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GAIL (India) Ltd. இன் கணக்கு குறிப்புகள்

Mar 31, 2017

Corporate Information

GAIL (India) Limited (“GAIL” or “the company”) is a limited company domiciled in India and was incorporated on August 16, 1984. Equity shares of the Company are listed in India on the Bombay Stock Exchange and the National Stock Exchange. Also Global Depository Receipts (GDRs) of the company are listed at London Stock Exchange. The Government of India holds 54.43% in the paid-up equity capital of the company as on 31st March 2017. The registered office of the Company is located at 16, Bhikaji Cama Place, R K Puram, New Delhi-110066. GAIL is the largest state-owned natural gas processing and distribution company in India. The company has a diversified business portfolio and has interests in the sourcing and trading of natural gas, production of LPG, Liquid hydrocarbons and petrochemicals, transmission of natural gas and LPG through pipelines, etc. GAIL has also participating interest in India and overseas in Oil and Gas Blocks.

The financial statements of the company for the year ended 31st March 2017 were authorized for issue in accordance with a resolution of the directors on 22nd May 2017.

Basis of Preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

For and upto the year ended 31st March 2016, the Company prepared its financial statements in accordance with Indian GAAP, including accounting standards notified under section 133 of the Companies Act 2013, read together with para 7 of the Companies (Accounts) Rules 2014 (Indian GAAP). The financial statements for the year ended 31st March 2017 have been prepared in accordance with Ind-AS.

The financial statements have been prepared as a going concern on accrual basis of accounting. The company has adopted historical cost basis for assets and liabilities except for certain items which have been measured on a different basis and such basis is disclosed in the relevant accounting policy.

The financial statements are presented in Indian Rupees (Rs.) and the values are rounded to the nearest crore (Rs.0,000,000), except when otherwise indicated.

2. Significant accounting judgements, estimates and assumptions

The preparation of the Company’s standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities/assets at the date of the standalone financial statements. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

In particular, the Company has identified the following areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.

2.1 Judgements

In the process of applying the Company’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the standalone financial statements:

Contingencies

Contingent liabilities and assets which may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence and potential quantum, of contingencies inherently involve the exercise of significant judgments and the use of estimates regarding the outcome of future events.

2.2 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

a) Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

b) Defined benefit plans

The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

c) Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

d) Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgments in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Impairment of investment in subsidiaries, joint ventures or associates is based on the impairment calculations using discounting cash flow/net asset value method, valuation report of external agencies, Investee Company’s past history etc.

3 First time adoption - Ind AS 101

3.1 Notes to first time adoptions of Ind-AS

(a) Transition to Ind-AS

These financial statements, for the year ended 31st March 2017 are the first financial Statements, the Company has prepared in accordance with Ind-AS. For periods up to and including the year ended 31st March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31st March 2017, together with the comparative period data as at and for the year ended 31st March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1st April 2015, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements.

(b) Exemptions and exceptions availed:

Ind AS 101 ‘First time Adoption of Indian Accounting Standards’ allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

Ind-AS optional exemptions

Deemed cost for Property, Plant and Equipments/Intangible assets: Ind-AS 101 permits a first time adopter to elect to continue with the carrying value for all of its Property, Plant and Equipments (PPE) as recognised in the financial statements 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. Since there is no change in the functional currency, the Company has elected to continue with the carrying value for all of its PPE and intangible assets as recognised in its Indian GAAP financials as deemed cost at the transition date.

Leases: The Company has applied Appendix C of Ind AS 17 ‘Determining whether an Arrangement contains a Lease’ to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.

Investment in subsidiary, joint ventures and associates: Ind AS 101 permits a first time adopter to elect to continue with the carrying value for all of its investments in subsidiaries, joint ventures and associates as recognised in the financial statements 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. The Company has elected to continue with the carrying value for all of its investments in subsidiaries, joint ventures and associates as recognised in its Indian GAAP financials as deemed cost at the transition date.

Designation of previously recognised financial instruments: Ind AS 101 permits an entity to designate particular equity investments (other than equity investments in subsidiaries, associates and joint arrangements) as at fair value through other comprehensive income (FVOCI) based on facts and circumstances at the date of transition to Ind AS (rather than at initial recognition). The Company has opted to avail this exemption to designate certain equity investments as FVOCI on the date of transition.

Business Combination: Ind AS 101 provides the option to apply Ind AS 103 ‘Business Combinations’ prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Company has elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

Ind-AS mandatory exemptions

Estimates: As per Ind-AS 101, an entity’s estimates in accordance with Ind AS at the date of transition to Ind-AS at the end of the comparative period presented in the entity’s first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error. The Company has determined that the estimates as at 1st April 2015 and at 31st March 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies).

Classification and measurement of financial assets: Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition.

De-recognition of financial assets and financial liabilities: As per Ind-AS 101, an entity should apply the de-recognition requirements in Ind-AS 109, Financial Instruments, prospectively for transactions occurring on or after the date of transition to Ind-AS. The Company has elected to apply the de-recognition requirements for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

Note-1

- Under the previous GAAP, investments in equity instruments were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments, other than investments in Joint ventures, Subsidiaries and Associates are required to be measured at fair value. The resulting fair value changes of these investments have been recognised in retained earnings as at the date of transition and subsequently in the other comprehensive income for the year ended 31 March 2016.

- Under the previous GAAP, in respect to foreign currency forward contracts covered under AS -11, The Effects of Changes in Foreign Exchange Rates, the premium or discount arising at inception of foreign currency forward contracts is amortised as expense or income over the life of the contract. Derivative instruments not covered under AS 11 are accounted based on the guidance provided by the ICAI. Under Ind AS, derivatives which are not designated as hedging instruments are fair valued with resulting changes being recognised in profit or loss. Accordingly, the resulting fair value changes of all derivatives have been recognised in retained earnings as at the date of transition and subsequently in the statement of profit and loss for the year ended 31st March 2016.

- Under the previous GAAP, foreign currency borrowings were accounted for by combining a derivative and the underlying liabilities together as a single package.Treating the loan and swap as one single contract is termed as ‘synthetic accounting’ and this approach is not permitted under the Ind AS. Under AS, loan liabilities are recognised separately from the swap contracts. Accordingly, the resulting changes has been adjusted in retained earnings as at the date of transition and subsequently in statement of profit and loss for the year ended 31st March 2016.

Note-2

- Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was 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 included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

Note-3

- Under the previous GAAP, machinery spares are usually charged to the statement of profit and loss as and when consumed. Under Ind AS, spare parts are, retrospectively, recognized in accordance with Ind AS 16 when they meet the definition of property, plant and equipment. Otherwise, such items are classified as inventory. Depreciation of an asset begins when it is available for use. Spare parts are generally available for use from the date of its purchase. Accordingly, spares that meet the definition of PPE are capitalized, with depreciation calculated retrospectively from the date of its purchase.

- Under the previous GAAP, capital expenditure on the assets (enabling facilities), the ownership of which is not with the company, was charged off to statement of profit and loss. Ind AS 16 requires the company to capitalise the capital expenses (e.g. roads, culverts, electricity transmission lines, over bridge, water and drainage system etc.) incurred on land not owned by the entity, which are directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management. Consequently, expenditures incurred by the company on enabling facilities have been capitalised from the date of transition.

- Under the previous GAAP, repairs and overhaul expenditure incurred was charged off to the statement of profit and loss in most cases. However, major repairs and overhaul expenditure are capitalized under Ind AS 16 as replacement costs, if they satisfy the recognition criteria of property, plant and equipment.

Note-4

- Under the previous GAAP, transaction costs incurred in connection with borrowings are amortised upfront and charged to profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to the statement of profit and loss/capitalised using the effective interest method.

- Under the previous GAAP, discounting of provisions was not allowed. Under Ind AS, provisions are measured at discounted amounts, if the effect of time value is material. Accordingly, non-current provisions for decommissioning liability have been discounted to their present values. Impact for the same as at 1st April 2015, has been adjusted with retained earnings; and for the year ended on 31st March 2016 has been recognized in the statement of profit and loss.

- Under the previous GAAP, the Company has created provision for impairment of receivables consists only in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on Expected Loss model (ECL). Due to ECL model, the Company impaired its trade receivable on 1st April 2015 which has been eliminated against retained earnings. The impact for year ended on 31st March 2016 has been recognized in the statement of profit and loss.

- Under the previous GAAP, the Company has recognized the government grant related to non-monetary assets under Reserves and Surplus as capital reserves. Under Ind AS, same is not allowed. Government grant is disclosed under non-current financial liabilities.

- Under the previous GAAP, company was following the accounting treatment as per paragraph 46/ 46A of AS 11 ’The Effects of Changes in Foreign Exchange Rates’, with respect to exchange differences arising on restatement of long term foreign currency monetary items. Exchange differences on account of depreciable assets was added/ deducted from the cost of the depreciable asset, which was depeciated over the balance life of the asset. In other cases, the exchange difference was accumulated in Foreign Currency Monetary Items Translation Difference Account (FCMITDA) and amortised over the balance period of such asset. Under Ind AS, company has discontinued the accounting as per paragraph 46/ 46A of AS 11 and FCMITDA has been adjusted with retained earnings as on 1st April 2015 and Statement of profit and loss on 31st March 2016.

- Under the previous GAAP, lease accounting is normally applied to transactions, which are structured as lease. However, in accordance with Appendix C to Ind AS 17, where the company is lessor and the arrangement is determined as finance lease, the asset shall be derecognised from property, plant and equipment and the corresponding finance lease receivables shall be recognised. Consequently, the Company has retrospectively applied the lease accounting and resultant changes have been made in retained earnings as at the date of transition and subsequently in the statement of profit and loss.

- Under the previous GAAP, the useful life of an intangible asset may not be indefinite. Under Ind AS, useful life of an intangible asset may be finite or indefinite. Ind AS 38 does not allow amortization of an intangible asset with indefinite life. Accordingly, depreciation on intangible asset with indefinite life has been reversed in financial year 2015-16.

- Under the previous GAAP, loans to employees were recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized initially at fair value. Accordingly, the Company has fair valued these loans given to employees under Ind AS at the date of transition. Difference between the fair value and transaction value of the loans to employee has been recognized as prepaid employee costs. Subsequent to initial recognition, these loans are measured at amortized cost using the effective interest method. The amount of increase in carrying amount of loan to employees is recognized as interest income. Prepaid benefit is amortized on a straight line basis over the loan period as employee benefit expense.

Note-5

- Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base.The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

- In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.

Note-6

- Both under the previous GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, remeasurements (comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income (OCI).

Note -7

- Under previous GAAP, the Company has not presented Other Comprehensive Income (OCI) separately. Hence, the Statement of Profit and Loss under previous GAAP has been reconciled with profit and loss statement and total Other Comprehensive Income as per Ind-AS.

In the preparation of these Ind AS Financial Statements, the Company has made several presentation differences between previous GAAP and Ind AS. These differences have no impact on reported profit or total equity. Accordingly, some assets and liabilities have been reclassified into another line item under Ind AS at the date of transition. Further, in these Financial Statements, some line items are described differently under Ind AS compared to previous GAAP, although the assets and liabilities included in these line items are unaffected.

4 Contingent Liabilities and Commitments:

I. Contingent Liabilities:

(a) Claims against the Company not acknowledged as debts:

(i) Legal cases for claim of Rs.1,622.61 crore (Previous Year: Rs.1,908.80 crore) by vendors/suppliers/contractors etc. on account of liquidated damages/price reduction schedule, natural gas price differential etc. and by customers for natural gas transmission charges etc.

(ii) Income tax demand of Rs.1,128.26 crore (net of provision) (Previous Year Rs.1,303.67 crore against which the Company has filed appeals before appellate authorities/court. Further, the Income Tax Department has also filed appeals before ITAT against the relief granted to the company by CIT (Appeals) amounting to Rs.628.09 crore (including interest) (Previous Year: Rs.35433 crore).

(iii) Disputed Indirect tax demands are as under:

(iv) Miscellaneous claims of Rs.162.84crore (Previous Year: Rs.238.29 crore)

(b) Corporate Guarantees

The Company has issued Corporate Guarantees for Rs.2,203 crore (Previous Year: Rs.2,352.00 crore) on behalf of related parties for raising loan(s). The amount of loans outstanding as at the end of the year under these Corporate Guarantees are Rs.1,306 crore (Previous Year: Rs.1,390 crore).

II. Capital Commitments:

(a) Estimated amount of contracts (Net of advances) remaining to be executed on capital account as at 31st March 2017 is Rs.3,128.92 crore (Previous Year: Rs.2,036.26 crore).

(b) Other Commitments:

(i) The Company has commitment of Rs.1525.31 crore (Previous Year: Rs.1775.46 crore) towards further investment and disbursement of loan in the subsidiaries, Joint Ventures, Associates and other companies.

(ii) Commitments made by the Company towards the minimum work programme in respect of Jointly Controlled Assets have been disclosed in Note 49 (B) (v).

5 Sales Tax Department has raised a demand of Rs.3,449.18 crore (Previous Year: Rs.3,449.18 crore) and interest thereon Rs.1,513.04 crore (Previous Year: Rs.1,513.04 crore) in respect of Hazira unit in Gujarat, treating the transfer of natural gas from the State of Gujarat to other states, as interstate sales, during the period from April 1994 to March 2001. Aggrieved by the order of the Tribunal in favour of the company, the Sales Tax Department has filed petition in Hon’ble High Court of Gujarat. Final hearing in the matter has concluded in the month of November 2016 and the order of Hon’ble high court is awaited. In the opinion of the management, there is a remote possibility of crystalizing this liability.

6 In terms of the Gas Sales Agreement with the customers, value of Annual Take or Pay Quantity (ATOPQ) of Gas is accounted for on the basis of realization and shown as liability till make up Gas is delivered to customer as per the contract.

7 Disclosure under CSR expenses:

As per Section 135 of the Companies Act 2013 read with DPE guidelines, the Company is required to spend Rs.81.47 crore ( Previous Year Rs.102.34 crore) during the current year. Amount incurred during the year is Rs.123.58 crore (Previous Year Rs.118.64 crore), as per details given below:

8 In respect of certain customers towards Ship or Pay charges being sub-judice/under dispute, the Company has been issuing claim letters, aggregate amount of which is Rs.1725.43 crore (Previous Year Rs.762.47 crore) as at the end of the year. Income in respect of the same shall be recognized on final disposal of the matter.

9 Pending court cases in respect of certain customers for recovery of invoices raised by the company for use of APM gas for non-specified purposes by fertilizer companies pursuant to guidelines of Ministry of Petroleum & Natural Gas (MOP & NG), the Company has issued claim letters amounting to Rs.1975.62 crore on the basis of information provided to company by FICC.

10 Pricing and Tariff

(a) Petronet LNG Ltd (PLL), a supplier of R-LNG, has been raising invoices on the company on provisional basis on certain matters and considering the same the Company has been raising provisional invoices for sale of R-LNG to its customers. Impact of any changes in such provisional invoices is taken as and when settled.

(b) With effect from 1st April 2002, Liquefied Petroleum Gas (LPG) prices has been deregulated and is now based on the import parity prices fixed by the Oil Marketing Companies. However, the pricing mechanism is provisional and is yet to be finalized by the MoPNG. Impact on pricing, if any, will be recognized as and when the matter is finalized.

(c) Natural Gas Pipeline Tariff and Petroleum and Petroleum Products Pipeline Transportation Tariff is subject to various Regulations issued by Petroleum and Natural Gas Regulatory Board (PNGRB) from time to time. Impact on profits, if any, is being recognized consistently as and when the pipeline tariff is revised by orders of PNGRB.

(d) As per directions of Appellate Tribunal (APTEL), PNGRB has issued 06(Six) final tariff orders applicable for financial year 2016-17. The Company has filed appeal(s) before Appellate Tribunal (APTEL), against various moderations done by PNGRB in these tariff orders. Aforesaid appeals are pending for disposal. Nonetheless, the company has recognized net revenue of Rs.360 crore during the year in pursuance of these orders. As regards rest of the provisional orders, PNGRB is yet to issue its final orders.

(e) The Company has filed a Writ Petition, during the financial year 201516, before the Hon’ble Delhi High Court challenging the jurisdiction of PNGRB on fixation of transmission tariff for pipelines. The

Hon’ble Delhi High Court has dismissed the aforesaid Writ Petition vide its Order dated 11.04.2017. In this regard, the Company has filed a Review Petition before the Hon’ble Delhi High Court on 12th May 2017 against the said Order.

11 Pending disposal of cases in relation to transportation charges for Uran Trombay Pipeline, the liability of ONGC Ltd., amounting to Rs.188.3 crore (Previous year Rs.222.14 crore) and corresponding debtors for the same amounting to Rs.186.13 crore (Previous year Rs.171.65 crore) have been continued as at the end of the current financial year. During the year, ONGC in a meeting with the Company has agreed that transportation charges for the said Pipeline be paid only after collection from the respective customers by the Company. In view of this the provision made in the previous year towards doubtful recovery of aforesaid debtors of Rs.171.65 crore has been withdrawn during the year.

12 Land & Building

(a) Freehold and Leasehold Land amounting to Rs.26.14 crore and Rs.40.45 crore (Previous Year: Rs.13.15 crore and Rs.18.29 crore) respectively are capitalized on provisional basis.

(b) Title deeds for freehold (4.81 hectares) and leasehold (197.32 hectares) land amounting to Rs.19.43 crore and Rs.36.75 crore (Previous Year: Rs.7.68 crore and Rs.16.96 crore) respectively are pending execution for transfer in the name of the Company. This includes Rs.939 crore amount of Lease hold Land shown under ‘Prepayments’ in Note no 10 (Other Non-Current Assets - Non financial)

(c) Title Deeds in respect of ten residential flats at Asiad Village, New Delhi, amounting to Rs.1.67 crore (Previous Year: Rs.1.67 crore) are pending for transfer from ONGC to GAIL. The Hon’ble High court of Delhi has referred the matter to cabinet secretary for settlement.

(d) Net Block for “Building” includes an amount of Rs.2.04Crore (Previous Year Rs.0.50 Crore) earmarked for disposal but in use.

13 Earmarked Balances

(a) The balance retention from Panna Mukta Tapti (PMT) JV consortium amounting to Rs.21.80 crore (Previous Year: Rs.20.40 crore) (shown in Note No 9B) is kept as Earmarked Balance in short term deposit in banks. It includes interest accrued but not due amounting to Rs.0.15 crore (Previous Year: Rs.0.26 crore). This interest income does not belong to the Company and not accounted for as income.

(b) Liability on account of “Gas Pool Account” amounting to Rs.268.56 crore (Previous Year: Rs.927.87 crore) (shown in Note No. 14) represents amount held by the Company as custodian pursuant to directions of MOPNG. The amount received is kept as Earmarked Fund in the form of Short Term Deposits in banks (shown in Note No 9B). It includes interest accrued but not due amounting to Rs.4.55 crore (Previous Year: Rs.14.91 crore). This interest does not belong to the Company and not accounted for as income.

(c) Gas Pool Money (Provisional) shown under “Other Long Term Liabilities” amounting to Rs.655.48 crore (Previous Year: Rs.1,006.79 crore) (shown in Note No 14) with a corresponding debit thereof under Trade Receivable (after reversal during the year in case of certain customers) will be invested/paid as and when said amount is received from the customers.

(d) Liability on account of Pipeline Overrun and Imbalance Charges amounting to Rs.99.74 crore (Previous Year: Rs.85.81 crore) (shown in Note No 14) represents amount held by the Company as custodian pursuant to directions of PNGRB. The amount received is kept as Earmarked Fund in the form of Short Term Deposits in banks (shown in Note No.9B). It includes interest accrued but not due amounting to Rs.382 crore (Previous Year: Rs.3.93 crore) on short term deposits. This interest does not belong to the Company and not accounted for as income.

14 The Company has an equity investment amounting to Rs.974.31 crore, in a joint venture company, Ratnagiri Gas and Power Private Limited (RGPPL), which is equivalent to 25.50% of the paid up equity capital of RGPPL as on 31stMarch 2017.

RGPPL is in the process of restructuring its business by way of de-merger of its LNG business into a separate company effective from 1st January 2016. The scheme of Demerger has been approved by the Board of RGPPL, all the Shareholders including GAIL & NTPC, as well as by the majority of Lenders and has been filed with National Company Law Tribunal, New Delhi on 23rd December 2016 for approval.

In order to comply with the provisions of Ind AS 36 on “Impairment of Assets” and for ascertaining the amount to be impaired as on 31st March 2017 from aforesaid investments the company has, along with RGPPL and other shareholder NTPC Ltd, undertaken impairment study of assets of RGPPL. Based upon the impairment study a provision of Rs.783 crore is made during the year towards impairment loss in carrying value of aforesaid investment. Amount of impairment has been shown as exceptional item in the statement of profit & loss.

15 GAIL is acting as pool operator in terms of the decision of Government of India for pooling of natural gas for Urea Plants. The scheme envisages uniform cost of gas for urea production by settlement of difference in weighted average price of gas of each plant to the weighted average price for the industry. Accordingly, an amount of Rs.78.34 crore (Previous Year Rs.604.27 Crore) is payable to and correspondingly receivable from Urea Plants, as on 31st March 2017. After netting of the payable and receivable amounts, there is no impact in the financial statements.

16 GAIL is acting as pool operator in terms of the decision of the Government of India for capacity utilisation of the notified gas based power plants. The Scheme, which was applicable till 31st March 2017, envisaged support to the power plants from the Power Sector Development Fund (PSDF) of the Government of India. The gas supplies were on provisional / estimated price basis which were to be reconciled based on actual cost. Accordingly, current liabilities include a sum of Rs.87.63 Crore (Previous Year Rs.510.89 Crore) on this account, as on 31st March 2017 which is payable to the above said power plants and / or to the Government of India.

17 Trade Receivables continued to (shown in Note No 6) include an amount of Rs.255.36crore(Previous Year Rs.255.36 Crore), from Indian Oil Corporation Ltd (IOCL) towards ship or pay charges for shortfall in the Annual Contracted Quantity (for the period from 2010 to 2015), in pursuance of Gas Transmission Agreement dated 7th October 2005. IOCL, on 22nd March 2016, has disputed the claim of the Company. As per the legal opinion obtained by the Company in the matter, the dispute raised by IOCL is not tenable and hence no provision has been made during the year. IOCL vide letter dated 28th April 2017 has come forward for an amicable settlement. Adjustments, if any, shall be done on final outcome of the matter.

18 PNGRB on 19.02.2014 notified insertion in Affiliate Code of Conduct that an entity engaged in both marketing and transportation of natural gas shall create a separate legal entity for transportation of natural gas by 31.03.2017 and the right of first use shall, however, remain with the affiliate of such entity. The Company has challenged the said PNGRB notification before Hon’ ble Delhi High Court by way of writ and the same is pending adjudication.

19 Pay Revision of the employees of the company is due w.e.f. 1st January 2017. Pending finalization of pay revision by Government of India, a provision of Rs.93.95 Crores has been made based on 3rd Pay Revision Recommendation for CPSEs on estimated basis.

20 Disclosure under the Ind AS 19 on Employee Benefits is given as below:

I. Superannuation Benefit Fund (Defined Contribution Fund)

The Company has paid for an amount of Rs.55.83 crore (Previous Year: Rs.65.66 crore) towards contribution to Superannuation Benefit Fund Trust and charged to statement of profit and loss.

II. Provident Fund

The Company has paid contribution of Rs.54.98 crore (Previous Year Rs.53 23 crore) to Provident Fund Trust at predetermined fixed percentage of eligible employees’ salary and charged to statement of profit and loss. Further, the obligation of the Company is to make good shortfall, if any, in the fund assets based on the statutory rate of interest in the future period. During the year, surplus in the fund is more than the interest rate guaranteed liability of the Company hence, the Company has reversed a provision of Rs.Nil (Previous Year Nil), as per actuarial valuation and the balance provision to meet any short fall in the future period to be compensated by the Company to the Provident Fund Trust as at the end of the current financial year is Nil (Previous Year Nil).

III. Other Benefit Plans

a) Gratuity:

15 days salary for every completed year of service. Vesting period is 5 years and payment is limited to Rs.10 lakh. However, in view of 3rd pay revision recommendations applicable from 01.01.2017, the provision towards for enhanced limit of Rs.20 lakhs has been made during the year. Actual disbursement would be made based on the final order w.r.t. aforesaid pay revision.

b) Post-Retirement Medical Scheme (PRMS)

The Company contributes to the defined benefit plans for Post Retirement Medical Scheme using projected unit credit method of actuarial valuation. Under the scheme eligible ex-employees are provided medical facilities. During the year the Company has earmarked Rs.248.99 crore (previous year Nil) towards the PRMS in a separate bank account.

c) Earned Leave Benefit (EL)

Accrual 30 days per year. Encashment while in service 75% of accumulated Earned Leave balance subject to maximum of 90 days at a time; provided a minimum balance of 15 days is left over in the respective employee’s account. Encashment on retirement or superannuation maximum 300 days.

d) Terminal Benefits (TB)

At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Transfer Traveling Allowance.

e) Half Pay Leave (HPL)

Accrual 20 days per year. The encashment of unavailed HPL is allowed as per approved Company rule.

f) Long Service Award (LSA)

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded monetarily based on the duration of service completed.

The following table summarizes the components of net benefit expenses recognized in the statement of profit and loss based on actuarial valuation.

21. Disclosure as per Ind AS 23 on ‘Borrowing Costs’:

Borrowing costs capitalized in assets including amount allocated towards Capital Work in Progress during the year was Rs.49.16 crore (Previous Year: Rs.42.34 crore).

22. In compliance of Ind AS 108 on “Operating Segment”, the Company has adopted following Business segments as its reportable segments:

(i) Transmission services

a) Natural Gas

b) LPG

(ii) Natural Gas Marketing

(iii) Petrochemicals

(iv) LPG and other Liquid Hydrocarbons

(v) Other Segments (include GAILTEL, E& P and Power Generation)

There are no geographical segments in the Company.

The disclosures of segment wise information is given as per Annexure-A.

23. In compliance of Ind AS 24 on “Related Party Disclosures”, the names of related parties, nature of relationship and detail of transactions entered therewith are given in Annexure - B.

24. Disclosure under Ind AS 112 on “Disclosure of Interests in Other Entities”:

a) Jointly Controlled Assets

I) The Company has participating interest in blocks offered under New Exploration Licensing Policy (NELP), in 10 Blocks (Previous Year: 12 Blocks) for which the Company has entered into Production Sharing Contract(s) with respective host Governments along with other partners for exploration and production of oil and gas. The Company is a nonoperator, except in Block CB-ONN-2010/11, where it is the operator. The expenses, incomes, assets and liabilities are shared by the company based upon its participating interest in production sharing contract(s) of respective blocks.

The participating interest in the ten NELP Blocks in India as at the end of the current financial is as under:

ii) In addition to above, the Company has farmed-in as non - operator in the following blocks:

* In addition, the Company has 8.5% participating interest in SHWE Offshore Midstream pipeline project in Myanmar for the purpose of transportation of gas from the delivery point in offshore, Myanmar to landfall point in Myanmar.

iii) The Company’s share in the assets, liabilities, income and expenditure for the year in respect of joint operations project blocks has been incorporated in the Company’s financial statements based upon un-audited financial statements submitted by the operators and are as given below : (Final adjustments are effected during the year in which audited financial statements are received):

The above value includes the following amounts pertaining to 32 E&P Blocks relinquished till 31st March, 2017 ( including 30 Blocks relinquished till 31st March, 2016) where the Company is non-operator.

iv) The Company has relinquished operated E&P block during the year as below:

v) Share of Minimum work program committed under various production sharing contracts in respect of E&P joint ventures is Rs.174.64 crore (Previous Year Rs.361.30 crore).

vi) Quantitative information:

a) Details of the Company’s Share of Production of Crude Oil and Natural Gas during the year ended 31st March 2017:

Notes:

i. The Company is Non-operating partner in E&P blocks for which reserves are disclosed.

ii. The initial oil and gas reserve assessment was made through expert third party agency / internal expert assessment by respective Operator of E&P blocks. The year-end oil reserves are estimated based on information obtained from Operator / on the basis of depletion during the year. Re-assessment of oil and gas reserves carried out by the respective Operator as and when new significant data or discovery of hydrocarbon in the respective block.

iii. The Company’s share of crude oil production for the year 2016-17 is 1,28,836 barrels (Previous year 1,45,613 barrels).

iv. E&P blocks are assessed individually for impairment.

c) The Company’s share of balance cost recovery is Rs.970.92 crore (Previous year Rs.1,196.56 crore) to be recovered from future revenues from E&P blocks having proved reserves as per Production sharing contracts.

25. TAPI Pipeline Company Limited (TPCL), a Joint Venture of the Company was incorporated in November, 2014 to construct, operate and maintain Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline. GAIL currently holds 25 equity shares of Nil value inTPCL as shown in Note no.5 (b) 10.

As at 31st March 2017, GAIL has made a total payment of Rs.26.87 crore, equivalent to USD 4.15 million (Previous Year Rs.9.17 crore, equivalent to USD 1.5 million) towards Pre Project Expenditure of the aforesaid project. This amount has been shown as Advance against Equity in Note no.5 (b) 11.

26. The Company has an equity shareholding of 4.1735% in South East Asia Gas Pipeline Company Limited (SEAGP). During the period from November 2010 to April 2012 Company has remitted US$ 22,536,899 to SEAGP towards equity contribution. Out of this, SEAGP has issued 8347 shares of Face Value of US$ 1 each amounting to US$ 8347 to GAIL and the balance amount of US$ 22,528,552 has been shown as advance against equity in the Company books. As per the latest audited accounts available as on 31st March 2016 of SEAGP, the amount of advance against equity are unsecured, interest free and not repayable. This amount has been shown as Other Investment in Note no. 5(d).

27. Exceptional item of Rs.489.31 crore (net of expenses) (Previous Year Nil) represents profit on sale of long term investment from partial off-load of 1,23,47,250 equity shares of Mahanagar Gas Limited (An Associate Company) through Initial Public Offer in June 2016, shown in Note No 5 (c) 3.

28. In compliance of Ind AS 36 on Impairment of Assets, the Company has carried out an assessment of impairment in respect of its following assets as on 31.03.2017:

i) During the year the Company has made net impairment of Rs.0.40 crore (Previous Year:- Rs.0.14 crore) in respect of its GAIL Tel assets and the same has been recognized as impairment loss in the statement of profit and loss.

ii) During the year the Company has made net impairment of Rs.6.82 crore (Previous Year Rs.7.91 crore) in respect of its unused dedicated pipelines and the same has been recognized as impairment loss in the statement of profit and loss.

iii) No impairment loss was considered necessary by the management of the Company in respect of Gas Processing Unit, Usar which is under shutdown condition since 16th July 2014 due to non-availability of rich feed gas. The management has decided to keep the plant in preservation mode till the availability of rich feed gas in the future.

iv) During the year the Company has provided loss on impairment of Rs.5.04 crore (Previous Year Nil) out of carrying value of investment in Fayum Gas Company S.A.E., Egypt.

v) During the year the Company has provided loss on impairment of Rs.783 crore (Previous Year Nil) out of carrying value of investment in Ratnagiri Gas and Power Private Limited (RGPPL) as mentioned at Note no 5 (b) 1.

Aggregate amount of iv) and v) above of Rs.788.04crore has been shown as exceptional item in statement of profit & loss.

29. In compliance of Ind AS 37 on “Provisions, Contingent liabilities and Contingent Assets”, the required information on provision for probable obligation is as under:

30. Foreign Currency exposure not hedged by a derivative instrument or otherwise.

*excludes amount which is naturally hedged against foreign currency inflows.

31. Details of Loans, Investments, Guarantee and Security given by the Company covered U/S 186 (4) of the Companies Act 2013.

a. Investments made and Loans given are disclosed under the respective notes No 5 and 7.

b. Corporate Guarantees given by the Company in respect of loans as at the end of the current financial year are as under:

c. There is no security provided by the Company.

32. Interest free advance has been given to Petronet LNG Ltd. (PLL) for booking of regasification capacity to the tune of Rs.561.80 crore upto 31.03.2017 (Previous year Rs.561.80 crore). The said advance is to be adjusted within 15 years against regasification invoices of PLL. Out of above advance, PLL has adjusted Rs.9.55 crore from OctRs.16 to MarRs.17. Balance amount of Rs.552.25 crore (Previous year Rs.561.80 crore) has been carried over as advance in Note No 10.

33. Out of the outstanding loan of US $7,500,000 given by the company to its wholly owned subsidiary, GAIL Global (Singapore) Pte Ltd. (GGSPL), US $ 5,000,000 has been converted to 5,000,000 equity shares of US $ 1 each at par value during the year.

34. In respect of corporate guarantees provided by the company to its related parties for obtaining loans, the company has opined that fair value of these guarantees is Nil as the beneficiary companies have not been provided any concession in the rate of interest by the lender.

35. In some cases, the Company has received intimation from Micro and Small Enterprises regarding their status under “The Micro, Small and Medium Enterprises Development Act, 2006” As per practice, the payment to all suppliers has been made within 7 -10 days. The amount remaining unpaid to Micro and Small suppliers as at the end of the financial year is Rs.33.28 crore. No interest for delay was paid or payable under the Act.

36. Cabinet Committee on Economic Affairs (CCEA), Government of India in its meeting held on 21st September 2016 has approved 40% capital grant of estimated capital cost of Rs.12,940 crore i.e. Rs.5,176 crore to the Company for execution of Jagdishpur Haldia Bokaro Dhamra Pipeline Project (JHBDPL). During the year, the Company has received Rs.450 crore towards capital grant on above account.

37. During the year the company has changed the estimated useful life for depreciation on furniture and electrical equipments provided for the use of employees (Tangible assets) from 7 years to 6 years and residual value is depreciated accordingly. However, this change has no material impact on financial statements of the company.

38. In compliance with Regulation 34(3) and 53(f) of Listing Obligations and Disclosure Requirements (LODR) of SEBI, the required information is given in Annexure-C.

39. Financial Risk management

The company is exposed to a number of different financial risks arising from natural business exposures as well as its use of financial instruments including market risks relating to commodity prices, foreign currency exchange and interest rates; credit risk; and liquidity risk.

1. Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, and derivative financial instruments.

a. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the long-term foreign currency loans with floating interest rates. The Company manages its interest rate risk according to its Board approved Foreign Currency and Interest Rate Risk Management policy’. Market interest rate risk is mitigated by hedging through appropriate derivatives products ,such as interest rate swaps & full currency swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.

Interest rate sensitivity

With all other variables held constant, the following table demonstrates the sensitivity to a reasonably possible change in interest rates on floating rate portion of forex loans and borrowings after considering the impact of swap contracts.

b. Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Company transacts business in local currency and in foreign currency, primarily U.S. dollars. Company has obtained foreign currency loans and has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk. As per its Board approved policy, Company may mitigate its foreign currency risk through plain vanilla derivative products such as foreign exchange option contracts, swap contracts or forward contracts towards hedging such risks. These foreign exchange contracts, carried at fair value, may have varying maturities depending upon the underlying contract requirement and risk management strategy of the Company.

Foreign Currency Sensitivity

The following table demonstrates the sensitivity in the USD, Euro and other currencies to the functional currency of Company, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives.

c. Commodity Price risk

Company imports LNG for marketing and for its internal consumption on an on-going basis and is not exposed to the price risk to the extent it has contracted with customers in India on back to back basis. However, a part of imported volume is not contracted on back to back basis. As most of the LNG purchase contract prices are based on crude based index, therefore Company is exposed to volatility in crude prices. In order to mitigate this crude linked price risk, Company has been taking appropriate derivative products in line with the Board approved ‘ Natural Gas Price Risk Management Policy’ As on 31st March 2017, there is no significant risk with respect to the open derivative contract.

d. Equity Price Risk

The Company’s listed and non-listed equity investments are susceptible to market price risk arising from uncertainties about future values of these investments. The Company manages the equity price risk through review of investments by Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all the equity investment decisions of the Company.

At the reporting date, the exposure to unlisted equity investments at fair value was Rs.293.76 Crore (Previous Year Rs.301.79 Crore).

At the reporting date, the exposure to listed equity investments at fair value was Rs.5712.87 Crore (Previous Year Rs.4419.89 Crore). A variation of ( /-) 10% in share price of equity investments listed on the stock exchange could have an impact of approximately ( /-) Rs.571 Crore (Previous Year Rs.442 Crore) on the OCI and equity investments of the Company. These changes would not have an effect on profit or loss.

2. Liquidity Risk

Liquidity is the risk that suitable sources of funding for Company’s business activities may not be available. The Company’s objective is to maintain optimum level of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It also maintains adequate sources to finance its short term and long term fund requirement such as overdraft facility and Long term borrowing through domestic and international market.

3. Credit risk

Credit risk is the risk that a customer or counter party to a financial instrument will fail to perform or fail to pay amounts due, causing financial loss to the company and arises from cash and cash equivalents, derivative financial instruments and deposits with financial institutions and principally from credit exposures to customers relating to outstanding receivables. Credit exposure also exists in relation to guarantees issued by company. Each segment is responsible for its own credit risk management and reporting. Credit risk is considered as part of the risk-reward balance of doing business. On entering into any business contract the extent to which the arrangement exposes the company to credit risk is considered.

Trade receivables

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on an individual basis for major clients.

Financial Instruments and Cash Deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with approved limits of its empanelled bank for the purpose of Investment surplus funds and foreign exchange transactions. Foreign exchange transaction and Investments of surplus funds are made only with empanelled Banks. Credit limits of all Banks are reviewed by the Management on regular basis.

4. Capital Management

For the purpose of the capital management, capital includes issued capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the reporting years.

5. Accounting classifications and fair value measurements

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

As at 31st March 2017, the Company held the following financial instruments carried at fair value on the statement of financial position:

Note: The carrying cost of Interest-bearing loans and borrowings is approximately equal to their Fair MarketValue

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Description for significant unobservable inputs to valuation:

The following table shows the valuation techniques and inputs used for financial instruments:

a. Confirmation of balances has been received in majority of cases for trade receivables and payables. These confirmations are subject to reconciliation and consequential adjustments, which in the opinion of the management are not material.

b. In the opinion of management, the value of assets, other than fixed assets and non-current investments, on realization in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

6. Other Quantitative details are given in Annexure-D.

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


Mar 31, 2016

1. Contingent Liabilities and Commitments:

I. Contingent Liabilities:

(a) Claims against the Company not acknowledged as debts:

i. Legal cases for claim of Rs.1,908.80 crore (Previous Year: Rs.1,709.68 crore) by trade payables on account of liquidated damages/ price reduction schedule, natural gas price differential etc., and by customers for natural gas transmission charges etc.

ii. Income tax demand of Rs.1,303.67 crore (net of provision) (Previous Year Rs.1,335.95 crore) against which the Company has filed appeals with Commissioner of Income Tax (CIT) / Income Tax Appellate Tribunal (ITAT). Further, the Income Tax Department has also filed appeals amounting to Rs.354.33 crore (including interest) (Previous Year: Rs.170.05 crore) before ITAT against the relief granted by CIT (Appeals) in favour of the Company.

iii. Amounts towards disputed tax demands relating to Custom Duty, Excise Duty, Sales tax, VAT, Entry tax, Service Tax etc., are as under:

iv. Miscellaneous claims of Rs.238.29 crore (Previous Year: Rs.233.37 crore)

(b) (i) The Company has issued Corporate Guarantees for Rs.2,352.00 crore (Previous Year: Rs.1,974.60 crore) on behalf of Subsidiaries for raising loan(s). The amount of loans outstanding as at the end of the year under these Corporate Guarantees are Rs.1,389.99 crore (Previous Year: Rs.1,073.09 crore).

(ii) Share in Contingent Liabilities of Joint Ventures based on their audited / unaudited financial statements is Rs.889.91 crore (Previous Year: Rs.824.01 crore).

II. Capital Commitments:

(a)Estimated amount of contracts remaining to be executed on capital account as at 31st March 2016 and not provided for, is Rs.2,036.26 crore (Previous Year: Rs.2,573.42 crore).

(b) Share in estimated amount of contracts remaining to be executed on capital account and not provided for based on audited/unaudited financial statement of Joint Venture, is Rs.458.58 crore (Previous Year: Rs.588.62 crore).

(c) Other Commitments:

i. The Company has commitment of Rs.579.51 crore (Previous Year: Rs.546.49 crore) towards further investment and disbursement of loan in the Joint Ventures and Associates.

ii. The Company has commitment of Rs.1,066.80 crore (Previous Year: Rs.1,316.75 crore) towards further investment in the Subsidiaries.

iii. The Company has commitment of I29.15 crore (Previous Year: Rs.134.15 crore) towards further investment in the entities other than Joint Ventures, Associates and Subsidiaries.

iv. The Company''s holding of 49.75% of equity as on 31st March 2016 represented by 4,44,50,000 equity shares in Mahanagar Gas Ltd (MGL),(A Joint Venture Company with BG Asia Pacific Holding Pte. Ltd). The Board of Directors of the Company has approved to off- load 1,23,47,250 equity shares out of its aforesaid holding, through Initial Public Offer (IPO) of MGL. The Draft Red Herring Prospectus

(DRHP) submitted by MGL was approved by SEBI on 15th January 2016. In view of the proposed disinvestment in next financial year, the amount of shares being offered has been shown as current investment.

v Commitments made by the Company towards the minimum work programme in respect of Jointly Controlled Assets has been disclosed in Note 62(B)(v).

2. Sales Tax Department has raised a demand of Rs.3,449.18 crore (Previous Year: Rs.3,449.18 crore) and interest thereon Rs.1,513.04 crore (Previous Year: 1,513.04 crore) in respect of Hazira unit in Gujarat, treating the transfer of natural gas from the State of Gujarat to other states, as inter-state sales, during the period from April 1994 to March 2001. Based on the decision of Hon''ble Supreme Court of India in the special writ petition, the Appellate Tribunal gave instructions for reassessment, considering inter-state transfer as branch transfer. The Sales Tax Department had filed rectification application under section 72 of the Gujarat Sales Tax Act, 1969 with the Appellate Tribunal which has been dismissed by the Tribunal. Thereafter, the Sales Tax Department has filed petition in Hon''ble High Court Gujarat against the order of the Tribunal and the same is pending as at the end of the year. In the opinion of the management, there is a remote possibility of crystalizing this liability.

3. Effective 1st April 2015, the Company has reviewed and implemented the componentization of its assets on the basis of amended Schedule II to the Companies Act, 2013. This has resulted in increase of depreciation and amortization expenses and decrease of fixed assets net block for the year by Rs.0.99 crore. Accordingly profit before tax for the year is decreased by the corresponding amount.

36. (a) In terms of the Gas Sales Agreement with the customers, value of Annual Take or Pay Quantity (ATOPQ) of Gas is accounted for on the basis of realization and shown as liability till make up Gas is delivered to customer, during the recovery period

(b) Other income includes I03.60 crore towards amount of one time settlement in respect of Take or Pay claims of the Company due from some customers in pursuance of indenture agreement executed with these customers without any commitment for future supply of gas against such settlement

4. Disclosure under CSR expenses:

As per Section 135 of the Companies Act 2013 read with DPE guidelines, the Company is required to spend Rs.102.34 crore during the current year and the amount of expenditure incurred is Rs.118.64 crore, as per details given below:

5. Realisation of dues in respect of certain customers in Kashipur Region towards Ship or Pay charges being sub-judice, the Company has issued claim letters amounting to Rs.762.47 crore. Income in respect of the same shall be recognized on final disposal of the matter.

6. Disclosure as per AS 11 on "The effect of changes in Foreign Exchange Rates"

(a) The amount of exchange difference (net) recognized in the Statement of Profit & Loss is Rs.86.08 crore (Previous Year: Rs.50.97 crore).

(b) The amount of exchange difference debited to the carrying amount of fixed assets is Rs.195.95 crore (Previous Year: Rs.198.60 crore).

7. MOP&NG had issued scheme of sharing of under recoveries on sensitive petroleum products. During the year, the Company has given discounts amounting to Rs. NIL (Previous Year Rs.1,000 crore). Corresponding adjustment on account of Central Sales Tax (CST) amounting to Rs. NIL (Previous Year Rs.9.42 crore) has been made.

8. (a) The Company has continued raising provisional invoices for sale of R-LNG as the supplier - Petronet LNG Ltd (PLL) has also continued raising provisional invoices on the Company since customs duty on import of LNG by PLL has been assessed on provisional basis.

(b) With effect from 1st April 2002, Liquefied Petroleum Gas (LPG) prices has been deregulated and is now based on the import parity prices fixed by the Oil Marketing Companies. However, the pricing mechanism is provisional and is pending finalization. Additional asset/liability or impact on profits, if any, will be recognized on finalization.

9. (a) Natural Gas Pipeline Tariff is subject to various Regulations issued by Petroleum and Natural Gas Regulatory Board (PNGRB) from time to time. Impact on profits, if any, is being recognized consistently as and when the pipeline tariff is revised by orders of PNGRB.

(b) During the year, PNGRB notified revised Petroleum and Petroleum Products Pipeline Transportation Tariff for Vizag-Secunderabad LPG Pipeline (VSPL). In compliance of the order, the Company has recognized the revenue by an amount of Rs.24.74 crore pertaining to previous financial years.

(c) The Company has filed appeal(s) at Appellate Tribunal (APTEL), against various moderations done by PNGRB in 6 (six) provisional tariff orders for natural gas pipelines. APTEL remanded back tariff orders to PNGRB for considering submissions made by the Company and also directed the Company to submit to PNGRB all its grievances. Accordingly, the Company has made its submissions to PNGRB for issuing final tariff orders. PNGRB has issued final tariff order for KG-Basin network on 16th March 2016, which is applicable from 1st April 2016 to 11th February 2017, keeping the same assumptions as considered in the provisional tariff orders, against which the Company has again gone in appeal before APTEL and the decision is pending. As regards rest of the provisional orders, PNGRB is yet to issue its final orders.

(d) Taking cognizance of Hon''ble Supreme Court judgment dated 1st July 2015, in the case of PNGRB vs. Indraprastha Gas Limited, the Company has filed a Writ Petition, during the year, before the Hon''ble Delhi High Court challenging the jurisdiction of PNGRB on fixation of tariff for own consumers. The matter is sub-judice as at the end of the financial year.

10. Pending disposal of cases in relation to pipe line transportation charges for Uran Trombay Pipeline, the liability of ONGC Ltd amounting to Rs. 222.14 crore and corresponding debtors for the same Rs. 171.65 crore has been continued as at the end of the current financial year. During the year, provision towards doubtful recovery of aforesaid debtors of Rs.171.65 crore has been made by the Company.

11. During the year, PNGRB has issued a revised Tariff Order in respect of new Tap off at Petro Park, Vizag for Hindustan Petroleum Corporation Limited (HPCL). The order is effective from June 2012 and accordingly the Company has issued Debit Notes / Invoices amounting to Rs. 49.07 crore including Service Tax. These Debit Notes / Invoices have been contested by HPCL. In the opinion of the management, the matter is under discussion with HPCL and the amount of Rs.48.55 crore outstanding at the end of the financial year, is considered as good.

12. (a) Freehold Land acquired valuing Rs.13.15 crore (Previous Year: Rs.16.78 crore) and Leasehold Land acquired valuing Rs.18.29 crore (Previous Year : Rs.78.75 crore) are valued / capitalized on provisional basis.

(b) Title deeds for freehold land (10.22 hectares) valuing Rs.7.68 crore (Previous Year: Rs.10.67 crore) and leasehold land (233.85 hectares) valuing Rs.16.96 crore (Previous Year: Rs.25.52 crore) are pending execution for transfer in the name of the Company,

(c) Title Deeds in respect of ten residential flats at Asiad Village, New Delhi, valuing I.67 crore (Previous Year: Rs.1.67 crore) are still in the name of ONGCL. Concerned authorities are being pursued for getting the same transferred in the name of the Company.

(d) Net Block for "Building" includes an amount of Rs.0.50 Crore (Previous Year Rs.0.51 Crore ) earmarked for disposal but in use.

13. (a) The balance retention from Panna Mukta Tapti (PMT) JV consortium amounting to Rs.20.40 crore (Previous Year: Rs.30.50 crore) (shown in Note No 20) is kept as Earmarked Balance in short term deposit in banks. It includes interest accrued but not due amounting to Rs.0.26 crore (Previous Year: Rs.1.09 crore). This interest income does not belong to the Company and not accounted for as income.

(b) (i) Liability on account of "Gas Pool Account" amounting to Rs.927.87 crore (Previous Year: Rs.816.81 crore) (shown in Note No. 10) represents amount held by the Company as custodian pursuant to directions of MOPNG. The amount received is kept as Earmarked Fund in the form of Short Term Deposits in banks (shown in Note No 20). It includes interest accrued but not due amounting to Rs.14.91 crore (Previous Year: Rs.34.27 crore). This interest does not belong to the Company and not accounted for as income.

(ii) Gas Pool Money (Provisional) shown under "Other Long Term Liabilities" amounting to Rs.1,006.79 crore (Previous Year: Rs.1,998.33 crore) (shown in Note No 6) will be invested as and when said amount is received from the customers.

(c) Liability on account of Pipeline Overrun and Imbalance Charges amounting to Rs.85.81 crore (Previous Year: Rs.80.38 crore) (shown in Note No 10) represents amount held by the Company as custodian pursuant to directions of PNGRB. The amount received is kept as Earmarked Fund in the form of Short Term Deposits in banks (shown in Note No 20). It includes interest accrued but not due amounting to Rs.3.93 crore (Previous Year: Rs.3.11 crore) on short term deposits. This interest does not belong to the Company and not accounted for as income.

14. The Company has an equity investment amounting to Rs.974.31 crore, in a joint venture company, Ratnagiri Gas and Power Private Limited (RGPPL), which is equivalent to 25.50% of the paid up equity capital of RGPPL as on 31st March 2016. In view of accumulated losses resulting in erosion of substantial net worth, the auditors of RGPPL in their report of FY 2014-15 have raised doubt on the ability of the company to continue as going concern. However, RGPPL has during the FY 2015-16 started power generation in one unit of 500MW, and also increased the capacity utilization of its regasification facilities, which has resulted in improved financial performance. In furtherance, RGPPL has obtained an in-principle approval from its Board of Directors for demerger of its Power generation business and LNG business into separate companies effective from 1st January 2016. The management of RGPPL is hopeful that restructuring / concessions from the lenders in the borrowings and other areas after aforesaid de-merger, shall result in further improvement in its financial position. In view of the facts stated above, the management of the Company is of the opinion that the investment is of strategic nature and there are projected future turnaround plans, the diminution in the value of investment is of non- permanent nature, hence, no provision is required at this stage.

15. GAIL is acting as pool operator in terms of the decision of Government of India for pooling of natural gas for Urea Plants. The scheme envisages uniform cost of gas for urea production by settlement of difference in weighted average price of gas of each plant to the weighted average price for the industry. Accordingly, an amount of Rs.604.27 crore is payable to and correspondingly receivable from Urea Plants, as on 31st March 2016. After netting of the payable and receivable amounts, there is no impact in the financial statements.

16. GAIL is acting as pool operator in terms of the decision of the Government of India for capacity utilisation of the notified gas based power plants. The Scheme envisages support to the power plants from the Power Sector Development Fund (PSDF) of the Government of India. The gas supplies were on provisional / estimated price basis which were to be reconciled based on actual cost. Accordingly, current liabilities include a sum of Rs.510.89 crore on this account, as on 31st March 2016 which is payable to the above said power plants and / or to the Government of India.

17. The Company has given interest bearing Bridge Loan, amounting to Rs.90 crore to Bhagyanagar Gas Ltd (BGL), a joint venture company, during the year 2011-12 and 2012-13, with stipulated repayment in six monthly installments along with interest starting from 31st October 2011. Due to delay in financial closure of BGL, the loan has not been repaid as stipulated and extensions of the loan repayment schedule are being done. The management of the Company is of the opinion that, the loan amount will be recovered along with interest.

18. Trade Receivables (shown in Note No 19) includes an amount of Rs.255.36 crore, inclusive of service tax, from Indian Oil Corporation Ltd (IOCL) towards invoices raised during the year on account of ship or pay charges for shortfall in the Annual Contracted Quantity (for the period from 2010 to 2015), in pursuance of Gas Transmission Agreement dated 7th October 2005. IOCL, on 22nd March 2016, has disputed the claim of the Company. As per the legal opinion obtained by the Company in the matter, the dispute raised by IOCL is not tenable.

19. PNGRB on 19.02.2014 notified insertion in Affiliate Code of Conduct that an entity engaged in both marketing and transportation of natural gas shall create a separate legal entity for transportation of natural gas by 31.03.2017 and the right of first use shall, however, remain with the affiliate of such entity The Company has challenged the said PNGRB notification before Hon'' ble Delhi High Court by way of writ and the same is pending adjudication.

20. Pursuant to the decision of Government of India, in the meeting of Inter-Ministerial Committee (IMC) dated 11th and 30th September 2013, the Company has, during the year, transferred the assets including specific liabilities of LPG Lakwa to Brahmaputra Cracker and Polymers Ltd (BCPL) at written down value of Rs.96.32 crore against issue of shares of Rs.95.29 crore and the balance amount in cash. Pending execution of asset transfer agreement, the said amount has been shown as recoverable from BCPL as at the end of the current financial year.

21. Non-Refundable Deposits Rs.1.25 crore (Previous Year: Rs.5.27 crore) made with the concerned authorities for railway crossings, forest crossings, removal and laying of electric/telephone poles and lines are accounted for under Capital Work-in-Progress/Capitalised on the basis of work done/confirmation from the concerned department.

22. Disclosure under the AS 15 on Employee Benefits is given as below:

I. Superannuation Benefit Fund (Defined Contribution Fund)

The Company has paid for an amount of Rs.65.66 crore (Previous Year: Rs.59.22 crore) towards contribution to Superannuation Benefit Fund Trust and charged to statement of profit and loss.

II . Provident Fund

The Company has paid contribution of Rs.53.23 crore (Previous Year Rs.48.58 crore) to Provident Fund Trust at predetermined fixed percentage of eligible employees'' salary and charged to statement of profit and loss. Further, the obligation of the Company is to make good shortfall, if any in the fund assets based on the statutory rate of interest in the future period. During the year, surplus in the fund is more than the interest rate guaranteed liability of the Company hence, the Company has reversed a provision of Rs. Nil crore (Previous Year Rs.2.31 crore), as per actuarial valuation and the balance provision to meet any short fall in the future period to be compensated by the Company to the Provident Fund Trust as at the end of the current financial year is Rs. Nil crore (Previous Year Rs. Nil crore).

III. Other Benefit Plans

a) Gratuity:

15 days salary for every completed year of service. Vesting period is 5 years and payment is restricted to Rs. 10 lakh.

b) Post-Retirement Medical Scheme (PRMS)

The Company has Post-Retirement Medical Scheme under which eligible ex-employees are provided medical facilities upon payment of one time prescribed contribution. The liability for the same is recognised on the basis of actuarial valuation.

c) Earned Leave Benefit (EL)

Accrual 30 days per year. Encashment while in service 75% of Earned Leave balance subject to maximum of 90 days at a time, twice per calendar year. Encashment on retirement or superannuation maximum 300 days.

d) Terminal Benefits (TB)

At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Transfer Traveling Allowance.

e) Half Pay Leave (HPL)

Accrual 20 days per year. The encashment of unavailed HPL is allowed as per approved Company rule.

f) Long Service Award (LSA)

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded monetarily based on the duration of service completed.

The following table summarizes the components of net benefit expenses recognized in the statement of profit and loss based on actuarial valuation.

Notes:

1. The actuarial valuation takes into account the estimates of future salaryincreases,inflation,seniority,promotionandotherrelevantfactors.

2. The management has relied on the overall actuarial valuation conducted by the actuary.

56. Disclosure as per Accounting Standard (AS) 16 on ''Borrowing Costs'': Borrowing costs capitalized in assets including CWIP during the year wasRs.42.34crore (Previous Year: Rs. 378.19crore).

57. In compliance of AS 17 on "Segment Reporting" the Company has adopted following Business segments as its reportable segments:

(i) Transmission services

a) Natural Gas

b) LPG

(ii) Natural Gas Marketing

(iii) Petrochemicals

(iv) LPG and other Liquid Hydrocarbons

(v) Other Segments (include GAIL TEL, E&P City Gas and Power Generation)There are no geographical segments in the Company The disclosures of segment wise information is given as per Annexure-A.

23. In compliance of AS 18 on "Related Party Disclosures" the names of related parties, nature of relationship and detail of transactions entered therewith are given in Annexure - B.

24. (a) In compliance of AS 22 on "Accounting for Taxes on Income" the Company has provided accumulated net deferred tax liability in respect of timing difference as at the end of the current financial year amounting to Rs.4,047.08 crore (Previous Year: Rs.3,308.65 crore).

25. During the year, an amount of Rs.3.03crore (Previous Year Rs.27.74crore has been capitalized towards Research and Development Assets.

26. Disclosure of Joint Ventures of the Company under AS 27 on "Financial Reporting of Interests in Joint Ventures" are:

Notes:

1. The Company is Non-operating partner in E&P blocks for which reserves are disclosed.

2. The initial oil and gas reserve assessment was made through expert third party agency / internal expert assessment by respective Operator of E&P blocks. The year-end oil reserves are estimated based on information obtained from Operator / on the basis of depletion duringthe year. Re-assessment of oil and gas reserves carried out by the respective Operator as and when new significant data or discovery of hydrocarbon in the respective block.

3. The Company''s share of crude oil production for the year 2015-16 is 1,45,613 barrels (Previous year 1,51,328 barrels).

4. According to the "Revised Guidance Note on Oil and Gas Producing Activities" issued by the Institute of Chartered Accountants of India, the Company considers individual E&P block as Cash Generating Unit (CGU) for assessment of impairment.

c) The Company''s share of balance cost recovery is Rs.1,196.56crore (Previous year Rs.1,298.96 crore) to be recovered from future revenuesfrom E&P blocks having proved reserves as per Production sharing contracts.

C) Jointly Owned Assets:

The Company''s interest in jointly owned assets, i.e., Heat Recovery Steam Generation System (HRSG) installed at Vaghodia with project cost of Rs.61.84crore (Previous Year Rs.61.69crore), is Rs.30.91crore (Previous Year Rs.30.84crore).

27. In compliance of AS-28 on Impairment of Assets, the Company has carried out an assessment of impairment in respect of its GAIL Tel assets and Gas Processing Unit (GPU) Plant,Usar, Maharashtra as on 31.03.2016. Necessary disclosures are as under:

i) During the year the Company has made netimpairment of Rs.8.05crore

(Previous Year:-Rs. 6.09crore) {( accumulated amount of impairment as at the end of the year is Rs.22.26crore (Previous Year:- Rs.14.16crore)] in respect of its GAIL Tel assets and the same has been recognized as impairment loss in the statement of profit and loss.

ii) No impairment loss was considered necessary by the management of the Company in respect of GPU, Usar which is under shutdown condition since 16th July 2014 due to non-availability of rich feed gas. The management has decided to keep the plant in preservation mode till the availability of rich feed gas in the future.

28. In compliance with Regulation 34(3) and 53(f) of Listing Obligations and Disclosure Requirements (LODR) ofSEBI, the required information is given in Annexure-C.

29. Details of Loans, Investments, Guarantee and security given by the Company covered U/S 186 (4) of the Companies Act 2013.

a. Investments made and Loans given are disclosed under the respe tive notes No 14, 15 and 21.

30. In some cases, the Company has received intimation from Micro and Small Enterprises regarding their status under "The Micro, Small and Medium Enterprises Development Act, 2006" As per practice, the payment to all suppliers has been made within 7 -10 days. The amount remaining unpaid to all suppliers as at the end of the current financial year is Rs.3,007.18crore (Previous Year: Rs.3,439.35crore). No interest for delay was paid or payable under the Act.

31. (a)Confirmation of balances has been received in majority of cases for trade receivables and payables. These confirmations are subject to reconciliation and consequential adjustments, which in the opinion of the management are not material.

Notes-

a) In addition to above remuneration, whole time directors are allowed the use of staff cars including for private journeys up to a ceiling of 1000 kms. per month on payment in accordance with the DPE Circular.

b) The remuneration does not include Provision for Leave, Gratuity and Post-Retirement Benefits as per revised AS 15 since the same were not ascertained for individual employees (Refer Note No-55).

32. Value of Raw Materials, Stores /Spares and Components consumed during the year.

33. Other Quantitative details are given in Annexure-D.

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


Mar 31, 2015

1. Contingent Liabilities and Commitments (to the extent not provided for):-

I. Contingent Liability

(a). Claims against the Company not acknowledged as debts: Rs.8,202.58 crore (Previous Year:Rs.7,596.6l crore), which include:

(i) Legal cases for claim of Rs.1,709.68 crore (Previous Year: Rs.1,649.56 crore) by trade payable on account of liquidated damages/price reduction schedule and natural gas price differential etc, and by customers for natural gas transmission charges etc.

(ii) Income tax assessments up to the Assessment Year 2012-13 have been completed and a demand (net of provision) of Rs.1,335.95 crore relating to the assessment years 1996-97 to 2015-16 (Previous Year Rs.1,337.15 crore relating to the assessment years 1996-97 to 2011-12) raised by the Income Tax Department on account of certain disallowances / additions, has been disputed by the Company, as it has been advised that the demand is likely to be deleted or may be reduced substantially by the appellate authorities. The Company has filed appeals with the appropriate appellate authorities against all the assessment years. However, to avoid coercive action by the Department, Rs.1,256.08 crore (Previous Year: Rs.1,298.13 crore) has already been paid pending decision by the appellate authorities. Further, Department has also filed appeals amounting to Rs.170.05 crore (including interest) (Previous Year: Rs.100.32 crore) before Income Tax Appellate Tribunal (ITAT), Delhi against the relief granted by CIT (A) in favour of the Company.

(iii) Rs.4,753-53 Crore (Previous Year: Rs.4,238.36 Crore) relating to disputed tax demand towards Custom Duty, Excise duty. Sales tax, VAT, Entry tax, Service Tax etc.

(b) (i) The Company has issued Corporate Guarantees for Rs.1,974.60 crore (Previous Year:Rs.1,919.99 crore) on behalf of Subsidiaries for raising loan(s). The amount of loans outstanding under these Corporate Guarantees are Rs.1,073.09 crore (Previous Year: Rs.1,555-37crore).

(ii) Share in Contingent Liabilities of Joint Ventures based on their audited/unaudited financial statements Rs.824.01 crore (Previous Year:Rs.980.49crore).

II. Commitments:-

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs.2,573.42 crore (Previous Year: Rs.2,658.21 crore).

(b) Share in estimated amount of contracts remaining to be executed on capital account and not provided for based on audited/unaudited financial statement of Joint Venture. Rs.588.62 crore (Previous Year: Rs.842.47 crore).

(c) Other Commitments:-

(i) As at 31st March 2015, the Company has commitment of Rs.546.49 crore (Previous Year: Rs.772.l6 crore) towards further investment and disbursement of loan in the Joint Ventures and Associates.

(ii) As at 31st March 2015, the Company has commitment of Rs.1,316.75 crore (Previous Year: Rs.140.93 crore) towards further investment in the Subsidiaries.

(iii) As at 31st March 2015, the Company has commitment of Rs.134.15 crore (Previous Year: Rs.147.58 crore) towards further investment in the entities other than Joint Ventures, Associates and Subsidiaries.

(iv) Commitments made by the Company towards the minimum work programme in respect of Jointly Controlled Assets has been disclosed in Note 53(b)(v).

2. Sales Tax Department has raised a demand of Rs.3,449.18 crore (Previous Year: Rs.3,449.l8 crore) and interest thereon Rs.1,513.04 crore (Previous Year: Rs.1,513.04 crore) in respect of Hazira unit in Gujarat State under the Central Sales Tax Acttreating the transfer of natural gas from the State of Gujarat to other states during the period from April 1994 to March 2001 as inter-state sales. Based on the decision of Supreme Court in the writ special writ petition, the Tribunal gave instructions for reassessment in accordance with law, considering inter-state transfer as branch transfer. The Sales Tax Department had filed rectification application under section 72 of the Gujarat Sales Tax Act, 1969 with the Tribunal which has dismissed the same. Thereafter, the Sales Tax Department has filed petition in Hon'ble High Court Gujarat against the order of the Tribunal and the same is pending. In the opinion of the management, there is a remote possibility of crystallizing this liability.

3. (a) Freehold Land acquired valuing Rs.16.78 crore (Previous Year: Rs.19.92 crore) and Leasehold Land acquired valuing Rs.78.75 crore (Previous Year : Rs.7950 crore) are valued / capitalized on Provisional basis.

(b) Title deeds for freehold land valuing Rs.10.67 crore (Previous Year: Rs.14.21 crore) and leasehold land valuing Rs.25.52 crore (Previous Year:Rs.25.55 crore) are pending execution.

(c) Title Deeds in respect of ten residential flats at A siad Village, New Delhi, valuing Rs.1.67 crore (Previous Year: Rs.1.17 crore) are still in the name of ONGCL. Concerned authorities are being pursued for getting the same transferred in the name of the Company.

(d) Net Block for "Building" includes an amount of Rs.0.52 Crore (Previous Year Rs.0.52 Crore (earmarked for disposal but in use.

(e) Freehold land valuing Rs.0.63 crore (previous year Rs.0.63 crore) and leasehold land valuing Rs.0.80 crore (previous year Rs.0.80 crore), registered in the name of the Company, does not belong to it and hence not capitalized.

(f) The Company has deposited Rs.0.09 crore (previous year Rs.0.og crore) for acquisition of freehold land through Govt, process and the allotment of same is pending.

4. Disclosure as per Accounting Standard (AS) 5 on "Net Profit or Loss for the period. Prior Period Items and Changes in Accounting Policies"

(a) Effective 1st April 2014, the Company has revised the useful life of fixed assets based on Schedule II to the Companies Act, 2013 for the purposes of providing depreciation on fixed assets. Accordingly, the umamortised carrying value is being depreciated/amortised over the revised / remaining useful life. The written down value of fixed assets whose life has expired as at 1st April 2014has been adjusted net of residual value and deferred tax in the opening balance of statement of profit and loss account amounting to Rs.87.54 crore. Thus, depreciation and amortization expenses for the year decreased byRs.263.03crore and accordingly profit before tax for the year increased by corresponding amount.

(b) Effective 1st April 2014, the Company has revised useful life of Furniture Electrical Equipments and Mobile Phones provided to employees under hire purchase scheme from the existing 6.4 (@15%p.a) years to 7 years in respect furniture and electrical equipment and from existing 6.4 (@15%p.a) years to 2 years for mobile phones. The change in Accounting Policy has resulted decrease in depreciation / amortization expenses amounting Rs.0.39 crore and thus, profit for the year increased by Rs.0.39 crore.

(c) In terms of the Guidance Note issued by the Institute of Chartered Accountants of India (ICAI) in respect of Corporate Social Responsibility (CSR) activity, the Company has provided liability incurred in respect of its contractual obligation to the extent of activities completed during the year, as against earlier of booking of such expenditure on payment basis. Accordingly, during the year, the Company has booked liability of Rs.21.00 crore on accrual basis towards CSR Expenses for which profit for the year has decreased by the same amount.

5. Disclosure under CSR expenses for Financial Year2014-15asfollows:

(i) The gross amount required to be spent by the Company is Rs.118.76 crore and the amount spent is as under:

6. (a) The balance retention from Panna Mukta Tapti (PMT) JV consortium amounting to Rs.30.50 crore (Previous Year: Rs.28.06 crore) includes interest accrued but not due amounting to Rs.1.09 crore (Previous Year: Rs.2.29 crore) on short term deposits. This interest income does not belong to the Company and hence not accounted as income.

(b) Liability on account of Gas Pool Money amounting to Rs.816.81 crore (Previous Year: Rs.1,03571 crore) includes interest accrued but not due amounting to Rs.34.27 crore (Previous Year: Rs.28.99 crore) on short term deposits. This interest does not belong to the Company and hence not accounted as income.

(c) The amount in Gas Pool Money (Provisional) account shown under "Other Long Term Liabilities" amounting to Rs.1,998.33 crore (Previous Year: Rs.652.20 crore) will be invested as and when said amount is received from the customers.

(d) Liability on account of Pipeline Overrun and Imbalance Charges amounting to Rs.80.38 crore (Previous Year: Rs.70.62 crore) includes interest accrued but not due amounting to Rs.3.11 crore (Previous Year: Rs.5.62 crore) on short term deposits. This interest does not belong to the Company and hence not accounted as income.

7. The Company has entered into Gas Transportation Agreements (GTAs) in the year 2010, with three shippers in Kashipur region, for transportation of gas. As per GTAs, Capacity Tranche (CT) date was fixed as 1st June 2011,15th December 2011 and 25th December 2011 for different shippers, which was revised to 1st June 2012. The CT completion date was informed to the shippers on 21st October 2014. An amount of Rs.562.61 crore, for the period 1st June 2012 to 21st October 2014, was not invoiced due to uncertainty of its realisation as per legal opinion obtained and in compliance to accounting standards. GAIL started invoicing for Ship or Pay charges with effect from 21st October 2014 (date of intimation of CT to the customers). Accordingly, an amount of Rs.103.86 crore (including Service Tax of Rs.11.42 crore) was invoiced for the period 22nd October 2014 to 31st March 2015, against which the Company is holding Bank Guarantee and Security Deposit amounting to Rs.69.99 crore. The customers have, inter alia, disputed the invoices and have taken up the matter with PNGRB who in-turn directed the Company to maintain the status quo. Pending the final disposal of the matter by the PNGRB, an amount of Rs.103.86 crore has been included in Sundry Debtors with corresponding provision of Rs.33.87 crore, i.e., the amount over and above the Bank guarantee and Security Deposit.

8. Disclosure as per AS 11 on "The effect of changes in Foreign Exchange Rates"

(i) The amount of exchange difference (net) recognized in the Statement of Profit & Loss is Rs.50.97 crore (Previous Year: Rs.25.21 crore).

(ii) The amount of exchange difference debited to the carrying amount of fixed assets is Rs.198.60 crore (Previous Year: Rs.502.49 crore).

9. The Company has a joint venture agreement along with NTPC, MSEB and other Financial Institutions in Ratnagiri Gas and Power Private Limited (RGPPL) with an equity investment of Rs.97431 crore, and the Company's share of equity as on 31st March 2015 (after conversion of partial loans / dues to financial institutions during FY 2014-15), is 28.91%. As per the latest available audited financial statements there are losses in the books of RGPPL, because of non-operation of power block and non-availability of domestic gas, indicating existence of uncertainty and doubt on the ability of the RGPPL to continue as going concern. However, the management of the Company is of the opinion that the investment of the Company being strategic in nature, with future turnaround plans, there is no permanent diminution in the value of its investment as on 31st March 2015, requiring any provision at this stage.

10. The required disclosure under the Revised AS15 is given as below:

(i) Superannuation Benefit Fund (Defined Contribution Fund)

The Company has paid for an amount of Rs.59.22 crore (Previous Year: Rs.52.07 crore) towards contribution to Superannuation Benefit Fund Trust and charged to statement of profit and loss.

(ii) Provident Fund

The Company has paid contribution of Rs.48.58 crore (Previous Year Rs.43.83 crore) to Provident Fund Trust at predetermined fixed percentage of eligible employees' salary and charged to statement of profit and loss. Further, the obligation of the Company is to make good shortfall, if any, in the fund assets based on the statutory rate of interest in the future period. During the year, surplus in the fund is more than the interest rate guarantee liability of the Company hence, the Company has reversed a provision of Rs.2.31 crore (Previous Year Rs.2472 crore), as per actuarial valuation and the balance provision to meet any shortfall in the future period to be compensated by the Company to the Provident Fund Trust as on 31st March 2015 is nil (Previous Year Rs.2.31 crore).

(iii) Other Benefit Plans

a) Gratuity

15 days salary for every completed year of service. Vesting period is 5years and payment is restricted to Rs.10 lakh.

b) Post Retirement Medical Scheme (PRMS)

The Company has Post Retirement Medical Scheme under which eligible ex-employees are provided medical facilities upon payment of one time prescribed contribution. The liability for the same is recognised on the basis of actuarial valuation. During the year. Company has made a provision towards the deficit in the liability as on 01.01.2007, having present value of Rs.114.48 crore as on 31st March 2015 as determined by the actuary in the statement of profit and loss, out of which Rs.106crore has been booked as prior period expenses.

c) Earned Leave Benefit (EL)

Accrual 30 days per year. Encashment while in service 75% of Earned Leave balance subject to maximum of 90 days at a time, twice per calendar year. Encashment on retirement or superannuation maximum300 days.

d) Terminal Benefits (TB)

At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Transfer Travelling Allowance.

e) Half Pay Leave (HPL)

Accrual 20 days per year. Encashment while in service NIL. Full encashment on retirement.

f) Long Service Award (LSA)

On completion of specified period of service with the company and also at the time of retirement, employees are rewarded with Gold Coins of different weight based on the duration of service completed.

The following table summarizes the components of net benefit expenses recognized in the statement of profit and loss based on actuarial valuation.

11. Disclosure as per Accounting Standard (A5) 16 on 'Borrowing Costs':

Borrowing costs capitalized during the year Rs.378.19 crore (Previous Year: Rs.351.35 crore).

12. MOP&NG had issued scheme of sharing of under recoveries on sensitive petroleum products. During the year, the Company has given discounts amounting to Rs.1,000 crore (Previous Year Rs.1900 crore). Corresponding adjustment on account of Central Sales Tax (CST) amounting to Rs.9.42 crore (Previous Year Rs.12.83 crore) has been made.

13. (a) The Company is raising provisional invoices for sale of R-LNG as the supplier Petronet LNG (PLL) is also raising provisional invoices on the Company since customs duty on import of LNG by PLL has been assessed on provisional basis.

(b) With effect from 1st April 2002, Liquefied Petroleum Gas (LPG) prices has been deregulated and is now based on the import parity prices fixed by the Oil Companies. However, the pricing mechanism is provisional and is pending finalization. Additional asset/liability or impact on profits, if any, arising due to such change, will be recognized on finalization of the pricing mechanism.

14. (i) Natural Gas Pipeline Tariff is subject to various Regulations issued by Petroleum and Natural Gas Regulatory Board (PNGRB) from time to time. With a view to provide fair opportunity to the consumers and public to participate in the pipeline tariff determination, PNGRB by way of Public notice, issues Public Consultation Documents and solicits views of the stakeholders. Impact on profits, if any, is being recognized consistently as and when the pipeline tariff is revised by orders of PNGRB in accordance with these Regulations.

(ii) During the year, PNGRB have notified following 'Provisional' initial unit natural gas pipeline tariff orders, revising the tariff on lower side. Accordingly, the Company has derecognized the revenue amounting to Rs.449.31 crore, as detailed below:

(iii) During the year, PNGRB vide Order No TO/02/2015 dated 3rc March'2015 have notified revised Petroleum and Petroleum Products Pipeline Transportation Tariff for Jamnagar Loni Pipeline (JLPL) effective from 20th December 2014. In compliance of the order, the Company has recognized the revenue by an amount of n 0.71 crore.

(iv) PNGRB has issued provisional tariff orders after various moderations, on account of capital employed, inflation rate, unaccounted gas loss, operating expenditure, volume devisor, future capex, working days etc. GAIL has filed appeals before the APTEL against the said moderations, in respect of following Tariff Orders, which are pending, and the relief, if any, will be accounted for in the year of decision:

(a) KG Basin,

(b) Dabhol-Bangalore,

(c) Kochi-Mangalore-Bangalore,

(d) Dadri-Bawana-Nangal,

(e) Chainsa-Jhajjar-Hissar,

(f) Cauvery Basin,

(g) Dukli-Maharajganj,

(h) Gujarat Network.

15. ONGC has raised debit notes dated 31st March2014forRs.l60.95crore for the period 20th November 2008 to 31st March 2014 of differential transportation charges (difference between Rs.12 and Rs.226 per 1000 5CM) for its Uran-Trombay Pipeline based on provisional tariff order dated 30th December 2013 issued by PNGRB. The Company in-turn, raised the debit notes to its customers on back-to-back basis amounting to Rs.195.80 crore out of which Rs.41.83 crore has been realised up to 31st March 2015. These debit notes have been contested by major customers in Court of Law/PNGRB including legal notice against encashment of LC. Pending final decision, as on 31st March 2015, an amount of Rs.153.97 crore has been included in Sundry debtors and an amount of Rs.191.15 crore as payable to ONGC. In view of above, and the action plan for recovery initiated, the management is of the opinion that no provision is required at this stage.

16. As per the advice of MOPNG, ONGC raised debit notes dated 19th December 2013 for differential of Non-APM price for certain gas supplied for the period February 2012 to November 2013 amounting to Rs.256.34 crore including VAT on GAIL who in-turn raised the corresponding debit notes Rs.236.41 crore (Rs.2.go crore realised up to 315t March2015 and net of Rs.32.go crore (including VAT) (the amount already recovered and credited to Gas Pool Account) to the allottee customers as on 31st March 2014.These customers have disputed the claims raised by the Company for retrospective change in gas price. In terms of the legal opinion obtained, the allottee customers are not liable to pay, and also observed that the debit note/invoices raised by ONGCL are based on deeming fiction and do not reflect the factual position, and in its record could not create a legally justifiable basis to raise debit note/invoice. The Company has referred the matter to MOPNG where decision is still pending. In view of above, an amount of Rs.233.51 crore (including Marketing Margin) is included in Sundry Debtors, and an amount of Rs.222.83 crore payable to ONGC. In view of above the management is of the opinion that no provision is required at this stage.

17. PNGRB on 19.02.2014 notified insertion in Affiliate Code of Conduct that an entity engaged in both marketing and transportation of natural gas shall create a separate legal entity for transportation of natural gas by 31.03.2017 and the right of first use shall, however, remain with the affiliate of such entity. The Company has challenged the said PNGRB notification before Delhi High Court by way of writ and the same is pending adjudication.

18. In compliance of AS 17 on "Segment Reporting" as notified under the Companies Accounting Standard Rules 2006, read with Companies (Accounts) Rules, 2014, the Company has adopted following Business segments as its reportable segments:

(i) Transmission services

a) Natural Gas

b) LPG

(ii) Natural Gas Marketing

(iii) Petrochemicals

(iv) LPG and other Liquid Hydrocarbons

(v) Other Segments (include GAIL TEL, E&R City Gas and Power Generation)

There are no geographical segments.

The disclosures of segment wise information is given as per Annexure-A.

19. In compliance of AS 18 on" Related Party Disclosures notified under Companies Accounting Standard Rules 2006, read with Companies (Accounts) Rules, 2014, the names of related parties, nature of relationship and detail of transactions entered therewith are given in Annexure-B.

20. In compliance of AS 20 on "Earning Per Share", the calculation of Earnings Per Share (Basic and Diluted) is as under:

21. In Compliance of AS 27 on "Financial Reporting of Interests in Joint Ventures" as notified under Companies Accounting Standard Rules 2006 read with Companies (Accounts) Rules, 2014 brief description of Joint Ventures of the Company are:

(a) Jointly Controlled Entities

(i) Mahanagar Gas Limited: A Joint Venture with British Gas Plc and Government of Maharashtra to supply gas to domestic, commercial, small industrial consumers and CNG for transport sector in Mumbai. The Company has equity participation of 35% (Previous Year 35%) of the paid up capital and has invested Rs.4445 crore (Previous Year Rs.4445 crore) in 444,50,000 equity shares of no/-each.

(ii) Indraprastha Gas Limited: A Joint Venture with BPCL and Government of National Capital Territory (NCT) of Delhi to supply gas to domestic, commercial, small industrial consumers and CNG for transport sector in Delhi. The Company has equity participation of 22.50% (Previous Year 22.50%) of the paid up capital and has invested Rs.31.50 crore (Previous Year Rs.31.50 crore) for acquiring 3,15,00,000 Equity shares of Rs.10/-each.

(iii) Petronet LNG Limited: A Joint Venture with BPCL, I0CL and ONGCL for setting up LNG import facilities. The Company has equity participation of 12.50% (Previous Year 12.50%) of the paid up capital and has invested Rs.98.75 crore (Previous Year Rs.98.75 crore) for acquiring 9,37,50,000 equity shares of Rs.10/- each in the Joint Venture Company (includes 1,00,00,000 equity shares allotted at a premium of Rs.5/- per share). The Company has also paid Rs.421.35 crore (Previous Year Rs.14045 crore) including service tax as advance for booking of 2.5 MMTPA capacity on long term basis at Dahej.

(iv) Bhagyanagar Gas Limited: A Joint Venture with HPCL for distribution and marketing of CNG, Auto LPG, natural gas and other gaseous fuels in Andhra Pradesh and Telengana. The Company has equity participation of 22.50% (Previous Year 22.50%)of the paid up capital and has invested Rs.22.50 crore (Previous Year Rs.0.01 crore) for acquiring2,25,00,000 equity shares (PreviousYearl2,500equityshares)ofRs.10/-each.

(v) Tripura Natural Gas Company Limited: A Joint Venture with Assam Gas Company Limited and Tripura Industrial Development Corporation for transportation and distribution of natural gas through pipelines in Tripura. The Company has equity participation of 29% (Previous Year 29%)of the paid up capital and has invested Rs.1.92 crore (Previous Year Rs.1.92 crore) for acquiring 1,92,000 equity shares (Previous Year 1,92,000 equity shares) of Rs.100/- each.

(vi) Central UP Gas Limited: A Joint Venture with BPC L to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Kanpur, Uttar Pradesh. The Company has equity participation of 25% (Previous Year 25%) of the paid up capital and has invested Rs.15 crore (Previous Year Rs.15 crore) for acquiring 1,50,00,000 equity shares of Rs.10/-each.

(vii) Green Gas Limited: A Joint Venture with I0CL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Agra and Lucknow, Uttar Pradesh. The Company has equity participation of 22.50% (Previous Year 22.50%)of the paid up capital and has invested Rs.23.04 crore (PreviousYearRs.0.01crore)foracquiring2,30,42,500equityshares (PreviousYearl2,500equityshares)ofRs.10/-each.

(viii) Maharashtra Natural Gas Limited: A Joint Venture with BPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Pune, Maharashtra.

The Company has equity participation of 22.50% (Previous Year 22.50%) of the paid up capital and has invested Rs.22.50 crore (Previous Year Rs.22.50 crore) for acquiring 2,25,00,000 equity sharesofRs.10/-each.

(ix) Ratnagiri Gas and Power Private Limited: A Joint Venture with NTPC, M5EB and other financial institutions for the revival of the Dabhol Project. The Company's equity participation has come down from 32.88% to 28.91% of the paid up capital due to availement of rights by the financial institutions converting their debt to equity during the year. There is no change in the investment of Rs.97431 crore (Previous Year Rs.97431 crore) in 97,43,08,300 equity shares (Previous Year 97,43,08,300 equity shares) of Rs.10/- each.

(x) Avantika Gas Ltd. A Joint Venture with HPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Madhya Pradesh. The Company has equity participation of 22.50% (Previous Year 22.50%) of the paid up capital and has invested Rs.22.50 crore (Previous Year Rs.0.0l crore) for acquiring 2,25,00,000 equity shares (Previous Year 12,500 equity shares)ofRs.10/-each.

(xi) ONGC Petro Additions Ltd (OPAL). A Joint Venture with ONGC, and Gujarat state Petroleum Corporation Ltd., for setting up Petrochemical Project at Dahej in Gujarat. The Company has equity participation of 15.50% (Previous Year :1550%) of the paid up capital and has invested Rs.994.95 crore (Previous Year Rs.994.95 crore) for acquiring 99,49,45,000 equity shares (Previous Year 99,49,45,000 equity shares) of Rs.10/-each.

(xii) GAIL China Gas Global Energy Holdings Ltd. A Joint Venture with China Gas Holdings Ltd, to pursue gas sector opportunities mainly in China. The Company has equity participation of 50% (Previous Year50%)of the paid up capital.

(xiii) Tapi Pipeline Company Ltd. A Joint Venture Company with Turkmengaz (Turkmenistan), Afghan Gas Enterprise (Afghanistan) and I5G5 Pvt. Ltd. (Pakistan) incorporated on 11th November 2014. The Company has equity participation of 25% of the paid up capital.

(b) Jointly Controlled Assets

(I) The Company has participated in joint bidding under the Government of India New Exploration Licensing Policy (NELP) and overseas exploration bidding and has 13 Blocks (Previous Year: 18 Blocks) as on 31st March 2015 for which the Company has entered into Production Sharing Contract(s) with respective host Governments along with other partners for exploration & production of oil and gas. The Company is a non-operator, except in Block RJ-ONN -2004/1, CY-ONN-2005/l and CB-ONN-2010/ll, where it is the operator. The expenses, income, assets and liabilities are based upon its percentage share in production sharing contract(s).

22. In compliance of AS-28 on Impairment of Assets as notified under the Companies Accounting Standard Rules 2006 read with Companies (Accounts) Rules, 2014, the Company has carried out an assessment of impairment of asset in respect of its GAIL Tel assets and Gas Processing Unit (GPU) Plant Usar as on31.03.2015. Accordingly:

(i) The Company has made impairment of Rs.6.09 crore (Previous Year:- Rs.5.62 crore) in respect of its GAIL Tel assets and the same has been recognised as impairment loss in the statement of profit and loss.

(ii) No impairment loss was considered necessary by the management of the Company in respect of GPU, Usar which is under shutdown condition since 16th July 2014 due to non-availability of rich feed gas. The management has decided to keep the plant in preservation mode till the availability of rich feed gas in the future.

23. In compliance with amended Clause 32 of the Listing Agreement with Stock Exchanges, the required information is given in Annexure - C.

24. Foreign currency exposure not hedged by a derivative instrument or otherwise:

25. In some cases, the Company has received intimation from Micro and Small Enterprises regarding their status under "The Micro, Small and Medium Enterprises Development Act, 2006". The management of the Company confirms that as per practice, the payment to all suppliers has been made within7-10days.The amount remainingun paid to all suppliers as at 31st March 2015 is Rs.3,439-35 crore (Previous Year: Rs.4,105.68 crore). No interest for delay was paid or payable under the Act.

26. (a) Following Government of India's approval, the shareholders of the Company in the Annual General Meeting held on 15thSeptember,1997 approved the transfer of all the assets including Plant and Machinery, accessories and other related assets which are part of Lakwa Project to Assam Gas Cracker Complex at a price to be determined by an independent Agency and on terms and stipulations as the Board of directors may in its discretion deem fit. The Cabinet Committee on Economic Affairs (CCEA) has approved the setting up of Assam Gas Cracker Project at Lepetkata by formation of a company in which the Company has equity participation of 70%. A company by the name of Brahmaputra Cracker and Polymer Limited (BCPL) was incorporated during2006- 07 and construction of the project is in progress. Further, Public Investment Board (PIB) in meeting dated 13th July 2011 recommended that the issue of ownership of the Lakwa facility may be decided by the Committee comprising of representative from Department of Expenditure, Planning Commission, MoPNG and the Administrative Ministry. The gross block of fixed assets and capital work in progress value of Lakwa unit is Rs.260.27 crore as on 31st March 2015(Previous Year: Rs.26l.l4crore).

(b) Exceptional items include profit of Rs.62.86 crore on slump sale consideration of Rs.79.14 crore, being market value as on 01.10.2014 of CNG business (including pipelines)in Vadodara to Vadodra Gas Ltd, a Joint Venture Company of GAIL Gas Ltd and Vadodara Municipal SewaSamiti.

27. Non-Refundable Deposits Rs.5.27 crore (Previous Year: Rs.17.21 crore) made with the concerned authorities for railway crossings, forest crossings, removal and laying of electric/telephone poles and lines are accounted for under Capital Work-in-Progress/Capitalised on the basis of work done/confirmation from the concerned department.

28. (a) Confirmation of balances has been received in majority of cases for trade receivables and payables. These confirmations are subject to reconciliation and consequential adjustments, which in the opinion of the management are not material.

(b) In the opinion of management, the value of assets, other than fixed assets and non-current investments, on realization in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

(c) During the year, the Company has CapitalisedRs.2974.28 crore in C2& C3 Project and Rs.3867.98 crore in Petrochemical Project.

29. During the year, an amount of Rs.27.74 crore (Previous Year Rs.28.96 crore) has been capitalized towards Research and Development Assets.

30. The Statement of Profit & loss includes:-

(a) Expenditure on Public Relations and Publicity amounting to Rs.44.90 crore (Previous Year: Rs.36.20 crore). The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.0006:1 (Previous Year: 0.0006:1).

(b) Research and Development Expenses Rs.17.01 crore (Previous Year Rs.28.45 crore).

(c) Entertainment Expenses Rs.0.27crore(Previous Year: Rs.0.21 crore).

31. Other disclosures as per Schedule III of the Companies Act2013.

32. Other Quantitative details are given in Annexure-D.

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


Mar 31, 2014

1. Contingent Liabilities and Commitments (To the extent not provided for):-

I. Contingent Liability

(a). Claims against the Company not acknowledged as debts: Rs. 7596.61 Crores (Previous Year: Rs. 5968.49 Crores), which mainly include:- (i) Legal cases for claim of Rs. 840.74 Crores (Previous Year: Rs. 807.23 Crores) by trade payable on account of Liquidated Damages/Price Reduction Schedule and Natural Gas price differential etc. and by customers for Natural gas transmission charges etc.

(ii) Income tax assessments up to the Assessment Year 2011-12 have been completed and a demand (net of provision) of Rs. 1337.15 Crores relating to the Assessment Years 1996-97 to 2011-12 (Previous Year: Rs. 1290.25 Crores relating to the Assessment Years 1996-97 to 2010-11) raised by the Department on account of certain disallowances / additions has been disputed by the company as it has been advised that the demand is likely to be deleted or may be reduced substantially by the appellate Authorities. The company has filed the appeal with the appropriate appellate authorities against all the assessment years. However, to avoid coercive action by the Department, Rs. 1298.14 Crores (Previous Year: Rs. 1221.67 Crores) has already been paid pending decision by the appellate authorities. Further, Department has also filed appeals amounting to Rs. 100.32 Crores (including interest) (Previous Year: Rs. 93.37 Crores) before Income Tax Appellate Tribunal, Delhi against the relief granted by CIT (A) in favour of Company.

(iii) Rs. 4238.36 Crores (Previous Year: Rs. 3147.06 Crores) relating to disputed tax demand towards Custom Duty, Excise duty, Sales tax, Entry tax, Service Tax etc.

(b) (i) The Company has issued Corporate Guarantee for Rs. 1555.37 Crores (Previous Year: Rs. 1100.74 Crores) on behalf of subsidiary companies for raising loan.

(ii) Share in Contingent Liabilities of Joint Ventures based on their audited / unaudited Financial Statement: Rs. 980.49 Crores (Previous Year: Rs. 728.87 Crores).

II. Commitments:- (a) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. 2658.21 Crores (Previous Year: Rs. 4841.24 Crores).

(b) Company''s share in estimated amount of contracts remaining to be executed on capital account and not provided for based on audited/unaudited Financial Statement of Joint Ventures. Rs. 842.47 Crores (Previous Year: Rs. 1005.49 Crores).

(c) Other Commitments:- (i) As at 31st March''2014, the company has commitment of Rs. 772.16 Crores (Previous Year: Rs. 615.65 Crores) towards further investment and disbursement of loan in the Joint Venture Entities and Associates.

(ii) As at 31st March''2014, the company has commitment of Rs. 140.93 Crores (Previous Year: Rs. 140.93 Crores) towards further investment in the Subsidiaries.

(iii) As at 31st March''2014, the company has commitment of Rs. 147.58 Crores (Previous Year: Rs. 177.62 Crores) towards further investment in the entity other than Joint Ventures, Associates & Subsidiaries.

(iv) Company''s commitment towards the minimum work programme in respect of Jointly Controlled Assets has been disclosed in Note 47(b).

2. Sales Tax demand of Rs. 3449.18 Crores (Previous Year: Rs. 3449.18 Crores) and interest thereon Rs. 1513.04 Crores (Previous Year: Rs. 1513.04 Crores) for Hazira unit in Gujarat State: Sales Tax Authorities, Ahmedabad have treated the transfer of Natural Gas by the company from the state of Gujarat to other states during the period April, 1994 to March, 2001 as inter-state sales under Section 3(a) of the Central Sales Tax Act. The company has been paying sales tax under section 12 of the Gujarat Sales Tax Act against Form 17 since inception (1987) and accordingly the sales tax assessments have been completed. Based on the interpretation of the provisions of the Sales Tax Act and legal advice from the experts, the company had filed writ petition and special leave petition in the Supreme Court of India. In February, 2005 the case was transferred by Hon''ble Supreme Court to Gujarat Sales Tax Tribunal for decision. The Tribunal has given its judgment on 16.05.2005 accepting the contention of the company for interstate transfer of Natural Gas as branch transfer and not the interstate sale and set aside the demand under section 41-B of the Gujarat Sales Tax Act. The Hon''ble Tribunal has given further instruction to the Assessing Authority to re-assess and decide tax liability in accordance with the law considering interstate transfer of natural gas as branch transfer. The Sales Tax Authorities had filed rectification application under section 72 of the Gujarat Sales Tax Act, 1969 in Gujarat Sales Tax Tribunal against its judgment dated 16.05.2005. The Tribunal had dismissed the rectification application of the sales tax authorities vide its order dated 06.07.2006. The sales tax authorities have now filed petition in Hon''ble high Court Ahmedabad against the order of the tribunal and no hearing has yet taken place. In opinion of the management there is a remote possibility of crystallizing this liability.

3. (a) Freehold Land acquired valuing Rs. 19.92 Crores (Previous Year: Rs. 11.55 Crores) and Leasehold Land acquired valuing Rs. 79.50 Crores (Previous Year : Rs. 64.07 Crore) are valued / capitalized on provisional basis.

(b) Title deeds for freehold land valuing Rs. 14.21 Crores (Previous Year: Rs. 10.86 Crores) and leasehold land valuing Rs. 25.55 Crores (Previous Year: Rs. 13.19 Crores) are pending execution.

(c) Title Deeds in respect of ten residential flats at Asiad Village, New Delhi, valuing Rs. 1.17 Crores (Previous Year: Rs. 1.17 Crores) are still in the name of ONGCL. Concerned authorities are being pursued for getting the same transferred in the name of the Company.

(d) Net Block for "Building" includes an amount of Rs. 0.52 Crores (Previous Year: Rs. 1.03 Crores) earmarked for disposal but in use.

(e) Freehold land valuing Rs. 0.63 Crores and leasehold land valuing Rs. 0.80 Crores, registered in the name of company, does not belong to it and hence not capitalized.

4. Disclosure as per Accounting Standard-5 on "Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies".

(a) In compliance of opinion of Expert Advisory Committee (EAC) of ICAI, the company has changed its Accounting Policy (Notes to Accounts No 1.04(a) (ix)) and amortised the cost of ROU considering the life as 99 years. As such, depreciation and amortization expenses increased by Rs. 21.05 Crores and accordingly, profit for the year reduced by corresponding amount.

(b) In compliance with revised "Guidance Note of Accounting of Oil & Gas Producing Activities" issued by ICAI, the company has changed its Accounting Policy (Notes to Accounts No. 1.19 (i) (c) and 1.19 (ii) (a)) relating to accounting of exploratory well in progress and capitalization of producing properties. There is no impact on the profit for the year.

5. (a) The balance retention from PMT JV consortium amounting to Rs. 28.06 Crores (Previous Year: Rs. 25.78 Crores) includes interest amounting to Rs. 2.29 Crores (Previous Year: Rs. 0.97 Crores) on Short term deposits for the year. This interest income does not belong to the company and hence not accounted as income.

(b) Liability on account of Gas Pool Money amounting to Rs. 1035.71 Crores (Previous Year: Rs. 598.89 Crores) includes interest amounting to Rs. 28.99 Crores (Previous Year: Rs. 4.26 Crores) on short term deposits. This interest does not belong to the company and hence not accounted as income.

(c) The amount in Gas Pool Money (Provisional) account shown under "Other Long Term Liabilities" amounting to Rs. 652.20 Crores (Previous Year: Rs. 584.47 Crores) will be invested as and when said amount is received from the customers.

(d) Liability on account of Pipeline overrun and Imbalance charges amounting to Rs. 70.62 Crores (Previous Year: Rs. 60.28 Crores) includes interest for the year amounting to Rs. 5.62 Crores (Previous Year: Rs. 3.20 Crores) on short term deposits. This interest does not belong to the company and hence not accounted as income.

6. Disclosure as per Accounting Standard-11 on "The effect of changes in Foreign Exchange Rates"

(i) The amount of exchange difference (net) recognized in the Statement of Profit & Loss is Rs. 25.21 Crores (Previous Year: Rs. 22.03 Crores).

(ii) The amount of exchange difference debited to the carrying amount of fixed assets is Rs. 502.49 Crores (Previous Year: Rs. 146.18 Crores).

7. The required disclosure under the Revised Accounting Standard 15 is given as below:

(i) Superannuation Benefit Fund (Defined Contribution Fund)

Company has paid for an amount of Rs.52.07 Crores (Previous Year: Rs. 46.29 Crores) towards contribution to Superannuation Benefit Fund Trust and charged to Statement of Profit and Loss.

(ii) Provident Fund

Company has paid contribution of Rs.43.83 crores (Previous Year:Rs.37.40 Crores) to Provident Fund Trust at predetermined fixed percentage of eligible employee''s salary and charged to Statement of Profit and Loss. Further, the obligation of the company is to make good shortfall, if any, in the fund assets based on the statutory rate of interest in the future period. During the year, the company has reversed a provision of Rs.24.72 Crore (Previous Year : made a provision of Rs.18.21 Crores), as per actuarial valuation and the balance provision to meet any shortfall in the future period to be compensated by the company to the Provident Fund Trust as on 31.03.2014 is Rs.2.31 Crore.

(iii) Other Benefit Plans

a) Gratuity

15 days salary for every completed year of service. Vesting period is 5 years and payment is restricted to ?10 Lakhs.

b) Post Retirement Medical Scheme (PRMS)

The company has Post Retirement Medical Scheme under which eligible ex-employees are provided medical facilities upon payment of one time prescribed contribution. The liability for the same is recognised on the basis of actuarial valuation.

c) Earned Leave Benefit (EL)

Accrual 30 days per year. Encashment while in service 75% of Earned Leave balance subject to maximum of 90 days at a time, twice per calendar year. Encashment on retirement or superannuation maximum 300 days.

d) Terminal Benefits (TB)

At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Transfer Traveling Allowance.

e) Half Pay Leave (HPL)

Accrual 20 days per year. Encashment while in service NIL. Full encashment on retirement.

f) Long Service Award (LSA)

Employees are eligible for gold coin weighing 5 gms on completion of 15 years, 10 gms each on completion of 20 years and 25 years, 20 gms each on completion of 30 years and 35 years of service. Employees are also gifted a gold coin weighing 25 grams at the time of superannuation.

The following table summarizes the components of net benefit expenses recognized in the statement of Profit and Loss based on actuarial valuation.

8. Disclosure as per Accounting Standard (AS) 16 on ''Borrowing Costs'' Borrowing costs capitalized during the year Rs. 351.35 Crore (Previous Year: Rs. 311.24 Crore).

9. MOP&NG had issued scheme of sharing of under recoveries on sensitive petroleum products. During the year, the Company has given discounts amounting to Rs. 1,900 Crores (Previous Year: Rs. 2687.18 Crores). Corresponding adjustment on account of CST amounting to Rs. 12.83 Crores (Previous Year: Rs. 9.58 Crores) has been made.

10. (a) The Company is raising provisional invoices for sale of R-LNG as the supplier M/s Petronet LNG (PLL) is also raising provisional invoices on the Company since customs duty on import of LNG by PLL has been assessed on provisional basis.

(b) With effect from April 1, 2002, Liquefied Petroleum Gas prices has been deregulated and is now based on the import parity prices fixed by the Oil Companies. However, the pricing mechanism is provisional and is pending finalization. Additional asset/liability or impact on profits, if any, arising due to such change, will be recognized on finalization of pricing mechanism.

(c) (i) Natural Gas Pipeline Tariff is subject to various Regulations issued by PNGRB from time to time. With a view to provide fair opportunity to the consumers and public to participate in the pipeline tariff determination, PNGRB by way of Public notice issues Public Consultation Documents and solicites views of the stakeholders. Impact on profits, if any, is being recognized consistently as and when the pipeline tariff is revised by orders of PNGRB in accordance with these Regulations.

(ii) The company has derecognized the revenue by an amount of Rs. 28.33 Crore on account of lower tariff submitted to PNGRB for approval in respect of Gujarat Pipelines Network during the year.

(d) Petroleum & Natural Gas Regulatory Board (PNGRB) on 19.02.2014 notified insertion in Affiliate Code of Conduct that an entity engaged in both marketing and transportation of natural gas shall create a separate legal entity for transportation of natural gas by 31.03.2017 and the right of first use shall however remain with the affiliate of such entity. Company has filed an appeal against the PNGRB notification in the High Court.

11. In compliance of Accounting Standard 17 (AS-17) on "Segment Reporting" as notified under Companies Accounting Standard Rules 2006, the company has adopted following Business segments as its reportable segments:

(i) Transmission services

a) Natural Gas

b) LPG

(ii) Natural Gas Trading

(iii) Petrochemicals

(iv) LPG and other Liquid Hydrocarbons

(v) Other Segments (include GAIL TEL, E&P, City Gas and Power Generation)

There are no geographical segments.

The disclosures of segment wise information is given as per Annexure-A.

12. In compliance of Accounting Standard 18 on "Related party Disclosures" as notified under Companies Accounting Standard Rules 2006, the names of related parties, nature of relationship and detail of transactions entered therewith are given in Annexure - B.

13. In compliance of Accounting Standard 22 on "Accounting for taxes on Income" as notified under Companies Accounting Standard Rules 2006, the Company has provided accumulated net deferred tax liability in respect of timing difference as on 31st March,2014 amounting to Rs. 2566.37 Crores (Previous Year: Rs. 2300.06 Crores). Net Deferred tax expense for the year of Rs. 266.31 Crores (Previous Year: Rs. 531.42 Crores) has been charged to Statement of Profit & Loss. The item- wise details of deferred tax liability and assets are as under:

14. In Compliance of Accounting Standard 27 on "Financial Reporting of Interests in Joint Ventures" as notified under Companies Accounting Standard Rules 2006, brief description of Joint Ventures of the Company are:

(a) Jointly Controlled Entities

(i) Mahanagar Gas Limited: A Joint Venture with British Gas Plc and Government of Maharashtra to supply gas to domestic, commercial, small industrial consumers and CNG for transport sector in Mumbai. The company has equity participation of 35% of the paid up capital and has invested Rs. 44.45 Crores (Previous Year Rs. 44.45 Crores) for acquiring 4,44,50,000 equity shares of Rs. 10/- each in Joint Venture Company.

(ii) Indraprastha Gas Limited: A Joint Venture with BPCL and Government of National Capital Territory (NCT) of Delhi to supply gas to domestic, commercial units and CNG for transport sector in Delhi. The company has equity participation of 22.50% of the paid up capital and has invested Rs. 31.50 Crores (Previous Year Rs. 31.50 Crores) for acquiring 3,15,00,000 equity shares of Rs. 10/- each in Joint Venture Company.

(iii) Petronet LNG Limited: A Joint Venture with BPCL, IOCL and ONGCL for setting up LNG imports facilities. The company has equity participation of 12.50% of the paid up capital and has invested Rs. 98.75 Crores (Previous Year Rs. 98.75 Crores) for acquiring 9,37,50,000 equity shares of Rs. 10/- each in Joint Venture Company (includes 1,00,00,000 equity shares allotted at a premium of Rs. 5/- per share)

(iv) Bhagyanagar Gas Limited: A Joint Venture with HPCL for distribution and marketing of CNG, Auto LPG, Natural Gas and other gaseous fuels in Andhra Pradesh. The company has equity participation of 22.50% of the paid up capital and has invested Rs. 0.01 Crores for acquiring 12,500 equity shares of Rs. 10/- each in Joint Venture Company. The Company has also paid Rs. 22.49 Crores (Previous Year Rs. 22.49 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(v) Tripura Natural Gas Company Limited: A Joint Venture with Assam Gas Company Limited and Tripura Industrial Development Corporation for transportation and distribution of natural gas through pipelines in Tripura. The company has equity participation of 29% (previous year 29%) of the paid up capital and has invested Rs. 1.92 Crores (Previous Year Rs. 1.92 Crores) for acquiring 1,92,000 equity shares (previous Year 1,92,000 equity shares) of Rs. 100/- each in Joint Venture Company.

(vi) Central UP Gas Limited: A Joint Venture with BPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Kanpur, Uttar Pradesh. The company has equity participation of 25% of the paid up capital and has invested Rs. 15 Crores (Previous Year Rs. 15 Crores) for acquiring 1,50,00,000 equity shares of Rs. 10/- each in Joint Venture Company.

(vii) Green Gas Limited: A Joint Venture with IOCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Agra, Lucknow & Uttar Pradesh. The company has equity participation of 22.50% of the paid up capital and has invested Rs. 0.01 Crores for acquiring 12,500 equity shares of Rs. 10/- each in Joint Venture Company. The Company has also paid Rs. 23.03 Crores (Previous Year Rs. 23.03 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(viii) Maharashtra Natural Gas Limited: A Joint Venture with BPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Pune, Maharashtra. The company has equity participation of 22.50% of the paid up capital and has invested Rs. 22.50 Crores (Previous Year Rs. 22.50 Crores) for acquiring 2,25,00,000 equity shares of Rs. 10/- each in Joint Venture Company.

(ix) Ratnagiri Gas and Power Private Limited: A Joint Venture with NTPC, MSEB and other Financial Institutions for the revival of the Dabhol Project. The company has equity participation of 32.88% (previous year 32.88%) of the paid up capital and has invested Rs. 974.31 Crores (Previous Year Rs. 974.31 Crores) for acquiring 9,74,308,300 equity shares (Previous Year 9,74,308,300 equity shares) of Rs. 10/- each in Joint Venture Company.

(x) Avantika Gas Ltd. A Joint Venture with HPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in M P. The company has equity participation of 22.50% of the paid up capital and has invested Rs. 0.01 Crores for acquiring 12,500 equity shares of Rs. 10/- each in Joint Venture Company. The Company has also paid Rs. 22.48 Crores (Previous Year Rs. 22.49 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(xi) ONGC Petro additions Ltd (OPAL). A Joint Venture with Oil and Natural Gas Corporation Ltd, GAIL (India) Ltd and Gujarat state Petroleum Corporation Ltd. for setting up Petrochemical Project at Dahej in Gujarat. The company has equity participation of 15.50% (Previous Year : 15.50%) of the paid up capital and has invested Rs. 994.95 Crores (Previous Year Rs. 634.44 Crores) for acquiring 99,49,45,000 equity shares (Previous Year 63,44,40,001 equity shares) of Rs. 10/- each.

(xii) GAIL China Gas Global Energy Holdings Ltd. A Joint Venture with China Gas Holdings Ltd. to pursue gas sector opportunities mainly in China. The company has equity participation of 50% of the paid up capital.

The Company''s share in the assets and liabilities and in the Income and expenditure for the year in respect of above Joint ventures, based on audited/unaudited Financial Statements as furnished by them, is as under: (Final adjustments are effected during the year in which audited financial statement are received).

(b) Jointly Controlled Assets

(i) The Company has participated in joint bidding under the Government of India New Exploration Licensing Policy (NELP) and overseas exploration bidding and has 18 Blocks (PY 28 Blocks) as on 31.03.2014 for which the Company has entered into Production Sharing Contract with respective host Governments along with other partners for Exploration & Production of Oil and Gas. The Company is a non-operator, except in Block RJ-ONN -2004/1, CY-ONN-2005/1 and CB- ONN-2010/11, where it is an operator, and shares in Expenses, Income, Assets and Liabilities based upon its percentage in production sharing contract.

(iii) The Company''s share in the Assets, Liabilities, Income and Expenditure for the year in respect of joint operations project blocks has been incorporated in the Company''s financial statements based upon un-audited financial statement submitted by the operators and are given below : (Final adjustments are effected during the year in which audited financial statement are received).

(v) Share of Minimum work program committed under various production sharing contracts in respect of E&P joint ventures is Rs. 475.31 Crores vious Year: Rs. 643.50 Crores).

(vi) Quantitative information:

(a) Details of Company''s Share of Production of Crude Oil and Natural Gas during the year ended 31.03.2014:

c) In terms of Production Sharing Agreements/Contracts, the balance (company''s share) in cost recovery of Blocks (having proved reserves) to be made from future revenue of such Blocks, if any, is Rs. 1300.77 Crores at the end of year (previous year : Rs. 940.75 Crores).

(vii) Jointly Owned Assets:

GAIL''s interest in jointly owned asset i.e. Heat Recovery Steam Generation System (HRSG) installed at GAIL, Vaghodia at a project cost of Rs. 61.61 crores, is Rs. 30.81 Crores.

15. In Compliance of Accounting Standard 28, impairment of assets notified under the Companies Accounting Standard Rules 2006, the company has carried out the assessment of impairment of assets. Based on such assessment, GAILTEL assets have been impaired to the extent of Rs. 5.62 Crore (Previous Year: Rs. 0.39 Crore) and same amount has been recognized as impairment loss in Statement of Profit & Loss.

16. In compliance with amended Clause 32 of the Listing Agreement with Stock Exchanges, the required information is given in Annexure – C.

17. Foreign currency exposure not hedged by a derivatives instrument or otherwise:

18. In some cases, the Company has received intimation from Micro and Small Enterprises regarding their status under "The Micro, Small and Medium Enterprises Development Act, 2006". The Company has certified that as a practice, the payment to all suppliers is made within 7 -10 days. No payments beyond appointed date were noticed. The amount remaining unpaid to all suppliers as at 31st March 2014 is Rs. 4105.68 Crores (Previous Year: Rs. 3832.93 Crores). No interest was paid or payable under the Act.

19. (a) Following Government of India''s approval, the shareholders of the Company in the Annual General Meeting held on 15th September, 1997 approved the transfer of all the assets including Plant and Machinery, accessories and other related assets which are part of Lakwa Project to Assam Gas Cracker Complex at a price to be determined by an independent Agency and on terms and stipulations as the Board may in its discretion deem fit. The Cabinet committee on Economic affairs (CCEA) has approved the setting up of Assam Gas based cracker project at Lepetkata by formation of a company in which GAIL has equity participation of 70%. A company by the name of Brahmaputra Cracker and Polymer Limited has been incorporated during 2006-07 and construction of Gas cracker complex is in progress. Further, Public Investment Board (PIB) in meeting dated 13th July 2011 recommended that the issue of ownership of the Lakwa facility may be decided by the Committee comprising of representative from Department of Expenditure, Planning Commission, MoPNG and the administrative Ministry. The gross block of fixed assets and Capital work in progress value of Lakwa unit is Rs. 261.14 Crores as on 31st March 2014 (Previous Year: Rs. 260.15 Crores ).

(b) Further the Board in its 287th Meeting held on 06th April''2011 has approved transfer of CNG stations and its associated pipeline in Vadodara to proposed Joint Venture Company of GAIL Gas Ltd. and Vadodra Municipal Seva Samiti at market value yet to be determined. The transfer has not been effected during the financial year.

20. Non-Refundable Deposits Rs. 17.21 Crores (Previous Year: Rs. 11.85 Crores) made with the concerned authorities for railway crossings, forest crossings, removal and laying of electric/telephone poles and lines are accounted for under Capital Work-in-Progress on the basis of work done/confirmation from the concerned department.

21. (a) Request for confirmations of balances of trade receivable and payables were sent. Confirmation of balances has been received in majority of cases. These confirmations are subject to reconciliation and consequential adjustments, which in the opinion of the management are not material.

(b) In the opinion of management, the value of assets, other than fixed assets and non-current investments, on realization in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

22. During the year, an overseas Original Equipment Manufacturer (OEM) who is supplier of the equipment to GAIL has made a declaration of payment of USD 4.34 Million and GBP 3,48,549 to an Agent over and above the declared amount in the bid. This is considered violation of tender / contract condition as well as Integrity Pact (IP) signed by the bidder. The company has issued a show cause Notice followed by Legal Notice claiming the refund of above amount including interest thereon. The company is contemplating further appropriate action in the matter. Meanwhile, the matter is under examination by Independent External Monitors (IEMs) in terms of IP.

23. During the year, an amount of Rs. 28.96 Crore (Previous Year: Rs. 24.98 Crores) has been capitalized towards Research and Development Assets.

24. The Statement of Profit & Loss includes: -

(a) Expenditure on Public Relations and Publicity amounting to Rs. 36.20 Crores (Previous Year: Rs. 33.76 Crores). The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.0006:1 (Previous Year: 0.0007:1).

(b) Research and Development Expenses Rs. 28.45 Crores (Previous Year : Rs. 12.91 Crores).

(c) Entertainment Expenses Rs. 0.21 Crores (Previous Year: Rs. 0.37 Crores).

25. Other Quantitative details are given in Annexure-D.

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


Mar 31, 2013

1. Contingent Liabilities and Commitments (To the extent not provided for):-

I. Contingent Liability

(a). Claims against the Company not acknowledged as debts: Rs. 5968.49 Crores (Previous Year: Rs. 6040.02 Crores), which mainly include:-

(i) Legal cases for claim of Rs. 807.23 Crores (Previous Year: Rs. 3261.11 Crores) by trade payable on account of Liquidated Damages/Price Reduction Schedule and Natural Gas price differential etc. and by customers for Natural gas transmission charges etc.

(ii) Income tax assessments up to the Assessment Year 2010-11 have been completed and a demand (net of provision) of Rs. 1290.25 Crores relating to the Assessment Years 1996-97 to 2010-11 (Previous Year: Rs.. 1345.92 Crores relating to the Assessment Years 1996-97 to 2009-10) raised by the Department on account of certain disallowances / additions has been disputed by the company as it has been advised that the demand is likely to be deleted or may be reduced substantially by the appellate Authorities. The company has filed the appeal with the appropriate appellate authorities against all the assessment years. However, to avoid coercive action by the Department, Rs. 1221.67 Crores (Previous Year: Rs. 117733 Crores) has already been paid pending decision by the appellate authorities. Further, Department has also filed appeals amounting to Rs. 93.37 Crores (including interest) before Income Tax Appellate Tribunal, Delhi against the relief granted by CIT (A) in favour of Company.

(iii) Rs. 3147.06 Crores (Previous Year: Rs. 1154.69 Crores) relating to disputed tax demand towards Excise duty, Sales tax, Entry tax, and Service Tax etc.

(b) (i) The Company has issued Corporate Guarantee for Rs. 1100.74 Crores (Previous Year: Rs. 806.03 Crores) on behalf of subsidiary companies for raising loan. Further Bank Gurantees for Rs. NIL Crore (Previous Year: Rs. 45.88 Crore) issued on behalf of subsidiary companies.

(ii) Share in Contingent Liabilities of Joint Ventures based on their audited / unaudited Financial Statement: Rs. 728.87 Crores (Previous Year: Rs.733.14 Crores).

II. Commitments:-

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs. 4841.24 Crores (Previous Year: Rs. 7115.17 Crores).

(b) Company''s share in estimated amount of contracts remaining to be executed on capital account and not provided for based on audited/unaudited Financial Statement of Joint Ventures. Rs.1005.49 Crores (Previous Year: Rs.1777.91 Crores).

(c) Other Commitments:-

(i) As at 31st March''2013, the company has commitment of Rs. 615.65 Crores (Previous Year : Rs. 970.70 Crores) towards further investment and disbursement of loan in the Joint Venture Entities and Associates.

(ii) As at 31st March''2013, the company has commitment of Rs.. 140.93 Crores (Previous Year: Rs..217.33 Crores) towards further investment in the Subsidiaries.

(iii) As at 31st March''2013, the company has commitment of Rs.. 177.62 Crores (Previous Year: Rs. 321.91 Crores) towards further investment in the entity other than Joint Ventures, Associates & Subsidiaries.

(iv) Company''s commitment towards the minimum work programme in respect of Jointly Controlled Assets has been disclosed in Note 46(b).

32. Sales Tax demand of Rs. 3449.18 Crores (Previous Year: Rs. 3449.18 Crores) and interest thereon I513.04 Crores. (Previous Year: 1513.04 Crores) for Hazira unit in Gujarat State: Sales Tax Authorities, Ahmedabad have treated the transfer of Natural Gas by the company from the state of Gujarat to other states during the period April, 1994 to March, 2001 as inter-state sales under Section 3(a) of the Central Sales Tax Act. The company has been paying sales tax under section 12 of the Gujarat Sales Tax Act against Form 17 since inception (1987) and accordingly the sales tax assessments have been completed. Based on the interpretation of the provisions of the Sales Tax Act and legal advice from the experts, the company had filed writ petition and special leave petition in the Supreme Court of India. In February, 2005 the case was transferred by Hon''ble Supreme Court to Gujarat Sales Tax Tribunal for decision. The Tribunal has given its judgment on 16.05.2005 accepting the contention of the company for interstate transfer of Natural Gas as branch transfer and not the interstate sale and set aside the demand under section 41-B of the Gujarat Sales Tax Act. The Hon''ble Tribunal has given further instruction to the Assessing Authority to re-assess and decide tax liability in accordance with the law considering interstate transfer of natural gas as branch transfer. The Sales Tax Authorities had filed rectification application under section 72 of the Gujarat Sales Tax Act, 1969 in Gujarat Sales Tax Tribunal against its judgment dated 16.05.2005. The Tribunal had dismissed the rectification application of the sales tax authorities vide its order dated 06.07.2006. The sales tax authorities have now filed petition in Hon''ble high Court Ahmedabad against the order of the tribunal and no hearing has yet taken place. In opinion of the management there is a remote possibility of crystallizing this liability.

2. (a) Freehold Land acquired valuing Rs..11.55 Crores (Previous Year: Rs. 6.39 Crores) and Leasehold Land acquired valuing Rs..64.07 Crores (Previous Year : Rs..NIL) are valued / capitalized on provisional basis.

(b) Title deeds for freehold land valuing Rs. 10.86 Crores (Previous Year: Rs. 7.84 Crores) and leasehold land valuing Rs. 13.19 Crores (Previous Year: Rs. 20.94 Crores) are pending execution.

(c) Title Deeds in respect of ten residential flats at Asiad Village, New Delhi, valuing Rs. 1.17 Crores (Previous Year: Rs. 1.17 Crores) are still in the name of ONGCL. Concerned authorities are being pursued for getting the same transferred in the name of the Company.

(d) Net Block for "Building" includes an amount of Rs. 1.03 Crores (Previous Year: Rs.. 1.20 Crores) earmarked for disposal but in use.

3. Disclosure as per Accounting Standard-5 on "Net Profit or Loss for the period, Prior Period Items and changes in Accounting Policy".

(a) Ministry of Corporate Affairs has issued clarification vide Circular No. 25/2012 dated 09.08.2012 that Para 6 of Accounting Standard (AS) 11 and Para 4 (e) of the Accounting Standard (AS) 16 shall not apply to a company which is applying Para 46-A of Accounting Standard (AS) 11. Accordingly, Company has modified the related accounting policies. Consequently, exchange differences arising on settlement/translation of foreign currency loans to the extent regarded as an adjustment to interest costs as per Para 4 (e) of AS 16 and hitherto charged to Statement of Profit and Loss have now been adjusted in the cost of related assets. As a result, profit for the year ended 31st March 2013 is increased by Rs. 46.37 Crores and fixed assets are increased by the same amount.

(b) During the year, a net amount of Rs. 2.42 Crores ( Previous Year Rs. 1.63 Crores) credited in Foreign Currency Monetary Item Translation Difference Account and a net amount of Rs. 1.77 Crores (Previous Year: Rs. 0.28 Crores) amortized during the year resulting in net decrease in profit by Rs. 0.65 Crores. The balance amount remaining to be amortized as on 31.03.2013 is Rs. 2.00 Crores ( Previous Year Rs. 1.35 Crores).

(c) During the year, the company has changed its Accounting Policy No 1.5 (vii) of charging Prepaid expenses and prior period expenses/income from upto Rs. 1,00,000/- to upto Rs. 5,00,000/- in each case to relevant heads of account. As such, Short term loans and advances decreased by Rs. 0.34 Crore, Prior period adjustments decreased by Rs. 0.50 Crore, and correspondingly other expenses increased by Rs. 0.84 Crore, resulted decrease in profit for the year by Rs. 0.34 Crore.

(d) During the year, the company has reviewed and modified its Accounting Policy No. 1.03 related to valuation of stock of LNG and Natural Gas in Pipeline, Raw materials and finished products to bring more clarity. As such, there is no impact on the Financial Statement for the year.

(e) During the year the company has added Note 1.03(vii) in the Accounting Policy for valuation of stock relating to Renewable Energy Certificates (RECs). As such, the profit of the company has increased by Rs. 0.07 Crore.

(f) The company has added Note 1.10 (v) in the Accounting Policy relating to derivative contracts, gain/losses on settlement and losses on restatement (by marking them to market) at the balance sheet date are recognized in the Statement of Profit & Loss. As such, there is no impact in the Statement of Profit and Loss during the year.

4. (a) The balance retention from PMT JV consortium amounting to Rs. 25.78 Crores (Previous Year: Rs. 47.06 Crores) includes interest amounting to Rs. 0.97 Crores (Previous Year: Rs. 0.92 Crores) on Short term deposits for the year. This interest income does not belong to the company hence not accounted as income.

(b) Liability on account of Gas Pool Money amounting to Rs. 598.89 Crores (Previous Year: Rs. 818.83 Crores) includes interest amounting to Rs. 4.26 Crores (Previous Year: Rs. 37.71 Crores) on short term deposits. This interest does not belong to the company hence not accounted as income.

(c) Liability on account of Pipeline overrun and Imbalance charges amounting to Rs. 60.28 Crores (Previous Year: Rs. 31.67 Crores) includes interest for the year amounting to Rs. 3.20 Crores (Previous Year: Rs. 1.96 Crores) on short term deposits. This interest does not belong to the company hence not accounted as income.

(d) (i) MOPNG has issued clarification vide letter No. L- 12014/1/2010-GP dated 04.04.2012 on the APM gas supply to consumers beyond their Gas Linkage Committee (GLC) allocations and directed GAIL to recover the amount as per market rates for the quantum of APM gas supplied to consumers beyond GLC allocation for the period from July 2005 to March 2010. Accordingly, GAIL raised the supplementary invoices for supply of Natural Gas for the difference of APM and Non-APM prices for the quantity drawn more than the GLC allocation for the said period by issuing the debit notes for additional amount of Rs. 68.24 Crores excluding taxes. Some consumers have obtained stay orders from courts and the cases are subjudice. The unrealized amount of Rs. 56.93 Crores as on 31.03.2013 has been shown as recoverable from consumers and correspondingly payable in Gas Pool Account (Provisional). The amount payable in Gas Pool Account will be invested as and when said amount is recovered from the consumers.

(ii) MOPNG directed that APM gas price would be applicable for only those quantities of gas which are used for generating electricity which is supplied to the grid for distribution to the consumers through the public utilities/ licensed distribution companies. Accordingly, GAIL raised the supplementary invoices considering difference of APM and Non APM prices for the said directive for the period from July 2005 to February 2013 by issuing debit notes for an additional amount of Rs. 336.09 Crores. Consumers have obtained stay orders from courts and the cases are subjudice. This amount has been shown as recoverable from consumers and correspondingly payable in Gas Pool Account (Provisional) amounting to Rs. 293.53 crores and VAT payable amount to Rs. 42.56 crores. The amount payable in Gas Pool Account will be invested as and when said amount is recovered from the consumers.

5. Disclosure as per Accounting Standard-11 on "The effect of changes in Foreign Exchange Rates"

(i) The amount of exchange difference (net) recognized in the Statement of Profit & Loss is (Rs. 22.03) Crores (Previous Year: Rs.12.41 Crores).

(ii) The amount of exchange difference debited to the carrying amount of fixed assets is Rs. 146.18 Crores (Previous Year: Rs. 38.48 Crores).

6. Company had a Superannuation Benefit Fund (Pension) primarily funded by employees. In line with DPE guidelines, the old scheme was required to be modified to Defined Contributory Scheme with effect from 01.01.2007. Therefore, based on actuary valuation, a provision of Rs. 225.85 crores, being the deficit assessed in the funds of the old scheme along with interest up to 31.03.2013, has been made in Statement of Profit & Loss. A provision of Rs. 4.76 crores has also been made regarding employees superannuated after 01.01.2007 etc.

7. The required disclosure under the Revised Accounting Standard 15 is given as below:

(i) Superannuation Benefit Fund (Defined Contribution Fund Company has paid for an amount of Rs. 46.29 Crores (Previous Year: Rs. 51.30 Crores) towards contribution to Superannuation Benefit Fund Trust and charged to Statement of Profit and Loss.

(ii) Provident Fund

Company has paid contribution of Rs. 55.61 crores (Previous Year: Rs. 29.53 Crores) to Provident Fund Trust at predetermined fixed percentage of eligible employee''s salary and charged to Statement of Profit and Loss. Further, the obligation of the company is to make good shortfall, if any, in the fund assets based on the statutory rate of interest in the future period. During the year, the company has made a provision of Rs. 18.21 Crore, as per actuarial valuation and the balance provision to meet any shortfall in the future period, to be compensated by the company to the Provident Fund Trust, as on 31.03.2013 is Rs. 27.03 Crore.

(iii) Other Benefit Plans

A) Gratuity

15 days salary for every completed year of service. Vesting period is 5 years and payment is restricted to Rs. 10 Lakhs.

B) Post Retirement Medical Scheme (PRMS)

Upon payment of one time prescribed contribution by the superannuated employees/those who resigned from service can avail the facility subject to the completion of minimum of 10 years of service and 50 years of age.

C) Earned Leave Benefit (EL)

Accrual 30 days per year. Encashment while in service 75% of Earned Leave balance subject to maximum of 90 days at a time, twice per calendar year. Encashment on retirement or superannuation maximum 300 days.

D) Terminal Benefits (TB)

At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Transfer Traveling Allowance. Employees are gifted a gold coin weighing 25 grams.

E) Half Pay Leave (HPL)

Accrual 20 days per year. Encashment while in service NIL. Full encashment on retirement.

F) Long Service Award (LSA)

Employees are eligible for gold coin weighing 5 gms on completion of 15 years, 10 gms each on completion of 20 years and 25 years, 20 gms each on completion of 30 years and 35 years of service.

The following table summarizes the components of net benefit expenses recognized in the statement of Profit and Loss.

8. Disclosure as per Accounting Standard (AS) 16 on ''Borrowing Costs'' Borrowing costs capitalized during the year r 311.24 Crore (Previous Year: r 215.14 Crore).

9. MOP&NG had issued scheme of sharing of under recoveries on sensitive petroleum products. During the year, the Company has given discounts amounting to r 2687.18 Crores (Previous Year: r 3182.62 Crores). Corresponding adjustment on account of CST amounting to r 9.58 Crores (Previous Year: r 17.54 Crores) has been made.

10. (a) The Company is raising provisional invoices for sale of R-LNG as the supplier M/s Petronet LNG (PLL) is also raising provisional invoices on the Company since customs duty on import of LNG by PLL has been assessed on provisional basis.

(b) With effect from April 1, 2002, Liquefied Petroleum Gas prices has been deregulated and is now based on the import parity prices fixed by the Oil Companies. However, the pricing mechanism is provisional and is pending finalization. Additional asset/liability or impact on profits, if any, arising due to such change, will be recognized on finalization of pricing mechanism.

(c) (i) Natural Gas Pipeline Tariff is subject to various Regulations issued by PNGRB from time to time. Impact on profits, if any, is being recognized as and when the pipeline tariff is revised in accordance with these Regulations.

(ii) PNGRB vide order no-TO/07/2012 dated 12th July 2012 have notified "PROVISIONAL" initial unit natural gas pipeline tariff for Dadri-Bawana-Nangal Natural Gas Pipeline effective from 04.01.2010.In accordance with the order, the company has derecognized the revenue by an amount of r 51.49 Crore.

Further PNGRB vide order no-TO/08/2013 dated 10th May 2013 have notified "PROVISIONAL" initial unit natural gas pipeline tariff for K.G.Basin Natural Gas Pipeline network effective from 20.11.2008. In accordance with the order, the company has derecognized the revenue by an amount of r 517.23 Crores.

Further, the company has also derecognized the revenue by an amount of r 11.08 Crore on account of lower tariff submitted to PNGRB for approval in respect of other pipelines.

(d) Value of Annual Take or Pay Quantity (ATOPQ) of Gas is accounted for on receipt basis and shown as liability till make up Gas is delivered to customer, during the recovery period, in terms of the Gas Sales Agreement with the customers.

11. In compliance of Accounting Standard 17 (AS-17) on "Segment Reporting" as notified under Companies Accounting Standard Rules 2006, the company has adopted following Business segments as its reportable segments:

(i) Transmission services

a) Natural Gas

b) LPG

(ii) Natural Gas Trading

(iii) Petrochemicals

(iv) LPG and other Liquid Hydrocarbons

(v) Other Segments (include GAIL TEL, E&P, City Gas and Power Generation)

There are no geographical segments.

The disclosures of segment wise information is given as per Annexure-A.

12. In compliance of Accounting Standard 18 on " Related party Disclosures" as notified under Companies Accounting Standard Rules 2006, the names of related parties, nature of relationship and detail of transactions entered therewith are given in Annexure - B.

13. In compliance to Accounting Standard 20 on "Earning Per Share", the calculation of Earnings Per Share (Basic and Diluted) is as under:

14. In compliance of Accounting Standard 22 on "Accounting for taxes on Income" as notified under Companies Accounting Standard Rules 2006, the Company has provided accumulated net deferred tax liability in respect of timing difference as on 31st March, 2013 amounting to r 2300.06 Crores (Previous Year: r 1768.64 Crores). Net Deferred tax expense for the year of r 531.42 Crores (Previous Year: r 135.40 Crores) has been charged to Statement of Profit & Loss. The item- wise details of deferred tax liability and assets are as under:

15. In Compliance of Accounting Standard 27 on "Financial Reporting of Interests in Joint Ventures" as notified under Companies Accounting Standard Rules 2006, brief description of Joint Ventures of the Company are:

(a) Jointly Controlled Entities

(i) Mahanagar Gas Limited: A Joint Venture with British Gas Plc and Government of Maharashtra to supply gas to domestic, commercial, small industrial consumers and CNG for transport sector in Mumbai. The company has equity participation of 49.75% of the paid up capital and has invested r 44.45 Crores (Previous Year r 44.45 Crores) for acquiring 4,44,50,000 equity shares of r 10/- each in Joint Venture Company.

(ii) Indraprastha Gas Limited: A Joint Venture with BPCL and Government of National Capital Territory (NCT) of Delhi to supply gas to domestic, commercial units and CNG for transport sector in Delhi. The company has equity participation of 22.50% of the paid up capital and has invested r 31.50 Crores (Previous Year r 31.50 Crores) for acquiring 3,15,00,000 equity shares of r 10/- each in Joint Venture Company.

(iii) Petronet LNG Limited: A Joint Venture with BPCL, IOCL and ONGCL for setting up LNG imports facilities. The company has equity participation of 12.50% of the paid up capital and has invested r 98.75 Crores (Previous Year r 98.75 Crores) for acquiring 9,37,50,000 equity shares of r 10/- each in Joint Venture Company.

(iv) Bhagyanagar Gas Limited: A Joint Venture with HPCL for distribution and marketing of CNG, Auto LPG, Natural Gas and other gaseous fuels in Andhra Pradesh. The company has equity participation of 22.50% of the paid up capital and has invested r 0.01 Crores for acquiring12,500 equity shares of r 10/- each in Joint Venture Company. The Company has also paid r 22.49 Crores (Previous Year r 22.49 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(v) Tripura Natural Gas Company Limited: A Joint Venture with Assam Gas Company Limited and Tripura Industrial Development Corporation for transportation and distribution of natural gas through pipelines in Tripura. The company has equity participation of 29% (previous year 29%) of the paid up capital and has invested r 1.92 Crores (Previous Year r 0.55 Crores) for acquiring 1,92,000 equity shares ( previous Year 55,000 equity shares) of r 100/- each in Joint Venture Company. The Company has also paid r NIL (Previous Year: r 0.28 Crores) as advance pending allotment of equity shares in JointVenture Company.

(vi) Central UP Gas Limited: A Joint Venture with BPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Kanpur, Uttar Pradesh. The company has equity participation of 25% of the paid up capital and has invested r 15 Crores (Previous Year r 15 Crores) for acquiring 1,50,00,000 equity shares of r 10/- each in Joint Venture Company.

(vii) Green Gas Limited: A Joint Venture with IOCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Agra & Lucknow, Uttar Pradesh. The company has equity participation of 22.50% of the paid up capital and has invested r 0.01 Crores for acquiring12,500 equity shares of r 10/- each in Joint Venture Company. The Company has also paid r 23.03 Crores (Previous Year r 23.03 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(viii) Maharashtra Natural Gas Limited: A Joint Venture with BPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Pune, Maharashtra. The company has equity participation of 22.50% of the paid up capital and has invested r 22.50 Crores (Previous Year r 22.50 Crores) for acquiring 2,25,00,000 equity shares of r 10/- each in Joint Venture Company.

(ix) Ratnagiri Gas and Power Private Limited: A Joint Venture with NTPC, MSEB and other Financial Institutions for the revival of the Dabhol Project. The company has equity participation of 32.88% (previous year 32.88%) of the paid up capital and has invested r 974.31 Crores (Previous Year r 776.90 Crores) for acquiring 9,74,308,300 equity shares (Previous Year 77,69,00,000 equity shares) of r 10/- each in Joint Venture Company. The Company has also paid r NIL (Previous Year: r 118.36 Crores) as advance pending allotment of equity shares in JointVenture Company.

(x) Avantika Gas Ltd. A Joint Venture with HPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in MP. The company has equity participation of 22.50% of the paid up capital and has invested r 0.01 Crores for acquiring 12,500 equity shares of r 10/- each in Joint Venture Company. The Company has also paid r 22.49 Crores (Previous Year r 22.49 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(xi) ONGC Petro additions Ltd (OPAL). A Joint Venture with Oil and Natural Gas Corporation Ltd, GAIL (India) Ltd and Gujarat state Petroleum Corporation Ltd. for setting up Petrochemical Project at Dahej in Gujarat. The company has equity participation of 15.50% (Previous Year : 17%) of the paid up capital and has invested r 634.44 Crores for acquiring 63,44,40,001 equity shares of Rs.10/- each. The Company has paid Rs.. NIL (Previous Year: Rs. 335.88 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(xii) GAIL China Gas Global Energy Holdings Ltd. A Joint Venture with China Gas Holdings Ltd. to pursue gas sector opportunities mainly in China. The company has equity participation of 50% of the paid up capital.

The Company''s share in the assets and liabilities and in the Income and expenditure for the year in respect of above Joint ventures, based on audited/unaudited Financial Statements as furnished by them, is as under: (Final adjustments are effected during the year in which audited financial statement are received).

(b) Jointly Controlled Assets

(i) The Company has participated in joint bidding under the Government of India New Exploration Licensing Policy (NELP) and overseas exploration bidding and has 28 Blocks (PY 29 Blocks) as on 31.03.2013 for which the Company has entered into Production Sharing Contract with respective host Governments along with other partners for Exploration & Production of Oil and Gas. The Company is a non-operator, except in Block RJ-ONN-2004/1, CY-ONN- 2005/1 and CB-ONN-2010/11, where it is an operator, and shares in Expenses, Income, Assets and Liabilities based upon its percentage in production sharing contract.

The participating interest in the twenty eight NELP Blocks in India as on 31st March, 2013 is as under:

16. In Compliance of Accounting Standard 28, impairment of assets notified under the Companies Accounting Standard Rules 2006, the company has carried out the assessment of impairment of assets. Based on such assessment, GAILTEL assets have been impaired to the extent of r 0.39 Crore (Previous Year: r 2.12 Crore) and same amount has been recognized as impairment loss in Statement of Profit & Loss.

17. In compliance with amended Clause 32 of the Listing Agreement with Stock Exchanges, the required information is given in Annexure - C.

18. In some cases, the Company has received intimation from Micro and Small Enterprises regarding their status under "The Micro, Small and Medium Enterprises Development Act, 2006". The Company has certified that as a practice, the payment to all suppliers is made within 7 -10 days. No payments beyond appointed date were noticed. The amount remaining unpaid to all suppliers as at 31st March 2013 is r 3832.93 Crores (Previous Year: r 3096.39 Crores). No interest was paid or payable under the Act.

19. (a) Following Government of India''s approval, the shareholders of the Company in the Annual General Meeting held on 15th September, 1997 approved the transfer of all the assets including Plant and Machinery, accessories and other related assets which are part of Lakwa Project to Assam Gas Cracker Complex at a price to be determined by an independent Agency and on terms and stipulations as the Board may in its discretion deem fit. The Cabinet committee on Economic affairs (CCEA) has approved the setting up of Assam Gas based cracker project at Lepetkata by formation of a company in which GAIL has equity participation of 70%. A company by the name of Brahmaputra Cracker and Polymer Limited has been incorporated during 2006-07 and construction of Gas cracker complex is in progress. Further, Public Investment Board (PIB) in meeting dated 13th July 2011 recommended that the issue of ownership of the Lakwa facility may be decided by the Committee comprising of representative from Department of Expenditure, Planning Commission, MoPNG and the administrative Ministry. The gross block of fixed assets and Capital work in progress value of Lakwa unit is Rs.260.15 Crores as on 31st March 2013 (Previous Year: Rs.255.68 Crores ).

(b) Further the Board in its 287th Meeting held on 06th April''2011 has approved transfer of CNG stations and its associated pipeline in Vadodara to proposed Joint Venture Company of GAIL Gas Ltd. and Vadodra Municipal Seva Samiti at market value yet to be determined. The transfer has not been effected during the financial year. 20. Non-Refundable Deposits Rs.11.85 Crores (Previous Year: Rs.7.34 Crores) made with the concerned authorities for railway crossings, forest crossings, removal and laying of electric/telephone poles and lines are accounted for under Capital Work-in-Progress on the basis of work done/confirmation from the concerned department.

21. (a) Request for confirmations of balances of trade receivable and payables were send. Confirmation of balances has been received from majority of cases. These confirmations are subject to reconciliation and consequential adjustments which in the opinion of the management is not material.

(b) In the opinion of management, the value of assets, other than fixed assets and non-current investments, on realization in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

22. During the year, an amount of Rs.24.98 Crore capitalized towards the Expenditure on Research and Development.

23. The Statement of Profit & Loss includes: -

(a) Expenditure on Public Relations and Publicity amounting to Rs. 33.76 Crores (Previous Year: Rs.24.21 Crores). The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.0007:1 (Previous Year: 0.0006:1).

(b) Research and Development Expenses Rs.12.91 Crores (Previous Year : Rs.1.19 Crores).

(c) Entertainment Expenses Rs.0.37 Crores (Previous Year:Rs.0.17 Crores).

24. Other Quantitative details are given in Annexure-D.

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


Mar 31, 2012

I) Capitalization of Producing Properties

(i) Producing Properties are capitalised when the wells in the area / field are ready to commence commercial production having proved developed oil and gas reserves.

(ii) Cost of Producing Properties includes cost of Successful exploratory wells, development wells, initial depreciation of support equipments & facilities and estimated future abandonment cost.

(iii) Depletion of Producing Properties Producing Properties are depleted Using the 'Unit of Production Method (UOP)" The depletion or unit of production charged for all the capitalized cost is calculated in the ratio of production during the year to the proved developed reserves at the year end.

iv) Production cost of Producing Properties

Company's share of production costs as indicated by Operator consists of pre well head and post wellhead expenses including depreciation and applicable operating costs of support equipment and facilities.

1.1.OTHERS

(i) Liquidated Damages / Price Reduction Schedule, if any, are accounted for as and when recovery is effected and the matter is considered settled by the Management. Liquidated damages / Price Reduction Schedule, if settled, after capitalization of assets are charged to revenue if below Rs. 50 lacs in each case, otherwise adjusted in the cost of relevant assets.

(ii) Insurance claims are accounted for on the basis of claims admitted by the insurers.

b) The Company has only one class of equity shares having a par value Rs.10/- per share. The holders of the equity shares are entitled to receive dividends as declared from time to time and are entitled to voting rights proportionate to their share holding at the shareholders meetings.

c) 104,90,634 shares are held in the form of Global Depository Receipts

d) During the year 2008-09, the company had issued 42,28,25,800 Bonus Equity shares of Rs. 10/-each out of General Reserve.

2. The financial statements for the year ended 31st March'2011 were prepared as per then applicable, Schedule Vi to the Companies Act, 1956. Consequent to the notification of Revised Schedule Vi under the Companies Act, 1956, the financial statements for the year ended 31st March'2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

3. Contingent Liabilities and Commitments (To the extent not provided for):-

I. Contingent Liability

(a) Claims against the Company not acknowledged as debts: Rs..6040.02 Crores (Previous Year: Rs. 4930.40 Crores), which mainly include:-

(i) Legal cases for claim of Rs..3261.11 Crores (Previous Year: Rs. 2731.63 Crores) by trade payable on account of Liquidated damages/Price Reduction Schedule and Natural Gas price differential etc. and by customers for Natural gas transmission charges etc.

(ii) Income tax assessments up to the Assessment Year 2009-10 have been completed and a demand of Rs..1345.92 Crores relating to the Assessment Years 1996-97 to 1998-1999 and 2000-01 to 2009-10 (Previous Year: Rs.. 1017.25 Crores related to Assessment years 1996-97 and 2000-01 to 2008-09) has been raised by the Department on account of certain disallowances / additions which has been disputed by the company as company has been advised that the demand is likely to be deleted or may be reduced substantially by the appellate Authorities. The company has filed the appeal with the appropriate appellate authorities against all the assessment years. However, to avoid coercive action by the Department, Rs.1177.33 Crores (Previous Year: Rs. 1323.66 Crores) has already been paid pending decision by the appellate authorities.

(iii) Rs..1154.69 Crores (Previous Year: Rs.. 760.15 Crores) relating to disputed tax demand towards Excise duty, Sales tax, Entry tax, and Service Tax etc.

(b) (i) The Company has issued Corporate Guarantee for Rs.. 806.03 Crores (Previous Year : Rs.. 372.34 Crores) on behalf of subsidiary companies for raising loan. Further Bank Gurantees for Rs..45.88 Crore (Previous Year: Rs..45.88 Crore) issued on behalf of subsidiary companies.

(ii) Share in Contingent Liabilities of Joint Ventures based on their audited / unaudited statement of accounts : Rs..733.14 Crores (Previous Year: Rs.. 437.20 Crores).

II. Commitments:-

(a) Estimated amount of contracts remaining to be executed on Capital account and not provided for: Rs..7115.17 Crores (Previous Year: Rs.4540.71 Crores).

(b) Company's share in estimated amount of contracts remaining to be executed on capital account and not provided for based on audited/unaudited statement of accounts of Joint Ventures. Rs..1777.91 Crores (Previous Year: Rs..1418.04 Crores).

(c) Other Commitments:-

(i) As at 31st March'2012, the company has commitment of Rs.. 970.70 Crores (Previous Year : Rs.1038.21 Crores) towards further investment and disbursement of loan in the Joint Venture Entities and Associates.

(ii) As at 31st March'2012, the company has commitment of Rs.. 217.33 Crores (Previous Year:Rs..505.45 Crores) towards further investment in the Subsidiaries.

(iii) As at 31st March'2012, the company has commitment of Rs.. 321.91 Crores (Previous Year: Rs.82.93 Crores) towards further investment in the entity other than Joint Ventures, Associates & Subsidiaries.

(iv) Counter Guarantee issued in favour of Bank etc for issuing Bank Guarantee & Letters of Credit : Rs..1242.63 Crores (Previous Year: Rs.. 951.45 Crores).

(v) Company's commitment towards the minimum work programme in respect of Jointly Controlled Assets has been disclosed in Note45(b).

4 (a) Sales Tax demand of Rs.3449.18 Crores (Previous Year: Rs. 3449.18 Crores) and interest thereon Rs.1513.04 Crores. (Previous Year: Rs.1513.04 Crores) for Hazira unit in Gujarat State: Sales Tax Authorities, Ahmedabad have treated the transfer of Natural Gas by the company from the state of Gujarat to other states during the period April, 1994 to March, 2001 as inter-state sales under Section 3(a) of the Central Sales Tax Act. The company has been paying sales tax under section 12 of the Gujarat Sales Tax Act against Form 17 since inception (1987) and accordingly the sales tax assessments have been completed. Based on the interpretation of the provisions of the Sales Tax Act and legal advice from the experts, the company had filed writ petition and special leave petition in the Supreme Court of India. In February, 2005 the case was transferred by Hon'ble Supreme Court to Gujarat Sales Tax Tribunal for decision. The Tribunal has given its judgment on 16.05.2005 accepting the contention of the company for interstate transfer of Natural Gas as branch transfer and not the interstate sale and set aside the demand under section 41-B of the Gujarat Sales Tax Act. The Hon'ble Tribunal has given further instruction to the Assessing Authority to re-assess and decide tax liability in accordance with the law considering interstate transfer of natural gas as branch transfer. The Sales Tax Authorities had filed rectification application under section 72 of the Gujarat Sales Tax Act, 1969 in Gujarat Sales Tax Tribunal against its judgment dated 16.05.2005. The Tribunal had dismissed the rectification application of the sales tax authorities vide its order dated 06.07.2006. The sales tax authorities have now filed petition in Hon'ble high Court Ahmedabad against the order of the tribunal and no hearing has yet taken place. In opinion of the management there is a remote possibility of crystallizing this liability.

(b) The Commissioner, Customs & Central Excise, Kanpur has issued a Show-Cause Notice demanding Rs.2808.89 Crores as Central Excise Duty on Natural Gas supplied by GAIL Dibiyapur Compressor Station treating it as Compressed Natural Gas (CNG). The company is of the view that there is remote possibility of crystallizing of this liability in view of extant legal position and clarification issued by Ministry of Finance vide circular no. F. No. B.1/3/2001-TRU dated 21st May 2001 on the subject which was issued in response to GAIL's request after introduction of excise duty on CNG in the year 2001.

5 (a) Freehold land acquired for city gate Station at Lucknow and Kanpur, Jhansi Maintenance Base and IMT Maneshar, Sectionalizing Valves in Jamnagar - Loni Pipeline and Mumbai, receiving terminalat Pune valuing Rs..6.39 Crores (Previous Year: Rs. 4.94 Crores) are valued /capitalized on provisional basis.

(b) Title deeds for freehold land valuing Rs.7.84 Crores (Previous Year: Rs. 6.38 Crores) and leasehold land valuing Rs.20.94 Crores (Previous Year: Rs. 10.24 Crores) are pending execution.

(c) Title Deeds in respect often residential flats at Asiad Village, New Delhi, valuing Rs.. 1.17 Crores (Previous Year: Rs..1.17 Crores) are still in the name of ONGCL. Concerned authorities are being pursued for getting the same transferred in the name of the Company.

(d) Net Block for 'Building" includes an amount of Rs.. 1.20 Crores (Previous Year: Rs.. 1.21 Crores) earmarked for disposal but in use.

6 (a) The company has added Note 1.10 (iv)

in the Accounting Policy relating to foreign exchange differences stating that "Exchange differences (loss), arising from translation of foreign currency loans relating to fixed assets to the extent regarded as an adjustment to interest cost are treated as borrowing cost"

Due to this, an amount of Rs..40.10 Crore has been debited to borrowing cost.

(b) In view of option allowed by the Ministry of Corporate Affairs vide its notification dated 29th Dec'2011 on Accounting Standard 11, the company during the year has exercised the option and changed its accounting policy to account for' any gains or loss arising on account of exchange difference either on settlement or on translation is accounted for in the Profit & Loss account except in case of long term foreign currency monetary items relating to acquisition of depreciable capital asset (other than regarded as borrowing cost) in which case they are adjusted to the carrying cost of such assets and in other cases, accumulated in 'Foreign Currency Monetary item Translation Difference Account' in the Financial statements and amortized over the balance period of such long terms asset or liability, by recognition as income or expenses in each of such period".

Due to change in Accounting Policy, Fixed Assets has increased by Rs. 38.48 Crore with consequent increase in profit for the year by Rs. 38.48 Crore and also an amount of Rs. 1.63 Crore credited in Foreign Currency Monetary item Translation Difference Account and amortised by Rs..0.28 crore during the year resulting in net decrease in profit by Rs..1.3S Crore. The balance in Foreign Currency Monetary item Translation Difference Account as on 31.03.2012 remaining to be amortized is Rs..1.35Crore.

7 (a) The balance retention from PMT JV consortium amounting to Rs. 47.06 Crores (Previous Year: Rs. 43.75 Crores) includes interest amounting to Rs. 0.92 Crores (Previous Year: Rs. 2.64 Crores) on Short term deposits for the year. This interest income does not belong to the company hence not accounted as income.

(b) Liability on account of Gas Pool Money amounting to Rs. 818.83 Crores (Previous Year: Rs. 722.60 Crores) includes interest amounting to Rs.37.71 Crores (Previous Year: Rs.. 29.10 Crores) on short term deposits. This interest does not belong to the company hence not accounted as income.

(c) Liability on account of Pipeline overrun and Imbalance Charges amounting toRs. 31.67 Crores (Previous Year: Rs. 23.95 Crores) includes interest amounting to Rs. 1.96 Crores (Previous Year: NIL) on short term deposits. This interest does not belong to the company hence not accounted as income.

(d) MOP&NG has issued clarification on the allocation of additional gas available from ONGCL's nominated blocks vide its letter no. L-12018/23/2010-GP-lldated 31.10.2011 and letter no. L- 13013/5/2011-GP dated 17.11.2011. In compliance with this clarification, GAIL has revised the invoices for supply of Natural Gas to some Power Plants in Pondicherry area for the period 1.7.2005 to 15.11.2011 for an additional amount of Rs..241.98 Crores by issuing the debit notes. This amount has been shown as recoverable from the respective power companies and correspondingly payable in Gas Pool Account (Provisional) amounting to Rs..234.01 crores and VAT payable amounting to Rs..7.97 crores. The amount payable in Gas Pool Account will be invested as and when said amount is recovered from the consumers. All the respective consumers have obtained stay orders against the recovery of these dues from Courts and the cases are sub judice.

8. Disclosure as per Accounting Standard-11 on 'The effect of changes in Foreign Exchange Rates"

(i) The amount of exchange difference (net) debited to the statement of Profit & Loss is Rs. 12.41 Crores (Previous Year: Rs. 3.30 Crores).

(ii) The amount of exchange difference (other than regarded as borrowing cost) debited to the carrying amount of fixed assets is Rs.. 38.48 Crores (Previous Year: Nil).

9. The required disclosure under the Revised Accounting Standard 15 Is given as below:

(i) Superannuation Benefit Fund (Defined Contribution Fund) Company has provided for an amount of Rs..51.30 Crores towards contribution to Superannuation Benefit Fund Trust and charged to statement of Profit and Loss.

(ii) Provident Fund

Company has paid contribution of Rs..29.53 crores (Previous Year: Rs. 32.90 Crores) to Provident Fund Trust at predetermined fixed percentage of eligible employee's salary and charged to statement of Profit and Loss. Further, the obligation of the company is to make good shortfall, if any, in the fund assets based on the statutory rate of interest in the future period. During the year, the company has reversed a provision of Rs..4.32 Crore, as per actuarial valuation and the balance provision to meet any short fall in the future period, to be compensated by the company to the Provident Fund Trust, as on 31.03.2012 is Rs..8.82 Crore.

(iii) Other Benefit Plans

A) Gratuity

15 days salary for every completed year of service. Vesting periodis5yearsand payment is restricted to Rs. 10 Lakhs.

B) Post Retirement Medical Benefit (PRMS)

Upon payment of one time prescribed contribution by the superannuated employees/those who resigned from service can avail the facility subject to the completion of minimum of 10 years of service and 50 years of age.

C) Earned Leave Benefit (EL)

Accrual 30days per year. Encashment while in service75%ofEarned Leave Balance subject to maximum of 90 days at a time, twice per calendar year. Encashment on retirement or superannuation maximum300days.

D) Terminal Benefits (TB)

At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Transfer Traveling Allowance. Employees are gifted a gold coin weighing 25 grams.

E) Half Pay Leave(HPL)

Accrual 20days per year. Encashment while in service NIL. Full encashment on retirement.

F) Long Service Award (LSA)

Employees are eligible for gold coin weighing 5 gms on completion of 15 years, 10gms each on completion of 20 years and 25 years, 20 gms each on completion of 30 years and 35 years of service.

The following table summarizes the components of net benefit expenses recognized in the statement of Profit and Loss.

10. Disclosure as per Accounting Standard-16 on 'Borrowing Costs'

Borrowing costs capitalized during the yearRs.215.14 Crore (Previous Year: Rs. 35.80 Crore).

11. MOP&NG had issued scheme of sharing of under recoveries on sensitive petroleum products. During the year, the Company has given discounts amounting to Rs.3182.62 Crores (Previous Year: Rs. 2111.24 Crores). Corresponding adjustment on account of CST amounting to Rs.17.54 Crores (Previous Year: Rs.6.98 Crores) has been made.

12. (a) The Company is raising provisional invoices for sale of R-LNG as the supplier M/s Petronet LNG (PLL) is also raising provisional invoices on the Company since customs duty on import of LNG by PLL has been assessed on provisional basis.

(b) With effect from April 1, 2002, Liquefied Petroleum Gas prices has been deregulated and is now based on the import parity prices fixed by the Oil Companies. However, the pricing mechanism is provisional and is pending finalization. Additional asset/liability or impact on profits, if any, arising due to such change, will be recognized on finalization of pricing mechanism.

(c) (i) Natural Gas Pipeline Tariff is subject to various Regulations issued by PNGRB from time to time. Impact on profits, if any, is being recognized as and when the pipeline tariff is revised in accordance with these Regulations. The impact on profit is recognized during the year of tariff submission.

(ii) PNGRB vide order no-TO/01/2012 dated 12th March' 2012 and order no. T0/06/2012 dated 01st May, 2012 have notified "PROVISIONAL" initial unit natural gas pipeline tariff for Mumbai Regional Network and Agartala Regional Pipeline respectively, effective from 20.11.2008. In accordance with the orders, the company has derecognized the revenue by an amount of Rs..114.68 Crore. Further, the company has also derecognized the revenue by an amount of Rs..140.23 Crore on account of lower tariff submitted to PNGRB for approval in respect of other pipelines.

(iii) PNGRB has issued PNGRB Regulations 2010 (Determination of Petroleum & Petroleum Products Pipelines transportation Tariff) effective from 20.12.2010 where LPG pipeline tariff has been benchmarked against railway freight. PNGRB vide its order no. TO/02/2012 dated 02nd April'2012 has notified transportation tariff for Vizag-Secunderabad LPG Pipeline effective from 27.12.2010. In accordance with the order, the company has derecognized the revenue by an amount of Rs..14.34 Crore. Further, the company has also derecognized the revenue by an amount of Rs..29.60 Crore (Previous Year: Rs..6.33 Crore) on account of lower tariff submitted to PNGRB for approval in respect of another pipeline.

(d) Value of Annual Take or Pay Quantity (ATOPQ) of Gas is accounted for on receipt basis and shown as liability till make up Gas is delivered to customer, during the recovery period, in terms of the Gas Sales Agreement with the customers.

13. In compliance of Accounting Standard 17 (AS-17) on "Segment Reporting" as notified under Companies Accounting Standard Rules, 2006, the company has adopted following Business segments as its Reportable segments:

(i) Transmission services

a) Natural Gas

b) LPG

(ii) Natural Gas Trading (Hi) Petrochemicals

(iv) LPG and other Liquid Hydrocarbons

(v) Other Segments (include GAIL TEL, E&P, City Gas and Power Generation)

There are no geographical segments.

The disclosures of segment wise information is given as per Annexure-A.

14. In compliance of Accounting Standard 18 on" Related party Disclosures" as notified under Companies Accounting Standard Rules,2006, the names of related parties, nature of relationship and detail of transactions entered therewith are given in Annexure-B.

15. In compliance to Accounting Standard 20 on "Earning Per Share", the calculation of Earnings Per Share (Basic and Diluted) is as under:

16. In compliance of Accounting Standard 22 on "Accounting for taxes on income" as notified under Companies Accounting Standard Rules,2006, the Company has provided accumulated net deferred tax liability in respect of timing difference as on 31st March,2012 amounting to Rs..1768.64 Crores (Previous Year: Rs. 1633.24 Crores). Net Deferred tax expense for the year of Rs.. 135.40 Crores (Previous Year: Rs.. 243.68 Crores) has been charged to Profit & Loss Account. The item- wise details of deferred tax liability and assets are as under:

17. In Compliance of Accounting Standard 27 on "Financial Reporting of Interests in Joint Ventures" as notified under Companies Accounting Standard Rules,2006, brief description of Joint Ventures of the Company are:

(a) Jointly Controlled Entities

(i) Mahanagar Gas Limited: A Joint Venture with British Gas Pic and Government of Maharashtra to supply gas to domestic, commercial, Small industrial consumers and CNG for transport sector in Mumbai.T he company has equity participation of 49.75% ofthe paid up capital and has invested Rs. 44.45 Crores for acquiring 4,44,50,000 equity shares of Rs. 10/-each in Joint Venture Company.

(ii) Indraprastha Gas Limited: A Joint Venture with BPCL and Government of National Capital Territory (NCT) of Delhi to supply gas to domestic, commercial units and CNG for transport sector in Delhi. The company has equity participation of 22.50% of the paid up capital and has invested Rs.. 31.50 Crores for acquiring 3,15,00,000 equity shares of Rs. 10/-each in Joint Venture Company.

(iii) Petronet LNG Limited: A Joint Venture with BPCL, lOCL and ONGCL for setting up LNG imports facilities. The company has equity participation of 12.50% of the paid up capital and has invested Rs..98.75 Crores for acquiring 9,37,50,000 equity shares of Rs. 10/- each in Joint Venture Company.

(iv) Bhagyanagar Gas Limited: A Joint Venture with HPCL for distribution and marketing of CNG, Auto LPG, NaturalGas and other gaseous fuels in Andhra Pradesh. The company has equity participation of 22.50% of the paid upcapital and has invested Rs..0.01 Crores for acquiring 12,500equity shares of Rs. 10/- each in Joint Venture Company. The Company has also paid Rs.. 22.49 Crores (Previous Year: Rs. 22.49 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(v) Tripura Natural Gas Company Limited: A Joint Venture with Assam Gas Company Limited and Tripura Industrial Development Corporation for transportation and distribution of naturalgas through pipelines in Tripura. The company has equity participation of 29% of the paid up Capital and has invested Rs. 0.55 Crores for acquiring 55,000 equity shares of Rs. 100/-each in Joint Venture Company. The Company has also paid Rs.. 0.28 Crores (Previous Year: Rs.0.28 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(vi) Central UP Gas Limited: A Joint Venture with BPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Kanpur, Uttar Pradesh. The company has equity participation of 25% (Previous Year: 22.5%)of the paid up capital and has invested Rs. 15 Crores for acquiring 1,50,00,000 equity shares of Rs. 10/-each in Joint Venture Company.

(vii) Green Gas Limited: A Joint Venture with IOCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Agra & Lucknow, Uttar Pradesh. The company has equity participation of 22.50% of the paid up capital and has invested Rs. 0.01 Crores for acquiring 12,500 equity shares of Rs. 10/- each in Joint Venture Company. The Company has also paid Rs. 23.03 Crores (Previous Year: Rs. 23.03 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(viii) Maharashtra Natural Gas Limited: A Joint Venture with BPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Pune, Maharashtra. The company has equity participation of 22.50% of the paid up capital and has invested Rs.22.50 Crores for acquiring 2,25,00,000 equity shares of Rs. 10/- each in Joint Venture Company.

(ix) Ratnagiri Gas and Power Private Limited: A Joint Venture with GAIL, NTPC and other Financial institutions for the revival of the Dabhol Project. The company has equity participation of 32.88% of the paid up capital and has invested Rs.776.90 Crores for acquiring 77,69,00,000 equity shares of Rs.10/- each in Joint Venture Company. The Company has also paid Rs. 118.36 Crores (Previous Year: NIL) as advance pending allotment of equity shares in Joint Venture Company.

(x) Avantika Gas Ltd. A Joint Venture with GAIL and HPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in MP. The company has equity participation of 22.50% of the paid upcapital and has invested Rs. 0.01 Crores for acquiring 12,500 equity shares ofRs. 10/-each in Joint Venture Company. The Company has also paid Rs. 22.49 Crores (Previous Year: Rs. 22.49 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(xi) ONGC Petro additions Ltd (OPAL). A Joint Venture with Oil and Natural Gas Corporation Ltd, GAIL (India) Ltd and Gujarat state Petroleum Corporation Ltd. for setting up Petrochemical Project at Dahejin Gujarat. The company has equity participation of 17% (Previous Year: 17%) ofthe paid up capital. The Company has paid Rs. 335.88 Crores (Previous Year: Rs. 299.41 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(xii) GAIL China Gas Global Energy Holdings Ltd. A Joint Venture with China Gas Holdings Ltd. to pursue gas sector opportunities mainly in China. The company has equity participation of 50% of the paid up capital.

(b) Jointly Controlled Assets

(i) The Company has participated in joint bidding under the Government of India New Exploration Licensing Policy (NELP) and overseas exploration bidding and has 29 Blocks (PY 25 Blocks) as on 31.03.2012 for which the Company has entered into Production Sharing Contract with respective host Governments along with other partners for Exploration & Production of Oil and Gas. The Company is a non-operator, except in Block RJ-ONN-2004/1, where it is a joint operator and CY-ONN-2005/1 and CY-ONN-2010/11, where it is an operator, and shares in Expenses, Income, Assets and Liabilities based upon its percentage in production sharing contract.

The participating interest in the twenty nine NELP Blocks in India as on 31st March, 2012 is as under:

*ln addition, the company has 8.5% participating interest in offshore Midstream pipeline project in Myanmar for the purpose of transportation of gas from the delivery point in offshore, Myanmar to landfall point in Myanmar.

(iii) The Company's share in the Assets, Liabilities, Income and Expenditure for the year in respect of joint operations project blocks has been incorporated in the Company's financial statements based upon un- audited statement of accounts submitted by the operators and are given below : (Finalad justments are effected during the year in which audited accounts are received).

The above includes Rs.. 7.31 Crore, Rs.. Nil, Rs. 0.36 Crores, Rs..5.59 crores, and Rs..27.41 Crores towards total value of Income, Expenses, Fixed Assets (Gross Block), Other Assets and Current Liabilities respectively pertaining to 12 E&P Blocks (including 11 Blocks relinquished in the earlier years for which Rs.Nil, Rs..17.39 Crore, Rs..0.24 Crore, Rs..6.15 Crore, Rs..47.65 Crore were Income, Expenses, Fixed assets (Gross Block), Other Assets, Current Liabilities respectively) relinquished till 31st March 2012 .The company is non operator in these E & P Blocks.

(v) Share of Minimum work program committed under various production sharing contracts in respect of E&P joint ventures is Rs..650.17 Crores (Previous Year: Rs.837.46Crores).

Note: Company's interest in Oil Reserves is in Indian blocks and in Gas Reserves is in Myanmar

c) In terms of Production Sharing Agreements/Contracts, the balance (company's share) in cost recovery of Blocks (having proved reserves) to be made from future revenue of such Blocks ,if any, is Rs.. 691.27 Crores at the end of year (previous year: Rs. 369.81 Crores).

18. In Compliance of Accounting Standard 28, impairment of assets notified under the Companies (Accounting Standard) Rules, 2006, the company has carried out the assessment of impairment of assets. Based on such assessment, GAILTEL assets have been impaired to the extent of Rs..2.12 Crore (Previous Year: Nil) and same amount has been recognized as impairment loss in statement of Profit & Loss.

Additions include Rs.37.88 Crores (Previous Year: Rs.47.40 Crores) capitalized during the year. Expected timing of outflows is not ascertainable at this stage being legal cases under litigation.

19 In compliance with amended Clause 32 of the Listing Agreement with Stock Exchanges, the required information is given in Annexure-C.

20. Foreign currency exposure not hedged by a derivatives instrument or otherwise:

21. In some cases, the Company has received intimation from Micro and Small Enterprises regarding their status under 'The Micro, Small and Medium Enterprises development Act, 2006".The Company has certified that as a practice, the payment to Suppliers is made within 7 -10 days. No payments beyond appointed date were noticed. The amount remaining unpaid as at 31st March 2012 is Rs..3096.39 Crores (Previous Year:Rs.. 2336.12 Crores). No payments beyond the appointed date were noticed. No interest was paid or payable under the Act.

22. (a) Following Government of India's approval, the shareholders of the Company in the Annual General Meeting held on 15th September, 1997 approved the transfer of all the assets including Plant and Machinery, accessories and other related assets which are part of Lakwa Project to Assam Gas Cracker Complex at a price to be determined by an independent Agency and on terms and stipulations as the Board may in its discretion deem fit. The Cabinet committee on Economic affairs (CCEA) has approved the setting up of Assam Gas based cracker project at Lepetkata by formation of a company in which GAIL has equity participation of 70%. A company by the name of Brahmaputra Cracker and Polymer Limited has been incorporated during 2006-07 and construction of Gas cracker complex is in progress. Further, Public Investment Board (PIB) in meeting dated 13th July 2011 recommended that the issue of ownership of the Lakwa facility may be decided by the Committee comprising of representative from Department of Expenditure, Planning Commission, MoPNG and the administrative Ministry. The gross block of fixed assets and Capital work in progress value of Lakwa unit is Rs.. 255.68 Crores as on 31st March 2012 (Previous Year: Rs..258.33 Crores).

(b) In pursuance with the Board Resolution passed in its 287th Meeting held on 06th April'2011, existing and ongoing expansion of local distribution assets amounting to Rs. 44.22 Crore in Agra and Firozabad has been transferred to GAIL Gas Limited, a wholly-owned subsidiary of GAIL, on 16th November,2011.

(c) Further the Board in its 287th Meeting held on 06th April'2011 has approved transfer of CNG stations and its associated pipeline in Vadodara to proposed Joint Venture Company of GAIL Gas Ltd. and Vadodra Municipal Seva Samiti at market value yet to be determined. The transfer has not been effected during the financial year.

23. Non-Refundable Deposits Rs..7.34 Crores (Previous Year: Rs. 24.09 Crores) made with the concerned authorities for railway crossings, forest crossings, removal and laying of electric/telephone poles and lines are accounted for under Capital Work-in-Progress on the basis of work done/confirmation from the concerned department.

24. During the year 2011-12, a newly wholly- owned Subsidiary in the name of GAIL Global(USA) Inc. was incorporated in USA on 26th September, 2011 with an investment of Rs..179.17Crore(USD36 million).

25. (a) Request for confirmations of balances of trade receivable and payables were send. Confirmation of balances has been received from majority of cases. These confirmations are subject to reconciliation and consequential adjustments which in the opinion of the managements not material.

(b) In the opinion of management, the value of assets, other than fixed assets and non- current investments, on realization in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

26. The Statement of Profit & Loss includes:-

(a) Expenditure on Public Relations and Publicity amounting to Rs..24.21 Crores (Previous Year: Rs. 20.92 Crores). The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.0006:1 (Previous Year: 0.0006:1).

(b) Research and Development Expenses Rs..1.19 Crores (Previous Year:Rs.0.13 Crores).

(c) Entertainment Expenses Rs..0.17 Crores (Previous Year: Rs..0.15 Crores).

27. Other disclosures as per Schedule VI of the Companies Act, 1956.

I) Relationship

A) Joint Venture Companies/Associates

1) Mahanagar Gas Limited

2) Indraprastha Gas Limited

3) Petronet LNG Limited

4) Bhagyanagar Gas Limited

5) Tripura NaturalGas Corporation Limited

6) Central UP Gas Limited

7) Green Gas Limited

8) Maharashtra NaturalGas Limited

9) Avantika Gas Ltd.

10) GAIL China Gas Global Energy Holding Ltd.

11) ONGC Petro additions Ltd (OPAL)

12) Shell Compressed NaturalGas (Disposed off during FY 2011-12)

13) Gujrat State Energy Generation Ltd.

14) National Gas Company "Nat Gas"

15) Fayum Gas Company

16) China Gas Holdings Ltd.

B) Key Management Personnel Whole time Directors(KMP):

1) Shri B C Tripathi ,Chairman and Managing Director

2) Shri R D Goyal

3) Shri S L Raina

4) Shri Prabhat Singh

5) Shri S Venkatraman

6) Shri P KJain


Mar 31, 2011

1. Estimated amount of Contracts remaining to be executed on Capital Account and not provided for:

i) Estimated amount of contracts remaining to be executed on capital account and not provided for:Rs 4540.71 Crores (Previous Year: Rs 4848.04 Crores).

ii) Company's share in estimated amount of contracts remaining to be executed on capital account and not provided for based on audited/unaudited statement of accounts of Joint Ventures. Rs 1418.04 Crores (Previous Year:Rs 1569.98 Crores).

2. Contingent Liabilities:-

I. Claims against the Company not acknowledged as debts: X 4930.40 Crores (Previous Year: X 4757.88 Crores), which mainly include:-

(a) Legal cases for claim ofRs 2731.63 Crores (Previous Year:Rs 2325.78 Crores) by vendors on account of Liquidated damages/Price Reduction Schedule and Natural Gas price differential etc. and by customers for Natural gas transmission charges etc.

(b) Income tax assessments up to the Assessment Year 2008-09 have been completed and a demand ofRs 1017.25 Crores relating to the Assessment Years 1996-97 and 2000-01 to 2008-09 (Previous Year: Rs 1262.06 Crores related to Assessment years 1996-97 to 2007-08) has been raised by making disallowances/additions . The company has already made the payment ofRs 1323.66 Crores (Previous Year: Rs 1260.30 Crores) which is under dispute. Based upon the decision of the appellate authorities and the interpretation of the IncomeTax Act, the company has been legally advised that the demand is likely to be deleted or it may be substantially reduced.The company has filed appeals against the Assessment orders /appeal orders for the Assessment Years 2000-01 to 2004-05, 2006-07 and 2007-08 with IncomeTax Appellate Tribunal (ITAT)and for Assessment Year 1996-97,2005- 06 and 2008-09 with Commissioner of Income Tax (Appeal). Based upon company's appeal with ITAT, income tax assessments for the AY 1997-98 to 1999-2000 have been remanded back by ITAT to the assessing officer for reassessment.

(c) Rs 760.15 Crores (Previous Year:Rs 596.50 Crores) relating to disputed tax demand towards Excise duty, Sales tax, Entry tax, and Service Tax etc.

(d) Claims of ONGCL forRs 289.57 Crores (Previous Year:Rs 335.25 Crores) on account of interest for delayed payment and MGO, etc. Out of these, MGO claims ofRs 25.34 Crores (Previous Year: Rs 47.81 Crores) are recoverable on back-to-back basis.

II. Bank Guarantees Letters of Credit:Rs 997.37 Crores (Previous Year:Rs 1665.58 Crores) including bank guarantees issued on behalf of subsidiariesRs 45.88 Crores (Previous Year: Rs 45.88 Crores)

III. The Company has issued corporate guarantees forRs 254.34 Crores (Previous Year:Rs 254.34 Crores) on behalf of Brahamputra Cracker & Polymer Limited (BCPL) and forRs 118 Crores (Previous Year: NIL) on behalf of GAIL Gas Limited, subsidiaries of the company, in favour of Oil Industry Development Board (OIDB) for raising loan from OIDB.

IV. Share in Contingent Liabilities of Joint Ventures based on their audited/unaudited statement of accounts:Rs 437.20 Crores (Previous Year:Rs 229.89 Crores).

3. Sales Tax demand ofRs 3449.18 Crores (Previous Year:Rs 3449.18 Crores) and interest thereonRs 1513.04 Crores. (Previous Year:Rs 1513.04 Crores) for Hazira unit in Gujarat State: Sales Tax Authorities, Ahmedabad have treated the transfer of Natural Gas by the company from the state of Gujarat to other states during the period April, 1 994 to March, 2001 as inter-state sales under Section 3(a) of the Central Sales Tax Act. The company has been paying sales tax under section 12 of the Gujarat Sales Tax Act against Form 17 since inception (1987) and accordingly the sales tax assessments have been completed. Based on the interpretation of the provisions of the Sales Tax Act and legal advice from the experts, the company had filed writ petition and special leave petition in the Supreme Court of India. In February, 2005 the case was transferred by Hon'ble Supreme Court to Gujarat Sales Tax Tribunal for decision.TheTribunal has given its judgment on 16.05.2005 accepting the contention of the company for interstate transfer of Natural Gas as branch transfer and not the interstate sale and set aside the demand under section 41-B of the Gujarat Sales Tax Act.The Hon'bleTribunal has given further instruction to the Assessing Authority to re-assess and decide tax liability in accordance with the law considering interstate transfer of natural gas as branch transfer. The Sales Tax Authorities had filed rectification application under section 72 of the Gujarat Sales Tax Act, 1969 in Gujarat Sales Tax Tribunal against its judgment dated 16.05.2005.TheTribunal had dismissed the rectification application of the sales tax authorities vide its order dated 06.07.2006.The sales tax authorities have now filed petition in Hon'ble high Court Ahmedabad against the order of the tribunal and no hearing has yet taken place. In opinion of the management there is a remote possibility of crystallizing this liability.

4. (a) Freehold land acquired for city gate station at Lucknow and

Kanpurjhansi Maintenance Base, Sectionalising Valves in Jamnagar -Loni Pipeline and Mumbai and receiving terminal at Pune valuing Rs 4.94 Crores (Previous Year: Rs 6.17 Crores) are valued/capitalized on provisional basis.

(b) Title deeds for freehold land valuing Rs 6.38 Crores (Previous Year:Rs 7.61 Crores) and leasehold land valuingRs 10.24 Crores (Previous Year: Rs 22.53 Crores) are pending execution.

(c) Title Deeds in respect often residential flats at Asiad Village, New Delhi, valuingRs 1.1 7 Crores (Previous Year:Rs 1.17 Crores) are still in the name of ONGCL. Concerned authorities are being pursued for getting the same transferred in the name of the Company.

(d) Net Blockfor"Building"includesan amount ofRs 1.21 Crores (Previous year: Rs 1.25 Crores) earmarked for disposal but in use.

5. (a) The balance retention from PMTJV consortium amounting to Rs A'iJS Crores (Previous Year:Rs 59.93 Crores) includes interest amounting toRs 2.64 Crores (Previous Year:Rs 2.55 Crores) on Short term deposits for the year.This interest income does not belong to the company hence not accounted as income.

(b) Liability on account of Gas Pool Money amounting to Rs 722.60 Crores (Previous Year:Rs 2571.66 Crores) includes interest amounting to Rs 29.10 Crores (Previous Year: Rs 225.00 Crores) on short term deposits. This interest does not belong to the company hence not accounted as income.

(c) Petroleum and Natural Gas Regulatory Board (PNGRB) has notified charges for pipeline overrun and imbalances created on account of positive/negative off-takes over the tolerance limit of allocated capacity to be charged from shippers. As the guidelines regarding modalities of maintaining and operation of escrow account are effective from 1.4.2011, the sum ofRs 23.95 Crores (Previous Year:Rs 12.59 Crores) recovered up to 31.03.2011 on this account has been recognized as liability in the financial statements.

6. Advances recoverable in Cash or in kind or value to be received includes an amount ofRs 3.02 Crores (Previous Year:Rs 3.02 Crores) recoverable on account of Disinvestment by Government of India of its equity in the company by way of GDR/offer for sale.

7. A net amount ofRs 3.30 Crores (Previous Year:Rs 0.86 Crores) has been debited to Profit & Loss account due to exchange rate variation.

8. The required disclosure under the Revised Accounting Standard 15 is given as below:

(i) Provident Fund

Company has paid contribution ofRs 32.90 crores (Previous Year: Rs 28.69 Crores) to Provident Fund Trust at predetermined fixed percentage of eligible employee's salary and charged to Profit and Loss Account. Further, the obligation of the company is to make good shortfall, if any, in the fund assets based on the statutory rate of interest in the future period.There being change in Accounting Policy during the year, the company has made a provision ofRs 13.13 Crores as per actuarial valuation to meet any shortfall in the future period, to be compensated by the company to the Provident Fund Trust.

(ii) Other Benefit Plans

A) Gratuity:

15 days salary for every completed year of service. Vesting period is 5 years and payment is restricted toRs 10 Lakhs.

B) Post Retirement Medical Benefit (PRMS)

Upon payment of one time prescribed contribution by the superannuated employees/those who resigned from service can avail the facility subject to the completion of minimum of 10 years of service and 50 years of age.

C) Earned Leave Benefit (EL)

Accrual 30 days per year. Encashment while in service 75% of Earned Leave balance subject to maximum of 90 days at a time, twice per calendar year. Encashment on retirement or superannuation maximum 300 days.

D) Terminal Benefits

At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for Transfer Traveling Allowance. Employees are gifted a gold coin weighing 25 grams.

E) Half Pay Leave (HPL)

Accrual 20 days per year. Encashment while in service NIL. Full encashment on retirement.

F) Long Service Award (LSA)

Employees are eligible for gold coin weighing 5 gms on completion of 15 years, 10 gms each on completion of 20 years and 25 years, 20 gms each on completion of 30 years and 35 years of service.

9. MOP&NG had issued scheme of sharing of under recoveries on sensitive petroleum products. During the year, the Company has given discounts amounting to Rs 2111.24 Crores (Previous Year: Rs 1326.73 Crores). Corresponding adjustment on account of CST amounting toRs 6.98Crores (Previous Year:Rs 9.95 Crores) has been made.

10. (a) The Company is raising provisional invoices for sale of R-LNG as the supplier M/s Petronet LNG ( PLL) is also raising provisional invoices on the Company since customs duty on import of LNG by PLL has been assessed on provisional basis.

(b) With effect from April 1, 2002, Liquefied Petroleum Gas prices has been deregulated and is now based on the import parity prices fixed by the Oil Companies. However, the pricing mechanism is provisional and is pending finalization. Additional asset/liability or impact on profits, if any, arising due to such change, will be recognized on finalization of pricing mechanism.

(c) Natural Gas Pipeline Tariff is subject to various Regulations issued by PNGRB from time to time. Impact on profits, if any, is being recognized as and when the pipeline tariff is revised in accordance with these Regulations.

(d) PNGRB has issued PNGRB (Determination of Petroleum & Petroleum Products Pipelines transportation Tariff) Regulations 2010 effective from 20.12.2010 where LPG pipeline tariff is benchmarked against railway freight. In one of the pipelines, where the proposed tariff based on railway freight has been filed with PNGRB is lower than the present tariff, the company has made a provision ofRs 6.33 Crores by reversing Income on account of LPG transmission charges.

(e) Value of Annual Take or Pay Quantity (ATOPQ) of Gas is accounted for on receipt basis and shown as liability till make up Gas is delivered to customer, during the recovery period, in terms of the Gas Sales Agreement with the customers.

11. In compliance of Accounting Standard 17 (AS-17) on "Segment Reporting"as notified under Companies Accounting Standard Rules, 2006, the company has adopted following Business segments as its reportable segments:

(i) Transmission services

a) Natural Gas

b) LPG

(ii) Natural Gas Trading

(iii) Petrochemicals

(iv) LPG and other Liquid Hydrocarbons

(v) Other Segments (include GAILTEL, E&P and City Gas segments)

Note: AsGAILTel segment did not satisfy the relevant 10% thresholds as per AS-17 during the current year as well as during previous year, it is not considered as a separate reportable segment in these financial statements and forms part of'Other Segments".

There are no geographical segments.

The disclosures of segment wise information is given as per Annexure-A.

12. In compliance of Accounting Standard 18 on" Related party Disclosures"as notified under Companies Accounting Standard Rules,2006, the names of related parties, nature of relationship and detail of transactions entered therewith are given in Annexure - B.

13. (a) In compliance of Accounting Standard 22 on "Accounting for taxes on Income"as notified under Companies Accounting Standard Rules,2006, the Company has provided accumulated net deferred tax liability in respect of timing difference as on 31st March, 2011 amounting toRs 1633.24Crores (Previous Year: Rs 1389.56 Crores). Net Deferred tax expense for the year of Rs 243.68 Crores (Previous Year: Rs 63.63 Crores) has been charged to Profit & Loss Account.The item-wise details of deferred tax liability are as under:

(b) Income Tax Provisions for the current year includesRs 4.18 Crores related to Assessment Year 2008-09 and 2009-10 as per orders passed under Income Tax Act, 1961.

14. In Compliance of Accounting Standard 27 on "Financial Reporting of interests in Joint Ventures"as notified under Companies Accounting Standard Rules, 2006, brief description of Joint Ventures of the Company are:

(a) Jointly Controlled Entities

(i) Mahanagar Gas Limited: A Joint Venture with British Gas Pic and Government of Maharashtra to supply gas to domestic, commercial, small industrial consumers and CNG for transport sector in Mumbai.The company has equity participation of 49.75% of the paid up capital and has investedRs 44.45 Crores for acquiring 4,44,50,000 equity shares ofRs 101- each in Joint Venture Company.

(ii) Indraprastha Gas Limited: A Joint Venture with BPCLand Government of National Capital Territory (NCT) of Delhi to supply gas to domestic, commercial units and CNG for transport sector in Delhi.The company has equity participation of 22.50% of the paid up capital and has invested Rs. 31.50 Crores for acquiring 3,15,00,000 equity shares ofRs 10/-each in Joint Venture Company.

(iii) Petronet LNG Limited: A Joint Venture with BPCL, lOCLand ONGCL for setting up LNG imports facilities.The company has equity participation of 12.50% of the paid up capital and has invested Rs 98.75 Crores for acquiring 9,37,50,000 equity shares ofRs 10/-each in Joint Venture Company.

(iv) Bhagyanagar Gas Limited: A Joint Venture with HPCL for distribution and marketing of CNG, Auto LPG, Natural Gas and other gaseous fuels in Andhra Pradesh.The company has equity participation of 22.50% of the paid up capital and has invested Rs 0.01 Crores for acquiring 1 2,500 equity shares of X 10/-each in Joint Venture Company. The Company has also paid X 22.49 Crores (Previous Year: X 22.49 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(v) Tripura Natural Gas Company Limited: AJoint Venture with Assam Gas Company Limited and Tripura Industrial Development Corporation for transportation and distribution of natural gas through pipelines in Tripura.The company has equity participation of 29%of the paid up capital and has invested X 0.55 Crores for acquiring 55,000 equity shares of X 100/-each in Joint Venture Company. The Company has also paid X 0.28 Crores (Previous Year: X 0.28 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(vi) Central UP Gas Limited: A Joint Venture with BPCLtosupply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Kanpur, Uttar Pradesh.The company has equity participation of 25% (Previous Year:22.5%)of the paid up capital and has investedRs 15 Crores for acquiring 1,50,00,000 equity shares ofRs 10/- each in Joint Venture Company.

(vii) Green Gas Limited: A Joint Venture with IOCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Agra & Lucknow, Uttar Pradesh.The company has equity participation of 22.50%of the paid up capital and has invested Rs 0.01 Crores for acquiring 12,500 equity shares ofRs 10/- each in Joint Venture Company. The Company has also paidRs 23.03 Crores (Previous Year:Rs 23.03 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(viii) Maharashtra Natural Gas Limited: A Joint Venture with BPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Pune, Maharashtra. The company has equity participation of 22.50% of the paid up capital and has invested Rs 22.50 Crores for acquiring 2,25,00,000 equity shares ofRs 10/-each in Joint Venture Company.

(ix) Ratnagiri Gas and Power Private Limited: A Joint Venture with GAIL, NTPC and other Financial Institutions for the revival of the Dabhol Project. The company has equity participation of 32.88% of the paid up capital and has investedRs 692.90 Crores for acquiring 69,29,00,000 equity shares ofRs 10/- each in Joint Venture Company.

(x) Avantika Gas Ltd. A Joint Venture with GAIL and HPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in MP.The company has equity participation of 22.50% of the paid up capital and has invested Rs.0.01 Crores for acquiring 12,500 equity shares of Rs. 10/-each in Joint Venture Company. The Company has also paid Rs. 22.49 Crores (Previous Year: Rs. 22.49 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(xi) ONGC Petro additions Ltd (OPAL). A Joint Venture with Oil and Natural Gas Corporation Ltd, GAIL (India) Ltd and Gujarat state Petroleum Corporation Ltd. for setting up Petrochemical Project at Dahej in Gujarat.The company has equity participation of 17% (Previous Year:19%) of the paid up capital. The Company has paid Rs. 299.41 Crores (Previous Year: Rs. 113.83 Crores) as advance pending allotment of equity shares in Joint Venture Company. A sum of Rs.36.46 crores also remain unpaid as on 31.3.2011 against call raised by the Joint Venture Company.

(xii) GAIL China Gas Global Energy Holdings Ltd. A Joint Venture with China Gas Holdings Ltd. to pursue gas sector opportunities mainly in China.The company has equity participation of 50% of the paid up capital.

The Company's share in the assets and liabilities and in the Income and expenditure for the year in respect of above Joint ventures, based on audited/unaudited statements of accounts as furnished by them, is as under: (Final adjustments are effected during the year in which audited accounts are received).

(b) Jointly Controlled Assets

(i) The Company has participated in joint bidding under the Government of India New Exploration Licensing Policy (NELP) and overseas exploration bidding and has 25 Blocks (PY 24 Blocks) as on 31.03.2011 for which the Company has entered into Production Sharing Contract with respective host Governments along with other partners for Exploration & Production of Oil and Gas. The Company is a non-operator, except in Block RJ-ONN-2004/1 where it is a joint operator and CY-ONN-2005/1 where it is an operator, and shares in Expenses, ncome, Assets and Liabilities based upon its percentage in production sharing contract.

The participating interest in the twenty five NELP Blocks in India as on 31st March, 2011 is as under:

*ln addition, the company has 8.5% participating interest in offshore Midstream pipeline project in Myanmar for the purpose of transportation of gas from the delivery point in offshore, Myanmar to landfall point in Myanmar.

(iv) The Company's share in the Assets, Liabilities, Income and Expenditure for the year in respect of joint operations project blocks has been incorporated in the Company's financial statements based upon un-audited statement of accounts submitted by the operators and are given below : (Final adjustments are effected during the year in which audited accounts are received)

The above includesRs Nil,Rs 17.39 Gores,Rs 0.24 crores,Rs 6.15 Crores andRs 47.65 Crores, towards total value of Income, Expenses, Fixed Assets(Gross Block), Other Assets and Current Liabilities respectively pertaining to 11 E&P Blocks relinquished till 31st March 2011 (including 7 Blocks relinquished in the earlier years).The company is non operator in these E&P Blocks.

(vi) Share of Minimum work program committed under various production sharing contracts in respect of E&P joint ventures isRs 837.46 Crores (Previous Year: Rs 921.06Crores).

* includes test production sales forRs 0.78 Crores (Previous YearRs 0.95 Crores)

Note: Company's interest in Oil Reserves is in Indian Blocks and in Gas Reserves is in Myanmar

c) In terms of Production Sharing Agreements/Contracts, the balance (company's share) in cost recovery of Blocks (having proved reserves) to be made from future revenue of such Blocks, if any, is Rs 369.81 Crores at the end of year (previous year:Rs 352.69 crores).

15. In terms of Production sharing contract (PSC), Myanmar Oil and Gas Enterprise (MOGE) exercised its right to demand 15% undivided interest in A-1 and A-3 E&P blocks and offshore midstream project and entered into an agreement with the other consortium partners during the year for acquiring the 15% undivided interest. This has resulted in reduction of the participating interest of the company in these two blocks from 10% to 8.5%. MOGE has paid Rs 50.97 Crores towards its share of past Petroleum Cost which has been adjusted against proportionate capital work in progress to the extent ofRs 32.57 Crores and credited the balance ofRs 18.40 Crores under the head "profit/loss on sale/writeoff of assets/rights (net)"in the Profit & Loss Account.

16. An amount ofRs 81.73 Crores remain unpaid as on 31st March, 2011 against call raised by Brahmaputra Cracker and Polymer Ltd., a subsidiary of the company.

17. In Compliance of Accounting Standard 29 on "Provisions, Contingent liabilities and Contingent Assets", as against NIL opening balance of "Provision for probable obligation", there is an addition ofRs 155.48 crores during the year, NIL utilization /reversal and closing balance is Rs 155.48 crores. Additions includeRs 47.40 Crores (Previous Year NIL) capitalized in schedule 4. Expected timing of outflows is not ascertainable at this stage being legal cases under litigation.

18. In compliance with amended Clause 32 of the Listing Agreement with Stock Exchanges, the required information are given in Annexure - C.

19. In some cases, the Company has received intimation from Micro and Small Enterprises under'The Micro, Small and Medium Enterprises Development Act, 2006". The Company has certified that as a practice, the payment to Suppliers is made within 7-10 days.

No payments beyond appointed date were noticed.The amount remaining unpaid as at 31st March 2011 isRs 2336.12 Crores (Previous Year:Rs 1 796.80Crores). No payments beyond the appointed date were noticed. No interest was paid or payable under the Act.

20. Following Government of India's approval, the shareholders of the Company in the Annual General Meeting held on 15th September, 1997 approved the transfer of all the assets including Plant and Machinery, accessories and other related assets which are part of Lakwa Project to Assam Gas Cracker Complex at a price to be determined by an independent Agency and on terms and stipulations as the Board may in its discretion deem fit.The Cabinet committee on Economic affairs (CCEA) has approved the setting up of Assam Gas based cracker project at Lepetkata by formation of a company in which GAIL has equity participation of 70%. A company by the name of Brahmaputra Cracker and Polymer Limited has been incorporated during 2006-07 and construction of Gas cracker complex is in progress.The gross block of fixed assets and Capital work in progress value of Lakwa unit isRs 258.33 Crores as on 31st March 2011 (Previous Year: Rs 253.11 Crores).

21. Non-Refundable DepositsRs 24.09Crores (Previous Year:Rs 15.98 Crores) made with the concerned authorities for railway crossings, forest crossings, removal and laying of electric/telephone poles and lines are accounted for under Capital Work-in-Progress on the basis of work done/confirmation from the concerned department.

22. During the year, the company has made a "provision for diminution ofRs 0.44 Crores in the carrying cost of its investment in Shel Compressed Natural Gas Company, Egypt based on its decision to sell the investment at lower value to that extent.

23. Request for confirmations of balances were sent and reconciliations with the parties are carried out as an ongoing process.

24. The Profit & Loss Account includes: -

(a) Expenditure on Public Relations and Publicity amounting to Rs 20.92 Crores (Previous Year:Rs 1 3.33 Crores).The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.0006:1 (Previous Year: 0.0005:1).

(b) Research and Development Expenses Rs 0.13 Crores (Previous Year:Rs 16.17 Crores).

(c) Entertainment ExpensesRs 0.15 Crores (Previous Year:Rs 0.11 Crores).

25. Previous Year's (PY) figures have been regrouped and recast to the extent practicable, wherever necessary. Figures in brackets indicate deductions.


Mar 31, 2010

1. Contingent Liabilities :-

I. Claims against the Company not acknowledged as debts: Rs 4757.88 Crores (Previous Year: Rs 4758.54 Crores). which mainly include:-

(a) Claims of ONGCL for Rs 33525 Crores (Previous Year: Rs 352.74 Crores) on account of interest for delayed payment and MGO. etc Out of these. MGO claims of Rs4781 Crores (Previous Year: Rs 4869 Crores) are recoverable cm back-to-back basis.

(b) income tax assessments up to the Assessment Year 2007-08 have been completed and a demand of Rs 1262.06 Crores relating to the Assessment Years 1996-97 to2007-08 (PreviousYear: Rs 121256Crores) is raised by disallowing deductions claimed by the company. The company has already made the payment of Rs 126030 Crores (Previous Year: Rs 1131.74 Crores) under protest. Based upon the decision of the appellate authorities and the interpretation of the Income Tax Act, the company has been legally advised that the demand is likely to be deleted or it may be substantially reduced. The company has Tiled appeals against the demand for the Assessment Years 1997-98 to 2004-05 with Income Tax Appellate Tribunal (ITAT)and for Assessment Year 1996-97 & 2005-06 to 2007-08 with Commissioner of Income Tax (Appeal).

(c) Legal cases for claim of Rs 2325.78 Crores (Previous Year: Rs 2507.59 Crores) by vendors on account of Liquidated damages/Price Reduction Schedule, Natural Gas price differential etc and by customers for Natural gas transmission charges etc. Further details are not disclosed as same are expected to prejudice the legal proceedings.

II. Bank Guarantee & Letters of Credit: Rs 1665.58 Crores (Previous Year: Rs

110582 Crores) including bank guarantees issued on behalf of subsidiaries Rs 45.88 Crores (Previous Year: 9.00 Crores)

III. The Company has issued corporate guarantee for Rs. 254.34 Crores (Previous Year: 254.34 Crores) in favour of Oil Industry Development Board (CxDB) on behalf of Brahamputra Cracker & Polymer Limited (BCPL), a subsidiary of the company, for raising a loan.

IV. Share in Contingent Liabilities of Joint ventures based on their audited/unaudited statement of accounts: Rs 229.89 Crores (Previous Year: Rs 229.05 Crores).

2. Sales Tax demand of Rs 3449.18 Crores (Previous Year: Rs 3449.18) and interest thereon Rs 1513.04 Crores (Previous Year: Rs 1513.04) for Ha2ira unit in Gujarat State: Sales Tax Authorities, Ahmedabad have treated the transfer of Natural Gas by the company from the state of Gujarat to other states during the period April. 1994 to March. 2001 as inter-state sales under Section 3(a) of the Central Sales Tax Act. The company has been paying sates tax under section 12 of the Gu>arat Sales Tax Act against Form I7since inception (1987) and accordingly the sales tax assessments have been completed. Based on the interpretation of the provisions of the Sales Tax Act and legal advice from the experts, the company had filed writ petition and special leave petition in the Supreme Court of India, in February, 2005 the case was transferred by Honble Supreme Court to Gujarat Sales Tax Tribunal for decision.The Tribunal has given its judgment on 16.052005 accepting the contention of the company for interstate transfer of Natural Gas as branch transfer and not the interstate sale and set aside the demand under section4i-B of the Gujarat Sales Tax Act. The Honble Tribunal has given further instruction to the Assessing Authority to re-assess and decide tax liability in accordance with the law for the period 1998-99 to 2000-2001 considering interstate transfer of natural gas as branch transfer. The Sales Tax Authorities had filed rectification application under section 72 of the Gujarat Sales Tax Act, 1969 in Gujarat Sales Tax Tribunal against its judgment dated 16.05.2005. The Tribunal had dismissed the rectification application of the sales tax authorities vide its order dated 06.07.2006. The sales tax authorities have now Tiled petition in honble high Court Ahmedabad against the order of the tribunal and no hearing has yet taken place. In opinion of the management there is a remote possibility of crystallizing this liability.

3. (a) Freehold land acquired for city gas Lucknow and Kanpur. Jhansi Maintenance Base. Secttonalising Valves in Jamnagar Lorn Pipeline and Mumbai valuing Rs 6.17 Crores (Previous Year: Rs l .70 Crores) are valued/capitalized on provisional basis.

(b) Title deeds for freehold land, valuing Rs 7.61 Gores (Previous Year: Rs 3.19 Crores) and leasehold land valuing Rs 2253 Crores (Previous Year: Rs 23.23 Crores) are pending execution.

(c) Title Deeds in respect often residential flats at Asiad Village, New Delhi. valuing Rsl.l 7 Crores (Previous Year: Rsl .17 Crores) are still in the name of ONGCL Concerned authorities are being pursued for getting the same transferred in the name of the Company.

(d) Net Block for Building*includes an amount of Rs.i .25 Crores (Previous year: Rs. 1.29 Crores) earmarked for disposal but in use.

4. (a) The balance retention from PMT JV consortium amounting to Rs 59.93 Cores (Previous Year: Rs 57.38 Gores) includes interest amounting to Rs 2.55 Crores (Previous Year: Rs 3.10 Crores) on Short term deposits for the year. This interest income does not belongs to the company hence not accounted as income.

(b) Liability on account of Gas Pool Money amounting to R&2S71.66 Gores (Previous Year: Rs 1512.25 Ctotes) includes interest amounting to Rs. 22500 Crotes {Previous Year: Rs. 108.13 Crores) on short term deposits. This interest does not belong to the company hence not accounted as income.

5. Advance recoverable in Cash or in kind or value to be received includes an amount of Rs3.02 Crores (Previous Year: Rs. 3.02Crotes) recoverable on account of Disinvestment by Government of India of its equity in the company by way of GDR/offer for sale.

6. Pending implementation of pay revision vtel i st January, 2007, provision ofRs.136.51 Crores (upto Previous Year Rs 184.39 Crores) has been made on estimated basis.

7. A net amount of Rs 036 Crores has been debited (Previous Year: credited Rs. 2.22 Crores) to Profit & Loss account due to exchange rate variation.

8. The required disclosure under the Revised Accounting Standard 15 is given as below:

(i) DEFINED CONTRIBUTION PLAN

Company pays fixed contribution to Provident Fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the Profit & Loss accounts. The obligation of the company is limited to such fixed contribution. However, the trust is required to pay a minimum rate of interest on contributions to the members as specified by Government of India (GOl) The fair value of the assets of the Provident Fund including the returns on the assets thereof, as on the Balance Sheet date is greater than the obligations under the defined contribution plan.

An amount of Rs 28.69 Crores (Previous Year: Rs 2025 Crores) is recognized as expense for defined contribution plan {Contributory Provident Fund).

(ii) DEFINED BENEFIT PLAN

Brief description.

A) Gratuity

15 days salary for every completed year of service. Vesting period is 5 years and payment is restricted to Rs 10 Lakhs {Previous Year: Rs. 10 Lakhs).

B) Post Retirement Medical Benefit (PRMS)

Upon payment of one time prescribed contribution by the superannuated employees/those who resigned from service can avail the facility subject to the completion of minimum of 10 years of service and 50 years of age.

C) Earned Leave Benefit (EL)

Accrual 30 days per year. Encashment while in service 75% of Earned Leave balance subject to maximum of 90 days at a time, twice per calendar year. Encashment on retirement or superannuation maximum 300 days

D) Terminal Benefits

At the time of superannuation, employees are entitled to settle at a place of their choice and they are eligible for transfer of traveling allowance. Employees are gifted a gold coin weighing 25 grams

E) Half Pay Leave (HPL)

Accrual 20 days per year. Encashment while in service NIL. Full encashment on retirement.

F) Long Service Award (LSA)

Employees are eligible for gold coin after every five years depending upon the completion of service, subject to minimum of 15 years of service.

The following table summarizes the components of net benefit expenses recognized in the Profit and Loss Account:-

9. MOP&NG had issued scheme or sharing of under recoveries on sensitive petroleum products. During the year, the Company has given discounts amounting to Rs.l 32673 Crores (Previous Year: Rs. 1781.20 Crores) out of which Rs. Nil Crores (Previous Year: 86.98 Crores) pertains to short provision for the quarter ended Jan- March2009. Corresponding adjustment on account ofCST amounting to Rs.9.95 Crores (Previous Year: Rs. 20.93Crores) has been made.

10. (a) The Company is raising provisional invoices for sale of R-LNG as the supplier M/s Petronet LNG Ltd (PLL) is also raising provisional invoices on the Company since customs duty on import of LNG by PLL has been assessed on provisional basis.

(b) With effect from April 1,2002, Liquefied Petroleum Gas prices has been deregulated and is now based on the import parity prices fixed by the Oil Companies. However, the pricing mechanism is provisional and is pending realization. Additional asset/liability or impact on profits, if any. arising due to such change, will be recognized on final ization of pricing mechanism.

(c) Petroleum and Natural Gas Regulatory Board (PNGRB) have issued PNGRB ("Determination of Natural Gas Pipeline Tariff*) Regulations 2008 effective from 20th November 2008. As per these Regulations, the natural gas pipeline tariff being charged by the company for its pipeline networks in operation is subject to revision with retrospective effect in accordance with the Regulations. Impact on profits, if any, is recognized as and when the pipeline tariff is revised in accordance with the Regulations.

PNGRB vide its order no-TO/02/2010 dated 19th April, 2010, have notified PROVISIONAL initial unit natural gas pipeline tariff on estimated basis for HVJ-GREP-DVPL and DVPL/GREP up gradation pipelines to be applicable w.ei.20.i 12008. in accordance with the order, the company has reversed a sum of Rs.140-37 Crores from Sales and created liability of that amount. Further, a sum of Rs.42.07 Crores has been adjusted in segment revenue on account of internal consumption. Impact on profit on final determination of tariff will be adjusted in the year in which it is finally determined.

(d) PNGRB has notified charges for pipeline overrun and imbalances created on account of positive/negative off-takes over the tolerance limit of allocated capacity to be charged from shippers. The amount recovered is to be kept in an escrow account. In the absence of guidelines of modalities of maintaining the escrow account, the sum of Rs. 12.S9 Crores recovered from customers have been recognized as liability in the financial statements.

(e) Value of Annual Take or Pay Quantity (ATOPQ) of Gas is accounted for on receipt basis and shown as liability till make up Gas is delivered to customer, during the recovery period, in terms of the Gas Sales Agreement with the customers.

11. In compliance of Accounting Standard 17 onSegment Reporting" as notified under Companies Accounting Standard Rules^0O6. the required information is given as per Annexure - A. The Company has adopted following Business segments as its reportable segment.

(i) Transmission services

a) Natural Gas

b) LPG

(ii) Natural Gas Trading

(iii) Petrochemicals

(iv) LPG and other Liquid Hydrocarbons

(v) GAILTEL

(vi) Others

There are no geographical segments.

12. In compliance of Accounting Standard 18 on Related party Disclosures as notified under Companies Accounting Standard Rules20O6, the names of related parties, nature of relationship and detail of transactions entered therewith are given in Annexure - B.

13. (b) Income Tax Provisions for the current year includes Rs. 2059 Crores related to Assessment Year 1997-98 & 2007-08 as per orders passed under Income Tax Act, 1961.

14. (a) In Compliance of Accounting Standard 27 on "Financial Reporting of Interests in Joint Ventures as notified under Companies Accounting Standard Rules^0O6, brief description of Joint Ventures of the Company are:

(I) Mahanagar Gas Limited: A Joint Venture with British Gas Pic and Government of Maharashtra to supply gas to domestic, commercial, small industrial consumers and CNG for transport sector in Mumbai.The company has equity participation of 4975% of the paid up capital and has invested Rs. 44.45 Crores for acquiring 4,44,49.970 equity shares of Rs. 10/- each in Joint venture Company.

(II) Indraprastha Gas Limited: A Joint Venture with 8PCL and Government of National Capital Territory (NCT) of Delhi to supply gas to domestic, commercial units and CNG for transport sector in Delhi.The company has equity participation of 22.50% of the paid up capital and has invested Rs. 31.50 Crores for acquiring 3,15,00.000 equity shares of Rs. 10/- each in Joint venture Company.

(III) Petronet LNG Limited: A Joint Venture with BPCL. I0CL and ONGCL for setting up LNG imports facilities.The company has equity participation of 12.50% of the paid up capital and has invested Rs. 98.75 Crores for acquiring 9.37,50,000 equity shares of Rs. 10/- each in Joint Venture Company.

(iv) Bhagyanagar Gas Limited: A Joint Venture with HPCL for distribution and marketing of CNG, Auto LPG, Natural Gas and other gaseous fuels m Andhra Pradesh. The company has equity participation of 22.50% of the paid up capital and has invested Rs. 0.01 Crores for acquiring 12300 equity shares of Rs. 10/- each in Joint Venture Company. The Company has also paid Rs. 22.49 Crores (Previous Year: Rs. 17.48 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(v) Tripura Natural Gas Company Limited: A Joint Venture with Assam Gas Company Limited and Tripura industrial Development Corporation for transportation and distribution of natural gas through pipelines in Tripura. The company has equity participation of 29% of the paid up capital and has invested Rs. 0.55 Crores for acquiring 55,000 equity shares of Rs. 100/- each in Joint Venture Company. The Company has also paid Rs. 0.28 Crores (Previous Year: Rs. 0S3 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(vi) Central UP Gas Limited: A Joint Venture with BPCL to supply gas to domestic commercial and small industrial consumers and CNG for transport sector m Kanpur, Uttar Pradesh. The company has equity participation of 22.50% of the paid up capital and has invested Rs. 13.50 Crores for acquiring 1.35,00,000 equity shares of Rs. 10/- each in Joint Venture Company- The Company has also paid Rs. 1.50 Crores (Previous Year: Rs. Nil) as advance pending allotment of equity shares in Joint Venture Company.

(vii) Green Gas Limited: A Joint Venture with I0CL to supply gas to domestic commercial and small industrial consumers and CNG for transport sector in Agra & Lucknow, Uttar Pradesh. The company has equity participation of 22.50% of the paid up capital and has invested Rs. 0.01 Crores for acquiring 12,500 equity shares of Rs. 10/- each in Joint Venture Company. The Company has also paid Rs. 23.03 Crores (Previous Year: Rs. 15.48 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(viii) Maharashtra Natural Gas Limited: A Joint Venture with BPCL to supply gas to domestic, commercial and small industrial consumers and CNG for transport sector in Pune, Maharashtra. The company has equity participation of 22.50% of the paid up capital and has invested Rs.2250 Crores for acquiring 2,25.00,000 equity shares of Rs. 10/- each in Joint venture Company.

(ix) Ratnagiri Gas and Power Private Limited: A Joint Venture with GAIL, NTPC and other Financial Institutions for the revival of the Dabhol Protect. The company has equity participation of 3288% of the paid up capital and has invested Rs.592.90 Crores for acquiring 59.29.00,000 equity shares of Rs. 10/-each in Joint Venture Company. The Company has also paid Rs. 100.00 Crores (Previous Year: Rs. 192.90 Crores) as advance pending allotment of equity shares in Joint venture Company. A sum of Rs. 84.00 Crores also remain unpaid as on 31st March, 2010 against call raised by Joint Venture Company.

(x) Aavantika Gas Limited: A Joint Venture with GAIL and HPCL to supply gas to domestic commercial and small industrial consumers and CNG for transport sector in MP. The company has equity participation of 22.50% of the paid up capital and has invested RsO.01 Crores for acquiring 12,500 equity shares of Rs. 10/- each in Joint Venture Company. The Company has also paid Rs. 22.49 Crores (Previous Year: Rs. 1350 Crores) as advance pending allotment of equity shares in Joint Venture Company.

(xi) ONGC Petro additions Limited (OPAL): A Joint Venture with Oil and Natural Gas Corporation Ltd, GAIL (India) Ltd and Gujarat state Petroleum Corporation Ltd. for setting up Petrochemical Project at Dahej in Gujarat. The company has equity participation of 19% of the paid up capital. The Company has paid Rs. 113.83 Crores (Previous Year: Rs. Nil) as advance pending allotment of equity shares m Joint Venture Company. A sum of Rs. 1S785 Crores also remain unpaid as on 3ist March, 2010 against call raised by Joint Venture Company.

(xii) GAIL China Gas Global Energy Holdings Limited: A Joint Venture witn China Gas Holdings Ltd. To pursue gas sector opportunities mainly in China. The company has equity participation of 50% of the paid up capital.

The Companys share in the assets and liabilities as at 31 st March, 2010 and in the Income and expenditure for the year in respect of above Joint ventures, based on audited/unaudited statements of accounts as furnished by them, is as under: Pinal adjustments shall be effected during the year in which audited accounts are received.

15. In compliance with amended Clause 32 of the Listing Agreement with Stock Exchanges, the requited information are given in Annexure • C.

16. In some cases, the Company has received intimation from Micro and Small Enterprises under The Micro, Small and Medium Enterprises Development Act, 2006". The Company has certified that as a practice, the payment to Suppliers is made within 7-10 days. No payments beyond appointed date were noticed.The amount remaining unpaid as at 3lst March 2010 is Rs. 1/9680 Gores (Previous Year: Rs. l74i.78Crores). Mo payments beyond the appointed date were noticed. No interest was paid or payable under the Act.

17. Following Government of Indias approval, the shareholders of the Company in the Annual General Meeting held on l Sth September, 1997 approved the transfer of all the assets including Plant and Machinery, accessories and other related assets which are part of Lakwa Project to Assam Gas Cracker Complex at a price to be determined by an independent Agency and on terms and stipulations as the Board may in its discretion deem fit. The Cabinet committee on Economic affairs (CCEA) has approved the setting up of Assam Gas based cracker project at Lepetkata by formation of a JVC in which GAIL has equity participation of 70%. A company by the name of Brahmaputra Cracker and Polymer Limited has been incorporated during 2006-07. The gross block of fixed assets and Capital work m progress value of Lakwa unit is Rs.253.11 Gores as on 3lst March2010(PreviousYear: Ri 252.58 Gores).

18. Non-Refundable Deposits Rs. 15.98 Crores (Previous Year: Rs. 9.31 Gores) made with the concerned authorities for railway crossings, forest crossings, removal and laying of electric/telephone poles and lines are accounted for under Capital Work-in-Progress on the basis of work done/confirmation from the concerned department.

19. Balances grouped under Material with Contractors, Sundry Debtors, Loans and Advances, Deposits and Sundry Creditors, etc. are subject to confirmation.

20. The Profit & Loss Account includes: -

(a) Expenditure on Public Relations and Publicity amounting to Rs 13.33 Crores (Previous Year: Rs 11.89 Crores). The ratio of annual expenditure on Public Relations and Publicity to the annual turnover is 0.0005:1 (Previous Year: 0.000S:l}.

(b) Research and Development Expenses Rs 16.17 Crores (Previous Year: Rs Nil).

(c) Entertainment Expenses Rs.0.11 Crores (Previous Year: Rs 0.11 Crores).

21. Previous Years (PY) figures have been regrouped and recast to the extent practicable, wherever necessary. Figures in brackets indicate deductions

Related Party Disclosures

i Relationship

A) Joint Venture Companies/Associates

1} Mahanagar Gas Limited

2) Indraptasiha Gas Limited

3} Pettonet LNG Limited

4} Bhagyanagar Gas Limited

5) Ttipura Natural Gas Corporation Limited

6) Central UP Gas Limited

7) Green Gas Limited

8} Maharashtra Natural Gas Limited

9) Avantika Gas Ltd.

10) GAIL China Gas Global Energy Holding Ltd.

11) ONGC Petro additions Ltd (OPAL)

12) Shell Compressed Natural Gas

13) Gujrat State Energy Generation Ltd.

14) National Gas Company Nat Gas

15) Fayum Gas Compnay

16) China Gas Holding Ltd

B) Whole time Directors:

1) Shn B CTripathi .Chairman and Managing Director (w.ei. 01.08.2009)

2) Dr U DChoubey.Chairman and Managing Director (up to 31.07.2009)

3} Shri R K Goel

4) Shri R D Goyal {w.e.f. 01.072009)

5) Shri S L Raina (w.e.f. 19.08.2009)

6) Shri Prabhat Singh (w.e.f. 24.02.2010)

7> Shri A K Purwaha (up to 30.092009)

8) Shri Santosh Kumar {up to 30.062009)

C) Unincorporated Joint venture for Exploration & Production Activities:

1) NEC - OSN ¦ 97/1 (Non-operator with participating interest 50%,

GAIL has relinquished from the Block on 11 th September 2007)

2) CB - ONN - 2000/1 (Non-operator with participating interest: 50%)

3} A-i.Myanmar (Non-operator with participating interest 10%)

4) CY-OS/2 (Non-operator with participating interest 25%)

5) AA-ONN-2002/1 (Non-operator with participating interest 80%)

6) CY-ONN-2002/1 (Non-operator with participating interest 50%)

7) AA-ONN-2003/2 (Non-operator with participating interest 35%)

8) CB-ONN-2003/2 (Non-operator with participating interest 20%)

9) AN-DWN-2003/2 (Non-operator with participating interest 15%)

10) A-3, Myanmar (Non-operator with participating interest 10%)

11) Block 56, Oman (Non-operator with participating interest 25%)

12) Rl-ONN-2004/1 (Joint operator along with GSPCL and having participating interest of 22.225%)

13) KG-OJN-2004/2 (Non-Operator with participating interest 40%)

14) MB-OSN-2004/l (Non-operator with participating interest 20%)

15) MB-OSN-2004/2 (Non-operator with participating interest 20%)

16) RM-CBM-2005/1II (Non-operator with participating interest 35%)

17) TR-CBM-2005/IH (Non-operator with participating interest 35%)

18) MR-CBM-2005/1H (Non-operator with participating interest 40%)

19) AD- 7, Myanmar (Non-operator with participating interest 10%)

20) CY-ONN-2005/1 (Joint operator along with GSPCL and having participating interest of 40%)

21) CB-ONN-2000/l-RFC (Non-operator with participating interest 50%)

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