Cairn India Ltd

Introduction

FY2011 indicates financial year 2010-11, or the period from 1 April 2010 to 31 March2011. Analogously, FY2010. CY2010 refers to the calendar year.

FY2011 has been a year of success and challenges for Cairn India Limited (hereinafterreferred to as ‘Cairn India’, ‘CIL’ or ‘the Company’). Onthe one hand, the operations in Rajasthan delivered excellent results, with the MangalaProcessing Terminal (MPT) swiftly ramping up production from 30,000 barrels of oil per day(bopd) to 125,000 bopd - and transporting all of it through the world’s longestcontinuously heated and insulated pipeline of approximately 590 km from Barmer right up toSalaya in Gujarat via the terminal at Viramgam.

The well heads in Rajasthan; the four trains of the MPT; and the pipeline which isbeing extended to a marine terminal at Bhogat on the Gujarat coast are engineeringachievements that are capable of producing and transporting more than 205,000 bopd,subject to approvals from the Ministry of Petroleum and Natural Gas (MoPNG) and theDirectorate General of Hydrocarbons (DGH) and additional investments.

These assets can produce at least a fifth of India’s domestic crude oilproduction. Indeed, the hydrocarbon resources in Rajasthan provide a basis for producing240,000 bopd, subject to regulatory approvals and additional investments. With theapplication of Enhanced Oil Recovery (EOR) techniques and the access to other reservoirs,the Company believes that there is further potential. The Company and the nation,therefore, can be proud of the excellent resources in Rajasthan and the state-of-the-artfacilities including the MPT and the pipeline.

On the other hand, however, throughout FY2011 the Company has faced considerableuncertainty arising out of the proposed transaction between Cairn Energy PLC and theVedanta Resources Plc. Unfortunately, the transaction has been dogged by serious delays,objections by the Oil and Natural Gas Corporation (ONGC) and major interventions by theMoPNG. These have been escalated to the level of the Cabinet Committee on Economic Affairs(CCEA), which then sought the views of a Group of Ministers (GoM) of the Government ofIndia (GoI).

At the time of writing this Management Discussion and Analysis, neither Cairn India norits Board of Directors know what decisions might have been taken by the GoM, which areexpected to subsequently flow to the Company as a note from the MoPNG via the CCEA.Whatever the outcome, the fact is that it has created considerable uncertainties.

Since the Company has not yet received a letter from the MoPNG containing theCCEA’s decisions, it is inappropriate to comment on its unsubstantiated contents. Box1 outlines the bare facts of the proposed deal, the various interventions and theirtimelines to date. The Company will define appropriate responses on receiving the formalcommunication from the MoPNG.

FY2011 was of great importance for Cairn India. While the drilling activities tookcentre-stage, commissioning of the pipeline from MPT to Salaya in Gujarat linked theRajasthan crude to key markets in different parts of the country. Production was ramped upto 125,000 bopd in August 2010, and maintained at around the same level throughout theyear. The EOR pilot and the Bhagyam development drilling progressed well. The year alsosaw Cairn India make a discovery in its onland block (KG-ONN-2003/1) in the KG Basin andcommence preparations for the frontier drilling programme in Sri Lanka.

Going forward, this chapter starts with Rajasthan — the project, the hydrocarbonresources, the MPT, the pipeline, Rajasthan crude sales and finance updates. It then moveson to the Company’s other operating assets followed by a discussion on exploration.The chapter then moves on to Cairn India’s achievements in human resources andhealth, safety, environment and assuarance. It concludes with internal controls and theiradequacy, financial results and business risks. The Company’s focus on corporatesocial responsibility is outlined in the chapter that follows.

1 Timelines of the Proposed Acquisition of Shares of Cairn India Limited

The Rajasthan Project

First, a bit of history. The RJ-ON-90/1 Production Sharing Contract (PSC) was signed on15 May 1995 and Cairn acquired an interest in the block in 1997. Based on interpretationof well data and a growing understanding of the characteristics of the basin, Cairn had abelief that the area was rich in hydrocarbons with the potential to become a significantproducing resource. In 2002, Cairn acquired 100% of the exploration interest and assumedthe role of operator of this acreage.

It was a sound investment decision. The Mangala Field — considered the largestonshore hydrocarbon find in India in the last 25 years — was discovered in January2004. This was followed by discoveries at Bhagyam and Aishwariya. To date, 25 discoverieshave been made in the Rajasthan block and studies show that the block may have furtherpotential for growth.

Cairn India is the operator of the Rajasthan block, which is spread over 3,111 km²,with a 70% participating interest. Its joint venture (JV) partner, ONGC, has a 30%participating interest.

The Rajasthan block, RJ-ON-90/1, consists of three contiguous development areas:

• Development Area (DA) 1, comprising the Mangala, Aishwariya, Raageshwari andSaraswati (MARS) fields;

• DA 2, comprising the Bhagyam and Shakti fields; and

• DA 3, comprising the Kaameshwari West fields.

Over the years, the development and commercialisation phases have led to a betterunderstanding of the geological formations, which has resulted in successive appreciationin the value of these assets. The Rajasthan field development is a relatively low riskonshore project in comparison to working in an offshore environment with the currentoperating costs of approximately USD 3.5 per bbl. The crude can be extracted usingindustry best practices in oilfield technology; and recovery could be further enhancedthrough proven tertiary methods such as EOR.

More than 350 wells and over 40 well pads are planned across the Rajasthan fields. Evenat the currently approved peak production rate of 175,000 bopd from the Mangala, Bhagyamand Aishwariya (MBA) fields, Cairn India will contribute more than 20% of India’scrude oil production.

The Rajasthan Hydrocarbon Resources

The Rajasthan potential resource is currently estimated to be approximately 6.5 billionbarrels of oil equivalent (boe) in place. The discovered resource in MBA and other fieldsstands at approximately 4 billion boe in place. The Fatehgarh Formation in the MBA fieldshold 2.1 billion boe in place, of which the Proved and Probable (2P) recoverable reservesand resource base are over 1 billion barrels.

The 22 other fields (including the Barmer Hill Formation) are estimated to holdapproximately 1.9 billion boe in place of which the gross 2P recoverable resource isestimated to be 140 million barrels of oil equivalent (mmboe). Evaluation work is underwayfor these fields.

The further exploration potential is now estimated at approximately 2.5 billion boe inplace. Detailed basin re-evaluation through re-analysis of well data, reprocessing ofseismic data and updated understanding of petroleum systems has resulted in a significantgrowth in the exploration portfolio, with the gross risked prospective recoverableresources of 250 mmboe.

The total resource base, thus, supports a vision to produce 240,000 bopd, (equivalentto a contribution of approximately 30% of India’s current crude production), subjectto further investments and regulatory approvals.

Mangala, Bhagyam and Aishwariya

The MBA fields’ Stock Tank Oil Initially In Place (STOIIP) is more than 2.1billion barrels, with approved Field Development Plans (FDPs) for all the three fields.Cairn India believes that production potential from these fields exceeds the MBA approvedrate of 175,000 bopd.

The MBA fields have gross recoverable reserves and resources of over 1 billion barrels.This includes 2P gross reserves and resources of 694 mmboe with a further 300 mmboe ormore of EOR resource potential. To date, more than 40 million barrels (mmbbls) have beenproduced from the Mangala field.

Development drilling at Mangala, which commenced in January 2009, is progressing well.To date, 143 wells have been drilled from eighteen well pads. The results from these wellshave confirmed the geological and reservoir understanding of the field and the STOIIPestimates. Performance of the horizontal wells has been better than expected, with testedrates being greater than 11,500 bopd. Production performance from the conventional wellshas been according to expectations.

Given these encouraging well results, performance based reservoir studies and thirdparty evaluation show that the Mangala field has the potential to produce 150,000 bopd,subject to regulatory approvals. Moreover, the increased offtake rate from Mangala is notexpected to have any impact on the ultimate technical recovery from the field.

The Bhagyam field, the second largest discovery in Rajasthan, is expected to commenceproduction in H2 CY2011 and achieve its currently approved plateau rate of 40,000 bopd byend CY2011. A total of 30 Bhagyam development wells have been drilled to date with thesurface facility development work progressing as planned with detailed engineering nearingcompletion and all major contracts being awarded. The well results from Bhagyamdevelopment drilling have been in line with expectations.

The third largest discovery in the Rajasthan block, the Aishwariya field, is currentlyundergoing an assessment of higher production potential and design optimisation due toincreased reserves and resources. Crude oil production is expected to commence in H2CY2012, subject to JV and GoI approval. The tendering process for the award of contractshas commenced.

Raageshwari Deep Gas Field

The Raageshwari Deep Gas field is designed to supply gas to meet the energyrequirements at the MPT and the pipeline. 19 new wells were drilled and completed inaddition to the three existing gas producers.

Hydraulic fracturing operations have been completed in seven development wells so far,with four to five zones fractured (or ‘fracced’) in each well. The operationshave been highly successful with wells having flowed at rates of up to 20 million standardcubic feet per day (mmscfd) — five times the rate previously achieved from thisreservoir.

Saraswati and Raageshwari Fields

The Saraswati Field, which commenced production in May 2011, is currently producing ata rate of 250 bopd. This oil is being processed at the MPT, and is being co-mingled withthe Mangala oil sold through the pipeline. Commencement of production from this fielddemonstrates the philosophy of bringing onstream smaller Rajasthan fields in order tooptimise the value.

Oil production from the Raageshwari oil field is scheduled to commence in the currentfinancial year. The first phase of development drilling has been completed.

Small and Satellite Fields

FDPs for many of the satellite fields are currently under preparation.

Barmer Hill and Other Fields

From the development drilling results and further evaluation of the Barmer HillFormation overlying the Mangala and Aishwariya Fatehgarh Formation reservoirs, the Companyhas identified significantly increased potential in the basin. Fields in other parts ofthe world with characteristics similar to the Barmer Hill are being developed and havedemonstrated recovery factors in the range of 7% to 20%.

Thanks to this evaluation, the estimated gross recoverable resources from the BarmerHill (from Mangala and Aishwariya) and other fields have almost doubled to 140 mmbbls.

Since the Barmer Hill reservoir is less permeable than the main Fatehgarh Formationreservoir, the plan is to fracture horizontal wells to optimise the well count and deliverhigh production rates. A Declaration of Commerciality (DoC) for the

Barmer Hill has been submitted to the GoI in March 2010 and a FDP is under preparation.

Kaameshwari West

A FDP covering fields in the Kaameshwari West development area has been submitted tothe GoI for approval.

Further Potential: Exploration Upside

Cairn India believes that there remains significant and as yet untested prospectiveresource potential to pursue in the Barmer basin. The Company and its JV partner, ONGC,continue to develop the hydrocarbon resources in Rajasthan with a focus on cost and theapplication of innovative technologies.Over the last two to three years, the Company hasundertaken a comprehensive re-evaluation of the Barmer basin. All 170 exploration andappraisal wells were re-examined, new studies were started and more than 2,700 km²of 3D seismic data was reprocessed and reinterpreted. The use of high density 3D seismicsurveys has enhanced the understanding of the reservoir and helped to precisely identifywell locations. Cairn India also acquired over 2.2 km of core samples to gain a betterunderstanding of the geological and reservoir models. The application of new fracturestimulation and completion technology proven in the Raageshwari Deep Gas wells willprovide the opportunity to replicate and thereby, exploit the lower permeability BarmerHill Formation.

As a result of these studies, the Rajasthan prospect portfolio has increasedsubstantially to 250 mmboe recoverable risked mean prospective resources with potential,equivalent to a most likely in place resource of 2.5 billion boe. Discovering anddeveloping these resources, subject to approvals from the JV partner and the GoI, will bean important step in realising the full production potential of the Rajasthan fields.

The Mangala Processing Terminal

The Mangala Processing Terminal (MPT) spread over an area of 1.6 km² is theheart of the Rajasthan development. It is located 40 km from the nearest town, Barmer,which is 200 km from Jodhpur, 150 km from Jaisalmer and 70 km from the border withPakistan.

Crude oil extracted from the Rajasthan fields flows into the MPT for processing priorto being transported to distant refineries through the 24 diameter export pipeline.The Mangala concession covers an area of 1,859 km² and includes the key fieldsand surface facilities such as:

• The fields at Mangala, Aishwariya, Raageshwari and Saraswati;

• Mangala Processing Terminal;

• 18 well pads — from which the in-field pipelines carry oil from and powerfluids to the pads; and

• The Raageshwari Gas Terminal (RGT) comprising of well pads, gas processing plantand pipe corridor transporting gas and condensate to the MPT.

The MPT is designed to process crude from the Rajasthan fields and will have aprocessing capacity to handle 205,000 bopd of crude with scope for further expansion.

Train One, Train Two and Train Three (with capacities of 30,000 bopd, 50,000 bopd and50,000 bopd respectively) are commissioned. The construction activities for Train Fourhave commenced and is on track for delivery in H2 CY2011.

The average gross production from the Rajasthan block for FY2011 was 100,993 bopd andthe MPT facilities had a plant uptime of more than 99% during the year.

Following the commencement of Mangala production in August 2009, the field ramped up toits plateau of 125,000 bopd in less than a year. The field continues to produce at thecurrently approved rate of 125,000 bopd. Since the start of production, the MPT has hadefficient and safe operations and has processed more than 40 mmbbls of crude oil, whichhas been sold to Public Sector Undertakings (PSU) and private refiners.

While Cairn India has come a long way from 2006 when the terminal was under design, itis imperative to look back at some of the key elements which have shaped the MPT.

The very location of the Rajasthan fields in the Thar Desert presented dauntingchallenges both logistically and environmentally — in an extremely remote locationwith extremes of temperature exceeding 50^o C during summer and dropping tounder 5^oC in winter, combined with periods of frequent sand storms, erratic butheavy rainfall patterns, and high velocity cold winds.

The Barmer district, thus, witnessed a spurt in economic activity and the localpopulation’s expectations for employment, entrepreneurial opportunities etc. wereconsiderably high. This was appropriately managed by excellent community engagementinitiatives which started years before the actual construction commenced and was thenreinforced by Cairn India’s clear commitment to utilise the local populace in theconstruction activities.

The challenge of raising the MPT in 28 months from barren desert sands was an enormousfeat, which required ingenuity, innovation, planning and relentless commitment. Prior tocommencing the construction of the MPT, the area required the removal of large sand dunesfollowed by levelling and compacting to suit the plant design. These tasks utilised over450 tractor trailers and removed more than 6 million cubic metres of sand in the first sixto eight months with local support. The plant construction was then completed inapproximately 18 months from the graded site and the plants were ready to start-up. For adevelopment of this scale, size and geographic distribution of the fields, this was acommendable achievement in project management and development.

Oil and Gas processing demands effective environment management measures from aregulatory perspective and as part of our responsibility towards the society and theenvironment. The project obtained an Environmental Clearance well ahead of theestablishment of the project and the recommendations were fully implemented in the designand construction phase. The monitoring of environmental parameters and periodic reportingto relevant authorities started from day one and is being followed during the operationsphase too.

Here are some interesting aspects of the MPT development:

Land Acquisition for the MPT

For a project of the scale of the MPT, acquiring land was a major task that needed tobe completed on schedule and within costs. Cairn India, on behalf of the JV, started theprocess of acquiring land for the Rajasthan project from early 2005. In doing so, theCompany focused on offering adequate compensation to farmers, and went about the landacquisition in a planned manner. The complete legal process was followed: the Governmentof Rajasthan appointed a Land Acquisition Officer (LAO), and the acquisition rate asdecided by the LAO and Government of Rajasthan was paid to each land contributor. Becauseof scrupulous adherence to due processes and, indeed going beyond it, Cairn Indiasucceeded in obtaining social and community approval to operate in the region, and builtdirect communications with the local citizens. In addition, the land acquisition processwas then followed up by training the land contributors for gainful employment in the MPTconstruction. Thanks to the strict adherence of processes, a mammoth project of this scalecould be completed smoothly.

Project Management

From the design stage, it was evident that the size and scale of the MPT would be a bigexecution challenge.

The physical location of the three fields - the Mangala oil field, the Raageshwari DeepGas field and the Thumbli water field - required huge efforts in planning, logistics,engaging locals, and implementing health, safety and environment (HSE) standards.Achieving over 42 million manhours without any lost time injury (LTI) speaks volumes ofthe considerable effort put in by the Company consistently across various locations andsites, and more specifically during the peak manpower deployment at multiple locations.

The procurement strategy for the project was complex because it involved combining manycritical long lead packages with other bulk orders to ensure that work fronts were notstarved of materials, equipment and consumables at the various sites. Regular meetingswith the vendors and placing dedicated personnel at the facility of key equipmentsuppliers led to better monitoring and control. The plant engineering, procurement andconstruction were simultaneous until a certain stage of the project and involved hundredsof vendors, sub-contractors and other agencies. This demanded a meticulous integratedplanning effort combining all aspects of project management.

At the peak of construction activity, over 11,000 people were engaged in constructionand this speaks about the challenges of construction management. The multiple locations ofsites; huge resource management; meeting local expectations; managing the requiredconstruction infrastructure; and the interface management of contractors /sub-contractors, etc. were some of the challenges that were managed well.

Environment Friendly Means to Generate Energy

Steam is used for power generation as well as for heating and pumping out the oil. TheMPT is based on a closed loop system where:

• Sub-surface saline water is transported to the MPT by a 20 pipeline fromthe Thumbli reservoir, 22 km from the terminal;

• Part of this water is desalinated and processed: (i) to feed the demineralisedwater to the five boilers at the MPT to generate steam for heating, driving the turbinesto generate electricity, to meet potable and other process requirements at the terminal;(ii) to waterflood the oil reservoirs;

• Part of the Thumbli water, heated with steam, is used to inject into the oilreservoirs as power fluid for the extraction of crude;

• The natural associated water that comes with crude is also processed in theterminal and re-injected along with waterflooding; and

• Natural gas is used as fuel to fire the boilers to generate steam, which besidesits use in processes, is used to generate power to run the electrical drives at theterminal and to power the electrical heat tracing system to keep the temperature of thewaxy crude above 65^oC to ensure flow assurance. The gas comes from theRaageshwari Deep Gas field, located some 90 km away from the MPT. The RGT, with four gaswell pads and 35 wells, is designed to produce dry gas of over 30 mmscfd. It istransported via a 12 gas pipeline to the MPT and the gas liquids, or condensate, bya separate 4 pipeline.

The steam condensate recovery helps to optimise the feed water requirement for boilers,heating requirement of various process units and the power fl uid management. The overallsystem design has ensured efficient power and environment management by way of loweremissions.

Buildings: There are a total of 82 buildings of which (i) 16 are in the MPT whichinclude the Central Control Room, electrical sub-stations, guard-houses, a fire station, alaboratory and a warehouse; (ii) 23 sub-stations serving the well pads and the Thumblisaline water reservoir besides security guard houses in all of these well pads; and (iii)three buildings at the Raageshwari site comprising a control room cum sub-station andothers.

Pipe racks: These are, in a manner of speaking, the skeleton of the MPT —carrying the pipe network in the terminal that interconnects various equipment, skids,tanks and vessels. Electrical cables, which are akin to the muscular system of the plant,are laid on the cable trays on top of the pipe racks. The neural network, which comprisesthe instrumentation and control system cables, is also laid on the pipe racks over adedicated tier. There are 36 pipe racks in the MPT, totalling more than 10 km in lengthwith the longest one running across the facility for nearly 1 km. The height of a piperack ranges from 8 to 16 metres. The pipe racks’ numerous grids and 24 bridges forcrossing the roads, comprise a total structural steel quantity of 6,600 metric tonnes.

Tanks: Totally, there are 26 tanks — 20 of them within the MPT and six at theRaageshwari Gas Terminal. These were constructed using the vertical jacking system, whereshell plates are installed and welded at about ground level / low height and then jackedup, after which the next shell is installed. This system led to quick completion andmitigated safety risks as all welding was conducted at the ground level. The largest tanksat MPT are the four export oil tanks with a capacity of 120,000 barrels followed by threeinjection water tanks at the MPT with a capacity of 150,000 barrels.

Electrical, instrumentation and telecommunications: The electrical power system atMPT operates at many levels such as at 415v / 6.6kv / 33kv ratings. The total length ofcable laid for the electrical, instrumentation and telecom systems across the MPT is morethan 2,000 km. These are laid in about 125 km of cable trays installed on the pipe racksat different heights. The electric power to the well pads and Thumbli is at 33kv level andis carried by overhead lines. The total overhead cabling is about 134 km. A total of 2,600instruments and about 1,000 detectors are installed across the MPT. Instrument tubingaccounts for a length of about 18 km. The commissioning of the plant meant testing ofapproximately 9,000 cold loops and 1,500 hot loops.

Drilling

Cairn has drilled more than 200 exploration, appraisal and development wells in theRajasthan block in the past decade, and made 25 discoveries using differentstate-of-the-art technologies. Some of these are:

Well design: Broadly speaking, Rajasthan development uses five different types ofwell design for the different reservoirs. These are:

i. Deviated oil producers: These target sands at shallower depths, and are designedto produce from 2,000 barrels to 4,000 barrels of fluid per day;

ii. Horizontal oil wells: These target deeper sands and are designed to produce inexcess of 10,000 barrels of fluid per day. The wells use electrical submersible pumps forartificial lift and latest generation inflow control devices to provide uniform influxalong the lateral length;

iii. Water injectors: These are simple and cost-effective wells designed to inject10,000 barrels of water per day for void replacement and pressure maintenance in theFatehgarh Formation reservoirs;

iv. Gas wells: These target the volcanic and tight low permeability Fatehgarh sandsin the Raageshwari Deep Gas field. Mono-bore type cost-effective wells with multiple zonefractures help produce the gas that fuels the MPT and the power generating stations alongthe continuously heated and insulated crude pipeline. These wells produce 6-7 mmscfd ofgas, and have been tested to produce natural gas at rates of up to 20 mmscfd; and

v. Source water wells: These target the extensive and prolific Thumbli saline wateraquifer and are designed to produce up to 60,000 barrels of water per day using heavy dutyelectrical submersible pumps.

All the above well designs have been tested and are performing as per expectations. Thehorizontal wells have been tested at rates of more than 11,500 bopd — setting therecord for the highest rate onshore oil producers in India.

Multi-well pad design: To enhance the success of an extensive drilling campaignthat required over 250 wells to bring the MBA fields online, Cairn India adopted themulti-well pad drilling concept. Each well pad provides facilities which allow a number ofwells to be drilled, produced and maintained at an optimum cost. The number of well padsand their locations were carefully selected for best exploitation of the field, takinginto account cost, deviated drilling and surface features such as sand dunes, flood paths,roads and railways. This process has increased the drilling efficiency in terms of areduced environmental footprint and lower infrastructure and drilling costs.

Custom-made rapid rig design: The innovative pad drilling concept was implementedvia its custom-made rapid rig technology, which allows fast and efficient drillingoperations on multi-slot well pads. The custom-built rigs are highly mobile skid mounted‘Super Singles’ of 1000 HP and AC driven. These were specially built for Cairnin Houston to be deployed in Rajasthan to drill more than 350 development wells. Theirsmaller footprint and self deploying design allows for ease of transport and faster onsiterig-up. Unlike conventional rigs, these purpose-built rigs can move easily between theslots on the pad without rigging down, which cuts down well construction time and deliversgreater productivity at reduced costs. The fastest that Cairn has been able to movebetween two well locations was 36 hours. Use of this rig design has conservatively helpedthe Company save a minimum of 300 rig days, which also corresponds to significant costsavings.

Completion and workover rig: Well completion and workover operations requirereduced rig capability compared to drilling. Therefore, a strategy was adopted to avoidthe use of a drilling rig (i.e. a rapid rig) for running well completions and carrying outworkovers. A separate rig was hired a much lower cost - which has made the well completionand workover operations cost effective.

Enhanced Oil Recovery (EOR)

EOR techniques are methods of increasing recovery from oil fields. Usually, EOR is usedas a tertiary recovery method — generally applied at the later stage of field lifefollowing primary and secondary recovery from the reservoirs.

Cairn India recognised the potential for EOR at an early stage of development in itsMBA fields. The reservoir quality, oil properties and ambient temperature make thesefields ideal for the application of chemical flooding EOR methods such as polymer orAlkali Surfactant Polymer (ASP) flooding.

Studies by two independent laboratories showed favourable trial results of 30% to 40%incremental recovery through the application of EOR in the reservoir corefloods. Detailedfield scale modelling and simulation studies indicate incremental recoveries of 15% fromthe MBA fields by ASP flooding.

The Company is currently conducting an EOR field pilot in the Mangala field. Eightwells of the pilot including one producer, four injectors and three observation wells havebeen drilled, completed and hooked-up to the facilities. The inter-well interference testconfirmed the expected reservoir quality and good reservoir connectivity in the pilotarea.

Water injection in the pilot , which started in December 2010, is progressing well.Chemical injection facilities have been fabricated and delivered to the site andcommissioning is in progress. Cairn India intends to implement chemical flooding on afield scale in Mangala, followed by Bhagyam and Aishwariya in a staged manner.

The current assessment of the EOR resource base is more than 300 mmbbls of incrementalrecoverable oil from the MBA fields.

Connecting Rajasthan to the market – Mangala Development Pipeline

To realise the value of the Rajasthan crude, Cairn India decided to build theworld’s longest continuously heated and insulated pipeline from the MPT at Barmer tothe west coast of Gujarat for delivery to refiners and thereby, access markets en route.

The project presented many challenges: how to keep the waxy crude heated; how tominimise disruption to the environment and habitation; and how to find the shortestpossible route to the coast, and yet meet the needs of all key buyers en route.

Of the total pipeline length of approximately 670 km up to Bhogat on the Arabian Seacoast, approximately 590 km up to Salaya is operational and the remaining 80 km isexpected to be completed in H2 CY2012. The pipeline construction from Barmer to Salaya wascompleted in a record time of 18 months and it is now the lifeline of the Rajasthanproject.

Once, the entire pipeline from MPT to Bhogat i.e. approximately 670 km is operational,the pipeline will have access to more than 75% of India’s refining market.

The Pipeline Project

The pipeline project dealt with:

• Laying of approximately 590 km oil evacuation pipeline (an insulated oilpipeline of 24 diameter and a gas pipeline of 8 diameter) from the MPT inRajasthan to Salaya in Gujarat via Viramgam in Gujarat; and then another 80 km to Bhogaton the Arabian Sea coast thus totalling to approximately 670 km;

• 39 Heating stations and pigging stations along the pipeline route;

• Construction of more than 700 crossings of various types, including 34 majorrivers, 38 canals and numerous national and state highways, railway, existing Maphydrocarbon pipelines, etc.; not to scale

• Storage and delivery / distribution infrastructure and export pumps plus mainline booster pumping station at

Viramgam in Gujarat;

• Storage and delivery/distribution infrastructure at Radhanpur and Salaya;

• Terminal facility with storage capacity of 2.1 mmbbls of crude oil at Bhogat,which includes a marine infrastructure with a subsea pipeline and a single point mooringfacility for the loading of oil tankers;

• Captive power generating facilities at all heating stations and at the Viramgamand Bhogat terminals;

• Employment of more than 6,000 people during the construction activity; and

• Passage through more than 270 villages in Rajasthan and Gujarat.

As the crude oil is waxy by nature, it has to be maintained above the wax appearancetemperature by preventing heat loss for fl ow assurance. This is achieved throughinsulation and an electrical heat tracing technology called the Skin Effect HeatManagement System (SEHMS). There are 36 above ground stations up to Salaya. The SEHMS usespower that is being generated at each heating station and then feeds it to the system oneither side of the heating station to keep the pipeline and the crude oil above 65^oC.

A parallel gas pipeline of 8 diameter from the RGT has been laid along the maincrude oil pipeline corridor for the supply of natural gas. Natural Gas is supplied at eachstation through the pipeline to generate the power required to operate the SEHMS and otherheating station power requirements using gas engine generators. The pipeline is insulatedwith 90 mm polyurethane foam and 5 mm high density polyethylene jacket to reduce heatloss. Power requirements are met by gas-based generators.

The entire length of the pipeline is being monitored at the MPT, Viramgam and Bhogatterminals for flow, temperature, pressure, other pipeline operational parameters.

The design and construction of this pipeline incorporated many technology innovations.

Some of which are:

• Improved river crossing designs in collaboration with the Department ofHydrology, Indian Institute of Technology, Roorkee;

• Development of high-temperature intelligent pigging of the main crudetransportation pipeline; and

• Pipeline Intrusion Detection System, first of its kind in India. This providessecurity along the length of the pipeline using a fibre optic electronic vibration systemthat generates an alarm, which is linked to a central control unit via a GeographicInformation System-based mapping system.

Project Management

The pipeline has been constructed and installed in accordance with notified regulationsand international best practices. Permission to lay the pipeline and the Right of Use(ROU) was granted by the respective authorities and ROU was obtained with the help ofGovernment appointed Competent Authorities (CA). The installation of the pipleine and RoUreinstatement has been subject to regular review not only by the internal but also by theInternational Finance Corporation (IFC) independent auditors.

The pipeline construction work has been carried out through the deployment of multiplespreads. The pump / storage terminals have also been constructed through separatecontractors to ensure that the project is completed as per schedule.

The marine facilities at Bhogat in the second phase of the project will handle morethan 5 million metric tonnes of hydrocarbon cargo per annum. The facilities willessentially consist of:

• Pipeline: A similar twin heated insulated buried 24 pipeline from thedelivery flange of the crude oil export pump at the Bhogat Terminal to the landfall pointlocated approximately 8 km from the terminal’s boundary walls;

• Marine pipeline: Heated, insulated buried concrete jacketed 24 twin marinepipeline from landfall point to Pipeline End Manifold anchored in the sea bed at a waterdepth of 30 metres. The subsea line length is approximately 6 km into the sea from thelandfall point;

• Pipeline End Manifold and interconnecting hoses; and

• Tanker loading mooring: This will be a single-point mooring with a dual hawsermooring system and tanker loading hoses.

On 13 May 2011, Cairn India completed one year of successful operation of theBarmer-Salaya pipeline.

Rajasthan Sales

FY2011 witnessed the commencement of crude oil sales through the pipelineinfrastructure. In line with the production, sales were ramped up and maintained at125,000 bopd. Sales commenced to Indian Oil Corporation Limited’s (IOCL) Panipatrefinery from the GoI approved Radhanpur delivery point, as per the approved GoInomination.

As mentioned in last year’s Annual Report, the GoI also agreed to allow domesticprivate refineries to qualify as additional buyers of the Mangala crude. Cairn India hasbeen successful in reaching agreements to supply Mangala crude to private refineries inGujarat.

With production from the Bhagyam field expected to commence in H2 CY2011, salesarrangements have been put in place with refineries for sale of the increased volume. Ason 31 March 2011, sales arrangements for 155,000 bopd are in place for the Rajasthancrude. IOCL’s Koyali refinery is expected to get supplies during Q3 CY2011 aftercompletion of their facilities at Viramgam.

According to the PSC, the pricing is based on Bonny Light - a comparable low sulphurcrude that is frequently traded in the region, with appropriate adjustments for quality.The implied price realisation represents an average of 10% to 15% discount to dated Brenton the basis of prices prevailing for the year.

Once the Bhogat terminal becomes operational in H2 CY2012, sales to other coastalrefineries will also be possible, subject to GoI approval.

Finance Overview

As at 31 March 2011, the Cairn India Group had INR 26,722 million (USD 598 million) ofdebt outstanding mainly in long term loans excluding the working capital facilities.

In October 2009, Cairn India refinanced an existing revolving credit facility to partlyfund the Rajasthan development covering Phase I and II. The refinancing comprised a totalof USD 1.6 billion consisting of USD 750 million USD facility and INR 40 billion (USD 850million) INR facility. The financing package was innovatively structured by accessing twodifferent markets (domestic and international) for the same project during very difficultmarket conditions. This helped to tide over the tight liquidity conditions then prevailingduring the global financial crisis (in CY2008 and CY2009) and complete the project withoutany delay. These loan facilities had participation from leading international and domesticbanks / financial institutions.

The risk profile of the company has improved considerably following the commissioningof the MPT and production of crude oil at plateau rates from the Mangala fields. Thisallowed for repositioning of the Cairn credit story with the lenders, resulting in theoptimisation of the Company’s borrowing programme. Thus, in October 2010, Cairn Indiaaccessed the Indian debt capital markets for the first time through the issue of unsecuredredeemable non-convertible debentures (NCDs) for INR 22.5 billion (approximately USD 500million). This was structured in three tranches with an average maturity period of 24months to suit the Company’s requirement. The refinancing carries lower interest costand is available for refinancing of the existing INR loan and general corporate purposes.

The Company continues to generate strong cash flow from its operations, namely theRajasthan fields along with the Ravva and Cambay assets. Cash in hand at the end of thefinancial year provides sufficient liquidity to meet the expenditure for Phase-II of theRajasthan project and other planned exploration programmes including Sri Lanka.

in USD billion

Note: *Exploration Cost: During the initial years the entire exploration cost was borneby Cairn and hence, the net number is > 70%.

**Cash flow from producing assets is an additional source of funds

*** data as on 31 March 2011

As at 31 March 2011, the Company held financial assets mainly in the form of bankdeposits and investments in liquid funds, of an aggregate amount of about INR 55,792million (USD 1,249 million).

Cairn India’s ability to raise finance at competitive costs demonstrates thestrength of its balance sheet, which is backed by robust assets and a growing cash flowstream. As always, the Company has an ongoing dialogue with various international anddomestic financial institutions to review its financing options towards securingcompetitively priced long-term debt with greater financial flexibility to fund the currentdevelopment programme and the future growth plan. In this, the guiding principle is tosecure terms that enhance long term shareholder value.

(Table 1 gives the financial details of the capital expenditure versus financing ofRajasthan project.)

The Company wishes to place on record its appreciation of the role played by variouslenders, both domestic and international, during the past year to help the company meetthe challenges of bringing the Rajasthan development to reality.

A Scheme of Arrangement between the Company and some of its wholly owned subsidiaries,to be effective from 1 January 2010, was approved earlier by our shareholders. This Schemehas since been approved by the Hon’ble High Court of Madras and Bombay but awaitsapproval from other regulatory authorities. Pending such approvals, no accounting impactof the scheme has been given in these financial statements. After the implementation ofthe scheme, the Cairn India Limited legal entity will directly own the Indian businesses,which are currently owned by some of its wholly owned subsidiaries.

Other Producing Assets

PKGM-1 BLOCK (RAVVA FIELD), Krishna-Godavari Basin, Andhra Pradesh (Cairn India’sparticipating interest 22.5% and is the operator)

Cairn India’s operations in the Ravva block are centred on the Ravva oil and gasfield in the Krishna-Godavari Basin. It lies off the coast of Andhra Pradesh in easternIndia, in water depths of up to 80 metres. Developed in partnership with ONGC, Videoconand Ravva Oil, Cairn became the operator in 1996, working under a PSC that runs until2019.

Crude oil and natural gas production from the Ravva field commenced in 1993. The Ravvafield celebrated its 16^th year of successful operations during the year and hasproduced more than 232 mmbbls of crude oil and 278 billion cubic feet (bcf) of gas —more than double the initial expectations. It has produced at a plateau rate in excess of50,000 bopd for more than nine years and is expected to achieve an estimated ultimaterecovery of approximately 60%. This higher recovery factor is largely due to CairnIndia’s reservoir management strategy and technical understanding of the reservoir.

Currently, there are eight unmanned offshore platforms. A 225-acre onshore processingfacility at Surasaniyanam processes the natural gas and crude oil produced from the field.The Ravva onshore terminal operates at an internationally recognised environmentalstandard (ISO 14001), and has the capacity to handle 70,000 bopd, 95 mmscfd of natural gasand 110,000 barrels per day of injection water per day. The terminal also has the capacityto store 1 mmbbls of crude oil.

The field direct operating cost for the Ravva block is amongst the lowest in the world.The low-cost operating base has been achieved by focusing on life-cycle planning,continuous monitoring, control of operational costs and the innovative application ofoperating technologies. The average gross production from the Ravva field for FY2011 was36,947 barrels of oil equivalent per day (boepd) — comprising an average oilproduction of 27,950 bopd and average gas production of 54 mmscfd. As on 9 April 2011, theRavva asset also crossed 5 million LTI free man-hours. The Ravva facilities had an uptimeof more than 97% during the year.

Being a mature asset, various steps such as a 4D seismic survey, drilling of infillwells and workover campaigns were undertaken during the year to help slow the productiondecline. Cairn India and its JV partners have completed infill drilling of four wells atRavva. Drilling of one production and two injector wells is in progress. The purpose ofthe infill campaign is to help slow production decline and add incremental reserves. Thecampaign is also targeted to increase the water injection capacity in the field.

The first ever horizontal well in Ravva was landed, drilled, completed and tested witha combination of sliding sleeve standalone screens, screens with inflow control devices(ICDs) and swell packers to successfully complete the entire oil pay with ICDs, and anadditional gas zone. For the first time in Ravva, oil production wells were completed asopen hole with multi-zone selective stand alone screens and swell packers technology.

Cairn India and its JV partners are focussed on identifying bypassed oil zones in thereservoir, slowing down the production decline rate and evaluating the scope of furtherpotential in the deeper zones.

CB/OS-2 BLOCK, Cambay Basin, Western India (Cairn India’s participating interest40% and is the operator)

Cairn India’s operations in Block CB/OS-2 are centred on the Lakshmi and Gauri oiland gas fields, and the CB-X development area. Gas production commenced from the Lakshmigas field in 2002, and from the Gauri field in 2004. Production of crude oil from Gauricommenced in 2005.

Exploration, development and production in the CB/OS-2 block is governed by a PSC thatruns until 2023. In partnership with ONGC and Tata Petrodyne Limited, Cairn India is theoperator with a participating interest of 40% in the Lakshmi, Gauri and CB-X developmentareas.

The application of advanced geophysical tools has helped map thin oil sands which arebeyond normal seismic resolution capability. These techniques have transformed the CB/OS-2block from a predominantly gas field to an oil field through the discovery of an oil leg.

An 82-acre onshore processing facility at Suvali, processes natural gas and crude oilfrom the Lakshmi and Gauri fields. The processing plant and offshore infrastructure arecertified to ISO 14001 and OHSAS 18001 standards. It has the capacity to process 150mmscfd of natural gas and 10,000 bopd of crude oil. It includes three stage separatortrains and a 28,300 bbls storage tank as well as two 2.4 MW captive power generationplants.

The average gross production from the CB/OS-2 block for FY2011 was 11,169 boepd —consisting of an average oil / condensate production of 6,869 bopd and an average gasproduction of 25.8 mmscfd. To date, the asset has produced more than 12 mmbbls ofco-mingled oil (i.e. crude and condensate) and 200 bcf of gas. The block recorded morethan 9 million LTI free man-hours over the last seven years. CB/OS-2 facilities had aplant uptime of more than 99% in FY2011.

The Term Sheet agreement to produce Gauri share of GBA (Gas Balancing Agreement –for sharing of gas from the shared reservoir formation) gas through the Hazira facilitiessigned in December 2009 has now been extended to March 2012. The GBA gas sales commencedfrom the Hazira facilities during December 2009 and to date sold more than 5.2 bcf of gasgenerating gross revenues of more than USD 30 million. This is a first of its kindarrangement in the country which showcases the Company’s commitment to produce gas inthe most economical manner and contribute to the nation’s energy security.

To sustain oil production from the CB/OS-2 block, an infill drilling campaign is beingplanned in the Lakshmi field, which will be firmed up subject to JV and GoI approval.

Technology Application

• Increase chances of exploration success through advanced geophysical dataacquisition, processing and interpretation

• Application of basin modelling tools to reduce exploration risk

• Application of high density 3D seismic survey to enhance understanding ofreservoirs and optimise well locations

• Use of 4D seismic data for better imaging of drained reservoirs andidentification of bypassed oil

• Reduce costs with purpose designed mobile onshore rigs and pad based development

• Geo-steering technology for better placement of horizontal wells to increaseproductivity

• High capacity horizontal wells with flow capacity > 10,000 bopd

• Application of new fracture simulation and completion technology

• Increased recovery through advanced petrophysical analysis and well design

• Coiled Tubing for efficiency and reduced environmental footprint

• Management and integration of all subsurface data and use of best-in-classsoftware applications

• Digital downhole monitoring for production management

People – Contributing to Technical Excellence

• Multi-cultural working environment with demographic representation from ninecountries

• Training accorded high priority

• Investment in people to build leadership capability - tailor-made programme partof annual individual development plan

Contribution to the Goverment

• Royalty paid – >USD 1 billion

• Indirect Taxes - >USD 0.6 billion

• Direct Taxes - >USD 0.4 billion

• Profit Petroleum - > USD 5 billion

• Significant foreign exchange savings due to reduced imports

Exploring to Discover and Add Value

Cairn India has 10 blocks (including three which are into production) located in threestrategically focused areas — one block in Rajasthan, three on the west coast ofIndia, five on the east coast of India, and one offshore block in Sri Lanka. Eight ofthese, including the three which are into production, are operated by the Company.

The Company uses cutting-edge geophysical and geological technologies to optimise itschances of exploration success and, thus, monetise hydrocarbon resources.

RJ-ON-90/1 (Cairn India’s participating interest 70%, and is the operator)

The Company continues to pursue a technical evaluation work programme in the block toassess existing and new plays and generate further prospects. Thanks to such programmes,the prospective resources portfolio has grown significantly. Detailed analysis of existingwell data has resulted in the delineation of hydrocarbons from logs in previouslyoverlooked reservoirs in other parts of the block. DoCs for two non-associated natural gasdiscoveries (GS-V and NC West) were submitted to the DGH under the terms of the PSC.

KG-ONN-2003/1 (Cairn India’s participating interest 49%, and is the operator)

The Company has drilled five commitment wells and completed the Minimum Work Programme(MWP) for this licence. There was a hydrocarbon discovery in the Nagayalanka-1z well and aDiscovery Notice was issued to the DGH and subsequently, an appraisal plan was submittedto GoI, which is currently under review. Based on the well results, the JV opted to enterPhase-II of the Exploration Licence. The exploration well, Nagayalanka SE-1, is planned tobe drilled during FY2012.

KG-OSN-2009/3 (Cairn India’s participating interest 100%, and is the operator)

This block, covering 1,988 km², was awarded under the New ExplorationLicensing Policy (NELP) VIII bidding round, and is located on-trend with recentdiscoveries in the KG Basin. The PSC was signed on 30 June 2010 and the PetroleumExploration Licence (PEL) was granted in August 2010. A bathymetry survey covering thelicence area was completed in May 2011. Work to obtain environmental clearance foracquisition of a 3D survey is underway, which is planned to start by end CY2011.

KG-DWN-98/2 (Cairn India’s participating interest 10%, ONGC is the operator)

Three appraisal wells were drilled in the Northern Discovery Area in 2010. The DoC wassubmitted in July 2010 by the operator for the Northern Discovery Area. The Southern Areaappraisal period was completed in December 2009, with the DoC submitted to the DGH. Theoperator is in discussion with the DGH and GoI to secure extension in the exploration andappraisal period for the block to carry out additional drilling.

MB-DWN-2009/1 (Cairn India’s participating interest 100%, is the operator)

This block, covering 2,961 km², was awarded under the NELP VIII licensinground, and is located in the Mumbai Offshore Basin. The PSC was signed on 30 June 2010 andthe PEL was granted in August 2010. Environmental clearance is being sought to enableacquisition of a 2D survey during Q1 CY2012. As part of the Company’s west coastexploration strategy, a detailed regional technical study is being undertaken.

KK-DWN-2004/1 (Cairn India’s participating interest 40%, ONGC is the operator)

A 3,840 line km 2D seismic programme was completed in 2009 and following mapping andinterpretation of the seismic data, 300 km² of 3D seismic data has beenacquired and processing is in progress. Interpretation of the data is expected to becompleted by Q3 CY2011.

PR-OSN-2004/1 (Cairn India’s participating interest 35%, is the operator)

This block, covering 9,400 km², is located between discoveries in theKrishna-Godavari and Cauvery basins. Following interpretation of 2D and 3D seismic data,three prospects were identified for drilling to fulfil the MWP. However, after the denialof permission to drill in a restricted area defined by the Department of Space, GoI, forcemajeure has been declared by Cairn India, which has been accepted by the DGH under theterms of the PSC. Cairn India and the other partners to the PSC are actively pursuing aresolution of this matter with the GoI.

SL 2007-01-001 (Cairn Lanka’s participating interest 100%, is the operator)

Cairn Lanka (Private) Limited, a wholly owned subsidiary of Cairn India, acquired 1,750km² 3D seismic data in the Mannar Basin in Sri Lanka during December 2009 andJanuary 2010. The Mannar Basin is an under-explored frontier basin. The programme fulfilsthe minimum work commitment of 1,450 km² of 3D seismic data acquisition.

Based on the 3D seismic interpretation, several prospects and leads have beenidentified, and technical work to understand the petroleum system in this basin is inprogress. A drill ship has been contracted and the final preparations for the drilling ofthree exploration wells are ongoing, which is planned to commence in August 2011.

FY2011 also saw the Company relinquishing a block. The GS-OSN-2003/1 block (off thecoast of Saurashtra in Gujarat, where Cairn India had a participating interest of 49%, andONGC was the operator) was relinquished by the Company after completion of the Phase-IIexploration programme.

Over the years, Cairn India has been optimising its exploration portfolio by adding newprospective blocks and relinquishing low graded blocks after full evaluation andcompletion of work programmes - thereby increasing the Company’s net unriskedpotential resource base.

Human Resources- Nurturing our Strength

Cairn India’s greatest assets are its people. The company is now around 1,300people strong, representing a 20% growth compared to the previous year. There has been asteady increase in its talent base over the years in order to keep up with the growingneeds of a world class business. The very nature and complexity of the business demandsthat the Company’s people are of the highest global standards. People are recruited,developed and rewarded according to a ‘People Strategy’, which is based on threepriorities:

1. Securing talent for today and tomorrow

As mentioned, the Company’s people strength increased by almost 20% acrossdifferent categories. More than four-fifths of the total recruitment during the year wasdone directly and through employee referrals; the remaining one-fifth was through externalagencies.

2. Strengthening leadership

Cairn India is committed to developing world class leadership in the top and middletiers of its organisational structure. This is being done through the Star Trek LeadershipProgramme, which has been developed with leading business schools in India to providecustomised management development courses. For the middle tier employees, there is alsothe ‘Action Learning Programme’ which focuses on cross functional projectinitiatives based on specific company requirements.

3. Enhancing individual performance

Cairn India’s online Performance Management System (PMS) forms the backbone forthe planning of people and career related decisions of the Company. The Company’svalues of teamwork, respect, pioneering spirit and ownership are reflected in the PMSframework, which facilitates an organisation-wide performance orientation where employeesare aware of how their work is linked to overall business objectives and results.

Health, Safety, Environment and Assurance (HSEA)

Cairn India is committed to protecting the health and safety of employees andcontractors working on its sites, the people who come into contact with its operations andthe health and sustainability of the environment in which it operates.

To support the delivery of the commitments made in the HSEA policies and the GuidingPrinciples, the company implements its Corporate Responsibility Management System (CRMS),supported by detailed procedures and guidelines.

The Cairn India CRMS Guiding Principles define its values and approach to managingCorporate Responsibility (CR) in accordance with the Company’s policies, and thegoals set out for its behaviour.

These Guiding Principles are based on:

• Respect: for people, communities, the environment, the rule of law and humanrights;

• Relationships: the Company believes that building strong, open and lastingrelationships with its stakeholders is not merely a social responsibility but is vital toachieving its business goals; and

• Responsibility: the Company recognises its responsibility to ensure its actionsdoes not harm people, the environment or society.

These values, known as the 3Rs, are promoted to staff, partners, suppliers andcontractors.

The CRMS provides the mechanisms that:

• Allow the Company to identify, assess and implement measures to mitigate CRrisks;

• Assess CR requirements through a gated process at key milestones during theproject life cycle;

• Guide how the Company monitors and reports its CR performance, conducts reviewsand audits, and, in the event of accidents or incidents, conducts investigations,identifies causes and rectifies deficiencies; and

• Identify its legal and regulatory requirements, and informs of any plans neededto ensure compliance.

Application of CRMS to all its business activities is essential in maintaining its‘licence to operate’.

Through implementing the CRMS, the Company recognises and manages potential CR impacts,and encourages a culture of openness and continuous improvement.

The Company aspires to the highest level of HSE practice by adopting appropriateinternational codes and standards in our activities while adopting an approach ofcontinuous improvement.

Health and Safety

The nature of its work carries inherent risks, and the environments in which itoperates can be challenging. The Company is, therefore, committed to a comprehensivehealth and safety strategy, which protects the well-being of everyone who comes intocontact with its operations. It also aims to create a healthy, supportive workingenvironment, which can help cut absenteeism, as well as boost morale.

Cairn India has HSE specialists at its operating sites, who are supported by HSEexperts at its Gurgaon Corporate Office. These HSE specialists are responsible forensuring that activities are performed in accordance with the safety guidelines andregulations prescribed by OISD and Directorate General of Mines Safety (DGMS).

A comprehensive HSE management system is in place, which provides the processes andprocedures to ensure that the Company’s HSE policies are implemented across variousactivities through design, implementation, operation, monitoring and reporting. The HSEmanagement systems are based on the international standards certification of ISO14001:2004 and OHSAS 18001 protocols at Ravva an CB/OS-2 with implementation in progressfor the Rajasthan operations.

The Phase-I of the Rajasthan Development, including all production facilities and thecrude transportation pipeline, were completed and safely commissioned without any releaseof hydrocarbons into the environment. This was achieved with no LTIs during 20 millionman-hours of work in the reporting period. The Rajasthan Operations won nine safety awardsin the 24^th Mine Safety Awards organised under the aegis of the DGMS,Rajasthan. The operations at Ravva and CB/OS-2 continued to maintain excellent safetyperformance with neither LTIs nor environmental incidents during FY2011.

Tragically, during the year, there were two contractor fatalities associated with ourRajasthan activities. These incidents were fully investigated and corrective steps takento minimise the likelihood of them recurring.

Cairn India takes precautions to avoid accidents or pollution incidents, and all itsoperations have rigorous procedures, equipment and emergency teams in place to respond toincidents. Exercises and drills are performed regularly to test its systems and plans andmaintain a high degree of emergency preparedness. In addition, the Company has oil spillresponse plans, trained staff and equipment in place at Ravva, CB/OS-2, Rajasthan and allexploration and production facilities.

Training

During the year, the Company completed 213,000 man-days of HSE training across itsprojects and operations. HSE induction training is mandatory for all visitors to the site.Additional safety training was provided to the construction workforce to enhance safetyunderstanding and competence in safe working practices. This was a key initiative indelivering the high level of performance in our construction projects. It also resulted inthe local contractors and the labour force becoming better prepared to provide services toCairn India and other businesses in the future.

Security

FY2011 also saw specific focus on the security of the Company’s installations,keeping in view the external environment as construction was completed and facilities werecommissioned. Cairn India worked closely with State authorities to ensure plans werealigned with government systems and protocols to ensure support can be providedefficiently when necessary for both onshore and offshore facilities.

HSE Management of the Contractors

Contractors engaged at various projects have contributed significantly in achievingexcellent HSE performance. To meet our HSE standards, various capacity building programmeswere organised for contractors. These included:

• Releasing a detailed performance-oriented manual on contractor HSE requirements;

• Setting up and communicating expectations and risk based targets forcontractors;

• Creating ownership and oversight of HSE compliance by Cairn India’s linemanagers and supervisors; and

• Having financial incentives / penalties for HSE performance of the suppliers /contractors.

Occupational Health

Cairn India focuses on occupational health practices to prevent work related illnessamongst the employees and contractors. In addition, various health promotional activitiesand wellness programmes are regularly initiated to maintain a healthy workforce. Standardshave been established to provide quality medical care - in terms of emergency care as wellas preventive health - across all the Company assets and project work sites. During theyear, regular health audits and inspections were conducted at all the operating andconstruction sites.

Quality

The Company’s quality achievements for FY2011 can be summarised thus:

• Quality Management System (QMS) Manual was issued;

• QMS awareness workshops were conducted at all the Company assets;

• All projects implemented a comprehensive QMS;

• Detailed Quality Assurance audits were conducted across the Rajasthan assets;

• Integrated HSE and Quality Audits were conducted across all operating assets;and

• Internal Quality Audit training was imparted to Cairn India’s staff acrossvarious functions to make them aware of roles and responsibilities of auditees and theauditors, and to brief them about Quality Audit procedures.

Environmental Impact

Cairn India recognises its responsibility of minimising the impact of its operations onthe environment. The Company introduced stringent measures, from initial impactassessments to waste management, and, in the event of any unplanned incident, has put inplace comprehensive emergency response and oil spill contingency plans.

Climate Change

Cairn India is in the business of hydrocarbon exploration and production. The Companyacknowledges that climate change is a complex, global issue with many causes (both naturaland man-made) and that it can help to limit its impact by following good practices andcontinuously working at minimising its environmental footprint.

The Company’s approach to each new project includes undertaking PreliminaryEnvironmental Impact Assessments (PEIAs), Environmental Impact Assessments (EIAs) andSocial Impact Assessments (SIAs), to minimise any potential impacts of its activities.During the year, the Company undertook – with the assistance of selected independentconsultants – PEIAs for all its seismic and site survey activities, and for itsplanned drilling operations in Sri Lanka.

Over the years, the Company has maintained its focus on protecting the environment inareas surrounding its operations. Some of the measures taken are:

Afforestation — Public Private Partnership, The Banaskantha Project

Cairn India undertook plantation activities in several districts of Gujarat where treefelling was necessitated for the laying of the Barmer-Salaya pipeline. To ensure that allstakeholders took ownership of the project, the local district authorities andadministration were consulted and several programmes were initiated. A detailedafforestation action plan was developed for implementation in a phased manner. With thesupport of the local administration, the land use was converted to forest land and around22,000 trees were planted, which are now being monitored and looked after by localcommunities and dedicated government staff.

Landfill facility at the MPT, Barmer

A waste management facility consisting of a captive engineered landfill for hazardousand non-hazardous waste and a high temperature incinerator has been established within theMPT. It is used for disposing of all non-recyclable wastes generated from the Rajasthanoperations. The landfill - designed according to Central Pollution Control Board standardsand approved by the Rajasthan State Pollution Control Board - has separate sections forhazardous and non-hazardous waste. It has the capacity to handle wastes generated over a20 year period. The landfill has a primary and secondary leachate collection system. Theleachate is solar evaporated and the residue is disposed off in the landfill. Theincinerator is primarily used for hazardous organic waste consumables, bio-medical wasteand oil contaminated filters or those that cannot be recycled. Ash from the incinerationis also disposed off in the landfill.

Micro-tunnelling at river crossings

Special care has been taken to mitigate environmental impacts during the laying of thepipeline across rivers, streams and canals. The oil export pipeline crosses more than 50water channels en route from Barmer to Salaya. The laying of pipe at perennial rivers andcanal crossings was done through micro-tunnelling to avoid affecting the fl ow of thewater body or the river bed. Cairn India conducted specific ecological and bio-diversitystudies at major water body crossings before the start of construction activities toassess the ecological sensitivity and to develop location-specific mitigation measures.Such surveys were again carried out after completion of the construction. The surveys showthat there has been no detrimental environmental impact. Stabilisation of bank slopesand/or river beds was also done to prevent potential erosion during monsoon.

Land acquisition for the pipeline

Agricultural land along the pipeline route was acquired from farmers after paying duecompensation for the temporary use of the land, standing crops and/or other facilitiesimpacted. After completion of the project activities, the land was restored and returnedto the owners to continue farming. The entire land acquisition was done according to theprocess outlined in the Petroleum and Mineral Pipelines (Acquisition of Right of User inLand) Act, 1962, and was completed by the CA appointed by the State Governments ofRajasthan and Gujarat.

Setting standards for the labour camps

The Rajasthan project activities at the MPT and along the pipeline involved a largelabour force. Realising the need to ensure hygienic living conditions, Cairn Indiadeveloped its Worker Accommodation Standards. This is unique for India. It outlines theprinciples, guidelines and where applicable, the minimum standards that are required to befollowed by the contractors.

Conservation of Energy

As a responsible corporate citizen, Cairn India continues to take steps to conserveenergy and to reduce methane and other green house gas (GHG) emissions. GHG emissionsduring the year were within targets set at the beginning of the year, notwithstanding arise in energy use. The

Company regularly monitored air emission sources and the ambient air quality, and wasable to maintain emission levels well within the regulatory standards.

During the year, several energy conservation initiatives were undertaken, some of whichare listed below:

At Ravva

• Additional windmills were installed on the Ravva offshore platforms. Installing400 watt windmills has resulted in an energy saving of 0.59 Mega Watthour (MWh); and

• Solar powered lights were installed in the process plant, living quarters andsome other areas at the Ravva onshore facilities. Installation of 14 watt solar poweredlights resulted in an energy saving of 0.12 MWh.

At CB/OS-2

Energy conservation at the Suvali plant was achieved by the installation of new energyefficient air compressors.

At the Corporate Office in Gurgaon, Haryana

Several energy conservation initiatives at the Cairn Gurgaon office have resulted insaving approximately 200,708 kwh (units) of electricity during the year. Initiativesinclude:

i. Emergency lights being switched off after working hours and on holidays;

ii. Air handling units start at 7 AM and are switched off when the employees leave office;

iii. Lights in empty cubicles being switched off after 6 PM; and

iv. Lights being switched on by the employees when they arrive on duty.

Internal Controls and their Adequacy

During FY 2011, Cairn India further strengthened internal controls by not onlyincreasing compliance to existing policies but also rolling out revised procurementpolicies and systems. Enhancements were made to the business risk management system inline with best practices; tracking of business critical information was intensified anddocumented in an online portal; and third party reviews of the various internal controlprocesses have led to improvements in the Company’s business systems and processes.

Business Risk Management Process

Cairn India’s business risk management system identifies and documents businessrisks and appropriate controls to mitigate these across all aspects of the Company’sbusiness. The risk management policy has been defined and establishes the principle bywhich risks are managed across the Company. The risk management process is cascadedthroughout the Company with independent function-specific risk management sub-committeesthat include appropriate cross functional membership. These sub-committees address riskspertinent to the asset, project or function, and provide regular reports to the RiskManagement Committee. The Risk Management Committee reviews these reports at its meetingsand considers other risks not captured by the sub-committees to derive the overall CairnIndia Group risk assessment.

Operating Policies and Procedures

Operating policies, as considered essential by senior management, have beendisseminated to appropriate departments / functions to increase awareness and compliance.A new procedure was introduced for procurement activities to strengthen internal controlsand ensure JV alignment was rolled out. Cairn India’s operational policies,procedures and activities have been subjected to internal audits and peer reviews.Implementation of the recommendations arising from all the audit reports is regularlymonitored by the senior management.

Legal and Commercial Procedures

These have been actively disseminated throughout the Company. A process is ongoing toensure that policies and procedures are in place for all key activities. A legalcompliance management system has been developed to track regulatory compliancerequirements. It has been successful in identifying areas which require immediate legalattention and has, thus, reduced the chances of penalties against the Company fornon-compliance.

Code of Business Ethics

The Cairn India Code of Business Ethics was distributed throughout the Company inFY2011. Staff have verified that they have understood and accepted the provisions of theCode.

Financial and Management Reporting

Financial policies, standards and delegations of authority have been disseminated tosenior management for further dissemination to staff within their departments. Proceduresto ensure conformance with the policies, standards and delegations of authority have beenput in place covering all activities. There are periodic assessment of the accuracy andreliability of the budget and forecast model with respect to the actual results.

Robust System of Audit Review of Operating and Financial Activities

Cairn India’s processes and financial activities are subjected to independentaudits by internal as well as statutory auditors. Implementation of the recommendationsarising from all the audit reports is regularly monitored by the senior management.Internal and statutory audit reports and findings, including comments by the management,are regularly placed before the Audit Committee of the Board of Directors.

Performance Setting and Measurement

Objectives and key performance indicators have been drawn up to meet the business plansand work programme. A system is in place to monitor and report on the progress of the keyperformance indicators to the Executive Committee and the Board of Directors.

Business Continuity

Emergency response and management plans are in place for all operations. A businesscontinuity plan covering the key risks for the Corporate Office at Gurgaon has been rolledout. A strategy is being formulated for a pan-India business continuity plan covering allsites, which is expected to be completed in CY2012. Three simulation exercises werecarried out during the year to check the efficiency and preparedness of the staff.

A new and advanced version of the Corporate Responsibility Management System (CRMS)database was developed in-house and launched across the organisation. It is used forprompt reporting of incidents, accidents and to monitor performance indicators ofdifferent HSEA functions. The CRMS database acts as a single point information bank with astructured and consistent approach across geographic areas and helps create a high levelof HSE ownership throughout the organisation.

Cairn India’s strategy for risk management is to go beyond compliance and create aposition wherein there is an embedded culture of informed risk acceptance supported by aneffective framework to both create and foster growth.

Highlights for FY2011

• Profit after tax crossed USD 1 billion; was at INR 63,344 million (USD 1,390million).

• Operating revenues at INR 102,779 million (USD 2,255 million).

• Average daily gross operated production at 149,103 boepd.

• Average crude oil price realisation was USD 79.1 per bbl. Average gas price wasUSD 4.55 per million standard cubic feet, resulting in an average price realisation of USD76.8 per boe.

• Net cash of INR 29,070 million (USD 651 million) as on 31 March 2011.

• Gross cumulative Rajasthan development capital expenditure stood at USD 2,995million of which USD 703 million was spent during FY2011.

• The Company replaced its Rupee financing facility of INR 40 billion (USD 850million) with an innovatively structured unsecured NCD of INR 22.5 billion (USD 500million).

• The NCD issue was rated ‘AAA’ by CARE for an aggregate amount of INR30 billion.

• The Company and some of its wholly owned subsidiaries (Cairn Energy India PtyLimited and the BV companies) have undergone a Scheme of Arrangement. After the approvaland implementation of the scheme, the Company will directly own the Indian businesses,which are currently owned by some of its wholly owned subsidiaries. The Scheme is approvedby the shareholders and by the Hon’ble High Court of Madras and the Hon’ble HighCourt of Bombay; however, it is pending for approval from other regulatory authorities.

(All amounts are in INR Million, unless otherwise stated)

* Please note that the FY2009 refers to the 15 month period January 2008 – March2009.

Business Risks

Due to the inherent nature of oil and gas exploration and production business, managingrisks is of prime importance for Cairn India. The senior exployees and the Board ofDirectors are aware of the risks; and the management takes steps when needed to mitigatesuch risks to the best possible extent, for example:

1. Exploration and production operations involve risks such as natural disasters andgeological uncertainties, over which Cairn India has no control.

Cairn India’s assets are designed with inherent safety systems to minimise theconsequences of any disasters and safe shutdown of facilities. All operations andfacilities of Cairn India are subjected to a robust and rigorous risk assessment processand appropriate risk mitigation plans and controls are implemented throughout the lifecycle.

Disaster Management Plans are developed for each facility and implemented across CairnIndia’s assets. Periodic exercises are conducted in collaboration and participationwith the local authorities. A three tier crisis and emergency management system is inplace which enables a rapid response from the impacted site through to the Corporatelevel. Plans are implemented across Cairn India which provide the platform for effectivelylaunching a large scale response in case of any disaster.

2. Approvals from joint venture and GoI may lead to plateau production rates from theRajasthan fields being less than forecast.

The estimates of production rates and field life for the Mangala, Bhagyam, Aishwariya,Raageshwari and Saraswati fields are contained in their respective FDPs — which weresubmitted to, and approved by, the Rajasthan Block PSC Management Committee. These arebased on Cairn India’s estimates of future field performance. If the estimate offuture production rate in any field is in excess of the approved field plateau productionrate, Cairn India will need prior consent of the JV partner, the appropriate regulatoryauthorities and the GoI before commencing production beyond the approved rate. In case,consent of the JV partner or the regulatory authority is delayed or not obtained,production has to be limited to the rate set out in the FDP.

There are two mitigating factors. First, up to now, approvals have come from the JVpartners, the DGH and the MoPNG. Second, the estimates based on which the FDPs have beenmade are subject to stringent checks by the internal team and third party consultants; andreservoir performance to date has shown that the estimates have been in the rightdirection.

3. The construction of the Salaya to Bhogat section of the crude pipeline and theBhogat Terminal may take longer than planned and the cost of construction may be greaterthan forecast.

While work has commenced on the construction of the Salaya to Bhogat section of thecrude pipeline, there is a risk that the construction, installation and commissioning ofthis section, which is approximately 80 km long and at the Bhogat Terminal, could takelonger than planned. Factors that could adversely affect the schedule are: (i) inclementweather conditions in Gujarat; (ii) difficulties in obtaining all the required RoU accessto the pipeline including difficulties with the local community threatening to disruptsite access due to their increasing demands for contracts and employment on the project;(iii) difficulties with local landowners obstructing access to the pipeline routes; (iv)shortages and/or delays in obtaining all the required material and equipment on site; (v)shortages of skilled labour; and (vi) non-compliance by the contractors to CairnIndia’s health, safety, environmental and quality policies.

Construction of the Salaya to Bhogat section of the pipeline has been approved by ONGC,the relevant regulatory authorities and the GoI. The estimated costs were included as partof the overall cost estimates for construction of the main pipeline. Although theseestimates allowed for some increase in costs, there is a risk that the actual costs mightbe higher. The Company has finalised most of the contracts and every effort is being madeto control the cost. Regular updates on the progress are being provided to the JV partner.

The Company is making every effort to control the costs and mitigate the impact of thefactors listed above.

4. Cairn India is, and may become, involved in proceedings in relation to payment ofroyalty and cess for the production of crude oil from the Mangala field in Rajasthan.

Cairn India has a participating interest of 70% in the Rajasthan block (RJ-ON-90/1) andis also the operator. ONGC holds the remaining 30% participating interest.

Under the PSC executed for this block, in the view of Cairn India, royalty and cess arepayable by ONGC as the licensee and these are not part of the contract cost for thepurpose of cost recovery.

ONGC has been paying royalty to Government of Rajasthan for the crude production everymonth. However, ONGC has contended that the royalty payable under this PSC should beconsidered as a contract cost for cost recovery purposes. However, to date, Cairn Indiahas no formal intimation from GoI or ONGC of any dispute, demand or allegation of royaltybeing part of contract cost for cost recovery purpose. Cairn India has secured legalopinions in its favour and believes that it has a strong case.

Cairn India has initiated arbitration proceedings against the GoI and ONGC pursuant toa claim notice seeking Cairn India to pay cess on oil produced from the Rajasthan block tothe extent of the Company’s participating interest in this block.

In the event that royalty is considered to be part of contract cost for cost recoveryor Cairn India is held liable to pay its 70% share of cess, there would be a materialadverse effect on its business, financial condition and results of operations.

5. Adverse changes in general economic, political and market conditions in the MiddleEast and North Africa region may affect global conditions.

Wars, acts of terrorism and uncertain political or economic prospects or instability inthe Middle East and North Africa (MENA) may adversely impact global financial markets andincreased volatility in the price of crude oil. Recent protests in North Africa and theMiddle East may continue and broaden across the MENA region and lead to significantpolitical uncertainties in a number of countries.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Company’sobjectives, projections, estimates and expectations may be ‘forward lookingstatements’ within the meaning of applicable laws and regulations. Actual resultsmight differ substantially or materially from those expressed or implied. Importantdevelopments that could affect the Company’s operations include a downtrend in thesector, significant changes in political, regulatory and economic environment in India,exchange rate fl uctuations, tax laws, litigation, labour relations and interest costs.

Milestones - FY2011

April - June, 2010

Ravva

New 8 RE-RF water Injection / Oil pipeline commissioned

Coiled Tubing workover for three wells completed

CB/OS-2

Achieved 9 million man-hours of LTI free operations

Mangala Crude Oil Pipeline

Cairn India and ONGC commenced sales through the world’s longest continuouslyheated and insulated crude oil pipeline.

The MPT to Salaya section of approximately 590 km becomes operational along with thefinal delivery infrastructure to each buyer

RJ-ON-90/1

Train Three commissioned in June 2010 to attain MPT processing capacity of 130,000 bopd

Train Two and Train Three at the MPT operational and processing >100,000 bopd

Others

PSC signed for the two blocks, KG-OSN-2009/3 and MB-DWN-2009/1, awarded under NELP– VIII bidding round

Data interpretation ongoing for 3D seismic data acquired for the Palar Block and theMannar Block

July - September, 2010

Ravva

Additional perforations carried out and high water cut zones isolated in RD-1 well

CB/OS-2

Successfully completed engine change out in the Gas Turbine Compressor

Mangala Crude Oil Pipeline

Pipeline sales started to IOC in July 2010.

Safe delivery of more than 10 mmbbls of Mangala crude through the pipeline to privateand PSU refineries in Q2 FY2011

RJ-ON-90/1

Completed one year of successful production from the Mangala field; currently producingat a rate of 125,000 bopd

Mangala EOR pilot production and injection wells drilled and completed; start-upinjection testing commenced

Bhagyam development and infrastructure extension work commenced

Others

Raised INR 22,500 million (USD 500 million) through INR Unsecured Non-convertibleDebentures

Cairn-Vedanta Deal announced on 16 August 2010

October - December, 2010

Ravva

Achieved 4 million man-hours of LTI free operations

CB/OS-2

Crossed 200 bcf of gas sales

OHSAS 14001 and ISO 18001 re-certification obtained–valid up to 2014

Mangala Crude Oil Pipeline

The pipeline system availability at 98.7% within six months of start-up

RJ-ON-90/1

First full quarter of Mangala approved plateau production at approximately 125,000 bopd

Mangala EOR - water injection phase of the pilot commenced

Others

Exploration activities in the two NELP-VIII blocks KG-OSN-2009/3 and MB-DWN-2009/1commenced

Force Majeure declared in the PR-OSN-2004/1 block until permission is granted tocontinue drilling / survey activities in the area designated as inaccessible by theDepartment of Space, GoI

Await GoI approval on the Cairn Vedanta deal

January - March, 2011

Ravva

Infill drilling and well maintenance campaign commenced

Produced Water Re-injection Phase-II project commissioned

The Ravva facilities had an uptime of more than 97% in FY2011

Average gross production for FY2011 was 36,942 boepd

CB/OS-2

Crossed 10 mmbbls of crude oil production

Gauri GBA term-sheet extended with Hazira JV for 2 years for FY2011 and FY2012

The CB/OS-2 facilities had an up-time of more than 99% in FY2011

Average gross production for FY2011 was 11,169 boepd

RJ-ON-90/1

Construction work for Bhagyam trunk line to connect Bhagyam field with MPT ongoing withcompletion targeted in June 2011

Cumulative revenue in excess of USD 3 billion realised since start of crude oilproduction from Mangala,

The plant uptime stood at more than 99% in FY2011

Average gross production for FY2011 was 100,993 bopd

Others

Await GoI approval on the Cairn Vedanta deal

OVERVIEW

Cairn India is committed to the highest standards of Corporate Social Responsibility(CSR). It is our conviction that business growth goes hand-in-hand with empoweredcommunities and the creation of value for our stakeholders.

We consider our commitment to conducting operations in a socially and environmentallyresponsible manner as fundamental to long-term success; and are focused on creating valueand making a difference where we operate through community development initiatives. Westrive to empower local communities through sustainable development models that fosterinclusive growth. To this end, we work to address local needs while partnering withgovernment agencies to support long-term nation building process.

We try to make a difference where we operate through our ideology of ‘Respect,Relationships and Responsibility’, or the 3Rs. This ideology comprises a core and anoverarching principle, buttressed by three principles focused on people, the environmentand society (see diagram below).

Strategic

Designed to establish best practices in the field of CSR and chartering a new path forothers to follow.

External

Aimed towards a positive engagement with the external stakeholders to enlist supportfor CSR initiatives and derive a vision striking a balance with the expectations and needsof external stakeholders.

Internal

Directed towards seeking active participation of internal stakeholders, namelyemployees, investors and supply chain members.

FOCUS AREAS

Cairn India is committed to the Millennium Development Goals and we will continue toleverage our CSR activities and bring the benefits of energy development to thecommunities.

We focus on inclusive growth by fostering social capital through health and educationinitiatives and creating access to opportunities and resources through economicdevelopment and infrastructure support initiatives. The key to all this is developinglong-term sustainable partnerships with local communities.

Cairn India aims to ensure that employment opportunities resulting from our operationsbenefit local communities. During FY2011, as most of the construction at the MPT wascompleted and the pipeline was commissioned, we had to reduce the number of constructionworkers and contractors needed at the site. Consequently, we developed an alternativeemployment strategy for the local communities in the post-construction phase. This notonly involved re-engaging people at our Bhagyam and Aishwariya fields, but also the localpopulace suitable for other jobs such as housekeeping, catering, maintenance andelectrical work.

We support local communities in the development of business and employment skills. In2007, Cairn India set up a partnership with the IFC. One of the most successfulinitiatives to result from this is the Enterprise Centre in Barmer, Rajasthan. Housed in abuilding provided by the State Government of Rajasthan, it is designed to promote andsupport local economic development. During the year, over 1,000 people underwent trainingat the Enterprise Centre, of which 80% secured appropriate jobs at the end of theprogramme. The Enterprise Centre also has programmes to help people looking to start theirown business. During the year, nearly 400 local women enhanced their livelioodopportunities after taking part in specialised handicraft courses.

Although the initial partnership with the IFC has now ended, Cairn India is working tostrengthen the future of the Enterprise Centre as a key resource for the local community.It has been registered as an independent, not-for-profit organisation that will continueto help build local enterprises and entrepreneurial talents, and drive local economicempowerment by developing community-owned, sustainable businesses.

Infrastructure

We recognise the role of infrastructure in development, and work closely with localadministration and communities surrounding our areas of operations - be it in Ravva,Barmer or Suvali to aid and improve existing infrastructure facilities. From buildingroads to improve access to the project site and water harvesting structures in Rajasthan,to providing health infrastructure and sanitation facilities in Ravva, we have tried toalign our social responsibility initiatives with local infrastructure development.

Dairy Development

Cairn India devised the Dairy Development Programme to enhance income generationopportunities for marginalised households in the villages in Barmer surrounding theCompany’s operations. The initiative encourages farmers, often living on the edge ofpoverty, to pool their surplus milk and turn it into a marketable commodity - thusproviding a year-round, stable source of income.

We have helped to create a bulk collection and distribution network for milk in thevillages. The project has also ensured:

• Dairy management training for more than 900 cooperative members;

• Immunisation of more than 2,500 cattle; and

• Personal insurance of more than 375 dairy farmers and 175 heads of cattle.

To ensure sustainability, 10 dairy cooperatives have been registered with SARAS, thestate’s milk cooperative society. In addition, 70 dairy farmers have receivedmicrofinance loans to help them develop their businesses.

So far, the dairy development project has generated approximately INR 30 million forthe local communities.

Gramin Suvidha Kendra (GSK)

In order to provide agriculture input support to the farmers along the pipeline, CairnIndia has collaborated with the Multi Commodities Exchange of India for implementing theGSK project. Six GSKs are operational at Viramgam, Radhanpur, Bhatia, Wankaner, Muli andTharad.

These GSKs are designed to provide farmers with the services to improve cropproductivity and post-harvest support, and include:

• Details of crop prices of the day, and forward prices of the next five days;

• Advice by agricultural experts on particular products;

• Services to farmers allowing them to raise queries and receive answers regardingtheir crops;

• Storage facilities;

• Expert inputs on how to produce quality crops and maintain that quality over aperiod of time; and

• Insurance cover for crops.

Education

Cairn India has been working closely with the Government of Gujarat to promote the‘Vanche Gujarat’ programme. This is a State Government initiative to promoteprimary education and to strengthen the education system in the villages. Cairn India hashelped to establish 24 new libraries as part of the Rural Library Project in the villagesalong the pipeline.

In addition, we run an innovative programme called ‘Science on Wheels’. Aspecially fitted-out van travels between villages and gives young people the chance totake part in hands-on scientific experiments, sparking curiosity, encouraging creativethinking and problem-solving skills, and enhancing student–teacher interaction. Italso helps the students to understand the role that science plays in their everyday lives.

As part of its commitment to education, Cairn Lanka (Private) Limited has also signed aMemorandum of Understanding (MoU) with the Government of Sri Lanka to assist in theconstruction and setting-up of libraries at a number of identified schools in theMoneragala district for the benefit of children in the area. The project will beimplemented in a phased manner to ensure proper usage of the libraries by the schoolchildren.

Health Initiatives

As part of Cairn India’s CSR commitment, we have a policy to improve healthcareaccess for local people in the communities surrounding our operations.

Our mobile health vans visited more than 100 remote villages in Rajasthan and Gujarat,which would otherwise have had little or no access to healthcare services. Each van isstaffed by a doctor, a pharmacist and a social worker. This was accomplished inpartnership with HelpAge India, a national nongovernmental organisation (NGO) that runssimilar schemes in other parts of the country too. The project has a strong emphasis onpreventive healthcare through awareness programmes.

Our work with the IFC included an HIV/ AIDS awareness programme as part of the Child,Maternal and Reproductive Health Awareness initiative. This has been developed inpartnership with the Centre for Development and Population, an international NGO thatworks on women and youth empowerment issues around the world.

We also attempt to improve the availability of safe drinking water in the communitieswhere we work.

During the year, the health initiatives benefited more than 50,000 people.

HelpAge Silver Plate Award (2010)

On 1 October 2010, Cairn India was awarded HelpAge India’s prestigious‘Silver Plate Award’ for its contribution towards the care of underprivilegedelderly people. The award was presented by Mr Prithviraj Chavan, Minister of State in thePrime Minister’s Office, in the presence of key dignitaries from the industry and thegovernment.

Golden Peacock Award for Corporate Social Responsibility (2011)

The Golden PeacockAwards are recognised worldwide as the hallmark of corporate excellence in communitydevelopment initiatives. The Awards jury was led by Mr P N Bhagwati, former Chief Justiceof India and Member, UN Human Rights Commission. The award was presented by Rt. HonBaroness Verma, Minister in Government Whips Office and House of Lords Spokesperson forInternational Development, UK on 29 April 2011.