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Notes to Accounts of Gujarat Gas Ltd.

Mar 31, 2016

Note 1: Pursuant to the scheme, the authorized share capital of the Company on the effective date has automatically stand increased by merging the authorized share capital of transferor Company with transferee Company without any further act or deed on the part of the transferee Company, including payment of stamp duty and Registrar of Companies fees, for the authorized share capital of transferor Company.

Note 2: Out of the above, 12,45,20,130 Equity Shares of Rs. 10 each have been allotted as fully paid at face value to the shareholders of transferor companies without payments being received in cash pursuant to the Scheme of Amalgamation and arrangement for transfer of the assets and liabilities determined by the management as on appointed date.

3 TERMS/ RIGHTS ATTACHED TO EQUITY SHARES

The company has only one class of equity shares having a face value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive residual assets of the company. The distribution will be in proportion to the number of equity shares held by the shareholders.

*Adjustment of deferred tax for the carrying value of assets, whose remaining useful life is Nil as at 1 April 2014, and therefore its residual value is charged to the opening balance of retained earnings as per the provisions of the Companies Act, 2013.

Note :4 Deferred tax assets and deferred tax liabilities have been offset as they relate to the same governing tax laws.

Note : 5 Security Deposits received from customers have been considered as long-term liabilities based on the commercial practice and the intention of the company to continue long-term relationship with its customers for the foreseeable future.

Note 6: Advances from customers includes amount of Rs 3.07 Crores (Previous Year Rs. 2.54 Crores) outstanding more than 365 days. These amounts are in the nature of security deposits for providing capital goods or services in the normal course of business. Note 9.2: The balance with the bank for unpaid dividend is not available for use by the Company and the money remaining unpaid will be deposited in Investor Protection and Education Fund u/s 124(5) of Companies Act, 2013 after the expiry of seven years from the date of declaration of dividend. No amount is due at the end of the period for credit to Investors education and protection fund.

Note 7: The Company deposited Rs. 464.78 crores on 12th June, 2013 into the escrow account ("named BG Asia Pacific Holdings Pte. Limited GSPC Distribution Networks Limited Escrow Account") opened with Citibank N.A. , acting as the escrow agent, pursuant to the escrow agreement executed between the BG Asia Pacific Holdings Pte. Limited (the Seller), Gujarat Gas Limited (Formerly known as GSPC Distribution Networks Limited) (the Purchaser) and Citibank N.A. The Payment of said amount into Escrow Account is to be utilized to meet future tax withholding liability (if any) based on outcome of the applications to the Authority for Advance Rulings or otherwise to be remitted to BG Asia Pacific Holdings Pte. Limited (the Seller) directly.

Note 8: The Company has given refundable security deposits in form of fixed deposits to various project authorities to be held in their name and custody. It will be refunded after satisfactory completion of work. The company has therefore shown these fixed deposits amounting Rs. 16.16 Crores- (Previous Year Rs. 7.37 Crores), till the same are in custody with project authorities as "Security Deposits” under the Note- "Long term Loans and Advances” in the balance sheet.

Note 9 : The balances in dividend accounts are not available for use by the Company and the money remaining unpaid will be deposited in the Investor Protection and Education Fund after the expiry of 7 years from the date they became due for payment. No amount is due at the end of the period for credit to Investor Protection and Education fund.

10. The company has taken premises for business and residential use for its employees under cancellable operating lease arrangements. The total lease rentals recognized as an expense during the year for such lease arrangements is INR 6.18 Crores (Previous Year 3.80 Crores). The lease arrangement typically ranges from 11 months to 9 years.

Note 11. Exceptional item pertains to stamp duty charges and other expenses incurred pursuant to Scheme of Amalgamation and Arrangement.

12. (i) In addition to above, Claims of Rs 2.22 Crores (P. Y. Rs. 2.22 Crores) against the Company have been disputed by the Company. The Company is, however, indemnified by an insurance policy.

(ii) UPL Limited (UPL) a customer of erstwhile Gujarat Gas Company Limited(GGCL) filed a complaint before Petroleum and Natural Gas Regulatory Board (PNGRB) against erstwhile GGCL alleging charging of tariff illegally under the City Gas Network Distribution Agreement entered into between the Parties. The matter was decided against erstwhile GGCL by PNGRB. Erstwhile GGCL has preferred an appeal at Appellate Tribunal for Electricity (APTEL) against the PNGRB Order. Erstwhile GGCL has also sought an interim stay on the PNGRB order which was granted by APTEL. Company has submitted bank guarantee of Rs. 40 Crores to in favour of UPL. The APTEL has in its order stated that it is an interim order without considering the merits of the case.

(iii) One of the gas suppliers of the Company has submitted a claim of Rs. 481.85 Crores, for unauthorized use of gas in earlier years. The company has refuted this erroneous claim contending that no contractual provisions of the agreement executed with GGL allow such claim. The management is of the firm view that the company is not liable to pay any such claim. The company has already taken up the matter with concerned party/authorities to withdraw the claim.

(iv) Erstwhile Gujarat Gas Company Limited and Erstwhile GSPC Gas Company Limited (Now collectively known as Gujarat Gas Limited "GGL”) had signed Gas supply agreement with Gujarat State Petroleum Corporation Limited (GSPCL) for purchase of Re-gasified liquefied natural gas (RLNG). As per the provision of said agreement, GGL has to pay interconnectivity charges to GSPCL for the supply and purchase of RLNG at Delivery point which is charged to GSPCL by their supplier i.e.PLL Off takers (GAIL India, BPCL, IOCL).

PGNRB had vide its orders dated 13.09.2011 of Chairman and dated 10.10.2011 of the majority members (three member panel of Board) unanimously held that GAIL had adopted Restrictive Trade Practices by blocking off direct connectivity to GSPC and further, directed Respondents to immediately give direct connectivity to GSPC at Dahej Terminal. The PLL Off takers (GAIL) filed appeals against the said PNGRB orders before the Appellate Tribunal for Electricity (APTEL). On 23-February-2012 APTEL had issued an interim order for shifting the Delivery Point from GAIL-GSPL Delivery Point to GSPL-PLL Delivery Point. On 18-December-2013 APTEL issued its judgment and required GSPCL to pay the amount of the difference between Rs. 8.74/MMBTU (exclusive of Service Tax) - earlier connectivity charges and Rs. 19.83/MMBTU (Exclusive of Service Tax) - HVJ/DVPL Zone-1 tariff to GAIL for the period from 20th November 2008 to 29th February 2012.

GSPCL has filed an appeal against the APTEL''s above referred judgment before Hon''ble Supreme Court of India (GSPCL vs. GAIL & Others, Civil Appeal No. 2473-2476 of 2014) and the Hon''ble Supreme Court of India had passed the Interim Order on 28th February 2014. The Court has stated that the ends of justice would be met if as a matter of interim arrangement, the appellant is directed to pay interconnectivity charges at the rate of Rs. 12.00 per MMBTU (exclusive of Taxes).

The Company has already provided and paid interconnectivity charges at the rate of Rs. 12.00 per MMBTU (exclusive of Taxes).

The company is contesting the demands and the management including its advisors believe that its position is likely to be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the company''s financial position and results of operations.

Note: No interest has been paid by the Company to the enterprises covered under Micro, Small and Medium Enterprises Development Act, 2006 according to the terms agreed with the enterprises.

NOTE 13. DISCLOSURE OF EMPLOYEE BENEFITS

The Company has implemented Accounting Standard - 15 (AS-15) (Revised 2005) on "Employee Benefits”.

(a) Provident Fund - Defined Contribution Plan

All employees are entitled to provident fund benefits and amount charged to Statement of Profit and Loss during 12 months ended is INR 5.87 Crores (Previous year I NR 5.36 Crores).

(b) Gratuity and Leave Encashment - Defined Benefit Plans (payable in future)

Provision has been made for gratuity and leave encashment as per actuarial valuation. The principal assumptions used in actuarial valuation and necessary disclosures are as below:

* Not applicable in case of Gratuity plan for GSPC gas employees

Note: The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Note

(I) During this year, the company has introduced/provided long service award benefits to its employees who completed 15/20/25 Years of employment with company. Accordingly company has provided Rs. 1.43 Crores (Previous year -Nil) on account of Long service award benefit. Current Liability as at 31st March 2016 is Rs. 0.31 Crores and Non- Current Liability is Rs. 1.12 Crores.

(ii) During this year, the company has removed the ceiling of liability of Gratuity payment of Rs. 10 Lacs which was applicable to certain employees. The impact of the change of limit is Rs. 3.74 crores and same is charged to Statement of profit and loss during this financial year.

(iii) The company has participated in Group Gratuity Scheme Plan with LIC, Reliance & HDFC life insurance co. Ltd through Gratuity Trust to meet its gratuity liability. The present value of the plan assets represents the balance available at the end of the year. The total value of plan assets is as certified by the LIC, Reliance & HDFC life insurance co. Ltd.

(iv) The expected rate of return on Plan Assets is determined considering several applicable factors, mainly the composition of Plan Assets held, assessed risks, historical results of return on Plan Assets and the Company''s policy for the Plan Assets management.

(v) The actuarial valuation takes into account the estimates of future salary increases, inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The management has relied on the overall actuarial valuation conducted by the actuary.

NOTE 14.

Employee Stock Option Plan :

The erstwhile GSPC Gas Company Limited (''e-GSPC''), erstwhile Gujarat Gas Company Limited (''e-GGCL''), erstwhile Gujarat Gas Financial Services Limited (''e-GFSL'') and erstwhile Gujarat Gas Trading Company Limited (''e-GTCL'') merged with and into GSPC Distribution Network Limited (''GDNL'') under the Composite Scheme of Amalgamation and Arrangement (the "Scheme of Amalgamation”). The effective date of Scheme of Amalgamation was 14 May 2015. Upon the Scheme of Amalgamation becoming effective, the name of GDNL has been changed to Gujarat Gas Limited (''GGL'') as per the provisions of the Companies Act.

Pursuant to the Scheme of Amalgamation, the Addendum Gujarat Gas Limited Employee Stock Option Plan 2016 ("ESOP 2016”) being supplementary to the Gujarat Gas Company Limited Employee Stock Option Plan 2008 ("ESOP 2008”) has been formulated for the limited purpose of adopting the ESOP 2008 in the Company.

The e-GGCL had formulated the above ESOP 2008, whereby Stock Options had been granted by e-GGCL to its employees. The ESOP 2008 has been effective from 1 November 2008 for a tenure of 8 years. As on the effective date of the Scheme of Amalgamation, certain employees of e-GGCL to whom Options had been Granted and Vested under the ESOP 2008, have not Exercised the said Options and hence as per the Scheme of Amalgamation, they are the Eligible Employees for the purpose of the ESOP 2016 as follows:

(1) Revised Grants have been made to them with effect from the effective date under the Scheme of Amalgamation of 13000 equivalent number of Options-I under the ESOP 2016, against the equivalent number of Options Granted and Vested in them pursuant to the ESOP 2008, which were not Exercised by them on the effective date under the Scheme of Amalgamation.

(2) The above Revised Grants of Options-I has been on the basis of the Share Exchange Ratio of 1 (one) equity share of Rs.10/-each of GGL, for every 1 (one) equity share of Rs.2/- each of e-GGCL, pursuant to the Scheme of Amalgamation.

(3) The Options-I bear the Exercise Price as per the ESOP 2008. The Exercise Price payable for Options-I under ESOP 2016 is based on the Exercise Price payable by such Eligible Employees under the ESOP 2008 that has been adjusted after taking into account the effect of the Share Exchange Ratio of 1:1 as mentioned above.

(4) Upon such Revised Grant of Options-I to the Eligible Employees the Options Granted under the ESOP 2008 stand cancelled and the Eligible Employees shall continue to be bound by all the terms and conditions of the ESOP 2008 in addition to this ESOP 2016.

The Gujarat Gas Company Limited Employee Welfare Stock Option Trust ("ESOP 2008 Trust”). which has been formed and created vide execution of the Deed of Gujarat Gas Company Limited Employee Welfare Stock Option Trust dated 4 November 2008 has been renamed as Gujarat Gas Limited Employee Welfare Stock Op-tion Trust ("ESOP 2016 Trust”).The ESOP 2016 Trust is an irrevocable Trust that functions for the limited purpose of adopting the ESOP 2008 and ESOP 2016 and to hold the existing share inventory of the ESOP 2008 Trust for the benefit of Eligible Employees under ESOP 2016 and the balance to be appropriated in line with the SEBI Regulations.

The ESOP 2016 and the ESOP 2016 Trust are governed by the provisions of the Companies Act 1956 or the Companies Act 2013, as may be applicable and the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 or the SEBI (Share Based Employee Benefits) Regulation, 2014, as may be applicable.

The ESOP 2008 Trust had purchased out of the funds advanced by the Company, the shares equivalent to the number of options granted. IDBI Trusteeship Services Limited are the Trustees. The Trustees can sell the shares in the market as per the approved scheme and for the year ended on 31st March 2016, there are no purchases from the market.

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 as per ESOP 2008. The graded vesting of options granted, over a period of 4 years from the date of grant is as follows:

The options are to be exercised within a maximum period of 2 years from the date of vesting. Within the exercise period, the employee would have the option to either purchase the shares from the trust at the exercise price or to give a mandate of sale to the trust at the best available market price, in which event the difference between the net price realized on sale after taxes and charges and the Exercise Price will accrue as gains to the employee.

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 2016 is 0.52 years. (Previous year 1.79 years)

In accordance with Guidance Note on Accounting for Employee Share-based Payments issued by Institute of Chartered Accountants of India (ICAI) and SEBI (Share Based Employee Benefits) Regulations, 2014 issued by Securities Exchange Board of India, an amount of 0.01 Crores (Previous year Rs. Nil) has been recognized as an expense in Employee Benefits Expenses (Note 26) and corresponding liability has been disclosed as Stock Options Outstanding Account (Note 3). The balance of Rs. 0.17 Crores (Previous year Rs. 0.32 Crores) in Stock Options Outstanding Account (Note 3) represents the amortized cost of stock options outstanding. As on 31 March 2016, the amount recoverable from ESOP trust is Rs. 3.01 Crores (Previous year Rs.3.01 Crores).

The Company has adjusted gain of Rs. 0.49 Crores (Previous year Rs. 2.06 Crores) 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, in accordance with Guidance Note on accounting for Employee Share-based Payment, issued by the ICAI.

Note 15. Related Party Transactions

(A) Name of related parties and description of relationship :

Sr. Relationships Name of Company

No.__

1 Holding company Gujarat State Petroleum Corporation Limited

2 Subsidiary of Holding Company Gujarat State Petronet Limited

GSPC Pipavav Power Company Limited GSPC (JPDA) Limited GSPC Offshore Ltd GSPC Energy Ltd.

GSPC Marginal Fields Limited GSPL India Gasnet Limited GSPL India Transco Limited

3 Associate of GGL Guj Info Petro Limited

4 Associate of Holding Company Gujarat State Energy Generation Limited

Sabarmati Gas Limited GSPC LNG Limited

5 Enterprise controlled by the Entity Gujarat Gas Company Limited Employee Stock Option Welfare Trust

Gujarat Gas Company Limited Employees Gratuity Trust Fund GSPC Gas Company Limited Employees'' Group Gratuity Scheme

6 Key Managerial Personnel Name of Related Parties Relationship

Mr.Atanu Chakraborty, IAS Director (w.e.f 16.04.2015)

Mr.Manoj Kumar Das, IAS Director (upto 21.04.2015)

Mr.PPG Sarma Chief Executive Officer

(upto 01.03.2016)

Mr.Nitin Patil In-Charge Chief Executive Officer

(w.e.f. 02.03.2016)

7 Relatives of Key Managerial Personnel Ms. P Subbalakshmi is related to Mr. PPG Sarma (upto 01.03.2016)

Note 16. Corporate Social Responsibility

During the year, the Company spent Rs 1.01 crores on corporate social responsibility out of which Rs. 1.00 Crores is included in Donation in Note 28.

Note 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. Accordingly, disclosures relating to primary and secondary business segments under the Accounting Standard 17 on Segment Reporting are not relevant to the Company.

Previous year figures are in brackets

Note 18. 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 19. Authorization 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 authorizations for Palej and Gandhinagar are under process of authorization with PNGRB.

The PNGRB has rejected the application of authorization of Halol and Khambhat GA by issuing a speaking orders in May, 2011. The management of company had replied to PNGRB against the said speaking order and requested to continue to operate in Halol and Khambhat GA in public interest and company has continued to operate and book the income thereof. Though the company''s application for reviewing of the decisions are pending before the board, it is exposed to penal provisions for contravention and continued contravention of the directions of the Board of the PNGRB Act, 2006.

Further, PNGRB has invited bidding for authorization of Anand GA and Panchmahal GA which now covers area of Halol and Khambhat also. Company has filed bid for said GA in the month of January 2016. The PNGRB is in process of review of said bid.

Erstwhile GSPC Gas has incurred capital expenditure amounting to Rs. 9.63 Crores during FY 2015-16 (Previous year Rs. 5.44 crores) in said GA. Total Capital expenditure till Balance sheet date is Rs. 150.54 Crores (Previous year Rs. 141.14 Crores) in said GA. Total revenue of Rs. 127.02 Crores (Previous year Rs. 163.50 Crores) is generated from said GA.

Note 20. Previous year figures

Previous year''s figures have been regrouped or reclassified wherever necessary to confirm to the current period''s presentation.

The above details represent Membership/ Chairmanship of Audit Committee and Stakeholders Relationship Committee as per Regulation 18 and 20 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (including details of GGL).

Membership does not include chairmanship


Mar 31, 2015

Note 1. The Company has taken premises for business and residential use for its employees under cancellable operating lease arrangements. The total lease rentals recognized as an expense during the year for such lease arrangements is Rs. 3.80 Crores (P.Y. 4.52 Crores). The lease arrangement typically ranges from 11 months to 9 years.

The company is contesting the demands and the management including its tax advisors believe that its position is likely to be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the company's financial position and results of operations.

Note 2. PGNRB had vide its orders dated 13.09.2011 of Chairman and dated 10.10.2011 of the majority members (three member panel of Board) unanimously held that GAIL had adopted Restrictive Trade Practices by blocking off direct connectivity to GSPC and further, directed Respondents to immediately give direct connectivity to GSPC at Dahej Terminal.

The PLL Off takers (GAIL) filed appeals against the said PNGRB orders before the Appellate Tribunal for Electricity (APTEL). On 23.02.2012 APTEL had issued an interim order for shifting the Delivery Point from GAIL-GSPL Delivery Point to GSPL-PLL Delivery Point. On 18.12.2013 APTEL issued its judgment and required GSPCL to pay the amount of the difference between Rs. 8.74/MMBTU (exclusive of Service Tax) - earlier connectivity charges and Rs. 19.83/MMBTU (Exclusive of Service Tax) - HVJ/ DVPL Zone-1 tariff to GAIL for the period from 20.11.2008 to 29.02.2012.

GSPCL has filed an appeal against the APTEL's above referred judgment before Hon'ble Supreme Court of India (GSPCL vs. GAIL & Others, Civil Appeal No. 2473-2476 of 2014) and the Hon'ble Supreme Court of India had passed the Interim Order on 28.02.2014. The Court has stated that the ends of justice would be met if as a matter of interim arrangement, the appellant is directed to pay interconnectivity charges at the rate of Rs. 12.00 per MMBTU (exclusive of Taxes).

Note: No interest has been paid by the Company to the enterprises covered under Micro, Small and Medium Enterprises Development Act, 2006 according to the terms agreed with the enterprises.

Note 3. DISCLOSURE OF EMPLOYEE BENEFITS

The Company has implemented Accounting Standard - 15 (Revised 2005) on "Employee Benefits", issued by the Institute of Chartered Accountants of India.

(a) Provident Fund - Defined Contribution Plan

All employees are entitled to provident fund benefits and amount charged to Statement of Profit and Loss during 12 months ended is Rs. 5.40 Crores (Previous year Rs. 5.01 Crores).

(b) Gratuity and Leave Encashment - Defined Benefit Plans (payable in future)

Provision has been made for gratuity and leave encashment as per actuarial valuation. The principal assumptions used in actuarial valuation and necessary disclosures are as below:

Note 4. 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 year ended on 31 st March 2015, 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 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. 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 2015 is 1.79 years. (Previous year 1.67 years).

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 Nil (Previous year Rs. 0.56 Crores) has been recognized as an expense in Employee Benefits Expenses (Note 27) and corresponding liability has been disclosed as Stock Options Outstanding Account (Note 3). The balance of Rs. 0.32 Crores (Previous year Rs. 2.69 Crores) in Stock Options Outstanding Account (Note 3) represents the amortized cost of stock options outstanding. As on 31 March 2015, the amount recoverable from ESOP trust is Rs. 3.01 Crores (Previous year Rs.8.63 Crores).

The Company has adjusted gain of Rs.2.06 Crores (Previous year loss of Rs. 1.05 Crores) to General Reserve (to Surplus in Statement of Profit and Loss in previous year) to 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 5. Corporate Social Responsibility

During the year, the Company spent Rs 1.07 crores on corporate social responsibility out of which Rs. 1.05 Crores is included in Donation in Note 29.

Note 6. 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. Accordingly, disclosures relating to primary and secondary business segments under the Accounting Standard 17 on Segment Reporting are not relevant to the Company.

Note 7. 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 8. Authorization 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 authorizations for Palej and Gandhinagar are under process of authorization with PNGRB.

The PNGRB has rejected the application of authorization of Halol and Khambhat GA by issuing a speaking orders in May, 2011. The management of company 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 has continued to operate and book the income thereof. Erstwhile GSPC Gas has incurred capital expenditure amounting to Rs. 5.44 Crores during FY 2014-15 (Previous year Rs. 8.82 crores) in said GA. Though the company's application for reviewing of the decisions are pending before the board, it is exposed to penal provisions for contravention and continued contravention of the directions of the Board of the PNGRB Act, 2006. Total Capital expenditure till Balance sheet date is Rs. 141.14 Crores (Previous year Rs. 135.69 Crores) in said GA. Total revenue of Rs. 207.57 Crores (Previous year Rs. 207.06 Crores) is generated from said GA. 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 9. 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 their meeting held on 21st 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. 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 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 Ahmadabad 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 Ahmadabad 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 Ahmadabad. 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 non- commercial 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 Companies are dissolved without winding up pursuant to the provisions of Section 394 of the Companies Act, 1956

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 in books of the 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 re- opening 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 have been re- opened and revised 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 1 st 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 1st April 2013.

Note : The above mentioned figures have been increased/(deceased) due to alignment of accounting policies as on 1st April, 2013 as mentioned below. These adjustments have been recorded in the opening reserves as per the accounting treatment prescribed under the scheme.

(a) Inventories have been increased by Rs. 2.12 Crores on account of recognition of Gas Inventory of erstwhile GGCL

(b) Long Term loans and advances have been decreased by Rs. 1.55 Crores on account of recognition of provision for doubtful advances of erstwhile GSPC GAS.

(c) Trade Receivables have been increased by Rs. 0.33 Crores on account of recognition of interest income accrual of erstwhile GSPC GAS.

(d) Unbilled Revenue has been decreased by Rs. 18.37 Crores to align accrual of sales income of erstwhile GGCL with erstwhile GSPC Gas.

3 As a purchase consideration for the transfer of the above mentioned assets and liabilities determined by the Board as on the appointed date 1 st April, 2013 and consequential expected future cash flows from the transferor companies, the company has to issue 4,731,764,975 equity shares of Rs. 10 each totaling value Rs. 4,731.77 Crores. This has resulted in recognition of goodwill of Rs. 742.99 crores (equity shares of Rs. 4,731.77 Crores for net assets of Rs. 3,988.77 Crores) based on the Purchase method of accounting as prescribed under AS 14 - "Accounting for Amalgamations". Pursuant to the scheme and after re-organation of share capital, new 124,520,130 equity shares have been issued to equity shareholders of Transferor Companies in the swap ratio as specified in the scheme.

4 Pursuant to the scheme, equity shares of the Company held by the transferor Company and transferor companies inter-company investments stood cancelled. Accordingly, investments of Rs. 2,811.14 crores (GDNL investments in GGCL) and Rs. 0.13 Crores (GGCL investments in GTCL) and Rs. 1.40 Crores (GGCL investments in GFSL) and Rs. 400.05 Crores (GSPC Gas investments in GDNL) have been cancelled.

Further, in accordance with the scheme, cancellation of equity shares of transferor companies has resulted in creation of goodwill of Rs. 2,812.67 Crores. This along with the amount of goodwill as mentioned in (3) above has been adjusted against the reserves arising on account of capital reduction to reduce the share capital to comprise of 137,678,025 equity shares of Rs. 10/- each aggregating value Rs. 137.68 Crores. The reduction in the share capital of the Company has been effected as an integral part of the Scheme in accordance with the provisions of Sections 100 to 103 of the Companies Act, 1956 and the order of the High Court sanctioning the Scheme.

5 Considering above points no. 1 to 4 and pursuant to the Scheme, the net assets of the transferor companies acquired by the transferee company in excess of the consideration issued as share capital by the transferee company to the shareholders of the transferor company after adjustments of the inter-company investment holdings and inter-company balances, if any, and reduction of share capital has been adjusted against the "Reserve Account" of the transferee company (Refer Note 3) in accordance with the requirements of the approved Scheme of Amalgamation.

Note 10 Previous year figures

Previous year's figures have been regrouped or reclassified wherever necessary to confirm to the current period's presentation.

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