cairn india | sustainability report 2013

CORPORATE SUSTAINABILITY REPORT 2012-13

Creating Amazing Champions of Energy(ACE) for India’s Energy Security issues

Project Shrishti & the Desert Greenhouse

Society & Local Community

Employee & Contractor Safety42

50 88

83Economic Sustainability

Environmental Management

Road Safety Programme

Going Local, The Cairn Way

CAn-Do SPIRIT

The cover embodies the Cairn India principle of creating

long term value for our stakeholders through sustainable

business processes. While the horizon is a reflection of our

diversified portfolio of producing assets, the heart of the

report is the people or communities around our areas of

operation. Just as the principles of Respect, Responsibility

and Relationships are embedded in our business

processes and carried forward by every employee, we

hope the essence and impact of sustainability will also

act as a bridge between older and younger generations

of communities. The tree of life embodies the fruit of

hydrocarbon development and the children the catalyst

and carriers of this sustainability journey.

ContentsCEo’s Statement 4

About the Report 7

About our Company 9 origin 10 operations 10 Production Facilities 13 Customers 20

Awards and Accolades 21

Governance Structure 22 Governance for Sustainability 25 Industry Associations 27

Principles and Policies 28 Code of Business Ethics 28

Business Environment 32 Risks in the oil & Gas Sector 32 Challenges Faced By Cairn India 33

Stakeholders 34 Stakeholder Engagement 34 Prioritizing our Stakeholders 34 Engaging with our Stakeholders for Sustainability 34

Materiality 37

Sustainability Goals 39

Economic Sustainability 42 Economic Performance 42 Energy Security & Reserve Accretion 43 Estimated Proven Reserves and Resources 45

Environmental Sustainability 50 Water Footprint 52 Climate Change 55 Energy Consumption 56 EnergyEfficiency&EnergyConservation 57 Greenhouse Gas Emissions 57 Exploring Alternative Energy 59

Environmental Management 61 Biodiversity 61 Air Emissions 65 Waste Management 65 other Initiatives to Mitigate Impact on Environment 67 Environmental Fines and non-monetary Sanctions 68 Environmental Protection Investments 68

Social Sustainability 70 Employment & Workplace Conditions 71 Composition of Governance Bodies 74 Worker Safety 80 Asset Security 84 Process Safety 85 Society & Local Community 88 Long Term Community Engagement 92 Corruption 99

Human Rights 100

Product Responsibility 102

Global Reporting Initiative (GRI) Index 103

nVG Principles Mapping 123

AssuranceCertificate 127

CAIRN INDIA SUSTAINABILITY REPORT 2012-13 CAIRN INDIA SUSTAINABILITY REPORT 2012-13

54

Dear Stakeholders,

I am proud to present to youCairnIndia’sveryfirstSustainability Report. our vision is to build a best-in class organisation through superior business performance and partnerships. As an oil & gas company in the natural resource sector, we are aware and therefore assume higher responsibility to promote and practice sustainability.

Energy security is the key to ensure economic prosperity for India, which remains one of the largest importers of crude oil. All forecasts indicate that

this dependence on imported oilwillincreasesignificantly.While ensuring our consistent efforts towards building an energysufficientfuture,our responsibility towards sustainable growth remains intact. Therefore our approach should integrate coordinated initiatives and energy strategies, policies and regulations to charter a low-carbon and energy-secure growth path.

The purpose of this report is to articulate the core values that will drive our Sustainability Initiatives, capture what we have done so far, communicate and commit what we intend to do.

We believe in creating ownership and individual commitment to our core values of Respect, Relationships and Responsibility.

• Werespecttherightsofallourstakeholders

• Werecognizeourresponsibilitytodeliver on these rights

• Wecommittobuildsustainablerelationships & Partnerships for Prosperity

We endeavour to:

• Integratethesustainabilityagenda into the way we do business

• Workincollaborationwithourstakeholders

CEo’s Statement

This report is one small step to build an organization, which will lead the path of growth through safe and sustainable practices and will emerge as an inspiration for individuals and organizations

• Harnesstheinnovativecapitaltodrive sustainability practices and initiatives

As we move forward, we are keenly aware that our commitment to sustainability will solely be judged by our performance on material sustainability indicators such as our carbon footprint, water usage, environmental stewardship, HSE performance, community engagement and inclusive growth.

To provide management oversight, we have constituted a sustainability steering committee to ensure that we meet our annual sustainability goals and targets.

This report is one small step to build an organization, which will lead the path of growth through safe and sustainable practices and will emerge as an inspiration for individuals and organizations through its innovative deeds.

As Cairn India continues to grow, many more projects with sustainability as their prime inspiration will be initiated and executed.

I am excited to steer our journey towards sustainability excellence. We seek your proactive participation to help us create a sustainable business where every stakeholder is a ‘Partner in Prosperity’.

P Elango

ChiefExecutiveOfficer&wholetimeDirector,Cairn India Limited

CEo STATEMEnT CEo STATEMEnT


76

For further informationplease contact:-

General Manager (Sustainability)Cairn India Pvt Ltd3rd & 4th Floor, Vipul Plaza, Sun City, Sector 54, Gurgaon – 122 002, Haryana, India.Email: [email protected]

ThisisCairnIndia’sfirstsustainability report which discloses aspects related to the company’s economic, environmental and socialperformanceinthefinancialyear 2012-13. We have reported our performance as per the Global Reporting Initiative 3.1 guidelines (including the oil & Gas Sector Supplement). The boundary of the report covers production operations from all our assets within India. This report excludes our exploration, project and drilling activities, our international operations, joint ventures and subsidiaries. Exceptions to the stated boundary above have been indicated by a β symbol.

Data in the report has been measured, monitored and reported as per national standards, International Association of oil & Gas Producer (oGP) guidelines and benchmarks; industry practices; and other recognised international standards. These are recorded

About the report

ABoUT THE REPoRT

Data in the report has been measured,

monitored, and reported as per national standards - International

Association of oil & Gas Producer (oGP)

guidelines, benchmarks etc. disclosing

information on 77 indicators.

in our Corporate Responsibility Management System.

ThefinancialfiguresarereportedinInR crores and in USD millions. The currency exchange rate used in this report is 1 USD = InR 54.36

The report discloses information on 77 indicators with 38 indicators reported fully. This is a B-level Sustainability Report externally assured by DnV AS. We plan to publish our sustainability report annually.

CAIRN INDIA SUSTAINABILITY REPORT 2012-13

9

Cambay Basin - CB/oS-2

MB-DWn-2009/1

Rajasthan - RJ-on-90/1

From relief map of South Asia

KG-onn-2003/1

KG-oSn-2009/3

PR-oSn-2004/1

Ravva - PKGM-1

Portfolio of Assets About our

CompanyCairn India Limited (hereafter referred to as ‘Cairn India’) is a part of the Vedanta Resources PLC, which is a globally diversifiednaturalresourceconglomerate.Thecompanywas rated as the fastest-growing energy company in the world by Platts Top 250 - 2012 (http://top250.platts.com/FastestGrowing). Cairn India accounts for more than 25% of India’s domestic crude oil production. We deliver best-in-class performance with one of the lowest operating coststocreatesignificantvalueforallstakeholders.CairnIndia’s operations not only helped reduce the country’s dependence on oil imports by nearly InR 38,500 crores (approximately USD 7,000 million), but also contributed nearly InR 20,000 crores (approximately USD 3,600 million) to the exchequer.

We produce two products, viz. Crude oil and natural Gas.

We hold nine (9) blocks, of which seven (7) are located in India and one each in South Africa and Sri Lanka. All our production operations are located in India. our producing facilities are in Rajasthan, Gujarat and Andhra Pradesh.

Ourregisteredofficeisat:101,WestView,VeerSavarkarMarg, Prabhadevi, Mumbai – 400025.

Ourcorporateofficeisat:3rd&4thFloor,VipulPlaza,SunCity, Sector 54, Gurgaon – 122002.


1110

originCairn India Limited, a public limited company was incorporated under the Companies Act, 1956, on 21 August, 2006 and was listed on the national Stock Exchange and Bombay Stock Exchange on 9 January, 2007. The Company is a subsidiary of Vedanta Resources Plc. which holds majority stake in the Company through its subsidiary companies.

Cairn India is the largest private exploration and production company currently operating in India. We are committed to ensuring the highest standards of safety and are among the top ten (10) global Exploration & Production (E&P) companies in Health, Safety and Environment (HSE) performance, based on the International Association of oil & Gas Producers (oGP) benchmark.

Shareholder Category no. of Equity Shares Shares held (%) Face Value InR 10/- each

A PRoMoTER HoLDInG 1 Indian Promoters 383,840,413 20.09 2 Foreign Promoters 738,873,586 38.68 3 Persons acting in concert - -

B non-PRoMoTER HoLDInG a) Banks, Financial Institutions, Insurance Companies (Central/State Govt. Institutions/non-Govt. Institutions) 152,765,191 8.00 b) Foreign Institutional Investors 278,117,140 14.56 c) Public 52,034,408 2.72 d) QualifiedForeignInvestors 75,050 0.00 e) Mutual Funds 59,751,067 3.13 f) nRI (Repatriable) 1,588,589 0.08 g) nRI (non-Repatriable) 661,433 0.03 h) Bodies Corporate 43,850,079 2.3 i) Foreign Bodies Corporate 196,174,600 10.27 j) Clearing Member 1,828,000 0.10 k) Directors/relatives 177,746 0.01 l) Trusts 500,852 0.03

Grand Total 1,910,238,154 100

Even as Cairn India is leading the way to opening up the country’s oil & gasreservesandmakingasignificantcontribution to the gross exchequer, it remains deeply committed to its inclusive-growth agenda. We have directed our efforts to a multitude of positive contributions to the local communities in the regions where we operate, strengthening local economies and supporting local communities.

operationsCairn India operates onshore and offshorehydrocarbonfieldsinIndia. We have made more than 40 hydrocarbon discoveries to date, of which 26 are in Rajasthan. out of the seven (7) landmark discoveries in the country in the last decade, three (3) have been made by us. These discoveries, include the Mangala field,whichisthelargestonshoreoilfielddiscoveryinIndiasince1985.

We undertake fast track development of the discovered fields.Wehavepioneeredtheuseof cutting-edge technologies to extend the production life of the producingfields.Ourhydrocarbonsales contracts are with public and private buyers, including four major refineriesacrossIndia.Ouraveragedaily production in FY 2012-13 was 205,323 barrels of oil equivalent per day (boepd), which is over 25% of India’s total hydrocarbon production.

Cairn India maintains a low operatingcostbasethroughefficientoperations which deploy innovative operating concepts and technologies. Cairn India’s low-cost domestic production is critical to meet India’s energy needs, and thus we aim to increase the nation’s oil & gas production. We are consolidating our position as one of the world’s largest independent exploration and

11

* As on 31 March, 2013

Ravva onshore facility, Surasaniyanam, Andhra Pradesh


1312

production companies with a rising productionprofile.

In addition to the joint ventures, Cairn India also has subsidiary companies in many other countries. All our subsidiaries are unlisted wholly owned foreign companies. These subsidiaries have their own Board of Directors holding the rights and obligations to manage such companies in their best interest. Cairn India has its representatives on the boards of subsidiary companies, and regularly monitors the performance of such companies.

We encourage the reader to refer to our Annual Report FY 2012-13 for further details onourfinancialperformance(http://cairnindia.com/IR/Pages/IRAnnualReport.aspx?UIDV=100&&Section=2)

Production FacilitiesCairn India has hydrocarbon production facilities at Ravva (PKGM-1 Block, Andhra Pradesh),

Suvali (CB-oS/2 Block, Gujarat) and near Barmer (RJ-on-90/1 Block, Rajasthan). The PKGM-1 and CB-oS/2 are offshore blocks with onshore processing facilities. The RJ-on-90/1 block is an onshore block. The company also operates

Key operations performance in FY 2012-13• Grossoperatedproductionwas205,323boepd

• DeliveredarecordrevenuefromoperationsofINR17,524.15crores (USD 3,223 million)

• Totalprofits(aftertaxes)fortheyearstoodatINR12,056.39crores (USD 2,218 million)

• MarketcapitalisationwasoverUSD10billion

ABoUT oUR CoMPAnY ABoUT oUR CoMPAnY

CB-oS/2 onshore facility, Suvali, Gujarat

Mangala Processing Facility, Barmer, Rajasthan


1514

the Mangala Development Pipeline from Barmer to Salaya; the pipeline is currently being further extended to Bhogat, Gujarat. A brief descriptions of the production facilities are:

• PKGM-1 Block (Ravva facility): The PKGM-1 block is primarily and offshore block. The Ravva processing terminal consists of onshore oil & gas processing facilities connected to eight offshore unmanned platforms located in the Bay of Bengal through subsea pipelines. The processed crude oil is transported to the Single Point Mooring (SPM) via subsea pipelines and is evacuated to thecoastalrefineriesbymarinetankers. The natural gas is transferred to Gas Authority of India, Limited (GAIL) at the custody transfer metering skid located within the Ravva facility.

• CB-oS/2 Block (Suvali facility): The CB-oS/2 block is primarily an offshore block with some portion of the block in the transition zone. The Suvali processing terminal is located near Hazira within the Gujarat Industrial Development Corporation (GIDC) notifiedindustrialarea.Thefacility processes crude oil and natural gas and is connected to three (3) offshore platforms

located in the Gulf of Khambhat and one onshore well located in the transition zone. The crude oil is sold to the onGC facility at Ankleshwar, Gujarat. The processed gas is transferred to the gas pipeline of Gujarat State Petroleum Corporation Limited (GSPCL) at the custody transfer metering skid within the Suvali facility.

• RJ-on-90/1 Block: The Rajasthan production facilities consist of the Mangala Processing Terminal (MPT) located near Kawas, Barmer; and the Raageshwari Gas Terminal (RGT) located about 60 km south of the Mangala facility. The hydrocarbonproductionfieldsofthe RJ-on-90/1 block currently consists of

- Mangala Field – It is the largestproductionfieldintheblock. There are eighteen (18) well pads that are connected toMPTthroughinfieldburiedpipelines

- Bhagyam Field – It is the second largest production fieldintheblock.Fifteen(15) well pads are connected throughinfieldpipelinestothe trunk line connecting BhagyamfieldtoMPT.TheBhagyamwellfluidsareprocessed at MPT

- Aishwariya Field – It is thethirdlargestfieldinthe block and was brought into production during the currentfiscal.Itcomprisesof eight (8) well pads and is connected to MPT through pipelines.Thewellfluidisprocessed at MPT.

- In addition to the above, Saraswati and Raageshwari fieldscontributeasmallvolume to the overall production. These facilities are standalone minor processing facilities, and the separated crude is transported to MPT using road tankers.

• Mangala Development Pipeline (Barmer-Salaya Crude oil Pipeline): The processed crude from the MPT is evacuated to the permitted buyers through a dedicated state-of-the-art pipeline system with crude storage and transfer facilities at Viramgam and Radhanpur, Gujarat. A large storage and marine export facility is under construction at Bhogat (Jamnagar district, Gujarat) with offshore marine loading facility through SPM.

ABoUT oUR CoMPAnY ABoUT oUR CoMPAnY

Mangala Processing Facility, Barmer, Rajasthan

1998RAVVA Satellite gas discoveries (Andhra Pradesh, India)

2000CAMBAY DISCoVERIES Lakshmi, Gauri andAmbefields(Gujarat, India)

2004MAnGALA DISCoVERY Largest onshore oil discovery in India in more than 2 decades(Rajasthan, India)

2007

InITIAL PUBLIC oFFERInG Cairn India listed on Bombay Stock Exchange & national Stock Exchange

2009FIRST oIL Commenced production from the Mangala field(Rajasthan, India)

2010WoRLD’S LonGEST ConTInUoUSLY HEATED & InSULATED PIPELInE oPERATIonAL

2011SRI LAnKA DISCoVERIES First to discover hydrocarbons in the frontier basin in 30 years

2012

2013

EnTRY In SoUTH AFRICAPartnership agreement with PetroSA; Technical Co-operation permit

FIRST oil & gas SALES Commenced production from the Aishwariya field;GasSales from Raageshwari Gas Terminal (Rajasthan, India)

2012

100 MILLIon BARRELS oF PRoDUCTIon FRoM RAJASTHAn In LESS THAn 3 YEARS Enabling reduced oil imports by ~USD 9 billion and contributed ~USD 3 billion to the government

Journey of Growth

TCP

SoUTH AFRICA

Cairn India Limited (I)

Cairn Petroleum

India Limited (S)

Cairn Energy

Discovery Limited (S)

Cairn Energy

Gujarat Block 1 Limited (S)

Cairn Exploration

(no.6) Limited (S)

Cairn Energy India

Holdings B.V. (n)

Cairn Exploration

(no.7) Limited (S)

1. 100% ownership unless specified.2. Country of incorporation: (A) - Australia (BVI) - British Virgin Islands (I) - India (J) - Jersey (M) - Mauritius (n) - netherlands (S) - Scotland (SA) - South Africa (SL) - Sri Lanka

Cairn Exploration

(no.4) Limited (S)

Cairn Exploration

(no.2) Limited (S)

Cairn Energy

Holdings Limited (S)

Cairn Energy Hydrocarbons

Limited (S)

CIG Mauritius

Private Limited (M)

Cairn South Africa

Proprietary Limited (SA)

Cairn Energy

Australia Pty Limited (A)

CEH Australia Limited

(BVI)

Cairn Energy Asia Pty Limited

(A)

Cairn Energy

Investments Australia Pty Limited (A)

Wessington Investments Pty Limited

(A) Cairn Energy India Pty Limited

(A)

Sydney oil Company Pty Limited

(A)

CEH Australia Pty Limited (A)

Cairn Lanka

Private Limited (SL)

Cairn Energy

netherlands Holdings B.V. (n)

CIG Mauritius

Holding Private

Limited (M)

Cairn India Holdings

Limited (J)

Cairn India Group Structure

Cairn Energy Group

Holdings B.V. (n)

69.6%

30.4%

31.82%

0.37%

99.63%

68.18%

Cairn Energy India West Holding

B.V. (n)

Cairn Energy Cambay HoldingB.V. (n)

Cairn Energy Gujarat Holding B.V. (n)

Cairn Energy

India West B.V. (n)

Cairn Energy Cambay B.V. (n)

Cairn Energy Gujarat B.V. (n)

C 100M 85Y 0M 13

C 0M 0Y 0M 100


20Customers our customers are oil & gas majors who are into functions that are further downstream. We do not have any direct retail customers.

Crude oil customers include, both Public Sector Undertaking (PSU) refinerieslikeIndianOilCorporationLimited (IoCL), Hindustan Petroleum Corporation Limited (HPCL), and Chennai Petroleum Corporation Limited (CPCL); as well asprivaterefinerieslikeRelianceIndia Limited (RIL) and Essar oil Limited (EoL).

natural gas buyers are Gujarat Gas, Gujarat narmada Valley Fertiliser Company Limited (GnVFC), Gas Authority India Limited (GAIL) and China Light and Power India Private Limited (CLPIPL).

The vision of Cairn India is to become a world class E&P company;establishadiversifiedand sustainable portfolio; and deliver long term value to host governments, local communities and all stakeholders. In our progress towards attaining this vision, we have received many awards which recognise our achievements. Some of these awards, which were obtained during the reporting period, are listed.

Awards and Accolades

• “Oil&GasPipelineTransportation – Company of the Year 2012” award given by Petrofed, part of the PetroFed Pipeline Transportation Award 2012

• “Fastestgrowingenergycompany in the world in 2012” by Platts Top 250

• Runner-upawardtoRaageshwarioil Mine by national Safety Awards (Mines), Govt. of India

• 16awardsin26thMinesSafetyweek 2012 under the aegis of DGMS, Ajmer

• RavvaassetwonthePlatinumAward under the FICCI Safety Excellence Awards for Manufacturing 2012

• GoldenPeacockAwardforExcellence in Corporate Governance for 2012

Technology Tower, Raageshwari Gas Terminal, Barmer, Rajasthan


23Governance Structure The overall management of the

company is overseen and regulated by the Board of Directors. The Board is responsible for formulating policies in the short and the long term to ensure smooth operations of the company. Cairn India’s Board decides the approach to manage the risks and utilise the opportunities that present themselves in the highly volatile oil & gas sector. It also ensures that the business is carried out in the best interests of its stakeholders and contributes to the overall growth of the industry and the economy. The company has a nomination Committee of the Board of Directors, which facilitates the composition and selection of Board members including independent and non-executive directors

The Board of Directors is the apex and highest governing body in Cairn India. It’s composition (including its committees) is determined keeping in focus the business critical needs, industry expertise and knowledge. It also ensures a judicial mix of executive, non-executive, independent and non-independent directors, diversity in composition, and compliance with legal requirements.

In nominating the members for the board, the nomination committee considers succession planning, the

challenges and opportunities that the company faces, and the skills and experience needed from the members of the Board. The criteria are mainly the skill, knowledge and experience related to the role that the incumbent would perform.

The Chairman of the Board is a non-executive promoter director. All non-executive directors on the Board are renowned professionals, who have diverse experience and expertiseinfinance,economics,oil & gas exploration, and general administration. Currently, the board comprises of seven male directors and one female director.

The Board of the company in addition to meeting as and when required also meets every quarter to assess the performance of the company. The Board discusses, among other points, the business responsibility issues as a part of its deliberation.

The company follows a structured process of decision-making by the Board and its Committees. The meetingdatesareusuallyfinalisedwell before the beginning of the year. Detailed agenda, management reports and other explanatory statements are circulated at least seven days ahead of the meeting. Toaddressspecificurgentneeds,

Cairn India Board of Directors 1. Mr. navin Agarwal Chairman, non-Executive Director2. Mr. Tarun Jain non-Executive Director3. Ms. Priya Agarwal non-Executive Director4. Mr. Aman Mehta non-Executive Independent Director5. Mr. naresh Chandra non-Executive Independent Director6. Dr. omkar Goswami non-Executive Independent Director7. Mr. Edward Story non-Executive Independent Director8. Mr. P Elango Interim CEo & Whole Time Director

meetings are also called at shorter notices but never less than a minimum of seven days. In some instances, resolutions are also passed by circulation. These are often preceded by Board discussions through audio conference. The Board is also free to recommend inclusion of any matter in the agenda for discussion. Senior managementofficialsareoftencalled to provide additional inputs on the matters being discussed by the Board/Committee.

The Board has complete access to all the relevant information of the Company. The quantum and quality of information supplied by the management to the Board goes well beyond the minimum requirements stipulated in Clause 49 of the Listing Agreement. All information, except critical price sensitive information (which is handed out at the meetings), is given to the Directors well in advance of the Board and Committee meetings.

The Company has been including data and information on the ‘responsible business’ aspects as an integral part of its Annual Report.

• Regularinternalandthirdpartyaudits are conducted for the effective implementation of all policies.

GoVERnAnCE STRUCTURE


2524

• Itistheresponsibilityofthesenior management to implement the policies. They have their respective departmental employees to assist them in implementation.

• Allapprovedpoliciesandprocedures are placed on the internal portal - Tejas.

We have a well-documented ‘Delegation of Authorities’ schedule that outlines authority levels for each transaction type and matters reserved for Board approval. All Board papers are deliberated and approved at the Executive Committee level before being taken up by the Board.

The board is assisted in its tasks primarily by four committees. These committees are integral to the board and its functioning. These are:

1. Audit Committee

2. Shareholders’/Investors’ Grievance Committee

3. Remuneration Committee

4. nomination Committee

All the Board Committees have specifictermsofreferenceapprovedby the Board of Directors.

The Company has an adequately qualifiedAuditCommittee.All

members of the Committee have the financialknowledgeandexpertisemandated by Clause 49 of the Listing Agreement. 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.

The shareholders’ and investors’ queries and complaints are reviewed and responded by the Shareholders’/Investors’ Grievance Committee

The Board has a Remuneration Committee to make recommendations to the Board with regards to the Company’s framework or broad policy for the remuneration of Executive Directors and senior executives’ - one level below the Board. In determining the remuneration policy, the Committee takes into account factors it deems relevant and gives due regard to the interests of shareholders and to the financialandcommercialhealthofthe Company.

Further, there are management Committees consisting of senior personnelwithspecifictermsofreference.

Cairn India takes immense pride in its governance practices.

During the recent change in promoter we maintained the

highest levels of good governance practices to ensure that

our shareholders’ interests, especially those of the minority

shareholders, were protected. We set up a Board Committee

of two Independent Directors not related to the existing or

prospective promoters and empowered it to supervise any

contractual relationship that the Company was required

to enter into, with the promoter and/or the acquirer and to

ensure that the obligations assumed therein were not onerous

or prejudicial to the interest of Cairn India and its public

shareholders. The Committee also provided the Board their

unbiased comments and recommendations on the offer made

bytheAcquirer,keepinginmindtheirfiduciaryresponsibility

towards the shareholders.

• WhereasimpleBoardmeetingwouldhavesufficed,the

Company sought mandate of the shareholders by way of

postal ballot – a more appropriate and democratic process

of decision making – and gave all shareholders including the

minority shareholders, the right to participate and vote on

the matter.

• Wedisclosedonlypubliclyavailableandapproved

information with our prospective promoter as well as

existing promoter. Exchange of information was strictly

monitored. We took about 18 months to get all conditional

approvals and this demonstrates that the procedures,

policies and best governance practices were adhered to at

all times.

Management Committees at Cairn India

• Executive Committee

• CentralCommitteeforStakeholderRelations

• ContractsCommittee

• RiskManagementCommittee

• EthicsCommittee

• GrievanceCommittee

• PeoplePanel

• OperatingUnitSteeringCommittee

• SustainabilitySteeringCommittee

Highlights from our governance practices

• AllourCSRactivitiesfollowthesamepracticesofethics,

transparency and accountability as the rest of Cairn India with

respecttofinancesandgovernance.

• AlldonationsandsponsorshipsmadebyCairnIndiaare

mandatorily approved by our Executive Committee and

Board of Directors.

Governance for SustainabilityWe have recently constituted a Sustainability Steering Committee and have rolled out our Sustainability framework document. The Sustainability Steering Committee is chaired by the Director (Strategy &

Integration) and has as members the top management of various functional verticals. The Steering Committee reports to the Executive Committee. The committee’s key objective is to systematically address sustainability related risks and opportunities. Its key responsibilities are:

GoVERnAnCE STRUCTURE GoVERnAnCE STRUCTURE


2726

• Coordinatingtheintegrationofsustainability agenda into the company’s development strategy, planning and operations.

• Directingtheorganisation’seffort and approach to the most critical sustainability issues over both the short-term and the long-term horizon

• Finalizingsustainabilityobjectivesand setting clearly articulated goals/initiatives

• Ensuringadequateresourcesare allocated, and reviewing & updating the initiatives at least annually

• Monitoringsustainabilityperformance against these targets and benchmarking Corporate Responsibility (CR) performance against peers

• Coordinatingthepreparation and publication of the Sustainability Report

• Advisingonimplementationofinitiatives/programmes to drive Sustainability practices with our major contractors & vendors

Industry AssociationsCairn India has a presence in the international body, oil & Gas Producers (oGP), and in national industry associations like the Association of oil & Gas operators (AoGo), Confederation of Indian Industries (CII), Federation of Indian Chambers of Commerce and Industry (FICCI), Associated Chambers of Commerce and Industry (ASSoCHAM) and Petroleum Federation of India (PetroFed) among others. Cairn India actively engages with these Associations for the policy formulation/advancement/improvement of public good and national interest towards Energy Security, Sustainable Business Principles, Governance and Administration and Inclusive Development Policies.

We actively contribute and work closely with the industry associations and the government

to arrive at informed policy decisions. Some of our recent submissions through industry associations are:

1. Submissions to the Rangarajan Committeeontheupstreamfiscalregime and the role of enabling reforms in the Indian oil & gas sector

2. Submission of comments on the national Shale Gas Policy

3. Budget Memorandum for the oil & gas sector, which highlighted key taxation issues impacting the sector

4. Submission to DGH on PSC Extension Policy bringing out international best practices on PSC extension

5. Submissions to the Dr. Vijay Kelkar Committee on the roadmap for reforms in the Indian oil & gas sector to achieve self-sufficiencyinhydrocarbonproduction

We need to interact with the Central and the State governments at different levels, for which we have clearlydefinedcontrolsandmethodsfor engaging with the government. We have mapped and assigned responsibilities for Cairn India officialsforinteractionwitheachlevel of the government. All these are strictly under the overview of the Management.

GoVERnAnCE STRUCTURE GoVERnAnCE STRUCTURE

Board of Directors

Executive Committee

Sustainability Steerling Committee

Chairman

Sustainability Secretary

Director QHSE

Director HR

Director RA & CS

Director Projects

Director PSCM

Head Pipeline & GB & LA

Head Operations

Head Renewable Energy

Head CSR

Cairn India Sustainability Steering Committee

Cairn India actively engages with these

Associations for policy formulation/

advancement;/improvement of public

good and national interest towards Energy Security,

Sustainable Business Principles, Governance and Administration & Inclusive Development

Policies.


29Principles and Policies Values

As we progress towards our objective of becoming a global, world class E&P company with a diversifiedportfolio,wealsoaimto deliver long-term value to host governments, local communities and all stakeholders. our vision of pioneering energy, enriching lives isreflectedinourvalueswhichencompass Teamwork, Respect, ownership and Pioneering Spirit.

our company believes in creating value for its stakeholders. We are committed to conducting our business in a sustainable and an efficientmanner.Ourfocusisonthelong-term growth of the company, for which we follow best practices in its business and operations.

The principles and policies of Cairn India are structured to inculcate a culture of accountability, transparency and integrity across the company as a whole.

our principles and policies are in adherence to the voluntary IFC Environmental and Social Sustainability Performance Standards (IFC PS).

We Believe:• Our“LicensetoOperate”comes

from the community which needs to be earned through our deeds and can never be taken for granted.

• Promoting‘stakeholderinterests’that include our shareholders’ interests is the way to build a sustainable future.

• “EveryLifeHasEqualValue”be it the life of our employees, contractor personnel or local community, and we will make every effort to protect it.

• Celebratinggoodbehaviourholdsmore value than punishing bad behaviour.

• HSEisapartofourDNA, Safety is not a parameter, it is a pre-requisite.

• Itisinour“CairnCanDoSpirit”to build a sustainable eco-system which complements all our business activities.

• Elementsofenvironmentandsocial aspects are integrated in our corporate strategy to help us make our business sustainable.

Code of Business EthicsCairnIndiahasdefineditscodeofbusiness ethics, which establishes the standards of business ethics and conduct. The code encompasses business ethics and practices, legal andregulatorycompliance,financialintegrity and asset protection, information management, and whistleblowing.

Compliance to the code is binding on everyone who carries out work, for or on behalf of the company. The Code of Business Ethics articulates our core values and it applies to all aspects and operations of Cairn India. Heads of Departments throughout Cairn India, all Employees and Service Providers are responsible for ensuring consistent compliance with Company policies, procedures and standards within their areas of responsibility. We have an Ethics Committee comprising of members from the senior management who ensure an independent review of the compliance with the Code within Cairn India.

The company has formulated the ‘Whistle-blower Policy’ and has provided various means by which any transgression of the code can be anonymously reported to a designated internal authority.

Pioneering Spirit

Innovativethinkinganda“cando”attitude• Demonstratesself-beliefandconfidenceinnewareas• Experimentswithoutfearoffailure• Providesleadershipanddrivestomeetchallenges• Ispassionateandoutperformsoncommitments

Respect

Care for people and environment• Demonstratesempathytowardsothers• Understandsdiversityandissensitivetodifferentcultures• Committedtohealth,safetyandsecurityinouroperations• Caresforthecommunityandenvironment

Teamwork

Working together towards common objectives• Putscollectivegoalaheadofindividualinterests• Asksforandgiveshelpwillingly• Listensandrespectsother’sopinions• Sharesinformationproactively

ownership

Committed and accountable for our actions• Responsibleforourownandteam’sactions• Takespersonalaccountabilityfordelivery• Goesbeyondone’sroletodeliveroncommitments• Managesresourcesoftheorganisationeffectively

oUR PRInCIPLES AnD PoLICIES

The principles and policies of Cairn India

are structured to inculcate a culture of accountability, transparency and

integrity across the company as a whole.


3130

Economic• Anti-Bribery Corruption

management System

• Code of Business Ethics

• Electronic Legal Compliance Management

• Gifts and Entertainment Policy

• Grievance Redressal Mechanism

• Insider Trading Code

Environmental• Health, Safety & Environment (HSE) Policy

Social• Anonymous Complaint

• Cairn India Land Acquisition & Compensation Plan (LACP)

• Cairn India Public Consultation & Disclosure Plan (PCDP)

• CEo’s Corner

• Company Medical Scheme

• Corporate Social Responsibility Policy

• Drug & Alcohol Policy

• Road Safety Policy

• Education related policies

• Human Rights handbook

• LTA, Club membership, Leave entitlements as per Laws

• Policy on Compensatory Time off

• Recruitment policy - An equal opportunity Employer

• Relocation Policy

• Remote Location Allowance Policy

• Sponsorship Donation Policy

• Transfer Policy

• vHearU

In the coming years, Cairn India aims to further strengthen

awareness on ethics & good governance principles amongst

employees and contractors. our objective

is to drive accountability and compliance to

governance procedures through policy revisions/

additions.

• Policy on the procedure for implementing code of conduct with suppliers

• Risk Management Policy

• Sponsorship, Donations Policy

• Whistleblower Policy

31

nal Sarovar Bird Sanctuary, Gujarat


33

Cairn India operates in a competitive environment in the global oil & gas sector. This sector plays a critical role in meeting the energy needs of people across the world. It comprises three main sub-sectors, viz. the exploration and production (E&P) industry; petroleumrefiningortheprocessingindustry; and retailing of petroleum fuels. The end-products generated by this sector are an integral part of our daily lives, and are also important for the transportation sector.

Cairn India’s current business is limited to the exploration and production (E&P) of hydrocarbon.

Risks in the oil & Gas SectorThe players in the E&P industry, including Cairn India, face many challenges in their operation. Some of the key challenges are listed below.

Business Environment

• Highlyvolatileglobalmarketfor our products, driven by geo-political factors as well as global demand-supply position, susceptible to frequent price fluctuations

• Challengingbusinessenvironment in accessing and developing new areas and monetizing them

• Availabilityofoilfieldserviceproviders and skilled manpower to meet the increased global demands

• Potentialregulatoryuncertainties

Since the E&P industry has the potential to cause stress on environmental resources, it has to address the environmental impacts that follow the:

• Extractionofnon-renewableresources such as oil and gas

• Significantwaterusageand

discharge in the process of drilling, fracturing, completion and well treatment

• Emissionofgreenhousegasesin the process of extraction, stabilization, and export of oil and gas

• Generationofwastesinoffshoreand on shore activities

• Potentialoilspillsduringproduction causing substantial environmental damage

The E&P industry also faces social concerns since a risky work environment is one of its attributes. Human rights may be a key concern for such companies and the focus must be on managing issues regarding health, safety, security and welfare of their employees. Lastly, this industry may also affect the indigenous and local communities with its operations due to geographically diverse locations of its sites.

Challenges Faced By Cairn Indiaour business environment presents many challenges in the short and long term. In addition to the global industry issues there are risks commonly faced by all the players in this industry in India.

1. Uncertain policy environment

Changes in the business environment and uncertainty in the regulatory landscape has led to negative implications for our business. Any unfavourable developments in the regulatory system; changes in central, state, local laws; and regulations, such as restrictions on production, additional taxes and royalties, where we operate could negatively impact our business.

2. Delay or denial of approvals

Ambiguity in regulations or unduly long approval processes could delay new projects and impact project economics adversely. This could also entail shortfall in the actual performance in comparison with our projected targets.

3. Variation in the estimated and actual recoveries from oil reserves

Reserves estimations involve a high degree of judgement and it is a function of the quality of the available data and the engineering and geological interpretation. Also, the actual extraction from the reservoir and the estimated volume may varysignificantly.Hence,thisrisk may have material impact on our company’s production and cashflows.

4. Availabilityofoilfieldservices

The company has to get the appropriate and competent service providers for services suchasgeo-scientificsurveysand has to secure the rigs at the right time. Any changes in this market and the quality of service provided imply operational and financialrisktoourcompany.

5. Acquiring land for expansion

In our business we need to acquire land for expansion of our operations. In the event of delays in land acquisition our project execution could be delayed.

Cairn India has in place a Risk Management Policy, and associated processes and procedures to address all such risks facing our business operations. Effective management of risk is imperative and of prime importance to Cairn India. The Board of Directors and senior management are aware of the risks to the business and its operations. Management takes appropriate measures, when needed, to mitigate such risks to the best possible extent.

In addition to the risks described above, Cairn India faces several environmental and social challenges that can have a material impact on its business. In order to understand these risks, Cairn India undertakes several stakeholder engagement programmes that help clarify the expectations its stakeholders have from the company. A detailed explanation of these risks is provided under materiality analysis.

oUR BUSInESS EnVIRonMEnToUR BUSInESS EnVIRonMEnT

CAIRn InDIA SUSTAInABILITY REPoRT 2012-13

Human rights may be a key concern for such companies and

the focus must be on managing issues

regarding health, safety and welfare of

their employees.

Stakeholder EngagementCairn India has various categories of stakeholders, owing to the size and nature of the organisation. our stakeholder group mainly comprises of our employees, contractors, suppliers, customers, shareholders, local community, land owners, district administration, national and state government, regulatory bodies, industry associations, and media. our interaction with them is fairly robust and is guided by our 3R principle – Respect, Relationships, and Responsibility. Many channels are available for these stakeholders to send us their feedback, complaints or even comments.

Presently we have empowered our various functional groups to determine the stakeholders they need to engage with and the frequency of these engagements

Employees

Stakeholders

basedontheirspecificfunctionaland business needs. These engagements cover both formal and informal engagement process. Going forward, we plan to strengthen and formalise the stakeholder engagement process as part of the overall stakeholder management plan.

Prioritizing our StakeholdersIn 2013, we conducted a survey among our employees to identify the most important group of stakeholders for the company. These representatives ranked all our stakeholders on two main criteria –stakeholders’influenceonthecompany;ourinfluenceonthem;atpresent and in the future. on the basis of this exercise, the depicted internal and external stakeholders were shortlisted.

Contractors

Suppliers

Local Community

Investors

Shareholders

Engaging with our Stakeholders for SustainabilityWith a formal sustainability framework at an early stage at Cairn India, we have made a conscious attempttofirstengagewithouremployees in order to spread the awareness on sustainability issues within the organization. A company-wide survey received over 500 responses to a pre-set questionnaire, which required the responder to rank each of the questions (covering the sustainability aspects as very important, important and not important). The survey covered aspects across the economic, environmental, and social dimensions.

Cairn India’s 3R PrincipleRelationships:- To understand our

potential impacts - Manage stakeholder

expectations & relationships with communities

- Third-party contractors

Responsibility:- Business ethics- Towards staff,

contractors, and communities

- Revenue transparency

- Climate change- Biodiversity

Respect:- Societies and

communities where we work

- Laws and social norms of the countries where we work

- Fundamental human rights


STAKEHoLDERS


36

The responses were collated and an in-house statistical tool was used to rank the issues. The results of the survey were presented to the senior management, Sustainability Steering Committee, and the CEo.

Materiality

Thefinallistofmaterialissuesarepresentedinthefigurebelow:

Energy Security

& Reserve

Accretion

TalentManagement

EnvironmentManagement

Community

Worker Safety

AssetSecurity

Water

Climate Change

The aim of the materiality analysis is to evaluate the organization’s performance on indicators across economic, environmental and social spheres. This process is an important step towards improving the sustainability performance of our company, and increasing disclosure and transparency for thebenefitofourstakeholders.The materiality analysis helps us ascertain our current performance and construct a sustainable path for our future as an organization.

We held deliberations at the highest management level with the Sustainability Development Steering Committee attended by the CEo to understand what the key sustainability issues were for the company. The material issues finalisedbytheSustainabilitySteering Committee were a culmination of:

• Issuesidentifiedbyanemployeeengagement survey

• Sustainabilityissuesidentifiedby the Cairn India senior leadership

• Keysustainabilityissuespertinent to the global oil & gas sector

Economic Aspects Environmental Aspects Social Aspects

Economic performance Indirect/Direct economic impacts on local Communities

Materials usage Energy usage

Environmental Compliance GHG emission

Water consumptionEnvironmental Impact of

Transportation Biodiversity

Waste management

Labour and workforce conditions Health & Safety

TrainingDiversity and Equal opportunity

Human Rights Corruption

Public Policy Product Responsibility

Local Community Compliance to Laws

Employees Consultants

Management levels Site

The respondents were categorised into the following groups:

oUR STAKEHoLDERS

Corporate

Gender

overall


3938

Material Issues - Employees

Material Issues - Leadership

Material Issues - Global oil and

Gas Sector

The stakeholder engagement exercise conducted with our employees brought out a list of key material issues for the organization. We recognise that while there was a convergence on the issues between our employees and top management, there remain certain areas where we feel the need to further socialise the topics with our employees. The Steering committee has decided on a clear plan for socializing the idea of ‘Sustainability’ across the organization.

In keeping with the principle of increasing rigour, we will expand our materiality analysis to include inputs from other keystakeholdersasidentifiedintheemploymentsurvey.Thiswillbereportedfromthenextreportingcycle.

our Sustainability GoalsWe recognize that addressing our material issues requires us to articulate andembedspecificgoalsthatwilldriveoursustainabilityperformance.The Sustainability Steering Committee, in collaboration with our functional departments has formalised the following short-to-medium-term sustainability goals for Cairn India:

oUR MATERIALITY

Economic performance

occupational health & safety

Compliance to environmental regulations

Compliance to social regulations

Disposal of effluents


Disposal of effluents


Compliance to social regulations

Compliance to environmental regulations

Air Emissions

Biodiversity

Local Community engagement

Energy security

Reserve accretion


Asset security

Waste management

Water management

Climate change

Local community engagement

Talent retention

Material Issues - Final List• Energy security & reserve accretion• occupational Health and Safety• Asset security• Talent management• Water management

• Local community engagement• Climate change• Air emissions• Greenbelt and Biodiversity

Sustainability Steering Committee

• Conservewaterbyimproving reuse/recyclingandefficientutilisation

The operations department has taken ownership of this goal.

Water Management

• Implementinitiatives/programmestodriveSustainabilitypracticeswithin our major contractors & Vendors

• Influencing&buildingcapabilityamongstlocalvendorsonsustainability principles

• Continuetosupportandimplementprogrammestodeliverbetterheath for all in our operational areas

• Progressonthevision–strivetoachieveprimaryeducationforallrural children in our operational area

• Implementfarmbasedprogrammesthatwillimprovethelivelihoodsof rural farmers and land contributors across our operational areas

• Supportinitiativesthatimprovethequalityoflifethrougheconomicempowerment of communities, and development of community owned sustainable businesses by building local capacities and entrepreneurial talents

The CSR department has taken ownership of these goals.

Local Community Engagement

Climate Change

• FormulateCairnIndia‘ClimateChangeStrategy’and socialize it among employees and contractors

• ReduceCarbonFootprintofourproductionoperation

• Pursuesolarenergyandenergyefficiencyinitiatives at operating sites

• CarryoutRenewableEnergyOpportunityAssessment Study to identify medium–term and long–term projects for implementation

• NewcorporateofficecomplexatGurgaontobedesigned to achieve LEED Commercial Interiors certification

The renewable energy, projects, operations, and HSE department has taken ownership of these goals.

• ContributetotheIndia’sGreencoverthrough‘Project Shrishti’ greenbelt development programme

• Implementmangroveplantationprogrammeandsupport Biodiversity conservation and prevent coastal erosion

The land and greenbelt department has taken ownership of these goals.

• RespectDiversityandworktowardsmakingCairnIndia“EmployerofChoice”

• Buildanddeveloponanenablingcultureandcontinuously focus on organizational capability to ensurethattheorganisationis“builttolast”

The Human Resources department has taken ownership of these goals.

• Implementawarenessandauditprogrammestobuildtechnical capability amongst employees and contractors on Process Safety Management and Asset Integrity

• MaintainbestinclassHSEperformancetoensureemployeeand community safety

• Engagewithglobalandnationalpolicymakersandpractitioners on HSE and Sustainability issues and best practices

The QHSE department has taken ownership of these goals.

• Increaseawarenessonethics&goodgovernanceprinciples amongst employees and contractors

• Strengthenaccountabilityandcompliancetogovernance procedures through policy revisions and improved internal controls

The Company Secretary’s department has taken ownership of these goals.

Biodiversity & Greenbelt Development

Talent Management

occupational Health & Safety

Ethics, Transparency and Governance


43

Economic SustainabilityStrongfinancialperformanceanda viable reserve base are keys to our economic sustainability. Towards this end, we have in place systems and process that help us achievefinancialviabilityaswellaseconomic sustainability for the short term as well as long term.

our Economic PerformanceAs an oil & gas major in India, we aim to continuously expand and consolidate our business in the exploration and production of crude oil and natural gas. At the end of March 2013, our gross production was 19% higher than the previous financialyear.

our company has exhibited a strong balance sheet last year, despite significantvolatilityinthecurrencymarkets in the reporting year. Cairn India is actively involved in currency hedging through options, as per the Board approved policy,

the Government of India, besides those provided to the sector in general.

Energy Security & Reserve AccretionOil&gassectormeetsasignificantpart of the global energy demand.

Cairn India is the largest private crude oil producer in India and makessignificantcontributiontowards achieving energy security by helping reduce dependence on oil imports. It currently operates over 25% of India’s crude oil production. Asignificantchallengeforourcompany is to ensure continued availability of oil & natural gas.

Direct economic value generated (InR crores)

Revenue 18,560.39 Netsalesplusrevenuesfromfinancialinvestmentsandsale of assets.

Economic value distributed (InR crores)

operating costs 3,693.30 Share of expenses from producing blocks, cess on crude oil, data acquisition, arbitration, royalty and production bonus.

Employeewagesandbenefits 103.25 Totalmonetaryoutflowsforemployees(currentpayments).

Payments to providers of capital 2,265.19 Allfinancialpaymentsmadetotheprovidersoftheorganization’s capital.

Payments to Government 654.97 Gross taxes.

Community Investments 20.85 Voluntary contributions and investment of funds in the broader community (includes donations).

Economic Value Retained (InR crores) 11,822.82

β:Thesenumbersrepresentconsolidatedfinancials

EConoMIC SUSTAInABILITYEConoMIC SUSTAInABILITY

Control Room Facility, Mangala Processing Terminal, Barmer, Rajasthan

Cairn Advanced Visualisation Environment, Gurgaon, Haryana

which mitigates the risk caused by suchfluctuations.Wehaverobustcashflowsfromtheoperatingassetsin Rajasthan, Ravva and Cambay. This supports our growth plans as well as meets our needs for capital expenditure.

Dividend paid out to our equity shareholders was InR 11.50 per

equity per share, which along with the dividend distribution tax translated to 21.2% of Cairn India’s consolidatedprofitaftertax.Thecompany fully redeemed the non-convertible debentures (nCD) during the year.

Wedonotgetanyfinancialassistanceorspecificbenefitsfrom



4544

The company has a multi-pronged strategy to maintain our oil reserves:-

(i) Increase yield from existing reservoirs using technologies like Enhanced oil Recovery (EoR)

(ii) Expand our exploration areas by securing licences to operate for new areas

(iii) Form Joint Ventures and Partnerships to allow us access tomoreoilfieldsandreserves

(iv) Retain high-quality talent so thattheycandriveefficienciesand extend the life of our existing reserves.

In addition to securing our reserves, we are also mindful of our own energy consumption, thereby making more natural gas available for national consumption. During the reporting period we engaged with the Government along with our Joint Venture partner to permit the sale of excess natural gas from the Rajasthan Block and thereby achievetwoprongedbenefitofminimising the environmental impactduetoreductioninflaring,and at the same time contributing to the energy demand of the country. The proposal is under consideration by the Government.

Estimated Proven Reserves and ResourcesCairn India’s main assets are its oil & gas reserves located in various parts of India.3 The Company’s gross reserve estimates are based onforecastproductionprofilesovertheremaininglifeofthefield,determined on an asset-by-asset basis, using appropriate petroleum engineering techniques. The Company’s net working interest in proven and probable reserves are as follows:

These internal estimates were prepared in accordance with the guidelinessetoutinthe“Cairn

Proved and Probable (2P WI) Reserves


(Developed)


(Undeveloped)

Type of Reserve oil(mmstb)

Gas(bscf)

oil (Mmstb)

Gas(bscf)

oil(Mmstb)

Gas(bscf)

Reserves as of 31 March, 2013 279.57 18.58 182.38 17.17 97.19 1.41

mmstb: million stock barrel; bscf: billion standard cubic feet

3. our resources are split into 3 main categories:(a) Reserves – Volumes of hydrocarbons to be commercially recoverable by application of a development project from a given date forward. These are categorised in terms of the level of uncertainty in the recoverable volume from Proved or 1P (most certain), Proved + Probable or 2P (Best Estimate), and Proved + Probable + Possible or 3P (least certain).(b) Contingent Resources – Volumes of hydrocarbons estimated to be recoverable from a discovered accumulation, but at which time are not considered commercially mature enough to be called reserves. (c) Prospective Resources – Volumes of hydrocarbons estimated to be recoverable from undiscovered accumulations

India Hydrocarbon Reserves and Resources Manual (2013)”, which is consistentwiththe“SPEPetroleumResources Management System (2007)”,theMoPNG“ResourceClassificationGuidelines(2006)”,theMoPNG“NewDiscoveryNotificationGuidelines(2006)”,and comply with the current

requirements of the Stock Exchange Board of India (SEBI). The internal report is also consistent with the requirements of the International Financial Reporting Standards (IFRS). SEC and FASB standards have not been applied.

State of the art seismic volumes reducing the subsurface uncertainty

EConoMIC SUSTAInABILITY EConoMIC SUSTAInABILITY


4746

Case Study on India’s Energy Security‘We are energy secure when we can supply lifeline energy to all our citizens irrespective of their ability to pay for it, as well as meet their effective demand for safe and convenient energy to satisfy their various needs at competitive prices, at all times, and with a prescribed confidencelevel,considering

shocks and disruptions that can be reasonably expected.’ –Integrated Energy Policy (2006).

The issue of India’s energy security and the role of hydrocarbons in the nation’s prosperity needed to be socialised amongst various target groups. Hence, Cairn India embarked on an engagement model (Project Amazing Minds) which aimed to raise awareness and issue recall regarding energy security comprising youth connect as well as influencerconnect.

The youth engagement programmes, Amazing Champions of Energy (ACE), is run under the aegis of Project Amazing Minds. Under this programme, Cairn India took the initiative to travel to different college campuses across India to connect with the students and encourage them to be perceptive of the importance of energy security and its economic impact on our country.

Fortheinfluencerconnectinitiatives, Cairn India also

organised four round table discussions on the topics related to energy security and the role of hydrocarbons to engage with important bureaucrats, academics, policymakers and media houses.

Genesis:

For a developing country like India, it becomes very important to be energy secure. India is the fourth largest primary energy consumer, and with the expected growth rate of Indian economy, the energy demand is also set to grow. Energy Security, thus entails a complex set of coordinated initiatives, and the need for energy strategies, policies and regulations to be aligned in making specificchoicesforthecountryincharting a low-carbon and energy-secure growth path. Given the strong dependency of Indian energy production on coal and considering that the coal supplies are stagnating, the importance of planning on energy security and looking for alternative resources becomes even more important.

Cairn India envisioned the importance of the energy security for India and understood the challenge of developing awareness about this issue across various stakeholders. Through ACE, Cairn India provided a platform for the youth to voice their opinions and

concerns on the issue of energy security and how best to shape it in the future. The key messages generated,wereamplifiedthroughengagement with national and regional media. A compendium of the above deliberations was documented and circulated among key stakeholders.

Theinfluencerconnectinvolveddiscussions on a wide range of topics concerning energy security– the policies, the technology, India’s hydrocarbon potential and the economicbenefitsofreducingdependence on foreign imports of energy.

Methodology:

Cairn India approached 12 management schools and engineering institutions for launching the case study ‘Amazing Champions of Energy’ competition and selected a campus champion (Team) from each of these institutes. We also organised on-campus events at each of the selected colleges.

The case study competition was supplemented with regular engagement activities on social networking websites. The submissions were judged by a panel of jury members and best strategies were awarded and appreciated across campuses. The same is being compiled as part of a compendium

to be circulated with the relevant ministries and the campuses.

Each round table discussion of the influencerconnectinitiativewasfollowed by a white paper emanating from the deliberations. This was also adapted in the form of media notes for publication. one composite white paper was also prepared by PwC consisting of all the key issues pertaining to the E&P (exploration and production) sector.

Achievements:

After its launch in early 2013, the project saw a phenomenal response across campuses. More than 4,000 students replied to the teaser questions which were posted on the social networking sites. The reach of the project was more than 208,000 viewers. The institutes covered under this included some of the leading management colleges (IIM Ahmedabad/Bangalore/Calcutta, XLRI Jamshedpur, ISB Hyderabad/Mohali) and some of the leading technical colleges (IIT Kharagpur/Bombay/Delhi, ISM Dhanbad, PDPU Gandhinagar, UPES Dehradun, MIT Pune).

Theinfluencerconnectroundtable discussions served its purpose by creating an eco-system of information generation and exchange on India’s energy security in the form of press notes, white


Campus Connect Initiatives -Amazing Champions of Energy (ACE)

CAIRn InDIA SUSTAInABILITY REPoRT 2012-13 CAIRn InDIA SUSTAInABILITY REPoRT 2012-13

4746


4948

papers, video content, and social media.Themessageamplifiedtoreach smaller towns and cities through more than 40 regional media coverage in Rajasthan, Gujarat and Andhra Pradesh. Special delivery of the white paper was made to various key government and non government stakeholders and placed in the libraries of top business schools and engineering colleges – IIMA, ISB, IIMB and UPES, ISM Dhanbad and PDPU Gandhinagar.

This multi-pronged strategy, involving multiple partners and leveraging their associations, helped to create the ripple effect of information eco-system on energy security.

Way Forward:

observing the overwhelming response to the campaign and results achieved as per the expectation, Cairn India plans to continue this project and further its outreach.


CAIRn InDIA SUSTAInABILITY REPoRT 2012-13 CAIRn InDIA SUSTAInABILITY REPoRT 2012-13

4948

Oil is one of humanity’s most valuable

commodities. Not only does it fuel transport,

its derivatives are key components in

the manufacturing of fertilizer, plastics,

pharmaceuticals, textiles and a whole host

of other industrial products. This view is

supported by the EIU: “Oil products are

dominant in the chemicals and petrochemicals

sub-sector, providing 94% of its energy

requirement. Transport equipment,

machinery, and mining and quarrying also rely

entirely on oil products.”

Simply put, today’s world cannot survive

without oil.

THE IMPORTANCE OF OIL TO THE GLOBAL ECONOMY

OIL AND GAS –

alls to increase domestic oil and gas pro-

duction in India have been frequent of late.

International bodies, academics and econ-

omists, as well as the oil and gas community it-

self, have unanimously voiced their concerns over

increased imports and the effect this will have not

only on India’s future energy security, but also on

the nation’s economy.

This stance was recently supported by a new re-

port published by the Economist Intelligence Unit

(EIU), titled Empowering Growth – Perspectives on

India’s energy future, a collection of essays from prom-

inent figures from research, industry and academia.

The report exposed the vulnerability of India’s energy

security and suggested that the Government of India

roll out reforms across the energy sector to enable

robust decision-making, increased foreign participa-

tion and competitive international pricing.

Such reforms will only go so far in addressing

India’s energy security challenges. As the EIU points

out, the country’s energy sector is highly diverse.

Although coal currently accounts for 70% of India’s

electricity, domestic production is currently lagging

behind the country’s needs. Coal found in India is

also widely acknowledged to be poor and high-ash,

forcing India to increase its coal imports. Alterna-

tive fuel sources could offer potential solutions, but

these too face significant obstacles. Possible al-

ternatives, such as renewable energy and nuclear

power, are constrained by the need for large upfront

investment, as well as public opposition and geo-

graphical constraints.

Increased domestic production of oil and gas

appears to be the most viable solution to India’s

growing energy needs. The infrastructure needed

to extract hydrocarbons is already in place, and the

probability of discovering new fields remains high.

Multinational exploration and production (E&P)

companies, with their world-class knowledge and

technical expertise, are well placed to fully harness

India’s oil and gas resources. These companies also

bring innovative thinking and new ways of address-

ing India’s energy challenges, which is greatly need-

ed if the country’s energy future is to be secured.

THE ECONOMIC BENEFITS OF

INCREASED DOMESTIC OIL PRODUCTION

India’s burgeoning economy and population of over

1.2 billion has created exceptionally high demand.

Currently, transportation fuel accounts for around

50% of domestic oil consumption, with other major

users including agriculture, industry and power gen-

eration. Diesel-run electricity generators have also

become increasingly common due to the nation’s

unreliable power supply. As a result, demand for oil

has rapidly increased over the last two decades: In-

dia is now the world’s fourth largest consumer of oil

and the world’s fifth largest oil importer, as per the

2012 BP Statistical Review of World Energy.

Currently, India imports around 80% of its oil

demand, with this percentage showing little sign

of cooling. India’s Prime Minister Manmohan Singh

Energy secure: Offshore rigs have the potential to be at the forefront of making India energy secure. Opening the oil and gas sector to

private enterprise could be key to securing this.

Increased domestic production of oil and gas could solve India’s energy

challenges and build an energy-secure future.

Cpredicted the nation’s oil needs would rise 40% by

2020 and this need has only become more acute in

recent years. Speaking at the Planning Commis-

sion – the institution that formulates India’s devel-

opmental Five-Year Plans – Prime Minister Singh

stated: “It is vital for our energy security that we

increase domestic production and also increase

energy efficiency.”

Increased domestic oil production would not only

make the country more energy secure, it would also

offer significant macroeconomic benefits too. Ac-

cording to a recently published white paper by Price-

waterhouseCoopers (PwC), titled It’s our turn now –

E&P partnerships for India’s energy security, had the

nation not imported the 169.7 million tonnes of oil it

did in 2011, India’s GDP would have been 6.5% high-

er in 2012. Not importing this oil, claims the report,

would have also meant India’s domestic energy sec-

tor providing 9.4 million person years of employment

over a period of 20 years. Through royalties and tax-

es, government revenues would have been between

US$8 billion and US$20 billion higher.

India’s high imports are not due to a lack of re-

sources – as some incorrectly assume − but more as

a result of policies and procedures that have signifi-

cantly slowed domestic production.

India is potentially sitting on significant hydro-

carbon resources, but reduced exploration activities

means their size and scope has yet to be properly

determined. This is compounded by a lack of encour-

agement at the national level for a more proactive

approach to exploration, which has undermined In-

dia’s E&P sector.

In 2011, India’s proven balance of recoverable

oil reserves were reported at 9.04 billion barrels of

oil equivalent, placing the country in an unimpres-

sive 19th position worldwide. However, according to

a 2012 report by India’s Directorate General of Hy-

drocarbons – the regulatory body charged with the

promotion and management of India’s oil and gas

resources – in the financial year 2010-2011, 12% of

India’s sedimentary basins remain unexplored, with

a further 22% classed as “poorly explored”. In the

near future, production from India’s underdeveloped

onshore and offshore fields is set to increase, as

these are yet to realise their full potential.

Energy imports are also currently hin-

dering the nation’s economy. The Govern-

ment of India currently spends billions of dol-

lars on non-targeted subsidies, which the IEA

claims the nation can ill afford. During the fi-

nancial year 2011-2012, 54% of India’s trade

deficit – which stood at US$189.9 billion

− was due to oil imports. Because

of such a high deficit, the rupee

weakened, inflation soared and

there was a drawdown of al-

most US$13 billion in India’s

foreign exchange reserves.

According to the PwC

report, these events could

have been avoided had In-

dia produced an additional 17

million tonnes of oil domesti-

cally. This increase in India’s

domestic production would ar-

rest currency depreciation, contain

inflation and reduce the import bill –

resulting in a higher GDP.

To increase domestic production and decrease

oil imports, the Indian government must first in-

troduce reforms that encourage foreign

and private sector participation. In

addition, it must turn to its trusted

international partners to leverage

their skills, expertise and tech-

nological capabilities.

TOWARDS ENERGY SECURITYAs India’s economy continues

to grow, so will its need for

energy security. While alterna-

tive forms of energy in the form

of renewable energy and nuclear

power look attractive, significant ob-

stacles to widespread implementation

of these sectors remain. The future of India’s

energy security, as well as the economic, geopoliti-

cal and social stability that stems from it, therefore

points towards increased domestic production of oil

and gas.Challenges in the nation’s hydrocarbons sector

do exist. Yet, they are not insurmountable. Increased

domestic production and investments in the nation’s

E&P sector will not only ease worries about India’s

future energy security, but also reduce the nation’s

trade deficit and rejuvenate the rupee on the inter-

national foreign exchange market.

In the next NELP round – the bidding round for

oil and gas exploration blocks – the Government

of India must further relax restrictions on foreign

participation so that national and international

companies have full access to the nation’s most

promising plays. It must also bring its pricing

mechanisms in line with global rates, otherwise

India will fall short of attracting adequate levels

of foreign investment that are required to grow its

energy sector. The nation’s policymakers must act

now in order to fast-track India’s journey towards

future energy security.

The Government of India

must turn to its trusted

partners and leverage

their skills, expertise and

technological capabilities

India is now the world’s

fourth largest consumer

of oil and the world’s fifth

largest oil importer

Status of exploration of Indian sedimentary

basins, FY 2010-2011

Source: Directorate General of Hydrocarbons

22% Poorly explored

12% Unexplored

22% Moderately to well explored

44% Exploration initiated

Gas production from India’s maturing fields

is starting to stagnate, as many of the

nation’s fields house lower levels of gas

than was previously thought. According

to data published by India’s Ministry of

Petroleum and Natural Gas, imports

accounted for 28% of the nation’s gas

supply in 2011, and this figure is expected to

increase to 37% by 2020.

This rise in imports is attributed to both

falling domestic supply and a significant

increase in demand. According to the IEA,

India’s gas consumption will triple by 2035

due to consumption growth in the power

sector. Natural gas is a more energy-

intense fuel than coal, as well as being

more environmentally friendly.

Today, India’s largest consumers

of natural gas are the nation’s

power sector, fertilizer

industry, and liquefied

petroleum gas (LPG)

market. All three are

critical components of

the Indian economy,

with LPG becoming

more significant as

domestic cooking and

heating moves from the

use of wood biomass to gas.

Being gas import-reliant carries

similar challenges to a reliance on

imported oil: both short- and long-term

supplies are significantly higher-priced than

domestically produced fuel.

However, only 22% of the

nation’s sedimentary

basins are deemed to be

“moderately to well-

explored” by India’s

Directorate General of

Hydrocarbons. Hence,

the probability of

future gas discoveries

remains strong.

India must therefore employ

a two-pronged approach

to its gas market. First, its

government must modify its current

pricing structure in order to make it more

attractive for private investors. These can

bring experience, expertise and capabilities

to bear, creating a win-win partnership

between the public and private sectors.

And second, it must intensify E&P activities

in order to move away from the nation’s

reliance on foreign imports and thus make

India more energy secure.

INDIA’S GAS MARKET

The unsung heroes of India’s energy future

ADVERTORIAL

C 100M 85Y 0M 13

C 0M 0Y 0M 100

sponsored by

C 100

M 85Y 0M 13

C 0M 0Y 0M 100

The University of Oxford published awhite paper in 2011 entitled OilRevenues and EconomicDevelopment: The Case ofRajasthan, India. The paper examined theeconomic climate of the northwestern stateof Rajasthan and identified areas of Indiansociety that could benefit from increaseddomestic oil revenues. Research for this project commenced inlate 2009, an exciting time in India's explo-ration and production (E&P) sector asRajasthan had just begun large-scale pro-duction of oil. However, the state had as yetto benefit from its newfound oil and the re-port duly highlighted the potential socio-economic growth of Rajasthan. "Rajasthan is a relatively poor state...Ithas a population of 68.6 million people ofwhich 15 million (22 per cent) live belowthe national poverty line...Correspondingly,it has a lower level of human developmentthan India as a whole," the study said. Itwent on to conclude that, "Given these lowlevels of economic and human develop-ment, effectively-spent resource revenuescould have a significant impact on the wel-fare of Rajasthan's citizens." The state's public infrastructure, includingenergy, telecommunications and trans-portation networks, was severely underde-veloped. Its vast labour force was a largelyunderused resource. Added to this, India asa whole was running a high trade deficit,amplified by a weakening rupee and in-creasing energy imports, which dampenedthe economic outlook of all Indian states,including Rajasthan.

RISING OIL, RISING REVENUESThankfully, times have changed. As a result ofincreased oil and gas production, Rajasthantoday is a different state. Successful explo-ration for oil and gas has transformed the re-gion into one of great economic promise, aspointed out by 2012PricewaterhouseCoopers (PwC) white paper:It's our turn now - E&P partnership for energysecurity.

The PwC white paper argues India's do-mestic upstream industry is capable of bothimproving the nation's energy security crisisand simultaneously enhancing the country's

economic status. Using Rajasthan as a casestudy, the paper contends that the state was:"Not on the map of petroleum-producingstates till recently when, in 2009-10, it startedproducing crude oil from the Barmer district(of Rajasthan) following the discovery in2004." However, Rajasthan seized the opportunitypresented to it with the discovery and ex-ploitation of hydrocarbon reserves. Within aperiod of just 12 months, Rajasthan movedfrom producing less than one per cent ofIndia's total oil production in 2008 to over 10

per cent in 2009. During the financial year(FY) 2009-10, the state produced just 448 kilotonnes per annum (KTPA) of oil with aroundRs 148 crore in revenues paid to the excheq-uer. A year later in FY 2010-11, Rajasthan pro-duced 5,149 KTPA with around Rs 1,858 crorepaid to the exchequer. PwC estimated that forFY 2012-13 these figures would reach 9,872KTPA and Rs 5,449 crore respectively, a year-on-year increase of between 40 per cent and100 per cent over the last three years. Of even greater significance is the contribu-tion these oil revenues make to Rajasthan'seconomy. As the PwC study points out, thestate's revenue deficit had been worseningsince mid-FY 2007-08. Yet, upon increased oilproduction, this trend reversed itself and by FY2010-11 oil production had helped transformRajasthan into a revenue surplus state. The benefits to society were equally impres-sive. Between 2006-07 and 2009-10, the dis-trict of Barmer saw over 50 per cent increasein Upper primary and secondary schools andschool enrolment grew by 107 per cent. In Rajasthan, the 'before and after' scenarioclearly indicates a clear link between oil pro-duction and the socio-economic develop-ment of a region. For Indian policymakers andoil and gas companies alike, the signs arethere for potentially fruitful partnerships overoil and gas E&P, with resultant positive resultsfor regional and national socio-economic de-velopment.

A NATIONWIDE PROBLEMDespite Rajasthan's rise in oil production, andselect examples from other states, India's E&Pactivities over the last few years have slowed

down. In those Indian states, such asRajasthan, where increased hydrocarbonsproduction has taken place, people have seenreal, sustainable improvements to their qualityof life. However, oil and gas production acrossthe nation is hindered by slow decision-mak-ing. This is due to the involvement of multiplegovernment agencies with inconsistencies re-siding between central and state authorities. This institutional failing was recognised in a2012 Economist Intelligence Unit (EIU) report,entitled Empowering growth - Perspectives on

India's energy future. "It is vital for India to for-mulate holistic policies that will encourage in-vestment in energy infrastructure, create astrategic energy mix, and promote coordina-tion between the central and state govern-ments so that the country's energy supply willbe able to match its economic growth aspira-tions," said the report. The EIU report went on to cite governmentprocrastination over E&P approvals as a majorobstacle to the advancement of India's oil andgas sector. Both local and international mediahave also pinpointed the Government ofIndia's lack of long-term strategy and its dis-couragement of private investment as con-tributing factors to the nation's lagging E&P sec-tor.

This combination means India's oil and gasproduction falls way short of its potential. As aresult of this, so does its socio-economicstanding. For example, to date 73 billion bar-rels of oil and oil equivalent gas has been es-tablished in India, out of 205 billion barrels ofprognosticated hydrocarbon resources. Thus,around 132 billion barrels of prognosticatedhydrocarbon resources are in a 'yet to find' cat-egory; this represents a vast untapped poten-tial that could be used to fuel the nation's fu-ture growth. However, given the sheer size and depth ofIndia's hydrocarbon reserves, were productionto take place the results could see muchgreater investment in the fundamentals of so-cio-economic development, such as educa-tion, healthcare, infrastructure and employ-ment. As the PwC report points out: "Factorssuch as regulatory policies and market deter-minants are among the primary agents ofchange in the E&P landscape and some na-tions have demonstrated that these factors canbe aligned and made complementary in na-ture."

OIL CHANGES LIVES As demonstrated by Norway and Brazil, in-creased oil and gas production influences thesocio-economic rise of a nation. Both nationshave shown that properly handled E&P canhave extremely beneficial results, with the rev-enues generated positively impacting thewhole of society. In India too, increased production of hydrocar-bons has helped improve peoples' lives.However, there must be a policy frameworkthat is conducive to India's E&P sector if the na-tion's enormous oil and gas resources are tobe effectively accessed. Legislation that furtherencourages foreign participation and partner-ship would drive the growth of India's hydro-carbon sector - and the nation's economicgrowth and development. It may be challenging, but increased oil andgas production could potentially lift millions ofpeople out of poverty. The opportunity is thereto bring India the economic prosperity the na-tion fully deserves - and India must seize it.

ADVERTORIAL & PROMOTIONAL FEATURE

THE ECONOMIC TIMES, THURSDAY, FEBRUARY 28, 2013 >>pg 27

Two nations that demonstrate the advan-tages for both the state and its people ofdeveloping domestic hydrocarbon indus-tries are Norway and Brazil. Despite theirvast geographical differences, during thelate-1960s and early-1970s Norway, Braziland India harboured similar market traits.However, Norway and Brazil took a very dif-ferent approach to India when it came totheir oil and gas sectors. "Norway and Brazil have set an examplefor India's E&P sector by not only being self-sufficient in their hydrocarbon quest, butalso commanding a place of respect in theglobal E&P sector," claimed the PwC study. In particular, the report stressed the im-portance of Norway's decision to providefavourable concession agreements to for-eign companies with no mandatory stateparticipation. It also noted the establish-ment of its national oil company, Statoil,which today operates independently of theNorwegian government. Finally, it high-lighted how Norway's hydrocarbons sectoroperates within the nation's highly robustindustrial framework. "Norway's nationalistic ambitions spreadbeyond amassing a greater fiscal share inproduction or imposing more taxes on for-eign companies. It entailed within this a vi-sion to expand the role of Norwegian oilsector by creating a new industrial sector,"said the PwC report. Today, Norway's oilsector is the sole contributor to the nation'ssovereign wealth fund, which is the world'slargest and manages Norway's state pen-sions. Brazil, on the other hand, focused on ag-gressively growing its E&P sector during the1970s. Following an initial monopolisationof the hydrocarbons sector by its nationaloil company, Petrobras, Brazil later openedup to foreign participants and embarkedupon a programme of internal reforms. Tospeed up oil and gas production, theBrazilian federal government gradually re-moved restrictions on foreign participationin exploring Brazilian oil assets. An inde-pendent oil regulatory agency was also es-tablished, and this model has since beensuccessfully adopted by countries such asAngola and Colombia that are developingtheir own domestic energy industries."Brazil's example highlights the importanceof a persistent attitude with which reformsare implemented," said the PwC study. Increased oil production was a key driverof growth as Brazil's economy rose frombeing ranked 61st in 1970 in terms of nom-inal GDP to being the sixth in the world to-day. Millions have risen out of poverty andthe country now houses one of the world'slargest middle-class populations, support-ed by state-sponsored healthcare, devel-oped world infrastructure and educationinstitutions that are on par with those ofthe West.

OILCHANGES LIVES

“As a result of increased oiland gas production, Rajasthantoday is a state with great eco-nomic promise”

“Increased oil and gas produc-tion could potentially lift mil-lions of people out of poverty”

Why Indian states must grow their hydrocarbons industry

Norway and Brazil:National models


5150

Environmental SustainabilityCairn India has always had a strong focus on HSE excellence including environment stewardship. This has been achieved through our HSE policy and associated procedures which focus on Health, Safety and Environment of our people and operations across the entire organization.

We take pride in strict enforcement of all our HSE policies and practices. Since the nature of our business, has high probability of HSE incidents, we mandate our HSE practices as non-negotiable and these have to be adhered to at all times by all employees, contractors and visitors at our premises. All our production operation facilities, including the crude oil evacuation pipeline

implement a robust Environment ManagementSystem(EMS)certifiedto the ISo 14001:2004 International Standards. In addition our production operations at Ravva and SuvaliarecertifiedtoOccupationalHealth and Safety Assessment System (oHSAS 18001) and work is in progress to implement the same in our Rajasthan operations. We also adhere to the requirements

of applicable IFC Performance Standards on Environment and Social Sustainability.

Cairn India approaches the management of environmental issues through an organizational structure at the corporate level, and as an embedded function at the operational assets. The corporate environmental group is responsible for advisory and strategic directions for environmental performance. It is also responsible for monitoring and reporting on performance parameters to internal and external stakeholders. The embed functionaries at the operational assets are responsible towards day-to-day environmental management and compliance requirements and are a part of the operations team.

Director QHSE has the overall responsibility for overseeing the environmental management for the company and is a member of Sustainability Steering Committee.

CairnIndiaregularlyidentifiesandassesses environmental risks and

liabilities through the following means:

• EnvironmentImpactAssessmentStudies carried out by independent expert agencies to identify risks, and develop appropriate environment & social management & monitoring plans

• Bi-annualauditbyExternalCompliance Monitoring Group

• IntegratedHSEauditcarried out by an independent internal audit team

• HazardIdentification(HAZID),HazardOperability(HAZOP)andProject HSE Review (PHSER) are carried out as part of designing and establishing any new project

Thumbli Reservoir, Barmer, Rajasthan

Cairn India has always had a strong focus on

HSE excellence including environment stewardship.

Since the nature of our business, has high

probability of HSE incidents, we mandate our HSE

practices as non-negotiable.


5352

oil recovery with water injection in an environmentally responsible manner• optimal extraction of saline water resources for pressure maintenance• Re-injection of treated produced water

or carrying out any major modification

• CompliancetotheGatedprocessduring the project life-cycle

• DeliberationsoftheRiskManagement Committees

Thefindings/risksemergingfromabove are mitigated through appropriate corrective and preventive actions based on the principle ‘Design & operate for Environment’.

Water Footprint

The water footprint of the oil & gas sector is an important environmental concern since its consumption is an integral part of exploration and production activities. If not responsibly managed the on-shore operations can pose a risk on the availability of water for the local communities and alsothefloraandfauna.Further,the operational discharge has the potential to contaminate the quality of water and thereby cause health concerns to the local communities and disrupt local biodiversity.

Cairn India has implemented a comprehensive plan to ensure that none of the above issues are faced by the communities in and near the operational area due to the company’s operations. While,

water is a part of the gamut of natural resources, we require, we also realise it is essential for the sustenance of local communities and the ecology. Cairn India believes that detailed Environmental Impact Assessments (EIA) and other related environmental studies, conducted early in the project cycle, help identify the environmental and social risks and are vital to the development of effective Environmental & Social Impact Management Plans (ESMP).

Sources and withdrawal of water

At Cairn India, we try and minimize our impact on local freshwater resources. The water sources that we extract from are modelled and monitored after necessary approvals have been taken from the regulatory authorities before any extraction is done. These measures ensure that access to freshwater for the local population is not disturbed

by the company’s operations. With the availability of fresh water to the local communities in and around Barmer from the Indira Gandhi canal, the dependency on the groundwater for potable use has significantlyreduced.

We strive to reduce our consumption of such resources and to design our operations in such a manner that reuse or recycling of resources is carried out to the greatest extent possible. our objective is to conserve water by improving reuse/recycling andefficientutilisation.

The Rajasthan Asset sources its water demand primarily from saline groundwater aquifer with Total Dissolved Solids (TDS) more than 5,000 milligrams/litre (mg/l). In terms of volume of water extracted from the source, our extraction isaninsignificantamountofthetotal reservoir volume. In the lifetime of Cairn India’s extraction of water from this groundwater

aquifer (Thumbli Aquifer), the total extracted volume will be less than 1% of the total subsurface reservoir volume. our unit at Ravva extracts saline groundwater for its operations through bore wells. The Suvali facility is located in the industrial belt and water is supplied to us by Gujarat Industrial Development Corporation (GIDC). We have the requisite permission to draw water from the above sources. The consumption of water is measured through water meters and reported to the concerned authorities.

The bulk of the water required in upstream processing terminal is for injecting back into the reservoir, as oil-replacement water. This is done to maintain the reservoir pressure. This process is called re-injection of water. The re-injected water generally comprises of additional water sourced for injection (water to replace the oil volume extracted) and the produced water removed

Water Source Total water consumption in 2012-13 (cubic meter)

Groundwater (Saline) 14,037,439

Groundwater (Fresh) 98,995

Surface Water nil

Rain Water nil

Municipal Supply 31,466

EnVIRonMEnTAL SUSTAInABILITY EnVIRonMEnTAL SUSTAInABILITY


5554

afterprocessingofthewellfluid.Itis the most water-intensive process in our operations. At our Rajasthan andRavvafieldreservoirs,salinegroundwater is sourced for the injection water requirement. We are not carrying out any water re-injection in our Suvali operations.

neither the sources of water, nor the surrounding areas lie in the protected region, or are acknowledgedtohavesignificantbiodiversity value. There are no imminent risks that emerge from the water used by our company from the mentioned sources.

Produced Water

In the process of oil & gas extraction from the ground, formation water also gets extracted as part of the reservoirwellfluid.Thevolumeofformation water commonly termed asproducedwaterinthewellfluidgenerally increases over time. The ratio of the volume of the formation watertothewellfluidvolumeiscalled ‘Water Cut’. The produced water is separated from the well fluidaspartofthehydrocarbonprocessing and the separated produced water is treated to remove suspended solids and oil content, compliant with quality limits acceptable for reservoir re-injection. The normal quality requirement is total suspended solids < 10 mg/l

and the oil content < 10 mg/l (which is within the permitted limits for discharge stipulated by the pollution control board discharge standards).

We follow different methods to dispose the water produced at each of our assets. At Ravva, the bulk of produced water (> 85%) is treated and injected back into the sub-sea hydrocarbon reservoir as injection water. At Suvali, it is treated to meet the marine discharge standards and disposed into the sea through a sub-sea diffuser system. At Rajasthan, the entire produced water is treated and mixed with injection water and injected back into the sub-surface hydrocarbon reservoir to maintain reservoir pressure support.

In the year 2012-13, Cairn India generated a total of 8,244,583 cubic meters of produced water,

out of which 7,865,903 cubic meters was re-injected back into the reservoir amounting to a re-injection percentage of 95.4%. The balance amount of 378,680 cubic meters was discharged to the sea after treatment. The marine discharge locations are not near any designated biodiversity notifiedarea.Thetotalvolumeofhydrocarbon discharged to the sea during the reporting period was 5.7 cubic meters.

Waste water & Recycled water

All our producing assets have adequately designed sewage andeffluenttreatmentplantstoensure that the treated discharge meets the regulatory compliance requirements. At Ravva production terminal and the Rajasthan Mangala Processing Terminal, wastewater treatment facility has been installed to treat and re-inject the produced water into the sub-surface for the reservoir for pressure maintenance purposes. The treatment system essentially consists of physiochemical treatment, followed byfiltrationtoremovethetracesofoil and solids. no surface discharge on land is carried out of any process effluent.InthecaseofSuvali,where the process water discharge is minimal, the treated produced

water is discharged into the sea in a diffuser system anchored to the seabed.

Domesticeffluentsuchassewagefromofficesandlivingquartersistreated through a physiochemical and biological treatment process so as to make it suitable for reuse for maintaining the greenbelts. During the reporting period 46,746 cubic meters was recycled amounting to about 0.33% of total water withdrawn from various sources. The above does not include the produced water re-injected.

Ravva and Suvali are the only assets that discharge treated wastewater to the marine environment. The total volume of treated wastewater discharged into the marine environment during the reporting period was 611,338 cubic meters. The quantity and quality of discharged water is within the limits permissible as per government regulations. The average treated waste water quality at Ravva, (Total suspended solids (TSS) = 14 mg/l, Biochemical oxygen Demand (BoD) = 22 mg/l, oil and Grease=7.5 mg/l) and at Suvali (TSS= 52 mg/l, BoD= 25 mg/l, oil and Grease=6 mg/l) is within permissible limits and poses no hazardous impact on the sea at present or likely to be in the near future.

The wastewater discharged by our assets at Ravva and Suvali is insignificantincomparisontothetotal volume of sea water. We ensure that location of discharge is not designated as a protected area and thatthereisnosignificantimpactorthreat to the biodiversity of the sea.

Climate Change

Climatechangehasbeenidentifiedas a material issue for the oil & gas

sector. Cairn India recognises the risks caused by climate change. We have conducted a qualitative assessment of the threats and aim toconductfinancialassessmentofsuch risks as well. It is important to us that we understand various aspects of the problem to take well-informed measures. We are committed through our HSE policy to prevent pollution and hence control emissions damaging the environment and those that are responsible for climate change. We have been reporting our Green House Gas (GHG) emissions intensity since 2002 and have been participating in the Carbon Disclosure Project (CDP) since 2009.

one of our short-term goals is the formulation of Cairn India’s ‘Climate Change Strategy’, which we plan to socialize among our employees and contractors. This document will formtheedificebasedonwhichourclimate change mitigation measures will be planned. our goal is to reduce the Carbon Footprint of our production operations.

As part of our mitigation measures to lower our carbon footprint we plan to integrate ‘Design for Environment’ concepts in the designofournewcorporateofficecomplex at Gurgaon to achieve LEED CommercialInteriorscertification.

•CairnIndia’scarbonemissionintensity for the reporting period 2012-13 based on all its production operation sites is approximately 95 TCo2E/‘000 T. Global average is 159 TCo2E/per ‘000 T of hydrocarbon produced from all its production sites as per the oGP Report for E&P industry in 2012. (http://www.ogp.org.uk/pubs/2011e.pdf)

•Ourcurrentenergyintensityis 1.21 GJ/tonne of crude equivalent produces. Global average is 1.6 GJ/tonne of hydrocarbon produced as per the oGP Report for E&P industry 2012.


We follow different methods to dispose the water

produced at each of our assets. Cairn India generated during the reporting period a total volume of 8,244,583

cubic meters of produced water and a re-injection

percentage of 95.4%.


5756

Cairn India has conducted an overall assessment of the issue of climate change. While we have not yet evaluatedthefinancialimplicationsof climate change for the organization, the overall assessment brought forth certain risks, which arise for our company.

a) Physical Risk

Cairn India’s offshore assets are vulnerable to severe weather events induced by climate change such as increased cyclonic activity in eastern and western coasts of India. This will result in increased risk to the safety and security of the installations and production down-time due to weather related impacts of cyclonic storms and resultant coastalflooding.Changesinrainfallpattern could pose a major risk in the Rajasthan asset, either due to increasedprobabilityofmajorfloodevents or severe drought.

b) Investment Risk

Currently, climate change is not regardedasasignificantinvestmentrisk for the retail investors in Cairn India. With Cairn India’s growth plan to be a global player in the hydrocarbon exploration and production, it is likely that Cairn India’s performance on GHG emissions and the mitigation

measures adopted will be a significantissuefortheglobalinvestor.

c) Regulatory Risk

The Government of India’s commitment to reduce the emissions intensity of its GDP by 20 - 25% by the year 2020 (compared to 2005) is expected to result in regulatory controls on emissions from our industry. Government’s schemes such as Perform Achieve Trade (PAT) scheme, Renewable Purchase obligations and Renewable EnergyCertificatesarealsoexpected to impact the oil & gas E&P industry. It is also likely that energy consumption, carbon emissionandflaringintensitywillbecomeverifiablemonitoringandreporting parameters and improved performance on these indicators a key requirement for capacity expansion/new projects, especially in the energy intensive sectors.

d) Reputation Risk

Companies can be exposed to reputation risks if they convey a sense of apathy with regard to their energy and carbon footprint or fail to implement sensible strategies and commitments to reduce energy consumption. Failure to seize the opportunities such as investing in

renewable and sustainable energy alternatives could also lead to a bad public image of the company. Hence, we plan to take initiatives to address our climate change impact through a judicious mix of initiatives based on low carbon growth strategy.

Energy Consumption

At Cairn India, our energy portfolio consists of primarily non-renewable and a small quantity of renewable energy sources. The primary source of fuel at all our production facilities is natural gas. natural gas is produced as part of our hydrocarbon production and a portion of this gas is used to run state-of-the-art turbines/engines at our various production facilities. In addition, at MPT, gas boilers produce steam to run the steam turbines.

High Sulphur Diesel is consumed for emergency start up and in some remote locations, it is also used in DG sets and in vehicles4 used for transportation purpose. In addition to these, some of the production facilities in the pipeline systems utilize grid power as the primary source of energy, which is obtained from state electricity board.

Electricity sourced from the grid comes from coal-based thermal power plants of the Gujarat State

Electricity Board. The consumption of coal by these power plants for the production of electricity used in Cairn India’s operations is estimated to be equal to 5,860 tonnes.

EnergyEfficiency&Energy Conservation

We have installed astronomical time switches, which automatically adjusts switch on-off time as per sunrise and sunset at our Raageshwari Gas Terminal (RGT) for the area lighting operation. We have been able to save 45 gigajoule (GJ) of energy in the year 2012-13.5

We have also focused our efforts on the reduction of indirect consumption of energy due to business travel by effectively using Tele-presence and video-calling services. However, since scope 3 GHG emissions are not within the boundary of this report, the quantifiedsavingisnotbeingreported.

Greenhouse Gas Emissions

our oil & gas exploration and production process involves various greenhouse gas emissions. As per the GHG protocol, such emissions areclassifiedintothreecategories,namely:

• Scope1emissionsincludeallthe direct GHG emissions by the

company arising from fuel use within the operational boundaries

• Scope2emissionsareallindirectGHG emissions from consumption of purchased electricity, steam or heat

• Scope3emissionsrefertoGHGemissions from other sources, which are not directly controlled by the reporting organisation

non Renewable Energy Volume Consumed Energy consumed in 2012-13 (GJ)

Diesel 5,512 (Kilolitres) 1,75,530

Fuel Gas 401 (million scm) 12,609,155

Electricity sourced from grid (GJ) 8,028 (MWh) 28,901

5Method of evaluation for energy saving = (Total lighting load * operating hours per day with electronic timer) – (Total lighting load * operating hours per day with Astro timer)

4Spark arrester vehicles solely used for plant operations and is considered to be part of fuel consumed for operations


Eco-friendly transportation, MPT, Barmer, Rajasthan


5958

For the reporting period 2012-13, Cairn India is reporting its emissions included under Scope 1 and 2. These emissions are derived from fuel and energy consumption numbers based on the API Compendium of Greenhouse Gas emissions methodologies for oil & natural gas industry, 2009.

SignificantScope1emissionsapplicable to our operations are Carbon Dioxide (Co2), Methane (CH4), and nitrous oxide (n2o). The emission of these components is as mentioned in the table below.

Emission source Total emissions in 2012-13 (in tonnes of Co2e)

Total Direct emissions (Scope 1 emissions) 9,83,302

Total Indirect emissions (Scope 2) 7,145

Total Emissions6 9,90,447

The Mangala pipeline transports crude oil from MPT at Barmer to the buyers and have helped us minimize our dependence on road transportation. By our estimate,

the pipeline results in six times lowerspecificGHGemissionscompared to transportation by road tankers. Consequently, it has helped ussignificantlylowerourtotalGHG emissions. The total volume of emissions that result from our pipeline operations are 96,197 tonnes of Co2e during the reporting period.

Component Emission in tCo2e

Co2 9,19,900

CH4 61,410

n2o 1,991

There was no packaging waste, noise pollution or spills with respect to transportation. our products do not contain benzene, lead, or sulphur.

Emission source Total emissions in 2012-13 (in tonnes of Co2e)

EmissionsviaTransportofrawmaterialsandfinishedproducts 96,197

Scope 1 emissions due to pipeline operations 89,053

Scope 2 emissions due to pipeline operations 7,145

Emission reduction

To reduce our GHG emissions, we have undertaken initiatives to generate renewable energy, namely solar and wind power. We have also implemented certain energy conservation measures, which have resultedinmulti-foldbenefitsforour company. In addition to saving energy, they have also contributed to reduction of our GHG emissions. During the reporting period we saved 280 GJ of energy consumption which translates to approximately 20 TCo2E GHG emission reduction.

Hydrocarbonflaringandventing

It is a necessary safety practice in oil & gas production to maintain an operationalflareintheprocessingfacilities. At Ravva and Suvali facility we maintain the level of flaringatoperationalflaringlevels,however at MPT, the volume of gas flaredisbeyondthislevel.Thisisbecause of lack of infrastructure

for the sale of surplus gas. We along with the joint venture partner discussed this issue with the Government of India and the approval is under consideration for gas sale from the Rajasthan block. We therefore believe in subsequent yearstheflaringatMPTwillalsobereducedtooperationalflarelevels.During the reporting period, the totalvolumeofflaredhydrocarbonsamounted to 62,560,986 cubic

6 Tonnes of n2o*310= Tonnes of Co2e ; Tonnes of CH4 *21=Tonnes of Co2e.

meters. Additionally, we vented 3,711,994 cubic meters of hydrocarbons.Theflaringandventing intensity for our operation was 0.88 mscb/mboe.

Exploring alternative energy

Although Cairn India is exploiting non-renewable hydrocarbons for providing energy security to the nation, we are of the opinion that

renewable resources such as solar energy and wind power are the next generation fuels that must be harnessed to their potential for long-term energy security. Hence, we are exploring options to use renewable energy as part of our captive energy consumption portfolio in a phased manner.


Solar Energy Panel at Ravva offshore Platform, Andhra Pradesh


6160

Renewable sources such as the sun, wind, ocean, water and biofuels are environmentally friendly and have much greater potential to provide for human needs than the non-renewable sources. We aim to pursue solar energy and energyefficiencyinitiativesatour operating sites. To plan such initiatives, we will carry out Renewable Energy opportunity Assessment Study to identify medium term and long term projects for implementation.

Forms of Renewable Energy Total amount of renewable energy generated in MWh in FY 12-13

Solar Energy 72.59

Wind Energy 2.06

Total amount of renewable energy generated 74.65

our company has primarily focused on generation of solar energy. In the year 2012-13, we invested InR 0.64 crores in our solar projects. This amount is about 0.027% of company’s overall capital expenditure.

The renewable energy projects undertaken include installation of solar lamps, street lights and arrays. This energy was generated across our assets. 76% of the solar power portfolio of the company was

our renewable energy initiatives have led to the following energy reduction in the reporting period:

Initiatives for renewable energy generation Reduction achieved7 (GJ)

Installation of Solar Lamps (Rajasthan) 28

Installation of Solar Water Heater at Ravva 153

Installation of Solar Arrays & Windmills in offshore platform at Ravva 54

Total Reduction Achieved 235

Environmental ManagementBiodiversityAssessment of biodiversity risk

As part of our commitment to biodiversity conservation and protection, Cairn India has enshrined the principle of ‘no net Loss’ as part of its HSE Policy. The biodiversity risk that may emerge from our activities is assessed as part of the environmental impact assessment for all of our existing and new projects or new regions of operation. However, these studies highlighted that no such threats were imminent. Currently, none of our sites are exposed to biodiversity risks.

Preserving Biodiversity

Weundertookspecificstudiesbeforecommencing the development in Rajasthan block to determine the biodiversity baseline and identify thefloralandfaunalassemblageinour area of operation. The results of the study were reported to the regulating agencies. The project

and operation staff have been sensitised to the conservation issues and strict procedures exist at all operating sites to ensure that there are no detrimental impacts to the biodiversity of the area.

our company acknowledges the critical role of biodiversity in maintaining the ecological balance in nature. none of our operating sites are located in or adjacent to protected areas of high biodiversity value. We do not own any land in any eco-sensitive zones, reserved forests, protected forests, national parks, wetlands or sanctuaries. our operational units do not lie within a 10 km radius of such regions.

no cases of land degradation due to our operations have been reported in the reporting period. Also, our production operations are likely to have had minimal impact, if any on biodiversity due to pollution from point and non-point sources. We have therefore no interventions to protect or restore any habitat around our area of operations.

As part of the greenbelt development in Rajasthan, a greenbelt study by the specialised nGo ‘School of Desert Sciences’ was conducted to ensure that there is no introduction of invasive species. An experimental nursery has been developed for desert plants.

In totality, in the year 2012-13, Cairn India’s operational activity has not directly impacted the biodiversity of the areas where we operate. We acknowledge that our supply chain partners’ activities may have had potential impacts on biodiversity in their areas of operations; however we have not conducted any studies or audits to investigate this aspect.

Through our social forestry & greenbelt development initiatives such as Project Shrishti’s greenbelt development programme, we aim to contribute to India’s green cover. We are also implementing a mangrove plantation programme that will support biodiversity conservation and prevent coastal erosion.

EnVIRonMEnTAL SUSTAInABILITY EnVIRonMEnTAL MAnAGEMEnT

generated at Ravva, followed by 19% at Suvali, and remaining by Barmer and Jalore.

A small amount of wind power was also generated through previous investments made in wind energy. This was generated through windmills installed on offshore platform in Ravva. The company has not yet ventured into other forms of renewable energy. Cairn India has made no investment in biofuel research during the reporting period.


6362

To minimise incidents of bird electrocution from the power lines, Cairn India implemented an unique programme of providing insulation of the points were large birds were observed to perch. This has reduced the bird casualty incidents by about 75%.

Cairn India has a captive power plant at Mangala Processing Terminal and the power generated at MPT is also carried to various well pads. The power is carried to the well pads using overhead lines (oHLs) at 33KVA. To prevent energy losses and to avoid incidents of power theft, power has to be transferred at high voltage. The transmission tower poles for the power distribution are convenient alternatives for perching for the birds in general. While smaller birds are not affected, large birds due to its larger wing span sometimes accidently are electrocuted. These incidents also led to temporary shut-down and production down-time at the well pads.

Cairn India overcame the problem by identifying the root cause for the

Cairn India is committed to biodiversity conservation and protection as mentioned in the principle of ‘no net Loss’ as part of its HSE Policy. As the name implies “ProjectShrishti”,isaboutcreatinggreenbelts and in the process developing livelihood options. Under this initiative, Cairn India has developed a forest cover of 210,000 trees in 227.50 Ha area.

Genesis:

Climatechangeposesasignificantdanger to the bio-diversity and eco system.“ProjectShrishti”,aspirestoincrease the country’s forest cover and provide a greener tomorrow for the future generation.

Methodology and Execution:

There are two models under Project Shrishti, in case of Afforestation and Mangrove Plantations:

• Engagingwiththestategovernment authorities in a public-private partnership (PPP) basis to contribute to social forestry and watershed development.

• PartneringwithNGOsinvolvingthe local community to develop social forest and green cover.

larger bird causality. Implemented a time bound project to provide greater protection and minimise the possibilities of such incidents. The vulnerable locations were insulated

Case Study: Protecting Local Fauna Case study: Biodiversity Initiatives

and the project was completed in about 1.5 months at a cost of approximately InR 0.224 crores. The number of incidents has since reducedsignificantly.

PROJECTSHRISHTI

Project ‘Shrishti’, aligned to the Prime Minister’s national Action Plan on Climate Change, will therefore help in promoting adaptation to climate change, increase the nation’s forest cover, promote biodiversity and utilize the skills of the local communities in plantation and maintenance thus provide livelihood support.

nalsarovar Sanctuary:

nalsarovar sanctuary, Gujarat’s largest and one of India’s prominent wetland bird sanctuaries, was in dire need of maintenance. Cairn India in association with the district administration and the forest department undertook the initiative to develop the park area and afforestation of the sanctuary forest in 4.5 Ha area.

Cairn India has built a nature park and bird nesting and breeding area. We developed 10 acres park area for General Tourists, students, bird watchers, etc. with aesthetic landscaping to include children’s play area, seating facilities, meditation places, gazebo and an amphitheatre and an 8 Ha forest area by planting more than 8000 saplings.

E-Plantation Scheme:

Plantation programmes usually fail due to lack of personal care required for plant growth in the initial years of plantation.

Cairn India has developed an “e-PlantationPortal”foritsemployees with the help of an nGo, providing opportunities to each individual to plant a tree and monitor its growth. Any individual who has planted a tree can log on from anywhere to the internet portal, pick a project site of personal choice and plant a sapling. The portals allows the following:-

• Taggingofsaplingswithpersonaldetails

EnVIRonMEnTAL MAnAGEMEnT EnVIRonMEnTAL MAnAGEMEnT

6362


6564

• BuildingaconnectwiththeTree

• Attachingcontributordetailstothe sapling

• Viewingthecontributionsmadeby the contributor on Google Earth map to show contributions made by the Contributor

• Monitoringtheplantation growth through real-time backend reporting

In e-Plantation, we prefer physical plantation to be done by school children in order to inculcate in them, the love and respect towards a green future.

Impact:

Development of social forest in Rajasthan & Gujarat with:

• 60,000treesplantedin77.50Haof land, and

• 125,000mangroveplantsin50Ha of land

• Plantationofnativeplants,medicinal plants in order to create indigenous traditional plant bank

Execution and maintenance by local community members has created responsibility amongst them to respect, protect and restore their own environment. It has promoted preservation of traditional knowledge and local wealth of bio-diversity with future economic

opportunities for traditional bio-products.

An estimated sequestration of more than 5000 tonnes of Co2 gas is expected by these trees after ten years of project implementation, assuming 80 per cent survival of the trees planted.

Way Forward

• Ourtargetistocompletethegreenbelt development in Rajasthan this year and in Gujarat overthenexttwofinancialyears.

• Weaimtodevelopadditionalareas into green forest by planting trees and developing mangrove plantation.

The Desert nurseryDeveloping a green belt in the desert and ensuring its survival is a challenging task. Care needs to be taken that non-native species are not introduced as they can have far-reaching negative impacts due to the predominantly aeolian environment.

Cairn India has sought the expertise of the School of Desert Sciences for its greenbelt development in general and developing an in-house nursery to grow hardy saplings of native plant species.

The goal is to gradually acclimatize the plants to the desert environment and ensure better survivability.

The nursery currently has 4,000 saplings.

It is envisaged that going forward we will involve local communities in spreading awareness on local natural medicinal plants and their traditional uses.

Generation of our primary products also involves emission of Sox, nox and Volatile organic Compounds. The following table presents an account of these three air emissions.8

Though we have not conducted a comparative study between nox, Sox and VoC emissions arising from

Waste

The oil & gas sector generates various forms of hazardous and non-hazardous wastes. These wastes have the potential to contaminate soil and ground water, and thus, need to be stored and disposed in an environmentally sound manner.Specificregulationsgoverntheiridentificationandmanner

Air Emissions

Waste Management

our pipeline operations and road tanker transportation, we believe that the pipeline emissions would besignificantlylowerthanroadtransport. The pipeline facilities operation has resulted in nox, Sox, and VoC emissions of 301.55 tonnes, 0.18 tonnes and 13.7 tonnes, respectively.

Product Source of Air Emissions Emissions in 2012-13 (in tonnes)

Crude oil Sox 0.041

nox 192.5

Volatile organic compound (VoC) 6.48

natural Gas Sox 3.98

nox 1302.9

Volatile organic compound (VoC) 230.03

8All the assets use natural gas as fuel so we are not reporting on HAP and other particulate matters

ofdisposal.Theidentificationofhazardous waste is in accordance withthe“HazardousWasteManagement and Handling Rules”, which is based on the Basel Convention. Cairn India has a well-structured management plan to handle all wastes that it generates in a manner compliant with the regulations.



64


6766

The following table provides the details of various kinds of wastes and the amount generated in the reporting period. neither was any waste transported internationally nor was it imported from any other country.

Type of Waste Generated Total amount for 2012-13 (MT)

Total Hazardous Waste (MT) 1,584

our hazardous waste includes: ATF Sludge/oil, Batteries, Discarded chemical containers, oil soaked cotton waste/gloves, etc,Oilyfilters,Oilysand,Oilysludge,Paintpeelings,Spentactivatedcarbon,Spentchemicals,Spentraisinfromusedionexchange/DM plant, Spent/used lube oil, Waste oil

Total non-Hazardous Waste (MT) 318

non-Hazardous waste includes: Bio-medical waste, Canteen waste (organic waste), Demolition/Construction waste, E-waste, Garbage, Glass, Insulation waste (PUF/Thermocol/Mineral wool), Metal scrap, organic waste (horticulture), Paper/corrugated boxes, Plastic, Rubber, Wood

Drilling mud and drill cuttings are alsoasignificantsourceofwasteforour company. However, since they are generated in our exploration and project activities, they are outside the boundary of this report. Hence, they are not being reported.

Spills

oil spill incidents are a major concern in the oil & gas industry. A high degree of precaution is

integrated by the company at various levels in the production process and transportation systems to minimise the likelihood of occurrence of such incidents. CairnIndiahasspecificoilspillmanagement response plan for

Augmentation of Sewage Treatement Plant (STP)

Augmentation of Sewage Treatment Plant (STP) from 80 KLD to 330 KLD capacity in MPT has been carried out. This STP augmentation eliminates the use of septic tanks and soaks pits thus preventing local discharges and also the treated sewage is effectively reused for the green belt development.

Use of nitrogen as ‘blanket gas’

• Crudeoilisstoredinfixedrooftanks.Duringtheevacuatingandfillingoftanksthereisventingof natural gas from the tank. It is proposed to replace fuel gas with nitrogen gas as blanketing gas. Thebenefitsare:

- Minimise GHG emissions (reduction in Cold venting at loading bay & storage tank)

- MinimiseResourceDepletion(Reductionin“Fuel”Blanketgasuseatstoragetank)

- Revenue Generation (Saved Blanketing Fuel gas & optimum Utilisation of Flashing Vapours)

- Reduce the operational hazards as nitrogen blanketing to tank is safer than Fuel Gas

onshore and offshore facilities. The plan includes internal spill reporting requirements, allocating an appropriate level of response to the spill - including the need seeking emergency response for large spills. We follow the oGP norm of categorising any spill > 1 barrel (1bbl)assignificantspill.AtCairnIndia, the oil spill contingency plan is periodically reviewed, training on execution of plan provided to

internal and external stakeholders and required resources for spill containment and clean-up are available with the company. Presently, Cairn India holds one of the largest inventories of oil

spill management and response equipment in the country.

We ensure that all our systems work in complete cohesion with each other and that there is no room for spills or leakages. As a result, our company has not seen any incidencesofsignificantspills9 in the reporting period.

Packaging Waste

our products of crude oil and natural gas are transported in bulk to the buyers through pipelines and a small volume by road tankers. our company does not use any packaging material. Hence, we are not required to report on the packaging and reclamation of such materials from our customers.

9The categorisation of spill severity is as per national oil Spill Contingency Plan stipulation (noSCoP) and external reporting of spills such as in oGP forum is as per oGP requirements. However, Cairn India’s internal requirement is that irrespective of quantity, oil spills need to be reported to the management.CairnIndiaconsidersoilspillsgreaterthan159liters(1barrel)assignificant,inlinewithOGPreportingrequirements.

our other initiatives to mitigate impact on environment

We take measures and precautions to ensure that there are no significantenvironmentalimpactsdue to our surface discharges, air emissions or material handling and use. These measures range from facilities for environmental

protection, strict enforcement of use of Personal Protective Equipment, training and awareness of the environmental and exposure risks to workforce and periodic monitoring programmes.



6968

Throughout the reporting period, Cairn India complied with applicable environmental laws and regulations. We have not received any legal notices on environmental matters involvingmonetaryfinesinthereporting period. However, the Gujarat Pollution Control Board has inspected the AGIs of the pipeline and has communicated the need to

Environmentalfinesandnon-monetarysanctionsprovide permanent arrangements to access the monitoring ports at all our Above Ground Installations (AGIs). These were issued for non-provision of access platforms to monitor performance of the stacks in the AGIs, which typically come in to operation under emergency or start-up conditions. Three non-monetary sanctions in the form

of show cause notices were issued to the company in this regard, out of which two were closed within the reporting period and work is in progress to close the remaining one. no closure notices were issued under any environmental laws.

Cairn India has spent InR 7.40 crores (USD 1.36 million) in the reporting period towards environmental protection expenditures. This expenditure falls under three categories – (i) prevention and environmental management costs,

Environmental Protection Investments

(ii) environmental protection expenditures, and (iii) waste disposal, emission treatment and remediation costs. The table given below shows the details of the expenditure in each of these categories.

Environment Expenditures (InR crores) in FY 2012-13

A) Waste disposal, emission treatment & remediation costs 3.88

B) Prevention and Environmental management costs 1.72

C) Environmental protection expenditures 1.80

Total 7.40

Cairn India has established, and is operating an approximately 600 km long pipeline from Barmer in Rajasthan to Salaya in Gujarat, to carry the crude produced to the refineries(MangalaDevelopmentPipeline). This pipeline is currently being further extended by 80 km to Bhogat, Jamnagar district in Gujarat to access the coastline of the Arabian Sea with a Marine Tanker Loading facility. The pipeline design and operation is a standing example of the ‘Cairn Can Do’ spirit of applying the best technologies, time-bound execution, stakeholder partnership and operational excellence. The MDP has won numerous national and international awards and is currently the longest continuously heated and insulated pipeline in the world.

• ThevolumeandnatureoftheRajasthan crude oil required a sophisticated design for transportationtorefinerieslocated more than 500 km away

• CairnIndiarequiredapipelinewhich would stay heated for the crudetoflowinit

• SuccessfulapplicationoftheSkin Effect Heat Management System, by far the longest of its kind in the world approximately

Case study: Integrating Sustainability – Mangala Development Pipeline operations (MDP)

- 670 km with 33 Above Ground Installations (AGIs), with the help of power generating stations of 1 MW each at the AGIs to power the heating system of the pipeline.

• Crudesalefromthepipelinecommenced within 24 months of the start of construction

• Pipelineintrusiondetectionsystem installed to ensure safety of the pipeline

Impacts & Achievements

• ScreenedontheDiscoveryChannel

• MentionedinLIMCAbookofrecords

• PMIrunnerupforBestManagedProject in 2011

• InfrastructureExcellenceAward,2012

• PetrofedAward,2012

• LossTimeInjuryFrequencyRatefor FY 2012-13 was 0.10

• Lowspecificenergyconsumptionin the transportation of the crude 6.34 MJ per kilometer annually per MT of hydrocarbon

• GHGemissioninthetransportation through pipeline was lowered by ~6 times as compared to transportation through road tankers

• Operationdowntimefigureofpipeline operation in FY 2012-13 was only 0.43%

• Amountofcrudecarriedthroughthe pipeline in the year 2012-13 was over 61 million barrels

EnVIRonMEnTAL MAnAGEMEnT

Mangala Development Pipeline during construction phase

Cairn India has spent InR 7.40 crores

(USD 1.36 million) in the reporting period towards environmental protection

expenditures.


7170

Social SustainabilityCairn India recognizes that ‘People’ are the common link across all our stakeholders. This includes our employees, our investors, as well as the communities where we operate. We realize that we cannot succeed as an organisation unless the people associated with us have pride and ownership in the work they do for the company or the way they are engaged with the company.

We therefore give high importance toalloureffortstocreatedignifiedenvirons for all our employees as well as members of the communities we impact. We respect diversity and work towards making Cairn India an“EmployerofChoice”.Weaimto continuously focus on building our organisational capabilities to develop an enabling culture to ensure that the organisation is“BuilttoLast”.Oneoftheimportant pillars in this regard is also to maintain best in class HSE performance to ensure employee and community safety.

At Cairn India the social management function has the oversight of the CEo through the Director (Strategy & Integration). The Head CSR reports to the Director (Strategy & Integration) and has teams at all assets and sites. The CSR team at sites works closelywiththefieldbasedfunction

and is particular with security and land. The head CSR and the team are responsible to actualise the programme intent of the company in its relation to community inclusiveness and engagement.

The company considers Rajasthan as its prime area of focus in the near-term and therefore, a major proportion of spend and programmes are around the Rajasthan block and the associated pipeline.Afieldbasedseniormanagement steering committee led by the head CSR has been constituted to provide managerial direction and decision making in community related affairs including liaison with the district administration. Implementation of community programmes are through partnership with regional and national nGo. Monitoring of programme effectiveness is done quarterly by the Director (Strategy & Integration).

We have also promoted two independent, registered, not-for-profitsocietiesthe‘CairnEnterpriseCentre (CEC)’ at Barmer and the Cairn Centre of Excellence (CCoE) at Jodhpur. The CEC has the prime of community outreach, and delivers on local development agenda, while the CCoE, presently under construction is aimed at becoming

a centre of vocational technical education of international quality.

Employment & Workplace ConditionsThe HR function is headed by the Director – HR & Administration who reports to the CEo. The function head is supported by Centres of Excellence (CoE) and Business Partnering teams to create an efficientandresponsiveHRdeliverymodel for the business. There are three CoEs, Compensation & Benefits,Learning&OrganisationalDevelopment and Talent Acquisition. Currently the CoE heads are also active in the role of HR Business Partners.

The Business Partnering teams cater to the organisation with one lead being responsible for each of the following verticals: operations, Projects, Petrotech and Business Support. They act as a conduit between the HR CoEs and the business. The BP teams not only executes the HR deliverables created and developed by the CoEs, but also act as strategic partners for the business and guide them on HR issues and effective functioning, especially with respect to people matters.

SoCIAL SUSTAInABILITY SoCIAL SUSTAInABILITY

Livelihood opportunities for women, Barmer, Rajasthan


7372

As on 31 March 2013, we had 1,317 employees, Short Term Employment on Contract (STEC) - 17, Direct Consultants -157 and third party consultants - 46. The above workforce consisted of 1416 males and 121 females. During the reporting year 300 new employees were recruited and 143 employees left the company.

Employees Short Term Employment ContractsDirect Consultants

Third Party Consultants

86%

3%10%

1%

Workforce by Gender as on 31 March 2013

Male

1416

121

Female

Chart 1: Employment by category and gender

β These numbers are inclusive of all our assets.

Employees who joined in 2012-13

7

16

5

142 130

Less than 30 50 and above

Female

Male

30-50

Employees who left in 2012-13

Less than 30

30-50

50 and above

Age in years


88

12

43


7574

Composition of governance bodies Cairn India strives to ensure a fair representation of all employee sections in the governance bodies so that the decisions taken prove beneficialtotheirinterests.Wedo not discriminate based on gender, religion, caste, nationality oranyotherformof“inheritedidentities”. We therefore do not track information on any of these attributes and are not reporting our diversity in those terms. We are however reporting gender and age-based diversity.

The following table highlights the composition of two key governance structures – the Board of Directors, and the Executive Committee.

Collective Bargaining

Cairn India does not have a collective bargaining agreement since we are not unionised. This

is a testimony to our proactive measures to engage with our employees at different platforms in a satisfactory manner. our initiatives like vHearU, CEo’s corner, easy accessibility to the top management and the option to make anonymous complaints apart from governance mechanisms like the Ethics Committee; HR policies related to leave, remuneration, training and education; and the Whistle-blower Policy ensure that we keep various avenues open for our employees to address any issues they may encounter.

Cairn India follows an amiable approach in matters concerning significantoperationalchangesfor any of our employees. Through mutual discussion and based on a balanced approach, a workable solution is found with respect to operational changes, which meets the operational objectives and employee concerns.

Employee Representation in Committees

We encourage representation of our employees in various committees, which take critical decisions for the management, operations of the company, and the well-being of the employees. We have a Health, Safety and Environment and Security (HSE) Committee in place. This committee is structured at two (2) levels. The Corporate HSE Leadership team chaired by the CEo has representation from senior management from all functions and discusses the HSE performance and expectations at a company wide basis. It also discusses the high potential incidents, the root causes, corrective and preventative actions taken, and the lessons learnt.

The second level of the HSE committee is structured at the site level. It is chaired by the Installation Manager and coordinated by the HSE manager. This committee has

Composition of Governance Bodies

Type of Governance BodyAge group

Less Than 30 years Between 30 & 50 years Above 50 years

Board of Directors 1 0 7

Executive Committee 0 0 5

note: In the above table international hires are part of minority groups

representation from all functions at the site level. The outcomes/deliberations of the committee are reported to the Head operations or Head Projects. There is also a separate HSE committee for contractor HSE management. All these committees operate at unit level and represent 100% of ourworkforce.Thefindingsandobservations of internal and external audits, management tour reports, Cairn observation Programme (CoP) findingsandotherformalvisitsareconsidered in developing corrective and preventive actions.

Skills Management and Lifelong Learning

The oil & gas E&P industry is very competitive and there is a high demand for skilled labour. The industry is largely technology-driven with frequent software and hardware innovations. Cairn India believes that the quality of its employees and their knowledge forms the keystone fortheefficiencyofouroperationsand the overall growth of the company. Cairn India promotes skill development and talent management of the employees with the vision togeneratemutualbenefitsfortheemployees and the company.

Cairn India supports continued employability of its employees throughout their service. We

impart knowledge and skills to our employees, which will help them continue to progress in their career. our programmes help them adapt to the changing technologies, innovations, and alternative management practices, which are strategically important for our business. Cairn India has invested InR 21.85 crores (approximately USD 4 Million) during the FY 2012-13 for training and skill management of its employees.

We have an Individual Development Programme (IDP), which assists individual employees as per their skills development needs. This programme is part of our performance appraisal programme. Cairn India has introduced Harvard Mentor Manage (HMM)

programme, which is a blended eLearning solution from Harvard Business School. This programme is customised for the needs of our employees and the organisation as a whole. HMM modules are organised in 4 topics: Personal Effectiveness, Leadership, Talent Management and Communicating Effectively.

other programmes introduced by Cairn India in this arena are listed below:-

• Mpower-DevelopmentPortalfor all Employees of Cairn India hosted on Tejas’ E-learning & Blended Learning

• OnlineCourses

• Simulationsandapplicationworkshops from PDI ninthHouse



7776

• CorporateLeadershipCouncil

• CenterforCreativeLeadership

• IHRDCPetroleumOnline&Business Essentials

• InstantAdvicefromPDIninthHouse

• In-houseClassroomLearningSolutions - Cairn Behavioural & Technical Training Calendar

• “Can-Do”BehaviouralCompetency Model

• NewHireProgramme

Inaddition,specifictrainingprogrammes are organised, which suit the needs of our site locations.

Training and Knowledge building

our employees underwent 37,280 hours of trainings in the reporting year. The maximum hours of training were attended by the employees in Band 2. We dedicated

a notable proportion of man-days to learning and development (L&D) purposes. Such trainings covered 94% of our employees. our contract workforce also underwent 68,922 man-hours of training.

Employees by Level Gender number of Employees Employee Training Hours in 2012-13

Senior LevelMale 79 2,512

Female 3 40

Middle LevelMale 440 19,168

Female 29 584

Junior levelMale 867 13,256

Female 96 1,720

Performance review

We consider it extremely important to review the performance of all our employees.Thispracticebenefitsthe organisation by appraising management about the quality

of our workforce with respect to the functional requirements. It allows management to identify the achievers and well-performing individuals in our workforce. This review forms the basis of remuneration, appraisals, and other performance related incentives for the employees and influencestheirgrowthtrajectory.It also simultaneously helps the company identify the gaps in its organizational capacity.

Cairn India also conducts career development reviews on a regular basis for the employees. These reviews help us understand the needs of the employees. The inputs from these reviews can be utilised to make decisions with respect to the skill development programmes. Both reviews are conducted for all the employees, irrespective of their gender.

Employee compensation

Cairn India believes that the human resource of the company provides it with the strength and skills required to maintain its operational excellence and aggressive growth. We ensure that our employees getcompetentbenefitsfortheirservices and promote building of long-term relationships with them. Ourmanagementhasdefinedbenefit

plans for the employees, which cover theirfinancialrequirementsduringtheir tenure as well as their post-retirement needs.

our company strictly ensures provision of equal opportunity of employment amongst various minority groups, irrespective of gender, class, caste, colour and otherinherentidentifiers.Incaseofgender,however,wefindthattheratio of female employees to male employees is mostly imbalanced on account of the nature of our operations. The policy of equal remuneration is also strictly adhered to and actively encouraged. We position our compensation competitively so that it enables us to retain and hire the best talent. Employees at senior, middle and junior level are paid in 12:3:1 ratio. no gender-based differentiation exists at any level of employment.

EmployeeBenefits

OurDefinedBenefitPlanfortheemployees consists of Provident Fund (PF), Superannuation, and Gratuity. We also have few other typesofbenefitsincludingrelocationexpenses and LTC. For Provident Fund, 12% of the basic salary is contributed by each employee and the same amount is given by Cairn India. Superannuation forms about

15% of the basic salary, and Gratuity contribution towards each employee is 4.81% of the basic salary. We also have a Voluntary Provident Fund Scheme (VPF). The VPF Scheme is over and above the mandatory 12% PF contribution and as the name suggests, is voluntary.

We have separate funds maintained foreachtypeofemployeebenefits.The Gratuity and Superannuation funds are managed by Life Insurance Corporation of India (LIC), while PF is overseen by the Regional Provident Fund Commission (RPFC), Chennai. The payment due is deposited to LIC and to RPFC on a monthly basis as part of the employees’ payroll payment. The contract employees are also entitled to PF and gratuity as per their employment terms with the contractor and in accordance with labour laws.


Cairn believes that the human resource of the

company provides it with the strength and skills

required to maintain its operational excellence and

aggressive growth.


7978

our pension liabilities are also fully covered by the funds set up for each of the above schemes. Participation in retirement schemes is mandatory in terms of payroll contribution except for the Voluntary Provident Fund Scheme.

Employees are also entitled to variousbenefitsprovidedbythecompany.Suchbenefitsaregivenduring their tenure as well as post-retirement.Manybenefitsaremade available to both permanent and contractual employees. We alsoprovidesomebenefitstotheconsultants who work for us. However, since 85% of our workforce constitutes permanent employees, certainspecificbenefitsaremadeavailable on a differential basis to these employees owing to their longer association with us.

The following provision of leave is applicable for our permanent employees. The contractual employees get their leaves as per the terms of their employment agreed upon with the contractor.

Parental Leaves & Rates of Re-joining and Retention

Cairn India has exhibited a 100% rate of rejoining and retention of employees who take parental leave. This is equally true for both women and men employed with us. The

Annual leave 20 days

Casual leave 10 days

Compensatory leave 3 days

Total leave each year 33 days

other specialised leaves

Maternity leave* 14 weeks

Paternity leave ** 5 days

* For women employees**For male employees

number of male employees who took paternalleaveduringthefirsthalfof the reporting period 2012-13 was 29. All of them rejoined service in due course and continued to work with us for the remaining part of the

reporting period. The same rate of rejoining was observed for female employees in 2012-13.

Healthcarebenefits

Cairn India ensures proper healthcare facilities for its employees.Otherbenefitsinclude:

• Medicalfacilities

• Lifeinsurancetopermanentemployees and direct consultants

• Accidentinsuranceschemes

• Insuranceagainstdisabilityorinvalidity

• MedicalandOPexpensereimbursement for permanent employees

no. of employees who took parental leaves from Apr’11-Mar’ 12

no. of employees who returned after availing parental

leave in FY 11-12 & were in continuous service for next 12

months

Retention % for FY 11-12

no. of employees who took parental leaves from Apr’12- Mar’13

no. of employees who were in continuous

service for 6 months 12-13

Male Female Male Female Male Female Male Female Male Female

14 8 100% 100% 100% 100% 29 3 100% 100%

• Compensationforanyaccidentcaused at work location or caused by the company operation/activities (This covers contract and other kinds of workers as well). If the accident involves disability or invalidity of an employee in the non-permanent category, they are subject to compensation as per the law or as agreed upon between parties.

Medical injuries to our contract workforce are also attended to through healthcare facilities available at Cairn India. They are covered under personal accident insurance in case of injury, disability or invalidity.

We conduct periodical medical examinations for the employees. All above the age of 40 have to compulsorily undergo health check-up annually and others have to do the same once in three years. In 2012-13, health check-ups were conducted for 364 employees.

Retirementbenefits

Upon retirement, our company providesbenefitsinadditiontopension. We give each employee an interim period accommodation, while they plan and relocate after completion of their employment. We also support relocation transportation and reimburse their travel cost for the same.

Otherbenefits

our company supports its employees in various aspects of their life, which helps us build a lifelong relationship with them. We provide:-

• Educationalallowance

• Loantoouremployeesatrelatively economical rates

• Membershiptohealthclubs

• Leavetravelallowancefortheirfamilies

• Clubmembership

our Safety Programmes

Upon retirement, our company providesbenefitsinadditiontopension.

1. Road safety and defensive driving

2. Cairn observation Programme

3. Asset integrity management systems

4. Women safety programmes

5. Asset security programmes



8180

Worker Safety We recognize that hydrocarbon production operations involve hazardous activities, which can pose a risk to the safety of people involved or exposed to them. Cairn India is committed to protecting the health and safety of its employees and contractors working at its sites. our aim is to eliminate all work related injuries and illnesses. By adopting and following international standards such as oHSAS 18001, PublicallyAvailableSpecification(PAS 55) – Part 1 (standard for optimal management of physical assets), ISo 14001, IFC Performance Standardsandotherspecificcodesof good practice we deliver on our key objectives through the entire project life cycle, namely:

• Ahealthy,safeandsecureworking environment

• Noaccidents,noinjuries,andnoharm to people

The security of our workforce is important when they are on Cairn India premises or on Cairn duty. All ourofficershavestrictlyenforcedvisitor access security protocols. We are sensitive towards the additional security required for our women employees. Security guards escort employees who are leaving late from the work place.

We organize self-defence classes for our women employees and have devised a mobile application to generate quick response in case of personal emergency. The code of business ethics and anti-harassment procedures focus on ensuring workplace security to women employees in particular.

our health & safety culture has been developed with the active involvement of our employees and contractors. our Health, Safety and Environment policy forms the foundation to the understanding, identificationandeffectivemitigation and management of risk to person and property. We have

Health, Safety & Environment (HSE) ‘embeds’ at all sites and in all our groups to ensure HSE issues are covered in all decisions and actions. our contractors, third party man power, and suppliers are mandated to implement our HSE requirements. We obtain written compliance to the policies as a part of the tender conditions and major non-compliance entails disciplinary action. We continuously seek to work with our contractors to raise the awareness and standards on HSE performance through training.

We report and maintain data as per thedefinitionsprescribedbyOGPinour CRMS database.

There have been no fatal accidents at any of our production sites during the reporting period. This is attributed to our continuous focus on safety related aspects of our operations. The table given above shows the incidents reported in 2012-13.

(note: Lost days are calculated based on calendar days; Figures mentioned above includes permanent employees and contract workers)

Due to health and safety measures in place, the total injury rate was 0.49 (calculated based on applicable GRI methodology). The lost day rate was 0.33. Systems have been put in place to record the absenteeism due to sickness and hence next year onwards we will report the absenteeism rate as well.

Health & Safety Metrics

near miss cases 109

Injuries (Minor & Major) 37

Lost Days3 25

non-fatal accidents 6

occupational Diseases 0

Fatal Accidents 0

Total no. of man hours worked 15,175,374

have undertaken many awareness programmes, which impart knowledge on health and lifestyle matters to those associated with us. Some of our initiatives and their scope are listed on the following page.

Cognizant of the fact that we work in hot arid geography in Rajasthan, the company has laid great emphasis on raising awareness and educating the workforce on the health risk of heat stress exposure. A heat stress management procedure has been implemented and the entire workforce has undergone the training. The occupational disease rate (oDR) was zero in the reporting period.

Health Training

It is important for us to maintain a healthy environment for the employees, their families and the community at large. With the aim to promote overall health, we


Self-defence workshop for women employees First aid training for drivers, Gurgaon, Haryana


8382

Programmes Description number of people covered

General Health Awareness

Target group: Employees, contractors and community members. Topics: Basic hygiene, sanitation, methods to counter common diseases, and nutrition.

Covers more than 150,000 people at the community level.

HIV/AIDS Awareness

Target group: Local communityTopics: Held every year on World AIDS Day. We deliver the information through lectures and interactive activities with the community.

Has imparted knowledge to 250 people in the reporting period.

Cancer Awareness Target group: Employees and their families Attended by 37 people.

Malaria/Fileria/Dengue

Target group: Employees, contractors, local communityTopics: Regular check-up for symptoms of Malaria, Fileria and Dengue.

This programme was extended to 96 Gram Panchayats in the reporting period. Almost 30,000 people participated in this initiative.

Lifestyle diseases Target group: Employees and their families, contractorsTopics: Talks with the experts at our Corporate OfficeinGurgaon.

These sessions were attended by 60 people.

Women’s Health

Target group: Women employees, families, local communitiesTopics: We promote women’s health through this program. Talk on breast cancer, General Gynaecological problems. In the community, we run mobile health clinics/vans to attend to various gynaecological issues.

This event saw participation by 45 women. This initiative has covered approximately 100,000 women.

TuberculosisTarget group: EmployeesTopics: Cairn India supports the drive to eliminate tuberculosis from India.

All employees. We ensure that all our employees and the contractors are tested regularly for this disease. They are also given medical aid in case anyone is found suffering from it.

Stress Management

Target group: Employees and their families, contractorsTopics: We organise stress management sessions at all our installations. These sessions are conducted by behavioural psychologists. our contractors can also gain from these sessions. We arrange special sessions for vehicle drivers and security guards who may have to deal with many mental pressures.

All employees, their families and contractors. Also special sessions are organised for vehicle drivers and security guards.

In addition to our health programmes, we also have a drug and alcohol policy, which mandates the workforce to practices avoidance behaviour at work and in the company premises. The socialising on the intent and content of thesepoliciesiscarriedthroughvernacularcircularsinordertoensuremaximumbenefittotheemployees.

Case Study on Road Safety at Cairn IndiaRoad safety is of high importance to Cairn India. Due to our work in different locations, extensive travel is involved in our operations. Road safety is affected by various critical factors such as vehicle and road conditions, weather, driver’s behavior etc. The challenge is to come up with a solution to ensure road safety that addresses most of these factors.

our Approach

Cairn India implements a robust Road Safety Management System to ensure the safety of those involved in the operations as well as other

incidental road users. The pillars of the road safety management system are:

1. Road Safety Policy

Cairn India has a clear set of guidelines elaborating the dos and don’ts for employees including contract personnel in all our road transport operations. Road safety indicators are made an integral part of our KPIs and we mandate compulsory reporting.

2. Driver’s Competence and Training

All the people who drive vehicles within Cairn India receive mandatory training by professional bodies such as the Institute of Road TrafficEducation(IRTE)&InstituteofDriving&TrafficResearch

(IDTR), and GlobalTHEn. We also carry out training programmes on road safety for police drivers, school children and village youth as a part of our community efforts.

3. Management of Vehicle Quality

Prior to mobilization, the age, condition, and color of the vehicles are checked and approved by the Site Road Safety coordinator and other designated agencies. To reduce the carbon footprint, we use fuel efficientvehiclesandwhereverpossible, avoid use of large number of small vehicles and ply fewer bigger vehicles.

4. HazardsIdentification&RiskAssessment of the Roads:

Cairn India conducts a Risk Assessment of Routes (RAR) where

Keep these wheels under your control.

DRIVE SAFE AND SLOW



85

employees have to travel. The RAR results help the employees understand the blind spots of the routes and analyze the inherent risks of travelling on such routes.

5. Vehicle Tracking and Monitoring

All the vehicles used for transportationarefittedwithVehicle Tracking System (VTS) to track the exact location of the vehicle. It also enables continuous monitoring of their speed and the route followed, simultaneously acting as a ‘watch-eye’ for drivers to adhere to our road safety policies.

6. Journey Management Plan (JMP)

This unique initiative by Cairn India involves a pre-planning stage for every journey to mitigate the road safety risk, avoid re-routed journeys and control any unauthorised journeys. The details such as number of passengers, route planning, rest point, contact numbers, and vehicle details are stored under the JMP. night journeys without proper approval (only in case of urgencies) are completely avoided.

Cairn India also undergoes incident reporting and analysis measures where we can learn from the incidents and improve our systems to avoid such errors in the future.

Achievements:

• Morethan10,000peopletrainedunder the defensive driving training programme

• Morethan500individualstrainedunder the behavior based training

• Roadsafetysessionheldforschoolchildren in Gurgaon, appreciated byDGPtraffic

• Numberofroadaccidentssignificantlyreducedinthereporting year from 26 cases in 2010-11 to 14 in 2012-13

Way forward

observing the success of the JMP, Cairn India plans to implement its electronic version on the internal web portal of the organization. We also plan to develop an integrated end-to-end solution for road safety under a central team set up to manage JMP and the VTS. Cairn India also plans to extend community training programmes to other locations.

We also plan to take forward our efforts of reducing our carbon footprint from road transport by includingmoreefficientvehicles.Inaddition to the above, we have our eye set on creating a Road Safety Task Force, which will continuously monitor our road safety measures and suggest improvements that will ensure zero fatality in road accidents.

Asset SecuritySecurity of assets and people is a matter of prime concern to the oil & gas sector globally. The nature of the business, the remoteness of operations, various geopolitical geographies and the unsettled times in different parts of the world drive the increased focus on adequacy and effectiveness of security measures. our security preparedness starts by assessing the threat-levels of project sites before beginning any operational activity. We believe that such assessments along with establishing legitimate ownership of land and other property claims are the cornerstone to lasting security.

Cairn India also applies appropriate technology as a proactive measure to safeguard its installations. We have collaborated with the district administration and other security authorities to improve and build local administrative capacity for crisis management response requirements. our onshore operational sites in Rajasthan are notifiedasprohibitedareasundertheOfficialSecretsAct.Theoffshoresites are regarded as vital assets by the Government of India, and are protected by the Indian navy and the Indian Coast Guard. Cairn also believes in partnering with the community to ensure a holistic

approach to security with innovative programmes like ‘Friends of Cairn’.

Process SafetyAn independent asset integrity group is entrusted to take care of asset integrity functions across the assets.A“RiskBasedInspection”approach is adopted across the organisation to synchronize the inspection frequency with the criticality of the process or equipment, and the annual maintenance plan or life cycle plan is chalked out accordingly. Predominantly the PAS 55 approach is being followed in Cairn India. A constant check on the safety aspects is maintained throughout the year across all the operational assets so as to take care of corrective and preventive actions well in advance.

At Cairn India, process safety incidents are investigated by an independent internal team of subject specialists who recommend corrective actions. These are put into the action tracker and monitored till the issue is effectively closed. Depending on the nature of the incident and its potential severity, corrective actions may include redesign, provision of additional safety measures, change in procedure, operator training, and other appropriate measures.



84

Process Safety during offshore operations

Keeping people safe is a top priority for Cairn India. This year (2013),theCompanylaunchedthe‘ZeroTolerance&LifeSavers’initiative to enforce its HSE commitment with greater vigour and to inculcate safe behaviour as a personal value.

ZeroToleranceandLifeSavers Cairn India Safety MascotHSE is a way of life at Cairn. Be it safe travel to work or activity at operational areas.

In our journey to achieve operational excellence, it is imperative that we nurture the HSE culture as an integral & inseparable part of our business.

To ensure that everyone at Cairn follows the HSE norms, Rakshak, our HSE mascot was introduced to the Cairn family.

Rakshak means – Saviour, Protector and Guardian.


8988

Any asset changes are implemented after due scrutiny through the ‘Management of Change’ procedure. In the reporting period, we undertookfiveTier2processsafetyevents.

our company aims to strengthen capability amongst our employees and contractors on Process Safety Management and Asset Integrity.

Society & Local Community At Cairn India, we believe that it is our responsibility to ensure that our operations do not disrupt the lifestyle of the local communities in the regions of our operation. Through our impact assessment mechanism, we ascertain the externality of our operations on these communities, and hence try to minimize our burden on them. There are no indigenous communities around our areas of operation.

We also have well planned initiatives to engage with the various communities where we operate. These initiatives are designed in a manner that the local communities and economies can grow and prosper without being fully dependant on us. These initiatives include the promotion of local content and local employment,

setting up of vocational training centres, protecting biodiversity and enhancing the local economy.

As part of our operations, we have Key Performance Indicators (KPIs) assigned to embed CSR teams within project and operations. At our Barmer site, the presence of Cairn India CSR senior management ensures that any potential issue that could escalate is dealt with in a timely manner. Maintaining good relationship based on our principle of 3 R’s (Respect-Relationships, & Responsibility) and listening to the grievances of the community is the duty of all employees at Cairn India. This ensures that there is constant proactive attention given to community harmony.

Going ‘Local’

Cairn India is committed to maintaining the highest standards of corporate responsibility in its business activities. We acknowledge that our operations can successfully involve the local community, and contribute to their development. As part of this, we intend to encourage the use of local content in our production process.

We give preference to regional employment provided the required skill and experience is available. The bulk of the management employees are Indian nationals, and only in specificexpertiseareas,expatsaresourced globally.

Cairn India has a PSCM Policy for Indian and Local Content for Cairn India operated Blocks. This policy definesthecontoursandmeasuresto be taken to make equitable opportunities available to the local population. The vendor and local contractor selection criteria is based on ensuring availability of economic opportunities to local community in a transparent manner andaimedatbenefittingthelandcontributorsasfirstpriorityandthelocal communities thereafter. The above is subject to meeting the HSE requirements. All our major tenders require at least 80% of unskilled labour to be sourced from the local community, subject to availability. Specificeffortsaretakentoimprove employability of the local community through skill and vocational development initiatives.

We also reward our contractors for compliance with the policy’s

Cairn India employees in India

Local (national) non Local (Expats)

1298 19


More than 300 local Barmer vendors associated with Cairn India


9190

Registered vendors at Vendor Development Cell400

350

300

250

200

150

100

50

0

2011 2012 2013

198

# R

egis

tere

d Ve

ndor

s

198

317

26

119

reporting requirements by providing them with up to 1% of contract value as a service fee. We also give favourable consideration, as well as bonus to those contractors

Details 2012-13 (InR crores)

Total amount of goods and supplies purchased within India 3,495.60

Total amount of goods and supplies purchased overall 5,832.00

% of Total Good and Supplies Purchased in India 60%

who utilise 10% or more of local content as per the contract. Those contractors who fail to comply or undertake partial compliance constitute material breach of the

contract, which could attract actions against non-compliance by Cairn India management. overall, the company acquired about 60% of its goods and supplies locally, which involved an outlay of InR 3495.60 crores (USD 643 million). Cairn India procured 9% of its material and services from regional sources during the reporting period.

Cairn India believes in leveraging its long term relations with the local community to drive sustainable economic development of the community. Even though we are a high spend technology and skilled expertise driven sector, we still could source over InR 500 crores from regional vendors during FY 2012-13.

Genesis:

Cairn India, from its early days of operations in Rajasthan, has felt the need to partner with the local communities to create sustainable environment by developing a local supplier and contractor pool.

Case Study on the Local Vendor Development

them on technical requirements of drilling, operations, Pipeline and EoR chemicals

Impact and Achievements:

• Increaseinthenumberofregistrations

• UsingsurveyresultstoCategorize and revalidate common pricing strategies

• Demonstratethatthevendorsaremajoritysatisfiedwiththeprocess transparency

• Segregatethecustomersin“Desirable”and“ManageableCategories”

• 49participantsfrom35local& international chemical companies based in Gujarat participated in the local vendor meet at Vadodra

Kiri & Company Logistics, Bunk House Manufacturer, Barmer

Kiri and Company, manufacturer of portable cabins, bunk house, supplier of heavy vehicles, generators, and other supplies has

been a portable bunkhouse supplier to Cairn India. Kiri has grown in size during the years of its association with Cairn India and has expanded the reach of its business to foreign geographies as well. Growth story of Kiri has proved to be the inspiration for other local vendors to excel in theirrespectivefieldsandtogrowup in the pyramid of progressive classification.

Way Forward:

To increase its connection with local suppliers, Cairn India has planned to organize vendor meets in different locations in the coming year. The efforts are in place to develop the local content further for the areas of operation.

91

Methodology:

• Focusonsupplierandworkforcedevelopment through a Local Content development policy

• Establishmentofavendordevelopment cell at Barmer

• FivephasesofVendormeetshave been held till March 2013 at Barmer in presence of senior management of PSCM department

• Developedapyramidstructure(shown alongside) for progressiveclassificationofitsvendors and supporting them to move from Level 4 to Level 1

• BasicandimportantpolicieslikeDrug policy, HSE manual and Road Transport policy translated to Hindi language for the better understanding of the local suppliers

• Togaugethelocalperceptionof the processes, a survey was conducted on the local vendors

• Whileawardingcontracts,thelocal land losers are given special preferences by adding weight to their bid

• InitiativearetakentoidentifyGujarat based Chemical Vendors for existing & potential requirements, and to educate


9392

Long-term Community Engagement At Cairn India, it is important for us to have the social license to operate in the regions where we have presence. We also believe that inclusive growth is essential for the long-term success of our business. We therefore seek to proactively engage the communities in areas of our operations.Ourfirstorderofbusinessistoensure that there are no disputes on land and water use.

The Cairn Incident Management System (CIMS) is used to also report any community related incident. These are then evaluated and responded with necessary corrective and preventive action. Thus all incidents reported are consideredsignificantformanagementinformation and response. During the reporting period six (6) incidents related to local communities were reported and resolved satisfactorily. We also ensure that we address any other form of negative impacts on the local community due to our presence.

Cairn India’s Land Acquisition and Compensation Plan (LACP) and the Public Consultation Disclosure Plan (PCDP) articulates our management approach towards involuntary resettlement, consultation and compensation. During the reporting period, there has been no involuntary resettlement in any of our production sites.

Cairn India also invests in the development of the areas and communities around its production sites. We also support and aid

the Government in its efforts at social progress through education, health, skills development and farming-based livelihood programmes. All our programmes are initiated after extensive Social Baseline studies that help us focus our time and resources on the most pertinent areas of intervention for the local communities. In addition there are various forums through which internal and external assessments and views are obtained ontheefficacyandusefulnessofthesocial interventions. Improvement actions as required are taken if deemed necessary. The programmes

are targeted towards the following stakeholders in the community, in order of priority:-

• ProjectAffectedPeople(PAP)• LocalResidents/Villagers• Vulnerablegroupsincluding

women, children, persons with disabilities

our primary goal with our projects and programmes is to enhance local capabilities and livelihoods, which can bring an improvement in the quality of life of the local communities.

In 2012-13, we spent a sum of

Project Amount invested

(InR crores)

Details

Community Ro plant 0.8 In areas of Rajasthan, water scarcity is a major problem. With setting of community Ro plants good quality water is made available at their door steps, which is a boon for the community. Also the long term effect can be decreased risk from water borne diseases.

SolarElectrificationProject 9.0 Limited access to water and electricity has been a general concern in many remote locations where Cairn India operated. This project was undertaken to support electrification of the villages, and addresstheir safety as well as economic concerns.

Supporting the Anganwadi Centre 0.5 Primary education is a very essential phase in the overall development of a child. Investing in the proper functioning of the Anganwadi project has provided the community a place where they can send their kids for early childhood learning as well as for the nourishment.

Supporting Gaushala Development 0.2 (for 5 units)

Cattle rearing and worshiping is a common phenomenon across Gujarat and Rajasthan. our intervention in this domain has provided common shelters for cattle. This has touched many lives on sensitive issues attached to their culture.

Building Girl School in Baiytu 1.0 Crores (expenditure in 2011-12)

Our intervention of building a girl school has benefited the causeto encourage quality education for girls. It has also addressed community’s concerns such as girls’ safety, and distance traveled to school. The longer term vision is the emancipation of women and to encourage the rights of women in society.

InR 10.5 crores (USD 1.93 million) on infrastructure projects. Some of these projects helped enhance the local community’s quality of life such as availability of electricity and good quality water. These projects are highlighted in the table below.

our overall CSR expenditure in the reporting period was approximately InR 20.85 crores (USD 3.83 million) and includes projects around all of our production sites and along the Barmer-Salaya-Bhogat pipeline. Some of our key projects are listed below:



9594

• Projectaimingatimprovedhealthindicators(IMR,MMR,andinstitutionaldelivery)includingspeciallyforthe children and expecting/lactating mothers

• ProvidingaccesstocleandrinkingwaterthroughcommunitybasedROplant

• Balwaadisforpre-schoolchildren• Forprimaryschoolchildren–RemedialEducation,SchoolUniformsandSchoolInfrastructure• ForHigherEducation–Supplyofstudybooksandbuspassestoeconomicallybackwardpeople• Fortheyouth–SkillDevelopmentTraining,ComputerEducationandLanguagecoursesforemployability.

To date more than 60 young people from backward sections of the society trained and employed• ModelAnganwadiProject(fournumbers)speciallyaimedatimprovingnutritionalstatusamongchildren

and promote all round growth• SchoolEnvironmentEducationacrossschoolsofSurattoraiseawarenessamongyoungergenerationabout

importanceofeco-systemandtheirroleinit.Morethan2000studentscovering20schoolsbenefitingfromthe programme

• Schoolscienceplaygroundandactivitycentretopromoteandpopularisescienceeducationamongchildren• Supporttogirlchildrenforhighereducationthroughprovisionofbicycles

•RegularVillagehealthclinics-Average2000patientseverymonthandfreemedicinesdistributed•ConstructionofHospitalbuildingforinitiatingprimaryHealthCentre

•Toiletconstructionfortotalsanitation•WatersupplysystemforS’Yanamvillage•Supporttopoorfamiliesforhouseconstruction

•MonthlypensionofRs.500/-to283widows•MonthlypensionofRs.500/-to68physicallyhandicapped•Tailoringcenterforwomen–OrdersworthRs.3Lakhgiveneveryyear(forschooluniformsandcoverall)

Community Health Initiatives

Education Initiatives

Health Initiatives

Infrastructure Support

Economic Empowerment

SoCIAL SUSTAInABILITY


9796

Focus Area Particulars 2012-13

Education

no. of Child Care centres 12

no. of Anganwadi centres 11

no. of children enrolled in Anganwadi centres 300

Health Total health outreach through health posts/clinic/mobile health units/camps (million)

1,85,000 (0.1.85 M)

Livelihoods

Farmers covered: training/cultivation/watershed/soil management/agricultural inputs 15,000

Cattle covered under veterinary health initiatives (thousands) 10,000

Total women Self Help Groups (SHGs) 7

no. of women members in SHG 100

Reach

Villages we work in 281

Villages under Integrated Village Development Programme 257

Total Population reached (Million) 5

Engagement no. of village meetings 100

WorkforcenGo and other partner 13

CSR Personnel 23

Cairn Enterprise Centre (CEC) was developed to promote employability among local community by imparting vocational training, skill development and local vendor development.

Genesis:

In Barmer, the harsh climatic conditions, lack of industrial activity in the region and dearth of skilled and semi-skilled labour led the youth to migrate to the cities in search of employment. Cairn created the CEC in 2007 (in collaboration with the International Finance Corporation (IFC)) to impart vocational training to foster sustainable economic growth in the region. IFC exited the partnership in 2009

The Challenge:

While training was provided to the local youth, linking them to employment opportunities proved to be a major challenge. This was mainly due to an extremely low general skill level, under-developed work ethic, high absenteeism, lack of quality trainers, unwillingness to relocate, etc. Thus, there was a need to reform the methodology and the effectiveness of the programme

delivery by evaluating and monitoring to make it more market-need oriented and economically attractive.

Methodology:

To overcome the challenges, Cairn India brought in major changes in the methodology and the programme content by contracting ILFS to deliver training to local youth at the CEC. Initiatives like providing adequate pre and post counselling; taking a small security deposit to curb absenteeism; providing on-the-job training; and post training tracking were part of the methodology. The model thus ensured that all the respective entities had some stake in the programme. Skill trainings that are now being imparted at CEC are:

• Masonry

• Welding

• HouseholdWiring

• MobileRepairing

• SpokenEnglish

• ComputereducationtoWomen

CEC also serves as a hub for collection and dissemination of information on employment opportunities, enterprise

development, government schemes, and upcoming contracts and tenders.

Milestones Achieved:

• 8200peopletrainedinCECforvocational skills

• 85%ofthetrainedpeopleplaced

• 15000peopleprovidedHSEtraining during Cairn India’s project phase

• Morethan160localvendorsregistered and more than 67 have got business linkages

• IncreasedrespectforCairnIndiaamong local community

Way forward:

owing to the success of the CEC, Cairn India has decided to increase the reach of the training programme to include more people in nearby communities by setting up satellite centres for CEC in collaboration with the Gram Panchayats. Cairn India has made a target of training 1000 youths in the region annually.

Case Study on Cairn Enterprise Centre:



9998

CorruptionWhile corruption does not appear asasignificantriskintheoverallrisk assessment of the company, we have detailed policies and systems to ensure that such mal-practices are not undertaken by any of our employees and suppliers. The Code of Business Ethics & Anti-corruption and Bribery Management System require all employees and service providers to demonstrate ethical behaviour.

In addition Cairn India has robust policies around the exchange of sponsorships, donations, gifts & hospitality. These policies extend to Group, Joint Ventures, Suppliers, Contractors, nGos and all other associated entities through our Code of Business Ethics. Compliance with this code is ensured through our contracts with all entities that we engage with. To reinforce the understanding of the above policies itisplannedtoconductspecificgroup trainings for employees and contractors.

Cairn India follows a zero tolerance policy on breach of ethics and all such incidents are investigated by third party agencies. We encourage our employees to inform us of any wrong doing that they become aware of. For this purpose, we have a Whistle Blower Policy that

protects individuals who make a disclosure even as we keep their identityconfidential.TheEthicsCommittee is responsible to carry out a detailed investigation on receipt of a complaint and ensure that the complaint is closed in a fair and transparent manner. All cases under the Whistle Blower Policy are reported to the Audit Committee.

Cairn India abides by all the relevant rules and regulations of the countries in which it operates. We do not make any monetary contribution to any political parties, politicians or any other related institutions in India or any other country. owing to strict adherence of our policies and business ethics, no legal actions were taken against our company for any form of anti-competitive behaviour, anti-trust, and monopoly practices. As a result of complete compliance with laws and regulations, our operating units have not been imposed with any kindofmonetaryfinesandnon-monetary sanctions in 2012-13.


Cairn India follows a zero tolerance policy on breach of ethics and all breaches are investigated by third

party agencies.

The Ethics Committee is responsible to carry out a detailed investigation on

receipt of a complaint and ensure that the complaint

is closed in a fair and transparent manner.


101100

Human RightsCairn India recognises the rights set out in the Universal Declaration of Human Rights (UDHR) and seeks to apply its principles within its sphereofinfluenceandactivities.We try to extend our value system to those in our supply chain through contracts that prescribe compliance to our values. While we recognise the challenges in fully driving these principles, we are trying to extend ourcircleofinfluenceandpropagateresponsible business practices.

We have embedded the human rights tenants in the Code of Ethics and our CSR policy. This is being further strengthened with standalone policies and procedures as per our functional needs. These policies help us determine the course of action in various foreseen and unforeseen circumstances, which could arise in the course of our operations.

Within the organization, it is mandatory for all the employees to undergo HSE training, which includes training related to human rights issues such as child labour,

worker facilities and safe working conditions. We have also carried out training on IFC Performance Standards to further sensitize our workforce on these topics.

We have included assessment of human rights issues as part of the ‘Gated Process’. When the company makessignificantinvestmentsinany venture or region, it has to ensure that the applicable law of the country/region subscribes to the human rights principles. It also has to ensure that the contracts formulated include human rights clauses, as per Cairn India policies, the national government or the global declarations.

We ensure that our suppliers, contractors, and business partners undergo human rights screening and are sensitised about human rights issues such as worker accommodation, no child or forced labour and safe working conditions. There have been no reported violations of our code by the service providers. We did not have to impose any performance conditions on them in this respect.

In case of any grievance expressed by any member of our organization, or the community, Cairn India has a formalised method to resolve the issue. We have setup an Ethics Committee, which looks into cases of human rights violation by the company, its employees, the suppliers or contractors. This committee addresses complaints arising from any kind of discrimination within the company.

In the reporting period, we have had three human rights related complaints and these have been resolved as well.

Freedom of Association Though Cairn India is not unionised, we ensure that representation of our employees in all matters concerning their well-being is achieved through robust and transparent systems in place such as the Performance Management System (PMS), Grievance Redressal System, Staff Welfare Committees, and Safety Committee. We enshrine the same rightstooursignificantsuppliers.Some of the steps taken by the company to support these rights are listed below.

• Adherencetoallstatutoryrulesand regulations

• Periodicinternalandexternalaudits to validate whether laws are being followed

• Employeesatisfactionengagement survey conducted by independent third party. The findingsaresharedwithalltheemployees of the company

• Proactivemeasurestakenbythe Wellness Committee & Safety Committee to look after the requirements at sites and corporateoffice

Forasignificantbreachofcompanycode and policies, disciplinary action is taken against people not abiding

by Cairn India’s principles and values.

Child and Forced LabourWe have strict policies to discourage child and forced labour in our organization. The ‘Fair Employment Practices Clause’ and the ‘Legal & Regulatory Compliance Clause’ in Code of Business Ethics clearly mentions our policies against the use of Child and Forced/Compulsory Labour.

In all Cairn India managed operations, strict enforcement is done through awareness building, direct supervision, security controls, integrated audits and special third party audits to ensure compliance.

We recognize that when it comes to work carried out at vendor facilities,

especially sub-contracted works; there may a potential risk of child/forced labour practices. In order to curb these practices, vendors and contractors are required to sign Cairn India’s ‘Code of Business Ethics’ and provide an annual disclosure of compliance. We also conduct third-party audits to ensure that no incident of child labour exists in the operations carried out by contractors in areas of our operations.

Rights of Indigenous and Local Peopleour operations are not located near populations of indigenous people, asdefinedbyIFCPerformanceStandard 7 (Indigenous People). We are therefore not exposed to suchconflictsrelatedtotheirdisplacement, land use, and impacts on cultural heritage.

We understand that our operations could have certain potential or actual impacts on the local communities. For example, in Rajasthan we have observed an increase in the cost of living in the surrounding areas, increased road trafficandtheincreasedriskofroadaccidents. Amongst these, the issue

HUMAn RIGHTS HUMAn RIGHTS

Cairn India recognises the rights set out in the Universal Declaration of

Human Rights (UDHR) and seek to apply its principles

within its sphere of influenceandactivities.

We also conduct third-party audits to ensure that

no incident of child labour exists in the

operations carried out by contractors in areas of

our operations.


102

of road safety is addressed through our internal HSE policy, training mechanisms and by providing better roads to the community. However, these impacts, except the road safety incidents have not been monitored in the reporting period.

Training Security Personnel on Human RightsThe security personnel are tasked with the safety of our workforce and assets and they are often the firstresponderstoincidentswiththe potential to violate human rights. To mitigate the risk of human rights violations, Cairn Indiafindsitcriticaltosensitiseand train its security staff on topics related to human rights. In the reporting period, we had employed 18 permanent and 1,232 contract security staff. 100% of this force has undergone training on Cairn India’s policies for human rights and the application of these policies in performing their duty. The security team also works in close coordination with our local CSR team to ensure that they do

not violate the human rights of local community members. They aretrainedonspecific‘rulesofengagement’ when faced with potentially volatile situations so as to diffuse them in an effective and conflict-freemanner.

Product ResponsibilityCairn India is committed to provide highest quality products to its customers. Simultaneously, it endeavours to address the environmental and social concerns, which emerge from the production of our goods.

our crude oil & natural gas processing facilities at Mangala Processing Terminal have been built based on the concept of ‘Design for Environment’. We only produce ‘processed crude’ and natural gas. The processed crude and the natural gas meet the buyer’s specification.Thecrudethatdoesnot meet the quality requirements is automatically routed to off-spec tank for reprocessing. Thus waste product generation and disposal is completely eliminated.

The hydrocarbon production from the Rajasthan block contributes significantlytoIndia’sindigenoushydrocarbon production and we make all efforts to ensure that we produce and process hydrocarbons in a safe and environmentally responsible manner.

The sale of our products is regulated by the Government of India through the provisions of the ‘Production Sharing Contract’ and the sale is made to the government nominated buyers. Since we do not have any direct retail customers, we are of the opinion that product responsibility aspects related to product advertising and marketing communications are not material to us.

Health and safety impacts of production/storage/disposal of crude oil/natural gas are continuously monitored. This applies to all the life cycle stages i.e. from exploration and production to delivery of the product at the respective delivery point. We have had no incidents of non-compliance with regulatory or voluntary codes concerning health and safety of our products.

HUMAn RIGHTS

G3.1 Content Index - oil & Gas Sector Supplement - Application Level B

Application Level B+ Type – II Moderate Assured by DnV AS

STANDARDDISCLOSURESPARTI:ProfileDisclosures

1. Strategy and Analysis

ProfileDisclosure

Disclosure Level of Reporting

Location of disclosure Reason for omission

Explanation for the reason for omission

1.1 Statement from the most senior decision-maker of the organization.

Fully CEo Statement, 4

1.2 Description of key impacts, risks, and opportunities.

Partially Risks in the oil & Gas Sector, 32

Impact on sustainability trends, risks and opportunities will be analysed and reported in future report Plan to report fully by 2015-16

2.OrganizationalProfile

2.1 name of the organization. Fully About our Company, 9

2.2 Primary brands, products, and/or services.

Fully About our Company, 9

2.3 operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures.

Fully operations, 10

2.4 Location of organization’s headquarters.

Fully About our Company, 9

2.5 number of countries where the organisation operates, and names of countries with either major operations or that arespecificallyrelevanttothe sustainability issues covered in the report.


2.6 nature of ownership and legal form.

Fully origin, 10

Global Reporting Initiative (GRI) Index


105104

ProfileDisclosure




2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).

Fully Customers, 20

2.8 Scale of the reporting organization.


2.9 Significantchangesduring the reporting period regarding size, structure, or ownership.

nR not Applicable

First Sustainability Report

2.10 Awards received in the reporting period.

Fully Awards and Accolades, 21

3. Report Parameters

3.1 Reporting period (e.g., fiscal/calendaryear)forinformation provided.

Fully About the report, 7

3.2 Date of most recent previous report (if any).


3.3 Reporting cycle (annual, biennial, etc.)


3.4 Contact point for questions regarding the report or its contents.


3.5 Processfordefiningreport content.

Fully Materiality, 37

3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance.


3.7 Stateanyspecificlimitations on the scope or boundary of the report (see completeness principle for explanation of scope).


GLoBAL REPoRTInG InITIATIVE (GRI) InDEX

ProfileDisclosure




3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantlyaffectcomparability from period to period and/or between organizations.

Fully About our company, 9

3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report. Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols.


3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g. mergers/acquisitions, change of base years/periods, nature of business, measurement methods).

nR not Applicable


3.11 Significantchangesfrom previous reporting periods in the scope, boundary, or measurement methods applied in the report.

nR not Applicable


3.12 Table identifying the location of the Standard Disclosures in the report.

Fully GRI Index, 103



107106

ProfileDisclosure




3.13 Policy and current practice with regard to seeking external assurance for the report.


4. Governance, Commitments, and Engagement

4.1 Governance structure of the organization, including committees under the highest governance body responsibleforspecifictasks, such as setting strategy or organizational oversight.

Fully Governance Structure, 22

4.2 Indicate whether the Chair of the highest governance body is also anexecutiveofficer.


4.3 For organizations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members.


4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.


4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization’s performance (including social and environmental performance).


ProfileDisclosure




4.6 Processes in place for the highest governance bodytoensureconflictsofinterest are avoided.

Fully Governance Structure, 24 (Text Box)

4.7 Process for determining the composition, qualifications,andexpertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity.


4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

Fully Principles and Policies, 28

4.9 Procedures of the highest governance body for overseeing the organization’s identificationandmanagement of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.


4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance.

nR not Reported

Cairn India plans to strengthen its governance procedure (refer Ethics, Transparency and Governance structure). Has been considered as a sustainability and plan to implement the same within 2 years

GLoBAL REPoRTInG InITIATIVE (GRI) InDEX GLoBAL REPoRTInG InITIATIVE (GRI) InDEX


109108

ProfileDisclosure




4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization.

nR not Reported

Management approach on application of the precautionary principle will be articulated in the next report

4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organisation subscribes or endorses.

Fully Principles and policies, 28Environment Sustainability, 50 Worker Safety, 80

4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization: * Has positions in governance bodies; * Participates in projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic.

Fully Industry Associations, 27

4.14CoMM List of stakeholder groups engaged by the organization.

Fully Stakeholder Engagement, 34

4.15 Basisforidentificationand selection of stakeholders with whom to engage.

Fully Stakeholder Engagement, 34

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.

Partially Stakeholder Engagement, 34

Formal procedure for stakeholder engagement including frequency, responsibility and reporting is under preparation. This will be articulated in the next report

ProfileDisclosure




4.17CoMM Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics and concerns, including through its reporting.

Fully Materiality, 37



111110

STAnDARD DISCLoSURES PART II: Disclosures on Management Approach (DMAs)

G3.1 oGSS DMAs


Location of disclosure Further comments

DMA EC Disclosure on Management Approach EC

Aspects Economic performance Fully Economic Performance, 42

Market presence, including local content

Fully Customers, 20 Going ‘Local’, 88

Indirect economic impacts Fully Long Term Community Engagement, 92

Reserves Fully Estimated Proven Reserves and Resources, 45

DMA En Disclosure on Management Approach En

Aspects Materials nR not Reported Significantmaterialsand consumables will be reported in the next report

EnergyCoMM Fully Environmental Sustainability, 50; Energy Consumption, 56

Water Fully Environmental Sustainability, 50; Water Footprint, 52

Ecosystem services including biodiversity

Fully Environmental Sustainability, 50; Environmental Management, 61

Emissions,effluentsandwaste Fully Environmental Sustainability, 50; Greenhouse Gas Emissions, 57; Air Emissions 65; Waste, 65

Products and services Fully About our Company, 9

Compliance Fully Environmental Sustainability, 50; Code of Business Ethics, 28

Transport Partially Caseon“IntegratingSustainability - Mangala Development Pipeline operation”, 69

The aspect of transportationofsignificantraw materials, consumables and products will be discussed in the next report

overall Fully Environmental Sustainability, 50

G3.1 oGSS DMAs

Disclosure LLevel of Reporting


DMA LA Disclosure on Management Approach LACoMM

Aspects Employment Fully Employment & Workplace Conditions, 71

Labour/management relations Fully Social Sustainability, 70Human Rights, 100

occupational Health and SafetyCoMM

Fully Worker Safety, 80

Training and education Fully Skills management and lifelong learning, 75

Diversity and equal opportunity Fully Employee Compensation, 77

Equal remuneration for women and men

Fully Employee Compensation, 77

DMA HR Disclosure on Management Approach HR

Aspects Investment and procurement practices

Fully Human rights, 100

non-discrimination Fully Human Rights, 100Employee Compensation, 77

Freedom of association and collective bargaining

Fully Collective bargaining, 74

Child labour Fully Child and Forced Labour, 101

Prevention of forced and compulsory labour

Fully Child and Forced Labour, 101

Security PracticesCoMM Fully Asset Security, 84

Indigenous rightsCoMM Fully Rights of indigenous and local people, 101

Assessment Fully Human Rights, 100

Remediation Fully Human rights, 100

DMA So Disclosure on Management Approach So

Aspects Local communitiesCoMM Fully Society & Local Community, 88

CorruptionCoMM Fully Corruption, 99

Public policy Fully Industry Association, 27

Anti-competitive behavior nR not Applicable



113112

G3.1 oGSS DMAs

Disclosure LLevel of Reporting


Compliance Fully Governance Structure, 22Code of Business Ethics, 28

Emergency preparedness Fully Process safety, 85 Asset security, 84

Involuntary resettlement Fully Long-term community engagement, 92

Asset integrity and process safety

Fully Process safety, 85

DMA PR Disclosure on Management Approach PR

Aspects Customer health and safety Fully Product Responsibility, 102

Product and service labelling nR not Applicable We do not have any end consumers

Marketing communications nR not Applicable ReferSection“ProductResponsibility” for explanation

Customer privacy nR not Applicable ReferSection“ProductResponsibility” for explanation

Compliance nR not Applicable ReferSection“ProductResponsibility” for explanation

Fossil fuel substitutes nR not Applicable not material to upstream oil & gas business

STAnDARD DISCLoSURES PART III: Performance Indicators

Economic

Indicator Disclosure Level of Reporting

Location of disclosure Additional Commentary


EC1CoMM Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

Fully Economic Performance, 42

EC2CoMM Financial implications and other risks and opportunities for the organization’s activities due to climate change.

Partially Climate Change, 55 Will be reported fully in 2015-16

EC3 Coverage of the organization’s definedbenefitplanobligations.

Partially EmployeeBenefits,77 Will be reported fully in 2014-15

EC4 Significantfinancialassistancereceived from government.

Fully Economic Performance, 42

Market presence

EC6CoMM Policy, practices, and proportion of spending on locally-based suppliersatsignificantlocationsof operation.

Fully Going ‘Local’, 88

EC7CoMM Procedures for local hiring and proportion of senior management hired from the localcommunityatsignificantlocations of operation.

Fully Going ‘Local’, 88

Indirect economic impacts

EC8CoMM Development and impact of infrastructure investments and services provided primarily forpublicbenefitthroughcommercial, in-kind, or pro bono engagement.

Fully Long-term Community Engagement, 92

Will be reported fully in 2015-16



115114



EC9CoMM Understanding and describing significantindirecteconomicimpacts, including the extent of impacts.

Partially Long-term Community Engagement, 92

oG1 Volume and type of estimated proved reserves and production.

Fully Estimated Proven Reserves and Resources, 45

Environmental

Materials

Energy

En3 Direct energy consumption by primary energy source.

Fully Energy Consumption, 56

En4 Indirect energy consumption by primary source.

Fully Energy Consumption, 56

oG2 Total amount invested in renewable energy.

Fully Exploring alternative energy, 59

oG3 Total amount of renewable energy generated by source.

Fully Exploring alternative energy, 59

En5 Energy saved due to conservationandefficiencyimprovements.

Partially EnergyEfficiencyandEnergy Conservation, 57


En6 Initiatives to provide energy-efficientorrenewableenergybased products and services, and reductions in energy requirements as a result of these initiatives.

Partially Exploring Alternative Energy, 59

Will be reported fully by 2015-16

En7 Initiatives to reduce indirect energy consumption and reductions achieved.

Partially EnergyEfficiencyandEnergy Conservation, 57

Will be reported fully by 2015-16

Water

En8CoMM Total water withdrawal by source.

Fully Water Footprint, 52

En9CoMM Watersourcessignificantlyaffected by withdrawal of water.


En10 Percentage and total volume of water recycled and reused.




Biodiversity

En11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.

Partially Environmental Management, 61


En12 Descriptionofsignificantimpacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.



En13 Habitats protected or restored. Partially Environmental Management, 61


En14CoMM Strategies, current actions, and future plans for managing impacts on biodiversity.



oG4 number and percentage of significantoperatingsitesinwhich biodiversity risk has been assessed and monitored.

Fully Environmental Management, 61

Emissions,effluentsandwaste

En16CoMM Total direct and indirect greenhouse gas emissions by weight.

Fully Greenhouse Gas Emissions, 57

En17CoMM other relevant indirect greenhouse gas emissions by weight.

Partially Greenhouse Gas Emissions, 57


En18CoMM Initiatives to reduce greenhouse gas emissions and reductions achieved.

Partially Emission reduction, 58 Will be reported fully in 2014-15

En20CoMM NOx,SOx,andothersignificantair emissions by type and weight.

Partially Air Emissions, 65 Will be reported fully in 2013-14

En21 Total water discharge by quality and destination.

Fully Wastewater & Recycle Water, 54

En22CoMM Total weight of waste by type and disposal method.

Fully Waste, 65



117116



oG5 Volume of formation or produced water.

Fully Produced Water, 54

En23CoMM Total number and volume of significantspills.

Fully Spills, 66

oG6 Volumeofflaredandventedhydrocarbon.

Fully Hydrocarbonflaringand venting, 58

En24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.

Partially Waste, 65 Will be reported fully in 2013-14

En25 Identity, size, protected status, and biodiversity value of water bodies and related habitatssignificantlyaffectedby the reporting organization’s discharges of water and runoff.

Partially Wastewater & Recycle Water, 54


Products and services

oG8 Benzene, Lead and Sulfur content in fuels.

Partially Greenhouse Gas Emissions, 57 Will be reported fully in 2013-14

Compliance

En28 Monetaryvalueofsignificantfinesandtotalnumberofnon-monetary sanctions for non-compliance with environmental laws and regulations.

Fully Environmentalfinesandnon-monetary sanctions, 68

Transport

En29 Significantenvironmentalimpacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce.

Partially Greenhouse Gas Emissions, 57 Will be reported fully in 2014-15

overall

En30 Total environmental protection expenditures and investments by type.

Partially Environmental Protection Investments, 68


Social: Labour Practices and Decent Work


Location of disclosure

Employment

LA1 Total workforce by employment type, employment contract, and region, broken down by gender.

Partially Employment & Workplace Conditions, 71


LA2 Total number and rate of new employee hires and employee turnover by age group, gender, and region.

Fully Employment & Workplace Conditions, 71

LA3 Benefitsprovidedtofull-timeemployees that are not provided to temporary or part-time employees, by major operations.

Partially Employeebenefits,77 Will be reported fully in 2013-14

LA15 Return to work and retention rates after parental leave, by gender.

Fully Parental Leave, 78

Labour/management relations

LA4 Percentage of employees covered by collective bargaining agreements.

Fully Collective bargaining, 74

LA5 Minimum notice period(s) regardingsignificantoperationalchanges, including whether itisspecifiedincollectiveagreements.

Partially Collective bargaining, 74 Will be reported fully in 2014-15

occupational health and safety

LA6 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programmes.

Partially Employee Representation in Committees, 74


LA7CoMM Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region and by gender.

Fully Worker Safety, 80



119118



LA8 Education, training, counseling, prevention, and risk-control programmes in place to assist workforce members, their families, or community members regarding serious diseases.

Fully Health Training, 81

Training and education

LA10 Average hours of training per year per employee by gender, and by employee category.

Fully Training and Knowledge-building, 76

LA11 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

Partially Skills Management and Lifelong Learning, 75


LA12 Percentage of employees receiving regular performance and career development reviews, by gender.

Partially Performance review, 76 Will be reported fully in 2013-14

Diversity and equal opportunity

LA13 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity.

Partially Employment & Workplace Conditions, 71


Equal remuneration for women and men

LA14 Ratio of basic salary and remuneration of women to men by employee category, bysignificantlocationsofoperation.

Fully Employee Compensation, 77

Social: Human Rights



Investment and procurement practices

HR1 Percentage and total number ofsignificantinvestmentagreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening.

Partially Human rights, 100 Will be reported fully in 2014-15

HR2 Percentageofsignificantsuppliers, contractors and other business partners that have undergone human rights screening, and actions taken.


non-discrimination

HR4 Total number of incidents of discrimination and corrective actions taken.

Fully Human rights, 100

Freedom of association and collective bargaining

Child labour

HR6 Operationsandsignificantsuppliersidentifiedashavingsignificantriskforincidentsof child labour, and measures taken to contribute to the effective abolition of child labour.

Partially Child and Forced Labour, 101 Will be reported fully in 2014-15

Prevention of forced and compulsory labour

HR7 Operationsandsignificantsuppliersidentifiedashavingsignificantriskforincidentsofforced or compulsory labour, and measures to contribute to the elimination of all forms of forced or compulsory labour.

Partially Child and Forced Labour, 101 Will be reported fully in 2014-15

Security practices

HR8CoMM Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations.

Fully Training Security personnel on Human Rights



121120



Indigenous rights

HR9CoMM Total number of incidents of violations involving rights of indigenous people and actions taken.

Partially Rights of indigenous and local people, 101


Assessment

HR10 Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments.

Partially Human Rights, 100 Will be reported fully in 2014-15

oG9 operations where indigenous communities are present or affected by activities and where specificengagementstrategiesare in place.

Fully Rights of indigenous and local people, 101

Remediation

HR11 number of grievances related to humanrightsfiled,addressedand resolved through formal grievance mechanisms.


Social: Society

Local communities

So1 Percentage of operations with implemented local community engagement, impact assessments, and development programmes.

Partially Long-term Community Engagement, 92


So9CoMM Operationswithsignificantpotential or actual negative impacts on local communities.



So10CoMM Prevention and mitigation measures implemented in operationswithsignificantpotential or actual negative impacts on local communities.



oG10 number and description of significantdisputeswithlocalcommunities and indigenous peoples.

Fully Long-term community engagement, 92



Corruption

So2 Percentage and total number of business units analysed for risks related to corruption.

Partially Human Rights, 100 Will be reported fully in 2014-15

So3 Percentage of employees trained in organization’s anti-corruption policies and procedures.

Fully Human Rights, 100

So4 Actions taken in response to incidents of corruption.

Fully Human Rights, 100

Public policy

So5CoMM Public policy positions and participation in public policy development and lobbying.

Partially Industry Association, 27 Will be reported fully in 2013-14

So6 Totalvalueoffinancialandin-kind contributions to political parties, politicians, and related institutions by country.

Fully Corruption, 99

Compliance

So8CoMM Monetaryvalueofsignificantfinesandtotalnumberofnon-monetary sanctions for non-compliance with laws and regulations.

Fully Industry Association, 27

Involuntary resettlement

oG12 operations where involuntary resettlement took place, the number of households resettled in each and how their livelihoods were affected in the process.



Asset Integrity and Process Safety

oG13 number of process safety events, by business activity.

Fully Process safety, 85



122



Social: Product Responsibility

Customer health and safety

PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage ofsignificantproductsandservices categories subject to such procedures.

Fully Product Responsibility, 102

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.

Partially Product Responsibility, 102 Will be reported fully in 2013-14

PRInCIPLE DESCRIPTIon SUSTAInABILITY REPoRT REFEREnCE

1 Businesses should conduct and govern themselves with Ethics, Transparency and Accountability

• Governance Structure, 22• Principles and Policies, 28• Code of Business Ethics, 28• Sustainability Goals, 39• Freedom of Association, 101

2 Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle

• CEo Statement, 4• Governance for Sustainability, 25• Principles and Policies, 28• Engaging with our Stakeholders for

Sustainability, 34• Sustainability Goals, 39• Environmental Sustainability, 50• Worker Safety, 80• Asset Security, 84• Process Safety, 85• Product Responsibility, 102

3 Businesses should promote the wellbeing of all employees • Code of Business Ethics, 28• our Principles and Policies, 28• Sustainability Goals, 39• Employment & Workplace Conditions, 71• Composition of Governance Bodies, 74• Collective Bargaining, 74• Employee Representation in Committees, 74• Worker Safety, 80• Health Training, 81• Employee Compensation, 77• EmployeeBenefits,77• Parental Leaves & Rates of Re-joining and

Retention, 78• HealthcareBenefits,78• RetirementBenefits,79• OtherBenefits,79• Freedom of Association, 101


nVG Principles Mapping


125124


4 Businesses should respect the interests of and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalised

• CEo Statement, 4• Governance Structure, (Text Box), 24• Governance for Sustainability, 25• our Principles and Policies, 28• Stakeholder Engagement, 34• Engaging with our Stakeholders for

Sustainability, 34• Materiality, 37• Sustainability Goals, 39• Case study on India’s Energy Security, 46• Environmental Sustainability, 50• Case study: Bio-diversity Initiatives, 63• Spills, 66• Social Sustainability, 70• Health Training, 81• Society & Local Community, 88• Going ‘Local’, 88• Long-Term Community Engagement, 92• Human Rights, 100• Rights of indigenous and local people, 101• Training Security Personnel on Human

Rights, 102

5 Business should respect and promote human rights • CEo Statement, 4• Risks in the oil & Gas Sector, 32• Engaging with our Stakeholders for

Sustainability, 34• Human Rights, 100• Freedom of Association, 101• Child and Forced Labour, 101• Rights of indigenous and local people, 101• Training Security Personnel on Human

Rights, 102


6 Business should respect, protect, and make efforts to restore the environment

• CEo Statement, 4• our Principles and Policies, 28• Code of Business Ethics, 28• Materiality, 37• Energy Security & Reserve Accretion, 43• Environmental Sustainability, 50• Water Footprint, 52• Climate Change, 55• Exploring Alternative Sources of Energy, 59• EnergyEfficiency&EnergyConservation,

57• Air Emissions (Text Box), 65• Emission reduction, 58• Preserving Biodiversity, 61• Case study: Bio-diversity Initiatives, 63• Waste, 65• other initiatives to mitigate impact on

environment, 67• Environmental Protection Investment, 68• Product Responsibility, 102

7 Businesses when engaged in influencing public andregulatory policy should do so in a responsible manner

• Industry Associations, 27• Code of Business Ethics, 28• Corruption, 99

nVG PRInCIPLES MAPPInG nVG PRInCIPLES MAPPInG


126

Page 1 of 3

INDEPENDENT ASSURANCE STATEMENT Introduction Det Norske Veritas AS (‘DNV’) has been commissioned by the management of Cairn India Limited (‘Cairn India or ‘the Company’) to carry out an independent assurance engagement on the Company’s Sustainability Report 2012 -13 (‘the Report’) in the printed format. This assurance engagement has been conducted against the Global Reporting Initiative (GRI) 2011, Sustainability Reporting Guidelines Version 3.1 (GRI G3.1) and AccountAbility’s AA1000 Assurance Standard 2008 (AA1000AS (2008)). The verification was conducted during March to October 2013, for the year of activities covered in the Report i.e. 1st April 2012 to 31st March 2013. The intended users of this assurance statement are the management of Company and readers of the Cairn India’s Sustainability Report 2012-13. The management of Cairn India is responsible for all information provided in the Report as well as the processes for collecting, analyzing and reporting the information. DNV’s responsibility regarding this verification is to the Company only and in accordance with the agreed scope of work. The assurance engagement is based on the assumption that the data and information provided to us is complete and true. DNV expressly disclaims any liability or co-responsibility for any decision a person or entity would make based on this Assurance Statement. Scope, boundary and limitations of Assurance The scope of work agreed upon with Cairn India includes verification of the following: � The content of the Sustainability Report – 2012-13 i.e. Review of the policies, initiatives, practices and performance described in the

Report as well as references made in the Report to the Annual Report; � Evaluation of the AccountAbility principles and specified performance information, described below, for a Type 2, moderate level of

assurance, in accordance with the requirements of AA1000AS (2008) detailed below: � Information relating to company’s sustainability issues, responses, performance data, case studies and underlying systems for

the management of such information and data; � Information relating to company’s materiality assessment and stakeholder engagement processes;

� Confirm that the Report meets the requirements of the GRI G3.1 for an Application Level B+, as declared by the Company. The reporting boundary is as set out in the Report and covers production operations from its assets in India operations i.e. Rava in Andhra Pradesh, Suvali in Gujarat, Barmer in Rajasthan and the Mangala Development Pipeline from Barmer to Salaya; no limitations on the scope of the assurance engagement were encountered during the verification process. Verification Methodology This assurance engagement was planned and carried out in accordance with the AA1000AS (2008) and the DNV Protocol for Verification of Sustainability Reporting1. The Report has been evaluated against the following criteria: � Adherence to the principles of Inclusivity, Materiality and Responsiveness as set out in the AA1000AS (2008); the Reliability of specified sustainability performance information, as required for a Type 2, moderate level assurance engagement,

� Adherence to the additional principles of Completeness and Neutrality as set out in DNV’s Protocol, and � The principles and requirements of the GRI G3.1 and Oil and Gas Sector Supplement for an Application Level B+.

As part of the engagement, DNV has verified the statements and claims made in the Report and assessed the robustness of the underlying data management system, information flow and controls. In doing so, we have: � Reviewed the Company’s approach to stakeholder engagement and its materiality determination process; � Verified the sustainability-related statements and claims made in the Report and assessed the robustness of the data

management system, information flow and controls; � Examined and reviewed documents, data and other information made available by Company; � Visited the Head Office at Gurgaon and Barmer facilities in Rajasthan; � Conducted interviews with key representatives including data owners and decision-makers from different divisions and

functions of the company; � Performed sample-based reviews of the mechanisms for implementing the Company’s sustainability related policies, as

described in the Report; � Performed sample-based checks of the processes for generating, gathering and managing the quantitative data and

qualitative information included in the Report. 1 www.dnv.com/services/assessment/corporate_responsibility/services_solutions/sustainabilityreporting/order/


8 Businesses should support inclusive growth and equitable development

• CEo Statement, 4• our Principles and Policies, 28• Code of Business Ethics, 28• Stakeholder Engagement, 34• Engaging with stakeholders for

sustainability, 34• Long-Term Community Engagement, 92• Economic Performance, 42• Social Sustainability, 70• Health Training, 81• Society and Local Community, 88• Going ‘Local’, 88• Case Study: Local Vendor Development, 90• Long-Term Community Engagement, 92• Case Study: Cairn Enterprise Centre, 97• Rights of indigenous and Local people, 101• Training Security Personnel on Human

Rights, 102

9 Businesses should engage with and provide value to their customers and consumers in a responsible manner

• About our Company, 9• our Principles and Policies, 28• Stakeholder Engagement, 34• Product Responsibility, 102

nVG PRInCIPLES MAPPInG

of 3

Conclusions The Cairn India’s Sustainability Report – 2012-13, provides a fair representation of the Company’s sustainability policies, objectives, management approach and performance during the reporting year. We confirm that the Report, along with the referenced information in the Annual Report, meets the general content and quality requirements of the GRI G3.1. DNV confirms that the Report meets the requirements for GRI Application Level B+. We have evaluated the Report’s adherence to the following principles on a scale of ‘Good’, ‘Acceptable’ and ‘Needs Improvement’: Inclusivity: As a part of its stakeholder engagement process, the Company has engaged an independent consultant to formally engage with employees across key locations to identify stakeholder perceptions and concerns; the engagement outcomes were validated by the top management team. In our opinion, the level at which the Report adheres to this principle is ‘Acceptable’.

Materiality: The materiality determination process is based on inputs from stakeholder engagement i.e. employees, leadership team and peer reporting of material issues related global Oil and Gas sector and the report focusses on eight key material aspects at macro level. The report does not bring out the relative materiality of aspects and issues in the sustainability context in an explicit way. However, in our opinion, considering the disclosure requirements for Application Level B as per GRI G3.1, the level at which the Report adheres to this principle is ‘Good’. Responsiveness: We consider that the Company has adequately responded to identified key sustainability aspects and challenges in the local sustainability context including aspects related to Oil and Gas sector, within the reporting boundary; Cairn India has implemented management systems with sustainability as focus, related to social, environment, health and safety to manage its key risks and opportunities. In our opinion, the level at which the Report adheres to this principle is ‘Acceptable’. Reliability: The majority of data and information verified at the Head Office and Barmer site at Rajasthan were found to be accurate. Some of the data inaccuracies identified during the verification process were found to be attributable to transcription, interpretation and aggregation errors and the errors have been communicated for correction and corrected. Hence, in accordance with the AA1000AS (2008) requirements for a Type 2, moderate level assurance engagement, we conclude that the specified sustainability data and information presented in the Report is reliable and acceptable. Specific evaluation of the information on sustainability performances We consider the methodology and process for gathering information developed by the Company for its sustainability performance reporting is appropriate and the qualitative and quantitative data included in the Report, was found to be identifiable and traceable; the personnel responsible was able to demonstrate the origin and interpretation of the data and its reliability. We observed that the Report presents a faithful description of the sustainability activities. Additional Parameters as per DNV’s Protocol Completeness: The scope of the Report covers select economic, environment and social aspects and performance indicators related to GRI G3.1 and the Oil and Gas Sector Supplement for Application Level B; the reporting boundary has been systematically selected to cover the entities over which it has control i.e. assets, identified the key stakeholders. The Report adequately responds to the disclosure requirements for Application Level B. In our opinion, the level at which the Report adheres to this principle is ‘Good’. Neutrality: This Report presents a balanced account of the Company’s sustainability performance, related issues and performance indicators in terms of content and tone. In our opinion, the level at which the Report adheres to this principle is ‘Good’. Opportunities for Improvement The following is an excerpt from the observations and opportunities for improvement reported to the management of the Company and are considered for drawing our conclusion on the Report; however they are generally consistent with the management’s objectives:

� Further strengthening the materiality determination process and linking them to sustainability drivers will help to improve the organisation’s sustainability performance, including timely detection of emerging issues and opportunities;

� Further strengthen the stakeholder engagement process i.e. multi stakeholder engagement process to determine the diverse stakeholder concerns and respond to the material aspects covering the entire value chain of activities including the projects under execution;

� Implement data management and analytics system to capture sustainability data/information at source and disclose sustainability performance at regular intervals;

� A systematic quality assurance process for quantitative data management will help to further improve the reliability of reported performance indicators;

� Integrate the sustainability performance data verification as part of the existing system of internal audits of management systems to further improve the quality of quantitative and qualitative data for future reporting;

� Progressively expand the boundary of reporting, goals, targets and performance metrics for material issues and benchmark the sustainability performance with peers.

Page 3 of 3

DNV’s Competence and Independence DNV is a global provider of sustainability services, with qualified environmental and social assurance specialists working in over 100 countries. DNV states its independence and impartiality with regard to this assurance engagement. While DNV did conduct other third party audits with Cairn India in 2012-13, in our judgement this does not compromise the independence or impartiality of our assurance engagement or associated findings, conclusions and recommendations. DNV was not involved in the preparation of any statements or data included in the Report, with the exception of this Assurance Statement. DNV maintains complete impartiality toward any people interviewed. For Det Norske Veritas AS,

Vadakepatth Nandkumar Project Manager, Head-SBE and ACS Services, Det Norske Veritas AS, India.

Antonio Astone Assurance Reviewer, Global Sustainability Manager, DNV Business Assurance, Italy.

Bangalore, India, 3rd October 2013.

The Company was adjudged the fastest-growing energy company in the world at the Platts Top 250 Energy Company Awards 2012.

The Company won 16 awards in the 26th Mines Safety week 2012 under the aegis of Directorate General of Mines Safety (DGMS), Ajmer.

Raageshwari Oil Mine won the runners up award at the National Safety Awards (Mines), 2010 held by GoI last year for Lowest Injury Frequency Rate per lakh Man Shifts in Oil Mines Category.

Ravva asset won the Platinum Award under the FICCI Safety Excellence Awards for Manufacturing 2012.

Cairn India won the Golden Peacock Award for Excellence in Corporate Governance for 2012

Cairn India was honoured with 4 EDGE

Recognitionawards for demonstrating best use of technology. EDGE (Enterprises Driving Growth and Excellence) is an initiative by the reputed IT magazine Information Week.

Cairn India won CMO Asia Award 2012 for best practices in Corporate Social Responsibility.

Cairn India won PetroFed’s “Oil & Gas Pipeline Transportation – Company of the Year 2012”award.

Cairn India won 3 HR awards from ET NOW Talent & HR Leadership awards - Organisation with Innovative HR practices, Best Talent Management Strategy and CHRO of the year.

Cairn India was awarded “Top Advance Tax Payer Award 2012” by the Income Tax Department (Tamil Nadu & Puducherry) for the first quarter 2012.

and the journey continues...

Cairn India Limited

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

+91 124 459 3000

Follow us on: twitter.com/ @Cairn_India

linkedin.com/company/cairn-india-ltd youtube.com/cairnindialtd slideshare.net/cairnindia

www.cairnindia.com