1st ANNUAL REPORT 2007-2008 (26

th March, 2007 to 31

st March, 2008)

ONGC TERI Biotech Limited

BOARD OF DIRECTORS

Shri A.K.Hazarika Chairman

Shri M.M.Joshi Director & CEO

Dr. D.M.Kale Director

Dr. Banwari Lal Director

STATUTORY AUDITORS

M/s A. K. Khurana & Associates

Chartered Accountants,

New Delhi

BANKERS

State Bank of Hyderabad,

Lodhi Road, New Delhi

REGISTERED OFFICE

The Energy and Resources Institute,

Darbari Seth Block, IHC Complex,

Lodhi Road, New Delhi-110003

NOTICE

NOTICE is hereby given that the 1st Annual General Meeting of the Members of ONGC

TERI Biotech Limited will be held on Monday, the 23rd June, 2008 at 1700 Hrs. at

Conference Room, 7th Floor, ONGC, Jeevan Bharti, New Delhi-110001, to transact the

following Business;

As Ordinary Business:

1. To receive, consider and adopt the Audited Balance Sheet along with

Schedules annexed thereto for the period commencing on 26th March, 2007

and ending on 31st March, 2008 and the Reports of the Directors and the

Auditors thereon.

2. To appoint a Director in place of Shri A.K.Hazarika who retires by rotation and

being eligible, offers himself for re-appointment.

3. To appoint a Director in place of Shri M.M.Joshi who retires by rotation and

being eligible, offers himself for re-appointment.

As Special Business:

4. To consider and if thought fit, to pass with or without modification(s), the

following as a Special Resolution:

“ RESOLVED THAT pursuant to section 224A of the Companies Act, 1956,

(including any statutory modification or re-enactment thereof for the

time being in force and as may be enacted from time to time) M/s A. K.

Khurana & Associates, Chartered Accountants, the retiring Auditors of

the Company from whom the Company has received a Certificate

under Section 224 (1)(B) of the Act, being eligible, be and are hereby,

re-appointed as the Auditors of the Company to hold office from the

conclusion of this meeting until the conclusion of the next Annual

General Meeting of the Company on a remuneration to be fixed by

the Board of Directors in due course.”

By Order of the Board of Directors

for ONGC TERI Biotech Limited

Sd/-

Place: New Delhi (S.K.C.Mathur)

Dated: 23rd June, 2008 Authorized Signatory

NOTES:

1. A Member entitled to attend and vote at the meeting is entitled to appoint a

Proxy to attend and vote instead of himself and the Proxy need not be a Member

of the Company. Proxies in order to be effective must be received by the

Company not less than forty-eight hours before the meeting.

2. The relevant Explanatory Statement pursuant to Section 173(2) of the Companies

Act, 1956 in respect of item no. 4 stated above is annexed hereto.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

Item No. 4

As per section 224A of the Companies Act, 1956, the re-appointment of an auditor

shall be made by a Special Resolution since Oil and Natural Gas Corporation Limited,

a Government Company holds more than 25% (Twenty-five) of the Subscribed Capital

of the Company.

The Board of Directors recommends the resolution for your approval as a Special

Resolution.

None of the Directors of the Company is in any way concerned or interested in the

resolution.

By Order of the Board of Directors

for ONGC TERI Biotech Limited

Sd/-

Place: New Delhi (S.K.C.Mathur)

Dated: 23rd June, 2008 Authorized Signatory

DIRECTORS’REPORT

Dear Members,

Your Directors are pleased to present the 1st Annual Report together with the

Audited Accounts of the Company for the period commencing 26th March,

2007 and ending on 31st March, 2008.

Incorporation of the Company

The Company was incorporated on 26th March, 2007 and received the

Certificate of Commencement of Business on 17th April,, 2007.

Financial Results

The Company is yet to commence commercial operations. The Pre-operative

expenses of Rs. 2,80,667/- incurred up-to 31st March,2008 shall be capitalized.

Dividend

Since the Company did not earn any revenue during the period ended 31st

March, 2008, payment of any dividend is not recommended by your Directors.

GENISIS & WAY FORWRD

The Company has been set-up as a Joint-Venture of Oil and Natural Gas

Corporation Ltd., (ONGC) and The Energy and Resources Institute (TERI) to

provide oil field services to the Oil and Gas Industry, using microbial methods

primarily in three areas, namely:

1. Bio-remediation using Oilzapper Technology;

2. Microbial Enhanced Oil Recovery; and

3. Prevention of Wax Deposition in the Production Tubing.

Apart from these three prime areas, many more areas in years to come

around the World will use the microbial methods leading to effective and

economic solutions to variety of oil field problems.

Currently, the ownership of the above-mentioned technologies, which have

been patented, is shared by ONGC and TERI, who have graciously agreed to

permit your Company to use these technologies and the patents without any

charge, in providing bio-remedial solutions to variety of oil field problems. Thus,

your Company is in a unique vantage position in the lucrative oil industry with

these proprietary technologies in its possession, as under the current high oil

price regime and the increasingly high demand for oil products the World

over, a lot of interest is evinced in these production-enhancing technologies

and it is expected that the services envisaged to be provided by your

Company would be very much sought after.

Your Company has also entered into an agreement with ONGC to provide

bio-remedial solutions and services to all its Assets and producing fields spread

throughout India for enhanced crude oil production.

On the International front, your Company has qualified and short-listed for

providing bio-remediation services to Kuwait Oil Company (KOC), Kuwait, and

is expecting award of the work shortly. The work would primarily concentrate

on cleaning-up large expanses of damaged oil fields in Kuwait, through bio-

remediation solutions, using Oilzapper Technology, with its two distinct

advantages of being extremely price competitive, and quicker in providing

time effective solutions, compared to other available bio-remedial solutions

and technologies, the World-over.

Statutory Meeting

The Statutory Meeting pursuant to the provisions of Section 165 of the

Companies Act, 1956 was held on 15TH October, 2007 wherein the members

considered the Statutory Report and discussed matters pertaining to the

formation of your Company.

Fixed Deposit

The Company has not accepted any Fixed Deposits from the public.

Auditors

M/s A.N. Khurana & Associates, Chartered Accountants, Auditors of the

Company holds office until the conclusion of the forthcoming Annual General

Meeting of the Company and are recommended for reappointment. The

Company has received certificate from them to the effect that their

appointment, if made, would be within the provisions of Section 224(1) of the

Companies Act, 1956.

Particulars of Employees

There is no employee in the Company whose particulars are required to be

given under Section217 (2A) of the Companies Act, 1956.

Particulars of Conservation of Energy, Technology Absorption etc.

Your Company is yet to commence commercial operations. No particulars

therefore are, therefore, given in terms of provisions of Section217 (1) (e) of the

Companies Act, 1956 read with The Companies (Disclosure of particulars in the

report of the Board of Directors) Rules, 1988. Your Company has also not

earned or spent any foreign exchange during the accounting period ended

31st March, 2008.

Directors’ Responsibility Statement

As required under Section 217 (2AA) of the Companies Act, 1956, your

Directors state that:

(i) that in the preparation of the Annual Accounts, the applicable

accounting standards have been followed;

(ii) that the accounting policies selected and applied are consistent

and the judgment and estimates made are reasonable and

prudent so as to give a true and fair view of the state of affairs of

the Company at the end of the financial year and of the profit or

loss of the Company for that period;

(iii) that proper and sufficient care has been taken for the

maintenance of adequate accounting records in accordance

with the provisions of the Companies Act,1956 for safeguarding the

assets of the Company and for preventing and detecting fraud

and other irregularities;

(iv) that the Annual Accounts have been prepared on a going

concern basis.

Directors

In accordance with the provisions of the Companies Act, 1956 and the Articles

of Association of the Company, Shri A. K. Hazarika & Shri M. M. Joshi retires by

rotation and being eligible, offer themselves for re-appointment.

None of the Directors are disqualified from being appointed as Directors in

terms of provisions of Section 274 (1) (g) of the Companies Act, 1956.

Acknowledgements

The Directors wish to thank and deeply acknowledge the co-operation,

assistance and support extended by ONGC, TERI and other shareholders,

Company’s bankers and Statutory Auditors etc. The Directors also wish to

place on record their appreciation for the all-round co-operation and

contribution made at all levels in the formative year of the Company.

Regd. Office: On behalf of the Board of Directors

for ONGC TERI Biotech Limited

The Energy and Resources Institute,

Darbari Seth Block, IHC Complex,

Lodhi Road, New Delhi-110003 Sd/-

(A.K.Hazarika)

Date: 23rd June, 2008 Chairman

AUDITOR’S REPORT

The Shareholders of ONGC TERI BIOTECH LIMITED

We have audited the attached Balance Sheet of ONGC TERI BIOTECH LIMITED

as at 31st March, 2008 for the period ended on that date annexed thereto.

These financial statements are the responsibility of the Company’s

management. Our responsibility is to express an opinion on these financial

statements based on our audit.

We conducted our audit in accordance with auditing standards generally

accepted in India. Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are

free of material misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and the disclosures in the financial

statements. An audit also includes assessing the accounting principles used

and significant estimates made by management, as well as evaluating the

overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) order 2003 issued by the

Central Government of India in terms of Section (4A) of Section 227 of the

Companies Act 1956, we enclose in the annexure a statement on the matters

specified in paragraphs 4 & 5 of the said order.

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

i) We have obtained all the information and explanations which to the

best of our knowledge and belief were necessary for the purpose of our

audit.

ii) In our opinion, proper Books of Account as required by law have been

kept by the Company so far as it appears from our examination of such

books;

iii) The Balance Sheet dealt with by this report is in agreement with the

Books of Account;

iv) In our opinion, the Balance Sheet dealt with by this report complies with

the Accounting Standards referred to in sub-section (3C) of Section 211

of the Companies Act, 1956.

v) On the basis of written representations received from the Directors, as on

31st March 2008, and taken on record by the Board of Directors, we

report that none of the Directors is disqualified as on 31st March 2008

from being appointed as a director in terms of clause (g) of sub-section

(1) of section 274 of the Companies Act, 1956.

vi) In our opinion and to the best of our information and according to the

explanations given to us, the said accounts give the information

required by the Companies Act, 1956, in the manner so required and

give a true and fair view in conformity with the accounting principles

generally accepted in India:

(a) In the case of the Balance Sheet, of the State of Affairs of the

Company as at 31st March, 2008

For A.K.KHURANA & ASSOCIATES

CHARTERED ACCOUNTANTS

Sd/-

Place: New Delhi (ASHOK KHURANA)

Dated: SOLE PRACTITIONER

ANNEXURE TO AUDITOR’S REPORT

1. The company has not granted or taken any loans, secured or unsecured to /

from companies, firm or other parties covered in the register maintained under

section 301 of the Companies Act, 1956.

2. In our opinion and according to the information and explanation given to us,

no transactions were made in pursuance of contracts or arrangements

required to be entered in the register maintained under section 301 of the

Companies Act, 1956.

3. The company has not accepted any deposits from the public under the

meaning of section 58A and 58AA of the Companies Act, 1956 or any other

relevant provision of the Act and the rules framed there under.

4. In our opinion and according to the information and explanations given to us,

the company is generally regular in depositing undisputed statutory dues

including income tax, sales tax, service tax, custom duty and cess and other

statutory dues, if any with the appropriate authorities. There are no arrears of

outstanding statutory dues as at 31st March 2008 for a period of more than six

months from the date they became payable.

5. The company has neither accumulated losses nor has incurred cash losses in

the financial year or in the immediately preceding financial year.

6. Based upon the audit procedures performed and as per the information and

explanations given to us by the management, we report that no fraud on or by

the company has been noticed during the year.

7. The Comment on other matters are required by the Company’s (Auditor’s

Report) Order, 2003 are not given as the same are not applicable to the

Company.

For A.K.KHURANA & ASSOCIATES

CHARTERED ACCOUNTANTS

Sd/-

Place: New Delhi (ASHOK KHURANA)

Dated: SOLE PRACTITIONER