Mar 31, 2015
A) BASIS OF PREPARATION:
The financial statements of Interlink Petroleum Limited (the Company)
are prepared under historical cost convention and on accrual basis in
accordance with Generally Accepted Accounting Principles in India
("GAAP"). GAAP comprises mandatory accounting standards as prescribed
under section 133 of the Companies Act, 2013 read with Rule 7 of
Companies (Accounts) Rules 2014, provisions of the Act (to the extant
notified), applicable guidance notes issued by The Institute of
Chartered Accountants of India and guidelines issued by the Securities
and Exchange Board of India. The accounting policies, in all material
respects, have been consistently applied by the Company and are
consistent with those used in the previous year.
b) USE OF ESTIMATES:
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to
contingent liabilities on the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Though management believes that the estimates used are prudent and
reasonable, actual results could differ from these estimates.
Difference between the actual results and estimates are recognized in
the period in which the results are known / materialized.
c) FIXED ASSETS, DEPRECIATION AND AMORTISATION:
i. Tangible assets are stated at cost, less accumulated depreciation
and impairment losses, if any. Cost comprises the purchase price and
any attributable cost of bringing the asset to its working condition
for its intended use. Borrowing and other financing costs including
foreign exchange variation relating to acquisition of fixed assets,
which take a substantial period of time to get ready for its intended
use, are also included to the extent they relate to the period till
such assets are ready to be put to use.
ii. Intangible assets are recognized only if it is probable that the
future economic benefits that are attributable to the asset will flow
to the enterprise and the cost of the asset can be measured reliably.
The intangible assets are recorded at cost and are carried at cost less
accumulated amortization. Cost of intangible assets includes Borrowing
and other financing costs including foreign exchange variation that are
attributable to development of such intangible assets.
iii. Depreciation on fixed assets is provided in accordance with the
rates as specified in Schedule II to The Companies Act, 2013, on
straight-line method, to at least 95% of the cost of the assets except
in respect of assets of value less than Rs.5,000 each, which are
depreciated fully in the year of acquisition. Depreciation is charged
pro-rata on monthly basis on all other assets from/up to the month of
capitalization/sale, disposal and/or dismantle. Depreciation relating
to assets attributable directly to qualifying asset including
prospecting, exploration and development of oil and gas are capitalized
as a part of Intangible Assets Under Development or Producing
Properties, as the case may be.
d) VALUATION OF INVENTORIES:
i. Natural Gas is extracted from field as and when supply of gas is to
be made. So there is no storage of Natural Gas available and hence
there is no stock of natural gas.
ii. The Closing Stock of Crude Oil in saleable condition is valued at
Cost or Net Realizable Value less estimated selling costs, whichever is
lower.
iii. Stores and spares are valued at lower of cost or net realizable
value.
e) PRELIMINARY EXPENSES:
Preliminary expenses in the nature of expenses for incorporation of the
Company, public issue expenses and like expenses; are amortized over a
period of five years.
f) EXPLORATION AND DEVELOPMENT COSTS:
i. The Company is following "Full Cost Method" for allocating all costs
incurred in prospecting, exploring and development of oil and gas
including related finance cost and depreciation, which are accumulated,
considering the country as a cost centre, as per the guidance note on
Accounting for Oil and Gas producing activities issued by the institute
of Chartered Accountants of India.
ii. Exploration Costs involved in drilling and equipping exploratory
and appraisal wells and cost of drilling exploratory type stratigraphic
test wells are initially accounted for under the head Capital Work In
Progress/Intangible Assets Under Development and are capitalized as
Producing Properties when ready to commence commercial production.
iii. All Costs relating to development wells, development type
stratigraphic test wells and service wells are initially accounted for
under the head Capital Work In Progress/Intangible Assets Under
Development and are capitalized as Producing Properties when ready to
commence commercial production.
iv. Producing Properties are depleted using 'Unit of Production' method
based on estimated proved developed reserves. Any changes in
Reserves/Cost are dealt with prospectively. Hydrocarbon reserves are
estimated by the Company following the International Reservoir
Engineering Principles and are approved by the appropriate
authority(s).
g) IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS:
At each Balance Sheet date, the Company reviews the carrying amount of
its assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine
the extent of impairment loss and provide for impairment. Where the
impairment loss subsequently reverses, the carrying amount of the asset
(cash generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset in prior accounting
periods.
h) INVESTMENTS:
Current investments are carried at the lower of cost and quoted / fair
value. Long- term investments are stated at cost. Provision for
diminution in the value of long-term investments is made only if such a
decline is other than temporary in the opinion of the management.
i) RECOGNITION OF INCOME AND EXPENDITURE:
i. Revenue from sale of products is recognized on transfer of custody
to customers. Any difference as of the reporting date between the
entitlement quantities minus the quantities sold in respect of crude
oil (including condensate) and gas, if positive is treated as inventory
and, if negative, is adjusted to revenue by recording the same as
liability.
ii. Sales are inclusive of all statutory levies and taxes that are paid
/ payable to the government, based on the provisions under various laws
and agreements governing Company's activities in the respective
field/project.
iii. Any payment received in respect of short lifted gas quantity for
which an obligation exists to supply such gas in subsequent periods is
recognized as Deferred Revenue in the year of receipt. The same is
recognized as revenue in the year in which such gas is actually
supplied for the quantity supplied or in the year in which the
obligation to supply such gas ceases, whichever is earlier.
iv. Revenue in respect of interest on delayed realizations is
recognized when there is reasonable certainty regarding ultimate
collection.
v. All income and expenditure items that have material bearing on the
financial statements are recognized on accrual basis. However insurance
claims are not accounted on accrual basis but are accounted for as and
when received.
j) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made based on technical evaluation and past
experience. Provisions are not discounted to its present value and are
determined based on management estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjust to reflect the current management
estimate.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
k) ACCOUNTING FOR TAXATION:
Income taxes are accounted for in accordance with Accounting Standard
22 AS "Accounting for Taxes on Income" issued by the Institute of
Chartered Accountants of India. Tax expense comprises both current and
deferred tax. Current tax is measured at the amount expected to be paid
to / recovered from the tax authorities using the applicable tax rates.
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to timing differences between taxable income
and accounting income that are capable of reversing in one or more
subsequent periods and are measured using the relevant enacted tax
rates. At each Balance Sheet date, the Company reassesses unrecognized
deferred tax assets to the extent they have become reasonably certain
or virtually certain of realization, as the case may be.
I) BORROWING COSTS:
Borrowing costs include interest and commitment charges on borrowings,
amortisation of costs incurred in connection with the arrangement of
borrowings, exchange differences to the extent they are considered a
substitute to the interest cost and finance charges under leases.
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
m) ACCOUNTING FOR EMPLOYEE BENEFITS:
i. Short term employee benefits are recognized in the year during
which the services have been rendered.
ii. The Company has no policy for leave encashment.
iii. Gratuity liability is a defined benefit obligation and is provided
for on the basis of actuarial valuation under group gratuity scheme of
Life Insurance Corporation of India at the end of each financial year.
iv. All other post retirement benefits to employees are accounted on
cash basis.
n) FOREIGN CURRENCY TRANSACTIONS:
i. Foreign currency transactions on initial recognition in the
reporting currency are accounted for at the exchange rates prevailing
on the date of transaction.
ii. At each Balance Sheet date, foreign currency monetary items are
translated using the average of exchange rates prevailing on the
balance sheet date and non-monetary items are translated using the
exchange rate prevailing on the date of transaction or on the date when
the fair value of such items are determined.
iii. Losses or gains relating to the loans/deferred credits utilized
for acquisition of fixed assets are adjusted to the carrying cost of
the relevant assets. All the other exchange differences arising on the
settlement of monetary items or on reporting of monetary items at the
rates different from those at which they were initially recorded during
the period, or reported in previous financial statements are recognized
as income or expenses in the period in which they arise.
o) SITE RESTORATION:
At the end of the producing life of a field, costs are incurred to
restore the site back to its original position. The Company estimates,
on a current basis, the cost (net of realisation) of site restoration
and recognizes it as a liability and provides for the same. Such
estimated cost of site restoration form part of the intangible assets
under development or cost of producing properties, as the case may be,
of the related asset. Any change in the value of the estimated
liability is reflected as an adjustment to the provision and the
corresponding intangible assets under development or producing
property.
Mar 31, 2014
A) BASIS OF PREPARATION:
The financial statements of Interlink Petroleum Limited (the Company)
are prepared under historical cost convention and on accrual basis in
accordance with Generally Accepted Accounting Principles in India
("GAAP"). GAAP comprises mandatory accounting standards and applicable
guidance notes issued by The Institute of Chartered Accountants of
India as specified in the Companies (Accounting Standards) Rules, 2006
(as amended), the relevant provisions of the Companies Act, 1956 and
guidelines issued by the Securities and Exchange Board of India. The
accounting policies, in all material respects, have been consistently
applied by the Company and are consistent with those used in the
previous year.
b) PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS:
During the year ended 31st March, 2014 the revised Schedule VI notified
under the Companies Act, 1956, has become applicable to the Company,
for preparation and presentation of its financial statements. Except
accounting for dividend on investments in subsidiary companies, the
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
c) USE OF ESTIMATES:
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to
contingent liabilities on the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Though management believes that the estimates used are prudent and
reasonable, actual results could differ from these estimates.
Difference between the actual results and estimates are recognised in
the period in which the results are known / materialised.
d) FIXED ASSETS, DEPRECIATION AND AMORTISATION:
i. Tangible assets are stated at cost, less accumulated depreciation
and impairment losses, if any. Cost comprises the purchase price and
any attributable cost of bringing the asset to its working condition
for its intended use. Borrowing and other financing costs including
foreign exchange variation relating to acquisition of fixed assets,
which take a substantial period of time to get ready for its intended
use, are also included to the extent they relate to the period till
such assets are ready to be put to use.
ii. Intangible assets are recognized only if it is probable that the
future economic benefits that are attributable to the asset will flow
to the enterprise and the cost of the asset can be measured reliably.
The intangible assets are recorded at cost and are carried at cost less
accumulated amortization. Cost of intangible assets includes Borrowing
and other financing costs including foreign exchange variation that are
attributable to development of such intangible assets.
iii. Depreciation on fixed assets is provided in accordance with the
rates as specified in Schedule XIV to The Companies Act, 1956, on
straight-line method, to at least 95% of the cost of the assets except
in respect of assets of value less than ''5000 each, which are
depreciated fully in the year of acquisition. Depreciation is charged
pro-rata on monthly basis on all other assets from/up to the month of
capitalization/sale, disposal and/or dismantle. Depreciation relating
to assets attributable directly to qualifying asset including
prospecting, exploration and development of oil and gas are capitalized
as a part of Intangible Assets Under Development or Producing
Properties, as the case may be.
e) VALUATION OF INVENTORIES:
i. Natural Gas is extracted from field as and when supply of gas is to
be made. So there is no storage of Natural Gas available and hence
there is no stock of natural gas.
ii. The Closing Stock of Crude Oil in saleable condition is valued at
Cost or Net Realizable Value less estimated selling costs, whichever is
lower.
iii. Stores and spares are valued at lower of cost or net realizable
value.
f) PRELIMINARY EXPENSES:
Preliminary expenses in the nature of expenses for incorporation of the
Company, public issue expenses and like expenses; are amortized over a
period of five years.
g) EXPLORATION AND DEVELOPMENT COSTS:
i. The Company is following "Full Cost Method" for allocating all costs
incurred in prospecting, exploring and development of oil and gas
including related finance cost and depreciation, which are accumulated,
considering the country as a cost centre, as per the guidance note on
Accounting for Oil and Gas producing activities issued by the institute
of Chartered Accountants of India.
ii. Exploration Costs involved in drilling and equipping exploratory
and appraisal wells and cost of drilling exploratory type stratigraphic
test wells are initially accounted for under the head Capital Work In
Progress/Intangible Assets Under Development and are capitalized as
Producing Properties when ready to commence commercial production.
iii. All Costs relating to development wells, development type
stratigraphic test wells and service wells are initially accounted for
under the head Capital Work In Progress/Intangible Assets Under
Development and are capitalized as Producing Properties when ready to
commence commercial production.
iv. Producing Properties are depleted using ''Unit of Production'' method
based on estimated proved developed reserves. Any changes in
Reserves/Cost are dealt with prospectively. Hydrocarbon reserves are
estimated by the Company following the International Reservoir
Engineering Principles and are approved by the appropriate
authority(s).
h) IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS:
At each Balance Sheet date, the Company reviews the carrying amount of
its assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine
the extent of impairment loss and provide for impairment. Where the
impairment loss subsequently reverses, the carrying amount of the asset
(cash generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset in prior accounting
periods.
i) INVESTMENTS:
Current investments are carried at the lower of cost and quoted / fair
value. Long- term investments are stated at cost. Provision for
diminution in the value of long-term investments is made only if such a
decline is other than temporary in the opinion of the management.
j) RECOGNITION OF INCOME AND EXPENDITURE:
i. Revenue from sale of products is recognized on transfer of custody
to customers Any difference as of the reporting date between the
entitlement quantities minus the quantities sold in respect of crude
oil (including condensate) and gas, if positive is treated as inventory
and, if negative, is adjusted to revenue by recording the same as
liability.
ii. Sales are inclusive of all statutory levies and taxes that are paid
/ payable to the government, based on the provisions under various laws
and agreements governing Company''s activities in the respective
field/project.
iii. Any payment received in respect of short lifted gas quantity for
which an obligation exists to supply such gas in subsequent periods is
recognized as Deferred Revenue in the year of receipt. The same is
recognized as revenue in the year in which such gas is actually
supplied for the quantity supplied or in the year in which the
obligation to supply such gas ceases, whichever is earlier.
iv. Revenue in respect of interest on delayed realizations is
recognized when there is reasonable certainty regarding ultimate
collection.
v. All income and expenditure items that have material bearing on the
financial statements are recognized on accrual basis. However insurance
claims are not accounted on accrual basis but are accounted for as and
when received.
k) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made based on technical evaluation and past
experience. Provisions are not discounted to its present value and are
determined based on management estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjust to reflect the current management
estimate. contingent liabilities are not recognized but are disclosed
in the notes. Contingent Assets are neither recognized nor disclosed in
the financial statements.
l) ACCOUNTING FOR TAXATION:
Income taxes are accounted for in accordance with Accounting Standard
22 AS "Accounting for Taxes on Income" issued by the Institute of
Chartered Accountants of India. Tax expense comprises both current and
deferred tax. Current tax is measured at the amount expected to be paid
to / recovered from the tax authorities using the applicable tax rates.
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to timing differences between taxable income
and accounting income that are capable of reversing in one or more
subsequent periods and are measured using the relevant enacted tax
rates. At each Balance Sheet date, the Company reassesses unrecognized
deferred tax assets to the extent they have become reasonably certain
or virtually certain of realization, as the case may be.
m) BORROWING COSTS :
Borrowing costs include interest and commitment charges on borrowings,
amortisation of costs incurred in connection with the arrangement of
borrowings, exchange differences to the extent they are considered a
substitute to the interest cost and finance charges under leases.
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
n) ACCOUNTING FOR EMPLOYEE BENEFITS:
i. Short term employee benefits are recognized in the year during which
the services have been rendered.
ii. The Company has no policy for leave encashment.
iii. Gratuity liability is a defined benefit obligation and is provided
for on the basis of actuarial valuation under group gratuity scheme of
Life Insurance Corporation of India at the end of each financial year.
iv. All other post retirement benefits to employees are accounted on
cash basis.
o) FOREIGN CURRENCY TRANSACTIONS:
i. Foreign currency transactions on initial recognition in the
reporting currency are accounted for at the exchange rates prevailing
on the date of transaction.
ii. At each Balance Sheet date, foreign currency monetary items are
translated using the average of exchange rates prevailing on the
balance sheet date and non-monetary items are translated using the
exchange rate prevailing on the date of transaction or on the date when
the fair value of such items are determined.
iii. Losses or gains relating to the loans/deferred credits utilized
for acquisition of fixed assets are adjusted to the carrying cost of
the relevant assets. All the other exchange differences arising on the
settlement of monetary items or on reporting of monetary items at the
rates different from those at which they were initially recorded during
the period, or reported in previous financial statements are recognized
as income or expenses in the period in which they arise.
p) SITE RESTORATION:
At the end of the producing life of a field, costs are incurred to
restore the site back to its original position. The Company estimates,
on a current basis, the cost (net of realisation) of site restoration
and recognizes it as a liability and provides for the same. Such
estimated cost of site restoration form part of the intangible assets
under developmentor cost of producing properties, as the case may be,
of the related asset. Any change in the value of the estimated
liability is reflected as an adjustment to the provision and the
corresponding intangible assets under development or producing
property.
Mar 31, 2013
A) BASIS OF PREPARATION:
The financial statements of Interlink Petroleum Limited (the Company)
are prepared under historical cost convention and on accrual basis in
accordance with Generally Accepted Accounting Principles in India
("GAAP"). GAAP comprises mandatory accounting standards and applicable
guidance notes issued by The Institute of Chartered Accountants of
India as specified in the Companies (Accounting Standards) Rules, 2006
(as amended), the relevant provisions of the Companies Act, 1956 and
guidelines issued by the Securities and Exchange Board of India. The
accounting policies, in all material respects, have been consistently
applied by the Company and are consistent with those used in the
previous year.
b) PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS:
During the year ended 31st March,2013 the revised Schedule VI notified
under the Companies Act,1956, has become applicable to the Company, for
preparation and presentation of its financial statements. Except
accounting for dividend on investments in subsidiary companies, the
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
c) USE OF ESTIMATES:
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to
contingent liabilities on the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Though management believes that the estimates used are prudent and
reasonable, actual results could differ from these estimates.
Difference between the actual results and estimates are recognised in
the period in which the results are known / materialised.
d) FIXED ASSETS, DEPRECIATION AND AMORTISATION:
i. Tangible assets are stated at cost, less accumulated depreciation
and impairment losses, if any. Cost comprises the purchase price and
any attributable cost of bringing the asset to its working condition
for its intended use. Borrowing and other financing costs including
foreign exchange variation relating to acquisition of fixed assets,
which take a substantial period of time to get ready for its intended
use, are also included to the extent they relate to the period till
such assets are ready to be put to use.
ii. Intangible assets are recognized only if it is probable that the
future economic benefits that are attributable to the asset will flow
to the enterprise and the cost of the asset can be measured reliably.
The intangible assets are recorded at cost and are carried at cost less
accumulated amortization. Cost of intangible assets includes Borrowing
and other financing costs including foreign exchange variation that are
attributable to development of such intangible assets.
iii. Depreciation on fixed assets is provided in accordance with the
rates as specified in Schedule XIV to The Companies Act, 1956, on
straight-line method, to at least 95% of the cost of the assets except
in respect of assets of value less than Rs. 5000 each, which are
depreciated fully in the year of acquisition. Depreciation is charged
pro-rata on monthly basis on all other assets from/up to the month of
capitalization/sale, disposal and/or dismantle. Depreciation relating
to assets attributable directly to qualifying asset including
prospecting, exploration and development of oil and gas are capitalized
as a part of Intangible Assets Under Development or Producing
Properties, as the case may be.
e) VALUATION OF INVENTORIES:
i. Natural Gas is extracted from field as and when supply of gas is to
be made. So there is no storage of Natural
Gas available and hence there is no stock of natural gas. ii. The
Closing Stock of Crude Oil in saleable condition is valued at Cost or
Net Realizable Value less estimated
selling costs, whichever is lower. iii. Stores and spares are valued
at lower of cost or net realizable value.
f) PRELIMINARY EXPENSES:
Preliminary expenses in the nature of expenses for incorporation of the
Company, public issue expenses and like expenses; are amortized over a
period of five years.
g) EXPLORATION AND DEVELOPMENT COSTS:
i. The Company is following "Full Cost Method" for allocating all costs
incurred in prospecting, exploring and development of oil and gas
including related finance cost and depreciation, which are accumulated,
as per the guidance note on Accounting for Oil and Gas producing
activities issued by the institute of Chartered Accountants of India.
ii. Exploration Costs involved in drilling and equipping exploratory
and appraisal wells and cost of drilling exploratory type stratigraphic
test wells are initially accounted for under the head Capital Work In
Progress/Intangible Assets Under Development and are capitalized as
Producing Properties when ready to commence commercial production.
iii. All Costs relating to development wells, development type
stratigraphic test wells and service wells are initially accounted for
under the head Capital Work In Progress/Intangible Assets Under
Development and are capitalized as Producing Properties when ready to
commence commercial production.
iv. Producing Properties are depleted using ''Unit of Production'' method
based on estimated proved developed reserves. Any changes in
Reserves/Cost are dealt with prospectively. Hydrocarbon reserves are
estimated by the Company following the International Reservoir
Engineering Principles and are approved by the appropriate
authority(s).
h) IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS:
At each Balance Sheet date, the Company reviews the carrying amount of
its assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine
the extent of impairment loss and provide for impairment. Where the
impairment loss subsequently reverses, the carrying amount of the asset
(cash generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset in prior accounting
periods.
i) INVESTMENTS:
Current investments are carried at the lower of cost and quoted / fair
value. Long- term investments are stated at cost. Provision for
diminution in the value of long-term investments is made only if such a
decline is other than temporary in the opinion of the management.
j) RECOGNITION OF INCOME AND EXPENDITURE:
i. Revenue from sale of products is recognized on transfer of custody
to customers. Any difference as of the reporting date between the
entitlement quantities minus the quantities sold in respect of crude
oil (including condensate) and gas, if positive is treated as inventory
and, if negative, is adjusted to revenue by recording the same as
liability. ii. Sales are inclusive of all statutory levies and taxes
that are paid / payable to the government, based on the provisions
under various laws and agreements governing Company''s activities in the
respective field/project. iii. Any payment received in respect of
short lifted gas quantity for which an obligation exists to supply such
gas in subsequent periods is recognized as Deferred Revenue in the year
of receipt. The same is recognized as revenue in the year in which such
gas is actually supplied for the quantity supplied or in the year in
which the obligation to supply such gas ceases, whichever is earlier.
iv. Revenue in respect of interest on delayed realizations is
recognized when there is reasonable certainty regarding ultimate
collection. All income and expenditure items that have material
bearing on the financial statements are recognized on accrual basis.
However insurance claims are not accounted on accrual basis but are
accounted for as and when received.
k) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made based on technical evaluation and past
experience. Provisions are not discounted to its present value and are
determined based on management estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjust to reflect the current management
estimate. Contingent liabilities are not recognized but are disclosed
in the notes. Contingent Assets are neither recognized nor disclosed in
the financial statements.
l) ACCOUNTING FOR TAXATION:
Income taxes are accounted for in accordance with Accounting Standard
22 AS "Accounting for Taxes on Income" issued by the Institute of
Chartered Accountants of India. Tax expense comprises both current and
deferred tax. Current tax is measured at the amount expected to be paid
to / recovered from the tax authorities using the applicable tax rates.
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to timing differences between taxable income
and accounting income that are capable of reversing in one or more
subsequent periods and are measured using the relevant enacted tax
rates. At each Balance Sheet date, the Company reassesses unrecognized
deferred tax assets to the extent they have become reasonably certain
or virtually certain of realization, as the case may be.
m) BORROWING COSTS :
Borrowing costs include interest and commitment charges on borrowings,
amortisation of costs incurred in connection with the arrangement of
borrowings, exchange differences to the extent they are considered a
substitute to the interest cost and finance charges under leases.
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
n) ACCOUNTING FOR EMPLOYEE BENEFITS:
i. Short term employee benefits are recognized in the year during
which the services have been rendered.
ii. The Company has no policy for leave encashment.
iii. Gratuity liability is a defined benefit obligation and is
provided for on the basis of actuarial valuation under group gratuity
scheme of Life Insurance Corporation of India at the end of each
financial year. iv. All other post retirement benefits to employees
are accounted on cash basis.
o) FOREIGN CURRENCY TRANSACTIONS:
i. Foreign currency transactions on initial recognition in the
reporting currency are accounted for at the exchange rates prevailing
on the date of transaction.
ii. At each Balance Sheet date, foreign currency monetary items are
translated using the average of exchange rates prevailing on the
balance sheet date and non-monetary items are translated using the
exchange rate prevailing on the date of transaction or on the date when
the fair value of such items are determined.
iii. Losses or gains relating to the loans/deferred credits utilized
for acquisition of fixed assets are adjusted to the carrying cost of
the relevant assets. All the other exchange differences arising on the
settlement of monetary items or on reporting of monetary items at the
rates different from those at which they were initially recorded during
the period, or reported in previous financial statements are recognized
as income or expenses in the period in which they arise.
p) SITE RESTORATION:
At the end of the producing life of a field, costs are incurred to
restore the site back to its original position. The Company estimates,
on a current basis, the cost (net of realisation) of site restoration
and recognizes it as a liability and provides for the same. Such
estimated cost of site restoration form part of the intangible assets
under development or cost of producing properties, as the case may be,
of the related asset. Any change in the value of the estimated
liability is reflected as an adjustment to the provision and the
corresponding intangible assets under development or producing
property.
Mar 31, 2012
A) BASIS OF PREPARATION:
The financial statements of Interlink Petroleum Limited (the Company)
are prepared under historical cost convention and on accrual basis in
accordance with Generally Accepted accounting Principles in India
("GAAP"). GAAP comprises mandatory accounting standards and applicable
guidance notes issued by The Institute of Chartered Accountants of
India as specified in the Companies (Accounting Standards) Rules, 2006
(as amended), the relevant provisions of the Companies Act, 1956 and
guidelines issued by the Securities and Exchange Board of India. The
accounting policies, in all material respects, have been consistently
applied by the Company and are consistent with those used in the
previous year.
b) PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS:
During the year ended 31st March, 2012 the revised Schedule VI notified
under the Companies Act,1956, has become applicable to the Company, for
preparation and presentation of its financial statements. Except
accounting for dividend on investments in subsidiary companies, the
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
c) USE OF ESTIMATES:
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to
contingent liabilities on the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Though management believes that the estimates used are prudent and
reasonable, actual results could differ from these estimates.
Difference between the actual results and estimates are recognized in
the period in which the results are known/materialized.
d) FIXED ASSETS, DEPRECIATION AND AMORTIZATION:
i. Tangible assets are stated at cost, less accumulated depreciation
and impairment losses, if any. Cost comprises the purchase price and
any attributable cost of bringing the asset to its working condition
for its intended use. Borrowing and other financing costs including
foreign exchange variation relating to acquisition of fixed assets,
which take a substantial period of time to get ready for its intended
use, are also included to the extent they relate to the period till
such assets are ready to be put to use.
ii. Intangible assets are recognized only if it is probable that the
future economic benefits that are attributable to the asset will flow
to the enterprise and the cost of the asset can be measured reliably.
The intangible assets are recorded at cost and are carried at cost less
accumulated amortization. Cost of intangible assets includes Borrowing
and other financing costs including foreign exchange variation that are
attributable to development of such intangible assets.
iii. Depreciation on fixed assets is provided in accordance with the
rates as specified in Schedule XIV to the Companies Act, 1956, on
straight-line method, to at least 95% of the cost of the assets except
in respect of assets of value less than Rs. 5000 each, which are
depreciated fully in the year of acquisition. Depreciation is charged
pro-rata on monthly basis on all other assets from/up to the month of
capitalization/sale, disposal and/or dismantle. Depreciation relating
to assets attributable directly to qualifying asset including
prospecting, exploration and development of oil and gas are capitalized
as a part of Intangible Assets Under Development or Producing
Properties, as the case may be.
e) VALUATION OF INVENTORIES:
i. Natural Gas is extracted from field as and when supply of gas is to
be made. So there is no storage of Gas available and hence there is no
stock of natural gas. ii. The Closing Stock of Crude Oil in saleable
condition is valued at Cost or Net Realizable Value less estimated
selling costs, whichever is lower. iii. Stores and spares are valued
at lower of cost or net realizable value.
f) PRELIMINARY EXPENSES:
Preliminary expenses in the nature of expenses for incorporation of the
Company, public issue expenses and like expenses; are amortized over a
period of five years.
g) EXPLORATION AND DEVELOPMENT COSTS:
i. The Company is following "Full Cost Method" for allocating all
costs incurred in prospecting, exploring and development of oil and gas
including related finance cost and depreciation, which are accumulated,
as per the guidance note on Accounting for Oil and Gas producing
activities issued by the institute of Chartered Accountants of India.
ii. Exploration Costs involved in drilling and equipping exploratory
and appraisal wells and cost of drilling exploratory type stratigraphic
test wells are initially accounted for under the head Capital Work In
Progress/Intangible Assets Under Development and are capitalized as
Producing Properties when ready to commence commercial production.
iii. All Costs relating to development wells, development type
stratigraphic test wells and service wells are initially accounted for
under the head Capital Work In Progress/Intangible Assets Under
Development and are capitalized as Producing Properties when ready to
commence commercial production.
iv. Producing Properties are depleted using 'Unit of Production' method
based on estimated proved developed reserves. Any changes in
Reserves/Cost are dealt with prospectively. Hydrocarbon reserves are
estimated by the Company following the International Reservoir
Engineering Principles and are approved by the appropriate
authority(s).
h) IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS:
At each Balance Sheet date, the Company reviews the carrying amount of
its assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine
the extent of impairment loss and provide for impairment. Where the
impairment loss subsequently reverses, the carrying amount of the asset
(cash generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset in prior accounting
periods.
i) INVESTMENTS:
Current investments are carried at the lower of cost and quoted/fair
value. Long- term investments are stated at cost. Provision for
diminution in the value of long-term investments is made only if such a
decline is other than temporary in the opinion of the management.
J) RECOGNITION OF INCOME AND EXPENDITURE:
i. Revenue from sale of products is recognized on transfer of custody
to customers. Any difference as of the reporting date between the
entitlement quantities minus the quantities sold in respect of crude
oil (including condensate) and gas, if positive is treated as inventory
and, if negative, is adjusted to revenue by recording the same as
liability. ii. Sales are inclusive of all statutory levies and taxes
that are paid/payable to the government, based on the provisions
under various laws and agreements governing Company's activities in the
respective field/project. iii. Any payment received in respect of
short lifted gas quantity for which an obligation exists to supply such
gas in subsequent periods is recognized as Deferred Revenue in the year
of receipt. The same is recognized as revenue in the year in which such
gas is actually supplied for the quantity supplied or in the year in
which the obligation to supply such gas ceases, whichever is earlier.
iv. Revenue in respect of interest on delayed realizations is
recognized when there is reasonable certainty regarding ultimate
collection. v. All income and expenditure items that have material
bearing on the financial statements are recognized on accrual basis.
However insurance claims are not accounted on accrual basis but are
accounted for as and when received.
k) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made based on technical evaluation and past
experience. Provisions are not discounted to its present value and are
determined based on management estimate required to settle the
obligation at the balance sheet date. These are reviewed at each
balance sheet date and adjust to reflect the current management
estimate. Contingent liabilities are not recognized but are disclosed
in the notes. Contingent Assets are neither recognized nor disclosed
in the financial statements.
l) ACCOUNTING FOR TAXATION:
Income taxes are accounted for in accordance with Accounting Standard
22 AS "Accounting for Taxes on Income" issued by the Institute of
Chartered Accountants of India. Tax expense comprises both current and
deferred tax Current tax is measured at the amount expected to be paid
to/recovered from the tax authorities using the applicable tax rates.
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to timing differences between taxable income
and accounting income that are capable of reversing in one or more
subsequent periods and are measured using the relevant enacted tax
rates. At each Balance Sheet date, the Company reassesses unrecognized
deferred tax assets to the extent they have become reasonably certain
or virtually certain of realization, as the case may be.
m) BORROWING COSTS :
Borrowing costs include interest and commitment charges on borrowings,
amortisation of costs incurred in connection with the arrangement of
borrowings, exchange differences to the extent they are considered a
substitute to the interest cost and finance charges under leases.
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
n) ACCOUNTING FOR EMPLOYEE BENEFITS:
i. Short term employee benefits are recognized in the year during
which the services have been rendered.
ii. The Company has no policy for leave encashment.
iii. Gratuity liability is a defined benefit obligation and is
provided for on the basis of actuarial valuation under group gratuity
scheme of Life Insurance Corporation of India at the end of each
financial year.
iv. All other post retirement benefits to employees are accounted on
cash basis.
o) FOREIGN CURRENCY TRANSACTIONS:
i. Foreign currency transactions on initial recognition in the
reporting currency are accounted for at the exchange rates prevailing
on the date of trans action.
ii. At each Balance Sheet date, foreign currency monetary items are
translated using the average of exchange rates prevailing on the
balance sheet date and non-monetary items are translated using the
exchange rate prevailing on the date of transaction or on the date when
the fair value of such items are determined.
iii. Losses or gains relating to the loans/deferred credits utilized
for acquisition of fixed assets are adjusted to the carrying cost of
the relevant assets. All the other exchange differences arising on the
settlement of monetary items or on reporting of monetary items at the
rates different from those at which they were initially recorded during
the period, or reported in previous financial statements are recognized
as income or expenses in the period in which they arise.
p) SITE RESTORATION:
At the end of the producing life of a field, costs are incurred to
restore the site back to its original position. The Company estimates,
on a current basis, the cost (net of realisation) of site restoration
and recognizes it as a liability and provides for the same. Such
estimated cost of site restoration form part of the intangible assets
under development or cost of producing properties, as the case may be,
of the related asset. Any change in the value of the estimated
liability is reflected as an adjustment to the provision and the
corresponding intangible assets under development or producing
property.
Mar 31, 2011
A) BASIS OF PREPARATION:
i. The financial statements are prepared under historical cost
convention on accrual basis of accounting in accordance with the
generally accepted accounting principles in India and in accordance
with the mandatory accounting standards issued by The Institute of
Chartered Accountants of India and the provisions of the Companies Act,
1956.
b) USE OF ESTIMATES:
i. The presentation of financial statements requires the management to
make estimates and assumptions that affect the reported amount of
assets and liabilities on the date of the financial statements and the
reported amount of revenues and expenses during the reporting period.
Differences between the actual results and estimates are recognized in
the period in which the results are known /materialized.
c) FIXED ASSETS AND DEPRECIATION:
i. Fixed Assets are stated at cost, less accumulated depreciation,
including financing costs till commencement of commercial production.
Net changes on foreign exchange contracts and adjustment arising from
exchange rate variations attributable to the fixed assets are
capitalized.
ii. Depreciation on fixed assets is provided in accordance with the
rates as specified in Schedule XIV to The Companies Act, 1956, on
straight-line method, up to 95% of the cost of the assets except in
respect of assets of value less than Rs.5000 each, which are
depreciated fully in the year of acquisition. Depreciation is charged
pro-rata on monthly basison all other assets from/up to the month of
capitalization/sale, disposal and/or dismantle. Depreciation relating
to assets attributable directly to prospecting, exploration and
development of oil and gas are capitalized as a part of Capital work in
progress or producing properties, as the case may be.
iii. Intangible assets are recognized only if it is probable that the
future economic benefits that are attributable to the asset will flow
to the enterprise and the cost of the asset can be measured reliably.
The intangible assets are recorded at cost and are carried at cost less
accumulated amortization.
d) VALUATION OF INVENTORIES :
i. Natural Gas is extracted from field as and when supply of gas is to
be made. So there is no storage of Natural Gas available and hence
there is no stock of natural gas.
ii. The Closing Stock of Crude Oil in saleable condition is valued at
Cost or Net Realizable Value less estimated selling costs, whichever is
lower.
iii. Cost of raw materials, process chemicals, stores and spares,
packing material, trading and other products are valued at cost or Net
Realisable Value whichever is lower. Cost is determined by using the
weighted average formula. Cost comprises all costs of purchases and
cost incurred to bring inventories to their present location and
condition.
e) PRELIMINARY EXPENSES:
i. Preliminary expenses in the nature of expenses for incorporation of
the Company, Public issue expenses and like expenses; are amortized
over a period of five years.
f) EXPLORATION AND DEVELOPMENT COSTS:
i. The Company is following "Full Cost Method" for allocating all costs
incurred in prospecting, exploring and developing oil and gas including
related interest and depreciation, which are accumulated, as per the
guidance note on Accounting for Oil and Gas producing activities issued
by the institute of Chartered Accountants of India.
ii. Exploration Costs involved in drilling and equipping exploratory
and appraisal wells and cost of drilling exploratory type stratigraphic
test wells are initially accounted for under the head Capital Work In
Progress and are capitalized as producing properties when ready to
commence commercial production.
iii. All Costs relating to development wells, development type
stratigraphic test wells and service wells are initially accounted for
under the head Capital Work In Progress and are capitalized as
producing properties when ready to commence commercial production.
iv. Producing properties are depleted using 'Unit of Production' method
based on estimated proved developed reserves. Any changes in Reserves
and / or Cost are dealt with prospectively. Hydrocarbon reserves are
estimated by the Company following the International Reservoir
Engineering Principles and are approved by the appropriate authority(s).
g) IMPAIRMENT OF ASSETS:
i. At each Balance Sheet date, the Company reviews the carrying amount
of its assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine
the extent of impairment loss. Where the impairment loss subsequently
reverses, the carrying amount of the asset (cash generating unit) is
increased to the revised estimate of its recoverable amount, but so
that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognized
for the asset in prior accounting periods.
h) INVESTMENTS:
i. Current investments are carried at the lower of cost and quoted /
fair value. Long term Investments are stated at cost. Provision for
diminution in the value of long-term investments is made only if such
a decline is other than temporary in the opinion of the management.
i) RECOGNITION OF INCOME AND EXPENDITURE:
i. Revenue from sale of products is recognized on transfer of custody
to customers. Any difference as of the reporting date between the
entitlement quantities minus the quantities sold in respect of crude
oil (including condensate) and gas, if positive is treated as inventory
and, if negative, is adjusted to revenue by recording the same as
liability.
ii. Sales are inclusive of all statutory levies and taxes that are
paid/payable to the government, based on the provisions under various
laws and agreements governing Company's activities in the respective
field/project.
iii. Any payment received in respect of short lifted gas quantity for
which an obligation exists to supply such gas in subsequent periods is
recognized as Deferred Revenue in the year of receipt. The same is
recognized as revenue in the year in which such gas is actually
supplied for the quantity supplied or in the year in which the
obligation to supply such gas ceases, whichever is earlier.
iv. Revenue in respect of interest on delayed realizations is
recognized when there is reasonable certainty regarding ultimate
collection.
v. All income and expenditure items that have material bearing on the
financial statements are recognized on accrual basis. However insurance
claims are not accounted on accrual basis but are accounted for as and
when received.
j) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
i. Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
k) ACCOUNTING FOR TAXATION:
i. Income taxes are accounted for in accordance with Accounting
Standard 22 AS "Accounting for Taxes on Income" issued by the Institute
of Chartered Accountants of India. Tax expense comprises both current
and deferred tax. Current tax is measured at the amount expected to be
paid to / recovered from the tax authorities using the applicable tax
rates. Deferred tax assets and liabilities are recognized for future
tax consequences attributable to timing differences between taxable
income and accounting income that are capable of reversing in one or
more subsequent periods and are measured using the relevant enacted tax
rates. At each Balance Sheet date, the Company reassesses unrecognized
deferred tax assets to the extent they have become reasonably certain
or virtually certain of realization, as the case may be.
l) BORROWING COSTS:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
m) ACCOUNTING FOR RETIREMENT BENEFIT:
The Company has no policy for Leave encashment. Gratuity is accounted
for on an accrual basis. All other Post retirement benefits to
employees are accounted on cash basis.
n) FOREIGN CURRENCY TRANSACTIONS:
i. Foreign Currency transactions on initial recognition in the
reporting currency are accounted for at the exchange rates prevailing
on the date of transaction.
ii. At each Balance sheet date, foreign currency monetary items are
translated using the average of exchange rates prevailing on the
balance sheet date and non-monetary items are translated using the
exchange rate prevailing on the date of transaction or on the date when
the fair value of such items are determined.
iii. Losses or gains relating to the loans/deferred credits utilized
for acquisition of fixed assets are adjusted to the carrying cost of
the relevant assets. All the other exchange differences arising on the
settlement of monetary items or on reporting of monetary items at the
rates different from those at which they were initially recorded during
the period, or reported in previous financial statements are recognized
as income or expenses in the period in which they arise.
o) SITE RESTORATION:
i. Estimated future liabilities relating to dismantling and abandoning
producing well sites and facilities whose estimated producing life is
expected to end during next ten years is recognized based on the
estimated future expenditure determined by the management in accordance
with the local conditions and requirements. The corresponding amount is
added to the cost of the producing property and is depleted using unit
of production method. Any change in the value of the estimated
liability is reflected as an adjustment to the provision and the
corresponding producing property.
Mar 31, 2010
A) BASIS OF PREPARATION:
The financial statements are prepared under historical cost convention
on accrual basis of accounting in accordance with the generally
accepted accounting principles in India and the mandatory accounting
standards issued by The Institute of Chartered Accountants of India and
the provisions of the Companies Act, 1956.
b) USE OF ESTIMATES:
The presentation of financial statements requires the management to
make estimates and assumptions that affect the reported amount of
assets and liabilities on the date of the financial statements and the
reported amount of revenues and expenses during the reporting period.
Differences between the actual results and estimates are recognized in
the period in which the results are known / materialized.
c) FIXED ASSETS AND DEPRECIATION :
i. Fixed Assets are stated at cost, less accumulated depreciation
including financing costs till commencement of commercial production.
Net changes on foreign exchange contracts and adjustment arising from
exchange rate variations attributable to the fixed assets are
capitalized.
ii. Depreciation on fixed assets is provided in accordance with the
rates as specified in Schedule XIV to The Companies Act, 1956, on
straight-line method, up to 95% of the cost of the assets.
Depreciation is charged pro-rata on monthly basis on assets from/up to
the month of capitalization/sale, disposal and/or dismantle.
Depreciation relating to assets attributable directly to prospecting,
exploration and development of oil and gas are capitalized as a part of
Capital work in progress or producing properties, as the case may be.
iii. Intangible assets are recognized only if it is probable that the
future economic benefits that are attributable to the asset will flow
to the enterprise and the cost of the asset can be measured reliably.
The intangible assets are recorded at cost and are carried at cost less
accumulated amortization
d) VALUATION OF INVENTORIES :
i. Natural Gas is extracted from field as and when supply of gas is to
be made. Hence neither there is any storage of Natural Gas nor any
stock of the same.
ii. The Closing Stock of Crude Oil in saleable condition is valued at
Cost or Net Realizable Value less estimated selling costs, whichever is
lower.
iii. Stores and spares are valued at lower of cost or net realizable
value.
e) PRELIMINARY EXPENSES:
Preliminary expenses, in the nature of expenses for incorporation of
the Company, Public issue expenses and like expenses; are amortized
over a period of five years.
f) EXPLORATION AND DEVELOPMENT COSTS:
i. The Company is following Full Cost Method for allocating all costs
incurred in prospecting, exploring and developing oil and gas including
related interest and depreciation, which are accumulated, as per the
guidance note on Accounting for Oil and Gas producing activities issued
by the institute of Chartered Accountants of India.
ii. Exploration Costs involved in drilling and equipping exploratory
and appraisal wells and cost of drilling exploratory type stratigraphic
test wells are initially accounted for under the head Capital Work In
Progress and are capitalized as producing properties when ready to
commence commercial production.
iii. All Costs relating to development wells, development type
stratigraphic test wells and service wells are initially accounted for
under the head Capital Work In Progress and are capitalized as
producing properties when ready to commence commercial production.
iv. Producing properties are depleted using Unit of Production method
based on estimated proved developed reserves. Any changes in Reserves
and / or Cost are dealt with prospectively. Hydrocarbon reserves are
estimated by the Company following the International Reservoir
Engineering Principles and are approved by the appropriate
authority(s).
g) IMPAIRMENT OF ASSETS:
At each Balance Sheet date, the Company reviews the carrying amount of
its assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine
the extent of impairment loss. Where the impairment loss subsequently
reverses, the carrying amount of the asset (cash generating unit) is
increased to the revised estimate of its recoverable amount to the
extent that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been
recognized for the asset in prior accounting periods.
h) INVESTMENTS:
Current investments are carried at the lower of cost and quoted / fair
value. Long term Investments are stated at cost. Provision for
diminution in the value of long-term investments is made only if such a
decline is other than temporary in the opinion of the management.
i) RECOGNITION OF INCOME AND EXPENDITURE:
(i) Revenue from sale of products is recognized on transfer of custody
to customers. Any difference as of the reporting date between the
entitlement quantities minus the quantities sold in respect of crude
oil (including condensate) and gas, if positive, is treated as
inventory and, if negative, is adjusted to revenue by recording the
same as liability.
(ii) Sales are inclusive of all statutory levies and taxes that are
paid/payable to the government, based on the provisions under various
laws and agreements governing Companys activities in the respective
field/project.
(iii) Any payment received in respect of short lifted gas quantity for
which an obligation exists to supply such gas in subsequent periods is
recognized as Deferred Revenue in the year of receipt. The same is
recognized as revenue in the year in which such gas is actually
supplied for the quantity supplied or in the year in which the
obligation to supply such gas ceases, whichever is earlier.
(iv) Revenue in respect of interest on delayed realizations is
recognized when there is reasonable certainty regarding ultimate
collection.
(v) All income and expenditure items that have material bearing on the
financial statements are recognized on accrual basis. However insurance
claims are not accounted on accrual basis but are accounted for as and
when received.
j) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
k) ACCOUNTING FOR TAXATION:
Income taxes are accounted for in accordance with Accounting Standard
22 AS Accounting for Taxes on Income issued by the Institute of
Chartered Accountants of India. Tax expense comprises both current and
deferred tax. Current tax is measured at the amount expected to be paid
to / recovered from the tax authorities using the applicable tax rates.
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to timing differences between taxable income
and accounting income that are capable of reversing in one or more
subsequent periods and are measured using the relevant enacted tax rates.
At each Balance Sheet date, the Company reassesses unrecognized deferred
tax assets to the extent they have become reasonably certain or virtually
certain of realization, as the case may be.
l) BORROWING COSTS :
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
m) ACCOUNTING FOR RETIREMENT BENEFIT:
The Company has no policy for Leave encashment. Gratuity is accounted
for on an accrual basis. All other Post retirement benefits to
employees are accounted on cash basis.
n) FOREIGN CURRENCY TRANSACTIONS:
(i) Foreign Currency transactions on initial recognition in the
reporting currency are accounted for at the exchange rates prevailing
on the date of transaction.
(ii) At each Balance sheet date, foreign currency monetary items are
translated using the average of exchange rates prevailing on the
balance sheet date and non-monetary items are translated using the
exchange rate prevailing on the date of transaction or on the date when
the fair value of such items are determined.
(iii) Losses or gains relating to the loans/deferred credits utilized
for acquisition of fixed assets are adjusted to the carrying cost of
the relevant assets. All the other exchange differences arising on the
settlement of monetary items or on reporting of monetary items at the
rates different from those at which they were initially recorded during
the period, or reported in previous financial statements are recognized
as income or expenses in the period in which they arise.
o) SITE RESTORATION:
Estimated future liabilities relating to dismantling and abandoning of
producing well sites and facilities, whose estimated producing life is
expected to end during next ten years, is recognized based on the
estimated future expenditure determined by the management in accordance
with the local conditions and requirements. The corresponding amount is
added to the cost of the producing property and is depleted using unit
of production method. Any change in the value of the estimated
liability is reflected as an adjustment to the provision and the
corresponding producing property.