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Accounting Policies of GAIL (India) Ltd. Company

Mar 31, 2016

1.01 Accounting Convention

The financial statements are prepared on accrual basis of Accounting under historical cost convention in accordance with Generally Accepted Accounting Principles in India and the relevant provisions of the Companies Act, 2013 including Accounting Standards as specified under section 133 of the Companies Act 2013, read with Rule ''7'' of the Companies (Accounts) Rule 2014.

1.02 Use of Estimates

The preparation of financial statements requires judgments, estimates and assumptions which affect the reported amount of assets, liabilities, revenues and expenses of the reporting period and disclosure of contingent liabilities. The difference between the actual results and estimates are recognized in the period in which the results are known or materialized.

1.03 Grants

In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to Capital Reserve which is recognised as income in the Statement of Profit and Loss over the useful life of the asset.

1.04 Fixed Assets

A. Tangible Assets

(a) Tangible Fixed Assets are stated at historical cost on consistent basis and are net of refundable taxes & levies wherever applicable. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.

(b) Machinery spares, which can be used only in connection with an item of fixed asset and their use is expected to be irregular, are capitalised with the cost of respective fixed asset and are depreciated fully over the remaining useful life of that asset.

(c) Technical know-how / license fee incurred at the time of procurement asset are capitalized as part of the underlying asset.

B. Intangible Assets

Intangible assets like software, licenses and right-of-use (ROU) of land including sharing of ROU with other entities which are expected to provide future enduring economic benefits are capitalized as Intangible Assets and are stated at their cost of acquisition.

Capital Work in Progress

(a) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/estimated liability, as and when work commences where ROU is acquired.

(b) The capital work in progress includes Construction Stores including Material in Transit/ Equipment / Services, etc. received at site for use in the projects.

(c) Pre-project expenditure relating to Projects which are considered unviable / closed is charged off to Revenue in the year of declaration/ closure.

(d) All revenue expenses incurred during Construction Period, which are exclusively attributable to acquisition / construction of fixed assets, are capitalized at the time of commissioning of such assets.

1.06 Exploration and Development Costs

i) The Company follows Successful Efforts Method for accounting of Oil & Gas exploration and production activities carried out through Joint Ventures in the nature of Production Sharing Contracts (PSC) with respective host government and various body corporates for exploration, development and production activities, which includes:

(a) Survey Costs are recognized as revenue expenditure in the year in which these are incurred.

(b) Cost of exploratory wells is carried as ''Exploratory wells in progress'' under Capital Work in Progress. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created. Such costs are written off in the year when determined to be dry / abandoned.

(c) Cost of all "exploratory wells in progress" is debited to Statement of Profits and Loss except of those wells for which there are reasonable indications of sufficient quantity of reserves and the enterprise is making sufficient progress assessing the reserves and the economic and operating viability of the project.

ii) Capitalization of Producing Properties

(a) Producing Properties are capitalized as "completed wells / producing wells" when the wells in the area / field are ready to commence commercial production on establishment of proved developed oil and gas reserves.

(b) Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments & facilities and estimated future abandonment cost.

iii) Depletion of Producing Properties

Producing Properties are depleted using the "Unit of Production Method (UOP)" The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.

iv) Production cost of Producing Properties

Company''s share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating cost of support equipment and facilities.

1.07 Foreign Currency Transaction

(a) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the transaction date.

(b) Monetary items denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.

(c) Non-monetary items, denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).

(d) Any gains or loss arising on account of exchange difference either on settlement or on translation is adjusted in the Statement of Profit & Loss except in case of long term foreign currency monetary items relating to acquisition of depreciable capital asset where they are adjusted to the carrying cost of such assets. In other cases exchange difference is accumulated in "Foreign Currency Monetary item Translation Difference Account" in the financial statements and amortized over the balance period of respective long terms asset or liability, by recognition as income or expenses in each of such period.

(e) Premium /discount arising at the inception of the forward contracts entered into to hedge foreign currency risk are amortized as expense / income over the life of the contract. Outstanding forward contracts as at the reporting date are restated at the exchange rate prevailing on that date. Exchange difference on such contracts where rate to long term foreign currency monetary items are adjusted in carrying cost of related asset.

In respect of other derivative contracts entered into, to hedge Foreign Currency and Interest rate risk, gain / losses on settlement and losses on restatement (by marking them to market) at the Balance Sheet date are recognised in the Statement of profit & loss.

1.08 Borrowing Cost

Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for its intended use after netting off any income earned on temporary investment of such funds. Other borrowing costs are recognized as expense during the year of incurrence.

1.09 Investments

Investments are classified into current and non-current investments. Current investments are stated at lower of cost or market value. Non- current investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

1.10 Inventories

(a) Stock of Liquefied Natural Gas (LNG) and Natural Gas in pipelines is valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.

(b) Raw materials and finished goods are valued at weighted average cost or net realizable value, whichever is lower. Finished goods include excise duty and royalty wherever applicable.

(c) Stock in process is valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which these are to be incorporated are expected to be sold at or above the weighted average cost.

(d) Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which they will be incorporated are expected to be sold at/or above cost.

(e) Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, whichever is lower.

(f) Surplus / Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.

(g) Imported LNG in transit is valued at CIF value or net realizable value whichever is lower.

(h) Renewable Energy Certificates (RECs) are valued at cost on First ir First out (FIFO) basis or net realizable value, whichever is lower.

1.11 Revenue recognition

(a) Sales are recognized on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude value added tax. Any retrospective revision in prices is accounted for in the year of such revision.

(b) Income from Consultancy/Contract Services, if any, is recognized based on percentage Completion Method.

(c) Dividend income is accounted for when the right to receive is established.

(d) Claims (including interest on delayed realization from customers) are accounted for, when there is significant certainty that the claims are realizable.

(e) Liability in respect of Minimum Guaranteed Off take (MGO) of Natural gas is not provided for where the same is secured by MGC recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basis.

(f) Minimum charges relating to transportation of LPG are accounted for on receipt basis.

(g) Prepaid expenses and prior period expenses/income up to Rs. 5 lacs in each case are charged to relevant heads of account of the current year.

1.12 Depreciation / Amortisation

A. Tangible Assets

Depreciation on Tangible Fixed Assets is provided in accordance with the manner and useful life as specified in Schedule II of the Companies Act, 2013, on straight line method (SLM) on pro-rata basis (monthly pro-rata for bought out assets), except for the assets as mentioned below where different useful life has been taken on the basis of external / internal technical evaluation:

(ii) Cost of the leasehold land is amortised over the lease period except perpetual leases.

(iii) Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.

(iv) Capital expenditure on the assets (enabling facilities), the ownership of which is not with the Company, is charged off to Revenue.

B. Intangible Assets

(i) Intangible assets are amortised on Straight Line Method (SLM) over the useful life not exceeding five years from the date of capitalization.

(ii) Cost of the Right of Use (ROU) is amortized considering life of RoU as 99 years.

(iii) After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

C. Capital assets facilities installed at the consumers'' premises on the land whose ownership is not with the company, has been depreciated on SLM basis in accordance with the useful life as specified m Schedule II of the Companies Act, 2013.

1.13 Employees Benefits

(a) All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.

(b) The Company''s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee''s salary and debited to Statement of Profit and Loss. Further, the company makes provision as per actuarial valuation towards any shortfall in fund assets to meet statutory rate of interest in the future period, to be compensated by the company to the Provident Fund Trust.

(c) Employee Benefits under Defined Benefit Plans in respect of leave encashment, compensated absence, post-retirement medical scheme, long service award and other terminal benefits are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit Method. Actuarial liability in excess of respective plan assets is recognized during the year. Actuarial gains / losses are recognized in the Statement of Profit and Loss.

(d) Liability for gratuity as per actuarial valuation is funded with a separate trust.

1.14 Impairment

The Carrying amount of cash generating unit are reviewed at each Balance Sheet date. In case there is any indication of impairment based on Internal / External factors, impairment loss is recognized wherever the carrying amount of asset exceeds its recoverable amount.

1.15 Provisions, Contingent Liabilities, Contingent Assets & Capital

Commitments

(a) Provisions involving substantial degree of estimation m measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent liabilities exceeding Rs. 5 Lacs in each case are disclosed by way of notes to accounts except when there is remote possibility of any outflow in settlement.

(b) Estimated amount of contracts remaining to be executed on capital accounts are disclosed in each case above Rs. 5 lacs.

1.16 Taxes on Income

Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal Income Tax during the specified period. Deferred Tax Liability / Asset resulting from ''timing difference'' between book profit and taxable profit is accounted for considering the tax rate and tax laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred Tax Asset, if any, is recognized and carried forward only to the extent that there is virtual certainty that the asset will be realized in future.

17 R&D Expenditure

Revenue expenditure on Research and Development is charged to Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on Research and Development is capitalized m case the same qualifies as tangible asset.

18 Cash Flow Statement

Cash flow statement is prepared in accordance with the indirect method prescribed in Accounting Standard (AS) 3 on ''Cash Flow Statements''

1.19 Others

(a) Liquidated Damages / Price Reduction Schedule, if any, are accounted for as and when recovery is effected and the matter is considered settled by the Management. Liquidated damages / Price Reduction Schedule, if settled, after capitalization of assets are charged to revenue if below Rs. 50 lacs in each case, otherwise adjusted in the cost of relevant assets.

(b) Insurance claims are accounted for on the basis of claims admitted by the insurers.


Mar 31, 2015

1.01 Accounting Convention

The financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 2013 including accounting standards and Companies (Accounts) Rules,2014 notified there under.

1.02 Use of Estimates

The preparation of financial statements requires estimates and assumptions which affect the reported amount of assets, liabilities, revenues and expenses of the reporting period. The difference between the actual results and estimates are recognized in the period in which the results are known or materialized.

1.03 Inventories

(a) Stock of LNG and Natural Gas in pipelines is valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.

(b) Raw materials and finished products are valued at weighted average cost or net realizable value, whichever is lower. Finished products include excise duty and royalty wherever applicable.

(c) Stock in process is valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished products in which these are to be incorporated are expected to be sold at or above the weighted average cost.

(d) Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished products in which they will be incorporated are expected to be sold at/or above cost.

(e) Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, whichever is lower.

(f) Surplus / Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.

(g) Renewable Energy Certificates (RECs) are valued at cost on First in First out (FIFO)basis or net realizable value, whichever is lower.

1.04 Depreciation / Amortisation

(a) Depreciation on Fixed Assets other than those mentioned below is provided in accordance with the useful life as specified in Schedule II of the Companies Act, 2013, on straight line method (SLM) on pro- rata basis (monthly pro-rata for bought out assets).

(i) Furniture and Electric Equipment's provided for the use of employees are depreciated on the basis of 7 years useful life. Mobile Phones provided for the use of employees are depreciated on the basis of 2years useful life.

(ii) Cost of the leasehold land is amortised over the lease period except perpetual leases.

(iii) Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.

(iv) Capital expenditure on the assets (enabling facilities), the ownership of which is not with the Company, is charged off to Revenue.

(v) Intangible assets are amortised on Straight Line Method (SLM) over the useful life not exceeding five years from the date of capitalization.

(vi) Cost of the Right of Use (ROU) is amortized considering life of Roll as 99 years.

(vii) After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

(b) Capital assets facilities installed at the consumers premises on the land whose ownership is not with the company, has been depreciated on SLM basis in accordance with the useful life as specified in Schedule II of the Companies Act, 2013.

1.05 Revenue recognition

(a) Sales are recognized on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude value added tax. Any retrospective revision in prices is accounted for in the year of such revision.

(b) Income from Consultancy/Contract Services, if any, is recognized based on Proportionate Completion Method.

(c) Dividend income is accounted for when the right to receive it is established.

(d) Claims (including interest on delayed realization from customers) are accounted for, when there is no significant uncertainty that the claims are realizable.

(e) Liability in respect of MGO of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on Receipt basis.

(f) Minimum charges relating to transportation of LPG are accounted for on Receipt basis.

(g) Prepaid expenses and prior period expenses/income upto Rs.5 lacs in each case are charged to relevant heads of account of the current year.

1.06 Fixed Assets

(a) Fixed Assets are valued at historical cost on consistent basis and are net of refundable taxes & levies wherever applicable. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.

(b) Machinery spares, which can be used only in connection with an item of fixed asset and their use is expected to be irregular, are capitalised with the cost of that fixed asset and are depreciated fully over the remaining useful life of that asset.

1.07 Intangible Assets

Intangible assets like software, licenses and right-of-use of land including sharing of ROU with other entities which are expected to provide future enduring economic benefits are capitalized as Intangible Assets.

1.08 Capital Work in Progress

(a) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/estimated liability, as and when work commences where ROU is acquired.

(b) The capital work in progress includes material in Transit/ value of materials / equipment / Services, etc. received at site for use in the projects.

(c) Pre-project expenditure relating to Projects which are considered unviable / closed is charged off to Revenue in the year of declaration/closure.

1.09 Expenses Incurred During Construction Period

All revenue expenditure incurred during the year, which is exclusively attributable to acquisition/construction of fixed assets, is capitalized at the time of commissioning of such assets.

1.10 Foreign Currency Translation

(a) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the transaction date.

(b) Monetary items (such as Cash, Receivables, Loans, Payables, etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.

(c) Non-monetary items (such as Investments, Fixed Assets, etc), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).

(d) Any gains or loss arising on account of exchange difference either on settlement or on translation is adjusted in the Statement of Profit & Loss except in case of long term foreign currency monetary items Relating to acquisition of depreciable capital asset in which case they are adjusted to the carrying cost of such assets and in other cases, accumulated in "Foreign Currency Monetary item Translation Difference Account" in the financial statements and amortized over the balance period of such long terms asset or liability, by recognition as income or expenses in each of such period.

(e) Premium /discount arising at the inception of the forward contracts entered into to hedge foreign currency risk are amortized as expense / income over the life of the contract. Outstanding forward contracts as at the reporting date are restated at the exchange rate prevailing on that date.

In respect of other derivative contracts entered into, to hedge Foreign Currency and Interest rate risk, gain/ losses on settlement and losses on restatement (by marking them to market) at the Balance Sheet date are recognised in the Statement of profit &loss.

1.11 Grants

In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to Capital Reserve which is recognised as income in the Statement of Profit and Loss over the useful life period of the asset.

1.12 Investments

Investments are classified into current and non-current investments. Current investments are stated at lower of cost or market value. Non- current investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

1.13 Employees Benefits

(a) All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.

(b) The Company's contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee's salary and debited to Statement of Profit and Loss. Further, the company makes provision as per actuarial valuation towards any shortfall in fund assets to meet statutory rate of interest in the future period, to be compensated by the company to the Provident Fund Trust.

(c) Employee Benefits under Defined Benefit Plans in respect of leave encashment, compensated absence, post retirement medical scheme, long service award and other terminal benefits are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit Method. Actuarial liability in excess of respective plan assets is recognized during The year.

(d) Provision for gratuity as per actuarial valuation is funded with a separate trust.

1.14 Borrowing Cost

Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for use after netting off any income earned on temporary investment of such funds.

1.15 Taxes on Income

Provision for current tax is made as per the provisions of the Income Tax Act,1961. Deferred Tax Liability/Asset resulting from 'timing difference' between book profit and taxable profit is accounted for considering the tax rate and laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred Tax Asset, if any, is recognized and carried forward only to the extent that there is virtual certainty that the asset will be realized in future.

1.16 R&D Expenditure

All expenditure, other than on capital account, on research and development are debited to Statement of Profit and Loss.

1.17 Impairment

The Carrying amount of assets are reviewed at each Balance Sheet date. In case there is any indication of impairment based on Internal/External factors. Impairment loss is recognized wherever the carrying amount of asset exceeds its recoverable amount.

1.18 Provisions, Contingent Liabilities, Contingent Assets & Capital Commitments

(a) Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent liabilities exceeding Rs.5 Lacs in each case are disclosed by way of notes to accounts except when there is remote possibility of any out flow in settlement.

(b) Estimated amount of contracts remaining to be executed on capital accounts are disclosed in each case above Rs.5 lacs.

1.19 Exploration and Development Costs

i) The Company follows Successful Efforts Method for accounting of Oil & Gas exploration and production activities, which includes:-

(a) Survey Costs are recognized as revenue expenditure in the year in which these are incurred.

(b) Cost of exploratory wells is carried as 'Exploratory wells in progresses'. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created or is written off in the year when Determined to be dry/abandoned.

(c) Cost of all "exploratory wells in progress" is debited to Statement of Profits and Loss except of those wells for which there are reasonable indications of sufficient quantity of reserves and the enterprise is making sufficient progress assessing the reserves and the economic and operating viability of the project.

ii) Capitalization of Producing Properties

a) Producing Properties are capitalized as "completed wells / producing wells" when the wells in the area / field are ready to commence commercial production on establishment of proved developed oil and gas reserves.

b) Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments & facilities and estimated future abandonment cost.

iii) Depletion of Producing Properties

Producing Properties are depleted using the "Unit of Production Method (UOP)".The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.

iv) Production cost of Producing Properties

Company's share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating cost of support equipment and facilities.

1.20 OTHERS

(a) Liquidated Damages/Price Reduction Schedule, if any, are accounted for as and when recovery is effected and the matter is considered settled by the Management. Liquidated damages / Price Reduction Schedule, if settled, after capitalization of assets are charged to revenue if below Rs.50 lacs in each case, otherwise adjusted in the cost of relevant assets.

(b) Insurance claims are accounted for on the basis of claims admitted by the insurers.


Mar 31, 2014

1.01 Accounting Convention

The financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 1956 including accounting standards notified there under.

1.02 Use of Estimates

The preparation of financial statements requires estimates and assumptions which affect the reported amount of assets, liabilities, revenues and expenses of the reporting period. The difference between the actual results and estimates are recognized in the period in which the results are known or materialized.

1.03 Inventories

(i) Stock of LNG and Natural Gas in pipelines is valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.

(ii) Raw materials and finished products are valued at weighted average cost or net realizable value, whichever is lower. Finished products include excise duty and royalty wherever applicable.

(iii) Stock in process is valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished products in which these are to be incorporated are expected to be sold at or above the weighted average cost.

(iv) Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished products in which they will be incorporated are expected to be sold at/or above cost.

(v) Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, whichever is lower.

(vi) Surplus / Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.

(vii) Renewable Energy Certificates (RECs) are valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.

1.04 Depreciation / Amortisation

(a) Depreciation on Fixed Assets other than those mentioned below is provided in accordance with the rates as specified in Schedule XIV of the Companies Act, 1956, on straight line method (SLM) on pro-rata basis (monthly pro-rata for bought out assets).

(i) Assets costing upto Rs. 5,000/- are depreciated fully in the year of capitalisation.

(ii) Bunk Houses are amortised on assumption of five years life.

(iii) Oil and Gas Pipelines including other related facilities are depreciated @ 3.17% per annum on SLM basis based on useful life of 30 years.

(iv) Computers at the residence of the employees are depreciated @ 23.75% per annum on SLM basis. Furniture, Electric Equipments and Mobiles provided for the use of employees are depreciated @ 15% per annum on SLM basis.

(v) Cost of the leasehold land not exceeding 99 years is amortised over the lease period.

(vi) Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.

(vii) Capital expenditure on the assets (enabling facilities), the ownership of which is not with the Company, is charged off to Revenue.

(viii) Software / Licences are amortised in 5 years on straight line method.

(ix) Cost of the Right of Use (ROU) is amortized considering life of RoU as 99 years.

(x) After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

(b) Capital assets except gas pipelines related facilities installed at the consumers premises on the land whose ownership is not with the company, has been depreciated on SLM basis in accordance with the rates as specified in Schedule XIV of the Companies Act, 1956.

1.05 Revenue recognition

(i) Sales are recognized on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude value added tax. Any retrospective revision in prices is accounted for in the year of such revision.

(ii) Income from Consultancy/Contract Services, if any, is recognized based on Proportionate Completion Method.

(iii) Dividend income is accounted for when the right to receive it is established.

(iv) Claims (including interest on delayed realization from customers) are accounted for, when there is no significant uncertainty that the claims are realizable.

(v) Liability in respect of MGO of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basis.

(vi) Minimum charges relating to transportation of LPG are accounted for on receipt basis.

(vii) Prepaid expenses and prior period expenses/income upto Rs. 5,00,000/- in each case are charged to relevant heads of account of the current year.

1.06 Fixed Assets

(a) Fixed Assets are valued at historical cost on consistent basis and are net of refundable taxes & levies wherever applicable. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.

(b) Machinery spares, which can be used only in connection with an item of fixed asset and their use is expected to be irregular, are capitalised with the cost of that fixed asset and are depreciated fully over the remaining useful life of that asset.

1.07 Intangible Assets

Intangible assets like software, licenses and right-of-use of land including sharing of ROU with other entities which are expected to provide future enduring economic benefits are capitalized as Intangible Assets.

1.08 Capital Work in Progress

(a) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/estimated liability, as and when work commences where ROU is acquired.

(b) The capital work in progress includes material in Transit/ value of materials / equipment / Services, etc. received at site for use in the projects.

(c) Pre-project expenditure relating to Projects which are considered unviable / closed is charged off to Revenue in the year of declaration/closure.

1.09 Expenses Incurred During Construction Period

All revenue expenditure incurred during the year, which is exclusively attributable to acquisition / construction of fixed assets, is capitalized at the time of commissioning of such assets.

1.10 Foreign Currency Translation

(i) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the transaction date.

(ii) Monetary items (such as Cash, Receivables, Loans, Payables, etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.

(iii) Non monetary items (such as Investments, Fixed Assets, etc), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).

(iv) Any gains or loss arising on account of exchange difference either on settlement or on translation is adjusted in the Statement of Profit & Loss except in case of long term foreign currency monetary items relating to acquisition of depreciable capital asset in which case they are adjusted to the carrying cost of such assets and in other cases, accumulated in "Foreign Currency Monetary item Translation Difference Account" in the financial statements and amortized over the balance period of such long terms asset or liability, by recognition as income or expenses in each of such period.

(v) In respect of derivative contracts, gain/losses on settlement and losses on re-statement (by marking them to market) at the balance sheet date are recognised in the statement of Profit & Loss.

1.11 Grants

In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to Capital Reserve which is recognised as income in the statement of Profit and Loss over the useful life period of the asset.

1.12 Investments

Investments are classified into current and non-current investments. Current investments are stated at lower of cost or market value. Non-current investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

1.13 Employees Benefits

(i) All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.

(ii) The Company''s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee''s salary and debited to statement of Profit and Loss. Further, the company makes provision as per actuarial valuation towards any shortfall in fund assets to meet statutory rate of interest in the future period, to be compensated by the company to the Provident Fund Trust.

(iii) Employee Benefits under Defined Benefit Plans in respect of leave encashment, compensated absence, post retirement medical scheme, long service award and other terminal benefits are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit method. Actuarial liability in excess of respective plan assets is recognized during the year.

(iv) Provision for gratuity as per actuarial valuation is funded with a separate trust.

1.14 Borrowing Cost

Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for use after netting off any income earned on temporary investment of such funds.

1.15 Taxes on Income

Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Deferred Tax Liability / Asset resulting from ''timing difference'' between book profit and taxable profit is accounted for considering the tax rate and laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred Tax Asset, if any, is recognized and carried forward only to the extent that there is virtual certainty that the asset will be realized in future.

1.16 R&D Expenditure

All expenditure, other than on capital account, on research and development are debited to statement of Profit and Loss.

1.17 Impairment

The Carrying amount of assets are reviewed at each Balance Sheet date. In case there is any indication of impairment based on Internal / External factors, an Impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

1.18 Provisions, Contingent Liabilities, Contingent Assets & Capital Commitments

(i) Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent liabilities exceeding Rs.5 Lacs in each case are disclosed by way of notes to accounts except when there is remote possibility of any outflow in settlement.

(ii) Estimated amount of contracts remaining to be executed on capital accounts are disclosed in each case above Rs.5 Lacs.

1.19 Exploration and Development Costs:- i) The Company follows Successful Efforts

Method for accounting of Oil & Gas exploration and production activities, which includes:-

a. Survey Costs are recognized as revenue expenditure in the year in which these are incurred.

b. Cost of exploratory wells is carried as ''Exploratory wells in progresses''. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created or is written off in the year when determined to be dry / abandoned.

c. Cost of all "exploratory wells in progress" is debited to statement of Profits and Loss except of those wells for which there are reasonable indications of sufficient quantity of reserves and the enterprise is making sufficient progress assessing the reserves and the economic and operating viability of the project.

ii) Capitalization of Producing Properties

a) Producing Properties are capitalized as "completed wells / producing wells" when the wells in the area / field are ready to commence commercial production on establishment of proved developed oil and gas reserves.

b) Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments & facilities and estimated future abandonment cost.

iii) Depletion of Producing Properties

Producing Properties are depleted using the "Unit of Production Method (UOP)". The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.

iv) Production cost of Producing Properties

Company''s share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating cost of support equipment and facilities..

1.20 OTHERS

(i) Liquidated Damages / Price Reduction Schedule, if any, are accounted for as and when recovery is effected and the matter is considered settled by the Management. Liquidated damages / Price Reduction Schedule, if settled, after capitalization of assets are charged to revenue if below Rs. 50 lacs in each case, otherwise adjusted in the cost of relevant assets.

(ii) Insurance claims are accounted for on the basis of claims admitted by the insurers.


Mar 31, 2013

1.01 Accounting Convention

The financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 1956 including accounting standards notified there under.

1.02 Use of Estimates

The preparation of financial statements requires estimates and assumptions which affect the reported amount of assets, liabilities, revenues and expenses of the reporting period. The difference between the actual results and estimates are recognized in the period in which the results are known or materialized.

1.03 Inventories

(i) Stock of LNG and Natural Gas in pipelines is valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.

(ii) Raw materials and finished products are valued at weighted average cost or net realizable value, whichever is lower. Finished products include excise duty and royalty wherever applicable.

(iii) Stock in process is valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished products in which these are to be incorporated are expected to be sold at or above the weighted average cost.

(iv) Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished products in which they will be incorporated are expected to be sold at/or above cost.

(v) Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, whichever is lower.

(vi) Surplus / Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.

(vii) Renewable Energy Certificates (RECs) are valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.

1.04 Depreciation / Amortisation

I. Depreciation on Fixed Assets other than those mentioned below is provided in accordance with the rates as specified in Schedule XIV of the Companies Act, 1956, on straight line method (SLM) on pro-rata basis (monthly pro-rata for bought out assets)

(i) Assets costing upto Rs.5,000/- are depreciated fully in the year of capitalisation.

(ii) Bunk Houses are amortised on assumption of five years life.

(iii) Oil and Gas Pipelines including other related facilities are depreciated @ 3.17% per annum on SLM basis based on useful life of 30 years

(iv) Computers at the residence of the employees are depreciated @ 23.75% per annum on SLM basis. Furniture, Electric Equipments and Mobiles provided for the use of employees are depreciated @ 15% per annum on SLM basis

(v) Cost of the leasehold land not exceeding 99 years is amortised over the lease period

(vi) Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively

(vii) Capital expenditure on the assets (enabling facilities), the ownership of which is not with the Company, is charged off to Revenue.

(viii) Software / Licences are amortised in 5 years on straight line method.

(ix) No depreciation is being charged on ROU being perpetual in nature

(x) After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life II. Capital assets installed at the consumers premises on the land whose ownership is not with the company, has been depreciated on SLM basis in accordance with the rates as specified in Schedule XIV of the Companies Act, 1956.

1.05 Revenue recognition

(i) Sales are recognized on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude value added tax. Any retrospective revision in prices is accounted for in the year of such revision.

(ii) Income from Consultancy/Contract Services, if any, is recognized based on Proportionate Completion Method.

(iii) Dividend income is accounted for when the right to receive it is established.

(iv) Claims (including interest on delayed realization from customers) are accounted for, when there is no significant uncertainty that the claims are realizable.

(v) Liability in respect of MGO of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basis.

(vi) Minimum charges relating to transportation of LPG are accounted for on receipt basis.

(vii) Prepaid expenses and prior period expenses/income upto Rs. 5,00,000/- in each case are charged to relevant heads of account of the current year.

1.06 Fixed Assets

(a) Fixed Assets are valued at historical cost on consistent basis and are net of refundable taxes & levies wherever applicable. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement

(b) Machinery spares, which can be used only in connection with an item of fixed asset and their use is expected to be irregular, are capitalised with the cost of that fixed asset and are depreciated fully over the remaining useful life of that asset.

1.07 Intangible Assets

Intangible assets like software, licenses and right-of-use of land including sharing of ROU with other entities which are expected to provide future enduring economic benefits are capitalized as Intangible Assets

1.08 Capital Work in Progress

(a) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/estimated liability, as and when work commences where ROU is acquired.

(b) The capital work in progress includes material in Transit/ value of materials / equipment / Services, etc. received at site for use in the projects.

(c) Pre-project expenditure relating to Projects which are considered unviable / closed is charged off to Revenue in the year of declaration/closure.

1.09 Expenses Incurred During Construction Period

All revenue expenditure incurred during the year, which is exclusively attributable to acquisition / construction of fixed assets, is transferred to capital work in progress and capitalized at the time of commissioning of such assets.

1.10 Foreign Currency Translation

(i) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the transaction date.

(ii) Monetary items (such as Cash, Receivables, Loans, Payables, etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.

(iii) Non monetary items (such as Investments, Fixed Assets, etc), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).

(iv) Any gains or loss arising on account of exchange difference either on settlement or on translation is adjusted in the Statement of Profit & Loss except in case of long term foreign currency monetary items relating to acquisition of depreciable capital asset in which case they are adjusted to the carrying cost of such assets and in other cases, accumulated in "Foreign Currency Monetary item Translation Difference Account" in the financial statements and amortized over the balance period of such long terms asset or liability, by recognition as income or expenses in each of such period.

(v) In respect of derivative contracts, gain/losses on settlement and losses on re-statement (by marking them to market) at the balance sheet date are recognised in the statement of Profit & Loss.

1.11 Grants

In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to Capital Reserve which is recognised as income in the statement of Profit and Loss over the useful life period of the asset

1.12 Investments

Investments are classified into current and non-current investments. Current investments are stated at lower of cost or market value. Non-current investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

1.13 Employees Benefits

(i) All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.

(ii) The Company''s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee''s salary and debited to statement of Profit and Loss. Further, the company makes provision as per actuarial valuation towards any shortfall in fund assets to meet statutory rate of interest in the future period , to becom pensated by the company tothe Provident FundTrust.

(iii) Employee Benefits under Defined Benefit Plans in respect of leave encashment, compensated absence, post retirement medical scheme, long service award and other terminal benefits are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit method. Actuarial liability in excess of respective plan assets is recognized during the year.

(iv) Provision for gratuity as per actuarial valuation is funded with a separate trust.

1.14 Borrowing Cost

Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for use after netting off any income earned on temporary investment of such funds

1.15 Taxes on Income

Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Deferred Tax Liability / Asset resulting from ''timing difference'' between book profit and taxable profit is accounted for considering the tax rate and laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred Tax Asset, if any, is recognized and carried forward only to the extent that there is virtual certainty that the asset will be realized in future.

1.16 R&D Expenditure

All expenditure, other than on capital account, on research and development are debited to statement of Profit and Loss.

1.17 Impairment

The Carrying amount of assets are reviewed at each Balance Sheet date. In case there is any indication of impairment based on Internal / External factors, an Impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

1.18 Provisions, Contingent Liabilities, Contingent Assets & Capital Commitments

(i) Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent liabilities exceeding Rs. 5 Lacs in each case are disclosed by way of notes to accounts except when there is remote possibility of any outflow in settlement.

(ii) Estimated amount of contracts remaining to be executed on capital accounts are disclosed in each case above Rs. 5 Lacs

1.19 Exploration and Development Costs:-

i) The Company follows Successful Efforts Method for accounting of Oil & Gas exploration and production activities, which includes:

a. Survey Costs are recognized as revenue expenditure in the year in which these are incurred.

b. Cost of exploratory wells is carried as ''Exploratory wells in progresses''. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created or is written off in the year when determined to be dry / abandoned.

c. All wells appearing as "exploratory wells in progress" which are more than two years old from the date of completion of drilling are debited to statement of Profits and Loss except those wells which have proved reserves and the development of the fields in which the wells are located has been planned.

ii) Capitalization of Producing Properties

(i) Producing Properties are capitalised when the wells in the area / field are ready to commence commercial production having proved developed oil and gas reserves.

(ii) Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments & facilities and estimated future abandonment cost.

iii) Depletion of Producing Properties

Producing Properties are depleted using the "Unit of Production Method (UOP)" The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.

iv) Production cost of Producing Properties Company''s share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating cost of support equipment and facilities.

1.20 OTHERS

(i) Liquidated Damages / Price Reduction Schedule, if any, are accounted for as and when recovery is effected and the matter is considered settled by the Management. Liquidated damages / Price Reduction Schedule, if settled, after capitalization of assets are charged to revenue if below Rs. 50 lacs in each case, otherwise adjusted in the cost of relevant assets.

(ii) Insurance claims are accounted for on the basis of claims admitted by the insurers.


Mar 31, 2012

1.1. Accounting Convention

The financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 1956 including accounting standards notified there under.

1.2. Use of Estimates

The preparation of financial statements requires estimates and assumptions which affect the reported amount of assets, liabilities, revenues and expenses of the reporting period. The difference between the actual results and estimates are recognized in the period in which the results are known or materialized.

1.3. Inventories

(i) Raw materials and Finished products are valued at cost or net realizable value, whichever is lower. Finished products include excise duty and royalty wherever applicable.

(ii) Stock in process is valued at cost or net realizable value, whichever is lower. It is valued at cost where the finished products in which these are to be incorporated are expected to be sold at or above cost.

(iii) Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realizable value, whichever is lower. It is valued at weighted average cost where the finished products in which they will be incorporated are expected to be sold at/or above cost.

(iv) Surplus / Obsolete Stores and Spares are valued at cost or net realizable value, which ever is lower.

(v) Surplus / Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realizable value.

1.4. Depreciation/Amortization

I. Depreciation on Fixed Assets other than those mentioned below is provided in accordance with the rates as specified in Schedule XIV of the Companies Act, 1956, on straight line method (SLM) on pro-rata basis (monthly pro-rata for bought out assets).

(i) Assets costing up to Rs.5,000/- are depreciated fully in the year of capitalization.

(ii) Bunk Houses are amortized on assumption of five years life.

(iii) Oil and Gas Pipelines including other related facilities are depreciated @ 3.17% per annum on SLM basis based on useful life of 30 years.

(iv) Computers at the residence of the employees are depreciated @ 23.75% per annum on SLM basis. Furniture, Electric Equipments and Mobiles provided for the use of employees are depreciated @ 15% Per annum on SLM basis.

(v) Cost of the leasehold land not exceeding 99 years is amortized over the lease period.

(vi) Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.

(vii) Capital expenditure on the assets (enabling facilities), the ownership of which is not with the Company is charged off to Revenue.

(viii) Software / Licenses are amortized in 5 years on straight line method.

(ix) No depreciation is being charged on ROU being perpetual in nature.

(x) After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

II. Capital assets installed at the consumers premises on the land whose ownership is not with the company, has been depreciated on SLM basis in accordance with the rates as specified in Schedule XIV of the Companies' Act, 1956.

1.5. Revenue recognition

(i) Sales are recognized on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude value added tax. Any retrospective revision in prices is accounted for in the year of such revision.

(ii) Income from Consultancy/Contract Services, if any, is recognized based on Proportionate Completion Method.

(iii) Dividend income is accounted for when the right to receive it is established.

(iv) Claims (including interest on delayed realization from customers) are accounted for, when there is no significant uncertainty that the claims are realizable.

(v) Liability in respect of MGO of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basis.

(vi) Minimum charges relating to transportation of LPG are accounted for on receipt basis.

(vii) Prepaid expenses and prior period expenses/income up to Rs.1,00,000/- in each case are charged to relevant heads of account of the current year.

1.6. Fixed Assets

(a) Fixed Assets are valued at historical cost on consistent basis and are net of refundable taxes & levies wherever applicable. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.

(b) Machinery spares, which can be used only in connection with an item of fixed asset and their use is expected to be irregular, are capitalized with the cost of that fixed asset and are depreciated fully over the remaining useful life of that asset.

1.7. Intangible Assets

Intangible assets like software, licenses and right-of-use of land including sharing of ROU with other entities which are expected to provide future enduring economic benefits are capitalized as Intangible Assets.

1.8. Capital Work in Progress

(a) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/estimated liability, as and when work commences where ROU is acquired.

(b) The capital work in progress includes material in Transit/ value of materials / equipment/Services, etc. received at site for use in the projects.

(c) Pre-project expenditure relating to Projects which are considered unviable / closed is charged off to Revenue in the year of declaration/closure.

1.9. Expenses Incurred During Construction Period

All revenue expenditure incurred during the year, which is exclusively attributable to acquisition / construction of fixed assets, is capitalized at the time of commissioning of such assets.

1.10. Foreign Currency Translation

(i) Transactions in foreign currency are accounted at the exchange rate prevailing on the transaction date.

(ii) Monetary items (such as Cash, Receivables, Loans, Payables, etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at yearend.

(iii) Non monetary items (such as Investments, Fixed Assets, etc), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).

(iv) Exchange differences (loss), arising from translation of foreign currency loans relating to fixed assets to the extent regarded as an adjustment to interest cost are treated as borrowing cost.

(v) Any gains or loss arising on account of exchange difference either on settlement or on translation is accounted for in the Profit & Loss account except in case of long term foreign currency monetary items relating to acquisition of depreciable capital asset (other than regarded as borrowing cost) in which case they are adjusted to the carrying cost of such assets and in other cases, accumulated in "Foreign Currency Monetary item Translation Difference Account" in the Financial statements and amortized over the balance period of such long terms asset or liability, by recognition as income or expenses in each of such period.

1.11.Grants

In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to Capital Reserve which is recognised as income in the Profit and Loss Account over the useful life period of the asset.

1.12. Investments

Investments are classified into current and long term investments. Current investments are stated at lower of cost or market value. Long term investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

1.13. Employees Benefits

(i) All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.

(ii) The Company's contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee's salary and charged to Statement of Profit and Loss. Further, the company makes provision as per actuarial valuation towards any shortfalls fund assets to meet statutory rate of interest in the future period, to be compensated by the company to the Provident Fund Trust.

(iii) Employee Benefits under Defined Benefit

Plans in respect of leave encashment, compensated absence, post retirement medical scheme, long service award and other terminal benefits are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit method. Actuarial liability in excess of respective plan assets is recognized during the year.

(iv) Provision for gratuity as per actuarial valuation is funded with a separate trust.

1.14. Borrowing Cost

Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for use after netting off any income earned on temporary investment of such funds.

1.15.Taxes on Income

Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Deferred Tax Liability / Asset resulting from 'timing difference' between book and taxable profit is accounted for considering the tax rate and laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred Tax Asset, if any, is recognized and carried forward only to the extent that there is virtual certainty that the asset will be realized in future.

1.16.R&D Expenditure

All expenditure, other than on capital account, on research and development are charged to Profit and Loss Account.

1.17.Impairment

The Carrying amounts of assets are reviewed at each Balance Sheet date. I n case there is any indication of impairment based on Internal /External factors, an Impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

1.18.Provisions, Contingent Liabilities, Contingent Assets & Capital Commitments

(i) Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Assets are neither recognized nor disclosed in the Financial statements. Contingent liabilities exceeding Rs. 5 Lacs in each case are disclosed by way of notes to accounts except when there is remote possibility of any out flow in settlement..

(ii) Estimated amount of contracts remaining to be executed on Capital accounts are disclosed in each case above Rs.5 Lacs.

1.19.Exploration and Development Costs:-

i) The Company follows Successful Efforts Method for accounting of Oil & Gas exploration and production activities, which includes:-

a. Survey Costs are recognized as revenue expenditure in the year in which these are incurred.

b. Cost of exploratory wells is carried as 'Exploratory wells in progresses'. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created or is written off in the year when determined to bedry/abandoned.

c. All wells appearing as "exploratory wells in progress" which are more than two years old from the date of completion of drilling are charged to Profits and Loss Account except those wells which have proved reserves and the development of the fields in which the wells are located has been planned.


Mar 31, 2011

1. Accounting Convention

The financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 1 956 including accounting standards notified there under.

2. Use of Estimates

The preparation of financial statements requires estimates and assumptions which affect the reported amount of assets, liabilities, revenues and expenses of the reporting period.The difference between the actual results and estimates are recognized in the period in which the results are known or materialized.

3. Fixed Assets

Fixed Assets are valued at historical cost on consistent basis and are net of refundable taxes & levies wherever applicable. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.

4. Intangible Assets

Intangible assets like software, licenses and right-of-use of land including sharing of ROD with other entities which are expected to provide future enduring economic benefits are capitalized as intangible Assets.

5. Capital Work in Progress

a. Crop compensation is accounted for under Capital Work-in- Progress on the basis of actual payments/estimated liability, as and when work commences where ROD is acquired.

b. The capital work in progress includes advance for capital goods/ material in Transit/value of materials /equipment etc. received at site for use in the projects

6. Borrowing Cost

Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for use after netting off any income earned on temporary investment of such funds.

7. Expenses Incurred During Construction Period

All revenue expenditure incurred during the year, which is exclusively attributable to acquisition / construction of fixed assets, is capitalized at the time of commissioning of such assets.

8. Depreciation/Amortisation

I. Depreciation on Fixed Assets other than those mentioned below is provided in accordance with the rates as specified in Schedule XIV of the Companies Act, 1956, on straight line method (SLM) on pro-rata basis (monthly pro-rata for bought out assets).

a. Assets costing upto X 5,000/- are depreciated fully in the year of capitalisation.

b. Bunk Houses are amortised on assumption of five years life.

c. Oil and Gas Pipelines including other related facilities are depreciated
d. Computers at the residence of the employees are depreciated
e. Cost of the leasehold land not exceeding 99 years is amortised over the lease period.

f. Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.

g. Capital expenditure on the assets (enabling facilities), the ownership of which is not with the Company, is charged off to Revenue.

h. Software/Licences are amortised in 5 years on straight line method.

i. No depreciation is being charged on ROD being perpetual in nature.

j. After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

II. Capital assets installed at the consumers premises on the land whose ownership is not with the company, has been depreciated on SLM basis in accordance with the rates as specified in Schedule XIV of the Companies Act, 1956.

9. Foreign Currency Translation

a). Transactions in foreign currency are accounted at the exchange rate prevailing on the transaction date.

b). Monetary items (such as Cash, Receivables, Loans, Payables, etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.

c). Non monetary items (such as Investments, Fixed Assets, etc), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).

d). Any gains or loss arising on account of exchange difference either on settlement or on translation is accounted for in the Profit & Loss account.



10. Investments

Investments are classified into current and long term investments.

Current investments are stated at lower of cost or market value. Long term investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

11. Inventories

a. Raw materials and Finished products are valued at cost or net realisable value, whichever is lower. Finished products include excise duty and royalty wherever applicable.

b. Stock in process is valued at cost or net realisable value, whichever is lower. It is valued at cost where the finished products in which these are to be incorporated are expected to be sold at or above cost.

c. Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished products in which they will be incorporated are expected to be sold at/or above cost.

d. Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, which ever is lower.

e. Surplus/Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.

12. Machinery spares, which can be used only in connection with an item of fixed asset and their use is expected to be irregular, are capitalised with the cost of that fixed asset and are depreciated fully over the remaining useful life of that asset.

13. Grants

In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to Capital Reserve which is recognised as income in the Profit and Loss Account over the useful life period of the asset.

14. Sale proceeds are accounted for based on the consumer price inclusive of Statutory Levies and charges upto the place where ownership of goods is transferred.

15. Income from Consultancy/Contract Services, if any, is recognized based on Proportionate Completion Method.

16. The interest allocable to operations in respect of assets commissioned during the year is worked out by adopting the average of debt equity ratios at the beginning and closing of that year and applying the average ratio of debt thus worked out to the capitalised cost.

17. Pre-project expenditure relating to Projects which are considered unviable/closed is charged off to Revenue in the year of declaration/closure.

18. Employees Benefits

a. All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.

b. The Company's contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee's salary and charged to Profit and Loss Account. Further, the company makes provision as per actuarial valuation towards any shortfall in fund assets to meet statutory rate of interest in the future period, to be compensated by the company to the Provident Fund Trust..

c Employee Benefits under Defined Benefit Plans in respect of leave encashment, compensated absence, post retirement medical scheme, long service award and other terminal benefits are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit method. Actuarial liability in excess of respective plan assets is recognized during the year.

d. Provision for gratuity as per actuarial valuation is funded with a separate trust.

19. Taxes on Income

Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Deferred Tax Liability/Asset resulting from'timing difference between bookand taxable profit is accounted for considering the tax rate and laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred Tax Asset, if any, is recognized and carried forward only to the extent that there is virtual certainty that the asset will be realized in future.

20. R&D Expenditure

All expenditure, other than on capital account, on research and development are charged to Profit and Loss Account.

21. Exploration and Development Costs :-

i) The Company follows Successful Efforts Method for accounting of Oil & Gas exploration and production activities, which includes:-

a. Survey Costs are recognized as revenue expenditure in the year in which these are incurred.

b. Cost of exploratory wells is carried as'Exploratory wells in progresses'. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created or is written off in the year when determined to be dry/abandoned.

c. All wells appearing as "exploratory wells in progress"which are more than two years old from the date of completion of drilling are charged to Profits and Loss Account except those wells which have proved reserves and the development of the fields in which the wells are located has been planned.

ii) Capitalization of Producing Properties

a. Producing Properties are capitalised when the wells in the area / field are ready to commence commercial production having proved developed oil and gas reserves.

b. Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments & facilities and estimated future abandonment cost.

iii) Depletion of Producing Properties

Producing Properties are depleted using the "Unit of Production Method (UOP)". The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.

iv) Production cost of Producing Properties

Company's share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating costs of support equipment and facilities.

22. Provisions, Contingent Liabilities, Contingent Assets & Capital Commitments

a. Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will bean outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent liabilities exceedingRs 5 Lacs in each case are disclosed by way of notes to accounts except when there is remote possibility of any outflow in settlement.

b. Estimated amount of contracts remaining to be executed on capital accounts are disclosed in each case above X 5 Lacs.

23. Impairment

The Carrying amounts of assets are reviewed at each Balance Sheet date. In case there is any indication of impairment based on Internal / External factors, an Impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

GENERAL

24. Prepaid expenses and prior period expenses/income uptoRs 1,00,000/- in each case are charged to relevant heads of account of the current year.

25. Liquidated Damages / Price Reduction Schedule, if any, are accounted for as and when recovery is effected and the matter is considered settled by the Management. Liquidated damages / Price Reduction Schedule, if settled, after capitalization of assets are charged to revenue if belowRs 50 lacs in each case, otherwise adjusted in the cost of relevant assets.

26. Insurance claims are accounted for on the basis of claims admitted by the insurers.

27. a Claims (including interest on delayed realization from customers) are accounted for, when there is no significant uncertainty that the claims are realizable.

b. Liability in respect of MGO of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basis.

c. Minimum charges relating to transportation of LPG are accounted for on receipt basis.


Mar 31, 2010

1. Accounting Convention

The financial statements ate prepared on accrual basis of accounting under historical cost convention in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 1956 including accounting standards notified there under.

2. Use of Estimates

The preparation of financial statements requites estimates and assumptions which affect the repotted amount of assets, liabilities. revenues and expenses of the reporting period. The difference between the actual results and estimates are recognized in the period m which the results are known or materialized.

3. Fixed Assets

Fixed Assets are valued at historical cost on consistent basis and ate net of refundable taxes & levies wherever applicable. All costs relating to acquisition of fixed assets till commissioning of such assets ate capitalized. in the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending apptoval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.

4. Intangible Assets

intangible assets like software, licenses and right-of-use of land including sharing of ROU with other entities which are expected to provide future enduring economic benefits are capitalized as intangible Assets.

5. Capital Work in Progress

a. Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/estimated liability, as and when work commences where ROU is acquired.

b The capital work in progress includes advance for capital goods/ material in Transit/ value of materials / equipment etc. received at site for use in the projects

6. Borrowing Cost

Borrowing cost of the funds specifically borrowed for the purpose of cost of the assets, is capitalized up to the date when the asset is ready fot use after netting off any income earned on temporary investment of such funds.

7. Expenses Incurred During Construction Period

All revenue expenditure incurred during the year, which is exclusively attributable to acquisition / construction of fixed assets, is capitalized at the time of commissioning of such assets.

8. Depreciation / Amortisation

I. Depreciation on Fixed Assets other than those mentioned below Is provided in accordance with the rates as specified in Schedule Xiv of the Companies Act, 1956, on straight line method (SLM) on pro-rata basis (monthly prorata for bought out assets).

a. Assets costing upto Rs5.00Q/- are depreciated fully in the year of capitalisation.

b. Bunk Houses are amortised on assumption of five years life.

c. Oil and Gas Pipelines including other related facilities ate depreciated & 3.17% per annum on SLM basis based on useful life of 30 years.

d. Computers at the residence of the employees are depreciated @ 2375% per annum on SLM basis. Furniture. Electric Equipments and Mobiles provided for the use of employees are depreciated 4* 15% per annum on SLM basis.

e. Cost of the leasehold land not exceeding 99 years is amortised over the lease period.

f. Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.

g. Capital expenditure on the assets (enabling facilities), the ownership of which is not with the Company, is charged off to Revenue.

h. Software / Licences are amortised in 5 years on straight line method.

i. No depreciation is being charged on ROU being perpetual in nature.

j. After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

II. Capital assets installed at the consumers premises on the land whose ownership is not with the company, has been depreciated on SLM basis in accordance with the rates as specified in Schedule XfV of the Companys Act, 1956.

9. Foreign Currency Translation

a). Transactions in foreign currency are accounted at the exchange rate prevailing on the transaction date.

b). Monetary items (such as Cash, Receivables, Loans, Payables, etc} denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.

c). Won monetary items (such as Investments, Fixed Assets, etc), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).

d) Any gains or loss arising on account of exchange difference either on settlement or on translation is accounted for in the Profit & Loss account.

10. Investments

Investments are classified into current and long term investments. Current investments are stated at lower of cost or market value. Long term investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

11. Inventories

a) Raw materials and Finished products ate valued at cost or net realisable value, whichever is lower. Finished products include excise duty and royalty wherever applicable.

b) Stock in process is valued at cost or net realisable value, whichever is lower. Ii is valued ai cost where ihe finished products m which these are to be incorporated are expected to be sold at or above cost.

c) Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished products in which they will be incorporated are expected to be sold at/or above cost.

d) Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, which ever is lower.

e) Surplus /Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.

12. Machinery spares, which can be used only in connection with an item of fixed asset and their use is expected to be irregular, are capitalised with the cost of that fixed asset and ate depreciated fully over the remaining useful life of that asset.

13. Grants

In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to Capital Reserve which is recognised as income in the Profit and Loss Account over the useful life period of the asset.

14. Sale proceeds are accounted for based on the consumer price inclusive of Statutory Levies and charges upto the place where ownership of goods is transferred.

15. Income from Consultancy/Contract Services, if any, is recognized based on Proportionate Completion Method.

16. The interest allocable to operations in respect of assets commissioned during the year is worked out by adopting the average of debt equity ratios at the beginning and closing of that year and applying the average ratio of debt thus worked out to the capitalised cost.

17. Pre- project expenditure relating to Projects which are considered unviable/ closed is charged off to Revenue in the year of declaration/closure.

18. Employees Benefits

a. All short term employee benefits are recognized at there undiscounted amount in the accounting period in which they are incurred.

b. Employee Benefits under Defined Contribution Plan in respect of provident fund is recognized based on the undiscounted obligation of the company towards contribution to the fund. The same is paid to the provident fund which is administered through a separate trust.

c. Employee Benefits under Defined Benefit Plans in respect of leave encashment, compensated absence, post retirement medical scheme, long service award and other terminal benefits are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit method. Actuarial liability in excess of respective plan assets is recognized during the year.

d. Provision for gratuity as per actuarial valuation is funded with a separate trust.

19. Taxes on Income

Provision for current tax is made as per the provisions of the Income Tax Act, 1961. DeferredTax Liability/ Asset resulting from timing difference between book and taxable profit is accounted for considering the tax rate and laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred Tax Asset, if any. is recognized and carried forward only to the extent that there is virtual certainty that the asset will be realized in future.

20. R&D Expenditure

All expenditure, other than on capital account, on research and development are charged to Profit and Loss Account.

21. Exploration and Development Costs:-

i) The Company follows Successful Efforts Method for accounting of Oil & Gas exploration and production activities, which includes:-

a. Survey Costs are recognized as revenue expenditure in the year in which these are incurred.

b. Cost of exploratory wells is carried as Exploratory wells in progresses. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created or is written off in the year when determined to be dry/ abandoned.

c. All wells appearing as exploratory wells in progresswhich are more than two years old from the date of completion of drilling are charged to Profits and Loss Account except those wells which have proved reserves and the development of the fields in which the wells are located has been planned.

ii) Capitalization of Producing Properties

a. Producing Properties are capitalised when the wells in the area / field are ready to commence commercial production having proved developed oil and gas reserves.

b. Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments & facilities and estimated future abandonment cost.

iii) Depletion of Producing Properties

Producing Properties are depleted using the Unit of Production Method (UOP).The depletion or una of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.

iv) Production cost of Producing Properties

Companys share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating costs of support equipment and facilities.

22. Provisions, Contingent Liabilities, Contingent Assets & Capital Commitments

a. Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent liabilities exceeding Rs. 5 Lacs in each case are disclosed by way of notes to accounts.

b. Estimated amount of contracts remaining to be executed on capital accounts are disclosed in each case above Rs S Lacs.

23. Impairment

The Carrying amounts of assets are reviewed at each Balance Sheet date. In case there is any indication of impairment based on internal / External factors, an Impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

GENERAL

24. Prepaid expenses and prior period expenses/income upto Rs. 1.00.000/- in each case are charged to relevant heads of account of the current year.

25. Liquidated Damages / Price Reduction Schedule, if any. are accounted for as and when recovery is effected and the matter is considered settled by the Management. Liquidated damages / Price Reduction Schedule, if settled, after capitalization of assets are charged to revenue if below Rs. 50 lacs in each case, otherwise adjusted m the cost of relevant assets.

26. Insurance claims are accounted for on the basis of claims admitted by the insurers.

27. a Claims (including interest on delayed realization from customers) are accounted for, when there is no significant uncertainty that the claims are realizable.

b Liability in respect of MGO of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basil

c. Minimum charges relating to transportation of LPG are accounted for on receipt basis.

1. Estimated amount of Contracts remaining to be executed on Capital Account and not provided Tor:

i) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs 484804 Gores (Previous Year: Rs 2890.08 Crores).

ii) Companys share in estimated amount of contracts remaining to be executed and not provided for based on audited/unaudited statement of accounts of Joint Ventures Rs. 1569.98 Crores (Previous Year: Rs.34058 Crores).

 
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