Annual Reports - Indraprastha Gas Limited

SCHEDULE 15
NOTES TO THE ACCOUNTS
1. Background
Indraprastha Gas Limited (‘The Company’) was incorporated on December 23, 1998 under the Companies Act, 1956. It
is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The Company is a joint venture between GAIL India Limited and Bharat Petroleum Corporation Limited. The Company’s
business consists of sale of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG).
2. Significant Accounting Policies
2.1 Basis of preparation of financial statements
The financial statements are prepared on the accrual basis under the historical cost convention in accordance with
Generally Accepted Accounting Principles, the provisions of the Companies Act, 1956 and applicable Accounting
Standards prescribed under Section 211(3C) of the Companies Act, 1956.
2.2 Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent liabilities on the date of financial statements. Actual results in future could differ from those estimates.
Any revision to accounting estimates is recognized prospectively in current and future periods.
2.3 Fixed assets
a) Fixed assets are stated at their original cost including freight, duties, taxes and other incidental expenses relating
to acquisition and installation and are net of recoveries from PNG customers towards the cost of installation of
PNG pipeline network.
b) Expenditure incurred during the period of construction, including all direct and indirect expenses, incidental
and related to construction, is carried forward and on completion, the costs are allocated to the respective
fixed assets.
c) Gas distribution systems are commissioned on commencement of supply of gas to consumers. In the case of
commissioned assets where final payment to the contractors is pending, capitalization is made on an estimated
basis pending receipt of final bills from the contractors, and subject to adjustment in cost and depreciation in
the year of final settlement.
d) Insurance spares are capitalized with the cost of plant and machinery and depreciated over the useful life of the
respective asset.
e) Capital inventory represents items of capital nature lying in the stores and valued at cost.
f) Intangible assets comprising ERP software are amortised using straight line method over an estimated useful
period of 5 years.
g) The carrying amount of assets, including those assets that are not yet available for use, are reviewed at each
balance sheet date to determine whether there is any indication of impairment. If any such indication exists,
recoverable amount of asset is determined. An impairment loss is recognized in the profit and loss account
whenever the carrying amount of an asset exceeds its recoverable amount. An impairment loss is reversed
only to the extent that the carrying amount of asset does not exceed the net book value that would have been
determined if no impairment loss had been recognized.
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