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Notes to Accounts of Mahanagar Gas Ltd.

Mar 31, 2023

Terms/rights attached to equity shares :

The Company has only one class of equity shares having par value at H 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 final 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 remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

30.1 Employee Benefit Obligations

a. Short-term Employee Benefits

These benefits include wages and salaries, including other monetary and non-monetary benefits, compensated absences which are either non-accumulating or accumulated and expected to be availed within twelve months after the end of the reporting period.

b. Long-term Employee Benefits

i) Defined Contribution Plans

The Company makes Provident Fund and National Pension Scheme (NPS) contributions, which are defined contribution plans, for qualifying employees. Company has no further payment obligations once the contributions have been paid. Under the Provident Fund Schemes and NPS, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the Company are in compliance with the rates specified in the rules of the schemes. The Company recognised H 6.79 crore (previous year H 5.08 crore) as an expense and included in Note 26 -Employee Benefits Expense âContribution to Provident Fund and Other Fundâs in the Statement of Profit and Loss for the year ended March 31, 2023.

ii) Defined Benefit Plans

The Company offers the following defined benefit schemes to its employees:

- Gratuity (refer note 26): The Companyâs gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, Employee who has completed five years of service is entitled to specific benefit, the plan is funded.

- Post-Retirement Medical Benefit Plan (PRMB) (refer note 26): The Company has provided Post-Retirement Medical Scheme. Under the scheme eligible retired employees of the company and their spouse are provided medical claims for hospitalisation through insurance policy coverage.

These plans typically expose the Company to actuarial risks such as:

Investment risk - The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to market yields at the end of the reporting period on government bond yields; if the return on plan asset is below this rate, it will create a plan deficit.

Interest rate risk - A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the planâs debt investments. The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc.

Demographic risk - This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, medical cost inflation, discount rate and vesting criteria.

In order to protect the capital and optimise returns within acceptable risk parameters, the plan assets are well diversified. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

Positive figures represent decrease in obligation and negative figures represents increase obligation.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

iii) Other Long-term Employee Benefits

Compensated absences which are accumulated and not expected to be availed within twelve months after the end of the reporting period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date. Long Service Awards are recognised as a liability based on actuarial valuation of the defined benefit obligation as at the balance sheet date.

An amount of J 10.27 crore (previous year H 3.51 crore) and J 1.03 crore (previous year H 0.67 crore) has been charged to the Statement of Profit and Loss towards Compensated absences and Long service awards respectively.

30.2 Segment Information

a. Description of segments and principal activities

The Company has a single operating segment that is âSale of Natural Gasâ. Accordingly, the segment revenue, segment results, segment assets and segment liabilities are reflected by the financial statements themselves as at and for the financial year ended March 31, 2023.

b. Entity wide disclosures

Information about products and services:

The Company is in a single line of business of âSale of Natural Gasâ.

Geographical Information:

The company operates presently in the business of city gas distribution in India. Accordingly, revenue from customers earned and non-current asset are located, in India.

Information about major customers:

Three customers during the year ended March 31, 2023 and three customers during the year ended March 31, 2022 contributed to more than 10% of the revenue individually. Revenue from these customers is H 2,932.32 crore (previous year H 1,523.92 crore).

30.3 Related Party Transactions

GAIL (India) Limited (GAIL) has a significant influence on the Company.

a. Fair Value Hierarchy of Financial Assets and Liabilities

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (i) recognised and measured at fair value and (ii) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, Company has classified its financial instruments into three levels prescribed under the accounting standards below:

Level 1: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company can access at the measurement date.

Level 2: Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Level 3 inputs are unobservable inputs for the asset or liability.

Companyâs policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There is no Level 1 and Level 3 type Financial Assets or Financials Liabilities as on 31st March 2023.

(i) Measured at Fair Value Through Profit or Loss (FVTPL)

The company has investments in debt mutual funds which are not quoted in the active market. These debt mutual funds are subsequently measured at FVTPL as per the closing NAV statement provided by the mutual fund house. The corresponding unrealized gain or loss on fair valuation is recorded in profit and loss account under other income. Accordingly, such debt mutual funds fall under fair value hierarchy level 2. The fair value of these mutual funds as at March 31, 2023 is H 717.21 crore (previous year H 483.02 crore).

(ii) Measured at Amortised Cost for which Fair Value is disclosed

The fair values of all current financial assets and liabilities including trade receivables and unbilled revenue, cash and cash equivalents, bank balances, bank fixed deposits, corporate fixed deposits, security deposits, trade payables, lease liabilities, Payables for purchase of property, plant and equipment and other current financial assets and liabilities are considered to be the same as their carrying values, due to their short term nature. The fair values of all non-current financial assets and liabilities including security deposits, trade receivables and lease liabilities and other non-current financial assets and liabilities are considered to be the same as their carrying values, as the impact of fair valuation is not material.

b. Capital Management

Total equity as shown in the balance sheet includes equity share capital, general reserves and retained earnings. There are no interest bearing loans and borrowings by the Company.

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to its shareholders.

30.4 Financial Instruments (Fair Value Measurements): (Contd..)

The Company''s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure. The management monitors the return on capital as well as the level of dividends to shareholders.

c. Financial risk management

Companyâs activities expose it to credit risk, liquidity risk and market risk. This note explains the sources of risk which the company is exposed to and how the company manages the risk and its impact on the financial statements.

(i) Credit Risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Company. The credit risk arises from trade receivables, security deposits, cash and cash equivalents and deposits with banks and corporates.

Trade receivables

The company supplies natural gas to customers.

Concentrations of credit risk with respect to trade receivables are limited as majority credit sales are made to high credit worthy entities and balance credit sales are against securities in the form of customer security deposits, bank guarantees and letter of credit. All trade receivables are reviewed and assessed for default on regular basis. Our historical experience of collecting receivables, supported by the level of default, is that credit risk is low.

For trade receivables, except for specifically identified cases, Company follow a simplified approach where provision is made as per the ageing buckets which are designed based on historical facts and patterns.

Other financial assets

The Company maintains exposure in security deposits, reinstatement charges receivable, cash and cash equivalents and term deposits with banks and corporates.

In case of security deposits and reinstatement charges, majority of which are given to Municipal authorities (which are government controlled entities) towards pipeline laying activity, the credit risk is low. However, historically the company has experienced a delay/ non receipt of these amounts and hence allowances have been taken into account for the expected credit losses of these security deposits and reinstatement charges.

In case of bank /corporate fixed deposits regular quotations for interest rate are invited and based on best offered rate the bank deposits are placed with banks/corporates having reasonably high net worth. Exposures of deposit placed are restricted to limits per bank/corporate as per policy and limits are actively monitored by the Company. We understand that the credit risk is very low to moderate for such deposits.

The Companyâs maximum exposure to credit risk is the carrying value of each class of financial assets as disclosed in note 4,5,8,9,10 and 11.

(ii) Liquidity Risk

Liquidity risk is the risk that the Company will find it difficult in meeting its obligations associated with its financial liabilities on time.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying business, Companyâs treasury maintains flexibility in funding by maintaining availability under cash and cash equivalents, bank fixed deposits, corporate fixed deposits and mutual funds.

Management monitors rolling forecasts of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows.

The tables below analyses the Companyâs financial liabilities into relevant maturity groupings based on their contractual maturities.

(iii) Market Risk

Foreign Exchange Risk

Company is exposed to foreign exchange risk arising from direct transactions in foreign currency and also indirectly through transactions denominated in foreign currency though settled in functional currency (INR), primarily with respect to the US Dollar (USD). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the companyâs functional currency (INR).

The risk is measured through a forecast of highly probable foreign currency cash flows. As per the risk management policy, the foreign currency exposure is unhedged however managed partially through natural hedge under gas sales contracts and balance through adjustment in sales prices.

(iv) Interest Rate Risk:

There are no interest bearing borrowings and hence company is not exposed to interest rate risk presently. The Companyâs investments in fixed deposits with banks/corporates and liquid debt mutual funds are for short durations, and therefore do not expose the Company to significant interest rates risk.

30.5 Leases - Ind AS 116:

Company as a Lessee

The company has various operating lease arrangements for hiring of vehicles, equipment, offices, stores premises and land. Operating leases relate to land with lease term of 17 to 116 years. The Company does not have an option to purchase at the end of the lease term.

The following are the practical expedients availed by the Company:

â¢ Discount rate of 9.00% per annum has been applied to leases entered till Junâ21, thereafter discount rate of 7.55% per annum till Septemberâ22 and discount rate of 8.85% per annum from Octoberâ22 has been applied which is likely incremental rate of borrowing.

â¢ Right-to-use assets and liabilities for leases not recognised for leases with lease tenure less than 12 months from transition date.

30.8 Capital and other commitments:

a. Estimated amount of contracts to be executed for project execution including labour and purchase of material relating to construction of pipeline network and CNG outlets not provided for (net of advances) H 468.52 crore (previous year H 445.40 crore).

b. All term contracts for purchase of natural gas with suppliers, has contractual obligation of âtake or payâ for shortfall in contracted Minimum Guaranteed Quantity (MGQ) as specified in individual contracts. Estimation of these MGQ commitments is dependent on nomination of quantity by suppliers and actual purchase by the company. As both the factors âquantity nomination by supplierâ and âquantity to be purchased by the companyâ, are not predictable, MGQ commitment is not quantifiable.

30.9 Contingent Liabilities (to the extent not provided for)

Claims against the Company not acknowledged as debts in respect of which the Company does not expect outflow of resources

H 372.18 crore (previous year H 371.29 crore), includes:

i) Claims disputed by the Company relating to issues of applicability aggregating to H 36.16 crore (previous year H 34.94 crore) as detailed below:

(H in Crore)
Particulars	For the year ended 31st March 2023	For the year ended 31st March 2022
a) Excise Duty	9.20	8.82
b) Service Tax	9.96	8.66
c) Sales Tax / Input VAT credits	-	4.03
d) Income Tax	17.00	13.43
Total	36.16	34.94

Future cash outflows in respect of above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.

ii) Central/State/Local Authority property taxes, lease rents, pipeline related re-instatement charges etc. claims disputed by the Company relating to issues of applicability and determination aggregating to H 3.93 crore (previous year H 4.31 crore).

iii) Third party/other claims arising from disputes relating to contracts aggregating to H 0.01 crore (previous year H 0.01 crore).

iv) GAIL (India) Limited (GAIL) raised demand in April 2014 for transportation tariff with respect to ONGCâs

Uran Trombay Natural Gas Pipeline (UTNGPL) pursuant to demand on them by Oil and Natural Gas Corporation Limited (ONGC), based on the Petroleum and Natural Gas Regulatory Board (PNGRB) order dated 30.12.2013, determining tariff for ONGCâs UTNGPL as a common carrier. The total demand raised by GAIL for the period from November 2008 till July 2021 was H 331.80 Crore. The Company disputed the demand with GAIL based on contractual provisions and since the transportation charges are to be paid by a third-party user for utilisation of UTNGPL to ONGC as common carrier and not for transportation of its own gas by ONGC.

The Company filed an appeal with the PNGRB in February 2015, the same was dismissed in October 2015. The Company filed a writ petition, in November 2015, with the Honâble High Court of Delhi. The Court advised the Company to file an appeal with Appellate Tribunal for Electricity (APTEL) being Appellate Authority of the PNGRB in November 2016. The matter was heard by APTEL and remanded back to the PNGRB on technical grounds in September 2019. PNGRB in March 2020, had passed an Order which directed the Company and GAIL to pay the disputed transportation tariff to ONGC. The Company filed an Appeal before APTEL against the PNGRB order in April 2020. The matter was heard by APTEL in October 2020. APTEL remanded back the case in July 2021 to PNGRB for proper adjudication. The matter was heard by PNGRB in April 2022 and an order was passed in September 2022 directing the Company to pay the disputed transportation tariff for the period 2014 to 2021 as per the transportation tariff fixed by PNGRB for UTNGPL. The Company had filed a writ before the Honâble High Court of Delhi challenging the PNGRBâs September 2022 order. The Honâble High Court of Delhi vide its order dated 13.12.2022 has stayed the recovery against the PNGRB order and has directed the Company to deposit a sum of H 50 Crore with GAIL by 15.02.2023, which was deposited with GAIL on 14th February 2023. The Honâble court of Delhi has listed the next hearing on May 16, 2023. Based on the legal opinions obtained, the Company believes that it has a strong case and does notexpect any outflow of resources. Hence, no provision has been recognised.

v) Claims from consumers are not acknowledged as debts H 0.29 crore (previous year H 0.24 crore).

vi) The revision of Trade Discount with the Oil Marketing Companies (OMCs) is pending from earlier years. In November 2021, The Ministry of Petroleum & Natural Gas (MoP&NG) issued guidelines pertaining to revised Trade Discounts and subsequently citing MoP&NG guideline, OMCs have raised their demand to the Company. However, the demand raised by OMCs is not as per the guidelines issued by the MoP&NG and hence the Company has contested the demand raised by OMCs. Further the Company has raised the matter to the MoP&NG vide its letter dated 30th December 2021, requesting their intervention and advised the OMCs to adhere to the guidance provided by the MoP&NG. Pending settlement, the liability is provided to the extent considered appropriate by the Company.

For year ending March 31, 2023, includes Audit Fees H 0.02 crore and out of pocket expenses H 17,700 paid to SRBC and Co LLP (predecessor auditor).

* Operating expenses include excise duty, employee benefits, other expenses.

** Capital employed - Tangible Net worth Deferred Tax Liability

# Explanation provided for change in the ratio by more than 25% as compared to the ratio in the previous year Notes: -

i. The increase in the trade receivable ratio is mainly due to an increase in level of activity during the current year and the previous year was impacted due to COOID-19 and resultant lockdown.

ii. The increase in the Trade Payable Turnover ratio is mainly due to 1) increase in the level of activity during the current year. Previous year was impacted due to COVID -19 and resultant lockdown, 2) value of gas purchase has increased due to increase in purchase prices and 3) with increase in level of activity direct expenses and other overheads have increased in the current year. There are no major variations with respect to number of days credit period compared to previous year.

iii. Due to the increase in volumes and sales prices, net sales of natural gas during the year have increased whereas working capital has increased marginally, resulting in higher net capital turnover ratio.

iv. Decrease in Net Profit Ratio in percentage terms is mainly due to increase in cost of gas and corresponding revision of sales prices to recover such increase in phased manner.

Current year increase in gas cost was on account of requirement of more spot gas purchase due to shortage of government allocated gas and increase in spot prices due to global factors.

v. Due to the increase in interest rates, the overall return on investment has improved compared to the previous year.

Sale of Natural gas is the main activity of city gas distribution business and other operating income is incidental to sale of natural gas. Other Operating Income significantly includes the compensation towards minimum contracted quantity for the respective billing period and application fee collected from customers. Sale of pipes, fittings and other material is revenue incidental to the activity of construction of pipeline network for own use for the purpose of sale and distribution of natural gas to customers. The company sells and distributes natural gas in India.

Sale of natural gas includes excise duty but excludes VAT collected from the customers on behalf of the Government.

Performance obligations

The Company earns revenues primarily from sale of natural gas. Revenue is recognised on supply of gas to

customers by metered/assessed measurements. There are no goods return rights attached to the sale and hence no right of return liability or asset exists.

There are no performance obligations remaining to be satisfied as at reporting date for which transaction price has been allocated.

30.15 Other Statutory Information:

i. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

ii. The Company does not have any transactions with companies struck off u/s 248 of Companies Act, 2013.

iii. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

iv. The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

v. The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

b. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

vi. The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. Provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

vii. The Company has not surrendered or disclosed any transaction, previously unrecorded in the books of account, in the tax

assessments under the Income Tax Act, 1961 as income during the year.

30.16 The Board of Directors, at its meeting held on May 08, 2023, has proposed a final dividend of J 16 per equity

share of face value H 10.00 each for the financial year ended March 31, 2023. This is in addition to the interim dividend of H 10.00 per equity share paid during the year. With this, the total dividend for the year is H 26 per equity share of face value H 10.00 each. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved would result in a final dividend cash outflow of approximately H 158.04 crore.

30.17 On 3rd March, 2023, the Company has signed a Share Purchase Agreement (SPA) with Unison Enviro Private Limited (UEPL) and existing shareholders of UEPL for acquisition of 100% stake in UEPL for a consideration of Rs 531 crore subject to other adjustments if any as per SPA. As per SPA, transfer of shares by the existing shareholders is subject to the approval of Petroleum and Natural Gas Regulatory Board (PNGRB).

30.18 The Code on Social Security 2020 has been notified in the Official Gazette on September 29, 2020. However, the date on which the code will come into effect have not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the code when it comes into effect and will record any related impact in the period the code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant.

30.19 Events after the reporting period - The company has evaluated subsequent events from the balance sheet date through May 08, 2023, the date at which the financial statements were available to be issued, and determined that there are no material items to disclose other than those disclosed above.

Mar 31, 2022

1) Capital Work-in-Progress includes Capital inventory of H 13,772.00 Lakh (as at 31st March, 2021 H 11,959.57 Lakh).

a) Capital inventory includes material with contractors H 4,473.84 Lakh (as at 31st March, 2021 H 3,364.84 Lakh).

b) Capital inventory includes material in transit H NIL (as at 31st March, 2021 H 203.95 Lakh).

c) As at March 31, 2022, H 737.55 Lakh (March 31, 2021 H 536.13 Lakh) has been recognised as an allowance for Capital inventory obsolescence.

d) As at March 31, 2022, H 1256.18 Lakh (March 31, 2021 H 172.27 Lakh) has been recognised as an allowance for Capital Work-in-Progress write off.

2) There are no projects as at reporting date which has exceeded cost as compared to its original approved plan. The Company follows practice of seeking approval for annual capital expenditure plan for each of the geographical/ project areas.

3) Figures in italic represent previous year''s figures.

Terms/rights attached to equity shares :

The Company has only one class of equity shares having par value at H10 per share, each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

30. Disclosures under Indian Accounting Standards:

30.1 Employee Benefit Obligations

a. Short-term Employee Benefits

b. Long-term Employee Benefits

i) Defined Contribution Plans

Company recognised ?507.25 Lakh (previous year H474.84 Lakh) as an expense and included in Note 26 -Employee Benefit Expenses ''Contribution to Provident Fund and Other Fund''s in the Statement of Profit and Loss for the year ended March 31, 2022.

ii) Defined Benefit Plans

The Company offers the following defined benefit schemes to its employees:

- Gratuity (refer note 26): The Company''s gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, Employee who has completed five years of service is entitled to specific benefit, the plan is funded.

The following table sets out the funded/unfunded status of the defined benefit schemes and the amount recognised in the financial statements:

These plans typically expose the Company to actuarial risks such as:

Interest rate risk - A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Salary risk - The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability. The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

iii) Other Long-term Employee Benefits

An amount of J351.30 Lakh (previous year H618.38 Lakh) and ?67.29 Lakh (previous year H62.10 Lakh) has been charged to the Statement of Profit and Loss towards Compensated absences and Long service awards respectively.

30.2 Segment Information

a. Description of segments and principal activities

The Company has a single operating segment that is "Sale of Natural Gas". Accordingly, the segment revenue, segment results, segment assets and segment liabilities are reflected by the financial statements themselves as at and for the financial year ended March 31, 2022.

b. Entity wide disclosures

Information about products and services:

The Company is in a single line of business of "Sale of Natural Gas".

Geographical Information:

The company operates presently in the business of city gas distribution in India. Accordingly, revenue from customers earned and non-current asset are located, in India.

Information about major customers:

Three customers during the year ended March 31, 2022 and three customers during the year ended March 31, 2021 contributed to more than 10% of the revenue individually. Revenue from these customers is ?1,52,391.67 Lakh (previous year H83,436.79 Lakh).

30.3 Related Party Transactions

GAIL (India) Limited (GAIL) has a significant influence on the Company.

a. Fair Value Hierarchy of Financial Assets and Liabilities

Level 1: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company can access at the measurement date.

Level 2: Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Level 3 inputs are unobservable inputs for the asset or liability.

Company''s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There is no Level 3 type Financial Assets or Financials Liabilities as on 31st March 2022.

30.4 Financial Instruments (Fair Value Measurements): (Contd..)

(i) Measured at Fair Value Through Profit or Loss (FVTPL)

The company has investments in debt mutual funds which are not quoted in the active market. These debt mutual funds are subsequently measured at FVTPL as per the closing NAV statement provided by the mutual fund house. The corresponding unrealized gain or loss on fair valuation is recorded in profit and loss account under other income. Accordingly, such debt mutual funds fall under fair value hierarchy level 2. The fair value of these mutual funds as at March 31, 2022 is J48,302.14 Lakh (previous year H61,758.30 Lakh).

(ii) Measured at Amortised Cost for which Fair Value is disclosed

b. Capital Management

Total equity as shown in the balance sheet includes equity share capital, general reserves and retained earnings. There are no interest bearing loans and borrowings by the Company.

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to its shareholders.

c. Financial risk management

Company''s activities expose it to credit risk, liquidity risk and market risk. This note explains the sources of risk which the company is exposed to and how the company manages the risk and its impact on the financial statements.

(i) Credit Risk

Trade receivables

The company supplies natural gas to customers.

Other financial assets

The Company maintains exposure in security deposits, reinstatement charges receivable, cash and cash equivalents and term deposits with banks and corporates.

The Company''s maximum exposure to credit risk is the carrying value of each class of financial assets as disclosed in note 4,5,8,9,10 and 11.

(ii) Liquidity Risk

Liquidity risk is the risk that the Company will find it difficult in meeting its obligations associated with its financial liabilities on time.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying business, Company''s treasury maintains flexibility in funding by maintaining availability under cash and cash equivalents, bank fixed deposits, corporate fixed deposits and mutual funds.

Management monitors rolling forecasts of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows.

The tables below analyses the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities.

(iii) Market Risk

Foreign Exchange Risk

(iv) Interest Rate Risk:

There are no interest bearing borrowings and hence company is not exposed to interest rate risk presently. The Company''s investments in fixed deposits with banks/corporates and liquid debt mutual funds are for short durations, and therefore do not expose the Company to significant interest rates risk.

30.5 Leases - Ind AS H6:

Company as a Lessee

The following are the practical expedients availed by the Company:

â¢ Discount rate of 9.00% per annum has been applied to leases entered till Jun''21, thereafter discount rate of 7.55% has been applied which is likely incremental rate of borrowing.

â¢ Right-to-use assets and liabilities for leases not recognised for leases with lease tenure less than 12 months from transition date.

â¢ Initial direct cost not considered for measurement of right-of-use asset, as the same is insignificant.

30.8 Capital and other commitments

b. All term contracts for purchase of natural gas with suppliers, has contractual obligation of "take or pay" for shortfall in contracted Minimum Guaranteed Quantity (MGQ) as specified in individual contracts. Estimation of these MGQ commitments is dependent on nomination of quantity by suppliers and actual purchase by the company. As both the factors "quantity nomination by supplier" and "quantity to be purchased by the company", are not predictable, MGQ commitment is not quantifiable.

30.9 Contingent Liabilities (to the extent not provided for)

Claims against the Company not acknowledged as debts in respect of which the Company does not expect outflow of

resources J37,128.94 Lakh (previous year H35,486.98 Lakh), includes:

Future cash outflows in respect of above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.

iii) Third party/other claims arising from disputes relating to contracts aggregating to J 0.63 Lakh (previous year H 0.63 Lakh).

iv) GAIL (India) Limited (GAIL) raised demand in April 2014 for additional transportation tariff pursuant to demand on them by Oil and Natural Gas Corporation Limited (ONGC), based on the Petroleum and Natural Gas Regulatory Board (PNGRB) order dated 30.12.2013, determining tariff for ONGC''s Uran Trombay pipeline (UTPL) as a common carrier. The Company disputed the demand with GAIL based on contractual provisions and since the transportation charges are to be paid by a third-party user for utilisation of UTPL to ONGC as common carrier and not for transportation of its own gas by ONGC.

Complaint was filed with the PNGRB in February 2015. It was dismissed in October 2015. The writ petition was filed in November 2015 with the High Court of Delhi. The Court advised to appeal before Appellate Tribunal for Electricity (APTEL) being Appellate Authority of the PNGRB in November 2016. The matter was heard by APTEL and remanded

30.9 Contingent Liabilities (to the extent not provided for) (Contd..)

back to the PNGRB on technical grounds in September 2019. PNGRB on 18 March 2020 had passed an Order through which it directed MGL and GAIL to pay to ONGC. MGL filed its Appeal before APTEL on 20th April 2020 during lockdown. The matter was heard by APTEL on 9th October 2020. APTEL had passed judgement on 16 July 2021 and the matter was remanded back to PNGRB for proper adjudication. The matter was heard by PNGRB on April 07, 2022, and ordered all the parties to file their written submission on the issues noted in the APTEL judgement by April 29, 2022. The matter is next listed for hearing on May 11, 2022. Total demand from November 2008 till July 2021 is J 33,180.09 Lakh (previous year H 31,463.35 Lakh) [including J 22,332.14 Lakh covered in the case filed with APTEL and J 10,847.95 Lakh (previous year H 9,131.21 Lakh) demand received subsequently]. Based on the legal opinion, the Company believes that it has a strong case and does not expect any outflow of resources. Hence, no provision has been made.

v) Claims from consumers not acknowledged as debts J24.10 Lakh (previous year H23.19 Lakh).

vii) As per authorisation terms and conditions of the PNGRB for Raigad Geographical Area, the Company is required to meet Minimum Work Programme (MWP) targets by March 2020 (with reference to connections and pipeline inch Kilo Meters) and the Company had submitted Performance Bank Guarantee of H 10,520.00 Lakh dated March 19, 2015, to the PNGRB. Show cause notice dated July 23, 2018, was given by the PNGRB for shortfall in periodic MWP, asking the Company to explain why penalty should not be levied for the interim MWP target shortfall. The Company submitted catch up plan vide letter dated August 2, 2018, and revised catch up plan vide letter dated November 15, 2019, was submitted to PNGRB seeking extension till September 30, 2021. Post outbreak of COVID-19, the Company had requested PNGRB in April 2020 to extend the timeline for achieving the revised catch-up plan for MWP of Inch-Kms till March 31, 2022. The PNGRB, sought information on COVID-19 lockdown in July 2020 from the City Gas Distribution companies and has issued public notice dated November 5, 2020, extending the MWP timeline due to COVID-19 lockdown for various Geographical areas, where extension of 251 days for Raigad was granted. The Company has appraised PNGRB vide letter dated February 9, 2021, with ground level challenges faced in Raigad and has requested for extension up to March 2022. The Company had already achieved the cumulative number of Domestic connections as per PNGRB MWP target as of March 31, 2020, and inch km targets in January 2022 and accordingly, no provision is deemed necessary in relation to the bank guarantee issued to the PNGRB.

viii) The Company has electricity connection provided by Maharashtra State Electricity Distribution Company Limited (MSEDCL) at certain CNG Retail Outlets. MSEDCL has issued a circular dated 1st December 2021 to all its local offices for application of Commercial tariff in place of Industrial tariff for electricity consumed for compression activity at the CNG retail outlet with retrospective effect from the August 2012. Accordingly, MSEDCL has raised bills for few CNG retail outlets along with arrears towards difference between Commercial and Industrial tariff. The Company has disputed the matter and has filed a petition on 13th January 2022, with Maharashtra Electricity Regulatory Commission (MERC) challenging the circular issued by MSEDCL. MERC vide its order dated 18th January 2022, has directed that till the matter is finally heard and decided by the MERC, MSEDCL shall desist from taking any coercive action against the Company and continue to supply electricity. Company has obtained a legal opinion for such demand and basis the legal opinion received, believes that it has a strong case and does not expect any outflow of resources.

ii. Increase in the Trade Payable Turnover ratio is mainly due to 1) increase in level of activity during the current year, as previous year was having comparatively more impact due to COVID -19 and resultant lockdown, 2) value of gas purchase has increased due to increase in purchase prices and 3) with increase in level of activity direct expenses and other overheads have increased in the current year. There are no major variations with respect to number of days credit period compared to previous year.

iii. Due to increase in volumes and sales prices, net sales of natural gas during the year have increased whereas working capital has decreases marginally, resulting in higher net capital turnover ratio.

iv. Decrease in Net Profit Ratio in percentage terms is mainly due to increase in cost of gas and corresponding revision of sales prices to recover such increase in phased manner. Current year increase in gas cost was on account of requirement of more spot gas purchase due to shortage of government allocated gas and increase in spot prices due to global factors.

Sale of Natural gas is the main activity of city gas distribution business and other operating income is incidental to sale of natural gas. Other Operating Income includes significantly the compensation towards minimum contracted quantity for the respective billing period and application fee collected from customers. Sale of pipes, fittings and other material is revenue incidental to the activity of construction of pipeline network for own use for the purpose of sale and distribution of natural gas to customers. The company sells and distributes natural gas in India.

Sale of natural gas includes excise duty but excludes VAT collected from the customers on behalf of the Government.

Trade receivables are non-interest bearing and are generally on terms of 7 to 60 days. Contract liabilities are the advances paid by the customers against which supply of natural gas is to happen after the reporting date.

Revenue recognised out of amounts included in contract liabilities at the beginning of the year is ?738.33 Lakh (previous year H835.35 Lakh). No amount recognised as revenue out of performance obligations satisfied fully or partially in previous year.

Performance obligations

The Company earns revenues primarily from sale of natural gas. Revenue is recognised on supply of gas to customers by metered/assessed measurements. There are no goods return rights attached to the sale and hence no right of return liability or asset exists.

There are no performance obligations remaining to be satisfied as at reporting date for which transaction price has been allocated.

30.15 Other Statutory Information:

i. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

ii. The Company does not have any transactions with companies struck off u/s 248 of Companies Act, 2013.

iii. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

iv. The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

v. The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries), or

b. Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

a. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries), or

b. Provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

vii. The Company has not surrendered or disclosed any transaction, previously unrecorded in the books of account, in the tax assessments under the Income Tax Act, 1961 as income during the year.

30.16 The Board of Directors, at its meeting held on May 10, 2022, has proposed a final dividend of H 15.50 per equity share of face value H10.00 each for the financial year ended March 31, 2022. This is in addition to the interim dividend of H9.50 per equity share paid during the year. With this, the total dividend for the year is H 25.00 per equity share of face value H10.00 each. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved would result in a final dividend cash outflow of approximately H 15,310.56 Lakh.

30.17 The Code on Social Security 2020 has been notified in the Official Gazette on September 29, 2020 However, the date on which the code will come into effect have not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the code when it comes into effect and will record any related impact in the period the code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant.

30.18 Events after the reporting period - The company has evaluated subsequent events from the balance sheet date through May 10, 2022, the date at which the financial statements were available to be issued, and determined that there are no material items to disclose other than those disclosed above.

Mar 31, 2018

1. General Information

Mahanagar Gas Limited (âMGLâ or âthe companyâ) is a limited company domiciled in India and was incorporated on May 8, 1995. Equity shares of the Company are listed in India on the Bombay Stock Exchange and The National Stock Exchange. The registered office of the Company is located at MGL House, G-33 Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400051.

MGL is in the business of City Gas Distribution (âCGDâ), presently supplying Natural Gas in the city of Mumbai including its adjoining areas and the Raigad district, in the State of Maharashtra, India.

The financial statements are presented in Indian Rupee (INR) which is also Functional Currency of the Company. The financial statements were authorised for issue by the directors on May 21, 2018.

All values are rounded off to the nearest H lakh except when stated otherwise.

Terms/rights attached to equity shares:

The Company has only one class of equity shares having par value at HI0 per share, each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The final 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 remaining assets of the Company, after distribution of all pfeferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2 Disclosures under Indian Accounting Standards:

2.1 Employee Benefit Obligations

a. Short-term Employee Benefits

b. Long-term Employee Benefits

i) Defined Contribution Plans

The Company makes Provident Fund and National Pension Scheme (NPS) contributions, which are defined contribution plans, for qualifying employees. Company has no further payment obligations once the contributions have been paid. Under the Provident Fund Schemes and NPS, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the Company are in compliance with the rates specified in the rules of the schemes. The Company recognised Rs.357.46 Lakh (previous year RS.320.13 Lakh) as an expense and included in Note 27 - Employee Benefit Expenses âContribution to Provident Fund and Other Fundsâ in the Statement of Profit and Loss for the year ended March 31, 2018.

ii) Defined Benefit Plans

The Company offers the following defined benefit schemes to its employees:

- Gratuity (refer note 27): The Companyâs gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, Employee who has completed five years of service is entitled to specific benefit, the plan is funded.

- Post-Retirement Medical Benefit Plan (PRMB) (refer note 27)

The following table sets out the funded/unfunded status of the defined benefit schemes and the amount recognised in the financial statements:

These plans typically expose the Company to actuarial risks such as:

Interest rate risk - A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the planâs debt investments.

Salary risk - The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability. The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc.

iii) Other Long-term Employee Benefits

An amount of J209.26 Lakh (previous year RS.292.36 Lakh) and J12.55 Lakh (previous year RS.20.74 Lakh) has been charged to the Statement of Profit and Loss towards Compensated absences and Long service awards respectively.

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.

NA : Not Applicable

2.2 Segment Information

a. Description of segments and principal activities

b. Entity wide disclosures

Information about products and services:

The Company is in a single line of business of âSale of Natural Gas.â

Geographical Information:

The company operates presently in the business of city gas distribution in India. Accordingly, revenue from customers earned and non-current asset are located, in India.

Information about major customers:

Three customers during the year ended March 31, 2018 and three customers during the year ended March 31, 2017 contributed to more than 10% of the revenue individually. Revenue from these customers is J1,11,488.44 Lakh (previous year RS.1,02,851.99 Lakh).

Key Management Personnel (KMP) as per Ind AS 24 :

Mr. Rajeev Mathur - Managing Director

Ms. Susmita Sengupta - Technical Director (upto 6th November 2017)

Mr. Goutam Ghosh - Technical Director (from 20th November 2017)

2.3 Financial Instruments (Fair Value Measurements) :

The Company has various financial assets and liabilities. The disclosures regarding the classification, fair value hierarchy, capital management, markets risk, credit risks and liquidity risks are as follows:

a. Classification of Financial Assets and Liabilities

b. Fair Value Hierarchy of Financial Assets and Liabilities

Level 1: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Level 3 inputs are unobservable inputs for the asset or liability.

Companyâs policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(i) Measured at Fair Value Through Profit or Loss (FVTPL)

The company has investments in debt mutual funds which are not quoted in the active market. These debt mutual funds are subsequently measured at FVTPL as per the closing NAV statement provided by the mutual fund house. The corresponding unrealized gain or loss on fair valuation is recorded in profit and loss account under other income. Accordingly, such debt mutual funds fall under fair value hierarchy level 2. The fair value of these mutual funds as at March 31, 2018 is J 53,160.55 Lakh (previous year RS.46,666.60 Lakh).

(ii) Measured at Amortised Cost for which Fair Value is disclosed

The fair values of all current financial assets and liabilities including trade receivables and unbilled revenue, cash and cash equivalents, bank balances, bank fixed deposits, corporate fixed deposits, security deposits, trade payables, payables for purchase of property, plant and equipment and other current financial assets and liabilities are considered to be the same as their carrying values, due to their short term nature. The fair values of all non-current financial assets and liabilities including security deposits, trade receivables and borrowings and other non-current financial assets and liabilities are considered to be the same as their carrying values, as the impact of fair valuation is not material.

c. Capital Management

Total equity as shown in the balance sheet includes equity share capital, general reserves and retained earnings.

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to its shareholders.

The Companyâs policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure. The management monitors the return on capital as well as the level of dividends to shareholders.

The Company does not have any borrowing except for sales tax deferred loan.

d. Financial risk management

Companyâs activities expose it to credit risk, liquidity risk and market risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and its impact on the financial statements

(i) Credit Risk

Trade receivables

The company supplies natural gas to customers.

Other financial assets

The Company maintains exposure in security deposits, cash and cash equivalents and term deposits with banks and corporates.

In case of security deposits, majority of which are given to Municipal authorities (which are government controlled entities) towards pipeline laying activity, the credit risk is low.

The Companyâs maximum exposure to credit risk is the carrying value of each class of financial assets as disclosed in note 4,5,6,9,10,11 and 12

(ii) Liquidity Risk

Liquidity risk is the risk that the Company will find it difficult in meeting its obligations associated with its financial liabilities on time.

Management monitors rolling forecasts of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows.

The tables below analyses the Companyâs financial liabilities into relevant maturity groupings based on their contractual maturities.

(iii) Market Risk

Foreign Exchange Risk

Interest Rate Risk:

There are no interest bearing borrowings and hence company is not exposed to interest rate risk presently.

The Companyâs investments in fixed deposits with banks/corporates and liquid debt mutual funds are for short durations, and therefore do not expose the Company to significant interest rates risk.

2.4 Operating Leases

The company has entered into various operating lease arrangements for hiring of vehicles, equipments and premises (residential, office and godown)

Basic EPS amounts are calculated by dividing the profits for the year by the weighted average number of equity shares outstanding during the year. There are no dilutive potential equity shares as at the respective dates. The following data has been used for calculating basic and diluted EPS.

2.5 Capital and other commitments

c. For lease commitments refer note 31.5

d. The Company has commitment to achieve Minimum Work Program (MWP) for its Raigarh Geographical Area (GA) as per the PNGRB authorization dated 1st April 2015 under the PNGRB (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks ((GSR 196 (E)) Regulations, 2008. The Company is yet to achieve MWP target specified up to 31st March 2018 in Raigarh GA. To achieve cumulative MWP required up to 2019-20, the Company as per regulation 16 of the PNGRB regulations GSR 196 (E), basis the Minutes of Meeting of the PNGRB hearing dated 12th March 2018, has submitted the remedial action plan completing by 2020-21 to PNGRB on 4th April 2018.

Claims against the Company not acknowledged as debts in respect of which the Company does not expect outflow of resources Rs.16,978.03 Lakh (previous year RS.31,637.46 Lakh), includes:

i) Claims disputed by the Company relating to issues of applicability aggregating to Rs.2,439.48 Lakh (previous year RS.18,951.50 Lakh) as detailed below:

Future cash outflows in respect of above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.

iii) Third party/other claims arising from disputes relating to contracts aggregating to Rs.63.33 Lakh (previous year RS.107.59 Lakh).

iv) Demand from GAIL (India) Limited in respect of additional transportation tariff for the period from November 2008 to March 2018 Rs.13,721.60 Lakh (previous year RS.12,252.59 Lakh). The company has filed an appeal before Appellate Tribunal for Electricity (APTEL). The case is being heard at APTEL. Based on the legal opinion, the Company contends that the same is not payable and the Company does not expect outflow of resources.

v) Claims raised by GAIL (India) Limited in respect of differential price for supplies over and above allocation J Nil (previous year RS.6.84 Lakh).

vi) Claims from consumers not acknowledged as debts Rs.38.84 Lakh (previous year RS.33.28 Lakh).

vii) Liability on account of revision of trade margin as per contracts with Oil Marketing Companies with effect from January 1, 2015 is yet to be determined in view of undergoing negotiations.

(a) Gross amount required to be spent by company for the year is J999.89 Lakh (previous year RS.909.11 Lakh)

(b) Amount spent during the period:

i. Construction/acquisition of asset J Nil (previous year H Nil)

ii. On purposes other than (i) above Rs.294.27 Lakh (previous year RS.468.60 Lakh) (Refer Note 29)

2.5 On January 5, 2016, existing shareholders were offered 94,92,545 Unsecured Compulsorily Convertible Debentures (UCCDs) (Face Value RS.10/- each), on a rights basis in the proportion of 17 (seventeen) Unsecured CCDs for every 160 (one hundred and sixty) equity shares of face value of RS.10 each. 94,36,178 Unsecured CCDs were allotted to Government of Maharashtra against their application and the balance 56,367 Unsecured CCDs were cancelled. These Unsecured CCDs allotted to Government of Maharashtra were converted at par into equity shares of same number on June 7, 2016.

2.6 The Board of Directors, at its meeting held on 21st May 2018, has proposed a final dividend of RS.11/- per equity share of face value RS.10/-each for the financial year ended March 31, 2018. This is in addition to the interim dividend of RS.8/- per equity share paid during the year. With this, the total dividend for the year is RS.19/- per equity share (normal dividend of RS.12.50 and special dividend of RS.6.50) of face value RS.10/- each. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved would result in a cash outflow of approximately RS.13,099 Lakh, including corporate dividend tax.

2.7 The previous year numbers have been audited by an audit firm other than S R B C & Co LLP. The previous numbers have been reclassified wherever necessary.

Mar 31, 2017

1.1 General Information

The financial statements are presented in Indian Rupee (INR) which is also Functional Currency of the Company. The financial statements were authorised for issue by the directors on May 26, 2017.

1.2 The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from April 1, 2016, with a transition date of April 1, 2015. The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the âFirst Ind AS financial statementsâ for the year ended March 31, 2017, be applied retrospectively and consistently for all financial years presented. However, in preparing these Ind AS financial statements, the Company has availed of certain exemptions and exceptions in accordance with Ind AS 101, as explained in note 3. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and Previous GAAP have been recognised directly in retained earnings.

2. First time adoption of Ind AS

These are the Companyâs first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of the opening Ind AS balance sheet as at April 1, 2015 (the Companyâs date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.

Explanation 1 - Exemptions and exceptions availed

Explanation 2 - Reconciliation of total equity as at March 31, 2016 and as at April 1, 2015.

Explanation 3 - Reconciliation of total comprehensive income for the year ended March 31, 2016.

Explanation 4 - Impact on cash flows for the year ended March 31, 2016.

Explanation 1 - Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

a. Ind AS Optional exemptions Deemed Cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 - Intangible Assets.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

b. Ind AS mandatory exceptions

i. Estimates

An entityâs estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP.

ii. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS. The Company accordingly has made such assessment to assess such classification and measurement on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Similarly, the Company has determined the classification of mutual fund investments at FVTPL based on the facts and circumstances that are existing as of transition date.

iii. De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entityâs choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions. The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

iv. Government loans

A first-time adopter shall classify all government loans received as a financial liability or an equity instrument in accordance with Ind AS 32, Financial Instruments: Presentation. A first-time adopter shall apply the requirements in Ind AS 109, Financial Instruments, and Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance, prospectively to government loans existing at the date of transition to Ind ASs and shall not recognise the corresponding benefit of the government loan at a below-market rate of interest as a government grant. Consequently, if a first-time adopter did not, under its previous GAAP, recognise and measure a government loan at a below-market rate of interest on a basis consistent with Ind AS requirements, it shall use its previous GAAP carrying amount of the loan at the date of transition to Ind ASs as the carrying amount of the loan in the opening Ind AS Balance Sheet. An entity shall apply Ind AS 109 to the measurement of such loans after the date of transition to Ind ASs.

The company has sales tax deferral loan, where by the sales tax collected by the Company is to be deposited with the authorities in a phased manner without any interest. Accordingly, the Company has elected to carry such sales tax deferral loan at previous GAAP value.

v. Impairment of financial assets

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.

Notes to the reconciliations:

a. Under IGAAP, leasehold lands were capitalised under fixed assets and depreciated over the lease term. Under Ind AS, such leasehold lands have to be assessed as to whether they are an operating lease or a financing lease, basis the terms and conditions in the lease agreement. Consequently, leasehold lands that classify as operating leases have been removed from property, plant and equipment and treated as a separate prepaid asset. The same is expensed off to the statement of profit and loss over the lease term as lease rent. Therefore an amount of Rs.3,043.33 lakh and Rs.3,086.39 lakh has been reclassified as at April 1, 2015 and March 31, 2016 respectively from property, plant and equipment to prepaid current and prepaid non-current asset. This transaction does not have any impact on equity.

b. The investments in mutual funds under IGAAP were carried at lower of cost and fair value. Under Ind AS, the investments in mutual funds are to be fair valued with the corresponding gains/losses to be recognised in the statement of profit and loss. Consequently, there is an increase in equity by Rs.36.77 lakh and Rs.520.31 lakh as on April 1, 2015 and March 31, 2016 respectively.

c. The company had issued compulsorily convertible debentures amounting to Rs.943.62 lakh which were classified as a borrowing under IGAAP. Under Ind AS, such instruments are classified into debt and equity component. Consequently, on April 1, 2015, the equity component of the borrowings has been transferred to equity from borrowings to the tune of Rs.793.85 lakh. The equity has increased by an equivalent amount.

The interest on the compulsory convertible debenture was provided as per the coupon rate of 9% under the previous GAAP. Under Ind AS, the liability component is accreted at an effective interest rate as finance cost. Consequently, the interest provided on such compulsorily convertible debentures as per the coupon rate is reversed to the tune of Rs.20.01 lakh and further Rs.84.93 lakh as at April 1, 2015 and March 31,2016 respectively. Instead the interest is accreted by Rs.3.21 lakh and Rs.12.68 lakh for the financial year 2014-15 and 2015-16 respectively. The corresponding increase is in equity to the tune of Rs.16.80 lakh and Rs.89.05 lakh as at April 1, 2015 and March 31, 2016 respectively.

d. Under IGAAP, the rent payments for operating leases were accounted on a straight line basis over the lease term and rent equalization provision was provided. Under Ind AS, the payments under the operating leases are charged to the statement of profit and loss over a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increased. There is no requirement of straight lining under Ind AS for leases under consideration, hence, the rent equalization provision of Rs.5.33 lakh and Rs.6.93 lakh has been reversed as on April 1, 2015 and March 31, 2016 respectively. This has led to a corresponding increase in equity by an equal amount.

e. Under IGAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as an adjusting event. Accordingly, provision for proposed dividend and tax on dividend were recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend and tax there on for financial year 2014-15 of Rs.18,817.65 lakh and for financial year 201516 of Rs.18,817.65 lakh included under provisions as at April 1, 2015 and March 31, 2016 have been reversed with corresponding adjustment in retained earnings. Consequently, the total equity increased by an equivalent amount.

f. Deferred taxes on the above adjustments have also been provided. Deferred tax liability has been recognised to the tune of Rs.14.59 lakh and Rs.182.48 lakh as on April 1, 2015 and March 31, 2016 respectively.

g. Under the previous GAAP, revenue from sale of goods was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended March 31, 2016 by Rs.20,683.40 lakh. There is no impact on equity and profit.

Under the previous GAAP, cash discount given to the customers was shown under other expenses and not netted from revenue. Under Ind AS, revenue from sale of goods is measured net of discounts, rebates etc. accordingly, the trade discount is netted from revenue. This change has resulted in a decrease in total revenue and total expenses for the year ended March 31, 2016 by Rs.62.97 lakh. There is no impact on equity and profit.

h. Under Ind AS, the mutual funds are carried at fair value through profit and loss account. Consequently, the profit for the year ended March 31, 2016 has increased by Rs.483.54 lakh (refer note b above).

i. Under Ind AS, remeasurements i.e actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in the other comprehensive income instead of the statement of profit and loss. Under the previous GAAP, these remeasurements were forming part of statement of profit and loss for the year. As a result of this change, the profit for the year ended March 31, 2016 decreased by Rs.259.19 lakh. These remeasurement losses have been reclassified to other comprehensive income at Rs.169.48 lakh (net of taxes Rs.89.70 lakh). This reclassification has led no impact on equity or profit for the year.

j. The interest on compulsorily convertible debentures provided as per the coupon has been reduced by Rs.84.93 lakh. Instead the interest has been provided at an effective interest rate to the tune of Rs.12.68 lakh. The profit has increased by Rs.72.25 lakh (refer note c above).

k. Under IGAAP, the depreciation on lease hold lands was classified as a depreciation expense. Since under Ind AS, these leasehold lands are classified as operating leases, the prepaid rent has been expensed off as lease rent. Hence, the depreciation expense has reduced by Rs.144.90 lakh and other expenses has increased by the same amount. There is no impact on profit for the year (refer note a above).

l. Under IGAAP, the company used to follow straight line method of accounting for operating leases. Under Ind AS, the company does not follow straight line accounting for operating leases and hence the rent equalization reserve has been reversed. It has increased the profit to the tune of Rs.1.62 lakh (refer note d above).

m. The deferred tax liability has been created on the above adjustments to the tune of Rs.167.89 lakh for the year ended March 31, 2016. Consequently, the profit for the year has reduced by an equivalent amount (refer note f above).

Explanation 4 - Impact on cash flows for the year ended March 31, 2016

There is no impact on cash flows due to transition to Ind AS.

3. Disclosures under Indian Accounting Standards:

3.1 Employee Benefit Obligations

a. Short-term Employee Benefits

b. Long-term Employee Benefits

i) Defined Contribution Plans

The Company makes Provident Fund contributions, which are defined contribution plans, for qualifying employees. Company has no further payment obligations once the contributions have been paid. Under the Provident Fund Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the Company are in compliance with the rates specified in the rules of the schemes. The Company recognised Rs.320.13 Lakh (previous year Rs.291.59 Lakh) as an expense and included in Note 28 - Employee Benefit Expenses âContribution to Provident Fund and Other Fundsâ in the Statement of Profit and Loss for the year ended March 31, 2017.

ii) Defined Benefit Plans

The Company offers the following defined benefit schemes to its employees:

- Gratuity (refer note 28)

- Post-Retirement Medical Benefit Plan(PRMB) (refer note 28)

The following table sets out the funded/unfunded status of the defined benefit schemes and the amount recognised in the financial statements:

These plans typically expose the Company to actuarial risks such as:

Interest rate risk - A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the planâs debt investments.

Salary risk - The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability. The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc.

Sensitivity

Sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

iii) Other Long-term Employee Benefits

An amount of Rs.292.36 Lakh (previous year Rs.237.09 Lakh) and Rs.20.74 Lakh (previous year Rs.24.97 Lakh) has been charged to the Statement of Profit and Loss for the year ended March 31, 2017 towards Compensated absences and Long service awards respectively.

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.

NA: Not Applicable

3.2 Segment Information

a. Description of segments and principal activities

b. Entity wide disclosures

Information about products and services:

The Company is in a single line of business of âSale of Natural Gasâ.

Geographical Information:

The company operates presently in the business of city gas distribution in India. Accordingly, revenue from customers earned and non-current asset are located, in India.

Information about major customers:

Three customers during the year ended March 31, 2017 and four customers during the year ended March 31, 2016 contributed to more than 10% of the revenue individually. Revenue from these customers was Rs.1,15,482.93 lakh and Rs.1,42,476.82 lakh during the year ended March 31, 2017 and March 31, 2016 respectively.

3.3 Related Party Transactions

GAIL (India) Limited (GAIL) and BG Asia Pacific Holdings Pte. Limited (BGAPHPL) were promoter joint venturers till June 30, 2016 and w.e.f. July 1, 2016 both are having significant influence on the Company. (BG Energy Holdings Limited (BGEHL) was a joint venturer under JV agreement and the JV agreement was assigned to BGAPHPL w.e.f. November 2, 2015).

Details of transactions with related entities (including entities transacting on behalf of related entities), in ordinary course of business:

3.4 Financial Instruments (Fair Value Measurements) :

a. Classification of Financial Assets and Liabilities

b. Fair Value Hierarchy of Financial Assets and Liabilities

Level 1: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Level 3 inputs are unobservable inputs for the asset or liability.

Companyâs policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(i) Measured at Fair Value Through Profit or Loss (FVTPL)

The company has investments in debt mutual funds which are not quoted in the active market. These debt mutual funds are subsequently measured at FVTPL as per the closing NAV statement provided by the mutual fund house. The corresponding unrealized gain or loss on fair valuation is recorded in profit and loss account under other income. Accordingly, such debt mutual funds fall under fair value hierarchy level 2. The fair value of these mutual funds as at March 31, 2017, March 31, 2016 and April 1, 2015 is Rs.46,666.60 lakh, Rs.39,340.10 lakh, Rs.37,183.40 lakh respectively.

(ii) Measured at Amortised Cost for which Fair Value is disclosed

The fair values of all current financial assets and liabilities including trade receivables and unbilled revenue, cash and cash equivalents, bank balances, security deposits, trade payables, capital creditors and other current financial assets and liabilities are considered to be the same as their carrying values, due to their short term nature. The fair values of all non-current financial assets and liabilities including security deposits, trade receivables and borrowings and other non-current financial assets and liabilities are considered to be the same as their carrying values, as the impact of fair valuation is not material.

c. Capital Management

Total equity as shown in the balance sheet includes equity share capital, general reserves and retained earnings.

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to its shareholders.

The Company does not have any borrowing except for sales tax deferred loan.

d. Financial risk management

(i) Credit Risk

Trade receivables

The company supplies natural gas to customers.

For trade receivables, except for specifically identified cases, Company follows a simplified approach where provision is made as per the ageing buckets which are designed based on historical facts and patterns.

Other financial assets

The Company maintains exposure in security deposits, cash and cash equivalents and term deposits with banks.

In case of security deposits, majority of which are given to Municipal authorities (which are government controlled entities) towards pipeline laying activity, the credit risk is low.

In case of bank deposits, regular quotations for interest rate are invited and based on best offered rate the bank deposits are placed with banks having reasonably high net worth. Exposures of deposit placed are restricted to limits per bank as per policy and limits are actively monitored by the Company. We understand that the credit risk is very low for such deposits.

The Companyâs maximum exposure to credit risk as at March 31, 2017, March 31, 2016, April 1, 2015 is the carrying value of each class of financial assets as disclosed in note 6,7,11,12 and 13.

(ii) Liquidity Risk

Liquidity risk is the risk that the Company will find it difficult in meeting its obligations associated with its financial liabilities in time.

Management monitors rolling forecasts of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows.

The tables below analyses the Companyâs financial liabilities into relevant maturity groupings based on their contractual maturities.

(iii) Market Risk

Foreign Exchange Risk

The table below shows the unhedged currency exposure of financial liabilities:

Interest Rate Risk:

There are no interest bearing borrowings and hence company is not exposed to interest rate risk presently.

The Companyâs investments in fixed deposits with banks and liquid debt mutual funds are for short durations, and therefore do not expose the Company to significant interest rates risk.

3.5 Operating Leases

a. Rental Expenses relating to Operating Leases (refer note 30)

b. The future minimum lease payments of non-cancellable operating leases are as under:

Operating leases relate to land with lease term of 17 to 116 years. The Company does not have an option to purchase at the end of the lease term.

3.6 Income Tax

a. Components and movements of Deferred Tax Liability (Net):

b. Components of Income Tax Expense

c. Reconciliation of Income Tax Expense with Accounting Profit :

3.7 Capital and other commitments

a. Estimated amount of contracts to be executed on capital account and not provided for (net of advances) Rs.14,623.82 Lakh (31.03.2016 - Rs.21,115.11 Lakh; 31.03.2015 - Rs.17,690.67 Lakh).

3.8 Contingent Liabilities (to the extent not provided for)

Claims against the Company not acknowledged as debts in respect of which the Company does not expect outflow of resources Rs.31,637.46 Lakh (31.03.2016 - Rs.28,195.44 Lakh; 31.03.2015 - Rs.25,322.40 Lakh), includes:

i) Claims disputed by the Company relating to issues of applicability aggregating to Rs.18,951.50 Lakh (31.03.2016 -Rs.17,027.68 Lakh; 31.03.2015 - Rs.15,418.74 Lakh) as detailed below:

# includes Rs.12,497.23 lakh, where CESTAT order is in favor of the company for which department may go into appeal, hence treated as contingent liability.

Future cash outflows in respect of above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.

iii) Third party/other claims arising from disputes relating to contracts aggregating to Rs.107.59 Lakh (31.03.2016 - Rs.157.17 Lakh; 31.03.2015 - Rs.421.40 Lakh).

iv) Demand from GAIL (India) Limited in respect of additional transportation tariff for the period from November 2008 to March 2017 Rs.12,252.59 Lakh (from November 2008 to March 2016 Rs.10,735.60 Lakh; from November 2008 to March 2015 Rs.9,277.45 Lakh). In respect to this, the company had filed a petition with PNGRB. PNGRB has set aside the petition vide web hosted order dated October 15, 2015. The company then filed petition on November 5, 2015 with the High Court of Delhi. High Court of Delhi vide order dated November 30, 2015 has advised the company to prefer an appeal before Appellate Tribunal for Electricity (APTEL) - Appellate Authority of PNGRB. Accordingly, the company has filed an appeal before APTEL on January 21, 2016 and the case is being heard at APTEL. Based on the legal opinion, the Company contends that the same is not payable and the Company does not expect outflow of resources.

v) Claims raised by GAIL (India) Limited in respect of differential price for supplies over and above allocation Rs.6.84 Lakh (31.03.2016 - Rs.50.38 Lakh; 31.03.2015 - Rs.Nil).

vi) Claims from consumers not acknowledged as debts Rs.33.28 Lakh (31.03.2016 - Rs.33.56 Lakh; 31.03.2015 - Rs.62.22 Lakh).

vii) Liability on account of revision of trade margin as per contracts with Oil Marketing Companies with effect from January 1, 2015 is yet to be determined in view of undergoing negotiations.

3.9 CSR Expenditure:

(a) Gross amount required to be spent by company for the year is Rs.909.11 Lakh (previous year Rs.888.98 Lakh)

(b) Amount spent during the period:

i. Construction/acquisition of asset Rs.Nil (previous year Rs.Nil)

ii. On purposes other than (i) above Rs.468.60 Lakh (previous year Rs.460.24 Lakh) (Refer Note 30)

Amount deposited of Rs.63,71,50,782 includes Rs.63,70,60,782 directly deposited by authorized collection entities under contract with MGL, in Companyâs bank account as follows:

(a) Permitted receipts being Sales Collection on account of sale of natural gas Rs.63,42,95,782 (Includes SBN Rs.30,75,49,500 and Other Denomination Notes Rs.32,67,46,282) and

(b) Other than Permitted receipts SBN Rs.27,65,000, which does not belong to the Company.

3.10 On January 5, 2016, existing shareholders were offered 94,92,545 Unsecured Compulsorily Convertible Debentures (UCCDs) (Face Value Rs.10/- each), on a rights basis in the proportion of 17 (seventeen) Unsecured CCDs for every 160 (one hundred and sixty) equity shares of face value of Rs.10 each. 94,36,178 Unsecured CCDs were allotted to Government of Maharashtra against their application and the balance 56,367 Unsecured CCDs were cancelled. These Unsecured CCDs allotted to Government of Maharashtra were converted at par into equity shares of same number on June 7, 2016.

3.11 The company has completed an Initial Public Offer (âIPOâ) in June, 2016 through offer for sale by the Selling shareholders, (âthe offerâ). The equity shares of the company got listed on Stock Exchanges (NSE and BSE) on July 1, 2016.

3.12 The Board of Directors, at its meeting held on May 26, 2017, has proposed a final dividend of Rs.11/- per equity share of face value Rs.10/- each for the financial year ended March 31, 2017. This is in addition to the interim dividend of Rs.8/- per equity share paid during the year. With this, the total dividend for the year is Rs.19/- per equity share (normal dividend of Rs.12.50 and special dividend of Rs.6.50) of face value Rs.10/- each. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved would result in a cash outflow of approximately Rs.12,848.20 Lakh, including corporate dividend tax.

Mar 31, 2016

1 Employee Benefit Plan

Defined Contribution Plans

The Company makes Provident Fund contributions, which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs,291.59 Lakh (previous year Rs,252.50 Lakh) as an expense and included in Note 23 - Employee Benefit Expenses ''Contribution to Provident Fund and Other Funds'' in the Statement of Profit and Loss for the year ended March 31, 2016. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the period when the employees render the service. These benefits include compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the balance sheet date. Long Service Awards are recognized as a liability based on actuarial valuation of the defined benefit obligation as at the balance sheet date.

Defined Benefit Plan

The Company offers the following employee benefit schemes to its employees:

1. Gratuity (included as part of Note 23 Employee benefits expense)

2. Post-retirement medical benefit plan(included as part of Note 23 Employee benefits expense)

The following table sets out the funded/unfunded status of the defined benefit schemes and the amount recognized in the financial statements:

The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc. In order to protect the capital and optimize returns within acceptable risk parameters, the plan assets are well diversified.

The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.

The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

The Company provides for compensated absences to employees which can be carried forward to future years. Consequently based on Guidance on implementation of Accounting Standard 15 "Employee Benefitsâ (AS-15), the Company has considered the benefits provided as other long term employee benefits. An amount of Rs,237.09 Lakh (previous year Rs,265.18 Lakh), has been charged to the Statement of Profit and Loss for the year ended March 31, 2016.

2 Disclosure as per Accounting Standard 17 - "Segment Reporting"

The Company operates presently in the business of city gas distribution. The Company earns revenue by selling natural gas and does not earn revenue by transporting gas of third parties. There are no separate reportable segments, other than selling of natural gas.

3 Disclosures as per Accounting Standard 18 - "Related Party Disclosures" are as follows:

A. GAIL (India) Ltd. - Joint Venturer

B. BG Asia Pacific Holdings Pte. Ltd. (BGAPHPL) - Investing Company

- (BG Energy Holdings Limited is the Joint Venturer $).

$ with effect from November 2, 2015 BG Energy Holdings Limited has assigned the existing Joint Venture agreement between GAIL and BG Energy Holdings Limited, to BGAPHPL

C. Key Management Personnel

- Mr. V. C. Chittoda - Managing Director (up to September 29, 2014)

- Mr. Rajeev Kumar Mathur - Managing Director (from September 29, 2014)

- Ms. Susmita Sengupta - Technical Director

Note: Related party relationship is as identified by the Company and relied upon by the auditors.

4 Disclosure for leases under Accounting Standard 19 - "Leases"

a. Company has taken on lease few equipments/ machines for some CNG Retail Outlets. Lease charges are dependent on sale of CNG at these outlets and hence there are no minimum lease payments. The term of the contract is one or two years, renewable at discretion of the Company. The contract does not impose any restrictions concerning dividend, additional debt and further leasing. Lease payments recognized in the Statement of Profit and Loss under "Miscellaneous Expensesâ (Note 25 - Other Expenses) for the year ended March 31, 2016 is Rs,246.81 Lakh (previous year Rs,241.53 Lakh).

b. Company has taken certain vehicles under operating lease agreements. Lease payments recognized in the Statement of Profit and Loss under "Miscellaneous Expensesâ (Note 25 - Other Expenses) for the year ended March 31, 2016 is Rs,1,320.95 Lakh (previous year Rs,1098.34 Lakh).

c. Company has entered into agreements for taking on leave and license basis certain residential/office premises/godowns. All the agreements contain a provision for its renewal. Lease payments recognized in the Statement of Profit and Loss under Rent (Note 25 - Other Expenses) for the year ended March 31, 2016 is Rs,1,018.83 Lakh (previous year ended Rs,1,004.30 Lakh).

5 Capital and other commitments

i. Estimated amount of contracts to be executed on capital account and not provided for (net of advances) Rs,21,115.11 Lakh (previous year Rs,17,690.67 Lakh).

ii. All term contracts for purchase of natural gas with suppliers, has contractual obligation of "take or payâ for shortfall in contracted Minimum Guaranteed Quantity (MGQ) as specified in individual contracts. Estimation of these MGQ commitments is dependent on nomination of quantity by suppliers and actual purchase by the company. As both the factors "quantity nomination by supplierâ and "quantity to be purchased by the companyâ, are not predictable, MGQ commitment is not quantifiable.

6 Contingent Liabilities (to the extent not provided for) Claims against the Company not acknowledged as debts in respect of which the Company does not expect outflow ofresources Rs,28,195.44 Lakh (previous year Rs,25,322.40 Lakh), includes:

Future cash outflows in respect of above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.

ii. Central/State/Local Authority property taxes, lease rents, pipeline related re-instatement charges etc claims disputed by the Company relating to issues of applicability and determination aggregating to Rs,191.05 Lakh (previous year Rs,142.59 Lakh).

iii. Third party/other claims arising from disputes relating to contracts aggregating to Rs,157.17 Lakh (previous year Rs,421.40 Lakh).

iv. Demand from GAIL (India) Limited in respect of additional transportation tariff for the period from November 2008 to March 2016 Rs,10,735.60 Lakh (previous year - from November 2008 to March 2015 Rs,9,277.45 Lakh). In respect to this, the company had filed a petition with PNGRB. PNGRB has set aside the petition vide web hosted order dated October 15, 2015. The company then filed petition on November 05, 2015 with the High Court of Delhi. High Court of Delhi vide order dated November 30, 2015 has advised the company to prefer an appeal before Appellate Tribunal for Electricity (APTEL) -Appellate Authority of PNGRB. Accordingly, the company has filed an appeal before APTEL on January 21, 2016. Based on the legal opinion, the Company contends that the same is not payable and the Company does not expect outflow of resources.

v. Claims raised by GAIL (India) Limited in respect of differential price for supplies over and above allocation Rs,50.38 Lakh (March 31, 2015 Rs, Nil)

vi. Claims from consumers not acknowledged as debts Rs,33.56 Lakh (March 31, 2015 Rs,62.22 Lakh).

vii. Liability on account of revision of trade margin as per contracts with Oil Marketing Companies with effect from January 1, 2015 is yet to be determined in view of undergoing negotiations.

iv. Remittance in foreign currency on account of dividend to a non-resident shareholder, BG Asia Pacific Holding Pte. Ltd., Singapore during the year ended March 31, 2016 is Rs, 7,778.74 Lakh for the year ended March 31, 2015 on 4,44,49,960 equity shares (Previous year Rs, 7,778.74 Lakh for the year ended March 31, 2014 on 4,44,49,960 equity shares).

^v. CSR Expenditure:

a. Gross amount required to be spent by company for the year is Rs, 888.98 Lakh (previous year Rs,892.19 Lakh)

b. Amount spent during the period:

i. Construction/acquisition of asset Rs, Nil (previous year Rs, Nil)

ii. On purposes other than (i) above Rs,460.24 Lakh (previous year Rs,244.54 Lakh) (Refer Note 25)

7 The Foreign Investment Promotion Board (FIPB) through its approval had allowed the Company to continue with the arrangements of foreign equity participation up to 50% in the paid up capital of the Company until December 2006. This approval was subject to the condition that the Company would be required to bring an Initial Public Offer (IPO) to divest the shareholding of the promoters to 35% each as per the Joint Venture Agreement. Further, FIPB vide its letter dated 2^ndJanuary, 2015 conveyed the approval of Government of India to the proposal of the Company regarding amendment of approval to record revised shareholding structure of the Company subject to compliance of certain conditions. FIPB has also conveyed that compounding would be needed by Reserve Bank of India (RBI) for non-compliance of divestment conditions during the period January, 2007 to 12.03.2008. RBI, vide order dated February 10, 2016, has approved the compounding application filed by the company for non-compliance of disinvestment condition. Compounding charges levied by RBI is Rs,7.87 Lakh and the same is paid by the company on February 18, 2016. The proposed IPO and the shareholding post the IPO will have to be in compliance with the aforesaid letter.

8 During the previous year existing shareholders were offered 94,92,545 Unsecured Compulsorily Convertible Debentures (CCDs) (Face Value Rs,10/- each), on a rights basis in the proportion of 17 (seventeen) Unsecured CCDs for every 160 (one hundred and sixty) equity shares of face value of Rs,10 each held on following terms and conditions:

a. Each Unsecured CCD issued under the Rights Issue shall be compulsorily and automatically convertible into one fully paid up Equity Share (i) on the expiry of 2 years from the date of allotment of the Unsecured CCDs; or (ii) during seven days prior to the date of the filing of the Red Herring Prospectus with [Registrar of Companies, Mumbai at Maharashtra ("RoCâ)] whichever is earlier, in the event the Company proposes an initial public offering either by way of a fresh issue of Equity Shares by the Company or an offer for sale by the existing shareholders or both, without any application or any further act on the part of the holder of the Unsecured CCDs. There shall be no redemption of the Unsecured CCDs. The conversion price would be adjusted for any bonus or rights issue made by the Company prior to the conversion date.

b. Interest at the rate of 9.0% per annum on the face value of the Unsecured CCDs will be payable annually on the Unsecured CCDs from the date of allotment of the Unsecured CCDs up to the date prior to the date of conversion of Unsecured CCDs into equity shares of the Company.

Application for Subscription for 94,36,178 Unsecured CCDs (Comprising of 46,920 Unsecured CCDs as their rights entitlement and 93,89,258 Unsecured CCDs were applied as additional Unsecured CCDs over and above their rights entitlement) was received from Government of Maharashtra (GOM), and accordingly 94,36,178 Unsecured CCDs were allotted to GOM and the balance 56,367 Unsecured CCDs have been cancelled.

9 The Company had filed Draft Red Herring Prospectus (DRHP) with The Securities Exchange Board of India (SEBI) under SEBI (Issue of Capital and Disclosure Requirements) Regulation 2009 on November 13, 2015. SEBI approved the DRHP vide letter dated January 15, 2016 and the Company is in the process of filing Red Herring Prospectus (RHP).

10. Proposed Dividend for the year 2015-16 is Rs,15,634.78 Lakh (Previous Year Rs,15,634.78 Lakh). Dividend per Equity share is Rs,17.50, including special dividend of Rs,7.50 (Previous Year Rs,17.50, including special dividend of Rs,7.50).

11. Previous year''s figures

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2014

1.1 Employee Benefit Plan

Defined Contribution Plans

The Company makes Provident Fund contributions, which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.291.59 Lakh (previous year Rs.252.50 Lakh) as an expense and included in Note 23 - Employee Benefit Expenses ''Contribution to Provident Fund and Other Funds'' in the Statement of Profit and Loss for the year ended March 31, 2016. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the period when the employees render the service. These benefits include compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date. Long Service Awards are recognised as a liability based on actuarial valuation of the defined benefit obligation as at the balance sheet date.

Defined Benefit Plan

The Company offers the following employee benefit schemes to its employees:

1. Gratuity (included as part of Note 23 Employee benefits expense)

2. Post-retirement medical benefit plan(included as part of Note 23 Employee benefits expense)

The following table sets out the funded/unfunded status of the defined benefit schemes and the amount recognised in the financial statements:

1.2 Disclosure as per Accounting Standard 17 - "Segment Reporting"

The Company operates presently in the business of city gas distribution. The Company earns revenue by selling natural gas and does not earn revenue by transporting gas of third parties. There are no separate reportable segments, other than selling of natural gas.

1.3 Disclosures as per Accounting Standard 18 - "Related Party Disclosures" are as follows:

A. GAIL (India) Ltd. - Joint Venturer

B. BG Asia Pacific Holdings Pte. Ltd. (BGAPHPL) - Investing Company

- (BG Energy Holdings Limited is the Joint Venturer $).

$ with effect from November 2, 2015 BG Energy Holdings Limited has assigned the existing Joint Venture agreement between GAIL and BG Energy Holdings Limited, to BGAPHPL

C. Key Management Personnel

- Mr. V. C. Chittoda - Managing Director (upto September 29, 2014)

- Mr. Rajeev Kumar Mathur - Managing Director (from September 29, 2014)

- Ms. Susmita Sengupta - Technical Director

1.4 Disclosure for leases under Accounting Standard 19 - "Leases"

a. Company has taken on lease few equipments/ machines for some CNG Retail Outlets. Lease charges are dependent on sale of CNG at these outlets and hence there are no minimum lease payments. The term of the contract is one or two years, renewable at discretion of the Company. The contract does not impose any restrictions concerning dividend, additional debt and further leasing. Lease payments recognized in the Statement of Profit and Loss under "Miscellaneous Expenses" (Note 25 - Other Expenses) for the year ended March 31, 2016 is Rs.246.81 Lakh (previous year Rs.241.53 Lakh).

b. Company has taken certain vehicles under operating lease agreements. Lease payments recognised in the Statement of Profit and Loss under "Miscellaneous Expenses" (Note 25 - Other Expenses) for the year ended March 31, 2016 is Rs.1,320.95 Lakh (previous year Rs.1098.34 Lakh).

c. Company has entered into agreements for taking on leave and license basis certain residential/office premises/godowns. All the agreements contain a provision for its renewal. Lease payments recognised in the Statement of Profit and Loss under Rent (Note 25 - Other Expenses) for the year ended March 31, 2016 is Rs.1,018.83 Lakh (previous year ended Rs.1,004.30 Lakh).

2.1 Capital and other commitments

i. Estimated amount of contracts to be executed on capital account and not provided for (net of advances) Rs.21,115.11 Lakh (previous year Rs.17,690.67 Lakh).

ii. All term contracts for purchase of natural gas with suppliers, has contractual obligation of "take or pay" for shortfall in contracted Minimum Guaranteed Quantity (MGQ) as specified in individual contracts. Estimation of these MGQ commitments is dependent on nomination of quantity by suppliers and actual purchase by the company. As both the factors "quantity nomination by supplier" and "quantity to be purchased by the company", are not predictable, MGQ commitment is not quantifiable.

2.2 Contingent Liabilities (to the extent not provided for)

Claims against the Company not acknowledged as debts in respect of which the Company does not expect outflow of resources Rs.28,195.44 Lakh (previous year Rs.25,322.40 Lakh), includes:

i. Claims disputed by the Company relating to issues of applicability aggregating to Rs.17,027.68 Lakh (previous year Rs.15,418.74 Lakh) as detailed below:

Future cash outflows in respect of above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.

ii. Central/State/Local Authority property taxes, lease rents, pipeline related re-instatement charges etc claims disputed by the Company relating to issues of applicability and determination aggregating to Rs.191.05 Lakh (previous year Rs.142.59 Lakh).

iii. Third party/other claims arising from disputes relating to contracts aggregating to Rs.157.17 Lakh (previous year Rs.421.40 Lakh).

iv. Demand from GAIL (India) Limited in respect of additional transportation tariff for the period from November 2008 to March 2016 Rs.10,735.60 Lakh (previous year - from November 2008 to March 2015 Rs.9,277.45 Lakh). In respect to this, the company had filed a petition with PNGRB. PNGRB has set aside the petition vide web hosted order dated October 15, 2015. The company then filed petition on November 05, 2015 with the High Court of Delhi. High Court of Delhi vide order dated November 30, 2015 has advised the company to prefer an appeal before Appellate Tribunal for Electricity (APTEL) - Appellate Authority of PNGRB. Accordingly, the company has filed an appeal before APTEL on January 21, 2016. Based on the legal opinion, the Company contends that the same is not payable and the Company does not expect outflow of resources.

v. Claims raised by GAIL (India) Limited in respect of differential price for supplies over and above allocation Rs.50.38 Lakh (March 31, 2015 Rs.Nil)

vi. Claims from consumers not acknowledged as debts Rs.33.56 Lakh (March 31, 2015 Rs.62.22 Lakh).

vii. Liability on account of revision of trade margin as per contracts with Oil Marketing Companies with effect from January 1, 2015 is yet to be determined in view of undergoing negotiations.

2.3 The Foreign Investment Promotion Board (FIPB) through its approval had allowed the Company to continue with the arrangements of foreign equity participation up to 50% in the paid up capital of the Company until December 2006. This approval was subject to the condition that the Company would be required to bring an Initial Public Offer (IPO) to divest the shareholding of the promoters to 35% each as per the Joint Venture Agreement. Further, FIPB vide its letter dated 2ndJanuary, 2015 conveyed the approval of Government of India to the proposal of the Company regarding amendment of approval to record revised shareholding structure of the Company subject to compliance of certain conditions. FIPB has also conveyed that compounding would be needed by Reserve Bank of India (RBI) for non-compliance of divestment conditions during the period January, 2007 to 12.03.2008. RBI, vide order dated February 10, 2016, has approved the compounding application filed by the company for non-compliance of disinvestment condition. Compounding charges levied by RBI is Rs.7.87 Lakh and the same is paid by the company on February 18, 2016. The proposed IPO and the shareholding post the IPO will have to be in compliance with the aforesaid letter.

2.4 During the previous year existing shareholderswere offered 94,92,545 Unsecured Compulsorily Convertible Debentures (CCDs) (Face Value Rs.10/- each), on a rights basis in the proportion of 17 (seventeen) Unsecured CCDs for every 160 (one hundred and sixty) equity shares of face value of Rs.10 each held on following terms and conditions:

a. Each Unsecured CCD issued under the Rights Issue shall be compulsorily and automatically convertible into one fully paid up Equity Share (i) on the expiry of 2 years from the date of allotment of the Unsecured CCDs; or (ii) during seven days prior to the date of the filing of the Red Herring Prospectus with [Registrar of Companies, Mumbai at Maharashtra ("RoC")] whichever is earlier, in the event the Company proposes an initial public offering either by way of a fresh issue of Equity Shares by the Company or an offer for sale by the existing shareholders or both, without any application or any further act on the part of the holder of the Unsecured CCDs. There shall be no redemption of the Unsecured CCDs. The conversion price would be adjusted for any bonus or rights issue made by the Company prior to the conversion date.

b. Interest at the rate of 9.0% per annum on the face value of the Unsecured CCDs will be payable annually on the Unsecured CCDs from the date of allotment of the Unsecured CCDs up to the date prior to the date of conversion of Unsecured CCDs into equity shares of the Company.

Application for Subscription for 94,36,178 Unsecured CCDs (Comprising of 46,920 Unsecured CCDs as their rights entitlement and 93,89,258 Unsecured CCDs were applied as additional Unsecured CCDs over and above their rights entitlement) was received from Government of Maharashtra (GOM), and accordingly 94,36,178 Unsecured CCDs were allotted to GOM and the balance 56,367 Unsecured CCDs have been cancelled.

2.5 The Company had filed Draft Red Herring Prospectus (DRHP) with The Securities Exchange Board of India (SEBI) under SEBI (Issue of Capital and Disclosure Requirements) Regulation 2009 on November 13, 2015. SEBI approved the DRHP vide letter dated January 15, 2016 and the Company is in the process of filing Red Herring Prospectus (RHP).

2.6 Proposed Dividend for the year 2015-16 is Rs.15,634.78 Lakh (Previous Year Rs.15,634.78 Lakh). Dividend per Equity share is Rs.17.50, including special dividend of Rs.7.50 (Previous Year Rs.17.50, including special dividend of Rs.7.50).

2.7 Previous year''s figures

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

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