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Accounting Policies of GOL Offshore Ltd. Company

Mar 31, 2015

1.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.3 Fixed Assets and Special Survey Expenses

Fixed assets are stated at cost less accumulated depreciation. Cost includes expenses related to acquisition and financing costs on borrowings during construction period. Exchange differences on repayment are recognised in the Profit and Loss Statement and year end translation of foreign currency liabilities covered under Hedge Accounting relating to acquisition of assets are recognised in the Hedge Reserve.

The Company capitalises expenses incurred at the time of five yearly special surveys and / or life enhancement programmes by which class certificates / operating licences are renewed. These expenses are depreciated over a period of 5 years. Similarly, specific expenses incurred for charters for which future benefits are expected over the period of the charter are capitalised and depreciated over the charter period or five years whichever is lower.

1.4 Investments

i) Investments are classified into long-term and current investments.

ii) Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognise a decline, other than of a temporary nature

iii) Current investments are stated at lower of cost or fair value and the resultant decline, if any, is charged to revenue.

1.5 Inventories

Inventories of fuel oil, spares , stores & consumables on board the vessels are valued at lower of cost or net realisable value.

1.6 Borrowing costs

Borrowing costs that are directly attributable to the acquisition / construction of the qualifying fixed assets are capitalised as a part of the cost of respective asset, upto the date of acquisition / completion of construction.

1.7 Revenue recognition

i) Charter hire earnings are recognised on accrual basis.

ii) Revenue from long term turnkey offshore projects is recognised on the percentage of completion basis, based on costs incurred and the expected costs to completion.

1.8 Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive is established

1.9 Operating Expenses

Operating expenses and standing charges are charged to revenue on accrual basis.

1.10 Employee Benefits:

i) Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, performance incentives, etc. are recognised as an expense at the undiscounted amount in the Profit and Loss Statement of the year in which the employee renders the related service.

ii) Post Employment Benefits

Defined Contribution Plan

Employee benefits in the form of Provident Fund, Family Pension Fund, Superannuation Scheme and others Seamen's Welfare Contributions, are considered as defined contribution plans and the Contributions are charged to the Profit and Loss Statement of the year when the contributions to the respective funds are due.

Defined Benefit Plan

The liability for Gratuity, a defined benefit obligation, is accrued and provided for on the basis of actuarial valuation as at the Balance Sheet date.

Other Long Term Benefits

Long term compensated absences & Pension benefits are provided on the basis of an actuarial valuation as at the Balance Sheet date. Actuarial gains and losses comprising of experience adjustments and the effects of changes in actuarial assumptions are recognised in the Profit and Loss Statement for the year as income or expense.

1.11 Depreciation and Amortisation

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act of 2013. In case of second hand acquisitions, depreciation is provided on the straight line method, so as to write off the cost over the estimated useful life, as technically evaluated by the management / consultants at the time of acquisition (20 to 27 years) , or at the rates prescribed in Schedule II to the Companies Act of 2013

1.12 Asset Impairment

The carrying amounts of the Company's tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognised whenever the carrying amounts of an asset exceed its recovered amount. The impairment loss, if any, is recognised in the Profit and Loss Statement in the period in which impairment take place.

Where an impairment loss subsequently reverses, the carrying amount of the assets is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior accounting period.

1.13 Foreign Exchange Transactions

(i) Transactions in foreign currency are recorded at standard exchange rates determined monthly. Monetary assets and liabilities other than foreign currency borrowings denominated in foreign currency, remaining unsettled at the period end are translated at closing rates. The difference in translation of these monetary assets and liabilities and realised gains and losses on foreign currency transactions is recognised in the Profit and Loss Statement.

Foreign currency derivative contracts which are embedded in the loan agreements and form an integral part of the agreement are translated at closing rates and the resultant gains or losses are recognised in the Hedge Reserve Account with the revaluation gains or losses of the hedged loans. The unrealised gains or losses arising on revaluation of other foreign currency swaps and options are carried forward under Loans and Advances or Other Liabilities until settlement in line with the underlying hedged assets / liabilities.

(ii) The Company designates borrowing in foreign currency as hedge instrument to hedge its foreign currency risk of its firm commitment and highly probable or forecasted revenue transaction to be accounted as cash flow hedge. The unrealised exchange gains or losses on transactions of foreign currency borrowing which qualify as effective hedge are recognised in the Hedge Reserve Account.

(iii) Realised gains or losses on cancellation of forward exchange contracts are recognised in the Profit and Loss Statement of the period in which they are cancelled.

1.14 Taxes on income

Tax expense comprises of current and deferred tax.

(i) Provision for current income-tax is made on the basis of the assessable income under the Income-tax Act, 1961. Income from shipping activities is assessed on the basis of deemed tonnage income of the Company.

(ii) Deferred income-tax is recognised on timing differences, between taxable income and accounting income which originate in one period and are capable of reversal in one or more subsequent periods, only in respect of the non-shipping activities of the Company. The tax effect is calculated on the accumulated timing differences at the year end based on tax rates and laws, enacted or substantially enacted as of the balance sheet date.

(iii) Taxes on income related to foreign operations is determined on the basis of provisions of the relevent acts applicable in the respective foreign country and the same is accounted for in the year in which it accrues.

1.15 Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised in the accounts in respect of present probable obligations and are based on best estimate required to settle the obligation at balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Contingent Liabilities are not recognised in financial statements but are disclosed in the notes.

Contingent Assets are neither recognised nor disclosed in the financial statements.

1.16 Earning per share

Basic earnings per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares,if any.

1.17 Segment Reporting

The Company is mainly engaged in offshore business and has only one reportable segment and there is no separate reportable segments as per Accounting Standard (AS) 17.

1.18 Cash and cash equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.19 Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.20 Leases

Operating lease

Lease in which a significant portion of the risks and rewards of the ownership are retained by the lessor are classified as operating lease.

Payments under operating lease are charged to profit and loss statement on a systematic basis representative of time.

1.21 Insurance Claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.

1.22 Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilising the credits.

1.23 Operating Cycle

Based on the nature of activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.


Mar 31, 2014

A) Accounting Convention

The financial statements are prepared under the historical cost convention, in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956.

b) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known / materialised.

c) Fixed Assets and Special Survey Expenses

Fixed assets are stated at cost less accumulated depreciation. Cost includes expenses related to acquisition and financing costs on borrowings during construction period. Exchange differences on repayment are recognised in the Profit and Loss Statement and year end translation of foreign currency liabilities covered under Hedge Accounting relating to acquisition of assets are recognised in the Hedge Reserve.

The Company capitalises expenses incurred at the time of five yearly special surveys and / or life enhancement programmes by which class certificates / operating licences are renewed. These expenses are depreciated over a period of 5 years. Similarly specific expenses incurred for charters for which future benefits are expected over the period of the charter are capitalised and depreciated over the charter period or five years whichever is lower.

d) Investments

i) Investments are classified into long-term and current investments.

ii) Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognise a decline, other than of a temporary nature.

iii) Current investments are stated at lower of cost or fair value and the resultant decline, if any, is charged to revenue.

e) Inventories

Inventories of fuel oil, spares , stores & consumables on board of the vessels are valued at lower of cost or net realisable value.

f) Borrowing cost

Borrowing costs that are directly attributable to the acquisition / construction of the qualifying fixed assets are capitalised as a part of the respective asset, upto the date of acquisition / completion of construction.

g) Revenue recognition

i) Charter hire earnings are recognised on accrual basis.

ii) Revenue from long term turnkey offshore projects is recognised on the percentage of completion

basis, based on costs incurred and the expected costs to completion.

h) Operating Expenses

Operating expenses and standing charges are charged to revenue on accrual basis.

i) Employee Benefits:

i) Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, performance incentives, etc. are recognised as an expense at the undiscounted amount in the Profit and Loss Statement of the year in which the employee renders the related service.

ii) Post Employee Benefits Defined Contribution Plan

Employee benefits in the form of Provident Fund, Family Pension Fund, Superannuation Scheme and others Seamen''s Welfare Contributions, are considered as defined contribution plans and the Contributions are charged to the Profit and Loss Statement of the year when the contributions to the respective funds are due.

Defined Benefit Plan

The liability for Gratuity, a defined benefit obligation, is accrued and provided for on the basis of actuarial valuation as at the Balance Sheet date.

Other Long Term Benefits

Long term compensated absences & Pension benefits are provided on the basis of an actuarial valuation as at the Balance Sheet date. Actuarial gains and losses comprising of experience adjustments and the effects of changes in actuarial assumptions are recognised in the Profit and Loss Statement for the year as income or expense.

j) Depreciation and Amortisation

Depreciation on new built vessels is provided on the straight line method at the rates prescribed in Schedule XIV to the Companies Act,1956 . In case of second hand acquisitions, depreciation is provided on the straight line method, so as to write off the cost over the estimated useful life, as technically evaluated by the management / consultants at the time of acquisition (20 to 27 years) , or at the rates prescribed in Schedule XIV to the Companies Act, 1956, whichever is higher.

Tangible Assets

Fleet : New built vessels On straight line method @ prescribed in Companies Act,1956

Second hand vessels On straight line method @ prescribed in Companies Act,1956 or as tech- nically evaluated by management / consultant whichever is higher

Rigs : On straight line method to write off original cost over estimated useful life of 7/10 years

Barges : On straight line method to write off original cost over estimated useful life of 7/10 years

Lease Hold Land : On straight Line method over the Lease Period

Properties : On written down value method @ prescribed in Companies Act,1956

Other Assets : Computers 3 years Vehicles 4 years Furniture, Fixtures and Office equipments 5 years

Intangible Assets

Computer Software : @ 20% on straight line method

k) Asset Impairment

The carrying amounts of the Company''s tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset''s recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognised whenever the carrying amounts of an asset exceed its recovered amount. The impairment loss, if any, is recognised in the Profit and Loss Statement in the period in which impairment take place.

Where an impairment loss subsequently reverses, the carrying amount of the assets is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior accounting period.

l) Foreign Exchange Transactions

(i) Transactions in foreign currency are recorded at standard exchange rates determined monthly. Monetary assets and liabilities other than foreign currency borrowings denominated in foreign currency, remaining unsettled at the period end are translated at closing rates. The difference in translation of these monetary assets and liabilities and realised gains and losses on foreign currency transactions is recognised in the Profit and Loss Statement.

Foreign currency derivative contracts which are embedded in the loan agreements and form an integral part of the agreement are translated at closing rates and the resultant gains or losses are recognised in the Hedge Reserve Account with the revaluation gains or losses of the hedged loans. The unrealised gains or losses arising on revaluation of other foreign currency swaps and options are carried forward under Loans and Advances or Other Liabilities until settlement in line with the underlying hedged assets / liabilities.

(ii) The Company designates borrowing in foreign currency as hedge instrument to hedge its foreign currency risk of its firm commitment and highly probable or forecasted revenue transaction to be accounted as cash flow hedge. The unrealised exchange gains or losses on transactions of foreign currency borrowing which qualify as effective hedge are recognised in the Hedge Reserve Account.

(iii) Realised gains or losses on cancellation of forward exchange contracts are recognised in the Profit and Loss Statement of the period in which they are cancelled.

m) Provision for Taxation

Tax expense comprises of current and deferred tax.

(i) Provision for current income-tax is made on the basis of the assessable income under the Income- tax Act, 1961. Income from shipping activities is assessed on the basis of deemed tonnage income of the Company.

(ii) Deferred income-tax is recognised on timing differences, between taxable income and accounting income which originate in one period and are capable of reversal in one or more subsequent periods only in respect of the non-shipping activities of the Company. The tax effect is calculated on the accumulated timing differences at the year end based on tax rates and laws, enacted or substantially enacted as of the balance sheet date.

(iii) Taxes on income related to foreign operation is determined on the basis of provisions of the relevant act applicable to the respective foreign country and the same is accounted for in the year in which it accrue.

n) Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised in the accounts in respect of present probable obligations and are based on best estimate required to settle the obligation at balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Contingent Liabilities are not recognised in financial statements but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements. o) Earning per share

Basic earnings per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

p) Segment Reporting

The Company is mainly engaged in offshore business and there are no separate reportable segments as per Accounting Standard (AS) 17.

q) Cash Flow Statement

Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard -3 ''Cash Flow Statement'' as notified under the Companies (Accounting Standard) Rules, 2006.

r) Leases

Operating lease

Lease in which a significant portion of the risks and rewards of the ownership are retained by the lessor are classified as operating lease.

Payments under operating lease are charged to profit and loss statement on a systematic basis representative of time.


Mar 31, 2013

(a) Accounting Convention

The fnancial statements are prepared under the historical cost convention, in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards notifed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956.

(b) use of estimates

The preparation of fnancial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the fnancial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known/ materialised.

(c) Fixed Assets and Special Survey Expenses

Fixed assets are stated at cost less accumulated depreciation. Cost includes expenses related to acquisition and fnancing costs on borrowings during construction period. Exchange differences on repayment are recognised in the Proft and Loss Statement and year end translation of foreign currency liabilities covered under Hedge Accounting relating to acquisition of assets are recognised in the Hedge Reserve.

The Company capitalises expenses incurred at the time of fve yearly special surveys and / or life enhancement programmes by which class certifcates / operating licences are renewed. These expenses are depreciated over a period of 5 years. Similarly specifc expenses incurred for charters for which future benefts are expected over the period of the charter are capitalised and depreciated over the charter period or fve years whichever is lower.

(d) Investments

(i) Investments are classifed into long-term and current investments.

(ii) Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognise a decline, other than of a temporary nature.

(iii) Current investments are stated at lower of cost or fair value and the resultant decline, if any, is charged to revenue.

(e) Inventories

Inventories of fuel oil, spares, stores & consumables on board of the vessels are valued at lower of cost or net realisable value.

(f) Borrowing cost

Borrowing costs that are directly attributable to the acquisition / construction of the qualifying fxed assets are capitalised as a part of the respective asset, upto the date of acquisition / completion of construction.

(g) Revenue recognition

(i) Charter hire earnings are recognised on accrual basis.

(ii) Revenue from long term turnkey offshore projects is recognised on the percentage of completion basis, based on costs incurred and the expected costs to completion.

(h) Operating Expenses

Operating expenses and standing charges are charged to revenue on accrual basis.

(i) Employee Benefts:

(i) Short Term Employee Benefts

All employee benefts payable wholly within twelve months of rendering the services are classifed as short term employee benefts. Benefts such as salaries, performance incentives, etc. are recognised as an expense at the undiscounted amount in the Proft and Loss Statement of the year in which the employee renders the related service.

(ii) Post Employee Benefts

Defned Contribution Plan

Employee benefts in the form of Provident Fund, Family Pension Fund, Superannuation Scheme and other Seamen''s Welfare Contributions, are considered as defned contribution plans and the contributions are charged to the Proft and Loss Statement of the year when the contributions to the respective funds are due.

Defned Beneft Plan

The liability for Gratuity, a defned beneft obligation, is accrued and provided for on the basis of actuarial valuation as at the Balance Sheet date.

Other Long Term Benefts

Long term compensated absences & Pension benefts are provided on the basis of an actuarial valuation as at the Balance Sheet date. Actuarial gains and losses comprising of experience adjustments and the effects of changes in actuarial assumptions are recognised in the Proft and Loss Statement for the year as income or expense.

(j) Depreciation and Amortisation

Depreciation on new built vessels is provided on the straight line method at the rates prescribed in Schedule XIV to the Companies Act,1956 . In case of second hand acquisitions, depreciation is provided on the straight line method, so as to write off the cost over the estimated useful life, as technically evaluated by the management / consultants at the time of acquisition (20 to 27 years), or at the rates prescribed in Schedule XIV to the Companies Act, 1956, whichever is higher.

(k) Asset Impairment

The carrying amounts of the Company''s tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset''s recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognised whenever the carrying amounts of an asset exceed its recoverable amount. The impairment loss, if any, is recognised in the Proft and Loss Statement in the period in which impairment take place.

Where an impairment loss subsequently reverses, the carrying amount of the assets is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior accounting period.

(l) Foreign Exchange Transactions

(i) Transactions in foreign currency are recorded at standard exchange rates determined monthly. Monetary assets and liabilities other than foreign currency borrowings denominated in foreign currency, remaining unsettled at the period end are translated at closing rates. The difference in translation of these monetary assets and liabilities and realised gains and losses on foreign currency transactions is recognised in the Proft and Loss Statement.

Foreign currency derivative contracts which are embedded in the loan agreements and form an integral part of the agreement are translated at closing rates and the resultant gains or losses are recognised in the Hedge Reserve Account with the revaluation gains or losses of the hedged loans. The unrealised gains or losses arising on revaluation of other foreign currency swaps and options are carried forward under Loans and Advances or Other Liabilities until settlement in line with the underlying hedged assets / liabilities.

(ii) The Company designates borrowing in foreign currency as hedge instrument to hedge its foreign currency risk of its frm commitments and highly probable or forecasted revenue transactions to be accounted as cash fow hedge. The unrealised exchange gains or losses on transactions of foreign currency borrowing which qualify as effective hedge are recognised in the Hedge Reserve Account.

(iii) Realised gains or losses on cancellation of forward exchange contracts are recognised in the Proft and Loss Statement of the period in which they are cancelled.

(m) Provision for Taxation

Tax expense comprises of current and deferred tax.

(i) Provision for current income-tax is made on the basis of the assessable income under the Income- tax Act, 1961. Income from shipping activities is assessed on the basis of deemed tonnage income of the Company.

(ii) Deferred income-tax is recognised on timing differences, between taxable income and accounting income which originate in one period and are capable of reversal in one or more subsequent periods, only in respect of the non-shipping activities of the Company. The tax effect is calculated on the accumulated timing differences at the year end based on tax rates and laws, enacted or substantially enacted as of the balance sheet date.

(iii) Taxes on income related to foreign operations is determined on the basis of provisions of the relevant law applicable to the respective foreign country and the same is accounted for in the year in which it accrue.

(n) Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised in the accounts in respect of present probable obligations and are based on best estimate required to settle the obligation at balance sheet date. These are reviewed at each balance sheet date and adjusted to refect the current best estimates.

Contingent Liabilities are not recognised in fnancial statements but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the fnancial statements.

(o) Earning per share

Basic earnings per share is calculated by dividing the net proft for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net proft for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

(p) Segment Reporting

The Company is mainly engaged in offshore business activity and there are no separate reportable segments as per Accounting Standard (AS) 17.

(q) Cash Flow Statement

Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard (AS) - 3 ‘Cash Flow Statement'' as notifed under the Companies (Accounting Standard) Rules, 2006.

(r) Leases

Operating lease

Lease in which a signifcant portion of the risks and rewards of the ownership are retained by the lessor are classifed as operating lease.

Payments under operating lease are charged to proft and loss statement on a systematic basis representative of time.


Mar 31, 2012

A) Accounting Convention

The financial statements are prepared under the historical cost convention, in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956.

b) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known/ materialised.

c) Fixed Assets and Special Survey Expenses

Fixed assets are stated at cost less accumulated depreciation. Cost includes expenses related to acquisition and financing costs on borrowings during construction period. Exchange differences on repayment are recognised in the Statement of Profit and Loss and year end translation of foreign currency liabilities relating to acquisition of assets are recognised in the Hedge Reserve.

The Company capitalises expenses incurred at the time of five yearly special surveys and / or life enhancement programmes by which class certificates / operating licences are renewed. These expenses are depreciated over a period of 5 years.

d) Investments

i) Investments are classified into long-term and current investments.

ii) Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognise a decline, other than of a temporary nature.

iii) Current investments are stated at lower of cost and fair value and the resultant decline, if any, is charged to revenue.

e) Inventories

Inventories of fuel oil, spares , stores & consumables on board of the vessels are valued at lower of cost or net realisable value.

f) Borrowing cost

Borrowing costs that are directly attributable to the acquisition / construction of the qualifying fixed assets are capitalised as a part of the respective asset, upto the date of acquisition / completion of construction.

g) Revenue recognition

i) Charter hire earnings are recognised on accrual basis.

ii) Revenue from long term turnkey offshore projects is recognised on the percentage of completion basis, based on costs incurred and the expected costs to completion.

h) Operating Expenses

Operating expenses and standing charges are charged to revenue on accrual basis.

i) Employee Benefits

i) Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, performance incentives, etc. are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss Account of the year in which the employee renders the related service.

ii) Post Employee Benefits Defined Contribution Plan

Retirement benefits in the Provident Fund, Family Pension Fund and Superannuation Scheme, which are defined contribution schemes, are charged to the Statement of Profit and Loss of the year when the contributions accrue.

Defined Benefit Plan

The liability for Gratuity, a defined benefit obligation, is accrued and provided for on the basis of actuarial valuation as at the Balance Sheet date.

Other Long Term Benefits

Long term compensated absences & Pension benefits are provided on the basis of an actuarial valuation as at the Balance Sheet date. Actuarial gains and losses comprising of experience adjustments and the effects of changes in actuarial assumptions are recognised in the Statement of Profit and Loss for the year as income or expense.

j) Depreciation and Amortisation

Depreciation on new built vessels is provided on the straight line method at the rates prescribed in Schedule XIV to the Companies Act,1956. In case of second hand acquisitions, depreciation is provided on the straight line method, so as to write off the cost over the estimated useful life, as technically evaluated by the management / consultants at the time of acquisition (20 to 27 years) , or at the rates prescribed in Schedule XIV to the Companies Act, 1956, whichever is higher.

k) Asset Impairment

The carrying amounts of the Company's tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognised whenever the carrying amounts of an asset exceed its recovered amount. The impairment loss, if any, is recognised in the Statement of Profit and Loss in the period in which impairment takes place.

Where an impairment loss subsequently reverses, the carrying amount of the assets is increased to the revised estimate of its recoverable amount however, subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortisation of depreciation) had no impairment loss been recognised for the asset in prior accounting period.

l) Foreign Exchange Transactions

(i) Transactions in foreign currency are recorded at standard exchange rates determined monthly. Monetary assets and liabilities other than foreign currency borrowings denominated in foreign currency, remaining unsettled at the period end are translated at closing rates. The difference in translation of these monetary assets and liabilities and realised gains and losses on foreign currency transactions is recognised in the Statement of Profit and Loss.

Foreign currency derivative contracts which are embedded in the loan agreements and form an integral part of the agreement are translated at closing rates and the resultant gains or losses are recognised in the Hedge Reserve Account with the revaluation gains or losses of the hedged loans. The unrealised gains or losses arising on revaluation of other foreign currency swaps and options are carried forward under Loans and Advances or Other Liabilities until settlement in line with the underlying hedged assets / liabilities.

(ii) The Company designates borrowing in foreign currency as hedge instrument to hedge foreign currency risk of its firm commitment and highly probable or forecasted revenue transaction to be accounted as cash flow hedge. The unrealised exchange gains or losses on transaction of foreign currency borrowing which qualify as effective hedge are recognised in the Hedge Reserve Account.

(iii) Realised gains or losses on cancellation of forward exchange contracts are recognised in the Statement of Profit and Loss of the period in which they are cancelled.

m) Provision for Taxation

Tax expense comprises of current and deferred tax.

(i) Provision for current income-tax is made on the basis of the assessable income under the Income- tax Act, 1961. Income from shipping activities is assessed on the basis of deemed tonnage income of the Company.

(ii) Deferred income-tax is recognised on timing differences, between taxable income and accounting income which originate in one period and are capable of reversal in one or more subsequent periods only in respect of the non-shipping activities of the Company. The tax effect is calculated on the accumulated timing differences at the year end based on tax rates and laws enacted or substantially enacted as of the balance sheet date.

n) Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised in the accounts in respect of present probable obligations and are based on best estimate required to settle the obligation at balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Contingent Liabilities are not recognised in financial statements but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

o) Earning per share

Basic earnings per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

p) Segment Reporting

The Company is mainly engaged in offshore business and there are no separate reportable segments as per Accounting Standard (AS) 17.


Mar 31, 2011

(a) Accounting Convention :

The financial statements are prepared under the historical cost convention, in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards notifed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956

(b) Use of Estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the financial statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Actual results could differ from the estimates.

(c) Fixed Assets :

Fixed assets are stated at cost less accumulated depreciation. Cost includes expenses related to acquisition and financing costs on borrowings during construction period. Exchange differences on repayment are recognised in the Profit and Loss Account and year end translation of foreign currency liabilities relating to acquisition of assets are recognized in the Hedge Reserve.

(d) Investments :

i. Investments are classifed into long-term and current investments.

ii. Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognise a decline, other than of a temporary nature.

iii. Current investments are stated at lower of cost and fair value and the resultant decline, if any, is charged to revenue.

(e) Inventories :

i. Inventories of fuel oil are valued at cost on first in first out basis. ii. Inventories of spares, stores & consumables on board the vessels are valued at weighted average cost method.

(f) Borrowing cost:

Borrowing costs that are directly attributable to the acquisition / construction of the qualifying fixed assets are capitalized as a part of the respective asset, upto the date of acquisition / completion of construction.

(g) Revenue recognition:

Charter hire earnings are recognized on accrual basis.

Revenue from long term turnkey offshore projects is recognized on the percentage of completion basis, based on costs incurred and the expected costs to completion.

(h) Operating expenses:

Operating expenses and standing charges are charged to revenue on accrual basis.

(i) Employee benefits:

(i) Short-term Employee benefits:

All employee benefits payable wholly within twelve months of rendering the service are classifed as short term employee benefits. Benefits such as salaries, performance incentives, etc. are recognized as an expense at the undiscounted amount in the Profit and Loss Account of the year in which the employee renders the related service.

(ii) Post Employment Benefits:

Defined Contribution Plan

Retirement benefits in the Provident Fund, Family Pension Fund and Superannuation Scheme, which are defined contribution schemes, are charged to the Profit and Loss account of the year when the contributions accrue.

Defined Benefit Plan

The liability for Gratuity, a defined benefit obligation, is accrued and provided for on the basis of actuarial valuation as at the Balance Sheet date.

Other Long Term Benefits

Long term compensated absences & Pension benefits are provided on the basis of an actuarial valuation as at the Balance Sheet date. Actuarial gains and losses comprising of experience adjustments and the effects of changes in actuarial assumptions are recognized in the Profit and Loss account for the year as income or expense.

(j) Depreciation:

(i) fileet :

Depreciation on new built vessels is provided on the straight line method at the rates prescribed in Schedule XIV to the Companies Act, 1956. In case of second hand acquisitions, depreciation is provided on the straight line method, so as to write off the cost over the estimated useful life, as technically evaluated by the management / consultants at the time of acquisition (20 to 27 years), or at the rates prescribed in Schedule XIV to the Companies Act, 1956, whichever is higher.

(ii) Rigs :

Rigs are depreciated on the straight line method so as to write off the original cost over the estimated useful life of 7/10 years.

(iii) Barge :

The Barge is depreciated on the straight line method so as to write off the original cost over the estimated useful life of 7/10 years.

(iv) Properties :

filats and Office premises are depreciated on the written down value method, at the rates prescribed in Schedule XIV to the Companies Act, 1956.

(v) Other Assets :

On the straight line method so as to write off the original cost of the asset over the estimated useful life as under:

Computers - 3 years

Vehicles - 4 years

Furniture & Fixtures,

Office Equipment, etc - 5 years

(k) Asset Impairment:

The carrying amounts of the Company's tangible and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amounts are estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognized whenever the carrying amounts of an asset exceed its recovered amount. The impairment loss, if any, is recognized in the statement of Profit and Loss in the period in which impairment take place.

Where an impairment loss subsequently reverses, the carrying amount of the assets is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount not exceeding the carrying amount that would have been determined (net of amortization of depreciation) had no impairment loss been recognized for the asset in prior accounting period.

(l) Foreign Exchange Transactions:

(i) Transactions in foreign currency are recorded at standard exchange rates determined monthly. Monetary assets and liabilities other than foreign currency borrowings denominated in foreign currency, remaining unsettled at the period end are translated at closing rates. The difference in translation of these monetary assets and liabilities and realised gains and losses on foreign currency transactions is recognised in the Profit and Loss Account.

(ii) The Company designates borrowing in foreign currency as hedge instrument to hedge its foreign currency risk of its firm commitment and highly probable or forecasted revenue transaction to be accounted as cash fow hedge. The unrealized exchange gains or losses on transaction foreign currency borrowing which qualify as effective hedge are recognized in the Hedge Reserve Account.

(iii) Forward exchange contracts, other than those entered into to hedge foreign currency risk of firm commitments or highly probable forecast transactions, are translated at period end exchange rates. Premium or discount on such forward exchange contracts is amortised as income or expenses over the life of the contracts.

(iv) Exchange differences in respect of forward exchange contracts entered into by the Company to hedge foreign currency risk of firm commitments or highly probable forecast transactions are accounted for on settlement.

(v) Realised gain or losses on cancellation of forward exchange contracts are recognised in the Profit and Loss Account of the period in which they are cancelled.

(vi) Foreign currency derivative contracts which are embedded in the loan agreements and form an integral part of the agreement are translated at closing rates and the resultant gains or losses are recognized in the Profit and Loss account along with the revaluation gains or losses of the hedged loans. The unrealised gains or losses arising on revaluation of other foreign currency swaps and options are carried forward under Loans and Advances or Other Liabilities until settlement in line with the underlying hedged assets / liabilities.

(m) Special Survey Expenses:

The Company capitalises expenses incurred at the time of five yearly special surveys and / or life enhancement programmes by which class certificates / operating licences are renewed.

(n) Provision for Taxation:

Tax expense comprises of current, deferred tax and fringe benefit tax.

(i) Provision for current income-tax and fringe benefit tax is made on the basis of the assessable income under the Income- tax Act, 1961. Income from shipping activities is assessed on the basis of deemed tonnage income of the Company.

(ii) Deferred income-tax is recognised on timing differences, between taxable income and accounting income which originate in one period and are capable of reversal in one or more subsequent periods only in respect of the non- shipping activities of the Company. The tax effect is calculated on the accumulated timing differences at the year end based on tax rates and laws, enacted or substantially enacted as of the balance sheet date.

(o) Provisions and Contingent Liabilities:

Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.

(p) Segment Reporting:

The Company is mainly engaged in offshore business and there are no separate reportable segments as per Accounting Standard (AS) 17.

 
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