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.
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
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/
(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
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.
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.
(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
(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
(d) Claims (including interest on delayed realization from customers)
are accounted for, when there is significant certainty that the claims
(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
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
(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
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
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
(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''
(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.