1.3.0 Material accounting policies
1.3.1 Statement of compliance
The Financial Statements have been prepared in
accordance with the Indian Accounting Standards (Ind
AS) issued by the Ministry of Corporate Affairs notified
under the Companies (Indian Accounting Standards)
Rules, 2015 as amended, presentation requirements of
Division II of Schedule III to the Companies Act, 2013 and
Guidance Note on Accounting for Oil and Gas Producing
Activities (Ind AS) issued by the Institute of Chartered
Accountants of India.
1.3.2 Basis of preparation
The Financial Statements are prepared on going concern
basis under the historical cost convention using accrual
basis of accounting except for assets and liabilities which
have been measured at fair value such as certain financial
assets and financial liabilities. (refer notes 43 for financial
instruments measured at fair value).
Accounting policies have been consistently applied
except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting
standard requires a change in the accounting policy
hitherto in use.
As the operating cycle cannot be identified in normal
course due to the special nature of industry, the same
has been assumed to have duration of 1 year. Accordingly,
all assets and liabilities have been classified as current
or non-current as per the Company's operating cycle and
other criteria set out in Ind AS-1 "Presentation of Financial
Statements" and Schedule III to the Companies Act, 2013.
The Financial Statements are presented in Indian
Rupees and all values are rounded off to the nearest two
decimal crore, except otherwise stated.
1.4.0 Revenue recognition
1.4.1 Revenue from contracts with customers
The Company derives revenues primarily from sale
of products such as Crude Oil, Natural Gas, Liquefied
Petroleum Gas (LPG), Condensate, Renewable Energy
and sale of services such as Pipeline Transportation
Services.
Revenue from contracts with customers is recognized
at the point in time when the Company satisfies a
performance obligation by transferring control of a
promised product or service to a customer and is
measured at the amount of transaction price allocated
to that performance obligation. Discount, taxes & duties
(other than excise duty) are excluded from revenue.
As per the Production Sharing Contracts for extracting
the Oil and Gas Reserves with Government of India, out
of the earnings from the exploitation of reserves after
recovery of eligible cost, a part of the revenue is paid to
Government of India which is called Profit Petroleum. It
is reduced from the revenue from Sale of Products as
Government of India's Share in Profit Petroleum.
The transfer of control on sale of Crude Oil, Natural Gas,
Liquefied Petroleum Gas (LPG), Renewable energy and
Condensate occurs either at the point of delivery or the
point of receipt, where usually the title is passed and/or
the customer takes physical possession, depending upon
the contractual conditions. Any retrospective revision in
prices is accounted for in the year of such revision.
Claims on Central Government / Petroleum Planning
& Analysis Cell (PPAC) towards gas pool revenue are
accrued based on quantity delivered to the customers
at discounted price, in respect of which revenue is
recognized when collectability of the receivable is
reasonably certain.
Revenue from sale of Renewable Energy Certificates
(REC) is recognized on sale of the certificates through
the Exchange. i.e., when the receivable is reasonably
certain.
Revenue in respect of contractual short- lifted quantity
of gas is recognized when the customer's right to such
quantity is expired and there is reasonable certainty
regarding its ultimate collection.
Sale and transportation of crude oil and natural gas are
based on mutually agreed terms between the parties/
governed by the Government directives issued from
time to time. Subsequent changes in terms, if any, are
recognized in the period of change. Such retrospective
revision in prices is not determinable at the time of sale.
1.4.2 Contract liabilities
The Company recognises contract liability for
consideration received for short lifted quantity of gas
under take or pay arrangements for which the customer
has right to take related volume in future (i.e. unsatisfied
performance obligations) and for the penalties that may
be raised by the contracting party in case of a dispute and
reports these amounts as advances from customers or
as penalties that may be payable in future, in the balance
sheet. The un-accrued amounts are not recognised
as revenue till all related performance obligations are
fulfilled or the customer's right to such quantities is
expired.
1.4.3 Other income
(i) Dividend income from investments is recognized
when the Company's right to receive payment is
established.
(ii) Interest income is recognized on a time proportion
basis considering the amount outstanding and the
effective interest rate applicable which is the rate
that equalizes discounted estimated future cash
receipts through expected life of the financial
asset to that asset's net carrying amount on initial
recognition. Interest on income tax refund is
accounted for upon finalisation of assessments.
(iii) Insurance claim other than that for transit loss of
stores items are accounted for on final acceptance
by the Insurance Company.
(iv) Revenue on account of subsidies/grants and
interest on delayed realization from customers
are recognized when there is certainty of ultimate
realization.
(v) Recovery of liquidated damages is recognized
in the Statement of Profit & Loss as income at
the time of occurrence except in case of Joint
Venture Contracts (JVC) which are governed by the
respective Production Sharing/Revenue Sharing
Contracts. In case of return/refund of the liquidated
damages, the same is accounted for as other
expenses. In case of any dispute over the liquidated
damages, provision is created in the accounts.
(vi) Income from Business development services
such as technical and administrative support,
maintenance of Right of Way, cathodic protection,
facilities extended to other organisations etc. are
recognised at a point in time when the Company
satisfies its performance obligation.
(vii) Income in respect of OFC fibre leasing is recognised
periodically over the contract term.
(viii) Other claims are recognized when there is a
reasonable certainty of recovery.
1.5.0 Leases
1.5.1 The Company as lessor
The Company has classified Numaligarh Siliguri Product
Pipeline as operating lease as per the provisions of Ind
AS 116.
Rental income from operating leases is recognized on
a straight-line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging
an operating lease are added to the carrying amount of
the leased asset and recognized as expense on a straight¬
line basis over the lease term on the same basis as lease
income.
1.5.2 The Company as lessee
The Company has applied Ind AS 116 "Leases" to service
contracts of equipment, land, buildings, vehicles, etc.
to evaluate whether these contracts contain lease or
not. Based on evaluation of the terms and conditions
of the arrangements, the Company assesses such
arrangements to be leases.
The Company has exercised the option not to apply Ind
AS 116 to intangible assets.
1.5.2.1 Lease term
The Company determines the lease term as the non¬
cancellable period of a lease, together with both periods
covered by an option to extend the lease if the Company
is reasonably certain to exercise that option; and periods
covered by an option to terminate the lease if the Company
is reasonably certain not to exercise that option. In
assessing whether the Company is reasonably certain to
exercise an option to extend a lease, or not to exercise an
option to terminate a lease, it considers all relevant facts
and circumstances that create an economic incentive for
the Company to exercise the option to extend the lease,
or not to exercise the option to terminate the lease.
1.5.2.2 Right of use assets
The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right of use assets
are recognized at cost, less any accumulated depreciation
and impairment losses (Ind AS 36), if any.
The cost of right of use assets includes the amount of
the initial measurement of the lease liability adjusted
for any lease payments made at or before the inception
date of the lease, any initial direct costs incurred and
restoration obligations, if any.
1.5.2.3 Depreciation
The right-of-use assets are depreciated using the
straight-line method, beginning from the commencement
date over the lease term or useful life of right-of-use
assets whichever is earlier.
1.5.2.4 Lease liabilities
The lease liability is initially measured at present value
of the future lease payments over the reasonably certain
lease term. The lease payments are discounted using the
incremental borrowing rate as applicable.
1.5.2.5 Finance cost on lease liabilities
The interest cost on lease liability, computed using
effective interest method, is expensed in the statement
of profit and loss, unless eligible for capitalization as per
accounting policy on "Borrowing costs".
1.5.2.6 Non lease component
The Company's contracts involve a number of additional
services and components including personnel cost,
maintenance, drilling related activities, consumables and
other items. In most of such contracts, the additional
services/non-lease components constitute significant
portion of the overall contract value. Where the additional
services/non-lease components are not separately
priced, the Company allocates the consideration paid
based on the relative stand-alone prices of the lease
and non-lease components. Further, these non-lease
components are not included in the measurement of
lease liability.
1.5.2.7 Reassessment of lease liabilities
The Company remeasures the carrying amount of lease
liabilities if there is a change in the lease term or a change
in the lease payments.
1.5.2.8 Short term lease and low value assets leases
Leases for which lease term ends within 12 months
is classified as short-term leases. The Company has
elected short term leases and low value asset leases
for recognition exemption in terms of Ind AS 116. The
Company recognizes the lease rental payment associated
with short term lease and low-value asset leases as
expense in the Statement of Profit & Loss over the lease
term.
1.6.0 Foreign currency transactions and
translations
The Financial Statements are presented in Indian Rupees,
which is also the Company's functional currency.
In preparing the Financial Statements of the Company,
transactions in currencies other than Indian Rupees
are recognized at the rates of exchange prevailing
at the dates of the transactions. At the end of each
reporting period, monetary items denominated in foreign
currencies are retranslated at the closing rates prevailing
at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated
at the rate prevailing at the date when the fair value was
measured. Non-monetary items that are measured
in terms of historical cost in a foreign currency are
translated using the exchange rate as on the dates of the
initial transactions. Transaction gains and losses realized
upon settlement of foreign currency transactions are
included in determining net profit / loss for the period in
which the transaction is settled.
Exchange differences on monetary items are recognized
in the statement of profit and loss in the period in which
they arise except for:
a) Exchange differences on foreign currency
borrowings relating to acquisition or construction
of qualifying assets to the extent they are regarded
as an adjustment to interest cost ;
b) In accordance with para D13AA of Ind AS 101, First¬
time Adoption of Indian Accounting Standards,
the Company continues to exercise policy adopted
under previous IGAAP and accordingly exchange
differences arising on long-term foreign currency
monetary items recognised as at 31st March,
2016 were accumulated in a "Foreign Currency
Monetary Item Translation Difference Account"
and amortized over the balance period of such
long term foreign currency monetary item by
recognition as income or expense.
1.7.0 Borrowing costs
Borrowing cost consists of interest and other cost
incurred in connection with borrowing of funds and
includes exchange difference arising from foreign
currency borrowings to the extent that they are regarded
as an adjustment to interest cost. Borrowing cost also
includes finance cost on decommissioning and lease
liability.
Borrowing costs directly attributable to the acquisition
or construction of qualifying assets are capitalized to
the cost of those assets, until such time the assets are
substantially ready for their intended use.
Capitalisation of borrowing costs is suspended when
active development activity on the qualifying assets is
interrupted other than on temporary basis and charged
to the statement of profit and loss.
All other borrowing costs are recognized in the statement
of profit and loss in the period in which they are incurred.
1.8.0 Government grants
Government grants are recognized when there is
reasonable assurance that the Company will comply with
the conditions attached to them and that the grants will
be received.
(i) Grant related to Income (Revenue Grants)
The Company recognizes revenue grants in the
statement of profit and loss as a deduction in the
reporting related expense.
(ii) Grant relating to Assets (Capital Grants)
Government grants with the primary condition
that the Company should purchase construct
or otherwise acquire non-current assets are
recognized as deferred income in the balance sheet
and transferred to the statement of profit and loss
in the ratio of depreciation / depletion calculated on
the related assets.
1.9.0 Employee benefits
1.9.1 Retirement benefit costs and termination
benefits
Payments to defined contribution plans (such as
superannuation benefit scheme fund) are charged to
the statement of profit and loss (other than expenses to
be capitalized), when employees have rendered service
entitling them to the contributions.
The cost of providing benefits under defined benefit plans
(such as provident fund, gratuity, leave encashment,
post-retirement medical benefits, defined benefit
pension, Social security schemes etc) are determined
separately for each plan using the projected unit credit
method, with actuarial valuations being carried out
half-yearly and annually. This attributes the increase in
present value of the defined benefit obligation resulting
from employee service in the current period to determine
current service cost. The current service cost as stated
above and past service costs, resulting from a plan
amendment are recognized in the statement of profit and
loss under 'employee benefits expense'.
Net interest which is recognized in the statement of profit
and loss under 'employee benefits expense' represents
the net change in present value of plan obligations and
the value of plan assets resulting from the passage of
time, and is determined by applying the discount rate to
the present value of the benefit obligation and to the fair
value of plan assets at the beginning of the year, taking
into account expected changes in the obligation or plan
assets during the year.
Re-measurement of the defined benefit liability and
asset, comprising actuarial gains and losses, and the
return on plan assets (excluding amounts included in net
interest described above) other than capitalised portion
are recognized in other comprehensive income in the
period in which they occur and are not subsequently
reclassified to the statement of profit and loss.
The Company presents remeasurement of defined
benefit plans as a part of retained earnings (refer
statement of changes in equity).
Surplus or deficit recognized in the Financial Statements
for each defined benefit plan is the difference between
the present value of the defined benefit obligation
and the fair value of plan assets. The deficit for each
plan managed through separate Trust fund is to be
settled directly to such Trust fund. Defined benefit plan
surpluses are only recognized to the extent they are
recoverable, naturally by way of refund or reductions in
future contributions to the plans.
Payments made under Voluntary Retirement Scheme or
any other early separation scheme are charged to the
statement of profit and loss on incurrence.
1.9.2 Short-term and other long-term employee
benefits
A liability is recognized for benefits accruing to employees
in respect of wages and salaries (including performance
related pay), annual leave, sick leave etc in the period the
related service is rendered at the undiscounted amount
of the benefits expected to be paid in exchange for that
service.
Liabilities recognized in respect of short-term employee
benefits are measured at the undiscounted amount
of the benefits expected to be paid in exchange for the
related service.
Liabilities recognized in respect of other long-term
employee benefits are measured at the present value
of the estimated future cash outflows expected to be
made by the Company in respect of services provided by
employees up to the reporting date.
1.10.0 Taxation
1.10.1 Current Tax
Income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or
substantively enacted, at the reporting date.
The Company evaluates positions taken in the tax
returns with respect to situations in which applicable
tax regulations are subject to interpretation at each
reporting date and considers whether it is probable that a
taxation authority will accept an uncertain tax treatment.
In respect of disputed cases, when an appeal is decided
by appellate authority, the corresponding appeal effect is
given in the accounts only after receipt of appellate order
from the concerned Department/ Authority, if not further
contested.
1.10.2 Deferred tax
(i) Deferred tax is recognized using liability method
on temporary differences between the carrying
amounts of assets and liabilities in the Financial
Statements and the corresponding tax bases used
in the computation of taxable profit.
(ii) Deferred tax liabilities are generally recognized for
all taxable temporary differences.
(iii) Deferred tax assets are generally recognized for
all deductible temporary differences to the extent
that it is probable that taxable profits will be
available against which those deductible temporary
differences can be utilized.
(iv) The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to
allow the benefits of all or part of the deferred tax
asset to be utilized. Any such reduction shall be
reversed to the extent when it becomes probable
that sufficient taxable profit will be available.
(v) In assessing the recoverability of deferred tax
assets, the Company relies on the same forecast,
assumptions used elsewhere in the Financial
Statements and in other management reports/
estimates.
(vi) Deferred tax liabilities and assets are measured at
the tax rates that are expected to apply in the period
in which the liability is to be settled or the asset
to be realized. The tax rates and tax laws used to
compute the amount are those that are enacted or
substantively enacted, at the reporting date in the
countries where the joint operations operates and
generates taxable income.
(vii) The Company offsets deferred tax assets and
deferred tax liabilities as it has a legally enforceable
right to set off current tax assets and current tax
liabilities and the deferred tax assets and deferred
tax liabilities relate to income taxes levied by the
same taxation authority.
1.11.0 Oil and gas exploration, evaluation and
development expenditure
The Company has applied "Ind AS 106" and the "Guidance
Note on Accounting for Oil and Gas Producing Activities
(for entities to whom Ind AS is applicable)' issued by the
Institute of Chartered Accountants of India ("ICAI"), for
the accounting of Oil and Gas Assets and Exploration and
Evaluation assets. The Company considers Exploration
and Evaluation Assets as intangible assets.
1.11.1 Pre-Acquisition, Acquisition, Exploration and
Evaluation Costs
(i) Pre-Acquisition costs: Pre-Acquisition costs
includes expenses such as data collection and
analysis cost etc. which are incurred prior to
obtaining the rights to explore, develop and produce
Oil and Gas assets. These costs are charged to
the Statement of Profit and Loss in the year of
incurrence.
(ii) Acquisition costs:
a) Acquisition costs include cost of land acquired
for drilling operations, cost of temporary
occupation of the land, crop and surface
compensation paid to occupiers, registration
fee, legal cost, signature bonus, brokers' fees,
consideration paid for farm-in arrangements
and other costs incurred for acquiring rights to
explore, drill and produce oil and gas.
b) These costs are initially recorded under
Exploration and Evaluation Assets except cost
of land acquired for drilling operations which
are disclosed as "Acquisition cost-land" under
capital work in progress.
c) On determination of proved developed
reserves, associated acquisition costs are
transferred to Property, Plant and Equipment
as "Oil & Gas Assets".
d) Acquisition cost relating to an exploratory
well that is determined to have no proved
reserves and its status is decided as dry or
of no further use for exploration purpose, is
charged to Statement of Profit and Loss. In
such cases, against the land value forming
part of acquisition cost, a nominal amount of
' 100 per bigha is transferred to Freehold land
under Property, Plant and Equipment and the
remaining carrying value of land is charged off
to Statement of Profit and Loss.
e) Cost for retaining the mineral interest in
properties like lease carrying cost, license fees
and other cost are charged as expense when
incurred.
(iii) Exploration & Evaluation Cost (E&E cost):
a) Geological and geophysical costs, including
seismic surveys for exploration purposes are
charged off to Statement of Profit and Loss, as
and when incurred.
b) Costs including allocated depreciation on
support equipment and facilities involved
in drilling and equipping exploratory and
appraisal wells (such as rig, mud plant, well
logging equipment, cementing unit etc.)
allocated interest on support equipment
taken on lease and cost of exploratory-type
drilling stratigraphic test wells are initially
shown as Exploration and Evaluation Assets
(E&E Assets), till the time these are either
transferred to Property, Plant and Equipment
as "Oil & Gas Assets", on establishment of
proved developed reserves or are charged off
as expense in Statement of Profit and Loss,
when determined to be dry or of no further use.
c) E&E costs related to each exploratory well are
not carried over unless it could be reasonably
demonstrated that there are indications of
sufficient quantity of reserves and activities
are firmly planned in near future for further
assessing the reserves and economic and
operating viability of the project. Costs of
written off exploratory wells are not reinstated
in the books even if they start producing
subsequently.
d) Estimated decommissioning cost is included in
the carrying value of exploration and evaluation
asset.
(iv) Development Cost:
Costs incurred on development activities such as
drilling of development wells and service wells,
setting of production and processing of plant
and facilities including allocated depreciation on
support equipment and facilities (such as rig, mud
plant, well logging equipment, cementing unit etc.)
and allocated interest on support equipment taken
on lease are initially shown under Capital Work
in Progress as "Development Cost wells" and are
capitalized as "Oil & Gas Asset" under Property, Plant
and Equipment on completion of well. Cost of dry
development well, if any, is also capitalized as Oil
and Gas Asset under Property, Plant and Equipment
upon completion of the well.
(v) Production Cost:
Production Cost consists of direct and indirect costs
incurred to operate and maintain wells and related
equipment and facilities, including depreciation and
applicable operating cost of support equipment and
facilities. These costs are charged off to Statement
of Profit and Loss, as and when incurred.
(vi) Side-Tracking Expenditure:
In case of exploratory wells, the cost of abandoned
portion of side tracked well is charged off
to Statement of Profit and Loss. In case of
development wells, the entire cost of abandoned
portion and side- tracking is capitalized. In case of
existing producing wells, the cost of side - tracking
is capitalized if it increases the proved developed
reserves, otherwise it is charged off to Statement
of Profit and Loss.
1.12.0 Research & Development Expenditure
All revenue expenditure incurred for Research &
Development Projects/Schemes, net of grants-in-aid
(other than those related to asset) if any, are charged to
the Statement of Profit and Loss.
1.13.0 Property, Plant and Equipment (PPE)
including Capital Work in Progress
(CWIP) (PPE) including Capital Work in
Progress (CWIP)
i. Property, plant and equipment including Oil and
Gas assets are stated at cost, less accumulated
depreciation, depletion and impairment losses.
Such cost includes the cost of replacing part of
the plant and equipment, if the recognition criteria
are met, the present value of the initial estimate
of any decommissioning or site abandonment or
restoration obligation, wherever applicable and
eligible borrowing costs, wherever applicable. Refer
to significant accounting judgements, estimates and
assumptions (Note 1.2.1) and provisions (Note 1.15.2)
for further information relating to decommissioning
cost and its provision.
ii. Assets which are in the course of construction are
initially kept under capital work in progress and
capitalized when the assets are available for use in
the manner as intended by the management. Such
cost includes the costs incurred during construction
period and the present value of the initial estimate
of any abandonment, decommissioning or site
restoration obligation, wherever applicable.
Capital work in progress is stated at cost, net of
accumulated impairment loss, if any.
iii. Borrowing cost consisting of interest on term
loan and unwinding of interest on lease liability in
respect of leases entered for support equipment
are capitalised in CWIP or the relevant item of
PPE (as the case may be), provided the criteria for
recognition of borrowing cost as a component of
carrying value of item of PPE has been fulfilled.
iv. If any item held under CWIP is not as per the defined
requirement or specifications and has no further
use, a provision is recognized for the write off of
such item, until such item is actually written off.
v. Items such as spare parts, stand-by equipment
and servicing equipment which meet the definition
of Property, Plant and Equipment are capitalised.
Other spare parts are carried as inventory and
recognized in the Statement of Profit and Loss on
consumption.
vi. When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates them separately based on their specific
useful lives not exceeding the remaining useful life
of respective plant and equipment. Where an asset
or part of an asset that was separately depreciated
is replaced and it is probable that future economic
benefits associated with the item will flow to
the Company, the expenditure is capitalized and
the carrying amount of the replaced asset is
derecognized.
vii. Major shut-down and overhaul expenditure is
capitalized as the activities undertaken to improve
the future economic benefits expected to arise from
the asset. Inspection costs associated with major
maintenance programs from which future economic
benefits are expected to flow, are capitalized and
depreciated over the period to the next inspection.
viii. Technical know-how /license fee relating to plants /
facilities and specific software that are integral part
of the related hardware are capitalized as part of
cost of the underlying asset.
ix. Oil and Gas assets forming part of PPE in respect of
an area / field having proved developed oil and gas
reserves, when the well in the area / field is ready
to commence commercial production. Oil and Gas
assets which comprise of producing wells, related
acquisition cost and production facilities are
depleted using a unit-of-production method. The
capitalised cost of producing wells and production
facilities including estimated decommissioning
and abandonment cost (net of salvage value,
accumulated depreciation and impairment
charge) are depleted over proved developed
reserves. Acquisition cost is depleted over proved
reserves. Rate of depletion is determined based on
production from the Oil/Gas field or a group of Oil/
Gas fields identified to the related reserves having
homogeneous geological features. Estimation of oil
and natural gas reserves are done annually at the
year end and the impact of changes in the estimated
proved reserves are dealt with prospectively by
depleting the remaining carrying value of the asset.
x. Other property, plant and equipment excluding
'Land-freehold' and 'Right of use (ROU) assets'
are depreciated based on useful life of the asset
under "Written down value method" as specified in
Schedule II to the Companies Act., 2013. Freehold
land are not depreciated.
xi. Low value items not exceeding ' 5,000 are fully
depreciated at the time of addition. Residual value
(net of estimated cost of disposal) of property plant
and equipment other than well asset is determined
considering past experience and technical
assessment (if applicable) and is upto 5% of the
original cost. The residual value of well assets are
determined based on technical assessment of
the net sale value of scrap that may be extracted
from the wells, depending upon the location and
condition of the wells. The typical useful life of other
major property, plant and equipment are as follows:
xii. Depreciation on subsequent expenditure on
PPE (other than of Oil and Gas Assets) arising on
account of capital improvement or other factors
is provided for prospectively over the remaining
useful life. Depreciation on furbished/revamped
PPE (other than of Oil and Gas Assets) which are
capitalized separately is provided for over the
reassessed useful life.
xiii. The expected useful life of property, plant and
equipment other than Oil and gas assets are
reviewed on an annual basis. The expected
useful life of Oil and Gas assets are reviewed
by estimating the reserves for the Oil and Gas
assets annually. Further, the residual value of
PPE is also reassessed annually. Impact arising
due to changes in useful life or the change in
residual value, are accounted for prospectively.
Company considers the impact of health, safety
and environmental legislation in its assessment
of expected useful lives and estimated residual
values.
xiv. Any tangible asset other than well assets retired
from active use and future economic benefits
are expected to arise on disposal of the asset is
carried as plant & equipment at lower of ' 1000
or 5% of the original cost and the balance written
down value, is charged off.
xv. An item of property, plant and equipment other
than well assets is derecognised upon disposal or
when no future economic benefits are expected
to arise from the continued use or disposal of the
asset. Any gain or loss arising on de-recognition
of the asset is included in the statement of
Profit & Loss in the period in which the item is
derecognized. Any gain or loss arising on actual
sale of the asset is included in the Statement of
Profit and Loss in the period in which the item is
actually sold as scrap.
xvi. Producing well assets are derecognized when the
designated oil/gas field or a group of oil/gas fields
ceases to produce.
xvii. Assets provided to employees as per the Company's
internal schemes are also classified as property,
plant and equipment and are depreciated under
written down value method based on the useful
life as defined in the internal schemes of the
Company or useful life as specified in Schedule II
of the Companies Act, whichever is lower. Such
assets are derecognised on expiry of useful life as
defined in the internal scheme or buy-back of such
assets by the employees as per aforesaid internal
schemes.
The assets provided to employees having its useful
life different than as specified in schedule II of the
Act are as follows:
Further, soft furniture given to employees as
per the aforesaid internal scheme, are fully
depreciated in the year of purchase.
viii. Physical verification of the property, plant
and equipment (other than PPE items given to
employees as per the policy of the Company) is
carried out by the Company in a phased manner
to cover all the items over a period of three years.
The discrepancies noticed, if any, are accounted
for in the year in which such differences are
found and provision is created in respect of these
discrepancies, till the time the same is written
off.
1.13.1 Intangible assets
The Company follows cost model for recognition and
measurement of intangible assets. Intangible assets
are stated at the amount initially recognized less
accumulated amortization and accumulated impairment
losses, if any.
Cost of right of way of land with indefinite useful lives are
not amortized but tested for impairment annually at the
cash-generating unit level. The assessment of indefinite
life is reviewed annually to determine whether the
indefinite life continues or not. If not, the change in useful
life from indefinite to finite is made on a prospective
basis.
Cost of computer software is amortized on straight
line basis over the useful life upto 5 years from the
date of capitalization. The amortisation period and
the amortisation method for Computer Software are
reviewed annually. Computer Software are assessed
for impairment whenever there is an indication that the
intangible asset may be impaired.
Any intangible asset when determined obsolete and no
further use, is written off.
1.13.2 Impairment of property, plant & equipment
(PPE), E&E assets and other Intangible assets
At the end of each reporting period, the Company reviews
whether there is an indication that its Property, Plant and
Equipment, Capital Work in Progress, Exploration and
Evaluation Assets and Intangible Assets may be impaired.
E&E Assets are reviewed for indicators of impairment
as per Ind AS 106. If any indication exists, the Company
estimates the asset's recoverable amount, which is the
higher of cash-generating unit's (CGU) fair value less
costs of disposal and its value in use. The recoverable
amount is determined for CGU as a whole. For this
purpose, Producing fields, LPG plant, Transportation
Pipeline and Renewable Energy Units (other than captive
power plants) are considered as Cash Generating Units
(CGU).
Corporate assets and common service assets are also
allocated to individual cash- generating units on a
reasonable and consistent basis. When the carrying
amount of all assets under the CGU exceeds the
recoverable amount of CGU, the asset is impaired and is
written down to its recoverable amount, by charging the
impairment loss in the Statement of Profit and Loss.
In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax
discount rate, that reflects current market assessments
of the time value of money and the risks specific to the
CGU.
An assessment is made at each reporting date to
determine whether there is an indication that previously
recognised impairment losses no longer exist or have
decreased. If such indication exists, the Company
estimates the CGU's recoverable amount. A previously
recognised impairment loss is reversed only if there has
been a favourable change in the assumptions used to
determine the asset's recoverable amount since the last
impairment loss was recognised.
When an impairment loss is subsequently reversed, the
carrying amount of the asset or group of assets covered
under the CGU is increased to the revised estimate of
its recoverable amount, up to the carrying amount that
would have been determined had no impairment loss
been recognized for the asset or group of assets covered
under the CGU in prior years. A reversal of an impairment
loss is recognized in the Statement of Profit and Loss.
After a reversal, the depreciation charge is adjusted in
future periods to allocate the asset's revised carrying
amount, less any residual value, on a systematic basis
over its remaining useful life.
1.14.0 Inventories
Inventory of Finished goods of Crude Oil, Liquefied
Petroleum Gas (LPG), and condensate are valued at
cost determined using absorption costing method or
net realizable value, whichever is lower. Cost of finished
goods is determined based on direct cost and directly
attributable services cost including depreciation and
depletion. The value of such inventories includes excise
duty, royalty and other levies, as applicable. Excise duty
on finished stocks lying at manufacturing locations is
provided for at the assessable value applicable at each
of the locations based on end use. Net realizable value
represents the estimated selling price of inventories less
all estimated costs necessary to effect the sale.
Crude oil in unfinished condition in the flow line up to
Group Gathering Station and Natural Gas in Pipeline are
not valued, as these pipeline fills are necessary for the
operation of the facility. Crude oil lying in flowlines from
Group Gathering Station (GGS) / Oil Collecting Station
(OCS) to tank farms are not valued, as these pipeline fills
will always remain and are necessary for the operation of
the facility. Crude oil in semi-finished condition in tanks in
GGS/OCS are measured and valued at cost on absorption
costing method or net realisable value, whichever is
lower.
Inventory of stores and spares (including inventory in
transit) and other raw materials are valued using weighted
average cost or net realizable value whichever is lower.
Obsolete / unserviceable items, as and when identified,
are written off. Any item of stores and spares including
those in storage locations which have not moved for last
four years as on date of Balance Sheet are identified as
slow-moving items for which a provision of 95% of the
book value is made.
Renewable Energy Certificates (REC) received by the
Company on the basis of generation of renewable energy
and certified by the competent authority, are held for
trading and are not valued.
Physical verification of inventory including store and
spare items (excluding materials in-transit) is carried
out by the Company in a phased manner to cover all the
items. Stores and Spares items of high and medium value
are physically verified every year whereas items carrying
low value are physically verified over a period of 3 years.
The discrepancies noticed, if any, are accounted for in
the year in which such differences are found.
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