The lignite and associated shale of the Khadsaliya Clays Formation (Eocene) of Saurashtra Basin, India have been studied. Organic petrographic, palynofacies and organic geochemical analyses have been carried out to deduce the depositional palaeoenvironment, including the assessment of the hydrocarbon potential of this sequence. Petrographically, the lignites constitute huminite macerals in dominance (ay. 60%). The organic facies, as derived from maceral composition and biomarker data, suggests that the peat biomass was formed from woody forest vegetation consists of angiosperms and pteridophytes. Microbial activity was also prominent over the peat biomass. The peat biomass was deposited in tropical-subtropical humid climatic conditions under deltaic control and brackish water influence. Further, there are signatures of intermittent floods in the mire, and is evident from the shift from mesotrophic to rheotrophic conditions. The organic matter has been categorized into two palynofacies and is derived from degraded terrestrial biomass. The extrapolation of Tyson's APP diagram and Pr/n-C-17 vs. Ph/n-C-18 plot suggest that deposition took place in dysoxic to sub-oxic conditions. The huminite reflectance values (0.30-0.38%, ay. 034% R-r) suggest that lignites are less mature and have reached up to lignitic stage (low rank B) of coalification. The geochemical (proximate + ultimate) analyses reveal that the lignites are characterized by high moisture content (ay. 18%) and relatively low ash yield (ay. 27%). The volatile matter yields and carbon contents are moderately high, whereas fixed carbon, sulphur and oxygen contents are average and hydrogen and nitrogen contents are relatively low. Rock-Eval pyrolysis data indicate that the hydrogen index values of the samples vary between 23 and 477 mg HC/g TOC (ay.188 mg HC/g TOC). The Tniax values of the lignites range between 377 and 433 degrees C (ay. 418 degrees C), along with the presence of beta beta hopanes suggesting the immature nature of the deposits. HI vs. T-max, S2 vs. TOC, HI vs. Ol and H/C vs. O/C plots of the studied samples indicate that the organic matters are a mix of type II/Ill kerogens. The types of kerogen along with high TOC contents (ay. 33 wt.%) indicate the ability of lignite-bearing sequence of Khadsaliya to generate mix of oil/gaseous hydrocarbons upon maturation. (C) 2017 Elsevier B.V. All rights reserved.