A.  ACCOUNTING CONVENTIONS AND CONCEPTS
 
 Financial statements are prepared based on historical cost convention
 and on the basis of a going concern and comply with the Accounting
 Standards refered to in Section 211(3C) of the Companies Act,1956. The
 Company follows mercantile system of accounting and recognises income
 and expenditure on an accrual basis.
 
 B.  USE OF ESTIMATES
 
 The preparation of the financial statements in conformity with the
 Generally Accepted Accounting Principals (GAAP) requires that the
 management makes prudent and reasonable estimates and assumptions that
 may affect the reported amounts of assets and liabilities, disclosure
 of contingent liabilities as at the date of the financial statements,
 and the reported amounts of revenue and expenses during the reported
 period. Actual results may differ from those estimates and such
 differences are accounted in the period in which they arise.
 
 C.  FIXED ASSETS
 
 Fixed Assets are capitalised at cost inclusive of installation expenses
 and interest upto the date the asset is put to use. The Foreign
 Exchange differences, in respect of Foreign Currency Loans /
 Liabilities relating to acquisition of Fixed Assets, are accounted in
 the Profit and Loss Account. Capital Work in Progress include the cost
 of Fixed Assets, that are not ready for use at the Balance Sheet date,
 and advances paid to acquire Fixed Assets before the Balance Sheet
 date.
 
 D.  DEPRECIATION
 
 Depreciation on Fixed Assets is provided on Straight Line basis at
 rates prescribed in Schedule XIV of the Companies Act,1956 on a
 pro-rata basis. Depreciation on Drillship is provided at a higher rate
 of 11.31% p.a and on windmills a higher rate of 10% p.a on straight
 line method based on technical evaluation of the expected useful life
 of the respective assets.
 
 E.  INVENTORY VALUATION
 
 Inventory of Stores, Spares & Fuel are valued at cost based on ''First
 in First out'' Cost formula / Weighted average method as applicable.
 
 F.  REVENUE RECOGNITION
 
 Income from drilling and production services is recognised as earned,
 based on contractual day rate billed on a monthly basis. Mobilisation /
 demobilisation fees if any, is recognised as earned in the year of
 mobilisation / demobilisation. Income from wind power generation is
 recognised based on the number of units of power generated every month
 at contracted rates.
 
 Interest income is recognised on a time proportion basis, taking into
 account the amount outstanding loan and the applicable rate. Dividend
 income is recognised when the Company''s right to receive the dividend
 is established.
 
 G.  FOREIGN CURRENCY TRANSACTIONS AND DERIVATIVES
 
 Transactions in foreign currency are recorded at the exchange rate
 prevailing on the date of transaction. Realised gains and losses on
 foreign exchange transactions during the year are recognised in the
 profit and Loss account. Exchange differences in respect of foreign
 currency loans/liabilities relating to Fixed Assets are accounted in
 the Profit and Loss Account.
 
 Foreign currency current assets and current liabilities are translated
 at year end rates. In circumstances, where the year end rate is not
 stable / highly volatile, monetary items shall be reported based on the
 subsequent actual realisation rate. Resulting gains / losses are
 recognised in the profit and Loss Account. Non monetary items such as
 Investments / Fixed Assets, denominated in foreign currency are
 transtated at exchange rate prevailing on the date of transaction.
 
 In the case of forward exchange contracts / options relating to foreign
 currencies:
 
 a.  The premium or discount on all such contracts arising at the
 inception of each contract is amortised as expense or income over the
 life of the contract.
 
 b.  Any profit or loss arising on the cancellation of such contracts is
 recognised as income / expense under respective head of account for the
 period.  c.  In respect of derivative contracts, gains / losses on any
 such contracts, is recognised in the Profit and Loss Account.
 
 H.  INVESTMENTS
 
 (a) Long Term Quoted Investments are stated at cost unless there is a
 permanent fall in the value. A provision for dimunition is made to
 recognise a decline other than temporary, in the value of Long Term
 Investments.
 
 (b) Long Term Unquoted Investments in Subsidiary Companies and
 investment in Joint Venture Company and other investments of long term
 nature are stated at cost and no loss is recognised in the fall in
 their net worth unless there is a permanent fall in their net worth.
 However, a provision for dimunition in value of investment is made if a
 material fall in net worth is anticipated.
 
 (c) Current Investments are stated at lower of cost and fair value of
 the category of such investments.
 
 I.  PROPOSED DIVIDEND
 
 The Dividend as proposed by the board of directors, including tax
 thereon is provided in the books of account pending approval at the
 Annual General Meeting.
 
 J.  EMPLOYEE BENEFITS
 
 (a) Contribution to Provident Fund, which is a defined contribution
 retirement plan, is made monthly at predetermined rate to the Provident
 Fund authorities and debited to the Profit and Loss Account on accrual
 basis.
 
 (b) Contribution to Super annuation scheme, which is a defined
 contribution retirement plan, is made annually at predetermined rate to
 Insurance Companies, which administer the fund and debited to Profit
 and Loss Account.
 
 (c) Company makes annual contribution to Gratuity funds administered by
 Insurance Companies, which is considered as defined benefit plan. The
 present value of the defined benefit is measured using the ''Projected
 unit Credit'' Method with actuarial valuation being carried out at each
 Balance Sheet date by an independent valuer. Actuarial gain and losses
 are immediately recognised in the Profit and Loss Account. Amount of
 contribution, computed by the insurers is paid by the Company and
 charged to Profit and Loss Account. No additional liability is
 anticipated under the scheme administered by the insurance Companies.
 
 (d) The Company makes provision for leave encashment based on actuarial
 valuation carried out by an Independant actuary at each Balance Sheet
 date.
 
 K.  BORROWING COST
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalised as part of the cost
 of such assets. A qualifying asset is one that necessarily takes
 substantial period of time to get ready for intended use. All other
 borrowing costs are charged to revenue.
 
 L.  TAXES ON INCOME
 
 The Income tax provision comprises of current tax and deferred tax.
 Current tax is the amount of tax payable in respect of income for the
 period. In accordance with the Accounting Standard - 22 - Accounting
 for Taxes on Income of the Companies (Accounting Standards) Rules, 2006
 the Deferred Tax on timing difference between book profit and tax
 profit for the period is accounted based on the rates and laws that
 have been enacted or substantially enacted as on the Balance Sheet
 date. However deferred tax assets arising from timing difference are
 recognised to the extent of virtual / reasonable certainity about its
 realisability in future years.
 
 M.  IMPAIRMENT OF ASSETS
 
 An Asset is treated as impaired when the carrying cost of the asset
 exceeds its recoverable value. An impairment loss is charged to Profit
 & Loss Account in the period in which an asset is identified as
 impaired. The impairment loss recognised in prior accounting period is
 reversed if there has been a change in the estimate of recoverable
 value.
 
 N.  PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
 
 The Company provides for all liabilities except liabilities of a
 contingent nature, which will be disclosed at their estimated values in
 the notes to accounts. Contingent Assets are neither recognised nor
 disclosed in the financial statements.