1. BASIS OF PREPARATION
The financial statements are prepared under historical cost convention
in accordance with the mandatory accounting standards issued by the
Institute of Chartered Accountants of India and the provisions of The
Companies Act, 1956.
2. FIXED ASSETS
2.1.1 Land acquired on lease for over 99 years and on perpetual lease
is treated as freehold land.
2.2 Expenditure during Construction period
2.2.1 Revenue expenses exclusively attributable to projects incurred
during construction period are capitalized.
2.3.1 Depreciation on Fixed Assets is provided in accordance with the
rates specified in schedule XIV of the Companies Act,1956 on straight
line method upto 95% of the cost of Fixed Assets. Depreciation is
charged pro-rata on quarterly basis on assets from/up to the quarter of
capitalization/sale, disposal and dismantled during the year.
Assets other than LPG Cylinders and Pressure Regulators, costing up to
Rs. 5000/-per item are depreciated fully in the year of capitalization.
2.3.2 Cost of leasehold land for 99 years or less is amortized during
the lease period.
2.4 Impairment of Assets
2.4.1 Carrying amount of cash generating units/assets is reviewed for
impairment. Impairment, if any, is recognized where the carrying amount
exceeds the recoverable amount being the higher of net realizable price
and value in use.
3. INTANGIBLE ASSETS
3.1 All expenditure other than on capital account, on research and
development are charged to Profit & Loss account.
3.2 Cost incurred on computer software purchased/developed/used,
resulting in future economic benefits are capitalized as Intangible
Assets and amortized over a period of three years beginning from the
quarter in which such software/assets is capitalized.
4.1 All long term investments are valued at cost and provision for
diminution in value, thereof is made, wherever such diminution is not
4.2 All current investments are valued at lower of cost or fair market
5. CURRENT ASSETS AND PROVISIONS
5.1.1 Raw Materials
Raw materials are valued at weighted average cost or net realizable
value whichever is lower. Stock in process is valued at raw materials
cost and allocated overheads at the factory cost level or net
realizable value which ever is lower. Stock in process of containers is
determined on First In First Out( FIFO) basis.
5.1.2 Stores & Spares
Stores and Spares including surplus found on physical inventory are
valued at weighted average cost. In case of obsolete stores and spares,
provision is made for likely loss and charged to revenue.
5.1.3 Finished Goods
Finished products are valued at cost or net realizable value whichever
is lower. Cost of petroleum products/cryogenic containers &
cryo-vessels is determined on FIFO basis. Cost of explosives, lubes &
greases is determined at weighted average cost.
5.2 Claims & Provisions
5.2.1 Claims on Petroleum Planning Analysis Cell/Government are booked
on the basis of acceptance in principle/approval thereof. Such claims
and provisions are booked on the basis of available
instructions/clarifications subject to final adjustment as per separate
5.2.2 Other claims are accounted for when there is certainty that the
claims are realizable.
6. CONTINGENT LIABILITIES AND CAPITAL COMMITMENT
6.1 Show-cause Notices issued by various Government Authorities are not
considered as obligation. When the demand notices are raised against
such show cause notices and are disputed by the Company, then these are
classified as disputed obligations.
6.2 Capital commitments and contingent liabilities are those which
exceed Rs. 5 lakhs in each case.
6.3 The treatment in respect of disputed obligations, in each case
above Rs. 5 Lakhs, are as under
a) a provision is recognized in respect of present obligations where
the outflow of resources is probable.
b) all other cases are disclosed as contingent liabilities unless the
possibility of outflow of resources is remote.
7. PROFIT AND LOSS ACCOUNT
7.1 Sales of Products
Adjustments pertaining to purchase of Raw materials/finished products,
sales and others as admissible under the erstwhile Administered Pricing
Mechanism are accounted as net claim from (surrender to) Industry Pool
7.2 Payment under Voluntary Retirement Scheme
Compensation paid under Voluntary Retirement Scheme is charged off in
the year of payment.
7.3 Prepaid Expenses
Prepaid expenses upto Rs. 1,00,000/- in each case are charged to
7.4 Prior Period Adjustments
Income & expenditure upto Rupees Five lakhs in each case pertaining to
prior period are accounted for in the current year.
7.5 Borrowing Cost
Borrowing Costs, on weighted average basis, that are attributable to
construction of qualifying assets are capitalized as part of the cost
of such assets. Qualifying asset is the one that necessarily takes
substantial period of time to get ready for intended use.
7.6 Revenue Grants (Subsidy)
Revenue grants are reckoned as per the scheme notified by Government of
India from time to time.
8. Retirement Benefits
Payment of gratuity is made through trust and the amount of
contribution, based on actuarial valuation, is charged to Profit & Loss
8.2 Leave Encashment/Post Retirement Medical Benefits/Resettlement
Accruing liability is charged to Profit & Loss Account based on
9. Foreign Exchange Transactions
9.1 Any gains or losses arising due to exchange differences at the time
of translation or settlement are accounted for in the Profit & Loss
Account either under the head foreign exchange fluctuation or interest
cost, as the case may be, except those relating to acquisition of fixed
9.2 Exchange differences arising on liabilities incurred or on
repayment of borrowings in foreign currency for acquisition of fixed
assets are accounted in the following manner:
a) in respect of fixed assets acquired from a country outside India,
exchange differences are adjusted in the carrying cost.
b) in respect of fixed assets acquired within India,
i. exchange differences on transactions in foreign currency entered
prior to 1st. April 2004, are adjusted in the carrying cost.
ii. Exchange differences on transactions in foreign currency entered on
or after 1st April 2004 are recognized in the Profit & Loss Account.