A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These financial statements have been prepared to comply with the
Generally Accepted Accounting Principles in India (Indian GAAP),
including the Accounting Standards notified under the relevant
provisions of the Companies Act, 2013.
The financial statements are prepared on accrual basis under the
historical cost convention, except for certain Fixed Assets which are
carried at revalued amounts. The financial statements are presented in
Indian rupees rounded off to the nearest rupees in crore.
B. USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP
requires judgements, estimates and assumptions to be made that affect
the reported amount of assets and liabilities, disclosure of contingent
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which the results are known/materialised.
C. FIXED ASSETS
Tangible Assets are stated at cost net of recoverable taxes, trade
discounts and rebates and include amounts added on revaluation, less
accumulated depreciation and impairment loss, if any. The cost of
Tangible Assets comprises its purchase price, borrowing cost and any
cost directly attributable to bringing the asset to its working
condition for its intended use, net charges on foreign exchange
contracts and adjustments arising from exchange rate variations
attributable to the assets.
Subsequent expenditures related to an item of Tangible Asset are added
to its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.
Projects under which assets are not ready for their intended use are
disclosed under Capital Work-in-Progress.
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortisation/depletion and impairment loss, if
any. The cost comprises purchase price, borrowing costs, and any cost
directly attributable to bringing the asset to its working condition
for the intended use and net charges on foreign exchange contracts and
adjustments arising from exchange rate variations attributable to the
a) Operating Leases: Rentals are expensed on a straight line basis with
reference to the lease terms and other considerations.
b) (i) Finance leases prior to 1st April, 2001: Rentals are expensed
with reference to lease terms and other considerations.
(ii) Finance leases on or after 1st April, 2001: The lower of the fair
value of the assets and present value of the minimum lease rentals is
capitalised as Fixed Assets with corresponding amount disclosed as
lease liability. The principal component in the lease rental is
adjusted against the lease liability and the interest component is
charged to Profit and Loss Statement.
c) However, rentals referred to in (a) or (b) (i) above and the
interest component referred to in (b) (ii) above, pertaining to the
period upto the date of commissioning of the asset are capitalised.
E. DEPRECIATION, AMORTISATION AND DEPLETION
Depreciation on Fixed Assets is provided to the extent of depreciable
amount on the Written Down Value (WDV) Method except in case of assets
pertaining to Refining segment and SEZ units / developer where
depreciation is provided on Straight Line Method (SLM). Depreciation is
provided based on useful life of the assets as prescribed in Schedule
II to the Companies Act, 2013 except in respect of the following
assets, where useful life is different than those prescribed in
Schedule II are used;
In respect of additions or extensions forming an integral part of
existing assets and insurance spares, including incremental cost
arising on account of translation of foreign currency liabilities for
acquisition of Fixed Assets, depreciation is provided as aforesaid over
the residual life of the respective assets.
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the Profit and
Loss Statement in the year in which an asset is identified as impaired.
The impairment loss recognised in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
G. FOREIGN CURRENCY TRANSACTIONS
a. Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate at the date of the transaction.
b. Monetary items denominated in foreign currencies at the year end are
restated at year end rates. In case of items which are covered by
forward exchange contracts, the difference between the year end rate
and rate on the date of the contract is recognised as exchange
difference and the premium paid on forward contracts is recognised over
the life of the contract.
c. Non-monetary foreign currency items are carried at cost.
d. I n respect of integral foreign operations, all transactions are
translated at rates prevailing on the date of transaction or that
approximates the actual rate at the date of transaction. Monetary
assets and liabilities are restated at the year end rates.
e. Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Profit and Loss
Statement, except in case of long term liabilities, where they relate
to acquisition of Fixed Assets, in which case they are adjusted to the
carrying cost of such assets.
Current investments are carried at lower of cost and quoted/fair value,
computed category-wise. Non Current investments are stated at cost.
Provision for diminution in the value of Non Current investments is
made only if such a decline is other than temporary.
Items of inventories are measured at lower of cost and net realisable
value after providing for obsolescence, if any, except in case of
by-products which are valued at net realisable value. Cost of
inventories comprises of cost of purchase, cost of conversion and other
costs including manufacturing overheads incurred in bringing them to
their respective present location and condition.
Cost of raw materials, process chemicals, stores and spares, packing
materials, trading and other products are determined on weighted
J. REVENUE RECOGNITION
Revenue is recognised only when risks and rewards incidental to
ownership are transferred to the customer, it can be reliably measured
and it is reasonable to expect ultimate collection. Revenue from
operations includes sale of goods, services, service tax, excise duty
and sales during trial run period, adjusted for discounts (net), and
gain/loss on corresponding hedge contracts.
Dividend income is recognised when the right to receive payment is
I nterest income is recognised on a time proportion basis taking into
account the amount outstanding and the interest rate applicable.
EXCISE DUTY / SERVICE TAX
Excise duty / Service tax is accounted on the basis of both, payments
made in respect of goods cleared / services provided and provisions
made for goods lying in bonded warehouses.
K. EMPLOYEE BENEFITS
Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
as an expense during the period when the employees render the services.
These benefits include performance incentive and compensated absences.
Post-Employment Benefits Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under
which the Company pays specified contributions to a separate entity.
The Company makes specified monthly contributions towards Provident
Fund, Superannuation Fund and Pension Scheme. The Company's
contribution is recognised as an expense in the Profit and Loss
Statement during the period in which the employee renders the related
Defined Benefit Plans
The liability in respect of defined benefit plans and other
post-employment benefits is calculated using the Projected Unit Credit
Method and spread over the period during which the benefit is expected
to be derived from employees' services.
Actuarial gains and losses in respect of post-employment and other long
term benefits are charged to the Profit and Loss Statement.
Employee Separation Costs
Compensation to employees who have opted for retirement under the
voluntary retirement scheme of the Company is charged to the Profit and
Loss Statement in the year of exercise of option by the employee.
L. BORROWING COSTS
Borrowing costs include exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost. Borrowing costs that are attributable to the
acquisition or construction of qualifying assets are capitalised as
part of the cost of such assets. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs are charged to the Profit and
Loss Statement in the period in which they are incurred.
M. RESEARCH AND DEVELOPMENT EXPENSES
Revenue expenditure pertaining to research is charged to the Profit and
Loss Statement. Development costs of products are charged to the Profit
and Loss Statement unless a product's technological feasibility has
been established, in which case such expenditure is capitalised.
N. FINANCIAL DERIVATIVES AND COMMODITY HEDGING TRANSACTIONS
I n respect of derivative contracts, premium paid, gains/losses on
settlement and losses on restatement are recognised in the Profit and
Loss Statement except in case where they relate to the acquisition or
construction of Fixed Assets, in which case, they are adjusted to the
carrying cost of such assets.
O. INCOME TAXES
Tax expense comprises of current tax and deferred tax. Current tax is
measured at the amount expected to be paid to the tax authorities,
using the applicable tax rates. Deferred income tax reflect the current
period timing differences between taxable income and accounting income
for the period and reversal of timing differences of earlier
years/period. Deferred tax assets are recognised only to the extent
that there is a reasonable certainty that sufficient future income will
be available except that deferred tax assets, in case there are
unabsorbed depreciation or losses, are recognised if there is virtual
certainty that sufficient future taxable income will be available to
realise the same.
Deferred tax assets and liabilities are measured using the tax rates
and tax law that have been enacted or substantively enacted by the
Balance Sheet date.
P. PREMIUM ON REDEMPTION OF BONDS / DEBENTURES
Premium on redemption of bonds/debentures, net of tax impact, are
adjusted against the Securities Premium Reserve.
Q. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provision is recognised in the accounts when there is a present
obligation as a result of past event(s) and it is probable that an
outflow of resources will be required to settle the obligation and a
reliable estimate can be made. Provisions are not discounted to their
present value and are determined based on the best estimate required to
settle the obligation at the reporting date. These estimates are
reviewed at each reporting date and adjusted to reflect the current
Contingent liabilities are disclosed unless the possibility of outflow
of resources is remote.
Contingent assets are neither recognised nor disclosed in the financial
R. ACCOUNTING FOR OIL AND GAS ACTIVITY
The Company has adopted Full Cost Method of accounting for its' Oil and
Gas activities and all costs incurred are accumulated considering the
country as a cost centre. Costs incurred on acquisition of interest in
oil and gas blocks and on exploration and evaluation are accounted for
as Intangible Assets under Development. Upon a reserve being either
'proved' or deemed to be 'dry', the costs accumulated in Intangible
Assets under Development are capitalised to intangible assets.
Development costs incurred thereafter in respect of 'proved' reserves
are capitalised to the said intangible asset. All costs relating to
production are charged to the Profit and Loss Statement.
Oil and Gas Joint Ventures are in the nature of Jointly Controlled
Assets. Accordingly, assets and liabilities as well as income and
expenditure are accounted on the basis of available information on a
line-by-line basis with similar items in the Company's financial
statements, according to the participating interest of the Company.