TIDMINDI
RNS Number : 0690B
Indus Gas Limited
29 September 2022
Indus Gas Limited
("Indus" or the "Company")
Audited final results for the 12 months ended 31 March 2022
Indus Gas Limited (AIM:INDI), an oil & gas exploration and
development company with assets in India, announces its full year
results for the 12 months to 31 March 2022.
Highlights
-- The production and sale of gas started from a small area in
the SSG and SSF field in the year 2021.
-- New development wells tested rich Gas with low CO2.
-- PNGRB is evaluating the options for pipelines
infrastructure/route for evacuation of the gas from the block.
-- As announced post year end, the gas price for RJ-ON/6 block
effective from 1 April 2022 has been agreed to be as per the
domestic gas price on Gross Calorific Value (GCV) basis as notified
by petroleum planning and analysis cell of the Government of India.
The floor price will continue to US$ 4.5146 per MMBTU on GCV being
the existing price of US$ 5 per MMBTU on Net Calorific Value (NCV)
basis. The gas price revision has resulted in the gas price being
revised to US$ 6.1 per MMBTU on GCV basis from 1 April 2022 to 30
September 2022 resulting in price increase of about 35% on the gas
price for the year 2021 -22.
OPERATIONAL
-- Preparations continued on site during the year for the
planned ramp up in production, including the drilling of additional
wells.
-- Drilling and completion of production wells for the SGL field
development continued as planned to meet the planned gas sale
requirements.
-- Continued testing of previously drilled wells.
FINANCIAL
-- Total Revenues were US$ 53.71 million (2020-21: US$ 48.53
million).
-- Operating profit Increased to US$ 45.94 million (2020-21:
increased to US$ 44.48 million).
-- Profit before tax Increased to US$ 45.96 million (2020-21:
US$ 44.08 million).
-- Net Investments made in property, plant and equipment
amounting to US$ 68.27 million (2020-21: US$ 100.26 million).
All repayments under the existing debt terms were made on a
timely basis.
For further information please conta ct:
Indus Gas Limited
Jonathan Keeling +44 (0) 20 8133 3375
Strand Hanson Limited (Nominated and Financial Adviser)
Ritchie Balmer, Rory Murphy +44 (0) 20 7409 3494
Arden Partners plc (Broker)
Equity Sales: James Reed-Daunter +44 (0) 20 7614 5900
Overview
Indus Gas Limited ("Indus" or "Company") is engaged in oil and
gas exploration and development in Block RJ-ON/6, Rajasthan, India.
Indus through its subsidiaries owns a 63% participating interest in
SGL gas field and 90% participating interest in SSG and SSF field.
Other partners in the block are (i) Focus Energy Ltd., which
operates the Block, and (ii) Oil and Natural Gas Corporation
(ONGC), India, which is the licensee of the Block. The
'Participative Interest' of Indus as mentioned above is held
through its wholly owned subsidiaries iServices Investment Limited,
Mauritius and Newbury Oil Company Limited, Cyprus. The Block
currently measures an area of 2,176 sq. km and lies onshore in the
highly prospective mid Indus Basin. The first discovery in the
Block was made in 2006 and the first commercial production
commenced in 2010. The Company has received approval from the
Directorate General of Hydrocarbons (DGH) and government for the
integrated Field Development Plan ("FDP") of SSG (Pariwar) &
SSF (B&B) discoveries and for enhancement of production from
the SGL field. Production has started from a small area in the SSG
and SSF field in the year 2021. The Petroleum & Natural Gas
Regulatory Board (PNGRB) is evaluating options for pipeline
infrastructure/route for evacuation of the gas from these
fields.
Chairman's Statement
This has been an encouraging year on account of the start of
production from a small area in the SSG and SSF fields.
The Company's strong operational and financial performance is
highlighted by another year of good profit generation and the Board
continues to anticipate a substantial increase in revenues once the
connectivity to national grid is achieved. The Board is very
pleased to have achieved the price increase with GAIL. Further,
there is no significant impact of the Russia-Ukraine crisis as the
group has been able to secure a gas price increase.
The Board would like to thank their employees, shareholders,
bankers and all other stakeholders for their loyalty and continued
support. The safety and well-being of our employees and all the
workers on-site at the RJ-ON/6 Block is our number one priority and
despite the current challenges posed by the coronavirus pandemic,
the management team will continue to focus on the execution of the
Company's long-term strategy of achieving both growth in reserves
and commercial production. The Indian government continues to
prioritize the increase of domestic gas production to make India
Self-reliant thereby reducing the dependence on expensive imported
energy and enhancing energy security.
Jonathan Keeling
Chairman
Board of Director's Review
We are pleased to announce another strong year of consolidated
total revenues totaling US$ 53.71 million (2020-21: US$ 48.53
million). We continued to have good operating profits and our
stated long-term business plan remains on track. The revised Field
Development Plan for the SGL area and an integrated Field
Development Plan for SSG & SSF area of the Block, for the
future enhancement of revenues, had been previously approved by the
Management Committee. Production of gas from small area of SSG and
SSF field of the block has started in 2021. PNGRB is evaluating
options for pipeline infrastructure/ route for evacuation of gas
from these fields
Operations
Operational activities over the last year have followed the
Group's objectives and are summarized below:
a) drilling of additional wells to support the integrated field development plan;
b) drilling and completion of production wells for the SGL, SSG
and SSF field development continued;
c) testing various wells previously drilled where gas shows were
encountered to enable the Group to increase its reserve base;
and
d) testing the B&B gas recovery potential in addition to gas
discovered in the Pariwar formation.
The current drilling programme is progressing on schedule and
producing positive results. Following the approval of the FDP for
SSG & SSF Development area, we continue to test concepts and
obtain log and core data for analysis outside of the SGL area. In
the SGL area, work continues to increase our knowledge of the
producing intervals. Additional testing is an important element of
the operational programme to enhance production and maximize
recovery of gas through efficient asset management. Activities such
as these will continue to increase as we obtain and act on new data
and production history. An important development in respect of the
SGL Field was the discovery of new intervals within Pariwar. These
were located below the existing producing P10 sands. These
reservoirs were successfully exploited for production and going
forward will add to the reserves and production from both existing
and new wells.
Financials
During the financial year, the Company achieved total revenue of
US$ 53.71 million (2020-21: US$ 48.53 million), resulting in
reported operating profit of US$ 45.94 million (2020-21US$ 44.48
million). The reported profit after tax was US$ 35.21 million
(2020-21 US$ 27.93 million).
While the Company is not expected to pay any significant taxes
on its income for many years in view of the 100% deduction allowed
on the capital expenses incurred in the Block, the Company has
accrued a deferred tax liability of US$ 10.75 million (2020-21: US$
16.15 million) as per IFRS requirements.
Post this deferred tax liability provision, the net profit for
the year was US$ 35.21 million.
The net expenditure on the purchase of property, plant &
equipment was US$ 68.27 million (2020-21: US$ 100.26 million) . The
property plant and equipment, including development assets and
production assets, increased to US$ 1,149.22million (2020-21: US$
1080.95 million).
The current assets (excluding cash) as of 31 March 2022 stood at
US$ 149.97 million (2020-21: US$ 165.88 million), which majorly
includes US$ 9.46 million (2020-21: US$ 8.54 million) of
inventories, US$ 120.41 million (2020-21: US$ 124.39 million) of
receivables from related party and US$ 20.11 million (2020-21: US$
32.95 million) of trade and other receivables. Receivables of US$
16.64 million of this total of US$ 20.11 million have been realized
subsequent to 31 March 2022. The current liabilities of the
Company, excluding the related party liability of US$ 0.35 million
(2020-21: US$ 0.35 million) and current portion of long-term debt
of US$ 172.75 million (2020-21: US$ 24.49 million), stood at US$
6.58 million (2020-21: US$ 8.96 million). This comprised mainly of
deferred revenue of US$ 5.08 million (2020-21: US$ 5.08 million)
(GAIL-Take or Pay Obligation) and other liabilities of US$ 1.50
million (2020-21: US$ 3.89 million).
As of 31 March 2022, the outstanding debt of the Company to
banks was US$ 58.32million (2020-21: US$ 78.90 million), of which
US$ 19.08 million (2020-21: US$ 20.92 million) was categorized as
repayable within a year and the remaining US$ 39.24million
(2020-21: US$ 57.98 million) has been categorized as a long-term
liability. During the year, the Company repaid an amount of US$
20.74 million of the outstanding term loan facilities, as per the
scheduled repayment plan. As of 31 March 2022, the outstanding
unsecured debt from bonds was US$ 153.67 million (2020-21: US$
153.55 million), of which US$ 153.67 million (2020-21: US$ 3.57
million) was categorized as repayable within a year and the
remaining US$ Nil (2020-21: US$ 149.98 million) has been
categorized as a long-term liability.
Outlook
During the next twelve months, we expect that the Company will
be able to achieve higher revenue and look forward to continued
drilling success in both Pariwar and B&B combined with making
further progress on the commercialization of our gas reserves.
Jonathan Keeling
Director
Consolidated Statement of Financial Position
(All amounts in United States Dollars, unless otherwise
stated)
Note 31 March 2022 31 March 2021
----------------------- ---------------
ASSETS
Non-current assets
7 1,149,223,672 1,080,954,065
1,213,986 916,330
Property, plant and equipment 549 567
-----------------------
Tax assets
Other assets
-----------------------
Total non-current assets 1,150,438,207 1,081,870,962
----------------------- ---------------
Current assets
Inventories 10 9,459,753 8,538,264
Trade and other receivables 11 20,105,840 32,954,081
Prepayments to related party 16 120,408,124 124,394,123
Cash and cash equivalents 12 4,452,010 995,765
----------------------- ---------------
Total current assets 154,425,727 166,882,233
----------------------- ---------------
Total assets 1,304,863,934 1,248,753,195
----------------------- ---------------
LIABILITIES AND EQUITY
Shareholders' equity
Share capital 13 3,619,443 3,619,443
Additional paid-in capital 13 46,733,689 46,733,689
Currency translation reserve 13 (9,313,782) (9,313,782)
Merger reserve 13 19,570,288 19,570,288
Retained earnings 13 251,953,802 216,743,618
Total shareholders' equity 312,563,440 277,353,256
----------------------- ---------------
Liabilities
Non-current liabilities
Long term debt, excluding current
portion 14 39,239,735 207,959,625
Provision for decommissioning 15 1,987,325 1,912,427
Deferred tax liabilities (net) 8 120,398,433 109,653,312
Payable to related parties,
excluding current portion 16 625,442,503 592,508,798
Deferred revenue 18 25,563,995 25,563,995
Total non-current liabilities 812,631,991 937,598,157
----------------------- ---------------
Current liabilities
Current portion of long-term
debt 14 172,747,343 24,490,194
Current portion payable to
related parties 16 345,105 349,019
Trade and other payables 17 1,498,969 3,885,483
Deferred revenue 18 5,077,086 5,077,086
Total current liabilities 179,668,503 33,801,782
----------------------- ---------------
Total liabilities 992,300,494 971,399,939
----------------------- ---------------
Total equity and liabilities 1,304,863,934 1,248,753,195
----------------------- ---------------
(The accompanying notes are an integral part of these
consolidated financial statements)
These consolidated financial statements were approved and
authorized for issue by the board on 27 September 2022 and was
signed on its behalf by:
Jonathan Keeling
Chairman
Consolidated Statement of Comprehensive Income
(All amounts in United States Dollars, unless otherwise
stated)
Year ended Year ended
Note 31 March 2022 31 March 2021
--------------------------- -----------------------
Revenues 18 53,709,538 48,526,007
Cost of sales (6,844,856) (2,893,101)
--------------------------- -----------------------
Gross profit 46,864,682 45,632,906
--------------------------- -----------------------
Cost and expenses
Administrative expenses (924,699) (1,154,696)
--------------------------- -----------------------
Operating profit 45,939,983 44,478,210
--------------------------- -----------------------
Foreign currency exchange
Gain/(loss),
net 20 15,322 (401,346) 56
Profit before tax 45,955,305 44,076,864
--------------------------- -----------------------
Income taxes 9
- Deferred tax expense (10,745,121) (16,148,477)
--------------------------- -----------------------
Profit for the year
(attributable
to the shareholders of the
Group) 35,210,184 27,928,387
Total comprehensive income for
the year (attributable to the
shareholders of the Group) 35,210,184 27,928,387
--------------------------- -----------------------
Earnings per share 22
Basic 0.19 0.15
Diluted 0.19 0.15
(The accompanying notes are an integral part of these
consolidated financial statements)
Consolidated Statement of Changes in Equity
(All amounts in United States Dollars, unless otherwise
stated)
Common stock Additional Currency Merger Retained Total
paid in translation reserve earnings shareholders'
capital reserve equity
------------------------- ----------- ------------ ----------- ------------- --------------
No. of Amount
shares
--------------- ------------ ----------- ----------- ------------ ----------- ------------- --------------
Balance
as at 1 April
2020 182,973,924 3,619,443 46,733,689 (9,313,782) 19,570,288 188,815,231 249,424,869
--------------- ------------ ----------- ----------- ------------ ----------- ------------- --------------
- - - - - 27,928,387 27,928,387
---------------
Total
comprehensive
income for
the year
--------------- ------------ ----------- ----------- ------------ -----------
Balance
as at 31
March 2021 182,973,924 3,619,443 46,733,689 (9,313,782) 19,570,288 216,743,618 277,353,256 -
--------------- ------------ ----------- ----------- ------------ ----------- ------------- --------------
- - - - - 35,210,184 35,210,184
---------------
Total
comprehensive
income for
the year
--------------- ------------ ----------- ----------- ------------ ----------- ------------- --------------
Balance
as at 31
March 2022 182,973,924 3,619,443 46,733,689 (9,313,782) 19,570,288 251,953,802 312,563,440
--------------- ------------ ----------- ----------- ------------ ----------- ------------- --------------
(The accompanying notes are an integral part of these
consolidated financial statements)
Consolidated Statement of Cash Flow
(All amounts in United States Dollars, unless otherwise
stated)
Year ended Year ended
31 March 31 March
2022 2021
-------------- --------------
Cash flow from operating activities
Profit before tax 45,955,305 44,076,864
Adjustments
Unrealized exchange loss/(gain) 36,942 (57,126)
Depreciation 5,834,482 1,665,054
Changes in operating assets and liabilities
Inventories (921,489) (902,843)
Trade receivables 14,573,417 (6,590,422)
Other current and non-current assets (1,725,158) (4,473)
Payable to related party-operating
activities 6,375,770 2,759,207
Provisions for decommissioning 74,898 213,218
Accrued expenses and other liabilities (2,390,428) 844,380
Cash generated from operations 67,813,739 42,003,859
Income taxes (paid)/received (320,588) 1,113,207
-------------- --------------
Net cash generated from operating
activities 67,493,151 43,117,066
-------------- --------------
Cash flow from investing activities
Purchase of property, plant and equipment (22,561,337) (121,601,484)
Net cash used in investing activities (22,561,337) (121,601,484)
-------------- --------------
Cash flow from financing activities
Repayment of long-term debt from banks (20,736,000) (21,168,000)
-------------- --------------
Proceeds from loans by related parties 17,425,000 116,950,000
Repayment of loans by related parties (23,000,000) -
Payment of interest (15,150,562) (16,618,465)
-------------- --------------
Net cash (used)/generated from financing
activities (41,461,562) 79,163,535
-------------- --------------
Net increase in cash and cash equivalents 3,470,252 679,117
Cash and cash equivalents at the
beginning of the year 995,765 284,619
Effects of exchange differences on
cash and cash equivalents (14,007) 32,029
-------------- --------------
Cash and cash equivalents at the
end of the year 4,452,010 995,765
-------------- --------------
(The accompanying notes are an integral part of these
consolidated financial statements)
Notes to Consolidated Financial Statements
(All amounts in United States Dollars, unless otherwise
stated)
1. INTRODUCTION
Indus Gas Limited ("Indus Gas" or "the Company") was
incorporated in the Island of Guernsey on 4 March 2008 pursuant to
an Act of the Royal Court of the Island of Guernsey. The Company
was set up to act as the holding Company of iServices Investments
Limited. ("iServices") and Newbury Oil Co. Limited ("Newbury").
iServices and Newbury are companies incorporated in Mauritius and
Cyprus, respectively. iServices was incorporated on 18 June 2003
and Newbury was incorporated on 17 February 2005. The Company was
listed on the Alternative Investment Market (AIM) of the London
Stock Exchange on 6 June 2008. Indus Gas through its wholly owned
subsidiaries iServices and Newbury (hereinafter collectively
referred to as "the Group") are engaged in the business of oil and
gas exploration, development and production.
Focus Energy Limited ("Focus"), an entity incorporated in India,
entered into a Production Sharing Contract ("PSC") with the
Government of India ("GOI") and Oil and Natural Gas Corporation
Limited ("ONGC") on 30 June 1998 for petroleum exploration and
development concession in India known as RJ-ON/06 ("the Block").
Focus is the Operator of the Block. On 13 January 2006, iServices
and Newbury entered into an interest sharing agreement with Focus
and obtained a 65 per cent and 25 per cent share respectively in
the Block. The balance of 10 per cent of participating interest is
owned by Focus. The participating interest explained above is
subject to any option exercised by ONGC in respect of individual
fields (already exercised for all the wells in SGL field as further
explained in note 3 ).
2. GENERAL INFORMATION
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ('IFRS') as adopted by the European Union ('EU'). The
consolidated financial statements have been prepared on a going
concern basis (refer to note 27) and are presented in United States
Dollar (US$). The functional currency of the Company as well as its
subsidiaries is US$.
3. JOINTLY CONTROLLED ASSETS
As explained above, the Group through its subsidiaries-iServices
and Newbury has an "Interest sharing arrangement" with Focus in the
block, which under IFRS 11 Joint Arrangements, is classified as a
'Joint operation'. All rights and obligations in respect of
exploration, development and production of oil and gas resources
under the 'Interest sharing agreement' are shared between Focus,
iServices and Newbury in the ratio of 10 per cent, 65 per cent and
25 per cent respectively.
Under the PSC, the GOI, through ONGC has an option to acquire a
30 per cent participating interest in any discovered field, upon
such successful discovery of oil or gas reserves, which has been
declared as commercially feasible to develop.
The block is divided into 3 fields - SGL, SSG and SSF.
The SGL field received its declaration of commercial discovery
on 21 January 2008. Subsequent to the declaration of commercial
discovery in SGL field, ONGC exercised the option to acquire a 30
per cent participating interest in the discovered fields on 6 June
2008. The exercise of this option would reduce the interest of the
existing partners proportionately.
However, on exercise of this option, ONGC is liable to pay its
share of 30 per cent of the SGL field development costs and
production costs incurred after 21 January 2008 and in order to be
entitled to their 30 per cent share in the production of gas
subject to recovery of contract costs as explained below.
The allocation of the production from the field to each
participant in any year is determined on the basis of the
respective proportion of each participant's cumulative unrecovered
contract costs as at the end of the previous year or where there is
no unrecovered contract cost at the end of previous year on the
basis of participating interest of each such participant in the
field.
On the basis of the above, gas production for the year ended 31
March 2022 continues to be shared between Focus, iServices and
Newbury in the ratio of 10 percent, 65 percent and 25 percent,
respectively. ONGC will not be entitled to any participating
interest in the production until the full exploration and
development cost is recovered by other participants.
The aggregate amounts relating to jointly controlled assets,
liabilities, expenses and commitments related thereto that have
been included in the consolidated financial statements are as
follows:
31 March 2022 31 March 2021
--------------------------------- --------------- --------------
Non-current assets 1,149,223,672 1,080,954,065
Current assets 132,932,387
129,867,877
Non-current liabilities 19,87,325 1,912,427
Expenses (net of finance income) 6,702,159 2,732,049
Commitments NIL NIL
Further, the SSG and SSF field also received its declaration of
commerciality on 24th November 2014. Subsequent to the declaration
of commerciality for SSG and SSF discovery, ONGC did not exercise
the option to acquire 30 percent in respect of SSG and SSF field.
The participating interest in SSG and SSF field between Focus,
iServices and Newbury will remain in ratio of 10 percent, 65
percent and 25 percent respectively for exploration, evaluation and
development cost, and production revenue for SSG and SSF in the
block.
4. NEW AND AMED STANDARDS ADOPTED BY THE GROUP
There are few Standards, interpretations or amendments that have
been issued prior to the date of approval of these financial
statements and endorsed by IASB. Following are the amendments that
applicable from financial year beginning 1 January 2021.
a. Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
b. COVID-19 Rent Related Concessions beyond 30 June 2021 (Amendments to IFRS 16)
These amendments do not have a significant impact on the
Financial Statements and therefore the disclosures have not been
made.
As at 31 March 2022, the Group held bank loans that reference
USD LIBOR which will have their last LIBOR fixing set before the
relevant USD LIBORs ceases publication on 30 June 2023.
5. STANDARDS AND INTERPRETATIONS ISSUED BUT NOT EFFECTIVE AND YET TO BE APPLIED BY THE GROUP
A number of new and amended accounting standards and
interpretations have been published that are not mandatory for the
Group's accounts ended 31 March 2022, nor have they been early
adopted. These standards and interpretations are not expected to
have a material impact on the Group's consolidated financial
statements:
i. References to the Conceptual Framework
ii. Proceeds before Intended Use (Amendments to IAS 16)
iii. Onerous Contracts - Cost of Fulfilling a Contract
(Amendments to IAS 37, effective from 1 January 2022)
iv. Annual Improvements to IFRS Standards 2018-2020 Cycle
(Amendments to IFRS 1, IFRS 9, IFRS 16, IAS 41, effective from 1
January 2022)
v. Classification of Liabilities as Current or Non-current
(Amendments to IAS 1) (effective from 1 January 2023).
vi. Deferred Tax related to Assets and Liabilities from a single
transaction. (Amendments to IAS 12, effective from 1 January
2023)
6. SUMMARY OF ACCOUNTING POLICIES
The consolidated financial statements have been prepared on a
historical basis, except where specified below. A summary of the
significant accounting policies applied in the preparation of the
accompanying consolidated financial statements are detailed
below.
6.1. BASIS OF CONSOLIDATION
The consolidated financial statements include the financial
statements of the parent company and all of its subsidiary
undertakings drawn up to 31 March 2022. The Group consolidates
entities which it controls. Control exists when the parent has
power over the entity, is exposed, or has rights, to variable
returns from its involvement with the entity and has the ability to
affect those returns by using its power over the entity. Power is
demonstrated through existing rights that give the ability to
direct relevant activities, those which significantly affect the
entity's returns.
The Group recognises in relation to its interest in a joint
operation:
a. its assets, including its share of any assets held jointly;
b. its liabilities, including its share of any liabilities incurred jointly;
c. its revenue from the sale of its share of the output arising from the joint operation;
d. its share of the revenue from the sale of the output by the joint operation; and
e. its expenses, including its share of any expenses incurred jointly.
Intra-Group balances and transactions, and any unrealised gains
and losses arising from intra-Group transactions are eliminated in
preparing the consolidated financial statements. Amounts reported
in the financial statements of subsidiaries have been adjusted
where necessary to ensure consistency with the accounting policies
adopted by the Group.
Profit or losses of subsidiaries acquired or disposed of during
the year are recognised from the date of control of acquisition, or
up to the effective date of disposal, as applicable.
6.2. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
In preparing consolidated financial statements, the Group's
management is required to make judgments, estimates and assumptions
that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
financial statement and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of current events and actions,
actual results may ultimately differ from those estimates. The
management's estimates for the useful life and residual value of
tangible assets, impairment of tangible and intangible assets and
recognition of provision for decommissioning represent certain
particularly sensitive estimates. The estimates and underlying
assumptions are reviewed on an on-going basis. Revisions to
accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period or in
the period of the revision and future periods if the revision
affects both current and future periods. Information about
significant judgments, estimates and assumptions that have the most
significant effect on recognition and measurement of assets,
liabilities, revenues and expenses is provided in note 26.
6.3. FOREIGN CURRENCIES
The consolidated financial statements have been presented in US$
which is the functional currency of the Company and the group
entities.
Foreign currency transactions are translated into the functional
currency of the respective Group entities, using the exchange rates
prevailing at the dates of the transactions (spot exchange
rate).
Functional currency is the currency of the primary economic
environment in which the entity operates. Despite having operations
in India, all revenues are reported and contracts are priced in US
dollars.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates of
exchange at the reporting date. Differences arising on settlement
or translation of monetary items and other foreign currency
transactions are recognized in consolidated statement of
comprehensive income.
Non-monetary items measured at historical cost are recorded in
the functional currency of the entity using the exchange rates at
the date of the transaction.
6.4. REVENUE RECOGNITION
In accordance with IFRS 15, Revenue from contracts with
customers is recognised when or as the Company satisfies a
performance obligation by transferring control of a promised good
or service to a customer at an amount that reflects the
consideration to which the Company expects to be entitled in
exchange for the sale of products and service, net of taxes on
sales, estimated rebates and other similar allowances.
Sale of gas
The contracts with customers establish, a single performance
obligation in relation to supply of natural gas. The transfer of
control of natural gas coincides with title passing to the customer
and the customer taking physical possession. The whole of the
transaction price of the contract is allocated to supply of natural
gas and the revenue has been recognised on point in time basis when
the quantities of natural gas are supplied to the customers.
Take or pay: Any payment received on account of lesser gas
volume lifted by the customer against the 'annual contracted volume
'for which an obligation exists to make-up such differential gas in
subsequent periods is recognised as Contract Liabilities in the
year of receipt. Revenue in respect of take or pay obligation is
recognised when such gas is actually supplied or when the
customer's right to make up is expired, whichever is earlier. For
other contracts, where the Company does not have any obligation to
make up such gas in subsequent period is directly recognised as
revenue.
Revenue from technical services
The Company provides technical and commercial feasibility
reports to its customers to assist them in their evaluation of
investments in oil and gas fields. Each report is considered as a
separate performance obligation and the transfer of control of
reports coincides with acceptance of reports by the customer. The
price charged for each such report is reflective of its standalone
selling price and the revenue has been recognised on point in time
basis on acceptance of the report by its customers.
6.5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprises development assets and
other properties, plant and equipment used in the gas fields and
for administrative purposes. These assets are stated at cost plus
decommissioning cost less accumulated depreciation and any
accumulated impairment losses.
Development assets are accumulated on a field by field basis and
comprise costs of developing the commercially feasible reserve,
expenditure on the construction, installation or completion of
infrastructure facilities such as platforms, pipelines and other
costs of bringing such reserves into production. It also includes
the exploration and evaluation costs incurred in discovering the
commercially feasible reserve, which have been transferred from the
exploration and evaluation assets as per the policy mentioned in
note 6.6. As consistent with the full cost method, all exploration
and evaluation expenditure incurred up to the date of the
commercial discovery have been classified under development assets
of that field.
The carrying values of property, plant and equipment are
reviewed for impairment when events or changes in circumstances
indicate that the carrying values may not be recoverable.
An item of property, plant and equipment is derecognized upon
disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on de-recognition of the
asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the
consolidated statement of comprehensive income of the year in which
the asset is derecognized. However, where the asset is being
consumed in developing exploration and evaluation intangible
assets, such gain or loss is recognized as part of the cost of the
intangible asset.
The asset's residual values, useful lives and depreciation
methods are reviewed, and adjusted if appropriate, at each period
end. No depreciation is charged on development assets until
production commences.
Depreciation on property, plant and equipment is provided at
rates estimated by the management. Depreciation is computed using
the straight-line method of depreciation, whereby each asset is
written down to its estimated residual value evenly over its
expected useful life. The useful lives estimated by the management
are as follows:
Extended well test equipment 20 years
Bunk houses 5 years
Vehicles 5 years
Other assets
Furniture and fixture 5 years
Buildings 10 years
Computer equipment 3 years
Other equipment 5 years
Land acquired is recognized at cost and no depreciation is
charged as it has an unlimited useful life.
Production assets are depreciated from the date of commencement
of production, on a field by field basis with reference to the unit
of production method for the commercially probable and proven
reserves in the particular field.
Advances paid for the acquisition/ construction of property,
plant and equipment which are outstanding as at the end of the
reporting period and the cost of property, plant and equipment
under construction before such date are disclosed as 'Capital
work-in-progress'.
6.6. EXPLORATION AND EVALUATION ASSETS
The Group adopts the full cost method of accounting for its oil
and gas interests, having regard to the requirements of IFRS 6:
Exploration for and Evaluation of Mineral Resources. Under the full
cost method of accounting, all costs of exploring for and
evaluating oil and gas properties, whether productive or not are
accumulated and capitalized by reference to appropriate cost pools.
Such cost pools are based on geographic areas and are not larger
than a segment. The Group currently has one cost pool being an area
of land located in Rajasthan, India.
Exploration and evaluation costs may include costs of license
acquisition, directly attributable exploration costs such as
technical services and studies, seismic data acquisition and
processing, exploration drilling and testing, technical
feasibility, commercial viability costs, finance costs to the
extent they are directly attributable to financing these activities
and an allocation of administrative and salary costs as determined
by management. All costs incurred prior to the award of an
exploration license are written off as a loss in the year
incurred.
Exploration and evaluation costs are classified as tangible or
intangible according to the nature of the assets acquired and the
classification is applied consistently. Tangible exploration and
evaluation assets are recognized and measured in accordance with
the accounting policy on property, plant and equipment. To the
extent that such a tangible asset is consumed in developing an
intangible exploration and evaluation asset, the amount reflecting
that consumption is recorded as part of the cost of the intangible
asset.
Exploration and evaluation assets are not amortized prior to the
conclusion of appraisal activities. Where technical feasibility and
commercial viability is demonstrated, the carrying value of the
relevant exploration and evaluation asset is reclassified as a
development and production asset and tested for impairment on the
date of reclassification. Impairment loss, if any, is
recognized.
The group has completed exploration and evaluation phase in 2017
when field development plan has been approved by Directorate
General of Hydrocarbons ('DGH') i.e., technical feasibility and
commercial viability were demonstrable. Therefore, any cost
incurred thereafter on development activities is capitalised
directly to development assets.
6.7. IMPAIRMENT TESTING FOR EXPLORATION AND EVALUATION ASSETS AND PROPERTY, PLANT AND EQUIPMENT
An impairment loss is recognized for the amount by which an
asset's cash-generating unit's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of fair
value, reflecting market conditions less costs to sell, and value
in use based on an internal discounted cash flow evaluation.
Where there are indicators that an exploration asset may be
impaired, the exploration and evaluation assets are grouped with
all development/producing assets belonging to the same geographic
segment to form the Cash Generating Unit (CGU) for impairment
testing. Where there are indicators that an item of property, plant
and equipment asset is impaired, assets are grouped at the lowest
levels for which there are separately identifiable cash flows to
form the CGU. The combined cost of the CGU is compared against the
CGU's recoverable amount and any resulting impairment loss is
written off in the profit or loss of the year. No impairment has
been recognized during the year.
An assessment is made at each reporting date as to whether there
is any indication that previously recognized impairment losses may
no longer exist or may have decreased. If such indication exists,
the Group estimates the asset's or CGU's recoverable amount. A
previously recognized impairment loss is reversed only if there has
been a change in the assumptions used to determine the asset's
recoverable amount since the last impairment loss was recognized.
The reversal is limited so that the carrying amount of the asset
does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation, had no
impairment loss been recognized for the asset in prior years. Such
reversal is recognized in profit or loss unless the asset is
carried at a re-valued amount, in which case the reversal is
treated as a revaluation increase.
6.8. FINANCIAL ASSETS
Financial Instruments
Financial assets and financial liabilities are recognized when
the Group becomes a party to the contractual provisions of the
financial instrument. Financial assets are derecognized when the
contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and
rewards are transferred. A financial liability is derecognized when
it is extinguished, discharged, cancelled or expires. Except for
trade receivables that are measured at transaction price in
accordance with IFRS 15, financial assets and financial liabilities
are measured initially at fair value plus transactions costs,
except for financial assets and financial liabilities carried at
fair value through profit or loss, which are measured initially at
fair value. The value of interest free financial assets and
financial liabilities with short term maturities are not discounted
at initial recognition if the impact is not material. Financial
assets and financial liabilities are measured subsequently as
described below.
Recognition of Financial Asset
On initial recognition, a financial asset is classified as
measured at
- Amortized cost;
- Fair value through other comprehensive income (FVOCI) - debt
investment;
- Fair value through other comprehensive income (FVOCI) - equity
investment; or
- Fair value through profit and loss (FVTPL)
Financial assets are not reclassified subsequent to their
initial recognition, except if and in the period the Group changes
its business model for managing financial assets.
All financial asset are measured at amortized cost if they meets
both of the following conditions and is not designated as at
FVTPL:
-- The asset is held within a business model whose objective is
to hold assets to collect contractual cash flows; and the
contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
-- The category determines subsequent measurement and whether
any resulting income and expense is recognized in consolidated
statement of comprehensive income.
After initial recognition, financials assets at amortized cost
are measured at amortized cost using the effective interest
method.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking
information to recognise expected credit losses - the 'expected
credit loss (ECL) model'. The Group considers a broader range of
information when assessing credit risk and measuring expected
credit losses, including past events, current conditions,
reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made
between:
-- financial instruments that have not deteriorated
significantly in credit quality since initial recognition or that
have low credit risk and
-- financial instruments that have deteriorated significantly in
credit quality since initial recognition and whose credit risk is
not low.
-- financial assets that have objective evidence of impairment at the reporting date.
'12-month expected credit losses' are recognised for the first
category while 'lifetime expected credit losses' are recognised for
the second category.
The impairment methodology applied depends on whether there has
been a significant increase in credit risk. For trade receivables
only, the Group applies the simplified approach required by IFRS 9,
which requires expected lifetime losses to be recognised from
initial recognition of the receivables.
6.9. FINANCIAL LIABILITIES
The Group's financial liabilities include borrowings, trade
payables and other payables which are classified as financial
liabilities recognized at amortized cost. Financial liabilities are
measured subsequently at amortized cost using the effective
interest method except for financial liabilities at fair value
through profit or loss ("FVTPL"), that are carried subsequently at
fair value with gains or losses recognized in profit or loss in
consolidated statement of comprehensive income.
6.10. INVENTORIES
Inventories are measured at the lower of cost and net realizable
value. Inventories of drilling stores and spares are accounted at
cost including taxes, duties and freight. The cost of all
inventories other than drilling bits is computed on the basis of
the first in first out method. The cost for drilling bits is
computed based on specific identification method.
6.11. ACCOUNTING FOR INCOME TAXES
Income tax assets and/or liabilities comprise those obligations
to, or claims from, fiscal authorities relating to the current or
prior reporting period that are unrecovered/unpaid at the date of
the statement of financial position. They are calculated according
to the tax rates and tax laws applicable to the fiscal periods to
which they relate, based on the taxable profit for the year. All
changes to current tax assets or liabilities are recognized as a
component of tax expense in consolidated statement of comprehensive
income.
Deferred income taxes are calculated using the balance sheet
method on temporary differences. This involves the comparison of
the carrying amounts of assets and liabilities in the financial
statement with their tax base. The cost incurred on each field is
claimed as deduction from the year of commercial production.
Deferred tax is, however, neither provided on the initial
recognition of goodwill, nor on the initial recognition of an asset
or liability unless the related transaction is a business
combination or affects tax or accounting profit. Tax losses
available to be carried forward as well as other income tax credits
to the Group are assessed for recognition as deferred tax
assets.
Deferred tax liabilities are always provided for in full.
Deferred tax assets are recognized to the extent that it is
probable that they will be offset against future taxable income.
Deferred tax assets and liabilities are calculated, without
discounting, at tax rates and laws that are expected to apply to
their respective period of realization, provided they are enacted
or substantively enacted at the date of the statement of financial
position.
Changes in deferred tax assets or liabilities are recognized as
a component of tax expense in profit or loss of the year, except
where they relate to items that are charged or credited directly to
other comprehensive income or equity in which case the related
deferred tax is also charged or credited directly to other
comprehensive income or equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same
taxation authority.
6.12. BORROWING COSTS
Any interest payable on funds borrowed for the purpose of
obtaining qualifying assets, which are assets that necessarily take
a substantial period of time to get ready for their intended use or
sale, is capitalized as a cost of that asset until such time as the
assets are substantially ready for their intended use or sale.
While the Company has not made any specific borrowings for
construction of a qualifying asset, they have capitalized certain
borrowing costs on account of general borrowings at an average rate
of borrowings for the Company in terms of IAS 23 'Borrowing
Costs'.
Any associated interest charge from funds borrowed principally
to address a short-term cash flow shortfall during the suspension
of development activities is expensed in the period. Transaction
costs incurred towards an unutilized debt facility is treated as
prepayments to be adjusted against the carrying value of debt as
and when drawn.
6.13. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand, at bank in
demand deposits and deposit with maturities of 3 months or less
from inception, which are readily convertible to known amounts of
cash. These assets are subject to an insignificant risk of change
in value.
6.14. LEASING ACTIVITIES
IFRS 16 supersedes IAS 17 Leases. All contracts that meet the
definition of a lease will be recorded in the consolidated
statements of financial position with a "Right of use" asset and a
corresponding lease liability. The Group has elected not to
recognize right-of-use assets and lease liabilities for leases that
have a lease term of 12 months or less and for leases of low-value
assets.
In accordance with management's evaluation, the Group's leases
do not fall under the definition of leases as per the standard
since the Group does not have the right to direct the use of leased
asset. The operator of the block i.e. Focus Energy Limited has
entered the lease agreements and it has not been subleased to joint
arrangement. Therefore, the Group recognizes its share in the lease
cost from the operations in accordance with the IFRS 6 "Exploration
for and evaluation of mineral resources".
Where the Group makes the lease payments in respect of its share
of lease cost for exploration and evaluation activities or
development and production activities, these are capitalized as
part of the cost of these assets (Exploration and evaluation,
development and production assets).
6.15. OTHER PROVISIONS AND CONTINGENT LIABILITIES
Provisions are recognized when the Group has a present
obligation (legal or constructive) as a result of a past event. It
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Where the Group expects some or all of provision to be
reimbursed, the reimbursement is recognized as a separate asset but
only when the reimbursement is virtually certain. The expense
relating to any provision net of any reimbursement is recognized in
profit or loss of the year. To the extent such expense is incurred
for construction or development of any asset, it is included in the
cost of that asset. If the effect 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 expenses.
Provisions include decommissioning provisions representing
management's best estimate of the Group's liability for restoring
the sites of drilled wells to their original status. Provision for
decommissioning is recognized at the present value of the estimated
future expenditure when the Group has an obligation and a reliable
estimate can be made, with a corresponding addition to property,
plant and equipment which is subsequently depreciated as part of
the asset.
Commitments and contingent liabilities are not recognized in the
financial statements. They are disclosed unless the possibility of
an outflow of resources embodying economic benefits is remote.
A contingent asset is not recognized but disclosed in the
financial statements when an inflow of economic benefits is
probable but when it is virtually certain than the asset is
recognized in the financial statements.
In those cases, where the possible outflow of economic resource
as a result of present obligations is considered improbable or
remote, or the amount to be provided for cannot be measured
reliably, no liability is recognized in the statement of financial
position and no disclosure is made.
6.16. SEGMENT REPORTING
Operating segments are identified on the basis of internal
reports about components of the Group that are regularly reviewed
by the Chief Operating Decision Maker in order to allocate
resources to the segments and to assess their performance. The
Company considers that it operates in a single operating segment
being the production and sale of gas.
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise of the following:
Cost Land Extended Production Bunk Houses Vehicles Other Capital Total
well test Development Assets assets work-in-progress
equipment assets
--------------- -------------- ------------------- -------------------- ------------ ------------- ---------------- -------------- ----------------- ----------------
Balance as at
1 April
2020 167,248 4,875,084 778,586,474 241,020,061 7,869,575 4,917,035 1,695,265 1,728,736 1,040,859,478
Additions - 39,344 101,349,205 - - - - 1,165,653 102,554,202
Transfers - - (17,556,303) 17,556,303 - - - -
Disposals - - - (2,691) - - - - (2,691)
--------------- -------------- ------------------- -------------------- ------------ ------------- ---------------- -------------- ----------------- ----------------
Balance as at
31 March
2021 167,248 4,914,428 862,379,376 258,573,673 7,869,575 4,917,035 1,695,265 2,894,389 1,143,410,989
--------------- -------------- ------------------- -------------------- ------------ ------------- ---------------- -------------- ----------------- ----------------
Additions - 258,301 74,380,143 - - - - 84,481 74,722,925
Transfers - - (71,343,270) 71,343,270 - - - - -
Disposals - - - - - - -
Balance as at
31 March
2022 167,248 5,172,729 865,416,249 329,916,943 7,869,575 4,917,035 1,695,265 2,978,870 1,218,133,914
--------------- -------------- ------------------- -------------------- ------------ ------------- ---------------- -------------- ----------------- ----------------
Accumulated
Depreciation
Balance as at
1 April
2020 - 2,472,112 - 45,713,555 5,893,195 4,438,082 1,649,747 - 60,166,691
Depreciation
for the
year - 201,548 - 1,665,054 125,401 264,600 33,630 - 2,290,233
-------------- ------------------- -------------------- ------------ ------------- ---------------- -------------- ----------------
Balance as at
31 March
2021 - 2,673,660 - 47,378,609 6,018,596 4,702,682 1,683,377 - 62,456,924
--------------- -------------- ------------------- -------------------- ------------ ------------- ---------------- -------------- ----------------- ----------------
Depreciation
for the
year - 225,161 - 5,834,481 198,577 195,099 - - 6,453,318
-------------- ------------------- -------------------- ------------ ------------- ---------------- -------------- ----------------
Balance as at
31 March
2022 - 2 ,898,821 - 53,213,090 6,217,173 4,897,781 1,683,377 - 68,910,242
--------------- -------------- ------------------- -------------------- ------------ ------------- ---------------- -------------- ----------------- ----------------
Carrying
values
At 31 March
2020 167,248 2,402,972 778,586,474 195,306,506 1,976,380 478,953 45,518 1,728,736 980,692,787
At 31 March
2021 167,248 2,240,768 862,379,376 211,195,064 1,850,979 214,353 11,888 2,894,389 1,080,954,065
At 31 March
2022 167,248 2,273,908 865,416,249 276,703,853 1,652,402 19,254 11,888 2,978,870 1,149,223,672
--------------- -------------- ------------------- -------------------- ------------ ------------- ---------------- -------------- ----------------- ----------------
The balances above represent the Group's share in property,
plant and equipment as per note 3 . Tangible assets comprise
development /production assets in respect of SGL, SSG and SSF
field.
Development assets of SGL, SSG and SSF field includes the amount
of exploration and evaluation expenditure transferred to
development cost on the date of the first commercial discovery
declared by the Group and also includes expenditure incurred for
the drilling of further wells in the these fields to enhance the
production activity.
Production assets in respect of SGL field includes completed
production facilities. The Group commenced the production facility
in October 2012, and accordingly such production assets have been
depreciated since this date.
During the year, the Group has started production in one of the
fields namely S-97 within SSG and SSF from July 2021 and
accordingly the proportionate amount of development assets
pertaining to such field on which production has been started, is
transferred to production assets. Such production assets have been
depreciated from this date of production.
The additions in development assets also include borrowing costs
US$ 53,932,526 (previous year: US$ 47,894,782). The weighted
average capitalization rate on funds borrowed generally is 6.72per
cent per annum (previous year 6.75per cent).
The depreciation has been included in the following
headings-
31 March 2022 31 March 2021
-------------------------------------- -------------- --------------
Depreciation included in development
assets 618,837 625,179
Depreciation included in statement
of comprehensive income under the
head cost of sales 5,834,481 1,665,054
--------------------------------------- -------------- ----------------
Total 6,453,318 2,290,233
--------------------------------------- -------------- ----------------
8. DEFERRED TAX ASSETS/ LIABILITIES (NET)
Deferred taxes arising from temporary differences are summarized
as follows:
31 March 31 March 2021
2022
----------------------------------------- -------------- ---------------
Deferred tax assets 378,661,726 256,662,686
Unabsorbed losses/credits 378,661,726 256,662,686
Total
Deferred tax liability
Development assets/ property, plant and
equipment 499,060,159 366,315,998
Total 499,060,159 366,315,998
Net deferred tax liabilities 120,398,433 109,653,312
------------------------------------------- -------------- ---------------
a) The Group has recognized deferred tax assets on all of its
unused tax losses/unabsorbed depreciation considering there is
convincing evidence of availability of sufficient taxable profit in
the Group in the future as summarized in note 9.
b) The deferred tax movements during the current year have been
recognized in the consolidated statement of comprehensive
income.
9. INCOME TAXES
Income tax is based on the tax rates applicable on profit or
loss in various jurisdictions in which the Group operates. The
effective tax at the domestic rates applicable to profits in the
country concerned as shown in the reconciliation below have been
computed by multiplying the accounting profit by the effective tax
rate in each jurisdiction in which the Group operates. The
individual entity amounts have then been aggregated for the
consolidated financial statements. The effective tax rate applied
in each individual entity has not been disclosed in the tax
reconciliation below as the amounts aggregated for individual Group
entities would not be a meaningful number.
Income tax credit is arising on account of the following:
31 March 2022 31 March
2021
------------------------------------------- -------------
Deferred tax charge (10,745,121) (16,148,477)
Total (10,745,121) (16,148,477)
---------------------- -------------------- -------------
The relationship between the expected tax expense based on the
domestic tax rates for each of the legal entities within the Group
and the reported tax expense in consolidated statement of
comprehensive income is reconciled as follows:
31 March 31 March
2022 2021
Accounting profit for the year before
tax 45,955,305 44,076,864
Effective tax at the domestic rates applicable
to profits in the country concerned 20,073,277 19,252,774
Tax impact of bought forward losses lapsed
during the year - 13,710,329
Non-taxable income (9,328,156) (16,814,626)
Tax expense 10,745,121 16,148,477
------------ -------------
The reconciliation shown above has been based on the rate 43.68
per cent (previous year: 43.68per cent) as applicable under Indian
tax laws.
The Company's profits are taxable as per the tax laws applicable
in Guernsey where zero per cent tax rate has been prescribed for
corporates. Accordingly, there is no tax liability for the Group in
Guernsey. iServices and Newbury being participants in the PSC are
covered under the Indian Income tax laws as well as tax laws for
their respective countries. However, considering the existence of
double tax avoidance arrangement between Cyprus and India, and
Mauritius and India, profits in Newbury and iServices are not
likely to attract any additional tax in their local jurisdiction.
Under Indian tax laws, Newbury and iServices are allowed to claim
the entire expenditure incurred in respect of the respective fields
in the Oil Block until the start of commercial production (whether
included in the exploration and evaluation assets or development
assets) as deductible expense in the first year of commercial
production or over a period of 10 years. The Group has opted to
claim the expenditure in the first year of commercial production.
As the Group has commenced commercial production for SGL, SSG and
SSF field and has generated profits in Newbury and iServices, the
management believes there is reasonable certainty of utilization of
such losses in the future years and thus a deferred tax asset has
been created in respect of these.
10. INVENTORIES
Inventories comprise the following:
31 March 2022 31 March
2021
------------------------------------ ------------------------- ----------
Drilling and production stores and
spares 6,478,942 7,340,320
Fuel 90,486 84,905
Goods in transit 2,890,325 1,113,039
Total 9,459,753 8,538,264
------------------------------------ ------------------------- ----------
The above inventories are held for use in the exploration,
development and production activities. These are valued at cost
determined based on policy explained in paragraph 6.10. Inventories
of US$629,160 (previous year: US$ 51,365) were recorded as an
expense under the heading 'cost of sales' in the consolidated
statement of comprehensive income during the year ended 31 March
2022. Inventories of US$ 10,504,352 (previous year: US$ 12,258,604)
were capitalized as part of development assets.
11. TRADE AND OTHER RECEIVABLE
31 March 2022 31 March
2021
--------------------- ----------------------------- -----------
Trade receivable 18,335,073 32,908,490
Other Current Asset 1,770,767 45,591
--------------------- -----------------------------
Total 20,105,840 32,954,081
--------------------- ----------------------------- -----------
The carrying amount of trade receivables approximates their fair
values. Refer "Credit risk" in note 29 for further information.
12. CASH AND CASH EQUIVALENTS
31 March 2022 31 March 2021
----------------------------------- -------------- --------------
Cash at banks in current accounts 4,452,010 995,765
----------------------------------- --------------
Total 4,452,010 995,765
----------------------------------- -------------- --------------
The Group only deposits cash surpluses with major banks of
high-quality credit standing.
13. EQUITY
Authorized share capital
The total authorized share capital of the Company is GBP
5,000,000 divided into 500,000,000 shares of GBP 0.01 each.
Issued share capital
The total issued share capital of the Company is USD 3,619,443
(previous year: 3,619,443) divided into 182,973,924 shares
(previous year: 182,973,924).
-- For all matters submitted to vote in the shareholders meeting
of the Company, every holder of ordinary shares, as reflected in
the records of the Company on the date of the shareholders' meeting
has one vote in respect of each share held.
All shareholders are equally eligible to receive dividends and
the repayment of capital in the event of liquidation of the
individual entities of the Group.
Additional paid in capital
Additional paid-in capital represents excess over the par value
of share capital paid in by shareholders in return for the shares
issued to them, recorded net of expenses incurred on issue of
shares.
Currency translation reserve
Currency translation reserve represents the balance of
translation of the entity's financial statements into US$ until 30
November 2010 when its functional currency was assessed as GBP.
Subsequent to 1 December 2010, the functional currency of Indus Gas
was reassessed as US$.
Merger reserve
The balance on the merger reserve represents the fair value of
the consideration given in excess of the nominal value of the
ordinary shares issued in an acquisition made by the issue of
shares of subsidiaries from other entities under common
control.
Retained earnings
Retained earnings include current and prior period retained
profits.
14. LONG TERM DEBT
From Banks
Maturity 31 March 2022 31 March
2021
---------------------------------- ----------- --------------- -----------
Non-current portion of long-term 2024 (PY:
debt 2024) 39,239,735 57,979,631
Current portion of long-term
debt 19,079,585 20,923,919
Total 58,319,320 78,903,550
----------------------------------------------- --------------- -----------
Current interest rates are variable and weighted average
interest for the year was 6.72 per cent per annum (previous year:
6.75 per cent per annum). The fair value of the above variable rate
borrowings is considered to approximate their carrying amounts. The
maturity profile (undiscounted) is explained in note 29.
During the previous year, RBI has issued guidelines relating to
Covid-19 Regulatory Package dated April 7, 2020 wherein Banks have
proposed to offer six months holiday on the payment of instalments
to eligible borrowers. The Company has availed the offer and
accordingly made the repayments of long-term loans from Bank.
Interest capitalised on loans above have been disclosed in notes
7.
The term loans are secured by following: -
-- First charge on all project assets of the Group both present
and future, to the extent of SGL Field Development and to the
extent of capex incurred out of this facility in the rest of
RJ-ON/6 field.
-- First charge on the current assets (inclusive of condensate
receivable) of the Group to the extent of SGL field.
-- First Charge on the entire current assets of the SGL Field
and to the extent of capex incurred out of this facility in the
rest of RJON/6 field.
From Bonds
Maturity 31 March 31 March
2022 2021
---------------------------------- ---------- ------------ ------------
Non-current portion of long-term
debt 2023 - 149,979,995
Current portion of long-term
debt 153,667,758 3,566,275
Total 153,667,758 153,546,270
---------------------------------------------- ------------ ------------
The Group has issued US Dollar 150 million bonds which carries
interest at the rate of 8 per cent per annum. These bonds are
unsecured bonds and are fully repayable at the end of 5 years i.e.
December 2022, further interest on these notes is paid
semi-annually.
15. PROVISION FOR DECOMMISSIONING
Amount
----------------------------- ----------
Balance at 1 April 2020 1,699,209
Increase in provision 213,218
Balance as at 31 March 2021 1,912,427
Increase in provision 74,898
Balance as at 31 March 2022 1,987,325
----------------------------- ----------
As per the PSC, the Group is required to carry out certain
decommissioning activities on gas wells. The provision for
decommissioning relates to the estimation of future disbursements
related to the abandonment and decommissioning of gas wells. The
provision has been estimated by the Group's engineers, based on
individual well filling and coverage. This provision will be
utilized when the related wells are fully depleted. The majority of
the cost is expected to be incurred within a period of next 4
years.
16. PAYABLE/ RECEIVABLE TO RELATED PARTIES
Related parties payable comprise the following:
Maturity 31 March 31 March 2021
2022
-------------------------------- ----------- ------------ ---------------
Current
Payable to directors On demand 345,105 349,019
345,105 349,019
Other than current
Borrowings from Gynia Holdings
Ltd.* 625,442,503 592,508,798
625,442,503 592,508,798
Total 625,787,608 592,857,817
--------------------------------------------- ------------ -----------------
* Borrowings from Gynia Holdings Ltd. carries interest rate of
6.5 per cent per annum compounded annually. The entire outstanding
balance (including interest) is subordinate to the loans taken from
the banks and bonds (detailed in note 14) and therefore, is payable
along with related interest subsequent to repayment of bank loan in
year 2024.
Interest capitalised on loans above have been disclosed in notes
7.
Related parties' receivable comprises the following:
Maturity 31 March 31 March
2022 2021
---------------------- ----------- ------------ ---------------
Current
Prepayments to Focus On demand 120,408,124 124,394,123
----------------------
Total 120,408,124 124,394,123
----------------------------------- ------------ ---------------
Prepayments to Focus
Prepayments to Focus represents excess amounts paid to them in
respect of the Group's share of contract costs, for its
participating interest in Block RJ-ON/6 pursuant to the terms of
Agreement for Assignment dated 13 January 2006 and its subsequent
amendments from time to time.
17. TRADE AND OTHER PAYABLES
31 March 31 March
2022 2021
------------------- ---------- ----------
Trade payables 1,199,586 3,829,578
VAT payables 116,125 35,241
Other liabilities 183,258 20,664
------------------- ---------- ----------
1,498,969 3,885,483
------------------- ---------- ----------
The carrying amount of trade and other payable approximates
their fair values and are non-interest bearing.
18. REVENUE
The Group's revenue disaggregated by primary geographical
markets is as follows:
31 March 31 March
2022 2021
-------- ----------- -----------
Asia 53,709,538 33,026,007
Europe - 15,500,000
-------- ----------- -----------
53,709,538 48,526,007
-------- ----------- -----------
The Group's revenue disaggregated by the portion of revenue
recognition is as follows:
31 March 31 March
2022 2021
-------------------------------------- ----------- -----------
Goods transferred at a point in time 53,709,538 33,026,007
Services transferred at a point in
time - 15,500,000
53,709,538 48,526,007
-------------------------------------- ----------- -----------
Sale of Goods (Gas)
The revenue majorly pertains to the sale of natural gas and
condensate production (by-product). The Group sells its natural gas
to GAIL at a price fixed under the agreement. The condensate is
sold in the open market through bidding. Further, the Company has
entered into a gas sale agreement wherein the customer is be liable
to pay 41 % (Previous year: 75%) of the annual contracted quantity
if the customer does not purchase gas during the financial
year.
Sale of services
The sale of services represents revenue earned from technical
and other support services being rendered to oil and gas
exploration companies.
Contractual assets and Contractual Liabilities
31 March 2022 31 March 2021
--------------------------------- -------------------------- --------------------------
Current Non-current Current Non-current
--------------------------------- ------------ ------------ ------------ ------------
Opening balance of Contract
liabilities - Deferred revenue 5,077,086 25,563,995 5,077,086 25,563,995
--------------------------------- ------------ ------------ ------------ ------------
Less: Amount of revenue
recognized against opening
contract liabilities (5,077,086) - (5,077,086) -
--------------------------------- ------------ ------------ ------------ ------------
Add: Transfer from non-current
to current liabilities 5,077,086 (5,077,086) 5,077,086 (5,077,086)
--------------------------------- ------------ ------------ ------------ ------------
Add: Addition in balance
of contract liabilities
for current year - 5,077,086 - 5,077,086
--------------------------------- ------------ ------------ ------------ ------------
Closing balance of Contract
liabilities - Deferred revenue 5,077,086 25,563,995 5,077,086 25,563,995
--------------------------------- ------------ ------------ ------------ ------------
19. EMPLOYEE COST
Per the PSC, Focus is the Operator of the Block. For SGL field,
ONGC has a participative interest of 30% in the development cost.
Hence, the share of iServices and Newbury are proportionately
reduced (i.e. 45.5% and 17.5% respectively). For the Non-SGL field,
the share of iServices, Newbury and Focus are in the ratio of 65%,
25% and 10% respectively. The Employee cost attributable to Indus
Gas Limited has been allocated in the agreed ratio (refer note 3)
by Focus and recorded as cost of sales and administrative expenses
in the consolidated statement of comprehensive income amounting to
US$ 201,245 (previous year US$ 211,885) and US$ 216,488(previous
year US$ 178,190) respectively. Cost pertaining to the employees of
the Group have been included under administrative expense is US$
261,045 (previous year US$ 243,143 ).
20. FOREIGN CURRENCY EXCHANGE (LOSS)/ GAIN, NET
The Group has recognized the following in the consolidated
statement of comprehensive income on account of foreign currency
fluctuations:
31 March 2022 31 March 2021
--------------------------------------- -------------- --------------
Gain/(Loss) on restatement of foreign
currency monetary receivables and
payables (6,825) 57,126
(Loss)/Gain arising on settlement
of foreign currency transactions
and restatement of foreign currency
balances arising out of Oil block
operations 22,147 (458,472)
Total 15,322 (401,346)
--------------------------------------- -------------- --------------
21. LEASES
The leasing activities involve lease of drilling rig and other
equipment's for exploration and development purpose by the
operator. In reference to note 6.14, the Group's leases do not fall
under the definition of lease as per IFRS 16 and accordingly they
capitalise the share of lease rentals under development assets.
Group's share in lease payments capitalised under development
assets during the year ended 31 March 2022 amount to US$ Nil
(previous year US$ 26,544,141)
22. EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year.
Calculation of basic and diluted earnings per share is as
follows:
31 March 2022 31 March 2021
---------------------------------------- --------------- --------------------
Profits attributable to shareholders
of Indus Gas Limited, for basic
and dilutive 35,210,184 27,928,387
Weighted average number of shares
(used for basic earnings per
share) 182,973,924 182,973,924
Diluted weighted average number
of shares (used for diluted earnings
per share) 182,973,924 182,973,924
Basic earnings per share 0.19 0.15
Diluted earnings per share 0.19 0.15
23. RELATED PARTY TRANSACTIONS
The related parties for each of the entities in the Group have
been summarised in the table below:
Nature of the relationship Related Party's Name
--------------------------------------------- ----------------------------
I. Holding Company Gynia Holdings Ltd.
II. Ultimate Holding Company Multi Asset Holdings Ltd.
(Holding Company of Gynia
Holdings Ltd.)
III. Enterprises over which Key Focus Energy Limited
Management Personnel (KMP) exercise
control (with whom there are transactions)
--------------------------------------------- ----------------------------
Disclosure of transactions between the Group and related parties
and the outstanding balances as at 31 March 2022 and 31 March 2021
is as under:
Transactions with holding Company
Particulars 31 March 2022 31 March
2021
----------------------------------- -------------- ------------
Transactions during the year with
the holding Company
Amount received 17,425,000 116,950,000
Amount paid 23,00,0000 -
Interest 38,508,705 31,276,092
Balances at the end of the year
Total payable* 625,442,503 592,508,798
----------------------------------- -------------- ------------
*including interest
Transactions with KMP and entity over which KMP exercise
control
Particulars 31 March 31 March
2022 2021
------------------------------------------ ------------ ------------
Transactions during the year
Remuneration to KMP
Short term employee benefits 261,045 243,143
Total 261,045 243,143
Entity over which KMP exercise control
Cost incurred by Focus on behalf of the
Group in respect of the Block 19,811,879 55,144,176
Remittances to Focus 15,825,880 119,980,000
Balances at the end of the year
Total receivables* 120,408,124 124,394,123
Total payable * (345,105) (349,019)
------------------------------------------ ------------ ------------
* including interest
Directors' remuneration
Directors' remuneration is included under administrative
expenses, evaluation and exploration assets or development assets
in the consolidated financial statements allocated on a systematic
and rational manner. Remuneration by director is separately
disclosed in the directors' report on page 7.
24. SEGMENT REPORTING
The Chief Operating Decision maker, who is Executive Chairman of
the Group, reviews the business as one operating segment being the
extraction and production of gas along with the technical
assistance to other oil and gas exploration companies . Hence, no
separate segment information has been furnished herewith.
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 US$ 1,149,223,672 (previous year: US$
1,080,954,065).
Revenue from customers have been identified on the basis of the
customer's geographical location and are disclosed in note 18. The
total revenue from the Group is from the sale of natural gas, its
by-products (i.e. condensate) and from the technical assistance
services to Oil and gas exploration companies. The revenue
comprises 91.27% (Previous year: 98.28%) of the Group's total
revenue from top two and top three customer respectively.
25. COMMITMENTS AND CONTINGENCIES
The Group has no contingent liabilities as at 31 March 2022
(previous year Nil).
The Group has no commitments as at 31 March 2022 (previous year
Nil).
26. ACCOUNTING ESTIMATES AND JUDGEMENTS
In preparing consolidated financial statements, the Group's
management is required to make judgments and estimates that affect
the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. The judgments and estimates are based on
management's best knowledge of current events and actions and
actual results from those estimates may ultimately differ.
Significant judgments applied in the preparation of the
consolidated financial statements are as under:
Determination of functional currency of individual entities
Following the guidance in IAS 21 "The effects of changes in
foreign exchange rates", the functional currency of each individual
entity is determined to be the currency of the primary economic
environment in which the entity operates. In the management's view
each of the individual entity's functional currency reflects the
transactions, events and conditions under which the entity conducts
its business. The management believes that US$ has been taken as
the functional currency for each of the entities within the Group.
US$ is the currency in which each of these entities primarily
generate and expend cash and also generate funds for financing
activities.
Full cost accounting for exploration and evaluation
expenditure
The Group has followed 'full cost' approach for accounting for
exploration and evaluation expenditure against the 'successful
efforts' method. As further explained in note 6.6 , exploration and
evaluation assets recorded using 'full cost' approach are tested
for impairment prior to reclassification into development assets on
successful discovery of gas reserves.
Impairment of tangible assets
The Group follows the guidance of IAS 36 to determine when a
tangible asset is impaired. This determination requires significant
judgment to evaluate indicators triggering impairment. The Group
monitors internal and external indicators of impairment relating to
its tangible assets. Management has carried out impairment testing
in accordance with IAS 36 'Impairment of Assets' . Based on
assessment, no impairment loss is required to be recorded.
Estimates used in the preparation of the consolidated financial
statements:
Useful life and residual value of tangible assets
The Group reviews the estimated useful lives of property, plant
and equipment at the end of each annual reporting period.
Specifically, production assets are depreciated on a basis of unit
of production (UOP) method which involves significant estimates in
respect of the total future production and estimate of reserves.
The calculation of UOP rate of depreciation could be impacted to
the extent that the actual production in future is different from
the forecasted production. During the financial year, the directors
determined that no change to the useful lives of any of the
property, plant and equipment is required. The carrying amounts of
property, plant and equipment have been summarized in note 7.
Recognition of provision for decommissioning cost
As per the PSC, the Group is required to carry out certain
decommissioning activities on gas wells. The ultimate
decommissioning costs are uncertain and cost estimates can vary in
response to many factors including changes to relevant legal
requirements, the emergence of new restoration techniques or
experience at other production sites. The expected timing and
amount of expenditure can also change, for example, in response to
changes in reserves or changes in laws and regulations or their
interpretation. As a result, there could be adjustments to the
provisions established which would affect future financial results.
The liabilities estimated in respect of decommissioning provisions
have been summarized in note 15.
Impairment testing
As explained above, management carried out impairment testing of
property, plant and equipment as on 31 March 2022. A n impairment
loss is recognized for the amount by which the asset's or cash
generating unit's carrying amount exceeds its recoverable
amount.
To determine the recoverable amount, management estimates
expected future cash flows from the Block and determines a suitable
interest rate in order to calculate the present value of those cash
flows. In the process of measuring expected future cash flows
management makes assumptions about future gross profits. These
assumptions relate to future events and circumstances. In most
cases, determining the applicable discount rate involves estimating
the appropriate adjustment to market risk and the appropriate
adjustment to asset-specific risk factors.
The recoverable amount was determined based on value-in-use
calculations, basis gas reserves confirmed by an independent
competent person. The gas price has been revised to US$ 6.1 per
MMBTU on Gross Calorific Value (GCV) basis from 1 April 2022 to 30
September 2022 resulting in price increase of 35% on the existing
price. The discount rate calculation is based on the Company's
weighted average cost of capital adjusted to reflect pre-tax
discount rate and amounts to 7% p.a. Management believes that no
reasonably possible changes in the assumptions may lead to
impairment of property, plants and equipment and intangible assets
of the Block.
Deferred tax assets
The assessment of the probability of future taxable income in
which deferred tax assets can be utilized is based on the
management's assessment, which is adjusted for specific limits to
the use of any unused tax loss or credit. The tax rules in the
jurisdictions in which the Group operates are also carefully taken
into consideration. If a positive forecast of taxable income
indicates the probable use of a deferred tax asset, then deferred
tax asset is usually recognized in full. The recoverability of
deferred tax assets is monitored as an ongoing basis based on the
expected taxable income from the sale of gas.
27. BASIS OF GOING CONCERN ASSUMPTION
The Group has current liabilities amounting to US$ 179,668,503
(2020-21: US$ 33,801,782) the majority of which is towards current
portion of borrowings from banks and bonds. As at 31 March 2022,
the amounts due for repayment (including interest payable) within
the next 12 months for long term borrowings are US$ 172,747,343
(2020-21: US$ 24,490,194) which the Group expects to meet from its
internal generation of cash from operations and refinancing of
bonds. The Group has net profits after tax of US$ 35,210,184
(2020-21: US$ 27,928,387) for the year ended 31 March 2022.
The group has considered following factors relevant to support
going concern.
In assessing whether the going concern assumption is
appropriate, the management considered the Group cash flow
forecasts under various scenarios, identifying risks and mitigants
and ensuring the Group has sufficient funding to meet its current
commitments as and when they fall due for a period of at least 12
months from the date of approval of the Financial Statements. These
forecasts assume the current bonds are fully repaid in December and
there is a new fund raising through bond refinancing at the end of
the 2022 calendar year. The Board is confident that the bond issue
will be successful based on the financial performance of the
business, current low level of debt funding from banks and previous
successful fund raises. However, at the date of signing the
financial statements the outcome of the bond issue is not known and
under the accounting and auditing framework, this indicates a
material uncertainty that may cast significant doubt on the group's
ability to continue as a going concern.
The management has also considered increase in production on
start of production from new fields or wells and increase in gas
price has been revised to US$ 6.1 per MMBTU on Gross Calorific
Value (GCV) basis from 1 April 2022 to 30 September 2022 resulting
in price increase of 35% on the existing price.
In addition, the holding Company has provided a letter of
support to the group confirming its intention to continue provide
financial and other support as necessary to enable the group to
meet its obligations.
Based on business strategies and operating plans / forecasts of
the Group, and based on the above reasons, the management is
confident that the Group will continue to meet all its obligations
as and when they fall due in the normal course of business.
Accordingly, these financial statements have been prepared on a
going concern basis.
28. CAPITAL MANAGEMENT POLICIES
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
The Group manages the capital structure and adjusts it in the
light of changes in economic conditions and the risk
characteristics of the underlying assets. The Group monitors
capital on the basis of the gearing ratio. This ratio is calculated
as net debt divided by total capital. Debt is calculated as total
liabilities (including 'current and non-current liabilities' as
shown in the consolidated Statement of Financial Position). Total
capital employed is calculated as 'equity' as shown in the
consolidated statement of financial position plus total debt.
31 March 2022 31 March 2021
-------------------------------- ----------------
Total debt (A) 992,300,494 971,399,939
Total equity (B) 312,563,440 277,353,256
Total capital employed (A+B) 1,304,863,934 1,248,753,195
Gearing ratio 76.05 % 77.79 %
---------------------------------- ---------------- ----------------
The gearing ratio has marginally decreased in the current year
due to proportionately lesser increase in the draw-down of loans
from related party to fund additional exploration, evaluation and
development activities for the Group as compared to increase in
equity.
The Group is not subject to any externally imposed capital
requirements. There were no changes in the Group's approach to
capital management during the year.
29. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
A summary of the Group's financial assets and liabilities by
category are mentioned in the table below. The carrying amounts of
the Group's financial assets and liabilities recognized at the end
of the reporting period are as follows:
31 March 31 March 2021
2022
----------------------------------------- ------------ --------------
Non-current assets
Loans
- Security deposits 549 567
Current assets
- Trade receivables 18,335,073 32,908,490
- Cash and cash equivalents 4,452,010 995,765
Total financial assets under loans
and receivables 22,787,632 33,904,822
----------------------------------------- ------------ --------------
Non-current liabilities
Financial liabilities measured at
amortized cost:
- Long term debt 39,239,735 207,959,625
- Payable to related parties 625,442,503 592,508,798
Current liabilities
Financial liabilities measured at
amortized cost:
- Current portion of long-term debt 172,747,343 24,490,194
- Current portion of payable to related
parties 345,105 349,019
- Trade and other payables (other
than VAT payable) 1,382,844 3,850,242
----------------------------------------- ------------ --------------
Total financial liabilities measured
at amortized cost 839,157,530 829,157,878
----------------------------------------- ------------ --------------
The fair value of the financial assets and liabilities described
above closely approximates their carrying value on the statement of
financial position date.
Risk management objectives and policies
The Group finances its operations through a mixture of loans
from banks and related parties and equity. Finance requirements
such as equity, debt and project finance are reviewed by the Board
when funds are required for acquisition, exploration and
development of projects.
The Group treasury functions are responsible for managing
funding requirements and investments which includes banking and
cash flow management. Interest and foreign exchange exposure are
key functions of treasury management to ensure adequate liquidity
at all times to meet cash requirements.
The Group's principal financial instruments are cash held with
banks and financial liabilities to banks and related parties and
these instruments are for the purpose of meeting its requirements
for operations. The Group's main risks arising from financial
instruments are foreign currency risk, liquidity risk, commodity
price risk and credit risks. Set out below are policies that are
used to manage such risks.
Foreign currency risk
The functional currency of each entity within the Group is US$
and the majority of its business is conducted in US$. All revenues
from gas sales are received in US$ and substantial costs are
incurred in US$. No forward exchange contracts were entered into
during the year.
Entities within the Group conduct the majority of their
transactions in their functional currency other than amounts of
cash held in GBP, SGD and INR. All other monetary assets and
liabilities are denominated in functional currencies of the
respective entities. The currency exposure on account of assets and
liabilities which are denominated in a currency other than the
functional currency of the entities of the Group as at 31 March
2022 and 31 March 2021 is as follows:
Particulars Functional Foreign currency 31 March 2022 31 March 2021
currency
----------------- ------------ --------------------
(Amount in (Amount in
US$) US$)
----------------- ------------ -------------------- -------------- --------------
Great Britain
US$ Pound 29,338 41,465
Short term
exposure- US$ Singapore Dollar 10,718 10,786
Cash and cash
equivalents US$ Indian Rupee 27,152 906,914
-----------------
Total exposure 67,208 959,165
----------------------------------------------------- -------------- --------------
As at March 31, 2022, every 1% (increase)/decrease of the
respective foreign currencies compared to the functional currency
of the Group entities would impact profit before tax by
approximately US$ (672) and US$ 672 respectively.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which has established an appropriate
liquidity risk management framework for the management of the
Group's short, medium and long-term funding and liquidity
management requirements. The Group manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve
borrowing facilities, by continuously monitoring forecast and
actual cash flows, and by matching the maturity profiles of
financial assets and liabilities.
The table below summaries the maturity profile of the Group's
financial liabilities based on contractual undiscounted payments
for the liquidity analysis.
3 months 1-2
0-3 months to 1 year years 2-5 years 5+ years Total
------------------ ------------ ----------- ---------- ----------- -------- -----------
31 March 2022
Non-interest
bearing 1,727,949 - - - - 1,727,949
Variable interest
rate liabilities 4,427,585 14,652,000 22,914,273 16,330,049 - 58,323,907
Fixed interest
rate liabilities 3,599,604 150,063,567 - 625,442,503 - 779,105,674
9,755,138 164,715,567 2,291,4273 641,772,552 - 839,157,530
------------------ ------------ ----------- ---------- ----------- -------- -------------
3 months
0-3 months to 1 year 1-2 years 2-5 years 5+ years Total
------------------ ------------ ---------- ----------- ----------- -------- -----------
31 March 2021
Non-interest
bearing 4,199,261 - - - - 4,199,261
Variable interest
rate liabilities 8,002,519 12,666,167 18,739,733 39,494,676 - 78,903,095
Fixed interest
rate liabilities 3,821,507 - 149,980,449 592,253,566 - 746,055,522
631, 748
16,023,287 12,666,167 168,720,182 ,242 - 829,157,878
------------------ ------------ ---------- ----------- ----------- -------- -----------
Interest rate risk
The Group's policy is to minimize interest rate risk exposures
on the borrowing from the banks and the sum payable to Focus Energy
Limited. Borrowing from the Gynia Holdings Ltd. is at fixed
interest rate and therefore, does not expose the Group to risk from
changes in interest rate. The interest rate on bond is fixed at 8%
per annum. The Group is exposed to changes in market interest rates
through bank borrowings at variable interest rates.
The Group's interest rate exposures are concentrated in US$.
The analysis below illustrates the sensitivity of profit and
equity to a reasonably possible change in interest rates. Based on
volatility in interest rates in the previous 12 months, the
management estimates a range of 50 basis points to be approximate
basis for the reasonably possible change in interest rates. All
other variables are held constant.
Interest rate
-------------- ---------------------------
- 0.50 per
+ 0.50 per cent cent
31 March 2022 339,270 (339,270)
31 March 2021 478,569 (478,569)
--------------- --------------- ----------
Since the loans are taken for the general corporate purpose and
according to the Group's policy the certain borrowing costs related
to development activities are capitalized on account of general
borrowings at an average rate of borrowings to the cost of the
development asset.
Commodity price risks
The Group's share of production of gas from the Block is sold to
GAIL. The prices have been agreed for a period of three years which
expired in September 2016. As per the terms of contract, after
expiry of three years' period, the price will be reviewed
periodically and reassessed mutually between the parties. The gas
price has been revised to US$ 6.1 per MMBTU on Gross Calorific
Value (GCV) basis from 1 April 2022 to 30 September 2022 resulting
in price increase of 35% on the existing price. No commodity price
hedging contracts have been entered into.
Further, there is no significant impact of Russia-Ukraine crisis
as the group has been able to secure gas price increase.
Credit risk
The Group has concentration of credit risk against the
receivable balance from customers with reputable credit standing
and the group carry out credit worthiness assessment on regular
basis. Hence the Group does not consider credit risk in respect of
these to be significant.. The management has evaluated the impact
of expected credit loss on the receivable balance. While evaluating
the same, macroeconomic factors affecting the customer's ability to
settle the amount outstanding have been considered. The Group has
identified gross domestic product (GDP) and unemployment rates of
the countries in which the customers are domiciled to be the most
relevant factors. The impact was insignificant and accordingly no
adjustment has been recorded in the financial statements.
Other receivables such as security deposits and cash and cash
equivalents do not comprise of a significant balance and thus do
not expose the Group to a significant credit risk.
The tables below detail the credit quality of the Group's
financial assets and other items, as well as the Group's maximum
exposure to credit risk by credit risk rating grades.
Internal
credit 12M or Lifetime Gross carrying Loss Net carrying
rating ECL amount allowance amount
-------------------- ----------- ------------------------ --------------- ---------- ------------
31 March 2022
Security deposit
s Performing 12 Month ECL 549 - 549
Lifetime ECL
Trade receivables Performing (simplified approach) 18,335,073 - 18,335,073
Cash and cash
equivalents Performing 12 Month ECL 4,452,010 - 4,452,010
22,787,632 - 22,787,632
------------ ------------------------ -------------- ---------- ------------
Internal
credit 12M or Lifetime Gross carrying Net carrying
rating ECL amount Loss allowance amount
------------------ ----------- ------------------------ --------------- -------------- ------------
31 March 2021
Security deposits Performing 12 Month ECL 567 - 567
Lifetime ECL
Trade receivables Performing (simplified approach) 32,908,490 - 32,908,490
Cash and cash
equivalents Performing 12 Month ECL 995,765 - 995,765
33,904,822 - 33,904,822
------------ ------------------------ -------------- -------------- ------------
An asset is performing when the counterparty has a low risk of
default.
30. RECONCILIATION OF LIABILITIES FROM FINANCING ACTIVITIES
Borrowings
---------------------------------------------- -------------
As at April 01, 2021 824,958,617
Cash Movement:
Net utilisation (41,461,562)
Other non- cash movements
Impact of effective interest rate adjustment 284,729
Impact of exchange fluctuations -
Interest accruals 53,647,797
---------------------------------------------- -------------
As at March 31, 2022 837,429,581
---------------------------------------------- -------------
Borrowings
---------------------------------------------- -------------
As at April 01, 2020
Cash Movement: 697,900,300
Net proceeds 79,163,535
Other non- cash movements
Impact of effective interest rate adjustment 190,357
Impact of exchange fluctuations -
Interest accruals 47,704,425
---------------------------------------------- -------------
As at March 31, 2021 824,958,617
---------------------------------------------- -------------
31. P OST REPORTING DATE EVENT
No adjusting or significant non-adjusting event have occurred
between 31 March 2022 and the date of authorization.
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FR UWRBRUAUKUAR
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September 29, 2022 02:00 ET (06:00 GMT)
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