1. Basis of Accounting:
a) The financial statements are prepared under historical cost
convention, except for certain Fixed Assets which are revalued, using
the accrual system of accounting in accordance with the accounting
principles generally accepted in India (Indian GAAP) and the
requirements of the Companies Act, 1956, including the mandatory
Accounting Standards as prescribed by the Companies (Accounting
Standards) Rules, 2006.
b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the year. Example of
such estimates include provisions for doubtful debts, employee
retirement benefits plans, provision for income tax and the useful
lives of fixed assets. The difference between the actual results and
estimates are recognized in the period in which results are known or
2. Fixed Assets/Capital Work-in-Progress:
a) Fixed Assets are stated at cost, except for certain fixed assets
which have been stated at revalued amounts, less accumulated
depreciation/ amortisation and impairment loss, if any. The cost is
inclusive of freight, installation cost, duties, taxes, financing cost
and other incidental expenses related to the acquisition and
installation of the respective assets but does not include tax/duty
b) Capital Work-in-Progress is carried at cost, comprising of direct
cost, attributable interest and related incidental expenditure. The
advances given for acquiring fixed assets are shown under Capital
3. Joint Ventures for Oil and Gas Fields:
In respect of unincorporated joint ventures in the nature of Production
Sharing Contracts (PSC) entered into by the Company for oil and gas
exploration and production activities, the Company''s share in the
assets and liabilities as well as income and expenditure of Joint
Venture Operations are accounted for, according to the Participating
Interest of the Company as per the PSC and the Joint Operating
Agreements on a line-by-line basis in the Company''s Financial
Statements. In respect of joint ventures in the form of incorporated
jointly controlled entities, the investment in such joint venture is
treated as long term investment and carried at cost. The decline in
value, other than temporary, is provided for.
4. Exploration, Development Costs and Producing Properties:
The Company follows the Full Cost method of accounting for its
oil and natural gas exploration and production activities. Accordingly,
all acquisition, exploration and development costs are treated as
capital work-in-progress and are accumulated in a cost centre. The cost
centre is not, normally, smaller than a country except where warranted
by major difference in economic, fiscal or other factors in the
country. When any well in a cost centre is ready to commence commercial
production, these costs are capitalised from capital work-in-progress
to producing properties in the gross block of assets regardless of
whether or not the results of specific costs are successful.
5. Abandonment Costs:
The full eventual estimated liability towards costs relating to
dismantling, abandoning and restoring well sites and allied facilities
is recognised as liability for abandonment cost based on evaluation by
experts at current costs and is capitalised as producing property. The
same is reviewed periodically.
6. Depreciation, Amortisation and Depletion:
The Company provides depreciation on fixed assets held in India on
written down value method in the manner and at the rates specified in
the Schedule XIV to the Companies Act, 1956, except, a) on Fixed Assets
of Consumer Electronics Divisions other than Glass Shell Division and;
b) on office buildings acquired after 1st April, 2000, on which
depreciation is provided on straight line method at the rates specified
in the said Schedule or based on useful life of assets whichever is
higher. Depreciation on fixed assets held outside India is provided on
straight line method at the rates prescribed in the aforesaid Schedule
or based on useful life of assets whichever is higher. Producing
Properties are depleted using the Unit of Production Method. The
rate of depletion is computed in proportion of oil and gas production
achieved vis-a-vis proved reserves. Leasehold Land is amortised over
the period of lease.
Intangibles: Intangible assets are amortised over a period of five
7. Impairment of Assets:
The Fixed Assets or a group of assets (cash generating unit) and
Producing Properties are reviewed for impairment at each Balance Sheet
date. In case of any such indication, the recoverable amount of these
assets or group of assets is determined, and if such recoverable amount
of the asset or cash generating unit to which the asset belongs is less
than it''s carrying amount, the impairment loss is recognised by
writing down such assets and Producing Properties to their recoverable
amount. An impairment loss is reversed if there is change in the
recoverable amount and such loss either no longer exists or has
a) Current Investments: Current Investments are carried at lower of
cost or quoted/fair value.
b) Long Term Investments: Quoted Investment are valued at cost or
market value whichever is lower. Unquoted Investments are stated at
cost. The decline in the value of the unquoted investment, other than
temporary, is provided for.
c) Cost is inclusive of brokerage, fees and duties but excludes
Securities Transaction Tax.
Inventories including crude oil stocks are valued at cost or net
realisable value whichever is lower. Cost of inventories comprises all
costs of purchase, conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost is determined
on Weighted Average Basis.
10. Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition,
construction or production of an qualifying asset are capitalised as
part of the cost of that asset. A qualifying asset is one that
necessarily takes substantial period of time to get ready for intended
use. Other borrowing costs are recognised as an expense in the period
in which they are incurred.
11. Excise and Customs Duty:
Excise Duty in respect of finished goods lying in the factory premises
and Customs Duty on goods lying in customs bonded warehouse are
provided for and included in the valuation of inventory.
12. CENVAT/Value Added Tax:
CENVAT/Value Added Tax Benefit is accounted for by reducing the cost of
the materials/ fixed assets/ services.
13. Revenue Recognition:
a) Revenue is recognised on transfer of significant risk and reward in
respect of ownership.
b) Sale of Crude Oil and Natural Gas are exclusive of Sales Tax. Other
Sales/turnover includes sales value of goods, services, excise duty,
duty drawback and other recoveries such as insurance, transportation
and packing charges but excludes sale tax and recovery of financial and
c) Revenue from supply of electricity is recognised on accrual basis.
d) Insurance, Duty Drawback and other claims are accounted for as and
when admitted by the appropriate authorities.
e) Dividend on investments is recognised when the right to receive is
14. Foreign Currency Transactions:
a) Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of transactions. Foreign Currency Monetary
Assets and Liabilities are translated at the year end rate. The
difference between the rate prevailing on the date of transaction and
on the date of settlement as also on translation of Monetary Items at
the end of the year is recognised, as the case may be, as income or
expense for the year.
b) Forward contracts other than those entered into to hedge foreign
currency risk on unexecuted firm commitments or of highly probable
forecast transactions are treated as foreign currency transaction and
accounted accordingly. Exchange differences arising on such contracts
are recognised in the period in which they arise and the premium paid/
received is recognised as expenses/income over the period of the
contract. Cash flows arising on account of roll over/cancellation of
forward contracts are recognised as income/expenses of the period in
line with the movement in the underlying exposure.
c) All other derivative contracts including forward contract entered
into for hedging foreign currency risks on unexecuted firm commitments
and highly probable forecast transactions which are not covered by the
existing Accounting Standard (AS) 11, are recognised in the financial
statements at fair value as on the Balance Sheet date, in pursuance of
the announcement of the Institute of Chartered Accountants of India
(ICAI) dated 29th March, 2008, on accounting of derivatives. The
resultant gains and losses on fair valuation of such contracts are
recognised in the Profit and Loss Account.
15. Translation of the financial statements of foreign branch:
a) Revenue items are translated at average rates.
b) Opening and closing inventories are translated at the rate prevalent
at the commencement and close, respectively, of the accounting year.
c) Fixed assets are translated at the exchange rate as on the date of
the transaction. Depreciation on fixed assets is translated at the
rates used for translation of the value of the assets to which it
d) Other current assets and current liabilities are translated at the
16. Employee Benefits:
a) Short Term Employees Benefits
Short Term Employees Benefits are recognized as an expense at the
undiscounted amount in the Profit and Loss Account of the year/period
in which the related services are rendered.
b) Post Employment Benefits
i) Provident Fund - Defined Contribution Plan
The Company contributes monthly at a determined rate. These
contributions are remitted to the Employees'' Provident Fund
Organisation, India for this purpose and is charged to Profit and Loss
Account on accrual basis.
ii) Gratuity - Defined Benefit Plan
The Company provides for gratuity to all the eligible employees. The
benefit is in the form of lump sum payments to vested employees on
retirement, on death while in employment, or termination of employment
for an amount equivalent to 15 days salary payable for each completed
year of service. Vesting occurs on completion of five years of service.
Liability in respect of gratuity is determined using the projected unit
credit method with actuarial valuations as on the Balance Sheet date
and gains/ losses are recognized immediately in the Profit and Loss
iii) Leave Encashment
Liability in respect of leave encashment is determined using the
projected unit credit method with actuarial valuations as on the
Balance Sheet date and gains/losses are recognized immediately in the
Profit and Loss Account.
Income tax comprises of current tax and deferred tax. Provision for
current income tax is made on the assessable income/benefits at the
rate applicable to relevant assessment year. Deferred tax assets and
liabilities are recognised for the future tax consequences of timing
differences, subject to the consideration of prudence. Deferred tax
assets and liabilities are measured using the tax rates enacted or
substantively enacted by the Balance Sheet date. The carrying amount of
deferred tax asset/liability are reviewed at each Balance Sheet date
and recognised and carried forward only to the extent that there is a
reasonable certainty that the asset will be realised in future.
18. Share Issue Expenses:
Share issue expenses are written off to Securities Premium Account.
19. Premium on Redemption of Bonds/Debentures:
Premium on Redemption of Bonds/Debentures are written off to Securities
20. Research and Development:
Revenue expenditure pertaining to Research and Development is charged
to revenue under the respective heads of account in the period in which
it is incurred. Capital expenditure, if any, on Research and
Development is shown as an addition to Fixed Assets under the
21. Accounting for Leases:
Where the company is lessee:
a) Operating Leases: Rentals in respect of all operating leases are
charged to Profit and Loss Account.
b) Finance Leases:
i) Rentals in respect of all finance leases entered before 1st April,
2001 are charged to Profit and Loss Account.
ii) Assets acquired on or after 1st April, 2001, under finance lease or
similar arrangements which effectively transfer to the Company,
substantially all the risks and benefits incidental to ownership of the
leased items, are capitalised at the lower of their fair value and
present value of the minimum lease payments and are disclosed as leased
Provision for the estimated liability in respect of warranty on sale of
consumer electronics and home appliances products is made in the year
in which the revenues are recognised, based on technical evaluation and
23. Prior Period Items:
Prior period items are included in the respective heads of accounts and
material items are disclosed by way of Notes to Accounts.
24. Provision, Contingent Liabilities and Contingent Assets:
Provisions are recognised when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resources in respect of which reliable estimate can be made.
Contingent Liabilities are disclosed by way of Notes to Accounts.
Disputed demands in respect of Central Excise, Customs, Income tax,
Sales tax and Others are disclosed as contingent liabilities. Payment
in respect of such demands, if any, is shown as an advance, till the
final outcome of the matter.
Contingent assets are not recognised in the financial statements.
25. Other Accounting Policies:
These are consistent with the generally accepted accounting principles.