1.  BASIS OF PREPARATION
 
 1.1 The financial statements are prepared under historical cost
 convention in accordance with the accounting standards notified by the
 Companies (Accounting Standards) Rules, 2006 and the provisions of the
 Companies Act, 1956.
 
 1.2 The preparation of financial statements requires the management to
 make estimates and assumptions that affect the reported amount of
 assets, liabilities and disclosure of contingent liabilities as at the
 date of the financial statements. Management believes that these
 estimates and assumptions are reasonable and prudent.  However, actual
 results could differ from estimates.
 
 2.  FIXED ASSETS
 
 2.1 Land
 
 Land acquired on lease for over 99 years and on perpetual lease is
 treated as freehold land.
 
 2.2 Technical know-how / license fee
 
 Technical know-how / license fee relating to plants/facilities are
 capitalised as part of cost of the underlying asset.
 
 2.3 Capitalisation of construction period expenses
 
 (a) Revenue expenses exclusively attributable to projects incurred
 during the year of construction period are capitalised.
 
 (b) Financing cost incurred during the construction period on loans
 specifically borrowed and utilised for projects is capitalised on
 quarterly basis at the actual borrowing rates.
 
 Financing cost, if any, incurred on general borrowings used for
 projects is capitalised at the weighted average cost.
 
 (c) Capital stores are valued at cost. Specific provision is made for
 likely diminution in value, wherever required.
 
 2.4 Depreciation / Amortisation
 
 (a) Depreciation on fixed assets is provided in accordance with the
 rates as specified in Schedule XIV to the Companies Act, 1956, on
 straight-line method, upto 95% of the cost of the asset other than
 Insurance Spares which are depreciated upto 100%. Depreciation is
 charged pro-rata on quarterly basis on assets, from/upto the quarter of
 capitalisation/sale, disposal and dismantled during the year.
 
 (b) Assets costing not more than Rs 5000/- each are depreciated in full
 in the year of addition.
 
 (c) Capital expenditure on assets, on which the ownership and control
 that does not vest with the company are charged to revenue in the year
 in which it is incurred.
 
 (d) Cost of leasehold land (including premium) for 99 years or less is
 amortised during the lease period.
 
 3.  IMPAIRMENT OF ASSETS
 
 Carrying amount of cash generating units/assets is reviewed for
 impairment. Impairment, if any, is recognised where the carrying amount
 exceeds the recoverable amount.
 
 4.  INTANGIBLE ASSETS
 
 (a) Technical know -how / license fee relating to production process
 and process design are accounted for as intangible assets and amortized
 on a straight line basis over a period of ten years or life of the said
 plant/ facility, whichever is earlier.
 
 (b) Expenditure incurred on Research and Development, other than on
 capital account, is charged to revenue.
 
 (c) Costs incurred on computer software purchased/developed on or after
 1st April 2003, resulting in future economic benefits are capitalised
 as Intangible Asset and amortised over a period of three years
 beginning from the quarter in which such software is capitalised.
 However, where such computer software is still in development stage,
 costs incurred during the development stage of such software are
 accounted as Work-in Progress - Intangible Assets.
 
 (d) Cost of Right of Way for laying pipelines is capitalised and where
 Right of Way is of perpetual nature, not amortised.
 
 5.  BORROWING COST
 
 Borrowing costs that are attributable to the acquisition and
 construction of the qualifying asset are capitalized as part of the
 cost of such assets. A qualifying asset is one that necessarily takes
 substantial period of time to get ready for intended use. All other
 borrowing costs are charged to revenue.
 
 6.  INVESTMENTS
 
 Long-term investments are carried at cost and provision for diminution
 in the value thereof, other than temporary in nature, is accounted.
 
 Current investments are carried at lower of cost or market value.
 
 7.  CURRENT ASSETS, LOANS AND ADVANCES 7.1 Valuation of Inventories
 
 (a) Raw materials Crude oil - At cost (on weighted average basis) or
 net realisable value whichever is lower.
 
 (b) Stock-in-process
 
 At raw material cost plus fifty percent of the cost of conversion, as
 applicable or net realisable value, whichever is lower.
 
 (c) Finished products
 
 Finished products are valued at cost on First in First out basis or net
 realisable value, whichever is lower.  Cost of finished products is
 determined based on crude cost and processing cost.
 
 (d) Stores and Spares
 
 Stores and Spares are valued at weighted average cost. In case of
 declared surplus/obsolete stores and spares, provision is made for
 likely loss on sale/disposal and charged to revenue. Necessary
 provisions are also made in respect of non-moving stores and spares
 after review.
 
 Stores and Spares in transit are valued at cost.
 
 (e) Imported Products in-transit and Crude Oil in-transit
 
 Imported products in-transit and crude oil in-transit are valued at CIF
 cost or net realisable value, whichever is lower.
 
 8.  FOREIGN CURRENCY TRANSLATION
 
 (a) Transactions in foreign currency are recorded at exchange rates
 prevailing on the date of transactions.
 
 (b) Monetary items denominated in foreign currencies (such as cash,
 receivables, payables etc) outstanding at the year-end, are translated
 at exchange rates applicable as of that date.
 
 (c) Non-monetary items denominated in foreign currency, (such as
 investments, fixed assets etc) are valued at the exchange rate
 prevailing on the date of transaction.
 
 (d) Any gains or losses arising due to exchange differences at the time
 of translation or settlement are recognized as income or as expense in
 the period in which, they arise.
 
 (e) Premium/discount arising at the inception of the forward exchange
 contracts entered into to hedge foreign currency risks are amortised 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.
 
 9.  CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS 
 
 9.1 CONTINGENT LIABILITIES
 
 (a) Show Cause Notices issued by various Government Authorities are not
 considered as Obligation.
 
 (b) When the demand notices are raised against such show cause notices
 and are disputed by the Corporation, then these are classified as
 disputed obligations.
 
 (c) The treatment in respect of disputed obligations, in each case
 above Rs.5 Lakhs, is as under:
 
 i) A provision is recognized in respect of present obligations where
 the outflow of resources is probable.
 
 ii) All other cases are disclosed as contingent liabilities unless the
 possibility of outflow of resources is remote.
 
 9.2 CAPITAL COMMITMENTS
 
 Estimated amount of contracts remaining to be executed on capital
 accounts are disclosed in each case above Rs.5 Lakhs.
 
 10. PROFIT AND LOSS ACCOUNT
 
 (a) Claims on Petroleum Planning and Analysis Cell (Formerly known as
 Oil Coordination Committee)/ Government arising on account of erstwhile
 Administered Pricing Mechanism / notified schemes are booked on
 acceptance in principle thereof. Such claims and provisions are booked
 on the basis of available instructions/clarifications subject to final
 adjustment as per separate audit.
 
 (b) Other claims (including interest on outstanding) are accounted: 
 
 i) When there is certainty that the claims are realizable
 
 ii) Generally at cost
 
 (c) Prepaid Expenses upto Rs.5,00,000/- in each case is charged to
 revenue.
 
 (d) Income and expenditure are disclosed as prior period items only
 when the value exceeds Rs.5,00,000/- in each case.
 
 11.  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
 is recognized and carried forward only to the extent that there is
 virtual certainty that the asset will be realized in future.
 
 12. EMPLOYEE BENEFITS 
 
 12.1SHORT TERM BENEFITS:
 
 Short Term Employee Benefits are accounted in the period during which
 the services have been rendered.
 
 12.2 POST-EMPLOYMENT BENEFITS AND OTHER LONG TERM EMPLOYEE BENEFITS:
 
 (a) The Company''s contribution to the Provident Fund is remitted to
 separate trust established for this purpose based on a fixed percentage
 of the eligible employee''s salary and charged to Profit and Loss
 Account.  Shortfall, if any, in the fund assets, based on the
 Government specified minimum rate of return, will be made good by the
 Company and charged to profit and loss account.
 
 (b) The company operates defined benefit plans for gratuity. The cost
 of providing such defined benefits is determined using the projected
 unit credit method of actuarial valuation made at the end of the year
 and is administered through a fund maintained by Insurance Company.
 Actuarial gains/losses are charged to Profit and Loss account.
 
 (c) The liability of the company in respect of superannuation scheme is
 restricted to the fixed contribution paid by the corporation on a
 monthly basis towards the defined contribution scheme maintained by
 Insurance Company, which is charged off to revenue.
 
 (d) Obligations on compensated absences, Post Retirement Medical
 Benefits and Long Service Awards are provided using the projected unit
 credit method of actuarial valuation made at the end of the year.
 
 12.3 TERMINATION BENEFITS:
 
 Payments made under Voluntary Retirement Scheme are charged to Profit
 and Loss Account.
 
 13.  COMMODITY HEDGING
 
 The realized gain or loss in respect of commodity hedging contracts,
 the pricing period of which has expired during the year, are recognised
 in the profit&loss account. However in respect of those contracts, the
 pricing period of which extends beyond the balance sheet date, suitable
 provision for likely loss, if any, is provided.