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Accounting Policies of Selan Exploration Technology Ltd. Company

Mar 31, 2023

1. No trade receivables are due from the directors or officers of the Company either severally or jointly with any other person. No trade receivables are due from firms or private companies respectively in which any director is a partner, a director or member.

2. The Company is exposed to credit risk from its operating activities, primarily trade receivables which the Company minimizes by dealing with high credit rating counterparties. Outstanding customer receivables are regularly monitored on individual basis and are reconciled at regular intervals. Impairment analysis of trade receivables is done at each reporting date on an individual basis. The expected loss recognised at each reporting date is Nil.

3. This amount has been deposited with banks under section 33ABA of the Income Tax Act, 1961 and can be withdrawn only for the purposes specified in the Scheme i.e. towards removal of equipment''s and installations in a manner agreed with the Central Government pursuant to an abandonment plan to prevent hazards to life, property, environment, etc. This amount is considered as restricted cash and hence not considered as ''Cash and cash equivalents''.

16.1 There are no amount recoverable from directors or other officers of the Company either severally or jointly with any other persons. No amount recoverable from firms or private companies respectively in which any director is a partner, a director or a member, except ^ 0.59 Lakh (previous year Nil) are recoverable from a private company in which a director of the Company is director.

35.2 There is no income or transaction which has not been disclosed or recorded in the books of accounts which has been surrendered or disclosed as income in the tax assessment during the year 31st March, 2023 and 31st March, 2022.

(? in Lakhs)

Particulars

31 March, 2023

31 March, 2022

38 COMMITMENTS AND CONTINGENT LIABILITIES A Commitments

Estimated amount of Contracts remaining to be executed on

66.86

5.17

Capital Account (Net of Advances) and not provided for B Contingent Items

a) Claims against the Company not acknowledged as debts: - On account of calculation of Profit Petrolium related to Lohar Field (refer note (c) below)

1,037.45

538.52

- Demand of Income Tax for A.Y. 2016-17 and 2020-21 (under Appeals)

35.26

Nil

- National Calamity Contingency Duty on production of

Crude Oil from Karjisan Oil Field from May 2017 to March 2021

4.48

Nil

b) In the Arbitration proceedings between the Company and the Ministry of Petroleum and Natural Gas, Government of India (GOI) with respect to the Lohar Oilfield, Inter alia, the issue is whether Profit Petroleum is payable to the GOI in a financial year, when the investment multiple in the preceding year is less than 3.5. The Company received an Award in its favour in May 2010, from the Arbitral Tribunal, against which the GOI had appealed to the Hon''ble Delhi High Court. The Single Bench of the High Court ruled in favour of the GOI. The Company has been paying the Profit Petroleum as per the order of the Delhi High Court although it has appealed against this to the Division Bench of the Delhi High Court and the same is sub judice.

c) In January, 2022, the Company had received a query from Directorate General of Hydrocarbons (DGH) on calculation and deposit of Profit Petroleum for Lohar field for the first and second quarters of FY 2021-22. Further, during the current year, Company has also received a demand letter dated 12th October 2022, from DGH, on payment of difference of short payment of Lohar Profit Petroleum post extension of Production Sharing Contract (PSC) in March 2020, along with interest. The same was refuted by the Company, and duly responded with reference to the applicable profit petroleum provisions under the PSC Addendum signed between MoPNG and the Company, on extension of lease for Lohar field beyond March 2020. The said matter is sub - judice.

d) The Company, under a Technical Manpower Service Contract, shall reimburse Gratuity, if any, paid by the manpower supply contractor to contractual labour employed in Bakrol, Lohar and Karjisan fields, under the Payment of Gratuity Act, 1972. As per the contractual terms, the said gratuity needs to be paid to the contractual labour by the manpower supply contractor, which shall then be reimbursed by the Company. The said liability arises due to the termination of the contract with the existing manpower supply agency and appointment of a new manpower service agency. Pursuant to the Contract, the company has received a demand from the previous manpower supply agency for payment of gratuity to the workers who have been in continuous engagement for a period exceeding the period, in accordance with the Gratuity Act. The Company is currently in the process to evaluating the authenticity of the said claim, in accordance with the contractual provisions.

In respect of the matters in Note No. 38-B, future cash outflows are determinable only on receipt of judgements/ decisions pending at various forums/ authorities. Furthermore, there is no possibility of any reimbursements to be made to the Company from any third party.

39 NOTE ON PRICING OF CRUDE OIL SUPPLIED FROM KARJISAN FIELD

The Company had received an interim price for the oil produced from Karjisan field. As per the terms of the Karjisan PSC, the interim price is 70% of the Brent price. Negotiations with Indian Oil Corporation Limited (IOCL) are ongoing to arrive at a final price, so that payment of differential included in trade receivables amounting to '' 85.71 Lakhs (P.Y. '' 85.71 Lakhs) can be realised by the Company, inclusive of amounts related to reimbursement of VAT.

40 Disclosures as required for loans given, investments made and guarantee given covered u/s 186(4) of the Companies Act, 2013 and pursuant to SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 :

During the year, Company has not given any loan, security or provided any guarantee and for investments made refer Note No. 8 and 12 of the financial statements.

II Defined Benefit Plans Gratuity

(a) The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. The Gratuity plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount equivalent to 15 days salary for each completed year of service subject to a maximum of ^ 20 Lakhs. Vesting occurs upon completion of five continuous years of service in accordance with Indian Law. The Company has taken a policy with Life Insurance Corporation of India approved by IRDA for meeting the accruing liability on account of gratuity. The present value of defined obligation and related current cost are measured using the Projected Unit Credit Method with actuarial valuation being carried out at Balance Sheet date.

(k) Expected contribution to the defined benefit plan for the next annual reporting period

The Company expects to contribute '' Nil (previous year '' 35.00 Lakhs) to its gratuity fund in 2022-23.

(l) Description of Risk Exposures

Valuation are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various risk as follows:-

(a) Salary Increases - Actual Salary increase will increase the plan''s liability. Increase in salary, increase in rate assumption in future valuation will also increase the liability.

(b) Investment Risk - Actual return on plan asset may be lower than the discount rate assumed at the last valuation date which can increase the liability.

(c) Discount Rate - Reduction in discount rate in subsequent valuation can increase the plan''s liability.

(d) Mortality and Disability - Actual death and disability cases proving lower or higher than asssumed in the valuation can impact the liabilities.

(e) Withdrawal - Actual withdrawal proving higher or lower than assumed withdrawal and change of withdrawal rates at subsequent valuations can impact plan''s liability.

III Other long-term employee benefits:

Leave encashment

The Company provides for the expected cost of accumulating paid leave which can be carried forward and used in future periods by the employees. The obligation for accumulating paid leaves has been recognised at the end of the reporting period. W.e.f. 1st September 2022, the Company has discontinued the leave-encashment facility to its employees.

47 DISCLOSURES AS PER IND AS 116 ''LEASES'' ARE AS FOLLOWS:

The Company''s significant leasing arrangements are in respect of leases for land, building, office premises etc. These leasing arrangements which are cancellable ranging between 11 months and 9 years generally, or longer, and are usually renewable by mutual consent on mutually agreed terms. The Company has used the following practical expedients for lease accounting^. Applying a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar remaining lease term.2. Applied the exemption not to recognized right of use assets and liabilities for leases with less than 12 months of lease term and low value leases.3. Used hindsight in determining the lease term whether the contract contained options to extend or terminate the lease.

(e) The weighted average incremental borrowing rate applied to lease liabilities is 10.00%.

(f) The Company does not face a significant liquidity risk with regards to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.

48 FAIR VALUE MEASUREMENT

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in an orderly transaction in the principal (or most advantageous) market at measurement date under the current market condition regardless of whether that price is directly observable or estimated using other valuation techniques.

The following methods and assumptions were used to estimate the fair values:

(i) Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short-term loans from banks and other financial institutions approximate their carrying amounts largely due to the short term maturities of these instruments.

(ii) Financial instruments with fixed and variable interest rate are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counter party. Based on this evaluation, allowances are taken into account for the expected losses of these receivables.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.

Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 : other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3 : techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

(c) During the year ended 31st March 2023 and 31st March 2022, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfer into and out of Level 3 fair value measurements.

49. FINANCIAL RISK MANAGEMENT

The Company''s principal financial liabilities comprises lease liabilities, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include Investments, trade and other receivables and cash and bank balances that derive directly from its operations.

The Company''s activities expose it to market risk, credit risk and liquidity risk. The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s financial risk management policy is set by the Managing Board. The Board of Directors reviews and finalises policies for managing each of these risks, which are summarised below :

(a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three type of risk: interest rate risk, foreign currency risk and commodity price risk. Financial instrument affected by market risk include investments and deposits, foreign currency receivables, payables, loans and borrowings.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. In order to optimize the Company''s position with regard to interest income and interest expenses to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio. The Company is also exposed to interest rate risk on surplus funds parked in fixed deposits and investments viz. mutual funds, NCDs and MLDs. To manage such risks, such investments are done mainly for short durations, in line with the expected business requirements for such funds.

Interest rate sensitivity

The Company has not availed any borrowings (floating or fixed interest) and also not having substantial long term fixed deposits and other investments, hence is not exposed to interest rate risk.

(ii) Foreign Currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The entity has limited foreign currency exposure which are mainly on account of purchases and imports. The Company manages its foreign currency risk by having natural hedge as the revenue on sale of oil and gas is determined and paid in equivalent US dollars.

The Company does not have any foreign currency exposure as well as no hedging instruments outstanding as at 31 March 2023 and 31 March 2022.

(iii) Commodity price risk

The Company is exposed to volatility of the oil and gas prices since the Company does not undertake any oil price hedge. The impact of a falling oil price is however partly mitigated via the production sharing formula in the PSCs, whereby the Company''s share of gross production increases in a falling oil price environment due to the cost recovery mechanism. Gas prices are fixed for a certain duration of time and the same are linked to policy guidelines issued by the Government.

(b) Credit Risk

Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and advances to suppliers) and from its financing activities, including deposits and other financial instruments.

(i) Trade Receivables

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to individual group of customers. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on an individual basis for major clients.

The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

The ageing analysis of the receivables (gross of provisions) have been considered from the date the invoice falls due:

(ii) Financial Instruments and Cash and bank balances

Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Company''s policy. Investments of surplus funds are made only with the institutions having good credit ratings. Credit worthiness of all theses institutions are reviewed by the Management on a regular basis. All balances with banks and financial institutions is subject to low credit risk due to the good credit ratings assigned to these entities.

(c) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Company''s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities.

In the management of liquidity risk, the Company monitors and maintains a level of cash and bank balances deemed adequate by the management to finance the Company''s operations and mitigate the effects of fluctuations in cash flow. The table below summarises the maturity profile of the Company''s financial liabilities at the end of the reporting period based on contractual undiscounted repayment obligations.

50 CAPITAL MANAGEMENT

The Company''s objectives when managing capital are to safeguard the Company''s ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings.

51 IMPAIRMENT OF ASSETS AND CUSTOMER/VENDOR BALANCES

(i) As a policy, the Company annually assesses the impairment of property plant and equipment (PPE), Development of Hydrocarbon Properties and other non-current assets by comparing the carrying value of PPE, Development of Hydrocarbon Properties and other non-current assets with its fair value. In case the fair value is less than the carrying value an impairment charge is created. Management has concluded that there is no impairment of PPE, Development of Hydrocarbon Properties and other assets during the current year and in previous year.

(ii) Certain Trade Receivables, Advances and Trade Payables are subject to confirmation. In the opinion of the management, the value of Trade Receivables and Advances on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

54 Additional regulatory information required by Schedule III of Companies Act, 201354.1 Relationship with Struck off Companies:

There are no transaction with the companies whose name has been struck off under section 248 of The Companies Act, 2013 or section 560 of Companies Act, 1956 during the year ended 31st March, 2023 and the year ended 31st March, 2022.

54.2 Compliance with number of layers of companies

No layers of companies has been established beyond the limit prescribed as per section 2(87) of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017.

54.3 Loans or Advances to Promoters, Directors, KMPs and the related parties

The Company has not given any loan or advance in the nature of loan to promoters, directors, KMPs and the related parties (as defined under the Act), either sevarally or jointly with any other person during the year ended 31st March, 2023 and the year ended 31st March, 2022.

54.4 Compliance with approved Scheme(s) of Arrangements

The Company has not entered into any Scheme of Arrangements, hence this clause not applicable to the Company.

54.5 Utilisation of Borrowed Funds and Share Premium

(i) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other persons or entities including foreign entities (intermediaries) with the understanding that the Intermediaries shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (ultimate beneficiaries) or provided any guarantee, security or the like or on behalf of the Ultimate Beneficiaries.

(ii) The Company has not received any fund from any persons or entities, including foreign entities (funding party) with the understanding that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or provided any guarantee, security or the like or on behalf of the Ultimate Beneficiaries.

54.6 Willful Defaulter

The Company has not been declared as a willful defaulter by any bank or financial Institution or other lender.

55 "Presentation of Negative Amounts"

Unless otherwise stated or the context requires it to be interpreted otherwise, figures in bracket in the financial statements

represent negative amounts.

56 Previous year figures have been rearranged / regrouped / reclassified wherever necessary. Further, there are no material

regroupings / reclassifications during the year.


Mar 31, 2018

1 Significant Accounting Policies

1.1 Statement of Compliance

The Financial Statements for the year ended 31 March 2018 are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015; and the other relevant Provisions of Companies Act, 2013 and Rules thereunder. The Financial Statements have been prepared under historical cost convention basis except for certain assets and liabilities which are measured at fair value (refer note 3.2). The Company has adopted Ind AS and the adoption was carried out in accordance with Ind AS 101 (First time adoption of Indian Accounting Standards). The transition was carried out from Accounting Standard as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, (previous GAAP).

The Company''s presentation currency and functional currency is Indian Rupees. All figures appearing in the Financial Statements are rounded off to the nearest lakhs ('' in lakhs), except where otherwise indicated.

1.2 Basis of Measurement

The financial statements have been prepared on historical cost basis (which includes deemed cost as per Ind AS-101), except for the following :

(a) Financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments); and

(b) Defined benefit plans - plan assets measured at fair value.

The Financial Statements as prepared in India Rupees (''), which is the functional currency and all values are rounded to the nearest Lakhs, except wherever otherwise stated.

1.3 Current and non-current classification

The company presents assets and liabilities in the balance sheet based on current and non-current classification.

An asset is current when it is;

- Expected to be realised or intended to be sold or consumed in a normal operating cycle.

- Held primarily for the purpose of trading,

- Expected to be realised with in twelve months after the reporting period, or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve month after the reporting period.

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in a normal operating cycle,

- It is held primarily for the purpose of trading

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve month after the reporting period.

Deferred tax assets / liabilities are classified as non-current. All other liabilities are classified as non-current.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. As the operating cycle can not be identified in normal course due to the special nature of industry, the same have been assumed to have duration of 12 months.

1.4 Use of estimates and judgements

The preparation of the Company''s Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information.

In particular, information about significant areas of estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as below :

- Financial instruments;

- Estimates of useful lives and residual value of Property, Plant and Equipment and intangible assets;

- Valuation of inventories;

- Measurement of recoverable amounts of cash-generating units;

- Measurement of Defined Benefit Obligation, key actuarial assumptions;

- Provisions and Contingencies; and

- Evaluation of recoverability of deferred tax assets; Revisions to accounting estimates are recognized prospectively in the Financial Statements in the period in which the estimates are revised and in any future periods affected.

1.5 Inventories

Inventories are valued in the balance sheet as follows :

a) Crude oil : Valued at cost or net realisable value whichever is lower. Cost is calculated on absorption cost method (at FIFO basis).

b) Component, stores, spares and consumables (including items related to hydrocarbon properties): at cost (on FIFO basis) or net realizable value, whichever is lower.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

1.6 Cash and Cash Equivlent

Cash and cash equivalent in the financial statements comprise cash at bank and on hand, short-term deposits with an original maturity of three months or less and highly liquid investment that are readily convertible into known amount of cash and which are subject to insignificant risk of changes in value.

1.7 Tax Expenses

Tax expenses represents the sum of the tax currently payable and deferred tax. It is recognised in the statement of profit and loss except to the extent that it relates to items directly in equity or in other comprehensive income.

a) Current income tax

Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments / appeals.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

b) Deferred tax

Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside the statement of profit and loss is recognised either in other comprehensive income or in equity and not in the statement of profit and loss.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

c) Minimum alternate Tax

Minimum Alternate Tax credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each balance sheet date and the carrying amount of MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal tax during the specified period.

1.8 Property, Plant and Equipment

The cost of an item of property, plant and equipment is recognised as an asset if, and only if, (a) it is probabale that future economic benefits associated with the item will flow to the entity; and (b) the cost of the item can be measured reliably. Property, plant and equipment are stated at original cost, net of tax / duty credit availed, less accumulated depreciation and accumulated impairment losses, if any. When significant parts of property, plant and equipment are required to be replaced at intervals, the company derecognises the replaced part, and recognise the new part with its own associated useful life and it is depreciated accordingly. Likewise, when a major inspection is performed, its cost is recognised In the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All others repair and maintenance costs are recognised in the statement of profit & loss as incurred. The present value of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.

The cost of an item of property, plant and equipment held by the Company as a lessee under a finance lease is determined in accordance with Ind AS 17-Leases.

Capital work in progress is stated at cost, net of accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.

The Company has elected to continue with the carrying values of Property, Plant and Equipment existing as per previous GAAP as on date of transition to Ind AS i.e. 1 April 2016 as deemed cost.

1.9 Intangible Assets

Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will flow to the company and the cost of the asset can be measured reliably.

Intangible assets acquired separately are measured at cost. Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and accumulated impairment loss, if any. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit and loss in the period in which the expenditure is incurred.

Intangible assets consisting of computer software are amortised over a period of 3-5 Years.

Gain or losses arising from derecognising of an intangible asset are measured as the difference between the net disposal proceed and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.

1.10 Depreciation on Property, Plant and Equipment (PPE) Depreciation is provided as per Schedule II to the Companies Act, 2013, on straight line method with reference to the useful life of the assets specified therein. On additions costing less than Rs. 5,000/-, depreciation is provided at 100% in the year of addition.

The determination of the useful economic life and residual values of property, plant and equipment is subject to management estimation. The residual value of PPE has been considered as Nil. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Depreciation on the property, plant and equipment is provided over the useful life of specified in schedule II of the companies Act, 2013. Property, plant and equipment which are added/disposed off during the year, depreciation is provided on pro-rata basis with reference to the date of addition/deletion.

1.11 Development of Hydrocarbon Properties

It has been considered appropriate to show the development expenses of oil wells under “Development of Hydracarbon Properties'' as a separate item. ''"Development of Hydrocarbon Properties” includes the cost incurred on the collection of seismic data, drilling of wells, reservoir modeling costs and other related expenditures on development of oil fields.

Amortisation for the same is done on straight line basis over the remaining lease period as this method most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset and this method is applied consistently from period to period.

Till 31.03.2014 these expenses were being amortised over a period not exceeding the remaining period of the contract. In the case of oil fields at Bakrol, Indrora and Lohar, the original contract period ends in 2020, while in the case of Karjisan and Ognaj, the contract ends in 2030 and 2033, respectively. Under the Production Sharing Contract (PSC), the Government has the power to extend the contract and they have written to the Company that it can apply for a 10 year extension. Management is of the opinion that there is a reasonable likelihood of this extension, especially keeping in view that investments made in recent years for drilling of new wells are expected to continue to result in oil and gas production significantly beyond the original contract period. Of this extension period, a 5 year extension period was incorporated in the accounts effective 2014-15 and the balance 5 year extension period is being made effective F.Y. 2017-18, whereby the amortisation for Year ended 31 March 2018 is lower by Rs.9.41 crores and consequently the profit before tax for the said period is higher by v 10.09 crores.

1.12 Impairment of non-financial assets

As at each reporting date, the Company assesses whether there is an indication that an asset may be impaired and also whether there is an indication of reversal of impairment loss recognised in the previous periods. If any indication exists, or when annual impairment testing for an asset is required, if any, the Company determines the recoverable amount and impairment loss is recognised, in the statement of profit and loss, when the carrying amount of an asset exceeds its recoverable amount.

Recoverable amount is determined:-

a) In the case of an individual asset, at the higher of the fair value less cost to sell and the value in use ; and

b) In the case of cash generating unit (a group of asset that generates identified, independent cash flow), at the higher of the cash generating unit''s fair value less cost to sell and the value in use.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discounting rate that reflect the current market assessment of the time value of the money and the risk specific to the asset. In determining fair value less cost of disposal, recent market transaction is taken into account. If no such transaction can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

1.13 Leases

Company as a Lessee

Finance leases that transfer substantially all of the risks and benefits incidental to ownership of the leases item, are capitalised at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets . Lease payments are apportioned between finance charges and a reduction in the lease liability based on the internal rate of return. Finance charges are recognised as finance costs in the statement of profit and loss.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by lessor are classified as operating leases. Lease rentals are charged to the statement of profit and loss on straight line basis. Company as a Lessor

The Company has recognized assets under a finance lease as a receivable at an amount equal to the net investment in the lease. The finance income has been recognised on a pattern reflecting a constant rate of return on the net investment in the finance lease. In case of operating lease, rental income is recognized on a straight line basis over the term of relevant lease.

1.14 Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government with an exeption to excise duty.

a) Sale of Goods:

Income on sale of crude oil and gas is accounted for net of VAT and profit petroleum to the Government of India is recognised when the risk and rewards are transferred to the buyer''s representative, and the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transactions will flow to the Company.

b) Dividend Income:

Dividend income is accounted for when the right to receive the same is established, which is generally when the mutual fund / shareholders approve the dividend.

c) Interest Income

For all financial instrument measured at amortised cost, interest income is recorded using the effective interest is recorded using the effective interest rate (EIR) which is the rate that exactly discounts the estimated future cash payments or receipt through the expected life of the financial instrument or a shorter period, where appropriate to the net carrying amount of the financial asset. Interest income is included in other income in the statement of profit and loss. Interest on fixed deposits are accounted for on accrual basis.

1.15 Employee benefits

Employee benefits include salaries, wages, provident fund, gratuity, leave encashment towards un-availed leave and other terminal benefits.

a) Short term employee benefits

All short term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be settled wholly before twelve months after the year end, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

b) Long term employee benefits

The Company''s net obligation in respect of other longterm employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. It includes compensation for accumulated absenses. The cost of providing benefits are determined on the basis of acturial valuation at each year end. Seprate acturial valuation is carried out using the projected unit credit method. A liability is recognised for the amount not expected to be settled wholly before twelve months after the year end.

c) Post employment benefits:

Defined Contribution Plan: Retirement benefits in the form of contribution to Provident Fund is defined contribution plan. The contributions are charged to statement of profit and loss for the year when the contributions are due. The Company has no obligation other than the contribution payable to the fund.

Defined Benefit Plan: The Company operates a defined benefit gratuity plan wiht Life Insurance Corporation of India. The cost of providing benefits under this plan are determined on the basis of acturial valuation at each year-end. Acturial valuation is carried out for the plan using the projected unit credit method.

1.16 Foreign Curreny transactions

a) Foreign currency transactions are recorded at the exchange rates prevailing on the date of transaction. The outstanding liabilities/ receivables are translated at the year end rates and the resultant exchange difference is recognised in the Statement of Profit and Loss.

b) In terms of Production Sharing Contracts (PSCs) with the Government of India, selling price of crude oil per barrel is to be determined FOB delivery point at the prevailing international market rates in US Dollars. However payment is receivable in Indian Rupees at the US Dollar / Rupee conversion rate prevailing at the time of payment.

c) The PSC permits sale of gas to domestic users. Sale of Gas is based on rupee denominated rate as per contractual agreements.

1.17 Segment Reporting

The Company operates in a single segment of production of Oil and Natural Gas. Therefore, Ind AS-108 on Segment Reporting is not applicable to the Company.

1.18 Earning per share

Basic earnings per share is calculated by dividing the profit from continuing operation and total profit, both attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period.

1.19 Provisions, contingent liabilities and contingent assets

a) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that the outflow of resources will be required to settle the obligation and can be reasonably estimated. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to the provision is presented in the statement of profit and loss net of any reimbursement.

If the effect of the time value of money is material, provision are discounted using a current pre-tax rate that reflects, when appropriate the risks specific to the liability. When discounting is used, the increase in the provision due to passage of time is recognised as a finance cost.

b) Contingent liabilities and contingent assets

In case of contingent liabilities, where there is no certainity of outflow or the amount of obligations cannot be measured reliably and a disclosure is made in the notes. Contingent assets are not recognised but disclosed in the financial statements when economic inflows is probable.

1.20 Fair value measurement

The Company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either;

- In the principal market for the asset or liability,or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the assets in its highest and best use.

The company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole :

Level 1 - Quoted (unadjusted) market prices in active market for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is observable.

For assets and liabilities that are recognised in the balance sheet on a recurring basis, the company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

1.21 Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity of another entity.

1.21.1 Financial Assets

a) Initial recognition and measurement

All financial assets are recognised initially at fair value and in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Financial asset are classified, at initial recognition in the same manner as described in subsequent measurements.

b) Subsequent measurement

For purposes of subsequent measurement financial assets are classified in four categories:

- Measured at amortised cost;

- Measured at Fair value through Other Comprehensive Income (FVTOCI);

- Measured at Fair value through Profit or Loss (FVTPL); and

- Equity instrument measured at Fair value through Other Comprehensive Income (FVTOCI).

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.

A financial asset that meets the following two conditions is measured at amortised cost (net of any write down for impairment) unless the asset is designated at fair value through profit or loss under the fair value option.

- Business model test: The objective of the company''s business model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes).

- Cash flow characteristics test: the contractual terms of the financial asset gives rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset that meets the following two conditions is measured at fair value through other comprehensive income unless the asset is designated at fair value through profit or loss under the fair value option.

- Business model test: The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

- Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows the are solely payments of principal and interest on the principal amount outstanding.

Even if an instrument meets the two requirements to be measured at amortised cost or fair value through other comprehensive income, a financial asset is measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an accounting mismatch) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different basis.

All other financial asset is measured at fair value through profit or loss.

De-recognition

The Company de-recognizes a financial asset on trade date only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the assets to another entity.

Impairment of financial assets

The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS - 109 requires expected credit losses to be measured through a loss allowance. The company recognizes lifetime expected losses for all contract assets and/or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

The Company follows ''simplified approach'' for recognition of impairment loss on trade receivables. Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime Expected Credit Loss Method (ECLs) at each reporting date, right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant in credit risk since initial recognition, then the Company reverts to recognising impairment loss allowance based on 12-months ECL.

For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

1.21.2 Financial Liabilities

a) Initial recognition and measurement

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, loans and borrowings including Cash Credit limits, and derivative financial instruments.

b) Subsequent measurement

Financial liabilities are measured subsequently at amortized cost or Fair Value through Profit and Loss (FVTPL). A financial liability is classified as FVTPL if it is classified as held for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

c) Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing Financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

d) Offseting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

1.22 Site Restoration

The Company has three oilfields at Bakrol, Indrora, Lohar wherein the Leases ends in 2020 but the said Leases are expected to be extended upto 2030. The Company has two other oilfields at Karjisan and Ognaj, wherein the Lease period ends in 2033.

At expiry of the Lease period, the Company''s Management expects to handover the aforementioned Oil Wells in working condition to new operator(s), assuming the leases are not extended in favour of the Company. This is similar to the manner in which the said oilfields were handed over to the Company in earlier years.

In view of the above, Management believes that the Company would not be required to abandon these fields, with any corresponding abandonment costs. Hence the Company does not recognizes any provision for Decommissioning / Site Restoration. However, as per the decisions taken at Management Committee Meeting (MCM) with Directorate General of Hydrocarbons (DGH), the Company creates earmarked funds, each year, in the form of Bank Deposits, towards Site Restoration Fund which is determined on the basis of Production to Reserve ratio. The said deposits are shown as under the Other Bank balances as “Under Lien to Government of India, State Government - For Site Restoration Fund Account”.

Management believes that this treatment provides a more prudent and faithful view of Financial Statements and reflects the economic substance of the transactions, other events and conditions, and not merely the legal form.

1.23 Cash Flow Statement

The cash flow statement is prepared by indirect method set out in Ind AS 7 on cash flow statements and presents the cash flows by operating, investing & financing activities of the company. Cash & cash equivalent presented in the cash flow statement consist of balance in the Bank account and cash in hand.

1.24 Borrowing Cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur.

2 Significant accounting judgements and key sources of estimates in applying the accounting policies

Information about Significant judgements and Key sources of estimation made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements are included in the following notes:

2.1 Defined benefit plans

The cost of the defined benefit plan and other postemployment benefits and the present value of such obligation are determined during actuarial Valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and attrition rate. Due to the complexities involved in the valuation and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

2.2 Fair value measurement of financial instrument

When the fair value of financial asset and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in an active market then their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to this model are taken from observable markets where possible but where this is not feasible a degree of judgement is required in establishing the fair value. Judgements include consideration of input such as liquidity risk, credit risk and volatility. Changes in assumption about this factor could affect the reported fair value of financial instruments.

2.3 Impairment of finacial assets

The impairment provision for financial asset is based on assumption about risk of default and expected loss rates. The company uses judgement in making the assumptions and selecting the inputs to the impairment calculation based on company''s past history, the existing market condition as well as forward looking estimates at the end of each reporting period.

2.4 Estimate of provision for decommissioning

The Company estimates provision for decommissioning for the future decommissioning of Oil & Gas assets at the end of their economic lives. Most of these decommissioning activities would be in the future, the exact requirements that may have to be met when the removal events occur are uncertain. Technologies and costs for decommissioning are constantly changing. The timing and amounts of future cash flows are subject to significant uncertainty.The impairment provision for financial asset is based on assumption about risk of default and expected loss rates. The Company uses judgements in making the assumptions and selecting the inputs for the impairment calculation based on the company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

The timing and amount of future expenditures are reviewed at the end of each reporting period, together with rate of inflation for escalation of current cost estimates and the interest rate used in discounting the cash flows. The economic life of the Oil & Gas assets is estimated on the basis of long term production profile of the relevant Oil & Gas asset.

2.5 Evaluation of indicators for impairment of Devlopment of Hydrocarbon Properties

The evaluation of applicability of indicators of impairment of assets requires assessment of external factors such as significant decline in asset''s value, significant changes in the technological, market, economic or legal environment, market interest rates etc. and internal factors such as obsolescence or physical damage of an asset, poor economic performance of the asset etc. which could result in significant change in recoverable amount of the Oil and Gas Assets.

2.6 Evaluation of Reserves

Management estimates production profile (proved and developed reserves) in relation to all the Oil and Gas Assets determined by the G&G team as per industry practice. The estimates so determined are used for the computation of depletion and impairment testing.


Mar 31, 2017

1 Significant Accounting Policies

1.01 Basis of preparation of financial statements :

The financial statements are prepared under historical cost convention, on accrual basis and in accordance with the generally accepted accounting principle (GAAP) in India and comply with the accounting standards specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (the 2013 Act).

1.02 Use of Estimates:

The preparation of financial statements requires management to make certain estimates and assumptions that affect the amount 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 Revenue recognition:

Income on sale of crude oil and gas is accounted for net of VAT and recognized when the risk & rewards are transferred to the buyer''s representative. Interest income is recognized on time proportion basis.

1.04 Fixed Assets and Depreciation :

a) Fixed Assets are shown at cost less accumulated Depreciation.

b) Depreciation is provided as per Schedule II to the Companies Act, 2013, on straight line method on the basis of useful life of the assets specified therein.

c) Intangible assets comprising software are amortized on straight line basis, over estimated useful life of three years.

1.05 Valuation of inventories :

a) Crude oil : Valued at cost or net realizable value whichever is

lower. Cost is calculated on absorption cost method.

b) Component, stores, spares and consumables (including items related to hydrocarbon properties): at cost (on FIFO basis) or net realizable value, whichever is lower.

1.06 Foreign currency transactions :

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

b) In terms of Production Sharing Contracts (PSCs) with Government of India, selling price of crude oil per barrel is to be determined FOB delivery point at the prevailing international market rates in US Dollars. However payment is receivable in Indian Rupees at the US Dollar / Rupee conversion rate prevailing at the time of payment.

c) The PSC permits sale of gas to domestic users. Sale of Gas is based on rupee denominated rate as per contractual agreements.

d) The accounts receivable and payable are restated at the rates prevailing on the balance sheet date and the resultant exchange difference is recognized in the Statement of Profit & Loss.

1.07 Development of Hydrocarbon Properties

Considering the nature of the oil industry and that Accounting Standard AS-26 being not applicable to Oil Industry, it is considered appropriate to show the development expenses of oil fields under "Development of Hydrocarbon Properties" as a separate item. Development of Hydrocarbon Properties includes the cost incurred on the collection of seismic data, drilling of wells, reservoir modeling costs and other related expenditures. Till 31.03.2014 these expenses were being amortized over a period not exceeding the remaining period of the contract. In the case of oil fields at Bakrol, Indrora and Lohar, the original contract period ends in 2020, while in the case of Karjisan and Ognaj, the contract ends in 2030 and 2033, respectively. Under

the Production Sharing Contract (PSC), the Government has the power to extend the contract for a period not exceeding 5 years and management is of the opinion that there is a reasonable likelihood of this extension. In the circumstance, effective from the year 2014-15, the amortization of expenses has been extended by 5 years, especially keeping in view that the investments made in recent years for drilling of new wells are expected to continue to result in oil and gas production significantly beyond the original contract period.

1.08 Employee Benefits :

The Company makes regular contributions to duly constituted funds set up for Provident Fund and Family Pension Fund. In respect of accruing liability for gratuity, the employees have been covered under the Group Gratuity Scheme of Life Insurance Corporation of India. There is no prescribed rule for encashment of leave by employees. Provision for gratuity and leave encashment liability is made on the basis of actuarial valuation carried out as at the Balance Sheet date.

1.09 Leases:

"The Company has not entered into any financial lease. Hire charges for equipment and rental for premises are treated as operating lease and charged to revenue/''

1.10 Deferred Tax:

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.

1.11 Minimum Alternate Tax (MAT):

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT credit entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

1.12 Impairment of Assets:

At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amounts, an impairment loss is recognized in the statement of profit and loss to the extent the carrying amount exceeds the recoverable amount. There is no impairment loss during the year.

1.13 Provisions and contingencies:

The Company creates a provision when there is a present obligation as result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation cannot be made.

1.14 Site Restoration:

Estimated future liability relating to dismantling and abandoning producing well sites and facilities is charged to revenue in proportion of Production to Reserve and the same is funded by investment in earmarked funds (Bank FDRs).


Mar 31, 2015

1.01 Basis of preparation of financial statements :

The financial statements are prepared under historical cost convention, on accrual basis and in accordance with the generally accepted accounting principle (GAAP) in India and comply with the accounting standards specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (the 2013 Act) / the Companies Act, 1956 (the 1956 Act), as applicable.

1.02 Use of Estimates :

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

1.03 Revenue recognition :

Income on sale of crude oil and gas is accounted for net of VAT and recognised when the risk & rewards are transferred to the buyer's representative. Interest income is recognised on time proportion basis.

1.04 fixed Assets and Depreciation :

a) Fixed Assets are shown at cost.

b) With effect from 01.04.2014, depreciation is provided as per Schedule II to the Companies Act, 2013, on straight line method on the basis of useful life of the assets specified therein.

c) Intangible assets comprising software are amortised on straight line basis, over estimated useful life of three years.

1.05 Valuation of inventories :

a) Crude oil : Valued at cost or net realisable value whichever is lower. Cost is calculated on absorption cost method.

b) Component, stores, spares and consumables (including items related to hydrocarbon properties): at cost (on weighted average basis) or net realizable value, whichever is lower.

1.06 foreign currency transactions :

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

b) In terms of Production Sharing Contracts (PSCs) with Government of India, selling price of crude oil per barrel is to be determined FOB delivery point at the prevailing international market rates in US Dollars. However payment is receivable in Indian Rupees at the US Dollar / Rupee conversion rate prevailing at the time of payment.

c) The PSC permits sale of gas to domestic users. Sale of Gas is based on rupee denominated rate as per contractual agreements.

d) The accounts receivable and payable are restated at the rates prevailing on the balance sheet date and the resultant exchange difference is recognised in the Statement of Profit & Loss.

1.07 Development of Hydrocarbon Properties:

Considering the nature of the oil industry and that Accounting Standard AS-26 being not applicable to Oil Industry, it is considered appropriate to show the development expenses of oil fields under "Development of Hydrocarbon Properties" as a separate item. Development of Hydrocarbon Properties includes the cost incurred on the collection of seismic data, drilling of wells, reservoir modelling costs and other related expenditures. Till 31.03.2014 these expenses were being amortised over a period not exceeding the remaining period of the contract. In the case of oil fields at Bakrol, Indrora and Lohar, the original contract period ends in 2020, while in the case of Karjisan and Ognaj, the contract ends in 2030 and 2033, respectively. Under the Production Sharing Contract (PSC), the Government has the power to extend the contract for a period not exceeding 5 years and management is of the opinion that there is a reasonable likelihood of this extension. In the circumstance, effective from the current year 2014-15, the amortisation of expenses has been extended by 5 years, especially keeping in view that the investments made in recent years for drilling of new wells are expected to continue to result in oil and gas production significantly beyond the original contract period. The Auditors have taken note of the above changes in their Audit Report and their opinion is not modified in respect of this matter.

1.08 Employee Benefits :

The Company makes regular contributions to duly constituted funds set up for Provident Fund and Family Pension Fund. In respect of accruing liability for gratuity, the employees have been covered under the Group Gratuity Scheme of Life Insurance Corporation of India. There is no prescribed rule for encashment of leave by employees. Provision for gratuity and leave encashment liability is made on the basis of actuarial valuation carried out as at the Balance Sheet date.

1.09 Leases:

The Company has not entered into any financial lease. Hire charges for equipment and rental for premises are treated as operating lease and charged to revenue.

1.10 Deferred Tax :

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.

1.11 Minimum Alternate Tax (MAT) :

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT credit entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

1.12 Impairment of Assets :

At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amounts, an impairment loss is recognized in the statement of profit and loss to the extent the carrying amount exceeds the recoverable amount. There is no impairment loss during the year.

1.13 Provisions and contingencies :

The Company creates a provision when there is a present obligation as result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation cannot be made.

1.14 Site Restoration :

Estimated future liability relating to dismantling and abandoning producing well sites and facilities is charged to revenue in proportion of Production to Reserve and the same is funded by investment in earmarked funds (Bank FDRs).


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 applicable accounting standards under Companies (Accounting Standards) Rules, 2006, notified by the Central Government under Section 211(3C) of the Companies Act, 1956.

1.02 Use of Estimates :

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

1.03 Revenue Recognition :

Income on sale of crude oil and gas is accounted for net of VAT and recognised when the risk & rewards are transferred to the buyer’s representative. Interest income is recognised on time proportion basis.

1.04 Fixed Assets and Depreciation :

a) Fixed Assets are shown at cost.

b) Depreciation is provided on straight line method in the manner and at the rates specified in schedule XIV of the Companies Act, 1956. Depreciation on additions is charged from the month in which the asset is put to use.

1.05 Valuation of Inventories :

a) Crude oil : Valued at cost or net realisable value whichever is lower. Cost is calculated on absorption cost method.

b) Stores, spares and consumables : at cost (on weighted average basis) or net realizable value, whichever is lower.

1.06 Foreign Currency Transactions :

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

b) In terms of PSCs with Government of India, selling price of crude oil per barrel is to be determined FOB delivery point at the prevailing international market rates in US Dollars. However payment is receivable in Indian Rupees at the US Dollar / Rupee conversion rate prevailing at the time of payment.

c) The PSC permits sale of gas to domestic users. Sale of Gas is based on rupee denominated rate as per contractual agreements.

d) The accounts receivable and payable are restated at the rates prevailing on the balance sheet date and the resultant exchange difference is recognised in the Statement of Profit & Loss.

1.07 Development of Hydrocarbon Properties :

Considering the nature of the oil industry and that Accounting Standard AS-26 being not applicable to Oil Industry, it is considered appropriate to show the development expenses of oil fields under "Development of Hydrocarbon Properties” as a separate item. Development of Hydrocarbon Properties includes the costs incurred on the collection of seismic data, drilling of wells, collection of log data, interpretation and reservoir modeling costs and other related expenditures. These expenditures are amortized over a period not exceeding the remaining period of the contract. The categorization/ allocation of expenses is done on a basis considered appropriate by the Management.

1.08 Employee Benefits :

The Company makes regular contributions to duly constituted funds set up for Provident Fund and Family Pension Fund. In respect of accruing liability for gratuity, the employees have been covered under the Group Gratuity Scheme of Life Insurance Corporation of India. There is no prescribed rule for encashment of leave by employees .

1.09 Leases :

The Company has not entered into any financial lease. Hire charges for equipment and rental for premises are treated as operating lease and charged to revenue.

1.10 Defered Tax :

In accordance with Accounting Standard 22 – Taxes on Income, deferred tax is recognised, subject to consideration of prudence, being the difference between accounting and taxable income that originate in one year and are capable of reversal in a subsequent year.

1.11 Impairment of Assets :

At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amounts, an impairment loss is recognized in the statement of profit and loss to the extent the carrying amount exceeds the recoverable amount. There is no impairment loss during the year.

1.12 Provisions and Contingencies :

The Company creates a provision when there is a present obligation as result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation cannot be made.


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 applicable accounting standards under Companies (Accounting Standards) Rules, 2006, notified by the Central Government under Section 211(3C) of the Companies Act, 1956.

1.02 Use of Estimates :

The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with applicable accounting standards under Companies (Accounting Standards) Rules 2006, notified by the Central Government under Section 211(3C) of the Companies Act, 1956.

1.03 Revenue Recognition :

Income on sale of crude oil and gas is accounted for net of VAT and recognised when the risk & rewards are transferred to the buyer's representative. Interest income is recognised on time proportion basis.

1.04 Fixed Assets and Depreciation :

a) Fixed Assets are shown at cost.

b) Depreciation is provided on straight line method in the manner and at the rates specified in Schedule XIV of the Companies Act, 1956. Depreciation on additions is charged from the month in which the asset is put to use.

1.05 Valuation of Inventories :

a) Crude oil: Valued at cost or net realisable value whichever is lower. Cost is calculated on absorption cost method.

b) Stores, spares and consumables : at cost (on weighted average basis) or net realizable value, whichever is lower.

1.06 Foreign Currency Transactions :

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

b) In terms of PSCs with Government of India, selling price of crude oil per barrel is to be determined FOB delivery point at the prevailing international market rates in US Dollars. However payment is receivable in Indian Rupees at the US Dollar / Rupee conversion rate prevailing at the time of payment.

c) The PSC permits sale of gas to domestic users. Sale of Gas is based on rupee denominated rate as per contractual agreements.

d) The accounts receivable and payable are restated at the rates prevailing on the balance sheet date and the resultant exchange difference is recognised in the Statement of Profit & Loss.

1.07 Development of Hydrocarbon Properties :

Considering the nature of the oil industry and that Accounting Standard AS-26 being not applicable to Oil Industry, it is considered appropriate to show the development expenses of oil fields under "Development of Hydrocarbon Properties" as a separate item. Development of Hydrocarbon Properties includes the costs incurred on the collection of seismic data, drilling of wells, collection of log data, interpretation and reservoir modeling costs and other related expenditures. These expenditures are amortized over a period not exceeding the remaining period of the contract. The categorization / allocation of expenses is done on a basis considered appropriate by the Management.

1.08 Employee Benefits :

The Company makes regular contributions to duly constituted funds set up for Provident Fund and Family Pension Fund. In respect of accruing liability for gratuity, the employees have been covered under the Group Gratuity Scheme of Life Insurance Corporation of India. There is no prescribed rule for encashment of leave by employees.

1.09 Leases :

The Company has not entered into any financial lease. Hire charges for equipment and rental for premises are treated as operating lease and charged to revenue.

1.10 Defered Tax :

In accordance with Accounting Standard 22 - Taxes on Income, deferred tax is recognised, subject to consideration of prudence, being the difference between accounting and taxable income that originate in one year and are capable of reversal in a subsequent year.

1.11 Impairment of Assets :

At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amounts, an impairment loss is recognized in the statement of profit and loss to the extent the carrying amount exceeds the recoverable amount. There is no impairment loss during the year.

1.12 Provisions and Contingencies :

The Company creates a provision when there is a present obligation as result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation cannot be made.


Mar 31, 2011

Not Available


Mar 31, 2010

1) The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with applicable accounting standards under Companies (Accounting Standards) Rules 2006, notified by the Central Government under Section 211(3C) 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 amount reported in the financial statements and notes thereto. Differences between actual results and estimates are recognised in the period in which they materialise.

3) Revenue recognition :

Income on sale of crude oil and gas is accounted for net of VAT and recognised when the risk & rewards are transferred to the buyer’s representative.

Interest income is recognised on time proportion basis.

4) Fixed Assets :

a) Fixed Assets are shown at cost.

b) Depreciation is provided on straight line method in the manner and at the rates specified in Schedule XIV of the Companies Act, 1956. Depreciation on additions is charged from the month in which the asset is put to use.

5) Valuation of inventories :

a) Crude oil - valued at cost or net realisable value, whichever is lower. Cost is calculated on absorption cost method.

b) Stores, spares and consumables - at cost (on weighted average basis) or net realizable value, whichever is lower.

6) (i) Foreign currency transactions are recorded at the exchange rates prevailing on the date of transaction.

(ii) In terms of Production Sharing Contract (PSC) with Government of India, selling price of crude oil per barrel is to be determined FOB delivery point at the prevailing international market rates in US Dollars. However, payment is receivable in Indian Rupees at the US Dollar / Rupee conversion rate prevailing at the time of payment.

The PSC permits sale of gas to domestic users. Sale of Gas is based on a rupee denominated rate as per contractual agreements.

(iii) The accounts receivable and payable are restated at the rates prevailing on the balance sheet date and the resultant exchange difference is recognised in the Profit & Loss Account.

7) Considering the nature of the oil industry and that Accounting Standard AS-26 being not applicable to Oil Industry, it is considered appropriate to show the development expenses of oil fields under "Development of Hydrocarbon Properties" as a separate item. Development of Hydrocarbon Properties includes the costs incurred on the collection of seismic data, drilling of wells, collection of log data, interpretation and reservoir modeling costs and other related expenditures. These expenditures are amortized over a period not exceeding the remaining period of the contract. The categorization / allocation of expenses is done on a basis considered appropriate by the Management.

8) Employee benefits :

The Company makes regular contributions to duly constituted funds set up for Provident Fund and Family Pension Fund. In respect of accruing liability for gratuity, the employees have been covered under the Group Gratuity Scheme of Life Insurance Corporation of India. There is no prescribed rule for encashment of leave by employees.

9) Leases :

The Company has not entered into any financial lease. Hire charges for equipment and rental for premises are treated as operating lease and charged to revenue.

10) Deferred Tax :

In accordance with Accounting Standard 22 – Taxes on Income, deferred tax is recognised, subject to consideration of prudence, being the difference between accounting and taxable income that originate in one year and are capable of reversal in a subsequent year.

11) Impairment of Assets :

At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amounts, an impairment loss is recognized in the profit and loss account to the extent the carrying amount exceeds the recoverable amount.

12) Provisions and Contingencies :

The Company creates a provision when there is a present obligation as result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation cannot be made.

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