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Notes to Accounts of Gujarat State Petronet Ltd.

Mar 31, 2016

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 Share is entitled to one vote per Share. The Company declares and pays Dividend in Indian Rupees. The Dividend proposed by the Board of Directors is subject to the approval of Shareholders in the ensuing Annual General Meeting.

During the year ended 31st March, 2016, the amount of Dividend per Share recognized as distributions to Equity Shareholders is Rs,1.5 per Share. (31st March 2015: Rs, 1.2 per Share.)

In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of Equity Shares held by the Shareholders.

Detail of Shares reserved for issue under ESOP

For details of Shares reserved for issue under the Employees Stock Option Plan (ESOP) 2005 and 2010 of GSPL, please refer Note No. 37.

Term Loan from banks and financial institutions including foreign currency loans are secured by first pari-passu charge on all Intangible and Tangible assets (except 36” pipeline from Hazira to Mora), Capital Work in Progress, operating Cash Flows, Book Debts and Other Movables of the Company.

For foreign currency loan, the Company has entered in to cross currency swap and interest rate swap in order to hedge its foreign currency risks in full.

1. Previous year figures have been re-classified or regrouped wherever necessary.

2. CONTINGENT LIABILITIES AS ON 31st MARCH, 2016:

a) Claims against Company not acknowledged as debt:

- By land owners seeking enhancement of compensation in respect of RoU acquired by the Company is Rs, 2,124.57 Lacs (Previous Year: Rs, 2,124.57 Lacs) and by other parties including contractual disputes are Rs, 7,094.78 Lacs (Previous Year: Rs, 39.86 Lacs)

- As regards Central Excise and Service Tax matters, the matters lying before HonRs,ble Supreme Court- Rs, 735.04 Lacs (Previous Year: Rs, 735.04 Lacs), Hon’ble Gujarat High Court - Rs, 19,100.28 Lacs (Previous Year: Rs, 19,100.28 Lacs), before CESTAT -Rs, 11,777.16 Lacs (Previous Year: Rs, 10,111.30 Lacs), before Commissioner/ Asst. Commissioner - Rs, 1525.45 Lacs (Previous Year: Rs, 1525.45 Lacs). Further, the company is in process of filing appeal before CESTAT for Rs, Nil (Previous Year: Rs, 1,665.86 Lacs). (Applicable interest & penalty has also been demanded by Department).

- Income Tax assessments up to Assessment Year 2013-14 have been completed and Company had filed various appeals against orders passed by Income Tax Department for various Assessment years. The tax impact/demand of appeals lying before Honorable Gujarat High Court for Assessment Year 2005-06, 2008-09 & 2009-10 is Rs, 113.25 Lacs (Previous Year : Rs, 19.69 Lacs), lying before the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2008-09 & 2010-11 is Rs, 66.41 Lacs (Previous Year : Rs, 370.41 Lacs), lying before CIT(Appeals) for Assessment Year 2012-13 & 2013-14 is Rs, 137.51 Lacs (Previous Year : Rs, 767.08 Lacs) and matters restored back to Assessing Officer for Assessment Year 2004-05 & 2006-07 is Rs, 38.77 Lacs. (Previous Year : Rs, 38.77 Lacs)

Based on interpretation of the Acts & various judicial pronouncements in relation to similar matters, Company is of the view

that these demands are likely to be deleted or may be substantially reduced.

b) Guarantees :

- Outstanding Bank Guarantees / Letter of Credits are Rs, 2,26,226.09 Lacs (Previous year Rs, 68,983.64 Lacs)

- Corporate Guarantee of Rs, 6,500.00 Lacs (Previous year 6,500.00 Lacs) for subsidiaries and of Rs, 50,000.00 Lacs for associate (executed jointly & severally along with associate) (Previous year 50,000.00 Lacs). Out of above, Corporate Guarantee of Rs, 50,000.00 Lacs was valid till 15th April, 2016 & hence contingent liability does not exist as on date of signing Balance Sheet.

c) Other :

Imbalance and overrun charges as per the ‘Modalities of maintaining & operation of Escrow Account under the PNGRB (Access Codefor Common or Contract Carrier Natural Gas Pipeline) Regulations, 2008’ issued by PNGRB on 7th March, 2011, collected for theperiod prior to 1st April, 2011 amounting to Rs, 226.02 Lacs (net of taxes) has been deposited in Escrow Account under protest.

However, the same is not recognized as liability as these guidelines are applicable w.e.f. 1st April, 2011.

3. CAPITAL & OTHER COMMITMENT

Capital Commitment:

Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs, 21,614.46 Lacs (Previous year

Rs, 25,686.84 Lacs).

Other Commitment:

As on 31st March, 2016, the Company has following other commitments:

a) Rs, 1,93,994.99 Lacs (approx) towards further investments in subsidiaries & associates (Previous year Rs, 1,96,594.99 Lacs)

b) Advance of Rs, Nil adjustable against re-gasification services (Previous year Rs, 5,000.00 Lacs)

4. As per Accounting Standard - 16 “Borrowing Cost” issued by ICAI, the Company has capitalized the borrowing cost amounting to Rs, 3,990.68 Lacs for the current year. (Previous year Rs, 2,333.72 Lacs).

5. There are no whole time / executive directors on the Board except Managing Director. Managing director is not drawing any remuneration from the Company.

There is no earning in foreign currency during the year as well as previous year

6. The balances of sundry debtors, creditors, loans & advances and deposits are subject to confirmation. Provision for all liabilities is adequate in opinion of the Company.

7. SEGMENT REPORTING

a. Business Segments

The Company has identified and reported business segments taking into account nature of product and services, differing risks and returns and internal business reporting systems. The Company’s principal business is transportation of Gas through pipeline. Other business segment includes generation of electricity through windmill.

b. Segment Revenue and Expense

Revenue and Expenses have been identified to a segment on the basis of operating activities of the segment. Revenue and Expenses which relate to common activities and are not allocable to segment on reasonable basis have been disclosed as “Unallocable”.

c. Segment Assets and Liabilities

Segment Assets include all operating assets in respective segments comprising of net Fixed Assets, Capital Work in Progress, Current Assets, Loans and Advances. Segment Liabilities include Operating Liabilities and Provisions.

d. The Company does not have geographical distribution of revenue hence secondary segmental reporting based on geographical locations of its customers is not applicable to the Company.

- Segment Revenue includes Other Income which is directly attributable to each segment.

8. RELATED PARTY DISCLOSURES

As per the Accounting Standard -18 on “Related Party Disclosures” issued by The Institute of Chartered Accountants of India, list of related parties identified of the company are as follows :

A. Holding Company:

- Gujarat State Petroleum Corporation Limited

B. Subsidiary:

- GSPL India Gasnet Limited

- GSPL India Transco Limited

C. Associates:

- Gujarat Gas Limited (Refer Note - 41)

- Sabarmati Gas Limited (w.e.f. 18th February, 2016 Refer Note - 42)

- Gujarat State Energy Generation Limited (associate of holding company)

D. Fellow Subsidiary:

- Guj Info Petro Limited

- GSPC Pipavav Power Company Limited

- GSPC LNG Limited

E. Key Managerial Personnel:

- Shri Atanu Chakraborty, IAS, MD (upto 11th April, 2016)

9. DISCLOSURE FOR GRATUITY & LEAVE SALARY PROVISION AS PER ACCOUNTING STANDARD-15

Company has participated in Group Gratuity Scheme of Life Insurance Corporation of India. The liability in respect of gratuity benefits & leave salary being defined benefit schemes, payable in future, are determined by actuarial valuation as on Balance Sheet date.

10. EMPLOYEE STOCK OPTION PLANS ESOP 2005 Scheme:

During the Financial Year 2005-06, the company instituted ESOP-2005. The Board of Directors and the Shareholders approved the plan in the meeting held on 13th October, 2005 and 18th October, 2005 respectively, which provides for the issue of 23,27,940 equity shares to the employees of the company and of Gujarat State Petroleum Corporation Ltd. The Compensation Committee administers ESOP-2005. These ESOPs are granted at an exercise price of Rs,14 per share to be vested equally over the period of four years and to be exercised within a period of five years from the date of vesting.

ESOP 2010 Scheme:

During the Financial Year 2010-11, the company instituted ESOP-2010. The Board of Directors and the Shareholders approved the plan in the meeting held on 23rd August, 2010 and 21th September, 2010 respectively, which provides for the issue of 21,28,925 equity shares to the employees of the company. The Compensation Committee administers ESOP-2010. These ESOPs are granted at an exercise price of Rs, 75 per share to be vested over the period of five years and to be exercised within a period of ten years from the date of Grant.

11. The Company has maintained a separate escrow account as per PNGRB guidelines for modalities of maintaining and operation of escrow account for charges towards system indiscipline in terms of positive or negative imbalance or overruns. In this regard, since financial year 2011-12, amount recovered from customers is deposited in the said bank account and the amount invoiced (net of taxes) is recognized as liability.

12. As at the balance sheet date, Company has reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss has been provided.

13. Amount due for credit to Investor Education and Protection Fund is NIL (Previous year NIL).

14. Pursuant to the scheme of amalgamation and arrangement sanctioned by the Hon’ble Gujarat High Court, inter-alia, GSPC Gas Company Limited and Gujarat Gas Company Limited have amalgamated with Gujarat Gas Limited (formerly known as GSPC Distribution Networks Limited). The schemes of amalgamation become effective on 14th May, 2015 with appointed date of 1st April, 2013. The shares of Gujarat Gas Limited have been listed on Bombay Stock Exchange and National Stock Exchange on 15th September, 2015.

15. On 18th February, 2016, the company acquired additional shares in Sabarmati Gas Limited. With present acquisition of shares, the later has become associate of the company.

16. In continuation to the disclosure made in the Notes to Accounts in the Annual Report of FY 2014-15 regarding the status of tariff proposal submitted to PNGRB for calculation of revised tariff pursuant to APTEL ruling in its judgment dated 25th November, 2014 and 28th November, 2014 allowing GSPL appeals and asking PNGRB to reconsider the tariff proposal to be submitted by GSPL based on relevant data and other submissions made by the appellant in this regard, GSPL had submitted the revised tariff proposals for consideration of PNGRB and the PNGRB Tariff order is awaited. The implementation of the order shall be done once the PNGRB Order is issued.

17. Disclosure of CSR expenditure for Financial Year 2015-16 is as follows:

(a) Gross amount required to be spent by the company during the year is Rs, 1425.82 Lacs

(b) Amount spent during the year on

18. In the opinion of management, any of the assets other than fixed assets and non-current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

19. The figures appearing in financial statements are rounded off to the nearest rupees in lacs.

Gujarat State Petroleum Corporation Limited.

Membership excludes Chairmanship.

* Excluding Directorship held in Foreign Companies.

$ Shri Atanu Chakraborty, IAS has tendered resignation from the Board of Directors on 11th April, 2016 and Dr. J N Singh, IAS has been appointed as Managing Director of the Company w.e.f. 16th April, 2016.

** Indicates Membership/Chairmanship in the Audit Committee, Stakeholders Relationship Committee (excluding Private Limited Companies, Foreign Companies and Section 8 Companies).

None of the Directors of the Company are related inter-se.

B. Board Meetings held during the year 2015 - 2016:

The Board meets at regular intervals to discuss and decide on various issues including strategy related matters pertaining to the business/ company. The tentative calendar of Board Meetings is circulated to the Directors in advance to facilitate them and to ensure their active participation in the Meetings of the Company. Apart from this, the Meetings of the Board are also convened or the approval of the Board is obtained through circulation of resolution to all the Directors in case some urgent/special situation arises. Such circular resolution is also confirmed in the next Board Meeting.


Mar 31, 2015

1 CORPORATE INFORMATION

Gujarat State Petronet Limited (GSPL) is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. GSPL is a Government Company u/s 2(45) of Companies Act 2013. Its shares are listed on Bombay Stock Exchange and National Stock Exchange in India. Te Company is primarily engaged in transmission of natural gas through pipeline on an open access basis from supply points to demand centres. Te Company also sells electricity generated through Windmills.

2 BASIS OF PREPARATION

(i) The financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 2013 including accounting standards notified there under.

(ii) The preparation of financial statements requires management to make certain judgments, estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Management believes these assumptions are reasonable and prudent.

3 Previous year figures have been re-classified or regrouped wherever necessary.

4 CONTINGENT LIABILITIES AS ON 31ST MARCH, 2015:

a) Claims against Company not acknowledged as debt:

- By land owners seeking enhancement of compensation in respect of RoU acquired by the Company is Rs. 2,124.57 Lacs (Previous Year: Rs. 2,128.53 Lacs) and by other parties are Rs. 39.86 Lacs (Previous Year: Rs. 39.86 Lacs) )

- As regards Central Excise and Service Tax matters, the matters lying before Hon''ble Supreme Court- Rs. 735.04 Lacs (Previous Year: Rs. Nil), Hon''ble Gujarat High Court - Rs. 19,100.28 Lacs (Previous Year: Rs. 19,100.28 Lacs), before CESTAT - Rs.10,111.30 Lacs (Previous Year: Rs. 9,018.14 Lacs), before Commissioner/ Asst. Commissioner - Rs. 1525.45 Lacs (Previous Year: Rs. 2,671.78 Lacs). Further, the company is in process of fling appeal before CESTAT for Rs. 1,665.86 Lacs (Previous Year: Rs. 91.01 Lacs). (Applicable interest & penalty has also been demanded by Department).

- Income Tax assessments up to Assessment Year 2012-13 have been completed and Company had fled various appeals against orders passed by Income Tax Department for various Assessment years. Te tax impact/demand of appeals lying before Hon''ble Gujarat High Court for Assessment Year 2005-06 & 2009-10 is Rs. 19.69 Lacs (Previous Year : Rs. 26.77 Lacs), lying before the Income Ta x Appellate Tribunal (ITAT) for Assessment Year 2008-09 & 2009-10 is Rs. 370.41 Lacs (Previous Year : Rs. 370.41 Lacs), lying before CIT(Appeals) for Assessment Year 2008-09, 2010-11, 2011-12 & 2012-13 is Rs. 767.08 Lacs (Previous Year : Rs. 657.48 Lacs) and matters restored back to Assessing Officer for Assessment Year 2004-05 & 2006-07 is Rs. 38.77 Lacs. (Previous Year : Rs. 38.77 Lacs)

Based on interpretation of the Acts & various judicial pronouncements in relation to similar matters, Company is of the view that these demands are likely to be deleted or may be substantially reduced.

b) Guarantees :

- Outstanding Bank Guarantees / Letter of Credits are Rs. 68,983.64 Lacs (Previous year Rs. 9,813.12 Lacs)

- Corporate Guarantee executed jointly & severally along with associate is Rs. 56,500.00 Lacs (Previous year 50,000.00 Lacs).

c) Other :

Imbalance and overrun charges as per the ''Modalities of maintaining & operation of Escrow Account under the PNGRB (Access Code for Common or Contract Carrier Natural Gas Pipeline) Regulations, 2008''issued by PNGRB on 7th March, 2011, collected for the period prior to 1st April, 2011 amounting to Rs. 226.02 Lacs (net of taxes) has been deposited in Escrow Account under protest. However, the same is not recognised as liability as these guidelines are applicable w.e.f. 1st April, 2011.

5 CAPITAL & OTHER COMMITMENT

Capital Commitment:

Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 25,686.84 Lacs (Previous year Rs. 40,086.24 Lacs).

Other Commitment:

As on 31st March, 2015, the Company has following other commitments:

a) Rs. 1,96,594.99 Lacs (approx.) towards further investments in subsidiaries & associates (Previous year Rs. 2,00,494.99 Lacs)

b) Advance of Rs. 5,000.00 Lacs adjustable against re-gasification services (Previous year Rs. 15,000.00 Lacs)

-27 As per Accounting Standard - 16 "Borrowing Cost" issued by ICAI, the Company has capitalised the borrowing cost amounting to Rs. 2,333.72 Lacs for the current year. (Previous year Rs. 1,879.50 Lacs).

6 The balances of sundry debtors, creditors, loans & advances and deposits are subject to confirmation. Provision for all liabilities is adequate in opinion of the Company.

7 SEGMENT REPORTING

a. Business Segments

The Company has identified and reported business segments taking into account nature of product and services, differing risks and returns and internal business reporting systems. Te Company''s principal business is transportation of Gas through pipeline. Other business segment includes generation of electricity through windmill.

b. Segment Revenue and Expense

Revenue and Expenses have been identified to a segment on the basis of operating activities of the segment. Revenue and Expenses which relate to common activities and are not allocable to segment on reasonable basis have been disclosed as "Unallowable".

c. Segment Assets and Liabilities

Segment Assets include all operating assets in respective segments comprising of net Fixed Assets, Capital Work in Progress, Current Assets, Loans and Advances. Segment Liabilities include Operating Liabilities and Provisions.

d. The Company does not have geographical distribution of revenue hence secondary segmental reporting based on geographical locations of its customers is not applicable to the Company.

8 RELATED PARTY DISCLOSURES

As per the Accounting Standard -18 on "Related Party Disclosures" issued by The Institute of Chartered Accountants of India, list of related parties identified of the company are as follows :

A. Holding Company:

- Gujarat State Petroleum Corporation Limited

B. Subsidiary: :

- GSPL India Gasnet Limited

- GSPL India Transco Limited

C. Associates:

- GSPC Gas Company Limited

- GSPC Distribution Network Limited

- Gujarat State Energy Generation Limited (associate of holding company)

D. Fellow Subsidiary:

- Guj Info Petro Limited

- GSPC Pipavav Power Company Limited

- GSPC LNG Limited

- Gujarat Gas Company Limited

E. Key Managerial Personnel:

- Shri Tapan Ray, IAS, MD (upto 30th September, 2014)

- Shri Atanu Chakraborty, IAS, MD (w.e.f. 6th November, 2014)

9 EMPLOYEE STOCK OPTION PLANS

ESOP 2005 Scheme:

During the Financial Year 2005-06, the company instituted ESOP-2005. The Board of Directors and the Shareholders approved the plan in the meeting held on 13th October, 05 and 18th October, 05 respectively, which provides for the issue of 23,27,940 equity shares to the employees of the company and of Gujarat State Petroleum Corporation Ltd. The Compensation Committee administers ESOP-2005. These ESOPs are granted at an exercise price of Rs.14 per share to be vested equally over the period of four years and to be exercised within a period of five years from the date of vesting.

ESOP 2010 Scheme:

During the Financial Year 2010-11, the company instituted ESOP-2010. The Board of Directors and the Shareholders approved the plan in the meeting held on 23rd August, 2010 and 21st September, 2010 respectively, which provides for the issue of 21,28,925 equity shares to the employees of the company. The Compensation Committee administers ESOP-2010. These ESOPs are granted at an exercise price of Rs. 75 per share to be vested over the period of five years and to be exercised within a period of ten years from the date of Grant.

10. The Company has maintained a separate escrow account as per PNGRB guidelines for modalities of maintaining and operation of escrow account for charges towards system indiscipline in terms of positive or negative imbalance or overruns. In this regard, since financial year 2011-12, amount recovered from customers is deposited in the said bank account and the amount invoiced (net of taxes) is recognized as liability.

11. As at the balance sheet date, Company has reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss has been provided.

12. Amount due for credit to Investor Education and Protection Fund is NIL (Previous year NIL).

13. In the matter of appeal filed by few customers with The Appellate Tribunal for Electricity (APTEL) against the stipulation in the PNGRB Tariff order No. TO/09/2012 dated 11th September, 2012 requiring GSPL to implement the order with retrospective effect from 20th November, 2008, being the date on which Petroleum and Natural Gas Regulatory Board (Determination of Tariff for Natural Gas Pipelines) Regulations, 2008 were notified, APTEL passed judgment on 6th January, 2014 against such retrospective application of tariff. Accordingly, PNGRB has vide Letter Ref: PNGR/M/(C)/43/Tariff GSPL Vol III dated 19th February, 2014 read with PNGRB Order Ref.No: TO/04/2014 dated 11th July, 2014 issued revised Provisional Initial Unit Natural Gas Pipeline tariff Order and zonal apportionment Order thereof for GSPL''s High Pressure Pipeline Network. Te same has been implemented during the year w.e.f. 27th July, 2012 being the authorization date for GSPL''s High Pressure Pipeline Network.

14. Further APTEL in the matter of the appeals filed by GSPL against the various provisions of the order No. TO/09/2012 dated 11th September, 2012 has in judgment dated 25th November, 2014 and 28th November, 2014 allowed the appeals asking PNGRB to reconsider the tariff proposal to be submitted by GSPL based on relevant data and other submissions made by the appellant in this regard. GSPL has submitted the revised tariff proposals for consideration of PNGRB.

15. During the current year, the company has adopted useful lives of fixed assets as per Schedule II of Companies Act, 2013. Accordingly, the carrying value of fixed assets as on 1st April, 2014, net of residual value, has been depreciated over remaining useful lives. Further, an amount of Rs. 2.24 crores representing the carrying value of assets, whose remaining useful life as at 1st April, 2014 as per schedule II has already elapsed, has been charged to the opening balance of retained earnings in accordance with Companies Act, 2013.

16. In compliance of opinion of Expert Advisory Committee (EAC) of ICAI and Accounting Standard 26 - Intangible Assets, during the year, estimated useful life of ROU and ROW has been changed to 99 years and 30 years respectively. As a result, depreciation and amortization expenses increased by Rs. 1,391.99 lacs (out of which Rs. 1,210.36 lacs pertains up to financial year 2013-14) and accordingly, profit for the year reduced by corresponding amount.

17. The figures appearing in financial statements are rounded of to the nearest rupees in lacs.


Mar 31, 2014

1 CORPORATE INFORMATION

Gujarat State Petronet Limited (GSPL) is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. GSPL is a Government Company u/s 617 of Companies Act. Its shares are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited in India. Te Company is primarily engaged in transmission of natural gas through pipeline on an open access basis from supply points to demand centres. The Company also sells electricity generated through Windmills.

2 BASIS OF PREPARATION

(i) The Financial Statements are prepared on accrual basis of accounting under historical cost convention in accordance with Generally Accepted Accounting Principles in India and the relevant provisions of the Companies Act, 1956 including Accounting standards notifed there under.

(ii) The preparation of Financial Statements requires management to make certain judgments, estimates and assumptions that afect the amounts reported in the Financial Statements and notes thereto. Management believes these assumptions are reasonable and prudent.

3 Previous year figures have been re-calssifed or regrouped whereever necessary.

4 CONTINGENT LIABILITIES AS ON 31ST MARCH, 2014:

a) Claims against Company not acknowledged as debt:

- By land owners seeking enhancement of compensation in respect of RoU acquired by the Company is Rs. 2,128.53 Lacs (Previous Year: Rs. 2,430.75 Lacs) and by other parties are Rs. 39.86 Lacs (Previous Year: Rs. 39.86 Lacs)

- As regards Central Excise and Service Tax matters, the matters lying before Honorable Gujarat High Court - Rs. 19,100.28 Lacs (Previous Year: Rs. 9,370.58 Lacs), before CESTAT - Rs. 9,018.14 Lacs (Previous Year: Rs. 9,018.14 Lacs) , before Commissioner/ Asst. Commissioner - Rs. 2,671.78 Lacs (Previous Year: Rs. 1,096.92 Lacs). Further, the Company is in process of fling appeal before CESTAT for Rs. 91.01 Lacs.

- Income Tax assessments up to Assessment Year 2011-12 have been completed and Company had fled various appeals against orders passed by Income Tax Department for various Assessment years. The Tax impact/demand of appeals lying before Honorable Gujarat High Court for Assessment Year 2005-06 & 2009-10 is Rs. 26.77 Lacs (Previous Year : Rs. 5.53 Lacs), lying before the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2008-09 & 2009-10 is Rs. 370.41 Lacs (Previous Year : Rs. 300.71 Lacs), lying before CIT(Appeals) for Assessment Year 2010-11 & 2011-12 is Rs. 657.48 Lacs (Previous Year : Rs. 543.50 Lacs) and matters restored back to Assessing officer for Assessment Year 2004-05 & 2006-07 is Rs. 38.77 Lacs. (Previous Year : Rs. 38.77 Lacs)

Based on interpretation of the Acts & various judicial pronouncements in relation to similar matters, Company is of the view that these demands are likely to be deleted or it may be substantially reduced.

b) Guarantees :

- Outstanding Bank Guarantees / Letter of Credits are Rs. 9,813.12 Lacs (Previous year Rs. 9,024.00 Lacs)

- Corporate Guarantee executed jointly & severally along with an associate is Rs. 50,000.00 Lacs (Previous year Nil).

c) Other :

Imbalance and overrun charges as per the ''Modalities of maintaining & operation of Escrow Account under the PNGRB (Access Code for Common or Contract Carrier Natural Gas Pipeline) Regulations, 2008'' issued by PNGRB on 7th March, 2011, collected for the period prior to 1st April, 2011 amounting to Rs. 226.02 Lacs (net of taxes) has been deposited in Escrow Account under protest. However, the same is not recognised as liability as these guidelines are applicable w.e.f. 1st April, 2011.

5 CAPITAL & OTHER COMMITMENT

Capital Commitment:

Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 40,086.24 Lacs (Previous year Rs. 53,438.64 Lacs).

Other Commitment:

As on 31st March, 2014, the Company has following other commitments:

a) Rs. 2,00,494.99 Lacs (approx) towards further investments in subsidiaries & associates (Previous year Rs. 2,41,589.99 Lacs)

b) Advance of Rs. 15,000.00 Lacs adjustable against re-gasifcation services (Previous year Rs. Nil)

6 As per Accounting Standard - 16 "Borrowing Cost" issued by ICAI, the Company has capitalised the borrowing cost amounting to Rs. 1,879.50 Lacs for the current year. (Previous year Rs. 2,321.97 Lacs).

7 During the year, the Company has changed its Accounting Policy of charging prepaid expenses and prior period expenses/income up to Rs. 50,000/- in each case to relevant heads of account for the year. As a result, prepaid expenses decreased by Rs. 0.97 Lacs and correspondingly resulted in decrease in Profit for the year by Rs. 0.97 Lacs.

8 There are no Whole Time / Executive Director on the Board except Shri Tapan Ray, Managing Director. He is not drawing any remuneration from the Company.

9 The balances of Sundry Debtors, Creditors, Loans & Advances and Deposits are subject to confirmation. Provision for all Liabilities is adequate in opinion of the Company.

10 SEGMENT REPORTING

a. Business Segments

The Company has identified and reported business segments taking into account nature of product and services, difering risks and returns and internal business reporting systems. The Company''s principal business is transportation of Gas through pipeline. Other business segment includes generation of electricity through windmill.

b. Segment Revenue and Expense

Revenue and Expenses have been identified to a segment on the basis of operating activities of the segment. Revenue and Expenses which relate to common activities and are not allocable to segment on reasonable basis have been disclosed as "Unallocable".

c. Segment Assets and Liabilities

Segment Assets include all operating assets in respective segments comprising of net Fixed Assets, Capital Work in Progress, Current Assets, Loans and Advances. Segment Liabilities include Operating Liabilities and Provisions.

d. The Company does not have geographical distribution of revenue hence secondary segmental reporting based on geographical locations of its customers is not applicable to the Company.

11 RELATED PARTY DISCLOSURES

As per the Accounting Standard -18 on "Related Party Disclosures" issued by The Institute of Chartered Accountants of India, list of related parties identified of the company are as follows :

A. Holding Company:

- Gujarat State Petroleum Corporation Limited

B. Subsidiary: :

- GSPL India Gasnet Limited

- GSPL India Transco Limited

C. Associates:

- GSPC Gas Company Limited

- GSPC Distribution Networks Limited

- Sabarmati Gas Limited (associate of Holding Company)

- Gujarat State Energy Generation Limited (associate of Holding Company)

D. Fellow Subsidiary:

- Guj Info Petro Limited

- GSPC Pipavav Power Company Limited

- GSPC LNG Limited

- Gujarat Gas Company Limited

E. Key Managerial Personnel:

- Shri Tapan Ray, IAS, MD

12 DISCLOSURE FOR GRATUITY & LEAVE SALARY PROVISION AS PER ACCOUNTING STANDARD-15

Company has participated in Group Gratuity Scheme of Life Insurance Corporation of India. The liability in respect of gratuity benefits & leave salary being Defined benefit schemes, payable in future, are determined by actuarial valuation as on Balance Sheet date.

In arriving at the valuation for gratuity & leave salary following assumptions were used:

13 EMPLOYEE STOCK OPTION PLANS

ESOP 2005 Scheme:

During the Financial Year 2005-06, the Company instituted ESOP-2005. The Board of Directors and the Shareholders approved the Plan in the Meeting held on 13th October, 2005 and 18th October, 2005 respectively, which provides for the issue of 23,27,940 Equity Shares to the employees of the Company and of Gujarat State Petroleum Corporation Ltd. The Compensation Committee administers ESOP-2005. These ESOPs are granted at an Exercise Price of Rs. 14 per Share to be vested equally over the period of four years and to be exercised within a period of five years from the date of vesting.

ESOP 2010 Scheme:

During the Financial Year 2010-11, the Company instituted ESOP-2010. The Board of Directors and the Shareholders approved the Plan in the Meeting held on 23rd August, 2010 and 21st September, 2010 respectively, which provides for the issue of 21,28,925 Equity shares to the employees of the Company. The Compensation Committee administers ESOP-2010. These ESOPs are granted at an exercise price of Rs. 75 per Share to be vested over the period of five years and to be exercised within a period of ten years from the date of Grant.

14 The Company has maintained a separate escrow account as per PNGRB guidelines for modalities of maintaining and operation of escrow account for charges towards system indiscipline in terms of positive or negative imbalance or overruns. In this regard, since Financial Year 2011-12, amount recovered from customers is deposited in the said bank account and the amount invoiced (net of taxes) is recognized as liability.

15 As at the Balance Sheet date, Company has reviewed the carrying amounts of its assets and found that there is no indication that those assets have sufered any impairment loss. Hence, no such impairment loss has been provided.

16 Amount due for credit to Investor Education and Protection Fund is NIL (Previous year NIL).

17 The figures appearing in Financial Statements are rounded of to the nearest Rs. in Lacs.


Mar 31, 2013

1 CORPORATE INFORMATION

Gujarat State Petronet Limited (GSPL) is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. GSPL is a Government Company u/s 617 of Companies Act. Its Shares are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited in India. The Company is primarily engaged in transmission of natural gas through pipeline on an open access basis from supply points to demand centres. The Company also sells electricity generated through Windmills.

2 BASIS OF PREPARATION

(i) The Financial Statements are prepared on accrual basis of accounting under historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) in India and the relevant provisions of the Companies Act, 1956 including Accounting Standards notified there under.

(ii) The preparation of Financial Statements requires management to make certain judgments, estimates and assumptions that affect the amounts reported in the Financial Statements and notes thereto. Management believes these assumptions are reasonable and prudent. However, actual results could differ from estimates.

3 Previous Year figures have been reclassified or regrouped wherever necessary.

4 CONTINGENT LIABILITIES

a) Bank Guarantee/Letter of Credit issued and outstanding as on 31st March 2013 is for an amount of Rs. 9,024.00 Lacs (Previous Year Rs. 6,870.00 Lacs)

b) As on 31st March, 2013, the ascertainable claims against the Company:

I. By land owners seeking enhancement of compensation in respect of RoU acquired by the Company is Rs. 2,430.75 Lacs (Previous Year: Rs. 2,544.84 Lacs) and

II. By other parties are Rs. 39.86 Lacs (Previous Year: Rs. 39.86 Lacs)

c) As regards Central Excise & Service Tax related matters, Department vide order for the period 2002-03 to 2004-05 has demanded Service Tax of Rs. 17.90 Lacs (Previous Year: Rs. 17.90 Lacs) along with interest and penalty, against which the Company filed an appeal with CCE (Appeals) and got favourable order. However, the Department has preferred an appeal against order of CCE (Appeals) with Custom Excise & Service Tax Appellate Tribunal (CESTAT), pending disposal.

Department vide various orders amounting to Rs. 28,835.56 Lacs (Previous Year: Rs. 18,699.49 Lacs) for the period 2005-06 to 2011- 12 has raised demand towards CENVAT credit on input services and capital goods availed by the Company plus applicable Interest and Penalty. Being aggrieved by the said orders, the Company has filed appeals before CESTAT, of which appeals of Rs. 4,980.84 Lacs as regards denial of CENVAT credit on input services are pending disposal.

As regards appeals filed against the orders confirming demand of Rs. 19,835.32 Lacs along with interest and penalty, CESTAT set aside demand for extended period of limitation and penalty however, confirming denial of CENVAT credit on capital goods. Being aggrieved by negative portion of order of CESTAT, the Company has filed Tax Appeals before Honourable Gujarat High Court which is pending for disposal.

As regards order denying CENVAT credit on capital goods for Rs. 4,019.40 Lacs, Company is in process of filling appeals before CESTAT.

Further, various Show Cause Notices amounting to Rs. 1,096.92 Lacs (Previous Year: 10,227.07 Lacs) plus Interest and Penalty have been issued by the department on various service tax related matters, for which suitable replies have been submitted by the Company, pending final disposal.

d) Income Tax assessments up to Assessment Year 2010-11 have been completed. Company had filed appeals against the various orders passed by assessing officers, whereby appeals lying before Honourable Gujarat High Court for Assessment Year 2005-06 — Rs. 5.53 Lacs, before the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2008-09 to Assessment Year 2009-10 — Rs. 300.71 Lacs, before CIT(Appeals) for Assessment Year 2010-11 — Rs. 543.50 Lacs & matters restored back to Assessing Officer for Assessment Year 2004-05 & 2006-07 - Rs. 38.77 Lacs

Based on interpretation of the Acts & various judicial pronouncements in relation to similar matters, Company is of the view that these demands are likely to be deleted or it may be substantially reduced.

e) Imbalance and overrun charges as per the ''Modalities of maintaining & operation of Escrow Account under the PNGRB (Access Code for Common or Contract Carrier Natural Gas Pipeline) Regulations, 2008'' issued by PNGRB on 7th March 2011, collected for the period prior to 1st April 2011 amounting to Rs. 212.73 Lacs (Net of Taxes) has been deposited in Escrow Account under protest. However, the same is not recognised as liability as these guidelines are applicable w.e.f. 1st April 2011.

5 CAPITAL & OTHER COMMITMENT Capital Commitment:

Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 53,438.64 Lacs (Previous Year Rs. 58,301.58 Lacs).

Other Commitment:

As on 31st March 2013, the Company has commitment of around Rs. 2,41,589.99 Lacs towards further investments in Subsidiaries and Associates ( Previous Year Rs. 2,09,589.98 Lacs )

6 As per AS-16 "Borrowing Cost" issued by ICAI, the Company has capitalised the borrowing cost amounting to Rs. 2,321.97 Lacs (Previous Year Rs. 2,646.70 Lacs).

7 MANAGERIAL REMUNERATION

There are no Whole Time / Executive Director on the Board except Shri Tapan Ray, Managing Director. He is not drawing any remuneration from the Company.

8 The balances of Sundry Debtors, Creditors, Loans and Advances and Deposits are subject to confirmation by the parties and provision for all liabilities is adequate in opinion of the Company.

9 SEGMENT REPORTING

a. Business Segments : The Company has identified and reported business segments taking into account nature of product and services, differing risks and returns and internal business reporting systems. The Company''s principal business is transportation of Gas through Pipeline. Other business segment includes generation of electricity through windmill.

b. Segment Revenue and Expense : Revenue and Expenses have been identified to a segment on the basis of operating activities of the segment. Revenue and Expenses which relate to common activities and are not allocable to segment on reasonable basis have been disclosed as "Unallocable".

c. Segment Assets and Liabilities : Segment Assets include all operating Assets in respective segments comprising of net Fixed Assets, Capital Work in Progress, Current Assets, Loans and Advances. Segment Liabilities include Operating Liabilities and Provisions

d. The Company does not have geographical distribution of revenue hence secondary segmental reporting based on geographical locations of its customers is not applicable to the Company.

10 DISCLOSURE FOR GRATUITY & LEAVE SALARY PROVISION AS PER AS-15

Company has participated in Group Gratuity Scheme of Life Insurance Corporation of India. The liability in respect of gratuity benefits & leave salary being defined benefit schemes, payable in future, are determined by actuarial valuation as on Balance Sheet date.

11. EMPLOYEE STOCK OPTION PLANS ESOP 2005 Scheme:

During the Financial Year 2005-06, the company instituted ESOP-2005. The Board of Directors and the Shareholders approved the Plan in the Meeting held on 13th October, 2005 and 18th October, 2005 respectively, which provides for the issue of 23,27,940 Equity Shares to the Employees of the Company and of Gujarat State Petroleum Corporation Ltd. The Compensation Committee administers ESOP-2005. These ESOPs are granted at an Exercise Price of Rs. 14 per Share to be vested equally over the period of four years and to be exercised within a period of five years from the date of vesting.

ESOP 2010 Scheme:

During the Financial Year 2010-11, the Company instituted ESOP-2010. The Board of Directors and the Shareholders approved the Plan in the Meeting held on 23rd August, 2010 and 21st September, 2010 respectively, pursuant to which 21,28,925 Options have been granted to the Employees of the Company. The Compensation Committee administers ESOP-2010. These ESOPs are granted at an exercise price of Rs. 75 per Share to be vested over the period of five years and to be exercised within a period of ten years from the date of Grant.

12. The Company has maintained a separate escrow account as per PNGRB Guidelines for modalities of maintaining and operation of escrow account for charges towards system indiscipline in terms of positive or negative imbalance or overruns. In this regard, since Financial Year 2011-12, amount recovered from customers is deposited in the said account and the amount invoiced (Net of Taxes) is recognized as liability.

13. As at the balance sheet date, Company has reviewed the carrying amounts of its Assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss has been provided.

14. The ''Petroleum & Natural Gas Regulatory Board'' has granted authorization to GSPL''s Pipeline Network under Section 18(1) of the ''Petroleum & Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008 during the year. The Authorization Letter for GSPL''s High Pressure Natural gas Pipeline Network totalling to 2239 Kms was issued on 27th July, 2012 and Authorization Letter for GSPL''s Low Pressure Natural gas Pipeline Network totalling to 57.6 Kms was issued on 19th March, 2013.

15. PNGRB has vide Order No. TO/09/2012 dated 11th September, 2012 determined the "Provisional" Initial Unit Natural Gas Pipeline Tariff (IUNGPT) for GSPL''s High Pressure Natural Gas Pipeline Network. Further, PNGRB has vide Order No. TO/02/2013 dated 19th February, 2013 determined the zonal tariff apportionment of the "Provisional" Initial Unit Natural Gas Pipeline Tariff (IUNGPT) for GSPL''s High Pressure Natural Gas Pipeline Network.

GSPL has filed appeal with The Appellate Tribunal for Electricity (APTEL) against the various provisions of the Order No. TO/09/2012 dated 11th September, 2012. Further few customers have also filed appeal with The Appellate Tribunal for Electricity (APTEL) against the stipulation in the order requiring GSPL to implement the order with retrospective effect from 20th November, 2008, being the date on which Petroleum and Natural Gas Regulatory Board (Determination of Tariff for Natural Gas Pipelines) Regulations, 2008 were notified. Accordingly APTEL has passed an order dated 25th February, 2013, staying the retrospective application of the Order No. TO/09/2012 dated 11th September, 2012. Thus in accordance with the APTEL Order, GSPL has implemented the Order No. TO/09/2012 dated 11th September, 2012 read with Order No. TO/02/2013 dated 19th February, 2013 from 27th July, 2012.

Further GSPL in compliance with APTEL Order dated 22nd March, 2013 has started bearing the expense on account of System Use Gas on account of transmission loss w.e.f. 16th February, 2013 against the earlier system of customers bearing the same based on periodical reconciliation of such loss with customers.

16. Amount due for credit to Investor Education and Protection Fund towards unclaimed interest warrant — Fixed Deposit from Public & Unclaimed Dividend is NIL (Previous year NIL).

17. The figures appearing in Financial Statements are rounded off to the nearest Rupees in Lacs.


Mar 31, 2012

1 CORPORATE INFORMATION

Gujarat State Petronet Limited (GSPL) is a Public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. GSPL is a Government Company u/s 617 of Companies Act, 1956. It's Shares are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited in India. The Company is primarily engaged in transportation of natural gas through pipeline on open access basis from supply points to demand centres. The Company also sells electricity generated through Windmills.

2 BASIS OF PREPARATION

The Financial Statements have been prepared under historical cost convention on accrual and going concern basis of accounting. The Financial Statements have been prepared and presented to comply in all material aspects with the Generally Accepted Accounting Principles (Indian GAAP) in India and the Accounting Standards issued by the Institute of Chartered Accountants of India, as notified by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and the relevant provisions of the Companies Act, 1956. The Company has consistently applied the Accounting Principles and Policies and these Accounting Polices not referred to otherwise, are in conformity with Generally Accepted Accounting Principles (Indian GAAP) in India.

3 Till year ended 31st March, 2011, the Company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of Financial Statements. During the year ended 31st March, 2012 the revised Schedule VI notified under the Companies Act, 1956, has become applicable to Company. Accordingly, corresponding figures of the previous year have been regrouped and reclassified wherever considered necessary to compare to this year's figures.

4 CONTINGENT LIABILITY

Bank Guarantee/Letter of Credit issued and outstanding as on 31st March, 2012 is for an amount of Rs. 6,870.00 Lacs (Previous Year: Rs. 5,450.00 Lacs)

As on 31st March, 2012, the Ascertainable Claims against the Company: 1) by certain land owners seeking enhancement of Compensation in respect of RoU acquired by the Company is Rs. 2,544.84 Lacs (Corresponding Previous Period: Rs. 2,591.93 Lacs) and 2) by other parties are Rs. 39.86 Lacs (Corresponding Previous Period: NIL)

As regards Excise & Service Tax Related matters, Dept. vide various Orders for the period 2005-06 to 2008-09 has demanded basic duty of Rs. 18,717.39 Lacs (Previous Year: 18717.39 Lacs) plus applicable interest & penalty, aggrieved by which Company had fled Appeals before CESTAT, pending final disposal. Also, various show cause notices for the period 2009-10 & 2010-11 amounting to Rs. 10,227.07 Lacs (Previous Year: 6,900.54 Lacs) plus applicable interest & penalty has also been issued by Department for which suitable replies have been filed by Company, pending final disposal.

Out of Rs. 18,717.39 Lacs lying at CESTAT stage as mentioned above, Rs. 10,859.94 Lacs related to 1st year of litigation (period covered 2005-06 to 2007-08), CESTAT has granted "Unconditional Stay of Demand" considering strong merits of the case, pending final disposal.

Income Tax Assessments up to Assessment Year 2009-10 have been completed. Company had fled Appeals against the various Orders passed by Assessing Officers, whereby Appeals lying before Gujarat High Court for Assessment Year 2005-06 – Rs. 5.53 Lacs, before the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2004-05 to Assessment Year 2008-09 – Rs. 409.36 Lacs, before CIT (Appeals) for Assessment Year 2009-10 Rs. 97.72 Lacs & matters restored back to Assessing Officer for Assessment Year 2004-05 & Assessment Year 2006-07 – Rs. 50.89 Lacs.

Imbalance and Overrun charges as per the ‘Modalities of maintaining & operation of Escrow Account under the PNGRB (Access Code for Common or Contract Carrier Natural Gas Pipelines) Regulations, 2008' issued by PNGRB on 7th March, 2011, collected for the period prior to 1st April, 2011 amounting to Rs. 212.73 Lacs (net of taxes) has been neither deposited in Escrow Account nor recognised as liability as these guidlines are applicable w.e.f. 1st April, 2011.

Based on interpretation of the Acts & various judicial pronouncements in relation to similar matters, Company is of the view that these demands are likely to be deleted or it may be substantially reduced.

5 CAPITAL & OTHER COMMITMENT

Capital Commitment:

Estimated amount of contracts remaining to be executed on capital account and not provided for is approximately Rs. 58,301.58 Lacs (Previous Year: Rs. 27,160.36 Lacs).

Other Commitment:

During the year, Company has formed two SPVs (Special Purpose Vehicles) namely GSPL India Gasnet Limited for implementation of Mehsana-Bhatinda and Bhatinda-Jammu-Srinagar Pipeline Projects and GSPL India Transco Limited for implementation of Mallavaram-Bhopal-Bhilwara-Vijaipur Pipeline Project. For this purpose, Company is required to contribute Rs. 209,589.98 Lacs as on 31st March, 2012 (Previous Year: NIL) as Equity Share Capital over a period of three years.

6 As per AS-16 "Borrowing Cost" issued by ICAI, the Company has capitalised the borrowing cost amounting to Rs. 2,646.70 Lacs (Previous Year: Rs. 3,729.97 Lacs).

7 MANAGERIAL REMUNERATION

There are no Whole Time / Executive Director on the Board except Shri Tapan Ray, Managing Director. He is not drawing any remuneration from the Company.

8 In the opinion of Management, any of the Assets other than Fixed Assets and Non-Current Investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

9 An Investment of Rs. 57.50 Lacs was made by the Company in 2006-07 in Equity Shares of Krishna Godavari Gas Network Ltd. (KGGNL), which was set-up to implement CGD Network in the State of Andhra Pradesh. The Board of Directors of KGGNL in its Meeting held on 27th June, 2011 have decided to go for Voluntary Winding-Up of KGGNL. Accordingly, as required by Accounting Standard 13 an estimated provision of 45% reduction in value of Investment amounting to Rs. 25.88 Lacs is made in P&L Account in Current Year.

10 The balances of Sundry Debtors, Creditors, Loans and Advances and Deposits are subject to the confirmation by the parties and provision for all Liabilities is adequate in opinion of the Company.

11 EMPLOYEE STOCK OPTION PLANS

ESOP Scheme 2005:

During the Financial Year 2005-06, the Company instituted ESOP-2005. The Board of Directors and the Shareholders approved the Plan in the Meetings held on 13th October, 2005 and 18th October, 05 respectively, which provides for the issue of 23,27,940 Equity Shares to the employees of the Company and of Gujarat State Petroleum Corporation Ltd. The Compensation Committee administers ESOP-2005. These ESOPs are granted at an exercise price of Rs. 14 per Share to be vested over the period of four years and to be exercised within a period of five years from the date of vesting.

ESOP Scheme 2010:

During the Financial Year 2010-11, the Company instituted ESOP-2010. The Board of Directors and the Shareholders approved the Plan in the Meetings held on 23rd August, 2010 and 21st September, 2010 respectively, pursuant to which 21,28,925 Options have been granted to the Employees of the Company. The Compensation Committee administers ESOP-2010. These ESOPs are granted at an Exercise Price of Rs. 75 per Share to be vested over the period of five years and to be exercised within a period of ten years from the date of grant.

12 SEGMENT REPORTING

a. Business Segments

The Company has identified and reported business segments taking into account nature of product and services, differing risks and returns and internal business reporting systems. The Company's principal business is Transportation of Gas through pipeline. Other business segment includes Generation of Electricity through Windmill.

b. Segment Revenue and Expense

Revenue and Expenses have been identified to a segment on the basis of operating activities of the segment. Revenue and Expenses which relate to common activities and are not allocable to segment on reasonable basis have been disclosed as "Unallocable".

c. Segment Assets and Liabilities

Segment assets include all Operating Assets in respective segments comprising of Net Fixed Assets, Capital Work in Progress, Other non-current Assets, Loans and Advances and Other Current Assets. Segment Liabilities include Operating Liabilities and Provisions.

d. The Company does not have geographical distribution of revenue hence secondary segmental reporting based on geographical locations of its customers is not applicable to the Company.

13 The Company has maintained a separate Escrow Account as per PNGRB Guidelines for modalities of maintaining and operation of Escrow Account for charges towards system indiscipline in terms of positive or negative imbalance or overruns. In this regard, during the year 2011-12, amount recovered from customers is deposited in the said account. Further the amount invoiced (Net of Taxes) during the year 2011-12 is recognised as Liability.

14 During the Year, the Company has changed it's Accounting Policy for Amortising Preliminary Expenditure. Accordingly, the unamortised amount of Preliminary Expenditure to the tune ofRs. 14.74 Lacs has been debited to P&L Account. Due to this change in Accounting Policy, the Profit and Other Asset (Unamortised Preliminary Expenditure) has been reduced by Rs. 14.74 Lacs.

15 As at the Balance Sheet date Company has reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss has been provided.

16 GSPL has applied to the ‘Petroleum & Natural Gas Regulatory Board' in December 2008 for authorization of its Pipeline Network under section 18(1) of the ‘Petroleum & Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008. The Board is currently processing the application of the Company.

17 Amount due for credit to Investor Education and Protection Fund towards unclaimed Interest Warrant – Fixed Deposit from Public & Unclaimed Dividend is NIL (Previous Year: NIL).

18 The figures appearing in Financial Statements are rounded off to the nearest Rs. in Lacs.


Mar 31, 2011

1. Corresponding figures of the previous year have been regrouped and reclassified wherever considered necessary to compare to this year's figures.

2. Contingent Liability:

a. Bank Guarantee/Letter of Credit issued and outstanding as on 31st March, 2011 is for an amount of Rs. 54,50,00,000 (Previous year: Rs. 12,50,00,000)

b. As at 31st March, 2011, ascertainable Claims against the Company by certain land owners seeking enhancement of compensation in respect of RoU acquired by the Company is Rs. 25.91 crores (Previous year: Rs. 1.69 crores)

c. Excise Department had issued a demand of Rs. 17.90 lacs on Company towards service tax plus interest & penalty dues as "Recipient of Services of Consulting Engineer from Non-Resident" by the Company during the period F.Y. 2002-03, 2003- 2004 & 2004-2005. Company fled an appeal against the order with Commissioner of Central Excise (Appeals) & got the order in favour. However, Department has fled an appeal against the order of CCE (Appeals) before CESTAT.

d. Excise Department during it's audit in 2008 had passed three orders demanding Rs. 142.95 crores, interest as applicable & penalty equivalent to basic demand, in relation to periods from 2005-2006 to 2007-2008. Company has fled appeal against the same before the CESTAT. Out of the above, one of the matter involving an amount of Rs. 34.35 crores as basic demand has been decided in Company's favour by CESTAT. For other two matters involving basic demand Rs. 108.60 crores, Company has been granted unconditional stay of demand, based on strong merits of the case, pending final disposal.

e. Department has continued adjudicating the issue mentioned in point (d) above, which were pending before CESTAT for earlier years, for F.Y. 2008-2009 and 2009-2010 (being subsequent periods) & passed corresponding orders demanding Rs. 78.40 Crores, interest as applicable & penalty equivalent to basic demand for F.Y. 2008-2009 and issued Show Cause Notices for Rs. 69 crores for F.Y. 2009-2010,. Against, order of Department for F.Y. 2008-2009, Company has fled an appeal before the CESTAT, pending final disposal.

f. Income Ta x assessments up to A.Y. 2008-2009 have been completed. Company had fled appeals against the various orders passed by assessing Officers, whereby appeals lying before Gujarat High Court for A.Y. 2005-2006 - Rs. 0.151 crores, before the Income Tax Appellate Tribunal (ITAT) for A.Y. 2004-2005 to A.Y. 2009-2010 - Rs. 25.419 crores & before Commissioner of Income Tax (Appeals) for A.Y. 2008-2009 - Rs.13.54 crores.

g. Based on interpretation of the Acts & various judicial pronouncements in relation to similar matters, Company is of the view that these demands are likely to be deleted or it may be substantially reduced.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for is approximately Rs. 271.60 crores (Previous year: Rs. 687.85 crores).

4. As per AS-16 "Borrowing Cost" issued by ICAI, the Company has capitalised the borrowing cost amounting to Rs. 37.29 crores during the year. (Previous year: Rs.16.87 crores).

5. The Company has undertaken windmill project of 52.50 MW at three sites Maliya Miyana (Dist: Rajkot), Gorsar (Dist: Porbandar) and Adodar (Dist: Porbandar) in the State of Gujarat. Company has commissioned the balance capacity of 46.50 MW during the financial year.

6. During the year, Company has transferred Atul Spurline, Dhuva Spurline and Thangadh Spurline to 'GSPC Gas Company Limited', a company promoted by 'Gujarat State Petroleum Corporation Limited' to undertake city gas distribution activity at Book Value and the consideration would be discharged by way of allotment of fully paid up Equity Shares in 'GSPC Gas Company Limited'.

7. During the year, the Company, has changed it's accounting policy for treatment of "Land Compensation relating to RoU" & non- refundable "RoW Payments" from part of Plant & Machinery to "Intangible Asset" for better presentation. Company will not amortize the said asset but will test it for impairment on periodic basis since the useful life is not accurately ascertainable. Because of the said change in policy, the Company has written back depreciation amounting to Rs. 23.38 crores provided up to F.Y. 2009-2010.

8. The company has changed the depreciation rate on natural gas pipelines from 8.33% per annum to 3.17% per annum on SLM basis w.e.f. 1st April, 2010 in terms of approval of Ministry of Corporate Affairs vide its letter no. 45/2/2011-CL-III dated 13th May, 2011. Due to change in depreciation rate, there is a reduction in depreciation charged to Profit & Loss Account amounting to Rs. 142.49 crores with consequent increase in PBT.

9. During the year, there has been no further development with regard to the 'Other Claims Recoverable' in Schedule 'K'.

10. The balances of sundry debtors, creditors, loans and advances and deposits are subject to the conformation by the parties and provision for all liabilities is adequate in opinion of the Company.

11. SEGMENT REPORTING

a. Business Segments:

The Company has identified and reported business segments taking into account nature of product and services, differing risks and returns and internal business reporting systems. The Company's principal business is transportation of Gas through pipeline. Other business segment includes generation of electricity through windmill.

b. Segment Revenue and expense:

Revenue and Expenses have been identified to a segment on the basis of operating activities of the segment. Revenue and Expenses which relate to common activities and are not allocable to segment on reasonable basis have been disclosed as "Unallocable".

c. Segment Assets and liabilities:

Segment Assets include all operating assets in respective segments comprising of Net Fixed Assets, Capital Work in Progress, Current Assets, Loans and Advances. Segment Liabilities include Operating Liabilities and Provisions.

d. The Company does not have geographical distribution of revenue hence secondary segmental reporting based on geographical locations of its customers is not applicable to the Company.

12. Employee Stock Option Plans

ESOP - 2005:

During the Financial Year 2005-2006, the Company instituted ESOP - 2005. The Board of Directors and the Shareholders approved the plan in the meeting held on 13th October, 2005 and 18th October, 2005 respectively, which provides for the issue of 23,27,940 Equity Shares to the employees of the Company and of Gujarat State Petroleum Corporation Ltd. The Compensation Committee administers ESOP - 2005.

ESOP - 2010:

During the Financial Year 2010-2011, the Company instituted ESOP - 2010. The Board of Directors and the Shareholders approved the plan in their meetings held on 23rd August, 2010 and 21st September, 2010 respectively, which provides for the issue of 62,40,000 Equity Shares to the employees of the Company and Gujarat State Petroleum Corporation Limited at future dates. The Compensation Committee administers the ESOP-2010. The Compensation Committee has granted 21,28,925 Options to the eligible employees under ESOP - 2010.

Accounting for ESOP:

In accordance with SEBI (Employees Stock Option Plan and Employees Share Purchase Plan) Guidelines, 1999, the difference between market price as on the date of grant of Option and the exercise price of total no. of Options granted is recognized as an asset called 'Deferred ESOP Compensation' and as a liability called 'ESOP Outstanding Account'. The asset called 'Deferred ESOP Compensation' is amortized over the vesting period on straight line basis and considered as a part of 'Employee Cost' in Profit & Loss Account, whereas the liability called 'ESOP Outstanding Account' is derecognized at the time of exercise of Shares by the employees.

13. Company has exercised its Call Option on 30th March, 2011 to redeem the outstanding bonds and accordingly liability in regards to bond is discharged in full.

14. As at the Balance Sheet date Company has reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence no such impairment loss has been provided.

15. GSPL has applied to the 'Petroleum & Natural Gas Regulatory Board' in December 2008 for authorization of its Pipeline Network under section 18(1) of the 'Petroleum & Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008. The Board is currently processing the application of the Company.

16. Amount due for credit to Investor Education and Protection Fund towards Unclaimed Interest Warrant - Fixed Deposit from Public & Unclaimed Dividend is NIL (Previous year: NIL).


Mar 31, 2010

1. Corresponding figures of the previous year have been regrouped and reclassified wherever considered necessary to compare to this years figures.

2. Contingent Liability

a. Bank Guarantee/Letter of Credit issued and outstanding to the extent of Rs. 12,50,00,000 (Previous year Rs. 4,00,00,000)

b. Ascertainable Claims against the company by certain land owners seeking enhancement of compensation in respect of RoU acquired by the company is Rs. 168,33,738 /- (Previous year Rs. 99,33,591/-)

c. Excise Department had issued a demand on Company towards service tax dues as "Recipient of Services of Consulting Engineer from Non-Resident" by the company during the period FY 2002-03, 2003-04 & 2004-05. Company filed an appeal against the order with Commissioner of Central Excise (Appeals) & got the order in favour. However, department has filed an appeal against the order of CCE (Appeals) before CESTAT.

The amount under adjudication is as under:

i. Service tax (Including Education Cess) of Rs. 17,90,459/-

ii. Interest under section 75 of the Finance Act

iii. Penalty of Rs. 100/- per day till failure to pay such service tax under section 76 of the Finance Act

iv. Penalty of Rs. 1000/- under section 77 of the Service Tax Rules, 1994,

v. Further Penalty of Rs. 17,90,459/- under section 78 of the Finance Act 1994

d. During FY 2008-09 Audit was conducted by Central Excise & Service Tax Department & three different orders were issued against the company. Details of the same have been summarized as below:

Particulars OIO NO. 33/ OIO NO. 35/ OIO NO. 34/ Remarks

COMMR/2009 COMMR/2009 COMMR/2009

Issue Involved Non- Non- Taxing the Allowability Allowability services Company has of "CENVAT of "Service of GSPL filed the Tax under the appeal Credit on credit on category befor Capital input "Clearing CESTAT Goods" used services" & Forwarding against in used in the relation to relation to Agency" for impugned the Order, providing of providing of period pending 01.04.03 disposal output output to 15.06.05 services services (For the (For the Period Period 1.7.2005 to 1.7.2005 to

31.3.2008) 31.3.2008)

Service Tax Company has also including 44.90 crores 63.70 crores 34.35crores been granted E. Cess Un condi tional Interest Interest under section 75 of the Finance Act stay of demand Penalty u/s 76 Rs. 200 per day or 2% per month whichever is higher, subject by CESTAT to maximum of basic demand amount against such orders

Penalty u/s 78 44.90 crores 63.70 crores 34.35 crores

e. Company has also received 2 orders from Central Excise & Service Tax department for matters covered under above referred OIO 33/COMMR/2009 & 35/COMMR/2009 for subsequent period of FY 2008-09 amounting to Rs. 44.80 crores & Rs. 33.60 crores respectively, interest as applicable & penalty equivalent to the basic demand. Company is in the process of filing an appeal before CESTAT against the impugned orders.

f. Company has received order from CIT (Appeals) for A.Y. 2004-05, regarding appeal made by company against various dis- allowances made by AO. Order was partially un-favoured to the company for which company has filed appeal before ITAT, Pending disposal (Amount involved Rs. 9.12 lacs). Department has also filed appeal before ITAT for matters decided against them by CIT(Appeals) (Amount Involved Rs. 30.89 lacs)

g. Company has received order from Income Tax appellate Tribunal (ITAT) for A.Y. 2005-06, disallowing companys claim u/s 35D of Rs. 15.12 lacs, for which company has filed appeal before High Court pending disposal.

h. For A.Y. 2006-07, AO has made various disallowances aggregating to Rs. 9.5 crores, company had filed appeal against the same before CIT (Appeals) & got the relief to the extent of Rs. 6.75 crores. For the balance disallowance, company has filed appeal before ITAT, pending disposal. Department has also filed appeal before ITAT for matters decided against them by CIT (Appeals), pending disposal.

i. Company has received order from CIT (Appeals) for A.Y. 2007-08, regarding appeal made by company against various dis- allowances made by AO. Order was partially un-favoured to the company to the extent of Rs.4.31 crores for which company has filed an appeal before ITAT, pending disposal.

j. Income tax department has passed the orders of Re-assessment u/s 147 for A.Y. 2004-05 & A.Y. 2005-06, based on opinion framed by AO during A.Y. 2006-07 for disallowance of depreciation claim on cost added in block of "Plant & Machinery" for "Compensation for acquiring Right of User in Land", "Right of Way" payments & "Crop Compensation". The dis- allowance on account of the same was Rs. 3.46 crores & Rs. 7.50 crores for A.Y. 2004-05 & A.Y. 2005-06 respectively. Being aggrieved by such order, company has filed an appeal against the same before CIT( Appeals), pending disposal.

k. Company has filed an appeal before CIT(A) against the order passed u/s 201 relating to A.Y. 2009-10, pending disposal. The amount involved is Rs. 1.32 lacs & interest as applicable.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 6,87,85,75,899/- (Previous year 6,33,80,95,036/-).

4. The amount of Capital Work in Progress (CWIP) mainly includes expenses incurred Darod-Jafrabad Pipeline and other interconnections / spur lines and Windmill project, which are under execution.

5. As per AS-16 "Borrowing Cost" issued by ICAI, the company has capitalised the borrowing cost amounting to Rs.16,87,04,843/ - (Previous year Rs. 21,31,66,629).

The cost of pipeline system is arrived at considering purchase value, cost incurred for development of pipeline system, commissioning & testing charge, interest cost, Civil Works and expenses directly attributable for putting the pipeline to use.

6. During the year, Company has undertaken windmill project of 52.5 MW, out of which windmill of 6 MW has been successfully commissioned in Maliya region of Rajkot District of Gujarat and the balance are expected to be on stream during the financial year 2010-11.

7. The company had proposed transfer of Atul Spurline, Palej Spurline, Dhuva Spurline and Thangadh Spurline to ‘GSPC Gas Company Limited, a company promoted by ‘Gujarat State Petroleum Corporation Limited to undertake city gas distribution activity during the year 2009-10. The assets would be transferred at Book Value and the consideration would be discharged by way of cash or allotment of equity shares in ‘GSPC Gas Company Limited. The matter is currently under process and is expected to be completed in financial year 2010-11.

8. The company acquires RoU / RoW (Right of Use / Right of Way) before the actual laying of the pipelines. RoU enables the company to obtain perpetual right to use the land along the pipeline route for specified purpose. The expenses involved in RoU / RoW include Consultancy fee for route survey, reconnaissance survey, Non-refundable deposits paid to various Statutory Authorities, Compensation for Crops etc. falling in the way of pipeline route etc.

9. The Company has incurred expenditure in foreign currency for Capital Goods Rs. NIL & Professional Services Rs. 1,05,694 (Previous year being Rs. NIL & Rs.36,83,573), Spare parts Rs. 1,40,22,624 (Previous year Rs. 61,16,525) Training Expenses Rs. 1,07,977 (Previous year Rs.13,10,013), and Others Rs. 2,09,794 (Previous year Rs. 4,10,507). Earning of the company in foreign currency is NIL (Previous year Rs.NIL)

10. During the year there has been no further development with regard to the ‘Other Claims Recoverable in Schedule ‘K.

11. The balances of sundry debtors, creditors, loans and advances and deposits are subject to the confirmation by the parties and provision for all liabilities is adequate in opinion of the company.

12. SEGMENT REPORTING

a. Business Segments:

The Company has identified and reported business segments taking into account nature of product and services, differing risks and returns and internal business reporting systems. The Companys principal business is transportation of Gas through pipeline. Other business segment includes generation of electricity through windmill.

b. Segment Revenue and Expense

Revenue and Expenses have been identified to a segment on the basis of operating activities of the segment. Revenue and Expenses which relate to common activities and are not allocable to segment on reasonable basis have been disclosed as "Unallocable".

c. Segment Assets and Liabilities

Segment assets include all operating assets in respective segments comprising of net fixed assets, Capital Work in Progress, current assets, loans and advances. Segment liabilities include operating liabilities and provisions.

d. The Company does not have geographical distribution of revenue hence secondary segmental reporting based on geographi- cal locations of its customers is not applicable to the Company.

e. As the Company was operating in only one segment till previous year, previous year figures have not been disclosed.

13. Employee Stock Option Plans

During the Financial Year 2005-06, the company instituted ESOP-2005. The Board of Directors and the Shareholders approved the plan in the meeting held on 13-Oct-05 and 18-Oct-05 respectively, which provides for the issue of 23,27,940 equity shares to the employees of the company and of Gujarat State Petroleum Corporation Ltd. The Compensation Committee administers ESOP-2005.

* Total options vested during the period under review does not include the ESOPs which have been lapsed / cancelled before getting vested on account of retirement / resignation etc. of employees.

**ESOPs which have lapsed / cancelled before getting vested during the period under review on account of retirement / resignation etc. of employees are included in "Total options lapsed / cancelled during the period under review.

14. As at the balance sheet date Company has reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence no such impairment loss has been provided

15. GSPL has applied to the "Petroleum & Natural Gas Regulatory Board" in December 2008 for authorization of its Pipeline Network under section 18(1) of the ‘Petroleum & Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008. The Board is currently processing the application of the company.

16. Amount due for credit to Investor Education and Protection Fund towards unclaimed interest warrant – Fixed Deposit from Public & Unclaimed Dividend is NIL (Previous year NIL).

17. The company had made a Provision of Rs.5,08,78,172 for a proposed salary revision till 31st March ,2009. Out of the same, an amount of Rs. 1,74,96,507 has been paid /payable to the employees based on implementation of Sixth Pay Commission Pay Scale and the balance of Rs. 3,33,81,655 has been reversed during the current financial year.

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