1. METHOD OF ACCOUNTING
The Company prepares financial statements under the historical cost
convention and follows the mercantile system of accounting except where
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities on the
date of financial statements and the reported amounts of revenues and
expenses during the reported period. Differences between actual
results and estimates are recognized in the period in which the results
3. FIXED ASSETS AND DEPRECIATION
Fixed assets are stated at their historical cost less accumulated
depreciation. Cost includes interest on specific borrowings to finance
construction / acquisition of fixed assets, upto completion /
commissioning. Depreciation on Fixed Assets is provided on the Written
Down Value Method (WDV) at the rates and in the manner laid down in
Schedule XIV to the Companies Act, 1956. Depreciation on Leasehold
Property (Workshop) is provided @10% on the Written Down Value Method.
Investments are considered long term in nature and carried at
cost.Diminution in value of investments, other than temporary in
nature, is provided for. Dividends are accounted for when received.
Finished Goods are valued at lower of cost or net realisable value
after providing for cost of obsolescence, if any. The
First-In-First-Out (FIFO) method is used for the valuation of Finished
Goods. (Refer Note 7, Schedule K)
Sundry Debtors identified as irrecoverable or doubtful are written off
or provided for respectively.
Sales comprises sale of Spare Parts, Petrol, Diesel, Oil and Grease.
Sale of Petrol, Diesel, Oil and Grease are as per the prices declared
by Hindustan Petroleum Corporation Limited / Bharat Petroleum
Corporation Limited or the Principals, as the case may be.
Sales are stated exclusive net of Value Added Tax and net of discounts,
rebates and settlements.
8. RETAIL BUSINESS INCOME
As per the Business Retailing Arrangement with Trent Limited (Trent),
the Company accrues a minimum guarantee fee of Rs.2,00,00,000 per annum
receivable half-yearly or an amount calculated as a percentage of sale
of Trents merchandise (as certified by the auditors of Trent),
whichever is higher. The Retailing Arrangement has come to end on 28th
February, 2009. With requests from Trent Limited the same has been
extended from time to time.
9. RETIREMENT BENEFITS
The Companys contribution to the Provident Fund and Superannuation
Fund are charged to revenue every year.
Gratuity liability is charged to revenue as per the rules of the
Pension is paid as per agreed terms to employees who have sought
voluntary retirement and is charged to revenue every year.
Leave Encashment to eligible employees is provided based on the
Companys own estimates, as the number of employees do not warrant an
Upto 31st March, 2002, compensation to employees under Voluntary
Retirement Scheme (VRS) and ex -gratia payments to employees who had
retired under VRS were charged to revenue in the year of incurrence.
Subseqent thereto, the compensation paid to employees under VRS and ex
- gratia payments made to employees who have retired under VRS are
treated as deferred revenue expenditure and amortised over a period of
five years. (Refer Note14(a) and 14(b), Schedule K)
10. SEGMENT REPORTING
The accounting policies adopted for segment reporting are in line with
the accounting polices of the Company. Segments are identified having
regard to the dominant source and nature of risks and returns and
internal organisation and management structure.
Revenue and expenses have been identified to the segments based on
their relationship to the business activity of the segment.
Segment assets and liabilities include those directly identifiable with
the respective segments.
Income-tax expense comprises current tax and deferred tax charge or
credit. Provision for current tax is made on the assessable income at
the tax rate applicable to the relevant assessment year.
The deferred tax asset and deferred tax liability is calculated by
applying tax rate and tax laws that have been enacted or substantially
enacted by the Balance Sheet date. Deferred tax assets arising mainly
on account of brought forward losses and unabsorbed depreciation under
tax laws, are recognized, only if there is a virtual certainty of its
realization, supported by convincing evidence. Deferred tax assets on
account of other timing differences are recognized only to the extent
there is a reasonable certainty of its realization. At each Balance
Sheet date, the carrying amount of deferred tax assets are reviewed to
12. CONTINGENT LIABILITIES
All known liabilities are provided for in the accounts except
liabilities of a contingent nature, which have been disclosed in the
notes to the accounts.
Supplementary Information :
1. Cash and Cash Equivalents represent cash (including cheques on hand
and cheques in transit) and bank balances only.
2. Previous years figures have been reclassified/recast to conform
with the current years presentation.