Hindustan Petroleum Corporation Ltd. நிறுவனத்தின் கணக்கியல் கொள்கைகள்
Mar 31, 2023
1. Corporate Information
Hindustan Petroleum Corporation Limited referred to as "HPCL" or "the Corporation" was incorporated on 5th July, 1952. HPCL is a Government of India Enterprise listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited, with Oil and Natural Gas Corporation Limited ("ONGC" or "the Holding Company") holding 51.11% of Equity Shares w.e.f. 31st January, 2018 and pursuant to a shares buy-back program carried-out by the Corporation during the period November 17, 2020 to May 14, 2021, it has increased further to 54.90% as of March 31,2023 (54.90% as of March 31, 2022). The Corporation is engaged, primarily in the business of refining of crude oil and marketing of petroleum products. The Corporation has, among others, refineries at Mumbai and Vishakhapatnam, LPG bottling plants and Lube blending plants. The Corporation''s marketing infrastructure includes vast network of Installations, Depots, Aviation Service Stations, Retail Outlets and LPG distributors.
Authorization of financial statements
The Financial Statements were authorized for issue in accordance with a resolution of the Board of Directors on May 12, 2023 (refer Note 63).
The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 ("Act") read with Companies (Indian Accounting Standards) Rules, 2015; and other relevant provisions of the Act and Rules thereunder.
The Financial Statements are prepared under historical cost convention basis, except for certain assets and liabilities measured at fair value;
The Corporation has adopted Ind AS in accordance with Ind AS 101 (First time adoption of Indian Accounting Standards). The transition was carried out from Accounting Standard as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, (previous GAAP). The Corporation''s presentation currency and functional currency is Indian Rupees (H). All figures appearing in the Financial Statements are rounded off to the nearest crore (H Crore), except where otherwise stated.
1.2. Use of Judgement and Estimates
The preparation of the Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affecting the financial statements of future periods. The Corporation continually evaluates these estimates and assumptions based on the most recently available information;
In particular, information about significant areas of estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as below:
⢠Financial instruments;
⢠Estimates of useful lives and residual value of Property, Plant and Equipment and intangible assets;
⢠Valuation of inventories;
⢠Measurement of recoverable amounts of cash-generating units;
⢠Measurement of Defined Benefit Obligation, key actuarial assumptions;
⢠Provisions and Contingencies; and
⢠Evaluation of recoverability of deferred tax assets;
Revisions to accounting estimates are recognized prospectively in the Financial Statements in the period in which the estimates are revised and in any future periods affected.
2. Significant Accounting Policies2.1. Property, Plant and Equipment
2.1.1. Freehold lands are carried at cost. All other items of Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any;
2.1.2. The initial cost of an asset comprises its purchase price or construction cost (including import duties and non-refundable taxes); any costs directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by management; initial estimated present value of any contractual decommissioning obligation; and borrowing cost for qualifying assets (i.e., assets that necessarily take a substantial period of time to get ready for their intended use);
2.1.3. Technical know-how / licence fee relating to plants / facilities are capitalized as part of cost of the underlying asset;
2.1.4. Expenditure during construction period: Direct expenses incurred during construction period on capital projects are capitalised;
2.1.5. The cost of an item of PPE (Initial and subsequent recognition) is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Corporation; and the cost of the item can be measured reliably;
2.1.6. Spare parts which are meeting the requirement of Property, Plant and Equipment are capitalized as Property, Plant and Equipment in case the unit value of the spare part is above the threshold limit. In other cases, the spare parts are inventorised on procurement and charged to Statement of Profit and Loss on consumption;
2.1.7. Gas distribution systems are treated as commissioned when supply of gas reaches to the individual points.
2.1.8. An item of Property, Plant and Equipment and any significant part initially recognised separately as part of Property, Plant and Equipment is derecognised upon disposal; or when no future economic benefits are expected from its use or disposal; or when the Property, Plant Equipment has been re-classified as ready for disposal. Any gain or loss arising on de-recognition of the asset is included in the Statement of Profit and Loss when the asset is derecognised;
2.1.9. The residual values and useful lives of Property, Plant and Equipment are reviewed during each financial year and changes are accounted for as change in accounting estimates on a prospective basis;
2.1.10. The Corporation has chosen the carrying value of Property, Plant and Equipment existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April, 2015 as deemed cost.
2.2. Depreciation / amortization
2.2.1. Depreciation on Property, Plant and Equipment is provided on straight line method. In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Corporation has assessed the estimated useful lives of its Property, Plant and Equipment and has adopted the useful lives and residual value as prescribed in Schedule II except for the following:
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a) Useful Life (Basis internal technical assessment): |
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Plant and Machinery relating to Retail Outlets (other than Storage tanks and related equipment) |
15 years |
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Cavern Structure |
60 years |
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LPG cylinders & regulators (excluding cylinders held for sale) |
15 years |
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CNG Compressors |
10 years |
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CNG Cascades and SS tubing in CNG Stations |
20 years |
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b) In case of assets covered under specific arrangements e.g. agreements entered into with Railways Consumer Depots, useful life as per agreement or Schedule II to the Act, whichever is lower. |
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c) Residual Value (Basis historical data): |
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LPG cylinder and pressure regulator |
25% of original cost |
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Catalyst with noble metal content |
90% of original cost of noble metal content |
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2.2.2. The Corporation depreciates significant components of the main asset (which have different useful lives as compared to the main asset) based on the individual useful life of those components. Useful life for such components is assessed by considering historical experience, internal technical inputs and any other relevant factor;
2.2.3. Items of Property, Plant and Equipment costing not more than the threshold limit are depreciated at 100 percent in the year of acquisition except LPG Cylinders and Pressure Regulators (excluding cylinders held for sale) which are depreciated over a useful life of 15 years based on the technical assessment;
2.2.4. Depreciation on spare parts specific to an item of Property, Plant and Equipment is based on life of the related Property, Plant and Equipment. In other cases, the spare parts are depreciated over their estimated useful life based on the technical assessment;
2.2.5. Depreciation is charged on additions / deletions on pro-rata monthly basis including the month of addition / deletion.
2.3.1. Intangible assets are carried at cost net of accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding development costs, are not capitalised and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalised if technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Corporation has an intention and ability to complete and use or sell the asset and the costs can be measured reliably;
2.3.2. Assets where entire output generated is committed to be sold to a public sector entity (including Government body) for almost the entire useful life of the asset are classified as intangible assets as per the requirements of Ind AS and are amortised (after retaining the residual value, if applicable) over their useful life;
2.3.3. In cases where, the Corporation has constructed assets and the Corporation has only a preferential right to use, these assets are classified as intangible assets and are amortised (after retaining the residual value, if applicable) over their useful life or the period of the agreement, whichever is lower;
2.3.4. The useful lives of intangible assets are assessed as either finite or indefinite;
2.3.5. Intangible assets with finite lives are amortised on straight line basis over their useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each financial year end. The amortisation expense on intangible assets with finite lives and impairment loss is recognised in the statement of Profit and Loss.
2.3.6. Intangible assets with indefinite useful lives, such as ''right of way'' which is perpetual and absolute in nature, are not amortised, but are tested for impairment annually. The useful lives are reviewed at each period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in useful life from indefinite to finite is made on a prospective basis. The impairment loss on intangible assets with indefinite life is recognised in the Statement of Profit and Loss;
2.3.7. Technical know-how / license fee relating to production process and process design are recognized as Intangible Assets;
2.3.8. Estimated lives of intangible assets (acquired) are as follows:
⢠Software: 2 to 4 years
⢠Technical know-how/license fees: 2 to 10 years
⢠Right to use - wind mills: 22 years
2.3.9. The Corporation has chosen the carrying value of Intangible Assets existing as per previous GAAP as on date of transition to Ind AS i.e., 1st April 2015 as deemed cost.
Expenditure, including eligible borrowing cost, net of income earned, during the construction period is included under capital work-in-progress and the same is attributed to the respective assets when they are ready for intended use.
2.5.1. Borrowing cost consists of interest and other costs incurred in connection with the borrowing of funds. Borrowing cost also includes exchange rate variation to the extent regarded as an adjustment to interest cost;
2.5.2. Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset till the month in which the asset is ready for intended use. Capitalisation of borrowing costs is suspended when active development on the qualifying assets is interrupted except when temporary and charged to the Statement of Profit and Loss during such periods. All other borrowing costs are expensed in the period in which they are incurred;
2.5.3. Borrowing cost, if any, incurred on General Borrowings used for projects is capitalised at the rate computed on weighted average basis.
2.6. Non-current assets held for sale
2.6.1. Non-current assets are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met, only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets;
2.6.2. Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell;
2.6.3. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortized.
2.7. Current / Non-current classification
Classification of current / non-current assets and liabilities in the Balance Sheet is based on principles as mentioned below:
2.7.1. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or Cash Equivalents unless restricted from being exchanged or used for settlement of a liability arising at least twelve months after the reporting period
All other assets are classified as non-current.
2.7.2. A liability is treated as current when it is:
⢠Expected to be settled in normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Due to be settled within twelve months after the reporting period, or
⢠Not granting any 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.
Wherever a Contract conveys the right to control the use of an identified Asset by either of the Parties for a period of time and in exchange for consideration, there arises a Lease Contract. At inception of every Contract, the Corporation examines the existence to the lease elements in a Contract and thereafter carries out appropriate accounting either as Lessor or Lessee.
2.8.1. Lessee:
At the commencement of the lease, the Corporation recognises right-of-use asset and lease liability, with an exception of short-term leases or lease of low-value underlying assets. The right-of-use asset is measured at cost, made up of the initial measurement of the lease liability, initial direct costs, an estimate of dismantling cost including removal of the asset at the end of the lease and any lease payments on or before commencement (net of any incentives received) of the lease;
The lease liability is measured at Present Value of the lease payments to be made during the course of the lease by using incremental borrowing rate that prevail at the beginning of each quarterly period for a similar tenure (such as AAA Corporate Bond rates for varying tenures of 5, 10 & 15 years) for all of the contracts executed in that period. The variable lease payments, which do not depend on an index or a rate, are excluded from the measurement of lease liability;
The Corporation has elected not to separate non-lease components in a contract and account as one unified lease contract covering all underlying assets by using the practical expedient prescribed in the Standard;
On re-measurement of lease liability, the right-of-use asset is suitably readjusted unless such readjustment lead to a restatement of carrying value below zero, in which case, the resultant amount is directly routed through Statement of Profit and Loss Account.
2.8.2. Lessor:
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. In all other cases, it is treated as operating lease;
The Corporation recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease;
Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease except where another systematic basis is more representative of the time pattern of the benefit derived from the asset given on lease.
2.9. Impairment of Non-Financial Assets
Non-financial assets other than inventories, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment;
If there exist any indication of impairment, or during annual impairment testing, the Corporation estimates the asset''s recoverable amount. The recoverable amount is the higher of the asset''s or Cash-Generating Unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets;
An impairment loss is recognised whenever the carrying amount of asset or assets of cash generating unit (CGU) exceeds their recoverable amount.
2.10.1.Valuation of inventories (including in transit) of different categories is as under: -
a) Crude oil is valued at cost on First in First Out (FIFO) basis or at net realisable value, whichever is lower. Crude oil is not written down below cost except in cases where their prices have declined subsequently and it is estimated that the cost of the finished goods will exceed their net realisable value;
b) Raw materials other than ''a)'' above are valued at weighted average cost or at net realisable value, whichever is lower;
c) Stock-in process is valued at raw material cost plus cost of conversion or at net realisable value, whichever is lower;
d) Empty packages are valued at weighted average cost;
e) Stores and spares which do not meet the recognition criteria under Property, Plant and Equipment are valued at weighted average cost. Surplus, obsolete and slow moving stores and spares, if any, are valued at cost or net realizable value whichever is lower. Surplus items, when transferred from completed projects are valued at cost / estimated value, pending periodic assessment / ascertainment of condition. Stores and Spares in transit are valued at cost;
f) Finished products other than Lubricants and petrochemicals are valued at cost (on FIFO basis month-wise) or at net realisable value, whichever is lower;
g) Finished products (lubricants and petrochemicals) are valued at weighted average cost or at net realisable value, whichever is lower;
2.10.2. Customs duty on Raw materials/Finished goods lying in bonded warehouse are provided for at the applicable rates except where liability to pay duty is transferred to consignee;
2.10.3. Excise duty on finished stocks lying at manufacturing locations is provided for at the assessable value applicable at each of the locations based on applicable duty;
2.10.4. The net realisable value of finished goods and stock in trade are final selling prices for sales to oil marketing companies and depot prices applicable to the locations. For the purpose of inventory valuation, the proportion of sales to oil marketing companies and consumer sales are determined on location wise and product wise sales of subsequent period.
2.11. Revenue recognition 2.11.1.Sale of goods
Revenue is recognised at transaction price when:
a) the Corporation satisfies a performance obligation by transferring control of a promised goods / services to a customer; and
b) it is probable that the Corporation will collect the consideration to which it will be entitled to in exchange for the goods or services that will be transferred to the customer.
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer including excise duties, as applicable and is measured at the consideration received or receivable, net of returns, taxes or duties collected on behalf of the government and trade discounts or rebates, as applicable;
Transaction price is allocated on each performance obligation and is recognised as and when the particular performance obligation is satisfied either at a point in time or over a period of time;
Revenue is allocated between Loyalty Programs and other components of the sale. The amount allocated to the Loyalty Program is deferred, and is recognised as Revenue when the Corporation has fulfilled its obligation to supply the products under the terms of the Program or when it is no longer probable that the points under the Program will be redeemed.
Where the Corporation acts as an agent on behalf of a third party, the associated Revenue is recognised on a net basis;
Claims, including subsidy on Liquified Petroleum Gas (LPG) and Superior Kerosene Oil (SKO), from Government of India, are booked on in-principle acceptance thereof on the basis of available instructions / clarifications, subject to final adjustments as stipulated.
2.11.2. Interest income is recognised taking into account the amount outstanding and the applicable effective interest rate;
2.11.3. Dividend is recognised when right to receive the payment is established;
2.11.4.Income from sale of scrap is accounted for on realization.
2.12. Accounting / classification of expenditure and income
2.12.1.Income / expenditure in aggregate pertaining to prior year(s) above the threshold limit are corrected retrospectively;
2.12.2. Prepaid expenses upto threshold limit in each case, are charged to revenue as and when incurred;
2.12.3. Insurance claims are accounted on acceptance basis;
2.12.4. All other claims / entitlements are accounted on the merits of each case.
2.12.5. Raw materials consumed are net of discount towards sharing of under-recoveries.
2.13. Employee benefits2.13.1. Short-term employee benefit
Short term employee benefits are recognized as an expense at undiscounted amount in the Statement of Profit & Loss of the year in which the related services are rendered by the employees;
2.13.2. Post-employment benefits Defined Contribution Plans:
Obligations for contributions to defined contribution plans are expensed in the Statement of Profit & Loss of the year in which the related services are rendered by the employees;
Defined Benefit Plans:Post-employment benefits
Liability towards defined employee benefits (gratuity, pension, post - retirement medical benefits, ex-gratia and resettlement allowance) are determined on actuarial valuation by independent actuaries at the year-end by using Projected Unit Credit method;
Re-measurements of the net defined benefit liability, which comprises of actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income;
Other long-term employee benefits
Liability towards other long term employee benefits (leave encashment, long service awards, provident fund contribution to trust and death benefits) are determined on actuarial valuation by independent actuaries using Projected Unit Credit method;
Re-measurements gains and losses are recognized in the Statement of Profit and Loss in the period in which they arise;
Prepaid contributions are recognized as an asset to the extent that a cash refund or a set-off in future payments is available.
Expenditure on account of Voluntary Retirement Schemes, are charged to Statement of Profit & Loss, as and when incurred.
2.14. Foreign currency transactions
2.14.1. Monetary items
Transactions in foreign currencies are initially recorded at the respective exchange rates prevailing at the date of transaction;
Monetary assets and liabilities denominated in foreign currencies are translated at spot rates of exchange at the reporting date;
Exchange differences arising on settlement or translation of monetary items (except for long term foreign currency monetary items outstanding as of 31st March 2016) are recognised in Statement of Profit and Loss either as ''Exchange Rate Variation'' or as ''finance costs'' (to the extent regarded as an adjustment to borrowing costs), as the case maybe.
In case of long term foreign currency monetary items outstanding as of 31st March 2016, foreign exchange differences arising on settlement or translation of long term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in case of other long term foreign currency monetary items, if any, accumulated in ''Foreign Currency Monetary Item Translation Difference Account'' and amortised over the balance period of the asset / liability.
Non-monetary items, other than those measured at fair value, denominated in foreign currency, are valued at the exchange rate prevailing on the date of transaction.
2.15. Investment in Subsidiary, associates and joint ventures
Investments in equity shares of Subsidiaries, Joint Ventures & Associates are recorded at cost and reviewed for impairment at each reporting date;
The Corporation has chosen the carrying value of the investment in Subsidiaries, associates and joint ventures existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April 2015 as deemed cost.
2.16.1. Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with;
2.16.2. When the grant relates to an expense item, it is recognized in Statement of Profit and Loss on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed;
2.16.3. When the grant relates to property, plant and equipment, the cost of property, plant and equipment is shown at gross value and grant thereon is treated as liability (deferred income) and are credited to statement of profit and loss on a systematic basis over the useful life of the asset.
2.17. Exploration and Production expenditure
Successful Efforts Method" of accounting is followed for Oil & Gas exploration and production activities as stated below:
2.17.1. Cost of surveys, studies, carrying and retaining undeveloped properties are expensed out in the year of incurrence;
2.17.2. Cost of acquisition, drilling and development are treated as Capital Work-in-Progress when incurred and are capitalised when the well is ready to commence commercial production;
2.17.3. Accumulated costs on exploratory wells in progress are expensed out in the year in which these are determined to be dry or are of no further use, as the case may be;
2.17.4. The proportionate share in the assets, liabilities, income and expenditure of joint operations are accounted as per the participating interest in such joint operations.
2.18. Provisions and contingent liabilities
2.18.1. Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation;
2.18.2. If the effect of the time value of money is material, provisions are discounted using an appropriate discount rate. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost;
2.18.3. Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Corporation, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability;
2.18.4. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote;
2.18.5. Contingent liabilities and Capital Commitments disclosed are in respect of items which in each case are above the threshold limit;
2.18.6. Contingent Liabilities are considered only when show-cause notice is converted into demand.
2.19.1. Fair value is the price that would be received/ paid to sell an asset or to transfer a liability, as the case may be, in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Corporation has access at that date. The fair value of a liability also reflects its nonperformance risk;
2.19.2. While measuring the fair value of an asset or liability, the Corporation uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs)
Financial Instruments2.20. Financial Assets2.20.1. Initial recognition and measurement
All financial assets (not measured subsequently at fair value through profit or loss) are recognised initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset. However, trade receivables that do not contain a significant financing component are measured at transaction price.
2.20.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. The Corporation classifies financial assets (other than equity instruments) as under:
(a) subsequently measured at amortised cost;
(b) fair value through other comprehensive income; or
(c) fair value through profit or loss
on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
The asset is held within a business model whose objective is
⢠To hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial recognition, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method and such amortization is recognised in the Statement of Profit and Loss.
Debt instruments at Fair value through profit and loss (FVTPL)
Fair value through profit and loss is a residual category for measurement of debt instruments.
After initial measurement, any fair value changes including any interest income, impairment loss and other net gains and losses are recognised in the Statement of Profit and Loss.
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Corporation decides to classify the same either as at FVOCI or FVTPL. The Corporation makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable;
For equity instruments classified as FVOCI, all fair value changes on the instrument, excluding dividends, are recognized in other comprehensive income (OCI);
Equity instruments included within the FVTPL category are measured at fair value with all fair value changes being recognized in the Statement of Profit and Loss.
2.20.3. Impairment of financial assets
In accordance with Ind-AS 109, the Corporation applies Expected Credit Loss ("ECL") model for measurement and recognition of impairment loss on the financial assets measured at amortised cost;
Loss allowances on trade receivables are measured following the ''simplified approach'' at an amount equal to the lifetime ECL at each reporting date.
2.21. Financial Liabilities2.21.1. Initial recognition and measurement
All financial liabilities (not measured subsequently at fair value through profit or loss) are recognised initially at fair value net of transaction costs that are directly attributable to the respective financial liabilities.
The Corporation classifies all financial liabilities as subsequently measured at amortised cost by using the Effective Interest Rate Method ("EIR") and such amortisation is recognised in the Statement of Profit and Loss.
2.21.3. Derecognition
A Financial Liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Financial guarantee contracts are recognised initially at fair value. Subsequently on each reporting date, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the fair value initially recognised less cumulative amortisation.
2.23. Derivative financial instruments
The Corporation uses derivative financial instruments, such as forward contracts, interest rate swaps to mitigate its foreign currency risk, interest risk and commodity price risk arising out of highly probable forecast transactions and are presented in Financial Statements, either as Financial Assets or Financial liabilities as the case may be.
2.23.1. Derivatives Contracts designated as hedging instruments:
Wherever Hedge Accounting is undertaken, at the inception of a hedge relationship, the Corporation formally designates and documents a) the hedge relationship to which it wishes to apply hedge accounting and b) the risk management objective and strategy. In such cases, the derivative financial instruments are recognized at fair value with due assessment to effectiveness of the hedge instrument. By following Cash Flow Hedges, the effective portion of changes in the fair value is recognized in Other Comprehensive Income (OCI) and accumulated under Cash Flow Hedge Reserve within Other Equity whereas the ineffective portion, if any, is recognized immediately in the Statement of Profit and Loss and presented under Other Income or Other Expenses, as the case may be. The effective portion, previously recognized in OCI and accumulated as Cash Flow Hedge Reserve is reclassified to the Statement of Profit and Loss in the subsequent period, during which, the hedged expected future cash flows affect profit or loss and further guided to the same line item to which the underlying is accounted. Further, in case of previously recognized forecasted transaction, upon the knowledge of its non-occurrence, the effective portion of cumulative gain or loss is forthwith recognized by transferring from Cash Flow Hedge Reserve to the Statement of Profit and Loss. If the amount accumulated in Cash Flow Hedge Reserve is a loss and Corporation expects that all or a portion of that loss will not be recovered in one or more future period, the Corporation immediately reclassifies the amount that is not expected to be recovered into profit or loss as a reclassification adjustment. The hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or no longer qualifies for hedge accounting.
2.23.2. Derivatives Contracts not designated as hedging instruments
The derivative financial instruments are accounted at fair value through Profit or Loss and presented under Other Income or Other Expenses, as the case may be.
2.24. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
2.25.1. Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961;
2.25.2. Deferred tax liability/asset on account of temporary difference is recognised using tax rates and tax laws enacted or substantively enacted as at the Balance Sheet date;
2.25.3. Deferred tax assets are recognised and carried forward for all deductible temporary differences only to the extent that it is probable that taxable profit will be available in future against which the deductible temporary difference can be utilized;
2.25.4. The carrying amount of deferred tax assets/Liabilities is reviewed at each Balance Sheet date.
2.25.5. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, is considered as an asset when it is probable that the future economic benefits associated with it, will flow to the Corporation.
2.26.1. Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period;
2.26.2. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.
2.27. Cash and Cash equivalents
Cash and cash equivalents includes cash on hand, balances with banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated. For the purpose of the Statement of Cash Flows, cash and cash equivalent consist of cash, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Corporation''s cash management.
The Company recognises a liability to make cash distributions to equity holders of the Corporation when the distribution is authorised and the distribution is no longer at the discretion of the Corporation. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in other equity.
On March 31, 2023, the Ministry of Corporate Affairs (MCA) has notified Companies (Indian Accounting Standards) Amendment
Rules, 2023. This notification has resulted into following amendments in the existing Accounting Standards which are applicable
from April 1,2023.
i. Ind AS 101 - First time adoption of Ind AS - modification relating to recognition of deferred tax asset by a first-time adopter associated with (a) right to use assets and related liabilities and (b) decommissioning, restoration and similar liabilities and corresponding amounts recognised as cost of the related assets.
ii. Ind AS 102 - Share-based Payment - modification relating to adjustment after vesting date to the fair value of equity instruments granted.
iii. Ind AS 103 - Business Combination - modification relating to disclosures to be made in the first financial statements following a business combination.
iv. Ind AS 107 - Financial Instruments Disclosures - modification relating to disclosure of material accounting policies including information about basis of measurement of financial instruments.
v. Ind AS 109 - Financial Instruments - modification relating to reassessment of embedded derivatives.
vi. Ind AS 1 - Presentation of Financials Statements - modification relating to disclosure of ''material accounting policy information'' in place of ''significant accounting policies''.
vii. Ind AS 8 - Accounting Policies, Change in Accounting Estimates and Errors - modification of definition of ''accounting estimate'' and application of changes in accounting estimates.
viii. Ind AS 12 - Income Taxes - modification relating to recognition of deferred tax liabilities and deferred tax assets.
ix. Ind AS 34 - Interim Financial Reporting - modification in interim financial reporting relating to disclosure of ''material accounting policy information'' in place of ''significant accounting policies''.
The Company is evaluating the amendments and the expected impact, if any, on the Company''s financial statements on
application of the amendments for annual reporting periods beginning on or after 1 April 2023.
Mar 31, 2022
1. Corporate Information
Hindustan Petroleum Corporation Limited referred to as "HPCL" or "the Corporation" was incorporated on 5th July, 1952. HPCL is a Government of India Enterprise listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited, with Oil and Natural Gas Corporation Limited ("ONGC" or "the Holding Company") holding 51.11% of Equity Shares w.e.f. 31st January, 2018 and pursuant to a shares buy-back program carried-out by the Corporation during the period November 17, 2020 to May 14, 2021, it has increased further to 54.90% as of March 31,2022 (53.64% as of March 31, 2021). The Corporation is engaged, primarily in the business of refining of crude oil and marketing of petroleum products. The Corporation has, among others, refineries at Mumbai and Vishakhapatnam, LPG bottling plants and Lube blending plants. The Corporation''s marketing infrastructure includes vast network of Installations, Depots, Aviation Service Stations, Retail Outlets and LPG distributors.
Authorization of financial statements
The Financial Statements were authorized for issue in accordance with a resolution of the Board of Directors on May 19, 2022 (refer Note 63).
1.1. Basis for preparation:
The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 ("Act") read with Companies (Indian Accounting Standards) Rules, 2015; and other relevant provisions of the Act and Rules thereunder.
The Financial Statements are prepared under historical cost convention basis, except for certain assets and liabilities measured at fair value;
The Corporation has adopted Ind AS in accordance with Ind AS 101 (First time adoption of Indian Accounting Standards). The transition was carried out from Accounting Standard as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, (previous GAAP). The Corporation''s presentation currency and functional currency is Indian Rupees (H). All figures appearing in the Financial Statements are rounded off to the nearest Crore (H Crore), except where otherwise stated.
1.2. Use of Judgement and Estimates
The preparation of the Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affecting the financial statements of future periods. The Corporation continually evaluates these estimates and assumptions based on the most recently available information;
In particular, information about significant areas of estimates and judgements in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as below:
⢠Financial instruments;
⢠Estimates of useful lives and residual value of Property, Plant and Equipment and intangible assets;
⢠Valuation of inventories;
⢠Measurement of recoverable amounts of cash-generating units;
⢠Measurement of Defined Benefit Obligation, key actuarial assumptions;
⢠Provisions and Contingencies; and
⢠Evaluation of recoverability of deferred tax assets;
Revisions to accounting estimates are recognized prospectively in the Financial Statements in the period in which the estimates are revised and in any future periods affected.
2. Significant Accounting Policies
2.1. Property, Plant and Equipment
2.1.1. Freehold lands are carried at cost. All other items of Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any;
2.1.2. The initial cost of an asset comprises its purchase price or construction cost (including import duties and nonrefundable taxes); any costs directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by management; initial estimated present value of any contractual decommissioning obligation; and borrowing cost for qualifying assets (i.e., assets that necessarily take a substantial period of time to get ready for their intended use);
2.1.3. Technical know-how / licence fee relating to plants / facilities are capitalized as part of cost of the underlying asset;
2.1.4. Expenditure during construction period: Direct expenses incurred during construction period on capital projects are capitalised;
2.1.5. The cost of an item of PPE (Initial and subsequent recognition) is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Corporation; and the cost of the item can be measured reliably;
2.1.6. Spare parts which are meeting the requirement of Property, Plant and Equipment are capitalized as Property, Plant and Equipment in case the unit value of the spare part is above the threshold limit. In other cases, the spare parts are inventorised on procurement and charged to Statement of Profit and Loss on consumption;
2.1.7. An item of Property, Plant and Equipment and any significant part initially recognised separately as part of Property, Plant and Equipment is derecognised upon disposal; or when no future economic benefits are expected from its use or disposal; or when the Property, Plant Equipment has been re-classified as ready for disposal. Any gain or loss arising on de-recognition of the asset is included in the Statement of Profit and Loss when the asset is derecognised;
2.1.8. The residual values and useful lives of Property, Plant and Equipment are reviewed during each financial year and changes are accounted for as change in accounting estimates on a prospective basis;
2.1.9. The Corporation has chosen the carrying value of Property, Plant and Equipment existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April, 2015 as deemed cost.
2.2. Depreciation / amortization
2.2.1. Depreciation on Property, Plant and Equipment is provided on straight line method. In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Corporation has assessed the estimated useful lives of its Property, Plant and Equipment and has adopted the useful lives and residual value as prescribed in Schedule II except for the following:
Useful Life (Basis internal technical assessment):
Plant and Machinery relating to Retail Outlets
(other than Storage tanks and related equipment) 15 years
Cavern Structure 60 years
LPG cylinders & regulators (excluding cylinders held for sale) 15 years
CNG Compressors 10 years
CNG Cascades and SS tubing in CNG Stations 20 years
Residual Value (Basis historical data):
LPG cylinder and pressure regulator 15% of original cost
Catalyst with noble metal content 90% of original cost of noble metal content
2.2.2. The Corporation depreciates significant components of the main asset (which have different useful lives as compared to the main asset) based on the individual useful life of those components. Useful life for such components is assessed by considering historical experience, internal technical inputs and any other relevant factor;
2.2.3. Items of Property, Plant and Equipment costing not more than the threshold limit are depreciated at 100 percent in the year of acquisition except LPG Cylinders and Pressure Regulators (excluding cylinders held for sale) which are depreciated over a useful life of 15 years based on the technical assessment;
2.2.4. Depreciation on spare parts specific to an item of Property, Plant and Equipment is based on life of the related Property, Plant and Equipment. In other cases, the spare parts are depreciated over their estimated useful life based on the technical assessment;
2.2.5. Depreciation is charged on additions / deletions on pro-rata monthly basis including the month of addition / deletion.
2.3. Intangible assets
2.3.1. Intangible assets are carried at cost net of accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding development costs, are not capitalised and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalised if technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Corporation has an intention and ability to complete and use or sell the asset and the costs can be measured reliably;
2.3.2. Assets where entire output generated is committed to be sold to a public sector entity (including Government body) for almost the entire useful life of the asset are classified as intangible assets as per the requirements of Ind AS and are amortised (after retaining the residual value, if applicable) over their useful life;
2.3.3. In cases where, the Corporation has constructed assets and the Corporation has only a preferential right to use, these assets are classified as intangible assets and are amortised (after retaining the residual value, if applicable) over their useful life or the period of the agreement, whichever is lower;
2.3.4. The useful lives of intangible assets are assessed as either finite or indefinite;
2.3.5. Intangible assets with finite lives are amortised on straight line basis over their useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each financial year end. The amortisation expense on intangible assets with finite lives and impairment loss is recognised in the statement of Profit and Loss.
2.3.6. Intangible assets with indefinite useful lives, such as ''right of way'' which is perpetual and absolute in nature, are not amortised, but are tested for impairment annually. The useful lives are reviewed at each period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in useful life from indefinite to finite is made on a prospective basis. The impairment loss on intangible assets with indefinite life is recognised in the Statement of Profit and Loss;
2.3.7. Technical know-how / license fee relating to production process and process design are recognized as Intangible Assets;
2.3.8. Estimated lives of intangible assets (acquired) are as follows:
⢠Software: 2 to 4 years
⢠Technical know-how/license fees: 2 to 10 years
⢠Right to use - wind mills: 22 years
2.3.9. The Corporation has chosen the carrying value of Intangible Assets existing as per previous GAAP as on date of transition to Ind AS i.e., 1st April 2015 as deemed cost.
2.4. Borrowing Cost
2.4.1. Borrowing cost consists of interest and other costs incurred in connection with the borrowing of funds. Borrowing cost also includes exchange rate variation to the extent regarded as an adjustment to interest cost;
2.4.2. Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset till the month in which the asset is ready for intended use. Capitalisation of borrowing costs is suspended when active development on the qualifying assets is interrupted except when temporary and charged to the Statement of Profit and Loss during such periods. All other borrowing costs are expensed in the period in which they are incurred;
2.4.3. Borrowing cost, if any, incurred on General Borrowings used for projects is capitalised at the rate computed on weighted average basis.
2.5. Non-current assets held for sale
2.5.1. Non-current assets are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met, only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets;
2.5.2. Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell;
2.5.3. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortized.
2.6. Current / Non-current classification
Classification of current / non-current assets and liabilities in the Balance Sheet is based on principles as mentioned below:
2.6.1. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or Cash Equivalents unless restricted from being exchanged or used for settlement of a liability arising at least twelve months after the reporting period
All other assets are classified as non-current.
2.6.2. A liability is treated as current when it is:
⢠Expected to be settled in normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Due to be settled within twelve months after the reporting period, or
⢠Not granting any 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.
2.7. Leases
Wherever a Contract conveys the right to control the use of an identified Asset by either of the Parties for a period of time and in exchange for consideration, there arises a Lease Contract. At inception of every Contract, the Corporation examines the existence to the lease elements in a Contract and thereafter carries out appropriate accounting either as Lessor or Lessee.
2.7.1. Lessee
At the commencement of the lease, the Corporation recognises right-of-use asset and lease liability, with an exception of short-term leases or lease of low-value underlying assets. The right-of-use asset is measured at cost, made up of the initial measurement of the lease liability, initial direct costs, an estimate of dismantling cost including removal of the asset at the end of the lease and any lease payments on or before commencement (net of any incentives received) of the lease;
The lease liability is measured at Present Value of the lease payments to be made during the course of the lease by using incremental borrowing rate that prevail at the beginning of each quarterly period for a similar tenure (such as AAA Corporate Bond rates for varying tenures of 5, 10 & 15 years) for all of the contracts executed in that period. The variable lease payments, which do not depend on an index or a rate, are excluded from the measurement of lease liability;
The Corporation has elected not to separate non-lease components in a contract and account as one unified lease contract covering all underlying assets by using the practical expedient prescribed in the Standard;
On re-measurement of lease liability, the right-of-use asset is suitably readjusted unless such readjustment lead to a restatement of carrying value below zero, in which case, the resultant amount is directly routed through Statement of Profit and Loss Account.
2.7.2. Lessor
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. In all other cases, it is treated as operating lease;
The Corporation recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease;
Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease except where another systematic basis is more representative of the time pattern of the benefit derived from the asset given on lease.
2.8. Impairment of Non-Financial Assets
Non-financial assets other than inventories, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment;
If there exist any indication of impairment, or during annual impairment testing, the Corporation estimates the asset''s recoverable amount. The recoverable amount is the higher of the asset''s or Cash-Generating Unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets;
An impairment loss is recognised whenever the carrying amount of asset or assets of cash generating unit (CGU) exceeds their recoverable amount.
2.9. Inventories
2.9.1. Valuation of inventories (including in transit) of different categories is as under: -
a) Crude oil is valued at cost on First in First Out (FIFO) basis or at net realisable value, whichever is lower. Crude oil is not written down below cost except in cases where their prices have declined subsequently and it is estimated that the cost of the finished goods will exceed their net realisable value;
b) Raw materials other than ''a)'' above are valued at weighted average cost or at net realisable value, whichever is lower;
c) Stock-in process is valued at raw material cost plus cost of conversion or at net realisable value, whichever is lower;
d) Empty packages are valued at weighted average cost;
e) Stores and spares which do not meet the recognition criteria under Property, Plant and Equipment are valued at weighted average cost. Surplus, obsolete and slow moving stores and spares, if any, are valued at cost or net realizable value whichever is lower. Surplus items, when transferred from completed projects are valued at cost / estimated value, pending periodic assessment / ascertainment of condition. Stores and Spares in transit are valued at cost;
f) Finished products other than Lubricants are valued at cost (on FIFO basis month-wise) or at net realisable value, whichever is lower;
g) Finished products (lubricants) are valued at weighted average cost or at net realisable value, whichever is lower;
2.9.2. Customs duty on Raw materials/Finished goods lying in bonded warehouse are provided for at the applicable rates except where liability to pay duty is transferred to consignee;
2.9.3. Excise duty on finished stocks lying at manufacturing locations is provided for at the assessable value applicable at each of the locations based on applicable duty;
2.9.4. The net realisable value of finished goods and stock in trade are final selling prices for sales to oil marketing companies and depot prices applicable to the locations. For the purpose of inventory valuation, the proportion of sales to oil marketing companies and consumer sales are determined on location wise and product wise sales of subsequent period.
2.10. Revenue recognition
2.10.1. Sale of goods
Revenue is recognised when:
a) the Corporation satisfies a performance obligation by transferring control of a promised goods / services to a customer;
b) transaction price is allocated on each performance obligation and is recognised as and when the particular performance obligation is satisfied either at a point in time or over a period of time;
c) the transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer including excise duties, as applicable and is measured at the fair value of the consideration received or receivable, net of returns, taxes or duties collected on behalf of the government and trade discounts or rebates, as applicable;
d) it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.
Revenue is allocated between Loyalty Programs and other components of the sale. The amount allocated to the Loyalty Program is deferred, and is recognised as Revenue when the Corporation has fulfilled its obligation to supply the products under the terms of the Program or when it is no longer probable that the points under the Program will be redeemed.
Where the Corporation acts as an agent on behalf of a third party, the associated Revenue is recognised on a net basis;
Claims, including subsidy on Liquified Petroleum Gas (LPG) and Superior Kerosene Oil (SKO), from Government of India, are booked on in-principle acceptance thereof on the basis of available instructions / clarifications, subject to final adjustments as stipulated.
2.10.2. Interest income is recognised taking into account the amount outstanding and the applicable effective interest rate;
2.10.3. Dividend is recognised when right to receive the payment is established;
2.10.4. Income from sale of scrap is accounted for on realization.
2.11. Accounting / classification of expenditure and income
2.11.1. Income / expenditure in aggregate pertaining to prior year(s) above the threshold limit are corrected retrospectively;
2.11.2. Prepaid expenses upto threshold limit in each case, are charged to revenue as and when incurred;
2.11.3. Insurance claims are accounted on acceptance basis;
2.11.4. All other claims / entitlements are accounted on the merits of each case.
2.11.5. Raw materials consumed are net of discount towards sharing of under-recoveries.
2.12. Employee benefits
2.12.1. Short-term employee benefit
Short term employee benefits are recognized as an expense at undiscounted amount in the Statement of Profit & Loss of the year in which the related services are rendered by the employees;
2.12.2. Post-employment benefits
Defined Contribution Plans:
Obligations for contributions to defined contribution plans are expensed in the Statement of Profit & Loss of the year in which the related services are rendered by the employees;
Defined Benefit Plans:
Post-employment benefits
Liability towards defined employee benefits (gratuity, pension, post - retirement medical benefits, ex-gratia and resettlement allowance) are determined on actuarial valuation by independent actuaries at the year-end by using Projected Unit Credit method;
Re-measurements of the net defined benefit liability, which comprises of actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income;
Other long-term employee benefits
Liability towards other long term employee benefits (leave encashment, long service awards, provident fund contribution to trust and death benefits) are determined on actuarial valuation by independent actuaries using Projected Unit Credit method;
Re-measurements gains and losses are recognized in the Statement of Profit and Loss in the period in which they arise; Prepaid contributions are recognized as an asset to the extent that a cash refund or a set-off in future payments is available.
2.12.3. Termination benefits
Expenditure on account of Voluntary Retirement Schemes, are charged to Statement of Profit & Loss, as and when incurred.
2.13. Foreign currency transactions
2.13.1. Monetary items
Transactions in foreign currencies are initially recorded at the respective exchange rates prevailing at the date of transaction;
Monetary assets and liabilities denominated in foreign currencies are translated at spot rates of exchange at the reporting date;
Exchange differences arising on settlement or translation of monetary items (except for long term foreign currency monetary items outstanding as of 31st March 2016) are recognised in Statement of Profit and Loss either as ''Exchange Rate Variation'' or as ''finance costs'' (to the extent regarded as an adjustment to borrowing costs), as the case maybe;
In case of long term foreign currency monetary items outstanding as of 31st March 2016, foreign exchange differences arising on settlement or translation of long term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in case of other long term foreign currency monetary items, if any, accumulated in ''Foreign Currency Monetary Item Translation Difference Account'' and amortised over the balance period of the asset / liability.
2.13.2. Non - Monetary items
Non-monetary items, other than those measured at fair value, denominated in foreign currency, are valued at the exchange rate prevailing on the date of transaction.
2.14. Investment in Subsidiary, associates and joint ventures
Investments in equity shares of Subsidiaries, Joint Ventures & Associates are recorded at cost and reviewed for impairment at each reporting date;
The Corporation has chosen the carrying value of the investment in Subsidiaries, associates and joint ventures existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April 2015 as deemed cost.
2.15. Government Grants
2.15.1. Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with;
2.15.2. When the grant relates to an expense item, it is recognized in Statement of Profit and Loss on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed;
2.15.3. When the grant relates to property, plant and equipment, the cost of property, plant and equipment is shown at gross value and grant thereon is treated as liability (deferred income) and are credited to statement of profit and loss on a systematic basis over the useful life of the asset.
2.16. Exploration and Production expenditure
"Successful Efforts Method" of accounting is followed for Oil & Gas exploration and production activities as stated below:
2.16.1. Cost of surveys, studies, carrying and retaining undeveloped properties are expensed out in the year of incurrence;
2.16.2. Cost of acquisition, drilling and development are treated as Capital Work-in-Progress when incurred and are capitalised when the well is ready to commence commercial production;
2.16.3. Accumulated costs on exploratory wells in progress are expensed out in the year in which these are determined to be dry or are of no further use, as the case may be;
2.16.4. The proportionate share in the assets, liabilities, income and expenditure of joint operations are accounted as per the participating interest in such joint operations.
2.17. Provisions and contingent liabilities
2.17.1. Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation;
2.17.2. If the effect of the time value of money is material, provisions are discounted using an appropriate discount rate. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost;
2.17.3. Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Corporation, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability;
2.17.4. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote;
2.17.5. Contingent liabilities and Capital Commitments disclosed are in respect of items which in each case are above the threshold limit;
2.17.6. Contingent Liabilities are considered only when show-cause notice is converted into demand.
2.18. Fair value measurement
2.18.1. Fair value is the price that would be received/ paid to sell an asset or to transfer a liability, as the case may be, in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Corporation has access at that date. The fair value of a liability also reflects its non-performance risk;
2.18.2. While measuring the fair value of an asset or liability, the Corporation uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: i nputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs)
Financial Instruments
2.19. Financial Assets
2.19.1. Initial recognition and measurement
All financial assets (not measured subsequently at fair value through profit or loss) are recognised initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.
2.19.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. The Corporation classifies financial assets (other than equity instruments) as under:
(a) subsequently measured at amortised cost;
(b) fair value through other comprehensive income; or
(c) fair value through profit or loss
on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Amortised cost
A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
The asset is held within a business model whose objective is
⢠To hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial recognition, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method and such amortization is recognised in the Statement of Profit and Loss.
Debt instruments at Fair value through profit and loss (FVTPL)
Fair value through profit and loss is a residual category for measurement of debt instruments.
After initial measurement, any fair value changes including any interest income, impairment loss and other net gains and losses are recognised in the Statement of Profit and Loss.
Equity investments
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Corporation decides to classify the same either as at FVOCI or FVTPL. The Corporation makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable;
For equity instruments classified as FVOCI, all fair value changes on the instrument, excluding dividends, are recognized in other comprehensive income (OCI);
Equity instruments included within the FVTPL category are measured at fair value with all fair value changes being recognized in the Statement of Profit and Loss.
2.19.3. Impairment of financial assets
In accordance with Ind-AS 109, the Corporation applies Expected Credit Loss ("ECL") model for measurement and recognition of impairment loss on the financial assets measured at amortised cost;
Loss allowances on trade receivables are measured following the ''simplified approach'' at an amount equal to the lifetime ECL at each reporting date.
2.20. Financial Liabilities
2.20.1. Initial recognition and measurement
All financial liabilities (not measured subsequently at fair value through profit or loss) are recognised initially at fair value net of transaction costs that are directly attributable to the respective financial liabilities.
2.20.2. Subsequent measurement
The Corporation classifies all financial liabilities as subsequently measured at amortised cost by using the Effective Interest Rate Method ("EIR") and such amortisation is recognised in the Statement of Profit and Loss.
2.20.3. Derecognition
A Financial Liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
2.21. Financial guarantees
Financial guarantee contracts are recognised initially at fair value. Subsequently on each reporting date, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the fair value initially recognised less cumulative amortisation.
2.22. Derivative financial instruments
The Corporation uses derivative financial instruments, such as forward contracts, interest rate swaps to mitigate its foreign currency risk, interest risk and commodity price risk arising out of highly probable forecast transactions and are presented in Financial Statements, either as Financial Assets or Financial liabilities as the case may be.
2.22.1. Derivatives Contracts designated as hedging instruments:
Wherever Hedge Accounting is undertaken, at the inception of a hedge relationship, the Corporation formally designates and documents a) the hedge relationship to which it wishes to apply hedge accounting and b) the risk management objective and strategy. In such cases, the derivative financial instruments are recognized at fair value with due assessment to effectiveness of the hedge instrument. By following Cash Flow Hedges, the effective portion of changes in the fair value is recognized in Other Comprehensive Income (OCI) and accumulated under Cash Flow Hedge Reserve within Other Equity whereas the ineffective portion, if any, is recognized immediately in the Statement of Profit and Loss and presented under Other Income or Other Expenses, as the case may be. The effective portion, previously recognized in OCI and accumulated as Cash Flow Hedge Reserve is reclassified to the Statement of Profit and Loss in the subsequent period, during which, the hedged expected future cash flows affect profit or loss and further guided to the same line item to which the underlying is accounted. Further, in case of previously recognized forecasted transaction, upon the knowledge of its non-occurrence, the effective portion of cumulative gain or loss is forthwith recognized by transferring from Cash Flow Hedge Reserve to the Statement of Profit and Loss. If the amount accumulated in Cash Flow Hedge Reserve is a loss and Corporation expects that all or a portion of that loss will not be recovered in one or more future period, the Corporation immediately reclassifies the amount that is not expected to be recovered into profit or loss as a reclassification adjustment. The hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or no longer qualifies for hedge accounting.
2.22.2. Derivatives Contracts not designated as hedging instruments
The derivative financial instruments are accounted at fair value through Profit or Loss and presented under Other Income or Other Expenses, as the case may be.
2.23. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
2.24. Taxes on Income
2.24.1. Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961;
2.24.2. Deferred tax liability/asset on account of temporary difference is recognised using tax rates and tax laws enacted or substantively enacted as at the Balance Sheet date;
2.24.3. Deferred tax assets are recognised and carried forward for all deductible temporary differences only to the extent that it is probable that taxable profit will be available in future against which the deductible temporary difference can be utilized;
2.24.4. The carrying amount of deferred tax assets/Liabilities is reviewed at each Balance Sheet date.
2.24.5. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, is considered as an asset when it is probable that the future economic benefits associated with it, will flow to the Corporation.
2.25. Earnings per share
2.25.1. Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period;
2.25.2. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.
2.26. Cash and Cash equivalents
Cash and cash equivalents includes cash on hand, balances with banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
2.27. Cash Flows
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated. For the purpose of the Statement of Cash Flows, cash and cash equivalent consist of cash, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Corporation''s cash management.
2.28 Dividend
The Company recognises a liability to make cash distributions to equity holders of the Corporation when the distribution is authorised and the distribution is no longer at the discretion of the Corporation. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in other equity.
Mar 31, 2021
1. Corporate Information
Hindustan Petroleum Corporation Limited referred to as âHPCLâ or âthe Corporationâ was incorporated on 5th July, 1952. HPCL is a Government of India Enterprise listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited, with ONGC holding 51.11% of Equity Shares w.e.f. 31st January, 2018. Pursuant to shares buy-back, the ONGC holding as of 31.03.2021 is 53.64%. The Corporation is engaged, primarily in the business of refining of crude oil and marketing of petroleum products. The Corporation has, among others, refineries at Mumbai and Vishakhapatnam, LPG bottling plants and Lube blending plants. The Corporation''s marketing infrastructure includes vast network of Installations, Depots, Aviation Service Stations, Retail Outlets and LPG distributors.
Authorization of financial statements
The Financial Statements were authorized for issue in accordance with a resolution of the Board of Directors on 20th May, 2021 (refer Note 63).
The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (âActâ) read with Companies (Indian Accounting Standards) Rules, 2015; and other relevant provisions of the Act and Rules thereunder.
The Financial Statements are prepared under historical cost convention basis, except for certain assets and liabilities measured at fair value.
The Corporation has adopted Ind AS in accordance with Ind AS 101 (First time adoption of Indian Accounting Standards). The transition was carried out from Accounting Standard as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, (previous GAAP). The Corporation''s presentation currency and functional currency is Indian Rupees (''). All figures appearing in the Financial Statements are rounded off to the nearest Crore ('' Crore), except where otherwise stated.
1.2. Use of Judgement and Estimates
The preparation of the Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affecting the financial statements of future periods. The Corporation continually evaluates these estimates and assumptions based on the most recently available information.
In particular, information about significant areas of estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as below:
⢠Financial instruments;
⢠Estimates of useful lives and residual value of Property, Plant and Equipment and intangible assets;
⢠Valuation of inventories;
⢠Measurement of recoverable amounts of cash-generating units;
⢠Measurement of Defined Benefit Obligation, key actuarial assumptions;
⢠Provisions and Contingencies; and
⢠Evaluation of recoverability of deferred tax assets;
Revisions to accounting estimates are recognized prospectively in the Financial Statements in the period in which the estimates are revised and in any future periods affected.
2. Significant Accounting Policies
2.1. Property, Plant and Equipment
2.1.1. Freehold lands are carried at cost. All other items of Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
2.1.2. The initial cost of an asset comprises its purchase price or construction cost (including import duties and non-refundable taxes); any costs directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by management; initial estimated present value of any of any contractual decommissioning obligation; and borrowing cost for qualifying assets (i.e., assets that necessarily take a substantial period of time to get ready for their intended use).
2.1.3. Technical know-how / licence fee relating to plants / facilities are capitalized as part of cost of the underlying asset.
2.1.4. Expenditure during construction period: Direct expenses incurred during construction period on capital projects are capitalised.
2.1.5. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Corporation.
2.1.6. Spare parts which are meeting the requirement of Property, Plant and Equipment are capitalized as Property, Plant and Equipment in case the unit value of the spare part is above the threshold limit. In other cases, the spare parts are inventorised on procurement and charged to Statement of Profit and Loss on consumption.
2.1.7. An item of Property, Plant and Equipment and any significant part initially recognised separately as part of Property, Plant and Equipment is derecognised upon disposal; or when no future economic benefits are expected from its use or disposal; or when the Property, Plant Equipment has been re-classified as ready for disposal. Any gain or loss arising on de-recognition of the asset is included in the Statement of Profit and Loss when the asset is derecognised.
2.1.8. The residual values and useful lives of Property, Plant and Equipment are reviewed during each financial year and changes are accounted for as change in accounting estimates on a prospective basis.
2.1.9. The Corporation has chosen the carrying value of Property, Plant and Equipment existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April, 2015 as deemed cost.
2.2. Depreciation / amortization
2.2.1. Depreciation on Property, Plant & Equipment is provided on straight line method. In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Corporation has assessed the estimated useful lives of its Property, Plant & Equipment and has adopted the useful lives and residual value as prescribed in Schedule II except for the following:
Useful Life (Basis internal technical assessment):
|
Plant and Machinery relating to Retail Outlets (other than Storage tanks and related equipment) |
15 years |
|
|
Cavern Structure |
60 years |
|
|
LPG cylinders & regulators (excluding cylinders held for sale) |
15 years |
|
|
CNG Compressors |
10 years |
|
|
CNG Cascades and SS tubing in CNG Stations |
20 years |
|
|
Residual Value (Basis historical data): |
||
|
LPG cylinder and pressure regulator |
15% of original cost |
|
|
Catalyst with noble metal content |
90% of original cost of noble metal content |
|
2.2.2. The Corporation depreciates significant components of the main asset (which have different useful lives as compared to the main asset) based on the individual useful life of those components. Useful life for such components is assessed by considering historical experience, internal technical inputs and any other relevant factor.
2.2.3. Items of Property, Plant and Equipment costing not more than the threshold limit are depreciated at 100 percent in the year of acquisition except LPG Cylinders and Pressure Regulators (excluding cylinders held for sale) which are depreciated over a useful life of 15 years based on the technical assessment.
2.2.4. Depreciation on spare parts specific to an item of Property, Plant and Equipment is based on life of the related Property, Plant and Equipment. In other cases, the spare parts are depreciated over their estimated useful life based on the technical assessment.
2.2.5. Depreciation is charged on additions / deletions on pro-rata monthly basis including the month of addition / deletion.
2.3. Intangible assets
2.3.1. Intangible assets are carried at cost net of accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding development costs, are not capitalised and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalised if technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Corporation has an intention and ability to complete and use or sell the asset and the costs can be measured reliably.
2.3.2. Assets where entire output generated is committed to be sold to a public sector entity (including Government body) for almost entire useful life of the asset are classified as intangible assets as per the requirements of Ind AS and are amortised (after retaining the residual value, if applicable) over their useful life.
2.3.3. In cases where, the Corporation has constructed assets and the Corporation has only a preferential right to use, these assets are classified as intangible assets and are amortised (after retaining the residual value, if applicable) over their useful life or the period of the agreement, whichever is lower.
2.3.4. The useful lives of intangible assets are assessed as either finite or indefinite.
2.3.5. Intangible assets with finite lives are amortised on straight line basis over their useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each financial year end. The amortisation expense on intangible assets with finite lives and impairment loss is recognised in the statement of Profit & Loss.
2.3.6. Intangible assets with indefinite useful lives, such as âright of way'' which is perpetual and absolute in nature, are not amortised, but are tested for impairment annually. The useful lives are reviewed at each period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in useful life from indefinite to finite is made on a prospective basis. The impairment loss on intangible assets with indefinite life is recognised in the Statement of Profit and Loss.
2.3.7. Technical know-how / license fee relating to production process and process design are recognized as Intangible Assets.
2.3.8. Estimated lives of intangible assets (acquired) are as follows:
⢠Software: 2 to 4 years
⢠Technical know-how/license fees: 2 to 10 years
⢠Right to use - wind mills: 22 years
2.3.9. The Corporation has chosen the carrying value of Intangible Assets existing as per previous GAAP as on date of transition to Ind AS i.e., 1st April 2015 as deemed cost.
2.4. Borrowing Cost
2.4.1. Borrowing cost consists of interest and other costs incurred in connection with the borrowing of funds. Borrowing cost also includes exchange rate variation to the extent regarded as an adjustment to interest cost.
2.4.2. Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset till the month in which the asset is ready for intended use. All other borrowing costs are expensed in the period in which they are incurred.
2.5. Non-currents assets held for sale
2.5.1. Non-current assets are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met, only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets.
2.5.2. Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
2.5.3. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortized.
2.6. Leases
Wherever a Contract conveys the right to control the Use of an identified Asset by either of the PARTIES for a period of time and in exchange for consideration, there arises a Lease Contract. At inception of every Contract, the Corporation examines the existence to the lease elements in a Contract and thereafter carries out appropriate accounting either as Lessor or Lessee.
2.6.1 Lessee:
At the commencement of the lease, the Corporation recognises right-of-use asset and lease liability, with an exception of short-term leases or lease of low-value underlying assets. The right-of-use asset is measured at cost, made up of the initial measurement of the lease liability, initial direct costs, an estimate of dismantling cost including removal of the asset at the end of the lease and any lease payments on or before commencement (net of any incentives received) of the lease.
The lease liability is measured at Present Value of the lease payments to be made during the course of the lease by using incremental borrowing rate that prevail at the beginning of each quarterly period for a similar tenure (such as AAA Corporate Bond rates for varying tenures of 5, 10 & 15 years) for all of the contracts executed in that period. The variable lease payments, which do not depend on an index or a rate, are excluded from the measurement of lease liability.
The Corporation has elected not to separate non-lease components in a contract and account as one unified lease contract covering all underlying assets by using the practical expedient prescribed in the Standard.
On re-measurement of lease liability, the right-of-use asset is suitably readjusted unless such readjustment lead to a restatement of carrying value below zero, in which case, the resultant amount is directly routed through Statement of Profit & Loss Account.
2.6.2 Lessor:
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. In all other cases, it is treated as operating lease.
2.7. Impairment of Non-Financial Assets
Non-financial assets other than inventories, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment.
An impairment loss is recognised whenever the carrying amount of assets of cash generating unit (CGU) exceeds their recoverable amount.
2.8. Inventories
2.8.1. Valuation of inventories (including in transit) of different categories is as under:
a) Crude oil is valued at cost on First in First Out (FIFO) basis or at net realisable value, whichever is lower. Crude oil is not written down below cost except in cases where their prices have declined subsequently and it is estimated that the cost of the finished goods will exceed their net realisable value.
b) Raw materials for lubricants are valued at weighted average cost or at net realisable value, whichever is lower.
c) Stock-in process is valued at raw material cost plus cost of conversion or at net realisable value, whichever is lower.
d) Finished products other than Lubricants are valued at cost (on FIFO basis month-wise) or at net realisable value, whichever is lower.
e) Finished products (lubricants) are valued at weighted average cost or at net realisable value, whichever is lower.
f) Empty packages are valued at weighted average cost.
g) Stores and spares which do not meet the recognition criteria under Property, Plant and Equipment are valued at weighted average cost. Surplus, obsolete and slow moving stores and spares, if any, are valued at cost or net realizable value whichever is lower. Surplus items, when transferred from completed projects are valued at cost / estimated value, pending periodic assessment/ ascertainment of condition. Stores and Spares in transit are valued at cost.
2.8.2. Customs duty on Raw materials/Finished goods lying in bonded warehouse are provided for at the applicable rates except where liability to pay duty is transferred to consignee.
2.8.3. Excise duty on finished stocks lying at manufacturing locations is provided for at the assessable value applicable at each of the locations based on applicable duty.
2.8.4. The net realisable value of finished goods and stock in trade are final selling prices for sales to oil marketing companies and depot prices applicable to the locations. For the purpose of stock valuation, the proportion of sales to oil marketing companies and consumer sales are determined on location wise and product wise sales of subsequent period.
2.9. Revenue recognition
2.9.1. Sale of goods
Revenue is recognised when:
a) The Corporation satisfies a performance obligation by transferring control of a promised goods / services to a customer;
b) Transaction price is allocated on each performance obligation and is recognised as and when the particular performance obligation is satisfied either at a point in time or over a period of time;
c) The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer including excise duties, as applicable and is measured at the fair value of the consideration received or receivable, net of returns, taxes or duties collected on behalf of the government and trade discounts or rebates, as applicable;
d) It is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.
Revenue is allocated between Loyalty Programs and other components of the sale. The amount allocated to the Loyalty Program is deferred, and is recognised as Revenue when the Corporation has fulfilled its obligation to supply the products under the terms of the Program or when it is no longer probable that the points under the Program will be redeemed.
Where the Corporation acts as an agent on behalf of a third party, the associated Revenue is recognised on a net basis.
Claims, including subsidy on Liquified Petroleum Gas (LPG) and Superior Kerosene Oil (SKO), from Government of India, are booked on in-principle acceptance thereof on the basis of available instructions / clarifications, subject to final adjustments as stipulated.
2.9.2 Interest income is recognised taking into account the amount outstanding and the applicable effective interest rate.
2.9.3 Dividend is recognised when right to receive the payment is established.
2.10. Accounting / classification of expenditure and income
2.10.1. Income / expenditure in aggregate pertaining to prior year(s) above the threshold limit are corrected retrospectively.
2.10.2. Prepaid expenses upto threshold limit in each case, are charged to revenue as and when incurred.
2.10.3. Insurance claims are accounted on acceptance basis.
2.10.4. All other claims / entitlements are accounted on the merits of each case.
2.10.5. Raw materials consumed are net of discount towards sharing of under-recoveries.
2.11. Employee benefits
2.11.1. Short-term employee benefit
Short term employee benefits are recognized as an expense at undiscounted amount in the Statement of Profit & Loss of the year in which the related services are rendered by the employees.
2.11.2. Post-employment benefits Defined Contribution Plans:
Obligations for contributions to defined contribution plans are expensed in the Statement of Profit & Loss of the year in which the related services are rendered by the employees.
Defined Benefit Plans:
Post-employment benefits
Liability towards defined employee benefits (gratuity, pension, post - retirement medical benefits, ex-gratia and resettlement allowance) are determined on actuarial valuation by independent actuaries at the year-end by using Projected Unit Credit method.
Re-measurements of the net defined benefit liability, which comprises of actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income.
Other long-term employee benefits
Liability towards other long term employee benefits (leave encashment, long service awards, provident fund contribution to trust and death benefits) are determined on actuarial valuation by independent actuaries using Projected Unit Credit method.
Re-measurements gains and losses are recognized in the Statement of Profit and Loss in the period in which they arise.
2.11.3. Termination benefits
Expenditure on account of Voluntary Retirement Schemes, are charged to Statement of Profit & Loss, as and when incurred.
2.12. Foreign currency transactions
2.12.1. Monetary items
Transactions in foreign currencies are initially recorded at the respective exchange rates prevailing at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items (except for long term foreign currency monetary items outstanding as of 31st March 2016) are recognised in Statement of Profit and Loss either as âExchange Rate Variation'' or as âfinance costs'' (to the extent regarded as an adjustment to borrowing costs), as the case maybe.
In case of long term foreign currency monetary items outstanding as of 31st March 2016, foreign exchange differences arising on settlement or translation of long term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in case of other long term foreign currency monetary items, if any, accumulated in âForeign Currency Monetary Item Translation Difference Account'' and amortised over the balance period of the asset / liability.
2.12.2. Non - Monetary items
Non-monetary items, other than those measured at fair value, denominated in foreign currency, are valued at the exchange rate prevailing on the date of transaction.
2.13. Investment in Subsidiary, associates and joint ventures
Investments in equity shares of Subsidiaries, Joint Ventures & Associates are recorded at cost and reviewed for impairment at each reporting date.
The Corporation has chosen the carrying value of the investment in Subsidiaries, associates and joint ventures existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April 2015 as deemed cost.
2.14. Government Grants
2.14.1. Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
2.14.2. When the grant relates to an expense item, it is recognized in Statement of Profit and Loss on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
2.14.3. When the grant relates to property, plant and equipment, the cost of property, plant and equipment is shown at gross value and grant thereon is treated as liability (deferred income) and are credited to statement of profit and loss on a systematic basis over the useful life of the asset.
2.15. Exploration & production expenditure
âSuccessful Efforts Methodâ of accounting is followed for Oil & Gas exploration and production activities as stated below:
2.15.1. Cost of surveys, studies, carrying and retaining undeveloped properties are expensed out in the year of incurrence.
2.15.2. Cost of acquisition, drilling and development are treated as Capital Work-in-Progress when incurred and are capitalised when the well is ready to commence commercial production.
2.15.3. Accumulated costs on exploratory wells in progress are expensed out in the year in which they are determined to be dry.
2.15.4. The proportionate share in the assets, liabilities, income and expenditure of joint operations are accounted as per the participating interest in such joint operations.
2.16. Provisions and contingent liabilities
2.16.1. Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
2.16.2. If the effect of the time value of money is material, provisions are discounted using an appropriate discount rate. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
2.16.3. Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Corporation, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability.
2.16.4. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.
2.16.5. Contingent liabilities and Capital Commitments disclosed are in respect of items which in each case are above the threshold limit.
2.16.6. Contingent Liabilities are considered only when show-cause notice is converted into demand.
2.17. Fair value measurement
2.17.1. Fair value is the price that would be received/ paid to sell an asset or to transfer a liability, as the case may be, in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Corporation has access at that date. The fair value of a liability also reflects its non-performance risk.
2.17.2. While measuring the fair value of an asset or liability, the Corporation uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs)
2.18. Financial Assets
2.18.1. Initial recognition and measurement
All financial assets (not measured subsequently at fair value through profit or loss) are recognised initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.
2.18.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. The Corporation classifies financial assets (other than equity instruments) as under:
(a) subsequently measured at amortised cost;
(b) fair value through other comprehensive income; or
(c) fair value through profit or loss
on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Amortised cost
A âdebt instrument'' is measured at the amortised cost if both the following conditions are met:
The asset is held within a business model whose objective is:
⢠To hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial recognition, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method and such amortization is recognised in the Statement of Profit and Loss.
Debt instruments at Fair value through profit and loss (FVTPL)
Fair value through profit and loss is a residual category for measurement of debt instruments.
After initial measurement, any fair value changes including any interest income, impairment loss and other net gains and losses are recognised in the Statement of Profit and Loss.
Equity investments
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Corporation decides to classify the same either as at FVOCI or FVTPL. The Corporation makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
For equity instruments classified as FVOCI, all fair value changes on the instrument, excluding dividends, are recognized in other comprehensive income (OCI).
Equity instruments included within the FVTPL category are measured at fair value with all fair value changes being recognized in the Statement of Profit and Loss.
2.18.3. Impairment of financial assets
In accordance with Ind-AS 109, the Corporation applies Expected Credit Loss (âECLâ) model for measurement and recognition of impairment loss on the financial assets measured at amortised cost.
Loss allowances on trade receivables are measured following the âsimplified approach'' at an amount equal to the lifetime ECL at each reporting date.
2.19. Financial Liabilities
2.19.1. Initial recognition and measurement
All financial liabilities (not measured subsequently at fair value through profit or loss) are recognised initially at fair value net of transaction costs that are directly attributable to the respective financial liabilities.
2.19.2. Subsequent measurement
The Corporation classifies all financial liabilities as subsequently measured at amortised cost by using the Effective Interest Rate Method (âEIRâ) and such amortisation is recognised in the Statement of Profit and Loss.
2.20. Financial guarantees
Financial guarantee contracts are recognised initially at fair value. Subsequently on each reporting date, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the fair value initially recognised less cumulative amortisation.
2.21. Derivative financial instruments
The Corporation uses derivative financial instruments, such as forward contracts, interest rate swaps to mitigate its foreign currency risk, interest risk and commodity price risk arising out of highly probable forecast transactions and are presented in Financial Statements, either as Financial Assets or Financial liabilities as the case may be.
2.21.1 Derivatives Contracts designated as hedging instruments:
Wherever Hedge Accounting is undertaken, at the inception of a hedge relationship, the Corporation formally designates and documents a) the hedge relationship to which it wishes to apply hedge accounting and b) the risk management objective and strategy. In such cases, the derivative financial instruments are recognized at fair value with due assessment to effectiveness of the hedge instrument. By following Cash Flow Hedges, the effective portion of changes in the fair value is recognized in Other Comprehensive Income (OCI) and accumulated under Cash Flow Hedge Reserve within Other Equity whereas the ineffective portion, if any, is recognized immediately in the Statement of Profit and Loss and presented under Other Income or Other Expenses, as the case may be. The effective portion, previously recognized in OCI and accumulated as Cash Flow Hedge Reserve is reclassified to the Statement of Profit and Loss in the subsequent period, during which, the hedged expected future cash flows affect profit or loss and further guided to the same line item to which the underlying is accounted. Further, in case of previously recognized forecasted transaction, upon the knowledge of its non-occurrence, the effective portion of cumulative gain or loss is forthwith recognized by transferring from Cash Flow Hedge Reserve to the Statement of Profit and Loss. If the amount accumulated in Cash Flow Hedge Reserve is a loss and Corporation expects that all or a portion of that loss will not be recovered in one or more future period, the Corporation immediately reclassifies the amount that is not expected to be recovered into profit or loss as a reclassification adjustment. The hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or no longer qualifies for hedge accounting.
2.21.2 Derivatives Contracts not designated as hedging instruments:
The derivative financial instruments are accounted at fair value through Profit or Loss and presented under Other Income or Other Expenses, as the case may be.
2.22. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
2.23. Taxes on Income
2.23.1. Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.
2.23.2. Deferred tax liability/asset on account of temporary difference is recognised using tax rates and tax laws enacted or substantively enacted as at the Balance Sheet date.
2.23.3. Deferred tax assets are recognised and carried forward for all deductible temporary differences only to the extent that it is probable that taxable profit will be available in future against which the deductible temporary difference can be utilized.
2.23.4. The carrying amount of deferred tax assets/Liabilities is reviewed at each Balance Sheet date.
2.23.5. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, is considered as an asset when it is probable that the future economic benefits associated with it, will flow to the Corporation.
2.24. Earnings per share
2.24.1. Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period.
2.24.2. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.
2.25. Cash and Cash equivalents
Cash and cash equivalents includes cash on hand, balances with banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
2.26. Cash Flows
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated. For the purpose of the Statement of Cash Flows, cash and cash equivalent consist of cash, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Corporation''s cash management.
Mar 31, 2019
1. Corporate Information
Hindustan Petroleum Corporation Limited referred to as "HPCL'' or "the Corporation" was incorporated on 5th July, 1952. HPCL is a Government of India Enterprise listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited, with ONGC holding 51.11% of Equity Shares w.e.f. 31st January, 2018. The Corporation is engaged, primarily in the business of refining of crude oil and marketing of petroleum products. The Corporation has, among others, refineries at Mumbai and Vishakhapatnam, LPG bottling plants and Lube blending plants. The Corporation''s marketing infrastructure includes vast network of Installations, Depots, Aviation Service Stations, Retail Outlets and LPG distributors.
Authorization of financial statements
The Financial Statements were authorized for issue in accordance with a resolution of the Board of Directors on 20th May 2019.
1.1. Basis for preparation:
The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 ("Act") read with Companies (Indian Accounting Standards) Rules, 2015; and other relevant provisions of the Act and Rules thereunder.
The Financial Statements are prepared under historical cost convention basis, except for certain assets and liabilities measured at fair value.
The Corporation has adopted Ind AS and the adoption was carried out in accordance with Ind AS 101 (First time adoption of Indian Accounting Standards). The transition was carried out from Accounting Standard as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, (previous GAAP). The Corporation''s Presentation currency and Functional currency is Indian Rupees (''). All figures appearing in the Financial Statements are rounded to the nearest crores (Rs,Crores), except where otherwise indicated.
1.2. Use of Judgment and Estimates
The preparation of the Corporation''s Financial Statements requires management to make judgmentsâ, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Corporation continually evaluates these estimates and assumptions based on the most recently available information.
In particular, information about significant areas of estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as below:
- Financial instruments;
- Estimates of useful lives and residual value of Property, Plant and Equipment and intangible assets;
- Valuation of inventories;
- Measurement of recoverable amounts of cash-generating units;
- Measurement of Defined Benefit Obligation, key actuarial assumptions;
- Provisions and Contingencies; and
- Evaluation of recoverability of deferred tax assets;
Revisions to accounting estimates are recognized prospectively in the Financial Statements in the period in which the estimates are revised and in any future periods affected.
2. Significant Accounting Policies
2.1. Property, Plant and Equipment
2.1.1. Freehold lands are carried at cost. All other items of Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
2.1.2. The initial cost of an asset comprises its purchase price or construction cost (including import duties and non-refundable taxes); any costs directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by management; initial estimated present value of any of any contractual decommissioning obligation; and borrowing cost for qualifying assets (i.e., assets that necessarily take a substantial period of time to get ready for their intended use).
2.1.3. Technical know-how / license fee relating to plants / facilities are capitalized as part of cost of the underlying asset.
2.1.4. Expenditure during construction period: Direct expenses incurred during construction period on capital projects are capitalized.
2.1.5. Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Corporation.
2.1.6. Spare parts which are meeting the requirement of Property, Plant and Equipment are capitalized as Property, Plant and Equipment in case the unit value of the spare part is above the threshold limit. In other cases, the spare parts are inventoried on procurement and charged to Statement of Profit and Loss on consumption.
2.1.7 An item of Property, Plant and Equipment and any significant part initially recognized separately as part of Property, Plant and Equipment is derecognized upon disposal; or when no future economic benefits are expected from its use or disposal; or when the Property, Plant Equipment has been re-classified as ready for disposal. Any gain or loss arising on de-recognition of the asset is included in the Statement of Profit and Loss when the asset is derecognized.
2.1.8. The residual values and useful lives of Property, Plant and Equipment are reviewed at each financial year end and changes are accounted for as a change in accounting estimates on a prospective basis.
2.1.9. The Corporation has chosen the carrying value of Property, Plant and Equipment existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April 2015 as deemed cost.
2.2. Depreciation / amortization
2.2.1. Depreciation on Property, Plant & Equipment is provided on straight line method. In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Company has assessed the estimated useful lives of its Property, Plant & Equipment and has adopted the useful lives and residual value as prescribed in Schedule II except for the following which are based on internal technical assessment:
2.2.2. The Company depreciates significant components of the main asset (which have different useful lives as compared to the main asset) based on the individual useful life of those components. Useful life for such components is assessed by considering historical experience, internal technical inputs and any other relevant factor.
2.2.3. Items of Property, Plant and Equipment costing not more than the threshold limit are depreciated at 100 percent in the year of acquisition except LPG Cylinders and Pressure Regulators (excluding cylinders held for sale) which are depreciated over a useful life of 15 years based on the technical assessment.
2.2.4. Depreciation on spare parts specific to an item of Property, Plant and Equipment is based on life of the related Property, Plant and Equipment. In other cases, the spare parts are depreciated over their estimated useful life based on the technical assessment.
2.2.5. Depreciation is charged on additions / deletions on pro-rata monthly basis including the month of addition / deletion.
2.3. Intangible assets
2.3.1. Intangible assets are carried at cost net of accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding development costs, are not capitalized and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalized if technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Corporation has an intention and ability to complete and use or sell the asset and the costs can be measured reliably.
2.3.2. Assets where entire output generated is committed to be sold to a public sector entity (including Government body) for almost entire useful life of the asset are classified as intangible assets as per the requirements of Ind AS and are amortized (after retaining the residual value, if applicable) over their useful life.
2.3.3. In cases where, the Corporation has constructed assets and the Corporation has only a preferential right to use, these assets are classified as intangible assets and are amortized (after retaining the residual value, if applicable) over their useful life or the period of the agreement, whichever is lower.
2.3.4. The useful lives of intangible assets are assessed as either finite or indefinite.
2.3.5. Intangible assets with finite lives are amortized on straight line basis over their useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at each financial year end. The amortization expense on intangible assets with finite lives and impairment loss is recognized in the statement of Profit & Loss.
2.3.6. Intangible assets with indefinite useful lives, such as ''right of way'' which is perpetual and absolute in nature, are not amortized, but are tested for impairment annually. The useful lives are reviewed at each period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in useful life from indefinite to finite is made on a prospective basis. The impairment loss on intangible assets with indefinite life is recognized in the Statement of Profit and Loss.
2.3.7 Technical know-how / license fee relating to production process and process design are recognized as Intangible Assets.
2.3.8. Estimated lives of intangible assets (acquired) are as follows:
- Software: 2to4 years
- Technical know-how/license fees: 2to10 years
- Righttouse-windmills:22years
2.3.9. The Corporation has chosen the carrying value of Intangible Assets existing as per previous GAAP as on date of transition to Ind AS i.e., 1st April 2015 as deemed cost.
2.4. Borrowing Cost
2.4.1. Borrowing cost consists of interest and other costs incurred in connection with the borrowing of funds. Borrowing cost also includes exchange rate variation to the extent regarded as an adjustment to interest cost.
2.4.2. Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset till the month in which the asset is ready for intended use. All other borrowing costs are expensed in the period in which they are incurred.
2.5. Non-currents assets held for sale
2.5.1. Non-current assets are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met, only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets.
2.5.2. Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
2.5.3. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortized.
2.6. Leases
2.6.1. Finance Lease
Lease arrangements are classified as finance leases, if substantially all the risks and rewards incidental to ownership of the leased asset is transferred to the lessee.
Lease arrangements in respect of land for lease period above threshold limit are classified as a finance lease
2.6.2. Operating Lease
Lease arrangements which are not classified as finance leases are considered as operating lease.
Payments made under operating leases are recognized in Statement of Profit and Loss with reference to lease terms and other relevant considerations. Lease incentives received / lease premium paid (if any) are recognized as an integral part of the total lease expense, over the term of the lease. Payments made under Operating Leases are generally recognized in Statement of Profit and Loss on a straight-line basis over the term of the lease, unless such payments are structured to increase in line with expected general inflation.
2.7. Impairment of Non-Financial Assets
Non-financial assets other than inventories, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment.
An impairment loss is recognized whenever the carrying amount of assets of cash generating unit (CGU) exceeds their recoverable amount.
2.8. Inventories
2.8.1. Valuation of inventories (including in transit) of different categories is as under: -
a) Crude oil is valued at cost on First in First Out (FIFO) basis or at net realisable value, whichever is lower. Crude oil is not written down below cost except in cases where their prices have declined subsequently and it is estimated that the cost of the finished goods will exceed their net realisable value.
b) Raw materials for lubricants are valued at weighted average cost or at net realisable value, whichever is lower.
c) Stock-in process is valued at raw material cost plus cost of conversion or at net realisable value, whichever is lower.
d) Finished products other than Lubricants are valued at cost (on FIFO basis month-wise) or at net realisable value, whichever is lower.
e) Finished products (lubricants) are valued at weighted average cost or at net realizable value, whichever is lower.
f) Empty packages are valued at weighted average cost.
g) Stores and spares which do not meet the recognition criteria under Property, Plant and Equipment are valued at weighted average cost. Surplus, obsolete and slow moving stores and spares, if any, are valued at cost or net realizable value whichever is lower. Surplus items, when transferred from completed projects are valued at cost / estimated value, pending periodic assessment / ascertainment of condition. Stores and Spares in transit are valued at cost.
2.8.2. Customs duty on Raw materials/Finished goods lying in bonded warehouse are provided for at the applicable rates except where liability to pay duty is transferred to consignee.
2.8.3. Excise duty on finished stocks lying at manufacturing locations is provided for at the assessable value applicable at each of the locations based on applicable duty.
2.8.4. The net realizable value of finished goods and stock in trade are final selling prices for sales to oil marketing companies and depot prices applicable to the locations. For the purpose of stock valuation, the proportion of sales to oil marketing companies and consumer sales are determined on location wise and product wise sales of subsequent period.
2.9. Revenue recognition
2.9.1. Sale of goods
Revenue is recognized when:
a) the Corporation satisfies a performance obligation by transferring control of a promised goods / services to a customer,
b) Transaction price is allocated on each performance obligation and is recognized as and when the particular performance obligation is satisfied either at a point in time or over a period of time
c) The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer including excise duties, as applicable and is measured at the fair value of the consideration received or receivable, net of returns, taxes or duties collected on behalf of the government and trade discounts or rebates, as applicable.
d) it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.
Revenue is allocated between Loyalty Programs and other components of the sale. The amount allocated to the Loyalty Program is deferred, and is recognized as Revenue when the Corporation has fulfilled its obligation to supply the products under the terms of the Program or when it is no longer probable that the points under the Program will be redeemed.
Where the Corporation acts as an agent on behalf of a third party, the associated Revenue is recognized on a net basis.
Claims, including subsidy on Liquefied Petroleum Gas (LPG) and Superior Kerosene Oil (SKO), from Government of India, are booked on in-principle acceptance thereof on the basis of available instructions / clarifications, subject to final adjustments as stipulated.
2.9.2 Interest income is recognized taking into account the amount outstanding and the applicable effective interest rate.
2.9.3 Dividend is recognized when right to receive the payment is established.
2.10. Accounting / classification of expenditure and income
2.10.1. Income / expenditure in aggregate pertaining to prior year(s) above the threshold limit are corrected retrospectively.
2.10.2. Prepaid expenses up to threshold limit in each case, are charged to revenue as and when incurred.
2.10.3. Insurance claims are accounted on acceptance basis.
2.10.4. All other claims / entitlements are accounted on the merits of each case.
2.10.5. Raw materials consumed are net of discount towards sharing of under-recoveries.
2.11. Employee benefits
2.11.1. Short-term employee benefit
Short term employee benefits are recognized as an expense at undiscounted amount in the Statement of Profit & Loss of the year in which the related services are rendered by the employees.
2.11.2. Post-employment benefits Defined Contribution Plans:
Obligations for contributions to defined contribution plans are expensed in the Statement of Profit & Loss of the year in which the related services are rendered by the employees.
Defined Benefit Plans:
Post-employment benefits
Liability towards defined employee benefits (gratuity, pension, post - retirement medical benefits, ex-gratia and resettlement allowance) are determined on actuarial valuation by independent actuaries at the year-end by using Projected Unit Credit method.
Re-measurements of the net defined benefit liability, which comprises of actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized in Other Comprehensive Income.
Other long-term employee benefits
Liability towards other long term employee benefits (leave encashment, long service awards, provident fund contribution to trust and death benefits) are determined on actuarial valuation by independent actuaries using Projected Unit Credit method.
Re-measurements gains and losses are recognized in the Statement of Profit and Loss in the period in which they arise.
2.11.3. Termination benefits
Expenditure on account of Voluntary Retirement Schemes, are charged to Statement of Profit & Loss, as and when incurred.
2.12. Foreign currency transactions
2.12.1. Monetary items
Transactions in foreign currencies are initially recorded at the respective exchange rates prevailing at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items (except for long term foreign currency monetary items outstanding as of 31st March 2016) are recognized in Statement of Profit and Loss either as ''Exchange Rate Variation'' or as ''finance costs'' (to the extent regarded as an adjustment to borrowing costs), as the case maybe.
In case of long term foreign currency monetary items outstanding as of 31st March 2016, foreign exchange differences arising on settlement or translation of long term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in case of other long term foreign currency monetary items, if any, accumulated in ''Foreign Currency Monetary Item Translation Difference Account'' and amortized overthe balance period ofthe asset/liability.
2.12.2. Non - Monetary items
Non-monetary items, other than those measured at fair value, denominated in foreign currency, are valued at the exchange rate prevailing on the date of transaction.
2.13. Investment in Subsidiary, associates and joint ventures
Investments in equity shares of Subsidiaries, Joint Ventures & Associates are recorded at cost and reviewed for impairment at each reporting date.
The Corporation has chosen the carrying value of the investment in Subsidiaries, associates and joint ventures existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April 2015 as deemed cost.
2.14. Government Grants
2.14.1. Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
2.14.2. When the grant relates to an expense item, it is recognized in Statement of Profit and Loss on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
2.14.3. When the grant relates to property, plant and equipment, the cost of property, plant and equipment is shown at gross value and grant thereon is treated as liability (deferred income) and are credited to statement of profit and loss on a systematic basis over the useful life of the asset.
2.15. Exploration & production expenditure
Successful Efforts Method" of accounting is followed for Oil & Gas exploration and production activities as stated below:
2.15.1. Cost of surveys, studies, carrying and retaining undeveloped properties are expensed out in the year of incurrence.
2.15.2. Cost of acquisition, drilling and development are treated as Capital Work-in-Progress when incurred and are capitalized when the well is ready to commence commercial production.
2.15.3. Accumulated costs on exploratory wells in progress are expensed out in the year in which they are determined to be dry.
2.15.4. The proportionate share in the assets, liabilities, income and expenditure of joint operations are accounted as per the participating interest in such joint operations.
2.16. Provisions and contingent liabilities
2.16.1. Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
2.16.2. If the effect of the time value of money is material, provisions are discounted using an appropriate discount rate. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
2.16.3. Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Corporation, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability.
2.16.4. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.
2.16.5. Contingent liabilities and Capital Commitments disclosed are in respect of items which in each case are above the threshold limit.
2.16.6. Contingent Liabilities are considered only when show-cause notice is converted into demand.
2.17. Fair value measurement
2.171. Fair value is the price that would be received/ paid to sell an asset or to transfer a liability, as the case may be, in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Corporation has access at that date. The fair value of a liability also reflects its non-performance risk.
2.172. While measuring the fair value of an asset or liability, the Corporation uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs)
Financial Instruments 2.18. Financial Assets
2.18.1. Initial recognition and measurement
All financial assets (not measured subsequently at fair value through profit or loss) are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.
2.18.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. The Corporation classifies financial assets (other than equity instruments) as under:
(a) subsequently measured at amortized cost;
(b) fair value through other comprehensive income; or
(c) fair value through profit or loss
on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Amortized cost
A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
The asset is held within a business model whose objective is
- To hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial recognition, such financial assets are subsequently measured at amortized cost using the Effective Interest Rate (EIR) method and such amortization is recognized in the Statement of Profit and Loss.
Debt instruments at Fair value through profit and loss (FVTPL)
Fair value through profit and loss is a residual category for measurement of debt instruments.
After initial measurement, any fair value changes including any interest income, impairment loss and other net gains and losses are recognized in the Statement of Profit and Loss.
Equity investments
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Corporation decides to classify the same either as at FVOCI or FVTPL. The Corporation makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
For equity instruments classified as FVOCI, all fair value changes on the instrument, excluding dividends, are recognized in other comprehensive income (OCI).
Equity instruments included within the FVTPL category are measured at fair value with all fair value changes being recognized in the Statement of Profit and Loss.
2.18.3. Impairment of financial assets
In accordance with Ind-AS 109, the Corporation applies Expected Credit Loss ("ECL'') model for measurement and recognition of impairment loss on the financial assets measured at amortized cost.
Loss allowances on trade receivables are measured following the ''simplified approach'' at an amount equal to the lifetime ECL at each reporting date.
2.19. Financial Liabilities
2.19.1. Initial recognition and measurement
All financial liabilities (not measured subsequently at fair value through profit or loss) are recognized initially at fair value net of transaction costs that are directly attributable to the respective financial liabilities.
2.19.2. Subsequent measurement
The Corporation classifies all financial liabilities as subsequently measured at amortized cost by using the Effective Interest Rate Method ("EIR") and such amortization is recognized in the Statement of Profit and Loss.
2.20. Financial guarantees
Financial guarantee contracts are recognized initially at fair value. Subsequently on each reporting date, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the fair value initially recognized less cumulative amortization.
2.21. Derivative financial instruments
Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently measured at each measurement date at fair value with the fair value changes being recognized in the Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
2.22. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported 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, or to realize the assets and settle the liabilities simultaneously.
2.23. Taxes on Income
2.23.1. Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.
2.23.2. Deferred tax liability/asset on account of temporary difference is recognized using tax rates and tax laws enacted or substantively enacted as at the Balance Sheet date.
2.23.3. Deferred tax assets are recognized and carried forward for all deductible temporary differences only to the extent that it is probable that taxable profit will be available in future against which the deductible temporary difference can be utilized.
2.23.4. The carrying amount of deferred tax assets/Liabilities is reviewed at each Balance Sheet date.
2.23.5. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, is considered as an asset when it is probable that the future economic benefits associated with it, will flow to the Corporation.
2.24. Earnings per share
2.24.1. Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period.
2.24.2. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.
2.25. Cash and Cash equivalents
Cash and cash equivalents includes cash on hand, balances with banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
2.26. Cash Flows
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated. For the purpose of the Statement of Cash Flows, cash and cash equivalent consist of cash, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Corporation''s cash management.
Notes:
1. Includes assets costing Rs,0.007 crores /- (31.03.2018 :Rs,0.007 crores) of erstwhile Kosan Gas Company not handed over to the Corporation. In case of these assets, Kosan Gas Company was to give up their claim. However, in view of the tenancy right sought by third party, the matter is under litigation.
2. Includes Rs,519.31 Crores (31.03.2018: Rs,501.45 Crores ) towards Building, Other Machinery, Pipelines, Railway Sidings, Right of Way etc. being the Corporation''s Share of Cost of Land & Other Assets jointly owned with other companies.
3. Includes Rs,32.39 Crores (31.03.2018 : Rs,35.23 Crores) towards Roads & Culverts, Transformers & Transmission lines, Railway Sidings & Rolling Stock, ownership of which does not vest with the Corporation. The Corporation is having operational control over such assets. These assets are amortized at the rate of depreciation specified in Schedule II of Companies Act, 2013.
4. a) Includes following assets which are used for distribution of PDS Kerosene under Jana Kalyan Pariyojana against which financial assistance was provided by OIDB:
5. Deduction/ reclassification includes assets of Rs,8.24 crores (31.03.2018 : Rs,3.49 crores) for which management has given consent for disposal & hence classified as Assets held for sale.
6. Leasehold Land includes Rs,2757 Crores (31.03.2018: Rs,2757 Crores) for land acquired on lease-cum-sale basis from Karnataka Industrial Area Development Board (KIADB) which is capitalized without being amortized over the period of lease. Lease shall be converted into Sale on fulfillment of certain terms and conditions, as per allotment letter.
7 In accordance with Para 7AA of Ind AS 21 read with Para D13AA of Ind AS 101, the Corporation has adjusted the exchange differences arising on long term foreign currency monetary items to the cost of assets and depreciated over the balance useful life of the assets.
8. The Corporation has considered the ISBL (Inside boundary Limit) pipeline directly associated as an integral part of Plant and Machinery / Tanks and has depreciated such pipelines based on the useful life of respective plants, which is considered as 25 years in line with the Schedule II of the Companies Act, 2013.
9. Includes assets having Net block of Rs,1.30 crores (31.03.2018: Rs,1.39 crores) towards Plant & Equipment, Buildings & Roads, where Infrastructure Facilities were provided at Railway Premises. However, No sales transactions were entered into during current financial year with such customers.
10. On the basis of the information to the extent compiled by the Company pending the reconciliation of the available records, title/lease deeds for free hold/lease hold lands are not available with the Company in the case of 6 properties with Gross Block of Rs,0.30 crores and in the case of 19 properties with Gross Block of Rs,2.49 crores property tax receipts are held by the Corporation. The data relating to lease deeds pending registration and refundable security deposit is under compilation and reconciliation.
11. The process of capitalization including CWIP in respect of Property, Plant and Equipment is under continuous review and updating, wherever required, are being carried out on a regular basis.
6.1 : As per the guidelines issued by Department of Public Enterprises (DPE) in August, 2005, the Board of Directors of Navratna
Public Sector Enterprises (PSEs) can invest in joint ventures and wholly owned subsidiaries subject to an overall ceiling of 30% of the net worth of the PSE. The company has requested Ministry of Petroleum & Natural Gas (MOP&NG) to confirm its understanding that for calculating this ceiling limit, the amount of investments specifically approved by Government of India (i.e. investment in HPCL Mittal Energy Ltd (HMEL) and HPCL Rajasthan Refinery Limited (HRRL) ) are to be excluded. The Company has calculated the limit of 30% investment in joint ventures and wholly owned subsidiaries, by excluding the investments specifically approved by Government of India. As per financial position as on 31st March 2019, the investments in joint ventures and wholly owned subsidiaries are well within 30% limit.
6.2 : The increase in investment is on account of conversion of preference shares into equity shares during the year.
6.3 : Petronet India Ltd. is in the process of Voluntary winding up w.e.f. August 30, 2018.
71 : The Company has designated these investments at fair value through other comprehensive income because these investments represent the investments that the corporation intends to hold for long-term strategic purposes. No strategic investments were disposed off during the year.
72 : Members in Petroleum India International (AOP) : Hindustan Petroleum Corporation Ltd., Bharat Petroleum Corporation
Ltd., Engineers India Ltd., Indian Oil Corporation Ltd., Reliance Industries Ltd., Chennai Petroleum Corporation Ltd.,Oil and Natural Gas Corporation Limited and Oil India Ltd. The total capital is Rs,0.55 crores of which share of every member is Rs,0.05 crores each except share of Indian Oil Corporation Limited is Rs,0.15 Crore and Bharat Petroleum Corporation Limited is Rs,0.10 Crores
73: The reduction is on account of conversion of 41.96 crores preference shares having carrying amount of Rs,189.63 crores into 41.96 crores equity shares.
F. Rights and Restrictions on Equity / preference Shares
The Company has only one class of Equity Shares having a face value of Rs,10/- per share which are issued and subscribed. Each Shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of the winding up of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company in proportion to the number of equity shares held by the shareholders and the amount paid up thereon.
The Company also has 75,000 6% cumulative Redeemable Non-convertible Preference Shares of Rs,100 /- each as a part of the Authorized Capital, which were issued earlier by the erstwhile ESSO Standard Refining Co. of India Ltd. (ESRC) . Presently the said Preference Shares stand redeemed.
Security has been created with first charge on the facilities of Vishakh Refinery Modernization Project (VRMP), Mumbai Refinery Expansion Project (MREP)-1, Awa Salawas Pipeline, Manglore Hasan Mysore LPG Pipeline, Uran-Chakan / Shikarpur LPG Pipeline & Rewari Project Pipeline. The value of such assets is Rs,8,08703 crores (31.03.2018: Rs,2,24724 crores). Rs,61.19 crores (31.03.2018: Rs,95.69 crores) is repayable within 1 year and the same has been shown as ''Current Maturity of Long Term Borrowings'' under Note # 26.
21.3 Syndicated Loans from Foreign Banks (repayable in foreign currency)
The Corporation has availed Long Term Foreign Currency Syndicated Loans from banks at 3 months floating LIBOR plus spread (spread range: 30 to 155 basis point p.a.). These loans are taken for the period up to 5 years. Rs,2,068.18 Crores (31.03.2018: Rs,1,302.23 crores) is repayable within 1 year and the same has been shown as "Current Maturity of Long Term Borrowings" under Note # 26. 25.1 : 759 % G - Sec Bonds 2026 of Rs,185 Crores, 8.15 % G - Sec Bonds 2026 of Rs,275 Crores, 8.33 % G - Sec Bonds 2026 of Rs,180 Crores and 772 % G - Sec Bonds 2025 of Rs,836 Crores are pledged with Clearing Corporation of India Limited against Triparty Repo Dealing System (previously known as CBLO) Loan.
26.1 : This includes loans repayable within one year: Syndicated Loans from Foreign Banks (repayable in foreign currency) Rs,2,068.18 crores (31.03.2018: Rs,1,302.23 crores), Loan from Oil Industry and Development Board Rs,61.19 crores (31.03.2018 : Rs,95.69 crores).
26.2 : No amount is due as at the end of the year for credit to Investors'' Education and Protection Fund.
26.3 : Includes deposit received towards Rajiv Gandhi Gramin LPG Vitrak Yojana and Prime Minister Ujjwala Yojana of
Rs,2,196.98 crores (31.03.2018: Rs,1,55786 crores) The deposits against these schemes have been funded from CSR fund or by Government of India.
26.4: In line with recent EAC opinion, deposits received from customers/dealers largely towards cylinders has been continued to be classified as ''current financial liabilities'' in current financial year.
30.1 : Net of discount of Rs,2,598.66 crores (2017-18: Rs,2,229.17 crores).
30.2 : During the current financial year 2018-19, Subsidy on PDS Kerosene and Domestic Subsidized LPG from State
Governments amounting to Rs,55.63 crores (2017-18: Rs,754 crores) has been accounted.
30.3 : The Corporation has accounted for Budgetary Support amounting to Rs,95712 crores (2017-18: Rs,756.34 crores) under ''Recovery under Subsidy Schemes'' towards under recovery on sale of PDS SKO.
Mar 31, 2018
1.1. Property, Plant and Equipment
1.1.1. Freehold lands are carried at cost. All other items of Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
1.1.2. The initial cost of an asset comprises its purchase price or construction cost (including import duties and non-refundable taxes); any costs directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by management; initial estimated present value of any of any contractual decommissioning obligation; and borrowing cost for qualifying assets (i.e., assets that necessarily take a substantial period of time to get ready for their intended use).
1.1.3. Technical know-how / licence fee relating to plants / facilities are capitalized as part of cost of the underlying asset.
1.1.4. Expenditure during construction period: Direct expenses incurred during construction period on capital projects are capitalised.
1.1.5. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Corporation.
1.1.6. Spare parts which are meeting the requirement of Property, Plant and Equipment are capitalized as Property, Plant and Equipment in case the unit value of the spare part is above the threshold limit. In other cases, the spare parts are inventorised on procurement and charged to Statement of Profit and Loss on consumption.
1.1.7. An item of Property, Plant and Equipment and any significant part initially recognised separately as part of Property, Plant and Equipment is derecognised upon disposal; or when no future economic benefits are expected from its use or disposal; or when the Property, Plant Equipment has been re-classified as ready for disposal. Any gain or loss arising on de-recognition of the asset is included in the Statement of Profit and Loss when the asset is derecognised.
1.1.8. The residual values and useful lives of Property, Plant and Equipment are reviewed at each financial year end and changes are accounted for as a change in accounting estimates on a prospective basis.
1.1.9. The Corporation has chosen the carrying value of Property, Plant and Equipment existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April 2015 as deemed cost.
1.2. Depreciation / amortization
1.2.1. Depreciation on Property, Plant & Equipment is provided on straight line method. In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Company has assessed the estimated useful lives of its Property, Plant & Equipment and has adopted the useful lives and residual value as prescribed in Schedule II except for the following which are based on internal technical assessment:
1.2.2. The Company depreciates significant components of the main asset (which have different useful lives as compared to the main asset) based on the individual useful life of those components. Useful life for such components is assessed by considering historical experience, internal technical inputs and any other relevant factor.
1.2.3. Items of Property, Plant and Equipment costing not more than the threshold limit are depreciated at 100 percent in the year of acquisition except LPG Cylinders and Pressure Regulators which are depreciated over a useful life of 15 years based on the technical assessment.
1.2.4. Depreciation on spare parts specific to an item of Property, Plant and Equipment is based on life of the related Property, Plant and Equipment. In other cases, the spare parts are depreciated over their estimated useful life based on the technical assessment.
1.2.5. Depreciation is charged on additions / deletions on pro-rata monthly basis including the month of addition / deletion.
1.3. Intangible assets
1.3.1. Intangible assets are carried at cost net of accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding development costs, are not capitalised and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalised if technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Corporation has an intention and ability to complete and use or sell the asset and the costs can be measured reliably.
1.3.2. Assets where entire output generated is committed to be sold to a public sector entity (including Government body) for almost entire useful life of the asset are classified as intangible assets as per the requirements of Ind AS and are amortised (after retaining the residual value, if applicable) over their useful life.
1.3.3. In cases where, the Corporation has constructed assets and the Corporation has only a preferential right to use, these assets are classified as intangible assets and are amortised (after retaining the residual value, if applicable) over their useful life or the period of the agreement, whichever is lower
1.3.4. The useful lives of intangible assets are assessed as either finite or indefinite.
1.3.5. Intangible assets with finite lives are amortised on straight line basis over their useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each financial year end. The amortisation expense on intangible assets with finite lives and impairment loss is recognised in the statement of Profit & Loss.
1.3.6. Intangible assets with indefinite useful lives, such as âright of wayâ which is perpetual and absolute in nature, are not amortised, but are tested for impairment annually. The useful lives are reviewed at each period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in useful life from indefinite to finite is made on a prospective basis. The impairment loss on intangible assets with indefinite life is recognised in the Statement of Profit and Loss.
1.3.7. Technical know-how / license fee relating to production process and process design are recognized as Intangible Assets.
1.3.8. Estimated lives of intangible assets (acquired) are as follows:
- Software: 2 to 4 years
- Technical know-how/license fees: 2 to 10 years
- Right to use - wind mills: 22 years
1.3.9. The Corporation has chosen the carrying value of Intangible Assets existing as per previous GAAP as on date of transition to Ind AS i.e., 1st April 2015 as deemed cost.
1.4. Borrowing Cost
1.4.1. Borrowing cost consists of interest and other costs incurred in connection with the borrowing of funds. Borrowing cost also includes exchange rate variation to the extent regarded as an adjustment to interest cost.
1.4.2. Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset till the month in which the asset is ready for intended use. All other borrowing costs are expensed in the period in which they are incurred.
1.5. Non-currents assets held for sale
1.5.1. Non-current assets are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met, only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets.
1.5.2. Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
1.5.3. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortized.
1.6. Leases
1.6.1. Finance Lease
Lease arrangements are classified as finance leases, if substantially all the risks and rewards incidental to ownership of the leased asset is transferred to the lessee.
Lease arrangements in respect of land for lease period above threshold limit are classified as a finance lease
1.6.2. Operating Lease
Lease arrangements which are not classified as finance leases are considered as operating lease.
Payments made under operating leases are recognised in Statement of Profit and Loss with reference to lease terms and other relevant considerations. Lease incentives received / lease premium paid (if any) are recognised as an integral part of the total lease expense, over the term of the lease. Payments made under Operating Leases are generally recognised in Statement of Profit and Loss on a straight-line basis over the term of the lease, unless such payments are structured to increase in line with expected general inflation.
1.7. Impairment of Non-Financial Assets
Non-financial assets other than inventories, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment.
An impairment loss is recognised whenever the carrying amount of assets of cash generating unit (CGU) exceeds their recoverable amount.
1.8. Inventories
1.8.1. Valuation of inventories (including in transit) of different categories is as under: -
a) Crude oil is valued at cost on First in First Out (FIFO) basis or at net realisable value, whichever is lower Crude oil is not written down below cost except in cases where their prices have declined subsequently and it is estimated that the cost of the finished goods will exceed their net realisable value.
b) Raw materials for lubricants are valued at weighted average cost or at net realisable value, whichever is lower
c) Stock-in process is valued at raw material cost plus cost of conversion or at net realisable value, whichever is lower
d) Finished products other than Lubricants are valued at cost (on FIFO basis month-wise) or at net realisable value, whichever is lower
e) Finished products (lubricants) are valued at weighted average cost or at net realisable value, whichever is lower
f) Empty packages are valued at weighted average cost.
g) Stores and spares which do not meet the recognition criteria under Property, Plant and Equipment are valued at weighted average cost. Surplus, obsolete and slow moving stores and spares, if any, are valued at cost or net realizable value whichever is lower Surplus items, when transferred from completed projects are valued at cost / estimated value, pending periodic assessment / ascertainment of condition. Stores and Spares in transit are valued at cost.
1.8.2. Customs duty on Raw materials/Finished goods lying in bonded warehouse are provided for at the applicable rates except where liability to pay duty is transferred to consignee.
1.8.3. Excise duty on finished stocks lying at manufacturing locations is provided for at the assessable value applicable at each of the locations based on applicable duty.
1.8.4. The net realisable value of finished goods and stock in trade are final selling prices for sales to oil marketing companies and depot prices applicable to the locations. For the purpose of stock valuation, the proportion of sales to oil marketing companies and consumer sales are determined on location wise and product wise sales of subsequent period.
1.9. Revenue recognition
2.9.1. Sale of goods
Revenue from the sale of goods is recognised when:
a) significant risks and rewards of ownership of the goods are passed to the buyer
b) the Corporation retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold,
c) revenue can be measured reliably,
d) it is probable that economic benefits associated with the transaction will flow to the Corporation, and
e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from the sale of goods includes excise duty and is measured at the fair value of the consideration received or receivable, net of returns, taxes or duties collected on behalf of the government and applicable trade discounts or rebates.
Revenue is allocated between loyalty programs and other components of the sale. The amount allocated to the loyalty program is deferred, and is recognised as revenue when the Corporation has fulfilled its obligation to supply the products under the terms of the program or when it is no longer probable that the points under the program will be redeemed.
Where the Corporation acts as an agent on behalf of a third party, the associated income is recognised on a net basis.
Claims, including subsidy on Liquified Petroleum Gas (LPG) and Superior Kerosene Oil (SKO), from Government of India are booked on in-principle acceptance thereof on the basis of available instructions / clarifications, subject to final adjustments as stipulated.
1.9.2. Interest income is recognised taking into account the amount outstanding and the applicable effective interest rate.
1.9.3. Dividend is recognised when right to receive the payment is established.
1.10. Accounting / classification of expenditure and income
1.10.1. Income / expenditure in aggregate pertaining to prior year(s) above the threshold limit are corrected retrospectively.
1.10.2. Prepaid expenses upto threshold limit in each case, are charged to revenue as and when incurred.
1.10.3. Insurance claims are accounted on acceptance basis.
1.10.4. All other claims / entitlements are accounted on the merits of each case.
1.10.5. Raw materials consumed are net of discount towards sharing of under-recoveries.
1.11. Employee benefits
1.11.1. Short-term employee benefit
Short term employee benefits are recognized as an expense at undiscounted amount in the Statement of Profit & Loss of the year in which the related services are rendered by the employees.
1.11.2. Post-employment benefits Defined Contribution Plans:
Obligations for contributions to defined contribution plans are expensed in the Statement of Profit & Loss of the year in which the related services are rendered by the employees.
Defined Benefit Plans:
Post-employment benefits
Liability towards defined employee benefits (gratuity, pension, post - retirement medical benefits, ex-gratia and resettlement allowance) are determined on actuarial valuation by independent actuaries at the year-end by using Projected Unit Credit method.
Re-measurements of the net defined benefit liability, which comprises of actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income.
Other long-term employee benefits
Liability towards other long term employee benefits (leave encashment, long service awards, provident fund contribution to trust and death benefits) are determined on actuarial valuation by independent actuaries using Projected Unit Credit method.
Re-measurements gains and losses are recognized in the Statement of Profit and Loss in the period in which they arise.
1.11.3. Termination benefits
Expenditure on account of Voluntary Retirement Schemes, are charged to Statement of Profit & Loss, as and when incurred.
1.12. Foreign currency transactions
1.12.1. Monetary items
Transactions in foreign currencies are initially recorded at the respective exchange rates prevailing at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items (except for long term foreign currency monetary items outstanding as of 31st March 2016) are recognised in Statement of Profit and Loss either as âExchange Rate Variationâ or as âfinance costsâ (to the extent regarded as an adjustment to borrowing costs), as the case maybe.
In case of long term foreign currency monetary items outstanding as of 31st March 2016, foreign exchange differences arising on settlement or translation of long term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in case of other long term foreign currency monetary items, if any, accumulated in âForeign Currency Monetary Item Translation Difference Accountâ and amortised over the balance period of the asset / liability.
1.12.2. Non - Monetary items
Non-monetary items, other than those measured at fair value, denominated in foreign currency, are valued at the exchange rate prevailing on the date of transaction.
1.13. Investment in Subsidiary, associates and joint ventures
Investments in equity shares of Subsidiaries, Joint Ventures & Associates are recorded at cost and reviewed for impairment at each reporting date.
The Corporation has chosen the carrying value of the investment in Subsidiaries, associates and joint ventures existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April 2015 as deemed cost.
1.14. Government Grants
1.14.1. Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
1.14.2. When the grant relates to an expense item, it is recognized in Statement of Profit and Loss on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
1.14.3. When the grant relates to property, plant and equipment, the cost of property, plant and equipment is shown at gross value and grant thereon is treated as liability (deferred income) and are credited to statement of profit and loss on a systematic basis over the useful life of the asset.
1.15. Exploration & production expenditure
âSuccessful Efforts Methodâ of accounting is followed for Oil & Gas exploration and production activities as stated below:
1.15.1. Cost of surveys, studies, carrying and retaining undeveloped properties are expensed out in the year of incurrence.
1.15.2. Cost of acquisition, drilling and development are treated as Capital Work-in-Progress when incurred and are capitalised when the well is ready to commence commercial production.
1.15.3. Accumulated costs on exploratory wells in progress are expensed out in the year in which they are determined to be dry
1.15.4. The proportionate share in the assets, liabilities, income and expenditure of joint operations are accounted as per the participating interest in such joint operations.
1.16. Provisions and contingent liabilities
1.16.1. Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
1.16.2. If the effect of the time value of money is material, provisions are discounted using an appropriate discount rate. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
1.16.3. Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Corporation, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability.
1.16.4. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.
1.16.5. Contingent liabilities and Capital Commitments disclosed are in respect of items which in each case are above the threshold limit.
1.16.6. Contingent Liabilities are considered only when show-cause notice is converted into demand.
1.17. Fair value measurement
1.17.1. Fair value is the price that would be received/ paid to sell an asset or to transfer a liability, as the case may be, in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Corporation has access at that date. The fair value of a liability also reflects its non-performance risk.
1.17.2. While measuring the fair value of an asset or liability, the Corporation uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs)
Financial Instruments
1.18. Financial Assets
1.18.1. Initial recognition and measurement
All financial assets (not measured subsequently at fair value through profit or loss) are recognised initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.
1.18.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. The Corporation classifies financial assets (other than equity instruments) as under:
(a) subsequently measured at amortised cost;
(b) fair value through other comprehensive income; or
(c) fair value through profit or loss
on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Amortised cost
A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
The asset is held within a business model whose objective is
- To hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial recognition, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method and such amortization is recognised in the Statement of Profit and Loss.
Debt instruments at Fair value through profit and loss (FVTPL)
Fair value through profit and loss is a residual category for measurement of debt instruments.
After initial measurement, any fair value changes including any interest income, impairment loss and other net gains and losses are recognised in the Statement of Profit and Loss.
Equity investments
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Corporation decides to classify the same either as at FVOCI or FVTPL. The Corporation makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
For equity instruments classified as FVOCI, all fair value changes on the instrument, excluding dividends, are recognized in other comprehensive income (OCI).
Equity instruments included within the FVTPL category are measured at fair value with all fair value changes being recognized in the Statement of Profit and Loss.
1.18.3 Impairment of financial assets
In accordance with Ind-AS 109, the Corporation applies Expected Credit Loss (âECLâ) model for measurement and recognition of impairment loss on the financial assets measured at amortised cost.
Loss allowances on trade receivables are measured following the âsimplified approachâ at an amount equal to the lifetime ECL at each reporting date.
1.19. Financial Liabilities
1.19.1. Initial recognition and measurement
All financial liabilities (not measured subsequently at fair value through profit or loss) are recognised initially at fair value net of transaction costs that are directly attributable to the respective financial liabilities.
1.19.2. Subsequent measurement
The Corporation classifies all financial liabilities as subsequently measured at amortised cost by using the Effective Interest Rate Method (âEIRâ) and such amortisation is recognised in the Statement of Profit and Loss.
1.20. Financial guarantees
Financial guarantee contracts are recognised initially at fair value. Subsequently on each reporting date, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the fair value initially recognised less cumulative amortisation.
1.21. Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently measured at each measurement date at fair value with the fair value changes being recognised in the Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
1.22. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
1.23. Taxes on Income
1.23.1. Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.
1.23.2. Deferred tax liability/asset on account of temporary difference is recognised using tax rates and tax laws enacted or substantively enacted as at the Balance Sheet date.
1.23.3. Deferred tax assets are recognised and carried forward for all deductible temporary differences only to the extent that it is probable that taxable profit will be available in future against which the deductible temporary difference can be utilized.
1.23.4. The carrying amount of deferred tax assets/Liabilities is reviewed at each Balance Sheet date.
1.23.5. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, is considered as an asset when it is probable that the future economic benefits associated with it, will flow to the Corporation.
1.24. Earnings per share
1.24.1. Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period.
1.24.2. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.
1.25. Cash and Cash equivalents
Cash and cash equivalents includes cash on hand, balances with banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
1.26. Cash Flows
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated. For the purpose of the Statement of Cash Flows, cash and cash equivalent consist of cash, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Corporationâs cash management.
Mar 31, 2017
1.1. Property, Plant and Equipment
1.1.1. Freehold lands are carried at cost. All other items of Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
1.1.2. The initial cost of an asset comprises its purchase price or construction cost (including import duties and non-refundable taxes); any costs directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by management; initial estimated present value of any of any contractual decommissioning obligation; and borrowing cost for qualifying assets (i.e. assets that necessarily take a substantial period of time to get ready for their intended use).
1.1.3. Technical know-how /licence fee relating to plants/ facilities are capitalized as part of cost of the underlying asset.
1.1.4. Expenditure during construction period: Direct expenses incurred during construction period on capital projects are capitalised.
1.1.5. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Corporation.
1.1.6. Spare parts which are meeting the requirement of Property, Plant and Equipment are capitalized as Property, Plant and Equipment in case the unit value of the spare part is above the threshold limit. In other cases, the spare parts are inventorised on procurement and charged to Statement of Profit and Loss on consumption.
1.1.7. An item of Property, Plant and Equipment and any significant part initially recognised separately as part of Property, Plant and Equipment is derecognised upon disposal; or when no future economic benefits are expected from its use or disposal; or when the Property, Plant and Equipment has been re-classified as ready for disposal. Any gain or loss arising on de-recognition of the asset is included in the Statement of Profit and Loss when the asset is derecognised.
1.1.8. The residual values and useful lives of Property, Plant and Equipment are reviewed at each financial year end and changes are accounted for as a change in accounting estimates on a prospective basis.
1.1.9. The Corporation has chosen the carrying value of Property, Plant and Equipment existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April 2015 as deemed cost.
1.2. Depreciation / amortization
1.2.1. Depreciation on Property, Plant & Equipment is provided on straight line method. In accordance with requirements prescribed under Schedule II of Companies Act, 2013, the Company has assessed the estimated useful lives of its Property, Plant & Equipment and has adopted the useful lives and residual value as prescribed in Schedule II except for the following which are based on internal technical assessment:
1.2.2. The Company depreciates significant components of the main asset (which have different useful lives as compared to the main asset) based on the individual useful life of those components. Useful life for such components is assessed by considering historical experience, internal technical inputs and any other relevant factor.
1.2.3. Items of Property, Plant and Equipment costing not more than the threshold limit are depreciated at 100 percent in the year of acquisition except LPG Cylinders and Pressure Regulators which are depreciated over a useful life of 15 years based on the technical assessment.
1.2.4. Depreciation on spare parts specific to an item of Property, Plant and Equipment is based on life of the related Property, Plant and Equipment. In other cases, the spare parts are depreciated over their estimated useful life based on the technical assessment.
1.2.5. Depreciation is charged on additions / deletions on pro-rata monthly basis including the month of addition / deletion.
1.3. Intangible assets
1.3.1. Intangible assets are carried at cost net of accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles, excluding development costs, are not capitalised and the related expenditure is reflected in Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalised if technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Corporation has an intention and ability to complete and use or sell the asset and the costs can be measured reliably.
1.3.2. Assets where entire output generated is committed to be sold to a public sector entity (including Government body) for almost entire useful life of the asset are classified as intangible assets as per the requirements of Ind AS and are amortised (after retaining the residual value, if applicable) over their useful life.
1.3.3. In cases where, the Corporation has constructed assets and the Corporation has only a preferential right to use, these assets are classified as intangible assets and are amortised (after retaining the residual value, if applicable) over their useful life or the period of the agreement, whichever is lower.
1.3.4. The useful lives of intangible assets are assessed as either finite or indefinite.
1.3.5. Intangible assets with finite lives are amortised on straight line basis over their useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each financial year end. The amortisation expense on intangible assets with finite lives and impairment loss is recognised in the statement of Profit & Loss.
1.3.6. Intangible assets with indefinite useful lives, such as right of way which is perpetual and absolute in nature, are not amortised, but are tested for impairment annually. The useful lives are reviewed at each period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in useful life from indefinite to finite is made on a prospective basis. The impairment loss on intangible assets with indefinite life is recognised in the Statement of Profit and Loss.
1.3.7. Technical know-how / license fee relating to production process and process design are recognized as Intangible Assets.
1.3.8. Estimated lives of intangible assets (acquired) are as follows:
- Software - 2 to 4 years
- Technical know-how/license fees - 2 to 10 years
- Right to use - wind mills - 22 years
1.3.9. The Corporation has chosen the carrying value of Intangible Assets existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April 2015 as deemed cost.
1.4. Borrowing Cost
1.4.1. Borrowing cost consists of interest and other costs incurred in connection with the borrowing of funds. Borrowing cost also includes exchange rate variation to the extent regarded as an adjustment to interest cost.
1.4.2. Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset till the month in which the asset is ready for intended use. All other borrowing costs are expensed in the period in which they are incurred.
1.5. Non-currents assets held for sale
1.5.1. Non-current assets are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met, only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets.
1.5.2. Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
1.5.3. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortized.
1.6. Lease
1.6.1. Finance Lease
Lease arrangements are classified as finance leases, if substantially all the risks and rewards incidental to ownership of the leased asset is transferred to the lessee.
Leases arrangements in respect of land for lease period above threshold limit are classified as a finance lease.
1.6.2. Operating Lease
Lease arrangements which are not classified as finance leases are considered as operating lease.
Payments made under operating leases are recognised in Statement of Profit and Loss with reference to lease terms and other relevant considerations. Lease incentives received / lease premium paid (if any) are recognised as an integral part of the total lease expense, over the term of the lease. Payments made under Operating Leases are generally recognised in Statement of Profit and Loss on a straight-line basis over the term of the lease, unless such payments are structured to increase in line with expected general inflation.
1.7. Impairment of Non-Financial Assets
Non-financial assets other than inventories, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment.
An impairment loss is recognised whenever the carrying amount of assets of cash generating unit (CGU) exceeds their recoverable amount.
1.8. Inventories
1.8.1. Valuation of inventories of different categories is as under: -
a) Crude oil is valued at cost on First in First Out (FIFO) basis or at net realisable value, whichever is lower. Crude oil is not written down below cost except in cases where their prices have declined subsequently and it is estimated that the cost of the finished goods will exceed their net realisable value.
b) Raw materials for lubricants are valued at weighted average cost or at net realisable value, whichever is lower.
c) Stock-in process is valued at raw material cost plus cost of conversion or at net realisable value, whichever is lower.
d) Finished products other than Lubricants are valued at cost (on FIFO basis month-wise) or at net realisable value, whichever is lower.
e) Finished products (lubricants) are valued at weighted average cost or at net realisable value, whichever is lower.
f) Empty packages are valued at weighted average cost.
g) Stores and spares which do not meet the recognition criteria under Property, Plant and Equipment are valued at weighted average cost. Surplus, obsolete and slow moving stores and spares, if any, are valued at cost of net realizable value whichever is lower. Surplus items, when transferred from completed projects are valued at cost / estimated value, pending periodic assessment / ascertainment of condition. Stores and Spares in transit are valued at cost.
1.8.2. Customs duty on Raw materials/Finished goods lying in bonded warehouse are provided for at the applicable rates except where liability to pay duty is transferred to consignee.
1.8.3. Excise duty on finished stocks lying at manufacturing locations is provided for at the assessable value applicable at each of the locations based on applicable duty.
1.8.4. The net realisable value of finished goods and stock in trade are final selling prices for sales to oil marketing companies and depot prices applicable to the locations. For the purpose of stock valuation, the proportion of sales of oil marketing companies and consumer sales are determined on location wise and product wise sales of subsequent period.
1.9. Revenue recognition
1.9.1. Sale of goods
Revenue from the sale of goods is recognised when the:
a) significant risks and rewards of ownership of the goods are passed to the buyer,
b) the Corporation retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold,
c) revenue can be measured reliably,
d) it is probable that economic benefits associated with the transaction will flow to the Corporation, and
e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from the sale of goods includes excise duty and is measured at the fair value of the consideration received or receivable, net of returns, taxes or duties collected on behalf of the government and applicable trade discounts or rebates.
Revenue is allocated between loyalty programs and other components of the sale. The amount allocated to the loyalty program is deferred, and is recognised as revenue when the Corporation has fulfilled its obligation to supply the products under the terms of the program or when it is no longer probable that the points under the program will be redeemed.
Where the Corporation acts as an agent on behalf of a third party, the associated income is recognised on a net basis.
Claims, including subsidy on LPG and SKO, from Government of India are booked on in principle acceptance thereof on the basis of available instructions / clarifications, subject to final adjustments as stipulated.
1.9.2. Interest income is recognised taking into account the amount outstanding and the applicable effective interest rate.
1.9.3. Dividend is recognised when right to receive the payment is established.
1.10. Accounting/ classification of expenditure and income
1.10.1. Income / expenditure in aggregate pertaining to prior year(s) above the threshold limit are corrected retrospectively.
1.10.2. Prepaid expenses upto threshold limit in each case, are charged to revenue as and when incurred.
1.10.3. Insurance claims are accounted on acceptance basis.
1.10.4. All other claims/entitlements are accounted on the merits of each case.
1.10.5. Raw materials consumed are net of discount towards sharing of under-recoveries.
1.11. Employee benefits
1.11.1. Short-term employee benefit
Short term employee benefits are recognized as an expense at undiscounted amount in the Statement of Profit & Loss of the year in which the related services are rendered by the employees.
1.11.2. Post-employment benefits Defined Contribution Plans:
Obligations for contributions to defined contribution plans are expensed in the Statement of Profit & Loss of the year in which the related services are rendered by the employees.
Defined Benefit Plans:
Post-employment benefits
Liability towards defined employee benefits (gratuity, pension, post-retirement medical benefits, ex-gratia and resettlement allowance) are determined on actuarial valuation by independent actuaries at the year-end by using Projected Unit Credit method.
Re-measurements of the net defined benefit liability, which comprises of actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income.
Other long-term employee benefits
Liability towards other long term employee benefits (leave encashment, long service awards, provident fund contribution to trust and death benefits) are determined on actuarial valuation by independent actuaries using Projected Unit Credit method.
Re-measurements gains and losses are recognized in the Statement of Profit and Loss in the period in which they arise.
1.11.3. Termination benefits
Expenditure on account of Voluntary Retirement Schemes, are charged to Statement of Profit & Loss, as and when incurred.
1.12. Foreign currency transactions
1.12.1. Monetary items:
Transactions in foreign currencies are initially recorded at the respective exchange rates prevailing at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items (except for long term foreign currency monetary items outstanding as of 31st March 2016) are recognised in Statement of Profit and Loss either as âExchange Rate Variationâ or as âfinance costsâ (to the extent regarded as an adjustment to borrowing costs), as the case maybe.
In case of long term foreign currency monetary items outstanding as of 31st March 2016, foreign exchange differences arising on settlement or translation of long term foreign currency monetary items relating to acquisition of depreciable assets are adjusted to the carrying cost of the assets and depreciated over the balance life of the asset and in case of other long term foreign currency monetary items, if any, accumulated in âForeign Currency Monetary Item Translation Difference Accountâ and amortised over the balance period of the asset / liability.
1.12.2. Non-Monetary items:
Non-monetary items, other than those measured at fair value, denominated in foreign currency, are valued at the exchange rate prevailing on the date of transaction.
1.13. Investment in Subsidiary, associates and joint ventures
Investments in equity shares of Subsidiaries, Joint Ventures & Associates are recorded at cost and reviewed for impairment at each reporting date.
The Corporation has chosen the carrying value of the investment in Subsidiaries, associates and joint ventures existing as per previous GAAP as on date of transition to Ind AS i.e. 1st April 2015 as deemed cost.
1.14. Government Grants
1.14.1. Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
1.14.2. When the grant relates to an expense item, it is recognized in Statement of Profit and Loss on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
1.14.3. When the grant relates to property, plant and equipment, the cost of property, plant and equipment is shown at gross value and grant thereon is treated as liability (deferred income) and are credited to statement of profit and loss on a systematic basis over the useful life of the asset.
1.15. Exploration & production expenditure
âSuccessful Efforts Methodâ of accounting is followed for Oil & Gas exploration and production activities as stated below:
1.15.1. Cost of surveys, studies, carrying and retaining undeveloped properties are expensed out in the year of incurrence.
1.15.2. Cost of acquisition, drilling and development are treated as Capital Work-in-Progress when incurred and are capitalised when the well is ready to commence commercial production.
1.15.3. Accumulated costs on exploratory wells in progress are expensed out in the year in which they are determined to be dry.
1.15.4. The proportionate share in the assets, liabilities, income and expenditure of joint operations are accounted as per the participating interest in such joint operations.
1.16. Provisions and contingent liabilities
1.16.1. Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
1.16.2. If the effect of the time value of money is material, provisions are discounted using an appropriate discount rate. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
1.16.3. Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Corporation, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability.
1.16.4. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.
1.16.5. Contingent liabilities and Capital Commitments disclosed are in respect of items which in each case are above the threshold limit.
1.16.6. Contingent Liabilities are considered only when show-cause notice is converted into demand.
1.17. Fair value measurement
1.17.1. Fair value is the price that would be received/ paid to sell an asset or to transfer a liability, as the case may be, in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Corporation has access at that date. The fair value of a liability also reflects its non-performance risk.
1.17.2. While measuring the fair value of an asset or liability, the Corporation uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs)
Financial Instruments
1.18. Financial Assets
1.18.1. Initial recognition and measurement
All financial assets (not measured subsequently at fair value through profit or loss) are recognised initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.
1.18.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. The Corporation classifies financial assets (other than equity instruments) as under:
(a) subsequently measured at amortised cost;
(b) fair value through other comprehensive income; or
(c) fair value through profit or loss
on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Amortised cost
A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
The asset is held within a business model whose objective is
- To hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial recognition, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method and such amortization is recognised in the Statement of Profit and Loss.
Debt instruments at Fair value through profit and loss (FVTPL)
Fair value through profit and loss is a residual category for measurement of debt instruments.
After initial measurement, any fair value changes including any interest income, impairment loss and other net gains and losses are recognised in the Statement of Profit and Loss.
Equity investments
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Corporation decides to classify the same either as at FVOCI or FVTPL. The Corporation makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
For equity instruments classified as FVOCI, all fair value changes on the instrument, excluding dividends, are recognized in other comprehensive income (OCI).
Equity instruments included within the FVTPL category are measured at fair value with all fair value changes being recognized in the Statement of Profit and Loss.
1.18.3. Impairment of financial assets
In accordance with Ind-AS 109, the Corporation applies Expected Credit Loss (âECLâ) model for measurement and recognition of impairment loss on the financial assets measured at amortised cost.
Loss allowances on trade receivables are measured following the âsimplified approachâ at an amount equal to the lifetime ECL at each reporting date.
1.19. Financial Liabilities
1.19.1. Initial recognition and measurement
All financial liabilities (not measured subsequently at fair value through profit or loss) are recognised initially at fair value net of transaction costs that are directly attributable to the respective financial liabilities.
1.19.2. Subsequent measurement
The Corporation classifies all financial liabilities as subsequently measured at amortised cost by using the Effective Interest Rate Method (âEIRâ) and such amortisation is recognised in the Statement of Profit and Loss.
1.20. Financial guarantees
Financial guarantee contracts are recognised initially at fair value. Subsequently on each reporting date, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the fair value initially recognised less cumulative amortisation.
1.21. Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently measured at each measurement date at fair value with the fair value changes being recognised in the Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
1.22. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
1.23. Taxes on Income
1.23.1. Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.
1.23.2. Deferred tax liability/asset on account of temporary difference is recognised using tax rates and tax laws enacted or substantively enacted as on the Balance Sheet date.
1.23.3.Deferred tax assets are recognised and carried forward for all deductible temporary differences only to the extent that it is probable that taxable profit will be available in future against which the deductible temporary difference can be utilized.
1.23.4.The carrying amount of deferred tax assets/Liabilities is reviewed at each Balance Sheet date.
1.23.5.Minimum Alternate Tax (MAT) paid in accordance with the tax laws, is considered as an asset when it is probable that the future economic benefits associated with it, will flow to the Corporation.
1.24. Earnings per share
1.24.1.Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period.
1.24.2.For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.
1.25. Cash and Cash equivalents
Cash and cash equivalents includes cash on hand, balances with banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
1.26. Cash Flows
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated. For the purpose of the Statement of Cash Flows, cash and cash equivalent consist of cash, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Corporationâs cash management.
Mar 31, 2015
1. BASIS OF PREPARATION
The financial statements are prepared under historical cost convention
in accordance with Generally Accepted Accounting Principles in India
(Indian GAAP), Accounting Standards notified under Section 133 of the
Companies Act, 2013 (the Act) read with R ule 7 of the Companies
(Accounts) Rules, 2014 and the relevant provisions of the Companies
Act, 2013. In accordance with first proviso to Section 129 (1) of the
Act and Schedule III to the Act, the terms contained in the enclosed
financial statements are in accordance with the Accounting Standards.
Use of Estimates
Necessary estimates and assumptions of income and expenditure are made
during the reporting period and difference between the actual and the
estimates are recognised in the period in which the results
materialise.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 TANGIBLE ASSETS
a. Tangible assets are stated at cost net of accumulated depreciation
/ amortization.
b. Land acquired on lease for 99 years or more is treated as freehold
land.
c. Technical know-how /licence fee relating to plants/ facilities are
capitalized as part of cost of the underlying asset.
2.2 INTANGIBLE ASSETS
a. Cost of Right of Way for laying pipelines is capitalised as
Intangible Asset and is amortised over a period of 99 years.
b. Technical know-how /licence fee relating to production process and
process design are recognized as Intangible Assets.
c. Cost of Software directly identified with hardware is capitalised
along with the cost of hardware. Application software is capitalised as
Intangible Asset.
2.3 CONSTRUCTION PERIOD EXPENSES ON PROJECTS
a. Related expenditure (including temporary facilities and crop
compensation expenses) incurred during construction period in respect
of plan projects and major non-plan projects are capitalised.
b. Financing cost incurred during the construction period on loans
specifically borrowed and utilised for projects is capitalised.
Financing cost includes exchange rate variation to the extent regarded
as an adjustment to interest cost.
c. Financing cost, if any, incurred on general borrowings used for
projects during the construction period is capitalised at the weighted
average cost.
2.4 DEPRECIATION / AMORTIZATION
a. Depreciation on Fixed Assets is provided on straight line method.
In accordance with requirements prescribed under Schedule II of
Companies Act, 2013, the Company has assessed the estimated useful
lives of its fixed assets and has adopted the useful lives as
prescribed in Schedule II except for, plant and machinery relating to
Retail Outlets (other than storage tanks and related equipment) and LPG
cylinders & regulators, the useful life of which are considered as 15
years based on its internal technical assessment.
b. All assets costing up to Rs. 5000/-, other than LPG cylinders and
pressure regulators, are fully depreciated in the year of
capitalisation.
c. Premium on leasehold land is amortised over the period of lease.
d. Machinery Spares, which can be used only in connection with an item
of fixed asset and the use of which is expected to be irregular, are
depreciated over a period not exceeding the useful life of the
principal item of fixed asset.
e. Intangible Assets other than application software and cost of right
of way are amortized on a straight line basis over a period of ten
years or life of the underlying plant/facility, whichever is earlier.
f. Application software are normally amortised over a period of four
years, or over its useful life, whichever is earlier.
2.5 IMPAIRMENT OF ASSETS
At each balance sheet date, an assessment is made of whether there is
any indication of impairment. An impairment loss is recognised whenever
the carrying amount of assets of cash generating units (CGU) exceeds
their recoverable amount.
2.6 FOREIGN CURRENCY TRANSACTIONS
a. Foreign Currency transactions during the year are recorded at the
exchange rates prevailing on the date of transactions.
b. All foreign currency assets, liabilities and forward contracts are
restated at the rates prevailing at the year end.
c. All exchange differences are dealt with in the Statement of Profit
and Loss including those covered by forward contracts, where the
premium / discount arising from such contracts are recognised over the
period of contracts.
However, foreign exchange differences on long term foreign currency
monetary items relating to acquisition of depreciable assets are
adjusted to the carrying cost of the assets and in other cases, if any,
accumulated in "Foreign Currency Monetary Item Translation Difference
Account" and amortised over the balance period of loan.
d. The realised gain or loss in respect of commodity hedging
contracts, the pricing period of which has expired during the year, are
recognised in the Statement of Profit and Loss along with the
underlying transaction. However, in respect of contracts, the pricing
period of which extends beyond the Balance Sheet date, suitable
provision is made for likely loss, if any.
2.7 INVESTMENTS
a. Long-Term Investments are valued at cost and provision for
diminution in value thereof is made, wherever such diminution is other
than temporary.
b. Current Investments are valued at the lower of cost and fair value.
2.8 INVENTORIES
a. Crude oil is valued at cost on First In First Out (FIFO) basis or
at net realisable value, whichever is lower.
b. Raw materials for lubricants and finished lubricants are valued at
weighted average cost or at net realisable value, whichever is lower.
c. Stock-in process is valued at raw material cost plus cost of
conversion or at net realisable value, whichever is lower.
d. Finished products other than Lubricants are valued at cost (on FIFO
basis month-wise) or at net realisable value, whichever is lower.
e. Empty packages are valued at weighted average cost.
f. Stores and spares are valued at weighted average cost. Stores and
Spares in transit are valued at cost.
g. Value of surplus, obsolete and slow moving stores and spares, if
any, is reduced to net realisable value. Surplus items, when
transferred from completed projects are valued at cost / estimated
value, pending periodic assessment / ascertainment of condition.
2.9 DUTIES ON BONDED STOCKS
Excise / Customs duty is provided on stocks stored in Bonded Warehouses
(excluding goods exempted from duty / exports or where liability to pay
duty is transferred to consignee).
2.10 GRANTS
a. In case of depreciable assets, the cost of the asset is shown at
gross value and grant thereon is treated as Capital Grants, which is
recognised in the Statement of Profit & Loss over the period and in the
proportion in which depreciation is charged.
b. Grants received against revenue items are recognised as income.
2.11 EXPLORATION & PRODUCTION EXPENDITURE
"Successful Efforts Method" of accounting is followed for Oil & Gas
exploration and production activities as stated below:
a. Cost of surveys, studies, carrying and retaining undeveloped
properties are expensed out in the year of incurrence.
b. Cost of acquisition, drilling and development are treated as
Capital Work-in-Progress when incurred and are capitalised when the
well is ready to commence commercial production.
c. Accumulated costs on exploratory wells in progress are expensed out
in the year in which they are determined to be dry.
d. The proportionate share in the assets, liabilities, income and
expenditure of joint operations are accounted as per the participating
interest in such joint operations.
2.12 EMPLOYEE BENEFITS
Liability towards long term defined employee benefits - leave
encashment, gratuity, pension, post  retirement medical benefits, long
service awards, ex-gratia, death benefits and resettlement allowance
are determined on actuarial valuation by independent actuaries at the
year-end by using Projected Unit Credit method. Liability so determined
is funded in the case of leave encashment and gratuity, and provided
for in other cases.
The Company''s contribution to the Provident Fund is remitted to
separate trusts established for this purpose based on a fixed
percentage of the eligible employee''s salary and charged to Statement
of Profit and Loss. Shortfall, if any, in the fund assets, based on the
Government specified minimum rate of return, will be made good by the
Company and charged to Statement of Profit and Loss.
Short term employee benefits are recognized as an expense at an
undiscounted amount in the Statement of Profit & Loss of the year in
which the related services are rendered.
2.13 REVENUE RECOGNITION
a. Sales are recorded based on significant risks and rewards of
ownership being transferred in favour of the customer.
b. Sales are net of discount, include applicable excise duty,
surcharge and other elements as are allowed to be recovered as part of
the price but excludes VAT/sales tax.
c. Claims, including subsidy on LPG, HSD and SKO, from Government of
India are booked on in principle acceptance thereof on the basis of
available instructions / clarifications.
d. Dividend income is recognised when the Company''s right to receive
the dividend is established.
e. Income from sale of scrap is accounted for on realisation.
f. Interest income is recognised on a time proportion basis taking
into account the amount outstanding and the applicable interest rate.
2.14 TAXES ON INCOME
a. Provision for current tax is made in accordance with the provisions
of the Income Tax Act, 1961.
b. Deferred tax liability/asset on account of timing difference
between taxable and accounting income is recognised using tax rates and
tax laws enacted or substantively enacted as at the Balance Sheet date.
In the event of unabsorbed depreciation or carry forward of losses,
deferred tax assets are recognized, if there is virtual certainty that
sufficient future taxable income will be available to realize such
assets.
c. Minimum Alternate Tax (MAT) paid in accordance with the tax laws,
is considered as an asset when it is probable that the future economic
benefits associated with it, will flow to the Corporation.
2.15 CONTINGENT LIABILITIES, CAPITAL COMMITMENTS AND PROVISIONS
a. Contingent Liabilities are disclosed in respect of:
i. A possible obligations that arise from past events but their
existence will be confirmed by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the
Company or
ii. A present obligation where it is not probable that an outflow of
resources embodying economic benefit will be required to settle the
obligations or a reliable estimate of the amount of obligation cannot
be made.
b. Contingent Liabilities are considered only for items exceeding Rs.
5 lakhs in each case. Contingent Liabilities in respect of show cause
notices are considered only when converted into demands. Capital
Commitments are considered only for items exceeding Rs. 1 lakh in each
case.
c. A provision is recognised when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made.
2.16 ACCOUNTING/CLASSIFICATION OF EXPENDITURE AND INCOME
a. Insurance claims are accounted on acceptance basis.
b. All other claims/entitlements are accounted on the merits of each
case/realisation.
c. Raw materials consumed are net of discount towards sharing of
under-recoveries.
d. Income and expenditure of previous years, individually amounting to
Rs. 5 lakhs and below are not considered as prior period items.
2.17 EARNINGS PER SHARE
a. Basic earnings per share are calculated by dividing the net profit
or loss for the period attributable to equity shareholders (after
deducting preference dividends, if any, and attributable taxes) by the
weighted average number of equity shares outstanding during the period.
b. For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effect of all dilutive potential equity shares.
Mar 31, 2014
1. BASIS OF PREPARATION
The financial statements are prepared under historical cost convention
in accordance with Generally Accepted Accounting Principles (GAAP),
Accounting Standards referred to in the Companies (Accounting
Standards) Rules, 2006 issued by the Central Government and the
relevant provisions of the Companies Act, 1956 read with the General
circular 15/2013 dated 13 September 2013 of the Ministry of Corporate
Affairs in respect of the Companies Act, 2013. All income and
expenditure having material bearing are recognised on accrual basis,
except where otherwise stated. Necessary estimates and assumptions of
income and expenditure are made during the reporting period and
difference between the actual and the estimates are recognised in the
period in which the results materialise.
2.1 TANGIBLE ASSETS
a. Tangible assets are stated at cost net of accumulated depreciation
/ amortization
b. Land acquired on lease for 99 years or more is treated as freehold
land.
c. Technical know-how /licence fee relating to plants/ facilities are
capitalized as part of cost of the underlying asset.
2.2 INTANGIBLE ASSETS
a. Cost of Right of Way for laying pipelines is capitalised as
Intangible Asset and is amortised over a period of 99 years.
b. Technical know-how /licence fee relating to production process and
process design are recognized as Intangible Assets.
c. Cost of Software directly identified with hardware is capitalised
along with the cost of hardware. Application software is capitalised as
Intangible Asset.
2.3 CONSTRUCTION PERIOD EXPENSES ON PROJECTS
a. Related expenditure (including temporary facilities and crop
compensation expenses) incurred during construction period in respect
of plan projects and major non-plan projects are capitalised.
b. Financing cost incurred during the construction period on loans
specifically borrowed and utilised for projects is capitalised.
Financing cost includes exchange rate variationto the extent regarded
as an adjustment to interest cost.
c. Financing cost, if any, incurred on general borrowings used for
projects during the construction period is capitalised at the weighted
average cost.
2.4 DEPRECIATION / AMORTIZATION
a. Depreciation on Fixed Assets is provided on the Straight Line
method, in the manner and at the rates prescribed under Schedule XIV to
the Companies Act, 1956 and is charged pro rata on a monthly basis on
assets, from / up to and inclusive of the month of capitalisation /
sale, disposal or deletion during the year.
b. All assets costing up to Rs. 5000/-, other than LPG cylinders and
pressure regulators, are fully depreciated in the year of
capitalisation.
c. Premium on leasehold land is amortised over the period of lease.
d. Machinery Spares, which can be used only in connection with an item
of fixed asset and the use of which is expected to be irregular, are
depreciated over a period not exceeding the useful life of the
principal item of fixed asset.
e. Intangible Assets other than application software and cost of right
of way are amortized on a straight line basis over a period of ten
years or life of the underlying plant/facility, whichever is earlier.
f. Application software are normally amortised over a period of four
years, or over its useful life, whichever is earlier.
2.5 IMPAIRMENT OF ASSETS
At each balance sheet date, an assessment is made of whether there is
any indication of impairment. An impairment loss is recognised whenever
the carrying amount of assets of cash generating units(CGU) exceeds
their recoverable amount.
2.6 FOREIGN CURRENCY TRANSACTIONS
a. Foreign Currency transactions during the year are recorded at the
exchange rates prevailing on the date of transactions.
b. All foreign currency assets, liabilities and forward contracts are
restated at the rates prevailing at the year end.
c. All exchange differences are dealt with in the Statement of Profit
and Loss including those covered by forward contracts, where the
premium / discount arising from such contracts are recognised over the
period of contracts.
However, foreign exchange differences on long term foreign currency
monetary items relating to acquisition of depreciable assets are
adjusted to the carrying cost of the assets and in other cases, if any,
accumulated in "Foreign Currency Monetary Item Translation Difference
Account" and amortised over the balance period of loan.
d. The realised gain or loss in respect of commodity hedging
contracts, the pricing period of which has expired during the year, are
recognised in the Statement of Profit and Loss along with the
underlying transaction. However, in respect of contracts, the pricing
period of which extends beyond the Balance Sheet date, suitable
provision is made for likely loss, if any.
2.7 INVESTMENTS
a. Long-Term Investments are valued at cost and provision for
diminution in value thereof is made, wherever such diminution is other
than temporary.
b. Current Investments are valued at the lower of cost and fair value.
2.8 INVENTORIES
a. Crude oil is valued at cost on First In First Out (FIFO) basis or
at net realisable value, whichever is lower.
b. Raw materials for lubricants and finished lubricants are valued at
weighted average cost or at net realisable value, whichever is lower.
c. Stock-in process is valued at raw material cost plus cost of
conversion or at net realisable value, whichever is lower.
d. Finished products other than Lubricants are valued at cost (on FIFO
basis month-wise) or at net realisable value, whichever is lower.
e. Empty packages are valued at weighted average cost.
f. Stores and spares are valued at weighted average cost. Stores and
Spares in transit are valued at cost.
g. Value of surplus, obsolete and slow moving stores and spares, if
any, is reduced to net realisable value. Surplus items, when
transferred from completed projects are valued at cost / estimated
value, pending periodic assessment / ascertainment of condition.
2.9 DUTIES ON BONDED STOCKS
Excise / Customs duty is provided on stocks stored in Bonded Warehouses
(excluding goods exempted from duty / exports or where liability to pay
duty is transferred to consignee).
2.10 GRANTS
a. In case of depreciable assets, the cost of the asset is shown at
gross value and grant thereon is treated as Capital Grants, which is
recognised in the Statement of Profit & Loss over the period and in the
proportion in which depreciation is charged.
b. Grants received against revenue items are recognised as income.
2.11 PROVISIONS
A provision is recognised when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made.
2.12 EXPLORATION & PRODUCTION EXPENDITURE
"Successful Efforts Method" of accounting is followed for Oil & Gas
exploration and production activities as stated below:
a. Cost of surveys, studies, carrying and retaining undeveloped
properties are expensed out in the year of incurrence.
b. Cost of acquisition, drilling and development are treated as
Capital Work-in-Progress when incurred and are capitalised when the
well is ready to commence commercial production.
c. Accumulated costs on exploratory wells in progress are expensed out
in the year in which they are determined to be dry.
The proportionate share in the assets, liabilities, income and
expenditure of joint operations are accounted as per the participating
interest in such joint operations.
2.13 EMPLOYEE BENEFITS
Liability towards long term defined employee benefits - leave
encashment, gratuity, pension, post  retirement medical benefits, long
service awards, ex-gratia, death benefits and resettlement allowance
are determined on actuarial valuation by independent actuaries at the
year-end by using Projected Unit Credit method. Liability so determined
is funded in the case of leave encashment and gratuity, and provided
for in other cases.
In respect of Provident Fund, the contribution for the period is
recognized as expense and charged to Statement of Profit & Loss.
Short term employee benefits are recognized as an expense at an
undiscounted amount in the Statement of Profit & Loss of the year in
which the related services are rendered.
2.14 REVENUE RECOGNITION
a. Sales are recorded based on significant risks and rewards of
ownership being transferred in favour of the customer.
b. Sales are net of discount, include applicable excise duty,
surcharge and other elements as are allowed to be recovered as part of
the price but excludes VAT/sales tax.
c. Claims, including subsidy on LPG, HSD and SKO, from Government of
India are booked on in principle acceptance thereof on the basis of
available instructions / clarifications.
d. Dividend income is recognised when the Company''s right to receive
the dividend is established.
e. Income from sale of scrap is accounted for on realisation.
f. Interest income is recognised on a time proportion basis taking
into account the amount outstanding and the applicable interest rate.
2.15 TAXES ON INCOME
a. Provision for current tax is made in accordance with the provisions
of the Income Tax Act, 1961.
b. Deferred tax liability/asset on account of timing difference
between taxable and accounting income is recognised using tax rates and
tax laws enacted or substantively enacted as at the Balance Sheet date.
In the event of unabsorbed depreciation or carry forward of losses,
deferred tax assets are recognized, if there is virtual certainty that
sufficient future taxable income will be available to realize such
assets.
c. Minimum Alternate Tax (MAT) paid in accordance with the tax laws,
is considered as an asset when it is probable that the future economic
benefits associated with it, will flow to the Corporation.
2.16 CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
a. Contingent Liabilities are disclosed in respect of:
i. A possible obligations that arise from past events but their
existence will be confirmed by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the
Company or
ii. A present obligation where it is not probable that an outflow of
resources embodying economic benefit will be required to settle the
obligations or a reliable estimate of the amount of obligation cannot
be made.
b. Contingent Liabilities are considered only for items exceeding Rs. 5
lakhs in each case. Contingent Liabilities in respect of show cause
notices are considered only when converted into demands. Capital
Commitments are considered only for items exceeding Rs. 1 lakh in each
case.
2.17 ACCOUNTING/CLASSIFICATION OF EXPENDITURE AND INCOME
a. Insurance claims are accounted on acceptance basis.
b. All other claims/entitlements are accounted on the merits of each
case/realisation.
c. Raw materials consumed are net of discount towards sharing of
under-recoveries.
d. Income and expenditure of previous years, individually amounting to
Rs. 5 lakhs and below are not considered as prior period items.
Mar 31, 2013
1.1 TANGIBLE ASSETS
a. Tangible assets are stated at cost net of accumulated depreciation
/ amortization
b. Land acquired on lease for 99 years or more is treated as freehold
land.
c. Technical know-how /licence fee relating to plants/ facilities are
capitalized as part of cost of the underlying asset.
1.2 INTANGIBLE ASSETS
a. Cost of Right of Way for laying pipelines is capitalised as
Intangible Asset and is amortisedover a period of 99 years.
b. Technical know-how /licence fee relating to production process and
process design are recognized as Intangible Assets.
c. Cost of Software directly identified with hardware is capitalised
along with the cost of hardware. Application software is capitalised as
Intangible Asset.
1.3 CONSTRUCTION PERIOD EXPENSES ON PROJECTS
a. Related expenditure (including temporary facilities and crop
compensation expenses) incurred during construction period in respect
of plan projects and major non-plan projects are capitalised.
b. Financing cost incurred during the construction period on loans
specifically borrowed and utilised for projects is capitalised.
Financing cost includes exchange rate variation in relation to
borrowings denominated in foreign currency.
c. Financing cost, if any, incurred on general borrowings used for
projects during the construction period is capitalised at the weighted
average cost.
1.4 DEPRECIATION / AMORTIZATION
a. Depreciation on Fixed Assets is provided on the Straight Line
method, in the manner and at the rates prescribed under Schedule XIV to
the Companies Act, 1956 and is charged pro rata on a monthly basis on
assets, from / up to and inclusive of the month of capitalisation /
sale, disposal or deletion during the year.
b. All assets costing up to R5000/-, other than LPG cylinders and
pressure regulators, are fully depreciated in the year of
capitalisation.
c. Premium on leasehold land is amortised over the period of lease.
d. Machinery Spares, which can be used only in connection with an item
of fixed asset and the use of which is expected to be irregular, are
depreciated over a period not exceeding the useful life of the
principal item of fixed asset.
e. Intangible Assets other than application software and cost of right
of way are amortized on a straight line basis over a period of ten
years or life of the underlying plant/facility, whichever is earlier.
f. Application software are normally amortised over a period of four
years, or over its useful life, whichever is earlier.
1.5 IMPAIRMENT OF ASSETS
At each balance sheet date, an assessment is made of whether there is
any indication of impairment. An impairment loss is recognised whenever
the carrying amount of assets of cash generating units(CGU) exceeds
their recoverable amount.
1.6 FOREIGN CURRENCY TRANSACTIONS
a. Foreign Currency transactions during the year are recorded at the
exchange rates prevailing on the date of transactions.
b. All foreign currency assets, liabilities and forward contracts are
restated at the rates prevailing at the year end.
c. All exchange differences (except as stated in note # 2.3 (b), 33,
34 and 35) are dealt with in the Statement of Profit and Loss including
those covered by forward contracts, where the premium / discount
arising from such contracts are recognised over the period of
contracts.
d. The realised gain or loss in respect of commodity hedging
contracts, the pricing period of which has expired during the year, are
recognised in the Statement of Profit and Loss along with the
underlying transaction. However, in respect of contracts, the pricing
period of which extends beyond the Balance Sheet date, suitable
provision is made for likely loss, if any.
1.7 INVESTMENTS
a. Long-Term Investments are valued at cost and provision for
diminution in value thereof is made, wherever such diminution is other
than temporary.
b. Current Investments are valued at the lower of cost and fair value.
1.8 INVENTORIES
a. Crude oil is valued at cost on First In First Out (FIFO) basis or
at net realisable value, whichever is lower.
b. Raw materials for lubricants and finished lubricants are valued at
weighted average cost or at net realisable value, whichever is lower.
c. Stock-in process is valued at raw material cost plus cost of
conversion oratnet realisable value, whichever is lower.
d. Finished products other than Lubricants are valued at cost (on FIFO
basis month-wise) or at net realisable value, whichever is lower.
e. Empty packages are valued at weighted average cost.
f. Stores and spares are valued at weighted average cost. Stores and
Spares in transit are valued at cost.
g. Value of surplus, obsolete and slow moving stores and spares, if
any, is reduced to net realisable value. Surplus items, when
transferred from completed projects are valued at cost / estimated
value, pending periodic assessment / ascertainment of condition.
1.9 DUTIES ON BONDED STOCKS
Excise / Customs duty is provided on stocks stored in Bonded Warehouses
(excluding goods exempted from duty / exports or where liability to pay
duty is transferred to consignee).
1.10 GRANTS
a. In case of depreciable assets, the cost of the asset is shown at
gross value and grant thereon is treated as Capital Grants, which is
recognised in the Statement of Profit & Loss over the period and in the
proportion in which depreciation is charged.
b. Grants received against revenue items are recognised as income.
1.11 PROVISIONS
A provision is recognised when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made.
1.12 EXPLORATION & PRODUCTION EXPENDITURE
"Successful Efforts Method" of accounting is followed for Oil & Gas
exploration and production activities as stated below:
a. Cost of surveys, studies, carrying and retaining undeveloped
properties are expensed out in the year of incurrence.
b. Cost of acquisition, drilling and development are treated as
Capital Work-in-Progress when incurred and are capitalised when the
well is ready to commence commercial production.
c. Accumulated costs on exploratory wells in progress are expensed out
in the year in which they are determined to be dry.
The proportionate share in the assets, liabilities, income and
expenditure of joint operations are accounted as per the participating
interest in such joint operations.
1.13 EMPLOYEE BENEFITS
Liability towards long term defined employee benefits - leave
encashment, gratuity, pension, post - retirement medical benefits, long
service awards, ex-gratia, death benefits and resettlement allowance
are determined on actuarial valuation by independent actuaries at the
year-end by using Projected Unit Credit method. Liability so determined
is funded in the case of leave encashment and gratuity, and provided
for in other cases.
In respect of Provident Fund, the contribution for the period is
recognized as expense and charged to Statement of Profit & Loss.
Short term employee benefits are recognized as an expense at an
undiscounted amount in the Statement of Profit & Loss of the year in
which the related services are rendered.
1.14 REVENUE RECOGNITION
a. Sales are recorded based on significant risks and rewards of
ownership being transferred in favour of the customer.
b. Sales are net of discount, include applicable excise duty,
surcharge and other elements as are allowed to be recovered as part of
the price but excludes VAT/sales tax.
c. Dividend income is recognised when the Company''s right to receive
the dividend is established.
1.15 RESEARCH & DEVELOPMENT
Expenditure incurred on research activities is charged off in the year
in which it is incurred. Expenses directly related to development
activities which are capable of generating future economic resources,
are treated as intangible assets.
1.16 TAXES ON INCOME
a. Provision for current tax is made in accordance with the provisions
of the Income Tax Act, 1961.
b. Deferred tax liability/asset on account of timing difference
between taxable and accounting income is recognised using tax rates and
tax laws enacted or substantively enacted as at the Balance Sheet date.
In the event of unabsorbed depreciation or carry forward of losses,
deferred tax assets are recognized, if there is virtual certainty that
sufficient future taxable income will be available to realize such
assets.
c. Minimum Alternate Tax (MAT) paid in accordance with the tax laws,
is considered as an asset when it is probable that the future economic
benefits associated with it, will flow to the Corporation.
1.17 CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
Contingent Liabilities are considered only for items exceeding Rs. 5.00
lakhs in each case. Contingent Liabilities in respect of show cause
notices are considered only when converted into demands. Capital
Commitments are considered only for items exceeding Rs. 1 lakh in each
case.
1.18 ACCOUNTING/CLASSIFICATION OF EXPENDITURE AND INCOME
a. Insurance claims are accounted on acceptance basis.
b. All other claims/entitlements are accounted on the merits of each
case/realisation.
c. Raw materials consumed are net of discount towards sharing of
under-recoveries.
d. Income and expenditure of previous years, individually amounting to
Rs. 5 lakhs and below are not considered as prior period items.
Mar 31, 2012
1.1 FIXED ASSETS
a. Land acquired on lease for 99 years or more is treated as freehold
land.
b. Technical know-how /licence fee relating to plants/ facilities are
capitalized as part of cost of the underlying asset.
1.2 INTANGIBLE ASSETS
a. Cost of Right of Way for laying pipelines is capitalised as
Intangible Asset and being perpetual in nature, is not amortised.
b. Technical know-how /licence fee relating to production process and
process design are recognized as Intangible Assets.
c. Cost of Software directly identified with hardware is capitalised
along with the cost of hardware. Application software is capitalised as
Intangible Asset.
1.3 CONSTRUCTION PERIOD EXPENSES ON PROJECTS
a. Related expenditure (including temporary facilities and crop
compensation expenses) incurred during construction period in respect
of plan projects and major non-plan projects are capitalised.
b. Financing cost incurred during the construction period on loans
specifically borrowed and utilised for projects is capitalised.
Financing cost includes exchange rate variation in relation to
borrowings denominated in foreign currency.
c. Financing cost, if any, incurred on general borrowings used for
projects during the construction period is capitalised at the weighted
average cost.
1.4 DEPRECIATION
a. Depreciation on Fixed Assets is provided on the Straight Line
method, in the manner and at the rates prescribed under Schedule XIV to
the Companies Act, 1956 and is charged pro rata on a monthly basis on
assets, from / up to and inclusive of the month of capitalisation /
sale, disposal or deletion during the year.
b. All assets costing up to Rs. 5,000/-, other than LPG cylinders and
pressure regulators, are fully depreciated in the year of
capitalisation.
c. Premium on leasehold land is amortised over the period of lease.
d. Machinery Spares, which can be used only in connection with an item
of fixed asset and the use of which is expected to be irregular, are
depreciated over a period not exceeding the useful life of the
principal item of fixed asset.
e. Intangible Assets other than application software are amortized on
a straight line basis over a period of ten years or life of the
underlying plant/facility, whichever is earlier.
f. Application software are normally amortised over a period of four
years, or over its useful life, whichever is earlier.
1.5 IMPAIRMENT OF ASSETS
At each balance sheet date, an assessment is made of whether there is
any indication of impairment. An impairment loss is recognised whenever
the carrying amount of assets of cash generating units(CGU) exceeds
their recoverable amount.
1.6 FOREIGN CURRENCY TRANSACTIONS
a. Foreign Currency transactions during the year are recorded at the
exchange rates prevailing on the date of transactions.
b. All foreign currency assets, liabilities and forward contracts are
restated at the rates prevailing at the year end.
c. All exchange differences (except as stated in note # 2.3 (b) and
note # 34) are dealt with in the Statement of profit and loss including
those covered by forward contracts, where the premium / discount
arising from such contracts are recognised over the period of
contracts.
d. The realised gain or loss in respect of commodity hedging
contracts, the pricing period of which has expired during the year, are
recognised in the Statement of Profit & Loss along with the underlying
transaction. However, in respect of contracts, the pricing period of
which extends beyond the balance sheet date, suitable provision is made
for likely loss, if any.
1.7 INVESTMENTS
a. Long-term investments are valued at cost and provision for
diminution in value thereof is made, wherever such diminution is other
than temporary.
b. Current investments are valued at the lower of cost and fair value.
1.8 INVENTORIES
a. Crude oil is valued at cost on First In First Out (FIFO) basis or
at net realisable value, whichever is lower.
b. Raw material for lubricants and finished lubricants are valued at
weighted average cost or at net realisable value, whichever is lower.
c. Stock-in process is valued at raw material cost plus cost of
conversion or at net realisable value, whichever is lower.
d. Finished products other than Lubricants are valued at cost (on FIFO
basis month-wise) or at net realisable value, whichever is lower.
e. Empty packages are valued at weighted average cost.
f. Stores and spares are valued at weighted average cost. Stores &
spares in transit are valued at cost.
g. Value of surplus, obsolete and slow moving stores and spares, if
any, is reduced to net realisable value. Surplus items, when
transferred from completed projects are valued at cost / estimated
value, pending periodic assessment / ascertainment of condition.
1.9 DUTIES ON BONDED STOCKS
Excise / Customs duty is provided on stocks stored in Bonded Warehouses
(excluding goods exempted from duty / exports or where liability to pay
duty is transferred to consignee).
1.10 GRANTS
a. In case of depreciable assets, the cost of the asset is shown at
gross value and grant thereon is treated as Capital Grants, which is
recognised in the Statement of Profit & Loss over the period and in the
proportion in which depreciation is charged.
b. Grants received against revenue items are recognised as income.
1.11 PROVISIONS
A provision is recognised when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made.
1.12 EXPLORATION & PRODUCTION EXPENDITURE
"Successful Efforts Method" of accounting is followed for Oil & Gas
exploration and production activities as stated below: a. Cost of
surveys, studies, carrying and retaining undeveloped properties are
expensed out in the year of incurrence.
b. Cost of acquisition, drilling and development are treated as
capital work-in-progress when incurred and are capitalised when the
well is ready to commence commercial production.
c. Accumulated costs on exploratory wells in progress are expensed out
in the year in which they are determined to be dry.
The proportionate share in the assets, liabilities, income and
expenditure of joint operations are accounted as per the participating
interest in such joint operations.
1.13 EMPLOYEE BENEFITS
Liability towards long term defined employee benefits - leave
encashment, gratuity, pension, post - retirement medical benefits, long
service awards, ex-gratia, death benefits and resettlement allowance
are determined on actuarial valuation by independent actuaries at the
year end by using Projected Unit Credit method. Liability so determined
is funded in the case of leave encashment and gratuity, and provided
for in other cases.
In respect of Provident Fund, the contribution for the period is
recognized as expense and charged to Statement of Profit & Loss.
Short term employee benefits are recognized as an expense at an
undiscounted amount in the Statement of Profit & Loss of the year in
which the related services are rendered.
1.14 SALE OF PRODUCTS
Sales are net of discount, include applicable excise duty, surcharge
and other elements as are allowed to be recovered as part of the price
but excludes VAT/sales tax.
1.15 RESEARCH & DEVELOPMENT
Expenditure incurred on research activities is charged off in the year
in which it is incurred. Expenses directly related to development
activities which are capable of generating future economic resources,
are treated as intangible assets.
1.16 TAXES ON INCOME
a. Provision for current tax is made in accordance with the provisions
of the Income Tax Act, 1961.
b. Deferred tax liability/asset on account of timing difference
between taxable and accounting income is recognised using tax rates and
tax laws enacted or substantively enacted as at the balance sheet date.
In the event of unabsorbed depreciation or carry forward of losses,
deferred tax assets are recognized, if there is virtual certainty that
sufficient future taxable income will be available to realize such
assets.
c. Minimum Alternate Tax (MAT) paid in accordance with the tax laws,
is considered as an asset when it is probable that the future economic
benefits associated with it, will flow to the Company.
1.17 CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
Contingent Liabilities are considered only for items exceeding Rs. 5
lakhs in each case. Contingent Liabilities in respect of show cause
notices are considered only when converted into demands. Capital
Commitments are considered only for items exceeding Rs. 1 lakh in each
case.
1.18 ACCOUNTING/CLASSIFICATION OF EXPENDITURE AND INCOME
a. Insurance claims are accounted on acceptance basis.
b. All other claims/entitlements are accounted on the merits of each
case/realisation.
c. Raw materials consumed are net of discount towards sharing of
under-recoveries.
d. Income and expenditure of previous years, individually amounting to
Rs. 5 lakhs and below are not considered as prior period items.
Mar 31, 2011
The financial statements are prepared under historical cost convention
in accordance with Generally Accepted Accounting Principles (GAAP),
Accounting Standards referred to in the Companies (Accounting
Standards) Rules, 2006 issued by the Central Government and the
relevant provisions of the Companies Act, 1956. All income and
expenditure having material bearing are recognised on accrual basis,
except where otherwise stated. Necessary estimates and assumptions of
income and expenditure are made during the reporting period and
difference between the actual and the estimates are recognised in the
period in which the results materialise.
1. FIXED ASSETS
a. Land acquired on lease for 99 years or more is treated as freehold
land.
b. Technical know-how /licence fee relating to plants/ facilities are
capitalised as part of cost of the underlying asset.
2. INTANGIBLE ASSETS
a. Cost of Right of Way for laying pipelines is capitalised as
Intangible Asset and being perpetual in nature, is not amortised.
b. Technical know-how /licence fee relating to production process and
process design are recognised as Intangible Assets.
c. Cost of Software directly identified with hardware is capitalised
along with the cost of hardware. Application software is capitalised as
Intangible Asset.
3. CONSTRUCTION PERIOD EXPENSES ON PROJECTS
a. Related expenditure (including temporary facilities and crop
compensation expenses) incurred during construction period in respect
of plan projects and major non-plan projects are capitalised.
b. Financing cost incurred during the construction period on loans
Specifically borrowed and utilised for projects is capitalised.
Financing cost includes exchange losses in relation to borrowings
denominated in foreign currency.
c. Financing cost, if any, incurred on general borrowings used for
projects during the construction period is capitalised at the weighted
average cost.
4. DEPRECIATION
a. Depreciation on Fixed Assets is provided on the Straight Line
method, in the manner and at the rates prescribed under Schedule XIV to
the Companies Act, 1956 and is charged pro rata on a monthly basis on
assets, from / up to and inclusive of the month of capitalisation /
sale, disposal or deletion during the year.
b. All assets costing up to Rs. 5000/-, other than LPG cylinders and
pressure regulators, are fully depreciated in the year of
capitalisation.
c. Premium on leasehold land is amortised over the period of lease.
d. Machinery Spares, which can be used only in connection with an item
of fxed asset and the use of which is expected to be irregular, are
depreciated over a period not exceeding the useful life of the
principal item of fxed asset.
e. Intangible Assets other than application software are amortised on
a straight line basis over a period of ten years or life of the
underlying plant/facility, whichever is earlier.
f. Application software are normally amortised over a period of four
years, or over its useful life, whichever is earlier.
5. IMPAIRMENT OF ASSETS
At each balance sheet date, an assessment is made of whether there is
any indication of impairment. An impairment loss is recognised whenever
the carrying amount of assets of cash generating units(CGU) exceeds
their recoverable amount.
6. FOREIGN CURRENCY TRANSACTIONS
a. Foreign Currency transactions during the year are recorded at the
exchange rates prevailing on the date of transactions.
b. All foreign currency assets, liabilities and forward contracts are
restated at the rates prevailing at the year end.
c. All exchange differences (except as stated in para 3 (b) of
Schedule 20A and para 7 of Schedule 20B) are dealt with in the Profit
and loss account including those covered by forward contracts, where
the premium / discount arising from such contracts are recognised over
the period of contracts.
d. The realised gain or loss in respect of commodity hedging
contracts, the pricing period of which has expired during the year, are
recognised in the Profit & Loss Account along with the underlying
transaction. However, in respect of contracts, the pricing period of
which extends beyond the balance sheet date, suitable provision is made
for likely loss, if any.
7. INVESTMENTS
a. Long-term investments are valued at cost and provision for
diminution in value thereof is made, wherever such diminution is other
than temporary.
b. Current investments are valued at the lower of cost and fair value.
8. INVENTORIES
a. Crude oil is valued at cost on First In First Out (FIFO) basis or
at net realisable value, whichever is lower.
b. Raw material for lubricants and fnished lubricants are valued at
weighted average cost or at net realisable value, whichever is lower.
c. Stock-in process is valued at raw material cost plus cost of
conversion or at net realisable value, whichever is lower.
d. Finished products other than Lubricants are valued at cost (on FIFO
basis) or at net realisable value, whichever is lower.
e. Empty packages are valued at weighted average cost.
f. Stores and spares are valued at weighted average cost. Stores &
spares in transit are valued at cost.
g. Value of surplus, obsolete and slow moving stores and spares, if
any, is reduced to net realisable value. Surplus items, when
transferred from completed projects are valued at cost / estimated
value, pending periodic assessment / ascertainment of condition.
9. DUTIES ON BONDED STOCKS
Excise / Customs duty is provided on stocks stored in Bonded Warehouses
(excluding goods exempted from duty / exports or where liability to pay
duty is transferred to consignee).
10. GRANTS
a. In case of depreciable assets, the cost of the asset is shown at
gross value and grant thereon is treated as Capital Grants, which is
recognised in the Profit and Loss Account over the period and in the
proportion in which depreciation is charged.
b. Grants received against revenue items are recognised as income.
11. PROVISIONS
A provision is recognised when there is a present obligation as a
result of a past event and it is probable that an outfow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made.
12. EXPLORATION & PRODUCTION EXPENDITURE
"Successful Efforts Method" of accounting is followed for Oil & Gas
exploration and production activities as stated below:
a. Cost of surveys, studies, carrying and retaining undeveloped
properties are expensed out in the year of incurrence.
b. Cost of acquisition, drilling and development are treated as
capital work-in-progress when incurred and are capitalised when the
well is ready to commence commercial production.
c. Accumulated costs on exploratory wells in progress are expensed out
in the year in which they are determined to be dry.
The proportionate share in the assets, liabilities, income and
expenditure of joint operations are accounted as per the participating
interest in such joint operations.
13. EMPLOYEE BENEFITS
Liability towards long term defned employee benefits - leave encashment,
gratuity, pension, post-retirement medical benefits, long service
awards, ex-gratia, death benefits and resettlement allowance are
determined on actuarial valuation by independent actuaries at the year
end by using Projected Unit Credit method. Liability so determined is
funded in the case of leave encashment and gratuity, and provided for
in other cases.
In respect of Provident Fund, the contribution for the period is
recognized as expense and charged to Profit & Loss Account.
Short term employee benefits are recognized as an expense at an
undiscounted amount in the Profit and Loss Account of the year in which
the related services are rendered.
14. SALE OF PRODUCTS
Sales are net of discount, include applicable excise duty, surcharge
and other elements as are allowed to be recovered as part of the price
but excludes VAT/Sales Tax.
15. RESEARCH & DEVELOPMENT
Expenditure incurred on research activities is charged off in the year
in which it is incurred. Expenses directly related to development
activities which are capable of generating future economic resources,
are treated as intangible assets.
16. TAXES ON INCOME
a. Provision for current tax is made in accordance with the provisions
of the Income Tax Act, 1961.
b. Deferred tax liability/asset on account of timing difference
between taxable and accounting income is recognised using tax rates and
tax laws enacted or substantively enacted as at the balance sheet date.
In the event of unabsorbed depreciation or carry forward of losses,
deferred tax assets are recognized, if there is virtual certainty that
sufficient future taxable income will be available to realize such
assets.
c. Minimum Alternate Tax (MAT) paid in accordance with the tax laws,
is considered as an asset when it is probable that the future economic
benefits associated with it, will fow to the Company.
17. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
Contingent Liabilities are considered only for items exceeding Rs. 5.00
lakhs in each case. Contingent Liabilities in respect of show cause
notices are considered only when converted into demands. Capital
Commitments are considered only for items exceeding Rs. 1 lakh in each
case.
18. ACCOUNTING/CLASSIFICATION OF EXPENDITURE AND INCOME
a. Insurance claims are accounted on acceptance basis.
b. All other claims/entitlements are accounted on the merits of each
case/realisation.
c. raw materials consumed are net of discount towards sharing of
under-recoveries.
d. Income and expenditure of previous years, individually amounting to
Rs. 5 lakhs and below are not considered as prior period items.
Mar 31, 2010
The financial statements are prepared under historical cost convention
in accordance with Generally Accepted Accounting Principles (GAAP),
Accounting Standards referred to in the Companies (Accounting
Standards) Rules, 2006 issued by the Central Government and the
relevant provisions of the Companies Act, 1956. All income and
expenditure having material bearing are recognized on accrual basis,
except where otherwise stated. Necessary estimates and assumptions of
income and expenditure are made during the reporting period and
difference between the actual and the estimates are recognised in the
period in which the results materialise.
1. FIXED ASSETS
a. Land acquired on lease for 99 years or more is treated as freehold
land.
b. Technical know-how /licence fee relating to plants/ facilities are
capitalized as part of cost of the underlying asset.
2. INTANGIBLE ASSETS
a. Cost of Right of Way for laying pipelines is capitalised as
Intangible Asset and being perpetual in nature, is not amortised.
b. Technical know-how /licence fee relating to production process and
process design are recognized as Intangible Assets.
c. Cost of Software directly identified with hardware is capitalised
along with the cost of hardware. Application software is capitalised
as Intangible Asset.
3. CONSTRUCTION PERIOD EXPENSES ON PROJECTS
a. Related expenditure (including temporary facilities and crop
compensation expenses) incurred during construction period in respect
of plan projects and major non-plan projects are capitalised.
b. Financing cost incurred during the construction period on loans
specifically borrowed and utilised for projects is capitalised.
Financing cost includes exchange losses in relation to borrowings
denominated in foreign currency.
c. Financing cost, if any, incurred on general borrowings used for
projects during the construction period is capitalised at the weighted
average cost.
4. DEPRECIATION
a. Depreciation on Fixed Assets is provided on the Straight Line
method, in the manner and at the rates prescribed under Schedule XIV to
the Companies Act, 1956 and is charged pro rata on a monthly basis on
assets, from / up to and inclusive of the month of capitalisation /
sale, disposal or deletion during the year.
b. All assets costing up to Rs. 5000/-, other than LPG cylinders and
pressure regulators, are fully depreciated in the year of
capitalisation.
c. Premium on leasehold land is amortised over the period of lease.
d. Machinery Spares, which can be used only in connection with an item
of fixed asset and the use of which is expected to be irregular, are
depreciated over a period not exceeding the useful life of the
principal item of fixed asset.
e. Intangible Assets other than application software are amortized on
a straight line basis over a period of ten years or life of the
underlying plant/facility, whichever is earlier.
f. Application software are normally amortised over a period of four
years, or over its useful life, whichever is earlier.
5. IMPAIRMENT OF ASSETS
At each balance sheet date, an assessment is made of whether there is
any indication of impairment. An impairment loss is recognised whenever
the carrying amount of assets of cash generating units(CGU) exceeds
their recoverable amount.
6. FOREIGN CURRENCY TRANSACTIONS
a. Foreign Currency transactions during the year are recorded at the
exchange rates prevailing on the date of transactions.
b. All foreign currency assets, liabilities and forward contracts are
restated at the rates prevailing at the year end.
c. All exchange differences (except as stated in para 3 (b) of
Schedule 20A and para 10 of Schedule 20B) are dealt with in the profit
and loss account including those covered by forward contracts, where
the premium / discount arising from such contracts are recognised over
the period of contracts.
d. The realised gain or loss in respect of commodity hedging
contracts, the pricing period of which has expired during the year, are
recognised in the Profit & Loss Account along with the underlying
transaction. However, in respect of contracts, the pricing period of
which extends beyond the balance sheet date, suitable provision is made
for likely loss, if any.
7. INVESTMENTS
a. Long-term investments are valued at cost and provision for
diminution in value thereof is made, wherever such diminution is other
than temporary.
b. Current investments are valued at the lower of cost and fair value.
8. INVENTORIES
a. Crude oil is valued at cost on First In First Out (FIFO) basis or
at net realisable value, whichever is lower.
b. Raw material for lubricants and finished lubricants are valued at
weighted average cost or at net realisable value, whichever is lower.
c. Stock-in process is valued at raw material cost plus cost of
conversion or at net realisable value, whichever is lower.
d. Finished products other than Lubricants are valued at cost (on FIFO
basis) or at net realisable value, whichever is lower.
e. Empty packages are valued at weighted average cost.
f. Stores and spares are valued at weighted average cost.
g. Value of surplus, obsolete and slow moving stores and spares, if
any, is reduced to net realisable value. Surplus items, when
transferred from completed projects are valued at cost / estimated
value, pending periodic assessment/ascertainment of condition.
9. DUTIES ON BONDED STOCKS
Excise / Customs duty is provided on stocks stored in Bonded Warehouses
(excluding goods exempted from duty / exports or where liability to pay
duty is transferred to consignee).
10. GRANTS
a. In case of depreciable assets, the cost of the asset is shown at
gross value and grant thereon is treated as Capital Grants, which is
recognised in the Profit and Loss Account over the period and in the
proportion in which depreciation is charged.
b. Grants received against revenue items are recognised as income.
11. PROVISIONS
A provision is recognised when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made.
12. EXPLORATION & PRODUCTION EXPENDITURE
"Successful Efforts Method" of accounting is followed for Oil & Gas
exploration and production activities as stated below:
a. Cost of surveys, studies, carrying and retaining undeveloped
properties are expensed out in the year of incurrence.
b. Cost of acquisition, drilling and development are treated as
capital work-in-progress when incurred and are capitalised when the
well is ready to commence commercial production.
c. Accumulated costs on exploratory wells in progress are expensed out
in the year in which they are determined to be dry.
The proportionate share in the assets, liabilities, income and
expenditure of joint operations are accounted as per the participating
interest in such joint operations.
13. EMPLOYEE BENEFITS
Liability towards long term defined employee benefits - leave
encashment, gratuity, pension, post à retirement medical benefits, long
service awards, ex-gratia, death benefits and resettlement allowance
are determined on actuarial valuation by independent actuaries at the
year end by using Projected Unit Credit method. Liability so
determined is funded in the case of leave encashment and gratuity, and
provided for in other cases.
In respect of Provident Fund, the contribution for the period is
recognized as expense and charged to Profit & Loss Account.
Short term employee benefits are recognized as an expense at an
undiscounted amount in the Profit and Loss Account of the year in which
the related services are rendered.
14. SALE OF PRODUCTS
Sales are net of discount, include applicable excise duty, surcharge
and other elements as are allowed to be recovered as part of the price
but excludes VAT/sales tax.
15. RESEARCH & DEVELOPMENT
Expenditure incurred on research activities is charged off in the year
in which it is incurred. Expenses directly related to development
activities which are capable of generating future economic resources,
are treated as intangible assets.
16. TAXES ON INCOME
a. Provision for current tax is made in accordance with the provisions
of the Income Tax Act, 1961.
b. Deferred tax on account of timing difference between taxable and
accounting income is provided by using tax rates and tax laws enacted
or substantively enacted as at the balance sheet date.
17. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
Contingent Liabilities are considered only for items exceeding Rs. 5.00
lakhs in each case. Contingent Liabilities in respect of show cause
notices are considered only when converted into demands. Capital
Commitments are considered only for items exceeding Rs. 1.00 lakh in
each case.
18. ACCOUNTING/CLASSIFICATION OF EXPENDITURE AND INCOME
a. Insurance claims are accounted on acceptance basis.
b. All other claims/entitlements are accounted on the merits of each
case/realisation.
c. Raw materials consumed are net of discount towards sharing of
under-recoveries.
d. Income and expenditure of previous years, individually amounting to
Rs. 5 lakhs and below are not considered as prior period items.
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Hindustan Petroleum Corporation Ltd. குறித்த கூடுதல் தகவல்களை
-
Hindustan Petroleum Corporation Ltd. டூல்ஸ்
- பல்க் டீல்ஸ்
- பிளாக் டீல்ஸ்
-
Hindustan Petroleum Corporation Ltd. நிறுவன தகவல்கள்
- நிறுவன வரலாறு
- நிர்வாக குழு
- மூலதன வடிவம்
- புராடெக்ட் மிக்ஸ்
- வங்கியாளர்/தணிக்கையாளர்/பதிவாளர்
-
நிறுவன வரலாறு
- போனஸ்
- மும்பை பங்குச் சந்தையில் விலை வரலாறு
- என்எஸ்இ விலை வரலாறு
-
Hindustan Petroleum Corporation Ltd. முக்கிய நிதியில் விகிதங்கள்
- விகிதங்கள்
-
Hindustan Petroleum Corporation Ltd. முடிவுகள்
- காலாண்டு முடிவுகள்
- அரையாண்டு முடிவுகள்
- 9 மாத முடிவுகள்
- வருடாந்திர முடிவுகள்
-
Hindustan Petroleum Corporation Ltd. நிதியியல் தகவல்கள்
- தணிக்கை முடிவுகள்
- பணப்பாய்வு
- இருப்பு நிலைக்குறிப்பு
-
Hindustan Petroleum Corporation Ltd. அறிக்கை
- கணக்கியல் கோட்பாடுகள்
- தணிக்கையாளர்கள் அறிக்கை
- இயக்குநர்கள் அறிக்கை
- கணக்கு குறிப்புகள்
-
Hindustan Petroleum Corporation Ltd. கார்ப்பரேட் அறிவிப்புகள்
- புத்தக முடிவு
- ஈவுத்தொகை
- நிர்வாகக் குழுக் கூட்டங்கள்
