1. SIGNIFICANT ACCOUNTING POLICIES

1 ACCOUNTING CONVENTION:

The Financial Statements are brpared under the historical cost convention on accrual method of accounting, in accordance with the Generally Accepted Accounting Principles and complying with the mandatory Accounting Standards notified by the Government of India under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions and brsentational requirement of the Companies Act, 2013.

2 CLASSIFICATION OF ASSETS & LIABILITIES:

All the Assets and Liabilities of the Company are segregated into Current & Non-current based on the principles and definitions as set out in the Schedule III to the Companies Act, 2013 as amended. The Company has adopted a period of 12 months as its Operating Cycle.

3 br-ACQUISITION COSTS, ACQUISITION COSTS, EXPLORATION COSTS,  DEVELOPMENT COSTS AND ABANDONMENT COSTS :

The Company follows the "Successful Efforts Method" (SEM) of Accounting in respect of its oil and gas exploration and production activities in accordance with the "Guidance Note on Accounting for Oil & Gas Producing Activities" issued by the Institute of Chartered Accountants of India.

4 br-ACQUISITION COSTS:

Costs of revenue nature incurred prior to obtaining the rights to explore, develop and produce Oil & Gas like data collection & analysis cost etc. are expensed to the Statement of Profit and Loss in the year of incidence.

5 GEOLOGICAL & GEOPHYSICAL COSTS:

Geological and Geophysical expenditure are charged as expense when incurred.

6 ACQUISITION COSTS:

i) Acquisition costs include land acquired for drilling operations including cost of temporary occupation of the land, crop compensation paid to farmers, registration fee, legal cost, signature  bonus, brokers' fees, consideration for farm-in arrangements and other costs incurred in acquiring mineral rights.

ii) Cost for retaining the mineral interest in properties like lease carrying cost, license fees & other cost are charged as expense when incurred.

iii) Acquisition costs are initially recorded under Capital work in progress-Tangible & Intangible as the case may be.

iv) On determination of proved developed reserves, associated acquisition costs are transferred to Fixed Assets-Producing Properties.

v) Acquisition cost of Producing Properties is capitalized under Fixed Asset-Producing Properties.

vi) 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 as expenses. In such cases, for land value forming part of acquisition cost, a nominal amount of Rs.100 per bigha is transferred to Freehold land under Fixed Assets.

7 EXPLORATION COSTS:

i) All exploration costs including allocated debrciation on support equipment and facilities involved in drilling and equipping exploratory and appraisal wells and cost of exploratory-type drilling stratigraphic test wells are initially shown as Intangible assets under Capital Work in Progress as exploration cost till the time these are either transferred to Fixed Assets as Producing Properties on determination of Proved Developed Reserves or charged as expense when determined to be dry or of no further use.

ii) Cost of exploratory wells 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 & operating viability of the project. Costs of written off exploratory wells are not reinstated in the book even if they start producing subsequently.

8 DEVELOPMENT COSTS:

Costs that are attributable to development activities including production and processing plant & facilities, service wells including allocated debrciation on support equipment and facilities are initially shown as Tangible Assets under Capital Work in Progress as Development Cost till such time they are capitalized as Producing Properties upon determination of Proved Developed Reserves.

9 PRODUCTION COSTS:

Production Cost consist of direct and indirect costs incurred to operate and maintain wells and related equipments and facilities, including debrciation and applicable operating cost of support equipment and facilities.

10 SIDE-TRACKING EXPENDITURE:

In case of exploratory wells, the cost of abandoned portion of side tracked well is charged off to Profit and Loss statement. In case of development wells, the entire cost of abandoned portion and side­tracking is capitalized. In case of existing producing wells the cost of side - tracking is capitalized if it increases the proved developed reserves, otherwise is charged off to Profit and loss statement.

11 ABANDONMENT COSTS:-

i. Estimated full eventual liability towards costs relating to dismantling, abandoning and restoring well sites and associated Production Facilities are recognized at the commencement of drilling a well or when facilities are installed, as the case may be. Liability for abandonment cost is updated annually based on the technical assessment available at current costs.

ii. The actual cost incurred on abandonment is adjusted against the liability and the ultimate gain or loss is recognized in the Statement of Profit and Loss, when the designated oil/gas field or a group of oil/ gas fields ceases to produce.

12 FIXED ASSETS, DEbrCIATION & DEPLETION

 TANGIBLE ASSETS:

i) Cost of Freehold & Leasehold land which are perpetual in nature used for other than exploration and development activity are not amortized. Leasehold land other than perpetual lease is amortized over the lease period.

ii) All successful exploratory well cost, development well cost and other development cost viz. Production Facilities are capitalized when the same is ready to commence commercial production.

iii) Costs relating to acquisition/ construction of tangible assets other than producing properties are capitalized on commissioning.

iv) Land acquired on perpetual lease as well as on lease over 99 years is treated as free hold land and not amortized.

v) Land acquired on lease for 99 years or less is treated as leasehold land and amortised over the lease period.

vi) Any Tangible asset, when determined of no further use, is deleted from the Gross Block of assets. The deleted assets are carried as 'Assets awaiting disposal' under Inventories at lower of k1000 or 5% of the original cost and the balance Written down Value, is charged off.

vii) Physical verification of the fixed assets is carried out by the Company in a phased manner to cover all the items over a period of five years. The discrepancies, if any, noticed are accounted for after reconciliation of the same.

13 INTANGIBLE ASSETS:

i) Costs of intangible assets are capitalized when the asset is ready for its intended use.

ii) Cost of right of use/right of way for laying pipelines is capitalized and amortized on a straight line basis over the period of such right of use / right of way or 99 years whichever is lower, as per industry practice.

iii) Cost incurred on computer software purchased /developed are capitalized as intangible asset and amortized over the useful life not exceeding five years from the date of capitalization.

iv) Any intangible asset, when determined of no further use, is written off.

14 DEbrCIATION:

i) Debrciation on Tangible Assets other than Producing Properties is provided for under the "Written down Value Method", in the manner specified in Schedule II to the Companies Act, 2013.

ii) Capital assets costing up to k 5000 each are fully debrciated in the year of acquisition.

15 DEPLETION:

i) Acquisition Costs are depleted using the "Unit of Production Method" with reference to the ratio of production and related Proved reserves.

ii) Producing Wells and Production Facilities are depleted using the "Unit of Production Method", with reference to ratio of production and the related Proved Developed Reserves.

iii) Rate of depletion is determined based on production from the Oil/Gas field or a group of Oil/Gas fields identified with reference to the related reserves having common geological feature.

16 FOREIGN CURRENCY TRANSLATION

(i) Foreign currency transactions are initially recognised and accounted for at the exchange rates brvailing at the dates of transactions.

(a) Foreign Currency monetary assets & liabilities outstanding at the close of the  year are translated at the rates of exchange brvailing at the date of Balance Sheet. Resultant gains or loss is accounted for during the year, except those relating to long-term foreign currency monetary items.

(b) Exchange differences on long-term foreign currency monetary items relating to acquisition of debrciable assets are adjusted to the carrying cost of the assets and debrciated over the balance life of the assets in line with para 46A of Accounting Standard-11. In other cases, exchange differences are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" and amortised over the balance period of such long term foreign currency monetary item by recognition as income or expense in each of such periods.

(ii) Foreign currency transactions in relation to Joint Venture (Overseas) are treated in the following manner:

(a) Foreign currency transactions are initially recognised and accounted for at the exchange rates brvailing at the dates of transactions. However, the average exchange rate of relevant month is taken for the transactions of that month, where actual rate of transaction is not available or at the rate as agreed otherwise.

(b) Foreign Currency monetary assets & liabilities outstanding at the close of the year are translated at the rates of exchange brvailing at the date of Balance Sheet. Resultant gains or loss is accounted for during the year.

17 IMPAIRMENT OF ASSETS:

(i) Acquisition costs, pending capitalization to Producing Properties and exploration costs under Intangible Assets-Capital Work in Progress are reviewed for indicators of impairment and if events and circumstances suggest, impairment loss is provided for and carrying amount is reduced accordingly.

(ii) Producing fields, LPG Plant, Transportation Pipeline and Power Generating Units (other than Captive Power Plants) are considered as Cash Generating Units. A "Cash Generating

Unit" is reviewed for impairment at each Balance Sheet date. An impairment loss is recognized, whenever the carrying amount of assets exceeds the recoverable amount by writing down such assets 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 decreased. Impairment loss/reversal thereof is adjusted to the carrying value of the respective assets. Impairment testing is normally carried out at the year-end unless compelling circumstances exist for review during the course of the year.

18 JOINT VENTURES:

Production Sharing Contracts (PSCs) executed with the Government of India / Government of Foreign Countries by the company along with other entities to undertake exploration, development and production of Oil and/or Gas activities under a joint venture in various concessions/block/area are accounted as under:

(i) The financial statements reflect the share of the Company's assets, liabilities and also the income and expenditure of the Joint Venture in proportion to the participating interest of the Company as per the terms of the PSCs, on a line by line basis. Debrciation, depletion and impairment and value of Stock of Crude Oil are accounted for as per the relevant accounting policies of the Company whereas provision for abandonment is created as per terms of PSC. Proved Developed Reserve of Oil & Gas in such concessions/block/area are also considered in proportion to participating interest of the Company.

(ii) Consideration recoverable from new Joint Venture Partners for the right to participate in operations are:

a) Reduced from respective assets and/or expenditure to the extent of the new partners contribution towards past cost,

b) Balance is considered as miscellaneous receipts/expenses.

19 INCOME TAX:

i) The tax expense for the year comprises current tax and deferred tax.

ii) Provision for current tax is made using the applicable tax rates on the taxable income for the relevant period determined in accordance with the provisions of the Income Tax Act'1961. Deferred tax resulting from "timing difference" between taxable income and accounting income is accounted for using the tax rates and tax laws applicable for the relevant financial year. Deferred Tax Asset is reassessed and recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available against which the deferred tax asset will be realized in future.

20 INVESTMENTS:

i) Non Current investments are valued at cost. However, provision for diminution in value is made to recognise a decline in the value, other than temporary.

ii) Current investments are valued at lower of cost or fair value.

21 INVENTORY:

(i) Finished goods of Crude Oil, Liquefied Petroleum Gas and LPG condensate are valued at cost or net realizable value, whichever is lower. Cost of finished goods is determined based on direct cost and directly attributable services cost including debrciation & depletion.

(ii) 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 to the operation of the facility.

(iii) Stores and spare are valued at 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 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 value is made in the accounts.

22 EMPLOYEE BENEFITS

i) All short-term employee benefits are recognised as an expense at the undiscounted amount in the accounting period in which the related service is rendered.

ii) Employee benefits under defined contribution plan such as provident fund is recognised based on the undiscounted obligations of the company to contribute to the plan.

iii) Employee benefits under defined benefit plans such as gratuity, leave encashment, post retirement medical benefits, pension are recognised based on the brsent value of defined benefit obligation, which is computed on the basis of actuarial valuation using the projected unit credit method. Actuarial liability in excess of respective plan assets is recognised during the year and in case the plan assets exceed the Actuarial Liability, no further provision is considered. Actuarial gain and losses in respect of post employment and other long-term benefits are recognised during the year.

23 REVENUE RECOGNITION

(i) Revenue from sale of products is recognized on custody transfer to customers.

(ii) Sale of crude oil and gas produced from exploratory wells is deducted from expenditure on such wells.

(iii) Sales are inclusive of statutory levies but excluding Value Added Tax (VAT) & Central Sales Tax (CST) and net of discounts & companies share of profit petroleum paid to GOI. Any retrospective revision in prices is accounted for in the year of such revision.

(iv) Claims on Government / Petroleum Planning & Analysis Cell (PPAC) are booked on acceptance in principle by the authority.

(v) Dividend Income is recognized when the right to receive the dividend is established.

(vi) Revenue in respect of the following is recognized when there is reasonable certainty regarding ultimate realization:

(a) Short lifted quantity of Crude Oil & Natural Gas, if any.

(b) Interest on delayed realization from customers.

(vii) Insurance claim other than for transit loss  of stores items are accounted for on final ii) Contingent liabilities, if material, are disclosed  acceptance by the Insurance Company. by way of notes to the accounts.

viii) Recovery/Refund of Liquidated Damages are recognised in the Statement of Profit and Loss in the year of occurrence as income or expenditure as the case may be except in case of JVC which are governed by the respective PSC.

(ix) Revenue from sale of other services is recognised when service is rendered in line with contracts executed there with.

24 GRANTS

Grants are recognised when there is reasonable assurance that the same would be realized. Grants related to specific assets are deducted from the gross value of the concerned assets.

25 BORROWING COSTS

i) Borrowing costs during the construction period that are attributable to qualifying assets are capitalized and also includes exchange difference arising from Foreign Currency borrowings to the extent that they are regarded as an adjustment to interest cost.

ii) Other borrowing costs are recognised as expenses when incurred.

26 SEGMENT ACCOUNTING

i) Considering the nature and associated risks and return of products & services, the company has adopted its products & services (viz. Crude Oil, Natural Gas, LPG and Pipeline Transportation) as the primary reporting segments. There are no reportable geographical segments.

ii) Segment assets, liabilities, income and expenses have been either directly identified or allocated to the segments on the basis usually followed for allocation of cost adopted for brparing and brsenting the financial statements of the Company.

27 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

i) Provisions in respect of which a reliable estimate can be made are recognised where there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resource.

iii) Contingent assets are neither recognised nor disclosed in the financial statements.

28 EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

29 GENERAL

i) All revenue expenditure, incurred for Research & Development Projects / Schemes, net of grants- in-aid, if any, are charged to the Statement of Profit & Loss.

ii) Assets given on finance lease are accounted as per Accounting Standard 19 "Leases". Such assets are included as a receivable at an amount equal to the net investment in the lease. Initial direct costs incurred in respect of finance leases are recognized in the statement of profit and loss in the year in which such costs are incurred.

iii) Prior period items/Prepaid expenses having value in each case up to ? 5 lacs are booked under natural head of accounts.

For SAHA GANGULI &

ASSOCIATES

Chartered Accountants

Firm Reg No- 302191E

Sd/- (S.K.SAHA)  

Membership No: 051392

For B. M. CHATRATH & CO

Chartered Accountants

Firm Reg No- 301011E

Sd/- (P.R.PAUL)  

Membership No: 051675

Sd/- (S.R.Krishnan)

Company Secretary

For and on behalf of the Board of Directors

Sd/- (Mrs. Rupshikha S. Borah)

Director (Finance)

Sd/- (S.K.Srivastava)

Chairman & Managing Director

Place : Noida

Date : 29th May, 2015