great eastern energy corporation limited

Independent Auditors’ Report To the Members of Great Eastern Energy Corporation Limited We have audited the accompanying financial statements of Great Eastern Energy Corporation Limited (“the Company”), which comprise the statement of financial position as at 31 March 2015, the income statement, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31 March 2015, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Emphasis of Matter Attention is invited to note 33 of the financial statements which explains that categorization of wells as exploratory, development, and producing; allocation of cost incurred on them; internal estimation of proved developed reserves and basis thereof; and depletion of producing properties on the basis of the proved developed reserves, are technical in nature and thus have been determined as per the technical/ commercial evaluation by the management/ management expert. Our opinion is not qualified in respect of this matter. KPMG Date: Gurgaon Place: 21 July 2015

Great Eastern Energy Corporation Limited (All amounts in US dollars unless otherwise stated)

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Statement of financial position

Note 31 March 2015 31 March 2014ASSETSNon-current assetsProperty, plant and equipment 6 128,423,720 125,992,509 Capital work-in-progress 7 65,462,862 72,322,999 Intangible assets 8 214,691 251,795 Intangible under development 8 838,682 709,181 Available for sale-financial assets 12 160 166 Prepayments 9 479,250 434,014 Derivative asset 5 - 187,067 Trade and other receivables 11 65,990 72,708 MAT credit entitlement 6,730,812 4,144,472 Other assets 99,057 900,691 Total non-current assets 202,315,224 205,015,602 Current assetsTrade and other receivables 11 1,346,553 1,579,516 Prepayments 9 201,381 689,324 Current tax assets 206,939 215,513 Derivative asset 5 - 97,338 Restricted deposits with banks 13 718,496 633,498 Deposits with banks 10 4,593 3,466 Cash and cash equivalents 14 763,590 504,522 Other current assets 22,045 877,977 Total current assets 3,263,597 4,601,154

Total assets 205,578,821 209,616,756

EquityShare capital 15 13,306,007 13,306,007 Share premium 91,006,858 91,006,858 Reserves (20,715,118) (18,644,849)Retained earnings 4,612,171 (5,361,689)

88,209,918 80,306,327 LiabilitiesLoans and borrowings 17 73,408,432 99,553,547 Employee benefits 18 1,181,217 519,005 Deferred tax liability 21 6,836,796 2,501,922 Derivative liabilities 5 3,060,070 1,487,173 Provisions 20 132,198 133,234 Total non-current liabilities 84,618,713 104,194,881 Loans and borrowings 17 21,645,233 14,191,738 Trade and other payables 19 5,118,164 5,125,494 Employee benefits 18 22,105 618,928 Current tax liability 3,675,822 3,908,722 Provisions 20 75,588 75,615 Derivative liabilities 5 1,322,733 639,918 Other current liabilities 890,545 555,133 Total current liabilities 32,750,190 25,115,548 Total liabilities 117,368,903 129,310,429

Total equity and liabilities 205,578,821 209,616,756

As at

Total equity attributable to owners of the Company

The accompanying notes form an integral part of the financial statements.

On behalf of Board of Directors

Yogendra Kr. Modi Ashok Jha

Chairman & Managing Director Director

Place: Gurgaon

Place: Gurgaon

Date: 21 July 2015 Date: 21 July 2015


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Income statement

Note 2015 2014

Revenue- Sale of gas 37,205,022 33,713,319 - Other operating revenue 109,455 79,725 Other income 24 143,135 642,822

37,457,612 34,435,866 Stores and consumables (1,517,085) (1,394,874) Employee benefit expenses 23 (2,836,978) (2,311,165) Depletion, depreciation and amortisation (3,503,816) (3,402,184) Other operating expenses (including non-recurring listing expenses of USD 543,714)

22(8,846,491) (6,811,042)

Results from operating activities 20,753,242 20,516,601

Finance income 25

- Exchange fluctuation gain and change in fair value of derivative instruments 2,234,883 2,838,925 - Interest and other finance income 164,588 2,399,471 224,624 3,063,549

Finance expenses 26 - Exchange fluctuation loss and change in fair value of derivative instruments (2,506,529) (4,654,304) - Other finance expenses (4,096,977) (6,603,506) (5,903,759) (10,558,063)

Net finance costs (4,204,035) (7,494,514)

Profit before tax 16,549,207 13,022,087

Income tax expenseCurrent tax (3,463,800) (3,929,502) MAT credit entitlement 2,816,005 3,588,469 Deferred tax expense (4,551,136) (2,485,380)

Profit for the year 11,350,276 10,195,674

Profit attributable to:

Owners of the Company 11,350,276 10,195,674

Earnings per shareBasic earnings per share (USD) 27 0.19 0.17 Diluted earnings per share (USD) 27 0.19 0.17

For the year ended31 March

The accompanying notes form an integral part of the financial statements. On behalf of Board of Directors

Yogendra Kr. Modi Ashok Jha Chairman & Managing Director Director

Place: Gurgaon Place: Gurgaon



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Statement of profit or loss and other comprehensive income

Note 2015 2014

Profit for the year 11,350,276 10,195,674

Other comprehensive income/ (loss)

Items that will never be reclassified to profit or loss:

Remeasurements of the defined benefit liability (36,199) (29,775)

Foreign currency translation adjustment (3,456,155) (7,283,266) Tax on items that will never be reclassified to profit or loss 12,304 -

Total other comprehensive income/ (loss) for the year (3,480,050) (7,313,041)

Total comprehensive income/ (loss) for the year 7,870,226 2,882,633

Total comprehensive income/ (loss) attributable to:

Owners of the Company 7,870,226 2,882,633

31 March

For the year ended

The accompanying notes form an integral part of the financial statements. On behalf of Board of Directors





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Statement of changes in equity

For the year ended 31 March 2014

Share capital

Share premium

Retained earnings

Foreign currency

translation reserve

Fair value reserve

Debenture redemption

reserve

Share based payment reserve

Total equity

Balance as at l April 2013 13,306,007 91,006,858 (15,390,023) (11,833,106) - - 285,063 77,374,799 Total comprehensive income/ (loss) for the yearProfit for the year - - 10,195,674 - - - - 10,195,674 Total other comprehensive income/(loss) - - (29,775) (7,283,266) - - - (7,313,041)Total comprehensive income/(loss) for the year - - 10,165,899 (7,283,266) - - - 2,882,633 Transactions with owners, recognised directly in equityContributions by and distrubutions to owners of the CompanyTransfer to debenture redemption reserve - - (168,494) - - 168,494 - - Share-based payment transactions - - - - - - 48,895 48,895 Options forfeited during the year - - 30,929 - - - (30,929) -

Balance as at 31 March 2014 13,306,007 91,006,858 (5,361,689) (19,116,372) - 168,494 303,029 80,306,327

Attributable to owners of the Company


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Statement of changes in equity

For the year ended 31 March 2015

Share capital

Share premium

Retained Earnings

Foreign currency

translation reserve

Fair value reserve

Debenture redemption

reserve

Share based payment reserve

Total equity

Balance as at l April 2014 13,306,007 91,006,858 (5,361,689) (19,116,372) - 168,494 303,029 80,306,327 Total comprehensive income/ (loss) for the yearProfit for the year - - 11,350,276 - - - - 11,350,276 Total other comprehensive income/(loss) - - (23,895) (3,456,155) - - - (3,480,050)Total comprehensive income/(loss) for the year - - 11,326,381 (3,456,155) - - - 7,870,226 Transactions with owners, recognised directly in equityContributions by and distrubutions to owners of the CompanyTransfer to debenture redemption reserve - - (1,568,513) - - 1,568,513 - - Share-based payment transactions - - - - - - 33,365 33,365 Options forfeited during the year - - 215,992 - - - (215,992) -

Balance as at 31 March 2015 13,306,007 91,006,858 4,612,171 (22,572,527) - 1,737,007 120,402 88,209,918

Attributable to owners of the Company



Chairman & Managing Director Director Place: Gurgaon Place: Gurgaon



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Statement of cash flow

2015 2014A. Cash flow from operating activities

Profit after tax 11,350,276 10,195,674 Adjustments for:-Provisions/ liabilities written back (125,074) (495,931) Net finance cost 4,211,456 6,614,727 Loss/ (profit) on disposal of property, plant and equipment 767 (121,122) Depreciation/amortisation/depletion 3,503,816 3,402,184 Share based payment expense 33,365 48,895 Tax expense 5,198,931 2,826,413 Changes in:Trade and other receivables 927,985 (880,880) Other current assets 840,339 (792,683) Prepayments 444,267 (829,213) Trade and other payables 876,178 152,771 Employee benefit 77,065 322,685 Cash generated from operating activities 27,339,371 20,443,520 Income tax paid (3,522,793) (538,074) Income tax refund - 78,065 Net cash from operating activities 23,816,578 19,983,511

B. Cash flow from investing activitiesPurchase of property, plant and equipment/ capital work in progress/ intangible assets (5,576,839) (21,423,525) Proceeds from sale of property, plant and equipment 336 325,359 Fixed deposits matured/(purchased) during the year (114,090) 2,458,015 Interest received 216,185 330,054 Income tax paid (20,230) (27,828) Net cash (used in) investing activities (5,494,638) (18,337,925)

C. Cash flow from financing activitiesProceeds from issue of debentures - 24,068,623 Proceeds from borrowings 1,131,864 14,721,798 Repayment of long term borrowings (7,305,993) (33,097,827) Repayment of debentures (1,576,451) - Proceeds from inter corporate deposits 997,547 - Repayment of inter corporate deposits (997,547) - Settlement of derivative contract 168,438 - Interest paid (10,454,085) (10,637,542) Net cash (used in) financing activities (18,036,227) (4,944,948)

Net decrease in cash and cash equivalents (A+B+C) 285,713 (3,299,362)

Cash and cash equivalents at 1 April 504,522 4,227,491 Effect of exchange rate fluctuations on cash and cash equivalents (26,645) (423,607) Cash and cash equivalents at 31 March 763,590 504,522

For the year ended 31 March

The accompanying notes form an integral part of the financial statements.






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1. Organization and nature of operations

Great Eastern Energy Corporation Limited ('GEECL' or 'the Company') is a public limited company incorporated in India. GEECL's shares were listed as Global Depository Receipts in the Alternate Investment Market, London, upto 27 May 2010. The Company made a publication of its prospectus in relation to the introduction of its Global Depositary Receipts ('GDRs') to the standard list on the official list of the UK Listing Authority (the 'Official List') and admission to trading on the London Stock Exchange Plc's Main Market for listed securities (the 'Main Market'). Pursuant to the admission of its GDRs to the standard list on the official list and commencement of trading in the GDRs on the main market on 28 May 2010, trading of the Company's GDRs on AIM has been cancelled.

The Company was incorporated in 1992 to explore, develop, distribute and market Coal Bed Methane gas or CBM gas in India. GEECL originally entered into a license agreement in December 1993 with Coal India Limited (CIL) for exploration and development of CBM over an area of approximately 210 Sq. km (approximately 52,000 acres) in the state of West Bengal (the block).

The PSC has been effective from 9 November 2001 as a result of the granting by Government of West Bengal of the Petrole-um Exploration License on the same date and provides for a five year initial assessment and market development phase, fol-lowed by a five year development phase and then a twenty-five year production phase, extendable with the approval of the Government of India (GOI). Besides this, the Company was awarded with Mannargudi block located in Tamil Nadu under CBM IV round for which the Production Sharing Contract was signed with the Government of India on 29 July 2010. In this regard, two Petroleum Exploration License (PEL) has been granted to the Company on 13 September 2011 and 4 November 2013. The Environmental Clearance for the block was granted by the Ministry of Environment & Forest, Government of India on 12 September 2012 and the Company has applied Tamil Nadu Pollution Control Board for the their sanction to start opera-tions in the block which is awaited.

The Company does not have any subsidiary and accordingly, does not require any consolidated financial statements. Since the Company does not have any investments in associates and joint ventures also, hence these financial statements are individual financial statements.

The financial statements of the Company as at and for the year ended 31 March 2015 are available upon request from the Company’s registered office at M-10, ADDA Industrial Area, Asansol-713305, West Bengal, India, or at www.geecl.com.

2. Basis of preparation and measurement

a) Statement of compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by International Accounting Standards Board (‘IASB’). The financial statements of the Company for the year end-ed 31 March 2015 have been prepared on a going concern basis. As at the balance sheet date, the Company has a negative working capital primarily due to installments on long term loans for next year. The Company has positive net worth and cash flow from operations supported by a history of profitable operations. As the Company is in its initial years’ of pro-duction of CBM gas and the Company has significant gas reserves/resources with a large number of wells scheduled to commence production in the next year which will increase the future cash inflows of the Company, the management is confident that the working capital situation will improve as per the projected growth of its business and operations. In ad-dition, to meet its funding requirements, the Company has been able to obtain additional funds from banks/ financial insti-tutions/ outside agencies post the year end and is confident of raising any further funding requirements which the Compa-ny may have. Accordingly, the management considers going concern assumption as appropriate.

The financial statements have been authorized for issue by the Board of Directors in their meeting held on 21 July 2015.


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b) Basis of measurement The financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position: - Derivative financial instruments are measured at fair value. - Available for sale financial assets are measured at fair value. - Share based payments are measured at fair value.

c) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic envi-ronment in which the entity operates ('the functional currency'). The functional currency of the Company is Indian Rupees (“Rs.” or “INR”). The financial statements are presented in US Dollar (US $), which is the Company's presentation currency, which the Company considers most appropriate for its investors being an overseas listed Company.

d) Use of estimates and judgments The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom be equal to the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed in the paragraphs that follow. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The Company invests in the development and production of coal bed methane gas. The assessment as to whether this expenditure will achieve the ultimate objective for which the technical feasibility is assured is a matter of judgment, as is the forecasting of how the product will generate future economic benefit. Finally, the period of time over which the economic benefit associated with the expenditure occurred will arise, is also a matter of judgment. (i) Measurement of defined benefit obligation and other long-term employment benefits

The cost of defined benefit plans consisting of the gratuity plan and compensated absences plan is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the long term nature of these plans, such estimates are subject to significant uncertainty. The net employee liability for these two plans at 31 March 2015 is USD 805,088 (31 March 2014: USD 766,730) (refer note 18).

(ii) Impairment of property, plant and equipment The Company assesses its properties, plant and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Such indicators include changes in the Company's business plans, changes in commodity prices and significant downward revisions of estimated reserve quantities etc. An impairment loss is recognised if the carrying value of an asset exceeds the higher of its fair value less costs to sell and the value in use. Determination as to whether and how much an asset is impaired involves management estimates on highly uncertain matters such as future commodity prices, the effects of inflation and technology improvements on operating expenses, production profiles, and the outlook for global or regional market supply and demand conditions for natural gas. However, the impairment reviews and calculations are based on assumptions that are consistent with the Company's business plans and long-term investment decisions.


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(iii) Functional currency

Functional currency is the currency of the primary economic environment in which the entity operates. In determining the functional currency, the Company emphasises the currency that determines the pricing of the transactions that it undertakes, rather than focusing on the currency in which those transactions are denominated.

Further, the Company also considers the following factors in determining its functional currency:

- the currency that mainly influences sales prices for goods and services; - the currency of the country whose competitive forces and regulations mainly determine the sales prices of its goods and servies; and

- the currency that mainly influences labour, material and other costs of providing goods or services.

The Company also considers certain supplementary factors in determining the functional currency:

- the currency in which funds from financing activities are generated. - the currency in which receipts from operating activities are usually retained. iv) Useful life of property, plant and equipment (PPE) and intangibles

The estimated useful life of PPE is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from such assets. The Company reviews the useful life of PPE and intangibles at the end of each reporting date. Refer note 3(b) for the Company’s policy in this regard and refer notes 6 and 8 for carrying amounts of PPE and intangible assets. v ) Gas reserves Reserves are those quantities of hydrocarbons anticipated to be commercially recoverable by application of development projects to known accumulations from a given date onwards under defined conditions. Reserves must further satisfy four criteria: they must be discovered, recoverable, commercial and remaining (as of the evaluation date) based on the development project(s) applied. Reserves are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by development and production status. The reserves are estimated annually by the management based on internal best estimates or independent expert’s evaluation, as considered appropriate. Annual adjustments in reserves include changes in estimates, volume of produced gas as well as fresh discoveries made during the year. A reduction in the reserves would result in increased rate of depletion charge. Refer note 3(b) for the Company’s policy in this regard. vi) Site restoration obligation The assessments undertaken in recognising provisions and contingencies is made in accordance with IAS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’. A provision is recognised only when the Company has a present obligation and it is probable that rehabilitation/restoration costs will be incurred at a future date. An obligation exists when there is no realistic alternative but to undertake the rehabilita-tion/restoration or when the entity becomes legally or constructively obliged to rectify damage caused and restore the environ-ment. A provision is recognised when a reasonable estimate of the obligation can be made. The amount recognised as a provision is the best estimate of the expenditure to be incurred.


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Refer Note 3 (n) for the basis of the provision for site restoration obligations and refer note 20 for the carrying amount of the provision. v) Income taxes Significant judgment is required in determining provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Additionally, probability for realizability of deferred tax asset on accumulated losses, Minimum Alternate Tax (MAT) and tempo-rary differences is assessed based on various factors available as of reporting date. Any changes in those factors will impact the income tax and deferred tax provisions in the period in which such determination is made.

3. Summary of significant accounting policies Except as described in note 3(x) below, the accounting policies set out below have been applied consistently to all the years presented in these financial statements.

a. Foreign currency transactions

Transactions in foreign currencies are retranslated to the functional currency of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on a monetary item is the difference between its amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value, are retranslated to the functional curren-cy at the exchange rate at the date when the fair value was determined. Non-monetary items that are measured in terms of his-torical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differ-ences are recognised in income statement as a part of finance income or expense as the case may be, except for difference aris-ing on the retranslation of available for sale equity instruments which are recognized in comprehensive income. For the purpose of conversion from the functional currency to the presentation currency, the assets and liabilities, for each balance sheet presented, are translated at the closing rate at the date of that balance sheet. Income and expense for each income statement presented are converted using an average rate of the relevant year and all resulting exchange differences are recog-nized as a separate component of equity viz, foreign currency translation reserve.

b. Property, plant and equipment

Property, plant and equipment is stated at historical cost including an initial estimate of dismantling and site restoration cost, less accumulated depreciation and any impairment in value. Historical cost includes expenditure that is directly attributable to the acquisition or self-construction of property, plant and equipment. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with them will flow to the Company and the cost of the item can be meas-ured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance expenditures are charged to the income statement during the financial year in which they are incurred. When any major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. The net carrying value of gas producing well is depleted using the unit of production method by reference to the ratio of production in the year to the related proved developed reserves.


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Proved reserves are those quantities of hydrocarbons which by analysis of geo-science and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date onwards, from known reservoirs and under defined economic conditions, operating methods and government regulations. Developed reserves are expected quantities to be recovered from existing wells and facilities. Reserves are considered developed only after the necessary equipment have been installed, or when the costs to do so are relatively minor compared to the cost of a well.

Proved developed reserves are estimated by the management based on internal best estimates or independent expert’s evalua-tion as considered appropriate. These estimates are reviewed at least annually. Depreciation (other than on Gas producing properties) is calculated on a straight-line basis over the estimated useful life of the assets as follows:-

Years

Buildings : 30-58 Plant and machinery : 3-30

Furniture, fixture and office equipment : 5-10

Vehicles : 8-10

Pipeline : 30

Leasehold land is amortised over the period of lease. The asset's residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each reporting date. During the current year, the management has undertaken a detailed technical evaluation to assess the estimated use-ful lives of the assets of the Company and accordingly the useful lives of the following assets has been changed from the previous estimates with effect from 1 April 2014. The existing and revised useful lives are as below.

Category of assets Existing useful

life (Years) Revised useful

life (Years) Plant and machinery 5-20 3-30 Furniture, fixture and office equipment 15-20 5-10 Vehicles 10 8-10 Pipeline 18 30

Had the Company continued with the previously assessed useful lives, charge for depreciation for the current year would have been higher by USD 314,960 for assets held at 1 April 2014. The revision of the useful lives will result in the follow-ing changes in the depreciation expense as compared to the original useful life of the assets:

Particulars Financial year

ending 31 March 2016

Financial year ending

31 March 2017


31 March 2018


31 March 2019 Decrease in depreciation 327,089 254,220 289,232 345,184

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment, and is recognised net within other income/ other expenses in the income statement.

c. Capital work in progress / wells in progress

Expenses incurred for development and construction of wells are included under the heading capital work-in-progress until the wells are ready for their intended use, applying the Full Costing method. When a well is ready for its intended use, the relevant cost are transferred to gas producing properties. The cost of drilling, wire line logging and perforation services, cementing and fracturing services, which have been outsourced, have been included in well development costs. All other expenses directly attributable in respect to developing and constructing wells are capitalized and included under capital work in progress.


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Inventories consumed as well as inventories lying in stock for the purpose of well development are grouped as part of capital work in progress. These items are not meant for sale in the ordinary course of business or for use as supplies in the production process of saleable gas, but are to be used towards well development and hence, are treated as capital work in progress. Advances paid for supply of capital goods and services are also grouped as part of capital work in progress. Changes in the measurement of an existing decommissioning, restoration and similar provisions that result from changes in the estimated timing or amount of the outflow of resources embodying economic benefits required to settle the obligation, are ad-justed from the cost of the related asset in the current period, to the extent of the carrying amount of the asset.

d. Impairment of non-financial assets The carrying amounts of the Company’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is re-quired, as per the requirement of relevant IFRS, the Company makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash generating unit's fair value less costs to sell and its value in use and is de-termined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from oth-er assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered im-paired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflow of other assets or group of assets (the ‘cash- generating unit’ or ‘CGU’). The recoverable amount of an assets or a CGU is the greater of its value in use and its fair value less costs to sell. The Company has identified each of its block (i.e. ‘production sharing contract / permit’) as a separate CGU. The Company’s corporate assets do not generate separate cash inflows and are utilised by more than one CGU. Corporate as-sets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated. Impairment losses are recognised in income statement. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis. An impairment loss is reversed only to the extent that the as-set’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortiza-tion, if no impairment loss had been recognized

e. Intangible assets The useful lives of intangible assets are assessed to be finite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. These are measured at cost less accumulated amortization and accumulated impairment losses. The amortisation period and the amortisa-tion method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the epected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisa-tion expense on intangible assets with finite lives is recognized in the income statement.

A summary of the policies applied to the Company's intangible assets is as follows: - Gas exploration rights are capitalized at historical costs. - Computer software-costs associated with identifiable and unique software products controlled by the Company having

probable economic benefits exceeding the costs beyond one year are recognized as intangible assets. These costs are amortized using the straight line method over their useful lives.


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Exploration and evaluation cost are related to each exploration license (‘block’ or ‘production sharing contract’ or ‘per-mit’) are initially capitalised within ‘intangible under development’. Such exploration and evaluation cost may include costs of license acquisition, technical services and studies, seismic acquisition, exploration drilling testing, directly attributable overhead and administrative expenses, including remuneration of personnel and supervisory management, and the projected cost of retiring the assets (if any), but do not include general prospecting or evaluation cost incurred prior to having obtained the legal rights to explore an area, which are expensed directly to the income statement as they are in-curred.

Particulars Gas exploration rights Computer software

Useful lives Finite Finite

Amortisation method used Amortized on a straight line basis over the period of 25 years

Amortized on a straight line basis over the period of 5 years

Internally generated or acquired

Acquired Acquired

Impairment testing/ recov-erable amount testing

Where an indicator of impairment exists Where an indicator of impairment exists

Remaining unamortised period

Seventeen years and three months One year to five years

f. Non-derivative financial assets and non-derivative financial liability

The Company initially recognises loans and receivables and deposits on the date that they are originated. All other finan-cial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only when, the Compa-ny has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. • Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. They are included in current assets except for maturities greater than 12 months after the balance sheet date in which case, these are classified as non-current assets. The Company's loans and receivables comprise of ‘trade and other receivables’, ‘deposits with banks’, ‘prepayments’, ‘cash and cash equivalents’ and ‘other assets’ on the reporting date. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is im-paired and any impairment loss is required to be recognised in the income statement. Impairment testing of receivables has been discussed in note 3(h). The Company considers whether a contract contains an embedded derivative when the entity first becomes a party to it. The embedded derivatives are separated from the host contract which is not measured at fair value through profit or loss when the analysis shows that the economic characteristics and risks of embedded derivatives are not closely related to those of the host contract. All regular way purchases and sales of financial assets are recognized on the trade date, which is the date that the Company com-mits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace. • Available for sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose it off within 12 months of the end of the reporting period. Changes in the fair value of securities classified as available-for-sale are recognised in


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other comprehensive income and presented within equity in fair value reserve. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are transferred to the income statement. Non-derivative financial liabilities The Company initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument. The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. The Company classifies non-derivative financial liabilities (comprising, loans and borrowings, other liabilities and trade and other payable) into the other financial liabilities category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

g. Derecognition of financial assets and liabilities

A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or ex-pires. Where the Company has transferred a financial asset and retained substantially all the risks and rewards of ownership of the transferred financial asset, the Company continues to recognize the transferred asset in its entirety and recognises a fi-nancial liability for the consideration received. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, such that the differ-ence in the respective carrying amounts together with any costs or fees incurred are recognised in income statement.

h. Trade and other receivables Trade and other receivables are initially recognized at fair value. Subsequent to initial recognition, trade and other receiva-bles are carried at amortized cost using the effective interest method less any allowance for impairment. Amortized cost is calcu-lated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective inter-est rate and transaction costs. A provision for impairment of trade and other receivables is established when there is objective evidence that the Compa-ny will not be able to collect all amounts due according to the original terms of the receivables. The allowance for impair-ment of receivables reflects management’s best estimate of probable losses inherent in the accounts receivable balance. Man-agement primarily determines the allowance based on the ageing of accounts receivable balances, historical write-off experience and customer credit worthiness. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement. When the receivable is uncollectible, it is written off against the allow-ance account.

i. Cash and cash equivalents

Cash and cash equivalents comprises cash in hand and at bank and term deposits held with banks with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

j. Trade and other payables

Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

k. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or erection of qualifying assets are capitalised as part of the cost of such asset and other borrowing costs are expensed. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Capitalisation of borrowing costs ceases when


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substantially all the activities necessary to prepare the qualifying assets for their intended use are complete. Borrowing costs include exchange differences (both exchange gains and losses) arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Other foreign currency gains and losses are reported under finance income and expenses on a net basis. Borrowing costs also includes loan amortization cost of borrowings.

l. Derivatives

Derivatives are initially recognised at fair value on the date the contract is entered into and subsequently remeasured at their fair value. Gains or losses arising from changes in the fair value of the derivative financial instruments are recognised in the income statement, under finance income/ expense on a net basis.

m. Share capital

Equity shares are classified as equity. Incremental cost, directly attributable to the issue of equity share are recognised as a deduction from equity, net of any tax effect.

n. Provisions and contingent liabilities Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable es-timate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the ef-fect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as other finance expense. These provisions are capitalized where they are directly relatable to or are expected to increase the economic benefits flowing from the use or eventual disposal of the asset, or when they represent an obligation to remediate at the end of the asset’s life and are recoverable from future economic benefits of using the asset. In all other cases, they are charged to the income statement.

Site restoration

The Company’s core activities give rise to dismantling, decommissioning and site disturbance remediation activities. A provision is made for the estimated cost of site restoration which is capitalised in the relevant asset category unless it aris-es from the normal course of production activities, in which case it is recognised in the income statement.

Contingent liabilities

Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obliga-tion is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.


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o. Employee benefits

i. Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into fund maintained by the Government of India and will have no legal or constructive obligation to pay further amounts. Obliga-tions for contributions to defined contribution plans are recognised as an employee benefit expense in income statement in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the ex-tent that a cash refund or a reduction in future payments is available. State administered provident fund

Under Indian law, employees are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employee and the employer make monthly contributions to the plan at a pre-determined rate (currently 12%) of the employee’s basic salary to a government recognised provident fund. The Company has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they accrue, i.e. when the services are rendered by the employees. Upon retirement or separation, an employee becomes entitled for this lump sum benefit, which is paid directly to the concerned employee by the fund.

Superannuation The Superannuation (pension) plan for the Company is a defined contribution plan where monthly contribution at the rate of 15% of salary is payable. These contributions will accumulate at the prevailing rate of interest. At the time of retirement, termi-nation or separation of employee, accumulated contribution will be utilized to buy pension annuity from an insurance Company. These contributions are recognised as employee benefit expense when they accrue.

ii. Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obli-gation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. The benefit is discounted to determine its present value and reduced by the fair value of plan assets, if any. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Company’s obliga-tions and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed annually by an actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Company if it is realisable during the life of the plan, or on settlement of the plan liabilities. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the assets ceiling (if any, excluding interest), are recognized immediately in the Other comprehensive income. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit li-ability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as expense immediately in the income statement.

iii. Other long term employee benefits Benefits under the Company’s compensated absences constitute other long-term employee benefits. The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present


17

value, and the fair value of any related assets is deducted. The discount rate is based on the prevailing market yields of In-dian government securities as at the reporting date that have maturity dates approximating the terms of the Company’s ob-ligations. The calculation is performed by an independent actuary using the projected unit credit method. Any actuarial gains or losses are recognised in the income statement in the period in which they arise.

iv. Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus if the Company has a present le-gal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

v. Employee stock option scheme

The fair value of the employee services received in exchange for grant of options are recognised as an expense with a correspond-ing increase in equity (share based payment reserve). The total amount to be expensed is determined by reference to fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions (for example, profitabil-ity, sales growth targets and tenure of the employee in the Company). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At each balance sheet date, the entity revises its es-timates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement of with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share pre-mium when the options are exercised.

p. Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: a) There is a change in contractual terms, other than a renewal or extension of the arrangement. b) A renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in

the lease term. c) There is a change in the determination of whether fulfillment is dependent on a specified asset. d) There is a substantial change to the asset. Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios a), c) or d) and at the date of renewal or extension period for scenario b). Company as a lessee Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the mini-mum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against in-come. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that as-set. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term.


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q. Revenue

Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Company’s activities. Revenue is shown net of value-added tax, sales tax, returns, rebates and discounts. Other operating revenue in respect of minimum guarantee offtake is recognised on accrual basis as per contractual ar-rangements with customers. Revenue from the sale of Coal Bed Methane (‘CBM’) and Compressed Natural Gas (CNG) in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume re-bates. Revenue is recognised on sale of gas to customers at delivery point which coincides when persuasive evidence ex-ists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of products can be estimated reliably, there is no continuing management involvement with the products, and the amount of revenue can be measured reliably.

r. Finance income and expenses

Finance income includes interest income on funds invested, and changes in the fair value of financial assets or liabilities at fair value through profit or loss. Interest income is recognised as it accrues in income statement, using the effective inter-est method. Finance expenses includes interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets or liabilities at fair value through profit or loss, impairment losses recognised on financial assets and losses on derivative instruments that are recognized in income statement. Foreign currency gains and losses are reported on net basis as either finance income or finance cost depending on whether foreign currency movement are in a net gain or net loss position.

s. Government grants

Government grants are recognized at their fair value where there is reasonable assurance that the grant will be received and all the conditions attached to it will be complied with. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Government grants relat-ing to the purchase of property, plant and equipment are adjusted against the carrying amount of the related asset.

t. Taxes

Current tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred tax Deferred income tax is provided on temporary differences at the balance sheet date between the tax bases of assets and liabili-ties and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilized except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of transaction, affects neither the accounting profit nor taxable profit or loss. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has be-


19

come probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is real-ized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Income tax relating to items recognized directly in equity is recognized in equity and not in the income statement. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

u. Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstand-ing during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employee.

v. Equity instruments

Equity instruments, convertible into fixed number of equity shares at a fixed predetermined price, and which are exercisable after a specific period, are accounted for as and when such instruments are exercised. The transaction costs pertaining to such instruments are adjusted against equity.

w. Segment reporting The Company has adopted IFRS 8, 'Operating Segments' which became effective as of 1 January 2009. An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses. All operating segment’s operating results are reviewed regularly by the Chief Operating Decision Maker (CODM) to make decisions about re-sources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company has only one reportable segment, i.e., extraction and sale of CBM / CNG gas. Accordingly, the Company has made relevant entity-wide disclosures (refer note 31).

x. Changes in accounting policies

The Company has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 April 2014.

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities: In December 2011, the International Ac-counting Standards Board issued amendments to IAS 32, Offsetting Financial Assets and Financial Liabilities. The amendments clarify that:

• an entity currently has a legally enforceable right to set-off if that right is

• not contingent on a future event; and

• enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the entity and all counterparties;

• gross settlement is equivalent to net settlement if and only if the gross settlement mechanism has features that:

• eliminate or result in insignificant credit and liquidity risk; and

• process receivables and payables in a single settlement process or cycle.

The adoption of this standard does not have any material impact on the financial statements of the Company.


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y. New standards and interpretations not yet adopted IFRSs, interpretations and amendments to published IFRSs that are not effective for the reporting period:

A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 March 2015 and have not been applied in preparing these separate financial statements. These standards and amendments are as below: IFRS 9 Financial Instruments: In November 2009, the International Accounting Standards Board issued IFRS 9, Financial Instruments: Recognition and Measurement, to reduce the complexity of the current rules on financial instruments as mandated in IAS 39. IFRS 9 has fewer classification and measurement categories as compared to IAS 39 and has elimi-nated the categories of held to maturity, available for sale and loans and receivables. Further it eliminates the rule-based requirement of segregating embedded derivatives and tainting rules pertaining to held to maturity investments. For an in-vestment in an equity instrument which is not held for trading, IFRS 9 permits an irrevocable election, on initial recogni-tion, on an individual share-by-share basis, to present all fair value changes from the investment in other comprehensive income. No amount recognized in other comprehensive income would ever be reclassified to profit or loss. IFRS, 9 was further amended in October 2010, and such amendment introduced requirements on accounting for financial liabilities. This amendment addresses the issue of volatility in the profit or loss due to changes in the fair value of an entity’s own debt. It requires the entity, which chooses to measure a liability at fair value, to present the portion of the fair value change attributable to the entity’s own credit risk in the other comprehensive income. The effective date for adoption of IFRS 9 is annual periods beginning on or after January 1, 2018, though early adoption is permitted. The Company is currently eval-uating the requirements of IFRS 9, and has not yet determined the impact on the financial statements. IFRS 15 Revenue from Contract with Customers: In May 2014, the International Accounting Standards Board and Finan-cial Accounting Standards Board jointly issued IFRS 15, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognise revenue to depict the transfer of promised goods or services to custom-ers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of rev-enue and cash flows arising from the entity’s contracts with customers. The standard permits the use of either the retro-spective or cumulative effect transition method. The effective date for adoption of IFRS 15 is annual periods beginning on or after 1 January 2017, though early adoption is permitted. The Company is currently evaluating the requirements of IFRS 15, and has not yet determined the impact on the financial statements. In May 2015, the IASB has published as exposure draft ‘Effective date of IFRS 15’ to propose changing date of IFRS 15 to periods beginning on or after 1 January 2018 instead of 1 January 2017.

4. Determination of fair values The Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial as-sets and liabilities. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. Fair values have been determined for measurement and/or disclosure purposes based on the following methods:

(i) Loans and receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. The fair value is determined for disclosure purposes only.

(ii) Non-derivative financial liabilities carried at amortised cost

Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of inter-est at the reporting date. The fair value is determined for disclosure purposes only.


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(iii) Equity-settled share-based payments

The fair value of stock options is measured using a Black-Scholes formula. Measurement inputs include share price on measure-ment date, exercise price of the instrument, expected volatility, weighted average expected life of the instruments, expected divi-dends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

(iv) Derivative financial instruments

The fair value of derivative instruments are based on the quotes provided by the concerned authorised dealer. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Company and counterparty, when ap-propriate.

5. Financial risk management

Overview

The Company’s activities expose it to a variety of financial risks that arise as a result of its exploration, development and pro-duction of CBM and CNG and also financing activities. These are as under: a) Market risk b) Credit risk c) Liquidity risk d) Operational risk

Risk management framework

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives; policies; and processes for measuring and managing such risks, and the Company’s management of capital. Further, quantitative disclo-sures are included through these financial statements, wherever considered appropriate.

The Board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has established the Risk Management Committee, which is responsible for developing and monitoring the Company’s risk management policies. The Committee reports regularly to the Board of Directors on its activities.

The Company has a risk management policy including the following clauses to facilitate the Company to enter into Indian Ru-pee derivative transactions and arrangements pursuant to the guidelines/norms of Reserve Bank of India:

(i) The risk limit for various risk exposures. (ii) Hedging in cases where currency of the hedge is different from the currency of the underlying exposure. (iii) Various types of cost reduction structure as permitted and defined by the Reserve Bank of India

The Board of Directors is also responsible for reviewing and updating the risk profile, monitoring the effectiveness of the risk management framework and reviewing at least annually the implementation of the risk management policy and framework.

The purpose of the Risk Management Committee is to assist the Board in fulfilling its corporate governance in overseeing the responsibilities with regard to the identification, evaluation and mitigation of operational, strategic and external environment risks.

The Committee has overall responsibility for monitoring and approving the risk policies and associated practices of the Com-pany. The Risk Management Committee is also responsible for reviewing and approving risk disclosure statements in any pub-lic documents or disclosures.

The Board of Directors approves the Risk Management Policy and associated frameworks, processes and practices of the Com-pany. There are periodic reviews to update the policy by the Board of Directors on its own, or as recommended by the risk management committee.


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The Board reviews the performance of the Risk Management Committee annually.

The Board of Directors oversees management’s establishment and execution of the Company’s risk management framework. The Company’s Risk management policies are to identify and analyse the risks faced by the Company, to set appropriate risk controls, and to monitor risks and adherence to market conditions and the Company’s activities.

The Company has established policies covering all the financial risks, namely market risk, credit risk and liquidity risk. Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measure-ment and the basis on which income and expenses are recognised, in respect of each class of financial assets and financial lia-bilities are disclosed in notes 2 and 3 to the financial statements.

a) Market risk

Market risk is the risk that arises from changes in market prices, such as commodity prices, foreign exchange rates, interest rates and equity prices and will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Company is exposed to interest rate risk that arises mainly from debt. The Company is exposed to interest rate risk because the fair value of fixed rate borrowings and the cash flows associated with floating rate borrowings fluctuate with changes in in-terest rates. The Company is exposed to market risk with respect to change in foreign exchange rates.

i) Currency risk: The Company’s exposure to foreign currency risk arises from foreign-currency denominated liabilities on account of purchase of ser-vices and materials from foreign contractors and suppliers and foreign currency denominated borrowings. The Company does not hold any financial assets denominated in any currency other than INR.

The Company has entered into various derivative contracts with banks. The Company’s exposure to foreign currency risk was based on the following amounts as at the reporting dates (in equivalent US dollars):

Financial liabilities USD Euro GBPTrade and other payables 268,528 - 68,817 Borrowings - 35,600,474 -

268,528 35,600,474 68,817

Financial liabilities USD Euro GBPTrade and other payables 242,785 - 91,207Borrowings - 47,515,387 -

242,785 47,515,387 91,207

As at 31 March 2015

As at 31 March 2014


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The following exchange rates against USD and EURO were applied to the currencies which are generally used by the Company:

2015 2014 2015 2014USD/INR 61.15 60.50 62.59 60.10 EUR/INR 77.47 81.14 67.51 82.58

Average rate for the year ended 31 March

Reporting date spot rate as at 31 March

Sensitivity analysis

A strengthening of the USD and Euro, as indicated below, against the INR as at 31 March 2015 and 31 March 2014 would have increased/(decreased) the profit or loss by the amounts shown below (without considering any consequential impact). This analy-sis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables remain constant.

2015 2014

5 percent strengthening of USD against INR (14,133) (12,778)

5 percent strengthening of EURO against INR (2,388,799) (2,500,810)

2015 20145 percent weakening of USD against INR 14,133 12,778 5 percent weakening of EURO against INR 2,406,416 2,500,810


Any change in the exchange rate of INR against currencies other than USD and Euro is not expected to have significant impact on the Company’s profit or loss. ii) Interest rate risk

All the financial assets and financial liabilities of the Company are either interest-free or at a fixed rate of interest except for bor-rowings at various floating rates linked to prime lending rates of respective banks. The carrying value of these loans as at 31 March 2015 is USD 73,145,284 (31 March 2014: USD 89,495,258). Accordingly, the Company is exposed to cash flow inter-est rate risk on its secured loans.

The Company analyses its interest rate exposure regularly. Various scenarios are analysed taking into consideration refinancing, alternative financing, etc., based on these scenarios, the Company calculates the impact on profit and loss of a defined interest rate shift.


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Fixed rate instruments 2015 2014Financial liabilities14% non-convertible redeemable debentures 21,908,381 24,237,815 Vehicle loan - 12,212

21,908,381 24,250,027

Financial assetsDeposits with banks 4,593 3,466 Restricted deposits with banks 718,496 633,498

Net financial liabilities (fixed rate instruments) 21,185,292 23,613,063

Variable rate instrumentsFinancial Liabilities at amortised costIndian rupee loan 37,544,810 38,979,871Foreign currency loan - 3,000,000External commercial borrowing 35,600,474 47,515,387Net financial liabilities (variable rate instruments) 73,145,284 89,495,258

As at 31 March

Fair value sensitivity analysis for fixed rate instruments and derivative financial instruments The Company does not account for any fixed rate financial asset and liabilities at fair value through profit or loss account and the Com-pany does not designate derivatives as hedging instruments, under fair value hedge accounting model. Therefore, change in interest rate at reporting date will not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 bps in interest rates as at the reporting dates would have decreased/ (increased) profit or loss by the amounts shown below:

As at 31 March 2015

100 bps increase

100 bps decrease

Indian rupee loan 366,415 (366,415)Foreign currency loan - - External commercial borrowing 553,681 (536,064)

As at 31 March 2014100 bps increase

100 bps decrease

Indian rupee loan 397,032 (397,032)Foreign currency loan 30,000 (30,000)External commercial borrowing 476,450 (476,450)

Impact on profit or loss

Impact on profit or loss

iii) Price risk:

Commodity price risk is the risk that the fair value of future cash flows will fluctuate as a result of changes in commodity prices. Commodity prices for CBM and CNG gas are impacted by not only the relationship between INR and US dollars and interna-tional market prices, but also economic events that dictate the levels of supply and demand.


25

b) Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company makes advances to suppliers and vendors in the normal course of its business and generally requires bank guarantees from them against these advances. The Company also makes advances to employees and places security deposits with related parties and restricted margin money deposits with banks. The majority of Company’s sale to its customer is on credit basis. In certain cases, customer provides bank guarantees against the sale made to them. These transactions expose the Company to credit risk on account of default by any of the counterparties. Credit risk is managed through credit approvals and continuously monitoring the creditwor-thiness of counterparties.

The below table discloses by class of financial instruments, the maximum amounts of exposures to credit risk as at the balance sheet date without taking into account any collateral or credit enhancements.

2015 2014

Trade and other receivablesTrade receivables Bank guarantee* 861,738 1,488,674 Receivable on minimum gurantee offtake None 106,937 - Unbilled revenue None 274,343 - Due from related parties None 26,965 28,083 Advances to employees None 4,678 5,039 Security deposits None 49,026 54,957 Interest receivable None 46,514 44,497 Others None 42,342 30,974

1,412,543 1,652,224 Bank BalancesBalance with banks (including deposit with original maturity of less than 3 months)

None 760,283 502,661

Restricted deposits with banks None 718,496 633,498 Short term deposits with banks None 4,593 3,466

2,895,915 2,791,849

Class of financial instrument Description of collateral

/ other credit enhancements

As at 31 March

* The Company holds bank guarantees against trade receivables amounting to USD 208,985 (31 March 2014: USD 583,230). The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit rat-ings (where available) or to historical information about counterparty default rates. As per the terms and condition of the agreement the Company has the right to encash bank guarantee in case of any default. The below table provides information in that respect.

2015 2014

Trade receivables: 861,738 1,488,674

861,738 1,488,674

Other receivables:Counterparties without external credit rating and with no defaults in the past 550,805 163,550

550,805 163,550

As at 31 March

Customers without external credit rating and with no defaults in the past

During the year, based on specific assessment the Company recognized bad debts amounting to USD Nil (31 March 2014: USD Nil). The year-end trade receivables do not include any amount with such parties. The trade receivable include USD 29,635 (31 March 2014: USD 4,613) which is due for a period of more than six months.


26

c) Liquidity Risk

The Company’s liquidity risk management policy involves management of short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining, banking facilities and reserve borrow-ing facilities by continuously monitoring forecasted and actual cash flows and matching the maturity profiles of financial assets and liabilities. Also refer note 2 (a).

The Company’s Finance department is responsible for managing the short-term and long-term liquidity requirements of the Group. The liquidity position is reviewed on a regular basis by the Board of Directors and appropriate decisions are taken accord-ing to the situation.

The Company ensures that it has sufficient cash on demand to meet expected operational expenses on a regular basis. To achieve this objective, the Company prepares annual capital expenditure budgets, which are regularly monitored and updated as consid-ered necessary. The Company also attempts to match its payment cycle with collection of gas revenue. The contractual maturity profile of the Company 's obligations are as under:

As at 31 March 2015Transaction

currencyCarrying amount

Contractual maturities

Less than 1 year

Between 1 and 5 years

Over 5 years

Total

Non -derivative financial liabilities14% non-convertible redeemable debentures INR

21,908,381 32,141,987 6,058,188 26,083,799 - 32,141,987

Loans and Borrowings

Indian currency loan INR 37,544,810 53,387,073 11,760,942 41,626,131 - 53,387,073

External Commercial Borrowing Euro 35,600,474 39,463,391 14,033,430 25,429,961 - 39,463,391

Trade and other payable 5,118,164 5,118,164 5,118,164 - - 5,118,164

Total 100,171,829 130,110,615 36,970,724 93,139,891 - 130,110,615

Derivative financial liabilities 4,382,803 4,382,803 1,558,552 2,824,251 - 4,382,803

As at 31 March 2014Transaction

currencyCarrying amount

Contractual maturities

Less than 1 year

Between 1 and 5 years

Over 5 years

Total

Non -derivative financial Liabilities14% non-convertible redeemable debentures INR 24,237,815 38,543,760 5,070,100 26,004,110 7,469,550 38,543,760Loans and Borrowings

Indian currency loan INR 38,979,871 59,644,604 7,635,050 40,204,294 11,805,261 59,644,604

Vehicle loan INR 12,212 12,411 12,411 - - 12,411

Foreign currency loan USD 3,000,000 3,157,067 2,545,848 611,219 - 3,157,067

External Commercial Borrowing Euro 47,515,387 54,024,987 9,749,470 44,275,517 - 54,024,987

Trade and other payable 5,125,494 5,125,494 5,125,494 - - 5,125,494

Total 118,870,779 160,508,323 30,138,373 111,095,140 19,274,811 160,508,323

Derivative financial liabilities 2,127,091 2,127,091 383,860 1,743,231 - 2,127,091 Capital risk management

The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for stakeholders. The Company also proposes to maintain an optimal capital structure to reduce the cost of capital. Hence, the Company may adjust any dividend payments, return capital to shareholders or issue new shares. Total capital is the equity as shown in the balance sheet. Currently, the Company primarily monitors its capital structure in terms of evaluating the funding of potential new investments.


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Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the balance sheet) less cash and cash equivalents. Total capital is the sum of equity and debt as shown in the Statement of financial position.

As at 31 March

2015As at 31 March

2014

Total borrowings 95,053,665 113,745,285

Less: cash and cash equivalents 763,590 504,522

Net debt ( A) 94,290,075 113,240,763

Total equity 88,209,918 80,306,327

Total capital (B) 182,499,993 193,547,090

Capital Gearing Ratio(A/B) 0.52 0.59

Fair value estimation

The fair value of Company’s financial assets and financial liabilities significantly approximate their carrying amount.

Set out below is a comparison of carrying amounts and fair values by class of the Company’s financial instruments.

31 March 2015Fair value measurement hierarchy

Measurement category

according to IAS 39

Carrying amount as at

31 March 2015

Financial assets:Deposits with banks( including restricted deposits) NA LaR * 723,089 Trade and other receivable NA LaR * 1,412,543 Cash and cash equivalents NA LaR * 763,590 Available for sale-financial assets Level 2 AfS** 160 Financial liabilitiesBorrowings NA FLaC *** 95,053,665 Trade and other payables NA FLaC *** 5,118,164 Derivative liabilities Level 2 FVPL **** 4,382,803

31 March 2014

Measurement category

according to IAS 39

Carrying amount as at

31 March 2014

Financial assets:Deposits with banks (including restricted deposits) NA LaR * 636,964Trade and other receivable NA LaR * 1,652,224Cash and cash equivalents NA LaR * 504,522Available for sale-financial assets Level 2 AfS** 166Derivative assets Level 2 FVPL **** 284,405Financial liabilitiesBorrowings NA FLaC *** 113,745,285Trade and other payables NA FLaC *** 5,125,494Derivative liabilities Level 2 FVPL **** 2,127,091

Fair value measurement

hierarchy


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* LaR = loans and receivables **AfS = available for sale-investments *** FLaC = financial liability at amortised cost ****FVPL=fair value through profit and loss.

Fair value of above financial assets and financial liabilities approximates their respective carrying amount as at the reporting date.

Fair Values

Fare Values Carrying Amounts

The fair values of financial assets and liabilities, together with carrying amounts shown in the statement of financial position, are as follow:

ParticularsCarrying amount

Fair valueCarrying amount

Fair value

Financial assets carried at fair valueAvailable for sale-financial assets 160 160 166 166 Derivative assets - - 284,405 284,405

160 160 284,571 284,571

Financial assets carried at amortised costTrade and other receivables 1,412,543 1,412,543 1,652,224 1,652,224 Deposits with banks( including restricted deposits) 723,089 723,089 636,964 636,964 Cash and cash equivalents 763,590 763,590 504,522 504,522

2,899,222 2,899,222 2,793,710 2,793,710

Financial liabilities carried at fair valueDerivative Liabilities 4,382,803 4,382,803 2,127,091 2,127,091

4,382,803 4,382,803 2,127,091 2,127,091

Financial liabilities carried at amortized cost14% non-convertible redeemable debentures 21,908,381 21,908,381 24,237,815 24,237,815 Indian currency loan 37,544,810 37,544,810 38,979,871 38,979,871 Vehicle loan - - 12,212 12,212 Foreign currency loan - - 3,000,000 3,000,000 External Commercial Borrowing 35,600,474 35,600,474 47,515,387 47,515,387 Trades and other payables 5,118,164 5,118,164 5,125,494 5,125,494

100,171,829 100,171,829 118,870,779 118,870,779

As at 31 March 2015 As at 31 March 2014

Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. The different levels are defined as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)


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Level 1 Level 2 Level 3

As at 31 March 2015Financial AssetsAvailable for sale-financial assets - 160 -

Financial liabilityDerivative instrument liability - 4,382,803 -

As at 31 March 2014Financial AssetsAvailable for sale-financial assets - 166 - Derivative financial asset - 284,405 -

Financial LiabilitiesDerivative instrument liability - 2,127,091 -

Derivative financial instruments

The Company uses derivative instruments to mitigate its risks associated with foreign currency fluctuation relating to underlying transactions, firm commitments, highly probable forecast transactions and certain other permissible derivative instruments. The counterparty for these contracts is generally a bank. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

d) Operational risk Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company’s process-es; personnel; technology; and infrastructure, and from external factors (other than credit; market; and liquidity risks) such as those arising from perspective of legal and regulatory requirements and generally accepted standards of corporate behavior.

The Company’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Company’s reputation with overall cost effectiveness.

The Company has an Internal Control Framework which identifies key controls and supervision of operational efficiency of de-signed key controls. The framework is aimed to providing elaborate system of checks and balances based on self-assessment. This responsibility is supported by the development of overall Company standards for the management of operational risk in the following areas:

- requirements of appropriate segregation of duties, including the independent authorisation of transactions; - requirements of reconciliation and monitoring of transactions; - compliance with regulatory and other legal requirements; - documentation of controls and procedures; - requirements of periodic assessment of adequacy of controls and procedures to address the risks identified; - requirements of reporting of operational losses and proposed remedial action; - development of contingency plans; - training and professional development; - ethical and business standards; - risk mitigation, including insurance, where this is effective.


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Derivative Instruments

The Company enters into various derivative instruments. These derivative instruments are fair valued as at the year end. The de-tails of derivative liabilities and assets instruments as at the year end are as below:-

As at 31 March 2015

ParticularsNumber of contracts

Underlying Exposure Amount of derivative liability

i) Coupon only swap - from the base 6 months Euribor to 6 months USD Libor

1 EUR 17,680,000 1,280,840

ii) Principal and coupon swap- range forward transactions from the loan currency of Euro to USD- from the base 6 months Euribor to 6 months USD Libor

4,382,803

As at 31 March 2014


Underlying Exposure Amount of derivative liability

i) Coupon only swap - from the base 6 months Euribor to 6 months USD Libor

1 EUR 20,995,000 940,513

ii) Principal and coupon swap- range forward transactions from the loan currency of Euro to USD- from the base 6 months Euribor to 6 months USD Libor

iii) Forward contract to hedge semi annually loan repayment from USD to INR

1 USD 2,423,069 130,533

iv) Forward contract to hedge the foreign currency USD loan taken from bank

1 USD 3,000,000 233,670

2,074,693

As at 31 March 2014


Underlying Exposure Amount of derivative

asseti) Principal -range forward transactions from the loan currency

of EURO to USD1 EUR 20,995,000 134,669

ii) Principal and coupon swap- range forward transactions from the loan currency of Euro to USD

1 EUR 4,180,000 97,338

- from the base 6 months Euribor to 6 months USD Libor

232,007

Total derivative liability

Total derivative assets

1 EUR 8,000,000 3,101,963

Total derivative liability

1 EUR 9,500,000 769,977


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6. Property, plant and equipment

Freehold land #

Leasehold land #

Building Plant and machinery

Pipeline Gas producing properties

Furniture, fixture and

office equipment

Vehicles Total

Carrying amount as at 1 April 2013, net of accumulated depreciation/ depletion

1,808,444 146,488 2,794,169 18,077,209 18,820,445 67,243,139 397,282 434,349 109,721,525

Additions during the year 184,203 8,682 1,579,256 10,080,278 1,393,840 17,171,804 27,330 - 30,445,393 Disposals / retirements - - (215,074) (69,864) - - (12,024) - (296,962)Depreciation/ depletion charge for the year - (1,918) (68,374) (1,640,995) (1,118,919) (805,481) (27,997) (50,451) (3,714,135)Depreciation retirement - - 37,596 34,367 - - 12,709 - 84,672 Exchange fluctuation (170,591) (13,873) (256,595) (1,661,579) (1,786,269) (6,279,730) (37,744) (41,603) (10,247,984)

As at 31 March 2014, net of accumulated depreciation/ depletion

1,822,056 139,379 3,870,978 24,819,416 17,309,097 77,329,732 359,556 342,295 125,992,509

Carrying amount as at 1 April 2014, net of accumulated depreciation/ depletion

1,822,056 139,379 3,870,978 24,819,416 17,309,097 77,329,732 359,556 342,295 125,992,509

Additions during the year 55,385 1,480,813 41,694 679,144 3,080,719 7,208,055 10,835 - 12,556,645 Disposals / retirements (1,101,704) - - (1,743) - - (146) - (1,103,593)Depreciation/ depletion charge for the year - (1,964) (115,314) (2,024,262) (670,201) (828,410) (114,296) (80,571) (3,835,018)Depreciation retirement - - - (772) - - (13) - (785)Exchange fluctuation (48,413) (39,568) (152,304) (954,871) (744,061) (3,223,162) (11,895) (11,764) (5,186,038)

As at 31 March 2015, net of accumulated depreciation/ depletion

727,324 1,578,660 3,645,054 22,516,912 18,975,554 80,486,215 244,041 249,960 128,423,720

As at 31 March 2014Gross carrying amount 1,822,056 150,113 4,171,301 31,083,467 21,845,178 79,585,308 514,125 535,179 139,706,727 Accumulated depreciation - (10,734) (300,323) (6,264,052) (4,536,081) (2,255,576) (154,569) (192,884) (13,714,218)

Net Carrying amount 1,822,056 139,379 3,870,978 24,819,415 17,309,097 77,329,732 359,556 342,295 125,992,509

As at 31 March 2015Gross carrying amount 727,324 1,590,885 4,046,090 30,508,699 23,985,959 83,461,409 504,115 513,888 145,338,369 Accumulated depreciation - (12,225) (401,036) (7,991,787) (5,010,405) (2,975,194) (260,074) (263,928) (16,914,649)

Net carrying amount 727,324 1,578,660 3,645,054 22,516,912 18,975,554 80,486,215 244,041 249,960 128,423,720


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Depreciation amounting to USD 363,198 (31 March 2014: USD 349,900) has been transferred to capital work in progress. # Subsequent to 31 March 2015, the Company has been granted approval by Government of West Bengal to hold land in ex-cess of ceiling limit on 99 years lease. Accordingly the lease has been classified as a finance lease and the land amounting to USD 101,704 earlier classified as freehold land has been transferred to leasehold land as at 31 March 2015. Also refer note 35. Freehold land includes land amounting to USD 335,473 (31 March 2014: USD 293,019) which is to be transferred in the name of the Company in the government records. Also refer note 35. Building includes: a) Premises acquired for USD 97,540 (31 March 2014: USD 101,581) which are yet to be registered in the name of the Company. b) Warehouse constructed at a cost of USD 3,371 (31 March 2014: USD 3,511) on land not owned by the Company.

Well capitalization During the year ended 31 March 2015, the Company has capitalized 8 wells (31 March 2014: 18 wells). All explora-tion/development cost involved in drilling, cementing, fracturing and drilling of exploratory core holes are initially consid-ered as capital work-in-progress till the time these are ready for commercial use when they are transferred to producing prop-erties. Depletion: Commercially producing wells are depleted using unit of production method, based on related proved developed reserves. Proved developed reserves of gas per well are technically re-assessed, ‘in house’ or by an independent expert, as considered appropriate, normally at the end of each reporting period, based on technical data available. Refer note 17 of security details and note 26 for borrowing cost capitalization.

7. Capital work-in-progress (CWIP)

2015 2014

Opening balance 72,322,999 84,559,173

Additions during the period 6,891,193 12,997,239

Capitalisation (10,967,918) (17,171,804)

Effect of movement in foreign exchange rates (2,783,412) (8,061,609)

Closing balance 65,462,862 72,322,999

As at 31 March

As at 31 March 2015, CWIP includes advances to capital equipment supply vendors amounting to USD 204,880 (31 March 2014: USD 264,518). It also includes capital inventory of USD 4,805,788 (31 March 2014: USD 5,337,386) which is net of provision for obsolescence of USD 190,924 (31 March 2014: USD 198,835). Refer note 17 for security details and note 26 for borrowing cost capitalisation.


33

Items of stores and spares included in capital work in progress are net of excise duty and customs duty which have been exempted by the Government of India. The Company enjoys exemption from paying Excise duty and Customs Duty on the purchase of goods un-der the Deemed Export category as per EXIM policy of the Government of India. The amount of such exemption relating to items of property, plant and equipment and capital Work in Progress is as follows:

2015 2014

Towards excise duty 96,009 108,417

Towards customs duty 186,870 817,131

282,879 925,548


There are no un-fulfilled conditions or contingencies attaching to these grants.

8. Intangible assets

Cost as at 31 March 2013, net of accumulated amortization

213,532 67,609 14,488 554,981 850,610

Additions during the year - 22,308 - 205,560 227,868 Amortisation charge for the year (9,917) (22,144) (5,888) - (37,949)Exchange fluctuation (20,354) (6,423) (1,416) (51,360) (79,553)

As at 31 March 2014, net of accumulated amortization

183,261 61,350 7,184 709,181 960,976

Additions during the year - 4,270 - 161,428 165,698 Amortisation charge for the year (9,812) (20,228) (1,956) - (31,996)Exchange fluctuation (7,065) (2,073) (240) (31,927) (41,305)

As at 31 March 2015, net of accumulated amortization

166,384 43,319 4,988 838,682 1,053,373

As at 31 March 2014Cost 234,609 241,129 97,040 709,181 1,281,959 Accumulated amortization (51,348) (179,779) (89,856) - (320,983)

Net carrying amount 183,261 61,350 7,184 709,181 960,976

As at 31 March 2015Cost 225,276 235,709 93,180 838,682 1,392,847 Accumulated amortization (58,892) (192,390) (88,192) - (339,474)

Net carrying amount 166,384 43,319 4,988 838,682 1,053,373

Intangible under

development*Total

Gas Exploration

Right

Computer Software

Other Intangibles

Refer note 17 for security details. *Intangible under development represents cost incurred on Mannargudi block located in Tamil Nadu. Also refer note 1 of the financial statements.


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9. Prepayments

As at 31 March 2015

As at 31 March 2014

Prepayments for leasehold 390,324 331,934

Prepaid expenses 290,307 791,404

680,631 1,123,338

Less: Non current portion

- Prepayments for leasehold 381,913 324,838

- Prepaid expenses 97,337 109,176

Total non-current portion 479,250 434,014

Current portion 201,381 689,324 Prepayment for leasehold primarily represents non-current portion of payments made for taking different pieces of land on lease for 25-59 years for the Company's site at Asansol, West Bengal, India. An amount of USD 8,498 (31 March 2014: USD 6,126) rep-resenting amortisation for the current year has been charged in the income statement.

Prepaid expenses include an amount of USD 26,965 (31 March 2014: USD 28,083) on account of rent paid in advance to a related party, YKM Holdings Private Limited (refer note 30). Refer note 17 for security details.

10. Deposits with Banks

Fixed deposits-current 4,593 3,466

As at 31 March 2015

As at 31 March 2014

Short-term deposits are made for varying periods ranging from three months to twelve months depending on the immediate cash requirements of the Company, and earn fixed interest at the respective short-term deposit rates.


35

11. Trade and other receivables

As at 31 March 2015

As at 31 March 2014

Trade receivables 861,738 1,488,674

Receivable towards minimum gurantee offtake 106,937 -

Unbilled revenue 274,343 -

Due from related parties (refer note 30) 26,965 28,083

Advances to employees 4,678 5,039

Security deposits 49,026 54,957

Interest receivable 46,514 44,497

Others 42,342 30,974

Total trade and other receivables 1,412,543 1,652,224

Less: Non current portion:

Due from related parties 26,965 28,083

Advances to employees 240 334


Total non-current portion 65,990 72,708

Current portion 1,346,553 1,579,516

The advances to employees and security deposits have not been discounted to their present value as the impact of the dis-counting is not expected to be material. The fair value of financial trade and other receivables approximates their carrying value in the balance sheet. As of 31 March 2015, trade receivables of USD 861,738 (31 March 2014: USD 1,488,674) were fully performing. The Company has obtained bank guarantee from customers in respect of trade receivables amounting to USD 208,985 (31 March 2014: USD 583,230). As of 31 March 2015, none of the trade receivables is either past due but not impaired, or impaired and provided for.

The carrying amount of trade and other receivables are all denominated in INR.

The other classes within trade and other receivables do not contain impaired assets.

Refer note 17 for security details.


36

12. Available for sale- financial assets

As at 31 March 2015

As at 31 March 2014

Non-current investments (non-current) (unquoted) at costLong-term

160 166

160 166

1,000 (previous year 1,000) equity shares of USD 0.20 each fully paid (equivalent to Rs 10) in Great Eastern Energy City Gas Private Limited

13. Restricted deposits with banks

As at 31 March

2015As at 31 March

2014

Fixed deposits maturing within 12 months 718,496 633,498

All the restricted fixed deposits are denominated in INR. These fixed deposits earn fixed interest at the respective bank deposit rates. These are margin money against USD loan with certain banks and against letter of credit and bank guarantee issued by bank on behalf of the Company. Restrictions on such deposits are released on the expiry of terms of respective arrangements.

14. Cash and cash equivalents

As at 31 March As at 31 March 2015 2014

Cash in hand 3,307 1,861

Cash at banks 760,283 502,661

763,590 504,522 Cash at banks is non-interest bearing. The carrying amounts of cash and cash equivalents are representative of their fair values as at the respective balance sheet dates. The carrying amounts of the cash and cash equivalents are all denominated in INR. Refer note 17 for security details.


37

15. Share capital

(i) Share capital and share premium

As at 31 March 2015

As at 31 March 2014

Authorised share capital70,000,000 ordinary shares of USD 0.22 (equivalent to Rs 10) each 15,857,418 15,857,418

(31 March 2014: 70,000,000 ordinary shares of USD 0.22 (equivalent to Rs 10) each

15,857,418 15,857,418Issued, Subscribed and Paid-up59,561,950 ordinary shares of USD 0.22 (equivalent to Rs 10) each 13,306,007 13,306,007

(31 March 2014: 59,561,950 ordinary shares of USD 0.22 (equivalent to Rs 10) each

13,306,007 13,306,007 Reconciliation of share capital outstanding as at beginning and at the end of the year:-

As at 31 March 2015

As at 31 March 2014

Particulars No. of shares No. of shares

Balance as at the beginning of the year 59,561,950 59,561,950 Add: Shares issued during the year - -

Balance as at the end of the year 59,561,950 59,561,950 The Company has only one class of equity shares, having a par value of Rs.10 per share. Each shareholder is eligible to one vote per share held. The dividend proposed, if any, by the Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend. The repayment of equity share capital in the event of liquidation and buy back of shares are possible subject to prevalent regulations. In the event of liquidation, nor-mally the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferen-tial amounts, in proportion to their shareholding. Share premium represents the premium paid by the shareholders on issue of shares and net of equity transaction cost. Under the Indian Companies Act, such a reserve has a restricted uses.

(ii) Nature and purpose of reserves

Debenture redemption reserve Debenture redemption reserve represents the reserve created for the redemption of debentures issued during the previous year. Under the India Companies Act, such a reserve has a restricted use until the redemption of debentures. Foreign currency translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of these financial state-ments from functional currency to presentation currency. Fair value reserve Fair value reserve represents net changes in the fair value of available-for-sale financial assets.


38

16. Share-based payments

Share options are granted to non-executive directors and eligible employees under the stock option plan established and operated by the Company. Originally the plan was an equity settled plan. The plan was established by the Company on 27 May 2008 and provides for allotment of up to 500,000 equity shares of Rs. 10 (before consolidation of shares 5,000,000 equity shares of Re 1). These options are fair valued using the Black-Scholes model. The share based payment charge on these options granted are amortized over the vesting period in accordance with the vesting schedule, provided that the holders of the options continue to be an employee on the vesting date. The options are to be exercised within a maximum period of 10 years from the date of grant. All the options would vest in five equal installments on an annual basis over a five year period. During the current year, the stock options issued in earlier years to independent non-executive directors have been can-celled in compliance with the Indian Companies Act 2013.

A. Charge to the income statement towards share based payment and the movement in share based payment reserve is

as given below.

Share based payment reserve: 2015 2014Opening balance 303,029 285,063 Share-based compensation charge for the year towards share options granted

33,365 48,895

Transfer to retained earnings towards share options exercised during the year

- -

Transfer to retained earnings towards share options forfeited during the year

(215,992) (30,929)

Closing balance 120,402 303,029


B. Details of options granted:

1-Aug-08 1-Dec-08 1-Apr-09 1-Aug-09 1-Dec-09 1-Apr-10 1-Aug-10Share price on grant date- In USD (INR denominated) 7.35 4.90 4.92 7.86 10.17 11.22 10.08 - In INR 460.00 307.00 308.00 491.78 636.65 702.15 631.01 Exercise price (in USD)- In USD (INR denominated) 6.39 6.39 6.39 6.39 9.59 9.59 9.59 - In INR 400.00 400.00 400.00 400.00 600.00 600.00 600.00 Number of options granted 43,272 5,292 8,113 11,450 26,448 3,711 4,967 Dividend yield - - - - - - - Expected volatility (%) 50.88% 54.85% 54.89% 54.37% 54.43% 52.20% 51.44%Risk-free interest rate(%) 9.29-9.30 7.17-7.51 7.06-7.21 6.75-7.17 7.09-7.43 7.56-7.87 7.70-7.85Expected term (in years) 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50Fair value of options (as on the date of grant)-in USD 3.75-5.66 2.49-2.99 2.84-3.34 4.94-5.54 7.06-7.73 6.85-7.75 5.86-6.71-In INR 235-354 156-187 178-209 309-347 442-484 429-485 367-420

Grant dates of options


39

1-Dec-10 1-Apr-11 1-Aug-11 1-Dec-11 1-Apr-12 1-Aug-12 1-Dec-12Share price on grant date- In USD (INR denominated) 8.42 8.39 9.01 8.16 8.56 7.22 7.41 - In INR 526.78 525.09 563.84 510.66 536.00 452.00 464.00 Exercise price (in USD)- In USD (INR denominated) 7.67 7.67 8.31 7.35 7.67 6.55 6.71 - In INR 480.00 480.00 520.00 460.00 480.00 410.00 420.00 Number of options granted 5,375 4,322 12,228 6,718 12,022 3,775 9,788 Dividend yield - - - - - - - Expected volatility (%) 50.62% 50.00% 50.00% 47.79% 51.12% 50.01% 48.78%Risk-free interest rate (%) 7.96-7.99 7.73-7.97 8.41-8.46 8.57-8.65 8.57-8.61 8.21-8.27 8.15-8.19Expected term (in years) 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50Fair value of options (as on the date of grant)-In USD 4.98-5.66 2.86-3.45 3.12-3.74 2.78-3.36 3.07-3.66 2.51-3.00 2.52-3.04-In INR 312-354 179-216 195-234 174-210 192-229 157-188 158-190


1-Apr-13 1-Aug-13 1-Dec-13 1-Apr-14 1-Aug-14 1-Dec-14Share price on grant date- In USD (INR denominated) 7.06 6.54 5.54 4.02 4.07 3.61 - In INR 442.00 409.09 347.00 251.63 254.81 225.89 Exercise price (in USD)- In USD (INR denominated) 6.47 6.07 4.87 3.67 3.67 3.20 - In INR 405.00 380.00 305.00 230.00 230.00 200.00 Number of options granted 3,107 15,396 484 5,461 17,364 9,107 Dividend yield - - - - - - Expected volatility (%) 47.68% 46.73% 45.97% 45.23% 44.38% 43.60%Risk-free interest rate (%) 7.90-7.98 8.57-8.65 8.66-8.84 9.00-9.12 8.60-8.65 8.10-8.13Expected term (in years) 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50 5.50 - 7.50Fair value of options (as on the date of grant)-In USD 2.33-2.83 2.16-2.61 1.88-2.27 1.33-1.62 1.32-1.60 1.15-1.39-In INR 146-177 135-163 118-142 83-101 83-100 72-87


Expected volatility has been computed on the basis of the historical daily volatility of the closing price of the equity share of the Company over the expected life of the option.

The total charge for the year ended 31 March 2015 relating to employee share-based payment plans was USD 33,125 (31 March 2014: USD 48,895). (Refer note 23)

The fair value of each option award is estimated using the Black- Scholes Option Pricing model.

The Company has assumed 6% forfeiture rate per annum.


40

C. Movement in the share options outstanding:

Number of equity shares

Weighted average exercise price (in USD per

share)

Number of

equity shares

Weighted average exercise

price (in USD per share)

Options outstanding at the beginning of the year

97,553 7.75 107,410 8.04

Options granted during the year 47,812 4.36 3,107 6.74 Options forfeited/ lapsed/cancelled during theyear

56,619 7.59 12964 7.52

Options exercised during the year - - - - Options outstanding at the end of the year 88,746 6.02 97,553 8.06 Options exercisable at the end of the year 42,086 7.17 67,551 8.05

31 March 2015 31 March 2014

For the year ended

The remaining weighted average contractual life of options outstanding as at 31 March 2015 is 7.04 years (31 March 2014: 6.14 years).


41

17. Borrowings (including accrued interest)

As at 31 March 2015

As at 31 March 2014

Non-current

14% non-convertible redeemable debentures 18,985,377 22,816,066

Indian rupee loan 31,066,055 36,501,336

Foreign currency loan - 600,000

External commercial borrowing 23,357,000 39,636,145

Total non-current 73,408,432 99,553,547

Current

14% non-convertible redeemable debentures 2,923,004 1,421,749

Indian rupee loan 6,478,755 2,478,535

Foreign currency loan - 2,400,000

External commercial borrowing 12,243,474 7,879,242

Vehicle loan - 12,212

Total current 21,645,233 14,191,738

Details of interest rates of loans and borrowings are given below:-

Currency As at 31 March 2015 As at 31 March 2014 Non-convertible redeemable de-bentures [refer note (a) below]

INR 14% p.a. 14% p.a.

Indian rupee loan [refer note (e) below]

INR Benchmark rate (-) 4.5% p.a. -

Indian rupee loan [refer note (d) below]

INR Base rate +3%, Base rate+2.5% and Base rate +2.55% as the case may be

Base rate +3%, Base rate+2.5% and Base rate +2.55% as the case may be

Foreign currency loan [refer note (b) below]

USD -

6 months Libor + 650-1000 bps

External commercial borrowing [refer note (c) below]

EUR Margin 4.372% + 6 month EURIBOR

Margin 3.90% + 6 month EURIBOR

Vehicle loan INR - 9.72% a) 14% non-convertible redeemable debentures of Rs. 1,000,000 each, redeemable at face value, were allotted during the year

ended 31 March 2014 and are secured by way of charge created/ to be created as under:

i) First ranking mortgage and charge over all the immovable and movable properties of the Company, both present and fu-ture, including without limitation, the land pertaining to the CBM Project save all immoveable properties of the Company situated at Mouza Ishwarpura, Taluka Kadi, District Mehsana, Gujarat;

ii) First charge by way of hypothecation over all movable assets in relation to the CBM Project including, without limitation

plant and machinery, machinery spares, tools and accessories, both present and future related to the CBM Project;

iii) First ranking charge over the Participating Interest of the Company under the Product Sharing Contract (“PSC”);

iv) Assignment of (a) all the Project Documents in relation to the Contract Area or the intended CBM Project at Raniganj Block, (b) all rights, titles, interests, benefits, claims, whatsoever of the Company, in all Project Documents, Insurances, Clearances and all interests of the Company relating to the CBM Project including without limitation any letter of credit,


42

guarantee or performance bond provided by any party under the Project Documents and all rights, titles, interests, bene-fits, claims, whatsoever of the Issuer on the PSC;

v) First charge on all book debts, operating cash flows, commissions, all revenues, receivables and other current assets of the

Company from or in relation to the CBM Project of whatsoever nature and whenever arising, both present and future, tangible and intangible assets, including, without limitation any know how rights, patents and the goodwill, related to the CBM Project, both present and future; and

vi) First charge on all the Company’s bank accounts including, without limitation, project capex account, Trust and Retention

Account and the Accounts to be established by the Company in consultation with the lenders and the Debenture Trustee and each of the other accounts required to be created by the Company in accordance with the Finance Documents and un-der any project document or contract and all moneys lying therein and/or to be credited therein.

b) Secured term loans (Indian rupee loan and Foreign currency loan), other than mentioned in (c), (d) and (e) below, are secured

by:

i) First mortgage and charge over all the immovable properties and assets of the Company and property situated at Mouza Ishwarpura, Taluka Kadi, District Mehsana, in the state of Gujarat, both present and future;

ii) First charge by way of hypothecation on all the movables (including movable plant and machinery, machineries spares,

tools and accessories and other current assets) of the Company, both present and future;

iii) First ranking charge on the Participating Interest of the Company under Raniganj Coalfields Production Sharing Contract (PSC);

iv) Assignment of (a) all the project documents in relation to the contract area; (b) all the rights, title, interest, benefits,

claims and demands, whatsoever, of the Company in the project documents, any letter of credit, guarantee or performance bond that may be provided by any party to any project document in favour of the Company, all as amended, varied or supplemented from time to time; and (c) all the rights, title, interest, benefits, claims and demands, whatsoever, of the Company in or under the authorization;

v) First charge on all receivables and the bank accounts including, without limitation, the Project Capex Account, Trust and

Retention Account and each of the other accounts required to be created by the Company in accordance with the Financ-ing Documents; and

vi) First charge on the intangible (including but not limited to any know how rights, patents and goodwill) and rights thereto

of the Company, both present and future. The Company has converted Indian currency loan amounting to USD Nil (31 March 2014: USD 9,286,918) taken from banks to foreign currency non-resident borrowing. The loans would be again convertible to rupee loan at the end of con-tracted period if the loan agreement is not renewed. The other terms and conditions of the loan including security and re-payments terms for the foreign currency loan remain the same as secured rupee loan.

The aforesaid mortgage and charge shall rank pari passu with mortgages and charges created in favour of the participating institutions/ banks to the project. The entire loan has been paid during the current year before its maturity period.

c) During the year ended 31 March 2011, the Company had been sanctioned External Commercial Borrowings (‘ECB’) facility

of EUR 36.50 million from ICICI Bank Ltd., Bahrain. Out of the sanctioned facility, the Company had drawn EUR 22.10 million on 29 December 2010, EUR 10 million on 7 July 2011 and Euro 4.40 million on 19 April 2012.

During the year ended 31 March 2012, the Company and the lender agreed to make certain changes in the terms and condi-tions of the original deed of hypothecation. As per the amended and restated deed of hypothecation, the Company has pri-marily hypothecated the following assets as security, as and by way of first charge in favour of the lender:

i) All rights, titles, interests, benefits, claims, and demands, whatsoever of the Company, into, under and/or in respect of the

Project Documents and the Clearances (both of the above hereinafter referred to as the "Contracts"), (collectively, the "First Hypothecated Properties");


43

ii) All and singular the moveable properties, accounts, plant and machinery, all other tangible moveable assets (both present and future) together with all benefits, rights and incidentals attached thereto which are now or shall at anytime hereafter be owned by the Company and the uncalled capital, intellectual property/ intellectual property rights, goodwill, permitted investments and all the other investments, rights, title and interest in the undertakings of the Company and all rights, ti-tles, interest, property, claims and demands, whatsoever of the Company, unto and upon the same, whether presently in existence, constructed or acquired hereafter (collectively, the "Second Hypothecated Properties");

iii) All amounts, revenues, receipts and other receivables owing to, and received by, the Company from whosoever person,

all rights, titles, interest, benefits, claims and demands whatsoever of the Company in, to or in respect of all amounts ow-ing to and received by, the Company from whomsoever person, including any amounts received by the Company under contract guarantees, performance bonds, letter of credit or receivables from the shareholders of the Company or other-wise, which description shall include all properties of the above description, including the accounts in which such amounts are held (including the Project Accounts), whether presently in existence or acquired hereafter, but excluding the Distribution Account (collectively the "Third Hypothecated Properties");

iv) All amounts, revenues, receipts owing to/receivable and/or received by, the Company in relation to the Project or other-

wise and all rights, titles, interest, benefits, claims and demands whatsoever of the Company in to or in respect of all amounts owing to/receivable and/or received by, the Company, both present and future, which description shall include all properties of the above description whether presently in existence or acquired hereafter (collectively, the "Fourth Hy-pothecated Properties"); and

v) By way of a first charge, all the other moveable assets of the Company both present and future including the Distribution

Account [other than the property effectively charged pursuant to the provisions of Sub-clause (i) through (iv) above], (collectively the “General Assets") provided that the charge created over the General Assets shall rank as a floating charge and shall not hinder the Company from dealing with the same or any part thereof in the ordinary course of its business in accordance with the terms of the Financing Documents and free of liens in each case unless the dealings have been restricted in accordance with the terms or its Deed or otherwise or the charge gets converted into a fixed charge and subject to and only as expressly permitted by the Financing Documents. The Company shall not, without the prior written consent of the lender, create or attempt to create any mortgage, charge, lien, pledge or hypothecation upon the General Assets.

The security interest created by the Company in favour of the lender on the hypothecated property by the deed rank pari passu with the security interest created/ to be created in favour of existing lenders and parallel lenders.

d) During the year ended 31 March 2012, the Company had been sanctioned Rupee Term Loan Facility of USD 39,143,633

from consortium of banks. The Company has drawn USD 38,123,695. The above term loan is repayable in 22 quarterly in-stallments commencing from 31 December 2014. As per the credit arrangement letter, the facility shall be secured by first ranking charge/ hypothecation/ mortgage/ assignment/ pledge/ security/ interest on the following, related to the project:

i) All the immovable properties (including leasehold rights in case of leasehold land) and assets of the borrower, present and

future, in relation to the CBM project and all immoveable properties of the borrower situated at Mouza Ishwarpura, Ta-lukda Kadi, District Mehsana, Gujarat;

ii) All the borrower's movable properties and assets (including intangible assets) in relation to the CBM project, present and

future, including but not limited to plant and machinery, machinery spares, tools, spares, accessories and current assets;

iii) All book debts, operating cash flows, receivables, commissions, revenues of whatsoever nature and wherever arising of the borrower and all intangibles, goodwill, uncalled capital of the borrower, present and future, relating to the CBM pro-ject;

iv) All accounts of the borrower wherever maintained, present and future, including but not limited to the Trust and Reten-

tion Account together with all accounts/ sub-accounts thereof, including Debt Service Reserve Account; and

v) All rights, title, interest, benefits, claims and demands whatsoever of the borrower, present and future, in, to and in re-spect of the project documents including (but not limited to) all insurance contracts, clearances and CBM contract(s), and any letters of credit, guarantees or performance bonds provided by any party to any project documents in favour of the Borrower and all benefits incidental thereto.


44

The aforesaid security will rank pari passu with the security interest created/ to be created in favour of participating lenders.

e) During the year ended 31 March 2015, the Company had been sanctioned and drawn Rupee Term Loan of USD 1,118,390

from Non-banking Financial Corporation (‘NBFC’). The above term loan is repayable in 18 equal installments. As per the credit arrangement letter, the facility shall be secured by the following: i) First charge by way of mortgage of office space admeasuring 7,138 sqft. owned by YKM Holdings Private Limited and

situated at Gurgaon (Haryana);

ii) First charge on all the cash flows of the YKM Holdings Private Limited from the property being mortgaged as mentioned in clause (i), in accordance with the Security Documents;

iii) Subservient charge on all the cash flows and movable assets of the Company in accordance with the the Security Docu-

ments;

iv) Personal guarantee of Mr. Yogendra Kr. Modi and Mr. Prashant Modi; and

v) Demand promissory note for the principal and the interest repayment.

f) Vehicle loan of USD Nil (31 March 2014: USD 12,213) was secured by way of hypothecation of vehicle and entire loan has been repaid during the year.

18. Employee benefits

2015 2014Superannuation payable 398,234 371,203 Gratuity payable (defined benefit plan) 301,495 280,700 Compensated leave payable (long term employee benefit) 503,593 486,030

1,203,322 1,137,933 Less: Non current portion 1,181,217 519,005

Current portion 22,105 618,928

As at 31 March

The following tables summarize the components of gratuity expense recognised in the income statement and the other comprehensive income and the amounts recognised in the balance sheet for the respective plans -

2015 2014Current service cost 32,360 42,677

19,215 15,460 52,530 55,535

104,105 113,673 29,927 52,727

Charged to the income statement 37,979 31,171 36,199 29,775

104,105 113,673


Charged to other comprehensive income

Transferred to capital work in progress

Actuarial losses recognised in the yearInterest cost on benefit obligations


45

Changes in the present value of the defined benefit obligation are as follows:

2015 2014

Opening defined benefit obligation 280,700 198,434 Current service cost 32,360 42,677 Interest cost 19,215 15,460

- financial assumptions 31,718 514 - demographic assumptions - 6,102 - experience adjustment 20,812 48,919 Exchange fluctuation (11,920) (18,183)

Benefits paid (71,390) (13,223)

Closing defined benefit obligation 301,495 280,700

As at 31 March

Actuarial (gains)/ losses arising from

The principal actuarial assumptions used for gratuity were as follows:

As at 31 March 2015

As at 31 March 2014

Particulars

Salary growth 6.00% 6.00%

Inflation factor 6.00% 6.00%

Discount rate 8.00% 9.00%

Mortality rates have been taken as per IALM Ultimate2006-2008

IALM Ultimate2006-2008

Gratuity plan is unfunded.

The Actuarial valuation is carried out annually by an independent actuary. The discount rate used for determining the pre-sent value of obligation under the defined benefit plan is determined by reference to market yields at the end of the report-ing period on Indian Government Bonds. The currency and the term of the Government Bonds are consistent with the cur-rency and term of the defined benefit obligation. The salary growth rate takes into account inflation, seniority, promotion and other relevant factor on long term basis. Sensitivity analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below: As at 31 March 2015

1% increase 1% decreaseDiscount rate (31,718) 39,846 Future salary growth 40,013 (32,323) Withdrawl rate 8,280 (5,520) As at 31 March 2014

1% increase 1% decreaseDiscount rate (23,719) 29,339 Future salary growth 29,745 (24,361) Withdrawl rate 6,334 (4,222)


46

Compensated absences plan The liability for the compensated absences plan is USD 503,593 (31 March 2014: USD 486,030). During the year, USD 55,117 (31 March 2014: USD 72,581) has been charged to income statement and an amount of USD 29,006 (31 March 2014: USD 94,275) has been allocated to capital work in progress on account of the compensated absences plan.

Other employee benefit contribution plans:

a) Defined contribution plans - Provident fund The liability for provident fund payable is USD 39,541 (31 March 2014: USD 28,958). The Company contributed USD 203,409 (31 March 2014: USD 173,683) to the Provident fund. Out of total contributions, USD 135,742 (31 March 2014: USD 104,497) has been charged to income statement and USD 67,667 (31 March 2014: USD 69,186) has been allocated to capital work in progress.

b) Defined contribution plans - Superannuation The liability for superannuation payable is USD 398,234 (31 March 2014: USD 371,203). The Company accrued USD 42,783 (31 March 2014: USD 95,854) to superannuation during the year. Out of the total accrual, USD 21,819 (31 March 2014: USD 38,342) has been charged to income statement and USD 20,964 (31 March 2014: USD 57,513) has been allocated to capital work in progress. The superannuation scheme is unfunded scheme. The movement of provision for superannuation is as below:

2015 2014

Balance at the beginning of the year 371,203 303,550

Current service cost 30,086 71,294

Interest cost 12,697 24,560

Exchange fluctuation (15,752) (28,201)

398,234 371,203

As at 31 March


47

19. Trade and other payables

Trade payables 468,695 380,079

Capital creditors 3,003,716 3,390,759

Due to related parties (refer note 30) 241,616 154,206

Employee benefit liability 470,851 373,459


Other liabilities 529,544 439,095

5,118,164 5,125,494

Less: Non current portion: - -

Current portion 5,118,164 5,125,494

As at 31 March 2015

As at 31 March 2014

Trade and other payables are non-interest bearing. The carrying amounts of trade and other payables approximate their fair values at the respective reporting dates. Except for financial liabilities denominated in USD and GBP for USD 268,528 (31 March 2014: USD 242,785) and USD 68,817 (31 March 2014: USD 91,207), respectively, all other trade and other payables are denominated in INR.


48

20. Provisions

Movement in provision for demobilisation and site restoration

Provision for demobilisation

Provision for site restoration

TotalProvision for

demobilisationProvision for

site restorationTotal

Opening balance 75,615 133,234 208,849 130,419 100,761 231,180

Addition during the year* - - - - 79,717 79,717

Adjusted/reversed during the year*

3,052 - 3,052 (42,132) - (42,132)

Effect of discounting - 4,365 4,365 - (37,948) (37,948)

Effect of movement in foreign exchange rates

(3,079) (5,401) (8,480) (12,672) (9,296) (21,968)

Closing balance 75,588 132,198 207,786 75,615 133,234 208,849

Less: Non current portion - 132,198 132,198 - 133,234 133,234

Current portion 75,588 - 75,588 75,615 - 75,615

For the year ended 31 March20142015

*The provisions created/adjusted/reversed during the year ended 31 March 2015 and 31 March 2014 have been capitalised and no amount has been charged to the income statement. Site restoration costs A provision for restoring the land back to its originality is created by way of site restoration costs, on a well by well basis. Such expenses are provided when the wells have been drilled substantially. These are expected to be incurred when the Company has commercially exploited the proved reserves of the well or when a well which has been drilled, has been de-clared as dead. Provision for demobilisation Provision for demobilisation represents the amount which would be required to be paid when the relevant equipment is de-mobilised.


49

21. Deferred income tax

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.

The break-up of deferred tax assets and liabilities is as follows:

As at 31 March

2015

As at 31 March

2014

Deferred tax liabilities:

20,653,511 17,398,966

Deferred tax assets:

Deferred tax assets (13,816,715) (14,897,044)

Deferred tax liabilities 6,836,796 2,501,922

Deferred tax liabilities

The gross movement on deferred income tax account is as follows:

Property, plant and

equipmentTotal

Deferred tax liabilities

At 1 April 2013 16,704,407 16,704,407

Additions during the year 2,266,531 2,266,531

Exchange differences (1,571,972) (1,571,972)

At 31 March 2014 17,398,966 17,398,966

Additions during the year 4,039,663 4,039,663

Exchange differences (785,118) (785,118)

At 31 March 2015 20,653,511 20,653,511

ParticularsEmployee benefits

Unabsorbed tax losses/ unabsorbed

depreciation

Provision for loss on derivative instruments

Others Total

At 1 April 2013 282,809 14,922,665 1,522,024 - 16,727,498

(76,015) 795,885 (1,056,330) 96,852 (239,608)

(27,375) (1,412,480) (151,636) 645 (1,590,846)

179,419 14,306,070 314,058 97,497 14,897,044

11,342 (1,696,296) 1,185,786 - (499,168)

(7,399) (530,108) (39,775) (3,879) (581,161)

183,362 12,079,666 1,460,069 93,618 13,816,715

Exchange differences

At 31 March 2015

Deferred tax assets

Additions/(reversals) during the year

Exchange differences

At 31 March 2014

Additions/(reversals) during the year

The Company was entitled to tax holiday for 7 years under section 80IB (9) of the Indian Income Tax Act, 1961. These in-centives provide a deduction from taxable income of an amount equal to 100% of profits derived from the business for 7 years from the date of commencement of production. The benefit of this deduction is available only upto the year ending 31 March 2014.


50

During the previous year, the Company has revised its Income tax return pertaining to assessment year 2012-2013 due to cor-rection of inadvertent error in reporting of brought forward loss and unabsorbed depreciation figures for the assessment year 2007-2008 and assessment year 2008-2009. This has resulted in revision in brought forward loss and unabsorbed deprecia-tion by USD 526,852 and USD 1,337,711 respectively.

The tax expense in the income statement for the year differs from the standard tax rate of corporate tax in India. Reconcili-ation between tax (expense) income and the product of accounting profit (loss) multiplied by India’s standard corporate tax rate 33.99% (31 March 2014: 33.99%) is as follows:

2015 2014

16,549,207 13,022,087

5,625,076 4,426,207

(17,370) 737,235

(728,874) -

(90,898) -

410,997 (2,337,029)

Tax charge 5,198,931 2,826,413

Profit before tax:


Tax expense at domestic tax rate

Tax effects of:

- Non-deductible expenses

- Reassessment of tax positions of earlier periods *

- Others

- True up effect

* During the current year, the Company has decided to claim mark to market gain or loss on realized basis. Further, the Company has also decided to adjust the mark to market loss or gain in the cost of fixed assets for tax purposes. This has resulted in an adjustment of USD 728,874 in the current year tax expense.


51

22. Other operating expenses

2015 2014

Audit fees 30,471 30,735

Electricity charges 24,826 23,374

Repairs and maintenance 1,031,701 703,221

Insurance 37,570 35,146

Operating lease rentals 173,027 168,013

Rates and taxes 53,707 36,158

Postage, printing and stationery 10,205 9,165

Telephone charges 51,192 54,097

Travelling and conveyance 409,778 364,057

Advertisement and publicity 287 5,670

Consultancy charges 1,019,721 776,471

Survey and information expenses 27,293 -

Fee and legal charges 198,224 197,358

Listing expenses (non-recurring) 543,714 -

Sitting fees/ commission paid to non-executive directors (refer note 30) 111,900 7,429

Hire charges 520,242 399,780

Security expenses 1,117,211 848,780

Selling and distribution expenses 183,547 197,246

Royalty 2,238,523 2,033,109

Production level payment 559,631 508,277

Conference and subscription 188,983 121,543

Loss on sale of assets 767 -

Excise duty on sales 138,416 109,796

Miscellaneous expenses 175,555 181,617

8,846,491 6,811,042


23. Employee benefit expenses

2015 2014

Wages and salaries 2,542,902 2,002,087

Defined contribution plans (refer note 18) 157,561 142,839

Provision for gratuity (refer note 18) 37,979 31,171

Provision for compensated absences (refer note 18) 55,117 72,581

Staff Welfare 10,054 13,592

Share-based payment charge (refer note 16) 33,365 48,895

2,836,978 2,311,165



52

24. Other income

2015 2014

Provisions/liabilities no longer required written back 125,074 495,931

Profit on sale of assets - 121,122

Miscellaneous income 18,061 25,769

143,135 642,822


25. Finance income

2015 2014

Interest on bank deposit 153,852 204,544

Interest others 10,736 20,080

Foreign exchange gain (net) 2,234,883 -

Gain on derivative instruments - 2,838,925

2,399,471 3,063,549


26. Finance expenses

2015 2014

Interest on borrowings from banks and financial institutions 701,617 5,578,505

Interest on non-convertible debentures 3,320,225 297,405

Interest on borrowings from others 56,220 3,620

Bank charges 18,915 24,229

Foreign exchange loss (net) - 4,654,304

Loss on derivative instruments 2,506,529 -

6,603,506 10,558,063


The capitalization rate used to determine the borrowing cost eligible for capitalization is 9.66% p.a for the year ended 31 March 2015 ( 31 March 2014: 14.48% p.a).

The Company has allocated borrowing cost of USD 5,080,740 (31 March 2014: USD 10,527,287) to fixed assets/capital work in progress, being directly attributable to the acquisition or construction of qualifying assets. The balance borrowing cost has been charged to income statement. Borrowing cost is reduced to the extent of USD 55,473 (31 March 2014: USD 86,807) in respect of income on temporary deployment of borrowings by the Company.


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27. Earnings per share

2015 2014

Profit after tax attributable to equity share holders for the year 11,350,276 10,195,674

Weighted average number of ordinary shares for basic earnings per share 59,561,950 59,561,950

Face value of share (INR) 10 10

Basic and diluted earnings per share (USD) 0.19 0.17


Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year. The effect of potential equity shares to be issued on exercise of stock options has not been taken into account for determination of diluted profit per share as their impact is anti-dilutive.

28. Contingencies

Claims made against the Company not acknowledged as debts (including interest wherever applicable) are as follows

As at 31 March As at 31 March

2015 2014

M/s Adkins Services Inc. (ii) 10,627,766 10,464,340

M/s M.R. Associates 27,767 22,888

M/s D.S. Steels 269,080 257,985

Claims by Government of India (Ministry of Petroleum and Natural Gas)

(iii) 190,325 183,885

M/s Goel Construction (India) Limited (iv) 483,508 503,540

Claims by Petroleum and Natural Gas Regulatory Board (v) 79,885 83,195

Claims by Excise department 734,056 658,102

Claims by Sales tax authorities 104,327 69,609

Claims by Income-tax authorities (i) - 341,369

Production level payment (vi) 264,782 275,752

Other claims, to the extent quantified 87,124 90,733

M/s SAIL ISP (vii) - 44,705,491

M/s Sopan Projects (viii) 418,826 436,178

M/s Jakson Limited (ix) 142,296 -

Footnote reference

Future cash outflows in respect of the above would be determinable on finalisation of judgments / decisions pending with various forums / authorities.

Foot notes:

i. Demand of income tax of USD 128,099 pertains to assessment years 2006-07 and 2007-08. These cases had been de-

cided in favour of the Company by Commissioner of Income Tax (Appeals) / ITAT, as the case may be. Further, the Company has received notice u/s 148 of the Income Tax Act, 1961 for these years. For assessment year 2006-07 the Company has filed a writ petition in High Court and for assessment year 2007-08 reply has been filed with the income


54

tax authority seeking reasons for reopening of case. During the current year, the writ petition has been allowed by the High Count vide order dated 30 July 2014 and proceedings initialed by Assessing Officer (Income-tax) for reopening the assessment for the assessment year 2006-07 is declared void and without authority of law. Further for the assess-ment year 2007-08, the Company had filed the reply to the notice received u/s 148 of the Income Tax Act, 1961 to give the appeal effect of order passed in favour of the Company by the ITAT. No further correspondence received from the Assessing Officer (Income-tax). On 25 March 2013, in respect of the assessment year 2010-11, the Assessing Officer (Income-tax) passed an assessment order under section 143(3) of the Income tax Act, 1961 and has made an addition amounting to USD 44,101. On 31 January 2014, in respect of the assessment year 2011-12, the Assessing Officer (Income-tax) passed an assessment order under section 143(3) of the Income tax Act and has made an addition amounting to USD 483,677. However, no demand has been raised since the Company has incurred loss in these years. The Company has filed an appeal with the Commissioner of Income Tax (Appeals) in this regard for both the assessment years. During the current year, Commis-sioner of Income Tax (Appeals) has passed its order allowing the appeal in favour of the Company in respect of the as-sessment year 2010-11 and in respect of the assessment year 2010-11 appeal of the Company has been partially allowed disallowing an expenses amounting to USD 19,514. On 27 March 2015, in respect of the assessment year 2012-13, the Assessing Officer (Income-tax) passed an assessment order under section 143(3) of the Income tax Act and has made an addition amounting to USD 30,815. However, no demand has been raised since the Company has brought forward losses of earlier years to set off such additions made by the Assessing Officer (Income-tax). The Company has filed an appeal with the Commissioner of Income Tax (Appeals) against the order.

ii. The Company has made a claim of USD 3,164,307 along with interest at a fixed rate, for damages on account of delays in providing the services by M/s Adkins Service Inc. (‘Adkins’ or ‘Contractor’). The contract with Adkins was termi-nated by the Company on the grounds of non-performance and continued breach of contract.

The Contractor had filed a counter claim of USD 3,864,835 excluding interest, against the Company, for loss of profit, damages, etc., which the Company has disputed. The Contractor had also further claimed interest with retrospective ef-fect at a fixed rate till the date of realization of its claim along with cost incurred on litigation. Besides this, the Contrac-tor has also filed other complaints against the Company and its directors/ employees. The arbitration proceedings are in process.

iii. The Company entered into an Exploration and Production Contract with Government of India (GOI), Ministry of Petro-leum & Natural Gas in the year 2001, pursuant to which, a Production Sharing Contract (PSC) was signed between GOI and the Company to carry out CBM operations in the contract area. In terms of the said contract, the Company was re-quired to pay a signature bonus of US $ 0.3 Million to GOI on signing of the PSC in 2001, and also the amount of Rs. 10,000,000 (equivalent USD 159,770) already paid by it to Coal India Limited in 1994, was to be adjusted against such amount. After signing of the PSC, Ministry of Petroleum & Natural Gas on the basis of the exchange rate applica-ble on the date of the contract, has worked out the signature bonus as Rs. 14,100,000 (equivalent USD 225,276) and claimed the balance amount of Rs. 4,100,000 (equivalent USD 65,506) after adjusting the amount of Rs. 10,000,000 (equivalent USD 159,770), which has been opposed by the Company. In the opinion of the management, no further amount is payable in this regard as the prevailing rate on the date of payment of such amount Rs. 10,000,000 (equiva-lent USD 159,770) was applicable and not the rate prevailing on the date of the contract.

This dispute has been referred to arbitration pursuant to the terms and conditions of the said contract and the Company filed a claim for refund of Rs. 627,400 (equivalent USD 10,024) along with fixed interest of 21% from 27 January 1994. GOI filed a counter claim of above mentioned amount of Rs. 4,100,000 (equivalent USD 65,506) along with in-terest at the rate of 21% from 31 May 2001.

During the year ended 31 March 2012, the said matter had been decided by the Arbitral Tribunal, against the Company. The Company had been directed to pay a sum of Rs. 4,100,000 (equivalent USD 65,506) along with applicable interest. The Company had made a provision of Rs. 4,100,000 (equivalent USD 65,506) during the year ended 31 March 2012 and had filed a review application to the tribunal requesting for waiver of interest. The said application has been dis-missed by the Arbitral Tribunal vide its order dated 12 May 2014 against which the Company has filed its objections before the Delhi High Court. Accordingly, the interest amount has been considered as contingent liability.


55

iv. One of the Contractors, Goel Construction (India) Limited, had filed a suit against the Company claiming a sum of USD 483,508 towards unpaid amount under the contract and damages for unlawful termination of contract for construction of office building at Asansol. The Company has disputed the claim of the Contractor and has initiated criminal proceeding against the Contractor and its employees, for breach of trust and for putting the life of employees of the Company at risk by undertaking faulty electrical wiring.

Rather than agreeing to the prayer of Contractor for stay on construction and engaging third party Contractor, the Court has decided against the pray and had granted status quo over machinery and material belonging to the Contractor. This does not adversely affect the Company in any manner. The legal proceedings are in progress and the Company is of the strong opinion that the claim of the said Contractor is not tenable and no amount is payable under the suit.

v. Petroleum and Natural Gas Regulatory Board (PNGRB) in its order dated 18 March 2011 has imposed a civil penalty

for laying down pipeline in alleged contravention with the PNGRB guidelines/directions, of USD 39,942 with an addi-tional penalty of USD 1,598 per day from the date of commencement of laying and building of pipeline or the date of the decision of the Board that the pipeline proposed by the Company did not fall within the definition of ‘dedicated pipeline’, whichever is later.

PNGRB issued notice to the Company on 3 December 2010 to stop incremental activity of laying pipeline in Durgapur area. The Company objected to PNGRB’s notice on the ground that the pipeline laid by the Company is neither a ‘Common Carrier’ nor a ‘Contract Carrier’, but a dedicated pipeline and challenged the jurisdiction of PNGRB on this matter. As per the provisions of Production Sharing Contract (PSC) signed with GOI on 31 May 2001, the Company is authorised to lay, build, operate and expand the pipelines within and outside the contract area. The Company has ob-tained legal opinion on the above matter. As per the opinion, pipeline laid by the Company is pursuant to terms and conditions as specified in the PSC which principally governs the entire project and, in particular, laying of pipeline.

The Company approached the Hon’ble High Court of Delhi against the order of PNGRB. The Hon’ble High Court after hearing the matter on 25 March 2011 has asked the Company to deposit an amount of USD 79,885 with the Court pend-ing the final decision on the matter. During the previous year, the above matter has been disposed off by the Hon’ble High Court and directed the PNGRB to decide the matter afresh. The Hon'ble Hight Court of Delhi has also released the deposit of USD 79,885 to the Com-pany. Thereafter, the hearing was conducted by PNGRB and on 31 March 2014, PNGRB issued fresh order declaring the pipelines of the Company as Common Carrier. It further also levied civil penalty of USD 159,770 and a penalty of USD 3,195 per day for the period during which the failure continued/continues after contravention of first direction. The Company challenged the same in Delhi High Court and the Court vide its order dated 28 April 2014 directed PNGRB not to take any coercive action against the Company. It also directed that the Company shall continue to supply the gas as of today through existing pipeline. The Company was also directed to undertake any incremental activity seeking permission of the Delhi High Court. Further, it also directed the Company to deposit USD 79,885 with the High Court within four weeks from date of order, which the Company has complied with. The matter is currently pending in High Court.

vi. During the previous year ended 31 March 2013, Directorate General of Hydrocarbons (DGH) demanded additional PLP

(Production linked payments) of USD 93,290 and USD 171,492 for the financial years ended 31 March 2011 and 31 March 2012 respectively disallowing compression and transportation cost. The contention of DGH was that the Company has not obtained any approval for compression and transportation from any authority as mentioned in the ap-proval letter dated 14 February 2007. The Company has obtained price approval from MoPNG as per the provisions of the CBM contract. The Company believes that none of the clauses of CBM contract dated 31 May 2001 makes it man-datory on the Company to seek any further approval before claiming any deductions for any entity/authority. The Com-pany has clarified the position to DGH and has not received further communication from them.

vii. On 12 December 2009, The Company and the SAIL entered into an agreement for supply of CBM Gas to SAIL. Subse-quently, SAIL discontinued the intake of gas in breach of the terms of the agreement. The Company issued letter dated 12 November 2010 calling upon SAIL to release payments to the tune of USD 431,934 against the debit notes dated 12 November 2010 for insufficient notice period. SAIL, vide letter dated 1 December 2010, refused to release payments to the Company with regard to the debit notes issued by the Company. The Company is of the view that conduct of SAIL is illegal and in violation of Clause 15 of the Agreement, as no sufficient notice period was given before stoppage


56

of supply. Further, the Company has raised debit notes/ invoices for the period from 26 November 2010 to 31 October 2012 for insufficient notice period.

The Company has filed a claim petition for an amount of USD 576,045 (inclusive of interest @ 15% from November 2010 till the time of filing of the petition). SAIL has also raised counter claim for USD 42,926,985.

During the pendency of the Arbitration proceedings, the matter was mutually settled between the parties and a memorandum of settlement dated 13 September 2014 was entered into between the Company and SAIL. Both the parties have unconditionally withdrawn their respective claims against each other as full and final settlement between the parties.

The matter was thereafter listed before the Arbitral Tribunal on 25 September 2014 on which the memorandum of set-tlement had been placed on record and the same was taken on record by the Tribunal. In view of the settlement arrived between the parties, the arbitration proceedings stand terminated and the Tribunal has passed an award in terms of the settlement and memorandum of settlement has been made part of the award. Since the claim has been withdrawn by SAIL, therefore it is no longer contingent liability.

viii. One of the contractors, M/s Sopan Projects (“Sopan”) filed an application against the Company in Hon’ble Delhi High Court under Section 9 of Arbitration & Conciliation Act, 1996 for interim measures of injunction against encashment of performance bank guarantee by the Company. The Hon’ble Delhi High Court permitted the Company to encash the bank guarantee amounting to USD 255,632 and further asked the Company to deposit USD 127,816 with the Registrar within one week of encashment of bank guarantee. The Company has deposited USD 127,816 within the stipulated time. The court has further directed that the said amount of USD 127,816 may be released to Sopan upon furnishing the bank guarantee amounting to USD 127,816 which should remain valid till the completion of the arbitral proceedings. Currently, this matter is pending under arbitration and during the arbitration proceeding, statement of claim has been filed by Sopan. The Company has filed its counter claim of USD 19,913,423 against the claim of Sopan. The Company is of the strong opinion that the claim of the said Contractor is untenable and no amount is payable.

ix. One of the supplier, M/s Jakson Limited (“Jakson”) invoked arbitration clause as per the agreement dated 6 October 2012 for payment against the supply of gensets to the Company. The Company has disputed the claim of the supplier as the genset supplied were to be free from any defects, however the gensets supplied by Jakson were defective and even after several complaints made by the Company the defect was not rectified by Jakson nor they were replaced, as per the terms of the warranty clause of the agreement, owing to which the productivity of the Company was critically ham-pered.

Currently, this matter is pending under arbitration and during the arbitration proceeding, statement of claim has been filed by Jakson. The Company has filed its counter claim of Rs. 1,159,685,351 against the claim of Jakson. The Com-pany is of the strong opinion that the claim of the said Contractor is untenable and no amount is payable.

x. During the current year one of the customer SRMB Srijan Limited (‘SRMB’) has filed a civil suit against the Company in regards to the bank guarantee issued by SRMB to the Company against the payment of gas supplied by the Company to SRMB. In the suit several applications have been filed by both parties. Pursuant to order passed by the Hon’ble Court bank guarantee has been invoked and encashed by the Company. The claim against SRMB arises due to their breach of the terms of the Gas Supply and Purchase Agreement executed on 11 May 2011 and their illegal attempt to terminate the Agreement. The Company has already initiated arbitration pro-ceedings and submitted its claim before the Arbitral Tribunal. Based on the legal opinion taken by the Company, the Company is of the strong view that the Company would able to recover their claim towards MGO (minimum guarantee offtake), other charges and expenses under the Gas Sale and Purchase Agreement.

xi. During the current year, based on a legal opinion, the Company has decided to refrain from the deposit of entry tax. In view of the opinion, based on a judgment passed by the Hon’ble Calcutta High Court, the Company can file a writ peti-tion in High Court for non-applicability of entry tax on its operations and is not required to pay any amount of entry tax until the disposal of that writ petition.


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29. Capital commitments:

31 March 2015 31 March 2014

Estimated amount of contracts remaining to be executed on capital account and not provided for:

- For land* 73,917 1,037,401

- For others 874,601 1,205,151

948,518 2,242,552

As at

* Previous year includes an estimated amount of USD 969,114 payable in relation to an exemption received from the Gov-ernment of West Bengal vide its order dated 9 January 2014 to hold 252.27 acres of land in the Phase I in the manner as stipu-lated in the order. (Refer note 35)

30. Related party disclosures

a) Relationship with the related parties

Related parties where control exists: The Company is controlled by Mr. Yogendra Kr. Modi, who is also the Company’s ultimate controlling party.

Other related parties with whom transactions have taken place during the year and the nature of related party relationship:

YKM Holdings Private Limited YKM Holdings Private Limited YKM Holding International Limited YKM Holding International Limited

Mr. Yogendra Kr. Modi Mr. Yogendra Kr. Modi

Mr. Pejavar Murari Mr. Pejavar Murari (till 16 December 2014) Mr. Kashi Nath Memani Mr. Kashi Nath Memani

(till 16 December 2014) Mr. Haigreve Khaitan Mr. Haigreve Khaitan

(till 17 February 2015) Mr. Paul Sebastian Zuckerman Mr. Paul Sebastian Zuckerman Mr. Ashok Jha Mr. Ashok Jha Mr. G.S Talwar Mr. G.S Talwar Mr. S. Sundareshan

(w.e.f. 10 January 2015)

Relative of key managerial personnel Mr. Prashant Modi Mr. Prashant Modi

YKM Holding International Limited YKM Holding International Limited Khaitan and Co. Khaitan and Co. Khaitan and Co. LLP Khaitan and Co. LLP

Key managerial personnel

Entities that are controlled, jointlycontrolled or significantly influencedby, or for which significant votingpower in such entity resides with,directly or indirectly, any individual orclose family member of such individualreferred above.

Year ended 31 March

Shareholders having significant influen2015 2014


58

b) The following tables provide the total amount of transactions which have been entered into with related parties during the years ended 31 March 2015 and 2014.

Related Party

2015 2014YKM Holdings Private Limited 136,763 131,650Khaitan & Co.

433 64,443

Khaitan & Co. LLP 114,780 115,958

YKM Holdings International Limited - 17,079

Payment for services rendered (including reimbursement of expenses)

Nature of transaction For the year ended 31 March

Lease rentals

Reimbursement of expenses

Payment for services rendered (including reimbursement of expenses)

c) Compensation paid to key management personnel and their relatives

2015 2014Short term employee benefits 1,070,583 959,254Provision for gratuity 22,159 74,992Compensated absences 36,753 145,304 Defined contribution plan 112,300 159,395 Commission - 82,645

1,241,795 1,421,590


In addition to above payments, the Company has also paid USD 20,028 (31 March 2014: USD 7,429) as sitting fees to the non-executive directors for attending various meetings and the same are included in ‘other operating expenses’ in the income statement (refer note 22). These non-executive directors have also been issued stock options by the Company under the stock options plan and the expense for the same recognised during the year ended 31 March 2015 amounts to USD Nil (31 March 2014: USD 1,060).

d) Also refer note 17(e) with respect to personal guarantee given by Mr. Mr. Yogendra Kr. Modi and Mr. Prashant Modi and other charges created on the assets/ cash flows of YKM Holdings Private Limited for the loan taken by the Company.

e) The following tables provide the total amount outstanding with related parties as at the financial year-end.

Receivable Payable Receivable PayableYKM Holdings Private Limited (refer notes 9, 11 and 19) *

53,930 - 56,166 10,062

Mr. Yogendra Kr. Modi (refer note 19) - 78,513 - 50,469

Mr. Prashant Kr. Modi (refer note 19) - 107,499 - 28,635

Mr. Paul Sebastian Zuckerman (refer note 19) - 11,216 - 11,423

Khaitan & Co. (refer note 19) - 230 - -

Khaitan & Co. LLP (refer note 19) - 44,158 - 53,617

53,930 241,616 56,166 154,206

As at 31 March 2015 As at 31 March 2014

*Amounts recoverable from YKM Holdings Private Limited consists of USD 26,965 (31 March 2014: USD 28,083) on ac-count of security deposits paid for property taken on lease recoverable on expiry of lease agreement (refer note 11) and USD 26,965 (31 March 2014: USD 28,083) on account of advance paid in rent adjustable against future occupation of property taken on lease (refer note 9).


59

f) Terms and conditions of transactions with related parties

Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. For the year ended 31 March 2015, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2014: USD Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

31. Segment reporting

Chief Operating Decision Maker (CODM) reviews the business as one operating segment being the extraction and sale of CBM/CNG gas. Hence, no separate segment information has been furnished herewith. The entire sale has been made to external customers domiciled in the entity’s country. Revenue of approximately USD 18,798,924 (31 March 2014: USD 13,420,178) is derived from 1 (31 March 2014: 2) customer which constitute more than 50% of the total sales. The revenue from each such customer is USD 18,798,924 (31 March 2014: USD 10,166,976 and USD 3,253,202). All of the non-current assets other than financial instruments and deferred tax assets (there are no employment benefit assets and rights arising under insurance contracts) are located in India and amounted to USD 194,939,955 (31 March 2014: USD 199,276,484).

32. Quantitative detail of sales

The details of gas sold in cubic meters during the year ended 31 March 2015 and 2014 are as follows:

2015 2014

Coal bed methane 104,000,171 92,938,498

Compressed natural gas 1,764,234 1,445,741

105,764,405 94,384,239


(in Standard Cubic Meters)

33. The categorization of wells as exploratory, development, and producing; allocation of cost incurred on them, internal esti-mation of proved developed reserves and basis thereof; and depletion of producing properties on the basis of the proved developed reserves are technical in nature particularly considering the nature of unconventional CBM industry and hence the management has performed the technical/ commercial evaluation in respect of these using its competent technical team and external expert as required.

34. Leases and arrangements containing lease

The Company enters into equipment lease and other arrangements with various contractors for development of its wells, whereby the specific assets leased by the contractors are used only at the Company's well development site and such ar-rangements convey the right to use the assets.

These arrangements include non-lease elements also and are being treated as well development costs along with other costs. The segregation of the lease and non-lease elements under the arrangements is not possible. The details of total expenses in this regard are as follows:


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Nature

2015 2014

Cementing and fracturing and perforation charges - 4,890,359

Logging and wireline charges - 240,479

Work over expenses 1,010,174 986,516

Directional drilling charges - 768,189


a) The Company’s leasing arrangements are in respect of operating leases for premises and equipments. This leasing ar-rangement ranges from 12 months to 3 years and are renewable on mutual consent of parties as per mutually agreeable terms. All the lease agreements are cancellable in nature.

Lease rentals accrued during the year for the premises, equipment and site office/store yard amounting to USD 173,027 (31 March 2014: USD 168,013) have been charged to the income statement and the balance of USD 1,540 (31 March 2014: USD 3,190) has been recognized in capital work in progress.

b) The Company had taken a building on lease for 99 years, the net carrying amount of which is USD Nil (31 March 2014:

USD Nil). Entire consideration for the building was paid during the year ended 31 March 2006 and there are no obligations in respect of future lease rentals payable. During the previous year, the Company had sublease the building for a net con-sideration of USD 315,868 and the resultant profit has been recognized in the income statement.

c) The Company has taken different pieces of land on lease on which the wells are being developed. The lease period for these pieces of land generally ranges from 25 to 99 years. The Company is required to pay the entire amount of consideration as lease premium upfront upon entering into agreement for acquisition of these pieces of land and no further periodic lease rentals are payable for use of these pieces of land. The leasehold land have been classified as finance (60 years or above) or operating lease (upto 59 years) on the basis of principles given in IAS 17.

35. During the year ended 31 March 2014, the Company had received an exemption from the Government of West Bengal to

hold 252.27 acres of land held by the Company which was in excess of the ceiling limit. Subsequent to current year, the Company has received the final order to hold above mentioned land on 99 years lease on a lump sum payment of USD 394,392. Further, the Company has also applied for balance requirement of 318 acres of land. The application is under pro-cess and the Company believes that the Government of West Bengal would give the exemption to the Company for remain-ing land also.

36. Mining Lease

The Company has received Grant of Petroleum Mining Lease under Rule 5(1)(ii) of the PNG Rules and Oil Fields (Regula-tion and Development) Act, 1948 for mining of CBM in the Raniganj block on 4 September 2008 from the Government of West Bengal. The Company has entered into the mining lease agreement with the West Bengal Government. The agree-ment got signed on 5 June 2014 and is valid for a period of 20 years with effect from 4 September 2008. The Governor of Tamil Nadu ("State Government") in accordance with the Petroleum and Natural Gas Rules, 1959 made under Oil Field (Regulation and Development) Act, 1948 has awarded a license to the Company, on 13 September 2011 for the term of 4 years, to prospect for Petroleum and Natural Gas for carrying out CBM activities in the land situated in Than-javur District, Tamil Nadu, subject to the condition as specified in the contract entered.



Chairman & Managing Director

Director

Place: Gurgaon Date: 21 July 2015

Place: Gurgaon Date: 21 July 2015