NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 ST MARCH, 2014 Note 1: Significant Accounting Policies 1. General Information a) Gujarat Gas Limited ("Company") formerly known as GSPC Distribution Networks Limited (GDNL) is engaged in Natural Gas Business in Gujarat. Natural gas business involves distribution of gas from sources of supply to centers of demand and to the end customers. b) The company is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 and is a part of GSPC group. The Company was originally incorporated as GSPC Distribution Networks Limited (GDNL) on 21st February 2012. The Scheme of amalgamation and arrangement (Refer Note No. 48) was sanctioned by the Hon'ble Gujarat High Court at Ahmedabad vide its order dated 30th March 2015 between the following transferors companies - 1. GSPC Gas Company Limited (GSPC Gas) 2. Gujarat Gas Company Limited (GGCL) 3. Gujarat Gas Financial Services Limited (GFSL) 4. Gujaratgas Trading Company Limited (GTCL) (Collectively called Transferor Companies) with Gujarat Gas Limited (formerly known as GSPC Distribution Networks Limited-GDNL) (the transferee) under the Scheme of Amalgamation and Arrangement with appointed date as 1st April, 2013. The certified copy of order was received on 18th April 2015 and filed with Registrar of Companies (ROC) at Ahmedabad on 14th May 2015. The Scheme of Amalgamation became effective on 14th May, 2015 with an appointed date of 1st April, 2013. Subsequently, the company's name has been changed from GSPC Distribution Networks Limited to Gujarat Gas Limited (GGL) with effect from 15th May 2015. Consequent to order dated 6th July 2015 of the Honourable High Court of Gujarat for sanctioning permission of reopening and revision of books of accounts for the year 2013 -14, the audited financial statements of transferee company Gujarat Gas Limited (formerly known as GSPC Distribution Networks Limited-GDNL) for year 2013-14 has been reopened and revised by the Company to give effect of the said amalgamation and arrangement in books of accounts for the year 2013-14. Accordingly, operation of all the transferors companies from April 1, 2013, have been accounted for in the financial statements for financial year 2013-14. 2. Basis of Preparation of Financial Statements The financial statements have been brpared under historical cost convention on accrual and going concern basis of accounting. The financial statements have been brpared and brsented to comply in all material aspects with the Generally Accepted Accounting Principles (IGAAP) in India and the Accounting Standards notified pursuant to Companies (Accounting Standards) Rules 2006 as per Section 211(3C) of the Companies Act, 1956 and the other relevant provisions of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. The company has consistently applied the accounting principles and policies; and accounting polices not referred to otherwise, are in conformity with IGAAP. All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Revised Schedule VI to the Companies Act, 1956. These financial statements are the merged financial statements of the company brpared in accordance with the Scheme of Amalgamation and Arrangement (Refer note no. 48) 3. Use of Estimates The brparation of financial statements in conformity with IGAAP requires management to make certain 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. Such estimates and assumptions are based on evaluation of relevant facts and circumstances as on date of the financial statements. Differences between the actual results and estimates are recognized in the period in which they are known or materialise. 4. Fixed Assets and Capital Work in Progress (CWIP) a. Tangible assets Fixed assets are stated at their cost of acquisition / construction (Fair value as determined on the date of acquisition of business) less debrciation and impairment, if any. The cost comprises of the purchase price and any attributable cost for bringing the asset to its working condition for its intended use; like freight, duties, taxes and other incidental expenses, net of CENVAT recoverable The Company capitalises to project assets all the cost directly attributable and ascertainable, to completing the project. These costs include expenditure of pipelines, plant and machinery, cost of laying of pipeline, cost of survey, commissioning and testing charge, detailed engineering and interest on borrowings attributable to acquisition of such assets. The gas distribution networks are treated as commissioned when supply of gas commences to the customer(s). Costs of meter / regulator consumed for initial connection to customers are capitalized as per underlying contracts with customers and consumed for replacement during the year are charged to statements of profit & loss. Gains or losses arising from disposal/retirement of fixed assets, which are carried at cost, are recognized in the Statement of Profit and Loss. b. Intangible Assets Intangible Assets includes amount paid towards obtaining the Right of Use (ROU) of land and Right of Way (ROW) permissions for laying the gas pipeline network and cost of developing software for internal use. The Company capitalises software as Intangible Asset in terms of Accounting Standard -26 "Intangible Assets" where it is expected to provide future enduring economic benefits. On the acquisition of an undertaking, the difference between the purchase consideration and the value of the net assets acquired is recognized as goodwill / reserve. c. Capital Work In Progress Capital Work in Progress -CWIP includes expenditure incurred on assets, which are yet to be commissioned and capital inventory, which comprises stock of capital items/construction materials at respective city gas network. All the identifiable and ascertainable expenditure including direct, indirect expenses, incidental and related to construction incurred during the period of construction on a project, till it is commissioned, is kept as Capital work in progress (CWIP) and after commissioning the same is transferred / allocated to the respective fixed assets. 5. Debrciation and Amortization a) Debrciation is provided on Straight Line Method (SLM) at the rates and in the manner brscribed in Schedule XIV to the Companies Act, 1956 or over the estimated useful lives of the assets, whichever is higher, except as under: i. Debrciation on Plant and Machinery - pipelines (Steel and MDPE) acquired from erstwhile GSPC GAS Company Limited is provided at 3.17 % on Straight-Line Method (SLM) considering useful life of thirty years. The company has changed the debrciation rate on natural gas pipelines from 5.28% per annum on SLM basis as per schedule XIV to 3.17% per annum on SLM basis w.e.f. 1st April, 2011 in terms of approval of Ministry of Corporate Affairs (MCA) vide its letter no. 45/5/2011 -CL-III dated 1st September, 2011. ii. Cost of mobile phones, are debrciated / expensed off in the year of purchase. b) Debrciation on assets acquired and or disposed off during the year is provided on pro-rata basis with reference to the date of addition/disposal. Assets costing Rs. 5,000 or less are fully debrciated in the year of purchase/capitalization. c) Intangible assets are amortized over their individual estimated useful lives on a Straight Line basis, commencing from the year in which the same are available to the company for its intended use. The useful lives as estimated by the management for the intangible assets are as follows : I. Right of Way (ROW) Permissions i. 18 Years for assets acquired from erstwhile Gujarat Gas Company Ltd. ii. 30 Years for assets acquired from erstwhile GSPC Gas Company Ltd. (Considered more than 10 years as inextricably linked and dependent on the useful life of pipeline networks as referred 5(a) above for which the Right of Way has been obtained). II. Software and other Intangibles 6 Years. Q d) Cost of leasehold land is amortized equally over the period of lease. e) No amortisation is charged on Right of Use (RoU) of Land being perpetual in nature. (f) The Company has constructed / installed CNG stations' buildings and machineries, on land taken on lease from various lessor under lease deed for periods ranging from 35 years to 99 years. However, assets constructed / installed on such land have been debrciated at normal rates as referred above, as the management does not foresee non-renewal of the above lease arrangements by the lessor. 3 Capital assets installed at the customers' brmises on the land of the customers have been debrciated at the rates specified as above. 6. Impairment of Assets In accordance with Accounting Standard 28 on "Impairment of Assets" at the balance sheet date, Fixed Assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset/cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to the recoverable amount. Recoverable amount is higher of an asset's or cash generating unit's net selling price and its value in use. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. 7. Revenue Recognition a) Sale of Natural Gas is recognized on supply of gas to customers by metered/assessed measurements as no significant uncertainty exists regarding the measurability or collectability of the sale consideration. Sales are billed bi-monthly for domestic customers, monthly/fortnightly for commercial and non-commercial customers and fortnightly for industrial customers. Revenue on sale of Combrssed Natural Gas (CNG) is recognized on sale of gas to consumers from retail outlets. Sales of natural gas are stated at net of value added tax. b) Gas transmission income is recognized in the same period in which the related volumes of gas are delivered to the customers. c) Commitments (take or pay charges) income from customers for gas sales and gas transmission is recognized on establishment of certainty of receipt of consideration from its customers. d) The amounts charged from customers for gas connections are accounted for based on the terms of the underlying contract with customers by accounting the revenue on commencement of the supply of gas to the customer as Connection, Service and Fitting Income under other operating revenue. The amounts collected towards connection charges from certain domestic customers are "non-refundable charges". Accordingly, the same are recognized as revenue as and when the Company commences the supply of gas to the customers and such amount is charged to customers. Until then, the amounts so collected are shown as "Advances received from customers" in the balance sheet. The company has provided the instalments facility to certain domestic customers towards "connection charges" which are non-refundable, the total amount of such instalments are recognized as revenue as and when the company commences the supply of gas to the customers. The connection amounts collected from certain domestic customers which are "refundable" in nature. Accordingly, the same are recognized as a liability under head "Deposit from Customers" in the balance sheet as and when the Company commences the supply of gas to the customers. Until then, the amounts so collected are shown as advances received from customers in the balance sheet. The difference between the amounts charged from customers for gas connections and amounts of connection which are refundable is disclosed as revenue as and when the company commences the supply of gas to the customers. e) Revenue in respect of interest/ late payment charges on delayed realizations from customers and cheque bounce charges, if any, is recognized on grounds of prudence and on the basis of certainty of collection. f) Liquidated damages income, if any is recognized at the time of recording the purchase of materials in books of accounts and the matter is considered settled by the Management. g) Interest expense and income are recognized on time proportion basis taking into account the amount outstanding and the rate applicable. h) Dividend income is recognised, when the right to receive the dividend is established by the reporting date. i) Other operating income and misc. income are accounted on accrual basis as and when the right to receive arises. j) Expenditure charged to profit and loss statement is provided for the period for which the expenditure is incurred. Adequate provisions are made for all known expenses and liabilities. 8. Borrowing Costs Interest and other costs in connection with the borrowing of funds to the extent they relate to the acquisition / construction of qualifying fixed assets as defined in Accounting Standard 16 on "Borrowing Costs" are capitalized as part of the cost of such assets up to the date of commissioning. The expenses incurred in connection with the arrangement of borrowings are capitalized over the period of the borrowing and every year such cost is apportioned to assets based on the actual amount borrowed during the year. All other borrowing costs are recognized as expense in the period in which they are incurred and charged to the profit and loss statement. 9. Investments Investments are classified as long term or short term in accordance with Accounting Standard 13 on "Accounting for Investments". Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Long term Investments are stated at cost less provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment. Provision, if any, is made to recognize any diminution in value of investments, other than that of a temporary nature. Current Investments are stated at lower of cost and fair value determined category wise. Any reduction in carrying amount and any reversals of such reductions are charged or credited to the profit and loss statement. 10. Inventories Inventory of Gas (including inventory in pipeline and CNG cascades) is valued at lower of cost and net realizable value. Cost is determined on weighted average cost method. Stores, spares and consumables are valued at cost on moving weighted average basis. Inventories of Project materials (Capital Inventory) are valued at cost on moving weighted average basis. 11. Foreign Currency Transactions Initial Recognition On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Subsequent Recognition As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of the transaction. Monetary assets and liabilities in foreign currency are restated at the end of accounting period. Exchange differences on restatement of monetary items are recognized in the Statement of Profit and Loss. Any income or expense on account of foreign exchange difference either on settlement or on translation is recognised in the statement of profit and loss in line with the provisions of Accounting Standard -11 on "The Effects of Changes in Foreign Exchange Rates". 12. Employee Benefits Employees Benefits are provided in the books as per Accounting Standard -15 on "Employee Benefits" (revised 2005) in the following manner: Post-employment benefit plans Defined Contribution Plan Contribution towards provident fund for eligible employees are accrued in accordance with applicable statutes and deposited with the regulatory authorities. The Group does not carry any other obligation apart from the monthly contribution. Defined benefit plan The company provides for gratuity, a defined benefit plan covering eligible employees in accordance with the Payment of Gratuity Act, 1972, through an approved Gratuity Fund. The Gratuity Fund is administered through a Trust. Contributions in respect of gratuity are made to the approved Gratuity Fund. The Company's liability is actuarially determined (using the Projected Unit Credit method) at the end of each year and is recognized in the Balance sheet as reduced by the fair value of Gratuity Fund. Actuarial losses/ gains are recognized in the Statement of Profit and Loss in the year in which they arise. Long term employee benefits The liability in respect of accrued leave benefits which are expected to be availed or encashed beyond 12 months from the end of the year, is treated as long term employee benefits. The Company's liability is actuarially determined using the Projected Unit Credit method at balance sheet date. Actuarial losses/ gains are recognized in the Statement of Profit and Loss in the year in which they arise. Short term employee benefits The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. Short term employee benefits also include accrued leave benefits, which are expected to be availed or encashed within 12 months from the end of the year. Employee Stock Option Plan Stock Option grants to the employees who accept the grant under the Stock Option Plan are accounted in accordance with Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and Guidance Note on Accounting for Employee Share-based Payments issued by the Institute of Chartered Accountants of India. The company follows the fair value method for option pricing and accordingly the fair value of the option as of the date of the grant of the option is recognized as employee compensation cost which is charged to Statement of Profit and Loss on straight line basis over the vesting period of the option. 13. Leases Operating Lease As a lessee: The Company has entered into cancellable operating lease arrangements for office brmises, staff quarters and others. The lease rentals paid for the same are charged to the Statement of Profit and Loss. The lease rentals on non-cancellable lease a contract is accounted for on are charged to the Statement of Profit and Loss on a straight-line basis over the period of the lease. As a lessor: The Company has leased certain tangible assets and such leases where the group has substantially retained all the risks and rewards of ownership are classified as operating leases. Lease income on such operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term which is rebrsentative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred. Finance lease As a lessor: The Company has leased certain tangible assets and such leases where the Company has passed on substantially all the risks and rewards of ownership are classified as finance leases. The aggregate of minimum lease payments less unearned finance income is recognized as a receivable. Unearned finance income is arrived at, as the difference between the aggregate of minimum lease payments and its brsent value based on the rate of return implicit as per the terms of the agreement. Finance Income is recognized over the term of the lease using net investment method, which reflects a constant periodic rate of return. Initial direct costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred. 14. Taxes on Income Tax provision comprises of current tax and deferred tax. Tax provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws that have been enacted as on balance sheet date. Deferred tax liability and assets is computed as per Accounting Standard (AS-22) on "Accounting for Taxes on Income". Deferred tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax asset is recognized on carried forward losses (if any) under tax laws, only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax assets against the current tax liabilities. Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period. i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement." The company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will pay normal tax during the specified period. Provision for Wealth Tax is made in accordance with the provisions of the Wealth Tax Act, 1957. 15. Earnings per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the company's earnings per share is the net profit for the period after deducting brference dividends, if any, and any attributable distribution tax thereto for the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of any dilutive potential equity shares. 16. Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Provision for contractual obligation has been disclosed based on management's assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions. Provisions are measured at the best estimate of the expenditure required to settle the brsent obligation at the Balance sheet date and are not discounted to its brsent value. Contingent liabilities are disclosed in the Notes to Financial Statements when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company or a brsent obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Contingent assets are neither recognized nor disclosed in the financial statements. Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date. 17. Segment reporting The Company primarily operates in the segment of Natural Gas Business. Natural gas business involves distribution of gas from sources of supply to centres of demand and to the end customers. The other activity of the Company comprised leasing of natural gas fired Cogeneration units, the income from which is not material in financial terms. Accordingly, disclosures relating to primary and secondary business segments under the Accounting Standard 17 on Segment Reporting are not relevant to the Company. 18. Cash Flow Statement The Cash Flow Statement is brpared by the "Indirect Method" set out in Accounting Standard 3 on "Cash Flow Statements" and brsents the cash flows by operating, investing and financing activities of the company. Cash and Cash equivalents brsented in the Cash Flow Statement consist of cash on hand, current account balances with Banks and demand deposits with banks. Cash equivalents consist of investments with original maturity of three months or less and which are readily convertible to known amounts of cash." 19. Prior Period Adjustments In respect of the transactions pertaining to the one or more prior periods, the expenditure / (income) relating to prior period as a result of errors or omission in the brparation of financial statements, is shown under the head "Prior Period Adjustments Account" in the profit and loss statements as per the provisions of Accounting Standard 5 on "Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies. 20. Proposed Dividend Dividend recommended by the Board of directors is provided for in the accounts, subject to the approval of the shareholders in the Annual General Meeting. 21. Insurance Claims The Company accounts for insurance claims when there is certainty that the claims are realizable and acknowledged by insurance company and amount recognized in books of accounts is as under : In case of loss of asset /goods by transferring, either the carrying cost of the relevant asset / goods or insurance value (subject to deductibles), whichever is lower under the head "Claims Recoverable-Insurance". In case insurance claim is, less than carrying cost the difference is charged to Profit and Loss statement. As and when claims are finally received from insurer, the difference, if any, between Claims Recoverable-Insurance and claims received is adjusted to Profit and Loss statement. 22. Event Occurring after Balance Sheet Date Material adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognized in the financial statements. Non adjusting events (that are indicative of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that rebrsents material change and commitment affecting the financial position are disclosed in the reports of the board of directors. Note 2 Employee Stock Option Plan 2008: The erstwhile Gujarat Gas Company Ltd implemented an Employee Stock Option Plan 2008 ('ESOP 2008') which provides for the allotment of equity shares of Rs. 2/- each to eligible employees of the erstwhile Gujarat Gas Company Ltd and its subsidiaries. The Scheme is administered by an ESOP Trust (Gujarat Gas Company Limited Employee Stock Option Welfare Trust) which purchases, out of the funds advanced by the Company, the shares equivalent to the number of options granted, for allotment to the grantees. IDBI Trusteeship Services Limited are the trustees of the said trust. The trustees can purchase or sell the shares from the market as per the approved scheme. For the 12 months ended on 31 st March 2014, there are no purchases from the market. Pursuant to the above scheme, the Company has granted options, as mentioned here below, convertible into equity shares of Rs. 2/- each to employees of the erstwhile Gujarat Gas Company Ltd and its subsidiaries. The exercise price is calculated at 10% discount to the closing price of the shares on record date, being the date on which the grant of options were approved by board of directors and shareholders. The Scheme provides for graded vesting of options granted, over a period of 4 years from the date of grant. In accordance with the approval granted by the members of the erstwhile Gujarat Gas Company Limited, to the issue of Bonus Shares in the ratio of one equity share of the Company of Rs. 2/- each for every one equity share of the Company held by the Shareholders of the Company as on September 19, 2009, being the Record Date, the Compensation Committee of the Board of Directors of the Company, on September 22, 2009, had approved adjustments to the Options granted and unvested as on September 19, 2009, under the Gujarat Gas Company Ltd - Employee Stock Option Plan 2008, whereby each option had been doubled and the Exercise Price thereof been halved with effect from September 22, 2009. The employee share based payment plans have been accounted based on the Fair value method of accounting using the Black-Scholes Option Pricing Formula. The weighted average remaining contractual life of options outstanding as on 31 March 2014 is 1.67 years. (Previous year N.A.) In accordance with Guidance Note on Accounting for Employee Share-based Payments issued by Institute of Chartered Accountants of India and SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 issued by Securities Exchange Board of India, an amount of Rs. 0.56 Crores (Previous year NIL) has been recognised as an expense in Employee Benefits Expenses (Note 27) and corresponding liability has been disclosed as Stock Options Outstanding Account (Note 2). The balance of Rs. 2.69 Crores (Previous year NIL) in Stock Options Outstanding Account (Note 2) rebrsents the amortised cost of stock options outstanding. As on 31 March 2014, the amount recoverable from ESOP trust is Rs. 8.63 Crores (Previous year NIL). The Company has adjusted loss of Rs. 1.05 Crores (Previous year NIL) to General Reserve as the difference between the cost incurred by the ESOP Trust for the purchase of shares and the exercise price of those options which have been exercised by the employees during the current year, in accordance with Guidance Note on accounting for Employee share based payment, issued by the ICAI Note 3 RECOVERABLE VALUE OF ALL ASSETS OTHER THAN FIXED ASSETS AND NON CURRENT INVESTMENTS In the opinion of management, the current assets including loans and advances, trade receivables and other current assets are recoverable at the value stated in the balance sheet in ordinary course of business. Note 4 Authorisation with PNGRB : Erstwhile GSPC GAS Company Limited had applied to the 'Petroleum & Natural Gas Regulatory Board' in May 2008 for authorization of its various Geographical Areas (GA)- City Gas Distribution Network under section 18( 1) of the 'Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand local or City Gas Distribution Network) Regulations, 2008. The authorisations for Valsad, Hazira, Palej and Gandhinagar are under process of authorisation with PNGRB . The PNGRB has not considered the application of authorization of Halol and Khambhat GA of erstwhile GSPC GAS Company Ltd by issuing a speaking order in May, 2011. The management of erstwhile GSPC GAS Company Limited has replied to PNGRB against the said speaking order and requested to continue to operate in Halol and Khambhat GA in public interest and company continue to operate and book the income thereof. Erstwhile GSPC GAS Company Limited has incurred capital expenditure amounting to Rs. 8.82 Crores during FY 2013-14 in said GA. Total actual Capital expenditure till Balancesheet date is Rs. 135.69 Crores in said GA's. Total revenue of Rs. 207.26 Crores during FY 201314 is generated from said GA's. Further, the company is engaged with PNGRB to obtain authorization for Halol and Khambhat GA as well along with other GA's under relevant rules of the PNGRB Act, 2006. Company has not received any further communication from PNGRB in this regard. Note 5. Scheme of Amalgamation and Arrangement Scheme of Amalgamation and Arrangement and Capital Reduction Overview of the scheme of amalgamation and arrangement The Board of Directors of the following Companies at its meeting held on 21 st April, 2014 passed a resolution to consider the Composite Scheme of Amalgamation and Arrangement under section 391 to 394 read with section 100 to 103 and other relevant provisions of the Companies Act 1956 between the following transferors companies - 1. GSPC Gas Company Limited (GSPC Gas) 2. Gujarat Gas Company Limited (GGCL) 3. Gujarat Gas Financial Services Limited (GFSL) 4. Gujarat Gas Trading Company Limited (GTCL) (Collectively called Transferor Companies) with Gujarat Gas Limited (formerly known as GSPC Distribution Networks Limited-GDNL) (the transferee) under the Scheme with appointed date as 1st April, 2013. The Scheme of Amalgamation and Arrangement was approved by respective board of directors and the shareholders of the transferor and transferee companies. The scheme of arrangement was sanctioned by the Hon'ble Gujarat High Court at Ahmedabad vide its order dated 30th March 2015. The certified copy of order was received on 18th April 2015 and filed with Registrar of Companies (ROC) at Ahmedabad on 14th May 2015. The Scheme of Amalgamation became effective on 14th May, 2015 on submission of the order of the High Court of Gujarat with the Registrar of Companies at Ahmedabad. Subsequently, the company's name has been changed from GSPC Distribution Networks Limited to Gujarat Gas Limited (GGL) with effect from 15th May 2015 The scheme of amalgamation and arrangement covers the below entities: 1. GSPC Distribution Networks Limited (GDNL) is an unlisted company incorporated under the Companies Act 1956 and main objective of the company is to engage in Natural Gas Business in Gujarat. 2. GSPC Gas Company Limited (GSPC Gas), an unlisted company incorporated under the Companies Act 1956, was also engaged in the business of natural gas. It caters to the requirements of retail segment comprising of industrial, commercial CNG and residential customers. 3. Gujarat Gas Company Limited (GGCL), a listed company incorporated under the Companies Act 1956, was also engaged in the business of transmission and distribution of natural gas to industrial, commercial, CNG and residential customers. 4. Gujarat Gas Financial Services Limited (GFSL), an unlisted company incorporated under the Companies Act 1956, was also engaged in the business of sale of gas connections in India to GGCL and other commercial as well as noncommercial customers in India. 5. Gujarat Gas Trading Company Limited (GTCL), an unlisted company incorporated under the Companies Act 1956, was also engaged in the business of distribution of gas from sources of supply to centers of demand and/or end customers. As a part of the scheme of amalgamation and arrangement, GSPC Gas, GGCL, GFSL and GTCL (transferor companies) have merged into to Gujarat Gas Limited (formerly known as GSPC Distribution Networks Limited-GDNL). The appointed date of the Scheme of Amalgamation for the merger is 1 st April 2013 (the appointed date). Upon the coming into effect of the Scheme of Amalgamation, and with effect from the appointed date, the transferor company carried all business and activities relating to the transferor company and stand possessed of all the estates, assets, rights, title, all debts, liabilities (including contingent liabilities), duties and obligations of every kind, nature and interest of the transferor company for and on account of, and in trust for, the transferee Company. Upon the Scheme becoming effective, all the Transferor Company have dissolved without winding up pursuant to the provisions of Section 394 of the Companies Act, 1956. Further details and salient features of the Scheme of Amalgamation and Arrangement are available at company website at <http://www.gujaratgas.com/investors/scheme-of-amalgamation>. Accounting Treatment The above Scheme of Amalgamation is an amalgamation in the nature of purchase in accordance with the requirements of Accounting Standard 14- "Accounting for Amalgamations" and has been accounted for the amalgamation in books of the transferee company with effect from the appointed date (1st April 2013) as per the Purchase method under AS -14 "Accounting for Amalgamations". Consequent to order dated 6th July 2015 of the Honourable High Court of Gujarat for sanctioning permission of reopening and revision of books of accounts for the year 2013-14, the audited financial statements of transferee company Gujarat Gas Limited (formerly known as GSPC Distribution Networks Limited-GDNL) for year 2013-14 has been re-opened and revised by the Company to give effect of the said amalgamation and arrangement in books of accounts for the year 2013-14. Accordingly, operation of all the transferors companies from 1st April 2013, as detailed below have been accounted for in the financial statements for financial year 2013-14. 1 The business of the transferor companies have been transferred to the company on a going concern basis. As per the Scheme, the appointed date, for the transfer of assets and liabilities at their respective fair value as determined by the board, is 1 st April 2013. Note 6 Previous year figures Previous year figures are of standalone entity for the period from 21.02.2012 to 31.03.2013 (first accounting year was from 21.02.2012 to 31.03.2013) hence they are not comparable with the current year figures of 12 months which includes the impact of the Scheme of Amalgamation and Arrangement w.e.f. 01.04.2013. Previous year's figures have been regrouped or reclassified wherever necessary to confirm to the current period's brsentation. The Accompanying Notes are an intergal part of the financial Statements. As per our report attached. For J. S. Maheshwari & Co. Chartered Accountants Firm Regn. No. 001318C Ashish Maheshwari Partner M. No. : 412441 For and on behalf of Board of Directors Jal Patel Director G.R. Aloria, IAS Chairman Atanu Chakraborty, IAS Director P.P.G.Sarma Chief Executive Officer Rahul Devi Executive Vice President (F & A) Rajeshwari Sharma Company Secretary Place : Gandhinagar Date : 13/08/2015 |