1. BASIS OF PREPARATION
1.1 The financial statements are prepared under historical cost
convention in accordance with the mandatory 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 Tangible Assets
2.1.1 Fixed Assets are stated at acquisition cost less accumulated
depreciation / amortization and cumulative impairment.
2.1.2 Land acquired on perpetual lease as well as on lease for over 99
years is treated as free hold land.
2.1.3 Land acquired on lease for 99 years or less is treated as
2.1.4 Technical know-how / license fee relating to plants/facilities
are capitalised as part of cost of the underlying asset.
2.2 Construction Period Expenses on Projects
2.2.1 Revenue expenses exclusively attributable to projects incurred
during construction period are capitalised. However, such expenses in
respect of capital facilities being executed along with the
production/operations simultaneously are charged to revenue.
2.2.2 Financing cost incurred during construction period on loans
specifically borrowed and utilised for projects is capitalised on
quarterly basis up to the date of capitalisation.
2.2.3 Financing cost, if any, incurred on General Borrowings used for
projects is capitalised at the weighted average cost. The amount of
such borrowings is determined on quarterly basis after setting off the
amount of internal accruals.
2.3 Capital Stores
2.3.1 Capital stores are valued at cost. Specific provision is made for
likely diminution in value, wherever required.
2.4.1 Cost of leasehold land for 99 years or less is amortised over the
2.4.2 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 dismantle or earmarking for
disposal/dismantling during the year.
2.4.3 Assets, other than LPG Cylinders and Pressure Regulators, costing
upto Rs. 5,000/- per item are depreciated fully in the year of
2.4.4 Expenditure on the items, ownership of which is not with the
Company are charged off to revenue in the year of incurrence of such
2.5 Impairment of Assets
As at each balance sheet date, the carrying amount of cash generating
units / assets is tested for impairment so as to determine:
(a) the provision for impairment loss, if any, required; or
(b) the reversal, if any, required of impairment loss recognized in
Impairment loss is recognized when the carrying amount of an asset
exceeds recoverable amount.
3. INTANGIBLE ASSETS
3.1 Technical know-how / license fee relating to production process and
process design are recognised as Intangible Assets and amortised on a
straight line basis over a period of ten years or life of the
underlying plant/ facility, whichever is earlier.
3.2 Expenditure incurred on Research & Development, other than
on capital account, is charged to revenue.
3.3 Costs incurred on computer software purchased/developed 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 Intangible Assets Under Development.
3.4 Cost of Right of Way for laying pipelines is capitalised. However,
such Right of Way being perpetual in nature, is not amortised.
4. 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.
5. FOREIGN CURRENCY TRANSLATION
5.1 Transactions in foreign currency are initially recorded at exchange
rates prevailing on the date of transactions.
5.2 Monetary items denominated in foreign currencies (such as cash,
receivables, payables etc.) outstanding at the end of reporting period,
are translated at exchange rates prevailing as at the end of reporting
5.3 Non-monetary items denominated in foreign currency, (such as
investments, fixed assets etc.) are valued at the exchange rate
prevailing on the date of the transaction.
5.4.1 (a) Any gains or losses arising due to differences in exchange
rates at the time of translation or settlement are accounted for in the
Statement of Profit & Loss either under the head foreign exchange
fluctuation or interest cost, as the case may be, except those relating
to long-term foreign currency monetary items.
(b) Exchange differences on long-term foreign currency monetary items
relating to acquisition of depreciable assets are adjusted to the
carrying cost of the assets and depreciated over the balance life of
the assets. In other cases, exchange differences are accumulated in a
Foreign Currency Monetary Item Translation Difference Account and
amortised over the balance period of such long-term foreign currency
monetary item but not beyond 31st March, 2020, by recognition as income
or expense in each of such periods.
5.4.2 Premium/discount arising at the inception of the forward
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.
6.1 Long term investments are valued at cost and provision for
diminution in value, thereof is made, wherever such diminution is other
6.2 Current investments are valued at lower of cost or fair market
7.1 Raw Materials
7.1.1 Raw materials including crude oil are valued at cost determined
on weighted average basis or net realizable value, whichever is lower.
7.1.2 Stock in Process is valued at raw material cost plus conversion
costs as applicable or net realizable value, whichever is lower.
7.1.3 Crude oil in Transit is valued at cost or net realizable value,
whichever is lower.
7.2 Finished Products and Stock-in-Trade
7.2.1 Finished products and stock in trade, other than lubricants, are
valued at cost determined on ''First in First Out'' basis or net
realizable value, whichever is lower. Cost of Finished Products
produced is determined based on raw material cost and processing cost.
7.2.2 Lubricants are valued at cost on weighted average basis or net
realizable value, whichever is lower. Cost of lubricants internally
produced is determined based on cost of inputs and processing cost.
7.2.3 Imported products in transit are valued at CIF cost or net
realisable value whichever is lower.
7.3 Stores and Spares
7.3.1 Stores and Spares (including Barrels & Tins) are valued at
weighted average cost. Specific provision is made in respect of
identified obsolete stores & spares and chemicals for likely diminution
in value. Further, an adhoc provision @ 5% is also made on the balance
stores and spares (excluding barrels, tins, stores in transit,
chemicals, crude oil and own products) towards likely diminution in the
7.3.2 Stores & Spares in transit are valued at cost.
8. TRADE RECEIVABLES
In addition to the specific provision made, an adhoc provision @ 1 % is
also made in respect of Trade Receivables, other than those relating to
Oil Marketing companies, Subsidiary & Joint Venture companies and
Export customers, to recognize the element of uncertainty.
9. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
9.1 Contingent Liabilities
9.1.1 Show Cause Notices issued by various Government Authorities are
not considered as Obligation.
9.1.2 When the demand notices are raised against such show cause
notices and are disputed by the Company, these are classified as
9.1.3 The treatment in respect of disputed obligations, in each case
above Rs. 5 lakh, 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.
9.2 Capital Commitments
Estimated amount of contracts remaining to be executed on capital
account above Rs. 5 lakh, in each case, are considered for disclosure.
10. REVENUE RECOGNITION
10.1 Revenue from sale of goods is recognised when sufficient risks and
rewards are transferred to customers, which is generally on dispatch of
10.2 Dividend income is recognized when the company''s right to
receive dividend is established.
10.3 Claims (including interest on outstandings) are accounted:
a) When there is certainty that the claims are realizable
b) Generally at cost
10.4 Income and expenditure upto Rupees five lakh in each case
pertaining to previous years are accounted for in the current year.
10.5 Pre-paid expenses upto Rupees five lakh in each case are charged
11. EXCISE DUTY
Excise duty is accounted on the basis of both, payments made in respect
of goods cleared and also provision made for goods lying in stock.
Closing stock value includes excise duty payable / paid on finished
12. 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
difference1 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
13. EMPLOYEES BENEFITS
13.1 Short Term Benefits:
Short Term Employee Benefits are accounted for in the period during
which the services have been rendered.
13.2 Post-Employment Benefits and Other Long Term Employee Benefits:
a) The Company''s contribution to the Provident Fund is remitted to
separate trusts established for this purpose based on a fixed
percentage of the eligible employee''s salary and charged to Statement
of Profit and Loss. 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 Statement of Profit and Loss.
b) The Company operates defined benefit plans for Gratuity and Post
Retirement Medical Benefits. 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 are administered
through respective trusts. Actuarial gains/ losses are charged to
Statement of Profit and Loss.
c) Obligations on Compensated Absences, Resettlement and Long Service
Awards are provided using the projected unit credit method of actuarial
valuation made at the end of the year.
d) The Company operates a defined contribution scheme for Pension
benefits for its employees and the contribution is remitted to a
13.3 Termination Benefits:
Payments made under Voluntary Retirement Scheme are charged to
Statement of Profit and Loss.
14.1 Capital Grants
In case of depreciable assets, the cost of the asset is shown at gross
value and grant thereon is treated as Capital Grants which are
recognised as income in the Statement of Profit and Loss over the
period and in the proportion in which depreciation is charged.
14.2 Revenue Grants
Revenue grants are reckoned as per the respective schemes notified by
Government from time to time, subject to final adjustments as per
separate audit wherever applicable.
15. OIL & GAS EXPLORATION ACTIVITIES
15.1 The Company is following the Successful Efforts Method of
accounting for Oil & Gas exploration and production activities as
a) Survey costs are expensed in the year of incurrence.
b) Acquisition cost, cost of incomplete / undecided exploratory wells
and development costs are carried as capital work in progress till the
time these are either transferred to producing properties on completion
or expensed in the year when determined to be dry, as the case may be.
c) Expenditure towards unfinished Minimum Work Programme with and
without extension of time is expensed in the year of incurrence.
15.2 Company''s share of proved reserves of oil and gas are disclosed
when notified by the Operator of the relevant block.
15.3 The Company''s proportionate share in the assets, liabilities,
income and expenditure of joint venture operations are accounted as
per the participating interest in such joint venture operations.
16. COMMODITY HEDGING
The realised gain or loss in respect of commodity hedging contracts,
the pricing period of which has expired during the year, are recognised
in the Statement of Profit & Loss. Flowever, in respect of contracts,
the pricing period of which extends beyond the balance sheet date,
suitable provision for likely loss, if any, is made.