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Accounting Policies of Hindustan Oil Exploration Company Ltd. Company

Mar 31, 2023

Significant accounting policies

i) Statement of compliance and basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards tind AS)
notified under the Companies (Indian Accounting Standards) Rules, 2015 tas amended) and Guidance note on Accounting
for oil and gas producing activities tind AS) issued by the Institute of Chartered Accountants of India. These financial
statements for the year ended March 31, 2023 for the Company has been prepared in accordance with Ind AS.

For all periods up to and including the year ended March 31,2023, the Company had prepared its financial statements
under historical cost convention on accrual basis in accordance with the generally accepted accounting principles and
the accounting standards notified under Section 133 of the Companies Act, 2013.

The Financial statements have been prepared on historical cost basis except for certain financial instruments that
are measured at fair values at the end of each reporting period, as explained in the accounting policies below.

As the operating cycle cannot be identified in normal course due to the nature of industry, the same has been
assumed to have a duration of 12 months. Accordingly, all assets and liabilities have been classified as current or nonÂ¬
current as per the Company''s operating cycle and other criteria set out in Ind AS1 ''Presentation of Financial Statements''
and Schedule III to the Companies Act, 2013.

The financial statements are presented in Indian Rupees, unless otherwise stated.

Fair value measurement

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 under the current market conditions.

The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability
to observe inputs employed in their measurement which are described as follows:

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

tb) Level 2 inputs are inputs that are observable, either directly or indirectly, other than quoted prices included

within level 1 for the asset or liability.

tc) Level 3 inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable

related market data or Company''s assumptions about pricing by market participants.

ii) Interest in joint operations

A joint operation is a joint arrangement whereby the parties that have the joint control of the arrangement have
rights to the assets, and obligations for the liabilities relating to the arrangement.

The Company has entered into Unincorporated Joint Ventures tUJVs) with other entities and executed Production
Sharing Contracts t''PSC") and Revenue Sharing Contracts t''RSC") with the Government of India. These UJVs are in
the form of joint arrangements wherein the participating entity''s assets and liabilities are proportionate to its
participating interest.

The UJVs entered into by the company are joint operations wherein the liabilities are several, not joint, and not joint
and several and therefore do not come under the category of Joint Venture as defined under the Ind AS. In accounting
for these joint operations, the company recognizes its assets and liabilities in proportion to its participating interest
in the respective UJV Likewise, revenue and expenses from the UJV are recognized for its participating interest only.
The Company accounts for the assets, liabilities, revenues and expenses relating to its interest in the UJVs in
accordance with the Ind AS.

The financial statements of the Company reflect its share of assets, liabilities, income and expenditure of the
Unincorporated Joint Ventures ("UJV") which are accounted, based on the available information in the audited financial
statements of UJV on line by line basis with similar items in the Company''s accounts to the extent of the participating
interest of the Company as per the various PSCs and RSCs. The financial statements of the UJVs are prepared by the
respective Operators in accordance with the requirements prescribed by the respective PSCs. Hence, in respect of
these UJVs, certain disclosures required under the relevant accounting standards have been made in the financial
statements.

iii) Investment in subsidiaries, associates and joint ventures

The Company records the investments in subsidiaries, associate and joint ventures at cost less impairment loss, if
any. On disposal of investment in subsidiaries, associates and joint ventures, the difference between the net disposal
proceeds and the carrying amounts (including corresponding value of dilution in deemed investment) are recognized in
the statement of profit and Loss.

iv) Foreign exchange transactions

The functional currency of the Company is Indian Rupee which represents the currency of the primary economic
environment in which it operates.

Transactions in currencies other than the Company''s functional currency (foreign currencies) are recognized at the
rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items
denominated in foreign currencies are translated using mean exchange rate prevailing on the last day of the reporting
period.

Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period in which
they arise.

v) Revenue recognition

Revenue towards satisfaction of a performance obligation is measured at transaction price allocated to that performance
obligation.

ti) Revenue from the sale of crude oil, condensate and natural gas, net of value added tax and profit petroleum to
the Government of India, is recognized on transfer of custody to customers, and the amount of revenue can be
measured reliably and it is probable that the economic benefits associated with the transaction will flow to the
Company.

tii) Income from service if any is recognized on accrual basis on its completion and is net of taxes.

Other income

tiii) Interest income is recognized on the basis of time, by reference to the principal outstanding and at effective
interest rate applicable on initial recognition.

tiv) Dividend Income from investments is recognized when the right to receive has been established.
tv) Rental income arising from operating leases is accounted on straight-line basis over the lease term.

vi) Taxes

Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the
year. Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized
in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in
other comprehensive income or directly in equity, respectively.

The tax rates and tax laws used to compute are the laws that are enacted or substantively enacted as on the
reporting date. The management evaluates and makes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.

Current income taxes

The current income tax expense includes income taxes payable by the Company. Advance taxes and provisions for
current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision
arising in the same tax jurisdiction and where the relevant tax paying units intends to settle the asset and liability on
a net basis.

Deferred income taxes

Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are
recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and
their carrying amount. It is recognized only to the extent it is probable that the taxable profit will be available against
which the deductible temporary differences and the carry forward losses can be utilized.

The carrying amount of deferred income 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 income tax
asset to be utilized.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority
and the relevant entity intends to settle its current tax assets and liabilities on a net basis.

vii) Property plant and equipment (other than Oil and Gas Assets)

Land and buildings held for use in the production and supply of goods or services, or for administrative purposes are
stated in the balance sheet at cost less accumulated depreciation and the accumulated impairment losses. Freehold
land is carried at historical cost and is not depreciated. All other items of property, plant and equipment are stated
at historical cost less accumulated depreciation.

Historical cost comprises the purchase price and any attributable cost of bringing the asset for its intended use. It
includes expenditure that is directly attributable to the acquisition of the items. Borrowing costs for acquisition of
fixed assets are capitalized till such assets are ready to be put to use.

Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of
the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is
derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred.

Improvements to Leasehold premises are amortized over the remaining primary lease period.

Capital work in progress are items of property, plant and equipment which are not ready for their intended use and are
carried at cost, comprising direct cost and related incidental expense. Capital work in progress includes items of
drilling materials which are held for use in extraction or production of oil and gas, and are expected to be used for more
than one period.

(i) Useful lives used for depreciation:

The Company follows the useful lives set out under Schedule II of the Companies Act 2013 for the purpose of
determining the useful lives of respective blocks of property plant and equipment. The following are the useful lives
followed:

- Buildings : 60 years

- Office Equipment : 05 years

- Computers : 03 years

- Furniture and Fixtures : 10 years

- Vehicles : 08 years

Depreciation is recognized so as to write off the cost of assets (other than freehold land) less their residual
values over their useful lives, using the written down value method.

(ii) De-recognition of property, plant and equipment

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continuous use of the asset. Any gain or loss arising from such disposal, retirement
or de-recognition of an item of property, plant and equipment is measured as the difference between the net
disposal proceeds and the carrying amount of the item. Such gain or loss is recognized in the statement of
profit and loss.

In case of de-recognition of a revalued asset, the corresponding portion of the revaluation surplus as is attributable
to that asset is transferred to retained earnings on such de-recognition. Such transfers to retained earnings
are made through Other Comprehensive Income and not routed through profit or loss.

viii) Oil and gas assets

Oil and gas assets are stated at historical cost less accumulated depletion and impairment. These are accounted in
respect of an area / field having proved oil and gas reserves, when the wells in the area / field is ready to commence
commercial production.

The Company generally follows the "Successful Efforts Method" of accounting for oil and gas assets as set out by the
Guidance Note issued by the ICAI on "Accounting for Oil and Gas Producing Activities".

Expenditure incurred on acquisition of license interest is initially capitalized on license by license basis as Intangible
Assets as "Exploration". Costs are not depleted within exploratory and development work in progress until the exploration
phase is completed or commercial oil and gas reserves are discovered.

ta) Cost of surveys and studies relating to exploration activities are expensed as and when incurred.

tb) Cost of exploratory / appraisal wellts) are expensed when it is not successful and the cost of successful wellts)

are retained as exploration expenditure till the development plan is submitted. On submission of development
plan, it is transferred to capital work in progress. On commencement of commercial production, the capital
work in progress is transferred to producing property as Property, plant and equipment .

tc) Cost of temporary occupation of land and cost of successful exploratory, appraisal and development wells are
considered as development expenditure. These expenses are capitalized as producing property on commercial
production.

td) Development costs on various activities which are in progress are accounted as capital work in progress.

On completion of the activities the costs are moved to respective oil and gas assets.

Depletion to oil and gas assets

Depletion is charged on a unit of production method based on proved reserves for acquisition costs and proved and
developed reserves for capitalized costs consisting of successful exploratory and development wells, processing
facilities, assets for distribution, estimated site restoration costs and all other related costs. These assets are
depleted within each cost center. Reserves for these purposes are considered on working interest basis which are
assessed annually. Impact of changes to reserves if any are accounted prospectively.

ix) Site restoration

Provision for decommissioning costs are recognized as and when the Company has a legal or constructive obligation
to plug and abandon a well, dismantle and remove plant and equipment to restore the site on which it is located. The
estimated liability towards the costs relating to dismantling, abandoning and restoring well sites and allied facilities
are recognized in respective assets when the well is completed, and the plant and equipment are installed.

The amount recognized is the present value of the estimated future expenditure determined using existing technology
at current prices and escalated using appropriate inflation rate till the expected date of decommissioning and discounted
up to the reporting date using the appropriate risk-free interest rate.

The corresponding amount is also capitalized to the cost of the producing property and is depleted on unit of production
method. Any change in the estimated liability is dealt with prospectively and is also adjusted to the carrying value of
the producing property.

Any change in the present value of the estimated decommissioning expenditure other than the periodic unwinding of
discount is adjusted to the decommissioning provision and the carrying value of the asset. In case reversal of provision
exceeds the carrying amount of the related asset, the excess amount is recognized in the Statement of Profit and
Loss. The unwinding of discount on provision is charged in the Statement of Profit and Loss as finance cost.
Provision for decommissioning cost in respect of assets under joint operations is considered as per the participating
interest of the Company in the block / field.

x) Investment property

Properties held to on rentals and / or capital appreciation are classified as investment property and are measured and
reported at cost, including transaction costs.

Depreciation is recognized using the Written Down Value Method, so as to write off the cost of the investment
property less their residual values over their useful lives specified in Schedule II to the Companies Act, 2013, or in the
case of assets where the useful lives are determined by technical evaluation, over the useful lives so determined.
Depreciation method, useful life and the residual values are reviewed at each financial year end to reflect the expected
pattern of consumption of the future benefits embodied in the investment property and the value thereon. The effect
of any change in the estimates of useful lives / residual value is accounted on a prospective basis.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn
from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of
property is recognized in the Statement of Profit and Loss in the same period.

xi) Intangible assets

Intangible assets - Exploration

Exploration expenditure includes cost of exploration activities such as:

â¢ Acquisition cost- cost associated with acquisition of licenses and rights to explore, including related professional
fees.

â¢ General exploration cost- cost of surveys and studies, rights of access to properties to conduct those studies
te.g cost incurred for environment clearance etc), salaries and other expenses of geologists, geophysical personnel
conducting those studies.

â¢ Cost of exploration drilling and equipping exploration and appraisal wells.

Intangible assets - others

Intangible assets with a finite useful life acquired separately are measured on initial recognition, at costs. Intangible
assets are carried at costless accumulated amortization and impairment losses if any.

The Company amortizes intangible assets with a finite useful life using the straight-line method. The useful life considered
for computer software is 6 years.

xii) Impairment

The carrying values of assets/cash generating units are assessed for impairment at the end of every reporting period.
If the carrying amount of an asset exceeds the estimated recoverable amount, an impairment is recognized as
expense in the statement of profit and loss. The recoverable amount is the greater of the net selling price and value
in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on an
appropriate discount factor.

An impairment loss recognized in prior periods for an asset other than goodwill is reversed if, and only if, there has
been a change in the estimates used to determine the asset''s recoverable amount since the last impairment loss was
recognized. In that case, the carrying amount of the asset is increased to its recoverable amount. However, such
reversal shall not exceed the carrying amount had there been no impairment loss.

xiii) Inventories

The accounting treatment in respect of recognition and measurement of inventory is as follows:
ti) Closing stock of crude oil and condensate in saleable condition is valued at the estimated net realizable value in
the ordinary course of business.

tii) Stores, spares, capital stock and drilling tangibles are valued at cost on first in first out basis and estimated
net realizable value, whichever is lower.

Inventories other than closing stock of crude oil and condensate are periodically assessed for restatement at lower
of cost and net realizable value. On restatement, any write-down of inventory to net realizable value is recognized as
an expense in the period the write-down or loss occurs. In case of increase in the net realizable value, the increase is
recognized and reversed to the extent of write-down.

xiv) Employee benefits

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

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

a) Defined contribution plan

The Company''s contribution to provident fund is considered as defined contribution plan and are recognized as
and when the employees have rendered services entitling them to contributions.

b) Defined benefit plan

The Company makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life
Insurance Corporation of India. The Company accounts its liability for future gratuity benefits based on actuarial
valuation, as at the Balance Sheet date using the Projected Unit Credit method.

Re-measurement comprising actuarial gains and losses are reflected immediately in the balance sheet with a
charge or credit recognized in the Other Comprehensive Income in the period in which they occur. Re-measurement
recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified
to profit or loss.

Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit
liability or asset and is recognized in the Statement of Profit and Loss except those included in cost of assets
as permitted.

Defined benefit costs are categorized as Service cost, Net interest expense and re-measurement cost.

c) Long term employee benefit

The liability for long term compensated absences which are not expected to occur within 12 months after the
end of the period in which the employee rendered related service are recognized as liability based on actuarial
valuation as at the balance sheet date.

d) Other Employee Benefits including allowances, incentives etc. are recognized based on the terms of the
employment.

xv) Employee share based payment

Equity settled share-based payments to employees are measured at fair value of the equity instruments at the grant
date. The fair value determined at the grant date of the equity settled share-based payment is expensed on straight
line basis over the vesting period based on the Company''s estimate of the equity instrument that will eventually vest,
with a corresponding increase in equity. At the end of each reporting period, the company revises its estimate of the
number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized
in profit or loss such that cumulative expense reflects the revised estimate, with corresponding adjustment to the
equity-settled employee benefits reserve.

xvi) Financial instruments

The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions
of the instruments. All financial assets and liabilities are initially measured at fair value except for trade receivables
which are initially measured at a transaction price. Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities that are not at fair value through profit or loss, are added to or
deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or
loss are recognized immediately in profit or loss.

Financial assets

All regular purchases or sales of financial assets are recognized and derecognized on the fair value. Recognized
financial assets are subsequently measured in their entirety at the fair value. In case of investments in wholly owned
subsidiary, the investments are considered at cost subject to impairment if any. However, trade receivables that do
not contain a significant financing component are measure at transaction price.

A financial asset is de-recognized only when the Company has transferred the rights to receive cash flows from the
financial asset or retains the contractual rights to receive the cash flows of the financial asset but assumes a
contractual obligation to pay the cash flows to one or more recipients.

Financial assets held with the objective to collect contractual cash flows and the terms give rise on specified dates
to cash flows that are solely payments of principal and interest are subsequently measured at amortized cost except
for financial assets that are designated at fair value through profit or loss on initial recognition.

Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair
value through other comprehensive income on initial recognition.

Financial liabilities

All financial liabilities are recognized initially at fair value. In the case of loans, borrowings and payables, recognition is net
of directly attributable transaction and other costs. The Company''s financial liabilities may include trade and other payables,
loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.The
measurement of financial liabilities is at fair value and adjustment thereon is routed through profit or loss.

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

Mar 31, 2018

1. Significant Accounting Policies

i) Statement of Compliance and Basis of Preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards tInd AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) and Guidance note on Accounting for oil and gas producing activities tInd AS) issued by the Institute of Chartered Accountants of India. These financial statements for the year ended March 31, 2018 for the Company has been prepared in accordance with Ind AS.

For all periods up to and including the year ended March 31, 2018, the Company had prepared its financial statements under historical cost convention on accrual basis in accordance with the generally accepted accounting principles and the accounting standards notified under section 133 of the Companies Act 2013.

The Financial statements have been prepared on historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.

As the operating cycle cannot be identified in normal course due to the nature of industry, the same has been assumed to have a duration of 12 months. Accordingly, all assets and liabilities have been classified as current or non-current as per the Companyâs operating cycle and other criteria set out in Ind AS-1 Presentation of Financial Statementsâ and Schedule III to the Companies Act, 2013.

The financial statements are presented in Indian Rupees, unless otherwise stated.

Fair value measurement

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 under the current market conditions.

The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed in their measurement which are described as follows:

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

tb) Level 2 inputs are inputs that are observable, either directly or indirectly, other than quoted prices included within level 1 for the asset or liability

tc) Level 3 inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable related market data or Companyâs assumptions about pricing by market participants.

ii) Interest in joint operations

A joint operation is a joint arrangement whereby the parties that have the joint control of the arrangement have rights to the assets, and obligations for the liabilities relating to the arrangement.

The Company has entered into Unincorporated Joint Ventures tUJVs) with other oil and gas companies and executed Production Sharing Contracts tâPSCâ) and Revenue Sharing Contracts tâRSCâ) with the Government of India. These UJVs are in the form of Joint arrangements wherein the participating entityâs assets and liabilities are proportionate to its participating interest.

The UJVs entered into by the company are joint operations wherein the liabilities are several, not joint, and not joint and several and therefore do not come under the category of Joint Venture as defined under the Ind AS. In accounting for these joint operations, the company recognizes its assets and liabilities in proportion to its participating interest in the respective UJV Likewise, revenue and expenses from the UJV are recognized for its participating interest only. The Company accounts for the assets, liabilities, revenues and expenses relating to its interest in the UJVs in accordance with the Ind AS.

The financial statements of the Company reflect its share of assets, liabilities, income and expenditure of the Unincorporated Joint Ventures tâUJVâ) which are accounted, based on the available information in the audited financial statements of UJV on line by line basis with similar items in the Companyâs accounts to the extent of the participating interest of the Company as per the various PSCs and RSCs. The financial statements of the UJVs are prepared by the respective Operators in accordance with the requirements prescribed by the respective PSCs. Hence, in respect of these UJVs, certain disclosures required under the relevant accounting standards have been made in the financial statements.

iii) Foreign exchange transactions

The functional currency of the Company is Indian Rupees which represents the currency of the primary economic environment in which it operates.

Transactions in currencies other than the Companyâs functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated using mean exchange rate prevailing on the last day of the reporting period.

Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period in which they arise.

iv) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable at the transacted price. ti) Revenue from the sale of crude oil, condensate and natural gas, net of value added tax and profit petroleum to the Government of India, is recognized on transfer of custody to customers, and the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Company

tii) Income from service if any is recognized on accrual basis on its completion and is net of taxes. tiii) Interest income is recognized on the basis of time, by reference to the principal outstanding and at effective interest rate applicable on initial recognition. tiv) Dividend Income from investments is recognized when the right to receive has been established. tv) Rental income arising from operating leases is accounted on straight-line basis over the lease term.

v) Taxes

Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively

The tax rates and tax laws used to compute are the laws that are enacted or substantively enacted as on the reporting date. The management evaluates makes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Current income taxes

The current income tax expense includes income taxes payable by the Company. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying units intends to settle the asset and liability on a net basis.

Deferred income taxes

Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount. It is recognized only to the extent it is probable that the taxable profit will be available against which the deductible temporary differences and the carry forward losses can be utilized.

The carrying amount of deferred income 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 income tax asset to be utilized.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.

Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognized as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.

The Company recognizes interest levied and penalties related to income tax assessments in income tax expenses.

vi) Property plant and equipment (other than oil and gas assets)

Land and buildings held for use in the production and supply of goods or services, or for administrative purposes are stated in the balance sheet at cost less accumulated depreciation and the accumulated impairment losses. Freehold land is carried at historical cost and is not depreciated. All other items of property, plant and equipment are stated at historical cost less depreciation.

Historical cost comprises the purchase price and any attributable cost of bringing the asset for its intended use. It includes expenditure that is directly attributable to the acquisition of the items. Borrowing costs for acquisition of fixed assets are capitalized till such assets are ready to be put to use.

Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Improvements to Leasehold premises are amortized over the remaining primary lease period.

(i) Useful lives used for depreciation (other than oil and gas assets):

The Company follows the useful lives set out under Schedule II of the Companies Act, 2013 for the purpose of determining the useful lives of respective blocks of property plant and equipment. The following are the useful lives followed:

- Buildings : 60 years

- Office Equipment : 05 years

- Computers : 03 years

- Furniture and Fixtures : 10 years

- Vehicles : 08 years

(ii) De-recognition of assets

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continuous use of the asset. Any gain or loss arising from such disposal, retirement or de-recognition of an item of property, plant and equipment is measured as the difference between the net disposal proceeds and the carrying amount of the item. Such gain or loss is recognized in the statement of profit and loss.

In case of de-recognition of a revalued asset, the corresponding portion ofthe revaluation surplus as is attributable to that asset is transferred to retained earnings on such de-recognition. Such transfers to retained earnings are made through Other Comprehensive Income and not routed through profit or loss.

vii) Oil and gas assets

Oil and gas assets are stated at historical cost less accumulated depletion and impairment. These are accounted in respect of an area / field having proved oil and gas reserves, when the wells in the area / field is ready to commence commercial production.

The Company generally follows the âSuccessful Efforts Methodâ of accounting for oil and gas assets as set out by the Guidance Note issued by the ICAI on âAccounting for Oil and Gas Producing Activitiesâ.

Expenditure incurred on acquisition of license interest is initially capitalized on license by license basis as Intangible Assets. Costs are not depleted within exploratory and development work in progress until the exploration phase is completed or commercial oil and gas reserves are discovered.

ta) Cost of surveys and studies relating to exploration activities are expensed as and when incurred. tb) Cost of exploratory / appraisal wellts) are expensed when it is not successful and the cost of successful wellts) are retained as exploration expenditure till it is transferred to Producing property on commercial production as tangible assets.

tc) Cost of temporary occupation of land and cost of successful exploratory, appraisal and development wells are considered as development expenditure. These expenses are capitalized as Producing Property on commercial production.

Depletion to oil and gas assets

Depletion is charged on a unit of production method based on proved reserves for acquisition costs and proved and developed reserves for capitalized costs consisting of successful exploratory and development wells, processing facilities, assets for distribution, estimated site restoration costs and all other related costs. These assets are depleted within each cost center. Reserves for these purposes are considered on working interest basis which are assessed annually. Impact of changes to reserves if any are accounted prospectively.

viii) Site restoration

Provision for decommissioning costs are recognized as and when the Company has a legal or constructive obligation to plug and abandon a well, dismantle and remove Plant and Equipment to restore the site on which it is located. The estimated liability towards the costs relating to dismantling, abandoning and restoring well sites and allied facilities are recognized in respective assets when the well is completed, and the Plant and Equipment are installed.

The amount recognized is the present value of the estimated future expenditure determined using existing technology at current prices and escalated using appropriate inflation rate till the expected date of decommissioning and discounted up to the reporting date using the appropriate risk-free interest rate.

The corresponding amount is also capitalized to the cost of the producing property and is depleted on unit of production method. Any change in the estimated liability is dealt with prospectively and is also adjusted to the carrying value of the producing property.

Any change in the present value of the estimated decommissioning expenditure other than the periodic unwinding of discount is adjusted to the decommissioning provision and the carrying value of the asset. In case reversal of provision exceeds the carrying amount of the related asset, the excess amount is recognized in the Statement of Profit and Loss. The unwinding of discount on provision is charged in the Statement of Profit and Loss as finance cost. Provision for decommissioning cost in respect of assets under Joint Operations is considered as per the participating interest of the Company in the block/field.

ix) Intangible assets

Intangible assets with a finite useful life acquired separately are measured on initial recognition, at costs. Intangible assets are carried at costless accumulated amortization and impairment losses if any.

The Company amortizes intangible assets with a finite useful life using the straight-line method. The useful life considered for computer software is 6 years.

x) Impairment

The carrying values of assets / cash generating units are assessed for impairment at the end of every reporting period. If the carrying amount of an asset exceeds the estimated recoverable amount, an impairment is recognized as expense in the statement of profit and loss. The recoverable amount is the greater of the net selling price and value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on an appropriate discount factor

An impairment loss recognized in prior periods for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognized. In that case, the carrying amount of the asset is increased to its recoverable amount. However, such reversal shall not exceed the carrying amount had there been no impairment loss.

xi) Inventories

The accounting treatment in respect of recognition and measurement of inventory is as follows: ti) Closing stock of crude oil and condensate in saleable condition is valued at the estimated net realizable value in the ordinary course of business.

tii) Stores, spares, capital stock and drilling tangibles are valued at cost on first in first out basis or estimated net realizable value, whichever is lower

Inventories are periodically assessed for restatement at lower of cost or net realizable value. On restatement, any write-down of inventory to net realizable value is recognized as an expense in the period the write-down or loss occurs. In case of increase in the net realizable value, the increase is recognized and reversed to the extent of writedown.

xii) Employee benefits

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

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

a) Defined contribution plan

The Companyâs contribution to provident fund is considered as defined contribution plan and are recognized as and when the employees have rendered services entitling them to contributions.

b) Defined benefit plan

The Company makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life Insurance Corporation of India. The Company accounts its liability for future gratuity benefits based on actuarial valuation, as at the Balance Sheet date using the Projected Unit Credit method.

Re-measurement comprising actuarial gains and losses are reflected immediately in the balance sheet with a charge or credit recognized in the Other Comprehensive Income in the period in which they occur. Re-measurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.

Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset and is recognized the Statement of Profit and Loss except those included in cost of assets as permitted.

Defined benefit costs are categorized as Service cost, Net interest expense and re-measurement cost.

c) Long term employee benefit

The liability for long term compensated absences which are not expected to occur within 12 months after the end of the period in which the employee rendered related service are recognized as liability based on actuarial valuation as at the balance sheet date.

d) Other Employee Benefits including allowances, incentives etc. are recognized based on the terms of the employment.

xiii) Employee share based payment

Equity settled share-based payments to employees are measured at fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity settled share-based payment is expensed on straight line basis over the vesting period based on the Companyâs estimate of the equity instrument that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that cumulative expense reflects the revised estimate, with corresponding adjustment to the equity-settled employee benefits reserve.

xiv) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. All finance assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or disposal are added to or deducted from the fair value of the financial assets or financial liabilities.

Financial assets

All regular purchases or sales of financial assets are recognized and derecognized on the trade date. Recognized financial assets are subsequently measured in their entirety at the fair value. In case of investments in wholly owned subsidiary, the investments are considered at cost subject to impairment if any

A financial asset is de-recognized only when the Company has transferred the rights to receive cash flows from the financial asset or retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients.

Financial assets at fair value through profit or loss

Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition.

Financial liabilities

All financial liabilities are recognized initially at fair value. In the case of loans, borrowings and payables, recognition is net of directly attributable transaction and other costs. The Companyâs financial liabilities may include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments. The measurement of financial liabilities is at fair value and adjustment thereon is routed through profit or loss.

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

xv) Provisions, contingent liabilities and contingent assets

A provision is recognized when the Company has a present obligation (legal or constructive) as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which the reliable estimate can be made.

Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date adjusted to reflect the current best estimates.

In case of contingent liabilities, where there is no certainty of outflow or the amount of obligation cannot be measured reliably, disclosure is made in the notes forming part of the financial statements. Contingent assets are not recognized in the financial statements. However, where the realization of income is reasonably certain, a disclosure of the fact is provided.

xvi) Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to the ownership of an asset to the Company. All other leases are classified as operating leases. Operating lease payments for land are recognized as prepayments and amortized on a straight-line basis over the term of the lease. Contingent rentals, if any, arising under operating leases are recognized as an expense in the period in which they are incurred.

xvii) Earnings per share

Basic earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

xviii) Cash flow statement

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activities.

xix) Cash and cash equivalents

Cash comprises for the purposes of cash flow statement comprise cash on hand and demand deposits with banks. Cash equivalents are short-term balances with a maturity of not exceeding three months, highly liquid investments that are readily convertible in to known amount of cash which are subject to insignificant risk of change in value.

Mar 31, 2017

1. Corporate Information

Hindustan Oil Exploration Company Limited (''the Company'' or ''HOEC'') was incorporated in India on September 22, 1983 under the provisions of the Companies Act, 1956. The Company''s shares are listed on the National Stock Exchange of India Limited (''NSE'') and BSE Limited (BSE). HOEC is engaged in the exploration, development and production of crude oil and natural gas in India, both onshore and offshore.

The Company is a participant in various oil and gas blocks / fields which are in the nature of joint operation through Production Sharing Contracts (PSC) entered by the Company with Government of India along with other entities. The details of Company''s participating interests and of the other entities are as follows:

(O] Operator

The Company has one wholly owned subsidiary, M/s. Hindage Oilfield Services Limited (formerly known as, HOEC Bardahl India Limited), as at the year end.

2. Significant Accounting Policies

i) Statement of Compliance and Basis of Preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) and Guidance note on Accounting for Oil and Gas producing activities (Ind AS) issued by the Institute of Chartered Accountants of India. These financial statements for the year ended March 31, 2017 are the first the Company has prepared in accordance with Ind AS. The date of transition to Ind AS is April 1, 2015. The mandatory exceptions and optional exemptions availed by the Company on first -time adoption have been detailed in Note no.3.

For all periods up to and including the year ended March 31, 2016, the Company had prepared its financial statements under historical cost convention on accrual basis in accordance with the generally accepted accounting principles and the accounting standards notified under the section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (together called the "Previous Indian GAAP").

In accordance with Ind AS 101- "First Time adoption of Indian Accounting Standards" (Ind AS 101), the Company has presented a reconciliation of Shareholders'' equity under previous GAAP and Ind AS as at March 31, 2016.

The Financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.

As the operating cycle cannot be identified in normal course due to the special nature of industry, the same has been assumed to have duration of 12 months. Accordingly, all assets and liabilities have been classified as current or noncurrent as per the Company''s operating cycle and other criteria set out in Ind AS-1 Presentation of Financial Statements'' and Schedule III to the Companies Act, 2013.

The financial statements are presented in Indian Rupees, unless otherwise stated.

Fair value measurement

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 under current market conditions.

The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed in their measurement which are described as follows:

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

(b) Level 2 inputs are inputs that are observable, either directly or indirectly, other than quoted prices included within level 1 for the asset or liability.

(c) Level 3 inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable related market data or Company''s assumptions about pricing by market participants.

ii) Interest in joint operations

A joint operation is a joint arrangement whereby the parties that have the joint control of the arrangement have rights to the assets, and obligations for the liabilities relating to the arrangement.

The Company has entered into Unincorporated Joint Ventures (UJVs) with other oil and gas companies and executed Production Sharing Contracts ("PSC") with the Government of India. These UJVs are in the form of Joint arrangements wherein the participating entity''s assets and liabilities are proportionate to its participating interest.

The UJVs entered into by the company are joint operations wherein the liabilities are several, not joint, and not joint and several and therefore do not come under the category of Joint Venture as defined under the Ind AS. In accounting for these joint operations, the company recognize sits assets and liabilities in proportion to its participating interest in the respective UJV. Likewise, revenue and expenses from the UJV are recognized for its participating interest only. The Company accounts for the assets, liabilities, revenues and expenses relating to its interest in the UJVs in accordance with the Ind AS.

The financial statements of the Company reflect its share of assets, liabilities, income and expenditure of the Unincorporated Joint Ventures ("UJV") which are accounted on the basis of available information in the audited financial statements of UJV on line by line basis with similar items in the Company''s accounts to the extent of the participating interest of the Company as per the various PSCs. The financial statements of the UJVs are prepared by the respective Operators in accordance with the requirements prescribed by the respective PSCs. Hence, in respect of these UJVs, certain disclosures required under the relevant accounting standards have been made in the financial statements.

iii) Foreign exchange transactions

The functional currency of the Company is Indian Rupees which represents the currency of the primary economic environment in which it operates.

Transactions in currencies other than the Company''s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated using mean exchange rate prevailing on the last day of the reporting period.

Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period in which they arise.

iv) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable at the transacted price.

(i) Revenue from the sale of crude oil, condensate and natural gas, net of value added tax and profit petroleum to the Government of India, is recognized on transfer of custody to customers, and the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Company.

(ii) Income from service if any is recognized on accrual basis on its completion and is net of service tax.

(iii) Interest income is recognized on the basis of time, by reference to the principal outstanding and at effective interest rate applicable on initial recognition.

(iv) Dividend Income from investments is recognized when the right to receive has been established.

(v) Rental income arising from operating leases is accounted for on a straight-line basis over the lease terms.

v) Taxes

Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively.

The tax rates and tax laws used to compute are the laws that are enacted or substantively enacted as on the reporting date. The management evaluates, makes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Current income taxes

The current income tax expense includes income taxes payable by the Company. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant taxpaying units intends to settle the asset and liability on a net basis.

Deferred income taxes

Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount. It is recognized only to the extent it is probable that the taxable profit will be available against which the deductible temporary differences and the carry forward losses can be utilized.

The carrying amount of deferred income 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 income tax asset to be utilized.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.

The Company recognizes interest levied and penalties related to income tax assessments in income tax expenses.

vi) Property plant and equipment (other than oil and gas assets)

Land and buildings held for use in the production and supply of goods or services, or for administrative purposes are stated in the balance sheet at cost less accumulated depreciation and the accumulated impairment losses. Freehold land is carried at historical cost and is not depreciated. All other items of property, plant and equipment are stated at historical cost less depreciation.

Historical cost comprises the purchase price and any attributable cost of bringing the asset for its intended use. It includes expenditure that is directly attributable to the acquisition of the items. Borrowing costs for acquisition of fixed assets are capitalized till such assets are ready to be put to use.

Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Improvements to Leasehold premises are amortized over the remaining primary lease period.

Useful lives used for depreciation (other than oil and gas assets):

The Company follows the useful lives set out under Schedule II of the Companies Act, 2013 for the purpose of determining the useful lives of respective blocks of property, plant and equipment. The following are the useful lives followed:

De-recognition of assets

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continuous use of the asset. Any gain or loss arising from such disposal, retirement or derecognition of an item of property, plant and equipment is measured as the difference between the net disposal proceeds and the carrying amount of the item. Such gain or loss is recognized in the statement of profit and loss.

In case of de-recognition of a revalued asset, the corresponding portion of the revaluation surplus as is attributable to that asset is transferred to retained earnings on such de-recognition. Such transfers to retained earnings are made through Other Comprehensive Income and not routed through profit or loss.

vii) Oil and gas assets

Oil and gas assets are stated at historical cost less accumulated depletion and impairment losses. These are created in respect of an area / field having proved developed oil and gas reserves, when the well in the area / field is ready to commence commercial production.

The Company generally follows the "Successful Efforts Method" of accounting for oil and gas assets as set out by the Guidance Note issued by the ICAI on "Accounting for Oil and Gas Producing Activities".

(a) Expenditure incurred on acquisition of license interest is initially capitalized on license by license basis as Intangible Assets. Costs are not depleted within exploratory and development work in progress until the exploration phase is complete or commercial oil and gas reserves are discovered.

(b) Cost of surveys and studies relating to exploration activities are expensed as and when incurred.

(c) Cost of exploratory/ appraisal well(s) are expensed when it is not successful and the cost of successful well(s) are retained as exploration expenditure till it is transferred to Producing property on commercial production as tangible assets.

(d) Cost of temporary occupation of land, successful exploratory wells, appraisal wells, development wells and all related development costs are considered as development expenditure. These expenses are capitalized as Producing Property on commercial production.

Depletion to oil and gas assets

Depletion is charged on a unit of production method based on proved reserves for acquisition costs and proved and developed reserves for capitalized as oil and gas assets consisting the costs of successful exploratory wells, development wells, processing facilities, distribution assets, estimated site restoration costs and all other related costs. These assets are depleted within each cost center. Reserves for these purposes are considered on working interest basis which are re-assessed annually. Impact of changes to reserves are accounted prospectively.

viii) Site restoration

Provision for decommissioning costs are recognized when the Company has a legal or constructive obligation to plug and abandon a well, dismantle and remove a facility or an item of Property, Plant and Equipment and to restore the site on which it is located. The full eventual estimated liability towards costs relating to dismantling, abandoning and restoring well sites and allied facilities are recognized in respective assets when the well is complete / facilities or Property, Plant and Equipment are installed.

The amount recognized is the present value of the estimated future expenditure determined using existing technology at current prices and escalated using appropriate inflation rate till the expected date of decommissioning and discounted up to the reporting date using the appropriate risk free discount rate.

The corresponding amount is also capitalized to the cost of the producing property and is depleted on unit of production method. Any change in the estimated liability is dealt with prospectively and is also adjusted to the corresponding producing property.

Any change in the present value of the estimated decommissioning expenditure other than the periodic unwinding of discount is adjusted to the decommissioning provision and the carrying value of the corresponding asset. In case reversal of provision exceeds the carrying amount of the related asset, the excess amount is recognized in the Statement of Profit and Loss. The unwinding of discount on provision is charged in the Statement of Profit and Loss as finance cost.

Provision for decommissioning cost in respect of assets under Joint Operations is considered as per participating interest of the Company.

ix) Intangible assets

Intangible assets with a finite useful life acquired separately are measured on initial recognition, at costs. Intangible assets are carried at cost less accumulated amortization and impairment losses.

The Company amortizes intangible assets with a finite useful life using the straight-line method. The useful life considered for computer software is 6 years.

x) Impairment

The carrying values of assets/cash generating units are assessed for impairment at the end of every reporting period. If the carrying amount of an asset exceeds the estimated recoverable amount, an impairment is recognized as expense in the statement of profit and loss. The recoverable amount is the greater of the net selling price and value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on an appropriate present value factor.

An impairment loss recognized in prior periods for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset''s recoverable amount since the last impairment loss was recognized. In that case, the carrying amount of the asset is increased to its recoverable amount. However, such reversal shall not exceed the carrying amount had there been no impairment loss.

xi) Inventories

The accounting treatment in respect of recognition and measurement of inventory is as follows:

(i) Closing stock of crude oil and condensate in saleable condition is valued at the estimated net realizable value in the ordinary course of business, less estimated costs necessary to make the sale.

(ii) Stores, spares, capital stock and drilling tangibles are valued at cost on first in first out basis or estimated net realizable value, whichever is lower

xii) Employee benefits

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

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

a) Defined contribution plan

The Company''s contribution to provident fund is considered as defined contribution plan and are recognized as and when the employees have rendered services entitling them to contributions.

b) Defined benefit plan

The Company makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life Insurance Corporation of India. The Company accounts its liability for future gratuity benefits based on actuarial valuation, as at the Balance Sheet date using the Projected Unit Credit method.

Re-measurement comprising actuarial gains and losses are reflected immediately in the balance sheet with a charge or credit recognized in the Other Comprehensive Income in the period in which they occur Re-measurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.

Defined benefit costs are categorized as Service cost, Net interest expense and re-measurement cost.

c) Long term employee benefit

The liability for long term compensated absences which are not expected to occur within 12 months after the end of the period in which the employee rendered related service are recognized as liability based on actuarial valuation as at the balance sheet date.

d) Other Employee Benefits including allowances, incentives etc. are recognized based on the terms of the employment.

xiii) Employee share based payment

Equity settled share based payments to employees are measured at fair value of the equity instruments at the grant date.

The fair value determined at the grant date of the equity settled share based payment is expensed on straight line basis over the vesting period based on the estimate of the equity instrument that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that cumulative expense reflects the revised estimate, with corresponding adjustment to the equity -settled employee benefits reserve.

xiv) Financial instruments

Financial assets

A financial asset is de-recognized only when the Company has transferred the rights to receive cash flows from the financial asset or retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Financial assets at fair value through profit or loss

Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition.

Financial liabilities

All financial liabilities are recognized initially at fair value. In the case of loans, borrowings and payables, recognition is net of directly attributable transaction and other costs. The Company''s financial liabilities may include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.The measurement of financial liabilities is at fair value and adjustment thereon is routed through profit or loss.

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

xv) Provisions, contingent liabilities and contingent assets

xvi) Leases

xvii) Earnings per share

weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

xviii) Cash flow statement

xix) Cash and cash equivalents

3. First time adoption - mandatory exceptions and optional exemptions

(i) Overall principle:

The Company has prepared the opening balance sheet as per Ind ASas of April 1, 2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying certain items from Previous GAAP to Ind AS as required under the Ind AS, and applying Ind AS in the measurement of recognized assets and liabilities. However, this principle is subject to certain mandatory exceptions and certain optional exemptions availed by the Company as detailed below.

(ii) Deemed cost for Property, plant and equipment and oil and gas assets

The Company has elected to continue with the carrying value of all its Property, plant and equipment, Oil and gas assets recognized as of April 1, 2015 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as of the transition date except adjustment related to decommissioning liabilities.

(iii) Investments in subsidiary

The Company has elected to carry its investments in subsidiary at deemed cost being carrying amount under Previous GAAP on the transition date.

(iv) Deemed cost for intangible assets

The Company has elected to continue with the carrying value of all intangible assets recognized as at April 1, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.

(v) Site restoration costs

The Company has availed optional exemption available with respect to decommissioning costs included in the Oil and Gas Assets. Accordingly, the Company has measured the decommissioning provision in accordance with Ind AS 37 ''Provisions, Contingent Liabilities and Contingent Assets'' as at transition date. The Company has computed the estimate of the amount that would have been included in the cost of the related Oil and Gas Assets by discounting the decommissioning provision computed at transition date using its best estimate of the historical risk adjusted discount rate to the date when decommissioning liability first arose. Thereafter, the Company has computed depletion / depreciation on Oil and Gas assets on the aforesaid estimated amount

Mar 31, 2015

I. Basis of Preparation

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The financial statements of the Company reflect its share of assets, liabilities, income and expenditure of the Unincorporated Joint Ventures which are accounted on the basis of available information in the audited / unaudited financial statements of the Unincorporated Joint Ventures on line by line basis with similar items in the Company's accounts to the extent of the participating interest of the Company as per the various "Production Sharing Contracts". The financial statements of the Unincorporated Joint Ventures are prepared by the respective Operators in accordance with the requirements prescribed by the respective Production Sharing Contracts of the Unincorporated Joint Ventures. Hence, in respect of these Unincorporated Joint Ventures, certain disclosures required under the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014, other pronouncements of The Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 2013 have been made in the financial statement of the Company based on audited/unaudited financial statement of the unincorporated Joint Venture.

ii. Use of Estimates

The preparation of the financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period like depletion of Producing Properties, estimate of Site Restoration Liability, expensing of the estimated Site Restoration Liability, provision for employee benefits, useful lives of fixed assets, provision for doubtful advances, provision for tax, recognition of MAT Credit, recognition of deferred tax asset etc. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates. Any revisions to accounting estimates are recognized prospectively.

iii. Fixed Assets and Depreciation, Depletion and Amortization

Fixed assets comprise of the following:

* Tangible assets:

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

Depreciation on fixed assets is calculated on a Written Down Value basis using the rates arrived at based on the useful lives estimated by the management.

Till the year ended 31 March 2014, depreciation rates prescribed under Schedule XIV were treated as minimum rates and the Company was not allowed to charge depreciation at lower rates even if such lower rates were justified by the estimated useful life of the asset. Schedule II to the Companies Act 2013 prescribes useful lives for fixed assets which, in many cases, are different from lives prescribed under the erstwhile Schedule XIV However, Schedule II allows companies to use higher/ lower useful lives and residual values if such useful lives and residual values can be technically supported and justification for difference is disclosed in the financial statements.

Considering the applicability of Schedule II, the management has re-estimated useful lives and residual values of all its fixed assets. The management believes that depreciation rates currently used fairly reflect its estimate of the useful lives and residual values of fixed assets. In view of this change the opening written down balance is being depreciated over the revised remaining useful life. Had the Company continued to use the earlier basis of providing depreciation, the charge to the statement of profit and loss before taxation for the current year would have been lower by INR 1,512,388 and the net block of fixed assets would correspondingly be higher by the same amount. In accordance with the transitional provision of Schedule II, the Company has charged off the written down value of assets of INR 1,131,612 where there is no revised remaining useful life as at April 01, 2014, to the statement of profit and loss.

Till year ended 31 March 2014, to comply with the requirements of Schedule XIV to the Companies Act, 1956, the Company was charging 100% depreciation on assets costing less than INR 5,000/- in the year of purchase. However, Schedule II to the Companies Act 2013, applicable from the current year, does not recognize such practice. Hence, to comply with the requirement of Schedule II to the Companies Act, 2013, the Company has changed its accounting policy for depreciations of assets costing less than INR 5,000/-. As per the revised policy, the Company is depreciating such assets over their useful life as assessed by the management. The management has decided to apply the revised accounting policy prospectively from accounting periods commencing on or after 1 April 2014. The change in accounting for depreciation of assets costing less than INR 5,000/- did not have any material impact on financial statements of the Company for the current year

Improvements to Leasehold premises are amortised over the remaining primary lease period.

* Intangible assets:

Intangible assets comprising computer software is amortised over the license period or 10 years, whichever is lower.

* Producing property and Exploration/ Development work-in-progress:

The Company generally follows the "Successful Efforts Method" of accounting for its exploration and production activities as explained below:

(a) Acquisition costs cover all costs incurred to purchase, lease or otherwise acquire a property or mineral right. These are costs incurred in acquiring the right to explore, drill and produce oil and gas including the initial costs incurred for obtaining the Petroleum Exploration License / Letter of Authority and Mining Lease. Acquisition costs are carried in books as Capital - Work in Progress and transferred to Producing Property on attainment of commercial production. Depletion on Acquisition cost is provided on "Unit of Production" method based on the related reserves as recommended by the Guidance Note issued by the Institute of Chartered Accountants of India.

(b) Cost of surveys and studies relating to exploration activities are expensed when the same are incurred (also see Note 38).

(c) Cost of exploratory well(s) are expensed when the well(s) are conclusively determined to be dry / permanently abandoned or are transferred to Producing Properties on attainment of commercial production.

(d) Cost of all appraisal programmes ("appraisal costs") related to a Discovery are initially capitalised as "Exploration Expenditure". If a Discovery is determined to be commercial pursuant to the appraisal programme, all appraisal costs, including the cost of unsuccessful appraisal wells, if any, are capitalised as Producing Properties on attainment of commercial production. If at the end of the appraisal programme, the Discovery is relinquished, then all appraisal costs related to the Discovery are charged to the Statement of Profit and Loss.

(e) Cost of temporary occupation of land, successful exploratory wells, appraisal wells, development wells and all related development costs, including depreciation on support equipment and facilities, are considered as development expenditure. These expenses are capitalised as Producing Properties on attainment of commercial production.

(f) Producing Properties, including the cost incurred on dry/abandoned wells in development areas, are depleted using " Unit of Production" method based on the related reserves as recommended by the Guidance Note issued by the Institute of Chartered Accountants of India. Any changes in Reserves and/or Cost are dealt with prospectively from the beginning of the year of such change. Hydrocarbon reserves are estimated and/or approved by the Management Committees of the Unincorporated Joint Ventures, which follow the International Reservoir Engineering Principles.

(g) If the Company/Unincorporated Joint Venture were to relinquish a block or part thereof, the accumulated acquisition and exploration costs carried in the books related to the block or part thereof, as the case may be, are written off as a charge to the Statement of Profit and Loss in the year of relinquishment.

Explanatory Note

1. Save the costs referred to in note (b) herein above, all exploration costs are initially capitalized as "Exploration Expenditure", and are retained in exploration expenditure-work-in-progress if the exploration well(s) in first drilling campaign is determined to be successful, or such costs are written off consistent with para 2 below, if is determined to be unsuccessful.

2. Exploration costs associated with drilling, testing and equipping exploratory well(s) are initially capitalized as "Exploration Expenditure", and retained in exploration expenditure-work-in-progress so long as:

(a) such well has found potential commercial reserves; or

(b) such well test result is inconclusive and is subject to further exploration or appraisal activity like acquisition of seismic, or re-entry of such well, or drilling of additional exploratory/step out well in the area of interest

* until such time as such costs are transferred to "Producing Properties" on attainment of commercial production; or

* else charged to the Statement of Profit and Loss.

Management makes quarterly assessment of the amounts included in "Exploration Expenditure-work-in-progress" to determine whether capitalization is appropriate and can continue. Exploration well(s) capitalized beyond 2 years are subject to additional judgment as to whether facts and circumstances have changed and therefore the conditions described in 2(a) and (b) above no longer apply.

iv. Site Restoration

Estimated future liability relating to dismantling and abandoning producing well sites and facilities is recognised when the installation of the production facilities is completed based on the estimated future expenditure determined by the Management in accordance with the local conditions and requirements. The corresponding amount is added to the cost of the Producing Property and is expensed in proportion to the production for the year and the estimated proved developed reserves of hydrocarbons based on latest technical assessment available with the Company. Any change in the value of the estimated liability is dealt with prospectively and reflected as an adjustment to the provision and the corresponding Producing Property.

v. Impairment

The carrying amounts of assets are reviewed annually or if there is any indication of impairment based on internal/external factors during the year An impairment loss is recognized wherever the carrying amount of an asset or Cash Generating Unit (CGU) exceeds its recoverable amount. The recoverable amount is the greater of the asset's or CGU's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation/depletion is provided in subsequent periods on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

vi. Investments

Investments are capitalised at cost plus brokerage and stamp charges. Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are valued at lower of cost and fair value determined on an individual investment basis. Long term investments are valued at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

vii. Inventories

(i) Closing stock of crude oil, condensate and natural gas in saleable condition is valued at Estimated Net Realisable Value. Estimated Net Realisable Value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

(ii) Stores, spares, capital stock and drilling tangibles are valued at cost on first in first out basis/ weighted average basis, as applicable, or estimated net realisable value, whichever is lower.

viii. Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

(i) Revenue from the sale of crude oil, condensate and natural gas, net of Government's share of Profit Petroleum (calculated as per the provisions of the respective Production Sharing Contracts), where applicable, and Value Added Tax, is recognised on transfer of custody.

(ii) Service Income is recognised on accrual basis as per the contractual terms and is net of Service Tax.

(iii) Delayed Payment charges, retrospective revision in prices, interest on delayed payments and interest on income tax refunds are recognised as and when there is no uncertainty in the determination/receipt of the amount, on grounds of prudence.

(iv) Interest Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(v) Dividend Income is recognised when the right to receive the dividend is unconditional.

ix Employee Benefits

(a) Defined Contribution Plan

(i) Provident Fund: Contributions towards Employees' Provident Fund are made to the Employees Provident Fund Scheme in accordance with the statutory provisions. Contributions towards Employees' Provident Fund are recognized as an expense in the year incurred. There are no obligations other than the contribution payable to the respective fund.

(ii) Superannuation Fund: The Company contributes a sum equivalent to 15% of eligible Employees' basic salary to a Superannuation Fund administered by trustees. The Company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred.

(b) Defined Benefit Plan

The Company makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life Insurance Corporation of India. The Company accounts its liability for future gratuity benefits based on actuarial valuation, as at the Balance Sheet date, determined every year by an Actuary appointed by the Company, using the Projected Unit Credit method. Actuarial gains/losses are recognised in the Statement of Profit and Loss. Obligation under the defined benefit plan is measured at the present value of estimated future cash flows. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

(c) Compensated Absences

The liability for long term compensated absences carried forward on the Balance Sheet date is provided for based on actuarial valuation done by an independent Actuary using the Projected Unit Credit method at the end of each accounting period. Short term compensated absences is recognized based on the eligible leave at credit on the Balance Sheet date and is estimated based on the terms of the employment contract.

(d) Other Employee Benefits

Other employee benefits, including allowances, incentives etc. are recognised based on the terms of the employment contract.

x. Borrowing Cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Eligible 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 respective asset. All other borrowing costs are expensed in the period they occur

xi. Foreign Currency Transactions

The Company translates foreign currency transactions into Indian Rupees at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currency are translated into Indian Rupees at the rate of exchange prevailing at the Balance Sheet date. Exchange differences arising on the settlement of monetary items or on reporting the Company's monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, excluding long term foreign currency monetary items (see below), are recognised as income or as expenses in the period in which they arise.

Exchange differences, both realised and unrealised, arising on reporting of long term foreign currency monetary items (as defined in the Accounting Standard-11 notified by the Government of India) relating to the acquisition of a depreciable capital asset are added to/deducted from the cost of the asset and in other cases unrealised exchange differences are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" in the Company's Balance Sheet and amortized over the balance period of such long term asset/liability by recognition as income or expense in each of such periods.

In accordance with MCA circular dated 09 August 2012, exchange differences for this purpose, are total differences arising on long-term foreign currency monetary items for the period. In other words, the company does not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange difference.

xii. Taxation

Income Tax: Current tax is the amount of tax payable on the taxable income for the year and is provided with reference to the provisions of the Income Tax Act, 1961.

Deferred Tax: Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities offset and relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each Balance Sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

MAT Credit: Minimum Alternate Tax (MAT) Credit is recognised as an asset, only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period, in accordance with the Guidance Note on "Accounting for Credit Available in respect of Minimum Alternate Tax under Income Tax Act, 1961". In the year in which the MAT Credit becomes eligible to be recognised as an asset, 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 the Company will pay normal income tax during the specified period.

xiii. Cash and Cash Equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash and deposits at bank, cash in hand and short-term investments with an original maturity of three months or less.

xiv. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when the Company has present or legal obligations as a result of past events for which it is probable that an outflow of economic benefit will be required to settle the transaction and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligations which will be confirmed only by future events not wholly within the control of the Company or (ii) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

Mar 31, 2014

(i) Basis of preparation

Te financial statements have been prepared to comply in all material respects with the Accounting Standards notifed by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956, read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate Afairs. Te financial statements have been prepared under the historical cost convention on an accrual basis. Te accounting policies have been consistently applied by the Company and are consistent with those used in the previous year, except for treatment of survey costs as referred to in Note 40. Te financial statements of the Company refect its share of assets, liabilities, income and expenditure of the Unincorporated Joint Ventures which are accounted on the basis of available information in the audited / unaudited financial statements of the Unincorporated Joint Ventures on line by line basis with similar items in the Company''s accounts to the extent of the participating interest of the Company as per the various "Production Sharing Contracts". Te financial statements of the Unincorporated Joint Ventures are prepared by the respective Operators in accordance with the requirements prescribed by the respective Production Sharing Contracts of the Unincorporated Joint Ventures. Hence, in respect of these Unincorporated Joint Ventures, certain disclosures required under the Accounting Standards notifed by Companies (Accounting Standards) Rules, 2006, (as amended), other pronouncements of Te Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 have been made in the financial statements of the Company based on audited / unaudited financial statement of the unincorporated Joint Venture.

(ii) Use of Estimates

Te preparation of the financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period like depletion of Producing Properties, estimate of Site Restoration Liability, expensing of the estimated Site Restoration Liability, provision for employee benefits, useful lives of fixed assets, provision for doubtful advances, provision for tax, recognition of MAT Credit, recognition of deferred tax asset etc. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates. Any revisions to accounting estimates are recognized prospectively.

(iii) Fixed Assets and depreciation, depletion and amortization

Fixed assets comprises of the following:

- Tangible assets:

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

Depreciation is provided on the "Written Down Value'''' method at the rates specified in Schedule XIV of the Companies Act, 1956. Assets individually costing less than or equal to INR 5,000 are fully depreciated in the year of acquisition.

Improvements to Leasehold premises are amortised over the remaining primary lease period.

- Intangible assets:

Intangible assets comprising computer software is amortised over the license period or 10 years, whichever is lower.

- Producing properties and Exploration / Development work-in-progress:

Te Company generally follows the "Successful Eforts Method" of accounting for its exploration and production activities as explained below:

(a) Acquisition costs cover all costs incurred to purchase, lease or otherwise acquire a property or mineral right. Tese are costs incurred in acquiring the right to explore, drill and produce oil and gas including the initial costs incurred for obtaining the Petroleum Exploration License / Letter of Authority and Mining Lease. Acquisition costs are carried in books as Capital Â Work in Progress and transferred to Producing Properties on attainment of commercial production. Depletion on Acquisition cost is provided on "Unit of production" method based on the related reserves as recommended by the Guidance Note issued by the Institute of Chartered Accountants of India.

NOTES TO FINANcIAl STATEMENTS FOR ThE YEAR ENDED MARch 31, 2014

(All amounts are in Indian Rupees, unless otherwise stated)

(b) Cost of surveys and studies relating to exploration activities are expensed when the same are incurred (also refer Note 40).

(c) Cost of exploratory well(s) are expensed when the well(s) are conclusively determined to be dry / permanently abandoned or are transferred to Producing Properties on attainment of commercial production.

(d) Cost of all appraisal programmes ("appraisal costs") related to a Discovery are initially capitalised as "Exploration Expenditure". If a Discovery is determined to be commercial pursuant to the appraisal programme, all appraisal costs, including the cost of unsuccessful appraisal wells, if any, are capitalised as Producing Properties on attainment of commercial production. If at the end of the appraisal programme, the Discovery is relinquished, then all appraisal costs related to the Discovery are charged to the Statement of Profit and Loss.

(e) Cost of temporary occupation of land, successful exploratory wells, appraisal wells, development wells and all related development costs, including depreciation on support equipment and facilities, are considered as development expenditure. Tese expenses are capitalised as Producing Properties on attainment of commercial production.

(f ) Producing Properties, including the cost incurred on dry / abandoned wells in development areas, are depleted using "Unit of Production'''' method based on the related reserves as recommended by the Guidance Note issued by the Institute of Chartered Accountants of India. Company provides minimum depreciation as prescribed under Schedule XIV of the Companies Act, 1956, wherever required. Any changes in Reserves and / or Cost are dealt with prospectively from the beginning of the year of such change. Hydrocarbon reserves are estimated and / or approved by the Management Committees of the Unincorporated Joint Ventures, which follow the International Reservoir Engineering Principles.

(g) If the Company / Unincorporated Joint Venture were to relinquish a block or part thereof, the accumulated acquisition and exploration costs carried in the books related to the block or part thereof, as the case may be, are written of as a charge to the Statement of Profit and Loss in the year of relinquishment.

Explanatory Note

1. Save the costs referred to in note (b) herein above, all exploration costs are initially capitalized as "Exploration Expenditure", and are retained in exploration expenditure-work-in-progress if the exploration well(s) in frst drilling campaign is determined to be successful, or such costs are written of consistent with para 2 below, if is determined to be unsuccessful.

2. Exploration costs associated with drilling, testing and equipping exploratory well(s) are initially capitalized as "Exploration Expenditure" and retained in exploration expenditure-work-in-progress so long as:

(a) such well has found potential commercial reserves; or

(b) such well test result is inconclusive and is subject to further exploration or appraisal activity like acquisition of seismic, or re-entry of such well, or drilling of additional exploratory / step out well in the area of interest

Â until such time as such costs are transferred to "Producing Properties" on attainment of commercial production; or

Â else charged to the Statement of Profit and Loss.

Management makes quarterly assessment of the amounts included in "Exploration Expenditure-work-in-progress" to determine whether capitalization is appropriate and can continue. Exploration well(s) capitalized beyond 2 years are subject to additional judgment as to whether facts and circumstances have changed and therefore the conditions described in 2(a) and (b) above no longer apply.

(iv) Site Restoration

Estimated future liability relating to dismantling and abandoning producing well sites and facilities is recognised when the installation of the production facilities is completed based on the estimated future expenditure determined by the Management in accordance with the local conditions and requirements. Te corresponding amount is added to the cost of the Producing Properties and is expensed in proportion to the production for the year and the estimated proved developed reserves of hydrocarbons based on latest technical assessment available with the Company. Any change in the value of the estimated liability is dealt with prospectively and refected as an adjustment to the provision and the corresponding Producing Properties.

(v) Impairment

Te carrying amounts of assets are reviewed annually or if there is any indication of impairment based on internal / external factors during the year. An impairment loss is recognized wherever the carrying amount of an asset or Cash Generating Unit (CGU) exceeds its recoverable amount. Te recoverable amount is the greater of the asset''s or CGU''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation / depletion is provided in subsequent periods on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(vi) Investments

Investments are capitalised at cost plus brokerage and stamp charges. Investments that are readily realisable and intended to be held for not more than a year are classifed as current investments. All other investments are classifed as long-term investments. Current investments are valued at lower of cost and fair value determined on an individual investment basis. Long term investments are valued at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

(vii) Inventories

(a) Closing stock of crude oil, condensate and natural gas in saleable condition is valued at Estimated Net Realisable Value. Estimated Net Realisable Value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

(b) Stores, spares, capital stock and drilling tangibles are valued at cost on frst in frst out basis / weighted average basis, as applicable, or estimated net realisable value, whichever is lower.

(viii) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will fow to the Company and the revenue can be reliably measured.

(a) Revenue from the sale of crude oil, condensate and natural gas, net of Government''s share of Profit Petroleum (calculated as per the provisions of the respective Production Sharing Contracts), where applicable, and Value Added Tax, is recognised on transfer of custody.

(b) Service Income is recognised on accrual basis as per the contractual terms and is net of Service Tax.

(c) Delayed Payment charges, retrospective revision in prices, interest on delayed payments and interest on income tax refunds are recognised as and when there is no uncertainty in the determination / receipt of the amount, on grounds of prudence.

(d) Interest Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(e) Dividend Income is recognised when the right to receive the dividend is unconditional.

(ix) Employee benefits

(a) Defined Contribution Plan

(i) Provident Fund: Contributions towards Employees'' Provident Fund are made to the Employees Provident Fund Scheme in accordance with the statutory provisions. Contributions towards Employees'' Provident Fund are recognized as an expense in the year incurred. Tere are no obligations other than the contribution payable to the respective fund.

(ii) Superannuation Fund: Te Company contributes a sum equivalent to 15% of eligible Employees'' basic salary to a Superannuation Fund administered by trustees. Te Company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred.

(b) Defined benefit Plan

Te Company makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life Insurance Corporation of India. Te Company accounts its liability for future gratuity benefits based on actuarial valuation, as at the Balance Sheet date, determined every year by an Actuary appointed by the Company, using the Projected Unit Credit method. Actuarial gains / losses are recognised in the Statement of Profit and Loss. Obligation under the Defined benefit plan is measured at the present value of estimated future cash flows. Te estimate of future salary increase takes into account infation, likely increments, promotions and other relevant factors.

(c) Compensated Absences

Te liability for long term compensated absences carried forward on the Balance Sheet date is provided for based on actuarial valuation done by an independent Actuary using the Projected Unit Credit method at the end of each accounting period. Short term compensated absences is recognized based on the eligible leave at credit on the Balance Sheet date and is estimated based on the terms of the employment contract.

(d) Other Employee benefits

Other employee benefits, including allowances, incentives etc. are recognised based on the terms of the employment contract.

(x) Borrowing Cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Eligible 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 respective asset. All other borrowing costs are expensed in the period the y occ u r.

(xi) Foreign Currency Transactions

Te Company translates foreign currency transactions into Indian Rupees at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currency are translated into Indian Rupees at the rate of exchange prevailing at the Balance Sheet date. Exchange diferences arising on the settlement of monetary items or on reporting the Company''s monetary items at rates diferent from those at which they were initially recorded during the period, or reported in previous financial statements, excluding long term foreign currency monetary items (see below), are recognised as income or as expenses in the period in which they arise.

Exchange diferences, both realised and unrealised, arising on reporting of long term foreign currency monetary items (as Defined in the Accounting Standard - 11 notifed by the Government of India) relating to the acquisition of a depreciable capital asset are added to / deducted from the cost of the asset and in other cases unrealised exchange diferences are accumulated in a "Foreign Currency Monetary Item Translation Diference Account" in the Company''s Balance Sheet and amortized over the balance period of such long term asset / liability by recognition as income or expense in each of such periods.

In accordance with MCA circular dated 09 August 2012, exchange diferences for this purpose, are total diferences arising on long-term foreign currency monetary items for the period. In other words, the company does not diferentiate between exchange diferences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange diference.

(xii) Taxation

Income Tax: Current tax is the amount of tax payable on the taxable income for the year and is provided with reference to the provisions of the Income Tax Act, 1961.

Deferred Tax: Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities ofset and relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufcient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable Profits.

At each Balance Sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufcient future taxable income will be available against which such deferred tax assets can be realised.

MAT Credit: Minimum Alternate Tax (MAT) Credit is recognised as an asset, only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period, in accordance with the Guidance Note on "Accounting for Credit Available in respect of Minimum Alternate Ta x under Income Ta x Act, 1961". In the year in which the MAT Credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. Te 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 efect that the Company will pay normal income tax during the specified period.

(xiii) Cash and cash equivalents

Cash and cash equivalents for the purposes of cash fow statement comprise cash and deposits at bank, cash in hand and short-term investments with an original maturity of three months or less.

(xiv) Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when the Company has present or legal obligations as a result of past events for which it is probable that an outflow of economic benefit will be required to settle the transaction and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligations which will be confirmed only by future events not wholly within the control of the Company or (ii) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

(a) Reconciliation of equity shares outstanding at the beginning and at the end of the reporting period

(b) Terms / rights attached to equity shares

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

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of the Company remaining after settlement of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Details of shareholders holding more than 5% shares in the company

As per records of the Company, including its register of shareholders / members, the above shareholding represents legal ownerships of shares.

Notes:

a. The term loans from banks (Foreign currency) include loans from Axis Bank Limited INR 92,175,630 (Previous Year: INR 167,009,795). Term loan is secured by way of charge on all movable properties pertaining to PY-1 Gas Project, the Company''s Participating Interest in PY-1 Field and on the PY-1 Trust and Retention Accounts. The Loan is to be paid in variable installments over a period upto Financial Year 2014-2015.

b. The term loans from banks (Rupee) includes loan from HDFC Bank Limited and Axis Bank Limited INR Nil (Previous Year INR 59,900,000) which are secured by way of charge on the Company''s Participating Interest in PY-3 and Palej Fields, frst charge on the Company''s share of Crude Oil Receivables from PY-3 and Palej Fields and charge on the Debt Service Reserve Account. These loans have been repaid during the year.

c. Loan from Related Party (Unsecured) includes (Total INR 9,375,950,000):

a. Unsecured loan of INR 5,746,550,000 (Previous Year: INR 5,343,000,000) is to be paid in variable installments over a period upto Financial Year 2015-2016.

b. During the previous year, Company had raised funds through External Commercial Borrowing (ECB) from ENI Finance International of USD 60 Million : INR equivalent 3,629,400,000 (Previous year: INR 3,288,000,000) to be paid in variable installments over a period up to 2018-2019 starting from June 2014.

All payments due to Micro, Small & Medium enterprises have been made within the prescribed time limits and / or date agreed upon under the contract.

b. There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund.

c. Includes Security Deposit of INR 8,500,000 (Previous Year: INR 8,500,000) received from HOEC Bardahl India Ltd., the Wholly Owned Subsidiary of the Company.

Notes:

a. The Hon''ble Mumbai ITAT has, vide its order dated September 17, 2013, passed a favorable order in relation to the Company''s Income Tax Assessment Cases for the Financial Years 2004-05 and 2005-06 primarily relating to deduction under Section 80IB(9) of the Income Tax Act, 1961. Since the deduction had been decided in favour of the Company (consistent with Financial Years 2002-03 and 2003-04), the excess Income Tax provision made for the Financial Years 2004-05 to 2006-07 amounting to INR 5,650 lacs has been written back during the current year.

b. Pursuant to a demand raised by Directorate General of Hydrocarbons with respect to the block CY-OS-97/1 in the previous year, the Company had paid amounts aggregating to INR 47,630,122 under protest. The matter is under arbitration and the Company had provided for the entire amount in books of account.

Notes:

a. Current accounts include lien marked amount of INR Nil (Previous Year: INR 1,176,472).

b. Deposits (with original maturity of less than 3 months) include lien marked deposits of INR Nil (Previous Year: INR 8,469,476).

c. Deposits (with original maturity of more than 12 months) include (i) lien marked deposits of INR 64,414,019 (Previous Year: INR 52,026,986), and (ii) deposits of INR 410,979,383 (Previous Year: INR 321,033,323) placed as "Site Restoration Fund" under Section 33ABA of Income Tax Act, 1961.

Notes:

a. PY-1 Field was shut in for a period of 102 days in the FY 2014 primarily on account of non evacuation of gas by GAIL (Buyer). Following the Amendment to the Gas Sales Contract which had been executed in July 2013, GAIL has been evacuating gas through the low pressure pipeline connecting PY-1 Gas Terminal to alternate consumers on a nearly continuous basis.

b. PY-3 Field, operated by Hardy Exploration & Production (India) Inc., remains shut since July 31, 2011. The Full Field Development Plan submitted by the Operator during May 2013 has been technically reviewed by all the JV Partners. Discussions are ongoing amongst the Joint Venture Partners with respect to the proposal to proportionately share cess and royalty on a cost recoverable basis.

Notes:

a. Previous year income includes dividend of INR 35,001,400 received from wholly owned subsidiary HOEC Bardahl India Limited.

b. Excess provision written back for the year ended March 31, 2013 represents provision of INR 4,249,904 relating to Long Term Incentive Plan, being provision no longer required.

Note:

a. Exceptional item in the previous year represents additional depletion and impairment loss charged to the statement of Profit and loss pursuant to an independent third party certification of PY-1 Field reserves based on information available subsequent to the drilling of Surya Well in PY-1 Field, the estimate of Proved Reserves of PY-1 Field had been revised to 120.2 billion cubic feet.

The Company had carried out an impairment assessment as at December 31, 2012, based on procedures consistent with Accounting Standard 28 (AS 28) and recognised an impairment loss to the extent of INR 4,593,886,734 and additional depletion amounting to INR 1,125,857,269 for the production upto the date of assessment of impairment. The aggregate amount of INR 5,719,744,003 had been disclosed under exceptional items.

The following key assumptions had been used for determining the value-in-use of PY-1 Asset:

i. Pre-tax cash flows had been projected for the life of the PY-1 Field based on the estimate of Proved Reserves as certified by the independent third party and considering cash flows necessary to maintain originally assessed standard of performance.

ii. Discount rate of 10% had been considered refecting market assessment based on transactions for similar assets.

25. Long Term Incentive Plan, Scheme 2005

Under the HOEC Limited Employee Stock Option Scheme Â 2005 (ESOS Scheme) approved by the Shareholders, and as amended from time to time, the Board had granted options in the prior years to the eligible Employees and eligible Directors at Nil exercise price as part of the Long Term Incentive Plan (LTIP). In terms of the ESOS Scheme, the options would vest at the third anniversary of the end of the financial year for which the grant corresponds to. During the previous year, the Company has written back excess provision towards cash and ESOS (deferred bonus) amounting to INR 4,249,904 based on the approval / ratifcation of the Board of Directors of the Company.

Method Used for Accounting for Share Based Payment Plan:

Under the LTIP Scheme 2005, the eligible employees are granted options in the succeeding year after adoption of the Annual Audited Accounts for the given year. Te Company charges the entire amount provided towards performance bonus and stock options to the Statement of Profit and Loss for the year for which the grant corresponds to. Any upward variation in the market price / acquisition price of the ESOS stocks, as may be applicable, as on the date of Balance Sheet, is charged to the Statement of Profit and Loss for the period as per LTIP.

Fair Value Methodology:

Te fair value of the options granted under LTIP Scheme 2005 approximates the intrinsic value of the options on the date of the grant.

26. Employee benefits

a. Gratuity

Te Company''s obligation towards the Gratuity Fund is a Defined benefit Plan. Every employee who has completed a continuous period of five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. Te scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy.

Te following tables summarize the components of net benefit expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the Balance Sheet.

Te estimates of future salary increases, considered in actuarial valuation, take account of infation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Te overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Amounts for the current and previous four periods are as follows:

b. Compensated Absences

Te key assumptions used in computation of provision for long term compensated absences are as given below:

Discount Rate (% p.a.) 9.10%

Future Salary Increase (% p.a.) 9.00%

Mortality Rate Indian Assured Lives Mortality (2006-08) Ult.

Attrition (% p.a.) 1% to 5%

27. Segmental Reporting

Te Company is primarily engaged in a single business segment of "Hydrocarbons and other incidental services". All the activities of the Company revolve around the main business. Further, the Company does not have any separate geographic segments other than India. Hence, there are no separate reportable segments as per AS-17 "Segmental Reporting".

28. Unincorporated Joint Venture Operations

Te Company has entered into Production Sharing Contracts (PSCs) and Unincorporated Joint Ventures (UJVs) in respect of certain properties with the Government of India and some bodies corporate. Details of these UJVs and participating interest of venture partners are as follows:

Notes:

All the Unincorporated Joint Ventures are for the blocks awarded within the territorial limits of India. * Pursuant to the Settlement Agreement entered into during 2012, the Participating Interest (PI) of the Company has been revised to 100%. ** On account of non-submission of Financial and Performance Guarantee to the Government of India, JPL has been declared "Defaulting Party"

by the Management Committee. Te non defaulting parties i.e HOEC, BPRL and IMC have assumed the PI of the defaulting party (JPL)

on interim basis with onward assignment of 25% PI to HPCL so that the efective Participating Interest of each of the parties remain at 25%.

Necessary Government approvals for the aforesaid assignment in favour of Hindustan Petroleum Corporation Limited (HPCL) are awaited.

30. Related Party Disclosures

(i) Te related parties of the Company as at March 31, 2014 are as follows:

(A) Wholly Owned Subsidiary Company: 1. HOEC Bardahl India Limited

(B) Promoter Group:

1. ENI UK Holding plc (Wholly Owned Subsidiary of ENI S.p.A, Italy)

2. Burren Shakti Limited (Wholly Owned Indirect Subsidiary of ENI UK Holding plc.)

3. Burren Energy India Limited (Wholly Owned Indirect Subsidiary of ENI UK Holding plc.)

(C) Other Group Entities

1. ENI Finance International S.A., Belgium

2. ENI India Limited, United Kingdom

3. Banque ENI, Belgium

4. Saipem (Portugal) Comercio Maritimo Su Lda

(D) Unincorporated Joint Ventures:

As per details given in Note 28 above

(E) Key Management Personnel:

Mr. Manish Maheshwari Â Managing Director (ii) Te nature and volume of transactions of the Company during the year with the above parties were as follows:

Mar 31, 2013

(i) Basis of preparation

Te fnancial statements have been prepared to comply in all material respects with the Accounting Standards notifed by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. Te fnancial statements have been prepared under the historical cost convention on an accrual basis. Te accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. Te fnancial statements of the Company refect its share of assets, liabilities, income and expenditure of the Unincorporated Joint Ventures which are accounted on the basis of available information in the audited / unaudited fnancial statements of the Unincorporated Joint Ventures on line by line basis with similar items in the Company''s accounts to the extent of the participating interest of the Company as per the various "Production Sharing Contracts". Te fnancial statements of the Unincorporated Joint Ventures are prepared by the respective Operators in accordance with the requirements prescribed by the respective Production Sharing Contracts of the Unincorporated Joint Ventures. Hence, in respect of these Unincorporated Joint Ventures, certain disclosures required under the Accounting Standards notifed by Companies (Accounting Standards) Rules, 2006, (as amended), other pronouncements of Te Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 have been made in the fnancial statements of the Company based on audited / unaudited fnancial statement of the unincorporated Joint Venture.

(ii) Use of Estimates

Te preparation of the fnancial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the fnancial statements and the reported income and expenses during the reporting period like depletion of Producing Properties, estimate of Site Restoration Liability, expensing of the estimated Site Restoration Liability, provision for employee benefts, useful lives of fxed assets, provision for doubtful advances, provision for tax, recognition of MAT Credit, recognition of deferred tax asset etc. Management believes that the estimates used in the preparation of the fnancial statements are prudent and reasonable. Future results may vary from these estimates. Any revisions to accounting estimates are recognized prospectively.

(iii) Fixed Assets and depreciation, depletion and amortization

Fixed assets comprises the following:

- Tangible assets:

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

Depreciation is provided on the "Written Down Value'''' method at the rates specifed in Schedule XIV of the Companies Act, 1956. Assets individually costing less than or equal to INR 5,000 are fully depreciated in the year of acquisition.

Improvements to Leasehold premises are amortised over the remaining primary lease period.

- Intangible assets:

Intangible assets comprising computer software is amortised over the license period or 10 years, whichever is lower.

- Producing properties and Exploration / Development work-in-progress:

Te Company generally follows the "Successful Eforts Method" of accounting for its exploration and production activities as explained below:

(a) Acquisition costs cover all costs incurred to purchase, lease or otherwise acquire a property or mineral right. Tese are costs incurred in acquiring the right to explore, drill and produce oil and gas including the initial costs incurred for obtaining the Petroleum Exploration License / Letter of Authority and Mining Lease. Acquisition costs are carried in books as Capital Â Work in Progress and transferred to Producing Properties on attainment of commercial production. Depletion on Acquisition cost is provided on "Unit of production" method based on the related reserves as recommended by the Guidance Note issued by the Institute of Chartered Accountants of India.

(b) Cost of exploratory wells, including survey costs, is expensed in the year when the well is determined to be dry / abandoned or is transferred to Producing Properties on attainment of commercial production.

(c) Cost of all appraisal programmes related to a Discovery are initially capitalised as "Exploration Expenditure". If a Discovery is determined to be commercial pursuant to the appraisal programme, all appraisal costs, including the cost of unsuccessful appraisal wells, if any, are capitalised as Producing Properties on attainment of commercial production. If at the end of the appraisal programme, the Discovery is relinquished, then all appraisal costs related to the Discovery are charged to the Statement of Proft and Loss.

(d) Cost of temporary occupation of land, successful exploratory wells, appraisal wells, development wells and all related development costs, including depreciation on support equipment and facilities, are considered as development expenditure. Tese expenses are capitalised as Producing Properties on attainment of commercial production.

(e) Producing Properties, including the cost incurred on dry / abandoned wells in development areas, are depleted using "Unit of Production'''' method based on the related reserves as recommended by the Guidance Note issued by the Institute of Chartered Accountants of India. Company provides minimum depreciation as prescribed under Schedule XIV of the Companies Act, 1956, wherever required. Any changes in Reserves and / or Cost are dealt with prospectively from the beginning of the year of such change. Hydrocarbon reserves are estimated and / or approved by the Management Committees of the Unincorporated Joint Ventures, which follow the International Reservoir Engineering Principles.

(f ) If the Company / Unincorporated Joint Venture were to relinquish a block or part thereof, the accumulated acquisition and exploration costs carried in the books related to the block or part thereof, as the case may be, are written of as a charge to the Statement of Proft and Loss in the year of relinquishment.

Explanatory Note

1. All exploration costs including acquisition of geological and geophysical seismic information, license, depreciation on support equipment and facilities and acquisition costs are initially capitalized as "Exploration Expenditure", and are retained in exploration expenditure-work-in-progress if the exploration well(s) in frst drilling campaign is determined to be successful, or such costs are written of consistent with para 2 below, if is determined to be unsuccessful.

2. Exploration costs associated with drilling, testing and equipping exploratory well(s) are initially capitalized as "Exploration Expenditure" and retained in exploration expenditure-work-in-progress so long as:

(a) such well has found potential commercial reserves; or

(b) such well test result is inconclusive and is subject to further exploration or appraisal activity like acquisition of seismic, or re-entry of such well, or drilling of additional exploratory / step out well in the area of interest, such activity to be carried out no later than 2 years from the date of completion of such well testing

Â until such time as such costs are transferred to "Producing Properties" on attainment of commercial production; or

Â else charged to the Statement of Proft and Loss.

Management makes quarterly assessment of the amounts included in "Exploration Expenditure-work-in-progress" to determine whether capitalization is appropriate and can continue. Exploration well(s) capitalized beyond 2 years are subject to additional judgment as to whether facts and circumstances have changed and therefore the conditions described in 2(a) and (b) above no longer apply.

(iv) Site Restoration

Estimated future liability relating to dismantling and abandoning producing well sites and facilities is recognised when the installation of the production facilities is completed based on the estimated future expenditure determined by the Management in accordance with the local conditions and requirements. Te corresponding amount is added to the cost of the Producing Properties and is expensed in proportion to the production for the year and the estimated proved developed reserves of hydrocarbons based on latest technical assessment available with the Company. Any change in the value of the estimated liability is dealt with prospectively and refected as an adjustment to the provision and the corresponding Producing Properties.

(v) Impairment

Te carrying amounts of assets are reviewed annually or if there is any indication of impairment based on internal/external factors during the year. An impairment loss is recognized wherever the carrying amount of an asset or Cash Generating Unit (CGU) exceeds its recoverable amount. Te recoverable amount is the greater of the asset''s or CGU''s net selling price and value in use. In assessing value in use, the estimated future cash fows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation/depletion is provided in subsequent periods on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(vi) Investments

Investments are capitalised at cost plus brokerage and stamp charges. Investments that are readily realisable and intended to be held for not more than a year are classifed as current investments. All other investments are classifed as long-term investments. Current investments are valued at lower of cost and fair value determined on an individual investment basis. Long term investments are valued at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

(vii) Inventories

(i) Closing stock of crude oil, condensate and natural gas in saleable condition is valued at Estimated Net Realisable Value. Estimated Net Realisable Value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

(ii) Stores, spares, capital stock and drilling tangibles are valued at cost on frst in frst out basis / weighted average basis, as applicable, or estimated net realisable value, whichever is lower.

(viii) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefts will fow to the Company and the revenue can be reliably measured.

(i) Revenue from the sale of crude oil, condensate and natural gas, net of Government''s share of Proft Petroleum (calculated as per the provisions of the respective Production Sharing Contracts), where applicable, and Value Added Tax, is recognised on transfer of custody. (ii) Service Income is recognised on accrual basis as per the contractual terms and is net of Service Tax. (iii) Delayed Payment charges, retrospective revision in prices, interest on delayed payments and interest on income tax refunds are recognised as and when there is no uncertainty in the determination / receipt of the amount, on grounds of prudence.

(iv) Interest Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(v) Dividend Income is recognised when the right to receive the dividend is unconditional.

(ix) Employee Benefts

(a) Defned Contribution Plan

(i) Provident Fund: Contributions towards Employees'' Provident Fund are made to the Employees Provident Fund Scheme in accordance with the statutory provisions. Contributions towards Employees'' Provident Fund are recognized as an expense in the year incurred. Tere are no obligations other than the contribution payable to the respective fund.

(ii) Superannuation Fund: Te Company contributes a sum equivalent to 15% of eligible Employees'' basic salary to a Superannuation Fund administered by trustees. Te Company has no liability for future Superannuation Fund benefts other than its annual contribution and recognizes such contributions as an expense in the year incurred.

(b) Defned Beneft Plan

Te Company makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life Insurance Corporation of India. Te Company accounts its liability for future gratuity benefts based on actuarial valuation, as at the Balance Sheet date, determined every year by an Actuary appointed by the Company, using the Projected Unit Credit method. Actuarial gains / losses are recognised in the Statement of Proft and Loss. Obligation under the defned beneft plan is measured at the present value of estimated future cash fows. Te estimate of future salary increase takes into account infation, likely increments, promotions and other relevant factors.

(c) Compensated Absences

Te liability for long term compensated absences carried forward on the Balance Sheet date is provided for based on actuarial valuation done by an independent Actuary using the Projected Unit Credit method at the end of each accounting period. Short term compensated absences is recognized based on the eligible leave at credit on the Balance Sheet date and is estimated based on the terms of the employment contract.

(d) Other Employee Benefts

Other employee benefts, including allowances, incentives etc. are recognised based on the terms of the employment contract.

(x) Borrowing Cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Eligible 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 respective asset. All other borrowing costs are expensed in the period the y occ u r.

(xi) Foreign Currency Transactions

Te Company translates foreign currency transactions into Indian Rupees at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currency are translated into Indian Rupees at the rate of exchange prevailing at the Balance Sheet date. Exchange diferences arising on the settlement of monetary items or on reporting the Company''s monetary items at rates diferent from those at which they were initially recorded during the period, or reported in previous fnancial statements, excluding long term foreign currency monetary items (see below), are recognised as income or as expenses in the period in which they arise.

Exchange diferences, both realised and unrealised, arising on reporting of long term foreign currency monetary items (as defned in the Accounting Standard - 11 notifed by the Government of India) relating to the acquisition of a depreciable capital asset are added to / deducted from the cost of the asset and in other cases unrealised exchange diferences are accumulated in a "Foreign Currency Monetary Item Translation Diference Account" in the Company''s Balance Sheet and amortized over the balance period of such long term asset / liability by recognition as income or expense in each of such periods.

In accordance with MCA circular dated 09 August 2012, exchange diferences for this purpose, are total diferences arising on long-term foreign currency monetary items for the period. In other words, the company does not diferentiate between exchange diferences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange diference.

(xii) Taxation

Income Tax: Current tax is the amount of tax payable on the taxable income for the year and is provided with reference to the provisions of the Income Tax Act, 1961.

Deferred Tax: Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities ofset and relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufcient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profts.

At each Balance Sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufcient future taxable income will be available against which such deferred tax assets can be realised.

MAT Credit: Minimum Alternate Tax (MAT) Credit is recognised as an asset, only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specifed period, in accordance with the Guidance Note on "Accounting for Credit Available in respect of Minimum Alternate Ta x under Income Ta x Act, 1961". In the year in which the MAT Credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the Statement of Proft and Loss and shown as MAT Credit Entitlement. Te 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 efect that the Company will pay normal income tax during the specifed period.

(xiii) Cash and cash equivalents

Cash and cash equivalents for the purposes of cash fow statement comprise cash and deposits at bank, cash in hand and short-term investments with an original maturity of three months or less.

(xiv) Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when the Company has present or legal obligations as a result of past events for which it is probable that an outfow of economic beneft will be required to settle the transaction and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligations which will be confrmed only by future events not wholly within the control of the Company or (ii) present obligations arising from past events where it is not probable that an outfow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognised in the fnancial statements since this may result in the recognition of income that may never be realised.

Mar 31, 2012

(i) Basis of preparation

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The financial statements of the Company reflect its share of assets, liabilities, income and expenditure of the Unincorporated Joint Ventures which are accounted on the basis of available information in the audited / unaudited financial statements of the Unincorporated Joint Ventures on line by line basis with similar items in the Company's accounts to the extent of the participating interest of the Company as per the various "Production Sharing Contracts". The financial statements of the Unincorporated Joint Ventures are prepared by the respective Operators in accordance with the requirements prescribed by the respective Production Sharing Contracts of the Unincorporated Joint Ventures. Hence, in respect of these Unincorporated Joint Ventures, certain disclosures required under the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended), other pronouncements of The Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 have been made in the financial statements of the Company based on audited / unaudited financial statement of the unincorporated Joint Venture.

(ii) Use of Estimates

The preparation of the financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period like depletion of Producing Properties, estimate of Site Restoration Liability, expensing of the estimated Site Restoration Liability, provision for employee benefits, useful lives of fixed assets, provision for doubtful advances, provision for tax, recognition of MAT Credit, recognition of deferred tax asset etc. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates. Any revisions to accounting estimates are recognized prospectively.

(iii) Fixed Assets and depreciation, depletion and amortization

Fixed assets comprises the following:

- Tangible assets:

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

Depreciation is provided on the " Written Down Value" method at the rates specified in Schedule XIV of the Companies Act, 1956 or as per the estimated useful lives of the assets, whichever is higher. Assets individually costing less than or equal to INR 5,000 are fully depreciated in the year of acquisition.

Improvements to Leasehold premises are amortised over the remaining primary lease period.

- Intangible assets:

Intangible assets comprising computer software is amortised over the license period or 10 years, whichever is lower.

- Producing properties and Exploration / Development work-in-progress:

The Company generally follows the "Successful Efforts Method" of accounting for its exploration and production activities as explained below:

(a) Cost of exploratory wells, including survey costs, is expensed in the year when the well is determined to be dry / abandoned or is transferred to Producing Properties on attainment of commercial production.

(b) Cost of all appraisal programmes related to a Discovery are initially capitalised as "Exploration Expenditure". If a Discovery is determined to be commercial pursuant to the appraisal programme, all appraisal costs, including the cost of unsuccessful appraisal wells, if any, are capitalised as Producing Properties on attainment of commercial production. If at the end of the appraisal programme, the Discovery is relinquished, then all appraisal costs related to the Discovery are charged to the Profit and Loss Account.

(c) Cost of temporary occupation of land, successful exploratory wells, appraisal wells, development wells and all related development costs, including depreciation on support equipment and facilities, are considered as development expenditure. These expenses are capitalised as Producing Properties on attainment of commercial production.

(d) Producing Properties, including the cost incurred on dry / abandoned wells in development areas, are depleted using "Unit of Production" method based on estimated proved developed reserves. Any changes in Reserves and / or Cost are dealt with prospectively from the beginning of the year of such change. Hydrocarbon reserves are estimated and / or approved by the Management Committees of the Unincorporated Joint Ventures, which follow the International Reservoir Engineering Principles.

(e) If the Company / Unincorporated Joint Venture were to relinquish a block or part thereof, the accumulated acquisition and exploration costs carried in the books related to the block or part thereof, as the case may be, are written off as a charge to the Profit and Loss Account in the year of relinquishment.

Explanatory Note

1. All exploration costs including acquisition of geological and geophysical seismic information, license, depreciation on support equipment and facilities and acquisition costs are initially capitalized as "Exploration Expenditure", until such time as either the exploration well(s) in the first drilling campaign is determined to be successful, at which point the costs are capitalised as "Producing Properties" or is determined to be unsuccessful, in which case such costs are written off consistent with para 2 below.

2. Exploration costs associated with drilling, testing and equipping exploratory well(s) are initially capitalized as "Exploration Expenditure" and retained in exploration expenditure-work-in-progress so long as:

(a) such well has found potential commercial reserves; or

(b) such well test result is inconclusive and is subject to further exploration or appraisal activity like acquisition of seismic, or re-entry of such well, or drilling of additional exploratory / step out well in the area of interest, such activity to be carried out no later than 2 years from the date of completion of such well testing

Ã until such time as such costs are transferred to "Producing Properties" on attainment of commercial production; or

Ã else charged to the Profit and Loss Account.

Management makes quarterly assessment of the amounts included in "Exploration Expenditure-work-in-progress" to determine whether capitalization is appropriate and can continue. Exploration well(s) capitalized beyond 2 years are subject to additional judgment as to whether facts and circumstances have changed and therefore the conditions described in 2(a) and (b) above no longer apply.

(iv) Site Restoration

Estimated future liability relating to dismantling and abandoning producing well sites and facilities is recognised when the installation of the production facilities is completed based on the estimated future expenditure determined by the Management in accordance with the local conditions and requirements. The corresponding amount is added to the cost of the Producing Properties and is expensed in proportion to the production for the year and the remaining estimated proved developed reserves of hydrocarbons based on latest technical assessment available with the Company. Any change in the value of the estimated liability is dealt with prospectively and reflected as an adjustment to the provision and the corresponding Producing Properties.

(v) Impairment

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation / depletion is provided in subsequent periods on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(vi) Depreciation

(i) Depreciation is provided on the "Written Down Value" method at the rates specified in Schedule XIV of the Companies Act, 1956 or as per the estimated useful lives of the assets, whichever is higher,

(ii) Improvements to Leasehold premises are amortised over the remaining primary lease period.

(iii) Computer software is amortised over the license period or 10 years, whichever is lower.

(iv) Assets individually costing less than or equal to INR 5,000 are fully depreciated in the year of acquisition.

(vii) Investments

Investments are capitalised at cost plus brokerage and stamp charges. Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are valued at lower of cost and fair value determined on an individual investment basis. Long term investments are valued at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

(viii) Inventories

(i) Closing stock of crude oil, condensate and natural gas in saleable condition is valued at Estimated Net Realisable Value. Estimated Net Realisable Value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

(ii) Stores, spares, capital stock and drilling tangibles are valued at cost on first in first out basis / weighted average basis, as applicable, or estimated net realisable value, whichever is lower.

(ix) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

(i) Revenue from the sale of crude oil, condensate and natural gas, net of Government's share of Profit Petroleum (calculated as per the provisions of the respective Production Sharing Contracts), where applicable, and Value Added Tax, is recognised on transfer of custody.

(ii) Service Income is recognised on accrual basis as per the contractual terms and is net of Service Tax.

(iii) Delayed Payment charges, retrospective revision in prices, interest on delayed payments and interest on income tax refunds are recognised as and when there is no uncertainty in the determination / receipt of the amount, on grounds of prudence.

(iv) Interest Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(v) Dividend Income is recognised when the right to receive the dividend is unconditional.

(x) Employee Benefits

(a) Defined Contribution Plan

(i) Provident Fund: Contributions towards Employees' Provident Fund are made to the Employees Provident Fund Scheme in accordance with the statutory provisions. Contributions towards Employees' Provident Fund are recognized as an expense in the year incurred. There are no obligations other than the contribution payable to the respective fund.

(ii) Superannuation Fund: The Company contributes a sum equivalent to 15% of eligible Employees' basic salary to a Superannuation Fund administered by trustees. The Company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred.

(b) Defined Benefit Plan

The Company makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life Insurance Corporation of India. The Company accounts its liability for future gratuity benefits based on actuarial valuation, as at the Balance Sheet date, determined every year by an Actuary appointed by the Company, using the Projected Unit Credit method. Actuarial gains / losses are recognised in the Profit and Loss Account. Obligation under the defined benefit plan is measured at the present value of estimated future cash flows. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

(c) Compensated Absences

The liability for long term compensated absences carried forward on the Balance Sheet date is provided for based on actuarial valuation done by an independent Actuary using the Projected Unit Credit method at the end of each accounting period. Short term compensated absences is recognized based on the eligible leave at credit on the Balance Sheet date and is estimated based on the terms of the employment contract.

(d) Other Employee Benefits

Other employee benefits, including allowances, incentives etc. are recognised based on the terms of the employment contract.

(xi) Borrowing Cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Eligible 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 respective asset. All other borrowing costs are expensed in the period they occur.

(xii) Foreign Currency Transactions

The Company translates foreign currency transactions into Indian Rupees at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currency are translated into Indian Rupees at the rate of exchange prevailing at the Balance Sheet date. Exchange differences arising on the settlement of monetary items or on reporting the Company's monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, excluding long term foreign currency monetary items (see below), are recognised as income or as expenses in the period in which they arise.

Exchange differences, both realised and unrealised, arising on reporting of long term foreign currency monetary items (as defined in the Accounting Standard Ã 11 notified by the Government of India) relating to the acquisition of a depreciable capital asset are added to / deducted from the cost of the asset and in other cases unrealised exchange differences are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" in the Company's Balance Sheet and amortized over the balance period of such long term asset / liability by recognition as income or expense in each of such periods.

(xiii)Taxation

Income Tax: Current tax is the amount of tax payable on the taxable income for the year and is provided with reference to the provisions of the Income Tax Act, 1961.

Deferred Tax: Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities offset and relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each Balance Sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

MAT Credit: Minimum Alternate Tax (MAT) Credit is recognised as an asset, only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period, in accordance with the Guidance Note on "Accounting for Credit Available in respect of Minimum Alternate Tax under Income Tax Act, 1961". In the year in which the MAT Credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the Profit and Loss Account 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 the Company will pay normal income tax during the specified period.

(xiv) Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when the Company has present or legal obligations as a result of past events for which it is probable that an outflow of economic benefit will be required to settle the transaction and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligations which will be confirmed only by future events not wholly within the control of the Company or (ii) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognised in the financial statements since this may result in the recognition of Income that may never be realised.

Mar 31, 2011

(i) Basis of preparation

Te financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. Te financial statements have been prepared under the historical cost convention on an accrual basis. Te accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. Te financial statements of the Company reflect its share of assets, liabilities, income and expenditure of the Unincorporated Joint Ventures which are accounted on the basis of available information in the audited/unaudited financial statements of the Unincorporated Joint Ventures on line by line basis with similar items in the Company's accounts to the extent of the participating interest of the Company as per the various "Production Sharing Contracts". Te financial statements of the Unincorporated Joint Ventures are prepared by the respective Operators in accordance with the requirements prescribed by the respective Production Sharing Contracts of the Unincorporated Joint Ventures. Hence, in respect of these Unincorporated Joint Ventures, certain disclosures required under the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended), other pronouncements of Te Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 have been made in the financial statements of the Company based on audited/unaudited financial statement of the unincorporated Joint Venture.

(ii) Use of Estimates

Te preparation of the financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period like depletion of Producing Properties, estimate of Site Restoration Liability, expensing of the estimated Site Restoration Liability, provision for employee benefits, useful lives of fixed assets, provision for doubtful advances, provision for tax, recognition of MAT Credit, recognition of deferred tax asset etc. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results may vary from these estimates. Any revisions to accounting estimates are recognised prospectively.

(iii) Fixed Assets and Exploration and Development Costs

Fixed Assets includes Fixed Assets and Producing Properties.

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

Te Company generally follows the "Successful Eforts Method" of accounting for its exploration and production activities as explained below:

(a) Cost of exploratory wells, including survey costs, is expensed in the year when the well is determined to be dry/abandoned or is transferred to Producing Properties on attainment of commercial production.

(b) Cost of all appraisal programmes related to a Discovery are initially capitalised as "Exploration Expenditure". If a Discovery is determined to be commercial pursuant to the appraisal programme, all appraisal costs, including the cost of unsuccessful appraisal wells, if any, are capitalised as Producing Properties on attainment of commercial production. If at the end of the appraisal programme, the Discovery is relinquished, then all appraisal costs related to the Discovery are charged to the Profit and Loss Account.

(c) Cost of temporary occupation of land, successful exploratory wells, appraisal wells, development wells and all related development costs, including depreciation on support equipment and facilities, are considered as development expenditure. Tese expenses are capitalised as Producing Properties on attainment of commercial production.

(d) Producing Properties, including the cost incurred on dry/abandoned wells in development areas, are depleted using "Unit of Production'' method based on estimated proved developed reserves. Any changes in Reserves and/or Cost are dealt with prospectively from the beginning of the year of such change. Hydrocarbon reserves are estimated and/or approved by the Management Committees of the Unincorporated Joint Ventures, which follow the International Reservoir Engineering Principles.

(e) If the Company/Unincorporated Joint Venture were to relinquish a block or part thereof, the accumulated acquisition and exploration costs carried in the books related to the block or part thereof, as the case may be, are written of as a charge to the Profit and Loss Account in the year of relinquishment.

Explanatory Note

1. All exploration costs including acquisition of geological and geophysical seismic information, license, depreciation on support equipment and facilities and acquisition costs are initially capitalized as "Exploration Expenditure", until such time as either the exploration well(s) in the first drilling campaign is determined to be successful, at which point the costs are capitalised as "Producing Properties", or is determined to be unsuccessful, in which case such costs are written of consistent with para 2 below.

2. Exploration costs associated with drilling, testing and equipping exploratory well(s) are initially capitalized as "Exploration Expenditure" and retained in exploration expenditure-work-in-progress so long as:

(a) such well has found potential commercial reserves; or

(b) such well test result is inconclusive and is subject to further exploration or appraisal activity like acquisition of seismic, or re-entry of such well, or drilling of additional exploratory/step out well in the area of interest, such activity to be carried out no later than 2 years from the date of completion of such well testing

Ã until such time as such costs are transferred to "Producing Properties" on attainment of commercial production; or

Ã else charged to the Profit and Loss Account.

Management makes quarterly assessment of the amounts included in "Exploration Expenditure-work-in-progress" to determine whether capitalization is appropriate and can continue. Exploration well(s) capitalized beyond 2 years are subject to additional judgment as to whether facts and circumstances have changed and therefore the conditions described in 2(a) and (b) no longer apply.

(iv) Site Restoration

Estimated future liability relating to dismantling and abandoning producing well sites and facilities is recognised when the installation of the production facilities is completed based on the estimated future expenditure determined by the Management in accordance with the local conditions and requirements. Te corresponding amount is added to the cost of the Producing Property and is expensed in proportion to the production for the year and the remaining estimated proved developed reserves of hydrocarbons based on latest technical assessment available with the Company. Any change in the value of the estimated liability is dealt with prospectively and reflected as an adjustment to the provision and the corresponding Producing Property.

(v) Impairment

Te carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. Te recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation/depletion is provided in subsequent periods on the revised carrying amount of the asset over its remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(vi) Depreciation

(i) Depreciation is provided on the "Written Down Value'' method at the rates specified in Schedule XIV of the Companies Act, 1956 or as per the estimated useful lives of the assets, whichever is higher.

(ii) Improvements to Leasehold premises are amortised over the remaining primary lease period.

(iii) Computer software is amortised over the license period or 10 years, whichever is lower.

(iv) Assets individually costing less than or equal to Rs. 5,000 are fully depreciated in the year of acquisition.

(vii) Investments

Investments are capitalised at cost plus brokerage and stamp charges. Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are valued at lower of cost and fair value determined on an individual investment basis. Long term investments are valued at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

(viii) Inventories

(i) Closing stock of crude oil, condensate and natural gas in saleable condition is valued at estimated Net Realisable Value. Estimated Net Realisable Value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

(ii) Stores, spares, capital stock and drilling tangibles are valued at cost on first in first out basis/weighted average basis, as applicable, or estimated Net Realisable Value, whichever is lower.

(ix) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

(i) Revenue from the sale of crude oil, condensate and natural gas, net of Government's share of Profit Petroleum (calculated as per the provisions of the respective Production Sharing Contracts), where applicable, and Value Added Tax, is recognised on transfer of custody.

(ii) Service Income is recognised on accrual basis as per the contractual terms and is net of Service Tax.

(iii) Delayed Payment charges, retrospective revision in prices, interest on delayed payments and interest on income tax refunds are recognised as and when there is no uncertainty in the determination/receipt of the amount, on grounds of prudence.

(iv) Interest Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(v) Dividend Income is recognised when the right to receive the dividend is unconditional.

(x) Employee benefits

(a) Defined Contribution Plan

(i) Provident Fund: Contributions towards employees' provident fund are made to the Employees Provident Fund Scheme in accordance with the statutory provisions. Contributions towards Employees' Provident Fund are recognized as an expense in the year incurred. Tere are no obligations other than the contribution payable to the respective fund.

(ii) Superannuation Fund: Te Company contributes a sum equivalent to 15% of eligible Employee's basic salary to a Superannuation Fund administered by trustees. Te Company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contributions as an expense in the year incurred.

(b) Defined benefit Plan

Te Company makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life Insurance Corporation of India. Te Company accounts its liability for future gratuity benefits based on actuarial valuation, as at the Balance Sheet date, determined every year by an Actuary appointed by the Company using the Projected Unit Credit method. Actuarial gains/losses are recognised in the Profit and Loss Account. Obligation under the defined benefit plan is measured at the present value of estimated future cash flows. Te estimate of future salary increase takes into account infation, likely increments, promotions and other relevant factors.

(c) Compensated Absences

Te liability for long term compensated absences carried forward on the Balance Sheet date is provided for based on actuarial valuation done by an independent Actuary using the Projected Unit Credit method at the end of each accounting period. Short term compensated absences is recognized based on the eligible leave at credit on the Balance Sheet date and is estimated based on the terms of the employment contract.

(d) Other Employee benefits

Other employee benefits, including allowances, incentives etc. are recognised based on the terms of the employment contract.

(xi) Borrowing Cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Eligible 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 respective asset. All other borrowing costs are expensed in the period they occur.

(xii) Foreign Currency Transactions

Te Company translates foreign currency transactions into Indian Rupees at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currency are translated into Indian Rupees at the rate of exchange prevailing at the Balance Sheet date. Exchange diferences arising on the settlement of monetary items or on reporting the Company's monetary items at rates diferent from those at which they were initially recorded during the period, or reported in previous financial statements, excluding long term foreign currency monetary items (see below), are recognised as income or as expenses in the period in which they arise.

Exchange diferences, both realised and unrealised, arising on reporting of long term foreign currency monetary items (as defined in the Accounting Standard - 11 notified by the Government of India) relating to the acquisition of a depreciable capital asset are added to/ deducted from the cost of the asset and in other cases unrealised exchange diferences are accumulated in a "Foreign Currency Monetary Item Translation Diference Account" in the Company's Balance Sheet and amortized over the balance period of such long term asset/liability but not beyond March 31, 2011, by recognition as income or expense in each of such periods.

(xiii) Taxation

Income Tax: Current tax is the amount of tax payable on the taxable income for the year and is provided with reference to the provisions of the Income Tax Act, 1961.

Deferred Tax: Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities are ofset and relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that suficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable Profits.

At each Balance Sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that suficient future taxable income will be available against which such deferred tax assets can be realised.

MAT Credit: Minimum Alternate Ta x (MAT) Credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period in accordance with the Guidance Note on "Accounting for Credit Available in respect of Minimum Alternate Ta x under Income Ta x Act, 1961". In the year in which the MAT Credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement. Te 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 efect that the Company will pay normal income tax during the specified period.

(xiv) Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when the Company has present or legal obligations as a result of past events for which it is probable that an outflow of economic benefit will be required to settle the transaction and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligations which will be conformed only by future events not wholly within the control of the Company or (ii) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised.

Mar 31, 2010

1. Accounting Convention

The financial Statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India including relevant provisions of the Companies Act, 1956 and accounting standards notified by the Government of India, as applicable.

2. Use of estimates

The preparation of the financial Statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial Statements and the reported income and expenses during the reporting period like depletion of producing properties, estimate of site restoration liability, expensing of the estimated site restoration liability, provision for employee benefits, useful lives of fixed assets, provision for doubtful advances, provision for tax, recognition of MAT Credit, recognition of deferred tax asset etc. Management believes that the estimates used in the preparation of the financial Statements are prudent and reasonable. Future results may vary from these estimates. Any revisions to accounting estimates are recognised prospectively.

3. Exploration and Development Costs

The Company generally follows the ÃSuccessful Efforts MethodÃ of accounting for its exploration and production activities as explained below:

(i) Cost of exploratory wells, including survey costs, is expensed in the year when the well is determined to be dry / abandoned or is transferred to producing properties on attainment of commercial production.

(ii) Cost of all appraisal programmes related to a Discovery are initially capitalised as ÃCapital Work in ProgressÃ. If a Discovery is determined to be commercial pursuant to the appraisal programme, all appraisal costs, including the cost of unsuccessful appraisal wells, if any, are capitalised on attainment of commercial production. If at the end of the appraisal programme, the Discovery is relinquished, then all appraisal costs related to the Discovery are charged to the Profit and Loss Account.

(iii) Cost of temporary occupation of land, successful exploratory wells, appraisal wells, development wells and all related development costs, including depreciation on support equipment and facilities, are considered as development expenditure. These expenses are capitalised as producing properties on attainment of commercial production.

(iv) Producing properties, including the cost incurred on dry / abandoned wells in development areas, are depleted using Ã Unit of Production method based on estimated proved developed reserves. Any changes in Reserves and/or Cost are dealt with prospectively from the beginning of the year of such change. Hydrocarbon reserves are estimated and/or approved by the Management Committees of the Unincorporated Joint Ventures, which follow the international Reservoir Engineering Principles.

(v) If the Company / Unincorporated Joint Venture were to relinquish a block or part thereof, the accumulated acquisition and exploration costs carried in the books related to the block or part thereof, as the case may be, are written off as a charge to the Profit and Loss Account in the year of relinquishment.

Explanatory note

1. All exploration costs including acquisition of geological and geophysical seismic information, license, depreciation on support equipment and facilities and acquisition costs are initially capitalized as ÃCapital Work in Progress - Exploration ExpenditureÃ, until such time as either the exploration well(s) in the first drilling campaign is determined to be successful, at which point the costs are transferred to ÃProducing PropertiesÃ, or is determined to be unsuccessful, in which case such costs are written off consistant with para 2 below.

2. Exploration costs associated with drilling,Thesting and equipping exploratory well(s) are initially capitalized as ÃCapital Work in Progress - Exploration ExpenditureÃ and retained in Capital Work in Progress Ã Exploration Expenditure so long as:

(a) such well has found potential commercial reserves; or

(b) such wellThest result is inconclusive and is subject to further exploration or appraisal activity like acquisition of seismic, or re-entry of such well, or drilling of additional exploratory / sThep out well in the area of interest, such activity to be carried out no laTher than 2 years from the date of completion of such wellThesting;

Ã until such time as such costs are transferred to ÃProducing PropertiesÃ on attainment of commercial production; or

Ã else charged to the Profit and Loss Account.

Management makes quarTherly assessment of the amounts included in ÃCapital Work in Progress - Exploration ExpenditureÃ to deThermine whether capitalization is appropriate and can continue. Exploration well(s) capitalized beyond 2 years are subject to additional judgment as to whether facts and circumstances have changed and therefore the conditions described in 2(a) and (b) no longer apply.

4. site Restoration

estimated future liability relating to dismantling and abandoning producing well sites and facilities is recognised when the installation of the production facilities is completed based on the estimated future expenditure deThermined by the Management in accordance with the local conditions and requirements.The corresponding amount is added to the cost of the producing property and is expensed in proportion to the production for the year and the remaining estimated proved reserves of hydrocarbons based on latest technical assessment available with the Company. Any change in the value of the estimated liability is dealt with prospectively and reflected as an adjustment to the provision and the corresponding producing property.

5. Impairment

At each Balance Sheet date, the Company reviews the carrying amount of its assets to deThermine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to deThermine the extent of impairment loss.

Where the impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimaThe of its recoverable amount, but not exceeding the carrying amount that would have been deThermined had no impairment loss been recognized for the asset in prior accounting periods.

6. Unincorporated Joint Ventures

The financial Statements of the Company reflect its share of assets, liabilities, income and expenditure of the Joint Venture operations which are accounted on the basis of available information in the Audited financial Statements of the Unincorporated Joint Ventures on line by line basis with similar items in the Companys accounts to the extent of the participating interest of the Company as per the various ÃProduction Sharing ContractsÃ.The financial Statements of the Unincorporated Joint Ventures are prepared by the respective Operators in accordance with the requirements prescribed by the respective Production Sharing Contracts of the Unincorporated Joint Ventures. Hence, in respect of these Unincorporated Joint Ventures, certain adjustments / disclosures required under the mandatory Accounting Standards as notified by the Government of India, the Companies Act, 1956 and other pronouncements ofThe InstituThe of CharThered Accountants of India have been made in the financial Statements of the Company only to the extent of information available with the Company. Such information may pertain to particulars relating to micro, small and medium Enterprises, particulars of expenditure in foreign currency, particulars of earnings in foreign currency, particulars of CIF value of imports, transactions with related parties, details of commitments and contingencies, information relating to valuation and consumption of stores, spares, capital stock and drilling tangibles, information relating to foreign exchange differences, particulars of unhedged foreign currency exposure of the respective Unincorporated Joint Ventures, details of leases and details relating to fixed assets. See notes 8, 10, 17, 20, 23, 24 and 35 of Schedule 16.

7. Fixed Assets

Fixed assets are stated at cost inclusive of all incidental expenses.

8. Depreciation

(i) Depreciation is provided on the Ãwritten Down Value method at the rates specified in Schedule XIV of the Companies Act, 1956.

(ii) In the case of additions during the year, depreciation is provided for the full year irrespective of the date of installation and no depreciation

is provided in the year of sale/disposal. (iii) Improvements to Leasehold premises are amorThised over the remaining primary lease period. (iv) CompuTher software is amorThised over their license periods or 10 years, whichever is lower. (v) Assets individually costing less than or equal to Rs. 5,000 are fully depreciaThed in the year of acquisition. (vi) Depreciation is accelerated on fixed assets, based on their condition, usability etc. as per the estimates of the Management, wherever

necessary.

9. Investments

Investments are capitalised at cost plus brokerage and stamp charges. Long-Therm investments are valued at cost. Provision is made for diminution, other thanThemporary, in the value of long-Therm investments. Current investments are valued at the lower of cost and fair value on individual scrip basis.

10. Inventories

(i) Closing stock of crude oil, condensate and natural gas in saleable condition is valued at estimated Net Realisable Value less estimated selling costs.

(ii) Stores, spares, capital stock and drilling tangibles are valued at cost on FIFO / weighThed average basis, as applicable, or estimated net realisable value, whichever is lower.

11. Miscellaneous Expenditure

Share issue expenses are either debiThed to the Profit and Loss Account or adjusThed against the securities premium account in accordance with Section 78 of the Companies Act, 1956, based on Managements decision.

12. Revenue Recognition

(i) Revenue from the sale of crude oil / condensate and natural gas, net of Governments share of Profit Petroleum (calculaThed as per the provisions of the respective Production Sharing Contracts), where applicable, and Value Added Tax, is recognised on transfer of custody.

(ii) Sale is recorded at the invoiced price, which is subject to the approval of the Government of India, Ministry of Petroleum & Natural Gas (MOP&NG).The difference between the invoiced price and the final approved price, if any, is adjusThed in the year in which the aforesaid approval is received. Also see note 33(i) of Schedule 16.

(iii) Service Income is recognised on accrual basis as per the contractualTerms and is net of Service Tax.

(iv) Delayed payment charges, interest on delayed payments and interest on income tax refunds are recognised as and when there is no uncertainty in the deThermination / receipt of the amount, on grounds of prudence.

13. Employee Benefits

(a) Defined Contribution Plan

(i) Provident Fund: Contributions towards Employees Provident Fund are made to the Employees Provident Fund Scheme in accordance with the statutory provisions.

(ii) Superannuation:The Company contributes a sum equivalent to 15% of eligible employees basic salary to a Superannuation Fund adminisThered by trusThees.The Company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contributions as an expense in the year of incurrence.

(b) Defined Benefit Plan

The Company makes annual contribution to a Gratuity Fund adminisThered by trusThees and managed by the Life Insurance Corporation of India.The Company accounts its liability for future gratuity benefits based on actuarial valuation, as at the Balance Sheet date, deThermined every year by an Actuary appointed by the Company using the ProjecThed Unit Credit method. Actuarial gains / losses are recognised in the Profit and Loss Account. Obligation under the defined benefit plan is measured at the present value of estimated future cash flows.The estimaThe of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.

(c) CompensaThed Absences

The liability for long term compensaThed absences carried forward on the balance sheet date is provided for based on actuarial valuation done by an independent actuary using the ProjecThed Unit Credit method at the end of each accounting period. ShortTherm compensaThed absences is recognized based on the eligible leave at credit on the Balance Sheet date and is estimated based on theTerms of the employment contract.

(d) Other Employee Benefits

Other employee benefits, including allowances, incentives etc. are recognised based on theTerms of the employment contract.

14. Borrowing Cost

Eligible borrowing cost specifically identified to the acquisition, construction or production of qualifying assets are capitalized as part of such asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are charged to the Profit and Loss Account.

15. Foreign Currency Transactions

Foreign currency transactions are accounted at the exchange rates ruling on the date of the transactions. Foreign currency monetary items as at the Balance Sheet date, are restated at the closing exchange rates. Exchange differences arising on actual payments / realisations and year-end reStatements of foreign currency monetary items, excluding long term foreign currency monetary items (see below), are dealt with in the Profit and Loss Account.

Exchange differences, both realised and unrealised, arising on reporting of long term foreign currency monetary items (as defined in the Accounting Standard - 11 notified by the Government of India) relating to the acquisition of a depreciable capital asset are added to / deducThed from the cost of the asset and in other cases unrealised exchange differences are accumulaThed in a ÃForeign Currency Monetary IThem Translation Difference AccountÃ in the Companys Balance Sheet and amortized over the balance period of such long term asset / liability but not beyond March 31, 2011, by recognition as income or expense in each of such periods.

Also See note 27 of Schedule 16.

16. Taxation

Income Tax: Current tax is the amount of tax payable on the taxable income for the year and is provided with reference to the provisions of the Income Tax Act, 1961.

Deferred Ta x : Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originaThe in one period and are capable of reversal in one or more subsequent periods. Deferred tax asset is recognised when there is a reasonable certainty of future taxable income except for deferred tax assets in respect of unabsorbed loss or depreciation where it is recognised only if there is a virtual certainty with convincing evidence.

MAT Credit: Minimum alternate Tax (MAT) Credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period in accordance with the Guidance note on ÃAccounting for Credit Available in respect of Minimum alternate Ta x under Income Ta x Act, 1961Ã. In the year in which the MAT Credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement.The Company reviews the same at each Balance Sheet date andWrites down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.

17. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised only when the Company has present or legal obligations as a result of past events for which it is probable that an outflow of economic benefit will be required to settle the transaction and when a reliable estimaThe of the amount of obligation can be made. Contingent liability is disclosed for (i) possible obligations which will be confirmed only by future events not wholly within the control of the Company or (ii) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimaThe of the amount of the obligation cannot be made. Contingent assets are not recognised in the financial Statements since this may result in the recognition of income that may never be realised.

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