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NOTES TO ACCOUNTS

Adani Gas Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 14704.46 Cr. P/BV 54.07 Book Value (₹) 2.47
52 Week High/Low (₹) 154/72 FV/ML 1/1 P/E(X) 90.78
Bookclosure EPS (₹) 1.47 Div Yield (%) 0.00
Year End :2018-03 

NOTE : 1 CORPORATE INFORMATION

Adani Gas Limited (AGL) was originally incorporated as Adani Energy (U.P.) Limited on 5th August 2005 as Public Limited Company under the Companies Act 1956 vide CIN U40100GJ2005PLC046553 8 is having registered address at “Adani House”, Nr. Mithakali Cross Roads. Ahmedabad & is having corporate office at 8th Floor, Heritage House, Nr. C.N.Vidhayala, Usmanpura, Ahmedabad -380009, Subsequently Adam Energy (U.P.) Ltd. was renamed as Adam Gas Limited vide fresh Certificate of Incorporation consequent upon change of name dated 8th January, 2010 It is a wholly owned subsidiary of Adani Gas Holding Limited, The company carries on the activity of City Gas Distribution and distributes and transports Natural Gas to Domestic, Commercial, Industrial and Vehicle users. The company is presently operating in Ahmedabad, Vadodara, Faridabad and Khurja.

Note: 2 INCOME TAX EXPENSE

a) Calculation of Deferred Tax Liability / Asset (net)

b) Reconciliation of Income Tax Expense and the Accounting Profit mulitplied by India’s tax rate :

This note presents the reconciliation of Income Tax charged as per the Tax Rate specified in Income Tax Act, 1961 & the actual provision made in the Financial Statements as at 31st March 2018 & 31st March 2017 with breakup of differences in Profit as per the Financial Statements & as per Income Tax Act, 1961.

Note : 3 FINANCIAL INSTRUMENTS AND RISK REVIEW a) Accounting Classification and Fair Value Hierarchy Financial Assets and Liabilities

The Company’s principal financial assets include loans and trade receivables, cash and cash equivalents and other receivables. The Company’s principal financial liabilities comprise of borrowings, provisions, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations and projects.

Fair Value Hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable on unobservable and consists of the following three levels:

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

Level-2 : Inputs are other than quoted prices included within Level-1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level-3 : Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on the assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The following tables summarises carrying amounts of financial instruments by their categories and their levels in fair value hierarchy for each year end presented.

Notes :

(a) Investments exclude Investment in Joint Ventures,

(b) Carrying amounts of current financial assets and liabilities as at the end of the each year presented approximate the fair value because of their short term nature. Difference between carrying amounts and fair values of other non-current financial assets and liabilities subsequently measured at amortised cost is not: significant in each of the year presented.

b) Financial Risk Management Objective and Policies :

The Company’s risk management activities are subject to the management direction and control under the framework of Risk Management Policy as approved by the Board of Directors of the Company, The Management ensures appropriate risk governance framework for the Company through appropriate policies and procedures and that risks are identified, measured and managed in accordance with the Company’s policies and risk objectives., the Company is mainly exposed to risks resulting from interest rate risk, credit risk and liquidity risk.

Interest risk

The Company is exposed to changes in interest rates due to its financing, investing and cash management activities. The risks arising from interest rate movements arise from borrowings with variable interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.

The Companies risk management activities are subject to the management, direction and control of Central Treasury Team of the Adam Group under the framewdrk of Risk Management Policy for interest rate risk. The Group’s central treasury team ensures appropriate financial risk governance framework for the Company through appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives.

Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a loss to the company. The company has adopted the policy of only dealing with creditworthy counter parties as a means of mitigating the risk of financial losses from default. The carrying amount of financial assets recorded in the financial statements represents the company’s maximum exposure to credit risk. Cash are held with creditworthy financial institutions.

Liquidity risk

The Company monitors its risk of shortage of funds using cash flow forecasting models. These models consider the maturity of its financial investments, committed funding and projected cash flows from operations. The Company’s objective is to provide financial resources to meet its business objectives in a timely, cost effective and reliable manner and to manage its capital structure, A balance between continuity of funding and flexibility is maintained through the use of various types of borrowings.

Maturity profile of financial liabilities :

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.

Capital Management

For the purpose of the Company’s capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value,

The Company monitors capital using gearing ratio, which is net debt (borrowing as detailed in note 18, 21 and 23 less cash and bank balances) divided by total capital plus debt.

Management monitors the return on capital, as well as the level of dividends to equity shareholders. The company is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the years ended 31st March, 2018 and 31st March, 2017.

NOTE : 4 OPERATING LEASES

Disclosure as required by the IND AS 17, “Leases” as prescribed under Companies (Accounting Standard) Rules, 2015 (as amended) are given below:

a) The aggregate lease rentals payable are charged to the Statement of Profit and Loss as Rent in Note 35

b) The leasing arrangements which are cancellable at any time on month to month basis and in some cases between 11 months to 5 years are usually renewable by mutual consent on mutually agreeable terms. Under these arrangements, generally interest free refundable deposits have been given.

c) Disclosure in respect of leasing arrangements which are non cancellable for a period exceeding 5 years is as under:

NOTE : 5 CORPORATE SOCIAL RESPONSIBILITY

As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) committee has been formed by the Company. The CSR activities of the Company are generally being carried out through Adani Foundation a Charitable Trust set up by the Group, whereby funds are allocated from the Company. The Charitable Trust carries out the CSR activities as specified in Schedule VII of the Companies Act, 2013 on behalf of the Company. During the year, Company is required to spend CSR expense of Rs. 283.20 Lakhs (P.Y Rs. 228.52 Lakhs) as per requirement of Section 135 of Companies Act, 2013 and had spent Rs. 283 20 Lakhs (P.YRs. 228.52 Lakhs) for the year.

NOTE : 6 DISCLOSURES IN RESPECT OF EMPLOYEE BENEFIT OBLIGATIONS

(a) Defined Benefit Obligations :

The Company provides for gratuity for eligible employees in India as per the Payment of Gratuity Act, 1972, which provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment. Liability in respect of Gratuity is determined based on actuarial valuation done by actuary as at the balance sheet date. Disclosures in respect of the defined benefit obligation (i.e. Gratuity) are as follows.

viii) Effect of Plan on Entity’s Future Cash Flows

a) Funding arrangements and Funding Policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company,

b) Expected Contribution during the next annual reporting period

The Company’s best estimate of Contribution during the next year is Rs, 31,143,620

c) Maturity Profile of Defined Benefit Obligation

The average duration of the defined benefit plan obligation at the end of the reporting period is 12 years (31 March 2017:12 years), The expected maturity analysis of gratuity benefits is as follows :

ix) Risk Exposure and Asset Liability Matching

Through its defined benefit plan of Gratuity, the Compay is exposed to its number of risks, viz, asset volatility, changes in return on assets, inflation risks and life expectancy. The Company has purchased insurance policy, which is a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk.

(b) Defined Benefit Contributions :

The company operates defined benefit contribution in the form of Provident Fund, liability in respect of which is provided for on actual contribution basis.

(c) Other Long Term Employee Benefits :

Other long term employee benefits comprise of compensated absences/leaves, which are recognised based on actuarial valuation. The actuarial liability for compensated absences as at the year ended 31st March, 2018 is X 312,33 Lakhs (31st March 2017: Rs.’327.73 Lakhs).

NOTE : 7 RELATED PARTY TRANSACTIONS

Pursuant to the IND AS - 24 - Related Party Transactions, as prescribed under Companies (Accounting Standard) Rules. 2015 (as amended) the disclosure relating to transactions entered into with related parties at arm’s length oasis by trie Company, as identified by the management are disclosed as under

i) Name of related parties & description of relationship

A Ultimate Holding Company

Adam Enteipiises Lid B Holding Company

Adam Gas Holding Ltd

C Fellow Subsidiaries (With whom transactions done during the year)

Adani Energy Ltd.

D Joint Venture

Indian Oil-Adani Gas Pvt Ltd

E Common Control Entity

Adani Power Limited Adani Power Mundra Limited Adani Foundation Adani Port SEZ Ltd F Key Management Personnel

Mr, Shridhar Tarnbraparni, Whole time Director (upto 28,02.2018)

Mr, Rajeev Sharma, Whole-time Director (w.e.f. 01.03.2018)

Mr. Naresh Poddar, CFO

Mr, Hardik Sanghvi, Company Secretary

3) The information on Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding as at the Balance Sheet date, has been determined to the extent such parties have been identified on the basis of information available with the Company, This has been relied upon by the auditors,

b) In the opinion of the Management and to the best of their knowledge and belief, the value under the head of Current and Non-Current Assets (other than fixed assets and non-current investments), are approximately of the value stated, if realized in the ordinary course of business, except unless stated otherwise. The provision for all the known liabilities is adequate and not in excess of amount considered reasonably necessary,

c) Item of expenditure in Statement of Profit & Loss includes reimbursement to and by the company, as agreed upon between group companies

d) The Company has constructed building and facilities for processing and distribution of natural gas on plots allotted on long term lease by Ahmedabad Municipal Corporation and has paid rent accordingly,

e) An amount of X 686.88 Lakhs (P.Y, 1029,31 Lakhs) is standing as CENVAT credit receivable being the difference between the amount of CENVAT credit availed in the books of account on Input, Capital Goods and Input Services and the credit claimed under statutory returns. Out of this, the company has made application to the excise 6 service tax dept, for availing this credit of Rs.686.88 Lakhs in statutory returns.

The Fixed Assets/ Expenses of the company is understated to the extent of the CENVAT credit taken by the company and the same will be charged to respective assets / revenue if, the claim of the company for CENVAT credit is not accepted by the department,

f) Company has given certain refundable deposits as security for the performance of work for ongoing projects to various government authorities. As interest rates are not specified in tne contracts, the same will accounted for in the year in which it is received,

g) The company is in the process to review and reconcile its liabilities in connection with Retention Deposits, some of which are long outstanding. Effect of the same will be given in the year when the balances will be reconciled.

h) Security Deposit include amount of Rs. 209.14 Lakhs and interest due thereon of Rs. 179,37 Lakhs are outstanding for a substantial period of time. The company has been actively negotiating for recovery and the management is reasonably confident of recovery against the same.

I) During the previous year, the company had suspended/ abondoned certain projects on account of denial of permission from the regulatory authority. Accordingly, expenses incurred on those projects had been written off and were reflected under Exceptional item.

NOTE : 8 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved for issue by the board of directors on 10th May, 2018.

NOTE: 9 PREVIOUS YEAR COMPARATIVES

Previous year’s figures have been recast, regrouped and rearranged, wherever necessary to confirm to this year’s classification. Further the figures have been rounded off to the nearest rupees in Lakhs upto 2 decimal.

The accompanying notes are an integral part of the financial statements

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