Annual Financial Report

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 contact:

Indus Gas Limited

Jonathan Keeling   [phone]

Strand Hanson Limited (Nominated and Financial Adviser)

Ritchie Balmer, Rory Murphy   [phone]

Arden Partners plc (Broker)

Equity Sales: James Reed-Daunter   [phone]

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
Property, plant and equipment		7	1,149,223,672 1,213,986 549			1,080,954,065 916,330   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 Prepayments to related party		11 16	20,105,840 120,408,124			32,954,081 124,394,123
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) Payable to related parties, excluding current portion		8 16	120,398,433   625,442,503			109,653,312 592,508,798
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)

	Note	Year ended 31 March 2022		Year ended 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 paid in capital	Currency translation reserve	Merger reserve		Retained earnings			Total shareholders' equity
	No. of shares		Amount
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
Total comprehensive income for the year	-	-		-	-		-		27,928,387		27,928,387
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										-
Total comprehensive income for the year	-		-	-	-	-		35,210,184			35,210,184
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 31 March 2022		Year ended 31 March 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 Current assets	1,149,223,672	1,080,954,065 132,932,387
	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 AMENDED 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 well test equipment	Development assets	Production Assets	Bunk Houses	Vehicles	Other assets	Capital work-in-progress	Total
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 2022	31 March 2021
Deferred tax assets Unabsorbed losses/credits Total Deferred tax liability			378,661,726 378,661,726	256,662,686 256,662,686
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 2022	31 March 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 debt	2024 (PY: 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 2022	31 March 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 2022		31 March 2021
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 2022	31 March 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 2022	31 March 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 2022	31 March 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 2022	31 March 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 ofGynia Holdings Ltd.)
III. Enterprises over which Key Management Personnel (KMP) exercise control (with whom there are transactions)	Focus Energy Limited

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 2022	31 March 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 2022	31 March 2021
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 currency	Foreign currency	31 March 2022	31 March 2021
			(Amount in US$)	(Amount in US$)
Short term exposure- Cash and cash equivalents	US$ US$ US$	Great Britain Pound Singapore Dollar Indian Rupee	29,338 10,718 27,152	41,465   10,786   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.

	0-3 months	3 months to 1 year		1-2 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

	0-3 months	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
	16,023,287	12,666,167		168,720,182		631, 748 ,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 cent	- 0.50 per 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 rating	12M or Lifetime ECL		Gross carrying amount		Loss allowance		Net carrying amount
31 March 2022
Security deposit s	Performing		12 Month ECL		549	-	549
Trade receivables	Performing		Lifetime ECL (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 rating	12M or Lifetime ECL		Gross carrying amount		Loss allowance	Net carrying amount
31 March 2021
Security deposits	Performing		12 Month ECL		567	-		567
Trade receivables	Performing		Lifetime ECL (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.

 

END

 

 

FR UWRBRUAUKUAR