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Accounting Policies of Interlink Petroleum Ltd. Company

Mar 31, 2015

A) BASIS OF PREPARATION:

The financial statements of Interlink Petroleum Limited (the Company) are prepared under historical cost convention and on accrual basis in accordance with Generally Accepted Accounting Principles in India ("GAAP"). GAAP comprises mandatory accounting standards as prescribed under section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules 2014, provisions of the Act (to the extant notified), applicable guidance notes issued by The Institute of Chartered Accountants of India and guidelines issued by the Securities and Exchange Board of India. The accounting policies, in all material respects, have been consistently applied by the Company and are consistent with those used in the previous year.

b) USE OF ESTIMATES:

The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Though management believes that the estimates used are prudent and reasonable, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) FIXED ASSETS, DEPRECIATION AND AMORTISATION:

i. Tangible assets are stated at cost, less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing and other financing costs including foreign exchange variation relating to acquisition of fixed assets, which take a substantial period of time to get ready for its intended use, are also included to the extent they relate to the period till such assets are ready to be put to use.

ii. Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization. Cost of intangible assets includes Borrowing and other financing costs including foreign exchange variation that are attributable to development of such intangible assets.

iii. Depreciation on fixed assets is provided in accordance with the rates as specified in Schedule II to The Companies Act, 2013, on straight-line method, to at least 95% of the cost of the assets except in respect of assets of value less than Rs.5,000 each, which are depreciated fully in the year of acquisition. Depreciation is charged pro-rata on monthly basis on all other assets from/up to the month of capitalization/sale, disposal and/or dismantle. Depreciation relating to assets attributable directly to qualifying asset including prospecting, exploration and development of oil and gas are capitalized as a part of Intangible Assets Under Development or Producing Properties, as the case may be.

d) VALUATION OF INVENTORIES:

i. Natural Gas is extracted from field as and when supply of gas is to be made. So there is no storage of Natural Gas available and hence there is no stock of natural gas.

ii. The Closing Stock of Crude Oil in saleable condition is valued at Cost or Net Realizable Value less estimated selling costs, whichever is lower.

iii. Stores and spares are valued at lower of cost or net realizable value.

e) PRELIMINARY EXPENSES:

Preliminary expenses in the nature of expenses for incorporation of the Company, public issue expenses and like expenses; are amortized over a period of five years.

f) EXPLORATION AND DEVELOPMENT COSTS:

i. The Company is following "Full Cost Method" for allocating all costs incurred in prospecting, exploring and development of oil and gas including related finance cost and depreciation, which are accumulated, considering the country as a cost centre, as per the guidance note on Accounting for Oil and Gas producing activities issued by the institute of Chartered Accountants of India.

ii. Exploration Costs involved in drilling and equipping exploratory and appraisal wells and cost of drilling exploratory type stratigraphic test wells are initially accounted for under the head Capital Work In Progress/Intangible Assets Under Development and are capitalized as Producing Properties when ready to commence commercial production.

iii. All Costs relating to development wells, development type stratigraphic test wells and service wells are initially accounted for under the head Capital Work In Progress/Intangible Assets Under Development and are capitalized as Producing Properties when ready to commence commercial production.

iv. Producing Properties are depleted using 'Unit of Production' method based on estimated proved developed reserves. Any changes in Reserves/Cost are dealt with prospectively. Hydrocarbon reserves are estimated by the Company following the International Reservoir Engineering Principles and are approved by the appropriate authority(s).

g) IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS:

At each Balance Sheet date, the Company reviews the carrying amount of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss and provide for impairment. Where the impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior accounting periods.

h) INVESTMENTS:

Current investments are carried at the lower of cost and quoted / fair value. Long- term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

i) RECOGNITION OF INCOME AND EXPENDITURE:

i. Revenue from sale of products is recognized on transfer of custody to customers. Any difference as of the reporting date between the entitlement quantities minus the quantities sold in respect of crude oil (including condensate) and gas, if positive is treated as inventory and, if negative, is adjusted to revenue by recording the same as liability.

ii. Sales are inclusive of all statutory levies and taxes that are paid / payable to the government, based on the provisions under various laws and agreements governing Company's activities in the respective field/project.

iii. Any payment received in respect of short lifted gas quantity for which an obligation exists to supply such gas in subsequent periods is recognized as Deferred Revenue in the year of receipt. The same is recognized as revenue in the year in which such gas is actually supplied for the quantity supplied or in the year in which the obligation to supply such gas ceases, whichever is earlier.

iv. Revenue in respect of interest on delayed realizations is recognized when there is reasonable certainty regarding ultimate collection.

v. All income and expenditure items that have material bearing on the financial statements are recognized on accrual basis. However insurance claims are not accounted on accrual basis but are accounted for as and when received.

j) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made based on technical evaluation and past experience. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjust to reflect the current management estimate.

Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

k) ACCOUNTING FOR TAXATION:

Income taxes are accounted for in accordance with Accounting Standard 22 AS "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to / recovered from the tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversing in one or more subsequent periods and are measured using the relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets to the extent they have become reasonably certain or virtually certain of realization, as the case may be.

I) BORROWING COSTS:

Borrowing costs include interest and commitment charges on borrowings, amortisation of costs incurred in connection with the arrangement of borrowings, exchange differences to the extent they are considered a substitute to the interest cost and finance charges under leases.

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

m) ACCOUNTING FOR EMPLOYEE BENEFITS:

i. Short term employee benefits are recognized in the year during which the services have been rendered.

ii. The Company has no policy for leave encashment.

iii. Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation under group gratuity scheme of Life Insurance Corporation of India at the end of each financial year.

iv. All other post retirement benefits to employees are accounted on cash basis.

n) FOREIGN CURRENCY TRANSACTIONS:

i. Foreign currency transactions on initial recognition in the reporting currency are accounted for at the exchange rates prevailing on the date of transaction.

ii. At each Balance Sheet date, foreign currency monetary items are translated using the average of exchange rates prevailing on the balance sheet date and non-monetary items are translated using the exchange rate prevailing on the date of transaction or on the date when the fair value of such items are determined.

iii. Losses or gains relating to the loans/deferred credits utilized for acquisition of fixed assets are adjusted to the carrying cost of the relevant assets. All the other exchange differences arising on the settlement of monetary items or on reporting of monetary items at the rates different from those at which they were initially recorded during the period, or reported in previous financial statements are recognized as income or expenses in the period in which they arise.

o) SITE RESTORATION:

At the end of the producing life of a field, costs are incurred to restore the site back to its original position. The Company estimates, on a current basis, the cost (net of realisation) of site restoration and recognizes it as a liability and provides for the same. Such estimated cost of site restoration form part of the intangible assets under development or cost of producing properties, as the case may be, of the related asset. Any change in the value of the estimated liability is reflected as an adjustment to the provision and the corresponding intangible assets under development or producing property.


Mar 31, 2014

A) BASIS OF PREPARATION:

The financial statements of Interlink Petroleum Limited (the Company) are prepared under historical cost convention and on accrual basis in accordance with Generally Accepted Accounting Principles in India ("GAAP"). GAAP comprises mandatory accounting standards and applicable guidance notes issued by The Institute of Chartered Accountants of India as specified in the Companies (Accounting Standards) Rules, 2006 (as amended), the relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. The accounting policies, in all material respects, have been consistently applied by the Company and are consistent with those used in the previous year.

b) PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS:

During the year ended 31st March, 2014 the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company, for preparation and presentation of its financial statements. Except accounting for dividend on investments in subsidiary companies, the adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

c) USE OF ESTIMATES:

The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Though management believes that the estimates used are prudent and reasonable, actual results could differ from these estimates. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

d) FIXED ASSETS, DEPRECIATION AND AMORTISATION:

i. Tangible assets are stated at cost, less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing and other financing costs including foreign exchange variation relating to acquisition of fixed assets, which take a substantial period of time to get ready for its intended use, are also included to the extent they relate to the period till such assets are ready to be put to use.

ii. Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization. Cost of intangible assets includes Borrowing and other financing costs including foreign exchange variation that are attributable to development of such intangible assets.

iii. Depreciation on fixed assets is provided in accordance with the rates as specified in Schedule XIV to The Companies Act, 1956, on straight-line method, to at least 95% of the cost of the assets except in respect of assets of value less than ''5000 each, which are depreciated fully in the year of acquisition. Depreciation is charged pro-rata on monthly basis on all other assets from/up to the month of capitalization/sale, disposal and/or dismantle. Depreciation relating to assets attributable directly to qualifying asset including prospecting, exploration and development of oil and gas are capitalized as a part of Intangible Assets Under Development or Producing Properties, as the case may be.

e) VALUATION OF INVENTORIES:

i. Natural Gas is extracted from field as and when supply of gas is to be made. So there is no storage of Natural Gas available and hence there is no stock of natural gas.

ii. The Closing Stock of Crude Oil in saleable condition is valued at Cost or Net Realizable Value less estimated selling costs, whichever is lower.

iii. Stores and spares are valued at lower of cost or net realizable value.

f) PRELIMINARY EXPENSES:

Preliminary expenses in the nature of expenses for incorporation of the Company, public issue expenses and like expenses; are amortized over a period of five years.

g) EXPLORATION AND DEVELOPMENT COSTS:

i. The Company is following "Full Cost Method" for allocating all costs incurred in prospecting, exploring and development of oil and gas including related finance cost and depreciation, which are accumulated, considering the country as a cost centre, as per the guidance note on Accounting for Oil and Gas producing activities issued by the institute of Chartered Accountants of India.

ii. Exploration Costs involved in drilling and equipping exploratory and appraisal wells and cost of drilling exploratory type stratigraphic test wells are initially accounted for under the head Capital Work In Progress/Intangible Assets Under Development and are capitalized as Producing Properties when ready to commence commercial production.

iii. All Costs relating to development wells, development type stratigraphic test wells and service wells are initially accounted for under the head Capital Work In Progress/Intangible Assets Under Development and are capitalized as Producing Properties when ready to commence commercial production.

iv. Producing Properties are depleted using ''Unit of Production'' method based on estimated proved developed reserves. Any changes in Reserves/Cost are dealt with prospectively. Hydrocarbon reserves are estimated by the Company following the International Reservoir Engineering Principles and are approved by the appropriate authority(s).

h) IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS:

At each Balance Sheet date, the Company reviews the carrying amount of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss and provide for impairment. Where the impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior accounting periods.

i) INVESTMENTS:

Current investments are carried at the lower of cost and quoted / fair value. Long- term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

j) RECOGNITION OF INCOME AND EXPENDITURE:

i. Revenue from sale of products is recognized on transfer of custody to customers Any difference as of the reporting date between the entitlement quantities minus the quantities sold in respect of crude oil (including condensate) and gas, if positive is treated as inventory and, if negative, is adjusted to revenue by recording the same as liability.

ii. Sales are inclusive of all statutory levies and taxes that are paid / payable to the government, based on the provisions under various laws and agreements governing Company''s activities in the respective field/project.

iii. Any payment received in respect of short lifted gas quantity for which an obligation exists to supply such gas in subsequent periods is recognized as Deferred Revenue in the year of receipt. The same is recognized as revenue in the year in which such gas is actually supplied for the quantity supplied or in the year in which the obligation to supply such gas ceases, whichever is earlier.

iv. Revenue in respect of interest on delayed realizations is recognized when there is reasonable certainty regarding ultimate collection.

v. All income and expenditure items that have material bearing on the financial statements are recognized on accrual basis. However insurance claims are not accounted on accrual basis but are accounted for as and when received.

k) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made based on technical evaluation and past experience. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjust to reflect the current management estimate. contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

l) ACCOUNTING FOR TAXATION:

Income taxes are accounted for in accordance with Accounting Standard 22 AS "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to / recovered from the tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversing in one or more subsequent periods and are measured using the relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets to the extent they have become reasonably certain or virtually certain of realization, as the case may be.

m) BORROWING COSTS :

Borrowing costs include interest and commitment charges on borrowings, amortisation of costs incurred in connection with the arrangement of borrowings, exchange differences to the extent they are considered a substitute to the interest cost and finance charges under leases.

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

n) ACCOUNTING FOR EMPLOYEE BENEFITS:

i. Short term employee benefits are recognized in the year during which the services have been rendered.

ii. The Company has no policy for leave encashment.

iii. Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation under group gratuity scheme of Life Insurance Corporation of India at the end of each financial year.

iv. All other post retirement benefits to employees are accounted on cash basis.

o) FOREIGN CURRENCY TRANSACTIONS:

i. Foreign currency transactions on initial recognition in the reporting currency are accounted for at the exchange rates prevailing on the date of transaction.

ii. At each Balance Sheet date, foreign currency monetary items are translated using the average of exchange rates prevailing on the balance sheet date and non-monetary items are translated using the exchange rate prevailing on the date of transaction or on the date when the fair value of such items are determined.

iii. Losses or gains relating to the loans/deferred credits utilized for acquisition of fixed assets are adjusted to the carrying cost of the relevant assets. All the other exchange differences arising on the settlement of monetary items or on reporting of monetary items at the rates different from those at which they were initially recorded during the period, or reported in previous financial statements are recognized as income or expenses in the period in which they arise.

p) SITE RESTORATION:

At the end of the producing life of a field, costs are incurred to restore the site back to its original position. The Company estimates, on a current basis, the cost (net of realisation) of site restoration and recognizes it as a liability and provides for the same. Such estimated cost of site restoration form part of the intangible assets under developmentor cost of producing properties, as the case may be, of the related asset. Any change in the value of the estimated liability is reflected as an adjustment to the provision and the corresponding intangible assets under development or producing property.


Mar 31, 2013

A) BASIS OF PREPARATION:

The financial statements of Interlink Petroleum Limited (the Company) are prepared under historical cost convention and on accrual basis in accordance with Generally Accepted Accounting Principles in India ("GAAP"). GAAP comprises mandatory accounting standards and applicable guidance notes issued by The Institute of Chartered Accountants of India as specified in the Companies (Accounting Standards) Rules, 2006 (as amended), the relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. The accounting policies, in all material respects, have been consistently applied by the Company and are consistent with those used in the previous year.

b) PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS:

During the year ended 31st March,2013 the revised Schedule VI notified under the Companies Act,1956, has become applicable to the Company, for preparation and presentation of its financial statements. Except accounting for dividend on investments in subsidiary companies, the adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

c) USE OF ESTIMATES:

The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Though management believes that the estimates used are prudent and reasonable, actual results could differ from these estimates. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

d) FIXED ASSETS, DEPRECIATION AND AMORTISATION:

i. Tangible assets are stated at cost, less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing and other financing costs including foreign exchange variation relating to acquisition of fixed assets, which take a substantial period of time to get ready for its intended use, are also included to the extent they relate to the period till such assets are ready to be put to use.

ii. Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization. Cost of intangible assets includes Borrowing and other financing costs including foreign exchange variation that are attributable to development of such intangible assets.

iii. Depreciation on fixed assets is provided in accordance with the rates as specified in Schedule XIV to The Companies Act, 1956, on straight-line method, to at least 95% of the cost of the assets except in respect of assets of value less than Rs. 5000 each, which are depreciated fully in the year of acquisition. Depreciation is charged pro-rata on monthly basis on all other assets from/up to the month of capitalization/sale, disposal and/or dismantle. Depreciation relating to assets attributable directly to qualifying asset including prospecting, exploration and development of oil and gas are capitalized as a part of Intangible Assets Under Development or Producing Properties, as the case may be.

e) VALUATION OF INVENTORIES:

i. Natural Gas is extracted from field as and when supply of gas is to be made. So there is no storage of Natural

Gas available and hence there is no stock of natural gas. ii. The Closing Stock of Crude Oil in saleable condition is valued at Cost or Net Realizable Value less estimated

selling costs, whichever is lower. iii. Stores and spares are valued at lower of cost or net realizable value.

f) PRELIMINARY EXPENSES:

Preliminary expenses in the nature of expenses for incorporation of the Company, public issue expenses and like expenses; are amortized over a period of five years.

g) EXPLORATION AND DEVELOPMENT COSTS:

i. The Company is following "Full Cost Method" for allocating all costs incurred in prospecting, exploring and development of oil and gas including related finance cost and depreciation, which are accumulated, as per the guidance note on Accounting for Oil and Gas producing activities issued by the institute of Chartered Accountants of India.

ii. Exploration Costs involved in drilling and equipping exploratory and appraisal wells and cost of drilling exploratory type stratigraphic test wells are initially accounted for under the head Capital Work In Progress/Intangible Assets Under Development and are capitalized as Producing Properties when ready to commence commercial production.

iii. All Costs relating to development wells, development type stratigraphic test wells and service wells are initially accounted for under the head Capital Work In Progress/Intangible Assets Under Development and are capitalized as Producing Properties when ready to commence commercial production.

iv. Producing Properties are depleted using ''Unit of Production'' method based on estimated proved developed reserves. Any changes in Reserves/Cost are dealt with prospectively. Hydrocarbon reserves are estimated by the Company following the International Reservoir Engineering Principles and are approved by the appropriate authority(s).

h) IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS:

At each Balance Sheet date, the Company reviews the carrying amount of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss and provide for impairment. Where the impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior accounting periods.

i) INVESTMENTS:

Current investments are carried at the lower of cost and quoted / fair value. Long- term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

j) RECOGNITION OF INCOME AND EXPENDITURE:

i. Revenue from sale of products is recognized on transfer of custody to customers. Any difference as of the reporting date between the entitlement quantities minus the quantities sold in respect of crude oil (including condensate) and gas, if positive is treated as inventory and, if negative, is adjusted to revenue by recording the same as liability. ii. Sales are inclusive of all statutory levies and taxes that are paid / payable to the government, based on the provisions under various laws and agreements governing Company''s activities in the respective field/project. iii. Any payment received in respect of short lifted gas quantity for which an obligation exists to supply such gas in subsequent periods is recognized as Deferred Revenue in the year of receipt. The same is recognized as revenue in the year in which such gas is actually supplied for the quantity supplied or in the year in which the obligation to supply such gas ceases, whichever is earlier. iv. Revenue in respect of interest on delayed realizations is recognized when there is reasonable certainty regarding ultimate collection. All income and expenditure items that have material bearing on the financial statements are recognized on accrual basis. However insurance claims are not accounted on accrual basis but are accounted for as and when received.

k) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made based on technical evaluation and past experience. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjust to reflect the current management estimate. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

l) ACCOUNTING FOR TAXATION:

Income taxes are accounted for in accordance with Accounting Standard 22 AS "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to / recovered from the tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversing in one or more subsequent periods and are measured using the relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets to the extent they have become reasonably certain or virtually certain of realization, as the case may be.

m) BORROWING COSTS :

Borrowing costs include interest and commitment charges on borrowings, amortisation of costs incurred in connection with the arrangement of borrowings, exchange differences to the extent they are considered a substitute to the interest cost and finance charges under leases.

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

n) ACCOUNTING FOR EMPLOYEE BENEFITS:

i. Short term employee benefits are recognized in the year during which the services have been rendered.

ii. The Company has no policy for leave encashment.

iii. Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation under group gratuity scheme of Life Insurance Corporation of India at the end of each financial year. iv. All other post retirement benefits to employees are accounted on cash basis.

o) FOREIGN CURRENCY TRANSACTIONS:

i. Foreign currency transactions on initial recognition in the reporting currency are accounted for at the exchange rates prevailing on the date of transaction.

ii. At each Balance Sheet date, foreign currency monetary items are translated using the average of exchange rates prevailing on the balance sheet date and non-monetary items are translated using the exchange rate prevailing on the date of transaction or on the date when the fair value of such items are determined.

iii. Losses or gains relating to the loans/deferred credits utilized for acquisition of fixed assets are adjusted to the carrying cost of the relevant assets. All the other exchange differences arising on the settlement of monetary items or on reporting of monetary items at the rates different from those at which they were initially recorded during the period, or reported in previous financial statements are recognized as income or expenses in the period in which they arise.

p) SITE RESTORATION:

At the end of the producing life of a field, costs are incurred to restore the site back to its original position. The Company estimates, on a current basis, the cost (net of realisation) of site restoration and recognizes it as a liability and provides for the same. Such estimated cost of site restoration form part of the intangible assets under development or cost of producing properties, as the case may be, of the related asset. Any change in the value of the estimated liability is reflected as an adjustment to the provision and the corresponding intangible assets under development or producing property.


Mar 31, 2012

A) BASIS OF PREPARATION:

The financial statements of Interlink Petroleum Limited (the Company) are prepared under historical cost convention and on accrual basis in accordance with Generally Accepted accounting Principles in India ("GAAP"). GAAP comprises mandatory accounting standards and applicable guidance notes issued by The Institute of Chartered Accountants of India as specified in the Companies (Accounting Standards) Rules, 2006 (as amended), the relevant provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. The accounting policies, in all material respects, have been consistently applied by the Company and are consistent with those used in the previous year.

b) PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS:

During the year ended 31st March, 2012 the revised Schedule VI notified under the Companies Act,1956, has become applicable to the Company, for preparation and presentation of its financial statements. Except accounting for dividend on investments in subsidiary companies, the adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

c) USE OF ESTIMATES:

The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Though management believes that the estimates used are prudent and reasonable, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

d) FIXED ASSETS, DEPRECIATION AND AMORTIZATION:

i. Tangible assets are stated at cost, less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing and other financing costs including foreign exchange variation relating to acquisition of fixed assets, which take a substantial period of time to get ready for its intended use, are also included to the extent they relate to the period till such assets are ready to be put to use.

ii. Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization. Cost of intangible assets includes Borrowing and other financing costs including foreign exchange variation that are attributable to development of such intangible assets.

iii. Depreciation on fixed assets is provided in accordance with the rates as specified in Schedule XIV to the Companies Act, 1956, on straight-line method, to at least 95% of the cost of the assets except in respect of assets of value less than Rs. 5000 each, which are depreciated fully in the year of acquisition. Depreciation is charged pro-rata on monthly basis on all other assets from/up to the month of capitalization/sale, disposal and/or dismantle. Depreciation relating to assets attributable directly to qualifying asset including prospecting, exploration and development of oil and gas are capitalized as a part of Intangible Assets Under Development or Producing Properties, as the case may be.

e) VALUATION OF INVENTORIES:

i. Natural Gas is extracted from field as and when supply of gas is to be made. So there is no storage of Gas available and hence there is no stock of natural gas. ii. The Closing Stock of Crude Oil in saleable condition is valued at Cost or Net Realizable Value less estimated selling costs, whichever is lower. iii. Stores and spares are valued at lower of cost or net realizable value.

f) PRELIMINARY EXPENSES:

Preliminary expenses in the nature of expenses for incorporation of the Company, public issue expenses and like expenses; are amortized over a period of five years.

g) EXPLORATION AND DEVELOPMENT COSTS:

i. The Company is following "Full Cost Method" for allocating all costs incurred in prospecting, exploring and development of oil and gas including related finance cost and depreciation, which are accumulated, as per the guidance note on Accounting for Oil and Gas producing activities issued by the institute of Chartered Accountants of India.

ii. Exploration Costs involved in drilling and equipping exploratory and appraisal wells and cost of drilling exploratory type stratigraphic test wells are initially accounted for under the head Capital Work In Progress/Intangible Assets Under Development and are capitalized as Producing Properties when ready to commence commercial production.

iii. All Costs relating to development wells, development type stratigraphic test wells and service wells are initially accounted for under the head Capital Work In Progress/Intangible Assets Under Development and are capitalized as Producing Properties when ready to commence commercial production.

iv. Producing Properties are depleted using 'Unit of Production' method based on estimated proved developed reserves. Any changes in Reserves/Cost are dealt with prospectively. Hydrocarbon reserves are estimated by the Company following the International Reservoir Engineering Principles and are approved by the appropriate authority(s).

h) IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS:

At each Balance Sheet date, the Company reviews the carrying amount of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss and provide for impairment. Where the impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior accounting periods.

i) INVESTMENTS:

Current investments are carried at the lower of cost and quoted/fair value. Long- term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

J) RECOGNITION OF INCOME AND EXPENDITURE:

i. Revenue from sale of products is recognized on transfer of custody to customers. Any difference as of the reporting date between the entitlement quantities minus the quantities sold in respect of crude oil (including condensate) and gas, if positive is treated as inventory and, if negative, is adjusted to revenue by recording the same as liability. ii. Sales are inclusive of all statutory levies and taxes that are paid/payable to the government, based on the provisions under various laws and agreements governing Company's activities in the respective field/project. iii. Any payment received in respect of short lifted gas quantity for which an obligation exists to supply such gas in subsequent periods is recognized as Deferred Revenue in the year of receipt. The same is recognized as revenue in the year in which such gas is actually supplied for the quantity supplied or in the year in which the obligation to supply such gas ceases, whichever is earlier. iv. Revenue in respect of interest on delayed realizations is recognized when there is reasonable certainty regarding ultimate collection. v. All income and expenditure items that have material bearing on the financial statements are recognized on accrual basis. However insurance claims are not accounted on accrual basis but are accounted for as and when received.

k) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made based on technical evaluation and past experience. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjust to reflect the current management estimate. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

l) ACCOUNTING FOR TAXATION:

Income taxes are accounted for in accordance with Accounting Standard 22 AS "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. Tax expense comprises both current and deferred tax Current tax is measured at the amount expected to be paid to/recovered from the tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversing in one or more subsequent periods and are measured using the relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets to the extent they have become reasonably certain or virtually certain of realization, as the case may be.

m) BORROWING COSTS :

Borrowing costs include interest and commitment charges on borrowings, amortisation of costs incurred in connection with the arrangement of borrowings, exchange differences to the extent they are considered a substitute to the interest cost and finance charges under leases.

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

n) ACCOUNTING FOR EMPLOYEE BENEFITS:

i. Short term employee benefits are recognized in the year during which the services have been rendered.

ii. The Company has no policy for leave encashment.

iii. Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation under group gratuity scheme of Life Insurance Corporation of India at the end of each financial year.

iv. All other post retirement benefits to employees are accounted on cash basis.

o) FOREIGN CURRENCY TRANSACTIONS:

i. Foreign currency transactions on initial recognition in the reporting currency are accounted for at the exchange rates prevailing on the date of trans action.

ii. At each Balance Sheet date, foreign currency monetary items are translated using the average of exchange rates prevailing on the balance sheet date and non-monetary items are translated using the exchange rate prevailing on the date of transaction or on the date when the fair value of such items are determined.

iii. Losses or gains relating to the loans/deferred credits utilized for acquisition of fixed assets are adjusted to the carrying cost of the relevant assets. All the other exchange differences arising on the settlement of monetary items or on reporting of monetary items at the rates different from those at which they were initially recorded during the period, or reported in previous financial statements are recognized as income or expenses in the period in which they arise.

p) SITE RESTORATION:

At the end of the producing life of a field, costs are incurred to restore the site back to its original position. The Company estimates, on a current basis, the cost (net of realisation) of site restoration and recognizes it as a liability and provides for the same. Such estimated cost of site restoration form part of the intangible assets under development or cost of producing properties, as the case may be, of the related asset. Any change in the value of the estimated liability is reflected as an adjustment to the provision and the corresponding intangible assets under development or producing property.


Mar 31, 2011

A) BASIS OF PREPARATION:

i. The financial statements are prepared under historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles in India and in accordance with the mandatory accounting standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) USE OF ESTIMATES:

i. The presentation of financial statements requires the management to make estimates and assumptions 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. Differences between the actual results and estimates are recognized in the period in which the results are known /materialized.

c) FIXED ASSETS AND DEPRECIATION:

i. Fixed Assets are stated at cost, less accumulated depreciation, including financing costs till commencement of commercial production. Net changes on foreign exchange contracts and adjustment arising from exchange rate variations attributable to the fixed assets are capitalized.

ii. Depreciation on fixed assets is provided in accordance with the rates as specified in Schedule XIV to The Companies Act, 1956, on straight-line method, up to 95% of the cost of the assets except in respect of assets of value less than Rs.5000 each, which are depreciated fully in the year of acquisition. Depreciation is charged pro-rata on monthly basison all other assets from/up to the month of capitalization/sale, disposal and/or dismantle. Depreciation relating to assets attributable directly to prospecting, exploration and development of oil and gas are capitalized as a part of Capital work in progress or producing properties, as the case may be.

iii. Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization.

d) VALUATION OF INVENTORIES :

i. Natural Gas is extracted from field as and when supply of gas is to be made. So there is no storage of Natural Gas available and hence there is no stock of natural gas.

ii. The Closing Stock of Crude Oil in saleable condition is valued at Cost or Net Realizable Value less estimated selling costs, whichever is lower.

iii. Cost of raw materials, process chemicals, stores and spares, packing material, trading and other products are valued at cost or Net Realisable Value whichever is lower. Cost is determined by using the weighted average formula. Cost comprises all costs of purchases and cost incurred to bring inventories to their present location and condition.

e) PRELIMINARY EXPENSES:

i. Preliminary expenses in the nature of expenses for incorporation of the Company, Public issue expenses and like expenses; are amortized over a period of five years.

f) EXPLORATION AND DEVELOPMENT COSTS:

i. The Company is following "Full Cost Method" for allocating all costs incurred in prospecting, exploring and developing oil and gas including related interest and depreciation, which are accumulated, as per the guidance note on Accounting for Oil and Gas producing activities issued by the institute of Chartered Accountants of India.

ii. Exploration Costs involved in drilling and equipping exploratory and appraisal wells and cost of drilling exploratory type stratigraphic test wells are initially accounted for under the head Capital Work In Progress and are capitalized as producing properties when ready to commence commercial production.

iii. All Costs relating to development wells, development type stratigraphic test wells and service wells are initially accounted for under the head Capital Work In Progress and are capitalized as producing properties when ready to commence commercial production.

iv. Producing properties are depleted using 'Unit of Production' method based on estimated proved developed reserves. Any changes in Reserves and / or Cost are dealt with prospectively. Hydrocarbon reserves are estimated by the Company following the International Reservoir Engineering Principles and are approved by the appropriate authority(s).

g) IMPAIRMENT OF ASSETS:

i. At each Balance Sheet date, the Company reviews the carrying amount of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Where the impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior accounting periods.

h) INVESTMENTS:

i. Current investments are carried at the lower of cost and quoted / fair value. Long term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

i) RECOGNITION OF INCOME AND EXPENDITURE:

i. Revenue from sale of products is recognized on transfer of custody to customers. Any difference as of the reporting date between the entitlement quantities minus the quantities sold in respect of crude oil (including condensate) and gas, if positive is treated as inventory and, if negative, is adjusted to revenue by recording the same as liability.

ii. Sales are inclusive of all statutory levies and taxes that are paid/payable to the government, based on the provisions under various laws and agreements governing Company's activities in the respective field/project.

iii. Any payment received in respect of short lifted gas quantity for which an obligation exists to supply such gas in subsequent periods is recognized as Deferred Revenue in the year of receipt. The same is recognized as revenue in the year in which such gas is actually supplied for the quantity supplied or in the year in which the obligation to supply such gas ceases, whichever is earlier.

iv. Revenue in respect of interest on delayed realizations is recognized when there is reasonable certainty regarding ultimate collection.

v. All income and expenditure items that have material bearing on the financial statements are recognized on accrual basis. However insurance claims are not accounted on accrual basis but are accounted for as and when received.

j) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

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 liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

k) ACCOUNTING FOR TAXATION:

i. Income taxes are accounted for in accordance with Accounting Standard 22 AS "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to / recovered from the tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversing in one or more subsequent periods and are measured using the relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets to the extent they have become reasonably certain or virtually certain of realization, as the case may be.

l) BORROWING COSTS:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

m) ACCOUNTING FOR RETIREMENT BENEFIT:

The Company has no policy for Leave encashment. Gratuity is accounted for on an accrual basis. All other Post retirement benefits to employees are accounted on cash basis.

n) FOREIGN CURRENCY TRANSACTIONS:

i. Foreign Currency transactions on initial recognition in the reporting currency are accounted for at the exchange rates prevailing on the date of transaction.

ii. At each Balance sheet date, foreign currency monetary items are translated using the average of exchange rates prevailing on the balance sheet date and non-monetary items are translated using the exchange rate prevailing on the date of transaction or on the date when the fair value of such items are determined.

iii. Losses or gains relating to the loans/deferred credits utilized for acquisition of fixed assets are adjusted to the carrying cost of the relevant assets. All the other exchange differences arising on the settlement of monetary items or on reporting of monetary items at the rates different from those at which they were initially recorded during the period, or reported in previous financial statements are recognized as income or expenses in the period in which they arise.

o) SITE RESTORATION:

i. Estimated future liabilities relating to dismantling and abandoning producing well sites and facilities whose estimated producing life is expected to end during next ten years is recognized based on the estimated future expenditure determined by the management in accordance with the local conditions and requirements. The corresponding amount is added to the cost of the producing property and is depleted using unit of production method. Any change in the value of the estimated liability is reflected as an adjustment to the provision and the corresponding producing property.


Mar 31, 2010

A) BASIS OF PREPARATION:

The financial statements are prepared under historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles in India and the mandatory accounting standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) USE OF ESTIMATES:

The presentation of financial statements requires the management to make estimates and assumptions 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. Differences between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) FIXED ASSETS AND DEPRECIATION :

i. Fixed Assets are stated at cost, less accumulated depreciation including financing costs till commencement of commercial production. Net changes on foreign exchange contracts and adjustment arising from exchange rate variations attributable to the fixed assets are capitalized.

ii. Depreciation on fixed assets is provided in accordance with the rates as specified in Schedule XIV to The Companies Act, 1956, on straight-line method, up to 95% of the cost of the assets. Depreciation is charged pro-rata on monthly basis on assets from/up to the month of capitalization/sale, disposal and/or dismantle. Depreciation relating to assets attributable directly to prospecting, exploration and development of oil and gas are capitalized as a part of Capital work in progress or producing properties, as the case may be.

iii. Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization

d) VALUATION OF INVENTORIES :

i. Natural Gas is extracted from field as and when supply of gas is to be made. Hence neither there is any storage of Natural Gas nor any stock of the same.

ii. The Closing Stock of Crude Oil in saleable condition is valued at Cost or Net Realizable Value less estimated selling costs, whichever is lower.

iii. Stores and spares are valued at lower of cost or net realizable value.

e) PRELIMINARY EXPENSES:

Preliminary expenses, in the nature of expenses for incorporation of the Company, Public issue expenses and like expenses; are amortized over a period of five years.

f) EXPLORATION AND DEVELOPMENT COSTS:

i. The Company is following Full Cost Method for allocating all costs incurred in prospecting, exploring and developing oil and gas including related interest and depreciation, which are accumulated, as per the guidance note on Accounting for Oil and Gas producing activities issued by the institute of Chartered Accountants of India.

ii. Exploration Costs involved in drilling and equipping exploratory and appraisal wells and cost of drilling exploratory type stratigraphic test wells are initially accounted for under the head Capital Work In Progress and are capitalized as producing properties when ready to commence commercial production.

iii. All Costs relating to development wells, development type stratigraphic test wells and service wells are initially accounted for under the head Capital Work In Progress and are capitalized as producing properties when ready to commence commercial production.

iv. Producing properties are depleted using Unit of Production method based on estimated proved developed reserves. Any changes in Reserves and / or Cost are dealt with prospectively. Hydrocarbon reserves are estimated by the Company following the International Reservoir Engineering Principles and are approved by the appropriate authority(s).

g) IMPAIRMENT OF ASSETS:

At each Balance Sheet date, the Company reviews the carrying amount of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Where the impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior accounting periods.

h) INVESTMENTS:

Current investments are carried at the lower of cost and quoted / fair value. Long term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

i) RECOGNITION OF INCOME AND EXPENDITURE:

(i) Revenue from sale of products is recognized on transfer of custody to customers. Any difference as of the reporting date between the entitlement quantities minus the quantities sold in respect of crude oil (including condensate) and gas, if positive, is treated as inventory and, if negative, is adjusted to revenue by recording the same as liability.

(ii) Sales are inclusive of all statutory levies and taxes that are paid/payable to the government, based on the provisions under various laws and agreements governing Companys activities in the respective field/project.

(iii) Any payment received in respect of short lifted gas quantity for which an obligation exists to supply such gas in subsequent periods is recognized as Deferred Revenue in the year of receipt. The same is recognized as revenue in the year in which such gas is actually supplied for the quantity supplied or in the year in which the obligation to supply such gas ceases, whichever is earlier.

(iv) Revenue in respect of interest on delayed realizations is recognized when there is reasonable certainty regarding ultimate collection.

(v) All income and expenditure items that have material bearing on the financial statements are recognized on accrual basis. However insurance claims are not accounted on accrual basis but are accounted for as and when received.

j) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

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 liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

k) ACCOUNTING FOR TAXATION:

Income taxes are accounted for in accordance with Accounting Standard 22 AS Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India. Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to / recovered from the tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversing in one or more subsequent periods and are measured using the relevant enacted tax rates. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets to the extent they have become reasonably certain or virtually certain of realization, as the case may be.

l) BORROWING COSTS :

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

m) ACCOUNTING FOR RETIREMENT BENEFIT:

The Company has no policy for Leave encashment. Gratuity is accounted for on an accrual basis. All other Post retirement benefits to employees are accounted on cash basis.

n) FOREIGN CURRENCY TRANSACTIONS:

(i) Foreign Currency transactions on initial recognition in the reporting currency are accounted for at the exchange rates prevailing on the date of transaction.

(ii) At each Balance sheet date, foreign currency monetary items are translated using the average of exchange rates prevailing on the balance sheet date and non-monetary items are translated using the exchange rate prevailing on the date of transaction or on the date when the fair value of such items are determined.

(iii) Losses or gains relating to the loans/deferred credits utilized for acquisition of fixed assets are adjusted to the carrying cost of the relevant assets. All the other exchange differences arising on the settlement of monetary items or on reporting of monetary items at the rates different from those at which they were initially recorded during the period, or reported in previous financial statements are recognized as income or expenses in the period in which they arise.

o) SITE RESTORATION:

Estimated future liabilities relating to dismantling and abandoning of producing well sites and facilities, whose estimated producing life is expected to end during next ten years, is recognized based on the estimated future expenditure determined by the management in accordance with the local conditions and requirements. The corresponding amount is added to the cost of the producing property and is depleted using unit of production method. Any change in the value of the estimated liability is reflected as an adjustment to the provision and the corresponding producing property.

 
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