200,225 203,117
Proceeds from sale of unquoted current investments 47,985,031 8,271,805
Net cash (used in) investing activities (B) (24,903,942) (59,743,077)
Cash flow from financing activities
Proceeds from issue of equity shares (including securities premium) 25,523,445 2,093,607
Payment for share issue expenses (208,410) (1,422,257)
Unsecured loans repaid – (204,708)
Security deposit recovered from / (paid) to a stock exchange – 30,000
Interest paid (388) (209)
Net cash from financing activities (C) 25,314,647 496,433
Net increase in cash and cash equivalents (A+B+C) 56,194 (59,366,649)
Cash and cash equivalents at the beginning of the period / year 7,757 59,374,406
Cash and cash equivalents at the end of the period / year 63,951 7,757
Components of cash and cash equivalents as at March 31, 2009 December 31, 2007
Cash in hand 15 –
Balances with scheduled banks
– on current accounts 13,936 7,757
– on deposit accounts 27,618,811 –
Less: Deposits having maturity of over 90 days (27,568,811) –
63,951 7,757
Notes:
1) The above Cash Flow Statement has been prepared under the ‘Indirect Method’ as set out in Accounting Standard-3 on “Cash flow statements”.
2) Amounts in bracket indicate a cash outflow or reduction.
3) Bank balance in deposit accounts includes INR 1,530,000 thousand, previous year Nil, pledged with the banks.

As per our report of even date

For S. R. Batliboi & Associates For and on behalf of the Board of Directors
Chartered Accountants Rahul Dhir Managing Director and Chief Executive Officer
per Raj Agrawal Aman Mehta Director
Partner Indrajit Banerjee Executive Director and Chief Financial Officer
Membership No.: 82028 Neerja Sharma Company Secretary

Place : Gurgaon
Date : 27th May, 2009

70 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Financial Statements

(All amounts are in thousand Indian Rupees, unless otherwise stated)

As at As at
March 31, 2009 December 31, 2007

SCHEDULE - 1
Share capital
Authorised:
2,250,000,000 (previous year 2,250,000,000) equity shares of INR 10 each 22,500,000 22,500,000
Issued, subscribed and fully paid up:
1,896,667,816 (previous year 1,778,399,420) equity shares of INR 10 each 18,966,678 17,783,994
18,966,678 17,783,994
Note:
1) Issued, subscribed and fully paid up share capital includes 1,226,843,791 equity shares (previous year - 1,226,843,791 equity shares) of INR 10
each held by Cairn UK Holdings Limited, the holding company together with its nominees.
2) Shares held by the holding company includes 861,764,893 equity shares (previous year - 861,764,893 equity shares) of INR 10 each, allotted as
fully paid up pursuant to contracts for consideration other than cash.
3) For stock options outstanding refer note no. 6 in schedule 18.

SCHEDULE - 2
Stock options outstanding
Employee stock options outstanding 782,548 2,496,095
Less: Deferred employee compensation outstanding 393,570 1,549,011
388,978 947,084

SCHEDULE - 3
Reserves and surplus
Securities premium account
Opening balance 276,084,115 275,017,837
Add: Additions during the period / year 25,006,159 1,962,756
Less: Adjustment against share issue expenses – 896,478
Closing Balance 301,090,274 276,084,115

SCHEDULE - 4
Fixed assets
Intangible Assets - Computer Software
Gross Block
Additions during the period / year 974 –
Closing balance 974 –
Accumulated amortisation
For the period / year 365 –
Closing balance 365 –
Net Block 609 –

71
 Schedules to the Financial Statements Continued

(All amounts are in thousand Indian Rupees, unless otherwise stated)

As at As at
March 31, 2009 December 31, 2007

SCHEDULE - 5

Exploratory work in progress

Additions during the period / year 1,353,867 8,879
Less: Unsuccessful exploration costs for the period / year 813,568 8,879
540,299 –

SCHEDULE - 6
Investments
Long term investments in Subsidiary Companies (at cost)
Unquoted, trade and fully paid-up
292,929,752 equity shares (previous year: 272,389,192 equity shares) of 290,524,514 289,083,710
GBP 1 each in Cairn India Holdings Limited, U.K.
2,509,960 equity shares (previous year: Nil) of USD 1 each in CIG Mauritius 121,980 –
Holding Pvt Limited
Current Investments (at lower of cost and market value)
Unquoted and non trade
Mutual Funds (Refer note no. 21 in Schedule 18 for details) * 1,607,472 5,053,575
292,253,966 294,137,285
Aggregate amount of unquoted investments 292,253,966 294,137,285
Repurchase price of mutual fund units, represented by Net Asset Value 1,607,472 5,114,006
* Includes unutilized monies of the public issue. (Refer note no. 5 in Schedule 18)

SCHEDULE - 7
Sundry Debtors
Debts outstanding for a period exceeding six months
– Unsecured, considered good 7,609 8,587
Other debts
– Unsecured, considered good 10,333 4,121
17,942 12,708

SCHEDULE - 8
Cash and bank balances
Cash in hand 15 –
Balances with scheduled banks *
– on current accounts 13,936 7,757
– on deposit accounts ** 27,618,811 –
27,632,762 7,757
* Includes unutilized monies of the public issue (refer note no.5 in Schedule 18)
** Includes INR 1,530,000 thousand, previous year Nil, pledged with the banks

72 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Financial Statements Continued

(All amounts are in thousand Indian Rupees, unless otherwise stated)

As at As at
March 31, 2009 December 31, 2007

SCHEDULE - 9
Other current assets
Interest accrued on bank deposits 633,645 –
633,645 –

SCHEDULE - 10
Loans and advances
Unsecured considered good:
Advances recoverable in cash or in kind or for value to be received 12,855 417
Advances recoverable from subsidiary companies 192,795 663
Deposits 15,164 –
Advance income tax / tax deducted at source (Net of provisions Nil, previous year Nil) – 34,870
220,814 35,950

SCHEDULE - 11
Current liabilities
Sundry Creditors
– Total outstanding dues to Micro and Small Enterprises (refer note no. 20 in schedule 18) 6 –
– Total outstanding dues to other than Micro and Small Enterprises 97,773 111,964
Amounts payable to Cairn Energy Plc., the ultimate holding company 24,109 25,000
Amounts payable to subsidiary companies 753,778 –
Other liabilities 201,068 1,446
1,076,734 138,410

SCHEDULE - 12
Provisions
Provision for taxation (net of advance tax -INR 338,382 thousand, previous year Nil) 205,118 –
Provision for fringe benefit tax (net of advance tax payments INR 266,883 thousand, 105,235 320,231
previous year - INR 258 thousand)
Provision for gratuity 3,994 233
Provision for leave encashment 1,026 40
315,373 320,504

73
 Schedules to the Financial Statements Continued

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Fifteen months ended Twelve months ended

March 31, 2009 December 31, 2007

SCHEDULE - 13
Other income
Interest on bank deposits (Gross, tax deducted at source INR 304,879 thousand, 1,341,377 96,166
previous year INR 23,103 thousand)
Dividend from non-trade current investments 200,225 203,117
Profit on sale of non-trade current investments (net) 1,245,686 27,632
Miscellaneous income 61 –
Exceptional gain (refer note no. 8 in schedule 18) 155,723 –
2,943,072 326,915

SCHEDULE - 14
Staff costs
Salary, wages and bonus 74,089 19,904
Contribution to provident fund 3,314 349
Contribution to superannuation fund 1,716 904
Gratuity expenses 3,720 192
Leave encashment expenses 1,103 –
Staff welfare expenses 6,179 –
Employee compensation expense (stock options) 122,398 602,025
212,519 623,374

74 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Financial Statements Continued

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Fifteen months ended Twelve months ended

March 31, 2009 December 31, 2007

SCHEDULE - 15
Administrative expenses
Legal and professional expenses 254,050 109,461
Contract employee charges 4,517 –
Rent 1,377 –
Auditor’s remuneration
As Auditors
– Fees for statutory audit and consolidated financial statements 5,314 2,921
– Fees for tax audit 828 563
– Fees for limited review 7,595 1,014
– Fees for certification 506 –
– Fees for statutory reporting for parent companies consolidated 10,566 13,847
financial statements
– Other services 2,997 10,637
– Out of pocket expenses 443 28,249 552 29,534
Directors’ sitting fees 1,320 700
Advertisement and publicity 14,385 14,321
Public relation expenses 42,959 14,329
Sponsorship 15,666 –
Repairs and maintenance (others) 303 140
Travel expenses 30,954 1,308
Insurance expenses 197 –
Communication expenses 5,983 4,777
Share issue expenses (refer note no. 13 in schedule 18) 208,410 –
Exchange differences (net) 180,632 –
Miscellaneous expenses 4,552 268
793,554 174,838

SCHEDULE - 16
Finance costs
Interest on bank overdraft – 200
Other interest 388 –
Bank charges 3,058 9
3,446 209

SCHEDULE - 17
Earnings / (Loss) per share
Profit/(Loss) for the period / year as per profit and loss account 542,407 (788,166)
Weighted average number of equity shares in 1,866,146,993 1,777,001,292
calculating basic earning / (loss) per share
Add: Number of equity shares arising on grant of stock options 10,052,076 11,017,256
Weighted average number of equity shares in 1,876,199,069 1,788,018,548
calculating diluted earning / (loss) per share
Earning/(Loss) per share in INR
Basic 0.29 (0.44)
Diluted (previous year considered as anti-dilutive) 0.29 (0.44)
75
 Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

1. NATURE OF OPERATIONS
Cairn India Limited (‘the Company’) was incorporated in India on August 21, 2006 and is a subsidiary of Cairn UK Holdings Limited, which in turn
is a wholly owned subsidiary of Cairn Energy Plc., UK which is listed on London Stock Exchange.
The Company is primarily engaged in the business of surveying, prospecting, drilling, exploring, acquiring, developing, producing, maintaining,
refining, storing, trading, supplying, transporting, marketing, distributing, importing, exporting and generally dealing in minerals, oils, petroleum,
gas and related by-products and other activities incidental to the above. As part of its business activities, the Company also holds interests in its
subsidiary companies which have been granted rights to explore and develop oil exploration blocks in the Indian sub-continent.
The Company is participant in various Oil and Gas blocks/fields granted by the Government of India through Production Sharing Contracts (‘PSC’)
entered into between the Company and Government of India and other venture partners. The Company has interest in the following Oil and Gas
blocks/fields-
Oil and Gas blocks/fields Area Participating Interest
Operated block (through subsidiaries)
1 VN-ONN-2003/1* Vindhyan Onshore 25%
2 PR-OSN-2004 Palar Basin Offshore 25%
3 KG-ONN-2003/1* Krishna Godavari Onshore 25%
Non – operated block
4 RJ-ONN-2003/1* Rajasthan Onshore 30%
5 GS-OSN-2003/1* Gujarat Saurashtra Onshore 49%
6 KK-DWN-2004 Kerala Konkan Basin Offshore 40%
7 CB-ONN-2002/1* Cambay Onshore 30%
(proposed to be relinquished)
*Acquired during current period through assignment of interest from subsidiary companies

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation
The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards notified under the
Companies (Accounting Standard) Rules, 2006 under the historical cost convention and on an accrual basis. The accounting policies, in all material
respects, have been consistently applied by the Company and are consistent with those used in the previous period, except to the extent stated in
note no. 8 below.
(b) Oil and gas assets
The Company follows a successful efforts method for accounting for oil and gas assets as set out by the Guidance Note issued by the Institute of
Chartered Accountants of India (ICAI) on “Accounting for Oil and Gas Producing Activities”.
Expenditure incurred on the acquisition of a license interest is initially capitalised on a license by license basis. Costs are held, undepleted, within
exploratory and development wells in progress until the exploration phase relating to the license area is complete or commercial oil and gas
reserves have been discovered.
Exploration expenditure incurred in the process of determining exploration targets which cannot be directly related to individual exploration
wells, is expensed in the period in which it is incurred. Exploration/appraisal drilling costs are initially capitalised within exploratory and
development work in progress on a well by well basis until the success or otherwise of the well has been established. The success or failure of each
exploration/appraisal effort is judged on a well by well basis. Drilling costs are written off on completion of a well unless the results indicate that oil
and gas reserves exist and there is a reasonable prospect that these reserves are commercial.
Where results of exploration drilling indicate the presence of oil and gas reserves which are ultimately not considered commercially viable, all
related costs are written off to the profit and loss account. Following appraisal of successful exploration wells, when a well is ready for
commencement of commercial production, the related exploratory and development wells in progress are transferred into a single field cost centre
within producing properties, after testing for impairment.
Where costs are incurred after technical feasibility and commercial viability of producing oil and gas is demonstrated and it has been
determined that the wells are ready for commencement of commercial production, they are capitalised within producing properties for each cost
centre. Subsequent expenditure is capitalised when it enhances the economic benefits of the producing properties or replaces part of the existing
producing properties. Any costs remaining associated with such part replaced are expensed in the financial statements.
Net proceeds from any disposal of an exploration asset within exploratory and development work in progress is initially credited against the
previously capitalised costs and any surplus proceeds are credited to the profit and loss account. Net proceeds from any disposal of producing
properties are credited against the previously capitalised cost and any gain or loss on disposal of producing properties is recognised in the profit
and loss account, to the extent that the net proceeds exceed or are less than the appropriate portion of the net capitalised costs of the asset.

76 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

(c) Depletion
The expenditure on producing properties is depleted within each cost centre.
Depletion is charged on a unit of production basis, based on proved reserves for acquisition costs and proved and developed reserves for
other costs.
(d) Site restoration costs
At the end of the producing life of a field, costs are incurred in restoring the site of production facilities. The Company recognizes the full cost of
site restoration as a liability when the obligation to rectify environmental damage arises. The site restoration expense forms part of the cost of
producing properties of the related asset. The amortization of the asset, calculated on a unit of production basis based on proved and developed
reserves, is included in the “depletion and site restoration costs” in the profit and loss account.
(e) Impairment
i. The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized where the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their
present value at the weighted average cost of capital.
ii. After impairment, depreciation/depletion is provided in subsequent periods on the revised carrying amount of the asset over its remaining
useful life.
(f) Other tangible fixed assets, depreciation and amortization
Tangible assets, other than oil and gas assets, are stated at cost, less accumulated depreciation and impairment losses, if any. Cost comprises the
purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition
of fixed assets which take a substantial period of time to get ready for its intended use are also included to the extent they relate to the period till
such assets are ready to be put to use. Depreciation is provided using the Straight Line Method as per the useful lives of the assets estimated by
the management, or at the rates prescribed under Schedule XIV of the Companies Act 1956, whichever is higher. The expected useful economic
lives are as follows:
Vehicles 2 to 5 years
Freehold buildings 10 years
Computers 2 to 5 years
Furniture and fixtures 2 to 5 years
Office equipments 2 to 5 years
Plant and Equipment 2 to 5 years
Leasehold improvements are amortized over the remaining period of the primary lease or expected useful economic lives, whichever is shorter.
(g) Intangible fixed assets and amortization
Intangible assets, other than oil and gas assets, have finite useful lives and are measured at cost and amortized over their expected useful
economic lives as follows:
Computer software 2 to 4 years
Goodwill arising on acquisition is capitalized and is subject to review for impairment.
(h) Leases
Finance leases, which effectively transfer substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the
lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease
payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are
charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalised.
If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset or the lease term.
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating
leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.
(i) Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. Current investments
are measured at cost or market value, whichever is lower, determined on an individual investment basis. All other investments are classified as
long-term investments. Long term investments are measured at cost. However, provision for diminution in value is made to recognise a decline
other than temporary in the value of the investments.
(j) Joint Ventures
The Company participates in several Joint Ventures which involve the joint control of assets used in the oil and gas exploration, development and
producing activities. It accounts for its share of the assets and liabilities of Joint Ventures along with attributable income and expenses in such Joint
Ventures, in which it holds a participating interest. Joint venture cash and cash equivalent balances are considered by the Company to be the
amounts contributed in excess of the Company’s obligations to the joint ventures and are, therefore, disclosed within loans and advances.
(k) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably
measured.
77
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(All amounts are in thousand Indian Rupees, unless otherwise stated)

Revenue from operating activities

The Company recognizes operators fees as revenue from joint ventures (in which its foreign subsidiaries are participants) based on the provisions
of respective PSCs.
Interest income
Interest income is recognised on a time proportion basis.
(l) Borrowing costs
Borrowing costs include interest and commitment charges on borrowings, amortisation of costs incurred in connection with the arrangement of
borrowings, exchange differences to the extent they are considered a substitute to the interest cost and finance charges under leases. Costs
incurred on borrowings directly attributable to development projects, which take a substantial period of time to complete, are capitalised within
the development/producing asset for each cost centre.
All other borrowing costs are recognised in the profit and loss account in the period in which they are incurred.
(m) Foreign currency transactions and translations
The Company translates foreign currency transactions into Indian Rupees at the rate of exchange prevailing at the transaction date. Monetary
assets and liabilities denominated in foreign currency are translated into Indian Rupees at the rate of exchange prevailing at the balance sheet
date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at
the date of the transaction.
Exchange differences arising on the settlement of monetary items or on reporting the Company’s monetary items at rates different from those
at which they were initially recorded during the period, or reported in previous financial statements, are recognised as income or as expenses in
the period in which they arise except those arising from investments in non-integral operations.
All transactions of integral foreign operations are translated as if the transactions of those foreign operations were the transactions of the
Company itself. In translating the financial statements of a non-integral foreign operation for incorporating in the Company’s financial statements,
the Company translates the assets and liabilities at the rate of exchange prevailing at the balance sheet date. Income and expenses of non-integral
operations are translated using rates at the date of transactions. Resulting exchange differences are disclosed under the foreign currency
translation reserve until the disposal of the net investment in non-integral operations.
(n) Income taxes
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax are measured at the amount
expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Fringe benefit tax also includes the proportionate
amount of tax likely to be paid by the Company, on the exercise of share options of the Company. Deferred income tax reflects the impact of
current period timing differences between taxable income and accounting income for the period and reversal of timing differences of earlier
periods.
Deferred tax assets and liabilities are measured, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. If the Company has carry forward of unabsorbed depreciation and tax losses, deferred tax
assets are recognised only if there is virtual certainty, supported by convincing evidence, that such deferred tax assets can be realised against
future taxable profits. Unrecognised deferred tax assets of earlier periods are re-assessed and recognised to the extent that it has become
reasonably certain that future taxable income will be available against which such deferred tax assets can be realised.
(o) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted
for events of bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares, if any.
(p) Provisions
A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will
be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
(q) Cash and Cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments, with an original maturity of
90 days or less.
(r) Employee Benefits
Retirement and Gratuity benefits
Retirement benefits in the form of provident fund and superannuation scheme are defined contribution schemes and the contributions are
charged to the profit and loss account of the period when the contributions to the respective funds are due. There are no obligations other than
the contribution payable to the respective funds.
Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made
at the end of each financial year. The scheme is maintained and administered by an insurer for the entire Cairn India Group to which the trustees
make periodic contributions.
78 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009
Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based actuarial
valuation made at the end of each financial year. The actuarial valuation is done as per projected unit credit method.
Actuarial gains / losses are immediately taken to profit and loss account and are not deferred.
Employee Stock Compensation Cost
Measurement and disclosure of the employee share-based payment plans is done in accordance with SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share-based Payments, issued by the
Institute of Chartered Accountants of India. The Company measures compensation cost relating to employee stock options using the intrinsic
value method. Compensation expense is amortized over the vesting period of the option on a straight line basis.
(s) Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements
and the results of operations during the reporting period end. Although these estimates are based upon management’s best knowledge of current
events and actions, actual results could differ from these estimates.
(t) Segment Reporting Policies
Identification of segments: The Company’s operating businesses are organized and managed separately according to the nature of products and
services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The
analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

3. SEGMENTAL REPORTING
Business segments
The primary reporting of the Company has been prepared on the basis of business segments. The Company has only one business segment,
which is the exploration, development and production of oil and gas and operates in a single business segment based on the nature of the
products, the risks and returns, the organisation structure and the internal financial reporting systems. Accordingly, the figures appearing in these
financial statements relate to the Company’s single business segment.
Geographical segments
Secondary segmental reporting is prepared on the basis of the geographical location of customers. The operating interests of the Company are
confined to India in terms of oil and gas blocks and customers. Accordingly, the figures appearing in these financial statements relate to the
Company’s single geographical segment being operations in India.

4. RELATED PARTY TRANSACTIONS

(a) Names of related parties:
Companies having control
• Cairn UK Holdings Limited, UK • Cairn Energy Plc., UK
Holding Company Ultimate holding company
Subsidiary companies
• Cairn Energy Australia Pty Limited • Cairn Energy India Pty Limited
• CEH Australia Pty Limited • Cairn Energy Asia Pty Limited
• Sydney Oil Company Pty Limited • Cairn Energy Investments Australia Pty Limited
• Wessington Investments Pty Limited • CEH Australia Limited
• Cairn India Holdings Limited (‘CIHL’) • CIG Mauritius Holding Private Limited (‘CMHPL’) –
• CIG Mauritius Private Limited – with effect from 1st July 2008 with effect from 1st July 2008
• Cairn Energy Holdings Limited • Cairn Energy Discovery Limited
• Cairn Exploration (No. 2) Limited • Cairn Exploration (No. 6) Limited
• Cairn Energy Hydrocarbons Limited • Cairn Petroleum India Limited
• Cairn Energy Gujarat Block 1 Limited • Cairn Exploration (No. 4) Limited
• Cairn Exploration (No. 7) Limited • Cairn Energy Development Pte Limited –
• Cairn Lanka Private Limited – with effect from 3rd July 2008 with effect from 16th July 2008
• Cairn Energy Group Holdings BV • Cairn Energy India West BV
• Cairn Energy India West Holding BV • Cairn Energy Gujarat Holding BV
• Cairn Energy India Holdings BV • Cairn Energy Netherlands Holdings BV
• Cairn Energy Gujarat BV • Cairn Energy Cambay BV
• Cairn Energy Cambay Holding BV
Key Managerial Personnel
• Rahul Dhir • Winston Frederick Bott Jr. Executive Director
Managing Director and Chief Executive Officer and Chief Operating Officer (Appointed on 29th April 2008)
• Indrajit Banerjee • Lawrence Smyth
Executive Director and Chief Financial Officer Executive Director and Chief Operating Officer (Appointed on
(Appointed on 1st March 2007) 1st March 2007 and resigned on 21st January 2008)
79
 Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

(b) Transactions during the period/year:

Nature of the Transactions Related Party Current period Previous year
Expenses incurred by related party on Cairn Energy India Pty Limited 93,757 858
behalf of the Company
Expenses incurred by the Company Cairn Energy India Pty Limited 256,499 1,100
on behalf of related party
Cairn Energy Plc. 854 Nil
CIG Mauritius Holding Private Limited 491 Nil
CIG Mauritius Private Limited 264 Nil
Cairn Energy Gujarat Block 1 Limited 10,648 Nil
Cairn Exploration (No. 4) Limited 100 Nil
Cairn Exploration (No. 7) Limited 13,668 Nil
Cairn Lanka Private Limited 881 Nil
Cairn Energy Hydrocarbons Limited 30,597 Nil
Total 314,002 1,100
Equity contributions made during the period Cairn India Holdings Limited 1,440,804 22,265,000
CIG Mauritius Holding Private Limited 121,980 Nil
Total 1,562,784 22,265,000
Assignment of interest in oil & gas blocks from Cairn Energy Gujarat Block 1 Limited 89,513 Nil
Cairn Exploration (No. 2) Limited 302,085 Nil
Cairn Exploration (No. 4) Limited 68,462 Nil
Cairn Exploration (No. 6) Limited 7,164 Nil
Cairn Exploration (No. 7) Limited 160,166 Nil
Total 627,390 Nil
Recovery of share option charge Cairn Energy India Pty Limited 140,617 Nil
Shares issued including premium and Cairn UK Holding Ltd Nil 2,093,607
stock option charge
Rahul Dhir 716,185 Nil
Lawrence Smyth 126,758 Nil
Total 842,943 2,093,607
Remuneration Rahul Dhir 3,000 2,400
Winston Frederick Bott Jr. 950 Nil
Indrajit Banerjee 2,250 1,500
Lawrence Smyth Nil 1,800
Total 6,200 5,700
(c) Balances outstanding as at the end of the period/year:
Nature of the Balance Related Party 31st March 2009 31st December 2007
Accounts receivable Cairn Energy India Pty Limited 160,563 663
CIG Mauritius Holding Private Limited 491 Nil
CIG Mauritius Private Limited 264 Nil
Cairn Lanka Private Limited 881 Nil
Cairn Energy Hydrocarbons Limited 30,596 Nil
Total 192,795 663
Accounts payable Cairn Energy Plc. 24,109 25,000
Cairn Energy Gujarat Block 1 Limited 102,552 Nil
Cairn Exploration (No. 2) Limited 367,147 Nil
Cairn Exploration (No. 4) Limited 86,635 Nil
Cairn Exploration (No. 6) Limited 9,558 Nil
Cairn Exploration (No. 7) Limited 187,886 Nil
Total 777,887 25,000

80 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Nature of the Balance Related Party 31st March 2009 31st December 2007
Remuneration payable Rahul Dhir Nil 3,261
Winston Frederick Bott Jr. Nil Nil
Indrajit Banerjee Nil 1,500
Lawrence Smyth Nil 1,800
Total Nil 6,561
Note: The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave encashment benefits, as they
are determined on an actuarial basis for the Company as a whole.

5. As at 31st March 2009, the Company and its subsidiaries together have utilized INR 82,563,170 thousand (previous year – 71,682,135 thousand)
for the purposes listed in the prospectus issued for the Initial Public Offer. The details of utilization of funds is as follows-
Particulars Upto 31st March 2009 Upto 31st December 2007
Acquisition of shares of Cairn India Holdings Limited from Cairn UK Holdings Limited 59,580,837 59,580,837
Exploration and development expenses 21,152,714 10,411,239
General corporate purposes 230,000 90,440
Issue expenses 1,599,619 1,599,619
Total 82,563,170 71,682,135
The details of the unutilized monies out of the public issue proceeds is as follows-
Particulars 31st March 2009 31st December 2007
Mutual funds 718,277 7,337,856
Balances with banks 4,967,454 9,228,910
Total 5,685,731 16,566,766

6. EMPLOYEES STOCK OPTION PLANS

The Company has provided various share-based payment schemes to its employees. During the period ended 31st March 2009, the following
schemes were in operation-
Particulars CISMP CIPOP CIESOP
Date of Board Approval 17th Nov 2006 17th Nov 2006 17th Nov 2006
Date of Shareholder’s approval 17th Nov 2006 17th Nov 2006 17th Nov 2006
Number of options granted till March 2009 8,298,713 5,732,956 12,792,651
Method of Settlement Equity Equity Equity
Vesting Period Refer vesting conditions below 3 years from grant date 3 years from grant date
Exercise Period 18 months from vesting 3 months from vesting date 7 years from vesting date
Number of options granted till March 2009
24th Nov 2006 8,298,713 – –
1st Jan 2007 – 1,708,195 3,467,702
20th Sept 2007 – 3,235,194 5,515,053
29th July 2008 – 789,567 3,773,856
10th Dec 2008 – – 36,040
Total 8,298,713 5,732,956 12,792,651
The vesting conditions of the above plans are as under-
CISMP plan
(a) 6,714,233 options are to be vested in the following manner-
– 1/3rd of the options will vest on the day following the date on which the equity shares have been admitted to listing on the Stock
Exchanges (‘admission date’). Listing date was 9th Jan 2007.
– 1/3rd of the options will vest 18 months after the admission date.
– 1/3rd of the options will vest on achieving 30 days’ consecutive production of over 150,000 bopd from the Rajasthan Block.
(b) 1,584,480 options are to be vested in the following manner-
– 1/2 of the options will vest on the day following the date on which the equity shares have been admitted to listing on the Stock
Exchanges.
– 1/4th of the options will vest on the date on which all major equipment for the start-up of the Mangala field is delivered to site.
– 1/4th of the options will vest on achieving 100,000 boepd from the Mangala Field.
81
 Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

CIPOP plan
Options will vest (i.e become exercisable) at the end of a “performance period” which will be set by the remuneration committee at the time of
grant (although such period will not be less than three years). However, the percentage of an option which vests on this date will be determined
by the extent to which pre-determined performance conditions have been satisfied.
CIESOP plan
There are no specific vesting conditions under CIESOP plan.
Details of activities under Employees Stock Option Plans
CISMP Plan Current period Previous year
Number Weighted average Number Weighted average
of options exercise of options exercise
Price in INR Price in INR
Outstanding at the beginning of the year 8,298,713 33.70 8,298,713 33.70
Granted during the year Nil NA Nil NA
Forfeited during the year Nil NA Nil NA
Exercised during the year 5,268,396 33.70 Nil NA
Expired during the year 792,240 33.70 Nil NA
Outstanding at the end of the year 2,238,077 33.70 8,298,713 33.70
Exercisable at the end of the year Nil NA Nil NA
Weighted average fair value of options granted 131.50 NA 131.50 NA
on the date of grant (INR)
The weighted average share price on the dates of exercise of stock options was INR 220.09
CIPOP Plan Current period Previous year
Number Weighted average Number Weighted average
of options exercise of options exercise
Price in INR Price in INR
Outstanding at the beginning of the year 4,755,244 10.00 Nil NA
Granted during the year 789,567 10.00 4,943,389 10.00
Forfeited during the year Nil NA Nil NA
Exercised during the year Nil NA Nil NA
Expired during the year 2,344,715 10.00 188,145 10.00
Outstanding at the end of the year 3,200,096 10.00 4,755,244 10.00
Exercisable at the end of the year Nil NA Nil NA
Weighted average fair value of options granted 165.46 NA 165.46 NA
on the date of grant (INR)
CIESOP Plan Current period Previous year
Number Weighted average Number Weighted average
of options exercise of options exercise
Price in INR Price in INR
Outstanding at the beginning of the year 8,545,710 164.49 Nil NA
Granted during the year 3,809,896 226.21 8,982,755 164.27
Forfeited during the year Nil NA Nil NA
Exercised during the year Nil NA Nil NA
Expired during the year 1,441,362 169.33 437,045 160.00
Outstanding at the end of the year 10,914,244 185.39 8,545,710 164.49
Exercisable at the end of the year Nil NA Nil NA
Weighted average fair value of options granted 101.47 NA 89.40 NA
on the date of grant (INR)

82 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

The details of exercise price for stock options outstanding as at March 31, 2009 are:
Scheme Range of No. of Weighted average Weighted
exercise options remaining contractual average
price (INR) outstanding life of options exercise
(in years) price (INR)
CISMP Plan 33.70 2,238,077 2.08 33.70
CIPOP Plan 10.00 3,200,096 1.51 10.00
CIESOP Plan 143-227 10,914,244 1.60 185.39
The details of exercise price for stock options outstanding as at December 31, 2007 are:
CISMP Plan 33.70 8,298,713 1.04 33.70
CIPOP Plan 10.00 4,755,244 2.49 10.00
CIESOP Plan 160-166.95 8,545,710 2.47 164.49
Inputs for Fair valuation of Employees Stock Option Plans
The Share Options have been fair valued using an Option Pricing Model (Black Scholes Model). The main inputs to the model and the Fair Value
of the options, based on an independent valuation, are as under:
Variables - CISMP A B
Grant date 24th Nov 2006 24th Nov 2006
Stock Price/fair value of the equity shares on the date of grant (INR) 160.00 160.00
Vesting date Refer vesting Refer vesting
conditions conditions
Vesting % Refer vesting Refer vesting
conditions conditions
Volatility (Weighted average) 44.08% 46.59%
Risk free rate (Weighted average) 7.05% 6.94%
Time to maturity in years (Weighted average) 2.45 2.00
Exercise price – INR 33.70 33.70
Fair Value of the options (Weighted average) - INR 131.69 130.69
Variables – CIESOP
Grant date 1st Jan 2007 20th Sept 2007 29th July 2008 10th Dec 2008
Stock Price/fair value of the equity shares on 160.00 166.95 228.55 150.10
the date of grant (INR)
Vesting date 1st Jan 2010 20th Sept 2010 29th July 2011 10th Dec 2011
Vesting % 100% 100% 100% 100%
Volatility 41.04% 40.24% 39.43% 38.19%
Risk free rate 7.50% 7.65% 9.20% 6.94%
Time to maturity (years) 6.50 6.50 6.50 6.50
Exercise price (INR) 160.00 166.95 227.00 143.00
Fair Value of the options (INR) 87.30 90.72 130.42 79.80
Variables – CIPOP
Grant date 1st Jan 2007 20th Sept 2007 29th July 2008
Stock Price/fair value of the equity shares on 160.00 166.95 228.55
the date of grant (INR)
Vesting date 1st Jan 2010 20th Sept 2010 29th July 2011
Vesting % Refer vesting Refer vesting Refer vesting
conditions conditions conditions
Volatility 41.61% 36.40% 37.49%
Risk free rate 7.33% 7.23% 9.37%
Time to maturity (years) 3.12 3.12 3.12
Exercise price (INR) 10.00 10.00 10.00
Fair Value of the options (INR) 152.05 158.97 221.09

83
 Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Volatility is the measure of the amount by which the price has fluctuated or is expected to fluctuate during the period. The measure of volatility
used in Black-Scholes option-pricing model is the annualized standard deviation of the continuously compounded rates of return on the stock over
a period of time. Time to maturity /expected life of options is the period for which the Company expects the options to be live. The time to
maturity has been calculated as an average of the minimum and maximum life of the options.
Effect of Employees Stock Option Plans on Financial Position
Effect of the employee share-based payment plans on the profit and loss account and on its financial position:
Particulars Current Period Previous Year
Total Employee Compensation Cost pertaining to equity settled share-based (33,325) 602,025
payment plans (including exceptional gain of INR 155,723 thousand in the
current period-refer note no. 8 below)
Liability for employee stock options outstanding as at period / year end 388,978 947,084
Deferred Compensation Cost 393,570 1,549,011
Impact of Fair Valuation Method on net profits and EPS
In March 2005, the Institute of Chartered Accountants of India has issued a guidance note on "Accounting for Employees Share Based Payments"
applicable to employee based share plan the grant date in respect of which falls on or after April 1, 2005. The said guidance note requires the
Proforma disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements.
Applying the fair value based method defined in the said guidance note, the impact on the reported net profit and earnings per share would be as
follows:
Particulars Current Period
Profit as reported 542,407
Add: Employee stock compensation under intrinsic value method (33,325)
(net of exceptional gain of INR 155,723 thousand-refer note no. 8 below)
Less: Employee stock compensation under fair value method 451,826
Proforma profit 57,256
Earnings Per Share in INR
Basic
– As reported 0.29
– Proforma 0.03
Diluted
– As reported 0.29
– Proforma 0.03

7. The Company has offered certain share options to some of the employees of one of its subsidiary companies and it was bearing the charge in its
profit and loss account till 31st March 2008. With effect from 1st April 2008, the management decided that this charge would be borne by the
immediate employer company of those employees. Accordingly, the stock option charge for the current period is lower and the profit after tax is
higher by INR 140,617 thousand.

8. During the current period, the Company decided to retrospectively account for stock options using the Intrinsic Value Method as against the Fair
Value Method (Black Scholes) followed till the financial year ended 31st December 2007. Accordingly, the excess stock option provision up to
31st December 2007 was reversed during the current period ended 31st March 2009, resulting in an exceptional gain of INR 155,723 thousand.
Further, the stock option charge for the current period is lower and the profit after tax is higher by INR 485,151 thousand (including exceptional
gain of INR 155,723 thousand) due to this change.

9. LEASE OBLIGATIONS DISCLOSURES

Operating Lease
The Joint Ventures, in which the Company has participating interest, have entered into operating lease for equipments. All such leases are
cancellable in nature. There are neither escalation clauses nor any restrictions in the lease agreements. There are no subleases.
Particulars 31st March 2009 31st December 2007
Lease rentals recognized during the period 7,255 Nil

84 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

10. DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

The Company did not take any derivative instruments during the current period / previous year. Particulars of unhedged foreign currency
exposures are as follows-
Particulars 31st March 2009 31st December 2007
Sundry debtors 17,942 12,708
Current assets 16,925 Nil
Current liabilities 785,562 25,000

11. The Company has a gratuity plan, wherein every employee who has completed five years or more of service gets a gratuity on departure at 15
days salary (last drawn salary) for each completed year of service. The gratuity plan of the Company is an unfunded scheme. However, one of the
subsidiary companies has taken an insurance policy with the Life Insurance Corporation of India to cover the gratuity liability of the entire group.
The following tables summarize the components of net benefit expense recognised in the profit and loss account and the amounts recognised in
the balance sheet for the gratuity plans.
Profit and Loss account
Net employee benefit expense (recognised in Employee Cost)
Particulars 31st March 2009
Current service cost 1,011
Interest cost on benefit obligation 200
Net actuarial (gain) / loss recognised in the year 2,509
Past service cost Nil
Net benefit expense 3,720
Balance sheet
Details of Provision for Gratuity
Particulars 31st March 2009
Defined benefit obligation 3,994
Less: Unrecognized past service cost Nil
Plan asset / (liability) (3,994)
Changes in the present value of the defined benefit obligation are as follows:
Particulars 31st March 2009
Opening defined benefit obligation 274
Current service cost 1,011
Interest cost 200
Benefits paid Nil
Actuarial (gains) / losses on obligation 2,509
Closing defined benefit obligation 3,994
The principal assumptions used in determining gratuity liability for the Group's plans are shown below:
Particulars 31st March 2009
Discount rate 7.00 %
Future salary increase 10.00 %
Employee turnover 13.13 %
Mortality Rate LIC (1994-96) Ultimate Table
Note: The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant
factors, such as supply and demand in the employment market.
Gratuity liabilities for the current period are as follows:
Particulars 31st March 2009
Defined benefit obligation 3,994
Surplus / (deficit) (3,994)
Experience adjustments on plan liabilities (loss) / gain (45)
Note - The Company has adopted AS-15 (Revised 2005) Employee Benefits for the first time during the current period, as the liability as at
31st December 2007 was not material. Disclosures required by paragraph 120 (n) of AS-15 (Revised 2005) are required to be furnished
prospectively from the date of transition and hence have been furnished for the current period only.

85
 Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

12. DETAILS OF MOVEMENT IN SHARE CAPITAL IS AS UNDER

Date Number Description Issue price Share capital Securities
of equity shares in INR premium
of INR 10 each
31st December 2006 1,765,314,379 Closing balance 17,653,144 275,017,837
8th February 2007 13,085,041 Issued under Green Shoe Option 160.00 130,850 1,962,756
Less: Share issue expenses
adjusted against premium (896,478)
31st December 2007 1,778,399,420 17,783,994 276,084,115
7th March 2008 792,240 Exercise of stock options 33.70 7,922 18,776
22nd April 2008 113,000,000 Preferential allotment of
shares to non promoter investors 224.30 1,130,000 24,215,900
7th May 2008 525,000 Exercise of share options 33.70 5,250 12,443
27th May 2008 1,713,078 Exercise of share options 33.70 17,131 40,600
8th December 2008 1,600,000 Exercise of share options 33.70 16,000 37,920
19th December 2008 638,078 Exercise of share options 33.70 6,381 15,122
Add : Share options liability transferred
to securities premium upon exercise of
the options 665,398
31st March 2009 1,896,667,816 18,966,678 301,090,274

13. Share issue expenses of INR 208,410 thousand incurred on the preferential allotment of 113,000,000 equity shares have been charged to the
profit and loss account and not adjusted from the securities premium account on conservative basis.

14. In accordance with the provisions of Accounting Standard 22 'Accounting for taxes on income', the Company would have had deferred tax assets
of approximately INR 511,000 thousand, primarily comprising of accumulated tax losses and unamortized issue expenses. However, as the
management is not virtually certain of subsequent realization of the asset, no deferred tax asset has been computed or recognized in these
financial statements.

15. MANAGERIAL REMUNERATION

Remuneration paid or payable to the Directors Current period Previous year
Salary and other benefits 6,200 5,700
Sitting fees 1,320 700
Total 7,520 6,400
Note - As the future liability for gratuity and leave encashment is provided on actuarial basis for the Company, the amount pertaining to the
directors is not ascertainable and therefore, not included above.

16. EARNINGS IN FOREIGN CURRENCY (ACCRUAL BASIS)

Particulars Current period Previous year
Parent company overhead 37,331 12,708
Interest 249 Nil
Total 37,580 12,708

17. EXPENDITURE IN FOREIGN CURRENCY (ACCRUAL BASIS)

Particulars Current period Previous year
Professional fees 128,251 26,776
Exploration cost 279,599 Nil
Assignment of interest in oil and gas blocks 627,390 Nil
Other expenses 1,072 Nil
Total 1,036,312 26,776

86 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

18. The Company has neither imported any goods nor consumed any stores and spares during the current period/previous year. Further, none of the
joint ventures where the Company has participating interest has commenced commercial production. Accordingly, no additional disclosures, other
than those furnished, are required in terms of paragraphs 3, 4C and 4D of Part-II of Schedule-VI to the Companies Act, 1956.

19. CAPITAL COMMITMENTS (NET OF ADVANCES)

Particulars 31st March 2009 31st December 2007
Company's share of Joint Ventures' Exploration and Development activities 3,517,376 Nil

20. DETAILS OF DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES AS PER MSMED ACT, 2006
31st March 2009 31st December 2007
The principal amount (interest-nil) remaining unpaid to any supplier as at the end of each accounting year 6 Nil
The amount of interest paid by the buyer in terms of section 16, of the Micro Small and Medium Nil Nil
Enterprise Development Act, 2006 along with the amounts of the payment made to the supplier
beyond the appointed day during each accounting year
The amount of interest due and payable for the period of delay in making payment (which have Nil Nil
been paid but beyond the appointed day during the year) but without adding the interest specified
under Micro Small and Medium Enterprise Development Act, 2006.
The amount of interest accrued and remaining unpaid at the end of each accounting year; and Nil Nil
The amount of further interest remaining due and payable even in the succeeding years, Nil Nil
until such date when the interest dues as above are actually paid to the small enterprise for the
purpose of disallowance as a deductible expenditure under section 23 of the Micro Small and
Medium Enterprise Development Act, 2006

21. CURRENT INVESTMENTS - UNQUOTED AND NON TRADE:

The details of investments in mutual fund units are as tabulated under:
31st March 2009
1 63,626,783.898 units, face value of Rs.10 each, of Birla Cash Plus - Institutional Premium- 637,509
Daily Dividend Reinvestment plan
2 21,126,234.606 units, face value of Rs.10 each, of HDFC Liquid Fund - Premium Plan- 259,003
Daily Dividend Reinvestment plan
3 26,081,125.863 units, face value of Rs.10 each, of ICICI Prudential Institutional Liquid Plan - 260,824
Super Iinst- Daily Dividend Reinvestment plan
4 15,494,677.273 units, face value of Rs.10 each, of Reliance Liquid Fund - Treasury Plan- 236,870
Institutional Option- Daily Dividend Reinvestment plan
5 191,352.168 units, face value of Rs.1000 each, of Tata Liquid Fund - SHIP- Daily Dividend 213,266
Reinvestment plan
Total 1,607,472

31st December 2007

1 20,594,145.28 units, face value Rs 10 each, of ABN AMRO Mutual Fund of ABN AMRO 238,367
Money Plus Fund-Institutional Plan-Growth Option
2 51,971,029.11 units, face value Rs 10 each, of Birla Sun Life Mutual Fund under Birla Sun Life 763,907
Liquid Plus-Institutional Plan - Growth Option
3 225,723.55 units, face value Rs 1,000 each, of DSP Merrill Lynch Mutual Fund under DSP 250,000
Merrill Lynch Liquid Plus Fund - Institutional Plan - Growth Option
4 28,699,826.62 units, face value Rs 10 each, of HDFC Mutual Fund under HDFC Floating 380,692
Rate Income Fund-Short Term Plan - Wholesale Option - Growth
5 17,009,296.46 units, face value Rs 10 each, of HDFC Mutual Fund under HDFC Cash 290,000
Management Savings Plus - Wholesale Plan Growth Option
6 23,353,354.94 units, face value Rs 10 each, of HDFC Mutual Fund under HDFC 250,000
Quarterly Interval Fund-Plan A Wholesale Growth

87
 Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

31st December 2007

7 43,733,776.21 units, face value Rs 10 each, of ICICI Prudential Mutual Fund under 502,628
ICICI Prudential Floating Plan D - Growth
8 19,998,847.30 units, face value Rs 10 each, of ICICI Prudential Mutual Fund under 290,047
ICICI Prudential Flexible Income Plan - Growth
9 47,430,680.06 units, face value Rs 10 each, of ING Mutual Fund under ING Liquid 500,000
Plus Fund - Institutional Growth Option
10 242,823.20 units, face value Rs 10 each, of Reliance Mutual Fund under Reliance 255,450
Liquid Plus Fund - Institutional Option - Growth Plan
11 23,960,359.98 units, face value Rs 10 each, of Reliance Mutual Fund under Reliance
Quarterly Interval Fund-Series III -Institutional Growth Plan 250,000
12 20,000,000.00 units, face value Rs 10 each, of SBI Mutual Fund under SBI Debt Fund 200,000
Series - 90 Days - November 2007 - Growth
13 55,482,327.99 units, face value Rs 10 each, of Tata Mutual Fund under 639,784
Tata Floater Fund - Growth
14 20,898,812.55 units, face value Rs 10 each, of Franklin Templeton Mutual Fund under 242,700
Templeton Floating Rate Income Fund Short Term Plan Institutional Option - Growth
TOTAL 5,053,575

The following mutual fund units were purchased and sold during the current period :-
1 288,767,315.348 units of Birla Sunlife mutual fund under Birla Sunlife Cash Plus - Institutional Premium - Daily Dividend Reinvestment
2 396,375,092.433 units of Birla Sunlife mutual fund under Birla Sunlife Cash Plus - Institutional Premium - Growth
3 22,951,572.183 units of Birla Sunlife mutual fund under Birla Sunlife Interval Income - Institutional - Quarterly - Series 2 - Growth
4 76,578,714.912 units of Birla Sunlife mutual fund under Birla Sunlife Liquid Plus - Institutional - Daily Dividend Reinvestment
5 185,222,322.210 units of Birla Sunlife mutual fund under Birla Sunlife Liquid Plus - Institutional - Growth
6 15,000,000.000 units of Canara Robeco mutual fund under Canara Robeco FMP - Series 3 - 90 Days - IP - Growth
7 48,919,527.434 units of Canara Robeco mutual fund under Canara Robeco Liquid Plus Super Institutional - Daily Dividend Reinvestment
8 31,366,504.158 units of Fidelity mutual fund under Fidelity Cash - SIP - Growth
9 62,263,785.752 units of Fidelity mutual fund under Fidelity Liquid Plus - SIP - Daily Dividend Reinvestment
10 57,042,071.083 units of Fidelity mutual fund under Fidelity Liquid Plus - SIP - Growth
11 128,735,016.559 units of HDFC mutual fund under HDFC Cash Mgmt - Savings Plan - Daily Dividend Reinvestment
12 193,231,349.459 units of HDFC mutual fund under HDFC Cash Mgmt - Savings Plus Plan - Wholesale - Daily Dividend Reinvestment
13 174,864,026.065 units of HDFC mutual fund under HDFC Cash Mgmt - Savings Plus Plan - Wholesale - Growth
14 166,891,417.599 units of HDFC mutual fund under HDFC Floating Rate Income - Short Term Plan - Wholesale - Daily Dividend Reinvestment
15 193,913,572.172 units of HDFC mutual fund under HDFC Floating Rate Income - Short Term Plan - Wholesale - Growth
16 24,000,000.000 units of HDFC mutual fund under HDFC FMP 90D (VIII)(3) - Wholesale - Growth
17 62,847,681.039 units of HDFC mutual fund under HDFC Liquid - Premium Plan - Daily Dividend Reinvestment
18 303,956,967.062 units of HDFC mutual fund under HDFC Liquid - Premium Plan - Growth
19 41,003,275.892 units of HDFC mutual fund under HDFC Liquid - Premium Plus Plan - Weekly Dividend Reinvestment
20 23,586,685.788 units of HDFC mutual fund under HDFC Quarterly Interval -Plan B Wholesale Growth - Growth
21 106,509,667.336 units of HSBC mutual fund under HSBC Cash - Inst Plus - Daily Dividend Reinvestment
22 155,825,133.036 units of HSBC mutual fund under HSBC Cash - Inst Plus - Growth
23 146,239,354.262 units of HSBC mutual fund under HSBC Liquid Plus - IP - Daily Dividend Reinvestment

88 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

24 229,632,812.180 units of HSBC mutual fund under HSBC Liquid Plus - IP - Growth
25 150,719,932.352 units of ICICI Prudential mutual fund under ICICI Prudential Flexible Income Plan - Daily Dividend Reinvestment
26 208,534,658.087 units of ICICI Prudential mutual fund under ICICI Prudential Flexible Income Plan - Growth
27 32,963,478.576 units of ICICI Prudential mutual fund under ICICI Prudential FRF - Plan D - Growth
28 475,076,846.158 units of ICICI Prudential mutual fund under ICICI Prudential Inst Liquid Plan - Super Iinst - Daily Dividend Reinvestment
29 446,678,299.784 units of ICICI Prudential mutual fund under ICICI Prudential Inst Liquid Plan - Super Iinst - Growth
30 24,485,318.603 units of ICICI prudential mutual fund under ICICI Prudential Interval II Quarterly Interval Plan B - Retail Cumulative - Growth
31 49,165,295.525 units of IDFC mutual fund under IDFC Cash - Super Institutional Plan C - Daily Dividend Reinvestment
32 81,765,529.637 units of IDFC mutual fund under IDFC Floating Rate -LT-Inst Plan B - Growth
33 24,000,000.000 units of IDFC mutual fund under IDFC FMP Qtr Series 31 - Growth
34 64,428,611.450 units of IDFC mutual fund under IDFC Liquid Plus - Investment Plan - Inst Plan B - Daily Dividend Reinvestment
35 15,341,933.611 units of IDFC mutual fund under IDFC Quarterly Interval - Plan A - Inst - Daily Dividend Reinvestment
36 15,984,796.682 units of IDFC mutual fund under IDFC Quarterly Interval - Plan A - Inst - Growth
37 18,000,000.000 units of ING mutual fund under ING Interval - Quarterly-C-Institutional - Growth
38 115,482,013.676 units of ING mutual fund under ING Liquid Super Institutional - Growth
39 128,337,221.108 units of ING mutual fund under ING Liquid Plus - Institutional - Growth
40 23,518,230.356 units of ING mutual fund under ING Vysya Liquid Plus - IP - Growth
41 66,088,564.716 units of JP Morgan mutual fund under JP Morgan India Liquid Plus - Growth
42 20,913,376.793 units of Kotak Mahindra mutual fund under Kotak Liquid - Institutional Premium - Growth
43 3,165,848.830 units of Principal mutual fund under Principal Cash Mgmt LO- Institutional Plan - Growth
44 50,350,377.553 units of Principal mutual fund under Principal Cash Mgmt LO- Institutional Premium Plan - Daily Dividend Reinvestment
45 150,114,424.840 units of Principal mutual fund under Principal Floating Rate - FMP - Institutional - Daily Dividend Reinvestment
46 197,490,161.056 units of Principal mutual fund under Principal Floating Rate - FMP - Institutional - Growth
47 20,583,956.929 units of Reliance mutual fund under Reliance Liquid - Treasury Plan-Institutional Option - Daily Dividend Reinvestment
48 82,564,434.800 units of Reliance mutual fund under Reliance Liquid - Treasury Plan-Institutional Option - Growth
49 2,052,210.472 units of Reliance mutual fund under Reliance Liquid Plus - Institutional - Daily Dividend Reinvestment
50 2,380,813.521 units of Reliance mutual fund under Reliance Liquid Plus - Institutional - Growth
51 23,091,764.916 units of Reliance mutual fund under Reliance Liquidity - Daily Dividend Reinvestment
52 36,180,904.523 units of Reliance mutual fund under Reliance Liquidity - Growth
53 158,916,208.254 units of Reliance mutual fund under Reliance Medium Term - Daily Dividend Reinvestment
54 21,680,412.651 units of Reliance mutual fund under Reliance Monthly Interval - Series I Institutional - Growth
55 23,407,582.184 units of Reliance mutual fund under Reliance Quarterly Interval - Series II Institutional - Growth
56 29,168,603.376 units of SBI mutual fund under SBI Magnum Insta Cash - Daily Dividend Reinvestment
57 20,444,600.000 units of SBI mutual fund under SBI SDFS - 90 Days - Growth
58 98,778,981.505 units of SBI mutual fund under SBI SHF - Liquid Plus - IP - Daily Dividend Reinvestment
59 233,026,708.605 units of SBI mutual fund under SBI SHF - Liquid Plus - IP - Growth
60 859,254.684 units of Standard Chartered mutual fund under Standard Chartered Liquidity Manager Plus - Growth
61 259,059,637.734 units of Tata mutual fund under Tata Floater - Daily Dividend Reinvestment
62 206,755,712.884 units of Tata mutual fund under Tata Floater - Growth
63 38,774,117.501 units of Tata mutual fund under Tata Floating Rate - STP - Institutional Plan - Growth
64 2,457,011.120 units of Tata mutual fund under Tata Liquid - SHIP - Daily Dividend Reinvestment
65 329,826.757 units of Tata mutual fund under Tata Liquid - SHIP - Growth

89
 Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

The following mutual fund units were purchased and sold during the previous year:-
1 18,535,141.015 units of ABN AMRO Mutual Fund under ABN AMRO Cash Fund - Institutional Plus Plan - Daily Dividend Reinvestment
Option
2 50,701,760.398 units of ABN AMRO Mutual Fund under ABN AMRO Money Plus Fund-Institutional Plan- Daily Dividend Option
3 22,604,265.015 units of ABN AMRO Mutual Fund under ABN AMRO Money Plus Fund-Institutional Plan-Growth Option
4 51,286,477.010 units of Birla Sun Life Mutual Fund under Birla Cash Plus-Institutional Premium Plan - Daily Dividend
5 51,393,934.559 units of Birla Sun Life Mutual Fund under Birla Floating Rate Fund-Long Term Plan-Weekly Dividend
6 1,175,375.415 units of Birla Sun Life Mutual Fund under Birla Cash Plus-Institutional (Growth)
7 62,395,963.596 units of Birla Sun Life Mutual Fund under Birla Sunlife Liquid Plus Fund - Institutional - Daily Dividend
8 1,055,356.222 units of Birla Sun Life Mutual Fund under Birla Sunlife Liquid Plus Fund - Institutional - Growth
9 799,966.925 units of DSP Merrill Lynch Mutual Fund under DSP Merrill Lynch Liquid Fund - Institutional Plan - Daily Dividend
Reinvestment Option
10 810,376.138 units of DSP Merrill Lynch Mutual Fund under DSP Merrill Lynch Liquid Plus Fund - Institutional Plan - Daily Dividend
Reinvestment Option
11 30,429,402.715 units of Standard Chartered Mutual Fund under Grindlays Floating Rate Fund - Long Term - Institutional Plan B - Daily
Dividend Reinvestment Option
12 25,141,266.651 units of Standard Chartered Mutual Fund under Grindlays Floating Rate Fund - Long Term - Institutional Plan B - Growth
13 74,125,061.345 units of HDFC Mutual Fund under HDFC Cash Management Fund - Savings Plan - Daily Dividend Reinvestment Option
14 79,686,483.778 units of HDFC Mutual Fund under HDFC Cash Management Fund - Savings Plus Plan - Wholesale - Daily Dividend
Reinvestment Option
15 32,404,919.325 units of HDFC Mutual Fund under HDFC Floating Rate Income Fund - Short Term Plan - Retail Option Dividend
Reinvestment - Daily
16 24,820,364.948 units of HDFC Mutual Fund under HDFC Floating Rate Income Fund - Short Term Plan - Retail Option - Growth
17 18,698,998.482 units of HDFC Mutual Fund under HDFC Floating Rate Income Fund - Short Term Plan - Wholesale - Growth
18 59,976,612.345 units of HSBC Mutual Fund under HSBC Cash Fund - Institutional Plus - Daily Dividend Reinvestment Option
19 62,786,020.733 units of HSBC Mutual Fund under HSBC Liquid Plus Fund - Institutional Plus - Daily Dividend Reinvestment Option
20 57,943,951.333 units of HSBC Mutual Fund under HSBC Liquid Plus Fund - Institutional Plus - Growth
21 686,242.889 units of ICICI Prudential Mutual Fund under ICICI Prudential Flexible Income Plan - Growth
22 100,777,456.602 units of ICICI Prudential Mutual Fund under ICICI Prudential Floating Rate Plan D - Daily Dividend - Reinvest Dividend
23 131,634,015.968 units of ICICI Prudential Mutual Fund under ICICI Prudential Liquid Plan - Super Institutional Dividend Daily
24 61,166,842.849 units of ING Mutual Fund under ING Liquid Plus Fund - Institutional Daily Dividend Option
25 58,606,580.178 units of ING Mutual Fund under ING Liquid Plus Fund - Institutional Growth Option
26 32,523,815.818 units of Kotak Mahindra Mutual Fund under Kotak Flexi Debt Fund - Daily Dividend
27 40,671,100.686 units of PRINCIPAL Mutual Fund under Principal Cash Management-Liquid Option-Institutional Premium - Daily Dividend
28 40,602,212.009 units of PRINCIPAL Mutual Fund under Principal Floating Rate Fund - SMP - Institutional - Growth
29 502,053.962 units of Reliance Mutual Fund under Reliance Liquid Plus Fund - Institutional Option - Daily Dividend Plan
30 234,933.967 units of Reliance Mutual Fund under Reliance Liquid Plus Fund - Institutional Option - Growth Plan
31 406,648.782 units of Standard Chartered Mutual Fund under Standard Chartered Liquidity Manager Plus-A-Dividend Daily
32 60,938,518.404 units of Sundaram BNP Paribas Mutual Fund under Sundaram BNP Paribas Liquid Plus Super Institutional Daily Dividend
33 58,603,615.153 units of Sundaram BNP Paribas Mutual Fund under Sundaram BNP Paribas Liquid Plus Super Institutional Growth
34 64,847,479.846 units of Tata Mutual Fund under Tata Floater Fund Growth
35 594,550.430 units of Tata Mutual Fund under Tata Liquid Super High Investment Plan - Daily
36 808,048.384 units of Franklin Templeton Mutual Fund under Templeton India Treasury Management Account-Super Institutional
Plan - Daily Dividend

90 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Financial Statements Continued
SCHEDULE 18 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

22. Details of outstanding advances given to subsidiary companies in which directors are interested are same as disclosed in note 4 (c) above. The
balance outstanding as at the period/year end is also the maximum amount outstanding during the period/year.

23. Change in financial year and prior year comparatives

The shareholders of the Company have approved the change of financial year end from 31st December to 31st March. Therefore, the current
financial year consists of fifteen month period from 1st January 2008 to 31st March 2009. Subsequent financial years would be for twelve months
period ending 31st March every year. Accordingly, previous year figures in the profit and loss account and cash flow statement are not
comparable with current extended financial year.
Previous year's figures have been regrouped where necessary to confirm to this year's classification.

As per our report of even date

For S. R. Batliboi & Associates For and on behalf of the Board of Directors
Chartered Accountants Rahul Dhir Managing Director and Chief Executive Officer
per Raj Agrawal Aman Mehta Director
Partner Indrajit Banerjee Executive Director and Chief Financial Officer
Membership No. 82028 Neerja Sharma Company Secretary

Place : Gurgaon
Date : 27th May, 2009

91
 Balance Sheet Abstract and Company’s General Business Profile

i) Registration Details
Registration No. L11101MH2006PLC163934
State Code 11
Balance Sheet Date 31/03/2009
ii) Capital raised during the year* (Amount in INR Thousands)
Public Issue –
Rights Issue –
Bonus Issue –
Private Placement (Includes stock options exercised) 1,182,684
*Does not include securities premium
iii) Position of Mobilisation and Deployment of Funds (Amount in INR Thousands)
Total Liabilities 321,300,037
Total Assets 321,300,037
Source of Funds
Paid up Capital 18,966,678
Reserves & Surplus (Includes stock options outstanding) 301,479,252
Secured Loans Nil
Unsecured Loans Nil
Application of Funds
Net Fixed Assets (Includes exploratory work-in-progress) 540,908
Investments 292,253,966
Net Current Assets 27,113,056
Miscellaneous Expenditure Nil
Accumulated losses 538,000
iv) Performance of the Company (Amount in INR Thousands)
Turnover (Total Income) 2,980,403
Total Expenditure 1,859,687
Profit/(Loss) before tax 1,120,716
Profit/(Loss) after tax 542,407
Profit per Share in Rs. (Basic & Diluted) 0.29
Dividend rate % Nil
v) Generic Names of Principal Products/Services of Company (as per monetary terms)
Item Code No. (ITC Code) 27090000
Product Description Crude Oil
Item Code No. (ITC Code) 27112100
Product Description Natural Gas

For and on behalf of the Board of Directors

Rahul Dhir Managing Director and Chief Executive Officer
Aman Mehta Director
Indrajit Banerjee Executive Director and Chief Financial Officer
Neerja Sharma Company Secretary

Place : Gurgaon
Date : 27th May, 2009

92 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Auditors' Report on Consolidated Financial Statements

TO
THE BOARD OF DIRECTORS OF CAIRN INDIA LIMITED
1. We have audited the attached consolidated balance sheet of Cairn India Limited (the Company) and its subsidiaries (collectively called 'the Cairn
India Group') as at March 31, 2009 and also the consolidated profit and loss account and the consolidated cash flow statement for the fifteen
months period ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
3. We report that the consolidated financial statements have been prepared by the Company's management in accordance with the requirements of
Accounting Standard (AS) 21, Consolidated Financial Statements notified under the Companies (Accounting Standard) Rules, 2006.
4. In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give a true
and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the consolidated balance sheet, of the state of affairs of the Cairn India Group as at March 31, 2009;
(b) in the case of the consolidated profit and loss account, of the profit of the Cairn India Group for the fifteen months period ended on that date;
and
(c) in the case of the consolidated cash flow statement, of the cash flows of the Cairn India Group for the fifteen months period ended on that
date.

For S. R. Batliboi & Associates

Chartered Accountants

per Raj Agrawal

Partner
Membership No.: 82028

Place : Gurgaon
Date : 27th May, 2009

93
 Consolidated Balance Sheet
AS AT MARCH 31, 2009

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Schedules As at As at
March 31, 2009 December 31, 2007

SOURCES OF FUNDS
Shareholders’ funds
Share capital 1 18,966,678 17,783,994
Stock options outstanding 2 388,978 947,084
Reserves and surplus 3 308,667,596 276,084,115
328,023,252 294,815,193
Loan funds
Secured loans (Finance lease liabilities) 222,402 169,361
Unsecured loans 4 43,341,500 2,955,000
43,563,902 3,124,361
Deferred tax liabilities (net) 5 5,623,782 4,916,494
377,210,936 302,856,048

APPLICATION OF FUNDS
Fixed assets 6
Gross cost 1,434,686 1,092,632
Less: Accumulated depreciation / amortisation 801,843 606,126
Net book value 632,843 486,506
Exploration, Development and Site-restoration costs 7
Cost of producing facilities (net) 3,013,742 4,389,517
Exploratory and development work in progress 62,027,323 24,670,264
Net book value 65,041,065 29,059,781
Goodwill 253,192,675 253,192,675
Investments 8 1,712,806 7,128,909
Deferred tax assets (net) 5 83,935 –
Current assets, loans and advances
Inventories 9 1,682,808 1,216,048
Sundry debtors 10 1,516,418 1,348,578
Cash and bank balances 11 65,270,674 13,317,907
Other current assets 12 704,244 134,533
Loans and advances 13 3,505,102 4,867,071
72,679,246 20,884,137
Less: Current liabilities and provisions
Current liabilities 14 11,794,353 4,691,797
Provisions 15 4,337,281 3,661,347
16,131,634 8,353,144
Net current assets 56,547,612 12,530,993
Profit & Loss account – 457,184
377,210,936 302,856,048
Notes to accounts 23
The schedules referred to above are an integral part of the consolidated balance sheet.
As per our report of even date

For S. R. Batliboi & Associates For and on behalf of the Board of Directors
Chartered Accountants Rahul Dhir Managing Director and Chief Executive Officer
per Raj Agrawal Aman Mehta Director
Partner Indrajit Banerjee Executive Director and Chief Financial Officer
Membership No. 82028 Neerja Sharma Company Secretary

Place : Gurgaon
Date : 27th May, 2009
94 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009
Consolidated Profit and Loss Account
FOR THE PERIOD ENDED MARCH 31, 2009

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Schedules Fifteen months ended Twelve months ended

March 31, 2009 December 31, 2007

INCOME
Income from operations 16 14,326,716 10,122,627
Other income 17 5,944,652 1,324,089
20,271,368 11,446,716

EXPENDITURE

Operating expenses 18 2,129,743 1,945,812

Depletion and site restoration costs 7 2,635,431 1,906,379
Unsuccessful exploration costs 7 1,683,851 2,512,282
Administrative expenses 19 3,311,407 3,884,855
(Increase)/decrease in inventories 20 222,342 (111,715)
Prior period exchange difference 283,045 –
Depreciation and amortisation 6 62,593 33,701
Finance costs 21 64,090 16,174
10,392,502 10,187,488
Profit before taxation 9,878,866 1,259,228
Current tax (net of INR 225,490 thousand, previous 1,110,792 387,756
year Nil of MAT credit availed during the period)
Deferred tax 623,354 764,194
Fringe Benefit Tax 110,214 352,719
1,844,360 1,504,669
Profit/(Loss) for the period / year 8,034,506 (245,441)
Surplus / (Deficit) brought forward from the previous year (457,184) (211,743)
Surplus / (Deficit) carried to Balance sheet 7,577,322 (457,184)
Earnings / (Loss) per share in INR 22
Basic 4.31 (0.14)
Diluted (previous year considered anti-dilutive) 4.28 (0.14)
(Nominal value of shares INR 10)
Notes to accounts 23
The schedules referred to above are an integral part of the consolidated profit and loss account.
As per our report of even date

For S. R. Batliboi & Associates For and on behalf of the Board of Directors
Chartered Accountants Rahul Dhir Managing Director and Chief Executive Officer
per Raj Agrawal Aman Mehta Director
Partner Indrajit Banerjee Executive Director and Chief Financial Officer
Membership No. 82028 Neerja Sharma Company Secretary

Place : Gurgaon
Date : 27th May, 2009
95
 Consolidated Statement of Cash Flows
FOR THE PERIOD ENDED MARCH 31, 2009

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Fifteen months ended Twelve months ended

March 31, 2009 December 31, 2007

Cash flow from operating activities

Profit / (Loss) before taxation for the period / year 9,878,866 1,259,228
Adjustments for
– Employee compensation expense (equity settled stock options) - net of exceptional gains 107,292 780,365
– Depreciation, depletion and site restoration costs 2,949,665 2,077,055
– Loss on sale / discard of fixed assets (net) 1,835 10,055
– Unsuccessful exploration costs 1,683,851 2,512,281
– Share issue expenses 208,410 –
– Unrealised exchange loss / (gain) on restatement of assets and liabilities (net) (1,710,406) 1,844,459
– Interest expense 819,258 8,256
– Profit on sale of non trade current investments (net) (1,245,686) (595,663)
– Interest income (1,920,273) (727,431)
– Dividend from investments (221,876) –
– Unrealised loss on option contracts 112,973 63,010
– Provisions written-back (60,351) –
Operating profit before working capital changes 10,603,558 7,231,615
Movements in working capital:
(Increase)/decrease in inventories (466,761) 35,062
(Increase)/decrease in debtors (108,344) 406,420
(Increase)/decrease in loans and advances and other current assets 186,699 (1,998,426)
Increase/(decrease) in current liabilities and provisions 1,601,491 649,255
Cash generated from operations 11,816,643 6,323,926
Current tax/FBT paid (net of refunds) (1,457,679) (819,797)
Net cash from operating activities (A) 10,358,964 5,504,129
Cash flow from investing activities
Payments made for acquisition of subsidiaries – (32,763,069)
Payments made for exploration and development activities (31,150,183) (11,566,913)
Payments made for purchase of fixed assets (462,608) (176,058)
Mutual funds purchased (43,293,242) (15,295,380)
Fixed deposits made (43,410,755) (14,076,538)
Proceeds from matured fixed deposits 11,686,817 –
Proceeds from sale of mutual funds 49,955,033 8,271,805
Proceeds from sale of fixed assets 202 4,270
Interest received 1,293,614 710,969
Dividend from investments received 224,849 587,403
Net cash used in investing activities (B) (55,156,273) (64,303,511)
Cash flow from financing activities
Proceeds from issue of equity shares 25,523,445 2,093,607
Payments made for share issue expenses (208,410) (1,422,257)
Finance lease taken 175,645 (204,708)
Repayment of finance lease (124,838) –
Proceeds from long term borrowings 37,620,170 31,217
Repayment of long term borrowings – (1,517,999)
Interest paid (724,779) (24,503)
Net cash from/(used in) financing activities (C) 62,261,233 (1,044,643)
Net increase/(decrease) in cash and cash equivalents (A+B+C) 17,463,924 (59,844,025)
Cash and cash equivalents at the beginning of the period / year 1,503,807 61,347,832
Cash and cash equivalents at the end of the period / year 18,967,731 1,503,807
Unrealised exchange differences on closing cash and cash equivalents 2,764,904 –
Cash and cash equivalents as per financial statements 21,732,635 1,503,807
Components of cash and cash equivalents as at March 31, 2009 December 31, 2007
Cash in hand 626 108
Balances with banks
– on current accounts 228,024 609,096
– on deposit accounts 65,042,024 12,708,703
Less: Deposits having maturity of over 90 days (43,538,039) (11,814,100)
21,732,635 1,503,807
Notes:
1) The above Cash Flow Statement has been prepared under the ‘Indirect Method’ as set out in Accounting Standard-3 on “Cash flow statements”.
2) Amounts in bracket indicate a cash outflow or reduction.
3) Bank balance in deposit accounts includes INR 3,312,342 thousand, previous year INR 1,717,840 thousand, pledged with the banks.

As per our report of even date

For S. R. Batliboi & Associates For and on behalf of the Board of Directors
Chartered Accountants Rahul Dhir Managing Director and Chief Executive Officer
per Raj Agrawal Aman Mehta Director
Partner Indrajit Banerjee Executive Director and Chief Financial Officer
Membership No. 82028 Neerja Sharma Company Secretary
Place : Gurgaon
Date : 27th May, 2009
96 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009
Schedules to the Consolidated Financial Statements

(All amounts are in thousand Indian Rupees, unless otherwise stated)

AS at As at
March 31, 2009 December 31, 2007

SCHEDULE - 1
Share capital
Authorised:
2,250,000,000 (previous year 2,250,000,000) equity shares of INR 10 each 22,500,000 22,500,000
Issued, subscribed and paid up:
1,896,667,816 (previous year 1,778,399,420) equity shares of INR 10 each 18,966,678 17,783,994
18,966,678 17,783,994
Note:
1) Issued, subscribed and fully paid up share capital includes 1,226,843,791 equity shares (previous year - 1,226,843,791 equity shares) of INR 10
each held by Cairn UK Holdings Limited, the holding company together with its nominees.
2) Shares held by the holding company includes 861,764,893 equity shares (previous year - 861,764,893 equity shares) of INR 10 each, allotted as
fully paid up pursuant to contracts for consideration other than cash.
3) For stock options outstanding refer note no. 7 in schedule 23.

SCHEDULE - 2
Stock Options Outstanding
Employee stock options outstanding 782,548 2,496,095
Less: Deferred employee compensation outstanding (393,570) (1,549,011)
Closing Balance 388,978 947,084

SCHEDULE - 3
Reserves and Surplus
Securities premium account
Opening Balance 276,084,115 275,017,837
Add:- Additions during the period / year 25,006,159 1,962,756
Less:- Adjustment against preliminary expenses / share issue expenses – (896,478)
Closing Balance 301,090,274 276,084,115
Profit and Loss Account 7,577,322 –
308,667,596 276,084,115

SCHEDULE - 4
Unsecured Loans
Long term loans
– from International Finance Corporation 7,648,500 521,471
– from banks 35,693,000 2,433,529
43,341,500 2,955,000

97
 Schedules to the Consolidated Financial Statements Continued

(All amounts are in thousand Indian Rupees, unless otherwise stated)

As at As at
March 31, 2009 December 31, 2007

SCHEDULE - 5
Deferred tax asset / liabilities (net)
Effect of differences in block of fixed assets as per tax books and financial books 6,178,716 5,208,962
Gross deferred tax liabilities 6,178,716 5,208,962
Effect of lease accounting 8,972 8,972
Expenditure debited to profit and loss but allowed for tax purposes in following years 629,897 283,496
Gross deferred tax assets 638,869 292,468
Net Deferred tax liabilities * 5,539,847 4,916,494
* After setting off net deferred tax assets aggregating to INR 83,935 thousand, previous year Nil in respect of certain group companies

SCHEDULE - 6
Fixed Assets
Description Gross Block Accumulated Depreciation / Amortisation Net Block
As on Additions Deletions/ As on As on For the Deletions/ As on As on As on
01.01.2008 Adjustments 31.03.2009 01.01.2008 period Adjustments 31.03.2009 31.03.2009 31.12.2007
A) Tangible Assets
Freehold land 43,583 – – 43,583 – – – – 43,583 43,583
Buildings 5,247 – – 5,247 1,109 1,224 – 2,333 2,914 4,138
Office equipments 364,752 182,623 (35,353) 512,022 233,766 145,535 (34,862) 344,439 167,583 130,986
Furniture and fittings 200,962 116,416 (17,508) 299,870 76,094 66,627 (15,961) 126,760 173,110 124,868
Vehicles 945 10,038 – 10,983 915 1,745 – 2,660 8,323 30
B) Intangible Assets
Computer software 477,143 153,531 (67,693) 562,981 294,242 99,102 (67,693) 325,651 237,330 182,901
Grand Total 1,092,632 462,608 (120,554) 1,434,686 606,126 314,233 (118,516) 801,843 632,843 486,506
Previous period 1,326,837 176,058 (410,263) 1,092,632 831,387 170,677 (395,938) 606,126 486,506 495,450
Notes:
1. Furniture and fittings includes Leasehold improvements of INR 278,895 thousand (previous year INR 165,013 thousand), accumulated depreciation thereon INR 110,482
thousand (previous year INR 49,882 thousand).
2. Leasehold improvements and Office equipments of INR 278,271 thousand (previous year INR 164,389 thousand) and INR 210,192 thousand (previous year INR 135,539
thousand) respectively have been acquired under finance lease. The depreciation charge for the period on these assets is INR 60,569 thousand (previous year INR 25,096
thousand) and INR 61,040 thousand (previous year INR 24,181 thousand) respectively and the accumulated depreciation thereon is INR 110,355 thousand (previous year INR
49,786 thousand) and INR 139,781 thousand (previous year INR 78,741 thousand) respectively.
3. Depreciation charge for the period includes INR 251,640 thousand (previous year INR 136,976 thousand) allocated to joint ventures.
4. Fixed assets include INR 176,798 thousand (previous year INR 120,805 thousand) jointly owned with the joint venture partners. Accumulated depreciation on these assets is
INR 82,643 thousand (previous year INR 60,932 thousand) and net book value is INR 94,155 thousand (previous year INR 59,873 thousand).

98 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Consolidated Financial Statements Continued

(All amounts are in thousand Indian Rupees, unless otherwise stated)

As at As at
March 31, 2009 December 31, 2007

SCHEDULE - 7
Exploration, Development and Site restoration costs
Opening balance of producing properties 4,389,517 2,976,132
Additions / Deletions / Transfer for the period / year 1,259,656 3,319,764
5,649,173 6,295,896
Less: Depletion and site restoration costs 2,635,431 1,906,379
Net producing properties 3,013,742 4,389,517

Opening balance of exploratory & development work in progress 24,670,264 17,122,353

Additions / Deletions / Transfer for the period / year 39,040,910 10,060,193
Less: Unsuccessful exploration costs for the period / year 1,683,851 2,512,282
Exploration and Development work in progress 62,027,323 24,670,264
Net book value 65,041,065 29,059,781
Note: Additions for the period includes borrowing costs (net of income on temporary investments INR 241,350 thousand, previous year Nil)
aggregating to INR 1,620,043 thousand (previous year INR 573,983 thousand)

SCHEDULE - 8
Investments
Long term investments (at cost)
Quoted and non-trade
755,275 (previous year 755,275) equity shares of INR 10 each 105,334 105,334
fully paid up in Videocon Industries Limited
Current Investments (at lower of cost and market value)
Unquoted and non trade
Mutual Funds 1,607,472 7,023,575
1,712,806 7,128,909

SCHEDULE - 9
Inventories
Stores and spares 1,595,774 906,672
Finished goods 87,034 309,376
1,682,808 1,216,048

SCHEDULE - 10
Sundry Debtors
Debts - Unsecured and outstanding for a period exceeding six months :
– Considered Good 94,261 8,587
– Considered doubtful – 62,025

Other unsecured debts :

– Considered Good 1,422,157 1,339,991
1,516,418 1,410,603
Less: Provision for doubtful debts – (62,025)
1,516,418 1,348,578

99
 Schedules to the Consolidated Financial Statements Continued

(All amounts are in thousand Indian Rupees, unless otherwise stated)

As at As at
March 31, 2009 December 31, 2007

SCHEDULE - 11
Cash and bank balances
Cash in hand 626 108

Balances with banks:

– on current accounts 228,024 609,096
– on deposit accounts (including deposits more than 3 months)* 65,042,024 12,708,703
65,270,674 13,317,907
* includes INR 3,312,342 thousand, previous year INR 1,717,840 thousand, pledged with the banks

SCHEDULE - 12
Other Current Assets
Interest accrued on bank deposits 660,639 28,614
Dividend receivable – 8,260
Outstanding option contracts 43,605 97,659
704,244 134,533

SCHEDULE - 13
Loans and advances
Unsecured and considered good, unless otherwise stated:
Advances recoverable in cash or kind or for value to be received* 5,789,515 5,921,540
Deposits 169,469 25,169
Advance tax and tax deducted at source (net of tax provisions 599,367 565,441
INR 1,921,505 thousand, (previous year INR 3,011,025 thousand)
Fringe benefit tax paid (net of provisions INR 266, 883 thousand, 13,290 1,920
previous year INR 6,000 thousand)
6,571,641 6,514,070
Less: Provision for doubtful advances (3,066,539) (1,646,999)
3,505,102 4,867,071
*Includes doubtful balances INR 3,066,539 thousand (previous year INR 1,646,999 thousand)

SCHEDULE - 14
Current liabilities
Amount payable to Cairn Energy Plc., the ultimate holding company 1,296,164 1,033,919
Sundry creditors 8,647,926 3,587,844
Lease equalisation liability 9,279 –
Interest accrued but not due 94,471 21,383
Other liabilities 1,746,513 48,651
11,794,353 4,691,797

100 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Consolidated Financial Statements Continued

(All amounts are in thousand Indian Rupees, unless otherwise stated)

As at As at
March 31, 2009 December 31, 2007

SCHEDULE - 15
Provisions
Provision for taxation (net of advance tax - INR 356,794 thousand, previous year Nil) 250,643 222,901
Provision for fringe benefit tax (net of advance tax payments, INR 127,956 thousand, 105,235 320,231
previous year - INR 258 thousand)
Site restoration provision * 3,886,882 2,714,913
Provision for Government share of profit petroleum ** 11,444 362,382
Provision for leave encashment 16,305 3,941
Provision for gratuity 39,571 36,979
Provision for employee stock options (cash settled) *** 27,201 –
4,337,281 3,661,347
* Site restoration provision
Opening balance 2,714,913 2,232,264
Additions for the period / year 1,388,000 482,649
Reversed during the period / year (216,031) –
Closing balance 3,886,882 2,714,913

** Provision for Government share of profit petroleum

Opening balance 362,382 306,211
Additions for the period / year 26,453 56,171
Payments during the period / year (377,391) –
Closing balance 11,444 362,382
*** Provision for employee stock options (cash settled)
Opening balance – –
Additions for the period / year 27,201 –
Payments during the period / year – –
Closing balance 27,201 –

Fifteen months ended Twelve months ended

March 31, 2009 December 31, 2007

SCHEDULE - 16
Income from operations
Revenue from sale of oil, gas and condensate 24,476,702 16,287,379
Less: Government share of Profit Petroleum (10,829,219) (6,438,550)
13,647,483 9,848,829

Tolling income 50,391 31,995

Income received as operator from joint venture 628,842 241,803
14,326,716 10,122,627

101
 Schedules to the Consolidated Financial Statements Continued

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Fifteen months ended Twelve months ended

March 31, 2009 December 31, 2007

SCHEDULE - 17
Other income
Interest on bank deposits 1,858,924 727,431
Profit on sale of non trade current investments (net) 1,245,686 27,632
Dividend income from non trade current investments 216,589 568,031
Dividend income from non trade long term investments 5,287 –
Exchange fluctuation (net) 2,319,158 –
Miscellaneous income 143,285 995
Exceptional gain (refer note no. 8 in schedule 23) 155,723 –
5,944,652 1,324,089

SCHEDULE - 18
Operating expenses
Production expenses 952,510 943,863
Data acquisition and analysis 66,266 32,884
Insurance 56,677 39,630
Royalty 393,787 342,907
Cess 546,365 487,569
Production bonus 114,138 98,959
2,129,743 1,945,812

SCHEDULE - 19
Administrative expenses
Salaries, wages and bonus 3,408,323 2,325,513
Employee compensation expense (stock options) 454,546 780,365
Contribution to Provident fund 97,356 35,490
Contribution to Superannuation fund 53,226 30,865
Leave encashment expenses 29,916 1,041
Gratuity expenses 40,888 33,137
Staff welfare expenses 280,312 32,519
Contract employee charges 1,295,828 1,534,541
Legal and professional expenses 1,488,580 464,776
Share issue expenses (refer note no. 15 in schedule 23) 208,410 –
Repair and maintenance 260,933 206,779
Rent 455,648 212,806
Travelling and conveyance expenses 511,320 192,505
Communication expenses 150,906 56,944
Exchange Fluctuation (net) – 2,057,001
Insurance 3,127 6,464
Directors' sitting fees 1,320 700
Loss on sale / discard of fixed assets (net) 1,835 10,055
Loss on derivative contracts 434,328 63,010
Miscellaneous expenses 357,706 246,298
9,534,508 8,290,809
Less: Cost allocated to joint ventures (6,223,101) (4,405,954)
3,311,407 3,884,855

102 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Consolidated Financial Statements Continued

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Fifteen months ended Twelve months ended

March 31, 2009 December 31, 2007

SCHEDULE - 20
(Increase) / Decrease in inventories
Inventories at the beginning of the period / year
Finished goods 309,376 197,661
Inventories at the end of the period / year
Finished goods 87,034 309,376
222,342 (111,715)

SCHEDULE - 21
Finance costs
Interest on bank overdraft – 199
Other interest 38,581 –
Finance lease charges 40,855 7,524
Bank charges 20,734 19,326
100,170 27,049
Less: Cost allocated to joint ventures (36,080) (10,875)
64,090 16,174

SCHEDULE - 22
Earnings / (Loss) Per Share
Profit / (Loss) for the period / year as per profit and loss account 8,034,506 (245,441)
Weighted average number of equity shares in calculating basic 1,866,146,993 1,777,001,292
earnings / (loss) per share
Add: Number of equity shares arising on grant of stock options 10,052,076 11,017,255
Weighted average number of equity shares in calculating diluted 1,876,199,069 1,788,018,547
earnings / (loss) per share
Earnings / (Loss) per share in INR
Basic 4.31 (0.14)
Diluted (previous year considered anti-dilutive) 4.28 (0.14)

103
 Schedules to the Consolidated Financial Statements Continued
SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

1. NATURE OF OPERATIONS
Cairn India Limited ('the Company') was incorporated in India on August 21, 2006 and is a subsidiary of Cairn UK Holdings Limited, which in turn
is a wholly owned subsidiary of Cairn Energy Plc., UK which is listed on London Stock Exchange.
The Company is primarily engaged in the business of surveying, prospecting, drilling, exploring, acquiring, developing, producing,
maintaining, refining, storing, trading, supplying, transporting, marketing, distributing, importing, exporting and generally dealing in minerals,
oils, petroleum, gas and related by-products and other activities incidental to the above. As part of its business activities, the Company also holds
interests in its subsidiary companies which have been granted rights to explore and develop oil exploration blocks in the Indian sub-continent.
The Company along with its subsidiaries are herein referred to as 'Cairn India Group'. The entities under the Cairn India Group are participants in
various Oil and Gas blocks/fields granted by the Government of India/Sri Lanka through Production Sharing Contract ('PSC')/Production
Resources Agreement ('PRA') entered into between these entities and Government of India/Sri Lanka and other venture partners.

2. COMPONENTS OF THE CAIRN INDIA GROUP

The Consolidated Financial Statements represent consolidation of accounts of the Company and its subsidiaries as detailed below:
S. No. Name of the Subsidiaries Country of Incorporation
i Cairn Energy Australia Pty Limited Australia
ii Cairn Energy India Pty Limited Australia
iii CEH Australia Pty Limited Australia
iv Cairn Energy Asia Pty Limited Australia
v Sydney Oil Company Pty Limited Australia
vi Cairn Energy Investments Australia Pty Limited Australia
vii Wessington Investments Pty Limited Australia
viii CEH Australia Limited British Virgin Islands
ix Cairn India Holdings Limited ('CIHL') Jersey
x CIG Mauritius Holding Private Limited ('CMHPL') - with effect from 1st July 2008 Mauritius
xi CIG Mauritius Private Limited - with effect from 1st July 2008 Mauritius
xii Cairn Energy Holdings Limited Scotland
xiii Cairn Energy Discovery Limited Scotland
xiv Cairn Exploration (No. 2) Limited Scotland
xv Cairn Exploration (No. 6) Limited Scotland
xvi Cairn Energy Hydrocarbons Limited Scotland
xvii Cairn Petroleum India Limited Scotland
xviii Cairn Energy Gujarat Block 1 Limited Scotland
xix Cairn Exploration (No. 4) Limited Scotland
xx Cairn Exploration (No. 7) Limited Scotland
xxi Cairn Energy Development Pte Limited - with effect from 16th July 2008 Singapore
xxii Cairn Lanka Private Limited - with effect from 3rd July 2008 Sri Lanka
xxiii Cairn Energy Group Holdings BV Netherlands
xxiv Cairn Energy India West BV Netherlands
xxv Cairn Energy India West Holding BV Netherlands
xxvi Cairn Energy Gujarat Holding BV Netherlands
xxvii Cairn Energy India Holdings BV Netherlands
xxviii Cairn Energy Netherlands Holdings BV Netherlands
xxix Cairn Energy Gujarat BV Netherlands
xxx Cairn Energy Cambay BV Netherlands
xxxi Cairn Energy Cambay Holding BV Netherlands
CIHL and CMHPL are wholly owned subsidiaries of the Company. All other above mentioned companies are direct or indirect wholly owned
subsidiaries of either CIHL or CMHPL.

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Schedules to the Consolidated Financial Statements Continued
SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Cairn India Group has interest in the following Oil and Gas blocks/fields-
S. No. Oil and Gas blocks/fields Area Participating Interest
Operated block
i Ravva Krishna Godavari 22.50%
ii CB-OS/2 - Exploration area Cambay Offshore 60%
CB-OS/2 - Development area Cambay Offshore 40%
iii RJ-ON-90/1 - Exploration area Rajasthan Onshore 100%
RJ-ON-90/1 - Development area Rajasthan Onshore 70%
iv GV-ONN-2003/1 Ganga Valley Onshore 24%
v VN-ONN-2003/1 Vindhyan Onshore 49%
vi PR-OSN-2004 Palar Basin Offshore 35%
vii SL 2007-01-001 North West Sri Lanka Offshore 100%
viii KG-ONN-2003/1 Krishna Godavari Onshore 49%
ix GV-ONN-2002/1 Ganga Valley Onshore 50%
Non - operated block
x KG-DWN-98/2 Krishna Godavari Deep water 10%
xi RJ-ONN-2003/1 Rajasthan Onshore 30%
xii GS-OSN-2003/1 Gujarat Saurashtra Onshore 49%
xiii KK-DWN-2004 Kerala Konkan Basin Offshore 40%
xiv CB-ONN-2002/1 Cambay Onshore 30%
(proposed to be relinquished)
xv GV-ONN-97/1 Ganga Valley Onshore 15%
(relinquished in 2008)
xvi CB-ONN-2001/1 Cambay Onshore 30%
(relinquished in 2007)

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation
The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards notified under the
Companies (Accounting Standard) Rules, 2006 under the historical cost convention and on an accrual basis. The accounting policies, in all
material respects, have been consistently applied by Cairn India Group and are consistent with those used in the previous period, except to the
extent stated in note no. 8 below.
Principles of consolidation:
The consolidated financial statements relate to the Cairn India Group. In the preparation of these consolidated financial statements, investments in
subsidiaries have been accounted for in accordance with the provisions of AS 21 (Accounting for Consolidated Financial Statements). The
financial statements of the subsidiaries have been drawn up to the same reporting date as of Cairn India Limited. The consolidated financial
statements are prepared on the following basis:
i. The financial statements of the Company and its subsidiary companies are consolidated on a line-by-line basis by adding together the book
values of the like items of assets, liabilities, income and expenses after eliminating all significant intra-group balances and intra-group
transactions and also unrealised profits or losses in accordance with Accounting Standard (AS) 21 "Consolidated Financial Statements".
ii. The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar
circumstances and are presented, to the extent possible, in the same manner as the Company's separate financial statements. The financial
statements of the subsidiaries are adjusted for the accounting principles and policies followed by the Company.
iii. The difference between the cost to the Company of its investment in subsidiaries and its proportionate share in the equity of the investee
company at the time of acquisition of shares in the subsidiaries is recognized in the financial statements as Goodwill or Capital Reserve, as the
case may be. Goodwill is tested for impairment by the management on each reporting date.
(b) Oil and gas assets
Cairn India Group follows a successful efforts method for accounting for oil and gas assets as set out by the Guidance Note issued by the Institute
of Chartered Accountants of India (ICAI) on "Accounting for Oil and Gas Producing Activities".
Expenditure incurred on the acquisition of a license interest is initially capitalised on a license by license basis. Costs are held, undepleted,
within exploratory and development work in progress until the exploration phase relating to the license area is complete or commercial oil and gas
reserves have been discovered.
Exploration expenditure incurred in the process of determining exploration targets which cannot be directly related to individual exploration

105
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(All amounts are in thousand Indian Rupees, unless otherwise stated)

wells is expensed in the period in which it is incurred.

Exploration/appraisal drilling costs are initially capitalised within exploratory and development work in progress on a well by well basis until
the success or otherwise of the well has been established. The success or failure of each exploration/appraisal effort is judged on a well by well
basis. Drilling costs are written off on completion of a well unless the results indicate that oil and gas reserves exist and there is a reasonable
prospect that these reserves are commercial.
Where results of exploration drilling indicate the presence of oil and gas reserves which are ultimately not considered commercially viable, all
related costs are written off to the profit and loss account. Following appraisal of successful exploration wells, when a well is ready for
commencement of commercial production, the related exploratory and development wells in progress are transferred into a single field cost centre
within producing properties, after testing for impairment.
Where costs are incurred after technical feasibility and commercial viability of producing oil and gas is demonstrated and it has been
determined that the wells are ready for commencement of commercial production, they are capitalised within producing properties for each cost
centre. Subsequent expenditure is capitalised when it enhances the economic benefits of the producing properties or replaces part of the existing
producing properties. Any costs remaining associated with such part replaced are expensed in the financial statements.
Net proceeds from any disposal of an exploration asset within exploratory and development work in progress are initially credited against the
previously capitalised costs and any surplus proceeds are credited to the profit and loss account. Net proceeds from any disposal of producing
properties are credited against the previously capitalised cost and any gain or loss on disposal of producing properties is recognised in the profit and
loss account, to the extent that the net proceeds exceed or are less than the appropriate portion of the net capitalised costs of the asset.
(c) Depletion
The expenditure on producing properties is depleted within each cost centre.
Depletion is charged on a unit of production basis, based on proved reserves for acquisition costs and proved and developed reserves for
other costs.
(d) Site restoration costs
At the end of the producing life of a field, costs are incurred in restoring the site of production facilities. Cairn India Group recognizes the full cost
of site restoration as a liability when the obligation to rectify environmental damage arises. The site restoration expense forms part of the cost of
producing properties of the related asset. The amortization of the asset, calculated on a unit of production basis based on proved and developed
reserves, is included in the "depletion and site restoration costs" in the profit and loss account.
(e) Impairment
i. The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/
external factors. An impairment loss is recognized where the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value at the weighted average cost of capital.
ii. After impairment, depreciation/depletion is provided in subsequent periods on the revised carrying amount of the asset over its
remaining useful life.
(f) Tangible Fixed Assets, depreciation and amortization
Tangible assets, other than oil and gas assets, are stated at cost, less accumulated depreciation and impairment losses, if any. Cost comprises the
purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition
of fixed assets which take a substantial period of time to get ready for its intended use are also included to the extent they relate to the period till
such assets are ready to be put to use.
Depreciation is provided using the Straight Line Method as per the useful lives of the assets estimated by the management, or at the rates
prescribed under Schedule XIV of the Companies Act 1956, whichever is higher. The expected useful economic lives are as follows:
Vehicles 2 to 5 years
Freehold buildings 10 years
Computers 2 to 5 years
Furniture and fixtures 2 to 5 years
Office equipments 2 to 5 years
Plant and Equipment 2 to 5 years
Leasehold improvements are amortized over the remaining period of the primary lease or expected useful lives, whichever is shorter.
(g) Intangible fixed assets and amortization
Intangible assets, other than oil and gas assets, have finite useful lives and are measured at cost and amortized over their expected useful
economic lives as follows:
Computer software 2 to 4 years
Goodwill arising on acquisition is capitalized and is subject to review for impairment.
(h) Leases
Finance leases, which effectively transfer substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the
lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease

106 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

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SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are
charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalised.
If there is no reasonable certainty that Cairn India Group will obtain the ownership by the end of the lease term, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset or the lease term.
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating
leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.
(i) Investments
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. Current investments
are measured at cost or market value, whichever is lower, determined on an individual investment basis. All other investments are classified as
long-term investments. Long term investments are measured at cost. However, provision for diminution in value is made to recognise a decline
other than temporary in the value of the investments.
(j) Inventory
Inventories of oil and condensate held at the balance sheet date are valued at net realizable value based on the estimated selling price. Inventory
of stores and spares related to exploration, development and production activities are stated at cost, determined on First in First out (FIFO) basis.
(k) Joint Ventures
Cairn India Group participates in several Joint Ventures which involve the joint control of assets used in the oil and gas exploration, development
and producing activities. It accounts for its share of the assets and liabilities of Joint Ventures along with attributable income and expenses in such
Joint Ventures, in which it holds a participating interest. Joint venture cash and cash equivalent balances are considered by the Cairn India Group
to be the amounts contributed in excess of the Cairn India Group's obligations to the joint ventures and are, therefore, disclosed within Loans and
Advances.
(l) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Cairn India Group and the revenue can be
reliably measured.
Revenue from operating activities
From sale of oil, gas and condensate
Revenue represents the Cairn India Group's share of oil, gas and condensate production, recognised on a direct entitlement basis, when
significant risks and rewards of ownership are transferred to the buyers.
As operator from the joint venture
Cairn India Group recognizes operators fees as revenue from joint ventures based on the provisions of respective PSCs.
Tolling income
Tolling income represents Cairn India Group's share of revenues from Pilotage and Oil Transfer Services from the respective joint ventures, which
is recognized based on the rates agreed with the customers, as and when the services are rendered.
Interest income
Interest income is recognised on a time proportion basis.
Dividend income
Revenue is recognized when the shareholders' right to receive payment is established by the balance sheet date. Dividend from subsidiaries is
recognized even if same are declared after the balance sheet date but pertains to period on or before the date of balance sheet as per the
requirement of schedule VI of the Companies Act, 1956.
(m) Borrowing costs
Borrowing costs include interest and commitment charges on borrowings, amortisation of costs incurred in connection with the arrangement of
borrowings, exchange differences to the extent they are considered a substitute to the interest cost and finance charges under leases. Costs
incurred on borrowings directly attributable to development projects, which take a substantial period of time to complete, are capitalised within
the development/producing asset for each cost centre.
All other borrowing costs are recognised in the profit and loss account in the period in which they are incurred.
(n) Foreign currency transactions and translations
Cairn India Group translates foreign currency transactions into Indian Rupees at the rate of exchange prevailing at the transaction date. Monetary
assets and liabilities denominated in foreign currency are translated into Indian Rupees at the rate of exchange prevailing at the Balance Sheet
date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at
the date of the transaction.
Exchange differences arising on the settlement of monetary items or on reporting the Cairn India Group's monetary items at rates different
from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as
expenses in the year in which they arise except those arising from investments in non-integral operations.
All transactions of integral foreign operations are translated as if the transactions of those foreign operations were the transactions of the
group itself. In translating the financial statements of a non-integral foreign operation for incorporating in the group's financial statements, the
Cairn India Group translates the assets and liabilities at the rate of exchange prevailing at the balance sheet date. Income and expenses of non-

107
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SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

integral operations are translated using rates at the date of transactions. Resulting exchange differences are disclosed under the foreign currency
translation reserve until the disposal of the net investment in non-integral operations.
(o) Income taxes
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax are measured at the amount
expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Fringe benefit tax also includes the proportionate
amount of tax likely to be paid by Cairn India Group, on the exercise of share options of the Company. Deferred income tax reflects the impact of
current period timing differences between taxable income and accounting income for the period and reversal of timing differences of earlier
period.
Deferred tax assets and liabilities are measured, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets and deferred tax liabilities across various subsidiaries or countries of operation are not set off against each other as Cairn India
Group does not have a legal right to do so. Current and deferred tax assets and liabilities are only offset where they arise within the same entity
and tax jurisdiction.
Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. If Cairn India Group has carry forward of unabsorbed depreciation and tax losses, deferred
tax assets are recognised only if there is virtual certainty, supported by convincing evidence, that such deferred tax assets can be realised against
future taxable profits. Unrecognised deferred tax assets of earlier periods are re-assessed and recognised to the extent that it has become
reasonably certain that future taxable income will be available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a
deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income
will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably
certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the company
will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that
Company will pay normal Income Tax during the specified period.
(p) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted
for events of bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares, if any.
(q) Provisions
A provision is recognised when Cairn India Group has a present obligation as a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and
are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.
(r) Cash and Cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments, with an original maturity of
90 days or less.
(s) Employee Benefits
Retirement and Gratuity benefits
Retirement benefits in the form of provident fund and superannuation scheme are defined contribution schemes and the contributions are
charged to the profit and loss account of the period when the contributions to the respective funds are due. There are no obligations other than
the contribution payable to the respective funds.
Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made
at the end of each financial year. The scheme is maintained and administered by an insurer to which the trustees make periodic contributions.
Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on
actuarial valuation made at the end of each financial year. The actuarial valuation is done as per projected unit credit method.
Actuarial gains / losses are immediately taken to profit and loss account and are not deferred.
Employee Stock Compensation Cost
Measurement and disclosure of the employee share-based payment plans is done in accordance with SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share-based Payments, issued by the
Institute of Chartered Accountants of India. Cairn India Group measures compensation cost relating to employee stock options using the intrinsic

108 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

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SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

value method. Compensation expense is amortized over the vesting period of the option on a straight line basis. The cost of awards to employees
under the Company's ultimate parent entity's Long Term Incentive Plans ("the LTIP") is recognised based on the amount cross charged by the
parent entity.
(t) Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements
and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current
events and actions, actual results could differ from these estimates.
(u) Segment Reporting Policies
Identification of segments:
The Company's operating businesses are organized and managed separately according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments
is based on the areas in which major operating divisions of the Company operate.
(v) Derivative Instruments
As per the ICAI Announcement, accounting for derivative contracts, other than those covered under AS-11, is done on marked to market on a
portfolio basis, and the net loss is charged to the income statement. Net gains are ignored.

4. SEGMENTAL REPORTING
Business segments
The primary reporting of Cairn India Group has been prepared on the basis of business segments. Cairn India Group has only one business
segment, which is the exploration, development and production of oil and gas and operates in a single business segment based on the nature of
the products, the risks and returns, the organisation structure and the internal financial reporting systems. Accordingly, the figures appearing in
these financial statements relate to the Cairn India Group's single business segment.
Geographical segments
Secondary segmental reporting is prepared on the basis of the geographical location of customers. The operating interests of the Cairn India
Group are confined to the Indian sub-continent in terms of oil and gas blocks and customers. Accordingly, the figures appearing in these financial
statements relate to Cairn India Group's single geographical segment being operations in the Indian sub-continent.

5. RELATED PARTY TRANSACTIONS

(a) Names of related parties:
Companies having control
• Cairn UK Holdings Limited, UK • Cairn Energy Plc., UK
Holding Company Ultimate holding company
Key Managerial Personnel
• Rahul Dhir • Winston Frederick Bott Jr.
Managing Director and Chief Executive Officer Executive Director and Chief Operating Officer
(Appointed on 29th April 2008)
• Indrajit Banerjee • Philip Tracy
Executive Director and Chief Financial Officer Alternate Director
(Appointed on 1st March 2007) (Appointed on 18th March 2009)
• Lawrence Smyth
Executive Director and Chief Operating Officer
(Appointed on 1st March 2007 and resigned on 21st January 2008)
(b) Transactions during the period/year:
Nature of the Transactions Related Party Current period Previous year
Reimbursement of expenses Cairn Energy Plc. 279,725 197,600
Shares issued including premium and stock option charge Rahul Dhir 716,185 Nil
Lawrence Smyth 126,758 Nil
Total 842,943 Nil
Remuneration (including bonus on cash basis) Rahul Dhir 125,460 165,579
Winston Frederick Bott Jr. 182,488 Nil
Indrajit Banerjee 26,123 15,593
Philip Tracy 1,354 Nil
Lawrence Smyth 39,336 113,677
Total 374,761 294,849
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SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

(c) Balances outstanding as at the end of the period/year:

Nature of the Balance Related Party 31st March 2009 31st December 2007
Accounts payable Cairn Energy Plc. 1,296,164 1,033,919
Remuneration payable Rahul Dhir Nil 3,261
Indrajit Banerjee Nil 1,500
Lawrence Smyth Nil 1,800
Total Nil 6,561
Note: The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave encashment benefits, as
they are determined on an actuarial basis for the Cairn India Group as a whole.

6. As at 31st March 2009, the Company and its subsidiaries together have utilized INR 82,563,170 thousand for the purposes listed in the
prospectus issued for the Initial Public Offer. The details of utilization of funds is as follows-
Particulars Upto Upto
31st March 2009 31st December 2007
Acquisition of shares of Cairn India Holdings Limited from Cairn UK Holdings Limited 59,580,837 59,580,837
Exploration and Development expenses 21,152,714 10,411,239
General corporate purposes 230,000 90,440
Issue expenses 1,599,619 1,599,619
Total 82,563,170 71,682,135
The details of the unutilized monies out of the public issue proceeds is as follows-
Particulars 31st March 2009 31st December 2007
Mutual funds 718,277 7,337,856
Balances with banks 4,967,454 9,228,910
Total 5,685,731 16,566,766

7. EMPLOYEES STOCK OPTION PLANS

The Company has provided various share-based payment schemes to its employees. During the period ended 31st March 2009, the following
schemes were in operation:
Particulars CISMP CIPOP CIESOP CIPOP CIESOP
Phantom Phantom
Date of Board Approval 17th Nov 2006 17th Nov 2006 17th Nov 2006 Not applicable Not applicable
Date of Shareholder's approval 17th Nov 2006 17th Nov 2006 17th Nov 2006 Not applicable Not applicable
Number of options granted till March 2009 8,298,713 5,732,956 12,792,651 822,867 362,556
Method of Settlement Equity Equity Equity Cash Cash
Vesting Period Refer vesting 3 years from 3 years from 3 years from 3 years from
conditions below grant date grant date grant date grant date
Exercise Period 18 months 3 months from 7 years from Immediately Immediately
from vesting vesting date vesting date upon vesting upon vesting
Number of options granted till March 2009
24th Nov 2006 8,298,713 – – – –
1st Jan 2007 – 1,708,195 3,467,702 – –
20th Sept 2007 – 3,235,194 5,515,053 – –
29th July 2008 – 789,567 3,773,856 822,867 324,548
10th Dec 2008 – – 36,040 – 38,008
Total 8,298,713 5,732,956 12,792,651 822,867 362,556
The vesting conditions of the above plans are as under-
CISMP plan
(a) 6,714,233 options are to be vested in the following manner-
– 1/3rd of the options will vest on the day following the date on which the equity shares have been admitted to listing on the Stock Exchanges
('admission date'). Listing date was 9th Jan 2007.
– 1/3rd of the options will vest 18 months after the admission date.
– 1/3rd of the options will vest on achieving 30 days' consecutive production of over 150,000 bopd from the Rajasthan Block.
110 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009
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SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

(b) 1,584,480 options are to be vested in the following manner-

– 1/2 of the options will vest on the day following the date on which the equity shares have been admitted to listing on the Stock Exchanges.
– 1/4th of the options will vest on the date on which all major equipment for the start-up of the Mangala field is delivered to site.
– 1/4th of the options will vest on achieving 100,000 boepd from the Mangala Field.
CIPOP plan (including phantom options)
Options will vest (i.e become exercisable) at the end of a "performance period" which will be set by the remuneration committee at the time of
grant (although such period will not be less than three years). However, the percentage of an option which vests on this date will be determined
by the extent to which pre-determined performance conditions have been satisfied.
CIESOP plan (including phantom options)
There are no specific vesting conditions under CIESOP plan.
Details of Activities under Employees Stock Option Plans
CISMP Plan Current period Previous year
Number of Weighted Number of Weighted
options average exercise options average exercise
Price in INR Price in INR
Outstanding at the beginning of the year 8,298,713 33.70 8,298,713 33.70
Granted during the year Nil NA Nil NA
Forfeited during the year Nil NA Nil NA
Exercised during the year 5,268,396 33.70 Nil NA
Expired during the year 792,240 33.70 Nil NA
Outstanding at the end of the year 2,238,077 33.70 8,298,713 33.70
Exercisable at the end of the year Nil NA Nil NA
Weighted average fair value of options 131.50 NA 131.50 NA
granted on the date of grant (INR)
The weighted average share price on the dates of exercise of stock options was INR 220.09

CIPOP Plan Current period Previous year

Number of Weighted Number of Weighted
options average exercise options average exercise
Price in INR Price in INR
Outstanding at the beginning of the year 4,755,244 10.00 Nil NA
Granted during the year 789,567 10.00 4,943,389 10.00
Forfeited during the year Nil NA Nil NA
Exercised during the year Nil NA Nil NA
Expired during the year 2,344,715 10.00 188,145 10.00
Outstanding at the end of the year 3,200,096 10.00 4,755,244 10.00
Exercisable at the end of the year Nil NA Nil NA
Weighted average fair value of options 165.46 NA 165.46 NA
granted on the date of grant (INR)

CIESOP Plan Current period Previous year

Number of Weighted Number of Weighted
options average exercise options average exercise
Price in INR Price in INR
Outstanding at the beginning of the year 8,545,710 164.49 Nil NA
Granted during the year 3,809,896 226.21 8,982,755 164.27
Forfeited during the year Nil NA Nil NA
Exercised during the year Nil NA Nil NA
Expired during the year 1,441,362 169.33 437,045 160.00
Outstanding at the end of the year 10,914,244 185.39 8,545,710 164.49
Exercisable at the end of the year Nil NA Nil NA
Weighted average fair value of options 101.47 NA 89.40 NA
granted on the date of grant (INR)

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(All amounts are in thousand Indian Rupees, unless otherwise stated)

CIPOP Plan - Phantom options Current period Previous year

Number of Weighted Number of Weighted
options average exercise options average exercise
Price in INR Price in INR
Outstanding at the beginning of the year Nil NA Nil NA
Granted during the year 822,867 10.00 Nil NA
Forfeited during the year Nil NA Nil NA
Exercised during the year Nil NA Nil NA
Expired during the year 38,008 10.00 Nil NA
Outstanding at the end of the year 784,859 10.00 Nil NA
Exercisable at the end of the year Nil NA Nil NA
Weighted average fair value of options 175.40 NA Nil NA
granted on reporting date (INR)

CIESOP Plan - Phantom options Current period Previous year

Number of Weighted Number of Weighted
options average exercise options average exercise
Price in INR Price in INR
Outstanding at the beginning of the year Nil NA Nil NA
Granted during the year 362,556 218.19 Nil NA
Forfeited during the year Nil NA Nil NA
Exercised during the year Nil NA Nil NA
Expired during the year Nil NA Nil NA
Outstanding at the end of the year 362,556 218.19 Nil NA
Exercisable at the end of the year Nil NA Nil NA
Weighted average fair value of options 48.13 NA Nil NA
granted on reporting date (INR)

The details of exercise price for stock options outstanding as at March 31, 2009 are:
Scheme Range of No. of Weighted Weighted
exercise options average average
price (INR) outstanding remaining exercise
contractual price (INR)
life of options
(in years)
CISMP Plan 33.70 2,238,077 2.08 33.70
CIPOP Plan 10.00 3,200,096 1.51 10.00
CIESOP Plan 143-227 10,914,244 1.60 185.39
CIPOP Plan - Phantom options* 10.00 784,859 2.33 10.00
CIESOP Plan - Phantom options* 143-227 362,556 2.37 218.19
The details of exercise price for stock options outstanding as at December 31, 2007 are:
CISMP Plan 33.70 8,298,713 1.04 33.70
CIPOP Plan 10.00 4,755,244 2.49 10.00
CIESOP Plan 160-166.95 8,545,710 2.47 164.49
*Introduced during the current period

112 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Consolidated Financial Statements Continued
SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Effect of Employees Stock Option Plans on Financial Position

Effect of the employee share-based payment plans on the profit and loss account and on its financial position:
Particulars Current Period Previous Year
Total Employee Compensation Cost pertaining to share-based payment plans 134,493 602,025
(including exceptional gain of INR 155,723 thousand in the current period-refer note no. 8 below)
Compensation Cost pertaining to equity-settled employee share-based payment plan included above 107,292 602,025
Compensation Cost pertaining to cash-settled employee share-based payment plan included above 27,201 Nil
Liability for equity-settled employee stock options outstanding as at period / year end 388,978 947,084
Liability for cash-settled employee stock options outstanding as at period / year end 27,201 Nil
Deferred compensation cost of equity-settled options 393,570 1,549,011
Deferred compensation cost of cash-settled options 94,719 Nil
Inputs for Fair valuation of Employees Stock Option Plans
The Share Options have been fair valued using an Option Pricing Model (Black Scholes Model). The main inputs to the model and the Fair Value of
the options, based on an independent valuation, are as under:
Variables - CISMP A B
Grant date 24th Nov 2006 24th Nov 2006
Stock Price / fair value of the equity shares on the date of grant (INR) 160.00 160.00
Vesting date Refer vesting Refer vesting
conditions conditions
Vesting % Refer vesting Refer vesting
conditions conditions
Volatility (Weighted average) 44.08% 46.59%
Risk free rate (Weighted average) 7.05% 6.94%
Time to maturity in years (Weighted average) 2.45 2.00
Exercise price - INR 33.70 33.70
Fair Value of the options (Weighted average) - INR 131.69 130.69
Variables - CIESOP
Grant date 1st Jan 2007 20th Sept 2007 29th July 2008 10th Dec 2008
Stock Price/fair value of the equity shares 160.00 166.95 228.55 150.10
on the date of grant (INR)
Vesting date 1st Jan 2010 20th Sept 2010 29th July 2011 10th Dec 2011
Vesting % 100% 100% 100% 100%
Volatility 41.04% 40.24% 39.43% 38.19%
Risk free rate 7.50% 7.65% 9.20% 6.94%
Time to maturity (years) 6.50 6.50 6.50 6.50
Exercise price (INR) 160.00 166.95 227.00 143.00
Fair Value of the options (INR) 87.30 90.72 130.42 79.80
Variables - CIPOP
Grant date 1st Jan 2007 20th Sept 2007 29th July 2008
Stock Price/fair value of the equity shares on the date of grant (INR) 160.00 166.95 228.55
Vesting date 1st Jan 2010 20th Sept 2010 29th July 2011
Vesting % Refer vesting Refer vesting Refer vesting
conditions conditions conditions
Volatility 41.61% 36.40% 37.49%
Risk free rate 7.33% 7.23% 9.37%
Time to maturity (years) 3.12 3.12 3.12
Exercise price (INR) 10.00 10.00 10.00
Fair Value of the options (INR) 152.05 158.97 221.09

113
 Schedules to the Consolidated Financial Statements Continued
SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

Variables - CIPOP Phantom

Grant date 29th July 2008
Stock Price of the equity shares on the reporting date (INR) 184.10
Vesting date 29th July 2011
Vesting % Refer vesting conditions
Volatility 44.64%
Risk free rate 5.97%
Time to maturity (years) 2.33
Exercise price (INR) 10.00
Fair Value of the options (INR) 175.40
Variables - CIESOP Phantom
Grant date 29th July 2008 10th Dec 2008
Stock Price of the equity shares on the reporting date (INR) 184.10 184.10
Vesting date 29th July 2011 10th Dec 2011
Vesting % 100% 100%
Volatility 44.64% 42.35%
Risk free rate 5.97% 6.18%
Time to maturity (years) 2.33 2.70
Exercise price (INR) 227.00 143.00
Fair Value of the options (INR) 44.41 79.91
Volatility is the measure of the amount by which the price has fluctuated or is expected to fluctuate during the period. The measure of volatility
used in Black-Scholes option-pricing model is the annualized standard deviation of the continuously compounded rates of return on the stock over
a period of time. Time to maturity /expected life of options is the period for which the Company expects the options to be live. The time to
maturity has been calculated as an average of the minimum and maximum life of the options.
Impact of Fair Valuation Method on net profits and EPS
In March 2005 the ICAI has issued a guidance note on "Accounting for Employees Share Based Payments" applicable to employee based share
plan the grant date in respect of which falls on or after April 1, 2005. The said guidance note requires the Proforma disclosures of the impact of
the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method
defined in the said guidance note, the impact on the reported net profit and earnings per share would be as follows:
Particulars Current Period
Profit as reported 8,034,506
Add: Employee stock compensation under intrinsic value method
(including exceptional gain of INR 155,723 thousand-refer note no. 8 below) 134,493
Less: Employee stock compensation under fair value method 622,866
Proforma profit 7,546,133
Earnings Per Share
Basic
– As reported 4.31
– Proforma 4.04
Diluted
– As reported 4.28
– Proforma 4.02

8. During the current period, Cairn India Group decided to retrospectively account for stock options using the Intrinsic Value Method as against the
Fair Value Method (Black Scholes) followed till the financial year ended 31st December 2007. Accordingly, the excess stock option provision up to
31st December 2007 was reversed during the current period ended 31st March 2009, resulting in an exceptional gain of INR 155,723 thousand.
Further, the stock option charge for the current period is lower and the profit after tax is higher by INR 488,373 thousand (including exceptional
gain of INR 155,723 thousand) due to this change.

114 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Consolidated Financial Statements Continued
SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

9. LEASE OBLIGATIONS DISCLOSURES

Finance Lease:
Fixed assets include office equipments and leasehold improvements obtained under finance lease. The lease is secured by way of hypothecation of
the respective assets acquired under them. The lease term is for 3 to 6 years and renewable for further period/years at the option of the Cairn India
Group. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements and there are no subleases.
Current Period Minimum lease Principal Interest due
payments amount due
Within one year of the balance sheet date 97,740 80,366 17,374
Due in a period between one year and five years 160,059 142,037 18,022
Due after five years Nil Nil Nil
Total 257,799 222,403 35,396

Previous Year Minimum lease Principal Interest due

payments amount due
Within one year of the balance sheet date 86,166 74,764 11,402
Due in a period between one year and five years 104,096 94,597 9,499
Due after five years Nil Nil Nil
Total 190,262 169,361 20,901
Note: The interest rate on finance lease ranges from 3.77% to 14.64%
Operating Lease:
Cairn India Group has entered into operating leases for office premises and office equipments. The leases have a life of 3 to 6 years. There is an
escalation clause in the lease agreement for the primary lease period. There are no restrictions imposed by lease arrangements and there are no
subleases. There are no contingent rents.
Particulars 31st March 2009 31st December 2007
Lease payments made during the period 120,173 40,199
Minimum lease payments in case of non-cancellable operating leases
Within one year of the balance sheet date 124,628 117,470
Due in a period between one year and five years 150,536 264,797
Due after five years Nil Nil

10. CONTINGENT LIABILITIES

Ravva Joint Venture Arbitration proceedings : ONGC Carry
Ravva is an unincorporated Joint Venture (JV) in which Cairn India Group has an interest. The calculation of the Government of India's (GoI) share
of petroleum produced from the Ravva oil field has been a matter of disagreement for some years.
An arbitration panel opined in October 2004 and Cairn has been willing to be bound by the award, although it was not as favourable as had been
hoped. The GoI, however, had lodged an appeal in the Malaysian courts in respect of one element of the award which was in Cairn's favour,
namely the "ONGC Carry" issue. The "ONGC Carry" issue relates to whether Contractor Parties under Ravva PSC are entitled to include in their
accounts for the purposes of calculating the PTRR certain costs paid by Contractor Parties in consideration for ONGC having paid 100% of costs
prior to the signing of the Ravva PSC in 1994.
Cairn India Group challenged both the GoI's right to appeal and the grounds of that appeal.
A judgement was delivered by the Malaysian High Court on 12th January 2009, ruling in favour of the GoI and setting the arbitration award aside.
This has the effect of negating the original award in favour of Cairn India Group. This judgement is subject to appeal to the Malaysian Court of
Appeal and, potentially, the Malaysian Federal Court. Cairn has appealed to the Malaysian Court of Appeal.
Should Cairn finally lose the argument through the Malaysian courts, given the terms of the High Court's award itself, this will require the matter
to be arbitrated afresh under the terms of the PSC for dispute resolution.
Cairn India Group has received advice from their Malaysian legal counsel to the effect that there are strong grounds for appeal through the
Malaysian courts but, even if this proved unsuccessful, given there was one arbitration award in Cairn India Group's favour on this issue and a
similar award was made in favour of one of Cairn India Group's joint venture partners on the same issue in a separate arbitration with GoI, Cairn
India Group believes it has a good chance of any new arbitration panel coming to the same conclusion.
The GoI has challenged Cairn's understanding of the effect of a set-aside claiming that this would not entitle Cairn to a fresh arbitration should we
ultimately lose in Malaysia. This dispute is currently before the courts in India although Cairn has received clear and consistent advice from
Malaysian lawyers that a set-aside under Malaysian law does not constitute a judgement in favour of GoI.
In addition, consistent with GoI's view that the set-aside meant they now have a binding judgement in their favour, GoI has demanded and

115
 Schedules to the Consolidated Financial Statements Continued
SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

commenced recovery from Cairn's buyers, of revenues from sale proceeds to set-off against the sums they claim are now due as a result of the
Malaysian judgement being in their favour. This recovery action is currently being contested by Cairn in the Indian courts.
In the event that the GoI's appeal ultimately succeeded in a manner which resulted in a ruling which Cairn India Group accepted as binding, then
Cairn India Group would be required to pay an additional USD 64 million (approximately INR 3,265,000 thousand). Cairn India Group would also
be potentially liable for interest on this sum currently estimated at approximately USD 30 million (INR 1,536,000 thousand) though the calculation
of interest would require further agreement.
Ravva Joint Venture Arbitration proceedings : Base Development Cost
In a separate and unrelated dispute related to the profit petroleum calculations under the Ravva PSC, the Ravva joint venture received a claim from
the Director General of Hydrocarbons (DGH) for the period from 2000-2005 for USD 166.4 million for an alleged underpayment of profit
petroleum to the Indian Government, out of which Cairn India Group's share will be USD 37.4 million (approximately INR 1,909,000 thousand)
plus potential interest at applicable rate (LIBOR plus 2% as per PSC).
This claim relates to the Indian Government's allegation that the Ravva JV has recovered costs in excess of the Base Development Costs ("BDC")
cap imposed in the PSC and that the Ravva JV has also allowed these excess costs in the calculation of the Post Tax Rate of Return (PTRR). Cairn
believes that such a claim is unsustainable under the terms of the PSC because, amongst other reasons, the BDC cap only applies to the initial
development of the Ravva field and not to subsequent development activities under the PSC. Additionally the Ravva JV has also contested the
basis of the calculation in the above claim from the DGH. Even if upheld, Cairn believes that the DGH has miscalculated the sums that would be
due to the Indian Government in such circumstances. Companies have initiated the arbitration proceedings with appointment of an arbitrator.
Government of India has also appointed its arbitrator. Presiding arbitrator is yet to be appointed.
Service tax
One of the subsidiary companies of the Cairn India Group has received three show cause notices from the tax authorities in India for non payment
of service tax as a recipient of services from foreign suppliers. These notices cover periods from 16th August 2002 to 31st March 2008. A writ
petition(s) challenging the liability to pay service tax as recipient of services in respect of first show cause notice (16th August 2002 to 31st March
2006) and challenging the scope of some services in respect of second show cause notice (1st April 2006 to 31st March 2007), has been filed
with the Chennai High Court. The reply for second and third show cause notice has also been filed before the authorities. Should the adjudication
go against Cairn India Group, it will be liable to pay the service tax of approximately INR 978,000 thousand plus potential interest of
approximately INR 395,000 thousand, although this could be recovered in part where it relates to services provided to Joint Venture of which
Cairn India is operator.
Tax holiday on gas production
Section 80-IB(9) of the Income Tax Act, 1961 allows the deduction of 100% of profits from the commercial production or refining of mineral oil.
The term 'mineral oil' is not defined but has always been understood to refer to both oil and gas, either separately and collectively.
The 2008 Finance Bill appeared to remove this deduction by stating [without amending section 80-IB(9)] that "for the purpose of section 80-IB(9),
the term 'mineral oil' does not include petroleum and natural gas, unlike in other sections of the Act". Subsequent announcements by the Finance
Minister and the Ministry of Petroleum and Natural Gas have confirmed that tax holiday would be available on production of crude oil but have
continued to exclude gas.
Cairn India Group filed a writ petition to the Gujarat High Court in December 2008 challenging the restriction of section 80-IB to the production of
oil. In the event this challenge is unsuccessful, the potential liability for tax and related interest on tax holiday claimed on gas production for all
periods to 31st March 2009 is approximately INR 2,370,000 thousand.
Based on the legal opinions received, the management is of the view that the liability in these cases is not probable and accordingly no provision
has been made in the financial statements.

11. CAPITAL COMMITMENTS (NET OF ADVANCES)

a. In respect of Cairn India Group's share of Joint Ventures' Exploration activities - INR 11,324,140 thousand (previous year - INR 23,442,498
thousand).
b. In respect of the Cairn India Group's share of Joint Ventures' Development activities - INR 34,536,062 thousand (previous year - INR
3,351,442 thousand).

12. DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

Cairn India Group has taken USD put/INR call options to hedge the risk of foreign currency exposure. The aggregate amount of outstanding
options as at 31st March 2009 aggregated to USD 214,000 thousand (previous year USD 210,000 thousand)
Particulars of Unhedged Foreign Currency Exposure at the Balance Sheet date
Particulars 31st March 2009 31st December 2007
Unsecured Loans 43,341,500 2,955,000
Sundry Debtors 1,516,418 1,335,754
Cash and Bank 31,366,364 11,304,311
Current Assets 2,266,955 4,843,437
Current Liabilities 5,623,077 4,168,594

116 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Consolidated Financial Statements Continued
SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

13. Cairn India Group has a defined contribution gratuity plan. Every employee who has completed five years or more of service gets a gratuity on
departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a
qualifying insurance policy.
The following tables summarize the components of net benefit expense recognised in the profit and loss account and the funded status and amounts
recognised in the balance sheet for the gratuity plans.
Profit and Loss account
Net employee benefit expense (recognised in Employee Cost)
Particulars 31st March 2009 31st December 2007
Current service cost 23,529 10,846
Interest cost on benefit obligation 6,051 2,863
Expected return on plan assets (3,666) (1,798)
Net actuarial (gain) / loss recognised in the year 14,974 21,226
Past service cost Nil Nil
Net benefit expense 40,888 33,137
Actual return on plan assets 6,700 2,975
Balance sheet
Details of Provision for Gratuity
Particulars 31st March 2009 31st December 2007
Defined benefit obligation 108,425 66,142
Fair value of plan assets 68,854 29,163
Less: Unrecognized past service cost Nil Nil
Plan asset / (liability) (39,571) (36,979)
Changes in the present value of the defined benefit obligation are as follows:
Particulars 31st March 2009 31st December 2007
Opening defined benefit obligation 66,142 41,207
Current service cost 23,529 10,846
Interest cost 6,051 2,515
Benefits paid (5,306) (10,829)
Actuarial (gains) / losses on obligation 18,009 22,403
Closing defined benefit obligation 108,425 66,142
Changes in the fair value of plan assets are as follows:
Particulars 31st March 2009 31st December 2007
Opening fair value of plan assets 29,163 25,693
Expected return 3,666 1,798
Contributions by employer 38,296 11,324
Benefits paid (5,306) (10,829)
Actuarial gains / (losses) 3,035 1,177
Closing fair value of plan assets 68,854 29,163
Note: The Group's expected contribution to the fund in the next year is INR 34,725 thousand.
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Particulars 31st March 2009 31st December 2007
Investments with insurer 100% 100%
The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which
the obligation is to be settled.

117
 Schedules to the Consolidated Financial Statements Continued
SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

The principal assumptions used in determining gratuity liability for the Group's plans are shown below:
Particulars 31st March 2009 31st December 2007
Discount rate 7% 8%
Future salary increase 10% 10%
Expected rate of return on assets 9.35% 9.1%
Employee turnover 13.13% 13.13%
Mortality Rate LIC (1994-96) LIC (1994-96)
Ultimate Table Ultimate Table
Note: The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant
factors, such as supply and demand in the employment market.
Gratuity liabilities for the current and previous period are as follows:
Particulars 31st March 2009 31st December 2007
Defined benefit obligation 108,425 66,142
Plan assets 68,854 29,163
Surplus / (deficit) (39,571) (36,979)
Experience adjustments on plan assets (loss)/gain 3,132 2,970
Experience adjustments on plan liabilities (loss)/gain (11,964) (6,960)
Notes:
a) The Group has adopted AS 15 (Revised 2005) Employee Benefits for the first time during the previous year. Disclosures required by
paragraph 120 (n) of AS-15 (Revised 2005) are required to be furnished prospectively from the date of transition and hence have been
furnished for the current and the previous year only.
b) The Group is maintaining a fund with the Life Insurance Corporation of India (LIC) to meet its gratuity liability. The present value of the plan
assets represents the balance available with the LIC as at the end of the period. The total value of plan assets amounts to INR 68,854
thousand as certified by the LIC.

14. DETAILS OF MOVEMENT IN SHARE CAPITAL IS AS UNDER

Date Number of equity Description Issue price Share capital Securities
shares of INR 10 each in INR premium
31st December 2006 1,765,314,379 Closing balance 17,653,144 275,017,837
8th February 2007 13,085,041 Issued under Green Shoe Option 160.00 130,850 1,962,756
Less: Share issue expenses (896,478)
adjusted against premium
31st December 2007 1,778,399,420 17,783,994 276,084,115
7th March 2008 792,240 Exercise of stock options 33.70 7,922 18,776
22nd April 2008 113,000,000 Preferential allotment of shares 224.30 1,130,000 24,215,900
to non promoter investors
7th May 2008 525,000 Exercise of share options 33.70 5,250 12,443
27th May 2008 1,713,078 Exercise of share options 33.70 17,131 40,600
8th December 2008 1,600,000 Exercise of share options 33.70 16,000 37,920
19th December 2008 638,078 Exercise of share options 33.70 6,381 15,122
Add : Share options liability 665,398
transferred to securities premium
upon exercise of the options
31st March 2009 1,896,667,816 18,966,678 301,090,274

15. The share issue expenses of INR 208,410 thousand incurred on the preferential allotment of 113,000,000 equity shares have been charged to the
profit and loss account and not adjusted from the securities premium account on conservative basis.

16. Cairn India Group supplies gas from its Ravva and Cambay blocks to various customers. The price contracts with two customers are due for
revision with effect from December 2008 and currently the same are under negotiation. Pending finalization of the price contracts, revenue has
been recognised based on the last agreed prices on a conservative basis, as the management is expecting an upward price revision.

118 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

Schedules to the Consolidated Financial Statements Continued
SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

17. The goodwill of Cairn India Group amounting to INR 253,192,675 thousand has arisen on consolidation of financial statements of the Company
with its subsidiaries and represents the difference between the cost to the Company of its investment in Cairn India Holdings Limited (which
largely represent Cairn India Group's operations in India through its subsidiaries) and its proportionate share in the net book value of Cairn India
Holdings Limited on consolidated basis at the time of acquisition of shares in Cairn India Holdings Limited. The management has carried out the
tests for impairment of goodwill at the year-end as per requirements of AS 28 (Impairment of Assets) by computing the value in use of the assets
and comparing the same with the carrying amount of the net assets. Value in use is based on the discounted future net cash flows of the oil and
gas assets held by the Cairn India Group. For all blocks in the exploration stage, valuation has been carried out using risked NPV / boe. The result
of the impairment tests indicate that the value in use is higher than the carrying amounts and no impairment provision is required to be created at
the reporting date.

18. The management committee for the Rajasthan block has recently approved the declaration of commerciality and has granted an area of 822 square
kilometers for future development. This includes an additional area of 238 square kilometers where the approval of the Ministry of Petroleum and
Natural Gas is awaited.

19. Long term investment represents shares of Videocon Industries Limited held by Cairn Energy India Pty Limited (CEIPL) by virtue of its holdings in
erstwhile Videocon Petroleum Limited, which subsequently merged with Videocon Industries Limited. CEIPL is yet to receive the share certificates
of the merged entity and the matter is being pursued with the company.

20. The current tax and deferred tax provisions have been computed on the basis of the standalone financial statements of the Company's
subsidiaries, i.e. not based on the consolidated financial statements of Cairn India Limited and its subsidiaries. There was a reversal of deferred tax
liability amounting to INR 237,884 thousand during the current period due to changes in assumptions for computing the timing differences in
relation to certain assets of Rajasthan project during the tax holiday period.

21. Cairn India Holdings Limited (CIHL), a wholly owned subsidiary of the Company along with some of its subsidiaries has entered into a loan facility
agreement for USD 850 million with a consortium of banks. For the purposes of securing this facility, CIHL along with some of its subsidiaries has
created a negative pledge on its assets and those of its subsidiaries, whereby it has undertaken not to dispose any of the said assets or create any
charge on the same without the prior consent of the lenders. Further, the entire shares of Cairn Energy Hydrocarbons Limited a wholly owned
subsidiary of CIHL, has been pledged with the lenders.

22. Cairn India Group's estimate of hydrocarbon reserves and resources at the period/year end is as follows-
Particulars Gross proved and probable Gross proved and probable Net proved and probable
hydrocarbons initially in place reserves and resources reserves and resources
(mmboe) (mmboe) (mmboe)
Current Year Previous Year Current Year Previous Year Current Year Previous Year
Rajasthan MBA Fields 2,054 2,054 685 685 479 479
Rajasthan MBA EOR – – 308 308 216 216
Rajasthan Block Other Fields 1,708 1,697 86 84 61 60
Ravva Fields 625 584 72 82 16 18
CBOS/2 Fields 156 116 20 25 8 10
KG-DWN-98/2 650 650 353 353 35 35
Total 5,193 5,101 1,524 1,537 815 818

Cairn India Group's net working interest in proved and probable reserves is as follows-
Particulars Proved and Proved and probable
probable Reserves reserves (developed)
Oil (mmstb) Gas (bscf) Oil (mmstb) Gas (bscf)
Reserves as at 1st January 2007* 207.15 53.19 18.10 53.19
Additions / revision during the year 44.47 4.21 3.63 4.21
Production during the year 4.59 13.40 4.59 13.40
Reserves as at 31st December 2007** 247.03 44.00 17.14 44.00
Additions / revision during the fifteen months period 98.35 (1.66) 2.64 (1.66)
Production during the fifteen months period 5.58 13.74 5.58 13.74
Reserves as at 31st March 2009*** 339.80 28.60 14.20 28.60

119
 Schedules to the Consolidated Financial Statements Continued
SCHEDULE 23 - NOTES TO ACCOUNTS

(All amounts are in thousand Indian Rupees, unless otherwise stated)

* Includes probable oil reserves of 35.81 mmstb (of which 3.24 mmstb is developed) and probable gas reserves of 16.73 bscf (of which 16.73
bscf is developed)
** Includes probable oil reserves of 41.78 mmstb (of which 4.17 mmstb is developed) and probable gas reserves of 16.57 bscf (of which 16.57
bscf is developed)
*** Includes probable oil reserves of 57.70 mmstb (of which 5.7 mmstb is developed) and probable gas reserves of 12.80 bscf (of which 12.80 bscf
is developed)
mmboe = million barrels of oil equivalent
mmstb = million stock tank barrels
bscf = billion standard cubic feet
1 million metric tonnes = 7.4 mmstb
1 standard cubic meter = 35.315 standard cubic feet
MBA = Mangala, Bhagyam & Aishwarya
EOR = Enhanced Oil Recovery

23. CHANGE IN FINANCIAL YEAR AND PRIOR YEAR COMPARATIVES

Shareholders of the Company have approved the change of financial year end from 31st December to 31st March. Therefore, the current financial
year consists of fifteen month period from 1st January 2008 to 31st March 2009. Subsequent financial years would be for twelve months period
ending 31st March every year. Accordingly, previous year figures in the profit and loss account and cash flow statement are not comparable with
current extended financial year.
Previous year's figures have been regrouped where necessary to confirm to current period's classification.

As per our report of even date

For S. R. Batliboi & Associates For and on behalf of the Board of Directors
Chartered Accountants Rahul Dhir Managing Director and Chief Executive Officer
per Raj Agrawal Aman Mehta Director
Partner Indrajit Banerjee Executive Director and Chief Financial Officer
Membership No.: 82028 Neerja Sharma Company Secretary

Place : Gurgaon
Date : 27th May, 2009

120 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

 Statement Pursuant to Section 212 (8) of the Companies Act, 1956
(All amounts are in thousand Indian Rupees, unless otherwise stated)
Pursuant to section 212 (8)of the Companies Act, 1956, the company has obtained exemption from the Ministry of Company Affairs, New Delhi, vide its letter No.47/108/2009-CL-III dated 30/03/2009 to
attach accounts of subsidiaries. The accounts of subsidiaries are available for inspection of members on any working day at the registered office of the company between 10 am and 12 noon. A statement
pursuant to above order giving details of subsidiaries is given below:
S. Name of the Subsidiary Company Capital Reserves Total Total Investments* Details of Turnover Profit / Provision for Profit / Proposed
No. Assets Liabilities Investment (Loss) taxation (Loss) dividend
before after
taxation taxation
1 Cairn India Holdings Limited 25,641,916 2,926,043 1,969,920 26,598,039 – – – 6,456,890 – 6,456,890 NIL
2 Cairn Energy Gujarat Block 1 Limited 46 62,953 275 62,724 – – – 104,336 9,703 94,633 NIL
3 Cairn Exploration (No.7) Limited – (13,766) 110 (13,876) – – – 142,121 12,354 129,766 NIL
4 Cairn Exploration (No.6) Limited – (427) (153) (274) – – – 7,913 443 7,469 NIL
5 Cairn Exploration (No.4) Limited – (1,190) 130 (1,321) – – – 6,603 84 6,519 NIL
6 Cairn Exploration (No.2) Limited – (41,014) 94 (41,108) – – – 241,844 19,867 221,977 NIL
7 Cairn Energy Discovery Limited 1,956 (71,450) (5,038) (64,455) – – – (16,679) 13 (16,692) NIL
8 Cairn Energy Hydrocarbons Limited 2,755,860 (2,576,888) 46,198,649 (46,019,677) – – 428 4,086,822 25,389 4,061,433 NIL
9 Cairn Petroleum India Limited – – – – – – – – – – NIL
10 Cairn Energy Holdings Limited 4,053,726 (3,219,853) 835,277 (1,404) – – 591,511 607,972 (145,042) 753,014 NIL
11 Cairn Energy Netherlands Holdings B.V. 760 (15,828) 879 (15,947) – – – (4,987,504) (30,253) (4,957,252) NIL
12 Cairn Energy Group Holdings B.V. 4,276 (971,429) 3,334 (970,486) – – – (1,440,244) (12,480) (1,427,764) NIL
13 Cairn Energy India Holdings B.V. 790 (668) 91 31 – – – (878) – (878) NIL
14 Cairn Energy Gujarat Holding B.V. 790 (816) – (26) – – – (26) – (26) NIL
15 Cairn Energy Gujarat B.V. 790 1,721,036 2,131,440 (409,614) – – 1,276,923 498,667 31,282 467,384 NIL
16 Cairn Energy India West Holding B.V. 791 (816) – (26) – – – (26) – (26) NIL
17 Cairn Energy India West B.V. 790 2,274,978 2,125,042 150,727 – – 1,687,029 581,041 118,207 462,834 NIL
18 Cairn Energy Cambay Holding B.V. 789 (815) – (26) – – – (26) – (26) NIL
19 Cairn Energy Cambay B.V. 790 1,762,656 2,212,858 (449,411) – – 1,289,650 373,414 (26,846) 400,260 NIL
20 Cairn Energy Australia Pty Limited 3,397,091 (3,458,256) 6,537 (67,702) – – – (16,732) (23,267) 6,535 NIL
21 CEH Australia Limited – – – – – – – – – – NIL
22 CEH Australia Pty Limited – – – – – – – – – – NIL
23 Cairn Energy Asia Pty Limited 85,734 923,341 4,544 1,004,532 – – – 233,002 – 233,002 NIL
24 Wessington Investments Pty Limited 194,543 (194,543) – – – – – – – – NIL
25 Cairn Energy Investments Australia 1,590,605 (1,590,605) – – – – – – – – NIL
Pty Limited
26 Sydney Oil Company Pty Limited 163,617 (163,617) – – – – – – – – NIL
27 Cairn Energy India Pty Limited 1,116,837 9,618,995 62,679,034 (52,048,535) 105,334 Long term investments 9,443,844 2,408,716 1,282,320 1,126,397 NIL
(at cost)–unquoted and
trade: 755,275 equity
shares of Rs.10 each
fully paid up in Videcon
Industries Limited
28 Cairn Lanka Private Limited 121,538 (68,156) 64,693 (11,311) – – – (68,156) – (68,156) NIL
29 CIG Mauritius Holding Private Limited 121,980 (123,103) 333 (1,457) – – – (3,518) – (3,518) NIL
30 CIG Mauritius Private Limited 119,585 (120,873) 7 (1,296) – – – 664 – 664 NIL
* Other than Investment in subsidiaries
For and on behalf of the Board of Directors
Rahul Dhir Managing Director and Chief Executive Officer
Aman Mehta Director
Place : Gurgaon Indrajit Banerjee Executive Director and Chief Financial Officer
Date : 27th May, 2009 Neerja Sharma Company Secretary

121
 Statement Pursuant to Section 212 of the Companies Act, 1956
(All amounts are in thousand Indian Rupees, unless otherwise stated)
Profits/(Losses) so far it Profits/(Losses) so far it
concerns the members of concerns the members
the Holding Company of the Holding Company
and not dealt with in the and dealt with in the
books of Account of the books of Account of the
Holding Company Holding Company
S. Name of the Subsidiary Company Name of the Holding Company Number of equity shares held Extent of Financial For the For the For the For the
No. Holding year of the Financial Previous Financial Previous
subsidiary Year of the Financial Year of the Financial
ended on Subsidiary Year(s) Subsidiary Year(s)
since it since it
became a became a
Subsidiary Subsidiary
1 Cairn India Holdings Limited Cairn India Limited 292,929,752 shares of £ 1 each 100% 12/31/2008 6,456,890 (1,592,111) – –
2 Cairn Energy Gujarat Block 1 Limited Cairn India Holdings Limited 551 ordinary shares of £ 1 each 100% 12/31/2008 94,633 (8,458) – –
3 Cairn Exploration (No.7) Limited Cairn India Holdings Limited 1 ordinary share of £ 1 each 100% 12/31/2008 129,766 (136,016) – –
4 Cairn Exploration (No.6) Limited Cairn India Holdings Limited 1 ordinary share of £ 1 each 100% 12/31/2008 7,469 (6,276) – –

122 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

5 Cairn Exploration (No.4) Limited Cairn India Holdings Limited 1 ordinary share of £ 1 each 100% 12/31/2008 6,519 (7,710) – –
6 Cairn Exploration (No.2) Limited Cairn India Holdings Limited 1 ordinary share of £ 1 each 100% 12/31/2008 221,977 (216,479) – –
7 Cairn Energy Discovery Limited Cairn India Holdings Limited 23,216 ordinary shares of £ 1 each 100% 12/31/2008 (16,692) (11,666) – –
8 Cairn Energy Hydrocarbons Limited Cairn India Holdings Limited 31,341,712 ordinary shares of £ 1 each 100% 12/31/2008 4,061,433 (392,625) – –
9 Cairn Petroleum India Limited Cairn India Holdings Limited 1 ordinary share of £ 1 each 100% 12/31/2008 – – – –
10 Cairn Energy Holdings Limited Cairn India Holdings Limited 67,418,405 ordinary shares of £ 1 each 100% 12/31/2008 753,014 240,863 – –
11 Cairn Energy Netherlands Holdings B.V. Cairn Energy Holdings Limited 18 equity shares of EUR 1,000 each 100% 12/31/2008 (4,957,252) (323,998) – –
12 Cairn Energy Group Holdings B.V. Cairn Energy Netherlands Holdings B.V. 215 equity shares of NLG 1,000 each
(in accordance with article 2:178c of the Dutch
Civil Code, this sum converts to EUR 453.78) 100% 12/31/2008 (1,427,764) (14,124) – –
13 Cairn Energy India Holdings B.V. Cairn Energy Group Holdings B.V. 40 equity shares of NLG 1,000 each
(in accordance with article 2:178c of the Dutch
Civil Code, this sum converts to EUR 453.78) 100% 12/31/2008 (878) (144) – –
14 Cairn Energy Gujarat Holding B.V. Cairn Energy India Holdings B.V. 41 shares of EUR 454 each 100% 12/31/2008 (26) – – –
15 Cairn Energy Gujarat B.V. Cairn Energy Gujarat Holding B.V. 40 equity shares of NLG 1,000 each
(in accordance with article 2:178c of the Dutch
Civil Code, this sum converts to EUR 453.78) 100% 12/31/2008 467,384 312,805 – –
16 Cairn Energy India West Holding B.V. Cairn Energy India Holdings B.V. 41 shares of EUR 454 each 100% 12/31/2008 (26) – – –
17 Cairn Energy India West B.V. Cairn Energy India West Holding B.V. 40 equity shares of NLG 1,000 each
(in accordance with article 2:178c of the Dutch
Civil Code, this sum converts to EUR 453.78) 100% 12/31/2008 462,834 456,307 – –
18 Cairn Energy Cambay Holding B.V. Cairn Energy India Holdings B.V. 18 equity shares of EUR 1,000 each 100% 12/31/2008 (26) – – –
19 Cairn Energy Cambay B.V. Cairn Energy Cambay Holding B.V. 40 equity shares of NLG 1,000 each
(in accordance with article 2:178c of the Dutch
Civil Code, this sum converts to EUR 453.78) 100% 12/31/2008 400,260 296,204 – –
20 Cairn Energy Australia Pty Limited Cairn Energy Group Holdings B.V. 116,789,079 ordinary shares of AUS$ 1 each 100% 12/31/2008 6,535 (6,653) – –
21 CEH Australia Limited Cairn Energy Australia Pty Limited 100 shares of US$ 1 each 100% 12/31/2008 – – – –
22 CEH Australia Pty Limited CEH Australia Limited 2 ordinary shares of AUS$ 1 each 100% 12/31/2008 – – – –
23 Cairn Energy Asia Pty Limited Cairn Energy Australia Pty Limited 330,522,617 ordinary shares of AUS$ 1 each 100% 12/31/2008 233,002 (56,683) – –
24 Wessington Investments Pty Limited Cairn Energy Asia Pty Limited 30,000,000 ordinary shares of AUS$ 0.25 each 100% 12/31/2008 – – – –
25 Cairn Energy Investments Australia Cairn Energy Asia Pty Limited 144,101,302 ordinary shares of AUS$ 1 each 100% 12/31/2008 – – – –
Pty Limited
26 Sydney Oil Company Pty Limited Cairn Energy Investments Australia 27,024,288 ordinary shares of AUS$ 0.25 each 100% 12/31/2008 – – – –
Pty Limited
27 Cairn Energy India Pty Limited Sydney Oil Company Pty Limited 2 ordinary shares of AUS$ 1 each and 1,000 100% 12/31/2008 1,126,397 2,009,486 – –
ordinary shares of AUS$ 45,792.67 each
28 Cairn Lanka Private Limited CIG Mauritius Private Limited 27,937,467 ordinary shares of LKR 10 each 100% 12/31/2008 (68,156) – – –
29 CIG Mauritius Holding Private Limited Cairn India Limited 2,509,960 ordinay shares of USD 1 each 100% 12/31/2008 (3,518) – – –
30 CIG Mauritius Private Limited CIG Mauritius Holding Private Limited 2,501,000 ordinay shares of USD 1 each 100% 12/31/2008 664 – – –
For and on behalf of the Board of Directors
Rahul Dhir Managing Director and Chief Executive Officer
Aman Mehta Director
Indrajit Banerjee Executive Director and Chief Financial Officer
Neerja Sharma Company Secretary
Place : Gurgaon
Date : 27th May, 2009
Glossary
ABBREVIATIONS AND FULL FORMS FOR MAIN TERMS USED IN THIS ANNOUNCEMENT

CORPORATE MBA Mangala, Bhagyam and Aishwariya

AGM Annual General Meeting mmbbls million barrels
Board The Board of Directors of Cairn India Limited mmboe million barrels of oil equivalent
BSE Bombay Stock Exchange Ltd mmscfd million standard cubic feet of gas per day
Cairn Cairn India Limited and its subsidiaries mmstb million stock tank barrels
CEIL or CEIPL Cairn Energy India Pty Limited MW Mega Watt
CIG Cairn India Group MWH Mega Watt per Hour
CIHL Cairn India Holdings Limited pigs pipeline inspection gauges
Company Cairn India Limited SEHMS Skin Effect Heat Management System
DGH Director General of Hydrocarbons STOIIP Stock Tank Oil Initially in Place
EGM Extraordinary General Meeting
FDP Field Development Plan ACCOUNTING
GoI Government of India $ US Dollar
IP Institutional Plan ADR American Depository Receipt
IPO Initial Public Offering AS Accounting Standard
ISIN International Securities Identifying Number AUS $ Australian Dollar
ITC Item code No. BDC Base Development Costs
KPI Key Performance Indicator CAGR Compounded Annual Growth Rate
LACP Land Acquisition and Compensation Plan CIESOP Cairn India Employee Stock Option Plan
LTIP Long Term Incentive Plans CIPOP Cairn India Performance Option Plan
MoPNG Ministry of Petroleum and Natural Gas CISMP Cairn India Senior Management Plan
MPT Mangala Processing Terminal EPS Earnings per share
NELP New Exploration Licensing Policy ESOP Employee Stock Option Plan
NRI Non Resident Indian EUR Euro - currency
NSE National Stock Exchange of India Limited FBT Fringe Benefit Tax
ONGC Oil and Natural Gas Corporation Limited GDR Global Depository Receipt
PRA Production Resources Agreement H1 First Half
PCDP Public Consultation and Disclosure Plan ICAI Institute of Chartered Accounts of India
PSC Production Sharing Contract IFC International Finance Corporation
RoU Right of Use IFRS International Financial Reporting Standards
SEBI Securities and Exchange Board of India INR Indian Rupees
SME Small & Medium Enterprise LIBOR London Inter Bank Offered Rate
MAT Minimum Alternate Tax
TECHNICAL NLG Dutch Guilder - currency
1P Proven NPV Net Present Value
2P Proven plus Probable PTRR Post Tax Rate of Return
3D 3 Dimensional
3P Proven plus Probable and Possible CORPORATE RESPONSIBILITY
AGI Above Ground Installation AIR All India Radio
API American Petroleum Institute CAB Corporate Advisory Board
ASP Alkali Surfactant Polymer CEDPA Centre for Development and Population Activities
boepd barrels of oil equivalent per day CSR Corporate Social Responsibility
bopd barrels of oil per day IAY Indira Awas Yojna
bscf billion standard cubic feet ISO International Organisation for Standardization
BTU British Thermal Unit ITI Industrial Training Institute
°C Celcius NGO Non Government Organisation
CO2 Carbon Dioxide NGRI National Geophysical Research Centre
DG Diesel Generator PCDP Public Consultation and Disclosure Plan
E&P Exploration and Production PWRI Produced Water Re Injection
EC Enterprise Centre RGT Reproductive and Child Health
EOR Enhanced Oil Recovery TERI The Energy Resources Institute
GHG Green House Gas
GJ Giga Joule
Kbopd Thousand barrels of oil per day
Km Kilo Meter
Km2 Square Kilo Meter
MARS Mangala, Aishwariya, Raageshwari and Saraswati

123
 Notes

124 CAIRN INDIA LIMITED ANNUAL REPORT 2008-2009

 Company
Contents Highlights Information

board of directors company secretary

Sir William B.B. Gammell (Chairman) Neerja Sharma
2 Board of Directors Malcolm Shaw Thoms (Deputy Chairman)
Jann Brown statutory auditors
Total acreage of the Total capacity of the
4 Letter from the CEO Naresh Chandra S.R. Batliboi & Associates
Rajasthan fields four trains of the MPT Dr Omkar Goswami Golf View Corporate Tower B
6 Management Discussion
and Analysis
3,111 km2 205,000 Aman Mehta
Edward T. Story
Sector 42, Sector Road
Gurgaon 122 002, India
Nearly the same as the
combined area of National
bopd Rahul Dhir (Managing Director & Chief Executive Officer)
32 Cairn Milestones Indrajit Banerjee (Executive Director & Chief Financial Officer) bankers
Capital Region of Delhi and Rick Bott (Executive Director & Chief Operating Officer) Citibank | State Bank of India | ABN AMRO
34 Corporate Social Responsibility Greater London The MPT will have four crude
oil processing trains, together board committees stock exchanges listed on
40 Report on Corporate Governance designed to handle a total Bombay Stock Exchange Limited
Area of the Mangala capacity of 205,000 bopd. Audit Committee National Stock Exchange of India Limited
58 Directors’ Report Processing Terminal Aman Mehta (Chairman)
(MPT) These are: Naresh Chandra registered office
TRAIN 1 Capacity of 30,000 Dr Omkar Goswami 101, West View
65 Auditors’ Report
1.6 km2 bopd from the Mangala Edward T. Story Veer Savarkar Marg
68 Balance Sheet or approximately field which is ready to start Jann Brown Prabhadevi
production. Initial evacuation Mumbai 400 025, India
69 Profit and Loss Account 400 acres by trucking Remuneration Committee
Equivalent to 200 football Naresh Chandra (Chairman) corporate office
grounds, or 27 times the size TRAIN 2 Capacity of 50,000 Sir William B.B. Gammell 3rd & 4th Floors, Vipul Plaza
70 Statement of Cash Flows
Malcolm Shaw Thoms Sun City, Sector 54
of the Eden Garden cricket bopd, also from the Mangala
Aman Mehta Gurgaon 122 002, India
71 Schedules to the ground at Kolkata, or three field is targeted for completion
Dr Omkar Goswami
Financial Statements times the area of the Red Fort by Q4 2009, along with the
registrar & share transfer agent
Complex in Delhi heated pipeline.
Nomination Committee Link Intime India Private Limited
92 Balance Sheet Abstract
Sir William B.B. Gammell (Chairman) (formerly Intime Spectrum Registry Limited)
and Company’s General TRAIN 3 Capacity of
Rahul Dhir C-13, Pannalal Silk Mills Compound
Business Profile 50,000 bopd — targeted for Jann Brown L.B.S.Marg , Bhandup (West)
Mangala, Bhagyam completion in H1 of 2010. Will Malcolm Shaw thoms Mumbai 400 078, India
93 Auditors’ Report on Consolidated and Aishwariya plan access the plateau production Edward T. Story
Financial Statements to produce of the Mangala field

94 Consolidated Balance Sheet 175,000 TRAIN 4 Capacity of

Shareholders’ / Investors’ Grievance Committee
Dr Omkar Goswami (Chairman)

95 Consolidated Profit
bopd 75,000 bopd, designed to
accommodate production from
Naresh Chandra
Rahul Dhir
and Loss Account (barrels of oil per day) Bhagyam and Aishwariya and
further expansion. Will be
96 Consolidated Statement At peak production which is commissioned by 2011
of Cash Flows estimated to account for more
than 20% of India’s crude oil
97 Schedules to Consolidated production
Financial Statements

123 Glossary
 Cairn India Limited Annual Report and Financial Statements 2008–09
Designed by www.icdindia.com & Printed at Thomson Press

Cairn India Limited

3rd & 4th Floors, Vipul Plaza, Sun City
Sector 54, Gurgaon 122 002, India

www.cairnindia.com