Home  »  Company  »  Assam Company  »  Quotes  »  Accounting Policy
Enter the first few characters of Company and click 'Go'

Accounting Policies of Assam Company (India) Ltd. Company

Mar 31, 2016

Note : 1 - Significant Accounting Policies

[a] Convention

The financial statements have been prepared to comply in all material aspects with the Accounting Standards, notified u/s 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rule, 2014.

[b] Basis of Accounting

The Financial Statements are prepared under the historical cost convention, modified by revaluation of certain fixed assets as detailed below.

[c] Fixed Assets

Fixed assets are stated at cost of acquisition including appropriate incidental / installation expenses. Cost of extension planting is capitalized. In respect of revalued assets, the appreciation in value of assets over its book value are credited to Revaluation Reserve.

The assets acquired on hire purchase for which ownership will vest at a future date are capitalized at the cash cost of the leased assets. Equated monthly payments are apportioned between finance charge and repayment of principal amount.

Subsidies received from Government in respect of fixed assets are deducted from cost of respective assets.

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal /external factors. An Impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.

Software cost is capitalized where it is expected to provide future enduring economic benefits. Software capitalization costs include license fees, cost of packages and implementation/system integration services. The costs are capitalized in the year in which the relevant software is implemented for use.

Profit or loss on disposal of fixed assets is recognized in the Statement of Profit and Loss.

Expenditure incurred in connection with Oil and Gas project

The Company has adopted “Full Cost Method” as per “Guidance Note on Accounting for Oil & Gas Producing Activities” by the Institute of Chartered Accountants of India. As per “Full Cost Method”, all costs incurred for acquisition of Exploration and Production (E&P) assets, exploration and development along with other expenses including financing cost and exchange fluctuating cost on borrowings are capitalized and treated as a cost centre under “Capital Work in Progress”. When discovery of oil and gas is made and the well is ready to commence commercial production, the exploratory / development cost under cost centre corresponding to the proved oil and gas reserve is capitalized from “Capital Work in Progress” to the “Fixed Assets”.

Producing properties are created in respect of an oil field having developed oil reserves when the well in the field is ready to commence commercial production.

[d] Depreciation

[i] Depreciation is provided on the Straight Line Method on the useful life of an asset as specified in part C of Schedule II to the Companies Act, 2013

[ii] In respect of revalued assets the incremental depreciation on account of revaluation is recouped from Revaluation Reserve. Land and Development including leasehold land are not depreciated.

[e] Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized. Other borrowing costs are charged to revenue.

[f] Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

[g] Inventories

Inventories are stated at lower of cost and net realizable value. Cost is determined on weighted average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition and includes appropriate production overheads, where applicable.

Provision is made for obsolete, slow moving and defective stocks, where necessary.

[h] Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. Transactions in foreign currency with a Joint Venture for Oil and Gas project are recorded at monthly average exchange rate prevailing at the time of such transaction. Monetary items denominated in foreign currency are restated at the exchange rate prevailing on the Balance Sheet date. Foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of the transactions. Exchange differences arising on settlement of transactions and /or restatements are dealt in the Statement of Profit and Loss.

Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are adjusted against the cost of such fixed assets and the balance is accumulated in ''Foreign Currency Monetary Item Translation Difference Account'' and amortized over the balance life of the long term monetary item or 30th November, 2019, whichever is earlier.

Derivative financial instruments, i.e. forward exchange contracts are used to hedge its risk associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments. In respect of forward exchange contracts with underlying transactions, the premium or discount arising at the inception of such contract is amortized as expense or income over the life of contract.

[i] Sales

Sales are recognized upon transfer of risks and rewards of ownership in the goods to the buyers. Sales represent invoiced value of goods sold less Sales Tax / Value Added Tax.

[j] Other Income

Interest income, income from investments and other incentives are accounted for on accrual basis. Export incentives are recognized only when no significant uncertainties as to measurability or collectability exist. Other items are accounted for on accrual basis.

[k] Replanting and Other Subsidies of Revenue nature

Replanting and other subsidies of revenue nature are recognized as income in the Statement of Profit and Loss.

[l] Compensation of Land

Compensation, if any, in respect of land surrendered / vested in the Government under various State Land legislations is accounted for as and when it takes place.

[m] Leases

Rentals in respect of operating leases are charged off to Statement of Profit and Loss.

[n] Retirement Benefits

The Company operates defined contribution schemes for a Provident Fund and a Pension Fund. Contributions to these funds are made regularly to the appropriate authority/Trust. The interest rate payable to the members of the Trust is not lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act,1952 and shortfall, if any, is made good by the Company.

The Company also provides for retirement benefits with defined benefits in the form of Gratuity and Pension. Annual contributions for Gratuity and Pension are made by the Company, based on actuarial valuation carried out every year end, to independent Trust Funds.

Leave encashment on retirement and post retirement medical benefits are determined on the basis of independent actuarial valuation at the year end and such liabilities are provided for in these accounts.

Actuarial gains and losses, where applicable, are determined and recognized in the Statement of Profit and Loss.

The Company recognizes gains and losses on curtailment or settlement of a defined benefit plan in the Statement of Profit and Loss as and when the curtailment or settlement occurs.

Short term employee benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the related service is rendered.

[o] Oil Production Cost

Production costs include pre well head and post well head expenses including depreciation and applicable operating costs of support equipment''s and facilities.

[p] Provision

A provision is recognized when there is a present obligation as a result of a past event if it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made, and such provisions are not discounted to their present value.

[q] Taxes on Income

Current Tax represents the amount of tax payable in respect of taxable income for the period based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.

Provision for deferred taxation is made using the liability method, at current rates of taxation, on timing differences to the extent it is probable that a liability or asset will crystallize.

Deferred Tax assets are not recognized unless there is reasonable certainty and in case of brought forward loss and unabsorbed depreciation there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred Tax assets are only recognized to the extent there are deferred tax liabilities of offsetting them.

[r] Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Examples of such estimates include estimates of income taxes, future obligations under employment retirement benefit plans, provision for doubtful debts and advances and estimated useful life of tangible and intangible assets. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.


Dec 31, 2014

[a] Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

[b] Basis of Accounting

The Financial Statements are prepared under the historical cost convention, modified by revaluation of certain fixed assets as detailed below.

[c] Fixed Assets

Fixed assets are stated at cost of acquisition including appropriate incidental / installation expenses. Cost of extension planting is capitalised. In respect of revalued assets, the appreciation in value of assets over its book value are credited to Revaluation Reserve.

The assets acquired on hire purchase for which ownership will vest at a future date are capitalised at the cash cost of the leased assets. Equated monthly payments are apportioned between finance charge and repayment of principal amount.

Subsidies received from Government in respect of fixed assets are deducted from cost of respective assets. Impairment loss, if any, ascertained as per the Accounting Standard of the Companies (Accounting Standards) Rules, 2006 is recognised.

Software cost is capitalised where it is expected to provide future enduring economic benefits. Software capitalisation costs include license fees, cost of packages and implementation/system integration services. The costs are capitalised in the year in which the relevant software is implemented for use.

Profit or loss on disposal of fixed assets is recognised in the Statement of Profit and Loss.

Expenditure incurred in connection with Oil and Gas project

The Company has adopted "Full Cost Method" as per "Guidance Note on Accounting for Oil & Gas Producing Activities" by the Institute of Chartered Accountants of India. As per "Full Cost Method", all costs incurred for acquisition of Exploration and Production (E&P) assets, exploration and development along with other expenses including financing cost and exchange fluctuating cost on borrowings are capitalized and treated as a cost centre under "Capital Work in Progress". When discovery of oil and gas is made and the well is ready to commence commercial production, the exploratory / development cost under cost centre corresponding to the proved oil and gas reserve is capitalized from "Capital Work in Progress" to the "Fixed Assets".

Producing properties are created in respect of an oil field having developed oil reserves when the well in the field is ready to commence commercial production.

[d] Depreciation

[i] Depreciation, other than on Oil and Gas producing properties, is provided on the Written Down Value method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Cost of certain fixed assets located in leasehold properties under the head Building and Furniture as mentioned below have been depreciated over their respective lease periods which is higher than the Schedule XIV rates.

Building and Furniture : Lease period - between 3to9 years.

Cost of certain fixed assets at estates under the head Buildings and Vehicles are depreciated at rates based on the estimated life of each asset and the aggregate depreciation so calculated is higher than the Schedule XIV rates.

The following depreciation rates are considered and applied:

Building 25 % and 33.33 %

Vehicles 30 %

[ii] Capitalised software costs are amortised over its useful life of five years on a straight line basis.

[iii] In respect of revalued assets the incremental depreciation on account of revaluation is recouped from Revaluation Reserve. Land and Development including leasehold land are not depreciated.

[iv] Depreciation in respect of oil and gas producing assets is calculated on the capitalized cost according to the "Unit of Production Method", under which the oil and gas assets are written off at the same rate as the quantitative depletion of the related reserve. Unit of Production depletion rates are revised when there is an indication of the need for revision based on revised reserve estimate. Such revisions are also accounted for prospectively to give effect in the Books of Accounts of the Company.

[v] Assets like Building, Plant and Machinery etc. included in Oil and Gas producing properties for which depreciation rates have been prescribed in Schedule XIV of the Companies Act,1956 are depreciated on Written Down Value method at the rates prescribed in Schedule XIV of the Companies Act, 1956. Other assets are depreciated according to the ''unit of production'' method as prescribed by The Institute of Chartered Accountants of India in the ''Guidance Note on Accounting for Oil and Gas Producing Activities''.

[e] Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. Other borrowing costs are charged to revenue.

[f] Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

[g] Inventories

Inventories are stated at lower of cost and net realisable value. Cost is determined on weighted average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition and includes appropriate production overheads, where applicable. Provision is made for obsolete, slow moving and defective stocks, where necessary.

[h] ForeignCurrencyTransactions

Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. Transactions in foreign currency with a Joint Venture for Oil and Gas project are recorded at monthly average exchange rate prevailing at the time of such transaction. Monetary items denominated in foreign currency are restated at the exchange rate prevailing on the Balance Sheet date. Foreign currency non- monetary items carried in terms of historical cost are reported using the exchange rate at the date of the transactions. Exchange differences arising on settlement of transactions and /or restatements are dealt in the Statement of Profit and Loss.

Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are adjusted against the cost of such fixed assets and the balance is accumulated in ''Foreign Currency Monetary Item Translation Difference Account'' and amortised over the balance life of the long term monetary item or 31st January, 2020, whichever is earlier.

Derivative financial instruments, i.e. forward exchange contracts are used to hedge its risk associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments. In respect of forward exchange contracts with underlying transactions, the premium or discount arising at the inception of such contract is amortised as expense or income over the life of contract.

[i] Sales

Sales are recognised upon transfer of risks and rewards of ownership in the goods to the buyers. Sales represent invoiced value of goods sold less Sales Tax / Value Added Tax.

[j] Other Income

Interest income, income from investments and other incentives are accounted for on accrual basis. Export incentives are recognised only when no significant uncertainties as to measurability or collectability exist. Other items are accounted for on accrual basis.

[k] Replanting and Other Subsidies

Replanting and other subsidies of revenue nature are recognised as income in the Statement of Profit and Loss.

[l] Compensation of Land

Compensation, if any, in respect of land surrendered / vested in the Government under various State Land legislations is accounted for as and when it takes place.

[m] Leases

Rentals in respect of operating leases are charged off to Statement of Profit and Loss.

[n] Retirement Benefits

The Company operates defined contribution schemes for Provident and a Pension Fund. Contributions to these funds are made regularly to the appropriate authority/Trust. The interest rate payable to the members of the Trust is not lower than the statutory rate of interest declared by the Central Government underthe Employees Provident Funds and Miscellaneous Provisions Act,1952 and shortfall, if any, is made good by the Company.

The Company also provides for retirement benefits with defined benefits in the form of Gratuity and Pension. Annual contributions for Gratuity and Pension are made by the Company, based on actuarial valuation carried out every year end, to independent Trust Funds.

Leave encashment on retirement and post retirement medical benefits are determined on the basis of independent actuarial valuation at the year end and such liabilities are provided for in these accounts. Actuarial gains and losses, where applicable, are determined and recognised in the Statement of Profit and Loss.

The Company recognises gains and losses on curtailment or settlement of a defined benefit plan in the Statement of Profit and Loss as and when the curtailment or settlement occurs.

Short term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the related service is rendered.

[o] Oil Production Cost

Production costs include pre well head and post well head expenses including depreciation and applicable operating costs of support equipment''s and facilities.

[p] Provision

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made, and such provisions are not discounted to their present value.

[q] Taxes on Income

Current tax represents the amount of tax payable in respect of taxable income for the period based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.

Provision for deferred taxation is made using the liability method, at current rates of taxation, on timing differences to the extent it is probable that a liability or asset will crystalise.

Deferred tax assets are not recognised unless there is reasonable certainty and in case of brought forward loss and unabsorbed depreciation there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are only recognised to the extent there are deferred tax liabilities of offsetting them.

[r] Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Examples of such estimates include estimates of income taxes, future obligations under employment retirement benefit plans, provision fordoubtful debts and advances and estimated useful life of tangible and intangible assets. Actual results could differfrom these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.


Dec 31, 2012

[a] Convention

The Financial Statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

[b] Basis of Accounting

The Financial Statements are prepared under the historical cost convention, modified by revaluation of certain fixed assets as detailed below.

[c] Fixed Assets

Fixed Assets are stated at cost of acquisition including appropriate incidental / installation expenses. Cost of extention planting is capitalised. In respect of revalued assets, the appreciation in value of assets over its book value are credited to Revaluation Reserve.

The assets acquired on hire purchase for which ownership will vest at a future date are capitalised at the cash cost ofthe leased assets. Equated monthly payments are apportioned between finance charge and repayment of principal amount.

Subsidies received from Government in respect of fixed assets are deducted from cost of respective assets. Impairment loss, if any, ascertained as per the Accounting Standard ofthe Companies (Accounting Standards) Rules, 2006 is recognised.

Software cost is capitalised where it is expected to provide future enduring economic benefits. Software capitalisation costs include license fees, cost of packages and implementation/system integration services. The costs are capitalised in the year in which the relevant software is implemented for use.

Profit or loss on disposal of fixed assets is recognised in the Statement of Profit and Loss.

Expenditure incurred in connection with Oil and Gas project

The Company has adopted "Full Cost Method" as per "Guidance Note on Accounting for Oil & Gas Producing Activities" by the Institute of Chartered Accountants of India. As per "Full Cost Method", all costs incurred for acquisition of Exploration and Production (E&P) assets, exploration and development alongwith other expenses including financing cost and exchange fluctuating cost on borrowings are capitalized and treated as a cost centre under "Capital Work in Progress". When discovery of oil and gas is made and the well is ready to commence commercial production, the exploratory / development cost under cost centre corresponding to the proved oil and gas reserve is capitalized from "Capital Work in Progress" to the "Fixed Assets". Producing properties are created in respect of an oil field having developed oil reserves when the well in the field is readyto commence commercial production.

[d] Depreciation

[i] Depreciation, other than on Oil and Gas producing properties, is provided on the Written Down Value method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Cost of certain fixed assets located in leasehold properties under the head Building and Furniture as mentioned below have been depreciated over their respective lease periods which is higher than the Schedule XIV rates. Building and Furniture : Lease period - between 3to9 years.

Cost of certain fixed assets at estates under the head Buildings and Vehicles are depreciated at rates based on the estimated life of each asset and the aggregate depreciation so calculated is higher than the Schedule XIV rates.

The following depreciation rates are considered and applied:

Building 25%and 33.33 %

Vehicles 30 %

[ii] Capitalised software costs are amortised over its useful life of five years on a straight line basis.

[iii] In respect of revalued assets the incremental depreciation on account of revaluation is recouped from Revaluation Reserve. Land and Development including leasehold land are not depreciated.

[iv] Depreciation in respect of oil and gas producing assets is calculated on the capitalized cost according to the "Unit of Production Method", under which the oil and gas assets are written off at the same rate as the quantitative depletion ofthe related reserve. Unit of Production depletion rates are revised when there is an indication ofthe need for revision based on revised reserve estimate. Such revisions are also accounted for prospectively to give effect in the Books ofAccounts of the Company.

[v] Assets like Building, Plant and Machinery etc. included in Oil and Gas producing properties for which depreciation rates have been prescribed in ScheduleXIV ofthe CompaniesAct,1956 are depreciated on Written Down Value method at the rates prescribed in Schedule XIV of the Companies Act, 1956. Other assets are depreciated according to the ''unit of production'' method as prescribed by The Institute of Chartered Accountants of India in the ''Guidance Note on Accounting for Oil and Gas Producing Activities''.

[e] Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. Other borrowing costs are charged to revenue.

[f] Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

[g] Inventories

Inventories are stated at lower of cost and net realisable value. Cost is determined on weighted average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition and includes appropriate production overheads, where applicable. Provision is made for obsolete, slow moving and defective stocks, where necessary.

[h] ForeignCurrencyTransactions

Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. Transactions in foreign currency with a Joint Venturer for Oil and Gas project are recorded at monthly average exchange rate prevailing at the time of such transaction. Monetary items denominated in foreign currency are restated at the exchange rate prevailing on the Balance Sheet date. Foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of the transactions. Exchange differences arising on settlement of transactions and /or restatements are dealt in the Statement of Profit and Loss. Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are adjusted against the cost of such fixed assets and the balance is accumulated in ''Foreign Currency Monetary Item Translation Difference Account'' and amortised over the balance life of the long term monetary item or31st January,2020, whichever is earlier.

Derivative financial instruments, i.e. forward exchange contracts are used to hedge its risk associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments. In respect of forward exchange contracts with underlying transactions, the premium or discount arising at the inception of such contract is amortised as expense or income over the life of contract.

[i] Sales

Sales represent invoiced value of goods sold less Sales Tax/Value Added Tax.

[j] Other Income

Interest income, income from investments and other incentives are accounted for on accrual basis. Export incentives are recognised only when no significant uncertinties as to measurability or collectibility exist.

[k] Replanting and Other Subsidies

Replanting and other subsidies of revenue nature are recognised as income in the Statement of Profit and Loss.

[l] Compensation of Land

Compensation, if any, in respect of land surrendered / vested in the Government under various State Land legislations is accounted for as and when it takes place.

[m] Leases

Rentals in respect of operating leases are charged off to Statement of Profit and Loss.

[n] Retirement Benefits

The Company operates defined contribution schemes for Provident and a Pension Fund. Contributions to these funds are made regularly to the appropriate Authority/Trust. The interest rate payable to the Members of the Trust is not lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act,1952 and shortfall, if any, is made good by the Company. The Company also provides for retirement benefits with defined benefits in the form of Gratuity and Pension. Annual contributions for Gratuity and Pension are made by the Company, based on actuarial valuation carried out every year end, to independent Trust Funds.

Leave encashment on retirement and post retirement medical benefits are determined on the basis of independent actuarial valuation at the year end and such liabilities are provided for in these accounts. Actuarial gains and losses, where applicable, are determined and recognised in the Statement of Profit and Loss.

The Company recognises gains and losses on curtailment or settlement of a defined benefit plan in the Statement of Profit and Loss as and when the curtailment or settlement occurs.

Short term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the related service is rendered.

[o] Oil Production Cost

Production costs include pre well head and post well head expenses including depreciation and applicable operating costs of support equipments and facilities.

[p] Provision

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made, and such provisions are not discounted to their present value.

[q] Taxes on Income

Current tax represents the amount of tax payable in respect of taxable income for the period based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.

Provision for deferred taxation is made using the liability method, at current rates of taxation, on timing differences to the extent it is probable that a liability or asset will crystalise.

Deferred tax assets are not recognised unless there is reasonable certainty and in case of brought forward loss and unabsorbed depreciation there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are only recognised to the extent there are deferred tax liabilities of offsetting them.

[r] Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Examples of such estimates include estimates of income taxes, future obligations under employment retirement benefit plans, provision for doubtful debts and advances and estimated useful life oftangible and intangible assets. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.


Dec 31, 2011

[a] Convention

The Financial Statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

[b] Basis of Accounting

The Financial Statements are prepared under the historical cost convention, modified by revaluation of certain fixed assets as detailed below.

[c] Fixed Assets

Fixed assets are stated at cost of acquisition including appropriate incidental / installation expenses. Cost of young tea plantation is capitalised. In respect of revalued assets, the appreciation in value of assets over its book value are credited to Revaluation Reserve.

The assets acquired on hire purchase for which ownership will vest at a future date are capitalised at the cash cost of the leased assets. Equated monthly payments are apportioned between finance charge and repayment of principal amount.

Subsidies received from Government in respect of fixed assets are deducted from cost of respective assets.

Impairment loss, if any, ascertained as per the Accounting Standard of the Companies (Accounting Standards) Rules, 2006 is recognised.

Software cost is capitalised where it is expected to provide future enduring economic benefits. Software capitalisation costs include license fees, cost of packages and implementation/system integration services. The costs are capitalised in the year in which the relevant software is implemented for use.

Profit or loss on disposal of fixed assets is recognised in the Profit and Loss Account.

Expenditure incurred in connection with Oil and Gas project

The Company has adopted “Full Cost Method” as per “Guidance Note on Accounting for Oil & Gas Producing Activities” by the Institute of Chartered Accountants of India. As per “Full Cost Method”, all cost incurred for acquisition of E&P assets, exploration and development alongwith other expenses including financing cost and exchange fluctuating cost on borrowings are capitalized and treated as a cost centre under “Capital Work in Progress”. When discovery of oil and gas is made and the well is ready to commence commercial production, the exploratory / development cost under cost centre corresponding to the proved oil and gas reserve is capitalized from “Capital Work in Progress” to the “Fixed Assets”.

Producing properties are created in respect of an oil field having developed oil reserves when the well in the field is ready to commence commercial production.

[d] Depreciation

[i] Depreciation, other than on Oil and Gas producing properties, is provided on the Written Down Value method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Cost of certain fixed assets located in leasehold properties under the head Building and Furniture as mentioned below have been depreciated over their respective lease periods which is higher than the Schedule XIV rates. Building and Furniture : Lease period - between 3 to 9 years.

Cost of certain fixed assets at estates under the head Buildings and Vehicles are depreciated at rates based on the estimated life of each asset and the aggregate depreciation so calculated is higher than the Schedule XIV rates.

The following depreciation rates are considered and applied: Building 25% and 33.33% Vehicles 30%

[ii] Capitalised software costs are amortised over its useful life of five years on a straight line basis.

[iii] In respect of revalued assets the incremental depreciation on account of revaluation is recouped from Revaluation Reserve. Land and Development including leasehold land are not depreciated.

[iv] Depreciation in respect of oil and gas producing assets is calculated on the capitalized cost according to the “Unit of Production Method”, under which the oil and gas assets are written off at the same rate as the quantitative depletion of the related reserve. Unit of Production depletion rates are revised when there is an indication of the need for revision based on revised reserve estimate, which is carried out once in a year. Such revisions are also accounted for prospectively to give effect in the Books of Accounts of the Company. [v] Assets like Building, Plant and Machinery etc. included in Oil and Gas producing properties for which depreciation rates have been prescribed in Schedule XIV of the Companies Act,1956 are depreciated on Written Down Value method at the rates prescribed in Schedule XIV of the Companies Act, 1956. Other assets are depreciated according to the 'unit of production' method as prescribed by The Institute of Chartered Accountants of India in the 'Guidance Note on Accounting for Oil and Gas Producing Activities'.

[e] Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. Other borrowing costs are charged to revenue.

[f] Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

[g] Inventories

Inventories are stated at lower of cost and net realisable value. Cost is determined on weighted average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition and includes appropriate production overheads, where applicable.

Provision is made for obsolete, slow moving and defective stocks, where necessary.

[h] Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. Transactions in foreign currency with a Joint Venturer for Oil and Gas project are recorded at monthly average exchange rate prevailing at the time of such transaction. Monetary items denominated in foreign currency are restated at the exchange rate prevailing on the Balance Sheet date. Foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of the transactions. Exchange differences arising on settlement of transactions and /or restatements are dealt in the Profit and Loss Account.

Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are adjusted against the cost of such fixed assets and the balance is accumulated in 'Foreign Currency Monetary Item Translation Difference Account' and amortised over the balance life of the long term monetary item or 31st March, 2011, whichever is earlier.

Derivative financial instruments, i.e. forward exchange contracts are used to hedge its risk associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments. In respect of forward exchange contracts with underlying transactions, the premium or discount arising at the inception of such contract is amortised as expense or income over the life of contract.

[i] Sales

Sales represent invoiced value of goods sold less Sales Tax / Value Added Tax.

[j] Other Income

Interest income, income from investments and other incentives except export incentives are accounted for on accrual basis.

[k] Replanting and Other Subsidies

Replanting and other subsidies of revenue nature are recognised as income in the Profit and Loss Account.

[l] Compensation of Land

Compensation, if any, in respect of land surrendered / vested in Government under various State Land legislations is accounted for as and when received.

[m] Leases

Rentals in respect of operating leases are charged off to Profit and Loss Account.

[n] Retirement Benefits

The Company operates defined contribution schemes for Provident and a Pension Fund. Contributions to these funds are made regularly to the appropriate authority/Trust . The interest rate payable to the members of the Trust is not lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act,1952 and shortfall, if any, is made good by the Company.

The Company also provides for retirement benefits with defined benefits in the form of Gratuity and Pension. Annual contributions for Gratuity and Pension are made by the Company, based on actuarial valuation carried out every year end, to Trust and Life Insurance Corporation of India (LICI) respectively.

Leave encashment on retirement and post retirement medical benefits are determined on the basis of independent actuarial valuation at the year end and such liabilities are provided for in these accounts.

Actuarial gains and losses, where applicable, are determined and recognised in the Profit and Loss Account.

The Company recognises gains and losses on curtailment or settlement of a defined benefit plan in the Profit and Loss Account as and when the curtailment or settlement occurs.

Short term employee benefits are recognised as an expense in the Profit and Loss Account for the year in which the related service is rendered.

[o] Oil Production Cost

Production costs include pre well head and post well head expenses including depreciation and applicable operating costs of support equipments and facilities.

[p] Provision

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made.

[q] Taxes on Income

Current tax represents the amount of tax payable in respect of taxable income for the period based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.

Provision for deferred taxation is made using the liability method, at current rates of taxation, on timing differences to the extent it is probable that a liability or asset will crystalise.

Deferred tax assets are not recognised unless there is reasonable certainty and in case of brought forward loss and unabsorbed depreciation there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are only recognised to the extent there are deferred tax liabilities of offsetting them.

[r] Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Examples of such estimates include estimates of income taxes, future obligations under employment retirement benefit plans, provision for doubtful debts and advances and estimated useful life of tangible and intangible assets. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.


Dec 31, 2010

[a] Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

[b] Basis of Accounting

The Financial Statements are prepared under the historical cost convention, modified by revaluation of certain fixed assets as detailed below.

[c] Fixed Assets

Fixed assets are stated at cost of acquisition including appropriate incidental / installation expenses. Cost of young tea plantation is capitalised. In respect of revalued assets, the appreciation in value of assets over its book value are credited to the Revaluation Reserve.

The assets acquired on hire purchase for which ownership will vest at a future date are capitalised at the cash cost of the leased assets. Equated monthly payments are apportioned between finance charge and repayment of principal amount.

Subsidies received from Government in respect of fixed assets are deducted from cost of respective assets.

Impairment loss, if any, ascertained as per the Accounting Standard of the Companies (Accounting Standards) Rules, 2006 is recognised.

Software cost is capitalised where it is expected to provide future enduring economic benefits. Software capitalisation costs include license fees, cost of packages and implementation/system integration services. The costs are capitalised in the year in which the relevant software is implemented for use.

Profit or loss on disposal of fixed assets is recognised in the Profit and Loss Account.

Expenditure incurred in connection with Oil and Gas project

Expenses incurred for acquiring rights for exploring, developing and producing oil along with other expenses incurred for developing and constructing wells have been capitalised and included under the head Capital Work in Progress in line with the suggested treatment prescribed by The Institute of Chartered Accountants of India in the 'Guidance Note on'

Accounting for Oil and Gas Producing Activities' under the 'Full Cost Method'.

Producing properties are created in respect of an oil field having developed oil reserves when the well in the field is ready to commence commercial production.

[d] Depreciation

[i] Depreciation other than on Oil and Gas producing properties is provided on the Written Down Value method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Cost of certain fixed assets located in leasehold properties under the head Building and Furniture as mentioned below have been depreciated over their respective lease periods which is higher than the Schedule XIV rates.

Building and Furniture : Lease period - between 3 to 9 years.

Cost of certain fixed assets at estates under the head Buildings and Vehicles are depreciated at rates based on the estimated life of each asset and the aggregate depreciation so calculated is higher than the Schedule XIV rates. The following depreciation rates are considered and applied: Building 25% and 33.33% Vehicles 30%

[ii] Capitalised software costs are amortised over its useful life of five years on a straight line basis.

In respect of revalued assets the incremental depreciation on account of revaluation is recouped from Revaluation Reserve. Land and Development including leasehold land are not depreciated.

[iii] Assets like Building, Plant and Machinery etc. included in Oil and Gas producing properties for which depreciation rates have been prescribed in Schedule XIV of the Companies Act,1956 are depreciated on Written Down Value method at the rates prescribed in Schedule XIV of the Companies Act, 1956. Other assets are depreciated according to the 'unit of production' method as prescribed by The Institute of Chartered Accountants of India in the 'Guidance Note on Accounting for Oil and Gas Producing Activities'. Until previous year all Oil and Gas producing properties were depreciated on "Unit of production method".

[e] Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. Other borrowing costs are charged to revenue.

[f] Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value. [g] Inventories

Inventories are stated at lower of cost and net realisable value. Cost is determined on weighted average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to their location and condition and includes appropriate production overheads, where applicable.

Provision is made for obsolete, slow moving and defective stocks, where necessary.

[h] Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. Transactions in foreign currency with a Joint Venturer for Oil and Gas project are recorded at monthly average exchange rate prevailing at the time of such transaction. Monetary items denominated in foreign currency are restated at the exchange rate prevailing on the Balance Sheet date. Foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of the transactions. Exchange differences arising on settlement of transactions and /or restatements are dealt in the Profit and Loss Account.

Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are adjusted against the cost of such fixed assets and the balance is accumulated in 'Foreign Currency Monetary Item Translation Difference Account' and amortised over the balance life of the long term monetary item or 31st March, 2011, whichever is earlier.

Derivative financial instruments, i.e. forward exchange contracts are used to hedge its risk associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments. In respect of forward exchange contracts with underlying transactions, the premium or discount arising at the inception of such contract is amortised as expense or income over the life of contract.

[i] Sales

Sales represent invoiced value of goods sold less Sales Tax / Value Added Tax.

[j] Other income

Export incentives, interest income and income from investments are accounted on accrual basis.

[k] Replanting and Other Subsidies

Replanting and other subsidies of revenue nature are recognised as income in the Profit and Loss Account.

[l] Compensation of Land

Compensation, if any, in respect of land surrendered / vested in Government under various State Land legislations is accounted for as and when received.

[m] Leases

Rentals in respect of operating leases are charged off to Profit and Loss Account.

[n] Retirement Benefits

The Company operates defined contribution schemes for Provident and a Pension Fund. Contributions to these funds - are made regularly to the appropriate authority/Trust. The interest rate payable to the members of the Trust is not lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act,1952 and shortfall, if any, is made good by the Company.

The Company also provides for retirement benefits with defined benefits in the form of Gratuity and Pension. Annual contributions for Gratuity and Pension are made by the Company, based on actuarial valuation carried out every year end, to Trust and Life Insurance Corporation of India (LICI) respectively.

Leave encashment on retirement and post retirement medical benefits are determined on the basis of independent actuarial valuation at the year end and such liabilities are provided for in these accounts.

Actuarial gains and losses, where applicable, are determined and recognised in the Profit and Loss Account.

The Company recognises gains and losses on curtailment or settlement of a defined benefit plan in the Profit and Loss Account as and when the curtailment or settlement occurs.

Short term employee benefits are recognised as an expense in the Profit and Loss Account for the year in which the related service is rendered.

[o] Oil Production Cost

Production costs include pre well head and post well head expenses including depreciation and applicable operating costs of support equipments and facilities.

[p] Provision

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. [q] Taxes on Income

Current tax represents the amount of tax payable in respect of taxable income for the period based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.

Provision for deferred taxation is made using the liability method, at current rates of taxation, on timing differences to the extent it is probable that a liability or asset will crystalise.

Deferred tax assets are not recognised unless there is reasonable certainty and in case of brought forward loss and unabsorbed depreciation there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are only recognised to the extent there are deferred tax liabilities of offsetting them.

[r] Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Examples of such estimates include estimates of income taxes, future obligations under employment retirement benefit plans, provision for doubtful debts and advances and estimated useful life of tangible and intangible assets. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.


Dec 31, 2009

[a] Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified U/S 211 (3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

[b] Basis of Accounting

The Financial Statements are prepared under the historical cost convention, modified by revaluation of certain fixed assets as detailed below.

[c] Fixed Assets

Fixed assets are stated at cost of acquisition including appropriate incidental / installation expenses. Cost of young tea plantation is capitalised. In respect of revalued assets the appreciation in value of assets over its book value are credited to the Revaluation Reserve.

The assets acquired on hire purchase for which ownership will vest at a future date are capitalised at the cash cost of the leased assets. Equated monthly payments are apportioned between the finance charge and repayment of principal amount.

Subsidies received from Government in respect of fixed assets are deducted from the cost of respective assets.

Impairment loss, if any, ascertained as per the Accounting Standard of the Companies (Accounting Standards) Rules, 2006 is recognised.

Software cost is capitalised where it is expected to provide future enduring economic benefits. Software capitalisation costs include license fees, cost of packages and implementation/system integration services. The costs are capitalised in the year in which the relevant software is implemented for use.

Profit or loss on disposal of Fixed Assets is recognised in the Profit and Loss Account.

Expenditure incurred in connection with Oil and Gas Project

Expenses incurred for acquiring rights for exploring, developing and producing oil along with other expenses incurred for developing and constructing wells have been capitalised and included under the head Capital Work in Progress in line with the suggested treatment prescribed by The Institute of Chartered Accountants of India in the Guidance Note on Accounting for Oil and Gas Producing Activities under the Full Cost Method.

Producing properties are created in respect of an oil field having developed oil reserves when the well in the field is ready to commence commercial production.

[d] Depreciation

[i] Depreciation is provided on the Written Down Value method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Cost of certain fixed assets located in leasehold properties under the head Building and Furniture as mentioned below have been depreciated over their respective lease periods which is higher than the Schedule XIV rates.

Building and Furniture : Lease period - between 3 to 9 years.

[ii] Capitalised software costs are amortised over its useful life of five years on a straight line basis.

In respect of revalued assets the incremental depreciation on account of revaluation is recouped from Revaluation Reserve. Land and Building including leasehold land are not depreciated.

[iii] Cost of wells capitalised as producing properties are depreciated according to the unit of production method as prescribed by The Institute of Chartered Accountants of India in the Guidance Note on Accounting for Oil and Gas Producing Activities.

[e] Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. Other borrowing costs are charged to revenue.

[f] Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

[g] Inventories

Inventories are stated at lower of cost and net realisable value. Cost is determined on weighted average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to their locations and condition and includes appropriate production overheads, where applicable.

Provision is made for obsolete, slow moving and defective stocks, where necessary.

[h] Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. Transactions in foreign currency with a Joint Venturer for Oil and Gas project are recorded at monthly average exchange rate prevailing at the time of such transaction. Monetary items denominated in foreign currency are restated at the exchange rate prevailing on the Balance Sheet date. Foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of the transactions. Exchange differences arising on settlement of transactions and /or restatements are dealt in the Profit and Loss Account.

Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are added to or subtracted from the cost of such fixed assets and the balance is accumulated in Foreign Currency Monetary Item Translation Difference Account and amortised over the balance life of the long term monetary item or 31st March, 2011, whichever is earlier.

Derivative financial instruments, i.e. forward exchange contracts are used to hedge its risk associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments. In respect of forward exchange contracts with underlying transactions, the premium or discount arising at the inception of such contract is amortised as expense or income over the life of contract.

[i] Sales

Sales represent invoiced value of goods sold less Sales Tax / Value Added Tax. [j] Other Income

Export incentives, interest income and income from investments are accounted on accrual basis. [k] Replanting and Other Subsidies

Replanting and other subsidies of revenue nature are recognised as income in the Profit and Loss Account.

[I] Compensation of Land

Compensation, if any, in respect of Land surrendered / vested in Governments under various State Land legislations is accounted for as and when received.

[m] Leases

Rentals in respect of operating leases are charged off to Profit and Loss Account.

[n] Retirement Benefits

The Company operates defined contribution schemes for Provident and a Pension Fund. Contributions to these funds are made regularly to the appropriate authority/Trust and a private insurance company respectively. The interest rate payable to the members of the Trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act,1952 and shortfall, if any, shall be made good by the Company.

The Company also provides for retirement benefits with defined benefits in the form of Gratuity and Pension. Annual contributions for Gratuity and Pension are made by the Company, based on actuarial valuation carried out every year at the year end, to Trust and Life Insurance Corporation of India (LICI) respectively.

Leave encashment benefit on retirement is determined on the basis of independent actuarial valuation done at the year end and such liability is provided for in this accounts.

Actuarial gains and losses, where applicable, are determined and recognised in the Profit and Loss Account.

The Company recognises gains and losses on curtailment or settlement of a defined benefit plan in the Profit and Loss Account as and when the curtailment or settlement occurs.

Short term employee beneifts are recognised as an expense in the Profit and Loss Account for the year in which the related service is rendered.

[o] Oil Production Cost

Production costs include pre well head and post well head expenses including depreciation and applicable operating costs of support equipments and facilities.

[p] Provision

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made.

[q] Taxes on Income

Current tax represents the amount of tax payable in respect of taxable income for the period based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.

Provision for deferred taxation is made using the liability method, at current rates of taxation, on timing differences to the extent it is probable that a liability or asset will crystalise.

Deferred tax assets are not recognised unless there is reasonable certainty and in case of brought forward loss and unabsorbed depreciation there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are only recognised to the extent there are deferred tax liabilities of offsetting them.

Find IFSC