To the Board of Directors of€¦ · Trade and other receivables 1,077,400155,141 Prepayments...

Independent Auditors’ Report on review of condensed interim financial informationIndependent Auditors’ Report on review of condensed interim financial informationIndependent Auditors’ Report on review of condensed interim financial informationIndependent Auditors’ Report on review of condensed interim financial information

To the Board of Directors of

Great Eastern Energy Corporation Limited

IntroductionIntroductionIntroductionIntroduction

We have reviewed the accompanying condensed balance sheet of Great Eastern Energy Corporation Limited as of

September 30, 2015 and the related condensed statements of income, changes in equity and cash flows for the

six-month period then ended, and a summary of significant accounting policies and other explanatory notes

(collectively the “condensed interim financial statements”). Management is responsible for the preparation and

fair presentation of this interim financial information in accordance with the International Financial Reporting

Standards (IFRSs) as issued by International Accounting Standards Board (‘IASB’). Our responsibility is to

express a conclusion on this interim financial information based on our review.

Scope of ReviewScope of ReviewScope of ReviewScope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of

Interim Financial Information Performed by the Independent Auditor of the Entity.” A review of interim financial

information consists of making inquiries, primarily of persons responsible for financial and accounting matters,

and applying analytical and other review procedures. A review is substantially less in scope than an audit

conducted in accordance with International Standards on Auditing and consequently does not enable us to

obtain assurance that we would become aware of all significant matters that might be identified in an audit.

Accordingly, we do not express an audit opinion.

ConclusionConclusionConclusionConclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial statements are not prepared, in all material respects, in accordance with the recognition and measurement principles of International Accounting Standard 34, “Interim Financial Reporting”. S.R.Batliboi & Co. LLPS.R.Batliboi & Co. LLPS.R.Batliboi & Co. LLPS.R.Batliboi & Co. LLP Chartered AccountantsChartered AccountantsChartered AccountantsChartered Accountants ICAI registration no.:301003EICAI registration no.:301003EICAI registration no.:301003EICAI registration no.:301003E

29 November 29 November 29 November 29 November 2015201520152015 GurgaonGurgaonGurgaonGurgaon

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

Great Eastern Energy Corporation Limited

Condensed interim financial statements

For the six months ended 30 September 2015


1

Condensed statement of financial position

Notes 30 September 2015 31 March 2015

(Unaudited) (Restated)

ASSETS

Non-current assets

Property, plant and equipment 8 120,901,869 128,423,720

Capital work-in-progress 9 62,534,892 60,657,074

Intangible assets 10 188,384 214,691

Intangible under development 11 798,496 838,682

Available for sale-financial assets 152 160

Prepayments 523,278 479,250

Trade and other receivables 162,984 165,047

Total non-current assets 185,110,055 190,778,624

Current assets

Inventories 4,426,914 4,805,788

Trade and other receivables 1,116,840 1,368,598

Prepayments 143,741 201,381

Current tax assets 197,024 206,939

Restricted deposits with banks 823,921 718,496

Deposits with banks 4,373 4,593

Cash and cash equivalents 622,391 763,590

Total current assets 7,335,204 8,069,385

Total assets 192,445,259 198,848,009

Equity

Share capital 13,306,007 13,306,007

Share premium 91,006,858 91,006,858

Reserves (24,599,818) (20,715,118)

Retained earnings 6,588,462 4,612,171

86,301,509 88,209,918

Liabilities

Loans and borrowings 14 73,608,177 73,408,432

Employee benefit liabilities 329,521 293,081

Deferred tax liabilities 177,978 105,984

Derivative liabilities 21 2,511,754 3,060,070

Provisions 17 125,864 132,198

Total non-current liabilities 76,753,294 76,999,765

Loans and borrowings 14 18,183,112 21,645,233

Trade and other payables 4,725,283 6,406,943

Employee benefit liabilities 561,297 512,007

Current tax liabilities 4,757,735 3,675,822

Provisions 17 76,038 75,588

Derivative liabilities 21 1,086,991 1,322,733

Total current liabilities 29,390,456 33,638,326

Total liabilities 106,143,750 110,638,091

Total equity and liabilities 192,445,259 198,848,009

As at

Total equity attributable to owners of the Company

The accompanying notes form an integral part of the condensed interim financial statements

On behalf of Board of Directors

Yogendra Kr. Modi Ashok Jha Executive Chairman Director

Place: Gurgaon

Date: 29 November 2015

Place: Gurgaon



2

Condensed income statement

Note 2015 2014

(Unaudited) (Unaudited)

Revenue

- Sale of gas 16,369,748 19,334,239

- Other operating revenue 75,404 103,999

Other income 5,285 8,446

16,450,437 19,446,684

Employee benefit expenses (1,342,272) (1,509,612)

Depletion, depreciation and amortisation (1,847,003) (1,889,912)

Other operating expenses (4,432,234) (4,977,665)

Exchange fluctuation gain and change in fair

value of derivative instruments 21 587,547 118,053

Interest and other finance income 35,448 91,146

Exchange fluctuation loss and change in fair

value of derivative instruments 21 (2,064,869) (1,354,556)

Finance expenses (3,409,000) (2,110,262)

(12,472,383) (11,632,808)

Profit before tax 3,978,054 7,813,876

Tax expense 13 (1,606,803) (2,032,267)

Profit for the period 2,371,251 5,781,609

Profit attributable to:

Owners of the Company 2,371,251 5,781,609

Earnings per share

Basic earnings per share 22 0.040 0.097

Diluted earnings per share 0.040 0.097

For the six months ended

30 September




Place: Gurgaon


Place: Gurgaon



3

Condensed statement of profit or loss and other comprehensive income

2015 2014

(Unaudited) (Unaudited)

Profit for the period 2,371,251 5,781,609

Other comprehensive income/ (loss)

Items that will never be reclassified to profit or loss:

Remeasurements of the defined benefit liability (13,642) (33,841)

Foreign currency translation adjustment (4,281,173) (2,100,538)

Tax on items that will never be reclassified

to profit or loss 4,721 -

Total other comprehensive income/ (loss) for the period (4,290,094) (2,134,379)

Total comprehensive income/ (loss) for the period (1,918,843) 3,647,230

Total comprehensive income attributable to:

Owners of the Company (1,918,843) 3,647,230

30 September



On behalf of the Board of Directors

Yogendra Kr. Modi

Ashok Jha Executive Chairman Director

Place: Gurgaon


Place: Gurgaon



4

Condensed statement of changes in equity

For the six months ended 30 September 2014 (Unaudited)

Share

capital

Share

premium*

Retained

earnings

Foreign

currency

translation

reserve ##

Fair value

reserve #

Debenture

redemption

reserve**

Share based

payment

reserve

Total equity

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

Total comprehensive income/ (loss) for the period

Profit for the period - - 5,781,609 - - - - 5,781,609

Total other comprehensive (loss) - - (33,841) (2,100,538) - - - (2,134,379)

Total comprehensive income/(loss) for the period - - 5,747,768 (2,100,538) - - - 3,647,230

Transactions with owners, recognised directly in equity

Contributions by and distrubutions to owners of the Company

Transfer to debenture redemption reserve - - (1,024,144) - - 1,024,144 - -

Share-based payment transactions - - - - - (7,186) (7,186)

Options forfeited during the period - - 50,862 - - (50,862) -

Balance as at 30 September 2014 13,306,007 91,006,858 (587,203) (21,216,910) - 1,192,638 244,981 83,946,371

Attributable to owners of the Company


5

Condensed statement of changes in equity

For the six months ended 30 September 2015 (Unaudited) Attributable to owners of the Company

Share

capital

Share

premium*

Retained

Earnings

Foreign

currency

translation

reserve ##

Fair value

reserve #

Debenture

redemption

reserve**

Share based

payment

reserve

Total equity

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

Total comprehensive income/ (loss) for the period

Profit for the period - - 2,371,251 - - - - 2,371,251

Total other comprehensive (loss) - - (8,921) (4,281,173) - - - (4,290,094)

Total comprehensive income/(loss) for the period - - 2,362,330 (4,281,173) - - - (1,918,843)

Transactions with owners, recognised directly in equity

Contributions by and distrubutions to owners of the Company

Transfer to debenture redemption reserve - - (386,884) - - 386,884 - -

Share-based payment transactions - - - - - - 10,434 10,434

Options forfeited during the period - - 845 - - - (845) -

Balance as at 30 September 2015 13,306,007 91,006,858 6,588,462 (26,853,700) - 2,123,891 129,991 86,301,509

*Share premium represents the premium paid by the shareholders on issue of shares and is net of equity transaction costs. Under the Indian Companies Act, such a reserve has a

restricted usage.

**Debenture redemption reserve represents the reserve created for the redemption of debentures issued during the previous year. Under the Indian Companies Act, such a reserve has a

restricted usage until the redemption of debentures.

# Fair value reserve represents net changes in the fair value of available-for-sale financial assets.

## The translation reserve comprises all foreign exchange differences arising from the translation of these financial statements from Indian Rupee (functional currency) to US Dollars

(presentation currency).



Yogendra Kr. Modi


Place: Gurgaon Place: Gurgaon

Date: 29 November 2015 Date: 29 November 2015


6

Condensed statement of cash flows

2015 2014

(Unaudited) (Restated)

A. Cash flow from operating activities

Profit after tax 2,371,251 5,781,610

Adjustments for:-

Net finance cost 3,373,552 2,019,116

Exchange difference 1,459,731 1,417,691

Loss on disposal of property, plant and equipment - 735

Depreciation/amortisation/depletion 1,847,003 1,889,912

Share based payment expense 10,434 (7,186)

Tax expense 1,606,803 2,032,267

Changes in:

Inventories 152,093 (287,623)

Trade and other receivables 155,141 1,077,400

Prepayments (19,448) (51,840)

Trade and other payables (621,120) 439,098

Cash generated from operating activities 10,335,440 14,311,180

Income tax paid (233,536) -

Net cash from operating activities 10,101,904 14,311,180

B. Cash flow from investing activities

Purchase of property, plant and equipment/ capital work in

progress/ intangible assets (2,547,842) (3,217,202)

Proceeds from sale of property, plant and equipment - 121

Fixed deposits purchased during the period (143,140) (288,523)

Interest received 64,642 130,083

Income tax paid (2,043) (7,099)

Net cash (used in) investing activities (2,628,383) (3,382,620)

C. Cash flow from financing activities

Proceeds from borrowings 10,091,922 -

Repayment of long term borrowings (11,317,794) (5,892,227)

Repayment of debentures (1,500,856) -

Proceeds from inter corporate deposits 700,607 847,317

Repayment of inter corporate deposits - (290,746)

Interest paid (5,554,468) (5,545,231)

Net cash (used in) financing activities (7,580,589) (10,880,887)

Net increase/ (decrease) in cash and cash equivalents (A+B+C) (107,068) 47,673

Cash and cash equivalents at 1 April 763,590 504,522

Effect of exchange rate fluctuations on cash and cash equivalents (34,131) (13,465)

Cash and cash equivalents at 30 September 622,391 538,730


30 September


On behalf of the Board of Directors

Yogendra Kr. Modi


Place: Gurgaon Place: Gurgaon

Date: 29 November 2015 Date: 29 November 2015


7

Notes to condensed interim financial statements

1. Organisation and nature of operations

Great Eastern Energy Corporation Limited ('GEECL' or 'the Company') is a public limited company incorporated in India.

GEECL's shares were listed as Global Depository Receipts in the Alternate Investment Market, London, upto 27 May 2010.

The Company made a publication of its prospectus in relation to the introduction of its Global Depositary Receipts ('GDRs') to

the standard list on the official list of the UK Listing Authority (the 'Official List') and admission to trading on the London

Stock Exchange Plc's Main Market for listed securities (the 'Main Market'). Pursuant to the admission of its GDRs to the

standard list on the official list and commencement of trading in the GDRs on the main market on 28 May 2010, trading of the

Company's GDRs on AIM has been cancelled.

The Company was incorporated in 1992 to explore, develop, distribute and market Coal Bed Methane gas or CBM gas in India.

GEECL originally entered into a license agreement in December 1993 with Coal India Limited (CIL) for exploration and

development of CBM over an area of approximately 210 Sq. km (approximately 52,000 acres) in the state of West Bengal (the

block).

The Production Sharing Contract (PSC) has been effective from 9 November 2001 as a result of the granting by Government of

West Bengal of the Petroleum Exploration License on the same date and provides for a five year initial assessment and market

development phase, followed by a five year development phase and then a twenty-five year production phase, extendable with

the approval of the Government of India (GOI). Besides this, the Company was awarded with Mannargudi block located in

Tamil Nadu under CBM IV round for which the PSC was signed with the Government of India on 29 July 2010. In this regard,

two Petroleum Exploration License (PEL) has been granted to the Company on 13 September 2011 and 4 November 2013. The

Environmental Clearance for the block was granted by the Ministry of Environment & Forest, Government of India on 12

September 2012 and the Company has applied Tamil Nadu Pollution Control Board for the their sanction to start operations in

the block which is awaited.

The Company does not have any subsidiary and accordingly, does not require any consolidated financial statements. Since the

Company does not have any investments in associates and joint ventures also, hence these financial statements are individual

financial statements.

These condensed interim financial statements have been prepared as at and for the six month ended 30 September 2015.

The financial statements of the Company as at and for the year ended 31 March 2015 are available upon request from the

Company’s registered office at M-10, ADDA Industrial Area, Asansol-713305, West Bengal, India, or at www.geecl.com.

2. Statement of compliance

These condensed interim financial statements have been prepared in accordance with International Accounting Standard (IAS)

34, Interim Financial Reporting. These condensed interim financial statements do not include all the information required for

complete set of International Financial Reporting Standards (IFRSs) financial statements and should be read in conjunction

with the financial statements of the Company as at and for the year ended 31 March 2015. These condensed interim financial

statements have been authorised for issue by the Board of Directors in its meeting held on 29 November 2015. Selected

explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the

Company’s financial position and performance since the last annual financial statements as at the end and for the year ended

31 March 2015.

3. Significant accounting policies

The accounting policies applied by the Company in these condensed interim financial statements are the same, in all material

respects, as those applied by the Company in its last annual financial statements as at and for the year ended 31 March 2015.

4. Estimates

The preparation of condensed interim financial statements requires management to make judgements, estimates and

assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and

expense. Actual results may differ from these estimates.


8

In preparing these condensed interim financial statements, the significant judgements made by the management in applying the

Company’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the last annual

financial statements as at and for the year ended 31 March 2015.

5. Financial risk management

The Company’s financial risk management objectives and policies are consistent with those disclosed in the financial

statements as at and for the year ended 31 March 2015.

6. Financial instruments

Fair value estimation

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

are as follow:

Particulars

Carrying

amountFair value

Carrying

amountFair value

Financial assets carried at fair value

Available for sale-financial assets 152 152 160 160

152 152 160 160

Financial assets carried at amortised cost

Trade and other receivables 1,279,824 1,279,824 1,533,645 1,533,645

Deposits with banks( including restricted deposits) 828,294 828,294 723,089 723,089

Cash and cash equivalents 622,391 622,391 763,590 763,590

2,730,509 2,730,509 3,020,324 3,020,324

Financial liabilities carried at fair value

Derivative Liabilities 3,598,745 3,598,745 4,382,803 4,382,803

3,598,745 3,598,745 4,382,803 4,382,803

Financial liabilities carried at amortized cost

14% non-convertible redeemable debentures 19,392,236 19,392,236 21,908,381 21,908,381

Indian currency loan 42,941,839 42,941,839 37,544,810 37,544,810

External Commercial Borrowing 28,772,699 28,772,699 35,600,474 35,600,474

Inter corporate deposits 684,515 684,515 - -

Trades and other payables 4,725,283 4,725,283 6,406,943 6,406,943

96,516,572 96,516,572 101,460,608 101,460,608

As at 30 September 2015 As at 31 March 2015

Fair value hierarchy

The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value

measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used.

The different levels are defined as follows.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that

is, as prices) or indirectly (that is, derived from prices).

Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)


9

Level 1 Level 2 Level 3

As at 30 September 2015

Financial Assets

Available for sale-financial assets - 152 -

Financial liability

Derivative instrument liability - 3,598,745 -

As at 31 March 2015

Financial Assets

Available for sale-financial assets - 160 -

Financial Liabilities

Derivative instrument liability - 4,382,803 -

Derivative financial instruments

The Company uses derivative instruments to mitigate its risks associated with foreign currency fluctuation relating to

underlying transactions, firm commitments, highly probable forecast transactions and certain other permissible derivative

instruments. The counterparty for these contracts is generally a bank. These derivative financial instruments are valued based on

quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the

marketplace.

7. Segment reporting

Chief Operating Decision Maker (CODM) reviews the business as one operating segment being the extraction and sale of

CBM/CNG gas. Hence, no separate segment information has been furnished herewith.

8. a) Property, plant and equipment

During the six-month period ended 30 September 2015, the Company has acquired assets with cost [including capitalized

borrowing cost (refer note 12)] of USD 566,267 (30 September 2014: USD 1,855,820).

Movements in property, plant and equipment are as follows:

2015 2014

Opening balance as at 1 April 128,423,720 125,992,509

Additions 566,267 1,855,820

Disposals/adjustments - (1,337)

Depreciation/amortisation for the period (1,966,728) (1,985,979)

Depreciation on retirement - 481

Effect of movements in foreign exchange rates (6,121,390) (3,084,907)

Closing balance as at 30 September 120,901,869 122,776,587


30 September

Depreciation amounting to USD 136,122 (30 September 2014: USD 114,325) has been transferred to capital work-in-progress.

Well capitalisation

During the six months period ended 30 September 2015, the Company has not capitalized any wells (30 September 2014: Nil).

All costs involved in drilling, cementing, fracturing and drilling of exploratory core holes are initially considered as Capital

work-in-progress till the time these are ready for commercial use when they are transferred to producing properties.


10

Depletion: Commercially producing wells are depleted using unit of production method, based on related proved developed

reserves. Proved developed reserves of gas per well are technically re-assessed, ‘in house’, normally at the end of each

reporting period, based on technical data available.

b) Capital commitments

30 September 2015 31 March 2015

Estimated amount of contracts remaining to be executed on

capital account and not provided for:

- For land 70,376 73,917

- For others 429,758 874,601

500,134 948,518

As at

Further, the Company has continuing commitments towards minimum work programme in terms of production sharing

contract for Mannargudi block. Such commitments aggregate USD 16,522,527 as at 30 September 2015 (31 March 2015:

USD 17,354,065).

9. Capital work-in-progress

During the six-month period ended 30 September 2015, the Company has made additions to Capital work-in-progress

(including borrowing cost) of USD 4,896,739 (30 September 2014: USD 3,131,258).

Movement in Capital work-in-progress is as follows:

For the six months ended 30 September

2015 2014

Opening balance 60,657,074 72,322,999

Additions during the period 4,896,739 3,131,258

Capitalization - -

Effect of movement in foreign exchange rates (3,018,921) (1,844,735)

Closing balance 62,534,892 73,609,522

10. Intangible assets

Intangible assets represent gas exploration right, computer software and other intangibles. During the six months period ended

30 September 2015, the Company has acquired intangible assets of USD Nil (30 September 2014: USD 4,338).

2015 2014

Opening balance 214,691 251,795

Additions - 4,338

Amortisation for the period (16,397) (18,258)

Effect of movements in foreign exchange rates (9,910) (5,851)

Closing balance 188,384 232,024



11

11. Intangible under development

During the six months period ended 30 September 2015, the Company has made additions to intangible under development of

USD Nil (30 September 2014: USD 90,855)

2015 2014


Additions - 90,855

Effect of movements in foreign exchange rates (40,186) (19,475)



30 September

12. Borrowing cost

For the six months period ended 30 September 2015, the capitalization rate used to determine the borrowing cost eligible for

capitalization in respect of general purpose borrowings is 14.89% p.a. (30 September 2014: 11.82% p.a.). Further, the effective

rate used to determine the borrowing cost eligible for capitalization in respect of specific purpose borrowing is 15.66%

(30 September 2014: Nil) for secured foreign currency loan and 13.51% p.a. (30 September 2014: 13.48%) for secured rupee

loan.

During the six months period ended 30 September 2015, the Company has allocated borrowing cost of USD 3,411,908

(30 September 2014: USD 2,536,994) to property, plant and equipment/capital work-in-progress, being directly attributable to

the acquisition or construction of qualifying assets. The balance borrowing cost amounting to USD 3,409,000 (30 September

2014: USD 2,110,262) has been charged to income statement. Borrowing cost is reduced by USD Nil (30 September 2014:

USD 28,335) in respect of income on temporary deployment of borrowings by the Company.

13. Income tax

Income tax expense is recognised on based on management’s best estimate of the weightage average annual income tax rate

expected for the full financial year applied to the pre-tax income of the interim period.

Income tax expense 2015 2014

Current tax expense 1,523,198 1,651,993

Deferred tax charge/ (credit) 83,605 380,274

1,606,803 2,032,267

2015 2014

Profit before tax: 3,978,054 7,813,876

Tax expense at domestic tax rate 1,376,725 2,655,936

Tax effects of:

- Non-deductible expenses 3,611 19,547

- Reassessment of tax positions of earlier periods - (740,499)

- True up effect 121,131 (72,430)

- Others 105,336 169,713

Tax charge 1,606,803 2,032,267

For the six months ended 30

September

For the six months ended 30

September


12

14. Loans and borrowings

Currency Interest rate Carrying amount

USD

Balance as at 1 April 2015 95,053,665

New issues

Secured rupee loans [refer foot note (a)] INR Base + 4.55% 4,711,817 2022

Secured rupee loans [refer foot note (b)] INR 15.00% 5,380,105 2025

Unsecured inter corporate deposits [refer foot note (c)] INR 17.00% 700,607 2016

Repayments

Secured rupee loans INR

Base + 3%, Base +

2.5% and Base +

2.55% as the case

may be (2,747,083)

External commercial borrowings EURMargin 4.372% + 6

Months Euribor (8,570,711)

Non convertible debentures INR 14.00% (1,500,856)

Other movements

Interest accrued INR (325,051)

Amortisation of loan origination cost INR 273,752

Effect of movements in foreign exchange rates (1,184,956)

Balance as at 30 September 2015 91,791,289

Current 18,183,112

Non-current 73,608,177

Total 91,791,289

* Secured rupee loan disbursed during the period

Proceeds from secured rupee loan 10,586,953

Less: transaction cost (495,031)

Net proceeds 10,091,922

Year of

maturity


13

Currency Interest rate Carrying amount

USD

Balance as at 1 April 2014 113,745,285

New issues

Unsecured inter corporate deposits INR 14.00% 681,176 2014

Unsecured inter corporate deposits INR 16.00% 166,141 2014

Repayments

Secured rupee loans INRPLR +/- 0.25% and

base rate + 3.5% (1,093,865)

Secured foreign currency loans USD6 months Libor +

650-1000 bps (2,159,827)

External commercial borrowings EURMargin 3.90% + 6

Months Euribor (2,626,340)

Car loan INR 9.72% (12,195)

Unsecured inter corporate deposits INR 14.00% (290,746)

Other movements

Interest accrued INR 5,014

Amortisation of loan origination cost INR 317,749

Conversion of USD loan to INR loan INR (1,008,582)

Increase in INR loan due to maturity of USD loan

outstanding as at 31 March 14 1,093,865

Effect of movements in foreign exchange rates (4,715,714)

Balance as at 30 September 2014 104,101,961

Current 18,050,423

Non-current 86,051,538

Total 104,101,961

Year of

maturity

Below are the terms of new loans taken during the period, there have been no changes in terms of loans outstanding as at 31

March 2015.

a) Secured Indian Rupee loan of USD 5,137,786 repayable in 14 variable quarterly instalments starting from 31 December 2018.

The same is secured by first ranking mortgage/charge/security interest on a pari passu basis on the following:

i) All the immovable properties and movable properties and assets related to Raniganj block, both present and future;

ii) All rights, title, interest, benefits, claims and demands whatsoever of PSC of Raniganj project; and

iii) All the revenues and receivables of the company

The rupee term loan carries an interest rate equivalent to the base rate of the respective bank plus a spread of 4.8% p.a. The

current rate of interest is 14.25% p.a.

b) Secure Indian Rupee loan of USD 5,449,167 repayable in 120 variable monthly instalments starting from 5 November 2015.

The same is secured by First charge by way of mortgage of plot owned by YKM Holdings Private Limited and situated at

Shivaji Marg, Rangpuri, New Delhi. The rupee term loan carries an interest rate of 15% p.a.

c) Unsecured Indian Rupee Inter-corporate Deposits of USD 700,607 repayable in one bullet payment after 180 days from date

of disbursement. The same carries interest rate of 17% p.a.


14

15. Share based payment

Share options are granted to non-executive directors and eligible employees under the stock option plan established and

operated by the Company. The plan is an equity settled plan. The plan was established by the Company on

27 May 2008 and provides for allotment of up to 500,000 equity shares of Rs. 10 (before consolidation of shares 5,000,000

equity shares of Re 1).

These options are fair valued using the Black-Scholes model. The share based payment charge on these options granted are

amortized over the vesting period in accordance with the vesting schedule, provided that the holders of the options continue to

be an employee on the vesting date. The options are to be exercised within a maximum period of 10 years from the date of

grant. All the options would vest in five equal installments on an annual basis over a five year period.

During the previous year, the stock options issued in earlier years to independent non-executive directors had been forfeited in

compliance with the Indian Companies Act 2013.

A. Charge to the condensed income statement towards share based payments and the movement in share based compensation reserve is as given below:

Share based payments reserve: 2015 2014


Share-based compensation charge for the period towards Share options granted 10,434 (7,186)

Transfer to retained earnings towards share options forfeited during the period (845) (50,862)



30 September

The total charge/(credit) for the six months period ended 30 September 2015 relating to employee share-based payment plans

is USD 10,434 [30 September 2014: USD (7,186)].

The fair value of each option award is estimated by using the Black-Scholes Option Pricing employee share-based payment

model.

B. Movement in the share options outstanding:

Number of

equity shares

Number of

equity

shares

Weighted average

exercise price (in

USD per share)

Options outstanding at the beginning of the year 88,746 97,553 7.87

Options granted during the period - - -

Options forfeited during the period (5,448) (18,477) 7.58

Options exercised during the period - - -

Options outstanding at the end of the period 83,298 79,076 7.94

Options exercisable at the end of the period 48,382 59,237 7.90


2014

Weighted average

exercise price (in

USD per share)

2014

6.63

5.73

-

3.49

-

5.88

The remaining weighted average contractual life of options outstanding as at 30 September 2015 is 6.39 years (31 March 2015:

7.04 years).

16. Retirement benefits

The state administered provident fund is a defined contribution plan. The Company's gratuity scheme is a defined benefit plan.

Gratuity is paid as a lump sum amount to employees at retirement or termination of employment at an amount based on the

respective employee’s eligible salary and the years of employment with the Company. The Company has made provision for

gratuity on the basis of actuarial valuation. Superannuation is a part of fixed amount to a category of employees/directors for

each year of service.


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17. Provisions

Provision for

demobilisation

Provision for

site restorationTotal

Provision for

demobilisation

Provision for

site restorationTotal

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

Addition during the period* 4,167 - 4,167 1,880 - 1,880

Adjusted/reversed during

the period*- - - - - -

Effect of discounting - - - - 2,125 2,125

Effect of movement in

foreign exchange rates(3,717) (6,334) (10,051) (1,897) (3,314) (5,211)

Closing balance 76,038 125,864 201,902 75,598 132,045 207,643

Less: Non current portion - 125,864 125,864 - 132,045 132,045

Current portion 76,038 - 76,038 75,598 - 75,598

For the six-months ended 30 September

20142015

*The provisions created/adjusted/reversed during the period ended 30 September 2015 and 30 September 2014 have been capitalised and

no amount has been charged to the income statement.

Site restoration costs A provision for restoring the land back to its originality is created by way of site restoration costs, on a well by well basis.

Such expenses are provided when the wells have been drilled substantially. These are expected to be incurred when the

Company has commercially exploited the proved reserves of the well or when a well which has been drilled, has been declared

as dead.

Provision for demobilisation Provision for demobilisation represent the amount which would be required to be paid when the relevant equipment is

demobilised.

18. Contingencies

There are no material changes to contingent liabilities from those disclosed in the financial statements as at and for the year

ended 31 March 2015.

19. Related party disclosures

a) Relationship with the related parties

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

ultimate controlling party.

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

Relationships Name of related parties

Shareholders having significant influence • YKM Holdings Private Limited

• YKM Holding International Limited


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Relationships Name of related parties

Key managerial personnel • Mr. Yogendra Kr. Modi

• Mr. Prashant Modi (w.e.f. 23 September 2015)

• Mr. Pejavar Murari (till 16 December 2014)

• Mr. Kashi Nath Memani (till 16 December 2014)

• Mr. Haigreve Khaitan (till 17 February 2015)

• Mr. Paul Sebastian Zuckerman

• Mr. Ashok Jha

• Mr. G.S. Talwar

• Mr. S. Sundareshan (w.e.f. 10 January 2015)

Relative of key managerial personnel • Mr. Prashant Modi

Entities that are controlled, jointly controlled or significantly

influenced by, or for which significant voting power in such

entity resides with, directly or indirectly, any individual or

close family member of such individual referred above.

• YKM Holding International Limited

• Khaitan and Co. (till 17 February 2015)

• Khaitan and Co. LLP (till 17 February 2015)

b) Related party transactions

The following tables provide the total amount of transactions which have been entered into with related parties during the period ended

30 September 2015 and 30 September 2014.

Related Party Nature of transaction 2015 2014

YKM Holdings Private Limited Lease rentals 80,938 69,472

Security deposit paid 4,340 -

Advance rent paid 4,340 -

Reimbursement of expenses 9,344 -

Khaitan & Co. LLP - 107,684

For six months ended 30 September

Payment for services rendered

(including reimbursement of expenses)

c) Compensation paid to key management personnel and their relatives

2015 2014

Short term employee benefits 603,794 586,735

Provision for gratuity 43,354 80,201

Compensated absences 65,330 163,585

Defined contribution plan 39,418 35,029

Commission 80,428 -

832,324 865,550


In addition to above payments, the Company during the six months period ended 30 September 2015, paid USD 11,511 (30

September 2014: USD 6,347) as sitting fees to the non-executive directors for attending various meetings and the same are

included in ‘other operative expenses’ in the income statement.

d) Personal guarantee given by Mr. Yogendra Kr. Modi and Mr. Prashant Modi and other charges created on the assets/ cash flows

of YKM Holdings Private Limited for the loan taken by the Company amounting to USD 1,064,801 (31 March 2015: USD

1,118,390).


17

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

Receivable Payable Receivable Payable

YKM Holdings Private Limited* 59,828 1,521 53,930 -

Mr. Yogendra Kr. Modi - 25,716 - 78,513

Mr. Prashant Modi - 17,496 - 107,499

Mr. Paul Zebastian Zuckerman - 13,753 - 11,216

Khaitan & Co. - - - 230

Khaitan & Co. LLP - - - 44,158

59,828 58,487 53,930 241,616

As at 30 September 2015 As at 31 March 2015

*Amounts recoverable from YKM Holdings Private Limited consist of USD 29,914 (31 March 2015: USD 26,965) on

account of security deposits paid for property taken on lease, recoverable on expiry of lease agreement and USD 29,914

(31 March 2015: USD 26,965) on account of advance rent paid, adjustable against future occupation of property taken on

lease.

f) Terms and conditions of transactions with related parties

Outstanding balances at the period-end are unsecured, interest free and settlement occurs in cash. For the period ended

30 September 2015, the Company has not recorded any impairment of receivables relating to amounts owed by related parties

(30 September 2014: Nil). This assessment is undertaken at each reporting period end through examining the financial position

of the related party and the market in which the related party operates.

20. Leases and arrangements containing lease

The Company enters into equipment lease and other arrangements with various contractors for development of its wells,

whereby the specific assets leased by the contractors are used only at the Company's well development site and such

arrangements convey the right to use the assets.

These arrangements include non-lease elements also and are being treated as well development costs along with other costs.

The segregation of the lease and non-lease elements under the arrangements is not possible. The details of total expenses in this

regard are as follows:

Nature

2015 2014

Logging and wireline charges 31,401 -

Work over expenses 375,545 561,825

For the period ended

30 September

a) The Company’s leasing arrangements are in respect of operating leases for premises and equipments. This leasing arrangement

ranges from 12 months to 3 years and are renewable on mutual consent of parties as per mutually agreeable terms. All the lease

agreements are cancellable in nature.

Lease rentals accrued during the period for the premises, equipment and site office/store yard amounting to USD 94,716

(30 September 2014: USD 88,496) have been charged to the income statement and the balance of USD 493 (30 September

2014: USD 436) has been recognized in capital work in progress.

b) The Company has taken different pieces of land on lease on which the wells are being developed. The lease period for these

pieces of land generally ranges from 25 to 99 years. The Company is required to pay the entire amount of consideration as

lease premium upfront upon entering into agreement for acquisition of these pieces of land and no further periodic lease rentals

are payable for use of these pieces of land other that long term settlement annual payment of USD 14,550 to government. The

leasehold land have been classified as finance (60 years or above) or operating lease (upto 59 years) on the basis of principles

given in IAS 17.


18

21. The Company uses derivative instruments to mitigate its risks associated with foreign currency fluctuation relating to

underlying transactions, firm commitments, highly probable forecast transactions and certain other permissible derivative

instruments.

The Company has carried out fair value of derivative instruments and recognised derivative instruments (gain)/ loss amounting

to USD (587,547) (30 September 2014: USD 1,294,020) primarily due to significant fluctuation in exchange rate during the six

months period ended 30 September 2015. The Company has also recognized loss on winding up of derivative instruments

amounting to USD Nil (30 September 2014: USD 60,536) during the six months period ended 30 September 2015. Further, the

Company has also recognised foreign exchange loss/ (gain) amounting to USD 2,064,869 [30 September 2014: USD (118,053)]

primarily due to exchange fluctuations in foreign currency denominated borrowings.

The details of derivative liabilities and assets instruments outstanding are as below:-

As at 30 September 2015

Particulars Number of

contracts

Underlying

Exposure

Amount of

derivative

liability

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

months USD Libor1 EUR 15,470,000 1,070,136

ii) Principal and coupon swap

- range forward transactions from the loan currency of Euro

to USD1 EUR 7,000,000

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

3,598,745

As at 31 March 2015

Particulars Number of

contracts

Underlying

Exposure

Amount of

derivative

liability

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

months USD Libor1 EUR 17,680,000 1,280,840

ii) Principal and coupon swap

- range forward transactions from the loan currency of Euro

to USD1 EUR 8,000,000

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

4,382,803

Total derivative liability

2,528,609

Total derivative liability

3,101,963

22. Potential equity shares are anti-dilutive, hence basic earnings/ (loss) per share and diluted earnings/ (loss) per share are the

same.

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

252.27 acres of land held by the Company which was in excess of the ceiling limit. During the current period, the Company has

received the final order to hold above mentioned land on 99 years lease on a lump sum payment of USD 375,480. Further, the

Company has also applied for balance requirement of 318 acres of land. The application is under process and the Company

believes that the Government of West Bengal would give the exemption to the Company for remaining land also.

24. Mining Lease

The Company has received Grant of Petroleum Mining Lease under Rule 5(1)(ii) of the PNG Rules and Oil Fields (Regulation

and Development) Act, 1948 for mining of CBM in the Raniganj block on 4 September 2008 from the Government of West

Bengal. The Company has entered into the mining lease agreement with the West Bengal Government. The agreement got

signed on 5 June 2014 and is valid for a period of 20 years with effect from 4 September 2008.

The Governor of Tamil Nadu ("State Government") in accordance with the Petroleum and Natural Gas Rules, 1959 made under

Oil Field (Regulation and Development) Act, 1948 has awarded a license to the Company, on 13 September 2011 for the term

of 4 years and applied for extension, to prospect for Petroleum and Natural Gas for carrying out CBM activities in the land

situated in Thanjavur District, Tamil Nadu, subject to the condition as specified in the contract entered.


19

25. Prior period Restatements

In accordance with IAS-12 ‘Income Taxes’, The Minimum Alternate Tax (MAT) credit entitlement of USD 7,793,593

(31 March 2015: USD 6,730,812) has been presented as a component of deferred tax, being an unused tax credit, as against the

past practice of presenting separately on the face of the statement of financial position. Further, the Company’s income

statements have been presented on the basis of analyses of expenses by nature. In order to enhance the presentation of the

Company’s performance, operating profits has not been separately presented in the condensed income statement, since such

analyses would be a functional measure.

Furthermore, the Company has analysed its inventories of stores and spares and observed that these are being used both for

maintenance and future drilling activities. Hence the same has been disclosed separately instead of hitherto followed practice of

including them under capital work-in-progress as they have multiple uses.

26. Foreign currency translation

The Company has converted Indian Rupees (‘INR’ or ‘Rs.’) balances to ‘USD’ equivalent balances on the following basis:

• For conversion of all assets and liabilities, other than equity, as at the reporting dates, the exchange rates prevailing as at

the reporting date have been used, which are as follows:

- as at 30 September 2015: USD 1 = INR 65.74

- as at 31 March 2015: USD 1 = INR 62.59

• For conversion of all expenses and income on income statement and the cash flow statement, for the respective periods,

periodic average exchange rates have been used, which are as follows:

- For the six months ended 30 September 2015: USD 1 = INR 64.23

- For the six months ended 30 September 2014: USD 1 = INR 60.19




Place: Gurgaon


Place: Gurgaon


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