1.3 Summary of Significant accounting polices
a) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current
classification. An asset is treated as current when it is:
• Expected to be realized or intended to be sold or consumed in normal operating cycle held
primarily for the purpose of trading
• Expected to be realized in normal operating cycle or within twelve months after the reporting
period or
• Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle or due to be settled within twelve months
after the reporting period
• It is held primarily for the purpose of trading
• There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in
cash and cash equivalents. The Company has identified period of twelve months as its operating cycle.
b) Revenue recognition
Revenue is recognized upon transfer of control of promised goods to customers in an amount that
reflects the consideration we expect to receive in exchange of product or services. Revenue is measured
at the fair value of the consideration received or receivable, taking into account contractually defined
terms of payment and excluding taxes or duties collected on behalf of the government.
Revenue is recognised only if following condition are satisfied:
• The performance obligations have been met;
• The Company retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
• It is probable that the economic benefit associated with the transaction will flow to the Company; and
• it can be reliably measured and it is reasonable to expect ultimate collection.
c) Cash flow
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items
and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past
or future cash receipts or payments. The cash flows from operating, investing and financing activities of
the Company are segregated based on the available information
d) Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any.
Cost directly attributable to acquisition are capitalised until the property, plant and equipment are ready
for use, as intended by the management. Depreciation has been provided on written down value method
in accordance with section 198 of the Companies Act, 2013 at the rates specified in schedule II to the
Companies Act, 2013, on pro-rata basis with reference to the period of use of such assets.
Capital WIP
Cost of assets not ready for intended use, as on the balance sheet date, is shown as capital work in
progress.
e) Amortisation of intangible assets
Intangible Assets as defined in Accounting Standard 26-“Intangible Assets” are valued at cost and
amortised as per its useful life and value in use.
f) Finance cost
Borrowing costs that are directly 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 statement of
profit and loss in the period in which they are incurred
g) Inventories
Inventories of petroleum products and machinery are measured at lower of cost and net realizable value
on FIFO basis after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase
and other cost incurred in bringing them to their respective present location and condition.
h) Lease
The Company assesses whether a contract is or contains a lease, at inception of a contract. The
assessment involves the exercise of judgement about whether (i) the contract involves the use of an
identified asset, (ii) the Company has substantially all of the economic benefits from the use of the asset
through the period of the lease, and (iii) the Company has the right to direct the use of the asset. The
Company recognises a right-of-use asset (“ROU”) and a corresponding lease liability at the lease
commencement date. The ROU asset is initially recognised at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made at or before the commencement date, plus any
initial direct costs incurred. They are subsequently measured at cost less accumulated depreciation and
impairment losses. The ROU asset is depreciated using the straightline method from the commencement
date to the earlier of, the end of the useful life of the ROU asset or the end of the lease term. The lease
liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the Company uses an incremental borrowing rate specific to the Company, term and
currency of the contract. Generally, the Company uses its incremental borrowing rate as the discount
rate.
The Company has elected not to recognize ROU assets and lease liabilities for short term leases as well as
low value assets and recognizes the lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
i) Income taxes
Income tax expense comprises of current and deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities in accordance with the Income-tax Act, 1961.
Current income tax relating to items recognized outside profit and loss is recognized outside profit and
loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation
to the underlying transaction either in OCI or directly in equity.
Deferred tax
Deferred tax is recognized 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. Deferred tax liabilities are generally recognized for all taxable temporary differences.
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.
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