Significant Accounting Policies
a. Basis of accounting and brparation of financial statements
The financial statements are brpared under the historical cost convention, on an accrual basis, in accordance with the generally accepted accounting principles and applicable accounting standards as notified under the Companies Act,1956 ( the Act )(which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) and relevant provisions of the Companies Act, 1956 ( the Act ) to the extent applicable. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year.
b. Use of Estimates
The brparation of financial statements requires estimates and assumptions that affect the reported amount of Assets and Liabilities on the date of the financial statements and the reported amount of Revenues and Expenses during the reporting period. Differences between the actual results and the estimates are recognised in the period in which the same are known/materialised.
c. Fixed Assets
Cost
Fixed assets are carried at cost of acquisition or construction less accumulated debrciation and accumulated impairment losses if any. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of fixed assets up to the date the assets are commissioned. In case of commissioned assets where final payment to the contractors is pending, capitalisation is made on provisional basis subject to necessary adjustment in cost and debrciation in the year of settlement.
Commissioning
Gas distribution systems are treated as commissioned when supply of gas commences to the individual points.
Intangible Assets
Intangible assets like software / licenses which are expected to provide future enduring economic benefits are capitalised as Intangible Assets.
Capital Work-in-Progress
Capital Work-in-Progress includes, expenditure incurred on assets, which are yet to be commissioned. Capital Inventory included in Capital work-in-Progress comprises stock of capital items / construction materials at stores and with contractors / processors.
d. Debrciation and Amortisation
Debrciation on fixed assets is provided on straight line method at rates specified and in the manner brscribed by Schedule XIV to the Companies Act, 1956 except for the following fixed assets and intangible assets which are debrciated / amortised over their useful life as determined by the management:
Roads and fences : | 30 years |
Bunk houses : | 5 years |
Online combrssors and dispensers : | 10 years |
Intangible Assets (Software / Licenses) : | 6 years |
Leasehold Land is amortised over the lease period.
e. Investments
Current investments carried individually are valued at the lower of cost and fair value.
f. Inventories
Inventories are valued at lower of cost and net realisable value. The cost is determined on weighted average basis.
g. Foreign Exchange Transactions
Foreign currency transactions are recorded at the exchange rates brvailing on the date of such transactions. Monetary items are translated at the rates of exchange brvailing at the date of the Balance Sheet. Gain/loss arising on account of differences in foreign exchange rates on settlement/translation of monetary items is recognised in the Statement of Profit and Loss.
h. Revenue Recognition
Sale is recognised on supply of natural gas to customers by metered/assessed measurements. Compensation receivable from customers with respect to shortfall in minimum guaranteed off take of gas are recognised on contractual basis and delayed payment charges are recognised on receipt basis in view of uncertainty of collection.
i. Employee Benefits
Defined Contribution Plan
Company s contribution to provident fund is recognised on accrual basis in the Statement of Profit and Loss.
Defined Benefit Plan
Employee Benefits under Defined Benefit Plans in respect of gratuity, compensated absence, post retirement medical scheme and long service award are recognized based on the brsent value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit method. Past services are recognised on a straight line basis over the average period until the benefits become vested. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss as Income or Expense. Obligation is measured at the brsent value of estimated future cash flows using a discounted rate that is determined by reference to the market yields at the Balance Sheet date on Government Bonds where the currency and the terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation.
Provision for gratuity as per actuarial valuation is funded with Life Insurance Corporation of India .
j. Taxes on Income
Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred Tax is measured using the tax rates and the Tax Laws enacted or substantially enacted as at the reporting date. Deferred tax is recognised, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbed debrciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future tax income will be available against which such deferred tax assets can be realised.
k. Operating Leases
Lease of assets under which all the risks and reward of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expense on accrual basis as per the lease agreements.
Operating lease arrangements for brmises (residential, office, godowns etc), which are not non-cancellable, range between eleven months to three years generally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals payable are charged as rent including lease rentals.
I. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a brsent legal obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent Liabilities are not recognised in the financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.
m. Borrowing Costs
Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. All other borrowing costs are charged to revenue.
Disclosure of employee benefits explanatoryEmployee Benefit Plan
Defined Contribution Plans
The Company makes Provident Fund contributions, which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 226.56 Lakhs (Year ended 31st March, 2013 Rs. 213.10 Lakhs) as an expense and included in Note 23 - Contribution to Provident Fund and Other Funds in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the brsent value of the defined benefit obligation as at the balance sheet date. Long Service Awards are recognised as a liability based on actuarial valuation of the defined benefit obligation as at the balance sheet date.
Defined Benefit Plan
The Company offers the following employee benefit schemes to its employees:
i. Gratuity (included as part of Note 23 Employee benefits expense)
ii. Post-retirement medical benefit plan (included as part of Note 23 Employee benefits expense)
The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:
Components of employer s expenses
(Rs. Lakhs)
Particulars | For the year ended 31st March, 2014 | | For the year ended 31st March, 2013 |
| Gratuity | Post Retirement Medical Benefit Plan (Unfunded) | Gratuity |
Current Service Cost | 68.13 | 295.97 | 45.44 |
Interest Cost | 42.92 | - | 29.99 |
Expected return on plan assets | -36.15 | - | -24.70 |
Actuarial (gain)/loss | -58.66 | 0.80 | 121.67 |
Total expense recognised in the Statement of Profit and Loss | 16.24 | 296.77 | 172.40 |
Actual contribution and benefit payments for the year
(Rs. Lakhs)
Particulars | As on 31st March, 2014 | | As on 31st March, 2013 |
| Gratuity | Post Retirement Medical Benefit Plan (Unfunded) | Gratuity |
Actual benefit payments | 31.68 | 0.80 | 18.36 |
Actual contributions | - | - | 150.00 |
Net Asset/ (Liability) recognised in the Balance Sheet
(Rs. Lakhs)
Particulars | As on 31st March, 2014 | | As on 31st March, 2013 |
| Gratuity | Post Retirement Medical Benefit Plan (Unfunded) | Gratuity |
Present value of defined benefit obligation | -550.27 | -295.97 | -536.54 |
Fair value of plan assets | 449.40 | - | 451.90 |
Net Asset/ (Liability) recognised in the Balance Sheet | -100.87 | -295.97 | -84.64 |
Change in defined obligation (DBO) during the year
(Rs. Lakhs)
Particulars | As on 31st March, 2014 | | As on 31st March, 2013 |
| Gratuity | Post Retirement Medical Benefit Plan (Unfunded) | Gratuity |
Present value of DBO at beginning of the year | 536.54 | - | 352.82 |
Current Service Cost | 68.13 | 295.97 | 45.44 |
Interest Cost | 42.92 | - | 29.99 |
Actuarial (gain)/loss | -65.64 | 0.80 | 126.65 |
Benefits paid | -31.68 | -0.80 | -18.36 |
Present value of DBO at the end of the year | 550.27 | 295.97 | 536.54 |
Change in the fair value of Asset during the year
(Rs. Lakhs)
Particulars | As on 31st March, 2014 | | As on 31st March, 2013 |
| Gratuity | Post Retirement Medical Benefit Plan (Unfunded) | Gratuity |
Plan assets at beginning of the year | 451.90 | - | 290.58 |
Expected return on plan assets | 36.16 | - | 24.70 |
Actuarial gain/(loss) | -6.98 | | 4.98 |
Employer contribution | - | - | 150.00 |
Benefits paid | -31.68 | - | -18.36 |
Plan assets as at year end | 449.40 | - | 451.90 |
Actual return on plan assets | 29.17 | - | 29.68 |
Composition of the plan assets is as follows:
Particulars | As on 31st March, 2014 |
| Gratuity |
Government bonds | 47% |
Others (Insurer Managed Funds) | 53% |
$ Category-wise composition of plan assets is not available with the company for the brvious year.
Actuarial assumptions
Particulars | As on 31st March, 2014 | | As on 31st March, 2013 |
| Gratuity | Post Retirement Medical Benefit Plan (Unfunded) | Gratuity |
Discount rate (per annum) | 9.31% | 9.31% | 8.00% |
Expected rate of return on plan assets (per annum) | 9.31% | NA | 8.00% |
Expected rate of escalation in salary (per annum) | 7.50% | NA | 7.50% |
Attrition | 1.00% | 1.00% | 1.00% |
Medical Cost inflation | | 3.00% | |
Mortality tables | Indian Assured | Indian Assured | Indian Assured |
| Lives Mortality | Lives Mortality | Lives Mortality |
| (2006-08) | (2006-08) | (2006-08) |
| Ultimate | Ultimate | Ultimate |
Estimate of amount of contribution in the immediate next year (Rs. Lakhs) | 168.99 | NA | 95.56 |
The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc.. In order to protect the capital and optimise returns within acceptable risk parameters, the plan assets are well diversified.
(Rs. Lakhs)
Effect of a 1% change in healthcare cost | 31st March, 2014 | | 31st March, 2013 | |
| Increase by 1% | Decrease by 1% | Increase by 1% | Decrease by 1% |
Closing balance of obligation | 371.72 | 238.25 | NA | NA |
Experience Adjustment
(Rs. Lakhs)
Gratuity | As on 31st March, 2014 | As on 31st March, 2013 | As on 31st March, 2012 | As on 31st March, 2011 | As on 31st March, 2010 @ |
Present value of DBO | 550.27 | 536.54 | 352.82 | 226.08 | NA |
Fair value of plan assets | 449.40 | 451.90 | 290.58 | 214.28 | NA |
Funded status [Surplus / (Deficit)] | -100.87 | -84.64 | -62.24 | -11.80 | NA |
Experience gain / (loss) adjustments on plan liabilities | -47.91 | 23.62 | 3.92 | 3.54 | NA |
Experience gain / (loss) adjustments on plan assets | -6.98 | 4.98 | 2.32 | 3.92 | NA |
@ Information of experience adjustment in respect of this year is not available, hence not disclosed.
(Rs. Lakhs)
Post Retirement Medical Benefit | As on 31st March, 2014 | As on 31st March, 2013 |
Present value of DBO | 296.77 | NA |
Fair value of plan assets | NA | NA |
Funded status [Surplus / (Deficit)] | NA | NA |
Experience (gain) / loss adjustments on plan liabilities | -0.80 | NA |
Experience gain / (loss) adjustments on plan assets | NA | NA |
| For the year ended 31st March, 2014 | For the year ended 31st March, 2013 |
Actuarial assumptions for long-term compensated absences | | |
Discount rate | 9.31% | 8.00% |
Expected return on plan assets | NA | NA |
Salary escalation | 7.50% | 7.50% |
Attrition | 1.00% | 1.00% |
The discount rate is based on the brvailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.
The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.
The Company provides for compensated absences to employees which can be carried forward to future years. Consequently based on Guidance on implementation of Accounting Standard 15 "Employee Benefits" (AS-15), the Company has considered the benefits provided as other long term employee benefits. An amount of Rs. 39.84 Lakhs (brvious year Rs. 171.40 Lakhs), has been charged to the Statement of Profit and Loss for the year ended 31st March, 2014.
The company has introduced post retirement medical benefit plan during the year, hence, there is no disclosure for the brvious year in this respect.
Disclosure of enterprise's reportable segments explanatoryDisclosure as per Accounting Standard 17 - "Segment Reporting"
The Company operates brsently in the business of city gas distribution. The Company earns revenue by selling natural gas and does not earn revenue by transporting gas of third parties. There are no separate reportable segments, other than selling of natural gas.