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Introduction
Board Of Directors
Board Procedure
Committees Of The Board
 
 Introduction
 
ONGC management continues to strive for excellence in good governance and responsible management practices, benchmarking with best of global companies.

ONGC has been practicing corporate governance principles much before it became mandatory. Your company believes that for a company to be successful it must maintain global standards of corporate conduct towards its stakeholders. The company believes that it is rewarding to be better managed and governed and to identify its activities with national interest. To that end, your company has always focused on good corporate governance which is the key driver of sustainable corporate growth and long term value creation.

Your company views corporate governance in its widest sense almost like a trusteeship, a philosophy to be progressed, a value to be imbibed and an ideology to be ingrained into the corporate culture.

It is not merely compliance and simply a matter of creating checks and balances; it is an ongoing measure of superior delivery of company’s objectives with a view to translate opportunities into reality. It involves leveraging its resources and aligning its activities to national need, shareholders benefit and employee growth, thereby delighting all its stakeholders, while minimizing the risks. The primary objective is to create and adhere to a corporate culture of conscience and consciousness, transparency and openness, fairness, accountability, propriety, equity, sustainable value creation, ethical practices and to develop capabilities and identify opportunities that best serve the goal of value creation, thereby creating an outperforming organization.

1.1 Corporate Governance Recognized

In recognition of excellence in Corporate Governance, the following awards have been conferred on ONGC:
  • 'Golden Peacock Award for Excellence in Corporate Governance - 2002' by the Institute of Directors;
  • 'ICSI National Award for Excellence in Corporate Governance' - 2003 by the Institute of Company Secretaries of India; and
  • 'Golden Peacock Global Award' for Corporate Governance in Emerging Economies -2005 by World Council for Corporate Governance, U.K.
  • 'Golden Peacock Award for Excellence in Corporate Governance - 2005' by the Institute of Directors;
  • ' Golden Peacock Award for Excellence in Corporate Social Responsibility in Emerging Economies' 2006 - by World Council for Corporate Governance, UK.
  • 'Golden Peacock Award for Excellence in Corporate Governance - 2006' by Institute of Directors.
 Board Of Directors
 
Composition, Meeting And Attendance

The Company is managed by the Board of Directors, which formulates strategies, policies and reviews its performance periodically. The Chairman & Managing Director (CMD) and six whole-time Directors manage the business of the Company under the overall supervision, control and guidance of the Board.

Composition

The Board of Directors has an adequate combination of Executive (Functional) and Non-executive Directors. The Board has 14 members, comprising of 7 Functional Directors including the Chairman & Managing Director. The CMD is holding additional charge of Director (Finance) w.e.f 4th July, 2007,on adhoc basis, pending appointment of regular incumbent for which Government of India has already initiated action. Besides, the Board comprises of 6 Non-executive Directors comprising of: 2 part-time official Directors and 4 part-time non-official Directors, all nominated by Government of India. IOC nominee Director ceases w.e.f 31st July, 2007. To share the experience and business strategies, C&MD, Oil India Limited and Managing Director, ONGC Videsh Ltd. are invitees to the meetings of the Board.

Shri R. S. Sharma, Director (Finance) has been elevated to the position of CMD w.e.f 4th July, 2007. Prior to that Shri Sharma was holding additional charge of the post of CMD with effect from 25th May, 2006, upon completion of the tenure of Shri Subir Raha.

Padma Bhushan, Dr. R.K. Pachauri, Director General, The Energy Research Institute (TERI), S/Shri V.P.Singh, former C&MD, IFCI, P.K.Choudhury, Vice Chairman and Group CEO, ICRA Ltd. and Padma Shree Dr. Bakul H. Dholakia, Director, IIM Ahmedabad were appointed as part-time independent Directors on the Board on 26th June, 2006.

Shri M.M.Chitale, Shri U. Sundararajan and Shri Rajesh V. Shah ceased to be members of the Board effective from 10th September,2006.

Upon elevation Shri Anil Razdan as Secretary, Power and Shri Ashok Chawla Secretary Civil Aviation, Govt. of India, respectively, ceased to be Directors w.e.f 08th March, 2007.

Shri A.K.Jain, Joint Secretary (E), MoP&NG was appointed as Govt. nominee Director, as an interim arrangement on 10.04.07 in place of Shri Anil Razdan, Special Secretary, MoP&NG. Shri S. Sundareshan, Addl. Secretary, MoP&NG and Smt Sindhushree Khullar, Addl Secretary, Department of Economic Affairs, MoF were appointed as Directors in place of Shri A.K.Jain and Shri Ashok Chawla, respectively w.e.f 10th Mat,2007.

Decisions and delibrations of the Board are supported by various committees of the Board as described at Para 7 hereof.
 Board Procedure
 
(A) Institutionalised decision making process:

With a view to institutionalize all corporate affairs and setting up systems and procedures for advance planning for matters requiring discussion/ decisions by the Board , the Company has defined guidelines for the meetings of the Board of Directors and Committees thereof. These Guidelines seek to systematize the decision making process at the meetings of Board/Committees, in an informed and efficient manner.

(B) Scheduling and selection of Agenda items for Board /Committee Meetings:

(i)The meetings are convened by giving appropriate advance notice after obtaining approval of the Chairman of the Board/ Committee. Detailed agenda, management reports and other explanatory statements are circulated in advance in the defined agenda format amongst the members for facilitating meaningful, informed and focused decisions at the meetings. To address specific urgent need, meetings are also being called at a shorter notice. In case of exigencies or urgency Resolutions are passed by circulation.

(ii)Where it is not practicable to attach any document or the agenda is of confidential nature, the same is tabled with the approval of CMD. In special and exceptional circumstances, additional or supplemental item(s) on the agenda are permitted. Sensitive subject matters are discussed at the meeting without written material being circulated.

(iii)The agenda papers are prepared by the concerned officials, sponsored by the concerned functional Directors and submitted for obtaining approval of the Chairman and Managing Director, well in advance. Duly approved agenda papers are circulated amongst the Board members by the Company Secretary and by the respective convener of the Committee.

(iv)The meetings of the Board/Committees are generally held at the Company’s Registered Office in New Delhi.

(v) The Board/Committee is given presentations covering Finance, Production, Operations, major Business Segments, Human Resources, Marketing, Joint Venture operations etc. of the Company and for taking on record quarterly / annual financial statements at the pre-scheduled Board/Committee meetings.

(vi) The members of the Board/Committee have complete access to all information of the Company. The Board is also free to recommend inclusion of any matter in agenda for discussion. Senior management officials are called to provide additional inputs to the items being discussed by the Board/Committee, as and when necessary.

(C) Recording minutes of proceedings at the Board Meeting:

Minutes of the proceedings of each Board/Committee meeting are recorded. Draft minutes are circulated amongst all members of the Board/ Committee for their critical appreciations and comments. The comments are incorporated in the minutes, which are finally approved by the Chairman of the Board/Committee. These minutes are confirmed in the next Board/Committee Meeting. The finalized minutes of the proceedings of the meetings are entered in the Minutes Book.

(D) Follow-up mechanism:

The guidelines for the Board/Committee Meetings facilitate an effective post meeting follow-up, review and reporting process for the action taken on decisions of the Board and Committee. Functional Directors submit follow-up Action Taken Report (ATR) on the areas of their responsibilities, at least once in a quarter, on the decisions/ instructions/directions of the Board.

(E) Compliance:  

Every functional Director while preparing the agenda notes is responsible for and is required to ensure adherence to all the applicable provisions of law, rules, guidelines etc. The Company Secretary has to ensure compliance to all the applicable provisions of the Companies Act, 1956, Secretarial Standards issued by ICSI, SEBI Guidelines, Listing Agreement, and other statutory requirements pertaining to capital market. A Quarterly Compliance Report (collected from all work centers) confirming adherence to all the applicable laws, rules, guidelines and internal instructions/manuals including on Corporate Governance is reviewed by the Audit & Ethics Committee and the Board.
 Board Meetings
 
During the year 2006-07, Twelve Board Meetings were held on: April 12, May 8, June 06 & 26, July 26, August 08, September 06,October 19, November 28, December 23, 2006 and January 30 and March 08, 2007.

The minimum and maximum interval between any two Board meetings was 13 days and 43 days, respectively.  

 Composition and Attendance:

a) Executive Directors


 
b) Non-Executive Directors
 

(i) Part- time official Directors – (ex – officio) Govt. nominees


* In accordance with Clause 49 of the Listing Agreement, Chairmanship/ Membership of only the Audit Committees and Shareholders’/ Investors’ Grievance Committees of all Public limited companies have been considered.

** The other Directorships held by Directors as mentioned above, do not include Directorships of Foreign Companies, Section 25 Companies and Private limited Companies.

Notes : (i) Being a PSU, all Directors are appointed/ nominated by the President of India;
(ii) Directors are not related to each other;
(iii) Directors do not have any pecuniary relationships or transactions with the Company;
(iv) The Directorships/Committee Memberships are based on the latest disclosure received from Directors;
(v) None of the Director is a Member of more than 10 Committees or Chairman of more than 5 Committees, across all the Companies in which he is a Director.

 Strategy Meets
 

The Company has a practice of periodic retreats where all members of the Board and high officials of the Ministry of Petroleum & Natural Gas discuss issues of Corporate Strategy and Policy. The 5 th Strategy Meet was held on 28 th – 30 th April, 2006 in Bangalore.

 Conclave
 

To have the benefit of cumulative knowledge and experience of the elders of the ONGC family, an assembly of the past and present members of Oil & Natural Gas Commission and Board is organized every year. The 6 th Conclave was held during 27 th - 29 th October,2006 at Agra.
 Vichar Vishleshan
 
The Key Executives in-charge of Assets, Basins, Services and Institutes meet periodically with the Executive Committee consisting of the C&MD and the functional Directors to review performance and to formulate future plans. During the year under review, 6 th ‘Key Executive Meet’ was held at the ONGC Academy, Dehradun from 9 th -10 th December, 2006.
 Resume of Directors Proposed to be re-appointed
 

The brief resume of Directors including nature of their experience in specific functional areas and names of companies in which they hold directorship and membership/chairmanship of Board/Committee, who are retiring by rotation and seeking reappointment is appended in the notice for calling Annual General Meeting.
 Board Committees
The Company has the following Committees of the Board:


Audit & ethics committee

The terms of reference of the Audit & Ethics Committee are in accordance with Section 292 of the Companies Act, 1956 and the guidelines set out in Clause 49 of the Listing Agreement.

The Committee is headed under the stewardship of Shri P.K.Choudhury, an Independent non-executive Director w.e.f. 11 th September, 2006. Shri P.K. Choudhury is a Chartered Accountant, Post graduate diploma in Advance Finance Management with distinction from Maastricht School of Management, Netherlands, CAIIB, CAIB( London) and Post graduate in Commerce from Calcutta University. Shri Choudhury has multifarious and enriched experience of more than 35 years in Finance and Banking. Prior to above, the Committee was headed by Shri M.M.Chitale, a Fellow Member and past president of the Institute of Chartered Accountants of India. All members of the Committee have requisite financial and management experience and have held or hold senior positions in other reputed organisations.

Director (Finance), ED-Chief-Corporate Finance and Head-Corporate Internal Audit are the permanent invitees. Representatives of Statutory Auditors were invited to attend and participate in the meetings. Functional Directors, Executives of Finance and other departments are invited on need basis.

The Chairman of the Audit & Ethics Committee was present at the last AGM of the Company.

Company Secretary acts as the Secretary to the Committee.

The role of the Audit & Ethics Committee includes the following:

a) Overseeing financial reporting processes and the disclosure of financial information, to ensure that the financial statements are correct, sufficient and credible;

b) Recommending to the Board, audit fees payable to Statutory Auditors appointed by C&AG and approving payments for any other services;

c) Reviewing with management the periodic financial statements/results before submission to the Board, focusing primarily on:
    • matters required to be included in the Directors’ Responsibility Statement ;
    • any changes in accounting policies and practices;
    • major accounting entries based on exercise of judgement by the management;
    • qualifications in draft audit report;
    • significant adjustments arising out of the audit;
    • the going concern assumption;
    • compliance with accounting standards;
    • compliance with listing agreement and legal requirements concerning financial statements;
    • any related party transactions i.e. transactions of the company of material nature, with promoters or the management, their subsidiaries or relatives etc. that may have potential conflict with the interest of the company at large;

d) Reviewing with the management, Statutory Auditors, Govt. Audit and Internal audit reports, adequacy of internal control systems and recommending improvements to the management;

e) Reviewing the adequacy of internal audit function, approving internal audit plans and efficacy of the functions including the structure of the internal audit department, staffing, reporting structure, coverage and frequency of internal audits;

f) Discussion with internal auditors any significant findings and follow-up thereon;

g) Reviewing the findings of any internal investigations by the internal auditors into the matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;

h) Discussion with the Statutory Auditors before the audit commences, the nature and scope of audit, as well as post-audit discussion including their observations to ascertain any area of concern;

i) Reviewing the Company’s financial and risk management policies;

j) Reviewing Quarterly Compliance Report confirming adherence to all the applicable laws, rules, guidelines, instructions and internal instructions/manuals including on Corporate Governance principles;

k) Reviewing the management discussion and analysis of financial condition and results of operations, statement of significant related party transactions, management letters/letter of internal control weaknesses issued by the statutory auditors, internal audit reports; and

l) Reviewing the financial statements and in particular the investments made by the unlisted subsidiaries of the Company.

m) Matters relating to Corporate Governance including Ethics in business.

Minutes of the meetings of the Audit & Ethics Committee are approved by the Chairman of the Committee and are noted and confirmed by the Board in its next meeting.

Composition, Meetings and Attendance

During the year 2006-07, seven meetings of Audit & Ethics Committee were held on: April 12 th , June 6 th & 26 th , July 26 th , September 6 th , October 19 th , 2006 and January 30 th , 2007.

Attendance:



* Attended 3 meetings as Dy.General Manager -IA
Remuneration committee

ONGC being a Government Company, appointment and terms and conditions of remuneration of Executive (whole-time functional) Directors are determined by the Government through administrative ministry, the Ministry of Petroleum & Natural Gas. Non-executive part-time official Directors (ex-officio) do not draw any remuneration. The Part-time non-official Directors receive sitting fees of Rs. 10,000/- for each Board/Committee meeting attended by them.

The Committee is headed by Shri S. Sundareshan, Addl. Secretary; MoP&NG (from 10.05.07), prior to that Shri Anil Razdan, Special Secretary, MoP&NG was heading the Committee (upto 08.03.07).Dr. Bakul H. Dholakia (from 26.06.06) and Shri U. Sundararajan (upto10.09.06), are/were part-time independent Directors, Shri R.S. Sharma, Director (Finance) and Dr. A.K. Balyan, Director (Human Resource) are the members of the Committee.

DIRECTORS’ REMUNERATION :

Remuneration of Directors for the year ended 31 st March, 2007 was as follows:

(a) Executive Directors

Notes:

1. The remuneration does not include cost of medical treatment availed from the Company’s owned medical facilities, provision/ payment for gratuity and leave encashment.

2. Notice period of 3 months or salary in lieu thereof is required for severance of service.

3. Pursuant to ONGC incentive scheme, annual incentive @ 4.5% for 2004-05 and additional Annual Incentive @ 5% for 1998-99, 10% for 1999-00, 18% for 2004-05 and 15% for 2005-06 on basic pay paid during the year are included in above remuneration. In addition Rs.50,000/- as Golden Jubilee Incentive, paid during the year is also included.

(b) Non-Executive Directors (Part-time non-official)  

Non-Executive non-official Directors are paid sitting fee at the rate of Rs.10000/- for attending each meeting of the Board /Committees thereof. Details of sitting fees paid during the year under review are as follows:


Note: *inclusive of sitting fee paid for attending Board and sub-committee meetings.

There were no other pecuniary relationships or transactions of the Non-executive Directors vis-à-vis the Company.

Stock Options

The Company has not issued any Stock Options to its Directors/Employees.

Equity Shares Held By Directors ( As on 31 st March, 2007 )

Except as stated hereunder, none of the Directors, hold any Equity Shares in the Company:


*Source: Declarations made to the Company.

Shareholdiner`s/Investors`grievance committee

The Shareholders’/Investors’ Grievances Committee specifically looks into redressing of shareholders’ and investors’ complaints/grievances pertaining to share transfers, non receipt of annual reports, dividend payments, issue of duplicate certificates, transmission(with or without legal representation) of shares and other miscellaneous complaints. The Committee oversees and review performance of the Registrar and Transfer Agent and recommends measures for overall improvement in the quality of investor services. The Committee also monitors implementation and compliance of Company’s Code of Conduct for Prevention of Insider Trading in ONGC securities.

From11.09.2006, the Committee is headed by Shri P.K.Choudhury, an independent non-official Director. Prior to above the Committee was headed by Shri Rajesh V. Shah, an independent Director upto 10.09.06.

The Company Secretary acts as Secretary to the Committee.

Minutes of the meetings of the Shareholders’/Investors’ Grievance Committee are approved by the Chairman of the Committee and are noted and confirmed by the Board in its next meeting.

Composition, Meetings and Attendance

During the year 2006-07, four meetings were held on: June 26 th , September 6 th , December 23 rd , 2006 and March 30 th , 2007. The attendance particulars are as under:


Redressal Of Investors' Grievance

The Company addresses all complaints, suggestions and grievances expeditiously and replies have been sent/issues resolved usually within 7 days except in case of dispute over facts or other legal constraints.

Except for Investor Grievances relating to ‘Offer for Sale’ of upto 10% equity shares by Govt. of India made in 2004 and a few other investor grievances constrained by incomplete documentation and/or legal impediments were settled within period of one month.

Except for the complaints pertaining to ‘Offer for Sale’, the Company received 78 shareholders’ complaints from Stock Exchanges/SEBI which inter-alia includes non receipt of dividend, annual report issue of Bonus Shares, payment for fraction Bonus Shares etc.

The complaints were duly attended to and the Company /RTA have furnished necessary documents/information to the shareholders.

The Shareholders’/Investors’ Grievance Committee reviews the complaints received and appropriate action is taken promptly.

No request for share transfer is pending beyond 30 days except those that are disputed or sub-judice. All requests for de-materialization of shares are likewise processed and confirmation communicated to investors and Depository Participants within 10 working days.

The total number of complaints/queries/correspondence received and replied/attended to the satisfaction of the shareholders was 4212. There were 4 outstanding complaints as on 31 st March,2007, since settled.

Barring complaints relating allocation of shares in the Offer for Sale 2004, 1388 complaints/ queries / correspondence was received from 1 st April to 15 th July, 2007, which have been resolved.

Company Secretary is the Compliance Officer.

Investor Relations Cell

In line with global practices, the Company is committed to maintain, the highest standards of Corporate Governance, reinforcing the relationship between the Company and its Shareholders. ‘Investor Service Center’ with information frequently required by investors and analysis, launched from 9th May, 2005 on the Company’s corporate website ongcindia.com. This website provides updates on financial statements, investor-related events and presentations, annual reports, dividend information and shareholding pattern along with media releases, company overview and report on Corporate Governance etc.

The inplace reserve information will help tremendously in arriving at investment decision by by FIIs, OCBs,NRIs, Institutional Investors and the small shareholders. Also existing and potential investors will be able to interact with the company through this link for their queries and seeking information.

A Core Team comprising of senior, seasoned and experienced officials, headed by Director (Finance) had been assigned the responsibilities for up-keeping the said link and also to serve as a platform for the shareholders to express their opinions, views, suggestions, etc. to understand the influencing factors in their investment decision-making process. Besides, the said team is also instrumental to maintain close liaison and to share information through periodic meets including tele-conferencing in India and abroad, regular press meets with investment bankers, research analysts, the media, institutional investors etc. The Company is committed to take such other steps as may be necessary to fulfill the expectations of the stakeholders.

Human Resource Management committee

 Composition, Meetings and Attendance

The terms of reference include consideration of all issues / areas concerning Human Resource Planning & Management, HR policies & Initiatives and Promotions from E6 to E7 and above level.

Minutes of the meetings of the Human Resource Management Committee are approved by the Chairman of the Committee and are noted and confirmed by the Board in the ensuing Board Meeting.

During the year 2006-07 seven meetings were held on April 12th , June 06th , July 25th , September 06th and December 23rd , 2006 , January 29th /30th , and March 8th , 2007. These meetings were attended by the members of the Committee, as under:

Project Appraisal committee

The Project Appraisal Committee examines and makes recommendations to the Board on projects/capital investment exceeding Rs.150 Crore. Proposals exceeding Rs.150 Crore are appraised in-house, while the proposals exceeding Rs.250 Crore are first appraised by outside technical and financial consultants. It monitors IOR / EOR Schemes. Shri V.P. Singh, an independent Director is the Chairman (from 08.08.06) and Shri U. Sundararajan, an independent Director was the Chairman.(upto 10.09.06). Director (T&FS) acts as a Member-Convener of the Committee.

Minutes of the meetings of the Project Appraisal Committee are approved by the Chairman of the Committee and are noted and confirmed by the Board in the ensuing Board Meeting.

Composition, Meetings and Attendance

During the year 2006-07, six meetings were held on: April 11th , July 25th , August 8th , October 19th , November 7th , 2006 and January 29th , 2007. These meetings were attended by the members of the Committee, as under:
*Note: The functional Directors attended only those meetings concerning the Projects of their responsibilities.

Share Transfer committee

In order to expedite the process of share transfers and other related activities, the Share Transfer Committee has been empowered to approve the requests received for share transfer/ transmission/ transposition, issue of duplicate share certificates, sub-division, consolidation, re-materialization, change of status etc. These requests are processed through the Registrar & Share Transfer Agent, M/s Karvy Computershare Private Ltd. generally once in a fortnight. The details of transfers are reported to the Board of Directors at the ensuing meeting. The Committee is headed by Shri P.K. Choudhury, an independent Director from 08th August, 06. Prior to that the Committee was headed by Director (Finance).The Company Secretary acts as a Convener to the Committee. Effective from 10th April,07 the Committee has delegated the power of approving transfer of securities etc. to an Officers Committee.

Minutes of the meetings of the Share Transfer Committee are circulated to the members of the Committee and the Board is kept apprised.

Composition, Meetings and Attendance

During the year 2006-07, nineteen meetings were held on: April 10 &25, May 15 & 30, June 16 & 29, July 12 & 29, August 17, September 6&19, October 19 , November 01 & 30 and December 15, 2006, January 02 & 30, February 23 and March 30, 2007. These meetings were attended by the members of the Committee, as under:

Health, Safety & Environment committee

The terms of reference includes review of policy, processes and systems on Safety, Health, Environment and Ecology aspects. Dr R.K.Pachauri, an independent Director is heading the Committee w.e.f. 11.09.06. Prior to that Shri U. Sundararajan, an independent Director was the Chairman of the Committee. Director (Onshore) acts as a Member-Convener.

The other members of the Committee are / were Shri S. Sundareshan (from 10.05.07), Shri V.P.Singh (from 08.08.06), Dr Bakul H.Dholakia (from.08.08.06) Shri Anil Razdan (upto 08.03.07), Shri R.S. Sharma, Shri Subir Raha (up to 24.05.06) Dr. .A.K. Balyan, A.K.Hazarika, N.K.Mitra Shri D.K.Pande, Shri U. N. Bose, Rajesh V Shah and M.M. Chitale (upto 10.09.06) .

Finanacial Management Committee

The Committee was constituted on 08.08.06. The mandate includes to look into the matters pertaining to Budget , Delegation of powers (Empowerment) Commercial Issues, Forex and Treasury Management, Investments, Risk Management, Capital Structure, Issue of Securities, Short & Long Term Loans, periodical Performance Review of subsidiaries.

The Committee is headed by Dr. Bakul H. Dholakia, an independent Director. Director (Finance) is the Member - Convener.

Minutes of the meetings of the Financial Management Committee are circulated to the members of the Committee and the Board is kept apprised.

S/Shri V.P.Singh, P.K.Choudhury, Shri Ashok Chawla ( upto 08.03.07), Smt Sindhushree Khullar ( from 10.05.07) and concerned functional Directors are/were the members.

During the year 2006-07, two meetings of the Committee were held on October 18, 2006 and March 8,2007. These meetings were attended by the members of the Committee, as under:



Business Development Committee

In order to oversee new areas of business, proposals for collaborations, Joint Ventures, amalgamation, mergers and acquisitions; commercial matters including marketing etc. a Committee under the Stewardship of Dr. R.K. Pachauri, an Independent Director has been constituted on 8th August, 2006. Other members include Shri Anil Razdan and Ashok Chawla (upto 08.03.07) Shri V.P.Singh and all functional Directors. The Managing Directors of OVL & MRPL are the invitees. Director (Human Resource) is the Convener-Member of the Committee.

Other Functional committee

Apart from the above, the Board also from time to time, constitute Functional Committees with specific terms of reference as it may deem fit. Meetings of such Committees are held as and when need for discussing the matter concerning the purpose arises.

Time schedule for holding the meetings of such functional committee(s) are finalized in consultation with the Committee Members. Minutes of the meetings of all such functional Committees are circulated to the members of the Committee and the Board is kept apprised.

Procedures At Committee Meetings

Company’s guidelines relating to Board Meetings are applicable to Committee Meetings as far as may be practicable. Each Committee has the authority to engage outside experts, advisers and counsels to the extent it considers appropriate to assist the Committee in its work. Minutes of the Committee meetings are circulated to the members of the Committee and the same are noted, ratified and approved by the Board of Directors.

Code of conduct for members of the baord and senior management

The Company is committed to conducting business in accordance with the highest standards of business ethics and complying with applicable laws, rules and regulations. A code of conduct, evolved in line with the industry practices was adopted by the Board on the recommendations of Audit and Ethics Committee and all Members of the Board and Senior Management i.e. ‘Key Executives’ have confirmed compliance with the Code of Conduct for the year under review. A copy of the Code has been placed on the Company’s website www.ongcindia.com.

A declaration signed by Chairman & Managing Director is given below:

“I hereby confirm that:

The Company has obtained from the Members of the Board and Key Executives, (Senior Management Personnel) affirmation that they have complied with the Code of Conduct for Directors and Senior Management in respect of the financial year 2006-07.”

R.S. Sharma
Chairman & Managing Director

 ONGC Code On Insider Trading
 

In pursuance of the Securities and Exchange Board of India ((Prohibition of Insider Trading) Regulations, 1992 (duly amended), the Board has approved the “Code of Conduct for Prevention of Insider Trading”. The objective of the Code is to prevent purchase and/or sale of shares of the Company by an Insider on the basis of unpublished price sensitive information. Under this Code, insiders (Directors, Advisors, Key Executives, Designated Employees and other concerned persons) are prohibited to deal in the Company’s shares during the closure of Trading Window. To deal securities, beyond specified limit permission of Compliance Officer is also required. All Directors/Advisors/Officers/designated employees are also required to disclose related information periodically as defined in the code, which in turn is being forwarded to the stock exchanges. Company Secretary has been designated as the Compliance Officer.

CEO/CFO Certification

In terms of revised Clause 49 of the Listing Agreement, the certification by the CEO/CFO on the financial statements and internal controls relating to financial reporting has been obtained.

Subsidiary Monitoring Framework

All subsidiaries of the Company are Board managed with their Boards having the rights and obligations to manage such companies in the best interest of their stakeholders. As a majority shareholder, the Company nominates its representatives on the Boards of subsidiary companies and monitors the performance of such companies periodically.

The Company has wholly-owned unlisted non-material subsidiary companies. In terms of Clause 49.III (ii) and (iii) of the Listing Agreement, their performance has been reviewed by the Audit and Ethics Committee and the Board by the following means:

a) Financial Statements for the year/period ended 31st March, 2007, in particular the investments made by the unlisted subsidiary companies, are reviewed by the Audit and Ethics Committee;

b) Minutes of the meetings of the Board of Directors are placed before the Company’s Board, periodically.

c) The Company does not have any Material unlisted Subsidiary in terms of Clause 49 of the Listing Agreement.

d) M/s. ONGC Do Brasil Exploracao Petrolifera Ltda., ONGC Amazon Alaknanda Ltd., and BC-10 Compos Holding Ltda. and became subsidiary on 7th July, 2006, 8th August, 2006 and16th March, 07 and there being no transaction, their performance was not reviewed.

e) Brief of the Company’s subsidiary companies as on March 31, 2007:



Compliance Officer

The Company Secretary has been nominated as the Compliance Officer.

Annual General Meetings

Location, date and time, where the AGMs were held during the preceding 3 years:



There was no special Resolution passed by the Company at the last AGM, nor any Resolution was passed by the Company’s members through postal ballot. At the ensuing AGM also, there is no Resolution proposed to be passed through postal ballot.
 Disclosures
 

Material Contracts/Related Party Transactions

 The Company has not entered into any material financial or commercial transactions with the Directors or the Management or their relatives or the companies and firms, etc., in which they are either directly or through their relatives interested as Directors and/or Partners except with certain PSUs, where the Directors are Directors without the required shareholdings. The Company has obtained declarations from all concerned in this regard, which were noted by the Board.

Transactions with related parties are disclosed in Note No. 31 of Schedule 28 to the Accounts in the Annual Report. Being a State enterprise, no disclosure has been made in respect of the transactions with subsidiary companies in line with Accounting Standard-18 on Related Party Transactions.

Compliances

 The Company has complied with applicable rules and the requirement of regulatory authorities on capital market and no penalties or strictures were imposed on the Company during last three years.

All Returns/Reports were filed with in stipulated time with stock exchanges/other authorities.

 Means of Communication
 
  • Quarterly/Annual Results: The Company regularly intimates un-audited as well as audited financial results to the Stock Exchanges, immediately these are taken on record/ approved. These financial results are normally published in Times of India, Business Standard, Economic Times (English) Navbharat Times and Jansatta (Hindi), other dailies having wide circulation across the country. The results are not sent individually to the shareholders. The Results are also displayed on the web site of the Company www.ongcindia.com and simultaneously posted on the Electronic Data Information Filing and Retrieval website namely www.sebiedifar.nic.in. The website is also accessible through a hyperlink ‘EDIFAR’ from SEBI’s official website, www.sebi.gov.in . The results are posted on NSE Electronic Issuer Interface (NSEEII) www.nseeii.com.
  • News Release, Presentation etc.: The official news releases, detailed presentations made to media, institutional investors, financial analysis etc. are displayed on the Company’s website www.ongcindia.com.
  • Website: The Company’s website www.ongcindia.com. Contains separate dedicated section ‘Investor Relations’ where the shareholders information is available. Full Annual Report, Shareholding Pattern and Corporate Governance Report etc. is also available on the web-site in a user-friendly manner.
 
  • Annual Report: Annual Report containing inter-alia, Audited Accounts, Consolidated Financial Statements, Directors’ Report, Auditors’ Report, Corporate Governance Report including Information for the Shareholders and other important information is circulated to the members and others entitled thereto. The Management Discussion and Analysis (MD&A) Report duly reviewed and approved by the Board forms part of the Directors’ Report in Annual Report.
Shareholders’ Information:

Annual General Meeting:

- Date : 19 th September, 2007.
- Time : 10.00 A.M.
- Venue : Siri Fort Auditorium, Khel Gaon,
August Kranti Marg,
New Delhi-110049.

Financial Calendar (Tentative):
Adoption of Quarterly Results for the
Quarter ending                                                  3 rd/4 th Week of:
  • June 30, 2007                                     25 th July, 2007
  • September 30, 2007                            October, 2007
  • December 31, 2007                             January, 2008
  • March 31, 2008 (audited)                    June, 2008
3 Book Closure Period:

Wednesday, the 5th September to Wednesday, 19th September, 2007 (both days inclusive) for payment of final Dividend.

Dividend Payment Date: On or after 20 th September, 2007.

Liquidity Of Shares:

The equity shares of the Company are part of the S&P CNX Nifty Index and are listed on the following Stock Exchanges:

Listing Fees

Annual listing fees for the year 2006-07, as applicable have been paid to the above Stock Exchanges.

DEMAT ISIN NUMBERS IN NSDL & CDSL: INE213A01011

 Stock Market Information
 



Stock Market Data



Registrar and Transfer Agents (RTA)

M/s Karvy Computershare Private Limited (Karvy) Plot No.17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500081. Phone Nos. 040- 23420815-819. Fax No: 040- 23420814 e-mail: mailmanager@karvy.com are the Registrar and Share Transfer Agent for Physical Shares. Karvy is also the depository interface of the Company with both National Securities Depository Ltd.(NSDL) and Central Depository Services ( India) Ltd. (CDSL).

Keeping in view the convenience of the shareholders, documents relating to sharesand any other documents are accepted at Karvy Computershare Private Ltd.,105-108 Arunachal Building, 1st floor, 19, Barakhambha Road, New Delhi-110001, Phone Nos. 011-41036370 and ( tele-fax) 011-43528522 email delhi@karvy.com and at the Company at 8 th floor, Jeevan Bharati Tower-II, 124 Indira Chowk, New Delhi-110-001, Phone Nos, 011-23301277 & 23301299, e-mail: secretariat@ ongc. co.in.
 

Share Transfer System

With a view to expedite the process of share transfer which are received in physical form, the Board of Directors of the Company had constituted a Committee‘ Share Transfer Committee’ which usually meets in a fortnight to consider and approve the shares received for transfer, transmission, re-materialization and dematerialization etc. The shares for transfers received in physical form are transferred expeditiously, provided the documents are complete and the share transfer is not under any dispute. Effective from 10 th April, 2007, the authority for approving transfer, transmission etc. have been delegated to an Officers Committee. A summary of transfer/ transmission of securities so approved by the Committee / Officers are placed periodically at Share Transfer Committee/ Board Meetings. The share certificates duly endorsed are returned immediately to the shareholders by RTA. Confirmation in respect to the requests for dematerialization of shares is sent to the respective depositories i.e. NSDL and CDSL, expeditiously.

Pursuant to the Clause 47-C of the Listing Agreement with the Stock Exchanges, Certificates on quarterly basis confirming due compliance of share transfer formalities by the Company, Certificate for timely dematerialization of the shares as per SEBI (Depositories and Participants) Regulations, 1996 and a Secretarial Audit Report for re-conciliation of the share capital of the Company obtained from practicing Company Secretary were submitted to Stock Exchanges with in stipulated time.

The total number of transfer deeds processed and shares transferred during the last three years are as under:


As on 31 st March, 2007, 10 requests involving transfer of 2131 shares were under process. The requests were less than 15 days old and have since been processed.

Shareholding Pattern as on 31st March, 2007

Top 10 Shareholders As On 30 th June, 07


Distribution Of Shareholding By Size As On 31 st March, 2007



Geographical Distribution Of Shareholders As On 30 th March, 2007



Corporate Benefits:

Transfer of unpaid/unclaimed dividend amount to investor education and protection fund

During the year under report, an amount of Rs.20,89,067/-(Rupees twenty lac eighty nine thousand and sixty seven only)- pertaining to unpaid dividend for the financial year 1998-99 were transferred to Investor Education And Protection Fund (IEPF) of the Central Government.

An amount of Rs.12,76,833/- (Rupees twelve lakhs seventy six thousand eight hundred thirty three only) pertaining to unpaid interim dividend for the financial year 1999-2000 has been transferred to IEPF on 08.06.2007.

As per provision of the Section 205A read with Section 205C of the Companies Act, 1956 the Company is required to transfer unpaid dividends remaining unclaimed and unpaid for a period of 7 years from the due date(s) to the Investor Education and Protection Fund (IEPF) set up by the Central Government.

Unclaimed final dividend for the year 1999-00 is due for transfer to Investors’ Education and Protection Fund (IEPF) established by Govt. of India on or before 26 th October, 2007. All Shareholders, whose dividend is unpaid, are requested to lodge their claim with M/s Karvy, the RTA by submitting an application before 30 th September, 2007. Kindly note that no claims will lie against the Company or the IEPF once the dividend amount is deposited in IEPF.

Members who have not encashed their dividend warrants within their validity period may write to the Company at its Registered Office or M/s Karvy Computershare Private Limited, Registrar & Transfer Agents of the Company, for revalidating the warrants or for obtaining duplicate warrants/or payments in lieu of such warrants in the form the demand draft.

Shareholders who have not encashed their warrants pertaining to payment on account of fraction bonus shares, within the validity period, are requested to submit the payment warrants for revalidation to M/s. M.M. Chitale & Co., Chartered Accountant, 204/205 Agarwal Shyamkamal-A, Vile Parle (E), Mumbai - 400 057, the trustee.

Given below are the proposed dates for transfer of the unclaimed dividend to IEPF by the Company:



Dematerialisation Of Shares

 The shares of the Company are in compulsory dematerialized segment and are available for trading in depository system of both National Securities Depository Limited and Central Depository Services (India) Limited. As on 31 st March, 2007, 55,00,76,764 Equity shares, forming 99.44% of divested shareholding in the hands of the public, stood de-materialized. Small shareholders can approach separate window at stock exchanges to sell up to 500 shares in physical form.

OUTSTANDING GDRs /ADRs/ WARRANTS OR CONVERTIBLE BONDS

No GDR/ADR/ Warrant or Convertible Bond has been issued by the Company.

Legal Proceedings

No case and/or suit of any material or substantial nature has been pending against the Company.

ASSETS /BASINS/ PLANTS/REGIONS/INSTITUTES/ MAJOR PROJECTS:

  • ASSETS:
 
  • Mumbai High Asset, Mumbai
  • Neelam & Heera Asset, Mumbai
  • Bassein & Satellite Asset, Mumbai
  • Ahmedabad Asset, Ahmedabad
  • Ankleshwar Asset, Mehsana
  • Mehsana Asset, Mehsana
  • Rajamundry Asset, Rajamundry
10 Karaikal Asset, Karaikal
11. Assam Asset, Nazira
  • Tripura Asset, Agartala
  • BASINS:
 
  • Western Offshore Basin, Mumbai
  • Western Onshore Basin, Baroda
  • KG Basin, Rajamundry
  • Cauvery Basin , Chennai
  • Assam & Assam-Arakan Basin , Jorhat
  • CBM- BPM Basin , Kolkata
  • Frontier Basin , Dehradun
C. PLANTS:  

1. Uran Plant, Uran
2. Hazira Plant, Hazira  

D. REGIONS:  
  • Mumbai Region, Mumbai
  • Western Region, Baroda
3. Eastern Region, Nazira
4. Southern Region, Chennai
5. Central Region, Kolkata

E. INSTITUTES:  

1. Keshava Deva Malaviya Institute of Petroleum Exploration (KDMIPE), Dehradun
2. Institute of Drilling Technology(IDT), Dehradun
3. Institute of Reservoir Studies, Ahmedabad
4. Institute of Oil & Gas Production Technology, Navi Mumbai
5. Institute of Engineering & Ocean Technology, Navi Mumbai
6. Geo- data Processing & Interpretation Center(GEOPIC), Dehradun
7. ONGC Academy, Dehradun
8. Institute of Petroleum Safety, Health & Environment Management, Goa.
9. Institute of Biotechnology & Geotectonics Studies, Jorhat
10. School of Maintenance Practices, Vadodara
11. Regional Training Institutes, Navi Mumbai, Chennai, Sivasagar & Vadodara.

F . SERVICES:

1. Drilling Services, Mumbai
2. Well Services, Mumbai
3. Geo- Physical Services, Dehradun
4. Logging Services, Baroda
5. Engineering Services, Mumbai
6. Offshore Logistics, Mumbai
7. Technical Services, Dehradun
8. Info-com Services, New Delhi
9. Corporate Planning, New Delhi
10. Human Resource Development, Dehradun
11. Employee Relations, Dehradun
12. Security, Dehradun
13. Company Secretary, New Delhi
14. Marketing, New Delhi
15. Corporate Affairs &Co-ordination, New Delhi
16. Corporate Communication, New Delhi
17. Health, Safety & Environment, Mumbai
18. Material Management, Dehradun
19. Legal, New Delhi
20. Medical, Dehradun
21. Internal Audit, New Delhi
22. Commercial, New Delhi
23. Exploration & Development, Dehradun.

Investor Services:

The Company serves its investors through its own Investors’ Service Cell and Registrar & Transfer Agent, M/s. Karvy Computershare Pvt. Ltd. who have adequate computer hardware & software and VSAT connectivity with both the depositories, which facilitate better and faster service to the investors.

Other facilities, such as remittance of dividend through Electronic Clearing Services (ECS), Bank mandate, incorporation of Bank details on dividend warrants, direct deposit of dividends, reminders for unclaimed dividends, nomination facility, issue of Public Notice for lost share certificate, issue of duplicate share certificate, etc. are also extended.

Addresses For Shareholders’ Correspondence:
  • Investor Correspondence: For transfer/transmission/ dematerilisation of shares, payments of dividend, bonus shares and other query relating to shares of the Company:
-For Shares held in Physical Form

M/s Karvy Computer share Private Ltd.

Plot No.17-24, Vittal Rao Nagar,
Madhapur, Hyderabad - 500081.
Telephone: 040- 23420815-819; Fax: 040-23420814.
e mail:mailmanager@karvy.com

-For Shares held in Demat Form

To the Investors’ Depository Participant(s) and/or Karvy Computershare Private Limited.

-For Offer for Sale made by Govt. In 2004
M/s MCS Limited
77/2-A, Hazra Raod, Kolkata -700029.
Phone No. 033-24541892 – 93 Fax No. 033-24541961
e-mail: mcskol@rediffmail.com.

RISK MANAGEMENT

The framework for risk assessment and minimization thereto has been evaluated and further improvements, if any, suggested by experts shall be launched.

COMPLIANCE CERTIFICATE OF THE AUDITORS

Certificate from the Auditors of the Company, M/s. K.K. Soni & Co., S.C.Ajmera & Co., P.S.D & Associates, Singhi & Co. and Padmanabhan Ramani & Ramanujam, Chartered Accountants, confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is annexed to the Directors’ Report forming part of the Annual Report.

The Certificate has also been forwarded to the Stock Exchanges where the securities of the Company are listed.  

 ADOPTION OF NON-MANDATORY REQUIREMENTS OF CLAUSE-49

Besides the mandatory requirements, the Company has complied with the following Non-mandatory requirements stipulated under Clause- 49

Remuneration Committee:  

The Company has constituted Remuneration Committee to recommend/renew payment of sitting fees to part-time non-official Directors. Being a PSU, appointment and terms and conditions of remuneration of Executive (whole-time functional) Directors are determined by the Government through the administrative ministry, the Ministry of Petroleum & Natural Gas.
    • Shareholders’ Rights :
 
The quarterly financial results are published in leading newspapers as mentioned under the heading ‘Means of Communications’ and also displayed on the website of the Company. The results are not separately circulated.
    • Audit qualification:

The Company is in the regime of unqualified financial statements.

Secretarial Compliance Report

Secretarial Compliance Report confirming Compliance to the applicable provisions of Companies Act, 1956, Listing Agreement, SEBI guidelines and all other related rules and regulations relating to capital market, though not mandatory, obtained from a practicing Company Secretary, were noted by the Board and forms part of the Directors’ Report.

 Capital Integrity Audit

 The Audit Report, confirming that the total issued capital of the Company is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL, is placed before the Board on a quarterly basis. A copy of the Audit Report is submitted to the Stock Exchanges where the securities of the Company are listed.

Training of Board Members :

No specific training programmes were arranged for Board members. However, at the Board / Committee / other meetings, detailed presentations are made by senior executives / professionals/ consultants on business related issues, risk assessment, strategy effect of regulatory changes etc.
    • Mechanism for evaluating Non-executive Board Members :

The Company has not adopted any mechanism for evaluating individual performance of non-executive Board members.

Whistle Blower Policy

 Being a PSU, the guidelines of CVC are applicable; therefore no separate mechanism has been formulated.

FEE TO STATUTORY AUDITORS  

The fee paid / payable to the Statutory Auditors for the year was Rs. 67.50 lac (previous year Rs. 54.40 lac) including Rs. 5.00 lac (previous year Rs. 3.75 lac) as fee for certification of Corporate Governance Report, and Rs. 18.75 lacs for limited review report.

AUDITORS’ CERTIFICATE ON COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE

To
The Members
Oil And Natural Gas Corporation Ltd.

We have examined the Compliance of conditions of Corporate Governance by Oil And Natural Gas Corporation Limited for the year ended 31st March, 2007, as stipulated in Clause 49 of the Listing Agreement entered into by the Company with the Stock Exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the management. Our examination as carried out in accordance with the Guidance Note on Certification of Corporate Governance (as stipulated in Clause 49 of the Listing agreement) issued by the Institute of Chartered Accountants of India and was limited to review the procedures and implementation thereof, adopted by the Company, for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of an opinion on financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company, except that the Board of Directors does not comprise of the required number of independent directors as per the terms of provisions of Clause 49 of the Listing Agreement, has complied with the conditions of Corporate Governance as stipulated in Clause49 of the above mentioned Listing Agreement.

As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we state that except for grievances relating to offer for sale of up to 10% equity shares by Government of India and few other investor grievances constrained by incomplete documentation and/or legal impediments, all complaints were settled within a period of one month as per the records maintained by the Shareholders’/Investors’ Grievance Committee.

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 K.K. Soni & Co.                             For Singhi & Co.
Chartered Accountants                           Chartered Accountants

(S.S.Soni)                                               (Pradeep Kr. Singhi )
Partner (Mem. No. 07737)                     Partner (Mem. No.50773)

For S.C. Ajmera & Co.                     For Padmanabhan Ramani & Ramanujam,
Chartered Accountants                       Chartered Accountants

(S.C.Ajmera)                                         (P.Ranga Ramanujam)
Partner (Mem. No. 81398)                    Partner (Mem.No. 22201)

For P.S.D. Associates
Chartered Accountants

(Prakash Sharma)
Partner (Mem. No. 72332)

New Delhi
14th August, 2007.


SECRETARIAL COMPLIANCE REPORT

The Board of Directors,
Oil and Natural Gas Corporation Ltd.

We have examined the registers, records and documents of Oil And Natural Gas Corporation Ltd. (the Company), for the financial year ended on 31st March, 2007 according to the provisions of:

- The Companies Act,1956 and the Rules framed thereunder that Act;
- The Depositories Act,1996 and the Bye-laws framed thereunder;
- The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997;
- The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 and
- The Listing Agreement with The National Stock Exchange Ltd. & The Bombay Stock Exchange Ltd.

Based on our examination and verification of records produced to us and according to the information and explanations given to us by the Company, in our opinion the Company has complied with the provisions of the Act and Rules made thereunder and the Memorandum and Articles of Association of the Company, with regard to:

(a) Maintenance of various statutory registers and documents and making necessary entries therein;