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Accounting Policies of Petronet LNG Ltd. Company

Mar 31, 2016

Company Overview

Petronet LNG Limited referred to as "PLL" or "the Company" was formed by Bharat Petroleum Corporation Limited (BPCL), GAIL (India) Limited (GAIL), Indian Oil Corporation Limited (IOCL) and Oil and Natural Gas Corporation Limited (ONGC) primarily to develop, design, construct, own and operate a Liquefied Natural Gas (LNG) import and regasification terminals in India. PLL was incorporated on April 2, 1998 under the Companies Act, 1956 and received certificate of commencement of business on June 1, 1998. The Company is involved in the business of import and regasification of LNG and supply to BPCL, GAIL, IOCL and others. Presently, the Company owns and operates LNG Regasification Terminal with name plate capacity of 10 MMTPA at Dahej, in the State of Gujarat. The Company has also commissioned another LNG terminal with name plate capacity of 5 MMTPA at Kochi, in the State of Kerala.

1.01 Basis of preparation of financial statements

The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2014 issued by the Central Government and as per relevant provisions of the Companies Act, 2013 read together with Paragraph 7 of The Companies (Accounts) Rules, 2014. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

1.02 Use of Estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise.

1.03 Fixed Assets, Intangible Assets and Capital Work-in-progress

Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date when the assets are ready to use and share issue expenses related to funds raised for financing the project. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed. Intangible Assets are stated at cost less accumulated amortization and impairment loss, if any.

1.04 Depreciation / Amortisation

Tangible Assets -

a) Depreciation on fixed assets is calculated on Straight Line Method (SLM) using the rates arrived at based on the estimated useful lives given in Schedule II of the Companies Act, 2013. Useful life of the assets, required to be transferred under Concession Agreement have been restricted up to the end of Concession Agreement.

b) Cost of leasehold land is amortized over the lease period.

Intangible Assets:

Intangible assets are amortized on straight line method basis over the estimated useful life. Estimated useful life of the Software/Licenses is considered as 3 years.

1.05 Investments

Trade investments are the investments made to enhance the Company''s business interests. Investments are either classified as current or long term based on Management''s intention at the time of purchase. Current investments are carried at the lower of cost and fair value of each investment individually. Overseas investments are recorded at the exchange rate prevailing on the date of investment. Long term investments are carried at cost after deducting provision, where the decline in value is considered as other than temporary in nature.

1.06 Inventories

Raw material, stores and spares are valued at lower of cost or net realizable value. Cost of stores and spares is determined on weighted average cost. Cost of raw material is determined on FIFO basis for respective categories of supplies.

1.07 Sale / Revenue Recognition

Revenue is primarily derived from Sale of RLNG and is net of sales tax. Revenue from sales is recognised at the point of dispatch, when risk and reward of ownership stand transferred to the customers.

Services are net of service tax. Revenue from services is recognised when services are rendered and related costs are incurred.

Interest income is recognised on time proportion basis.

Dividend income is recognised, when the right to receive the dividend is established.

1.08 Foreign Currency Transactions

(a) Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction.

(b) Monetary items denominated in foreign currencies (such as cash, receivables, payables etc.) outstanding at the year end, are translated at exchange rates applicable on year end date.

(c) Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction and carried at cost.

(d) Any gains or losses arising due to exchange differences arising on translation or settlement are accounted for in the Statement of Profit and Loss.

(e) In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the life of the contract.

1.09 Employee Benefits

Provision for leave encashment is made on the basis of actuarial valuation at the end of the year. Actuarial gains or losses are recognized in the Statement of Profit and Loss. Contribution to Provident Fund and Superannuation is accounted for on accrual basis. Liabilities with respect to gratuity are determined by actuarial valuation as of the balance sheet date, based upon which the Company contributes the ascertained liabilities to the insurer (LIC).

1.10 Borrowing Costs

Borrowing cost (net of any income on the temporary investments of those borrowings) attributable to acquisition, construction or production of qualifying assets are capitalised as part of the cost till the assets are ready for use. Other borrowing costs are recognized as expense in the period in which these are incurred.

1.11 Taxes on Income

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates.

Deferred tax assets are recognized, only if there is reasonable / virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

1.12 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 to Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.

1.13 Impairment of Assets

An asset is treated as impaired, when the carrying cost of asset exceeds its recoverable value. An impairment loss, if any, is charged to Statement of Profit and Loss, in the year in which an asset is identified as impaired.

27. Contingent Liability and commitment

A. Commitments

a) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs. 40,497.02 lac (as on 31st March 2015 Rs. 1,08,476 lac).

b) The Company has entered into following long term LNG purchase agreements:

a. 8.5 MMTPA with RasGas Company Limited, Qatar for a period upto April 2028.

b. 1.44 MMTPA with Mobil Australia Resources Company PTY Ltd, likely to commence supply by the end of 2016 for a period upto 2035.

Since the Company has entered into materially back to back sale agreements for the same, there is no foreseeable loss on these agreements as on the balance sheet date. The Company has issued Standby Letter of Credit of Rs. 5,91,981 lac (Rs. 5,12,667 lac as on 31st March 2015) to RasGas Company Limited against Long Term Purchase Agreement.

B. Contingent Liability

a) The Collector of Electricity Duty, Gandhinagar (Gujarat) had issued notices classifying the business activities of the Company as "Storage(HTP-NA)" instead of "Industrial Undertaking (HTP I)" and hence levied Electricity Duty @ 45% instead of 20% of the consumption charges and charging 70 paise per unit on the power generated by the Company for its own consumption. The Company has challenged the legality and validity of the notices by way of writ petitions before the High Court of Gujarat. Meanwhile, the Company continues to make payment of Electricity Duty @15%(Revised rate of HTP-I) on the basis of the stay order granted by the High Court. The High Court vide order dated 1.7.2014 has set aside the notice and quashed the supplementary bill/demand notice and remanded the case back to the Collector of Electricity Duty, Gandhinagar to decide the nature of undertaking of the Company. The Company has made its oral and written submissions before the Collector of Electricity Duty, Gandhinagar and the order is awaited. The total contingent liability till March, 2016 calculated on the differential payable (25% (Revised rates for "HTP-II A") as classified by GEB and what is actually paid by the Company on "HTP-I" rate i.e. 15%) is Rs. 2,668 lac (as on 31st March 2015 Rs. 2,251 lac).

b) The Company has filed a writ petition before the Gujarat High Court challenging the legality and correctness of the notice dated April 1, 2006 from the Collector of Stamps, Bharuch stating that pursuant to the amendment to Section 24 of the Bombay Stamp Act, 1958, the Company is required to pay stamp duty @ Re.1 per Rs. 1000/- or part thereof of the value mentioned in the Delivery Order of the goods imported through ports in Gujarat. The Hon''ble High Court of Gujarat vide its order dated February 24, 2010 has quashed the notice issued by the Stamp Authorities. Stamp authorities have filed Special Leave Petition (SLP) in Supreme Court against the same, the last hearing of the same was done on January 23, 2012 and the case is pending as on 31st March 2016. The contingent liability from the effective date of amendment i.e. April 1, 2006 till March 31, 2016 on the CIF value is estimated to be Rs. 17,421 lac. (as on 31st March 2015 Rs. 15,258 lac).

c) The Company has received refund of Rs. 112 lac, Rs. 284 lac and Rs. 346 lac from Customs department vide CESTAT order dated November 7, 2013, September 9, 2011 and May 31, 2010 respectively, mainly pertaining to custom duty on short landing of LNG. The Custom Authorities have filed appeal against the order of the CESTAT with the Hon''ble High court of Gujarat and the outcome of the case is pending as on March 31, 2016.

d) Taxes and duties recoverable (Note 13) includes service tax of Rs. 4,005 lac (as on 31st March 2015 Rs. 4,005 lac) on vessel hire charges (including interest of Rs. 2,97 lac) paid under protest for the period from May 16, 2008 to September 30, 2009 under Section 65(105)(zzzzj) of the Finance Act, 1994 (as amended) - "Supply of Tangible Goods for Use". The Commissioner of the Service Tax, vide Order dated March 6, 2012 has confirmed the demand. Against the Order of the Commissioner, the Company has filed an appeal before CESTAT and CESTAT has passed an order in favour of the Company vide order no. ST/A/58706/2013-CU(DB) on October 24, 2013. The department has filed an appeal against the CESTAT order before the Supreme Court and stay order has been issued by the court dated 08th January 2016. The case is pending before Supreme Court as on 31st March 2016.

e) The Company has cases pending with Service Tax Department at various levels, pertaining to applicability of service tax on charges paid for External Commercial Borrowings taken from IFC, ADB & Proparco. Amount involved in such cases is Rs. 913 lac (as on 31st March 2015 Rs. 479 lac).

f) The service tax department has issued show cause notice dated April 2016 claiming service tax amounting Rs. 1,928 lac for period upto March 2015 (including earlier demand of Rs. 1,416 lac for period upto June 2014 vide notice dated 10th Oct 2014) on the boil off quantity of LNG during regasification process for the period July 2014 to March 2015. The Company had replied against the notice and the matter is pending for adjudication.

g) The Company has filed Service Tax Refund Application for services availed in the Special Economic Zone for the LNG Terminal at Kochi, amounting to Rs. 1,924 lac (as on 31st March 2015 Rs. 1,919 lac), out of which Rs. 774 lac (as on 31st March 2015 Rs. 774 lac) is before the CESTAT level and Rs. 1,150 lac (as on 31st March 2015 Rs. 1,145 lac) is at Assistant Commissioner level.

h) The sales tax department has issued show cause notice dated 11th February 2016 claiming sales tax amounting to Rs. 7,985 lac against the high seas sales transaction made by the company. The reply against the show cause notice is submitted by the Company and the matter is pending for adjudication.

i) There are certain claims of Rs. 18,362 lac (as on 31st March 2015 Rs. 18,362 lac) made by a Contractor against capital works for which the Company has also made certain counter claims. As per the terms of the contract, Independent expert''s opinion is being sought and pending the settlement of liability, claims are not determinable and therefore no provision has been made in the books.

j) Dahej Second Jetty Topside contract awarded to a consortium of two parties was terminated by the Company in July, 2012 because of the failure of the contractor to carry out the work as per schedule. Contractor invoked arbitration and claimed Rs. 15,409 lac (as on 31st March 2015 Rs. 15,156 lac). PLL has also filed counter claim of Rs. 11,522 lac (as on 31st March 2015 Rs. 11,671 lac) as per the contract. Pending the outcome of arbitration proceedings, liability against the claims, if any, is not determinable and therefore no provision has been made in the books.

k) The Company had entered into a lease agreement with Cochin port trust (CPT) for 33.4015 hectare of land for building and operating port and regasification facility at Kochi. CPT has raised demand for enhanced lease rent (almost 10 times), by quoting the order of Tariff Authority for Major Ports (TAMP) dated 10th June 2010. CPT has invoked arbitration and claimed Rs. 4,258 lac (as on 31st March 2015 Rs. 4,258 lac). Further, an additional demand amounting to Rs. 2,000 lac (as on 31st March 2015 Rs. 2,000 lac) has been raised by CPT for usage of dredged sand by the Company. PLL has been contesting the increase in lease rent as well as dredging sand claims. As such, the matter has been referred to Arbitration. Pending the outcome of arbitration proceedings, liability against the claims, if any, is not determinable and therefore no provision has been made in the books.

l) The Company is eligible for deduction under section 80IA of the Income Tax Act, 1961, with respect to power generation and port undertakings at Dahej. The assessing officer has disallowed deduction under Section 80-IA for assessment years 2009-10, 2010-11 and 2011-12. During the year, the Company has received favourable order from CIT(A) for the abovementioned years and accordingly the Company has reversed tax provision amounting to Rs. 7,237 lac in books of accounts. The Income tax department has preferred an appeal with ITAT against this order of CIT(A), the outcome of which is pending to be received as on 31st March 2016.

m) The Assessing officer has raised income tax demand of Rs. 1,244 lac (Rs. 1,244 lac as on 31st March 2015) vide its order dated 20.03.2015 w.r.t. assessment year 2008-09. The Company has filed an appeal against the same with CIT (A), the final outcome of which is pending to be received as on 31st March 2016.


Mar 31, 2015

1.01 Basis of preparation of financial statements

The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2014 issued by the Central Government and as per relevant provisions of the Companies Act, 2013. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

1.02 Use of Estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise.

1.03 Fixed Assets, Intangible Assets and Capital Work-in-progress

Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use, including borrowing cost and incidental expenditure during construction incurred upto the date when the assets are ready to use and share issue expenses related to funds raised for financing the project. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed. Intangible Assets are stated at cost less accumulated amortization and impairment loss, if any.

1.04 Depreciation / Amortisation Tangible Assets -

(a) Depreciation on fixed asset is calculated on Straight Line Method (SLM) using the rates arrived at based on the estimated useful lives given in Schedule II of the Companies Act, 2013. Useful life of the assets, required to be transferred under Concession Agreement have been restricted up to the end of Concession Agreement.

(b) Cost of leasehold land is amortized over the lease period.

Intangible Assets-

(c) Intangible assets are amortized on straight line method basis over the estimated useful life. Estimated useful life of the Software/Licenses are considered as 3 years.

1.05 Investments

Trade investments are the investments made to enhance the Company's business interests. Investments are either classified as current or long term, based on Management's intention at the time of purchase. Current investments are carried at the lower of cost and fair value of each investment individually. Overseas investments are recorded at the exchange rate prevailing on the date of investment. Long term investments are carried at cost after deducting provision, where the decline in value is considered as other than temporary in nature.

1.06 Inventories

Raw material, stores and spares are valued at lower of cost or net realizable value. Cost of stores and spares is determined on weighted average cost. Cost of raw material is determined on FIFO basis for respective categories of supplies.

1.07 Sale / Revenue Recognition

Revenue is primarily derived from Sale of RLNG and is net of sales tax. Revenue from sales is recognised at the point of dispatch, when risk and reward of ownership stand transferred to the customers.

Services are net of service tax. Revenue from services is recognised when services are rendered and related costs are incurred.

Interest income is recognised on time proportion basis.

Dividend income is recognised, when the right to receive the dividend is established.

1.08 Foreign Currency Transactions

(a) Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction.

(b) Monetary items denominated in foreign currencies (such as cash, receivables, payables etc.) outstanding at the year end, are translated at exchange rates applicable on year end date.

(c) Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction and carried at cost.

(d) Any gains or losses arising due to exchange differences arising on translation or settlement are accounted for in the Statement of Profit and Loss.

(e) In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the life of the contract.

1.09 Employee Benefits

Provision for leave encashment is made on the basis of actuarial valuation at the end of the year. Actuarial gains or losses are recognized in the Statement of Profit and Loss. Contribution to Provident Fund and Superannuation is accounted for on accrual basis. Liabilities with respects to gratuity are determined by actuarial valuation as on the balance date, based upon which the Company contributes the ascertained liabilities to the insurer (LIC).

1.10 Borrowing Costs

Borrowing cost (net of any income on the temporary investments of those borrowings) attributable to acquisition, construction or production of qualifying assets are capitalised as part of the cost till the assets are ready for use. Other borrowing costs are recognized as expense in the period in which these are incurred.

1.11 Taxes on Income

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates.

Deferred tax assets are recognized, only if there is reasonable / virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

1.12 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 to Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.

1.13 Impairment of Assets

An asset is treated as impaired, when the carrying cost of asset exceeds its recoverable value. An impairment loss, if any, is charged to Statement of Profit and Loss, in the year in which an asset is identified as impaired.




Mar 31, 2014

1.1 Basis of preparation of financial statements

The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards and relevant provisions of the Companies Act, 1956. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

1.2 Use of Estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise.

1.3 Fixed Assets, Intangible Assets and Capital Work-in-progress

Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date when the assets are ready to use and share issue expenses related to funds raised for financing the project. Capital work in progress includes cost of assets at sites, construction expenditure, advances made for acquisition of capital assets and interest on the funds deployed. Intangible Assets are stated at cost less accumulated amortization and impairment loss, if any.

Estimated amounts of contracts remaining to be executed exceeding Rs. one lakh in each case are disclosed in the notes to accounts.

1.4 Depreciation / Amortisation

Tangible Assets -

(a) Cost of leasehold land is amortized over the lease period.

(b) Depreciation on fixed assets other than those costing upto Rs. 5,000 is provided on straight line method in accordance with the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

(c) Assets costing upto Rs. 5000/- are depreciated fully in the year of purchase / capitalization.

Intangible Assets -

(d) Software / Licenses are amortised over 3 years on Straight Line Method.

1.5 Investments

Trade investments are the investments made to enhance the Company''s business interests. Investments are either classified as current or long term based on Management''s intention at the time of purchase. Current investments are carried at the lower of cost and fair value of each investment individually. Overseas investments are recorded at the exchange rate prevailing on the date of investment. Long term investments are carried at cost after deducting provision, where the decline in value is considered as other than temporary in nature.

1.6 Inventories

Raw material, stores and spares are valued at lower of cost or net realizable value. Cost of stores and spares is determined on weighted average cost. Cost of raw material is determined on FIFO basis for respective categories of supplies.

1.7 Sale / Revenue Recognition

Revenue is primarily derived from Sale of RLNG and is net of sales tax. Revenue from sales is recognised at the point of dispatch when risk and reward of ownership stand transferred to the customers.

Services are net of service tax. Revenue from services is recognised when services are rendered and related costs are incurred.

Interest income is recognised on time proportion basis.

Dividend income is recognised, when the right to receive the dividend is established.

1.8 Foreign Currency Transactions

(a) Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction.

(b) Monetary items denominated in foreign currencies (such as cash, receivables, payables etc.) outstanding at the year end, are translated at exchange rates applicable on year end date.

(c) Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction and carried at cost.

(d) Any gains or losses arising due to exchange differences arising on translation or settlement are accounted for in the Statement of Profit and Loss.

(e) In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the life of the contract.

1.09 Employee Benefits

Provision for gratuity and leave encashment is made on the basis of actuarial valuation at the end of the year. Actuarial gains or losses are recognized in the Statement of Profit and Loss. Contribution to Provident Fund and Superannuation is accounted for on accrual basis.

1.10 Borrowing Costs

Borrowing cost (net of any income on the temporary investments of those borrowings) attributable to acquisition, construction or production of qualifying assets are capitalised as part of the cost till the assets are ready for use. Other borrowing costs are recognized as expense in the period in which these are incurred.

1.11 Taxes on Income

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates.

Deferred tax assets are recognized, only if there is reasonable / virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

1.12 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 to Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.

1.13 Impairment of Assets

An asset is treated as impaired, when the carrying cost of asset exceeds its recoverable value. An impairment loss, if any, is charged to Statement of Profit and Loss, in the year in which an asset is identified as impaired.

2 Share Capital

The Company declares and pays dividend in Indian Rs.. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2014, the amount of dividend per share recognized as distribution to equity shareholders is Rs. 2.00/- (previous year Rs. 2.50/-). The total dividend appropriation for the year ended March 31, 2014 amounted to Rs. 15,000 lac (previous year Rs. 18,750 lac) including corporate dividend tax of Rs. 2,549 lac (previous year Rs. 3,187 lac).

4 Long-Term Borrowings

2 Term Loans are secured by first ranking mortgage and first charge on pari passu basis on all movable and immovable properties, both present and future including current assets except on trade receivables on which second charge is created on pari passu basis.

4 In respect of external commercial borrowings from International Finance Corporation Washington D.C.,USA and Proparco, France, the Company has entered into derivative contracts to hedge the loan amount including interest. This has the effect of freezing the Rupee equivalent of this liability as reflected under the Borrowings. Thus there is no impact in the statement of Profit & Loss, arising out of exchange fluctuations for the duration of the loan. Consequently, there is no restatement of the loan taken in foreign currency.The interest payable in Indian Rupees on the derivative contracts is accounted for in the Statement of Profit & Loss.


Mar 31, 2013

1.01 Basis of preparation of financial statements

The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards and relevant provisions of the Companies Act, 1956. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

1.02 Use of Estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise.

1.03 Fixed Assets, Intangible Assets and Capital Work-in-progress

Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date when the assets are ready to use and share issue expenses related to funds raised for financing the project. Capital work in progress includes cost of assets at sites, construction expenditure, advances made for acquisition of capital assets and interest on the funds deployed. Intangible Assets are stated at cost less accumulated amortization and impairment loss, if any.

Estimated amount of contracts remaining to be executed exceeding rupees one lakh in each case are disclosed in the notes to accounts.

1.04 Depreciation / Amortisation Tangible Assets -

(a) Cost of leasehold land is amortized over the lease period.

(b) Depreciation on fixed assets other than those costing upto Rs. 5,000 is provided on straight line method in accordance with the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

(c) Assets costing upto Rs. 5000/- are depreciated fully in the year of purchase / capitalization.

Intangible Assets -

(d) Software / Licenses are amortised over 3 years on Straight Line Method.

1.05 Investments

Trade investments are the investments made to enhance the Company''s business interests. Investments are either classified as current or long term based on Management''s intention at the time of purchase. Current investments are carried at the lower of cost and fair value of each investment individually. Overseas investments are recorded at the exchange rate prevailing on the date of investment. Long term investments are carried at cost after deducting provision, where the decline in value is considered as other than temporary in nature.

1.06 Inventories

Raw material, stores and spares are valued at lower of cost or net realizable value. Cost of stores and spares is determined on weighted average cost. Cost of raw material is determined on FIFO basis for respective categories of supplies.

1.07 Sale / Revenue Recognition

Revenue is primarily derived from Sale of RLNG and are net of sales tax. Revenue from sales is recognised at the point of dispatch when risk and reward of ownership stand transferred to the customers.

Services are net of service tax. Revenue from services is recognised when services are rendered and related costs are incurred.

Interest income is recognised on time proportion basis.

Dividend income is recognised, when the right to receive the dividend is established.

1.08 Foreign Currency Transactions

(a) Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction.

(b) Monetary items denominated in foreign currencies (such as cash, receivables, payables etc.) outstanding at the year end, are translated at exchange rates applicable on year end date.

(c) Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction and carried at cost.

(d) Any gains or losses arising due to exchange differences arising on translation or settlement are accounted for in the Statement of Profit and Loss.

(e) In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the life of the contract.

1.09 Employee Benefits

Provision for gratuity and leave encashment is made on the basis of actuarial valuation at the end of the year. Actuarial gains or losses are recognized in the Statement of Profit and Loss.

Contribution to Provident Fund and Superannuation is accounted for on accrual basis.

1.10 Borrowing Costs

Borrowing cost (net of any income on the temporary investments of those borrowings) attributable to acquisition, construction or production of qualifying assets are capitalised as part of the cost till the assets are ready for use. Other borrowing costs are recognized as expense in the period in which these are incurred.

1.11 Taxes on Income

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates.

Deferred tax assets are recognized, only if there is reasonable / virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

1.12 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 to Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.

1.13 Impairment of Assets

An asset is treated as impaired, when the carrying cost of asset exceeds its recoverable value. An impairment loss, if any, is charged to Statement of Profit and Loss, in the year in which an asset is identified as impaired.


Mar 31, 2012

1.01 Basis of preparation of financial statements

The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards and relevant provisions of the Companies Act, 1956. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

1.02 Use of Estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

1.03 Fixed Assets, Intangible Assets and Capital Work-in-progress

Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date when the assets are ready to use and share issue expenses related to funds raised for financing the project. Capital work in progress includes cost of assets at sites, construction expenditure, advances made for acquisition of capital assets and interest on the funds deployed. Intangible Assets are stated at cost less accumulated amortization and impairment loss, if any.

Estimated amount of contracts remaining to be executed exceeding rupees one lakh in each case are disclosed in the notes to accounts.

1.04 Depreciation / Amortisation Tangible Assets -

(a) Cost of leasehold land is amortized over the lease period.

(b) Depreciation on fixed assets other than those costing upto Rs. 5,000 provided on straight line method in accordance with the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

(c) Assets costing upto Rs. 5000/- are depreciated fully in the year of purchase/capitalization.

Intangible Assets -

(d) Software/Licenses are amortised over 3 years on Straight Line Method.

1.05 Investments

Trade investments are the investments made to enhance the Company's business interests. Investments are either classified as current or long term based on Management's intention at the time of purchase. Current investments are carried at the lower of cost and fair value of each investment individually. Overseas investments are recorded at the exchange rate prevailing on the date of investment. Long term investments are carried at cost after deducting provision, where the decline in value is considered as other than temporary in nature.

1.06 Inventories

Raw material, stores and spares are valued at lower of cost or net realizable value. Cost is determined on weighted average cost.

1.07 Sale/Revenue Recognition

Revenue is primarily derived from Sale of RLNG and are net of sales tax. Revenue from sales is recognised at the point of dispatch when risk and reward of ownership stand transferred to the customers.

Services are net of service tax. Revenue from services is recognised when services are rendered and related costs are incurred.

Interest income is recognised on time proportion basis.

Dividend income is recognised, when the right to receive the dividend is established.

1.08 Foreign Currency Transactions

a) Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction.

b) Monetary items denominated in foreign currencies (such as cash, receivables, payables etc.) outstanding at the year end, are translated at exchange rates applicable on year end date.

c) Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction and carried at cost.

d) Any gains or losses arising due to exchange differences arising on translation or settlement are accounted for in the Statement of Profit and Loss.

e) In case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the life of the contract.

1.09 Employee Benefits

a) Provision for gratuity and leave encashment is made on the basis of actuarial valuation at the end of the year. Actuarial gains or losses are recognized in the Statement of Profit and Loss.

b) Contribution to Provident Fund and Superannuation is accounted for on accrual basis.

1.10 Borrowing Costs

Borrowing cost (net of any income on the temporary investments of those borrowings) attributable to acquisition, construction or production of qualifying assets are capitalised as part of the cost till the assets are ready for use. Other borrowing costs are recognized as expense in the period in which these are incurred.

1.11 Taxes on Income

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates.

Deferred tax assets are recognized, only if there is reasonable/virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

1.12 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 to Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.

1.13 Impairment of Assets

An asset is treated as impaired; when the carrying cost of asset exceeds its recoverable value. An impairment loss, if any, is charged to Statement of Profit and Loss, in the year in which an asset is identified as impaired.

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2012, the amount of dividend per share recognized as distribution to equity shareholders is Rs. 2.50/- (previous year Rs. 2.00/-). The total dividend appropriation for the year ended March 31, 2012 amounted to Rs. 18,750 lacs (previous year Rs. 17,433 lacs) including coporate dividend tax of Rs. 3,042 lacs (previous year Rs. 2,433 lacs)


Mar 31, 2011

1. Basis of Accounting

The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards and relevant provisions of the Companies Act, 1956

2. Use of Estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise.

3. Fixed Assets

(a) Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date of ready to use and share issue expenses related to funds raised for financing the project.

(b) Capital Work in Progress

Capital work in progress includes cost of assets at sites, construction expenditure, advances made for acquisition of capital assets and interest on the funds deployed.

(c) Capital Commitments

Estimated amount of contracts remaining to be executed exceeding rupees one lakh in each case are disclosed in the notes to accounts.

4. Depreciation / Amortisation

Tangible Assets -

(a) Cost of leasehold land is amortized over the lease period.

(b) Depreciation on fixed assets other than those costing upto Rs. 5,000 is provided on straight line method in accordance with the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

(c) Assets costing upto Rs. 5000/- are depreciated fully in the year of purchase / capitalization. Intangible Assets -

(d) Software / Licenses are amortised over 3 years on Straight Line Method.

5. Investments

(a) Long term investments are carried at cost after deducting provision, where the decline in value is considered as other than temporary in nature.

(b) Current investments are valued at lower of cost or fair value.

6. Inventories

Raw material, stores and spares are valued at lower of cost or net realizable value. Cost is determined on weighted average cost.

7. Sale / Revenue Recognition

(a) Sales are net of sales tax. Revenue from sales is recognised at the point of dispatch when risk and reward stand transferred to the customers.

(b) Services are net of service tax. Revenue from services is recognised when services are rendered and related costs are incurred.

(c) Interest income is recognised on time proportion basis.

(d) Dividend income is recognised, when the right to receive the dividend is established.

8. Foreign Currency Transactions

(a) Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction.

(b) Monetary items denominated in foreign currencies (such as cash, receivables, payables etc.) outstanding at the year end, are translated at exchange rates applicable on year end date.

(c) Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction and carried at cost.

(d) Any gains or losses arising due to exchange differences arising on translation or settlement are accounted for in the Profit and Loss Account.

(e) In the case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the life of the contract as well as exchange difference on such contracts, i.e. difference between the exchange rate at the reporting / settlement date and the exchange rate on the date of inception / the last reporting date, is recognized as income / expense for the period.

9. Employee Benefits

(a) Provision for gratuity and leave encashment is made on the basis of actuarial valuation at the end of the year. Actuarial gains or losses are recognized to the profit and loss account.

(b) Contribution to Provident Fund and Superannuation is accounted for on accrual basis.

10. Borrowing Costs

Borrowing cost (net of any income on the temporary investments of those borrowings) attributable to acquisition, construction or production of qualifying assets are capitalised as part of the cost till the asset is ready for use. Other borrowing costs are recognized as expense in the period in which these are incurred.

11. Taxes on Income

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates.

Deferred tax assets are recognized, only if there is reasonable / virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

12. 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 to Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.

13. Impairment of Assets

An asset is treated as impaired, when the carrying cost of asset exceeds its recoverable value. An impairment loss, if any, is charged to Profit and Loss account, in the year in which an asset is identified as impaired.




Mar 31, 2010

1. Basis of Accounting

The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards and relevant provisions of the Companies Act, 1956

2. Use of Estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialise.

3. Fixed Assets

(a) Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date of ready to use and share issue expenses related to funds raised for financing the project.

(b) Capital Work in Progress

Capital work in progress includes cost of assets at sites, construction expenditure, advances made for acquisition of capital assets and interest on the funds deployed.

(c) Capital Commitments

Estimated amount of contracts remaining to be executed exceeding rupees one lakh in each case are disclosed in the notes to accounts.

4. Depreciation / Amortisation

Tangible Assets -

(a) Cost of leasehold land is amortized over the lease period.

(b) Depreciation on fixed assets other than those costing upto Rs. 5000 is provided on straight line method in accordance with the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

(c) Assets costing upto Rs. 5000/- are depreciated fully in the year of purchase / capitalization. Intangible Assets -

(d) Software/Licenses are amortised over 3 years on Straight Line Method.

5. Investments

(a) Long term investments are carried at cost after deducting provision, where the decline in value is considerd as other than temporary in nature.

(b) Current investments are valued at lower of cost or fair value.

6. Inventories

Raw Material, stores and spares are valued at lower of cost or net realizable value. Cost is determined on weighted average cost.

7. Sale / Revenue Recognition

(a) Sales are net of sales tax. Revenue from sales is recognised at the point of dispatch when risk and reward stand transferred to the customers.

(b) Services are net of service tax. Revenue from services is recognised when services are rendered and related costs are incurred.

(c) Interest income is recognised on time proportion basis.

(d) Dividend income is recognised, when the right to receive the dividend is established.

8. Foreign Currency Transactions

(a) Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction.

(b) Monetary items denominated in foreign currencies (such as cash, receivables, payables etc.) outstanding at the year end, are translated at exchange rates applicable on that date.

(c) Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate prevailing on the date of transaction.

(d) Any gains or losses arising due to exchange differences arising on translation or settlement are accounted for in the Profit and Loss Account.

(e) In the case of forward exchange contracts, the premium or discount arising at the inception of such contracts, is amortised as income or expense over the life of the contract as well as exchange difference on such contracts, i.e. difference between the exchange rate at the reporting / settlement date and the exchange rate on the date of inception / the last reporting date, is recognized as income / expense for the period.

9. Employee Benefits

(a) Provision for gratuity and leave encashment is made on the basis of actuarial valuation at the end of the year. Actuarial gains or losses are recognized to the profit and loss account.

(b) Contribution to Provident Fund and Superannuation is accounted for on accrual basis.

10. Borrowing Costs

Borrowing cost attributable to acquisition, construction or production of qualifying assets are capitalised as part of the cost till the asset is ready for use. Other borrowing costs are recognized as expense in the period in which these are incurred.

11. Taxes on Income

Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates.

Deferred tax assets are recognized, only if there is reasonable/ virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

12. 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 to Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.

13. Impairment of Assets

An asset is treated as impaired, when the carrying cost of asset exceeds its recoverable value. An impairment loss, if any, is charged to profit and loss account, in the year in which an asset is identified as impaired.

 
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