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  Land
 
 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 Depreciation
 
 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. INVESTMENT
 
 4.1 All long term investments are valued at cost and provision for
 diminution in value, thereof is made, wherever such diminution is not
 temporary.
 
 4.2 All current investments are valued at lower of cost or fair market
 value.
 
 5. CURRENT ASSETS AND PROVISIONS
 
 5.1  Inventories
 
 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
 audit.
 
 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
 Accounts/Government.
 
 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
 revenue.
 
 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
 
 8.1 Gratuity
 
 Payment of gratuity is made through trust and the amount of
 contribution, based on actuarial valuation, is charged to Profit & Loss
 Account.
 
 8.2 Leave Encashment/Post Retirement Medical Benefits/Resettlement
 Benefits
 
 Accruing liability is charged to Profit & Loss Account based on
 Actuarial valuation.
 
 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
 assets.
 
 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.