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DIRECTOR'S REPORT

Adani Gas Ltd.

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Market Cap. (₹) 17943.40 Cr. P/BV 16.28 Book Value (₹) 10.02
52 Week High/Low (₹) 184/72 FV/ML 1/1 P/E(X) 78.46
Bookclosure 06/08/2019 EPS (₹) 2.08 Div Yield (%) 0.15
Year End :2018-03 

Dear Shareholders,

The Directors are pleased to present the 13th Annual Report along with the audited financial statements of your Company for the financial year ended on 31st March, 2018.

FINANCIAL PERFORAAANCE SUMMARY

The summarized financial highlight is depicted below:

(Rs, In Lakhs)

Particulars

2017-18

2016-17

CNG sales

68,341.22

61,387.01

PNG sales

68,585.54

53,480.45

Transportation Income

236.36

242.56

Gas Connection Income

750.35

604.19

Other Operating Income

616.21

529.99

Other Income

828.12

4,053.64

Total income

1,39,357.80

1,20,297.84

Less: Total Expenditure

1,12,628.35

98,592.06

Profit / ( Loss) Before Exceptional Items & Tax

26,729.45

21,705.78

Add: Exceptional Items

-

(6,096.69)

Profit / ( Loss ) Before Tax

26,729.45

15,609.09

Less: Current Tax

8,282.00

4,654.46

Less: Deferred Tax

1,111.97

821.05

Less: Adjustment of earlier years

45.08

14.42

Profit / (Loss) After Tax

17,290.40

10,119.16

Total Other Comprehensive Income

14.19

(33.31)

Total Comprehensive Income

17,304.59

10,085.85

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

PROJECTS A) Ahmedabad:

During the year under review, your Company has continued to expand its network in Ahmedabad and has further laid steel and PE network to cater CNG fuel to vehicles and PNG to residential, industrial and commercial customers. At the end of the year your Company has 204 kms of Steel Pipelines, 4266 kms of PE main pipelines & PE service pipelines. Your Company operates 53 nos. of CNG stations. Further by the end of the year, your Company has 2,68,970 plus nos. of Residential customers, 2300 plus nos. of Commercial customers & 816 plus nos. of Industrial customers.

Further, for the year 2018-19, your Company plans to set up additional infrastructure network to cater Residential customers by another 40,000 customers, 225 commercial customers and 50 Industrial customers.

B) Vadodara:

During the year under review, your Company has 33 kms of Steel pipelines 8- 24 kms of PE pipelines in Vadodara. Your Company operates 6 nos. of CNG stations. Further by the end of the year, your Company has 584 nos. of Residential customers 8 91 nos. of Industrial customers.

C) Faridabad:

During the year under review, your Company has continued to expand its network in Faridabad and has further laid steel and PE network to cater to CNG fuel to vehicles and PNG to residential, industrial and commercial customers. At the end of the year your Company has 111 kms of Steel lines 8 1138 kms of PE lines. Your Company operates 13 nos. of CNG stations. Further by the end of the year, your Company has 34738 plus nos. of Residential customers, 98 nos. of Commercial customers 8 251 nos. of Industrial customers.

Further, for the year 2018-19, your Company plans to set up additional infrastructure network to cater additional residential customer base by another 15000 customers, 150 commercial customers and 50 Industrial customers.

D) Khurja:

During the year under review, your Company has continued to expand its network in Khurja and has further laid steel and PE network to cater to CNG fuel to vehicles and PNG to residential, industrial and commercial customers. At the end of the year, your Company has 30 kms of Steel lines 8 150 kms of PE main pipelines 8- PE service pipelines. Your Company operates 1 (one) CNG station..

Further, for the year 2018-19, your Company plans to set up additional infrastructure network to cater additional residential customer base by another 5000 customers, and 10 Industrial customers.

PERFORMANCE HIGHLIGHTS

As you are aware, sale of Gas to Ahmedabad & Vadodara have commenced in September, 2004, Your Company has also commenced operations in Faridabad in February, 2009 and Khurja in 2013. There has been excellent response to the projects from all consumers. Your Company has achieved an increase of 12% in case of CNG quantity & decrease by 23% in case of PNG quantity. Your Company had an average sale of 13.11 Lacs Standard Cubic Meters per Day (SCAAD).

(Lakhs SCM)

Particulars

Quantity (Lakhs SCA/l)

Growth % YOY

2017-18

2016-17

CNG

2479

2209

12%

PNG

2307

1876

23%

Total

4786

4084

17%

Per Day LSCMD

13.11

11.19

Your Company has designed, developed, implemented and established its management system in conformance with the requirements of International Quality Management System (QMS) / Environment Management System (EMS) and Occupational Health 8- Safety Management System (OHSMS) and got accreditation of its management system from International Organization for Standardization (ISO) and obtained following certification:

- IS09001:2008 (QMS)

- IS014001.-2004 (EMS)

- OHSAS18001:2007 (OHSASMS)

By achieving these three certificates, your Company is able to address the requirements of all its stakeholders i.e. customer requirements through IS09001:2008, interest parties requirements through IS014001:2004 and employee requirements through OHSAS18001:2007. Your Company has been able to validate certification during interim surveillance audit.

In addition your Company has got Emergency Response & Disaster Management Plan (ERDMP) certified by PNGRB approved agency accredited as per codes of practices for ERDMP Regulation 2010. This restored our confidence not only in QMS/EMS/OSHAS processed but also our Emergency Response awareness, training and adequacy.

DIVIDEND

With a view to conserve the resources of the Company, the Directors have not recommended any dividend on Equity Shares for the financial year under review. In view of the same, the directors do not propose to carry amounts to reserves.

STATUS OF THE COMPOSITE SCHEME OF ARRANGEMENT

During the year under review, the Board of Directors at its meeting held on 18th January, 2018 had approved the Composite Scheme of Arrangement among Adani Gas Holdings Limited (AGHL) and Adani Gas Limited (the Company) and Adani Enterprises Limited (AEL) and their respective shareholders and creditors for:

(a) amalgamation of AGHLwith the Company; and

(b) subject to satisfactory fulfilment of (a) above i.e., upon amalgamation of AGHL with the Company becoming effective, demerger of the Demerged Undertaking of AEL and transfer of the same to the Company.

The rational for the Composite Scheme of Arrangement are as under:

(i) The amalgamation of AGHL with the Company is for simplification of the holding structure resulting in reduction of managerial overlaps and reduction in multiplicity of legal and regulatory compliances.

(ii) Further, considering the following factors, it is desired to segregate Gas Sourcing and Distribution Business by way of demerger and transfer the same to the Company from other businesses of AEL:

(a) To lend greater/enhanced focus to the operation of the Gas Sourcing and Distribution Business and the other businesses.

(b) To facilitate the management to efficiently exploit opportunities for each of the Gas Sourcing and Distribution Business and the other businesses.

(c) To create enhanced value for shareholders by allowing a focused strategy and specialization for sustained growth.

(d)To provide scope for independent collaboration and expansion pertaining to Gas Sourcing and Distribution Business.

The said Scheme is effective upon approval of shareholders and creditors, Hon’ble National Company Law Tribunal and other regulatory and statutory approvals as applicable.

FIXED DEPOSITS

During the year under review, your Company has not accepted any fixed deposits within the meaning of Section 73 of the Companies Act, 2013 and the rules made there under.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The provisions of Section 186 of the Companies Act, 2013, with respect to a loan, guarantee or security are not applicable to the Company as the Company is engaged in providing infrastructural facilities which is exempted under Section 186 of the Companies Act, 2013. The details of investment made during the year under review are disclosed in the financial statements.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

No Company has become/ceased to be a Subsidiary/ Joint venture/ associate during the financial year 2017-18.

A separate statement containing the salient features of financial statements of Joint Venture in Form AOC-1 forms part of this Annual Report.

The financial statements of the Joint Venture shall be kept for inspection by any shareholder/s during working hours at the Company’s registered office and that of the respective Joint Venture concerned.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Rajeev Sharma (DIN: 00084188) was appointed as an Additional Director by the Board at its meeting held on 1st March, 2018. He was also appointed as a Whole-time Director of the Company subject to approval of members at the ensuing Annual General Meeting. As an Additional Director, he holds office upto the ensuing Annual General Meeting. The Company has received notice from a member under Section 160 of the Companies Act, 2013 proposing his appointment as a Director of the Company.

Pursuant to the requirements of the Companies Act, 2013 and Articles of Association of the Company, Mr. Pranav Adani (DIN: 00008457) is liable to retire by rotation and being eligible offers himself for re-appointment.

The Board recommends the appointment / re-appointment of above directors for your approval,

During the year under review, Mr. Shyamal Joshi (DIN: 00005766) and Ms. Nayanaben Gadhvi (DIN: 07148619) resigned from the Directorship of the Company w.e.f. 9th October, 2017 due to personal reasons. Mr. Shridhar Tambraparni, Whole-time Director (DIN: 07131658) of the Company resigned w.e.f. the closure of business hours on 28th February, 2018 on attaining the age of superannuation. The Board places on record its sincere appreciation for the valuable contribution and guidance rendered by Mr. Shyamal Joshi, Ms. Nayanaben Gadhvi and Mr, Shridhar Tambraparni during their tenure with the Company.

DIRECTORS* RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, state the following:

a. that in the preparation of the annual financial statements, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st Mach, 2018 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

NUMBER OF BOARD MEETINGS

During the year under review, seven Board Meetings were held on 11th May, 2017, 28th July, 2017, 16th October, 2017, 4th December, 2017, 13th January, 2018, 18th January, 2018 and 1st March, 2018. The maximum time gap between any two meetings was not more than 120 days.

The attendance of each Director at the Board Meetings held during the year under review is as under:

Name of Directors

Meetings

Held during the tenure

Attended

Mr. Pranav Adani

7

6

Mr. Rajesh S. Adani

7

7

Mr. Shridhar Tambraparni1

6

6

Mr. Shyamal Joshi^

2

2

Ms. Nayanaben Gadhvi^

2

2

Mr. Rajeev Sharmai

-

-

1. Resigned as a Director of the Company w.e.f. closure of business hours on 28th February, 2018 on attaining the age of superannuation.

2. Resigned as Directors w.e.f. 9th October, 2017.

3. Appointed as a Whole-time Director of the Company for a period of 3 years w.e.f. 1st March, 2018 subject to the approvals of members and such other approvals as may be required.

BOARD EVALUATION

The Board has adopted a formal mechanism for evaluating its performance and as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board & committees, experience 8- competencies, performance of specific duties & obligations, contribution at the meetings and otherwise, independent judgment, governance issues etc.

POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION

Your Company’s policy on directors’ appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 is made available on the Company’s website.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company.

SECRETARIAL STANDARDS

The Company complies with all applicable secretarial standards.

RISK MANAGEMENT

Your Company has a formal risk assessment and management system which periodically identifies risk areas, evaluates their consequences, initiates risk mitigation strategies and implements corrective actions where required.

COMMITTEES OF THE BOARD

Ministry of Corporate Affairs vide its notifications dated 5th July, 2017 and 13th July, 2017 has amended the provisions of the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Companies (Meetings of Board and its Powers) Rules, 2014 respectively, whereby it has been notified that the criteria / applicability in respect of appointment of Independent Directors and constitution of Audit Committee and Nomination and Remuneration Committee are no more applicable to the Company. Accordingly, the Board of Directors at the meeting held on 16th October, 2017 had dissolved the Audit Committee and Nomination and Remuneration Committee.

a) Audit Committee:

During the year under review, two committee meetings were held on 11th May, 2017 and 28th July, 2017.

The details of attendance of the members at the committee meeting during the year are given below:

Name of Members

Meetings

Held

Attended

Mr. Shyamal Joshi, Chairman

2

2

Mr. Rajesh S. Adani, Member

2

2

Ms. Nayanaben Gadhvi, Member

2

2

b) Nomination and Remuneration Committee:

During the year under review, one Committee meeting was held on 11th May, 2017.

The details of attendance of the members at the committee meeting during the year are given below:

Name of Members

Meetings

Held

Attended

Ms. Nayanaben Gadhvi, Chairperson

1

1

Mr. Pranav Adani, Member

1

-

Mr. Shyamal Joshi, Member

1

1

c) Corporate Social Responsibility Committee

During the year under review, your Company has reconstituted Corporate Social Responsibility Committee on 1st March, 2018. The present members of the CSR Committee comprises of Mr. Rajeev Sharma, Mr. Pranav Adani and Mr. Rajesh S. Adani.

The Company has identified Primary Education, Community Health, Sustainable Livelihood Development and Rural Infrastructure Development as the core sectors for CSR. The role and functions of the CSR Committee are in conformity with the requirements of Section 135 of the Companies Act, 2013 and the rules made thereunder. The Annual Report on CSR activities is annexed herewith as Annexure-A which forms part of this report. The CSR Policy is available on the website of the Company.

During the year under review, one CSR Committee meeting was 11th May, 2017.

The details of attendance of the members at the committee meeting during the year are given below:

Name of Members

Meetings

Held during the tenure

Attended

Mr. Shridhar Tambraparni, Chairman1

1

1

Mr. Pranav Adani, Member

1

-

Ms. Nayanaben Gadhvi, Member^

1

1

1. Resigned as a Director of the Company w.e.f. closure of business hours on 28th February, 2018. Accordingly, he also ceased as Member of the CSR Committee with effect from the said date,

2. Resigned as a Director of the Company w.e.f. 9th October, 2017. Accordingly, she also ceased as Member of the CSR Committee with effect from the said date.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Your Company has formulated a vigil mechanism / Whistle Blower Policy to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the policy, The Vigil Mechanism / Whistle Blower Policy has been uploaded on the website of the Company at http://www.adaniQas.eom/Common/UDloads/DownloadTemolate/4 FFReport Ada ni0/o20Gas0/o20-0/o20Whistle0/o20Blower0/o20Policv0/o20-0/o20ViQir/o20Mechanism.pdf.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 are annexed to this Report as Annexure-B.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per the requirement, the Sexual Harassment of Women at Workplace (Prevention, Prohibition 8- Redressal) Act 2013, read with rules made thereunder an Internal Complaints Committee of the Group is responsible for redressal of complaints related to sexual harassment. During the year under review, there were no complaints pertaining to sexual harassment.

RELATED PARTY TRANSACTIONS

All related party transactions entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. Your Company had not entered into any transactions with related parties which could be considered material in terms of Section 188 of the Companies Act, 2013. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC 2 is not applicable, Suitable disclosure as required by the Indian Accounting Standard (Ind AS 24) has been made in the notes to the Financial Statements.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY

There were no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status and the Company’s future operations.

INSURANCE

The Company has taken appropriate insurance for all assets against foreseeable perils.

AUDITORS & AUDITORS’ REPORT

The shareholders at their 12th Annual General Meeting (AGM) held on 8th August, 2017, approved the appointment of M/s. Shah Dhandharia & Co., Chartered Accountants (Firm Registration No.: 118707W), as Statutory Auditors of the Company, to hold office from the conclusion of the 12th AGM up to the conclusion of the 17th AGM for FY 2021-22.

Notes to the financial statements referred in the Auditors Report are self-explanatory and therefore do not call for any comments under Section 134 of the Companies Act, 2013.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made thereunder, the Company had appointed Mr. Ashwin Shah, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for FY 2017-18 is annexed, which forms part of this report as Annexure-C.

There were no qualifications, reservation or adverse remarks given by Secretarial Auditors of the Company except for appointment of woman director, The Board of Directors would like to inform that the Company is in the process of appointment of Woman Director.

COST AUDIT REPORT

Your Company has re-appointed M/s N. D. Birla & Co., Cost Accountants to conduct audit of cost records maintained for Petroleum Products of the Company for the year ended 31st March, 2019. The Cost Audit Report for the year 2016-17 was filed before the due date with the Ministry of Corporate Affairs.

PARTICULARS OF EMPLOYEES

The Statement of Employees who are in receipt of remuneration in excess of limits prescribed under the provisions of Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the year under review is appended as an Annexure-D.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, as amended from time to time is annexed to this Report as Annexure-E.

ACKNOWLEDGMENT

Your Directors are highly grateful for all the guidance, support and assistance received from the Government of India, Government of Gujarat, Financial Institutions and Banks. Your Directors thank all shareowners, esteemed customers, suppliers and business associates for their faith, trust and confidence reposed in the Company.

Your Directors wish to place on record their sincere appreciation for the dedicated efforts and consistent contribution made by the employees at all levels, to ensure that the Company continues to grow and excel.

For and on behalf of the Board of Directors

Date: 10.05.2018 Pranav Adani

Place: Ahmedabad Chairman

(DIN: 00008457)

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