TIDMINDI
RNS Number : 0751O
Indus Gas Limited
29 September 2023
29 September 2023
Indus Gas Limited
("Indus" or the "Company")
Audited Final Results for the 12 months ended 31 March 2023
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 2023.
Highlights
-- With effect from 1(st) April 2022, the sales gas price was
agreed to be the price as per the Domestic Natural Gas Price (APM
Price) on GCV basis as notified by Petroleum Planning &
Analysis Cell (PPAC) from time to time. The gas price revision had
resulted in the gas price being revised to US$ 6.1 per MMBTU
(Metric Million British Thermal Unit) on GCV basis from 1 April
2022 to 30 September 2022 and to US$ 8.57 per MMBTU on GCV basis
from 1st October 2022 to 31st March 2023. As per revised Domestic
gas pricing Guidelines, Sales gas price shall be 10 pct of monthly
average of Indian crude basket as notified by PPAC on monthly basis
from 8th April, 2023.
-- New development wells produced rich Gas with lower CO2.
-- PNGRB is evaluating the options for pipelines
infrastructure/route for evacuation of the gas from the block.
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$ 63.03 million (2021-22: US$ 53.71
million).
-- Operating profit increased to US$ 54.76 million (2021-22:
increased to US$ 45.94million).
-- Profit before tax increased to US$ 54.87 million (2021-22:
US$ 45.96 million).
-- Net Investments made in property, plant and equipment
amounting to US$ 74.21 million (2021-22: US$ 68.27 million).
-- All repayments under the existing debt terms were made on a
timely basis.
Chairman's Statements
This has been a good year and the Company has been able to
achieve higher Gas Revenues.
The Company's strong operational and financial performance is
highlighted by another year of good profit generation.
The Board would like to thank employees, shareholders, bankers
and all other stakeholders for their loyalty and continued support.
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.
The Board also wishes to thank Mr Clive Gibbons, who steps down
from his role as a Non-Executive Director, effective today
following the publication of these financial statements, for his
time and contribution to the Company and wish him all the best in
future endeavours.
Jonathan Keeling
Chairman
Board of Director's Review
We are pleased to announce another strong year of consolidated
total revenues totaling US$ 63.03 million (2021-22: US$ 53.71
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.
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$ 63.03million (2021-22: US$ 53.71 million), resulting in
reported operating profit of US$ 54.76 million (2021-22US$ 45.94
million). The reported profit after tax was US$ 30.87 million
(2021-22 US$ 35.21 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$ 23.99 million (2021-22: US$
10.75 million) as per IFRS requirements.
Post this deferred tax liability provision, the net profit for
the year was US$ 30.87 million.
The net expenditure on the purchase of property, plant &
equipment was US$ 74.21 million (2021-22: US$ 68.27 million) . The
property plant and equipment, including development assets and
production assets, increased to US$ 1,223.43million (2021-22: US$
1,149.22 million).
The current assets (excluding cash) as of 31 March 2023 stood at
US$ 123.92 million (2021-22: US$ 149.97 million), which majorly
includes US$ 9.93 million (2021-22: US$ 9.46 million) of
inventories, US$ 101.07 million (2021-22: US$ 120.41 million) of
receivables from related party and US$ 6.60 million (2021-22: US$
20.11 million) of trade receivables and another receivable.
Receivables of US$ 4.54 million of this total of US$ 6.60 million
have been realized subsequent to 31 March 2023. The current
liabilities of the Company, excluding the related party liability
of US$ 0.33 million (2021-22: US$ 0.35 million) and current portion
of long-term debt of US$ 28.46 million (2021-22: US$ 172.75
million), stood at US$ 6.78 million (2021-22: US$ 6.58 million).
This comprised mainly of deferred revenue of US$ 4.75 million
(2021-22: US$ 5.08 million) (GAIL-Take or Pay Obligation) and other
liabilities of US$ 2.03 million (2021-22: US$ 1.50 million).
As of 31 March 2023, the outstanding debt of the Company to
banks was US$ 40.02million (2021-22: US$ 58.32 million), of which
US$ 24.16 million (2021-22: US$ 19.08 million) was categorized as
repayable within a year and the remaining US$ 15.86million
(2021-22: US$ 39.24 million) has been categorized as a long-term
liability. During the year, the Company repaid an amount of US$
21.94 million of the outstanding term loan facilities, as per the
scheduled repayment plan. As of 31 March 2023, the outstanding
unsecured debt from bonds was US$ 163.92million (2021-22: US$
153.68 million), of which US$ 4.30million (2021-22: US$ 153.68
million) was categorized as repayable within a year and the
remaining US$ 159.62million (2021-22: US$ Nil) has been categorized
as a long-term liability.
Outlook
During the next twelve months, we expect that the Company look
forward to continued drilling success in both Pariwar and B&B
combined with delivering further progress on the commercialization
of our gas reserves.
Jonathan Keeling
Executive Chairman
Board of Directors
JONATHAN KEELING - EXECUTIVE CHAIRMAN
Jonathan was a founding partner and a main board member of Arden
Partners plc, a small and mid-cap institutional stockbroker and
Jonathan's career in equity capital markets spans in excess of 30
years. Prior to Arden, Jonathan worked at Albert E Sharp, Harris
All day and Old Mutual Securities. Jonathan is a Fellow of the
Chartered Institute for Securities and Investment.
CLIVE GIBBONS -DIRECTOR
Mr Clive Gibbons joined the board of directors with effect from
17 September 2020, Clive is an experienced Operations Director,
specialising in the corporate and fiduciary services sector and
currently works at the Newhaven Group, based in Guernsey. Clive is
a qualified Independent Investment Financial Advisor Level 3,
compliance manager, accredited director, approved by the Guernsey
GFSC (Guernsey regulator), BVI FSC (BVI regulator), with over 18
years in the sector. He was previously a Managing Director in the
Cayman Islands for Vistra and previously worked at Close Brothers
(Close Finance), Kleinwort Benson and Royal Bank of Scotland
International.
ATIQ ANJARWALLA - DIRECTOR
During the year, Mr. Atiq joined the board of director as
independent non-executive director on 3(rd) October 2022. Mr. Atiq
is an experience Lawyer and is a Solicitor of the Supreme Court of
England and Wales Advocate of the High Court of Kenya and a Legal
Consultant in Dubai. Atiq has a Master of Law from Jesus College
Cambridge, England. Atiq's legal experience spans Corporate,
Private Client, Banking, Project Finance and Capital Markets.
ELIZABETH POWELL - DIRECTOR
During the year, Mrs. Elizabeth Powell joined the board of
director as independent non-executive director on 7(th) March 2023.
Liz's background is primarily in Human Resources through her work
with a major Guernsey based independent fiduciary. She has a CIPD
qualification in HR and has become skilled in international payroll
matters. In recent years, in addition to her personnel skills, she
has taken on directorships in companies employing staff in the Oil
& Gas sector as well as companies owning assets for
international oil companies.
NICHOLAS SAUL - DIRECTOR
During the year, Mr. Nicholas Saul joined the board of director
as independent non-executive director on 7(th) March 2023. Nick
started his career as a Merchant Navy Officer with Texaco in 1980
and has been working in the Oil & Gas industry since. Today, he
owns successful Guernsey business that manages the employment of
thousands working in the hydrocarbons industry as well over 10,000
mariners. Nick has a BSc in Maritime Commerce, is an Associate
Fellow of the Nautical Institute and a Chartered Member of The
Chartered Institute of Logistics and Transport.
Directors' Report
The Directors present their report and the financial statements
of Indus Gas Limited ("the Company") and its subsidiaries,
iServices Investments Ltd and Newbury Oil Co. Ltd (collectively the
"Group"), which covers the year from 1 April 2022 to 31 March
2023.
PRINCIPAL ACTIVITY AND REVIEW OF THE BUSINESS
The principal activity of the Company and Group is that of oil
and gas exploration, development and production and other related
services.
RESULTS AND DIVIDS
The trading results for the year and the Group's financial
position at the end of the year are shown in the attached financial
statements. The Group has earned a profit before tax of USD 54.87
million (2021-22: US$ 45.96 million) during the year, which is a
significant aspect for measurement of the effectiveness of
company's operations.
The Directors have not recommended a dividend for the year
(2022-23: Nil).
REVIEW OF BUSINESS AND FUTURE DEVELOPMENTS
A review of the business and likely future developments of the
Company are contained in the Chairman's statement and the Board of
Director's review, given above.
BOARD AND SECRETARIAL CHANGES
The Company announces the following changes to its Board:
-- Mrs. Elizabeth Powell has been appointed as a Non-Executive
Director with effect from 7(th) March 2023.
-- Mr. Nicholas Saul has been appointed as a Non-Executive
Director with effect from 7(th) March 2023.
-- Mr. Atiq Anjarwalla has been appointed as a Non-Executive
Director with effect from 3(rd) October 2022.
-- Mr. Clive Gibbons is stepping down from the Board effective today.
The Company announces following other changes with effect from
7(th) March 2023:
-- Beauvoir Trust Limited have resigned as the Company Secretary
of the Company and Bachmann Secretarial Services Limited have been
appointed as the new Company Secretary of the Company.
-- Registered office of the Company has changed from 1st Floor,
Tudor House, Le Bordage, St Peter Port, Guernsey GY1 1DB to the new
office at PO Box 112, St Martins House, Le Bordage, St Peter Port,
Guernsey GY1 4EA.
DIRECTORS REMUNERATION
The Directors' remuneration for the year ended 31 March 2023
was:
Remuneration Remuneration (US
(GBP) $)
Jonathan Keeling 100,000 119,166
------------- -----------------
Clive Gibbons 14,620 17,323
------------- -----------------
Atiq Anjarwalla 3,655 4,405
------------- -----------------
Fareed Soreefan* 759 1,000
------------- -----------------
Sangeeta Bissessur* 759 1,000
------------- -----------------
Angelos Alexandrou* 745 981
------------- -----------------
Paschalis Magnitis* 745 981
------------- -----------------
Total Directors' Remuneration 121,283 144,856
------------- -----------------
*Directors of subsidiary companies (I Services and Newbury)
The two new non-executive directors have only been paid in the
current financial year due to appointment on 7(th) March 2023.
The Directors' remuneration for the year ended 31 March 2022
was:
Remuneration (GBP) Remuneration
(US $)
Peter Cockburn 75,000 101,304
------------------- -------------
Jonathan Keeling 100,000 135,851
------------------- -------------
Clive Gibbons 14,620 19,930
------------------- -------------
Antonia Kyriakou* 1,490 1,962
------------------- -------------
Fareed Soreefan* 759 1,000
------------------- -------------
Sangeeta Bissessur* 759 1,000
------------------- -------------
Total Directors' Remuneration 192,628 261,047
------------------- -------------
*Directors of subsidiary companies (iServices and Newbury)
The Director remuneration consists of monthly/quarterly
compensation as per the agreed terms. There are no further cash
payments or benefits provided to Directors.
GAS MARKETS IN INDIA
India has a significant deficit of hydrocarbons which we believe
will result in a long-term, steady demand for gas produced by our
Block. According to the Petroleum and Natural Gas Regulatory Board
("PNGRB") Report, Vision 2030, India's natural gas demand will grow
significantly to 746 MMSCM/d (26.3 BCF/d) by the end of Fiscal
2030. India is expected to have approximately 32,727 km of natural
gas pipeline with a design capacity of 815 MMSCM/d in place by
2030. In order to further boost the consumption of natural gas in
the country, the Government established a Gas Trading Hub/ Exchange
(GTHE), where natural gas can be traded and supplied through a
market-based mechanism instead of multiple formula driven prices.
Initial trading has already started on Indian Gas Exchange.
The gas pricing policy announced by Government of India clearly
outlined that the pricing restriction under this policy is not
applicable to RJ-ON/6. Gas sold from Block RJ-ON/06 does not
require any approval from the government for the gas price. As a
result, we are able to negotiate the price of natural gas with our
customers without such price restriction. The Gas sales are
currently being invoiced at a price of US$ 8.57per MMBTU on Net
Calorific Value (NCV) basis. From April 2023 the gas prices have
been agreed to be US$ 9.16 per MMBTU on Gross Calorific Value (GCV)
basis. The prices for existing gas contract will be linked to
domestic gas prices on GCV basis as notified by Petroleum planning
and analysis cell of Government of India. The floor price will
continue to be existing price being US$ 4.5146 per MMBTU on GCV
(US$ 5 per MMBTU on NCV).
FINANCIAL INSTRUMENTS
Details of the use of financial instruments by the Company are
contained in note 29 to the attached financial statements.
RELATED PARTY TRANSACTIONS
Details of significant related party transactions are contained
in note 16 and note 23 to the attached financial statements.
INTERNAL CONTROL
The Directors acknowledge their responsibility for the Company's
system of internal control and for reviewing its effectiveness. The
system of internal control is designed to manage the risk of
failure to achieve the Company's strategic objectives. It cannot
totally eliminate the risk of failure but will provide reasonable,
although not absolute, assurance against material misstatement or
loss.
GOING CONCERN
After making enquires, the Directors have a reasonable
expectation that the Company will have adequate resources to
continue in operational existence for the foreseeable future. This
expectation is based on estimates of future potential revenues from
the RJ-ON/6 Block that the Company will derive from the sale of
hydrocarbon reserves/resources and availability of adequate debt
funding from banks, financial markets as well as related parties to
support capital investment to enable the Company to undertake
development activities in the Block. For this reason, they continue
to adopt the going concern basis in preparing the financial
statements. Refer note 27.
DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors'
report and consolidated financial statements for each financial
year which give a true and fair view of the state of affairs of the
Group and of the consolidated statement of comprehensive income of
the Group for that year. In preparing those financial statements
the Directors are required to:
o Select suitable accounting policies and apply them consistently;
o Make judgements and estimates that are reasonable and prudent;
o State whether International Financial Reporting Standards as
adopted by EU have been followed subject to any material departures
disclosed and explained in the financial statements; and
o Prepare consolidated financial statements on a going concern
basis unless it is inappropriate to presume that the Group will
continue in business.
The Directors confirm that the financial statements comply with
the above requirements.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and of the Group to enable them
to ensure that the financial statements comply with the
requirements of the Companies (Guernsey) Law, 2008. They are also
responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the provision and detection of
fraud and other irregularities.
The Directors are responsible for maintaining the integrity of
the corporate financial information included on the Group's
website. Legislation in Guernsey governing the preparation and
dissemination of financial information may differ from legislation
in other jurisdictions.
To the best of our knowledge and belief:
-- The financial statements have been prepared in accordance
with International Financial Reporting Standards, as adopted by the
European Union;
-- Give a true and fair view of the financial position and results of the Group; and
-- The financial statements include an analysis of the principal
financial instruments specific risks and uncertainties faced by the
Group.
AUDITOR
All of the current Directors have taken all steps that they
oughts to have taken to make themselves aware of any information
needed by the Group's Auditor for the purposes of their audit and
to establish that the Auditor is aware of that information. The
Directors are not aware of any relevant audit information of which
the Auditor is unaware.
By order of the Board
Jonathan Keeling
Risks and Risk Management
In planning our future activities and reacting to changes in our
ongoing business environment, we seek to identify, assess, mitigate
and monitor the risks that we face. Considerable effort is made
during our planning process to reduce and mitigate the various
risks to the extent that this is practical and commercially sound.
Ideally large decisions taken early means that any later adaptation
or reaction should be small.
We cannot remove the Company from all risk and the oil and gas
industry brings with it many special challenges in specific risks.
What we can and do strive to achieve is to understand and manage
the risk environment we work within.
The Company faces the appraisal, development and production
risks of the oil and gas industry. The business relies on extensive
engineering, geological and geophysical judgements.
As activities on the Block have grown and generated actual data
and experience, we have used this knowledge to reduce these risks.
There has been an increase in the number of wells to find
hydrocarbons through the knowledge gained from almost complete 3D
seismic data and analysis of drilling results. We shall continue to
de-risk this area of our operations but the risk of a dry hole will
never reach zero. The risk of mechanical issues or well
construction failing remains. However, with greater standardization
of well design and repetition of activities this has reduced.
We currently depend on two customers for the sale of gas and
substantially all of our revenues. Discussions are on-going to find
and develop new customer relationships.
GAIL has significant financial resources and maintains a strong
credit rating providing comfort in meeting any obligations under
our Agreement. Our gas is purchased at our field and shipped via a
GAIL owned pipeline to the power plant. The pipeline is purpose
built and operating well within its design specification.
Further, the Company had entered into a Gas sale and purchase
agreement with another customer wherein the Company shall arrange
to supply gas to its plant. This provides good opportunity to the
Company to expand its production. However, the buyer's plant has
been delayed and consequently the customer is liable to pay Take or
Pay charges.
The Company has one bank debt facility outstanding from its
group of lenders. These facilities were obtained on attractive
terms in difficult lending markets. Debt service for the facility
remains strong and contributes to our sound borrower track record.
Additional amounts were raised during 2018 through unsecured bonds,
which were further re-financed with the additional bond offering
made by the Company in November 2022. The Company has benefited
from consistent support of the majority shareholder particularly
reducing the risk of any funding gaps due to the delay in closing
external finance. The Production Sharing Contract that includes
cost recovery and the long-term sales contract for gas provide an
enhanced cash flow to service debt and give protection to
lenders.
Our business, revenues and profits may fluctuate with changes in
oil and gas prices. Our production is mainly gas and has been sold
on strong "Take or Pay" contracts that significantly reduce the
impact of fluctuations in the wider global energy market. However,
the prevailing prices of oil and gas can have some bearing on new
contracts and price revisions.
With effect from 1st April, 2022, the Sales Gas price was agreed
to be the price as per the Domestic Natural Gas Price (APM Price)
on GCV basis as notified by Petroleum Planning & Analysis Cell
(PPAC) from time to time. The gas price revision had resulted in
the gas price being revised to US$ 6.1 per MMBTU on GCV basis from
1 April 2022 to 30 September 2022 and to US$ 8.57 per MMBTU on GCV
basis from 1st October 2022 to 31st March 2023. As per the revised
Domestic gas pricing Guidelines, Sales gas price shall be 10 pct of
monthly average of Indian crude basket as notified by PPAC on a
monthly basis from 8th April, 2023.
The oil and gas industry are subject to laws and regulations
relating to environmental and safety matters in exploration for and
the development and production of hydrocarbons. We are bound by the
environmental laws and regulations applicable to India and satisfy
and in some areas exceed these requirements by using good industry
practice, trained staff and quality equipment.
We are committed to upholding procedures to protect the
environment and enforce environmental, health, safety and security
mechanisms through accountability at all levels, suitable policies,
feedback and full compliance by each employee and contractor to all
policies we develop.
Indus is subject to regulation and supervision by the Government
of India covering various aspects of our business. The Government
has historically played a key role, and is expected to continue to
play a key role in regulating, reforming and restructuring the
Indian oil and natural gas industry. A major platform for shaping
the industry has been the award of assets by various rounds under
the NELP. Our Block was awarded before the formation of NELP and
therefore places greater emphasis on our Production Sharing
Contract (PSC) in our dealings with Government in various forms. To
date the Block Management Committee created under our PSC and
including multiple Government agencies has assisted the development
progress we have made so far. The Field Development Plan for the
area beyond SGL has also been approved by Management Committee
consisting representatives of DGH and government created under
PSC.
Corporate Governance
The Directors recognize the importance of sound corporate
governance and have chosen to apply the Quoted Companies Alliance
("QCA") Corporate Governance Code and Guernsey regulations in so
far as they are appropriate given the Company's size and stage of
development. The Company may take additional Corporate Governance
measures beyond QCA guidelines and Guernsey regulations as may be
appropriate considering the Company's operations from time to
time.
The Company has not adopted the UK Corporate Governance Code
("the Code") and has chosen to apply the QCA Corporate Governance
Code for Small and Mid-Size Quoted Companies which is in line with
most growing AIM companies adopted practices. The disclosure
requirements under the code have been complied with and the
detailed report is available on the official website (
http://www.indusgas.com/ ) of the company.
Corporate Governance standards and procedures adopted by the
Company are regularly reviewed by the Chairman who has maintained
dialogue and answered questions of shareholders throughout the
year. The Chairman has consulted the Nomad on the objectives of
Corporate Governance within the Company.
BOARD OF DIRECTORS
The Board is responsible for the proper management of the
Company. The resumes of the current board members are as outlined
in the section 'Board of Directors' on page no. 6.
Mr. Ajay Kalsi brings knowledge of the oil and gas industry and
a range of general business skills and continues to be an advisor
to the company. The other Directors had formed a number of
committees to assist in the governance of the Company and these are
detailed below.
All Directors have access to independent professional advice, at
the Company's expense, when required.
SUB-COMMITTEES
The Board had constituted the three sub-committees outlined
below, which were then disbanded in March 2022 as a result of the
Board's reduced size. Given the Board's new directors appointed
recently these sub committees will reform in the future.
AUDIT COMMITTEE
The committee is responsible for ensuring that the financial
performance of the Company is monitored and reported on, for
meeting with the Auditor and reviewing findings of the audit with
the external auditor. It is authorized to seek any information it
properly requires from any employee and may ask questions of any
employee. It meets the Auditor once per year without and is
responsible for considering and making recommendations regarding
the engagement and remuneration of the Auditor.
REMUNERATION COMMITTEE
The committee considers and recommends to the Board the
framework for the remuneration of the executive director of the
Company and any other member of senior management. It considers and
recommends to the Board the total individual termination package of
each executive director including bonuses, incentive payments and
share options or other share awards. In addition, subject to
existing contractual obligations, it reviews the design of all
share incentive plans for approval by the Board and the Company's
shareholders and, for each such plan, recommends whether awards are
made and, if so, the overall amount of such awards, the individual
awards to executive directors and performance targets to be used in
assessing performance. Board of directors determines director
remuneration. No director is involved in decisions concerning his
own remuneration.
NOMINATION COMMITTEE
The committee considers the selection and re-appointment of
Directors. It identifies and nominates candidates to all board
vacancies and regularly reviews the structure, size and composition
of the board (including the skills, knowledge and experience) and
makes recommendations to the Board with regard to any changes.
SHARE DEALING
The Company has adopted a share dealing code (based on the Model
Code) and the Company takes all proper and reasonable steps to
ensure compliance by Directors and relevant employees.
THE CITY CODE ON TAKEOVERS AND MERGERS
Being a Channel Islands incorporated company, the Company is
subject to the UK City Code on Takeovers and Mergers.
DISCLOSURE AND TRANSPARENCY RULES
As a Company incorporated in Guernsey, Shareholders are not
obliged to disclose their interests in the Company in the same way
as shareholders of certain companies incorporated in the UK. In
particular, the relevant provisions of chapter 5 of the Disclosure
and Transparency Rules (DTR) do not apply. While the Articles
contain provisions requiring disclosure of voting rights in
Ordinary Shares, which are similar to the provisions of the DTR,
this may not always, ensure compliance with the requirements of
Rule 17 of the AIM Rules. Furthermore, the Articles may be amended
in the future by a special resolution of the Shareholders.
CONTROL BY SIGNIFICANT SHAREHOLDER
Gynia Holdings Limited, along with its wholly owned subsidiary
Focus oil Inc. own a significant percentage of outstanding shares
of the Company. As a significant shareholder, Gynia could exercise
significant influence over certain corporate governance matters
requiring shareholder approval, including the election of directors
and the approval of significant corporate transactions and other
transactions requiring a majority vote.
The Company, Strand Hanson Limited (Nomad & Broker), Gynia
and Mr. Ajay Kalsi have entered into a relationship agreement to
regulate the arrangements between them. The relationship agreement
applies for as long as Gynia directly or indirectly holds in excess
of thirty per cent of the issued share capital of the Company and
the Company's shares remain admitted to trading on AIM. The
relationship agreement includes provisions to ensure that:
a) The Board and its committees are able to carry on their
business independently of the personal interests of Gynia;
b) The constitutional documents of the Company are not changed
in such a way which would be inconsistent with the relationship
agreement.
c) All transactions between the Group and Gynia (or its
affiliates) are on a normal commercial basis and at arm's
length;
d) In the event of a conflict of interest between Gynia and the
Board, no person who is connected with Gynia is appointed as a
Non-Executive Director of the Company and no existing Non-Executive
Director is removed as a director of the Company unless such an
appointment or removal has been previously approved by the
nomination committee of the Board and that to the extent that any
previously approved by the nomination committees concerns the
composition of the Board which has been approved by the Board
requiring the approval of the shareholders of the Company then
Gynia will vote its Ordinary Shares in favour; and
e) The Shareholder puts certain restrictions in place to prevent
interference with the business of the Company.
Consolidated Financial Statements and Independent Auditor's
Report
Indus Gas Limited and its subsidiaries
31 March 2023
Independent auditor's report
To the members of Indus Gas Limited
Opinion
We have audited the Consolidated financial statements of Indus
Gas Limited (the 'Company') and its subsidiaries (the 'Group') for
the year ended 31 March 2023 which comprise the Consolidated
Statement of Financial Position, the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Cash Flows and notes to the
consolidated financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion, the consolidated financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 March 2023 and of the Group's profit for the year then
ended;
-- are in accordance with IFRSs as adopted by the European Union; and
-- comply with The Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
'Auditor's responsibilities for the audit of the consolidated
financial statements' section of our report. We are independent of
the Group in accordance with the ethical requirements that are
relevant to our audit of the consolidated financial statements in
Guernsey, including the FRC's Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the
directors' use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant
doubt on the Group's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in our report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to
modify the auditor's opinion. Our conclusions are based on the
audit evidence obtained up to the date of our report. However,
future events or conditions may cause the Group to cease to
continue as a going concern.
Our evaluation of management's assessment of the entity's
ability to continue as a going concern
Our evaluation of the directors' assessment of the Group's
ability to continue to adopt the going concern basis of accounting
included the following:
-- The audit engagement leader increased time spent directing
and supervising the audit procedures on going concern;
-- We assessed the determination, made by the Board of Directors
of the Group, that the Group is a going concern and the
appropriateness of the financial statements to be prepared on a
going concern;
-- We obtained the 12 month going concern assement performed by
management, including the assumptions and sensitivities prepared by
management;
-- We challenged the appropriateness of management's forecasts by;
o checking the mathematical accuracy of the cash flow
forecasts
o assessing the key assumptions used in the going concern
assessment based on our knowledge of the Group and the current
economic climate; and
o challenging management's consideration of downside sensitivity
by applying further sensitivies to understand the impact on
liquidity reverse stress stressing.
-- We assessed the disclosures in the financial statements
relating to going concern to ensure that they were fai, balanced
and understandable and in compliance with IFRS as adopted by the
European Union and
-- We obtained verbal and written representations from
management and those charged with governance detailing their basis
on their decision to continue adopting the going concern
assumption
In our evaluation of the directors' conclusions, we considered
the inherent risks associated with the Group's business model , we
assessed and challenged the reasonableness of estimates made by the
directors and the related disclosures and analysed how those risks
might affect the Group's financial resources or ability to continue
operations over the going concern period.
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our approach to the audit
Overview of our audit approach
Overall
materiality:
US$
2,669,500
which
represents
5%
of
the
Group's
profit
before
taxation,
determined
at
the
planning
stage
of
the
audit.
------------------------------------------------------------------
Key
audit
matters
were
identified
as
* impairment of production and development assets (same
as previous year)
Our
audit
report
for
the
year
ended
31
March
2022
included
a
key
audit
matter
relating
to
the
material
uncertainty
regarding
going
concern
of
the
Group
for
which
management's
forecasts
assumed
the
bonds
would
be
fully
repaid
in
December
2022
through
a
fund
raise
that
was
anticiapated
at
the
end
of
the
2022
calendar
year.
The
key
audit
matter
has
not
been
reported
in
our
current
year's
report
as
this
was
addressed
by
the
refinancing
which
occurred
in
the
current
year.
------------------------------------------------------------------
Full
scope
audit
procedures
have
been
performed
on
the
financial
information
of
Indus
Gas
Limited
and
its
subsidiary
companies.
There
is
no
change
in
scope
of
the
audit
from
the
prior
year.
------------------------------------------------------------------
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
consolidated financial statements of the current period and include
the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters
included those that had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in
the context of our audit of the consolidated financial statements
as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters .
In the graph below, we have presented the key audit matters,
significant risks and other risks relevant to the audit.
Key audit Significant Other risk
matter risk
How our scope addressed
Key Audit Matter the matter
============================================================= ===============================================================
Impairment of production In responding to the key
and development assets ("P&D audit matter, we performed
assets") the following audit procedures:
We identified the impairment o We have compared the carrying
of P&D assets as one of the value of assets to management's
most significant assessed assessment of the recoverable
risks of material misstatement amount to assess that the
due to error. carrying value is not in
excess of recoverable amount
At 31 March 2023, the Group .
held P&D assets of US$ 1, o We agreed the recoverable
21 2, 726 , 514 (31 March amount to management's future
202 2 : US$ 1, 142 , 120 cash flow model and performed
, 102 ). the following detailed procedures
over the model, along with
Recoverability of P&D assets impairment assessment and
is dependent on the expected disclosures in financial
future success of exploration statements:
and development activities.
Under International Accounting * We corroborated, through obtaining supporting
Standard (IAS) 16 "Property, documentation and audit evidence, estimates of future
plant and equipment", an cash flows and challenged whether these were
impairment test is required, appropriate in light of the future price, volume
using the principles of IAS assumptions and the costs budgets.
36 "Impairment of Assets",
for P&D assets.
* We assessed the sensitivity analysis over inputs to
Based on our professional the cash flow models wherein we have challenged the
judgement, we determined assumptions taken by management (including price,
the recoverability of the discount rate, operating cost etc) ;
carrying amount of P&D assets
amounting to US$1, 212 ,
726 , 514 is dependent upon * We have assessed the appropriateness of management's
the future cashflows of the defined cash generating units ("CGUs") and impairment
business. The Group has capitalised testing methodology under IFRSs as adopted by the
taking into account the IFRS European Union and whether disclosures in the
6 "Exploration for and Evaluation consolidated financial statements are appropriate,
of Mineral Resources " and complete and in accordance with IFRSs as adopted by
IAS 16 " Property, Plant the European Union ; and
and Equipment " recognition
criteria. In the previous
years, the Group obtained * We examined the methodology used at the CGU level by
approval on the reserves the management to assess the carrying value of P&D
for the SSG and SSF field assets assigned to the Group's principal CGU to
from the Directorate General evaluate its compliance with accounting standards and
of Hydrocarbons ('DGH') . consistency of application.
Further the Management Committee
has also approved the revised
Field Development Plan ('FDP')
in respect of the SGL area
for the enhancement of production.
Bearing in mind the generally
long-lived nature of the
Group's assets, the most
critical assumption in relation
to the management's assessment
of future cash flows, which
are used to project the recoverability
of P&D assets are management's
views on sales volume and
gas price outlook.
Impairment of P&D assets
has been identified as a
key audit matter as the assessment
of the recoverable amount
of the Company's cash generating
units (CGUs) and investments
involves significant judgements
about the future cash flow
forecasts and the discount
rate applied .
Relevant disclosures in Our results
the Annual Report and Accounts
2022-23 Based on our procedures we
* Consolidated Financial statements: Note 6.7, have not identified any material
Impariment testing for exploration and evaluation misstatements in relation
assets and property,plant and equipment; to the impairment of production
and development costs.
* Consolidated Financial Statements: Note 7, Property,
plant and equipment .
Our application of materiality
We apply the concept of materiality both in planning and
performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements, if
any, on the consolidated financial statements and in forming the
opinion in the auditor's report.
Materiality was determined as follows:
Materiality measure Group
======================== ========================================================================
Materiality for We define materiality as the magnitude
consolidated financial of misstatement in the consolidated financial
statements as statements that, individually or in the
a whole aggregate, could reasonably be expected
to influence the economic decisions of
the users of these consolidated financial
statements. We use materiality in determining
the nature, timing and extent of our
audit work.
======================== ==========================================================================
Materiality threshold US$ 2,669,500 which is 5% of the Group's
profit before tax determined at the planning
stage.
Significant judgements In determining materiality, we made the
made by auditor following significant judgements
in determining * P rofit before tax is considered to be the most
the materiality appropriate benchmark as this is used by investors to
judge the performance of the Group and is a
significant aspect for measurement of the
effectiveness of the Group's operations for
management.
Materiality for the current year is higher
than the level that we determined for
the year ended 31 March 2022 due to increase
in profit before tax for the year ended
31 March 2023 .
Performance materiality We set performance materiality at an
used to drive amount less than materiality for the
the extent of consolidated financial statements as
our testing a whole to reduce to an appropriately
low level the probability that the aggregate
of uncorrected and undetected misstatements
exceeds materiality for the consolidated
financial statements as a whole.
======================== ==========================================================================
Performance materiality US$ 1,601,712 which is 60% of financial
threshold statement materiality.
Significant judgements In determining performance materiality,
made by auditor we made the following significant judgements
in determining * We considered the Group's overall control environment
the performance to be effective based on the results of our risk
materiality assessment procedures; and
* There were no misstatement identified in the previous
year.
Specific materiality We determine specific materiality for
one or more particular classes of transactions,
account balances or disclosures for which
misstatements of lesser amounts than
materiality for the consolidated financial
statements as a whole could reasonably
be expected to influence the economic
decisions of users taken on the basis
of the consolidated financial statements.
======================== ==========================================================================
Specific materiality We determined a lower level of specific
materiality for the following areas:
Related party transactions and balances
as a class of transactions, account balances
or disclosures.
======================== ==========================================================================
Communication We determine a threshold for reporting
of misstatements unadjusted differences to the audit committee.
to the audit committee
======================== ==========================================================================
Threshold for US$ 133,500 and misstatements below that
communication threshold that, in our view, warrant
reporting on qualitative grounds.
======================== ==========================================================================
The graph below illustrates how performance materiality
interacts with our overall materiality and the tolerance for
potential uncorrected misstatements.
Overall materiality
===================
FSM: Financial statements materiality, PM: Performance
materiality, TFPUM: Tolerance for potential uncorrected
misstatements
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding
of the Group's business and in particular matters related to:
Understanding the Group, its components, and their environments,
including Group-wide controls
-- The engagement team obtained an understanding of the Group
and its environment, including Group-wide controls, and assessed
the risks of material misstatement at the Group level;
-- All significant elements of the group's finance and
accounting function are situated and managed centrally and operate
under one common internal control environment; all operations of
the group are also managed from this location; and
Identifying significant components and the type of work
performed on financial information of parent and other components
(including how it addressed the key audit matters)
-- The financial significance of the two significant components.
In assessing the risk of material misstatement to the consolidated
financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the consolidated financial
statements, we performed full scope audit procedures the two
components. This enabled us to obtain coverage of 100% of
consolidated revenue, 100% coverage of consolidated profit before
tax and 100% coverage of total assets for the group;
-- We undertook substantive testing on significant transactions,
balances and disclosures, the extent of which was based on various
factors such as our overall assessment of the control environment,
the effectiveness of controls over individual systems and the
management of specific risks.
-- Our audit procedures in respect of key audit matters have
been described in the 'Key audit matter's section or our report
The approach adopted for the scope of the audit is same as that
of the previous year and there has been no change.
Other information
The other information comprises the information included in the
annual report, other than the consolidated financial statements and
our auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the consolidated financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements
or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether there is a material misstatement of the consolidated
financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which the Companies (Guernsey) Law, 2008 requires us us
to report to you, in our opinion:
-- proper accounting records have not been kept by the Company; or
-- the Company's financial statements are not in agreement with the accounting records; or
-- we have not obtained all the information and explanations,
which to the best of our knowledge and belief, are necessary for
the purposes of our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 11, the directors are responsible for the
preparation of the consolidated financial statements which give a
true and fair view in accordance with IFRSs, and for such internal
control as the directors determine is necessary to enable the
preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the
directors are responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but
to do so.
Auditor's responsibilities for the audit of the consolidated
financial statements
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue
an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these consolidated financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. Owing to the
inherent limitations of an audit, there is an unavoidable risk that
material misstatements in the consolidated financial statements may
not be detected, even though the audit is properly planned and
performed in accordance with the ISAs (UK).
The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
-- We obtained an understanding of the legal and regulatory
frameworks applicable to the Group and industry in which it
operates. We determined that the following laws and regulations
were most significant: IFRS as adopted by the European Union,
Companies (Guernsey) Law, 2008, and the relevant tax compliance
regulations in the jurisdictions in which the Group operates. In
addition, we concluded that there are certain significant laws and
regulations that may have an effect on the determination of the
amounts and disclosures in the consolidated financial statements
such as those laws and regulations relating to health and safety,
employee matters, and bribery and corruption practices ;
-- We obtained an understanding of how the Group is complying
with those legal and regulatory frameworks by making inquiries of
management and those responsible for legal and regulatory
procedures. We corroborated our inquiries through our review of
board minutes and papers provided to the Board;
-- We assessed the susceptibility of the Group's financial
statements to material misstatement, including how fraud might
occur. Audit procedures performed by the engagement team included
;
- identifying and assessing the design and implementation of
controls management has in place to prevent and detect fraud;
-challenging assumptions and judgements made by management in
its significant accounting estimates;
- identifying and testing journal entries, in particular any
journal entries posted with unusual account combinations; and
-- These audit procedures were designed to provide reasonable
assurance that the financial statements were free from fraud or
error. The risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from
error and detecting irregularities that result from fraud is
inherently more difficult than detecting those that result from
error, as fraud may involve collusion, deliberate concealment,
forgery or intentional misrepresentations. Also, the further
removed non-compliance with laws and regulations is from events and
transactions reflected in the financial statements, the less likely
we would become aware of it.
-- The engagement partner's assessment of the appropriateness of
the collective competence and capabilities of the engagement team
including consideration of the engagement teams :
- understanding of, and practical experience with audit
engagements of a similar nature and complexity through appropriate
training and participation;
- knowledge of industry in which the client operates; and
- understanding of the legal and regulatory requirements specific to the Group
-- We communicated relevant laws and regulations and potential
fraud risk areas to all engagement team members, and remained alert
to any indications of fraud or non compliance with laws and
regulations throughout the audit.
-- In assessing the potential risks of material misstatement, we obtained an understanding of :
- the Group's operations, including the nature of its revenue
sources, products and services and of its objectives and strategies
to understand the classes of transactions, account balances,
expected financial statement disclosures and business risks that
may result in risks of material misstatement;
- the applicable statutory provisions; and
- the adequacy of procedures for authorisation of transactions,
internal review procedures over Group's compliance with statutory
requirements;
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state to
the Company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Michael Carpenter
For and on behalf of Grant Thornton Limited
Chartered Accountants
St Peter Port
Guernsey
Date: xx September 2023
Consolidated Statement of Financial Position
(All amounts in United States Dollars, unless otherwise
stated)
Note 31 March 2023 31 March 2022
--------------- -----------------------
ASSETS
Non-current assets
7 1,223,434,478 1,149,223,672
1,140,605 1,213,986
Property, plant and equipment 7,891 549
---------------
Tax assets
Other assets
--------------
Total non-current assets 1,224,582,974 1,150,438,207
--------------- -----------------------
Current assets
Inventories 10 9,932,047 9,459,753
Trade and other receivables 11 6,640,424 20,105,840
Prepayment and other assets
due from a related party 16 107,348,170 120,408,124
Cash and cash equivalents 12 11,765,514 4,452,010
--------------- -----------------------
Total current assets 135,686,155 154,425,727
--------------- -----------------------
Total assets 1,360,269,129 1,304,863,934
--------------- -----------------------
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 13 282,833,686 251,953,802
Total shareholders' equity 343,443,324 312,563,440
--------------- -----------------------
Liabilities
Non-current liabilities
Long term debt, excluding current
portion 14 175,475,431 39,239,735
Provision for decommissioning 15 1,894,795 1,987,325
Deferred tax liabilities (net) 8 144,392,951 120,398,433
Payable to related parties,
excluding current portion 16 633,924,200 625,442,503
Deferred revenue 18 30,311,748 25,563,995
Total non-current liabilities 985,999,125 812,631,991
--------------- -----------------------
Current liabilities
Current portion of long-term
debt 14 28,458,200 172,747,343
Current portion payable to
related parties 16 333,611 345,105
Trade and other payables 17 2,034,869 1,498,969
Deferred revenue 18 - 5,077,086
Total current liabilities 30,826,680 179,668,503
-------------- -----------------------
Total liabilities 1,016,825,805 992,300,494
-------------- -----------------------
Total equity and liabilities 1,360,269,129 1,304,863,934
-------------- -----------------------
(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 26 September 2023 and was
signed on its behalf by:
JONATHAN KEELING
Chairman
Consolidated Statement of Comprehensive Income
(All amounts in United States Dollars, unless otherwise
stated)
Year ended Year ended
Note 31 March 2023 31 March 2022
------------------------ -----------------------
Revenues 18 63,034,644 53,709,538
Cost of sales (7,362,450) (6,844,856)
------------------------ -----------------------
Gross profit 55,672,194 46,864,682
------------------------ -----------------------
Cost and expenses
Administrative expenses (915,858) (924,699)
------------------------ -----------------------
Operating profit 54,756,336 45,939,983
------------------------ -----------------------
Foreign currency exchange gain,
net 20 118,066 15,322
Profit before tax 54,874,402 45,955,305
------------------------ -----------------------
Income taxes 9
- Deferred tax expense (23,994,518) (10,745,121)
------------------------ -----------------------
Profit for the year (attributable
to the shareholders of the Group) 30,879,884 35,210,184
Total comprehensive income for
the year (attributable to the
shareholders of the Group) 30,879,884 35,210,184
------------------------ -----------------------
Earnings per share 22
Basic 0.17 0.19
Diluted 0.17 0.19
(The accompanying notes are an integral part of these
consolidated financial statements)
Consolidated Statement of Changes in Equity
(All amounts in United States Dollars, unless otherwise
stated)
Common stock Additional Currency Merger Retained Total
paid in translation reserve earnings shareholders'
capital reserve equity
-------------------------- ----------- ------------ ----------- --------------- ----------------
No. of Amount
shares
--------------- -------------- ---------- ----------- ------------ ----------- ---------- --- --- -----------
Balance
as at 1 April
2021 182,973,924 3,619,443 46,733,689 (9,313,782) 19,570,288 216,743,618 277,353,256
--------------- -------------- ---------- ----------- ------------ ----------- --------------- ----------------
- - - - - 35,210,184 35,210,184
---------------
Total
comprehensive
income for
the year
--------------- --------- --------------- ----------- ------------ ----------- ----------
Balance
as at 31
March 2022 182,973,924 3,619,443 46,733,689 (9,313,782) 19,570,288 251,953,802 312,563,440 -
--------------- -------------- ---------- ----------- ------------ ----------- --------------- ----------------
- - - - - 30,879,884 30,879,884
---------------
Total
comprehensive
income for
the year
--------------- -------------- ---------- ----------- ------------ ----------- --------------- ----------------
Balance
as at 31
March 2023 182,973,924 3,619,443 46,733,689 (9,313,782) 19,570,288 282,833,686 343,443,324
--------------- -------------- ---------- ----------- ------------ ----------- --------------- ----------------
(The accompanying notes are an integral part of these
consolidated financial statements)
Consolidated Statement of Cash Flow
(All amounts in United States Dollars, unless otherwise
stated)
Year ended Year ended
31 March 31 March
2023 2022
-------------- -------------------------------------
Cash flow from operating activities
Profit before tax 54,874,402 45,955,305
Adjustments
Unrealized exchange loss/(gain) (118,066) 36,942
Depreciation 6,443,735 5,834,482
Changes in operating assets and
liabilities
Inventories (472,294) (921,489)
Trade receivables 11,736,924 14,573,417
Other current and non-current assets (3,355,936) (1,725,158)
Payable to related party-operating
activities 13,059,954 6,375,770
Provisions for decommissioning (92,528) 74,898
Accrued expenses and other liabilities (7,724,358) (2,390,428)
Cash generated from operations 74,351,833 67,813,739
Income taxes (paid)/received 73,384 (320,588)
-------------- -------------------------------------
Net cash generated from operating
activities 74,425,217 67,493,151
-------------- -------------------------------------
Cash flow from investing activities
Purchase of property, plant and equipment (12,237,220) (22,561,337)
Net cash used in investing activities (12,237,220) (22,561,337)
-------------- -------------------------------------
Cash flow from financing activities
Proceeds from long term bonds 159,839,930 -
Repayment of long-term Bonds (150,000,000) -
Repayment of long-term debt from banks (18,936,000) (20,736,000)
-------------- -------------------------------------
Proceeds from loans by related parties 6,000,000 17,425,000
Repayment of loans by related parties (37,250,000) (23,000,000)
Payment of interest (14,646,488) (15,150,562)
-------------- -------------------------------------
Net cash generated from financing
activities (54,992,558) (41,461,562)
-------------- -------------------------------------
Net increase in cash and cash equivalents 7,195,439 3,470,242
Cash and cash equivalents at the
beginning of the year 4,452,010 995,765
Effects of exchange differences on
cash and cash equivalents 118,066 (14,007)
-------------- -------------------------------------
Cash and cash equivalents at the
end of the year 11,765,514 4,452,010
-------------- -------------------------------------
(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 28), 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, SSF and SSG.
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 reduced 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 are entitled to
a 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 2023 is 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 and
production 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 2023 31 March 2022
--------------------------------- ------------------- ----------------
Non-current assets 1,223,434,478 1,149,223,672
Current assets 129,867,877
111,000,741
Non-current liabilities 1,894,797 1,987,325
Expenses (net of finance income) 6,342,915 6,702,159
Further, the SSF and SSG field also received its declaration of
commerciality on 24th November 2014. Subsequent to the declaration
of commerciality for SSF and SSG discovery, ONGC did not exercise
the option to acquire 30 percent in respect of SSG and SSF field.
The participating interest in SSG and SSF field between Focus,
iServices and Newbury will remain in ratio of 10 percent, 65
percent and 25 percent respectively for exploration, evaluation and
development cost, and production revenue for SSG and SSF in the
block.
4. NEW AND AMED STANDARDS ADOPTED BY THE GROUP
There are few Standards, interpretations or amendments that have
been issued prior to the date of approval of these financial
statements and endorsed by IASB. Following are the amendments that
applicable from financial year beginning 1 January 2022.
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 2022 (Amendments to IFRS 16)
These amendments do not have a significant impact on the
Financial Statements and therefore the disclosures have not been
made.
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 2023, 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. IFRS 17, 'Insurance contracts' as amended in December 2021
ii. Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8
iii. Amendment to IAS 12- deferred tax related to assets and
liabilities arising from a single transaction
iv. Amendment to IAS 1 - Non current liabilities with
covenants
v. Amendment to IFRS 16 - Leases on sale and leaseback
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 2023. 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 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.
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 goods
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, 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.
The Group has only one contractual arrangement for sale of gas
to Gas Authority of India Limited (GAIL), wherein the revenue gets
recognised on the basis of delivery i.e. point in time revenue
recognition. Further, there are no other performance obligations
which the company is liable to perform . As per the contract signed
with customer, entity is eligible to recover the amount from
customer within 15 days of raising invoice .
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.
6.5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise 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 assets, such gain
or loss is recognized as part of the cost of the 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
asset 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
exploration and evaluation asset, the amount reflecting that
consumption is recorded as part of the cost of the 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 capitalized
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. 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. Trade receivables that
do not contain a significant financing component are measured at
the transaction price. 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.
A financial asset is measured at amortized cost if it 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. 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, for example under an insurance contract, the
reimbursement is recognized as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any
provision 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.
6.15. SEGMENT REPORTING
Operating segments are identified on the basis of internal
reports about components of the Group that are regularly reviewed
by the Chief Operating Decision Maker in order to allocate
resources to the segments and to assess their performance. The
Company considers that it operates in a single operating segment
being the production and sale of gas.
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise of the following:
Cost Land Extended Production Bunk Houses Vehicles Other Capital Total
well test Development Assets assets work-in-progress
equipment assets
--------------- -------------- -------------- -------------------- ------------ ------------------ ---------- -------------- ----------------- ----------------
Balance as at
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 73,380,143 - - - - 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
--------------- -------------- -------------- -------------------- ------------ ------------------ ---------- -------------- ----------------- ----------------
Additions - 3,958,473 77,050,148 - - 46,888 - 45,876 81,101,385
Transfers - - (63,779,513) 63,779,513 - - - - -
Disposals - - - - - - -
Balance as at
31 March
2023 167,248 9,131,202 878,686,884 393,696,456 7,869,575 4,963,923 1,695,265 3,024,746 1,299,235,299
--------------- -------------- -------------- -------------------- ------------ ------------------ ---------- -------------- ----------------- ----------------
Accumulated
Depreciation
Balance as at
1 April
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
--------------- -------------- -------------- -------------------- ------------ ------------------ ---------- -------------- ----------------- ----------------
Depreciation
for the
year - 230,847 - 6,443,735 195,536 18,543 1,917 - 6,890,578
-------------- -------------- -------------------- ------------ ------------------ ---------- -------------- ----------------
Balance as at
31 March
2023 - 3 ,129,668 - 59,656,825 6,412,709 4,916,324 1,684,294 - 75,800,820
--------------- -------------- -------------- -------------------- ------------ ------------------ ---------- -------------- ----------------- ----------------
Carrying
values
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
At 31 March
2023 167,248 6,001,534 878,686,885 334,039,630 1,456,864 47,599 9,971 3,024,749 1,223,434,478
--------------- -------------- -------------- -------------------- ------------ ------------------ ---------- -------------- ----------------- ----------------
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
fields.
Development assets of SGL, SSG and SSF fields 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 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.
The additions in development assets also include borrowing costs
US$ 55,091,974 (previous year: US$ 53,932,526). The weighted
average capitalization rate on funds borrowed generally is 6.76per
cent per annum (previous year 6.72per cent).
The depreciation has been included in the following
headings-
31 March 2023 31 March 2022
--------------------------------------- -------------- --------------
Depreciation included in assets other
than production assets 446,843 618,837
Depreciation included in statement
of comprehensive income under the
head cost of sales for production
assets 6,443,735 5,834,481
---------------------------------------- -------------- --------------
Total 6,890,578 6,453,318
---------------------------------------- -------------- --------------
8. DEFERRED TAX ASSETS/ LIABILITIES (NET)
Deferred taxes arising from temporary differences are summarized
as follows:
31 March 31 March 2022
2023
----------------------------------------- ------------- ---------------
385,508,089
Deferred tax assets 385,508,089 378,661,726
Unabsorbed losses/credits 378,661,726
Total
Deferred tax liability
Development assets/ property, plant and
equipment 529,901,040 499,060,159
Total 529,901,040 499,060,159
Net deferred tax liabilities 144,392,951 120,398,433
------------------------------------------- ------------- ---------------
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 2023 31 March
2022
------------------------------ --------------------------- --------------
Deferred tax charge (23,994,518) (10,745,121)
Total (23,994,518) ( 10,745,121)
----------------------------------- ---------------------- --------------
The relationship between the expected tax expense based on the
domestic tax rates for each of the legal entities within the Group
and the reported tax expense in consolidated statement of
comprehensive income is reconciled as follows:
31 March 31 March
2023 2022
Accounting profit for the year before
tax 54,873,961 45,955,305
Effective tax at the domestic rates applicable
to profits in the country concerned 23,968,946 20,073,277
Tax impact of bought forward losses lapsed - -
during the year
Non-taxable income 25,572 (9,328,156)
Other - -
Tax expense 23,994,518 10,745,121
----------- ------------
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
corporate. 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 2023 31 March
2022
------------------------------------ ------------------------- ----------
Drilling and production stores and
spares 9,778,466 6,478,942
Fuel 109,357 90,486
Goods in transit 44,224 2,890,325
Total 9,932,047 9,459,753
------------------------------------ ------------------------- ----------
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$552,413 (previous year: US$ 629,160) were recorded as an
expense under the heading 'cost of sales' in the consolidated
statement of comprehensive income during the year ended 31 March
2023. Inventories of US$ 9,248,791 (previous year: US$ 10,504,352)
were capitalized as part of development assets.
11. TRADE AND OTHER RECEIVABLE
31 March 2023 31 March
2022
--------------------- ----------------------------- -----------
Trade receivable 6,598,149 18,335,073
Other Current Asset 42,275 1,770,767
--------------------- -----------------------------
Total 6,640,424 20,105,840
--------------------- ----------------------------- -----------
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 2023 31 March 2022
----------------------------------- -------------- --------------
Cash at banks in current accounts 11,765,514 4,452,010
----------------------------------- --------------
Total 11,765,514 4,452,010
----------------------------------- -------------- --------------
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 2023 31 March
2022
---------------------------------- ------------ --------------- -----------
November
2024 (PY:
Non-current portion of long-term November
debt 2024) 15,859,060 39,239,735
Current portion of long-term
debt 24,155,800 19,079,585
Total 40,014,860 58,319,320
------------------------------------------------ --------------- -----------
Current interest rates are variable and weighted average
interest for the year was 6.76 per cent per annum (previous year:
6.72 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.
Interest capitalised on loans above have been disclosed in notes
7.
The term loans are secured by following: -
-- First charge on all project assets of the Group both present
and future, to the extent of SGL Field Development and to the
extent of capex incurred out of this facility in the rest of
RJ-ON/6 field.
-- First charge on the current assets (inclusive of condensate
receivable) of the Group to the extent of SGL field.
-- First Charge on the entire current assets of the SGL Field
and to the extent of capex incurred out of this facility in the
rest of RJON/6 field.
From Bonds
Maturity 31 March 31 March
2023 2022
---------------------------------- ---------- ------------ ------------
Current portion of long-term
debt 2023 - 153,667,758
Non-current portion of long-term 2027 159,608,734 -
debt
Current portion of long-term 4,302,400 -
debt
Total 163,918,772 153,667,758
---------------------------------------------- ------------ ------------
The Group has issued US Dollar 160.00 million bonds which
carries interest at the rate of 8 per cent per annum, for the
purpose of re-financing the bonds which were repayable in December
2022. These bonds are unsecured bonds and are fully repayable at
the end of 5 years i.e., November 2027, further interest on these
notes is paid semi-annually.
15. PROVISION FOR DECOMMISSIONING
Amount
----------------------------- ----------
Balance at 1 April 2021 1,912,427
Increase in provision 74,898
Balance as at 31 March 2022 1,987,325
(Decrease) in provision (92,529)
Balance as at 31 March 2023 1,894,794
----------------------------- ----------
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 31March 2023 31March 2022
-------------------------------- ---------- ------------- -------------
Current
Payable to directors 333,611 345,105
333,611 345,105
Other than current
Borrowings from Gynia Holdings
Ltd.* 633,924,200 625,442,503
633,924,200 625,442,503
Total 634,257,811 625,787,608
-------------------------------------------- ------------- ---------------
* 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 (detailed in note 14) and therefore, is payable along
with related interest subsequent to repayment of bank loan.
Interest capitalised on loans above have been disclosed in
note7.
Related parties' receivable comprises the following:
Maturity 31March 31March 2022
2023
------------------------------ ----------- ------------ -------------------
Current
Prepayments and other assets
due from Focus On demand 107,348,170 120,408,124
------------------------------
Total 107,348,170 120,408,124
------------------------------------------- ------------ -------------------
Prepayments and other assets due from 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.
Other assets comprises of the amount of royalty recoverable from
Focus Energy Limited.
17. TRADE AND OTHER PAYABLES
31March 2023 31March 2022
------------------- ------------- -------------
Trade payables 1,139,946 1,199,586
VAT payables 483,957 116,125
Other liabilities 410,966 183,258
------------------- ------------- -------------
2,034,869 1,498,969
------------------- ------------- -------------
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:
31March 2023 31March 2022
-------- ------------- -------------
Asia 63,034,644 53,709,538
Europe - -
-------- ------------- -------------
63,034,644 53,709,538
-------- ------------- -------------
The Group's revenue disaggregated by the portion of revenue
recognition is as follows:
31March 2023 31March 2022
-------------------------------------- ------------- -------------
Goods transferred at a point in time 63,034,644 53,709,538
Services transferred at a point in - -
time
63,992,688 53,709,538
-------------------------------------- ------------- -------------
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 to be
liable to pay 41 % (Previous year: 41%) 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 2023 31 March 2022
--------------------------------- -------------------------- ------------------------
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
--------------------------------- ------------ ------------ ---------- ------------
Add: Transfer from current
to non-current liabilities (4,474,753) 4,747,753 - -
--------------------------------- ------------ ------------ ---------- ------------
Less: Amount written off (329,333) - - -
during the year
--------------------------------- ------------ ------------ ---------- ------------
Closing balance of Contract
liabilities - Deferred revenue - 30,311,748 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$ 212,270 (previous year US$ 201,245) and US$
201,627(previous year US$ 216,488) respectively. Cost pertaining to
the employees of the Group have been included under administrative
expense is US$ 144,856 (previous year US$ 261,045).
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 2023 31 March 2022
----------------------------------------- -------------- --------------
(Loss) on restatement of foreign
currency monetary receivables and
payables (31,336) (6,825)
Gain arising on settlement of foreign
currency transactions and restatement
of foreign currency balances arising
out of Oil block operations. 149,402 22,147
Total 118,066 15,322
----------------------------------------- -------------- --------------
21. 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 2023 31 March 2022
-------------------------------------- -------------------- -------------------
Profits attributable to shareholders
of Indus Gas Limited, for basic
and dilutive 30,879,884 35,210,184
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 0.17 0.19
Diluted earnings per share 0.17 0.19
22. RELATED PARTY TRANSACTIONS
The related parties for each of the entities in the Group have
been summarised in the table below:
Nature of the relationship Related Party's Name
--------------------------------------------- ----------------------------
I. Holding Company Gynia Holdings Ltd.
II. Ultimate Holding Company Multi Asset Holdings Ltd.
(Holding Company of Gynia
Holdings Ltd.)
III. Enterprises over which Key Focus Energy Limited
Management Personnel (KMP) exercise
control (with whom there are transactions)
--------------------------------------------- ----------------------------
Disclosure of transactions between the Group and related parties
and the outstanding balances as at 31 March 2023 and 31 March 2022
is as under:
Transactions with Holding Company
Particulars 31 March 2023 31 March
2022
----------------------------------- -------------- ------------
Transactions during the year with
the holding Company
Amount Received 6,000,000 17,425,000
Amount Paid 37,250,000 23,00,0000
Interest 39,731,697 38,508,705
Balances at the end of the year
Total payable* 633,924,200 625,442,503
----------------------------------- -------------- ------------
*Including interest
Transactions with KMP and entity over which KMP exercise
control
Particulars 31March 2023 31March 2022
------------------------------------------ ------------- -------------
Transactions during the year
Remuneration to KMP
Short term employee benefits 144,856 261,045
Total 144,856 261,045
Entity over which KMP exercise control
Cost incurred by Focus on behalf of the
Group in respect of the Block 26,812,100 19,811,879
Remittances to Focus 7,472,670 15,825,880
Balances at the end of the year
Total receivables* 107,348,170 12,04,08,124
Total payable * (333,611) (345,105)
------------------------------------------ ------------- -------------
* 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.
23. SEGMENT REPORTING
The Chief Operating Decision Maker being the Chief Executive
Officer of the Group, reviews the business as one operating segment
being the extraction and production of gas . The operating segments
have been aggregated due to similar economic characters and allied
nature of product and services. 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$ 1,223,434,478 (previous year: US$
1,149,223,672).
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) to Oil and gas exploration
companies. The revenue from the top three customer comprises 99.93%
(Previous year: 94.02%) of the Group's total revenue.
24. COMMITMENTS AND CONTINGENCIES
The Group has no contingent liabilities as at 31 March 2023
(previous year Nil).
The Group has no commitments as at 31 March 2022 (previous year
Nil).
25. 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 and IFRS 6 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. For the purpose of impairment
assessment, judgements are involved in estimating the expected gas
extraction from production assets, based on which, indicators are
identified necessary for determining that an impairment assessment
is necessary. Based on management assessment, the management has
carried out impairment testing for impairment of property, plant
and equipment as at 31 March 2023.
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 2023. An 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$ 9.16 per
Metric Million British Thermal Unit (MMBTU) on Gross Calorific
Value (GCV) basis from 1 April 2023 to 30 April 2023 resulting in
price increase of 6.88% 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.
USD (In million)
Sensitivity analysis has been performed by the management with
respect to the assumptions as mentioned below:
Particulars Carrying value of Property, Plant & Equipment
Reduction in projected revenue by 1% and increasing discount rate by
1% 1,868
----------------------------------------------
Increase in projected revenue by 1% and decreasing discount rate by
1% 1,340
----------------------------------------------
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.
26. BASIS OF GOING CONCERN ASSUMPTION
The Group has current liabilities amounting to US$ 35,574,432
(2021-22: US$ 179,668,503) the majority of which is towards current
portion of borrowings from banks and bond and other liabilities. As
at 31 March 2023, the amounts due for repayment (including interest
payable) within the next 12 months for long term borrowings are US$
28,458,200 (2021-22: US$ 172,747,343 ) which the Group expects to
meet from its internal generation of cash from operations. The
Group has sufficient cash flows to repay the maturing debt as the
Group is financially sound . The Group has net profits after tax of
US$ 30,879,443 (2021-22: US$ 35,210,183) for the year ended 31
March 2023 and net working capital of US$ 100,112,213 as at March
2023.
Further, there is no significant impact of Covid-19 on the
Company's ability to continue as going concern considering that the
entity is in the business of essential services.
27. 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 2023 31 March 2022
-------------------------------- ---------------- ---------------
Total debt (A) 1,016,825,804 992,300,494
Total equity (B) 343,443,324 312,563,440
Total capital employed (A+B) 1,360,269,128 1,304,863,934
Gearing ratio 74.75 % 76.05 %
--------------------------------- ---------------- ------------------
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.
28. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
A summary of the Group's financial assets and liabilities by
category are mentioned in the table below. The carrying amounts of
the Group's financial assets and liabilities recognized at the end
of the reporting period are as follows:
31 March 31 March 2022
2023
----------------------------------------- ------------ --------------
Non-current assets
Loans
- Security deposits 7,891 549
Current assets
- Trade receivables 6,598,149 18,335,073
- Cash and cash equivalents 11,765,514 4,452,010
Total financial assets under loans
and receivables 18,371,554 22,787,632
----------------------------------------- ------------ --------------
Non-current liabilities
Financial liabilities measured at
amortized cost:
- Long term debt 175,475,431 39,239,735
- Payable to related parties 633,924,200 625,442,503
Current liabilities
Financial liabilities measured at
amortized cost:
- Current portion of long-term debt 28,458,200 172,747,343
- Current portion of payable to related
parties 333,611 345,105
- Trade and other payables (other
than VAT payable) 1,550,911 1,382,844
----------------------------------------- ------------ --------------
Total financial liabilities measured
at amortized cost 839,742,353 839,157,530
----------------------------------------- ------------ --------------
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$. No forward exchange contracts were entered into
during the year.
Entities within the Group conduct the majority of their
transactions in their functional currency other than amounts of
cash held in GBP, SGD and INR. All other monetary assets and
liabilities are denominated in functional currencies of the
respective entities. The currency exposure on account of assets and
liabilities which are denominated in a currency other than the
functional currency of the entities of the Group as at 31 March
2023 and 31 March 2022 is as follows:
Particulars Functional Foreign currency 31 March 2023 31 March 2022
currency
----------------- ------------ --------------------
(Amount in (Amount in
US$) US$)
----------------- ------------ -------------------- -------------- --------------
Great Britain
US$ Pound 87,781 29,338
Short term
exposure- US$ Singapore Dollar 7,968 10,718
Cash and cash
equivalents US$ Indian Rupee 27,756 27,152
-----------------
Total exposure 123,505 67,208
----------------------------------------------------- -------------- --------------
As at March 31, 2023 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$ (1,235) and US$ 1,1235 respectively.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which has established an appropriate
liquidity risk management framework for the management of the
Group's short, medium and long-term funding and liquidity
management requirements. The Group manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve
borrowing facilities, by continuously monitoring forecast and
actual cash flows, and by matching the maturity profiles of
financial assets and liabilities.
The table below summaries the maturity profile of the Group's
financial liabilities based on contractual undiscounted payments
for the liquidity analysis.
3 months 1-2
0-3 months to 1 year years 2-5 years 5+ years Total
------------------ ------------ -------------- -------- ----------- --------- -----------
31 March 2023
Non-interest
bearing 1,884,522 - - - - 1,884,522
Variable interest
rate liabilities 6,587,800 17,568,000 15,866,697 - - 40,022,497
Fixed interest
rate liabilities 4,302,400 - - 793,532,935 - 797,835,335
12,774,722 17,568,000 15,866,697 793,532,935 - 839,742,354
------------------ ------------ ---------- ------------ ----------- --------- -----------
3 months
0-3 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 22,914,273 641,772,552 - 839,157,530
------------------ ------------ ----------- ---------- ----------- ------ -------------
Interest rate risk
The Group's policy is to minimize interest rate risk exposures
on the borrowing from the banks and the sum payable to Focus Energy
Limited. Borrowing from the Gynia Holdings Ltd. is at fixed
interest rate and therefore, does not expose the Group to risk from
changes in interest rate. The interest rate on bond is fixed at 8%
per annum. The Group is exposed to changes in market interest rates
through bank borrowings at variable interest rates.
The Group's interest rate exposures are concentrated in US$.
The analysis below illustrates the sensitivity of profit and
equity to a reasonably possible change in interest rates. Based on
volatility in interest rates in the previous 12 months, the
management estimates a range of 50 basis points to be approximate
basis for the reasonably possible change in interest rates. All
other variables are held constant.
Interest rate
-------------- ---------------------------
- 0.50 per
+ 0.50 per cent cent
31 March 2023 278,772 (278,772)
31 March 2022 339,270 (339,270)
--------------- --------------- ----------
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
Company is presently in negotiations with GAIL for increase in gas
price. No commodity price hedging contracts have been entered
into.
Credit risk
The Group has concentration of credit risk against the
receivable balance from customers with reputable credit standing
and hence the Group does not consider credit risk in respect of
these to be significant. The management has evaluated the impact of
expected credit loss on the receivable balance. While evaluating
the same, macroeconomic factors affecting the customer's ability to
settle the amount outstanding have been considered. The Group has
identified gross domestic product (GDP) and unemployment rates of
the countries in which the customers are domiciled to be the most
relevant factors. The impact was insignificant and accordingly no
adjustment has been recorded in the financial statements.
Other receivables such as security deposits and cash and cash
equivalents do not comprise of a significant balance and thus do
not expose the Group to a significant credit risk.
The tables below detail the credit quality of the Group's
financial assets and other items, as well as the Group's maximum
exposure to credit risk by credit risk rating grades.
Internal
credit 12M or Lifetime Gross carrying Loss Net carrying
rating ECL amount allowance amount
-------------------- ----------- ------------------------ --------------- ---------- ------------
31 March 2023
Security deposit
s Performing 12 Month ECL 7,891 - 7,891
Lifetime ECL
Trade receivables Performing (simplified approach) 6,598,149 - 6,598,149
Cash and cash
equivalents Performing 12 Month ECL 11,765,514 - 11,765,514
18,371,554 - 18,371,554
------------ ------------------------ -------------- --------- -------------
Internal
credit 12M or Lifetime Gross carrying Net carrying
rating ECL amount Loss allowance amount
------------------ ----------- ------------------------ --------------- -------------- ------------
31 March 2022
Security deposits Performing 12 Month ECL 549 - 549
Lifetime ECL
Trade receivables Performing (Simplified approach) 18,335,073 - 18,335,073
Cash and cash
equivalents Performing 12 Month ECL 4,452,010 - 4,452,010
22,787,632 - 22,787,632
------------ ------------------------ -------------- -------------- ------------
An asset is performing when the counterparty has a low risk of
default.
29. RECONCILIATION OF LIABILITIES FROM FINANCING ACTIVITIES
Borrowings
---------------------------------------------- ---------------
As at April 01, 2022 837,429,581
Cash Movement:
Net utilisation (54,992,558)
Other non- cash movements
Impact of effective interest rate adjustment 662,445
Impact of exchange fluctuations -
Interest accruals 55,091,974
---------------------------------------------- ---------------
Net debts as at March 31, 2023 838,191,442
---------------------------------------------- ---------------
Borrowings
---------------------------------------------- ---------------
As at April 01, 2021
Cash Movement: 824,958,617
Net proceeds
Net utilisation (41,461,562)
Other non- cash movements
Impact of effective interest rate adjustment 284,629
Impact of exchange fluctuations -
Interest accruals 53,647,797
---------------------------------------------- ---------------
Net debts as at March 31, 2022 837,429,581
---------------------------------------------- ---------------
30. P OST REPORTING DATE EVENT
No adjusting or significant non-adjusting event have occurred
between 31(st) March 2023 and the date of authorization.
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END
FR UWOBROWUKUAR
(END) Dow Jones Newswires
September 29, 2023 02:00 ET (06:00 GMT)
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