Mar 31, 2023
Corporate information
GAIL (India) Limited ("GAIL" or "the Company") is a Public Limited Company domiciled in India (CIN: L40200DL1984GOI018976) and was incorporated on August 16, 1984. Equity Shares of the Company are listed in India on the Bombay Stock Exchange and the National Stock Exchange. Global Depository Receipts (GDRs) of the Company are listed on London Stock Exchange. The Government of India holds 51.52% in the paid-up equity capital of the Company as on 31st March 2023. The registered office of the Company is located at 16, Bhikaji Cama Place, R K Puram, New Delhi- 110066.
GAIL is the largest state-owned natural gas processing and distribution company in India. The Company has a diversified business portfolio and has interests in the sourcing and trading of natural gas, production of LPG, Liquid hydrocarbons and petrochemicals, transmission of natural gas and LPG through pipelines, etc. GAIL has also participating interest in India and overseas in Oil and Gas Blocks.
The Standalone Financial Statements of the Company for the year ended 31st March 2023 were authorized for issue in accordance with a resolution of the Board of Directors on 18th May 2023
The Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind-AS) as notified by the Ministry of Corporate Affairs ("MCA") under section 133 of the Companies Act, 2013 ("Act"), read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other relevant provisions of the Act.
The Financial Statements have been prepared as a going concern on accrual basis of accounting. The Company has adopted historical cost basis for assets and liabilities except for certain items which have been measured on a different basis and such basis is disclosed in the relevant accounting policy.
The Financial Statements are presented in Indian Rupees (?) and the values are rounded to the nearest crore (up to two decimals) except when otherwise indicated.
1. Accounting Policies1.1 Property, Plant and Equipment (PPE)
a) The Costs of an item of PPE is recognized as an asset if, and only if:
i. It is probable that the future economic benefits flow to the entity; and
ii. The cost of an item can be measured reliably
b) Property, Plant and Equipment are stated at original cost net of tax / duty credit availed, less accumulated depreciation / amortization and cumulative impairment losses. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.
c) Stores & Spares which meet the definition of PPE (whether as component or otherwise) and satisfy
the recognition criteria, are capitalized as PPE in the underlying asset. Expenditure on major inspection and overhauls of PPE is capitalized, when it meets the asset recognition criteria. Any remaining carrying amount of the cost of the previous inspection and overhaul is derecognized. The cost of replacing major part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized regardless of whether the replaced part has been depreciated separately. If it is not practicable to determine the carrying amount of the replaced part, the Company uses the cost of the replacement as an indication of what the cost of replaced part was at the time it was acquired or constructed
d) Technical know-how/license fee incurred at the time of procurement of PPE are capitalized as part of the underlying asset.
e) Items of PPE may be acquired for safety or environmental reasons. The acquisition of such PPE, although not directly increasing the future economic benefits of any particular existing item of PPE, may be necessary for an entity to obtain the future economic benefits from its other assets. Such items of PPE are recognized as assets
f) Property, plant and equipment is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains and losses on de-recognition of an item of property, plant and equipment are determined as the difference between sale proceeds from disposal, if any, and the carrying amount of property, plant and equipment and are recognized in the statement of profit and loss. In circumstance, where an item of property, plant and equipment is abandoned, the net carrying cost relating to the property, plant and equipment is written off in the same period.
g) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its PPE recognized as at 01.04.2015 measured as per previous GAAP and use that carrying value as deemed cost of the PPE.
a) Intangible assets like Right of Use (RoU), Software, Licenses which are expected to provide future enduring economic benefits are capitalized as Intangible Assets and are stated at their cost of acquisition less accumulated amortization and any accumulated impairment loss.
b) Expenditure incurred which are eligible for capitalizations under intangible assets are carried as intangible assets under development till they are ready for their intended use.
c) An intangible asset is derecognized when no future economic benefits are expected from their use or upon their disposal. Gain or loss on de-recognition of an intangible asset is determined as the difference between the net disposal proceeds, if any, and the
carrying amount of intangible assets and are recognized in the statement of profit and loss.
d) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as at 01.04.2015 measured as per previous GAAP and use that carrying value as deemed cost of the intangible assets.
a) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/ estimated liability, as and when work commences where ROU is acquired.
b) The capital work in progress includes Construction Stores including Material in Transit/ Equipment / Services, etc. received at site for use in the projects.
c) All revenue expenses incurred during Construction Period, which are exclusively attributable to acquisition/ construction of the asset, are capitalized at the time of commissioning of such assets.
1.4 Exploration and Development Costs
a) The Company follows Successful Efforts Method for accounting of Oil & Gas exploration and production activities carried out through incorporate or unincorporated Joint Ventures in the nature of Production Sharing Contracts (PSC) and Revenue Sharing Contracts (RSC) with respective host government and various body corporates for exploration, development and production activities, which includes exploration and evaluation costs as follows:
(i) Geological and Geophysical (G&G) costs including seismic surveys, surface lease rentals etc. for exploration and appraisal proposes are recognized as revenue expenditure in the year in which these are incurred.
(ii) Cost of exploratory/ appraisal wells are carried as Capital Work in Progress - Intangible Assets under development/ Capital work in progress. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created. Such costs are written off in the year when determined to be dry / abandoned.
(iii) Cost of all "exploratory wells in progress" is debited to Statement of Profits and Loss except of those wells for which there are reasonable indications of sufficient quantity of reserves and the enterprise is making sufficient progress assessing the reserves and the economic and operating viability of the project.
b) Capitalization of Producing Properties
Producing Properties are capitalized as "completed wells / producing wells" when the wells in the area / field are ready to commence commercial production on establishment of proved developed oil and gas reserves.
Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments & facilities and estimated future abandonment cost.
c) Depletion of Producing Properties
Producing Properties are depleted using the "Unit of Production Method (UOP)". The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.
d) Production cost of Producing Properties
Company''s share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating cost of support equipment and facilities.
e) Accounting for joint operations
In relation to its interests in joint operations entered through Production Sharing Contracts (PSC) and Revenue Sharing Contracts, the company recognizes its proportionate share in assets, liabilities, revenue from the sale of the output, expenses of the joint operation entity, in the financial statements.
1.5 Foreign currency Transaction
a) Functional Currency of the Company is Indian Rupee ('').
b) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the transaction date.
c) Monetary items (such as Cash, Receivables, Loans, Payables, etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.
d) Non-monetary items (such as Equity Investments, Property plant and equipment, Intangible assets etc.), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s) other than those measured at fair value.
e) Any gains or loss arising on account of exchange difference either on settlement or on translation is adjusted in the Statement of Profit & Loss.
f) Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items is recognized in line with the gain or loss of the item arising on determination of fair value of such item, either in other comprehensive income or the Statement of Profit and Loss as the case maybe.
Borrowing costs consist of:
(a) interest expense calculated using the effective interest method as described in Ind AS 109-''Financial Instruments''
(b) interest expense on lease liabilities recognized in accordance with Ind AS 116- ''Leases'' and
(c) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
Borrowing cost of the funds specifically borrowed for the
purpose of obtaining qualifying assets and eligible for
capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for its intended use after netting off any income earned on temporary investment of such funds. Other borrowing costs are recognized as expense in the year of incurrence.
Government Grants are not recognized until there is reasonable assurance that the Company will comply with conditions attached to them and the grants will be received. In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to deferred income which is recognized as income in the Statement of Profit and Loss over the useful life of the asset. Government Grants related to nondepreciable assets may also require the fulfilment of certain obligations and would then be recognised in profit or loss over the periods that bear the cost of meeting the obligations.
1.8 Non-Current Assets held for Sale:
Non-current assets or disposable groups classified as held for sale are measured at the lower of carrying amount and fair value less cost to sale. Assets and liabilities classified as held for sale are presented separately in the balance sheet.
Non-current assets or disposable groups are classified as held for sale if their carrying amount will be recovered principally through a sale rather than through continuing use. Management must be committed to the sale expected within one year from the date of classification. Action required to complete the plan of sale should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
PPE and Intangible assets once classified as held for sale are not depreciated or amortised.
a) Stock of Liquefied Natural Gas (LNG) and Natural Gas in pipelines is valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.
b) Raw materials and finished goods are valued at weighted average cost or net realizable value, whichever is lower. Finished goods include excise duty and royalty wherever applicable.
c) Stock in process is valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which these are to be incorporated are expected to be sold at or above the weighted average cost.
d) Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which they will be incorporated are expected to be sold at/or above cost.
e) Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, whichever is lower.
f) Surplus / Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.
g) Imported LNG in transit is valued at CIF value or net realizable value whichever is lower.
h) Renewable Energy Certificates (RECs) are valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.
The Company has applied the modified retrospective approach
on transition to Ind AS 115
a) Revenue is recognized to depict the transfer of control of promised goods or services to customers upon the satisfaction of performance obligation under the contract in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Consideration includes contributions by customers towards assets over which Company has control.
b) Where performance obligation is satisfied over time, company recognizes revenue using input/ output method based on performance completion till reporting date. Where performance obligation is satisfied at a point in time, company recognizes revenue when customer obtains control of promised goods and services in the contract.
c) The Company uses output method in accounting for the revenue in respect of sale of services. Use of output method requires the Company to recognize revenue based on performance completion till date e.g. time elapsed. The estimates are assessed continually during the term of the contract and the company remeasures its progress towards complete satisfaction of its performance obligations satisfied over time at the end of each reporting period.
d) Company updates its estimated transaction price at each reporting period, to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period including penalties, discounts and damages etc.
e) Insurance claims are accounted for on the basis of claims admitted by the insurers.
f) Claims (including interest on delayed realization from customers) are accounted for, when there is significant certainty that the claims are realizable.
g) Liability in respect of Minimum Guaranteed Offtake (MGO) of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basis.
h) Minimum charges relating to transportation of LPG are accounted for on receipt basis.
i) In terms of the Gas Sales Agreement with the customers, amount received towards Annual Take or Pay Quantity (ATOPQ) of Gas is accounted for on the basis of realization and shown as liability till make up Gas is delivered to customer as per the contract.
j) Dividend is recognized when right to receive the payment is established, it is probable that the economic benefits associated with the dividend will flow to the entity and the amount of dividend can be measured reliably.
1.11 Depreciation /Amortisationa) Property Plant and Equipment (PPE)
i. Depreciation on PPE (including enabling assets) is provided in accordance with the manner and useful life as specified in Schedule II of the Companies Act, 2013, on straight line method (SLM) on pro-rata basis (monthly pro-rata for bought out assets), except for the assets as mentioned below where different useful life has been taken based on external / internal technical evaluation:
Particulars |
Years |
Furniture provided for the use of employees |
6 years |
Electrical Equipment''s provided for the use of employees |
4 years |
Mobile Phones provided for the use of employees |
2 years |
ii. Cost of the leasehold land is amortized over the lease period except perpetual leases.
iii. Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.
iv. The residual values, useful lives and methods of depreciation of PPE are reviewed at each financial year end and adjusted prospectively, if appropriate. The depreciation/amortization for future periods is revised if there are significant changes from previous estimates. The Company has considered residual value of PPE at 5% of the cost of assets.
i. Right of use (ROU) having indefinite life (for which there is no foreseeable limit to the period over which they are expected to generate net cash flows given the fact that these rights can be used even after the life of respective pipelines) are not amortized, but are tested for impairment annually.
ii. The cost of Intangible assets comprising software and licences, etc. are amortised on Straight Line Method (SLM) over a period of 5 years/actual useful life whichever is lower from the date of capitalization.
iii. After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
c) capital assets facilities installed at the consumers'' premises
Capital assets facilities installed at the consumers'' premises on the land whose ownership is not with the company, has been depreciated on SLM basis in accordance with the useful life as specified in Schedule II of the Companies Act, 2013.
(a) All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.
(b) The Company''s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee''s salary and debited to Statement of Profit and Loss / CWIP. Further, the company makes provision as per actuarial valuation towards any shortfall in fund assets to meet statutory rate of interest in the future period, to be compensated by the company to the Provident Fund Trust.
(c) Employee Benefits under Defined Benefit Plans in respect of post-retirement medical scheme and gratuity are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit Method. Actuarial liability in excess of respective plan assets is recognized during the year.
(d) Obligations on other long term employee benefits, viz., leave encashment, compensated absence and long service awards are provided using the Projected Unit Credit method of actuarial valuation made at the end of the year.
(e) Re-measurement including actuarial gains and losses are recognized in the balance sheet with a corresponding debit or credit to retained earnings through Statement of Profit and Loss or Other Comprehensive Income in the year of occurrence, as the case may be. Remeasurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
(f) The Company also operates a defined contribution scheme for Pension benefits for its employees and the contribution is remitted to a separate Trust.
(g) Liability for gratuity and Post-Retirement Medical Scheme (PRMS) as per actuarial valuation is funded with a separate trust.
1.13 impairment of non-financial assets
The Carrying amount of cash generating unit are reviewed at each reporting date. In case there is any indication of impairment based on Internal / External factors, impairment loss is recognized wherever the carrying amount of asset exceeds its recoverable amount.
1.14 Provisions, contingent Liabilities, contingent assets & capital commitments
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, the amount of a provision shall be the present value of the expenditures expected to be required to settle the obligation. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The amount recognized as a provision is the best estimate of
the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented in the statement of profit and loss net of reimbursement, if any.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
Contingent assets are possible assets that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent assets are disclosed in the financial statements when inflow of economic benefits is probable on the basis of judgment of management. These are assessed continually to ensure that developments are appropriately reflected in the financial statements.
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/ assets exceeding '' 5 Lacs in each case are disclosed by way of notes to accounts except when there is remote possibility of settlement/realization.
Estimated amount of contracts (Inclusive of Tax & net of advances) remaining to be executed on capital accounts are disclosed in each case above '' 5 lacs.
.15 Taxes on incomea) Current Tax
Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes considering the tax rate and tax laws that have been enacted or substantively enacted as on the reporting date.
Deferred tax relating to items recognized outside Statement of Profit and Loss is recognized outside Statement of Profit and Loss (either in Other Comprehensive Income or in Equity).
The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities are recognised for all taxable temporary differences, except when the deferred tax liabilities arises from the initial recognition of assets/ liabilities/ goodwill in a transaction that is not a business combination and at the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets/ liabilities are measured based on the tax rates (and tax laws) that have been enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legal right exists to set off the same.
1.16 Research & Development Expenditure
Revenue expenditure on Research and Development is charged to Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on Research and Development is capitalized in case the same qualifies as asset.
1.17 cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
The Management of the company monitors the operating results of its business Segments for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.
The Operating segments have been identified on the basis of the nature of products / services.
a) Segment revenue includes directly identifiable with/ allocable to the segment including inter-segment revenue.
b) Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result.
c) Expenses which relate to the Company as a whole and not allocable to segments are included under unallocable expenditure.
d) Income which relates to the Company as a whole and not allocable to segments is included in unallocable income.
e) Segment assets including CWIP and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.
Basic earnings per equity share is computed by dividing the net profit after tax attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed by dividing adjusted net profit after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares during the year.
1.20 Liquidated damages/ Price Reduction Schedule
Amount recovered towards Liquidated Damages/Price Reduction Schedule are adjusted/appropriated as and when the matter is settled.
1.21 Statement of cash Flow
Statement of cash flow is prepared in accordance with the indirect method prescribed in Ind AS 7, ''Statement of Cash Flows''
1.22 Fair value measurement
The Company measures financial instruments including derivatives and specific investments (other than subsidiary, joint venture and associates), at fair value at each balance sheet date.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
(i) level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
(ii) level 2 â Valuation techniques for which the
lowest level input that is significant to the fair value measurement is directly or indirectly observable
(iii) level 3 â Valuation techniques for which the
lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the balance sheet on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.23 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.
(A) Financial assets
a) classification
The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through Statement of Profit and Loss on the basis of its business model for managing the financial assets and the contractual cash flows characteristics of the financial asset.
b) initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through Statement of Profit and Loss, transaction costs that are attributable to the acquisition of the financial asset.
For purposes of subsequent measurement financial assets are classified in below categories:
i. Financial assets carried at amortised cost
A financial asset other than derivatives and specific investments, is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii. Financial assets at fair value through other comprehensive income
A financial asset other than derivatives comprising specific investment is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
iii. Financial assets at fair value through Statement of Profit and Loss
A financial asset comprising derivatives which is not classified in any of the above categories are subsequently fair valued through profit or loss.
A financial asset is primarily derecognized when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
e) investment in subsidiaries, joint ventures and associates
i. The company has accounted for its investment in subsidiaries, joint ventures and associates at cost. The company assesses whether there is any indication that these investments may be impaired. If any such indication exists, the investment is considered for impairment based on the fair value thereof.
ii. When the company issues financial guarantees on behalf of subsidiaries, joint ventures and associates initially it measures the financial guarantee at their fair values and subsequently measures at higher of:
⢠The amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 and
⢠The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 115 ''Revenue from Contracts with Customers''
iii. The Company recognize the initial fair value of financial guarantee as deemed investment with a corresponding liability recorded as financial guarantee obligation. Such deemed investment is added to the carrying value amount of the investment in subsidiaries, joint venture and associates. Financial guarantee obligation is recognized as other income in Statement of Profit and Loss over the remaining period of financial guarantee.
f) impairment of other financial assets
The Company assesses impairment based on expected credit losses (ECL) model for measurement and recognition of impairment loss on the financial assets that are trade receivables or contract revenue receivables and all lease receivables etc.
(B) Financial liabilitiesa) Classification
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through Statement of Profit and Loss. Such liabilities, including derivatives shall be subsequently measured at fair value.
b) initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
c) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
i. Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
ii. Financial liabilities at fair value through Statement of Profit and Loss
Financial liabilities at fair value through Statement of Profit and Loss include financial liabilities held for trading and financial liabilities designated
upon initial recognition as at fair value through Statement of Profit and Loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category comprises derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
a) If the hybrid contract contains a host that is an asset within the scope of Ind AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109 to the entire hybrid contract.
b) If the hybrid contract contains a host that is not an asset within the scope of Ind AS 109, the Company separate embedded derivatives from the host and measures at fair value with changes in fair value recognized in statement of profit or loss if, and only if:
(i) The economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host.
(ii) A separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and
(iii) The hybrid contract is not measured at fair value with changes in fair value recognized in profit or loss
(D) offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously
(E) derivative financial instruments and Hedge Accounting
The Company uses derivative financial instruments, in form of forward currency contracts, interest rate swaps, cross currency interest rate swaps, commodity swap contracts to hedge its foreign currency risks, interest rate risks and commodity price risks.
a) derivatives contracts not designated as hedging instruments
i. The derivatives that are not designated as hedging instrument under Ind AS 109, are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when
the fair value is positive and as financial liabilities when the fair value is negative.
ii. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss.
b) Derivatives Contracts designated as hedging
instruments
i. The derivatives that are designated as hedging instrument under Ind AS 109 to mitigate its risk arising out of foreign currency and commodity hedge transactions are accounted for as cash flow hedges.
ii. The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors, provide written principles which is consistent with the risk management strategy of the Company.
iii. The hedge instruments are designated and documented as hedges at the inception of the contract. The effectiveness of hedge instruments is assessed and measured at inception and on an ongoing basis. The effective portion of change in the fair value of the designated hedging instrument is recognized in the "Other Comprehensive Income" as "Cash Flow Hedge Reserve". The ineffective portion is recognized immediately in the Statement of Profit and Loss as and when occurs. The amount accumulated in Cash Flow Hedge Reserve is reclassified to profit or loss in the same period(s) during which the hedged item affects the Statement of Profit or Loss Account. In case the hedged item is the cost of non- financial assets / liabilities, the amount recognized as Cash Flow Hedge Reserve are transferred to the initial carrying amount of the non-financial assets / liabilities.
iv. If the hedging relationship no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in Cash Flow Hedging Reserve remains in Cash Flow Hedging Reserve till the period the hedge was effective. The cumulative gain or loss previously recognized in the Cash Flow Hedging Reserve is transferred to the Statement of Profit and Loss upon the occurrence of the underlying transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified in the Statement of Profit and Loss.
The Company adopted Ind AS 116 "Leases" and applied the standard to all lease contracts existing on April 1, 2019 using the modified retrospective method. The Company assesses at the inception of contract whether a contract is, or contains, a lease i.e. if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
As a lesseea) identifying a lease
At the inception of the contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The company assesses whether:
i. The contract involves the use of an identified asset, specified explicitly or implicitly.
ii. The Company has the right to obtain substantially all the economic benefits from use of the asset throughout the period of use, and
iii. The Company has right to direct the use of the asset.
Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
b) initial recognition of Right of use asset (RoU)
The Company recognizes a ROU asset at the lease commencement date (i.e., the date the underlying asset is available for use). ROU assets are initially measured at cost less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, adjusted for any lease payments made on or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or site on which it is located, less any lease incentives received.
c) Subsequent measurement of Right of use asset (RoU)
ROU assets are subsequently amortized using the straightline method from the commencement date to the earlier of the end of the useful life of ROU asset or the end of the lease term. If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. In addition, the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurement of the lease liability. Refer to the accounting policies in section 1.12 Impairment of non-financial assets.
d) initial recognition of lease liability
Lease liabilities are initially measured at the present value of the lease payments to be paid over the lease term. Lease payments included in the measurement of the lease liabilities comprise of the following:
i. Fixed payments, including in-substance fixed payments
ii. Variable lease payments that depend on an index or a rate
iii. Amounts expected to be payable under a residual value guarantee; and
iv. The exercise price under a purchase option, extension option and penalties for early termination only if the Company is reasonably certain to exercise those options.
e) Subsequent measurement of lease liability
Lease liabilities are subsequently increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
f) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption. Lease payments on short-term leases and leases of low-value assets are recognized as expense in Statement of Profit and Loss.
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the lease term.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables and finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Estimates and assumptionsDetermination of discount rate as a lessee
Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. Company estimates its incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment using observable available inputs (such as market interest rates).
1.25 The company presents assets and liabilities in the Balance Sheet based on current/ non-current classification as below.
an asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or Cash Equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
a liability is treated as current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current
1.26 Recent accounting pronouncements - Standards issued but not yet effective:
The Ministry of Corporate Affairs (MCA) has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 vide notification No. G.S.R 242(E ) dated 31st March 2023, effective from 1st April 2023. The following are the major amendments
ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
The amendments clarifies how company should account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements.
ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments clarifies the definition of a change in accounting estimates by replacing with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty''''. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
The preparation of the Company''s standalone financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, accompanying disclosures, contingent liabilities/ assets at the date of the standalone financial statements. Estimates and assumptions are continuously evaluated and are based on management''s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require adjustment to the carrying amount of assets or liabilities affected in future periods.
In particular, the Company has identified the areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.
In the process of applying the Company''s accounting policies, management has made the judgments, which have the most significant effect on the amounts recognized in the standalone financial statements:
Contingent liabilities and assets which may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involve the exercise of significant judgments and the use of estimates regarding the outcome of future events.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company determines its assumptions and estimates on parameters available when the financial statements are prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
2.1 Estimation uncertainties relating to global health pandemic from coViD-19:
On March 11, 2020 the World Health Organization (WHO) declared the outbreak of new coronavirus ("COVID-19") as a global pandemic. This outbreak is causing significant disturbances and slowdown of economic activity. The Company''s operations were slightly impacted in the last week of March 2020, resulting in slight reduction of sales volumes due to nationwide lockdown advised by the Government of India in view of COVID-19.
In assessing the recoverability of carrying amounts of Company''s assets such as property, plant and equipment, trade receivables, loans/ advance, intangible assets, investments and
other assets etc., the Company has considered various internal and external information up to the date of approval of these financial statements and concluded that they are recoverable based on the cash flow projections.
The Company has assessed the potential impact of COVID-19 based on the current circumstances and expects no significant impact on the continuity of operations of the business on long term basis/ on useful life of the assets/on financial position etc.
2.2 impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
The cost of the defined benefit plan and other postemployment benefits and the present value of such obligation are determined using actuarial valuation. An actuarial valuation involves mak
Mar 31, 2022
GAIL (India) Limited ("GAIL" or "the Company") is a Public Limited Company domiciled in India and was incorporated on August 16, 1984. Equity Shares of the Company are listed in India on the Bombay Stock Exchange and the National Stock Exchange. Global Depository Receipts (GDRs) of the Company are listed on London Stock Exchange. The Government of India holds 51.45% in the paid-up equity capital of the Company as on 31st March, 2022. The registered office of the Company is located at 16, Bhikaji Cama Place, R K Puram, New Delhi- 110066.
GAIL is the largest state-owned natural gas processing and distribution Company in India. The Company has a diversified business portfolio and has interests in the sourcing and trading of natural gas, production of LPG, Liquid hydrocarbons and petrochemicals, transmission of natural gas and LPG through pipelines, etc. GAIL has also participating interest in India and overseas in Oil and Gas Blocks.
The Standalone Financial Statements of the Company for the year ended 31st March, 2022 were authorized for issue in accordance with a resolution of the Board of Directors on 27th May, 2022.
The Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind-AS) as notified by the Ministry of Corporate Affairs ("MCA") under section 133 of the Companies Act, 2013 ("Act"), read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other relevant provisions of the Act.
The Financial Statements have been prepared as a going concern on accrual basis of accounting. The Company has adopted historical cost basis for assets and liabilities except for certain items which have been measured on a different basis and such basis is disclosed in the relevant accounting policy.
The Financial Statements are presented in Indian Rupees (?) and the values are rounded to the nearest crore (up to two decimals) except when otherwise indicated.
a) The Costs of an item of PPE is recognized as an asset if, and only if:
i. It is probable that the future economic benefits flow to the entity; and
ii. The cost of an item can be measured reliably
b) Property, Plant and Equipment are stated at original cost net of tax / duty credit availed, less accumulated depreciation / amortization and cumulative impairment losses. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.
c) Stores & Spares which meet the definition of PPE (whether as component or otherwise) and satisfy
the recognition criteria, are capitalized as PPE in the underlying asset. Major inspection/overhaul/repair is recognized in the carrying amount of respective assets as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
d) Technical know-how/license fee incurred at the time of procurement of PPE are capitalized as part of the underlying asset.
e) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its PPE recognized as at 1st April, 2015 measured as per previous GAAP and use that carrying value as deemed cost of the PPE.
a) Intangible assets like Right of Use (RoU), Software, Licenses which are expected to provide future enduring economic benefits are capitalized as Intangible Assets and are stated at their cost of acquisition less accumulated amortization and any accumulated impairment loss.
b) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as at 1st April, 2015 measured as per previous GAAP and use that carrying value as deemed cost of the intangible assets.
a) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/ estimated liability, as and when work commences where ROU is acquired.
b) The capital work in progress includes Construction Stores including Material in Transit/ Equipment / Services, etc. received at site for use in the projects.
c) All revenue expenses incurred during Construction Period, which are exclusively attributable to acquisition / construction of the asset, are capitalized at the time of commissioning of such assets.
a) The Company follows Successful Efforts Method for accounting of Oil & Gas exploration and production activities carried out through incorporate or unincorporated Joint Ventures in the nature of Production Sharing Contracts (PSC) and Revenue Sharing Contracts (RSC) with respective host government and various body corporates for exploration, development and production activities, which includes exploration and evaluation costs as follows:
(i) Geological and Geophysical (G&G) costs including seismic surveys, surface lease rentals etc. for exploration and appraisal proposes are recognized as revenue expenditure in the year in which these are incurred.
(ii) Cost of exploratory/ appraisal wells are carried as Capital Work in Progress - Intangible Assets
under development/ Capital work in progress. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created. Such costs are written off in the year when determined to be dry / abandoned.
(iii) Cost of all "exploratory wells in progress" is debited to Statement of Profits and Loss except of those wells for which there are reasonable indications of sufficient quantity of reserves and the enterprise is making sufficient progress assessing the reserves and the economic and operating viability of the project.
Producing Properties are capitalized as "completed wells / producing wells" when the wells in the area / field are ready to commence commercial production on establishment of proved developed oil and gas reserves.
Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments & facilities and estimated future abandonment cost.
Producing Properties are depleted using the "Unit of Production Method (UOP)". The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.
Company''s share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating cost of support equipment and facilities.
e) Accounting for joint operations
In relation to its interests in joint operations entered through Production Sharing Contracts (PSC) and Revenue Sharing Contracts, the company recognizes its proportionate share in assets, liabilities, revenue from the sale of the output, expenses of the joint operation entity, in the financial statements.
a) Functional Currency of the Company is Indian Rupee ('').
b) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the transaction date.
c) Monetary items (such as Cash, Receivables, Loans, Payables, etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.
d) Non-monetary items (such as Investments, Property plant and equipment, etc.), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).
e) Any gains or loss arising on account of exchange difference either on settlement or on translation is adjusted in the Statement of Profit & Loss.
f) Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items is recognized in line with the gain or loss of the item arising on determination of fair value of such item, either in other comprehensive income or the Statement of Profit and Loss as the case maybe.
Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for its intended use after netting off any income earned on temporary investment of such funds. Other borrowing costs are recognized as expense in the year of incurrence.
Government Grants are not recognized until there is reasonable assurance that the Company will comply with conditions attached to them and the grants will be received. In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to deferred income which is recognized as income in the Statement of Profit and Loss over the useful life of the asset. Government Grants related to nondepreciable assets may also require the fulfillment of certain obligations and would then be recognised in profit or loss over the periods that bear the cost of meeting the obligations.
Non-current assets or disposable groups classified as held for sale are measured at the lower of carrying amount and fair value less cost to sale. Assets and liabilities classified as held for sale are presented separately in the balance sheet.
Non-current assets or disposable groups are classified as held for sale if their carrying amount will be recovered principally through a sale rather than through continuing use. Management must be committed to the sale expected within one year from the date of classification. Action required to complete the plan of sale should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
PPE and Intangible assets once classified as held for sale are not depreciated or amortised.
a) Stock of Liquefied Natural Gas (LNG) and Natural Gas in pipelines is valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.
b) Raw materials and finished goods are valued at weighted average cost or net realizable value, whichever is lower. Finished goods include excise duty and royalty wherever applicable.
c) Stock in process is valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which these are to be incorporated are expected to be sold at or above the weighted average cost.
d) Stores and spares and other material for use in production of inventories are valued at weighted
average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which they will be incorporated are expected to be sold at/or above cost.
e) Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, whichever is lower.
f) Surplus / Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.
g) Imported LNG in transit is valued at CIF value or net realizable value whichever is lower.
h) Renewable Energy Certificates (RECs) are valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.
The Company has applied the modified retrospective approach
on transition to Ind AS 115.
a) Revenue is recognized to depict the transfer of control of promised goods or services to customers upon the satisfaction of performance obligation under the contract in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Consideration includes contributions by customers towards assets over which Company has control.
b) Where performance obligation is satisfied over time, Company recognizes revenue using input/ output method based on performance completion till reporting date. Where performance obligation is satisfied at a point in time, Company recognizes revenue when customer obtains control of promised goods and services in the contract.
c) The Company uses output method in accounting for the revenue in respect of sale of services. Use of output method requires the Company to recognize revenue based on performance completion till date e.g. time elapsed. The estimates are assessed continually during the term of the contract and the Company remeasures its progress towards complete satisfaction of its performance obligations satisfied over time at the end of each reporting period.
d) Company updates its estimated transaction price at each reporting period, to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period including penalties, discounts and damages etc.
e) Insurance claims are accounted for on the basis of claims admitted by the insurers
f) Claims (including interest on delayed realization from customers) are accounted for, when there is significant certainty that the claims are realizable.
g) Liability in respect of Minimum Guaranteed Offtake (MGO) of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basis.
h) Minimum charges relating to transportation of LPG are accounted for on receipt basis.
i) In terms of the Gas Sales Agreement with the customers, amount received towards Annual Take or Pay Quantity (ATOPQ) of Gas is accounted for on the basis of realization and shown as liability till make up Gas is delivered to customer as per the contract.
i. Depreciation on PPE (excluding freehold land) is provided in accordance with the manner and useful life as specified in Schedule II of the Companies Act, 2013, on straight line method (SLM) on pro-rata basis (monthly pro-rata for bought out assets), except for the assets as mentioned below where different useful life has been taken on the basis of external / internal technical evaluation:
Particulars |
Years |
Furniture provided for the use of employees |
6 years |
Electrical Equipment''s provided for the use of employees |
4 years |
Mobile Phones provided for the use of employees |
2 years |
ii. Cost of the leasehold land is amortised over the lease period except perpetual leases.
iii. Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.
b) Intangible Assets
i. Right of use (ROU) having indefinite life (for which there is no foreseeable limit to the period over which they are expected to generate net cash flows given the fact that these rights can be used even after the life of respective pipelines) are not amortized, but are tested for impairment annually.
ii. The cost of Intangible assets comprising software and licences, etc. are amortised on Straight Line Method (SLM) over a period of 5 years/actual useful life whichever is lower from the date of capitalization.
iii. After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
Capital assets facilities installed at the consumers'' premises on the land whose ownership is not with the Company, has been depreciated on SLM basis in accordance with the useful life as specified in Schedule II of the Companies Act, 2013.
(a) All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.
(b) The Company''s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee''s salary and debited to Statement of Profit and Loss / CWIP. Further, the Company makes provision as per actuarial valuation towards any shortfall in fund assets to meet statutory rate of interest in the future period, to be compensated by the Company to the Provident Fund Trust.
(c) Employee Benefits under Defined Benefit Plans in respect of post-retirement medical scheme and gratuity are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit Method. Actuarial liability in excess of respective plan assets is recognized during the year.
(d) Obligations on other long term employee benefits, viz., leave encashment, compensated absence and long service awards are provided using the Projected Unit Credit method of actuarial valuation made at the end of the year.
(e) Re-measurement including actuarial gains and losses are recognized in the balance sheet with a corresponding debit or credit to retained earnings through Statement of Profit and Loss or Other Comprehensive Income in the year of occurrence, as the case may be. Remeasurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
(f) The Company also operates a defined contribution scheme for Pension benefits for its employees and the contribution is remitted to a separate Trust.
(g) Liability for gratuity and Post-Retirement Medical Scheme (PRMS) as per actuarial valuation is funded with a separate trust.
The Carrying amount of cash generating unit are reviewed at each reporting date. In case there is any indication of impairment based on Internal / External factors, impairment loss is recognized wherever the carrying amount of asset exceeds its recoverable amount.
(a) 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/assets exceeding '' 5 Lacs in each case are disclosed by way of notes to accounts except when there is remote possibility of settlement/realization.
(b) Estimated amount of contracts remaining to be executed on capital accounts are disclosed in each case above '' 5 lacs.
Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes considering the tax rate and tax laws that have been enacted or substantively enacted as on the reporting date.
Deferred tax relating to items recognized outside Statement of Profit and Loss is recognized outside Statement of Profit and Loss (either in Other Comprehensive Income or in Equity).
The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Revenue expenditure on Research and Development is charged to Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on Research and Development is capitalized in case the same qualifies as asset.
Cash and cash equivalents consist of cash at bank and in hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
The Management of the Company monitors the operating results of its business Segments for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.
The Operating segments have been identified on the basis of the nature of products / services.
a) Segment revenue includes directly identifiable with/ allocable to the segment including inter-segment revenue.
b) Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result.
c) Expenses which relate to the Company as a whole and not allocable to segments are included under unallocable expenditure.
d) Income which relates to the Company as a whole and not allocable to segments is included in unallocable income.
e) Segment assets including CWIP and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.
Basic earnings per equity share is computed by dividing the net profit after tax attributable to the equity shareholders by the weighted average number of equity shares outstanding
during the year. Diluted earnings per equity share is computed by dividing adjusted net profit after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares during the year.
Amount recovered towards Liquidated Damages/Price Reduction Schedule are adjusted/appropriated as and when the matter is settled.
Statement of cash flow is prepared in accordance with the indirect method prescribed in Ind AS 7, ''Statement of Cash Flows''
The Company measures financial instruments including derivatives and specific investments (other than subsidiary, joint venture and associates), at fair value at each balance sheet date.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
(i) Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
(ii) Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
(iii) Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the balance sheet on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
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.
(A) Financial assets
a) Classification
The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through Statement of Profit and Loss on the basis of its business model for managing the financial assets and the contractual cash flows characteristics of the financial asset.
b) Initial recognition and measurement
All financial assets are recognized initially at fair value
plus, in the case of financial assets not recorded at fair value through Statement of Profit and Loss, transaction costs that are attributable to the acquisition of the financial asset.
For purposes of subsequent measurement financial assets are classified in below categories:
A financial asset other than derivatives and specific investments, is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii. Financial assets at fair value through other comprehensive income
A financial asset other than derivatives comprising specific investment is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
iii. Financial assets at fair value through Statement of Profit and Loss
A financial asset comprising derivatives which is not classified in any of the above categories are subsequently fair valued through profit or loss.
d) De recognition
A financial asset is primarily derecognized when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
i. The Company has accounted for its investment in subsidiaries, joint ventures and associates at cost. The Company assesses whether there is any indication that these investments may be impaired. If any such indication exists, the investment is considered for impairment based on the fair value thereof.
ii. When the Company issues financial guarantees on behalf of subsidiaries, joint ventures and associates initially it measures the financial guarantee at their fair values and subsequently measures at higher of:
⢠The amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 and
⢠The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 115 ''Revenue from Contracts with Customers''
iii. The Company recognize the initial fair value of financial guarantee as deemed investment with a corresponding liability recorded as financial guarantee obligation. Such deemed investment is added to the carrying value amount of the investment in subsidiaries, joint venture and associates. Financial guarantee obligation is recognized as other income in Statement of Profit and Loss over the remaining period of financial guarantee.
The Company assesses impairment based on expected credit losses (ECL) model for measurement and recognition of impairment loss on the financial assets that are trade receivables or contract revenue receivables and all lease receivables etc.
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through Statement of Profit and Loss. Such liabilities, including derivatives shall be subsequently measured at fair value.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
c) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
i. Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
ii. Financial liabilities at fair value through Statement of Profit and Loss
Financial liabilities at fair value through Statement of Profit and Loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through Statement of Profit and Loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category comprises derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
d) Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
(C) Embedded Derivatives
a) If the hybrid contract contains a host that is an asset within the scope of Ind AS 109, the Company does not separate embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109 to the entire hybrid contract.
b) If the hybrid contract contains a host that is not an asset within the scope of Ind AS 109, the Company separate embedded derivatives from the host and measures at fair value with changes in fair value recognized in statement of profit or loss if, and only if:
(i) The economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host.
(ii) A separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and
(iii) The hybrid contract is not measured at fair value with changes in fair value recognized in profit or loss
(D) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously
(E) Derivative financial instruments and Hedge Accounting
The Company uses derivative financial instruments, in form of forward currency contracts, interest rate swaps, cross currency interest rate swaps, commodity swap contracts to hedge its foreign currency risks, interest rate risks and commodity price risks.
i. The derivatives that are not designated as hedging instrument under Ind AS 109, are
initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
ii. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss.
instruments
i. The derivatives that are designated as hedging instrument under Ind AS 109 to mitigate its risk arising out of foreign currency and commodity hedge transactions are accounted for as cash flow hedges.
ii. The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors, provide written principles which is consistent with the risk management strategy of the Company.
iii. The hedge instruments are designated and documented as hedges at the inception of the contract. The effectiveness of hedge instruments is assessed and measured at inception and on an ongoing basis. The effective portion of change in the fair value of the designated hedging instrument is recognized in the "Other Comprehensive Income" as "Cash Flow Hedge Reserve". The ineffective portion is recognized immediately in the Statement of Profit and Loss as and when occurs. The amount accumulated in Cash Flow Hedge Reserve is reclassified to profit or loss in the same period(s) during which the hedged item affects the Statement of Profit or Loss Account. In case the hedged item is the cost of non- financial assets / liabilities, the amount recognized as Cash Flow Hedge Reserve are transferred to the initial carrying amount of the non-financial assets / liabilities.
iv. If the hedging relationship no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in Cash Flow Hedging Reserve remains in Cash Flow Hedging Reserve till the period the hedge was effective. The cumulative gain or loss previously recognized in the Cash Flow Hedging Reserve is transferred to the Statement of Profit and Loss upon the occurrence of the underlying transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified in the Statement of Profit and Loss.
The Company adopted Ind AS 116 "Leases" and applied the standard to all lease contracts existing on April 1, 2019 using the modified retrospective method. The Company assesses at
the inception of contract whether a contract is, or contains, a lease i.e. if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
As a Lessee
a) Identifying a lease
At the inception of the contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company assesses whether:
i. The contract involves the use of an identified asset, specified explicitly or implicitly.
ii. The Company has the right to obtain substantially all the economic benefits from use of the asset throughout the period of use, and
iii. The Company has right to direct the use of the asset.
Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
b) Initial recognition of Right of use asset (ROU)
The Company recognizes a ROU asset at the lease commencement date (i.e., the date the underlying asset is available for use). ROU assets are initially measured at cost less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, adjusted for any lease payments made on or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or site on which it is located, less any lease incentives received.
c) Subsequent measurement of Right of use asset (ROU)
ROU assets are subsequently amortized using the straightline method from the commencement date to the earlier of the end of the useful life of ROU asset or the end of the lease term. If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. In addition, the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurement of the lease liability. Refer to the accounting policies in section 1.12 Impairment of non-financial assets.
Lease liabilities are initially measured at the present value of the lease payments to be paid over the lease term. Lease payments included in the measurement of the lease liabilities comprise of the following:
i. Fixed payments, including in-substance fixed payments
ii. Variable lease payments that depend on an index or a rate
iii. Amounts expected to be payable under a residual value guarantee; and
iv. The exercise price under a purchase option, extension option and penalties for early termination only if the Company is reasonably certain to exercise those options.
Lease liabilities are subsequently increased to reflect the accretion of interest and reduced for the lease payments made. . In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption. Lease payments on short-term leases and leases of low-value assets are recognized as expense in Statement of Profit and Loss.
As a Lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the lease term.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables and finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Estimates and assumptions
Determination of discount rate as a lessee
Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. Company estimates its incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment using observable available inputs (such as market interest rates).
The Ministry of Corporate Affairs (MCA) has notified Companies (Indian Accounting Standards) Amendment Rules, 2022 vide notification No. G.S.R 255(E ) dated 23rd March 2022, effective from 1st April 2022. The following are the major amendments
The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards
(Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact in its financial statements.
The amendments clarify that the excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of Property, Plant, and Equipment. The Company does not expect the amendment to have any significant impact in its financial statements.
The amendments specify that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts. The amendment is essentially a clarification and the Company does not expect the amendment to have any significant impact in its financial statements.
The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability. The Company does not expect the amendment to have any significant impact in its financial statements.
The amendments remove the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives were described in that illustration. The Company does not expect the amendment to have any significant impact in its financial statements.
The preparation of the Company''s standalone financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, accompanying disclosures, contingent liabilities/ assets at the date of the standalone financial statements. Estimates and assumptions are continuously evaluated and are based on management''s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require adjustment to the carrying amount of assets or liabilities affected in future periods.
In particular, the Company has identified the areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.
In the process of applying the Company''s accounting policies, management has made the judgments, which have the most significant effect on the amounts recognized in the standalone financial statements:
Contingent liabilities and assets which may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involve the exercise of significant judgments and the use of estimates regarding the outcome of future events.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company determines its assumptions and estimates on parameters available when the financial statements are prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
On 11th March, 2020 the World Health Organization (WHO) declared the outbreak of new coronavirus ("COVID-19") as a global pandemic. This outbreak is causing significant disturbances and slowdown of economic activity. The Company''s operations were slightly impacted in the last week of March 2020, resulting in slight reduction of sales volumes due to nationwide lockdown advised by the Government of India in view of COVID-19.
In assessing the recoverability of carrying amounts of Company''s assets such as property, plant and equipment, trade receivables, loans/ advance, intangible assets, investments and
other assets etc., the Company has considered various internal and external information up to the date of approval of these financial statements and concluded that they are recoverable based on the cash flow projections.
The Company has assessed the potential impact of COVID-19 based on the current circumstances and expects no significant impact on the continuity of operations of the business on long term basis/ on useful life of the assets/on financial position etc.
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
The cost of the defined benefit plan and other postemployment benefits and the present value of such obligation are determined using actuarial valuation. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgments in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Impairment of investment in subsidiaries, joint ventures or associates is based on the impairment calculations using discounted cash flow/net asset value method, valuation report of external agencies, Investee Company''s past history etc.
Mar 31, 2021
1. Accounting Policies
1.1 Property, Plant and Equipment (PPE)
a) The Costs of an item of PPE is recognized as an asset if, and only if:
i. It is probable that the future economic benefits flow to the entity; and
ii. The cost of an item can be measured reliably
b) Property, Plant and Equipment are stated at original cost net of tax/ duty credit availed, less accumulated depreciation / amortization and cumulative impairment losses. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.
c) Stores & Spares which meet the definition of PPE (whether as component or otherwise) and satisfy the recognition criteria, are capitalized as PPE in the underlying asset. Major inspection/ overhaul/repair is recognized in the carrying amount of respective assets as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
d) Technical know-how/license fee incurred at the time of procurement of PPE are capitalized as part of the underlying asset.
e) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its PPE recognized as at 1st April, 2015 measured as per previous GAAP and use that carrying value as deemed cost of the PPE.
1.2 IntangibleAssets
a) Intangible assets like Right of Use (RoU), Software, Licenses which are expected to provide future enduring economic benefits are capitalized as Intangible Assets and are stated at their cost of
acquisition less accumulated amortization and any accumulated impairment loss.
b) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as at 1st April,
2015 measured as per previous GAAP and use that carrying value as deemed cost of the intangible assets.
a) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/estimated liability, as and when work commences where ROU is acquired.
b) The capital work in progress includes Construction Stores including Material in Transit/ Equipment / Services, etc. received at site for use in the projects.
c) All revenue expenses incurred during Construction Period, which are exclusively attributable to acquisition / construction of the asset, are capitalized atthe time of commissioning of such assets.
a) The Company follows Successful Efforts Method for accounting of Oil
& Gas exploration and production activities carried out through incorporate or unincorporated Joint Ventures in the nature of Production Sharing Contracts (PSC) and Revenue Sharing Contracts (RSC) with respective host government and various body corporates for exploration, development and production activities, which includes exploration and evaluation costs as follows:
(i) Geological and Geophysical (G&G) costs including seismic surveys, surface lease rentals etc. for exploration and appraisal proposes are recognized as revenue expenditure in the year in which these are incurred.
(ii) Cost of exploratory/ appraisal wells are carried as Capital Work in Progress - Intangible Assets under development/ Capital work in progress. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created. Such costs are written off in the year when determined to be dry / abandoned.
(iii) Cost of all "exploratory wells in progress" is debited to Statement of Profits and Loss except of those wells for which there are reasonable indications of sufficient quantity of reserves and the enterprise is making sufficient progress assessing the reserves and the economic and operating viability of the project.
b) Capitalization of Producing Properties
Producing Properties are capitalized as "completed wells/ producing wells" when the wells in the area / field are ready to commence commercial production on establishment of proved developed oil and gas reserves.
Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments & facilities and estimated future abandonment cost.
c) Depletion of Producing Properties
Producing Properties are depleted using the "Unit of Production Method (UOP)". The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.
d) Production cost of Producing Properties
Company''s share of production costs as indicated by Operator -!B consists of pre well head and post well head expenses including depreciation and applicable operating cost of support equipment and facilities.
e) Accountingfor joint operations
In relation to its interests in joint operations entered through Production Sharing Contracts (PSC) and Revenue Sharing Contracts, the Company recognizes its proportionate share in assets, liabilities, revenue from the sale of the output, expenses of the joint operation entity, in the financial statements.
a) Functional Currency of the Company is Indian Rupee (?).
b) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the transaction date.
c) Monetary items (such as Cash, Receivables, Loans, Payables etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.
d) Non-monetary items (such as Investments, Property plant and equipment etc.), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).
e) Any gains or loss arising on account of exchange difference either on settlement or on translation is adjusted in the Statement of Profit & Loss.
f) Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of nonmonetary items is recognized in line with the gain or loss of the item arising on determination of fair value of such item, either in other comprehensive income or the Statement of Profit and Loss as the case maybe.
Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for its intended use after netting off any income earned on temporary investment of such funds. Other borrowing costs are recognized as expense in the year of incurrence.
Government Grants are not recognized until there is reasonable assurance that the Company will comply with conditions attached to them and the grants will be received. Incase of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to deferred income which is recognized as income in the Statement of Profit and Loss over the useful life of the asset. Government Grants related to non-depreciable assets may also require the fulfillment of certain obligations and would then be recognised in profit or loss over the periods that bear the cost of meeting the obligations.
Non-current assets or disposable groups classified as held for sale are measured at the lower of carrying amount and fair value less cost to sale. Assets and liabilities classified as held for sale are presented separately in the balance sheet.
Non-current assets or disposable groups are classified as held for sale if their carrying amount will be recovered principally through a sale rather than through continuing use. Management must be committed to the sale expected within one year from the date of classification. Action required to complete the plan of sale should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
PPE and Intangible assets once classified as held for sale are not depreciated oramortised.
a) Stock of Liquefied Natural Gas (LNG) and Natural Gas in pipelines is valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.
b) Raw materials and finished goods are valued at weighted average cost or net realizable value, whichever is lower. Finished goods include excise duty and royalty wherever applicable.
c) Stock in process is valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which these are to be incorporated are expected to be sold at or above the weighted average cost.
d) Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where
the finished goods in which they will be incorporated are expected to be sold at/or above cost.
e) Surplus/Obsolete Stores and Spares are valued at cost or net realisable value, whichever is lower.
f) Surplus/Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.
g) Imported LNG in transit is valued at CIF value or net realizable value whichever is lower.
h) Renewable Energy Certificates (RECs) are valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.
The Company has applied the modified retrospective approach on
transition to Ind AS 115.
a) Revenue is recognized to depict the transfer of control of promised goods or services to customers upon the satisfaction of performance obligation under the contract in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Consideration includes contributions by customers towards assets over which Company has control.
b) Where performance obligation is satisfied over time, company recognizes revenue using input/ output method based on performance completion till reporting date. Where performance obligation is satisfied at a point in time, company recognizes revenue when customer obtains control of promised goods and services in the contract.
c) The Company uses output method in accounting for the revenue in respect of sale of services. Use of output method requires the Company to recognize revenue based on performance completion till date e.g. time elapsed. The estimates are assessed continually during the term of the contract and the Company re-measures its progress towards complete satisfaction of its performance obligations satisfied over time at the end of each reporting period.
d) Company updates its estimated transaction price at each reporting period, to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period including penalties, discounts and damages etc.
e) Insurance claims are accounted for on the basis of claims admitted by the insurers.
f) Claims (including interest on delayed realization from customers) are accounted for, when there is significant certainty that the claims are realizable.
g) Liability in respect of Minimum Guaranteed Offtake (MGO) of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basis.
h) Minimum charges relating to transportation of LPG are accounted for on receipt basis.
i) In terms of the Gas Sales Agreement with the customers, amount received towards Annual Take or Pay Quantity (ATOPQ) of Gas is accounted for on the basis of realization and shown as liability till make up Gas is delivered to customer as per the contract.
a) Property Plantand Equipment (PPE)
i. Depreciation on PPE (including enabling assets) is provided in accordance with the manner and useful life as specified in Schedule II of the Companies Act, 2013, on straight line method (SLM) on prorata basis (monthly pro- rata for bought out assets), except for the assets as mentioned below where different useful life has been taken on the basis of external /internal technical evaluation:
ii. Cost of the leasehold land is amortised over the lease period except perpetual leases.
iii. Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.
b) Intangible Assets
i. Right of use (ROU) having indefinite life (for which there is no foreseeable limit to the period over which they are expected to generate net cash flows given the fact that these rights can be used even after the life of respective pipelines) are not amortized, but are tested for impairment annually.
ii. Intangible assets comprising software and licences etc. are amortised on Straight Line Method (SLM) over the useful life from the date of capitalization which is considered not exceeding five years.
iii. After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
c) Capital assets facilities installed atthe consumers''premises
Capital assets facilities installed at the consumers'' premises on the land whose ownership is not with the Company, has been depreciated on SLM basis in accordance with the useful life as specified in Schedule II of the Companies Act, 2013.
(a) All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.
(b) The Company''s contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employee''s salary and debited to Statement of Profit and Loss / CWIP. Further, the Company makes provision as per actuarial valuation towards any shortfall in fund assets to meet statutory rate of interest in the future period, to be compensated by the Company to the Provident Fund Trust.
(c) Employee Benefits under Defined Benefit Plans in respect of postretirement medical scheme and gratuityare recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit Method. Actuarial liability in excess of respective plan assets is recognized during the year.
(d) Obligations on other long term employee benefits, viz., leave encashment, compensated absence and long service awards are provided using the Projected Unit Credit method of actuarial valuation made at the end of the year.
(e) Re-measurement including actuarial gains and losses are recognized in the balance sheet with a corresponding debit or credit to retained earnings through Statement of Profit and Loss or Other Comprehensive Income in the year of occurrence, as the case may be. Re-measurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
(f) The Company also operates a defined contribution scheme for Pension benefits for its employees and the contribution is remitted to a separate Trust.
(g) Liability for gratuity and Post-Retirement Medical Scheme (PRMS)as per actuarial valuation is funded with a separate trust.
The Carrying amount of cash generating unit are reviewed at each reporting date. In case there is any indication of impairment based on Internal / External factors, impairment loss is recognized wherever the carrying amount of asset exceeds its recoverable amount
Mar 31, 2019
1. Accounting Policies
1.1 Property, Plant and Equipment (PPE)
A. Tangible Assets
(i) Property, Plant and Equipment are stated at original cost net of tax / duty credit availed, less accumulated depreciation/ amortization and cumulative impairment losses. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.
(ii) Stores & Spares which meet the definition of PPE (whether as component or otherwise) and satisfy the recognition criteria, are capitalized as PPE in the underlying asset. Major inspection/overhaul/repair is recognized in the carrying amount of respective assets as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
(iii) Technical know-how/license fee incurred at the time of procurement of PPE are capitalized as part of the underlying asset.
B. Intangible Assets
(iv) Intangible assets like Right of Use (RoU), Software, Licenses which are expected to provide future enduring economic benefits are capitalized as Intangible Assets and are stated at their cost of acquisition less accumulated amortization and any accumulated impairment loss.
1.2 Capital Work in Progress
(i) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/estimated liability, as and when work commences where RoU is acquired.
(ii) The capital work in progress includes Construction Stores including Material in Transit/ Equipment / Services, etc. received at site for use in the projects.
(iii) All revenue expenses incurred during Construction Period, which are exclusively attributable to acquisition / construction of the asset, are capitalized at the time of commissioning of such assets.
1.3 Exploration and Development Costs
a. The Company follows Successful Efforts Method for accounting of Oil & Gas exploration and production activities carried out through Joint Ventures in the nature of Production Sharing Contracts (PSC) with respective host government and various body corporates for exploration, development and production activities, which includes:
(i) Survey Costs are recognized as revenue expenditure in the year in which these are incurred.
(ii) Cost of exploratory/development wells are carried as Intangible assets under development/Capital work in progress. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created. Such costs are written off in the year when determined to be dry / abandoned.
(iii) Cost of all âexploratory wells in progressâ is debited to Statement of Profits and Loss except of those wells for which there are reasonable indications of sufficient quantity of reserves and the enterprise is making sufficient progress assessing the reserves and the economic and operating viability of the project.
b. Capitalization of Producing Properties
(i) Producing Properties are capitalized as âcompleted wells / producing wellsâ when the wells in the area / field are ready to commence commercial production on establishment of proved developed oil and gas reserves.
(ii) Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments& facilities and estimated future abandonment cost.
c. Depletion of Producing Properties
Producing Properties are depleted using the âUnit of Production Method (UOP)â. The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.
d. Production cost of Producing Properties
Companyâs share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating cost of support equipment and facilities.
e. Accounting for joint operations
In relation to its interests in joint operations entered through Production Sharing Contracts (PSC), the company recognizes its proportionate share in assets, liabilities, revenue from the sale of the output, expenses of the joint operation entity, in the financial statements.
1.4 Foreign Currency Transaction
(i) Functional Currency of the Company is Indian Rupee (INR).
(ii) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the transaction date.
(iii) Monetary items (such as Cash, Receivables, Loans, Payables, etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.
(iv) Non-monetary items (such as Investments, Property plant and equipment, etc.), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).
(v) Any gains or loss arising on account of exchange difference either on settlement or on translation is adjusted in the Statement of Profit & Loss.
(vi) Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items is recognized in line with the gain or loss of the item arising on determination of fair value of such item, either in other comprehensive income or the Statement of Profit and Loss as the case maybe.
1.5 Borrowing Cost
Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for its intended use after netting off any income earned on temporary investment of such funds. Other borrowing costs are recognized as expense in the year of incurrence.
1.6 Grants
Government Grants are not recognized until there is reasonable assurance that the Company will comply with conditions attached to them and the grants will be received.In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to deferred income which is recognised as income in the Statement of Profit and Loss over the useful life of the asset. Grants related to non-depreciable assets may also require the fulfilment of certain obligations and would then be recognised in profit or loss over the periods that bear the cost of meeting the obligations.
1.7 Non Current Assets held for Sale:
Non-current assets or disposable groups classified as held for sale are measured at the lower of carrying amount and fair value less cost to sale. Assets and liabilities classified as held for sale are presented separately in the balance sheet.
Non-current assets or disposable groups are classified as held for sale if their carrying amount will be recovered principally through a sale rather than through continuing use. Management must be committed to the sale expected within one year from the date of classification. Action required to complete the plan of sale should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
PPE and Intangible assets once classified as held for sale are not depreciated or amortised.
1.8 Inventories
a) Stock of Liquefied Natural Gas (LNG) and Natural Gas in pipelines is valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.
b) Raw materials and finished goods are valued at weighted average cost or net realizable value, whichever is lower. Finished goods include excise duty and royalty wherever applicable.
c) Stock in process is valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which these are to be incorporated are expected to be sold at or above the weighted average cost.
d) Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which they will be incorporated are expected to be sold at/or above cost.
e) Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, whichever is lower.
f) Surplus / Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.
g) Imported LNG in transit is valued at CIF value or net realizable value whichever is lower.
h) Renewable Energy Certificates (RECs) are valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.
1.9 Revenue recognition
Ind AS I15 Revenue from Contracts with Customers, mandatory for reporting periods beginning on or after April I, 2018, replaces existing revenue recognition requirements. The Company has applied the modified retrospective approach on transition to Ind AS I15.
1. Revenue is recognized to depict the transfer of control of promised goods or services to customers upon the satisfaction of performance obligation under the contract in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Consideration includes contributions by customers towards assets over which Company has control.
2. Where performance obligation is satisfied over time, company recognizes revenue using input/ output method based on performance completion till reporting date. Where performance obligation is satisfied at a point in time, company recognizes revenue when customer obtains control of promised goods and services in the contract.
3. The Company uses output method in accounting for the revenue in respect of sale of services. Use of output method requires the Company to recognize revenue based on performance completion till date e.g. time elapsed. The estimates are assessed continually during the term of the contract and the company re-measures its progress towards complete satisfaction of its performance obligations satisfied over time at the end of each reporting period.
4. Company updates its estimated transaction price at each reporting period, to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period including penalties, discounts and damages etc.
5. Insurance claims are accounted for on the basis of claims admitted by the insurers.
6. Claims (including interest on delayed realization from customers) are accounted for, when there is significant certainty that the claims are realizable.
7. Liability in respect of Minimum Guaranteed Offtake (MGO) of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basis.
8. Minimum charges relating to transportation of LPG are accounted for on receipt basis.
9. In terms of the Gas Sales Agreement with the customers, amount received towards Annual Take or Pay Quantity (ATOPQ) of Gas is accounted for on the basis of realization and shown as liability till make up Gas is delivered to customer as per the contract.
1.10 Depreciation /Amortisation
A. Tangible Assets
Depreciation on Tangible PPE (including enabling assets) is provided in accordance with the manner and useful life as specified in Schedule II of the Companies Act, 2013, on straight line method (SLM) on pro-rata basis (monthly pro-rata for bought out assets), except for the assets as mentioned below where different useful life has been taken on the basis of external / internal technical evaluation:
(I) Cost of the leasehold land is amortised over the lease period except perpetual leases.
(ii) Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.
B. Intangible Assets
(i) Intangible assets comprising software and licences are amortised on Straight Line Method (SLM) over the useful life from the date of capitalization which is considered not exceeding five years.
Right of Use (RoU) having indefinite life (for which there is no foreseeable limit to the period over which they are expected to generate net cash flows given the fact that these rights can be used even after the life of respective pipelines) are not amortized, but are tested for impairment annually.
(ii) After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
C. Capital assets facilities installed at the consumersâ premises
Capital assets facilities installed at the consumersâ premises on the land whose ownership is not with the company, has been depreciated on SLM basis in accordance with the useful life as specified in Schedule II of the Companies Act, 2013.
1.11 Employees Benefits
(a) All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.
(b) The Companyâs contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employeeâs salary and debited to Statement of Profit and Loss / CWIP. Further, the company makes provision as per actuarial valuation towards any shortfall in fund assets to meet statutory rate of interest in the future period, to be compensated by the company to the Provident Fund Trust.
(c) Employee Benefits under Defined Benefit Plans in respect of postretirement medical scheme and gratuity are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit Method. Actuarial liability in excess of respective plan assets is recognized during the year.
(d) Obligations on other long term employee benefits, viz., leave encashment, Compensated absence and Long Service Awards are provided using the Projected Unit Credit method of actuarial valuation made at the end of the year.
(e) Re-measurement including actuarial gains and losses are recognized in the balance sheet with a corresponding debit or credit to retained earnings through Statement of Profit and Loss or Other Comprehensive Income in the year of occurrence, as the case may be. Re-measurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
(f) The Company also operates a defined contribution scheme for Pension benefits for its employees and the contribution is remitted to a separate Trust.
(g) Liability for gratuity as per actuarial valuation is funded with a separate trust.
1.12 Impairment of non-financial assets
The Carrying amount of cash generating unit are reviewed at each reporting date. In case there is any indication of impairment based on Internal / External factors, impairment loss is recognized wherever the carrying amount of asset exceeds its recoverable amount.
1.13 Provisions, Contingent Liabilities, Contingent Assets & Capital Commitments
(a) 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/assets exceeding Rs. 5 Lacs in each case are disclosed by way of notes to accounts except when there is remote possibility of settlement/realization.
(b) Estimated amount of contracts remaining to be executed on capital accounts are disclosed each case above Rs. 5 lacs.
1.14 Taxes on Income
Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal Income Tax during the specified period.
Deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes considering the tax rate and tax laws that have been enacted or substantively enacted as on the reporting date.
Deferred tax relating to items recognized outside Statement of Profit and Loss is recognized outside Statement of Profit and Loss (either in Other Comprehensive Income or in Equity).
The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
1.15 R&D Expenditure
Revenue expenditure on Research and Development is charged to Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on Research and Development is capitalized in case the same qualifies as asset.
1.16 Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
1.17 Segment reporting
The Management of the company monitors the operating results of its business Segments for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.
The Operating segments have been identified on the basis of the nature of products / services.
a) Segment revenue includes directly identifiable with/allocable to the segment including inter-segment revenue.
b) Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result.
c) Expenses which relate to the Company as a whole and not allocable to segments are included under unallocable expenditure.
d) Income which relates to the Company as a whole and not allocable to segments is included in unallocable income.
e) Segment assets including CWIP and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.
1.18 Earning per share
Basic earnings per equity share is computed by dividing the net profit after tax attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed by dividing adjusted net profit after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares during the year.
1.19 Leases
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
(A) Company as a lessee
Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on straight line basis. However, rent expenses shall not be straight-lined, if escalation in rentals is in line with expected inflationary cost.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the Statement of Profit and Loss.
(B) Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee.
(C) Lease Land
Land having lease term of 70 year and above are accounted as finance leases which are recognized at upfront premium paid for the lease and the present value of the lease rent obligation. The corresponding liability is recognized as a finance lease obligation. Land having lease term of below 70 year are treated as operating leases.
1.20 Liquidated damages/ Price Reduction Schedule
Amount recovered towards Liquidated Damages/Price Reduction Schedule are adjusted/appropriated as and when the matter is settled.
1.21 Cash Flow Statement
Cash flow statement is prepared in accordance with the indirect method prescribed in Indian Accounting Standard (Ind AS) 7 on âStatement of Cash Flows â.
1.22 Fair value measurement
The Company measures financial instruments including derivatives and specific investments (other than subsidiary, joint venture and associates), at fair value at each balance sheet date.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
(i) Level I â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
(ii) Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
(iii) Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the balance sheet on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.23 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.
(A) Financial assets
(i) Classification
The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through Statement of Profit and Loss on the basis of its business model for managing the financial assets and the contractual cash flows characteristics of the financial asset.
(ii) Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through Statement of Profit and Loss, transaction costs that are attributable to the acquisition of the financial asset.
(iii) Subsequent measurement
For purposes of subsequent measurement financial assets are classified in below categories:
(a) Financial assets carried at amortised cost
A financial asset other than derivatives and specific investments, is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(b) Financial assets at fair value through other comprehensive income
A financial asset other than derivatives comprising specific investment is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
c) Financial assets at fair value through Statement of Profit and Loss
A financial asset comprising derivatives which is not classified in any of the above categories are subsequently fair valued through profit or loss.
(iv) Derecognition
A financial asset is primarily derecognized when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
(v) Investment in subsidiaries, joint ventures and associates The company has accounted for its investment in subsidiaries, joint ventures and associates at cost. The company assesses whether there is any indication that these investments may be impaired. If any such indication exists, the investment is considered for impairment based on the fair value thereof.
(vi) Impairment of other financial assets
The Company assesses impairment based on expected credit losses (ECL) model for measurement and recognition of impairment loss on the financial assets that are trade receivables or contract revenue receivables and all lease receivables etc.
(B) Financial liabilities
(i) Classification
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through Statement of Profit and Loss. Such liabilities, including derivatives shall be subsequently measured at fair value.
(ii) Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
(iii) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
(a) Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
(b) Financial liabilities at fair value through Statement of Profit and Loss
Financial liabilities at fair value through Statement of Profit and Loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through Statement of Profit and Loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category comprises derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
(iv) Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
(C) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously
(D) Derivative financial instruments and Hedge Accounting
The Company uses derivative financial instruments, in form of forward currency contracts, interest rate swaps, cross currency interest rate swaps, commodity swap contracts to hedge its foreign currency risks, interest rate risks and commodity price risks.
(i) Derivatives Contracts not designated as hedging instruments
- The derivatives that are not designated as hedging instrument under Ind AS 109, are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
- Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss.
(ii) Derivatives Contracts designated as hedging instruments
- The derivatives that are designated as hedging instrument under Ind AS 109 to mitigate its risk arising out of foreign currency and commodity hedge transactions are accounted for as cash flow hedges.
- The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors, provide written principles which is consistent with the risk management strategy of the Company.
- The hedge instruments are designated and documented as hedges at the inception of the contract. The effectiveness of hedge instruments is assessed and measured at inception and on an ongoing basis. The effective portion of change in the fair value of the designated hedging instrument is recognized in the âOther Comprehensive Incomeâ as âCash Flow Hedge Reserveâ. The ineffective portion is recognized immediately in the Statement of Profit and Loss as and when occurs. The amount accumulated in Cash Flow Hedge Reserve is reclassified to profit or loss in the same period(s) during which the hedged item affects the Statement of Profit or Loss Account. In case the hedged item is the cost of non- financial assets / liabilities, the amount recognized as Cash Flow Hedge Reserve are transferred to the initial carrying amount of the non-financial assets / liabilities.
- If the hedging relationship no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in Cash Flow Hedging Reserve remains in Cash Flow Hedging Reserve till the period the hedge was effective. The cumulative gain or loss previously recognized in the Cash Flow Hedging Reserve is transferred to the Statement of Profit and Loss upon the occurrence of the underlying transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified in the Statement of Profit and Loss.
1.24 Recent accounting pronouncements - Standards issued but not yet effective:
The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2019 amending the following standard. Several other amendments and interpretations have been issued but are not yet effective.
1. Ind AS 116-Leases
Ind AS I16 Leases was notified by MCA on 30 March 2019 and it replaces Ind AS 17 Leases, including appendices thereto. Ind AS I16 is effective for annual periods beginning on or after I April 2019. Ind AS I16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under Ind AS 17. The standard includes two recognition exemptions for lessees -leases of âlow-valueâ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less).
At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the re-measurement of the lease liability as an adjustment to the right-of-use asset.
Lessor accounting under Ind AS I16 is substantially unchanged from todayâs accounting under Ind AS 17. Lessors will continue to classify all leases using the same classification principle as in Ind AS 17 and distinguish between two types of leases: operating and finance leases.
The Company will implement Ind AS I16 from I April 2019 by applying the modified retrospective approach, meaning that the comparative figures in the financial statements for the year ending 31st March 2019 will not be restated to show the impact of Ind AS I16.
The operating leases which will be recorded on the balance sheet following implementation of Ind AS I16 are principally in respect of office premises, leasehold land, warehouses, plant and machinery, vehicles and other identified assets representing right to use as per contracts excluding low value assets and short term leases of 12 months or less.
The anticipated impact of the standard on the company is not yet known though is not expected to be material on the income statement or net assets though assets and liabilities will be grossed up for the net present value of the outstanding operating lease liabilities as at I April 2019.
2. Amendments to Ind AS 19 : Plan Amendment, Curtailment or Settlement
The amendments to Ind AS 19 address the accounting when a plan amendment, curtailment or settlement occurs during a reporting period. The amendments specify that when a plan amendment, curtailment or settlement occurs during the annual reporting period, an entity is required to:
- Determine current service cost for the remainder of the period after the plan amendment, curtailment or settlement, using the actuarial assumptions used to remeasure the net defined benefit liability (asset) reflecting the benefits offered under the plan and the plan assets after that event
- Determine net interest for the remainder of the period after the plan amendment, curtailment or settlement using: the net defined benefit liability (asset) reflecting the benefits offered under the plan and the plan assets after that event; and the discount rate used to remeasure that net defined benefit liability (asset).
The amendments also clarify that an entity first determines any past service cost, or a gain or loss on settlement, without considering the effect of the asset ceiling. This amount is recognised in profit or loss.
An entity then determines the effect of the asset ceiling after the plan amendment, curtailment or settlement. Any change in that effect, excluding amounts included in the net interest, is recognised in other comprehensive income.
The amendments apply to plan amendments, curtailments, or settlements occurring on or after the beginning of the first annual reporting period that begins on or after I April 2019. These amendments will apply only to any future plan amendments, curtailments, or settlements of the Company.
3. Amendments to Ind AS 12: Income Taxes
The amendments clarify that the income tax consequences of dividends are linked more directly to past transactions or events that generated distributable profits than to distributions to owners. Therefore, an entity recognises the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events.
An entity applies those amendments for annual reporting periods beginning on or after I April 2019. Since the Companyâs current practice is in line with these amendments, the Company does not expect any effect on its financial statements.
4. Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments:
On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments which is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The standard permits two possible methods of transition - i) Full retrospective approach - Under this approach, Appendix C will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, without using hindsight and ii) Retrospectively with cumulative effect of initially applying Appendix C recognized by adjusting equity on initial application, without adjusting comparatives.
The effective date for adoption of Ind AS 12 Appendix C is annual periods beginning on or after April I, 2019. The Company is currently evaluating the effect of this amendment on the standalone financial statements
NOTE-1 B: Significant Accounting Judgements, Estimates and Assumptions
The preparation of the Companyâs standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, accompanying disclosures, contingent liabilities/assets at the date of the standalone financial statements. Estimates and assumptions are continuously evaluated and are based on managementâs experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require adjustment to the carrying amount of assets or liabilities affected in future periods.
In particular, the Company has identified the areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.
1. Judgements
In the process of applying the Companyâs accounting policies, management has made the judgements, which have the most significant effect on the amounts recognized in the standalone financial statements:
1.1 Contingencies
Contingent liabilities and assets which may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involve the exercise of significant judgements and the use of estimates regarding the outcome of future events.
2. Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company determines its assumptions and estimates on parameters available when the financial statements are prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
2.1 Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
2.2 Defined benefit plans
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuation. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
2.3 Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
2.4 Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgements in making these assumptions and selecting the inputs to the impairment calculation, based on Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Impairment of investment in subsidiaries, joint ventures or associates is based on the impairment calculations using discounted cash flow/net asset value method, valuation report of external agencies, Investee Companyâs past history etc.
Mar 31, 2017
1. Significant Accounting Policies
1.1 Property, Plant and Equipments (PPE)
A. Tangible Assets
(i) Property, Plant and Equipment are stated at original cost net of tax/duty credit availed, less accumulated depreciation. All costs relating to acquisition of fixed assets till commissioning of such assets are capitalized. In the case of commissioned assets where final payment to the Contractors is pending, capitalization is made on provisional basis, including provisional liability pending approval of Competent Authority, subject to necessary adjustment in cost and depreciation in the year of settlement.
(ii) Stores & Spares which meet the definition of PPE (whether as component or otherwise) and satisfy the recognition criteria, are capitalized as PPE in the underlying asset. Major inspection/ overhaul/repair is recognized in the carrying amount of respective assets as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
(iii) Technical know-how/license fee incurred at the time of procurement of PPE are capitalized as part of the underlying asset.
B. Intangible Assets
(iv) Intangible assets like Right of Use (RoU), Software, Licenses which are expected to provide future enduring economic benefits are capitalized as Intangible Assets and are stated at their cost of acquisition less accumulated amortization and any accumulated impairment loss.
1.2 Capital Work in Progress
(i) Crop compensation is accounted for under Capital Work-in-Progress on the basis of actual payments/estimated liability, as and when work commences where ROU is acquired.
(ii) The capital work in progress includes Construction Stores including Material in Transit/ Equipment / Services, etc. received at site for use in the projects.
(iii) All revenue expenses incurred during Construction Period, which are exclusively attributable to acquisition / construction of the asset, are capitalized at the time of commissioning of such assets.
1.3 Exploration and Development Costs
a. The Company follows Successful Efforts Method for accounting of Oil & Gas exploration and production activities carried out through Joint Ventures in the nature of Production Sharing Contracts (PSC) with respective host government and various body corporates for exploration, development and production activities, which includes:
(i) Survey Costs are recognized as revenue expenditure in the year in which these are incurred.
(ii) Cost of exploratory/development wells are carried as Intangible assets under development/Capital work in progress. Such exploratory wells in progress are capitalized in the year in which the Producing Property is created. Such costs are written off in the year when determined to be dry / abandoned.
(iii) Cost of all âexploratory wells in progressâ is debited to Statement of Profits and Loss except of those wells for which there are reasonable indications of sufficient quantity of reserves and the enterprise is making sufficient progress assessing the reserves and the economic and operating viability of the project.
b. Capitalization of Producing Properties
(i) Producing Properties are capitalized as âcompleted wells / producing wellsâ when the wells in the area / field are ready to commence commercial production on establishment of proved developed oil and gas reserves.
(ii) Cost of Producing Properties includes cost of successful exploratory wells, development wells, initial depreciation of support equipments& facilities and estimated future abandonment cost.
c. Depletion of Producing Properties
Producing Properties are depleted using the âUnit of Production Method (UOP)â The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.
d. Production cost of Producing Properties
Companyâs share of production costs as indicated by Operator consists of pre well head and post well head expenses including depreciation and applicable operating cost of support equipment and facilities.
e. Accounting for joint operations
In relation to its interests in joint operations entered through Production Sharing Contracts (PSC), the company recognizes its proportionate share in assets, liabilities, revenue from the sale of the output, expenses of the joint operation entity, in the financial statements.
1.4 Foreign Currency Transaction
(i) Functional Currency of the Company is Indian Rupee (Rs.).
(ii) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the transaction date.
(iii) Monetary items (such as Cash, Receivables, Loans, Payables, etc.) denominated in foreign currencies, outstanding at the year end, are translated at exchange rates (BC Selling Rate for Payables and TT Buying Rate for Receivables) prevailing at year end.
(iv) Non-monetary items (such as Investments, Property plant and equipment, etc.), denominated in foreign currencies are accounted at the exchange rate prevailing on the date of transaction(s).
(v) Any gains or loss arising on account of exchange difference either on settlement or on translation is adjusted in the Statement of Profit & Loss.
(vi) Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items is recognized in line with the gain or loss of the item arising on determination of fair value of such item, either in other comprehensive income or the Statement of Profit and Loss as the case may be.
1.5 Borrowing Cost
Borrowing cost of the funds specifically borrowed for the purpose of obtaining qualifying assets and eligible for capitalization along with the cost of the assets, is capitalized up to the date when the asset is ready for its intended use after netting off any income earned on temporary investment of such funds. Other borrowing costs are recognized as expense in the year of incurrence.
1.6 Grants
In case of depreciable assets, the cost of the assets is shown at gross value and grant thereon is taken to deferred income which is recognised as income in the Statement of Profit and Loss over the useful life of the asset.
1.7 Inventories
a) Stock of Liquefied Natural Gas (LNG) and Natural Gas in pipelines is valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.
b) Raw materials and finished goods are valued at weighted average cost or net realizable value, whichever is lower. Finished goods include excise duty and royalty wherever applicable.
c) Stock in process is valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which these are to be incorporated are expected to be sold at or above the weighted average cost.
d) Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished goods in which they will be incorporated are expected to be sold at/or above cost.
e) Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, whichever is lower.
f) Surplus / Obsolete Capital Stores, other than held for use in construction of a capital asset, are valued at lower of cost or net realisable value.
g) Imported LNG in transit is valued at CIF value or net realizable value whichever is lower.
h) Renewable Energy Certificates (RECs) are valued at cost on First in First out (FIFO) basis or net realizable value, whichever is lower.
1.8 Revenue recognition
a) Sales are recognized on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude value added tax. Any retrospective revision in prices is accounted for in the year of such revision. It is measured at fair value of consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
b) Income from Consultancy/Contract Services, if any, is recognized based on percentage Completion Method.
c) Dividend income is accounted for when the right to receive is established.
d) Claims (including interest on delayed realization from customers) are accounted for, when there is significant certainty that the claims are realizable.
e) Insurance claims are accounted for on the basis of claims admitted by the insurers.
f) Liability in respect of Minimum Guaranteed Offtake (MGO) of Natural gas is not provided for where the same is secured by MGO recoverable from customers. Payments/receipts during the year on account of MGO are adjusted on receipt basis.
g) Minimum charges relating to transportation of LPG are accounted for on receipt basis.
h) Contributions by customers towards items of Property, Plant and Equipment, realized in pursuance of a contract after 01/04/2015 are credited to deferred revenue and are amortized over the period of contract. Any tangible assets built/to be built, wherever applicable, under such contract are stated at gross value thereof.
1.9 Depreciation /Amortisation
A. Tangible Assets
Depreciation on Tangible PPE (including enabling assets) is provided in accordance with the manner and useful life as specified in Schedule II of the Companies Act, 2013, on straight line method (SLM) on pro-rata basis (monthly pro-rata for bought out assets), except for the assets as mentioned below where different useful life has been taken on the basis of external / internal technical evaluation:
(ii) Cost of the leasehold land is amortised over the lease period except perpetual leases.
(iii) Depreciation due to price adjustment in the original cost of fixed assets is charged prospectively.
B. Intangible Assets
(i) Intangible assets comprising software and licences are amortised on Straight Line Method (SLM) over the useful life from the date of capitalization which is considered not exceeding five years.
Right of use (ROU) having indefinite life (for which there is no foreseeable limit to the period over which they are expected to generate net cash flows given the fact that these rights can be used even after the life of respective pipelines) are not amortized, but are tested for impairment annually.
(ii) After impairment of assets, if any, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
C. Capital assets facilities installed at the consumersâ premises
Capital assets facilities installed at the consumersâ premises on the land whose ownership is not with the company, has been depreciated on SLM basis in accordance with the useful life as specified in Schedule II of the Companies Act, 2013.
1.10 Employees Benefits
(a) All short term employee benefits are recognized at the undiscounted amount in the accounting period in which they are incurred.
(b) The Companyâs contribution to the Provident Fund is remitted to a separate trust established for this purpose based on a fixed percentage of the eligible employeeâs salary and debited to Statement of Profit and Loss. Further, the company makes provision as per actuarial valuation towards any shortfall in fund assets to meet statutory rate of interest in the future period, to be compensated by the company to the Provident Fund Trust.
(c) Employee Benefits under Defined Benefit Plans in respect of leave encashment, compensated absences, post-retirement medical scheme, long service award and other terminal benefits are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit Method. Actuarial liability in excess of respective plan assets is recognized during the year.
(d) Re-measurement including actuarial gains and losses are recognized in the balance sheet with a corresponding debit or credit to retained earnings through Statement of Profit and Loss or Other Comprehensive Income in the year of occurrence, as the case may be. Re-measurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
(e) Liability for gratuity as per actuarial valuation is funded with a separate trust.
1.11 Impairment of non-financial assets
The Carrying amount of cash generating unit are reviewed at each reporting date. In case there is any indication of impairment based on Internal/External factors, impairment loss is recognized wherever the carrying amount of asset exceeds its recoverable amount.
1.12 Provisions, Contingent Liabilities, Contingent Assets & Capital Commitments
(a) 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/ assets exceeding Rs.5 Lacs in each case are disclosed by way of notes to accounts except when there is remote possibility of settlement/realization.
(b) Estimated amount of contracts remaining to be executed on capital accounts are disclosed in each case above Rs.5 lacs.
1.13 Taxes on Income
Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal Income Tax during the specified period.
Deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes considering the tax rate and tax laws that have been enacted or substantively enacted as on the reporting date. Deferred tax relating to items recognized outside Statement of Profit and Loss is recognized outside Statement of Profit and Loss (either in Other Comprehensive Income or in Equity).
The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
1.14 R&D Expenditure
Revenue expenditure on Research and Development is charged to Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on Research and Development is capitalized in case the same qualifies as an asset.
1.15 Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value
1.16 Segment reporting
The Management of the company monitors the operating results of its business Segments for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.
The Operating segments have been identified on the basis of the nature of products / services.
a) Segment revenue includes directly identifiable with/allocable to the segment including inter-segment revenue.
b) Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result.
c) Expenses which relate to the Company as a whole and not allocable to segments are included under unallocable expenditure.
d) Income which relates to the Company as a whole and not allocable to segments is included in unallocable income.
e) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.
1.17 Earning per share
Basic earnings per equity share is computed by dividing the net profit after tax attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed by dividing adjusted net profit after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares during the year.
1.18 Leases
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership of the Company is classified as a finance lease.
(A) Company as a lessee
Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on straight line basis. However, rent expenses shall not be straight-lined, if escalation in rentals is in line with expected inflationary cost.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the Statement of Profit and Loss.
(B) Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Leases are classified as finance leases when substantially all of the risks and rewards incidental to ownership is transferred by the Company to the lessee.
1.19 Liquidated damages/ Price Reduction Schedule
Amount recovered towards Liquidated Damages/Price Reduction Schedule are adjusted/appropriated as and when the matter is settled.
1.20 Fair value measurement
The Company measures financial instruments including derivatives and specific investments (other than subsidiary, joint venture and associates), at fair value at each balance sheet date.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
(i) Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
(ii) Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
(iii) Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the balance sheet on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.21 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(A) Financial assets
(i) Classification
The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through Statement of Profit and Loss on the basis of its business model for managing the financial assets and the contractual cash flows characteristics of the financial asset.
(ii) Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through Statement of Profit and Loss, transaction costs that are attributable to the acquisition of the financial asset.
(iii) Subsequent measurement
For purposes of subsequent measurement financial assets are classified in below categories:
(a) Financial assets carried at amortised cost
A financial asset other than derivatives and specific investments, is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(b) Financial assets at fair value through other comprehensive income
A financial asset comprising specific investment is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
(c) Financial assets at fair value through Statement of Profit and Loss
A financial asset comprising derivatives which is not classified in any of the above categories are subsequently fair valued through profit or loss.
(iv) Derecognition
A financial asset is primarily derecognized when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
(v) Investment in subsidiaries, joint ventures and associates
The company has accounted for its investment in subsidiaries, joint ventures and associates at cost. The company assesses whether there is any indication that these investments may be impaired. If any such indication exists, the investment is considered for impairment based on the fair value thereof.
(vi) Impairment of other financial assets
The Company assesses impairment based on expected credit losses (ECL) model for measurement and recognition of impairment loss on the financial assets that are trade receivables or contract revenue receivables and all lease receivables etc.
(B) Financial liabilities
(i) Classification
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through Statement of Profit and Loss. Such liabilities, including derivatives shall be subsequently measured at fair value.
(ii) Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
(iii) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
(a) Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
(b) Financial liabilities at fair value through Statement of Profit and Loss
Financial liabilities at fair value through Statement of Profit and Loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through Statement of Profit and Loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category comprises derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
(iv) Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
(a) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously
(b) Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts, interest rate swaps, full currency swaps and forward commodity contracts, to hedge its foreign currency risks, interest rate risks and commodity price risks, respectively. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss.
1.22 Standards Issued but not yet Effective
a) Ind - AS 115 âRevenue from Contract with Customers
Ind AS 115 was issued in February, 2015. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to the customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
This standard will come into force from accounting period commencing on or after 1st April, 2018. The company will adopt the new standard on the required effective date. The Company is in the process of making an assessment of the impact of Ind - AS 115 upon initial application, which is subject to changes arising from a more detailed ongoing analysis.
b) Amendments to Ind AS 7 âStatement of cash flowsâ
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
This amendment is effective for accounting period commencing on or after 1st April, 2017. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Mar 31, 2016
1.01 Accounting Convention
The financial statements are prepared on accrual basis of
Accounting under historical cost convention in accordance with Generally
Accepted Accounting Principles in India and the relevant provisions of
the Companies Act, 2013 including Accounting Standards as specified
under section 133 of the Companies Act 2013, read with Rule ''7'' of the
Companies (Accounts) Rule 2014.
1.02 Use of Estimates
The preparation of financial statements requires judgments, estimates
and assumptions which affect the reported amount of assets,
liabilities, revenues and expenses of the reporting period and
disclosure of contingent liabilities. The difference between the actual
results and estimates are recognized in the period in which the results
are known or materialized.
1.03 Grants
In case of depreciable assets, the cost of the assets is shown at gross
value and grant thereon is taken to Capital Reserve which is recognised
as income in the Statement of Profit and Loss over the useful life of
the asset.
1.04 Fixed Assets
A. Tangible Assets
(a) Tangible Fixed Assets are stated at historical cost on consistent
basis and are net of refundable taxes & levies wherever applicable.
All costs relating to acquisition of fixed assets till commissioning of
such assets are capitalized. In the case of commissioned assets where
final payment to the Contractors is pending, capitalization is made on
provisional basis, including provisional liability pending approval of
Competent Authority, subject to necessary adjustment in cost and
depreciation in the year of settlement.
(b) Machinery spares, which can be used only in connection with an item
of fixed asset and their use is expected to be irregular, are
capitalised with the cost of respective fixed asset and are depreciated
fully over the remaining useful life of that asset.
(c) Technical know-how / license fee incurred at the time of
procurement asset are capitalized as part of the underlying asset.
B. Intangible Assets
Intangible assets like software, licenses and right-of-use (ROU) of
land including sharing of ROU with other entities which are expected to
provide future enduring economic benefits are capitalized as Intangible
Assets and are stated at their cost of acquisition.
Capital Work in Progress
(a) Crop compensation is accounted for under Capital Work-in-Progress
on the basis of actual payments/estimated liability, as and when work
commences where ROU is acquired.
(b) The capital work in progress includes Construction Stores including
Material in Transit/ Equipment / Services, etc. received at site for
use in the projects.
(c) Pre-project expenditure relating to Projects which are considered
unviable / closed is charged off to Revenue in the year of declaration/
closure.
(d) All revenue expenses incurred during Construction Period, which are
exclusively attributable to acquisition / construction of fixed assets,
are capitalized at the time of commissioning of such assets.
1.06 Exploration and Development Costs
i) The Company follows Successful Efforts Method for accounting of Oil
& Gas exploration and production activities carried out through Joint
Ventures in the nature of Production Sharing Contracts (PSC) with
respective host government and various body corporates for exploration,
development and production activities, which includes:
(a) Survey Costs are recognized as revenue expenditure in the year in
which these are incurred.
(b) Cost of exploratory wells is carried as ''Exploratory wells in
progress'' under Capital Work in Progress. Such exploratory wells in
progress are capitalized in the year in which the Producing Property is
created. Such costs are written off in the year when determined to be
dry / abandoned.
(c) Cost of all "exploratory wells in progress" is debited to Statement
of Profits and Loss except of those wells for which there are
reasonable indications of sufficient quantity of reserves and the
enterprise is making sufficient progress assessing the reserves and the
economic and operating viability of the project.
ii) Capitalization of Producing Properties
(a) Producing Properties are capitalized as "completed wells /
producing wells" when the wells in the area / field are ready to
commence commercial production on establishment of proved developed oil
and gas reserves.
(b) Cost of Producing Properties includes cost of successful
exploratory wells, development wells, initial depreciation of support
equipments & facilities and estimated future abandonment cost.
iii) Depletion of Producing Properties
Producing Properties are depleted using the "Unit of Production Method
(UOP)" The depletion or unit of production charged for all the
capitalized cost is calculated in the ratio of production during the
year to the proved developed reserves at the year end.
iv) Production cost of Producing Properties
Company''s share of production costs as indicated by Operator consists
of pre well head and post well head expenses including depreciation and
applicable operating cost of support equipment and facilities.
1.07 Foreign Currency Transaction
(a) Transactions in foreign currency are initially accounted at the
exchange rate prevailing on the transaction date.
(b) Monetary items denominated in foreign currencies, outstanding at
the year end, are translated at exchange rates (BC Selling Rate for
Payables and TT Buying Rate for Receivables) prevailing at year end.
(c) Non-monetary items, denominated in foreign currencies are accounted
at the exchange rate prevailing on the date of transaction(s).
(d) Any gains or loss arising on account of exchange difference either
on settlement or on translation is adjusted in the Statement of Profit
& Loss except in case of long term foreign currency monetary items
relating to acquisition of depreciable capital asset where they are
adjusted to the carrying cost of such assets. In other cases exchange
difference is accumulated in "Foreign Currency Monetary item
Translation Difference Account" in the financial statements and
amortized over the balance period of respective long terms asset or
liability, by recognition as income or expenses in each of such period.
(e) Premium /discount arising at the inception of the forward contracts
entered into to hedge foreign currency risk are amortized as expense /
income over the life of the contract. Outstanding forward contracts as
at the reporting date are restated at the exchange rate prevailing on
that date. Exchange difference on such contracts where rate to long
term foreign currency monetary items are adjusted in carrying cost of
related asset.
In respect of other derivative contracts entered into, to hedge Foreign
Currency and Interest rate risk, gain / losses on settlement and losses
on restatement (by marking them to market) at the Balance Sheet date
are recognised in the Statement of profit & loss.
1.08 Borrowing Cost
Borrowing cost of the funds specifically borrowed for the purpose of
obtaining qualifying assets and eligible for capitalization along with
the cost of the assets, is capitalized up to the date when the asset is
ready for its intended use after netting off any income earned on
temporary investment of such funds. Other borrowing costs are
recognized as expense during the year of incurrence.
1.09 Investments
Investments are classified into current and non-current investments.
Current investments are stated at lower of cost or market value. Non-
current investments are stated at cost and provision for diminution in
value is made only if such decline is other than temporary in the
opinion of management.
1.10 Inventories
(a) Stock of Liquefied Natural Gas (LNG) and Natural Gas in pipelines
is valued at cost on First in First out (FIFO) basis or net realizable
value, whichever is lower.
(b) Raw materials and finished goods are valued at weighted average
cost or net realizable value, whichever is lower. Finished goods
include excise duty and royalty wherever applicable.
(c) Stock in process is valued at weighted average cost or net
realisable value, whichever is lower. It is valued at weighted average
cost where the finished goods in which these are to be incorporated are
expected to be sold at or above the weighted average cost.
(d) Stores and spares and other material for use in production of
inventories are valued at weighted average cost or net realisable
value, whichever is lower. It is valued at weighted average cost where
the finished goods in which they will be incorporated are expected to
be sold at/or above cost.
(e) Surplus / Obsolete Stores and Spares are valued at cost or net
realisable value, whichever is lower.
(f) Surplus / Obsolete Capital Stores, other than held for use in
construction of a capital asset, are valued at lower of cost or net
realisable value.
(g) Imported LNG in transit is valued at CIF value or net realizable
value whichever is lower.
(h) Renewable Energy Certificates (RECs) are valued at cost on First ir
First out (FIFO) basis or net realizable value, whichever is lower.
1.11 Revenue recognition
(a) Sales are recognized on transfer of significant risks and rewards
of ownership to the buyer, which generally coincides with the delivery
of goods to customers. Sales include excise duty but exclude value
added tax. Any retrospective revision in prices is accounted for in the
year of such revision.
(b) Income from Consultancy/Contract Services, if any, is recognized
based on percentage Completion Method.
(c) Dividend income is accounted for when the right to receive is
established.
(d) Claims (including interest on delayed realization from customers)
are accounted for, when there is significant certainty that the claims
are realizable.
(e) Liability in respect of Minimum Guaranteed Off take (MGO) of
Natural gas is not provided for where the same is secured by MGC
recoverable from customers. Payments/receipts during the year on
account of MGO are adjusted on receipt basis.
(f) Minimum charges relating to transportation of LPG are accounted for
on receipt basis.
(g) Prepaid expenses and prior period expenses/income up to Rs. 5 lacs
in each case are charged to relevant heads of account of the current
year.
1.12 Depreciation / Amortisation
A. Tangible Assets
Depreciation on Tangible Fixed Assets is provided in accordance with
the manner and useful life as specified in Schedule II of the Companies
Act, 2013, on straight line method (SLM) on pro-rata basis (monthly
pro-rata for bought out assets), except for the assets as mentioned
below where different useful life has been taken on the basis of
external / internal technical evaluation:
(ii) Cost of the leasehold land is amortised over the lease period
except perpetual leases.
(iii) Depreciation due to price adjustment in the original cost of
fixed assets is charged prospectively.
(iv) Capital expenditure on the assets (enabling facilities), the
ownership of which is not with the Company, is charged off to Revenue.
B. Intangible Assets
(i) Intangible assets are amortised on Straight Line Method (SLM) over
the useful life not exceeding five years from the date of
capitalization.
(ii) Cost of the Right of Use (ROU) is amortized considering life of
RoU as 99 years.
(iii) After impairment of assets, if any, depreciation is provided on
the revised carrying amount of the assets over its remaining useful
life.
C. Capital assets facilities installed at the consumers'' premises on
the land whose ownership is not with the company, has been depreciated
on SLM basis in accordance with the useful life as specified m Schedule
II of the Companies Act, 2013.
1.13 Employees Benefits
(a) All short term employee benefits are recognized at the undiscounted
amount in the accounting period in which they are incurred.
(b) The Company''s contribution to the Provident Fund is remitted to a
separate trust established for this purpose based on a fixed percentage
of the eligible employee''s salary and debited to Statement of Profit
and Loss. Further, the company makes provision as per actuarial
valuation towards any shortfall in fund assets to meet statutory rate
of interest in the future period, to be compensated by the company to
the Provident Fund Trust.
(c) Employee Benefits under Defined Benefit Plans in respect of leave
encashment, compensated absence, post-retirement medical scheme, long
service award and other terminal benefits are recognized based on the
present value of defined benefit obligation, which is computed on the
basis of actuarial valuation using the Projected Unit Credit Method.
Actuarial liability in excess of respective plan assets is recognized
during the year. Actuarial gains / losses are recognized in the
Statement of Profit and Loss.
(d) Liability for gratuity as per actuarial valuation is funded with a
separate trust.
1.14 Impairment
The Carrying amount of cash generating unit are reviewed at each
Balance Sheet date. In case there is any indication of impairment based
on Internal / External factors, impairment loss is recognized wherever
the carrying amount of asset exceeds its recoverable amount.
1.15 Provisions, Contingent Liabilities, Contingent Assets & Capital
Commitments
(a) Provisions involving substantial degree of estimation m 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 Assets are neither recognized nor disclosed in the financial
statements. Contingent liabilities exceeding Rs. 5 Lacs in each case
are disclosed by way of notes to accounts except when there is remote
possibility of any outflow in settlement.
(b) Estimated amount of contracts remaining to be executed on capital
accounts are disclosed in each case above Rs. 5 lacs.
1.16 Taxes on Income
Provision for current tax is made as per the provisions of the Income
Tax Act, 1961. Minimum Alternate Tax (MAT) credit is recognized as an
asset only when and to the extent there is convincing evidence that the
Company will pay normal Income Tax during the specified period.
Deferred Tax Liability / Asset resulting from ''timing difference''
between book profit and taxable profit is accounted for considering the
tax rate and tax laws that have been enacted or substantively enacted
as on the Balance Sheet date. Deferred Tax Asset, if any, is recognized
and carried forward only to the extent that there is virtual certainty
that the asset will be realized in future.
17 R&D Expenditure
Revenue expenditure on Research and Development is charged to Statement
of Profit and Loss in the year in which it is incurred. Capital
expenditure on Research and Development is capitalized m case the same
qualifies as tangible asset.
18 Cash Flow Statement
Cash flow statement is prepared in accordance with the indirect method
prescribed in Accounting Standard (AS) 3 on ''Cash Flow Statements''
1.19 Others
(a) Liquidated Damages / Price Reduction Schedule, if any, are
accounted for as and when recovery is effected and the matter is
considered settled by the Management. Liquidated damages / Price
Reduction Schedule, if settled, after capitalization of assets are
charged to revenue if below Rs. 50 lacs in each case, otherwise
adjusted in the cost of relevant assets.
(b) Insurance claims are accounted for on the basis of claims admitted
by the insurers.
Mar 31, 2015
1.01 Accounting Convention
The financial statements are prepared on accrual basis of accounting
under historical cost convention in accordance with generally accepted
accounting principles in India and the relevant provisions of the
Companies Act, 2013 including accounting standards and Companies
(Accounts) Rules,2014 notified there under.
1.02 Use of Estimates
The preparation of financial statements requires estimates and
assumptions which affect the reported amount of assets, liabilities,
revenues and expenses of the reporting period. The difference between
the actual results and estimates are recognized in the period in which
the results are known or materialized.
1.03 Inventories
(a) Stock of LNG and Natural Gas in pipelines is valued at cost on
First in First out (FIFO) basis or net realizable value, whichever is
lower.
(b) Raw materials and finished products are valued at weighted average
cost or net realizable value, whichever is lower. Finished products
include excise duty and royalty wherever applicable.
(c) Stock in process is valued at weighted average cost or net
realisable value, whichever is lower. It is valued at weighted average
cost where the finished products in which these are to be incorporated
are expected to be sold at or above the weighted average cost.
(d) Stores and spares and other material for use in production of
inventories are valued at weighted average cost or net realisable
value, whichever is lower. It is valued at weighted average cost where
the finished products in which they will be incorporated are expected
to be sold at/or above cost.
(e) Surplus / Obsolete Stores and Spares are valued at cost or net
realisable value, whichever is lower.
(f) Surplus / Obsolete Capital Stores, other than held for use in
construction of a capital asset, are valued at lower of cost or net
realisable value.
(g) Renewable Energy Certificates (RECs) are valued at cost on First in
First out (FIFO)basis or net realizable value, whichever is lower.
1.04 Depreciation / Amortisation
(a) Depreciation on Fixed Assets other than those mentioned below is
provided in accordance with the useful life as specified in Schedule II
of the Companies Act, 2013, on straight line method (SLM) on pro- rata
basis (monthly pro-rata for bought out assets).
(i) Furniture and Electric Equipment's provided for the use of
employees are depreciated on the basis of 7 years useful life. Mobile
Phones provided for the use of employees are depreciated on the basis
of 2years useful life.
(ii) Cost of the leasehold land is amortised over the lease period
except perpetual leases.
(iii) Depreciation due to price adjustment in the original cost of
fixed assets is charged prospectively.
(iv) Capital expenditure on the assets (enabling facilities), the
ownership of which is not with the Company, is charged off to Revenue.
(v) Intangible assets are amortised on Straight Line Method (SLM) over
the useful life not exceeding five years from the date of
capitalization.
(vi) Cost of the Right of Use (ROU) is amortized considering life of
Roll as 99 years.
(vii) After impairment of assets, if any, depreciation is provided on
the revised carrying amount of the assets over its remaining useful
life.
(b) Capital assets facilities installed at the consumers premises on
the land whose ownership is not with the company, has been depreciated
on SLM basis in accordance with the useful life as specified in
Schedule II of the Companies Act, 2013.
1.05 Revenue recognition
(a) Sales are recognized on transfer of significant risks and rewards
of ownership to the buyer, which generally coincides with the delivery
of goods to customers. Sales include excise duty but exclude value
added tax. Any retrospective revision in prices is accounted for in the
year of such revision.
(b) Income from Consultancy/Contract Services, if any, is recognized
based on Proportionate Completion Method.
(c) Dividend income is accounted for when the right to receive it is
established.
(d) Claims (including interest on delayed realization from customers)
are accounted for, when there is no significant uncertainty that the
claims are realizable.
(e) Liability in respect of MGO of Natural gas is not provided for
where the same is secured by MGO recoverable from customers.
Payments/receipts during the year on account of MGO are adjusted on
Receipt basis.
(f) Minimum charges relating to transportation of LPG are accounted for
on Receipt basis.
(g) Prepaid expenses and prior period expenses/income upto Rs.5 lacs in
each case are charged to relevant heads of account of the current year.
1.06 Fixed Assets
(a) Fixed Assets are valued at historical cost on consistent basis and
are net of refundable taxes & levies wherever applicable. All costs
relating to acquisition of fixed assets till commissioning of such
assets are capitalized. In the case of commissioned assets where final
payment to the Contractors is pending, capitalization is made on
provisional basis, including provisional liability pending approval of
Competent Authority, subject to necessary adjustment in cost and
depreciation in the year of settlement.
(b) Machinery spares, which can be used only in connection with an item
of fixed asset and their use is expected to be irregular, are
capitalised with the cost of that fixed asset and are depreciated fully
over the remaining useful life of that asset.
1.07 Intangible Assets
Intangible assets like software, licenses and right-of-use of land
including sharing of ROU with other entities which are expected to
provide future enduring economic benefits are capitalized as Intangible
Assets.
1.08 Capital Work in Progress
(a) Crop compensation is accounted for under Capital Work-in-Progress
on the basis of actual payments/estimated liability, as and when work
commences where ROU is acquired.
(b) The capital work in progress includes material in Transit/ value of
materials / equipment / Services, etc. received at site for use in the
projects.
(c) Pre-project expenditure relating to Projects which are considered
unviable / closed is charged off to Revenue in the year of
declaration/closure.
1.09 Expenses Incurred During Construction Period
All revenue expenditure incurred during the year, which is exclusively
attributable to acquisition/construction of fixed assets, is
capitalized at the time of commissioning of such assets.
1.10 Foreign Currency Translation
(a) Transactions in foreign currency are initially accounted at the
exchange rate prevailing on the transaction date.
(b) Monetary items (such as Cash, Receivables, Loans, Payables, etc.)
denominated in foreign currencies, outstanding at the year end, are
translated at exchange rates (BC Selling Rate for Payables and TT
Buying Rate for Receivables) prevailing at year end.
(c) Non-monetary items (such as Investments, Fixed Assets, etc),
denominated in foreign currencies are accounted at the exchange rate
prevailing on the date of transaction(s).
(d) Any gains or loss arising on account of exchange difference either
on settlement or on translation is adjusted in the Statement of Profit
& Loss except in case of long term foreign currency monetary items
Relating to acquisition of depreciable capital asset in which case they
are adjusted to the carrying cost of such assets and in other cases,
accumulated in "Foreign Currency Monetary item Translation Difference
Account" in the financial statements and amortized over the balance
period of such long terms asset or liability, by recognition as income
or expenses in each of such period.
(e) Premium /discount arising at the inception of the forward contracts
entered into to hedge foreign currency risk are amortized as expense /
income over the life of the contract. Outstanding forward contracts as
at the reporting date are restated at the exchange rate prevailing on
that date.
In respect of other derivative contracts entered into, to hedge Foreign
Currency and Interest rate risk, gain/ losses on settlement and losses
on restatement (by marking them to market) at the Balance Sheet date
are recognised in the Statement of profit &loss.
1.11 Grants
In case of depreciable assets, the cost of the assets is shown at gross
value and grant thereon is taken to Capital Reserve which is recognised
as income in the Statement of Profit and Loss over the useful life
period of the asset.
1.12 Investments
Investments are classified into current and non-current investments.
Current investments are stated at lower of cost or market value. Non-
current investments are stated at cost and provision for diminution in
value is made only if such decline is other than temporary in the
opinion of management.
1.13 Employees Benefits
(a) All short term employee benefits are recognized at the undiscounted
amount in the accounting period in which they are incurred.
(b) The Company's contribution to the Provident Fund is remitted to a
separate trust established for this purpose based on a fixed percentage
of the eligible employee's salary and debited to Statement of Profit
and Loss. Further, the company makes provision as per actuarial
valuation towards any shortfall in fund assets to meet statutory rate
of interest in the future period, to be compensated by the company to
the Provident Fund Trust.
(c) Employee Benefits under Defined Benefit Plans in respect of leave
encashment, compensated absence, post retirement medical scheme, long
service award and other terminal benefits are recognized based on the
present value of defined benefit obligation, which is computed on the
basis of actuarial valuation using the Projected Unit Credit Method.
Actuarial liability in excess of respective plan assets is recognized
during The year.
(d) Provision for gratuity as per actuarial valuation is funded with a
separate trust.
1.14 Borrowing Cost
Borrowing cost of the funds specifically borrowed for the purpose of
obtaining qualifying assets and eligible for capitalization along with
the cost of the assets, is capitalized up to the date when the asset is
ready for use after netting off any income earned on temporary
investment of such funds.
1.15 Taxes on Income
Provision for current tax is made as per the provisions of the Income
Tax Act,1961. Deferred Tax Liability/Asset resulting from 'timing
difference' between book profit and taxable profit is accounted for
considering the tax rate and laws that have been enacted or
substantively enacted as on the Balance Sheet date. Deferred Tax Asset,
if any, is recognized and carried forward only to the extent that there
is virtual certainty that the asset will be realized in future.
1.16 R&D Expenditure
All expenditure, other than on capital account, on research and
development are debited to Statement of Profit and Loss.
1.17 Impairment
The Carrying amount of assets are reviewed at each Balance Sheet date.
In case there is any indication of impairment based on
Internal/External factors. Impairment loss is recognized wherever the
carrying amount of asset exceeds its recoverable amount.
1.18 Provisions, Contingent Liabilities, Contingent Assets & Capital
Commitments
(a) 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 Assets are neither recognized nor disclosed
in the financial statements. Contingent liabilities exceeding Rs.5 Lacs
in each case are disclosed by way of notes to accounts except when
there is remote possibility of any out flow in settlement.
(b) Estimated amount of contracts remaining to be executed on capital
accounts are disclosed in each case above Rs.5 lacs.
1.19 Exploration and Development Costs
i) The Company follows Successful Efforts Method for accounting of Oil
& Gas exploration and production activities, which includes:-
(a) Survey Costs are recognized as revenue expenditure in the year in
which these are incurred.
(b) Cost of exploratory wells is carried as 'Exploratory wells in
progresses'. Such exploratory wells in progress are capitalized in the
year in which the Producing Property is created or is written off in
the year when Determined to be dry/abandoned.
(c) Cost of all "exploratory wells in progress" is debited to Statement
of Profits and Loss except of those wells for which there are
reasonable indications of sufficient quantity of reserves and the
enterprise is making sufficient progress assessing the reserves and the
economic and operating viability of the project.
ii) Capitalization of Producing Properties
a) Producing Properties are capitalized as "completed wells / producing
wells" when the wells in the area / field are ready to commence
commercial production on establishment of proved developed oil and gas
reserves.
b) Cost of Producing Properties includes cost of successful exploratory
wells, development wells, initial depreciation of support equipments &
facilities and estimated future abandonment cost.
iii) Depletion of Producing Properties
Producing Properties are depleted using the "Unit of Production Method
(UOP)".The depletion or unit of production charged for all the
capitalized cost is calculated in the ratio of production during the
year to the proved developed reserves at the year end.
iv) Production cost of Producing Properties
Company's share of production costs as indicated by Operator consists
of pre well head and post well head expenses including depreciation and
applicable operating cost of support equipment and facilities.
1.20 OTHERS
(a) Liquidated Damages/Price Reduction Schedule, if any, are accounted
for as and when recovery is effected and the matter is considered
settled by the Management. Liquidated damages / Price Reduction
Schedule, if settled, after capitalization of assets are charged to
revenue if below Rs.50 lacs in each case, otherwise adjusted in the
cost of relevant assets.
(b) Insurance claims are accounted for on the basis of claims admitted
by the insurers.
Mar 31, 2014
1.01 Accounting Convention
The financial statements are prepared on accrual basis of accounting
under historical cost convention in accordance with generally accepted
accounting principles in India and the relevant provisions of the
Companies Act, 1956 including accounting standards notified there
under.
1.02 Use of Estimates
The preparation of financial statements requires estimates and
assumptions which affect the reported amount of assets, liabilities,
revenues and expenses of the reporting period. The difference between
the actual results and estimates are recognized in the period in which
the results are known or materialized.
1.03 Inventories
(i) Stock of LNG and Natural Gas in pipelines is valued at cost on
First in First out (FIFO) basis or net realizable value, whichever is
lower.
(ii) Raw materials and finished products are valued at weighted average
cost or net realizable value, whichever is lower. Finished products
include excise duty and royalty wherever applicable.
(iii) Stock in process is valued at weighted average cost or net
realisable value, whichever is lower. It is valued at weighted average
cost where the finished products in which these are to be incorporated
are expected to be sold at or above the weighted average cost.
(iv) Stores and spares and other material for use in production of
inventories are valued at weighted average cost or net realisable
value, whichever is lower. It is valued at weighted average cost where
the finished products in which they will be incorporated are expected
to be sold at/or above cost.
(v) Surplus / Obsolete Stores and Spares are valued at cost or net
realisable value, whichever is lower.
(vi) Surplus / Obsolete Capital Stores, other than held for use in
construction of a capital asset, are valued at lower of cost or net
realisable value.
(vii) Renewable Energy Certificates (RECs) are valued at cost on First
in First out (FIFO) basis or net realizable value, whichever is lower.
1.04 Depreciation / Amortisation
(a) Depreciation on Fixed Assets other than those mentioned below is
provided in accordance with the rates as specified in Schedule XIV of
the Companies Act, 1956, on straight line method (SLM) on pro-rata
basis (monthly pro-rata for bought out assets).
(i) Assets costing upto Rs. 5,000/- are depreciated fully in the year of
capitalisation.
(ii) Bunk Houses are amortised on assumption of five years life.
(iii) Oil and Gas Pipelines including other related facilities are
depreciated @ 3.17% per annum on SLM basis based on useful life of 30
years.
(iv) Computers at the residence of the employees are depreciated @
23.75% per annum on SLM basis. Furniture, Electric Equipments and
Mobiles provided for the use of employees are depreciated @ 15% per
annum on SLM basis.
(v) Cost of the leasehold land not exceeding 99 years is amortised over
the lease period.
(vi) Depreciation due to price adjustment in the original cost of fixed
assets is charged prospectively.
(vii) Capital expenditure on the assets (enabling facilities), the
ownership of which is not with the Company, is charged off to Revenue.
(viii) Software / Licences are amortised in 5 years on straight line
method.
(ix) Cost of the Right of Use (ROU) is amortized considering life of
RoU as 99 years.
(x) After impairment of assets, if any, depreciation is provided on the
revised carrying amount of the assets over its remaining useful life.
(b) Capital assets except gas pipelines related facilities installed at
the consumers premises on the land whose ownership is not with the
company, has been depreciated on SLM basis in accordance with the rates
as specified in Schedule XIV of the Companies Act, 1956.
1.05 Revenue recognition
(i) Sales are recognized on transfer of significant risks and rewards
of ownership to the buyer, which generally coincides with the delivery
of goods to customers. Sales include excise duty but exclude value
added tax. Any retrospective revision in prices is accounted for in the
year of such revision.
(ii) Income from Consultancy/Contract Services, if any, is recognized
based on Proportionate Completion Method.
(iii) Dividend income is accounted for when the right to receive it is
established.
(iv) Claims (including interest on delayed realization from customers)
are accounted for, when there is no significant uncertainty that the
claims are realizable.
(v) Liability in respect of MGO of Natural gas is not provided for
where the same is secured by MGO recoverable from customers.
Payments/receipts during the year on account of MGO are adjusted on
receipt basis.
(vi) Minimum charges relating to transportation of LPG are accounted
for on receipt basis.
(vii) Prepaid expenses and prior period expenses/income upto Rs.
5,00,000/- in each case are charged to relevant heads of account of the
current year.
1.06 Fixed Assets
(a) Fixed Assets are valued at historical cost on consistent basis and
are net of refundable taxes & levies wherever applicable. All costs
relating to acquisition of fixed assets till commissioning of such
assets are capitalized. In the case of commissioned assets where final
payment to the Contractors is pending, capitalization is made on
provisional basis, including provisional liability pending approval of
Competent Authority, subject to necessary adjustment in cost and
depreciation in the year of settlement.
(b) Machinery spares, which can be used only in connection with an item
of fixed asset and their use is expected to be irregular, are
capitalised with the cost of that fixed asset and are depreciated fully
over the remaining useful life of that asset.
1.07 Intangible Assets
Intangible assets like software, licenses and right-of-use of land
including sharing of ROU with other entities which are expected to
provide future enduring economic benefits are capitalized as Intangible
Assets.
1.08 Capital Work in Progress
(a) Crop compensation is accounted for under Capital Work-in-Progress
on the basis of actual payments/estimated liability, as and when work
commences where ROU is acquired.
(b) The capital work in progress includes material in Transit/ value of
materials / equipment / Services, etc. received at site for use in the
projects.
(c) Pre-project expenditure relating to Projects which are considered
unviable / closed is charged off to Revenue in the year of
declaration/closure.
1.09 Expenses Incurred During Construction Period
All revenue expenditure incurred during the year, which is exclusively
attributable to acquisition / construction of fixed assets, is
capitalized at the time of commissioning of such assets.
1.10 Foreign Currency Translation
(i) Transactions in foreign currency are initially accounted at the
exchange rate prevailing on the transaction date.
(ii) Monetary items (such as Cash, Receivables, Loans, Payables, etc.)
denominated in foreign currencies, outstanding at the year end, are
translated at exchange rates (BC Selling Rate for Payables and TT
Buying Rate for Receivables) prevailing at year end.
(iii) Non monetary items (such as Investments, Fixed Assets, etc),
denominated in foreign currencies are accounted at the exchange rate
prevailing on the date of transaction(s).
(iv) Any gains or loss arising on account of exchange difference either
on settlement or on translation is adjusted in the Statement of Profit
& Loss except in case of long term foreign currency monetary items
relating to acquisition of depreciable capital asset in which case they
are adjusted to the carrying cost of such assets and in other cases,
accumulated in "Foreign Currency Monetary item Translation Difference
Account" in the financial statements and amortized over the balance
period of such long terms asset or liability, by recognition as income
or expenses in each of such period.
(v) In respect of derivative contracts, gain/losses on settlement and
losses on re-statement (by marking them to market) at the balance sheet
date are recognised in the statement of Profit & Loss.
1.11 Grants
In case of depreciable assets, the cost of the assets is shown at gross
value and grant thereon is taken to Capital Reserve which is recognised
as income in the statement of Profit and Loss over the useful life
period of the asset.
1.12 Investments
Investments are classified into current and non-current investments.
Current investments are stated at lower of cost or market value.
Non-current investments are stated at cost and provision for diminution
in value is made only if such decline is other than temporary in the
opinion of management.
1.13 Employees Benefits
(i) All short term employee benefits are recognized at the undiscounted
amount in the accounting period in which they are incurred.
(ii) The Company''s contribution to the Provident Fund is remitted to a
separate trust established for this purpose based on a fixed percentage
of the eligible employee''s salary and debited to statement of Profit
and Loss. Further, the company makes provision as per actuarial
valuation towards any shortfall in fund assets to meet statutory rate
of interest in the future period, to be compensated by the company to
the Provident Fund Trust.
(iii) Employee Benefits under Defined Benefit Plans in respect of leave
encashment, compensated absence, post retirement medical scheme, long
service award and other terminal benefits are recognized based on the
present value of defined benefit obligation, which is computed on the
basis of actuarial valuation using the Projected Unit Credit method.
Actuarial liability in excess of respective plan assets is recognized
during the year.
(iv) Provision for gratuity as per actuarial valuation is funded with a
separate trust.
1.14 Borrowing Cost
Borrowing cost of the funds specifically borrowed for the purpose of
obtaining qualifying assets and eligible for capitalization along with
the cost of the assets, is capitalized up to the date when the asset is
ready for use after netting off any income earned on temporary
investment of such funds.
1.15 Taxes on Income
Provision for current tax is made as per the provisions of the Income
Tax Act, 1961. Deferred Tax Liability / Asset resulting from ''timing
difference'' between book profit and taxable profit is accounted for
considering the tax rate and laws that have been enacted or
substantively enacted as on the Balance Sheet date. Deferred Tax Asset,
if any, is recognized and carried forward only to the extent that there
is virtual certainty that the asset will be realized in future.
1.16 R&D Expenditure
All expenditure, other than on capital account, on research and
development are debited to statement of Profit and Loss.
1.17 Impairment
The Carrying amount of assets are reviewed at each Balance Sheet date.
In case 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.
1.18 Provisions, Contingent Liabilities, Contingent Assets & Capital
Commitments
(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 Assets are neither recognized nor disclosed in
the financial statements. Contingent liabilities exceeding Rs.5 Lacs in
each case are disclosed by way of notes to accounts except when there
is remote possibility of any outflow in settlement.
(ii) Estimated amount of contracts remaining to be executed on capital
accounts are disclosed in each case above Rs.5 Lacs.
1.19 Exploration and Development Costs:- i) The Company follows
Successful Efforts
Method for accounting of Oil & Gas exploration and production
activities, which includes:-
a. Survey Costs are recognized as revenue expenditure in the year in
which these are incurred.
b. Cost of exploratory wells is carried as ''Exploratory wells in
progresses''. Such exploratory wells in progress are capitalized in the
year in which the Producing Property is created or is written off in
the year when determined to be dry / abandoned.
c. Cost of all "exploratory wells in progress" is debited to statement
of Profits and Loss except of those wells for which there are
reasonable indications of sufficient quantity of reserves and the
enterprise is making sufficient progress assessing the reserves and the
economic and operating viability of the project.
ii) Capitalization of Producing Properties
a) Producing Properties are capitalized as "completed wells / producing
wells" when the wells in the area / field are ready to commence
commercial production on establishment of proved developed oil and gas
reserves.
b) Cost of Producing Properties includes cost of successful exploratory
wells, development wells, initial depreciation of support equipments &
facilities and estimated future abandonment cost.
iii) Depletion of Producing Properties
Producing Properties are depleted using the "Unit of Production Method
(UOP)". The depletion or unit of production charged for all the
capitalized cost is calculated in the ratio of production during the
year to the proved developed reserves at the year end.
iv) Production cost of Producing Properties
Company''s share of production costs as indicated by Operator consists
of pre well head and post well head expenses including depreciation and
applicable operating cost of support equipment and facilities..
1.20 OTHERS
(i) Liquidated Damages / Price Reduction Schedule, if any, are
accounted for as and when recovery is effected and the matter is
considered settled by the Management. Liquidated damages / Price
Reduction Schedule, if settled, after capitalization of assets are
charged to revenue if below Rs. 50 lacs in each case, otherwise adjusted
in the cost of relevant assets.
(ii) Insurance claims are accounted for on the basis of claims admitted
by the insurers.
Mar 31, 2013
1.01 Accounting Convention
The financial statements are prepared on accrual basis of accounting
under historical cost convention in accordance with generally accepted
accounting principles in India and the relevant provisions of the
Companies Act, 1956 including accounting standards notified there
under.
1.02 Use of Estimates
The preparation of financial statements requires estimates and
assumptions which affect the reported amount of assets, liabilities,
revenues and expenses of the reporting period. The difference between
the actual results and estimates are recognized in the period in which
the results are known or materialized.
1.03 Inventories
(i) Stock of LNG and Natural Gas in pipelines is valued at cost on
First in First out (FIFO) basis or net realizable value, whichever is
lower.
(ii) Raw materials and finished products are valued at weighted average
cost or net realizable value, whichever is lower. Finished products
include excise duty and royalty wherever applicable.
(iii) Stock in process is valued at weighted average cost or net
realisable value, whichever is lower. It is valued at weighted average
cost where the finished products in which these are to be incorporated
are expected to be sold at or above the weighted average cost.
(iv) Stores and spares and other material for use in production of
inventories are valued at weighted average cost or net realisable
value, whichever is lower. It is valued at weighted average cost where
the finished products in which they will be incorporated are expected
to be sold at/or above cost.
(v) Surplus / Obsolete Stores and Spares are valued at cost or net
realisable value, whichever is lower.
(vi) Surplus / Obsolete Capital Stores, other than held for use in
construction of a capital asset, are valued at lower of cost or net
realisable value.
(vii) Renewable Energy Certificates (RECs) are valued at cost on First
in First out (FIFO) basis or net realizable value, whichever is lower.
1.04 Depreciation / Amortisation
I. Depreciation on Fixed Assets other than those mentioned below is
provided in accordance with the rates as specified in Schedule XIV of
the Companies Act, 1956, on straight line method (SLM) on pro-rata
basis (monthly pro-rata for bought out assets)
(i) Assets costing upto Rs.5,000/- are depreciated fully in the year of
capitalisation.
(ii) Bunk Houses are amortised on assumption of five years life.
(iii) Oil and Gas Pipelines including other related facilities are
depreciated @ 3.17% per annum on SLM basis based on useful life of 30
years
(iv) Computers at the residence of the employees are depreciated @
23.75% per annum on SLM basis. Furniture, Electric Equipments and
Mobiles provided for the use of employees are depreciated @ 15% per
annum on SLM basis
(v) Cost of the leasehold land not exceeding 99 years is amortised over
the lease period
(vi) Depreciation due to price adjustment in the original cost of fixed
assets is charged prospectively
(vii) Capital expenditure on the assets (enabling facilities), the
ownership of which is not with the Company, is charged off to Revenue.
(viii) Software / Licences are amortised in 5 years on straight line
method.
(ix) No depreciation is being charged on ROU being perpetual in nature
(x) After impairment of assets, if any, depreciation is provided on the
revised carrying amount of the assets over its remaining useful life
II. Capital assets installed at the consumers premises on the land
whose ownership is not with the company, has been depreciated on SLM
basis in accordance with the rates as specified in Schedule XIV of the
Companies Act, 1956.
1.05 Revenue recognition
(i) Sales are recognized on transfer of significant risks and rewards
of ownership to the buyer, which generally coincides with the delivery
of goods to customers. Sales include excise duty but exclude value
added tax. Any retrospective revision in prices is accounted for in the
year of such revision.
(ii) Income from Consultancy/Contract Services, if any, is recognized
based on Proportionate Completion Method.
(iii) Dividend income is accounted for when the right to receive it is
established.
(iv) Claims (including interest on delayed realization from customers)
are accounted for, when there is no significant uncertainty that the
claims are realizable.
(v) Liability in respect of MGO of Natural gas is not provided for
where the same is secured by MGO recoverable from customers.
Payments/receipts during the year on account of MGO are adjusted on
receipt basis.
(vi) Minimum charges relating to transportation of LPG are accounted
for on receipt basis.
(vii) Prepaid expenses and prior period expenses/income upto Rs.
5,00,000/- in each case are charged to relevant heads of account of the
current year.
1.06 Fixed Assets
(a) Fixed Assets are valued at historical cost on consistent basis and
are net of refundable taxes & levies wherever applicable. All costs
relating to acquisition of fixed assets till commissioning of such
assets are capitalized. In the case of commissioned assets where final
payment to the Contractors is pending, capitalization is made on
provisional basis, including provisional liability pending approval of
Competent Authority, subject to necessary adjustment in cost and
depreciation in the year of settlement
(b) Machinery spares, which can be used only in connection with an item
of fixed asset and their use is expected to be irregular, are
capitalised with the cost of that fixed asset and are depreciated fully
over the remaining useful life of that asset.
1.07 Intangible Assets
Intangible assets like software, licenses and right-of-use of land
including sharing of ROU with other entities which are expected to
provide future enduring economic benefits are capitalized as Intangible
Assets
1.08 Capital Work in Progress
(a) Crop compensation is accounted for under Capital Work-in-Progress
on the basis of actual payments/estimated liability, as and when work
commences where ROU is acquired.
(b) The capital work in progress includes material in Transit/ value of
materials / equipment / Services, etc. received at site for use in the
projects.
(c) Pre-project expenditure relating to Projects which are considered
unviable / closed is charged off to Revenue in the year of
declaration/closure.
1.09 Expenses Incurred During Construction Period
All revenue expenditure incurred during the year, which is exclusively
attributable to acquisition / construction of fixed assets, is
transferred to capital work in progress and capitalized at the time of
commissioning of such assets.
1.10 Foreign Currency Translation
(i) Transactions in foreign currency are initially accounted at the
exchange rate prevailing on the transaction date.
(ii) Monetary items (such as Cash, Receivables, Loans, Payables, etc.)
denominated in foreign currencies, outstanding at the year end, are
translated at exchange rates (BC Selling Rate for Payables and TT
Buying Rate for Receivables) prevailing at year end.
(iii) Non monetary items (such as Investments, Fixed Assets, etc),
denominated in foreign currencies are accounted at the exchange rate
prevailing on the date of transaction(s).
(iv) Any gains or loss arising on account of exchange difference either
on settlement or on translation is adjusted in the Statement of Profit
& Loss except in case of long term foreign currency monetary items
relating to acquisition of depreciable capital asset in which case they
are adjusted to the carrying cost of such assets and in other cases,
accumulated in "Foreign Currency Monetary item Translation Difference
Account" in the financial statements and amortized over the balance
period of such long terms asset or liability, by recognition as income
or expenses in each of such period.
(v) In respect of derivative contracts, gain/losses on settlement and
losses on re-statement (by marking them to market) at the balance sheet
date are recognised in the statement of Profit & Loss.
1.11 Grants
In case of depreciable assets, the cost of the assets is shown at gross
value and grant thereon is taken to Capital Reserve which is recognised
as income in the statement of Profit and Loss over the useful life
period of the asset
1.12 Investments
Investments are classified into current and non-current investments.
Current investments are stated at lower of cost or market value.
Non-current investments are stated at cost and provision for diminution
in value is made only if such decline is other than temporary in the
opinion of management.
1.13 Employees Benefits
(i) All short term employee benefits are recognized at the undiscounted
amount in the accounting period in which they are incurred.
(ii) The Company''s contribution to the Provident Fund is remitted to a
separate trust established for this purpose based on a fixed percentage
of the eligible employee''s salary and debited to statement of Profit
and Loss. Further, the company makes provision as per actuarial
valuation towards any shortfall in fund assets to meet statutory rate
of interest in the future period , to becom pensated by the company
tothe Provident FundTrust.
(iii) Employee Benefits under Defined Benefit Plans in respect of leave
encashment, compensated absence, post retirement medical scheme, long
service award and other terminal benefits are recognized based on the
present value of defined benefit obligation, which is computed on the
basis of actuarial valuation using the Projected Unit Credit method.
Actuarial liability in excess of respective plan assets is recognized
during the year.
(iv) Provision for gratuity as per actuarial valuation is funded with a
separate trust.
1.14 Borrowing Cost
Borrowing cost of the funds specifically borrowed for the purpose of
obtaining qualifying assets and eligible for capitalization along with
the cost of the assets, is capitalized up to the date when the asset is
ready for use after netting off any income earned on temporary
investment of such funds
1.15 Taxes on Income
Provision for current tax is made as per the provisions of the Income
Tax Act, 1961. Deferred Tax Liability / Asset resulting from ''timing
difference'' between book profit and taxable profit is accounted for
considering the tax rate and laws that have been enacted or
substantively enacted as on the Balance Sheet date. Deferred Tax Asset,
if any, is recognized and carried forward only to the extent that there
is virtual certainty that the asset will be realized in future.
1.16 R&D Expenditure
All expenditure, other than on capital account, on research and
development are debited to statement of Profit and Loss.
1.17 Impairment
The Carrying amount of assets are reviewed at each Balance Sheet date.
In case 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.
1.18 Provisions, Contingent Liabilities, Contingent Assets & Capital
Commitments
(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 Assets are neither recognized nor disclosed in
the financial statements. Contingent liabilities exceeding Rs. 5 Lacs
in each case are disclosed by way of notes to accounts except when
there is remote possibility of any outflow in settlement.
(ii) Estimated amount of contracts remaining to be executed on capital
accounts are disclosed in each case above Rs. 5 Lacs
1.19 Exploration and Development Costs:-
i) The Company follows Successful Efforts Method for accounting of Oil
& Gas exploration and production activities, which includes:
a. Survey Costs are recognized as revenue expenditure in the year in
which these are incurred.
b. Cost of exploratory wells is carried as ''Exploratory wells in
progresses''. Such exploratory wells in progress are capitalized in the
year in which the Producing Property is created or is written off in
the year when determined to be dry / abandoned.
c. All wells appearing as "exploratory wells in progress" which are
more than two years old from the date of completion of drilling are
debited to statement of Profits and Loss except those wells which have
proved reserves and the development of the fields in which the wells
are located has been planned.
ii) Capitalization of Producing Properties
(i) Producing Properties are capitalised when the wells in the area /
field are ready to commence commercial production having proved
developed oil and gas reserves.
(ii) Cost of Producing Properties includes cost of successful
exploratory wells, development wells, initial depreciation of support
equipments & facilities and estimated future abandonment cost.
iii) Depletion of Producing Properties
Producing Properties are depleted using the "Unit of Production Method
(UOP)" The depletion or unit of production charged for all the
capitalized cost is calculated in the ratio of production during the
year to the proved developed reserves at the year end.
iv) Production cost of Producing Properties Company''s share of
production costs as indicated by Operator consists of pre well head and
post well head expenses including depreciation and applicable operating
cost of support equipment and facilities.
1.20 OTHERS
(i) Liquidated Damages / Price Reduction Schedule, if any, are
accounted for as and when recovery is effected and the matter is
considered settled by the Management. Liquidated damages / Price
Reduction Schedule, if settled, after capitalization of assets are
charged to revenue if below Rs. 50 lacs in each case, otherwise
adjusted in the cost of relevant assets.
(ii) Insurance claims are accounted for on the basis of claims admitted
by the insurers.
Mar 31, 2012
1.1. Accounting Convention
The financial statements are prepared on accrual basis of accounting
under historical cost convention in accordance with generally accepted
accounting principles in India and the relevant provisions of the
Companies Act, 1956 including accounting standards notified there
under.
1.2. Use of Estimates
The preparation of financial statements requires estimates and
assumptions which affect the reported amount of assets, liabilities,
revenues and expenses of the reporting period. The difference between
the actual results and estimates are recognized in the period in which
the results are known or materialized.
1.3. Inventories
(i) Raw materials and Finished products are valued at cost or net
realizable value, whichever is lower. Finished products include excise
duty and royalty wherever applicable.
(ii) Stock in process is valued at cost or net realizable value,
whichever is lower. It is valued at cost where the finished products in
which these are to be incorporated are expected to be sold at or above
cost.
(iii) Stores and spares and other material for use in production of
inventories are valued at weighted average cost or net realizable
value, whichever is lower. It is valued at weighted average cost where
the finished products in which they will be incorporated are expected
to be sold at/or above cost.
(iv) Surplus / Obsolete Stores and Spares are valued at cost or net
realizable value, which ever is lower.
(v) Surplus / Obsolete Capital Stores, other than held for use in
construction of a capital asset, are valued at lower of cost or net
realizable value.
1.4. Depreciation/Amortization
I. Depreciation on Fixed Assets other than those mentioned below is
provided in accordance with the rates as specified in Schedule XIV of
the Companies Act, 1956, on straight line method (SLM) on pro-rata
basis (monthly pro-rata for bought out assets).
(i) Assets costing up to Rs.5,000/- are depreciated fully in the year
of capitalization.
(ii) Bunk Houses are amortized on assumption of five years life.
(iii) Oil and Gas Pipelines including other related facilities are
depreciated @ 3.17% per annum on SLM basis based on useful life of 30
years.
(iv) Computers at the residence of the employees are depreciated @
23.75% per annum on SLM basis. Furniture, Electric Equipments and
Mobiles provided for the use of employees are depreciated @ 15% Per
annum on SLM basis.
(v) Cost of the leasehold land not exceeding 99 years is amortized over
the lease period.
(vi) Depreciation due to price adjustment in the original cost of fixed
assets is charged prospectively.
(vii) Capital expenditure on the assets (enabling facilities), the
ownership of which is not with the Company is charged off to Revenue.
(viii) Software / Licenses are amortized in 5 years on straight line
method.
(ix) No depreciation is being charged on ROU being perpetual in nature.
(x) After impairment of assets, if any, depreciation is provided on the
revised carrying amount of the assets over its remaining useful life.
II. Capital assets installed at the consumers premises on the land
whose ownership is not with the company, has been depreciated on SLM
basis in accordance with the rates as specified in Schedule XIV of the
Companies' Act, 1956.
1.5. Revenue recognition
(i) Sales are recognized on transfer of significant risks and rewards
of ownership to the buyer, which generally coincides with the delivery
of goods to customers. Sales include excise duty but exclude value
added tax. Any retrospective revision in prices is accounted for in the
year of such revision.
(ii) Income from Consultancy/Contract Services, if any, is recognized
based on Proportionate Completion Method.
(iii) Dividend income is accounted for when the right to receive it is
established.
(iv) Claims (including interest on delayed realization from customers)
are accounted for, when there is no significant uncertainty that the
claims are realizable.
(v) Liability in respect of MGO of Natural gas is not provided for
where the same is secured by MGO recoverable from customers.
Payments/receipts during the year on account of MGO are adjusted on
receipt basis.
(vi) Minimum charges relating to transportation of LPG are accounted
for on receipt basis.
(vii) Prepaid expenses and prior period expenses/income up to
Rs.1,00,000/- in each case are charged to relevant heads of account of
the current year.
1.6. Fixed Assets
(a) Fixed Assets are valued at historical cost on consistent basis and
are net of refundable taxes & levies wherever applicable. All costs
relating to acquisition of fixed assets till commissioning of such
assets are capitalized. In the case of commissioned assets where final
payment to the Contractors is pending, capitalization is made on
provisional basis, including provisional liability pending approval of
Competent Authority, subject to necessary adjustment in cost and
depreciation in the year of settlement.
(b) Machinery spares, which can be used only in connection with an item
of fixed asset and their use is expected to be irregular, are
capitalized with the cost of that fixed asset and are depreciated fully
over the remaining useful life of that asset.
1.7. Intangible Assets
Intangible assets like software, licenses and right-of-use of land
including sharing of ROU with other entities which are expected to
provide future enduring economic benefits are capitalized as Intangible
Assets.
1.8. Capital Work in Progress
(a) Crop compensation is accounted for under Capital Work-in-Progress
on the basis of actual payments/estimated liability, as and when work
commences where ROU is acquired.
(b) The capital work in progress includes material in Transit/ value of
materials / equipment/Services, etc. received at site for use in the
projects.
(c) Pre-project expenditure relating to Projects which are considered
unviable / closed is charged off to Revenue in the year of
declaration/closure.
1.9. Expenses Incurred During Construction Period
All revenue expenditure incurred during the year, which is exclusively
attributable to acquisition / construction of fixed assets, is
capitalized at the time of commissioning of such assets.
1.10. Foreign Currency Translation
(i) Transactions in foreign currency are accounted at the exchange rate
prevailing on the transaction date.
(ii) Monetary items (such as Cash, Receivables, Loans, Payables, etc.)
denominated in foreign currencies, outstanding at the year end, are
translated at exchange rates (BC Selling Rate for Payables and TT
Buying Rate for Receivables) prevailing at yearend.
(iii) Non monetary items (such as Investments, Fixed Assets, etc),
denominated in foreign currencies are accounted at the exchange rate
prevailing on the date of transaction(s).
(iv) Exchange differences (loss), arising from translation of foreign
currency loans relating to fixed assets to the extent regarded as an
adjustment to interest cost are treated as borrowing cost.
(v) Any gains or loss arising on account of exchange difference either
on settlement or on translation is accounted for in the Profit & Loss
account except in case of long term foreign currency monetary items
relating to acquisition of depreciable capital asset (other than
regarded as borrowing cost) in which case they are adjusted to the
carrying cost of such assets and in other cases, accumulated in
"Foreign Currency Monetary item Translation Difference Account" in the
Financial statements and amortized over the balance period of such long
terms asset or liability, by recognition as income or expenses in each
of such period.
1.11.Grants
In case of depreciable assets, the cost of the assets is shown at gross
value and grant thereon is taken to Capital Reserve which is recognised
as income in the Profit and Loss Account over the useful life period of
the asset.
1.12. Investments
Investments are classified into current and long term investments.
Current investments are stated at lower of cost or market value. Long
term investments are stated at cost and provision for diminution in
value is made only if such decline is other than temporary in the
opinion of management.
1.13. Employees Benefits
(i) All short term employee benefits are recognized at the undiscounted
amount in the accounting period in which they are incurred.
(ii) The Company's contribution to the Provident Fund is remitted to a
separate trust established for this purpose based on a fixed percentage
of the eligible employee's salary and charged to Statement of Profit
and Loss. Further, the company makes provision as per actuarial
valuation towards any shortfalls fund assets to meet statutory rate of
interest in the future period, to be compensated by the company to the
Provident Fund Trust.
(iii) Employee Benefits under Defined Benefit
Plans in respect of leave encashment, compensated absence, post
retirement medical scheme, long service award and other terminal
benefits are recognized based on the present value of defined benefit
obligation, which is computed on the basis of actuarial valuation using
the Projected Unit Credit method. Actuarial liability in excess of
respective plan assets is recognized during the year.
(iv) Provision for gratuity as per actuarial valuation is funded with a
separate trust.
1.14. Borrowing Cost
Borrowing cost of the funds specifically borrowed for the purpose of
obtaining qualifying assets and eligible for capitalization along with
the cost of the assets, is capitalized up to the date when the asset is
ready for use after netting off any income earned on temporary
investment of such funds.
1.15.Taxes on Income
Provision for current tax is made as per the provisions of the Income
Tax Act, 1961. Deferred Tax Liability / Asset resulting from 'timing
difference' between book and taxable profit is accounted for
considering the tax rate and laws that have been enacted or
substantively enacted as on the Balance Sheet date. Deferred Tax Asset,
if any, is recognized and carried forward only to the extent that there
is virtual certainty that the asset will be realized in future.
1.16.R&D Expenditure
All expenditure, other than on capital account, on research and
development are charged to Profit and Loss Account.
1.17.Impairment
The Carrying amounts of assets are reviewed at each Balance Sheet date.
I n case 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.
1.18.Provisions, Contingent Liabilities, Contingent Assets & Capital
Commitments
(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 Assets are neither recognized nor disclosed
in the Financial statements. Contingent liabilities exceeding Rs. 5
Lacs in each case are disclosed by way of notes to accounts except when
there is remote possibility of any out flow in settlement..
(ii) Estimated amount of contracts remaining to be executed on Capital
accounts are disclosed in each case above Rs.5 Lacs.
1.19.Exploration and Development Costs:-
i) The Company follows Successful Efforts Method for accounting of Oil
& Gas exploration and production activities, which includes:-
a. Survey Costs are recognized as revenue expenditure in the year in
which these are incurred.
b. Cost of exploratory wells is carried as 'Exploratory wells in
progresses'. Such exploratory wells in progress are capitalized in the
year in which the Producing Property is created or is written off in
the year when determined to bedry/abandoned.
c. All wells appearing as "exploratory wells in progress" which are
more than two years old from the date of completion of drilling are
charged to Profits and Loss Account except those wells which have
proved reserves and the development of the fields in which the wells
are located has been planned.
Mar 31, 2011
1. Accounting Convention
The financial statements are prepared on accrual basis of accounting
under historical cost convention in accordance with generally accepted
accounting principles in India and the relevant provisions of the
Companies Act, 1 956 including accounting standards notified there
under.
2. Use of Estimates
The preparation of financial statements requires estimates and
assumptions which affect the reported amount of assets, liabilities,
revenues and expenses of the reporting period.The difference between
the actual results and estimates are recognized in the period in which
the results are known or materialized.
3. Fixed Assets
Fixed Assets are valued at historical cost on consistent basis and are
net of refundable taxes & levies wherever applicable. All costs
relating to acquisition of fixed assets till commissioning of such
assets are capitalized. In the case of commissioned assets where final
payment to the Contractors is pending, capitalization is made on
provisional basis, including provisional liability pending approval of
Competent Authority, subject to necessary adjustment in cost and
depreciation in the year of settlement.
4. Intangible Assets
Intangible assets like software, licenses and right-of-use of land
including sharing of ROD with other entities which are expected to
provide future enduring economic benefits are capitalized as intangible
Assets.
5. Capital Work in Progress
a. Crop compensation is accounted for under Capital Work-in- Progress
on the basis of actual payments/estimated liability, as and when
work commences where ROD is acquired.
b. The capital work in progress includes advance for capital goods/
material in Transit/value of materials /equipment etc. received at site
for use in the projects
6. Borrowing Cost
Borrowing cost of the funds specifically borrowed for the purpose of
obtaining qualifying assets and eligible for capitalization along with
the cost of the assets, is capitalized up to the date when the asset is
ready for use after netting off any income earned on temporary
investment of such funds.
7. Expenses Incurred During Construction Period
All revenue expenditure incurred during the year, which is exclusively
attributable to acquisition / construction of fixed assets, is
capitalized at the time of commissioning of such assets.
8. Depreciation/Amortisation
I. Depreciation on Fixed Assets other than those mentioned below is
provided in accordance with the rates as specified in Schedule XIV of
the Companies Act, 1956, on straight line method (SLM) on pro-rata
basis (monthly pro-rata for bought out assets).
a. Assets costing upto X 5,000/- are depreciated fully in the year of
capitalisation.
b. Bunk Houses are amortised on assumption of five years life.
c. Oil and Gas Pipelines including other related facilities are
depreciated
d. Computers at the residence of the employees are depreciated
e. Cost of the leasehold land not exceeding 99 years is amortised over
the lease period.
f. Depreciation due to price adjustment in the original cost of fixed
assets is charged prospectively.
g. Capital expenditure on the assets (enabling facilities), the
ownership of which is not with the Company, is charged off to Revenue.
h. Software/Licences are amortised in 5 years on straight line method.
i. No depreciation is being charged on ROD being perpetual in nature.
j. After impairment of assets, if any, depreciation is provided on the
revised carrying amount of the assets over its remaining useful life.
II. Capital assets installed at the consumers premises on the land
whose ownership is not with the company, has been depreciated on SLM
basis in accordance with the rates as specified in Schedule XIV of the
Companies Act, 1956.
9. Foreign Currency Translation
a). Transactions in foreign currency are accounted at the exchange
rate prevailing on the transaction date.
b). Monetary items (such as Cash, Receivables, Loans, Payables, etc.)
denominated in foreign currencies, outstanding at the year end, are
translated at exchange rates (BC Selling Rate for Payables and TT
Buying Rate for Receivables) prevailing at year end.
c). Non monetary items (such as Investments, Fixed Assets, etc),
denominated in foreign currencies are accounted at the exchange rate
prevailing on the date of transaction(s).
d). Any gains or loss arising on account of exchange difference either
on settlement or on translation is accounted for in the Profit & Loss
account.
10. Investments
Investments are classified into current and long term investments.
Current investments are stated at lower of cost or market value. Long
term investments are stated at cost and provision for diminution in
value is made only if such decline is other than temporary in the
opinion of management.
11. Inventories
a. Raw materials and Finished products are valued at cost or net
realisable value, whichever is lower. Finished products include excise
duty and royalty wherever applicable.
b. Stock in process is valued at cost or net realisable value,
whichever is lower. It is valued at cost where the finished products in
which these are to be incorporated are expected to be sold at or above
cost.
c. Stores and spares and other material for use in production of
inventories are valued at weighted average cost or net realisable
value, whichever is lower. It is valued at weighted average cost where
the finished products in which they will be incorporated are expected
to be sold at/or above cost.
d. Surplus / Obsolete Stores and Spares are valued at cost or net
realisable value, which ever is lower.
e. Surplus/Obsolete Capital Stores, other than held for use in
construction of a capital asset, are valued at lower of cost or net
realisable value.
12. Machinery spares, which can be used only in connection with an
item of fixed asset and their use is expected to be irregular, are
capitalised with the cost of that fixed asset and are depreciated fully
over the remaining useful life of that asset.
13. Grants
In case of depreciable assets, the cost of the assets is shown at gross
value and grant thereon is taken to Capital Reserve which is recognised
as income in the Profit and Loss Account over the useful life period of
the asset.
14. Sale proceeds are accounted for based on the consumer price
inclusive of Statutory Levies and charges upto the place where
ownership of goods is transferred.
15. Income from Consultancy/Contract Services, if any, is recognized
based on Proportionate Completion Method.
16. The interest allocable to operations in respect of assets
commissioned during the year is worked out by adopting the average of
debt equity ratios at the beginning and closing of that year and
applying the average ratio of debt thus worked out to the capitalised
cost.
17. Pre-project expenditure relating to Projects which are considered
unviable/closed is charged off to Revenue in the year of
declaration/closure.
18. Employees Benefits
a. All short term employee benefits are recognized at the undiscounted
amount in the accounting period in which they are incurred.
b. The Company's contribution to the Provident Fund is remitted to a
separate trust established for this purpose based on a fixed percentage
of the eligible employee's salary and charged to Profit and Loss
Account. Further, the company makes provision as per actuarial
valuation towards any shortfall in fund assets to meet statutory rate
of interest in the future period, to be compensated by the company to
the Provident Fund Trust..
c Employee Benefits under Defined Benefit Plans in respect of leave
encashment, compensated absence, post retirement medical scheme, long
service award and other terminal benefits are recognized based on the
present value of defined benefit obligation, which is computed on the
basis of actuarial valuation using the Projected Unit Credit method.
Actuarial liability in excess of respective plan assets is recognized
during the year.
d. Provision for gratuity as per actuarial valuation is funded with a
separate trust.
19. Taxes on Income
Provision for current tax is made as per the provisions of the Income
Tax Act, 1961. Deferred Tax Liability/Asset resulting from'timing
difference between bookand taxable profit is accounted for considering
the tax rate and laws that have been enacted or substantively enacted
as on the Balance Sheet date. Deferred Tax Asset, if any, is recognized
and carried forward only to the extent that there is virtual certainty
that the asset will be realized in future.
20. R&D Expenditure
All expenditure, other than on capital account, on research and
development are charged to Profit and Loss Account.
21. Exploration and Development Costs :-
i) The Company follows Successful Efforts Method for accounting of Oil
& Gas exploration and production activities, which includes:-
a. Survey Costs are recognized as revenue expenditure in the year in
which these are incurred.
b. Cost of exploratory wells is carried as'Exploratory wells in
progresses'. Such exploratory wells in progress are capitalized in the
year in which the Producing Property is created or is written off in
the year when determined to be dry/abandoned.
c. All wells appearing as "exploratory wells in progress"which are
more than two years old from the date of completion of drilling are
charged to Profits and Loss Account except those wells which have
proved reserves and the development of the fields in which the wells
are located has been planned.
ii) Capitalization of Producing Properties
a. Producing Properties are capitalised when the wells in the area /
field are ready to commence commercial production having proved
developed oil and gas reserves.
b. Cost of Producing Properties includes cost of successful
exploratory wells, development wells, initial depreciation of support
equipments & facilities and estimated future abandonment cost.
iii) Depletion of Producing Properties
Producing Properties are depleted using the "Unit of Production Method
(UOP)". The depletion or unit of production charged for all the
capitalized cost is calculated in the ratio of production during the
year to the proved developed reserves at the year end.
iv) Production cost of Producing Properties
Company's share of production costs as indicated by Operator consists
of pre well head and post well head expenses including depreciation and
applicable operating costs of support equipment and facilities.
22. Provisions, Contingent Liabilities, Contingent Assets & Capital
Commitments
a. 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 bean outflow
of resources. Contingent Assets are neither recognized nor disclosed in
the financial statements. Contingent liabilities exceedingRs 5 Lacs in
each case are disclosed by way of notes to accounts except when there
is remote possibility of any outflow in settlement.
b. Estimated amount of contracts remaining to be executed on capital
accounts are disclosed in each case above X 5 Lacs.
23. Impairment
The Carrying amounts of assets are reviewed at each Balance Sheet date.
In case 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.
GENERAL
24. Prepaid expenses and prior period expenses/income uptoRs 1,00,000/-
in each case are charged to relevant heads of account of the current
year.
25. Liquidated Damages / Price Reduction Schedule, if any, are
accounted for as and when recovery is effected and the matter is
considered settled by the Management. Liquidated damages / Price
Reduction Schedule, if settled, after capitalization of assets are
charged to revenue if belowRs 50 lacs in each case, otherwise adjusted
in the cost of relevant assets.
26. Insurance claims are accounted for on the basis of claims admitted
by the insurers.
27. a Claims (including interest on delayed realization from
customers) are accounted for, when there is no significant uncertainty
that the claims are realizable.
b. Liability in respect of MGO of Natural gas is not provided for where
the same is secured by MGO recoverable from customers.
Payments/receipts during the year on account of MGO are adjusted on
receipt basis.
c. Minimum charges relating to transportation of LPG are accounted for
on receipt basis.
Mar 31, 2010
1. Accounting Convention
The financial statements ate prepared on accrual basis of accounting
under historical cost convention in accordance with generally accepted
accounting principles in India and the relevant provisions of the
Companies Act, 1956 including accounting standards notified there
under.
2. Use of Estimates
The preparation of financial statements requites estimates and
assumptions which affect the repotted amount of assets, liabilities.
revenues and expenses of the reporting period. The difference between
the actual results and estimates are recognized in the period m which
the results are known or materialized.
3. Fixed Assets
Fixed Assets are valued at historical cost on consistent basis and ate
net of refundable taxes & levies wherever applicable. All costs
relating to acquisition of fixed assets till commissioning of such
assets ate capitalized. in the case of commissioned assets where final
payment to the Contractors is pending, capitalization is made on
provisional basis, including provisional liability pending apptoval of
Competent Authority, subject to necessary adjustment in cost and
depreciation in the year of settlement.
4. Intangible Assets
intangible assets like software, licenses and right-of-use of land
including sharing of ROU with other entities which are expected to
provide future enduring economic benefits are capitalized as intangible
Assets.
5. Capital Work in Progress
a. Crop compensation is accounted for under Capital Work-in-Progress
on the basis of actual payments/estimated liability, as and when work
commences where ROU is acquired.
b The capital work in progress includes advance for capital goods/
material in Transit/ value of materials / equipment etc. received at
site for use in the projects
6. Borrowing Cost
Borrowing cost of the funds specifically borrowed for the purpose of
cost of the assets, is capitalized up to the date when the asset is
ready fot use after netting off any income earned on temporary
investment of such funds.
7. Expenses Incurred During Construction Period
All revenue expenditure incurred during the year, which is exclusively
attributable to acquisition / construction of fixed assets, is
capitalized at the time of commissioning of such assets.
8. Depreciation / Amortisation
I. Depreciation on Fixed Assets other than those mentioned below Is
provided in accordance with the rates as specified in Schedule Xiv of
the Companies Act, 1956, on straight line method (SLM) on pro-rata
basis (monthly prorata for bought out assets).
a. Assets costing upto Rs5.00Q/- are depreciated fully in the year of
capitalisation.
b. Bunk Houses are amortised on assumption of five years life.
c. Oil and Gas Pipelines including other related facilities ate
depreciated & 3.17% per annum on SLM basis based on useful life of 30
years.
d. Computers at the residence of the employees are depreciated @ 2375%
per annum on SLM basis. Furniture. Electric Equipments and Mobiles
provided for the use of employees are depreciated 4* 15% per annum on
SLM basis.
e. Cost of the leasehold land not exceeding 99 years is amortised over
the lease period.
f. Depreciation due to price adjustment in the original cost of fixed
assets is charged prospectively.
g. Capital expenditure on the assets (enabling facilities), the
ownership of which is not with the Company, is charged off to Revenue.
h. Software / Licences are amortised in 5 years on straight line
method.
i. No depreciation is being charged on ROU being perpetual in nature.
j. After impairment of assets, if any, depreciation is provided on the
revised carrying amount of the assets over its remaining useful life.
II. Capital assets installed at the consumers premises on the land
whose ownership is not with the company, has been depreciated on SLM
basis in accordance with the rates as specified in Schedule XfV of the
Companys Act, 1956.
9. Foreign Currency Translation
a). Transactions in foreign currency are accounted at the exchange
rate prevailing on the transaction date.
b). Monetary items (such as Cash, Receivables, Loans, Payables, etc}
denominated in foreign currencies, outstanding at the year end, are
translated at exchange rates (BC Selling Rate for Payables and TT
Buying Rate for Receivables) prevailing at year end.
c). Won monetary items (such as Investments, Fixed Assets, etc),
denominated in foreign currencies are accounted at the exchange rate
prevailing on the date of transaction(s).
d) Any gains or loss arising on account of exchange difference either
on settlement or on translation is accounted for in the Profit & Loss
account.
10. Investments
Investments are classified into current and long term investments.
Current investments are stated at lower of cost or market value. Long
term investments are stated at cost and provision for diminution in
value is made only if such decline is other than temporary in the
opinion of management.
11. Inventories
a) Raw materials and Finished products ate valued at cost or net
realisable value, whichever is lower. Finished products include excise
duty and royalty wherever applicable.
b) Stock in process is valued at cost or net realisable value,
whichever is lower. Ii is valued ai cost where ihe finished products m
which these are to be incorporated are expected to be sold at or above
cost.
c) Stores and spares and other material for use in production of
inventories are valued at weighted average cost or net realisable
value, whichever is lower. It is valued at weighted average cost where
the finished products in which they will be incorporated are expected
to be sold at/or above cost.
d) Surplus / Obsolete Stores and Spares are valued at cost or net
realisable value, which ever is lower.
e) Surplus /Obsolete Capital Stores, other than held for use in
construction of a capital asset, are valued at lower of cost or net
realisable value.
12. Machinery spares, which can be used only in connection with an
item of fixed asset and their use is expected to be irregular, are
capitalised with the cost of that fixed asset and ate depreciated fully
over the remaining useful life of that asset.
13. Grants
In case of depreciable assets, the cost of the assets is shown at gross
value and grant thereon is taken to Capital Reserve which is recognised
as income in the Profit and Loss Account over the useful life period of
the asset.
14. Sale proceeds are accounted for based on the consumer price
inclusive of Statutory Levies and charges upto the place where
ownership of goods is transferred.
15. Income from Consultancy/Contract Services, if any, is recognized
based on Proportionate Completion Method.
16. The interest allocable to operations in respect of assets
commissioned during the year is worked out by adopting the average of
debt equity ratios at the beginning and closing of that year and
applying the average ratio of debt thus worked out to the capitalised
cost.
17. Pre- project expenditure relating to Projects which are considered
unviable/ closed is charged off to Revenue in the year of
declaration/closure.
18. Employees Benefits
a. All short term employee benefits are recognized at there
undiscounted amount in the accounting period in which they are
incurred.
b. Employee Benefits under Defined Contribution Plan in respect of
provident fund is recognized based on the undiscounted obligation of
the company towards contribution to the fund. The same is paid to the
provident fund which is administered through a separate trust.
c. Employee Benefits under Defined Benefit Plans in respect of leave
encashment, compensated absence, post retirement medical scheme, long
service award and other terminal benefits are recognized based on the
present value of defined benefit obligation, which is computed on the
basis of actuarial valuation using the Projected Unit Credit method.
Actuarial liability in excess of respective plan assets is recognized
during the year.
d. Provision for gratuity as per actuarial valuation is funded with a
separate trust.
19. Taxes on Income
Provision for current tax is made as per the provisions of the Income
Tax Act, 1961. DeferredTax Liability/ Asset resulting from timing
difference between book and taxable profit is accounted for
considering the tax rate and laws that have been enacted or
substantively enacted as on the Balance Sheet date. Deferred Tax Asset,
if any. is recognized and carried forward only to the extent that there
is virtual certainty that the asset will be realized in future.
20. R&D Expenditure
All expenditure, other than on capital account, on research and
development are charged to Profit and Loss Account.
21. Exploration and Development Costs:-
i) The Company follows Successful Efforts Method for accounting of Oil
& Gas exploration and production activities, which includes:-
a. Survey Costs are recognized as revenue expenditure in the year in
which these are incurred.
b. Cost of exploratory wells is carried as Exploratory wells in
progresses. Such exploratory wells in progress are capitalized in the
year in which the Producing Property is created or is written off in
the year when determined to be dry/ abandoned.
c. All wells appearing as exploratory wells in progresswhich are
more than two years old from the date of completion of drilling are
charged to Profits and Loss Account except those wells which have
proved reserves and the development of the fields in which the wells
are located has been planned.
ii) Capitalization of Producing Properties
a. Producing Properties are capitalised when the wells in the area /
field are ready to commence commercial production having proved
developed oil and gas reserves.
b. Cost of Producing Properties includes cost of successful
exploratory wells, development wells, initial depreciation of support
equipments & facilities and estimated future abandonment cost.
iii) Depletion of Producing Properties
Producing Properties are depleted using the Unit of Production Method
(UOP).The depletion or una of production charged for all the
capitalized cost is calculated in the ratio of production during the
year to the proved developed reserves at the year end.
iv) Production cost of Producing Properties
Companys share of production costs as indicated by Operator consists
of pre well head and post well head expenses including depreciation and
applicable operating costs of support equipment and facilities.
22. Provisions, Contingent Liabilities, Contingent Assets & Capital
Commitments
a. 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 Assets are neither recognized nor disclosed in
the financial statements. Contingent liabilities exceeding Rs. 5 Lacs
in each case are disclosed by way of notes to accounts.
b. Estimated amount of contracts remaining to be executed on capital
accounts are disclosed in each case above Rs S Lacs.
23. Impairment
The Carrying amounts of assets are reviewed at each Balance Sheet date.
In case 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.
GENERAL
24. Prepaid expenses and prior period expenses/income upto Rs.
1.00.000/- in each case are charged to relevant heads of account of the
current year.
25. Liquidated Damages / Price Reduction Schedule, if any. are
accounted for as and when recovery is effected and the matter is
considered settled by the Management. Liquidated damages / Price
Reduction Schedule, if settled, after capitalization of assets are
charged to revenue if below Rs. 50 lacs in each case, otherwise
adjusted m the cost of relevant assets.
26. Insurance claims are accounted for on the basis of claims admitted
by the insurers.
27. a Claims (including interest on delayed realization from
customers) are accounted for, when there is no significant uncertainty
that the claims are realizable.
b Liability in respect of MGO of Natural gas is not provided for where
the same is secured by MGO recoverable from customers.
Payments/receipts during the year on account of MGO are adjusted on
receipt basil
c. Minimum charges relating to transportation of LPG are accounted for
on receipt basis.
1. Estimated amount of Contracts remaining to be executed on Capital
Account and not provided Tor:
i) Estimated amount of contracts remaining to be executed on capital
account and not provided for: Rs 484804 Gores (Previous Year: Rs
2890.08 Crores).
ii) Companys share in estimated amount of contracts remaining to be
executed and not provided for based on audited/unaudited statement of
accounts of Joint Ventures Rs. 1569.98 Crores (Previous Year: Rs.34058
Crores).