2. Material accounting policies
i) Statement of compliance and basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards tind AS)
notified under section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules,
2015(as amended) and Guidance note on Accounting for oil and gas producing activities tind AS) issued by the
Institute of Chartered Accountants of India. These financial statements for the year ended March 31, 2025 for the
Company has been prepared in accordance with Ind AS.
For all periods up to and including the year ended March 31,2025, the Company had prepared its financial statements
under historical cost convention on accrual basis in accordance with the generally accepted accounting principles.
The Financial statements have been prepared on going concern basis on historical cost basis except for certain
financial instruments that are measured at fair values / amortised cost / net present value at the end of each
reporting period, as explained in the accounting policies below.
As the operating cycle cannot be identified in normal course due to the nature of industry, the same has been
assumed to have a duration of 12 months. 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 Standalone Financial Statements are presented in Indian Rupees t'Rs.) and all values are rounded off to the
nearest Lakhs except otherwise stated.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date under the current market conditions.
The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability
to observe inputs employed in their measurement which are described as follows:
ta) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
tb) Level 2 inputs are inputs that are observable, either directly or indirectly, other than quoted prices included
within level 1 for the asset or liability.
tc) Level 3 inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable
related market data or Company's assumptions about pricing by market participants.
ii) Interest in joint operations
A joint operation is a joint arrangement whereby the parties that have the joint control of the arrangement have
rights to the assets, and obligations for the liabilities relating to the arrangement.
The Company has entered into Unincorporated Joint Ventures tUJVs) with other entities and executed Production
Sharing Contracts t'PSC") and Revenue Sharing Contracts t'RSC") with the Government of India. These UJVs are in
the form of joint arrangements wherein the participating entity's assets and liabilities are proportionate to its
participating interest.
The UJVs entered into by the company are joint operations wherein the liabilities are several, not joint, and not joint
and several and therefore do not come under the category of Joint Venture as defined under the Ind AS. In accounting
for these joint operations, the company recognizes its assets and liabilities in proportion to its participating interest
in the respective UJV Likewise, revenue and expenses from the UJV are recognized for its participating interest only.
The Company accounts for the assets, liabilities, revenues and expenses relating to its interest in the UJVs in
accordance with the Ind AS.
The financial statements of the Company reflect its share of assets, liabilities, income and expenditure of the
Unincorporated Joint Ventures t'"UJV'") which are accounted, based on the available information in the audited financial
statements of UJV on line by line basis with similar items in the Company's accounts to the extent of the participating
interest of the Company as per the various PSCs and RSCs. The financial statements of the UJVs are prepared by the
respective Operators in accordance with the requirements prescribed by the respective PSCs. Hence, in respect of
these UJVs, certain disclosures required under the relevant accounting standards have been made in the financial
statements.
iii) Investment in subsidiaries, associate and joint ventures
The Company records the investments in subsidiaries, associate and joint ventures at cost less impairment loss, if
any. On disposal of investment in subsidiaries, associates and joint ventures, the difference between the net disposal
proceeds and the carrying amounts tincluding corresponding value of dilution in deemed investment) are recognized in
the statement of profit and Loss.
iv) Foreign exchange transactions
The functional currency of the Company is Indian Rupee which represents the currency of the primary economic
environment in which it operates.
Transactions in currencies other than the Company's functional currency (foreign currencies) 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 translated using mean exchange rate prevailing on the last day of the reporting
period.
Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period in which
they arise.
v) Revenue recognition
Revenue towards satisfaction of a performance obligation is measured at transaction price allocated to that performance
obligation. The transfer of control on sale of crude oil and natural gas occurs at the point of delivery, where usually the
title is passed and the customer takes physical possession, depending upon the contractual conditions. Any retrospective
revision in prices is accounted for in the year of such revision.
ti) Revenue from the sale of crude oil, condensate and natural gas, net of value added tax and profit petroleum to
the Government of India, is recognized on transfer of custody to customers, and the amount of revenue can be
measured reliably and it is probable that the economic benefits associated with the transaction will flow to the
Company.
Other income
tii) Interest income is recognized on the basis of time, by reference to the principal outstanding and at effective
interest rate applicable on initial recognition.
tiii) Dividend Income from investments is recognized when the right to receive has been established.
tiv) Rental income arising from operating leases is accounted on straight-line basis over the lease term.
tv) Income from sale of scrap is accounted for on realization, if any.
vi) Taxes
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the
year. Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized
in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in
other comprehensive income or directly in equity, respectively.
The tax rates and tax laws used to compute are the laws that are enacted or substantively enacted as on the
reporting date. The management evaluates and makes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Current taxes
The current tax expense includes income taxes payable by the Company. Advance taxes and provisions for current
taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the
same tax jurisdiction and where the relevant tax paying units intends to settle the asset and liability on a net basis.
Deferred taxes
Deferred tax is recognised 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 recognised for all taxable temporary differences. Deferred tax assets are generally recognised 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. Such deferred tax assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
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 all or part of the asset to be
recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on tax rates tand tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority
and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
vii) Property plant and equipment (other than oil and gas assets)
Land and buildings held for use in the production and supply of goods or services, or for administrative purposes are
stated in the balance sheet at cost less accumulated depreciation and the accumulated impairment losses.
Freehold land is carried at historical cost and is not depreciated. All other items of property, plant and equipment are
stated at historical cost less accumulated depreciation.
Historical cost comprises the purchase price and any attributable cost of bringing the asset for its intended use.
It includes expenditure that is directly attributable to the acquisition of the items. Borrowing costs for acquisition of
Property Plant and equipments are capitalized till such assets are ready to be put to use.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of
the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is
derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred.
Improvements to Leasehold premises are amortized over the remaining primary lease period.
Capital work in progress are items of property, plant and equipment which are not ready for their intended use and are
carried at cost, comprising direct cost and related incidental expense. Capital work in progress includes items of
drilling materials which are held for use in extraction or production of oil and gas, and are expected to be used for more
than one period.
a) Useful lives used for depreciation:
The Company follows the useful lives set out under Schedule II of the Companies Act 2013 for the purpose of
determining the useful lives of respective blocks of property plant and equipment. The following are the useful lives
followed:
- Buildings : 60 years
- Office Equipment : 05 years
- Computers : 03 years
- Furniture and Fixtures : 10 years
- Vehicles : 08 years
- Plant and Machinery : 15 years
Depreciation is recognized so as to write off the cost of assets (other than freehold land) less their residual
values over their useful lives, using the written down value method.
b) De-recognition of property, plant and equipment
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continuous use of the asset. Any gain or loss arising from such disposal, retirement
or de-recognition of an item of property, plant and equipment is measured as the difference between the net
disposal proceeds and the carrying amount of the item. Such gain or loss is recognized in the statement of
profit and loss.
In case of de-recognition of a revalued asset, the corresponding portion of the revaluation surplus as is attributable
to that asset is transferred to retained earnings on such de-recognition. Such transfers to retained earnings
are made through Other Comprehensive Income and not routed through profit or loss.
viii) Oil and gas assets
Oil and gas assets are stated at historical cost less accumulated depletion and impairment. These are accounted in
respect of an area / field having proved oil and gas reserves, when the wells in the area / field are ready to commence
commercial production.
The Company follows the "Successful Efforts Method" of accounting for oil and gas assets as set out by the Guidance
Note issued by the ICAI on "Accounting for Oil and Gas Producing Activities".
Expenditure incurred on acquisition of license interest is initially capitalized on license by license basis as Intangible
Assets as "Exploration". Costs are not depleted within exploratory and development work in progress until the exploration
phase is completed or commercial oil and gas reserves are discovered.
ta) Cost of surveys and studies relating to exploration activities are expensed as and when incurred.
tb) Cost of exploratory/appraisal wellts) are expensed when it is not successful and the cost of successful wellts)
are retained as exploration expenditure till the development plan is submitted. On submission of development
plan, it is transferred to capital work in progress. On commencement of commercial production, the capital
work in progress is transferred to producing property as Property, plant and equipment - Oil and gas assets..
tc) Cost of temporary occupation of land and cost of successful exploratory, appraisal and development wells are
considered as development expenditure. These expenses are capitalized as producing property as Property,
plant and equipment - Oil and gas assets on commercial production.
td) Development costs on various activities which are in progress are accounted as capital work in progress.
On completion of the activities the costs are moved to respective oil and gas assets.
Depletion to oil and gas assets
Depletion is charged on a unit of production method based on proved reserves for acquisition costs and proved and
developed reserves for capitalized costs consisting of successful exploratory and development wells, processing
facilities, assets for distribution, estimated site restoration costs and all other related costs. These assets are
depleted within each block. Reserves for these purposes are considered on participating interest basis which are
assessed annually. Impact of changes to reserves if any are accounted prospectively.
ix) Site restoration
Provision for decommissioning costs are recognized as and when the Company has a legal or constructive obligation
to plug and abandon a well, dismantle and remove plant and equipment to restore the site on which it is located.
The estimated liability towards the costs relating to dismantling, abandoning and restoring well sites and allied
facilities are recognized in respective assets when the well is completed, and the plant and equipment are installed.
The amount recognized is the present value of the estimated future expenditure determined using existing technology
at current prices and escalated using appropriate inflation rate till the expected date of decommissioning and discounted
up to the reporting date using the appropriate risk-free interest rate.
The corresponding amount is also capitalized to the cost of the producing property ti.e. Property, plant and equipment
- Oil and gas assets) and is depleted on unit of production method. Any change in the estimated liability is dealt with
prospectively and is also adjusted to the carrying value of the producing property ti.e. Property, plant and equipment
- Oil and gas assets).
Any change in the present value of the estimated decommissioning expenditure other than the periodic unwinding of
discount is adjusted to the decommissioning provision and the carrying value of the asset. In case reversal of provision
exceeds the carrying amount of the related asset, the excess amount is recognized in the Statement of Profit and
Loss. The unwinding of discount on provision is charged in the Statement of Profit and Loss as finance cost.
Provision for decommissioning cost in respect of assets under joint operations is considered as per the participating
interest of the Company in the block/field.
x) Investment property
Properties held to on rentals and / or capital appreciation are classified as investment property and are measured and
reported at cost, including transaction costs.
Depreciation is recognized using the Written Down Value Method, so as to write off the cost of the investment
property less their residual values over their useful lives specified in Schedule II to the Companies Act, 2013, or in the
case of assets where the useful lives are determined by technical evaluation, over the useful lives so determined.
Depreciation method, useful life and the residual values are reviewed at each financial year end to reflect the expected
pattern of consumption of the future benefits embodied in the investment property and the value thereon. The effect
of any change in the estimates of useful lives / residual value is accounted on a prospective basis.
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn
from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of
property is recognized in the Statement of Profit and Loss in the same period.
xi) Intangible assets
Intangible assets - Exploration
Exploration expenditure includes cost of exploration activities such as:
• Acquisition cost- cost associated with acquisition of licenses and rights to explore, including related professional
fees.
• General exploration cost- cost of surveys and studies, rights of access to properties to conduct those studies
te.g cost incurred for environment clearance etc), salaries and other expenses of geologists, geophysical personnel
conducting those studies.
• Cost of exploration drilling and equipping exploration and appraisal wells.
Intangible assets - others
Intangible assets with a finite useful life acquired separately are measured on initial recognition, at costs. Intangible
assets are carried at cost less accumulated amortization and impairment losses if any.
The Company amortizes intangible assets with a finite useful life using the straight-line method. The useful life considered
for computer software is 6 years.
xii) Impairment
The carrying values of assets/cash generating units are assessed for impairment at the end of every reporting period.
If the carrying amount of an asset exceeds the estimated recoverable amount, an impairment is recognized as
expense in the statement of profit and loss. The recoverable amount is the greater of the net selling price and value
in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on an
appropriate discount factor.
An impairment loss recognized in prior periods for an asset other than goodwill is reversed if, and only if, there has
been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was
recognized. In that case, the carrying amount of the asset is increased to its recoverable amount. However, such
reversal shall not exceed the carrying amount had there been no impairment loss.
xiii) Inventories
The accounting treatment in respect of recognition and measurement of inventory is as follows:
(i) Closing stock of crude oil and condensate in saleable condition is valued at the estimated net realizable value in
the ordinary course of business.
(ii) Stores, spares, capital stock and drilling tangibles are valued at cost on first in first out basis and estimated
net realizable value, whichever is lower.
xiv) Employee benefits
Employee benefits include salaries, wages, provident fund, gratuity, leave encashment towards un-availed leave,
compensated absences and other terminal benefits.
All short-term employee benefits are recognized at their undiscounted amount in the accounting period in which they
are incurred.
a) Defined contribution plan
The Company's contribution to provident fund is considered as defined contribution plan and are recognized as
and when the employees have rendered services entitling them to contributions.
b) Defined benefit plan
The Company makes annual contribution to a Gratuity Fund administered by trustees and managed by the Life
Insurance Corporation of India. The Company accounts its liability for future gratuity benefits based on actuarial
valuation, as at the Balance Sheet date using the Projected Unit Credit method.
Re-measurement comprising actuarial gains and losses are reflected immediately in the balance sheet with a
charge or credit recognized in the Other Comprehensive Income in the period in which they occur. Re-measurement
recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified
to profit or loss.
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit
liability or asset and is recognized the Statement of Profit and Loss except those included in cost of assets as
permitted.
Defined benefit costs are categorized as Service cost, Net interest expense and re-measurement cost.
c) Long term employee benefit
The liability for long term compensated absences which are not expected to occur within 12 months after the
end of the period in which the employee rendered related service are recognized as liability based on actuarial
valuation as at the balance sheet date.
d) Other Employee Benefits including allowances, incentives etc. are recognized based on the terms of the
employment.
xv) Employee share based payment
Equity settled share-based payments if any, to employees are measured at fair value of the equity instruments at the
grant date. The fair value determined at the grant date of the equity settled share-based payment is expensed on
straight line basis over the vesting period based on the Company's estimate of the equity instrument that will
eventually vest, with a corresponding increase in other equity. At the end of each reporting period, the company
revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognized in profit or loss such that cumulative expense reflects the revised estimate, with
corresponding adjustment to the equity -settled employee benefits reserve.
xvi) Financial instruments
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions
of the instruments. All financial assets and liabilities are initially measured at fair value except for trade receivables
which are initially measured at a transaction price. Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities that are not at fair value through profit or loss, are added to or
deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through
profit or loss are recognized immediately in profit or loss.
Financial assets
All regular purchases or sales of financial assets are recognized and derecognized on the fair value. Recognized financial
assets are subsequently measured in their entirety at the fair value. In case of investments in wholly owned subsidiary, the
investments are considered at cost subject to impairment if any. However, trade receivables that do not contain a
significant financing component are measured at transaction price.
A financial asset is de-recognized only when the Company has transferred the rights to receive cash flows from the
financial asset or retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual
obligation to pay the cash flows to one or more recipients.
Financial assets held with the objective to collect contractual cash flows and the terms give rise on specified dates to cash
flows that are solely payments of principal and interest are subsequently measured at amortized cost except for financial
assets that are designated at fair value through profit or loss on initial recognition.
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value
through other comprehensive income on initial recognition.
All equity investments in entities other than subsidiaries, associates and joint venture companies are measured at fair
value. Equity instruments which are held for trading are classified as at FVTPL.
Impairment of Financial Assets:
The Company applies the Expected Credit Loss tECL) model for measuring and recognizing impairment losses on
financial assets, including those measured at amortized cost and trade receivables or other financial assets.
For trade receivables and amounts receivable from contracts with customers, the Company follows the simplified
approach, where the loss allowance is measured at an amount equal to the lifetime expected credit loss tECL).
Lifetime ECL represents the expected credit losses resulting from all possible default events over the expected life of
a financial instrument. In contrast, the 12-month ECL refers to the portion of expected credit losses arising from
default events that may occur within 12 months after the reporting date tor a shorter period if the instruments
expected life is less than 12 months).
For all other financial assets, , the Company follows the general approach to recognize impairment loss, which involves
assessing Significant Increase in Credit Risk tSICR). If the credit risk has not increased significantly since initial
recognition, the 12-month ECL is applied. However, if the credit risk has increased significantly, a lifetime ECL is
recognized. If in a subsequent period, the credit quality of the financial instrument improves such that there is no
longer a significant increase in credit risk, the Company reverts to 12-month ECL for impairment loss recognition.
When assessing whether the credit risk of a financial asset has increased significantly and estimating ECLs, the
Company considers all relevant and supportable information available without undue cost or effort. This includes both
quantitative and qualitative factors, incorporating the Company's historical experience, informed credit assessment,
and forward-looking information.
Financial liabilities
All financial liabilities are recognized initially at fair value. In the case of loans, borrowings and payables, recognition is net
of directly attributable transaction and other costs. Financial liabilities are subsequently measured at amortized cost
using the effective interest method. The Company's financial liabilities may include trade and other payables, loans and
borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments. The measurement
of financial liabilities is at fair value and adjustment thereon is routed through profit or loss.
Derecognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
Derivative financial instruments
The Company uses derivative financial instruments such as forward and options currency contracts to hedge its foreign
currency risks. Such derivative financial instruments are initially recognised and subsequently measured at fair value
through profit or loss (FVTPL). Derivatives are carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivative financial
instrument are recognised in the Statement of Profit and Loss and reported with foreign exchange gains/tloss).
Changes in fair value and gains/tlosses) on settlement of foreign currency derivative financial instruments relating to
borrowings, which have not been designated as hedge are recorded as finance cost.
Offsetting of financial assets and financial liabilities:
Financial assets and financial liabilities are offset, and the net amount is presented in the balance sheet if there is a
currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to
realize the assets and settle the liabilities simultaneously.
|